Federal Register Vol. 82, No.139,

This proposal is issued under Marketing Agreement and Order No. 986, (7 CFR part 986), regulating the handling of pecans grown in the states of Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

The Department of Agriculture (USDA) is issuing this proposed rule in conformance with Executive Orders 13563 and 13175.

This action falls within a category of regulatory actions that the Office of Management and Budget (OMB) has exempted from Executive Order 12866 review. Additionally, because this rule does not meet the definition of a significant regulatory action it does not trigger the requirements contained in Executive Order 13771. See OMB's Memorandum titled “Interim Guidance Implementing Section 2 of the Executive Order of January 30, 2017 titled ‘Reducing Regulation and Controlling Regulatory Costs’ ” (February 2, 2017).

This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. This proposed rule is not intended to have retroactive effect.

The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. A handler is afforded the opportunity for a hearing on the petition. After the hearing, USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling.

This proposed rule would establish reporting requirements under the order. This action would require all pecan handlers to submit to the Council reports of inter-handler transfers of pecans, inventory, and a summary of pecans handled. This information would be used to facilitate assessment collection and provide valuable reports to the industry, including the annual marketing policy required by the order. This proposal was unanimously recommended by the Council at its April 17, 2017, meeting.

Section 986.61 of the order requires all handlers warehousing pecans as of August 31 be identified as the handler of those pecans and pay the assessment rate accordingly. Section 986.62 provides the Council, with the approval of the Secretary, authority to establish methods and procedures, including necessary reports, to maintain accurate records for inter-handler transfers. Sections 986.75, 986.76, and 986.77 provide authority to prescribe reports of handler inventory, merchantable pecans handled, and pecans received by handlers, respectively. Section 986.78 further provides the Council, with the approval of the Secretary, authority to collect other reports and information from handlers needed to enable the Council to perform its duties. This proposed rule would utilize these authorities to establish new §§ 986.162 and 986.175 under the rules and regulations of the order. These new sections would require handlers of pecans to report to the Council any inter-handler transfers, and the volume of shelled, inshell, and total volume of pecans handled each fiscal year by type using specific Council forms.

At its November 16, 2016 meeting, the first meeting following the order's promulgation, the Council discussed its initial budget, assessment rates, and necessary reporting requirements in order to set up a program that is efficient and responsive to industry needs. During these discussions, the Council established a Statistics and Reporting Committee (Committee) to develop reporting requirements.

Members of the Committee discussed the reporting needs of the industry, reviewed examples of reporting forms from other marketing orders, and met and worked with the staff of another marketing order in developing the proposed reporting requirements. The Committee also worked with USDA to ensure the recommended information collection would provide the information necessary to facilitate the administration of the order.

At its February 23, 2017 meeting, the Council reviewed drafts of seven reporting forms as developed and recommended by the Committee. The Council expressed its interest in having as much electronic reporting as possible, but recognized that many handlers may prefer a paper submission. The Council also considered the timing of when forms would be due and submission dates that would work for all parts of the industry. After a thorough review and some modifications, seven forms were approved by the Council.

At a meeting on April 17, 2017, the Council revisited the recommended reporting requirements and the accompanying forms. Acknowledging the industry was more than halfway through the fiscal year at that time, the Council took action to move forward with the minimum reports necessary to facilitate the collection of assessments and to provide the other information needed for the 2016-17 fiscal year. Specifically, the Council voted to utilize two forms for the current fiscal year, one focusing on inter-handler transfers, and one containing information regarding year-end inventory and pecans handled throughout the fiscal year. The Council agreed it still wanted to move forward with all seven forms for the 2017-18 fiscal year, but considered year-end reporting on two forms as the most viable option for this fiscal year. The remaining five forms will be proposed in a subsequent rulemaking action.

This proposed rule would add two new reporting requirements and two new forms to the rules and regulations under the order by adding §§ 986.162 and 986.175. The pecan industry includes a subset of handlers, defined in the order as accumulators, who compile pecans for the purpose of resale or transfer to another handler. Additionally, small handlers may also sell or transfer pecans to other handlers. During the formal rulemaking hearing, the industry expressed concern that it may be difficult to track pecans moved through accumulators or transferred between handlers. Further, some handlers and accumulators that are small operations may find reporting, recordkeeping, and paying assessments burdensome.

The report of inter-handler transfers would include information on the month of transfer, type of pecans transferred, the volume transferred, the amount of assessments owed on the pecans transferred, identification information and signatures of the two handlers involved, and whether the transferring handler or receiving handler would be responsible for reporting and paying the assessments. This report would help ensure that transferred pecans are not counted twice for volume reporting purposes and would help facilitate the collection of assessments. It would also allow receiving handlers to assume the reporting burden from smaller entities and ensure payment of corresponding assessments.

The Council selected the tenth day of the month following the month of transfer as the due date for reports of inter-handler transfers. Should the tenth day of the month fall on a weekend or holiday, reports would be due by the first business day following the tenth day of the month. However, given that the current season began October 1, 2016, for the 2016-17 fiscal year, all inter-handler transfer forms would need to be submitted by Monday, September 11, 2017. For subsequent fiscal years, reports of inter-handler transfers would be due on a monthly basis as specified above.

In order to correctly collect assessments, provide industry data, and complete a marketing policy for the coming fiscal year, the Council requires accurate reports of what has been handled and what is in inventory going into the next fiscal year. Based on Council discussions, it is also important for the industry to know the variety and form of the pecan in inventory. This information would be vital to the industry as it enters the next harvest, as the amount and type of inventory impacts prices of the new crop. Collection of this data was one of the industry's goals in promulgating the order, as currently there is no source for this type of information across the 15-state production area. This information would be captured in the year-end inventory report.

The year-end inventory report would include information on the handler submitting the form, total pounds by type of pecans inshell and shelled in inventory, inventory committed but not shipped for both export and domestic, and any uncommitted inventory. It would also include information on pecans handled throughout the year, as well as data for total inventory including both shelled and inshell, with shelled volume converted to an inshell basis using the conversion specified in the order (volume shelled × 2). In addition, it would include information regarding total assessments owed, assessments paid to date, and remaining assessments due for that handler.

The order specifies that on August 31 of each year, every handler warehousing inshell pecans shall be identified as the first handler of those pecans and shall be required to pay the required assessment rate. The order also specifies that the marketing policy include an estimate of the handler inventory as of August 31. Consequently, the Council selected September 10 as the due date for the year-end inventory report, or the first business day following the tenth of September should the tenth fall on a weekend or a holiday. The Council believes this would give all handlers sufficient time to submit the information to the Council after August 31. Further, handlers would be required to pay to the Council all remaining unpaid assessments by the due date of the year-end inventory report.

This action would require all pecan handlers to provide the Council with reports of any inter-handler transfers, year-end inventory, and pecans handled throughout the year. This information would facilitate assessment collections, provide valuable reports to the industry, and allow the Council to complete the annual marketing policy required by the order.

The Council also recommended additional reporting requirements, which would be effective for the 2017-18 fiscal year. These requirements are being considered under a separate action.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) has considered the economic impact of this action on small entities. Accordingly, AMS has prepared this initial regulatory flexibility analysis.

The purpose of the RFA is to determine whether the regulatory action will have a significant economic impact on a substantial number of small entities and to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and the rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf.

There are approximately 2,500 growers of pecans in the production area and approximately 250 handlers subject to regulation under the marketing order. Small agricultural growers are defined by the Small Business Administration as those having annual receipts less than $750,000, and small agricultural service firms are defined as those whose annual receipts are less than $7,500,000 (13 CFR 121.201).

According to information from the National Agricultural Statistics Service (NASS), the average grower price for pecans during the 2015-16 season was $2.20 per pound and 254 million pounds were utilized. The value for pecans that year totaled $558.8 million ($2.20 per pound multiplied by 254 million pounds). Taking the total value of production for pecans and dividing it by the total number of pecan growers provides an average return per grower of $223,520. Using the average price and utilization information, and assuming a normal bell-curve distribution of receipts among growers, the majority of growers receive less than $750,000 annually.

Evidence presented at the formal rulemaking hearing indicates an average handler margin of $0.58 per pound. Adding this margin to the average grower price of $2.20 per pound of inshell pecans results in an estimated handler price of $2.78 per pound. With a total 2015 production of 254 million pounds, ($2.78 per pound multiplied by 254 million pounds) the total value of production in 2015 was $706.12 million. Taking the total value of production for pecans and dividing it by the total number of pecan handlers provides an average return per handler of $2,824,480. Using this estimated price, the utilization volume, number of handlers, and assuming a normal bell-curve distribution of receipts among handlers, the majority of handlers have annual receipts of less than $7,500,000. Thus, the majority (a substantial number) of growers and handlers of pecans grown in the states of Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas may be classified as small entities.

This proposed rule would establish reporting requirements under the order. This action would require all pecan handlers to provide the Council with reports of any inter-handler transfers, year-end inventory, and pecans handled throughout the year. This information would facilitate the Council's collection of assessments and provide valuable reports to the industry. This rule would establish new §§ 986.162 and 986.175 under the rules and regulations of the order. The authority for this action is provided for in §§ 986.62, 986.75, 986.76, 986.77, and 986.78 of the order.

Requiring reports of transfers, handler inventory, and pecans handled throughout the year would impose an increase in the reporting burden on all pecan handlers. However, this data is already recorded and maintained by handlers as a part of their daily business. Handlers, regardless of size, should be able to readily access this information. Consequently, any additional costs associated with this change would be minimal (not significant) and apply equally to all handlers.

This action should also help the entire industry by providing comprehensive data on pecans handled and year-end inventory. Collection of this data was one of the industry's goals in promulgating the order as there is no other source for this type of data. This information would help with marketing and planning for the industry, as well as provide important information for the collection of assessments and in preparing the annual marketing policy required by the order. The benefits of this rule are expected to be equally available to all pecan growers and handlers, regardless of their size.

The Council discussed other alternatives to this action, including having additional reporting requirements, but determined that in order to efficiently carry out the objectives of the marketing order this first fiscal year, the information collected in these two reports would be sufficient. The Council also considered requiring the inter-handler transfer form to be submitted for each transfer. However, the Council determined that could be burdensome for some handlers and a monthly report would provide the necessary documentation. Therefore, the alternatives were rejected.

This proposal would establish two new reporting requirements and would require two new Council forms. Therefore, this proposed rule would impose an increase in the reporting burden for all handlers, which is discussed in the Paperwork Reduction Act section of this document.

As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.

AMS is committed to complying with the E-Government Act, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

Further, the Council's meetings were widely publicized throughout the pecan industry and all interested persons were invited to attend the meetings and participate in Council deliberations on all issues. Additionally, the Council's Committee meetings held February 23, 2017, and April 17, 2017, were also public meetings and all entities, both large and small, were able to express views on this issue. Finally, interested persons are invited to submit comments on this proposed rule, including the regulatory and information collection impacts of this action on small businesses.

A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/rules-regulations/moa/small-businesses. Any questions about the compliance guide should be sent to Richard Lower at the previously-mentioned address in the FOR FURTHER INFORMATION CONTACT section.

A 60-day comment period is provided to allow interested persons to respond to this proposal. All written comments timely received will be considered before a final determination is made on this matter.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), this notice announces AMS's intent to request approval from the Office of Management and Budget (OMB) for a new information collection under OMB No. 0581—NEW. It will be merged with the forms currently approved under OMB No. 0581-0291 “Federal Marketing Order for Pecans.”

Title: Pecans Grown in the States of Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas; Marketing Order No. 986.

OMB Number: 0581—NEW.

Type of Request: New Collection.

Abstract: The information requirements in this request are essential to carry out the intent of the Act, to provide the respondents the type of service they request, and to administer the pecan marketing order program.

On April 17, 2017, the Council unanimously recommended that all pecan handlers covered under the order provide the Council with a record of any inter-handler transfers by type and volume. This form, titled “Report of Inter-Handler Transfers of Pecans”, would be submitted directly to the Council by handlers by the tenth day of the month following the transfer(s).

This information collection would improve the accuracy of the Council's data collection by accounting for transferred pecans, and allow smaller handlers to transfer reporting and assessment obligations to another handler.

The Council also recommended that all handlers covered under the order submit an annual report of inventory held by type as well as a summary of pecans handled for the year. This form, titled “Year End Inventory Report”, would be submitted directly to the Council by handlers by September 10. This information collection will facilitate the Council's collection of assessments needed to administer the program and provide necessary data for the industry on volume handled. It would also provide the volume in inventory going into the next fiscal year, which would assist with market planning and provide information for the marketing policy required by the order.

The information collected would only be used by authorized representatives of the USDA, including the AMS Specialty Crops Program regional and headquarters staff, and authorized employees of the Council. Authorized Council employees would be the primary users of the information, and the AMS would be the secondary users. The Council's staff would compile the information and utilize it to account for assessments due, to calculate total pecans handled, and to prepare a marketing policy as required under the order. All proprietary information would be kept confidential in accordance with the Act and the order.

The proposed request for new information collection under the order is as follows:

Estimate of Burden: Public reporting burden for this collection of information is estimated to be an average of 0.16 hours per response.

Respondents: Handlers of pecans in Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas.

Estimated Number of Respondents: 30.

Estimated Number of Responses per Respondent: 12.

Estimated Total Annual Burden on Respondents: 60 hours.

Estimate of Burden: Public reporting burden for this collection of information is estimated to be an average of 0.33 hours per response.

Respondents: Handlers of pecans in Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas.

Estimated Number of Respondents: 250.

Estimated Number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: 125 hours.

Comments are invited on: (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, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.

Comments should reference OMB No. 0581-NEW and the Marketing Order for Pecans Grown in the states of Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas, and should be sent to the USDA in care of the Docket Clerk at the previously-mentioned address or at http://www.regulations.gov.

All responses to this notice will be summarized and included in the request for OMB approval. All comments received will become a matter of public record and will be available for public inspection during regular business hours at the address of the Docket Clerk or at http://www.regulations.gov.

If this proposed rule is finalized, this information collection will be merged with the forms currently approved under OMB No. 0581-0291 “Federal Marketing Order for Pecans.”

For the reasons set forth in the preamble, 7 CFR part 986 is proposed to be amended as follows:

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

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Commenters wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2017-0354/Airspace Docket No. 17-ACE-8.” The postcard will be date/time stamped and returned to the commenter.

All communications received before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of the comments received. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

An electronic copy of this document may be downloaded through the Internet at http://www.regulations.gov. Recently published rulemaking documents can also be accessed through the FAA's Web page at http://www.faa.gov/air_traffic/publications/airspace_amendments/.

You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see the ADDRESSES section for the address and phone number) between 9:00 a.m. and 5:00 p.m., Monday through Friday, except federal holidays. An informal docket may also be examined during normal business hours at the Federal Aviation Administration, Air Traffic Organization, Central Service Center, Operations Support Group, 10101 Hillwood Parkway, Fort Worth, TX 76177.

This document proposes to amend FAA Order 7400.11A, Airspace Designations and Reporting Points, dated August 3, 2016, and effective September 15, 2016. FAA Order 7400.11A is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11A lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

The FAA is proposing an amendment to Title 14 Code of Federal Regulations (14 CFR) part 71 by modifying Class E airspace extending upward from 700 feet above the surface within a 6.5-mile radius of Seward Municipal Airport. The segments within 4 miles each side of the 166° bearing from the Seward NDB extending from the 6.4-mile radius to 14 miles southeast of the NDB, and within 4 miles each side of the 359° bearing from the Seward NDB extending from the 6.4-mile radius to 13 miles north of the NDB, would be modified due to the decommissioning of the Seward NDB and cancellation of the NDB approach. This action would enhance the safety and management of the standard instrument approach procedures for IFR operations at the airport.

Class E airspace designations are published in paragraph 6005 of FAA Order 7400.11A, dated August 3, 2016, and effective September 15, 2016, 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 proposed 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 will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, would not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.

Accordingly, pursuant to the authority delegated to me, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would amend Class E airspace extending upward from 700 feet above the surface at Schenck Field, Clarinda, IA, to support IFR operations at this airport.

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Commenters wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2017-0536/Airspace Docket No. 17-ACE-10.” The postcard will be date/time stamped and returned to the commenter.

All communications received before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of the comments received. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

An electronic copy of this document may be downloaded through the Internet at http://www.regulations.gov. Recently published rulemaking documents can also be accessed through the FAA's Web page at http://www.faa.gov/air_traffic/publications/airspace_amendments/.

You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see the ADDRESSES section for the address and phone number) between 9:00 a.m. and 5:00 p.m., Monday through Friday, except federal holidays. An informal docket may also be examined during normal business hours at the Federal Aviation Administration, Air Traffic Organization, Central Service Center, Operations Support Group, 10101 Hillwood Parkway, Fort Worth, TX 76177.

This document proposes to amend FAA Order 7400.11A, Airspace Designations and Reporting Points, dated August 3, 2016, and effective September 15, 2016. FAA Order 7400.11A is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11A lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

The FAA is proposing an amendment to Title 14, Code of Federal Regulations (14 CFR) part 71 by modifying the Class E airspace extending upward from 700 feet above the surface at Schenck Field, Clarinda, IA, by removing the Clarinda NDB from the legal description; removing the extension south of the airport; and updating the geographic coordinates of the airport to coincide with the FAA's aeronautical database.

Airspace reconfiguration is necessary due to the decommissioning of the Clarinda NDB, the cancellation of the associated instrument approach procedures, and to bring the airspace in compliance with FAA Order JO 7400.2L, Procedures for Handling Airspace Matters. Controlled airspace is necessary for the safety and management of standard instrument approach procedures for IFR operations at this airport.

Class E airspace designations are published in paragraph 6005 of FAA Order 7400.11A, dated August 3, 2016, and effective September 15, 2016, 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 proposed 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 will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, would not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.

Accordingly, pursuant to the authority delegated to me, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part, A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would establish Class E airspace extending up to and including 700 feet above the surface at Woodruff County Airport, Augusta, AR, to support special instrument approach procedures for IFR operations at the airport.

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Commenters wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2016-9274/Airspace Docket No. 15-ASW-18.” The postcard will be date/time stamped and returned to the commenter.

An electronic copy of this document may be downloaded through the Internet at http://www.regulations.gov. Recently published rulemaking documents can also be accessed through the FAA's Web page at http://www.faa.gov/air_traffic/publications/airspace_amendments/.

You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see the ADDRESSES section for the address and phone number) between 9:00 a.m. and 5:00 p.m., Monday through Friday, except federal holidays. An informal docket may also be examined during normal business hours at the Federal Aviation Administration, Air Traffic Organization, Central Service Center, Operations Support Group, 10101 Hillwood Parkway, Fort Worth, TX 76177.

All communications received before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of the comments received. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

This document proposes to amend FAA Order 7400.11A, Airspace Designations and Reporting Points, dated August 3, 2016, and effective September 15, 2016. FAA Order 7400.11A is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11A lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

The FAA is proposing an amendment to Title 14 Code of Federal Regulations (14 CFR) part 71 by establishing Class E airspace extending upward from 700 feet above the surface within a 6.4-mile radius of Woodruff County Airport, Augusta, AR, to accommodate new special 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 7400.11A, dated August 3, 2016, and effective September 15, 2016, 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 will only affect air traffic procedures and air navigation, it is certified that this rule, when promulgated, would not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.

Accordingly, pursuant to the authority delegated to me, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would amend Class D and Class E airspace at Elizabeth City CGAS/Regional Airport, Elizabeth City, NC, to ensure the efficient use of airspace within the National Airspace System.

Interested persons are invited to comment on this rule by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal.

Communications should identify both docket numbers and be submitted in triplicate to the address listed above. You may also submit comments through the Internet at http://www.regulations.gov.

Persons wishing the FAA to acknowledge receipt of their comments on this action must submit with those comments a self-addressed stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2016-0384; Airspace Docket No. 17-ASO-14.” The postcard will be date/time stamped and returned to the commenter.

All communications received before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of the comments received. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

An electronic copy of this document may be downloaded from and comments submitted through http://www.regulations.gov. Recently published rulemaking documents can also be accessed through the FAA's Web page at http://www.faa.gov/air_traffic/publications/airspace_amendments/.

You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see the ADDRESSES section for address and phone number) between 9:00 a.m. and 5:00 p.m., Monday through Friday, except Federal Holidays. An informal docket may also be examined between 8:00 a.m. and 4:30 p.m., Monday through Friday, except Federal Holidays at the office of the Eastern Service Center, Federal Aviation Administration, Room 350, 1701 Columbia Avenue, College Park, Georgia 30337.

This document proposes to amend FAA Order 7400.11A, Airspace Designations and Reporting Points, dated August 3, 2016, and effective September 15, 2016. FAA Order 7400.11A is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11A lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

The FAA is considering an amendment to Title 14, Code of Federal Regulations (14 CFR) part 71 by eliminating the NOTAM information that reads, “This Class D airspace is effective during the specific dates and times established in advance by a Notice to Airmen. The effective date and time will thereafter be continuously published in the Airport/Facility Directory.” from the regulatory text of Class E airspace designated as an extension to Class D, Elizabeth City CGAS/Regional Airport, Elizabeth City, NC.

This proposal also would add NOTAM part-time status information to the regulatory text in Class E surface area airspace. This would bring the airspace descriptions in Order 7400.11A in line with the airspace hours listed in the applicable Chart Supplement. Additionally, the geographic coordinates of the airport and Woodville NDB would be adjusted to coincide with the FAAs aeronautical database.

Class D and Class E airspace designations are published in paragraph 5000, 6002, 6004, and 6005, respectively, of FAA Order 7400.11A, dated August 3, 2016, and effective September 15, 2016, which is incorporated by reference in 14 CFR 71.1. The Class D and E airspace designations listed in this document will be published subsequently in the Order.

The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a Regulatory Evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

This proposal would be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.

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

In 1996, Congress amended Section 18 of the Securities Act to exempt from state registration requirements securities listed, or authorized for listing, on the New York Stock Exchange LLC (“NYSE”), the American Stock Exchange LLC (“Amex”) (now known as NYSE American LLC),1 or the National Market System of The Nasdaq Stock Market LLC (“Nasdaq/NGM”) 2 (collectively, “Named Markets”), or any national securities exchange designated by the Commission to have “substantially similar” listing standards to those of the Named Markets.3 Specifically, Section 18(a) of the Securities Act provides that “no law, rule, regulation, or order, or other administrative action of any State . . . requiring, or with respect to, registration or qualification of securities . . . shall directly or indirectly apply to a security that—(A) is a covered security. . . .” 4 Covered securities are defined in Section 18(b)(1) of the Securities Act to include those securities listed, or authorized for listing, on the Named Markets, or securities listed, or authorized for listing, on a national securities exchange (or tier or segment thereof) that has listing standards that the Commission determines by rule are “substantially similar” to those of the Named Markets (“Covered Securities”).5

In 1998, the Chicago Board Options Exchange, Incorporated (“CBOE”), the Pacific Exchange, Inc. (“PCX”) (now known as NYSE Arca, Inc.), the Philadelphia Stock Exchange, Inc. (“Phlx”) (now known as NASDAQ PHLX LLC),6 and the Chicago Stock Exchange, Inc. (“CHX”) each petitioned the Commission to determine by rule that specified portions of the exchanges' listing standards were substantially similar to the listing standards of the Named Markets.7 In response to the petitions, and after extensive review of the petitioners' listing standards, the Commission adopted Rule 146(b) pursuant to Section 18(b)(1)(B) of the Securities Act, having determined that the listing standards of CBOE, Tier 1 of PCX, and Tier 1 of Phlx were substantially similar to those of the Named Markets, and thus securities listed pursuant to those standards are deemed Covered Securities.8

Accordingly, Rule 146(b) lists those national securities exchanges, or segments or tiers thereof, that the Commission has determined to have listing standards that are “substantially similar” to those of the Named Markets and thus securities listed on such exchanges are deemed Covered Securities.9

The Commission has since amended Rule 146(b) several times in response to petitions after having determined that the listing standards for securities listed, or authorized for listing, on the petitioning markets were substantially similar to those of the Named Markets and, accordingly, that such securities listed pursuant to such listing standards qualified as Covered Securities for purposes of Section 18(b) of the Securities Act.10

In June 2016, the Commission granted the application of IEX to become a registered national securities exchange.11 IEX's exchange registration application included a rulebook, which contained a complete set of listing rules and standards that were based on those of Nasdaq/NGM.12 When the Commission granted IEX's exchange registration it stated, among other things, that it believed IEX's proposed initial and continuing listing standards are consistent with the requirements of the Securities Exchange Act of 1934 (“Exchange Act”).13

Subsequent to its exchange registration, IEX petitioned the Commission to amend Rule 146(b) and determine that the listing standards for securities listed on IEX are substantially similar to those of the Named Markets, such that IEX listed securities would be Covered Securities under Section 18(b) of the Securities Act.14

For the reasons discussed below, the Commission preliminarily believes that IEX's listing standards are substantially similar to those of the Named Markets and, therefore, securities listed, or authorized for listing, on IEX would be eligible to be designated as Covered Securities under Rule 146(b)(1) under the Securities Act, which, as described above, are exempt from state law registration requirements. The Commission notes that, as provided in Rule 146(b)(2) under the Securities Act, the designation of IEX's listed securities as Covered Securities under Rule 146(b)(1) would be conditioned on IEX maintaining listing standards for equity securities that continue to be substantially similar to those of the Named Markets.15

Under Section 18(b)(1)(B) of the Securities Act,16 the Commission has the authority to determine that the listing standards of an exchange, or tier or segment thereof, are substantially similar with those of the NYSE, NYSE American, or Nasdaq/NGM. The Commission has compared IEX's listing standards with these Named Markets.17 In addition, as it has done previously, the Commission has interpreted the “substantially similar” standard to require listing standards at least as comprehensive as those of the Named Markets.18 If a petitioner's listing standards are higher than the Named Markets, then the Commission may still determine that the petitioner's listing standards are substantially similar to those of the Named Markets.19 Finally, the Commission notes that differences in language or approach would not necessarily lead to a determination that the listing standards of the petitioner are not substantially similar to those of any Named Market.20

The Commission has reviewed the listing standards for securities to be listed and traded on IEX and, for the reasons discussed below, preliminarily believes that the standards are substantially similar to those of the Named Markets.21

The Commission preliminarily believes that IEX's initial and continued quantitative listing standards for its securities are substantively identical to, and thus substantially similar to, the initial and continued quantitative listing standards for securities listed on Nasdaq/NGM.22 Therefore, the Commission preliminarily believes that IEX's quantitative listing standards are substantially similar to a Named Market.

The Commission requests comment on whether IEX's quantitative listing rules are “substantially similar” to Nasdaq/NGM's listing rules.

The Commission preliminarily believes that IEX's initial and continued qualitative listing standards for its securities are substantively identical to, and thus substantially similar to, the qualitative listing standards for securities listed on Nasdaq/NGM, with the exception of IEX Rule 14.201 (Confidential Pre-Application Review of Eligibility), discussed below, which is substantively similar to rules of NYSE and NYSE American, and IEX Rule 14.414 (Internal Audit Function), also discussed below, which is substantively similar to a rule of NYSE.23

With respect to the standards relating to the listing and delisting of companies, including prerequisites for initial and continued listing on IEX, obligations of security issuers listed on IEX, as well as rules describing the application and qualification process,24 IEX's listing rules for securities are virtually identical to, and thus the Commission preliminarily believes they are substantially similar to, those of Nasdaq/NGM.25 With respect to IEX Rule 14.201, which relates to confidential pre-application review for listing eligibility, the Commission preliminarily believes that this rule is substantially similar to the corresponding rules of NYSE and NYSE American.26 This rule requires a company seeking the initial listing of one or more classes of securities to participate in a free, confidential pre-application eligibility review to determine whether the company meets the applicable listing criteria and, if, upon completion of this review, IEX determines that a company is eligible for listing, IEX will notify that company in writing that it has been cleared to submit an original listing application.27

The Commission also notes that IEX's corporate governance standards in connection with securities to be listed and traded on IEX are virtually identical to, and thus the Commission preliminarily believes they are substantially similar to, the current rules of Nasdaq/NGM and NYSE.28 With respect to IEX Rule 14.414, concerning the internal audit function for a listed issuer, the Commission preliminarily believes that this rule is substantially similar to the corresponding rule of NYSE.29 Therefore, the Commission preliminarily believes that IEX's qualitative listing standards are substantially similar to a Named Market.

The Commission requests comment on whether IEX's qualitative listing standards are “substantially similar” to Nasdaq/NGM's and NYSE's listing standards.

IEX has listing standards for other types of securities and exchange-traded derivative securities products, including, for example, portfolio depository receipts; index fund shares; securities linked to the performance of indexes, commodities, and currencies; index-linked exchangeable notes; partnership units; trust units; and managed fund shares.30 The Commission notes that IEX's listing rules for these other securities are virtually identical to, and thus the Commission preliminarily believes they are substantially similar to, those of Nasdaq/NGM.31 Therefore, the Commission preliminarily believes that IEX's standards for these other securities are substantially similar to those of a Named Market.

The Commission requests comment on whether IEX's listing standards relating to other securities are “substantially similar” to Nasdaq/NGM's listing standards.

Paragraphs (b)(1) and (b)(2) of Rule 146 use the term “NYSE Amex” to refer to the national securities exchange formerly known as the American Stock Exchange LLC. As noted above, in 2012, NYSE Amex changed its name from NYSE Amex LLC to NYSE MKT LLC, and, in 2017, NYSE MKT LLC intends to change its name to NYSE American LLC.32 In addition, paragraph (b)(1) of Rule 146 refers to Tier I of the NASDAQ OMX PHLX LLC. As noted above, in December 2015, NASDAQ OMX PHLX LLC changed its name to NASDAQ PHLX LLC.33 In addition, paragraph (b)(1) of Rule 146 refers to Tier I and Tier II of BATS Exchange, Inc. As noted above, in March 2016, BATS Exchange, Inc. changed its name to Bats BZX Exchange, Inc.34 Lastly, paragraph (b)(1) of Rule 146 refers to Options listed on the International Securities Exchange, LLC. As noted above, in March 2017, the International Securities Exchange, LLC changed its name to Nasdaq ISE, LLC.35 This proposed rule includes changes to Rule 146(b) to account for these name changes.

To date, the Commission has not received any comment letters on the IEX Petition.

The Commission seeks comment generally on amending Rule 146(b) to include securities listed, or authorized for listing, on IEX. As discussed above, based on its review of IEX's listing standards, the Commission preliminarily believes that the initial and continued listing standards for IEX are substantially similar to those of the Named Markets. In addition to the questions posed above, commenters are welcome to offer their views on any other matter raised by the proposed amendment to Rule 146(b).

The Paperwork Reduction Act of 1995 does not apply because the proposed amendment to Rule 146(b) does not impose recordkeeping or information collection requirements or other collection of information, which require the approval of the Office of Management and Budget under 44 U.S.C. 3501 et seq.

The Commission is sensitive to the economic consequences of its rules, including the benefits, costs, and effects on efficiency, competition, and capital formation. As noted above, the Commission preliminarily believes that the overall listing standards for securities to be listed and traded on IEX are substantially similar to those of a Named Market. As such, the Commission proposes to amend Rule 146 under Section 18 of the Securities Act, as amended, to designate securities listed, or authorized for listing, on IEX as Covered Securities. The following analysis considers the economic effects that may result from the proposed amendment.

Where possible, the Commission has quantified the economic effects of the proposed amendment; however, as explained further below, the Commission is unable to quantify all of the economic effects because it lacks the information necessary to provide reasonable estimates. In some cases, quantification depends heavily on factors outside of the control of the Commission, particularly due to the flexibility that an issuer has when choosing if and where to list and the flexibility of a registered national securities exchange to tailor its policies and rules to the nature of its business and technology. These factors make it difficult to quantify the changes in market share of Named and Designated Markets that may result from the proposed amendment. In addition, the incumbent Named and Designated Markets and IEX each may react to the proposed amendments with respect to listing fees and services. These reactions are also difficult to quantify or predict, which further complicates quantification of changes to market share, and also makes quantification of the economic effects of the proposed amendment difficult. Therefore, some of the discussions below are qualitative in nature. The Commission encourages commenters to provide data and information to help quantify the costs, benefits, and the potential impacts on efficiency, competition, and capital formation of the proposed amendment.

We compare the economic effects of the proposed rule, including benefits, costs, and effects on efficiency, competition, and capital formation, to a baseline that consists of the existing regulatory framework and market structure.

The listing standards of Named and Designated Markets are quantitative and qualitative requirements that issuers must satisfy before they may list on these markets. Securities listed on a Named or Designated Market are Covered Securities, which are exempt from complying with state securities law registration and qualification requirements. As mentioned above,36 subsequent to its exchange registration, IEX petitioned the Commission to amend Rule 146(b) and determine that the listing standards for securities listed on IEX are substantially similar to those of the Named Markets.

Pursuant to unlisted trading privileges (“UTP”), a national securities exchange such as IEX currently can trade securities that are listed on other exchanges.37 While IEX may offer to list securities for trading, currently, those securities would not be Covered Securities. Issuers of securities that are not Covered Securities must comply with state securities law registration and qualification requirements, which generally require the issuer to register such securities in each state or jurisdiction in which the issuer will offer or sell its securities. State registration and qualification requirements generally vary across the 54 U.S. jurisdictions, comprising the 50 states, the District of Columbia, and the three U.S. territories of Puerto Rico, the Virgin Islands, and Guam.38 These requirements typically include: (1) Filing state administrative forms and other paperwork necessary for compliance with state registration requirements; (2) adherence to disclosure standards; and (3) in some states, requirements based upon the merits of the offering or issuer.39

The Commission lacks comprehensive, independent data to precisely estimate the total time, registration and compliance costs associated with state registration and qualification. Moreover, those total costs may vary widely for issuers depending on how many states an issuer needs to register in. To provide some information about potential costs for state registration, we list examples of Blue Sky registration filing fees for several states below in Table 1.

The issuer of a non-Covered Security in multiple jurisdictions would have more compliance obligations than the issuer of a Covered Security, including the potential for considerable additional costs and legal fees associated with reviews of offering-related materials at the state level.41 Additionally, as discussed above, many state securities regulators also review securities offerings based upon the merits of the offering and/or the issuer of the securities, which can further increase an issuer's compliance obligations and associated costs.42 In addition, the Commission notes that one commenter estimated that an issuer seeking state registration in 50 states would incur $50,000 to $70,000 in filing fees and $80,000 to $100,000 in legal fees.43 The Commission encourages commenters to provide additional information on the costs associated with complying with Blue Sky laws.44

In addition, the Commission preliminarily believes that the state registration and qualification requirements applicable to non-Covered Securities also impose costs on broker-dealers. Specifically, broker-dealers may incur costs to ensure that they are complying with applicable state laws governing non-Covered Securities in each state in which they are transacting in those securities on behalf of their customers or providing advice or other information to customers related to those securities. For example, broker-dealers could incur costs associated with maintaining a compliance program to verify an issuer's state registration status and comply with any state requirements applicable to broker-dealers that transact in non-Covered Securities, which could vary depending on where the customer resides and the transaction occurs. In addition, the types and content of communications broker-dealers may have with their customers regarding non-Covered securities may be subject to regulation under Blue Sky laws, so broker-dealers may incur costs to ensure they are compliant with such requirements in each state in which they advising customers.45 While some portion of these costs may be passed on to a broker-dealer's customers—i.e., the investors that transact through the broker-dealer in non-Covered Securities—through commissions or transaction fees, the Commission preliminarily believes that the compliance costs associated with Blue Sky requirements may lead some broker-dealers to only offer their services for Covered Securities.46 However, the Commission lacks the data necessary to quantify the costs that broker-dealers and their customers face, and encourages commenters to provide information on these costs and the extent to which the Blue Sky requirements affect the services broker-dealers offer for non-Covered Securities.

The proposed amendment, which would make IEX a Designated Market, would preempt the application of state securities law registration and qualification requirements for securities that are listed or authorized for listing on IEX, and would impact (1) issuers who currently list their securities on a Named or Designated Market; (2) issuers with securities not currently listed on any incumbent Named or Designated Market but who would consider listing on IEX, or on an incumbent Named or Designated Market, as a result of the competition from IEX if IEX enters the listing market; and (3) issuers with securities not currently listed on any incumbent Named or Designated Market and would eventually list on a Named or Designated Market, regardless of IEX's entry into the market. Given that issuers who meet the listing standards of IEX are likely to meet the listing standards of other Named or Designated Markets, the number of issuers that would list on a Named or Designated Market solely as a result of the proposed amendment (i.e., those in category (ii) above) may be small. The proposed amendment would also affect IEX and the existing trading venues for securities that IEX would be able to list.47

Issuers of public securities make several considerations when deciding on which exchange to list their securities. These considerations include, among other things, the visibility and publicity provided by the exchange, the listing services and fees, and the exchange's listing standards. The Named and Designated Markets may provide issuers of Covered Securities with additional visibility over that of securities traded over the counter, which may, in turn, increase the pool of potential investors for an issuer and thereby improve an investor's access to capital. In addition, the Named and Designated Markets provide listing services for their listed issuers, which can include monitoring, communication, and regulatory compliance services. These services may help issuers by reducing the cost of raising capital and the costs associated with going or remaining public. However, many issuers that list for the first time do so as part of an initial public offering, which can include considerations not related to listing on an exchange, such as SEC reporting obligations, as well as legal, accounting, and other expenses (both for the initial offering and the ongoing requirements of remaining public), as well as the benefits of going public, such as increased access to capital and providing investors with a signal of an issuer's ability to meet obligations, such as reporting requirements, that apply to public companies. In this case, the decision of which exchange to list on is made along with the decision about whether or not to go public.

Issuers must pay listing fees and meet listing standards to list on a Named or Designated Market. Listing fees may include an initial application fee as well as an ongoing annual fee, and may vary by the number of shares in the initial offering or be a fixed fee. However, listing fees typically represent a small portion of the overall cost of an initial public offering or the ongoing costs of remaining public,48 and thus may not be a significant factor that issuers consider when deciding (1) whether to list on a Named or Designated Market; and (2) which Named or Designated market to list on. Listing exchanges also impose listing standards on issuers, which can include corporate governance standards as well as quantitative requirements such as minimum income, market capitalization, and operating history requirements. While an exchange's listing standards may prevent potential issuers who do not meet those standards from listing on the exchange, the stringency of an exchange's listing standards may provide a valuable signal to investors about the quality of issuers that are able to list, which may improve the issuers' access to capital.49

Because securities listed on the Named or Designated Markets are Covered Securities, being a Named Market or achieving status as a Designated Market permits exchanges to compete to provide listing services to issuers of Covered Securities.50 Because Covered Securities are exempt from state securities registration laws, issuers of Covered Securities are not subject to costs from state securities registration laws and the costs associated with complying with state securities registration laws are lower for broker-dealers that transact on behalf of their customers in Covered Securities.

Furthermore, as described below in SectionVI.A.3.b, evidence that the listing status and listing designation (i.e., whether a security is a Covered Security and where it is listed) of securities are related to where and how the securities trade leads the Commission to believe that the proposed rule could also impact the market for trading services. In this section, we discuss competition between Named and Designated Markets for listings, as well as competition between Named and Designated Markets and other trading platforms for trading services.

Listing exchanges compete with each other on many dimensions for listing securities, including, but not limited to, listing fees, listing standards, and listing services. When issuers choose which listing exchange to list on, issuers compare the listing fees and the costs of compliance with listing standards against the quality of listing services across listing exchanges. Although issuers may incur costs to meet an exchange's listing standards, high listing standards may also yield benefits as they may serve as a positive signal to investors of an issuer's ability to satisfy high qualitative and quantitative listing requirements. Investors may interpret the reputation of listing exchanges and their listing standards as a credible signal of the quality of listed security, and the reputation of an exchange is one of the factors that issuers consider when choosing which listing exchange to list on.51

Currently, there are three Named Markets under Section 18(b)(1)(A) of the Securities Act: NYSE, NYSE American, and Nasdaq/NGM. In addition, there are currently six Designated Markets: (1) Tier I of the NYSE Arca, Inc.; (2) Tier I of the NASDAQ OMX PHLX LLC; (3) CBOE; (4) options listed on ISE; (5) The Nasdaq Capital Market; and (6) Tier I and Tier II of BATS. As of June 2, 2017, NYSE listed 3,172, Nasdaq listed 3,183, NYSE Arca listed 1,529, NYSE American listed 359, and BATS listed 176.52

While the number of equities listed on an exchange may be informative about the general size of exchanges, the market shares for recent equity issue listings may provide a better picture of the nature of competition between exchanges and the size of the new listings market. In Table 2, we show the number of new equity issue listings from 2008 to 2016.53

As shown in Table 2, two listing exchanges—NYSE and Nasdaq—captured 71% of all new equity listings on Named and Designated Markets in 2016, which is evidence of a highly concentrated listing market.54 In addition, when BATS entered the market in 2012, it gained only 17 new listings, which was 5.2% of all new equity listings of 2012, which suggests that the number of issuers that remain unlisted but would list with an entrant is likely to be small.55

A highly concentrated market may be the result of barriers to entry, which limit competition, and can include economies of scale, reputation, legal barriers to entry, and network externalities. Listing exchanges may exhibit economies of scale because an exchange with a large number of listings can spread the fixed costs of listing equities over a greater number of issuers. The larger these fixed costs are, the greater will be the scale economies of larger listing exchanges. Entrant exchanges can also face barriers to entry related to reputation. Exchanges that enter the market may not be able to quickly establish a strong reputation for high quality listings, which may adversely affect their ability to compete with incumbent exchanges. This lack of reputation may discourage both investors and issuers from transacting or listing on an entrant exchange, which may reinforce an entrant exchange's lack of reputation.

Legal barriers to entry could also apply because exchanges are self-regulatory organizations overseen by the Commission. The governing statute and regulations establish legal barriers of entry for an entity becoming an exchange as well as for an exchange becoming a Designated Market. As discussed, the fact that an exchange must be designated by the Commission to become a Designated Market, which enables such an exchange to effectively compete for the listing business of Covered Securities, imposes legal barriers to entry.

In addition, the market for listing exhibits positive network externalities: Issuers may prefer to be listed on exchanges where other similar issuers are listed because of increased visibility. This indicates that, all else being equal, large exchanges (in terms of listings) may tend to be favored over smaller ones.

Issuers also may face switching costs associated with moving their listing from one exchange to another. These switching costs would not only include the fixed costs associated with a listing on an new exchange such as the exchange's application fee, and the legal and accounting expenses associated with ensuring that the issuer satisfies the listing standards of the new exchange, but would also include the costs associated with communicating with investors, including about the move to the new exchange. Thus, an issuer that is considering moving from one exchange would compare the relatively lower annual listing fee of their current exchange with the relatively high costs of moving its listing to a new exchange, which places the new exchange at a disadvantage and creates a barrier to entry for a potential entrant. Even if an entrant exchange prices its listing fees and services competitively compared to the incumbent exchanges for new issuers, the switching costs for issuers that are already listed may prevent the entrant from gaining market share.

Table 3 shows estimates of the probability that an issuer would change its listing market in a given year, based on issuer switching behavior for equities over the period 2008 to 2016. As an example, during this period, if an equity security was listed on NYSE, there was a 99.33% chance that it would still be listed on NYSE the following year and a 0.04% chance it would be listed on AMEX the following year, a 0.34% chance it would be listed on Nasdaq the following year, and a 0.08% chance it would be listed on ARCA the following year. More generally, equities listed on NYSE and Nasdaq had a greater than 99% chance of remaining listed on that exchange the following year, which suggests that issuers were unlikely to switch their listings away from the two exchanges with the highest market shares.

Trading in Covered Securities is segmented from trading in securities that are not covered (“OTC trading”). In addition to trading on Named or Designated Markets, Covered Securities can also trade on 12 other registered national securities exchanges or off-exchange either on 35 alternative trading systems (“ATSs”) or by broker-dealers who internalize orders. The market to trade Covered Securities on Named and Designated Markets as well as other trading platforms is more liquid than OTC trading of securities that are not Covered Securities due to, among other things, the search costs associated with finding buyers and sellers in OTC markets.58

Covered Securities can trade on exchanges and other markets that do not “list” the security. This flexibility allows trading platforms to compete with each other by offering better trading services or innovative trading mechanisms to attract order flow for securities, even if they do not list such securities. The order flow from these securities, through the application of transaction fees, can generate revenue for an exchange. Exchanges also receive revenue from the sale of SIP data, determined, in part, from an exchange's share of transaction volume.59 Listing exchanges currently enjoy a larger trading market share in their listed securities.60

Despite the historical advantages listing exchanges enjoy in the market for trading services, the success of listing exchanges when competing for equity issue listings by offering better trading services or innovative trading mechanisms has declined over the past decade.61 During this time, the increase in fragmentation in the market for trading services resulted in a significant shift in the market share of trading volume in Covered Securities across trading venues. For example, the two exchanges historically with the highest trading volume, NYSE and Nasdaq, have each experienced a sharp decline in market share of trading volume in securities they list. The market share of the NYSE in NYSE-listed stocks fell from approximately 80% in 2005 to 20% in 2013; for Nasdaq-listed stocks, Nasdaq's market share of Nasdaq-listed stocks fell by approximately half, from 50% in 2005 to 25% in 2013.62

The competition for trading services is not limited to exchanges. Over the past decade, greater trading volume has been executed on other venues, including ATSs. Since the third quarter of 2009, the number of ATSs that trade NMS stocks has increased from 32 to 34, while the share of trading volume of Covered Securities that trade on ATSs has increased from 7.9% to 13.0%.63 This suggests that the importance of ATSs for trading services has increased relative to Named and Designated Markets, and that the listing exchange of a security may be less important in determining the location of trading activity.

Securities Act Section 2(b) 64 requires the Commission, when engaging in rulemaking that requires it to consider or determine whether an action is necessary or appropriate in the public interest, to consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation.

By listing on IEX, security issuers that otherwise would have not listed their securities on a Named or Designated Market would be able to avoid the duplicative costs of securities registration in multiple jurisdictions and thus reduce the impediments to listing on exchanges, which in turn can improve market efficiency. To the extent that the proposed amendment results in increased listing activity, then it may improve the allocative efficiency of securities markets by allowing investors to better diversify financial risks by investing in newly-listed securities.

However, these two impacts may be mitigated by the extent to which issuers' abilities to list on a Named or Designated Market are constrained by other factors, such as their ability to satisfy listing standards and the attendant costs from doing so. For example, issuers may face increased disclosure costs associated with becoming an SEC reporting company if they are not already an SEC reporting company because issuers must be an SEC reporting company to list on a national securities exchange.65 Moreover, issuers that are able to meet the listing standards of IEX are likely to be able to meet the listing standards of other Named or Designated Markets, so the entry of IEX would not necessarily increase the pool of securities eligible for listing. As a result, the Commission preliminarily believes that the number of issuers that would list on IEX, where, in the absence of the proposed amendment, would not have listed at all, is likely to be small.66

As noted in Section VI.A, a reason issuers list on a Named or Designated Market is improved access to capital. Listing on a Named or Designated Market may improve access to capital, which can promote capital formation, in several ways. First, listing on a Named or Designated Market may credibly signal to investors that a firm is of higher quality because firms that list on these exchanges must meet certain minimum standards for governance and disclosure set by listing on these exchanges. Like listed issuers on the Named and Designated Markets, IEX's listed issuers might benefit from the signal of quality that comes from listing on a Named or Designated Market compared to issuers that do not list. The reputational benefits that come from listing on a Named or Designated Market may make investors more willing to invest in such issuers, which may improve the issuers' access to capital, and promote capital formation.

Second, listing on a Named or Designated Market may provide additional liquidity for equities relative to OTC trading, due in part to potential frictions to liquidity imposed by OTC search costs.67 If investors demand a liquidity risk premium,68 the enhanced liquidity could facilitate capital formation by reducing the size of the premium that issuers would otherwise incur when issuing new securities. Additionally, listing on a Named or Designated Market may promote access to capital by reducing the costs associated with broker-dealers ensuring their compliance with state securities laws in multiple jurisdictions, which would be borne by broker-dealers and potentially shared with investors, thus attracting broker-dealers and investors to transact in securities that list on a Named or Designated Market.69 Investors in securities that list on IEX as a result of the proposed amendment would have easier access to invest in those securities and to further diversify their investment portfolios, which may promote capital formation by improving allocative efficiency.70

Whether IEX entering the listing market promotes capital formation depends on the extent to which issuers previously unable or unwilling to list on a Named or Designated Market subsequently do so. Some issuers may, as a result of improved services and/or decreased fees stemming from the increased competition between listing exchanges, be induced to list on an exchange where, in the absence of the proposed amendment, they would not have. If so, then the entrance of IEX could provide issuers with lower cost access to capital.

The proposed amendment to Rule 146(b) would likely increase competition among the Named and Designated Markets that compete to list securities. By determining that IEX has “substantially similar” listing standards to the Named and other Designated Markets, the proposed amendment permits IEX to compete with other Named and Designated Markets to list securities that are exempt from state registration requirements. This would reduce the costs associated with complying with state securities laws in multiple jurisdictions that are borne by broker-dealers and such a reduction would potentially be shared with customers. As mentioned earlier, the Named and Designated Markets compete with each other on many dimensions, including listing standards, listing fees, and listing services. Besides permitting IEX to compete to list securities as a Designated Market, IEX's entry as a listing market might also provide incumbent listing markets with incentives to change how they compete with each other.71

Generally, there are two ways that increased competition can affect how listing markets compete with each other. The first involves how the Named or Designated Markets compete to provide better services and value for listing issuers. For example, listing markets could reduce fees, improve services, or reduce compliance burdens associated with their listing standards.72 If an additional entrant competes by providing better listing and monitoring services or lower costs for issuers, incumbent listing exchanges may decide to follow suit.

The Named and Designated Markets also may compete to provide better services by increasing their level of specialization with respect to securities listings. As noted below, as in the case of BATS, some Named and Designated Markets may develop reputations for specializing in specific types of issues by catering to specific types of issuers. An increase in competitive pressures may cause the Named and Designated Markets to more closely cater to specific types of issuers. Specialization may reduce the cost of providing listing services or may promote innovation in the provision of listing services. To the extent that specialization improves the services provided to issuers or reduces the costs of these services, this competitive response may improve the efficiency of the market for listing services.

The second way that increased competition can affect how the Named and Designated Markets compete with each other is through their role as intermediaries. The Named and Designated Markets serve as information and reputation intermediaries partly through their listing standards. Because issuers cannot perfectly signal their quality, the reputation of a Named or Designated Market for strict listing standards may be informative to an investor and serve as a signal of the quality of an issuer.73 Issuers that are able to meet the listing standards of a Named or Designated Market can signal their ability to do so by listing on them. However, because complying with these listing standards may be costly for issuers, issuers weigh the benefits of higher quality signaling through stronger listing standards against the costs of compliance with these standards. The Named and Designated Markets thus balance the competitive incentives to cater to two different groups of market participants—issuers and investors.

Because the Named and Designated Markets serve as information and reputation intermediaries between issuers and investors, the impact of increased competition on listing standards is ambiguous. The Named and Designated Markets may respond to increased competition by increasing listing standards to provide additional signaling and attract investors. Alternatively, the Named and Designated Markets could instead respond to increased competition by decreasing listing standards to attract additional listings. The intermediaries' opposing incentives to cater to these two groups of market participants make predicting the impact of competition on listing standards difficult.

The Named and Designated Markets' ability to lower standards would be constrained by the fact that 1. any proposed listing standards or proposed changes to existing listing standards must be filed with the Commission pursuant to Section 19(b) of the Exchange Act and must meet statutory and rule requirements to become effective,74 and 2. an exchange with lower listing standards that are not substantially similar to those of a Named Market may lose its status as a Designated Market.75 The requirement that the listing standards of a Designated Market be substantially similar to those of a Named Market means that the listing standards of the Named Markets serve as a lower bound for the extent to which competition may drive down listing standards for the other exchanges.

Despite the potential for increased competition, some of the features of the market for listings that inhibit competition, as discussed above, may also mitigate the effects of IEX's entry on competition. Specifically, some of the barriers to entry discussed in the baseline—economies of scale and network externalities—may make it difficult for IEX to effectively compete with incumbent exchanges for listings.76 For example, if a new entrant does not attract enough initial listings, the fixed cost of operations may make it difficult to keep its listing fees competitive. In addition, new entrants may not have established a sufficient reputation as a listing exchange to credibly certify the quality of its new issues. Thus, the structure of the market for listings may mitigate some of the potential effects of increased competition between Named and Designated Markets.

The latest example of an entrant into the market for listings is BATS BZX, which became a Designated Market in 2012.77 Table 2 in Section VI.A.3.a shows that the number of new listings on BATS decreased each year until 2015, but has increased more recently. While the growth in new listings by BATS may be indicative of the barriers to entry that entrants such as IEX face, circumstances specific to BATS may have impacted its ability during that period to attract listings.78

Table 3 in Section VI.A.3.a shows that almost none of the new listings on BATS arrived as transfers from another exchange, but were instead the first listing for each issuer that listed on BATS. This evidence is consistent with the argument that switching costs may also have had an impact on BATS' ability to gain market share, and may be a factor that also shapes IEX's entry. Moreover, the vast majority of BATS-listed securities are exchange-traded products. This is consistent with the idea that despite barriers to entry, BATS was able to enter by competing for one segment of the market and specializing in listing exchange-traded products.

If the Commission amends Rule 146(b) to include IEX, then securities listed, or authorized for listing, on IEX would be eligible to be designated as Covered Securities under Rule 146(b)(1) under the Securities Act, which, as described above, are exempt from state law registration requirements.79 In this section, we discuss the benefits and costs of the proposed amendment, which stem from its two major effects: (1) The exemption from Blue Sky laws provided to any issuers that would not list in the absence of the proposed amendment; and (2) the entry of IEX into the market for listings as a Designated Market.

As noted above, the Commission is unable to quantify all of the economic effects of the proposed amendment because it lacks the information necessary to provide reasonable estimates. The Commission seeks comment on any information on these factors or information that would help it directly quantify the economic effects of the rule.

The proposed amendment could provide benefits, flowing from the exemption from Blue Sky laws, to currently unlisted issuers that do not currently list on an existing Named or Designated Market but would choose to list on IEX.80 Specifically, the proposed amendment permits these issuers of Covered Securities that list on IEX to avoid the potentially duplicative costs of complying with multiple state securities regulations. As mentioned previously, these duplicative costs could include both a fixed cost of registration and ongoing compliance costs. An unlisted issuer needs to register in each of the jurisdictions it wants to transact in, so if the proposed amendments increase the number of issuers that list, such issuers save these costs. To the extent that IEX attracts previously unlisted issuers, IEX may benefit as a result of revenue from listing fees, trading fees, and data fees associated with the new issuers. In addition, absent the proposed amendment, the heterogeneity in state securities regulations generates ongoing costs for broker-dealers and investors transacting in multiple jurisdictions.81 However, the overall magnitude of these benefits depends on the number of currently unlisted issuers that choose to list on IEX as a result of the proposed amendment, and the Commission preliminarily believes this number is likely to be small because any unlisted issuer able to meet the listing standards of IEX is likely to be able to meet the listing standards of the other Named and Designated Markets.82

More generally, by making IEX a Designated Market, the proposed amendment would benefit IEX by allowing it to compete in the listing market for Covered Securities on a more level playing field with similarly situated national securities exchanges.83 Specifically, being able to list Covered Securities would allow IEX to more effectively compete with the incumbent Named and Designated Markets that also are able to offer Covered Securities status. This would also benefit issuers that choose to list securities on a Named or Designated Market by providing them with another alternative venue on which to list. Furthermore, adding IEX as an entrant into this market would increase the number of competitors in the market for listings. To the extent that the existing Named and Designated Markets respond to this increased competition by reducing listing fees or improving listing services, as discussed above, currently listed issuers and their investors may benefit from the improved quality of listing services, reduced listing fees or reduced compliance costs. In addition, to the extent that the entry of IEX increases the specialization of incumbent Named and Designated Markets, issuers may benefit from listing services that are more tailored to their needs.

Although the direct effect of the proposed amendment may reduce the costs associated with registering in multiple jurisdictions, the Commission notes that issuers already have other Named and Designated Markets as options to list, and are likely to be able to meet the listing standards of these other markets if they would be able to list on IEX. IEX's entry into the market for listings may have a larger impact on issuers by increasing the amount of competition between Named and Designated Markets, rather than through the direct provision of Covered Securities status provided to securities that list on IEX. An increased amount of competition between Named and Designated Markets may improve listing services, reduce listing fees, and issuer specialization, which may benefit issuers.84

Last, issuers that choose to list on a Named or Designated Market because of IEX's entry may impact the trading of those issuers' securities on markets that are not Named or Designated Markets. As noted in the baseline, securities that list on a Named or Designated Market may also trade on exchanges that are not Named or Designated Markets, which may bring them additional revenue from trades.85 Exchanges that are not Named or Designated Markets may thus benefit from the entry of IEX into the market for listings, even if these exchanges do not directly compete with IEX or the Named or Designated Markets for listings business.

The Commission notes that the overall magnitude of costs associated with the loss of state oversight depends on the number of unlisted issuers that choose to list as a result of the proposed amendment, and the Commission preliminarily believes this number is likely to be small, if any, for the reasons noted above.86 For unlisted issuers that choose to list on IEX as a result of the proposed amendment, listing on IEX may entail costs from a loss of state oversight and compliance costs arising from new reporting obligations from IEX's listing standards. However, we note that these issuers would only choose to list on IEX and bear these costs if they decided that the benefits of listing on IEX justified the costs.

The Commission preliminarily believes that any costs to investors from a loss of state oversight for such issuers would be mitigated by federal regulations and oversight of IEX and the other Named and Designated Markets and the requirement to meet their respective listing standards. Indeed, Congress, in Section 18, has already determined that federal regulation is sufficient for those issuers that meet the high listing standards of a Named/Designated Market. Furthermore, the Commission preliminarily believes that other regulatory protections (e.g., market surveillance, investigation and enforcement) already imposed on previously unlisted issuers who choose to list on IEX will mitigate these potential costs.

Issuers who currently list on an existing Named or Designated Market that would switch to IEX would not experience potential costs from a loss of state oversight or compliance costs arising from new reporting obligations. However, any previously listed issuers that decide to change their listing from a Named or Designated Market to IEX would incur costs to switch their listing.87 Still, the issuers could choose whether or not to incur this cost and likely would do so only if the benefits of switching their listing exceed their switching costs.

Some of the effects of the proposed amendments to IEX, incumbent Named and Designated Markets, and issuers involve transfers from one party to another. For example, the listing fees collected by IEX from previously-listed issuers may accompany a related loss of the listing fees collected by other Named or Designated Markets. Issuers that list on Named and Designated Markets may also enjoy savings from listing fee reductions as a result of increased listing exchange competition, which would also accompany a loss of listing fees collected by Named or Designated Markets.

Additionally, as a result of changes to competition in the market for listings, the volume of trade in trading venues may shift, to the advantage of some venues and to the detriment of others. Changes to the Named or Designated Markets' shares of the market for listings may affect the distribution of trading volumes across Named and Designated Markets, as well as other trading venues. Commission staff estimates that an exchange captures an average of about 20% higher share of volume in the securities listed by that exchange compared to the market share of other exchanges trading the same securities.88 This result suggests that changes to listings driven by increased competition may alter the market share of trades distributed across each venue, even if the number of listed securities does not change, by about 20% of the volume in such securities. Any shifts in the market share of trading could result in gains and losses in transaction fees collected and the share of data fees split between exchanges. Although these gains and losses are relevant potential economic effects of the proposed amendment, the Commission preliminarily does not consider these transfers to be a benefit or cost of the proposed amendment, but rather a consequence of increased competition between listings.89

The Commission seeks comment and supporting information as to the costs and benefits associated with this rule amendment, including identification and assessments of any costs and benefits not discussed in this analysis, and the effects on efficiency, capital formation and competition. We solicit comments on the usefulness of the rule amendment to investors, reporting persons, registrants, and the marketplace at large. We encourage commentators to identify, discuss, analyze, and supply relevant data, information, or statistics regarding any such costs or benefits, as well as any costs and benefits not already defined. We also request qualitative feedback on the nature of the benefits and costs described above. Additionally, we request comment on the extent of any costs that may be attributable to any loss of protections that currently are afforded by the state registration process, such as any merit-based requirements imposed by states on issuers. In particular, the Commission seeks comment on the following:

1. Has the Commission accurately described the baseline for the economic analysis? What are the typical costs of registering securities in multiple states? In how many states do issuers that qualify or are close to qualifying to list register? What are the typical attorney fees and other costs for registering securities in multiple states?

2. Has the Commission accurately described the competitive landscape for the market for listing Covered Securities? Has the Commission accurately described the competitive landscape for the market for trading services?

3. Does the proposing release discuss all relevant markets and forms of competition? If not, which additional markets or forms of competition could the proposal impact and what is the current competitive landscape in those markets?

4. Has the Commission accurately identified all market participants that would be affected by the proposed amendments to Rule 146? Which market participants do commenters believe would be affected by the proposed amendments but have not been included in the analysis?

5. Has the Commission accurately identified the potential impacts on efficiency, competition, and capital formation?

6. Has the Commission accurately identified and explained the costs and benefits of the proposed amendments to Rule 146?

a. Has the Commission accurately described the benefits to issuers and investors that would choose to list on IEX should IEX become a Designated Market?

b. Has the Commission accurately described the benefits to investors, IEX and other Designated Markets as a result of IEX becoming a Designated Market?

c. Has the Commission accurately described the costs to investors in securities of issuers that will choose to list on IEX should IEX become a Designated Market?

d. Has the Commission accurately described the costs to issuers of securities that will choose to list on IEX should IEX become a Designated Market?

e. Has the Commission accurately described the costs to IEX and other Designated Markets as a result of IEX becoming a Designated Market?

7. Are there benefits or costs that could be quantified or otherwise monetized? The Commission encourages commenters to provide specific estimates or data.

8. In light of the relevant statutory language and in the context of this particular proposed rulemaking, are there reasonable alternatives to this proposal to designate securities listed on IEX as covered securities?

Section 603(a) of the Regulatory Flexibility Act 90 requires the Commission to undertake an initial regulatory flexibility analysis of the proposed amendment to Rule 146 on small entities, unless the Commission certifies that the proposed amendment, if adopted, would not have a significant economic impact on a substantial number of small entities.91 For purposes of Commission rulemaking in connection with the Regulatory Flexibility Act, an issuer is a small business if its “total assets on the last day of its most recent fiscal year were $5 million or less.” 92 In addition, an exchange is a small entity if it is an exchange that is exempt from the reporting requirements of Rule 601 under Regulation NMS, and is not affiliated with any person (other than a natural person) that is not a small business or small organization.93

The Commission preliminarily believes that the proposal to amend Rule 146(b) would not affect a substantial number of small entities because IEX is not a small entity. Further, to list its securities on IEX, an issuer's aggregate market value of publicly held shares would be required to be at least $5 million. If an entity's market value of publicly held shares were at least $5 million, it is reasonable to believe that its assets generally would be worth more than $5 million. Therefore, an entity seeking to list securities on IEX pursuant to IEX's listing standards generally would have assets with a market value of more than $5 million and thus would not be a small entity.

Accordingly, the Commission hereby certifies, pursuant to Section 605(b) of the Regulatory Flexibility Act,94 that amending Rule 146(b) as proposed would not have a significant economic impact on a substantial number of small entities. The Commission encourages written comments regarding this certification. The Commission solicits comment as to whether the proposed amendment to Rule 146(b) could have an effect that has not been considered. The Commission requests that commenters describe the nature of any impact on small entities and provide empirical data to support the extent of such impact.

For purposes of the Small Business Enforcement Fairness Act of 1996, a rule is “major” if it results or is likely to result in:

1. An annual effect on the economy of $100 million or more;

2. a major increase in costs or prices for consumers or individual industries; or

3. significant adverse effects on competition, investment, or innovation. 95

The Commission requests comment regarding the potential impact of the proposed amendment on the economy on an annual basis. Commenters should provide empirical data to support their views to the extent possible.

The Commission is proposing an amendment to Rule 146 pursuant to the Securities Act of 1933,96 particularly Sections 18(b)(1)(B) and 19(a).97

For the reasons set forth in the preamble, the Commission proposes to amend Title 17, Chapter II of the Code of Federal Regulations as follows:

In the Final Rules Section of this Federal Register, EPA is approving the State's implementation plan revision as a direct final rule without prior proposal because the Agency views this as a noncontroversial submittal and anticipates no adverse comments. A detailed rationale for the approval is set forth in the direct final rule. If no adverse comments are received in response to this rule, no further activity is contemplated. If EPA receives adverse comments, the direct final rule will be withdrawn and all public comments received will be addressed in a subsequent final rule based on this proposed rule. EPA will not institute a second comment period on this document. Any parties interested in commenting on this document should do so at this time.

The Committee, operating as the U.S. AbilityOne Commission, administers the AbilityOne Program pursuant to the authority of 41 U.S.C. 8501. Through this program, employment opportunities are provided to people who are blind or severely disabled through the provisions of products and services to the Federal Government.

Pursuant to 5 U.S.C. 301, the head of an Executive department or military department may prescribe regulations for the government of his department, the conduct of its employees, the distribution and performance of its business, and the custody, use, and preservation of its records, papers, and property. The part does not authorize withholding information from the public or limiting the availability of records to the public.

The United States Supreme Court held in United States ex rel. Touhy v. Ragen, 340 U.S. 462 (1951), that the head of a federal agency may make the determination on his/her sole authority to produce documents and authorize employee's testimony in response to a subpoena or other demand for information.

This proposed regulation will govern the Committee's procedures for authorizing or denying such demands. In addition to updating this section for the Touhy case, the Committee is taking this opportunity to make technical corrections to include changes to the mailing address and changing “JWOD” to “AbilityOne” the operating name of the agency since 2010. Changes to this section of the CFR were last made in 1994.

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distribute impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule benefits the public and the United States Government by providing clear procedures for members of the public and Government employees to follow when official testimony or official documents, records, files or information are sought from the Committee or from Committee personnel in connection with legal proceedings. This rule has not been designated a significant regulatory action.

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1532) requires agencies to assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2016, that threshold is approximately $146 million. This rule will not mandate any requirements for State, local, or tribal governments, nor will it affect private sector costs.

The Committee certifies this proposed rule is not subject to the Regulatory Flexibility Act (5 U.S.C. Ch. 6) because it would not, if promulgated, have a significant economic impact on a substantial number of small entities. This rule will provide clarity to U.S. Government personnel and outside counsel on the proper rules and procedures to serve process on U.S. Government officials in their official capacity and to obtain official U.S. Government testimony or documents for use in legal proceedings. Therefore, the Regulatory Flexibility Act, as amended, does not require the Committee to prepare a regulatory flexibility analysis.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. This rule will not have a substantial effect on the States; the relationship between the National Government and the States; or the distribution of power and responsibilities among the various levels of Government.

It has been determined that this rule does not impose reporting or record keeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).

This is a summary of the Commission's document DA 17-656, released July 7, 2017. The full text of the Petition is available for viewing and copying at the FCC Reference Information Center, 445 12th Street SW., Room CY-A257, Washington, DC 20554 or may be accessed online via the Commission's Electronic Comment Filing System at: https://ecfsapi.fcc.gov/file/10530218217172/2017-05-30%20Sorenson%20Petition%20for%20Reconsideration%20re%20RUE%20Profile.pdf. The Commission will not send a Congressional Review Act (CRA) submission to Congress or the Government Accountability Office Pursuant to the CRA, 5 U.S.C. because no rules are being adopted by the Commission.

Subject: Structure and Practices of the Video Relay Service Program; Telecommunications Relay Services and Speech-to-Speech Services for Individuals with Hearing and Speech Disabilities, Report and Order, DA 17-76, published at 82 FR 19322, April 27, 2017, in CG Docket Nos. 10-51 and 03-123. This document is being published pursuant to 47 CFR 1.429(e). See also 47 CFR 1.4(b)(1) and 1.429(f), (g).

Number of Petitions Filed: 1.

This is a summary of the Commission's Notice of Proposed Rulemaking, document FCC 17-76, adopted on June 22, 2017, and released on June 22, 2017. The full text of document FCC 17-76 will be available for public inspection and copying via ECFS, and during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street SW., Room CY-A257, Washington, DC 20554. A copy of document FCC 17-76 and any subsequently filed documents in this matter may also be found by searching ECFS at: http://apps.fcc.gov/ecfs/ (insert CC Docket No. 91-281 into the Proceeding block).

Pursuant to 47 CFR 1.415, 1.419, interested parties may file comments and reply comments on or before the dates indicated on the first page of this document. Comments may be filed using ECFS. See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).

• All hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at 445 12th Street SW., Room TW-A325, Washington, DC 20554. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes must be disposed of before entering the building.

• Commercial Mail sent by 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 should be addressed to 445 12th Street SW., Washington, DC 20554.

Pursuant to § 1.1200 of the Commission's rules, 47 CFR 1.1200, this matter shall be treated as a “permit-but-disclose” proceeding in accordance with the Commission's ex parte rules. Persons making oral ex parte presentations are reminded that memoranda summarizing the presentations must contain summaries of the substances of the presentations and not merely a listing of the subjects discussed. More than a one or two sentence description of the views and arguments presented is generally required. See 47 CFR 1.1206(b). Other rules pertaining to oral and written ex parte presentations in permit-but-disclose proceedings are set forth in § 1.1206(b) of the Commission's rules, 47 CFR 1.1206(b).

To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an email to: [email protected] or call CGB at: (202) 418-0530 (voice), or (202) 418-0432 (TTY). Document FCC 17-76 can also be downloaded in Word or Portable Document Format (PDF) at: https://www.fcc.gov/document/fcc-proposes-rules-aid-investigation-threatening-calls.

Document FCC 17-76 seeks comment on proposed rule amendments that may result in modified information collection requirements. If the Commission adopts any modified information collection requirements, the Commission will publish another notice in the Federal Register inviting the public to comment on the requirements, as required by the Paperwork Reduction Act. Public Law 104-13; 44 U.S.C. 3501-3520. In addition, pursuant to the Small Business Paperwork Relief Act of 2002, the Commission seeks comment on how it might further reduce the information collection burden for small business concerns with fewer than 25 employees. Public Law 107-198, 116 Stat. 729; 44 U.S.C. 3506(c)(4).

1. In the document FCC 17-76, the Commission proposes to amend its Caller ID rules to enable called parties and/or law enforcement to obtain blocked Caller ID information in connection with threatening calls. For purposes of document FCC 17-76, the Commission defines a “threatening call” as any call that includes a threat of serious and imminent unlawful action posing a substantial risk to property, life, safety, or health.

2. Based on reports of widespread and increasing numbers of threatening calls that have targeted schools, religious organizations and other entities, the Commission proposes amending § 64.1601 of its rules, which provides that “[n]o common carrier subscribing to or offering any service that delivers [the Calling Party Number (CPN)] may override the privacy indicator associate with an interstate call,” to ensure that all parties who receive threatening calls are not hindered by the Commission's rules in gaining timely access to CPN information that may allow them to identify threatening callers. Amending the Commission's Caller ID rules to permit threatened parties, law enforcement and security personnel of threatened entities to gain access to the CPN of threatening callers could promote public safety and provide administrative efficiencies over the current process, which necessitates addressing individual waiver requests on a case-by-case basis. Even when threatening calls prove to be a hoax, they can often result in substantial disruption and expenditure of public resources by law enforcement. The Commission therefore proposes to amend its rules to recognize an exemption from the privacy protections contained in § 64.1601(b) of its rules in the limited case of threatening calls. The Commission seeks additional comment on ways to facilitate the ability of law enforcement and security personnel to investigate and identify threatening callers while protecting the legitimate privacy interests of non-threatening callers. In that regard, the Commission seeks comment on how to define the term “security personnel” to ensure that only the appropriate personnel responsible for the safety of any threatened entity has access to the information they require to perform their duties.

3. Section 64.1601(b) of the Commission's rules requires that carriers must act in accordance with the customer's privacy request that CPN not be passed on interstate calls. The Commission has recognized, however, certain exemptions to this requirement. The Commission has concluded, for example, that to the extent CPN-based services are used to deliver emergency services, privacy requirements should not apply to delivery of CPN to a public agency's emergency lines, a poison control line, or in conjunction with 911 emergency services. In these instances, the Commission concluded that Caller ID blocking mechanisms could jeopardize emergency services and therefore pose a serious threat to the safety of life and property. The Commission believes that threatening calls present equally compelling circumstances in which the need to ensure public safety, in accordance with the Commission's fundamental statutory mission, outweighs the threatening caller's interest in maintaining the privacy of his or her CPN.

4. Specifically, the Commission proposes amending § 64.1601 of its rules to recognize an exemption to § 64.1601(b)'s of its rules prohibition on overriding a privacy indicator associated with an interstate call when such call contains a threat of a serious nature. For purposes of this context, the Commission proposes defining a “threatening call” as any call that includes a threat of serious and imminent unlawful action posing a substantial risk to property, life, safety, or health. The Commission seeks comment on this definition and on any alternatives. Accordingly, the Commission proposes adding an exemption in § 64.1601(d) of its rules to exclude threatening calls from the privacy protections afforded by § 64.1601(b) of its rules.

5. In this context, the Commission seeks comment on how evaluations should be made to determine whether a threat meets the proposed definition of a threatening call, including who should make that evaluation. Should the Commission require, for example, that otherwise restricted CPN be made available only after a law enforcement agency confirms that it constitutes a threat of a serious and imminent unlawful action posing a substantial risk to property, life, safety, or health? Would this approach provide sufficient privacy safeguards to ensure that blocked CPN is released only in those limited situations? Conversely, to what extent would involving law enforcement in this process hinder the ability of threatened parties to gain timely access to the CPN of threatening callers?

6. The Commission seeks comment on this proposal and any additional options that might aid law enforcement and threatened parties in obtaining the information they need to identify threatening callers. In addition, the Commission seeks comment on how to facilitate the provision of CPN to threatened entities in a manner that minimizes administrative burdens on carriers while ensuring that such information is provided to the threatened party and law enforcement in a timely manner. How are carriers burdened today when law enforcement uses lawful processes to compel disclosure of call details? In particular, the Commission seeks comment on the potential burdens on small providers that may be asked to disclose information upon a report of a threatening call, including measures that could mitigate those burdens. The Commission recognizes that telecommunications systems utilized by threatened entities and relationships with their carriers may vary widely. The Commission therefore seeks the input of carriers on how best to facilitate the process of providing CPN information in a timely manner to parties that report a threatening call. Given the existing exemption for public agencies that deliver emergency services as noted above, the Commission also seeks comment on whether it should extend that exemption to non-public entities that provide emergency services such as private ambulance companies.

7. Privacy. In proposing this amendment to the Caller ID rules, the Commission endeavors to ensure that this exemption is not abused and that the legitimate privacy interests of non-threatening callers are not infringed, particularly when the calling party has a higher need for CPN blocking protections to mitigate the risk of personal injury, such as in the case of calls made from domestic violence agencies. When the Commission adopted the rule in 1994, it concluded based on an extensive record that “the calling public has an interest in exercising a measure of control over the dissemination of telephone numbers that must be reflected in federal policies governing caller ID services.” As a result, the Commission adopted a rule requiring carriers to offer per-call blocking of Caller ID and allowed carriers to continue offering per-line blocking as long as they also provided per-call unblocking. Because of this recognized privacy interest, the Commission seeks comment on whether it should require anyone reporting a threatening call for purposes of obtaining otherwise restricted CPN to do so in conjunction with a law enforcement agency, so as to provide some assurance that the called party is not attempting to circumvent the privacy obligations of the rule by reporting a false threat. Should access to restricted CPN be limited only to law enforcement authorities? Would the risk of abuse be further reduced by limiting application of this exemption only to non-residential entities such as schools, religious organizations, and other public and private business and governmental entities? Would excluding private individuals who are not typically the target of mass phone threats limit the potential for abuse of this exemption? The Commission notes, for example, that petitions seeking waivers on the basis of a pattern of threatening calls, including most press reports, relate to threatening calls that target entities such as these rather than private individuals. Finally, how would a carrier's obligations under section 222 of the Communications Act of 1934 (the Act) be affected? Is CPN that a caller intends to block protected by section 222 of the Act, and would a rule that requires or allows carriers to divulge blocked CPN conflict with section 222 of the Act?

8. Are there other means to ensure that legitimate privacy protections are not infringed should the Commissions exempt threatening calls from the privacy requirements of § 64.1601(b) of its rules? The Commission notes, for example, that CGB, in granting waivers of the Commission's rule, has imposed certain conditions and obligations on entities granted waivers of § 64.1601(b) of its rules in the past to ensure that restricted CPN information is disclosed only to authorized personnel for purposes of investigating threatening calls, and hence, any legitimate expectation of privacy by non-threatening callers is adequately protected. These conditions typically include: (1) The CPN on incoming restricted calls not be passed on to the line called; (2) any system used to record CPN be operated in a secure way, limiting access to designated telecommunications and security personnel; (3) telecommunications and security personnel may access restricted CPN data only when investigating phone calls of a threatening and serious nature, and shall document that access as part of the investigative report; (4) transmission of restricted CPN information to law enforcement agencies must occur only through secure communications; (5) CPN information must be destroyed in a secure manner after a reasonable retention period; and (6) any violation of these conditions must be reported promptly to the Commission. The Commission seeks comment on whether similar conditions should be imposed on any party that obtains restricted CPN pursuant to the proposed exemption. The Commission seeks comment on these and any other proposals to achieve the Commission's objective in assisting threatened parties and law enforcement officials in identifying threatening callers in a timely manner.

9. The Commission seeks comment on whether circumstances have changed since the Commission originally adopted § 64.1601 of its rules. At the time, the Commission rejected arguments that parts of the rule would infringe on callers' expectations of privacy and anonymity. This was in part because the rule would allow callers to choose to block passage of CPN by choosing either per-call or per-line blocking. Would this logic hold true if the Commission were to allow call recipients to demand that CPN be revealed by asserting that the call contained a threat? In concluding that compelling the transmission of CPN would not violate any privacy rights under the Fourth Amendment, the Commission reasoned that callers have no reasonable expectation of privacy in their phone numbers because those numbers are voluntarily exposed to the telephone company's equipment. Does this hold true today, and would it be true if callers intending to block CPN delivery could have it unblocked by a called party's assertion that a call contained a threat?

10. Based on the large numbers of recent threats phoned in to the JCCs and the record compiled in this matter, the Commission confirms that good cause continues to exist to maintain the temporary waiver of § 64.1601(b) of its rules granted to JCCs and the carriers who serve them for disclosure of CPN associated with threatening calls to JCCs.

11. In the event the Commission amends its rules to recognize an exemption for threatening calls as proposed herein, this waiver, along with other similar prior waivers, will be encompassed within the protections afforded by that exemption. In the meantime, this temporary waiver ensures that JCCs are afforded certainty that they will continue to have the necessary protections from threatening calls.

12. As required by the Regulatory Flexibility Act (RFA), the Commission has prepared an Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on small entities by the policies and rules proposed in document FCC 17-76. Written public comments are requested on the IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments specified in the DATES section. The Commission will send a copy of document FCC 17-76, including the IRFA to the Chief Counsel for Advocacy of the Small Business Administration (SBA).

13. In recent years, media and law enforcement reports indicate that the number of threatening calls appears be increasing dramatically. In the past the Commission has addressed such situations on a case-by-case basis via a waiver process at the request of individual entities that report receiving threatening calls. In document FCC 17-76, the Commission takes steps to amend the Caller ID rules to ensure that law enforcement and threatened parties are not hindered in their ability to investigate and respond to threatening phone calls. The Commission recognizes the privacy interests of non-threatening callers that may have valid reasons to block their telephone numbers by limiting the proposal strictly to those situations that involve threatening calls of a serious and imminent nature while further limiting access to such restricted CPN information in the case of threatening calls only to those parties responsible for safety and security of the threatened party. The Commission proposes to amend the current process that necessitates addressing individual waiver requests on a case-by-case basis. The Commission proposes and seeks additional comment on ways to facilitate the ability of law enforcement and security personnel to investigate and identify callers while protecting the legitimate privacy interests of non-threatening callers.

14. Specifically, the Commission proposes to amend § 64.1601(d)(4)'s of its rules current list of exemptions by adding a new section (iv) to read: (4) CPN delivery—“(iv) Is made in connection with a threatening call. Upon report of such a threatening call, the carrier will provide any CPN of the calling party to the called party and/or law enforcement for the purpose of identifying the responsible party.” The Commission proposes defining a “threatening call” as any called that includes a threat of serious and imminent unlawful action posing a substantial risk to property, life, safety, or health. In addition, the Commission seeks comment on how to facilitate the provision of CPN to threatened entities in a manner that minimizes administrative burdens on carriers while ensuring that such information is provided to the threatened party and law enforcement in a timely manner.

15. For privacy purposes, the Commission seeks comment on whether it should require anyone reporting a threatening call for purpose of obtaining otherwise restricted CPN to do so in conjunction with a law enforcement agency to provide some assurance that the called party is not attempting to circumvent the privacy obligations of the rule by reporting a false threat. The Commission also inquiries into the possibility of excluding private individuals, who are not typically the target of mass phone threats, from this exemption in order to limit the potential for abuse. The Commission notes, for example, that CGB has imposed certain conditions and obligations on entities granted waivers of § 64.1601(b) of its rules in the past to ensure that restricted CPN information is disclosed only to authorized personnel for purposes of investigating threatening calls, and hence, any legitimate expectation of privacy by non-threatening callers is adequately protected. The Commission seeks comment on whether similar conditions should be imposed on any party that obtains restricted CPN pursuant to the proposed exemption.

16. The proposed and anticipated rules are authorized under sections 1-4 and 201 of the Act, as amended, 47 U.S.C. 151-154, and 201.

17. The RFA directs agencies to provide a description of, and where feasible, an estimate of the number of small entities that will be affected by the proposed rules, if adopted. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. Under the Small Business Act, a “small business concern” is one that: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) meets any additional criteria established by the SBA. Nationwide, there are a total of approximately 28.8 million small businesses, according to the SBA.

18. Wired Telecommunications Carriers. The U.S. Census Bureau defines this industry as “establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired communications networks. Transmission facilities may be based on a single technology or a combination of technologies. Establishments in this industry use the wired telecommunications network facilities that they operate to provide a variety of services, such as wired telephony services, including voice over Internet protocol (VoIP) services, wired (cable) audio and video programming distribution, and wired broadband internet services. By exception, establishments providing satellite television distribution services using facilities and infrastructure that they operate are included in this industry.” The SBA has developed a small business size standard for Wired Telecommunications Carriers, which consists of all such companies having 1,500 or fewer employees. Census data for 2012 shows that there were 3,117 firms that operated that year. Of this total, 3,083 operated with fewer than 1,000 employees. Thus, under this size standard, the majority of firms in this industry can be considered small.

19. Local Exchange Carriers (LECs). Neither the Commission nor the SBA has developed a small business size standard specifically for local exchange services. The closest applicable size standard under SBA rules is for the category Wired Telecommunications Carriers. The U.S. Census Bureau defines this industry as “establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired communications networks. Transmission facilities may be based on a single technology or a combination of technologies. Establishments in this industry use the wired telecommunications network facilities that they operate to provide a variety of services, such as wired telephony services, including VoIP services, wired (cable) audio and video programming distribution, and wired broadband internet services. By exception, establishments providing satellite television distribution services using facilities and infrastructure that they operate are included in this industry.” Under that size standard, such a business is small if it has 1,500 or fewer employees. Census data for 2012 show that there were 3,117 firms that operated that year. Of this total, 3,083 operated with fewer than 1,000 employees. Consequently, the Commission estimates that most providers of local exchange service are small businesses.

20. Incumbent Local Exchange Carriers (Incumbent LECs). Neither the Commission nor the SBA has developed a small business size standard specifically for incumbent local exchange services. The closest applicable size standard under SBA rules is for the category Wired Telecommunications Carriers. The U.S. Census Bureau defines this industry as “establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired communications networks. Transmission facilities may be based on a single technology or a combination of technologies. Establishments in this industry use the wired telecommunications network facilities that they operate to provide a variety of services, such as wired telephony services, including VoIP services, wired (cable) audio and video programming distribution, and wired broadband internet services. By exception, establishments providing satellite television distribution services using facilities and infrastructure that they operate are included in this industry.” Under that size standard, such a business is small if it has 1,500 or fewer employees. Census data for 2012 show that there were 3,117 firms that operated that year. Of this total, 3,083 operated with fewer than 1,000 employees. Consequently, the Commission estimates that most providers of incumbent local exchange service are small businesses.

21. Competitive Local Exchange Carriers (Competitive LECs), Competitive Access Providers (CAPs), Shared-Tenant Service Providers, and Other Local Service Providers. Neither the Commission nor the SBA has developed a small business size standard specifically for these service providers. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. The U.S. Census Bureau defines this industry as “establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired communications networks. Transmission facilities may be based on a single technology or a combination of technologies. Establishments in this industry use the wired telecommunications network facilities that they operate to provide a variety of services, such as wired telephony services, including VoIP services, wired (cable) audio and video programming distribution, and wired broadband internet services. By exception, establishments providing satellite television distribution services using facilities and infrastructure that they operate are included in this industry.” Under that size standard, such a business is small if it has 1,500 or fewer employees. Census data for 2012 show that there were 3,117 firms that operated that year. Of this total, 3,083 operated with fewer than 1,000 employees. Consequently, the Commission estimates that most providers of competitive local exchange service, competitive access providers, Shared-Tenant Service Providers, and other local service providers are small entities.

22. The Commission has included small incumbent LECs in the RFA analysis. As noted above, a “small business” under the RFA is one that, inter alia, meets the pertinent small business size standard (e.g., a telephone communications business having 1,500 or fewer employees), and “is not dominant in its field of operation.” The SBA's Office of Advocacy contends that, for RFA purposes, small incumbent LECs are not dominant in their field of operation because any such dominance is not “national” in scope. The Commission has therefore included small incumbent LECs in the RFA analysis, although it emphasizes that the RFA action has no effect on Commission analyses and determinations in other, non-RFA contexts.

23. Interexchange Carriers (IXCs). Neither the Commission nor the SBA has developed a small business size standard specifically for providers of interexchange services. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. The U.S. Census Bureau defines this industry as “establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired communications networks. Transmission facilities may be based on a single technology or a combination of technologies. Establishments in this industry use the wired telecommunications network facilities that they operate to provide a variety of services, such as wired telephony services, including VoIP services, wired (cable) audio and video programming distribution, and wired broadband internet services. By exception, establishments providing satellite television distribution services using facilities and infrastructure that they operate are included in this industry.” Under that size standard, such a business is small if it has 1,500 or fewer employees. Census data for 2012 show that there were 3,117 firms that operated that year. Of this total, 3,083 operated with fewer than 1,000 employees. Consequently, the Commission estimates that the majority of IXCs are small entities.

24. Other Toll Carriers. Neither the Commission nor the SBA has developed a size standard for small businesses specifically applicable to Other Toll Carriers. This category includes toll carriers that do not fall within the categories of interexchange carriers, operator service providers, prepaid calling card providers, satellite service carriers, or toll resellers. The closest applicable size standard under SBA rules is for Wired Telecommunications Carriers. The U.S. Census Bureau defines this industry as “establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired communications networks. Transmission facilities may be based on a single technology or a combination of technologies. Establishments in this industry use the wired telecommunications network facilities that they operate to provide a variety of services, such as wired telephony services, including VoIP services, wired (cable) audio and video programming distribution, and wired broadband internet services. By exception, establishments providing satellite television distribution services using facilities and infrastructure that they operate are included in this industry.” Under that size standard, such a business is small if it has 1,500 or fewer employees. Census data for 2012 show that there were 3,117 firms that operated that year. Of this total, 3,083 operated with fewer than 1,000 employees. Thus, under this category and the associated small business size standard, the majority of Other Toll Carriers can be considered small.

25. Wireless Telecommunications Carriers (except Satellite). Since 2007, the Census Bureau has placed wireless firms within this new, broad, economic census category. Under the present and prior categories, the SBA has deemed a wireless business to be small if it has 1,500 or fewer employees. For the category of Wireless Telecommunications Carriers (except Satellite), Census data for 2012 show that there were 967 firms that operated for the entire year. Of this total, 955 firms had fewer than 1,000 employees. Thus under this category and the associated size standard, the Commission estimates that the majority of wireless telecommunications carriers (except satellite) are small entities. Similarly, according to internally developed Commission data, 413 carriers reported that they were engaged in the provision of wireless telephony, including cellular service, Personal Communications Service (PCS), and Specialized Mobile Radio (SMR) services. Of this total, an estimated 261 have 1,500 or fewer employees. Thus, using available data, the Commission estimates that the majority of wireless firms can be considered small.

26. Satellite Telecommunications Providers. The category of Satellite Telecommunications “comprises establishments primarily engaged in providing telecommunications services to other establishments in the telecommunications and broadcasting industries by forwarding and receiving communications signals via a system of satellites or reselling satellite telecommunications.” This category has a small business size standard of $32.5 million or less in average annual receipts, under SBA rules. For this category, Census Bureau data for 2012 show that there were a total of 333 firms that operated for the entire year. Of this total, 299 firms had annual receipts of under $25 million. Consequently, the Commission estimates that the majority of Satellite Telecommunications firms are small entities.

27. All Other Telecommunications. All Other Telecommunications comprises, inter alia, “establishments primarily engaged in providing specialized telecommunications services, such as satellite tracking, communications telemetry, and radar station operation. This industry also includes establishments primarily engaged in providing satellite terminal stations and associated facilities connected with one or more terrestrial systems and capable of transmitting telecommunications to, and receiving telecommunications from, satellite systems. Establishments providing Internet services or VoIP services via client-supplied telecommunications connections are also included in this industry.” For this category, Census Bureau data for 2012 show that there were a total of 1,442 firms that operated for the entire year. Of this total, 1,400 had annual receipts below $25 million per year. Consequently, the Commission estimates that the majority of All Other Telecommunications firms are small entities.

28. Toll Resellers. The Commission has not developed a definition for Toll Resellers. The closest NAICS Code Category is Telecommunications Resellers. The Telecommunications Resellers industry comprises establishments engaged in purchasing access and network capacity from owners and operators of telecommunications networks and reselling wired and wireless telecommunications services (except satellite) to businesses and households. Establishments in this industry resell telecommunications; they do not operate transmission facilities and infrastructure. Mobile virtual network operators (MVNOs) are included in this industry. The SBA has developed a small business size standard for the category of Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer employees. Census data for 2012 show that 1,341 firms provided resale services during that year. Of that number, 1,341 operated with fewer than 1,000 employees. Thus, under this category and the associated small business size standard, the majority of these resellers can be considered small entities. According to Commission data, 881 carriers have reported that they are engaged in the provision of toll resale services. Of this total, an estimated 857 have 1,500 or fewer employees. Consequently, the Commission estimates that the majority of toll resellers are small entities.

29. Local Resellers. The SBA has developed a small business size standard for the category of Telecommunications Resellers. The Telecommunications Resellers industry comprises establishments engaged in purchasing access and network capacity from owners and operators of telecommunications networks and reselling wired and wireless telecommunications services (except satellite) to businesses and households. Establishments in this industry resell telecommunications; they do not operate transmission facilities and infrastructure. MVNOs are included in this industry. Under that size standard, such a business is small if it has 1,500 or fewer employees. Census data for 2012 show that 1,341 firms provided resale services during that year. Of that number, all operated with fewer than 1,000 employees. Thus, under this category and the associated small business size standard, the majority of these prepaid calling card providers can be considered small entities.

30. Prepaid Calling Card Providers. The SBA has developed a small business size standard for the category of Telecommunications Resellers. The Telecommunications Resellers industry comprises establishments engaged in purchasing access and network capacity from owners and operators of telecommunications networks and reselling wired and wireless telecommunications services (except satellite) to businesses and households. Establishments in this industry resell telecommunications; they do not operate transmission facilities and infrastructure. MVNOs are included in this industry. Under that size standard, such a business is small if it has 1,500 or fewer employees. Census data for 2012 show that 1,341 firms provided resale services during that year. Of that number, all operated with fewer than 1,000 employees. Thus, under this category and the associated small business size standard, the majority of these prepaid calling card providers can be considered small entities.

31. As indicated above, document FCC 17-76 seeks comment on a proposed amendment to the rules to require carriers to make available, upon report of a threatening call from the called party, any CPN of the calling party to the called party and/or law enforcement for the purpose of identifying the responsible party. Until these requirements are defined in full, it is not possible to predict with certainty whether the costs of compliance will be proportionate between small and large providers. The Commission seeks to minimize the burden associated with reporting, recordkeeping, and other compliance requirements for the proposed rules, such as modifying software, developing procedures, and training staff.

32. Under the proposed rules, carriers will need to make the CPN of a calling party available to a threatened recipient of the call. They may need to work with law enforcement and the entity called to ensure there is a genuine threat in order to protect the privacy of the caller.

33. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.

34. The Commission has proposed rules for carriers, upon report of a threatening call from the called party, to provide any CPN of the calling party to the called party and/or law enforcement for the purpose of identifying the responsible party. The Commission requested feedback from small businesses in document FCC 17-76, and seeks comment on ways to make the proposed rules less costly. The Commission asks how to facilitate the provision of CPN to threatened entities in a manner that minimizes the administrative burdens on carriers while ensuring that such information is provided to the threatened party and law enforcement in a timely manner. The Commission seeks the input of carriers on how to best facilitate the process of providing CPN information in a timely manner to parties that report a threatening call. To help carriers protect privacy interests, the Commission seeks comment on whether it should require anyone reporting a threatening call for purposes of obtaining otherwise restricted CPN to do so in conjunction with a law enforcement agency to provide some assurance that the called party is not attempting to circumvent the privacy obligations of the rule by reporting a false threat. The Commission also asks whether excluding private individuals would limit the potential for abuse. The Commission seeks comment on how to minimize the economic impact of its proposals, particularly to small businesses.

35. The Commission expects to consider the economic impact on small entities, as identified in comments filed in response to document FCC 17-76 and the IRFA, in reaching its final conclusions and taking action in this proceeding.

36. None.

For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR part 64 as follows: