Federal Register Vol. 82, No.227,

The purpose of this Request for Information (RFI) is to outline and request feedback on the design, value, and solutions to potential challenges of revising the U.S. Appliance and Equipment Energy Conservation Standards (ECS) program to include additional compliance flexibilities, with the goal of reducing compliance costs, enhancing consumer choice and maintaining or increasing energy savings. Of particular interest are designs that would use market-based policy mechanisms such as averaging, credit trading, or feebates. Market-based policy mechanisms are potentially less burdensome alternatives as they use markets, price, and other economic variables to provide incentives for regulated entities to reduce or eliminate negative environmental externalities in the least cost way. These policy mechanisms recognize that compliance costs may vary significantly across the regulated sector and allows individual parties to choose the most cost effective compliance option.

An example, discussed further below, of a market-based regulatory program that uses averaging, banking, and trading of credits is the Corporate Average Fuel Economy (CAFE) standards program for light-duty vehicles. The CAFE standards program specifies a fleet-based average fuel efficiency standard that allows manufacturers to trade credits across vehicle classes and manufacturers. This is only one example of how a regulatory program can include some market-based mechanism allowing for more flexibility in compliance. Other examples of market-based mechanisms used in a number of other U.S. energy and environmental programs include standards to which gasoline refineries were subject during the leaded gasoline phase-down,1 the use of credits, or RINs (Renewable Fuel Identification Numbers) in the U.S. EPA Renewable Fuel Standards program,2 fuel efficiency standards for heavy duty engines and vehicles, various versions of state-level Renewable Portfolio Standard programs, including those allowing for the use of Tradable Renewable Certificates (TRCs),3 and several power plant emissions control programs including California's Cap and Trade program.4

DOE requests feedback on possible revisions to the ECS to adopt some type of market-based approach and/or other program flexibilities. DOE additionally requests feedback on possible impacts on consumer and manufacturer costs, estimated benefits of the program such as energy savings, design and implementation of such a program, and suggestions for a pilot product category and/or phase-in of revisions across ECS. DOE encourages the public to provide input on measures DOE could take to lower the cost of its regulations consistent with the requirements of EPCA.

Economic theory suggests that the introduction of credit trading into a mandatory regulatory program such as ECS would likely improve economic efficiency (see Coase (1960),5 Crocker (1966),6 Dales (1968a, 1968b),7 and Montgomery (1972) 8 ) and subsequent discussions such as Ellerman (2005) 9 ). Credit trading, for example, either within a single manufacturer or between manufacturers, would allow a level of flexibility for compliance, and could thereby reduce compliance costs associated with production, and establish a market mechanism to reveal the “shadow value” 10 of the efficiency standard through the value of credits on the credit trading market. In principle, the same aggregate level of energy savings could be obtained with reduced compliance cost, because manufacturers with a lower marginal cost of providing efficiency improvements could increase the efficiency of the products they sell even more, and sell credits from their over-compliance to manufacturers with a higher marginal cost of providing efficiency, thereby allowing them to produce products with efficiency levels below the standard. This could reduce the overall manufacturer cost associated with producing the same aggregate level of energy savings. Such a program would allow a degree of flexibility that could accommodate increased consumer choice as well. For example, if there is a small market segment of consumers with a very high willingness to pay for a product that, for whatever reason, cannot be produced to meet a given energy conservation standard level, under a mandatory standard they could not obtain this product. However, under a trading, averaging, or other market-based scheme a manufacturer could choose to produce that product by purchasing credits in the credit market. Furthermore, market-based standards further incentivize even the makers of the most efficient appliances to continue to innovate and improve efficiency, gains once the minimum standard is met.11 DOE requests comment on which flexible compliance or market-based program scheme might incentivize the most cost-effective improvements in energy efficiency.

Increased flexibility, reduced economic costs, and increased incentives for manufacturers to innovate and improve efficiency across a spectrum of products (i.e., both high efficiency products and products that just meet the standard level) are all possible benefits from introducing average standards and/or market-based approaches, or other compliance flexibilities. These market-based program options will differ from the current DOE compliance structure creating some uncertainty about implementation, interaction with voluntary programs such as ENERGY STAR, certification, and enforcement for both manufacturers and DOE. The scope of a tradable standards program could range from allowing averaging only across each company's appliances within a product category (that is, no trading across product categories or between companies). For example, considering the consumer refrigerator and freezer product category,12 a company could average the energy efficiency of their products across all of the product classes of equipment that they produce or just average across some of the various residential refrigerator products in different product classes that they produce, but different companies would not be able to average their energy efficiencies between companies. Another program design could allow companies to trade credits across product categories and/or between companies. A feebate program could similarly vary in scope but would have different implementation and administrative requirements and costs. As there are many program design possibilities and potential program flexibilities, DOE requests comment on any potential benefits or costs that may arise with the implementation of these types of policy changes and any recommendations for how the program could be successfully implemented.

There are many examples of market-based mechanisms incorporated into environmental regulation. Broadly, prominent examples in the United States include emissions trading systems (ETS, or cap and trade); and performance-based standards with a market-based mechanism or similar allowance for some element of flexibility in compliance. In the case of an ETS, a particular cap, or limit, is placed on the level of emissions. That cap would generally be structured in the form of emissions credits (e.g., a single ton of emissions) allocated to each entity subject to the policy. Several allocation mechanisms are possible, including grandfathering, lottery, or auctioning. There are numerous other examples of ETS policies at the state and federal levels in the United States and across the world.13

A successful example of an ETS is EPA's Acid Rain Program, where fossil fuel-fired electric power plant emissions of sulfur dioxide were capped nationwide and power plant owners could either install emissions control technologies to reduce their sulfur dioxide emissions allowing the owner to earn credits for each ton of emissions reduced or the owner could purchase credits to offset their emissions. The Acid Rain Program also included an emissions averaging component for nitrous oxide (NOX) emissions that allowed owners to use company-wide averaging to meet the emissions standard.

An example of flexible performance standards include the various implementations of vehicle fuel economy standards across the world. Many of these vehicle fuel economy programs incorporate some variation of an average target, allowing flexibility in compliance by enabling manufacturers to sell models that are less efficient than the target as long as they balance it out with sales of models that are more efficient.14 China is one of the exceptions as they set minimum standards that each vehicle model must achieve. In addition, some programs have also incorporated some degree of flexible compliance or coordination in compliance across manufacturers. A program already implemented in the U.S., is the Department of Transportation's Corporate Average Fuel Economy (CAFE) standards and EPA's greenhouse gas (GHG) standards for passenger vehicles. CAFE standards were first enacted by Congress in 1975. Starting in 1978, each vehicle manufacturer was required to meet a fleet-wide, average fuel economy standard: One for passenger cars and another for light trucks. The Department of Transportation's National Highway Traffic and Safety Administration (NHTSA) administers the CAFE standards, while the Environmental Protection Agency (EPA) administers the greenhouse gas emissions (GHG) standards for passenger cars and light-duty trucks under section 202(a) of the Clean Air Act (42 U.S.C. 7521(a)). The two agencies work together, with the California Air Resources Board, to set CAFE and GHG standards for passenger vehicles in part to harmonize their standards to reduce compliance burdens on manufacturers so manufacturers can produce the same vehicle model across the nation. The current CAFE standards cover light-duty passenger vehicles for model years out to 2021 while EPA's GHG standards go out to 2025 (77 FR 62623).

For all U.S. sales in a given model year, the CAFE standards require each manufacturer's U.S. sales meet a production-weighted harmonic mean fuel economy/emissions target based on vehicle footprint (the vehicle wheelbase times its track width, or the area between its tires). Thus, CAFE is a fleet-based standard, which allows each manufacturer to trade off fuel economy between its own models by altering its product mix (i.e., “internal trading”). The standards are applied fleetwide for a company so that domestically produced vehicles 15 and imported vehicles, are treated the same for compliance purposes.

Beginning with the standards issued in 2009 for model year 2011 vehicles, the CAFE program allows for trading of credits across manufacturers (74 FR 14195). Manufacturers who fail to meet their fleet-level target may buy credits from manufacturers who achieved greater-than-required fleet-level fuel economy; alternatively, manufacturers failing to meet their fleet-level target may pay a fine. Credits may also be used within a manufacturer's own product mix, trading from passenger cars to light trucks, or from domestic to foreign production. Credits earned by exceeding the fuel economy standard may be banked and used up to five years in the future.

The CAFE calculation incorporates many different complexities and allowances for vehicle design features (e.g., flex-fuel capability, air conditioning, off-cycling technologies, solar panels, engine start/stop, active aerodynamics, etc.), which may or may not have logical analogs in products covered by ECS. It is important when designing a credit program that there is sufficient heterogeneity in the affected product category to leverage the advantages of a market-based approach. For analysis of the impact and effectiveness of credit trading within CAFE, see, e.g., Leard and McConnell (2015) 16 and Greenstone et al. (2017).17

Other passenger vehicle fuel economy standards programs around the world also provide some examples for variations on this concept. For example, Japan follows a similar model to the United States, in that their vehicle standards are mandatory and their fuel economy targets are also based on average vehicle fuel economy, where the target is specific to weight classes. Starting in 2001 the regulation was revised to allow manufacturers to transfer credits across weight classes (see An & Sauer 2004).18

The European Union (E.U.) program differs significantly from that used in the United States. In the E.U. program the average passenger vehicle fuel economy across the entire industry is to meet a certain target by the compliance date (i.e., there are no manufacturer-specific targets). It is a voluntary standard established through an agreement between manufacturers and the European Commission. Because the target is not specific to each manufacturer, manufacturers can presumably coordinate to enable the entire passenger vehicle fleet to meet the target (An & Sauer 2004).

Another example of a performance standard incorporating a level of flexibility in compliance is a feebate. Examples include the Swedish program to incentivize power plant operators to reduce nitrous oxide emissions, as well as vehicle fuel economy programs in several countries.19  20 Under a feebate program, an efficiency “pivot-point” is set, below which manufacturers pay a fee and above which manufacturers receive a payment from the regulating body or government entity. The fee or payment is based on the efficiency of products sold relative to the pivot point. So, for example, the highest efficiency products generate higher payments than products also above the pivot point but that are lower efficiency (see for example Gillingham 2013 21 ). Feebates may be easier to administer than tradable standards because tracking of permits is not required and credit market liquidity is not a concern, though other implementation challenges may arise.22

Regardless of the specific program design, the general concept with existing programs is to establish a target level, and allow manufacturers to have the flexibility to meet that target in the least cost way. That flexibility can include a penalty or payment based on if a manufacturer under- or over-performs relative to the target (i.e., feebate), a credit market (e.g., CAFE), or allowing for other forms of collaboration in compliance (e.g., E.U. vehicle standard program). DOE seeks feedback on what type of approach would best serve the ECS program. In the remainder of this document CAFE is used as an example to discuss some of the specific points on which DOE seeks feedback, although DOE is interested in feedback regarding any other potential policy approaches.

The markets for consumer products and commercial equipment covered by the ECS program will inform the way a market mechanism or allowance for compliance flexibility could possibly be established for ECS's consumer products and commercial equipment.

First, the scope of the ECS program covers a broad range of consumer products and commercial equipment. The ECS program currently covers more than 60 types of products, each of which have a number of product classes. For this full scope of products, there are a large number of manufacturers controlling hundreds of brands across a wide range of sectors and industries that may facilitate averaging or trading amongst manufacturers. The EPCA definition of manufacturer applies not only to original equipment manufacturers, but also retailers, distributors, installers, or importers, some of which rebrand products manufactured by other distributors. All of these regulated entities would have to submit sales data on covered models in order to track compliance with such a program. The current program of mandatory energy conservation standards for each model currently requires that manufacturers certify and report to DOE the efficiency level of all covered models. Production or sales data are not collected.

Careful consideration should be given to the scope of additional program flexibilities, for example the range of product categories across which trading under a tradable standard could occur. One potential approach could be to maintain a single standard level as is currently the case for covered appliances and commercial equipment. The standard level would still be set separately for each product category and each class within that product category. Trading could be allowed within a single product class or across all product classes within a particular product category both for a given manufacturer (they could sell some models exceeding the standard as long as they also have sufficient sales below the standard to offset that difference) and across manufacturers so that those with excess credits could bank them or sell them to those with a deficit for a given year. As is the case for CAFE standards, such a system incentivizes manufacturers already producing efficient models to continue improving efficiency 23 Another potential approach could be requiring both a minimum efficiency level and an average standard above the minimum efficiency level that can be met through a more flexible approach, although that approach may reduce the potential cost savings.24

While maintaining the same sets of product classes would likely be desirable in most cases, the introduction of trading could allow a degree of freedom and flexibility that could potentially allow for simplification in other dimensions of the program. For example, some product classes could be consolidated, or volume-based standards, such as are established for refrigerators currently, might be simplified to no longer depend on volume. Product classes were defined in order to ensure preservation of consumer choice and product utility/functionality, effectively mandating a degree of flexibility to the program. If the trading introduced a market-driven allowance for flexibility, some of the mandated features may be redundant, and further simplification might be beneficial. This would have to be carefully assessed.

As discussed above, defining the products across which credit trading would be allowed or a single feebate set must be carefully considered. In the case of a tradable standard, trading could be allowed across product categories using the same type of fuel. For example, a manufacturer could trade credits for room air conditioners with electric clothes dryers, with the common metric being kilowatt hours saved over a product's expected lifetime. Alternatively, trading could be allowed only across product classes for a particular product category (e.g., across all room air conditioner product classes), product classes could be consolidated or eliminated for a single product (e.g., a single standard for all room air conditioners), or trading could be allowed across product categories using similar technologies (room air conditioners and commercial air conditioners, and perhaps consumer refrigerators as well). One of the key program design elements would be ensuring a standardized definition of credits across product classes to the extent trading was allowed across products with differing fuel sources, requiring a normalization of energy savings, though most covered products use electricity. Program administration and compliance costs, potential efficiency gains, credit market liquidity, and potential impacts on competition in product markets are important considerations in setting the scope of the program.

As a final note, for one product currently covered under the ECS program (central air conditioners), the standard level for this product varies regionally. If this feature were present for a product category included in the scope of trading, trading would have to reflect region-specific product sales as well.

Credit trading across appliances with different fuel sources (e.g., electric versus natural gas dryers) would require normalizing energy metrics across fuel types. CAFE currently does this for alternative fuel vehicles (including those that run on electricity, natural gas, hydrogen and other fuels) by generating energy-equivalent fuel economy values. So for instance a natural gas vehicle that travels 30 miles on 100 cubic feet of natural gas is given a gasoline-fuel-equivalent miles per gallon value by multiplying the natural gas fuel economy by an energy content conversion factor representing the relative energy content of 100 cubic feet of gas and one gallon of gasoline. Appliance fuels could similarly be converted into energy-equivalent values, or trading could be restricted to appliances of the same fuel type. DOE seeks feedback on this point.

Incorporating elements of a market-based or flexible approach to the ECS program in order to enable more flexible compliance could have significant benefits for consumer's manufacturers, such as providing manufacturers flexibility to comply with the efficiency target in the least cost way. However, even if overall costs decline, the distribution of costs among regulated firms could change, and some firms might face higher costs than under the current program. Administrative costs for firms may increase while overall compliance costs may be reduced, for instance as a result of reductions in production costs or larger profits from better targeting of consumer preferences. DOE seeks feedback on the potential for distributional asymmetries in costs and benefits that could be relevant. For example, would a credit trading mechanism significantly change administrative costs associated with complying with the ECS? Would these cost changes disproportionately impact some types and sizes of firms relative to others (e.g., would some firms potentially have a compliance advantage, in that they may be better equipped to establish designated personnel to manage participation in the credit market)? How would different approaches to program flexibility impact those costs (e.g., credit trading versus feebates?). What are the likely net gains to consumers and manufacturers of a more flexible approach?

The establishment of credit trading would require additional data collection and monitoring to set standards and ensure compliance.25 As under the current CAFE program, calculating credit holdings would depend on accurate sales data for every covered model. In cases where standards vary regionally, these data would also need to be broken out by region. These data would be necessary to support accurate and consistent calculations for the determination of appropriate energy conservation standard levels as part of the rulemaking, and would be essential for enabling and monitoring the credit market and ensuring compliance.

For several product markets, particularly for large appliances, the set of manufacturers is relatively small. This level of concentration in the product market, if replicated in the credit market, implies manufacturers may be able to exercise market power (i.e., the market would not be perfectly competitive).26 Competitive credit markets are an important factor in design of programs that include trading. The extent to which market power could be exercised in credit markets, and the potential impact on appliance program outcomes and on consumers, would need to be carefully considered in design of a program. In general, liquid and competitive credit markets would be more likely if trading was allowed across many product categories.27 Approaches that do not involve credit markets, such as a feebate, would not generate the same credit trading concerns. More broadly, the interaction of standards and market power in product markets is an important consideration.28 For a discussion of how market power has the potential to impact a credit market in an emissions trading context see Fowlie, Reguant, and Ryan (2016).29

Second, as with the current appliance program, the impact of special provisions on program goals would have to be carefully considered. For example, CAFE standards allow a mpg benefit for flex-fuel vehicles regardless of the actual fuel used by the vehicles.30 The resulting incentive to produce flex-fuel vehicles that do not for the most part actually use alternative fuels results in smaller reductions in petroleum fuel use. This provision is being phased out as a result.

Third, introduction of efficiency incentives like tradable performance standards or feebates into the ECS program would mean that manufacturers that specialize in more efficient products may experience higher sales, while those that specialize in lower efficiency products may have added costs and lower sales. As noted above, the impact on small firms must be carefully considered.

DOE requests input on potential scope for a market-based pilot. For example, is there a product or equipment type that would be appropriate for such a pilot? Is there a particular industry with a structure more amenable to a market-based pilot than others? Are any potential policy approaches identified in this RFI more suitable to certain industries or products than others? Could this pilot be successfully applied to an industry voluntary program (e.g., set-top boxes)?

DOE also requests feedback on how to assess pilot program results. In particular, how could DOE identify the counterfactual or control group for comparison with the existing mandatory ECS program? How could DOE best conduct a retroactive assessment of costs and benefits to manufacturers under the existing ECS program and the market-based pilot? How could DOE identify distributional impacts across manufacturers? How could DOE determine if a broader or narrower scope of trading, if allowed, would have been more beneficial? DOE also requests input on what data it would need to collect to properly assess pilot program results.

DOE invites all interested parties to submit in writing by February 26, 2018, comments and information on matters addressed in this RFI and on other matters relevant to DOE's evaluation of the potential advantages and disadvantages of additional compliance flexibilities in energy conservation standards, such as tradable average standards, feebates or other market-based approaches. DOE requests feedback on program design, possible economic efficiency gains, impacts on consumer and manufacturer costs and on energy savings, and potential challenges associated with designing and implementing such a program, including suggestions for a pilot and/or phase-in of a revised ECS.

DOE considers public participation to be a very important part of the process for developing new and/or amended energy conservation standards. DOE actively encourages the participation and interaction of the public during the comment period. Interactions with and between members of the public provide a balanced discussion of the issues and assist DOE. Anyone who wishes to be added to the DOE mailing list to receive future notices and information about this RFI should contact Appliance and Equipment Standards Program staff at (202) 287-1445 or via email at [email protected].

1. Pursuant to section 215 of the Federal Power Act (FPA), the Commission proposes to approve proposed Reliability Standards PRC-027-1 (Coordination of Protection Systems for Performance During Faults) and PER-006-1 (Specific Training for Personnel), which were submitted for approval by the North American Electric Reliability Corporation (NERC), the Commission-certified Electric Reliability Organization (ERO).1 As discussed below, however, the Commission also proposes to direct NERC to modify proposed Reliability Standard PRC-027-1 to require an initial protection system coordination study to ensure that applicable entities will perform (or have performed), as a baseline, a study demonstrating proper coordination of its protection systems. We propose to direct NERC to submit the modified Reliability Standard for Commission approval within 12 months following the effective date of a final rule in this proceeding.

2. The Commission also proposes to approve the associated violation risk factors, violation severity levels, implementation plans, and effective dates proposed by NERC for Reliability Standards PRC-027-1 and PER-006-1. The Commission further proposes to approve the retirement of currently-effective Reliability Standard PRC-001-1.1(ii) (System Protection Coordination).2

3. In addition, the Commission proposes to approve new and revised definitions submitted by NERC for incorporation in the NERC Glossary of Terms Used in NERC Reliability Standards (“NERC Glossary”) for the following terms: (1) “protection system coordination study;” (2) “operational planning analysis;” and (3) “real-time assessment.”

4. Section 215 of the FPA requires a Commission-certified ERO to develop mandatory and enforceable Reliability Standards, subject to Commission review and approval.3 Once approved, the Reliability Standards may be enforced by the ERO subject to Commission oversight or by the Commission independently.4 In 2006, the Commission certified NERC as the ERO pursuant to section 215 of the FPA.5

5. On March 16, 2007, the Commission issued Order No. 693, approving 83 of the 107 Reliability Standards filed by NERC, including Reliability Standard PRC-001-1.6 In addition, the Commission directed NERC to develop modifications to Reliability Standard PRC-001-1 that:

6. On September 2, 2016, NERC submitted a petition seeking Commission approval of proposed Reliability Standards PRC-027-1 and PER-006-1.8 NERC states that the proposed Reliability Standards, new and revised NERC Glossary terms, and the retirement of Reliability Standard PRC-001-1.1(ii) satisfy the Commission's criteria in Order No. 672 and are just, reasonable, not unduly discriminatory or preferential, and in the public interest.9 NERC explains that the intent of the proposed Reliability Standards and changes to the NERC Glossary are to maintain the coordination of protection systems installed to detect and isolate faults on bulk electric system elements and require registered entities to provide training to their relevant personnel on protection systems and remedial action schemes. NERC asserts that the proposed Reliability Standards are an improvement over currently-effective Reliability Standard PRC-001-1.1(ii) and will ensure that appropriate personnel are trained on protection systems and that protection systems are appropriately studied, coordinated, and monitored.

7. NERC states that proposed Reliability Standard PER-006-1 requires generator operators to use a systematic approach to develop and implement training for dispatch personnel at centrally-located dispatch centers.10 NERC explains that proposed Reliability Standard PER-006-1 will also cover plant personnel who are responsible for real-time control of a generator. NERC maintains that it is appropriate to train plant personnel [in] the functionality of protection systems and remedial action schemes. NERC observes that proposed Reliability Standard PER-006-1 replaces the phrase “purpose and limitations” used in currently-effective Reliability Standard PRC-001-1(ii) with the phrase “operational functionality” to clearly identify the objective of the training.11 NERC also observes that proposed Reliability Standard PER-006-1 replaces the phrase “applied in its area” in Reliability Standard PRC-001-1.1(ii) with the phrase “that affect the output of the generating facility(ies) it operates” to properly tailor the scope of the required training. NERC notes that proposed Reliability Standard PER-006-1 does not specify a periodicity for the required training.

8. NERC asserts that proposed Reliability Standard PRC-027-1:

According to NERC, proposed Reliability Standard PRC-027-1, Requirement R1 mandates that each transmission owner, generator owner, and distribution provider establish a process for developing new and revised protection system settings for bulk electric system elements.13

9. NERC states that proposed Reliability Standard PRC-027-1, Requirement R2 mandates that every six years, applicable entities must either: (1) Perform a protection system coordination study to determine whether the protection systems continue to operate in the intended sequence during faults; (2) compare present fault current values to an established fault current baseline and, only if the comparison identifies a 15 percent or greater deviation in fault current values (either three phase or phase to ground) at a bus to which the bulk electric system is connected, perform a protection system coordination study; or (3) use a combination of options 1 and 2.14

10. NERC explains that proposed Reliability Standard PRC-027-1, Requirement R3 will require applicable entities to use the process established under proposed Reliability Standard PRC-027-1, Requirement R1 for the development of any new or revised protection system settings.

11. NERC states that Reliability Standard PRC-001-1.1(ii) includes six requirements that are either addressed by Reliability Standards approved by the Commission or by the proposed Reliability Standards. Specifically, NERC explains that Reliability Standard PRC-001-1.1(ii), Requirement R1 has been partially replaced by currently-effective Reliability Standards PER-003-1 and PER-005-2. NERC continues that proposed Reliability Standard PER-006-1 and the proposed revised definitions of operational planning analysis and real-time assessment will replace the remaining portions of Reliability Standard PRC-001-1.1(ii), Requirement R1. NERC asserts that Reliability Standard PRC-001-1.1(ii), Requirement R2 has been addressed by Reliability Standards IRO-001-4, IRO-008-2, IRO-010-2, TOP-001-3, and TOP-003-3, which the Commission approved in Order No. 817.15 NERC states that Reliability Standard PRC-001-1.1(ii), Requirements R3 and R4 will be replaced with proposed Reliability Standard PRC-027-1. NERC also explains that Reliability Standard PRC-001-1.1(ii), Requirement R5 has been replaced with several Reliability Standards developed after Reliability Standard PRC-001-1(ii) became effective.16 NERC further states that Reliability Standard PRC-001-1.1(ii), Requirement R6 has been replaced with Reliability Standards TOP-001-3 and TOP-003-3.

12. Pursuant to section 215(d)(2) of the FPA, we propose to approve proposed Reliability Standards PER-006-1 and PRC-027-1 as just, reasonable, not unduly discriminatory or preferential, and in the public interest, as both proposed Reliability Standards improve upon currently-effective Reliability Standard PRC-001-1.1(ii) in important ways.17 Specifically, proposed Reliability Standard PRC-027-1 does so by (1) modifying the applicability section to include the appropriate functional entity types with the responsibilities, resources, and skill sets to conduct the studies required to coordinate protection systems, and (2) listing the protection system functions on all bulk electric system elements that require coordination. Proposed Reliability Standard PER-006-1, along with existing formal training requirements in the PER group of Reliability Standards, also improves upon Reliability Standard PRC-001-1.1(ii), Requirement R1 by ensuring that the necessary personnel are familiar with and understand the purpose and limitations of protection systems schemes while providing more precise and auditable requirements. However, proposed Reliability Standard PRC-027-1, Requirement R2, Option 2 does not appear to ensure coordination of all bulk electric system elements with protection system functions. Accordingly, pursuant to section 215(d)(5) of the FPA, we propose to direct that NERC develop modifications to proposed Reliability Standard PRC-027-1 that address our concern regarding this gap, as discussed below.

13. In addition, we propose to approve NERC's associated violation risk factors, violation severity levels, implementation plans, and effective dates. We also propose to approve the revised definitions for inclusion in the NERC Glossary. Further, we propose to approve the retirement of Reliability Standard PRC-001-1.1(ii), as requested by NERC.

14. Pursuant to 215(d)(5) of the FPA, we propose to direct that NERC develop modifications to proposed Reliability Standard PRC-027-1 addressing our concern that applicable entities that choose Requirement R2, Option 2 perform (or have already performed) an initial baseline study demonstrating proper coordination of their protection systems. Any additional protection system coordination studies would be necessary only if an applicable entity is confronted with 15 percent or greater fault current deviations from the prior baseline study amounts, as currently proposed in Reliability Standard PRC-027-1, Requirement R2, Option 2. We propose to direct NERC to submit the modified Reliability Standard within 12 months following the effective date of a final rule in this proceeding.

15. Proposed Reliability Standard PRC-027-1, Requirement R2 does not require an initial protection system coordination study if an applicable entity elects Option 2. Unlike Option 1, which requires performance of protection system coordination studies every six years, Option 2 requires applicable entities to “[c]ompare present Fault current values to an established Fault current baseline and perform a Protection System Coordination Study when the comparison identifies a 15 percent or greater deviation.” The proposed Reliability Standard and NERC's petition do not indicate that the “Fault current baseline” must be established through an initial protection system coordination study. Instead, NERC's petition states that the baseline must be established “by the effective date of the standard based on short-circuit studies.” 18 The proposed Reliability Standard provides that “the initial Fault current baseline(s) shall be established by the effective date of this Reliability Standard and updated each time a Protection System Coordination Study is performed,” but this language does not require establishing the “initial Fault current baseline” through an initial protection system coordination study.19 NERC's petition reinforces this understanding, as noted above, by explicitly allowing the use of short-circuit studies to establish the initial Fault current baseline.

16. While they are related terms, we understand there to be a difference between short-circuit studies and protection system coordination studies. NERC defines protection system coordination study as an “analysis to determine whether Protection Systems operate in the intended sequence during Faults.” 20 By comparison, proposed Reliability Standard PRC-027-1 explains that a short-circuit study is “an analysis of an electrical network that determines the magnitude of the currents flowing in the network during an electrical fault . . . [and] are used as the basis for protection device coordination studies.” 21 Therefore, while short-circuit studies are inputs to protection system coordination studies, it appears that a short-circuit study differs in scope from a protection system coordination study. Based on this record, it would be incorrect to conclude that proposed Reliability Standard PRC-027-1, Requirement R2, Options 1 and 2 afford the same level of protection system coordination because the former requires a protection system coordination study while the latter does not.

17. While we generally support permitting flexibility in the Reliability Standards to achieve required performance goals, the possibility that some bulk electric system elements may never undergo a protection system coordination study raises reliability concerns. In past serious Bulk-Power System events, mis-coordination was a contributing factor to misoperations and outages. For example, the Arizona Southern California September 8, 2011 Outage Report identified an instance where a transmission owner did not perform a protection system coordination study prior to the implementation of a protection system.22 The 2011 Outage Report stated that this omission negatively affected the reliable operation of the Bulk-Power System during the 2011 event.23

18. Over the past eleven years, several NERC reports have addressed the importance of protection system coordination to Bulk-Power System reliability. Proposed Reliability Standard PRC-027-1 addresses some of the issues raised in these reports; but without requiring an initial protection system coordination study, the proposed Reliability Standard does not address all of them. In 2006, for example, the NERC System Protection Control Task Force assessed Reliability Standard PRC-001.24 The report recommended requiring the coordination of all existing protection systems.25

19. In 2009, in a letter from the NERC President to the NERC Board of Trustees and stakeholders, NERC identified generation and transmission mis-coordination as responsible for 30 percent of the misoperations that occurred between 2005 and 2008.26 The 2009 letter stated that mis-coordination between generation and transmission protection systems “has caused two significant system disturbances in the past two years, and resulted in the unnecessary loss of generation during seven additional disturbances in that timeframe.” 27 The letter explained that the 2009 NERC System Protection Initiative would initially focus on the area of protection system coordination.28

20. In 2013, NERC issued a Misoperations Report prepared by the Protection System Misoperations Task Force.29 The Misoperations Report identified “ways to potentially reduce the amount of future misoperations” and concluded that “[m]isoperations due to setting errors can potentially be reduced.” 30 The identified techniques to reduce incorrect settings, included: Peer reviews, increased training, more extensive fault studies, standard templates for setting standard schemes using complex relays, and periodic review of existing settings when there is a change in system topography.31 In the ReliabilityFirst region, NERC identified a category of misoperations caused by “Engineering/Design Issues,” which specifically included setting mis-coordination.32 This category of misoperations was one of the three most common causes of misoperations for above 200 kV facilities within the ReliabilityFirst region.33 The positive impact on Bulk-Power System reliability of reducing misoperations because of “Incorrect setting/logic/design errors” is found in NERC's 2015 Analysis of System Protection Misoperations:

21. In 2014, a NERC “lessons learned” document on “Generation Relaying—Underfrequency Protection Coordination” identified a 2014 incident where underfrequency relay trip settings were installed on the system unnecessarily and were not coordinated with a generator's relay trip setting.35 The document explained that “[u]nintended generator tripping during an underfrequency event can exacerbate the condition.” 36 The document also stated that “generator relay protection should be coordinated with all auxiliary power system relaying with specific regard to time-delay settings” in order to ensure reliable generator operation.37

22. The 2016 State of Reliability Report noted that while protection system misoperations declined in 2015, misoperations showed a “statistically significant positive correlation with transmission outage severity and show[ed] a higher relative transmission risk.” 38 Misoperations showed the strongest correlation of the factors considered. In addition, the 2016 State of Reliability Report identified that “over 40 percent of the incorrect setting/logic/design misoperations were due to the miss coordination [sic] of ground overcurrent settings” found by ERCOT.39

23. The 2017 State of Reliability Report recognized the significance of protection system misoperations to Bulk-Power System reliability by observing that “[p]rotection system misoperations should remain an area of focus as it continues to be one of the largest contributors to the severity of transmission outages.” 40

24. For the reasons discussed above, we propose to direct that NERC develop modifications to proposed Reliability Standard PRC-027-1 to address our concern by requiring that applicable entities perform an initial protection coordination study under Requirement R2, Option 2. We propose that applicable entities would have six years from the effective date of a modified Reliability Standard to complete the analysis. An applicable entity could use pre-existing protection system coordination studies to satisfy the proposed requirement provided it was reasonable (i.e., no intervening system changes that would render the earlier work obsolete). After conducting the initial protection system coordination study, subsequent protection system coordination studies would only be required when an applicable entity is confronted with 15 percent or greater fault current deviations from the prior baseline study amounts, as currently proposed in Reliability Standard PRC-027-1, Requirement R2, Option 2. We seek comments on this proposal.

25. Separately, we seek comment from NERC and other interested entities explaining the technical basis for employing a 15 percent deviation threshold in proposed Reliability Standard PRC-027-1, Requirement R2, Option 2. We seek to better understand the basis for this threshold to ensure an adequate record in the proceeding on this matter.

26. The collection of information addressed in this Notice of Proposed Rulemaking is subject to review by the Office of Management and Budget (OMB) under section 3507(d) of the Paperwork Reduction Act of 1995.41 OMB's regulations require approval of certain information collection requirements imposed by agency rules.42 Upon approval of a collection(s) of information, OMB will assign an OMB control number and an expiration date. Respondents subject to the filing requirements of a rule will not be penalized for failing to respond to these collections of information unless the collections of information display a valid OMB control number.

27. The Commission will submit the information collection requirement to OMB for its final review and approval. We solicit public comments on the need for this information, whether the information will have practical utility, the accuracy of the burden estimates, ways to enhance the quality, utility, and clarity of the information to be collected or retained, and any suggested methods for minimizing respondents' burden, including the use of automated information techniques.

28. The information collection requirements in this Notice of Proposed Rulemaking in Docket No. RM16-22-000 are associated with FERC-725A,43 FERC-725G6,44 and FERC-725Y, as discussed below.

29. Public Reporting Burden: The number of respondents below is based on an examination of the NERC compliance registry on April 7, 2017, for transmission owners, generator owners, generator operators, and distribution providers within the United States and an estimate of how many entities from that registry will be affected by the Reliability Standards proposed for adoption and implementation. At the time of Commission review of proposed Reliability Standards PRC-027-1 and PER-006-1, 334 transmission owners, 913 generator owners, 875 generator operators, and 365 distribution providers in the United States were registered in the NERC compliance registry. However, under NERC's compliance registration program, entities may be registered for multiple functions, so these numbers incorporate some double counting. We note that many generation sites share a common generator owner or generator operator. The following table provides the estimated proposed annual burden and cost related to information collection requirements in this Notice of Proposed Rulemaking.45

Titles: FERC-725G6 (Mandatory Reliability Standard PRC-027-1) and FERC-725Y (Mandatory Reliability Standards: Operations Personnel Training (PER-005-2 and PER-006-1).

Action: Revision to existing collections and proposed new information collection.

OMB Control Nos.: To be determined (FERC-725G6) 51 and 1902-0279 (FERC-725Y).

Respondents: Business or other for profit, and not for profit institutions.

Frequency of Responses: Annual recordkeeping and reporting requirements, with some reporting requirements being at least once every six years.

Necessity of the Information: Proposed Reliability Standards PRC-027-1 and PER-006-1 set forth requirements for coordination of protection systems and personnel training on specific topics essential to reliability. The Commission proposes to approve proposed Reliability Standards PRC-027-1 and PER-006-1, which will replace Commission-approved Reliability Standard PRC-001-1.1(ii). The proposed Reliability Standards PRC-027-1 and PER-006-1 improve upon the existing Reliability Standard PRC-001-1.1(ii) because the proposed Reliability Standards assign responsibilities to entities with more appropriate resources and skill sets to conduct studies required to coordinate protection systems. The proposed Reliability Standards also provide additional clarity to the applicable entities.

Internal review: The Commission has assured itself, by means of its internal review, that there is specific, objective support for the burden estimates associated with the information requirements.

30. Interested persons may obtain information on the reporting requirements by contacting the Federal Energy Regulatory Commission, Office of the Executive Director, 888 First Street NE., Washington, DC 20426 [Attention: Ellen Brown, email: [email protected], phone: (202) 502-8663, fax: (202) 273-0873].

31. Comments concerning the information collection proposed in this Notice of Proposed Rulemaking and the associated burden estimates should be sent to the Commission in this docket and may also be sent to the Office of Management and Budget, Office of Information and Regulatory Affairs [Attention: Desk Officer for the Federal Energy Regulatory Commission]. For security reasons, comments should be sent by email to OMB at the following email address: [email protected]. Please refer to OMB Control Nos. to be determined (FERC-725G6) and 1902-0279 (FERC-725Y) in your submittal.

32. The Commission is required to prepare an Environmental Assessment or an Environmental Impact Statement for any action that may have a significant adverse effect on the human environment.52 The action proposed here falls within the categorical exclusion in the Commission's regulations for rules that are clarifying, corrective or procedural, for information gathering, analysis, and dissemination.53

33. The Regulatory Flexibility Act of 1980 (RFA) generally requires a description and analysis of proposed rules that will have significant economic impact on a substantial number of small entities.54 The Small Business Administration (SBA) defines which utilities are small businesses based on the number of employees that a utility and its affiliates employ.55

34. The proposed Reliability Standard PRC-027-1 (included in FERC-725G6) will apply to approximately 1,612 entities (334 transmission owners, 913 generator owners, and 365 distribution providers) in the United States.56 Pursuant to SBA regulations, the employment threshold for transmission is 500 employees, for generator owners is between 250 and 750 employees (depending on the fuel source), and for distribution providers is 1,000 employees. We estimate that the annual cost for each entity will be $1,048 for each generator owner and distribution provider and $5,507 for each transmission owner.

35. The proposed Reliability Standard PER-006-1 (included in FERC-725Y) will apply to approximately 875 generator operators in the United States. Pursuant to SBA regulations the employment threshold for generator operators is between 250 and 750 employees (depending on the fuel source). We estimate that the annual cost for each generator operator will be $719.

36. In addition, this Notice of Proposed Rulemaking proposes the retirement of Reliability Standard PRC-001-1.1(ii) (included in FERC-725A). That retirement would decrease the annual estimated cost for 875 generator operators by $4,585 each, for 177 transmission operators by $6,681 each, and for 99 balancing authorities by $2,885 each. For the generator operators affected by this retirement and the proposed Reliability Standard PER-006-1, the net annual effect would be a decrease of $3,866 each. We estimate the net annual cost of this Notice of Proposed Rulemaking would vary, by type of entity, from an annual decrease of $6,681 (for each transmission operator) to an annual increase of $5,507 (for each transmission owner). We view this as a minimal economic impact for each entity. Accordingly, we certify that the proposed Reliability Standards PRC-027-1 and PER-006-1 and retirement of Reliability Standard PRC-001-1.1 (ii) will not have a significant economic impact on a substantial number of small entities.

37. The Commission invites interested persons to submit comments on the matters and issues proposed in this notice to be adopted, including any related matters or alternative proposals that commenters may wish to discuss. Comments are due January 29, 2018. Comments must refer to Docket No. RM16-22-000, and must include the commenter's name, the organization they represent, if applicable, and their address in their comments.

38. The Commission encourages comments to be filed electronically via the eFiling link on the Commission's Web site at http://www.ferc.gov. The Commission accepts most standard word processing formats. Documents created electronically using word processing software should be filed in native applications or print-to-PDF format and not in a scanned format. Commenters filing electronically do not need to make a paper filing.

39. Commenters that are not able to file comments electronically must send an original of their comments to: Federal Energy Regulatory Commission, Secretary of the Commission, 888 First Street NE., Washington, DC 20426.

40. All comments will be placed in the Commission's public files and may be viewed, printed, or downloaded remotely as described in the Document Availability section below. Commenters on this proposal are not required to serve copies of their comments on other commenters.

41. In addition to publishing the full text of this document in the Federal Register, the Commission provides all interested persons an opportunity to view and/or print the contents of this document via the Internet through the Commission's Home Page (http://www.ferc.gov) and in the Commission's Public Reference Room during normal business hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE., Room 2A, Washington, DC 20426.

42. From the Commission's Home Page on the Internet, this information is available on eLibrary. The full text of this document is available on eLibrary in PDF and Microsoft Word format for viewing, printing, and/or downloading. To access this document in eLibrary, type the docket number of this document, excluding the last three digits, in the docket number field.

43. User assistance is available for eLibrary and the Commission's Web site during normal business hours from the Commission's Online Support at (202) 502-6652 (toll free at 1-866-208-3676) or email at [email protected], or the Public Reference Room at (202) 502-8371, TTY (202) 502-8659. Email the Public Reference Room at [email protected].

Executive Order (E.O.) 13783, Promoting Energy Independence and Economic Growth, was published in the Federal Register on March 31, 2017 (82 FR 16093). That E.O. requires federal agencies to immediately review existing regulations that may burden the development or use of domestically produced energy resources. Section 2 of E.O. 13783 requires federal agencies to prepare and issue reports with specific recommendations to change their regulations that could reduce or eliminate burdens to domestic energy production.

On October 25, 2017, the Corps issued a report recommending changes to nine nationwide permits to reduce burdens on domestic energy producers. The report is available at: http://www.usace.army.mil/Portals/2/docs/civilworks/nwp/NWP_13783_25sept2017_castle.pdf?ver=2017-10-25-092532-813.

The Corps issues nationwide permits to authorize certain categories of activities that require Department of the Army permits under section 404 of the Clean Water Act and/or section 10 of the Rivers and Harbors Act of 1899. Nationwide permits are general permits that authorize activities across the country that result in no more than minimal individual and cumulative adverse environmental effects. Nationwide permits can be issued for a period of 5 years, and the current nationwide permits were issued on December 21, 2016. Those nationwide permits were published in the Federal Register on January 6, 2017 (82 FR 1860) and went into effect on March 19, 2017. Those nationwide permits expire on March 18, 2022. There are 52 nationwide permits, and the report identifies 12 nationwide permits that authorize activities associated with domestic energy production and use. The report suggests modifications to nine of those nationwide permits to reduce burdens on domestic energy producers.

The nine nationwide permits (NWPs) recommended for changes include: NWP 3, Maintenance; NWP 12, Utility Line Activities; NWP 17, Hydropower Projects; NWP 21, Surface Coal Mining Activities; NWP 39, Commercial and Institutional Developments; NWP 49, Coal Remining Activities; NWP 50, Underground Coal Mining Activities; NWP 51, Land-Based Renewable Energy Generation Projects; and NWP 52, Water-Based Renewable Energy Generation Pilot Projects.

The Corps will coordinate with the administration to determine if the recommended changes in the report will be pursued. Any modifications to the nine nationwide permits identified in the report would require rulemaking to change those nationwide permits. That rulemaking process requires publishing a proposed rule in the Federal Register to solicit comments on the proposed changes to the nationwide permits, evaluating the comments received, and issuing a final rule to modify those nationwide permits. Modification of those nationwide permits will also require, as applicable, water quality certifications under section 401 of the Clean Water Act and consistency determinations under the Coastal Zone Management Act.

This is a summary of the Commission's Notice of Proposed Rulemaking (NPRM) in GN Docket No. 17-258, FCC 17-134, released on October 24, 2017. The complete text of the NPRM is available for viewing via the Commission's ECFS Web site by entering the docket number, GN Docket No. 17-258. The complete text of the NPRM is also available for public inspection and copying from 8:00 a.m. to 4:30 p.m. Eastern Time (ET) Monday through Thursday or from 8:00 a.m. to 11:30 a.m. ET on Fridays in the FCC Reference Information Center, 445 12th Street SW., Room CY-B402, Washington, DC 20554, telephone 202-488-5300, fax 202-488-5563.

Alternative formats are available for people with disabilities (Braille, large print, electronic files, audio format), by sending an email to [email protected] or calling the Consumer and Government Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

The proceeding this NPRM initiates shall be treated as a “permit-but-disclose” proceeding in accordance with the Commission's ex parte rules (47 CFR 1.1200 et seq.). Persons making ex parte presentations must file a copy of any written presentation or a memorandum summarizing any oral presentation within two business days after the presentation (unless a different deadline applicable to the Sunshine period applies). Persons making oral ex parte presentations are reminded that memoranda summarizing the presentation must (1) list all persons attending or otherwise participating in the meeting at which the ex parte presentation was made, and (2) summarize all data presented and arguments made during the presentation. If the presentation consisted in whole or in part of the presentation of data or arguments already reflected in the presenter's written comments, memoranda or other filings in the proceeding, the presenter may provide citations to such data or arguments in his or her prior comments, memoranda, or other filings (specifying the relevant page and/or paragraph numbers where such data or arguments can be found) in lieu of summarizing them in the memorandum. Documents shown or given to Commission staff during ex parte meetings are deemed to be written ex parte presentations and must be filed consistent with rule 1.1206(b). In proceedings governed by rule 1.49(f) or for which the Commission has made available a method of electronic filing, written ex parte presentations and memoranda summarizing oral ex parte presentations, and all attachments thereto, must be filed through the electronic comment filing system available for that proceeding, and must be filed in their native format (e.g., .doc, .xml, .ppt, searchable .pdf). Participants in this proceeding should familiarize themselves with the Commission's ex parte rules. We find that all ex parte presentations made by NTIA or Department of Defense representatives are exempt under our exemption for presentations by federal agencies sharing jurisdiction with the Commission (see 47 CFR 1.1204(a)(5)).

In this Notice of Proposed Rulemaking in GN Docket No. 17-258 (NPRM), the Commission seeks comment on several proposed changes to the rules governing Priority Access Licenses (PALs) that will be issued in 3550-3700 MHz band (3.5 GHz Band)—including longer license terms, renewability, larger geographic license areas, and auction methodology. These changes are consistent with the service rules and license assignment models that helped foster the development of 4G and LTE services in the United States. We anticipate that adopting similar rules for the 3.5 GHz Band similarly will encourage robust investment in network deployment. We also seek comment on changes to the technical rules that could facilitate operations over wider bandwidths while ensuring that current and future incumbent operations continue to be protected from interference. In addition, we seek changes to the information security requirements that would help safeguard private information and protect critical infrastructure.

In 2015, the Commission adopted rules for commercial use of 150 megahertz in the 3.5 GHz Band. Specifically, the First Report and Order in GN Docket No. 12-354, adopted April 15, 2015 and released April 21, 2015 (FCC 15-47), created a three-tiered framework to coordinate shared federal and non-federal use of the band. Incumbents comprise the highest tier and receive protection from all other users, followed by PAL, the second tier, and General Authorized Access (GAA), the third tier. PALs receive protection from GAA operations; GAA is licensed-by-rule and must accept interference from all other users. Automated frequency coordinators, known as Spectrum Access Systems (SASs), will coordinate operations between and among users in different access tiers. The service and technical rules governing the 3.5 GHz Band were adopted as the new Part 96 of the Commission's rules.

In June 2017, both CTIA and T-Mobile (together, Petitioners) filed petitions for rulemaking, which ask the Commission to reexamine several of the PAL licensing rules. CTIA proposes several changes to the PAL licensing rules; T-Mobile supports CTIA's proposals and makes additional proposals, including proposed changes to the amount of spectrum available for PALs and to the technical rules governing the 3.5 GHz Band. Petitioners argue that these changes are necessary to promote 5G network deployment in the Citizens Broadband Radio Service.

The Wireless Telecommunications Bureau and Office of Engineering and Technology sought comment on the Petitions—and on related issues raised in ex parte communications—on June 22, 2017 (DA 17-609), and received comments and reply comments from more than 120 parties.

The rules adopted in the First Report and Order established a three-year license term for PALs. Under the current rules, at the end of its term, a PAL will terminate automatically and may not be renewed. During the first application window, however, an applicant may apply for up to two consecutive three-year terms for a given PAL. During subsequent regular application windows, only the next three-year license term will be made available for any given PAL.

Petitioners ask the Commission to increase the PAL license term to ten years, and to include an expectation of renewal. Petitioners and some commenters argue that a longer, renewable license term will better encourage investment in the 3.5 GHz Band, stressing that a three-year term with automatic termination creates a risk that Priority Access licensees will face stranded investment in just three (or, initially, six) years. Petitioners and some commenters also disagree with the assumption underlying the current rule—that a user's ability to switch between Priority Access and GAA use will provide sufficient incentives for investment. T-Mobile argues that the current rule does not account for challenges “that providers have reported experiencing in the real world today” that can delay network deployment. For example, CTIA cites difficulties in obtaining siting approvals, which they argue are magnified in this band, given the complexity of rolling out a high number of small cell deployments.

CTIA and several commenters also note that a ten-year, renewable licensing scheme is consistent with the Commission's “proven approach” in most other licensed mobile bands, including the bands at issue in the Spectrum Frontiers proceeding which, like the 3.5 GHz Band, “will see network deployments comprised mostly of small cells.” Others argue that ten-year terms would harmonize the U.S. approach with the global approach to actively encourage 5G network deployment in the mid-band spectrum.

Other commenters, however, support the existing rules. They argue that that a longer, renewable license—combined with other potential rule changes sought by the Petitioners—would make PALs economically viable investments only for large entities, and would convert the 3.5 GHz Band from an innovative framework into a traditionally licensed band. These commenters also argue that the investments already made in the band based on the current rules belie concerns about barriers to investment and that any changes to the band should permit a diversity of deployment models and use cases and not be solely designed for the benefit of one (i.e., 5G).

We propose to revise our rules by increasing the PAL license term from three years to ten years and by eliminating the requirement that PALs automatically terminate at the end of the license term. We also seek comment on this change and on the appropriate performance requirements and renewal standards for PALs. This approach is consistent with that adopted for other wireless services and will afford each licensee sufficient time to design and acquire the necessary equipment and devices and to deploy facilities across the license area. We invite detailed comments on this proposal from all stakeholders.

We seek comment on whether the proposed rule changes will affect investment already made, as well as how they will incentivize future investment, in this band. What specific impact will a longer, renewable license have on investments and business plans already underway? How will the proposal affect investment in the future, particularly given the longer term of ten years and the possibility of renewal? To what extent would a longer license term with the possibility of renewal facilitate the deployment of a wide array of technologies?

We also seek comment on how a longer, renewable license term for PALs could affect deployments in rural areas. Does the proposed rule change effectively promote the development and rapid deployment of new technologies, products, and services to benefit the public, including those residing in rural areas? Given concerns raised by the Wireless Internet Service Providers Association (WISPA) and other commenters about access to spectrum in rural areas, does the proposed rule change appropriately balance the objectives in Section 309(j) (47 U.S.C. 309(j))? Do these arguments present a persuasive case for maintaining the current three-year license term for PALs in rural areas? Further, does extending the license term to ten years lead to barriers to exit for companies that could impede innovation and investment or is the ability to return a license to the Commission sufficient to allay such concerns?

Additionally, we seek comment on alternative approaches to the length of the license term, including different, hybrid approaches for particular subsets of PALs (e.g., three years for some PALs, five years for some, and ten for yet others). Many of these other approaches are already in the record. For example, Charter proposes a six-year renewable term, Motorola Solutions proposes a five-year term with only a single renewal allowed, and Southern Linc and WISPA suggest that a subset of PALs could have a five-year term, with PALs seeking renewal paying a fee. What other alternative licensing terms and conditions might be appropriate for this band? What impact would these alternatives have on investment, deployment, and on smaller or rural entities seeking PALs? Commenters that submit alternative proposals should include a cost-benefit analysis to support their approach.

If the license term is increased to ten years with the possibility of renewal, PALs would more closely resemble other licenses issued by the Commission under its auction authority. Such licenses include performance requirements—typically construction requirements—and many services also include renewal standards. Some commenters argue that, if PALs are licensed for a ten-year, renewable term, the Commission should impose construction requirements on Priority Access licensees, as it has for other licensed wireless services. We seek comment on whether, if we adopt longer term, renewable PALs, it would serve the public interest to adopt certain performance requirements to ensure that the spectrum is put to its best use in an efficient and effective manner. If so, what types of performance requirements would be appropriate? Which performance metrics (e.g., population coverage, geographic coverage) and benchmarks would be appropriate? Does the opportunistic GAA use of the band—including unused PAL channels—alleviate concerns involving spectrum warehousing or otherwise satisfy the Commission's statutory obligations? If so, how can we take that into account in determining performance requirements for longer term, renewable PALs?

In addition, to obtain renewal, a licensee generally must show that it has continued to provide at least the initially-required level of service necessary to satisfy its performance requirement, and that it has substantially complied with the Communications Act and Commission rules. If we adopt the proposed changes to PALs, what standard, if any, would be appropriate for the Commission to apply at the end of the PAL license term to determine whether renewal is warranted? Would such a requirement be appropriate in this band? If so, how should it be applied and what level of service should be used as a renewal standard?

Some commenters have argued that, instead of renewability, the licenses should be reauctioned at the end of the license term. For example, Paul Milgrom describes an auction format under which an incumbent would be required to bid for a renewal of its license at the end of the license term, but it would be given a bidding credit so that, if it won, it would have to pay only a fraction of the auction-determined price. Moreover, if the incumbent loses, it would be compensated with a transferable bidding credit to apply to the purchase of other outcomes. Milgrom argues that this would mitigate the risk that the incumbent licensee's investments may become stranded. We seek comment on this approach and its assumptions, as well as on other approaches that might offer an alternative to renewability and still encourage robust investment in the band. Could this approach promote competition and efficient use of spectrum?

The First Report and Order defined the geographic license area for each PAL as one census tract. Petitioners request that the Commission increase the geographic licensing area from census tracts to Partial Economic Area (PEAs). T-Mobile argues that doing so would “be consistent with the geographic licensing area that the Commission has already identified as best for 5G operations” in the Spectrum Frontiers proceeding. Petitioners and some commenters contend that licensing PALs on a census tract-basis—which could result in over 500,000 PALs—will be challenging for SAS Administrators, the Commission, and licensees to manage, and will create unnecessary interference risks due to the large number of border areas that will need to be managed and maintained. Petitioners and some commenters contend that these challenges ultimately will make PALs unattractive to licensees and reduce investment. They argue that PEAs are small enough to allow for flexible and targeted networks, but large enough to reduce border areas and decrease administrative burdens. Some commenters also contend that a larger license area (along with a longer, renewable license term) will promote global harmonization of the 3.5 GHz Band for 5G development.

Many commenters oppose expanding the geographic license area of PALs from census tracts to PEAs or other larger areas. These commenters argue that PEAs—especially in combination with other potential changes to the PAL licensing rules—could foreclose smaller entities from participating in the PAL auction. Some commenters similarly contend that enlarging the geographic area and extending the license term will effectively grant permanent spectrum rights to large carriers, and upend planned business models for targeted, local, and rural uses. Some of these commenters—including, Google and Sony, which have applied to be SAS Administrators—argue that managing licenses in over 70,000 geographic areas would not pose an undue burden “given the meaningful advances in database management, cloud computing, and other technologies and engineering systems in recent years.”

NCTA and Charter suggest that county-sized license areas could strike a balance between preserving low barriers to entry and minimizing administrative burdens. Some commenters propose using a hybrid approach to offer more than one PAL license size (e.g., offering some licenses by PEAs and others by county or census tracts). GeoLinks similarly asks us to consider whether rural areas would benefit more from using census tracts or counties to ensure more timely broadband access to rural communities, while more urban areas could benefit from using PEAs.

We seek comment on increasing the geographic licensing area of PALs to stimulate additional investment, promote innovation, and encourage efficient use of spectrum resources. We seek comment on this proposal and on the potential effects of this change on investment in and use of the 3.5 GHz Band. We also seek comment on whether a larger license area would provide additional flexibility to facilitate the deployment of a wide variety of technologies, including 5G.

We seek comment on Petitioners' specific request to increase the license size of PALs to PEAs, and how this would affect investment in PALs—both investments currently underway and future PAL investment—and diversity of PAL uses and users. Would PEAs strike an appropriate balance between facilitating access to spectrum by both large and small providers while incentivizing investment in, and rapid deployment of, new technologies? We also note that, like census tracts, counties nest into PEAs, which in turn nest into EAs. This nesting would make it easier for operators to combine or partition their PEAs into the license area of their choice. Would the larger size of PEAs and the ability to combine and partition licenses to customize service areas effectively address the concerns raised by commenters and promote robust deployment in the band? Commenters should include cost-benefit analyses when comparing licensing PALs on a PEA-basis versus a census tract-basis, as well as for options in between these choices (e.g., licensing on a county-basis). Would PEAs effectively balance the objectives set forth in Section 309(j) of the Act (47 U.S.C. 309(j)), including encouraging “efficient and intensive” use of the 3.5 GHz spectrum and prescribing license area designations that promote “an equitable distribution of licenses and services among geographic areas” and “economic opportunity for a wide variety of applications”? What impact would licensing PALs using PEAs have on smaller entities, rural deployments, and existing investments? Would PEA-based licensing facilitate compatible, authorized users and uses occupying the same spectrum?

We also seek comment on alternatives or hybrid approaches, including those already in the record. Would counties, or a combination of PAL license areas (e.g., a hybrid combination of PEAs in urban areas and census tracts in rural areas, offering PALs of different sizes, such as PEAs and census tracts, or some other combination) ensure a diversity of auction participants, differing technologies, and rural deployments? Since we are offering seven PALs, commenters in favor of offering different license sizes in rural and urban areas should discuss what would be the appropriate balance between larger geographic areas and census tracts. Are there other possibilities that could promote such objectives? Should the Commission reconsider package bidding of census tracts or other geographic areas for a limited number of PALs? Would this approach promote our objectives? Would package bidding, bidding credits for certain bidders or areas, or other auction design mechanisms be appropriate for us to consider if we were to increase the license area? Specifically, we seek comment on whether we should adopt the bidding credits we used in the 600 MHz Band (Incentive Auction). Commenters should include a cost-benefit analysis of their proposed alternatives or hybrid approaches and discuss how their proposed approach appropriately balances the objectives set forth in Section 309(j) of the Act (47 U.S.C. 309(j)).

In addition, we seek comment generally on how changes to the license area (on their own, and in combination with changes to the license term) could affect auction complexity. How might such changes affect bidding strategies? How would a combination of license areas affect the auction mechanism and bidding strategies? Are there insights from bidders' experience during recent auctions that may be relevant in this context?

In light of the proposed change to modify the geographic license area, as well as any other changes considered in this NPRM, should the Commission modify the current 40 megahertz spectrum aggregation limit? Should we remove it altogether? What are the costs and benefits of higher or lower limits? How would changes affect competition and new entrants?

In the Second Report and Order in GN Docket No. 12-354 (FCC 16-55), the Commission prohibited Priority Access licensees from partitioning or disaggregating their licenses because the Commission found typical reasons for permitting partitioning and disaggregation in more traditionally licensed bands were not present in the 3.5 GHz Band. The Commission also determined that a light-touch leasing process could achieve the goal of making PAL spectrum use rights available in secondary markets—on a targeted, flexible basis—without the need for the Commission oversight required of partitioning and disaggregation.

In its Petition, T-Mobile asks the Commission to consider allowing partitioning and disaggregation of PALs, if it permits licensing on a PEA basis. Several commenters agree that allowing partitioning and disaggregation will help ensure that PAL spectrum rights flow to their best use and support a wide variety of deployments. These commenters also argue that partitioning and disaggregation will encourage service to targeted areas, mitigating concerns that licensing larger area PALs might result in in inefficient spectrum use.

Several commenters oppose the concept of secondary market transactions as a replacement for smaller geographic areas and shorter term PALs to encourage efficient use of spectrum by a variety of users. They argue that there is no guarantee that the licensee will lease or sell idle spectrum in the secondary market. Other commenters, however, suggest that, if the Commission were to make changes to the PAL license term, renewability, and geographic area, then the ability of a PAL licensee to partition or disaggregate its license on the secondary market could be a useful tool to ensure robust and targeted use of the spectrum throughout the license area.

We propose to allow partitioning and disaggregation of PALs in secondary market transactions. Allowing partitioning and disaggregation would be consistent with other changes considered in this NPRM, and is consistent with the licensing paradigm for other similarly licensed services. We also anticipate that the ability to partition and disaggregate a PAL will be an effective way to improve spectral efficiency and facilitate targeted network deployments, particularly if the Commission adopts a longer license term or larger license area for PALs. We seek comment on this proposal and its underlying assumptions. If we were to adopt a larger geographic license area for some or all PALs, would allowing partitioning and disaggregation of PALs enable prospective PAL licensees to acquire PAL rights in smaller geographic areas where their business needs call for it? Are partitioning and disaggregation effective means to facilitate the ability of small entities to access the spectrum they desire for targeted, local deployments? If the Commission does not adopt some or all of the other proposed revisions to PALs, should we still allow partitioning and disaggregation? If so, why? To what extent would partitioning and disaggregation help the Commission facilitate the objectives of Section 309(j) (47 U.S.C. 309(j)), which, among other considerations, asks us to promote “economic opportunity for a wide variety of applications”?

We note that several commenters argue the PAL licensees will lack an incentive to disaggregate or partition a larger, longer-term PAL. T-Mobile, in response, suggests that this “can be remedied by adopt[ing] reasonable performance requirements associated with renewal expectations.” We seek comment on the relationship between secondary market transactions and performance requirements. What types of requirements would be appropriate to encourage a robust secondary market for PALs to facilitate targeted and intensive spectrum use? How would requirements related to secondary markets interplay with construction requirements for PALs more broadly? How could performance requirements and secondary markets incentivize users to provide service to rural and other difficult-to-serve areas?

In the First Report and Order, the Commission required that SAS Administrators make Citizens Broadband Radio Service Device (CBSD) registration information available to the general public. When doing so, however, SAS Administrators must “obfuscate the identities of the licensees.” In doing so, the Commission acknowledged “the concerns raised by commenters about disclosure of confidential business information to the public.”

Both CTIA and T-Mobile, supported by several commenters, ask the Commission to eliminate the rule requiring public disclosure of CBSD registration information. Petitioners assert that the rule raises both competitive concerns and “cybersecurity and national security concerns.” AT&T also claims that “the SAS will be required to collect extensive data regarding users' network configuration, uses, and technical parameters”—data that “amounts to critical infrastructure data” that must be adequately protected to avoid competitive and cybersecurity concerns.” In addition, Petitioners and commenters argue that obfuscating the licensees' identities does not adequately address these concerns because it still may be possible to uncover the identities of individual licensees based on publicly available information. Petitioners and commenters also contend that, since potential GAA operators can coordinate directly with the SAS Administrators to deploy GAA services, the public disclosure requirement is unnecessary to ensure that operations in the band are effectively coordinated.

Google, Open Technology Institute and Public Knowledge (OTI/PK), and WISPA support retention of the current rule, arguing that it benefits potential operators that need to investigate the feasibility of deploying GAA or PAL service before incurring the cost of attempting to reserve or auction spectrum. OTI/PK contends that meaningful transparency allows incumbents and public advocacy groups to play a productive role in holding SAS Administrators and other stakeholders accountable for responsibilities such as military radar protection and ensuring that valuable PAL spectrum does not lie fallow. Google denies that anonymized public registration data presents security or competitive concerns and argues that such information is already available, as wireless carriers' transceiver locations are visible to a passerby, logged by crowd-sourced applications, and publicly documented. Google also notes that several aspiring SAS Administrators—including CTIA—already have negotiated a model sharing agreement, and that CTIA itself has stated that the agreement “provides the necessary protections for SAS customers' proprietary and competitively sensitive information, as well as end users' private information.” In response, AT&T argues that the model sharing agreement that Google references addresses SAS-to-SAS information sharing, not public availability of information, and that Google incorrectly assumes that licensees plan network deployment based on activities of others rather than on internal objectives and consumer behavior.

Charter, Federated Wireless, and NCTA encourage the Commission to seek comment on how it could ensure that prospective users of the band can obtain sufficient information to execute network deployments without disclosing detailed CBSD registration information to the public.

We propose to amend the current rules to prohibit SASs from disclosing publicly CBSD registration information that may compromise the security of critical network deployments or be considered competitively sensitive. We seek comment on the proposal and ask which specific information should be withheld from public disclosure to address the concerns raised by Petitioners and Commenters. We ask commenters to address the potential competitive, security, or other forms of risk presented by the rule, as well as on specific and actionable suggestions to mitigate these risks. Nothing we propose here will affect SAS-to-SAS information sharing requirements.

We also note that some commenters claim that potential GAA and PAL users will use registration information to plan deployments. As such, we seek comment on how to appropriately balance the potential competitive and security risks with potential users' need for information about CBSD deployment. Is there a mechanism—other than full public disclosure of CBSD registration information—for potential users to plan future GAA and/or PAL deployments? For example, could potential users communicate with an SAS on a confidential basis? We also seek comment on whether there is certain information that the SAS can publicly provide while balancing data sensitivity and security concerns.

Section 309(j) of the Communications Act (47 U.S.C. 309(j)) requires that the Commission assign licenses using competitive bidding when “mutually exclusive applications are accepted for any initial license,” subject to certain exemptions not applicable to this band. Because of the “generic” nature of PAL frequency assignments, mutual exclusivity exists when multiple applicants apply to bid on more PALs than exist in a given census tract. In the First Report and Order, the Commission decided that, when there are two or more applicants for PALs in a given census tract, it will make available one fewer PAL than the total number of PALs for which all applicants have applied in that license area, up to a maximum of seven PALs. The Commission also concluded that assigning PALs on a non-auctioned basis would not result in the most efficient assignment of the spectrum. It therefore decided that, where there is only a single applicant for one or more PALs in a license area, it would not proceed to an auction or assign any PALs for that license area and there would only be shared GAA access to that spectrum until the next filing window for competitive bidding. In its Order on Reconsideration in GN Docket No. 12-354 (FCC 16-55), the Commission granted a limited exception for certain rural areas, finding it in the public interest to assign a PAL even if there is only a single applicant, given the likelihood of lower demand in rural areas.

T-Mobile and several commenters ask the Commission to make all PALs available, regardless of the number of applications the Commission receives in any given license area. GeoLinks argues that, by prohibiting the assignment of PALs when there is only one interested carrier, the Commission will “surely create gaps in rural, sparsely populated parts of the country that could benefit from an interested service provider.” Further, several commenters, like AT&T and Ericsson, argue that the Commission's current policy will eventually phase out PAL licenses in a market with each subsequent auction if there is no renewal expectancy, rendering the auctions “essentially a game of musical chairs for PAL licensees.” No commenter opposes T-Mobile's mutual exclusivity proposal specifically.

United States Cellular Corporation (USCC) argues that the Commission should assign PALs in any given license area by subjecting all PALs to a minimum opening bid and the existing spectrum aggregation limit of four PALs. If the aggregate demand in a license area does not exceed seven PALs, USCC suggests that the applicant(s) would receive the number of PALs for which they applied, subject to the payment of the minimum opening bid for those PALs, and remaining spectrum would be available on a GAA basis.

Consistent with our proposals to lengthen the PAL license term, make them renewable, and increase the PAL geographic license area, we also propose to employ our standard practice for finding mutual exclusivity among accepted applications. We propose to eliminate the rule that limited the number of PALs the Commission would make available. We also propose to assign PALs even when there is only one applicant in a given license area, assuming the applicant is otherwise qualified. We seek comment on these changes, which appear consistent with the broad opposition to the current requirements already in the record. The other proposed changes to PAL licensing discussed in this NPRM—including longer, renewable license terms and a larger geographic area—would make PALs more similar to licenses offered in the Incentive Auction and other recent spectrum auctions, where there was no need for the requirements in Sections 96.29(c) and 96.29(d) of our rules (47 CFR 96.29(c) and 47 CFR 96.29(d)). We seek comment on this proposal. What are the costs and benefits of removing these requirements? Are these changes consistent with the statutory objectives of Section 309(j) (47 U.S.C. 309(j)), including to “promot[e]economic opportunity and competition,” “ensur[e] that new and innovative technologies are readily accessible,” “avoid[ ] excessive concentration of licenses” and “disseminat[e] licenses among a wide variety of applicants”; “recover[ ] for the public of a portion of the value of the of the public spectrum”; and promote “efficient and intensive use of electromagnetic spectrum.” Additionally, as fully described below, we also seek comment on whether a PAL for any given license area is mutually exclusive to GAA use in that area such that the Commission would have the authority to assign PALs by auction in those situations.

In the First Report and Order, the Commission adopted these two limitations on the assignment of PALs because it concluded that assigning PALs on a non-auctioned basis would not result in as efficient an assignment of the spectrum as licensing the spectrum for shared GAA use. The Commission found that ensuring widespread GAA use of spectrum in any geographic area for which it had not received mutually exclusive PAL applications was the best way to discharge its statutory obligation to “encourage the larger and more effective use of radio in the public interest.” However, the Commission reached these conclusions regarding nonrenewable PALs that had substantially shorter license terms than we are now proposing to adopt for PALs. Under our current proposals, the use case for PALs could vary more significantly from GAA use than under our current rules. The Commission also noted in the First Report and Order that the determination of mutual exclusivity of PAL applications would not be a one-time event for this band, because PALs would be licensed for three-year, non-renewable terms and the Commission would periodically open application windows for new PALs, as well as interim filing windows to accept applications for unassigned PALs. If we adopt our proposal to increase PAL license terms to 10 years, such frequent application or filing windows likely would not be necessary. We seek comment on whether the circumstances that will pertain if our proposals regarding license term, renewability, and geographic area are adopted warrant our elimination of the current limits on the number of PALs we make available.

Moreover, the record indicates that PALs will be more useful to a wide variety of potential licensees if PALs are renewable, longer term, and/or licensed for a larger geographic area. USCC suggests that, if the Commission adopts PEA-based license areas and a ten-year license period with a renewal expectancy, “it will be far less likely that the aggregate demand in any license area will be less than seven PALs.” We seek comment on whether our proposed changes in the term, renewability, and service area of PALs would make them more useful to a wider range of potential licensees and, if so, whether that would reduce the benefit of limiting the number of PALs available in a given license area or not assigning PALs in any area for which there is only one applicant.

We note that, if we adopt the above proposal to make all of the PALs in a given license area available for assignment regardless of the number of applicants that have applied in that area, it would still be possible, albeit less likely, for the number of PALs being offered to exceed applicant demand in a given area. Similarly, if we were to assign PALs in a license area for which only a single applicant applied for a PAL, as some commenters advocate, in those instances we would not have accepted mutually exclusive PAL applications, which is the prerequisite for assigning PALs by auction. While the Commission has the authority in both situations to assign the PALs on a non-auctioned basis, we seek comment on whether it would be consistent with our statutory objectives to do so on a non-auctioned basis given the nature of the changes we propose to adopt for PALs. Such a circumstance raises questions of how to accommodate GAA use such that the sharing envisioned within this band could occur. To the extent necessary and as an alternative, we also seek comment on whether we nevertheless have authority to assign PALs by auction in these situations because a PAL for any given area is mutually exclusive to GAA use in that area. If we were to assign PALs by auction in these situations, applicants would be required to submit at least the minimum opening bid for each PAL consistent with the Commission's general competitive bidding procedures. Would such an approach be consistent with our statutory requirements and objectives under Section 309 of Act (47 U.S.C. 309(j))? Commenters that support this proposal should describe in detail the mechanism by which such a change would work, particularly within the sharing regime contemplated in the 3.5 GHz Band, and how it would fit within the Commission's statutory requirements.

Under the current rules, Priority Access licensees do not bid on specific spectrum blocks. Rather, SAS Administrators assign frequencies based on the amount of spectrum that the PAL licensee is authorized to use in a given license area. Licensees may request a particular channel or frequency range from the SAS, but are not guaranteed a particular assignment. The SAS will “assign geographically contiguous PALs held by the same Priority Access Licensee to the same channels in each geographic area” and “assign multiple channels held by the same Priority Access Licensee to contiguous frequencies within the same License Area” when it is feasible to do so. T-Mobile instead asks the Commission to allow applicants to bid on particular channels, rather than bidding solely on an amount of spectrum that will later be assigned by the SAS.

A few commenters support T-Mobile's proposal. Ericsson argues that this approach would ensure a “stable and predictable” spectrum environment, while 5G Americas and GSMA argue that it would encourage robust use of the band for 5G and would align with what other countries have planned for the band.

Commenters opposing this proposal question how it would work given the need to protect incumbent rights. Vivint Wireless calls it “unnecessary and a bit confusing,” arguing that it “would seem to limit the available channels should a PAL licensee need to move to avoid interfering with a protected incumbent.” Google argues that, if the Commission permitted parties to manually select frequencies, an operator could position itself in the middle of the PAL spectrum, preventing other PAL holders from aggregating contiguous blocks. It argues that “the current SAS dynamic assignment framework allows protection of federal incumbent and Priority Access operations while enabling a seamless experience for end users of [Citizens Broadband Radio Service] services.”

We seek comment on the feasibility and desirability of allowing PAL licensees to bid on specific channel assignments. How could the Commission accomplish this given the other constraints of the band, including the need to protect incumbents? Would having a separate voluntary channel assignment phase of the auction—as was done recently in the Incentive Auction—work in this context? For example, could we first allow applicants to bid on the amount of PAL spectrum they desire, then in a separate round, allow PAL bidders to value and bid on specific channel assignments? Would this allow PAL bidders to value their PAL spectrum more accurately by knowing their primary location vis-a-vis federal and other incumbents and adjacent band licensees? Would the Commission need to make changes to the assignment phase framework used in the Incentive Auction to accommodate interference protection of federal incumbents by PALs? And if so, what changes would it need to make? Should the Commission adopt rules to ensure that bidders are assigned to contiguous frequencies within a geographic area, where possible? We also seek comment on what alternative auction methodologies might be appropriate to balance the SAS Administrator's need to dynamically avoid interference with Priority Access licensees' desire for certainty and the ability to aggregate contiguous spectrum. Are there other auction designs that could better balance interests in this context? We seek comment on the costs and benefits of any proposed approaches.

In the First Report and Order, the Commission adopted the following emission limits:

• −13 dBm/MHz from 0 to 10 megahertz from the assigned channel edge;

• −25 dBm/MHz beyond 10 megahertz from the assigned channel edge down to 3530 megahertz and up to 3720 megahertz;

• −40 dBm/MHz below 3530 megahertz and above 3720 megahertz.

In the Second Report and Order, the Commission denied petitions for reconsideration that requested changes to these limits.

T-Mobile's Petition requests changes to the emission limits that it claims are necessary to support channels wider than 10 megahertz without power reduction. Specifically, T-Mobile argues that the −13 dBm/MHz limit should apply from 0-20 megahertz outside the channel edge, and the −25 dBm/MHz requirement should be eliminated (or, alternatively, apply at least 20 megahertz from the channel edge). Outside of the 3550-3700 MHz band, T-Mobile contends that the −40 dBm/MHz limit should be eliminated (or, alternatively, the transition gap should be 40 megahertz instead of 20 megahertz).

Qualcomm agrees that the emission limits should be relaxed to facilitate wider channels without power reduction. Qualcomm argues that, for single or aggregated channels that are the channel bandwidth (B) megahertz wide (up to 40 megahertz), the −13 dBm/MHz requirement should apply from 0 to B megahertz above and below the channel edges, and the−25 dBm/MHz requirement should apply at frequencies beyond B megahertz. Qualcomm does not request changes to the −40 dBm/MHz emission limit outside of the 3550-3700 megahertz band. Several other commenters also support relaxation of the emission limits.

Others, including Motorola Solutions and Vivint Wireless, support the current emissions limits. Motorola Solutions argues that no changes are necessary because current technologies can be utilized to meet the existing limits, and the existing rules allow higher power with wider bandwidth which helps counteract the need for power reduction. Vivint Wireless asserts that relaxing the emissions limits will increase the risk of interference between adjacent channel operations.

Our current rules were designed to accommodate 10 megahertz and 20 megahertz channels. We propose to relax the emissions mask in a manner that will be scalable to accommodate wider bandwidth channels. Petitioners and commenters agree on the value of the first step of attenuation at −13 dBm/MHz—starting at the channel edge—and many of them agree on the value of the lowest attenuation in the band at −25 dBm/MHz. We believe that relaxation of the current emission limits, while enabling efficient frequency and power assignments, would promote innovation and investment in the band and allow operators to make use of wider channels without reducing their transmit power. However, we are not persuaded by T-Mobile's proposals to eliminate the −25 dBm/MHz limit or to eliminate the −40 dBm/MHz limit below 3530 megahertz and above 3720 megahertz. We also are not persuaded by T-Mobile's proposal to increase the transition bandwidth to 40 megahertz outside of the band, because of the impact these changes would have on protecting adjacent operations. Rather, we seek comment on two alternative proposals. First, we seek comment on Qualcomm's proposal to: (1) Extend the −13 dBm/MHz limit from 0 to 100% of B; (2) apply the −25 dBm/MHz limit beyond 100% of B; and (3) not change the −40 dBm/MHz limit specified in Section 96.41(e)(2). Second, we seek comment on a more graduated reduction of the emission limits in Qualcomm's proposal, with the addition of an attenuation step between the channel edge and a full channel bandwidth from the channel edge, as follows:

• −13 dBm/MHz from 0 to B/2 (i.e., 50% of B) megahertz from the assigned channel edge;

• −20 dBm/MHz from B/2 to B (i.e., 100% of B) megahertz from the assigned channel edge;

• −25 dBm/MHz beyond B megahertz from the assigned channel edge, down to 3530 megahertz and up to 3720 megahertz;

• −40 dBm/MHz below 3530 megahertz and above 3720 megahertz.

We seek comment on these two proposals and on the tradeoffs in the number and levels of the attenuation steps. A more relaxed mask gives more margin to accommodate bandwidths wider than 10 megahertz, although this could raise the potential for increased interference to users operating on adjacent channels. We seek quantitative analysis of these tradeoffs and we seek comment on whether alternative attenuation steps could balance these tradeoffs more effectively. What is the balance between vendor cost, radio performance, and spectrum efficiency? For example, are there tradeoffs in the design complexity of out-of-band signal reduction techniques, balanced with flexible and efficient spectrum sharing? Will either or both of the proposed masks facilitate the use of wider channels in the band without requiring power reduction?

In the second proposal above, we seek comment on an attenuation step of −20 dBm/MHz between −13 dBm/MHz and −25 dBm/MHz, between one-half channel (50% of B) and one channel bandwidth (100% of B) from the channel edge. This additional attenuation step may enable more efficient SAS-based frequency and power assignments while facilitating wider channel bandwidths. Without this step, frequency separation between PAL channels (and other GAA/PAL channels) may be larger under some operational use cases. We seek comment on the capabilities of current and future CBSDs and end user devices to meet these masks, and the attenuation steps used in other bands for other wireless services. We also seek quantitative analysis of TDD interference scenarios to assess the tradeoff and balance between the emission mask and the statistical likelihood of interference between licensees.

We note that studies have shown that device output power and out-of-band emissions are likely to be lower than regulatory limits or industry standards. For instance, an Ofcom study describes a case where the actual out-of-band emissions is lower than the minimum requirements specified in 3GPP by ~8 dB in the first adjacent channel. The study also shows the non-linear effect of out-of-band emissions at maximum power, and higher reduction in out-of-band emissions for every dB of reduction in fundamental transmit power. Ofcom notes that the increased emission leakage that accompanies increasing fundamental power is due to the non-linear behavior of the power amplifier when it is driven into saturation. What are the likely effects of this behavior in devices that will be deployed in the 3.5 GHz Band? We seek comment and quantitative evidence that actual out-of-channel emissions in the 3.5 GHz Band will be substantially lower than worst case values. Are the margins found in the Ofcom study typical and representative of the margins that can be expected in 3.5 GHz?

We also seek comment on the tradeoffs inherent in any change to the emission mask(s) in the band. Specifically, what are the tradeoffs between the margins of actual emissions, and the spectral efficiency of frequency assignments in the 3.5 GHz Band? Will either or both of the proposed masks meet the more restrictive 3GPP Adjacent Channel Leakage Ratio (ACLR) emissions limit (i.e., 30 dBc for user devices and 45 dBc for base stations)? Finally, given the existing OOBE limits that apply above 3720 MHz and below 3530 MHz—which we do not propose to change—we seek comment on whether either of these proposals would facilitate the use of wider bandwidth channels at or near the band edges.

As required by the Regulatory Flexibility Act of 1980 (RFA) (5 U.S.C. 603), the Commission has prepared an Initial Regulatory Flexibility Analysis (IRFA) for this NPRM, of the possible significant economic impact on small entities of the policies and rules addressed in this document. Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed on or before the dates on the first page of this NPRM. The Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, will send a copy of the NPRM, including the IRFA, to the Chief Counsel for Advocacy of the Small Business Administration.

The NPRM contains proposed modified information collection requirements. The Commission, as part of its continuing effort to reduce paperwork burdens, invites the general public and the Office of Management and Budget OMB to comment on the information collection requirements contained in this document, as required by the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), the Commission seeks specific comment on how it might further reduce the information collection burden for small business concerns with fewer than 25 employees.

For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR part 96 as follows:

Background History of the Federal Migratory Bird Hunting and Conservation Stamp (Duck Stamp) Program

On March 16, 1934, Congress passed, and President Franklin D. Roosevelt signed, the Migratory Bird Hunting Stamp Act. Popularly known as the Duck Stamp Act, it required all waterfowl hunters 16 years or older to buy a stamp annually. The revenue generated was originally earmarked for the Department of Agriculture, but 5 years later was transferred to the Department of the Interior and the Service.

In the years since its enactment, the Federal Duck Stamp Program has become one of the most popular and successful conservation programs ever initiated. Today, some 1.8 million stamps are sold each year, and as of 2017, Federal Duck Stamps have generated more than $1 billion for the preservation of more than 6 million acres of waterfowl habitat in the United States. Numerous other birds, mammals, fish, reptiles, and amphibians have similarly prospered because of habitat protection made possible by the program. An estimated one-third of the Nation's endangered and threatened species find food or shelter in refuges preserved by Duck Stamp funds. Moreover, the protected wetlands help dissipate storms, purify water supplies, store flood water, and nourish fish hatchlings important for sport and commercial fishermen.

The first Federal Duck Stamp was designed at President Roosevelt's request by Jay N. “Ding” Darling, a nationally known political cartoonist for the Des Moines Register and a noted hunter and wildlife conservationist. In subsequent years, noted wildlife artists were asked to submit designs. The first Federal Duck Stamp Contest was opened in 1949 to any U.S. artist who wished to enter, and 65 artists submitted a total of 88 design entries. Since then, the contest has attracted large numbers of entrants, and it remains the only art competition of its kind sponsored by the U.S. Government. The Secretary of the Interior appoints a panel of noted art, waterfowl, and philatelic authorities to select each year's winning design. Winners receive no compensation for the work, except a pane of their stamps, but winners may sell prints of their designs, which are sought by hunters, conservationists, and art collectors.

Throughout the history of the Federal Duck Stamp, there has been an effort to increase its messaging capabilities. For example, in 1959, the theme of the contest was “Retrievers Save Game,” and artists were required to produce a design which illustrated this theme. The resulting 1959-1960 stamp, the “King Buck,” featuring a black Labrador Retriever and a mallard, is arguably among the most identifiable Federal Duck Stamps. With the introduction of the 1998-1999 pressure-sensitive adhesive stamp, the Service developed a dollar-bill sized stamp carrier which provided additional area for visual and verbal messages. Additional opportunities exist for messages on the back of the stamp as well as on the appreciation certificates that are available to customers interested in the Duck Stamp Program.

To address Executive Order 13443 (Facilitation of Hunting Heritage and Wildlife Conservation; 72 FR 46537, August 20, 2007) and Department of the Interior Secretary's Order 3356 (Hunting, Fishing, Recreational Shooting, and Wildlife Conservation Opportunities and Coordination with States, Tribes, and Territories; September 15, 2017), the theme of the 2019-2020 stamp and accompanying certificate of appreciation will be “celebrating our waterfowl hunting heritage.” This will provide visual and verbal recognition to the contributions waterfowl hunters make to habitat conservation. As the only ones required to purchase a Federal Duck Stamp, waterfowl hunters have been the primary supporters of the Federal Duck Stamp program and have enabled the purchase of wetland habitats that support both hunted and nonhunted species, assist in flood control and water purification, and provide communities with an economic stimulus. By celebrating our waterfowl hunting heritage and showing hunters in a positive light as active wildlife conservationists on the 2019-2020 stamp, we will celebrate their contributions to providing public lands and robust wildlife populations. Through additional messaging, we also hope to engage Americans of all ages and backgrounds who may not have traditionally realized the benefits of wetland conservation.

On February 11, 2016, we published a proposed rule (81 FR 7279) to revise the regulations at 50 CFR part 91 governing the annual Federal Duck Stamp Contest. Specifically, we proposed to update our contact information; update common names and spelling of species on our list of contest design subjects; correct minor grammar errors; and specify the requirement to include a second, appropriate, migratory bird species in the artwork design beginning with the 2016 contest. We did not make that rule final. Now, with this document, we are revising that proposed rule.

As set forth in the February 11, 2016, proposed rule (81 FR 7279), we continue to propose to:

• Update §§ 91.1(b) and 91.11 to provide current and accurate contact information for the Service's Duck Stamp Office.

• Update the scientific and common names on our list at § 91.4 of species that are potential contest design subjects to ensure that list contains names currently accepted by the American Ornithological Society (AOS) http://www.americanornithology.org/; see also the AOS Checklist at http://checklist.aou.org/taxa/; this checklist is our standard reference on taxonomy, nomenclature, and capitalization). Some of the names differ in this revised proposed rule from those set forth in our February 11, 2016, proposed rule. Those differences are explained in Revised Provisions, below.

• Correct minor grammar errors in our regulations at 50 CFR part 91.

For the proposed text of §§ 91.1(b), 91.4, and 91.11, refer to our February 11, 2016, proposed rule (81 FR 7279).

The revisions to our February 11, 2016, proposed rule contained in this document consist of:

• Further updates to the scientific names of species on our list at § 91.4;

• Updates to recognize technological advances in stamp design and printing;

• Addition of judging and subject matter regulations to require that each depiction illustrates the theme “celebrating our waterfowl hunting heritage” for the 2018 contest.

Section 91.4 contains our list of eligible waterfowl species. For each year's contest, we choose five or fewer species from the list; one or more of those species (or a combination thereof; see § 91.14) are the only acceptable subjects for entries during that contest year. We announce each year's eligible species on our Web site and in an annual contest brochure. Our list at § 91.4 contains scientific and common names accepted by the AOS.

Since we last revised our regulations, and again since we published our proposed rule on February 11, 2016, the AOS has changed the listing order among species and updated several species names. The further updates contained in this revised proposed rule are to two categories: (1) Geese, and (2) dabbling ducks. For geese, the revised proposed changes would correct the genus name of Emperor, Snow, and Ross's geese to Anser, so that they would read, “Emperor Goose (Anser canagicus),” “Snow Goose (Anser caerulescens),” and “Ross's Goose (Anser rossii),” respectively.

For dabbling ducks, the revised proposed changes would correct the genus name of Blue-winged and Cinnamon teal and Northern Shoveler to Spatula, so that they would read, “Blue-winged Teal (Spatula discors),” “Cinnamon Teal (Spatula cyanoptera),” and “Northern Shoveler (Spatula clypeata),” respectively. We would also correct the genus name of Gadwall and American Wigeon to Mareca, so that the entries read, “Gadwall (Mareca strepera)” and “American Wigeon (Mareca americana).”

We propose these further changes to our list at § 91.4 to reflect the most current scientific names of eligible waterfowl species.

Currently both § 91.15 and § 91.23 contain regulations and references to a stamp production process that is no longer used. We propose to remove these outdated statements to reflect current technology in this revised proposed rule.

Current § 91.14 explains that a live portrayal of any bird(s) of the five or fewer identified eligible waterfowl species must be the dominant feature of the design, but that the design may depict other appropriate elements such as hunting dogs, as long as an eligible waterfowl species is in the foreground and clearly the focus of attention. In this revised proposed rule, we propose that, for 2018, contest entries must include one or more elements that reflect the theme “celebrating our waterfowl hunting heritage.”

Section 91.21(b) outlines the qualification of the judging panel. We also propose that, for 2018, all selected contest judges must have an understanding and appreciation of the waterfowl hunting heritage and be able to recognize scenery or objects related to waterfowl hunting.

Finally, § 91.23 sets forth the scoring criteria for the contest. We propose to specify that, for 2018, entries will also be judged on how well they illustrate the theme of “celebrating our waterfowl hunting heritage.”

The proposed changes to the regulations concerning the theme of “celebrating our waterfowl hunting heritage” would be in effect only for the 2018 contest.

To ensure that any final action resulting from this proposed rule will be as accurate and as effective as possible, we request that you send relevant information for our consideration. We will accept public comments we receive on or before the date listed above in DATES. We are striving to ensure that any amendments to the regulations resulting from our February 11, 2016, proposed rule (81 FR 7279) and this revised proposed rule would be in effect with sufficient time for artists to prepare submissions by the June opening of the 2018 contest. The comments that will be most useful are those that you support by quantitative information or studies and those that include citations to, and analyses of, the applicable laws and regulations. Please make your comments as specific as possible and explain the basis for them. In addition, please include sufficient information with your comments to allow us to authenticate any scientific or commercial data you include.

You must submit your comments and materials concerning this proposed rule by one of the methods listed above in ADDRESSES. We will not accept comments sent by email or fax or to an address not listed in ADDRESSES. If you submit a comment via http://www.regulations.gov, your entire comment—including any personal identifying information, such as your address, telephone number, or email address—will be posted on the Web site. Please note that comments submitted to this Web site are not immediately viewable. When you submit a comment, the system receives it immediately. However, the comment will not be publically viewable until we post it, which might not occur until several days after submission.

If you mail or hand-carry a hardcopy comment directly to us that includes personal information, you may request at the top of your document that we withhold this information from public review. However, we cannot guarantee that we will be able to do so. To ensure that the electronic docket for this rulemaking is complete and all comments we receive are publicly available, we will post all hardcopy comments on http://www.regulations.gov.

In addition, comments and materials we receive, as well as supporting documentation used in preparing this proposed rule, will be available for public inspection in two ways:

(1) You can view them on http://www.regulations.gov. In the Search box, enter FWS-HQ-MB-2015-0161, which is the docket number for this rulemaking. Then, in the Search panel on the left side of the screen, select the type of documents you want to view under the Document Type heading.

(2) You can make an appointment, during normal business hours, to view the comments and materials in person by contacting the person listed above under FOR FURTHER INFORMATION CONTACT.

As stated above in more detail, before including your address, phone number, email address or other personal identifying information in your comment, you should be aware that your entire comment, including your personal identifying information, may be made publically available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.

For this revised proposed rule, we affirm the following required determinations provided in our February 11, 2016, proposed rule (81 FR 7279):

• Regulatory Planning and Review (Executive Orders 12866 and 13563);

• Small Business Regulatory Enforcement Fairness Act (5 U.S.C. 804(2));

• Federalism (Executive Order 13132);

• Unfunded Mandates Reform Act (2 U.S.C. 1531 et seq.);

• Takings (Executive Order 12630);

• Civil Justice Reform (Executive Order 12988);

• Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.);

• National Environmental Policy Act (42 U.S.C. 4321 et seq.);

• Government-to-Government Relationship with Tribes (Executive Order 13175); and

• Energy Supply, Distribution, or Use (Executive Order 13211).

We provide new required determinations as follows:

Under the Regulatory Flexibility Act (as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996), whenever a Federal agency is required to publish a notice of rulemaking for any proposed or final rule, it must prepare and make available for public comment a regulatory flexibility analysis that describes the effect of the rule on small entities (i.e., small businesses, small organizations, and small government jurisdictions) (5 U.S.C. 601 et seq.). However, no regulatory flexibility analysis is required if the head of an agency certifies that the rule would not have a significant economic impact on a substantial number of small entities. Thus, for a regulatory flexibility analysis to be required, impacts must exceed a threshold for “significant impact” and a threshold for a “substantial number of small entities.” See 5 U.S.C. 605(b). SBREFA amended the Regulatory Flexibility Act to require Federal agencies to provide a statement of the factual basis for certifying that a rule would not have a significant economic impact on a substantial number of small entities. The changes we propose are intended primarily to clarify the requirements for the contest. These changes would affect individuals, not businesses or other small entities as defined in the Regulatory Flexibility Act.

We therefore certify that, if adopted, this rule would not have a significant economic effect on a substantial number of small entities as defined under the Regulatory Flexibility Act. A Regulatory Flexibility Analysis is not required. Accordingly, a Small Entity Compliance Guide is not required.

This rule is not an Executive Order (E.O.) 13771 (82 FR 9339, February 3, 2017) regulatory action because this rule is not significant under E.O. 12866.

We are required by Executive Orders 12866 and 12988 and by the Presidential Memorandum of June 1, 1998, to write all rules in plain language. This means that each rule we publish must:

(a) Be logically organized;

(b) Use the active voice to address readers directly;

(c) Use clear language rather than jargon;

(d) Be divided into short sections and sentences; and

(e) Use lists and tables wherever possible.

If you feel that we have not met these requirements, send us comments by one of the methods listed in ADDRESSES. To better help us revise the rule, your comments should be as specific as possible. For example, you should tell us the numbers of the sections or paragraphs that are unclearly written, which sections or sentences are too long, the sections where you feel lists or tables would be useful, etc.

For the reasons stated in the preamble, we propose to further amend 50 CFR part 91, as proposed to be amended at 81 FR 7279 (February 11, 2016), as set forth below:

Under the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), 16 U.S.C. 1801 et seq., NMFS manages the Pacific mackerel fishery in the U.S. EEZ off the West Coast in accordance with the CPS FMP. The CPS FMP and its implementing regulations require NMFS to set annual harvest specifications for the Pacific mackerel fishery based on the annual specification framework and control rules in the FMP. The purpose of this proposed rule is to implement these harvest specifications, which include allowable harvest levels (ACT/HG/annual catch level [ACL]), as well as annual catch reference points (overfishing limit [OFL] and acceptable biological catch [ABC]) that take into consideration uncertainty surrounding the current biomass estimates for Pacific mackerel for the 2017-2018 and 2018-2019 fishing years.

During public meetings each year, biomass estimates for Pacific mackerel are presented to the Pacific Fishery Management Council's (Council) CPS Management Team (CPSMT), the Council's CPS Advisory Subpanel (CPSAS) and the Council's Scientific and Statistical Committee (SSC), where the biomass estimates and the status of the fisheries are reviewed and discussed. These biomass estimates are then presented to the Council along with the calculated OFL, ABC, ACL, HG and ACT recommendations and comments from the CPSMT, CPSAS and SSC. Following review by the Council and after hearing public comment, the Council adopts biomass estimates and makes its harvest specification recommendations to NMFS. Biennial specifications published in the Federal Register establish these allowable harvest levels (i.e., ACT/ACL/HG) for the upcoming two Pacific mackerel fishing years. This is the first proposed rule where harvest specifications are being adopted for the upcoming two fishing years (2017-2018 and 2018-2019) per the recently published final rule (82 FR 35687; August 1, 2017) that changed the CPS FMP management framework so that Pacific mackerel harvest specifications could be adopted biennially instead of annually.

The control rules in the CPS FMP include the HG control rule, which in conjunction with the OFL and ABC rules, are used to manage harvest levels for Pacific mackerel. According to the FMP, the quota for the principal commercial fishery, the HG, is determined using the FMP-specified HG formula. The HG is based, in large part, on the current estimate of stock biomass. The biomass estimate is an explicit part of the various harvest control rules for Pacific mackerel, and as the estimated biomass decreases or increases from one year to the next, the resulting allowable catch levels similarly trend. The harvest control rule in the CPS FMP is HG = [(Biomass-Cutoff) * Fraction * Distribution] with the parameters described as follows:

1. Biomass. The estimated stock biomass of Pacific mackerel for the 2017-2018 management season is 143,403 mt. The estimated stock biomass of Pacific mackerel for the 2018-2019 management season 131,724 mt.

2. Cutoff. This is the biomass level below which no commercial fishery is allowed. The FMP established this level at 18,200 mt.

3. Fraction. The harvest fraction is the percentage of the biomass above 18,200 mt that may be harvested. This is set in the FMP at 30 percent.

4. Distribution. The average portion of the Pacific mackerel biomass estimated in the U.S. EEZ off the Pacific coast is 70 percent and is based on the average historical larval distribution obtained from scientific cruises and the distribution of the resource according to the logbooks of aerial fish-spotters.

The Council has recommended and NMFS is proposing, Pacific mackerel harvest specifications and management measures for both the 2017-2018 and 2018-2019 fishing years. For the 2017-2018 Pacific mackerel fishing year these include an OFL of 30,115 metric tons (mt), an ABC and ACL of 27,510 mt, a HG of 26,293 mt, and an annual ACT of 25,293 mt. For the 2018-2019 Pacific mackerel fishing year these include an OFL of 27,662 mt, and ABC and ACL of 25,269 mt, a HG of 23,840 mt, and an ACT of 22,840 mt. The Pacific mackerel fishing season runs from July 1 to June 30. These catch specifications are based on the control rules established in the CPS FMP and biomass estimates of 143,403 mt (2017-2018) and 131,724 mt (2018-2019); these biomass estimates are the result of a full stock assessment completed in June 2015 and a subsequent catch-only projection estimate completed in June 2017 by NMFS Southwest Fisheries Science Center and approved by the Council's SSC and the Council at their June 2017 meeting as best available science (see ADDRESSES).

Under this proposed action, upon the unlikely attainment of the ACT in either fishing year, directed fishing would close, reserving the difference between the HG and ACT (1,000 mt) as a set aside for incidental landings in other fisheries and other sources of mortality. For the remainder of the fishing year, incidental landings would be constrained to a 45-percent incidental catch allowance when Pacific mackerel are landed with other CPS (in other words, no more than 45 percent by weight of the CPS landed per trip may be Pacific mackerel) or up to 3 mt of Pacific mackerel could be landed incidentally in non-CPS fisheries.1 Upon attainment or projected attainment of the HG, no retention of Pacific mackerel would be allowed even as incidental catch. The purpose of the incidental set-aside and allowance of an incidental fishery is to allow for the restricted incidental landings of Pacific mackerel in other fisheries, particularly other CPS fisheries, when the directed fishery is closed to reduce potential discard of Pacific mackerel and allow for continued prosecution of other important stocks that may school with Pacific mackerel.

The NMFS West Coast Regional Administrator will publish a notice in the Federal Register announcing the date of any closure of either (1) directed fishing (when harvest levels near or take the ACT) or (2) retention—including by incidental fishing (when harvest levels near or attain the HG). Additionally, to ensure the regulated community is informed of any closure, NMFS will also make announcements through other means available, including fax, email, and mail to fishermen, processors, and state fishery management agencies. This rule would also add paragraph (p) to the prohibitions section at 50 CFR 660.505 referencing the prohibition on retention, possession, or landing of Pacific mackerel for the remainder of the year after the closure date specified in the Federal Register notice published by the Regional Administrator.

Pursuant to section 304(b)(1)(A) of the Magnuson-Stevens Act, the NMFS Assistant Administrator has determined that this proposed rule is consistent with the CPS FMP, other provisions of the Magnuson-Stevens Act, and other applicable law, subject to further consideration after public comment.

This proposed rule has been determined to be not significant for purposes of Executive Order 12866.

The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration that this proposed rule, if adopted, would not have a significant economic impact on a substantial number of small entities, for the following reasons:

For Regulatory Flexibility Act (RFA) purposes only, NMFS has established a small business size standard for businesses, including their affiliates, whose primary industry is commercial fishing (see 50 CFR 200.2). A business primarily engaged in commercial fishing (NAICS code 11411) is classified as a small business if it is independently owned and operated, is not dominant in its field of operation (including its affiliates), and has combined annual receipts not in excess of $11 million for all its affiliated operations worldwide.

Pacific mackerel are principally caught off southern California within the limited entry portion (south of 39 degrees N. latitude; Point Arena, California) of the CPS fishery and is one component of CPS fisheries off the U.S. West Coast, which also includes the fisheries for Pacific sardine, northern anchovy and market squid. The small entities that would be affected by the proposed action are those vessels that harvest Pacific mackerel as part of the West Coast CPS purse seine fleet and are all considered small business under the above size standards. Currently there are 58 vessels permitted in the Federal CPS limited entry fishery off California. The average annual per vessel revenue in 2016 for those vessels was well below the threshold level of $11 million; therefore, all of these vessels are considered small businesses under the RFA. Therefore, this rule would not create disproportionate costs between small and large vessels/businesses.

NMFS used the ex-vessel revenue information for a profitability analysis, as the cost data for the harvesting operations of CPS finfish vessels was limited or unavailable. For the 2016-2017 fishing year, the HG was 21,161 mt and was divided into an ACT of 20,161 mt and an incidental set-aside of 1,000 mt. Approximately 1,492.16 mt of Pacific mackerel was harvested in the 2016-2017 fishing year with an estimated ex-vessel value of approximately $417,616.

The HG for the 2017-2018 Pacific mackerel fishing year is 26,293 mt, with an ACT of 25,293 mt and an incidental set-aside of 1,000 mt. The HG for the 2018-2019 Pacific mackerel fishing year is 23,840 mt with an ACT of 22,840 mt and an incidental set-aside of 1,000 mt. These proposed ACTs are similar to the ACT established for the 2016-2017 fishing year (20,161 mt), thus it is highly unlikely that the ACTs proposed in this rule will limit the potential profitability to the fleet from catching Pacific mackerel compared to last season or recent catch levels, as shown below. The annual average U.S. Pacific mackerel harvest in recent years (2010-2015) has been about 5,000 mt. In this period, the landings have not exceeded 11,800 mt. Additionally, annual average landings during the last decade (2005-2015) have not been restricted by the applicable quota. Accordingly, vessel income from fishing is not expected to be altered as a result of this rule as it compares to recent catches in the fishery, including under the previous season's regulations.

Based on the disproportionality and profitability analysis above, the proposed action, if adopted, will not have adverse or disproportional economic impact on these small business entities. As a result, an Initial Regulatory Flexibility Analysis is not required, and none has been prepared.

This action does not contain a collection-of-information requirement for purposes of the Paperwork Reduction Act.

For the reasons set out in the preamble, 50 CFR part 660 is proposed to be amended as follows: