Federal Register Vol. 83, No.10,

The Debt Collection Improvement Act of 1996 1 (DCIA) amended the Federal Civil Penalties Inflation Adjustment Act of 1990 2 (FCPIA Act) to require every federal agency to enact regulations that adjust each CMP provided by law under its jurisdiction by the rate of inflation at least once every four years.

In November 2015, Congress further amended the CMP inflation requirements in the Bipartisan Budget Act of 2015,3 which contains the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 2015 amendments).4 This legislation provided for an initial “catch-up” adjustment of CMPs in 2016, followed by annual adjustments. The catch-up adjustment re-set CMP maximum amounts by setting aside the inflation adjustments that agencies made in prior years and instead calculated inflation with reference to the year when each CMP was enacted or last modified by Congress. Agencies were required to publish their catch-up adjustments in an interim final rule by July 1, 2016 and make them effective by August 1, 2016.5 The NCUA complied with these requirements in a June 2016 interim final rule, followed by an October 2016 final rule to confirm the adjustments as final.6

The 2015 amendments also specified how agencies must conduct annual inflation adjustments after the 2016 catch-up adjustment. Following the catch-up adjustment, agencies must make the required adjustments and publish them in the Federal Register by January 15 each year.7 The NCUA issued an interim final rule on January 6, 2017,8 followed by a final rule issued on June 23, 2017.9 This final rule will satisfy the agency's requirement for the 2018 annual adjustments.

The statute provides that the adjustments shall be made notwithstanding the section of the Administrative Procedure Act (APA) that requires prior notice and public comment for agency rulemaking.10 The 2015 amendments also specify that each CMP maximum must be increased by the percentage by which the consumer price index for urban consumers (CPI-U) 11 for October of the year immediately preceding the year the adjustment is made exceeds the CPI-U for October of the prior year.12 For example, for the adjustment made in 2018, agencies must compare the October 2016 and 2017 CPI-U figures.

The 2015 amendments also provide that agencies may forgo the required annual adjustments in certain circumstances. Specifically, in a subsection titled “Other Adjustments Made,” the statute provides that an agency is not required to make an annual adjustment to a CMP if it has been increased by a greater amount than the contemplated annual adjustment in the preceding 12 months.13 When these criteria are met, the agency has discretion not to make the adjustments otherwise required by the statute.

In addition, the 2015 amendments directed the Office of Management and Budget (OMB) to issue guidance to agencies on implementing the inflation adjustments.14 OMB is required to issue its guidance each December and did so on December 15, 2017.15 This OMB guidance for the 2018 adjustments includes an inflationary multiplier (1.02041) to apply to each current CMP maximum amount to determine the adjusted maximum. The guidance also addresses rulemaking procedures and agency reporting and oversight requirements for CMPs.16

The next section sets forth the Board's calculation of the adjustments for 2018, in accordance with the foregoing requirements.

This section applies the statutory requirements and OMB's guidance to the NCUA's CMPs.

As explained above, the 2015 amendments require the NCUA to adjust the maximum amounts of its CMPs by the percentage by which the October 2017 CPI-U (246.663) exceeds the October 2016 CPI-U (241.729). The percentage change is 2.041. This percentage increase can be expressed as an inflation multiplier (the quotient of the October 2017 figure divided by the October 2016 figure). Accordingly, each CMP maximum amount should be multiplied by 1.02041 to determine the adjusted maximum amount. OMB's guidance identifies the same multiplier.

The Board has considered the exception in the 2015 amendments for adjustments made in the preceding 12 months, discussed above, and has determined that it does not apply. All of the adjustments calculated below are equal to or greater than the adjustments made in January 2017 for each CMP. Accordingly, the exception for greater adjustments in the preceding 12 months does not apply. Thus, the Board lacks discretion to decline to make the adjustments calculated below.

The table below presents the adjustment calculations. The current maximums are found at 12 CFR 747.1001, as adjusted in January 2017. This amount is multiplied by the inflation multiplier to calculate the new maximum in the far right column. Only these adjusted maximum amounts, and not the calculations, will be codified at 12 CFR 747.1001 under this final rule. The adjusted amounts will be effective January 15, 2018, and can be applied to violations that occurred on or after November 2, 2015, the date the 2015 amendments were enacted. The table to be published in the CFR adds a separate row for tier 3 penalties against insured credit unions under 12 U.S.C. 1786(k). This is a format change to conform the table in the CFR with the table below, which lists the tier 3 penalties against credit unions and natural persons separately, following the structure of the statute.

Future Requests for Installation of Non-Rechargeable Lithium Batteries

The FAA anticipates that non-rechargeable lithium batteries will be installed in most makes and models of transport category airplanes. We intend to require special conditions for certification projects involving non-rechargeable lithium battery installations to address certain safety issues until we can revise the airworthiness requirements. Applying special conditions to these installations across the range of transport category airplanes will ensure regulatory consistency.

Typically, the FAA issues special conditions after receiving an application for type certificate approval of a novel or unusual design feature. However, the FAA has found that the presence of non-rechargeable lithium batteries in certification projects is not always immediately identifiable, since the battery itself may not be the focus of the project. Meanwhile, the inclusion of these batteries has become virtually ubiquitous on in-production transport category airplanes, which shows that there will be a need for these special conditions. Also, delaying the issuance of special conditions until after each design application is received could lead to costly certification delays. Therefore, the FAA finds it necessary to issue special conditions applicable to these battery installations on particular makes and models of aircraft.

On April 22, 2016, the FAA published special conditions no. 25-612-SC in the Federal Register (81 FR 23573) applicable to Gulfstream Aerospace Corporation for the GVI airplane. Those were the first special conditions the FAA issued for non-rechargeable lithium battery installations. We explained in that document our decision to make those special conditions effective one year after publication in the Federal Register, which is April 22, 2017. In those special conditions, the FAA stated its intention to apply non-rechargeable lithium battery special conditions to design changes on other makes and models applied for after this same date.

Section 1205 of the FAA Reauthorization Act of 1996 requires the FAA to consider the extent to which Alaska is not served by transportation modes other than aviation and to establish appropriate regulatory distinctions when modifying airworthiness regulations that affect intrastate aviation in Alaska. In consideration of this requirement and the overall impact on safety, the FAA does not intend to require non-rechargeable lithium battery special conditions for design changes that only replace a 121.5 megahertz (MHz) emergency locator transmitter (ELT) with a 406 MHz ELT that meets Technical Standard Order C126b, or later revision, on transport airplanes operating only in Alaska. This will support our efforts of encouraging operators in Alaska to upgrade to a 406 MHz ELT. These ELTs provide significantly improved accuracy for lifesaving services to locate an accident site in Alaskan terrain. The FAA considers that the safety benefits from upgrading to a 406 MHz ELT for Alaskan operations will outweigh the battery fire risk.

The substance of these special conditions previously has been published in the Federal Register for public comment. These special conditions have been derived without substantive change from those previously issued. It is unlikely that prior public comment would result in a significant change from the substance contained herein. Therefore, the FAA has determined that prior public notice and comment are unnecessary, and finds that, for the same reason, good cause exists for adopting these special conditions upon publication in the Federal Register.

The FAA is requesting comments to allow interested persons to submit views that may not have been submitted in response to the prior opportunities for comment described above. We invite interested people to take part in this rulemaking by sending written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data.

We will consider all comments we receive by the closing date for comments. We may change these special conditions based on the comments we receive.

On July 1, 2012, Dassault applied for a type certificate for a new Model Falcon 5X airplane. The Model Falcon 5X airplane is a twin engine, transport category airplane with a passenger seating capacity of 19 and a projected maximum takeoff weight of 66,635 pounds.

The FAA is issuing these special conditions for non-rechargeable lithium battery installations on the Dassault Model Falcon 5X airplane. The current battery requirements in title 14, Code of Federal Regulations (14 CFR) part 25 are inadequate for addressing an airplane with non-rechargeable lithium batteries.

Under the provisions of 14 CFR 21.17, Dassault must show that the Model Falcon 5X airplane meets the applicable provisions of part 25, as amended by Amendments 25-1 through 25-139.

If the Administrator finds that the applicable airworthiness regulations (i.e., 14 CFR part 25) do not contain adequate or appropriate safety standards for the Dassault Model Falcon 5X airplane because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.

Special conditions are initially applicable to the airplane model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same novel or unusual design feature, these special conditions would also apply to the other model under § 21.101.

In addition to the applicable airworthiness regulations and special conditions, the Dassault Model Falcon 5X airplane must comply with the fuel-vent and exhaust-emission requirements of 14 CFR part 34, and the noise-certification requirements of 14 CFR part 36.

The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type certification basis under § 21.17.

The novel or unusual design feature is the installation of non-rechargeable lithium batteries.

For the purpose of these special conditions, we refer to a battery and battery system as a battery. A battery system consists of the battery and any protective, monitoring, and alerting circuitry or hardware inside or outside of the battery. It also includes vents (where necessary) and packaging.

The FAA derived the current regulations governing installation of batteries in transport category airplanes from Civil Air Regulations (CAR) 4b.625(d) as part of the recodification of CAR 4b that established 14 CFR part 25 in February 1965. This recodification basically reworded the CAR 4b battery requirements, which are currently in § 25.1353(b)(1) through (4). Non-rechargeable lithium batteries are novel and unusual with respect to the state of technology considered when these requirements were codified. These batteries introduce higher energy levels into airplane systems through new chemical compositions in various battery cell sizes and construction. Interconnection of these cells in battery packs introduces failure modes that require unique design considerations, such as provisions for thermal management.

Recent events involving rechargeable and non-rechargeable lithium batteries prompted the FAA to initiate a broad evaluation of these energy storage technologies. In January 2013, two independent events involving rechargeable lithium-ion batteries revealed unanticipated failure modes. A National Transportation Safety Board (NTSB) letter to the FAA, dated May 22, 2014, which is available at http://www.ntsb.gov, filename A-14-032-036.pdf, describes these events.

On July 12, 2013, an event involving a non-rechargeable lithium battery in an emergency locator transmitter installation demonstrated unanticipated failure modes. The United Kingdom's Air Accidents Investigation Branch Bulletin S5/2013 describes this event.

Some known uses of rechargeable and non-rechargeable lithium batteries on airplanes include:

Flight deck and avionics systems such as displays, global positioning systems, cockpit voice recorders, flight data recorders, underwater locator beacons, navigation computers, integrated avionics computers, satellite network and communication systems, communication management units, and remote-monitor electronic line-replaceable units;

Cabin safety, entertainment, and communications equipment, including emergency locator transmitters, life rafts, escape slides, seatbelt air bags, cabin management systems, Ethernet switches, routers and media servers, wireless systems, internet and in-flight entertainment systems, satellite televisions, remotes, and handsets;

Systems in cargo areas including door controls, sensors, video surveillance equipment, and security systems.

Some known potential hazards and failure modes associated with non-rechargeable lithium batteries are:

Internal failures: In general, these batteries are significantly more susceptible to internal failures that can result in self-sustaining increases in temperature and pressure (i.e., thermal runaway) than their nickel-cadmium or lead-acid counterparts. The metallic lithium can ignite, resulting in a self-sustaining fire or explosion.

Fast or imbalanced discharging: Fast discharging or an imbalanced discharge of one cell of a multi-cell battery may create an overheating condition that results in an uncontrollable venting condition, which in turn leads to a thermal event or an explosion.

Flammability: Unlike nickel-cadmium and lead-acid batteries, lithium batteries use higher energy and current in an electrochemical system that can be configured to maximize energy storage of lithium. They also use liquid electrolytes that can be extremely flammable. The electrolyte, as well as the electrodes, can serve as a source of fuel for an external fire if the battery casing is breached.

Special condition no. 1 of these special conditions requires that each individual cell within a non-rechargeable lithium battery be designed to maintain safe temperatures and pressures. Special condition no. 2 addresses these same issues but for the entire battery. Special condition no. 2 requires the battery be designed to prevent propagation of a thermal event, such as self-sustained, uncontrollable increases in temperature or pressure from one cell to adjacent cells.

Special conditions nos. 1 and 2 are intended to ensure that the non-rechargeable lithium battery and its cells are designed to eliminate the potential for uncontrollable failures. However, a certain number of failures will occur due to various factors beyond the control of the battery designer. Therefore, other special conditions are intended to protect the airplane and its occupants if failure occurs.

Special conditions 3, 7, and 8 are self-explanatory.

Special condition no. 4 makes it clear that the flammable fluid fire protection requirements of § 25.863 apply to non-rechargeable lithium battery installations. Section 25.863 is applicable to areas of the airplane that could be exposed to flammable fluid leakage from airplane systems. Non-rechargeable lithium batteries contain an electrolyte that is a flammable fluid.

Special condition no. 5 requires that each non-rechargeable lithium battery installation not damage surrounding structure or adjacent systems, equipment, or electrical wiring from corrosive fluids or gases that may escape in such a way as to cause a major or more severe failure condition.

While special condition no. 5 addresses corrosive fluids and gases, special condition no. 6 addresses heat. Special condition no. 6 requires that each non-rechargeable lithium battery installation have provisions to prevent any hazardous effect on airplane structure or systems caused by the maximum amount of heat the battery installation can generate due to any failure of it or its individual cells. The means of meeting special conditions nos. 5 and 6 may be the same, but the requirements are independent and address different hazards.

These special conditions apply to all non-rechargeable lithium battery installations in lieu of § 25.1353(b)(1) through (4) at Amendment 25-123. Sections 25.1353(b)(1) through (4) at Amendment 25-123 remain in effect for other battery installations.

These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.

These special conditions are applicable to the Dassault Model Falcon 5X airplane. Should Dassault apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, these special conditions would apply to that model as well.

These special conditions are only applicable to design changes applied for after the effective date.

These special conditions are not applicable to changes to previously certified non-rechargeable lithium battery installations where the only change is either cosmetic or to relocate the installation to improve the safety of the airplane and occupants. Previously certified non-rechargeable lithium battery installations, as used in this paragraph, are those installations approved for certification projects applied for on or before the effective date of these special conditions. A cosmetic change is a change in appearance only, and does not change any function or safety characteristic of the battery installation. These special conditions are also not applicable to unchanged, previously certified non-rechargeable lithium battery installations that are affected by a change in a manner that improves the safety of its installation. The FAA determined that these exclusions are in the public interest because the need to meet all of the special conditions might otherwise deter these design changes that improve safety.

This action affects only a certain novel or unusual design feature on one model of airplane. It is not a rule of general applicability.

The authority citation for these special conditions is as follows:

In lieu of § 25.1353(b)(1) through (4) at Amendment 25-123, each non-rechargeable lithium battery installation must:

1. Be designed to maintain safe cell temperatures and pressures under all foreseeable operating conditions to prevent fire and explosion.

2. Be designed to prevent the occurrence of self-sustaining, uncontrollable increases in temperature or pressure.

3. Not emit explosive or toxic gases, either in normal operation or as a result of its failure, that may accumulate in hazardous quantities within the airplane.

4. Meet the requirements of § 25.863.

5. Not damage surrounding structure or adjacent systems, equipment, or electrical wiring from corrosive fluids or gases that may escape in such a way as to cause a major or more severe failure condition.

6. Have provisions to prevent any hazardous effect on airplane structure or systems caused by the maximum amount of heat it can generate due to any failure of it or its individual cells.

7. Have a failure sensing and warning system to alert the flightcrew if its failure affects safe operation of the airplane.

8. Have a means for the flightcrew or maintenance personnel to determine the battery charge state if the battery's function is required for safe operation of the airplane.

On April 22, 2016, the Federal Register published a document designated as Docket No. FAA-2015-4279, Final Special Conditions No. 25-612-SC (81 FR 23573). The document issued special conditions pertaining to the installation of non-rechargeable lithium batteries in Gulfstream GVI airplanes. As published, the document contained an error in a title 14, Code of Federal Regulations (14 CFR) section citation in two locations in the final special conditions document. These citations inadvertently referred to the wrong amendment level for the certification basis of the various Gulfstream GVI airplanes. Therefore, we have corrected these special conditions to include the correct citations and amendment levels that apply to certification bases applicable to airplanes with non-rechargeable lithium-ion battery installations.

In the final special conditions document (FR Doc. 2016-09311 Filed 4-21-16; 8:45 a.m.), published on April 22, 2016 (81 FR 23573), make the following corrections.

1. On page 23574, second column, change the following paragraph:

These special conditions apply to all non-rechargeable lithium battery installations in lieu of § 25.1353(b)(1) through (b)(4) at Amendment 25-113. Sections 25.1353(b)(1) through (b)(4) at Amendment 25-113 remain in effect for other battery installations.

To read:

These special conditions apply to all non-rechargeable lithium battery installations in lieu of §  25.1353(b)(1) through (4) at Amendment 25-123 or §  25.1353(c)(1) through (4) at earlier amendments. Those regulations remain in effect for other battery installations.

2. On page 23577, third column, change the following paragraph:

In lieu of § 25.1353(b)(1) through (b)(4) at Amendment 25-113, each non-rechargeable lithium battery installation must:

To read:

In lieu of §  25.1353(b)(1) through (4) at Amendment 25-123, or §  25.1353(c)(1) through (4) at earlier amendments, each non-rechargeable lithium battery installation must:

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to remove AD 2015-22-53, Amendment 39-18331 (80 FR 74982, December 1, 2015) and add a new AD. AD 2015-22-53 applied to Airbus Helicopters Model AS350B3 helicopters with a dual hydraulic system installed. AD 2015-22-53 required revising the pre-flight and post-flight procedures in the RFM to perform the yaw load compensator check (ACCU TST switch) after rotor shut-down instead of during preflight procedures and to state that the yaw servo hydraulic switch (collective switch) must be in the “ON” (forward) position before taking off.

The NPRM published in the Federal Register on September 8, 2017 (82 FR 42487). The NPRM was prompted by AD No. 2016-0220, dated November 4, 2016, issued by EASA, which is the Technical Agent for the Member States of the European Union, to correct an unsafe condition for Airbus Helicopters Model AS 350 B3 helicopters. EASA advises that further analysis resulted in the recognition that a pilot could forget to activate a switch despite the RFM changes and that altering the bistable push button (push-on, push-off) ACCU TST switch is necessary.

Accordingly, the NPRM proposed to retain the requirements of AD 2015-22-53 and also proposed to require, within 350 hours time-in-service, installing a timer relay for the yaw servo hydraulic switch, installing an additional light on the caution and warning panel, and replacing the bistable ACCU TST button with a monostable button. The proposed requirements were intended to prevent takeoff without hydraulic pressure in the tail rotor (T/R) hydraulic system, loss of T/R flight control, and subsequent loss of control of the helicopter.

After our NPRM was published, we received comments from two commenters.

The National Transportation Safety Board (NTSB) requested that the AD address the need for an alert when there is insufficient pressure in the T/R hydraulic system, which results in increased pedal loads. In support of this request, the NTSB stated that, for at least four events it investigated in which the yaw servo hydraulic switch was likely not returned to its correct position before takeoff, a salient alert could have cued the pilots of insufficient T/R hydraulic pressure.

We partially agree. We agree that an aural and visual alert to the pilot to indicate loss of T/R hydraulic pressure would address this unsafe condition. However, Airbus Helicopters has not developed an alteration that provides such an alert. The FAA has determined the requirements proposed by the NPRM are appropriate to address this unsafe condition at this time. Should an aural and visual alert to the pilot to indicate loss of T/R hydraulic pressure be developed and approved, we might consider additional rulemaking at that time. We did not change the AD based on this comment.

The NTSB also requested that we eliminate the requirement to move the yaw load compensator check (ACCU TST switch) to post-flight procedures instead of preflight procedures. In support of this request, the NTSB stated that performing this check post-flight does not ensure the yaw load compensator will remain functional for the next flight.

We disagree. We determined that requiring this check post-flight with the RFM procedure to have the yaw servo hydraulic switch in the “ON” position before takeoff, along with the alterations to the yaw servo hydraulic switch and replacement of the ACCU TST button, reduces the risk of takeoff with the switch in the incorrect position to an acceptable level. We did not change the AD based on this comment.

Eagle Copters requested we change the AD to address helicopters that have replaced the factory console with a Geneva Aviation P122 or P132 electrical console under Eagle Copters USA, Inc. Supplemental Type Certificate No. SH4747NM. In support of this request, Eagle Copters noted that operators of these helicopters will need to request an Alternative Method of Compliance to comply with the AD, because the Airbus Helicopters service information required for replacing the bistable ACCU TST button does not apply to these helicopters. Eagle Copters proposed adding a requirement to the AD to replace the HYD TEST/ACCU TEST ESN-11 switch on the console from the locking bistable toggle switch to a locking momentary (monostable) toggle switch part number (P/N) MS24658-16F.

We agree. We revised the AD to require helicopters with a P122 or P132 electrical console installed to replace the bistable ACCU TEST switch (which may be marked “HYD TEST”) with monostable toggle switch P/N MS24658-16F.

We have reviewed the relevant information and determined that an unsafe condition exists and is likely to exist or develop on other helicopters of the same type design and that air safety and the public interest require adopting the AD requirements as proposed with the change previously described. This change is consistent with the intent of the proposals in the NPRM and will not increase the economic burden on any operator nor increase the scope of the AD.

We reviewed Airbus Helicopters Service Bulletin (SB) No. AS350-67.00.64, Revision 0, dated February 25, 2015. This service information specifies procedures to install a timer relay and an additional indicator light on the caution and warning panel. This modification provides an “OFF” status indication of the yaw servo hydraulic switch by flashing a newly installed “HYD2” indicator light on the caution and warning panel. Airbus Helicopters identifies performance of this SB as modification 074622. This modification was available when AD 2015-22-53 was issued; however, it was determined unnecessary to address the unsafe condition at that time.

We also reviewed Airbus Helicopters SB No. AS350-67.00.65, Revision 0, dated August 25, 2016. This service information specifies procedures to replace the bistable push button ACCU TST switch with a monostable push button switch. Airbus Helicopters identifies performance of this SB as modification 074719.

This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

We reviewed Airbus Helicopters SB No. AS350-67.00.66, Revision 1, dated October 22, 2015. This service information specifies inserting specific pages of the SB into the rotorcraft flight manual. These pages revise the preflight and post-flight hydraulic checks by moving the T/R yaw load compensator check from preflight to post-flight. These pages also revise terminology within the flight manuals for the different engine configurations.

We estimate that this AD affects 86 helicopters of U.S. Registry. We estimate that operators may incur the following costs in order to comply with this AD. Labor costs are estimated at $85 per work-hour.

Revising an RFM would take about 0.5 work-hour for a cost of $43 per helicopter and $3,698 for the U.S. fleet. Installing a timer relay for the yaw servo hydraulic switch and an indicator light would take about 9 work-hours and parts would cost about $2,224. Replacing the ACCU TST button would take about 1 work-hour and parts would cost about $2,244.

Based on these figures, we estimate a total cost of $5,361 per helicopter and $461,046 for the U.S. fleet.

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority.

We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

We have determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that this AD:

(1) Is not a “significant regulatory action” under Executive Order 12866,

(2) Is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),

(3) Will not affect intrastate aviation in Alaska to the extent that a regulatory, and

(4) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Airbus Model A300 B4-600, B4-600R, and F4-600R series airplanes, and Model A300 C4-605R Variant F airplanes (collectively called Model A300-600 series airplanes). The NPRM published in the Federal Register on June 2, 2017 (82 FR 25552) (“the NPRM”).

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2016-0218, dated November 2, 2016 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Airbus Model A300 B4-600, B4-600R, and F4-600R series airplanes, and Model A300 C4-605R Variant F airplanes (collectively called Model A300-600 series airplanes). The MCAI states:

You may examine the MCAI in the AD docket on the internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2017-0514.

We gave the public the opportunity to participate in developing this AD. The following presents the comments received on the NPRM and the FAA's response. FedEx generally supported the NPRM.

United Parcel Service (UPS) requested that the compliance time specified in paragraph (g) of the NPRM be revised to add an additional grace period. UPS pointed out that there are several new or revised tasks with relatively low compliance time thresholds that would lead to short lead times on accomplishing those tasks after the effective date of the AD. UPS referenced the compliance time required in AD 2013-13-13 as an example of the type of grace period it envisions, which specifies that a compliance time, in flight cycles (FC), that is after the publication date of the applicable service information should be considered as after the effective date of that AD. UPS suggested that where the compliance time in Airbus A300-600 Airworthiness Limitations Section (ALS), Part 2, “Damage Tolerant Airworthiness Limitation Items (DT—ALI),” Revision 01, dated August 7, 2015, specifies “within 2000 FC from Jun 11/15,” the proposed AD should specify that phrase as “within 2000 FC from the effective date of this AD.” UPS anticipated submitting a request for an alternative method of compliance (AMOC) if the additional grace period is not added.

We do not agree with the commenter's request to add an additional grace period. We have reviewed the compliance times specified in the service information and have determined that the compliance times specified and grace periods provided in both the service information and in paragraph (g) of this AD are sufficient to allow compliance. However, under the provisions of paragraph (j)(1) of this AD, we will also consider requests for approval of an extension of the compliance time if sufficient data are submitted to substantiate that the new compliance time would provide an acceptable level of safety. We have not changed the AD in this regard.

FedEx requested that AMOCs for AD 2013-13-13 be applicable to this AD. No further justification was provided.

We agree to allow AMOCs that were previously approved for AD 2013-13-13 as AMOCs for this AD. We have revised paragraph (j)(1) of this AD and added paragraphs (j)(1)(i) and (j)(1)(ii) to this AD to add that provision.

FedEx requested that the cost information be revised to include the costs of additional actions such as AD tracking and planning, changing work cards and the maintenance program, getting local FAA approvals, and aircraft down time. FedEx proposed that the cost for U.S. operators would exceed $500,000.

We agree to revise the cost information. Based on the information provided by FedEx, we have revised the estimated work-hours from 1 work-hour to 90 work-hours. We recognize that revising the maintenance or inspection program to incorporate changes in multiple tasks or a new revision level of a section of an ALS document would take more time than a change in a single task. The cost analysis in AD rulemaking actions, however, typically does not include incidental costs such as the time necessary for planning or time necessitated by other administrative actions. Those incidental costs, which might vary significantly among operators, are almost impossible to calculate.

We reviewed the relevant data, considered the comment received, and determined that air safety and the public interest require adopting this AD with the changes described previously and minor editorial changes. We have determined that these minor changes:

• Are consistent with the intent that was proposed in the NPRM for correcting the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM.

We also determined that these changes will not increase the economic burden on any operator or increase the scope of this AD.

We reviewed the following service information:

• Airbus A300-600 Airworthiness Limitations Section (ALS), Part 2, “Damage Tolerant Airworthiness Limitation Items (DT—ALI),” Revision 01, dated August 7, 2015.

• Airbus A300-600 Airworthiness Limitations Section (ALS), Part 2, “Damage Tolerant Airworthiness Limitation Items (DT—ALI),” Variation 1.1, dated January 25, 2016.

• Airbus A300-600 Airworthiness Limitations Section (ALS), Part 2, “Damage Tolerant Airworthiness Limitation Items (DT—ALI),” Variation 1.2, dated July 22, 2016.

The service information describes airworthiness limitations applicable to the DT ALIs. These documents are distinct because they contain unique tasks. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

We estimate that this AD affects 128 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.

We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

This AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to transport category airplanes to the Director of the System Oversight Division.

We determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that this AD:

1. Is not a “significant regulatory action” under Executive Order 12866;

2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);

3. Will not affect intrastate aviation in Alaska; and

4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:

The Inflation Adjustment Act, as amended by the 2015 Act, required Federal agencies to adjust the civil penalty amounts within their jurisdiction for inflation by July 1, 2016. Subsequent to the 2016 adjustment, Federal agencies were required to make an annual inflation adjustment by January 15 every year thereafter.1 Agencies were required to make the initial 2016 adjustments through an interim final rulemaking published in the Federal Register.2 Under the amended Act, any increase in a civil penalty made under the Act will apply to penalties assessed after the increase takes effect, including penalties whose associated violation predated the increase.3 The inflation adjustments mandated by the Act serve to maintain the deterrent effect of civil penalties and to promote compliance with the law.

On June 26, 2017, NASA published its interim final rule providing for the initial adjustment called for under the Act.4 The public comment period interim final rule closed on August 24, 2016, and the rule became effective on August 25, 2017. On October 20, 2017, NASA adopted this interim rule as final.5 In its final rule, NASA also amended the interim rule to incorporate the required annual adjustments for 2017.

Pursuant to the Act, adjustments to the civil penalties are required to be made by January 15 of each year. The annual adjustments are based on the percent change between the U.S. Department of Labor's Consumer Price Index for All Urban Consumers (“CPI-U”) for the month of October preceding the date of the adjustment, and the CPI-U for October of the prior year (28 U.S.C. 2461 note, section (5)(b)(1)). Based on that formula, the cost-of-living adjustment multiplier for 2018 is 1.02041 percent. Pursuant to the 2015 Act, adjustments are rounded to the nearest dollar.

This final rule makes the required adjustments to civil penalties for 2018. Applying the 2018 multiplier above, the adjustments for each penalty are summarized below.

This rule codifies these civil penalty amounts by amending parts 1264 and 1271 of title 14 of the CFR.

NASA issues this rule under the Federal Civil Penalties Inflation Adjustment Act of 1990,6 as amended by the Debt Collection Improvement Act of 1996,7 and further amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015,8 which requires NASA to adjust the civil penalties within its jurisdiction for inflation according to a statutorily prescribed formula.

Section 553 of title 5 of the United States Code generally requires an agency to publish a rule at least 30 days before its effective date to allow for advance notice and opportunity for public comments.9 After the initial adjustment for 2016, however, the Civil Penalties Inflation Adjustment Act requires agencies to make subsequent annual adjustments for inflation “notwithstanding section 553 of title 5, United States Code.” Moreover, the 2018 adjustments are made according to a statutory formula that does not provide for agency discretion. Accordingly, a delay in effectiveness of the 2018 adjustments is not required.

Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis.10

In accordance with the Paperwork Reduction Act of 1995,11 NASA reviewed this final rule. No collections of information pursuant to the Paperwork Reduction Act are contained in the final rule.

For the reasons stated in the preamble, the National Aeronautics and Space Administration is amending 14 CFR parts 1264 and 1271 as follows:

We are adopting Rule 135d under the Securities Act.1

On July 21, 2010, President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) 2 into law. Title VII of the Dodd-Frank Act (“Title VII”) provides the Securities and Exchange Commission (“SEC” or the “Commission”) and the Commodity Futures Trading Commission (“CFTC”) with the authority to regulate over-the-counter derivatives. Under Title VII, the CFTC regulates “swaps,” the SEC regulates “security-based swaps,” and the CFTC and SEC jointly regulate “mixed swaps.” 3

Title VII amended the Securities Act and the Securities Exchange Act of 1934 (“Exchange Act”) 4 to include “security-based swaps” in the definition of “security.” 5 As a result, “security-based swaps” are subject to the Securities Act and the Exchange Act and the rules and regulations thereunder. Section 5 of the Securities Act requires that any offer or sale of a security must either be registered under the Securities Act or be made pursuant to an exemption from registration.6 As a result, counterparties entering into security-based swap transactions need either to rely on an available exemption from the registration requirements of the Securities Act or register such transactions. Title VII also amended the Securities Act to prohibit offers and sales of security-based swaps to persons who are not “eligible contract participants” (“ECPs”) 7 unless a registration statement is in effect as to the security-based swaps.8

Because security-based swaps are included in the definition of “security,” the publication or distribution of certain communications involving security-based swaps on an unrestricted basis could be viewed as offers of those security-based swaps within the meaning of Section 2(a)(3) of the Securities Act.9 Further, such communications also may be considered offers to non-ECPs, even though such persons are not permitted to purchase the security-based swaps unless, as noted above, a registration statement under the Securities Act is in effect as to such security-based swaps.10 If there are no Securities Act exemptions available with respect to a security-based swap transaction, the required registration of such transactions could negatively affect the security-based swaps market.

On September 8, 2014, the Commission proposed a rule to address the treatment of certain communications involving covered SBS, in particular price quotes relating to covered SBS that are traded or processed on or through a facility either registered as a national securities exchange or as a security-based swap execution facility (“security-based SEF”), or exempt from registration as a security-based SEF pursuant to a rule, regulation, or order of the Commission (“SBS price quotes”).11 Under the proposed rule, the publication or distribution of SBS price quotes would not be deemed to constitute an offer, an offer to sell, or a solicitation of an offer to buy or purchase the security-based swaps that are the subject of such communications or any guarantees of such security-based swaps for purposes of Section 5 of the Securities Act.12 The purpose of the proposed rule was to further the goal of Title VII to bring the trading of security-based swaps onto regulated trading platforms while avoiding unintended consequences arising from the application of the Securities Act to the dissemination of price quotes on such platforms.

The Proposing Release requested comment on all aspects of the proposed rule, including whether the proposed rule should cover other types of communications, such as communications characterized as research that discuss security-based swaps.13 We have reviewed and considered all of the comments that we received relating to the proposed rule. As described in detail below, we are adopting the rule substantially as proposed, with one substantive addition addressing written communications that discuss covered SBS and meet the definition of “research report” in Rule 139(d) under the Securities Act 14 and certain other conditions (“SBS-related research reports”). The final rule provides that a broker, dealer, or security-based swap dealer's publication or distribution of SBS-related research reports will not be deemed to be an offer of the security-based swaps that are the subject of such communication or any guarantees of such security-based swaps for purposes of Section 5 of the Securities Act.

The final rule does not affect the treatment of research reports under existing Securities Act Rules 137, 138 and 139 (the “Research Rules”).15 As a result, communications relating to offerings of securities underlying security-based swaps, including by operation of Section 2(a)(3) of the Securities Act,16 must be analyzed separately under the Research Rules. In that case, any discussion of a security-based swap in a research report would be analyzed under the final rule, while any discussion of securities underlying such security-based swap (which could be in the same research reports discussing the security-based swap) would be analyzed under the Research Rules.

While the provisions of Title VII relating to security-based SEFs have not yet been fully implemented,17 given that market participants currently are publishing and distributing SBS-related research reports, we believe that it is appropriate at this time to adopt the final rule. As one commenter noted,18 if SBS-related research reports are published or distributed on an unrestricted basis, such communications may be viewed as an offer. As a result, they may affect the availability of Securities Act exemptions for transactions in the security-based swaps that may be discussed in the research reports.19 Such communications also may constitute an illegal offer to non-ECPs if there is no effective registration statement under the Securities Act because no Securities Act exemptions are available for offers and sales of security-based swaps to non-ECPs. In addition, potential uncertainty about the availability of Securities Act exemptions for transactions between ECPs may lead some market participants to not engage in security-based swap transactions or withhold or limit the publication or distribution of SBS-related research reports. This in turn could reduce the information available to investors and other market participants in the security-based swaps market, credit markets, and securities markets generally. We believe that the final rule is needed at this time to reduce this uncertainty.

We are not extending the expiration date of the interim final exemptions or adopting one commenter's request for an exemption from the registration and other provisions of the Securities Act for security-based swap transactions between ECPs.20 We do not believe that either course would address the identified concern about the availability of existing Securities Act exemptions for transactions between ECPs. For example, neither course would address the concern that certain communications involving security-based swaps could be considered offers to non-ECPs. As noted above, such offers must be registered under the Securities Act because no exemptions from the registration requirements of the Securities Act are available for offers and sales of security-based swaps to non-ECPs.21 As such, neither course would remove uncertainty about whether certain communications involving security-based swaps would be deemed to be offers to non-ECPs and thereby require registration of the relevant security-based swaps under the Securities Act.

We received four comment letters, each of which supported the proposed rule.22 We discuss and respond to the comments received below.

One commenter argued that the proposed rule should be expanded to cover written communications involving “research” discussing security-based swaps.23 This commenter argued that such written communications are not meaningfully different from other types of securities research produced and distributed by broker-dealers and their affiliates in the ordinary course of business. The commenter noted that such written communications are produced and distributed by broker-dealers' or their affiliates' research departments and are subject to the same policies and procedures as other securities research.24 The commenter also noted that such written communications often are included within other published securities research, such as general credit research, and in such materials credit analysts frequently discuss security-based swaps in the context of more general analyses of credit markets, credit strategies, or credit worthiness of an issuer.25 Further, the commenter noted that such written communications included in other credit research or research reports may be published or distributed by broker-dealers or their affiliates through a variety of channels, which, depending on the particular firm, may include proprietary platforms as well as third-party research aggregators.26 Such written communications included in other credit research or research reports may be made accessible to existing clients, including clients that are not ECPs, and in some cases may be made accessible to the general public.27

Because of the manner in which such written communications are disseminated, the commenter was concerned that the publication or distribution of such communications may be deemed to be an offer of the relevant security-based swaps, including to non-ECPs.28 According to the commenter, there could be no exemption available for such offer because of the possible dissemination to or accessibility by non-ECPs.29 Further, the commenter noted that determining whether an exemption is available for each particular security-based swap transaction as a result of such written communications would be a time-consuming and fact-intensive judgment call.30 The commenter noted that if no Securities Act exemptions are available for a security-based swap transaction because such written communications are viewed as an offer, market participants may withhold or limit the publication or distribution of such written communications.31

The commenter described the possible effects of a limitation on the publication or distribution of such written communications on the security-based swaps market and securities markets generally. According to the commenter, such written communications inform market participants' investment decisions.32 For example, such written communications assist ECPs in determining the pricing of security-based swaps, such as credit default swaps, including with respect to the relative value of a given security-based swap in relation to other securities.33 In addition, the commenter indicated that such written communications also have informational value to securities markets generally, including to non-ECPs.34 Market participants, whether transacting in security-based swaps or not, may find such written communications useful in analyzing underlying issuers or securities because such communications provide views on markets, sectors, and/or issuers.35 For example, credit default swaps can be an indicator of an issuer's creditworthiness.36 Further, the commenter noted that such written communications may be disseminated about swaps based on broad indices of securities or issuers (which are subject to a different regulatory regime).37 A different treatment of communications discussing security-based swaps (i.e., those swaps based on a single security, an issuer or a narrow-based security index) could result in incomplete information being available to the security-based swaps market and securities markets generally.38

As we noted in the Proposing Release,39 we previously adopted interim final rules to provide exemptions under the Securities Act, the Exchange Act, and the Trust Indenture Act of 1939 (“Trust Indenture Act”) 40 for those security-based swaps that prior to the effective date of Title VII were “security-based swap agreements” and are defined as “securities” under the Securities Act and the Exchange Act due solely to the provisions of Title VII (collectively, the “interim final exemptions”).41 We adopted the interim final exemptions because, among other things, we were concerned about disrupting the operation of the security-based swaps market while we evaluated the implications for security-based swaps under the Securities Act and the Exchange Act as a result of the inclusion of the term “security-based swap” in the definition of “security.” The interim final exemptions expire on February 11, 2018.42

The Proposing Release requested comment as to whether the expiration date of the interim final exemptions should be altered, including possibly shortening or further extending the expiration date.43 The Commission did not receive any comments addressing whether we should alter the expiration date of the interim final exemptions, but we did receive one comment that addressed issues relating to the interim final exemptions.44 The commenter requested that we consider adopting an exemption from the registration and other provisions of the Securities Act, other than the anti-fraud provisions of Section 17(a), for security-based swap transactions between ECPs.45 The commenter argued that an exemption from the registration and other provisions of the Securities Act is needed to provide legal certainty as to whether security-based swap transactions effected on security-based SEFs are exempt from the registration requirements of the Securities Act.46 In particular, the commenter argued that certain activities engaged in by the operator of a security-based SEF may create uncertainty as to the availability of exemptions from Section 5 of the Securities Act for such transactions.47

We do not believe that the exemption suggested by the commenter would provide the legal certainty the commenter seeks. The operator of a security-based SEF will facilitate security-based swap transactions by providing the trading platform on or through which other parties will offer and sell security-based swaps to each other. The examples provided by the commenter primarily relate to activities typically conducted by brokers or dealers. Market participants regularly communicate with each other to facilitate and execute transactions, and the examples appear to be no different from the activities typically conducted by brokers or dealers in connection with other private offerings of securities effected on trading platforms. The commenter did not explain why such activities in the context of security-based swap transactions would affect the ability of market participants to rely upon existing Securities Act exemptions. In contrast, the rule we are adopting today addresses a unique feature of security-based swaps regulation—balancing the prohibition on offers and sales to non-ECPs with the need to disseminate information broadly to market participants, which may incidentally include non-ECPs. The final rule addresses the concern that certain communications involving SBS price quotes and SBS-related research reports could be viewed as offers to non-ECPs in violation of Section 5(e) of the Securities Act. The exemption suggested by the commenter would not address the concern that certain communications could be considered offers to non-ECPs or provide greater certainty in the security-based swaps market because it would not address this concern. As such, we believe that the final rule better addresses this concern.

We are not persuaded that there is a need for an exemption from the registration and other provisions of the Securities Act for security-based swap transactions between ECPs. As we finalize our regulation of security-based SEFs, we will remain mindful as to whether the regulation of particular communications presents barriers to the efficient operation of the security-based swaps market that are not necessary to protect investors. Further, we are taking no action as to the interim final exemptions, and our adoption of the final rule in this release will not affect the interim final exemptions. The interim final exemptions expire on February 11, 2018.48

We are adopting Rule 135d under the Securities Act substantially as proposed, with one substantive addition concerning SBS-related research reports. We believe that the final rule is necessary and appropriate so that the publication or distribution of SBS price quotes will not cause unintended consequences for the operation of security-based swap trading platforms following the full implementation of Title VII. We also believe that the final rule is necessary and appropriate so that a broker, dealer, or security-based swap dealer's ability to publish or distribute SBS-related research reports will not be restricted in a manner that would limit the availability of information about security-based swaps to investors and other market participants.

We note that although the final rule provides that the publication or distribution of SBS price quotes and SBS-related research reports will not be deemed to be offers for purposes of Section 5 of the Securities Act, the final rule will not otherwise affect the provisions of any exemptions from the registration requirements of the Securities Act. As a result, market participants will still need to make a determination as to whether an exemption from the registration requirements of the Securities Act is available with respect to a security-based swap transaction, including whether such transaction complies with any applicable conditions of the exemption. We also note that the final rule applies to any communication of SBS price quotes or SBS-related research reports regardless of whether transactions in the relevant security-based swaps are effected bilaterally in the over-the-counter market or on or through security-based swap trading platforms, or are subsequently cleared in transactions involving an eligible clearing agency.49

The final rule allows SBS price quotes to be published or distributed without such dissemination being considered an offer of the relevant security-based swaps or any guarantees thereof for purposes of Section 5 of the Securities Act.50 The scope of dissemination methods covered by the final rule is broad. The final rule applies to the initial publication or distribution of SBS price quotes on security-based swap trading platforms. It also applies to any subsequent republication or redistribution of SBS price quotes on or through mediums other than security-based swap trading platforms, including on-line information services, as it is possible that participants in security-based swap trading platforms that receive the SBS price quotes could further disseminate the SBS price quotes without restriction. We do not believe that the treatment of the SBS price quotes under the final rule should depend on who republishes or redistributes the SBS price quotes or where they are republished or redistributed, so long as only ECPs may purchase the relevant security-based swaps.

The final rule applies to SBS price quotes, which could take a number of forms depending on the type of trading platform model, including indicative quotes, executable quotes, bids and offers, and other pricing information and other types of quote information that may develop in the future. We are not defining the specific type of SBS price quotes with respect to which the final rule will apply because we do not want to limit the types of trading platform models that currently or may in the future exist.51 This approach is intended to allow flexibility in the final rule as organized markets for the trading of security-based swaps continue to develop.

The final rule addresses price quotes relating to security-based swaps that are traded or processed on or through registered or exempt security-based SEFs and national securities exchanges because the Title VII provisions applicable to these entities, as well as existing requirements applicable to national securities exchanges, require them to make their trading platforms available or price quotes on their platforms available to all participants without limitation.

We believe that the final rule with respect to SBS price quotes is necessary and appropriate in the public interest. One of the goals of Title VII is to bring the trading of security-based swaps onto regulated trading platforms, such as security-based SEFs and national securities exchanges, which should help advance the objective of greater transparency for the trading of security-based swaps. We believe that increased transparency in the security-based swaps market could help lower transaction costs associated with market participant risk mitigating strategies and thereby lower the cost of capital and facilitate the capital formation process. If the publication or distribution of SBS price quotes is unrestricted, no Securities Act exemptions may be available with respect to transactions in the relevant security-based swaps because such communications may be viewed as an offer of those security-based swaps, including to non-ECPs. Accordingly, we believe that the final rule is needed so that the publication or distribution of SBS price quotes will not cause unintended consequences for the operation of security-based swap trading platforms by affecting the ability of market participants to rely on available exemptions from the registration requirements of the Securities Act or requiring that such transactions be registered under the Securities Act because they are viewed as offers to non-ECPs.

We also believe that the final rule with respect to SBS price quotes is consistent with the protection of investors. We believe that the final rule strikes an appropriate balance between providing more certainty to market participants while ensuring that the interests of non-ECPs are adequately protected. Security-based swaps that are not registered under the Securities Act are permitted to be sold only to ECPs, and therefore the final rule is limited to the publication or distribution of SBS price quotes that relate to security-based swaps that may be purchased only by ECPs. Treating the publication or distribution of SBS price quotes as not being offers of the relevant security-based swaps will not harm non-ECPs because they will not be able to purchase such security-based swaps. Further, security-based swap transactions entered into solely between ECPs will be subject to the comprehensive regulatory regime of Title VII once it has been fully implemented, including transaction reporting, trade acknowledgment and verification, and business conduct standards.52 In addition, the final rule relates to the treatment of communications involving SBS price quotes as offers for purposes of Section 5 of the Securities Act and will preserve the other protections of the federal securities laws, including the Commission's ability to pursue an antifraud action in the offer and sale of the securities under Section 17(a) of the Securities Act.53

The final rule also will enable security-based swap dealers to publish or distribute SBS price quotes on an unrestricted basis without concern that such publication or distribution could jeopardize the availability of exemptions from the registration requirements of the Securities Act for transactions involving the relevant security-based swaps. Unrestricted access to SBS price quotes will improve market transparency by providing all investors with the same information on the pricing of security-based swap transactions.

Therefore, we believe that the final rule with respect to SBS price quotes is necessary or appropriate in the public interest, and consistent with the protection of investors.

We believe that written communications discussing security-based swaps that fall within the definition of “research report” in Rule 139(d) under the Securities Act should be treated similarly to other research involving securities offered pursuant to exemptions from the registration requirements of the Securities Act and should not be considered to be an offer.54 We previously have noted the value of securities research in providing information to investors and the securities markets generally.55 We believe that failing to exclude such written communications from the definition of “offer” under the Securities Act could have an adverse effect on the information available to investors and other market participants in the security-based swaps market, credit markets and securities markets generally. Further, we believe that written communications discussing security-based swaps and security-based swap agreements should have consistent regulatory treatment.

The Research Rules generally apply in the context of registered offerings. They also apply in the context of two types of unregistered offerings: Rule 144A and Regulation S offerings.56 Under the Research Rules, research reports meeting certain conditions are not considered offers or general solicitation or general advertising in connection with offerings relying on Rule 144A and are not deemed to be directed selling efforts or to be inconsistent with the offshore transaction requirements of Regulation S. The Commission addressed these types of unregistered offerings in the Research Rules because it was concerned that the restrictions in Rule 144A and in Regulation S had resulted in brokers and dealers unnecessarily withholding regularly published securities research.57 Security-based swaps offerings typically are not transacted in registered offerings or in reliance on Rule 144A or Regulation S and, as a result, the Research Rules currently do not cover written communications discussing security-based swaps.

The final rule imposes several conditions on the publication or distribution of such written communications. First, the written communications must discuss covered SBS.58 Second, the broker, dealer, or security-based swap dealer must publish or distribute research reports on the issuer underlying the security-based swap or its securities in the regular course of its business and the publication or distribution of the research report must not represent the initiation of publication of research reports about such issuer or its securities or the reinitiation of such publication following discontinuation of publication of such research reports. Third, the written communications must be a “research report” as defined in Rule 139(d) under the Securities Act.59 The final rule clarifies that the term “issuer” as used in the definition of “research report” is (i) the issuer of a security or loan referenced in the security-based swap, (ii) each issuer or issuer of a security in a narrow-based security index referenced in the security-based swap, or (iii) each issuer referenced in the security-based swap (each, a “Referenced Issuer”). This provision makes clear that the “issuer” referenced in the definition of “research report” for purposes of the final rule is the Referenced Issuer and not the counterparties to the security-based swap.60

The conditions to the final rule are similar to the conditions that apply to research reports covered by Rules 138 and 139 in the context of unregistered offerings transacted in reliance on Rule 144A or Regulation S.61 Rules 138 and 139 include other conditions that apply to communications used in unregistered offerings transacted in reliance on Rule 144A and Regulation S that limit the types of issuers whose securities may be the subject of the securities research that is covered by the Research Rules. However, in the context of security-based swaps, a Referenced Issuer typically is not involved in the offering of the security-based swap.62 As such, we do not believe that it is necessary to limit the types of issuers that may be the subject of SBS-related research reports.

We believe that the final rule with respect to SBS-related research reports is necessary and appropriate in the public interest. As noted above, absent the provisions of the final rule, unrestricted publication or distribution of SBS-related research reports may affect the availability of Securities Act exemptions from registration and may constitute making “offers” to non-ECPs. Accordingly, we believe that the final rule is necessary so that the publication or distribution of SBS-related research reports will not impede the continuous flow of essential information into the security-based swaps market and security markets generally, affect the ability of market participants to rely on available exemptions from the registration requirements of the Securities Act, or require registration of the transactions under the Securities Act because they are viewed as offers to non-ECPs.

We also believe that the final rule is consistent with the protection of investors. The availability of the final rule is conditioned on the satisfaction of certain requirements similar to the Research Rules. These requirements were included in the Research Rules to permit the dissemination of securities research around the time of an offering while avoiding offering abuses.63 We believe that these requirements, which were designed to ensure that appropriate investor protections are maintained, will be similarly effective in avoiding offering abuses in the security-based swaps context. Further, the final rule applies with respect to covered SBS. Excluding the publication or distribution of SBS-related research reports from the definition of “offer” will not harm non-ECPs because they will not be able to purchase the relevant security-based swaps, as discussed above. Finally, the final rule has no effect on other provisions of the federal securities laws, including the application of the registration requirements of the Securities Act to transactions involving securities referenced in security-based swaps as well as the continued application of the antifraud provisions of the federal securities laws to transactions in security-based swaps or the securities referenced in such security-based swaps.

Therefore, we believe that the final rule with respect to SBS-related research reports is necessary or appropriate in the public interest, and consistent with the protection of investors.

If any of the provisions of these rules, or the application thereof to any person or circumstance, is held to be invalid, such invalidity shall not affect other provisions or application of such provisions to other persons or circumstances that can be given effect without the invalid provision or application.

Section 553(d) of the Administrative Procedure Act generally requires an agency to publish an adopted rule in the Federal Register 30 days before it becomes effective.64 This requirement does not apply, however, if the adopted rule is a “substantive rule which grants or recognizes an exemption or relieves a restriction.” 65 We find that the final rule is a substantive rule which relieves a restriction. As explained above, under current law, there is uncertainty as to whether the publication or distribution of SBS price quotes or SBS-related research reports could be viewed as an “offer” of the relevant security-based swaps within the meaning of the Securities Act. If such communications are deemed to be an offer, the relevant security-based swaps consequently would not be able to be offered or sold absent an effective registration statement under the Securities Act. The final rule relieves this restriction and dispels market uncertainty by providing that the publication or distribution of SBS price quotes and SBS-related research reports will not be deemed offers of the relevant security-based swaps for purposes of Section 5 of the Securities Act.

We are sensitive to the economic consequences and effects, including costs and benefits, of our rules. The discussion below addresses the potential economic consequences and effects of the final rule and alternatives, including the costs and benefits, as well as the potential effects on efficiency, competition, and capital formation.66

The final rule does not itself establish the scope or nature of the substantive requirements for security-based swaps following the full implementation of Title VII or their related costs and benefits. The rules implementing the substantive requirements under Title VII will be subject to their own economic analysis. The costs and benefits described below therefore are those that may arise in connection with the final rule.

To assess the economic impact of the final rule, we are using as our baseline the regulation of security-based swaps as it exists at the time of this release, taking into account applicable rules adopted by the Commission, including the interim final exemptions affecting security-based swaps under the Securities Act and the Exchange Act.

As part of the economic analysis in the Business Conduct Standards Adopting Release, we provided an extensive description of the security-based swaps market, including a detailed analysis of the participants in the security-based swaps market and the levels of security-based swaps trading activity.67 The present release addresses a narrower aspect of the security-based swaps market, and we refer market participants to the more comprehensive discussion set forth in the Business Conduct Standards Adopting Release for additional context. In particular, we noted in the Business Conduct Standards Adopting Release that the single-name credit default swaps market—a significant part of the security-based swaps market generally—involves thousands of distinct counterparties but with a heavy concentration of transactions among a relatively small number of dealer entities.68 The notional size of the single-name credit default swaps market is in the trillions of dollars annually, corresponding to hundreds of thousands of individual transactions, and with approximately 80% of transactions between dealers.69 Among the non-dealer market participants, private funds are the largest constituent group, followed by Dodd-Frank Act-defined special entities and investment companies registered under the Investment Company Act of 1940.70 More broadly, the analysis shows that although the dollar volume of transactions in the security-based swaps market is large, there are fewer market participants than for other securities markets.71

As noted above,72 we adopted the interim final exemptions to exempt offers and sales of security-based swap agreements that became security-based swaps on the effective date of Title VII from all provisions of the Securities Act, other than the Section 17(a) anti-fraud provisions, as well as from the Exchange Act registration requirements and from the provisions of the Trust Indenture Act, provided that the transactions are entered into solely between ECPs. Currently, certain market participants may rely on the interim final exemptions to continue to enter into security-based swap transactions as they did prior to the effective date of Title VII without concern they would have to comply with the provisions of the Securities Act.

The interim final exemptions are available, however, only for certain types of transactions involving security-based swaps. The security-based swaps covered by the interim final exemptions are only those that would have been “security-based swap agreements” prior to the effective date of Title VII, which is a narrower category of security-based swaps than under Title VII.73 In addition, the persons who may enter into security-based swaps covered by the interim final exemptions may be different from those entering into “security-based swap agreements” prior to the effective date of Title VII because the definition of “eligible contract participant” under Title VII is narrower than the pre-Title VII definition.74 Any security-based swap transaction that cannot rely on the interim final exemptions would have to rely on another available exemption from the registration requirements of the Securities Act, such as the exemption in Section 4(a)(2),75 or would have to be registered under the Securities Act. However, no Securities Act exemptions are available with respect to security-based swap transactions involving non-ECPs because Title VII amended the Securities Act to require that all offers and sales of security-based swaps to non-ECPs must be registered under the Securities Act.76

The interim final exemptions are self-executing and as such are available without any action by the Commission or its staff. As a result, market participants must make their own determinations as to whether such exemptions are available with respect to a particular security-based swap transaction. Given that such exemptions are self-executing, we do not have any data or other quantifiable information regarding the use of such exemptions, including which market participants are effecting transactions in reliance on such exemptions or the number of transactions effected in reliance on such exemptions.

If we do not take other action, the interim final exemptions will expire on February 11, 2018. Although the analysis below considers the economic consequences and effects of the final rule under the current baseline, which includes the interim final exemptions, we also consider the potential impact of the final rule without the interim final exemptions in our discussion of alternatives.

Under the final rule, certain communications involving security-based swaps are not considered “offers” for purposes of Section 5 of the Securities Act. However, unlike the interim final exemptions, the final rule is not itself an exemption from the registration requirements of the Securities Act. As a result, while the types of communications covered by the final rule are not considered offers, market participants engaging in any security-based swap transaction will have to either satisfy the conditions of existing exemptions under the Securities Act or register such transactions under the Securities Act.

Security-based swaps are transacted through hundreds of thousands of individual transactions annually, but because the available registration exemptions are self-executing, we do not know what fraction of market participants that engage in these transactions currently rely on the interim final exemptions as opposed to other exemptions from registration under the Securities Act.77 For transactions involving security-based swaps that do not satisfy the conditions of the interim final exemptions, the final rule will assist market participants in evaluating how they should analyze certain communications that may affect their transactions. In particular, market participants will be able to assess the availability of exemptions from the registration requirements of the Securities Act without concern that certain communications will affect the availability of such exemptions.

The final rule is self-executing in that the publication or distribution of SBS price quotes or SBS-related research reports is excluded from the definition of “offer” and thereby will not be deemed to be an offer to buy or purchase the security-based swaps that are the subject of the SBS price quotes or SBS-related research reports or any guarantees of such security-based swaps that are securities for purposes of Section 5 of the Securities Act without any action by the Commission or its staff. Because the final rule is self-executing, the only cost of being able to rely on the final rule is to determine its applicability. In addition, the final rule does not create any new filing, reporting, recordkeeping, or disclosure reporting requirements for any market participants.

Excluding the types of communications covered by the final rule from the definition of “offer” will have minimal economic consequences or effects on the ability of market participants to enter into security-based swap transactions compared with the baseline.78 For example, as compared to the baseline, the final rule does not affect the ability of market participants to enter into security-based swap transactions in reliance on available exemptions under the Securities Act, such as the exemption in Section 4(a)(2). While the interim final exemptions have limited conditions,79 which differ from the conditions of the exemption under Section 4(a)(2) (including with respect to the communications that are the subject of the final rule), some security-based swap transactions engaged in after the effective date of Title VII may have been effected in reliance on Section 4(a)(2) rather than in reliance on the interim final exemptions. Further, the protections that currently exist under the interim final exemptions and under Section 4(a)(2) still apply. For example, the interim final exemptions do not limit or otherwise affect the antifraud provisions of the federal securities laws, including Section 17(a) of the Securities Act.

The final rule does not impose new requirements on market participants. Further, because the final rule is available with respect to any security-based swap transaction involving an ECP, we do not believe that the final rule impairs competition between the different types of trading venues and methods that differ in the extent to which they make SBS price quotes available to the public and differ in their level of public SBS price quotes. Moreover, we believe that the final rule furthers the goal of Title VII to bring the trading of security-based swaps onto regulated trading platforms, which should help advance the objective of greater transparency and a more competitive environment for the trading of security-based swaps. As a result, we believe that increased transparency and competitiveness in the security-based swaps market could help lower transaction costs associated with market participant hedging (risk mitigating) strategies and thereby lower the cost of capital and facilitate the capital formation process. We also note that investors and other users of SBS-related research reports may benefit from the additional information provided by security-based swaps research included in research on other securities.

We believe that the costs associated with the final rule are minimal. The final rule does not impose additional costs on market participants to determine ECP status.80 In addition, non-ECPs are not permitted to purchase any security-based swaps that are the subject of the SBS price quotes or SBS-related research reports within the scope of the final rule, and the Securities Act registration requirements continue to apply to security-based swap transactions involving such non-ECPs. As a result of these limitations, the exclusion of the SBS price quotes and SBS-related research reports from being deemed offers should not increase the potential for unlawful sales of security-based swaps to non-ECPs.

We recognize that a consequence of the final rule is that the vast majority of offers and sales of security-based swap transactions that potentially could be implicated by the final rule are unlikely to be registered under the Securities Act (with the consequent unavailability of certain remedies). As a result, and as is the case under the interim final exemptions, there will not be an effective registration statement under the Securities Act covering the offer and sale of such security-based swaps. A registration statement would provide certain information about the market participants, the security-based swap contract terms, and the identification of the particular reference securities, issuers, or loans underlying the security-based swaps. Further, while an investor will be able to pursue an antifraud action in connection with the purchase and sale of the securities in these security-based swap transactions under Section 10(b) of the Exchange Act, an investor will not be able to pursue civil remedies under Section 11 or 12(a)(2) of the Securities Act because the offer and sale of the securities in these security-based swap transactions will not be registered under the Securities Act. In addition, an investor may be limited in its ability to pursue civil remedies under Section 12(a)(1) of the Securities Act because the publication or distribution of quotes for security-based swaps will not be deemed to be an offer for purposes of Section 5 of the Securities Act. However, the Commission could still pursue an antifraud action in the offer and sale of the securities in these security-based swap transactions under Section 17(a) of the Securities Act.

We note that the Business Conduct Standards require, among other things, that certain disclosures be made to certain ECPs.81 Such disclosures include (i) the material risks and characteristics of the security-based swap, and certain clearing rights, (ii) the material incentives or conflicts of interest that a security-based swap dealer or major security-based swap participant may have in connection with the security-based swap, and (iii) the daily mark of the security-based swap.82 While the information to be conveyed in the daily mark is not equivalent to that in a registration statement, we believe it could provide a counterparty with a useful and meaningful reference point against which to assess, among other things, the calculation of variation margin for a security-based swap or portfolio of security-based swaps, and otherwise inform the counterparty's understanding of its financial relationship with the security-based swap dealer or major security-based swap participant.83 Moreover, because under the Business Conduct Standards security-based swap dealers and major security-based swap participants are required to provide the same valuation to all of their counterparties, and because counterparties could interact with multiple security-based swap dealers and major security-based swap participants, counterparties should have greater confidence of equal treatment as they now have the ability to observe when valuations differ among security-based swap dealers and major security-based swap participants.

As noted above, to the extent that a security-based swap transaction does not meet the conditions of the interim final exemptions, the counterparties to such transaction likely are effecting the transaction in reliance on an available exemption from the registration requirements of the Securities Act. The final rule will benefit these counterparties because they will be able to assess the availability of an exemption from the registration requirements of the Securities Act without concern that the publication or distribution of SBS price quotes or SBS-related research reports for the security-based swap that is the subject of the transaction may compromise the availability of an exemption. The final rule also will benefit these counterparties by clarifying that the publication or distribution of SBS price quotes or SBS-related research reports does not constitute an offer of the security-based swaps that are the subject of such SBS price quotes or SBS-related research reports to non-ECPs. As noted above, no exemptions from the registration requirements of the Securities Act are available with respect to offers of security-based swaps to non-ECPs. As a result, without the final rule, these counterparties would be required to incur the costs associated with registration under the Securities Act.

Unlike an equity or debt security, a security-based swap transaction could entail an ongoing financial commitment (i.e., economic exposure) between the dealer (or its affiliate) and the ECP client, whereby a client loss could result in a dealer gain of equal measure. The dealer (or its affiliate) would, at least initially, take the opposite economic exposure as that of the client, who may be entering into the transaction based on information provided by the dealer's research or the research of its affiliate. In such instances, the research may not be considered independent.

While the final rule's treatment of SBS-related research reports could facilitate these types of transactions, which have the potential for a conflict of interest, we note that such communications are permissible today under the interim final exemptions, and that the additional disclosures required by the Business Conduct Standards should make such potential conflicts transparent to ECPs. Further, the Business Conduct Standards require detailed descriptions of any material risks and other characteristics of a security-based swap, which may mitigate any bias introduced in the SBS-related research reports.

It remains possible, however, that some market participants may use the provisions under the final rule to disseminate SBS-related research reports with the intent of making an offer or for solicitation purposes, particularly given the lower cost of disseminating these reports compared to registration statements. The potential for market participants to misuse the final rule in this manner should be mitigated by the fact that the final rule covers only communications made in connection with security-based swaps that may be sold only to ECPs and would not cover other security-based swaps that may be offered or sold to non-ECPs. Further, the final rule incorporates other safeguards similar to those in the Research Rules.84

One alternative to the final rule that we considered was to take no action at this time to address issues arising under the Securities Act for certain communications involving security-based swaps. This alternative would affect all security-based swap transactions, including those currently relying on the interim final exemptions. At this time, all security-based swap transactions either must be registered under the Securities Act or rely on an available exemption from registration. If we take no action with respect to the treatment of communications involving security-based swaps, the publication or distribution of SBS price quotes or SBS-related research reports could be deemed to constitute an offer, an offer to sell, or a solicitation of an offer to buy or purchase security-based swaps. If considered offers, such communications could affect the availability of exemptions from the registration requirements of the Securities Act. If no Securities Act exemptions are available with respect to a security-based swap transaction, such transactions would require registration.

We believe that taking no action could disrupt and impose unnecessary costs on this segment of the security-based swaps market because it would perpetuate uncertainty as to whether certain communications involving SBS price quotes or SBS-related research reports will be deemed offers for purposes of Section 5 of the Securities Act. Without the final rule, the risk that these communications will be deemed offers might lead some market participants either not to engage in these security-based swap transactions, which could impede the market, or to register the offer and sale of the security-based swap transactions, which would likely increase costs for market participants. This risk also may lead some market participants to withhold or limit the publication or distribution of SBS-related research reports, which could reduce the amount and quality of the information available to investors and other market participants in the security-based swaps market, credit markets and securities markets generally.

We believe that the final rule facilitates capital formation and promotes efficiency by lowering the costs of security-based swap transactions relative to what would be required without the final rule. Without the final rule and following the expiration of the interim final exemptions, we believe that the operation of the registration provisions of the Securities Act could have unintended consequences for the operation of security-based swap trading platforms and the ability of market participants to enter into these security-based swap transactions in reliance on available exemptions from the registration requirements of the Securities Act following the full implementation of Title VII. Following the expiration of the interim final exemptions, we anticipate that the final rule will facilitate a more efficient market place for these security-based swap transactions.

Without the final rule, a market participant may choose not to continue to participate in these types of transactions if compliance with the registration requirements of the Securities Act is required. This would likely curtail the use of trading platforms and venues that make use of broad communications methods for the public dissemination of SBS price quotes. As noted above, one of the goals of Title VII is to bring the trading of security-based swaps onto regulated trading platforms. In the absence of applicable Securities Act exemptions for a security-based swap transaction because the dissemination of price quotes for security-based swaps could be viewed as offers of those security-based swaps, the costs of the required registration of such transactions under the Securities Act could limit the incentive for market participants to engage in security-based swap transactions on regulated trading platforms. In response to the lack of an available exemption from registration, some market participants may also seek to restructure their operations to minimize their transactions in, or contact with, the United States in an effort to avoid having to register these transactions under the Securities Act. If market participants were to determine not to engage in security-based swap transactions due to the lack of an available exemption from registration, or to restructure their operations and thus avoid U.S. exposure because of the lack of such an exemption, such actions could affect the number of price quotes for, and the liquidity of, certain types of security-based swaps, which could have a detrimental effect on the ability of U.S. market participants to obtain credit exposure or hedge risk, and could have a more general adverse impact on the liquidity and price discovery of security-based swap transactions. This effect would be inconsistent with the tenet of increased transparency that is central to the legislative intent of Title VII.

If market participants continue to engage in security-based swap transactions without the final rule and register these transactions under the Securities Act, they would incur increased compliance costs associated with such registration. Additionally, there is unlikely to be a commensurate benefit to registration given that the investors typically in greater need of the investor protections provided by registration are likely not ECPs, and those investors are not eligible to purchase any security-based swaps that are the subject of the communications within the scope of the final rule.

While the use of a shelf registration statement may be available to some participants and would lessen the costs of registration compared to the costs for participants who were not able to use a shelf registration statement, there would be costs whether or not a shelf registration statement is available.85 Given the eligibility criteria for using a shelf registration statement, the use of a shelf registration statement is likely to be available to a majority of market participants. However, to the extent that there is a decrease in the dissemination of certain communications related to security-based swaps in the absence of the final rule, such a decline may be concentrated among market participants who cannot lower their costs by using a shelf registration statement.

Another alternative to the final rule would be to deem only SBS price quotes as not constituting offers for purposes of Section 5 of the Securities Act. To the extent SBS-related research reports are deemed to be offers for purposes of Section 5, dealers or their affiliates may not include information about security-based swaps in research reports, which may otherwise be useful to some investors. However, inclusion of this information may create conflicts of interest problems unique to the security-based swaps market, as discussed above.

The final rule does not impose any new “collections of information” within the meaning of the Paperwork Reduction Act of 1995 (“PRA”),86 nor does it create any new filing, reporting, recordkeeping, or disclosure reporting requirements. Accordingly, we are not submitting the final rule to the Office of Management and Budget for review in accordance with the PRA.87

Under Section 605(b) of the Regulatory Flexibility Act,88 we certified that proposed Rule 135d under the Securities Act would not have a significant economic impact on a substantial number of small entities. This certification, including our basis for the certification, was included in Part VII of the Proposing Release. We solicited comments on the potential impact of the proposed rule on small entities but received none. We are adopting this rule as proposed with one substantive addition concerning SBS-related research reports. We do not believe that this substantive addition alters the basis upon which the certification in the Proposing Release was made. Accordingly, we certify that Rule 135d under the Securities Act will not have a significant economic impact on a substantial number of small entities.

The rule described in this release is being adopted under the authority set forth in Sections 5, 19, and 28 of the Securities Act.

For the reasons set out above, we are amending title 17, chapter II of the Code of Federal Regulations as follows:

I. Background

FDA is announcing the availability of a guidance entitled “Unique Device Identification: Policy Regarding Compliance Dates for Class I and Unclassified Devices; Immediately in Effect Guidance for Industry and Food and Drug Administration Staff.” In the September 24, 2013, Federal Register (78 FR 58786), FDA published a final rule establishing a unique device identification system designed to adequately identify medical devices during their distribution and use (the UDI Rule). Under § 801.20 (21 CFR 801.20) a device is required to bear a unique device identifier (UDI) on its label and packages unless an exception or alternative applies. Special labeling requirements apply to stand-alone software regulated as a device (§ 801.50 (21 CFR 801.50)). Under § 830.300 (21 CFR 830.300) data pertaining to the key characteristics of each device required to bear a UDI must be submitted to the GUDID. Devices that must bear UDIs on their labels and that are intended to be used more than once and reprocessed between uses must be directly marked with a UDI (§ 801.45 (21 CFR 801.45)). In addition, § 801.18 (21 CFR 801.18) requires certain dates on device labels to be in a standard format.

UDI requirements are being phased in over 7 years according to a schedule of compliance dates established in the UDI Rule ranging from September 24, 2014, to September 24, 2020. The compliance dates established for class I and unclassified devices—other than implantable, life-supporting, or life-sustaining (I/LS/LS) devices—are September 24, 2018, for labeling, GUDID submission, and standard date format requirements, and September 24, 2020, for direct mark requirements.

FDA does not intend to enforce standard date formatting, UDI labeling, and GUDID data submission requirements under §§ 801.18, 801.20, 801.50, and 830.300 for class I and unclassified devices, other than I/LS/LS devices, before September 24, 2020. FDA also does not intend to enforce direct mark requirements under § 801.45 for these devices before September 24, 2022. This policy does not apply to class I devices that FDA has by regulation exempted from the good manufacturing practice requirements because such devices are excepted from UDI requirements (see § 801.30(a)(2) (21 CFR 801.30(a)(2))).

In addition, finished class I and unclassified devices, other than I/LS/LS devices, manufactured and labeled prior to September 24, 2018, are excepted from UDI labeling requirements under §§ 801.20 and 801.50, as well as from GUDID data submission requirements for a period of 3 years after the established compliance date or until September 24, 2021. (See §§ 801.30(a)(1) and 830.300(a).) We also do not intend to enforce standard date format requirements under § 801.18 during that same 3-year period for finished class I and unclassified devices, other than I/LS/LS devices, manufactured and labeled before September 24, 2018.

Pursuant to § 801.30(a)(1), finished class I and unclassified devices, other than I/LS/LS devices, manufactured and labeled prior to September 24, 2018, would also be excepted from direct marking requirements until September 24, 2021. However, with the exception of I/LS/LS devices, we do not intend to enforce direct mark requirements before September 24, 2022, for class I and unclassified devices (including those manufactured and labeled prior to September 24, 2018). We believe this policy regarding direct mark compliance dates is appropriate because it is not in the best interest of the public health for labelers of class I and unclassified devices to prioritize remediating devices in inventory to meet direct mark requirements prior to addressing direct marking, and its impact on the safety and effectiveness, for devices manufactured following labelers' full implementation of UDI.

Fully realizing the benefits of the unique device identification system depends on UDI being integrated into data sources throughout our health care system, including in the supply chain, electronic health records, and registries. This requires UDI data to be of a high quality such that all stakeholders in the health care community have sufficient confidence in the accuracy and completeness of that data.

To fully reap the public health benefits and a return on investment of the unique device identification system, the Agency intends to focus its resources on addressing existing implementation challenges and optimizing the quality and utility of UDI data for higher-risk devices before focusing on UDI implementation issues for lower-risk devices. Undertaking this endeavor now will help ensure the transition from development of the unique device identification system to widespread use and sustainability.

This guidance is being implemented without prior public comment because the Agency has determined that prior public participation is not feasible or appropriate (§ 10.115(g)(2) (21 CFR 10.115(g)(2))). FDA has determined that this guidance document presents a less burdensome policy that is consistent with public health. Although this guidance is immediately in effect, FDA will consider all comments received and revise the guidance document as appropriate.

This guidance is being issued consistent with FDA's good guidance practices regulation (§ 10.115). The guidance represents the current thinking of FDA on “Unique Device Identification: Policy Regarding Compliance Dates for Class I and Unclassified Devices; Immediately in Effect Guidance for Industry and Food and Drug Administration Staff.” It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations. This guidance is not subject to Executive Order 12866.

Persons interested in obtaining a copy of the guidance may do so by downloading an electronic copy from the internet. A search capability for all Center for Devices and Radiological Health guidance documents is available at https://www.fda.gov/MedicalDevices/DeviceRegulationandGuidance/GuidanceDocuments/default.htm. A search capability for all Center for Biologics Evaluation and Research guidance documents is available at https://www.fda.gov/BiologicsBloodVaccines/GuidanceComplianceRegulatoryInformation/default.htm. This guidance document is also available at https://www.regulations.gov. Persons unable to download an electronic copy of “Unique Device Identification: Policy Regarding Compliance Dates for Class I and Unclassified Devices; Immediately in Effect Guidance for Industry and Food and Drug Administration Staff” may send an email request to [email protected] to receive an electronic copy of the document. Please use the document number 17029 to identify the guidance you are requesting.

This guidance refers to previously approved collections of information found in FDA regulations. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The collections of information in 21 CFR part 801 have been approved under OMB control number 0910-0485 and the collections of information in 21 CFR part 830 have been approved under OMB control number 0910-0720.

I. Background

On November 2, 2015, the President signed into law the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Sec. 701 of Pub. L. 114-74). Beginning in 2017, the Act requires agencies to make annual inflationary adjustments to their civil monetary penalties by January 15th of each year, in accordance with annual OMB guidance.

On December 15, 2017, OMB issued guidance to agencies to calculate the annual adjustment. See M-18-03 Memorandum for the Heads of Executive Departments and Agencies, from Mick Mulvaney, Director, Subject: Implementation of Penalty Inflation Adjustments for 2018, Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (December 15, 2017). According to OMB, the cost-of-living adjustment multiplier for 2018, based on the Consumer Price Index (CPI-U) for the month of October 2017, not seasonally adjusted, is 1.02041.

Pursuant to this guidance, the Commission has calculated the annual adjustment level of the civil monetary penalty contained in 25 CFR 575.4 (“The Chairman may assess a civil fine, not to exceed $50,276 per violation, against a tribe, management contractor, or individual operating Indian gaming for each notice of violation . . .”). The 2018 adjusted level of the civil monetary penalty is $51,302 ($50,276 × 1.02041).

This final rule is not a significant rule under Executive Order 12866.

(1) This rule will not have an effect of $100 million or more on the economy or will not adversely affect, in a material way, the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities.

(2) This rule will not create a serious inconsistency or otherwise interfere with an action taken or planned by another agency.

(3) This rule does not involve entitlements, grants, user fees, or loan programs or the rights or obligations of recipients.

(4) This regulatory change does not raise novel legal or policy issues.

The Commission certifies that this rule will not have a significant economic effect on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) because the rule makes annual adjustments for inflation.

This final rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. It will not result in the expenditure by state, local, or tribal governments, in the aggregate, or by the private sector of $100 million or more in any one year. The rule will not result in a major increase in costs or prices for consumers, individual industries, federal, state, or local government agencies, or geographic regions. Nor will this rule have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of the U.S.-based enterprises to compete with foreign-based enterprises.

This final rule does not impose an unfunded mandate of more than $100 million per year on state, local, or tribal governments or the private sector. The rule also does not have a significant or unique effect on state, local, or tribal governments or the private sector. Therefore, a statement containing the information required by the Unfunded Mandates Reform Act (2 U.S.C. 1531 et seq.) is not required.

Under the criteria in Executive Order 12630, this final rule does not affect individual property rights protected by the Fifth Amendment nor does it involve a compensable “taking.” Thus, a takings implication assessment is not required.

Under the criteria in Executive Order 13132, this final rule has no substantial direct effect on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.

This final rule complies with the requirements of Executive Order 12988. Specifically, this rule has been reviewed to eliminate errors and ambiguity and written to minimize litigation. It is written in clear language and contains clear legal standards.

In accordance with the President's memorandum of April 29, 1994, Government-to-Government Relations with Native American Tribal Governments, Executive Order 13175 (59 FR 22951, November 6, 2000), the Commission has determined that consultations with Indian gaming tribes is not practicable, as Congress has mandated that annual civil penalty adjustments in the Act be implemented no later than January 15th of each year.

This final rule does not affect any information collections under the Paperwork Reduction Act.

This final rule does not constitute a major federal action significantly affecting the quality of the human environment.

In developing this final rule, the Commission did not conduct or use a study, experiment, or survey requiring peer review under the Information Quality Act (Pub. L. 106-554).

This final rule is not a significant energy action under the definition in Executive Order 13211. A Statement of Energy Effects is not required.

The Commission is 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 that the Commission publishes 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.

In accordance with the Act, agencies are to annually adjust civil monetary penalties without providing an opportunity for notice and comment, and without a delay in its effective date. Therefore, the Commission is not required to complete a notice and comment process prior to promulgation.

For the reasons set forth in the preamble, the Commission amends 25 CFR part 575 as follows:

On October 24, 2017, we published a notice of proposed rulemaking (NPRM) entitled Drawbridge Operation Regulation; Isthmus Slough, Coos Bay, OR, in the Federal Register (82 FR 49153). We received no comments on this rule. ODOT owns and operates the double bascule Isthmus Slough Bridge, across Isthmus Slough, mile 1.0, at Coos Bay, OR. The operating regulation has been temporarily modified to accommodate ODOT's painting, preservation, and upgrading of the bridge electrical systems. Isthmus Slough provides no alternate routes to pass around the Isthmus Slough Bridge. To facilitate this event, ODOT will operate the double bascule bridge in single leaf mode (half of the span), and reduce the vertical clearance of the non-functioning leaf. Up to ten feet of containment will be installed under the non-functioning leaf only, and will reduce the vertical clearance to 18 feet. Vessels that do not require an opening may transit under the bridge at any time. We approved a temporary deviation on August 4, 2017 (82 FR 36332), with the same change in bridge operations as this rule change. We have not received any reports of problems or complaints with the subject bridge operating under the temporary deviation.

The Coast Guard is issuing this rule under authority 33 U.S.C. 499. Isthmus Slough Bridge, across Isthmus Slough, mile 1.0, at Coos Bay, OR, is a double bascule drawbridge, and provides a vertical clearance of 28 feet in the closed-to-navigation position referenced to the vertical clearance above mean high water tide level. ODOT cannot complete scheduled maintenance and equipment upgrades unless the operating schedule for the subject bridge is changed.

We approved a temporary deviation for this event, but later learned 180 days will not be enough time to complete the work. This temporary rule change to 33 CFR 117.879 will allow ODOT time to complete their scheduled maintenance and equipment upgrades. This temporary rule suspends the current paragraph regarding the Isthmus Slough Bridge, and adds a temporary new paragraph which amends the operating schedule of the Isthmus Slough Bridge by authorizing one half of the draw to open on signal, and reduces the horizontal clearance and vertical clearance of the bridge. The temporary rule is necessary to accommodate painting, preservation, and upgrading of its electrical systems. One half of the double bascule bridge will have a containment system installed on the non-functioning half of the span, and therefore reduces the vertical clearance by ten feet to 18 feet. The horizontal clearance with a full opening is 140 feet. In single leaf operation, the horizontal clearance is reduced to approximately 70 feet.

We published a NPRM in October 2017 with a 30 day comment period, and did not receive any comments. We approved this temporary rule change to 33 CFR 117.879 to be in effect from 6 a.m. on February 26, 2018, through 6 p.m. on July 31, 2019. This temporary rule authorizes ODOT to operate the Isthmus Slough Bridge one half of the draw on signal if at least 24 hours notice is given to the bridge operator, and reduce the horizontal clearance and vertical clearance of the bridge.

We developed this rule after considering numerous statutes and Executive Orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive Orders, and we discuss First Amendment rights of protesters.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13771 directs agencies to control regulatory costs through a budgeting process. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, it has not been reviewed by the Office of Management and Budget (OMB) and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771. This regulatory action determination is based on the ability for mariners to transit under the bridge because the Isthmus Slough Bridge can open half the draw allowing for the reasonable needs of navigation.

The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, as amended, requires federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard received no comments from the Small Business Administration on this rule. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. While some owners or operators of vessels intending to transit the bridge may be small entities, for the reasons stated in section VI.A above, this rule would not have a significant economic impact on any vessel owner or operator.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction, and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT, above.

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

This rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.

Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. We received no (0) comments in the NPRM for this section.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble. We received no (0) comments in the NPRM for this section.

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have made a determination that this action is one of a category of actions which do not individually or cumulatively have a significant effect on the human environment. This rule simply promulgates the operating regulations or procedures for drawbridges. This action is categorically excluded from further review, under figure 2-1, paragraph (32) (e), of the Instruction. A Record of Environmental Consideration and a Memorandum for the Record are not required for this rule.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the “For Further Information Contact” section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places or vessels.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 117 as follows:

A CMP is defined in the Inflation Adjustment Act (28 U.S.C. 2461 note) as any penalty, fine, or other sanction that is (1) for a specific monetary amount as provided by Federal law, or has a maximum amount provided for by Federal law; (2) assessed or enforced by an agency pursuant to Federal law; and (3) assessed or enforced pursuant to an administrative proceeding or a civil action in the Federal courts.

The Inflation Adjustment Act provides for the regular evaluation of CMPs to ensure that they continue to maintain their deterrent value. The Inflation Adjustment Act required that each agency issue regulations to adjust its CMPs beginning in 1996 and at least every four years thereafter. The Department published its most recent cost adjustment to its CMPs in the Federal Register on April 20, 2017 (82 FR 18559), and those adjustments became effective on the date of publication.

The 2015 Act (section 701 of Pub. Law 114-74) amended the Inflation Adjustment Act to improve the effectiveness of CMPs and to maintain their deterrent effect.

The 2015 Act requires agencies to: (1) Adjust the level of CMPs with an initial “catch-up” adjustment through an interim final rule (IFR); and (2) make subsequent annual adjustments for inflation. Catch-up adjustments are based on the percentage change between the Consumer Price Index for all Urban Consumers (CPI-U) for the month of October in the year the penalty was last adjusted by a statute other than the Inflation Adjustment Act, and the October 2015 CPI-U. Annual inflation adjustments are based on the percentage change between the October CPI-U preceding the date of each statutory adjustment, and the prior year's October CPI-U.1 The Department published an IFR with the initial “catch-up” penalty adjustment amounts on August 1, 2016 (81 FR 50321).

In these final regulations, based on the CPI-U for the month of October 2017, not seasonally adjusted, we are annually adjusting each CMP amount by a multiplier for 2018 of 1.02041, as directed by the Office of Management and Budget (OMB) Memorandum No. M-18-03 issued on December 15, 2017.

The following analysis calculates new CMPs for penalty statutes in the order in which they appear in 34 CFR 36.2. The penalty amounts are being adjusted up based on the multiplier of 1.02041 provided in OMB Memorandum No. M-18-03.

Statute: 20 U.S.C. 1015(c)(5).

Current Regulations: The CMP for 20 U.S.C. 1015(c)(5) (Section 131(c)(5) of the Higher Education Act of 1965, as amended (HEA)), as last set out in statute in 1998 (Pub. Law 105-244, title I, § 101(a), October 7, 1998, 112 Stat. 1602), is a fine of up to $25,000 for failure by an institution of higher education (IHE) to provide information on the cost of higher education to the Commissioner of Education Statistics. In the 2017 final rule, we increased this amount to $36,849.

New Regulations: The new penalty for this section is $37,601.

Reason: Using the multiplier of 1.02041 from OMB Memorandum No. M-18-03, the new penalty is calculated as follows: $36,849 × 1.02041 = $37,601.09, which makes the adjusted penalty $37,601, when rounded to the nearest dollar.

Statute: 20 U.S.C. 1022d(a)(3).

Current Regulations: The CMP for 20 U.S.C. 1022d(a)(3) (Section 205(a)(3) of the HEA), as last set out in statute in 2008 (Pub. Law 110-315, title II, § 201(2), August 14, 2008, 122 Stat. 3147), provides for a fine of up to $27,500 for failure by an IHE to provide information to the State and the public regarding its teacher-preparation programs. In the 2017 final rule, we increased this amount to $30,694.

New Regulations: The new penalty for this section is $31,320.

Reason: Using the multiplier of 1.02041 from OMB Memorandum No. M-18-03, the new penalty is calculated as follows: $30,694 × 1.02041 = $31,320.46, which makes the adjusted penalty $31,320, when rounded to the nearest dollar.

Statute: 20 U.S.C. 1082(g).

Current Regulations: The CMP for 20 U.S.C. 1082(g) (Section 432(g) of the HEA), as last set out in statute in 1986 (Pub. Law 99-498, title IV, § 402(a), October 17, 1986, 100 Stat. 1401), provides for a fine of up to $25,000 for violations by lenders and guaranty agencies of Title IV of the HEA, which authorizes the Federal Family Education Loan Program. In the 2017 final rule, we increased this amount to $54,789.

New Regulations: The new penalty for this section is $55,907.

Reason: Using the multiplier of 1.02041 from OMB Memorandum No. M-18-03, the new penalty is calculated as follows: $54,789 × 1.02041 = $55,907.24, which makes the adjusted penalty $55,907, when rounded to the nearest dollar.

Statute: 20 U.S.C. 1094(c)(3)(B).

Current Regulations: The CMP for 20 U.S.C. 1094(c)(3)(B) (Section 487(c)(3)(B) of the HEA), as set out in statute in 1986 (Pub. Law 99-498, title IV, § 407(a), October 17, 1986, 100 Stat. 1488), provides for a fine of up to $25,000 for an IHE's violation of Title IV of the HEA or its implementing regulations. Title IV authorizes various programs of student financial assistance. In the 2017 final rule, we increased this amount to $54,789.

New Regulations: The new penalty for this section is $55,907.

Reason: Using the multiplier of 1.02041 from OMB Memorandum No. M-18-03, the new penalty is calculated as follows: $54,789 × 1.02041 = $55,907.24, which makes the adjusted penalty $55,907, when rounded to the nearest dollar.

Statute: 20 U.S.C. 1228c(c)(2)(E).

Current Regulations: The CMP for 20 U.S.C. 1228c(c)(2)(E) (Section 429 of the General Education Provisions Act), as set out in statute in 1994 (Pub. Law 103-382, title II, § 238, October 20, 1994, 108 Stat. 3918), provides for a fine of up to $1,000 for an educational organization's failure to disclose certain information to minor students and their parents. In the 2017 final rule, we increased this amount to $1,617.

New Regulations: The new penalty for this section is $1,650.

Reason: Using the multiplier of 1.02041 from OMB Memorandum No. M-18-03, the new penalty is calculated as follows: $1,617 × 1.02041 = $1,650.00, which makes the adjusted penalty $1,650, when rounded to the nearest dollar.

Statute: 31 U.S.C. 1352(c)(1) and (c)(2)(A).

Current Regulations: The CMPs for 31 U.S.C. 1352(c)(1) and (c)(2)(A), as set out in statute in 1989, provide for a fine of $10,000 to $100,000 for recipients of Government grants, contracts, etc. that improperly lobby Congress or the Executive Branch with respect to the award of Government grants and contracts. In the 2017 final rule, we increased these amounts to $19,246 to $192,459.

New Regulations: The new penalties for these sections are $19,639 to $196,387.

Reason: Using the multiplier of 1.02041 from OMB Memorandum No. M-18-03, the new minimum penalty is calculated as follows: $19,246 × 1.02041 = $19,638.81, which makes the adjusted penalty $19,639, when rounded to the nearest dollar. The new maximum penalty is calculated as follows: $192,459 × 1.02041 = $196,387.09, which makes the adjusted penalty $196,387, when rounded to the nearest dollar.

Statute: 31 U.S.C. 3802(a)(1) and (a)(2).

Current Regulations: The CMPs for 31 U.S.C. 3802(a)(1) and (a)(2), as set out in statute in 1986 (Pub. Law 99-509, title VI, § 6103(a), Oct. 21, 1986, 100 Stat. 1937), provide for a fine of up to $5,000 for false claims and statements made to the Government. In the 2017 final rule, we increased this amount to $10,957.

New Regulations: The new penalty for this section is $11,181.

Reason: Using the multiplier of 1.02041 from OMB Memorandum No. M-18-03, the new penalty is calculated as follows: $10,957 × 1.02041 = $11,180.63, which makes the adjusted penalty $11,181, when rounded to the nearest dollar.

Under Executive Order 12866, the Secretary must determine whether this regulatory action is “significant” and, therefore, subject to the requirements of the Executive order and subject to review by OMB. Section 3(f) of Executive Order 12866 defines a significant regulatory action as an action likely to result in a rule that may—

(1) Have an annual effect on the economy of $100 million or more, or adversely affect a sector of the economy; productivity; competition; jobs; the environment; public health or safety; or State, local, or Tribal governments or communities in a material way (also referred to as “economically significant” regulations);

(2) Create serious inconsistency or otherwise interfere with an action taken or planned by another agency;

(3) Materially alter the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or

(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles stated in the Executive order.

We have determined that these final regulations: (1) Exclusively implement the annual adjustment; (2) are consistent with OMB Memorandum No. M-18-03; and (3) have an annual impact of less than $100 million. Therefore, based on OMB Memorandum No. M-18-03, this is not a significant regulatory action subject to review by OMB under section 3(f) of Executive Order 12866.

We have also reviewed these regulations under Executive Order 13563, which supplements and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866. To the extent permitted by law, Executive Order 13563 requires that an agency—

(1) Propose or adopt regulations only upon a reasoned determination that their benefits justify their costs (recognizing that some benefits and costs are difficult to quantify);

(2) Tailor its regulations to impose the least burden on society, consistent with obtaining regulatory objectives and taking into account, among other things, and to the extent practicable, the costs of cumulative regulations;

(3) In choosing among alternative regulatory approaches, select those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity);

(4) To the extent feasible, specify performance objectives, rather than the behavior or manner of compliance a regulated entity must adopt; and

(5) Identify and assess available alternatives to direct regulation, including economic incentives—such as user fees or marketable permits—to encourage the desired behavior, or providing information that enables the public to make choices.

Executive Order 13563 also requires an agency “to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible.” The Office of Information and Regulatory Affairs of OMB has emphasized that these techniques may include “identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes.”

We are issuing these final regulations as required by statute and in accordance with OMB Memorandum No. M-18-03. The Secretary has no discretion to consider alternative approaches as delineated in the Executive order. Based on this analysis and the reasons stated in the preamble, the Department believes that these final regulations are consistent with the principles in Executive Order 13563.

Under Executive Order 13771, if the Department proposes for notice and comment or otherwise promulgates a new regulation that is a significant regulatory action under Executive Order 12866 and that imposes total costs greater than zero, it must identify two existing regulations for elimination. For fiscal year 2018, any new incremental costs associated with the new regulation must be fully offset by the elimination of existing costs through the repeal of at least two regulations. These final regulations are not a significant regulatory action. Therefore, the requirements of Executive Order 13771 do not apply.

Under the Administrative Procedure Act (APA) (5 U.S.C. 553), the Department generally offers interested parties the opportunity to comment on proposed regulations. However, section 4(b)(2) of the 2015 Act (28 U.S.C. 2461 note) provides that the Secretary can adjust these 2018 penalty amounts notwithstanding section 553 of title 5, United States Code. Therefore, the requirements of 5 U.S.C. 553 for notice and comment and delaying the effective date of a final rule do not apply here.

The Secretary certifies that these regulations will not have a significant economic impact on a substantial number of small entities. The formula for the amount of the inflation adjustments is prescribed by statute and is not subject to the Secretary's discretion. These CMPs are infrequently imposed by the Secretary, and the regulations do not involve any special considerations that might affect the imposition of CMPs on small entities.

These regulations do not contain any information collection requirements.

This program is not subject to Executive Order 12372 and the regulations in 34 CFR part 79.

Based on our own review, we have determined that these regulations do not require transmission of information that any other agency or authority of the United States gathers or makes available.

Electronic Access to This Document: The official version of this document is the document published in the Federal Register. Free internet access to the official edition of the Federal Register and the Code of Federal Regulations is available via the Federal Digital System at: www.thefederalregister.org/fdsys. At this site you can view this document, as well as all other documents of this Department published in the Federal Register, in text or Portable Document Format (PDF). To use PDF you must have Adobe Acrobat Reader, which is available free at the site.

You may also access documents of the Department published in the Federal Register by using the article search feature at: www.federalregister.gov. Specifically, through the advanced search feature at this site, you can limit your search to documents published by the Department.

For the reasons discussed in the preamble, the Secretary amends parts 36 and 668 of title 34 of the Code of Federal Regulations as follows:

In the National Park Service (NPS) Organic Act (54 U.S.C. 100101), Congress granted the NPS broad authority to regulate the use of areas under its jurisdiction. The Organic Act authorizes the Secretary of the Interior, acting through the NPS, to “prescribe such regulations as the Secretary considers necessary or proper for the use and management of [National Park] System units.” 54 U.S.C. 100751(a).

Consisting of over 400 units in 50 states, the District of Columbia and multiple territories, the National Park System covers more than 84 million acres. These units are located in a wide range of environments as diverse as the United States itself. The size of these units also varies tremendously, ranging from Wrangell-St. Elias National Park and National Preserve, Alaska, at 13.2 million acres, to Thaddeus Kosciuszko National Memorial, Pennsylvania, at 0.02 acres.

About one-third of the units—such as Great Smoky Mountains National Park, Tennessee; Grand Canyon National Park, Arizona; Everglades National Park, Florida; and Hawaii Volcanoes National Parks, Hawaii—preserve nature's many and varied gifts to the nation. The other two-thirds of the units recognize benchmarks of human history in America. These units protect elements of great native cultures, far older than European exploration and settlement; preserve battle sites from the Revolutionary and Civil Wars—including the key surrender fields of both great conflicts; embrace Thomas Edison's New Jersey laboratories where he and his staff led a technological revolution more dramatic even than the coming of the computer age; and more. These historical park units reflect the development of both art and industry in America, along with landmarks of social and political change.

As a broader understanding of history took hold, the National Park System eventually grew to include the historic homes of civil rights, political, and corporate leaders, and the lands of the poor, struggling to build lives for themselves on a Nebraska homestead claim or in an urban community. The National Park System now embraces the birthplace, church, and grave of Dr. Martin Luther King at Martin Luther King, Jr. National Historical Site, Georgia; the birth of jazz at New Orleans Jazz National Historical Park, Louisiana; the flowering of a literary giant at the Eugene O'Neill National Historical Site, California; and the artistic grace of a great sculptor's studios at Saint-Gaudens National Historical Site, New Hampshire. Because of the lessons they help us remember, the National Park System also includes the Japanese American World War II internment camp in the desert at Manzanar National Historical Site, California, as well as Andersonville National Historical Site, Georgia, one of the very bleakest of the Civil War prison sites.

The National Park System is habitat for 247 threatened or endangered species, has more than 167 million items in museum collections, has 75,000 archaeological sites, and 27,000 historic and prehistoric structures. The National Park System also has an extensive physical infrastructure, which includes thousands of buildings, tens of thousands of miles of trails and roads, and almost 30,000 housing units, campgrounds, and picnic areas as well as 3,000 water and waste water treatment systems.

Over 325 million visitors visited the National Park System in 2016, where visitors find not only visual, educational, and recreational experiences but also inspirational, contemplative, and spiritual experiences. For Native Americans, certain national parks are also considered sacred religious sites, where the NPS asks visitors to respect these long-held beliefs, such as by voluntarily not walking under a natural bridge.

First Amendment activities in units of the National Park System are governed by longstanding but ever-evolving First Amendment jurisprudence; by the statutes and regulations governing the National Park System as a whole; and by park-specific statutes and regulations.

Title 36 CFR 2.52 currently allows the sale or distribution only of printed matter and only in areas of a park designated by the superintendent. The regulation defines “printed matter” as “message-bearing textual printed material such as books, pamphlets, magazines, and leaflets, provided that it is not solely commercial advertising.” The NPS recognizes, however, that items other than “printed matter” may also contain or present speech, either literal or symbolic, that is not solely commercial and whose expression may be protected by the First Amendment. Accordingly, the NPS is revising its regulations to allow the free distribution of message-bearing items other than printed matter in areas of a park designated by the superintendent, subject to compliance with the regulations at 36 CFR 2.51 and 2.52. These items include readable electronic media like CDs, DVDs, and flash drives; articles of clothing like hats and accessories like buttons and pins; key chains; and bumper stickers.1

Under the rule, message-bearing items other than printed matter may not be sold within a park unit; they may only be distributed free of charge. This restriction is necessary to prevent the proliferation of unregulated commercial activity that would be inconsistent with park resources and values, that would impinge upon and degrade park scenery, and that would disrupt the visitor experience in many park units.

The revision to § 2.52 to allow the free distribution of other message-bearing items is consistent with the NPS's National Capital Region (NCR) regulation at 36 CFR 7.96(k). As discussed in the preambles to the proposed and final rules for the NCR regulation, 59 FR 25855 (1994) and 60 FR 17639 (1995), the NPS promulgated § 7.96 to resolve serious issues created by unregulated sales of merchandise on NPS-administered lands that resulted in conflicting and excessive commercialism; degraded aesthetic values; had negative impacts on visitor circulation and contemplation and historic scenes; and inhibited the conservation of park property. In upholding the constitutionality of the NCR regulation limiting the sales of such items, the U.S. Court of Appeals for the District of Columbia Circuit found that the regulation was “content neutral” and “narrowly tailored to serve significant government interests” and offered “ample alternative channels of communication” insofar as “members may display and give the audio tapes and [religious] beads to members of the public so long as they do not try to exact a payment or request a donation in exchange for them.” ISKCON of Potomac v. Kennedy, 61 F.3d 949, 952, 958 (D.C. Cir. 1995).

The NPS published the proposed rule on October 14, 2016 (81 FR 71026) with request for public comment through the Federal eRulemaking portal at www.regulations.gov, or by mail or hand delivery. The 60-day comment period ended on December 13, 2016. A total of 26 comments were received. The NPS evaluated these comments when developing this final rule. A summary of comments and NPS responses is provided below. Many comments supported the rule and expressed gratitude that it provides an alternative means of communication in national parks. After taking the public comments into consideration and after additional review, the NPS has not made any substantive changes in the final rule. A few conforming edits to 36 CFR 2.51 and 2.52 are included in this final rule. These changes simply add references to the free distribution of other message-bearing items to reflect the substantive revisions to section 2.52 that were included in the proposed rule.

1. Comment: Some commenters were concerned that the rule would lead to the commercialization of national parks and take away from the serenity and beauty of the environment. One commenter suggested that the rule should prohibit the sale of printed matter as well as other message-bearing items in order to prevent rampant consumerism in national parks. Several commenters suggested that the rule prohibit all items that include or function as commercial advertising, or any items that are predominantly or primarily commercial advertising, rather than only prohibiting those items that are “solely commercial advertising.” One commenter stated that t-shirts, even when given away for free, are primarily used as marketing devices and not to communicate information.

NPS Response: The rule only allows the free distribution of other message-bearing items. Asking for or requiring payment or donations in exchange for these items is prohibited without written authorization under 36 CFR 5.3 (Business operations) or 36 CFR 2.37 (Noncommercial soliciting). The NPS will use the permit process to ensure that the free distribution of other message-bearing items will not result in the commercialization of national parks and the degradation of park values and visitor experiences. This activity will only be allowed in areas designated as available for First Amendment activities by the Superintendent.

Items with some amount of commercial advertising may also contain protected speech under the First Amendment. For this reason, the free distribution of these items is properly regulated under 36 CFR 2.52 rather than 36 CFR 5.3, which focuses on business operations. Examples may include t-shirts and water bottles that contain a message unrelated to commercial advertising that are freely distributed by a corporate sponsor at a permitted event. Although these items may also contain a logo or other mark associated with the company, they are not solely commercial advertising and are therefore subject to regulations addressing speech rather than business operations.

2. Comment: One commenter questioned the basis for allowing the sale of printed matter, but not the sale of other message-bearing items, when both may contain speech protected by the First Amendment.

NPS Response: Experiences on the National Mall and in other national parks suggest that other message bearing items such as t-shirts, mugs, hats, and jewelry are more likely than printed matter to be sold primarily as a commercial enterprise rather than as part of a sincere First Amendment activity. In the past, the proliferation of sales of other message bearing items has degraded the purposes and values of the National Park System in manner not experienced with the sale of printed matter that is primarily focused on communicating a message. The distinction in this rule between printed matter and other message bearing items will provide the public with a broader opportunity to engage in protected speech without opening national parks to unchecked commerce. The sale of an unlimited range of message bearing merchandise, including t-shirts, would negatively impact park resources and values as well as the visitor experience. In order to sell other message bearing items in national parks, written authorization must be obtained under 36 CFR 5.3.

3. Comment: Several commenters were concerned that allowing the free distribution of other message-bearing items will result in litter and waste that will harm resources, including wildlife, and the ability of visitors to enjoy national parks. These commenters were concerned about items such as CDs and keychains that are made out of plastic and other materials that are not biodegradable and are costly to recycle.

NPS Response: Groups of more than 25 people who wish to freely distribute other message bearing items must obtain a permit that will contain terms and conditions addressing the proper disposal of litter and waste. These items will not be allowed to be distributed outside of designated First Amendment areas, reducing their impact on more unspoiled and sensitive areas of the Parks. Designated First Amendment areas are generally developed and have more foot traffic and nearby amenities such as trash and recycling cans. National parks have existing programs in place to collect and dispose of litter that will help mitigate any incremental waste associated with the free distribution of these items. The NPS will not regulate substantially more speech than necessary to implement the NPS's substantial government interest in protecting park resources from impairment. This rule allows the exercise of protected speech. The NPS has determined that any additional measures the NPS could take at this time to prevent additional litter associated with this speech, including, for example, prohibiting the free distribution of plastic message bearing items, are unnecessary. If the NPS determines at a later date that additional management actions are needed to address increases in litter attributable to message-bearing items, then the NPS will consider appropriate responses, including new terms and conditions to permits and changes to this rule.

4. Comment: Some commenters felt that the free distribution of other message-bearing items will lead to an influx of visitors and material objects, such as t-shirts and keychains, to national parks, which will degrade the natural beauty, contemplative quality, and integrity of these areas. One commenter suggested that the rule allow the Superintendent to deny a permit application based upon the severity of impacts to park resources and values imposed by these items. One commenter was concerned about audio and visual pollution from the distribution of these items that will harm park resources and values.

NPS Response: There are several protections in place that will mitigate the impacts of this activity on park values and resources. Groups of more than 25 people who wish to freely distribute other message bearing items must obtain a permit that will contain terms and conditions that will address potential impacts. The Superintendent may deny a permit if the number of persons engaged in the distribution cannot be reasonably accommodated, considering such things as damage to park resources or facilities, impairment of a protected area's atmosphere of peace and tranquility, interference with program activities, or impairment of public use facilities. 36 CFR 2.52(e). The free distribution of other message-bearing items may only occur in locations designated under 36 CFR 2.51(c). These locations may only be designated if the free distribution of other message-bearing items in these locations would not (i) cause injury or damage to park resources; (ii) unreasonably impair the atmosphere of peace and tranquility maintained in wilderness, natural, historic, or commemorative zones; or (iii) be incompatible with the nature and traditional use of the particular park area.

5. Comment: Some commenters were concerned that the content of other message-bearing items could be offensive or contain political messages that are not appropriate in national parks.

NPS Response: Similar to other types of protected speech that occurs in the National Park System, the NPS does not regulate the content of protected speech contained in other message- bearing items.

6. Comment: One commenter suggested that the NPS define other message-bearing items by a closed list of items that meet the definition, rather than an open-ended definition that lists only examples of items that qualify. This commenter felt that an exclusive list would relieve park managers from the burden of having to identify which items are message-bearing on a case-by-case basis.

NPS Response: A non-exhaustive list of things that qualify as other message-bearing items gives the NPS more flexibility than a closed list to determine which items are message- bearing. This will allow the NPS to adapt to the introduction of new message-bearing technologies such as digital downloads and other means of delivering electronic content.

7. Comment: One commenter suggested that the rule establish standard locations in all national park units that are designated for First Amendment activities, including the free distribution of other message-bearing items, in order to preserve the integrity of the parks. This commenter suggested visitor centers or information kiosks as potential places that could be designated across the National Park System.

NPS Response: NPS regulations at 36 CFR 2.51 require Superintendents to identify on a map the locations that are designated for demonstrations and the sale and distribution of printed matter. As stated above, these locations must meet certain criteria that will help address the commenter's concerns. This rule updates these regulations to state that these locations are also designated for the free distribution of other message-bearing items. The geography, infrastructure, and frequency and size of First Amendment activities are unique for each national park unit. This makes it difficult to identify a standard location that can be designated as appropriate for First Amendment activities in every unit. The NPS believes that the Superintendents are in the best position to determine which areas in the parks they manage are most appropriate for First Amendment activities.

Executive Order 12866 provides that the Office of Information and Regulatory Affairs in the Office of Management and Budget will review all significant rules. The Office of Information and Regulatory Affairs has determined that this rule is not significant.

Executive Order 13563 reaffirms the principles of Executive Order 12866 while calling for improvements in the nation's regulatory system to promote predictability, to reduce uncertainty, and to use the best, most innovative, and least burdensome tools for achieving regulatory ends. The executive order directs agencies to consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public where these approaches are relevant, feasible, and consistent with regulatory objectives. Executive Order 13563 emphasizes further that regulations must be based on the best available science and that the rulemaking process must allow for public participation and an open exchange of ideas. We have developed this rule in a manner consistent with these requirements.

This rule is an E.O. 13771 deregulatory action because once finalized, it will have costs less than zero.

This rule will not have a significant economic effect on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). This rule will generate positive benefits and no costs. This certification is based upon the cost-benefit and regulatory flexibility analyses found in the report entitled “Cost-Benefit and Regulatory Flexibility Analyses: Proposed Regulation Revisions for Free Distribution of Other Message-Bearing Items” that is available to the public upon request.

This rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. This rule:

(a) Does not have an annual effect on the economy of $100 million or more.

(b) Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions.

(c) Does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises.

This rule does not impose an unfunded mandate on State, local, or tribal governments or the private sector of more than $100 million per year. The rule does not have a significant or unique effect on State, local or tribal governments or the private sector. It addresses public use of national park lands, and imposes no requirements on other agencies or governments. A statement containing the information required by the Unfunded Mandates Reform Act (2 U.S.C. 1531 et seq.) is not required.

This rule does not effect a taking of private property or otherwise have takings implications under Executive Order 12630. A takings implication assessment is not required.

Under the criteria in section 1 of Executive Order 13132, the rule does not have sufficient federalism implications to warrant the preparation of a Federalism summary impact statement. This rule only affects use of federally-administered lands and waters. It has no outside effects on other areas. A Federalism summary impact statement is not required.

This rule complies with the requirements of Executive Order 12988. This rule:

(a) Meets the criteria of section 3(a) requiring that all regulations be reviewed to eliminate errors and ambiguity and be written to minimize litigation; and

(b) Meets the criteria of section 3(b)(2) requiring that all regulations be written in clear language and contain clear legal standards.

The Department of the Interior strives to strengthen its government-to-government relationship with Indian tribes through a commitment to consultation with Indian tribes and recognition of their right to self-governance and tribal sovereignty. We have evaluated this rule under the criteria in Executive Order 13175 and under the Department's tribal consultation policy and have determined that tribal consultation is not required because the rule will have no substantial direct effect on federally recognized Indian tribes.

This rule does not contain any new collections of information that require approval by the Office of Management and Budget (OMB) under the Paperwork Reduction Act. OMB has approved the information collection requirements associated with NPS Special Park Use Permits and has assigned OMB Control Number 1024-0026 (expires 01/31/20). An agency may not conduct or sponsor and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number.

This rule does not constitute a major Federal action significantly affecting the quality of the human environment. A detailed statement under the National Environmental Policy Act of 1969 (NEPA) is not required because the rule is covered by a categorical exclusion. We have determined that the rule is categorically excluded under 516 DM 12.5(A)(10) as it is a modification of existing NPS regulations that does not increase public use to the extent of compromising the nature and character of the area or causing physical damage to it. Further, the rule will not result in the introduction of incompatible uses which might compromise the nature and characteristics of the area or cause physical damage to it. Finally, the rule will not conflict with adjacent ownerships or lands uses, or cause a nuisance to adjacent owners or occupants.

We have also determined that the rule does not involve any of the extraordinary circumstances listed in 43 CFR 46.215 that would require further analysis under NEPA.

This rule is not a significant energy action under the definition in Executive Order 13211. A Statement of Energy Effects is not required.

In consideration of the foregoing, the National Park Service amends 36 CFR part 2 as set forth below:

On July 11, 1980, the National Park Service (NPS) promulgated regulations at 36 CFR part 14 that provide a process for the review, consideration, and approval or disapproval of requests for rights-of-way across all areas of the National Park System. 45 FR 47092. Section 14.78 describes the process for filing applications for rights-of-way for power transmission lines. Paragraph (b)(6)(i) of this section requires that the applicant include a detailed description of the environmental impact of the project that provides information about the impact of the project on airspace, air and water quality, scenic and aesthetic features, historical and archeological features, and wildlife, fish, and marine life. Paragraph (b)(6)(ii) requires that the proposed site, design, and construction of the project be consistent with a document entitled the “Environmental Criteria for Electric Transmission Lines.” This document was published by the Department of the Interior and the Department of Agriculture in 1970 and revised in 1979. This document is no longer available and no longer used by the NPS to evaluate applications for right-of-way permits for power transmission lines.

This rule removes paragraph (b)(6)(ii) from § 14.78 because the reference to the environmental criteria document is obsolete and outdated. The NPS will continue to evaluate applications for rights-of-way for power transmission lines in accordance the other provisions in subpart F of 36 CFR part 14. This rule also updates the authority line for 36 CFR part 14 to reflect the 2014 recodification of former 16 U.S.C. 5 and 79 into 54 U.S.C. 100902.

Executive Order 12866 provides that the Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget will review all significant rules. OIRA has determined that this rule is not significant.

Executive Order 13563 reaffirms the principles of Executive Order 12866 while calling for improvements in the nation's regulatory system to promote predictability, to reduce uncertainty, and to use the best, most innovative, and least burdensome tools for achieving regulatory ends. The Executive Order directs agencies to consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public where these approaches are relevant, feasible, and consistent with regulatory objectives. Executive Order 13563 emphasizes further that agencies must base regulations on the best available science and the rulemaking process must allow for public participation and an open exchange of ideas. We have developed this rule in a manner consistent with these requirements.

This rule is an E.O. 13771 deregulatory action because it will have costs less than zero. This rule will remove an outdated requirement. This will reduce the potential for confusion and may result in a more efficient application process for those applying for rights of way for power transmission lines across NPS-administered lands. This rule meets the goals of E.O. 13771 because the regulatory requirement being removed is outdated and unnecessary.

This rule is not a major rule under 5 U.S.C. 804(2), the SBREFA. This rule:

(a) Does not have an annual effect on the economy of $100 million or more;

(b) Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions;

(c) Does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises.

We recognize that under 5 U.S.C. 553(b) and (c) notice of proposed rules ordinarily must be published in the Federal Register and the agency must give interested parties an opportunity to submit their views and comments. We have determined under 5 U.S.C. 553(b) and 318 DM HB 5.3, however, that notice and public comment for this rule are not required. We find good cause to treat notice and comment as unnecessary. As discussed above, the document entitled “Environmental Criteria for Electric Transmission Lines” is no longer used by the NPS to evaluate applications for right-of-way permits for power transmission lines. The current reference in 36 CFR 14.78(b)(6)(ii) is potentially confusing for right-of-way applicants and its removal will simply reflect how the NPS currently processes applications. This correction will not benefit from public comment, and further delaying it is contrary to the public interest.

We also recognize that rules ordinarily do not become effective until at least 30 days after their publication in the Federal Register. We have determined, however, that good cause exists for all the rule to be effective immediately upon publication for the reasons stated above.

This rule does not impose an unfunded mandate on State, local, or tribal governments or the private sector of more than $100 million per year. The rule does not have a significant or unique effect on State, local or tribal governments or the private sector. This rule does not impose requirements on other agencies or governments. A statement containing the information required by the UMRA (2 U.S.C. 1531 et seq.) is not required.

This rule does not effect a taking of private property or otherwise have takings implications under Executive Order 12630. A takings implication assessment is not required.

Under the criteria in section 1 of Executive Order 13132, the rule does not have sufficient federalism implications to warrant the preparation of a Federalism summary impact statement. A Federalism summary impact statement is not required.

This rule complies with the requirements of Executive Order 12988. This rule:

(a) Meets the criteria of section 3(a) requiring agencies to review all regulations to eliminate errors and ambiguity and write them to minimize litigation; and

(b) Meets the criteria of section 3(b)(2) requiring agencies to write all regulations in clear language and contain clear legal standards.

The Department of the Interior strives to strengthen its government-to-government relationship with Indian tribes through a commitment to consultation with Indian tribes and recognition of their right to self-governance and tribal sovereignty. We have evaluated this rule under the Department's consultation policy and under the criteria in Executive Order 13175 and have determined it has no substantial direct effects on federally recognized Indian tribes and consultation under the Department's tribal consultation policy is not required.

This rule does not contain new collections of information that require approval by the Office of Management and Budget under the PRA. The rule does not impose new recordkeeping or reporting requirements on State, tribal, or local governments; individuals; businesses; or organizations. We may not conduct or sponsor and you are not required to respond to a collection of information unless it displays a currently valid OMB control number.

This rule does not constitute a major Federal action significantly affecting the quality of the human environment. A detailed statement under the NEPA of 1969 is not required. We have determined the rule is categorically excluded under 43 CFR 46.210(i) because it is administrative, legal, and technical in nature. We also have determined the rule does not involve any of the extraordinary circumstances listed in 43 CFR 46.215 that would require further analysis under NEPA.

This rule is not a significant energy action under the definition in Executive Order 13211. A Statement of Energy Effects in not required.

Drafting Information: The primary author of this regulation was Jay Calhoun, Regulations Program Specialist, National Park Service.

In consideration of the foregoing, the National Park Service amends 36 CFR part 14 as follows:

On June 12, 2017, the U.S. Copyright Office issued an interim rule memorializing its special procedures for examining secure texts.1 On November 13, 2017, the Office issued an additional interim rule establishing a new group registration option for secure test questions.2 The Office invited public comment on each of these interim rules, and previously extended its initial deadline for the submission of written comments.3 To ensure that members of the public have sufficient time to respond, and to ensure that the Office has the benefit of a complete record, the Office is further extending the submission deadline by an additional sixty days. Written comments now are due no later than April 2, 2018.

On December 12, 2017 the NEA issued a final rule entitled “Federal Civil Penalties Adjustments” which finalized the NEA's June 15, 2017 interim final rule entitled “Implementing the Federal Civil Penalties Adjustment Act Improvements Act”, implementing the 2015 Act (section 701 of Pub. L. 114-74), which amended the Inflation Adjustment Act (28 U.S.C. 2461 note) requiring catch-up and annual adjustments to the NEA's CMPs. The 2015 Act requires agencies make annual adjustments to its CMPs for inflation.

A CMP is defined in the Inflation Adjustment Act as any penalty, fine, or other sanction that is (1) for a specific monetary amount as provided by Federal law, or has a maximum amount provided for by Federal law; (2) assessed or enforced by an agency pursuant to Federal law; and (3) assessed or enforced pursuant to an administrative proceeding or a civil action in the Federal courts.

These annual inflation adjustments are based on the percentage change in the Consumer Price Index for all Urban Consumers (CPI-U) for the month of October preceding the date of the adjustment, relative to the October CPI-U in the year of the previous adjustment. The formula for the amount of a CMP inflation adjustment is prescribed by law, as explained in OMB Memorandum M-16-06 (February 24, 2016), and therefore the amount of the adjustment is not subject to the exercise of discretion by the Chairman of the National Endowment for the Arts (Chairman).

The Office of Management and Budget has issued guidance on implementing and calculating the 2018 adjustment under the 2015 Act.1 Per this guidance, the CPI-U adjustment multiplier for this annual adjustment in 1.02041. In its prior rules, the NEA identified two civil penalties which require adjustment: The penalty for false statements under the PFCRA and the penalty for violations of the NEA's Restrictions on Lobbying. The NEA adjusts the amount of those CMPs amount accordingly.

The inflation adjustments contained in this rule shall apply to any violations assessed after January 15, 2018, the effective date of this rule.

Two civil penalties in NEA regulations require adjustment in accordance with the 2015 Act: (1) The penalty associated with Restrictions on Lobbying (45 CFR 1158.400; 45 CFR part 1158, app. A) and (2) the penalty associated with the Program Fraud Civil Remedies Act (45 CFR 1149.9).

The current penalty under the PFCRA for false claims and statements is currently set at $10,957. The post-adjustment penalty or range is obtained by multiplying the pre-adjustment penalty or range by the percent change in the CPI-U over the relevant time period and rounding to the nearest dollar. Between October 2016 and October 2017, the CPI-U increased by 102.041 percent. Therefore, the new post-adjustment maximum penalty under the PFCRA for false statements is $10,957 × 1.02041 = $11,180.63, which rounds to $11,180. Therefore, the maximum penalty under the PFCRA for false claims and statements will be $11,180.

The penalty for violations of the Restrictions on Lobbying is currently set at a range of a minimum of $19,246 and a maximum of $192,459. The post-adjustment penalty or range is obtained by multiplying the pre-adjustment penalty or range by the percent change in the CPI-U over the relevant time period and rounding to the nearest dollar. Between October 2016 and October 2017, the CPI-U increased by 102.041 percent. Therefore, the new post-adjustment minimum penalty under the Restrictions on Lobbying is $19,246 × 1.02041 = $19,638.81, which rounds to $19,639, and the maximum penalty under the Restrictions on Lobbying is $192,459 × 1.02041 = $196,387.09, which rounds to $196,387. Therefore, range of penalties under the law on the Restrictions on Lobbying shall be between $19,639 and $196,387.

Section 553 of the Administrative Procedure Act requires agencies to provide an opportunity for notice and comment on rulemaking and also requires agencies to delay a rule's effective date for 30 days following the date of publication in the Federal Register unless an agency finds good cause to forgo these requirements. However, section 4(b)(2) of the 2015 Act requires agencies to adjust civil monetary penalties notwithstanding section 553 of the Administrative Procedure Act (APA) and publish annual inflation adjustments in the Federal Register. “This means that the public procedure the APA generally requires . . . is not required for agencies to issue regulations implementing the annual adjustment.” OMB Memorandum M-18-03.

Even if the 2015 Act did not except this rulemaking from section 553 of the APA, the NEA has good cause to dispense with notice and comment. Section 553(b)(B), authorizes agencies to dispense with notice and comment procedures for rulemaking if the agency finds good cause that notice and comment are impracticable, unnecessary, or contrary to public interest. The annual adjustments to civil penalties for inflation and the method of calculating those adjustments are established by section 5 of the FCPIAA, as amended, leaving no discretion for the NEA. Accordingly, public comment would be impracticable because the NEA would be unable to consider such comments in the rulemaking process.

Executive Order 12866 (E.O. 12866) established a process for review of rules by the Office of Information and Regulatory Affairs, which is within the Office of Management and Budget (OMB). Only “significant” proposed and final rules are subject to review under this Executive Order. “Significant,” as used in E.O. 12866, means “economically significant.” It refers to rules with (1) an impact on the economy of $100 million; or that (2) were inconsistent or interfered with an action taken or planned by another agency; (3) materially altered the budgetary impact of entitlements, grants, user fees, or loan programs; or (4) raised novel legal or policy issues.

This final rule would not be a significant policy change and OMB has not reviewed this final rule under E.O. 12866. The NEA has made the assessments required by E.O. 12866 and determined that this rule: (1) Will not have an effect of $100 million or more on the economy; (2) will not adversely affect in a material way the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or Tribal governments or communities; (3) will not create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (4) does not alter the budgetary effects of entitlements, grants, user fees, or loan programs or the rights or obligations of their recipients; and (5) does not raise novel legal or policy issues.

Executive Order 13771 section 5 requires that agencies, in most circumstances, remove or rescind two regulations for every regulatory action (such as the promulgation of regulations) unless they request and are specifically exempted from that order's requirements by the Director of the Office of Management and Budget (the Director).

This rule is not subject to the requirements of Executive Order 13771 because this rule is not significant under Executive Order 12866. Per OMB guidance, annual inflation adjustments “are not significant regulatory actions under E.O. 12866, they are not considered E.O. 13771 regulatory actions.” 2 Furthermore, the NEA has requested and has received an exemption from the requirement that the agency rescind two regulations for every regulation it promulgate from the Director.

This rule does not have Federalism implications, as set forth in E.O. 13132. As used in this order, Federalism implications mean “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” The NEA has determined that this rulemaking will not have Federalism implications within the meaning of E.O. 13132.

This Directive meets the applicable standards set forth in section 3(a) and 3(b)(2) of E.O. 12988. Specifically, this final rule is written in clear language designed to help reduce litigation.

Under the criteria in E.O. 13175, the NEA has evaluated this final rule and determined that it would have no potential effects on Federally recognized Indian Tribes.

Under the criteria in E.O. 12630, this rule does not have significant takings implications. Therefore, a takings implication assessment is not required.

This rulemaking will not have a significant adverse impact on a substantial number of small entities, including small businesses, small governmental jurisdictions, or certain small not-for-profit organizations.

This rulemaking will not impose any “information collection” requirements under the Paperwork Reduction Act. Under the act, information collection means the obtaining or disclosure of facts or opinions by or for an agency by 10 or more nonfederal persons.

This rulemaking does not contain a Federal mandate that will result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector of $100 million or more in any one year.

The final rule will not have significant effect on the human environment.

This final rule would not be a major rule as defined in section 804 of the Small Business Regulatory Enforcement Fairness Act of 1996. This final rule will not result in an annual effect on the economy of $100,000,000 or more, a major increase in costs or prices, significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign based companies in domestic and export markets.

Section 206 of the E-Government Act requires agencies, to the extent practicable, to ensure that all information about that agency required to be published in the Federal Register is also published on a publicly accessible website. All information about the NEA required to be published in the Federal Register may be accessed at www.arts.gov. This Act also requires agencies to accept public comments on their rules “by electronic means.” See heading “Public Participation” for directions on electronic submission of public comments on this final rule.

Finally, the E-Government Act requires, to the extent practicable, that agencies ensure that a publicly accessible Federal Government website contains electronic dockets for rulemakings under the Administrative Procedure Act of 1946 (5 U.S.C. 551 et seq.). Under this Act, an electronic docket consists of all submissions under section 553(c) of title 5, United States Code; and all other materials that by agency rule or practice are included in the rulemaking docket under section 553(c) of title 5, United States Code, whether or not submitted electronically. The website https://www.regulations.gov contains electronic dockets for the NEA's rulemakings under the Administrative Procedure Act of 1946.

Under this Act, the term “plain writing” means writing that is clear, concise, well-organized, and follows other best practices appropriate to the subject or field and intended audience. To ensure that this rule has been written in plain and clear language so that it can be used and understood by the public, the NEA has modeled the language of this rule on the Federal Plain Language Guidelines.

The NEA encourages public participation by ensuring its documentation is understandable by the general public, and has written this final rule in compliance with E.O. 13563 by ensuring its accessibility, consistency, simplicity of language, and overall comprehensibility.

For the reasons stated in the preamble, the NEA amends 45 CFR chapter XI, subchapter B, as follows:

I. Background

The Corporation for National and Community Service (CNCS) is a federal agency that engages more than five million Americans in service through its AmeriCorps, Senior Corps, and Volunteer Generation Fund programs to further its mission to improve lives, strengthen communities, and foster civic engagement through service and volunteering. For more information, visit NationalService.gov.

The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Sec. 701 of Pub. L. 114-74) (the “Act”), which is intended to improve the effectiveness of civil monetary penalties and to maintain the deterrent effect of such penalties, requires agencies to adjust the civil monetary penalties for inflation annually.

CNCS has two civil monetary penalties in its regulations. A civil monetary penalty under the Act is a penalty, fine, or other sanction that is for a specific monetary amount as provided by Federal law or has a maximum amount provided for by Federal law and is assessed or enforced by an agency pursuant to Federal law and is assessed or enforced pursuant to an administrative proceeding or a civil action in the Federal courts. (See 28 U.S.C. 2461 note).

The inflation adjustment for each applicable civil monetary penalty is determined using the percent increase in the Consumer Price Index for all Urban Consumers (CPI-U) for the month of October of the year in which the amount of each civil money penalty was most recently established or modified. In the December 15, 2017, OMB Memo for the Heads of Executive Agencies and Departments, M-18-03, Implementation of Penalty Inflation Adjustments for 2018, Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, OMB published the multiplier for the required annual adjustment. The cost-of-living adjustment multiplier for 2018, based on the CPI-U for the month of October 2017, not seasonally adjusted, is 1.02041.

CNCS identified two civil penalties in its regulations: (1) The penalty associated with Restrictions on Lobbying (45 CFR 1230.400) and (2) the penalty associated with the Program Fraud Civil Remedies Act (45 CFR 2554.1).

The civil monetary penalties related to Restrictions on Lobbying (Section 319, Pub. L. 101-121; 31 U.S.C. 1352) range from $19,246 to $192,459. Using the 2018 multiplier, the new range of possible civil monetary penalties is from $19,639 to $196,387.

The Program Fraud Civil Remedies Act of 1986 (Pub. L. 99-509) civil monetary penalty has an upper limit of $10,957. Using the 2018 multiplier, the new upper limit of the civil monetary penalty is $11,181.

This final rule adjusts the civil monetary penalty amounts related to Restrictions on Lobbying (45 CFR 1230.400) and the Program Fraud Civil Remedies Act of 1986 (45 CFR 2554.1). The range of civil monetary penalties related to Restrictions on Lobbying increase from “$19,246 to $192,459” to “$19,639 to $196,387.” The civil monetary penalties for the Program Fraud Civil Remedies Act of 1986 increase from “up to $10,957” to “up to $11,181.”

CNCS finds, under 5 U.S.C. 553(b)(3)(B), that there is good cause to except this rule from the public notice and comment provisions of the Administrative Procedure Act, 5 U.S.C. 553(b). Because CNCS is implementing a final rule pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, which requires CNCS to update its regulations based on a prescribed formula, CNCS has no discretion in the nature or amount of the change to the civil monetary penalties. Therefore, notice and comment for these proscribed updates is impracticable and unnecessary. As an interim final rule, no further regulatory action is required for the issuance of this legally binding rule. If you would like to provide technical comments, however, they may be submitted until February 15, 2018.

CNCS has determined that making technical changes to the amount of civil monetary penalties in its regulations does not trigger any requirements under procedural statutes and Executive Orders that govern rulemaking procedures.

This rule is effective January 15, 2018. The adjusted civil penalty amounts apply to civil penalties assessed on or after January 15, 2018, when the violation occurred after November 2, 2015. If the violation occurred prior to November 2, 2015, or a penalty was assessed prior to August 1, 2016, the pre-adjustment civil penalty amounts in effect prior to August 1, 2106, will apply.

For the reasons discussed in the preamble, under the authority of 42 U.S.C. 12651c(c), the Corporation for National and Community Service amends chapters XII and XXV, title 45 of the Code of Federal Regulations as follows:

This is a summary of the Commission's Fourth Report and Order, Order on Reconsideration, and Memorandum Opinion and Order in WC Docket Nos. 17-287, 11-42, 09-197; FCC 17-155, adopted on November 16, 2017 and released on December 1, 2017. The full text of this document is available for public inspection during regular business hours in the FCC Reference Center, Room CY-A257, 445 12th Street SW, Washington, DC 20554 or at the following internet address: http://transition.fcc.gov/Daily_Releases/Daily_Business/2017/db1201/FCC-17-155A1.pdf. The Notice of Proposed Rulemaking (NPRM) and Notice of Inquiry (NOI) that was adopted concurrently with the Fourth Report and Order, Order on Reconsideration, Memorandum Opinion and Order are published elsewhere in this issue of the Federal Register.

1. This Fourth Report and Order, Order on Reconsideration, and Memorandum Opinion and Order takes a series of steps to address ongoing areas of concern in the Lifeline program to prevent waste, fraud, and abuse. Specifically, the Orders target enhanced Lifeline support to residents of rural areas on Tribal lands, establish mapping resources to identify rural Tribal lands, require independent certification of residency on rural Tribal lands, and direct enhanced support to facilities-based providers. In addition, this document makes changes to increase Lifeline benefit portability by eliminating the port freezes for voice and broadband internet access services. This document also clarifies that “premium Wi-Fi” and other similar networks of Wi-Fi-delivered broadband internet access service do not qualify as mobile broadband under the Lifeline program rules. Together, the Orders target enhanced Lifeline support for Tribal lands to support the deployment of modern communications networks, promote consumer choice within the program, and remove uncertainty and streamline our rules regarding the application of Lifeline support and eligibility for Lifeline reimbursement.

2. In this Fourth Report and Order, the Commission adopts several reforms to our Tribal Lifeline policies to increase the availability and affordability of high-quality communications services on Tribal lands. The Commission first targets enhanced Lifeline support on Tribal lands to residents of rural areas on Tribal lands. Since 2000, the Lifeline and Link Up programs have provided an enhanced subsidy of up to an additional $25 per month for service provided to qualified residents of Tribal lands, and a Link Up reduction of up to $100 for the cost to initiate supported service for qualifying residents of Tribal lands. This targeted support is in recognition of not only the low income levels but also the particularly poor connectivity on many Tribal lands. When it adopted the enhanced Lifeline Tribal subsidy, the Commission noted that the “unavailability or unaffordability of telecommunications service on Tribal lands is at odds with our statutory goal of ensuring access to such services to `[c]onsumers in all regions of the Nation, including low-income consumers,'” and explained that the added Lifeline and Link Up support would help lead to the deployment of more robust networks. While the Commission provided the enhanced support as a discount on services, that support was focused to most efficiently encourage “investment and deployment” in facilities, especially since all Lifeline providers in the program at the time were facilities-based. Because of an overly-broad definition of the geographic areas eligible for the enhanced subsidy, however, many areas where this enhanced subsidy is currently available are not lacking in either voice or broadband networks. To remedy this, the Commission refines its approach to target enhanced Lifeline support to residents of rural areas on Tribal lands. Focusing the enhanced subsidy for Tribal lands on rural areas is consistent with the enhanced subsidy's purpose and will ensure that the Fund is better directed toward the residents of Tribal lands who typically have the least choice for communications services.

3. The Commission believes that targeting enhanced support toward rural, facilities-based providers is consistent with the intent of the 2000 Tribal Order, 65 FR 47883, August 4, 2000. While the 2000 Tribal Order referenced reducing the costs of telecommunications services, it specifically premised the support on the idea that enhanced support would incentivize providers to “deploy telecommunications facilities in areas that previously may have been regarded as high risk and unprofitable.” The Commission's creation of an enhanced Lifeline benefit in the 2000 Tribal Order both reduced telecommunications costs and supported the deployment of networks because, at the time, all ETCs were facilities-based. (The Commission did not forbear from the Act's facilities-based requirements at all until 2005.) While the Commission must consider and address appropriate distinctions between support for facilities-based and non-facilities-based providers, the Commission does so in a way that continues to follow the principles identified in the 2000 Tribal Order and Sections 214 and 254 of the Act. (See U.S.C. 214(e) and 254(b)(3).)

4. To identify rural areas on Tribal lands, the Commission adopts the definition of “rural” used in the E-rate program rules, which define “urban” as “an urbanized area or urban cluster area with a population equal to or greater than 25,000.” The Commission defines all other areas as “rural.” (47 CFR 54.505(b)(3).) In the 2015 Lifeline FNPRM, 80 FR 42669, July 17, 2015, the Commission asked for comment on “what level of density” and at “what level of geographic granularity” it should define such rural areas. Shortly thereafter, the Commission began consultations with Tribal Nations regarding the Lifeline proposals that the Commission sought comment on in the 2015 Lifeline FNPRM. After consideration of the comments, including comments by numerous Tribal stakeholders, and evaluation of the practicality of implementation, the Commission believes this definition will reasonably identify the Tribal areas the Commission intends to benefit from additional Lifeline funding. Accordingly, the Commission amends §§ 54.403(a)(3), 54.413, and 54.414 of the Lifeline program rules and directs the Universal Service Administrative Company (USAC) to develop a tool that will allow Lifeline service providers to determine whether a subscriber residing on Tribal lands resides in a rural area according to this definition. USAC shall update this tool pursuant to the same update schedule used for the E-rate rurality tool.

5. Selection of the E-rate program's “rural” definition is based on consideration of the record and matters of administrative efficiency. In the 2015 Lifeline FNPRM, the Commission sought comment on focusing enhanced support to those Tribal lands with lower population densities. Specifically, the Commission sought comment on “focus[ing] enhanced support only on areas of low population density that are likely to lack the facilities necessary to serve subscribers.” The Commission also sought comment on the approach taken by the United States Department of Agriculture's Food Distribution Program on Indian Reservations (FDPIR), which excludes from eligibility residents of towns or cities in Oklahoma with populations of 10,000 or more, and sought comment on whether the Commission “should implement a similar approach that excludes urban areas on Tribal lands from receiving enhanced Tribal support.” Some commenters expressed concerns with a population density approach, but provided alternative density-based proposals ranging from limiting enhanced support to areas with fewer than 10,000 people and a county population density of less than 125 people per square mile, (Navajo Nation Telecommunications Regulatory Commission Comments at 12-13.) or “only to Tribal lands that are located outside of a Metropolitan Statistical Area and that have less than 100 persons per square mile.” (Smith Bagley Inc., Comments at 16) These proposals are more restrictive than the E-rate program's definition of rural. Other commenters opposed limiting the enhanced Tribal subsidy based on population density. The Commission disagrees with those commenters because their path would preserve the status quo of providing enhanced support to Lifeline subscribers on Tribal lands in densely populated areas where service providers already have sufficient incentive to deploy broadband facilities as in non-Tribal areas.

6. The Commission agrees that focusing enhanced support on less-dense areas will improve the Tribal support mechanism and better serve the goals of enhanced Tribal Lifeline support to incent deployment in areas that need it most and to increase the affordability of Lifeline services for Tribal lands residents. Based on the record, however, the Commission declines to adopt a population-density threshold to identify the Tribal areas that are eligible for enhanced Tribal support. Instead, the Commission takes an approach similar to the approach used by the FDPIR and use the E-rate program definition of “rural” to identify Tribal areas that are eligible for enhanced Lifeline support. This approach provides consistency between the E-rate and Lifeline programs. In addition, the Commission's definition of “rural” in the E-rate program serves the goals of enhanced Tribal Lifeline support by focusing enhanced support where communications services are more costly. As explained in the 2014 E-rate Order, 80 FR 5961, February 4, 2015, the Commission adopted the current E-rate program definition of “rural” after numerous parties demonstrated that a narrower definition would result in an urban classification for numerous schools and libraries in small towns and remote areas where E-rate supported services are more costly. Using the E-rate definition of “rural” to identify Tribal areas that are eligible for enhanced support would ensure that the enhanced support is available for Tribal lands in these small towns and remote areas where supported services are more costly. Further, the E-rate definition of “rural” is less restrictive than the alternative population density-based methodologies proposed by Smith Bagley and the Navajo Nation Telecommunications Regulatory Commission.

7. The Commission also concludes that identifying less-dense areas by using the same definition of “rural” as the E-rate program (which was adopted in December 2014 and implemented for E-rate Funding Year 2015) will allow for more accurate, efficient administration by USAC. The Commission expects that consistency between the two USF programs will simplify the urban/rural determinations for carriers and eligible households. Specifically, standard program definitions of rurality would allow USAC to develop master data sources and simplify the development and updating of service provider tools for identifying addresses that qualify for enhanced support. The Commission therefore declines to adopt commenters' proposals to create an entirely new definition of rurality based directly on the number of persons per square mile in a particular geographic area. Those proposals would create unnecessary administrative difficulties and uncertainty for Lifeline providers, which the Commission believes would in turn create confusion and fewer choices for eligible low-income consumers.

8. The Commission also concludes that the provision of enhanced support in more densely populated Tribal lands, such as large cities (e.g., Tulsa, Oklahoma or Reno, Nevada), is inconsistent with the Commission's primary purpose of the enhanced support. (Despite being “The Biggest Little City in the World,” Reno, NV has a population of 446,154 and, according to Form 477 data, 97.5% percent of the population in its county have access to fixed broadband speeds of at least 25 Mbps/3 Mbps. Tulsa, OK has a population of 637,215 and 100% percent of the population in its county has access to fixed broadband speeds of at least 25 Mbps/3 Mbps. See Fixed Broadband Deployment Data, Deployment (last visited Oct. 24, 2017), https://www.fcc.gov/maps/fixed-broadband-deployment-data/.) When the Commission first adopted enhanced support on Tribal lands, it noted that “unlike in urban areas where there may be a greater concentration of both residential and business customers, carriers may need additional incentives to serve Tribal lands that, due to their extreme geographic remoteness, are sparsely populated and have few businesses.” That remains too true today. Approximately 98 percent of Americans in urban areas already have access to fixed broadband internet access service at speeds of 25 Mbps/3 Mbps, including residents of both Tulsa and Reno. (See Fixed Broadband Deployment Data, Deployment (last visited Oct. 24, 2017), https://www.fcc.gov/maps/fixed-broadband-deployment-data/.) Directing enhanced support to Tribal lands in urban areas is unlikely to materially increase the deployment of facilities in such areas and, therefore, risks wasting scarce program resources. In contrast, rural Americans, particularly those residing on Tribal lands, are much less likely to have access to high-speed internet access services, with Commission data showing that 63 percent of Americans living on rural, Tribal lands lack access to fixed broadband services at speeds of 25 Mbps/3 Mbps, making enhanced support more likely to incentivize deployment to serve low-income, rural residents on Tribal lands. (See Fixed Broadband Deployment Data, Deployment (last visited Oct. 24, 2017), https://www.fcc.gov/maps/fixed-broadband-deployment-data/.) This policy supports our view that enhanced Tribal support should be targeted to rural areas where the need is greatest.

9. The Commission next identifies mapping resources that can be used to locate “Tribal lands” under our rules. These maps can then be intersected with the maps delineating rural areas in order to create a map showing where enhanced Tribal lands Lifeline support is available. The Commission directs USAC to make these mapping resources available to providers.

10. Section 54.400(e) of our rules defines Tribal lands to include any federally recognized Indian tribe's reservation, pueblo, or colony (including former reservations in Oklahoma); Alaska Native regions established pursuant to the Alaska Native Claims Settlement Act; Indian allotments; Hawaiian Home Lands held in trust for Native Hawaiians pursuant to the Hawaiian Homes Commission Act; and “. . . any land designated as such by the Commission for purposes of this subpart.” Before 2015, the Commission had not established any mapping resources to provide ready access to the boundaries of these Tribal lands.

11. The geographic areas described in § 54.400(e) of the Lifeline program rules correspond with the map of Hawaiian Home Lands maintained by the Department of Hawaiian Home Lands (DHHL), the U.S. Census Bureau's American Indians and Alaska Natives Map, the Oklahoma Historical Map 1870-1890, as amended by the Commission to include the Cherokee Outlet, and the Alaska Native regions established pursuant to the Alaska Native Claims Settlement Act. (See 85 Stat. 688.)

12. To assist carriers and subscribers, the Commission identifies specific maps of these Tribal lands. In the 2015 Lifeline FNPRM, the Commission interpreted the term “former reservations in Oklahoma” to establish boundaries for Tribal lands in the Lifeline program for residents in Oklahoma. The Commission and USAC later provided a map and shapefile for carriers to use in determining whether their customers reside on Tribal lands in Oklahoma. The Commission believes making this map available has successfully given clarity to providers and subscribers about the boundaries of Tribal lands in Oklahoma. The Commission thus believes providing additional maps and data, including in shapefile format, is appropriate for the other Tribal lands listed in § 54.400(e) of the Commission's rules. By providing carriers the information they need to quickly and accurately determine if an enrolling customer qualifies for enhanced support under the Lifeline rules, these maps and data will help prevent waste, fraud, and abuse in the program. These maps and data will also help Lifeline providers avoid situations in which the provider improperly requests enhanced Tribal support for customers who self-certified their Tribal residence but did not actually reside on Tribal lands.

13. The Hawaiian Homes Commission Act of 1921 (42 Stat. 108.) delineated the boundaries of “Hawaiian Home Lands” and tasked the DHHL with maintaining those boundaries, along with the responsibility of promulgating rules under that Act. As part of its responsibilities, the DHHL makes available a map and shapefile that precisely defines the geographic areas within the state of Hawaii considered “Hawaiian Home Lands.” Using this map will assist both Lifeline providers and consumers. Likewise, the Census Bureau maintains a map of every “federally recognized Indian tribe's reservation, pueblo, or colony,” called the American Indian and Alaska Native Areas Map. (See 47 CFR 54.400(e).) This map, and its accompanying shapefile, comports with the data sources the Commission uses regularly and will also provide clear guidance for Lifeline providers and consumers.

14. In light of these identified mapping resources, as well as the expected need for a reasonable transition period, the Commission directs USAC to prepare a map and the corresponding shapefiles to delineate the areas on which subscribers may receive enhanced Lifeline support for rural Tribal lands. USAC shall make this map and data available at least sixty (60) days before the effective date of this Order's rule changes for enhanced Lifeline support on Tribal lands. If, in the future, any of the sources identified in this section issue updated maps or shapefiles, the Commission directs USAC to make an updated map and the underlying data available within a reasonable time period but no later than ninety (90) days after the updated map or shapefile is issued.

15. The Commission also directs USAC to incorporate the map discussed above in its administration and implementation of the National Lifeline Accountability Database (NLAD) and National Eligibility Verifier (NV).

16. In the 2015 Lifeline FNPRM, the Commission sought comment on requiring additional evidence of Tribal residency beyond the current self-certification requirement and placing the obligation to confirm Tribal residency with the Lifeline provider. To see that enhanced Lifeline support for rural Tribal lands is actually directed to subscribers who verifiably reside on Tribal lands, the Commission now establishes that only subscribers whose residential address or location is shown to fall within the boundary of the enhanced Tribal Lifeline map discussed above may receive enhanced support. Previously, the Commission had permitted providers to accept subscribers' self-certifications that they reside on Tribal lands according to the Commission's Lifeline rules, which made the program vulnerable to fraud and abuse and resulted in a $2 million settlement with one provider for claiming enhanced Tribal support for subscribers who did not reside on Tribal lands. The Commission finds that the provision of maps delineating the boundaries of areas eligible for enhanced Tribal Lifeline support will give consumers and providers a more effective and simpler means of determining rural Tribal residency, thereby eliminating the need for reliance on self-certification. Accordingly, going forward, Lifeline providers will be required to independently verify and document subscribers' rural Tribal residency according to the map and data sources identified above. An ETC may seek enhanced reimbursement only for subscribers whose residential address is located within the bounds of that map.

17. In response to the 2015 Lifeline FNPRM, some commenters urged the Commission to continue to permit consumers to self-certify their residence on Tribal lands. Commenters supporting this approach argue that there is no evidence of abuse of the self-certification mechanism, and eliminating self-certification would only increase subscriber costs. However, the Commission has recently found concrete evidence of abuse of the self-certification mechanism, resulting in improper payments that had to be reclaimed through an enforcement proceeding. (See Blue Jay Wireless, LLC, Order, 31 FCC Rcd 7603 (EB 2016).) In that instance, a Lifeline provider relied on subscriber self-certifications to improperly enroll several thousand customers as residents of Tribal lands, and continued to do so even after being informed that it was apparently over-claiming enhanced Tribal support. The Commission also finds that providing a map against which providers can verify eligibility for enhanced Tribal support provides greater certainty to providers and consumers alike, and thus eliminates questions about how to handle a consumer's self-certification if that consumer seems to reside outside Tribal lands.

18. The Commission concludes that a process by which providers determine enhanced eligibility by comparing the subscriber's residential address to data sources delineating rural Tribal lands is a more accurate method of verifying that a subscriber is entitled to enhanced Tribal reimbursement. If a subscriber does not reside within the bounds of the map that the Commission now provides, permitting that subscriber to receive reimbursement by simply certifying that she or he lives on Tribal lands leaves the program open to improper payments, waste, and possibly fraud and abuse.

19. The Commission is also sensitive to Tribal residences that have not been assigned conventional addresses and instead use descriptive addresses that are not recognized by the U.S. Postal Service. For those residences, a Lifeline subscriber may provide a descriptive address when enrolling in the program. A provider enrolling a subscriber with a descriptive residential address in a state where the National Verifier is not responsible for eligibility determinations must retain records documenting compliance with the program rules, including the rules the Commission amends in this Order limiting enhanced Lifeline support to rural Tribal lands and removing subscriber self-certification of Tribal lands residency. Accordingly, the Commission reminds providers that they must retain the documentation demonstrating how the provider determined that a subscriber with a descriptive address resides on rural Tribal lands to claim the enhanced Tribal Lifeline support. For example, as providers do today to verify the accuracy of consumers' self-certification, providers may note if a subscriber has a ZIP code that is entirely located in an area eligible for enhanced support, or may record the latitude and longitude of the subscriber's residence to compare against a map identifying areas eligible for enhanced support. The Commission directs USAC to develop a process for subscribers with descriptive addresses who reside on Tribal lands for use in the National Verifier, and to make public the steps in that process to better inform providers about acceptable methods of determining whether such subscribers are eligible for enhanced support.

20. In the 2015 Lifeline FNPRM, the Commission sought comment on limiting enhanced Tribal Lifeline support to facilities-based service providers, just as the Commission in 2012 had limited enhanced Tribal Link Up support to facilities-based service providers that also received high-cost support. The Commission now concludes that such a limitation is appropriate. Accordingly, the Commission amends § 54.403(a)(3) of the Lifeline program rules to effectuate this change.

21. The Commission finds that last-mile facilities are critical to deploying, maintaining, and building voice- and broadband-capable networks on Tribal lands and Lifeline funds are more efficiently spent when supporting such networks. When the Lifeline discount is applied to a consumer's bill for a facilities-based service, those funds go directly toward the cost of providing that service, including provisioning, maintaining, and upgrading that provider's facilities. Since the introduction of enhanced Tribal and Link Up support in 2000, facilities-based providers have used that support to construct and upgrade networks on Tribal lands.

22. In contrast, Lifeline funds disbursed to non-facilities-based providers will still lower the cost of the consumer's service, but cannot directly support the provider's network because the provider does not have one. When the Commission eliminated Link Up support for non-facilities-based carriers on Tribal lands in 2012, it noted that at least one wireless reseller “has received approximately a million in Link Up support for two months in 2011 on Tribal lands in [Oklahoma] without building infrastructure”—contravening the purposes of the enhanced support. And in the 2015 Lifeline FNPRM, the Commission explained, “Lifeline program data show that two-thirds of enhanced Tribal support goes to non-facilities based providers, and it is unclear whether the support is being used to deploy facilities in Tribal areas”—which contravened the Commission's express “desire to use enhanced support to incent the deployment of facilities on Tribal lands.”

23. For the purposes of the Lifeline program, to enforce our revised § 54.403(a)(3), the Commission limits enhanced Tribal support to (1) fixed or mobile wireless facilities-based Lifeline service provided on Tribal lands with wireless network facilities covering all or a portion of the relevant Lifeline ETC's service area on Tribal lands; and (2) facilities-based fixed broadband or voice telephony service provided through the ETC's ownership or a long-term lease of last-mile wireline loop facilities capable of providing Lifeline service to all or a portion of the ETC's service area on Tribal lands. For purposes of enhanced Lifeline support, a fixed wireless provider must, consistent with FCC Form 477 instructions, provision or equip a broadband wireless channel to the end-user premises over licensed or unlicensed spectrum, while a mobile wireless provider must hold usage rights under a spectrum license or a long-term spectrum leasing arrangement along with wireless network facilities that that can be used to provide wireless voice and broadband services. (The Commission considers a long-term spectrum leasing arrangement as long-term de facto transfer spectrum leasing arrangements as defined and identified in 47 CFR 1.9003 and 1.9030, and long-term spectrum manager leasing arrangements as defined and identified in 47 CFR 1.9003 and 1.9020(e).) For wireline providers, the Commission considers a “long-term lease” as an indefeasible right of use (IRU) of 10 years or more over the last-mile facility in question. The Commission has found that IRUs carry many of the same indicia of control as full ownership and therefore are considered fully owned facilities in other regulatory contexts.

24. The Commission concludes that, in the Lifeline program, an ETC's use of tariffed and un-tariffed special access services, resold services offered pursuant to sections 251(b) and (c), commercially available resold services, or unbundled network elements (UNEs) does not demonstrate that the service is “facilities-based” because such services do not reflect investment in broadband-capable networks in the service area by the ETC. Previously, the Commission found that competitors' use of incumbent local exchange carrier (LEC) special access services is not relevant to whether there is sufficient facilities-based competition in a market to justify forbearance from the incumbent LEC's obligation to provide UNEs. Additionally, UNEs themselves are only available in those cases where competitors are “impaired” without access—that is, UNEs are available to competitive carriers for those network components that a “reasonably efficient” competitor would not likely be able to construct on its own and without which market entry would likely be uneconomic.

25. If an ETC offers service using its own as well as others' facilities in its service area on rural Tribal lands, it may only receive enhanced support for the customers it serves using its own last-mile facilities. The Commission finds this definition is technology-neutral as between fixed and mobile services.

26. For many of the same reasons the Commission limited Link Up support to facilities-based carriers on Tribal lands, the Commission finds that limiting enhanced Lifeline support to facilities-based service provided to subscribers residing on Tribal lands will focus the enhanced support toward those providers directly investing in voice- and broadband-capable networks on rural Tribal lands. The Commission finds that this result comports with the Act's direction to the Commission to base its policies on the principle that “low-income consumers and those in rural, insular, and high cost areas, should have access to telecommunications and information services . . . that are reasonably comparable to those services provided in urban areas. . . .” (47 U.S.C. 254(b)(3).) Directing enhanced Lifeline funds to facilities-based services makes those services more affordable and competitive for low-income consumers and also encourages investment that will ultimately provide more robust networks and higher quality service on rural Tribal lands. Doing so also ensures that the payments Lifeline providers receive from the Fund to serve rural Tribal lands will be reinvested in the “provision, maintenance, and upgrading” of facilities in those areas. (47 U.S.C. 254(e).) A number of Tribal Nations, Tribally-owned Lifeline providers, and other Lifeline providers agree with this decision and favor limiting enhanced support to providers with facilities, arguing that it will ensure that the enhanced subsidies reach the Tribal lands and residences that have never been connected and will support those network facilities already constructed.

27. The Commission disagrees with parties who argue that resellers' purchase of wholesale services from carriers that own facilities increases the incentive of those carriers to deploy and maintain their networks. Resellers offer little evidence beyond their own assertions that funneling Lifeline enhanced support funding through middle men will spur facilities-based carriers to invest in their rural, Tribal networks. Moreover, even if revenue from resellers marginally increases the ability and incentive of other providers to deploy or maintain facilities, the Commission concludes that this benefit is outweighed by our need to prudently manage Fund expenditures. Indeed, these resellers cannot explain how passing only a fraction of funds through to facilities-based carriers will mean more investment in rural Tribal areas than ensuring that facilities-based carriers receive 100 percent of the support. The Commission concludes that providing the enhanced support to Lifeline providers deploying, building, and maintaining critical last mile infrastructure is a more appropriate way to support the expansion of voice- and broadband-capable networks on Tribal lands. (The Commission reminds all ETCs that they may not discontinue Lifeline service to any community they serve without first relinquishing their ETC designation after the approval of the designation (state or federal) commission. See 47 U.S.C. 214(e)(4).)

28. To ensure compliance with this requirement and prevent potential waste, fraud, and abuse, the Commission directs USAC to take appropriate measures to verify that any ETC claiming enhanced rural Tribal support satisfies the facilities requirement outlined in this section prior to disbursing the enhanced support.

29. The Commission also clarifies that the “facilities-based” standard it describes bears only on whether the Lifeline provider is eligible to receive enhanced rural Tribal support. Whether a provider is “facilities-based” under the Act for purposes of seeking a Lifeline-only ETC designation and must obtain approval for a compliance plan to take advantage of blanket forbearance from the facilities requirement is unaffected by this standard and remains the same. (See 47 U.S.C. 214(e)(1)(A) (requiring ETCs to offer service “either using its own facilities or a combination of its own facilities and resale of another carrier's services”).)

30. To ensure all impacted parties have sufficient time to make the necessary changes adopted in this Fourth Report and Order, the Commission provides a transition period. The changes made in this Fourth Report and Order for enhanced Lifeline support on Tribal lands shall be effective 90 days after the Wireline Competition Bureau announces that the Commission has received approval from the Office of Management and Budget (OMB) for the new information collection requirements in this Fourth Report and Order subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13, or on August 1, 2018, whichever date occurs later. The Commission directs ETCs to notify, in writing, any customers who are currently receiving enhanced support who will no longer be eligible for enhanced support as a result of the changes in this Order. This notice must be sent no more than 30 days after the announcement of PRA approval. (Or, if the Commission has not received approval from the Office of Management and Budget (OMB) for the new information collection requirements in this Order subject to the Paperwork Reduction Act of 1995 (PRA), once OMB approval has been received.) This notice must inform any impacted customers that they will not receive the enhanced Lifeline discount beginning 90 days after the announcement of PRA approval or on August 1, 2018, whichever occurs later, and that customers residing on rural Tribal lands who are currently receiving service from a non-facilities-based provider have the option of switching their Lifeline benefit to a facilities-based provider to continue receiving enhanced rural Tribal support. The notice must also detail the ETC's offerings for Lifeline subscribers who are not eligible for enhanced support.

31. By this Order, the Commission eliminates the port freeze for voice and broadband internet access services found in § 54.411 of the Commission's rules. The Commission takes this action in response to significant concerns regarding the port freeze raised in Petitions for Reconsideration and other recent filings in the docket. In the 2016 Lifeline Order, 81 FR 33026, May 24, 2016, the Commission codified port freezes lasting 12 months for broadband internet access service and 60 days for voice telephony service. After reconsideration of certain findings in the 2016 Lifeline Order, the Commission now eliminates the Lifeline port freeze for voice and broadband internet access service.

32. The Commission established the extended port freeze for broadband internet access service “[t]o facilitate market entry for Lifeline-supported BIAS [broadband internet access service] offerings, provide additional consumer benefits, and encourage competition” by “allowing broadband providers the security of a longer term relationship with subscribers. . . .” Since the Commission adopted these requirements, multiple parties have filed Petitions for Reconsideration raising a variety of concerns regarding the port freeze rule. Petitioners argue that the port freeze requirements adversely impact consumers by restricting consumer choice and the record lacks evidence that demonstrates new entrants were or are having difficulty entering the Lifeline market. Petitioners also argue that the port freeze requirements were imposed without adequate notice, as required under the Administrative Procedure Act (APA); and raise concerns regarding the challenges ETCs will face from an administrative perspective in attempting to comply with the 12-month port freeze requirement. Because the Commission grants the petitions for reconsideration on other grounds below, it does not address the APA and administrative burden arguments here. Additionally, since implementation of the port freeze rule, other parties have raised concerns regarding the alleged improper invocation of consumer port freezes by certain Lifeline providers, which limits consumer choice, especially with regard to the 12-month port freeze for broadband service.

33. The Commission agrees with arguments raised by Petitioners and others that the disadvantages to consumers of the port freeze rule, in practice, outweigh the anticipated advantages; accordingly, the Commission eliminates the codified Lifeline benefit port freeze for voice and broadband internet access service. (See 47 CFR 54.411.) The Commission concludes that restricting the ability of Lifeline consumers to transfer their Lifeline benefit between service providers ultimately disadvantages Lifeline consumers. Such a restriction limits Lifeline consumers' ability to seek more competitive offerings and obtain those services that best meet their needs. In addition, restricting consumers' ability to transfer their Lifeline benefit will not promote competitive service offerings and, in fact, may diminish providers' motivation to provide higher quality service after enrolling a Lifeline-supported broadband subscriber, because the provider is assured a 12-month commitment from the subscriber. The Commission also agrees that the record evidence does not clearly support the view that a 12-month port freeze is necessary to ease market entry, and indeed can discourage new providers from entering the Lifeline market or a new geographical area because a significant portion of Lifeline subscribers would not be able to transfer their benefit to otherwise compelling new services offerings. Nor does the Commission believe that the 60-day port freeze for voice services adopted in the 2016 Lifeline Order, while leading to these disadvantages, is effective in furthering its desired goals.

34. In general, parties that filed in support of a longer port freeze argued that carriers will be willing to make more significant investments as a result of longer term customer-carrier relationships and that a longer port freeze will discourage consumers from “flipping.” Indeed, several carriers decry “flipping” and explain how consumer churn makes it harder for carriers to recover their costs, including the costs of free phones. But flipping and consumer churn are not unique to the Lifeline marketplace, and companies have repeatedly turned to voluntary agreements (such as contracts) and alternative business models (such as prepaid plans) to address such concerns without the federal government artificially limiting consumer choice. In addition, the Commission notes that the primary intent of the Lifeline program is to provide a discount on service rather than devices. To the extent that providing discounted or free devices incentivizes consumers to engage in flipping, that outcome primarily results from a service provider's own marketing practices. The Commission also notes that supporters of the port freeze generally did not assert the 12-month port freeze was needed to address impediments to entering the market.

35. The Commission disagrees with those commenters who contend that removing the 12-month broadband internet access service port freeze will reduce provider participation in the Lifeline program and make it “impossible to meet the Commission's minimum service standards and handset requirements at a cost that is affordable for low-income consumers.” (Joint Lifeline ETC Respondents' Opposition at 7-8.) The Commission adopted minimum service standards after considering the record and concluding that minimum service standards are not unduly burdensome. Affordability was an important factor in adopting minimum service standards, and the standards the Commission adopted struck “a balance between the demands of affordability and reasonable comparability.” While the Commission considered concerns raised by some providers that they would not be able to offer services that meet the minimum standards, the Commission ultimately concluded that allowing the Lifeline benefit to be used on services that do not meet minimum service standards would lead to the type of “second class” service that the minimum service standards are meant to eliminate. Furthermore, prior to the 2016 Lifeline Order, the shorter USAC-administered 60-day benefit port freeze for voice service did not drive providers out of the program. Indeed, the Commission is now acting in response to requests from Lifeline providers to eliminate or shorten the port freeze due to the administrative burdens associated with compliance.

36. The Commission codified the port freeze in part because it anticipated that consumers would benefit from greater choice and innovative service offerings as a result. In addition, the Commission envisioned benefits would accrue to consumers from a longer term relationship with their service providers. Since the implementation of the port freeze, the Commission has been presented with evidence, however, that it has not delivered the consumer benefits the Commission envisioned when it codified the requirement, but instead has incented certain providers to enroll consumers in offerings that provide little meaningful residential broadband access while locking in their Lifeline benefit with that provider for the following 12 months. These providers have used the port freeze to prevent customer churn, asserting that the service falls within the 12-month port freeze timeframe, even when offering plans with only 10 MB of guaranteed mobile cellular data. As a result, although the port freeze rule has in some instances resulted in longer term relationships as anticipated, any benefits have come at the expense of consumers who find themselves trapped in low-quality plans for a full year. Parties such as Consumer Action and the National Consumers League have urged the Commission “to stop the abuse of the so-called `port freeze' rule, which is now being used to limit consumer choice and access to true broadband service and broadband-suitable devices.” Because implementation of the port freeze has not, on balance, resulted in the anticipated benefits to Lifeline consumers and instead appears to have harmed consumers, the Commission now determines that this rule should be eliminated. The Commission also finds that retaining existing customers' port freezes would hinder consumer choice without leading or having led to improved offerings for consumers, and so the Commission declines to continue subscribers' existing port freezes.

37. Finally, the Commission clarifies the application of the Commission's rolling recertification rule in the absence of the port freeze rule and the port freeze exceptions. (47 CFR 54.410(f).) For purposes of rolling recertification, the subscriber's service initiation date is twelve months from the date of the most recent transfer or enrollment with the subscriber's current service provider, and recertification will be required every twelve months thereafter.

38. These changes to § 54.411 of the Commission's rules will become effective 60 days after publication of this Order in the Federal Register.

39. To ensure that qualifying low-income Americans receive quality, affordable Lifeline-supported broadband service, the Commission revises its rules concerning the application of Lifeline support. Section 54.403(b)(1) of the Commission's rules requires ETCs “that charge federal End User Common Line charges or equivalent federal charges” to apply federal Lifeline support to waive such charges for Lifeline subscribers. (47 CFR 54.403(b)(1).) The rule is silent, however, on the application of Lifeline support for subscribers receiving the Lifeline benefit for broadband internet access service, either in a bundle with qualifying voice telephony service or on a standalone basis, which does not have an End User Common Line charge. The Commission hereby clarifies that § 54.403(b)(1) of the Commission's rules only applies to subscribers receiving Lifeline-supported standalone voice telephony service or a bundled offering where the ETC is requesting reimbursement from the Lifeline program for the voice telephony component of the bundle.

40. USTelecom has filed a petition for reconsideration requesting, in relevant part, that the Commission eliminate § 54.403(b) of the Commission's rules to resolve the rule's ambiguity with regard to Lifeline-supported broadband internet access service. USTelecom argues that broadband internet access service does not have a federal End User Common Line charge or intrastate service, creating confusion as to how ETCs may comply with § 54.403(b) of the Commission's rules when the customer is receiving Lifeline-supported broadband internet access service. No parties filed in opposition to USTelecom's petition on this issue.

41. The Commission declines to eliminate the rule, as requested by USTelecom, so that ETCs seeking reimbursement for Lifeline voice telephony service, either on a standalone basis or in a bundle, will continue to apply the Lifeline discount to the EUCL. Instead the Commission now modifies § 54.403(b)(1) to clarify that this rule only applies to subscribers receiving standalone voice telephony service or a bundled offering where the ETC is requesting reimbursement from the Lifeline program for the voice telephony component of the bundle. By not addressing whether and how § 54.403(b)(1) applies to Lifeline-supported broadband internet access service, the rule causes unnecessary uncertainty for ETCs and may result in less affordable offerings for subscribers without any corresponding benefit for Lifeline subscribers. This revision of § 54.403(b)(1) also comports with the longstanding Commission goal of simplifying administration of the Lifeline program and reflecting current marketplace conditions. Accordingly, the Commission amends § 54.403(b)(1) to clarify that ETCs are only required to apply the Lifeline discount to the End User Common Line charge or equivalent federal charges where the ETC is receiving Lifeline support for that subscriber's voice telephony service.

42. The 2016 Lifeline Order modified § 54.410(b)(2)(ii), (c)(2)(ii), and (e) to require the National Verifier, where it is responsible for determining subscriber eligibility or conducting recertification, to provide a copy of the subscriber's certification to the provider. (47 CFR 54.410(b)(2)(ii), (c)(2)(ii), (e).) The Commission now resolves an apparent conflict in our rules and alters § 54.410(b)(2)(ii), (c)(2)(ii), and (e) of the Commission's rules to eliminate the requirement that the National Verifier provide copies of certifications to ETCs where the National Verifier is responsible for eligibility determinations.

43. USTelecom filed a petition for reconsideration requesting, in relevant part, modifications to § 54.410(b)(2)(ii), (c)(2)(ii), and (e) of the Commission's rules to properly reflect the 2016 Lifeline Order's intent with regard to the National Verifier. USTelecom argues that the text of the rule is in direct conflict with the 2016 Lifeline Order's language and intent. The 2016 Lifeline Order states: “[t]he National Verifier will retain eligibility information collected as a result of the eligibility determination process” and that “Lifeline providers will not be required to retain eligibility documentation for subscribers who have been determined eligible by the National Verifier.” However, § 54.410(b)(2)(ii), (c)(2)(ii), and (e) require Lifeline providers to retain eligibility documentation and certifications even when the National Verifier was responsible for the enrollment process. USTelecom adds that the cost and burden to providers of maintaining duplicative subscriber eligibility information from the National Verifier are unsupported by any “sound policy basis.” Further, USTelecom argues the rule may actually subvert program goals of “. . . `ensur[ing] that the National Verifier will incorporate robust privacy and data security best practices in its creation and operation of the National Verifier.' ” No parties filed in opposition to USTelecom's petition on this issue.

44. The Commission now modifies § 54.410(b)(2)(ii), (c)(2)(ii), and (e) to clarify that where the National Verifier is responsible for the consumer's initial eligibility determination or recertification, the National Verifier is not required to deliver copies of those certifications to the ETC. The Commission finds that this amendment to the rules is consistent with the goals of the National Verifier to ease burdens on Lifeline providers while improving privacy and security for consumers applying to participate in the program. This amendment also brings § 54.410 of the Commission's rules in line with the Commission's stated intent in the 2016 Lifeline Order that Lifeline providers would not be required to retain eligibility documentation for eligibility determinations made by the National Verifier. Additionally, the Commission agrees with USTelecom that requiring Lifeline providers to maintain duplicative subscriber enrollment documentation presents unnecessary risk to the privacy and security of subscriber information.

45. To fully realize the Commission's objectives of providing Lifeline-support for broadband services, the Commission provides clarity to ensure that service providers claiming Lifeline support for broadband service actually provide Lifeline customers with the level of broadband service intended in the 2016 Lifeline Order. In February 2017, the Wireline Competition Bureau solicited public comment on a TracFone Wireless, Inc. (TracFone) request for clarification regarding §§ 54.408 and 54.411 of the Commission's rules. The Commission now removes any uncertainty in the record with respect to whether certain Wi-Fi technologies qualify for Lifeline reimbursement by clarifying that broadband internet access delivered via Wi-Fi is not eligible for reimbursement as mobile broadband under the Lifeline program rules, and the Commission reiterates that mobile broadband service eligible for Lifeline reimbursement must be provided on a network using at least 3G (Third Generation) mobile technologies. The Commission also clarifies that a provider does not directly serve a customer with fixed broadband service under the Lifeline rules if that customer cannot access the services at their residential address and, therefore, Wi-Fi offerings like the “premium Wi-Fi” service described in the record also do not qualify for Lifeline support as fixed broadband service offerings.

46. In its request for clarification, TracFone sought clarification regarding the types of service that meet the minimum service standards for Lifeline-supported mobile broadband and qualify for the twelve-month benefit port freeze. In response, several commenters expressed concerns that interpreting the minimum service standards for Lifeline-eligible mobile broadband to allow for Wi-Fi-delivered broadband as described in the request would inhibit the Commission's goal of supporting quality service to low-income consumers, while others supported an interpretation of the Commission's rules that would permit Lifeline support for “premium Wi-Fi” access offerings.

47. The Commission clarifies that “premium Wi-Fi” and other similar networks of Wi-Fi-delivered broadband internet access service do not qualify as mobile broadband under the Lifeline program rules. (See 47 CFR 54.400 et seq.) In the 2016 Lifeline Order, the Commission focused on “mobile network technologies” and mobile service offerings over different generations of mobile technologies in adopting rules for Lifeline-eligible mobile broadband service. (See 47 CFR 54.408(b)(2)(i).) Against this backdrop, the Commission established minimum service standards, including minimum 3G (Third Generation mobile network) speeds, to qualify for Lifeline support. There is no evidence in the record that Wi-Fi-only technology, as deployed today, is a “mobile technology” or one of the “generations” of mobile technologies, as contemplated by the Commission in the 2016 Lifeline Order. Further, nothing in the record demonstrates that Wi-Fi, including “premium Wi-Fi,” as deployed today, should be treated as an industry accepted generation of mobile technology.

48. The Commission also disagrees with Telrite that the use of the term “3G” in the § 54.408(b)(2)(i) of the Commission's rules was only intended as a proxy for a particular minimum network speed threshold and not a generation of mobile technology. In the 2016 Lifeline Order, the Commission's discussion makes it clear that it was incorporating industry mobile technology generations, and that 3G was not just a proxy for a speed threshold. The Commission, for example, stated that “[f]or the mobile broadband minimum service standard for speed, it relies on Form 477 data while also incorporating industry mobile technology generation (i.e., 3G, 4G).”

49. Unlike Wi-Fi, mobile networks provide ubiquitous mobility with large service area coverage. Wi-Fi access, however, can be a complement to a consumer's primary broadband service. Lifeline-eligible mobile broadband requires a mobile service provided through 3G mobile broadband technologies or subsequent and superior generations of mobile broadband technologies. Accordingly, the rules governing Lifeline support for a “mobile broadband service” contemplate not just a minimum of “3G” mobile network threshold speeds, but also a mobile network. (47 U.S.C. 153(33) (defining “mobile service”); 47 CFR 20.3 (same).) As noted above, mobile networks, unlike current Wi-Fi networks, provide ubiquitous mobility within a large service area. Was the Commission to interpret the minimum service standard otherwise, an ETC could offer any fixed service with an arguably fast-enough speed, limit it to serve end users primarily using mobile devices, and claim that such a service was in fact “mobile” broadband because it offers speeds faster than “3G.” As a result, the section establishing Lifeline minimum service standards for fixed broadband service would have no meaningful application, because ETCs could simply offer the much lower data allowances permitted under the mobile broadband standards, supplement that amount with Wi-Fi-delivered data, and receive the same Lifeline support amount. (See 47 CFR 54.408(b)(1).)

50. The Commission also clarifies that a provider does not directly serve a customer with fixed broadband service under the Lifeline rules if that customer cannot access the service at their residential address. (See 47 CFR 54.407(a) (“Universal service support for providing Lifeline shall be provided directly to an eligible telecommunications carrier based on the number of actual qualifying low-income customers it serves directly as of the first day of the month.”)) The 2016 Lifeline Order contemplates Lifeline-supported fixed broadband service as a residential service. A service that, for example, purports to offer Lifeline-supported fixed broadband service but only provides customers with access to hotspots that a qualifying low-income subscriber cannot access from their own residence undermines the Commission's requirement that carriers directly provide service to receive reimbursement. A review of the Wi-Fi service disputed in the record before us indicates that the iPass network used to provide the premium Wi-Fi service keeps customers connected in “hotels, airports, and other business venues,” trains, airplanes, and convention centers, and in many towns only includes hotspots at establishments with pre-existing free public Wi-Fi offerings, like McDonald's, Burger King, and Walmart. (See The iPass Global Wi-Fi Network, iPass (last visited Oct. 24, 2017), https://www.ipass.com/mobile-network/. See also, e.g., iPass hotspot locations in Indianola, Iowa, and Forrest City, Arkansas, https://hotspot-finder.ipass.com/united-states/indianola-iowa, https://hotspot-finder.ipass.com/united-states/forrest-city-arkansas (last visited Oct. 24, 2017).) Some commenters indicated that these hot spot locations are “likely to be of little use to most Lifeline customers” because few of the hot spots are located in low-income residential areas, and the hot spot locations “may not be common areas in which Lifeline customers would find themselves trying to utilize their Lifeline supported [broadband internet access service].” (TracFone Wireless Reply at 7 & n. 12; Public Utility Division of Oklahoma Comments at 4.) TracFone also states that based on its sample testing for one Florida ZIP Code, “[l]ess than one percent of the 10,223 Lifeline households within that ZIP Code reside within areas covered by iPass hotspots” and that nine of the twelve iPass hot spots within that ZIP Code “are located inside business locations (typically, restaurants and hotels, and only available to patrons of those businesses).” Accordingly, these types of premium Wi-Fi services would be functionally inaccessible to many Lifeline consumers and, thus, offering such services does not directly serve a Lifeline customer with fixed broadband service as required by § 54.407(a) of the Lifeline rules.

51. The Fourth Report and Order contains new information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. It will be submitted to the Office of Management and Budget (OMB) for review under section 3507(d) of the PRA. OMB, the general public, and other federal agencies will be invited to comment on the revised information collection requirements contained in this proceeding. In addition, the Commission notes that pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, the Commission previously sought specific comment on how it might further reduce the information collection burden on small business concerns with fewer than 25 employees.

52. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), the Federal Communications Commission (Commission) included an Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on a substantial number of small entities by the policies and rules proposed in the 2015 Lifeline FNPRM in WC Docket Nos. 11-42, 09-197, 10-90. The Commission sought written public comment on the proposals in the 2015 Lifeline FNPRM, including comment on the IRFA. This Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.

53. The Commission is required by section 254 of the Communications Act of 1934, as amended, to promulgate rules to implement the universal service provisions of section 254. The Lifeline program was implemented in 1985 in the wake of the 1984 divestiture of AT&T. On May 8, 1997, the Commission adopted rules to reform its system of universal service support mechanisms so that universal service is preserved and advanced as markets move toward competition. Since the 2012 Lifeline Reform Order, 77 FR 12952, March 2, 2012, the Commission has acted to address waste, fraud and abuse in the Lifeline program and improved program administration and accountability. In this Fourth Report and Order, Order on Reconsideration, and Memorandum Opinion and Order (Order), the Commission takes steps to focus Lifeline program support to effectively and efficiently bridge the digital divide for low-income consumers while minimizing the contributions burden on ratepayers. The Commission resolves questions regarding enhanced Lifeline support for Tribal lands, which were raised in the 2015 Lifeline Further Notice of Proposed Rulemaking but left unaddressed by the 2016 Lifeline Order. The Commission resolves Petitions for Reconsideration to improve competition and efficiency in the Lifeline program. The Commission enables competition and empower Lifeline consumers by increasing their ability to switch their Lifeline benefit to a new provider. The Commission also clarifies how Lifeline providers should apply the Lifeline discount to service offerings that include Lifeline-supported broadband internet access service.

54. The RFA directs agencies to provide a description of and, where feasible, an estimate of the number of small entities that may be affected by the proposed rules, if adopted. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A small business concern is one that: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA). Nationwide, there are a total of approximately 28.2 million small businesses, according to the SBA. A “small organization” is generally “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.”

55. Small Entities, Small Organizations, Small Governmental Jurisdictions. Our actions, over time, may affect small entities that are not easily categorized at present. The Commission therefore describes here, at the outset, three comprehensive small entity size standards that could be directly affected herein. As of 2016, according to the SBA, there were 28.8 million small businesses in the U.S., which represented 99.9 percent of all businesses in the United States. Additionally, a “small organization is generally any not-for-profit enterprise which is independently owned and operated and not dominant in its field.” Nationwide, as of 2014, there were approximately 2,131,200 small organizations. Finally, the term “small governmental jurisdiction” is defined generally as “governments of cities, towns, townships, villages, school districts, or special districts, with a population of less than fifty thousand”. U.S. Census Bureau data published in 2012 indicates that there were 89,476 local governmental jurisdictions in the United States. The Commission estimates that, of this total, as many as 88,761 entities may qualify as “small governmental jurisdictions.” Thus, the Commission estimates that most governmental jurisdictions are small.

56. A number of our rule changes will result in additional reporting, recordkeeping, or compliance requirements for small entities. For all of those rule changes, the Commission has determined that the benefit the rule change will bring for the Lifeline program outweighs the burden of the increased requirement/s. Other rule changes decrease reporting, recordkeeping, or compliance requirements for small entities. The Commission has noted the applicable rule changes below impacting small entities.

57. Compliance burdens. All of the rules the Commission implements impose some compliance burdens on small entities by requiring them to become familiar with the new rules to comply with them. For several of the new rules the burden of becoming familiar with the new rule in order to comply with it is the only additional burden the rule imposes.

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

59. This rulemaking could impose minimal additional burdens on small entities. In this Order, the Commission modifies certain Lifeline rules to target funding to areas where it is most needed. In developing these rules, the Commission worked to ensure the burdens associated with implementing these rules would be minimized for all service providers, including small entities. In taking this action, the Commission considered potential impacts on service providers, including small entities. The Commission considered alternatives to the rulemaking changes that increase projected reporting, recordkeeping and other compliance requirements for small entities, including alternatives on how to define “rural” for purposes of describing rural Tribal lands and how the Commission and USAC could provide mapping resources to help small entities identify with certainty areas that are eligible for enhanced support. In developing our rules related to Tribal benefits, the Commission carefully crafted the requirements to be easier on all service providers and determined that a specific carve-out for small businesses was not necessary.

60. No commenters specifically offered alternatives to the changes made in this Order. Further, given the narrow and targeted scope of the changes being made no alternative readily presents itself to limit the burdens on small business or organizations. The identified increase in burden is minimal and outweighed by the advantages in combating waste, fraud, and abuse in the program.

61. Accordingly, it is ordered, that pursuant to the authority contained in sections 1 through 4, 201 through 205, 254, and 403 of the Communications Act of 1934, as amended, 47 U.S.C. 151-154, 201-205, 254, and 403, and § 1.2 of the Commission's rules, 47 CFR 1.2, this Fourth Report and Order, Order on Reconsideration, and Memorandum Opinion and Order is adopted effective thirty (30) days after the publication of this Fourth Report and Order, Order on Reconsideration, and Memorandum Opinion and Order, in the Federal Register, except to the extent provided herein and expressly addressed below.

62. It is further ordered, that pursuant to the authority contained in sections 1 through 4, 201 through 205, 254, and 403 of the Communications Act of 1934, as amended, 47 U.S.C. 151-154, 201-205, 254, and 403, part 54 of the Commission's rules, 47 CFR part 54, is amended as described in the following Final Rules, and such rule amendments to §§ 54.403(b) and 54.410 of the Commission's rules shall be effective thirty (30) days after the publication of this Fourth Report and Order, Order on Reconsideration, and Memorandum Opinion and Order in the Federal Register.

63. It is further ordered, that pursuant to the authority contained in sections 1 through 4, 201 through 205, 254, and 403 of the Communications Act of 1934, as amended, 47 U.S.C. 151-154, 201-205, 254, and 403, that the removal and reservation of § 54.411 of the Commission's rules shall be effective sixty (60) days after the publication of this Fourth Report and Order, Order on Reconsideration, and Memorandum Opinion and Order in the Federal Register.

64. It is further ordered, that pursuant to the authority contained in sections 1 through 4, 201 through 205, 254, and 403 of the Communications Act of 1934, as amended, 47 U.S.C. 151-154, 201-205, 254, and 403, part 54 of the Commission's rules, 47 CFR part 54, is amended as described in the following Final Rules, and such rule amendments to §§ 54.403(a)(3), 54.413, and 54.414 of the Commission's rules are subject to the PRA and shall be effective ninety (90) days after announcement in the Federal Register of OMB approval of the subject information collection requirements or on August 1, 2018, whichever occurs later.

65. It is further ordered that, pursuant to the authority contained in sections 1-5 and 254 of the Communications Act of 1934, as amended, 47 U.S.C. 151-155 and 254, and § 1.429 of the Commission's rules, 47 CFR 1.429, the Petition for Reconsideration filed by United States Telecom Association on June 23, 2016 and the Petition for Reconsideration/Clarification of NTCA—The Rural Broadband Association and WTA—Advocates for Rural Broadband are granted to the extent described above.

66. It is further ordered that the Commission shall send a copy of this Fourth Report and Order, Order on Reconsideration, and Memorandum Opinion and Order to Congress and to the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR part 54 as follows:

You may submit your comments and materials regarding this direct final rule by one of the methods listed in ADDRESSES. Please include sufficient information with your comments to allow us to verify any scientific or commercial information you include. We will not consider comments sent by email or fax, or to an address not listed in ADDRESSES.

We will post all comments on http://www.regulations.gov. Before including your address, phone number, email address, or other personal information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.

Comments and materials we receive, as well as supporting documentation we used in preparing this direct final rule, will be available for public inspection on the internet at http://www.regulations.gov. Please note that comments posted to http://www.regulations.gov are not immediately viewable. When you submit a comment, the system receives it immediately. However, the comment will not be publicly viewable until we post it, which might not occur until several days after the submission. Information regarding this rule is available in alternative formats upon request (see FOR FURTHER INFORMATION CONTACT).

In a final rule published in the Federal Register on June 2, 1970 (35 FR 8491), we listed the orangutan (Pongo pygmaeus) under the Act's precursor, the Endangered Species Conservation Act of 1969 (Pub. L. 91-135), as an endangered species, and since then, the species has remained listed as an endangered species under the Act (16 U.S.C. 1531 et seq.).

We are directed by title 50 of the Code of Federal Regulations (CFR) at §§ 17.11(c) and 17.12(b) (50 CFR 17.11(c) and 17.12(b)) to use the most recently accepted scientific name of any wildlife or plant species, respectively, that we have determined to be an endangered or threatened species.

Orangutans were historically classified as one species with two subspecies, Pongo pygmaeus pygmaeus and P. p. abelii. In accordance with taxonomic classifications at the time, we listed the orangutan in 1970, recognizing one species of orangutan (Pongo pygmaeus) as the listed entity occurring in Indonesia, Malaysia, and Brunei (35 FR 8491; June 2, 1970). However, the orangutan, currently only found in northern Sumatra (Indonesia) and Borneo (Indonesia and Malaysia), has recently been reclassified as belonging to two distinct species: P. pygmaeus, which occurs in Borneo (Malaysia and Indonesia), and P. abelii, which occurs in northern Sumatra (Indonesia) (Groves, in WWF Orangutan Action Plan, 1999, p. 27; Singleton et al. 2016, p. 3; Singleton et al. 2004, p. 181; Xu and Arnason 1996, p. 435; Brandon-Jones et al. 2004, pp. 153-155; Zhang et al. 2001, pp. 522-525). Additionally, orangutans in Borneo (P. pygmaeus) are now recognized to contain three subspecies (P. pygmaeus pygmaeus, P. p. wurmbii, and P. p. morio) (Brandon-Jones et al. 2004, pp. 181, 193).

While some scientists question the data and effectiveness of elevating Sumatran and Bornean orangutans to full species (Muir 1998, p. 378; Muir et al. 2000, pp. 476-479), species-level classification was advocated jointly in April 2000, by Conservation International, the International Union for the Conservation of Nature Species Survival Commission's Primate Specialist Group, and the Center for Environmental Research and Conservation (Orangutan Species Survival Plan 2015). The newer classification recognizing two distinct species is widely accepted today by most experts based on genetic and morphological data (Singleton et al. 2016, p. 3; Ancrenaz et al. 2016, p. 3).

The entity that resides closest to Brunei is a subspecies of P. pygmaeus. Individual orangutans in Brunei are described as transient, and no permanent populations have been reported there (World Atlas of Great Apes and Their Conservation 2005, p. 427; Orangutan Foundation International 2017, no pagination).

All orangutan populations are encompassed by the previous listed entity, Pongo pygmaeus. Using the best available scientific information, this direct final rule documents the reclassification of the orangutan as two distinct species, Pongo pygmaeus and Pongo abelii, on the List of Endangered and Threatened Wildlife (50 CFR 17.11(h)). This change is supported by published studies in peer-reviewed journals, and it does not affect the range or endangered status of the orangutan. If other Pongo species emerge due to future taxonomic revisions to further subdivide the genus Pongo, they would be encompassed by the original listing and this technical correction.

The purpose of this direct final rule is to notify the public that we are revising the List of Endangered and Threatened Wildlife at 50 CFR 17.11(h) to reflect the scientifically accepted taxonomy and nomenclature of the orangutan. In accordance with 50 CFR 17.11(c), we are revising the taxonomy of the orangutan to reflect the reclassification of the previously listed entity into two distinct species, acknowledging both Pongo pygmaeus and P. abelii as endangered species under the Act.

We are publishing this final rule without a prior proposal because this is a technical action that is in the best interest of the public and should be undertaken in as timely a manner as possible. It does not alter the regulatory protections afforded to the orangutan but is a taxonomic revision necessary to acknowledge that both Pongo pygmaeus and Pongo abelii retain endangered status under the Act.

This rule will be effective, as published in this document, on the effective date specified in DATES, unless we receive significant scientific information that provides strong justifications as to why this rule should not be adopted or why it should be changed on or before the comment due date specified in DATES.

If we receive comments containing significant scientific information that provides strong justifications as to why this rule should not be adopted or why it should be changed regarding the taxonomic change for the orangutan, we will publish a document in the Federal Register withdrawing this rule before the effective date. If the rule is withdrawn, we may publish a proposed rule to initiate promulgation of this taxonomic revision or we may end the rulemaking process.

We have determined that environmental assessments and environmental impact statements, as defined under the authority of the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.), need not be prepared in connection with regulations issued pursuant to section 4(a) of the Act. We published a notice outlining our reasons for this determination in the Federal Register on October 25, 1983 (43 FR 49244).

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 help us to revise this rule, your comments should be as specific as possible.

A list of the references cited in this direct final rule is provided in Docket No. FWS-HQ-ES-2017-0081 at http://www.regulations.gov.

Accordingly, we hereby amend part 17, subchapter B of chapter I, title 50 of the Code of Federal Regulations, as set forth below: