Federal Register Vol. 83, No.205,

Executive Order 12866

The Office of Management and Budget (OMB) has waived the review process required by Executive Order (E.O.) 12866 for this action.

This final rule was reviewed under E.O. 12988, Civil Justice Reform. It is not intended to have a retroactive effect. This action would not preempt any State or local laws, regulations, or policies unless they present an irreconcilable conflict with this rule.

The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 1971 of the Act (7 U.S.C. 6306), a person subject to the Soybean Promotion and Research Order (7 CFR part 1220, subpart A (hereinafter referred to as the Order)) may file a petition with USDA stating that the Order, any provision of the Order, or any obligation imposed in connection with the Order is not in accordance with the law and request a modification of the Order or an exemption from the Order. The petitioner is afforded the opportunity for a hearing on the petition. After a hearing, USDA would rule on the petition. The Act provides that district courts of the United States in any district in which such person is an inhabitant, or has his or her principal place of business, have jurisdiction to review USDA's ruling on the petition if a complaint for this purpose is filed within 20 days after the date of the entry of the ruling.

Pursuant to the requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612 et seq.), AMS has considered the economic effect of this final rule on small entities and has determined that this action does not have a significant economic impact on a substantial number of small businesses entities because it only adjusts representation on the Board to reflect changes in production levels that have occurred since the Board was last reapportioned in 2015. The purposed of RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small business will not be unduly burdened.

There are an estimated 515,008 soybean producers and an estimated 10,000 first purchasers who collect the assessment, most of whom would be considered small businesses under the criteria established by the Small Business Administration (SBA) [13 CFR 121.201]. SBA defines small agricultural producers as those having annual receipts of less than $750,000.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the reporting and recordkeeping requirements included in 7 CFR part 1220 were previously approved by OMB and were assigned control number 0581-0093.

The Act (7 U.S.C. 6301-6311) provides for the establishment of a coordinated program of promotion and research designed to strengthen the soybean industry's position in the marketplace, and to maintain and expand domestic and foreign markets and uses for soybeans and soybean products. The program is financed by an assessment of 0.5 percent of the net market price of soybeans sold by producers. Pursuant to the Act, the Order, which established an initial Board with 60 members, became effective July 9, 1991. For purposes of establishing the Board, the United States was divided into 31 States and geographical units. Representation on the Board from each unit was determined by the level of production in each unit. The initial Board was appointed on July 11, 1991. The Board is comprised of soybean producers. Section 1220.201(c) of the Order provides that at the end of each 3-year period, the Board shall review soybean production levels in the geographic units throughout the United States. The Board may recommend to the Secretary of Agriculture modifications in the levels of production necessary to determine Board membership for each unit.

Section 1220.201(d) of the Order provides that at the end of each 3-year period, the Secretary must review the volume of production of each unit and adjust the boundaries of any unit and the number of Board members from each such unit as necessary to conform with the criteria set forth in § 1220.201(e): (1) To the extent practicable, States with annual average soybean production of less than 3 million bushels shall be grouped into geographically contiguous units, each of which has a combined production level equal to or greater than 3 million bushels, and each such group shall be entitled to at least one member on the Board; (2) units with at least 3 million bushels, but fewer than 15 million bushels shall be entitled to one board member; (3) units with 15 million bushels or more but fewer than 70 million bushels shall be entitled to two Board members; (4) units with 70 million bushels or more but fewer than 200 million bushels shall be entitled to three Board members; and (5) units with 200 million bushels or more shall be entitled to four Board members.

The Board was last reapportioned in 2015. The total Board membership increased from 70 to 73 members, with Missouri, New Jersey, and Wisconsin each gaining one additional member. The final rule was published in the Federal Register (80 FR 63909) on October 22, 2015. This change was effective with the 2016 appointments.

This final rule will increase total membership on the Board from 73 to 78, based on production data for years 2013-2017 (excluding the crops in years in which production was the highest and in which production was the lowest) as reported by USDA's National Agricultural Statistics Service. This change will not affect the number of geographical units.

This final rule will adjust representation on the Board as follows:

Board adjustments will become effective with the 2019 appointment process.

A proposed rule was published in the Federal Register (83 FR 31477) on July 6, 2018, with a 60-day comment period. USDA received no comments.

For the reasons set forth in the preamble, 7 CFR part 1220 is amended as follows:

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to remove AD 2017-13-03, Amendment 39-18933 (82 FR 28397, June 22, 2017) (AD 2017-13-03) and add a new AD. AD 2017-13-03 applied to Bell Model 429 helicopters, S/N 57001 through 57260, with a pylon restraint spring assembly (spring assembly) forward rod end assembly (rod end) part number (P/N) 427-010-210-105 installed. AD 2017-13-03 required cleaning and marking each forward rod end with the S/N of the spring assembly. AD 2017-13-03 also prohibited the installation of forward rod end P/N 427-010-210-105 on any helicopter unless it had been marked.

The NPRM published in the Federal Register on April 5, 2018 (83 FR 14606). The NPRM was prompted by AD No. CF-2015-15R1, Revision 1, dated July 28, 2017, issued by Transport Canada, which is the Technical Agent for the Member States of Canada, to correct an unsafe condition for Bell Model 429 helicopters, S/Ns 57001 through 57260. Transport Canada advises that, per its regulations, life-limited parts must be marked with their P/N and S/N. Transport Canada further states that spring assembly rod end P/Ns 427-010-210-105 and -109 have a life limit of 5,000 hours; however, they are not serialized, causing difficulties in tracking accumulated air time. According to Transport Canada, this condition could result in a rod end remaining in service beyond its life limit. Therefore, the Transport Canada AD requires adding identification markings on each spring assembly rod end.

Accordingly, the NPRM proposed to continue to retain the requirements of AD 2017-13-03 and revise the Applicability paragraph by adding aft rod end P/N 427-010-210-109 since it is also affected by the same unsafe condition. The proposed requirements were intended to prevent a rod end from remaining in service after reaching its life limit, which could result in failure of the rod end and subsequent loss of control of a helicopter.

After our NPRM was published, we received a comment from one commenter.

Bell noted a typographical error in the “Actions Since AD 2017-13-03 Was Issued” section of the preamble, which incorrectly referred to rod end P/N 427-010-210-105 instead of P/N 427-010-210-109.

We agree with the comment. However, since the text with the error is not restated in the preamble of this Final Rule, no change is necessary.

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.

We reviewed Bell Helicopter Alert Service Bulletin 429-15-19, dated February 26, 2015, for Model 429 helicopters. This service information specifies procedures for permanently marking each forward and aft rod end with the S/N of the spring assembly. This service information applies to certain serial-numbered helicopters, as subsequent helicopters will have these actions performed during the manufacturing process.

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 also reviewed Bell Helicopter Maintenance Manual BHT-429-MM-1, Chapter 4, Airworthiness Limitations Schedule, Revision 26, approved September 9, 2016, which specifies airworthiness life limits and inspection intervals for parts installed on Model 429 helicopters.

We estimate that this AD affects 75 helicopters of U.S. Registry. We estimate that operators may incur the following costs in order to comply with this AD.

Marking the rod ends takes about 0.5 work-hour for an estimated cost of $43 per helicopter and $3,225 for the U.S. fleet. Replacing a rod end that has exceeded its life limit takes about 3 work-hours and required parts cost about $4,100 for an estimated cost of $4,355 per rod end.

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 distinction is required, 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:

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to remove AD 2018-11-05, Amendment 39-19293 (83 FR 24016, May 24, 2018) (“AD 2018-11-05”), and add a new AD to correct an unsafe condition on certain Honda Model HA-420 airplanes. We issued AD 2018-11-05 as a short-term immediate action to detect a faulty PBV. AD 2018-11-05 required inserting a temporary revision into the AFM and replacing the installed PBV, part number (P/N) HJ1-13243-101-005 or P/N HJ1-13243-101-007, with an improved PBV, P/N HJ1-13243-101-009, if any of the procedures listed in the AFM temporary revision revealed a leaking PBV. In addition, AD 2018-11-05 allowed replacing the installed P/N HJ1-13243-101-005 or P/N HJ1-13243-101-007 with the improved P/N HJ1-13243-101-009 as an optional terminating action for the temporary revision procedures in the AFM. AD 2018-11-05 resulted from reports of unannunciated asymmetric braking during ground operations and landing deceleration.

The NPRM published in the Federal Register on June 7, 2018 (83 FR 26381). The NPRM was issued as follow-on rulemaking to propose the long-term actions necessary to address the faulty PBV. The NPRM proposed to retain the requirements of AD 2018-11-05 and require replacing the installed PBV, P/N HJ1-13243-101-005 or P/N HJ1-13243-101-007, with the improved PBV, P/N HJ1-13243-101-009, within 12 months. We are issuing this AD to address the long-term corrective action.

We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM or on the determination of the cost to the public.

We reviewed the relevant data and determined that air safety and the public interest require adopting this AD as proposed except for minor editorial changes. We also removed the optional terminating action provision, which allowed operators to replace the PBV at any time to terminate the pre-flight checks in the AFM, because that provision was unnecessary. The requirement to replace the PBV within 12 months of the effective date of this AD provides operators with that same option. We have determined that these minor changes:

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

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

We reviewed Honda AFM Temporary Revision TR 01.1, dated February 16, 2018 (temporary revision), Honda Service Bulletin SB-420-32-001, dated January 8, 2018 (SB-420-32-001), and Honda Service Bulletin SB-420-32-001, Revision B, dated April 16, 2018 (SB-420-32-001, Revision B). The temporary revision contains procedures for pilot checks of the braking system before every flight during ground operations and before every landing, procedures for landing with a leaking PBV, and procedures for rechecking the PBV for leaking after landing. The temporary revision also includes instructions for corrective actions if any indication of a leaking PBV is found after landing. SB-420-32-001 and SB-420-32-001, Revision B both contain procedures for replacing a faulty PBV with an improved PBV. 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.

SB-420-32-001 and SB-420-32-001, Revision B specify submitting certain information to the manufacturer. This AD does not require that action.

We estimate that this AD affects 72 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

We provided the cost of replacing the PBV as an on-condition cost based on the procedures in the temporary revision and as an optional terminating action in AD 2018-11-05. We have no way of determining how many owner/operators of the affected airplanes may have already done this replacement. Therefore, we have included a total cost for all affected airplanes.

The difference in the Cost of Compliance between AD 2018-11-05 and this AD is the requirement to replace the power brake valve.

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 small airplanes, gliders, balloons, airships, domestic business jet transport airplanes, and associated appliances to the Director of the Policy and Innovation Division.

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, 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:

Section 104(b)(1)(B) of the CPSIA, also known as the Danny Keysar Child Product Safety Notification Act, requires the Commission to promulgate consumer product safety standards for durable infant or toddler products. The law requires that these standards are to be “substantially the same as” applicable voluntary standards or more stringent than the voluntary standards if the Commission concludes that more stringent requirements would further reduce the risk of injury associated with the product.

Section 104(b) of the CPSIA also sets forth a process for updating CPSC's mandatory durable infant or toddler standards when the voluntary standard upon which such standards are based are modified. Section 104(b)(4)(B) of the CPSIA provides that if an organization revises a standard that has been adopted, in whole or in part, as a consumer product safety standard under this subsection, it shall notify the Commission. By statute, the revised voluntary standard shall be considered to be a consumer product safety standard issued by the Commission under section 9 of the Consumer Product Safety Act (15 U.S.C. 2058), effective 180 days after the date on which the organization notifies the Commission (or such later date specified by the Commission in the Federal Register) unless, within 90 days after receiving that notice, the Commission notifies the organization that it has determined that the proposed revision does not improve the safety of the consumer product covered by the standard and that the Commission is retaining the existing consumer product safety standard.

The Commission issued a safety standard for infant bath tubs on March 30, 2017, codified at 16 CFR part 1234. 82 FR 15615. The bath tub standard incorporated by reference the then-current voluntary standard for infant bath tubs, ASTM F2670-17, Standard Consumer Safety Specification for Infant Bath Tubs. Paragraph 3.1.2 of ASTM F2670-17 defines an “infant bath tub” as a “tub, enclosure, or other similar product intended to hold water and be placed into an adult bath tub, sink, or on top of other surfaces to provide support or containment, or both, for an infant in a reclining, sitting, or standing position during bathing by a caregiver.” Paragraph 1.1 of ASTM F2670-17 specifically excludes “products commonly known as bath slings, typically made of fabric or mesh” from the scope of the standard. However, the preambles to proposed and final rules for infant bath tubs discuss that ASTM was working to include accessories in the standard.1 In 2017, CPSC staff recommended proceeding with the final rule intending to update the mandatory rule after updating the voluntary standard to include infant bath tub accessories. See March 15, 2017, Briefing Package regarding Staff's Final Rule for Infant Bath Tubs Under the Danny Keysar Child Product Safety Notification Act, at 13-14.2

On July 19, 2018, ASTM officially notified the CPSC that ASTM published a revised 2018 version of ASTM F2670, approved on March 1, 2018. The revised ASTM F2670 includes bath tub accessories and specifies other minor changes, as discussed below in section II of this preamble. By statute, the revised ASTM F2670-18 shall be considered a consumer product safety standard issued by the Commission, effective 180 days after July 19, 2018 (January 15, 2019), unless the Commission specifies a later effective date in the Federal Register, or notifies ASTM within 90 days of July 19, 2018 (October 17, 2018) that the Commission has determined that the proposed revision does not improve the safety of infant bath tubs and that the Commission will retain ASTM F2670-17 as the mandatory standard.

As reviewed in sections II and VI of this preamble, the Commission determines that the proposed revision in ASTM F2670-18 improves the safety of infant bath tubs, and therefore, will allow the revision to become a consumer product safety standard effective January 15, 2019. Accordingly, the Commission is revising the incorporation by reference in 16 CFR 1234.2 to reference ASTM F2670-18.

The 2018 revision to ASTM F2670 expands the scope of the voluntary standard to include accessories used with an infant bath tub, includes new performance tests for accessories used with infant bath tubs, and makes corresponding changes to product labeling and instructions. ASTM F2670-18 also includes several non-substantive changes that do not affect safety, such as spacing, formatting, and language stating that ASTM developed the standard in accordance with principles recognized by the World Trade Organization. None of these changes affects the safety of infant bath tubs. Accordingly, below we summarize the major revisions made in ASTM F2670-18.

ASTM F2670-17 specifically excludes infant bath tub accessories from the bath tub standard. The revised ASTM F2670-18 now explicitly states that included within the scope of the standard are “slings, pads, inserts and similar accessories when such accessories are used with the infant bath tub.” Adding bath tub accessories to the scope of the standard improves the safety of infant bath tubs because the revision is intended to address product failure incidents involving accessories, which are now included with the sale of some infant bath tubs.

The revised standard includes six new definitions to address the addition of infant bath tub accessories and other changes recommended by the ASTM subcommittee for consistency across juvenile product safety standards. New terms include “double action release system,” “fabric,” “infant bath tub accessory,” “product,” “protective component,” and “seam.” Paragraph 3.1.5 of ASTM F2670-18 defines “infant bath tub accessory” as a “component or product sold with an infant bath tub or sold separately and that is intended to be attached or placed on or in an infant bath tub for the purpose of supporting an infant during bathing by an adult caregiver.” 3 Revisions in ASTM F2670-18 use this definition to expand the scope of the voluntary standard and apply new testing and labeling requirements to such products to reduce the risk of injury associated with the use of infant bath tub accessories used with an infant bath tub.

ASTM F2670-18 contains revised general requirements that now include infant bath tub accessories, such as the general requirement for Resistance to Collapse. Paragraph 5.4.1 requires that infant bath tub accessories must contain latching and locking mechanisms to prevent the unintentional collapse of the product with the infant in the product, using either a single or double action release system as described in paragraphs 5.4.1.1 and 5.4.1.2, and that meet the new testing requirements in section 7 of the standard. The majority of incidents noted in the proposed and final rules for infant bath tubs involved bath tub accessories that collapsed during use. Accordingly, revising general requirements to address this risk of injury improves the safety of infant bath tubs when used with infant bath tub accessories.

Changes in paragraphs 5.7 and 5.8 of ASTM F2670-18 improve the safety of infant bath tub accessories by extending the existing requirements for protective components and toys to include infant bath tub accessories. Paragraph 5.10 of the revised standard, Compliance with Multi-use Products, is a new provision aimed at addressing infant bath tub accessories that can be used alone or with an infant bath tub. ASTM F2670-18 only applies to infant bath tub accessories when used with an infant bath tub. Paragraph 5.10 states that if an infant bath tub accessory can be used as a standalone product that is subject to a different standard, the product must be tested and comply with the requirements of that standard as well. Paragraph 5.10 ensures that infant bath tub accessories are tested to every applicable standard. This revision improves safety by ensuring that existing requirements apply to infant bath tub accessories, and by ensuring that all use modes of infant bath tub accessories are required to be in compliance with applicable standards.

Paragraph 6.4 of ASTM F2670-18 includes new performance testing for infant bath tub accessories, Structural Integrity/Attachment of Infant Bath Tub Accessories. The new requirements include: Static and dynamic load testing to ensure that accessories stay attached to the bath tub during use; integrity and strength testing for fabric and mesh accessories to ensure no material breakage, disengagement, detachment, or change in the ability to support an infant; and seam strength testing of fabric and mesh accessories to ensure a breakage strength of 30 lbf or greater. The addition of performance requirements for infant bath tub accessories improves safety because the requirements are intended to address the incident data reports involving infant bath tub accessories, as described in the proposed and final rules for infant bath tubs, that previously were not covered by the voluntary or mandatory standard.

Paragraph 7 of ASTM F2670-18 contains the test methods to determine whether the product complies with the performance requirements in paragraph 6, including the new testing requirements for bath tub accessories. Revisions to paragraph 7.1, Latching and Locking Mechanism(s), add 730 cycles of testing on latching and locking mechanisms for an infant bath tub accessory while maintaining 2000 cycles of testing on the bath tub. The number of cycles for testing accessories is lower than bath tubs, with the assumption that consumers will use the accessory for a shorter length of time (while the infant cannot sit up unassisted) than the bath tub. The addition of paragraphs 7.6 Structural Integrity—Infant Bath Tub Accessory and 7.7 Mesh/Fabric Attachment Strength Test Method, provide new testing requirements that correspond to the performance requirements in paragraph 6. For example, the test method for the dynamic load test acknowledges that infants are not stationary and move around on the accessories. The new test methods for infant bath tub accessories in paragraph 7 of ASTM F2670-18 adequately determine compliance with the performance requirements in paragraph 6 of the standard, and therefore improve safety.

Revisions to the marking and labeling section in paragraph 8 of the 2018 revised standard include requiring the same drowning and fall hazard warnings on infant bath tub accessories as are on the bath tub, except “infant bath tub accessories” replaces “infant bath tub.” ASTM F2670-18 provides that manufacturers can use one set of labels, solely on the bath tub, if the warnings on the bath tub are visible while the accessory is in place, and the accessory can only be used while on the bath tub. This requirement prevents over-labeling, which can lead to warning saturation and consumers disregarding warnings. To allow the single label on the bath tub to include the accessories, the hazard statements in paragraphs 8.5.1.1 and 8.5.2.1 were changed from “exactly as stated” to “shall address.” Use of the phrase “shall address” allows manufacturers to combine the infant bath tub and infant bath tub accessory hazard statements to be merged to read: “Drowning Hazard: Babies have drowned while using infant bath tubs and infant bath tub accessories.” When infant bath tub accessories are sold separately, ASTM F2670-18 requires that the drowning and fall hazard warnings appear on the retail packaging, unless such warnings on the product are not concealed by the packaging.

The requirements for instructional literature in paragraph 9 of ASTM F2670-18 have been broadened to include infant bath tub accessories, similar to the marking and labeling section of the revised standard (paragraph 8).

The Office of the Federal Register (OFR) has regulations concerning incorporation by reference. 1 CFR part 51. Under these regulations, agencies must discuss, in the preamble to the final rule, ways that the materials the agency incorporates by reference are reasonably available to interested persons, and how interested parties can obtain the materials. In addition, the preamble to the final rule must summarize the material. 1 CFR 51.5(b).

In accordance with the OFR's requirements, section II of this preamble summarizes the substantive revisions in ASTM F2670-18 that the Commission incorporates by reference into 16 CFR part 1234. The standard is reasonably available to interested parties, and interested parties may purchase a copy of the standard from ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959 USA; phone: 610-832-9585; http://www.astm.org/. A copy of the standard can also be inspected at CPSC's Division of the Secretariat, U.S. Consumer Product Safety Commission, Room 820, 4330 East West Highway, Bethesda, MD 20814, telephone 301-504-7923.

Section 14(a) of the CPSA requires that products subject to a consumer product safety rule under the CPSA, or to a similar rule, ban, standard, or regulation under any other act enforced by the Commission, be certified as complying with all applicable CPSC requirements. 15 U.S.C. 2063(a). Such certification must be based on a test of each product, or on a reasonable testing program, or, for children's products, on tests of a sufficient number of samples by a third party conformity assessment body accredited by the Commission to test according to the applicable requirements. Standards for durable infant or toddler products that are issued under section 104(b)(1)(B) of the CPSIA are “consumer product safety standards.” Thus, the revised standard for infant bath tubs is subject to the testing and certification requirements of section 14 of the CPSA.

Because infant bath tubs are children's products, samples of these products must be tested by a third party conformity assessment body whose accreditation has been accepted by the Commission. These products also must comply with all other applicable CPSC requirements, such as the lead content requirements in section 101 of the CPSIA, the phthalates prohibitions in section 108 of the CPSIA, the tracking label requirement in section 14(a)(5) of the CPSA, and the consumer registration form requirements in section 104(b) of the CPSIA.

In accordance with section 14(a)(3)(B)(iv) of the CPSA, the Commission has previously published a notice of requirements (NOR) for accreditation of third party conformity assessment bodies for testing infant bath tubs (78 FR 15836 (March 12, 2013) (final rule for 16 CFR part 1112); 82 FR 15626 (final rule for infant bath tubs updating part 1112)). The NOR provided the criteria and process for our acceptance of accreditation of third party conformity assessment bodies for testing infant bath tubs to 16 CFR part 1234 (which incorporated ASTM F2670-17). The NOR is listed in the Commission's rule, “Requirements Pertaining to Third Party Conformity Assessment Bodies.” 16 CFR part 1112.

Staff's analysis of the new testing requirements in ASTM F2670-18 for infant bath tub accessories concludes that such testing does not require use of new or specialized equipment that is different than testing equipment for ASTM F2670-17. Staff states that testing accessories pursuant to ASTM F2670-18 requires use of existing testing equipment and similar testing protocols that are used to test infant bath tubs, with minor adjustments. For example, the new dynamic test for accessories uses the same testing equipment as the static load test already in the standard. Moreover, staff states that the revised standard provides clear instructions and figures to describe the load placement for accessory testing. Testing laboratories that have previously demonstrated competence for testing in accordance with ASTM F2670-17 will have the competence to test in accordance with the revised standard. Therefore, the Commission will consider the existing accreditations that CPSC has accepted for testing to ASTM F2670-17 to also cover testing to F2670-18. In this case, the existing NOR for this standard will remain in place, and CPSC-accepted third party conformity assessment bodies are expected to update the scope of the testing laboratories' accreditation to reflect the revised standard in the normal course of renewing their accreditation. CPSC staff will notify all CPSC-accepted labs by direct email and will provide links to the Federal Register notice to explain the changes to the standard and the effective date.

The Commission is issuing this rule as a direct final rule. Although the Administrative Procedure Act (APA) generally requires notice and comment rulemaking, section 553 of the APA provides an exception when the agency, for good cause, finds that notice and public procedure are “impracticable, unnecessary, or contrary to the public interest.” 5 U.S.C. 553(b)(B). The Commission concludes that when the Commission updates a reference to an ASTM standard that the Commission has incorporated by reference under section 104(b) of the CPSIA, notice and comment are not necessary.

The process set forth in section 104(b)(4)(B) of the CPSIA specifies that when ASTM revises a standard previously incorporated by reference by the Commission as a durable infant or toddler product under section 104(b)(1)(b) of the CPSIA, the revision will become the new CPSC standard, unless the Commission determines that ASTM's revision does not improve the safety of the product. Thus, unless the Commission makes such a determination, the ASTM revision becomes CPSC's standard by operation of law. The Commission is allowing ASTM F2670-18 to become CPSC's new standard. The purpose of this direct final rule is merely to update the reference in the Code of Federal Regulations (CFR), so that the CFR accurately reflects the version of the standard that takes effect by statute. Public comment will not impact the substantive changes to the standard or the effect of the revised standard as a consumer product safety standard under section 104(b) of the CPSIA. Under these circumstances, notice and comment are not necessary.

The Commission also highlights that in Recommendation 95-4, the Administrative Conference of the United States (ACUS) endorsed direct final rulemaking as an appropriate procedure to expedite promulgating rules that are noncontroversial and that are not expected to generate significant adverse comment. See 60 FR 43108 (August 18, 1995). ACUS recommends that agencies use the direct final rule process when they act under the “unnecessary” prong of the good cause exemption in 5 U.S.C. 553(b)(B). Consistent with the ACUS recommendation, the Commission is publishing this rule as a direct final rule because we do not expect any significant adverse comments.

Unless the Commission receives a significant adverse comment within 30 days, the rule becomes effective on January 15, 2019. In accordance with ACUS's recommendation, the Commission considers a significant adverse comment to be one where the commenter explains why the rule would be inappropriate, including an assertion challenging the rule's underlying premise or approach, or a claim that the rule would be ineffective or unacceptable without change.

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

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

The infant bath tub standard contains information collection requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The current revision to incorporate by reference a new version of ASTM F2670 makes no changes to the information collection previously established for infant bath tubs. Thus, the revision will not have any effect on the information collection requirements related to the standard.

The Commission's regulations provide a categorical exclusion for the Commission's rules from any requirement to prepare an environmental assessment or an environmental impact statement because they “have little or no potential for affecting the human environment.” 16 CFR 1021.5(c)(2). This direct final rule falls within the categorical exclusion, so no environmental assessment or environmental impact statement is required.

Section 26(a) of the CPSA, 15 U.S.C. 2075(a), provides that where a “consumer product safety standard under [the Consumer Product Safety Act (CPSA)]” is in effect and applies to a product, no state or political subdivision of a state may either establish or continue in effect a requirement dealing with the same risk of injury, unless the state requirement is identical to the federal standard. Section 26(c) of the CPSA also provides that states or political subdivisions of states may apply to the Commission for an exemption from this preemption under certain circumstances.

Section 104(b)(1)(B) of the CPSIA refers to the rules to be issued under that section as “consumer product safety standards,” thus, implying that the preemptive effect of section 26(a) of the CPSA would apply. Therefore, a rule issued under section 104 of the CPSIA will invoke the preemptive effect of section 26(a) of the CPSA when it becomes effective.

Under the procedure set forth in section 104(b)(4)(B) of the CPSIA, when a voluntary standard organization revises a standard upon which a consumer product safety standard issued under section 104(b) of the CPSIA was based, the revision becomes the CPSC standard within 180 days of notification to the Commission, unless the Commission determines that the revision does not improve the safety of the product, or the Commission sets a later date in the Federal Register. The Commission has not set a different effective date. Thus, in accordance with this provision, this rule takes effect 180 days after we received notification from ASTM of revisions to these standards. As discussed in the preceding section, this is a direct final rule. Unless we receive a significant adverse comment within 30 days, the rule will become effective on January 15, 2019.

For the reasons stated above, the Commission amends Title 16 CFR chapter II as follows:

BNSF has requested a temporary deviation from the operating schedule for the BNSF Bridge 37.0, mile 1.0, crossing Steamboat Slough (Snohomish River), near Marysville, WA. BNSF requested for BNSF Bridge 37.0 be allowed to remain in the closed-to-navigation position for swing span maintenance. This maintenance will improve the reliability of the bridge for marine openings. The normal operating schedule for the subject bridge is in 33 CFR 117.1059. BNSF Bridge 37.0 is a swing bridge and provides 8 feet of vertical clearance above mean high water elevation while in the closed-to-navigation position.

This deviation allows the BNSF Bridge 37.0 to remain in the closed-to-navigation position, and need not open for maritime traffic from 11 a.m. on November 26, 2018 to 3 p.m. on December 14, 2018 per the table below:

The Louisiana Department of Transportation and Development (LADOTD) requested a temporary deviation from the operating schedule of the State Route 433 Bridge across Bonfouca Bayou, mile 7.0, at Slidell, St. Tammany Parish, Louisiana. This deviation is necessary to accommodate the removal and replacement of the open grid steel deck on the movable section of the swing bridge, which will take place seven days a week during nighttime hours. The vertical clearance of the bridge is 8 feet above mean high water (MHW) in the closed-to-navigation position and unlimited in the open-to-navigation position. There is 125 feet of fender to fender horizontal clearance. The bridge currently operates under 33 CFR 117.433.

This deviation is effective from 6 p.m. on Saturday, October 27, 2018, through 6 a.m. on Friday, December 7, 2018. During the deviation period, the bridge will be closed-to-navigation from 6 p.m. to 6 a.m., Monday through Friday, and from 6 p.m. to 9 a.m. on Saturday and Sunday, including holidays. At all other times, the bridge will operate in accordance with 33 CFR 117.433.

During the nighttime repair periods when the bridge is in the closed-to-navigation position, vessels will not be allowed to pass through the bridge and the bridge will not be able to open for emergencies. Navigation on the waterway consists mainly of recreational craft, with some tugs with tows. There is no alternative route. The Coast Guard will inform the users of the waterways through our Local and Broadcast Notices to Mariners of the change in operating schedule for the bridge so that vessel operators can arrange their transits to minimize any impact caused by the temporary deviation.

In accordance with 33 CFR 117.35, the drawbridge must return to its regular operating schedule immediately at the end of the effective period of this temporary deviation. This deviation from the operating regulations is authorized under 33 CFR 117.35.

The Washington Department of Transportation (WSDOT), the bridge owner, has requested a temporary deviation from the operating schedule of the Hood Canal Bridge. This deviation will allow the subject bridge to open half of the draw span, east half only, to facilitate replacement of worn equipment discovered after installation of upgrades. The Hood Canal Bridge crosses Hood Canal, mile 5.0, near Port Gamble, WA. The bridge has two fixed spans (east and west), and one draw span (center). The east span provides 50 feet of vertical clearance, the west span provides 35 feet of vertical clearance, and the center span provides zero feet of vertical clearance in the closed-to-navigation position. The center span provides unlimited vertical clearance in the open-to-navigation position. Vertical clearances are referenced to mean high-water elevation.

This deviation allows the center span of the Hood Canal Bridge to open half-way (300 feet vice 600 feet) on signal after receiving at least a four hour notice from 6 a.m. on October 13, 2018 to 11:59 p.m. on November 16, 2019. During the period of this deviation, the drawbridge will not be able to operate according to the normal operating schedule. The normal operating schedule for the Hood Canal Bridge is in accordance with 33 CFR 117.1045. The bridge shall operate in accordance to 33 CFR 117.1045 at all other times. Waterway usage on this part of Hood Canal (Admiralty Inlet) includes commercial tugs and barges, U.S. Navy and U.S. Coast Guard vessels, and small pleasure craft. Coordination has been completed with known waterway users, and a no objections to the deviation have been received.

Vessels able to pass through the east and west spans may do so at any time. The center span does not provide passage in the closed-to-navigation position. The subject bridge will be able to open half the center span for Navy and Coast Guard vessels during emergencies, when at least a one hour notice has been given by the Navy or Coast Guard. The Coast Guard will also inform the users of the waterways through our Local and Broadcast Notices to Mariners of the change in operating schedule for the bridge so that vessels can arrange their transits to minimize any impact caused by this temporary deviation.

In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular operating schedule immediately at the end of the effective period of this temporary deviation. This deviation from the operating regulations is authorized under 33 CFR 117.35.

This is a summary of the Commission's Report and Order in WC Docket No. 17-192, CC Docket No. 95-155, FCC 18-137, adopted September 26, 2018, and released September 27, 2018. The full text of this document is available for public inspection during regular business hours in the FCC Reference Information Center, Portals II, 445 12th Street SW, Room CY-A257, Washington, DC 20554. It is available on the Commission's website at https://docs.fcc.gov/public/attachments/FCC-18-137A1.pdf.

1. Today, we demonstrate our continued commitment to modernize the way we assign toll free numbers by adopting an additional assignment methodology that is both market-based and equitable. Based on the Federal Communications Commission's success using competitive bidding to assign spectrum licenses and award universal service support, we adopt new measures to explore the use of competitive bidding for the assignment of toll free numbers. To further evaluate this approach, as an experiment we establish the framework in this Report and Order for an auction of the rights to use certain numbers in the recently-opened 833 toll free code. After the release of this Report and Order, we will initiate the pre-auction phase of this proceeding to seek input on the procedures for the auction. This experiment will help us determine how best to use competitive bidding to most effectively assign toll free numbers, as well as provide experience in applying auction procedures to the toll-free numbering assignment process.

2. Toll free calling and texting remains an important part of our communications system. Even as websites and smartphone apps have provided new avenues for public engagement, businesses, government entities, and non-profit organizations alike continue to make use of toll free services to keep an open line to the public, and enterprising subscribers put toll free numbers to use in creative new ways. Toll free services rely on toll free numbers—a limited resource the Commission is charged by statute with making available “on an equitable basis.”

3. Toll free calling began in 1967, with the introduction of the 800 toll free code. The 800 code was established by AT&T, and the Commission's role in the toll free service market increased over the following 30 years. In 1997, faced with the possibility of exhaust of the 800 code, the Commission concluded that the Communications Act of 1934, as amended, “require[s] the Commission to ensure the efficient, fair, and orderly allocation of toll free numbers.” Thirty years later, when the Commission opened the second toll free code—888—it addressed an age-old question for the first time in the context of toll free numbers: How can limited resources be most fairly and efficiently allocated when some of those resources are more desirable than others? Whether they were desirable because they were easy to remember, because they could spell a name or common word, or because a subscriber had built up good will in that number in the 800 code, some 888 numbers were likely to be highly desirable while others might draw no interest at all.

4. Congress has given the Commission only one guideline regarding the allocation of toll-free numbers: Do so “on an equitable basis.” Interpreting this guideline after opening the 888 code, the Commission understood “equitable” to include two prongs: “orderly and efficient” and “fair.” After considering multiple methodologies to assign toll free numbers, the Commission settled on a first-come, first-served approach. The Commission also offered a limited right of first refusal to subscribers of 800 numbers that expressed an interest in subscribing to that number in the 888 code. Inspired by its low cost and simplicity, the Commission found such an approach to be “orderly and efficient”; it also concluded that it was “fair” because it did not discriminate on its face against any potential subscribers.

5. Among the alternate methodologies the Commission considered when it opened the 888 code was competitive bidding. The Commission observed the fairness of this approach, stating that it “would offer all participants an equal opportunity to obtain a particular . . . number”; it also described auctions as “generally efficient.” Although the Commission had conducted spectrum auctions prior to the 888 code opening, the Commission concluded that an auction of toll free numbers presented “practical difficulties”—not only could it cost more than a first-come, first-served approach, but it could also require oversight to ensure that bidders met requirements and followed auction procedures.

6. When the Commission decided how to assign certain 888 toll free numbers, the Commission's auctions program was still in its relatively early stages. The Commission's first spectrum auction was held in July 1994. The Notice of Proposed Rulemaking for the 888 toll free code was adopted in October 1995, and the 1998 Toll Free Order was adopted in March 1998. In the 20 years since that decision, the Commission has conducted over 70 spectrum auctions, including those for commercial wireless licenses and broadcast construction permits, using various auction formats. More recently, the Commission has begun using auctions as a mechanism for distributing universal service high-cost support.

7. During this same period, the first-come, first-served approach to toll free number assignment—which was used with some modification for the 877, 866, 855, and 844 code openings—has been subject to scrutiny by the Wireline Competition Bureau (Bureau) for falling short of expectations in several ways. For example, first-come, first-served assignment has rewarded actors that have invested in systems to increase the chances that their choices are received first in the Service Management System Database (the Toll Free Database, the “database system for toll free numbers,” in which entities reserve numbers and “enter and amend the data about toll free numbers within their control”); and, by assigning numbers at no cost, it has allowed accumulation of numbers without ensuring those numbers are being put to their most efficient use. The Bureau addressed this latter issue, and the issue of some registrants having enhanced connectivity to the toll free database, by limiting registrants to 100 numbers per day for a month after the opening of the last two codes, 844 and 855.

8. 833 Code Opening. In April 2017, the Bureau authorized Somos, Inc. (Somos), the Toll Free Numbering Administrator, to open the 833 toll free code. To facilitate the exploration of alternative assignment methodologies, the Bureau took steps in the pre-code opening process to identify numbers that could be part of an experiment regarding the use of an alternative assignment process, such as an auction. Specifically, the Bureau authorized Responsible Organizations (RespOrgs, which are “entit[ies] chosen by a toll free subscriber to manage and administer the appropriate records in the toll free Service Management System for the toll free subscriber”) to identify up to 2,000 desired numbers in the 833 code and submit a request for those numbers to Somos. The Bureau directed Somos to review these requests, identify numbers subject to multiple requests, and place these “mutually exclusive” numbers in unavailable status (which means “[t]he toll free number is not available for assignment due to an unusual condition”) pending the outcome of this proceeding. Numbers that were not requested by multiple RespOrgs were made available on a first-come, first-served basis.

9. Nearly 150 RespOrgs participated in the 833 pre-code opening process, requesting over 72,000 numbers. Somos identified over 17,000 mutually exclusive numbers—including “ `repeaters' (833-333-3333, 833-888-8888, 833-800-0000, etc.) and numbers that spell memorable words or phrases (833-DENTIST, 833-DOCTORS, 833-FLOWERS . . . etc.)”—and placed those numbers in unavailable status. Ten or more RespOrgs requested over 1,800 mutually exclusive numbers, and 65 or more RespOrgs requested the ten most popular numbers.

10. Notice of Proposed Rulemaking. In September 2017, the Commission released the Toll Free Assignment NPRM, which proposed and sought comment on steps to better promote the equitable and efficient assignment and use of toll free numbers. Specifically, the Commission proposed expanding the existing toll free number assignment rule to include assignment by auction or other equitable assignment methodologies, and assigning the over 17,000 mutually exclusive numbers in the 833 toll free code through competitive bidding. (The Commission also proposed and sought comment on various specific auction rules and mechanisms.) The Commission also sought comment on eliminating the brokering (under our rules, the selling of numbers by a subscriber for a fee), warehousing (the reservation of numbers by a RespOrg without an actual subscriber for whom the numbers are being reserved), and hoarding (the acquisition of more numbers by a subscriber than it intends to use) prohibitions; setting aside numbers for use for public interest purposes; options to address abuse of toll free numbers; and changes to overall toll free numbering administration. The Commission received comments from various stakeholders including RespOrgs, service providers, and companies that have built their businesses around toll free calling.

11. Given the passage of time since adopting the first-come, first-served methodology, and experience gained in opening five toll free codes, we modify our toll free number assignment rule to give the Commission flexibility to implement alternative approaches to assigning numbers. As an experiment in using such an alternative approach, we establish an auction to assign the over 17,000 identified mutually exclusive numbers in the 833 code (the 833 Auction). We also designate Somos as the auctioneer. While this Report and Order provides Somos with the general framework for the 833 Auction, we also provide for a pre-auction process to establish detailed auction procedures after additional notice and comment, as is typical in all Commission auctions. We require Somos to implement the established procedures to conduct the auction and, after the bidding has ended, to provide the Commission with all data and information gained from the auction. Moreover, consistent with our goal of assigning numbers via a market mechanism, we create an exception to our brokering, warehousing, and hoarding prohibitions for numbers acquired through competitive bidding.

12. We adopt the toll free assignment revision of section 52.111 of our rules that the Commission proposed in the Toll Free Assignment NPRM. (We adopt the proposed rule revision with two minor changes. First, we make our rule consistent with the rules governing spectrum and universal service support competitive bidding, by using the phrase “competitive bidding” rather than “auction.” Second, we improve the clarity of our rule by removing proposed language providing that the Commission will assign numbers through an assignment methodology “as circumstances require.” We further make administrative revisions to our toll free rules, consistent with the recommendations of the North American Numbering Council (NANC) Toll Free Assignment Modernization Working Group Report.) Our revised rule allows the Commission to direct the assignment of toll free telephone numbers to RespOrgs and subscribers on an equitable basis by competitive bidding, on a first-come, first-served basis, by using an alternative assignment methodology, or by a combination of these approaches. We find that our experience assigning toll free numbers since the original rule's adoption 20 years ago—in which time certain entities have undertaken efforts to increase their chances that desirable numbers are assigned to them through the first-come, first-served system—supports the revised rule's flexible approach to number assignment and is supported by the record.

13. With our revised rule, we increase our options to assign toll free numbers in a way that accounts for valuable social use. The revised rule provides us greater flexibility to explore alternative assignment mechanisms in addition to the current first-come, first-served methodology. By revising our rule to permit—but not obligate—the Commission to assign toll free numbers by auction, we add a valuable tool to our tool chest while maintaining the flexibility to craft assignment mechanisms suited to the nature of different inventories of numbers. One commenter argues that, in so doing we are “upending” the toll free market to address demand for a “statistically insignificant” amount of toll free numbers. But the demand for those specific numbers is not insignificant and, in fact, demonstrates the need to reconcile the demand with the assignment mechanism. Our rule does not mandate the use of a new assignment mechanism, instead allowing for targeted modifications to the assignment process going forward as circumstances require.

14. We find that revising our rules to allow alternative means of toll free number assignment is consistent with our statutory obligation to distribute numbers on an equitable basis. Section 251(e)(1) of the Communications Act of 1934, as amended (the Act), directs the Commission to make numbers available on an equitable basis. We find that the revised rule adopted today facilitates assignment of numbers equitably, per the standards of our precedent. The flexibility of our rule, including the option to use competitive bidding to assign toll free numbers, increases the likelihood that, as limited resources, toll free numbers will be assigned to parties that value the numbers most.

15. In considering whether number distribution means are equitable under section 251(e)(1), we consider the principles of order, efficiency, and fairness. In so doing, the Commission has allowed exceptions to the assignment of numbers by the first-come, first-served approach, with the intent to serve the broader public interest of equitably distributing the finite resource of toll free numbers. (For example, the Wireline Competition Bureau allowed a right of first refusal in 1997 for 800 number subscribers seeking corresponding 888 code numbers. The Bureau has also rationed the release of disconnected 800 code numbers, and the release of 844 and 855 numbers upon opening of those codes. Aside from modifications of first-come, first-served, assignment, the Bureau has also assigned numbers upon request for reasons of national defense and public safety.) When it established the first-come, first-served assignment method in the 1998 Toll Free Order, the Commission opined that pursuant to section 251(e)(1), the Commission must apply a two-part test to determine if any given assignment methods were “1) orderly and efficient, and 2) fair.” When it first applied this test over twenty years ago, based on certain limitations and unknown factors with respect to number auctions, the Commission found that “the use of a first-come, first-served assignment method is a more equitable method of allocating these numbers.” With the benefit of some twenty years' of additional experience in toll free number allocation, in addition to extensive use of the auction mechanism in various contexts, we now reassess this conclusion.

16. Section 251(e)(1) Test for Assigning Toll Free Numbers. We reapply the 251(e)(1) two-part test and conclude that the use of competitive bidding, like the other assignment methodologies in revised rule section 52.111, will result in an orderly, efficient, and fair assignment of toll free resources. The Commission has explained that an orderly toll free number assignment mechanism “will simplify the administrative requirements necessary to assign toll free numbers and avoid the need to resolve competing claims among subscribers to particular numbers.” Additionally, an efficient toll free number assignment mechanism will minimize exhaust of the toll free numbering resource.

17. After reevaluating the criteria in the 1998 Toll Free Order, we conclude that assigning toll free numbers through the use of competitive bidding is orderly; any entity interested in a toll free number can, through an auction, express the value it places on a particular number, in a clear, transparent, and relatively simple manner. Moreover, assigning a number to the entity that places the highest bid is easy to understand and avoids the need to resolve competing claims among potential subscribers to particular numbers. Further, the first-come, first-served approach has not always resulted in an orderly and efficient distribution of highly-valued—i.e., mutually exclusive—numbers. Since the Commission's adoption of this approach in the 1998 Toll Free Order, the Bureau has intervened to withhold or ration highly desired numbers in subsequent code openings due to concerns with the first-come, first-served assignment process. The Bureau, expressing concern that RespOrgs were inefficiently warehousing numbers, implemented conservation plans for four out of the seven presently available toll free number codes.

18. Given the Commission's considerable experience with auctions since 1998 and the ability of an entity to bid the value it places on a particular number in a clear, transparent, and relatively simple manner, we believe any administrative costs and “practical difficulties” in holding an auction would be significantly lower than previously believed, making it more likely that the efficiencies of competitive bidding will outweigh such costs. Therefore, we conclude that adding competitive bidding as one possible assignment method meets the first prong of our established test, namely, that an assignment mechanism be orderly and efficient.

19. We also find that the market-based assignment methodologies in revised rule 52.111 are fair, meeting the second part of the section 251(e)(1) test. The Commission has explained that a fair toll free number assignment mechanism is one that gives “[a]ll subscribers . . . an equal opportunity to reserve desirable toll free numbers as new codes are opened.” Using a competitive bidding process to assign mutually exclusive toll free numbers can provide interested parties with a level playing field, on which everyone has the same ability to express their valuation for specific numbers in a clear, transparent manner, using an equally accessible method. Based on our experience with auctions in other contexts, we find that we are more likely to achieve our stated objective of assigning mutually exclusive toll-free numbers on an equitable basis by allowing all qualified bidders the same opportunity to express their value for a number and assigning the numbers to the party that values it the most, than if we use a method by which a number is assigned to the party that employs the most advanced access system. (We expect that the experimental use of an auction for mutually exclusive 833 toll free numbers (as adopted in this item) will yield additional insight into whether auctions are the best methodology for assigning toll free numbers and, if so, how best to use competitive bidding in the future.) Moreover, the current method leads to unnecessary expenditure on equipment to gain a timing advantage, whereas the proceeds from a toll free number auction will go towards the administration of the toll free system.

20. While in its 1998 application of this test, the Commission stated that auctions “offer all participants an equal opportunity to obtain a particular . . . number,” it also concluded that a first-come, first-served assignment mechanism was also fair and selected that approach due to its then perceived benefits of order and efficiency. We find that the Commission's prior conclusion has not borne out for highly desired toll free numbers; indeed, the Bureau has intervened in the last four toll free code openings, altering the first-come, first-served methodology precisely to ensure fairness in the toll free number assignment methodology.

21. Since the 1998 Toll Free Order was adopted, the Commission has observed that the underlying numbering access technology has evolved: Certain automated systems now used to access the Toll Free Database have placed smaller RespOrgs at a competitive disadvantage because they do not have the capacity to quickly reserve sought-after vanity numbers. Enhanced connectivity gives larger, more sophisticated entities the incentive to invest in these systems to increase the chances that their number requests are processed. This situation undermines a key rationale for the first-come, first-served approach: That all interested parties have an equal chance of getting a number. And while it advances the separate goal of ensuring a number is quickly allocated to the party that values it most highly—a differential willingness to invest indicates an underlying differential in the value the investing party sees in numbers—it does so only loosely, since there is no direct mechanism that allows potential subscribers to bid in their valuation. In the absence of conservation controls, the Bureau has seen evidence of unfair access following new toll free code openings. For example, following the 877 and 866 code openings, the Commission received reports from RespOrgs suggesting that during database “timeouts,” only RespOrgs with more advanced access systems were able to reserve numbers, while RespOrgs not using those advanced systems were “locked out” and unable to reserve their desired numbers. For the 855 and 844 toll free code openings, the Bureau directed the toll free database administrator to limit the quantity of toll free numbers a RespOrg may reserve to 100 per day for the first 30 days—“larger RespOrgs with enhanced connectivity to the [toll free] database” would otherwise be able to more quickly to reserve sought-after numbers than smaller RespOrgs without enhanced connectivity.

22. We reject commenters' arguments that an auction is unfair because it favors parties with deep pockets. An auction allocates the number to the bidder willing to pay the most, but that willingness may derive from expected future revenues from a profitable business case, rather than from the bidders' current finances. Moreover, auctions should reflect the value of the toll free number in the marketplace and a bidder may be able to obtain financing based on anticipated profitability. We anticipate that a first-come, first-served approach will continue to be an appropriate assignment methodology in some circumstances, however. For instance, first-come, first-served assignment may be appropriate for less desirable numbers, or in instances where numbers made available via an auction are not assigned thereby. We expect that our experience with the 833 Auction will provide us with insight we can use when determining the best mechanism for assignment of a given set of numbers.

23. Effective Assignment of Toll Free Resources. Our revised assignment rule gives us a new option for the assignment of numbers, without removing currently available options. The Commission has extensive experience in public outreach and education about the auction process, including online tutorials for the auction application and bidding processes. Based on this experience, we disagree with the argument that providing adequate notice to the public about auction procedures will be unreasonably costly. Nor do we agree with commenters who argue that preparing for and participating in the auction will be unduly burdensome to participants. We recognize that individual subscribers or RespOrgs acquiring toll free numbers through an auction may incur some costs relating to the participation in the auction that they did not incur through the first-come, first-served process, but we believe those costs are outweighed by the benefits to the toll free system at large when toll free numbers are put to their highest-valued use. Many toll free numbers have a much greater value for certain subscribers. Some 150 RespOrgs participated in the 833 pre-code opening process, requesting over 72,000 numbers. This fact undermines the basic rationales on the effectiveness of first-come, first-served for mutually exclusive numbers—that first-come, first-served allocation requires less oversight, and avoids “the need to resolve competing claims among subscribers to assignment of particular numbers.” On the contrary, the Commission has been compelled to provide increased oversight by intervening multiple times to ensure new code openings are “orderly and efficient” and “fair,” and adjudicated numbering conflicts in at least two notable cases. Our practice of resolving competing claims has previously been resolved inefficiently in favor of the party most privileged with access to the faster reservation system. Instead of the number going to whichever entity happens to be first in the door (thereby preventing others, who may value it more, from getting it), use of competitive bidding will give all entities an equal opportunity to express the value they place on any particular number. By increasing the likelihood that mutually exclusive toll free numbers are assigned to parties that will use the resource in the most productive way, we in turn increase the efficiency and equity of our number assignment process.

24. Revising the Commission's rules to allow us to assign numbers by auction, on a first-come, first-served basis, an alternative assignment methodology, or by a combination of the forgoing as circumstances require, gives the Commission the flexibility to adapt our assignment procedures to the circumstances and characteristics of the specific toll free numbers to be assigned. In any future toll free code release, the revised rule will not require the Commission to use competitive bidding and, if it decides to use competitive bidding, the Commission will not be confined to a specific auction design, or the designation of a particular auctioneer. Instead, for new toll free code openings, the Commission can determine the best method to proceed for assigning numbers, armed with the data collected in the 833 Auction.

25. We establish the 833 Auction as an experiment to analyze the most efficient way to use competitive bidding as a toll free number assignment method. We agree with one commenter who argues that, as a first step, the Commission should assign toll free numbers by auction on a “limited, trial basis,” which will allow us to “study the impact of this new allocation method and make any necessary changes to serve the public interest.” (By adopting the 833 Auction as an experiment, the actions we take today are also consistent with the recommendation of the Administrative Conference of the United States (ACUS) that agencies adopt pilot programs and learn from regulatory experience.) Thus, we will offer in this auction only the rights to use the 17,000 mutually exclusive numbers in the 833 toll free code that were identified pursuant to the 833 Code Opening Order. Once the auction is complete, we direct Somos to assign those numbers to winning bidders based on the auction's results. We will continue to assign 833 numbers that are not part of the 833 Auction using our first-come, first-served approach.

26. After completion of the 833 Auction, and subsequent number assignments, the Bureau will issue a report outlining the outcomes of the 833 Auction, lessons learned, and future recommendations for toll free number assignment methodologies.

27. We intend to use this experiment as an opportunity to evaluate the contours of using competitive bidding for toll free assignments and to determine how to best use a market-based assignment to effectively assign toll free numbers. We also underscore the need to reform the current method of assigning highly desired toll free numbers. We envision that the experiment, as designed in this Report and Order and forthcoming Auction Procedures Public Notice, will meet our goals of equitable distribution and be used, as designed, for certain future toll free number assignments or be used for future assignments with refinements.

28. In the Toll Free Assignment NPRM, the Commission “invite[d] parties to . . . offer further economic, legal, or logistical insights about . . . auction designs and procedures.” Given the experimental nature of using competitive bidding as a mechanism for assigning toll free numbers, we outline here a general framework for the 833 Auction and require a pre-auction proceeding in which we will seek public input on the procedures for the auction after the release of this Report and Order. We expect that our approach to the 833 Auction will be modeled on the rules and procedures governing auctions for wireless spectrum licenses, broadcast permits, and universal service support, where appropriate, given the success and familiar nature of those auctions.

29. Specifically, we will issue an Auction Comment Public Notice after the release of this Report and Order and will solicit public input on proposed application and bidding procedures, including specific proposals for application requirements and bidding mechanisms, such as bid processing and determining payments. Thereafter, we will release an Auction Procedures Public Notice, and will specify final auction procedures, including dates, deadlines, and other final details of the application and bidding processes. We require the auctioneer to implement the auction pursuant to the procedures specified in the Auction Procedures Public Notice. We conclude that, in addition to the general framework we provide here, the Commission's practice of finalizing auction procedures in the pre-auction process will give interested participants sufficient time and opportunity both to comment on the final procedures and to develop business plans in advance of the auction.

30. We adopt the proposal in the Toll Free Assignment NPRM to conduct the 833 Auction as a Vickrey single round, sealed-bid auction. In this type of auction, a qualified bidder can submit a sealed-bid for each available toll free number that the bidder wants. The 833 Auction will consist of only a single round of bidding, and the highest bidder for each toll free number will win the rights to that number, but will generally only pay the second highest bid for them. In the case of tied bids, a winning bidder may end up paying the tied bid amount. For the 833 Auction, we defer to the pre-auction process, the detailed procedures for bid processing and payment determination, including, among other things, how winners and payments will be determined in the case of tied bids and what to do if a toll free number receives only one bid in the single round of bidding.

31. A Vickrey auction can yield an equitable and efficient assignment of mutually exclusive toll free numbers as it incentivizes bidders to bid their true valuation. In particular, the amount paid by the winner (i.e., the bidder with the highest bid) is determined by the second highest bid and does not depend on the exact amount of the winning bidder's own bid. This payment rule results in the winning bidder essentially receiving what it might view as a “surplus,” i.e., the difference between its own bid and the second highest bid. A Vickrey auction thus encourages bidders to bid the true maximum they are willing to pay, while at the same time efficiently assigns the numbers to the bidders who have the highest valuations for the numbers. (As a first approximation, it is likely that individual valuations for toll free numbers are not dependent on another's valuation, at least beyond a broker's desire to purchase for resale. Moreover, to the extent that this is not the case, auction theory does not provide unambiguous direction as to optimal auction design. Thus, for our opening experiment in assigning toll free numbers via competitive bidding, we adopt the simple and transparent Vickrey auction.)

32. We conclude that the 833 Auction should use a single round rather than multiple rounds to keep the auction process for this experiment as simple and cost-effective as possible. As the Commission observed in the Toll Free Assignment NPRM, a single round, sealed-bid auction is relatively easy for both the auctioneer (to implement) and participants (to participate in). In addition, a single round auction will be completed more quickly than a multi-round auction, and comes at a lower cost to the auctioneer and the participants. In fact, we do not believe that auction participants will be required to incur substantial time or expense to prepare for the auction. They have already determined which 833 numbers to reserve, thus spending some time and expense in reaching those determinations; the incremental effort on their part to participate in the auction is unlikely to impose an additional time or cost burden on them. And because of the lower cost of a single round Vickrey auction, we reject commenters' concerns that the costs to implement and run the auction will be excessive.

33. We also reject the notion that a Vickrey single round, sealed-bid auction will result in a scenario where inexperienced bidders will overbid and be unwilling or unable to pay the winning bid. A second-price auction encourages bidders to bid the true maximum that they are willing to pay, knowing they will not actually pay more than needed to outbid the second highest bidder. Also, we note that each bid is a binding commitment, so bidders know in advance that they should only submit bids that they are willing to pay. (This is true even in a Vickery auction, where the winning bidder will only pay the second highest bid, because the second highest bid price may be equal to (in case of a tie) or just slightly less than the winning bidder's submitted bid. As Power Auction notes, “[i]t is important for bids to be binding commitments, because the lack of binding commitments could cause the auction process to be manipulated or to unravel.”) In addition, as discussed further below, entities interested in participating in an auction generally have to submit some form of financial security in order to participate. Further, consistent with the Commission's standard practice, we will ensure that prospective auction participants have an opportunity to become fully informed about the auction through public outreach and education, including online tutorials about the application and bidding processes.

34. Alternative Auction Methodologies. Although the Commission sought comment on alternative auction methodologies to consider for assigning the mutually exclusive 833 numbers, we decline to employ any such methodologies for the 833 Auction. (For example, the Toll Free Assignment NPRM sought comment on a pay-your-bid auction, whereby the highest bidder wins and pays its bid, and an open auction, such as a simultaneous multi-round auction used by the Commission for our spectrum auctions.) One commenter suggested that we use what it calls an “open” auction, specifically “a simultaneous ascending clock auction with multiple independent clocks.” While this type of auction has certain advantages over a single round, sealed-bid, Vickrey auction, we conclude that these advantages do not justify the additional complexity and expense of a multiple round auction at this time. (Power Auctions enumerates several advantages of an “open” auction, including (1) permitting bidders the opportunity of price discovery; (2) permitting bidders more control over the money spent on winning bids; (3) permitting bidders some ability to handle bids for numbers that may be viewed as substitutes; (4) maintaining privacy of auction participants' bids; and (5) potentially resulting in higher auction revenues and more efficient results.) While the Commission uses multiple round auctions and will continue to do so, the 833 Auction will be the Commission's first auction of the rights to use toll free numbers, and our intent for this experiment is to gather data to help inform future toll free assignment decisions while minimizing the complexity and cost to the Commission, auctioneer, and participants during the experiment. We also have limited information on which to base any estimate of the dollar amounts potential subscribers are willing to bid. Also, the relatively modest nature of the items to be auctioned—the rights to use toll free numbers, as opposed to spectrum licenses or Universal Service Fund support—seems at this juncture to warrant a less complex and costly type of auction. Thus, we do not want to create a more complex and costly auction than necessary at this early stage.

35. One commenter argues that a single round, sealed-bid Vickrey auction limits the ability of a bidder to develop a bidding strategy involving substitute numbers vis-à-vis an “open” auction. That commenter does not, however, provide a basis for its position that bidders in the 833 Auction will have a need for such a complex auction, or how such a need outweighs the impact to cost and complexity for this experimental auction. Further, unlike other auctions the Commission has conducted, such as auctions for spectrum and Universal Service Fund support, where some items may be substitutable, this auction allocates items for which managing bids across substitutes is less important. Similarly, there are important complementarities in bids for spectrum and Universal Service Fund support which we have no reason to believe apply to the toll free number market.

36. More specifically, the Commission has historically used multiple round bidding as the primary auction methodology in spectrum auctions. When implementing its spectrum auction authority, the Commission found that multiple round auctions provide needed information about the value of substitutable and complementary licenses and allows participants the flexibility to pursue back-up strategies during an auction, allowing the spectrum to go to its highest value use. The Commission recognized, however, that while multiple round auctions are preferable, if the value of the licenses or the number of bidders would be so low that the administrative costs of a multiple round auction may exceed its benefits, other auction methods are available. Our spectrum auctions, generally, involve many entities pursuing complex strategies weighing the cost of various quantities of spectrum within and between markets. Similarly, in competitive bidding for Universal Service Fund support, many participants are contemplating multiple markets that they are willing to serve based on the price of the subsidy. In the case of toll free numbers, there is limited information in the record that one number is a substitute for another or on how bidders will view the relative values of the available numbers. The Commission hopes to obtain such information through this auction.

37. In sum, because the Vickrey single round, sealed-bid auction should demand fewer resources from the Commission, the auctioneer, and the auction participants while still yielding an efficient allocation of toll free numbers, we believe it will help achieve our objectives for this experiment. We note, however, that we are not intending to foreclose the use of an “open” auction—or another auction methodology—in any future toll free number auctions. (To the contrary, we recognize that there are cases where an open auction may perform better than a sealed-bid auction.) We expect that the Bureau's report will address the success of the Vickrey single round, sealed-bid auction methodology, and compare it to alternative methodologies.

38. Deciding which parties can participate in an auction is an integral part of the process. Although we generally require applicants for our auctions to demonstrate certain qualifications consistent with the regulatory objectives of a particular auction, it is also true that the broader the participation, the more likely it is that 833 numbers will be assigned to the highest-valuing bidders. For the 833 Auction, we will allow any party interested in obtaining an 833 number (potential subscriber) to participate directly in the auction or indirectly through a RespOrg. We also will not limit the 833 Auction to only those RespOrgs that participated in the 833 pre-code opening; any RespOrg may participate. We believe allowing all interested parties to participate directly in the auction will provide them with greater flexibility and control to accurately express their level of interest and will allow the Commission to glean as much information from the experiment as possible to better inform future toll free code opening assignments.

39. 833 Auction Not Limited to RespOrgs. We will permit any potential subscriber to participate directly in the 833 Auction or indirectly through a RespOrg. (A toll free “subscriber,” per the rule revision we adopt today, is “The entity that has been assigned a toll free number.” Because we do not intend to limit auction participation to entities that already have been assigned numbers, we establish that “potential subscribers”—any parties interested in subscribing to a toll free number—may participate in the 833 Auction. As auction participants, these parties will be obligated to comply with the Auctions Procedures Public Notice in this proceeding.) In the Toll Free Assignment NRPM, the Commission proposed to permit only RespOrgs to participate in the proposed auction, based on RespOrgs' role as manager and administrator of toll free records in the Toll Free Database. (The Commission also recognized “the importance of RespOrgs as market makers” and noted that RespOrgs “may have strengths in maximizing the valuation of certain numbers, for example, by piecing together geographic coalitions of subscribers who may be unable to coordinate themselves.”) After reviewing the record, we conclude that allowing potential subscribers to directly participate will likely increase the efficiency of the auction while also addressing possible conflicts of interest between RespOrgs and potential subscribers. We agree with 800 Response, who argues that allowing potential subscribers to participate will minimize opportunities for participants to engage in undesirable and/or anticompetitive strategic behavior that could occur if a RespOrg and one or more of its subscribers were interested in the same 833 numbers. (If a RespOrg and one or more of its subscribers do not have an interest in the same 833 numbers, permitting RespOrgs to participate in the auction gives subscribers to option to have their RespOrgs bid on their behalf.) Therefore, we find it appropriate to allow potential subscribers to act on their own behalf and represent their own interests in the auction. (Potential subscribers also have the option to become a RespOrg by meeting various requirements for certification. By formally allowing potential subscribers the option to participate directly, non-RespOrg participants will not need to spend resources to become a RespOrg if they are concerned that current RespOrgs would not fully represent their interests.) We stress that if a potential subscriber directly participates in and is assigned a number via the 833 Auction, it must still work with a RespOrg after the auction to reserve the number in the Toll Free Database in accordance with our rules.

40. We do not go so far as to remove RespOrgs from the process of acquiring toll free numbers in the 833 Auction, as one commenter suggests. Because subscribers are familiar with working with RespOrgs to acquire toll free numbers and may prefer to continue to take advantage of RespOrg expertise here, we conclude that we should allow subscribers the choice of working with a RespOrg in the 833 Auction.

41. Some commenters oppose permitting potential subscribers to participate in the auction. For example, Somos claims that allowing subscribers to participate “would introduce unnecessary and potentially costly administrative problems” and Power Auctions advocates allowing only RespOrgs to participate since they can maximize valuations of certain numbers and including subscribers would increase the costs of running the auction. On the other hand, one commenter advocates excluding RespOrgs completely, and allowing only end-user customers to participate. We recognize the value added by RespOrgs as “market makers” (as the Commission recognized in the Toll Free Assignment NPRM, RespOrgs “may have strengths in maximizing the valuation of certain numbers, for example, by piecing together geographic coalitions of subscribers who may be unable to coordinate themselves”), but find that allowing potential subscribers to participate in the auction will likely increase the efficiency of the auction, by increasing competition and reducing the likelihood of tacit collusion and other undesirable strategic behavior that can occur when there are very few auction participants. Although we recognize there may be additional cost in auction overhead by allowing more participants, we believe that the benefits to auction efficiency created by expanding the pool of potential participants identified above are worth the minimal expense in determining whether the additional participants are qualified to bid in the auction. And by allowing potential subscribers to bid on their own, we lower administrative costs for participants who choose not to place a bid through a RespOrg.

42. Maximizing Auction Participation. We will not otherwise limit the number of participants in the auction, such as by limiting RespOrg eligibility to participate in the 833 Auction only to those RespOrgs that participated in the 833 pre-code opening process. Permitting the maximum number of eligible participants to bid in the 833 Auction ensures a robust auction and results in the bidders with the highest willingness to pay being assigned a number, which is in the public interest. The inclusion of all RespOrgs and potential subscribers in the pool of eligible participants will also provide the Commission with greater information about the value of toll free numbers, increasing the value of the experiment. In furtherance of this goal, the Commission, along with Somos in its role as auctioneer, will undertake outreach efforts to promote maximum participation among RespOrgs and potential subscribers.

43. In Commission auctions, interested parties must disclose certain information and make certain certifications in an application or series of applications. In the Commission auctions, we typically have a two-stage application filing process. In the pre-auction “short-form” application, a potential bidder will need to establish its eligibility to participate, providing, among other things, basic ownership information. After the auction, the Commission conducts a more extensive review of the winning bidders' qualifications to receive support through “long-form” applications. This information helps promote auction transparency and integrity and assists us in monitoring compliance with our auction rules and procedures, including, for example, the prohibition against certain communications. We find it is necessary to qualify entities to participate in the auction, and therefore require interested entities to submit a short-form application to participate in the auction. The information and certification required in the short-form application, along with an upfront payment, will help determine if an applicant is qualified to bid in the 833 Auction. We will not require applicants to submit a long-form application after the conclusion of this auction, given the lack of need to verify winning bidders' qualifications in this context and to limit the administrative burden on bidders, the auctioneer, and the Commission.

44. We establish here some basic requirements and limitations regarding applications to participate. We expect that each entity interested in bidding in the 833 Auction will be required to disclose certain information and make certain certifications to promote compliance with the framework we outline here and protect auction integrity. These submissions will promote the transparency and efficiency of the auction and reduce the instances of conflicts of interest and the likelihood of undesirable and/or anticompetitive strategic behavior by participants.

45. A Potential Subscriber May Participate Through Only a Single Auction Applicant and Submit a Single Application. Potential subscribers can participate in the 833 Auction through only a single auction applicant. In particular, a potential subscriber may not engage multiple applicants to bid for a particular number in which it is interested. This prohibition assures a level playing field for all bidders and prevents distortions in the information on bidder interests, by assuring that each auction participant has at most one bid per number in the single round.

46. We likewise prohibit a single party, or multiple parties with a controlling interest in common, from becoming qualified to bid based on multiple applications. While we will seek comment and decide how to define parties with common controlling interests in our pre-auction process, we anticipate utilizing the Commission's definitions adopted for similar purposes in our spectrum auctions. We employ this same prohibition in spectrum auctions to ensure that auction participants bid in a straightforward manner. We believe that this type of restriction is warranted in the 833 Auction and will address concerns raised in the record regarding the potential for undesirable strategic bidding behavior, which could harm other bidders.

47. A RespOrg Can Apply on Behalf of Only a Single Potential Subscriber (Including Itself) per Number. We recognize that allowing RespOrgs to serve as bidders for potential subscribers of toll free numbers may present the opportunity for certain auction participants to have more information about the competition for certain numbers. Such asymmetric information could be used in ways that adversely affect some potential subscribers. To mitigate the potential anticompetitive effects of RespOrgs bidding for potential subscribers, we will limit a RespOrg to representing a single potential subscriber (including itself) for the rights to use a particular number. We note that, under a different auction design (e.g., in a multiple round auction) or with different eligibility requirements, a different limitation may be appropriate to help ensure that RespOrgs fully represent subscriber interests, but, for the 833 Auction, we find this limitation to be appropriate.

48. Disclosures and Certifications. To promote transparency as well as compliance with the limitations discussed above, we establish certain general requirements for applicant disclosures and certifications. Specifically, we expect that each auction participant—whether a potential subscriber or a RespOrg serving as a bidding agent—will be required to certify, as applicable, that it is not bidding on behalf of multiple interested parties (including itself) for the same toll free numbers or that it is only bidding through one entity for a given number. A RespOrg can bid on behalf of multiple subscribers, as long the subscribers it represents, as well as itself, are not bidding on the rights to use the same number(s). We will also require the applicants that have overlapping non-controlling interests to certify, during the application process, that they have established internal control procedures to preclude any person acting on behalf of an applicant from possessing information about the bids or bidding strategies of more than one applicant or communicating such information with respect to either applicant to another person acting on behalf of and possessing such information regarding another applicant. To enforce this prohibition, we expect that applicants will need to disclose the party on whose behalf it is bidding, for each toll free number that it selects. To enforce the prohibition, and to allow entities to comply with the prohibition on certain communications discussed below, we also expect that any entity wishing to participate in the 833 Auction will have to fully disclose information regarding the real party- or parties-in-interest in the applicant or application and the ownership structure of the applicant, including both direct and indirect ownership interests of 10 percent or more. We also will also require applicants to provide additional information and make additional certifications in the application, as may be found in the pre-auction process to be necessary to implement our decisions in this Report and Order. By requiring these certifications and disclosures, we guard against potential conflicts of interest between a RespOrg and its customer subscriber(s), between a RespOrg's customer subscribers, and between RespOrgs with overlapping controlling interests seeking the rights to use the same toll free numbers. Moreover, such actions will help implement our overriding principle that each entity should participate through only one bidder, thus encouraging sincere bidding and enhancing the integrity of the auction.

49. For the 833 Auction, we expect that applications to participate in the auction will be processed in a manner similar to applications to participate in spectrum license auctions. Specifically, no application will be accepted if, by the initial deadline, the applicant has failed to make the required certifications, e.g., no additional applications will be accepted after the initial deadline. Put differently, no additional applications will be accepted after the deadline. Moreover, applicants will be afforded an opportunity to cure any identified minor defects after an initial review of the application. Applications to which major modifications are made after the deadline for submitting applications shall be denied. Major modifications include, but are not limited to, any changes in the ownership of the applicant that constitute an assignment or change of control of the applicant (pro forma transfers and assignments have not generally been considered to be major modifications), or the certifications required in the application. If an applicant fails to make necessary corrections before a resubmission deadline, the applicant would be found not qualified to bid.

50. Prohibition on Certain Communications. For spectrum and universal service auctions, the Commission has adopted rules prohibiting an applicant from communicating certain auction-related information to another applicant from the auction application filing deadline until the post-auction deadline for winning bidders to file long-form applications. In these rules, “applicant” is defined broadly to include “all controlling interest in the entity submitting a short-form application to participate in an auction . . . as well as all holders of partnership and other ownership interests and any stock interest amounting to 10 percent or more of the entity, or outstanding stock, or outstanding voting stock of the entity submitting a short-form application, and all officers and directors of that entity.” This prohibition on certain communications is intended to reinforce existing antitrust laws, facilitate detection of collusive conduct, and deter anticompetitive behavior. While we believe the 833 Auction should have a similar prohibition on certain communications, we defer until the pre-auction process the details of the prohibition on certain communications, but absent unique factors that may be applicable to the 833 Auction we expect the prohibition to be generally consistent with our rule in spectrum auctions. Regardless of the procedures ultimately decided upon for the 833 Auction, participants will be subject to antitrust laws, which are designed to prevent anticompetitive behavior in the marketplace.

51. Availability of Auction-Related Information During and After the Auction Process. It is our objective that the 833 Auction be transparent and objective. Consistent with that objective, we conclude that the procedures to be established in the pre-auction process should address what auction-related information will be available to bidders and to the public during the auction process, and when any information withheld during the auction will be made publicly available.

52. Upfront Payments and Default Payments. Entities that are interested in participating in the 833 Auction will be required to demonstrate an ability to pay for the rights to use the numbers for which they intend to bid by submitting an upfront payment. Moreover, since bids are binding commitments, if a bidder fails to make full payment on its bid, or otherwise defaults, it should be subject to a default payment. We defer to the pre-auction process what the upfront payments and default payments for the 833 Auction should be, but we generally expect the approach to be modeled on those used in the Commission's spectrum auctions.

53. Bidding Credits. We will not adopt bidding credits for the 833 Auction. We recognize that bidding credits can provide economic opportunity for a wide range of participants. Given the experimental nature of this auction, however, we conclude bidding credits are not appropriate at this time. No commenters who advocate we incorporate bidding credits in the 833 Auction provide specifics about the size standards or size of the bidding credits that might be employed, and we have no prior basis for determining the appropriate amount of any such bidding credit. We further do not wish to confuse the lessons we take away from this experiment by including bidding credits, which would influence bidder behavior. Instead, we will consider all of the data collected from the 833 Auction to determine if bidding credits should be offered in any possible toll free number auctions in the future.

54. Reserve Prices. We also decline to establish reserve prices for the 833 Auction. (By “reserve price,” we refer to a minimum amount that must be reached in order for a number to be assigned after the auction closes.) Most commenters oppose establishing reserve prices, arguing that reserves may discourage entities from bidding. Our goal for this auction is to gain as much information as possible about the effectiveness of a market-based approach to toll free number assignment, and we are convinced by the record that a reserve price may discourage auction participation and, thereby, decrease the amount of information we gain from the auction. And because this is our first time using competitive bidding to assign toll free numbers, we have a limited basis on which to establish a reasonable and efficient reserve price.

55. Bidding on Multiple Numbers. Consistent with our proposal in the Toll Free Assignment NPRM, we will not limit the overall quantity of toll free numbers the rights to which can be acquired by an auction participant. Establishing such a limit could hamper the efficiency of the auction by constraining bidders who hold the highest valuations. Moreover, we wish to obtain as much information as possible from this experiment and believe any such constraint would limit the information derived from this experiment.

56. Similarly, we find it is unnecessary to permit package bidding (i.e., single bids for the rights to groups of numbers) in the experiment. As the Commission stated in the Toll Free Assignment NPRM, though it is likely some bidders will demand the rights to multiple numbers, we do not believe valuation synergies warrant the additional complexity that package bidding brings. We desire to minimize the auctioneer's development costs for the auction interface and to simplify the bidding process for the auction participants. We expect the Bureau's post-auction report to address the auction's effectiveness, and to recommend whether any of the measures we have declined to adopt in the Report and Order—including package bidding—could be useful in deciding on future toll free assignment methods.

57. Post-Auction Winning Bidder Public Notice. Once the auction has been completed, we will release a public notice identifying the winning bidders and establishing the deadline for making final payment for winning bids. This public notice will also explain how unsold inventory—numbers that received no bids—will be assigned after the 833 Auction. As we have explained, any potential subscriber that participates directly in the auction and wins the rights to a number must still work through a RespOrg after the auction to reserve the number in the Toll Free Database in accordance with our rules.

58. We establish Somos, the Toll Free Numbering Administrator, as the auctioneer for the 833 Auction. We believe this role is commensurate with its present statutory and regulatory duties and its responsibilities. The Commission established Somos as the Toll Free Numbering Administrator in the 2013 Toll Free Governance Order. There, we determined that Somos met the impartiality requirement of section 251(e)(1) of the Act—codified in section 52.12 of our rules—and was “eligible to serve as neutral SMS administrator.” As the auctioneer for the 833 Auction, Somos shall continue to implement impartially toll free number assignments, consistent with the Act and our implementing rules.

59. In its role as auctioneer, we require Somos to provide the infrastructure and software for online bidding and carry out other activities necessary to implement the auction. These activities include performing bidder education and other outreach; accepting and reviewing applications to participate in the auction; accepting upfront payments; announcing qualified bidders and those not qualified to bid; accepting bids during a single round of bidding; accepting final payments for winning bids and distributing refunds for any upfront payments not applied to winning bids; activating in the toll free database the numbers won at auction and for which final payment has been made; and undertaking any other tasks in furtherance of the 833 Auction that the Commission deems appropriate and as elaborated in the Auction Procedures Public Notice. The Commission will maintain oversight of Somos's implementation of the 833 Auction and will re-direct it as necessary to most effectively execute the 833 Auction. To maintain oversight, the Commission will review tariff filings, issue specific instruction in the Auction Procedures Public Notice, and direct Somos under our broad authority over the Toll Free Numbering Administrator.

60. One commenter posits that the present Toll Free Numbering Administrator should not serve as the toll free number auctioneer because Somos “has no experience in conducting auctions” and it “would be called upon to develop entirely new [auction] processes.” We disagree. Somos has asserted that it is fully capable of executing the Commission's proposed auction, and we have no basis on which to question its assertion. Moreover, given the considerable expertise in number assignment and administration that Somos has gained since the Commission formally designated it as the Toll Free Numbering Administrator, we are confident that Somos will perform its auctioneer duties in accordance with the procedures established by the Auction Procedures Public Notice.

61. We also agree with Somos that it is critical “to maintain continuity and stability in TFN [toll free number] administration.” In contrast, were we to establish an independent auctioneer, the independent auctioneer would have to first coordinate with Somos to verify that the numbers available in the 833 Auction are indeed available. The independent auctioneer would then have to direct Somos to assign the number to the winning bidder. We find this step in the process unnecessary as Somos is capable to serve as auctioneer in accord with the specific and direct instruction to be set forth in the Auction Procedures Public Notice.

62. While we appreciate the novelty of our experiment in using competitive bidding in the toll free context, the Commission itself has a vast amount of experience in conducting auctions in other contexts. We will oversee Somos's implementation of the 833 Auction, along with our general oversight of numbering, to alleviate any concerns about auction execution. Moreover, a single-round, sealed-bid auction should not require complex software or administration.

63. For these reasons, we direct Somos to serve as the auctioneer of the 833 Auction. In the event Somos seeks to add outside personnel to assist with the auction in any way, it may do so provided that it retains the overall administrative responsibility and neutrality. (Section 251(e) requires the Commission to “create or designate one or more impartial entities to administer telecommunications numbering and to make such numbers available on an equitable basis.”) We further direct Somos to obtain an independent audit of the 833 Auction, including Somos's performance as auctioneer, after completion of the auction. In the event that the Bureau determines, and announces in a Public Notice, that the costs of conducting such an audit are unlikely to exceed the benefits—for example, because of low auction revenue—Somos need not obtain an audit.

64. In designating Somos as the auctioneer of the 833 Auction, we do not foreclose the Commission's ability to assign this role to a different entity, or through a different method, such as a competitive process, in a future toll free number auction. In its report on the outcomes of the 833 Auction, we direct the Bureau to evaluate Somos' performance as the auctioneer, including its technical execution and cost-effectiveness in conducting the auction. The results of the 833 Auction, including its costs and the degree of its financial success, ought to inform the Commission's method for assigning the role of auctioneer in future toll free number auctions.

65. Auction Information. To allow the Commission to make a fair and accurate assessment of the results and consequences of the 833 Auction, we require Somos to retain and make available to the Commission all data and information about the auction and its administration, gathered before, during, and after the auction. Such information includes, but is not limited to, information on the following: Winning and losing bids, bidders, administrative costs (including detailed costs to design the auction user interface, auction platform, and software to evaluate the auction results), and post-auction secondary market transfers. (Per the exception we establish today, the secondary market is limited to numbers assigned via competitive bidding. The mutually exclusive numbers in the 833 code assigned in the 833 Auction will therefore be eligible for secondary market transfers.) We also require Somos to make available to the Commission information on 833 numbers not included in the auction for comparison purposes. This data will enable us to get a complete picture of the viability of the 833 Auction and on competitive bidding as an assignment method for future toll free code openings.

66. We will use any net positive proceeds from the 833 Auction to defray the costs of administering toll free numbering incurred by the Toll Free Numbering Administrator 1 (i.e., costs beyond conducting the auction) and, potentially, the North American Numbering Plan Administrator (NANPA). (The NANPA is currently Neustar, Inc. The Toll Free Numbering Administrator is Somos, a not-for-profit corporation that provides the Toll Free Numbering Administrator function pursuant to FCC tariff, subject to section 61.38 of the Commission's rules.) By “net positive proceeds,” we mean any amount by which revenues from the auction exceed the costs of conducting the auction. (Because Somos will also be developing and conducting the auction, the administrator's costs for the auction will be paid first from auction revenues.) Applying net positive proceeds in this manner is consistent with our authority in section 251(e) to administer numbering, and its requirement that the costs of administration be borne by carriers on a competitively neutral basis. As discussed in the Toll Free Assignment NPRM, it will benefit all toll free subscribers and RespOrgs, as well as potentially all stakeholders in the 20 countries that are members of the NANP. (The NANP member countries are Anguilla, Antigua and Barbuda, Bahamas, Barbados, Bermuda, British Virgin Islands, Canada, Cayman Islands, Dominica, Dominican Republic, Grenada, Jamaica, Montserrat, Sint Maarten, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Trinidad and Tobago, Turks and Caicos Islands, and the United States (including American Samoa, Puerto Rico, U.S. Virgin Islands, Guam, and the Commonwealth of the Northern Mariana Islands). NANP toll free numbers are allotted to all member countries. The Toll Free Numbering Administrator administers the pool of toll free number resources allotted to Canada, Sint Maarten, and the United States. Other NANP member countries administer toll free numbering outside of the Toll Free Numbering Administrator and its Toll Free Database.)

67. Disbursement of 833 Auction Revenues That Exceed Somos's Auction Costs. We conclude that net positive proceeds from the 833 Auction should be used to defray toll free numbering administration costs. We establish a methodology that will benefit Toll Free Numbering Administrator users while tempering resulting year-over-year change of administrative rates and charges. We therefore tie our disbursement to the ratio between net positive proceeds and Somos's revenue requirements. In the present tariff year, Somos's revenue requirement for toll free numbering administration services is $56.9 million. (The revenue requirement to cover forecasted costs for toll free numbering administration (referenced in the Tariff as “SMS/800”) services in the current tariff period, covering February 15, 2018—February 14, 2019, is $56,933,855.) If net positive proceeds are less than five percent of Somos's then-current annual revenue requirement, then the net positive proceeds should be used only to defray toll free numbering administration costs for the tariff period immediately following the close of the 833 Auction. (Somos would make this determination based on its cost study for the ensuing tariff year, with and without cost reduction by offset of auction proceeds. Should there be any further auction proceeds received after such determination (e.g., delayed payments accepted by the Commission), those proceeds will be applied/remitted in accordance with the manner set forth herein based on the then-cumulative amount of all auction proceeds from that auction, inclusive of such further auction proceeds. Auction proceeds amounting to five percent or less of the current annual revenue requirement applied to that single tariff year would likely have a de minimis effect on administrative rates and charges.) In the event that net positive proceeds exceed five percent of Somos's costs, then the net positive proceeds should be distributed evenly across five years for cost recovery under the tariff to minimize the impact on the administrative rates and charges. This approach avoids substantial year-over-year changes in administrative rates and charges, and allows RespOrgs and toll free subscribers to receive the cost reduction over an extended period if net positive proceeds are large enough to warrant. (The Commission has long sought to “smooth” the impact of its actions on telephony rates and charges.)

68. If net positive proceeds from the 833 Auction are large enough that applying them to defray toll free numbering administration costs over five years would result in a greater than 25 percent decrease in the revenue requirement for the Toll Free Numbering Administrator over the five-year period, then the excess of net positive proceeds beyond that amount will be remitted to the Billing and Collection (B&C) Agent for the NANP to be applied to defray the costs of NANP administration on behalf of its 20 member countries. (The present B&C Agent is Welch LLP. The B&C Agent will apply such funds prior to application of the various contribution factors and billing and collections processes.) We find that directing funds in excess of 25 percent for the benefit of the NANP strikes an appropriate balance, avoiding excessive fluctuations in the toll free tariff structure and benefitting both numbering administrations upon which toll free calling is dependent. The toll free numbers administered by the Toll Free Numbering Administrator are numbers within the NANP; it is therefore appropriate that such funds potentially go to defray the costs of the administering the NANP, which are borne by the countries served by the Toll Free Numbering Administrator and the other NANP member countries. In the event proceeds remitted to the B&C Agent exceed five percent of NANPA costs, then the net positive proceeds should be distributed evenly by the B&C Agent across five fiscal years of the NANPA, to minimize the impact on the NANPA rates and charges. If proceeds remitted to the B&C Agent are large enough that applying them to defray NANPA costs over five years would result in a greater than 25 percent decrease in the revenue requirement for the NANPA over the five-year period, then the excess of net positive proceeds beyond that amount will be distributed evenly by the B&C Agent across the next ten fiscal years of the NANPA.

69. Recovery of 833 Auction Costs That Exceed Auction Revenues. In the event the costs of the 833 Auction exceed its revenues, Somos may recover the resulting deficit in the same manner as other costs of toll free number administration: By incorporating them into the cost recovery mechanism in its tariff. These auction costs would be recovered along with all other allowable costs as part of the Toll Free Numbering Administrator's revenue requirement for the ensuing tariff year(s). This means that all RespOrgs and their underlying toll free subscribers will bear the auction's costs, just as they would share the benefit of any net auction proceeds. This approach is consistent with the cost-recovery system whereby all RespOrgs, and ultimately all toll free subscribers, bear the costs of numbering administration collectively. (Toll free numbering administration costs are recovered via the Toll Free Numbering Administrator's rates and charges, in the form of both transaction-specific fees, and monthly and other charges that are not tied to any specific transaction of number acquisition or change.)

70. We anticipate that the 833 Auction will benefit the entire toll-free industry by potentially lowering the monthly fees associated with toll free reservations. Accordingly, we reject the suggestion that equitable and efficient distribution of numbers requires that any costs of the 833 Auction exceeding auction revenues should be imposed only upon auction winners, or auction participants, under “competitively neutral” and “cost-causer” approaches. The 833 Auction is open to all RespOrgs and all potential subscribers. Moreover, the sharing of any net auction proceeds—or any auction deficit—does not of itself distort the toll free market in any fashion or favor one competitor in that marketplace over any other. As one commenter notes, consumers benefit directly from the use of toll free numbers, and “reducing the input costs proportionally across RespOrgs will benefit all participants at their level of participation, thereby not distorting the toll-free market. The method proposed by the FCC is an efficient and effective mechanism for achieving that goal.”

71. Finally, for the reasons discussed above, if the deficit exceeds five percent of the forecasted cost of the Toll Free Numbering Administrator's services for the next tariff year, we will require the recovery of any deficit over the ensuing five years of cost recovery under the tariff. Such a deficit will be divided equally among each of those five years, and incorporated into the administrator's cost studies and revenue requirements for each of those years. By this approach, we seek to avoid or reduce any substantial increases or fluctuations in the Toll Free Number Administrator's rates and charges due to any deficit.

72. International Considerations. One commenter notes the international nature of the NANP and asks “what right does US, or its agencies, have to unilaterally benefit from an auction?” This concern is misplaced. The United States will not unilaterally benefit from the 833 Auction's proceeds. Rather, as explained, net positive proceeds will be used to defray the costs of toll free number administration, benefitting all RespOrgs (and ultimately toll free subscribers) in those countries served by the Toll Free Numbering Administrator (Canada, Sint Maarten and the United States), and may also be used to defray the cost of NANP administration, benefitting all of its member countries. Even if the 833 Auction does not meet the 25 percent threshold, RespOrgs from these countries will benefit from lowered charges from the Toll Free Numbering Administrator. We note that a coalition of 10 Canadian RespOrgs, including major Canadian telecommunications service providers, supports our proposal to apply net auction proceeds to the Toll Free Numbering Administrator's administration costs. Applying net auction proceeds as set forth herein is consistent with the way Somos applies RespOrg fee proceeds, and the NANPA collects fees, through the B&C Agent, from member countries and service providers.

73. Somos Tariff Implications. We direct Somos to reflect any net positive proceeds or deficit related to the 833 Auction in the section 61.38 cost support filed with the Toll Free Tariff. We have previously said that Somos must support the costs of its Toll Free Database administration as part of its tariff filing with the Commission. The present Toll Free Tariff “contains regulations, rates and charges” applicable to administration of the Toll Free Database. As explained above, any auction proceeds will be applied to decrease Toll Free Database administration costs. This will allow Somos to lower certain of its charges, such as the monthly customer record administration charge. On the other hand, any auction deficit, i.e., auction costs that exceed revenues from the auction, will be recovered via the tariff's cost recovery mechanism along with any other costs associated with administering the database. Inclusion of auction-related costs in the tariff's cost justification is necessary to show the impact of the 833 Auction on the tariffed charges to RespOrgs for use of the Toll Free Database.

74. To ensure that the public interest is protected in the 833 Auction, we will set aside numbers in the 833 code that have been identified as mutually exclusive upon reasonable request by government entities and non-profit health and safety organizations. (Government entities include federal, state, local, and Tribal governments, and includes any such entities in all countries served by the Toll Free Numbering Administrator. Non-profit health and safety organizations must be 26 U.S.C. 501(c)(3) organizations.) In the Toll Free Assignment NPRM, the Commission sought comment on whether certain desirable toll free numbers should be set aside for use, without cost, by government agencies or by non-profit health, safety, education, or other non-profit public interest organizations. After reviewing the record, we find that “[c]ertain desirable toll free numbers that promote health and safety should be set aside for use by government, without cost,” as well as for use by non-profit health and safety organizations that meet the standard of our precedent.

75. Government (federal, state, local and Tribal) entities as well non-profit health and safety organizations have a unique relationship with toll free numbers. Not only do they use numbers to provide service to the public, but they also face unique budgeting challenges that may place toll free numbers assigned at auction out of reach. We disagree with commenters who argue that the public interest nature of non-profit organizations can be practically difficult to identify, and that setting aside numbers for non-profits presents a greater possibility of fraud and abuse. We further disagree with the suggestion that allowing private non-profit organizations to petition for numbers to be set aside is an act of “eminent domain.” This claim is fundamentally at odds with the toll free numbering scheme, which vests the Commission with authority to assign numbers “equitabl[y].” Further, subscribers have no property interest in toll free numbers. The Commission will use the 501(c)(3) designation as well our existing standard for public health and safety use to limit set-asides to those legitimate public interest organizations that truly promote public health and safety. This process is consistent with the way the Commission has considered petitions for reassignment of toll free numbers in the past.

76. We disagree with the arguments in the record that offering any public interest-related number set aside for governmental or non-profit entities is inherently not “equitable” under section 251(e)(1) of the Act. To the contrary, this set aside works to assuage concerns that some bidders—government and non-profit entities—may be precluded from obtaining desired numbers by our auction experiment. However, we are sympathetic to the argument that the public should have an opportunity to object to requests that numbers be set aside. For this reason, while we will consider requests from government and non-profit entities to set aside numbers in the 833 code that are already considered mutually exclusive, in order for a request to be considered, the government or non-profit entity must file a “Petition for an 833 Toll Free Number” with the Bureau in accordance with the Auction Procedures Public Notice. The Bureau will then solicit public comment prior to making its decision on the number request based on the public interest. (Petitions must be filed in ECFS in Docket No. WC 17-192 and CC Docket No. 95-155. Filing the petition does not guarantee the request will be granted.) We intend to maintain our standard for review consistent with the unusual and compelling public health and safety standards in Commission precedent and direct the Bureau to consider each application individually, on a case-by-case basis, as it is filed with the Commission. We note that while being a government entity or a 501(c)(3) organization is a necessary condition for a set aside, it is not in and of itself a sufficient condition and the Bureau must apply the unusual and compelling public health and safety standards discussed above. If, however, multiple government or non-profit entities file petitions requesting the same number for public health and safety purposes which meet the standard of our precedent, we direct Somos to conduct a lottery for the number among the requesting applicants. We believe a lottery is both an equitable and expedient way to resolve competing requests for the same number. The Commission will use the information obtained from this number set aside process to determine whether we should continue to use it in future code openings.

77. We decline to adopt proposals in the record to provide special treatment for trademark-holders. Specifically, commenters have suggested that we provide trademark-holders a right of first refusal or adopt new “procedures” to address instances of abuse of a number desired by a trademark-holder. We find that, as under the first-come, first-served methodology, “concerns regarding trademark infringement and unfair competition . . . should be addressed by the courts under the trademark protection and unfair competition laws, rather than by the Commission.”

78. We disagree with commenters who argue that failing to provide special treatment for trademark-holders is contrary to the public interest. As 1-800-CONTACTS admits, the Lanham Act already serves to “protect consumers by preventing confusion and unfair competition,” and 1-800-FLOWERS has acknowledged its success policing use that infringes on its trademarks under the first-come, first-served methodology. Some commenters argue that a market-based approach to number assignment will encourage “extortion” of trademark-holders by bad actors, but we see no reason to diverge from our position that number assignment should be trademark-agnostic. An auction mechanism assigns numbers to those who value them most highly, and a secondary market—which we adopt on a limited basis below—only facilitates this assignment. Subscribers remain bound by trademark law once a number has been assigned. We also disagree with the argument of 1-800-CONTACTS that auctioning numbers without special protection for trademark holders “would conflict with the statutory requirements of the Lanham Act.” 1-800-CONTACTS does not identify with specificity which requirements the Commission would violate, or provide support for its argument. The United States Court of Appeals for the Sixth Circuit has found, in the context of an internet domain name registrar, that assigning an item to a third party is not “use” for purposes of a trademark infringement claim.

79. To fully realize the effectiveness of assigning numbers via competitive bidding, we allow for a secondary market of toll free numbers won at auction. In the Toll Free Assignment NPRM, the Commission sought comment on revising our rules to promote development of a secondary market for toll free numbers. We have reviewed the record, and agree with commenters who argue that our current rules may have a “chilling impact . . . on private enterprise.” Consistent with our goal of making the rights to use numbers available on an equitable basis by assigning them to those who can put the numbers to their best use, and with the record, we now allow for the development of a secondary market for numbers assigned via competitive bidding.

80. The Commission's current rules prevent three types of conduct that limit or preclude the development of a secondary market. First, the rules prevent brokering—“the selling of a toll free number by a private entity for a fee.” Second, the rules prevent hoarding, which is the “acquisition by a toll free subscriber . . . of more toll free numbers than the toll free subscriber intends to use for the provision of toll free service.” Third, the rules prevent warehousing, a practice in which a RespOrg reserves toll free numbers “without having an actual toll free subscriber for whom the numbers are being reserved.” These rules not only preclude the sale of the rights to use toll free numbers—central to a secondary market—but also frustrate number sales by placing obligations on potential sellers.

81. As the Commission explained in the Toll Free Assignment NPRM, a secondary market appears to be “an efficient and productive use of numbers” because it “permit[s] subscribers to legally obtain numbers which they value.” It also promotes the efficient operation of an auction: Permitting the free acquisition and transfer of the rights to use numbers allows subscribers to purchase or sell numbers in response to the outcome of the auction, and limits pre-auction costs associated with estimating which—and how many—numbers a bidder may win. It further encourages value-creating entities to promote efficiency by procuring rights to numbers with an intent to sell those rights to other interested subscribers. The secondary market thus ensures that numbers are assigned to those parties who can most efficiently use them. Under our current system, by contrast, a party that desires a number most cannot ensure that it is assigned that number; and if it fails to be assigned that number, it has no mechanism to procure it after the initial assignment. An auction mechanism with a robust secondary market not only ensures that numbers are assigned to the bidder that values them most at the time of assignment, but also allows the rights to numbers to be reassigned when valuations change.

82. We disagree with commenters who claim that permitting a robust secondary market will lead to undesirable conduct and extortion. With an auction and secondary market, the rights to numbers will be assigned to those entities who value them most; differences in valuation do not reflect undesirable conduct or extortion. To the extent there is genuine misconduct, trademark and competition law serves to protect parties from bad actors. Further, the argument that allowing a secondary market will “lead to premature exhaust” is minimized by our decision to allow a secondary market only for those numbers assigned by auction. In the present experiment, the 833 Auction includes approximately 17,000 numbers—under one percent of all 833 numbers. To the extent our rules preventing a secondary market were adopted to limit exhaust, we do not believe this limited exception will significantly affect the exhaust of the entire pool of 833 numbers. Because creating this limited secondary market will not lead to premature exhaust, we see no need to adopt the proposal in the record that we “assess[ ] a fixed monthly direct contribution from all toll-free number holders [to] discourage hoarding and warehousing” in order to combat exhaust. Further, we disagree with CenturyLink's argument that we should not combine a secondary market with the 833 Auction experiment so that an auction “may be adequately evaluated without the influence of other variables.” As we have explained, a secondary market is an important component to a successful auction, because it allows auction participants to later transfer numbers in response to information learned at the auction. And exploring these two changes simultaneously will allow us to see how they work in conjunction with one another.

83. We also disagree with the argument that “abandoning the brokering rule . . . violates the statutory mandate of equitable distribution of numbers.” The secondary market is both “orderly and efficient” and “fair.” The secondary market is “orderly” because it is simple: Competing claims are resolved by assigning rights to a number to the party who values it most. The secondary market is “efficient,” as that term is interpreted under our precedent in this context, in that it will minimize number exhaust by allowing rights to numbers to be obtained without requiring the opening of a new code. Finally, the secondary market is “fair” because no potential subscribers are discriminated against; there is equal opportunity to participate in the secondary market.

84. To allow for a secondary market to develop, we adopt exceptions to the Commission's rules prohibiting the brokering, hoarding, and warehousing of toll free numbers for numbers acquired in an auction. (We also modify our rule limiting how long a number may remain in “reserved” status in order to harmonize that rule with the exceptions we adopt today.) Because, as explained, a secondary market can promote the efficiency of an auction, we find that it is appropriate that we apply our exceptions to numbers assigned via competitive bidding. Numbers which are eligible for this exception by virtue of having been assigned via competitive bidding do not lose their eligibility if they are sold or otherwise transferred to another subscriber. Numbers which are returned to the spare pool, however, do not retain eligibility for the exception simply because they were once assigned in an auction.

85. We decline, at this time, to mandate that fees associated with the sale of numbers on the secondary market go to the cost of toll free numbering administration borne by Somos. We are convinced by the record that our rules should not “increase the costs to subscribers.” However, as we have explained previously, in order to evaluate the operation of the secondary market, we direct Somos to maintain data on secondary market transactions and make that data available to the Commission. To facilitate the collection of data, RespOrgs will be required to provide subscriber information to Somos, including the new subscriber's name and contact information, and other limited information Somos deems necessary.

86. To further modernize our decades-old toll free numbering rules, we adopt several definitional and technical updates to improve clarity and flexibility in toll free number assignment. We also incorporate recommendations of the North American Numbering Council (NANC, the Commission's Federal Advisory Committee on numbering matters) to revise our definitions and lag time rules to be consistent with our new market-based toll free assignment rule.

87. NANC Report. In the Toll Free Assignment NPRM, the Commission sought comment on whether to “eliminate or revise any other toll free rules” and specifically suggested sections 52.101(d) and 52.103 as potential targets for revision. After the release of the NPRM, the Bureau directed the NANC to recommend possible rule changes to promote a market-based approach to the assignment of toll free numbers. In response to this direction, the NANC Toll Free Number Assignment Modernization Working Group recommended revisions to sections 52.101 and 52.103 of our rules regarding general definitions and lag times.

88. General Definitions. We revise section 52.101(a) to replace the term “Number Administration and Service Center” (NASC) with the term “Toll Free Numbering Administrator.” (Section 52.101(a) currently defines “Number Administration and Service Center” as “The entity that provides user support for the Service Management System and administers the Service Management System database on a day-to-day basis.”) Despite the fact that the Commission has used the term Toll Free Numbering Administrator for several years, our rules have not reflected that terminology. Our rules' reference to the NASC is now outdated, and this revision will update the Commission's rules to reflect current industry terminology. We further modify our definition, consistent with the NANC's recommendation, to reflect that the Toll Free Numbering Administrator role is filled by an entity appointed under our authority pursuant to section 251(e)(1) of the Act. Because the Toll Free Numbering Administrator serves the same purpose as the former NASC, however, we otherwise retain the same definition as to the role of the toll free administrator.

89. We further revise section 52.101(e) to expand the definition of “Toll Free Subscriber.” The Commission's rules currently define a Toll Free Subscriber as “[T]he entity that requests a Responsible Organization to reserve a toll free number from the SMS database.” Our revised rule establishes that a Toll Free Subscriber is “The entity that has been assigned a toll free number.” This change will make our definition consistent with our revised rule section 52.111, which allows for assignment via a market-based methodology, by making clear that a subscriber is not limited to requesting a toll free number be reserved in the toll free database. For example, a subscriber can be assigned a number through the competitive bidding process.

90. Lag Times. We make multiple revisions to section 52.103, which sets forth the various statuses of toll free numbers in the Toll Free Database. First, we adopt a new section 52.103(a)(10) to create a “Transitional Status” category for numbers that have been disconnected for less than four months, but for which no service provider intercept recording (also known as Exchange Carrier Intercept Recording) is being provided. (Transitional Status is thus distinct from Disconnect Status, where a service provider intercept recording (i.e., a recording explaining that a number has been disconnected) is being provided.) The NANC comments, and we agree, that adding this Transitional Status will better align the Commission's rules with current industry practice.

91. Second, we modify section 52.103(d) to make the existing Disconnect Status rule compatible with a market-based number assignment approach. Section 52.103(d) requires disconnected numbers to stay in Disconnect Status for a period of up to four months, and then go to Spare Status at the end of that period. The NANC Report recommends amending the rule to allow numbers that have been in Disconnect Status for up to four months to go directly to Unavailable or Spare Status. (We note that numbers set-aside for a market-based assignment are placed in unavailable status.) We conclude, and the NANC agrees, that allowing numbers to go from Disconnect Status to Unavailable—rather than directly to Spare Status—will ensure that any number can be assigned by a market-based mechanism. This change will allow the Toll Free Numbering Administrator to send numbers that have been selected for market-based assignment directly into Unavailable rather than into Spare Status. We thus adopt this change, which will allow greater flexibility and further modernize the toll free assignment process.

92. Finally, we also adopt a change to section 52.103(f), “Unavailable Status.” The description of “Unavailable Status” in that section references DSMI, which has since been replaced by Somos as the Toll Free Numbering Administrator. The definition should be updated to refer to the Toll Free Numbering Administrator. This revision will ensure that the Commission's rules reflect current industry terminology. We also revise rule section 52.109(c) to change spare “poll” to spare “pool,” thus correcting a typographical error in this rule.

93. The ministerial revisions we adopt today are a logical outgrowth of the proposals in the Toll Free Assignment NPRM. As the Commission has previously explained, “[a]n NPRM satisfies the logical outgrowth test if it `expressly ask[s] for comment on a particular issue or otherwise ma[kes] clear that the agency [is] contemplating a particular change.'” That test is satisfied here. The Toll Free Assignment NPRM expressly proposed a revision to the rules governing toll free number assignment to allow for assignment via competitive bidding. It further sought comment on whether to “eliminate or revise any other toll free rules,” with specific reference to sections 52.101(d) and 52.103 of the rules. Our ministerial revisions, with one minor exception, apply to sections 52.101 and 52.103. (The exception is our revision to section 52.109(c), correcting a typographical error in that rule.) Further, the revisions operate to harmonize those rules with the competitive bidding assignment methodology expressly noticed in the Toll Free Assignment NPRM. We find that “parties should have anticipated that the rule [revisions] ultimately adopted [were] possible.” We also find good cause, to the extent necessary, to adopt these ministerial changes. These revisions are insignificant and inconsequential to the industry and the public. Our revisions to sections 52.101(a), 52.103(a)(10), 52.103(f), and 52.109(c) either correct typographical errors or bring our rules into line with contemporary practice and do not increase or otherwise modify any entities' regulatory burden. Our revisions to sections 52.101(e) and 52.103(d) similarly do not impact any entities' regulatory burden, and only harmonize our rules to allow for the successful operation of the competitive bidding assignment methodology we adopt today.

94. The Commission has found section 251(e)(1) of the Act “to empower the Commission to ensure that toll free numbers, which are a scarce and valuable national public resource, are allocated in an equitable and orderly manner that serves the public interest.” Pursuant to these statutory mandates, the Commission has the “authority to set policy with respect to all facets of numbering administration in the United States,” and a “require[ment] . . . to ensure the efficient, fair, and orderly allocation of toll free numbers.” The actions we take today meet the statutory requirement that numbers be made “available on an equitable basis”—an auction and secondary market are both efficient and orderly, and fair. We also have clear authority to require Somos to serve as the auctioneer for 833 numbers and to comply with requirements adopted in this order. Section 251(e)(1) obligates the Commission to ensure its Toll Free Numbering Administrator administers “telecommunications numbering and to make such numbers available on an equitable basis.” And section 201(b) authorizes the Commission to “prescribe such rules and regulations as may be necessary in the public interest to carry out the provisions of this [Act].”

95. CenturyLink argues that we do not have authority to assign toll free numbers through competitive bidding because, unlike in the context of spectrum auctions, Congress did not specifically task the Commission with using competitive bidding for toll free numbers. Since the Act was adopted in 1934, however, Congress has stated with particularity the various means for assignment of spectrum licenses; the specific addition of an assignment via competitive bidding supplemented the previous Congressional direction to make licenses available via an application process or random assignment. By contrast, Congress has used much more general language in section 251 and thus given us broad discretion to administer numbering. In Congress's grant of “exclusive jurisdiction over those portions of the North American Numbering Plan that pertain to the United States” in section 251(e)(1), we find authority to employ any number assignment mechanisms which meet the statute's “equitable basis” requirement, including competitive bidding.

1. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was incorporated into the Notice of Proposed Rulemaking (Toll Free Assignment NPRM) for the Toll Free Assignment Modernization proceeding. The Commission sought written public comment on the proposals in the Toll Free Assignment NPRM, including comment on the IRFA. The Commission received no comments on the IRFA. Because the Commission amends its rules in this Order, the Commission has included this Final Regulatory Flexibility Analysis (FRFA). This present FRFA conforms to the RFA.

2. In the Toll Free Assignment NPRM, the Commission reconsidered how to best meet the statutory mandate that it make toll free numbers “available on an equitable basis.” To this end, the Commission proposed and sought comment on numerous regulatory reforms to existing rules regarding toll free number assignment.

3. Pursuant to the objectives set forth in the Toll Free Assignment NPRM, this Report and Order (Order) adopts changes to Commission rules regarding toll free number assignment. Specifically, the Order (1) revises the Commission's toll free assignment rule to allow for the use of competitive bidding for toll free numbers; (2) establishes the use of competitive bidding to assign the over 17,000 mutually exclusive numbers in the 833 toll free code, identified pursuant to the 833 Code Opening Order; (3) exempts numbers assigned via competitive bidding from the rules preventing the development of a secondary market; and (4) makes ministerial changes to our toll free number assignment rules. These modifications to our toll free number assignment rules will create a more efficient method of toll free number assignment, consistent with our statutory mandate. Ultimately, these reforms will ensure the equitable and efficient assignment of toll free numbers.

4. The Commission did not receive comments addressing the rules and policies proposed in the IRFAs in the Toll Free Assignment NPRM.

5. Pursuant to the Small Business Jobs Act of 2010, which amended the RFA, the Commission is required to respond to any comments filed by the Chief Counsel for Advocacy of the Small Business Administration (SBA), and to provide a detailed statement of any change made to the proposed rules as a result of those comments.

6. The Chief Counsel did not file any comments in response to this proceeding.

7. The RFA directs agencies to provide a description and, where feasible, an estimate of the number of small entities that may be affected by the final rules adopted pursuant to the Order. 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. (Pursuant to 5 U.S.C. 601(3), the statutory definition of a small business applies “unless an agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity for public comment, establishes one or more definitions of such term which are appropriate to the activities of the agency and publishes such definition(s) in the Federal Register.”) A “small-business concern” is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA.

8. The changes to our toll free number assignment rules affect obligations on wired and wireless telecommunications carriers, local exchange and interexchange carriers, local and toll resellers, prepaid calling card providers, and cable operators.

9. Small Businesses, Small Organizations, Small Governmental Jurisdictions. Our actions, over time, may affect small entities that are not easily categorized at present. We therefore describe here, at the outset, three comprehensive small entity size standards that could be directly affected herein. First, while there are industry specific size standards for small businesses that are used in the regulatory flexibility analysis, according to data from the SBA's Office of Advocacy, in general a small business is an independent business having fewer than 500 employees. These types of small businesses represent 99.9% of all businesses in the United States which translates to 28.8 million businesses. Next, the type of small entity described as a “small organization” is generally “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.” Nationwide, as of 2007, there were approximately 1,621,215 small organizations. Finally, the small entity described as a “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 indicate that there were 89,476 local governmental jurisdictions in the United States. We estimate that, of this total, as many as 88,761 entities may qualify as “small governmental jurisdictions.” (The 2012 U.S. Census Bureau data for small governmental organizations are not presented based on the size of the population in each organization. There were 89,476 local governmental organizations in the Census Bureau data for 2012, which is based on 2007 data. As a basis of estimating how many of these 89,476 local government organizations were small, we note that there were a total of 715 cities and towns (incorporated places and minor civil divisions) with populations over 50,000 in 2011. If we subtract the 715 cities and towns that meet or exceed the 50,000 population threshold, we conclude that approximately 88,761 are small.) Thus, we estimate that most governmental jurisdictions are small.

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

11. Local Exchange Carriers (LECs). Neither the Commission nor the SBA has developed a size standard for small businesses specifically applicable to local exchange services. The closest applicable NAICS Code category is Wired Telecommunications Carriers as defined above. Under the applicable SBA size standard, such a business is small if it has 1,500 or fewer employees. According to Commission data, census data for 2012 shows that there were 3,117 firms that operated that year. Of this total, 3,083 operated with fewer than 1,000 employees. The Commission therefore estimates that most providers of local exchange carrier service are small entities that may be affected by the rules adopted.

12. Incumbent LECs. Neither the Commission nor the SBA has developed a small business size standard specifically for incumbent local exchange services. The closest applicable NAICS Code category is Wired Telecommunications Carriers as defined above. Under that size standard, such a business is small if it has 1,500 or fewer employees. According to Commission data, 3,117 firms operated in that year. Of this total, 3,083 operated with fewer than 1,000 employees. Consequently, the Commission estimates that most providers of incumbent local exchange service are small businesses that may be affected by the rules and policies adopted. Three hundred and seven (307) Incumbent Local Exchange Carriers reported that they were incumbent local exchange service providers. Of this total, an estimated 1,006 have 1,500 or fewer employees.

13. Competitive Local Exchange Carriers (Competitive LECs), Competitive Access Providers (CAPs), Shared-Tenant Service Providers, and Other Local Service Providers. Neither the Commission nor the SBA has developed a small business size standard specifically for these service providers. The appropriate NAICS Code category is Wired Telecommunications Carriers, as defined above. Under that size standard, such a business is small if it has 1,500 or fewer employees. U.S. Census data for 2012 indicate that 3,117 firms operated during that year. Of that number, 3,083 operated with fewer than 1,000 employees. Based on this data, the Commission concludes that the majority of Competitive LECS, CAPs, Shared-Tenant Service Providers, and Other Local Service Providers, are small entities. According to Commission data, 1,442 carriers reported that they were engaged in the provision of either competitive local exchange services or competitive access provider services. Of these 1,442 carriers, an estimated 1,256 have 1,500 or fewer employees. In addition, 17 carriers have reported that they are Shared-Tenant Service Providers, and all 17 are estimated to have 1,500 or fewer employees. Also, 72 carriers have reported that they are Other Local Service Providers. Of this total, 70 have 1,500 or fewer employees. Consequently, based on internally researched FCC data, the Commission estimates that most providers of competitive local exchange service, competitive access providers, Shared-Tenant Service Providers, and Other Local Service Providers are small entities.

14. We have included small incumbent LECs in this present RFA analysis. As noted above, a “small business” under the RFA is one that, inter alia, meets the pertinent small business size standard (e.g., a telephone communications business having 1,500 or fewer employees), and “is not dominant in its field of operation.” The SBA's Office of Advocacy contends that, for RFA purposes, small incumbent LECs are not dominant in their field of operation because any such dominance is not “national” in scope. (The Small Business Act contains a definition of “small business concern,” which the RFA incorporates into its own definition of “small business.” SBA regulations interpret “small business concern” to include the concept of dominance on a national basis.) We have therefore included small incumbent LECs in this RFA analysis, although we emphasize that this RFA action has no effect on Commission analyses and determinations in other, non-RFA contexts.

15. Interexchange Carriers (IXCs). Neither the Commission nor the SBA has developed a definition for Interexchange Carriers. The closest NAICS Code category is Wired Telecommunications Carriers as defined above. The applicable size standard under SBA rules is that such a business is small if it has 1,500 or fewer employees. U.S. Census data for 2012 indicates that 3,117 firms operated during that year. Of that number, 3,083 operated with fewer than 1,000 employees. According to internally developed Commission data, 359 companies reported that their primary telecommunications service activity was the provision of interexchange services. Of this total, an estimated 317 have 1,500 or fewer employees. Consequently, the Commission estimates that the majority of IXCs are small entities that may be affected by our proposed rules.

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

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

18. Other Toll Carriers. Neither the Commission nor the SBA has developed a definition for small businesses specifically applicable to Other Toll Carriers. This category includes toll carriers that do not fall within the categories of interexchange carriers, operator service providers, prepaid calling card providers, satellite service carriers, or toll resellers. The closest applicable NAICS Code category is for Wired Telecommunications Carriers as defined above. Under the applicable SBA size standard, such a business is small if it has 1,500 or fewer employees. Census data for 2012 shows that there were 3,117 firms that operated that year. Of this total, 3,083 operated with fewer than 1,000 employees. Thus, under this category and the associated small business size standard, the majority of Other Toll Carriers can be considered small. According to internally developed Commission data, 284 companies reported that their primary telecommunications service activity was the provision of other toll carriage. Of these, an estimated 279 have 1,500 or fewer employees. Consequently, the Commission estimates that most Other Toll Carriers are small entities that may be affected by rules adopted pursuant to the Report and Order.

19. Prepaid Calling Card Providers. The SBA has developed a definition for small businesses within the category of Telecommunications Resellers. Under that SBA definition, such a business is small if it has 1,500 or fewer employees. According to the Commission's Form 499 Filer Database, 500 companies reported that they were engaged in the provision of prepaid calling cards. The Commission does not have data regarding how many of these 500 companies have 1,500 or fewer employees. Consequently, the Commission estimates that there are 500 or fewer prepaid calling card providers that may be affected by the rules.

20. Wireless Telecommunications Carriers (except Satellite). This industry comprises establishments engaged in operating and maintaining switching and transmission facilities to provide communications via the airwaves. Establishments in this industry have spectrum licenses and provide services using that spectrum, such as cellular services, paging services, wireless internet access, and wireless video services. The appropriate size standard under SBA rules is that such a business is small if it has 1,500 or fewer employees. For this industry, U.S. Census data for 2012 show that there were 967 firms that operated for the entire year. Of this total, 955 firms had employment of 999 or fewer employees and 12 had employment of 1000 employees or more. (Available census data do not provide a more precise estimate of the number of firms that have employment of 1,500 or fewer employees; the largest category provided is for firms with “1000 employees or more.”) Thus under this category and the associated size standard, the Commission estimates that the majority of wireless telecommunications carriers (except satellite) are small entities.

21. The Commission's own data—available in its Universal Licensing System—indicate that, as of October 25, 2016, there are 280 Cellular licensees that will be affected by our actions today. (For the purposes of this FRFA, consistent with Commission practice for wireless services, the Commission estimates the number of licensees based on the number of unique FCC Registration Numbers.) The Commission does not know how many of these licensees are small, as the Commission does not collect that information for these types of entities. Similarly, according to internally developed Commission data, 413 carriers reported that they were engaged in the provision of wireless telephony, including cellular service, Personal Communications Service, and Specialized Mobile Radio Telephony services. Of this total, an estimated 261 have 1,500 or fewer employees, and 152 have more than 1,500 employees. Thus, using available data, we estimate that the majority of wireless firms can be considered small.

22. Wireless Communications Services. This service can be used for fixed, mobile, radiolocation, and digital audio broadcasting satellite uses. The Commission defined “small business” for the wireless communications services (WCS) auction as an entity with average gross revenues of $40 million for each of the three preceding years, and a “very small business” as an entity with average gross revenues of $15 million for each of the three preceding years. The SBA has approved these definitions.

23. Wireless Telephony. Wireless telephony includes cellular, personal communications services, and specialized mobile radio telephony carriers. As noted, the SBA has developed a small business size standard for Wireless Telecommunications Carriers (except Satellite). Under the SBA small business size standard, a business is small if it has 1,500 or fewer employees. According to Commission data, 413 carriers reported that they were engaged in wireless telephony. Of these, an estimated 261 have 1,500 or fewer employees and 152 have more than 1,500 employees. Therefore, a little less than one third of these entities can be considered small.

24. Cable and Other Subscription Programming. This industry comprises establishments primarily engaged in operating studios and facilities for the broadcasting of programs on a subscription or fee basis. The broadcast programming is typically narrowcast in nature (e.g., limited format, such as news, sports, education, or youth-oriented). These establishments produce programming in their own facilities or acquire programming from external sources. The programming material is usually delivered to a third party, such as cable systems or direct-to-home satellite systems, for transmission to viewers. The SBA has established a size standard for this industry stating that a business in this industry is small if it has 1,500 or fewer employees. The 2012 Economic Census indicates that 367 firms were operational for that entire year. Of this total, 357 operated with less than 1,000 employees. Accordingly we conclude that a substantial majority of firms in this industry are small under the applicable SBA size standard.

25. Cable Companies and Systems (Rate Regulation). The Commission has developed its own small business size standards for the purpose of cable rate regulation. Under the Commission's rules, a “small cable company” is one serving 400,000 or fewer subscribers nationwide. Industry data indicate that there are currently 4,600 active cable systems in the United States. (This figure was derived from a August 15, 2015 report from the FCC Media Bureau, based on data contained in the Commission's Cable Operations and Licensing System (COALS).) Of this total, all but eleven cable operators nationwide are small under the 400,000-subscriber size standard. In addition, under the Commission's rate regulation rules, a “small system” is a cable system serving 15,000 or fewer subscribers. Current Commission records show 4,600 cable systems nationwide. Of this total, 3,900 cable systems have fewer than 15,000 subscribers, and 700 systems have 15,000 or more subscribers, based on the same records. Thus, under this standard as well, we estimate that most cable systems are small entities.

26. Cable System Operators (Telecom Act Standard). The Communications Act also contains a size standard for small cable system operators, which is “a cable operator that, directly or through an affiliate, serves in the aggregate fewer than 1 percent of all subscribers in the United States and is not affiliated with any entity or entities whose gross annual revenues in the aggregate exceed $250,000,000.” There are approximately 52,403,705 cable video subscribers in the United States today. Accordingly, an operator serving fewer than 524,037 subscribers shall be deemed a small operator if its annual revenues, when combined with the total annual revenues of all its affiliates, do not exceed $250 million in the aggregate. Based on available data, we find that all but nine incumbent cable operators are small entities under this size standard. We note that the Commission neither requests nor collects information on whether cable system operators are affiliated with entities whose gross annual revenues exceed $250 million. (The Commission does receive such information on a case-by-case basis if a cable operator appeals a local franchise authority's finding that the operator does not qualify as a small cable operator pursuant to section 76.901(f) of the Commission's rules.) Although it seems certain that some of these cable system operators are affiliated with entities whose gross annual revenues exceed $250 million, we are unable at this time to estimate with greater precision the number of cable system operators that would qualify as small cable operators under the definition in the Communications Act.

27. All Other Telecommunications. The “All Other Telecommunications” industry is comprised of establishments that are primarily engaged in providing specialized telecommunications services, such as satellite tracking, communications telemetry, and radar station operation. This industry also includes establishments primarily engaged in providing satellite terminal stations and associated facilities connected with one or more terrestrial systems and capable of transmitting telecommunications to, and receiving telecommunications from, satellite systems. Establishments providing internet services or voice over internet protocol (VoIP) services via client-supplied telecommunications connections are also included in this industry. The SBA has developed a small business size standard for “All Other Telecommunications,” which consists of all such firms with gross annual receipts of $32.5 million or less. For this category, U.S. Census data for 2012 show that there were 1,442 firms that operated for the entire year. Of these firms, a total of 1,400 had gross annual receipts of less than $25 million. Thus a majority of “All Other Telecommunications” firms potentially affected by our action can be considered small.

28. Auction Applications and Certifications. The Order establishes the use competitive bidding to assign the over 17,000 mutually exclusive numbers in the 833 toll free code, identified pursuant to the 833 Code Opening Order. In order to participate in the competitive bidding process, a potential participant will be obligated to submit an application including information regarding, but not limited to, ownership information. Potential participants will also be required to submit certifications stating that they will follow certain auction rules and requirements, including the limitation that each auction participant bid on behalf of only one interested party (including itself) for the same toll free numbers.

29. Secondary Market Transfers. The Order exempts numbers assigned via competitive bidding from the rules preventing the development of a secondary market. We require Somos, Inc., the Toll Free Numbering Administrator, to maintain information regarding post-auction secondary market transfers. Entities will be required to provide transaction information to Somos, including the new subscriber's name and contact information and other limited information as necessary.

30. In this Order, the Commission modifies its toll free number assignment rules to promote the efficient and equitable assignment of toll free numbers. Overall, we believe the actions in this document will reduce burdens on toll free number subscribers, potential subscribers, and Responsible Organizations, including any small entities.

31. In the Order, we find that revising our rule to allow for an auction-based assignment methodology will benefit smaller entities. Our first-come, first-served assignment methodology has allowed larger, more sophisticated entities to invest in systems that provided enhanced connectivity to the Toll Free Database, allowing these entities to be assigned desirable numbers before smaller competitors. An auction-based assignment methodology, by contrast, does not allow sophisticated entities this advantage.

32. In the Order, we also establish the use of a Vickrey single round, sealed-bid auction to assign the over 17,000 mutually exclusive numbers in the 833 toll free code, identified pursuant to the 833 Code Opening Order. We conclude that the use of this type of auction is appropriate because it is simple to participate in, addressing concerns that an auction-based assignment methodology is more complicated than the first-come, first-served approach.

33. The Commission will send a copy of the Report and Order, including this FRFA, in a report to be sent to Congress pursuant to the Congressional Review Act. In addition, the Commission will send a copy of the Report and Order, including this FRFA, to the Chief Counsel for Advocacy of the SBA. A copy of the Order and FRFA (or summaries thereof) will also be published in the Federal Register.

34. Congressional Review Act. The Commission will send a copy of this Report and Order, to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

35. Paperwork Reduction Act of 1995 Analysis. This Order contains new or modified 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, 44 U.S.C. 3507. 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, we note that pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), we previously sought specific comment on how the Commission might further reduce the information collection burden for small business concerns with fewer than 25 employees.

36. Final Regulatory Flexibility Analysis. As required by the Regulatory Flexibility Act of 1980, see 5 U.S.C. 604, the Commission has prepared a Final Regulatory Flexibility Analysis (FRFA) of the possible significant economic impact on small entities of the policies and rules, as proposed, addressed in this Order. The FRFA is contained in Section IV above.

37. Accordingly, it is ordered that, pursuant to sections 1, 4(i), 201(b), and 251(e)(1) of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 201(b), and 251(e)(1), this Order is adopted.

38. It is further ordered that Part 52 of the Commission's rules are amended as set forth in Appendix A, and such rule amendments shall be effective thirty (30) days after publication of the rule amendments in the Federal Register.

39. It is further ordered that, pursuant to sections 1, 4(i), 5(c), and 251(e)(1) of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 155(c), 251(e)(1), Somos, Inc., the Toll Free Numbering Administrator, is directed to retain and make available to the Commission all data and information about the auction and its administration gathered before, during, and after the auction.

40. It is further ordered that, pursuant to section 251(e)(1) of the Communications Act of 1934, as amended, the Wireline Competition Bureau is directed to review specific petitions and, as necessary and after a notice and comment period, grant toll free numbers to governmental and non-profit entities where such grant is consistent with the public health and safety standards in Commission precedent.

41. It is further ordered that the Commission's Consumer & Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Report and Order to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

For the reasons set forth above, part 52 of Title 47 of the Code of Federal Regulations is amended as follows:

The theft prevention standard (49 CFR part 541) applies to (1) all passenger car lines; (2) all multipurpose passenger vehicle (MPV) lines with a gross vehicle weight rating (GVWR) of 6,000 pounds or less; (3) low-theft light-duty truck (LDT) lines with a GVWR of 6,000 pounds or less that have major parts that are interchangeable with a majority of the covered major parts of passenger car or MPV lines; and (4) high-theft LDT lines with a GVWR of 6,000 pounds or less.

The purpose of the theft prevention standard is to reduce the incidence of motor vehicle theft by facilitating the tracing and recovery of parts from stolen vehicles. The standard seeks to facilitate such tracing by requiring that vehicle identification numbers (VINs), VIN derivative numbers, or other symbols be placed on major component vehicle parts. The theft prevention standard requires motor vehicle manufacturers to inscribe or affix VINs onto covered original equipment major component parts, and to inscribe or affix a symbol identifying the manufacturer and a common symbol identifying the replacement component parts for those original equipment parts, on all vehicle lines subject to the requirements of the standard.

Section 33104(d) provides that once a line has become subject to the theft prevention standard, the line remains subject to the requirements of the standard unless it is exempted under section 33106. Section 33106 provides that a manufacturer may petition annually to have one vehicle line exempted from the requirements of section 33104, if the line is equipped with an antitheft device meeting certain conditions as standard equipment. The exemption is granted if NHTSA determines that the antitheft device is likely to be as effective as compliance with the theft prevention standard in reducing and deterring motor vehicle thefts.

The agency annually publishes the names of those LDT lines that have been determined to be high theft pursuant to 49 CFR part 541, LDT lines that have been determined to have major parts that are interchangeable with a majority of the covered major parts of passenger car or MPV lines, and vehicle lines that are exempted from the theft prevention standard under section 33104. Appendix A to part 541 identifies those LDT lines that are or will be subject to the theft prevention standard beginning in a given model year. Appendix A-I to part 541 lists those vehicle lines that are or have been exempted from the theft prevention standard.

For MY 2017, there are no new LDT lines that will be subject to the theft prevention standard in accordance with the procedures published in 49 CFR part 542. However, appendix A to part 541 is amended to remove two vehicle lines that have been discontinued more than 5 years ago: The Chevrolet S-10 and the GMC Sonoma.

For MY 2017, appendix A-1 identifies those vehicle lines that have been exempted by the agency from the parts-marking requirements of part 541 and is amended to include eleven vehicle lines newly exempted in full. The eleven exempted vehicle lines are the BMW MINI Countryman (MPV), Chevrolet Bolt, Fiat 124 Spyder, Honda Pilot, Hyundai IONIQ, Jaguar XE, Jeep Compass, Lexus RX, Lincoln MKC, Maserati Levante (MPV) and the Tesla Model 3.

The agency is removing the Lincoln Town Car, Mercury Mariner, Mercury Grand Marquis, Buick Lucerne, Pontiac G6, Saturn Aura, Mazda Tribute and Nissan Versa (2008-2011), vehicle lines from the appendix A-I listing because they have been discontinued more than 5 years ago. The agency is also removing the Cadillac Eldorado, Cadillac Concours, Oldsmobile Ninety-Eight, Pontiac Firebird, Chevrolet Camaro (1990-2002) and Oldsmobile Eighty-Eight vehicle lines from the appendix A-II listing because they have also been discontinued more than 5 years ago. The agency will continue to maintain a comprehensive database of all exemptions on our website. However, we believe that re-publishing a list containing vehicle lines that have not been in production for a considerable period of time is unnecessary.

The vehicle lines listed as being exempt from the standard have previously been exempted in accordance with the procedures of 49 CFR part 543 and 49 U.S.C. 33106. Therefore, NHTSA finds good cause under 5 U.S.C. 553(b)(3)(B) that notice and opportunity for comment on these listings are unnecessary. Further, public comment on the listing of selections and exemptions is not contemplated by 49 U.S.C. chapter 331. For the same reasons, since this revised listing only informs the public of previous agency actions and does not impose additional obligations on any party, NHTSA finds good cause under 5 U.S.C. 553(d)(3) that the amendment made by this document should be effective as soon as it is published in the Federal Register.

A. Executive Order 12866, Executive Order 13563 and the Department of Transportation's regulatory policies provide for making determinations on whether a regulatory action is “significant” and therefore subject to Office of Management and Budget (OMB) review and to the requirements of the Executive Orders. The Order defines a “significant regulatory action” as one that is likely to result in a rule that may:

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

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

(3) Materially alter the budgetary impact of entitlements, 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 set forth in the Executive Order.

This final rule was not reviewed under Executive Order 12866. It is not significant within the meaning of the DOT Regulatory Policies and Procedures. It will not impose any new burdens on vehicle manufacturers. This document informs the public of previously granted exemptions. Since the only purpose of this final rule is to inform the public of previous actions taken by the agency no new costs or burdens will result.

B. Executive Order 13771

Executive Order 13771 titled “Reducing Regulation and Controlling Regulatory Costs,” directs that, unless prohibited by law, whenever an executive department or agency publicly proposes for notice and comment or otherwise promulgates a new regulation, it shall identify at least two existing regulations to be repealed. In addition, any new incremental costs associated with new regulations shall, to the extent permitted by law, be offset by the elimination of existing costs. Only those rules deemed significant under section 3(f) of Executive Order 12866, “Regulatory Planning and Review,” are subject to these requirements. As discussed above, this rule is not a significant rule under Executive Order 12866 and, accordingly, is not subject to the offset requirements of Executive Order 13771.

C. National Environmental Policy Act

NHTSA has analyzed this final rule for the purposes of the National Environmental Policy Act. The agency has determined that implementation of this action will not have any significant impact on the quality of the human environment as it merely informs the public about previous agency actions. Accordingly, no environmental assessment is required.

D. Executive Order 13132 (Federalism)

The agency has analyzed this rulemaking in accordance with the principles and criteria contained in Executive Order 13132 and has determined that it does not have sufficient Federal implications to warrant consultation with State and local officials or the preparation of a federalism summary impact statement. As discussed above, this final rule only provides better information to the public about previous agency actions.

E. Unfunded Mandates Act

The Unfunded Mandates Reform Act of 1995 requires agencies to prepare a written assessment of the costs, benefits and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local or tribal governments, in the aggregate, or by the private sector, of more than $100 million annually ($120.7 million as adjusted annually for inflation with base year of 1995). The assessment may be combined with other assessments, as it is here.

This final rule will not result in expenditures by State, local or tribal governments or automobile manufacturers and/or their suppliers of more than $120.7 million annually. This document informs the public of previously granted exemptions. Since the only purpose of this final rule is to inform the public of previous actions taken by the agency, no new costs or burdens will result.

F. Executive Order 12988 (Civil Justice Reform)

Pursuant to Executive Order 12988, “Civil Justice Reform,” 1 the agency has considered whether this final rule has any retroactive effect. We conclude that it would not have such an effect as it only informs the public of previous agency actions. In accordance with section 33118 when the Theft Prevention Standard is in effect, a State or political subdivision of a State may not have a different motor vehicle theft prevention standard for a motor vehicle or major replacement part. Title 49 U.S.C. 33117 provides that judicial review of this rule may be obtained pursuant to 49 U.S.C. 32909. Section 32909 does not require submission of a petition for reconsideration or other administrative proceedings before parties may file suit in court.

G. Paperwork Reduction Act

The Department of Transportation has not submitted an information collection request to OMB for review and clearance under the Paperwork Reduction Act of 1995 (Pub. L. 104-13, 44 U.S.C. chapter 35). This rule does not impose any new information collection requirements on manufacturers.

In consideration of the foregoing, 49 CFR part 541 is amended as follows:

Regulations governing the summer flounder fishery are found in 50 CFR 648.100 through 648.110. These regulations require annual specification of a commercial quota that is apportioned among the coastal states from Maine through North Carolina. The process to set the annual commercial quota and the percent allocated to each state is described in § 648.102, and the initial 2018 allocations were published on December 22, 2017 (82 FR 60682), and corrected January 30, 2018 (83 FR 4165).

The final rule implementing Amendment 5 to the Summer Flounder Fishery Management Plan, as published in the Federal Register on December 17, 1993 (58 FR 65936), provided a mechanism for transferring summer flounder commercial quota from one state to another. Two or more states, under mutual agreement and with the concurrence of the NMFS Greater Atlantic Regional Administrator, can transfer or combine summer flounder commercial quota under § 648.102(c)(2). The Regional Administrator is required to consider the criteria in § 648.102(c)(2)(i)(A) through (C) in the evaluation of requests for quota transfers or combinations.

Maine is transferring 2,500 lb (1,134 kg) of summer flounder commercial quota to Connecticut through mutual agreement of the states. Based on the initial quotas published in the 2018 Summer Flounder, Scup, and Black Sea Bass Specifications and subsequent adjustments, the revised summer flounder quotas for calendar year 2018 are now: Maine, 561 lb (254 kg); and Connecticut, 147,768 lb (67,026 kg).

This action is taken under 50 CFR part 648 and is exempt from review under Executive Order 12866.

NMFS is specifying a catch limit of 2,000 t of longline-caught bigeye tuna for each U.S. territory in 2018. NMFS is also authorizing each territory to allocate up to 1,000 t of its 2,000 t bigeye tuna limit to U.S. longline fishing vessels permitted to fish under the Pelagic FEP. NMFS will monitor catches of longline-caught bigeye tuna by the longline fisheries of each territory, including catches made by U.S. longline vessels operating under specified fishing agreements. The criteria that a specified fishing agreement must meet, and the process for attributing longline-caught bigeye tuna, will follow the procedures in 50 CFR 665.819. When NMFS projects that a territorial catch or allocation limit will be reached, NMFS will, as an accountability measure, prohibit the catch and retention of longline-caught bigeye tuna by vessels in the applicable territory (territorial catch limit), and/or vessels in a specified fishing agreement (allocation limit).

You may find additional background information on this action in the preamble to the proposed specifications published on August 8, 2018 (83 FR 39037).

On August 8, 2018, NMFS published the proposed specifications and request for public comments (83 FR 39037); the comment period closed on August 23, 2018. In light of the decision in Territory of American Samoa v. NMFS, et al. (16-cv-95, D. Haw), NMFS specifically invited public comments that would address the impact of the proposed action on cultural fishing in American Samoa. NMFS received no comments addressing cultural fishing.

NMFS received comments only from the Hawaii Longline Association (HLA) on the proposed specifications and the draft EA. NMFS considered the public comments, and responds to comments below.

Comment 1: NMFS should act thoughtfully and quickly in completing this rulemaking process. In past years, the deep-set fishery in the Western and Central Pacific Ocean (WCPO) and the Eastern Pacific Ocean (EPO) attained the U.S. bigeye tuna catch limits in each area. As a result, many U.S. deep-set vessels were unable to fish because they were not able to allocate catch pursuant to already-executed specified fishing agreements. Such delays in rulemaking impede the achievement of the goals of the Pelagic FEP.

Response: NMFS reviews the proposed catch and allocation limits for consistency with the provisions of the Magnuson-Stevens Act, the Pelagic FEP, decisions of the Western and Central Pacific Fisheries Commission (WCPFC), and other applicable laws. This review requires preparation of comprehensive supporting environmental analyses to ensure the conservation of affected fish stocks and protected species. While NMFS is committed to preparing analyses before the fishery could reach the WCPO bigeye tuna limit, we also encourage HLA to consider industry-led actions in both the WCPO and the EPO that might reduce the likelihood of reaching a catch limit, or otherwise alleviate the impact of a closure.

Comment 2: The proposed rule will provide substantial benefits for the Hawaii-based longline fisheries, the Hawaii seafood market, the territories, and protected species.

Response: NMFS agrees. We are satisfied that this action (which is identical to the catch and allocation limits implemented in 2017 (82 FR 47642, Oct. 13, 2017)) addresses the conservation and management needs of bigeye tuna in the western and central Pacific Ocean, and considers the needs of fishing communities of the U.S. Pacific Islands, and the impacts to protected species.

Comment 3: Transferred effects caused by closing Hawaii-based longline fisheries have detrimental impacts on local Hawaii seafood markets and on protected species that are caught more frequently by foreign fisheries. HLA provided copies of scientific papers on transferred effects, and requested that NMFS include these papers, along with its comment letter, in the administrative record for this rulemaking.

Response: NMFS acknowledges the concept of transferred effects during a closure of the U.S. longline fleet, and we have posted HLA's comment letter and enclosures at www.regulations.gov.

Comment 4: The issuance of the proposed rule will have no significant impacts on the WCPO bigeye tuna stock.

Response: NMFS agrees, and is satisfied that this action is consistent with the conservation and management needs of bigeye tuna in the WCPO.

Comment 5: HLA notes that the proposed limits are substantially more stringent than conservation measures adopted by WCPFC, which do not establish any bigeye limits for the Territories, and questions whether there is a factual basis to limit each territory to a 1,000 t allocation.

Response: This action implements the recommendation from the Council's 172nd meeting, in March 2018, that NMFS specify for each U.S. participating territory, a 2,000 t longline bigeye catch limit and specify that each territory can each allocate up to 1,000 t of their bigeye catch limit. Utilizing the best scientific information available, NMFS has determined that these catch and allocation limits are consistent with WCPFC objectives to conserve the bigeye stock. NMFS agrees that the WCPFC has not adopted bigeye limits for the U.S. Territories, and notes that the Council has recommended amending the Pelagic FEP and Federal regulations to remove the requirement that NMFS must first specify catch limits for the territories before specifying allocation limits, but the Council has not yet developed the recommended amendment.

Comment 6: HLA disagrees with the conclusions of the draft EA that the deep-set fishery may have some (albeit very limited) adverse effect on the insular false killer whale stock, because NMFS observers have never recorded an interaction in the very small area in which fishing effort and the designated range of the insular stock currently overlap.

Response: The conclusion that the Hawaii deep-set longline fishery is likely to adversely affect the main Hawaiian Islands insular false killer whale stock is based on NMFS determinations made in the most recent (2014 as supplemented in 2017) biological opinion for the fishery, which we reference in the EA. While we agree that observers have not recently documented interactions in the area where fishing effort and the designated range of the insular stock currently overlap, based on historical data and fishing gear employed, NMFS anticipates that low levels of fishery interactions are still likely to occur on trips within that overlap zone. NMFS applies a proration method described in the 2014 biological opinion that uses fishing effort inside and outside the U.S. EEZ around the MHI to attribute mortality and serious injury, a subset of total take, of false killer whales and unidentified black fish to the pelagic false killer whale stock, the northwestern Hawaiian Islands killer whale stock or the MHI insular false killer whale stock. The proration method also accounts for effort within the small area fishing effort and the insular stock overlap. Because this proration method results in attribution of take to the MHI insular false killer whale stock, NMFS, in the 2014 biological opinion, determined the fishery is likely to adversely affect this stock, but is not likely to jeopardize its continued existence.

Comment 7: Reference to the recent settlement in the shallow-set fishery litigation should clarify that the hard cap limit of 17 loggerhead sea turtles will be effective January 1, 2019, unless or until superseded by a new hard cap limit.

Response: NMFS has made this suggested change in section 3.3.1.2 of the EA.

Comment 8: The EA should clarify that the Southern Exclusion Zone closure is temporary, lasting only to the end of 2018.

Response: NMFS revised the text in EA sections 3.2.3.1, 3.3.2.1, and 4.3.1.1 to reflect the temporary nature of the closure.

Comment 9: As to protected species more broadly, it is more accurate to say that the proposed rule will not result in significant adverse effects to protected species (as opposed to “large adverse effects.”

Response: NMFS agrees that the action implemented by this final rule will not result in significant impacts to protected species.

The Regional Administrator, NMFS Pacific Islands Region, determined that this action is necessary for the conservation and management of Pacific Island fishery resources, and that it is consistent with the Magnuson-Stevens Act and other applicable laws.

The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration during the proposed rule stage that this action would not have a significant economic impact on a substantial number of small entities. NMFS published the factual basis for the certification in the proposed rule, and we do not repeat it here. NMFS received no comments on this certification; as a result, a regulatory flexibility analysis is not required, and none has been prepared.

Because this rule relieves a restriction, it is not subject to the 30-day delayed effectiveness provision of the APA pursuant to 5 U.S.C. 553(d)(1). This rule allows U.S. vessels identified in a valid specified fishing agreement to resume fishing in the western and central Pacific Ocean (WCPO) if and when NMFS closes the longline fishery for bigeye tuna. On July 18, 2018, through a separate action, NMFS established the 2018 limit of 3,554 t of bigeye tuna caught by U.S. longline fisheries in the WCPO (83 FR 33851). When NMFS projects that the fishery will reach the limit, NMFS must close the fishery for bigeye tuna in the WCPO. Regulations at 50 CFR 665.819 require NMFS to begin attributing longline caught bigeye tuna to the U.S. territory to which a fishing agreement applies seven days before the date NMFS projects the fishery will reach the WCPO U.S bigeye tuna limit, or upon the effective date of the agreement, whichever is later. Based on longline catch records to date, NMFS projects the fishery will reach the current 3,554 t limit of WCPO bigeye tuna in early November 2018. If the effectiveness of this final rule is delayed past the date the WCPO bigeye tuna limit is reached, NMFS would be required to publish a temporary rule that restricts the Hawaii-based longline fishery for WCPO bigeye tuna until this final rule is effective. After the effective date, NMFS would remove the restrictions for U.S. vessels identified in a valid specified fishing agreement with a U.S. territory. By implementing this rule immediately, it allows the Hawaii longline fishery to continue fishing without the uncertainty or disruption of a potential closure.

This action is exempt from review under E.O. 12866 because it contains no implementing regulations.