| Page Range | 63041-63381 | |
| FR Document |
| Page and Subject | |
|---|---|
| 83 FR 63162 - Sunshine Act Meeting; Farm Credit Administration Board | |
| 83 FR 63066 - Significant New Use Rules on Certain Chemical Substances; Withdrawal | |
| 83 FR 63190 - Sunshine Act Meeting; Cancellation | |
| 83 FR 63185 - Change of Date of Government in the Sunshine Act Meeting; Issuance of Revised Agenda for Meeting of December 7, 2018 at 11:00 a.m. | |
| 83 FR 63194 - Hours of Service (HOS) of Drivers; Applications for Exemption From the Electronic Logging Device Rule | |
| 83 FR 63191 - Progressive Rail Incorporated-Continuance in Control Exemption-St. Paul & Pacific Northwest Railroad Company, LLC | |
| 83 FR 63190 - St. Paul & Pacific Northwest Railroad Company, LLC-Change in Operators Exemption-Kettle Falls International Railway, LLC | |
| 83 FR 63061 - Notices of Intention and Statements of Account Under Compulsory License To Make and Distribute Phonorecords of Musical Works | |
| 83 FR 63059 - Safety Zone; Barters Island Bridge, Back River, Barters Island, ME | |
| 83 FR 63161 - Environmental Impact Statements; Notice of Availability | |
| 83 FR 63192 - North Carolina & Virginia Railroad Company, L.L.C., Chesapeake & Albemarle Railroad Division-Lease Amendment and Operation Exemption Including Interchange Commitment-Norfolk Southern Railway Company | |
| 83 FR 63188 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Reemployment Services and Eligibility Assessments (RESEA) Program Implementation Study; New Collection | |
| 83 FR 63184 - Notice of Availability of a Draft Environmental Impact Statement for Vineyard Wind LLC's Proposed Wind Energy Facility Offshore Massachusetts | |
| 83 FR 63163 - Change in Bank Control Notices; Acquisitions of Shares of a Bank or Bank Holding Company | |
| 83 FR 63162 - Formations of, Acquisitions by, and Mergers of Bank Holding Companies | |
| 83 FR 63183 - Meeting of the Presidential Advisory Council on HIV/AIDS | |
| 83 FR 63164 - Submission for OMB Review; Head Start Child and Family Experiences Survey (FACES) (OMB #0970-0151) | |
| 83 FR 63168 - Food Handler Antiseptic Drug Products for Over-the-Counter Human Use; Request for Data and Information | |
| 83 FR 63149 - Cardinal-Hickory Creek 345-kV Transmission Line Project | |
| 83 FR 63184 - Laboratory Animal Welfare: Draft Report on Recommendations To Reduce Administrative Burden on Researchers | |
| 83 FR 63179 - Agency Information Collection Activities; Submission for Office of Management and Budget Review; Comment Request; Environmental Impact Considerations | |
| 83 FR 63176 - Agency Information Collection Activities; Submission for Office of Management and Budget Review; Comment Request; Food and Drug Administration's Research and Evaluation Survey for the Public Education Campaign on Tobacco Among the Lesbian Gay Bisexual Transgender Community | |
| 83 FR 63166 - Developing and Labeling In vitro | |
| 83 FR 63159 - Chlorinated Isocyanurates From the People's Republic of China: Preliminary Results of Countervailing Duty Administrative Review; 2016 | |
| 83 FR 63155 - Approval of Subzone Status, Winpak Heat Seal Corporation, Pekin, Illinois | |
| 83 FR 63154 - Foreign-Trade Zone (FTZ) 70-Detroit, Michigan, Notification of Proposed Production Activity, Fluid Equipment Development Company, LLC (Energy Recovery Turbines and Centrifugal Pumps), Monroe, Michigan | |
| 83 FR 63155 - Approval of Subzone Status, Mayfield Consumer Products, Mayfield and Hickory, Kentucky | |
| 83 FR 63154 - Foreign-Trade Zone (FTZ) 18-San Jose, California, Authorization of Production Activity, Tesla, Inc. (Electric Passenger Vehicles and Components), Fremont and Palo Alto, California | |
| 83 FR 63178 - Framework for a Real-World Evidence Program; Availability | |
| 83 FR 63157 - Polyethylene Terephthalate Film, Sheet, and Strip From the United Arab Emirates: Preliminary Results of Antidumping Duty Administrative Review; 2016-2017 | |
| 83 FR 63155 - Welded Carbon Steel Standard Pipe and Tube Products From Turkey: Final Results of Antidumping Duty Administrative Review; 2016-2017 | |
| 83 FR 63160 - Agency Information Collection Activities; Comment Request; Federal Student Aid (FSA) Feedback System | |
| 83 FR 63188 - Steel Concrete Reinforcing Bar From Belarus, China, Indonesia, Latvia, Moldova, Poland, and Ukraine | |
| 83 FR 63162 - Notice of Termination of Receiverships | |
| 83 FR 63152 - Submission for OMB Review; Comment Request | |
| 83 FR 63151 - Submission for OMB Review; Comment Request | |
| 83 FR 63165 - Submission for OMB Review; Comment Request | |
| 83 FR 63192 - Environmental Impact Statement for Gallatin Fossil Plant Surface Impoundment Closure and Restoration Project | |
| 83 FR 63196 - U.S. Merchant Marine Academy Board of Visitors | |
| 83 FR 63196 - Hazardous Materials: Emergency Waiver No. 11 | |
| 83 FR 63052 - Uniform Compliance Date for Food Labeling Regulations | |
| 83 FR 63163 - Submission for OMB Review; Use of Products and Services of Kaspersky Lab | |
| 83 FR 63182 - Agency Information Collection Activities: Submission to OMB for Review and Approval; Public Comment Request; Information Collection Request Title: Family-to-Family Health Information Center Feedback Surveys, OMB Number: 0906-xxxx-New | |
| 83 FR 63186 - Certain Robotic Vacuum Cleaning Devices and Components Thereof Such as Spare Parts; Notice of the Commission's Final Determination Finding a Violation of Section 337; Issuance of a Limited Exclusion Order and Cease and Desist Orders; Termination of the Investigation | |
| 83 FR 63046 - Highly Erodible Land and Wetland Conservation | |
| 83 FR 63042 - General Schedule Locality Pay Areas | |
| 83 FR 63110 - Real Estate Appraisals | |
| 83 FR 63189 - Advisory Committee on Reactor Safeguards; Procedures for Meetings | |
| 83 FR 63149 - Information Collection Request; Request for Special Priorities Assistance | |
| 83 FR 63148 - Information Collection Request; Agricultural Foreign Investment Disclosure Act Report | |
| 83 FR 63146 - National Oil and Hazardous Substances Pollution Contingency Plan; National Priorities List: Deletion of the Tomah Armory Landfill Superfund Site | |
| 83 FR 63068 - National Oil and Hazardous Substances Pollution Contingency Plan; National Priorities List: Deletion of the Tomah Armory Landfill Superfund Site | |
| 83 FR 63067 - National Oil and Hazardous Substances Pollution Contingency Plan; National Priorities List: Partial Deletion of the Beloit Corporation Superfund Site | |
| 83 FR 63268 - Takes of Marine Mammals Incidental to Specified Activities; Taking Marine Mammals Incidental to Geophysical Surveys in the Atlantic Ocean | |
| 83 FR 63054 - Miscellaneous Federal Home Loan Bank Operations and Authorities-Financing Corporation Assessments | |
| 83 FR 63106 - System Safety Program | |
| 83 FR 63073 - Establishment of the Office of Economics and Analytics | |
| 83 FR 63127 - Medical Device De Novo Classification Process | |
| 83 FR 63200 - Guidance Related to the Foreign Tax Credit, Including Guidance Implementing Changes Made by the Tax Cuts and Jobs Act | |
| 83 FR 63041 - Veterans' Preference | |
| 83 FR 63148 - Performance Review Board Membership | |
| 83 FR 63098 - Reporting Requirements Governing Hearing Aid-Compatible Mobile Handsets | |
| 83 FR 63076 - Promoting Investment in the 3550-3700 MHz Band |
In the printed version of the
Farm Service Agency
Food Safety and Inspection Service
Rural Utilities Service
Census Bureau
Foreign-Trade Zones Board
International Trade Administration
National Oceanic and Atmospheric Administration
Children and Families Administration
Food and Drug Administration
Health Resources and Services Administration
National Institutes of Health
Coast Guard
Ocean Energy Management Bureau
Copyright Office, Library of Congress
Federal Motor Carrier Safety Administration
Federal Railroad Administration
Maritime Administration
Pipeline and Hazardous Materials Safety Administration
Comptroller of the Currency
Internal Revenue Service
Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, and notice of recently enacted public laws.
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Office of Personnel Management.
Final rule.
The U.S. Office of Personnel Management (OPM) is issuing a final rule to implement a statutory change pertaining to veterans' preference. This change is made in response to the Gold Star Fathers Act of 2015. The Act broadens the category of individuals eligible for veterans' preference to provide that fathers of certain permanently disabled or deceased veterans shall be included with mothers of such veterans as preference eligibles for treatment in the civil service.
This rule will be effective January 7, 2019.
Roseanna Ciarlante by telephone on (267) 932-8640, by fax at (202) 606-4430, by TTY at (202) 418-3134, or by email at
On October 7, 2015, the Gold Star Fathers Act of 2015 (the “Act”) was enacted as Public Law 114-62. The Act provides an amendment to the eligibility criteria for veterans' preference purposes by amending subparagraphs (F) and (G) to 5 U.S.C. 2108(3). The amendment provides that fathers of certain permanently disabled or deceased veterans shall be included with mothers of such veterans as preference eligibles for treatment in the civil service. The Act also changes the requirements for parents of such veterans to qualify for this preference.
The Act replaces 5 U.S.C. 2108(3)(F) to state that the parent of an individual who lost his or her life under honorable conditions while serving in the armed forces during a war, in a campaign or expedition for which a campaign badge has been authorized, or during the period beginning April 28, 1952, and ending July 1, 1955, is eligible for preference if the spouse of that parent is totally and permanently disabled; or that parent, when preference is claimed, is unmarried or, if married, legally separated from his or her spouse.
The Act also replaces 5 U.S.C. 2108(3)(G) to state that the parent of a service-connected permanently and totally disabled veteran is eligible for preference if the spouse of that parent is totally and permanently disabled; or that parent, when preference is claimed, is unmarried or, if married, legally separated from his or her spouse.
On December 27, 2016, OPM issued an interim rule at 81 FR 94909, amending 5 CFR 211.102(d) to state that a “preference eligible” is “a veteran, disabled veteran, sole survivor veteran, spouse, widow, widower, or parent who meets the definition of `preference eligible' in 5 U.S.C. 2108.” The amendment replaced the word “mother” with the word “parent” to conform to the statutory definition.
During the 60-day comment period between December 27, 2016 and February 27, 2017, OPM received one comment from an individual. The individual expressed concern that absent oversight, agencies will use this change to (1) replace their older career employees with a non-career workforce, and (2) circumvent unspecified special hiring authorities. The commenter did not articulate how giving the fathers of certain permanently-disabled or deceased veterans the same rights as mothers would have these effects. Because the commenter's concern is unclear and speculative, OPM cannot address it.
OPM acknowledges that oversight of veterans' preference is critical. OPM conducts regular reviews of veterans hiring across the Government to ensure that veterans are receiving the entitlements they have earned in the Federal hiring process. We have identified no systemic abuses or issues with veterans' preference or veterans hiring practices.
OPM has examined the impact of this rule as required by Executive Order 12866 and Executive Order 13563, which directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public, health, and safety effects, distributive impacts, and equity). A regulatory impact analysis must be prepared for major rules with economically significant effects of $100 million or more in any one year. This rule was not designated as a “significant regulatory action,” under Executive Order 12866 and was not reviewed by the Office of Management and Budget.
This final rule is not an E.O. 13771 regulatory action because this rule is not significant under E.O. 12866.
The Office of Personnel Management certifies that this rule will not have a significant economic impact on a substantial number of small entities.
This rule will not result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any year and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.
This action pertains to agency management, personnel, and organization and does not substantially affect the rights or obligations of nonagency parties and, accordingly, is not a “rule” as that term is used by the Congressional Review Act (Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA)). Therefore, the reporting requirement of 5 U.S.C. 801 does not apply.
Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with a collection of information subject to the requirements of the Paperwork
This rule involves a collection of information subject to the PRA—Standard Form (SF) 15,
Government employees, Veterans.
Accordingly, OPM amends part 211 of title 5, Code of Federal Regulations, as follows:
5 U.S.C. 1302, 2108, 2108a.
(d)
Office of Personnel Management.
Final rule.
On behalf of the President's Pay Agent, the Office of Personnel Management (OPM) is issuing final regulations to establish six new General Schedule locality pay areas, make certain changes to the definitions of existing locality pay areas, and make minor clarifying changes to the names of two locality pay areas. Those changes in locality pay area definitions are applicable on the first day of the first pay period beginning on or after January 1, 2019. Locality pay rates for the six new locality pay areas will be set by the President.
The regulations are effective January 5, 2019, and are applicable on the first day of the first pay period beginning on or after January 1, 2019.
Joe Ratcliffe by email at
Section 5304 of title 5, United States Code (U.S.C.), authorizes locality pay for General Schedule (GS) employees with duty stations in the United States and its territories and possessions. Section 5304(f) authorizes the President's Pay Agent (the Secretary of Labor, the Director of the Office of Management and Budget (OMB), and the Director of the Office of Personnel Management (OPM)) to determine locality pay areas. The boundaries of locality pay areas must be based on appropriate factors, which may include local labor market patterns, commuting patterns, and the practices of other employers. The Pay Agent must give thorough consideration to the views and recommendations of the Federal Salary Council, a body composed of experts in the fields of labor relations and pay policy and representatives of Federal employee organizations. The President appoints the members of the Federal Salary Council, which submits annual recommendations on the locality pay program to the Pay Agent. The establishment or modification of locality pay area boundaries must conform to the notice and comment provisions of the Administrative Procedure Act (5 U.S.C. 553).
On July 9, 2018, OPM published a proposed rule in the
The proposed rule provided a 30-day comment period. Accordingly, the Pay Agent reviewed comments received through August 8, 2018. After considering those comments, the Pay Agent has decided to implement the locality pay area definitions in the proposed rule, with two additional changes based on recommendations received from the Federal Salary Council on July 10, 2018. Those changes are the establishment of a new Corpus Christi-Kingsville-Alice, TX, locality pay area and establishment of a new Omaha-Council Bluffs-Fremont, NE-IA, locality pay area.
On July 10, 2018—the day after the proposed rule was published—the Pay Agent received the Federal Salary Council's recommendations for locality pay for January 2019, which included a recommendation to establish a Corpus Christi-Kingsville-Alice, TX, locality pay area and an Omaha-Council Bluffs-Fremont, NE-IA, locality pay area. (The Council's recommendations for locality pay for January 2019 are posted at
Establishing 6 new locality pay areas will impact about 70,000 GS employees. Locality pay rates now applicable in those areas will not change automatically because locality pay percentages are established by Executive order under the President's authority in 5 U.S.C. 5304 or 5304a, and the President decides each year whether to adjust locality pay percentages. When locality pay percentages are adjusted, past practice has been to allocate a percent of the total GS payroll for locality pay raises and to have the overall dollar cost for such pay raises be the same, regardless of the number of locality pay areas. If a percent of the total GS payroll is allocated for locality pay increases, the addition of new areas results in a somewhat smaller amount to allocate for locality pay increases in existing areas. Implementing higher locality pay rates in the six new locality pay areas could thus result in relatively lower pay increases for employees in existing locality pay areas than they would otherwise receive.
Establishing McKinley County, NM, as an area of application to the Albuquerque-Santa Fe-Las Vegas, NM, locality pay area will impact about 1,600 GS employees. Establishing San Luis Obispo County, CA, as an area of application to the Los Angeles-Long Beach, CA, locality pay area will impact about 100 GS employees.
Using the definitions of MSAs and CSAs in OMB Bulletin No. 18-03 as the basis for locality pay area boundaries will impact about 153 GS employees in the new San Antonio-New Braunfels-Pearsall, TX, locality pay area. However, those GS employees are included in the impact statement above regarding establishment of the six new locality pay areas. No other locality pay areas are impacted by using MSAs and CSAs in OMB Bulletin No. 18-03 as the basis for locality pay area boundaries.
The changes in the names of the Boston-Worcester-Providence, MA-RI-NH-CT-ME and Albany-Schenectady, NY, locality pay areas will have no impact on GS employees because the geographic boundaries of the two locality pay areas affected will remain the same.
OPM received 184 comments on the proposed rule. Most commenters supported the proposed changes in the definitions of locality pay areas.
A number of comments reflected misunderstanding of the proposed rule's definitions of locality pay areas, with some comments indicating a belief that certain counties actually included in a proposed locality pay area were excluded. As explained in the proposed rule, locality pay areas consist of (1) the MSA or CSA comprising the basic locality pay area and, where criteria recommended by the Federal Salary Council and approved by the Pay Agent are met, (2) areas of application. Regarding the MSAs and CSAs comprising basic locality pay areas, these final regulations define MSA as the geographic scope of an MSA as defined in OMB Bulletin No. 18-03 and define CSA as the geographic scope of a CSA as defined in OMB Bulletin No. 18-03. (OMB Bulletin No. 18-03 is posted at
Some commenters objected that certain locations were to remain in the “Rest of U.S.” locality pay area under the proposed rule. Some of these commenters were concerned about locations in MSAs or CSAs in the “Rest of U.S.” locality pay area for which the Federal Salary Council has studied disparities between non-Federal pay and Federal pay over several years of data. For such locations that will remain in the “Rest of U.S.” locality pay area, the Council found that the pay disparities do not significantly exceed the pay disparity for the “Rest of U.S.” locality pay area over the same period. Some commenters were concerned about locations that will remain in the “Rest of U.S.” locality pay area because those locations do not meet the criteria for areas of application. Some commenters were concerned about rural locations that do not qualify as areas of application and for which the locality pay program's current salary survey methodology cannot produce reliable estimates due to data insufficiency with respect to non-Federal salaries. For example, some comments expressed concern about Accomack and Northampton Counties, VA, not being included in the proposed Virginia Beach-Norfolk, VA-NC, locality pay area. These two counties comprise an area known as the Eastern Shore of Virginia and do not meet the Pay Agent's criteria to be part of the Virginia Beach-Norfolk, VA-NC, locality pay area. In some cases, comments expressed concern regarding possible recruitment and retention difficulties the commenters believe agencies may have in certain locations that will remain in the “Rest of U.S.” locality pay area when these final regulations are put into effect. The Pay Agent has no evidence that the changes these final regulations will make in locality pay area definitions will create recruitment and retention challenges for Federal employers. However, should recruitment and retention challenges exist in a location, Federal agencies have considerable administrative authority to address those challenges through the use of current pay flexibilities. Information on these flexibilities is posted on the OPM website at
A number of commenters expressed their views on pay levels in locality pay areas. Some commenters suggested specific locality pay percentages to apply to new or existing locality pay areas, and some commenters offered opinions on the extent to which pay increases are needed in some locality pay areas compared to others. Some commenters expressed concern that existing locality pay areas' future pay levels could be set lower than they otherwise would, due to establishment of new locality pay areas. Such comments as these are outside of the scope of these final regulations. The purpose of these final regulations is to define the boundaries of locality pay areas. The role of the Pay Agent with regard to locality pay percentages is to report annually to the President what locality pay percentages would go into effect under the Federal Employees Pay Comparability Act of 1990 (FEPCA). The President establishes a base General Schedule and sets locality pay percentages each year by Executive order.
Some commenters expressed the belief that various indicators of living costs should be considered in defining locality pay areas or in setting locality pay. Living costs are not directly considered in the locality pay program. Locality pay is not designed to equalize living standards for GS employees across the country. Under 5 U.S.C. 5304, locality pay rates are based on comparisons of GS pay and non-Federal pay at the same work levels in a locality pay area. Relative living costs may indirectly affect non-Federal pay levels, but living costs are just one of many
Some commenters objected that, as a consequence of the definitions of current locality pay areas, adjacent counties are included in two different locality pay areas while receiving different locality payments. These commenters were concerned that the adjacent California Counties of Sacramento and San Joaquin receive different locality payments, with Sacramento County receiving Sacramento-Roseville, CA-NV, locality pay and San Joaquin County receiving higher San Jose-San Francisco-Oakland, CA, locality pay. Sacramento County is located in the Sacramento-Roseville, CA, CSA, which is the basis for the geographic definition of the Sacramento-Roseville, CA-NV, locality pay area. San Joaquin County is located in the San Jose-San Francisco-Oakland, CA, CSA, which is the basis for the geographic definition of the San Jose-San Francisco-Oakland, CA, locality pay area. Locality pay percentages are based on comparisons in each locality pay area between GS and non-Federal pay for the entire locality pay area. The results of such pay comparisons differ between the Sacramento-Roseville, CA-NV, and San Jose-San Francisco-Oakland, CA, locality pay areas. Consequently, those two locality pay areas and the locations comprising them receive different locality payments.
One commenter suggested a change in the criteria for evaluating Federal facilities that cross locality pay area boundaries. This commenter suggested that the term “facility” in those criteria be replaced with the term “Federal administrative boundary.” The commenter stated that most GS employees with duty stations within the Tahoe National Forest are in the Sacramento-Roseville, CA-NV, locality pay area, while Sierra County, CA, remains in the “Rest of U.S.” locality pay area. The commenter reported that the U.S. Forest Service is having difficulty recruiting and retaining employees for its duty stations in Sierra County. The Pay Agent's criteria for evaluating Federal facilities that cross locality pay area boundaries is intended to cover single Federal facilities rather than large geographic areas such as National Forests. As stated above, Federal agencies have considerable administrative authority to address significant recruitment and retention challenges through the use of current pay flexibilities.
Some commenters expressed concern that certain Federal pay systems outside of the General Schedule would not benefit from the changes planned for definitions of GS locality pay areas. The purpose of these final regulations is to define locality pay areas for Federal employees who receive locality pay under 5 U.S.C. 5304, not to set pay levels for Federal employees who do not receive locality pay under 5 U.S.C. 5304.
One commenter suggested that all GS employees should receive the same locality pay rates regardless of location. The purpose of locality pay is to reduce pay disparities, which vary by locality pay area. Therefore, it is appropriate that locality rates differ between locations.
Establishing new locality pay areas could have the long-term effect of increasing pay for Federal employees in affected locations if the President establishes higher locality pay percentages for those new pay areas. In addition, studies do suggest that increasing wages can raise the wages of other workers when employers need to compete for personnel. However, when locality pay percentages are adjusted, the practice has been to allocate a percent of the total GS payroll for locality pay raises and to have the overall cost for such pay raises be the same, regardless of the number of locality pay areas.
OPM expects this final rule to impact approximately 71,700 GS employees. Of the changes this final rule implements, the most significant change in terms of employment results from establishment of the Virginia Beach-Norfolk, VA-NC locality pay area, in which approximately 30,400 GS employees would be affected. Considering the relatively small number of employees affected, OPM does not anticipate this rule will substantially impact local economies or have a large impact in local labor markets. In addition, OPM did not receive any comments expressing concern regarding such impact.
As future locality pay rulemakings may impact higher volumes of employees in geographical areas and could rise to the level of impacting markets, OPM will continue to study the implications of such impacts in E.O. 13771 designations for future rules as needed.
Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distribute impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This final rule has been designated a “significant regulatory action,” although not economically significant, under section 3(f) of Executive Order 12866. Accordingly, the rule has been reviewed by the Office of Management and Budget (OMB).
This rule is not an Executive Order 13771 regulatory action because this rule is related to agency organization, management, or personnel.
OPM certifies that this rule will not have a significant economic impact on a substantial number of small entities as this rule only applies to Federal agencies and employees.
OPM has examined this rule in accordance with Executive Order 13132, Federalism, and has determined that this rule will not have any negative impact on the rights, roles and responsibilities of State, local, or tribal governments.
This regulation meets the applicable standard set forth in Executive Order 12988.
This rule will not result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any year and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.
This action pertains to agency management, personnel, and
This rule does not impose any new reporting or record-keeping requirements subject to the Paperwork Reduction Act.
Government employees, Law enforcement officers, Wages.
Office of Personnel Management.
Accordingly, OPM is amending 5 CFR part 531 as follows:
5 U.S.C. 5115, 5307, and 5338; sec. 4 of Public Law 103-89, 107 Stat. 981; and E.O. 12748, 56 FR 4521, 3 CFR, 1991 Comp., p. 316; Subpart B also issued under 5 U.S.C. 5303(g), 5305, 5333, 5334(a) and (b), and 7701(b)(2); Subpart D also issued under 5 U.S.C. 5335 and 7701(b)(2); Subpart E also issued under 5 U.S.C. 5336; Subpart F also issued under 5 U.S.C. 5304, 5305, and 5941(a), E.O. 12883, 58 FR 63281, 3 CFR, 1993 Comp., p. 682; and E.O. 13106, 63 FR 68151, 3 CFR, 1998 Comp., p. 224.
(b) The following are locality pay areas for the purposes of this subpart:
(1) Alaska—consisting of the State of Alaska;
(2) Albany-Schenectady, NY-MA—consisting of the Albany-Schenectady, NY CSA and also including Berkshire County, MA;
(3) Albuquerque-Santa Fe-Las Vegas, NM—consisting of the Albuquerque-Santa Fe-Las Vegas, NM CSA and also including McKinley County, NM;
(4) Atlanta—Athens-Clarke County—Sandy Springs, GA-AL—consisting of the Atlanta—Athens-Clarke County—Sandy Springs, GA CSA and also including Chambers County, AL;
(5) Austin-Round Rock, TX—consisting of the Austin-Round Rock, TX MSA;
(6) Birmingham-Hoover-Talladega, AL—consisting of the Birmingham-Hoover-Talladega, AL CSA and also including Calhoun County, AL;
(7) Boston-Worcester-Providence, MA-RI-NH-ME—consisting of the Boston-Worcester-Providence, MA-RI-NH-CT CSA, except for Windham County, CT, and also including Androscoggin County, ME, Cumberland County, ME, Sagadahoc County, ME, and York County, ME;
(8) Buffalo-Cheektowaga, NY—consisting of the Buffalo-Cheektowaga, NY CSA;
(9) Burlington-South Burlington, VT—consisting of the Burlington-South Burlington, VT MSA;
(10) Charlotte-Concord, NC-SC—consisting of the Charlotte-Concord, NC-SC CSA;
(11) Chicago-Naperville, IL-IN-WI—consisting of the Chicago-Naperville, IL-IN-WI CSA;
(12) Cincinnati-Wilmington-Maysville, OH-KY-IN—consisting of the Cincinnati-Wilmington-Maysville, OH-KY-IN CSA and also including Franklin County, IN;
(13) Cleveland-Akron-Canton, OH—consisting of the Cleveland-Akron-Canton, OH CSA and also including Harrison County, OH;
(14) Colorado Springs, CO—consisting of the Colorado Springs, CO MSA and also including Fremont County, CO, and Pueblo County, CO;
(15) Columbus-Marion-Zanesville, OH—consisting of the Columbus-Marion-Zanesville, OH CSA;
(16) Corpus Christi-Kingsville-Alice, TX—consisting of the Corpus Christi-Kingsville-Alice, TX CSA;
(17) Dallas-Fort Worth, TX-OK—consisting of the Dallas-Fort Worth, TX-OK CSA and also including Delta County, TX;
(18) Davenport-Moline, IA-IL—consisting of the Davenport-Moline, IA-IL CSA;
(19) Dayton-Springfield-Sidney, OH—consisting of the Dayton-Springfield-Sidney, OH CSA and also including Preble County, OH;
(20) Denver-Aurora, CO—consisting of the Denver-Aurora, CO CSA and also including Larimer County, CO;
(21) Detroit-Warren-Ann Arbor, MI—consisting of the Detroit-Warren-Ann Arbor, MI CSA;
(22) Harrisburg-Lebanon, PA—consisting of the Harrisburg-York-Lebanon, PA CSA, except for Adams County, PA, and York County, PA, and also including Lancaster County, PA;
(23) Hartford-West Hartford, CT-MA—consisting of the Hartford-West Hartford, CT CSA and also including Windham County, CT, Franklin County, MA, Hampden County, MA, and Hampshire County, MA;
(24) Hawaii—consisting of the State of Hawaii;
(25) Houston-The Woodlands, TX—consisting of the Houston-The Woodlands, TX CSA and also including San Jacinto County, TX;
(26) Huntsville-Decatur-Albertville, AL—consisting of the Huntsville-Decatur-Albertville, AL CSA;
(27) Indianapolis-Carmel-Muncie, IN—consisting of the Indianapolis-Carmel-Muncie, IN CSA and also including Grant County, IN;
(28) Kansas City-Overland Park-Kansas City, MO-KS—consisting of the Kansas City-Overland Park-Kansas City, MO-KS CSA and also including Jackson County, KS, Jefferson County, KS, Osage County, KS, Shawnee County, KS, and Wabaunsee County, KS;
(29) Laredo, TX—consisting of the Laredo, TX MSA;
(30) Las Vegas-Henderson, NV-AZ—consisting of the Las Vegas-Henderson, NV-AZ CSA;
(31) Los Angeles-Long Beach, CA—consisting of the Los Angeles-Long Beach, CA CSA and also including Kern County, CA, San Luis Obispo County, CA, and Santa Barbara County, CA;
(32) Miami-Fort Lauderdale-Port St. Lucie, FL—consisting of the Miami-Fort Lauderdale-Port St. Lucie, FL CSA and also including Monroe County, FL;
(33) Milwaukee-Racine-Waukesha, WI—consisting of the Milwaukee-Racine-Waukesha, WI CSA;
(34) Minneapolis-St. Paul, MN-WI—consisting of the Minneapolis-St. Paul, MN-WI CSA;
(35) New York-Newark, NY-NJ-CT-PA—consisting of the New York-Newark, NY-NJ-CT-PA CSA and also including all of Joint Base McGuire-Dix-Lakehurst;
(36) Omaha-Council Bluffs-Fremont, NE-IA—consisting of the Omaha-Council Bluffs-Fremont, NE-IA CSA;
(37) Palm Bay-Melbourne-Titusville, FL—consisting of the Palm Bay-Melbourne-Titusville, FL MSA;
(38) Philadelphia-Reading-Camden, PA-NJ-DE-MD—consisting of the Philadelphia-Reading-Camden, PA-NJ-DE-MD CSA, except for Joint Base McGuire-Dix-Lakehurst;
(39) Phoenix-Mesa-Scottsdale, AZ—consisting of the Phoenix-Mesa-Scottsdale, AZ MSA;
(40) Pittsburgh-New Castle-Weirton, PA-OH-WV—consisting of the Pittsburgh-New Castle-Weirton, PA-OH-WV CSA;
(41) Portland-Vancouver-Salem, OR-WA—consisting of the Portland-Vancouver-Salem, OR-WA CSA;
(42) Raleigh-Durham-Chapel Hill, NC—consisting of the Raleigh-Durham-Chapel Hill, NC CSA and also including Cumberland County, NC, Hoke County, NC, Robeson County, NC, Scotland County, NC, and Wayne County, NC;
(43) Richmond, VA—consisting of the Richmond, VA MSA and also including Cumberland County, VA, King and Queen County, VA, and Louisa County, VA;
(44) Sacramento-Roseville, CA-NV—consisting of the Sacramento-Roseville, CA CSA and also including Carson City, NV, and Douglas County, NV;
(45) San Antonio-New Braunfels-Pearsall, TX—consisting of the San Antonio-New Braunfels-Pearsall, TX CSA;
(46) San Diego-Carlsbad, CA—consisting of the San Diego-Carlsbad, CA MSA;
(47) San Jose-San Francisco-Oakland, CA—consisting of the San Jose-San Francisco-Oakland, CA CSA and also including Monterey County, CA;
(48) Seattle-Tacoma, WA—consisting of the Seattle-Tacoma, WA CSA and also including Whatcom County, WA;
(49) St. Louis-St. Charles-Farmington, MO-IL—consisting of the St. Louis-St. Charles-Farmington, MO-IL CSA;
(50) Tucson-Nogales, AZ—consisting of the Tucson-Nogales, AZ CSA and also including Cochise County, AZ;
(51) Virginia Beach-Norfolk, VA-NC—consisting of the Virginia Beach-Norfolk, VA-NC CSA;
(52) Washington-Baltimore-Arlington, DC-MD-VA-WV-PA—consisting of the Washington-Baltimore-Arlington, DC-MD-VA-WV-PA CSA and also including Kent County, MD, Adams County, PA, York County, PA, King George County, VA, and Morgan County, WV; and
(53) Rest of U.S.—consisting of those portions of the United States and its territories and possessions as listed in 5 CFR 591.205 not located within another locality pay area.
Office of the Secretary, USDA.
Interim rule with request for comments.
The U.S. Department of Agriculture (USDA) is issuing an interim rule for the Highly Erodible Land and Wetland Conservation Compliance provisions of the Food Security Act of 1985, as amended. This rulemaking clarifies how USDA delineates, determines, and certifies wetlands located on subject land in a manner sufficient for making determinations of ineligibility for certain USDA program benefits. USDA is seeking comments from the public about these clarifications that will be considered prior to issuing a final rule.
Effective December 7, 2018. Comments must be received February 5, 2019.
Comments should be submitted, identified by Docket Number NRCS-2018-0010, using any of the following methods:
•
•
NRCS will post all comments on
This rule also may be accessed, and comments submitted, via the internet.
For specific questions about this document, please contact Jason Outlaw at (202) 720-7838 or
This rule is not a “significant regulatory action” under Executive Order 12866.
The Regulatory Flexibility Act is not applicable to this rule because USDA is not required by 5 U.S.C. 533 or any other provisions of law to publish a notice of proposed rulemaking with respect to the subject matter of this rule.
It has been determined through an environmental assessment that the issuance of this interim final rule will not have a significant impact upon the human environment. Copies of the environmental assessment may be obtained by contacting Karen Fullen at (503) 273-2404 or
Executive Order 12372, “Intergovernmental Review of Federal Programs,” requires consultation with State and local officials. The objectives of the Executive Order are to foster an intergovernmental partnership and a strengthened federalism, by relying on State and local processes for State and local government coordination and review of proposed Federal Financial assistance and direct Federal development. This program is not subject to Executive Order 12372, which requires consultation with State and local officials.
This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule will not preempt State or local laws, regulations, or policies unless they present an irreconcilable conflict with this rule. Before any judicial action may be brought regarding the provisions of this rule, appeal provisions of 7 CFR parts 11, 614, and 780 must be exhausted.
This rule has been reviewed under Executive Order 13132, “Federalism.” The policies contained in this rule do not have any substantial direct effect on States, on the relationship between the Federal Government and the States, or
This rule has been reviewed in accordance with Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments.” Executive Order 13175 requires Federal agencies to consult and coordinate with Tribes on a government-to-government basis on policies that have Tribal implications, including regulations, legislative comments or proposed legislation, and other policy statements or actions that have substantial direct effects on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes or on the distribution of power and responsibilities between the Federal Government and Indian Tribes.
USDA has assessed the impact of this rule on Indian Tribes and determined that this rule does not, to our knowledge, have Tribal implications that require Tribal consultation under Executive Order 13175. If a Tribe requests consultation, the Natural Resources Conservation Service (NRCS) will work with the USDA Office of Tribal Relations to ensure meaningful consultation is provided.
Pursuant to Title II of the unfunded Mandates Reform Act of 1995, Public Law 104-4, the effects of this rulemaking action on State, local, and Tribal governments, and the public have been assessed. This action does not compel the expenditure of $100 million or more by any State, local, or Tribal governments, or anyone in the private sector; therefore, a statement under Section 202 of the Unfunded Mandates Reform Act of 1995 is not required.
This rule has a potential impact on participants for many programs listed in the Catalog of Federal Domestic Assistance in the Agency Program Index under the Department of Agriculture.
Section 1246 of the Food Security Act of 1985 provides that regulations issued under Title XII are exempt from the requirements of the Paperwork Reduction Act (44 U.S.C. Chapter 35).
USDA is committed to complying with the E-Government Act to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.
Title XII of the Food Security Act of 1985, as amended (the 1985 Act), encourages participants in USDA programs to adopt land management measures by linking eligibility for USDA program benefits to farming practices on highly erodible land and wetlands. In particular, the highly erodible land conservation (HELC) provisions of the 1985 Act provide that after December 23, 1985, a program participant is ineligible for certain USDA program benefits for the production of an agricultural commodity on a field in which highly erodible land is predominant. Additionally, the wetland conservation (WC) provisions of the 1985 Act provide that after December 23, 1985, a program participant is ineligible for certain USDA program benefits for the production of an agricultural commodity on a converted wetland, or after November 28, 1990, for the conversion of a wetland that makes the production of an agriculture commodity possible. The Agricultural Act of 2014 amended the 1985 Act to expand the HELC/WC requirements to encompass crop insurance benefits, and thus, producers obtaining Federally reinsured crop insurance must be in compliance with an NRCS-approved conservation plan for all highly erodible land; not plant or produce an agricultural commodity on a wetland converted after February 7, 2014; and not have converted a wetland after February 7, 2014, to make possible the production of an agricultural commodity. The 1985 Act, however, affords relief to program participants who meet certain conditions identified under the 1985 Act by exempting such actions from the ineligibility provisions.
The USDA regulations implementing the HELC and WC provisions of the 1985 Act are found at 7 CFR part 12. The regulations at 7 CFR part 12 list actions that may result in a determination of ineligibility, the program benefits that are at risk, and the conditions under which these activities can occur without losing program eligibility. The regulations are divided into three subparts. Subpart A describes the terms of ineligibility, USDA programs encompassed by its terms, the list of exemptions from ineligibility, the agency responsibilities, and conditions that apply when persons adversely affected by an agency determination request an appeal. Subpart B describes in greater detail the technical aspects of the HELC provisions, including the technical criteria for identification of highly erodible lands, criteria for highly erodible field determinations, and requirements for the development of conservation plans and conservation systems. Subpart C describes in greater detail the technical aspects of the WC provisions, including the criteria for determining a wetland, the criteria for determining a converted wetland, and the uses of wetlands and converted wetlands that can be made without losing program eligibility.
USDA policy guidance regarding implementation of the HELC and WC provisions is found in the current edition of the NRCS National Food Security Act Manual (NFSAM), including the procedures for how to delineate wetlands and make wetland determinations in accordance with Subpart C of 7 CFR part 12. This rule provides transparency to USDA program participants and stakeholders concerning how USDA delineates, determines, and certifies wetlands. It also allows program participants to better understand whether their actions may result in ineligibility for USDA program benefits. USDA requests public comment and will consider incorporating such public comment into its policy guidance.
The complexity of making a wetland determination in highly altered agricultural landscapes requires flexibility in the approach used to identify wetlands. Since 1986, USDA has provided the internal agency policy on making HELC and WC determinations in the NFSAM. In response to multiple statutory changes and changes to the science, those methods have evolved over the decades since passage of the WC provisions. The regulations and internal agency policy have also been revised many times over this 33-year period. The purpose of this interim rule, with request for comment, is to codify many technical portions of the existing agency policy that have not undergone public review and comment.
USDA developed the wetland determination procedures from the statutory framework for the WC provisions. In particular, section 1201(a) of the 1985 Act defines “wetland” as follows:
(27) The term “wetland”, except when such term is part of the term “converted wetland”, means land that—
(A) has a predominance of hydric soils;
(B) is inundated or saturated by surface or groundwater at a frequency and duration sufficient to support a prevalence of hydrophytic vegetation typically adapted for life in saturated soil conditions; and
(C) under normal circumstances does support a prevalence of such vegetation. For purposes of this Act, and any other Act, this term shall not include lands in Alaska identified as having high potential for agricultural development which have a predominance of permafrost soils.
Section 1201(b) of the 1985 Act requires the Secretary to develop “(1) criteria for the identification of hydric soils and hydrophytic vegetation; and (2) lists of such soils and such vegetation.”
USDA then defined in the regulation that a wetland determination is “a decision regarding whether or not an area is a wetland, including identification of wetland type and size.” Thus, the term wetland determination for the WC provisions includes a basic three-step process: (1) Wetland identification; (2) application of exemption criteria from § 12.5(b) of this part, to determine the appropriate wetland conservation label; and (3) determination of size of each area delineated on the certified wetland determination map.
NRCS staff utilize four different sources of information when deciding whether an area would, under normal circumstances, meet the 1985 Act definition of wetland, including 7 CFR part 12, the 1987 Corps of Engineers Wetland Delineation Manual (Corps Manual), the regional supplements to the Corps Manual, and the Food Security Act Wetland Identification Procedures (FSA Procedures) located in the NFSAM, Part 514. The FSA Procedures are not stand-alone procedures, but rather, they supplement the Corps methods when identifying wetlands for Food Security Act purposes. The Corps Manual provides for three levels:
• A
• A
• A
The findings in Step 1 results are recorded on a wetland identification base map indicating the area(s) in question as either wetland or non-wetland as defined in the 1985 Act.
In Step 1 (wetland identification) of the wetland determination process, NRCS applies the FSA Procedures to determine if a site “under normal circumstances” meets the 1985 Act wetland definition.
To determine normal circumstances, NRCS is required to determine if the indicators (on-site or off-site) are reflective of normal climatic conditions. NRCS is identifying in part 12 the criteria that NRCS commonly uses to determine normal climatic conditions.
The NRCS National Water and Climate Center compiles precipitation data using information from National Oceanic and Atmospheric Administration weather stations and publishes normal precipitation data that encompass 30 years of weather data. NRCS uses this weather data in Chapter 19 of the NRCS National Engineering Field Handbook Climate Analysis for Wetlands Tables (WETS). The tables can be updated to encompass the most recent 30-year cycle of data and are available in the Field Office Technical Guide.
The agency is concerned that the forward adjustment of precipitation data will result in unfair and inconsistent determinations and will fail to best represent conditions in or prior to 1985, a critical decision common to many exemptions. To address this concern, NRCS is establishing a fixed precipitation data set. This data set will provide continued certainty to agricultural producers, and the 1985 date of enactment of the WC provisions falls near the mid-point of this data set.
NRCS utilizes parts of the 1987 Army Corps of Engineers Wetland Delineation Manual and approved regional supplements, subject to agency-defined variances required to implement the 1985 Act provisions. NRCS has received questions about the basis for its use of the 1987 Corps Manual.
In 1980, the Environmental Protection Agency (EPA) issued interim guidance for identifying wetlands under Section 404 of the Clean Water Act. In 1980 and
“Those areas that are inundated or saturated by surface or ground water at a frequency and duration sufficient to support, and that under normal circumstances do support, a prevalence of vegetation typically adapted for life in saturated soil conditions. Wetlands generally include swamps, marshes, bogs, and similar areas.” (33 CFR Section 328.3)
This definition was used by the Corps and EPA as they developed and published the
In the 1985 Act, Congress defined wetlands subject to the WC provisions as:
The 1985 Act definition represents the first time that Congress defined the term “wetland.” Also, for the first time in Federal law, Congress also provided a definition for the terms “hydric soil” and “hydrophytic vegetation.” These three congressional definitions in the 1985 Act only differ slightly from what is used by the Corps and EPA for Section 404 of the Clean Water Act. The Manager's Report to the 1990 Act acknowledges that NRCS used wetland delineation methodology that had been developed in consultation with other Federal and State agencies.
Since the WC provisions contain specific definitions, exemptions, and guidance for its implementation, where these provisions differ from those in the Corps Manual, NRCS identifies these differences in the FSA procedures. Thus, NRCS adopted the use of the Corps methods, but not in their entirety. Where needed to address differences in the two laws, and where needed to address unique challenges of delineating wetlands on agricultural lands, NRCS provides variances to the Corps methods.
To avoid confusion, NRCS clearly informs the program participant that the determinations are for purposes of the WC provisions only, and that the producer should contact the Army Corps of Engineers for clarification about whether a particular activity will require a Clean Water Act Section 404 permit.
Current language in 7 CFR part 12 distinguishes farmed wetland hydrology criteria on whether the area is a pothole, playa, or pocosin. These three landforms are not defined in the regulation. Since it is a critical determination about the scope of the restrictions to which a producer will be subject, there is a need for a regulatory definition to provide consistency in the determination of the presence of these special land forms. NRCS has longstanding definitions in policy, located in the appendix to the NFSAM; however, the appendix was not transferred to the current electronic policy document storage system. NRCS is amending § 12.2 to add these definitions to the WC regulation.
The prior hydrologic criteria for farmed wetland and farmed wetland pasture was based strictly on the quantification of the number of days that the wetland experienced inundation or saturation during the growing season. Further, for farmed wetland, these criteria differed depending on the landscape position of the wetland, with playa, pothole, and pocosin requiring 7 days of inundation or 14 of saturation, and all other landscape positions requiring 15 consecutive days of inundation.
Quantification of a number-based hydrologic criteria is both inefficient and cost prohibitive, and if practiced, requires the installation of monitoring equipment. For this reason, other Federal agencies with responsibilities for wetland conservation or regulation either did not adopt or have since abandoned such an approach in favor of one that uses more readily observable and easily quantifiable criteria. The agency has itself moved from a number-based approach to such an approach, with criteria that are based on observable conditions resulting from such inundation or saturation and is therefore more consistent with the agency's statutory definition of “wetland.” Codifying this indicator-based approach as the current science and approach by NRCS to make a decision on wetland hydrology will improve transparency and understanding by program participants and the general public.
The term “best drained condition” is introduced and defined to provide clarity regarding a long-standing and practiced statutory concept that is fundamental to the identification of wetlands that experienced drainage manipulations prior to enactment of the 1985 Act, and to meet congressional intent to provide certainty to persons concerning the status of such land and its future use. This long-standing concept provides that a person has the statutory right to maintain hydrologic conditions on wetlands that were converted to crop production prior to the 1985 Act, and are not abandoned, to the extent that those conditions existed on or before December 23, 1985.
The definition of wetland requires the presence of hydrology sufficient to support a prevalence of hydrophytic vegetation. Hydrology, as it relates to the definition of “wetland” contained in § 12.2, is further referenced throughout part 12 as a diagnostic factor for which consideration is required during the identification of wetlands. To provide clarification concerning this requirement, the definition of wetland hydrology and its related identification procedures are being incorporated into part 12, with associated reference to the underlying considerations of “best drained condition” and the determination of normal climatic conditions in § 12.31.
Wetland determinations can be conducted on different areas of an agricultural operation. In some cases, the wetland determinations are conducted on a farm tract, while in other instances only specific farm fields or areas within a field are assessed. The USDA program participant initiates the wetland determination with a request submitted to the Farm Service Agency on an AD-1026. If an activity that could potentially result in a determination of ineligibility is planned, the program participant identifies the location of the activity on a map. NRCS will conduct wetland determinations on a field or sub-field basis except when the producer requests a determination for their entire farm tract. To clarify that NRCS will conduct a wetland determination only on the area specified by the USDA program participant,
Part 12 provides for a minimal effect exemption for wetland conversions that have only a minimal effect on the functional hydrological and biological value of the wetland and other wetlands in the area. Current regulatory language requires that the minimal effect determination be based upon a functional assessment made during an on-site evaluation of all wetlands in the area. This requirement is overly burdensome, and on-site evaluations can seldom be made on property not controlled by the subject person. Removing the on-site requirement will better allow USDA to provide this statutory exemption to USDA program participants, and such removal will not provide a substantially different decision as would otherwise occur, especially considering that assessments can be conducted remotely based on a general knowledge of wetland conditions in the area.
NRCS began making wetland determinations subsequent to the enactment of the 1985 Act and the interim final rule for 7 CFR part 12 promulgated in 1986. These wetland determinations were completed utilizing soil surveys, U.S. Fish and Wildlife Service National Wetland Inventory maps, and USDA aerial imagery or site visits. Producers were provided appeal rights with these determinations. In the 1990 Farm Bill, the concept of certification of wetland determinations was incorporated into the WC provisions. In particular, as described in the Manager's Report to the 1990 Farm Bill:
[T]he certification process is to provide farmers with certainty as to which of their lands are to be considered wetlands for purposes of Swampbuster. The Managers note that the current USDA wetland delineation process involves the use of substantial materials to make an initial determination in the field office, developed in consultation with other appropriate Federal and State agencies. Wetlands identified in this process are delineated on maps which are then mailed to producers for review. If the producer finds such map to be in error, and the USDA agrees that an error has been made, then the map is corrected. If the USDA does not agree that there is an error in the map, and the producer continues to believe so, then the producer may appeal such determination. The Managers find that this process is adequate for certification of any new maps delineated after the date of enactment of this Act. For maps completed prior to the date of enactment of this Act, the Managers intend for producers to be notified that their maps are to be certified and that they have some appropriate time for appeal. In this circumstance, producers who had not already been mailed their maps should be given a map for their review.
The changes made to 7 CFR part 12 in 1991 included the following incorporation of certification at § 12.30(c) (1991):
SCS determinations of wetland status and any applicable exemptions granted under this part shall be delineated on a map of the farm or tract. Notification of the wetland determination, a copy of the wetland delineation and the SCS appeal procedures shall be provided to each person who completes a Form AD-1026. The wetland determination and wetland delineation shall be certified as final by the SCS official 45 days after providing the person notice or, if appeal is filed with SCS, after a final appeal decision is made by SCS.
By statute, as clarified in the 1990 Conference Managers Report, determinations made pursuant to the 1991 rule are certified determinations when the producer was provided a copy of the determination and had been provided appeal rights. The producer was not required to appeal the determination for the determination to become certified. In June of 1991, USDA issued a revised CPA-026 form that included certification language in the agency signature block and contained the applicable appeal rights on the back side of the person copy.
The certification provisions were further strengthened in the 1996 Farm Bill, due in part to a moratorium that had been placed on wetland determinations by the Secretary of Agriculture in 1995. In response to these changes, in the 1996 interim final rule USDA identified that all wetland determinations made after its effective date of July 3, 1996, would be considered a certified wetland determination. A final certification remains valid and in effect as long as the area is devoted to an agricultural use or until such time as the person, affected by the review, requests review of the certification if “a natural event alters the topography or hydrology of the subject land to the extent that the final certification is no longer a reliable indication of site conditions, or if NRCS concurs with an affected person that an error exists in the current wetland determination.” 7 CFR 12.30(c)(6).
NRCS, program participants, farm organizations, conservation organizations, and others have long focused upon the certification process for NRCS wetland determinations because of the certainty that such determinations provide to program participants regarding future business decisions. Through this rulemaking, USDA is adding further guidance in the WC regulation to improve clarity on the statutory concept of certification, particularly for those certified determinations issued between 1990 and 1996.
Administrative practice and procedure, Coastal zone, Crop insurance, Flood plains, Loan programs—agriculture, Price support programs, Reporting and recordkeeping requirements, Soil conservation.
For the reasons explained above, USDA amends 7 CFR part 12 as follows:
16 U.S.C. 3801, 3811-12, 3812a, 3813-3814, and 3821-3824.
The additions and revision read as follows:
(a) * * *
(4)
(i) If not a playa, pocosin, or pothole, experienced inundation for 15 consecutive days or more during the growing season or 10 percent of the growing season, whichever is less, in most years (50 percent chance or more), as determined by having met any of the following hydrologic indicators:
(A) Inundation is directly observed during a site visit conducted under a period of normal climatic conditions or drier;
(B) The presence of any indicator from Group B (Evidence of Recent Inundation) of the wetland hydrology indicators contained in the applicable regional supplement to the Corps of Engineers Wetland Delineation Manual is observed;
(C) The presence of conditions resulting from inundation during the growing season is observed on aerial imagery, and the imagery is determined to represent normal or drier than normal climatic conditions (that is, not abnormally wet); or
(D) The use of analytic techniques, such as the use of drainage equations or the evaluation of monitoring data, demonstrate that the wetland would experience inundation during the growing season in most years (50-percent chance or more).
(ii) If a playa, pocosin, or pothole experienced ponding for 7 or more consecutive days during the growing season in most years (50-percent chance of more) or saturation for 14 or more consecutive days during the growing season in most years (50-percent chance or more) as determined by having met any of the following hydrologic indicators:
(A) Inundation or saturation is directly observed during a site visit conducted under a period of normal climatic conditions or drier;
(B) The presence of one primary or two secondary wetland hydrology indicators contained in the applicable regional supplement to the Corps of Engineers Wetland Delineation Manual is observed;
(C) The presence of conditions resulting from inundation or saturation during the growing season is observed on aerial imagery, and the imagery is determined to represent hydrologic conditions that would be expected to occur under normal or drier than normal climatic conditions (that is, not abnormally wet); or
(D) The use of analytic techniques, such as the use of drainage equations or the evaluation of monitoring data, demonstrate that the wetland would experience inundation or saturation during the growing season in most years (50-percent chance or more).
(5)
(i) Inundation or saturation is directly observed during a site visit conducted under a period of normal climatic conditions or drier;
(ii) The presence of one primary or two secondary wetland hydrology indicators contained in the applicable regional supplement to the Corps of Engineers Wetland Delineation Manual is observed;
(iii) The presence of conditions resulting from inundation or saturation during the growing season is observed on aerial imagery, and the imagery is determined to represent hydrologic conditions that would be expected to occur under normal, or drier than normal climatic conditions (that is, not abnormally wet); or
(iv) The use of analytic techniques, such as the use of drainage equations or the evaluation of monitoring data, demonstrate that the wetland would experience inundation or saturation during the growing season in most years (50-percent chance or more).
(8)
(c)
(c) * * *
(1) Certification of a wetland determination means that the wetland determination is of sufficient quality to make a determination of ineligibility for program benefits under § 12.4. In order for a map to be of sufficient quality to determine ineligibility for program benefits, the map document must be legible to the extent that areas that are determined wetland can be discerned in relation to other ground features. NRCS may certify a wetland determination without making a field investigation. NRCS will notify the person affected by the certification and provide an opportunity to appeal the certification prior to the certification becoming final. All wetland determinations made after July 3, 1996, will be done on a field or sub-field basis and will be considered certified wetland determinations.
(7) The wetland determination process for wetland conservation compliance includes three distinct steps. In Step 1, wetland identification, it is determined if the area of interest supports a prevalence of hydrophytic vegetation, a predominance of hydric soils, and wetland hydrology under normal circumstances. In Step 2, determination of wetland type, it is determined if any exemptions apply from § 12.5(b). The findings are reflected in the assignment of an appropriate wetland conservation compliance label. In Step 3, sizing of the wetland, the boundary of each wetland type determined in Step 2 is delineated on the certified wetland determination map.
(c)
(2) When a wetland is affected by drainage manipulations that occurred prior to December 23, 1985, wetland hydrology shall be identified on the basis of the best-drained condition resulting from such drainage manipulations.
(3) The determination of wetland hydrology will be made in accordance with the current Federal wetland delineation methodology in use by NRCS at the time of the determination.
(4) When making a decision on wetland hydrology, NRCS will utilize a fixed precipitation date range of 1971-2000 for determining normal climatic conditions.
(e)(1)
(2)
Food Safety and Inspection Service, USDA.
Final rule.
The Food Safety and Inspection Service (FSIS) is establishing January 1, 2022, as the uniform compliance date for new meat and poultry product labeling regulations that will be issued between January 1, 2019, and December 31, 2020. FSIS periodically announces uniform compliance dates for new meat and poultry product labeling regulations to minimize the economic impact of label changes.
This rule is effective December 7, 2018. Comments on this final rule must be received on or before January 7, 2019.
FSIS invites interested persons to submit comments on this final rule. Comments may be submitted by one of the following methods:
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Rosalyn Murphy-Jenkins, Director, Labeling and Program Delivery Staff, Office of Policy and Program Development, Food Safety and Inspection Service, U.S. Department of Agriculture, Telephone: 301-504-0879.
On December 14, 2004, FSIS issued a final rule establishing January 1, 2008, as the uniform compliance date for new meat and poultry labeling regulations issued between January 1, 2005, and December 31, 2006. The 2004 final rule also provided that the Agency would set uniform compliance dates for new labeling regulations in 2-year increments and periodically issue final rules announcing those dates. Consistent with the 2004 final rule, the Agency has since published six rules establishing the uniform compliance dates of January 1, 2010, January 1, 2012, January 1, 2014, January 1, 2016, January 1, 2018, and January 1, 2020 (72 FR 9651, 73 FR 75564, 75 FR 71344, 77 FR 76824, 79 FR 71007 and 81 FR 91670).
The new uniform compliance date will apply only to final FSIS regulations that require changes in the labeling of meat and poultry products and that are published after January 1, 2019, and before December 31, 2020. For each final rule that requires changes in labeling, FSIS will specifically identify January 1, 2022, as the compliance date. All meat and poultry food products that are subject to labeling regulations issued between January 1, 2019, and December 31, 2020, will be required to comply with these regulations on products introduced into commerce on or after January 1, 2022. If any food labeling regulation involves special circumstances that justify a compliance date other than January 1, 2022, the Agency will determine an appropriate compliance date and will publish that compliance date in the rulemaking.
Two-year increments increase industry's ability to make orderly adjustments to new labeling requirements without exposing consumers to outdated labels. This approach allows meat and poultry producers to plan for the use of label inventories and to develop new labeling materials that meet the new requirements. It also serves to reduce the economic impact of changing labels on both producers and consumers.
In the May 4, 2004, proposed rule on uniform compliance dates for labeling requirements, FSIS provided notice and solicited comment (69 FR 24539). In the March 5, 2007, final rule, FSIS received only four comments in response to the proposal, all in support. In the March 5, 2007, final rule, FSIS determined that further rulemaking for uniform compliance dates for labeling requirements is unnecessary (72 FR 9651). The Agency received no comments on the 2007 final rule, the comments FSIS received on the 2012 final rule were outside the scope (77 FR 76824), and FSIS received no comments on the 2014 final rule (79 FR 71007) or the 2016 final rule (81 FR 91670). Consistent with its statement in 2007, FSIS finds that further rulemaking on this matter is unnecessary. However, FSIS is providing an opportunity for comment on the uniform compliance date established in this final rule.
Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety benefits, distributive impacts, and equity). Executive Order (E.O.) 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This final rule has been designated as a “non-significant” regulatory action under section 3(f) of E.O. 12866. Accordingly, the final rule has not been reviewed by the Office of Management and Budget under E.O. 12866.
This rule does not have a significant economic impact on a substantial number of small entities; consequently, a regulatory flexibility analysis is not required (5 U.S.C. 601-612).
Public awareness of all segments of rulemaking and policy development is important. Consequently, FSIS will announce this
FSIS also will make copies of this publication available through the FSIS
No agency, officer, or employee of the USDA shall, on the grounds of race, color, national origin, religion, sex, gender identity, sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, or political beliefs, exclude from participation in, deny the benefits of, or subject to discrimination any person in the United States under any program or activity conducted by the USDA.
To file a complaint of discrimination, complete the USDA Program Discrimination Complaint Form, which may be accessed online at
Send your completed complaint form or letter to USDA by mail, fax, or email:
Persons with disabilities who require alternative means for communication (Braille, large print, audiotape, etc.) should contact USDA's TARGET Center at (202) 720-2600 (voice and TDD).
Done at Washington, DC.
Federal Housing Finance Agency.
Final rule.
The Federal Housing Finance Agency (FHFA) is adopting a final rule pertaining to the operation of the Financing Corporation (FICO), a vehicle established by one of FHFA's predecessors to issue bonds, the proceeds of which were used to help fund the resolution of failed savings and loan associations during the 1980s. The last of those FICO bonds will mature in September 2019. By statute, FICO obtains the monies to pay the interest on those bonds by assessing depository institutions (FICO assessments) that are insured by the Federal Deposit Insurance Corporation (FDIC). The final rule addresses the manner in which FICO will conduct the 2019 FICO assessments, which will be the last of those assessments. Specifically, the final rule provides that all payments made by FDIC-insured depository institutions during 2019 are final, and that no adjustments to prior FICO assessments will be permitted after March 26, 2019, the projected date as of which the FDIC will finalize the amounts of the final collection for the 2019 FICO assessments.
The rule is effective on January 7, 2019.
Louis M. Scalza, Associate Director, Examinations, Office of Safety & Soundness Examinations,
FHFA is an independent agency of the federal government established to regulate and oversee the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Federal Home Loan Banks (Banks), and the Bank System's Office of Finance.
FICO is a mixed-ownership, tax-exempt government corporation, chartered in 1987 by the former Federal Home Loan Bank Board, one of FHFA's predecessor agencies, pursuant to the Federal Savings and Loan Insurance Corporation (FSLIC) Recapitalization Act of 1987, as amended (Recapitalization Act).
FICO was initially capitalized by issuing stock to the Banks in an aggregate amount of $680 million, apportioned pro rata among the Banks in accordance with a statutory formula.
The Recapitalization Act established a different source for providing the funds needed to service the semiannual interest payments on the FICO Obligations.
The FDIC conducts its own Deposit Insurance Fund assessments quarterly (FDIC assessment), with the amount of the FDIC assessment for each insured depository institution being determined based, in part, on data that the institution has submitted to the Federal Financial Institutions Examination Council (FFIEC) in its Consolidated Reports of Condition and Income (call report). If an insured depository institution amends a call report on which a previous FDIC assessment had been calculated and the amendment to the call report would cause the calculation of the prior FDIC assessment to change, the institution may receive an adjustment, which generally appears on an upcoming invoice.
Pursuant to the Memorandum of Understanding, the FDIC collects the FICO assessments from the insured depository institutions quarterly, as agent for FICO, at the same time as the collection of FDIC assessments. FICO assessments are made based on an assessment rate formula adopted by FICO, and approved by the FDIC Board of Directors. One factor in FICO's formula is the deposit insurance assessment base, which (as described above) is calculated using an insured depository institution's call report data. Under the terms of the Memorandum of Understanding, twice per year, FICO notifies the FDIC of the total amounts that would be needed for FICO to make its upcoming Obligation interest payments and annually informs the FDIC of the interest it has earned. Using that information and FICO's assessment rate formula, the FDIC calculates a “quarterly multiplier” and applies it to information derived from each institution's call report to determine the FICO assessment for each institution for that calendar quarter. The FDIC then issues an invoice to each insured depository institution detailing both its quarterly FDIC and FICO assessments.
In the case of an insured depository institution that amends its call report for a prior period, FICO assessments are adjusted in the same manner as FDIC assessments. Thus, if an amended call report results in an institution having overpaid or underpaid a prior quarter's FICO assessment an adjustment amount will appear on an upcoming invoice, provided that the amendment has been made within three years after the date that the associated FICO payment was due.
With respect to all such refunds for overpayments of prior period FICO assessments, however, FICO has no legal obligation to use its own assets to provide monies to any insured depository institutions to make those refunds and does not do so. Indeed, FICO has no legal authority to assess insured depository institutions for the sole purpose of obtaining monies to provide refunds to other insured depository institutions or to spend its own non-assessment assets for that purpose. As a practical matter, because these refunds are processed as credits against the next FICO assessment, they do not require any cash outlay from FICO and all refunds are effectively paid from the assessments on the other insured depository institutions collectively. The principal effect of such refunds is that they modestly reduce the amount of monies actually collected by the FDIC, as agent for FICO, as part of a particular quarter's FICO assessment. Those refund credits, however, may be offset by the additional amounts that the FDIC collects, as an agent for FICO, from other institutions that had previously underpaid a prior FICO assessment.
As is evident from the above description, the current practice for adjusting individual FICO assessments—to account for either refunds or additional collections—depends on the existence of a subsequent FICO collection that could serve as the source of funds and the means by which any such adjustments may be processed. The last of the FICO bonds will mature during 2019 and FICO is scheduled to make five different interest payments during 2019.
This rulemaking pertains only to the FICO assessments, which the FDIC collects on behalf of FICO. It does not affect the deposit insurance assessments that the FDIC collects from insured depository institutions, which will continue in their normal manner. The sections below describe the history and content of the final rule.
On September 26, 2018, FHFA published in the
A key difference between the FICO assessments and the FDIC assessments is that the FDIC assessments are continual, with no predetermined termination date. The FICO assessment authority, however, is required by statute to cease after FICO has collected sufficient monies to pay the interest and related costs on its Obligations. In light of that difference, FHFA believes that the statutory language requiring FICO to conduct its assessments in the same manner as the FDIC assessments is best read as requiring FICO to follow the FDIC practice for prior period adjustments only for so long as FICO actually is collecting assessments from the insured depository institutions. FHFA has drafted the final regulation in that manner,
For the foregoing reasons, FHFA does not believe that the “in the same manner” language of the Bank Act can reasonably be construed to require FICO to provide refunds to, or to collect monies from, insured depository institutions that amend a prior period call report after FICO has ceased its assessments. As noted above, there will be no practical way to process such adjustments because there will be no invoiced amount against which a credit could be applied or to which a surcharge could be added. Moreover, there is no source of funds from which FICO could pay cash refunds because FICO will have used all monies received from its prior assessments to pay the interest and other costs due on its Obligations. FICO also could not assess insured depository institutions to obtain additional monies to provide refunds to
FHFA believes that the most appropriate reading of the Bank Act in these circumstances is that it allows insured depository institutions to continue to receive refunds for prior overpayments (and to continue to be billed for prior underpayments) in the same manner as FDIC assessments through and including the final FICO assessment. That approach gives appropriate effect to the “in the same manner” language of the statute without creating any conflict with the provision requiring the prompt dissolution of FICO, and without imposing on FICO any obligations that are not expressly mandated by the Bank Act.
FHFA also does not believe that this final rule will have a significant effect on FDIC-insured institutions. As an initial matter, the number of insured depository institutions amending call reports in any calendar quarter that affect their prior FICO assessments typically is small. For example, the number of such amended call reports for the fourth quarter of 2017 was 91, out of approximately 5,600 FDIC-insured depository institutions filing call reports. Moreover, the dollar amount of FICO assessment adjustments also is generally small. For that same period, the gross amount of refunds of prior FICO assessments related to those amended call reports was approximately $24,000, while the gross amount of collections of prior FICO underpayments was approximately $170,000, resulting in a net surplus of collections over refunds of approximately $146,000,
The Paperwork Reduction Act (44 U.S.C. 3501
The Regulatory Flexibility Act (RFA) generally requires that, in connection with a notice of final rulemaking, an agency prepare a Final Regulatory Flexibility Act analysis describing the impact of the rule on small entities.
By statute, FHFA must dissolve FICO as soon as practicable after it has made the final payments of principal and interest due on its Obligations, the last of which matures in September 2019. To facilitate FICO's prompt and orderly dissolution, and for the other reasons described in Section III above, this final rule will make all 2019 FICO assessments final and will terminate FICO assessment adjustments as of March 26, 2019.
A description of this final rule is presented in Section III: Final Rule. Please refer to it for further information.
FHFA has exclusive regulatory authority over FICO and has sole responsibility for interpreting and applying the provisions of the Bank Act that govern FICO's operations and dissolution. For the reasons described in Section III, FHFA has determined that the most appropriate way to interpret the provisions of the Bank Act that refer to the manner in which the FDIC conducts its own assessments is to read them as applying only while FICO is conducting its own assessments. FHFA has not identified any likely duplication, overlap, and/or potential conflict between the final rule and any other federal rule.
This final rule applies to FICO and the manner in which it conducts its assessments, and may indirectly affect any FDIC-insured depository institutions that have been assessed to pay interest on the FICO's obligations. As of March 2018, the FDIC insured 5,606 depository institutions, of which 4,492 are defined as small banking entities for purposes of the RFA.
Between March 2012 and December 2017, there has been an average of approximately 205 FICO assessments amended per calendar quarter, split evenly between refunds and additional collections. Based on the proportion of small entities to the total number of FDIC-insured depository institutions, FHFA has deemed approximately 80 percent of those amendments to have been attributable to small entities. The actual number of small entities amending call reports that affect their FICO assessments is apt to be lower, however, because each institution may amend multiple quarters' call reports at one time. For example, an institution amending a call report from a particular calendar quarter two years ago may also amend some or all of the subsequent call reports. Of the 164 FICO assessment amendments attributable to small banking entities per quarter, if each entity submits an average of two amendments per quarter, approximately 82, or slightly less than two percent, of FDIC-insured small banking entities would be affected per quarter by this final rule.
During the same period, the average gross FICO refunds to institutions due to their overpayments of prior FICO assessments was approximately $139,000 per quarter, or an average of about $1,350 per amendment. The average gross additional FICO collection for underpayment of prior FICO assessments was $243,000 per quarter, or $2,370 per amendment. Based on those numbers, and assuming the largest possible estimated refunds,
This final rule poses no regulatory costs for FDIC insured small entities, as their FDIC assessment process will remain in place as currently implemented. Overall assessment costs will be permanently reduced to the extent each entity's FICO assessment is no longer collected. Further, FDIC assessment adjustments will be unaffected by this final rule, which typically represent 90 percent of an insured institution's total potential adjustment value. For these reasons and based on the figures cited above, FHFA finds that this final rule will not have a significant economic impact on a substantial number of small entities.
As discussed previously, FHFA is promulgating this final rule to provide clarity and finality to an issue—the status of future adjustments to prior FICO assessments—that is not otherwise addressed by the statute. FHFA has considered three other approaches to addressing this issue. First, FHFA considered taking no action. That approach likely would have resulted in insured depository institutions being in the same situation as will be the case under the final rule—without any mechanism to process adjustments to their prior FICO assessments—but neither they nor FICO would have had any guidance as to the status of their prior FICO assessments. By providing that all FICO assessments become final and nonrefundable when FICO completes its 2019 assessments, the final rule provides certainty to those institutions that they would not have otherwise, and without placing them in any different situation than would be the case if FHFA took no action.
Second, FHFA considered whether, after all FICO obligations are paid, FICO could assess all FDIC-insured institutions or use its own assets to obtain the monies needed to pay refunds to any insured depository institutions whose FICO assessments had changed due to amendments to their prior period call reports. FHFA concluded that further assessments are not legally permissible because Congress has authorized FICO to assess FDIC-insured institutions only for three specific purposes—to pay interest on the FICO Obligations, issuance costs, and custodian fees—which means that FICO's assessment authority does not extend to obtaining monies for paying refunds of prior FICO assessments. FICO also could not use its own assets to provide such monies because, as described previously, FICO has no legal obligation under any statute to reimburse insured institutions for their prior overpayments of FICO assessments, and has no authority to spend its assets for any purposes beyond those authorized by statute.
Third, FHFA considered whether FICO could direct the FDIC, as collection agent, to continue to process adjustments to prior FICO assessments on its own, but deemed that approach not to be legally permissible. The FDIC acts solely as FICO's agent when collecting the FICO assessments, and as such FDIC's authority derives from, and can be no greater than, FICO's own assessment authority.
Accounting, Community development, Credit, Federal home loan banks, Government securities, Housing, Miscellaneous federal home loan bank operations and authorities, Reporting and recordkeeping requirements.
Accordingly, for reasons stated in the
12 U.S.C. 1430, 1431, 1432, 1441(b)(8), (c), (j), 1442, 4511(b), 4513(a), 4526.
(d)(1)
(2)
(3)
Coast Guard, DHS.
Temporary final rule.
The Coast Guard is establishing a temporary safety zone for the navigable waters within a 50 yard radius from the center point of the Barters Island Bridge, on the Back River, ME, approximately 4.6 miles north of the mouth of the waterway. The safety zone is necessary to protect personnel, vessels, and the marine environment from potential hazards which could pose as imminent hazard to persons and vessels operating in the area created by the demolition, subsequent removal, and replacement of the Barters Island Bridge and a temporary bridge. When enforced, persons and vessels are prohibited from being in the safety zone during bridge replacement operations unless authorized by the Captain of the Port Northern New England or a designated representative.
This rule is effective without actual notice from December 7, 2018 through January 31, 2021. For the purposes of enforcement, actual notice will be used from December 1, 2018 through December 7, 2018.
To view documents mentioned in this preamble as being available in the docket, go to
If you have questions about this rulemaking, call or email LT Matthew Odom, Waterways Management Division, U.S. Coast Guard Sector Northern New England, telephone 207-347-5015, email
On April 27, 2018, the Maine Department of Transportation (MEDOT) applied for a bridge construction permit for Barter's Island Bridge with the Coast Guard. On June 22, 2018, the Coast Guard issued Public Notice 1-164, published it on the USCG Navigation Center website, and solicited comments through July 23, 2018. Three comments were received in response to the public notice: One commenter requested the project be stopped if any human remains, archaeological properties or other items of historical importance are unearthed and we report the findings. A second commenter notified us this project will not affect any Penobscot cultural/historic properties or interests and had no objection. A third commenter stated that Tennessee Gas Pipeline currently does not have facilities within the area. There were no statements of objection.
On August 22, 2018, MEDOT requested by letter that the Coast Guard impose waterway restrictions on the Back River around the Barters Island Bridge between Hodgdon Island and Barters Island in Boothbay Harbor in support of the bridge improvements. The project includes the replacement of the swing span of the bridge and the existing center pier. A temporary fixed bridge will be used to maintain vehicle traffic during construction of the new bridge. The temporary fixed bridge will reduce the vertical clearance of the channel to 6.8 feet mean high water (MHW) from approximately November 1, 2019 through May 31, 2020. On or about June 1, 2020, the new swing bridge is expected to be operating with unlimited clearance in the open position. The anticipated date for removal of the temporary bridge is August 2020. A bridge protection system and bridge lighting will be installed as part of the new bridge. Captain of the Port (COTP) Northern New England has determined that hazards associated with the bridge replacement project will be a safety concern for anyone within a 50-yard radius from the center point of the Barters Island bridge. It is anticipated that the Back River will be closed because of this safety zone for a total of 85 non-continuous days.
On October 9, 2018, the Coast Guard published a notice of proposed rulemaking (NPRM) titled “Safety Zones; Barters Island Bridge, Back River, Barters Island, ME” (83 FR 50545). There we stated why we issued the NPRM, and invited comments on our proposed regulatory action related to this safety zone. During the comment period that ended November 8, 2018, we received one comment.
Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the
The Coast Guard is issuing this rule under authority in 33 U.S.C. 1231. The COTP Northern New England has determined that potential hazards associated with the demolition, subsequent removal, and replacement of the Barters Island Bridge and a temporary bridge will be a safety concern for anyone transiting within a 50 yard radius of the center point of the Barters Island Bridge. The purpose of this rule is to ensure safety of vessels and the navigable waters in the safety zone before, during, and after the bridge demolition, removal, and replacement. During times of enforcement, no vessel or person would be permitted to enter the safety zone without obtaining permission from the COTP Northern New England or a designated representative.
As noted above, we received one comment on our NPRM published October 9, 2018. The comment was not related to this rulemaking nor does it fall within the scope of this rulemaking. There are no changes in the regulatory text of this rule from the proposed rule in the NPRM.
This rule establishes a safety zone from 12:01 a.m. on December 1, 2018 through 11:59 p.m. on January 31, 2021. While the safety zone would be effective throughout this period, it would only be enforced during operations on replacement of the Barters Island Bridge. The safety zone would include all navigable waters from surface to bottom within a 50 yard radius from the center point of the Barters Island Bridge on the Back River, ME. During times of enforcement, no vessel or person would be permitted to enter the safety zone without obtaining permission from the COTP Northern New England or a designated representative. The duration of the zone is intended to ensure the safety of vessels and these navigable waters before, during, and after operations on replacement of the Barters Island Bridge. The Coast Guard will notify the public and local mariners of this safety zone through appropriate means, which may include, but are not limited to, publication in the
We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders and we discuss First Amendment rights of protestors.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13771 directs agencies to control regulatory costs through a budgeting process. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, the rule has not been reviewed by the Office of Management and Budget (OMB), and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771.
This regulatory action determination is based on the following reasons: (1) The safety zone only impacts a small designated area of Back River, (2) the safety zone will only be enforced during certain construction activities necessitating a full waterway closure for safety purposes, which is only anticipated to occur on 85 days over a two year period, or if there is an emergency, (3) persons or vessels desiring to enter the safety zone may do so with permission from the COTP Northern New England or a designated representative, (4) the Coast Guard will notify the public of the enforcement of this rule via appropriate means, such as via Local Notice to Mariners and Broadcast Notice to Mariners via marine Channel 16 (VHF-FM).
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard received no comments from the Small Business Administration on this rulemaking. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule would not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section IV.A above, this rule would not have a significant economic impact on any vessel owner or operator.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the
This rule would not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this rule has implications for federalism or Indian tribes, please contact the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this rule under Department of Homeland Security Directive 023-01 and Commandant Instruction M16475.1D, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves a safety zone that would prohibit entry within a 50 yards radius from the center point of the Barters Island Bridge during its removal and replacement over an approximately two year period. It is categorically excluded from further review under paragraph L60 (a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 01. A
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
Harbors, Marine Safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:
33 U.S.C. 1231; 50 U.S.C. 191; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5; Department of Homeland Security Delegation No. 0170.1.
(a)
(b)
(c)
(d)
(1) No person or vessel may enter or remain in this safety zone without the permission of the COTP or the COTP's designated representative.
(2) To obtain permission required by this regulation, individuals may reach the COTP or the COTP's designated representative via Channel 16 (VHF-FM) or (207) 741-5465 (Sector Northern New England Command Center).
(3) During periods of enforcement, any person or vessel permitted to enter the safety zone shall comply with the directions and orders of the COTP or the COTP's designated representative.
(4) During periods of enforcement, upon being hailed by a U.S. Coast Guard vessel by siren, radio, flashing lights, or other means, the operator of a vessel within the zone must proceed as directed. Any person or vessel within the safety zone shall exit the zone when directed by the COTP or the COTP's designated representative.
U.S. Copyright Office, Library of Congress.
Interim rule with request for comments.
The U.S. Copyright Office is issuing interim regulations pursuant to the Musical Works Modernization Act, title I of the recently enacted Orrin G. Hatch-Bob Goodlatte Music Modernization Act. This interim rule amends the Office's existing regulations pertaining to the compulsory license to make and distribute phonorecords of musical works so as to conform the existing regulations to the new law, including with respect to the operation of notices of intention and statements of account, and to make other minor technical updates. To be clear, this interim rule is generally directed at the present transition period before a blanket license is offered by a mechanical licensing collective and does not include regulatory updates that may be required in connection with the future offering of that blanket license; such updates will be the subject of future rulemakings. These regulations are issued on an interim basis with opportunity for public comment to avoid delay in making these necessary updates and clarifications and because they are technical in nature. The Office welcomes comment on these interim regulations.
The effective date of the interim regulations is December 7, 2018. Written comments must be received no later than 11:59 p.m. Eastern Time on January 22, 2019.
For reasons of government efficiency, the Copyright Office is using the
Regan A. Smith, General Counsel and Associate Register of Copyrights, by email at
On October 11, 2018, the president signed into law the Orrin G. Hatch-Bob
Title I of the MMA, the Musical Works Modernization Act, substantially modifies the compulsory “mechanical” license for making and distributing phonorecords of nondramatic musical works available under 17 U.S.C. 115. Prior to the MMA, a compulsory license was obtained by licensees on a per-work, song-by-song basis, whereby a licensee was required to serve a notice of intention to obtain a compulsory license (“NOI”) on the relevant copyright owner (or file the NOI with the Copyright Office if the Office's public records did not identify the copyright owner and include an address at which notice could be served) and then pay applicable royalties accompanied by accounting statements.
The MMA amends this regime in multiple ways, most significantly by establishing a new blanket compulsory license that digital music providers may obtain to make digital phonorecord deliveries (“DPDs”) of musical works, including in the form of permanent downloads, limited downloads, or interactive streams.
The new blanket license created by the MMA will not become available until the license availability date, which is January 1 following the expiration of the 2-year period after the enactment date, or January 1, 2021.
On and after the license availability date, a compulsory license to make DPDs will generally only be available through the new blanket license, subject to a limited exception for record companies to continue using the song-by-song licensing process to make and distribute, or authorize the making and distribution of, permanent downloads embodying a specific individual musical work (called an “individual download license”).
The Office promulgates the following interim rule to make technical amendments to its existing section 115-related regulations to harmonize them with the MMA's requirements, and to make other minor technical updates. These amendments largely fall into two categories: Those affecting NOIs and those affecting statements of account.
Under the interim rule, 37 CFR 201.18 is primarily updated to implement 17 U.S.C. 115(b), as amended by the MMA. As outlined above, as of enactment of the MMA on October 11, 2018: (1) NOIs pertaining to phonorecords that are not DPDs (
Under the interim rule, the Office is not making any changes to the form, content, or manner of service for NOIs. In addition to the conforming amendments necessitated by the MMA, the Office is taking this opportunity to make two minor clarifying technical updates. First, the regulations previously stated that the Office does not provide forms to use for serving or filing NOIs, but since 2016, the Office has had a required form that must be used to file NOIs electronically with the Office.
Under the interim rule, the Office is not making any amendments to the form, content, or manner of service for monthly or annual statements of account under subpart B of part 210 of the Office's regulations. But the interim rule clarifies that on and after the license availability date, these regulations will not apply to any DPDs made under a compulsory license, unless they are made by a record company under an individual download license.
The interim rule also details the requirements for digital music providers to report and pay royalties regarding previously unmatched works for purposes of eligibility for the limitation on liability for making unauthorized DPDs during the transition period before the blanket license becomes available. As noted, once a digital music provider has identified and located a musical work copyright owner, the statute requires the provider to pay the copyright owner all accrued royalties accompanied by a cumulative statement of account that includes all of the information that would have been provided in monthly statements of account from the initial use of the work, had the copyright owner been previously identified and located.
These interim regulations will go into effect immediately after publication of this document in the
The Copyright Office notes that this is only the first of what will be a number of rulemakings required by the MMA that concern the section 115 license. Over the next few months, the Office will be issuing additional notices to address other issues presented by the MMA, including the designation of the MLC and the filing by digital music providers of notices of license and reports of usage with the MLC under the blanket license. This interim rule, in contrast, does not cover the MLC or activity under the blanket license, and comments on such matters should not be submitted in response to it. Rather, comments submitted in response to this notice should be limited to the subjects of this interim rule. The Office looks forward to hearing from all who are interested in these important issues as the process continues.
Copyright, General provisions.
Freedom of information.
Copyright, Phonorecords, Recordings.
For the reasons set forth in the preamble, the Copyright Office amends 37 CFR parts 201, 203, and 210 as follows:
17 U.S.C. 702.
The revisions and additions read as follows:
(a)
(2)(i) To obtain a compulsory license to make and distribute phonorecords of a musical work other than by means of digital phonorecord delivery, a Notice must be served on the copyright owner or, if the registration or other public records of the Copyright Office do not identify the copyright owner and include an address at which Notice can be served, filed with the Copyright Office, before, or not later than 30 calendar days after, making, and before distributing, any phonorecord of the work.
(ii) Prior to the license availability date, as defined in 17 U.S.C. 115(e), to obtain a compulsory license to make and distribute phonorecords of a musical work by means of digital phonorecord delivery, a Notice must be served on the copyright owner, before, or not later than 30 calendar days after, first making any such digital phonorecord delivery. On and after the license availability date, as defined in 17 U.S.C. 115(e), to obtain such a compulsory license, the procedure described in 17 U.S.C. 115(d)(2) must be followed. As of October 11, 2018, the Copyright Office does not accept Notices that pertain to digital phonorecord deliveries, regardless of whether such a Notice also pertains to phonorecords that are not digital phonorecord deliveries.
(iii) Notwithstanding paragraph (a)(2)(ii) of this section, a record company, as defined in 17 U.S.C. 115(e), may, on or after the license availability date, as defined in 17 U.S.C. 115(e), obtain an individual download license, as described in 17 U.S.C. 115(b)(3) and defined in 17 U.S.C. 115(e), by serving a Notice on the copyright owner, before, or not later than 30 calendar days after, first making any digital phonorecord delivery in the form of a permanent download.
(3) * * * Notwithstanding the foregoing, a permanent download, a limited download, or an interactive stream, as defined in 17 U.S.C. 115(e), is a digital phonorecord delivery. A digital phonorecord delivery does not include the digital transmission of sounds accompanying a motion picture or other audiovisual work as defined in 17 U.S.C. 101.
(c)
(g) * * * Notwithstanding the foregoing, the Copyright Office will examine Notices to ensure that they do not pertain to digital phonorecord deliveries. Any Notice submitted to the Office that does pertain to digital phonorecord deliveries, regardless of whether such a Notice also pertains to phonorecords that are not digital phonorecord deliveries, will be rejected. The Office's decision to accept or reject such a Notice is without prejudice to any party claiming that the Notice does or does not pertain to digital phonorecord deliveries, including before a court of competent jurisdiction.
5 U.S.C. 552.
The revisions read as follows:
(h) The Copyright Modernization Office (“CMO”) is headed by the Director, who is the Register's top advisor on Copyright Office modernization and oversees the development and implementation of technology initiatives affecting registration and recordation. This Office directs and coordinates all modernization activities on behalf of the
(i) The Chief Financial Officer (“CFO”) is a senior staff position that serves under the Register and oversees all fiscal, financial, and budgetary activities for the Copyright Office. The CFO also oversees the Licensing Division, which administers certain statutory licenses set forth in the Copyright Act. The Division collects royalty payments and examines statements of account for the cable statutory license (17 U.S.C. 111), the satellite statutory license for retransmission of distant television broadcast stations (17 U.S.C. 119), and the statutory license for digital audio recording technology (17 U.S.C. chapter 10). The Division also accepts and records certain documents associated with the use of the mechanical statutory license for making and distributing phonorecords of nondramatic musical works (17 U.S.C. 115) and the statutory licenses for publicly performing sound recordings by means of digital audio transmission (17 U.S.C. 112, 114).
17 U.S.C. 115, 702.
* * * On and after the license availability date, this subpart shall not apply with respect to any digital phonorecord delivery made pursuant to the compulsory license unless such digital phonorecord delivery is made by a record company under an individual download license under 17 U.S.C. 115(b)(3), which must be reported and paid for in accordance with § 210.21; that is, this subpart shall not apply where a digital music provider reports and pays royalties under a blanket license under 17 U.S.C. 115(d)(4)(A)(i).
The additions read as follows:
(c) * * * Notwithstanding the foregoing, a permanent download, a limited download, or an interactive stream, as defined in 17 U.S.C. 115(e), is a digital phonorecord delivery. A digital phonorecord delivery does not include the digital transmission of sounds accompanying a motion picture or other audiovisual work as defined in 17 U.S.C. 101.
(k) The term
(l) The term
(m) The term
(n) The term
(o) The term
This section specifies the requirements for a digital music provider to report and pay royalties for purposes of being eligible for the limitation on liability described in 17 U.S.C. 115(d)(10). Terms used in this section that are defined in 17 U.S.C. 115(e) shall have the meaning given those terms in 17 U.S.C. 115(e).
(a) If the required matching efforts are successful in identifying and locating a copyright owner of a musical work (or share thereof) by the end of the calendar month in which the digital music provider first makes use of the work, the digital music provider shall provide statements of account and pay royalties to such copyright owner as a compulsory licensee in accordance with this subpart.
(b) If the copyright owner is not identified or located by the end of the calendar month in which the digital music provider first makes use of the work, the digital music provider shall accrue and hold royalties calculated under the applicable statutory rate in accordance with usage of the work, from initial use of the work until the accrued royalties can be paid to the copyright owner or are required to be transferred to the mechanical licensing collective, as follows:
(1) Accrued royalties shall be maintained by the digital music provider in accordance with generally accepted accounting principles.
(2) If a copyright owner of an unmatched musical work (or share thereof) is identified and located by or to the digital music provider before the license availability date, the digital music provider shall—
(i) Not later than 45 calendar days after the end of the calendar month during which the copyright owner was identified and located, pay the copyright owner all accrued royalties, such payment to be accompanied by a cumulative statement of account that includes all of the information that would have been provided to the copyright owner had the digital music provider been providing Monthly Statements of Account as a compulsory licensee in accordance with this subpart to the copyright owner from initial use of the work, and including, in addition to the information and certification required by § 210.16, a clear identification of the total period covered by the cumulative statement and the total royalty payable for the period;
(ii) Beginning with the accounting period following the calendar month in
(iii) Beginning with the monthly royalty reporting period commencing on the license availability date, report usage and pay royalties for such musical work (or share thereof) for such reporting period and reporting periods thereafter to the mechanical licensing collective, as required under 17 U.S.C. 115(d) and applicable regulations.
(3) If a copyright owner of an unmatched musical work (or share thereof) is not identified and located by the license availability date, the digital music provider shall—
(i) Not later than 45 calendar days after the license availability date, transfer all accrued royalties to the mechanical licensing collective, such payment to be accompanied by a cumulative statement of account that includes all of the information that would have been provided to the copyright owner had the digital music provider been serving Monthly Statements of Account as a compulsory licensee in accordance with this subpart on the copyright owner from initial use of the work, accompanied by a certification by a duly authorized officer of the digital music provider that the digital music provider has fulfilled the requirements of 17 U.S.C. 115(d)(10)(B)(i) and (ii) but has not been successful in locating or identifying the copyright owner, and further including, in addition to the information and certification required by § 210.16, a clear identification of the total period covered by the cumulative statement and the total royalty payable for the period; and
(ii) Beginning with the monthly royalty reporting period commencing on the license availability date, report usage and pay royalties for such musical work (or share thereof) for such period and reporting periods thereafter to the mechanical licensing collective, as required under 17 U.S.C. 115(d) and applicable regulations.
A record company that obtains an individual download license under 17 U.S.C. 115(b)(3) shall provide statements of account and pay royalties as a compulsory licensee in accordance with this subpart.
Approved by:
Environmental Protection Agency (EPA).
Withdrawal of direct final rule.
EPA is withdrawing significant new use rules (SNURs) promulgated under the Toxic Substances Control Act (TSCA) for 28 chemical substances, which were the subject of premanufacture notices (PMNs). EPA published these SNURs using direct final rulemaking procedures, which requires EPA to take certain actions if an adverse comment is received. EPA received adverse comments regarding the SNURs identified in the direct final rule. Therefore, the Agency is withdrawing the direct final rule SNURs identified in this document, as required under the direct final rulemaking procedures.
The direct final rule published at 83 FR 50838 on October 10, 2018 (FRL-9984-65) is withdrawn effective December 7, 2018.
The docket for this action, identified by docket identification (ID) number EPA-HQ-OPPT-2018-0649, is available at
A list of potentially affected entities is provided in the
In the
EPA determined that this document is not subject to the 30-day delay of effective date generally required by the Administrative Procedure Act (APA) (5 U.S.C. 553(d)) because of the time limitations for publication in the
This action withdraws regulatory requirements that have not gone into effect and which contain no new or amended requirements and reopens a comment period. As such, the Agency has determined that this action will not have any adverse impacts, economic or
Pursuant to the Congressional Review Act (5 U.S.C. 801
Environmental protection, Reporting and recordkeeping requirements.
Environmental protection, Chemicals, Hazardous substances, Reporting and recordkeeping requirements.
Accordingly, the amendments to 40 CFR parts 9 and 721 published on October 10, 2018 (83 FR 50838), are withdrawn effective December 10, 2018.
Environmental Protection Agency (EPA).
Final rule.
The Environmental Protection Agency (EPA) Region 5 announces the partial deletion of all media at the 20-acre Former Research Center Property of the Beloit Corporation Superfund Site (Site), in Rockton, Illinois from the National Priorities List (NPL). The NPL, promulgated pursuant to Section 105 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 1980, as amended, is an appendix of the National Oil and Hazardous Substances Pollution Contingency Plan (NCP). The remainder of the Site will remain on the NPL and is not being considered for deletion as part of this action. EPA and the State of Illinois through the Illinois Environmental Protection Agency (IEPA), have determined that all appropriate response actions under CERCLA, other than operation and maintenance, monitoring and five-year reviews, have been completed. However, the deletion of this parcel does not preclude future actions under Superfund.
This action is effective December 7, 2018.
EPA has established a docket for this action under Docket Identification No. EPA-HQ-SFUND-1990-0011. All documents in the docket are listed on the
U.S. Environmental Protection Agency, Region 5, Superfund Records Center, 77 West Jackson Boulevard, 7th Floor South, Chicago, IL 60604, Phone: (312) 886-0900, Hours: Monday through Friday, 8 a.m. to 4 p.m., excluding Federal holidays.
Talcott Free Library, 101 East Main Street, Rockton, IL 61072, Phone: (815) 624-7511, Hours: Monday, Tuesday and Thursday, 9:00 a.m. to 8:00 p.m., Wednesday and Friday 9 a.m. to 5:30 p.m., and Saturday 9 a.m. to 3 p.m.
Randolph Cano, NPL Deletion Coordinator, U.S. Environmental Protection Agency Region 5 (SR-6J), 77 West Jackson Boulevard, Chicago, IL 60604, (312) 886-6036, or via email at
The portion of the Beloit Corporation (Beloit Corp.) Site to be deleted from the NPL is the Former Beloit Corp. Research Center Property, PIN 03-12-452-003, located at 1155 Prairie Hill Road, in Rockton, Illinois. A Notice of Intent for Partial Deletion for the Beloit Corp. Site was published in the
EPA was required to withdraw the Direct final rule of July 16, 2018 (83 FR 32826), effective September 14, 2018, to prevent the Direct final rule from taking effect, because EPA did not provide timely notice of the publication of the Direct final rule through publication of an advertisement in a local newspaper as required by EPA policy.
The closing date for comments on the Notice of Intent for Partial Deletion as published in the Notice was August 15, 2018. EPA informally extended the public comment period until October 15, 2018, through advertisements published in two local newspapers, The Rockton Hearld and The Rockford Register Star on September 13, 2018.
EPA received one public comment on the partial deletion. Upon review of the comment, EPA finds that the comment is not related to the rule-making, is not site-specific and, as such, is not adverse. Therefore, EPA Region 5 is proceeding with the partial deletion of the Beloit Corp. Site. EPA prepared a memorandum responding to the public comment and placed the memorandum in the docket, EPA-HQ-SFUND-1990-0011, on
EPA maintains the NPL as the list of sites that appear to present a significant risk to public health, welfare, or the environment. Deletion of a site from the NPL does not preclude further remedial action. Whenever there is a significant release from a site deleted from the NPL, the deleted site may be restored to the NPL without application of the hazard ranking system. Deletion of portions of a site from the NPL does not affect responsible party liability, in the unlikely event that future conditions warrant further actions.
Environmental protection, Air pollution control, Chemicals, Hazardous waste, Hazardous substances, Intergovernmental relations, Penalties, Reporting and recordkeeping requirements, Superfund, Water pollution control, Water supply.
For the reasons set out in the preamble, 40 CFR part 300 is amended as follows:
33 U.S.C. 1321(d); 42 U.S.C. 9601-9657; E.O. 13626, 77 FR 56749, 3 CFR, 2013 Comp., p. 306; E.O. 12777, 56 FR 54757, 3 CFR, 1991 Comp., p. 351; E.O. 12580, 52 FR 2923, 3 CFR, 1987 Comp., p. 193.
Environmental Protection Agency (EPA).
Direct final rule.
The Environmental Protection Agency (EPA) Region 5 is publishing a direct final Notice of Deletion of the Tomah Armory Landfill Superfund Site (Tomah Armory Site), located in Tomah, Wisconsin, from the National Priorities List (NPL). The NPL, promulgated pursuant to Section 105 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 1980, as amended, is an appendix of the National Oil and Hazardous Substances Pollution Contingency Plan (NCP). This direct final deletion is being published by EPA with the concurrence of the State of Wisconsin, through the Wisconsin Department of Natural Resources (WDNR), because EPA has determined that all appropriate response actions under CERCLA, other than operation and maintenance, monitoring and five-year reviews, have been completed. However, this deletion does not preclude future actions under Superfund.
This direct final deletion is effective February 5, 2019 unless EPA receives adverse comments by January 7, 2019. If adverse comments are received, EPA will publish a timely withdrawal of the direct final deletion in the
Submit your comments, identified by Docket ID No. EPA-HQ-SFUND-1987-0002, by one of the following methods:
U.S. Environmental Protection Agency, Region 5, Superfund Records Center, 77 West Jackson Boulevard, 7th Floor South, Chicago, IL 60604, Phone: (312) 886-0900, Hours: Monday through Friday, 8 a.m. to 4 p.m., excluding Federal holidays.
Tomah Public Library, 716 Superior Avenue, Tomah, WI 54660, Phone: (608) 374-7470. Hours: Monday through Wednesday, 9 a.m. to 8 p.m., Thursday through Saturday, 9 a.m. to 5 p.m., Sunday, 1 p.m. to 5 p.m.
Randolph Cano, NPL Deletion Coordinator, U.S. Environmental Protection Agency Region 5 (SR-6J), 77 West Jackson Boulevard, Chicago, IL 60604, (312) 886-6036, or via email at
EPA Region 5 is publishing this direct final Notice of Deletion of the Tomah Armory Site, from the NPL. The NPL constitutes Appendix B of 40 CFR part 300, which is the National Oil and Hazardous Substances Pollution Contingency Plan (NCP), which EPA promulgated pursuant to Section 105 of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) of 1980, as amended. EPA maintains the NPL as the list of sites that appear to present a significant risk to public health, welfare, or the environment. Sites on the NPL may be the subject of remedial actions financed by the Hazardous Substance Superfund (Fund). As described in 40 CFR 300.425(e)(3) of the NCP, sites deleted from the NPL remain eligible for Fund-financed remedial actions if future conditions warrant such actions.
Section II of this document explains the criteria for deleting sites from the NPL. Section III discusses procedures that EPA is using for this action. Section IV discusses the Tomah Armory Site and demonstrates how it meets the deletion criteria. Section V discusses EPA's action to delete the Tomah Armory Site from the NPL unless adverse comments are received during the public comment period.
The NCP establishes the criteria that EPA uses to delete sites from the NPL. In accordance with 40 CFR 300.425(e), sites may be deleted from the NPL where no further response is appropriate. In making such a determination pursuant to 40 CFR 300.425(e), EPA will consider, in consultation with the state, whether any of the following criteria have been met:
i. Responsible parties or other persons have implemented all appropriate response actions required;
ii. all appropriate Fund-financed response under CERCLA has been implemented, and no further response action by responsible parties is appropriate; or
iii. the remedial investigation has shown that the release poses no significant threat to public health or the environment and, therefore, the taking of remedial measures is not appropriate.
Pursuant to CERCLA Section 121(c) and the NCP, EPA conducts five-year reviews to ensure the continued protectiveness of remedial actions where hazardous substances, pollutants, or contaminants remain at a site above levels that allow for unlimited use and unrestricted exposure. EPA conducts such five-year reviews even if a site is deleted from the NPL. EPA may initiate further action to ensure continued protectiveness at a deleted site if new information becomes available that indicates it is appropriate. Whenever there is a significant release from a site deleted from the NPL, the deleted site may be restored to the NPL without application of the hazard ranking system.
The following procedures apply to deletion of the Tomah Armory Site:
(1) EPA consulted with the State of Wisconsin prior to developing this direct final Notice of Deletion and the Notice of Intent to Delete co-published today in the “Proposed Rules” section of the
(2) EPA has provided the State 30 working days for review of this notice and the parallel Notice of Intent to Delete prior to their publication today, and the State, through the WDNR, has concurred on the deletion of the Tomah Armory Site from the NPL.
(3) Concurrently with the publication of this direct final Notice of Deletion, a notice of the availability of the parallel Notice of Intent to Delete is being published in a major local newspaper, the Tomah Monitor-Herald. The newspaper advertisement announces the 30-day public comment period concerning the Notice of Intent to Delete the Tomah Armory Site from the NPL.
(4) The EPA placed copies of documents supporting the proposed deletion in the deletion docket and made these items available for public inspection and copying at the Tomah Armory Site information repositories identified above.
(5) If adverse comments are received within the 30-day public comment period on this deletion action, EPA will publish a timely notice of withdrawal of this direct final Notice of Deletion before its effective date and will prepare a response to comments and continue with the deletion process on the basis of the Notice of Intent to Delete and the comments already received.
Deletion of a site from the NPL does not itself create, alter, or revoke any individual's rights or obligations. Deletion of a site from the NPL does not in any way alter EPA's right to take enforcement actions, as appropriate. The NPL is designed primarily for informational purposes and to assist EPA management. Section 300.425(e)(3) of the NCP states that the deletion of a site from the NPL does not preclude eligibility for future response actions, should future conditions warrant such actions.
The following information provides EPA's rationale for deleting the Tomah Armory Site from the NPL:
The Tomah Armory Site (CERCLS ID: WID980610299) is approximately 9.6
The City of Tomah owned the Tomah Armory Site property until 1968. The City used the Tomah Armory Site as a landfill from 1950 until sometime between 1955 and 1960. Waste disposal methods consisted of excavating six to eight feet of surface soil, disposing waste in the excavated area, covering the waste with previously excavated topsoil, and final grading. Some of the material disposed in the landfill may have been burned before it was buried. Records regarding the types (residential, commercial, or industrial) and quantities of landfilled waste are not available.
The Wisconsin Army National Guard (WIARNG) purchased 5.9 acres of the Tomah Armory Site in July of 1968 to support WIARNG activities associated with the administration, logistical support, and readiness of the unit. Prior to the purchase of the property by WIARNG, a portion of the landfill was excavated and disposed of off-site to construct the Armory building. Subsequently, several additional areas of the landfill were excavated. These areas included: An area west of Woodard Avenue, the northern 100 feet of a former telephone museum property in the southwest corner of the Tomah Armory Site deeded to WIARNG in 1997, and for a southern expansion of the Armory building. Excavated areas were filled and graded and seeded, or built over.
WDNR and EPA inspected the Tomah Armory Site in 1984 to obtain information about past waste disposal activities at the Tomah Armory Site. EPA prepared a Site Inspection Report in 1984 and scored the Tomah Armory Site using EPA's Hazard Ranking System. EPA's primary concern in the Tomah Armory Site Inspection Report was the potential for groundwater contamination and contaminated water supplies due to waste disposal into an unlined landfill.
EPA proposed the Tomah Armory Site to the NPL on January 22, 1987 (52 FR 2492). EPA finalized the Tomah Armory Site on the NPL on July 22, 1987 (52 FR 27620), effective August 21, 1987.
Current land use and occupants of the Tomah Armory Site include WIARNG (6.6 acres), a commercial property in the southwest corner of the Tomah Armory Site (1.717 acres) and the Tomah Fire Department (0.91 acres). Two residential properties are located in the southeast corner of the Tomah Armory Site (0.13 and 0.24 acres), however, these properties are not located within the landfilled area.
The landfilled area north of the Tomah Armory Site, which was the location of the former Tomah sewage disposal and wastewater treatment plant, is owned by the City of Tomah and is zoned as “other”. A recreational path for pedestrians and non-motorized bicycles runs along the northern portion of the City's property adjacent to the South Fork Lemonweir River.
EPA conducted a Phase I Remedial Investigation (RI) at the Tomah Armory Site in 1993 in cooperation with WDNR and the United States Geological Survey. The purpose of the Phase I RI was to collect groundwater and soil samples to characterize the nature and extent of contamination and evaluate associated risks. The results of the Phase I RI determined there was a need for additional data. WIARNG conducted a Phase II RI from 1995 to 1997.
The Phase I and II RI involved the sampling and analysis of groundwater, air, and surface and subsurface soil. The RI included groundwater sampling at residential wells and groundwater monitoring wells around the Tomah Armory Site. Surface and subsurface soil samples were collected within the landfill area and outside the landfill to determine background conditions.
The RI included a geophysical investigation. The geophysical investigation consisted of a magnetic survey and an electromagnetic survey. The results of the geophysical investigation and the data collected from the soil borings and test pits were used to determine the approximate boundaries of the landfill, shown in the Tomah Armory Site Map, Docket Document ID No. EPA-HQ-SFUND-1987-0002-0839 in the Docket.
The Phase I groundwater investigation identified inorganic groundwater contaminants inside the boundaries of the landfill. The concentration of lead exceeded the Federal action level (AL) for lead of 15 micrograms/liter (µg/L). EPA also detected lead in a groundwater monitoring well at one location outside the boundary of the landfill at a concentration slightly above the AL.
Phase II groundwater sampling performed outside the boundaries of the landfill in 1995 and 1996 did not detect lead in any wells above the AL. Multiple rounds of groundwater sampling performed at the Tomah Armory Site in 1999, 2000, 2001, 2010 and 2011 confirmed that lead levels outside the boundaries of the landfill are well below the AL.
The RI identified organic groundwater contamination at the Tomah Armory Site from a source upgradient of the landfill. The Phase I sampling detected trichloroethene (TCE) in groundwater below the landfill at concentrations above the Maximum Contaminant Level (MCL) for TCE of 5 µg/L. The Phase II sampling confirmed the presence of TCE, and detected TCE and other organic contaminants outside the boundaries of the landfill in upgradient wells at greater concentrations. Based on this, EPA determined that the organic groundwater contamination detected at the Tomah Armory Site was not site-related.
EPA evaluated the threats to human health and the environment posed by the Tomah Armory Site from ingestion and/or direct contact with contaminants in surface and subsurface soil. The contaminants of concern were benzo(a)pyrene (BAP) and lead in surface soil, and BAP, beryllium, chromium, arsenic and lead in subsurface soil.
Exposure to surface and subsurface soil did not pose any unacceptable risks. The calculated risks from exposure to surface soil were within EPA's acceptable range for cancer risk (10
The risk assessment noted that waste material underlay the surface of the
The Tomah Armory Site property and the City of Tomah are served by municipal water service. Given that the municipal water supply system had adequate capacity for expansion, EPA concluded that any potential future on-site development would also use municipal water.
EPA determined that the contamination at the landfill did not pose any significant risks to human health or the environment under current or reasonably anticipated future land use based upon the results of the Tomah Armory Site investigations and risk assessment. Additionally, institutional controls (ICs) to prevent inappropriate land and groundwater use at the Tomah Armory Site were already in place in the form of restrictive covenants enforceable by the WDNR.
EPA determined that remedial action at the Tomah Armory Site was not warranted, and recommended no action for the Tomah Armory Site. EPA proposed, however, that additional groundwater monitoring be conducted to ensure that groundwater conditions continued to pose no significant risk. EPA issued a Record of Decision (ROD) for no action with groundwater monitoring for the Tomah Armory Site on September 23, 1997.
EPA executed an Explanation of Significant Differences (ESD) modifying the Tomah Armory Site remedy in September 2014. The purpose of the ESD was to document EPA's decision to formally incorporate ICs as part of the remedy and to modify the requirement for groundwater monitoring.
The ESD noted the ICs that were already in place at the Tomah Armory Site, and added additional ICs in the form of Wisconsin Continuing Obligations regulations and a Long-Term Stewardship (LTS) Plan to the selected remedy. The ESD also changed the groundwater monitoring component of the remedy from being “required” to being conducted “as needed”.
WIARNG conducted seven rounds of post-ROD groundwater monitoring at the Tomah Armory Site from May 1999 through April 2011. WIARNG collected the groundwater samples from six monitoring locations around the Tomah Armory Site during the first six rounds of sampling, and follow-up groundwater sampling at three locations during the last round of sampling. WIARNG analyzed the groundwater samples for dissolved lead.
None of the groundwater samples exceeded the lead AL of 15 µg/L. Most of the groundwater monitoring results were at or below the detection limit. The highest value observed was 4.1 µg/L in 2010 at groundwater monitoring well MW-3. WIARNG resampled MW-3 in 2011 and did not detect any lead.
WIARNG collected, analyzed and reviewed all groundwater monitoring data in accordance with the Quality Assurance Project Plan for the Tomah Armory and Tomah Fairgrounds Remedial Investigation (U.S. Environmental Protection Agency, June 1993).
WIARNG conducted a landfill cap evaluation in November 2010. The purpose of the evaluation was to assess areas of potential settlement and areas of potential contamination and stressed vegetation. WIARNG did not find any evidence of settlement or visible contamination in the paved or gravel covered areas of the Tomah Armory Site. WIARNG did not find any evidence of exposed refuse on the surface of the Tomah Armory Site or across the alleyway to the west. There were several areas of stressed vegetation in lawn-covered areas on the west side of the Tomah Armory Site. WIARNG personnel maintain the Tomah Armory Site by mowing the property, filling the occasional depression, and re-seeding areas of stressed vegetation as needed.
WIARNG requested EPA's concurrence with WDNR's recommendations to abandon the remaining monitoring wells around the Tomah Armory Site in December 2015. EPA reviewed WIARNG's request and concurred with removing the wells in April 2016. WIARNG properly abandoned the groundwater monitoring wells in June 2016.
WIARNG completed a Remedial Action (RA) Report in August 2016. The RA Report documents the successful implementation of the Landfill Cap Maintenance Plan and the Institutional Control Plan (ICP), including a Long-Term Stewardship (LTS) Plan for the Tomah Armory Site. A copy of the Landfill Cap Maintenance Plan, the ICP and the LTS Plan are included in Attachment 1 and Appendix H of the 2016 RA Report.
EPA completed a Final Close Out Report (FCOR) documenting the completion of all appropriate response actions at the Tomah Armory Site on February 7, 2018.
The Tomah Armory Site ROD is a no-action ROD with groundwater monitoring and does not establish any cleanup levels for soil or groundwater. During monitoring, EPA compared detected concentrations of lead in the groundwater to the Federal AL and Wisconsin Administrative Code (WAC) Natural Resources (NR) Chapter 140 limit for lead of 15 µg/L.
Eight rounds of groundwater samples collected from six groundwater monitoring locations around the Tomah Armory Site from 1995 to 2010, and a follow-up round of sampling at three wells in 2011, did not detect any lead concentrations above the AL for lead. The majority of the lead results were at or below the detection limit. The highest observed values for lead were 4.7 µg/L at MW-4 in 1996 and 4.1 µg/L in MW-3 in 2010.
Subsequent groundwater samples collected from MW-4 from 1999 to 2010 and from MW-3 in 2010 did not contain lead. The results of the groundwater monitoring confirm that EPA's no action remedy for the Tomah Armory Site selected in the 1997 ROD, as modified by the 2014 ESD, is appropriate. A summary of the groundwater monitoring data for the Tomah Armory Site is provided in Table 3 of the 2018 FCOR, Docket Document ID No. EPA-HQ-SFUND-1987-0002-0384 in the Docket.
WIARNG conducts operation and maintenance (O&M) in accordance with the Landfill Cap Maintenance Plan and the ICP and LTS Plan. WIARNG inspects the Tomah Armory Landfill annually, at a minimum. WIANRG mows and maintains the property throughout the year, and addresses maintenance issues such as filling occasional depressions, re-seeding areas of stressed vegetation, and evaluating the landfill cap for subsidence. If subsidence is observed indicating possible degradation of the landfill cap, the cap will be evaluated and potential problems addressed as soon as possible. Property owners must contact WDNR at least 45 days prior to making any removal, replacement or changes to the landfill cap.
The remedy for the Tomah Armory Site includes ICs to ensure long term protectiveness to human health and the environment. Several types of proprietary and government controls including deed restrictions, zoning, municipal ordinances, and Wisconsin state regulations are in place to provide
Declarations of Restrictions are implemented on the four properties where the majority of the historical extent of the landfill is located. These include parcels 286-00061-0000 and 286-00059-2000 owned by WIARNG (armory property), 286-02710-0000 owned by the City of Tomah (former waste water treatment plant/current bike path property), and the commercial property in the southwest corner of the Tomah Armory Site (286-00059-0000). See Tomah Armory Site Map, Docket Document ID No. EPA-HQ-SFUND-1987-0002-0389 in the Docket.
The deed restrictions subject the owner to the following limitation and restrictions unless prior written approval is obtained from the Wisconsin Department of Natural Resources or its successor: (1) Excavating or grading of the land surface, (2) filling on the capped area, (3) plowing for agricultural cultivation, and (4) construction or installation of a building or other structure with a foundation that would sit on, or be placed within, the cap or which would interfere with the existing cap. Copies of the Declarations of Restrictions are available in Appendix G of the 2016 RA Report, Docket Document ID No. EPA-HQ-SFUND-1987-0002-0383 in the Docket.
Other implemented ICs include zoning, municipal ordinances and state regulations. Current zoning prohibits residential use of the landfill area. The armory property is zoned X2, state; the city property to the north and the Fire Department property are zoned X4, other; and the parcel to the southwest is zoned G2, commercial. Two Tomah Armory Site properties in the southeast corner of the Tomah Armory Site are zoned for residential use, however, these properties are outside the limits of the landfill. Tomah Armory Site zoning designations are shown in Figure 3 of the 2016 RA Report, Docket Document ID No. EPA-HQ-SFUND-1987-0002-0383 in the Docket.
A zoning district designation may be changed; however, this requires a petition for change to be filed with the city clerk and reviewed by the planning commission. A recommendation by the planning commission is then given to the city council, and requires a public hearing prior to the zoning change.
Tomah City Ordinance Section 46-101 restricts the installation and use of private wells and cross connections between municipal well lines and private wells. Private wells located on parcels served by the City municipal water supply were also to be properly abandoned by January 1, 1989 (Tomah Ordinance Section 46-529).
Private well operation is allowable in the city with a Well Operation Permit if the well meets the requirements of Tomah Ordinance Section 46-530. One of the requirements for obtaining a Well Operation Permit is that the well and pump installation meet the requirements of Chapter NR 812 of the WAC. The proposed well would also have to be necessary, considering the mandatory Tomah water supply system (Tomah Ordinance Section 46-50). Permits are also considered an Enforcement and Permit Tool control.
Well head protection areas are delineated for all City of Tomah municipal wells. The City of Tomah enacted a Wellhead Protection Ordinance that prohibits the issuance of a well operation permit for a 200-foot radius around the Tomah Armory Site (Tomah Ordinance Section 46-531; Code 1993, § 13.37(3)).
Changes and amendments to zoning district designations are governed by Tomah Ordinance Section 52-256. City of Tomah Ordinances apply to parcels within the municipal boundaries. Copies of pertinent ordinances are available in Appendix D in the 2016 RA Report, Docket Document ID No. EPA-HQ-SFUND-1987-0002-0383 in the Docket.
The State of Wisconsin through the WAC specifies the regulations applicable to waters of the state and land use. WDNR regulates the design and operation of municipal water systems through Chapter NR 811 WAC. Section NR 811.06 WAC prohibits unprotected cross-connections and Section NR 811.07 WAC prohibits interconnections between public water supply systems and other sources of water unless permitted by WDNR.
Chapter NR 812 WAC regulates construction and installation of new and existing water systems and drill holes (excepting certain monitoring wells, community water systems, and nonpotable surface water systems). Section NR 812.08 WAC (Table A) specifies a minimum separation distance between potable and nonpotable wells, reservoirs, springs, and landfills. This distance is measured from the nearest fill area, if known, otherwise to the property line. The 1,200-foot set-back distance for the Tomah Armory Site is indicated on Figure 4 in the RA Report, Docket Document ID No. EPA-HQ-SFUND-1987-0002-0383 in the Docket.
Chapter NR 504 WAC regulates landfill location, performance, design, and construction. Specifically, Section NR 504.07(9) prohibits the use of covered landfill sites which are no longer in operation for agricultural use, the establishment of construction of any buildings over the waste disposal area, or excavation of the final cover of any waste materials. A copy of the relevant state regulations for the Tomah Armory Site is provided in Appendix E of the RA Report, Docket Document ID No. EPA-HQ-SFUND-1987-0002-0383 in the Docket.
The Tomah Armory Site requires statutory five-year reviews (FYRs) because hazardous substances remain at the Tomah Armory Site above levels that allow for unrestricted use and unlimited exposure. EPA conducted FYRs of the Tomah Armory Site in 2001, 2006, 2011, and 2016.
EPA's most recent FYR of the Tomah Armory Site, in August 2016, determined that the remedy at the Tomah Armory Site is protective of human health and the environment. The remedy is functioning as intended, groundwater standards continue to be met, there has been compliance with groundwater and land use restrictions on the property, and no incompatible groundwater or land use has occurred at the Tomah Armory Site. ICs that restrict groundwater use and the disturbance of the cap and buried waste remain in place, and are effectively monitored and maintained through the implementation of the ICP, which includes a LTS Plan.
The FYR did not identify any issues or recommendations that would affect the current or future protectiveness of the remedy for the Tomah Armory Site. The most important tasks to continue are maintaining the landfill cover and ensuring that the ICs remain in place and are effective.
Finally, the FYR recommended deleting the Tomah Armory Site from the NPL.
EPA satisfied public participation activities for the Tomah Armory Site required in Sections 113(k) and 117 of CERCLA, 42 U.S.C. 9613(k) and 9617. EPA hosted a “kick-off” public meeting for the Tomah Armory Site in July 1993 at the Tomah City Hall Council Chambers. During the meeting, EPA informed local residents about the Tomah Armory Site, the Superfund process and the work to be performed as part of the RI.
EPA established an information repository for the Tomah Armory Site in 1993 at the Tomah Public Library, 716 Superior Avenue, Tomah, Wisconsin 54660. EPA maintains a copy of the administrative record documents for the
EPA released the RI Report to the public in April 1997. EPA made its Proposed Plan for cleaning up the Tomah Armory Site available to the public on July 22, 1997. EPA held a public meeting on August 18, 1997 to discuss the RI and EPA's Proposed Plan. EPA placed advertisements in local newspapers announcing EPA's proposed cleanup plan for the Tomah Armory Site, the public meeting and the comment period.
EPA held a public comment period on its Proposed Plan from July 25, 1997 to August 25, 1997. The public generally supported the selected remedy. EPA considered the public comments received during the public meeting and public comment period prior to selecting a final remedy for the Tomah Armory Site in the ROD. EPA's responses to the comments received are included in a Responsiveness Summary, which is part of the ROD. EPA also placed a copy of the 2014 ESD in the information repositories for the Tomah Armory Site.
EPA placed advertisements announcing the FYRs for the Tomah Armory Site in local newspapers including the Tomah Monitor-Herald (November 27, 2006 and November 23, 2015), the Tomah Journal (November 30, 2006 and February 2011), and the Tri-County Foxxy Shopper East Edition (November 27, 2006). EPA made the results of the FYRs available at the Tomah Armory Site information repositories and at the following website:
EPA arranged to publish an advertisement announcing the publication of this proposed direct final Notice of Deletion in the Tomah Journal prior to its publication in the
Documents in the deletion docket which EPA relied on to support the deletion of the Tomah Armory Site from the NPL are available to the public in the Tomah Armory Site information repositories and at
The February 7, 2018, Final Close Out Report (FCOR) documents that EPA, the WIARNG and the WDNR have successfully implemented all appropriate response actions at the Tomah Armory Site in accordance with the 1997 EPA Record of Decision (ROD), the 2014 EPA Explanation of Significant Differences (ESD) and the
Cleanup actions specified in the ROD and ESD for the Tomah Armory Site have been implemented and the Tomah Armory Site meets acceptable risk levels for all media and exposure pathways. The ongoing IC and LTS actions required at the Tomah Armory Site are consistent with EPA policy and guidance.
Groundwater sampling results confirm that the Tomah Armory Site does not pose any threat to human health or the environment. Therefore, the EPA has determined that no further Superfund response is necessary at the Tomah Armory Site to protect human health and the environment.
The NCP (40 CFR 300.425(e)) states that a site may be deleted from the NPL when no further response action is appropriate. EPA, in consultation with the State of Wisconsin, has determined that all required response actions have been implemented at the Tomah Armory Site and that no further response action by the responsible parties is appropriate.
The EPA, with concurrence of the State of Wisconsin through the WDNR, has determined that all appropriate response actions under CERCLA, other than operation and maintenance, monitoring and five-year reviews have been completed. Therefore, EPA is deleting the Tomah Armory Site from the NPL.
Because EPA considers this action to be noncontroversial and routine, EPA is taking it without prior proposal. This action will be effective February 5, 2019 unless EPA receives adverse comments by January 7, 2019. If adverse comments are received within the 30-day public comment period, EPA will publish a timely withdrawal of this direct final notice of deletion before the effective date of the deletion, and it will not take effect. EPA will prepare a response to comments and continue with the deletion process on the basis of the notice of intent to delete and the comments already received. There will be no additional opportunity to comment.
Environmental protection, Air pollution control, Chemicals, Hazardous waste, Hazardous substances, Intergovernmental relations, Penalties, Reporting and recordkeeping requirements, Superfund, Water pollution control, Water supply.
For the reasons set out in the preamble, 40 CFR part 300 is amended as follows:
33 U.S.C. 1321(d); 42 U.S.C. 9601-9657; E.O. 13626, 77 FR 56749, 3 CFR, 2013 Comp., p. 306; E.O. 12777, 56 FR 54757, 3 CFR, 1991 Comp., p. 351; E.O. 12580, 52 FR 2923, 3 CFR, 1987 Comp., p. 193.
Federal Communications Commission.
Final rule.
Establishment of the Office of Economics and Analytics. This action is taken to enhance the role of economic analysis, the design and implementation of auctions, and the use and management of data at the Federal Communications Commission (the Commission or FCC). The Commission determined that the proper dispatch of its business and the public interest will be served by creating an Office of Economics and Analytics (the Office or OEA). In the Order, the Commission amended its Rules to reflect the new organizational structure, describe the Office's functions and delegated authority, and make other conforming changes. The Commission found it appropriate to make these organizational changes to integrate the use of economics and data analysis into the Commission's various rulemakings and other actions in a more comprehensive and thorough manner.
Effective December 7, 2018.
Wayne Leighton, 202-418-0950.
This is a summary of the Commission's Order, in MD Docket No. 18-3; FCC 18-7, adopted on January 30, 2018 and released on January 31, 2018. The full text of this document is available at
The Office will be charged with ensuring that economic analysis is deeply and consistently incorporated into the agency's regular operations, and will support work across the FCC and throughout the decision-making process. Specifically, it will: (A) Provide economic analysis, including cost-benefit analysis, for rulemakings, transactions, adjudications, and other Commission actions; (B) manage the FCC's auctions in support of and in coordination with FCC Bureaus and Offices; (C) develop policies and strategies to help manage the FCC's data resources and establish best practices for data use throughout the FCC in coordination with FCC Bureaus and Offices; and (D) conduct long-term research on ways to improve the Commission's policies and processes in each of these areas.
To accomplish these objectives and functions, the Office of Economics and Analytics will combine economists, attorneys, and data professionals from across the Commission. In particular, we intend for the majority of the Commission's economists currently in multiple Bureaus and Offices to staff the Office of Economics and Analytics.
To accomplish this organizational change, the following actions are taken.
• The Commission will eliminate the Office of Strategic Planning and Policy Analysis (OSP) and generally shift OSP authorities and functions to the Office of Economics and Analytics.
• The Commission will create an Economic Analysis Division within the Office of Economics and Analytics. The Economic Analysis Division will provide analytical and quantitative support as needed to Bureaus and Offices engaged in rulemakings, transactions, auctions, adjudications, and other matters.
• The Commission will create an Industry Analysis Division within the Office of Economics and Analytics. To accomplish this, the Commission will generally shift the functions of the Industry Analysis and Technology Division of the Wireline Competition Bureau (WCB) to OEA. Through its Industry Analysis Division, OEA will serve as the Commission's principal resource with regard to designing and administering significant, economically-relevant data collections used by a variety of Bureaus and Offices, providing support to Bureaus and Offices with respect to these data collections as well as support using the data for Continuity of Operations (COOP)/Emergency Response Group (ERG)/Incident Management Team (IMT), and performing analyses and studies.
• The Commission will create an Auctions Division within the Office of Economics and Analytics. To accomplish this, the Commission will generally shift the functions of the Auctions and Spectrum Access Division in the Wireless Telecommunications Bureau (WTB) to OEA. Through its Auctions Division and in consultation with WTB and WCB, OEA will serve as the Commission's principal resource with regard to all auction design and implementation issues. OEA will collaborate with other Bureaus involved in establishing and conducting auctions, such as spectrum or universal service auctions.
• The Commission will create a Data Division within the Office of Economics and Analytics. The Data Division will help develop and implement best practices, processes, and standards for data management in order to meet the needs of Commission staff who rely on data to inform policymaking and other core activities of the Commission.
This document does not contain new or modified information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In addition, therefore, it does not contain any new or modified information collection burden for small business concerns with fewer than 25 employees, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198,
The Commission will not send a copy of this Order pursuant to the Congressional Review Act,
The amendments adopted herein pertain to agency organization, procedure, and practice. Consequently, the notice and comment and effective date provisions of the Administrative Procedure Act contained in 5 U.S.C. 553(b) and (d) do not apply.
Consistent with the Consolidated Appropriations Act, 2017, this reorganization will not become effective until the appropriate clearance has been obtained, and the Order has thereafter been published in the
Accordingly,
Classified information, Freedom of information, Government publications, Infants and children, Organization and functions (Government agencies), Postal Service, Privacy, Reporting and recordkeeping requirements, Sunshine Act.
For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR part 0 as follows:
Secs. 5, 48 Stat. 1068, as amended; 47 U.S.C. 155, 225, unless otherwise noted.
(a) * * *
(4) Office of Economics and Analytics.
The Office of Economics and Analytics advises and makes recommendations to the Commission in the areas of economic and data analysis and data management policy. The Office reviews all Commission actions involving significant economic or data analysis and provides expertise, guidance, and assistance to the Bureaus and other Offices in applying the principles of economic and data analysis. The Office coordinates the Commission's research and development activities relating to economic and data analysis and data management policy. In addition, the Office serves, in close coordination with other relevant Bureaus and Offices, as a principal resource for policy and administrative staff of the Commission with regard to the design, implementation, and administration of auctions. The Office also establishes and implements Commission data management policies in conjunction with the relevant Bureaus and Offices and with the Office of Managing Director and Office of General Counsel. The Office of Economics and Analytics has the following duties and responsibilities:
(a) Identifies and evaluates significant communications policy issues, based on the principles and methods of economics and data analysis.
(b) Collaborates with and advises other Bureaus and Offices in the areas of economic and data analysis and with respect to the analysis of benefits, costs, and regulatory impacts of Commission policies, rules, and proposals.
(c) Prepares a rigorous, economically-grounded cost-benefit analysis for every rulemaking deemed to have an annual effect on the economy of $100 million or more.
(d) Confirms that the Office of Economics and Analytics has reviewed each Commission rulemaking to ensure it is complete before release to the public.
(e) Reviews and comments on all significant issues of economic and data analysis raised in connection with actions proposed to be taken by the Commission and advises the Commission regarding such issues.
(f) Develops, recommends, and implements data management policies in conjunction with the Office of Managing Director, the Office of General Counsel, and relevant Bureaus and Offices, and collaborates with and advises other Bureaus and Offices with respect to data management and data analysis.
(g) Manages the Commission's economic and data analysis research programs, recommends budget levels and priorities for these programs, and serves as central account manager for all contractual economic and data analysis research studies funded by the Commission.
(h) Conducts economic, statistical, cost-benefit, and other data analysis of the impact of existing and proposed communications policies and operations, including cooperative studies with other staff units and consultant and contract efforts as appropriate.
(i) Coordinates the Commission's evaluation of government (state and federal), academic, and industry-sponsored research affecting Commission policy.
(j) Coordinates with other Bureaus and Offices in making recommendations to the Commission on communications policy issues that involve economic and data analysis, to include cost-benefit analysis; represents the Commission at appropriate discussions and conferences.
(k) Develops and recommends procedures and plans for effective economic and data analysis, to include cost-benefit analysis, within the Commission.
(l) Seeks to ensure that FCC policy encourages and promotes competitive markets by providing Bureaus and Offices with the necessary support to identify, evaluate, and resolve competition issues.
(m) In conjunction with the relevant subject matter Bureau, serves as the Commission's principal policy and administrative staff resource with regard to the design, implementation, and administration of auctions and other types of competitive bidding.
(n) Administers Commission spectrum auctions for wireless telecommunications in conjunction with the Wireless Telecommunications Bureau. Administers Commission spectrum auctions for broadcasting in conjunction with the Media Bureau. Works with the Wireless Telecommunications Bureau to develop recommendations to the Commission on policies, programs and rules concerning auctions of spectrum for wireless telecommunications. In conjunction with the Wireless Telecommunications Bureau, Media Bureau, Wireline Competition Bureau, and other relevant Bureaus and Offices, advises the Commission on policy relating to auctions and competitive bidding to achieve other Commission policy objectives. Administers procurement of auction-related services from outside contractors. Provides policy, administrative and technical assistance to other Bureaus and Offices on auction issues.
(o) In conjunction with the Wireline Competition Bureau and Wireless Telecommunications Bureau, provides policy and administrative staff resources for the use of market-based mechanisms, including competitive bidding, to distribute universal service support.
(p) With respect to applicable data and reporting duties assigned to the Office, coordinates with the Public Safety and Homeland Security Bureau and other relevant Bureaus and Offices on all matters affecting public safety, homeland security, national security, emergency management, disaster management, and related issues.
(q) With respect to applicable data and reporting duties assigned to the Office, and in coordination with the Wireline Competition Bureau and the Wireless Telecommunications Bureau, provides federal staff support for the Federal-State Joint Board on Universal Service and the Federal-State Joint Board on Jurisdictional Separations.
(r) In coordination with other relevant Bureaus and Offices, provides economic, financial, and technical analyses of communications markets and provider performance.
(s) In coordination with the Wireline Competition Bureau, provides technical support for
(t) Prepares briefings, position papers, and proposed Commission actions, as appropriate.
(u) In coordination with other relevant Bureaus and Offices, develops and recommends responses to legislative, regulatory or judicial inquiries and proposals concerning or affecting matters within the purview of its functions.
(g) In cooperation with the relevant Bureaus and Offices, including the Office of General Counsel and the Office of Economics and Analytics, to advise the Commission, participate in and coordinate staff work with respect to general frequency allocation proceedings and other proceedings not within the jurisdiction of any single Bureau, and render service and advice
(p) In coordination with the Office of Economics and Analytics and Wireless Telecommunications Bureau, serves as the Commission's principal policy and administrative staff resource with respect to the use of market-based mechanisms, including competitive bidding, to distribute universal service support. Develops, recommends and administers policies, programs, rules and procedures concerning the use of market-based mechanisms, including competitive bidding, to distribute universal service support.
(a) Advises and makes recommendations to the Commission, or acts for the Commission under delegated authority, in all matters pertaining to the licensing and regulation of wireless telecommunications, including ancillary operations related to the provision or use of such services; any matters concerning wireless carriers that also affect wireline carriers in cooperation with the Wireline Competition Bureau; and, in cooperation with the Office of Economics and Analytics, all matters regarding spectrum auctions and, in cooperation with the Wireline Competition Bureau, USF mechanisms affecting wireless carriers. These activities include: Policy development and coordination; conducting rulemaking and adjudicatory proceedings, including licensing and complaint proceedings for matters not within the responsibility of the Enforcement Bureau; acting on waivers of rules; acting on applications for service and facility authorizations; compliance and enforcement activities for matters not within the responsibility of the Enforcement Bureau; determining resource impacts of existing, planned or recommended Commission activities concerning wireless telecommunications, and developing and recommending resource deployment priorities.
(c) Serves as a staff resource, in coordination with the Office of Economics and Analytics, with regard to the development and implementation of spectrum policy through spectrum auctions. Develops, recommends and administers policies, programs and rules concerning licensing of spectrum for wireless telecommunications through auctions. Advises the Commission on policy, engineering and technical matters relating to auctions of spectrum used for other purposes.
(r) In coordination with the Wireline Competition Bureau and the Office of Economics and Analytics, develops and recommends policies, programs, rules and procedures concerning the use of market-based mechanisms, including competitive bidding, to distribute universal service support.
(a) Insofar as authority is not delegated to any other Bureau or Office, the Chief, Office of Economics and Analytics, is delegated authority to carry out the performance of functions and activities described in § 0.21, provided that the following matters shall be referred to the Commission en banc for disposition:
(1) Notices of proposed rulemaking and of inquiry, final orders in rulemaking proceedings and inquiry proceedings and non-editorial orders making changes, and any reports arising from any of the foregoing;
(2) Any petition, pleading, request, or other matter presenting new or novel questions of fact, law, or policy that cannot be resolved under existing precedents and guidelines; and
(3) Applications for review of actions taken to delegated authority, except that the Chief may dismiss any such application that does not comply with the filing requirements of § 1.115(d) and (f) of this chapter.
(4) Any applications that are in hearing status.
(b) Insofar as authority is not delegated to any other Bureau or Office, and with respect only to matters that are not in hearing status, the Chief, Office of Economics and Analytics, is delegated authority to deny requests for extension of time or to extend the time within which comments may be filed in dockets over which the Office of Economics and Analytics has primary authority.
(c) Insofar as authority is not delegated to any other Bureau or Office, the Chief, Office of Economics and Analytics, is authorized to dismiss or deny petitions for rulemaking that are repetitive or moot or that for other reasons plainly do not warrant consideration by the Commission.
(d) The Chief, Office of Economics and Analytics, is authorized to dismiss or deny petitions for reconsideration to the extent permitted by § 1.429(l) of this chapter and, jointly with the Wireless Telecommunications Bureau, to the extent permitted by § 1.106 of this chapter.
(e) The Chief, Office of Economics and Analytics, is delegated authority to make nonsubstantive, editorial revisions to the Commission's rules and regulations contained in part 1, subparts Q, V, W, and AA, of this chapter.
The application and authorization files and other appropriate files of the Office of Economics and Analytics are designated as the Commission's official records of action of the Chief, Office of Economics and Analytics, pursuant to authority delegated to the Chief. The official records of action are maintained in the Reference Information Center in the Consumer and Governmental Affairs Bureau.
In discharging the authority conferred by § 0.271, the Chief, Office of Economics and Analytics, shall establish working relationships with other Bureaus and staff Offices to assure the effective coordination of actions taken in the analysis of regulatory impacts, including assessments of paperwork burdens and initial and final regulatory flexibility assessments.
Federal Communications Commission.
Final rule.
In this document, the Federal Communications Commission
Jessica Greffenius at
This is a summary of the Commission's
The Commission will send a copy of this
1. In 2015, the Commission adopted rules for shared commercial use of the 3.5 GHz band. It created a three-tiered access and authorization framework to coordinate shared federal and non-federal use of the band. Incumbents comprise the first tier (Incumbent Access) and receive protection from all other users, followed by PALs, the second tier (Priority Access), and General Authorized Access (GAA), the third tier. Over half of the band—a minimum of 80 megahertz—is reserved for GAA use. PALs receive protection from GAA operations but must protect and accept interference from Incumbent Access tier users. GAA is licensed-by-rule and must avoid causing harmful interference to higher tier users and accept interference from all other users, including other GAA users. GAA users can operate throughout the entire 150 megahertz of the 3.5 GHz band on any frequencies not in use by PALs. Automated frequency coordinators, known as Spectrum Access Systems (SASs), will coordinate operations between and among users in different access tiers. The Commission adopted service and technical rules governing the 3.5 GHz band as the new part 96 of its rules.
2. In June 2017, CTIA and T-Mobile filed petitions for rulemaking, which asked the Commission to reexamine several of the part 96 rules related to PALs. CTIA proposed several changes to the PAL licensing rules, including much larger license areas, longer license terms, and renewability. T-Mobile supported CTIA's proposals and made additional proposals, including changes to the amount of spectrum available for PALs and to the technical rules governing the 3.5 GHz band. Both petitioners argued that these requested changes were necessary to promote additional investment to facilitate 5G network deployment in the band. On June 22, 2017, the Wireless Telecommunications Bureau and Office of Engineering and Technology sought comment on the Petitions and on related issues raised in
3. On October 24, 2017, the Commission issued a
4. The Commission received nearly 200 comments and 40 reply comments in response to the
5.
6. Several commenters support increasing the PAL license area significantly, from census tracts to PEAs, as a way to simplify the auction process, reduce interference risks and coordination complications at border areas, and encourage investment by all providers. Other commenters argue that the Commission should retain census tracts as the geographic licensing unit for PALs, arguing that using census tracts would increase the likelihood of localized services reaching rural and underserved areas, and open up PAL auctions to a wider variety of potential users and uses. Other commenters support using county-sized PALs as a compromise between census tracts and PEAs. Some commenters suggest that the Commission rely on a hybrid approach and to adopt multiple, different-sized PAL license areas. After the comment cycle closed, many stakeholders worked to find a hybrid solution for the size of the PAL license area.
7.
8. In 2015, the Commission determined that larger license areas were inconsistent with its desire to promote innovative, low power uses in the band, such as small cells, which align well with small, targeted geographic areas, and that census tracts would permit intensive use of the band and support a variety of use cases. The Commission now reassesses these determinations in the wake of the changed technological landscape, with efforts here and abroad to prioritize mid-band spectrum as part of the spectrum portfolio that will support next generation wireless networks, including 5G. While the decision to use census tracts may well support the deployment of targeted use cases—particularly fixed uses—as discussed below, the record shows that census tracts could disadvantage flexible mobile use, including 5G, and other wide-area network deployments, which in turn would decrease investment in the band. Increasing the PAL license area slightly from 714,000 census tracts to about 3,200 counties strikes a more appropriate balance and will more effectively support next generation mobile network deployments, while still retaining the ability to support small, targeted uses, included fixed uses. In contrast, increasing the PAL license area size further (
9.
10. The Commission agrees with certain commenters' arguments that licensing PALs using census tracts could raise insurmountable technical issues in urban areas. These commenters stress that the number of PALs under a census tract regime—and the number of license borders in particular—will cause unnecessarily challenging border coordination issues and create network deployment complexities. In New York City, for example, there are 2,168 census tracts, spanning an average of less than one-sixth of a square mile. This appears to be far smaller than the area necessary for a single CBSD to operate in its coverage area on at least 20 megahertz of PAL spectrum. Some commenters argue that there are engineering and cost challenges to using census tracts, and stress that, in order to cover the border areas of census tracts, Priority Access Licensees will need to severely limit their power and deploy many more CBSDs than what may be actually needed. They also argue that TDD-LTE technology requires coordination among co-channel and adjacent channel systems at the border, and that synchronization of uplink and downlink operations with neighbors would be almost impossible to implement in census tracts in large urban areas.
11. Further, the smaller the license area, the more the interference protection requirements will limit a licensee's ability to use its assigned spectrum throughout its service area. This is because there is a much higher likelihood that when a licensee seeks to deploy a CBSD, there will be a nearby PAL Protection Area that requires protection, forcing the licensee to reduce power or take other steps to protect the transmitter deployed in the adjacent geographic area. Some commenters argue that licensing PALs by census tract will add tremendous administrative overhead to the process of acquiring PALs and building networks to align with areas where licensees actually want to operate, and also express concern over the cost of designing and deploying networks under a census tract licensing regime. The Commission finds this evidence credible that census-tract based licensing risks intractable interference problems at PAL borders, potentially precluding the use of this spectrum for mobile 5G services.
12. Other commenters argue that these border interference concerns are overstated, because a licensee can operate within its entire PAL Protection Area, which may consist of several aggregated PAL licenses areas, and because the signals from CBSDs whose service contours form the PAL Protection Area would be treated as GAA outside of the PAL area. The Commission is unconvinced that these factors fully mitigate the problem. For instance, commenters describe scenarios illustrating that there is no guarantee that a licensee will have a common channel assignment in adjacent markets. And with respect to potentially extending a licensee's service contours outside of its license area on a GAA basis, some providers note that they cannot make network deployment decisions that are premised on not having to protect adjacent operations because they might not be deployed, and will need to assume that adjacent markets are robustly utilized by PAL (or GAA) licensees to the fullest extent possible.
13. Nor is the Commission persuaded by the argument that it need not worry about these interference concerns because they will not affect a licensee with a geographically targeted LTE deployment, such as within a hotel, convention center, or business campus. If relying on census tracts precludes wide-area use of the 3.5 GHz band (and thus prevents its use for 5G or rural broadband deployments), the
14. The Commission further finds that the requirement that the SAS assign geographically contiguous PALs held by the same Priority Access Licensee to the same channel block in each geographic area does not mitigate these concerns. This requirement applies only “to the extent feasible,” and doing so may not be feasible when, for example, multiple licensees want common channels across overlapping aggregate PAL Protection Areas. The smaller the license area, the greater the likelihood of such conflicts occurring. For example, a carrier seeking to offer 5G mobile broadband throughout the New York area would be required to bid on 28,000 licenses and be the auction winner 4,000 times in a single geographic area; this would increase dramatically the likelihood that, instead of taking advantage of the contiguous-area rule, an auction winner with a checkerboard of census tract-based licenses would be able to use none of them. Further, even if some form of package or combinatorial bidding could mitigate such risks, licensees would still face potentially discontiguous channel assignments.
15. Although other commenters, in disputing these claims, stress the legal obligation of the SAS to protect a licensee's PAL Protection Area, they do not persuasively refute the demonstration that the use of census tracts is likely in practice to increase dramatically the number of potential border conflicts and related engineering and coordination challenges, potentially precluding next generation mobile services, including 5G, in the 3.5 GHz band. As the Commission recognized in 2015, licensees may have a legitimate need to coordinate with holders of both geographically and spectrally adjacent licenses in order to maximize the utility of the band and facilitate efficient network planning. The record presents serious concerns that, for large scale deployments, such coordination could involve a prohibitive number of co-channel and adjacent channel licensees.
16.
17.
18.
19. Counties are sufficiently small to support the small cell deployments and localized types of service the Commission anticipates will be an important part of this band. They are also small enough to allow licensees to target their deployments where they need capacity. At the same time, as the Commission and commenters have recognized, counties are the basic “building blocks” of many geographic areas, making them suitable for aggregation for licensees that wish to operate over larger areas. This flexibility makes counties an appropriate middle ground for this band, given that the characteristics of 3.5 GHz band spectrum are favorable to support both localized and wide-area deployments, and thus to entities wanting to provide a variety of innovative services—some more targeted than others—to the public.
20.
21. The Commission also anticipates that fewer license areas and fewer overall biddable items available through the PAL auction will reduce auction complexity and will enable it to move forward more quickly to offer all available PALs in one multiple round auction conferring significant benefits to the public. Historically, the Commission has preferred to use a specific simultaneous multiple round (SMR) auction format for offering spectrum licenses. In the forward auction portion of the broadcast incentive auction (Auction 1002), the Commission used a clock auction format which, like the SMR, also offers all items simultaneously in multiple bidding rounds. These auction formats allow bidders to engage in price discovery and pursue backup strategies as prices ascend, which, for many license inventories, are important benefits for bidders. The Commission's current bidding systems for multiple round spectrum auctions were designed so as to offer these bidder advantages given historically typical inventories of geographic areas. While a county-based geographic license area gives us an inventory with the largest number of areas that the Commission has ever auctioned or licensed, it is a far smaller number than an inventory based on 74,000 census tracts. Accordingly, licensing PALs on the basis of counties will enable the Commission to use an auction system that offers bidders important benefits, as well as allow it to auction them more quickly with a bidding system that is manageable for bidders.
22. Relatedly, if providers with larger-area needs have to turn to the secondary market to aggregate additional licenses, the smaller the license area used, the larger the number of transactions that would be required, thus increasing transaction costs. The Commission believes that this balance will not only promote Section 309's goal of “efficient and intensive use of the electromagnetic spectrum,” but also encourage investment by a wider array of users than under the census tract regime by removing unnecessary administrative hurdles and associated costs.
23. Several parties, including those representing small and rural interests, also agree that counties will minimize administrative burdens imposed on licensees, while still being small enough to support rural deployment, reduce barriers of entry, and encourage localized use cases. They stress that, as compared to census tracts, counties will simplify license management burdens and border coordination issues, while still supporting rural deployment preserving low barriers to entry.
24.
25.
26. The Commission disagrees with the argument that census tract licensing is necessary for localized use cases, or that these localized use cases should be the primary focus of the balance struck by its rules. Some commenters argue that counties are too large for localized deployments such as those intended by colleges, industrial parks, manufacturing plants, sports arenas and other similar users, and that census tracts are the least costly way to support targeted use cases. The Commission finds that the public interest best served by ensuring that all potential use cases are technically and economically feasible, and by using competitive bidding to allocate the 3.5 GHz band to its highest and best use.
27. Further, county-sized licenses will still enable the construction of localized, private networks using 3.5 GHz spectrum. Targeted use cases are already encouraged by the “use-or-share” nature of the band and the GAA tier. A minimum of 80 out of 150 megahertz—more than half the band—will be available for GAA use even if all of the potential PAL channels are occupied, and the Commission previously denied T-Mobile's request to change the apportionment of PAL to GAA spectrum. Even census tracts are already significantly larger than a single campus, hotel, factory, or other similar enterprise, and the demands of such targeted applications can be addressed in ways that provide interference protection without using license areas as small as census tracts, including entering into transactions tailored to the area or amount of spectrum needed through leasing, partitioning, or disaggregation, or entering into commercial agreements with PAL licensees in which the licensee manages the spectrum. What is more, network deployers, manufacturers, and technology companies are well positioned to aggregate demand across counties to coordinate the deployment of localized use cases. This
28. The Commission also disagrees that increasing the size of PAL license areas will “strand” investments in the band. Those making this argument either are incumbents with grandfathered licenses in one portion of the band or they have made those investments in reliance on the 2015 rules. For one, the Commission does not find any such reliance expectations to be reasonable. It had neither scheduled nor even sought comment on how to design a competitive bidding system for PALs before seeking comment on the petitions for rulemaking to change the 2015 rules—and no provider is ever guaranteed to win protected spectrum at auction in a given market, regardless of the size of the geographic license area. For another, the unique structure and technical rules governing the 3.5 GHz band reduce the risk of stranded investment for all entrants and largely obviate the need to rely solely on auctioned licenses for access to the band. As stated previously, a minimum of 80 megahertz of the band will be available for use on a GAA basis in any area, by any entity that registers with the SAS. Additional spectrum will also be made available when it is not in use by Priority Access Licensees. The technical rules are the same for GAA and PAL users, meaning entities can use the same equipment in either tier, and can rely on both PAL and GAA spectrum, one or the other, or switch between the two to meet their business needs. And so any entity that deploys in the band prior to the PAL auction would need to operate on a GAA basis for some period of time and would be able to continue to do so after the auction, regardless of the outcome. Moreover, counties are small enough that the Commission anticipates rural providers and WISPs will actively seek county-sized PALs at auction, or enter arrangements to partition or disaggregate county-sized areas into smaller ones. Additionally, the opportunities for small entities and rural carriers to win will be supported by the bidding credits that have been successful in other Commission proceedings.
29. The Commission rejects arguments that it should adopt PEAs nationwide, as petitioners and some commenters support, or Metropolitan Statistical Areas (MSAs) in urban areas, as suggested in multiple hybrid proposals. The incremental benefit for 5G mobile use of going from counties to MSAs or PEAs would be far less than the incremental costs incurred by other potential users of the band. In particular, the Commission agrees with those commenters that cite the potential negative effects of adopting license areas as large as PEAs. Many WISPs express concerns that the incongruity between PEAs and WISP service footprints will diminish or foreclose their ability to win PALs at auction. In response to these concerns, the Commission has decided not to increase the size of the PAL license area to PEAs.
30. Nevertheless, to provide greater flexibility to PAL applicants interested in serving larger areas, the Commission will seek comment in the pre-auction process on allowing package bids to facilitate bidding for the counties that comprise a complete MSA in the top 305 markets. Several commenters argue that MSAs in urban areas will promote investment in the band in those markets, and—in combination with counties—provide an opportunity for parties to acquire PAL spectrum in areas that best fit their business models and investment plans and minimize burdens for applicants interested in a larger footprint in urban areas. The Commission expects that the proposed procedures for the auction will include specific procedures for a form of package bidding consistent with proposals for other bidding procedures proposed in the pre-auction public notice process. Licensing PALs by county, and seeking comment on the best flexible auction mechanism that may allow bidders to aggregate MSA bids, including possibly using package bidding for all of the counties in an MSA, could reduce secondary market transaction costs while still promoting an active secondary market.
31. The Commission rejects hybrid approaches that offer multiple size PALs in every market, such as licensing 50 megahertz of PALs by county and 20 megahertz by census tract. As discussed above, using counties nationwide will support licensee diversity and increased investment. Further, there are already significant complexities inherent to the 3.5 GHz band authorization and spectrum coordination model, which involve the SAS coordinating access between and among the three tiers of users, including the protection of multiple discrete types of Incumbent users. While SASs may be—and likely are—capable of modifying their systems to address multiple sizes of PALs in a given geographic area, on balance, it is not in the public interest to add yet another layer of complexity to the SAS's spectrum coordination responsibilities at this time. Such additional requirements could delay SAS certification and, possibly, affect the deployment timeline for the band. No party has articulated a compelling argument for the benefits of such a hybrid model (vis-à-vis nationwide use of counties) that would outweigh the potential costs inherent in increasing the complexity of the licensing and authorization framework at this stage of the SAS development cycle. The Commission also agrees with certain commenters that, given the specific characteristics of the 3.5 GHz band, licensing all PALs available in a market using the same geographic area will avoid unnecessarily complicating network management burdens for all users. Using the same license area in both rural and urban areas, as opposed to a hybrid approach licensing different sized PALs in urban and rural areas, will minimize complexities in a band that has a unique tiered access structure with dynamic spectrum sharing.
32.
33. In the
34. The Commission traditionally has licensed many wireless services on a 10-year renewable basis. For example, the Commission issues 10-year renewable licenses in Personal Communications Services, Wireless Communications Services, 700 MHz Services, and Advanced Wireless Services. Since it adopted the
35.
36. First, review of the record persuades the Commission that longer, renewable license terms will provide Priority Access Licensees with the level of certainty needed to promote robust investment and widespread deployment in the band. Many commenters maintain that longer, renewable license terms are necessary to incentivize robust investment in the band. They emphasize that successful network buildout is a multi-year process that includes standardizing a new frequency band, developing and certifying equipment, introducing a new band into end-user devices, and deploying infrastructure. They likewise maintain that 10-year renewable licenses would provide the long-term certainty required to invest in solutions utilizing the CBRS spectrum, and allow PAL holders to work with equipment manufacturers to lower equipment costs, the savings from which can in turn can be reinvested in networks to achieve higher speeds and additional rollout. Other commenters argue that the investment that larger entities have already made in 3.5 GHz band technology demonstrates that a three-year, non-renewable term will not deter their participation in the band. Such preparatory efforts certainly reflect an encouraging interest in the band, but do not guarantee a robust level of investment and deployment going forward. The Commission believes that the certainty provided by a 10-year, renewable license is warranted to help ensure the kind of robust investment and deployment that will achieve global leadership in next generation wireless technologies, including 5G.
37. The conclusion that a longer, renewable PAL license term is necessary to support robust investment in the band is further supported by economic analyses in the record. For instance, one such analysis argues that infrastructure investment decisions depend on the present value of the expected increase in profits on the investment. It explains that expected profits are a function of revenues and costs over the period a firm expects to use the investment, and thus, with shorter non-renewable licenses, expected profits will decrease. As such, it contends that three-year license terms, even when coupled with the option to obtain two consecutive three-year terms in the first license period, would provide insufficient time for investment returns in an infrastructure-heavy industry. Another analysis similarly finds that short term licenses discourage long-term investments in comparison to long-term licenses and the utilization of secondary markets. One study finds that shorter, non-renewable license terms are listed as one of the factors likely to decrease market value for PALs by as much as 50 to 95 percent overall relative to similarly licensed spectrum in the 2.5-2.6 GHz band.
38. Second, the Commission's experience managing other commercial spectrum supports adopting this modification. A 10-year renewable license term is consistent with the time-tested licensing frameworks that have proven successful in many other bands. Further, the Commission recently concluded in the
39. Third, the adoption of larger license areas for PALs further supports the modification to PAL license terms. The Commission in 2015 adopted a three-year, non-renewable term partly based on the conclusion that the economics and upgrade cycles for the small use case “in the context of census tract license areas” might resemble those for enterprise and Wi-Fi deployments rather than the large mobile deployments in other bands. The Commission expects the larger license areas now adopted to be more attractive to wide area network operators than census tracts and, as such, anticipates more large scale mobile deployments, including 5G. Given the nature and scale of such investments, the economics and upgrade cycles of such deployments will likely be closer to those in other bands used for mobile broadband, such as those bands addressed in
40. Fourth, as with the adoption of counties as the license area size for PALs, the Commission finds that 10-year, renewable terms are suited for a wide variety of entrants in both urban and rural areas. Ten-year renewable terms were supported by a diverse group of commenters, including mobile wireless providers, rural telecommunications and electric cooperatives, fixed wireless broadband providers, and equipment manufacturers. Further, a large number of other parties, as part of a multi-stakeholder consensus, support adoption of a renewable license term, albeit with a term of seven years rather than 10. The Commission finds their support for renewability and a term only somewhat shorter than the one it adopts
41. The Commission is not persuaded by commenters who argue that the longer term and renewability will make PALs broadly uneconomical for rural and innovative investments or lead to a less efficient use and distribution of the band. As discussed in economic analysis in the record, a licensee's expected profits from license acquisition should generally increase with a longer term and renewability. While some commenters challenge this assertion, arguing that extending the term will force prospective licensees to acquire spectrum for a longer period than they need, they offer no evidence that there is any mismatch between the longer term and the use cases discussed in the record. Numerous parties with various use cases, including rural WISPs and industrial entities, assert that they seek to deploy with the use of PALs, and they do not assert that their need for or use of such priority access will terminate by some fixed period, or that they plan to switch to GAA spectrum after that period. The Commission anticipates that the longer, renewable term will provide additional value to small and rural entities seeking to use spectrum for commercial broadband networks and other uses that involve significant long-term investments, and that the greater value to small and rural entities will help such entities absorb a higher acquisition cost at auction to the extent it may result from such terms.
42. Other aspects of the revised framework should further help ensure that small and rural providers have affordable access to the 3.5 GHz band. The bidding credits the Commission adopts for small businesses and rural providers will directly help them to compete for PALs at auction without compromising the certainty needed for substantial long-term investment. Expanded access through the secondary market will also help facilitate access to PALs. As discussed elsewhere, the Commission is not persuaded by commenters' claims that small entities will be unable to participate in secondary market transactions. Further, GAA spectrum will continue to be available on an opportunistic basis, and may be particularly suitable for short-term investments. Taking all these factors into account, to the extent a change to a longer-term, renewable license might still result in some reduction in liquidity in the market for priority spectrum access or otherwise raise the cost of access, the benefits of longer, renewable terms outweigh these concerns.
43. Finally, while commenters advocate for a variety of license terms shorter than 10 years, with limited or no renewability, these other options would not encourage investment as effectively and efficiently as a 10-year renewable license. Many commenters maintain that less than a 10-year license term is insufficient for investors to obtain a return on investment. Several commenters also contend that, without reasonable expectancy of license renewal, many potential entrants may be dissuaded from investing in the band because of the risk of stranded investment. The Commission concludes that its revised framework, when taken as a whole, appropriately addresses the needs of a wide variety of stakeholders, including those that wish to use the band for short-term purposes and those providers that require more certainty and stability, and will result in greater overall investment and deployment while still providing a wide variety of stakeholders with the opportunity to participate in this innovative band.
44. Regarding license renewal, last year, the Commission adopted a unified renewal framework for Wireless Radio Services (WRS) to replace the then-existing patchwork of service-specific rules for renewal. Consistent with that reform, the Commission finds it appropriate to include PALs in the unified WRS renewal framework rather than create a service-specific standard. Consequently, PAL licensees must comply with § 1.949 of the Commission's rules. Under that section, each PAL licensee, in order to qualify for renewal, must demonstrate that over the course of its license term, the licensee either: (1) Provided and continues to provide service to the public, or (2) operated and continues to operate the license to meet the licensee's private, internal communications needs. Like other WRS licensees, Priority Access Licensees may avail themselves of appropriate safe harbors contained in § 1.949(e) or make a Renewal Showing consistent with § 1.949(f). Including PALs in the unified WRS renewal framework is consistent with the Commission's determination in the
45. Some commenters have argued that, instead of renewability, the licenses should be reauctioned at the end of the license term. For example, one economist describes an auction format under which an incumbent would be required to bid for a renewal of its license at the end of the license term, but it would be given a bidding credit so that, if it won, it would have to pay only a fraction of the auction-determined price. Moreover, if the incumbent loses, it would be compensated with a transferable bidding credit to apply to the purchase of other licenses. The economist argues that this format would mitigate the risk that the incumbent licensee's investments may become stranded. This proposal gained little support in the record, however. Moreover, several commenters, opposing this proposal, argue that a “foothold” auction system will lower license valuations and initial investments in the band due to its complex approach within the setting of three-year terms and unknown subsidy rates. The Commission therefore declines to adopt this proposal in place of the time-tested approach of providing for renewability.
46.
47.
48. New performance requirements are warranted given the other changes to the PALs that adopted in this
49. The Commission also find that, given the revised PAL parameters adopted herein, the potential for opportunistic GAA use of unused PAL spectrum does not obviate the need for performance requirements. Under the current rules, GAA users can operate in unused 3.5 GHz band spectrum on an opportunistic basis. GAA users will be excluded from operating only to the extent that the Priority Access Licensee actually operates over a given channel within its license area (
50. After review of the record, and the various alternatives for performance requirements discussed therein, the Commission concludes that an end-of-term performance requirement of substantial service, with certain specific safe harbors, is the appropriate requirement for the revised PALs. Many commenters emphasize the importance of ensuring that performance requirements do not inhibit the innovation anticipated in this band. The substantial service requirement, with appropriate safe harbors for different types of network deployments, will provide licensees with the flexibility to deploy new and innovative technologies while ensuring that the spectrum is used in a productive manner by the end of the license term.
51. In particular, the Commission finds that specific safe harbors for different types of network deployments will provide additional regulatory certainty that will promote investment and encourage robust deployment in the band. Priority Access Licensees will have the option of satisfying their end-of-term performance requirement by demonstrating that they have provided service that meets or exceeds one of the safe harbors or making an individualized showing of substantial service in the license area. This approach will incentivize licensees to provide service throughout their license areas while retaining the flexibility to deploy new and innovative services. In addition, the Commission anticipates that the option of opportunistic GAA use, while not eliminating the need for new performance requirements, will complement such requirements and provide a low-cost entry point in the band. This should promote additional use of spectrum assigned to PALs and thereby help ensure efficient and productive use of the band. For these reasons, the Commission finds that a substantial service standard, with appropriate specific safe harbors, adequately safeguards effective use of spectrum in the 3.5 GHz band and satisfies its obligations under section 309(j)(4)(B).
52. In selecting an appropriate safe harbor for mobile and point-to-multipoint services, the Commission notes that a wide range of metrics are proposed in the record. In addition, the Commission has adopted a range of performance standards for similar services in other spectrum bands. Several considerations in this band weigh in favor of a safe harbor that provides licensees with relatively greater flexibility. First, such flexibility is appropriate given the power limits for deployments in the 3.5 GHz band. The Commission adopted significantly lower limits in this band than it has typically
53. In addition, a flexible performance requirement for mobile and point-to-multipoint may provide particular benefits to WISPs and other small providers in the 3.5 GHz band. The record supports the conclusion that many small providers seek to overlay existing service areas that may incompletely cover a PAL license area, such as those who have deployed networks targeting unserved or underserved rural populations under the Commission's prior 3650-3700 MHz service rules. A flexible requirement that allows these providers to implement such overlay or incremental strategies will thus benefit small entities and help to foster a diversity of users in the band. Further, the Commission anticipates that opportunistic GAA use, although not eliminating the need for performance requirements, will complement such requirements and help to ensure that spectrum is used productively, including in rural areas. Accordingly, the Commission does not need to rely as heavily on performance requirements to ensure intensive and productive use in the 3.5 GHz band as in other bands.
54. After considering these factors and the arguments and proposals in the record, the Commission concludes that a 50 percent population coverage safe harbor strikes an appropriate balance between, on the one hand, ensuring spectrum is used efficiently and productively in rural and non-rural areas, including through secondary market access, and, on the other, providing licensees the flexibility to invest in and deploy innovative network technologies that may be more suitable for smaller coverage areas and the co-existence regime that governs the 3.5 GHz band. The Commission finds, consistent with the analysis above, that a 50 percent requirement, rather than the higher coverage requirements adopted in certain other bands, is appropriate in the context of the low power limits and other unique aspects of the licensing and authorization regime in the 3.5 GHz band. Further, this safe harbor for substantial service, together with secondary market mechanisms and the potential for opportunistic GAA use, will foster efficient and innovative use of the band, including in rural areas.
55. As the Commission indicated in 2015, it contemplates that the band may also be used for fixed point-to-point services. Commenters responding to the inquiry in the
56. The Commission recognizes that Priority Access Licensees may seek to deploy innovative services, including low-power IoT-type services, for which the safe harbors discussed above may not be suitable. Given the lack of any comment on a metric or safe harbor for such services, and the uncertainty regarding what type of services will be deployed and what safe harbor would be appropriate in the context of the 3.5 GHz band's multi-tiered sharing regime, power limits, and other band-specific rules, the Commission declines to adopt a specific safe harbor for such services at this time. Priority Access Licensees providing such services may file individualized showings to demonstrate that they provided a bona fide communications service, either for unaffiliated customers or for private, internal use, that meets the standard of substantial service.
57. Priority Access Licensees also may provide a mix of services covered by more than one safe harbor. With respect to such mixed deployments, the Commission declines to establish a specific formula for applying the safe harbors. Instead, licensees whose deployments contain a mix of services covered by more than one safe harbor may either demonstrate that at least one of these safe harbors is met, or they may make an individualized showing that the services in combination meet a standard of substantial service. The Commission clarifies, however, that in its assessment of individualized substantial service showings, the safe harbors established above will generally be important factors in cases involving, in whole or in part, services that fall within the scope of such safe harbors. Absent justifications such as those discussed above, and given the flexibility already incorporated into the safe harbors, its expects that, in cases of a service addressed by a safe harbor, substantial service will meet or exceed the relevant safe harbor standard.
58. The Commission declines to adopt interim performance requirements for PALs. Adopting specific coverage requirements as an interim requirement would be inconsistent with the flexible substantial service showings allowed at
59. In order to confirm that the spectrum is being utilized consistent with the performance requirements, the Commission adopts performance verification procedures largely consistent with those for other bands. Parties must comply with the procedures under § 1.946 of the Commission's rules in making their compliance demonstration. That section provides, in part, that licensees must notify the Commission of compliance with the performance requirement within 15 days of the relevant deadline by filing FCC Form 601. As part of this notification, licensees will be required to submit and certify to a description of the service and documentation of the extent of the service, including electronic coverage maps accurately depicting the boundaries of each license area and where in the license area the licensee provides service that meets the performance requirement (
60. Consistent with the approach in many other bands, if a licensee fails to meet the substantial service requirement, its authorization under the relevant license will terminate automatically without Commission action. The Commission declines to adopt a “use-or-lose” regime, as suggested by some commenters, under which a licensee would lose only those areas or census tracts within a license area that are not developed. Such an approach, which has been adopted rarely for other bands, would complicate coordination with the PAL tier and between PAL and GAA users, may reduce incentives for licensees to build out to the less populated areas covered by their license, and is unnecessary to ensure effective use of the spectrum.
61. The Commission clarifies that operations pursuant to lease arrangements, other than short-term
62.
63. Given the other modifications the Commission adopts for PALs in this
64. Instead, the Commission will use its standard approach to determine whether accepted applications with respect to initial geographic area licenses are mutually exclusive applications subject to competitive bidding, which takes into consideration the Commission's need to “effectively implement” the public interest considerations underlying the licensing of the spectrum. Here, determining mutual exclusivity based on applicant interest in a given geographic area serves the public interest objective of assigning these licenses to the applicant that values them most highly and therefore is most likely to make effective use of them. Making the determination based on interest in geographic areas without respect to particular frequencies or bandwidth is necessary to provide applicants with maximum flexibility to pursue back-up strategies to aggregate blocks to meet their licensing needs as the auction progresses and the value of and opportunities in the band become better known. Applicants here will have an opportunity to identify on their short-form application each geographic area(s) in which they are interested in bidding for PALs. An applicant will only be permitted to bid for PALs in the particular geographic area or areas that it initially selects on its short-form application, subject to the 40-megahertz PAL aggregation cap. The record supports following this approach for identifying an applicant's interest in a particular geographic area. If the Commission accepts more than one application to bid on the generic PALs available in any particular geographic area, those PALs will be assigned by competitive bidding. As in other Commission auctions, the Commission will proceed to competitive bidding even if other applicants ultimately do not pursue licenses in that area or pursue fewer than all the licenses available.
65. The Commission also adopts the proposal to assign PAL(s) even when there is only one application in a given geographic area, assuming the applicant is otherwise qualified. In the absence of accepting mutually exclusive applications, the Commission cannot assign a license through the use of competitive bidding. Accordingly, consistent with its long-standing approach, if the Commission does not accept competing applications in a particular geographic area, it will cancel the auction for the PAL(s) in that area, and if the short form application is otherwise acceptable, it will establish a date for the filing of a long-form application by the applicant. The Commission also eliminates the single applicant exception in rural areas as the exception is no longer necessary under this approach. Adopting this licensing approach for PALs generally is also consistent with the Commission's earlier decision to do so on a limited basis. The fundamental benefit of a PAL is the right to prioritized, interference protected use of 10 megahertz of spectrum in a given geographic area. Commenters maintain that there are certain use cases that require the interference protected use of the spectrum that only a PAL can confer, making GAA access, with its lack of prioritized access, insufficient. Under the rules adopted in this
66. The Commission reminds parties that it will conduct any auction of PALs in conformity with the general competitive bidding rules set forth in part 1, subpart Q of the Commission's rules, including any modifications that the Commission may adopt to its part 1 general competitive bidding rules in the future. As has been the Commission's practice in past spectrum auctions, the rules adopted in this
67.
68. In the
69. The Commission affirms its decision that PALs will operate over 10 megahertz unpaired channels, wherein all channels will be assigned by the SAS. The exact frequencies of specific assigned channels may be changed by the SAS, if necessary, to facilitate sharing between the three tiers of authorized users. Accordingly, bidders will not be permitted to bid on specific channel assignments through competitive bidding. As the Commission previously explained, “flexible band management is essential
70. While there may be some uncertainty for a Priority Access Licensee in receiving a channel assignment from an SAS rather than bidding on a specific PAL license block, it is precisely this flexibility that is needed in a tiered licensing approach to ensure that a Priority Access Licensee is not forced to shut down its operations indefinitely or even permanently. Under a static channel assignment framework proposed by certain commenters, a Priority Access Licensee could be required to move off of a frequency to protect an incumbent, thus losing access to the exclusive channel until incumbent operations were no longer affected. In contrast, under the approach the Commission affirms in the
71. In the
72.
73. Because the Commission has modified the characteristics of PALs to more closely resemble those of other wireless licenses, it concludes that designated entities might have less opportunity to obtain spectrum in the 3.5 GHz band without small business size standards and bidding credits. Thus, by modifying its rules to include bidding credits, the Commission can address the concerns that some commenters have raised that the decision to adopt counties as the geographic area size for PAL licensing and a longer, renewal license term will impede small businesses' ability to effectively compete in the auction. Commenters generally support implementing a system of bidding credits for the 3.5 GHz band and recognize the related pro-competitive benefits for smaller carriers. Accordingly, the Commission is persuaded by commenters that maintain offering bidding credits here should improve the ability of small businesses to attract the capital necessary to meaningfully participate in a PAL auction.
74. In the
75. As a general matter, the Commission defines eligibility requirements for small businesses benefits on a service-specific basis, taking into account the capital requirements and other characteristics of each particular service in establishing the appropriate threshold. While the capital requirements of the services to be deployed in the 3.5 GHz band are not yet known, based on the record and on the its most recent actions in other similar wireless spectrum bands, the Commission concludes that using the same small business size standards and bidding credits adopted in the 600 MHz and UMFUS bands should enhance the ability of small businesses to acquire and retain capital and thereby compete more meaningfully at auction in the 3.5 GHz band. Use of these small business definitions and associated bidding credits should provide consistency and predictability for small businesses
76. Accordingly, for the 3.5 GHz band, an entity with average annual gross revenues for the preceding three years not exceeding $55 million will be eligible to qualify as a “small business” for a bidding credit of 15 percent, while an entity with average annual gross revenues for the preceding three years not exceeding $20 million will be eligible to qualify as a “very small business” for a bidding credit of 25 percent, consistent with the standardized schedule in part 1 of the Commission's rules.
77.
78.
79. Finally, the Commission rejects a proposal from some commenters to provide a bidding preference for applicants that indicate their intention to use a PAL to meet Connect America Fund (CAF) obligations. Insofar as providers participating in CAF would be receiving CAF support already, additional bidding preferences should not be necessary, and are likely to distort participation in and the results of both the CAF-II and 3.5 GHz auctions. It also rejects other proposals from commenters asking the Commission to offer bidding credits to entities based upon standards other than the ones discussed above. The record lacks support to justify a departure from the Commission's approach to promoting the participation of designated entities in the provision of spectrum-based service, and it believes that the small business and rural service bidding credits should help sufficiently to address the challenges that such groups face.
80.
81. In the
82. In the
83.
84. Many commenters support allowing partitioning and disaggregation of PALs, particularly when coupled with the larger geographic area license size, longer license term, and license renewability that the Commission adopts in this
85. Some commenters maintain that partitioning and disaggregation are not substitutes for initially licensing smaller license areas. Their positions, however, relate to disagreements over license size rather than opposition to these secondary market transactions
86. Other commenters contend that simply allowing secondary market transactions in the band will not necessarily result in such transactions. These commenters maintain that large wireless providers generally are unwilling to make licensed spectrum available on the secondary market. Some assert that secondary market transactions operate far more frequently and efficiently in the opposite direction, allowing large carriers to aggregate spectrum that initially was acquired by smaller operators. Other commenters argue that high transaction costs inhibit a robust secondary market.
87. The Commission is unpersuaded by commenters' claims that small entities will be unable to participate in secondary market transactions. Commission records reflect that there is an active secondary market for partitioned and disaggregated licenses. The Commission has received about 1,000 assignment applications involving partitioned or disaggregated licenses over the last 10 years. Further, the unique characteristics of the 3.5 GHz band are particularly conducive to secondary market transactions. First, the SAS can be leveraged to facilitate secondary market transactions. In addition, the use-or-share rule greatly diminishes the concerns of potential hoarding or incomplete deployment over a license area. Priority Access Licensees will be incentivized to sell on the secondary market spectrum within their license area that may lie outside of their current network build or that they otherwise do not need access to for their future deployments. The availability of up to seven PALs in each market combined with a 40 megahertz spectrum aggregation limit also decrease the likelihood of excessive or even prohibitive transaction costs.
88. The Commission rejects the suggestion of some commenters that, if it determines to license PALs in larger geographic areas, it should impose an affirmative obligation on larger providers to engage in secondary market transactions with smaller providers and new entrants. The Commission typically relies upon market forces and economic incentives to drive spectrum to its most beneficial use. This remains the correct approach in this band.
89. One commenter questions whether this approach fulfills the Commission's statutory and public responsibilities under section 309(j) of the Act to promote “economic opportunity for a wide variety of applicants.” It maintains that the Commission would be relying solely on private commercial interests' use of partitioning, disaggregation, and secondary market transactions to provide such economic opportunities. The Commission disagrees. By developing a new framework to license PALs by counties, the Commission creates opportunities for a variety of applicants both large and small to participate in this innovative band. Further, by making a variety of secondary market opportunities available to all licensees, it creates economic opportunities for all types of entrants to the band. The decision to permit partitioning and disaggregation in the band furthers, rather than undermines, efforts to fulfill the Commission's statutory responsibilities under section 309(j). This change, along with the others adopted in this
90. For these reasons, the Commission finds that it is in the public interest to permit partitioning and disaggregation in the 3.5 GHz band, subject to the requirements in § 1.950 of the rules. The Commission's spectrum manager and
91.
92.
93.
94. Noting that some parties had asserted that public disclosure of the registration information, even with licensee identities obfuscated, would raise both competitive and security concerns, the Commission proposed in the
95.
96. Although the current requirement provides that licensees' identities must be obfuscated, numerous commenters argue that public disclosure of CBSD registration information would still allow competitors or other parties to identify the licensee—using a combination of publicly available data—and obtain competitively sensitive information about the licensee's network. Some commenters also argue that such information could compromise the security of network infrastructure. Due to the concerns raised by commenters, the Commission finds that, on balance, the current requirement to publicly disclose CBSD registration information does not adequately protect sensitive information about licensees' network deployments.
97. The Commission continues to find, however, that the success of the shared spectrum model adopted for the 3.5 GHz band requires providing potential users of the band with enough information to accurately assess the overall spectrum environment in an area in order to make investment and deployment decisions. It further finds substantial support in the record for the conclusion that revising the public disclosure requirement to require the disclosure of aggregated spectrum usage data will enable potential users of the 3.5 GHz band to make investment and deployment decisions, while significantly reducing the concerns from the disclosure of disaggregated device registration data. Several commenters support disclosure of a heat map based on aggregate data showing the level of spectrum use in a given area and the amount of spectrum available, arguing that such an approach would permit current and prospective users to better plan for future deployments while withholding potentially commercially sensitive or security-related, licensee-specific information. Accordingly, the Commission finds that it will serve the public interest to require SAS Administrators to make publicly available up-to-date aggregated spectrum usage data for any desired area of interest, including the extent of usage and available spectrum in the 3.5 GHz band throughout that area and the maximum available contiguous spectrum, using graphical “heat maps” or other appropriate formats that provide this information.
98. This approach strikes a better balance between protecting sensitive network information and the legitimate needs that parties have for information on the local spectrum environment than a prohibition on any public disclosures. Some commenters, while not disputing that potential users will need information on the spectrum environment to plan their deployments, argue that any public disclosure is nevertheless unnecessary because, under a Wireless Innovation Forum working document, SAS Administrators must publish certain information to assist operators in assessing whether there is available spectrum. The suggestion that no Commission requirement is needed in the light of the working document requirements is unpersuasive, particularly given that the working document requirements were only adopted pursuant to the existing Commission disclosure requirement. Some commenters argue that disclosure is unnecessary because potential users can obtain information from SAS Administrators on a confidential basis to make such decisions. But these commenters do not provide details regarding how such an option would operate, who would be authorized to access CBSD registration information,
99. Some proponents of the current requirement assert that the harms of disclosure should be discounted because the deployment information will in any case become available through other means. The Commission disagrees that the possibility that, in the future, there may be independent methods to obtain data about some licensees' networks is an appropriate justification for us to disregard concerns over the commercial sensitivity of that data and to allow today the public disclosure of commercially sensitive data about all licensees' networks. Further, there is no evident source currently that would reproduce the CBSD registration information and find it unlikely that any third-party public source will provide 3.5 GHz band network infrastructure data of the same character, in terms of information covered, specificity, comprehensiveness, timeliness, and accuracy. As evidence that CBSD registration data will likely be available from providers' own voluntary disclosures, some commenters cite several cable provider websites disclosing the location of their commercially offered Wi-Fi hotspots. However, the Commission finds these disclosures of the locations of Wi-Fi hotspots reflect that such Wi-Fi services are typically provided only at discrete locations. Such disclosures do not support the conclusion that mobile broadband providers would similarly disclose the location of individual antenna sites that are subsumed within the broad coverage of a cellular service. The Commission also rejects the argument that concerns regarding the disclosure of the network data should be discounted because access points will cover very limited areas. While the anticipated deployment of 5G services in the band will likely often involve small cell technologies, that does not reduce the sensitive nature of the deployment information.
100. Some commenters also argue that the Commission typically has disclosed site information in historic site-based licensing regimes and that there is no reason to provide any greater protection here. Their assessment of Commission practice disregards other Commission or Bureau actions, however, that have found that comparable disclosures of network infrastructure information encompass sensitive information that warranted some degree of protection. These latter precedents, as well as the record in this proceeding, support a determination that parties have legitimate concerns regarding the sensitivity of CBSD registration data that may impact their investment and deployment decisions.
101. Arguments in the record that a disclosure of aggregate data would be insufficient are similarly unpersuasive. Some commenters argue that a GAA user will need to know how many contiguous channels are available throughout its service area in order to predict the speeds it can offer its subscribers; however, the modified requirement directly addresses that concern because the Commission requires publicly disclosed information to include aggregate information on the maximum number of contiguous channels available. While one commenter argues that a heat map is inadequate because it does not necessarily provide sufficient information for the aiming of directional antennas, aggregate data should enable potential users to identify geographic areas with sufficient available spectrum to support a range of directional orientations for deployments within that area. Some commenters argue that licensees need information on specific channel availability. However, specific channel availability will be far less relevant to 3.5 GHz band network planning than aggregate spectrum availability, given that all 3.5 GHz band equipment must be operable across the entire band, and that the SASs will be making the frequency assignments, which will be subject to change during the operation of the equipment.
102. One commenter proposes that if the Commission determines that the current public disclosure requirement raises security or competitive concerns, it should require SAS Administrators, in their public disclosure of disaggregated data, to obscure or randomize the location of individual CBSDs within a triangle of points 50 linear feet apart or another defined area. The Commission finds this proposal does not differ significantly from the current requirement, which does not adequately protect competitively sensitive information. The modified requirement is a better approach to address the concern, as it will directly provide current and potential users with information on the availability of spectrum in a geographic area without requiring public disclosure of disaggregated CBSD data.
103. Other purposes that commenters identify for the public disclosure of disaggregated registration data are likely to be able to be achieved without the public disclosure of such data. For example, while some argue that disclosure will help users identify sources of interference, that is a core function of the SAS itself and therefore does not require public disclosure of disaggregated SAS registration data. The role of the SASs further distinguishes the 3.5 GHz band from the prior 3650-3700 MHz Band service rules, where the Commission adopted public disclosure of site registrations to enable non-exclusive licensees to coordinate to avoid harmful interference. Under that regime, there was no license administrator to facilitate coordination.
104. The Commission does not find that disclosure would enable the public to detect and hold operators accountable for erroneous or obsolete information, as some commenters argue. The Commission acknowledges that, for the white space database, it did adopt public disclosure for some registrations in part to “permit public examination of protected entity registration information to allow the detection and correction of errors.” However, it finds the 3.5 GHz band is not analogous to the white space service in this regard, as the Commission discussed extensively in the
105. The Commission also disagrees that Category B GAA users will need disaggregated registration data, and particularly relevant contact data, to fulfill their obligation to coordinate with other Category B GAA users under § 96.35(e) of the Commission's rules. Mandatory disclosure of disaggregated CBSD registration data, including contact data, is not necessary for Category B GAA coordination, and voluntary mechanisms and arrangements facilitated by an SAS, supplemented by the mandatory disclosure of aggregate spectrum usage data, can reasonably be expected to support and achieve the coordination contemplated in § 96.35(e), given that Category B GAA users will generally have mutual incentives to coordinate with one another and SASs are required to facilitate such coordination. For example, one multi-stakeholder standards document for Citizens Broadband Radio Service commercial operation, noted by several commenters, addresses the need for GAA coordination through a voluntary approach to be administered by the SASs. The Commission anticipates that the SAS Administrators will play an active role in facilitating GAA coordination, and bases its expectation that a voluntary mechanism will be successful in part on SAS involvement.
106. The Commission also anticipates that disclosure of aggregate information on spectrum availability will be sufficient in many cases to help interested parties identify potential secondary market opportunities, and that the SASs will help facilitate secondary market transactions in other ways that do not require disaggregated disclosure. Further, parties can directly contact the Priority Access Licensees in a particular license area (which will be a matter of public record) for that purpose. Indeed, even if the Commission continued to mandate disclosure of anonymized CBSD data, it would still generally be necessary to determine from the licensees in an area (either directly or through SAS facilitation) whether a particular licensee has unused PAL spectrum it is willing to make available through a secondary market transaction. To the extent that mandatory public disclosures of detailed, disaggregated CBSD registration data might in some circumstances provide some additional benefit over aggregate data, and the benefits are outweighed by the security and competitive concerns that such disclosures would raise. In sum, the Commission concludes that the revised requirement provides a reasonable balance for the services in the 3.5 GHz band, including emerging 5G and other innovative services anticipated in this band, and will thus promote its effective and efficient use.
107.
• −13 dBm/MHz from 0 to 10 megahertz from the assigned channel edge;
• −25 dBm/MHz beyond 10 megahertz from the assigned channel edge down to 3530 megahertz and up to 3720 megahertz;
• −40 dBm/MHz below 3530 megahertz and above 3720 megahertz.
108. The Commission adopted these limits to achieve a balance between the ability of CBSDs and End User Devices to protect out-of-band incumbent services, the ability of equipment vendors to meet reasonable standards of design performance, and the ability of CBSD and End User Devices to minimize the addition of in-band noise affecting other users of the band. The Commission denied petitions for reconsideration that sought changes to these limits in 2016.
109. In the
110. Qualcomm submitted results of a simulation study of the additional maximum power reduction (A-MPR) that would be required for the Qualcomm Mask and the Graduated Mask. Qualcomm asserts that both masks require the same amount of (non-zero) power reduction (
111.
112. There is little in the record to suggest that changes in the OOBE limits outside the 3.5 GHz band are necessary to accommodate signals having wide bandwidths. Indeed, many commenters argue that there should be no relaxation of the emissions limits outside the 3.5 GHz band. The existing OOBE limits outside the 3.5 GHz band were adopted
113. In addition, the Commission finds that no changes to the emission limits for CBSDs are needed. Qualcomm's proposal is focused solely on End User Devices and there were no other technical showings that would support relaxation of the emissions limits for CBSDs. Indeed, equipment vendors argue that no change to the emission limits are necessary because current technologies can meet the existing limits and the existing rules allow higher power with wider bandwidth, which helps counteract the need for a reduction in power. The Commission believes their comments were in the context of CBSDs (
114. The Commission is aware that it is generally easier to employ linearization techniques and better filtering in CBSDs to achieve low out-of-channel emissions because they operate off external electrical power and are less constrained by space limitations in the device as compared to End User Devices. Accordingly, the Commission is maintaining the existing OOBE limits for CBSDs.
115. There is justification for relaxing the OOBE limits within the 3.5 GHz band for End User Devices to accommodate bandwidths wider than ten megahertz. The Commission adopts the Qualcomm Mask and an adjacent channel leakage requirement of −30 dBc for End User Devices, because Qualcomm's analysis showed that −30 dBc, a 3GPP standard, in addition to the Qualcomm Mask, would limit the total emission power that affects adjacent channels. While most commenters support the Qualcomm Mask rather than the Graduated Mask, the Commission is concerned that the Qualcomm Mask, by itself, may lead to a higher level of OOBE than necessary to accommodate wider bandwidths with little or no power reduction. The Commission also believes that much of the equipment that will be used in this band will be designed to meet 3GPP standards. The 3GPP standards are based on an adjacent channel leakage ratio (ACLR) of 30 dBc for End User Devices, as well as a spectrum emission mask. The value of ACLR is a measure of the total power in the adjacent channel, as opposed to an emission mask that specifies a (typically) flat (per-megahertz) limit over some frequency range, with reductions at particular points (
116. Some commenters expressed concern that changes to the emission limits could make some channels in the band (
117. Finally, the Commission corrects a typographic error in a paragraph reference in § 96.41(e)(2) of its rules, which should reference paragraph (e)(1) instead of (d)(1).
118.
119.
120.
121. Accordingly,
122.
123.
124.
Telecommunications, Radio.
For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR parts 1 and part 96 as follows:
47 U.S.C. chs. 2, 5, 9, 13; Sec. 102(c), Div. P, Public Law 115-141, 132 Stat. 1084; 28 U.S.C. 2461, unless otherwise noted.
(c)
47 U.S.C. 154(i), 303, and 307.
The additions and revision read as follows:
(a) An applicant must file an application for an initial PAL. Applications for PALs must:
(d) Paragraph (a) of this section contains information-collection and recordkeeping requirements. Compliance will not be required until after approval by the Office of Management and Budget. The Commission will publish a document in the
(b) * * *
(3)
(4)
(i)
(ii)
(5)
Mutually exclusive initial applications for PALs are subject to competitive bidding. The general competitive bidding procedures set forth in part 1, subpart Q, of this chapter will apply unless otherwise provided in this subpart.
(a)
(2) A very small business is an entity that, together with its affiliates, its controlling interests, and the affiliates of its controlling interests, has average gross revenues not exceeding $20 million for the preceding three (3) years.
(b)
(c)
(2) An entity that qualifies as eligible rural service provider or a consortium of rural service providers who has not claimed a small business bidding credit may use a bidding credit of 15 percent, as specified in § 1.2110(f)(4) of this chapter.
(b) Priority Access Licensees may partition or disaggregate their licenses and partially assign or transfer their licenses pursuant to § 1.950 of this chapter and may enter into de facto transfer leasing arrangements for a portion of their licensed spectrum pursuant to part 1 of this chapter.
(d) Paragraph (b) of this section contains information-collection and recordkeeping requirements. Compliance will not be required until after approval by the Office of Management and Budget. The Commission will publish a document in the
(e)
(i) Except as otherwise specified in paragraph (e)(2) of this section, for channel and frequency assignments made by the SAS to CBSDs, the conducted power of any CBSD emission outside the fundamental emission bandwidth as specified in paragraph (e)(3) of this section (whether the emission is inside or outside of the authorized band) shall not exceed −13 dBm/MHz within 0-10 megahertz above the upper SAS-assigned channel edge and within 0-10 megahertz below the lower SAS-assigned channel edge. At all frequencies greater than 10 megahertz above the upper SAS assigned channel edge and less than 10 MHz below the lower SAS assigned channel edge, the conducted power of any CBSD emission shall not exceed −25 dBm/MHz. The upper and lower SAS assigned channel edges are the upper and lower limits of any channel assigned to a CBSD by an SAS, or in the case of multiple contiguous channels, the upper and lower limits of the combined contiguous channels.
(ii) Except as otherwise specified in paragraph (e)(2) of this section, for channel and frequency assignments made by a CBSD to End User Devices, the conducted power of any End User Device emission outside the fundamental emission (whether in or outside of the authorized band) shall not exceed −13 dBm/MHz within 0 to B megahertz (where B is the bandwidth in megahertz of the assigned channel or multiple contiguous channels of the End User Device) above the upper CBSD-assigned channel edge and within 0 to B megahertz below the lower CBSD-assigned channel edge. At all frequencies greater than B megahertz above the upper CBSD assigned channel edge and less than B megahertz below the lower CBSD-assigned channel edge, the conducted power of any End User Device emission shall not exceed −25 dBm/MHz. Notwithstanding the emission limits in this paragraph, the Adjacent Channel Leakage Ratio for End User Devices shall be at least 30 dB.
(2)
(3)
(a) * * *
(3) Upon request, SAS Administrators must make available to the general public aggregated spectrum usage data for any geographic area. Such information must include the total available spectrum and the maximum available contiguous spectrum in the requested area. SAS Administrators shall not disclose specific CBSD registration information to the general public except where such disclosure is authorized by the registrant.
Federal Communications Commission.
Final rule.
In this document, the Federal Communications Commission (“Commission” or “FCC”) revises its rules to require service providers to post on their publicly accessible websites information regarding the hearing aid compatibility of their offered handsets. Service providers are also required to retain information regarding the hearing aid compatibility of handsets previously offered. Through this information, consumers will have access to the most recent data about hearing aid-compatible handsets and the Commission will be able to ensure compliance with the hearing aid compatibility rules and requirements. In addition, the Commission no longer requires providers to file FCC Form 655 on an annual basis. Instead, providers must file an annual certification indicating whether or not they are compliant with the hearing aid compatibility rules.
Weiren Wang, Wireless Telecommunications Bureau, (202) 418-7275, email
This is a summary of the Commission's Report and Order (Order), WT Docket No. 17-228; FCC 18-167, adopted November 15, 2018 and released November 16, 2018. The full text of this document is available for inspection and copying during business hours in the FCC Reference Information Center, Portals II, 445 12th Street SW, Room CY-A257, Washington, DC 20554. Also, it may be purchased from the Commission's duplicating contractor at Portals II, 445 12th Street SW, Room CY-B402, Washington, DC 20554; the contractor's website,
1. The Commission has witnessed unprecedented growth in the degree to which service providers offer handsets that are hearing aid-compatible. In light of the growth in hearing aid-compatible handsets and decreasing public reliance on reports since they were first adopted by the Commission in 2003, the Commission takes two key steps to reform the hearing-aid compatibility reporting regime. First, the Commission revises its rules to require service providers to post on their websites the most critical information currently submitted on FCC Form 655. By requiring all service providers to post this information on publicly accessible websites that they control, the Commission can ensure that consumers have access to information about the increased numbers of hearing aid-compatible handset models with less burden for both service providers and consumers. This website information also will allow the Commission to continue to evaluate rule compliance without collecting information directly from service providers. Consumers will benefit from having access to the most up-to-date information about each handset model being offered by service providers.
2. Second, the Commission finds that many of the benefits of annual status reporting by service providers have become increasingly outweighed by the burdens that such information collection places on these entities. Instead of requiring providers to submit the FCC Form 655 on an annual basis, the Commission will require providers to submit annual certifications that require only a statement that a service provider is or is not in full compliance with the Commission's hearing aid compatibility rules, and if not, explain why. The action the Commission takes here streamlines the Commission's collection of information while continuing to fulfill the underlying purposes of the current reporting regime.
3. By using streamlined annual certifications combined with website reporting, the Commission ensures that it meets its objectives of monitoring industry and enforcing compliance with the relevant deployment benchmarks and other hearing aid compatibility provisions in the Commission's rules. This approach will ensure that consumers have better access to useful, current information about the hearing aid compatibility of the handset models being offered by service providers.
4. The Commission notes that in a separate docket, it is considering broader changes to the hearing aid compatibility rules that may be appropriate in the event the Commission requires 100% of covered handsets to be hearing aid-compatible. Per the schedule established in that proceeding, which the Commission has no current plan to deviate from, the process through which the Commission would make a determination whether a 100 percent requirement is achievable would conclude at the end of 2022. Revisions to the existing deployment benchmarks and other related rules are outside of the scope of this proceeding, and therefore these requirements will remain in place unless and until the Commission takes further action in that docket. To that end, the Commission's decision here is not predicated on further changes that might be under consideration, and thus, does not prejudge any further steps it may take to modify its reporting rules in that proceeding.
5. The Commission amends its hearing aid compatibility website requirements for service providers to ensure that the objectives of the FCC Form 655 reporting requirement continue to be met. In doing so, the Commission adopts, in part, the proposal put forth by the Joint Consensus filers. Under the Commission's new rules, service providers will continue to comply with the existing website requirements supplemented with additional content that is useful to consumers. In addition, the Commission will carry over to the new website posting obligation limited content from the FCC Form 655 necessary to meet the Commission's information, monitoring, and enforcement goals.
6. In addition to the current website requirements, all service providers that operate publicly accessible websites (other than
(1) A list of all non-hearing aid-compatible handset models currently offered, including the level of functionality of those models;
(2) among other pieces of data, the marketing model name/number(s) and FCC ID number of each hearing aid-compatible and non-hearing aid-compatible handset model currently offered;
(3) a link to a third-party website as designated by the Commission or Wireless Telecommunications Bureau, with information regarding hearing aid-compatible and non-hearing aid-compatible devices OR, alternatively, a clearly marked list of hearing aid-compatible devices that have been offered in the past 24 months but are no longer offered by that provider. For purposes of initial implementation, the Commission designates the Global Accessibility Reporting Initiative (GARI) website as the third party website referred to in this portion of the rule;
(4) A link to the current FCC web page containing information about the wireless hearing aid compatibility rules and service providers' obligations; and
(5) A “date stamp” on any website page containing the above referenced information that indicates when the page was last updated.
7. Service providers must also retain internal records for discontinued models, to be made available upon Commission request of:
(1) Handset model information, including the month year/each hearing aid-compatible and non-hearing aid-compatible handset model was first offered; and
(2) the month/year each hearing aid-compatible handset model and non-hearing aid-compatible handset was last offered for all discontinued handset models until a period of 24 months has passed from that date.
8. Retaining a trailing list of all handsets offered over the past 24 months will ensure that the Commission can continue to monitor whether service providers meet numerical and percentage-based handset deployment obligations. The obligation to post a link to the GARI website, or alternatively, post a clearly marked list of hearing aid compatible devices that have been offered in the past 24 months (which at least one smaller provider has already voluntarily adopted) also permits consumers to locate information about a model they may have recently purchased that is no longer being offered. The Commission concludes that it can serve as a useful tool for consumers to obtain hearing aid compatibility information regarding past handsets offered. Past handset information is useful not only to consumers who purchase devices via re-sale, but also to consumers who, for instance, start using a hearing aid or change hearing aids and want to check on whether their current device is compatible. So that service providers have flexibility, the Commission will not prescribe a standard template for posting and retaining this information. In addition, service providers can rely on the information from device manufacturers' FCC Form 655 as a safe harbor, similar to the Commission's policy in the past for service providers' FCC Form 655 filings.
9. The Commission does not anticipate that it will be difficult or burdensome for service providers to gather and post this additional information on their websites or to retain it. Service providers must continue to meet applicable deployment benchmarks and maintain compliance with all other hearing aid compatibility requirements. Therefore, service providers would likely need to track the information outlined above, some of which service providers need in order to run their businesses independent of the Commission's requirements (
10. The Commission finds that its new website and record retention requirements should better serve the Commission's objectives because the information on websites will be more up-to-date than the data submitted on FCC Form 655. The current website rules require providers to update the website information within 30 days of any relevant changes. As the Commission stated when it adopted the website posting requirement, “updated website postings are necessary . . . so that consumers can obtain up-to-date hearing aid compatibility information from their service providers.” To ensure that providers are aware that their websites need to be kept up to date, the Commission codifies this requirement.
11. The Commission will be able to use the information on a service provider's website to ensure that it is in compliance with the appropriate deployment benchmarks on a month-by-month basis. The Commission believes this is a better approach than other options, such as, for example, relying on informal complaints. The Commission also can use the posted information to monitor the state of the provision of hearing aid-compatible handsets by the wireless industry and the effectiveness of its hearing aid compatibility requirements. The Commission also believes that the proceeding in which the Commission is considering whether to require 100% of handsets to be hearing aid-compatible allows the Commission to monitor industry progress without requiring individual hearing aid compatibility status data from service providers. These revisions to the Commission's website posting requirements will allow consumers better access to more current information about the hearing aid compatibility features of current handset models offered by their service providers, and the information will be in a clearer format than is currently possible on FCC Form 655.
12. The website and record retention requirements the Commission adopts here differ slightly from the approach outlined in the Joint Consensus Letter and the separate request of HLAA-RERC. The requirement to post information about non-hearing aid-compatible handsets, for instance, is not addressed by the Joint Consensus filers. Nevertheless, the Commission concludes that requiring the posting of this information, along with information regarding currently offered hearing aid-compatible handsets on providers' websites, provides an easy means for the Commission and interested third parties to quickly derive a percentage of hearing aid-compatible handsets to determine whether the provider is meeting the relevant benchmarks. The Commission would not have to wait for the annual certification or make a request for internal data from the provider to determine whether the provider is currently compliant. Because the majority of handsets are hearing aid-compatible, this requirement imposes a limited burden compared to the compliance benefit.
13. The Commission adopts a requirement that all service providers certify whether they are in compliance with all of the Commission's wireless hearing aid compatibility requirements. Service providers should affirmatively state their compliance with the hearing aid compatibility rules through an annual certification. The Commission adopts the Joint Consensus proposal with some modifications. This new annual certification requirement applies
I am a knowledgeable executive [of company x] regarding compliance with the Federal Communications Commission's wireless hearing aid compatibility requirements at a wireless service provider covered by those requirements.
I certify that the provider was [(in full compliance/not in full compliance)] [choose one] at all times during the applicable time period with the Commission's wireless hearing aid compatibility deployment benchmarks and all other relevant wireless hearing aid compatibility requirements.
The company represents and warrants, and I certify by this declaration under penalty of perjury pursuant to 47 CFR 1.16 that the above certification is consistent with 47 CFR 1.17, which requires truthful and accurate statements to the Commission. The company also acknowledges that false statements and misrepresentations to the Commission are punishable under Title 18 of the U.S. Code and may subject it to enforcement action pursuant to sections 501 and 503 of the Act.
14. If the certification states that the provider is “not in full compliance,” it must include an explanation of which wireless hearing aid compatibility requirements the wireless service provider was not in full compliance with, and when non-compliance began and (if applicable) ended with respect to each requirement. In addition, as part of the certification, the service provider must submit the name of the signing executive, his or her contact information, the website address (if applicable) of pages(s) containing hearing aid compatibility information required by section 20.19(h), and the FCC FRN and the name of the company(ies) covered by the certification. The Commission expects to rely on this affirmative statement of compliance in any enforcement action.
15. The service provider must also indicate on the certification form the percentage of hearing aid compatible wireless handsets it made available that year. Providers will derive this percentage by determining the number of hearing aid-compatible handsets offered across all air interfaces during the year divided by the total number of handsets offered during the year. This requirement, while not directly related to service providers' compliance, will help the Commission and consumers quickly determine the state of the hearing aid compatibility marketplace. The Commission will rely on website postings of current handsets and the document retention requirements it adopts here to monitor carrier compliance with the deployment benchmarks by air interface.
16. The Commission does not adopt one element of the Joint Consensus Letter regarding the certification. Specifically, it does not adopt the Joint Consensus Letter request to state in the rules that providers may request confidentiality when submitting records to the Commission because providers already have the right to make such a request and such requests are typically ruled upon subsequent to the information submission. The Commission also adopts the requirement proposed by CTIA, CCA and TIA that a “knowledgeable executive,” rather than an officer, sign the certification in order to increase service providers' flexibility and consistency with the language of the Form FCC 655 certification. The Commission does not however, adopt their proposal that the knowledgeable executive certify only that the company has procedures in place to ensure compliance with the rules. Requiring the executive to certify that the company is in fact in compliance increases service providers' accountability and is necessary to provide the Commission and the public with a clear picture of each company's compliance as well as industry-wide compliance levels.
17. Given the Commission's improved website posting obligations, the new, streamlined certification requirements, and manufacturers' continued submission of FCC Form 655s, it is no longer necessary to require service providers to file FCC Form 655. The revised website and certification requirements the Commission adopts in this Order fulfill the objectives underlying the filing requirement with increased consumer benefits and less burden. For example, service providers will no longer be required to list the air interface(s) and frequency band(s) over which an offered model operates, information that they say is particularly burdensome to gather and list in their filings. Moreover, this information duplicates what manufacturers are filing for the same handsets. As long as service providers correctly and clearly identify on their websites the models that they currently offer and retain historical handset information, the Commission will be able to use this information to compare the handsets offered to Commission databases and derive the relevant information for enforcement purposes, and consumers will have much simpler access to this data.
18. Further, the Commission will be able to determine benchmark compliance by air interface by examining the data on service providers' websites by cross referencing that information on manufacturers' FCC Form 655. Service providers will not need to answer or provide a description in response to the several questions on the status of product labeling and outreach efforts. Service providers will no longer have the burden of identifying the total number of hearing aid-compatible and non-hearing aid-compatible models they offer to customers for each air interface over which the service provider offers service by month, or answer company information questions regarding their status as it relates to the
19. Based on the record, the Commission therefore modifies its rules to eliminate the FCC Form 655 reporting requirement for all service providers. The Joint Consensus filers support eliminating the FCC Form 655 if other safeguards are put in place, and with minor deviations, the Commission is adopting the safeguards they propose. Moreover, small service providers, such as members of RWA, agree that the burden of reporting is not justified and that the costs saved by eliminating the requirement will allow them to maintain and improve their websites and other outreach materials that are more readily accessible to consumers. And CTIA/CCA state that a certification approach would not harm consumers' ability to obtain information about hearing aid-compatible handsets from other publicly available sources of information.
20. For small, rural, and regional service providers, especially, the burden of reporting is substantial. The record indicates that such service providers must devote substantial time and resources to tracking and collecting the information necessary to fill out the form. These efforts are a strain on these providers' limited resources. The financial cost of the reporting requirement is disproportionate to the number of customers served by these providers. For example, in January
21. The Commission expects that service providers' percentages of hearing aid-compatible handset models being offered, as well as their compliance levels with deployment benchmarks, are unlikely to decline for the foreseeable future because nearly all handsets offered by manufacturers are hearing aid-compatible, reducing the need for up-front detailed information in FCC Form 655. The Commission recognizes that the implementation of new, unforeseen technologies could affect handset manufacturers' and providers' ability to offer hearing aid-compatible handsets in the future. The Commission will therefore continue to monitor the wireless handset marketplace to assess the need for further amendments to its rules.
22. The Commission notes that it is eliminating certain reporting requirements, such as reporting on the status of outreach efforts and product labelling, because they are no longer useful for the Commission or consumers, and the burden of these requirements outweighs the benefits.
23. Finally, the Commission makes clear that its decision today does not affect its wireless hearing aid compatibility rules outside of its reporting and website requirements, including those designed to facilitate consumer access to hearing aid-compatible devices. Although service providers will no longer be required to complete the FCC Form 655, the Commission's hearing aid compatibility rules still require service providers to comply with all labeling, disclosure, in-store testing, and level of functionality requirements. The Commission continues to encourage providers to continue engaging in outreach efforts to educate the public, audiologists, hearing aid dispensers, and retail personnel concerning the use of digital wireless phones with hearing aids.
24. In order that service providers focus future efforts toward an orderly transition to the new website and annual certification requirements that the Commission adopted in this Report and Order, it waived, on its own motion, the requirement that service providers file the hearing aid status report currently due by January 15, 2019. This waiver will last from public release of the Report and Order until its effective date whereupon this reporting requirement will be deleted from the rules. The first annual certification will cover calendar year 2018, the same period that would be covered by the FCC Form 655 for which the Commission is providing a waiver. Subsequent annual certifications starting in 2020 will be due by January 15 each year.
25. The Commission finds good cause to grant a waiver under the circumstances presented. The Commission intends to relieve providers of the current reporting burden as soon as possible and a limited waiver both effectuates this purpose as efficiently as possible and avoids duplicate collections of the same 2018 calendar-year handset information. The certification that would substitute for the January 2019 report fully satisfies the Commission's goals. And although the certification will occur somewhat later than January in order to obtain the necessary OMB approval, this minor delay will not significantly undercut the purpose underlying the certification in part because the revisions the Commission adopts here require posting and retention of data for the 2018 calendar year, not just data from approval of the information collection requirements onward. Service providers will still have an affirmative obligation to confirm compliance with all of the Commission's hearing aid-compatibility requirements, including the handset deployment benchmarks, and the Commission and public will have an opportunity to evaluate that statement against the Commission's revised website deployment obligations. In addition, because manufacturers will continue to file even more detailed handset information on their Form 655 to which consumers may refer, the Commission believes that any harm from this limited waiver would be minimal. Finally, while the Commission does not choose to eliminate the existing reporting rule immediately upon publication of this Report and Order in the
26. The Commission also provides for a transition for the revised website and data retention obligations. Thirty days following publication in the
27. Per the new 24-month handset history rule, the number of months of historical handset information providers must post to the website and retain will increase until it reaches 24 months in January 2020, at which time providers will no longer have an obligation to retain or post data from January 2018. Until the revised rule takes effect, providers must still meet current website requirements and post an ongoing list of all hearing aid-compatible models that they currently offer, the ratings of those models, and an explanation of the rating system, as well as other information about handset functionality levels, and update the website information within thirty days of any relevant change.
28. The Commission finds that this website and data retention transition period and the FCC Form 655 waiver affords service providers time to compile the requisite information and make the necessary changes to their websites and internal compliance processes. This schedule appropriately balances service providers' need for time to collect the information that will be required with the public's interest in maintaining a steady flow of handset information. By having the revised certification and website rule become effective at the same time, they work in tandem to ensure compliance with the Commission's wireless hearing aid compatibility rules in 2018 and subsequent years.
29. Amendments to § 20.19(e), § 20.19(h), and § 20.19(i) contain new or modified information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13, that are not effective until approved by the Office of Management and Budget (OMB). The Commission will publish a document in the
30. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the Notice of Proposed Rulemaking (NPRM), released in September 2017. The Commission sought written public comment on the proposals in the NPRM, including comment on the IRFA. The comments received are addressed below in section 2. This present Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.
31. In the Report and Order, the Commission modifies its wireless hearing aid compatibility rules, eliminates unnecessary and outdated reporting requirements, and improves its collection of information regarding the status of hearing aid-compatible handsets. The Commission finds that many of the benefits of annual status reporting by service providers have been realized and increasingly have become outweighed by the burdens that such information collection places on these entities. The Commission's new streamlined approach will continue to serve the underlying purposes of the Commission's annual reporting requirements without the burdens associated with that filing.
32. Specifically, the Commission waives the requirement for service provides to file the FCC Form 655 annual filing by January 15, 2019 and eliminates the requirement in subsequent years. Under the Commission's new approach, only wireless device manufacturers will continue to be obligated to file FCC Form 655 by July 15 of each calendar year. Next, the Commission amends its existing website requirements to ensure that consumers have access to the most up-to-date and useful information about the hearing aid compatibility of the handset models offered by service providers, and the Commission has sufficient information to verify compliance with the benchmark requirements. Only the most critical pieces of information currently submitted as part of the FCC Form 655 must continue to be made available on service providers' websites. The Commission will also require the service providers to file a simple, new, annual certification to enhance the ability of the Commission to enforce the hearing aid compatibility rules. The Commission also requires service providers to retain data regarding handsets no longer offered to verify compliance with its rules.
33. This new light-touch regulatory approach will enable the Commission to fulfill its responsibilities and objectives for wireless hearing aid compatibility. By requiring all service providers to post consistent content and information on their publicly available websites, the Commission ensures that consumers can access the information they need about the hearing aid compatibility of the handsets being offered. This website information will also allow the Commission to evaluate compliance with the relevant benchmarks and other hearing aid compatibility provisions in its rules. In addition to being able to verify compliance with its rules when necessary, the Commission will also be able to monitor the overall status of access to hearing aid-compatible handsets. The Commission's ability to verify and enforce compliance and monitor industry developments will also be served by requiring all service providers to annually file a certification stating whether or not they are in compliance with the Commission's hearing aid compatibility provisions.
34. There were no comments filed that specifically addressed the rules and policies proposed in the IRFA.
35. 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.
36. The Chief Counsel did not file any comments in response to the proposed rules in this proceeding.
37. The RFA directs agencies to provide a description of, and where feasible, an estimate of the number of small entities that may be affected by the rules adopted herein. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A “small business concern” is one 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.
38.
39. 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 August 2016, there were approximately 356,494 small organizations based on registration and tax data filed by nonprofits with the Internal Revenue Service (IRS).
40. Finally, the small entity described as a “small governmental jurisdiction” is defined generally as “governments of cities, counties, towns, townships, villages, school districts, or special districts, with a population of less than fifty thousand.” U.S. Census Bureau data from the 2012 Census of Governments indicate that there were 90,056 local governmental jurisdictions consisting of general purpose governments and special purpose governments in the United States. Of this number there were 37,132 General purpose governments (county, municipal and town or township) with populations of less than 50,000 and 12,184 Special purpose governments (independent school districts and special districts) with populations of less than 50,000. The 2012 U.S. Census Bureau data for most types of governments in the local government category show that the majority of these governments have populations of less than 50,000. Based on this data the Commission estimates that at least 49,316 local government jurisdictions fall in the category of “small governmental jurisdictions.”
41.
42.
43.
44. 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 the Commission's actions here. 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 Commission data, 413 carriers reported that they were engaged in the provision of wireless telephony, including cellular service, Personal Communications Service (PCS), and Specialized Mobile Radio (SMR) Telephony services. Of these, an estimated 261 have 1,500 or fewer employees and 152 have more than 1,500 employees. Thus, using available data, the Commission estimates that the majority of wireless firms can be considered small.
45. Also included in this classification is Personal Radio Services, which provide short-range, low power radio for personal communications, radio signaling, and business communications not provided for in other services. The Personal Radio Services include spectrum licensed under part 95 of the Commission's rules. These services include Citizen Band Radio Service (“CB”), General Mobile Radio Service (“GMRS”), Radio Control Radio Service (“R/C”), Family Radio Service (“FRS”), Wireless Medical Telemetry Service (“WMTS”), Medical Implant Communications Service (“MICS”), Low Power Radio Service (“LPRS”), and Multi-Use Radio Service (“MURS”). The Commission notes that many of the licensees in these services are individuals, and thus are not small entities. In addition, due to the mostly unlicensed and shared nature of the spectrum utilized in many of these services, the Commission lacks direct information upon which to base a more specific estimation of the number of small entities under an SBA definition that might be directly affected by its action.
46.
47. In the Report and Order, the Commission is eliminating a substantial reporting requirement that all service providers—large and small—argue is burdensome and unnecessary. The Commission finds that as the percentage of hearing aid-compatible handsets offered by service providers increases, the burden of the annual reporting requirement outweighs its usefulness as a monitoring and compliance tool. The Commission has determined that annual hearing aid compatibility status reports show a near universal compliance with the Commission's hearing aid compatibility requirements. Further, the Commission finds that the information that service providers submit as part of their FCC Form 655 filing requirement is duplicative of information that wireless device manufacturers are already providing and will continue to provide to the Commission in their annual filings. By eliminating the FCC
48. While the Commission is eliminating a reporting requirement that all service providers argue should be eliminated, the Commission's new light-touch regulatory approach will continue to allow it to fulfill its responsibilities and objectives for wireless hearing aid compatibility. Service providers will continue to have to meet relevant hearing aid compatibility handset benchmarks and comply with product labeling and disclosure requirements. Further, service providers will have to continue to post certain information about their handsets on their publicly accessible websites along with certain information that they previously included as part of their FCC Form 655 annual reporting requirement. The Commission is not prescribing a standard template for posting this information on their websites and the Commission finds that service providers may rely on information that device manufacturers included in their FCC Form 655 filings as a safe harbor. The record in this proceeding shows that some service providers already post some of this information to their websites and both large and small service providers support the use of web posting as an alternative to the FCC Form 655 filing requirement. Service providers will also be required to retain information regarding past handsets offered.
49. In addition to web posting and data retention requirements, the Commission is requiring all service providers to certify whether or not the provider is in full compliance with the Commission's hearing aid compatibility provisions and if they are not, a requirement to explain why. This requirement includes a short statement and information about who is making the certification. Commenters in the proceeding supported replacing the annual filing requirement with a certification requirement. The Commission does not anticipate that it will be difficult or burdensome for service providers to gather and post information on their website or to make the required certification. While the Commission is eliminating FCC Form 655 reporting requirements for all service providers, the Commission is not eliminating the requirement that they continue to meet applicable deployment benchmarks and maintain compliance with all other hearing aid compatibility provisions. Therefore, all service providers would likely need to maintain information demonstrating compliance with the rules in the normal course of business and posting this information to their websites and making the required certification should only impose a minimal additional incremental burden and, and, be substantially less than the burden associated with filing FCC Form 655 each year.
50. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its approach, which may include the following four alternatives (among others): “(1) the establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance and reporting requirements under the rule for such small entities; (3) the use of performance rather than design standards; and (4) an exemption from coverage of the rule, or any part thereof, for such small entities.”
51. The Commission considered but rejected more burdensome compliance requirements. For instance, the Commission considered retaining but streamlining the information that is collected in the FCC Form 655. The Commission found that this approach would only result in a minimal reduction of regulatory burdens for service providers. Given the passage of time and the current state of availability of information about handset hearing aid compatibility, the burden of collecting the information necessary to fill out the form and file it, the Commission found that even in a streamlined format the benefit of filing the form was not outweighed by any benefit to consumers or the Commission. The Commission determined that streamlining the form will only result in a minimal reduction of regulatory burden with no corresponding benefit to the public interest. As a result, the Commission rejected the solution of streamlining the form and continuing the requirement that service providers file the form on an annual basis.
52. The Commission also chose to make the elimination of the FCC Form 655 reporting requirement for service providers effective 30 days after publication of the rule in the
53. The Commission will send a copy of the Report and Order, including this FRFA, in a report 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 Report and Order and FRFA (or summaries thereof) also will be published in the
54. The requirements in revised section 20.19(e), (h) and (i) constitute new or modified collections subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. They will be submitted to the Office of Management and Budget (OMB) for review under section 3507(d) of the PRA. OMB, the general public, and other Federal agencies are invited to comment on the new information collection requirements contained in this proceeding. This document will be submitted to OMB for review under section 3507(d) of the PRA. In addition, the Commission notes that, pursuant to the Small Business Paperwork Relief Act of 2002, it previously sought, but did not receive, specific comment on how the Commission might further reduce the information collection burden for small business concerns with fewer than 25 employees. The Commission describes impacts that might affect small businesses, which includes more businesses with fewer than 25 employees, in the Final Regulatory Flexibility Analysis in Appendix C.
55. The Commission will include a copy of this Report and Order in a report to be sent to Congress and the Government Accountability Office
56. Accordingly,
57.
58.
59.
60.
Communications common carriers, Communications equipment, Radio.
For the reasons set forth in the preamble, part 20 of title 47 of the Code of Federal Regulations is amended as follows:
47 U.S.C. 151, 152(a), 154(i), 157, 160, 201, 214, 222, 251(e) 301, 302, 303, 303(b), 303(r), 307, 307(a), 309, 309(j)(3), 316, 316(a), 332, 610, 615, 615a, 615b, 615c, unless otherwise noted.
(c) * * *
(4) * * *
(ii)
(d) * * *
(4) * * *
(ii)
(e)
(h)
(2) Service providers must maintain on their website either:
(i) A link to a third-party website as designated by the Commission or Wireless Telecommunications Bureau with information regarding hearing aid-compatible and non-hearing aid-compatible handset models; or
(ii) A clearly marked list of hearing aid-compatible handset models that are no longer offered if the calendar month/year that model was last offered is within 24 months of the current calendar month/year and was last offered in January 2018 or later along with the information listed in paragraph (h)(1) of this section for each hearing aid-compatible handset.
(3) If the Wireless Telecommunications Bureau determines that the third-party website has been eliminated or is not updated in a timely manner, it may select another website or require service providers to comply with paragraph (h)(2)(ii) of this section.
(4) The information on the website must be updated within 30 days of any relevant changes, and any website pages containing information so updated must indicate the day on which the update occurred.
(5) Service providers must maintain internal records including the ratings, if applicable, of all hearing aid-compatible and non-hearing aid-compatible models no longer offered (if the calendar month/year that model was last offered is within 24 months of the current calendar month/year and was last offered in January 2018 or later); for models no longer offered (if the calendar month/year that model was last offered is within 24 months of the current calendar month/year), the calendar months and years each hearing aid-compatible and non-hearing aid-compatible model was first and last offered; and the marketing model name/number(s) and FCC ID number of each hearing aid-compatible and non-hearing aid-compatible model no longer offered (if the calendar month/year that model was last offered is within 24 months of
(i)
(3)
(i) The name of the signing executive and contact information;
(ii) The company(ies) covered by the certification;
(iii) The FCC Registration Number (FRN);
(iv) If the service provider is subject to paragraph (h) of this section, the website address of the page(s) containing the required information regarding handset models;
(v) The percentage of handsets offered that are hearing aid-compatible (providers will derive this percentage by determining the number of hearing aid-compatible handsets offered across all air interfaces during the year divided by the total number of handsets offered during the year); and
(vi) The following language:
I am a knowledgeable executive [of company x] regarding compliance with the Federal Communications Commission's wireless hearing aid compatibility requirements at a wireless service provider covered by those requirements.
I certify that the provider was [(in full compliance/not in full compliance)] [choose one] at all times during the applicable time period with the Commission's wireless hearing aid compatibility deployment benchmarks and all other relevant wireless hearing aid compatibility requirements.
The company represents and warrants, and I certify by this declaration under penalty of perjury pursuant to 47 CFR 1.16 that the above certification is consistent with 47 CFR 1.17, which requires truthful and accurate statements to the Commission. The company also acknowledges that false statements and misrepresentations to the Commission are punishable under Title 18 of the U.S. Code and may subject it to enforcement action pursuant to Sections 501 and 503 of the Act.
(vii) If the company selected that it was not in full compliance, an explanation of which wireless hearing aid compatibility requirements it was not in compliance with, when the non-compliance began and (if applicable) ended with respect to each requirement.
(4)
(m)
Federal Railroad Administration (FRA), Department of Transportation (DOT).
Final rule; stay of regulations.
On August 12, 2016, FRA published a final rule requiring commuter and intercity passenger railroads to develop and implement a system safety program (SSP) to improve the safety of their operations. FRA has stayed the SSP final rule's requirements until December 4, 2018. FRA is issuing this final rule to extend that stay until September 4, 2019.
Effective December 4, 2018, the stay of 49 CFR part 270 is extended until September 4, 2019.
Elizabeth A. Gross, Attorney, U.S. Department of Transportation, Federal Railroad Administration, Office of Chief Counsel; telephone: 202-493-1342; email:
On August 12, 2016, FRA published a final rule requiring commuter and intercity passenger railroads to develop and implement an SSP to improve the safety of their operations.
FRA's review included petitions for reconsideration of the SSP final rule (Petitions). Various rail labor organizations (Labor Organizations) filed a single joint petition.
On October 30, 2017, FRA met with the Passenger Safety Working Group and the System Safety Task Group of the Railroad Safety Advisory Committee (RSAC) to discuss the Petitions and comments received in response to the Petitions.
In response to draft rule text FRA presented for discussion during the RSAC meeting, the States indicated they would need an extended caucus to discuss. On March 16, 2018, the Executive Committee of the States for Passenger Rail Coalition (SPRC)
Given the request for a continued stay of the rule, the comment received supporting a stay, the lack of opposition to a stay in either the comments or at the public RSAC meeting, and FRA's interest in addressing the issues raised in the State petitions through notice and comment rulemaking prior to requiring full compliance with the SSP final rule, FRA finds notice and comment for this stay to be impracticable and incompatible with the forthcoming NPRM.
This final rule is a non-significant deregulatory action within the meaning of Executive Order 12866 and DOT policies and procedures.
In August 2016, FRA issued the System Safety Program final rule (2016 Final Rule) as part of its efforts to continuously improve rail safety and to satisfy the statutory mandate in sections 103 and 109 of the Rail Safety Improvement Act of 2008. The 2016 Final Rule requires passenger railroads to establish a program that systematically evaluates railroad safety risks and manages those risks with the goal of reducing the number and rates of railroad accidents, incidents, injuries, and fatalities. Paperwork requirements are the largest burden of the 2016 Final Rule.
FRA believes that this final rule, which will stay the requirements of the 2016 Final Rule until September 4, 2019, will reduce regulatory burden on the railroad industry. By staying the requirements of the 2016 Final Rule, railroads will realize a cost savings as railroads will not sustain any costs during the first nine months of this analysis. In addition, because this analysis discounts future costs and this final rule will move forward all costs by nine months, the present value costs of this stay will lower the present value cost of the SSP rulemaking. FRA estimates this cost savings to be approximately $255,928, at a 3-percent discount rate, and $246,360, at a 7-percent discount rate. The following table shows the 2016 Final Rule's total cost, delayed an additional nine months past the 2017 stay extension, the implementation date total costs, and the cost savings from the additional nine-month implementation date delay.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601
This final rule will affect passenger railroads, but will have a beneficial effect, lessening the burden on any small railroad.
“Small entity” is defined in 5 U.S.C. 601 as including a small business concern that is independently owned and operated, and is not dominant in its field of operation. The U.S. Small Business Administration (SBA) has authority to regulate issues related to small businesses, and stipulates in its size standards that a “small entity” in the railroad industry is a for profit “linehaul railroad” that has fewer than 1,500 employees, a “short line railroad” with fewer than 1,500 employees, or a “commuter rail system” with annual receipts of less than $15.0 million dollars.
For purposes of this analysis, this final rule will apply to 30 commuter or other short-haul passenger railroads and two intercity passenger railroads, the National Railroad Passenger Corporation (Amtrak) and the Alaska Railroad Corporation (ARC). Neither is considered a small entity. Amtrak serves populations well in excess of 50,000, and the ARC is owned by the State of Alaska, which has a population well in excess of 50,000.
Based on the definition of “small entity,” only one passenger railroad is considered a small entity: The Hawkeye Express (operated by the Iowa Northern Railway Company). As the final rule is not significant, this final rule will merely provide this entity with additional compliance time without introducing any additional burden.
Pursuant to the Regulatory Flexibility Act, 5 U.S.C. 601(b), the FRA Administrator hereby certifies that this final rule will not have a significant impact on a substantial number of small entities. A substantial number of small entities may be impacted by this regulation; however, any impact will be minimal and positive.
There are no new collection of information requirements contained in this final rule and, in accordance with the Paperwork Reduction Act of 1995, 44 U.S.C. 3501
Executive Order 13132, “Federalism” (64 FR 43255, Aug. 10, 1999), requires FRA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” are defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” Under Executive Order 13132, the agency may not issue a regulation with federalism implications that imposes substantial direct compliance costs and that is not required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by State and local governments or the agency consults with State and local government officials early in the process of developing the regulation. Where a regulation has federalism implications and preempts State law, the agency seeks to consult with State and local officials in the process of developing the regulation.
This final rule has been analyzed in accordance with the principles and criteria contained in Executive Order 13132. FRA has determined that this rule does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. In addition, FRA has determined that this rule does not impose substantial direct compliance costs on State and local governments. Therefore, the consultation and funding requirements of Executive Order 13132 do not apply.
FRA has evaluated this rule in accordance with its “Procedures for Considering Environmental Impacts” (FRA's Procedures) (64 FR 28545, May 26, 1999) as required by the National Environmental Policy Act (42 U.S.C. 4321
In accordance with section 4(c) and (e) of FRA's Procedures, the agency has further concluded that no extraordinary circumstances exist with respect to this regulation that might trigger the need for a more detailed environmental review. As a result, FRA finds that this rule is not a major Federal action significantly affecting the quality of the human environment.
Pursuant to section 201 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 2 U.S.C. 1531), each Federal agency shall, unless otherwise prohibited by law, assess the effects of Federal regulatory actions on State, local, and tribal governments, and the private sector (other than to the extent that such regulations incorporate requirements specifically set forth in law). Section 202 of the Act (2 U.S.C. 1532) further requires that before promulgating any general notice of proposed rulemaking that is likely to result in the promulgation of any rule that includes any Federal mandate that may result in expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any 1 year, and before promulgating any final rule for which a general notice of proposed rulemaking was published, the agency shall prepare a written statement detailing the effect on State, local, and tribal governments and the private sector. This final rule will not result in such an expenditure, and thus preparation of such a statement is not required.
Executive Order 13211 requires Federal agencies to prepare a Statement of Energy Effects for any “significant energy action.” 66 FR 28355 (May 22, 2001). FRA has evaluated this rule in accordance with Executive Order 13211 and has determined that this regulatory action is not a “significant energy action” within the meaning of Executive Order 13211.
Executive Order 13783, “Promoting Energy Independence and Economic Growth,” requires Federal agencies to review regulations to determine whether they potentially burden the development or use of domestically produced energy resources, with particular attention to oil, natural gas, coal, and nuclear energy resources.
Penalties, Railroad safety, Reporting and recordkeeping requirements, System safety.
49 U.S.C. 20103, 20106-20107, 20118-20119, 20156, 21301, 21304, 21311; 28 U.S.C. 2461, note; and 49 CFR 1.89.
Issued in Washington, DC.
Office of the Comptroller of the Currency, Treasury (OCC); Board of Governors of the Federal Reserve System (Board); and Federal Deposit Insurance Corporation (FDIC).
Notice of proposed rulemaking and request for comment.
The OCC, Board, and FDIC (collectively, the agencies) are inviting comment on a proposed rule to amend the agencies' regulations requiring appraisals for certain real estate-related transactions. The proposed rule would increase the threshold level at or below which appraisals would not be required for residential real estate-related transactions from $250,000 to $400,000. Consistent with the requirement for other transactions that fall below applicable thresholds, regulated institutions would be required to obtain an evaluation of the real property collateral that is consistent with safe and sound banking practices. The proposed rule would make conforming changes to add transactions secured by residential property in rural areas that have been exempted from the agencies' appraisal requirement pursuant to the Economic Growth, Regulatory Relief and Consumer Protection Act to the list of exempt transactions. The proposed rule would require evaluations for these exempt transactions. Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the proposed rule would amend the agencies' appraisal regulations to require regulated institutions to subject appraisals for federally related transactions to appropriate review for compliance with the Uniform Standards of Professional Appraisal Practice.
Comments must be received by February 5, 2019.
Interested parties are encouraged to submit written comments jointly to all of the agencies. Commenters should use the title “Real Estate Appraisals” to facilitate the organization and distribution of comments among the agencies. Interested parties are invited to submit written comments to:
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You may review comments and other related materials that pertain to this rulemaking action by any of the following methods:
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All public comments will be made available on the Board's website at
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The agencies are inviting comment on a proposal to increase the threshold level at or below which appraisals would not be required for residential real estate-related transactions from $250,000 to $400,000. The proposal would continue to require evaluations that are consistent with safe and sound business practices for transactions exempted by the increased threshold. Additionally, the proposal would require regulated institutions to obtain evaluations for transactions secured by residential property in rural areas that have been exempted from the agencies' appraisal requirement pursuant to the Economic Growth, Regulatory Relief and Consumer Protection Act
The proposal to raise the residential threshold is based on consideration of available information on real estate transactions secured by a single 1-to-4 family residential property (residential real estate transactions), supervisory experience, and comments received from the public in connection with the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA)
The agencies have long recognized that the valuation information provided by appraisals and evaluations assists financial institutions in making informed lending decisions and mitigating risk. The agencies also recognize and support the role that appraisers play in helping to ensure a safe and sound real estate lending process. The agencies acknowledge as well that appraisals can provide protection to consumers by facilitating the informed use of credit and helping to ensure that the estimated value of the property supports the mortgage amount. However, the agencies also are aware that the cost and time of obtaining an appraisal can, in some cases, result in delays and higher expenses for both regulated institutions and consumers.
In addition, the agencies are proposing several conforming and technical amendments to their appraisal regulations. The agencies are also proposing to define a residential real estate transaction as a real estate transaction secured by a single 1-to-4 family residential property, which is consistent with current references to appraisals for residential real estate in the agencies' appraisal regulations and in Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (Title XI).
Further, the agencies are proposing to implement the appraisal review provision in Section 1473(e) of the Dodd-Frank Act,
Under Title XI, the agencies must receive BCFP concurrence that the proposed threshold level provides reasonable protection for consumers who purchase 1-to-4 unit single-family residences.
Title XI directs each Federal financial institutions regulatory agency
Title XI directs the agencies to prescribe appropriate standards for Title XI appraisals under the agencies' respective jurisdictions.
A federally related transaction
Title XI expressly authorizes the agencies to establish thresholds at or below which Title XI appraisals are not required if: (1) The agencies determine in writing that the threshold does not represent a threat to the safety and soundness of financial institutions; and (2) the agencies receive concurrence from the BCFP that such threshold level provides reasonable protection for consumers who purchase 1-to-4 unit single-family residences.
For real estate-related financial transactions at or below the applicable thresholds and for certain existing extensions of credit exempt from the agencies' appraisal requirement,
In preparing the proposed rule, the agencies conducted analyses using 2017 data reported under the Home Mortgage Disclosure Act (HMDA),
As described in further detail below, the agencies used the 2017 HMDA data
The agencies are proposing to increase the appraisal threshold for residential real estate transactions in an effort to reduce regulatory burden, while maintaining federal public policy interests in real estate-related transactions and the safety and soundness of regulated institutions. The agencies' appraisal regulations were identified as an opportunity to reduce regulatory burden by commenters to the EGRPRA process that concluded in early 2017. The agencies concluded in the joint EGRPRA report to Congress (EGRPRA Report)
In response to comments received during the EGRPRA process, the agencies published a Notice of Proposed Rulemaking to increase the CRE appraisal threshold (CRE NPR).
The comments received in the EGRPRA process and in response to the CRE NPR reflect different perspectives on the appraisal threshold for residential real estate transactions.
To consider the probable effect on burden reduction, the agencies assessed the potential impact of the proposed threshold increase on the entire mortgage market and on regulated transactions.
After considering all of the comments and further analysis by the agencies, the agencies are proposing an increase to the appraisal threshold for residential real estate transactions in order to reduce regulatory burden, particularly in rural areas, in a manner that is safe and sound and consistent with consumer protection.
As described in the CRE NPR, available information suggests that evaluations for CRE properties typically cost significantly less than Title XI appraisals for the same properties.
The United States Department of Veterans Affairs' appraisal fee schedule
The agencies also considered the amount of time associated with performing and reviewing appraisals and evaluations. There may be less delay in finding appropriate personnel to perform an evaluation than to perform a Title XI appraisal, particularly in rural areas. As described in the Guidelines, financial institutions should also review the property valuation prior to entering into the transaction.
In considering the aggregate effect of this proposed rule, the agencies considered the number of affected transactions. As discussed in the
One consideration in assessing consumer protection issues related to this rulemaking is that the agencies have long required evaluations in lieu of appraisals for many transactions, including those transactions exempted by an appraisal threshold. An evaluation must be consistent with safe and sound banking practices
Another consideration is the availability of property valuation information to consumers in residential real estate transactions. In this regard, the Dodd-Frank Act amended the Equal Credit Opportunity Act
The agencies also note that consumers have significantly more access to information relevant to residential real estate values than when the appraisal threshold was last increased in 1994. For example, property records are often available to the public through the internet. These records may include not only a particular property's tax assessed value, but also the property's historical sale activity.
At the same time, the agencies recognize that these options might not be readily available to or used by some consumers, and that appraisals provide more property information to a consumer than an evaluation. Given that evaluations are not required to be in a standard form and specific content is not mandated, it is also possible that some evaluations might be more difficult for consumers to understand or lack information about the property typically included in an appraisal that could be useful to a consumer.
Another consideration is that under federal law, individuals performing evaluations are not required to have professional credentials for valuing real estate. The agencies acknowledge that expanding the appraisal exemption for more residential transactions might therefore raise concerns about the accountability of individuals performing evaluations and could limit the options for recourse available to consumers. For example, the Dodd-Frank Act required establishment of a national hotline for complaints against state-certified and state-licensed appraisers,
A further consideration is that appraisal and valuation rules put into place to protect consumers would remain unchanged. As noted, under ECOA, creditors must provide to consumers in first-lien, dwelling-secured transactions free copies of valuations, including evaluations, in connection with their applications for credit.
Further, the interim final rule on valuation independence (IFR on Valuation Independence), also implementing TILA, applies to all types of valuations (other than valuations produced solely using an automated model or system) used in connection with a consumer-purpose transaction secured by a consumer's principal dwelling.
In the Evaluations Advisory, the agencies also observed that evaluations may be completed by a bank employee or by a third party.
Finally, if the proportion of residential mortgage transactions subject to the Title XI appraisal requirements increases in the future, the proposed threshold increase could exempt a larger percentage of the overall market of residential mortgage originations, which may have an effect on consumer protection. As noted above, loans that are wholly or partially insured or guaranteed by, or eligible for sale to, a U.S. government agency or U.S. government-sponsored agency, are not subject to the agencies' appraisal requirement.
The 2017 HMDA data show that the proposed rule would provide significant burden relief in rural areas. The agencies estimate that increasing the appraisal threshold to $400,000 would potentially increase the share of exempt transactions from 82 percent to 91 percent of the number and from 43 percent to 58 percent of the dollar volume of regulated transactions that were secured by residential property located in a rural area.
The agencies propose to increase the appraisal threshold from $250,000 to $400,000 for residential real estate transactions. In determining the level of the proposed increase, the agencies considered the comments received through the EGRPRA process and in response to the CRE NPR, as well as a variety of house price and inflation indices. In particular, the agencies analyzed the Standard & Poor's Case-Shiller Home Price Index (Case-Shiller Index)
These house price indices reflect that prices for residential real estate have increased since 1994. Table 1 shows the expected sales price at about its highest amount in 2006, at about its lowest amount in 2011, and about its current amount in 2018 relative to a residential property that sold for $250,000 in 1994 for each index.
In proposing to raise the appraisal threshold for residential real estate transactions to $400,000, the agencies are approximating housing prices on an indexed basis at the low point of the most recent cycle, which generally occurred in 2011. For example, the Case-Shiller Index reflects that home prices fell from about $578,000 in December 2006 to their lowest point of about $445,000 in December 2011. The FHFA Index also reflects a similar decline in housing prices, which fell from about $512,000 to $415,000 during this same time period. This more conservative approach takes into consideration the potential risk exposure to institutions that engage in residential real estate lending. In addition, the increased appraisal threshold in the proposed rule is consistent with general measures of inflation across the economy reflected in the CPI since 1994, when the current appraisal threshold of $250,000 was set.
Under Title XI, in setting a threshold at or below which an appraisal performed by a state certified or state licensed appraiser is not required, the agencies must determine in writing that such a threshold level does not pose a threat to the safety and soundness of financial institutions.
Based on supervisory experience and analysis of material loss reviews,
Similar concerns are detailed in the material loss review for Downey Savings and Loan,
In its final report, the National Commission on the Causes of the Financial and Economic Crisis in the United States documents the pressure appraisers were under from mortgage lenders, brokers, and others with an interest in generating loan volume, to meet target values in order to complete loan transactions.
The agencies do not have data that show that raising the appraisal threshold would result in increased loss rates. The agencies note that loss rates did not increase in the 13 years after the threshold was raised from $100,000 to $250,000 in 1994 and returned to more historical levels in 2014 after the implementation of more prudent underwriting practices in 2009. The agencies also note that a majority of residential real estate transactions are sold to the GSEs or otherwise insured or guaranteed by a U.S. government agency, which reduces the impact of the agencies' appraisal requirement to an estimated three percent of all first-lien, single-family mortgage transactions in the United States, based on 2017 HMDA data.
The agencies assessed trends in the loss rate experience of residential real estate transactions. While the agencies do not regularly collect data on rates of loss for residential real estate by the size of loans, they do collect net charge-off data for residential real estate loans on the Call Report. The agencies considered aggregate net charge-off rates for residential real estate loans in determining whether the threshold would pose a threat to the safety and soundness of financial institutions.
To evaluate the impact of residential real estate transactions on the safety and soundness of the banking system, the agencies compared the peak net charge-off rates from 1991 to 2018, which includes two recessionary periods. The net charge-off rate for residential real estate transactions did not increase after the increase in the appraisal threshold from $100,000 to $250,000 in June 1994, which indicates that the 1994 threshold increase did not have a negative impact on the safety and soundness of regulated institutions. As discussed above, housing prices have increased substantially since the last increase of this threshold, and the agencies are proposing an increase close to the lower bound of the estimate of current value of a residential property that sold for $250,000 in 1994.
The historical loss information in the Call Reports also reflects that the net charge-off rate for residential real estate transactions did not increase during and after the recession in 2001 through year-end 2007. During this timeframe, the net charge-off rate ranged from 8 basis points to 30 basis points. However, the net charge-off rate for residential real estate transactions increased significantly from 2008 through 2013, which was during and immediately after the recent recession, ranging from 63 basis points to 204 basis points. This data suggests that the loss experience associated with residential real estate loans generally stayed at a relatively consistent low rate except during the most recent crisis.
To evaluate whether the loss experience on residential real estate loans had an impact on the safety and soundness of regulated institutions of varying sizes, the agencies examined peak charge-off rates on such loans for all regulated institutions, as well as those with total assets under one billion dollars, total assets between one billion dollars and ten billion dollars, and total assets of more than ten billion dollars. The analysis showed that aggregate peak net charge-off rates for residential real estate loans over the most recent cycle were generally much worse than those recorded before the prior cycle, with larger regulated institutions experiencing a higher loan loss rate than regulated institutions with less than $1 billion in total assets. However, the loss rates declined to historical levels for all regulated institutions in 2014, indicating that the increase in the appraisal threshold in 1994 was not a significant contributing factor to the safety and soundness of regulated institutions, regardless of their size, during the recent recession.
The agencies examined the 2017 HMDA data, as explained above, to estimate the number and dollar volume of residential real estate transactions covered by the existing and proposed residential appraisal thresholds. An analysis using the 2017 HMDA data shows that transactions subject to the agencies' current appraisal requirement continue to comprise only a small portion of all reported mortgage originations. The agencies estimate that approximately 91 percent of all mortgages originated in the United States are not subject to the agencies' appraisal requirement due to their not being originated by regulated institutions, being sold to the GSEs or otherwise insured or guaranteed by a U.S. government agency, or having transaction amounts at or below the current $250,000 threshold.
Table 2 shows the aggregate number and dollar volume of regulated transactions in 2017 for loans that would have been exempted under the current threshold, that would be newly exempted under the proposed threshold increase, the totals exempted under the proposed threshold increase, and the totals not exempted by the proposed threshold increase.
As
When the threshold was raised in 1994, the agencies estimated that the aggregate dollar volume of exempted transactions due to the threshold increase was 85 percent of all new home sales, and 82 percent of all existing home sales.
The agencies note that evaluations consistent with safe and sound banking practices would continue to be required for residential real estate transactions exempted by the increased threshold. Evaluations prepared by qualified, competent, and independent individuals who provide appropriate supporting information can provide an estimate of market value that regulated institutions and consumers can consider. The agencies have issued guidance to assist regulated institutions in obtaining evaluations.
As discussed above, the Title XI appraisal regulations require regulated institutions to obtain evaluations for four categories of real estate-related financial transactions that the agencies have determined do not require a Title XI appraisal, including residential real estate transactions at or below the current $250,000 threshold. Under the proposal, residential real estate transactions exempted by the proposed increase to a $400,000 threshold would be required to obtain appropriate evaluations that are consistent with safe and sound banking practices.
The Guidelines describe the transactions for which financial institutions are required to obtain an evaluation and advise that institutions should develop policies and procedures for identifying when to obtain appraisals for such transactions.
The Guidelines provide guidance on obtaining appropriate evaluations that are consistent with safe and sound banking practices.
The proposed rule would amend the agencies' appraisal regulations to reflect the rural residential appraisal exemption in the list of transactions that are exempt from the agencies' appraisal requirement. The amendment to this provision would be a technical change that would not alter any substantive requirement, because the statutory provision is self-effectuating. In addition, the proposed rule would require evaluations for transactions that are exempt from the agencies' appraisal requirement under the rural residential appraisal exemption. The agencies are proposing that financial institutions obtain evaluations for these transactions that will be retained in their portfolios, because evaluations protect the safety and soundness of financial institutions. Since the early 1990's, the agencies' appraisal regulations have required that regulated institutions obtain evaluations for certain other exempt residential real estate transactions (which in practice are generally retained in their portfolios). Requiring evaluations for transactions exempted by the rural residential appraisal exemption reflects the agencies' long-standing view that safety and soundness principles require institutions to obtain an understanding of the value of real estate collateral underlying most real estate-related transactions they originate. As discussed earlier, evaluations should contain sufficient information and analysis to support the financial institution's decision to engage in the transaction and are important to safety and soundness.
The agencies invite comment on all aspects of the proposed rulemaking.
The agencies propose to make all provisions of the rule, other than the evaluation requirement for transactions exempted by the rural residential appraisal exemption
The OCC currently supervises 1,260 institutions (commercial banks, trust companies, federal savings associations, and branches or agencies of foreign banks) of which approximately 886 are small entities.
The proposal to increase the residential threshold may result in cost savings for impacted institutions. For transactions at or below the proposed threshold, regulated institutions would be given the option to obtain an evaluation of the property instead of an appraisal. While the cost of obtaining appraisals and evaluations can vary and may be passed on to borrowers, evaluations generally cost less to perform than appraisals, given that evaluations are not required to comply with USPAP. In addition to costing less than an appraisal, evaluations may require less time to review than appraisals because evaluations typically contain less detailed information than appraisals.
In addition to savings relating to the relative costs associated with appraisals and evaluations, the proposed rule may also reduce burden for institutions in areas with appraiser shortages. In the course of the agencies' most recent Economic Growth and Regulatory Paperwork Reduction Act review, commenters contended that it can be difficult to find state certified and licensed appraisers, particularly in rural areas, which results in delays in completing transactions and sometimes increased costs for appraisals.
The proposal to require institutions to obtain an evaluation for transactions that qualify for the rural residential appraisal exemption could be viewed as a new mandate. However, because the proposed rule would increase the residential threshold to $400,000 for all residential transactions, institutions would not need to comply with the detailed requirements of the rural residential appraisal exemption in order for such transactions to be exempt from the agencies' appraisal requirement. Therefore, complying with the evaluation requirement for below-threshold transactions would be significantly less burdensome than complying with the requirements of the rural residential appraisal exemption.
Because the proposal does not contain any new recordkeeping, reporting, or significant compliance requirements, the OCC anticipates that costs associated with the proposal, if any, will be
The Board requests public comment on all aspects of this analysis.
As discussed in sections I and II of the
As discussed above, Title XI explicitly authorizes the agencies to establish a threshold level at or below which a Title XI appraisal is not required if the agencies determine in writing that the threshold does not represent a threat to the safety and soundness of financial institutions and receive concurrence from the BCFP that such threshold level provides reasonable protection for consumers who purchase 1-to-4 unit single-family residences.
The Board's proposed rule would apply to state chartered banks that are members of the Federal Reserve System (state member banks), as well as bank holding companies and nonbank subsidiaries of bank holding companies that engage in lending. There are approximately 607 state member banks and 77 nonbank lenders regulated by the Board that meet the SBA definition of small entities and would be subject to the proposed rule. Data currently available to the Board do not allow for a precise estimate of the number of small entities that would be affected by the proposed threshold increase and by the rural residential appraisal exemption, because the number of small entities that would engage in residential real estate transactions qualifying for these exemptions is unknown. The requirement that Title XI appraisals be subject to appropriate review would apply to all small entities regulated by the Board that engage in real estate lending; however, the Board does not believe this requirement would impose a significant additional burden on such institutions.
For the small entities that are affected by the threshold increase, the proposed rule would reduce reporting, recordkeeping, and other compliance requirements. For transactions at or below the proposed threshold, regulated institutions would be required to obtain an evaluation of the property instead of an appraisal. Unlike appraisals, evaluations may be performed by a lender's own employees and are not required to comply with USPAP. As previously discussed, the cost of obtaining appraisals and evaluations can vary and may be passed on to borrowers. Because of this variation in cost and practice, it is not possible to precisely determine the cost savings that regulated institutions will experience due to the decreased cost of obtaining an evaluation rather than an appraisal. However, based on information available to the Board, small entities and borrowers engaging in residential real estate transactions could experience significant cost reductions.
In addition to costing less to obtain than appraisals, evaluations also require less time to review than appraisals because they contain less detailed information. As previously discussed, the agencies estimate that, on average, the review process for an evaluation would take substantially less time than the review process for an appraisal. Thus, for affected transactions, the proposed rule could reduce the time required for employees to review transactions, potentially reducing delay and increasing cost savings of obtaining an evaluation instead of an appraisal.
The Board estimates that the number of residential real estate transactions exempted by the threshold would increase by approximately 29 percent under the proposed rule.
With respect to transactions that qualify for the rural residential appraisal exemption, the proposal to require that institutions obtain an evaluation could be viewed as an additional burden. However, because the agencies also proposed to increase the residential threshold to $400,000 for all residential transactions, regulated institutions, including small entities, would not need to comply with the detailed requirements of the rural exemption in order for such transactions to be exempt from the appraisal requirements. The Board believes that complying with the requirements of the threshold exemption would be significantly less burdensome than complying with the requirements of the rural residential threshold exemption, even if no evaluation was required for the latter.
Because the agencies' appraisal requirements already require that Title XI appraisals be performed in compliance with USPAP, the proposed requirement that such appraisals be subject to appropriate review for compliance with USPAP is not expected to impose a significant additional burden on regulated institutions, including small entities. Additionally, due to the proposed threshold increase, fewer transactions would be subject to the agencies' appraisal requirement and, thus, the review requirement.
Overall, the Board expects that the proposed rule may provide a significant burden reduction for small entities and borrowers that engage in real estate transactions.
The Board has not identified any federal statutes or regulations that would duplicate, overlap, or conflict with the proposed revisions.
The agencies considered additional burden-reducing measures, such as increasing the residential threshold to a higher dollar amount, but have not proposed such a measure at this time for the reasons previously discussed. For transactions exempted from the Title XI appraisal requirements, the proposed rule would require regulated institutions to obtain an evaluation. The agencies are proposing this provision to protect the safety and soundness of financial institutions and to protect consumers, which is a legal prerequisite to the establishment of any threshold. The Board is not aware of any other significant alternatives that would reduce burden on small entities without sacrificing the safety and soundness of financial institutions or consumer protections.
The proposed rule is likely to reduce loan valuation-related costs for small, covered institutions. By increasing the residential real estate appraisal threshold, the proposed rule is expected to increase the number of residential real estate loans eligible for an evaluation, instead of an appraisal. The FDIC estimates that, on average, the review process for an appraisal would take approximately forty minutes, but only ten minutes, on average, for an evaluation. Therefore, the FDIC estimates that the proposed rule would reduce loan valuation-related costs for small, FDIC-supervised institutions by 30 minutes per transaction. According to the 2017 HMDA data, approximately eight percent of residential real estate loans originated by FDIC-insured institutions and affiliated institutions are subject to the Title XI appraisal requirements and have loan amounts between $250,000 and $400,000. Additionally, of the small, FDIC-supervised institutions that reported residential loan originations, the average number of originations per year was approximately 116. Using the average number of originations and the percent exempt from the rule, approximately an additional nine originations per year per small, FDIC-supervised institution may have an evaluation in lieu of an appraisal. Thus, by using evaluations instead of appraisals, a small, FDIC-supervised institution may reduce its total annual residential real estate transaction valuation-related labor hours by 4.5 hours. The FDIC estimates this will result in a potential cost savings for small, FDIC-supervised institutions of $321.75 per year, per institution.
The proposed rule is likely to reduce residential real estate transaction valuation-related costs for the parties involved. By increasing the residential real estate appraisal threshold, the proposed rule is expected to increase the number of residential real estate loans eligible for an evaluation, instead of an appraisal. As discussed previously, the United States Department of Veterans Affairs' appraisal fee schedule
The proposed rule is not likely to have any substantive effects on the safety and soundness of small, FDIC-supervised institutions. As discussed previously, historical loss information in the Call Reports reflect that the net charge-off rate for residential transactions did not increase after the increase in the appraisal threshold from $100,000 to $250,000 in June 1994, or during and after the recession in 2001 through year-end 2007. During this timeframe, the net charge-off rate ranged from 8 basis points to 30 basis points. However, the net charge-off rate for residential transactions increased significantly from 2008-2013, which was during and immediately after the recent recession, ranging from 63 basis points to 204 basis points. The increase in the net charge-off rate for loans secured by single 1-to-4 family residential real estate during the recent recession has been attributed to a number of factors, such as a weakening economy, declining home values, overstating the market value of homes in appraisal reports, increasing demand for residential mortgage backed securities, relaxing underwriting practices, and expanding the use of higher risk loan products. Therefore, data related to net charge-offs of loans secured by 1-to-4 family residential real estate at financial institutions suggests that an increase in the threshold would not pose a safety and soundness risk. The FDIC believes the proposed rule is unlikely to pose significant safety and soundness risks for small, FDIC-supervised entities.
The proposed rule is likely to pose relatively larger residential real estate valuation-related transaction cost reductions for rural buyers and small, FDIC-supervised institutions lending in rural areas, however these effects are difficult to accurately estimate. Home prices in rural areas are generally lower than those in suburban and urban areas. Therefore, residential real estate transactions in rural areas are likely to utilize evaluations more than appraisals, under the proposed rule. Additionally, there may be less delay in finding qualified personnel to perform an evaluation than to perform a Title XI appraisal, particularly in rural areas.
As described in the Guidelines, financial institutions should review the property valuation prior to entering into the transaction. As described previously, the FDIC estimates that financial institutions require less time to review evaluations than to review appraisals, because evaluations contain less detailed information. However, the
Finally, by potentially reducing valuation-related costs associated with residential real estate transactions for properties greater than $250,000 but not more than $400,000, the proposed rule could result in a marginal increase in lending activity of small, FDIC-supervised institutions for properties of this type. However, the FDIC assumes that this effect is likely to be negligible given that the potential cost savings of using an evaluation rather than an appraisal, represents between 0.05-0.15 percent of the median home price.
For the reasons described above and under section 605(b) of the RFA, the FDIC certifies that the proposed rule will not have a significant economic impact on a substantial number of small entities.
The FDIC invites comments on all aspects of the supporting information provided in this RFA section. In particular, would this rule have any significant effects on small entities that the FDIC has not identified?
In accordance with the requirements of the Paperwork Reduction Act of 1995 (PRA),
Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act (RCDRIA),
The agencies recognize that the requirement to obtain an evaluation for transactions exempted by the rural residential appraisal exemption
Otherwise, the proposed rule would reduce burden and would not impose any reporting, disclosure, or other new requirements on IDIs. For transactions exempted from the agencies' appraisal requirement by the proposed rule (
Because delaying the effective date of the proposed rule's threshold increase is not required and would serve no purpose, the agencies propose to make the threshold increase and all other provisions of the proposed rule, other than the evaluation requirement for transactions exempt under 103 and the appraisal review provision, effective on the first day after publication of the final rule in the
The agencies note that comment on these matters has been solicited in the
Section 722 of the Gramm-Leach-Bliley Act
• Have the agencies organized the material to suit your needs? If not, how could they present the proposed rule more clearly?
• Are the requirements in the proposed rule clearly stated? If not, how could the proposed rules be more clearly stated?
• Do the regulations contain technical language or jargon that is not clear? If so, which language requires clarification?
• Would a different format (grouping and order of sections, use of headings, paragraphing) make the regulation easier to understand? If so, what changes would achieve that?
• Would more, but shorter, sections be better? If so, which sections should be changed?
• What other changes can the agencies incorporate to make the regulation easier to understand?
The OCC has analyzed the proposed rule under the factors in the Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1532). Under this analysis, the OCC considered whether the proposed rule includes a Federal mandate that may result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year (adjusted annually for inflation). As discussed in the OCC's Regulatory Flexibility Act section, the costs associated with the proposed rule, if any, would be
Appraisal, Appraiser, Banks, Banking, Consumer protection, Credit, Mortgages, National banks, Reporting and recordkeeping requirements, Savings associations, Truth in lending.
Administrative practice and procedure, Banks, banking, Federal Reserve System, Capital planning, Holding companies, Reporting and recordkeeping requirements, Securities, Stress testing
Banks, banking, Mortgages, Reporting and recordkeeping requirements, Savings associations.
For the reasons set forth in the joint preamble, the OCC proposes to amend part 34 of chapter I of title 12 of the Code of Federal Regulations as follows:
12 U.S.C. 1, 25b, 29, 93a, 371, 1462a, 1463, 1464, 1465, 1701j-3, 1828(o), 3331
The revisions and addition read as set forth below.
(f) Complex appraisal for a residential real estate transaction means one in which the property to be appraised, the form of ownership, or market conditions are atypical.
(k) Residential real estate transaction means a real estate-related financial transaction that is secured by a single 1-to-4 family residential property.
The addition and revisions read as set forth below.
(a) * * *
(1) The transaction is a residential real estate transaction that has a transaction value of $400,000 or less;
(14) The transaction is exempted from the appraisal requirement pursuant to the rural residential exemption under 12 U.S.C. 3356.
(b)
(d) * * *
(3)
(i) The regulated institution may ask the licensed appraiser to complete the appraisal and have a certified appraiser approve and co-sign the appraisal; or
(ii) The institution may engage a certified appraiser to complete the appraisal.
The addition reads as set forth below.
For federally related transactions, all appraisals shall, at a minimum:
* * *
(c) Be subject to appropriate review for compliance with the Uniform Standards of Professional Appraisal Practice;
For the reasons set forth in the joint preamble, the Board amends part 225 of chapter II of title 12 of the Code of Federal Regulations as follows:
12 U.S.C. 1817(j)(13), 1818, 1828(o), 1831i, 1831p-1, 1843(c)(8), 1844(b), 1972(l), 3106, 3108, 3310, 3331
The revisions and addition read as set forth below.
(f) Complex appraisal for a residential real estate transaction means one in which the property to be appraised, the form of ownership, or market conditions are atypical.
(k) Residential real estate transaction means a real estate-related financial transaction that is secured by a single 1-to-4 family residential property.
The addition and revisions read as set forth below.
(a) * * *
(1) The transaction is a residential real estate transaction that has a transaction value of $400,000 or less;
(15) The transaction is exempted from the appraisal requirement pursuant to the rural residential exemption under 12 U.S.C. 3356.
(b)
(d) * * *
(3)
(i) The regulated institution may ask the licensed appraiser to complete the appraisal and have a certified appraiser approve and co-sign the appraisal; or
(ii) The institution may engage a certified appraiser to complete the appraisal.
The revisions and addition read as set forth below.
For federally related transactions, all appraisals shall, at a minimum:
* * *
(c) Be subject to appropriate review for compliance with the Uniform Standards of Professional Appraisal Practice;
For the reasons set forth in the joint preamble, the FDIC amends part 323 of chapter III of title 12 of the Code of Federal Regulations as follows:
12 U.S.C. 1818, 1819(a) (“Seventh” and “Tenth”), 1831p-1 and 3331
The revisions and addition read as set forth below.
(f) Complex appraisal for a residential real estate transaction means one in which the property to be appraised, the form of ownership, or market conditions are atypical.
(k) Residential real estate transaction means a real estate-related financial transaction that is secured by a single 1-to-4 family residential property.
The addition and revisions read as set forth below.
(a) * * *
(1) The transaction is a residential real estate transaction that has a transaction value of $400,000 or less;
(14) The transaction is exempted from the appraisal requirement pursuant to the rural residential exemption under 12 U.S.C. 3356.
(b)
(d) * * *
(3)
(i) The regulated institution may ask the licensed appraiser to complete the appraisal and have a certified appraiser approve and co-sign the appraisal; or
(ii) The institution may engage a certified appraiser to complete the appraisal.
The addition reads as set forth below.
For federally related transactions, all appraisals shall, at a minimum:
* * *
(c) Be subject to appropriate review for compliance with the Uniform Standards of Professional Appraisal Practice;
By order of the Board of Governors of the Federal Reserve System.
By order of the Board of Directors.
Food and Drug Administration, HHS.
Proposed rule.
The Food and Drug Administration (FDA) proposes to establish requirements for the medical device De Novo classification process under the Federal Food, Drug, and Cosmetic Act (FD&C Act). The proposed requirements establish procedures and criteria related to requests for De Novo classification (“De Novo request”). These requirements are intended to ensure the most appropriate classification of devices consistent with the protection of the public health and the statutory scheme for device regulation, as well as to limit the unnecessary expenditure of FDA and industry resources that may occur if devices for which general controls or general and special controls provide a reasonable assurance of safety and effectiveness are subject to premarket approval. The proposed rule, if finalized, would implement the De Novo classification process under the FD&C Act, as enacted by the Food and Drug Administration Modernization Act of 1997 and modified by the Food and Drug Administration Safety and Innovation Act and the 21st Century Cures Act.
Submit either electronic or written comments on the proposed rule by March 7, 2019. Submit comments on information collection issues under the Paperwork Reduction Act of 1995 by January 7, 2019.
You may submit comments as follows. Please note that late, untimely filed comments will not be considered. Electronic comments must be submitted on or before March 7, 2019. The
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• For written/paper comments submitted to the Dockets Management Staff, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
•
Submit comments on information collection issues to the Office of Management and Budget (OMB) in the following ways:
• Fax to the Office of Information and Regulatory Affairs, OMB, Attn: FDA Desk Officer, Fax: 202-395-7285, or email to
Sergio de del Castillo, Center for Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Rm. 1538, Silver Spring, MD 20993, 301-796- 6419.
This proposed rule implements the medical device De Novo classification process under the FD&C Act (section 513(f)(2) (21 U.S.C. 360c(f)(2)), which provides a pathway for certain new types of devices to obtain marketing authorization as class I or class II devices, rather than remaining automatically designated as a class III device which would require premarket approval under the postamendments device classification section of the FD&C Act (section 513(f)(1) (21 U.S.C. 360c(f)(1)).
The De Novo classification process is intended to provide an efficient pathway to ensure the most appropriate classification of a device consistent with the protection of the public health and the statutory scheme for device regulation.
When FDA classifies a device type as class I or II via the De Novo classification process, other manufacturers do not necessarily have to submit a De Novo request or premarket approval application (PMA) in order to legally market a device of the same type. Instead, manufacturers can use the less burdensome pathway of premarket notification (section 510(k) of the FD&C Act (21 U.S.C. 360(k)), when applicable, to legally market their device, because the device that was the subject of the original De Novo request can serve as a predicate device for a substantial equivalence determination.
If this rule is finalized as proposed, it will establish procedures and criteria for the submission and withdrawal of a De Novo request. It would also establish procedures and criteria for FDA to accept, review, grant and/or decline a De Novo request. The proposed rule provides that:
• A person may submit a De Novo request after submitting a 510(k) and receiving a not substantially equivalent (NSE) determination.
• A person may also submit a De Novo request without first submitting a 510(k), if the person determines that there is no legally marketed device upon which to base a determination of substantial equivalence (SE).
• FDA will classify devices according to the classification criteria in the FD&C Act. FDA classifies devices into class I (general controls) if there is information showing that the general controls of the FD&C Act are sufficient to reasonably assure safety and effectiveness; into class II (special controls), if general controls, by themselves, are insufficient to provide reasonable assurance of safety and effectiveness, but there is sufficient information to establish special controls to provide such assurance; and into class III (premarket approval), if there is insufficient information to support classifying a device into class I or class II and the device is a life-sustaining or life-supporting device or is for a use which is of substantial importance in preventing impairment of human health or presents a potential unreasonable risk of illness or injury.
• Devices will be classified by FDA by written order.
• A De Novo request includes administrative information, regulatory history, device description, classification summary information, benefits and risks of device use, and performance data to demonstrate reasonable assurance of safety and effectiveness.
• FDA may refuse to accept a De Novo request that is ineligible or is incomplete on its face.
• After a De Novo request is accepted, FDA will begin a substantive review of the De Novo request that may result in either FDA requesting additional information, issuing an order granting the request, or declining the De Novo request.
• FDA may decline a De Novo request if, among other things, the device is ineligible or insufficient information is provided to support De Novo classification.
The proposed rule also describes our practices for the conditions under which the confidentiality of a De Novo request is maintained.
FDA is issuing this rule under the De Novo classification section of the FD&C Act, the device classification section of the FD&C Act, and the general rulemaking section of the FD&C Act. (See section 513(f)(2), section 513(a)(1), and section 701(a) of the FD&C Act (21 U.S.C. 371(a).)
The proposed rule would clarify and make more efficient the De Novo classification process for certain medical devices to obtain marketing authorization as class I or class II devices, rather than remaining automatically designated as class III devices under the FD&C Act. A more transparent De Novo classification process would improve the efficiency of obtaining marketing authorization for certain novel medical devices. Over 10 years, the annualized cost estimates
The De Novo classification process provides a pathway to ensure the most appropriate classification of a device consistent with the protection of the public health and the statutory scheme for device regulation. This pathway is intended to limit unnecessary expenditure of FDA and industry resources that may occur if devices for which general controls or general and special controls provide a reasonable assurance of safety and effectiveness are subject to a PMA due to a lack of a predicate.
When FDA classifies a device type as class I or II via the De Novo classification pathway, other manufacturers do not have to submit a De Novo request or PMA in order to market the same device type, unless the device has a new intended use or technological characteristics that raise different questions of safety or effectiveness. Instead, manufacturers can use the less burdensome 510(k) pathway, when applicable, to market their device, because the device that was the subject of the original De Novo classification can serve as a predicate device.
On October 30, 2017, FDA issued a final guidance (Ref. 1) to provide recommendations on the process for the submission and review of a De Novo request. The guidance provides recommendations for interactions with FDA related to the De Novo classification process, including what information to submit when seeking a path to market via the De Novo classification process. Nevertheless, some De Novo requests lack crucial data or other information rendering the requests incomplete and requiring additional reviews.
To enhance regulatory clarity and predictability, FDA is also conducting this rulemaking. We believe it will, when finalized, provide a regulatory framework that sets clear standards, expectations and processes for De Novo classification. The statutory language on the content of De Novo requests is vague regarding what specific information is expected from the requester. With codified minimum content requirements, industry will be better able to anticipate what is necessary for successful De Novo classification, and FDA staff will have clear standards for the content and process for De Novo classification. This may also reduce the number of questions raised by FDA during the review of the De Novo request and may reduce the total review time needed to render a final decision. It is important to have enforceable content requirements for De Novo requests as well as additional clarity regarding FDA's review and ultimate decision on a De Novo request. A regulation will allow FDA to communicate minimum content requirements, which will thereby give FDA the ability to triage inadequate De Novo requests by refusing to accept such De Novo requests.
The FD&C Act establishes a comprehensive system for the regulation of medical devices intended for human use. The FD&C Act establishes three categories (classes) of medical devices based on the extent of the regulatory controls necessary and sufficient to provide reasonable assurance of safety and effectiveness of the device. The three categories of devices are class I (general controls), class II (special controls), and class III (premarket approval).
FDA refers to devices that were not in commercial distribution before May 28, 1976, the enactment date of the Medical Device Amendments of 1976, as “postamendments” devices. Postamendments devices are classified into class III “automatically” or “statutorily.” (Section 513(f)(1) of the FD&C Act.) These devices are automatically designated as class III devices and require premarket approval, unless: (1) FDA issues an order classifying the device into class I or II; (2) FDA reclassifies the device into class I or II; or (3) FDA issues an order finding the device to be SE to a predicate device that does not require premarket approval. Under this third option, FDA determines whether a postamendments device is SE to a previously cleared device (predicate device) by means of its 510(k) procedures (section 510(k) of the FD&C Act; 21 CFR part 807). Legally marketed devices that may serve as a predicate device include: A device that has been cleared through the 510(k) process, including a device that is not currently being marketed; a device that was legally marketed prior to May 28, 1976 (“preamendments device”) for which a PMA is not required; a device that has been reclassified from class III into class II or I; or a device that by
In 1997, Congress enacted a new De Novo classification pathway. (Section 207 of the Food and Drug Administration Modernization Act of 1997 (Pub. L. 105-115)). Congress included this new pathway to limit unnecessary expenditure of FDA and industry resources that may occur if devices for which general controls or general and special controls would provide a reasonable assurance of safety and effectiveness were, nevertheless, subject to premarket approval by operation of law because a predicate device could not be identified. In 2012, Congress streamlined the De Novo classification process by providing that FDA may classify certain medical devices under the De Novo classification process without first issuing a determination that such devices are NSE to legally marketed devices (Section 607 of the Food and Drug Administration Safety and Innovation Act (Pub. L. 112-144)). In 2016, the process was further modified so that a De Novo request need not be submitted within 30 days of receiving an NSE determination (Section 3101 of the 21st Century Cures Act (Pub. L. 114-255)).
A De Novo request may recommend to FDA whether the device should be class I or class II. The De Novo request should describe why general controls or general and special controls are adequate to provide reasonable assurance of safety and effectiveness of the device. For any class II recommendation, the De Novo request must also provide an initial draft of proposed special controls along with a description of how the special controls provide reasonable assurance of safety and effectiveness. In response to a De Novo request, FDA will classify the device by written order within 120 days. This classification is the initial classification of the device. After the issuance of an order classifying the device, FDA will publish a notice in the
FDA may decline a De Novo request when the device does not meet the statutory criteria for classification into class I or II. For De Novo requests that are not preceded by a 510(k) and an NSE determination, FDA may also decline to undertake the De Novo request if FDA identifies a legally marketed device that could provide a reasonable basis for review of substantial equivalence with the device, or when FDA determines that the device submitted is not of low to moderate risk or that general controls would be inadequate to control the risks and special controls to mitigate the risks cannot be established. A device that remains in class III shall be deemed adulterated and may not be distributed until approved in a PMA or exempted from such approval by an investigational device exemption (IDE).
In addition, the general administrative provisions of the FD&C Act provide authority to issue regulations for the efficient enforcement of the FD&C Act (section 701(a) of the FD&C Act).
FDA is proposing to amend its regulations to establish a new subpart to the medical device classification procedures regulations. The proposed rule, if finalized, would establish requirements for the medical device De Novo classification process.
FDA proposes to add a new subpart to the medical device classification procedures regulations, subpart D (21 CFR part 860, subpart D). The new proposed subpart will describe the form and manner for submission of a De Novo request. It would also describe FDA's process for a review of a De Novo request, and the form and manner in which FDA would grant or decline a De Novo request. Lastly, it would also describe the form and manner for withdrawal of a De Novo request.
The proposed rule would clarify and explain the regulatory framework and process for submitting a De Novo classification request. A De Novo request can be submitted after the submission of a premarket notification (510(k)) and a subsequent order declaring the device NSE to legally marketed devices. Under the proposed rule, a De Novo request may also be submitted without first submitting a 510(k) for that device, if the submitter determines that there is no legally marketed device upon which to base a determination of substantial equivalence.
In response to a De Novo request, FDA would classify the device by written order. This classification would be the initial classification of the device (section 513(f)(1) of the FD&C Act). FDA would publish a notice in the
FDA proposes to amend its regulations to prescribe the content and format of a De Novo request. FDA also proposes to amend its regulations to include processes and criteria for FDA to accept, review, grant, and decline a De Novo request.
The proposed regulation would define the scope of the medical device classification procedures (§ 860.1 (21 CFR 860.1)). It includes the criteria and procedures used by classification panels and the FDA Commissioner in the classification and reclassification of devices (sections 513, 514(b), (21 U.S.C. 360d(b)), 515(b) (21 U.S.C. 360e(b)) and 520(
FDA proposes to add five new definitions to the definitions section of the medical device classification procedures regulations (§ 860.3). FDA also proposes to amend the definitions section to remove the paragraph designations and to list the definitions alphabetically. This proposed amendment would make adding any new definitions to this part easier in the future. Except for removing the paragraph designations, and deleting the definition for “the act” because we are replacing “the act” with “Federal Food, Drug, and Cosmetic Act” throughout part 860, FDA is not proposing in this rulemaking to change any of the definitions currently listed in the definitions section.
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The proposed additions to confidentiality of information and data section of the medical device classification procedures regulations address the public disclosure of data and information submitted as part of a De Novo request (§ 860.5). FDA is proposing that the public disclosure of data and information in a De Novo request be governed by the confidentiality sections of the regulations (§ 860.5 and part 20 (21 CFR part 20)).
The proposed De Novo request confidentiality section discusses which De Novo request information is covered (§ 860.5(g)(1)). FDA proposes that information covered includes all information submitted or incorporated by reference in the De Novo request, any De Novo supplement, or any other submission relevant to the administrative file (as defined in 21 CFR 10.3(a)).
The proposed De Novo request confidentiality section discusses when FDA may disclose the existence of a De Novo request (§ 860.5(g)(2)). FDA is proposing that the existence of a De Novo request may not be disclosed before it issues an order granting the De Novo request. FDA is further proposing that when a De Novo requester itself has disclosed the existence of the De Novo request publicly, then FDA may also publicly disclose the existence of a De Novo request before issuing an order granting the De Novo request.
The proposed De Novo request confidentiality section discusses when FDA may publicly disclose data or information contained in a De Novo request before FDA issues an order granting the De Novo request (§ 860.5(g)(3)). The data or information contained in the De Novo request will not be disclosed unless the De Novo requestor has publicly disclosed or acknowledged the information.
The proposed De Novo request confidentiality section proposes that FDA may immediately disclose any safety and effectiveness information and any other information not exempt from release under the trade secret and confidential commercial information section of the regulations after FDA issues the order granting the De Novo request (§ 860.5(g)(4) and § 20.61).
The proposed section provides the purpose of the new subpart and the devices to which the subpart is applicable (§ 860.201). In this proposed rule, FDA would add a new subpart to the medical device classification procedures regulations (part 860, subpart D). The new proposed subpart contains the procedures and criteria for the De Novo classification process (section 513(f)(2) of the FD&C Act).
The proposed purpose section states that the purpose of the new subpart is to establish an efficient and thorough process to facilitate the classification into class I or II for devices for which there are no legally marketed devices on which to base a review of substantial equivalence and which meet the requirements for class I or class II as described in (§ 860.201(a), and section 513(a)(1) of the FD&C Act and § 860.3).
The proposed purpose section would identify the devices for which a De Novo request may be submitted (§ 860.201(b)). Under the proposed purpose section, a De Novo request may be submitted after receiving a NSE determination in response to a 510(k) (§ 860.201(b)(1)). We note that devices that have been found to be NSE for lack of a predicate, new intended use, or different technological characteristics that raise different questions of safety and effectiveness will generally be eligible for the De Novo classification process. We further note that a De Novo request for more than one device type would not be eligible for the De Novo classification process as part of the same request.
Under the proposed purpose section, a De Novo request may also be submitted if a person, without first submitting a 510(k) and receiving an NSE determination, determines that there is no legally marketed device upon which to base a SE determination (§ 860.201(b)(2)).
The De Novo classification process is a pathway to market for devices for which there are no legally marketed devices on which to base a review of SE and which meet the requirements for class I or class II (as described in section 513(a)(1) of the FD&C Act and 21 CFR 860.3). Under the De Novo classification section of the FD&C Act, if FDA identifies a legally marketed device that could provide a reasonable basis for review of SE, FDA may decline to undertake a De Novo request (section 513(f)(2)(A)(iv) of the FD&C Act). A device that could provide a reasonable basis for review of SE with another device is known as a predicate device. Thus, devices that have been found to be NSE solely due to inadequate performance data to demonstrate SE will generally be ineligible for the De Novo classification process because a predicate device that could provide a
FDA proposes a submission process and format for a De Novo request in this section (§ 860.223). FDA proposes in the format section that De Novo requests for a device be submitted to the FDA Center that has the lead in regulating that device (§ 860.223(a)(1)). FDA proposes that De Novo requests related to devices regulated by the Center for Devices for Radiological Health (CDRH) be submitted to CDRH and that those De Novo requests related to devices regulated by the Center for Biologics Evaluation and Research (CBER) be submitted to CBER. FDA provides the appropriate CBER and CDRH addresses as part of the proposed rule.
FDA also proposes in the format section that the De Novo request be signed by the requester or its authorized representative (§ 860.223(a)(2)).
FDA is proposing further format requirements for the De Novo request (§§ 860.223(a)(3) and (4)). These proposed requirements are intended to assist in the efficiency of FDA's processing and review of the De Novo request. FDA is proposing in the format requirements that a cover page designate the De Novo request as a “De Novo Request” (§ 860.223(a)(3)). FDA is proposing that the entire content of the submission be in English or translated into English (§ 860.223(a)(4)). FDA proposes this requirement because FDA does not have the resources to assure the accurate and timely English translation of documents written in a non-English language to facilitate the document's use in FDA's review. Please note FDA's “eCopy Program for Medical Device Submissions” guidance (Ref. 3), is applicable to De Novo requests.
FDA proposes requirements for the content of a De Novo request (§ 860.234). This proposed section would establish the types of information that must be included in each De Novo request. To adequately support a request for De Novo classification, FDA proposes that the De Novo request include the following information, unless the De Novo requester provides a justification for each particular omission.
FDA proposes the De Novo request must include a table of contents that identifies the volume and page number for each item listed (§ 860.234(a)(1)). A table of contents assists FDA in locating information included in the De Novo request, including during the review of the De Novo request.
To assist FDA in contacting the De Novo requester during review of a De Novo request, FDA is proposing that the De Novo request include the appropriate contact information of the De Novo requester (§ 860.234(a)(2)). During its review of a De Novo request, FDA may need to contact the De Novo requester for various reasons, including to ask questions. Contact information would assist in quick and efficient contact of the appropriate person. FDA is proposing to require that the De Novo request include the name, address, phone, fax, and email address of the De Novo requester.
FDA is also proposing to require that a De Novo request include the establishment registration number of the owner or operator submitting the De Novo request, if applicable (§ 860.234(a)(2)). FDA would use this information should FDA determine an onsite inspection is necessary.
FDA is proposing that a De Novo request include a statement regarding the regulatory history of the device, including if there have been prior submissions to FDA on the device (§ 860.234(a)(3)). If there has been a prior submission, FDA proposes to require that a De Novo request identify on the prior submission, including any 510(k)s and related NSE decisions, IDEs, requests for designation (RFD) under § 3.7 (21 CFR 3.7), Pre-Submission, PMAs, Humanitarian Device Exemptions (HDEs), Emergency Use Authorizations (EUAs), section 513(g) requests for information, and previously withdrawn or declined De Novo requests (§ 860.234(a)(3)). The identification of the prior submission would also be required to identify any feedback or deficiencies communicated to the requester during the Agency's review of the prior submission and how the feedback or deficiencies are addressed in the De Novo request, where applicable. This proposed requirement is useful for FDA in communicating with a firm or when determining whether there is an existing active submission for the same device. This information may also assist FDA in determining if feedback provided during a related submission noted above, including any deficiencies communicated to the requester, was addressed in a previous De Novo request. FDA also uses this regulatory history information when determining whether a potential predicate device exists or whether a more appropriate pathway to marketing exists for the device.
FDA is proposing that the De Novo request include the name of the device (§ 860.234(a)(4)). The name of the device would include any generic, proprietary, and trade names. These names help FDA identify the device.
FDA is proposing that the De Novo request include the device's indications for use, including whether the device would be prescription or over the counter (§ 860.234(a)(5)). As part of the indications for use, the De Novo request must describe the disease or condition the device would diagnose, treat, prevent, cure or mitigate, or how the device would affect the structure or function of the body, including a description of the patient population for which the device is intended. The indications would include all the labeled patient uses of the device. FDA uses this information to assess whether all of the risks associated with the device are identified, whether the indications for use are consistent with the labeling, and to determine whether the device is of a type that has already been classified. For more information about indications for use, see FDA's guidance “The 510(k) Program: Evaluating Substantial Equivalence in Premarket Notifications [510(k)], Guidance for Industry and CDRH Staff” (Ref. 1).
FDA is proposing that the De Novo request include a device description (§ 860.234(a)(6)). Proposed § 860.234(a)(6)(i) requires the submission of a complete description of the device. This may include a narrative description of the device pictorial representations, device specifications, and engineering drawings, where applicable.
FDA is proposing that the device description include a description of each of the functional components or ingredients of the device, if the device consists of more than one physical component or ingredient (§ 860.234(a)(6)(ii)).
FDA is proposing that the device description include a description of the properties of the device relevant to diagnosing, treating, preventing, curing, or mitigating the disease or condition, and/or the effect of the device on the structure or function of the body (§ 860.234(a)(6)(iii)). This description is intended to assist in FDA's assessment of the benefits and risks of the device type.
FDA is proposing that the De Novo request include a complete description of the operational principles of the device (§ 860.234(a)(6)(iv)). This would include the mode of operation through
FDA is proposing that the device description include FDA assigned reference numbers (
FDA proposes that the De Novo request include a description of known or reasonably known existing alternative practices or procedures for diagnosing, treating, preventing, curing, or mitigating the disease or condition for which the device is intended, or which similarly affect the structure or function of the body (§ 860.234(a)(6)(v)). This information is intended to capture available alternative biologic, device, or drug practices or procedures during FDA's assessment of the benefits and risks of the device and device type.
FDA proposes a classification summary requirement for a De Novo request for a device that has not previously been the subject of a premarket notification under section 510(k) of the FD&C Act (§ 860.234(a)(8)(i)). This information would be intended to assist FDA to establish that the De Novo classification process is appropriate for the device or if a legally marketed device of the same type exists. For such devices, FDA proposes that the De Novo request include a complete description of the searches used to establish that no legally marketed device of the same type exists (§ 860.234(a)(8)(i)(A)). Further, for such devices, FDA proposes that the De Novo request include a list of potentially similar devices to the subject device, including any classification regulations, PMAs, HDEs, 510(k)s, EUAs, or product codes applicable to the other devices, and a rationale explaining how the subject device is different from these devices (§ 860.234(a)(8)(i)(B) and (C)). FDA intends to use this information in assessing the appropriate classification of the device.
FDA proposes a classification summary requirement for a De Novo request for a device that has been the subject of a premarket notification under section 510(k) of the FD&C Act (§ 860.234(a)(8)(ii)). For such devices, FDA proposes that the submitter include the relevant 510(k) number(s) to assist FDA in locating the previously submitted information. Further, for such devices, FDA proposes that the submitter include a summary of the search performed to confirm that no legally marketed device of the same type exists since the date FDA issued the NSE determination letter. This requirement would assist FDA in establishing that no legally marketed device of the same type exists.
In accordance with the De Novo classification section in the FD&C Act, FDA proposes that the De Novo request must recommend class I or II classification (section 513(f)(2)(A)(v) of the FD&C Act and § 860.234(a)(9)). FDA proposes that this classification recommendation include a description of why the De Novo requester believes general controls or general and special controls are adequate to provide reasonable assurance of safety and effectiveness. If the submitter recommends that the device be classified as class II, FDA proposes that the recommendation must include a draft proposal for applicable special controls, and a description of how those special controls provide reasonable assurance of safety and effectiveness of the device (§ 860.234(a)(10)).
FDA proposes that the De Novo request include a summary of known or reasonably known probable risks to health associated with the use of the device and any proposed mitigations for each probable risk (§ 860.234(a)(11)). FDA would use this information to assess the different types of harmful events that may potentially result from use of the device and when determining if the harmful events can be mitigated sufficiently. A summary of probable risks to health should be based on the best available information at the time of submission of the De Novo request. A summary of any proposed mitigation should identify whether the mitigation is a general control or a special control and provide details about each control. A summary of any proposed mitigation that involves specific performance testing or labeling must include references to the applicable section or pages in the De Novo request that support the proposed testing or labeling.
FDA proposes that the De Novo request include reference to any published standard relevant to the safety or effectiveness of the device and that are known or should reasonably be known to the requester (§ 860.234(a)(12)). The proposed standards section would require that the De Novo request provide adequate information to demonstrate how the device meets, or justify any deviation from, performance standards (§ 860.234(a)(12)(i)). These published standards include both voluntary consensus standards recognized under the recognition of standards section of the FD&C Act and any voluntary consensus standard not yet recognized by FDA but cited in the De Novo request (section 514(c) of the FD&C Act (21 U.S.C. 360d(c)). This explanation would specify what applicable voluntary consensus standards or parts of standard(s) the device does not meet and explain any deviations.
FDA proposes that the De Novo request summarize each study used to support the De Novo request (§ 860.234(a)(13)). This proposed requirement is intended to ensure the quality and integrity of data obtained from these studies. This proposed requirement would apply to nonclinical laboratory studies and clinical investigations involving human subjects. For nonclinical laboratory studies and clinical investigations involving human subjects, the summary would be required to include a description of the following: The study objective, the experimental design, any data collection and analysis, and any positive, negative, or inconclusive study results. For nonclinical laboratory studies, FDA proposes to require a summary of each study (§ 860.234(a)(13)(i)). For a clinical investigation involving human subjects, FDA proposes to require that a discussion of subject selection and exclusion criteria, investigation population, investigation period, safety and effectiveness data, adverse reactions and complications, patient discontinuation, patient complaints, device failures (including unexpected software events if applicable) and replacements, results of statistical analyses of the clinical investigation, contraindications and precautions for use of the device, and other information from the clinical investigation as appropriate (any investigation conducted under an IDE must be identified as such) must be included (§ 860.234(a)(13)(ii)). FDA proposes these requirements to assure that a study's data and reported results are credible and accurate and to ensure consistency in FDA clinical data requirements. FDA would use the summary of investigations in assessing safety and effectiveness of the device.
FDA proposes that the De Novo request include a discussion of benefit and risk considerations (§ 860.234(a)(14)). The proposed benefit and risk consideration section would require a discussion demonstrating that the data and information in the De Novo request constitute valid scientific evidence (§ 860.234(a)(14)(i)). Valid scientific evidence is evidence from well-controlled investigations, partially controlled investigations, investigations and objective trials without matched
FDA proposes that a De Novo request must include technical sections that contain data and information in sufficient detail to permit FDA to reach a decision on whether to grant or decline the De Novo request (in § 860.234(a)(15)). This proposed section would require the inclusion of a section containing the nonclinical laboratory studies of the device (§ 860.234(a)(15)(i)). A nonclinical laboratory study is an in vivo or in vitro experiment in which a test article is studied prospectively in a test system under laboratory conditions to determine its safety (21 CFR 58.3(d)). The nonclinical laboratory studies' section would include information on microbiology, toxicology, immunology, biocompatibility (see FDA's guidance “Use of International Standard ISO-10993, “Biological evaluation of medical devices—Part 1: Evaluation and testing within a risk management process” (Ref. 7)), stress, wear, shelf life, electrical safety, electromagnetic compatibility, and other laboratory or animal tests results,
FDA proposes that, for all devices incorporating software, the De Novo request include a section containing all relevant information regarding software information and testing, including, but not limited to, appropriate device hazard analysis, hardware, and system information (§ 860.234(a)(15)(ii)). FDA recommends consulting FDA's “Guidance for the Content of Premarket Submissions for Software Contained in Medical Devices” (Ref. 8).
FDA proposes that a section be included in a De Novo request that contains the results of any clinical investigation of the device involving human subjects (§ 860.234(a)(15)(iii)). This information is intended to assist FDA in its assessment of the quality and integrity of data obtained from these investigations. The following elements would be included in this section of the request, pursuant to the proposed rule:
• Discussion of clinical protocols in sufficient detail for FDA to assess the strengths and limitations of the investigation, which generally include a discussion of the objectives, design, methodology, and organization of the clinical investigation.
• The number of investigators and the number of subjects per investigator.
• Discussion of any subject selection and exclusion criteria, and the investigation population, to assist FDA in assessing whether the selection of clinical investigation subjects reflects the intended target population for the device. Selection and exclusion criteria typically include standards that investigation participants must meet or characteristics they must have, such as age, gender, type and stage of a disease, previous treatment history, and other medical conditions that may impact selection or exclusion criteria. To the extent a device has disparate safety or effectiveness outcomes or benefits in different demographic groups, differences in the race, ethnicity, age, gender, and sex of a subject population can affect the applicability of the investigation to the intended population. For more information, see FDA guidance documents “Collection of Race and Ethnicity Data in Clinical Trials” (Ref. 4) and “Evaluation and Reporting of Age-, Race-, and Ethnicity-Specific Data in Medical Device Clinical Studies (Ref. 5).
• An investigation period description to assist FDA in assessing whether the clinical investigation period is applicable to the target population. The investigation period also would assist FDA in evaluating whether the clinical investigation supports the effectiveness of the device as labeled.
• Any safety and effectiveness data to assist FDA in assessing whether the clinical investigation supports that a reasonable assurance of safety and effectiveness exists. FDA would assess reasonable assurance of safety and effectiveness by evaluating the valid scientific evidence submitted to support the De Novo request. FDA would review the data to assess whether the data supports the claims made in the indications for use and demonstrates that the probable benefits of the device outweigh the probable risks. For more information, see FDA's guidance “Factors to Consider When Making Benefit-Risk Determinations in Medical Device Premarket Approval and De Novo Classifications” (Ref. 6).
• Discussion of data on any adverse reactions to the use of the device (
• Discussion of data on any subject discontinuation that occurred in an investigation including the reasons for the discontinuation and the extent of the discontinuation of the subject. FDA would need all discontinuation data in order to determine the safety and effectiveness of the device. Whether the subject decides to discontinue participation in the clinical investigation, or is discontinued by the investigator because the subject no longer qualifies under the protocol, the data collected up to withdrawal of the subject are required for clinical investigation data to be complete.
• Discussion of any identified trends after analyzing any subject complaints that occurred. In analyzing trends, factors such as location, user application, as well as repeat component or device events may apply. Trends in complaints may point to possible risks posed by the device. FDA would review such trend analyses in assessing the safety and effectiveness of the device.
• Discussion of any device failures and replacements. In analyzing failures, factors such as location, user application, and repeat component failures may apply. FDA would review such analyses in assessing the safety and effectiveness of the device.
• Discussion of any tabulations of data from all individual subject reporting forms and copies of such forms for each subject who died during a clinical investigation or who did not complete the investigation. Complete information for all subjects who died during the investigation would assist in assessing safety problems as well as to ensure that the investigation evaluation is as unbiased as possible.
• Statistical analysis of the results from each clinical investigation. The statistical analysis should specify and discuss all effects. FDA would review such analyses in assessing the safety and effectiveness of the device.
• Any contraindication, precaution, warning, or other limiting statement relevant to the use of the device (
• Other appropriate information from the clinical investigation. For example, this section should identify any investigation conducted under an IDE.
For clinical investigations conducted in the United States, FDA proposes that the technical sections of the De Novo request would include a number of statements indicating compliance (or, if the investigation is noncompliant, a brief statement of the reason for the noncompliance) with the following FDA requirements with respect to each investigation conducted (§ 860.234(a)(15)(iii)(A)-(B)): (1) The institutional review board regulations (21 CFR part 56), or alternatively, a statement that the investigation was not subject to the regulations under § 56.104 or § 56.105; (2) the informed consent regulations (21 CFR part 50); and (3) the applicable IDE regulations concerning sponsors of clinical investigations and clinical investigators (21 CFR part 812). Proposed § 860.234(a)(15)(iii)(A)-(B) would also remind requesters that failure or inability to comply with the requirements does not justify failure to provide information on a relevant clinical investigation.
For clinical investigations conducted outside the United States that are intended to support a De Novo request, the requirements under 21 CFR 812.28 relating to Good Clinical Practice (GCP) would apply when they become effective on February 21, 2019 (83 FR 7366). Consistent with the new provisions for 510(k)s and PMAs that were promulgated as part of the GCP rulemaking (83 FR 7366, 7385 & 7387), FDA proposes to include a provision (§ 860.234(a)(15)(iii)(C)) stating that, for clinical investigations conducted outside the United States that are intended to support a De Novo request, the requirements under § 812.28 would apply. If any such investigation was not conducted in accordance with GCP, FDA proposes that the De Novo request would be required to include either a waiver request in accordance with § 812.28(c) or a brief statement of the reason for not conducting the investigation in accordance with GCP, as well as a description of steps taken to ensure that the data and results are credible and accurate and that the rights, safety, and well-being of subjects have been adequately protected. Proposed § 860.234(a)(15)(iii)(C) would also remind requesters that failure or inability to comply with the requirements does not justify failure to provide information on a relevant clinical investigation.
For clinical investigations conducted in the United States and outside the United States, FDA proposes to require the De Novo request include the following elements (§ 860.234(a)(15)(iii)(D)-(E)): (1) A statement that each investigation has been completed in accordance with the protocol or a summary of any deviations from the protocol; and (2) a financial certification or disclosure statement (21 CFR part 54). This information would assist FDA in its assessment of the quality and integrity of data obtained from these investigations, as well as to evaluate any uncertainty in the data as part of the benefit-risk assessment.
FDA further proposes that, if a De Novo request relies primarily on data from a single investigator at one investigation site, the De Novo request must include a justification showing why these data and other information are sufficient to demonstrate the safety and effectiveness of the device and to ensure that the results from a site are applicable to the intended population (§ 860.234(a)(15)(iii)(F)). This information would assist FDA in verifying that data from a single investigation site are representative of the safety and effectiveness of the device when used in the intended population.
FDA further proposes to require that a De Novo request include a discussion of the clinical significance of the results, pursuant to the determination of safety and effectiveness (§ 860.234(a)(15)(iii)(G) and § 860.7(e)).
FDA proposes to require that a De Novo request include a bibliography of all published reports not submitted under the technical sections in (§§ 860.234(a)(16)(i) and 860.234(a)(15)). These reports are in addition to, and not the same as, the data and information on any laboratory studies and any clinical investigations conducted by the requester. FDA proposes to require that the De Novo request include any other identification, discussion, and analysis of any other data, information, or report relevant to the safety and effectiveness of the device (§ 860.234(a)(16)(ii)). Under the proposed other information section, such information may be from foreign or domestic sources, and includes information obtained from investigations other than those in the De Novo request and from commercial marketing experience, if applicable (§ 860.234(a)(16)(ii)). FDA proposes that the De Novo request would be required to include copies of such reports or information, if requested by FDA (§ 860.234(a)(16)(iii)). Only those reports or information in the possession of the De Novo requester or reasonably obtainable by the De Novo requester would be required to be provided when requested.
FDA proposes that, if requested by FDA, the De Novo request would be required to include one or more samples of the device and its components, as requested (§ 860.234(a)(17)). If submitting samples of the device is impractical, the De Novo requester would be required to name the location where FDA may examine or test one or more of the devices.
FDA proposes to require that the De Novo request include any proposed labels, labeling, and advertisements for the device (§ 860.234(a)(18)). The
FDA proposes that the De Novo request must include other information that is necessary for FDA to determine whether general controls or general and special controls provide a reasonable assurance of safety and effectiveness of the device (§ 860.234(a)(19)). Examples would include marketing experience outside the United States, medical device reporting (MDR) data (if the device is legally marketed in the United States for a different intended use, and such data may be relevant to an evaluation of safety of the device), and patient preference information (
FDA proposes that pertinent information in FDA files specifically referred to by a De Novo requester may be included in a De Novo request by reference (§ 860.234(b)). This would include information that is specifically referred to and incorporated by reference from any of the De Novo requester's submissions or submissions of someone other than the De Novo requester. The De Novo requester would be required to include the written authorization to reference the information by the person who submitted that information.
FDA proposes to require that the De Novo request include a statement for any omission of any information required by the De Novo content regulation if the requester believes the information is not applicable to the device that is the subject of the De Novo request (in §§ 860.234(c) and 860.234(a)). The statement would have to be in a separate section of the De Novo request and listed in the table of contents. FDA would require the statement for any omission to specify the information omitted, and include a justification for the omission. FDA would notify the De Novo requester if the justification for the omission is not accepted.
FDA proposes to require the De Novo requester to update its pending De Novo request with new safety and effectiveness information learned about the device from ongoing or completed studies and investigations that may reasonably affect an evaluation of safety or effectiveness of the device as such information becomes available (§ 860.234(d)).
The proposed section provides proposed criteria for FDA's acceptance of a De Novo request (§ 860.245). The purpose of the criteria for FDA's acceptance for review of the De Novo request would be to enable FDA to make a threshold determination whether the De Novo request contains the information necessary to permit a substantive review. FDA proposes that, after a De Novo request is received by FDA, FDA would notify the requester whether the submission has been accepted for review (§ 860.245(a)). FDA proposes that, if FDA does not find any reason to refuse to accept the De Novo request, or FDA fails to complete the acceptance review within 15 days, FDA would accept the De Novo request and notify the De Novo requester (§ 860.245(b)). For an accepted De Novo request, FDA proposes that the date of acceptance would be the date FDA received the De Novo request or the date FDA received additional information that results in acceptance of the De Novo request.
FDA proposes that, if a De Novo request contains one or more of the listed deficiencies, FDA would be able to refuse to accept the De Novo request (§ 860.245(c)). The deficiencies are as follows:
• The requester has a pending premarket submission, including a 510(k), HDE, EUA, PMA, or reclassification petition for the same device.
• The De Novo request does not contain either: (1) Each of the items required under the De Novo classification section of the FD&C Act or this part or (2) a justification for any omission of the items (section 513(f)(2) of the FD&C Act).
• The De Novo request is not in the required format set out in proposed § 860.223.
• The De Novo request is for more than one device type. A device type is a grouping of devices that do not differ significantly in purpose, design, materials, energy source, function, or any other feature related to safety and effectiveness, and for which similar regulatory controls are sufficient to provide reasonable assurance of safety and effectiveness.
• The requester has either not provided a complete response (
The proposed section on acceptance of a De Novo request provides that FDA would notify the De Novo requester of the reasons for refusal if FDA refuses to accept a De Novo request (§ 860.245(c)(2)). The notice would include the De Novo request reference number and will identify the deficiencies in the De Novo request. FDA proposes that, if FDA refuses to accept a De Novo request, the requester would be permitted to submit the additional information necessary to comply with the requirements of the De Novo classification section of the FD&C Act and applicable regulations, including the provisions of this part (§ 860.245(c)(3) and section 513(f)(2) of the FD&C Act). If FDA subsequently accepts the De Novo request, the acceptance date for the De Novo request would be the date FDA received the additional information.
FDA proposes that FDA would substantively review and grant or decline a De Novo request within 120 days after the De Novo request is received or additional information is received that results in acceptance of the De Novo request (§ 860.256(a)). The 120 days would begin on the day FDA receives the most recent De Novo request or additional information that results in acceptance of the De Novo request (§ 860.245).
FDA proposes that a De Novo requester would be permitted to supplement or amend a pending De Novo request to revise existing information or provide additional information (§ 860.256(b)). Under the proposed rule, FDA may request this information, or a De Novo requester may submit this information on its own initiative. These responses to the FDA requests for additional information regarding a De Novo request under
FDA proposes that FDA would be able to inspect relevant facilities prior to granting or declining a De Novo request (§ 860.256(c)). Such an inspection is intended to assist FDA in determining whether a reasonable assurance of safety and effectiveness can be provided by general or general and special controls. FDA proposes to inspect to help determine that clinical or nonclinical data were collected in a manner that ensures the data accurately represents the risks and benefits of the device, and to help determine that that FDA's Quality System Regulation (QSR), in addition to other general and any special controls, are adequate to ensure that critical and/or novel manufacturing processes that may impact the safety and effectiveness of the device are controlled (21 CFR part 820). Inspection would allow FDA to verify the documentation and implementation of a facility's QSR.
The proposed section on withdrawal of a De Novo request specifies when FDA would notify a requester that FDA considers the De Novo request withdrawn (§ 860.267). Once a De Novo request has been withdrawn, the requester would be required to submit a new De Novo request to restart the De Novo review process.
The proposed section on withdrawal of a De Novo request provides when FDA would consider a De Novo request to have been withdrawn (§ 860.267(a)). Under the proposed section, if the De Novo requester fails to provide a complete response to a request for additional information within 180 days, FDA would consider the De Novo request withdrawn (§ 860.267(a)(1)). Under the proposed section, if the De Novo requester fails to provide a complete response to any deficiencies identified by FDA within 180 days of the date FDA notifies the requester of such deficiencies, FDA would also consider the De Novo request withdrawn (§ 860.267(a)(2)). In addition, under the proposed section, if the De Novo requester does not permit an authorized FDA employee an opportunity to inspect the facilities and to have access to copy and verify records pertinent to the De Novo request, FDA would consider the De Novo request withdrawn (section § 860.267(a)(3)). Finally, under the proposed section, if the De Novo requester submits a written notice to FDA that the De Novo request has been withdrawn, FDA would also consider the De Novo request withdrawn (§ 860.267(a)(4)).
Under the proposed section, if FDA considers a De Novo request withdrawn, FDA would notify the De Novo requester (§ 860.267(b)). The written notice would include the De Novo request reference number and the date FDA considered the De Novo request withdrawn.
FDA proposes the processes and criteria for granting and declining a De Novo request (§ 860.289). Pursuant to the De Novo classification section of the FD&C Act, a De Novo request will be granted by administrative order (section 513(f)(2)(B)(i) of the FD&C Act). The order will classify the device into class I or class II, and include any special controls, if applicable. Prior to the issuance of the administrative order, FDA will review the De Novo request under the criteria set forth in the classification section of the FD&C Act, determine the appropriate class of the device, and issue an order to the requester in the form of a letter that classifies the device (section 513(a)(1) of the FD&C Act). The proposed section on granting or declining a De Novo request provides that FDA would grant a De Novo request if none of the reasons listed in the section for denying a De Novo request applies (§§ 860.289(a)(1) and 860.289(b)). Under the proposed section, and as required by the De Novo classification section of the FD&C Act, FDA would subsequently publish a notice in the
FDA proposes that it would decline a De Novo request by issuing a written order to the requester (§ 860.289(b)). If the De Novo request is declined, the device would remain in class III and may not be legally marketed unless and until it has been approved in a PMA, cleared in a 510(k), or a new De Novo request has been granted.
FDA proposes the following grounds for declining a De Novo request (§ 860.289(b)):
• The device does not meet the criteria under the classification section of the FD&C Act and the definitions section of the medical device classification procedures regulations for classification into class I or II (section 513(a)(1) of the FD&C Act and § 860.3).
• The De Novo request contains a false statement of material fact, or there is a material omission. FDA may rescind a De Novo request containing a false statement of material fact or a material omission.
• The proposed labeling for the device does not meet the requirements in the labeling part and the in vitro diagnostic products for human use part, as applicable (part 801 (21 CFR part 801) and part 809 (21 CFR part 809)).
• The product does not meet the definition of a device at section 201(h) in the FD&C Act (21 U.S.C. 321(h)) and is not a combination product as defined at § 3.2(e)) (21 CFR 3.2(e)). FDA generally intends to decline a De Novo request for a combination product that does not have a device primary mode of action (see § 3.2(m)). However, a De Novo request may be appropriate, for example, for the device constituent part of such a combination product if the constituent parts of the combination product are to be distributed separately (see § 3.2(e)(3)-(4)), and the other constituent part (drug or biological product) of the combination product is to be marketed under its own, separate application (
• The device is of a type which has already been approved in existing applications for PMAs submitted under the premarket approval of medical devices (21 CFR part 814).
• The device type has already been classified into class I, class II, or class III.
• An inspection of a relevant facility under the procedures for review of a De Novo request section results in a determination that general or general and special controls would not provide a reasonable assurance of safety and effectiveness (§ 860.256(c)).
• A nonclinical laboratory study that is described in the De Novo request, and that is essential to show the device there is a reasonable assurance of safety was not conducted in compliance with the GLP requirements and no reason for the noncompliance is provided or, if a reason for noncompliance with the GLP
• A clinical investigation described in the De Novo request involving human subjects that is subject to the institutional review board regulations in part 56, the informed consent regulations in part 50, or GCP described in § 812.28(a), was not conducted in compliance with those regulations such that the rights or safety of human subjects were not adequately protected or the supporting data are otherwise unreliable.
• A clinical or nonclinical study necessary to demonstrate that general or general and special controls provide a reasonable assurance of safety and effectiveness has either not been completed according to the study protocol, or deficiencies about such a study identified in a request for additional information under the procedures for review of a De Novo request section have not been adequately addressed (§ 860.256(b)(1)).
• After the De Novo request has been accepted for review under the accepting a De Novo request section, the De Novo requester makes significant changes not solicited by FDA to either the device's indications for use or to the device's technological characteristics (§ 860.245(b)).
FDA proposes that FDA would issue an order declining a De Novo request that would inform the De Novo requester of the grounds for declining the request (§ 860.289(c)).
As noted in the list above, one of the grounds for declining a De Novo request is that the device is of a type which has already been approved in a PMA submitted under the premarket approval of medical devices (21 CFR part 814). With respect to such devices (section 513(f)(1) of the FD&C Act), the postamendments devices reclassification section of the FD&C Act (section 513(f)(3) of the FD&C Act), and not the De Novo classification section of the FD&C Act (section 513(f)(2) of the FD&C Act), is the appropriate pathway for reclassification of such devices. The classification section of the FD&C Act on classification and/or reclassification of postamendments devices (section 513(f)(2) and (3) of the FD&C Act), especially the unique provision (section 513(f)(3) of the FD&C Act) that supports reclassification of a group of devices, support the view that FD&C Act's provisions on reclassification of postamendments devices (section 513(f)(3) of the FD&C Act), rather than its De Novo classification section (section 513(f)(2) of the FD&C Act), is to be used for reclassification of device types already approved in a PMA.
If a De Novo request is declined because a device was classified into class III under the classification section or the classification change section of the FD&C Act (section 513(d) or (e) of the FD&C Act), and there is evidence to support classification into class I or class II, a person, or FDA on its own initiative, may seek reclassification of the class III device under the classification change section of the FD&C Act (section 513(e) of the FD&C Act).
FDA proposes that FDA would determine the safety and effectiveness of the device using the criteria specified in the determination of safety and effectiveness section of the regulations (§§ 860.289(d) and 860.7). Under the proposed rule, FDA would be permitted to use information other than that submitted by the De Novo requester in making such determinations,
FDA proposes that this rule would go into effect 90 days after publication of a final rule.
We have examined the impacts of the proposed rule under Executive Order 12866, Executive Order 13563, Executive Order 13771, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). Executive Orders 12866 and 13563 direct us to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). Executive Order 13771 requires that the costs associated with significant new regulations “shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least two prior regulations.” We believe that this proposed rule is a significant regulatory action as defined by Executive Order 12866.
The Regulatory Flexibility Act requires us to analyze regulatory options that would minimize any significant impact of a rule on small entities. Because small entities affected by this rule would incur very small one-time costs to read and understand the rule, we propose to certify that the proposed rule will not have a significant economic impact on a substantial number of small entities.
The Unfunded Mandates Reform Act of 1995 (section 202(a)) requires us to prepare a written statement, which includes an assessment of anticipated costs and benefits, before proposing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year.” The current threshold after adjustment for inflation is $150 million, using the most current (2017) Implicit Price Deflator for the Gross Domestic Product. This proposed rule would not result in an expenditure in any year that meets or exceeds this amount.
The proposed rule, if finalized, would clarify and create a more efficient De Novo classification process by specifying: (1) What medical devices are eligible for the De Novo classification process; (2) what information manufacturers must provide in De Novo requests; (3) how to organize these data. By clarifying and making more efficient these requirements, we expect the proposed rule, if finalized, would reduce the time and costs associated with reviewing De Novo requests, and generate net benefits in the form of cost savings. Moreover, the proposed rule, if finalized, would allow us to refuse to accept inappropriate and deficient De Novo requests, and require us to protect the confidentiality of certain data and information submitted with a request until we issue an order granting the request. Table 2 summarizes our estimate of the annualized costs and the annualized benefits of the proposed rule over 10 years.
In line with Executive Order 13771, in Table 3 we estimate present and annualized values of the costs and cost-savings over an infinite time horizon.
We have developed a comprehensive Preliminary Economic Analysis of Impacts that assesses the impacts of the proposed rule. The full preliminary analysis of economic impacts is available in the docket for this proposed rule (Ref. 10) and at
We have determined that, under 21 CFR 25.34(b) and (f), this proposed action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.
We have analyzed this proposed rule in accordance with the principles set forth in Executive Order 13175. We have tentatively determined that the rule does not contain policies that would have a substantial direct effect on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes. The Agency solicits comments from tribal officials on any potential impact on Indian Tribes from this proposed action.
This proposed rule contains information collection provisions that are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). A description of these provisions is given in the
FDA invites comments on these topics: (1) Whether the proposed collection of information is necessary for the proper performance of FDA's functions, including whether the information will have practical utility; (2) the accuracy of FDA's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology.
On October 30, 2017, FDA issued a final guidance (De Novo Program guidance) (Ref. 1) to provide recommendations on the process for the submission and review of a De Novo request. The information collections associated with the guidance are approved under OMB control number 0910-0844. We provide below a revised burden estimate for the De Novo classification process as described in this proposed rule.
Proposed 860.201 explains the purpose of the proposed De Novo Classification regulations and provides the applicability of a De Novo request submission. Proposed 860.223 and 860.234 describe the format and content, respectively, of a De Novo request. Proposed 860.245 describes the conditions under which FDA may refuse to accept a De Novo request. Proposed 860.256(b) provides for supplemental, amendatory, or additional information for a pending De Novo request. Proposed 860.267(a)(4) provides that a requester may submit a written notice to FDA that the De Novo request has been withdrawn.
Based on our recent experience with the De Novo Program, FDA estimates that the average burden per response for a De Novo request is 182 hours. This includes information collection associated with the proposed provisions described in 860.201, 860.223, 860.234, 860.245, and 860.256(b). Because the provisions under proposed 860.245 are not included in the information collection burden estimates associated with the De Novo Program guidance, we have included an additional 2 hours per response in the average burden per response for manufacturers to review their De Novo request for compliance with the acceptance criteria listed in proposed 860.245. Based on updated program data and trends, we expect to receive approximately 60 De Novo requests per year. This estimate is a 3,640-hour increase from the burden estimate approved for the De Novo Program guidance.
We estimate that the average burden per response for written notice of withdrawal of a De Novo request, as described in proposed 860.267(a)(4), is 10 minutes. The average burden per response is based on estimates by FDA administrative and technical staff who are familiar with the requirements for submission of a De Novo request (and related materials), have consulted and advised manufacturers on submissions, and have reviewed the documentation submitted. We expect that we will receive approximately five requests for withdrawal per year. There is no change to the currently approved burden estimate for this information collection.
The operating and maintenance cost for a De Novo submission includes the cost of printing, shipping, and the eCopy. We estimate the cost burden for a De Novo submission to be $121.30 ($90 printing + $30 shipping + $1.30 eCopy). The annual cost estimate for De Novo submissions is $7,278 (60 submissions × $121.30). We estimate the cost for a request for withdrawal to be $1 (rounded) ($0.09 printing 1 page + $0.03 shipping + $1.30 eCopy). The annual cost estimate for requests for withdrawal is $5.
To ensure that comments on information collection are received, OMB recommends that written comments be faxed to the Office of Information and Regulatory Affairs, OMB (see
In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3407(d)), the Agency has submitted the information collection provisions of this proposed rule to OMB for review. These requirements will not be effective until FDA obtains OMB approval. FDA will publish a notice concerning OMB approval of these requirements in the
This proposed rule also refers to previously approved collections of information. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The collections of information in the
We have analyzed this proposed rule in accordance with the principles set forth in Executive Order 13132. We have determined that the proposed rule does not contain policies that have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Accordingly, we conclude that the rule does not contain policies that have federalism implications as defined in the Executive order and, consequently, a federalism summary impact statement is not required.
The following references are on display in the Dockets Management Staff (see
FDA has verified the website addresses, as of the date this document publishes in the
Administrative practice and procedure, Medical devices.
Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, we propose that 21 CFR part 860 be amended as follows:
21 U.S.C. 321(h), 360c, 360d, 360e, 360i, 360j, 371, 374.
(b) This part prescribes the criteria and procedures to be used by advisory committees, including classification panels, where applicable, in making their recommendations, and by the Commissioner in making the Commissioner's determinations regarding the class of regulatory control (class I, class II, or class III) appropriate for particular devices. Supplementing the general FDA procedures governing advisory committees (part 14 of this chapter), this part also provides procedures for manufacturers, importers, and other interested persons to participate in proceedings to classify and reclassify devices. This part also describes the kind of data required for determination of the safety and effectiveness of a device, and the circumstances under which information submitted to advisory committees, including classification panels, or to the Commissioner in connection with classification and reclassification proceedings will be available to the public.
For the purposes of this part:
(1) General controls are sufficient to provide reasonable assurance of the safety and effectiveness of the device, or
(2) There is insufficient information from which to determine that general controls are sufficient to provide reasonable assurance of the safety and effectiveness of the device or to establish special controls to provide such assurance, but the device is not life-supporting or life-sustaining, or for a use which is of substantial importance in preventing impairment of human health, and which does not present a potential unreasonable risk of illness of injury.
(1) A summary of the reasons for the recommendation (or petition);
(2) A summary of the data upon which the recommendation (or petition) is based;
(3) An identification of the risks to health (if any) presented by the device;
(4) To the extent practicable in the case of a class II or class III device, a recommendation for the assignment of a priority for the application of the requirements of performance standards or premarket approval;
(5) In the case of a class I device, a recommendation whether the device should be exempted from any of the requirements of registration, recordkeeping and reporting, or good manufacturing practice requirements of the quality system regulation;
(6) In the case of an implant or a life-supporting or life-sustaining device for which classification in class III is not recommended, a statement of the reasons for not recommending that the device be classified in class III;
(7) Identification of any needed restrictions on the use of the device,
(8) Any known existing standards applicable to the device, device components, or device materials.
(g) Confidentiality of data and information in a De Novo file is as follows:
(1) A “De Novo file” includes all data and information from the requester submitted with or incorporated by reference in the De Novo request, any De Novo supplement, or any other related submission relevant to the administrative file, as defined in § 10.3(a) of this chapter. Any record in the De Novo file will be available for public disclosure in accordance with the provisions of this section and part 20 of this chapter.
(2) The existence of a De Novo request may not be disclosed by FDA before an order granting the De Novo request is issued unless it previously has been publicly disclosed or acknowledged by the De Novo requester.
(3) Before an order granting the De Novo request is issued, data or information contained in the De Novo request is not available for public disclosure, except to the extent the existence of the De Novo request is disclosable under paragraph (2) of this section and such data or information has been publicly disclosed or acknowledged by the De Novo requester.
(4) After FDA issues an order granting a De Novo request, the data and information in the De Novo request that are not exempt from release under § 20.61 of this chapter are immediately available for public disclosure.
(a) The purpose of this part is to establish an efficient, transparent, and thorough process to facilitate De Novo classification into class I or class II for devices for which there is no legally marketed device on which to base a review of substantial equivalence and which meet the definition of class I or class II as described in section 513(a)(1) of the Federal Food, Drug, and Cosmetic Act and § 860.3.
(b) De Novo requests can be submitted for a single device type:
(1) After receiving a not substantially equivalent determination in response to a premarket notification [510(k)], or
(2) If a person determines there is no legally marketed device upon which to base a determination of substantial equivalence.
(a) Each De Novo request or information related to a De Novo request pursuant to this part must be formatted in accordance with this section. Each De Novo request must:
(1)(i) For devices regulated by the Center for Devices and Radiological Health, be sent to the current mailing address displayed on the website
(ii) For devices regulated by the Center for Biologics Evaluation and Research, be sent to the current mailing address displayed on the website
(2) Be signed by the requester or an authorized representative.
(3) Be designated “De Novo Request” in the cover letter.
(4) Have all content used to support the request written in, or translated into, English.
(a) Unless the requester justifies an omission in accordance with paragraph (c) of this section, a De Novo request must include:
(1)
(2)
(3)
(4)
(5)
(6)
(i) The device, including, where applicable, pictorial representations, device specifications, and engineering drawings;
(ii) Each of the functional components or ingredients of the device, if the device consists of more than one physical component or ingredient;
(iii) The properties of the device relevant to the diagnosis, treatment, prevention, cure, or mitigation of a disease or condition and/or the effect of the device on the structure or function of the body;
(iv) The principles of operation of the device; and
(v) The relevant FDA assigned reference number(s) for any medical devices (such as accessories or components) that are intended to be used with the device and that are already legally marketed.
(7)
(8)
(A) The searches used to establish that no legally marketed device of the same type exists.
(B) A list of classification regulations, PMAs, humanitarian use devices
(C) A rationale explaining how the device that is the subject of the De Novo request is different from the devices covered by the classification regulations, PMAs, HUDs, HDEs, 510(k)s, EUAs, and/or product codes identified in paragraph (a)(8)(i)(B) of this section.
(ii) For devices which were the subject of a previous submission under section 510(k) of the Federal Food, Drug, and Cosmetic Act that were determined not substantially equivalent (NSE), the relevant 510(k) number, along with a summary of the search performed to confirm the device has not been classified or reclassified since the date the NSE order was issued by FDA pursuant to § 807.100(a) of this chapter.
(9)
(10)
(11)
(12)
(13)
(i) A summary of each nonclinical laboratory study submitted in the De Novo request;
(ii) A summary of each clinical investigation involving human subjects submitted in the De Novo request, including a discussion of investigation design, subject selection and exclusion criteria, investigation population, investigation period, safety and effectiveness data, adverse reactions and complications, subject discontinuation, subject complaints, device failures (including unexpected software events, if applicable) and replacements, results of statistical analyses of the clinical investigations, contraindications and precautions for use of the device, and other information from the clinical investigations as appropriate. Any investigation conducted under an investigational device exemption (IDE) under part 812 of this chapter must be identified as such.
(14)
(i) The data and information in the De Novo request constitute valid scientific evidence within the meaning of § 860.7(c) and
(ii) Pursuant to § 860.7, when subject to general controls, or general and special controls, the probable benefit to health from use of the device outweighs any probable injury or illness from such use.
(15)
(i) A section containing the results of the nonclinical laboratory studies of the device, including microbiological, toxicological, immunological, biocompatibility, stress, wear, shelf life, electrical safety, electromagnetic compatibility, and other laboratory or animal tests, as appropriate. Information on nonclinical laboratory studies must include a statement that each such study was conducted in compliance with part 58 of this chapter, or, if the study was not conducted in compliance with such regulations, a brief statement of the reason for the noncompliance.
(ii) For all devices that incorporate software, a section containing all relevant software information and testing, including, but not limited to, appropriate device hazard analysis, hardware, and system information.
(iii) A section containing results of each clinical investigation of the device involving human subjects, including clinical protocols, number of investigators and subjects per investigator, investigation design, subject selection and exclusion criteria, investigation population, investigation period, safety and effectiveness data, adverse reactions and complications, subject discontinuation, subject complaints, device failures (including unexpected software events if applicable) and replacements, tabulations of data from all individual subject report forms and copies of such forms for each subject who died during a clinical investigation or who did not complete the investigation, results of statistical analyses of the results of the clinical investigations, contraindications, warnings, precautions, and other limiting statements relevant to the use of the device type, and any other appropriate information from the clinical investigations. Any investigation conducted under an IDE under part 812 of this chapter must be identified as such. Information on clinical investigations involving human subjects must include the following:
(A) For clinical investigations conducted in the United States, a statement with respect to each investigation that it either was conducted in compliance with the institutional review board regulations in part 56 of this chapter, or was not subject to the regulations under § 56.104 or § 56.105 of this chapter, and that it was conducted in compliance with the informed consent regulations in part 50 of this chapter; or if the investigation was not conducted in compliance with those regulations, a brief statement of the reason for the noncompliance. Failure or inability to comply with these requirements does not justify failure to provide information on a relevant clinical investigation.
(B) For clinical investigations conducted in the United States, a statement that each investigation was conducted in compliance with part 812 of this chapter concerning sponsors of clinical investigations and clinical investigators, or if the investigation was not conducted in compliance with those regulations, a brief statement of the reason for the noncompliance. Failure
(C) For clinical investigations conducted outside the United States that are intended to support the De Novo request, the requirements under § 812.28 of this chapter apply. If any such investigation was not conducted in accordance with good clinical practice (GCP) as described in § 812.28(a) of this chapter, include either a waiver request in accordance with § 812.28(c) of this chapter or a brief statement of the reason for not conducting the investigation in accordance with GCP and a description of steps taken to ensure that the data and results are credible and accurate and that the rights, safety, and well-being of subjects have been adequately protected. Failure or inability to comply with these requirements does not justify failure to provide information on a relevant clinical investigation.
(D) A statement that each investigation has been completed per the protocol or a summary of any protocol deviations.
(E) A financial certification or disclosure statement or both as required by part 54 of this chapter.
(F) For a De Novo request that relies primarily on data from a single investigator at one investigation site, a justification showing that these data and other information are sufficient to reasonably demonstrate the safety and effectiveness of the device when subject to general controls or general and special controls, and to ensure that the results from a site are applicable to the intended population.
(G) A discussion of how the investigation data represent clinically significant results, pursuant to § 860.7(e).
(16)
(ii) An identification, discussion, and analysis of any other data, information, or report relevant to an evaluation of the safety and effectiveness of the device known to or that should reasonably be known to the requester from any source, foreign or domestic, including information derived from investigations other than those in the request and from commercial marketing experience.
(iii) Copies of such published reports or unpublished information in the possession of or reasonably obtainable by the requester, if requested by FDA.
(17)
(18)
(19)
(b) Pertinent information in FDA files specifically referred to by a requester may be incorporated into a De Novo request by reference. Information submitted to FDA by a person other than the requester will not be considered part of a De Novo request unless such reference is authorized in writing by the person who submitted the information.
(c) If the requester believes that certain information required under paragraph (a) of this section to be in a De Novo request is not applicable to the device that is the subject of the De Novo request, and omits any such information from the De Novo request, the requester must submit a statement that specifies the omitted information and justifies the omission. The statement must be submitted as a separate section in the De Novo request and listed in the table of contents. If the justification for the omission is not accepted by FDA, FDA will so notify the requester.
(d) The requester must update its pending De Novo request with new safety and effectiveness information learned about the device from ongoing or completed studies and investigations that may reasonably affect an evaluation of the safety or effectiveness of the device as such information becomes available.
(a) The acceptance of a De Novo request means that FDA has made a threshold determination that the De Novo request contains the information necessary to permit a substantive review. Within 15 days after a De Novo request is received by FDA, FDA will notify the requester whether the De Novo request has been accepted.
(b) If FDA does not find that any of the reasons in paragraph (c)(1) of this section for refusing to accept the De Novo request apply or FDA fails to complete the acceptance review within 15 days, FDA will accept the De Novo request for review and will notify the requester. The notice will include the De Novo request reference number and the date FDA accepted the De Novo request. The date of acceptance is the date that an accepted De Novo request was received by FDA.
(c)(1) FDA may refuse to accept a De Novo request if any of the following applies:
(i) The requester has an open or pending premarket submission or reclassification petition for the device;
(ii) The De Novo request is incomplete because it does not on its face contain all the information required under section 513(f)(2) of the Federal Food, Drug, and Cosmetic Act or does not contain each of the items required under this part, or a justification for omission of any item;
(iii) The De Novo request is not formatted as required under § 860.223;
(iv) The De Novo request is for multiple devices and those devices are of more than one type; or
(v) The requester has not responded to, or has failed to provide a rationale for not responding to, deficiencies identified by FDA in previous submissions for the same device, including those submissions described in § 860.234(a)(3).
(2) If FDA refuses to accept a De Novo request, FDA will notify the requester of the reasons for the refusal. The notice will identify the deficiencies in the De Novo request that prevent accepting and will include the De Novo request reference number.
(3) If FDA refuses to accept a De Novo request, the requester may submit the additional information necessary to comply with the requirements of section 513(f)(2) of the Federal Food, Drug, and Cosmetic Act and this part. The additional information must include the De Novo request reference number of the original submission. If the De Novo request is subsequently accepted, the date of acceptance is the date FDA receives the additional information.
(a) FDA will begin substantive review of a De Novo request after the De Novo request is accepted under § 860.245. Within 120 days after receipt of a De Novo request or receipt of additional information that results in the De Novo request being accepted under § 860.245, FDA will review the De Novo request and send the requester an order granting the De Novo request under § 860.289(a)
(b) A requester may supplement or amend a pending De Novo request to revise existing information or provide additional information.
(1) FDA may require additional information regarding the device that is necessary for FDA to complete the review of the De Novo request.
(2) Additional information submitted to FDA must include the reference number assigned to the original De Novo request and, if submitted on the requester's own initiative, the reason for submitting the additional information.
(c) Prior to granting or declining a De Novo request, FDA may inspect relevant facilities to help determine:
(1) That clinical or nonclinical data were collected in a manner that ensures that the data accurately represents the benefits and risks of the device; or
(2) That implementation of Quality System Regulation (part 820 of this chapter) requirements, in addition to other general controls and any specified special controls, provide adequate assurance that critical and/or novel manufacturing processes produce devices that meet specifications necessary to ensure reasonable assurance of safety and effectiveness.
(a) FDA will consider a De Novo request to have been withdrawn if:
(1) The requester fails to provide a complete response to a request for additional information pursuant to § 860.256(b)(1) within 180 days after the date FDA issues such request;
(2) The requester fails to provide a complete response to the deficiencies identified by FDA pursuant to § 860.245(c)(2) within 180 days of the date notification was issued by FDA;
(3) The requester does not permit an authorized FDA employee an opportunity to inspect the facilities, pursuant to § 860.256(c), at a reasonable time and in a reasonable manner, and to have access to copy and verify all records pertinent to the De Novo request; or
(4) The requester submits a written notice to FDA that the De Novo request has been withdrawn.
(b) If FDA considers a De Novo request to be withdrawn, the Agency will notify the requester. The notice will include the De Novo request reference number and the date FDA considered the De Novo request withdrawn.
(a)(1) FDA will issue to the requester an order granting a De Novo request if none of the reasons in paragraph (b) of this section for declining the De Novo request applies.
(2) If FDA grants a De Novo request, FDA will subsequently publish in the
(b) FDA may issue written notice to the requester declining a De Novo request if the requester fails to follow the requirements of this part or if, upon the basis of the information submitted in the De Novo request or any other information before FDA, FDA determines:
(1) The device does not meet the criteria under section 513(a)(1) of the Federal Food, Drug, and Cosmetic Act and § 860.3 for classification into class I or II;
(2) The De Novo request contains a false statement of material fact or there is a material omission;
(3) The device's labeling does not comply with the requirements in parts 801 and 809 of this chapter, as applicable;
(4) The product described in the De Novo request does not meet the definition of a device under section 201(h) of the Federal Food, Drug, and Cosmetic Act and is not a combination product as defined at § 3.2(e) of this chapter;
(5) The device is of a type which has already been approved in existing applications for premarket approval (PMAs) submitted under part 814 of this chapter;
(6) The device is of a type that has already been classified into class I, class II, or class III;
(7) An inspection of a relevant facility under § 860.256(c) results in a determination that general or general and special controls would not provide reasonable assurance of safety and effectiveness;
(8) A nonclinical laboratory study that is described in the De Novo request, and that is essential to show there is reasonable assurance of safety was not conducted in compliance with the good laboratory practice regulations in part 58 of this chapter and no reason for the noncompliance is provided or, if a reason is provided, the practices used in conducting the study do not support the validity of the study;
(9) A clinical investigation described in the De Novo request involving human subjects that is subject to the institutional review board regulations in part 56 of this chapter, informed consent regulations in part 50 of this chapter, or GCP described in 812.28(a) of this chapter, was not conducted in compliance with those regulations such that the rights or safety of human subjects were not adequately protected or the supporting data were determined to be otherwise unreliable;
(10) A clinical or nonclinical study necessary to demonstrate that general controls or general and special controls provide reasonable assurance of safety and effectiveness:
(i) Has not been completed per the study protocol, or
(ii) Deficiencies related to the investigation and identified in any request for additional information under § 860.256(b)(1) have not been adequately addressed; or
(11) After a De Novo request is accepted for review under § 860.245(b), the requester makes significant unsolicited changes to the device's:
(i) Indications for use; or
(ii) Technological characteristics.
(c) An order declining a De Novo request will inform the requester of the deficiencies in the De Novo request, including each applicable ground for declining the De Novo request.
(d) FDA will use the criteria specified in § 860.7 to determine the safety and effectiveness of a device in deciding whether to grant or decline a De Novo request. FDA may use information other than that submitted by the requester in making such determination.
Environmental Protection Agency (EPA).
Proposed rule; notification of intent.
The Environmental Protection Agency (EPA) Region 5 is issuing a Notice of Intent to Delete the Tomah Armory Landfill Superfund Site (Tomah Armory Site), located in Tomah, Wisconsin, from the National Priorities
Comments must be received by January 7, 2019.
Submit your comments, identified by Docket ID no. EPA-HQ-SFUND-1987-0002, by mail to Randolph Cano, NPL Deletion Coordinator, U.S. Environmental Protection Agency Region 5 (SR-6J), 77 West Jackson Boulevard, Chicago, IL 60604. Comments may also be submitted electronically or through hand delivery/courier by following the detailed instructions in the
Randolph Cano, NPL Deletion Coordinator, U.S. Environmental Protection Agency Region 5 (SR-6J), 77 West Jackson Boulevard, Chicago, IL 60604, (312) 886-6036, email:
In the “Rules and Regulations” section of today's
For additional information, see the direct final Notice of Deletion which is located in the “Rules and Regulations” section of this
Environmental protection, Air pollution control, Chemicals, Hazardous waste, Hazardous substances, Intergovernmental relations, Penalties, Reporting and recordkeeping requirements, Superfund, Water pollution control, Water supply.
33 U.S.C. 1321(d); 42 U.S.C. 9601-9657; E.O. 13626, 77 FR 56749, 3 CFR, 2013 Comp., p. 306; E.O. 12777, 56 FR 54757, 3 CFR, 1991 Comp., p. 351; E.O. 12580, 52 FR 2923, 3 CFR, 1987 Comp., p. 193.
Office of Human Resource Management, Departmental Administration, USDA.
Notice of Performance Review Board appointments.
This notice announces the members of the Senior Executive Service (SES) and Senior Level (SL) and Scientific or Professional (ST) Performance Review Board. Agriculture has two PRBs that are represented by each Mission Area. The PRB is comprised of a Chairperson and a mix of career and noncareer senior executives and senior professionals that meet annually to review and evaluate performance appraisal documents and provides a written recommendation to the Secretary for final approval of each executive's performance rating, performance-based pay adjustment, and performance award.
The board membership is applicable beginning on November 20, 2018.
Mary Pletcher Rice, Chief Human Capital Officer, Office of Human Resources Management, telephone: (202) 756-7149, or Natalie Duncan, Executive Director, Executive Resources Management Division, telephone: (202) 720-8629.
In accordance with 5 U.S.C. 4314(c)(4), the USDA PRB members are named below:
Farm Service Agency, USDA.
Notice; request for comments.
In accordance with the Paperwork Reduction Act of 1995, the Farm Service Agency (FSA) is requesting comments from all interested individuals and organizations on an extension of a currently approved information collection request associated with the Agricultural Foreign Investment Disclosure Act (AFIDA) of 1978.
We will consider comments that we receive by February 5, 2019.
We invite you to submit comments on the notice. In your comments, include date, volume, and page number of this issue of the
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You may also send comments to the Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, DC 20503. Copies of the information collection may be requested by contacting Philip Sronce at the above addresses.
Philip Sronce, (202) 720-2711.
For the following estimated total annual burden on respondents, the formula used to calculate the total burden hour is the estimated average time per responses hours multiplied by the estimated total annual responses.
We are requesting comments on all aspects of this information collection to help us to:
(1) Evaluate whether the collection of information is necessary for the proper performance of the functions of the FSA, including whether the information will have practical utility;
(2) Evaluate the accuracy of the FSA's estimate of burden including the validity of the methodology and assumptions used;
(3) Enhance the quality, utility and clarity of the information to be collected;
(4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.
All comments received in response to this notice, including names and addresses when provided, will be a matter of public record. Comments will be summarized and included in the submission for Office of Management and Budget approval.
Farm Service Agency, USDA.
Notice; request for comments.
In accordance with the Paperwork Reduction Act of 1995, the Farm Service Agency (FSA) is requesting comments from all interested individuals and organizations on an extension of a currently approved information collection request associated with the Request for Special Priorities Assistance. The information collection established by the Agriculture Priorities and Allocations System (APAS) regulation is necessary for the program applicant (person) to request prioritizing of a contract above all other contracts. The purpose of the priority rating is to obtain item(s) in support of national defense programs that they are not able to obtain in time through normal market channels.
We will consider comments that we receive by February 5, 2019.
We invite you to submit comments on the notice. In your comments, include date, volume, and page number of this issue of the
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You may also send comments to the Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, DC 20503. Copies of the information collection may be requested by contacting Lesa A. Johnson at the above addresses.
David Wechsler, (202) 720-2929.
For the following estimated total annual burden on respondents, the formula used to calculate the total burden hour is the estimated average time per responses hours multiplied by the estimated total annual responses.
We are requesting comments on all aspects of this information collection to help us to:
(1) Evaluate whether the collection of information is necessary for the proper performance of the functions of the FSA, including whether the information will have practical utility;
(2) Evaluate the accuracy of the FSA's estimate of burden including the validity of the methodology and assumptions used;
(3) Enhance the quality, utility and clarity of the information to be collected;
(4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.
All comments received in response to this notice, including names and addresses when provided, will be a matter of public record. Comments will be summarized and included in the submission for Office of Management and Budget approval.
Rural Utilities Service, USDA.
Notice of availability of a draft environmental impact statement; notice of public meetings; and section 106 notification to the public.
Notice is hereby given that the Rural Utilities Service (RUS) has prepared a Draft Environmental Impact Statement (EIS) to meet its responsibilities under the National Environmental Policy Act (NEPA) and environmental policies and procedures related to providing financial assistance
The purpose of the proposed project is to: Address reliability issues on the regional bulk transmission system, alleviate congestion that occurs in certain parts of the transmission system and remove constraints that limit the delivery of power, expand the access of the transmission system to additional resources, increase the transfer capability of the electrical system between Iowa and Wisconsin, reduce the losses in transferring power and increase the efficiency of the transmission system, and respond to public policy objectives aimed at enhancing the nation's transmission system and to support the changing generation mix. A more detailed explanation of the purpose and need for the project can be found in the Draft EIS.
Written comments on this Draft EIS will be accepted for 60 calendar days following the publication of the U.S. Environmental Protection Agency's notice of receipt of the Draft EIS in the
A copy of the Draft EIS may be viewed online at the following website:
To obtain copies of the Draft EIS, to request further participation or request consulting party status under section 106 of the NHPA or for further information, contact: Lauren Cusick or Dennis Rankin, Environmental Protection Specialist, USDA, Rural Utilities Service, 1400 Independence Avenue SW, Room 2244, Stop 1571, Washington, DC 20250-1571, by phone at (202) 720-1414 or email
RUS is the lead agency for the federal environmental review with cooperating and participating agencies as outlined in the Draft EIS. The first Notice of Intent (NOI) to Prepare an EIS and Hold Public Scoping Meeting was published in the
The Draft EIS addresses the construction and operation of the proposed project, which, in addition to the 345-kV transmission line and associated infrastructure, includes the following facilities:
a. At the existing Cardinal Substation in Dane County, Wisconsin: A new 345-kV terminal within the substation;
b. At the new proposed Hill Valley Substation near the Village of Montfort, Wisconsin: A 10-acre facility with four 345-kV circuit breakers, one 345-kV shunt reactor, one 345-kV/138-kV autotransformer, and three 138-kV circuit breakers;
c. At the existing Eden Substation near the village of Montfort, Wisconsin: Transmission line protective relaying upgrades, ground grid improvements, and replacement of equipment within the Eden Substation;
d. Between the existing Eden Substation and the proposed Hill Valley Substation near the Village of Montfort, Wisconsin: A rebuild of the approximately 1-mile Hill Valley to Eden 138-kV transmission line;
e. At the existing Wyoming Valley Substation near Wyoming, Wisconsin: Ground grid improvements;
f. Between the existing Cardinal Substation and the proposed Hill Valley Substation: A new 50- to 53-mile (depending on the final route) 345-kV transmission line;
g. Between the proposed Hill Valley Substation and existing Hickory Creek
h. At the Mississippi River in Cassville, Wisconsin: A rebuild and possible relocation of the existing Mississippi River transmission line crossing to accommodate the new 345-kV transmission line and Dairyland's 161-kV transmission line, and which would be capable of operating at 345-kV/345-kV but will initially be operated at 345-kV/161-kV;
1. depending on the final route and the Mississippi River crossing locations:
i. A new 161-kV terminal and transmission line protective relaying upgrades within the existing Nelson Dewey Substation in Cassville, Wisconsin;
ii. a replaced or reinforced structure within the Stoneman Substation in Cassville, Wisconsin;
iii. multiple, partial, or complete rebuilds of existing 69-kV and 138-kV transmission lines in Wisconsin that would be collocated with the new 345-kV line;
i. At the existing Turkey River Substation in Dubuque County, Iowa: Two 161-/69-kV transformers, four 161-kV circuit breakers, and five 69-kV circuit breakers; and
j. At the existing Hickory Creek Substation in Dubuque County, Iowa: A new 345-kV terminal within the existing Hickory Creek Substation.
Among the alternatives addressed in the Draft EIS is the No Action alternative, under which the proposed project would not be undertaken. Additional alternatives addressed in the Draft EIS include six action alternatives connecting the Cardinal Station in Wisconsin with the Hickory Creek Station in Iowa. RUS has carefully studied public health and safety, environmental impacts, and engineering aspects of the proposed project.
RUS used input provided by government agencies, private organizations, and the public in the preparation of the Draft EIS. RUS will prepare a Final EIS that considers all comments received on the Draft EIS. Following the 30 calendar day comment period for the Final EIS, RUS will prepare a Record of Decision (ROD). Notices announcing the availability of the Final EIS and the ROD will be published in the
In accordance with section 106 of the National Historic Preservation Act and its implementing regulation, “Protection of Historic Properties” (36 CFR part 800) and as part of its broad environmental review process, RUS must take into account the effect of the proposed project on historic properties. Pursuant to 36 CFR 800.2(d)(3), RUS is using its procedures for public involvement under NEPA to meet its responsibilities to solicit and consider the views of the public during section 106 review. Any party wishing to participate more directly with RUS as a “consulting party” in section 106 review may submit a written request to the RUS contact provided in this notice.
The proposed project involves unavoidable impacts to wetlands and floodplains; this Notice of Availability also serves as a statement of no practicable alternatives to impacts on wetlands and floodplains, in accordance with Executive Orders 11990 and 11988, respectively.
Any final action by RUS related to the proposed project will be subject to, and contingent upon, compliance with all relevant Federal, State and local environmental laws and regulations, and completion of the environmental review requirements as prescribed in the RUS Environmental Policies and Procedures (7 CFR part 1970).
The Department of Commerce will submit to the Office of Management and Budget (OMB) for clearance the following proposal for collection of information under the provisions of the Paperwork Reduction Act.
The Census Bureau allowed the previous clearance to lapse since ASM inquiries for survey year 2017 (collected in 2018) are cleared as part of the 2017 Economic Census (0607-0998). The Census Bureau is requesting reinstatement to continue annual collection of the ASM for survey years 2018, 2019, and 2020.
The ASM collects data on employment, payroll, hours, wages of production workers, value added by manufacture, cost of materials, value of shipments by North American Product Classification System (NAPCS) product code, inventories, cost of employer's fringe benefits, operating expenses, and expenditures for new and used plant and equipment. The Census Bureau tabulates and publishes data for most of these items by two-digit through six-digit North American Industry Classification System (NAICS) levels. The Census Bureau also publishes ASM data by state at the two-through four-digit NAICS levels.
Federal agencies use ASM data as benchmarks for their statistical programs, including the Federal Reserve Board's Index of Industrial Production and the Bureau of Economic Analysis' (BEA) National Income and Product Accounts. The Department of Energy relies on ASM estimates on the use of energy during production in the manufacturing sector. These data also are used as benchmark data for the Manufacturing Energy Consumption Survey, which is conducted for the Department of Energy by the Census Bureau. Within the Census Bureau, the ASM data are used to benchmark and reconcile monthly and quarterly estimates of manufacturing production and inventories.
The survey also provides valuable information to private companies, research organizations, and trade associations. Industry makes extensive use of the annual figures on NAPCS product shipments for market analysis, product planning, and investment planning. State development and planning agencies rely on ASM data for policymaking, planning, and administration.
The Census Bureau plans to make the following changes to the ASM data collection:
The MA-10000(S) questionnaire will be eliminated. Historically, all locations of multiple-establishment firms and large single-establishment firms in the sample were asked to report on the MA-10000(L) questionnaire. The remaining
The 2018 ASM will include two paths. The multiple-establishment firms will receive a questionnaire path that includes spreadsheet functionality. Firms will be able to enter data for their locations in a form view or select the spreadsheet option. Respondents have the ability to download, export, and import their spreadsheets. Respondents will have the option to “add locations” if there are establishments not listed for their firm. The path for single-establishment firms does not include spreadsheet functionality, or the ability to “add locations”. The multiple-establishment path includes instructions and a question related to interplant transfers; single-establishment firms do not have interplant transfers.
Item 5B, Exports and Item 11, Inventories Outside the U.S. are no longer needed by either the International Trade Administration (ITA) or the Bureau of Economic Analysis. The elimination of these items was not documented in the ASM pre-submission notice dated July 13, 2018, because the decision was made after the notice was published in the
Item 17, Principal Business Activity on the MA-10000 will ask the respondent to identify their principal kind of business or activity. The question will pre-list suggested six-digit NAICS codes and descriptions for each establishment. The respondent will have the option to select the pre-listed NAICS that describes their principal business activity or to “write-in” their principal business activity if the pre-listed NAICS does not apply. Adding this question will help the Census Bureau identify out-of-scope establishments that do not conduct manufacturing activities and establishments which are classified in an incorrect manufacturing industry.
Previously, Item 22, Details of Sales Shipments Receipts or Revenue was collected on a NAICS basis. Beginning with the 2018 ASM, the collection of Item 22 will be based on the North American Product Classification System (NAPCS). NAPCS is a comprehensive demand-based hierarchical classification system for products that is not industry-of-origin based, but can be linked to the NAICS industry structure, and is consistent across the three North American countries. The primary objective of this product classification change is to identify, define, and classify the outputs produced and transacted (sold, transferred, or placed in inventory) by the reporting units within each industry regardless of their designation (intermediate or final).
Due to the implementation of NAPCS, it is unnecessary to collect Miscellaneous Receipts. In previous ASM survey years, products were collected using only manufacturing sector NAICS codes. Non-manufacturing sector products, produced by manufacturing establishments were classified as Miscellaneous Receipts, which included contract work, resales, and other. NAPCS is an economy-wide solution, which allows ASM respondents to classify out of sector products in valid NAPCS codes.
Add a new Special Inquiry, Item 28 on basic robotic use in manufacturing to gauge the prevalence of robotics use in the manufacturing sector across different geographies and by firm size. Questions will be added to collect the number of industrial robots in operation, the number of industrial robots purchased, and the value of capital expenditures for robotic equipment.
Firms will be asked to provide an estimate of how long it took to complete the MA-10000 questionnaire. Responses to this question will be used to re-evaluate the burden hours we impose on respondents, given the various question additions, changes and deletions we are making. The Census Bureau will submit a nonsubstantive change request to revise the burden of this collection if analysis indicates a change. Efforts to analyze paradata to assess burden are currently being evaluated. ASM instrument paradata shows time logged-in and patterns of movement through the instrument, but not time spent reviewing instructions and gathering the necessary data. Nor does it provide an indication of idle time while the respondent is logged in. Paradata can help the Census Bureau calculate the time spent in the instrument but may not be a true reflection of respondent burden.
This information collection request may be viewed at
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
The Department of Commerce will submit to the Office of Management and Budget (OMB) for clearance the following proposal for collection of information under the provisions of the Paperwork Reduction Act.
The AES is the primary instrument used for collecting export trade data, which are used by the Census Bureau for statistical purposes. The AES record provides the means for collecting data on U.S. exports. Title 13, U.S.C., Chapter 9, Sections 301-307, mandates the collection of these data. The regulatory provisions for the collection of these data are contained in the Foreign Trade Regulations (FTR), Title 15, Code of Federal Regulations (CFR), Part 30. The official export statistics collected from these tools provide the basic component for the compilation of the U.S. position on merchandise trade. These data are an essential component of the monthly totals provided in the U.S. International Trade in Goods and Services Press Release, a principal economic indicator and a primary component of the Gross Domestic Product. Traditionally, other federal agencies use the Electronic Export Information (EEI) for export control purposes to detect and prevent the export of certain items by unauthorized parties or to unauthorized destinations or end users. This information is noted in the ACE AESDirect User Guide.
Since 2016, the Census Bureau and the U.S. Customs and Border Protection (CBP) have implemented the following enhancements to the AES, in accordance with revisions to the FTR: (1) Added the Original Internal Transaction Number (ITN) to the AES. The Original ITN field is an optional data element and is utilized if the filer creates an additional AES record for a shipment that was previously filed; (2) added the Ultimate Consignee Type data field, which requires the filer to identify the ultimate consignee as a Direct Consumer, Government Entity, Reseller, or Other.
In addition, the Census Bureau and CBP implemented the following changes to the AES: (1) Added Bureau of Industry and Security (BIS) Export Control Classification Numbers (ECCNs) and increased edits and validations between License Codes and ECCNs, including the addition of the 600 series ECCNs; (2) renamed the country Swaziland to Eswatini in the AES; and (3) removed the BIS license codes C32, C49, C55, and C56.
The Census Bureau also revised the FTR to clarify the split shipment requirements (82 FR 18383) and the collection of the Kimberley Process Certificates (83 FR 17749). Additionally, the Census Bureau revised language in the FTR to reflect the implementation of the International Trade Data System, in accordance with the Executive Order 13659, Streamlining the Export/Import Process for America's Businesses.
These revisions made should not affect the average three-minute response time for the completion of the AES record: The Original ITN is an optional data element and filers will only report it when they choose to provide CBP with additional information about the export shipment; The Ultimate Consignee Type was added for the BIS for export enforcement purposes and is information that filers should know based on BIS's “Know Your Customer” guidance; The revision to the ECCNs and License Codes modified selections for fields that already exist.
Currently, the Census Bureau is drafting a Notice of Proposed Rulemaking (NPRM) to clarify the responsibilities of parties participating in routed and standard export transactions. The Census Bureau published an Advance Notice of Proposed Rulemaking (ANPRM) on October 6, 2017 (82 FR 46739) soliciting comments on the clarity, usability, and any other matters of interest to the trade community and the public related to the regulatory requirements for routed transactions. The Census Bureau considered all comments received in response to the ANPRM in drafting the NPRM. The NPRM potentially would propose revisions and add several key terms used in the regulatory provision of these transactions, including authorized agent, forwarding agent, standard export transaction and written release. While revisions to the FTR are necessary to improve clarity to the filing requirements for the routed export transaction, it is critical for the Census Bureau to ensure that any revisions made to the FTR will allow for the continued collection and compilation of accurate trade statistics. Additionally, it is important that the responsibilities of the U.S. Principal Party in Interest (USPPI) and the U.S. authorized agent are clearly defined to ensure that the Electronic Export Information is filed by the appropriate party to prevent receiving duplicate filings or in some cases, no filings. The changes proposed in the NPRM will not have an impact on the reporting burden of the export trade community.
The information collected via the AES conveys what is being exported (description and commodity classification number), how much is exported (quantity, shipping weight, and value), how it is exported (mode of transport, exporting carrier, and whether containerized), from where (state of origin and port of export), to where (port of unloading and country of ultimate destination), and when a commodity is exported (date of exportation). The identification of the USPPI shows who is exporting goods. The USPPI and/or the forwarding or other agent information provides a contact for verification of the information.
The U.S. Federal Government uses every data element on the AES record. The Census Bureau published the Final Rule “Foreign Trade Regulations (FTR): Clarification on Filing Requirements” on April 19, 2017 (82 FR 18383) to update the language in the Foreign Trade Regulations to reflect the implementation of the International Trade Data System (ITDS). The ITDS was established to eliminate the redundant information collection requirements, efficiently regulate the flow of commerce, and effectively enforce laws and regulations relating to international trade. ITDS establishes a single portal system for the collection and distribution of standard electronic import and export data required by all participating federal agencies. In addition, this Rule allows federal agencies with appropriate authority to access export data in the AES and ensure consistency with the Executive Order 13659, Streamlining the Export/Import Process for America's Businesses, issued on February 19, 2014.
The data collected from the AES serves as the official record of export transactions. The mandatory use of the AES enables the Federal Government to produce more accurate export statistics. The Census Bureau delegated the
Other Federal agencies use these data to develop the components of the merchandise trade figures used to calculate the balance of payments and Gross Domestic Product accounts; to enforce U.S. export laws and regulations; to plan and examine export promotion programs and agricultural development and assistance programs; and to prepare for and assist in trade negotiations under the General Agreement on Tariffs and Trade. Collection of these data also eliminates the need for conducting additional surveys for the collection of information, as the AES shows the relationship of the parties to the export transaction (as required by the Bureau of Economic Analysis). These AES data are also used by the Bureau of Labor Statistics as a source for developing the export price index and by the U.S. Department of Transportation for administering the negotiation of reciprocal arrangements for transportation facilities between the United States and other countries.
Export statistics collected from the AES aid state governments, private sector companies, financial institutions, and transportation entities in conducting market analysis and market penetration studies for the development of new markets and market-share strategies. A collaborative effort among the Census Bureau, the National Governors' Association and other data users resulted in the development of export statistics using the state of origin reported on the AES. This information enables state governments to focus activities and resources on fostering the exports of goods that originate in their states. Port authorities, steamship lines, airlines, aircraft manufacturers, and air transport associations use these data for measuring the volume and effect of air or vessel shipments and the need for additional or new types of facilities.
This information collection request may be viewed at
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
On August 1, 2018, Tesla, Inc. submitted a notification of proposed production activity to the FTZ Board for its facilities within FTZ 18—Subzone 18G, in Fremont and Palo Alto, California.
The notification was processed in accordance with the regulations of the FTZ Board (15 CFR part 400), including notice in the
The Greater Detroit Foreign-Trade Zone, Inc., grantee of FTZ 70, submitted a notification of proposed production activity to the FTZ Board on behalf of Fluid Equipment Development Company, LLC (FEDCO), located in Monroe, Michigan. The notification conforming to the requirements of the regulations of the FTZ Board (15 CFR 400.22) was received on November 28, 2018.
The FEDCO facility is located within Site 77 of FTZ 70. The facility is used for the production of energy recovery turbines and centrifugal pumps used in water desalination. Pursuant to 15 CFR 400.14(b), FTZ activity would be limited to the specific foreign-status materials and components and specific finished products described in the submitted notification (as described below) and subsequently authorized by the FTZ Board.
Production under FTZ procedures could exempt FEDCO from customs duty payments on the foreign-status components used in export production. On its domestic sales, for the foreign-status materials/components noted below, FEDCO would be able to choose the duty rates during customs entry procedures that apply to: Energy recovery turbines; single-stage pumps under 2-inch discharge; single-stage pumps over 2-inch discharge; single-stage pumps over 3-inch discharge; multi-stage centrifugal pumps; and, pump spare parts (duty-free). FEDCO would be able to avoid duty on foreign-status components which become scrap/waste. Customs duties also could possibly be deferred or reduced on foreign-status production equipment.
The components and materials sourced from abroad include: Steel cast flanges; steel cast rings; steel cast cavity covers; steel cast bearing holders; steel cast pump inlets; steel cast housings; steel cast seal carriers; and, steel cast impellers (duty rate 2.9%). The request indicates that the materials/components are subject to special duties under Section 301 of the Trade Act of 1974 (Section 301), depending on the country of origin. The applicable Section 301 decisions require subject merchandise
Public comment is invited from interested parties. Submissions shall be addressed to the Board's Executive Secretary at the address below. The closing period for their receipt is January 16, 2019.
A copy of the notification will be available for public inspection at the Office of the Executive Secretary, Foreign-Trade Zones Board, Room 21013, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230-0002, and in the “Reading Room” section of the Board's website, which is accessible via
For further information, contact Elizabeth Whiteman at
On October 11, 2018, the Executive Secretary of the Foreign-Trade Zones (FTZ) Board docketed an application submitted by the Paducah McCracken County Riverport Authority, grantee of FTZ 294, requesting subzone status subject to the existing activation limit of FTZ 294, on behalf of Mayfield Consumer Products, in Mayfield and Hickory, Kentucky.
The application was processed in accordance with the FTZ Act and Regulations, including notice in the
On October 9, 2018, the Executive Secretary of the Foreign-Trade Zones (FTZ) Board docketed an application submitted by the EDC, Inc., The Economic Development Council for the Peoria Area, grantee of FTZ 114, requesting subzone status subject to the existing activation limit of FTZ 114, on behalf of Winpak Heat Seal Corporation, in Pekin, Illinois.
The application was processed in accordance with the FTZ Act and Regulations, including notice in the
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) determines that welded carbon steel standard pipe and tube products (pipe and tube) from Turkey were sold at less than normal value during the period of review (POR), May 1, 2016, through April 30, 2017.
Applicable December 7, 2018.
Fred Baker, AD/CVD Operations, Office VI, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-2924.
On June 11, 2018, Commerce published the preliminary results of the administrative review of the antidumping duty order on pipe and tube from Turkey.
On June 21, 2018, we placed on the record certain entry documents obtained from U.S. Customs and Border
Based on our analysis of the comments received, we have made certain changes in the margin calculations. The final weighted-average dumping margins for the reviewed firms are listed below in the section entitled, “Final Results of the Review.” Further, we continue to find that Erbosan, Borusan Birlesik, Borusan Gemlik, Borusan Ihracat, Borusan Ithicat, and Tubeco had no reviewable shipments of subject merchandise during the POR.
The merchandise subject to the order is welded pipe and tube. The welded pipe and tube subject to the order is currently classifiable under subheading 7306.30.1000, 7306.30.5025, 7306.30.5032, 7306.30.5040, 7306.30.5055, 7306.30.5085, and 7306.30.5090 of the Harmonized Tariff Schedule of the United States (HTSUS). The HTSUS subheadings are provided for convenience and customs purposes only. The written description is dispositive.
In the
As noted above, we also made a preliminary determination of no shipments with respect to the constituent members of the Yücel Group (
All issues raised in the case and rebuttal briefs submitted in this review are addressed in the Issues and Decision Memorandum, which is hereby adopted with this notice. A list of the issues raised is attached as an appendix to this notice. The Issues and Decision Memorandum is a public document and is on file electronically
Based on our analysis of the comments received, we made certain changes to the
The statute and Commerce's regulations do not address the establishment of a rate to be applied to companies not selected for examination when Commerce limits its examination in an administrative review pursuant to section 777A(c)(2) of the Act. Generally, Commerce looks to section 735(c)(5) of the Act, which provides instructions for calculating the all-others rate in a market-economy investigation, for guidance when calculating the rate for companies which were not selected for individual review in an administrative review. Under section 735(c)(5)(A) of the Act, the all-others rate is normally “an amount equal to the weighted average of the estimated weighted average dumping margins established for exporters and producers individually investigated, excluding any zero or
In this review, we have a calculated a weighted-average dumping margin for Borusan that is not zero,
As a result of this review, we determine that the following weighted-average dumping margins exist for the period May 1, 2016 through April 30, 2017:
We intend to disclose the calculations performed for these final results of review within five days of the date of publication of this notice in the
Commerce shall determine, and CBP shall assess, antidumping duties on all appropriate entries covered by this review pursuant to section 751(a)(2)(C) of the Act and 19 CFR 351.212(b)(1).
For Borusan, because its weighted-average dumping margin is not zero or
For Toscelik, we will instruct CBP to liquidate its entries during the POR imported by the importers identified in its questionnaire responses without regard to antidumping duties because its weighted-average dumping margin in these final results is zero.
For companies that were not selected for individual examination, we will instruct CBP to liquidate unreviewed entries based on the methodology described in the “Final Rates for Non-Examined Companies” section, above.
Consistent with Commerce's assessment practice, for entries of subject merchandise during the POR produced by any company upon which we initiated an administrative review, for which they did not know that the merchandise was destined for the United States, we will instruct CBP to liquidate unreviewed entries at the all-others rate if there is no rate for the intermediate company(ies) involved in the transaction.
We intend to issue instructions to CBP 15 days after publication of the final results of this review.
The following cash deposit requirements will be effective for all shipments of subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided by section 751(a)(2)(C) of the Act: (1) The cash deposit rates will be equal to the weighted-average dumping margins established in the final results of this review; (2) for previously reviewed or investigated companies not participating in this review, the cash deposit rate will continue to be the company-specific rate published for the most recently completed segment of this proceeding in which the company was reviewed; (3) if the exporter is not a firm covered in this review, a previous review, or the original less-than-fair-value (LTFV) investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recently completed segment of this proceeding for the manufacturer of subject merchandise; and (4) the cash deposit rate for all other manufacturers or exporters will continue to be 14.74 percent, the all-others rate established in the LTFV investigation.
This notice serves as a final reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
This notice also serves as a reminder to parties subject to administrative protective order (APO) of their responsibility concerning the destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of the return or destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is a sanctionable violation.
We are issuing and publishing these results in accordance with sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 351.213(h) and 351.221(b)(5) of Commerce's regulations.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) preliminarily finds that JBF RAK LLC, the sole producer/exporter
Applicable December 7, 2018.
Andrew Huston, AD/CVD Operations, Office VII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-4261.
Commerce is conducting an administrative review of the antidumping duty order on polyethylene terephthalate film, sheet, and strip (PET Film) from the United Arab Emirates (UAE). The notice of initiation of this administrative review was published on January 11, 2018.
The merchandise subject to the order is polyethylene terephthalate film. The product is currently classified under subheading 3920.62.00.90 of the Harmonized Tariff Schedule of the United States (HTSUS). Although the HTSUS number is provided for convenience and for customs purposes, the written product description, available in the Preliminary Decision Memorandum, remains dispositive.
Commerce is conducting this review in accordance with section 751(a) of the Tariff Act of 1930, as amended (the Act). Export price and constructed export price are calculated in accordance with section 772 of the Act. Normal value is calculated in accordance with section 773 of the Act.
For a full description of the methodology underlying our preliminary results,
As a result of our review, we preliminarily determine the following weighted-average dumping margin for the period November 1, 2016, through October 31, 2017:
Commerce intends to disclose the calculations used in our analysis for the preliminary results to parties in this review within five days of the date of publication of this notice in accordance with 19 CFR 351.224(b). Interested parties are invited to comment on the preliminary results of this review. Pursuant to 19 CFR 351.309(c)(1)(ii), interested parties may submit case briefs not later than 30 days after the date of publication of this notice. Rebuttal briefs, limited to issues raised in the case briefs, may not be filed later than five days after the time limit for filing case briefs.
Pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing, or to participate if one is requested, must submit a written request to the Assistant Secretary for Enforcement and Compliance, filed electronically via ACCESS within 30 days after the date of publication of this notice. Requests should contain: (1) The party's name, address, and telephone number; (2) the number of participants; and (3) a list of the issues to be discussed. Issues raised in the hearing will be limited to those raised in the respective case briefs. If a hearing is requested, Commerce will notify interested parties of the hearing schedule.
We intend to issue the final results of this administrative review, including the results of our analysis of issues raised by the parties in the written comments, within 120 days of publication of these preliminary results in the
Upon issuing the final results of the review, Commerce shall determine, and U.S. Customs and Border Protection (CBP) shall assess, antidumping duties on all appropriate entries covered by this review. Commerce intends to issue assessment instructions to CBP 15 days after the date of publication of the final results of review.
For any individually examined respondents whose weighted-average dumping margin is above
The final results of this review shall be the basis for the assessment of antidumping duties on entries of merchandise covered by the final results
The following deposit requirements will be effective upon publication of the final results for all shipments of PET Film from the UAE entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of this administrative review, as provided for by section 751(a)(2)(C) of the Act: (1) The cash deposit rate for the companies under review will be the rate established in the final results of this review (except, if the rate is zero or
This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in Commerce's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
These preliminary results of administrative review are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act, and 19 CFR 351.213(h)(1).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) preliminarily finds that countervailable subsidies are being provided to producers and exporters of chlorinated isocyanurates (chloro isos) from the People's Republic of China (China) for the period of review (POR) January 1, 2016, through December 31, 2016. Interested parties are invited to comment on these preliminary results.
Applicable December 7, 2018.
Omar Qureshi or Susan Pulongbarit, AD/CVD Operations, Office V, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone (202) 482-5307 or (202) 482-4031, respectively.
Commerce published the notice of initiation of this administrative review on January 11, 2018.
The products covered by the order are chloro isos, which are derivatives are cyanuric acid, described as chlorinated s-triazine triones.
On November 13, 2014, Commerce published in the
As a result of this review, we preliminarily determine that the following estimated countervailable subsidy rates exist.
Commerce intends to disclose its calculations and analysis performed to interested parties in these preliminary results within five days of its public announcement, or if there is no public announcement, within five days of the date of this notice in accordance with 19 CFR 351.224(b). Case briefs or other written comments may be submitted to the Assistant Secretary for Enforcement and Compliance no later than 30 days after the date of publication of the preliminary results of review. Rebuttal briefs, limited to issues raised in case briefs, may be submitted no later than five days after the deadline date for case briefs.
Pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing, limited to issues raised in the case and rebuttal briefs, must submit a written request to the Assistant Secretary for Enforcement and Compliance, U.S. Department of Commerce within 30 days after the date of publication of this notice. Requests should contain the party's name, address, and telephone number, the number of participants, whether any participant is a foreign national, and a list of the issues to be discussed. If a request for a hearing is made, Commerce intends to hold the hearing at the U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230, at a time and date to be determined. Parties should confirm by telephone the date, time, and location of the hearing two days before the scheduled date.
Unless the deadline is extended pursuant to section 751(a)(3)(A) of the Act, we intend to issue the final results of this administrative review, including the results of our analysis of the issues raised by the parties in their comments, within 120 days after issuance of these preliminary results.
In accordance with 19 CFR 351.221(b)(4)(i), we preliminarily assigned subsidy rates in the amounts shown above for the producer/exporters shown above. Upon issuance of the final results, Commerce shall determine, and U.S. Customs and Border Protection (CBP) shall assess, CVDs on all appropriate entries covered by this review. We intend to issue instructions to CBP 15 days after publication of the final results of review.
Pursuant to section 751(a)(2)(C) of the Act, Commerce also intends to instruct CBP to collect cash deposits of estimated CVDs, in the amounts shown above for each of the respective companies shown above, on shipments of subject merchandise entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of this review. For all non-reviewed firms, we will instruct CBP to continue to collect cash deposits at the most-recent company-specific or all-others rate applicable to the company, as appropriate. These cash deposit requirements, when imposed, shall remain in effect until further notice.
These preliminary results are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act, and 19 CFR 351.221(b)(4).
Federal Student Aid (FSA), Department of Education (ED).
Notice.
In accordance with the Paperwork Reduction Act of 1995, ED is proposing an extension of an existing information collection.
Interested persons are invited to submit comments on or before February 5, 2019.
To access and review all the documents related to the information collection listed in this notice, please use
For specific questions related to collection activities, please contact Beth Grebeldinger, 202-377-4018.
The Department of Education (ED), in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)), provides the general public and Federal agencies with an opportunity to comment on proposed, revised, and continuing collections of information. This helps the Department assess the impact of its information collection requirements and minimize the public's reporting burden. It also helps the public understand the Department's information collection requirements and provide the requested data in the desired format. ED is soliciting comments on the proposed information collection request (ICR) that is described below. The Department of Education is especially interested in public comment addressing the following issues: (1) Is this collection necessary to the proper functions of the Department; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the Department enhance the quality, utility, and clarity of the information to be collected; and (5) how might the Department minimize the burden of this collection on the respondents, including through the use of information technology. Please note that written comments received in response to this notice will be considered public records.
Section 309(a) of the Clean Air Act requires that EPA make public its comments on EISs issued by other Federal agencies. EPA's comment letters on EISs are available at:
Farm Credit Administration.
Notice, regular meeting.
Notice is hereby given, pursuant to the Government in the Sunshine Act, of the regular meeting of the Farm Credit Administration Board (Board).
The regular meeting of the Board will be held at the offices of the Farm Credit Administration in McLean, Virginia, on December 13, 2018, from 9:00 a.m. until such time as the Board concludes its business.
Farm Credit Administration, 1501 Farm Credit Drive, McLean, Virginia 22102-5090. Submit attendance requests via email to
Dale Aultman, Secretary to the Farm Credit Administration Board, (703) 883-4009, TTY (703) 883-4056.
This meeting of the Board will be open to the public (limited space available). Please send an email to
The Federal Deposit Insurance Corporation (FDIC or Receiver), as Receiver for each of the following insured depository institutions, was charged with the duty of winding up the affairs of the former institutions and liquidating all related assets. The Receiver has fulfilled its obligations and made all dividend distributions required by law.
The Receiver has further irrevocably authorized and appointed FDIC-Corporate as its attorney-in-fact to execute and file any and all documents that may be required to be executed by the Receiver which FDIC-Corporate, in its sole discretion, deems necessary, including but not limited to releases, discharges, satisfactions, endorsements, assignments, and deeds. Effective on the termination dates listed above, the Receiverships have been terminated, the Receiver has been discharged, and the Receiverships have ceased to exist as legal entities.
The companies listed in this notice have applied to the Board for approval, pursuant to the Bank Holding Company Act of 1956 (12 U.S.C. 1841
The applications listed below, as well as other related filings required by the Board, are available for immediate
Unless otherwise noted, comments regarding each of these applications must be received at the Reserve Bank indicated or the offices of the Board of Governors not later than January 4, 2019.
1.
The notificants listed below have applied under the Change in Bank Control Act (12 U.S.C. 1817(j)) and § 225.41 of the Board's Regulation Y (12 CFR 225.41) to acquire shares of a bank or bank holding company. The factors that are considered in acting on the notices are set forth in paragraph 7 of the Act (12 U.S.C. 1817(j)(7)).
The notices are available for immediate inspection at the Federal Reserve Bank indicated. The notices also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing to the Reserve Bank indicated for that notice or to the offices of the Board of Governors. Comments must be received not later than December 26, 2018.
1.
Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).
Notice.
Under the provisions of the Paperwork Reduction Act, the Regulatory Secretariat Division will be submitting to the Office of Management and Budget (OMB) a request to review and approve an extension of an existing OMB emergency clearance notice regarding the use of products and services of Kaspersky Labs.
Submit comments on or before January 7, 2019.
Submit comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden to: Office of Information and Regulatory Affairs of OMB, Attention: Desk Officer for GSA, Room 10236, NEOB, Washington, DC 20503. Additionally submit a copy to GSA by any of the following methods:
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•
Ms. Camara Francis, Procurement Analyst, at telephone 202-550-0935, or email
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501
This information collection requirement supports implementation of Section 1634 of Division A of the National Defense Authorization Act (NDAA) for Fiscal Year 2018 (Pub. L. 115-91). This section of the NDAA prohibits Government use of any hardware, software, or services developed or provided, in whole or in part, by Kaspersky Lab or its related entities. This requirement is implemented in the Federal Acquisition Regulation (FAR) through the clause at FAR 52.204-23, Prohibition on Contracting for Hardware, Software, and Services Developed or Provided by Kaspersky Lab and Other Covered Entities.
This clearance covers the information contractors must submit to comply with the requirements of FAR 52.204-23,
DoD, GSA, and NASA request approval of this information collection in order to implement the law. The information will be used by agency personnel to identify and remove prohibited hardware, software, or services from Government use.
The public reporting burden for this collection of information consists of reports of identified covered articles during contract performance as required by 52.204-23. Reports are estimated to average 1.5 hour per response, including the time for reviewing definitions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the report.
A 60-day notice was published in the
Office of Planning, Research, and Evaluation; Administration for Children and Families; HHS.
Request for public comment.
The Office of Planning, Research, and Evaluation (OPRE), Administration for Children and Families (ACF), U.S. Department of Health and Human Services (HHS), is proposing to collect data for a new round of the Head Start Family and Child Experiences Survey (FACES).
Written comments and recommendations for the proposed information collection should be sent directly to the following: Office of Management and Budget, Paperwork Reduction Project, Email:
Copies of the proposed collection may be obtained by writing to the Administration for Children and Families, Office of Planning, Research and Evaluation, 330 C Street SW, Washington, DC 20201, Attn: OPRE Reports Clearance Officer. All requests should be identified by the title of the information collection. Email address:
Similar to FACES 2014-2018, in 2019, two parallel studies will commence. FACES 2019 focuses on Head Start Regions I through X (which are geographically based); AI/AN (American Indian and Alaska Native) FACES 2019 focuses on Region XI (which funds Head Start programs that serve federally recognized American Indian and Alaska Native tribes). Both studies will provide data on a set of key indicators for Head Start programs. In fall 2019 and spring 2020, FACES will assess the school readiness skills of 2,400 Head Start children in Regions I-X (FACES 2019) and 800 children in Region XI (AI/AN FACES 2019), survey their parents, and ask their Head Start teachers to rate children's social and emotional skills. This sample will be drawn from 60 programs in Regions I-X and 22 programs in Region XI. In spring 2020, classroom observations of sampled programs will occur. In Regions I-X, the number of programs will increase from the 60 that are used to collect data on children's school readiness outcomes to 180 for the purpose of conducting observations in 720 Head Start classrooms. In Region XI, the program sample will remain at 22, and approximately 80 Head Start classroom observations will take place. Program director, center director, and teacher surveys will also be conducted in spring 2020 in Regions I-XI. In spring 2022, program level data collection will be repeated in Regions I-X only. FACES 2019 also features a “Core Plus” design, with the above activities reflecting the Core data, with the potential of “Plus” studies to inform emerging programmatic questions. If any Plus studies are conducted, they will be conducted within the Core sample and will be included in a future
Previous
Sampling of children and classrooms for FACES starts with site visits to 157 Head Start centers (120 for FACES 2019 and 37 for AI/AN FACES 2019) in fall 2019. Field enrollment specialists (FES) will request a list of all Head Start-funded classrooms from Head Start staff. Next, for each selected classroom, the FES will request enrollment information for each child enrolled. Data collection will then start with site visits in fall 2019 to 82 Head Start programs (60 for FACES 2019 and 22 for AI/AN FACES 2019) to directly assess the school readiness skills of 3,200 children (2,400 for FACES 2019 and 800 for AI/AN FACES 2019) sampled for FACES and whose parents agree to participate. Parents of sampled children will complete surveys on the Web or by telephone about their children and family background. Head Start teachers will rate each sampled child (approximately 10 children per classroom) using the Web or paper-and pencil forms. These activities will occur a second time in spring 2020. When the FACES 2019 program sample size increases to 180 programs in the spring, the methods of data collection for this phase will feature classroom sampling and site visitors conducting observations of the quality of classrooms. Head Start program directors, center directors, and teachers will complete surveys about themselves and the services and instruction at Head Start. The purpose of the FACES data collection is to support the 2007
OCSE is proposing updates to the OCSE-157 report instructions to update and clarify reporting requirements. Respondents are encouraged to contact the agency to obtain a copy of the revised instructions for review and comment.
Food and Drug Administration, HHS.
Notice of availability.
The Food and Drug Administration (FDA or Agency) is announcing the availability of a draft guidance for industry entitled “Developing and Labeling
Submit either electronic or written comments on the draft guidance by February 5, 2019 to ensure that the Agency considers your comment on this draft guidance before it begins work on the final version of the guidance.
You may submit comments on any guidance at any time as follows:
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
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• For written/paper comments submitted to the Dockets Management Staff, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
You may submit comments on any guidance at any time (see 21 CFR 10.115(g)(5)).
Submit written requests for single copies of the draft guidance to the Office of Communication, Outreach and Development, Center for Biologics Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 71, Rm. 3128, Silver Spring, MD 20993-0002; the Office of the Center Director, Guidance and Policy Development, Center for Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Rm. 5431, Silver Spring, MD 20993-0002; or the Division of Drug Information, Center for Drug Evaluation and Research, Food and Drug Administration, 10001 New Hampshire Ave., Hillandale Building, 4th Floor, Silver Spring, MD 20993-0002. Send one self-addressed adhesive label to assist that office in processing your requests. The draft guidance may also be obtained by mail by calling FDA's Center for Biologics Evaluation and Research (CBER) at 1-800-835-4709 or 240-402-8010. See the
Stephen Ripley, Center for Biologics Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 71, Rm. 7301, Silver Spring, MD 20993-0002, 240-402-7911; Reena Philip, Center for
FDA is announcing the availability of a draft guidance for industry entitled “Developing and Labeling
Trials designed to support approval of a specific therapeutic product and a specific companion diagnostic have led to companion diagnostic labels that reference only a specific therapeutic product(s). Such specificity in labeling can limit a potentially broader use of a companion diagnostic that may be scientifically appropriate. In clinical practice, an oncologist generally considers the mutation profile of the tumor along with other factors when determining the treatment for a patient, such as the toxicity profile of the therapeutic product, the patient's preference, and formulary options. When a companion diagnostic is labeled for use with a specific therapeutic product, the clinician may need to order a different companion diagnostic (
The draft guidance describes considerations for when broader labeling may be scientifically appropriate and when it may not. FDA recommends developers of therapeutic oncology products and associated companion diagnostics collaboratively consider development programs that may result in broader labeling of companion diagnostics that are most clinically useful. Developers are encouraged to discuss development programs that could result in broader labeling with the CBER, Center for Devices and Radiological Health (CDRH), or Center for Drug Evaluation and Research, in coordination with the Oncology Center of Excellence, as appropriate, early to determine if the approach described in this guidance is appropriate for consideration. Developers whose approved companion diagnostics may be appropriate for broader labeling are encouraged to contact CDRH or CBER, as appropriate, to discuss.
This draft guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The draft guidance, when finalized, will represent the current thinking of FDA on “Developing and Labeling
In addition to providing stakeholders an opportunity to comment on the draft guidance, the Agency is interested in responses from stakeholders to the following:
1. Please describe any specific challenges with developing the evidence needed to identify in labeling a companion diagnostic for use with a specific group or class of oncology therapeutic products, rather than a specific therapeutic product. For example, please describe any challenges resulting from industry or business practices, including business agreements. What actions can FDA take to address the challenge(s)?
2. Please describe any specific challenges with submitting a premarket approval (PMA) supplement to FDA to expand the labeling for an approved companion diagnostic for use with a specific group or class of oncology therapeutic products. What actions can FDA take to address the challenge(s)?
3. Please describe any additional actions FDA can take to facilitate or encourage broader, evidence-based labeling that supports the use of a specific group or class of oncology therapeutic products with a companion diagnostic.
4. The guidance notes that variations in defined cut-points established for specific biomarkers for companion diagnostics can lead to challenges in implementing broader labeling for a specific group or class of oncology therapeutic products. Are there actions that FDA, or the broader scientific community, can take to facilitate standardization in this area?
This draft guidance refers to previously approved collections of information found in FDA regulations and guidance. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The collections of information in 21 CFR parts 801 and 809 have been approved under OMB control number 0910-0485; the collections of information in 21 CFR part 807, subpart E, have been approved under OMB control number 0910-0120; the collections of information in 21 CFR part 814, subparts A through E, have been approved under OMB control number 0910-0231; the collections of information in 21 CFR part 814, subpart H, have been approved under OMB control number 0910-0332; the collections of information in the guidance document “Requests for Feedback on Medical Device Submissions: The Pre-Submission Program and Meetings with Food and Drug Administration Staff” have been approved under OMB control number 0910-0756; and the collections of information in the guidance “De Novo Classification Process (Evaluation of Automatic Class III Designation)” have been approved under OMB control number 0910-0844.
Persons with access to the internet may obtain the draft guidance at either
Food and Drug Administration, HHS.
Notice; request for data and information.
The Food and Drug Administration (FDA or Agency) is announcing the establishment of a docket to obtain data, information, and comments that will assist the Agency in assessing the safety and effectiveness of food handler antiseptic drug products (
Submit either electronic or written comments, data, or information by February 5, 2019.
You may submit data and comments as follows. For each comment, indicate the specific question to which you are responding. Please note that late, untimely filed comments will not be considered. Electronic comments must be submitted on or before February 5, 2019. The
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”). We note however, that the OTC drug monograph process is a public process; and, the Agency intends to consider only non-confidential material that is submitted to the docket in response to this request for information, or that is otherwise publicly available in evaluating if a relevant ingredient is generally recognized as safe and effective (GRAS/GRAE).
Submit written/paper submissions as follows:
•
• For written/paper comments submitted to the Dockets Management Staff, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
Pranvera Ikonomi, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 22, Rm. 5418, Silver Spring, MD 20993-0002, 240-402-0272.
We are seeking public input regarding the safety and effectiveness of food handler antiseptics to inform FDA's ongoing review of OTC antiseptic drug products and the Agency's review of the active ingredients used in these products in the food handler setting. The Agency seeks data and information about these topical antiseptics and how the active ingredients should be tested and evaluated for safety and effectiveness.
This Request for Information (RFI) covers only OTC food handler antiseptics that are intended for use by food handlers in commercial or regulated environments where growth, harvest, production, manufacturing, processing, packaging, transportation, storage, preparation, service, or consumption of food occurs. This RFI does not cover consumer antiseptic washes (78 FR 76444, December 17, 2013; 81 FR 61106, September 6, 2016); health care antiseptics (80 FR 25166, May 1, 2015; 82 FR 60474, December 20, 2017); consumer antiseptic rubs (81 FR 42912, June 30, 2016); or antiseptics identified as “first aid antiseptics” in the 1991 First Aid tentative final monograph (TFM) (56 FR 33644, July 22, 1991).
FDA has tentatively concluded that, based on FDA's current categorization of other antiseptic products and considering factors that may include specific microorganisms of concern in food handling environments as well as the safety of repeated-exposure use patterns, food handler antiseptics may differ from antiseptic products addressed in other rulemakings. There has been support from industry and interested parties for an OTC food handler antiseptic category, and some information and data have been submitted in support of establishing such a category. However, we believe more data and information are needed to assist the Agency in evaluating the safety and effectiveness criteria appropriate for food handler antiseptics.
This RFI is part of FDA's ongoing evaluation of the safety and effectiveness of OTC drug products marketed in the United States on or before May 11, 1972 (OTC Drug Review). The OTC topical antimicrobial rulemaking has had a broad scope, encompassing drug products that may contain the same active ingredients, but that are labeled and marketed for different intended uses. In 1974, the Agency published an advance notice of proposed rulemaking (ANPR) for topical antimicrobial products that encompassed products for both health care and consumer use. The 1974 ANPR covered seven different intended uses for these products: (1) Antimicrobial soap; (2) health care personnel hand wash; (3) patient preoperative skin preparation; (4) skin antiseptic; (5) skin wound cleanser; (6) skin wound protectant; and (7) surgical hand scrub (39 FR 33103 at 33140, September 13, 1974). FDA subsequently identified skin antiseptics, skin wound cleansers, and skin wound protectants as antiseptics used primarily by consumers for first aid use and referred to them collectively as “first aid antiseptics.” FDA published a separate TFM covering the first aid antiseptics in the 1991 First Aid TFM (56 FR 33644). The remaining categories of topical antimicrobials were addressed in the 1994 TFM for healthcare antiseptic drug products (59 FR 31402, June 17, 1994). The 1994 TFM covered: (1) Antiseptic hand wash (
The 1994 TFM did not distinguish between consumer antiseptic washes and rubs and health care antiseptic washes and rubs. In the 2013 Consumer Wash Proposed Rule, we proposed that our evaluation of OTC antiseptic drug products be further subdivided into health care antiseptics and consumer antiseptics (78 FR 76444 at 76446). These categories are distinct based on the proposed use setting, target population, and the fact that each setting presents a different level of risk for infection. In the 2013 Consumer Wash Proposed Rule (78 FR 76444 at 76446-76447) and the 2016 Consumer Rub Proposed Rule (81 FR 42912 at 42915-42916), we proposed that our evaluation of OTC consumer antiseptic drug products be further subdivided into consumer washes (products that are rinsed off with water, including hand washes and body washes) and consumer rubs (products that are not rinsed off after use, including hand rubs and antibacterial wipes).
In the 1994 TFM, FDA also identified a new category of antiseptics for use by the food industry, which historically had been marketed for use by food handlers in federally inspected meat and poultry processing plants, and other food handling establishments (59 FR 31402 at 31440). As stated in the 2016 Consumer Wash Final Rule (81 FR 61106 at 61109; September 6, 2016) and the 2017 Health Care Antiseptic Final Rule (82 FR 60474 at 60483, December 20, 2017), we classify the food handler antiseptics as separate and distinct from the other OTC topical antiseptics. Based on FDA's current categorization of other OTC antiseptic products and given the additional issues raised by the public health consequences of foodborne illness, differences in frequency and type of use, and contamination of the hands by dirt, grease and other oils, we believe that a separate evaluation of food handler antiseptics is warranted. Food handler antiseptics include antiseptic products labeled for use in commercial or other regulated settings where food is grown, harvested, manufactured, packed, held, transported, prepared, served, or
FDA has determined that the safety and effectiveness of active ingredients intended for use in food handler antiseptic products needed to be demonstrated, and we proposed to include an evaluation of the safety and effectiveness of these active ingredients in the rulemaking for OTC topical antimicrobial drug products (59 FR 31402 at 31440). In the 1994 TFM, we requested relevant data and information to assist in characterizing this category of food handler antiseptics (59 FR 31402 at 31440), but we did not discuss what data would be necessary to support a GRAS/GRAE determination. In response to the 1994 TFM, we received public comments pertaining to food handler antiseptic hand washes (see section IV), including an industry proposal, the Health Care Continuum Model (HCCM), which refers to the effectiveness, effectiveness testing requirements, and labeling of antiseptic products discussed in the 1994 TFM, including the antiseptic hand wash products used by food handlers (Refs. 1 and 2). We also received comments in response to the 1994 TFM regarding antiviral testing for antiseptic products used by food handlers (59 FR 31402).
FDA also received comments pertaining to food handler antiseptics in response to the 2013 Consumer Antiseptic Wash proposed rule. One of these comments was submitted from the Personal Care Products Council (PCPC) and American Cleaning Institute in the form of a citizen petition (FDA-1975-N-0012-0493) (Ref. 3) requesting that FDA, among other things, define food handler antiseptic hand washes or rubs as antiseptic products for use in commercial establishments and other regulated settings, establish food handler antiseptic hand washes as a separate category, and consider food handler antiseptic products as professional use products similar to health care antiseptics.
In response to the 1994 TFM, FDA received comments pertaining to food handler antiseptic hand washes. The comments that addressed food handler antiseptic hand washes generally agreed that they should be evaluated in the review of antiseptic products. FDA also received comments and a citizen petition proposing an effectiveness model for antiseptic products in general, including food handler antiseptics, as well as a proposal on specific indications for food handler antiseptics (Refs. 1, 2, 33, and 14). We describe and respond to the proposed model and indications in sections IV.A. through IV.D.
A comment from two trade associations proposed regulating food handler antiseptics as part of the HCCM (Ref. 1). This regulatory model included proposed labeling, final formulation testing requirements, and effectiveness testing criteria. The proposed testing included in vitro and in vivo testing that is modeled after FDA's previously proposed testing for OTC health care antiseptic drug products (Ref. 1). Table 1 summarizes the HCCM's proposed in vitro and in vivo testing and other effectiveness criteria for food handler antiseptics.
The HCCM proposal explained that the ATCC strains recommended for in vitro testing were chosen to represent a broad spectrum of bacteria that “present a challenge to antisepsis” and are the principal foodborne pathogens and contaminants. The model also proposed the use of clinical simulation studies to demonstrate the effectiveness of final formulations that rely on the reduction of the same surrogate organisms that historically have been used to demonstrate the effectiveness of health care personnel and antiseptic hand washes. More specifically, two protocols were proposed for clinical simulation studies: (1) A General Hand Wash Method for the demonstration of fast-acting and persistent activity of products used with water; and (2) an ASTM method for the evaluation of alcohol-based hand rub formulations to demonstrate the fast-acting antimicrobial activity of leave-on products. The proposal also provides log-reduction effectiveness criteria that are similar to the effectiveness criteria for health care personnel hand antiseptics proposed in the 1994 TFM (59 FR 31402 at 31444) (see table 1). The Soap and Detergent Association (SDA) stated that the proposed HCCM “log reduction and acceptance criteria will demonstrate the appropriate effectiveness of products used in a food handling environment” (Ref. 5). However, the HCCM did not define the appropriate level of effectiveness or include data to support corresponding effectiveness testing criteria.
The SDA also recommended the continued use of the Association of Official Analytical Chemists (AOAC International) chlorine equivalency test for in vitro effectiveness testing of food handler antiseptics (Ref. 6). The SDA suggested that an antiseptic activity equivalent to 50 parts per million of available chlorine be a strict requirement for food handler antiseptic products (Ref. 5).
FDA identified several issues in the proposed HCCM. The use conditions of food handler antiseptics vary widely. Heavily soiled items are common in food preparation and food handling settings, and in general, antiseptic products are considered to be less effective in soiled hands (Ref. 7). Studies simulating moderate and heavily soiled hand conditions showed decreased efficacy of antiseptic products, suggesting that the organic load,
Contact time is another factor that is expected to impact an antiseptic's effectiveness. The Food Code, a model that represents FDA's advice for a uniform system of provisions that address the safety and protection of food offered at retail and in food service establishments, specifies that a food handler's hand cleaning regimen should last “at least 20 seconds” using a cleaning compound in a hand washing sink (Ref. 10). In the method for in vivo efficacy testing proposed in the HCCM, contact times vary from 30 seconds to 5 minutes. These timeframes do not reflect the hand cleaning procedures recommended in the Food Code. The contact times used in effectiveness testing should be appropriately related to reasonable real-life conditions of use, as reflected in product labeling. We are interested in comments on appropriate contact times for in vivo effectiveness testing.
The HCCM proposal also requires the demonstration of an antiseptic's effectiveness after multiple hand washes or rubs and proposes effectiveness criteria that range from 1.5 to 2 log
When evaluating food handler antiseptics, it is important to focus on the foodborne pathogens most often known to cause foodborne illness through contamination of food by food employee's hands (Ref. 11). The list of “
In addition, in a 2005 meeting of FDA's Nonprescription Drugs Advisory Committee (Ref. 13) the committee observed that the existing test methods for topical antiseptics used in consumer and professional settings are based on the premise that bacterial reductions translate to a reduced potential for infection. Although bacterial reduction can be demonstrated using tests that simulate conditions of actual use, no corresponding clinical data demonstrate that bacterial reductions of the required magnitude produce a corresponding reduction in infection. For consumer antiseptic wash products, FDA has since recommended clinical outcome studies to demonstrate the products' clinical benefit and their superiority compared to plain soap and water (78 FR 76444, 81 FR 61106). This concern—whether the product's efficacy can be evaluated solely by in vitro tests—remains valid also for food handler antiseptics.
In light of the questions raised by FDA's review of the proposed HCCM, we have concluded that additional public input is needed before a proposed monograph for OTC food handler antiseptics can be developed. Therefore, FDA is seeking comments and requesting submission of data and information relevant to a number of questions related to OTC food handler antiseptics (see section V.)
In response to the 1994 TFM, the Agency also received a citizen petition in 2003 from the SDA and Cosmetic Toiletry and Fragrance Association
The SDA/PCPC Petition included studies and publications in which the antiviral activity of several active ingredients included in the 1994 TFM and their final formulations were assessed by both in vitro test methods and clinical simulation studies (
The SDA/PCPC Petition recommends testing against respiratory and enteric viral pathogens to determine the antiviral activity of the antiseptics: Rhinovirus Type 37 (ATCC VR-1147) or Rhinovirus Type 13 (ATCC VR-284) and Rotavirus Wa (ATCC VR-2018). The rationale for this recommendation is based on the premise that both viruses are important hand-transmitted pathogens, less susceptible to inactivation than enveloped viruses, and are known to survive for a significant period on skin and surfaces commonly contacted by hands. As such, they present an adequate challenge for testing the antiviral activity of antiseptic products.
Regarding the test methods for demonstration of virucidal effectiveness, the SDA/PCPC Petition proposed two specific methods: ASTM E1838 and ASTM E201. Both these methods present simulation models of viral contamination, and both measure the reduction of viral load on fingerpads (ASTM E1838) or on the entire hand (ASTM E201) after the application of the antiseptic test product. The SDA/PCPC Petition also proposed a 2 log
Lastly, the SDA/PCPC Petition suggested a two-step approach for antibacterial and antiviral labeling: Providing that the antibacterial criteria as laid out in the rulemaking have been met, the antiviral labeling would be optional for products that in addition to antibacterial criteria, meet the antiviral criteria.
FDA responded to the SDA/PCPC Petition on March 26, 2010, and denied the petition's request that FDA amend the 1994 TFM (Ref. 18). The submitted data were reviewed by FDA, and the following points were addressed:
In vitro data included in the SDA/PCPC Petition do not clearly demonstrate the effectiveness of the antiseptic active ingredients or product formulations against viruses. Primarily, the in vitro results obtained may not predict the antiseptic's effectiveness against viruses on human skin. An evaluation of effectiveness against viruses on human skin would need to be supported by adequate in vivo studies. In most of the studies, the test conditions and results vary considerably. Also, most studies lacked vehicle and neutralization controls; this undermines the validity of the data and makes it difficult to evaluate the contribution of the antiseptic product in the reduction of the viral concentration.
Clinical simulation studies included in the SDA/PCPC Petition were not adequately controlled to distinguish the antiviral effectiveness of the antiseptic and eliminate bias. These studies lacked proper controls and adequate statistical analyses. Most studies lacked either vehicle or placebo controls such as washing with plain soap and water. In the few studies in which a vehicle control was included, the advantage of the antiseptic product use was not demonstrated. Moreover, the use of plain soap and water was often found to be as or more effective than using the test antiseptic. Most studies also lacked proper documentation of neutralization and they were not randomized or blinded. Overall, the lack of adequate comparison controls rendered the submitted studies insufficient to demonstrate antiviral effectiveness.
The SDA/PCPC Petition proposed using an enteric pathogen, Rotavirus Wa Type 30, and a respiratory pathogen, Rhinovirus Type 37, for testing antiseptic viral activity. After reviewing submitted data and current publications, FDA determined that viruses vary significantly in their susceptibility to antiseptics and that this variability makes it difficult to extrapolate the effectiveness results obtained from the proposed viruses to a broader range of viruses (Ref. 19).
The SDA/PCPC Petition's proposed 2 log
FDA found the test methods proposed in the SDA/PCPC Petition inadequate to support a general antiviral indication; the proposed ASTM methods do not account for data variability, nor do they provide guidance on adequate study size and data analysis. Moreover, the studies submitted in support of the proposed methods are insufficient to demonstrate comparable results between the two ASTM methods proposed due to the small study size.
In short, data reviewed by FDA are insufficient to support general antiviral labeling for antiseptic products including food handler antiseptics. Additional data that adequately demonstrate the antiviral effectiveness of antiseptic active ingredients and their product formulations are needed to properly address the antiviral activity of food handler antiseptics.
Data to support the effectiveness of several antiseptic active ingredients were also submitted to the FDA-1975-N-0012-0494 docket by the PCPC in response to the Consumer Wash Proposed Rule (Ref. 20). Comments received from the PCPC asserted that the data provided demonstrated effectiveness based on the industry's proposed standard of effectiveness for food handler antiseptic products. However, because FDA currently has insufficient information to determine what constitutes an adequate demonstration of effectiveness of antiseptic active ingredients intended for use in the food handler setting, an evaluation of the submitted data would be premature.
Based on the history of food handler antiseptics and a review of our records and data received, we have determined that additional new data and information are needed to inform FDA on the safety and effectiveness of the active ingredients used in food handler antiseptics and drug products containing them. Thus, we are soliciting data and information that will help address the questions that follow.
As discussed in section III, we view food handler antiseptics as a category that includes antiseptic products used in regulated settings where food is grown, harvested, produced, manufactured, processed, packed, transported, prepared, served, or consumed.
In response to the questions that follow, FDA is seeking data and other information on defining food handler antiseptic products and any other information relevant to their definition.
• What are the categories of workers who might use the food handler antiseptic products?
• In what settings are food handler antiseptics used? What should be the boundaries (
• What types of antiseptic products are used by food handlers and what terms are used in the food industry to describe such products (
• How frequently are food handler antiseptics used?
An OTC drug is eligible for the OTC Drug Review if its conditions of use existed in the OTC drug marketplace on or before May 11, 1972 (37 FR 9464), or if drug products with the same conditions of use have been marketed for a material time and extent such that they meet the requirements for eligibility under FDA's time and extent application regulation (§ 330.14 (21 CFR
To determine eligibility for the OTC Drug Review, FDA typically must have actual product labeling or a facsimile of labeling that documents the conditions of marketing of a product prior to May 1972 (21 CFR 330.10(a)(2)). FDA considers a drug that is ineligible for inclusion in the OTC monograph system to be a new drug that will require FDA approval under a new drug application (NDA) or an abbreviated new drug application (ANDA). Also, an active ingredient's ineligibility for evaluation under the OTC Drug Review for a specific indication does not affect its eligibility for evaluation for other indications under the OTC Drug Review.
FDA's recognition of the potential eligibility of food handler antiseptic products for evaluation under the OTC Drug Review is relatively new. We expect that many of the antiseptic active ingredients found in products currently used by food handlers may not have been on the U.S. market when the OTC Drug Review was first established, or that it may be difficult to establish eligibility based on use at that time. It may be possible, however, that some of the active ingredients currently used in these products have been in use in or outside of the United States for a material time and extent such that they meet the requirements for eligibility under FDA's time and extent application regulation (§ 330.14). We are, therefore, seeking information about food handler antiseptic active ingredients and the products in which they are found.
For the active ingredients used in food handler antiseptics, we ask for submission of the following information:
• What are the active ingredients currently used in food handler antiseptic products?
• How long and to what extent (
• What active ingredients were in products on the market for food handler use prior to 1972, and what evidence of eligibility for evaluation for use in food handler antiseptic products under the OTC Drug Review is available for these active ingredients?
• What other information relevant to the eligibility of active ingredients for use in food handler antiseptic products is available?
In the consumer antiseptic wash and rubs, and in the health care antiseptics rulemakings for OTC topical antiseptic active ingredients, the following data are required to determine the safety of these active ingredients as part of the risk-to-benefit evaluation of the product's use (81 FR 61106 at 61117, 81 FR 42912, 80 FR 25166):
To better assess the criteria for a determination of the safety of active ingredients used in food handler antiseptics, we welcome information to answer the following questions and any other issues related to evaluating the safety of these products:
• Should the data required to demonstrate the safety of active ingredients intended for use in food handler antiseptic products be the same as the safety criteria for active ingredients intended for use in consumer antiseptic and health care antiseptic products?
• If antiseptic hand rubs or leave-on products are used, the presence of residual antiseptic products on the hands of food handler professionals may result in indirect consumer exposure (
• If additional studies are required to address indirect consumer exposure to antiseptic ingredients, what should they be?
• On a daily basis, how frequently do food handlers use food handler antiseptic products in the workplace? Are there any requirements related to the frequency of using food handler antiseptics in the workplaces where food is handled (
• What data are available to support the long-term safety of the active ingredients of these products (
• How should the potential for antimicrobial resistance to these active ingredients be assessed?
• What data are available regarding antimicrobial resistance for these products, and how should the potential of food handler antiseptics' use with potential emergence of antimicrobial resistance be assessed?
• What other issues should be taken into consideration to support evaluation of the safety of food handler antiseptic products?
New information on potential risks posed by the long-term use of certain antiseptic active ingredients prompted us to reconsider the data necessary to determine that active ingredients used in consumer or health care antiseptic products are generally recognized as safe and effective for their intended use. Based on new data as well as on input provided during the Nonprescription Drugs Advisory Committee meeting of March 2005, we have reevaluated the effectiveness data needed for consumer and health care antiseptic active ingredients (78 FR 76444, 81 FR 42912, 80 FR 25166).
For topical antiseptics used both in consumer and health care settings, the following studies in table 3 are required or proposed to be required to demonstrate effectiveness.
To assess the effectiveness criteria for food handler antiseptic active ingredients, as well as the testing methods necessary to demonstrate effectiveness, we are interested in gathering information on the following questions related to in vivo testing:
• What studies should be used for a demonstration of efficacy in vivo?
• Should effectiveness be established through clinical outcome study (
• Do the data support use of a simulation model as a surrogate for effectiveness, such as bacterial log reduction on the hands of a food handler or on food following use of the product? What data can be used to link a simulation model to clinical outcomes related to food-borne illness (
• If the bacterial log reduction method for assessing effectiveness is used, what should be the required log reduction criteria for food handler antiseptics and what are the data that support such log reduction criteria?
• Are there any other criteria, such as reduction of transmission of microorganisms after use of food handler antiseptics that should be considered to determine the effectiveness of food-handler antiseptics?
• The Health Care Antiseptics Final Rule requires that for surgical hand scrub and patient preoperative skin preparation indications, the antiseptic activity of the product must be both immediate and persistent (82 FR 60474 at 60488). The effectiveness criteria for such products require that, in addition to the immediate antibacterial activity demonstrated by log reduction, bacterial growth is also suppressed for 6 hours after product use. Should food handler antiseptics' action be persistent?
• How are food handler antiseptics used in food handler settings? Are they used according to the manufacturer's directions of use or according to establishment-based standard operating procedures?
• Given the importance of a consistently effective product, should the dose of a food handler antiseptic vary with the product or should a standard dose be required?
• For the same reasons noted earlier, should the recommended length of time and/or frequency of use of the antiseptic product be consistent and standardized for all food handler antiseptics?
We would also like information as it relates to the following questions on in vitro testing:
• How should the products demonstrate effectiveness in vitro?
• What in vitro test methods should be used,
• What organisms should food handler antiseptics be required to demonstrate effectiveness against? Should viruses and other organisms (
• Should the test methods address the effects of organic load (
• What other variables could impact the effectiveness of food handler antiseptics besides organic load, and how should the effect of such variables be taken into consideration during testing?
• How quickly must these products demonstrate effectiveness?
• At what specific time point(s) should effectiveness be measured?
The following references marked with an asterisk (*) are on display at the Dockets Management Staff (see
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing that a proposed collection of information has been submitted to the Office of Management and Budget (OMB) for review and clearance under the Paperwork Reduction Act of 1995.
Fax written comments on the collection of information by January 7, 2019.
To ensure that comments on the information collection are received, OMB recommends that written comments be faxed to the Office of Information and Regulatory Affairs, OMB, Attn: FDA Desk Officer, Fax: 202-395-7285, or emailed to
Amber Sanford, Office of Operations, Food and Drug Administration, Three White Flint North, 10A-12M, 11601 Landsdown St., North Bethesda, MD 20852, 301-796-8867,
In compliance with 44 U.S.C. 3507, FDA has submitted the following proposed collection of information to OMB for review and clearance.
The 2009 Family Smoking Prevention and Tobacco Control Act (Tobacco Control Act) (Pub. L. 111-31) amended the Federal Food, Drug, and Cosmetic Act (FD&C Act) to grant FDA authority to regulate the manufacture, marketing, and distribution of tobacco products to protect public health and to reduce tobacco use by minors. Section 1003(d)(2)(D) of the FD&C Act (21 U.S.C. 393(d)(2)(D)) supports the development and implementation of FDA public education campaigns related to tobacco use. In May 2016, FDA began implementing a public education campaign to help prevent and reduce tobacco use among Lesbian, Gay, Bisexual, and Transgender (LGBT) young adults and thereby reduce the public health burden of tobacco. The campaign continues to be implemented in 12 U.S. cities and features events, television and radio and print advertisements, digital communications, including videos, social media, and other forms of media. For the purpose of this notice, these campaign elements will be referred to as “advertisements” or “ads.”
In support of the provisions of the Tobacco Control Act that require FDA to protect the public health and to reduce tobacco use, FDA requests OMB approval to collect information needed to evaluate FDA's campaign to reduce tobacco use among LGBT young adults. Comprehensive evaluation of FDA's public education campaigns is needed to ensure campaign messages are effectively received, understood, and accepted by those for whom they are intended. Evaluation is an essential organizational practice in public health and a systematic way to account for and improve public health actions.
To evaluate the effectiveness of FDA's RESPECT at reducing tobacco use among LGBT young adults aged 18 to 24, FDA contracted with RTI International to conduct Web-based surveys with the target population in the 12 campaign cities and 12 comparison cities. The surveys include measures of tobacco-related knowledge, attitudes, beliefs, intentions, and use as well as measures of audience awareness of and exposure to campaign events and advertisements. The voluntary surveys also collect information on demographic variables, including sexual orientation, age, sex, race/ethnicity, education, and
FDA will continue to implement RESPECT in 12 U.S. cities through April 2019. To complete the evaluation of RESPECT, FDA is requesting an extension of the previously approved information collection in order to conduct two additional waves of data collection with the target population. The proposed sixth and seventh waves of data collection (
As in previous waves, new and returning survey respondents will be invited to complete the online questionnaire. New (or cross-sectional) respondents will be recruited at LGBT social venues and via social media (
Our goal is to recruit 75 percent of the sample via intercept interviews and 25 percent via social media. To obtain the target number of completed fifth and sixth followup questionnaires, an additional 11,904 adults (3,968 annualized) recruited in person and 2,736 adults (912 annualized) recruited via social media will complete screening questionnaires. For the entire evaluation study, a total of 33,717 adults (11,239 annualized) recruited in person will complete screening questionnaires along with 10,617 adults (3,539 annualized) recruited via social media. The estimated burden to complete the screening questionnaire is 5 minutes (0.083 hour), for a total of 2,799 hours (933 annualized) for in-person recruits and 881 hours (294 annualized) for social media recruits.
Based on analysis of response rates from prior waves of data collection, we expect 65 percent of intercept respondents will be deemed eligible and 50 percent of those will complete the fifth followup questionnaire. We expect 30 percent of those recruited via social media will be deemed eligible and complete the fifth followup questionnaire. Lastly, we expect 50 percent of returning (or longitudinal) respondents to complete the fifth and sixth followup questionnaires. We estimate that approximately 2,100 new respondents (700 annualized) and 6,678 returning (2,226 annualized) respondents will complete the fifth and sixth followup questionnaires, for a total of 8,778 responses (2,926 annualized).
OMB previously approved 3,156 (1,052 annualized) respondents recruited via social media and 9,456 (3,152 annualized) respondents recruited in person to complete the first four followup questionnaires. Adding the fifth and sixth followups brings the total estimated number of followup questionnaires completed by social media recruits to 5,256 (1,752 annualized) and by in-person recruits to 16,134 (5,378 annualized). At 40 minutes per completed questionnaire, the total burden is 3,507 hours (1,169 annualized) for social media respondents and 10,761 hours (3,587 annualized) for in-person respondents.
OMB also previously approved 393 hours (approximately 132 annualized) for social media respondents and 1,182 hours (394 annualized) for in-person respondents to complete baseline questionnaires. OMB also approved the pilot test of procedures in bars (6 hours (2 annualized)). As these study components are complete, the corresponding burden will not change. Lastly, the original study design included a media tracking component, which included a burden of 414 hours (138 annualized) for completing a 5-minute screening questionnaire and 999 hours (333 annualized) for completing the media tracking questionnaire. However, this component was dropped from the study; hence, the related burden has been deducted from the total study burden.
In the
(Comment) Two commenters indicated support for FDA's efforts to evaluate media campaigns targeting smoking within the LGBT community.
(Response) FDA appreciates the public's support of its efforts to meet its mission to promote and protect public health.
(Comment) One commenter questioned the need for further data collection on this topic.
(Response) FDA disagrees. This collection of information is necessary for FDA to meet its mission to promote and protect public, and in its implementation of the Tobacco Control Act.
(Comment) One commenter questioned whether the evaluation is collecting sufficient data on the campaign's impact on the target population's thinking about smoking.
(Response) The campaign is intended to influence the target population's attitude towards smoking. To evaluate the effectiveness of the campaign, FDA is asking questions about the target population's tobacco use-related knowledge, attitudes, beliefs, and intentions before and after seeing the campaign's ads to test whether those have changed over time as a result of exposure to the campaign.
(Comment) One commenter questioned the utility of collecting data on smoking among LGBT young adults without first gathering information on smoking rates in this population, and also suggested specific modes for participant recruitment.
(Response) Multiple peer-reviewed studies have found that LGBT populations of all age groups are significantly more likely to smoke cigarettes and use other tobacco products compared to non-LGBT populations. FDA appreciates the detailed review of the evaluation's recruitment approach. Consistent with the commenter's recommendation, this information collection recruits participants both online via social media platforms and in person at LGBT social venues. This information collection does not recruit on the street or advertise via television.
(Comment) Several comments raised questions about the appropriateness of the target population and implementation approach of the public education campaigns being conducted by FDA.
(Response) FDA notes that these comments address the content, focus, or implementation of an existing public education campaign, and are therefore outside the scope of this information
FDA estimates the burden of this collection of information as follows:
To accommodate the additional waves of data collection, FDA requests approval to increase the number of burden hours under the existing control number. The previous number of approved responses was 53,967 (17,989 annualized), and the previous burden was 14,031 hours (4,677 annualized). The fifth and sixth followups add 23,478 responses (7,826 annualized), which include responses to new venues assessments, screening questionnaires, and the followup questionnaires, for a total of 7,074 additional burden hours (2,357 annualized). Removing the media tracking component deducts 6,507 responses (2,169 annualized) and 1,413 burden hours (471 annualized). The totals for the entire evaluation study are increasing by 16,971 responses (5,657 annualized) and 5,661 hours (1,887 annualized) for a new total of 70,938 responses (23,646 annualized) and 19,692 burden hours (approximately 6,566 annualized).
Food and Drug Administration, HHS.
Notice of availability.
The Food and Drug Administration (FDA or Agency) is establishing a public docket to collect comments on a framework created by the Center for Drug Evaluation and Research and the Center for Biologic Evaluation and Research for implementing a program to evaluate the potential use of real-world evidence (RWE) in regulatory decision making. This framework is entitled “Framework for the Real-World Evidence Program.” The 21st Century Cures Act (Cures Act) was enacted on December 13, 2016, and requires that FDA establish a framework for implementing a program to evaluate the potential use of RWE to help support the approval of a new indication for a drug approved under the Federal Food, Drug, and Cosmetic Act (FD&C Act) and to help support or satisfy postapproval study requirements. FDA has created this framework to satisfy the Cures Act mandate and is establishing a docket to receive public comments.
Submit either electronic or written comments on the draft document by February 5, 2019 to ensure that the Agency considers your comment before it begins work to implement the program.
You may submit comments as follows:
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• For written/paper comments submitted to the Dockets Management Staff, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
Dianne Paraoan, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 51, Rm. 3326, Silver Spring, MD 20993-0002, 301-796-2500,
FDA is establishing a public docket to collect comments on its “Framework for a Real-World Evidence Program.” Section 3022 of the Cures Act amended the FD&C Act to add section 505F, Utilizing real world evidence (21 U.S.C. 355g). This section requires the establishment of a program to evaluate the potential use of RWE to help support the approval of a new indication for a drug approved under section 505(c) of the FD&C Act (21 U.S.C. 355(c)) and to help to support or satisfy postapproval study requirements. This section also requires FDA publish a framework for that program. In addition to drug and biological products approved under section 505(c) of the FD&C Act, FDA is also applying this framework to biological products licensed under section 351 of the Public Health Service Act (42 U.S.C. 262).
The statute directs that the framework for the RWE program include information describing sources of RWE, gaps in data collection activities, standards and methodologies for collecting and analyzing RWE, and priority areas, remaining challenges, and potential pilot opportunities to address the overarching Cures Act requirements. To help meet a requirement in the Cures Act for consultation in developing the program framework, on September 13, 2017, through its cooperative agreement with the Duke Margolis Center for Health Policy, FDA convened a public meeting that explored the use of RWE for regulatory decisions. Representatives from industry, academia, and patient advocacy groups discussed, among other things, opportunities and challenges associated with applying real-world data and RWE, the evidence derived from that data, to demonstrate product effectiveness, including data acquisition, study design, and analytic methods necessary to establish causal inference. The workshop helped to inform FDA's RWE framework. FDA will continue to consult stakeholders through public-private partnerships, public workshops, and demonstration projects as it implements its RWE program.
Persons with access to the internet may obtain the “Framework for the Real-World Evidence Program” at
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing that a proposed collection of information has been submitted to the Office of Management and Budget (OMB) for review and clearance under the Paperwork Reduction Act of 1995.
Fax written comments on the collection of information by January 7, 2019.
To ensure that comments on the information collection are received, OMB recommends that written comments be faxed to the Office of Information and Regulatory Affairs, OMB, Attn: FDA Desk Officer, Fax: 202-395-7285, or emailed to
Amber Sanford, Office of Operations, Food and Drug Administration, Three White Flint North, 10A-12M, 11601 Landsdown St., North Bethesda, MD
In compliance with 44 U.S.C. 3507, FDA has submitted the following proposed collection of information to OMB for review and clearance.
FDA is requesting OMB approval for the reporting requirements contained in the FDA collection of information “Environmental Impact Considerations.” The National Environmental Policy Act (NEPA) (42 U.S.C. 4321-4347) states national environmental objectives and imposes upon each Federal Agency the duty to consider the environmental effects of its actions. Section 102(2)(C) of NEPA requires the preparation of an environmental impact statement (EIS) for every major Federal action that will significantly affect the quality of the human environment.
FDA's NEPA regulations are in part 25 (21 CFR part 25). All applications or petitions requesting Agency action require the submission of a claim for categorical exclusion or an environmental assessment (EA). A categorical exclusion applies to certain classes of FDA-regulated actions that usually have little or no potential to cause significant environmental effects and are excluded from the requirements to prepare an EA or EIS. Section 25.15(a) and (d) specifies the procedures for submitting to FDA a claim for a categorical exclusion. Extraordinary circumstances (§ 25.21), which may result in significant environmental impacts, may exist for some actions that are usually categorically excluded. An EA provides information that is used to determine whether an FDA action could result in a significant environmental impact. Section 25.40(a) and (c) specifies the content requirements for EAs for non-excluded actions.
This collection of information is used by FDA to assess the environmental impact of Agency actions and to ensure that the public is informed of environmental analyses. Firms wishing to manufacture and market substances regulated under statutes for which FDA is responsible must, in most instances, submit applications requesting approval. Environmental information must be included in such applications for the purpose of determining whether the proposed action may have a significant impact on the environment. Where significant adverse events cannot be avoided, the Agency uses the submitted information as the basis for preparing and circulating to the public an EIS, made available through a
Any final EIS would contain additional information gathered by the Agency after the publication of the draft EIS, a copy or a summary of the comments received on the draft EIS, and the Agency's responses to the comments, including any revisions resulting from the comments or other information. When the Agency finds that no significant environmental effects are expected, the Agency prepares a finding of no significant impact.
In the
(Comment) One commenter requested that FDA should categorically exclude all categories of SE applications from the EA requirement.
(Response) FDA appreciates this comment. We note, however, that any action to establish a categorial exclusion would need to be undertaken through a notice and comment rulemaking procedure.
FDA estimates the burden of this collection of information as follows:
Under §§ 312.23(a)(7)(iv)(e), 314.50(d)(1)(iii), and 314.94(a)(9)(i) (21 CFR 312.23(a)(7)(iv)(e), 314.50(d)(1)(iii), and 314.94(a)(9)(i)), each investigational new drug application (IND), new drug application (NDA), and abbreviated new drug application (ANDA) must contain a claim for categorical exclusion under § 25.30 or § 25.31, or an EA under § 25.40. Annually, FDA receives approximately 3,687 INDs from 2,456 sponsors; 140 NDAs from 116 applicants; 3,192 supplements to NDAs from 443 applicants; 28 biologic license applications (BLAs) from 22 applicants; 464 supplements to BLAs from 52 applicants; 1,152 ANDAs from 248 applicants; and 6,774 supplements to ANDAs from 384 applicants. FDA estimates that it receives approximately 15,437 claims for categorical exclusions as required under § 25.15(a) and (d) and 10 EAs as required under § 25.40(a) and (c). Based on information provided by the pharmaceutical industry, FDA estimates that it takes sponsors or applicants approximately 8 hours to prepare a claim for a categorical exclusion and approximately 3,400 hours to prepare an EA.
Under § 814.20(b)(11) (21 CFR 814.20(b)(11)), premarket approvals (PMAs) (original PMAs and supplements) must contain a claim for categorical exclusion under § 25.30 or § 25.34 or an EA under § 25.40. In 2017, FDA received an average of 50 claims (original PMAs and supplements) for categorical exclusions as required under § 25.15(a) and (d), and 0 EAs as required under § 25.40(a) and (c). FDA estimates that approximately 50 respondents will submit an average of 1 application for
Under 21 CFR 601.2(a), BLAs as well as INDs (§ 312.23), NDAs (§ 314.50), ANDAs (§ 314.94), and PMAs (§ 814.20) must contain either a claim of categorical exclusion under § 25.30 or § 25.32 or an EA under § 25.40. Annually, FDA receives approximately 34 BLAs from 18 applicants, 801 BLA supplements to license applications from 156 applicants, 345 INDs from 256 sponsors, 1 NDA from 1 applicant, 26 supplements to NDAs from 8 applicants, 1 ANDA from 1 applicant, 1 supplement to ANDAs from 1 applicant, 8 PMAs from 3 applicants, and 33 PMA supplements from 16 applicants. FDA estimates that approximately 10 percent of these supplements would be submitted with a claim for categorical exclusion or an EA.
FDA has received approximately 481 claims for categorical exclusion as required under § 25.15(a) and (d) annually and 2 EAs as required under § 25.40(a) and (c) annually. Therefore, FDA estimates that approximately 247 respondents will submit an average of 2 applications for categorical exclusion and 2 respondents will submit an average of 1 EA. Based on information provided by industry, FDA estimates that it takes sponsors and applicants approximately 8 hours to prepare a claim of categorical exclusion and approximately 3,400 hours to prepare an EA for a biological product.
Under 21 CFR 514.1(b)(14), new animal drug applications (NADAs) and abbreviated new animal drug applications (ANADAs); 21 CFR 514.8(a)(1) supplemental NADAs and ANADAs; 21 CFR 511.1(b)(10) investigational new animal drug applications (INADs) and generic investigational new animal drug applications (JINADs), and 21 CFR 571.1(c) food additive petitions must contain a claim for categorical exclusion under § 25.30 or § 25.32 or an EA under § 25.40. Annually, FDA's Center for Veterinary Medicine has received approximately 810 claims for categorical exclusion as required under § 25.15(a) and (d) and 22 EAs as required under § 25.40(a) and (c). Assuming an average of 10 claims per respondent, FDA estimates that approximately 81 respondents will submit an average of 10 claims for categorical exclusion. FDA further estimates that 22 respondents will submit an average of 1 EA. FDA estimates that it takes sponsors/applicants approximately 3 hours to prepare a claim of categorical exclusion and an average of 2,160 hours to prepare an EA.
Under sections 905, 910, and 911 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 387e, 387j, and 387k), product applications and supplements (PMTAs), SEs, Exemption from SEs, and modified risk tobacco products must contain a claim for categorical exclusion or an EA. After further review, the agency has concluded that the majority of the EA burden for tobacco products
FDA's estimates are based on actual report data from fiscal year (FY) 2015 to FY 2017, on average FDA estimated it received approximately 27 modified risk tobacco product applications (MRTPAs) from 27 respondents. Based on updated data for this collection, FDA estimates 27 EAs from 27 respondents. A total of 27 respondents will submit an average of 1 application for environmental assessment. Based on FDA's experience, previous information provided by potential sponsors and knowledge that part of the EA information has already been produced in one of the tobacco product applications, FDA estimates that it takes approximately 80 hours to prepare an EA.
The Estimated Annual Reporting Burden for Human Foods is no longer a part of this information collection. The burden has now been incorporated into OMB control number 0910-0541.
Our estimated burden for the information collection reflects an overall decrease of 10,566 hours (currently approved 231,224) and a corresponding decrease of 11,364 annual responses (currently approved 15,527). The new estimated totals are 220,658 hours and 4,163 annual responses. We attribute this adjustment to the removal of the majority tobacco burden from this collection, and the number of EA submissions we received since the last extension.
Health Resources and Services Administration (HRSA), Department of Health and Human Services (HHS).
Notice.
In compliance with the Paperwork Reduction Act of 1995, HRSA submitted an Information Collection Request (ICR) to the Office of Management and Budget (OMB) for review and approval. Comments submitted during the first public review of this ICR will be provided to OMB. OMB will accept further comments from the public during the review and approval period.
Comments on this ICR must be received no later than January 7, 2019.
Submit your comments to
To request more information on the proposed project or to obtain a copy of the data collection plans and draft instruments, email
When submitting comments or requesting information, please include the information request collection title for reference, in compliance with Section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995.
During Fiscal Years (FY) 2003 to 2017, HRSA's Maternal and Child Health Bureau (MCHB) awarded approximately $4.9 million per FY in grants to support 51 F2F HICs in each of the 50 states and the District of Columbia. In FY 2017, 49 centers that reported data served and trained over 184,000 families and approximately 85,500 health professionals. For FYs 2018 and 2019, HRSA MCHB will award approximately $6 million per FY to support 59 F2F HICs: One each in the 50 states and the District of Columbia, 1 each in the 5 U.S. Territories (American Samoa, Guam, Puerto Rico, the Northern Mariana Islands and the U.S. Virgin Islands), and 3 to serve American Indians/Alaska Natives.
HRSA has developed feedback surveys to determine the extent to which F2F HICs provide service to families of CYSHCN and health professionals who serve such families. Each F2F HIC will administer the surveys and report data back to HRSA. Survey respondents will be asked to answer questions about how useful they found the information, assistance, or resources received from the F2F HICs. The purpose of this notice is to solicit comments regarding the proposed feedback surveys and the F2F HIC grant recipient activity instructions form.
The total annual burden hours estimated for this ICR are summarized in the table below.
HRSA specifically requests comments on (1) the necessity and utility of the proposed information collection for the proper performance of the agency's functions; (2) the accuracy of the estimated burden; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) the use of automated collection techniques or other forms of information technology to minimize the information collection burden.
Department of Health and Human Services, Office of the Secretary, Office of the Assistant Secretary for Health.
Notice.
As stipulated by the Federal Advisory Committee Act, the U.S. Department of Health and Human Service is hereby giving notice that the Presidential Advisory Council on HIV/AIDS (PACHA or the Council) will be holding a meeting and will discuss recommendations regarding programs, policies, and research to promote effective, prevention, treatment and cure of HIV disease and AIDS. The meeting will be open to the public.
The Council meeting is scheduled to convene on March 14-15, 2019 from 9:00 a.m. to approximately 5:00 p.m. (ET) on March 14 and from 9:00 a.m. to 1:00 p.m. (ET) on March 15. Please note that on March 14, the meeting will include a closed session from 9:00 a.m. to 12:00 p.m. This portion of the meeting will be closed for administrative briefings to be presented to the new Council members. The meeting will be open to the public from 1:00 p.m. to 5:00 p.m. on March 14 and from 9:00 a.m.-1:00 p.m. (ET) on March 15.
200 Independence Avenue SW, Washington, DC 20201 in the Penthouse (eighth floor), Room 800.
Ms. Caroline Talev, Public Health Analyst, Presidential Advisory Council on HIV/AIDS, 330 C Street SW, Room L106B, Washington, DC 20024; (202) 795-7622 or
PACHA was established by Executive Order 12963, dated June 14, 1995, as amended by Executive Order 13009, dated June 14, 1996 and is currently operating under the authority given in Executive Order 13811, dated September 29, 2017. The Council was established to provide advice, information, and recommendations to the Secretary regarding programs and policies intended to promote effective prevention and care of HIV infection and AIDS. The functions of the Council are solely advisory in nature.
The Council consists of not more than 25 members. Council members are selected from prominent community leaders with particular expertise in, or knowledge of, matters concerning HIV and AIDS, public health, global health, philanthropy, marketing or business, as well as other national leaders held in high esteem from other sectors of society. Council members are appointed by the Secretary or designee, in consultation with the White House. The agenda for the upcoming meeting will be posted on the
Public attendance at the meeting is limited to space available. Individuals who plan to attend and need special assistance, such as sign language interpretation or other reasonable accommodations, should notify Caroline Talev at
National Institutes of Health, HHS.
Notice; request for comments.
The National Institutes of Health (NIH) is seeking input on the draft report by the 21st Century Cures Act Working Group on Reducing Administrative Burden to Researchers for Animal Care and Use in Research. The draft report is a coordinated effort of the Director of the National Institutes of Health, in collaboration with the Secretary of Agriculture and the Commissioner of Food and Drugs. It describes the proposed actions that the working group has identified to reduce administrative burden on investigators while maintaining the integrity and credibility of research findings and protection of research animals.
The Request for Information regarding the proposed actions that the working group has identified is open for public comment for a period of 60 days. Comments must be submitted electronically at
Patricia Brown, Office of Laboratory Animal Welfare (OLAW), Office of Extramural Research, National Institutes of Health, Suite 2500, 6700B Rockledge Drive, Bethesda, MD 20892-6910, phone: 301-496-7163, email:
This request for information is a coordinated effort of the Director of the National Institutes of Health, in collaboration with the Secretary of Agriculture and the Commissioner of Food and Drugs, to seek input on the draft report by the 21st Century Cures Act, Section 2034(d) Working Group on Reducing Administrative Burden to Researchers for Animal Care and Use in Research.
Section 2034(d) of the 21st Century Cures Act (Pub. L. 114-255) was enacted December 13, 2016 and requires that the NIH, in collaboration with the United States Department of Agriculture (USDA) and the Food and Drug Administration (FDA), complete a review of applicable regulations and policies for the care and use of laboratory animals and make revisions to reduce administrative burden on investigators. NIH OLAW, USDA, and FDA formed a Working Group to: (1) Identify overlapping regulations and policies; (2) take steps to reduce such identified regulations and policies; and (3) take actions to improve coordination, as directed by the U.S. Congress. Input is sought on the draft report of the Working Group and others within the federal government and the proposed recommendations to reduce the administrative burden associated with research activities with laboratory animals while maintaining appropriate protections and scientific integrity. The draft report is available at
Bureau of Ocean Energy Management, Interior.
Notice of availability of a Draft Environmental Impact Statement.
Consistent with the regulations implementing the National Environmental Policy Act (NEPA), the Bureau of Ocean Energy Management (BOEM) is announcing the availability of a Draft Environmental Impact Statement (EIS) for the Construction and Operation Plan (COP) submitted by Vineyard Wind LLC (Vineyard Wind). The Draft EIS analyzes the potential environmental impacts of the proposed action described in the Vineyard Wind COP and reasonable alternatives to the proposed action. This Notice of Availability (NOA) announces the start of the public review and comment period, as well as the dates and locations of public hearings on the Draft EIS. After BOEM holds the public hearings and addresses comments on the Draft EIS, BOEM will prepare a Final EIS.
Comments should be submitted no later than January 22, 2019. BOEM's public hearings will be held at the following dates and times. Please see the
The Draft EIS and detailed information about the proposed wind energy facility, including the COP, can be found on BOEM's website at:
• In written form, delivered by hand or by mail, enclosed in an envelope labeled “Vineyard Wind COP Draft EIS” and addressed to Program Manager, Office of Renewable Energy, Bureau of Ocean Energy Management, 45600 Woodland Road, Sterling, Virginia 20166. Comments must be received or postmarked no later than January 22, 2019; or
• Through the
BOEM will hold public hearings for the Draft EIS for the Vineyard Wind COP at the following places and times:
New Bedford, Massachusetts: Tuesday, January 8, 2019; New Bedford Whaling Museum, 18 Johnny Cake Hill, New Bedford, Massachusetts 02740; Open House 5:00-8:00 p.m.; Presentation and Q&A 6:00 p.m.
Narragansett, Rhode Island: Wednesday: January 9, 2019; Narragansett Town Hall, 25 5th Avenue, Narragansett, Rhode Island 02882; Open
Hyannis, Massachusetts: Tuesday, January 15, 2019; Double Tree Hotel, Cape Cod Room, 287 Iyannough Road, Hyannis, Massachusetts 02601; Open House 5:00-8:00 p.m.; Presentation and Q&A 6:00 p.m.
Nantucket, Massachusetts: Wednesday, January 16, 2019; Nantucket Atheneum, 1 India Street, Nantucket, Massachusetts 02554; Open House 5:00 p.m.-7:30 p.m.; Presentation and Q&A 6:00 p.m.
Vineyard Haven, Massachusetts: Thursday, January 17, 2019; Martha's Vineyard Hebrew Center, 130 Center Street, Vineyard Haven, Massachusetts 02568; Open House 5:00-8:00 p.m.; Presentation and Q&A 6:00 p.m.
For information on the Vineyard Wind COP EIS, the submission of comments, or BOEM's policies associated with this notice, please contact Michelle Morin, BOEM Office of Renewable Energy Programs, 45600 Woodland Road, Sterling, Virginia 20166, (703) 787-1722 or
Once BOEM completes the Final EIS and associated consultations, BOEM will decide whether to approve, approve with modification, or disapprove the Vineyard Wind COP. If BOEM approves the COP and the proposed facility is constructed, the lessee must submit a plan to decommission the facilities before the lease term ends.
BOEM does not consider anonymous comments. Please include your name and address as part of your submittal. BOEM makes all comments, including the name and addresses of respondents, available for public review during regular business hours. Individual respondents may request that BOEM withhold their names or addresses from the public record; however, BOEM cannot guarantee that it will be able to do so. If you wish your name or address to be withheld, you must state your preference prominently at the beginning of your comment. All submissions from organizations or businesses and from individuals identifying themselves as representatives or officials of organizations or businesses will be made available for public inspection in their entirety.
This NOA was prepared pursuant to NEPA and implementing regulations at 40 CFR 1506.6 and 43 CFR 46.435.
United States International Trade Commission.
December 5, 2018 at 11:00 a.m.
December 7, 2018 at 11:00 a.m.
Room 100, 500 E Street SW, Washington, DC 20436, Telephone: (202) 205-2000.
Open to the public.
In accordance with 19 CFR 201.35 (d)(2)(i), the Commission hereby gives notice that the Commission has determined to change the date of the meeting originally scheduled for December 5, 2018 at 11:00 a.m. to December 7, 2018 at 11:00 a.m. to consider Inv. Nos. 701-TA-591 and 731-TA-1399 (Final) (Common Alloy Aluminum Sheet from China).
In accordance with Commission policy, subject matter listed above, not disposed of at the scheduled meeting, may be carried over to the agenda of the
The revised agenda of December 7, 2018 at 11:00 a.m. is as follows:
By order of the Commission.
U.S. International Trade Commission.
Notice.
Notice is hereby given that the U.S. International Trade Commission has found a violation of section 337 of the Tariff Act of 1930, in this investigation. The Commission has issued a limited exclusion order prohibiting the unlicensed entry of certain vacuum cleaning devices and components thereof, such as spare parts, that infringe certain claims of U.S. Patent No. 9,038,233. The Commission has also issued cease and desist orders prohibiting the sale and distribution within the United States of articles that infringe certain claims of that patent against Hoover, Inc. of Glenwillow, Ohio; Royal Appliance Manufacturing Co., Inc. d/b/a TTI Floor Care North America, Inc. of Glenwillow, Ohio; bObsweep, Inc. of Toronto, Canada; and bObsweep USA of Henderson, Nevada. The investigation is terminated.
Lucy Grace D. Noyola, Office of the General Counsel, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436, telephone 202-205-3438. Copies of non-confidential documents filed in connection with this investigation are or will be available for inspection during official business hours (8:45 a.m. to 5:15 p.m.) in the Office of the Secretary, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436, telephone 202-205-2000. General information concerning the Commission may also be obtained by accessing its internet server (
The Commission instituted this investigation under section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. 1337, on May 23, 2017, based on a complaint filed by iRobot Corporation of Bedford, Massachusetts (“iRobot”). 82 FR 23592 (May 23, 2017). The complaint alleges a violation of section 337 based upon the importation into the United States, the sale for importation, and the sale within the United States after importation of certain vacuum cleaning devices and components thereof, such as spare parts, by reason of infringement of certain claims of U.S. Patent Nos. 6,809,490 (“the '490 patent”), 7,155,308 (“the '308 patent”), 8,474,090 (“the '090 patent”), 8,600,553 (“the '553 patent”), 9,038,233 (“the '233 patent”), and 9,486,924 (“the '924 patent”). The Notice of Investigation names as respondents Bissell Homecare, Inc. of Grand Rapids, Michigan (“Bissell”); Hoover, Inc. of Glenwillow, Ohio and Royal Appliance Manufacturing Co., Inc. d/b/a TTI Floor Care North America, Inc. of Glenwillow, Ohio (collectively, “Hoover”); bObsweep, Inc. of Toronto, Canada and bObsweep USA of Henderson, Nevada (collectively, “bObsweep”); The Black & Decker Corporation of Towson, Maryland and Black & Decker (U.S.) Inc. of Towson, Maryland (collectively, “Black & Decker”); Shenzhen ZhiYi Technology Co., Ltd., d/b/a iLife of Shenzhen, China (“iLife”); Matsutek Enterprises Co., Ltd. of Taipei City, Taiwan (“Matsutek”); Suzhou Real Power Electric Appliance Co., Ltd. of Suzhou, China (“Suzhou”); and Shenzhen Silver Star Intelligent Technology Co., Ltd. of Shenzhen, China (“SSSIT”). The Office of Unfair Import Investigations is not a party in this investigation.
The investigation has been terminated with respect to respondents Suzhou, Black & Decker, Bissell, and Matsutek. Notice (Oct. 18, 2017) (determining not to review Order No. 23 (Sept. 26, 2017)); Notice (Jan. 31, 2018) (determining not to review Order No. 31 (Jan. 9, 2018)); Notice (Feb. 16, 2018) (determining not to review Order No. 34 (Jan. 25, 2018)). The investigation has also been terminated with respect to the '924 and the '308 patents. Notice (Jan. 16, 2018) (determining not to review Order No. 29 (Dec. 14, 2017)); Notice (Mar. 15, 2018) (determining not to review Order No. 40 (Feb. 21, 2018)).
On June 25, 2018, the presiding administrative law judge (“ALJ”) issued a final initial determination (“ID”), finding a violation of section 337 with respect to the '553 and '233 patents and no violation with respect to the '490 and '090 patents. Specifically, with respect to the '553 patent, the ID found that: (1) iLife directly infringes claims 1 and 4, but not claims 11, 12, 13, and 22; (2) iLife has not induced or contributed to infringement of the patent; (3) iRobot has satisfied the technical prong of the domestic industry requirement; (4) claim 1, but not claims 11 and 12, is invalid for anticipation; and (5) claims 4, 12, 13, and 22 are not invalid for obviousness. With respect to the '490 patent, the ID found that: (1) iLife and bObsweep directly infringe claim 42, but not claims 1 and 12, and Hoover directly infringes claim 42; (2) iLife, Hoover, bObsweep, and SSSIT have not induced or contributed to infringement of the patent; (3) iRobot has satisfied the technical prong of the domestic industry requirement; (4) claim 1, but not claim 12, is invalid for anticipation: (5) claims 12 and 42 are invalid for obviousness; and (6) claims 1 and 42 are not invalid for indefiniteness. With respect to the '090 patent, the ID found that: (1) iLife, Hoover, SSSIT, and bObsweep directly infringe claims 1, 2, 3, 5, 7, and 10, but not claim 17; (2) iLife, Hoover, bObsweep, and SSSIT have not induced or contributed to infringement of the patent; (3) iRobot has satisfied the technical prong of the domestic industry requirement; (4) claims 1, 5, 7, 10, and 17 are not invalid for anticipation; and (5) claims 1, 2, 3, 4, 5, 7, 10, and 17 are invalid for obviousness in view of certain prior art combinations, but not others. With respect to the '233 patent,
The ALJ also issued a Recommended Determination on Remedy and Bond (“RD”), recommending, if the Commission finds a section 337 violation, the issuance of (1) a limited exclusion order against certain robotic vacuum cleaning devices and components thereof that are imported, sold for importation, and/or sold after importation by Hoover, bObsweep, SSSIT, and iLife, (2) cease and desist orders against Hoover and iLife, and (3) imposition of a bond of 18.89 percent of the entered value for iLife products, 48.65 percent for bObsweep products, and 41.35 percent for Hoover products that are imported during the period of Presidential review.
On July 9, 2018, iRobot and Respondents each filed a petition for review challenging various findings in the final ID. On July 17, 2018, iRobot and Respondents each filed responses to the petitions for review.
On July 16, 2018, the Commission determined that iRobot satisfied the economic prong of the domestic industry requirement under 19 U.S.C. 1337(a)(3)(B). Notice (July 16, 2018) (determining to affirm with modifications Order No. 39 (Feb. 13, 2018)).
On July 25, 2018, iRobot filed post-RD statements on the public interest under Commission Rule 210.50(a)(4). The Commission did not receive any post-RD public interest comments from any respondent pursuant to Commission Rule 210.50(a)(4). The Commission did not receive comments from the public in response to the Commission notice issued on July 10, 2018 soliciting public interest comments. 83 FR 31977 (July 10, 2018).
On September 12, 2018, the Commission determined to review in part the final ID. 83 FR 47188 (Sept. 18, 2018). Specifically, the Commission determined to review the ID's findings on: (1) Induced and contributory infringement with respect to the '553, '490, '090, and '233 patents; (2) anticipation with respect to the asserted claims of the '553 patent; (3) obviousness with respect to the asserted claims of the '553 patent; (4) direct infringement of the '090 patent by iLife, Hoover, bObsweep, and SSSIT; (5) anticipation with respect to the asserted claims of the '090 patent; (6) obviousness with respect to the asserted claims of the '090 patent; (7) anticipation with respect to the asserted claims of the '233 patent; and (8) consideration of U.S. Patent No. 6,594,844 as prior art under 35 U.S.C. 102(a) and 35 U.S.C. 103 with respect to the '233 patent. The Commission also requested briefing from the parties on certain issues under review and briefing from the parties, interested government agencies, and interested persons on the issues of remedy, the public interest, and bonding.
On September 19, 2018, iRobot filed an unopposed motion to terminate the investigation as to iLife based on a settlement agreement and, because the '553 patent is asserted against iLife only, all claims asserted under the '553 patent for mootness. On October 2, 2018, the Commission determined to grant that motion. Notice (Oct. 2, 2018). Thus, the respondents remaining in this investigation are Hoover, bObsweep, and SSSIT, and the remaining asserted patents are the '490, '090, and '233 patents.
On September 24, 2018, iRobot and the remaining respondents filed initial written submissions addressing the Commission's questions and the issues of remedy, the public interest, and bonding. On October 1, 2018, the parties filed response briefs. No comments were received from the public.
Having examined the record of this investigation, including the ID and the parties' submissions, the Commission has determined to affirm, on modified grounds, the ID's finding of a violation as to the '233 patent and no violation as to the '490 and '090 patents. Specifically, the Commission has determined that Hoover, bObsweep, and SSSIT have not induced or contributed to infringement of the '490, '090, and '233 patents. With respect to the '090 patent, the Commission has determined that the Hoover, SSSIT, and bObsweep bObi products meet all limitations of claims 1, 2, 3, 5, 7, 10, and 17, and that the asserted claims are invalid for obviousness, but not invalid for anticipation. With respect to the '233 patent, the Commission has determined that claims 1, 10, 11, 14, 15, and 16 are not invalid for anticipation nor obviousness. The Commission has determined to adopt all findings and conclusions in the final ID that are not inconsistent with the Commission's opinion issued herewith.
The Commission has determined the appropriate remedy is a limited exclusion order prohibiting Hoover, bObsweep, and SSSIT from importing certain vacuum cleaning devices and components thereof, such as spare parts, that infringe one or more of claims 1, 10, 11, 14, 15, and 16 of the '233 patent, as well as cease and desist orders against Hoover and bObsweep prohibiting them from,
The Commission has also determined to set a bond in the following percentages of the entered value of the respondents' infringing products during the period of Presidential review (19 U.S.C. 1337(j)): 48.65 percent for products that are manufactured by or on behalf of bObsweep; 41.35 percent for products that are manufactured by or on behalf of Hoover; and zero percent (no bond) for products that are manufactured by SSSIT on behalf of entities other than Hoover and bObsweep, as well as products that are manufactured on behalf of SSSIT. The Commission's orders and opinion were delivered to the President and to the United States Trade Representative on the day of their issuance.
The authority for the Commission's determination is contained in section 337 of the Tariff Act of 1930, as amended (19 U.S.C. 1337), and in part 210 of the Commission's Rules of Practice and Procedure (19 CFR part 210).
By order of the Commission.
On the basis of the record
The Commission, pursuant to section 751(c) of the Act (19 U.S.C. 1675(c)), instituted these reviews on June 1, 2018 (83 FR 25490) and determined on September 4, 2018 that it would conduct expedited reviews (83 FR 48651, September 26, 2018).
The Commission made these determinations pursuant to section 751(c) of the Act (19 U.S.C. 1675(c)). It completed and filed its determinations in these reviews on November 30, 2018. The views of the Commission are contained in USITC Publication 4838 (November 2018), entitled
By order of the Commission.
Office of the Assistant Secretary for Policy, Chief Evaluation Office, Department of Labor.
Notice of information collection; request for comment.
The Department of Labor (DOL), as part of its continuing effort to reduce paperwork and respondent burden, conducts a preclearance consultation program to provide the general public and federal agencies with an opportunity to comment on proposed and/or continuing collections of information in accordance with the Paperwork Reduction Act of 1995 (PRA95). This program helps to ensure that requested data can be provided in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the impact of collection requirements on respondents is properly assessed. Currently, the Department of Labor is soliciting comments concerning the collection of data for the Reemployment Services and Eligibility Assessments (RESEA) Program Implementation Study. A copy of the proposed Information Collection Request (ICR) can be obtained by contacting the office listed below in the addressee section of this notice.
Written comments must be submitted to the office listed in the addressee section below on or before February 5, 2019.
You may submit comments by either one of the following methods:
Megan Lizik by email at
This
•
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A separate information collection activity request will be submitted in the future for a web survey of all RESEA programs. This web survey will provide the data needed to systematically understand RESEA program operations and state plans across all RESEA grantees nationwide.
○ Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
○ evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
○ enhance the quality, utility, and clarity of the information to be collected; and
○ minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology—for example, permitting electronic submission of responses.
Comments submitted in response to this request will be summarized and/or included in the request for Office of Management and Budget approval of the information collection request; they will also become a matter of public record.
This notice describes procedures to be followed with respect to meetings conducted by the U.S. Nuclear Regulatory Commission's (NRC's) Advisory Committee on Reactor Safeguards (ACRS) pursuant to the Federal Advisory Committee Act (FACA). These procedures are set forth so that they may be incorporated by reference in future notices for individual meetings.
The ACRS is a statutory advisory Committee established by Congress to review and report on nuclear safety matters and applications for the licensing of nuclear facilities. The Committee's reports become a part of the public record.
The ACRS meetings are conducted in accordance with FACA; they are normally open to the public and provide opportunities for oral or written statements from members of the public to be considered as part of the Committee's information gathering process. ACRS reviews do not normally encompass matters pertaining to environmental impacts other than those related to radiological safety.
The ACRS meetings are not adjudicatory hearings such as those conducted by the NRC's Atomic Safety and Licensing Board Panel as part of the Commission's licensing process.
An agenda will be published in the
The following requirements shall apply to public participation in ACRS Full Committee meetings:
(a) Persons who plan to submit written comments at the meeting should provide 35 copies to the DFO at the beginning of the meeting. Persons who cannot attend the meeting, but wish to submit written comments regarding the agenda items may do so by sending a readily reproducible copy addressed to the DFO specified in the
(b) Persons desiring to make oral statements at the meeting should make a request to do so to the DFO; if possible, the request should be made 5 days before the meeting, identifying the topic(s) on which oral statements will be made and the amount of time needed for presentation so that orderly arrangements can be made. The Committee will hear oral statements on topics being reviewed at an appropriate time during the meeting as scheduled by the Chairman.
(c) Information regarding topics to be discussed, changes to the agenda, whether the meeting has been canceled or rescheduled, and the time allotted to present oral statements can be obtained by contacting the DFO.
(d) The use of still, motion picture, and television cameras will be permitted at the discretion of the Chairman and subject to the condition that the use of such equipment will not interfere with the conduct of the meeting. The DFO will have to be notified prior to the meeting and will authorize the use of such equipment after consultation with the Chairman. The use of such equipment will be restricted as is necessary to protect proprietary or privileged information that may be in documents, folders, etc., in the meeting room. Electronic recordings will be permitted only during those portions of the meeting that are open to the public.
(e) A transcript will be kept for certain open portions of the meeting and will be available in the NRC Public Document Room (PDR), One White Flint North, Room O-1F21, 11555 Rockville Pike, Rockville, Maryland 20852-2738. A copy of the certified minutes of the meeting will be available at the same location 3 months following the meeting. Copies may be obtained upon payment of appropriate reproduction charges. ACRS meeting agendas, transcripts, and letter reports are available at
(f) Video teleconferencing service may be available for observing open sessions of ACRS meetings. Those wishing to use this service for observing ACRS meetings should contact the ACRS Audio Visual Office, telephone: 301-415-6702, between 7:30 a.m. and 3:45 p.m. Eastern Time at least 10 days before the meeting to ensure the availability of this service. Individuals or organizations requesting this service will be responsible for telephone line charges and for providing the equipment and facilities that they use to establish the video teleconferencing link. The availability of video teleconferencing services is not guaranteed.
In accordance with the revised FACA, the agency is no longer required to apply the FACA requirements to meetings conducted by the Subcommittees of the NRC Advisory Committees, if the Subcommittee's recommendations would be independently reviewed by its parent Committee.
The ACRS, however, chose to conduct its subcommittee meetings in accordance with the procedures noted above for ACRS Full Committee meetings, as appropriate, to facilitate public participation, and to provide a forum for stakeholders to express their views on regulatory matters being considered by the ACRS. When subcommittee meetings are held at locations other than at NRC facilities, reproduction facilities may not be available at a reasonable cost. Accordingly, 50 copies of the materials to be used during the meeting should be provided for distribution at such meetings.
If it is necessary to hold closed sessions for the purpose of discussing matters involving proprietary information, persons with agreements permitting access to such information may attend those portions of the ACRS meetings where this material is being discussed upon confirmation that such agreements are effective and related to the material being discussed.
The DFO should be informed of such an agreement at least five working days prior to the meeting so that it can be confirmed, and a determination can be made regarding the applicability of the agreement to the material that will be discussed during the meeting. The minimum information provided should include information regarding the date of the agreement, the scope of material included in the agreement, the project or projects involved, and the names and titles of the persons signing the agreement. Additional information may be requested to identify the specific agreement involved. A copy of the executed agreement should be provided to the DFO prior to the beginning of the meeting for admittance to the closed session.
83 FR 62396, 3 Dec. 2018.
Wednesday, December 5, 2018 at 10:00 a.m.
The Open Meeting scheduled for Wednesday, December 5, 2018 at 10:00 a.m., has been cancelled.
For further information, please contact Brent J. Fields of the Office of the Secretary at (202) 551-5400.
St. Paul & Pacific Northwest Railroad Company, LLC (SPN), a noncarrier, has filed a verified notice of exemption under 49 CFR 1150.31 to assume operations over approximately 83 miles of rail lines owned by BNSF Railway Company. The lines originate at milepost 60.5 in Chewelah, Wash., extending to milepost 0.0 at Kettle Falls, Wash., where the line diverges into two branches (the Lines). The West Branch continues northwest from Kettle Falls to milepost 4.7 at West Kettle Falls, Wash. The East Branch continues northeast to the United States-Canada border at milepost 139.7 and across the border at milepost 139.7 to Columbia Gardens,
This transaction is related to a concurrently filed verified notice of exemption in
SPN certifies that the underlying lease and operation agreement does not contain an interchange commitment. SPN also certifies that its projected revenues as a result of this proposed transaction will not exceed those that would result in the creation of a Class II or Class I rail carrier but notes that they will exceed $5 million. PGR filed the certification of notice to employees required under 49 CFR 1150.42(e) on November 1, 2018. Further, under 49 CFR 1150.32(b), a change in operator requires that notice be given to shippers. SPN certifies that notice of the change in operator was served on all known shippers on the Lines.
The earliest this transaction may be consummated is December 31, 2018, the effective date of the exemption (60 days after the Section 1150.42(e) certification was filed). SPN states that it expects to consummate the underlying transaction on receipt of all regulatory approvals, anticipated to be no later than January 1, 2019.
If the notice contains false or misleading information, the exemption is void
An original and 10 copies of all pleadings, referring to Docket No. FD 36246, must be filed with the Surface Transportation Board, 395 E Street SW, Washington, DC 20423. In addition, one copy of each pleading must be served on Bradon J. Smith, Fletcher & Sippel LLC, 29 North Wacker Drive, Suite 800, Chicago, Ill. 60606.
Board decisions and notices are available on our website at
By the Board, Scott M. Zimmerman, Acting Director, Office of Proceedings.
Progressive Rail Incorporated (PGR), a Class III rail carrier, has filed a verified notice of exemption under 49 CFR 1180.2(d)(2) to continue in control of St. Paul & Pacific Northwest Railroad Company, LLC (SPN), upon SPN's becoming a Class III rail carrier.
This transaction is related to a concurrently filed verified notice of exemption in
The earliest this transaction may be consummated is December 20, 2018, the effective date of the exemption (30 days after the verified notice was filed). PGR states that it intends to consummate the transaction concurrently with SPN's commencement of operations pursuant to Docket No. FD 36246, on or about January 1, 2019.
PGR will continue in control of SPN upon SPN's becoming a Class III rail carrier, while remaining in control of eight other Class III carriers: Airlake Terminal Railway Company, LLC; Central Midland Railway Company; Iowa Traction Railway Company; Iowa Southern Railway Company; Piedmont & Northern Railroad, LLC; Chicago Junction Railway Company; St. Paul & Pacific Railroad Company, LLC; and Clackamas Valley Railway Company, LLC.
PGR verifies that: (1) The rail lines do not connect with the lines of PGR or of the lines of any of the other eight Class III rail carriers controlled by PGR; (2) this continuance in control transaction is not part of a series of anticipated transactions that would result in such a connection; and (3) the transaction does not involve a Class I rail carrier. Therefore, the transaction is exempt from the prior approval requirements of 49 U.S.C. 11323.
Under 49 U.S.C. 10502(g), the Board may not use its exemption authority to relieve a rail carrier of its statutory obligation to protect the interests of its employees. Section 11326(c), however, does not provide for labor protection for transactions under sections 11324 and 11325 that involve only Class III rail carriers. Accordingly, the Board may not impose labor protective conditions here because all the carriers involved are Class III carriers.
If the notice contains false or misleading information, the exemption is void ab initio. Petitions to revoke the exemption under 49 U.S.C. 10502(d) may be filed at any time. The filing of a petition to revoke will not automatically stay the effectiveness of the exemption. Petitions for stay must be filed no later than December 13, 2018 (at least seven days before the exemption becomes effective).
An original and 10 copies of all pleadings, referring to Docket No. FD 36254, must be filed with the Surface Transportation Board, 395 E Street SW, Washington, DC 20423. In addition, one copy of each pleading must be served on Bradon J. Smith, Fletcher & Sippel LLC, 29 North Wacker Drive, Suite 800, Chicago, Ill. 60606.
Board decisions and notices are available on our website at
By the Board, Scott M. Zimmerman, Acting Director, Office of Proceedings.
Chesapeake & Albemarle Railroad (CA), a Class III railroad and division of North Carolina & Virginia Railroad Company, L.L.C. (NCVA), has filed a verified notice of exemption under 49 U.S.C. 10902 to enter into a superseding and replacement lease with Norfolk Southern Railway Company (NSR) and operate lines of railroad between (1) milepost NS 4.00 at Providence Junction, Va., and milepost NS 8.00 at Butts, Va., (2) milepost NS 8.00 at Butts, Va., and milepost NS 73.59 at Edenton, N.C., and (3) milepost WK 0.00 at Elizabeth City, N.C., and milepost WK 7.48 at Weeksville, N.C. (collectively, the Line). The Line totals approximately 77.07 miles.
CA and NSR entered into a lease in 1990, which covered lines between (1) milepost NS 8.00, and milepost NS 74.00, and (2) milepost WK 0.00, and milepost WK 7.48 (Original Lease).
According to CA, the New Lease includes an interchange commitment that is similar in structure to the interchange commitment included in the Original Lease. As required under 49 CFR 1150.43(h)(1), CA provided additional information regarding the interchange commitment.
CA does not project that this transaction will result in annual revenues significant enough to establish a Class I or Class II rail carrier. Additionally, CA confirms that its total revenues will not exceed $5 million after the transaction; however, CA states that NCVA, of which CA is a division, will have revenues over $5 million following the transaction. Accordingly, CA is required by Board regulations to send notice of the transaction to the national offices of the labor unions with employees on the affected lines at least 60 days before this exemption is to become effective, to post a copy of the notice at the workplace of the employees on the affected lines, and to certify to the Board that it has done so. 49 CFR 1150.42(e).
CA requests a waiver of the 60-day advance labor notice requirement under 49 CFR 1150.42(e). In that request, CA argues that: (1) No employees of the transferring carrier, NSR, will be affected by the lease and no employees of NSR have worked on any part of the Line since 2003 and therefore, posting notices would be futile because no NSR employees work on the Line and (2) there will be no operational changes and no CA employees will be affected by the lease. CA's waiver request will be addressed in a separate decision.
CA states that it expects to consummate the transaction on the effective date of this exemption. The Board will establish the effective date in its separate decision on the waiver request.
If the notice contains false or misleading information, the exemption is void
An original and 10 copies of all pleadings, referring to Docket No. FD 36252, must be filed with the Surface Transportation Board, 395 E Street SW, Washington, DC 20423-0001. In addition, a copy of each pleading must be served on Eric M. Hocky, Clark Hill PLC, One Commerce Square, 2005 Market Street, Suite 1000, Philadelphia, PA 19103.
Board decisions and notices are available on our website at
By the Board, Scott M. Zimmerman, Acting Director, Office of Proceedings.
Tennessee Valley Authority.
Notice of intent.
The Tennessee Valley Authority (TVA) intends to prepare an Environmental Impact Statement (EIS) to address the potential environmental effects associated with management of coal combustion residual (CCR) material at the Gallatin Fossil Plant (GAF) located near Gallatin in Sumner County, Tennessee. The purpose of the EIS is to address the final disposition of CCR onsite at GAF, support TVA's goal to eliminate wet CCR storage at its plants, and assist TVA in complying with the U.S. Environmental Protection Agency's (EPA's) CCR Rule. The proposed actions would also provide long-term on-site landfill space for operations and/or storage of CCR. TVA will develop and evaluate various alternatives for these actions, including the No Action Alternative. Public comments are invited concerning both the scope of the review and environmental issues that should be addressed.
Comments on the scope of the EIS must be received on or before January 11, 2019.
Comments may be submitted in writing to Ashley Farless, NEPA Specialist, 1101 Market Street, BR4A-C, Chattanooga, TN, 37402. Comments may also be submitted online
Other related questions should be sent to Tennessee Valley Authority, Ashley Farless, NEPA Specialist, 1101 Market Street, BR4A-C, Chattanooga, TN, 37402, Phone 423.751.2361 or
This notice is provided in accordance with the Council on Environmental Quality's regulations (40 CFR parts 1500 to 1508) for implementing the National Environmental Policy Act (NEPA), TVA's procedures for implementing NEPA, and Section 106 of the National Historic Preservation Act (NHPA) and its implementing regulations (36 CFR part 800).
TVA is a corporate agency and instrumentality of the United States created by and existing pursuant to the TVA Act of 1933 that provides electricity for business customers and local power distributors. TVA serves more than 9 million people in parts of seven southeastern states. TVA receives no taxpayer funding, deriving virtually all of its revenues from sales of electricity. In addition to operating and investing its revenues in its electric system, TVA provides flood control, navigation and land management for the Tennessee River system and assists local power companies and state and local governments with economic development and job creation.
The GAF is located in Sumner County, Tennessee, on 1,950 acres of land on the north bank of the Cumberland River. The plant has four turbo-generating units with a combined summer net generating capacity of 976 megawatts. The plant consumes an average of 3.5 million tons of coal per year which results in the annual production of approximately 255,000 tons of CCR. This CCR is the byproduct produced from burning coal and includes fly ash, bottom ash, boiler slag, and flue gas desulfurization materials. Historically, GAF stored CCR wet in onsite surface impoundments (commonly referred to as ash ponds). Bottom ash and boiler slag are the only remaining CCRs currently sent to the ponds. Newly installed air emission controls at GAF allow the majority of CCR to be stored dry in the North Rail Loop Landfill located at GAF, a state-of-the-art lined and state permitted facility. When the construction of a new bottom ash dewatering facility is finished in 2020, the plant will have completed its transition from wet CCR handling to dry handling of all CCR.
In July 2009, the TVA Board of Directors passed a resolution for staff to review TVA practices for storing CCRs at its generating facilities, including GAF, which resulted in a recommendation to convert the wet ash management system at GAF to a dry storage system. On April 17, 2015, the EPA published the final Disposal of CCRs from Electric Utilities rule, also known as the CCR Rule.
In June 2016, TVA issued a Final Programmatic Environmental Impact Statement (PEIS) that analyzed methods for closing CCR impoundments at TVA fossil plants and identified specific screening and evaluation factors to help frame its evaluation of closures at its other facilities. A Record of Decision was released in July 2016 that would allow future environmental reviews of qualifying CCR impoundment closures to tier from the PEIS. This PEIS can be found at
The EIS will examine closure of the following surface impoundments: Ash Pond A, Ash Pond E, Middle Pond A and a Non-Registered Site. In addition, TVA will examine removal of CCR from on-site Stilling Ponds and permanent disposition of CCR from the Bottom Ash Pond at Gallatin. TVA is performing a separate NEPA review for a project at Gallatin that could result in a temporary stockpile of CCR from the Bottom Ash Pond in the on-site landfill (North Rail Loop Landfill). The Bottom Ash Pond CCR would be temporarily stockpiled to make the most efficient use of property at GAF. Whether the Bottom Ash Pond CCR remains in its current location onsite at GAF or is temporarily stockpiled to allow TVA to make use of real estate available onsite, the final disposition of the Bottom Ash Pond CCR will be addressed in this EIS. Construction of a new on-site landfill will be examined as well as construction of a CCR beneficial re-use facility.
In addition to a No Action Alternative, this EIS will address alternatives that meet the purpose and need for the project. One alternative identified by TVA is closure of all surface impoundments and stilling ponds via closure-by-removal with construction of a new on-site landfill. The CCR material removed in this closure-by-removal alternative would be disposed of in a new on-site landfill and/or a beneficial re-use facility. Another alternative identified by TVA is closure of all surface impoundments and stilling ponds via closure-in-place with construction of a new on-site landfill that would be used to support ongoing long-term plant operations. TVA could also consider a combination closure-in-place and closure-by-removal alternative(s).
No decision has been made about CCR storage at GAF beyond the current operations. TVA is preparing this EIS to inform decision makers, other agencies and the public about the potential for environmental impacts associated with management of CCR at GAF.
This EIS will identify the purpose and need of the project and will contain descriptions of the existing environmental and socioeconomic resources within the area that could be affected by management of CCR at GAF. Evaluation of potential environmental impacts to these resources will include, but not be limited to, water quality, aquatic and terrestrial ecology, threatened and endangered species, wetlands, land use, historic and archaeological resources, solid and hazardous waste, safety, and socioeconomic and environmental justice issues. The final range of issues to be addressed in the environmental review will be determined, in part, from scoping comments received. The preliminary identification of reasonable alternatives and environmental issues in this notice is not meant to be exhaustive or final.
TVA is interested in an open process and wants to hear from the community. The public is invited to submit comments on the scope of this EIS no later than the date identified in the “Dates” section of this notice. Federal, state, local agencies and Native American Tribes are invited to provide comments.
After consideration of comments received during the scoping period, TVA will develop and distribute a scoping document that will summarize public and agency comments that were received and identify the schedule for completing the EIS process. Following analysis of the issues, TVA will prepare a draft EIS for public review and comment. In making its final decision, TVA will consider the analyses in this EIS and substantive comments that it receives. A final decision on proceeding with the management and storage of CCRs at GAF will depend on a number of factors. These include results of the EIS, requirements of the CCR Rule,
TVA anticipates holding a community meeting near the plant after releasing the Draft EIS. Meeting details will be posted on TVA's website. TVA expects to release the Draft EIS in the Fall 2019.
40 CFR 1501.7.
Federal Motor Carrier Safety Administration (FMCSA), DOT.
Notice of final disposition; denial of applications for exemption.
As required by statute, FMCSA announces denials of 10 applications for exemptions from the hours-of service (HOS) electronic logging device (ELD) rule. The applicants are as follows: Power and Construction Contractors Association; Western Equipment Dealers Association; Association of Energy Service Companies; Cudd Energy Services, Inc.; SikhsPAC and North American Punjabi Trucker Association; Owner- Operator Independent Drivers Association, Inc.; American Disposal Service; Towing and Recovery Association of America; National Electrical Contractors Association; and the Agricultural Retailers Association. The Agency reviewed each application and any comments received and rendered each decision based upon the merits of the application.
On June 16, 2018, FMCSA denied 9 applications for exemption and on July 26, 2018, the Agency denied the application of the Agricultural Retailers Association.
Ms. Pearlie Robinson, FMCSA Driver and Carrier Operations Division; Office of Carrier, Driver and Vehicle Safety Standards; Telephone: 202-366-4325. Email:
FMCSA has authority under 49 U.S.C. 31136(e) and 31315 to grant exemptions from certain parts of the Federal Motor Carrier Safety Regulations. FMCSA must publish a notice of each exemption request in the
The Agency reviews safety analyses and public comments submitted and determines whether granting the exemption would likely achieve a level of safety equivalent to, or greater than, the level that would be achieved by the current regulation (49 CFR 381.305). The decision of the Agency must be published in the
The current hours-of-service (HOS) regulations in 49 CFR 395.8(a) require motor carriers subject to the regulation to ensure their drivers use ELDs in place of written logs to record their duty status for each 24-hour period. Additionally, Part 395 lists certain ELD exceptions for short-haul operations within a 100 air-mile radius and agricultural operations within a 150 air-mile radius.
The 10 applicants cited below applied for an exemption from the requirement to use an ELD to record HOS for drivers subject to the regulation for various reasons. FMCSA published
The PCCA requested that motor carriers and drivers operating commercial motor vehicles (CMVs) in the power and communication construction industry be allowed to use paper records of duty status (RODS) instead of ELDs. PCCA noted that construction contractors spend considerable time off-road on varying jobsites; a single CMV may have several different drivers over the course of a day, moving the vehicle short distances around the jobsite. Due to the limited time that their drivers spend driving on public roads within a workday, PCCA states that the ELD and RODS requirements for drivers in its industries do not result in a significant safety benefit.
FMCSA reviewed the application and the 259 public comments submitted. On June 16, 2018, FMCSA denied PCCA's application for exemption because the Agency could not ensure that the exemption would provide the requisite level of safety. A copy of the denial letter is available for review in the docket (FMCSA-2017-0243).
WEDA requested this exemption from ELD use on behalf of several organizations and their members. Effectively, the requested exemption would eliminate the requirement for agricultural equipment dealers to install ELDs on their CMVs. WEDA stated that equipment dealer operations in agriculture present unique circumstances that warrant the requested exemption and that the failure to grant it would pose an undue burden on equipment dealers and their customers without a measurable safety benefit.
FMCSA reviewed the application and the 125 public comments submitted. On June 16, 2018, FMCSA denied WEDA's application for exemption because the Agency could not ensure that the exemption would provide the requisite level of safety. A copy of the denial letter is available for review in the docket (FMCSA-2017-0296).
AESC requested this exemption to allow all drivers of well service rigs to complete paper RODS instead of using an ELD whenever the drivers exceeded the requirements of the short-haul exception. According to AESC, complying with the ELD requirement would be overly burdensome for well
FMCSA reviewed the application and the 8 public comments submitted. On June 16, 2018, FMCSA denied AESC's application for exemption because the Agency could not ensure that the exemption would provide the requisite level of safety. A copy of the denial letter is available for review in the docket (FMCSA-2017-0337).
CES requested an exemption from the ELD requirements for its specially trained drivers of specially constructed CMVs used in oilfield operations to allow drivers of these infrequently driven CMVs to complete paper RODS instead of using an ELD. FMCSA regulations prohibit these drivers from using the short-haul exceptions to the HOS rules. CES believes that the exemption would not have any adverse impacts on operational safety because drivers would remain subject to the HOS regulations as well as the requirements to maintain paper RODS.
FMCSA reviewed the application and the 8 comments submitted. None of the comments supported the exemption. On June 16, 2018, FMCSA denied AESC's application for exemption because the Agency could not ensure that the exemption would provide the requisite level of safety. A copy of the denial letter is available for review in the docket (FMCSA-2017-0340).
These applicants requested an exemption from the ELD requirements on behalf of their members (fresh produce shippers and small truck businesses). According to the applicants, many of their members were not fully prepared to meet the December 18, 2017, compliance date. The exemption would allow members involved in segments of America's agricultural transportation industry to delay using ELDs for one year. The applicants asserted that the exemption, if granted, would give the marketplace time necessary to develop cost-effective and practical solutions for the specific needs of impacted stakeholders and would allow FMCSA time to address training programs with compliant ELD options.
FMCSA reviewed the application and the 41 comments submitted. On June 16, 2018, FMCSA denied the application. The information provided by the applicants failed to distinguish the drivers who would be included under the exemption. The applicants failed to indicate how they could ensure that the exemption would achieve a level of safety equivalent to, or greater than, the level of safety that would be obtained by compliance with the HOS regulation. A copy of the denial letter is available for review in the docket (FMCSA-2017-0342).
OOIDA requested a five-year exemption from the ELD rule for certain motor carriers considered to be a small transportation trucking business under 13 CFR 121.201. If granted, the exemption would cover small trucking businesses that do not have a carrier safety rating of “unsatisfactory,” and that can document a proven history of safety performance with no attributable at-fault crashes.
FMCSA reviewed the application and approximately 4,090 comments submitted. An estimated 96 percent of the comments were from owner-operators in favor of the exemption. Approximately 4 percent of the comments were in opposition to the proposed exemption. On June 16, 2018, FMCSA denied the application. FMCSA noted that most of the content of the application challenges the basis of the ELD rule itself, rather than justifying an exemption for a specific segment of drivers under applicable statutory standards. FMCSA noted further that the application provided no consideration of the significant difficulty that would be encountered in trying to identify and validate drivers who meet the proposed exemption criteria, especially during roadside inspections. A copy of the denial letter is available for review in the docket (FMCSA-2017-0356).
ADS is a trash hauling and recycling company operating in four States, with over 300 drivers who hold CDLs. ADS has been using the multiple stop rule, “treating all the stops in a village, town or city as one.” ADS operations fall under the 100 air-mile short haul exemption in Section 395.1(e)(1). When drivers exceed the 12-hour limitation more than 8 times in any 30 consecutive days, ADS is required to install and use ELDs in its CMVs.
ADS applied for the exemption from the ELD and paper RODS requirements because the company does not believe ELDs can accurately record driving time when the CMV makes constant short movements with the driver often exiting the vehicle. FMCSA reviewed the application and the 10 comments submitted. On June 16, 2018, FMCSA denied the application. FMCSA concluded that ADS had not clearly explained how its non-use of ELDs and its discontinued use of paper RODS would reach the current level of safety that compliance with the HOS rules provides. A copy of the denial letter is available for review in the docket (FMCSA-2017-0361).
TRAA is the national towing association representing more than 35,000 towing companies in all 50 states. TRAA has requested a 5-year exemption for all operators of CMVs owned or leased to providers of motor vehicle towing, recovery, and roadside repair services while providing such services. TRAA states that towing industry operations represent a unique and vital segment of the overall transportation industry in America that warrants exemption from the ELD regulations. TRAA believes that failure to grant the exemption will cause confusion and create an overly complex regulatory framework that will pose an undue burden on towers and their customers without any measurable benefit to public safety.
FMCSA reviewed the application and the 250 comments submitted. On June 16, 2018, FMCSA denied the application. FMCSA concluded that TRAA's plan for the continued use of paper RODS and the process for reviewing the RODS to verify accuracy would be comparable to the level of safety provided by paper RODS prior to the implementation of the ELD rule but would not achieve the equivalent level of safety that would be achieved by the use of ELDs. A copy of the denial letter is available for review in the docket (FMCSA-2017-0373).
NECA requested an exemption from the requirement to use an ELD on CMVs used by 4,000 contractor members who install, repair, and maintain the infrastructure of electrical utilities. NECA believes the ELD requirement burdens its members' operations unnecessarily. It proposed to continue to use paper logs to record their HOS.
FMCSA reviewed the application and the 275 comments submitted. Many of the comments were form letters in support of the application. On June 16, 2018, FMCSA denied the application. FMCSA was unable to determine from
ARA applied for exemption from the ELD requirement on behalf of its members who are retailers and distributors of farm-related products and services. ARA members rely on CMVs to deliver their products and services to farms. ARA asserted that its members were not prepared to meet the December 18, 2017 deadline for complying with the ELD rule and sought to obtain postponement of the deadline.
FMCSA reviewed the application and the 117 comments submitted. On July 26, 2018, FMCSA denied the application. FMCSA was unable to determine from the application and the public comments whether operations under the requested exemption would provide a requisite level of safety. A copy of the denial letter is available for review in the docket (FMCSA-2017-0336).
FMCSA has reviewed these applications carefully and the comments received and has concluded that each application lacks sufficient merit to justify the exemptions sought. Accordingly, FMCSA denies each application.
Maritime Administration, DOT.
Notice of U.S. Merchant Marine Academy Board Public Meeting.
The U.S. Department of Transportation, Maritime Administration (MARAD) announces that the following U.S. Merchant Marine Academy (Academy) Board of Visitors (BOV) meeting will take place:
1.
2.
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4.
(a) Introduce the new Academy Superintendent and Academic Dean/Provost.
(b) Provide a briefing on the Critical Infrastructure Plan, the infrastructure spending plan and ongoing capital improvements.
(c) Provide an update on the general state of the Academy, Class of 2022 performance, and status of incoming class of 2023.
(d) Provide an update on the Sexual Assault/Sexual Harassment program progress.
(e) Provide an update on the status of implementing the 5-year Strategic Plan.
(f) Establish the meeting schedule for CY 2019.
5.
The BOV's Designated Federal Officer and Point of Contact Brian Blower, 202-366-2765 or
Any member of the public is permitted to file a written statement with the Academy BOV. Written statements should be sent to the Designated Federal Officer at: Brian Blower; 1200 New Jersey Ave. SE W28-314, Washington, DC 20590 or via email at
By Order of the Maritime Administrator.
Pipeline and Hazardous Materials Safety Administration (PHMSA), DOT.
Notice of emergency waiver order.
PHMSA is issuing an emergency waiver order to persons conducting operations under the direction of Environmental Protection Agency (EPA) Region 10 or United States Coast Guard (USCG) Seventeenth District within the emergency area affected by the November 30, 2018 Alaska earthquake. The Waiver is granted to support the EPA and USCG in taking appropriate actions to prepare for, respond to, and recover from a threat to public health, welfare, or the environment caused by actual or potential oil and hazardous materials incidents resulting from the Alaska earthquake. This Waiver Order is effective immediately and shall remain in effect for 30 days from the date of issuance.
Adam Horsley, Deputy Assistant Chief Counsel for Hazardous Materials Safety, Pipeline and Hazardous Materials Safety Administration, telephone: (202) 366-4400.
In accordance with the provisions of 49 U.S.C. 5103(c), the Administrator for PHMSA hereby declares that an emergency exists that warrants issuance of a Waiver of the Hazardous Materials Regulations (HMR, 49 CFR parts 171-180) to persons conducting operations under the direction of EPA Region 10 or USCG Seventeenth District within the emergency area affected by the November 30, 2018 Alaska earthquake. The Waiver is granted to support the EPA and USCG in taking appropriate actions to prepare for, respond to, and recover from a threat to public health, welfare, or the environment caused by actual or potential oil and hazardous materials incidents resulting from the Alaska earthquake.
On November 30, 2018, the President issued an Emergency Declaration for the Alaska earthquake (EM-3410) for Anchorage Municipality, Kenai Peninsula Borough, and Matanuska-Susitna Borough. This Waiver Order
Given the continuing impacts caused by the Alaska earthquake, PHMSA's Administrator has determined that regulatory relief is in the public interest and necessary to ensure the safe transportation in commerce of hazardous materials while the EPA and USCG execute their recovery and cleanup efforts in Alaska. Specifically, PHMSA's Administrator finds that issuing this Waiver Order will allow the EPA and USCG to conduct their Emergency Support Function #10 response activities under the National Response Framework to safely remove, transport, and dispose of hazardous materials. By execution of this Waiver Order, persons conducting operations under the direction of EPA Region 10 or USCG Seventeenth District within the Alaska earthquake emergency area are authorized to offer and transport non-radioactive hazardous materials under alternative safety requirements imposed by EPA Region 10 or USCG Seventeenth District when compliance with the HMR is not practicable. Under this Waiver Order, non-radioactive hazardous materials may be transported to staging areas within 50 miles of the point of origin. Further transportation of the hazardous materials from staging areas must be in full compliance with the HMR.
This Waiver Order is effective immediately and shall remain in effect for 30 days from the date of issuance.
Internal Revenue Service (IRS), Treasury.
Notice of proposed rulemaking.
This document contains proposed regulations that provide guidance relating to the determination of the foreign tax credit under the Internal Revenue Code (the “Code”). The guidance relates to changes made to the applicable law by the Tax Cuts and Jobs Act (the “Act”), which was enacted on December 22, 2017. Guidance on other foreign tax credit issues, including in relation to pre-Act statutory amendments, is also included in this document. The proposed regulations provide guidance needed to comply with statutory changes and affect individuals and corporations claiming foreign tax credits.
Written or electronic comments and requests for a public hearing must be received by February 5, 2019.
Send submissions to CC:PA:LPD:PR (REG-105600-18), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20224. Submissions may be hand delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-105600-18), Courier's desk, Internal Revenue Service, 1111 Constitution Avenue NW, Washington, DC 20044, or sent electronically, via the Federal eRulemaking Portal at
Concerning the proposed regulations under §§ 1.861-8 through 1.861-13, 1.861-17, and 1.904(b)-3, Jeffrey P. Cowan, (202) 317-4924; concerning the proposed regulations under §§ 1.901(j)-1, 1.904-1 through 1.904-6, 1.904(f)-12, and 1.954-1, Jeffrey L. Parry, (202) 317-4916, and Larry R. Pounders, (202) 317-5465; concerning §§ 1.78-1 and 1.960-1 through 1.960-7, Suzanne M. Walsh, (202) 317-4908; concerning §§ 1.965-5 and 1.965-7, Karen J. Cate, (202) 317-4667; concerning submissions of comments and requests for a public hearing, Regina Johnson, (202) 317-6901 (not toll-free numbers).
The Act made several significant changes to the Internal Revenue Code with respect to the foreign tax credit rules and related rules for allocating and apportioning expenses for purposes of determining the foreign tax credit limitation. In particular, the Act repealed the fair market value method of asset valuation for purposes of allocating and apportioning interest expense under section 864(e)(2), added section 904(b)(4), added two foreign tax credit limitation categories in section 904(d), amended section 960(a) through (c), added section 960(d) through (f), and repealed section 902 along with making other conforming changes. The Act also added section 951A, which requires a United States shareholder of a controlled foreign corporation (“CFC”) to include certain amounts in income (a “global intangible low-taxed income inclusion” or “GILTI inclusion”).
This document contains proposed regulations (the “proposed regulations”) addressing (1) the allocation and apportionment of deductions under sections 861 through 865 and adjustments to the foreign tax credit limitation under section 904(b)(4); (2) transition rules for overall foreign loss, separate limitation loss, and overall domestic loss accounts under section 904(f) and (g), and for the carryover and carryback of unused foreign taxes under section 904(c); (3) the addition of separate categories under section 904(d) and other necessary updates to the regulations under section 904, including revisions to the look-through rules and other updates to reflect pre-Act statutory amendments; (4) the calculation of the exception from subpart F income for high-taxed income under section 954(b)(4); (5) the determination of deemed paid credits under section 960 and the gross up under section 78; and (6) the application of the election under section 965(n).
The foreign tax credit limitation under section 904 is determined, in part, based on a taxpayer's taxable income from sources without the United States. Regulations under sections 861 through 865 provide rules for allocating and apportioning deductions to determine, among other things, a taxpayer's taxable income from sources without the United States for purposes of applying section 904. Section 904(b)(4) makes certain adjustments to both the taxpayer's taxable income from sources without the United States and the taxpayer's entire taxable income for purposes of computing the applicable foreign tax credit limitation. Proposed §§ 1.861-8 through 1.861-13 and 1.861-17 amend existing regulations to clarify how deductions are allocated and apportioned in general, and provide new rules to account for the specific changes made to sections 864(e) and 904 by the Act. Proposed § 1.904(b)-3 provides rules regarding the application of section 904(b)(4) for purposes of determining a taxpayer's foreign tax credit limitation.
The Department of the Treasury (“Treasury Department”) and the Internal Revenue Service (“IRS”) have received comments suggesting that section 951A, in combination with section 904(d)(1)(A) (the “section 951A category”), was intended to provide that the income of a United States shareholder derived through the CFC would be subject to additional U.S. tax if the foreign effective tax rate is below a particular rate, and should be effectively exempt from U.S. tax if the foreign effective tax rate is at or above that rate. These comments generally cite language in H.R. Rep. 115-466 (2017) (the “Conference Report”) illustrating that no U.S. “residual tax” applies to foreign earnings subject to a foreign effective tax rate of 13.125 percent or more.
Allocated expenses may reduce the amount of section 951A category income included in U.S. taxable income below the amount of the foreign base on which the CFC paid at least a 13.125 percent foreign effective tax rate, with the effect that the United States shareholder's foreign taxes deemed paid may exceed the pre-credit U.S. tax on its section 951A category income, resulting in excess credits that may not offset U.S. tax on other income. This result flows from the fact that the foreign tax credit limitation under section 904 is calculated with respect to the pre-credit U.S. tax on the shareholder's net foreign source taxable income in each separate category. The comments nevertheless suggest that taxpayers' inability to reduce U.S. tax on non-section 951A category income (such as U.S. source income) with the excess credits is tantamount to imposing U.S. “residual tax” on section 951A category income, even though the actual U.S. tax liability on that income, as reduced by foreign tax credits, is zero. The comments suggest that in order to assure full
The Treasury Department and the IRS have determined that the Act is not consistent with this view of how the section 904 limitation should apply to the section 951A category. Congress added a new separate category under section 904(d)(1) for amounts includible under section 951A and amended section 904(c) to disallow carryovers of excess foreign tax credits in that category, but did not modify the existing rules under section 904 or sections 861 through 865 to provide for special treatment of expenses allocable to the section 951A category. Other provisions added in the Act are inconsistent with the notion described by comments that Congress intended effectively to exempt section 951A category income that was subject to a certain foreign effective tax rate from U.S. tax, since those provisions may result in U.S. tax being imposed on income derived through a CFC even if the foreign effective tax rate on the income exceeds 13.125 percent. See, for example, sections 59A (limiting the benefits of foreign tax credits) and 250(a)(2)(B)(ii) (limiting the deduction under section 250 in certain cases). In addition, numerous provisions in the Code that were unamended by the Act apply by their terms to section 951A category income, also indicating that Congress did not intend to eliminate generally-applicable limitations on foreign tax credits associated with foreign earnings of a CFC even if such earnings were subject to a certain foreign effective tax rate. For example, the Act did not amend provisions that limit the availability of foreign tax credits (such as sections 901(j), (k), (l), or (m)) or that reduce (or increase) the foreign tax credit limitation in the section 951A category based on U.S. or foreign losses in other separate categories or losses in other years (sections 904(f) and (g)). These provisions apply to a GILTI inclusion and related taxes under section 960(d), and as applied the provisions are not consistent with the policy of determining allowable foreign tax credits based solely on a CFC's foreign effective tax rate because they may reduce the amount of taxes that may be credited without regard to the foreign effective tax rate of the CFC. The Act did, however, add section 904(b)(4)(B), which disregards certain deductions other than those that are “properly allocable or apportioned to” amounts includible under sections 951A(a) or 951(a)(1) and stock that produces amounts includible under section 951A(a) or 951(a)(1). This new provision plainly contemplates that deductions will be allocated and apportioned to the section 951A category.
Accordingly, the proposed regulations generally apply the existing approach of the expense allocation rules to determine taxable income in the section 951A category, as well as the new foreign branch category described in section 904(d)(1)(B). However, as discussed in Part I.A of this Explanation of Provisions, the proposed regulations also provide for exempt income and exempt asset treatment with respect to income in the section 951A category that is offset by the deduction allowed under section 250(a)(1) for inclusions under section 951A(a) and a corresponding percentage of the stock of CFCs that generates such income. This will generally have the effect of reducing the amount of expenses apportioned to the section 951A category.
The Treasury Department and the IRS recognize that in light of the significant reduction in the corporate tax rate and the enactment of section 951A, the foreign tax credit limitation and the related expense allocation rules will have a broader impact on taxpayers than before the Act. In particular, although all U.S. taxpayers claiming foreign tax credits were subject to the foreign tax credit limitation under section 904, many taxpayers were not significantly affected by the limitation so long as the U.S. corporate tax rate was higher than the effective foreign tax rate. In addition, the pre-Act deferral system that taxed non-passive income earned through foreign subsidiaries (and allowed deemed paid foreign tax credits) only upon repatriation allowed taxpayers to manage their foreign tax credit limitation by timing repatriations. However, the Act's reduction in the U.S. corporate tax rate, limitations on deferral, and introduction of a participation exemption regime without deemed paid credits has limited the benefits of this type of planning. The Treasury Department and the IRS welcome comments on the proposed approach and anticipated impacts.
Many of the existing expense allocation rules have not been significantly modified since 1988. Furthermore, for taxable years beginning after December 31, 2020, a worldwide affiliated group will be able to elect to allocate and apportion interest expense on a worldwide basis.
Therefore, the Treasury Department and the IRS expect to reexamine the existing approaches for allocating and apportioning expenses, including in particular the apportionment of interest, research and experimentation (“R&E”), stewardship, and general & administrative expenses, as well as to reexamine the “CFC netting rule” in § 1.861-10(e). The Treasury Department and the IRS request comments with respect to specific revisions to the regulations that should be made in connection with this review.
Part I.A of this Explanation of Provisions describes proposed changes to the rules addressing exempt income and assets, including the application of those rules in the context of the deduction under section 250. Part I.B of this Explanation of Provisions describes rules to address the allocation and apportionment of the deduction under section 250 and clarifying changes to the allocation and apportionment of certain other deductions. Part I.C of this Explanation of Provisions describes a new rule addressing loans to partnerships by certain partners and their affiliates. Part I.D of this Explanation of Provisions describes a revision to the CFC netting rule. Part I.E of this Explanation of Provisions describes rules for the valuation of assets, including stock, for purposes of allocating and apportioning deductions. Part I.F of this Explanation of Provisions describes rules for characterizing the stock of certain foreign corporations for purposes of allocating and apportioning deductions. Part I.G of this Explanation of Provisions describes rules for certain elections relating to the allocation and apportionment of R&E expenditures. Part I.H of this Explanation of Provisions describes rules for applying section 904(b)(4).
Section 864(e)(3) provides that, for purposes of allocating and apportioning any deductible expense, any tax-exempt asset (and any income from the asset) is not taken into account. Section 864(e)(3) also provides that a similar rule applies for the portion of any dividend equal to the deduction allowable under section 243 or 245(a) with respect to the dividend and the like portion of any stock the dividends on which would be
The Treasury Department and the IRS are aware that some taxpayers have taken the position that under § 1.861-8T(d)(2)(ii) assets or income that are partially exempt, excluded, or eliminated may be treated as entirely exempt. This interpretation is inconsistent with section 864(e)(3). The proposed regulations revise the definitions of exempt income and exempt asset to clarify that income or assets are treated as exempt (or partially exempt) under section 864(e)(3) only to the extent that the income or the income from the assets are, or are treated as, exempt, excluded, or eliminated. Proposed § 1.861-8(d)(2)(ii)(A).
New section 250(a)(1) allows a domestic corporate shareholder a deduction (the “section 250 deduction”) equal to portions of its foreign-derived intangible income (“FDII”), GILTI inclusion, and the amount treated as a dividend under section 78 that is attributable to its GILTI inclusion. Because the section 250 deduction effectively exempts a portion of certain income, the proposed regulations provide that for purposes of applying the expense allocation and apportionment rules, the gross income offset by the section 250 deduction is treated as exempt income, and the stock or other asset giving rise to that income is treated as a partially exempt asset.
Under proposed § 1.861-8(d)(2)(ii)(C)(
The amount of the section 250 deduction used to determine the amount of gross income that is exempt is reduced to the extent section 250(a)(2)(B) requires a reduction to the amount of the deduction. Therefore, proposed § 1.861-8(d)(2)(ii)(C) does not apply to treat income or assets as exempt if the domestic corporation is not allowed a deduction under section 250(a)(2), even though the domestic corporation may have FDII or a GILTI inclusion.
A special rule is provided in proposed § 1.861-8(d)(2)(ii)(C)(
Section 245A(a) allows domestic corporate shareholders a deduction equal to the foreign-source portion of dividends received from certain foreign corporations (the “section 245A deduction”), subject to certain limitations described in section 246. Although section 864(e)(3) contemplates that dividends described in sections 243 and 245(a) are treated similarly to exempt income to the extent of the deductions allowed under those sections, section 864(e)(3) does not apply to the dividend income reduced by the section 245A deduction. Instead, section 904(b)(4) provides for alternative adjustments.
Finally, the proposed regulations confirm in proposed § 1.861-8(d)(2)(iv) that earnings and profits excluded from income under section 959 (“previously taxed earnings and profits”) do not result in any portion of the stock in a CFC being treated as an exempt asset. Under §§ 1.861-12 and 1.861-12T, stock in a CFC is characterized by reference to the income generated each year by the CFC's assets. Previously taxed earnings and profits are not a type of income that is generated during the taxable year by a CFC's assets; rather, the CFC's assets, whether acquired with previously taxed or non-previously taxed earnings and profits or with another source of funds, generate income used to characterize the stock. For the avoidance of doubt, proposed § 1.861-8(d)(2)(iv) confirms that the fact that a CFC has previously taxed earnings and profits does not result in any portion of the CFC's stock being treated as an exempt asset under section 864(e)(3).
Section 1.861-8(e) provides rules for allocating and apportioning certain deductions. Section 1.861-8(e)(6) provides rules for the allocation and apportionment of deductions for state, local, and foreign income, war profits and excess profits taxes. In the case of deductions for foreign income, war profits and excess profits taxes, the allocation and apportionment rules under § 1.861-8(e) are intended to be consistent with the principles of § 1.904-6. The proposed regulations clarify this result by expressly incorporating the principles of § 1.904-6(a)(1)(i), (ii), and (iv) in allocating and apportioning taxes to the relevant statutory and residual groupings (and not just to separate categories of income for purposes of determining the foreign tax credit limitation).
The proposed regulations include rules for allocating and apportioning the section 250 deduction. For these purposes, although the section 250 deduction is a single deduction that equals the sum of the amounts specified
Under proposed § 1.861-8(e)(13), the portion of the section 250 deduction for FDII is treated as definitely related and allocable to the specific class of gross income that is included in the taxpayer's foreign-derived deduction eligible income (as defined in section 250(b)(4)). Although foreign-derived deduction eligible income is an amount net of expenses, the class is determined based solely on the gross income that is used to calculate foreign-derived deduction eligible income. In cases where the income is allocated to a class that contains multiple categories under section 904(d) or U.S. source income, the deduction is apportioned ratably based on the relative amounts of gross income in the different income groupings.
Proposed § 1.861-8(e)(14) provides a similar rule for the portion of the section 250 deduction allowed for the GILTI inclusion and the corresponding section 78 gross up. In certain cases, gross income from the GILTI inclusion could be in a grouping other than the grouping for section 951A category income (for example, because it is U.S. source or passive category income). In such cases, the deduction for the GILTI inclusion and the section 78 gross up is apportioned ratably based on the relative amounts of gross income in the different income groupings.
The proposed regulations also clarify the general rule for allocating and apportioning a taxpayer's distributive share of partnership deductions. Proposed § 1.861-8(e)(15) provides that if a taxpayer is a partner in a partnership, the taxpayer's deductions that are allocated and apportioned include the taxpayer's distributive share of the partnership's deductions.
The Treasury Department and the IRS are aware that certain loans made to a partnership by a United States person, or a member of its affiliated group, that owns an interest (directly or indirectly) in the partnership can result in a distortion in the determination of the foreign tax credit limitation under section 904 when the same person takes into account both a distributive share of the interest expense and the interest income with respect to the same loan. This result occurs due to differences in the rules that govern the source and separate category of the interest income and those that govern the allocation and apportionment of interest expense. To prevent the distortive effect of these differences, proposed § 1.861-9(e)(8)(ii) generally provides that, to the extent the lender in a specified partnership loan transaction takes into account both interest expense and interest income with respect to the same loan, the interest income is assigned to the same statutory and residual groupings as those groupings from which the interest expense is deducted, as determined under the allocation and apportionment rules in §§ 1.861-9 through 1.861-13. Additionally, proposed § 1.861-9(e)(8)(i) provides that, for purposes of applying the allocation and apportionment rules, a portion of the loan is not taken into account as an asset of the lender based on the ratio of the portion of the interest income included by the lender that is subject to this matching rule to the total amount of interest income included by the lender with respect to the loan in the taxable year. The proposed regulations include anti-avoidance rules to extend these provisions to certain back-to-back loans or loans made through CFCs.
Section 1.861-10(e)(8)(vi) provides that for purposes of applying the CFC netting rule of § 1.861-10(e), certain related party hybrid debt is treated as related group indebtedness, but the income derived from the hybrid debt is not treated as interest income derived from related group indebtedness. As a result, no interest expense is generally allocated to income from the hybrid debt, but the debt may nevertheless increase the amount of allocable related group indebtedness for which a reduction in assets is required under § 1.861-10(e)(7). This has a distortive effect on the general allocation and apportionment of other interest expense under § 1.861-9. The proposed regulations revise § 1.861-10(e)(8)(vi) to provide that hybrid debt is not treated as related group indebtedness for purposes of the CFC netting rule. Proposed § 1.861-10(e)(8)(vi) also provides that hybrid debt is not treated as related group indebtedness for purposes of determining the foreign base period ratio, which is based on the average of related group debt-to-asset ratios in the five prior taxable years, even if the hybrid debt was otherwise properly treated as related group indebtedness in a prior year. This is necessary to prevent distortions that would otherwise arise in comparing the ratio in a year in which the hybrid debt was treated as related group indebtedness to the ratio in a year in which the hybrid debt is not treated as related group indebtedness.
Section 864(e)(2) requires taxpayers to apportion interest expense on the basis of assets rather than income. Under the asset method, a taxpayer apportions interest expense to the various statutory groupings based on the average total value of assets within each grouping for the taxable year as determined under the asset valuation rules of § 1.861-9T(g). Before the Act, taxpayers could elect to determine the value of their assets under the tax book value, alternative tax book value, or the fair market value method, and were required to obtain the Commissioner's approval to switch from the fair market value method to the tax book or alternative tax book value methods.
For purposes of determining asset values, an average of values within each statutory grouping is computed for the year on the basis of the values of assets at the beginning and end of the year.
The amendments made to section 864(e)(2) by the Act repealed the fair market value method only for purposes of allocating and apportioning interest expense. Accordingly, the fair market value method and the rules in § 1.861-9(h) remain applicable for non-interest expenses that are properly apportioned on the basis of the relative fair market values of assets.
Under section 864(e)(4)(A) and § 1.861-12(c)(2)(i)(A), for purposes of apportioning expenses on the basis of the tax book value of assets, certain adjustments are made to the adjusted basis of stock in a 10 percent owned corporation based on the earnings and profits (or deficits in earnings and profits) of the corporation attributable to the stock. The Treasury Department and the IRS are aware that some taxpayers have taken the position that the adjustment to basis for earnings and profits under § 1.861-12T(c)(2) does not include previously taxed earnings and profits. This interpretation is inconsistent with the text and purpose of section 864(e)(4) and § 1.861-12(c)(2). The adjustment under section 864(e)(4) is intended to better approximate the value of stock.
The Treasury Department and the IRS are also aware that taxpayers have expressed uncertainty as to which values are used for averaging beginning and year-end values in the case of 10 percent owned corporations whose stock basis is adjusted under § 1.861-12(c)(2) (including rules described in § 1.861-12T(c)(2)), which, in general, first eliminates any additions to basis on account of previously taxed earnings and profits made under sections 961 and 1293(d), and then increases or decreases adjusted basis by the shareholder's pro rata share of total earnings and profits. The proposed regulations clarify in proposed § 1.861-9(g)(2)(i)(B) that the beginning and end-of-year values of stock are determined without regard to any adjustments under section 961(a) or 1293(d), and before making the adjustment for earnings and profits provided in § 1.861-12(c)(1)(i)(A). The adjustment for total earnings and profits provided in § 1.861-12(c)(1)(i)(A) is only made after the average of the beginning and end of year values has been determined.
In Part VII.D of the Explanation of Provisions of the notice of proposed rulemaking for the regulations under section 965,
If a shareholder elects to make the basis adjustments under proposed § 1.965-2(f)(2)(i), the tax book value of the stock of its foreign corporations that were specified foreign corporations (as defined in § 1.965-1(f)(45)) will generally reflect the proper adjusted basis amounts as long as any amounts included in basis under proposed § 1.965-2(f)(2)(ii)(A) are treated similarly to adjustments under section 961 and not included in the taxpayer's basis in stock under § 1.861-12T(c)(2)(i)(B). Accordingly, proposed § 1.861-12(c)(2)(i)(B)(
The Treasury Department and the IRS request comments on alternative ways to account for section 965(b) that minimize taxpayer burdens without distorting the measurement of a CFC's tax book value.
Section 1.861-12 provides special rules for applying the asset method in order to apportion expenses to the separate categories in computing the foreign tax credit limitation. The proposed regulations clarify in § 1.861-12(a) that § 1.861-12 also applies in apportioning expenses among statutory and residual groupings for operative sections other than section 904.
Special rules are provided in § 1.861-12T(c) regarding the treatment of stock, including stock in 10 percent owned corporations (as defined in § 1.861-12T(c)(2)(ii)) and stock in CFCs. The purpose of the stock characterization rules of § 1.861-12T(c) is to characterize the stock by reference to the income which the stock generates to its owner. With respect to CFCs, the rules generally look through to the income generated by the assets of the CFC for purposes of characterizing the stock of the CFC. Before the Act, the income earned by the CFC was generally assigned to the same separate category to which that income would be assigned if earned directly by the United States shareholder because the categories of income of a CFC and U.S. person were the same, and the look-through rules
As described in Part II.B.3 of this Explanation of Provisions, the new separate category for section 951A category income applies only to an inclusion by a United States person of gross income under section 951A(a). Accordingly, gross tested income of a CFC is generally assigned to the general category, even though the stock of the CFC may give rise to a GILTI inclusion that is section 951A category income in the hands of a United States shareholder. Therefore, § 1.861-12T(c) would not result in characterizing any of the stock of the CFC as a section 951A category asset because the tested income of the CFC is assigned to the general category, even though the related income included by the United States shareholder is assigned to the section 951A category. Accordingly, the proposed regulations in § 1.861-13 provide special rules to account for the fact that, with respect to the section 951A category, the application of § 1.861-12T(c) to determine the income of the CFC or the income generated by the assets of the CFC does not, on its own, reflect the separate category of the income generated by the stock of the CFC to the United States shareholder. The proposed regulations also address a similar issue that arises when a CFC earns U.S. source income that is included under section 951(a) or 951A(a) in gross income of a United States shareholder who elects under an income tax treaty to treat the inclusion as foreign source income, resulting in separate category treatment for income resourced under a tax treaty (a “treaty category”).
Under proposed § 1.861-13, a taxpayer first determines the amount of the stock of a CFC that is characterized in each of the statutory groupings described in § 1.861-13(a)(1) under the asset method or the modified gross income method. Under the modified gross income method, stock of a CFC may be characterized as producing general category gross tested income even though the CFC has a tested loss.
Next, a portion of the stock characterized as producing general category gross tested income is assigned to the section 951A category. Only a portion of the stock so characterized is assigned to the section 951A category because the amount of the GILTI inclusion by the United States shareholder may be less than the aggregate tested income of its CFCs because of offsets from another CFC's tested loss or because of a reduction for net deemed tangible income return described in section 951A(b)(2). The inclusion percentage, as defined in section 960(d)(2), takes into account the percentage of net CFC tested income that is not included under section 951A(a) due to tested losses or the net deemed tangible income return. Accordingly, proposed § 1.861-13(a)(2) assigns a United States shareholder's stock in a CFC generating gross tested income to the section 951A category based on the United States shareholder's inclusion percentage as determined under § 1.960-2(c)(2). In general, earnings and profits related to the gross tested income that is not included under section 951A(a), when distributed, result in dividend income that is assigned to the general category.
The use of the inclusion percentage to assign stock to the section 951A category applies regardless of whether the stock of the CFC produces tested income or a tested loss for the year, in order to reflect the aggregate nature of the calculation of a United States shareholder's GILTI inclusion. Stock of a CFC is generally assigned to the statutory grouping for gross tested income, under either the asset or modified gross income methods described in proposed § 1.861-12(c)(3), if the CFC's assets generate gross tested income or if the CFC earns gross tested income, even if the CFC ultimately produces a tested loss for the taxable year. However, a United States shareholder with no GILTI inclusion for a taxable year has an inclusion percentage of zero, and therefore none of the stock of its CFCs is assigned to the section 951A category in that year.
Under proposed § 1.861-13(a)(3), a similar rule applies for characterizing stock as a treaty category asset if stock of a CFC is assigned to the statutory grouping for gross tested income that was resourced under a treaty. The portion of the stock of the CFC that is assigned to a treaty category is based on the United States shareholder's inclusion percentage. In the case of stock of a CFC initially assigned to the statutory groupings for gross subpart F income that is resourced under a treaty, all of that stock is assigned to a treaty category.
Finally, in the case of stock of a CFC assigned to the general and passive categories or the residual grouping for U.S. source income, proposed § 1.861-13(a)(5) provides rules for subdividing the categories or groupings into a section 245A subgroup and non-section 245A subgroup for purposes of applying section 904(b)(4). See Part I.H of this Explanation of Provisions for a description of the regulations under section 904(b)(4). In general, these rules provide that the portion of stock that does not generate income that is included under section 951A(a) or 951(a)(1) and does not represent income described in section 245(a)(5) (which gives rise to a dividends received deduction under section 245 instead of section 245A) is assigned to the section 245A subgroup.
Both the asset method and modified gross income method described in § 1.861-12T(c)(3) provide rules to characterize stock in a CFC when there are tiers of CFCs. Under the modified gross income method in § 1.861-12T(c)(3)(iii), a taxpayer characterizes the value of the first-tier CFC based on the gross income net of interest expense of the CFC within each relevant separate category. In the case of vertically-owned CFCs, gross income of any higher-tier CFC includes the gross income net of interest expense of any lower-tier CFC, but does not include subpart F income of any lower-tier CFC.
The proposed regulations add similar rules for GILTI inclusions. In particular, the proposed regulations provide in §§ 1.861-9(j)(2)(ii)(C) and 1.861-12(c)(3)(iii) that for purposes of characterizing CFC stock under the modified gross income method, the gross tested income of lower-tier CFCs, net of interest expense apportioned to the tested income, is excluded from the gross income of intermediate-tier CFCs but is included in the gross income of the first-tier CFC. The Treasury Department and the IRS request comments on whether additional rules are required to account for gross tested income earned in lower-tier CFCs, including gross tested income of lower-tier CFCs that produce tested losses.
To reflect the repeal of section 902, the Act modifies section 904(d)(2)(E) to provide a new definition for a noncontrolled 10-percent owned foreign corporation. The proposed regulations modify § 1.861-12(c)(4) to provide that stock in a noncontrolled 10-percent owned foreign corporation is generally characterized under the same rules previously used for noncontrolled section 902 corporations.
In general, R&E expenditures are apportioned between groupings within product categories according to either a sales or gross income method of apportionment at the taxpayer's election. § 1.861-17(c) and (d). Under § 1.861-17(e)(1), a taxpayer may choose to use either the sales method or gross income method for its original return for its first taxable year. The taxpayer's use of either method constitutes a binding election to use the method chosen for that year and for the subsequent four years. Within this five-year period, the election can only be revoked with the Commissioner's consent. A taxpayer may change the election at any time after five years, but the new election is binding for a new five-year period. § 1.861-17(e)(2).
In light of the numerous amendments to the foreign tax credit rules made by the Act, the proposed regulations provide a one-time exception to the five-year binding election period. Accordingly, under proposed § 1.861-17(e)(3), even if a taxpayer is subject to the binding election period, for the taxpayer's first taxable year beginning after December 31, 2017, the taxpayer may change its apportionment method without obtaining the Commissioner's consent. This one-time change of method constitutes a binding election to use the method chosen for that year and for the next four taxable years.
The Treasury Department and the IRS request comments on whether other aspects of § 1.861-17 should be revised in light of the changes to section 904(d), in particular the addition of the section 951A category. For example, because the look-through rules in section 904(d)(3)(C) do not assign interest, rents, or royalties that reduce tested income to the section 951A category, royalties paid by a CFC to a United States shareholder are generally general category income even though the sales by the CFC to which the royalties relate may generate income in the section 951A category to the United States shareholder. This could result in R&E expenditures being apportioned under the sales method solely to the section 951A category, even though the royalty income is assigned to the general category. However, under the gross income method, R&E expenditures would be apportioned to both the general and section 951A category. Comments are requested on whether and how the regulations governing either or both methods should be revised to account for the addition of the section 951A category.
Under new section 904(b)(4), for purposes of the foreign tax credit limitation in section 904(a), a domestic corporation that is a United States shareholder with respect to a specified 10-percent owned foreign corporation disregards the “foreign-source portion” of any dividend received from the foreign corporation and any deductions properly allocable or apportioned to income (other than amounts includible under section 951(a)(1) or 951A(a)) with respect to the stock of the foreign corporation or to the stock itself (to the extent income with respect to the stock is other than amounts includible under section 951(a)(1) or 951A(a)). Dividends and deductions that are disregarded under section 904(b)(4) result in an adjustment to both the taxpayer's foreign source taxable income in the relevant separate category (the numerator of the fraction under section 904(a)) and its worldwide taxable income (the denominator of the fraction under section 904(a)) in all separate categories.
In general, under section 904(b)(4), disregarding both the dividend income eligible for a deduction under section 245A as well as the associated deduction under section 245A has no effect on the foreign tax credit limitation in any separate category because they generally net to zero. However, additional deductions that are disregarded under section 904(b)(4)(B) generally have the effect of increasing the foreign tax credit limitation with respect to the separate category to which the deductions are allocated and apportioned, because both the numerator (foreign source taxable income in the category) and the denominator (worldwide taxable income) of the fraction under section 904(a) are increased by the same amount. In contrast, the limitation in other categories will generally decrease because the numerator (foreign source taxable income in the category) is unchanged but the denominator (worldwide taxable income) of the fraction is increased.
Section 904(b)(4)(B) requires determining what income with respect to stock of a specified 10-percent owned foreign corporation is income “other than amounts includible under section 951(a)(1) or 951A(a).” The terms used in section 904(b)(4) are defined by reference to definitions provided in section 245A.
As discussed in Part I.A of this Explanation of Provisions, with respect to other dividends received deductions, section 864(e)(3) provides that rules similar to the exempt income and exempt asset rules apply to the dividends and stock on which the dividends are paid. The Act did not extend this treatment to the section 245A deduction but instead added section 904(b)(4). In contrast to section 864(e)(3), which removes the exempt income and assets from the determination before deductions are allocated and apportioned under the rules of §§ 1.861-8 through 1.861-17, section 904(b)(4) provides that the deductions are disregarded after they have been allocated and apportioned. Disregarding the deductions after they have been allocated and apportioned is consistent with a policy that the deductions are properly allocable and apportioned to income eligible for a section 245A deduction and, therefore, should not be apportioned to income in other separate categories or U.S. source income. By disregarding these deductions, section 904(b)(4) has the effect of computing the foreign tax credit limitation fraction in section 904(a) (but not the pre-credit U.S. tax) as if the deductions had not been allowed.
The proposed regulations provide that income “other than amounts includible under section 951(a)(1) or 951A(a)” refers to income for which a section 245A deduction is allowed. Thus, in the case of section 904(b)(4)(B)(i), proposed § 1.904(b)-3(c)(1) provides that income for which a section 245A deduction is allowed means dividends for which a section 245A deduction is allowed. In the case of section 904(b)(4)(B)(ii), proposed § 1.904(b)-3(c)(1) and (2) provide rules for determining what amount of stock of the foreign corporation corresponds to income that, if distributed, is generally eligible for a
Proposed § 1.904(b)-3(a)(1)(ii) provides that deductions “properly allocable” to dividends for which a section 245A deduction is allowed are disregarded. The amount of properly allocable deductions is determined by treating each section 245A subgroup for each separate category as a statutory grouping under § 1.861-8(a)(4) for purposes of allocating and apportioning deductions. Only dividend income for which a section 245A deduction is allowed is included in a section 245A subgroup.
The deductions allocated and apportioned to the section 245A subgroup within each separate category are disregarded for purposes of determining the foreign source taxable income in the separate category and the entire taxable income included in the fraction under section 904(a) for all separate categories. Deductions allocated and apportioned to the section 245A subgroup within the residual grouping for U.S. source income are disregarded solely for purposes of determining the denominator of the limitation fraction (worldwide taxable income) in the separate categories that have foreign source taxable income. Proposed § 1.904(b)-3(a)(2). Dividends in the residual grouping for which a section 245A deduction is allowed could include, for example, dividends from a United States-owned foreign corporation (as defined in section 904(h)(6)) paid out of U.S. source income that is neither effectively connected income nor dividend income received from a domestic corporation.
Proposed § 1.904(b)-3(b) also provides that the section 245A deduction is always allocated solely to a section 245A subgroup and therefore is always disregarded under section 904(b)(4).
In order to determine the deductions “properly allocable” to stock of a specified 10-percent owned foreign corporation that is in the section 245A subgroup, the stock is first characterized for purposes of allocating and apportioning expenses under § 1.861-12 and, if applicable, § 1.861-13. In the case of a specified 10-percent owned foreign corporation that is not a CFC, all of the value of its stock is generally in a section 245A subgroup because the stock cannot generate an inclusion under section 951(a)(1) or 951A(a). Proposed § 1.904(b)-3(c)(2). If the specified 10-percent owned foreign corporation is a CFC, a portion of the value of stock in each separate category and in the residual grouping for U.S. source income is subdivided between a section 245A and non-section 245A subgroup under the rules described in § 1.861-13(a)(5).
Previously taxed earnings and profits do not affect the amount of expenses that are disregarded under section 904(b)(4). The characterization of stock in a specified 10-percent owned foreign corporation for purposes of section 904(b)(4)(B)(ii) is determined on an annual basis by applying the rules in § 1.861-12(c), which generally requires applying either the asset method or the modified gross income method. Whether or not the CFC has previously taxed earnings and profits, including from prior years or due to section 965, has no bearing on how either method is applied to characterize stock.
Because the section 904(b)(4) adjustments apply in computing the foreign tax credit limitation under section 904(a), proposed § 1.904(b)-3(d) provides that the adjustments under section 904(b)(4), like the adjustments under section 904(b)(2) to account for foreign source capital gain net income and rate differentials, apply before the operation of both the separate limitation loss and overall foreign loss rules in section 904(f) and the overall domestic loss rules in section 904(g). This rule permits loss accounts to be recaptured out of income that is added to the foreign tax credit limitation calculation by reason of the section 904(b)(4) adjustments.
The proposed regulations update §§ 1.904-1 through 1.904-6 (the “section 904 regulations”) to eliminate deadwood and reflect statutory amendments made to section 904 before the Act. For example, proposed §§ 1.904-1 through 1.904-3 reflect the repeal of the overall limitation and per-country limitation. Proposed § 1.904-4 reflects statutory amendments made before the Act eliminating various separate categories described in section 904(d)(1).
The proposed regulations also propose revisions and additions to the section 904 regulations to reflect the changes made under the Act. Part II.A of this Explanation of Provisions describes proposed transition rules to account for the addition of separate categories for section 951A category income and foreign branch category income. Part II.B of this Explanation of Provisions describes (1) proposed amendments to the rules relating to the passive category with respect to high-taxed income, export financing interest, and financial services income; (2) rules relating to the foreign branch category, section 951A category, and separate category described in section 904(d)(6) for items resourced under a treaty; and (3) rules for assigning the section 78 gross up and section 986(c) gain or loss to a separate category. Part II.C of this Explanation of Provisions describes updates relating to amendments made by the Act replacing references to “noncontrolled section 902 corporations” with “non-controlled 10 percent owned foreign corporations.” Part II.D of this Explanation of Provisions describes proposed amendments to the look-through rules under sections 904(d)(3) and (d)(4) to account for the addition of the foreign branch category and section 951A category under the Act. Part II.E of this Explanation of Provisions describes the proposed changes to the rules for allocating and apportioning foreign taxes to separate categories.
The Act does not provide any transition rules for assigning carryforwards of unused foreign taxes earned in pre-2018 taxable years to a different separate category, including the new post-2017 separate categories for section 951A category income and
However, double taxation may result if unused foreign taxes paid, accrued, or deemed paid in a pre-2018 taxable year are not assigned to the separate category to which the taxes would have been assigned if the new post-2017 separate categories had existed in the pre-2018 taxable year. This could arise, for example, if unused foreign taxes imposed on income derived through foreign branches in a pre-2018 taxable year are not associated with foreign branch category income. Matching the unused foreign taxes to the separate category that includes income of the same type as the income on which the taxes were imposed furthers the purpose of the section 904(c) foreign tax credit carryover rules to mitigate the effect of timing differences in the recognition of income for U.S. and foreign tax purposes that could otherwise result in double taxation.
Therefore, proposed § 1.904-2(j)(1)(iii) provides an exception that permits taxpayers to assign unused foreign taxes in the pre-2018 separate category for general category income to the post-2017 separate category for foreign branch category income to the extent they would have been assigned to that separate category if the taxes had been paid or accrued in a post-2017 taxable year. Any remaining unused taxes are assigned to the post-2017 separate category for general category income. The exception applies only to unused taxes that were paid or accrued, and not taxes that were deemed paid with respect to dividends or inclusions from foreign corporations, because income derived through foreign corporations cannot be foreign branch category income.
Because the new post-2017 separate category for foreign branch category income does not include income that would have been passive category income or income in a separate category described in proposed § 1.904-4(m) that is not listed in section 904(d)(1) (a “specified separate category”) if earned in a pre-2018 taxable year, the exception in proposed § 1.904-2(j)(1)(iii) applies only to unused foreign taxes that were paid or accrued with respect to income in the pre-2018 separate category for general category income. Furthermore, because the determination of taxable income in the section 951A category is intertwined with numerous other new provisions in the Code outside of section 904 that contain novel elements (such as the section 250 deduction and the new inclusion rules in section 951A that permit the sharing of tested losses among CFCs) that did not exist under prior law, it is not possible to reconstruct the amount of unused foreign taxes in a pre-2018 taxable year that would have been assigned to section 951A category income. Therefore, the reallocation exception in the proposed regulations does not require or allow taxpayers to assign any unused foreign taxes to the post-2017 separate category for section 951A category income, which is not eligible to be sheltered from U.S. tax by foreign tax credit carryovers.
The proposed regulations require taxpayers applying the exception in § 1.904-2(j)(1)(iii) to analyze general category income earned in prior years in order to determine the extent to which the income would have been foreign branch category income under the rules described in proposed § 1.904-4(f). Unused foreign taxes in the general category arising in those prior years are then allocated and apportioned under § 1.904-6 between the general category and the foreign branch category. This analysis does not require applying any other post-Act provisions to prior years (for example, the new expense allocation rules described in the proposed regulations would not be relevant to the analysis).
The Treasury Department and the IRS recognize that taxpayers may face difficulties in reconstructing the allocation of unused foreign taxes. Therefore, the Treasury Department and the IRS request comments on whether the final regulations should include a simplified rule for taxpayers that choose to reconstruct the allocation of general category unused foreign taxes (for example, by looking to the relative amounts of foreign branch category and general category income or assets in the first post-2017 taxable year to which the unused foreign taxes are carried), what form such a rule should take, and whether there are any special concerns regarding members that have left a consolidated group. See, for example, § 1.904-7(f)(4)(ii).
All income included in the post-2017 separate category for foreign branch category income would have been general category income if earned in a pre-2018 taxable year. All income included in the post-2017 separate categories for general category income, passive category income, or income in a specified separate category would have been treated as general category income, passive category income, or income in a specified separate category, respectively, if earned in a pre-2018 taxable year. Accordingly, proposed § 1.904-2(j)(2)(ii) and (iii) provides that any unused foreign taxes with respect to general category income or foreign branch category income in a post-2017 taxable year that are carried back to a pre-2018 taxable year are allocated to the pre-2018 separate category for general category income, and any excess foreign taxes with respect to passive category income or income in a specified separate category in a post-2017 taxable year that are carried back to a pre-2018 taxable year are allocated to the same pre-2018 separate category. No rule is included with respect to the post-2017 separate category for section 951A category income (including a separate category for a GILTI inclusion that is resourced under a tax treaty), because carrybacks are not allowed for unused foreign taxes in that separate category.
Similar to the transition rules for carryovers and carrybacks of unused foreign taxes, the proposed regulations provide transition rules for recapture in a post-2017 taxable year of an overall foreign loss (OFL) or separate limitation loss (SLL) in a pre-2018 separate category that offset U.S. source income or income in another pre-2018 separate category, respectively, in a pre-2018 taxable year, as well as for recapture of an overall domestic loss (ODL) that offset income in a pre-2018 separate category in a pre-2018 taxable year.
Proposed § 1.904(f)-12(j) provides that any SLL or OFL accounts in the pre-2018 separate category for passive category income or income in a specified separate category remain in the same post-2017 separate category. Any SLL or OFL account in the pre-2018 separate category for general category income is allocated between the post-2017 separate categories for general category income and foreign branch category income in the same proportion that any unused foreign taxes with respect to the pre-2018 separate category for general category income are allocated to those post-2017 separate categories. Therefore, in the case of a taxpayer that does not apply the exception described in proposed § 1.904-2(j)(1)(iii), all of its SLL or OFL accounts in the pre-2018 separate
Under section 904(d)(2)(B)(iii), passive income does not include export financing interest and high-taxed income. Before the Act, the only separate category described in section 904(d)(1) aside from passive category income was general category income, and therefore §§ 1.904-4(c) and (h)(2) treated export financing interest and high-taxed income as general category income.
Given the expansion of categories under section 904(d)(1) to include foreign branch category and section 951A category income, and the fact that section 904(d)(2)(B)(iii) only provides that export financing interest and high-taxed income are not passive income, the proposed regulations provide that export financing interest and high-taxed income should be categorized based on whether the income otherwise meets the definition of foreign branch category income, section 951A category income, or general category income. Therefore, the proposed regulations revise § 1.904-4(c) and (h)(2) to provide that export financing interest and high-taxed income are assigned to separate categories other than passive category income based on the general rules in § 1.904-4.
To coordinate the high-taxed income rules of section 904(d)(2)(F) with the new rules for computing foreign income taxes deemed paid under section 960 described in Part IV of this Explanation of Provisions, the proposed regulations revise the grouping rules of § 1.904-4(c)(4) to group passive category income from dividends, subpart F and GILTI inclusions from each foreign corporation, and passive category income derived from each foreign qualified business unit (QBU), under the grouping rules in § 1.904-4(c)(3) rather than by reference to the source of the corporation's or QBU's income. The Treasury Department and the IRS request comments on whether additional changes should be made to the high-taxed income rules in § 1.904-4(c) in light of changes to section 904(d) made by the Act.
Both before and after the Act, section 904(d)(2)(C)(i) provides that certain financial services income is treated as general category income. However, the Act's addition of foreign branch category and section 951A category income, which are new and more specific categories, take precedence over the treatment of financial services income as general category income. Therefore, the proposed regulations provide that any financial services income not treated as foreign branch category income or section 951A category income is generally treated as general category income.
The proposed regulations do not include any substantive changes to the definition of financial services entity in § 1.904-4(e)(3). It is intended that the current classification of an entity as a financial services entity is generally unaffected by the changes made by the proposed regulations to the look-through rules in § 1.904-5. However, the Treasury Department and the IRS are considering modifications to the gross income-based test for determining financial services entity status and request comments in this regard, particularly with respect to the appropriate treatment of related party payments.
Section 904(d)(1)(B) provides a new separate category for foreign branch category income, which is defined in section 904(d)(2)(J) as the business profits of a United States person attributable to a qualified business unit (QBU) in a foreign country (excluding passive category income). Section 904(d)(1)(B) further provides that the amount of business profits attributable to a QBU is determined under rules established by the Secretary.
Section 904(d)(2)(J) limits foreign branch income to income of a United States person. Therefore, foreign persons (including CFCs) cannot have foreign branch category income. While a domestic partnership (or other pass-through entity) that is a United States person may earn income that is attributable to a foreign branch of such partnership, a distributive share of income earned by a domestic partnership cannot be foreign branch category income to foreign partners of the partnership. To avoid any conflict, the proposed regulations define foreign branch category income as the gross income of a United States person (other than a pass-through entity).
Specifically, proposed § 1.904-4(f)(1)(i) provides that foreign branch category income means the gross income of a United States person (other than a pass-through entity) that is attributable to foreign branches held directly or indirectly through disregarded entities by the United States person. Foreign branch category income also includes a United States person's (other than a pass-through entity) distributive share of partnership income that is attributable to a foreign branch held by the partnership directly or indirectly through another partnership or other pass-through entity. Similar principles apply for income of any other type of pass-through entity that is attributable to a foreign branch. All the income described is aggregated in a single foreign branch category; there are not separate categories for each foreign branch. Conforming changes are made to the rules for allocating and apportioning partnership deductions and creditable foreign tax expenditures.
In general, gross income is attributable to a foreign branch to the extent it is reflected on a foreign branch's separate set of books and records. For this purpose, items of gross income must be adjusted to conform to Federal income tax principles. In addition, the proposed regulations provide several rules adjusting the gross income attributable to a foreign branch from what is reflected on the foreign branch's separate set of books and records.
First, the proposed regulations provide that gross income attributable to a foreign branch does not include items arising from activities carried out in the United States. Proposed § 1.904-4(f)(2)(ii).
Second, the regulations provide that gross income attributable to a foreign branch does not include items of gross income arising from stock, including dividend income, income included under section 951(a)(1), 951A(a), or 1293(a) or gain from the disposition of stock. Proposed § 1.904-4(f)(2)(iii)(A);
Third, the proposed regulations provide that foreign branch category income does not include gain realized by a foreign branch owner on the disposition of an interest in a disregarded entity or an interest in a partnership or other pass-through entity. Proposed § 1.904-4(f)(2)(iv)(A). However, an exception is provided for the sale of a partnership interest if the gain is reflected on the books and records of a foreign branch and the interest is held in the ordinary course of the foreign branch owner's trade or business. Proposed § 1.904-4(f)(2)(iv)(B).
Fourth, the proposed regulations provide anti-abuse rules relating to the reflection of income on the books and records of a branch. The Treasury Department and the IRS are concerned that in certain cases gross income items could be inappropriately recorded on the books and records of a foreign branch or a foreign branch owner. Therefore, the proposed regulations include an anti-abuse rule providing for the reattribution of gross income if a principal purpose of recording, or failing to record, an item on the books and records of a foreign branch is the avoidance of Federal income tax or avoiding the purposes of section 904 or section 250. Proposed § 1.904-4(f)(2)(v). The rule further provides a presumption that interest income received by a foreign branch from a related party is not gross income attributable to the foreign branch unless the interest income meets the definition of financial services income.
Finally, in order to accurately reflect the gross income attributable to a foreign branch, a determination that affects not only the application of section 904(a) but also the determination of deduction eligible income under section 250(b)(3)(A), the proposed regulations provide that gross income attributable to a foreign branch that is not passive category income must be adjusted to reflect certain transactions that are disregarded for Federal income tax purposes. Proposed § 1.904-4(f)(2)(vi). This rule applies to transactions between a foreign branch and its foreign branch owner, as well as transactions between or among foreign branches, involving payments that would be deductible or capitalized if the payment were regarded for Federal income tax purposes. For example, a payment made by a foreign branch to its foreign branch owner may, to the extent allocable to non-passive category income, result in a downward adjustment to the gross income attributable to the foreign branch and an increase in the general category gross income of the United States person. Each payment in a series of disregarded back-to-back payments, for example, a payment from one foreign branch to another foreign branch followed by a payment to the foreign branch owner, must be accounted for separately under these rules. Comments are requested on whether special rules are required in the case of a true branch (generally, a branch that is taxable solely on profits from a business conducted in the country and not taxable as a resident of that country) with respect to amounts that are deemed to be made to or from the home office of the branch under the foreign jurisdiction's rules for attributing profits to the branch.
In general, the proposed regulations do not treat disregarded transactions as “regarded” for Federal income tax purposes; rather, they provide that certain disregarded transactions result in a redetermination of whether gross income of the United States person is attributable to its foreign branch or to the foreign branch owner. Thus, while disregarded transactions may allocate income between the foreign branch category and the general category, those transactions have no effect on the amount, character, or source of a United States person's gross income. U.S. source gross income that is reallocated from the general category to the foreign branch category and that is properly subject to foreign tax may be eligible to be treated as foreign source income under the terms of an income tax treaty, in which case the resourced income would be subject to a separate foreign tax credit limitation for income resourced under a tax treaty.
The proposed regulations provide an exception from the special rules regarding disregarded transactions that applies to contributions, remittances, and payments of interest (including certain interest equivalents). Proposed § 1.904-4(f)(2)(vi)(C). Generally, contributions, remittances, and interest payments to or from a foreign branch reflect a shift of, or return on, capital rather than a payment for goods and services. However, the different treatment of contributions and remittances, on the one hand, and other disregarded transactions, on the other, could allow for non-economic reallocations of the amount of gross income attributable to the foreign branch category. To prevent this in connection with certain transactions, the proposed regulations require the amount of gross income attributable to a foreign branch (and the amount attributable to the foreign branch owner) to be adjusted to account for consideration that would be due in any disregarded transactions in which property described in section 367(d)(4) is transferred to or from a foreign branch if the transactions were regarded, whether or not a disregarded payment is made in connection with the transfer. Proposed § 1.904-4(f)(2)(vi)(D). The proposed regulations further require that the amount of any adjustment under the disregarded payment provisions must be determined under the arm's length principle of section 482 and the regulations under that section. Proposed § 1.904-4(f)(2)(vi)(E).
The Treasury Department and the IRS request comments on how adjustments relating to these transactions could be limited or simplified to reduce administrative and compliance burdens while still providing for an accurate categorization of gross income, consistent with the purpose of both sections 904 and 250(b)(3)(A). For example, comments are requested on whether these rules should be narrowed to cover a more limited set of transactions or whether disregarded payments should be netted before determining the amount of reallocation.
The proposed regulations do not propose any special rules for determining the amount of deductions allocated and apportioned to foreign branch category income, including deductions reflected on the books and records of foreign branches. Therefore, the proposed regulations provide that the rules for allocating and apportioning deductions in §§ 1.861-8 through 1.861-17 that apply with respect to the other separate categories also apply to the foreign branch category. The Treasury Department and the IRS request comments on whether any special rules should be issued for determining the allocation and apportionment of deductions between the foreign branch category and the general category. In addition, the Treasury Department and the IRS request comments on whether special rules should be provided for financial institutions with branches subject to regulatory capital requirements, including for example, rules similar to those in § 1.882-5.
The proposed regulations define a foreign branch by reference to the regulations under section 989 (“section 989 regulations”) by providing that a foreign branch is a QBU described in § 1.989(a)-1(b)(2)(ii) and (b)(3) that carries on a trade or business outside the United States. Proposed § 1.904-
The section 989 regulations treat partnerships and trusts as
In order to ensure that foreign branch category income does not include income reflected on the books and records of a QBU unless the QBU conducts a trade or business, the proposed regulations' definition of foreign branch does not incorporate the section 989 regulations'
The proposed regulations also modify the trade or business requirements in the section 989 regulations for purposes of the foreign branch definition. Specifically, to constitute a foreign branch, a QBU must carry on a trade or business outside the United States. For this purpose, activities that constitute a permanent establishment in a foreign country under a bilateral U.S. tax treaty, whether or not the activities also rise to the level of a separate trade or business, are presumed to constitute a trade or business.
Under § 1.989(a)-1(c), for activities to constitute a trade or business, they must ordinarily include the collection of income and the payment of expenses. The proposed regulations provide that, for purposes of determining whether a set of activities satisfy the trade or business requirement of § 1.989(a)-1(c) in the context of the definition of a foreign branch, activities that relate to disregarded transactions are taken into account and may give rise to a trade or business for this purpose.
Section 904(d)(1)(A) defines a new separate category as “any amount includible in gross income under section 951A (other than passive category income).” Consistent with that language, proposed § 1.904-4(g) provides that the gross income included in the section 951A category is generally the gross income of a United States shareholder from a GILTI inclusion. However, a GILTI inclusion that is allocable to passive category income under the look-through rules in § 1.904-5(c)(6) is excluded from section 951A category income. A passive category GILTI inclusion could arise, for example, from a CFC's distributive share of partnership income in which the CFC owns less than 10 percent of the value in the partnership.
In addition, the proposed regulations amend § 1.904-2(a) to reflect the exclusion of foreign tax credit carryovers under section 904(c) for foreign taxes paid or accrued with respect to section 951A category income or with respect to section 951A category income that is treated as income in a separate category for income resourced under a tax treaty.
Legislation commonly referred to as the Education Jobs and Medicaid Assistance Act (EJMAA), enacted on August 10, 2010, added section 904(d)(6), which, as amended by the Tax Cuts and Jobs Act, provides that if, without regard to any treaty obligation of the United States, any item of income would be treated as derived from sources within the United States, under a treaty obligation of the United States the item of income would be treated as arising from sources outside the United States, and the taxpayer chooses the benefits of the treaty obligation to treat the income as arising from sources outside the United States, then subsections 904(a), (b), and (c) and sections 907 and 960 shall be applied separately with respect to each item. Thus, section 904(d)(6)(A) applies a separate foreign tax credit limitation to each item of resourced income, without regard to the separate category to which the item would otherwise be assigned.
Proposed § 1.904-4(k)(2) adopts a grouping methodology similar to that employed in § 1.904-5(m)(7) with respect to income treated as in a separate category under the separate treaty resourcing rules of section 904(h)(10). Under the proposed regulations, the taxpayer must segregate income treated as foreign source under each treaty and then compute a separate foreign tax credit limitation for income in each separate category that is resourced under that treaty.
For purposes of allocating foreign taxes to each grouping of section 904(d)(6) income, the principles of § 1.904-6 apply to allocate to the section 904(d)(6) separate category all foreign income taxes related to the income included in that group, including taxes imposed by a third country. The Treasury Department and the IRS are considering whether the regulations should provide a special rule limiting the tax assigned to a section 904(d)(6) separate category to tax paid to the foreign country that is a party to the income tax treaty pursuant to which the income is resourced, and request comments on this issue.
Some U.S. income tax treaties contain provisions for the tax treatment in both Contracting States of certain types of income derived from sources within the United States by U.S. citizens who are residents of the other Contracting State. See, for example, paragraph 3 of Article 24 (Relief from Double Taxation) of the income tax convention between the United States and Ireland, signed on July 28, 1997. These rules generally use a three-step approach to determine the U.S. citizen's ultimate U.S. income tax liability with respect to an applicable item of income. First, the other Contracting State provides a credit against its tax for the notional U.S. tax that would apply under the treaty to a resident of the other Contracting State who is not a U.S. citizen. Second, the United States provides a credit against U.S. tax for the income tax paid or accrued to the other Contracting State after the application of the credit for notional U.S. tax by the other Contracting State. Finally, the income is deemed to arise in the other Contracting State to the extent necessary to avoid double taxation under these rules.
These treaty rules are generally designed to preserve the United States'
In addition, under the mutual agreement procedures of U.S. income tax treaties, U.S. taxpayers may request assistance from the U.S. competent authority, such as for the relief of double taxation in cases not provided for in the treaty. Where the U.S. competent authority agrees to grant relief to a taxpayer that involves resourcing, the taxpayer has effectively chosen the benefit of a treaty obligation of the United States to treat the item of income as foreign source. Accordingly, proposed § 1.904-4(k)(4)(ii) clarifies that section 904(d)(6) separate category treatment applies to items of income resourced pursuant to a competent authority agreement.
Numerous comments were received requesting guidance on the appropriate separate category to which the gross up described in section 78 attributable to foreign taxes deemed paid under section 960(d) should be assigned. Proposed § 1.904-4(o) provides a rule consistent with existing § 1.904-6(b)(3) that assigns the gross up to the same separate category as the deemed paid taxes. See Part II.E.3 of this Explanation of Provisions for a description of rules for allocating and apportioning deemed paid taxes to separate categories.
Proposed § 1.904-4(p) also provides a rule assigning gain or loss under section 986(c) with respect to a distribution of previously taxed earnings and profits to the separate category from which the distribution was made.
Under section 904(d)(2)(E) as amended by the Act, the term “noncontrolled section 902 corporation” has been revised to “noncontrolled 10-percent owned foreign corporation.” The definition has also been amended to reflect the repeal of section 902, but maintains pre-Act rules for when a taxpayer meets the requisite stock ownership with respect to a passive foreign investment company (“PFIC”). The proposed regulations update the references in the section 904 regulations to noncontrolled section 902 corporations to reflect the revised statutory term and definition.
The ownership requirement for PFICs differs from the United States shareholder requirement that generally applies to a noncontrolled 10-percent owned foreign corporation described in section 904(d)(2)(E)(i)(I). The proposed regulations in § 1.904-5(a)(4)(vi) provide that for purposes of the regulations under section 904, any reference to a United States shareholder in the context of a noncontrolled 10-percent owned foreign corporation also includes a taxpayer that meets the stock ownership requirements described in section 904(d)(2)(E)(i)(II), even if the taxpayer is not a United States shareholder within the meaning of section 951(b).
Before amendments made by the American Jobs Creation Act of 2004 (AJCA), section 904(d)(3) generally provided that dividends, interest, rents, and royalties (“look-through payments”) received or accrued by a taxpayer from a CFC in which the taxpayer is a United States shareholder were treated as income in the separate category to which the payment was allocable. Section 904(d)(4) provided similar look-through rules for dividends from noncontrolled section 902 corporations. The AJCA reduced the number of separate categories from nine to two, and revised section 904(d)(3). Under section 904(d)(3)(A) as amended by the AJCA, except as otherwise provided by section 904(d)(3), dividends, interest, rents, and royalties received or accrued by a taxpayer from a CFC in which the taxpayer is a United States shareholder are not treated as passive category income. Exceptions are provided, generally, when the payment is allocable to passive category income. However, the existing regulations under § 1.904-5 were largely unchanged after the AJCA amendments and retained the pre-AJCA approach to assigning dividends, interest, rents, and royalties based on the separate category of the income to which the payment was allocable, rather than excluding the income from the passive category to the extent not allocable to the passive category. In practice, because there were generally only two separate categories after the AJCA and because the general category was a residual category, the approach under the existing regulations of assigning payments to a separate category based on the separate category to which they were allocable resulted in payments that were not allocable to passive category income being assigned to the general category.
The Act added two new separate categories to section 904(d)(1) but made no changes to the look-through rules in section 904(d)(3) and (4). In addition, the legislative history does not provide any indication of how the look-through rules were intended to operate with the addition of the new separate categories.
The proposed regulations provide that the look-through rules under section 904(d)(3) provide look-through treatment solely for payments allocable to the passive category. Any other payments described in section 904(d)(3) are assigned to a separate category other than the passive category based on the general rules in § 1.904-4. Therefore, proposed § 1.904-5 revises the various look-through rules to reflect the application of look-through rules solely with respect to payments allocable to passive category income. Dividends, interest, rents, or royalties paid from a CFC to a United States shareholder thus are not assigned to a separate category (other than the passive category) under the look-through rules, but are assigned to the foreign branch category, a specified separate category described in proposed § 1.904-4(m), or the general category under the rules of proposed § 1.904-4(d).
Consistent with the general rule for look-through payments, section 904(d)(3)(B) assigns amounts included under section 951(a)(1)(A) (“subpart F inclusions”) to the passive category to the extent the inclusion is attributable to passive category income. Under the authority of section 951A(f)(1)(B), the proposed regulations treat GILTI inclusions in the same manner as subpart F inclusions for purposes of section 904(d)(3)(B). Therefore, proposed § 1.904-5(c)(6) provides that GILTI inclusions are treated as passive category income to the extent the amount so included is attributable to income received or accrued by the CFC that is passive category income.
Under the proposed regulations, the look-through rules also do not apply to
Finally, as a result of the proposed revisions to § 1.904-5 that limit the look-through rules generally to passive category income, the proposed regulations include a rule addressing income subject to the separate category required under section 901(j)(1)(B). These rules ensure that income from sources within countries described in section 901(j)(2) that is paid or accrued through one or more entities retains its source and therefore continues to be subject to the separate category described in section 901(j)(1)(B).
Section 904(d)(2)(H)(i) and § 1.904-6(a)(1)(iv) provide a special rule for allocating foreign tax that is imposed on an amount that does not constitute income under Federal income tax principles (a “base difference”). Section 1.904-6(a)(1)(iv) also provides special rules for timing differences.
The proposed regulations clarify that base differences arise only in limited circumstances, such as in the case of categories of items such as life insurance proceeds or gifts, which are excluded from income for Federal income tax purposes but may be taxed as income under foreign law. In contrast, a computational difference attributable to differences in the amounts, as opposed to the types, of items included in U.S. taxable income and the foreign tax base does not give rise to a base difference.
In addition, the proposed regulations clarify that the fact that a distribution of previously taxed earnings and profits is exempt from Federal income tax does not mean that a tax imposed on the distribution is attributable to a base difference. Instead, because the previously taxed earnings and profits were included in U.S. taxable income in a prior year, the tax imposed on the distribution is treated as attributable to a timing difference and is allocated to the separate category to which the earnings and profits from which the distribution was paid are attributable.
The regulations in § 1.904-6(a) generally provide that foreign taxes are allocated and apportioned to separate categories by reference to the separate category of the income to which the foreign tax relates. Disregarded transactions between a foreign branch and the United States owner of the foreign branch (or between two foreign branches of the same United States person) may involve disregarded payments that are subject to foreign tax, including disregarded payments that result in the reallocation of gross income between the foreign branch category and the general category under the proposed regulations in § 1.904-4(f)(2)(vi).
The proposed regulations are consistent with the general principles and purpose of § 1.904-6(a)(1) and are intended to provide clarity where the application of these principles would be difficult or uncertain. The Treasury Department and the IRS recognize that there may be additional circumstances where the application of these rules may be ambiguous and request comments on whether further guidance is needed to clarify how foreign taxes should be allocated and apportioned between the foreign branch category and other separate categories.
The proposed regulations propose modifications to § 1.904-6(b) to reflect the Act's repeal of section 902 and revisions to section 960. In general, the proposed regulations provide that foreign income taxes deemed paid under section 960(a) or (d) are allocated to the same separate category to which the related section 951(a)(1) or 951A(a) inclusion is assigned. Similarly, in the case of a distribution of previously taxed earnings and profits described in section 960(b)(1) or (2), any foreign tax deemed paid with respect to the distribution under section 960(b) is allocated to the separate category to which the distribution is attributable.
As discussed in Part II.B.2 of this Explanation of Provisions, a U.S. or foreign partnership does not characterize any of its income as foreign branch category income. Instead, a distributive share of a partnership's income may be characterized as foreign branch category income in the hands of certain U.S. partners. In order to ensure that creditable foreign tax expenditures (CFTEs) that are allocated to a partner that has a distributive share of income that is assigned to the foreign branch category are appropriately assigned, proposed § 1.904-6(b)(4) provides rules for allocating and apportioning CFTEs to the foreign branch category.
The Treasury Department and the IRS are aware that certain taxpayers have formed CFCs in certain jurisdictions that purport to have a type of integration regime whereby all or substantially all of the corporate income tax paid by the CFC on its earnings is refunded to its shareholder when the earnings are distributed, even though the shareholder is not subject to any foreign tax on the distribution. These taxpayers rely on the rules in § 1.954-1(d)(3), which provide that a subsequent reduction in corporate foreign income taxes when earnings are later distributed to a shareholder does not affect the amount of foreign income taxes used to compute the effective tax rate on an item of income unless the reduction requires a redetermination of the United States shareholder's U.S. tax under section 905(c). These taxpayers claim that the high-tax exception from foreign base company income under section 954(b)(4) allows them to exclude the CFC's income from current taxation under subpart F, despite the fact that all or substantially all of the foreign corporate income tax is later refunded to the shareholder.
The proposed regulations modify § 1.954-1(d)(3) to provide that to the extent the foreign income taxes paid or accrued by a CFC are reasonably certain to be returned to a shareholder upon a subsequent distribution to the shareholder, the foreign income taxes are not treated as paid or accrued for purposes of the high-tax exception under section 954(b)(4). The IRS may also challenge these arrangements under
Comments are requested on what special rules under § 1.954-1(d)(3), § 1.901-2, and section 905(c) should be considered to account for genuine integration regimes that do not have the effect of exempting resident corporations and their shareholders from all or substantially all tax.
Section 960(a) and (d), as revised by the Act, deems a domestic corporation that is a United States shareholder of a CFC to pay the portion of the foreign income taxes paid or accrued by the CFC that is properly attributable to income of the CFC that the United States shareholder takes into account in computing its subpart F or GILTI inclusion, subject to certain limitations. Section 960(b), as revised by the Act, provides rules for taxes that are deemed paid in connection with distributions by a CFC of previously taxed earnings and profits to either a United States shareholder that is a domestic corporation or to a shareholder that is a CFC.
Additionally, the Act redesignated former section 960(b), relating to excess limitation accounts, without change, as section 960(c). The proposed regulations treat a GILTI inclusion amount as a subpart F inclusion for purposes of section 960(c).
Finally, § 1.960-7 includes updated applicability dates for §§ 1.960-1 through 1.960-6, which are consistent with the effective dates of the Act.
The Act also amended section 78 to, among other things, reflect the addition of deemed paid credits under section 960(d) and to provide that any amount of taxes deemed paid under section 960 that is treated as a dividend under section 78 (a “section 78 dividend”) is not eligible for a section 245A deduction. The proposed regulations revise § 1.78-1 to reflect changes made to section 78.
Part IV.A of this Explanation of Provisions describes computational and grouping rules relating to the calculation of deemed paid taxes under section 960(a), (b), and (d). Part IV.B of this Explanation of Provisions describes specific rules for the calculation of deemed paid taxes under section 960(a) and (d). Part IV.C of this Explanation of Provisions describes specific rules for the calculation of deemed paid taxes under section 960(b). Part IV.D of this Explanation of Provisions describes the application of the rules under section 960(a), (b), and (d) when the domestic corporation owns the CFC through a domestic partnership. Part IV.E of this Explanation of Provisions describes revisions to § 1.78-1.
For a particular taxable year, a CFC may have subpart F income or tested income that is taken into account by a domestic corporation that is a United States shareholder of the CFC under sections 951(a)(1)(A) or 951A(a), and may incur foreign income taxes related to that income that may be treated as deemed paid by the United States shareholder under sections 960(a) or (d). Additionally, a CFC may receive distributions of previously taxed earnings and profits and incur foreign income taxes with respect to those distributions that may subsequently be treated as deemed paid by the United States shareholder or an upper-tier CFC under section 960(b).
Proposed § 1.960-1 provides definitions as well as computational and grouping rules that associate the current year foreign income taxes (“current year taxes”) of the CFC with current year income of the CFC or a distribution of previously taxed earnings and profits received by the CFC. These taxes, in turn, may be deemed paid by the United States shareholder or upper-tier CFC under section 960. Foreign income taxes generally include income, war profits, and excess profits taxes that are imposed by a foreign country or a possession of the United States.
Proposed § 1.960-1(c)(1) describes and orders the computations involved in calculating the foreign income taxes deemed paid by either a domestic corporation that is a United States shareholder of a CFC or by a CFC that is a shareholder of another CFC. These steps are applied by each CFC in a chain of ownership beginning with the lowest-tier CFC with respect to which the domestic corporation is a United States shareholder.
Under these computational rules, a United States shareholder first applies the grouping rules described in Part IV.A.3 of this Explanation of Provisions to assign the income of the CFC to separate categories of income described in proposed § 1.904-5(a)(4)(v) (each a “section 904 category”) and then to groups that correspond to certain types of income (each, an “income group”) in a section 904 category. If the CFC receives a distribution of previously taxed earnings and profits (“PTEP”), it increases the group or groups (each, a “PTEP group”) within an annual PTEP account that corresponds both to the taxable year for which a CFC took into account the income from which the
Second, deductions of the CFC, including for expenses attributable to current year taxes, are allocated and apportioned to the income groups. Current year taxes are also allocated and apportioned to a PTEP group that was increased in the first step. Third, taxes deemed paid by the United States shareholder under section 960(a) and (d), and taxes deemed paid by the CFC under section 960(b)(2) in connection with its receipt of a section 959(b) distribution, are calculated. Fourth, the previously taxed earnings and profits resulting from the subpart F inclusion or GILTI inclusion of the United States shareholder are added to an annual PTEP account and further assigned to the relevant PTEP groups within the account. Fifth, the first four steps are repeated for each higher-tier CFC. Sixth, with respect to the highest-tier CFC, the United States shareholder computes its taxes deemed paid under section 960(b)(1).
Proposed § 1.960-1(c)(2) provides that only items that the CFC takes into account during its current taxable year are used in the computational rules of § 1.960-1(c)(1). The items of gross income and expense that are in a section 904 category and income group within a section 904 category are therefore items that the CFC accrues and takes into account in its current taxable year, and the foreign income taxes that are eligible to be deemed paid are foreign income taxes that the CFC pays or accrues in its current taxable year. Proposed § 1.960-1(c)(3) provides rules relating to foreign currency and translation.
In order to determine the foreign income taxes paid or accrued by the CFC that are properly attributable to amounts that a domestic corporation that is a United States shareholder of the CFC takes into account in determining its subpart F or GILTI inclusions, proposed § 1.960-1(d) provides rules associating current year taxes of the CFC with the types of income earned by the CFC from which the inclusions arise. Proposed § 1.960-1(d) requires a CFC to assign its income to one or more income groups within each section 904 category. Deductions of the CFC, including for current year taxes, are allocated and apportioned to the income groups in order to determine net income (or loss) in each income group and to identify the current year foreign income taxes that relate to the income in each income group for section 960 purposes.
Proposed § 1.960-1(d)(2)(ii) defines several separate income groups with respect to the subpart F income of the CFC (“subpart F income groups”) within each applicable section 904 category. Each single item of foreign base company income as defined in § 1.954-1(c)(1)(iii) is a separate subpart F income group. For example, with respect to a CFC, § 1.954-1(c)(1)(iii)(A)(
Proposed § 1.960-1(d)(2)(ii)(C) also defines separate income groups for tested income (each, a “tested income group”) in each section 904 category. In general, tested income will be in a single tested income group within the general category. Because a CFC cannot earn section 951A category income or foreign branch category income at the CFC level, there is no tested income group within either section 904 category. With respect to the CFC's general category tested income group, GILTI inclusion amounts and taxes with respect to the tested income group will generally be treated as income and deemed paid taxes in the section 951A category.
Income in a section 904 category that is not of a type that is included in one of the subpart F income groups or tested income groups is assigned to the residual income group.
In order to determine its net income in each income group, a CFC first assigns its items of gross income to a section 904 category and to the appropriate income group within the category, and then allocates and apportions its deductions and expenses, including current year taxes, to the categories and to the income groups within the categories under the rules of sections 861 through 865 and 904(d) and the regulations under those sections.
Current year taxes are allocated and apportioned to income groups for two purposes. The first purpose is to deduct current year taxes (in functional currency) from gross income in the income group in computing the net income in the income group. The second purpose is to associate an amount of current year taxes (in U.S. dollars) with an income group. These current year taxes associated with an income group are eligible to be deemed paid by a United States shareholder that has a subpart F or GILTI inclusion that is attributable to that income group. The rules for allocating and apportioning current year taxes are the same for both purposes.
Proposed § 1.960-1(d)(3)(ii) applies the rules of § 1.904-6 to allocate and apportion current year taxes to and among the section 904 categories based upon the amount of taxable income, as calculated under foreign law, of the CFC that is in each section 904 category. Proposed § 1.960-1(d)(3)(ii) then applies the principles of § 1.904-6 to allocate and apportion current year taxes to and among the income groups. If a PTEP group of the CFC is increased as a result of a section 959(b) distribution that it receives in the current taxable year, then for purposes of allocating and apportioning current year taxes that are imposed solely by reason of the section 959(b) distribution, the PTEP group is treated as an income group within the
Under § 1.904-6, Federal income tax principles apply to determine the separate category, income group, or PTEP group of the CFC's gross items of income and expense, the amounts of which are computed under foreign law, that are included in the foreign tax base. For example, if the United States treats a distribution as resulting in capital gain that is passive category income, but foreign law treats the item as a dividend that would be general category income, the item is assigned to the passive category for purposes of allocating and apportioning current year taxes of the CFC to the item.
Proposed § 1.960-1(d)(3)(ii)(B) also provides a rule for addressing base and timing differences (within the meaning of proposed § 1.904-6(a)(1)(iv)) for purposes of allocating and apportioning current year taxes of a CFC to income groups and PTEP groups. Current year taxes that are attributable to a base difference are allocated to the residual income group, and therefore are ineligible to be deemed paid. Current year taxes that are attributable to a timing difference—namely, current year tax imposed on an amount that is income of the CFC in a different taxable year under Federal income tax law—are allocated and apportioned to a section 904 category and income group as though the income that foreign law recognizes in the CFC's current taxable year were also recognized for Federal income tax purposes in that year. Proposed § 1.960-1(d)(3)(ii)(B) includes a special rule, which is discussed in Part IV.C.2 of this Explanation of Provisions, for current year taxes that are attributable to a timing difference resulting from a section 959(b) distribution.
Section 960(a) provides that a domestic corporation that is a United States shareholder of a CFC is deemed to have paid the CFC's foreign income taxes that are properly attributable to the item of income of the CFC that the United States shareholder includes in gross income under section 951(a)(1) as a subpart F inclusion.
Section 960(d) provides that a domestic corporation that is a United States shareholder is deemed to have paid 80 percent of an amount that is equal to the product of the United States shareholder's inclusion percentage and the aggregate of the tested foreign income taxes paid or accrued by the CFCs of the United States shareholder. The inclusion percentage of the United States shareholder is the ratio of the United States shareholder's GILTI inclusion amount with respect to its CFCs to the aggregate amount of the United States shareholder's pro rata share of tested income of those CFCs. Section 960(d)(3) defines tested foreign income taxes as the foreign income taxes paid or accrued by a CFC of a United States shareholder that are properly attributable to the tested income of the CFC that the United States shareholder takes into account in computing its GILTI inclusion amount.
Under proposed § 1.960-2(b), the amount of the foreign income taxes of a CFC that its United States shareholder that is a domestic corporation is deemed to pay under section 960(a) is computed with respect to the income of the CFC, determined under Federal income tax principles in each subpart F income group within a section 904 category. A domestic corporate shareholder that has a subpart F inclusion with respect to its CFC is deemed to pay the CFC's foreign income taxes that are properly attributable to the items of income of the CFC that give rise to the subpart F inclusion of that shareholder. The amount of taxes that are properly attributable to an item of income for this purpose is equal to the domestic corporate shareholder's proportionate share of the current year taxes of the CFC that are allocated and apportioned to the subpart F income group within a section 904 category of the CFC to which the item of income is attributable. The proportionate share for each subpart F income group is equal to the current year taxes that are allocated and apportioned to a subpart F income group within a section 904 category multiplied by a fraction equal to the portion of the subpart F inclusion that is attributable to that subpart F income group to the total income in that subpart F income group. Therefore, no tax is deemed paid by a corporate United States shareholder of a CFC with respect to a subpart F income group to which current year taxes of the CFC are allocated and apportioned (including by reason of the rule for timing differences) but with respect to which no portion of a subpart F inclusion is attributable.
The denominator of the fraction, the net income in the subpart F income group, is not reduced to reflect any prior year deficits because those deficits do not reduce the subpart F income of the CFC in the current year. A pro rata share of a prior year qualified deficit reduces the amount of a United States shareholder's subpart F inclusion, and therefore by its own account reduces the numerator of the fraction. Proposed § 1.960-2(b)(3)(ii). The denominator of the fraction is, however, reduced to reflect the limitation in section 952(c)(1)(A) of the subpart F income of the CFC to its current year earnings and profits. The denominator is also reduced to reflect any reduction in the subpart F income of a CFC under section 952(c)(1)(C), which allows a CFC to reduce certain of its subpart F income by an amount of certain current year deficits of certain CFCs in the same chain of ownership. Proposed § 1.960-2(b)(3)(iii).
Section 960(a) treats foreign income taxes of a CFC as deemed paid by a United States shareholder only with respect to an item of income of a CFC that is included in the gross income of the United States shareholder under section 951(a)(1). Proposed § 1.960-2(b)(1) treats taxes as deemed paid under section 960(a) specifically with respect to subpart F inclusions because the inclusions are with respect to items of income of the CFC. In contrast, an inclusion under section 951(a)(1)(B) is not an inclusion of an “item of income” of the CFC but instead is an inclusion equal to an amount that is determined under the formula in section 956(a). Therefore, proposed § 1.960-2(b)(1) provides that no foreign income taxes are deemed paid under section 960(a) with respect to an inclusion under section 951(a)(1)(B).
Proposed § 1.960-2(c) provides that the amount of the tested foreign income taxes that a United States shareholder is deemed to pay under section 960(d) is computed with respect to the income of
The United States shareholder's inclusion percentage is required to determine the amount of taxes deemed paid by the United States shareholder. In general, current year taxes allocated and apportioned to a tested income group will be in the general category at the level of the CFC, although in limited cases involving passive category tested income, current year taxes may be allocated and apportioned to the passive category. However, the domestic corporation computes only a single inclusion percentage with respect to all of its tested income, regardless of the section 904 category to which the tested income is assigned.
In the case of a United States shareholder that is a member of a consolidated group, the numerator of the inclusion percentage is computed using the GILTI inclusion amount of a United States shareholder as determined under § 1.1502-51.
Section 960(b)(1) provides that a United States shareholder of a CFC is deemed to have paid the CFC's foreign income taxes that the United States shareholder has not been previously deemed to pay and that are properly attributable to a distribution from the CFC that the United States shareholder excludes from its income under section 959(a) (a “section 959(a) distribution”). Section 960(b)(2) provides that a CFC is deemed to have paid the foreign income taxes of another CFC that have not previously been deemed paid by a United States shareholder and that are properly attributable to a distribution from the other CFC to which section 959(b) applies (a “section 959(b) distribution,” and together with a section 959(a) distribution, a “section 959 distribution”).
Proposed § 1.960-3(c)(1) requires a CFC to establish a separate, annual account (“annual PTEP account”) for its earnings and profits for its current taxable year to which subpart F or GILTI inclusions of United States shareholders of the CFC are attributable. Each account must correspond to the inclusion year of the previously taxed earnings and profits and to the section 904 category of the inclusions at the United States shareholder level. Accordingly, a CFC may have an annual PTEP account in the section 951A category or a treaty category (as defined in § 1.861-13(b)(6)), even though income of the controlled foreign corporation cannot initially be assigned to the section 951A category or a treaty category. The previously taxed earnings and profits in each annual account are then assigned to one of ten possible groups of previously taxed earnings and profits described in proposed § 1.960-3(c)(2) (each, a “PTEP group”). The PTEP groups serve a similar function to the subpart F income groups and tested income groups—they are the mechanism for associating foreign taxes paid or accrued, or deemed paid, by a CFC with section 959 distributions of previously taxed earnings and profits. If, following the issuance of new guidance under section 959 (which will be addressed in a separate guidance project), it is determined that maintaining all ten of the PTEP groups is unnecessary, or that grouping of annual accounts into multi-year accounts is permissible, the Treasury Department and the IRS will consider consolidating PTEP groups as part of finalizing the proposed regulations.
A CFC accounts for a section 959(b) distribution that it receives by adding the distribution amount to an annual PTEP account and PTEP group that corresponds to the annual PTEP account and PTEP group from which the distributing CFC made the distribution. Proposed § 1.960-3(c)(3). A CFC that makes a section 959 distribution must similarly reduce the annual PTEP account and PTEP group within the account from which the distribution is made by the distribution amount. A CFC must also reduce PTEP groups that relate to previously taxed earnings and profits described in section 959(c)(2) (“section 959(c)(2) PTEP”) to account for reclassification of amounts into those groups as previously taxed earnings and profits described in section 959(c)(1) (“reclassified PTEP”), and increase the PTEP group that corresponds to the reclassified amount. Proposed § 1.960-3(c)(4).
A CFC must also account for the foreign income taxes that it pays, accrues or is deemed to pay with respect to the amount in each PTEP group (“PTEP group taxes”). PTEP group taxes are accounted for with respect to previously taxed earnings and profits assigned to a PTEP group within an annual PTEP account. PTEP group taxes consist of (1) the current year taxes paid or accrued by the CFC as the result of its receipt of a section 959(b) distribution that are allocated and apportioned to the PTEP group; (2) foreign income taxes that are deemed paid by the CFC with respect to an amount in a PTEP group; and (3) in the case of a reclassified PTEP group, foreign income taxes that were paid, accrued or deemed paid with respect to an amount that was initially included in a section 959(c)(2) PTEP group and subsequently added to a corresponding reclassified PTEP group. Proposed § 1.960-3(d)(1). PTEP group taxes are reduced by the amount of foreign income taxes in the group that are deemed paid by a United States shareholder under section 960(b)(1) or by another CFC under section 960(b)(2), and foreign income taxes relating to a PTEP group that is reclassified to a section 959(c)(1) PTEP group. Proposed § 1.960-3(d)(2).
As discussed in Part IV.A.3.ii of this Explanation of Provisions, proposed § 1.960-1(d)(3)(ii)(A) associates current year taxes of a CFC with a PTEP group for purposes of section 960(b) only in the case of an increase in a PTEP group as a result of the receipt of a section 959(b) distribution. The increased PTEP group is treated as an income group to which current year taxes that are imposed solely by reason of that section 959(b) distribution are allocated and apportioned. For example, a withholding tax imposed on a section 959(b) distribution received by an upper-tier CFC is allocated and apportioned to the PTEP group that is increased by the section 959(b) distribution. The withholding tax also reduces (as a deduction) the amount in that same PTEP group.
Proposed § 1.960-1(d)(3)(ii)(B) generally applies the timing difference rule of § 1.904-6(a)(1)(iv) to allocate and apportion current year taxes that are
Therefore, under proposed § 1.960-1(d)(3)(ii)(B), the only taxes that are allocated and apportioned to a PTEP group are taxes that are imposed solely by reason of a CFC's receipt of a section 959(b) distribution and that are otherwise allocated and apportioned to the PTEP group under § 1.904-6 principles. For example, a net basis tax imposed on a CFC's receipt of a section 959(b) distribution by the CFC's country of residence is treated as related to a PTEP group. Similarly, a withholding tax imposed with respect to a CFC's receipt of a section 959(b) distribution is allocated and apportioned to a PTEP group. In contrast, a withholding tax imposed on a disregarded payment from a disregarded entity to a CFC owner is treated as a timing difference and is never treated as related to a PTEP group (even if all of the CFC's earnings and profits are previously taxed earnings and profits from income earned by the disregarded entity), because the tax is not imposed solely by reason of a section 959(b) distribution. The withholding tax, however, may be treated as related to a subpart F income group or tested income group under the rule for timing differences.
Proposed § 1.960-3(b) provides rules for determining the amount of taxes deemed paid with respect to a section 959(a) distribution. A domestic corporation that receives a section 959(a) distribution is deemed to have paid the foreign income taxes that are properly attributable to the section 959(a) distribution from the PTEP group of the distributing CFC, to the extent the PTEP group taxes have not already been deemed to have been paid in the current taxable year or any prior taxable year. Proposed § 1.960-3(b)(1). The amount of foreign income taxes that are properly attributable to a domestic corporation's receipt of a section 959(a) distribution from a PTEP group within a section 904 category are its proportionate share of PTEP group taxes associated with the PTEP group. The domestic corporation's proportionate share of foreign income taxes associated with a section 959(a) distribution from a PTEP group is determined by a fraction equal to the amount of the section 959(a) distribution attributable to the PTEP group over the total amount of previously taxed earnings and profits in the PTEP group.
A single section 959(a) distribution could be attributable to multiple PTEP groups, with respect to multiple different inclusion years, of the distributing CFC. The proposed regulations, including the order of the list of PTEP groups in § 1.960-3(c)(2), do not provide rules for the allocation of distributions among different kinds of previously taxed earnings and profits under section 959(c). The Treasury Department and the IRS anticipate that future regulations under section 959 will provide ordering rules for determining the annual PTEP account and PTEP group to which a section 959 distribution is attributable.
Proposed § 1.960-3(b)(2) provides similar rules to those in proposed § 1.960-3(b)(1) for taxes deemed paid under section 960(b)(2) with respect to a CFC's receipt of a section 959(b) distribution.
Proposed § 1.960-3(d)(3) provides a rule relating to foreign income taxes paid or accrued in a taxable year of a CFC that began before January 1, 2018, with respect to an annual PTEP account, and a PTEP group within such account, that was established for an inclusion year of a CFC that began before January 1, 2018. Specifically, in certain cases, the foreign income taxes may be deemed paid under section 960(b) with respect to a section 959 distribution in a year of the CFC that begins after December 31, 2017.
However, the Treasury Department and the IRS recognize that with respect to CFC taxable years beginning before January 1, 2018, the application of section 960(a)(3) was uncertain and some taxpayers may have added taxes paid or accrued with respect to a section 959 distribution to post-1986 foreign income taxes described in section 902(c)(2) (as in effect on December 21, 2017). In that case, those foreign income taxes could have been included in computing foreign taxes deemed paid under section 902 with respect to a distribution or inclusion of post-1986 undistributed earnings (including by reason of sections 960 and 965) in taxable years of CFCs beginning before January 1, 2018, in which case the taxes are not available to be deemed paid under section 960(b).
The proposed regulations under section 965, see 83 FR 39,514, reserved on the application of section 965(g) to taxes deemed paid under new section 960(b). The preamble to the regulations under section 965 indicated that future regulations would provide rules for new section 960(b) similar to the rules that apply for section 960(a)(3) (as in effect on December 21, 2017).
The proposed regulations in this document provide a rule in proposed § 1.965-5(c)(1)(iii) similar to the rule that applies to taxes deemed paid under section 960(a)(3) that is in proposed § 1.965-5(c)(1)(i) and (ii). In particular, no credit is allowed for the applicable percentage of taxes deemed paid under section 960(b) that are attributable to the PTEP groups described in § 1.960-3(c)(2) that relate to section 965.
In order to ensure that the disallowance under section 965(g) only applies once, the rule in proposed § 1.965-5(c)(1)(iii) does not apply to taxes deemed paid under section 960(b)(2) with respect to a section 959(b) distribution, but only applies when previously taxed earnings and profits are distributed to a domestic corporate shareholder.
If a domestic corporation owns an interest in a CFC through a domestic partnership, to the extent the domestic corporation is a United States shareholder with respect to the CFC, the proposed regulations provide that the domestic corporation is deemed to have
The proposed regulations revise § 1.78-1 to reflect the amended section 78, as well as make conforming changes to reflect pre-Act statutory amendments. In addition, the proposed regulations provide that section 78 dividends that relate to taxable years of foreign corporations that begin before January 1, 2018, are not treated as dividends for purposes of section 245A. This rule is necessary by reason of the enactment of section 245A to ensure that similarly situated taxpayers do not have different tax consequences under section 245A with respect to section 78 dividends. Absent this rule, a United States shareholder of a CFC using a fiscal year beginning in 2017 as its U.S. taxable year (a “fiscal year CFC”) could potentially claim a section 245A deduction with respect to its section 78 dividend attributable to the United States shareholder's inclusion under section 951 (including by reason of section 965) for the CFC's fiscal year ending in 2018, whereas a United States shareholder of a CFC using the calendar year as its U.S. taxable year could not claim a section 245A deduction with respect to any section 78 dividend for any taxable year. There is no indication that Congress intended to treat these similarly situated taxpayers differently with respect to the section 78 dividend given that the purpose of the section 78 dividend—to prevent a taxpayer from obtaining the benefit of both a credit under section 901 and a deduction with respect to the same foreign tax—is unrelated to the CFC's U.S. taxable year. Accordingly, proposed § 1.78-1(c) includes a special applicability date to prevent this potential disparate treatment and double benefit to taxpayers with fiscal year CFCs.
Section 965(n) allows a taxpayer to exclude section 965(a) inclusions (reduced by section 965(c) deductions) and associated section 78 gross ups in determining the amount of the net operating loss carryover or carryback that is absorbed in the taxable year of the inclusions. Proposed § 1.965-7(e)(1), as proposed to be added at 83 FR 39,514 (August 9, 2018), provides that the election also applies to the determination of the amount of the net operating loss for the taxable year.
These proposed regulations at § 1.965-7(e)(1)(i) clarify that if the section 965(n) election creates or increases a net operating loss under section 172 for the taxable year, then the taxable income of the person for the taxable year cannot be less than the amount described in proposed § 1.965-7(e)(1)(ii). This rule is necessary to prevent the same deduction from being taken into account in the taxable year and also used again to create a net operating loss that is deducted in a different taxable year. The amount of the deductions that create or increase a net operating loss for the taxable year in each separate category and the U.S. source residual category by reason of the section 965(n) election is determined under proposed § 1.965-7(e)(1)(iv), and those amounts are not also taken into account in computing taxable income or the foreign tax credit limitations under section 904 for that year.
Proposed § 1.965-7(e)(1)(iv)(A) clarifies that the election under section 965(n) applies solely for purposes of determining the amount of the net operating loss for the election year and the amount of net operating loss carryover or carryback to that year. The proposed regulations provide ordering rules to coordinate the election's effect on section 172 with the computation of the foreign tax credit limitations under section 904.
First, deductions that would have been allowed for the taxable year but for the section 965(n) election, other than the amount of any net operating loss carryover or carryback to the election year that is not allowed by reason of the election, are allocated and apportioned under §§ 1.861-8 through 1.861-17 in the taxable year for which the section 965(n) election is made. The section 965(a) inclusions and associated section 78 gross ups are taken into account for this purpose, and also in applying the rules under § 1.904(g)-3(b)(3) to determine the source components of a partial net operating loss carryover to the taxable year for which the section 965(n) election is made, if any, including when the amount deducted under section 172 in that year is reduced by reason of the section 965(n) election. Proposed § 1.965-7(e)(1)(iv)(B)(
Second, the proposed regulations provide that the amount by which a net operating loss is created or increased by reason of the section 965(n) election, if any, is considered to comprise a ratable portion of all of the taxpayer's deductions (other than the section 965(c) deduction) that are allocated and apportioned to each statutory and residual grouping for the taxable year under the rules in proposed § 1.965-7(e)(1)(iv)(B)(
Third, deductions allocated and apportioned to the statutory and residual groupings, to the extent deducted in the election year rather than deferred to create or increase a net operating loss, are combined with income in those groupings to determine the foreign tax credit limitations for the year. Deductions allocated and apportioned to the section 965(a) inclusions and associated section 78 gross ups therefore reduce income in the separate category or categories (or U.S. source residual category) to which those section 965 amounts are assigned, and are not re-allocated to reduce other income, other than by operation of the separate limitation loss and overall domestic loss allocation rules of section 904(f) and (g).
In general, the portions of the proposed regulations that relate to statutory amendments made by the Act apply to taxable years beginning after December 22, 2017.
A special applicability date is provided is provided in § 1.861-12(k) in order to apply § 1.861-12(c)(2)(i)(
Proposed §§ 1.965-5(c)(1)(iii) and 1.965-7(e)(1)(i) and (iv) have the applicability dates provided in proposed § 1.965-9 (contained in 83 FR 39,514).
Sections 1.902-0 through 1.902-4 will be withdrawn as part of finalizing the proposed regulations. With respect to portions of the temporary regulations under sections 861 through 865 that are being reproposed under the proposed regulations, the Treasury Department and the IRS will remove the corresponding temporary regulations upon finalization of the proposed regulations. In addition, the Treasury Department and the IRS intend to make conforming amendments to the examples throughout the foreign tax credit regulations upon finalization of the proposed regulations. In light of the numerous changes made under the Act to various defined terms and statutory cross references, the Treasury Department and the IRS also request comments on other regulations that require updating to conform to changes made by the Act.
Executive Orders 13563 and 12866 direct agencies to assess costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. The Executive Order 13771 designation for any final rule resulting from these proposed regulations will be informed by comments received. The preliminary E.O. 13771 designation for this proposed rule is regulatory.
The proposed regulations have been designated by the Office of Information and Regulatory Affairs (OIRA) as subject to review under Executive Order 12866 pursuant to the Memorandum of Agreement (MOA, April 11, 2018) between the Treasury Department and the Office of Management and Budget regarding review of tax regulations. OIRA has designated this rule as a significant regulatory action, under Executive Order 12866, and as economically significant under E.O. 12866 and section 1(c) of the MOA. Accordingly, the proposed regulations have been reviewed by the Office of Information and Regulatory Affairs. For more detail on the economic analysis, please refer to the following analysis.
Before the Act, the United States taxed its citizens, residents, and domestic corporations on their worldwide income. However, to the extent that both the foreign jurisdiction and the U.S. taxed the same income, this would have resulted in double taxation. The U.S. foreign tax credit (FTC) regime alleviated the double taxation issue by allowing a non-refundable credit for foreign income taxes paid or accrued to reduce U.S. tax on foreign source income.
Under the Code, the FTC calculation is applied separately to different categories of income (a “separate category”). For example, suppose a domestic corporate taxpayer has $100 of active foreign source income in the “general category,” $100 of passive foreign source income in the “passive category,” $50 of foreign taxes associated with the “general category” income, and $0 of foreign taxes associated with the “passive category” income. The allowable FTC is determined separately for the different categories of income (general and passive). Therefore, none of the $50 of “general category” FTCs can be used to offset U.S. tax on the “passive category” income. This taxpayer has a pre-FTC U.S. tax liability of $42 (21 percent of $200) but can claim a FTC for only $21 (21 percent of $100) of this liability, which is with respect to active foreign source income in the general category. The taxpayer carries over the remaining $29 of foreign taxes ($50 minus $21) and can generally apply the taxes as a credit in the prior taxable year or over the next 10 years against U.S. tax on general category foreign source income, subject to certain restrictions.
Further, certain expenses borne by U.S. parents and domestic affiliates that support foreign operations are allocated to separate categories based, for example, on gross income or assets. These allocations reduce foreign source taxable income and therefore reduce the allowable FTCs for the separate category, since FTCs are limited to the U.S. income tax on the foreign source taxable income (
The 2017 Act made several significant changes to the FTC rules and related rules for allocating expenses to foreign income for the purpose of calculating the allowable FTCs. In particular, the Act repealed the fair market value method of asset valuation used to apportion interest expense to separate categories based on the fair market value of assets, added new separate categories for global intangible low-taxed income (the section 951A category) and foreign branch income, and amended Code sections which address deemed paid credits for subpart F income, global intangible low-taxed income (GILTI), and distributions of previously taxed earnings and profits. Further, because repatriated dividends are no longer taxable, the Act also repealed section 902 (which allowed a domestic corporation to claim FTCs with respect to dividends paid from a foreign corporation) and made other conforming changes.
These regulations provide the detail, structure and language required to implement the changes made by the statute. The following analysis describes the need for the proposed regulations, as well as provides an overview of the regulations, discussion of the costs and benefits of these regulations as compared with the baseline, and a
The numerous changes to the FTC rules in the Act require practical guidance for implementation. The proposed regulations provide the details, methodology, and approaches necessary to conform the existing FTC regulations to the many changes specified in the Act; for example, they provide structure and detail concerning how to incorporate the new separate categories of income into the foreign tax credit calculation, including how expenses will be allocated to separate categories. The regulations also update outdated portions of the existing regulations to help conform the existing regulations to the post-Act world. Thus, the guidance provides certainty, clarity, and consistency regarding FTC computations, which promotes efficiency and equity, contingent on the overall Code.
The economic analysis that follows compares the proposed regulations to a no-action baseline reflecting anticipated federal income tax-related behavior in the absence of these proposed regulations. A no-action baseline reflects the current environment including the existing FTC regulations, prior to any amendment by the proposed regulations.
As noted above, the proposed regulations specify the methodologies and approaches necessary to conform the existing regulations to the many changes specified in the Act. Several aspects of the proposed regulations are particularly noteworthy, as they involve more discretion on the part of the Treasury Department and the IRS. These are the aspect of the regulations governing expense allocation, the aspect of the regulations governing FTC carryovers to the new foreign income categories, the special applicability date regarding the section 78 gross up, and the anti-abuse rules addressing certain loans made to partnerships. The ultimate rules proposed, as well as the alternatives that were considered are discussed below.
Most notably, in response to taxpayer requests for guidance, these regulations help interpret the statute by providing details regarding how expenses must be apportioned to the new separate categories created by the Act. In particular, the proposed regulations specify that, for purposes of applying the expense allocation and apportionment rules, the gross income offset by the section 250 deduction is treated as exempt income, and the stock giving rise to GILTI that is offset by the section 250 deduction is treated as an exempt asset (see Part I.A of the Explanation of Provisions). Such treatment implies that fewer expenses will be allocated to the section 951A category as a result of this rule, leading to higher computed foreign source taxable income, a larger foreign tax credit limitation, and a larger foreign tax credit offset with respect to GILTI income. Because these expenses are now allocated to another separate category (where they may be less likely to displace FTCs) or to U.S. source income, this rule will in general reduce the tax burden of U.S. multinational corporations with GILTI income and allocable expenses.
The regulations also address how FTC carryovers are to be allocated across the new separate categories. The formation of two new separate categories requires a determination regarding how pre-Act FTC carryovers must be allocated across new and existing separate categories. The Treasury Department and the IRS determined that, because continuity in the definition of income and assignment of tax attributes is appropriate, taxpayers should be able to analyze their general category income earned in prior years to determine the extent to which it would have been considered to belong in the new separate category for foreign branch income under the rules described here (see Part II.A of the Explanation of Provisions). However, because allocation of pre-Act income to hypothetical post-Act separate categories has the potential to be administratively burdensome, the regulation provides that the allocation of FTC carryovers to the new foreign branch category is optional, which allows for continuity of income treatment while minimizing administrative and compliance burdens during the transition. For taxpayers that do not choose to allocate FTC carryovers to the new foreign branch category, their FTC carryovers will remain in the general category. See Part I.E.2 of this Special Analyses for a discussion of alternatives considered and additional reasoning regarding the approach taken under the proposed regulations.
Further, as described in section IV.E of the Explanation of Provisions, the proposed regulations include an updated applicability date for the new section 78 provisions. In particular, the proposed regulations provide that section 78 dividends relating to taxable years of foreign corporations beginning before January 1, 2018, are not treated as dividends for purposes of the section 245A deduction. As further noted in section IV.E of the Explanation of Provisions, absent this rule, taxpayers that have calendar year CFCs instead of fiscal year CFCs would be treated differently with respect to their section 78 dividends solely on the basis of this difference in tax year status; and taxpayers with fiscal year CFCs could receive the double benefit of a section 245A deduction and a FTC under section 960 with respect to the same foreign taxes. Allowing a double benefit for a single expense erodes the U.S. tax base and treats otherwise similar taxpayers (those who have different CFC tax years) inequitably. Based on these equity considerations, the Treasury Department and the IRS expect that the proposed regulation will provide greater net benefits than the alternative of not issuing a regulation on this issue.
The regulations also address certain potentially abusive borrowing arrangements, such as when a U.S. person lends money to a foreign partnership in order to artificially increase foreign source income (and therefore the FTC limitation) without affecting U.S. taxable income (see Part I.C. of the Explanation of Provisions). This is accomplished, for example, by lending to a controlled partnership, which has no effect on U.S. taxable income, because the interest income received from the partnership is offset by the lender's share of the interest expense incurred by the partnership. However, the transaction can increase foreign source income and allowable foreign tax credits, because the existing interest expense allocation rules do not generally allocate interest income and interest expenses similarly. To prevent such artificial inflation of foreign tax credits, the regulations specify that interest income attributable to borrowing through a partnership will be allocated across foreign tax credit separate categories in the same manner as the associated interest expense. See Part I.E.2 of this Special Analyses for a discussion of alternatives considered and additional reasoning regarding the approach taken under the proposed regulations.
In addition, the regulations clarify and provide guidance on numerous other technical issues. For example, they clarify the regulatory environment by updating inoperative language in §§ 1.904-1 through 1.904-3; parts of the regulations have not previously been updated to reflect changes to section 904 made in 1978. They also ease transitional administrative burdens associated with the implementation of the Act; for example, allowing a one-
The regulations further clarify the § 1.904-6 rules concerning how allocation of taxes across separate categories should be calculated in the presence of base and timing differences. A base difference occurs, for example, if the foreign jurisdiction taxes income, such as life insurance proceeds or gifts, which are excluded from income for U.S. tax purposes. A timing difference occurs, for example, if the U.S. tax rules define income as being earned by marking an asset to market, but a domestic corporation operates a CFC in a foreign jurisdiction that defines income as being earned by realization upon sale. Regulatory guidance instructs taxpayers how to appropriately navigate these cross jurisdictional base and timing differences in the assignment of taxes to FTC separate categories. They also fill technical gaps in how to implement the statute in practice, for example, by providing a clear rule for how to characterize the value of stock in each separate category in the context of the new separate categories.
The guidance, clarity, and specificity provided by the regulations help ensure that all taxpayers calculate foreign income and the foreign tax credit in a similar manner. The economic analysis that follows discusses the costs and benefits of these regulations, and the alternative choices that could have been made, in greater detail.
The Treasury Department and the IRS have assessed the benefits and costs of the proposed regulations against a no-action baseline—which, as explained above, is the
In the absence of the enhanced specificity provided by the regulations described above, similarly situated taxpayers might interpret the statutory rules differently, and different taxpayers might then pursue or forego economic activities based on different interpretations of the tax consequences alone. By providing clear rules to eliminate ambiguity and to fill in technical gaps, the guidance provided in these regulations helps to ensure that taxpayers face more uniform incentives. Such uniformity across economic decision-makers is a tenet of economic efficiency. Clear and consistent rules also increase transparency and decrease the incentives and opportunities for tax evasion. Rules to combat abusive transactions also help to ensure that taxpayers make decisions based on market conditions rather than on tax considerations.
Further, because the changes introduced in the Act are substantial, the start-up costs and learning curves involved in complying with the Act will also be substantial. In particular, the Act's elimination of tax imposed on repatriations going forward, the creation of the tax on global intangible low taxed income (and the corresponding section 951A category), and the creation of a deduction for foreign-derived intangible income each embody a completely new component of U.S. international tax law, and together restructure a U.S. international tax system that had remained relatively constant since 1987. By definition, transitioning to such a completely new system will involve substantial start-up costs in terms of learning the nuances of the new rules, and revamping record keeping, documentation, and software systems to aid in filling out the new tax forms and to ensure the availability of all the records required to benefit from new exclusions and deductions (such as the section 250 deduction). The proposed regulations assist taxpayers in this process by providing definitional clarity in order to minimize the disruption caused by the move to the new system. When possible and appropriate, they further provide significant transitional flexibility in order to help relieve compliance burdens and reduce transition administrative costs. Additional details, including the types of cost savings and benefits expected, are discussed below, as well as in Part I.E.2 of this Special Analyses.
Notably, as mentioned in Part I of the Explanation of Provisions, taxpayers have repeatedly requested regulatory guidance concerning appropriate expense allocation in light of the new separate categories for GILTI and foreign branch income; in the absence of new regulations, the correct approach for allocating expenses is subject to interpretation. Therefore, the proposed regulations seek to clarify the allowable expense allocation rules that are consistent with legislative history's description of the section 250 deduction as effectively exempting income, by specifying that the income associated with the section 250 deduction is, for foreign tax credit purposes, treated as partially exempt. The regulations therefore potentially increase the competitiveness of U.S. corporations relative to the no-action baseline, which includes proposed though not yet final regulations under section 951A, by generally reducing the amount of U.S. parent expenses that are allocated to the section 951A category. They also provide certainty and clarity for taxpayers, which, as noted above, increases efficiency and transparency, and reduces the incentive for evasion, relative to the no-action baseline.
However, the reduced expense allocation to the section 951A category resulting from these proposed regulations has the potential to reduce Federal tax revenue relative to the statute and in consideration of proposed though not yet final regulations related to section 951A. In addition, it could also provide some taxpayers with the incentive to locate more of their worldwide expenses in the United States, because U.S. expenses will have the potential to reduce U.S. taxable income, and also increase allowable foreign tax credits relative to the no-action baseline. However, the post-Act U.S. interest expense limitation rules under section 163(j) make it more difficult to use excessive interest expense to reduce U.S. taxable income, and the significantly lower U.S. statutory corporate rate reduces the (previously strong) incentive to locate “fungible” deductions such as interest
In addition to the provisions described in the overview section above, the look-through rules provide an example of a proposed rule that fills a technical gap left by the implementation of the Act that if left unaddressed would impose significant tax uncertainty on taxpayers and negatively impact taxpayers' economic decision making. Before the Act, dividends, interest, rents and royalties (“look-through payments”) paid to a United States shareholder by its CFC were generally allocated to the general category to the extent that they were not treated as passive category income. The Act split the general category income into three categories: General category, section 951A category, and foreign branch category, creating a question of how to assign non-passive category look-through payments to the two new separate categories. The Treasury Department and the IRS studied this issue and propose to revise the look-through rules to clarify that non-passive look-through payments cannot be assigned to the section 951A category but instead are generally assigned to the general category or foreign branch category. This treatment is consistent with the fact that the new section 951A category by definition cannot include payments of dividends, interest, rents, and royalties made directly to a United States shareholder. On the other hand, certain interest, rents, and royalties earned by a foreign branch can meet the definition of foreign branch category income, and the general category is a residual category that encompasses all income that is not specifically assigned to any other category.
Whether a deduction is disallowed under section 267A with respect to a payment of interest or royalties does not affect the treatment of such payment in the hands of the recipient for purposes of section 904(d)(3). Furthermore, future regulations issued under section 267A will address whether such payments that are subject to U.S. tax are subject to the disallowance under section 267A.
The Treasury Department and the IRS next considered the benefits and costs of providing these specific methodologies and definitions regarding FTC calculations relative to possible alternatives. In choosing among alternatives, the Treasury Department and the IRS strive to adhere to Congressional intent and consistency with existing law, while minimizing economic distortions and compliance burdens imposed on taxpayers, and promoting market-driven decision making and administrative feasibility.
The Act created two new separate categories with respect to FTCs, splitting the existing general category into general, section 951A, and foreign branch categories. The Act did not, however, specify how FTC carryovers were to be treated. The Treasury Department and the IRS considered alternative methods of allocating FTC carryovers originally associated with the general category to the new section 951A and foreign branch categories. One option that was considered would have required taxpayers to reassign existing general category FTC carryovers to the section 951A category as if that category existed prior to the adoption of the statute. Allocating carryovers to the section 951A category was deemed infeasible because it would be extraordinarily burdensome on taxpayers to attempt to recreate historical GILTI and would present numerous technical challenges. Such an approach would also result in eliminating the ability of taxpayers to credit those FTC carryovers since no carryovers are allowed for FTCs attributable to the section 951A category. This outcome would negatively impact taxpayers that had potentially structured their prior decisions on their presumed ability to use these FTC carryovers against U.S. tax on general category income and could result in costly and undesirable financial statement adjustments for some companies without providing any corresponding economic efficiency gains.
By contrast, allocating carryovers to the foreign branch category would be technically feasible and therefore does not present the same technical challenges as allocating FTC carryovers to the section 951A category would. However, with respect to FTC carryovers and the foreign branch category, the Treasury Department and the IRS first considered providing no additional guidance beyond the existing statutory language, which would mean that FTC carryovers would remain in the general category and none would be reassigned to the foreign branch category. However, requiring FTC carryovers to remain in the general category would potentially prevent taxpayers with substantial historic and continuing branch operations and who previously incurred taxes on their branch income from being able to utilize FTC carryovers in future years because general category carryovers would not be available to offset U.S. tax on future foreign branch category income. This outcome would negatively impact taxpayers that had potentially structured their prior decisions on their presumed ability to use these FTC carryovers to reduce U.S. tax on what became their future foreign branch category income.
As an alternative, the Treasury Department and the IRS considered requiring that all taxpayers do a computation to assign general category FTC carryovers to the foreign branch category. The concept of branch income existed prior to TCJA, and thus there would have been continuity in the assignment of pre- and post-TCJA FTCs associated with foreign branch category income. However, these FTC carryovers had previously been allocated to the general category and hence some taxpayers had potentially structured their prior decisions on their presumed ability to use these taxes against U.S. tax on general category income. Therefore, reassigning such FTC carryovers after the fact could create perverse incentives for some taxpayers to restructure their ongoing operations into branch form in order to generate foreign branch category income that can absorb FTC carryovers that were reassigned to the foreign branch category. Furthermore, requiring taxpayers to reconstruct prior year events in order to determine what income and FTCs would have been associated with the foreign branch category would be burdensome for taxpayers, again with no corresponding efficiency gains. The benefit of matching income and FTCs which applies more generally as a principle of economically efficient taxation is less relevant in this context because the foreign taxes have already been incurred.
On the basis of these considerations of compliance burden and efficiency gains (or lack thereof), the proposed regulations settled on an approach whereby FTC carryovers would by default remain in the general category but the regulations also provide an option to allow taxpayers to allocate transitional FTC carryovers to the foreign branch category. The Treasury Department and the IRS chose this approach in response to some taxpayers' concerns that their business and investment plans were based on the presumption that FTC carryovers could be used against U.S. tax on general category income and precluding them from using FTCs in this way would have
The Treasury Department and the IRS also faced the question of how to align interest income and interest expenses related to loans to a partnership from a U.S. partner. The Treasury Department and the IRS chose to match interest income allocation to interest expense allocation, rather than the reverse, because this minimizes distortions that could arise in the apportionment of other types of expenses. Under the matching rule in the proposed regulations, the gross interest income is apportioned between U.S. and foreign sources in each separate category based on a taxpayer's interest expense apportionment ratios. The Treasury Department and the IRS considered an alternative approach of tracing expenses to gross income under which the gross interest income would, under the general rules for sourcing interest income, be 100 percent foreign source income if paid by a foreign partnership not engaged in a U.S. trade or business. Some deductions, such as general and administrative expenses, can be apportioned on the basis of gross income to foreign sources. A rule that did not alter the source of the gross interest income would affect the allocation and apportionment of these other expenses, such as general and administrative expenses, that can be allocated on the basis of gross income to foreign sources. The matching rule limits these distortions because it minimizes the artificial increase in gross foreign source income based solely on a related party loan to a partnership. Accordingly, the proposed matching rule achieves a more neutral foreign tax credit limitation result and better minimizes the impact of related party loans on a taxpayer's foreign tax credit limitation.
The Treasury Department and the IRS considered two options with respect to the application of the section 245A deduction to section 78 dividends. The first option considered was to do nothing and allow taxpayers with fiscal year CFCs to get a double benefit, leaving taxpayers with calendar year CFCs at a relative disadvantage. An additional drawback of this approach is that taxpayers with fiscal year CFCs would likely face uncertainty with respect to their tax positions, as the availability of a section 245A deduction to a section 78 dividend may be anticipated to be deemed inappropriate and ultimately be reversed. Such delayed changes would force taxpayers that are publicly traded companies to issue costly restatements of their financial accounts, which could result in stock market volatility. The second option considered was to eliminate this inequity of tax treatment between taxpayers with calendar year CFCs versus fiscal year CFCs by providing that section 78 dividends relating to taxable years beginning before January 1, 2018, are not treated as dividends for purposes of the section 245A deduction. The advantage of this approach is that it eliminates the disparate tax treatment of otherwise similarly situated taxpayers because it removes the unintended benefit for taxpayers with fiscal year CFCs. This approach also promotes economic efficiency by resolving the uncertainty related to the availability of a section 245A deduction to a section 78 dividend. The latter option is the approach adopted in the proposed regulations.
The rules relating to foreign tax credits that were modified by the Act are reflected in several revised and new schedules added to existing forms. For purposes of the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) (“PRA”), the reporting burden associated with the revised and new schedules will be reflected in the IRS Forms 14029, Paperwork Reduction Act Submission, associated with the forms described in this Part II.
Form 1118, Foreign Tax Credit—Corporations, has been revised to add new Schedule C (Tax Deemed Paid With Respect to Section 951(a)(1) Inclusions by Domestic Corporation Filing Return (Section 960(a)), Schedule D (Tax Deemed Paid With Respect to Section 951A Income by Domestic Corporation Filing the Return (Section 960(d)), and Schedule E (Tax Deemed Paid With Respect to Previously Taxed Income by Domestic Corporation Filing the Return (Section 960(b)). In addition, the existing schedules of Form 1118 have been modified to account for the two new separate categories of income under section 904(d); the repeal of section 902 indirect credits for foreign taxes deemed paid with respect to dividends from foreign corporations; modified indirect credits under section 960 for inclusions under sections 951(a)(1) and 951A; modified section 78 gross up with respect to inclusions under sections 951(a)(1) and 951A; the revised sourcing rule for certain income from the sale of inventory under section 863(b); the repeal of the fair market value method for apportioning interest expense under 864(e); new adjustments for purposes of section 904 with respect to expenses allocable to certain stock or dividends for which a dividends received deduction is allowed under section 245A; the election to increase pre-2018 section 904(g) Overall Domestic Loss (ODL) recapture; and limited foreign tax credits with respect to inclusions under section 965. For purposes of the PRA, the reporting burden associated with these changes is reflected in the IRS Form 14029, Paperwork Reduction Act Submission, associated with Form 1118 (OMB control number 1545-0123, which represents a total estimated burden time, including all other related forms and schedules, of 3.157 billion hours and total estimated monetized costs of $58.148 billion).
Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations, has also been revised to add Schedule E-1 (Taxes Paid, Accrued, or Deemed Paid on Accumulated Earnings and Profits (E&P) of Foreign Corporation) and Schedule P (Previously Taxed Earnings and Profits of U.S. Shareholder of Certain Foreign Corporations) and to amend Schedule E (Income, War Profits, and Excess Profits Taxes Paid or Accrued) and Schedule J (Accumulated Earnings & Profits (E&P) of Controlled Foreign Corporations). These changes to the Form 5471 reflect the two new separate categories of income under section 904(d); the repeal of section 902 indirect credits for foreign taxes deemed paid with respect to dividends from foreign corporations; modified indirect credits under section 960 for inclusions under sections 951(a)(1) and 951A; and limited foreign tax credits with respect to inclusions under section 965. For purposes of the PRA, the reporting burden associated with these changes is reflected in the IRS Form 14029, Paperwork Reduction Act Submission, associated with Schedules E, E-1, J, and P of Form 5471 (OMB control number 1545-0123).
Schedule B (Specifically Attributable Taxes and Income (Section 999(c)(2)) of the Form 5713, International Boycott Report, has also been revised to reflect the repeal of section 902. Schedule C (Tax Effect of the International Boycott Provisions) of the Form 5713 has been revised to account for the new section
Schedules K and K-1 of the following forms have been revised to account for the new section 904(d) categories of income: Form 1065, U.S. Return of Partnership Income, Form 1120-S, U.S. Income Tax Return for an S Corporation, and Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships. Form 1116, Foreign Tax Credit (Individual, Estate, or Trust), has also been revised to account for the new section 904(d) categories of income. For purposes of the PRA, the reporting burden associated with these changes is reflected in the IRS Form 14029, Paperwork Reduction Act Submission, associated with Forms 1065 and 1120S (OMB control number 1545-0123), associated with Form 8865 (OMB control number 1545-1668, which represents a total estimated burden time, including all other related forms and schedules, of 289,354 hours), and associated with Form 1116 (OMB control numbers 1545-0121, which represents a total estimated burden time, including all other related forms and schedules, of 25,066,693 hours; and 1545-0074, which represents a total estimated burden time, including all other related forms and schedules, of 1.784 billion hours and total estimated monetized costs of $31.764 billion).
The IRS estimates the number of affected filers for the aforementioned forms to be the following:
The current status of the Paperwork Reduction Act submissions related to foreign tax credits is provided in the following table. The burden estimates provided in the above narrative are aggregate amounts that relate to the entire package of forms associated with the OMB control number, and include but do not isolate the estimated burden of only the foreign tax credit-related forms that are included in the tables in this Part II. The Treasury Department and the IRS have assumed that any burden estimates and forms, including new information collections, related to foreign tax credits capture changes made by the Act and that no additional information collection burdens arise out of discretionary authority exercised in these regulations. The Treasury Department and the IRS welcome comments on all aspects of information collection burdens related to the foreign tax credit. In addition, the IRS forms will be posted and available for comment at
Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it is hereby certified that this regulation, if adopted, will not have a significant economic impact on a substantial number of small entities within the meaning of section 601(6) of the Regulatory Flexibility Act.
The proposed regulations provide guidance needed to comply with statutory changes and affect individuals and corporations claiming foreign tax credits. The domestic small business entities that are subject to the foreign tax credit rules in the Code and this notice of proposed rulemaking are generally those domestic small business entities that are at least 10 percent corporate shareholders of foreign corporations, and so are eligible to claim dividends-received deductions or compute foreign taxes deemed paid under section 960 with respect to inclusions under subpart F and section 951A from controlled foreign corporations. Other provisions of the Act, such as the new separate foreign tax credit limitation category for foreign branch income and the repeal of the option to allocate and apportion interest expense on the basis of the fair market value (rather than tax basis) of a taxpayer's assets, might also affect domestic small business entities that operate in foreign jurisdictions. Data about the number of domestic small business entities potentially affected by these aspects of the Act, and therefore potentially by these proposed regulations, is not readily available.
However, the Treasury Department and IRS do not believe a substantial number of domestic small business entities will be affected by this notice of proposed rulemaking. Many of the more significant aspects of the proposed regulations, including all of the rules in proposed §§ 1.861-8(d)(2)(C), 1.861-10, 1.861-12, 1.861-13, 1.901(j)-1, 1.904-5, 1.904(b)-3, 1.954-1, 1.960-1 through 1.960-3, and 1.965-7 apply only to United States persons that operate a foreign business in corporate form, and, in most cases, only if the foreign
The Treasury Department and the IRS also do not believe that the proposed regulations will have a substantial economic effect on domestic small business entities. See Table below. Based on published information from 2013, foreign tax credits as a percentage of three different tax-related measures of annual receipts (see Table for variables) by corporations are substantially less than the 3 to 5 percent threshold for significant economic impact. The amount of foreign tax credits in 2013 is an upper bound on the change in foreign tax credits resulting from the proposed regulations.
To the extent a domestic small business entity is affected by the Act, the proposed regulations help reduce their compliance costs by providing clarity, certainty, and flexibility to the taxpayer regarding how to take into account the changes made by the Act in claiming foreign tax credits. Therefore, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act is not required with respect to the proposed regulations.
Notwithstanding this certification, the Treasury Department and the IRS invite comments on the impact of this rule on small entities.
Pursuant to section 7805(f), this notice of proposed rulemaking has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small businesses. The Treasury Department and the IRS invites the public to comment on this certification.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires that agencies assess anticipated costs and benefits and take certain other actions before issuing a final rule that includes any Federal mandate that may result in expenditures in any one year by a state, local, or tribal government, in the aggregate, or by the private sector, of $100 million in 1995 dollars, updated annually for inflation. In 2018, that threshold is approximately $150 million. This rule does not include any Federal mandate that may result in expenditures by state, local, or tribal governments, or by the private sector in excess of that threshold.
Executive Order 13132 (entitled “Federalism”) prohibits an agency from publishing any rule that has federalism implications if the rule either imposes substantial, direct compliance costs on state and local governments, and is not required by statute, or preempts state law, unless the agency meets the consultation and funding requirements of section 6 of the Executive Order. This proposed rule does not have federalism implications and does not impose substantial direct compliance costs on state and local governments or preempt state law within the meaning of the Executive Order.
Before the proposed regulations are adopted as final regulations, consideration will be given to any comments that are submitted timely to the IRS as prescribed in this preamble under
The principal authors of the proposed regulations are Karen J. Cate, Jeffrey P. Cowan, Jeffrey L. Parry, Larry R. Pounders, and Suzanne M. Walsh of the Office of Associate Chief Counsel (International). However, other personnel from the Treasury Department and the IRS participated in their development.
Income taxes, Reporting and recordkeeping requirements.
Accordingly, 26 CFR part 1 is proposed to be amended as follows:
26 U.S.C. 7805.
Section 1.861-8 also issued under 26 U.S.C. 250(c), 864(e)(7), and 882(c).
Sections 1.861-9 and 1.861-9T also issued under 26 U.S.C. 863(a), 26 U.S.C. 864(e)(7), 26 U.S.C. 865(i), and 26 U.S.C. 7701(f).
Section 1.861-10(e) also issued under 26 U.S.C. 863(a), 26 U.S.C. 864(e)(7), 26 U.S.C. 865(i), and 26 U.S.C. 7701(f).
Section 1.861-11 also issued under 26 U.S.C. 863(a), 26 U.S.C. 864(e)(7), 26 U.S.C. 865(i), and 26 U.S.C. 7701(f).
Section 1.861-12 also issued under 26 U.S.C. 864(e)(7).
Section 1.861-13 also issued under 26 U.S.C. 864(e)(7).
Section 1.901(j)-1 also issued under 26 U.S.C. 901(j)(4).
Section 1.904-1 also issued under 26 U.S.C. 904(d)(7).
Section 1.904-2 also issued under 26 U.S.C. 904(d)(7).
Section 1.904-3 also issued under 26 U.S.C. 904(d)(7).
Section 1.904-4 also issued under 26 U.S.C. 250(c), 904(d)(2)(J)(i), 904(d)(6)(C), 26 U.S.C. 904(d)(7), and 26 U.S.C. 951A(f)(1)(B).
Section 1.904-5 also issued under 26 U.S.C. 904(d)(7), and 26 U.S.C. 951A(f)(1)(B).
Section 1.904-6 also issued under 26 U.S.C. 904(d)(7).
Section 1.960-1 also issued under 26 U.S.C. 960(f).
Section 1.960-2 also issued under 26 U.S.C. 960(f).
Section 1.960-3 also issued under 26 U.S.C. 960(f).
Section 1.960-4 also issued under 26 U.S.C. 951A(f)(1)(B) and 26 U.S.C. 960(f).
Section 1.965-5 also issued under 26 U.S.C. 965(o).
Section 1.965-7 also issued under 26 U.S.C. 965(o).
(a)
(b)
(1) The corporation includes in gross income under section 951(a)(1)(A) the amounts by reason of which there are deemed paid under section 960(a) the foreign income taxes that give rise to that section 78 dividend, notwithstanding that the foreign income taxes may be carried back or carried over to another taxable year and deemed to be paid or accrued in such other taxable year under section 904(c); or
(2) The corporation includes in gross income under section 951A(a) the amounts by reason of which there are deemed paid under section 960(d) the foreign income taxes that give rise to that section 78 dividend.
(c)
The revisions and additions read as follows:
(c) * * *
(2)
(i) Uses tax book value or alternative tax book value, and
(ii) Owns directly or indirectly (within the meaning of § 1.861-12T(c)(2)(ii)(B)) 10 percent or more of the total combined voting power of all classes of stock entitled to vote in any other corporation (domestic or foreign) that is not a member of the affiliated group (as defined in section 864(e)(5)), the taxpayer must adjust its basis in that stock in the manner described in § 1.861-12(c)(2).
(d) * * *
(2)
(ii)
(B) [Reserved]. For further guidance, see § 1.861-8T(d)(2)(ii)(B).
(C)
(
(
(
(
(
(
(
(
(
(
(
(
(d)(2)(iii) through (d)(2)(iii)(B) [Reserved]. For further guidance, see § 1.861-8T(d)(2)(iii) through § 1.861-8T(d)(2)(iii)(B).
(C) Dividends for which a deduction is allowed under section 245A;
(D) Foreign earned income as defined in section 911 and the regulations thereunder (however, the rules of § 1.911-6 do not require the allocation and apportionment of certain deductions, including home mortgage interest, to foreign earned income for purposes of determining the deductions disallowed under section 911(d)(6)); and
(E) Inclusions for which a deduction is allowed under section 965(c).
(iv)
(e) * * * (1) * * * Paragraphs (e)(13) and (14) of this section contain rules with respect to the allocation and apportionment of the deduction allowed under section 250(a). Paragraph (e)(15) of this section contains rules with respect to the allocation and apportionment of a taxpayer's distributive share of a partnership's deductions. * * *
(6) * * * (i)
(13)
(14)
(15)
(f) * * *
(1) * * *
(i)
(h)
The revisions and additions read as follows:
(a) through (c)(4) [Reserved]. For further guidance, see § 1.861-9T(a) through (c)(4).
(5)
(d) through (e)(1) [Reserved]. For further guidance, see § 1.861-9T(d) through (e)(1).
(4)
(e)(4)(ii) through (e)(7) [Reserved]. For further guidance, see § 1.861-9T(e)(4)(ii) through (e)(7).
(8)
(ii)
(iii)
(iv)
(v)
(vi)
(A)
(B)
(C)
(D)
(E)
(F)
(9)
(f) through (f)(1) [Reserved]. For further guidance, see § 1.861-9T(f) through (f)(1).
(2)
(A) Takes into account the assets of any section 987 QBU (as defined in § 1.987-1(b)(2)), translated according to the rules set forth in paragraph (g) of this section, and
(B) Combines with its own interest expense any deductible interest expense incurred by a section 987 QBU, translated according to the rules of section 987 and the regulations under that section.
(ii)
(iii)
(A)
(B)
(3)
(4)
(iii)
(f)(5) [Reserved]. For further guidance, see § 1.861-9T(f)(5).
(g) through (g)(1)(i) [Reserved]. For further guidance, see § 1.861-9T(g) through (g)(1)(i).
(ii) A taxpayer may elect to determine the value of its assets on the basis of either the tax book value or the fair market value of its assets. However, for taxable years beginning after December 31, 2017, the fair market value method is not allowed with respect to allocations and apportionments of interest expense.
(iii) [Reserved]
(iv) For rules relating to earnings and profits adjustments by taxpayers using the tax book value method for the stock in certain 10 percent owned corporations, see § 1.861-12(c)(2).
(v) [Reserved]
(2)
(B)
(g)(2)(ii) through (g)(2)(ii)(A)(
(
(g)(2)(ii)(B) through (g)(3) [Reserved]. For further guidance, see § 1.861-9T(g)(2)(ii)(B) through (g)(3).
(h)
(h)(1) through (h)(3) [Reserved]. For further guidance, see § 1.861-9T(h)(1) through (h)(3).
(5)
(i) * * *
(2) * * * (i) Except as provided in this paragraph (i)(2)(i), a taxpayer may elect to use the alternative tax book value method. For the taxpayer's first taxable year beginning after December 31, 2017, the Commissioner's approval is not required to switch from the fair market value method to the alternative tax book value method for purposes of apportioning interest expense. * * *
(j) through (j)(2)(i) [Reserved]. For further guidance, see § 1.861-9T(j) through (j)(2)(i).
(ii)
(A) Exclude from the gross income of the higher-tier corporation any dividends or other payments received from the lower-tier corporation other than interest income received from the lower-tier corporation;
(B) Exclude from the gross income net of interest expense of any lower-tier corporation any gross subpart F income, net of interest expense apportioned to such income;
(C) Exclude from the gross income net of interest expense of any lower-tier corporation any gross tested income as defined in § 1.951A-2(c)(1), net of interest expense apportioned to such income;
(D) Then apportion the interest expense of the higher-tier controlled foreign corporation based on the adjusted combined gross income amounts; and
(E) Repeat paragraphs (j)(2)(ii)(A) through (D) of this section for each next higher-tier controlled foreign corporation in the chain.
(k)
The revisions and additions read as follows:
(e) * * *
(8) * * *
(vi)
(10) [Reserved]
(f)
The revisions and addition read as follows:
(a) [Reserved]. For further guidance, see § 1.861-11T(a).
(b)
(b)(2) through (c) [Reserved]. For further guidance, see § 1.861-11T(b)(2) through (c).
(d) * * *
(2) [Reserved]
(h)
The revisions and additions read as follows:
(a)
(b) through (c)(1) [Reserved]. For further guidance, see § 1.861-12T(b) through (c)(1).
(2)
(B)
(
(
(
(
(C)
(
(
(
(
(c)(2)(ii) through (c)(2)(vi) [Reserved]. For further guidance, see § 1.861-12T(c)(2)(ii) through (c)(2)(vi).
(3)
(B)
(ii) [Reserved]. For further guidance, see § 1.861-12T(c)(3)(ii).
(iii)
(4)
(ii)
(d)
(2)
(e) through (j) [Reserved]. For further guidance, see § 1.861-12T(e) through (j).
(k)
(a)
(1)
(A)
(
(
(
(
(
(
(
(
(
(
(B)
(ii)
(2)
(3)
(ii)
(4)
(5)
(ii)
(iii)
(A) The value of the portion of the stock of the controlled foreign corporation that is assigned to the gross tested income statutory grouping within foreign source passive category income multiplied by a percentage equal to 100 percent minus the United States shareholder's inclusion percentage for passive category gross tested income; and
(B) The value of the portion of the stock of the controlled foreign corporation that was assigned to the specified foreign source passive category income statutory grouping.
(iv)
(A) The value of the portion of the stock of the controlled foreign corporation that is assigned to the U.S. source general category gross tested income statutory grouping multiplied by a percentage equal to 100 percent minus the United States shareholder's inclusion percentage for the general category;
(B) The value of the portion of the stock of the controlled foreign corporation that is assigned to the U.S. source passive category gross tested income statutory grouping multiplied by a percentage equal to 100 percent minus the United States shareholder's inclusion percentage for the passive category;
(C) The value of the resourced gross tested income stock of the controlled foreign corporation that is not assigned to a particular treaty category under paragraph (a)(3)(i) of this section (Step 3);
(D) The value of the portion of the stock of the controlled foreign corporation that is assigned to the specified U.S. source general category gross income statutory grouping; and
(E) The value of the portion of the stock of the controlled foreign corporation that is assigned to the specified U.S. source passive category gross income statutory grouping.
(v)
(b)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(c)
(1)
(B) CFC1 owns the following assets with the following values as determined under §§ 1.861-9(g)(2) and 1.861-9T(g)(3): Assets that generate income described in the foreign source gross tested income statutory grouping within the general category ($4,000), assets that generate income described in the foreign source gross subpart F income statutory grouping within the general category ($1,000), assets that generate specified foreign source general category income ($3,000), and assets that generate income described in the foreign source gross subpart F income statutory grouping within the passive category ($2,000).
(C) CFC1 also owns all of the stock of CFC2, a controlled foreign corporation. The tax book value of CFC1's stock in CFC2 is $5,000. CFC2 owns the following assets with the following values as determined under §§ 1.861-9(g)(2) and 1.861-9T(g)(3): Assets that generate income described in the foreign source gross subpart F income statutory grouping within the general category ($2,250) and assets that generate specified foreign source general category income ($750).
(ii)
(
(B)
(C)
(D)
(
(
(E)
(
(
(F)
(2)
(ii)
(
(B)
(C)
(D)
(
(E)
(
(
(F)
(3)
(B) CFC1 earns $1,500 of foreign source gross tested income within the general category and $500 of foreign source gross subpart F income within the passive category. CFC1 incurs $200 of interest expense.
(C) CFC2 earns $3,000 of foreign source gross tested income within the general category, $2,000 of foreign source gross subpart F income within the general category, and $1,000 of specified foreign source general category income. CFC2 incurs $3,000 of interest expense.
(ii)
(
(
(B)
(C)
(D)
(
(
(E)
(
(
(F)
(d)
The additions and revisions read as follows:
(e) * * *
(3)
(g) [Reserved]
(i)
(a)
(b)
(a)
(b)
(c)
(d)
(e)
The revisions and additions read as follows:
(a)
(b)
(c)
(1)
(2)
(3)
(A) The creditable foreign tax actually paid or accrued or deemed paid under section 902 (as in effect on December 21, 2017) or section 960 with respect to the separate category in the excess limitation year, and
(B) The portion of any unused foreign tax for a taxable year preceding the excess credit year that is absorbed as taxes deemed paid or accrued in the excess limitation year under paragraph (a) of this section.
(ii)
(d)
(i) The portion of the unused foreign tax that may be carried to the taxable year under paragraph (b) of this section, or
(ii) The amount, if any, of the excess limitation for such taxable year with respect to such unused foreign tax.
(2)
(3)
(g) [Reserved]
(h)
(i)
(j)
(ii)
(iii)
(B)
(2)
(ii)
(iii)
(k)
The additions and revisions read as follows:
(a) * * * The rules in this section apply separately with respect to each separate category as defined in § 1.904-5(a)(4)(v).
(e)
(i) The spouses file separate returns for the current taxable year and an unused foreign tax is carried thereto from a taxable year for which they filed a joint return;
(ii) The spouses file separate returns for the current taxable year and an unused foreign tax is carried to such taxable year from a year for which they filed separate returns but is first carried through a year for which they filed a joint return; or
(iii) The spouses file a joint return for the current taxable year and an unused foreign tax is carried from a taxable year for which they filed joint returns but is first carried through a year for which they filed separate returns.
(2)
(f) * * * (1)
(2)
(3)
(g) [Reserved]
(h)
The revisions and additions read as follows:
(a)
(b) * * *
(2) * * *
(i) * * *
(C) Distributive shares of partnership income treated as passive category income under paragraph (n)(1) of this section, and income from the sale of a partnership interest treated as passive category income under paragraph (n)(2) of this section; or
(D) Income treated as passive category income under the look-through rules in § 1.904-5.
(ii)
(c) * * * (1) * * * Income is considered to be high-taxed income if, after allocating expenses, losses, and other deductions of the United States person to that income under paragraph (c)(2) of this section, the sum of the foreign income taxes paid or accrued, and deemed paid under section 960, by the United States person with respect to such income (reduced by any portion of such taxes for which a credit is not
(3) * * * Paragraph (c)(4) of this section provides additional rules for inclusions under section 951(a)(1) or 951A(a) that are passive income, dividends from a controlled foreign corporation or noncontrolled 10-percent owned foreign corporation that are passive income, and income that is received or accrued by a United States person through a foreign QBU that is passive income. For purposes of this paragraph (c), a foreign QBU is a qualified business unit (as defined in section 989(a)), other than a controlled foreign corporation or noncontrolled 10-percent owned foreign corporation, that has its principal place of business outside the United States. These rules apply whether the income is received from a controlled foreign corporation of which the United States person is a United States shareholder, from a noncontrolled 10-percent owned foreign corporation of which the United States person is a United States shareholder that is a domestic corporation, or from any other person. In applying these rules, passive income is not treated as subject to a withholding tax or other foreign tax for which a credit is disallowed in full, for example, under section 901(k). * * *
(4)
(5) * * *
(ii)
(6) * * * (i) * * * The determination of whether an amount included in gross income under section 951(a)(1) or 951A(a) is high-taxed income is made in the taxable year the income is included in the gross income of the United States shareholder under section 951(a) or 951A(a) (for purposes of this paragraph (c), the
(iii) * * * If an item of income is considered high-taxed income in the year of inclusion and paragraph (c)(6)(i) of this section applies, then any increase in foreign income taxes imposed with respect to that item are considered to be related to the same separate category to which the income was assigned in the taxable year of inclusion. * * * The taxpayer shall treat any taxes paid or accrued, or deemed paid, on the distribution in excess of this amount as taxes related to the same category of income to which such inclusion would have been assigned had the income been treated as high-taxed income in the year of inclusion (general category income, section 951A category income, or income in a specified separate category). If these additional taxes are not creditable in the year of distribution, the carryover rules of section 904(c) apply (see section 904(c) and § 1.904-2(a) for rules disallowing carryovers in the section 951A category). For purposes of this paragraph (c)(6), the foreign tax on an inclusion under section 951(a)(1) or 951A(a) is considered increased on distribution of the earnings and profits associated with that inclusion if the total of taxes paid and deemed paid on the inclusion and the distribution (taking into account any reductions in tax and any withholding taxes) exceeds the total taxes deemed paid in the year of inclusion. * * *
(iv)
(7) * * * (i) * * * If the inclusion is considered to be high-taxed income, then the taxpayer shall treat the inclusion as general category income, section 951A category income or income in a specified separate category as provided in paragraph (c)(1) of this section. * * * For this purpose, the foreign tax on an inclusion under section 951(a)(1) or 951A(a) shall be considered reduced on distribution of the earnings and profits associated with the inclusion if the total taxes paid and deemed paid on the inclusion and the distribution (taking into account any reductions in tax and any withholding taxes) is less than the total taxes deemed paid in the year of inclusion. * * *
(d)
(e) * * * (1)
(ii)
(A) Income derived in the active conduct of a banking, insurance, financing, or similar business (active financing income as defined in paragraph (e)(2) of this section);
(B) Passive income as defined in section 904(d)(2)(B) and paragraph (b) of this section as determined before the application of the exception for high-taxed income but after the application of the exception for export financing interest; or
(C) Incidental income as defined in paragraph (e)(4) of this section.
(2) * * *
(i) * * *
(W) [Reserved]
(f)
(A) Income attributable to foreign branches of the United States person held directly or indirectly through disregarded entities;
(B) A distributive share of partnership income that is attributable to foreign branches held by the partnership directly or indirectly through disregarded entities, or held indirectly by the partnership through another partnership or other pass-through entity that holds the foreign branch directly or indirectly through disregarded entities; and
(C) Income from other pass-through entities determined under principles similar to those described in paragraph (f)(1)(i)(B) of this section.
(ii)
(2)
(ii)
(iii)
(B)
(iv)
(B)
(v)
(vi)
(B)
(
(
(
(
(C)
(
(
(
(D)
(E)
(F)
(3)
(i)
(ii)
(A)
(B)
(iii)
(B)
(C)
(
(
(
(iv)
(v)
(4)
(i)
(
(
(B)
(
(
(ii)
(B)
(
(iii)
(B)
(g)
(2)
(h) * * *
(2)
(5) * * * (i)
(ii)
(k)
(2)
(3)
(4)
(ii)
(5)
(l)
(m)
(n)
(ii)
(B)
(2)
(ii)
(3)
(o)
(p)
(q)
The additions and revisions read as follows:
(a)
(2)
(3)
(4)
(i) The term
(ii) The term
(iii) The term
(iv) The term
(v) The term
(vi) The term
(b)
(2)
(c) * * * (1)
(2) * * * (i) * * * Related person interest is treated as passive category income to the extent it is allocable to passive category income of the controlled foreign corporation. If related person interest is received or accrued from a controlled foreign corporation by two or more persons, the amount of interest received or accrued by each person that is allocable to passive category income is determined by multiplying the amount of related person interest allocable to passive category income by a fraction. * * *
(3)
(4) * * * (i) * * * Except as provided in paragraph (d)(2) of this section, any dividend paid or accrued out of the earnings and profits of any controlled foreign corporation is treated as passive category income in proportion to the ratio of the portion of earnings and profits attributable to passive category income to the total amount of earnings and profits of the controlled foreign corporation. * * *
(iii)
(B)
(5)
(ii) [Reserved]
(6)
(d) * * * (1)
(2)
(f) * * * (1) [Reserved]
(h)
(i) * * * (1) * * * For purposes of this paragraph (i)(1), indirect ownership of stock is determined under section 318 and the regulations under that section. In the case of a partnership or other pass-through entity, indirect ownership and value is determined under the rules in paragraph (i)(2) of this section.
(2)
(3)
(4) [Reserved]
(k) * * *
(2) * * *
(iii) Inclusions under sections 951(a)(1)(A) and 951A(a) and distributive shares of partnership income;
(m) * * *
(2) * * *
(ii)
(4) * * * (i)
(5) * * * (i) * * * Any amount included in the gross income of a United States shareholder of a controlled foreign corporation under section 951(a)(1)(A), 951A, or in the gross income of a domestic corporation that is a United States shareholder of a noncontrolled 10-percent owned foreign corporation described in section 904(d)(2)(E)(i)(II) that is a qualified electing fund under section 1293 is treated as income subject to a separate category that is derived from sources within the United States to the extent the amount is attributable to income of the controlled foreign corporation or qualified electing fund, respectively, in the corresponding category of income from sources within the United States. * * *
(n) * * * Section 904(d)(3), (d)(4), and (h), and this section are then applied for purposes of characterizing and sourcing income received, accrued, or included by a United States shareholder of the foreign corporation that is attributable or allocable to income or earnings and profits of the foreign corporation.
(o)
The revisions and additions read as follows:
(a) * * * (1) * * * (i) * * * The amount of foreign taxes paid or accrued with respect to a separate category (as defined in § 1.904-5(a)(4)(v)) of income (including United States source income within the separate category) includes only those taxes that are related to income in that separate category. * * * Income included in the foreign tax base is calculated under foreign law, but characterized as income in a separate category under United States tax principles. For example, a foreign tax imposed on an amount realized on the disposition of controlled foreign corporation stock that is characterized as a capital gain under foreign law but as a dividend under section 1248 is generally assigned to the general category, not the passive category. * * *
(iv)
(2)
(ii)
(B)
(iii)
(B)
(iv)
(A)
(B) The terms
(3)
(b)
(2)
(3)
(4)
(ii)
(A) The CFTEs are allocated and apportioned by the partnership under the rules of paragraph (a) of this section to the general category;
(B) In the hands of the partnership, the CFTEs are related to general category income attributable to a foreign branch (as described in § 1.904-4(f)(2)) under the principles of paragraph (a) of this section; and
(C) The partner's distributive share of the income described in paragraph (b)(4)(ii)(B) of this section is foreign branch category income of the partner under § 1.904-4(f)(1)(i)(B).
(d)
(a)
(i) Any dividend for which a deduction is allowed under section 245A;
(ii) Deductions properly allocable or apportioned to gross income in the section 245A subgroup as determined under paragraphs (b) and (c)(1) of this section; and
(iii) Deductions properly allocable or apportioned to stock of specified 10-percent owned foreign corporations in the section 245A subgroup as determined under paragraphs (b) and (c) of this section.
(2)
(b)
(c)
(2)
(d)
(e)
(1)
(ii)
(iii)
(2)
(ii)
(A)
(B)
(f)
(i) [Reserved]
(j)
(ii) The term
(iii) The term
(2)
(ii)
(3)
(ii)
(4)
(5)
The revision and additions read as follows:
(d) * * *
(3) * * *
(i) * * * Except as provided in the next sentence, the amount of foreign income taxes paid or accrued with respect to a net item of income, determined in the manner provided in this paragraph (d), is not affected by a subsequent reduction in foreign income taxes attributable to a distribution to shareholders of all or part of such income. To the extent the foreign income taxes paid or accrued by the controlled foreign corporation are reasonably certain to be returned by the foreign jurisdiction imposing such taxes to a shareholder, directly or indirectly, through any means (including, but not limited to, a refund, credit, payment, discharge of an obligation, or any other method) on a subsequent distribution to such shareholder, the foreign income taxes are not treated as paid or accrued for purposes of this paragraph (d)(3)(i).
(ii) * * * However, notwithstanding the rules in § 1.904-4(c)(7), to the extent the foreign income taxes paid or accrued by the controlled foreign corporation are reasonably certain to be returned by the foreign jurisdiction imposing such taxes to a shareholder, directly or indirectly, through any means (including, but not limited to, a refund, credit, payment, discharge of an obligation, or any other method) on a subsequent distribution to such shareholder, the foreign income taxes are not treated as paid or accrued for purposes of this paragraph (d)(3)(ii).
(h)
(2)
(a)
(2)
(b)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(16)
(17)
(18)
(19)
(20)
(21)
(22)
(23)
(24)
(25)
(26)
(27)
(28)
(29)
(30)
(31)
(32)
(33)
(34)
(35)
(36)
(c)
(i) First, items of gross income of the controlled foreign corporation for the current taxable year other than a section 959(b) distribution are assigned to section 904 categories and included in income groups within those section 904 categories under the rules in paragraph (d)(2) of this section. The receipt of a section 959(b) distribution by the controlled foreign corporation is accounted for under § 1.960-3(c)(3).
(ii) Second, deductions (other than for current year taxes) of the controlled foreign corporation for the current taxable year are allocated and apportioned to reduce gross income in the section 904 categories and the income groups within a section 904 category. See paragraph (d)(3)(i) of this section. Additionally, the functional currency amounts of current year taxes of the controlled foreign corporation for the current taxable year are allocated and apportioned to reduce gross income in the section 904 categories and the income groups within a section 904 category, and to reduce earnings and profits in any PTEP groups that were increased as provided in paragraph (c)(1)(i) of this section. See paragraph (d)(3)(ii) of this section. For purposes of computing foreign taxes deemed paid, current year taxes allocated and apportioned to income groups and PTEP groups in the section 904 categories are translated into U.S. dollars in accordance with section 986(a). See paragraph (c)(3) of this section.
(iii) Third, current year taxes deemed paid under section 960(a) and (d) by the domestic corporation with respect to income of the controlled foreign corporation are computed under the rules of § 1.960-2. In addition, foreign income taxes deemed paid under section 960(b)(2) with respect to the receipt of a section 959(b) distribution by the controlled foreign corporation are computed under the rules of § 1.960-3(b).
(iv) Fourth, any previously taxed earnings and profits of the controlled foreign corporation resulting from subpart F inclusions and GILTI inclusion amounts with respect to the controlled foreign corporation's current taxable year are separated from other earnings and profits of the controlled foreign corporation and added to an annual PTEP account, and a PTEP group within the PTEP account, under the rules of § 1.960-3(c).
(v) Fifth, paragraphs (c)(1)(i) through (iv) of this section are repeated for each next higher-tier controlled foreign corporation in the chain.
(vi) Sixth, with respect to the highest-tier controlled foreign corporation in a chain that is owned directly (or indirectly through a partnership) by the domestic corporation, foreign income taxes that are deemed paid under section 960(b)(1) in connection with the receipt of a section 959(a) distribution by the domestic corporation are computed under the rules of § 1.960-3(b).
(2)
(3)
(d)
(2)
(ii)
(B)
(
(
(
(
(
(
(C)
(D)
(E)
(
(
(
(
(3)
(A) First, the rules of sections 861 through 865 and 904(d) and the regulations under those sections (taking into account the rules of section 954(b)(5) and § 1.954-1(c), and section 951A(c)(2)(A)(ii) and § 1.951A-2(c)(3), as appropriate) apply to allocate and apportion to reduce gross income (or create a loss) in each section 904 category and income group within a section 904 category any deductions of the controlled foreign corporation that are definitely related to less than all of the controlled foreign corporation's gross income as a class. See paragraph (d)(3)(ii) of this section for special rules for allocating and apportioning current year taxes to section 904 categories, income groups, and PTEP groups.
(B) Second, related person interest expense is allocated to and apportioned among the subpart F income groups within the passive category under the principles of § 1.904-5(c)(2) and § 1.954-1(c)(1)(i).
(C) Third, any remaining deductions are allocated and apportioned to reduce gross income (or create a loss) in the section 904 categories and income groups within each section 904 category under the rules referenced in paragraph (d)(3)(i)(A) of this section. No deductions of the controlled foreign corporation for the current taxable year other than a deduction for current year taxes imposed solely by reason of the receipt of a section 959(b) distribution are allocated or apportioned to reduce earnings and profits in a PTEP group.
(ii)
(B)
(
(e)
(f)
(1)
(ii)
(iii)
(2)
(ii)
(B)
(
(C)
(D)
(E)
(F)
(a)
(b)
(2)
(3)
(ii)
(iii)
(4)
(5)
(i)
(ii)
(B)
(c)
(2)
(3)
(4)
(5)
(6)
(7)
(i)
(B)
(ii)
(
(B)
(
(
(a)
(b)
(2)
(3)
(4)
(5)
(c)
(2)
(i) Earnings and profits described in section 959(c)(1)(A) by reason of section 951(a)(1)(B) and not by reason of the application of section 959(a)(2);
(ii) Earnings and profits described in section 959(c)(1)(A) that were initially described in section 959(c)(2) by reason of section 965(a);
(iii) Earnings and profits described in section 959(c)(1)(A) that were initially described in section 959(c)(2) by reason of section 965(b)(4)(A);
(iv) Earnings and profits described in section 959(c)(1)(A) that were initially described in section 959(c)(2) by reason of section 951A;
(v) Earnings and profits described in section 959(c)(1)(A) that were initially described in section 959(c)(2) by reason of section 951(a)(1)(A) (other than as a result of the application of section 965);
(vi) Earnings and profits described in section 959(c)(1)(B);
(vii) Earnings and profits described in section 959(c)(2) by reason of section 965(a);
(viii) Earnings and profits described in section 959(c)(2) by reason of section 965(b)(4)(A);
(ix) Earnings and profits described in section 959(c)(2) by reason of section 951A;
(x) Earnings and profits described in section 959(c)(2) by reason of section 951(a)(1)(A) (other than as a result of the application of section 965).
(3)
(4)
(d)
(i) The sum of—
(A) The current year taxes paid or accrued by the controlled foreign corporation that are allocated and apportioned to the PTEP group under § 1.960-1(d)(3)(ii);
(B) Foreign income taxes that are deemed paid under section 960(b)(2) and paragraph (b)(2) of this section by the controlled foreign corporation with respect to a section 959(b) distribution received by the controlled foreign corporation, the amount of which is added to the PTEP group under paragraph (c)(3) of this section; and
(C) In the case of a reclassified PTEP group of the controlled foreign corporation, reclassified PTEP group taxes that are attributable to the section 959(c)(2) PTEP group that corresponds to the reclassified PTEP group;
(ii) Reduced by—
(A) Foreign income taxes that were deemed paid under section 960(b)(2) and paragraph (b)(2) of this section by another controlled foreign corporation that received a section 959(b) distribution from the controlled foreign corporation, the amount of which is subtracted from the controlled foreign corporation's PTEP group under paragraph (c)(3) of this section;
(B) Foreign income taxes that were deemed paid under section 960(b)(1) and paragraph (b)(1) of this section by a domestic corporation that is a United States shareholder of the controlled foreign corporation that received a section 959(a) distribution from the controlled foreign corporation, the amount of which is subtracted from the controlled foreign corporation's PTEP group under paragraph (c)(3) of this section; and
(C) In the case of a section 959(c)(2) PTEP group of the controlled foreign corporation, reclassified PTEP group taxes.
(2)
(3)
(i) Paid or accrued in a taxable year of the controlled foreign corporation that began before January 1, 2018;
(ii) Not included in a controlled foreign corporation's post-1986 foreign income taxes (as defined in section 902(c)(2) as in effect on December 21, 2017) used to compute foreign taxes deemed paid under section 902 (as in effect on December 21, 2017) in any taxable year that began before January 1, 2018; and
(iii) Not treated as deemed paid under section 960(a)(3) (as in effect on December 21, 2017) by a domestic corporation that was a United States shareholder of the controlled foreign corporation.
(e)
(1)
(ii)
(B) Under paragraph (c)(3) of this section, in the 2019 taxable year, the 1,000,000u related to the section 959(b) distribution from CFC2 is added to CFC1's annual PTEP account for the 2018 taxable year in the passive category and to the PTEP group within such account described in paragraph (c)(2)(x) of this section. Similarly, CFC2's 2018 taxable year annual PTEP account within the passive category, and the PTEP group within such account described in paragraph (c)(2)(x) of this section, is reduced by the amount of the 1,000,000u section 959(b) distribution to CFC1. Additionally, CFC1's annual PTEP account for the 2018 taxable year in the passive category, and the PTEP group within such account described in paragraph (c)(2)(x) of this section, is reduced by the 300,000u of withholding taxes imposed on CFC1 by Country X. Therefore, CFC1's annual PTEP account for the 2018 taxable year within the passive category and the PTEP group within such account described in paragraph (c)(2)(x) of this section is 700,000u.
(C) Under paragraph (d)(1) of this section, the 300,000u of withholding tax is translated into U.S. dollars and $300,000 is added to the PTEP group taxes with respect to CFC1's PTEP group described in paragraph (c)(2)(x) of this section within the annual PTEP account for the 2018 taxable year within the passive category.
(2)
(ii)
(B)
(C)
(
(
The addition and revision read as follows:
(a) * * * (1) * * * For purposes of this section, an amount included in gross income under section 951A(a) is treated as an amount included in gross income under section 951(a). The amount of the increase in the foreign tax credit limitation allowed by this section is determined with regard to each separate category of income described in § 1.904-5(a)(4)(v).
(d) * * * For purposes of this paragraph (d), the term “foreign income taxes” includes foreign income taxes paid or accrued, foreign income taxes deemed paid or accrued under section 904(c), and foreign income taxes deemed paid under section 960, for the taxable year of inclusion.
(c) * * *
(1) * * *
(iii)
(e) * * *
(1) * * *
(i) * * * If the section 965(n) election creates or increases a net operating loss under section 172 for the taxable year, then the taxable income of the person
(iv)
(B)
(
(
(
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; issuance of five incidental harassment authorizations.
In accordance with the regulations implementing the Marine Mammal Protection Act (MMPA) as amended, notification is hereby given that we have issued incidental harassment authorizations (IHA) to five separate applicants to incidentally harass marine mammals during geophysical survey activities in the Atlantic Ocean.
These authorizations are effective for one year from the date of effectiveness.
Ben Laws, Office of Protected Resources, NMFS, (301) 427-8401.
Electronic copies of the applications and supporting documents, as well as a list of the references cited in this document, may be obtained online at:
Section 101(a)(5)(D) of the MMPA (16 U.S.C. 1361
An authorization for incidental takings shall be granted if NMFS finds that the taking will have a negligible impact on the species or stock(s), will not have an unmitigable adverse impact on the availability of the species or stock(s) for subsistence uses (where relevant), and if the permissible methods of taking and requirements pertaining to the mitigation, monitoring and reporting of such takings are set forth.
NMFS has defined “negligible impact” in 50 CFR 216.103 as an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival.
The MMPA states that the term “take” means to harass, hunt, capture, or kill, or attempt to harass, hunt, capture, or kill any marine mammal.
Except with respect to certain activities not pertinent here, the MMPA defines “harassment” as any act of pursuit, torment, or annoyance which (i) has the potential to injure a marine mammal or marine mammal stock in the wild (Level A harassment); or (ii) has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering (Level B harassment).
In 2014, the Bureau of Ocean Energy Management (BOEM) produced a Programmatic Environmental Impact Statement (PEIS) to evaluate potential significant environmental effects of geological and geophysical (G&G) activities on the Mid- and South Atlantic Outer Continental Shelf (OCS), pursuant to requirements of the National Environmental Policy Act (NEPA). BOEM's PEIS and associated Record of Decision are available online at:
In 2014-15, we received multiple separate requests for authorization for take of marine mammals incidental to geophysical surveys in support of hydrocarbon exploration in the Atlantic Ocean. The applicants are companies that provide services, such as geophysical data acquisition, to the oil and gas industry. Upon review of these requests, we submitted questions, comments, and requests for additional information to the individual applicant companies. As a result of these interactions, the applicant companies provided revised versions of the applications that we determined were adequate and complete. Adequate and complete applications were received from ION GeoVentures (ION) on June 24, 2015, Spectrum Geo Inc. (Spectrum) on July 6, 2015, and from TGS-NOPEC Geophysical Company (TGS) on July 21, 2015.
We subsequently posted these applications for public review and sought public input (80 FR 45195; July 29, 2015). The comments and information received during this public review period informed development of the proposed IHAs (82 FR 26244; June 6, 2017), and all letters received are available online at
On June 26, 2018, Spectrum notified NMFS of a modification to their survey plan. Spectrum's letter and related information is available online, as is their preceding adequate and complete application. The descriptions and analyses contained herein were complete at the time we received notification of the modification. Therefore, we present those descriptions and analyses, including those related to Spectrum's request (as detailed in their 2015 application), intact as originally developed. However, we provide detail regarding Spectrum's modified survey plan, our evaluation of the modification to the specified activity, and our finding that the determinations made in regard to Spectrum's previously proposed specified activity remain appropriate and valid in a standalone section entitled “Spectrum Survey Plan Modification” at the end of this notice.
All issued authorizations are valid for the statutory maximum of one year. All applicants plan to conduct two-dimensional (2D) marine seismic surveys using airgun arrays. Generally speaking, these surveys may occur within the U.S. Exclusive Economic Zone (EEZ) (
Because the specified activity, specific geographic region, and planned dates of activity are substantially similar for the five separate requests for authorization, we have determined it appropriate to provide a joint notice for issuance of the five authorizations. However, while we provide relevant information together, we consider the potential impacts of the specified activities independently and make determinations specific to each request for authorization, as required by the MMPA.
In this section, we provide a generalized discussion that is broadly applicable to all five requests for authorization, with project-specific portions indicated.
The five applicants plan to conduct deep penetration seismic surveys using airgun arrays as an acoustic source. Seismic surveys are one method of obtaining geophysical data used to characterize the subsurface structure, in this case in support of hydrocarbon exploration. The planned surveys are 2D surveys, designed to acquire data over large areas in order to screen for potential hydrocarbon prospectivity. To contrast, three-dimensional surveys may use similar acoustic sources but are designed to cover smaller areas with greater resolution (
An airgun is a device used to emit acoustic energy pulses into the seafloor, and generally consists of a steel cylinder that is charged with high-pressure air. The firing pressure of an array is typically 2,000 pounds per square inch (psi). Release of the compressed air into the water column generates a signal that reflects (or refracts) off of the seafloor and/or subsurface layers having acoustic impedance contrast. When fired, a brief (~0.1 second (s)) pulse of sound is emitted by all airguns nearly simultaneously. The airguns do not fire during the intervening periods, with the array typically fired on a fixed distance (or shot point) interval. This interval may vary depending on survey objectives, but a typical interval for a 2D survey in relatively deep water might be 25 m (approximately every 10 s, depending on vessel speed). Vessel speed when towing gear is typically 4-5 knots (kn). The return signal is recorded by a listening device and later analyzed with computer interpretation and mapping systems used to depict the subsurface. In this case, towed streamers contain hydrophones that would record the return signal.
Individual airguns are available in different volumetric sizes, and for deep penetration seismic surveys are towed in arrays (
Survey protocols generally involve a predetermined set of survey, or track, lines. The seismic acquisition vessel (source vessel) will travel down a linear track for some distance until a line of data is acquired, then turn and acquire data on a different track. In addition to the line over which data acquisition is desired, full-power operation may include run-in and run-out. Run-in is approximately 1 kilometer (km) of full-power source operation before starting a new line to ensure equipment is functioning properly, and run-out is additional full-power operation beyond the conclusion of a trackline (typically half the distance of the acquisition streamer behind the source vessel) to ensure that all data along the trackline are collected by the streamer. Line turns typically require two to three hours due to the long, trailing streamers (approximately 10 km). Spacing and length of tracks vary by survey. Survey operations often involve the source vessel, supported by a chase vessel. Chase vessels typically support the source vessel by protecting the hydrophone streamer from damage (
All issued IHAs are valid for the statutory maximum of one year from the date of effectiveness. The IHAs are effective upon written notification from the applicant to NMFS, but not beginning later than one year from the date of issuance or extending beyond two years from the date of issuance. However, the expected temporal extent of survey activity varies by company and may be subject to unpredictability due to inclement weather days, equipment maintenance and/or repair, transit to and from ports to survey locations, and other contingencies. Spectrum originally planned a 6-month data acquisition program (February through July), consisting of an expected 165 days of seismic operations. This plan has been modified and now consists of an estimated 108 days of operations. Please see “Spectrum Survey Plan Modification” for further information. TGS plans a full year data acquisition program, with an estimated 308 days of seismic operations. ION plans a six-month data acquisition program (July through December), with an estimated 70 days of seismic data collection. Western plans a full year data acquisition program, with an estimated 208 days of seismic operations. CGG plans a six-month data acquisition program (July through
The planned survey activities would occur off the Atlantic coast of the United States, within BOEM's Mid-Atlantic and South Atlantic OCS planning areas (
The specific survey areas differ within this region; please see maps provided in the individual applications (Spectrum: Figure 1; Western: Figures 1-1 to 1-4; TGS: Figures 1-1 to 1-4; ION: Figure 1; CGG: Figure 3) (however, please see “Spectrum Survey Plan Modification” for further information). The specific geographic region has not changed compared with what was described in our Notice of Proposed IHAs (82 FR 26244; June 6, 2017), nor has substantive new information regarding the region become available. Therefore, we do not reprint that discussion here; for additional detail regarding the specific geographic region, please see our Notice of Proposed IHAs.
Survey descriptions, as summarized from specific applications, are provided here. Please see Table 1 for a summary of airgun array characteristics. With the exception of Spectrum, the planned surveys have not changed from those described in our Notice of Proposed IHAs (82 FR 26244; June 6, 2017) Please see “Spectrum Survey Plan Modification” for further information. For full detail, please see the individual IHA applications and our Notice of Proposed IHAs. Note that all applicants expect there to be limited additional operations associated with equipment testing, startup, line changes, and repeat coverage of any areas where initial data quality is sub-standard. Therefore, there
As stated above, Spectrum notified NMFS on June 26, 2018, of a modification to their survey plan. Please see “Spectrum Survey Plan Modification” for further information.
We published a Notice of Proposed IHAs in the
During the 45-day comment period, we received 117,294 total comment letters. Of this total, we determined that approximately 3,196 comment letters represented unique submissions, including 73 letters from various organizations or individuals acting in an official capacity (
NMFS has reviewed all public comments received on the proposed issuance of the five IHAs. All relevant comments and our responses are described below. Comments indicating general support for or opposition to hydrocarbon exploration but not containing relevant recommendations or information are not addressed here. Similarly, any comments relating to hydrocarbon development (
A large majority of commenters, including all of those following one of the 20 templates, expressed general opposition towards geophysical airgun surveys in the U.S. Atlantic Ocean. We reiterate here that NMFS's proposed actions concern only the authorization of marine mammal take incidental to the planned surveys—jurisdiction concerning decisions to allow the surveys rests solely with BOEM, pursuant to their authority under the OCSLA. Further, NMFS does not have discretion regarding issuance of requested incidental take authorizations pursuant to the MMPA, assuming (1) the total taking associated with a specified activity will have a negligible impact on the affected species or stock(s); (2) the total taking associated with a specified activity will not have an unmitigable adverse impact on the availability of the species or stock(s) for subsistence uses (not relevant here); (3) the total taking associated with a specified activity is small numbers of marine mammals of any species or stock; and (4) appropriate mitigation, monitoring, and reporting of such takings are set forth, including mitigation measures sufficient to meet the standard of least practicable adverse impact on the affected species or stocks. A large volume of the comments received request that NMFS not issue any of the IHAs and/or express disdain for NMFS's proposal to issue the requested IHAs, but without providing information relevant to NMFS's decisions. These comments appear to indicate a lack of understanding of the MMPA's requirement that NMFS shall issue requested authorizations when the above listed conditions are met; therefore, these comments were not considered.
In general, commenters described the close linkages between their local and state economies to a healthy ocean, contending that the planned surveys could have substantial impacts on, for example, commercial and recreational fishing, wildlife viewing, outdoor recreation, and businesses dependent on these activities. Commenters suggested that NMFS should undertake analyses unrelated to the proposed actions (
Multiple commenters focused on specific, rather than general, issues that are not germane to our consideration of requested action under the MMPA. For example, the Northwest Atlantic Marine Alliance (NAMA) and other groups provided comments related to potential impacts on commercial fisheries, and the New Jersey Council of Diving Clubs expressed concern regarding potential impacts of the planned surveys on recreational divers. Recommendations were provided concerning mitigating potential impacts. We reiterate that NMFS's proposed action—the issuance
Multiple groups stated that NMFS should consider impacts and protection for other species in the action area, such as Atlantic sturgeon, other fish species, invertebrates, plankton, and sea turtles. Some of these comments specifically referenced the importance of the area offshore Cape Hatteras as home to a diverse assemblage of non-marine mammal species, including sharks, turtles, seabirds, and other fish species. The NAMA provided comments relating to Essential Fish Habitat (EFH) (as designated pursuant to the Magnuson Stevens Fishery Conservation and Management Act (MSA), as amended by the Sustainable Fisheries Act of 1996 (Pub. L. 104-267)), including concerns regarding effects to EFH resulting from the planned surveys. Because NMFS's proposed action is limited to the authorization of marine mammal take incidental to the planned surveys, effects of the surveys on aspects of the marine environment other than marine mammals and their habitat are not relevant to NMFS's analyses under the MMPA. Pursuant to guidance from NMFS's Office of Habitat Conservation concerning EFH and MMPA incidental take authorizations, we have determined that the issuance of these IHAs will not result in adverse impacts to EFH, and further, that issuance of these IHAs does not require separate consultation per section 305(B)(2) of the MSA. We do not further address potential impacts to EFH.
The MMPA does require that we evaluate potential effects to marine mammal habitat, which includes prey species (
With regard to this specific comment, the surveys are largely not occurring in or near any shipping lanes, as they will occur a minimum of 30 km offshore. NMFS is not aware of any scientific information suggesting that the surveys would drive marine mammals into shipping lanes, and disagrees that this would be a reasonably anticipated effect of the specified activities.
Based on the available evidence, a responsible analysis of potential impacts of airgun noise on marine mammal individuals and populations cannot assume that such effects cannot occur. In reality, conclusive statements regarding population-level consequences of acoustic stressors cannot be made due to insufficient investigation, as such studies are exceedingly difficult to carry out and no appropriate study and reference populations have yet been established. For example, a recent report from the National Academy of Sciences noted that, while a commonly-cited statement from the National Research Council (“[n]o scientific studies have conclusively demonstrated a link between exposure to sound and adverse effects on a marine mammal population”) remains true, it is largely because such impacts are very difficult to demonstrate (NRC, 2005; NAS, 2017). Population‐level effects are inherently difficult to assess because of high variability, migrations, and multiple factors affecting the populations. However, NMFS has carefully considered the available evidence in determining the most appropriate suite of mitigation measures and in making the necessary determinations (see “Negligible Impact Analyses and Determinations”).
Although the primary stressor to marine mammals from the specified activities is acoustic exposure to the sound source, NMFS takes seriously the risk of vessel strike and has prescribed measures sufficient to avoid the potential for ship strike to the extent practicable. NMFS has required these measures despite a very low likelihood of vessel strike; vessels associated with the surveys will add a discountable amount of vessel traffic to the specific geographic region (
NMFS's required vessel strike avoidance protocol is expected to further minimize any potential interactions between marine mammals and survey vessels. Please see “Vessel Strike Avoidance” for a full description of requirements, which include: Vessels must maintain a 10 kn speed restriction when in North Atlantic right whale critical habitat, Seasonal Management Areas, or Dynamic Management Areas; vessel operators and crews must maintain a vigilant watch for all marine mammals and must take necessary actions to avoid striking a marine mammal; vessels must reduce speeds to 10 kn or less when mother/calf pairs, pods, or large assemblages of cetaceans are observed near a vessel; and vessels must maintain minimum separation distances.
NMFS recognizes that masking may occur beyond the 160-dB zone and, further, that the primary concern is when numerous sources, many of which may be at distances beyond their 160-dB isopleth, contribute to higher background noise levels over extended time periods and significant portions of an individual's acoustic habitat. However, as noted above, any masking effects of these single surveys operating far offshore (with no expectation that any of the five would be in close enough proximity to one another to contemporaneously expose animals to noise from multiple source vessels) are expected to be limited and brief, if present. Further, we recognize the presence of multipath arrivals, especially the farther the receiver is from the ship, but given the reduced received levels at distance, combined with the short duration of potential masking and the lower likelihood of extensive additional contributors to background noise this far offshore and within these short exposure periods, we believe that the incremental addition of the seismic vessel is unlikely to result in more than minor and short-term masking effects, likely occurring to some small number of the same individuals captured in the estimate of behavioral harassment.
In regard to some of the specific examples NRDC raised, we acknowledge that vocal modifications of low-frequency cetaceans in response to distant sound sources have been detected. However, as discussed elsewhere in this Notice, not every behavioral change or minor vocal modification rises to the level of a take or has any potential to adversely impact marine mammal fitness, and NRDC has not demonstrated why it believes the short duration exposures that low-frequency cetaceans might be exposed to a few times a year from a survey should constitute a “high” versus “medium” consequence in NMFS's assessment framework.
Similarly, NMFS is also aware of the Videsen
Last, in response to the suggestion that we utilize a model, such as the model NMFS used for assessing similar potential impacts in the Gulf of Mexico, to assess impacts to communication space from the surveys evaluated here—it is neither necessary nor an appropriate use of those tools. As noted above, the combination of the modeled take estimates, along with a qualitative evaluation of the temporal and spatial footprint of the activities within the large action area and dispersed marine mammal distributions, makes it clear that masking effects, if any, would be highly limited for these activities. In the Gulf of Mexico, NMFS used the referenced model in the context of a five-year rule to programmatically assess the chronic impacts of an entire seismic program in a mature and active hydrocarbon-producing region, with a significantly greater amount of effort than is contemplated in these five surveys, overlaid in an area with already otherwise high ambient noise. Use of the model is comparatively expensive and time-consuming, and produces a relatively gross-scale comparison of predicted annual averages (or other duration) of accumulated sound energy (which can also be interpreted in the context of the communication space of any species). This sort of analysis can be helpful in understanding relative chronic effects when higher and longer-term overall levels of activity and impacts are being evaluated across areas with notably variable levels of activities and/or ambient noise, and can potentially inform decisions regarding time-area mitigation. Here, however, any impacts to communication space from any individual survey are expected to be minimal; in addition to being unnecessary, the lack of granularity in the suggested model (which is appropriate at larger and denser scales of impacts, and which can be improved with improvement of the available input data) is such that its application to these activities would not produce useful information.
NMFS is unaware of any information linking possible strandings on Bald Head Island, or in any other location on the East Coast, with offshore airgun survey activity, and does not expect the planned surveys to have any potential to result in stranding events or the type of injuries or effects that could lead to stranding events, given the required mitigation and operational protocols. In support of its position, Sea Shepherd Legal cites two review articles (Gordon
However, as a precaution NMFS has modified its reporting requirements to include protocols relating to minimization of additional harm to live-stranded (or milling) marine mammals. Addition of these protocols does not imply any change to our determination that stranding events are unlikely, nor does it imply that a stranding event that does occur is necessarily the result of the specified activities. However, we recognize that regardless of the cause of a stranding event, it is appropriate to take action in certain circumstances to avoid additional harm. Please see “Monitoring and Reporting” for more information.
In contrast, the International Association of Geophysical Contractors, American Petroleum Institute, and National Ocean Industries Association (hereafter, “the Associations”) stated that McCauley
In summary, fish react to sounds which are especially strong and/or intermittent low-frequency sounds, and behavioral responses such as flight or avoidance are the most likely effects. However, the reaction of fish to airguns depends on the physiological state of the fish, past exposures, motivation (
As discussed by NRDC, however, even temporary effects to fish distribution patterns can impact their ability to carry out important life-history functions. SPLs of sufficient strength have been known to cause injury to fish and fish mortality and, in some studies, fish auditory systems have been damaged by airgun noise (McCauley
Available data suggest that cephalopods are capable of sensing the particle motion of sounds and detect low frequencies up to 1-1.5 kHz, depending on the species, and so are likely to detect airgun noise (Kaifu
With regard to potential impacts on zooplankton, McCauley
A modeling exercise was conducted as a follow-up to the McCauley
However, while potential impacts to zooplankton are of obvious concern with regard to their follow-on effects for higher-order predators, the survey area is not an important area for feeding for taxa that feed directly on zooplankton,
Overall, prey species exposed to sound might move away from the sound source, experience TTS, experience masking of biologically relevant sounds, or show no obvious direct effects. Mortality from decompression injuries is possible in close proximity to a sound, but only limited data on mortality in response to airgun noise exposure are available (Hawkins
NMFS addressed potential effects to habitat, including acoustic habitat, and acknowledges that the surveys will increase noise levels in the vicinity of operating source vessels. However, following consideration of the available information, NMFS concludes that these impacts will not significantly affect ambient noise levels or acoustic communication space over long time periods, especially in the context of any given exposed individual. As described previously, exploratory surveys such as these cover a large area but would be transient rather than focused in a given location over time and therefore would not be considered as contributing meaningfully to chronic effects in any given location. Given these conclusions, a separate quantitative analysis of potential impacts to acoustic habitat, as is suggested by Nowacek
We acknowledge and appreciate the commenters' scientific expertise, but there are relevant statutory and regulatory requirements that inform NMFS in the scope of analysis relevant to a finding of negligible impact. Please see also our response to a previous comment above, in which NRDC makes similar charges regarding the impacts of masking. Finally, regarding terminology used in the comments (
Our 1989 final rule for the MMPA implementing regulations also addressed public comments regarding cumulative effects from future, unrelated activities. There we stated that such effects are not considered in making findings under section 101(a)(5) concerning negligible impact. We indicated that NMFS would consider cumulative effects that are reasonably foreseeable when preparing a NEPA analysis; and also that reasonably foreseeable cumulative effects would be considered under section 7 of the ESA for ESA-listed species.
In this case, we deem each of these IHAs a future, unrelated activity relative to the others. Although these IHAs are all for surveys that will be conducted for
Here, we recognize the potential for cumulative impacts, and that the aggregate impacts of the five surveys will be greater than the impacts of any given survey. The direct aggregate impacts of multiple surveys were addressed through the associated NEPA analyses: In BOEM's PEIS, which addressed the impacts of a significantly greater amount of survey activity that may be permitted by BOEM, and which NMFS adopted as the basis for its Record of Decision; as well as in NMFS's tiered Environmental Assessment, which supported a Finding of No Significant Impact (FONSI) for the issuance of the five IHAs here.
In our FONSI, NMFS's assessment was focused on whether the predicted level of take from the five surveys, when considered in context, would have a meaningful biological consequence at a species or population level. NMFS, therefore, assessed and integrated other contextual factors (
In summary, NMFS finds that when the required mitigation and monitoring is considered in combination with the large spatial extent over which the activities are spread across for comparatively short durations (less than one year), the potential impacts are both temporary and relatively minor. Therefore, NMFS does not expect aggregate impacts from the five surveys to marine mammals to affect rates of recruitment or survival, either alone or in combination with other past, present, or ongoing activities. The cumulative impacts of these surveys (
Separately, cumulative effects were analyzed as required through NMFS's required intra-agency consultation under section 7 of the ESA, which concluded that NMFS's action of issuing the five IHAs was not likely to jeopardize the continued existence of listed marine mammals and was not likely to adversely affect any designated critical habitat.
We note that section 101(a)(5)(D) of the MMPA requires NMFS to make a determination that the take incidental to a “specified activity” will have a negligible impact on the affected species or stocks of marine mammals, and will not result in an unmitigable adverse impact on the availability of marine mammals for taking for subsistence uses. We believe the “specified activity” for which incidental take coverage is being sought under section 101(a)(5)(D) is appropriately defined and described by the IHA applicant, just as with applications submitted for section 101(a)(5)(A) incidental take regulations. Here there are five specified activities, with a separate applicant for each. NMFS must make the necessary findings for each specified activity.
NRDC consistently cites reports of changes in vocalization, typically for baleen whales, as evidence in support of a lower threshold than the 160-dB threshold currently in use. A mere reaction to noise exposure does not, however, mean that a take by Level B harassment, as defined by the MMPA, has occurred. For a take to occur requires that an act have “the potential to disturb by causing disruption of behavioral patterns,” not simply result in a detectable change in motion or vocalization. Even a moderate cessation or modification of vocalization might not appropriately be considered as being of sufficient severity to result in take (Ellison
• Malme
• Malme
• McCauley
• Malme
These examples are related only to baleen whales, for which NRDC provides examples of vocalization changes in response to noise exposure. Although associated received levels are not available, a substantial body of evidence indicates that delphinids are significantly more tolerant of exposure to airgun noise. Based on review of monitoring reports from many years of airgun surveys, many delphinids approach acoustic source vessels with no apparent discomfort or obvious behavioral change (Barkaszi
Overall, we reiterate the lack of scientific consensus regarding what criteria might be more appropriate. Defining sound levels that disrupt behavioral patterns is difficult because responses depend on the context in which the animal receives the sound, including an animal's behavioral mode when it hears sounds (
There is currently no agreement on these complex issues, and NMFS followed the practice at the time of submission and review of these applications in assessing the likelihood
NRDC consistently cites Nowacek
NMFS disagrees that establishing species-specific thresholds is practical (
Overall, while we agree that there may be methods of assessing likely behavioral response to acoustic stimuli that better capture the variation and context-dependency of those responses than the simple step-function used here, there is no agreement on what that method should be or how more complicated methods may be implemented by applicants. NMFS is committed to continuing its work in developing updated guidance with regard to acoustic thresholds, but pending additional consideration and process is reliant upon an established threshold that is reasonably reflective of available science.
In support of exploring new methods for quantitatively predicting behavioral harassment, we note NMFS's recently published proposed incidental take regulations for geophysical surveys in the Gulf of Mexico (83 FR 29212; June 22, 2018), which propose using the modeling study first published in BOEM's associated EIS (Appendix D in BOEM, 2017) to estimate take. This study evaluated potential disruption of behavioral patterns that could result from a program of airgun surveys, using both the 160-dB step function and a probabilistic risk function similar to that suggested by Nowacek
In addition, there is a prevalent misconception in comments from NRDC and others regarding Level B harassment, as defined by the MMPA. NRDC cites multiple observations of behavioral reactions or of changes in vocal behavior in making statements supporting their overall recommendation that behavioral harassment thresholds be lower. However, these observations do not necessarily constitute evidence of disruption of behavioral patterns (Level B harassment) rather than simple reactions to often distant noise, which may provoke a reaction when discernable above ambient noise levels.
For example, changes in mysticete vocalization associated with exposure to airgun surveys within migratory and non-migratory contexts have been observed (
Our
Regarding Level B harassment, based on the language and structure of the definition of Level B harassment, we interpret the concept of “potential to disturb” as embedded in the assessment of the behavioral response that results from an act of pursuit, torment, or annoyance (collectively referred to hereafter as an “annoyance”). The definition refers to a “potential to disturb” by causing disruption of behavioral patterns. Thus, an analysis that indicates a disruption in behavioral patterns establishes the “potential to disturb.” A separate analysis of “potential to disturb” is not needed. In the context of an authorization such as this, our analysis is forward-looking. The inquiry is whether we would reasonably expect a disruption of behavioral patterns; if so, we would conclude a potential to disturb and therefore expect Level B harassment. We addressed NRDC's concerns regarding the scientific support for the Level B harassment threshold in a previous comment response.
Second, NMFS did comply with the OMB Peer Review Bulletin and IQA Guidelines in development of the technical guidance. The technical guidance was classified as a Highly Influential Scientific Assessment and, as such, underwent three independent peer reviews, at three different stages in its development, including a follow-up to one of the peer reviews, prior to its dissemination by NMFS. In addition, there were three separate public comment periods. Responses to public comments were provided in a previous
Furthermore, the technical guidance is not significant for purposes of Executive Orders 12866 or 13771 or OMB's Bulletin entitled, “Agency Good Guidance Practices” for significant guidance documents. 72 FR 3432 (January 25, 2007). Nevertheless, the technical guidance follows the practices and includes disclaimer language suggested by the OMB Bulletin to communicate effectively to the public about the legal effect of the guidance. Finally, with regard to the claim that NMFS's use of the technical guidance violates the MMPA requirement that all mitigation requirements be practicable, as the guidance supposedly requires monitoring and reporting requirements and other mitigation requirements that are impossible to comply with, we reiterate that mitigation and monitoring requirements associated with an MMPA authorization or ESA consultation or permit are independent management decisions made in accordance with statutory and regulatory standards in the context of a proposed activity and comprehensive effects analysis and are beyond the scope of the technical guidance. The technical guidance does not mandate mitigation or monitoring. Finally, there is no collection of information requirement associated with the technical guidance, so no ICR is required.
The guidance updates the historical 180-dB rms injury threshold, which was based on professional judgement (
First, oceanographic conditions in the mid-Atlantic region do not support a persistent surface duct, which usually occurs after a storm or consistently cool and windy weather. A reduction of surface wind velocity and the warming of the surface water will quickly break down a surface duct and cause the downward refraction of a shallow source (
Second, as stated above, the formation of a surface duct requires strong wind gusts and a high sea state, which are not ideal conditions for conducting a seismic survey given the need to tow a large array of airguns and long streamers. Thus, even if a surface duct is formed, it is very unlikely that a seismic survey would continue under such conditions.
Third—as OCR correctly pointed out—sound propagation in a surface duct is dependent on the wavelength of the source, the angle of incidence, the depth of the mixed layer, and the surface conditions. Among these parameters, the depth of the mixed layer is typically determined by the wind speed and sea state. While relatively low wind speed may support a weak, shallow surface duct, such a duct cannot support propagation of airgun sound, which is predominantly low-frequency. Jensen
Finally, most acoustic rays from an airgun array are emitted at very steep angles to be contained within the surface duct waveguide.
For these reasons, we do not believe surface ducts in the mid-Atlantic region, if they exist, would contribute noticeably to propagation for sound emitted from airguns.
NRDC's statement that “low-frequency propagation along the seabed can spread in a planar manner . . . can propagate with significantly greater efficiency than cylindrical propagation would indicate” is incorrect. Any acoustic wave can be approximated for plane wave propagation at sufficiently far range (
Finally, substrate types for propagation modeling are based on grain size, porosity, and shear velocity, etc., and “coral bottom” is not one of them. In fact, the roughness of the coral habitat would cause severe bottom loss due to scattering. Based on published literature, bottom types of the region are mostly composed of sand (
Furthermore, Bain and Williams (2006) focus on behavioral responses of marine mammals to airgun surveys, rather than on potential impacts on hearing. Harbor porpoises, while considered a high-frequency cetacean in terms of hearing, are also often categorized as a particularly sensitive species behaviorally (
As stated below and in our Notice of Proposed IHAs, we determined that their alternative approach (for seven species or species groups) is acceptable. We recognize that there is no model or approach that is always the most appropriate and that there may be multiple approaches that may be considered acceptable. The alternative approach used for seven species actually uses the most recent data, and does so in a way that conforms with recommended methods for deriving density values from sightings data. We do not believe that one or the other approach is non-representative of the best available science and methodologies.
SAR abundance estimates have other issues that compromise their use in creating meaningful comparisons here. As in the example above, use of multiple years of data in developing an abundance estimate minimizes the influence of interannual variation in over- or underestimating actual abundance. Further, SAR abundance estimates are typically underestimates of actual abundance because they do not account for availability bias due to submerged animals—in contrast, Roberts
NRDC appears to claim that the SARs are an appropriate representation of “actual” abundance, whereas the Roberts
NMFS participated in development of the acoustic modeling through its status as a cooperating agency in development of BOEM's PEIS. We strongly disagree with the Associations' characterization of the modeling conducted by BOEM and with the BOEM statements cited by the Associations. While the modeling required that a number of assumptions and choices be made by subject matter experts, some of these are purposely conservative to minimize the likelihood of underestimating the potential impacts on marine mammals represented by a specified level of survey effort. The modeling effort incorporated representative sound sources and projected survey scenarios (both based on the best available information obtained by BOEM), physical and geological oceanographic parameters at multiple locations within U.S. waters of the mid- and south Atlantic and during different seasons, the best available information regarding marine mammal distribution and density, and available information regarding known behavioral patterns of the affected species. Current scientific information and state-of-the-art acoustic propagation and animal movement modeling were used to reasonably estimate potential exposures to noise. NMFS's position is that the results of the modeling effort represent a conservative but reasonable best estimate. These comments provide no reasonable justification as to why the modeling results in overestimates of take, instead seemingly relying on the mistaken notion that real-time mitigation would somehow reduce actual levels of acoustic exposure, and we disagree that “each of the inputs is purposely developed to be conservative”—indeed, neither the Associations nor BOEM provide any support for the latter statement. Although it may be correct that conservativeness accumulates throughout the analysis, the Associations do not adequately describe the nature of conservativeness associated with model inputs or to what degree (either quantitatively or qualitatively) such conservativeness “accumulates.”
There is no conclusive evidence that exposure to airgun noise results in behaviorally-mediated forms of injury. Behaviorally-mediated injury (
In extreme circumstances, some echosounders and pingers may also have the potential to cause injury, and in one case evidence indicates such a system likely played a contributing role in a cetacean stranding event. However, injury (or any threshold shift) is even less likely than behavioral responses since animals would need to be even closer to the transducer for these to occur. It is also important to note that the system implicated in the stranding event was a lower-frequency (12-kHz), higher-power deepwater mapping system; typical navigational systems, including those that the applicants here would use, would have lower potential to cause similar responses. Kremser
Navigational echosounders are operated routinely by thousands of vessels around the world, and to our knowledge, strandings have not been correlated with their use. The echosounders and pinger proposed for use differ from sonars used during naval operations, which generally have higher source levels, lower frequencies, a longer pulse duration, and more horizontal orientation than the more downward-directed echosounders. The sound energy received by any individuals exposed to an echosounder during the proposed seismic survey activities would be much lower relative to naval sonars, as would be the duration of exposure. The area of possible influence for the echosounders is also much smaller, consisting of a narrow zone close to and below the source vessels as described previously for TTS and PTS. Because of these differences, we do not expect the proposed echosounders and pinger to contribute to a marine mammal stranding event. In summary, any effects that would be considered as take are so unlikely to occur as a result of exposure from ancillary acoustic sources as to be considered discountable.
Overall, we believe that there has been sufficient opportunity for public engagement with regard to the proposed surveys, through opportunities associated with NMFS's consideration of the requested IHAs under the MMPA and those associated with BOEM's consideration of requested permits under OCSLA (or through other associated statutory requirements). The public, coastal states, and other stakeholders have had substantial opportunity for involvement via processes related to the Coastal Zone Management Act (CZMA), NEPA, OCSLA, and the MMPA. In 2014, BOEM completed their PEIS, with NOAA acting as a cooperating agency in development of the PEIS. During EIS scoping, BOEM offered two separate comment periods and held seven public meetings in coastal states. The draft PEIS was made available for public review and comment for 94 days. Public hearings were held in eight coastal states. Subsequently, the final PEIS was made available for public comment for 90 days prior to BOEM's issuance of a Record of Decision. After completion of the 2014 PEIS, BOEM made all geophysical survey permit requests available for public review and comment for 30 days. With NMFS's participation, BOEM subsequently held eight open house meetings in coastal states for the public to learn more about the proposed surveys and to provide input to the permitting process. In addition, NOAA and BOEM engaged with coastal states as required by the CZMA federal consistency provision.
Separately, section 101(a)(5)(D) of the MMPA, which governs the issuance of IHAs, indicates that the “the Secretary shall authorize . . . . taking by harassment [ . . . . ]” The definition of “harassment” in the MMPA clearly includes both Level A and Level B harassment.
Last, PBR is defined in the MMPA (16 U.S.C. 1362(20)) as “the maximum number of animals, not including natural mortalities, that may be removed from a marine mammal stock while allowing that stock to reach or maintain its optimum sustainable population” and is a measure to be considered when evaluating the effects of mortality or serious injury on a marine mammal species or stock. Level A harassment is not equivalent to serious injury and does not “remove” an individual from a stock. Therefore, it is not appropriate to use the PBR metric to directly evaluate the effects of Level A harassment on a stock in the manner suggested by commenters.
Although NRDC's comment correctly cites the pertinent language from section 101(a)(5)(D) (which was enacted in 1994), it refers to legislative history from 1981 in support of its argument. But that legislative history corresponds to Congress' enactment of the provision for incidental take regulations. Because the IHA provisions were added in 1994, citations from the 1981 legislative history cannot accurately be referenced as statements made “in enacting this provision.” More substantively, the sentence from which NRDC quotes was, in our view, for the purpose of instructing the agencies to avoid promulgating incidental take regulations that are overly broad in their scope (“It is the intention of the Committee that [ . . . ] the specified activity [ . . . ] be narrowly identified so that
We do not mean to suggest that the legislative history for section 101(a)(5)(A) and our implementing regulations that preceded enactment of section 101(a)(5)(D) have no application to that section. We recognize there is considerable overlap between the two provisions. However, there are enough differences that the two provisions should not be casually conflated with one another.
NRDC asserts that impacts resulting from each of the five separate specified activities on the endangered North Atlantic right whale would be greater than negligible, stating that it is “inconceivable” that impacts should be considered anything less than “high,” regardless of the expected avoidance of right whales in time and space. We have addressed concerns regarding North Atlantic right whales in greater detail elsewhere in these comment responses. While we acknowledge that there will be some effects to individual right whales, as it is not possible to conduct these activities without the potential for impacts to whales that venture outside of areas where they are expected to occur or that undertake migration at atypical times, impacts to the population are in fact effectively minimized for each of these specified activities. As described later in this document, we have revised our exposure analysis for right whales using the latest and best available scientific information, and have appropriately revised our prescribed mitigation on the basis of that information, as well as public comment, in such a way as to reasonably avoid almost all potential right whale occurrence. We also include real-time mitigation that would minimize the effect of any disturbance on a right whale, in the unexpected event that an individual was encountered in the vicinity of a survey. Accordingly, the impact ratings for mysticetes are at least “low” versus “de minimis” (as stated above, we agree that the impact rating should likely be greater than de minimis given the inherent vulnerabilities of the species).
NRDC goes on to state that NMFS uses a “non-conservative” metric in characterizing the amount of take, and
For sperm whales, NRDC demands that the likely consequences to individuals be considered “high” rather than “medium,” as we have done (on the basis of presumed heightened potential for disruption of foraging activity). In so doing, NRDC primarily relies upon Miller
With regard to
Similarly, for delphinids (for which NRDC also urges a more severe assumption of likely consequence to individuals of the given disturbance), NRDC states that the consequences must be considered higher when the magnitude is high. Again, this is a misapprehension of the framework: The assigned “consequences” factor is independent of the magnitude rating, and is designed to account for aspects of a species life history that may make individuals from that species more or less susceptible to a biologically significant degree of impact from a
NRDC concludes its criticism of this aspect of our negligible impact analyses by demanding that we weight this assessment of likely consequences to individuals more highly in the determination of the overall impact rating. However, this appears to again evidence a misapprehension of our framework and its function. We certainly agree that an activity that is found to take small numbers of marine mammals may not be found to satisfy the negligible impact standard. However, here, as in their criticism of NMFS's approach to the small numbers analysis, NRDC inappropriately conflates the two findings. Here, NRDC seems to confuse a low magnitude of effect with the independent small numbers finding, rather than understand this magnitude factor as an important input to the development of the impact rating. As described in greater detail in our section entitled “Negligible Impact Analyses and Determinations,” the impact rating represents the coupling of the magnitude rating and the likely consequences to individuals in order to represent the potential impact to the stock (before considering other contextual factors). Therefore, although the likely consequences to individuals of incidental take may be high, if the magnitude of effect is low, then the impact to the stock will not likely be high. NRDC's example indicates that it prefers that the likely consequences to individuals be determinative of the impact rating,
For example, with regard to the North Atlantic right whale, consideration of the mitigation in our negligible impact analyses was appropriate. That is, it was appropriate to weigh heavily in our analyses mitigation that would avoid most exposures of right whales to noise at levels that would result in take. We acknowledge that our proposed mitigation for right whales was not sufficient. As described in greater detail in previous comment responses, as well as in the section entitled “Mitigation,” we re-evaluated our proposed mitigation in light of the public comments we received and on the basis of the best available information.
NRDC elsewhere stresses the importance of developing appropriate habitat-based mitigation—that is, avoiding impacts in areas of importance for marine mammals—and not relying solely on “real-time” mitigation (
NRDC also misunderstands the degree to which we rely on shutdowns for sensitive or vulnerable species, including right whales and beaked whales, at extended distances. We agree that these measures in and of themselves are not likely to carry substantial benefit, especially for cryptic species such as beaked whales that are unlikely to be observed. The prescribed habitat-based mitigation,
In summary, we have prescribed practicable mitigation that largely eliminates takes of North Atlantic right whales, as indicated by the best available science and further minimizes impacts by mitigating for duration and intensity of exposures. Separately, we have developed mitigation that protects use of some of the most important habitat in the region for other sensitive species. We consider these measures appropriately as mitigating factors in the
NRDC claims that a number may be considered small only if it is “little or close to zero” or “limited in degree.” While we do not accept that a dictionary definition of the word “small” is an acceptable guide for establishment of a reasoned small numbers limit, we also note that NRDC cherry-picks the accepted definitions in support of its favored position. The word “small” is also defined by Merriam-Webster Dictionary as “having comparatively little size,” which comports with the small numbers interpretation developed by NMFS and offered here. See
The argument to establish a small numbers threshold on the basis of stock-specific context is unnecessarily duplicative of the required negligible impact finding, in which relevant biological and contextual factors are considered in conjunction with the amount of take.
Similarly, NRDC's assertion that take from multiple specified activities should be considered in additive fashion when making a small numbers finding is not required by section 101(a)(5)(D) of the MMPA. We are unclear whether the logic presented in this comment suggests only that a single small numbers analysis should be undertaken for the five separate specified activities considered herein, or whether NRDC believes that all “taking” to which a given stock may be subject from all ongoing anthropogenic activities should be considered in making a small numbers finding for a given specified activity. Regardless, these suggestions from NRDC are not founded in any relevant requirement of statute or regulation, discussed in relevant legislative history, or supported by relevant case law.
In summary, as a result of our review of public comments, we re-evaluated the relevant available information and produced revised small numbers analyses (see “Small Numbers Analyses,” later in this document). The revised small numbers analyses alleviated the need for the proposed take reporting scheme and cap, which were also challenged by multiple applicant and public commenters.
We disagree with NRDC's apparent contention that surveys conducted in this region are likely to result in the death of resident beaked whales. As we discussed in our Notice of Proposed IHAs, we recognize the importance of the concepts described in Forney
We also disagree with NRDC's summary dismissal of the benefit of completely restricting survey activity in the habitat for a portion of the year. The benefit of a restriction targeting resident animals is sensibly scaled to the duration of the restriction and/or the timing of the restriction in relation to reproductive behavior. However, we believe that a full season without acute noise exposure, at minimum, for those animals will provide meaningful benefit, including but not limited to avoidance of the stress responses of concern to NRDC elsewhere in their comments.
That said, the available information does not suggest that such reactions are likely to have meaningful energetic
As noted above, one commenter suggested that a power-down requirement would be practicable (though we note that this alternative was offered against the backdrop of broader claims that no measures should be required). We considered modifying the behavior-based shutdown requirement contained in our proposed IHAs to CGG's suggested general power down requirement. However, following consultation with applicants and with BOEM, we determined that the circumstances of this particular commenter (CGG) with regard to practicability may not be broadly transferable, and that a power down requirement would potentially lead to the need for termination of survey lines and infill of the line where data were not acquired if a power down was performed according to accepted practice, in which the power down condition would last until the dolphin(s) are no longer observed within the exclusion zone. As noted in our Notice of Proposed IHAs, the need to revisit missed track line to reacquire data is likely to result in an overall increase in the total sound energy input to the marine environment and an increase in the total duration over which the survey is active in a given area.
We disagree with comments that no shutdown requirements should apply to any delphinid species, regardless of behavior. Here we refer to “large delphinids” and “small delphinids” as shorthand for generally deep-diving versus surface-dwelling/bow-riding groups, respectively, although the important distinction is their dive behavior rather than their size. As noted above, industry commenters have asserted that no shutdown requirements are warranted for any species of dolphin, stating that the best available science does not support imposing such requirements. The comments acknowledge that small delphinids are more likely to approach survey vessels than large delphinids, but claim without supporting data that there is no evidence that large delphinids will benefit from a shutdown requirement. In contrast to the typical behaviors of (and observed effects on) the small delphinid species group, the typical deep diving behavior of the relatively rarely occurring large delphinid group of species makes these animals potentially susceptible to interrupted/delayed feeding dives, which can cause energetic losses that accrue to affect fitness. As described in greater detail elsewhere in this Notice, there are ample data illustrating the responses of deeper diving odontocetes (including large delphinids) to loud sound sources (including seismic) to include interrupted foraging dives, as well as avoidance with increased speed and stroke rate, both of which may contribute to energetic costs through lost feeding opportunities and/or increased energy demands. Significant advances in study of the population consequences of disturbance are informing our understanding of how disturbances accrue to effects on individual fitness (reproduction and survival) and ultimately to populations via the use of energetic models, where data are available for a species, and expert elicitation when data are still limited. The link between behavioral disturbance, reduced energy budgets, and impacts on reproduction and survival is clear, as is the value in reducing the probability or severity of these behavioral disturbances where possible. Therefore, we find that there is support for the effectiveness of the standard shutdown requirement as applied to the large delphinid species group.
Further, the claim of industry commenters that shutdowns for these deep-diving species would be impracticable was not accompanied by supporting data. The data available to NMFS demonstrates that this requirement is practicable. For example, Barkaszi
Regarding NRDC's recommended guidelines, we disagree that these would be appropriate for use in determining habitats for protection in this circumstance. The guidelines come from a white paper (“Identifying Areas of Biological Importance to Cetaceans in Data-Poor Regions”) written by NMFS scientists for consideration in identifying such areas in relation to mitigation development for the incidental take rule governing the U.S. Navy's Surveillance Towed Array Sensor System Low Frequency Active (SURTASS LFA) sonar activities, which was applicable for much of the world's oceans, including in many so-called data-poor areas. NMFS convened a panel of subject matter experts tasked with helping to identify areas that met our criteria for offshore biologically important areas (OBIAs) for marine mammals relevant to the Navy's use of SURTASS LFA sonar, and the white paper offered guidance on alternate
NRDC's comment regarding the sperm whale is illustrative. NRDC refers simply to the 5 percent core abundance area for sperm whales as “entirely inadequate.” However, when analyzing multiple different core abundance areas for the species, we find that it is predicted as being broadly distributed over slope waters throughout much of the year,
Our definition of the Hatteras and North area was primarily informed by review of the available literature (as described in our Notice of Proposed IHAs), which shows that, for example, beaked whales are consistently present in particular waters of the shelf break region at all times of year (
We also acknowledge the important role that practicability for applicants plays in defining the appropriate suite of mitigation requirements to satisfy the MMPA's least practicable adverse impact standard, including design of habitat-based protections. Where a negligible impact finding is not conditioned upon the implementation of specific mitigation, prescription of mitigation must consider impacts on practicability. As stated above, protection of additional habitat for the sperm whale—given no basis on which to specify targeted protections beyond those included herein—would necessarily involve restricting access to large swaths of the specific geographic region. Based on our understanding of applicant considerations, such significant restrictions would likely lead to an applicant's determination that the survey would not take place, as the return on investment would not justify the expenditure,
NRDC goes on to cite “important passive acoustic detections, opportunistic sightings, and other data” that we have supposedly ignored, and cites the New York Bight (an area outside the specific geographic region) as an area illustrating the supposed failure of the density models to adequately highlight important habitat. NRDC also references biologically important areas; as described later in this document, we reviewed available information regarding BIAs (LaBrecque
In summary, and contrary to NRDC's statements, we did not rely exclusively on the core abundance analysis to define restriction areas. While we may have inadvertently overemphasized this important aspect of our process in the description provided in our Notice of Proposed IHAs, we evaluated the available literature to inform our understanding of rough areas suitable for protection (or characteristics that might provide such areas), subsequently refining our analysis through use of core abundance analysis to identify specific areas where features expected to provide important habitat overlap with actual predictions of high abundance and/or to refine the specific boundaries of areas that the literature indicated to be of importance. We appropriately based our definition of time-area restrictions on the available literature as well as on our analysis of core abundance areas.
The DMA concept also was used between 2002 and 2009 to protect unexpected aggregations of right whales that met an appropriate trigger by temporarily restricting lobster trap/pot and anchored gillnet fishing in the designated area (gear modifications have since replaced those requirements).
As we have stated, it is critically important to avoid impacts to right whales when possible and to minimize impacts when they do occur. Because DMAs identify aggregations of right whales, it is appropriate to restrict operations in these areas when DMAs are in effect. While we acknowledge that this requirement will impose operational costs, if the establishment of a DMA results in the need for a survey to temporarily move to another location, such concerns are weighted appropriately here in determining that this measure should be included in the suite of mitigation necessary to achieve the least practicable adverse impact.
We agree that, when practicable, the exclusion zone should encompass distances within which auditory injury is expected to occur on the basis of instantaneous exposure. For high-frequency cetaceans, these distances range from 355-562 m for four of the five applicants (Table 5). For Spectrum, the predicted distance is significantly larger (1,585 m). However, we require an extended exclusion zone of 1.5 km for certain sensitive species, including
We disagree that this measure is counterintuitive, an assertion based on the apparent sense that a larger zone should be in effect when the array is firing and a smaller zone prior to firing. On the contrary, we believe it important to implement a larger zone during pre-clearance, when naïve animals may be present and potentially subject to severe behavioral reactions if airguns begin firing at close range. While the delineation of zones is typically associated with shutdown, the period during which use of the acoustic source is being initiated is critical, and in order to avoid more severe behavioral reactions it is important to be cautionary regarding marine mammal presence in the vicinity when the source is turned on. This requirement has broad acceptance in other required protocols: The Brazilian Institute of the Environment and Natural Resources requires a 1,000-m pre-clearance zone (IBAMA, 2005), the New Zealand Department of Conservation requires that a 1,000-m zone be monitored as both a pre-clearance and a shutdown zone for most species (DOC, 2013), and the Australian Department of the Environment, Water, Heritage and the Arts requires an even more protective scheme, in which a 2,000-m “power down” zone is maintained for higher-power surveys (DEWHA, 2008). Broker
We disagree with the remainder of the statement. NMFS has evaluated the appropriate PSO staffing requirements, as described in “Mitigation,” and we have determined that a minimum of two visual PSOs must be on duty at all times during daylight hours in order to adequately ensure visual coverage of the area around the source vessel. Applicants must account for these requirements in selecting vessels that will be suitable for their planned surveys. The Associations' third point contains an apparent misconception, in that not all PSOs must have a minimum of 90 days at-sea experience, with no more than 18 months elapsed since the conclusion of the relevant experience. As described in our Notice of Proposed IHAs and herein, a minimum of one visual PSO and two acoustic PSOs must have such experience (rather than all PSOs). The Associations also apparently believe that a requirement for professional biological observers to be “trained biologists with experience or training in the field identification of marine mammals, including the identification of behaviors” is a “rigid restriction.” We respectfully disagree with these claims, and note that no labor shortage was experienced in the Gulf of Mexico during 2013-2015 when a significantly greater amount of survey activity (
There are multiple explanations of how marine mammals could be in a shutdown zone and yet go undetected by observers. Animals are missed because they are underwater (availability bias) or because they are available to be seen, but are missed by observers (perception and detection biases) (
We expect that PAM technology will continue to develop and improve, and look forward in the near-term to the establishment of formal standards regarding specifications for hardware, software, and operator training requirements, under the auspices of the Acoustical Society of America's (ASA) Accredited Standards Committee on Animal Bioacoustics (ANSI S3/SC1/WG3; “Towed Array Passive Acoustic Operations for Bioacoustics Applications”). In short, we expect that PAM will continue to be an integral component of mandatory mitigation monitoring for deep penetration airgun surveys conducted in compliance with the MMPA.
However, as described elsewhere in this document, section 101(a)(5)(D) of the MMPA indicates that the analysis, the findings, and any requirements included in the development of an IHA pertain only to the specified activity—specifically, NMFS is required to include the “requirements pertaining to the monitoring and reporting of such taking by harassment” (referring to the taking authorized in the IHA). Notably, section 101(a)(5)(A), which applies in the case of NMFS's incidental take regulations for a specified activity for up to five years, contains similar requirements, but the requirements apply to the entirety of the activities covered under any incidental take rulemaking. Indeed, NMFS's implementing regulations indicate that “for all petitions for regulations [ . . . ] applicants must provide the information requested in 216.104 on their activity as a whole.” Therefore, it
Although the statute provides flexibility in what constitutes acceptable monitoring and reporting measures (increased knowledge of the species and the taking), NMFS's implementing regulations provide additional guidance as to what an applicant should submit in their requests, indicating “Monitoring plans should include a description of the techniques that would be used to determine the movement and activities of marine mammals near the activity site(s) including migration and habitat uses, such as feeding.” We appreciate the recommendations provided by the public, and agree that from a content standpoint, many of the recommendations could qualify as appropriate monitoring for any of these surveys. However, we note that many of the monitoring recommendations require a scale of effort that is not commensurate to the scale of either the underlying activities or the anticipated impacts of the activities on marine mammals covered by any single IHA. In other words, many of the recommended measures would necessitate complex and expensive survey designs and methods that would exceed the duration of any one activity (
Most importantly, regardless of whether other monitoring plans would also suffice, we believe that the visual and acoustic monitoring required for each of these surveys meets the MMPA requirement for monitoring and reporting. NRDC implies that monitoring within 1 km of the vessel is not useful or adequate. First, the required monitoring is not limited to within a zone, as PSOs will record the required information at whatever distance they can accurately collect it—and past monitoring reports from similar platforms show useful data collected beyond 1 km. Further, even if the PSOs cannot always see, or acoustically monitor, the entire zone within which take is estimated to occur, the data collected will still be both qualitatively and quantitatively informative, as behaviors will be detectable within these distances and there are accepted methods for extrapolating sightings data to make inferences about larger areas. For these surveys, the PSOs will gather detailed information on the marine mammals both sighted and acoustically detected, their behaviors (different facets detectable visually and acoustically) and locations in relation to the sound source, and the operating status of any sound sources—allowing for a better understanding of both the impacted species as well as the taking itself.
However, following review of public comments, NMFS agrees with NRDC and other commenters who suggested that it would not be appropriate for NMFS to simply adopt BOEM's EIS (our stated approach in the Notice of Proposed IHAs). Although we disagree with claims that the EIS is deficient, it is appropriate to evaluate whether supplementation is necessary. In so doing, we consider (1) whether new information not previously considered in the EIS is now available; (2) whether that new information may change the impact analysis contained in the EIS; and (3) whether our impact conclusions may change as a result of the new information and new impact analyses. However, we further consider that the EIS was purposely developed so that additional information could be included in subsequent NEPA evaluations. Because we determined that relevant new information was in fact available, in addition to applicant-specific details, we determined it appropriate to conduct a supplemental Environmental Assessment.
NMFS determined that conducting NEPA review and preparing a tiered EA is appropriate to analyze environmental impacts associated with NMFS's issuance of separate IHAs to five different companies. NMFS further determined that the issuance of these five IHAs are “similar” but not “connected actions” per 40 CFR 1508.25(a)(3) due to general commonalities in geography, timing, and type of activity, which provides a reasonable basis for evaluating them together in a single environmental analysis. The EA also incorporates relevant portions of BOEM's Final PEIS while focusing analysis on environmental issues specific to the five IHAs. NMFS has completed the necessary environmental analysis under NEPA.
The MMC specifically cites a number of collaborative surveys conducted in foreign waters, and recommends that NMFS “work with BOEM” to require such collaboration. However, MMC provides no useful recommendations as to how such collaboration might be achieved. Given the absence of appropriate statutory authority, we recommend that the MMC itself undertake to foster such collaboration between geophysical data acquisition companies and relevant Federal agencies as it deems necessary to protect and conserve marine mammals. NMFS looks forward to joining in such an MMC-led collaboration, as appropriate.
We also note that industry commenters stated, anticipating suggestions of this sort, that such recommendations “are based upon a substantial misunderstanding of important technical, operational, and economic aspects of seismic surveying.” These commenters also noted that, based on the findings of an expert panel recently convened by BOEM to study the issue of duplicative surveys (see Appendix L in BOEM, 2017), none of the surveys considered here would meet the definition established for a “duplicate” survey.
With regard to the recommended requirements to measure or control vessel noise, or to make some minimum requirements regarding the design of vessels used in the surveys, we disagree that these requirements would be practicable. While we agree that vessel noise is of concern in a cumulative and chronic sense, it is not of substantial concern in relation to the MMPA's least practicable adverse impact standard, given the few vessels used in any given specified activity. NMFS looks forward to continued collaboration with NRDC and others towards ship quieting.
We refer readers to NMFS's Stock Assessment Reports (SAR;
Table 2 lists all species with expected potential for occurrence in the mid- and south Atlantic and summarizes information related to the population or stock, including potential biological removal (PBR). For taxonomy, we follow Committee on Taxonomy (2017). PBR, defined by the MMPA as the maximum number of animals, not including natural mortalities, that may be removed from a marine mammal stock while allowing that stock to reach or maintain its optimum sustainable population, is considered in concert with known sources of ongoing anthropogenic mortality (as described in NMFS's SARs). For status of species, we provide information regarding U.S. regulatory status under the MMPA and ESA.
Marine mammal abundance estimates presented in this document represent the total number of individuals that make up a given stock or the total number estimated within a particular study area. NMFS's stock abundance estimates for most species represent the total estimate of individuals within the geographic area, if known, that comprises that stock. For some species, this geographic area may extend beyond U.S. waters. Survey abundance (as compared to stock or species abundance) is the total number of individuals estimated within the survey area, which may or may not align completely with a stock's geographic range as defined in the SARs. These surveys may also extend beyond U.S. waters.
In some cases, species are treated as guilds. In general ecological terms, a guild is a group of species that have similar requirements and play a similar role within a community. However, for purposes of stock assessment or abundance prediction, certain species may be treated together as a guild because they are difficult to distinguish visually and many observations are ambiguous. For example, NMFS's Atlantic SARs assess
Thirty-four species (with 39 managed stocks) are considered to have the potential to co-occur with the planned survey activities. Species that could potentially occur in the survey areas but are not expected to have reasonable potential to be harassed by any survey are omitted from further analysis. These include extralimital species, which are species that do not normally occur in a given area but for which there are one or more occurrence records that are considered beyond the normal range of the species. Extralimital species or stocks unlikely to co-occur with survey activity include nine estuarine bottlenose dolphin stocks, four pinniped species, the white-beaked dolphin (
For the majority of species potentially present in the specific geographic region, NMFS has designated only a single generic stock (
Modeling suggests that in 1980, females had a life expectancy of approximately 52 years of age (twice that of males at the time) (Fujiwara and Caswell, 2001). However, due to reduced survival probability, in 1995 female life expectancy was estimated to have declined to approximately 15 years, with males having a slightly higher life expectancy into the 20s (Fujiwara and Caswell, 2001). A recent study demonstrated that females have substantially higher mortality than males (Pace
Gestation is approximately one year, after which calves typically nurse for around a year (Kenney, 2009; Kraus
Pregnant North Atlantic right whales migrate south, through the mid-Atlantic region of the United States, to low latitudes during late fall where they overwinter and give birth in shallow, coastal waters (Kenney, 2009; Krzystan
The western North Atlantic right whale population demonstrated overall growth of 2.8 percent per year between 1990 to 2010, despite a decline in 1993 and no growth between 1997 and 2000 (Pace
While data are not yet available to statistically estimate the population's trend beyond 2015, three lines of evidence indicate the population is still in decline. First, calving rates in recent years were low, with only five new calves being documented in 2017 (Pettis
Analysis of mtDNA from North Atlantic right whales has identified seven mtDNA haplotypes in the western North Atlantic (Malik
In recent years, there has been a shift in distribution in right whale feeding grounds, with fewer animals being seen in the Great South Channel and the Bay of Fundy and perhaps more animals being observed in the Gulf of Saint Lawrence and mid-Atlantic region (Daoust
Currently, no identified right whale recovery goals have been met (for more information on these goals, see the 2005 recovery plan; NMFS, 2005, 2017). With whaling now prohibited, the two major known human causes of mortality are vessel strikes and entanglement in fishing gear (Hayes
Because both the SAR (in most cases) and Roberts
As was described in our Notice of Proposed IHAs, NMFS's SAR abundance estimates are typically generated from the most recent shipboard and/or aerial surveys conducted, and often incorporate correction for detection bias. While these snapshot estimates provide valuable information about a stock, they are not generally relevant here for use in comparison to the take estimates, as stated above. The Roberts
The abundance values reported by Roberts
The appropriate maximum estimate for each taxon more closely represents actual total theoretical abundance of the stock as a whole, as those animals may exit the study area during other months but still exist conceptually as members of the population. The mean does not represent the actual population abundance, because although there are seasonal shifts in distribution, the actual population abundance should be as estimated for the period when the largest portion of the population is present in the area. While species may migrate or shift distribution out of the study area, total abundance of a stock changes only via births and deaths,
For most species, we use the Roberts
NMFS's abundance estimate for the North Atlantic right whale is based on models of the sighting histories of individual whales identified using photo-identification techniques. North Atlantic right whales represent one of the most intensely studied populations of cetaceans in the world with effort supported by a rigorously maintained individual sightings database and considerable survey effort throughout their range; therefore, the most appropriate abundance estimate is based on this photo-identification database. The current estimate of 451 individuals (95% credible intervals 434-464) reflects the database as of November 2017 (
The 2007 Canadian Trans-North Atlantic Sighting Survey (TNASS), which provided full coverage of the Atlantic Canadian coast (Lawson and Gosselin, 2009), provided abundance estimates for multiple stocks. The abundance estimates from this survey were corrected for perception and availability bias, when possible. In general, where the TNASS survey effort provided superior coverage of a stock's range (as compared with NOAA survey effort), we elect to use the resulting abundance estimate over either the current NMFS abundance estimate (derived from survey effort with inferior coverage of the stock range) or the Roberts
We use the TNASS abundance estimate for the minke whale and for the short-beaked common dolphin. While the TNASS survey also produced an abundance estimate of 3,522 (CV=0.27) fin whales, and similarly better represents the stock range than does NMFS's SAR estimate, this value underrepresents the maximum population predicted by Roberts
Note that, while the same TNASS survey produced an abundance estimate of 2,612 (CV=0.26) humpback whales, the survey did not provide superior coverage of the stock's range in the same way that it did for minke whales (Waring
The current SARs abundance estimate for
The area associated with such features includes nearshore and offshore waters of the southeastern United States, extending from Cape Fear, North Carolina south to 28° N. The specific area designated as Unit 2 of critical habitat, as defined by regulation (81 FR 4838; January 27, 2016), is demarcated by rhumb lines connecting the specific points identified in 50 CFR 226.203(b)(2), as shown in Figure 2.
Biologically important areas for North Atlantic right whales in the mid- and south Atlantic were further described by LaBrecque
As noted by LaBrecque
Since January 2016, elevated humpback whale mortalities have occurred along the Atlantic coast from Maine through Florida (though there are only two records to date south of North Carolina). As of October 2018, partial or full necropsy examinations have been conducted on approximately half of the 84 known cases. Of the cases examined, approximately half had evidence of human interaction (ship strike or entanglement). Some of these investigated mortalities showed blunt force trauma or pre-mortem propeller wounds indicative of vessel strike, indicating a strike rate above the annual long-term average; however, these findings of pre-mortem vessel strike are not consistent across all of the whales examined and more research is needed. NOAA is consulting with researchers that are conducting studies on the humpback whale populations, and these efforts may provide information on changes in whale distribution and habitat use that could provide additional insight into how these vessel interactions occurred. Three previous UMEs involving humpback whales have occurred since 2000, in 2003, 2005, and 2006. More information is available at
Since January 2017, elevated minke whale strandings have occurred along the Atlantic coast from Maine through South Carolina, with highest numbers in Massachusetts, Maine, and New York. As of October 2018, partial or full necropsy examinations have been conducted on more than 60 percent of the 54 known cases. Preliminary findings in several of the whales have shown evidence of human interactions or infectious disease. These findings are not consistent across all of the whales examined, so more research is needed. As part of the UME investigation process, NOAA is assembling an independent team of scientists to coordinate with the Working Group on Marine Mammal Unusual Mortality Events to review the data collected, sample stranded whales, and determine the next steps for the investigation. More information is available at:
Elevated North Atlantic right whale mortalities began in June 2017, primarily in Canada. To date, there are a total of 20 confirmed dead stranded whales (12 in Canada; 8 in the United States), and 5 live whale entanglements in Canada have been documented. Full necropsy examinations have been conducted on 13 of the cases, with results currently available for seven of these that occurred in Canada (Daoust
Beginning in July 2013, elevated strandings of bottlenose dolphins were observed along the Atlantic coast from New York to Florida. The investigation was closed in 2015, with the UME ultimately being attributed to cetacean morbillivirus (though additional contributory factors are under investigation;
Additional recent UMEs include various localized events with undetermined cause involving bottlenose dolphins (
There are several take reduction plans in place for marine mammals in the survey areas of the mid- and south Atlantic. We described these here briefly in order to fully describe, in conjunction with referenced material, the baseline conditions for the affected marine mammal stocks. The Atlantic Large Whale Take Reduction Plan (ALWTRP) was implemented in 1997 to reduce injuries and deaths of large whales due to incidental entanglement in fishing gear. The ALWTRP is an evolving plan that changes as NMFS learns more about why whales become entangled and how fishing practices might be modified to reduce the risk of entanglement. It has several components, including restrictions on where and how gear can be set and requirements for entangling gears (
NMFS implemented a Harbor Porpoise Take Reduction Plan (HPTRP) to reduce interactions between harbor porpoise and commercial gillnet gear in both New England and the mid-Atlantic. The HPTRP has several components including restrictions on where, when, and how gear can be set, and in some areas requires the use of acoustic deterrent devices. More information is available online at:
The Atlantic Trawl Gear Take Reduction Team was developed to address the incidental mortality and serious injury of pilot whales, common dolphins, and white-sided dolphins incidental to Atlantic trawl fisheries. More information is available online at:
Hearing is the most important sensory modality for marine mammals underwater, and exposure to anthropogenic sound can have deleterious effects. To appropriately assess the potential effects of exposure to sound, it is necessary to understand the frequency ranges marine mammals are able to hear. Current data indicate that not all marine mammal species have equal hearing capabilities (
• Low-frequency cetaceans (mysticetes): Generalized hearing is estimated to occur between approximately 7 Hz and 35 kHz;
• Mid-frequency cetaceans (larger toothed whales, beaked whales, and most delphinids): Generalized hearing is estimated to occur between approximately 150 Hz and 160 kHz;
• High-frequency cetaceans (porpoises, river dolphins, and members of the genera
For more detail concerning these groups and associated frequency ranges, please see NMFS (2018) for a review of available information. Thirty-four marine mammal species, all cetaceans, have the reasonable potential to co-occur with the survey activities. Please refer to Table 2. Of the species that may
In our Notice of Proposed IHAs, this section included a comprehensive summary and discussion of the ways that components of the specified activity may impact marine mammals and their habitat, including general background information on sound and specific discussion of potential effects to marine mammals from noise produced through use of airgun arrays. We do not repeat that discussion here, instead referring the reader to the Notice of Proposed IHAs. However, we do provide a more thorough discussion regarding potential impacts to marine mammal habitat via effects to prey species, as well as discussion of important new information regarding potential impacts to prey species produced since publication of our notice. The “Estimated Take” section later in this document includes a quantitative analysis of the number of individuals that are expected to be taken by this activity. The “Negligible Impact Analyses and Determinations” section will include an analysis of how these specific activities will impact marine mammals and will consider the content of this section, the “Estimated Take” section, and the “Mitigation” section, to draw conclusions regarding the likely impacts of these activities on the reproductive success or survivorship of individuals and from that on the affected marine mammal populations.
In our Notice of Proposed IHAs, this section contained a brief technical background on sound, the characteristics of certain sound types, and on metrics used in the proposal inasmuch as the information is relevant to the specified activity and to a discussion of the potential effects of the specified activity on marine mammals found later in this document. Here, we summarize key information relating to terminology used in this notice.
Amplitude (or “loudness”) of sound is typically described using the relative unit of the decibel (dB). A sound pressure level (SPL) in dB is described as the ratio between a measured pressure and a reference pressure (for underwater sound, this is 1 microPascal (μPa)). The source level (SL) represents the SPL referenced at a distance of 1 m from the source (referenced to 1 μPa), while the received level is the SPL at the listener's position (referenced to 1 μPa).
Root mean square (rms) is the quadratic mean sound pressure over the duration of an impulse. This measurement is often used in the context of discussing behavioral effects, in part because behavioral effects, which often result from auditory cues, may be better expressed through averaged units than by peak pressures. Sound exposure level (SEL; represented as dB re 1 μPa
As described in more detail in our Notice of Proposed IHAs, airgun arrays are in a general sense considered to be omnidirectional sources of pulsed noise. Pulsed sound sources (as compared with non-pulsed sources) produce signals that are brief (typically considered to be less than one second), broadband, atonal transients (ANSI, 1986, 2005; Harris, 1998; NIOSH, 1998; ISO, 2003) and occur either as isolated events or repeated in some succession. Pulsed sounds are all characterized by a relatively rapid rise from ambient pressure to a maximal pressure value followed by a rapid decay period that may include a period of diminishing, oscillating maximal and minimal pressures, and generally have an increased capacity to induce physical injury as compared with sounds that lack these features. Airguns produce sound with energy in a frequency range from about 10-2,000 Hz, with most energy radiated at frequencies below 200 Hz. Although the amplitude of the acoustic wave emitted from the source is equal in all directions (
We received numerous public comments regarding potential effects to marine mammal habitat, including to prey species, including some comments pointing out additional relevant literature and/or claiming that we had not adequately considered potential impacts to prey species. While we disagree that we had not adequately considered potential impacts to marine mammal habitat, particularly with regard to marine mammal prey, in response to public comment we did consider additional literature regarding potential impacts to prey species, as well as some new literature made available since publication of our Notice of Proposed IHAs (
Sound may affect marine mammals through impacts on the abundance, behavior, or distribution of prey species (
Fish utilize the soundscape (see our Notice of Proposed IHAs for discussion of this concept) and components of sound in their environment to perform important functions such as foraging, predator avoidance, mating, and spawning (
Fish react to sounds which are especially strong and/or intermittent low-frequency sounds, and behavioral responses such as flight or avoidance are the most likely effects. Short duration, sharp sounds can cause overt or subtle changes in fish behavior and local distribution. The reaction of fish to airguns depends on the physiological state of the fish, past exposures, motivation (
However, our review shows that the bulk of studies indicate no or slight reaction to noise (
While the findings of Paxton
SPLs of sufficient strength have been known to cause injury to fish and fish mortality and, in some studies, fish auditory systems have been damaged by airgun noise (McCauley
Injury caused by barotrauma can range from slight to severe and can cause death, and is most likely for fish with swim bladders. Barotrauma injuries have been documented during controlled exposure to impact pile driving (an impulsive noise source, as are airguns) (Halvorsen
Invertebrates appear to be able to detect sounds (Pumphrey, 1950; Frings and Frings, 1967) and are most sensitive to low-frequency sounds (Packard
Impacts to benthic communities from impulsive sound generated by active acoustic sound sources are not well documented. There are no published data that indicate whether threshold shift injuries or effects of auditory masking occur in benthic invertebrates, and there are little data to suggest whether sounds from seismic surveys would have any substantial impact on invertebrate behavior (Hawkins
There is little information concerning potential impacts of noise on zooplankton populations. However, one recent study (McCauley
A modeling exercise was conducted as a follow-up to the McCauley
In the absence of further validation of the McCauley
A recent review article concluded that, while laboratory results provide scientific evidence for high-intensity and low-frequency sound-induced physical trauma and other negative effects on some fish and invertebrates, the sound exposure scenarios in some cases are not realistic to those encountered by marine organisms during routine seismic operations (Carroll
As addressed earlier in “Comments and Responses,” some members of the public made strong assertions regarding the likely effects of airgun survey noise on marine mammal prey. These assertions included, for example, that the specified activities would harm fish and invertebrate species over the long-term, cause reductions in recruitment and effects to behavior that may reduce reproductive potential and foraging success and increase the risk of predation, and induce changes in community composition via such population-level impacts. We have addressed these claims both in our comment responses and in our review of the available literature, above. We also reviewed available information regarding populations of representative prey stocks in the northern Gulf of Mexico (GOM), which is the only U.S. location where marine seismic surveys are a routinely occurring activity. While we recognize the need for caution in assuming correlation between the ongoing survey activity in the GOM and the health of assessed stocks there, we believe this information has some value in informing the likelihood of population-level effects to prey species and, therefore, the likelihood that the specified activities would negatively impact marine mammal populations via effects to prey. We note that the information reported below is in context of managed commercial and recreational fishery exploitation, in addition to any other impacts (
• Red snapper (
• Yellowfin tuna (
• King mackerel (
In summary, impacts of the specified activities will likely be limited to behavioral responses, the majority of prey species will be capable of moving out of the project area during surveys, a rapid return to normal recruitment, distribution, and behavior for prey species is anticipated, and, overall, impacts to prey species will be minor and temporary. Prey species exposed to sound might move away from the sound source, experience TTS, experience masking of biologically relevant sounds, or show no obvious direct effects. Mortality from decompression injuries is possible in close proximity to a sound, but only limited data on mortality in response to airgun noise exposure are available (Hawkins
Based on the information discussed herein, we reaffirm our conclusion that impacts of the specified activities are not likely to have more than short-term adverse effects on any prey habitat or populations of prey species. Further, any impacts to marine mammal habitat are not expected to result in significant or long-term consequences for individual marine mammals, or to contribute to adverse impacts on their populations.
This section provides information regarding the number of incidental takes authorized, which informs both NMFS's consideration of “small numbers” and the negligible impact determinations.
Except with respect to certain activities not pertinent here, section 3(18) of the MMPA defines “harassment” as: Any act of pursuit, torment, or annoyance which (i) has the potential to injure a marine mammal or marine mammal stock in the wild (Level A harassment); or (ii) has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering (Level B harassment).
Anticipated takes would primarily be by Level B harassment, as use of the acoustic sources (
NMFS uses acoustic thresholds that identify the received level of underwater sound above which exposed marine mammals generally would be reasonably expected to exhibit disruption of behavioral patterns (equated to Level B harassment) or to incur PTS of some degree (equated to Level A harassment).
However, based on the practical need to use a relatively simple threshold based on available information that is both predictable and measurable for most activities, NMFS has historically used a generalized acoustic threshold based on received level to estimate the onset of Level B harassment. These thresholds are 160 dB rms (intermittent sources, which include impulsive sources) and 120 dB rms (continuous sources). Airguns are impulsive sound sources; therefore, the 160 dB rms threshold is appropriate for use in evaluating effects from the specified activities.
• Dividing sound sources into two groups (
• Choosing metrics that best address the impacts of noise on hearing sensitivity,
• Dividing marine mammals into hearing groups and developing auditory weighting functions based on the science supporting that not all marine mammals hear and use sound in the same manner.
The premise of the dual criteria approach is that, while there is no definitive answer to the question of which acoustic metric is most appropriate for assessing the potential for injury, both the received level and duration of received signals are important to an understanding of the potential for auditory injury. Therefore, peak SPL is used to define a pressure criterion above which auditory injury is predicted to occur, regardless of exposure duration (
NMFS (2018) recommends 24 hours as a maximum accumulation period relative to cSEL thresholds. These thresholds were developed by compiling and synthesizing the best available science, and are provided in Table 3 below. The references, analysis, and methodology used in the development of the thresholds are described in NMFS (2018), and more information is available online at:
NMFS considers these updated thresholds and associated weighting functions to be the best available information for assessing whether exposure to specific activities is likely to result in changes in marine mammal hearing sensitivity.
BOEM's PEIS (BOEM, 2014a) provides information related to estimation of the sound fields that would be generated by potential geophysical survey activity on the mid- and south Atlantic OCS. We provide a brief summary of that modeling effort here; for more information, please see our Notice of Proposed IHAs. For full detail, please see Appendix D of BOEM's PEIS (Zykov and Carr, 2014 in BOEM, 2014a). The acoustic modeling generated a three-dimensional acoustic propagation field as a function of source characteristics and physical properties of the ocean for later integration with marine mammal density information in an animal movement model to estimate potential acoustic exposures.
The authors selected 15 modeling sites throughout BOEM's mid-Atlantic and south Atlantic OCS planning areas for use in modeling predicted sound fields resulting from use of the airgun array. The water depth at the sites varied from 30-5,400 m. Two types of bottom composition were considered: Sand and clay, their selection depending on the water depth at the source. Twelve possible sound speed profiles for the water column were used to cover the variation of the sound velocity distribution in the water with location and season. Twenty-one distinct propagation scenarios resulted from considering different sound speed profiles at some of the modeling sites. Two acoustic propagation models were employed to estimate the acoustic field radiated by the sound sources. A version of JASCO Applied Science's Marine Operations Noise Model (MONM), based on the Range-dependent Acoustic Model (RAM) parabolic-equations model, MONM-RAM, was used to estimate the SELs for low-frequency sources (below 2 kHz) such as an airgun array. For more information on sound propagation model types, please see,
The modeling used a 5,400 in
Four depth regions were classified based on bathymetry: Shallow continental shelf (<60 m); continental shelf (60-150 m); continental slope (150-1,000 m); and deep ocean (>1,000 m). The modeling results show that the largest threshold radii are typically associated with sites in intermediate water depths (250 and 900 m). Low frequencies propagate relatively poorly in shallow water (
We provide this description of the modeling performed for BOEM's PEIS as a general point of reference for the surveys, and also because three of the applicant companies—TGS, CGG, and Western—directly used these results to inform their exposure modeling, rather than performing separate sound field modeling. As described by BOEM (2014a), the modeled array was selected to be representative of the large airgun arrays likely to be used by geophysical exploration companies in the mid- and south Atlantic OCS. Therefore, we use the BOEM (2014a) results as a reasonable proxy for those three companies (please see “Detailed Description of Activities” for further description of the acoustic sources planned for use by these three companies). ION and Spectrum elected to perform separate sound field modeling efforts, and these are described below.
The best available scientific information was considered in conducting marine mammal exposure estimates (the basis for estimating take). Historically, distance sampling methodology (Buckland
At the time the applications were initially developed, the best available information concerning marine mammal densities in the survey area was the U.S. Navy's Navy Operating Area (OPAREA) Density Estimates (NODEs) (DoN, 2007). These habitat-based cetacean density models utilized vessel-based and aerial survey data collected by NMFS from 1998-2005 during broad-scale abundance studies. Modeling methodology is detailed in DoN (2007). A more advanced cetacean density modeling effort, described in Roberts
Roberts
Aerial and shipboard survey data produced by the Atlantic Marine Assessment Program for Protected Species (AMAPPS) program provides an additional source of information regarding marine mammal presence in the survey areas. These surveys represent a collaborative effort between NMFS, BOEM, and the Navy. Although the cetacean density models described above do include survey data from 2010-14, the AMAPPS data for those years was not made available to the model authors. Future model updates will incorporate these data, but currently the AMAPPS data comprise a separate source of information (
Cetacean density predictions provided by the Roberts
We note that, in addition to the models for North Atlantic right whales, Roberts
Here, we provide applicant-specific descriptions of the processes employed to estimate potential exposures of marine mammals to given levels of received sound. The discussions provided here are specific to estimated exposures at or above the criterion for Level B harassment (
This description builds on the description of sound field modeling provided earlier in this section and in Appendix D of BOEM's PEIS. As described previously, 21 distinct acoustic propagation regions were defined. Reflecting seasonal differences in sound velocity profiles, these regions were specific to each season. Using the NODEs data, the average density of each species was then numerically determined for each region. However, the NODEs models do not provide outputs for the extended continental shelf areas seaward of the EEZ; therefore, known density information at the edge of the area modeled by NODEs was extrapolated to the remainder of the study area.
The results of the acoustic modeling exercise (
Species-specific animats were created with programmed behavioral parameters describing dive depth, surfacing and dive durations, swimming speed, course change, and behavioral aversions (
A model run consists of a user-specified number of steps forward in time, in which each animat is moved according to the rules describing its behavior. For each time step of the model run, the received sound levels at each animat (
Animat positions relative to the acoustic source (
As noted previously, the NODEs models (DoN, 2007) provided the best available information at the time of initial development for these applications. Outputs of the cetacean density models described by Roberts
In order to revise the exposure estimates for Spectrum and ION, we first extracted appropriate density estimates from the Roberts
In summary, the original exposure results were obtained using AIM to model source and animat movements, with received SEL for each animat predicted at a 30-second time step. This predicted SEL history was used to determine the maximum SPL (rms or peak) and cSEL for each animat, and the number of exposures exceeding relevant criteria recorded. The number of exposures are summed for all animats to get the number of exposures for each species, with that summed value then scaled by the ratio of real-world density to the model density value. The final scaling value was the ratio of the length of the modeled survey line to the length of survey line in each modeling region. The exposure estimates provided in Spectrum's application were based on the NODEs model outputs. In order to make use of the best available information (
As stated above, Spectrum notified NMFS on June 26, 2018, of a modification to their survey plan. Note that analysis corresponding with Spectrum's original survey plan is retained here, in “Estimated Take.” Please see “Spectrum Survey Plan Modification” for further information and for revised (and authorized) take numbers (Table 17) relating to Spectrum's modified survey plan.
In summary, the original exposure results were obtained using AIM to model source and animat movements, with received SEL for each animat predicted at a 30-second time step. This predicted SEL history was used to determine the maximum SPL (rms or peak) and cSEL for each animat, and the number of exposures exceeding relevant criteria recorded. The number of exposures are summed for all animats to get the number of exposures for each species, with that summed value then scaled by the ratio of real-world density to the model density value. The final scaling value was the ratio of the length of the modeled survey line to the length of survey line in each modeling region. As described above, the exposure estimates provided in ION's application were based on the NODEs model outputs. In order to make use of the best available information (
Regarding marine mammal occurrence, TGS considered both the Roberts
As stated above, we believe the density models described by Roberts
In summary, TGS described the following issues in support of their development of an alternative approach for certain species:
• There are very few sightings of some species despite substantial survey effort;
• The modeling approach extrapolates based on habitat associations and assumes some species' occurrence in areas where they have never been or were rarely documented (despite substantial effort);
• In some cases, uniform density models spread densities of species with small sample sizes across large areas of the EEZ without regard to habitat, and;
• The most recent NOAA shipboard and aerial survey data (
As a result of their general concerns regarding suitability of model outputs for exposure estimation, TGS developed a scheme related to the number of observations in the dataset available to Roberts
As described previously, marine mammal abundance has traditionally been estimated by applying distance sampling methodology (Buckland
Nine species or species groups met TGS' requirement of having at least 60 sightings within the survey area in the dataset available to Roberts
Seven species or species groups met TGS' criterion for conducting exposure modeling, but did not have the recommended 60 sightings in the survey area: Minke whale, fin whale,
TGS initially proposed use of a mitigation source (
Western also initially proposed use of a mitigation source for line turns and transits not exceeding three hours and produced exposure estimates specific to use of the mitigation source. Like TGS, Western's application provided information specific to use of the full-power array versus the mitigation source for the seven species for which the alternative approach was followed, but not for the nine species whose exposure estimates are based on the Roberts
Importantly, in these calculations we took into account the time-area restrictions specified in “Mitigation.” For the year-round closure areas, data (
For sperm whales, we calculated the monthly density within each year-round closure area using the Roberts
For other species, a simpler approach was taken. First, we did not account for any seasonal restrictions, either because sufficient data is not available or because the seasonal restrictions' benefit in protecting species for which they were not specifically designed is unclear. Second, we did not recalculate density estimates specifically within the year-round closures, but instead relied on density estimates derived from the Roberts
All requests for IHAs described herein were received prior to NMFS's original 2016 technical guidance and, therefore, did not reflect consideration of the currently best available information regarding the potential for auditory injury. In our Notice of Proposed IHAs, we described a process by which we estimated expected takes by Level A harassment in reflection of both NMFS's technical guidance and the specific survey characteristics (
In our Notice of Proposed IHAs, we acknowledged that the Level A exposure estimates provided therein—based on adjustments made to the results provided in BOEM's PEIS—were a rough approximation of potential exposures, with multiple limitations in reflection of the available information or lack thereof. For example, specific trackline locations planned by the applicant companies may differ somewhat from those considered in BOEM's PEIS, although it is likely that all portions of the survey area are considered in the PEIS analysis. More importantly, the PEIS exposure estimates were based on outputs of the NODEs models (DoN, 2007) available for BOEM's analysis versus the density models subsequently provided by Roberts
Specifically, we determined that there is a low likelihood of take by Level A harassment for any species, and that this likelihood is primarily influenced by the specific hearing group. For mid- and high-frequency cetaceans, potential auditory injury would be expected to occur on the basis of instantaneous exposure to peak pressure output from an airgun array, leading to a relatively straightforward consideration of the Level A harassment zone as an areal subset of the Level B harassment zone and, therefore, takes by Level A harassment as a subset of the previously enumerated takes by Level B harassment. However, for mid-frequency cetaceans, additional considerations of the small calculated Level A harassment zone size in conjunction with the properties of sound fields produced by arrays in the near field versus far field lead to a logical conclusion that Level A harassment is so unlikely for species in this hearing group as to be discountable. For low-frequency cetaceans, consideration of the likely potential for auditory injury is not straightforward, as such exposure would occur on the basis of the accumulation of energy output over time by an airgun array. Additional factors, such as the relative motion of source and receiver and the implementation of mitigation lead us to conclude that a quantitative evaluation of such potential, in light of the available information, does not make sense. Our evaluations for all three hearing groups are detailed below.
As part of the exposure estimation process described in our Notice of Proposed IHAs, we calculated expected injury zones specific to each applicant's array for each hearing group relative to injury criteria for both the cSEL and peak pressure metrics. The results of this process, shown in Table 5, remain valid and were used to inform the revised estimates of take by Level A harassment described herein. For the cSEL metric, in order to incorporate the technical guidance's weighting functions over an array's full acoustic band, we obtained unweighted spectrum data (modeled in 1 Hz bands) for a reasonably equivalent acoustic source (
When NMFS (2016) was published, in recognition of the fact that appropriate
Using the User Spreadsheet's “safe distance” methodology for mobile sources (described by Sivle
Based on our analysis of expected injury zones (Table 5), accumulation of energy is considered to be the predominant source of potential auditory injury for low-frequency cetaceans in all cases, while instantaneous exposure to peak pressure received levels is considered to be the predominant source of potential injury for both mid- and high-frequency cetaceans in all cases. Please note that discussion in this section and estimates of take by Level A harassment provided in Table 6 for Spectrum relate to Spectrum's original survey plan. Please see “Spectrum Survey Plan Modification” for additional discussion of Level A harassment reflecting Spectrum's modified survey plan.
In order to provide quantitative support for this theoretical argument, we calculated expected maximum distances at which the near-field would transition to the far-field (Table 5). For a specific array one can estimate the distance at which the near-field transitions to the far-field by:
To determine the closest distance to the arrays at which the source level predictions in Table 1 are valid (
If the largest distance to the peak sound pressure level threshold was equal to or less than the longest dimension of the array (
Within the near-field, in order to explicitly evaluate the likelihood of exceeding any particular acoustic threshold, one would need to consider the exact position of the animal, its relationship to individual array elements, and how the individual acoustic sources propagate and their acoustic fields interact. Given that within the near-field and dimensions of the array source levels would be below those in Table 1, we believe exceedance of the peak pressure threshold would only be possible under highly unlikely circumstances.
Therefore, we expect the potential for Level A harassment of mid-frequency cetaceans to be de minimis, even before the likely moderating effects of aversion and/or other compensatory behaviors (
Therefore, while we do believe that some limited Level A harassment of low-frequency cetaceans is likely unavoidable, despite the required mitigation measures (including ramp-up, shutdown upon detection within a 500-m exclusion zone for most mysticetes and shutdown upon detection of North Atlantic right whales within an expanded 1.5-km exclusion zone; see “Mitigation”), we do not believe that the process followed in estimating potential Level A harassment in our Notice of Proposed IHAs is the most appropriate method. Further, upon re-evaluation of the results of that process, we do not have confidence in those results, which suggest that Level A harassment is likely for humpback whales but not for fin whales. Upon reconsideration of the available information, we note that the original information from BOEM's PEIS includes prediction of zero incidents of Level A harassment for fin whales while predicting non-zero results for all other mysticete species (see Table E-4 in BOEM (2014a))—a puzzling result that underlies the lack of predicted Level A harassment for fin whales in our Notice of Proposed IHAs. Therefore, we apply a simplified approach intended to acknowledge that there would likely be some minimal, yet difficult to accurately quantify, Level A harassment of certain mysticete species. As a result of the planned mitigation, including a seasonal restriction (or alternate methods of equivalent impact avoidance) and an expanded right whale exclusion zone of 1.5 km (intended to practicably avoid or minimize interaction with North Atlantic right whales; see “Mitigation”), we do not expect any reasonable potential for Level A harassment of North Atlantic right whales (consistent with the predictions of our original analysis). Any likely potential for the occurrence of Level A harassment is further minimized by likely aversion. For example, Ellison
In order to account for the minimal likelihood of Level A harassment occurring for low-frequency cetaceans, we assume that in most cases during the course of conducting the survey at least one group of each species could incur auditory injury for all applicants other than Western. (As shown in Table 5, the calculated injury zone for Western is only 80 m. It is extremely unlikely that injury could occur given such a small
For applicants other than Western, we consider both the size of the calculated potential injury zone and the total amount of planned survey effort. Spectrum, CGG, and ION have larger calculated potential injury zones,
In summary, we conclude there is sufficiently reasonable potential for Level A harassment (even considering the likely effects of aversion) that it is appropriate to authorize take by Level A harassment for a minimum of one average size group of each relevant species (
Average group size was determined by considering observational data from AMAPPS survey effort (
We recognize that the Level A exposure estimates provided here are a rough approximation of actual exposures; however, our intention is to use the information available to us, in reflection of available science regarding the potential for auditory injury, to acknowledge the potential for such outcomes in a way that is a reasonable approximation. Our revised analysis of potential Level A harassment, as reflected in Table 6, accomplishes this goal. As described in our Notice of Proposed IHAs, we note here that four of the five applicant companies (excepting Spectrum) declined to request authorization of take by Level A harassment. These four applicants claim, in summary, that injurious exposures will not occur largely due to the effectiveness of planned mitigation. While we agree that Level A harassment is unlikely for mid-frequency cetaceans, and that only limited injurious exposure is likely for low-frequency cetaceans, we do not find this assertion persuasive in all cases. Therefore, we are authorizing limited take by Level A harassment, as displayed in Table 6.
Certain species potentially present in the survey areas are expected to be encountered only extremely rarely, if at all. Although Roberts
Table 6 provides the authorized numbers of take by Level A and Level B harassment for each applicant. The numbers of authorized take reflect the expected exposure numbers provided in Table 10 of our Notice of Proposed IHAs, as derived by various methods described above, and additionally include take numbers for rare species that reflect the approach described above for average group size. In summary, the exposure estimates provided in Table 10 of our Notice of Proposed IHAs have been changed in reflection of the following: (1) Revised exposure estimates for North Atlantic right whales using Roberts
As described previously, for most species these estimated exposure levels apply to a generic western North Atlantic stock defined by NMFS for management purposes. For the humpback and sei whale, any takes are assumed to occur to individuals of the species occurring in the specific geographic region (which may or may not be individuals from the Gulf of Maine and Nova Scotia stocks, respectively). For bottlenose dolphins, NMFS defines an offshore stock and multiple coastal stocks of dolphins, and we are not able to quantitatively determine the extent to which the estimated exposures may accrue to the oceanic versus various coastal stocks. However, because of the spatial distribution of planned survey effort and our prescribed mitigation, we assume that almost all incidents of take for bottlenose dolphins would accrue to the offshore stock.
Under section 101(a)(5)(D) of the MMPA, NMFS must set forth the “permissible methods of taking pursuant to such activity, and other means of effecting the least practicable impact on such species or stock and its habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance, and on the availability of such species or stock for taking for certain subsistence uses.” (While section 101(a)(5)(D) refers to “least practicable impact,” we hereafter use the term “least practicable adverse impact,” the term as it appears in section 101(a)(5)(A). Given the provision in which the language appears, and its similarity to the parallel provision in section 101(a)(5)(A), we believe that “least practicable impact” in section 101(a)(5)(D) similarly is referring to the requirement to prescribe the means of effecting the least practicable
In
Before NMFS can issue an incidental take authorization under sections 101(a)(5)(A) or (D) of the MMPA, it must make a finding that the taking will have a “negligible impact” on the affected “species or stocks” of marine mammals. NMFS's and U.S. Fish and Wildlife Service's implementing regulations for section 101(a)(5) both define “negligible impact” as an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival (50 CFR 216.103 and 50 CFR 18.27(c)). Recruitment (
Not every population-level impact violates the negligible impact requirement. The negligible impact standard does not require a finding that the anticipated take will have “no effect” on population numbers or growth rates. The statutory standard does not require that the same recovery rate be maintained, rather that no significant effect on annual rates of recruitment or survival occurs. The key factor is the significance of the level of impact on rates of recruitment or survival. See 54 FR 40338, 40341-42 (September 29, 1989).
While some level of impact on population numbers or growth rates of a species or stock may occur and still satisfy the negligible impact requirement—even without consideration of mitigation—the least practicable adverse impact provision separately requires NMFS to prescribe means of effecting the least practicable adverse impact on such species or stock and its habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance. 50 CFR 216.102(b). These are typically identified as mitigation measures.
The negligible impact and least practicable adverse impact standards in the MMPA both call for evaluation at the level of the “species or stock.” The MMPA does not define the term “species.” However, Merriam-Webster Dictionary defines “species” to include “related organisms or
This interpretation is consistent with Congress's statutory findings for enacting the MMPA, nearly all of which are most applicable at the species or stock (
Recognizing this common focus of the least practicable adverse impact and negligible impact provisions on the “species or stock” does not mean we conflate the two standards; despite some common statutory language, we recognize the two provisions are different and have different functions. First, a negligible impact finding is required before NMFS can issue an incidental take authorization. Although it is acceptable to use the mitigation measures to reach a negligible impact finding (see 50 CFR 216.104(c)), no amount of mitigation can enable NMFS
Section 101(a)(5)(D)(ii)(I) (like section 101(a)(5)(A)(i)(II)) requires NMFS to issue, in conjunction with its authorization, binding—and enforceable—restrictions setting forth how the activity must be conducted, thus ensuring the activity has the “least practicable adverse impact” on the affected species or stocks. In situations where mitigation is specifically needed to reach a negligible impact determination, section 101(a)(5)(D)(ii)(I) also provides a mechanism for ensuring compliance with the “negligible impact” requirement. Finally, we reiterate that the least practicable adverse impact standard also requires consideration of measures for marine mammal habitat, with particular attention to rookeries, mating grounds, and other areas of similar significance, and for subsistence impacts; whereas the negligible impact standard is concerned solely with conclusions about the impact of an activity on annual rates of recruitment and survival.
In
We have carefully reviewed and considered the Ninth Circuit's opinion in
Given the
Our evaluation of potential mitigation measures includes consideration of two primary factors:
(1) The manner in which, and the degree to which, implementation of the potential measure(s) is expected to reduce adverse impacts to marine mammal species or stocks, their habitat, and their availability for subsistence uses (when relevant). This analysis considers such things as the nature of the potential adverse impact (such as likelihood, scope, and range), the likelihood that the measure will be effective if implemented, and the likelihood of successful implementation.
(2) The practicability of the measure for applicant implementation. Practicability of implementation may consider such things as cost, impact on operations, personnel safety, and practicality of implementation.
While the language of the least practicable adverse impact standard calls for minimizing impacts to affected species or stocks, we recognize that the reduction of impacts to those species or stocks accrues through the application of mitigation measures that limit impacts to individual animals. Accordingly, NMFS's analysis focuses on measures designed to avoid or minimize impacts on marine mammals from activities that are likely to increase the probability or severity of population-level effects.
While complete information on impacts to species or stocks from a specified activity is not available for every activity type, and additional information would help NMFS better understand how specific disturbance events affect the fitness of individuals of certain species, there have been significant improvements in understanding the process by which disturbance effects are translated to the population. With recent scientific advancements (both marine mammal energetic research and the development of energetic frameworks), the relative likelihood or degree of impacts on species or stocks may typically be predicted given a detailed understanding of the activity, the environment, and the affected species or stocks. This same information is used in the development of mitigation measures and helps us understand how mitigation measures contribute to lessening effects to species or stocks. We also acknowledge that there is always the potential that new information, or a new recommendation that we had not previously considered, becomes available and necessitates re-evaluation of mitigation measures (which may be addressed through adaptive management) to see if further reductions of population impacts are possible and practicable.
In the evaluation of specific measures, the details of the specified activity will necessarily inform each of the two primary factors discussed above (expected reduction of impacts and practicability), and will be carefully considered to determine the types of mitigation that are appropriate under the least practicable adverse impact standard. Analysis of how a potential mitigation measure may reduce adverse impacts on a marine mammal stock or species and practicability of implementation are not issues that can be meaningfully evaluated through a yes/no lens. The manner in which, and the degree to which, implementation of a measure is expected to reduce impacts, as well as its practicability, can vary widely. For example, a time-area
The emphasis given to a measure's ability to reduce the impacts on a species or stock considers the degree, likelihood, and context of the anticipated reduction of impacts to individuals as well as the status of the species or stock.
The ultimate impact on any individual from a disturbance event (which informs the likelihood of adverse species- or stock-level effects) is dependent on the circumstances and associated contextual factors, such as duration of exposure to stressors. Though any required mitigation needs to be evaluated in the context of the specific activity and the species or stocks affected, measures with the following types of goals are expected to reduce the likelihood or severity of adverse species- or stock-level impacts: Avoiding or minimizing injury or mortality; limiting interruption of known feeding, breeding, mother/calf, or resting behaviors; minimizing the abandonment of important habitat (temporally and spatially); minimizing the number of individuals subjected to these types of disruptions; and limiting degradation of habitat. Mitigating these types of effects is intended to reduce the likelihood that the activity will result in energetic or other types of impacts that are more likely to result in reduced reproductive success or survivorship. It is also important to consider the degree of impacts that are expected in the absence of mitigation in order to assess the added value of any potential measures. Finally, because the least practicable adverse impact standard gives NMFS the discretion to weigh a variety of factors when determining what should be included as appropriate mitigation measures and because the focus is on reducing impacts at the species or stock level, it does not compel mitigation for every kind of individual take, even when practicable for implementation by the applicant.
The status of the species or stock is also relevant in evaluating the appropriateness of potential mitigation measures in the context of least practicable adverse impact. The following are examples of factors that may (either alone, or in combination) result in greater emphasis on the importance of a mitigation measure in reducing impacts on a species or stock: The stock is known to be decreasing or status is unknown, but believed to be declining; the known annual mortality (from any source) is approaching or exceeding the PBR level; the affected species or stock is a small, resident population; or the stock is involved in a UME or has other known vulnerabilities.
Habitat mitigation, particularly as it relates to rookeries, mating grounds, and areas of similar significance, is also relevant to achieving the standard and can include measures such as reducing impacts of the activity on known prey utilized in the activity area or reducing impacts on physical habitat. As with species- or stock-related mitigation, the emphasis given to a measure's ability to reduce impacts on a species or stock's habitat considers the degree, likelihood, and context of the anticipated reduction of impacts to habitat. Because habitat value is informed by marine mammal presence and use, in some cases there may be overlap in measures for the species or stock and for use of habitat.
We consider available information indicating the likelihood of any measure to accomplish its objective. If evidence shows that a measure has not typically been effective or successful, then either that measure should be modified or the potential value of the measure to reduce effects is lowered.
Factors considered may include those such as cost, impact on operations, personnel safety, and practicality of implementation.
In carrying out the MMPA's mandate for these five IHAs, we apply the previously described context-specific balance between the manner in which and the degree to which measures are expected to reduce impacts to the affected species or stocks and their habitat and practicability for the applicant. The effects of concern (
In order to satisfy the MMPA's least practicable adverse impact standard, we evaluated a suite of basic mitigation protocols that are required regardless of the status of a stock. Additional or enhanced protections are required for species whose stocks are in poor health and/or are subject to some significant additional stressor that lessens that stock's ability to weather the effects of the specified activities without worsening its status. We reviewed the applicants' proposals, the requirements specified in BOEM's PEIS, seismic mitigation protocols required or recommended elsewhere (
First, we summarize notable changes made to the mitigation requirements as a result of review of public comments and then describe mitigation prescribed in the issued IHAs. For additional detail regarding mitigation considerations, including expected efficacy and/or practicability, or descriptions of mitigation considered but not required, please see our Notice of Proposed IHAs.
Here we provide a single description of required mitigation measures, as we require the same measures of all applicants.
Here we summarize substantive changes to mitigation requirements from our Notice of Proposed IHAs. All changes were made on the basis of review of public comments received, including from applicants, and/or review of new information.
• We spatially expanded the proposed time-area restriction for North Atlantic right whales. Our proposed restriction area was comprised of an area containing three distinct areas: (1) A 20-nmi coastal strip throughout the specific geographic region; (2) designated Seasonal Management Areas; and (3) designated critical habitat. This combined area was then buffered by 10 km, resulting in an approximate 47-km standoff distance. We received numerous public comments expressing concern regarding the adequacy of this measure and, more generally, regarding the status of the North Atlantic right whale. Also, since publication of the Notice of Proposed IHAs, the status of this population has worsened, including declaration of an ongoing UME. Given this, we considered newly available information (
However, in lieu of this requirement, applicants may alternatively develop and submit a monitoring and mitigation plan for NMFS's approval that would be sufficient to achieve comparable protection for North Atlantic right whales. If approved, applicants would be required to maintain a minimum coastal standoff distance of 47 km from November through April while operating in adherence with the approved plan from 47 through 80 km offshore. (Note that the 80 km distance is assumed to represent to a reasonable extent right whale occurrence on the migratory pathway; therefore, under an approved plan the 10-km buffer would not be relevant.)
• We shifted the timing of the “Hatteras and North” time-area restriction (Area #4 in Figure 4 and Table 7; described as Area #5 in our Notice of Proposed IHAs), developed primarily to benefit beaked whales, sperm whales, and pilot whales, but also to provide seasonal protection to a notable biodiversity hotspot. The timing of this restriction, proposed as July through September (Roberts
• We eliminated the proposed (former) Area #1, which was delineated in an effort to reduce likely acoustic exposures for the species for three applicants only, as opposed to a more meaningful reduction of impacts in important habitat and/or for species expected to be more sensitive to disturbance from airgun noise. As was stated in our Notice of Proposed IHAs, “Although there are no relevant considerations with regard to population context or specific stressors that lead us to develop mitigation focused on Atlantic spotted dolphins [ . . . ] we believe it appropriate to delineate a time-area restriction for the sole purpose of reducing likely acoustic exposures for the species [for three companies].” We received comments on this proposed restriction from several commenters who provided compelling rationale to eliminate the measure. As was stated in our Notice of Proposed IHAs, Atlantic spotted dolphins display a bifurcated distribution, with a portion of the stock inhabiting the continental shelf south of Cape Hatteras inside the 200-m isobath and a portion of the stock off the shelf and north of the Gulf Stream (north of Cape Hatteras). Our proposed restriction—located in the southern, on-shelf portion of the range, which we believe to be more predictable habitat for the species—was not likely to have the intended effect, as a seasonal restriction would not necessarily reduce acoustic exposures for a species that is not known to migrate in and out of the restriction area, and because a relatively small portion of overall survey effort was planned for this area. Implementation of this restriction would also likely have meaningful practicability implications for applicants with survey lines in the area, as they would need to plan for both the seasonal restriction for spotted dolphin (proposed as July through September) as well as the right whale restriction, which overlaps the proposed spotted dolphin area and would be in effect from November through April. Therefore, the proposal would not likely provide commensurate benefit to the species to offset these concerns.
• In our Notice of Proposed IHAs, we proposed an exception to the general shutdown requirements for certain species of dolphins in certain circumstances. Specifically, we proposed that the exception to the shutdown requirement would apply if the animals are traveling, including approaching the vessel. Our rationale in proposing this specific exception was to avoid the perceived subjective decision-
• We proposed a number of expanded shutdown requirements on the basis of detections of certain species deemed particularly sensitive (
• We eliminated a proposed requirement for shutdowns upon observation of a diving sperm whale at any distance centered on the forward track of the source vessel. We received several comments indicating that this proposed requirement was unclear in terms of how it was to be implemented, and that the benefit to the species was poorly demonstrated. We agree with these comments.
• We eliminated a proposed requirement for shutdowns upon detection of fin whales at any distance (proposed for TGS only). As stated in our Notice of Proposed IHAs, this requirement was proposed only on the basis of a high predicted amount of exposures. Following review of this requirement, we recognize that it would not be effective in achieving the stated goal of reducing the overall amount of takes, as any observed fin whale would still be within the Level B harassment zone and thus taken. Therefore, this measure serves no meaningful purpose while imposing an additional practicability burden on TGS.
• We clarify that the proposed requirement to shut down upon observation of an aggregation of marine mammals applies only to large whales (
• We require that at least two acoustic PSOs have prior experience (minimum 90 days) working in that role, on the basis of discussion with experts who emphasized the critical importance of experience for acoustic PSOs (
Below, we describe mitigation requirements in detail.
Monitoring by independent, dedicated, trained marine mammal observers is required. Note that, although we discuss requirements related only to observation of marine mammals, we hereafter use the generic term “protected species observer” (PSO). Independent observers are employed by a third-party observer provider; vessel crew may not serve as PSOs. Dedicated observers are those who have no tasks other than to conduct observational effort, record observational data, and communicate with and instruct the survey operator (
NMFS expects to provide informal approval for specific training courses as needed to approve PSO staffing plans. NMFS does not plan to formally administer any training program or to sanction any specific provider, but will approve courses that meet the curriculum and trainer requirements specified herein (see “Monitoring and Reporting”). We expect to provide such approvals in context of the need to ensure that PSOs have the necessary training to carry out their duties competently while also approving applicant staffing plans quickly. In order for PSOs to be approved, NMFS must review and approve PSO resumes accompanied by a relevant training course information packet that includes
During survey operations (
All source vessels must carry a minimum of one experienced visual PSO, who shall be designated as the lead PSO, coordinate duty schedules and roles, and serve as primary point of contact for the operator. However, while it is desirable for all PSOs to be qualified through experience, we are also mindful of the need to expand the workforce by allowing opportunity for newly trained PSOs to gain experience. Therefore, the lead PSO shall devise the duty schedule such that experienced PSOs are on duty with trained PSOs (
With regard to specific observational protocols, we largely follow those described in Appendix C of BOEM's PEIS (BOEM, 2014a). The lead PSO shall determine the most appropriate observation posts that will not interfere with navigation or operation of the vessel while affording an optimal, elevated view of the sea surface; these should be the highest elevation available on each vessel, with the maximum viewable range from the bow to 90 degrees to port or starboard of the vessel. PSOs shall coordinate to ensure 360° visual coverage around the vessel, and shall conduct visual observations using binoculars and the naked eye while free from distractions and in a consistent, systematic, and diligent manner. All source vessels must be equipped with pedestal-mounted “bigeye” binoculars that will be available for PSO use. Within these broad outlines, the lead PSO and PSO team will have discretion to determine the most appropriate vessel- and survey-specific system for implementing effective marine mammal observational effort. Any observations of marine mammals by crew members aboard any vessel associated with the survey, including chase vessels, should be relayed to the source vessel and to the PSO team.
All source vessels must use a towed PAM system for potential detection of marine mammals. The system must be monitored at all times during use of the acoustic source, and acoustic monitoring must begin at least 30 minutes prior to ramp-up. PAM operators must be independent, and all source vessels shall carry a minimum of two experienced PAM operators. PAM operators shall communicate all detections to visual PSOs, when visual PSOs are on duty, including any determination by the PSO regarding species identification, distance and bearing and the degree of confidence in the determination. Further detail regarding PAM system requirements may be found in the “Monitoring and Reporting” section, later in this document. The effectiveness of PAM depends to a certain extent on the equipment and methods used and competency of the PAM operator, but no established standards are currently in place.
Visual monitoring must begin at least 30 minutes prior to ramp-up (described below) and must continue until one hour after use of the acoustic source ceases or until 30 minutes past sunset. If any marine mammal is observed at any distance from the vessel, a PSO would record the observation and monitor the animal's position (including latitude/longitude of the vessel and relative bearing and estimated distance to the animal) until the animal dives or moves out of visual range of the observer. A PSO would continue to observe the area to watch for the animal to resurface or for additional animals that may surface in the area. Visual PSOs shall communicate all observations to PAM operators, including any determination by the PSO regarding species identification, distance, and bearing and the degree of confidence in the determination.
As noted previously, all source vessels must carry a minimum of one experienced visual PSO and two experienced PAM operators. The observer designated as lead PSO (including the full team of visual PSOs and PAM operators) must have experience as a visual PSO. The applicant may determine how many additional PSOs are required to adequately fulfill the requirements specified here. To summarize, these requirements are: (1) 24-hour acoustic monitoring during use of the acoustic source; (2) visual monitoring during use of the acoustic source by two PSOs during all daylight hours, with one visual PSO on-duty during nighttime ramp-ups; (3) maximum of two consecutive hours on watch followed by a minimum of one hour off watch for visual PSOs and a maximum of four consecutive hours on watch followed by a minimum of two consecutive hours off watch for PAM operators; and (4) maximum of 12 hours of observational effort per 24-hour period for any PSO, regardless of duties.
• Daylight hours and sea state is less than or equal to Beaufort sea state (BSS) 4;
• No marine mammals (excluding delphinids; see below) detected solely by PAM in the exclusion zone (see below) in the previous two hours;
• NMFS is notified via email as soon as practicable with the time and location in which operations began without an active PAM system; and
• Operations with an active acoustic source, but without an operating PAM system, do not exceed a cumulative total of four hours in any 24-hour period.
An exclusion zone is a defined area within which occurrence of a marine mammal triggers mitigation action intended to reduce potential for certain outcomes,
Ramp-up of an acoustic source is intended to provide a gradual increase in sound levels, enabling animals to move away from the source if the signal is sufficiently aversive prior to its reaching full intensity. We infer on the basis of behavioral avoidance studies and observations that this measure results in some reduced potential for auditory injury and/or more severe behavioral reactions. Although this measure is not proven and some arguments have been made that use of ramp-up may not have the desired effect of aversion (which is itself a potentially negative impact but assumed to be better than the alternative), ramp-up remains a relatively low-cost, common-sense component of standard mitigation for airgun surveys. Ramp-up is most likely to be effective for more sensitive species (
The ramp-up procedure involves a step-wise increase in the number of airguns firing and total array volume until all operational airguns are activated and the full volume is achieved. Ramp-up is required at all times as part of the activation of the acoustic source (including source tests; see “Miscellaneous Protocols” for more detail) and may occur at times of poor visibility, assuming appropriate acoustic monitoring with no detections in the 30 minutes prior to beginning ramp-up. Acoustic source activation should only occur at night where operational planning cannot reasonably avoid such circumstances. For example, a nighttime initial ramp-up following port departure is reasonably avoidable and may not occur. Ramp-up may occur at night following acoustic source deactivation due to line turn or mechanical difficulty. The operator must notify a designated PSO of the planned start of ramp-up as agreed-upon with the lead PSO; the notification time should be at least 60 minutes prior to the planned ramp-up. A designated PSO must be notified again immediately prior to initiating ramp-up procedures and the operator must receive confirmation from the PSO to proceed.
Ramp-up procedures follow the recommendations of IAGC (2015). Ramp-up would begin by activating a single airgun (
PSOs must monitor a 1,000-m zone (or to the distance visible if less than 1,000 m) for a minimum of 30 minutes prior to ramp-up (
The PSOs must establish a minimum exclusion zone with a 500-m radius as a perimeter around the outer extent of the airgun array (rather than being delineated around the center of the array or the vessel itself). If a marine mammal (other than the small delphinid species discussed below) appears within or enters this zone, the acoustic source must be shut down (
The 500-m radial distance of the standard exclusion zone is expected to contain sound levels exceeding peak pressure injury criteria for all hearing groups other than, potentially, high-frequency cetaceans, while also
As discussed in our Notice of Proposed IHAs, use of monitoring and shutdown measures within defined exclusion zone distances is inherently an essentially instantaneous proposition—a rule or set of rules that requires mitigation action upon detection of an animal. This indicates that defining an exclusion zone on the basis of cSEL thresholds, which require that an animal accumulate some level of sound energy exposure over some period of time (
Cumulative SEL thresholds are more relevant for purposes of modeling the potential for auditory injury than they are for dictating real-time mitigation, though they can be informative (especially in a relative sense). We recognize the importance of the accumulation of sound energy to an understanding of the potential for auditory injury and that it is likely that, at least for low-frequency cetaceans, some potential auditory injury is likely impossible to fully avoid and should be considered for authorization.
Considering both the dual-metric thresholds described previously (and shown in Table 3) and hearing group-specific marine mammal auditory weighting functions in the context of the airgun sources considered here, auditory injury zones indicated by the peak pressure metric are expected to be predominant for both mid- and high-frequency cetaceans, while zones indicated by cSEL criteria are expected to be predominant for low-frequency cetaceans. Assuming source levels provided by the applicants and indicated in Table 1 and spherical spreading propagation, distances for exceedance of group-specific peak injury thresholds were calculated and are shown in Table 5.
Consideration of auditory injury zones based on cSEL criteria are dependent on the animal's generalized hearing range and how that overlaps with the frequencies produced by the sound source of interest in relation to marine mammal auditory weighting functions (NMFS, 2018). As noted above, these are expected to be predominant for low-frequency cetaceans because their most susceptible hearing range overlaps the low frequencies produced by airguns, while the modeling indicates that zones based on peak pressure criteria dominate for mid- and high-frequency cetaceans. As described in detail in our Notice of Proposed IHAs, we obtained unweighted spectrum data (modeled in 1 Hz bands) for a reasonably equivalent acoustic source (
Therefore, our 500-m exclusion zone contains the entirety of any potential injury zone for mid-frequency cetaceans (realistically, there is no such zone, as discussed above in “Estimated Take”), while the zones within which injury could occur may be larger for high-frequency cetaceans (on the basis of peak pressure and depending on the specific array) and for low-frequency cetaceans (on the basis of cumulative sound exposure). Only three species of high-frequency cetacean could occur in the planned survey areas: The harbor porpoise and two species of the Family Kogiidae. Harbor porpoise are expected to occur rarely and only in the northern portion of the survey area. However, we require an extended shutdown measure for
In summary, our goal in prescribing a standard exclusion zone distance is to (1) encompass zones for most species within which auditory injury could occur on the basis of instantaneous exposure; (2) provide protection from the potential for more severe behavioral reactions (
The best available scientific evidence indicates that auditory injury as a result of airgun sources is extremely unlikely for mid-frequency cetaceans, primarily due to a relative lack of sensitivity and susceptibility to noise-induced hearing loss at the frequency range output by airguns (
We caution that, while dolphins are observed voluntarily approaching source vessels (
Additionally, increased shutdowns resulting from such a measure would require source vessels to revisit the missed track line to reacquire data, resulting in an overall increase in the total sound energy input to the marine environment and an increase in the total duration over which the survey is active in a given area. Therefore, the removal of such measures for small delphinids is warranted in consideration of the available information regarding the effectiveness of such measures in mitigating impacts to small delphinids and the practicability of such measures.
Although other mid-frequency hearing specialists (
At the same time, large delphinids are much less likely to approach vessels. Therefore, a shutdown requirement for large delphinids would not have similar impacts as a small delphinid shutdown in terms of either practicability for the applicant or corollary increase in sound energy output and time on the water.
We determined an appropriate distance on the basis of available information regarding detection functions for relevant species, but note that, while based on quantitative data, the distance is an approximate limit that is merely intended to encompass the region within which we would expect a relatively high degree of success in sighting certain species while also improving PSO efficacy by removing the potential that a PSO might interpret these requirements as demanding a focus on areas further from the vessel. For each modeled taxon, Roberts
Comments disagreeing with our proposal to require shutdowns upon certain detections at any distance also suggested that the measures did not have commensurate benefit for the relevant species. However, it must be noted that any such observations would still be within range of where behavioral disturbance of some form and degree would be likely to occur (Table 4). While visual PSOs should focus observational effort within the vicinity of the acoustic source and vessel, this does not preclude them from periodic scanning of the remainder of the visible area or from noting observations at greater distances, and there is no reason to believe that such periodic scans by professional PSOs would hamper the ability to maintain observation of areas closer to the source and vessel. Circumstances justifying shutdown at extended distance (
• Upon detection of a right whale. Recent data concerning the North Atlantic right whale, one of the most endangered whale species (Best
• Upon visual observation of a large whale (
• Upon detection of a beaked whale or
• Upon visual observation of an aggregation (defined as six or more animals) of large whales of any species. Under these circumstances, we assume that the animals are engaged in some important behavior (
Upon implementation of shutdown, the source may be reactivated after the animal(s) has been observed exiting the exclusion zone or following a 30-minute clearance period with no further detection of the animal(s). For harbor porpoise—the only small odontocete for which shutdown is required—this clearance period is limited to 15 minutes.
If the acoustic source is shut down for reasons other than mitigation (
Power-down, as defined here, refers to reducing the array to a single element as a substitute for full shutdown. Use of a single airgun as a “mitigation source,”
The acoustic source must be deactivated when not acquiring data or preparing to acquire data, except as necessary for testing. Unnecessary use of the acoustic source should be avoided. Firing of the acoustic source at any volume above the stated production volume is not authorized for these IHAs; the operator must provide information to the lead PSO at regular intervals confirming the firing volume. Notified operational capacity (not including redundant backup airguns) must not be exceeded during the survey, except where unavoidable for source testing and calibration purposes. All occasions where activated source volume exceeds notified operational capacity must be noticed to the PSO(s) on duty and fully documented for reporting. The lead PSO must be granted access to relevant instrumentation documenting acoustic source power and/or operational volume.
Testing of the acoustic source involving all elements requires normal mitigation protocols (
Below we provide discussion of various time-area restrictions. Because the purpose of these areas is to reduce the likelihood of exposing animals within the designated areas to noise from airgun surveys that is likely to result in harassment, we require that source vessels maintain minimum standoff distances (
Specifically, we became aware of an effort by Roberts
While we acknowledge that some whales may be present at distances further offshore during the November through April restriction—though whales are not likely to occur in waters deeper than 1,500 m—and that there may be whales present during months outside the restriction (
However, as discussed above, in lieu of this requirement, applicants may alternatively develop and submit a monitoring and mitigation plan for NMFS's approval that would be sufficient to achieve comparable protection for North Atlantic right whales. If approved, applicants would be required to maintain a minimum coastal standoff distance of 47 km from November through April while operating in adherence with the approved plan from 47 through 80 km offshore. (Note that the 80 km distance is assumed to represent to a reasonable extent right whale occurrence on the migratory pathway; therefore, under an approved plan the 10-km buffer would not be relevant.)
DMAs are associated with a scheme established by the final rule for vessel speed limits (73 FR 60173; October 10, 2008; extended by 78 FR 73726; December 9, 2013) to reduce the risk of ship strike for right whales. In association with those regulations, NMFS established a program whereby vessels are requested, but not required, to abide by speed restrictions or avoid locations when certain aggregations of right whales are detected outside SMAs. Generally, the DMA construct is intended to acknowledge that right whales can occur outside of areas where they predictably and consistently occur due to,
NMFS issues announcements of DMAs to mariners via its customary maritime communication media (
The restrictions described here are primarily targeted towards protection of sperm whales, beaked whales (
In some cases, we expect substantial subsidiary benefit for additional species that also find preferred habitat in the designated area of restriction. In particular, Area #4 (Figure 4), although delineated in order to specifically provide an area of anticipated benefit to beaked whales, sperm whales, and pilot whales, is expected to host a diverse cetacean fauna (
We described our rationale for and development of these time-area restrictions in detail in our Notice of Proposed IHAs; please see that document for more detail. Literature newly available since publication of the Notice of Proposed IHAs provides additional support for the importance of these areas. For example, McLellan
Please note that, following review of public comments, former Area #1 was eliminated from consideration (discussed in greater detail under “Comments and Responses”). Therefore, numbering of areas described here has shifted down by one as compared with the discussion presented in our Notice of Proposed IHAs,
A core abundance area is the smallest area that represents a given percentage of abundance. As described in our Notice of Proposed IHAs, we created a range of core abundance areas for each species of interest and determined that in most cases the 25 percent core abundance area best balanced adequate protection for the target species with concerns regarding practicability for applicants. The larger the percentage of abundance captured, the larger the area. However, Area #4 was designed as a conglomerate by merging areas indicated to be important through the core abundance analysis and available scientific literature for beaked whales, pilot whales, and sperm whales. In particular, for sperm whales (which are predicted to be broadly distributed on the slope throughout the year), we included an area predicted to consistently host higher relative densities in all months (corresponding with the five percent core abundance threshold). We assessed different levels of core abundance in order to define a relatively restricted area of preferred habitat across all seasons. This area in the vicinity of the shelf break to the north of Cape Hatteras (which forms the
In summary, we require the following time-area restrictions:
• In order to protect coastal bottlenose dolphins, a 30-km coastal strip (20 km plus 10 km buffer) would be closed to use of the acoustic source year-round;
• In order to protect the North Atlantic right whale, a 90-km coastal strip (80 km plus 10 km buffer) would be closed to use of the acoustic source from November through April (Figure 3) (or comparable protection would be provided through implementation of a NMFS-approved mitigation and monitoring plan at distances between 47-80 km offshore). Dynamic management areas (buffered by 10 km) are also closed to use of the acoustic source when in effect;
The 10-km buffer is built into the areas defined below and in Table 7. Therefore, we do not separately mention the addition of the buffer.
• Deepwater canyon areas. Areas #1-3 (Figure 4) are defined in Table 7 and will be closed to use of the acoustic source year-round. Although they may be protective of additional species (
• Shelf break off Cape Hatteras and to the north (“Hatteras and North”), including slope waters around “The Point.” Area #4 is defined in Table 7 and will be closed to use of the acoustic source from January through March. Although this closure is expected to be beneficial for a diverse species assemblage, Area #4 is expected to be particularly beneficial for beaked whales, sperm whales, and pilot whales.
These measures apply to all vessels associated with the planned survey activity (
1. Vessel operators and crews must maintain a vigilant watch for all marine mammals and slow down, stop their vessel, or alter course, as appropriate and regardless of vessel size, to avoid striking any marine mammal. A single marine mammal at the surface may indicate the presence of submerged animals in the vicinity of the vessel; therefore, precautionary measures should be exercised when an animal is observed. A visual observer aboard the vessel must monitor a vessel strike avoidance zone around the vessel (specific distances detailed below), to ensure the potential for strike is minimized. Visual observers monitoring the vessel strike avoidance zone can be either third-party observers or crew members, but crew members responsible for these duties must be provided sufficient training to distinguish marine mammals from other phenomena and broadly to identify a marine mammal to broad taxonomic group (
2. All vessels, regardless of size, must observe the 10 kn speed restriction in specific areas designated for the protection of North Atlantic right whales: Any DMAs when in effect, the Mid-Atlantic SMAs (from November 1 through April 30), and critical habitat and the Southeast SMA (from November 15 through April 15). See
3. Vessel speeds must also be reduced to 10 kn or less when mother/calf pairs, pods, or large assemblages of any marine mammal are observed near a vessel;
4. All vessels must maintain a minimum separation distance of 500 m from right whales. If a whale is observed but cannot be confirmed as a species other than a right whale, the vessel operator must assume that it is a right whale and take appropriate action;
5. All vessels must maintain a minimum separation distance of 100 m from sperm whales and all other baleen whales;
6. All vessels must attempt to maintain a minimum separation distance of 50 m from all other marine mammals, with an exception made for those animals that approach the vessel; and
7. When marine mammals are sighted while a vessel is underway, the vessel should take action as necessary to avoid violating the relevant separation distance (
All vessels associated with survey activity (
We have carefully evaluated the suite of mitigation measures described here and considered a range of other measures in the context of ensuring that we prescribe the means of effecting the least practicable adverse impact on the affected marine mammal species and stocks and their habitat. Based on our evaluation of these measures, we have determined that the required mitigation measures provide the means of effecting the least practicable adverse impact on marine mammal species or stocks and their habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance.
In order to issue an IHA for an activity, Section 101(a)(5)(D) of the MMPA states that NMFS must set forth requirements pertaining to the monitoring and reporting of the authorized taking. NMFS's MMPA implementing regulations further describe the information that an applicant should provide when requesting an authorization (50 CFR 216.104(a)(13)), including the means of accomplishing the necessary monitoring and reporting that will result in increased knowledge of the species and the level of taking or impacts on populations of marine mammals. Effective reporting is critical both to compliance as well as ensuring that the most value is obtained from the required monitoring.
Monitoring and reporting requirements prescribed by NMFS should contribute to improved understanding of one or more of the following:
• Occurrence of marine mammal species in action area (
• Nature, scope, or context of likely marine mammal exposure to potential stressors/impacts (individual or cumulative, acute or chronic), through better understanding of: (1) Action or environment (
• Individual marine mammal responses (behavioral or physiological) to acoustic stressors (acute, chronic, or cumulative), other stressors, or
• How anticipated responses to stressors impact either: (1) Long-term fitness and survival of individual marine mammals; or (2) populations, species, or stocks;
• Effects on marine mammal habitat (
• Mitigation and monitoring effectiveness.
Here we summarize substantive changes to monitoring and reporting requirements from our Notice of Proposed IHAs. All changes were made on the basis of review of public comments received and/or review of new information.
• As described in our Notice of Proposed IHAs, we preliminarily reached small numbers findings for some species on the basis of the proposed limitation of authorized take to approximately one-third of the abundance estimate deemed at the time to be most appropriate. In order to ensure that IHA-holders would not exceed this cap without limiting the planned survey activity, we proposed to require interim reporting in which IHA-holders would report all observations of marine mammals as well as corrected numbers of marine mammals “taken.” We received information from several commenters—including several of the applicants—strongly indicating that such a de facto limitation, coupled with a novel reporting requirement, was impracticable. In summary, commenters noted that such surveys are multi-million dollar endeavors and stated that the surveys would simply not be conducted rather than commit such costs to the survey in the face of significant uncertainty as to whether the survey might be suddenly shut down as a result of reaching a pre-determined cap on the basis of novel modeling of “corrected” takes. We also received many comments indicating that our small numbers analyses were flawed and, as described in detail later in this notice (see “Small Numbers Analyses”) we reconsidered the available information and re-evaluated our analyses in response to these comments. As a result of our revised small numbers analyses, such a cap coupled with reporting scheme is not necessary. Further, we agree with commenters that the proposal presented significant practicability concerns. Therefore, the proposed “interim” reporting requirement is eliminated.
• Separately, while we recognize the importance of producing the most accurate estimates of actual take possible, we agree that the proposed approach to correcting observations to produce estimates of actual takes was (1) not the best available approach; (2) is novel in that it has not been previously required of applicants conducting similar activities; and (3) may not be appropriate for application to observations conducted from working source vessels. We have adopted a different approach to performing these “corrections,” as recommended through comment from the Marine Mammal Commission, but in this case we will perform these corrections upon submission of reports from IHA-holders and evaluate the appropriateness of this approach and the validity of the results prior to requiring it for future IHAs.
• As a result of concerns expressed through public comment, we have revised requirements relating to reporting of injured or dead marine mammals and have added newly crafted requirements relating to actions that should be taken in response to stranding events in certain circumstances.
Monitoring requirements are the same for all applicants, and a single discussion is provided here.
All PSO resumes must be submitted to NMFS and PSOs must be approved by NMFS after a review of their qualifications. These qualifications include whether the individual has successfully completed the necessary training (see “Training,” below) and, if relevant, whether the individual has the requisite experience (and is in good standing). PSOs should provide a current resume and information related to PSO training; submitted resumes should not include superfluous information. Information related to PSO training should include (1) a course information packet that includes the name and qualifications (
• A bachelor's degree from an accredited college or university with a major in one of the natural sciences and a minimum of 30 semester hours or equivalent in the biological sciences and at least one undergraduate course in math or statistics;
• Experience and ability to conduct field observations and collect data according to assigned protocols (may include academic experience) and experience with data entry on computers;
• Visual acuity in both eyes (correction is permissible) sufficient for discernment of moving targets at the water's surface with ability to estimate target size and distance; use of binoculars may be necessary to correctly identify the target (required for visual PSOs only);
• Experience or training in the field identification of marine mammals, including the identification of behaviors (required for visual PSOs only);
• Sufficient training, orientation, or experience with the survey operation to ensure personal safety during observations;
• Writing skills sufficient to prepare a report of observations (
• Ability to communicate orally, by radio or in person, with survey personnel to provide real-time information on marine mammals detected in the area as necessary; and
• Successful completion of relevant training (described below), including completion of all required coursework and passing (80 percent or greater) a written and/or oral examination developed for the training program.
The educational requirements may be waived if the PSO has acquired the relevant skills through alternate experience. Requests for such a waiver must include written justification, and prospective PSOs granted waivers must satisfy training requirements described below. Alternate experience that may be considered includes, but is not limited to, the following:
• Secondary education and/or experience comparable to PSO duties;
• Previous work experience conducting academic, commercial, or government-sponsored marine mammal surveys; and
• Previous work experience as a PSO; the PSO should demonstrate good standing and consistently good performance of PSO duties.
• Life at sea, duties, and authorities;
• Ethics, conflicts of interest, standards of conduct, and data confidentiality;
• Offshore survival and safety training;
• Overview of oil and gas activities (including geophysical data acquisition operations, theory, and principles) and types of relevant sound source technology and equipment;
• Overview of the MMPA and ESA as they relate to protection of marine mammals;
• Mitigation, monitoring, and reporting requirements as they pertain to geophysical surveys;
• Marine mammal identification, biology and behavior;
• Background on underwater sound;
• Visual surveying protocols, distance calculations and determination, cues, and search methods for locating and tracking different marine mammal species (visual PSOs only);
• Optimized deployment and configuration of PAM equipment to ensure effective detections of cetaceans for mitigation purposes (PAM operators only);
• Detection and identification of vocalizing species or cetacean groups (PAM operators only);
• Measuring distance and bearing of vocalizing cetaceans while accounting for vessel movement (PAM operators only);
• Data recording and protocols, including standard forms and reports, determining range, distance, direction, and bearing of marine mammals and vessels; recording GPS location coordinates, weather conditions, Beaufort wind force and sea state, etc.;
• Proficiency with relevant software tools;
• Field communication/support with appropriate personnel, and using communication devices (
• Reporting of violations, noncompliance, and coercion; and
• Conflict resolution.
PAM operators should regularly refresh their detection skills through practice with simulation-modeling software, and should keep up to date with training on the latest software/hardware advances.
The lead PSO is responsible for establishing and maintaining clear lines of communication with vessel crew. The vessel operator shall work with the lead PSO to accomplish this and shall ensure any necessary briefings are provided for vessel crew to understand mitigation requirements and protocols. While on duty, PSOs will continually scan the water surface in all directions around the acoustic source and vessel for presence of marine mammals, using a combination of the naked eye and high-quality binoculars, from optimum vantage points for unimpaired visual observations with minimum distractions. PSOs will collect observational data for all marine mammals observed, regardless of distance from the vessel, including species, group size, presence of calves, distance from vessel and direction of travel, and any observed behavior (including an assessment of behavioral responses to survey activity). Upon observation of marine mammal(s), a PSO will record the observation and monitor the animal's position (including latitude/longitude of the vessel and relative bearing and estimated distance to the animal) until the animal dives or moves out of visual range of the observer, and a PSO will continue to observe the area to watch for the animal to resurface or for additional animals that may surface in the area. PSOs will also record environmental conditions at the beginning and end of the observation period and at the time of any observations, as well as whenever conditions change significantly in the judgment of the PSO on duty.
The vessel operator must provide bigeye binoculars (
Individuals implementing the monitoring protocol will assess its effectiveness using an adaptive approach. Monitoring biologists will use their best professional judgment throughout implementation and seek improvements to these methods when deemed appropriate. Specifically, implementation of shutdown requirements will be made on the basis of the PSO's best professional judgment. While PSOs should not insert undue “precaution” into decision-making, it is expected that PSOs may call for mitigation action on the basis of reasonable certainty regarding the need for such action, as informed by professional judgment. Any modifications to protocol will be coordinated between NMFS and the applicant.
Monitoring of a towed PAM system is required at all times, from 30 minutes prior to ramp-up and throughout all use of the acoustic source. Towed PAM systems generally consist of hardware (
Our requirement to use PAM refers to the use of calibrated hydrophone arrays with full system redundancy to detect, identify, and estimate distance and bearing to vocalizing cetaceans, to the extent possible. With regard to calibration, the PAM system should have at least one calibrated hydrophone, sufficient for determining whether background noise levels on the towed PAM system are sufficiently low to meet performance expectations. Additionally,
Applicant-specific PAM plans were made available for review either in individual applications or as separate documents online at:
In coordination with vessel crew, the lead PAM operator will be responsible for deployment, retrieval, and testing and optimization of the hydrophone array. While on duty, the PAM operator must diligently listen to received signals and/or monitoring display screens in order to detect vocalizing cetaceans, except as required to attend to PAM equipment. The PAM operator must use appropriate sample analysis and filtering techniques and, as described below, must report all cetacean detections. While not required prior to development of formal standards for PAM use, we recommend that vessel self-noise assessments are undertaken during mobilization in order to optimize PAM array configuration according to the specific noise characteristics of the vessel and equipment involved, and to refine expectations for distance/bearing estimations for cetacean species during the survey. Copies of any vessel self-noise assessment reports must be included with the summary trip report.
PSOs must use standardized data forms, whether hard copy or electronic. PSOs will record detailed information about any implementation of mitigation requirements, including the distance of animals to the acoustic source and description of specific actions that ensued, the behavior of the animal(s), any observed changes in behavior before and after implementation of mitigation, and if shutdown was implemented, the length of time before any subsequent ramp-up of the acoustic source to resume survey. If required mitigation was not implemented, PSOs should submit a description of the circumstances. We require that, at a minimum, the following information be reported:
• Vessel names (source vessel and other vessels associated with survey) and call signs;
• PSO names and affiliations;
• Dates of departures and returns to port with port name;
• Dates and times (Greenwich Mean Time) of survey effort and times corresponding with PSO effort;
• Vessel location (latitude/longitude) when survey effort begins and ends; vessel location at beginning and end of visual PSO duty shifts;
• Vessel heading and speed at beginning and end of visual PSO duty shifts and upon any line change;
• Environmental conditions while on visual survey (at beginning and end of PSO shift and whenever conditions change significantly), including wind speed and direction, Beaufort sea state, Beaufort wind force, swell height, weather conditions, cloud cover, sun glare, and overall visibility to the horizon;
• Factors that may be contributing to impaired observations during each PSO shift change or as needed as environmental conditions change (
• Survey activity information, such as acoustic source power output while in operation, number and volume of airguns operating in the array, tow depth of the array, and any other notes of significance (
• If a marine mammal is sighted, the following information should be recorded:
○ Watch status (sighting made by PSO on/off effort, opportunistic, crew, alternate vessel/platform);
○ PSO who sighted the animal;
○ Time of sighting;
○ Vessel location at time of sighting;
○ Water depth;
○ Direction of vessel's travel (compass direction);
○ Direction of animal's travel relative to the vessel;
○ Pace of the animal;
○ Estimated distance to the animal and its heading relative to vessel at initial sighting;
○ Identification of the animal (
○ Estimated number of animals (high/low/best);
○ Estimated number of animals by cohort (adults, yearlings, juveniles, calves, group composition, etc.);
○ Description (as many distinguishing features as possible of each individual seen, including length, shape, color, pattern, scars or markings, shape and size of dorsal fin, shape of head, and blow characteristics);
○ Detailed behavior observations (
○ Animal's closest point of approach (CPA) and/or closest distance from the acoustic source;
○ Platform activity at time of sighting (
○ Description of any actions implemented in response to the sighting (
• If a marine mammal is detected while using the PAM system, the following information should be recorded:
○ An acoustic encounter identification number, and whether the detection was linked with a visual sighting;
○ Time when first and last heard;
○ Types and nature of sounds heard (
○ Any additional information recorded such as water depth of the hydrophone array, bearing of the animal to the vessel (if determinable), species or taxonomic group (if determinable), spectrogram screenshot, and any other notable information.
Applicants must submit a draft comprehensive report to NMFS within 90 days of the completion of survey effort or expiration of the IHA (whichever comes first), and must include all information described above under “Data Collection.” If a subsequent IHA request is planned, a report must be submitted a minimum of 75 days prior to the requested date of issuance for the subsequent IHA. The report must describe the operations conducted and sightings of marine mammals near the operations; provide full documentation of methods, results, and interpretation pertaining to all monitoring; summarize the dates and locations of survey operations, and all marine mammal sightings (dates, times, locations, activities, associated survey activities); and provide information regarding locations where the acoustic source was used. The IHA-holder shall provide geo-referenced time-stamped vessel tracklines for all time periods in which airguns (full array or single) were operating. Tracklines should include points recording any change in airgun status (
In association with the final comprehensive reports, NMFS will calculate and make available estimates of the number of takes based on the observations and in consideration of the detectability of the marine mammal species observed (as described below). PSO effort, survey details, and sightings data should be recorded continuously during surveys and reports prepared each day during which survey effort is conducted. As described below, NMFS will use these observational data to calculate corrected numbers of marine mammals taken.
There are multiple reasons why marine mammals may be present and yet be undetected by observers. Animals are missed because they are underwater (availability bias) or because they are available to be seen, but are missed by observers (perception and detection biases) (
• Time, date, and location (latitude/longitude) of the first discovery (and updated location information if known and applicable);
• Species identification (if known) or description of the animal(s) involved;
• Condition of the animal(s) (including carcass condition if the animal is dead);
• Observed behaviors of the animal(s), if alive;
• If available, photographs or video footage of the animal(s); and
• General circumstances under which the animal was discovered.
• Time, date, and location (latitude/longitude) of the incident;
• Species identification (if known) or description of the animal(s) involved;
• Vessel's speed during and leading up to the incident;
• Vessel's course/heading and what operations were being conducted (if applicable);
• Status of all sound sources in use;
• Description of avoidance measures/requirements that were in place at the time of the strike and what additional measures were taken, if any, to avoid strike;
• Environmental conditions (
• Estimated size and length of animal that was struck;
• Description of the behavior of the marine mammal immediately preceding and following the strike;
• If available, description of the presence and behavior of any other marine mammals immediately preceding the strike;
• Estimated fate of the animal (
• To the extent practicable, photographs or video footage of the animal(s).
In the event of a live stranding (or near-shore atypical milling) event within 50 km of the survey operations, where the NMFS stranding network is engaged in herding or other interventions to return animals to the water, the Director of OPR, NMFS (or designee) will advise the IHA-holder of the need to implement shutdown procedures for all active acoustic sources operating within 50 km of the stranding. Shutdown procedures for live stranding or milling marine mammals include the following:
• If at any time, the marine mammals die or are euthanized, or if herding/intervention efforts are stopped, the Director of OPR, NMFS (or designee) will advise the IHA-holder that the
• Otherwise, shutdown procedures will remain in effect until the Director of OPR, NMFS (or designee) determines and advises the IHA-holder that all live animals involved have left the area (either of their own volition or following an intervention).
• If further observations of the marine mammals indicate the potential for re-stranding, additional coordination with the IHA-holder will be required to determine what measures are necessary to minimize that likelihood (
Shutdown procedures are not related to the investigation of the cause of the stranding and their implementation is not intended to imply that the specified activity is the cause of the stranding. Rather, shutdown procedures are intended to protect marine mammals exhibiting indicators of distress by minimizing their exposure to possible additional stressors, regardless of the factors that contributed to the stranding.
• Status of all sound source use in the 48 hours preceding the estimated time of stranding and within 50 km of the discovery/notification of the stranding by NMFS; and
• If available, description of the behavior of any marine mammal(s) observed preceding (
Examples of circumstances that could trigger the additional information request include, but are not limited to, the following:
• Atypical nearshore milling events of live cetaceans;
• Mass strandings of cetaceans (two or more individuals, not including cow/calf pairs);
• Beaked whale strandings;
• Necropsies with findings of pathologies that are unusual for the species or area; or
• Stranded animals with findings consistent with blast trauma.
In the event that the investigation is still inconclusive, the investigation of the association of the survey activities is still warranted, and the investigation is still being pursued, NMFS may provide additional information requests, in writing, regarding the nature and location of survey operations prior to the time period above.
NMFS has defined negligible impact as an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival (50 CFR 216.103). A negligible impact finding is based on the lack of likely adverse effects on annual rates of recruitment or survival (
We first provide a generic description of our approach to the negligible impact analyses for these actions, which incorporates elements of the assessment methodology described by Wood
Our analyses incorporate a simple matrix assessment approach to generate relative impact ratings that couple potential magnitude of effect on a stock and likely consequences of those effects for individuals, given biologically relevant information (
Following review of public comments, we largely retain the negligible impact analysis framework and specific analyses described in our Notice of Proposed IHAs. However, we have made several adjustments on the basis of our review.
• As a result of our revised take estimates (“Estimated Take”) and reconsideration of available information (“Description of Marine Mammals in the Area of the Specified Activities” and “Small Numbers Analyses”), the amount of take has changed for some species for some applicants. In some cases, this leads to a change in overall magnitude rating.
• We agree with commenters who pointed out that a de minimis magnitude rating should not render consequences for individuals irrelevant to the impact rating. Rather, the assessed level of consequences pairs with the magnitude rating to produce the overall impact rating. In our preliminary negligible impact analyses, for example, mysticete whales with a de minimis amount of take were assigned an overall de minimis impact rating, as consequences were considered not applicable in cases where a de minimis magnitude rating was assigned. However, the assessed level of potential consequences for individual mysticetes of “medium”—which is related to inherent vulnerabilities of the taxon, and is therefore not dependent on the specific magnitude rating—would still exist, regardless of the amount of take/magnitude rating. Therefore, under our revised approach, a mysticete whale with a de minimis magnitude rating is now assigned a low impact rating.
In order to reflect the change described in the preceding paragraph, we have adjusted the impact rating scheme (Table 9). Whereas before a de minimis magnitude rating previously resulted in a de minimis impact rating regardless of assessed potential consequences to individuals, a de minimis magnitude rating now leads to a de minimis impact rating only if the assessed consequences are low; the de minimis impact rating with medium assessed potential consequences for individuals would lead to an impact rating of low.
We consider authorized take by Level B harassment of less than five percent of the most appropriate population abundance to be de minimis, while authorized Level B harassment taking between 5-15 percent is low. A moderate amount of authorized taking by Level B harassment would be from 15-25 percent, and high above 25 percent.
Although we do not define quantitative metrics relating to amount of potential take by Level A harassment, for all applicant companies the expected potential for Level A harassment and, therefore, the authorized taking, is very low (Table 6). For these specified activities, as described in detail in “Estimated Take,” the best available science indicates that there is no reasonable potential for Level A harassment of mid-frequency cetaceans, while there is only limited potential for Level A harassment of low-frequency cetaceans when considering that Level A harassment is dependent on accumulation of energy from a mobile acoustic source. Similarly, estimated takes by Level A harassment are very low for all high-frequency cetacean species.
Overall, while these limited incidents of Level A harassment would result in
Spatial extent relates to overlap of the expected range of the affected stock with the expected footprint of the stressor. While we do not define quantitative metrics relative to assessment of spatial extent, a relatively low impact is defined here as a localized effect on the stock's range, a relatively moderate impact is defined as a regional-scale effect (meaning that the overlap between stressor and range was partial), and a relatively high impact is one in which the degree of overlap between stressor and range is near total. For a mobile activity occurring over a relatively large, regional-scale area, this categorization is made largely on the basis of the stock range in relation to the action area. For example, the harbor porpoise is expected to occur almost entirely outside of the planned survey areas (Hayes
In Tables 10-14 below, spatial extent is presented as a range for certain species with known migratory patterns. We expect spatial extent (overlap of stock range with planned survey area) to be low for right whales from May through October but moderate from November through April, due to right whale movements into southeastern shelf waters in the winter for calving. The overlap is considered moderate during winter because not all right whales make this winter migration, and those that do are largely found in shallow waters where little survey effort is planned (and when/where we prescribe a spatial restriction that would largely preclude any potential overlap between right whales and effects of the survey activities). Spatial extent for humpback whales is expected to be low for most of the year, but likely moderate during winter, while spatial extent for minke whales is likely low in summer, moderate in spring and fall, and high in winter. While we consider spatial extent to be low year-round for fin whales, their range overlap with the planned survey area does vary across the seasons and is closer to moderate in winter and spring. We expect spatial extent for common dolphins to be lower in fall but generally moderate. Similarly, we expect spatial extent for Risso's dolphins to be lower in summer but generally moderate. Although survey plans differ across applicants, all cover large spatial scales that extend throughout much of the specific geographic region, and we do not expect meaningful differences across surveys with regard to spatial extent.
The temporal aspect of the stressor is measured through consideration of duration and frequency. Duration describes how long the effects of the stressor last. Temporal frequency may range from continuous to isolated (may occur one or two times), or may be intermittent. We consider a temporary effect lasting up to one month (prior to the animal or habitat reverting to a “normal” condition) to be short-term, whereas long‐term effects are more permanent, lasting beyond one season (with animals or habitat potentially reverting to a “normal” condition). Moderate‐term is defined as between 1-3 months. These metrics and their potential combinations help to derive the ratings summarized in Table 8. Temporal extent is not indicated in Tables 10-14 below, as it did not affect the magnitude rating for any applicant's specified activity.
With regard to the duration of each estimated instance of exposure, we are unable to produce estimates specific to the specified activities due to the temporal and spatial uncertainty of vessel and cetacean movements within the geographic region. However, given the constant movement of vessels and animals, all exposures are expected to be less than a single day in duration. For example, based on modeling of similar activities in the Gulf of Mexico, we
For example, if a delphinid species is predicted to have a high amount of disturbance and over a high degree of spatial extent, that stock would receive a high magnitude rating for that particular survey. However, we may then assess that the species may have a high degree of compensatory ability among individuals; therefore, our conclusion would be that the consequences of any effects on individuals are likely low. The overall impact rating in this scenario would be moderate. Table 9 summarizes impact rating scenarios.
Likely consequences, as presented in Tables 10-14 below, are considered medium for each species of mysticete whales (low-frequency hearing specialists), due to the greater potential for masking impacts at longer ranges than other taxa and at frequencies that overlap a larger portion of both their hearing and vocalization ranges. Likely consequences are considered medium for sperm whales due to potential for survey noise to disrupt foraging activity (
In addition to our initial impact ratings, we then also consider additional relevant contextual factors in a qualitative fashion. This important consideration of context is applied to a given impact rating in order to produce a final assessment of impact to the stock or species,
Here, we reiterate discussion relating to our development of targeted mitigation measures and note certain contextual factors, which are applicable to negligible impact analyses for all five applicants. Applicant-specific analyses are provided later.
• We developed mitigation requirements (
These mitigation measures benefit both the primary species for which they were designed and the species that may benefit secondarily by reducing impacts to marine mammal habitat and by reducing the numbers of individuals likely to be exposed to survey noise. For resident species in areas where seasonal closures are required, we also expect reduction in the numbers of times that individuals are exposed to survey noise (also discussed in “Small Numbers Analyses,” below). Perhaps of greater importance, we expect that these restrictions will reduce disturbance of these species in the places most important to them for critical behaviors such as foraging and socialization. Area #1 (Figure 4), which is a year-round closure, is assumed to be an area important for beaked whale foraging, while Areas #2-3 (also year-round closures) are assumed to provide important foraging opportunities for sperm whales as well as beaked whales. Area #4, a seasonal closure, is comprised of shelf-edge habitat where beaked whales and pilot whales are believed to be year-round residents as well as slope and abyss habitat predicted to contain high abundance of sperm whales during the period of closure. Further detail regarding rationale for these closures is provided under “Mitigation.”
• The North Atlantic right whale, sei whale, fin whale, blue whale, and sperm whale are listed as endangered under the Endangered Species Act, and all coastal stocks of bottlenose dolphin are designated as depleted under the MMPA (and have recently experienced an Unusual Mortality Event, described earlier in this document). However, sei whales and blue whales are unlikely to be meaningfully impacted by the specified activities (see “Rare Species” below). All four mysticete species are also classified as endangered (
Although listed as endangered, the primary threat faced by the sperm whale (
The most recent status review for the species stated that existing regulatory mechanisms appear to minimize threats to sperm whales and that, despite uncertainty regarding threats such as climate change, contaminants, and anthropogenic noise, the significance of threat facing the species should be considered low to moderate (NMFS, 2015b). Nevertheless, existing empirical data (
Although the primary direct threat to fin whales was addressed through the moratorium on commercial whaling, vessel strike and entanglement in commercial fishing gear remain as substantial direct threats for the species in the western North Atlantic. As noted below, the most recent estimate of annual average human-caused mortality for the fin whale in U.S. waters is equal to the PBR value (Table 2). In addition, mysticete whales are particularly sensitive to sound in the frequency range output from use of airgun arrays (
• Critical habitat is designated only for the North Atlantic right whale, and there are no biologically important areas (BIA) described within the region (other than for the right whale, and the described BIA is similar to designated critical habitat). Our required mitigation is designed to avoid impacts to important habitat for the North Atlantic right whale (or achieve comparable protection through implementation of a NMFS-approved mitigation and monitoring plan at distances between 47-80 km offshore; see “Mitigation”).
• High levels of average annual human-caused M/SI (approaching or exceeding the PBR level) are ongoing for the North Atlantic right whale, sei whale, fin whale, and for both long-finned and short-finned pilot whales (see Table 2). Average annual M/SI is considered unknown for the blue whale and the false killer whale (PBR is undetermined for a number of other species (Table 2), but average annual human-caused M/SI is zero for all of these). Separately, there are ongoing UMEs for humpback whales and minke whales (as well as for the right whale), as discussed previously in this notice. Although threats are considered poorly known for North Atlantic blue whales, PBR is less than one and ship strike is a known cause of mortality for all mysticete whales. The most recent record of ship strike mortality for a blue whale in the U.S. EEZ is from 1998 (Waring
We addressed our consideration of specific mitigation efforts for the right whale and fin whale above. For minke whales, although the ongoing UME is under investigation (as occurs for all UMEs), this event does not provide cause for concern regarding population-level impacts, as the likely population abundance is greater than 20,000 whales. Even though the PBR value is based on an abundance for U.S. waters that is negatively biased and a small fraction of the true population abundance, annual M/SI does not exceed the calculated PBR value for minke whales.
With regard to humpback whales, the UME does not yet provide cause for concern regarding population-level impacts. Despite the UME, the relevant population of humpback whales (the West Indies breeding population, or distinct population segment (DPS)) remains healthy. Prior to 2016, humpback whales were listed under the ESA as an endangered species worldwide. Following a 2015 global status review (Bettridge
In response to this population context concern for pilot whales, in conjunction with relatively medium to high amount of predicted exposures to survey noise for pilot whales, we have given special consideration to mitigation focused on pilot whales and have defined time-area restrictions (see “Mitigation” and Figure 4) specifically designed to reduce such impacts on pilot whales in areas
• Beaked whales are considered to be particularly acoustically sensitive (
• Given the current declining population status of North Atlantic right whales, it is important to understand the likely demographics of the expected taking. Therefore, we obtained data from the North Atlantic Right Whale Consortium Database (pers. comm., T.A. Gowan to E. Patterson, November 8, 2017), consisting of standardized sighting records of right whales from 2005 to 2013 from South Carolina to Florida. Because of the low total number of expected exposure for right whales, we could not reasonably apply this information on an applicant-specific basis and therefore present these findings for the total expected taking across all applicants. Based on this information, of the total 23 takes of North Atlantic right whales (now revised downward to 19 takes on the basis of Spectrum's modified survey plan; see “Spectrum Survey Plan Modification”), it should be expected that four exposures could be of adult females with calves, two of adult females without calves, five of adult males, 11 of juveniles of either sex, three of calves of either sex, one of an adult of unknown sex, and two of animals of unknown age and sex. It is important to note that age class estimates sum to greater than the originally expected total of 23 due to conservative rounding up in presenting the maximum number of each age-sex class that might be exposed; this should not be construed as an assumption that there would be more total takes of right whales than are authorized across all applicants. Each of these exposures represents a single instance of Level B harassment and is therefore not considered as a meaningful impact to individuals that could lead to population-level impacts.
As described previously, there are multiple species that should be considered rare in the survey areas and for which we authorize only nominal and precautionary take of a single group for each applicant survey. Specific to each of the five applicant companies, we do not expect meaningful impacts to these species (
Spectrum originally planned a 165-day survey program, or 45 percent of the year (approximately two seasons). The original survey plan would cover a large spatial extent (
The North Atlantic right whale is endangered, has a very low population size, and faces significant additional stressors. Therefore, regardless of even a low impact rating, we believe that the required mitigation described previously is critically important in order for us to make the necessary finding and it is with consideration of this mitigation that we find the take from Spectrum's survey activities will have a negligible impact on the North Atlantic right whale. The fin whale receives a moderate impact rating overall, but we expect that for two seasons (summer and fall) almost no fin whales will be present in the survey area. For the remainder of the year, it is likely that less than one quarter of the population will be present within the survey area (Roberts
Magnitude ratings for the sperm whale and beaked whales are medium; however, consequence factors are medium and high, respectively. Magnitude rating for pilot whales is medium, but similar to beaked whales, we expect that compensatory ability will be low (high consequence rating) due to presumed residency in areas targeted by the planned survey. These factors lead to moderate impact ratings for all three species/species groups. However, regardless of impact rating, the consideration of likely consequences and contextual factors for all three taxa leads us to conclude that targeted mitigation is important to support a finding that the effects of the survey will have a negligible impact on these species. As described previously, sperm whales are an endangered species with particular susceptibility to disruption of foraging behavior, beaked whales are particularly acoustically sensitive (with presumed low compensatory ability), and pilot whales are sensitive to additional stressors due to a high degree of mortality in commercial fisheries (and also with low compensatory ability). Finally, due to their acoustic sensitivity, we require shutdown of the acoustic source upon detection of a beaked whale at extended distance from the source vessel. In consideration of the required mitigation, we find the take from Spectrum's survey activities will have a negligible impact on the sperm whale, beaked whales (
As described in the introduction to this analysis, it is assumed that likely consequences are somewhat higher for species of mysticete whales (low-frequency hearing specialists) due to the greater potential for masking impacts at longer ranges than other taxa and at frequencies that overlap a larger portion of both their hearing and vocalization ranges. Therefore, despite de minimis magnitude ratings, we expect some consequences to individual humpback and minke whales,
Despite medium to high magnitude ratings, remaining delphinid species receive low to moderate impact ratings due to low consequences rating relating to a lack of propensity for behavioral disruption due to airgun survey activity and our expectation that these species would generally have relatively high compensatory ability. In addition, contextually these species do not have significant issues relating to population status or context. Many oceanic delphinid species are generally more associated with dynamic oceanographic characteristics rather than static physical features, and those species (such as common dolphin) with substantial distribution to the north of the survey area would likely be little affected at the population level by the activity. For example, both species of spotted dolphin and the offshore stock of bottlenose dolphin range widely over slope and abyssal waters (
For those species with de minimis impact ratings we believe that, absent additional relevant concerns related to population status or context, the rating implies that a negligible impact should be expected as a result of the specified activity. No such concerns exist for these species, and we find the take from Spectrum's survey activities will have a negligible impact on the Risso's dolphin and harbor porpoise.
In summary, based on the analysis contained herein of the likely effects of the specified activity on marine mammals and their habitat, and taking into consideration the implementation of the required monitoring and mitigation measures, we find that the total marine mammal take from Spectrum's survey activities will have a negligible impact on all affected marine mammal species or stocks.
The North Atlantic right whale is endangered, has a very low population size, and faces significant additional stressors. Therefore, regardless of even a low impact rating, we believe that the required mitigation described previously is critically important in order for us to make the necessary finding and it is with consideration of this mitigation that we find the take from TGS's survey activities will have a negligible impact on the North Atlantic right whale. The fin whale receives a moderate impact rating overall, but we expect that for two seasons (summer and fall) almost no fin whales will be present in the survey area. For the remainder of the year, it is likely that less than one quarter of the population will be present within the survey area (Roberts
Magnitude ratings for the sperm whale, beaked whales, and pilot whales are high and, further, consequence factors reinforce high impact ratings for all three. In addition, the consideration of likely consequences and contextual factors leads us to conclude that targeted mitigation is important to support a finding that the effects of the survey will have a negligible impact on these species. As described previously, sperm whales are an endangered species with particular susceptibility to disruption of foraging behavior, beaked whales are particularly acoustically sensitive (with presumed low compensatory ability and, therefore, high consequence rating), and pilot whales are sensitive to additional stressors due to a high degree of mortality in commercial fisheries (and also with low compensatory ability). Finally, due to their acoustic sensitivity, we have required shutdown of the acoustic source upon observation of a beaked whale at extended distance from the source vessel. In consideration of the required mitigation, we find the take from TGS's survey activities will have a negligible impact on the sperm whale, beaked whales (
As described in the introduction to this analysis, it is assumed that likely consequences are somewhat higher for
Despite high magnitude ratings, most remaining delphinid species receive moderate impact ratings (with the exception of the striped dolphin, with medium magnitude rating and low impact rating), due to low consequences rating relating to a lack of propensity for behavioral disruption due to airgun survey activity and our expectation that these species would generally have relatively high compensatory ability. In addition, contextually these species do not have significant issues relating to population status or context. Many oceanic delphinid species are generally more associated with dynamic oceanographic characteristics rather than static physical features, and those species (such as common dolphin) with substantial distribution to the north of the survey area would likely be little affected at the population level by the specified activity. For example, both species of spotted dolphin and the offshore stock of bottlenose dolphin range widely over slope and abyssal waters (
For those species with de minimis impact ratings we believe that, absent additional relevant concerns related to population status or context, the rating implies that a negligible impact should be expected as a result of the specified activity. No such concerns exist for these species, and we find the take from TGS's survey activities will have a negligible impact on the Clymene dolphin and harbor porpoise.
In summary, based on the analysis contained herein of the likely effects of the specified activity on marine mammals and their habitat, and taking into consideration the implementation of the required monitoring and mitigation measures, we find that the total marine mammal take from TGS's survey activities will have a negligible impact on all affected marine mammal species or stocks.
The North Atlantic right whale is endangered, has a very low population size, and faces significant additional stressors. Therefore, regardless of impact rating, we believe that the required mitigation described previously is critically important in order for us to make the necessary finding and it is with consideration of this mitigation that we find the take from ION's planned survey activities will have a negligible impact on the North Atlantic right whale.
Also regardless of impact rating, consideration of assumed behavioral susceptibility and lack of compensatory ability (
As described in the introduction to this analysis, it is assumed that likely consequences are somewhat higher for species of mysticete whales (low-frequency hearing specialists) due to the greater potential for masking impacts at longer ranges than other taxa and at frequencies that overlap a larger portion of both their hearing and vocalization ranges. Therefore, despite de minimis magnitude ratings, we expect some consequences to individual humpback, fin, and minke whales,
For those species with de minimis impact ratings we believe that, absent additional relevant concerns related to population status or context, the rating implies that a negligible impact should be expected as a result of the specified activity. No such concerns exist for these species, and we find the take from ION's planned survey activities will have a negligible impact on all stocks of bottlenose dolphin, two species of spotted dolphin, rough-toothed dolphin, striped dolphin, common dolphin, Clymene dolphin, Risso's dolphin, and harbor porpoise.
In summary, based on the analysis contained herein of the likely effects of the specified activity on marine mammals and their habitat, and taking into consideration the implementation of the required monitoring and mitigation measures, we find that the total marine mammal take from ION's survey activities will have a negligible impact on all affected marine mammal species or stocks.
The North Atlantic right whale is endangered, has a very low population size, and faces significant additional stressors. Therefore, regardless of impact rating, we believe that the required mitigation described previously is critically important in order for us to make the necessary finding and it is with consideration of this mitigation that we find the take from Western's survey activities will have a negligible impact on the North Atlantic right whale. The fin whale receives a moderate impact rating overall, but we expect that for two seasons (summer and fall) almost no fin whales will be present in the survey area. For the remainder of the year, it is likely that less than one quarter of the population will be present within the survey area (Roberts
Magnitude ratings for the sperm whale and beaked whales are high and, further, consequence factors reinforce high impact ratings for both. Magnitude rating for pilot whales is medium but, similar to beaked whales, we expect that compensatory ability will be low (high consequence rating) due to presumed residency in areas targeted by the planned survey—leading to a moderate impact rating. However, regardless of impact rating, the consideration of likely consequences and contextual factors for all three taxa leads us to conclude that targeted mitigation is important to support a finding that the effects of the survey will have a negligible impact on these species. As described previously, sperm whales are an endangered species with particular susceptibility to disruption of foraging behavior, beaked whales are particularly acoustically sensitive (with presumed low compensatory ability), and pilot whales are sensitive to additional stressors due to a high degree of mortality in commercial fisheries (and also with low compensatory ability). Finally, due to their acoustic sensitivity, we have required shutdown of the acoustic source upon observation of a beaked whale at extended distance from the source vessel. In consideration of the required mitigation, we find the take from Western's survey activities will have a negligible impact on the sperm whale, beaked whales (
As described in the introduction to this analysis, it is assumed that likely consequences are somewhat higher for species of mysticete whales (low-frequency hearing specialists) due to the greater potential for masking impacts at longer ranges than other taxa and at frequencies that overlap a larger portion of both their hearing and vocalization ranges. Therefore, despite de minimis magnitude ratings, we expect some consequences to individual humpback and minke whales,
Despite medium to high magnitude ratings (with the exception of the Clymene dolphin), remaining delphinid species receive low to moderate impact ratings due to consequences relating to a lack of propensity for behavioral disruption due to airgun survey activity and our expectation that these species would generally have relatively high compensatory ability. In addition, contextually these species do not have significant issues relating to population status or context. Many oceanic delphinid species are generally more associated with dynamic oceanographic characteristics rather than static physical features, and those species (such as common dolphin) with substantial distribution to the north of the survey area would likely be little affected at the population level by the specified activity. For example, both species of spotted dolphin and the offshore stock of bottlenose dolphin range widely over slope and abyssal waters (
For those species with de minimis impact ratings we believe that, absent additional relevant concerns related to
In summary, based on the analysis contained herein of the likely effects of the specified activity on marine mammals and their habitat, and taking into consideration the implementation of the required monitoring and mitigation measures, we find that the total marine mammal take from Western's survey activities will have a negligible impact on all affected marine mammal species or stocks.
The North Atlantic right whale is endangered, has a very low population size, and faces significant additional stressors. Therefore, regardless of impact rating, we believe that the required mitigation described previously is critically important in order for us to make the necessary finding and it is with consideration of this mitigation that we find the take from CGG's survey activities will have a negligible impact on the North Atlantic right whale.
Magnitude ratings for the sperm whale and beaked whales are medium; however, consequence factors are medium and high, respectively. Magnitude rating for pilot whales is medium but, similar to beaked whales, we expect that compensatory ability will be low (high consequence rating) due to presumed residency in areas targeted by the planned survey—leading to a moderate impact rating. However, regardless of impact rating, the consideration of likely consequences and contextual factors for all three taxa leads us to conclude that targeted mitigation is important to support a finding that the effects of the survey will have a negligible impact on these species. As described previously, sperm whales are an endangered species with particular susceptibility to disruption of foraging behavior, beaked whales are particularly acoustically sensitive (with presumed low compensatory ability), and pilot whales are sensitive to additional stressors due to a high degree of mortality in commercial fisheries (and also with low compensatory ability). Finally, due to their acoustic sensitivity, we require shutdown of the acoustic source upon detection of a beaked whale at extended distance from the source vessel. In consideration of the required mitigation, we find the take from CGG's survey activities will have a negligible impact on the sperm whale, beaked whales (
As described in the introduction to this analysis, it is assumed that likely consequences are somewhat higher for species of mysticete whales (low-frequency hearing specialists) due to the greater potential for masking impacts at longer ranges than other taxa and at frequencies that overlap a larger portion of both their hearing and vocalization ranges. Therefore, despite de minimis magnitude ratings, we expect some consequences to individual humpback, fin, and minke whales,
Despite medium to high magnitude ratings (with some exceptions), most remaining delphinid species receive low to moderate impact ratings due to consequences relating to a lack of propensity for behavioral disruption due to airgun survey activity and our expectation that these species would generally have relatively high compensatory ability. In addition, contextually these species do not have significant issues relating to population status or context. Many oceanic delphinid species are generally more associated with dynamic oceanographic characteristics rather than static physical features, and those species (such as common dolphin) with substantial distribution to the north of the survey area would likely be little affected at the population level by the specified activity. For example, both species of spotted dolphin and the offshore stock of bottlenose dolphin range widely over slope and abyssal waters (
For those species with de minimis impact ratings we believe that, absent additional relevant concerns related to population status or context, the rating implies that a negligible impact should be expected as a result of the specified activity. No such concerns exist for these species, and we find the take from CGG's survey activities will have a negligible impact on the common dolphin, striped dolphin, Risso's dolphin, and harbor porpoise.
In summary, based on the analysis contained herein of the likely effects of the specified activity on marine mammals and their habitat, and taking into consideration the implementation of the required monitoring and mitigation measures, we find that the total marine mammal take from CGG's survey activities will have a negligible impact on all affected marine mammal species or stocks.
The MMPA does not define “small numbers.” NMFS's and the U.S. Fish and Wildlife Service's 1989 implementing regulations defined small numbers as a portion of a marine mammal species or stock whose taking would have a negligible impact on that species or stock. This definition was invalidated in
To maintain an interpretation of small numbers as a proportion of a species or stock that does not conflate with negligible impact, we use the following framework. A plain reading of “small” implies as corollary that there also could be “medium” or “large” numbers of animals from the species or stock taken. We therefore use a simple approach that establishes equal bins corresponding to small, medium, and large proportions of the population abundance.
NMFS's practice for making small numbers determinations is to compare the number of individuals estimated and authorized to be taken (often using estimates of total instances of take, without regard to whether individuals are exposed more than once) against the best available abundance estimate for that species or stock. We note, however, that although NMFS's implementing regulations require applications for incidental take to include an estimate of the marine mammals to be taken, there is nothing in paragraphs (A) or (D) of section 101(a)(5) that requires NMFS to quantify or estimate numbers of marine mammals to be taken for purposes of evaluating whether the number is small. (See
Another circumstance in which NMFS considers it appropriate to make a small numbers finding is in the case of a species or stock that may potentially be taken but is either rarely encountered or only expected to be taken on rare occasions. In that
In summary, when quantitative take estimates of individual marine mammals are available or inferable through consideration of additional factors, and the number of animals taken is one third or less of the best available abundance estimate for the species or stock, NMFS considers it to be of small numbers. NMFS may appropriately find that one or two predicted group encounters will result in small numbers of take relative to the range and distribution of a species, regardless of the estimated proportion of the abundance.
Please see Table 15 for information relating to the basis for our small numbers analyses. For the sei whale, Bryde's whale, blue whale, northern bottlenose whale, Fraser's dolphin, melon-headed whale, false killer whale, pygmy killer whale, killer whale, spinner dolphin, and white-sided dolphin, we authorize take resulting from a single exposure of one group of each species or stock, as appropriate (using average group size), for each applicant. We believe that a single incident of take of one group of any of these species represents take of small numbers for that species. Therefore, for each applicant, based on the analyses contained herein of their specified activity, we find that small numbers of marine mammals will be taken for each of these 11 affected species or stocks for each specified activity. We do not discuss these 11 species further in the applicant-specific analyses that follow.
As discussed previously, the MMPA does not define small numbers. NMFS compares the estimated numbers of individuals expected to be taken (when available; often take estimates are presented as estimated instances of take) to the most appropriate estimation of the relevant species or stock size in our determination of whether an authorization is limited to small numbers of marine mammals,
However, as discussed elsewhere in this notice (including in “Comments and Responses”), we received numerous comments criticizing this approach. Notably, comments indicated that the pre-determined threshold (described in our Notice of Proposed IHAs as30 percent) was arbitrary and not rooted in any meaningful biological consideration, and that the proposal—
The number of exposures presented in Table 15 represent the estimated number of instantaneous instances in which an individual from each species or stock would be exposed to sound fields from airgun surveys at or above the 160 dB rms threshold. They do not necessarily represent the estimated number of individuals of each species that would be exposed, nor do they provide information on the duration of the exposure. In this case, the likelihood that any individual of a given species is exposed more than once is low due to the movement of both the vessels and the animals themselves. That said, for species where the estimated exposure numbers are higher compared to the population abundance, we assume that some individuals may be exposed more than once, meaning the exposures given in Table 15 overestimate the numbers of individuals that would be exposed. Applicant-specific analyses follow.
Based on the analysis contained herein of Spectrum's specified activity, the required monitoring and mitigation measures, and the anticipated take of marine mammals, we find that small numbers of marine mammals will be taken relative to the population sizes of the affected species or stocks.
TGS is the only applicant that provided an analysis of estimated individuals exposed versus instances of exposure (see Table 6-5 of TGS's application). As described in the introduction to this section, the number of individuals taken (versus total instances of take), is the relevant metric for comparison to population abundance in a small numbers analysis. We note, though, that total instances of take are routinely used to evaluate small numbers when data to distinguish individuals is not available, and we further note the conservativeness of the assumption, as the number of total instances of take equates to the highest possible number of individuals. For example, in some cases the total number of takes may exceed the number of individuals in a population abundance, meaning there are multiple exposures of at least some animals.
We do not typically attempt to quantitatively assess this comparison of individuals taken versus instances of take when we do not have direct information regarding individuals exposed (
The conceptual approach to the analysis involves a comparison of total ensonified area to the portion of that total area that is ensonified more than once. For TGS, 84 percent of the total ensonified area is area that is ensonified more than once,
The number of individuals potentially taken (versus total incidents of take) can then be determined using the following equation: (Numerical Output of the Model)−(0.84 * Numerical Output of the Model) + 0.5 * (0.84 * Numerical Output of the Model). This may be simplified as: 0.58 * Numerical Output of the Model. “Numerical output of the model” refers to the estimated total incidents of take. As we stated in the introduction to this section, where there are relatively few total takes, it is more likely that all takes occur to new individuals, though this is dependent on actual distribution and movement of animals in relation to the survey vessel. While there is no clear threshold as to what level of total takes indicates a likelihood of repeat taking of individuals, here we assume that total taking of a moderate or high magnitude (consistent with our approach to assessing magnitude in the negligible impact analysis framework; see “Negligible Impact Analyses and Determinations”),
This approach also allows us to estimate the number of individuals that we assume to be taken once and the number assumed to be taken twice. As we noted previously, although it is possible that some individuals may be taken more than twice, we assume a maximum of one repeat ensonification (a conservative assumption in this small numbers analysis context). For example, if there are 1,144 total takes of fin whales, with 664 total individuals taken, and where:
In summary, for those stocks for which we assume each authorized take represents a new individual, the total amount of taking authorized ranges from 1 to 15 percent of the most appropriate population abundance estimate (Table 15), and is therefore less than the appropriate small numbers threshold (
Based on the analysis contained herein of ION's specified activity, the required monitoring and mitigation measures, and the anticipated take of marine mammals, we find that small numbers of marine mammals will be taken relative to the population sizes of the affected species or stocks.
Based on the analysis contained herein of Western's specified activity, the required monitoring and mitigation measures, and the anticipated take of marine mammals, we find that small numbers of marine mammals will be taken relative to the population sizes of the affected species or stocks.
Based on the analysis contained herein of CGG's specified activity, the required monitoring and mitigation measures, and the anticipated take of marine mammals, we find that small numbers of marine mammals will be taken relative to the population sizes of the affected species or stocks.
There are no relevant subsistence uses of marine mammals implicated by these actions. Therefore, relevant to the Spectrum, TGS, ION, CGG, and Western IHAs, we have determined that the total taking of affected species or stocks would not have an unmitigable adverse impact on the availability of such species or stocks for taking for subsistence purposes.
As described earlier in this notice, Spectrum's proposed survey plan described in our Notice of Proposed IHAs included ~21,635 km of survey line (see Figure 1 of Spectrum's application). However, on June 4, 2018, Spectrum notified NMFS of a modification to their survey plan. NMFS's understanding is this modification is based on a voluntary collaborative effort between Spectrum and TGS, another IHA applicant, to reduce duplication of effort and expense. Subsequently, on June 26, 2018, Spectrum submitted a final, revised modified survey plan. The modified survey plan occurs roughly within the same survey “footprint” and consists of ~13,766 km of survey line (see Figure provided on p. 2 of Spectrum's letter notifying us of their intent to modify their survey plan). Therefore, the modified survey plan represents an approximate 36 percent decrease in total survey line. With this reduction in survey effort, Spectrum now estimates that the survey plan will require approximately 108 days of
The changes to the survey plan, in summary, include the following: (1) Rotated the survey grid by approximately 5 degrees; (2) trimmed lines from most time-area restrictions; (3) removed certain lines; and (4) shifted certain lines. The figure provided on p. 3 of Spectrum's letter notifying us of their intent to modify their survey plan shows an overlay of the modified survey plan (red lines) with the previously proposed survey plan (black lines).
Following receipt of the notification from Spectrum, we evaluated the potential effect of the change through use of a spatial analysis. In summary, we compared marine mammal densities within assumed ensonified areas associated with the original survey tracklines and associated with the modified survey tracklines. This allowed us to produce a ratio of the expected takes by Level B harassment from the modified survey to the original survey and, therefore, to evaluate the degree of change in terms of take. In conducting this evaluation, we used mean marine mammal densities over the 21 modeling areas or zones (extracted from Roberts
• Obtain trackline lengths for each relevant season and zone for proposed (
• Multiply trackline lengths by mean buffer widths for each zone to get area surveyed for both proposed and modified tracklines;
• Multiply these areas surveyed within each zone by each species density to get raw take by zone for proposed and modified tracklines for each species (accounting for implementation of North Atlantic right whale time-area restriction, in effect out to 90 km from shore from November through April);
• Create ratio of the expected take from the modified tracklines to the proposed tracklines; and
• Multiply this ratio by the originally proposed take numbers to obtain revised take numbers.
However, note that we did not follow this process (
The results of this evaluation in terms of take numbers are shown in Table 17. Our analysis of the potential for auditory injury of mid-frequency cetaceans remains the same and, therefore, the amount of take by Level A harassment for these species is unchanged. For low-frequency cetaceans, the reduction in total survey line reduces the likely potential that take by Level A harassment would occur. The total amount of survey line in the modified survey plan is similar to that proposed by ION and, in fact, Spectrum's estimated auditory injury zone for low-frequency cetaceans is slightly smaller than ION's. Therefore, we adopt the logic presented previously for ION in revising the authorized take by Level A harassment for low-frequency cetaceans (see “Estimated Take” for more detail). For high-frequency cetaceans, we revise the take authorized by Level A harassment according to the same procedure described previously in “Estimated Take.” For rarely occurring species (
Total authorized take for all species shown in Table 17 decreased. The modified survey plan largely remains within the footprint of the proposed survey plan, with the only notable change being the reduction of total survey line and the removal of survey line from certain areas within that footprint, including, importantly, the total removal of lines from within our designated seasonal “Hatteras and North” time-area restriction along the shelf break off of Cape Hatteras (Area #4; Figure 4). This area constitutes some of the most important marine mammal
As previously described in “Negligible Impact Analyses and Determinations,” we have determined on the basis of Spectrum's proposed survey plan that the likely effects of the (previously described) specified activity on marine mammals and their habitat due to the total marine mammal take from Spectrum's survey activities would have a negligible impact on all affected marine mammal species or stocks. Based on our evaluation of Spectrum's modified survey plan, we affirm that this conclusion remains valid, and we authorize the revised take numbers shown in Table 17. Similarly, as previously described in “Small Numbers Analyses,” we have determined that the take of marine mammals incidental to Spectrum's specified activity would represent small numbers of marine mammals relative to the population sizes of the affected species or stocks. All authorized take numbers for Spectrum have decreased from what we considered in that small numbers analysis and, therefore, we affirm that this conclusion remains valid.
In conclusion, we affirm and restate our findings for Spectrum:
• All previously described mitigation, monitoring, and reporting requirements remain the same. Based on our evaluation of these measures, we have determined that the required mitigation measures provide the means of effecting the least practicable adverse impact on marine mammal species or stocks and their habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance.
• With regard to the negligible impact analysis, we refer the reader to the analysis presented previously. In addition, our evaluation of the modified survey plan shows (1) total survey line is reduced by approximately one-third; (2) the modified survey plan does not include new areas not originally considered in our assessment of the effects of Spectrum's specified activity; (3) Spectrum has removed lines from portions of the survey area, including important habitat for marine mammals; and (4) authorized take for all taxa has been reduced. Therefore, based on the analysis contained herein of the likely effects of the specified activity on marine mammals and their habitat, and taking into consideration the implementation of the required monitoring and mitigation measures, we find that the total marine mammal take from Spectrum's survey activities will have a negligible impact on the affected marine mammal species or stocks.
• With regard to the small numbers analysis, we refer the reader to the analysis presented previously. Our evaluation of Spectrum's modified survey plan results in a reduction of authorized take for all taxa. Therefore, based on the analysis contained herein of Spectrum's specified activity, the required monitoring and mitigation measures, and the anticipated take of marine mammals, we find that small numbers of marine mammals will be taken relative to the population sizes of the affected species or stocks.
Section 7 of the ESA requires Federal agencies to insure that their actions are not likely to jeopardize the continued existence of endangered or threatened species or adversely modify or destroy their designated critical habitat. Federal agencies must consult with NMFS for actions that may affect species under NMFS's jurisdiction listed as threatened or endangered or critical habitat designated for such species.
At the conclusion of consultation, the consulting agency provides an opinion stating whether the Federal agency's action is likely to jeopardize the continued existence of ESA-listed species or destroy or adversely modify designated critical habitat.
NMFS's issuance of IHAs to the five companies is subject to the requirements of Section 7 of the ESA. Therefore, NMFS's Office of Protected Resources (OPR), Permits and Conservation Division requested initiation of a formal consultation with the NMFS OPR, ESA Interagency Cooperation Division on the proposed issuance of IHAs on June 5, 2017. The formal consultation concluded in November 2018 and a final Biological Opinion (BiOp) was issued. The BiOp found that the Permits and Conservation Division's proposed action of issuing the five IHAs is not likely to jeopardize the continued existence or recovery of blue whales, fin whales, North Atlantic right whales, sei whales, or sperm whales. Furthermore, the BiOp found that the proposed action is also not likely to adversely affect designated critical habitat for North Atlantic right whales.
In 2014, the BOEM produced a final Programmatic Environmental Impact Statement (PEIS) to evaluate the direct, indirect, and cumulative impacts of geological and geophysical survey activities on the Mid- and South Atlantic OCS, pursuant to requirements of NEPA. These activities include geophysical surveys in support of hydrocarbon exploration, as were proposed in the MMPA applications before NMFS. The PEIS is available at:
NEPA, Council on Environmental Quality (CEQ) regulations, and NOAA's NEPA implementing procedures (NOAA Administrative Order (NAO) 216-6A) encourage the use of programmatic NEPA documents and tiering to streamline decision-making in staged decision-making processes that progress from programmatic analyses to site-specific reviews. NMFS reviewed the Final PEIS and determined that it meets the requirements of the CEQ regulations (40 CFR part 1500-1508) and NAO 216-6A. NMFS further determined, after independent review, that the Final PEIS satisfied NMFS's comments and suggestions in the NEPA process. In our Notice of Proposed IHAs, we stated our intention to adopt BOEM's analysis in order to assess the impacts to the human environment of issuance of the subject IHAs, and that we would review all comments submitted in response to the notice as we completed the NEPA process, including a final decision of whether to adopt BOEM's PEIS and sign a Record of Decision related to issuance of IHAs. Following review of public comments received, we confirmed that it would be appropriate to adopt BOEM's analysis in order to support our assessment of the impacts to the human environment of issuance of the subject IHAs. Therefore, on February 23, 2018, NMFS signed a Record of Decision for the following purposes: (1) To adopt the Final PEIS to support NMFS's analysis associated with issuance of incidental take authorizations pursuant to sections 101(a)(5)(A) or (D) of the MMPA and the regulations governing the taking and importing of marine mammals (50 CFR part 216), and (2) in accordance with 40 CFR 1505.2, to announce and explain the basis for our decision to review and potentially issue incidental take authorizations under the MMPA on a case-by-case basis, if appropriate.
Following review of public comment, we also determined that conducting additional NEPA review and preparing a tiered Environmental Assessment (EA) is appropriate to analyze environmental impacts associated with NMFS's issuance of separate IHAs to five different applicants. Through the description and analysis of NMFS's
As a result of these determinations, NMFS has issued five separate IHAs to the aforementioned applicant companies for conducting the described geophysical survey activities in the Atlantic Ocean within the specific geographic region, incorporating the previously mentioned mitigation, monitoring, and reporting requirements.
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration |