Federal Register Vol. 83, No.235,

Federal Register Volume 83, Issue 235 (December 7, 2018)

Page Range63041-63381
FR Document

83_FR_235
Current View
Page and SubjectPDF
83 FR 63162 - Sunshine Act Meeting; Farm Credit Administration BoardPDF
83 FR 63066 - Significant New Use Rules on Certain Chemical Substances; WithdrawalPDF
83 FR 63190 - Sunshine Act Meeting; CancellationPDF
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.PDF
83 FR 63194 - Hours of Service (HOS) of Drivers; Applications for Exemption From the Electronic Logging Device RulePDF
83 FR 63191 - Progressive Rail Incorporated-Continuance in Control Exemption-St. Paul & Pacific Northwest Railroad Company, LLCPDF
83 FR 63190 - St. Paul & Pacific Northwest Railroad Company, LLC-Change in Operators Exemption-Kettle Falls International Railway, LLCPDF
83 FR 63061 - Notices of Intention and Statements of Account Under Compulsory License To Make and Distribute Phonorecords of Musical WorksPDF
83 FR 63059 - Safety Zone; Barters Island Bridge, Back River, Barters Island, MEPDF
83 FR 63161 - Environmental Impact Statements; Notice of AvailabilityPDF
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 CompanyPDF
83 FR 63188 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Reemployment Services and Eligibility Assessments (RESEA) Program Implementation Study; New CollectionPDF
83 FR 63184 - Notice of Availability of a Draft Environmental Impact Statement for Vineyard Wind LLC's Proposed Wind Energy Facility Offshore MassachusettsPDF
83 FR 63163 - Change in Bank Control Notices; Acquisitions of Shares of a Bank or Bank Holding CompanyPDF
83 FR 63162 - Formations of, Acquisitions by, and Mergers of Bank Holding CompaniesPDF
83 FR 63183 - Meeting of the Presidential Advisory Council on HIV/AIDSPDF
83 FR 63164 - Submission for OMB Review; Head Start Child and Family Experiences Survey (FACES) (OMB #0970-0151)PDF
83 FR 63168 - Food Handler Antiseptic Drug Products for Over-the-Counter Human Use; Request for Data and InformationPDF
83 FR 63149 - Cardinal-Hickory Creek 345-kV Transmission Line ProjectPDF
83 FR 63184 - Laboratory Animal Welfare: Draft Report on Recommendations To Reduce Administrative Burden on ResearchersPDF
83 FR 63179 - Agency Information Collection Activities; Submission for Office of Management and Budget Review; Comment Request; Environmental Impact ConsiderationsPDF
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 CommunityPDF
83 FR 63166 - Developing and Labeling In vitroPDF
83 FR 63159 - Chlorinated Isocyanurates From the People's Republic of China: Preliminary Results of Countervailing Duty Administrative Review; 2016PDF
83 FR 63155 - Approval of Subzone Status, Winpak Heat Seal Corporation, Pekin, IllinoisPDF
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, MichiganPDF
83 FR 63155 - Approval of Subzone Status, Mayfield Consumer Products, Mayfield and Hickory, KentuckyPDF
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, CaliforniaPDF
83 FR 63178 - Framework for a Real-World Evidence Program; AvailabilityPDF
83 FR 63157 - Polyethylene Terephthalate Film, Sheet, and Strip From the United Arab Emirates: Preliminary Results of Antidumping Duty Administrative Review; 2016-2017PDF
83 FR 63155 - Welded Carbon Steel Standard Pipe and Tube Products From Turkey: Final Results of Antidumping Duty Administrative Review; 2016-2017PDF
83 FR 63160 - Agency Information Collection Activities; Comment Request; Federal Student Aid (FSA) Feedback SystemPDF
83 FR 63188 - Steel Concrete Reinforcing Bar From Belarus, China, Indonesia, Latvia, Moldova, Poland, and UkrainePDF
83 FR 63162 - Notice of Termination of ReceivershipsPDF
83 FR 63152 - Submission for OMB Review; Comment RequestPDF
83 FR 63151 - Submission for OMB Review; Comment RequestPDF
83 FR 63165 - Submission for OMB Review; Comment RequestPDF
83 FR 63192 - Environmental Impact Statement for Gallatin Fossil Plant Surface Impoundment Closure and Restoration ProjectPDF
83 FR 63196 - U.S. Merchant Marine Academy Board of VisitorsPDF
83 FR 63196 - Hazardous Materials: Emergency Waiver No. 11PDF
83 FR 63052 - Uniform Compliance Date for Food Labeling RegulationsPDF
83 FR 63163 - Submission for OMB Review; Use of Products and Services of Kaspersky LabPDF
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-NewPDF
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 InvestigationPDF
83 FR 63046 - Highly Erodible Land and Wetland ConservationPDF
83 FR 63042 - General Schedule Locality Pay AreasPDF
83 FR 63110 - Real Estate AppraisalsPDF
83 FR 63189 - Advisory Committee on Reactor Safeguards; Procedures for MeetingsPDF
83 FR 63149 - Information Collection Request; Request for Special Priorities AssistancePDF
83 FR 63148 - Information Collection Request; Agricultural Foreign Investment Disclosure Act ReportPDF
83 FR 63146 - National Oil and Hazardous Substances Pollution Contingency Plan; National Priorities List: Deletion of the Tomah Armory Landfill Superfund SitePDF
83 FR 63068 - National Oil and Hazardous Substances Pollution Contingency Plan; National Priorities List: Deletion of the Tomah Armory Landfill Superfund SitePDF
83 FR 63067 - National Oil and Hazardous Substances Pollution Contingency Plan; National Priorities List: Partial Deletion of the Beloit Corporation Superfund SitePDF
83 FR 63268 - Takes of Marine Mammals Incidental to Specified Activities; Taking Marine Mammals Incidental to Geophysical Surveys in the Atlantic OceanPDF
83 FR 63054 - Miscellaneous Federal Home Loan Bank Operations and Authorities-Financing Corporation AssessmentsPDF
83 FR 63106 - System Safety ProgramPDF
83 FR 63073 - Establishment of the Office of Economics and AnalyticsPDF
83 FR 63127 - Medical Device De Novo Classification ProcessPDF
83 FR 63200 - Guidance Related to the Foreign Tax Credit, Including Guidance Implementing Changes Made by the Tax Cuts and Jobs ActPDF
83 FR 63041 - Veterans' PreferencePDF
83 FR 63148 - Performance Review Board MembershipPDF
83 FR 63098 - Reporting Requirements Governing Hearing Aid-Compatible Mobile HandsetsPDF
83 FR 63076 - Promoting Investment in the 3550-3700 MHz BandPDF

Issue

83 235 Friday, December 7, 2018 Contents Editorial Note:

In the printed version of the Federal Register Table of Contents for Thursday, December 6, 2018, FR Doc. 2018-26499 was incorrectly indexed under Commission on Interstate Child Support. This document should have been indexed under Coast Guard.

Agriculture Agriculture Department See

Farm Service Agency

See

Food Safety and Inspection Service

See

Rural Utilities Service

RULES Highly Erodible Land and Wetland Conservation, 63046-63052 2018-26521 NOTICES Performance Review Board Membership, 63148 2018-26255
Census Bureau Census Bureau NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 63151-63154 2018-26537 2018-26538 Children Children and Families Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 63165-63166 2018-26535 Agency Information Collection Activities; Proposals, Submissions, and Approvals: Head Start Child and Family Experiences Survey, 63164-63165 2018-26563 Coast Guard Coast Guard RULES Safety Zones: Barters Island Bridge, Back River, Barters Island, ME, 63059-63061 2018-26578 Commerce Commerce Department See

Census Bureau

See

Foreign-Trade Zones Board

See

International Trade Administration

See

National Oceanic and Atmospheric Administration

Comptroller Comptroller of the Currency PROPOSED RULES Real Estate Appraisals, 63110-63127 2018-26507 Copyright Office Copyright Office, Library of Congress RULES Notices of Intention and Statements of Account Under Compulsory License To Make and Distribute Phonorecords of Musical Works, 63061-63066 2018-26579 Defense Department Defense Department NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Use of Products and Services of Kaspersky Lab, 63163-63164 2018-26525 Education Department Education Department NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Federal Student Aid Feedback System, 63160-63161 2018-26542 Environmental Protection Environmental Protection Agency RULES National Oil and Hazardous Substances Pollution Contingency Plan; National Priorities List: Deletion of the Tomah Armory Landfill Superfund Site, 63068-63073 2018-26486 Partial Deletion of the Beloit Corporation Superfund Site, 63067-63068 2018-26480 Significant New Use Rules on Certain Chemical Substances; Withdrawal, 63066-63067 2018-26686 PROPOSED RULES National Oil and Hazardous Substances Pollution Contingency Plan; National Priorities List: Deletion of the Tomah Armory Landfill Superfund Site, 63146-63147 2018-26492 NOTICES Environmental Impact Statements; Availability, etc.: Weekly Receipts, 63161-63162 2018-26577 Farm Credit Farm Credit Administration NOTICES Meetings; Sunshine Act, 63162 2018-26718 Farm Service Farm Service Agency NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Agricultural Foreign Investment Disclosure Act Report, 63148-63149 2018-26504 Request for Special Priorities Assistance, 63149 2018-26505 Federal Communications Federal Communications Commission RULES Establishment of the Office of Economics and Analytics, 63073-63076 2018-26423 Promoting Investment in the 3550-3700 MHz Band, 63076-63097 2018-25795 Reporting Requirements Governing Hearing Aid-Compatible Mobile Handsets, 63098-63106 2018-26037 Federal Deposit Federal Deposit Insurance Corporation PROPOSED RULES Real Estate Appraisals, 63110-63127 2018-26507 NOTICES Termination of Receiverships, 63162 2018-26539 Federal Housing Finance Agency Federal Housing Finance Agency RULES Miscellaneous Federal Home Loan Bank Operations and Authorities—Financing Corporation Assessments, 63054-63059 2018-26449 Federal Motor Federal Motor Carrier Safety Administration NOTICES Hours of Service of Drivers; Exemption Applications: Applications for Exemption From the Electronic Logging Device Rule, 63194-63196 2018-26597 Federal Railroad Federal Railroad Administration RULES System Safety Program, 63106-63109 2018-26447 Federal Reserve Federal Reserve System PROPOSED RULES Real Estate Appraisals, 63110-63127 2018-26507 NOTICES Changes in Bank Control: Acquisitions of Shares of a Bank or Bank Holding Company, 63163 2018-26572 Formations of, Acquisitions by, and Mergers of Bank Holding Companies, 63162-63163 2018-26571 Food and Drug Food and Drug Administration PROPOSED RULES Medical Device De Novo Classification Process, 63127-63146 2018-26378 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Environmental Impact Considerations, 63179-63182 2018-26556 Research and Evaluation Survey for the Public Education Campaign on Tobacco Among the Lesbian Gay Bisexual Transgender Community, 63176-63178 2018-26555 Food Handler Antiseptic Drug Products for Over-the-Counter Human Use; Request for Data and Information, 63168-63176 2018-26561 Framework for a Real-World Evidence Program, 63178-63179 2018-26546 Guidance: Developing and Labeling In vitro Companion Diagnostic Devices for a Specific Group or Class of Oncology Therapeutic Products, 63166-63167 2018-26554 Food Safety Food Safety and Inspection Service RULES Uniform Compliance Date for Food Labeling Regulations, 63052-63053 2018-26526 Foreign Trade Foreign-Trade Zones Board NOTICES Production Activities: Fluid Equipment Development Co., LLC, Foreign-Trade Zone 70, Detroit, MI, 63154-63155 2018-26549 Tesla, Inc., Foreign-Trade Zone 18, San Jose, CA, 63154 2018-26547 Subzone Approvals: Mayfield Consumer Products Mayfield and Hickory, KY, 63155 2018-26548 Subzone Status Approvals: Winpak Heat Seal Corp., Pekin, IL, 63155 2018-26550 General Services General Services Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Use of Products and Services of Kaspersky Lab, 63163-63164 2018-26525 Health and Human Health and Human Services Department See

Children and Families Administration

See

Food and Drug Administration

See

Health Resources and Services Administration

See

National Institutes of Health

NOTICES Meetings: Presidential Advisory Council on HIV/AIDS, 63183-63184 2018-26568
Health Resources Health Resources and Services Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Family-to-Family Health Information Center Feedback Surveys, 63182-63183 2018-26524 Homeland Homeland Security Department See

Coast Guard

Interior Interior Department See

Ocean Energy Management Bureau

Internal Revenue Internal Revenue Service PROPOSED RULES Guidance Related to the Foreign Tax Credit, Including Guidance Implementing Changes Made by the Tax Cuts and Jobs Act, 63200-63266 2018-26322 International Trade Adm International Trade Administration NOTICES Antidumping or Countervailing Duty Investigations, Orders, or Reviews: Chlorinated Isocyanurates From the People's Republic of China, 63159-63160 2018-26551 Polyethylene Terephthalate Film, Sheet, and Strip From the United Arab Emirates, 63157-63159 2018-26545 Welded Carbon Steel Standard Pipe and Tube Products From Turkey, 63155-63157 2018-26544 International Trade Com International Trade Commission NOTICES Investigations; Determinations, Modifications, and Rulings, etc.: Certain Robotic Vacuum Cleaning Devices and Components Thereof Such as Spare Parts, 63186-63187 2018-26522 Steel Concrete Reinforcing Bar From Belarus, China, Indonesia, Latvia, Moldova, Poland, and Ukraine, 63188 2018-26541 Meetings; Sunshine Act, 63185-63186 2018-26608 Labor Department Labor Department NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Reemployment Services and Eligibility Assessments Program Implementation Study, 63188-63189 2018-26574 Library Library of Congress See

Copyright Office, Library of Congress

Maritime Maritime Administration NOTICES Meetings: U.S. Merchant Marine Academy Board of Visitors, 63196 2018-26529 NASA National Aeronautics and Space Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Use of Products and Services of Kaspersky Lab, 63163-63164 2018-26525 National Institute National Institutes of Health NOTICES Laboratory Animal Welfare: Draft Report on Recommendations To Reduce Administrative Burden on Researchers, 63184 2018-26557 National Oceanic National Oceanic and Atmospheric Administration NOTICES Takes of Marine Mammals: Incidental to Geophysical Surveys in the Atlantic Ocean, 63268-63381 2018-26460 Nuclear Regulatory Nuclear Regulatory Commission NOTICES Meetings: Advisory Committee on Reactor Safeguards, 63189-63190 2018-26506 Ocean Energy Management Ocean Energy Management Bureau NOTICES Environmental Impact Statements; Availability, etc.: Vineyard Wind LLC's Proposed Wind Energy Facility Offshore Massachusetts, 63184-63185 2018-26573 Personnel Personnel Management Office RULES General Schedule Locality Pay Areas, 63042-63046 2018-26519 Veterans' Preference, 63041-63042 2018-26265 Pipeline Pipeline and Hazardous Materials Safety Administration NOTICES Hazardous Materials: Emergency Waiver No. 11, 63196-63197 2018-26527 Rural Utilities Rural Utilities Service NOTICES Environmental Impact Statements; Availability, etc.: Cardinal-Hickory Creek 345-kv Transmission Line Project, 63149-63151 2018-26558 Securities Securities and Exchange Commission NOTICES Meetings; Sunshine Act, 63190 2018-26656 Surface Transportation Surface Transportation Board NOTICES Change in Operators Exemptions: St. Paul and Pacific Northwest Railroad Co., LLC; Kettle Falls International Railway, LLC, 63190-63191 2018-26581 Continuance in Control Exemptions: Progressive Rail Inc.; St. Paul and Pacific Northwest Railroad Co., LLC, 63191 2018-26582 Lease Amendment and Operation Exemption Including Interchange Commitment: North Carolina and Virginia Railroad Co., LLC, Chesapeake and Albemarle Railroad Division; Norfolk Southern Railway Co., 63192 2018-26575 Tennessee Tennessee Valley Authority NOTICES Environmental Impact Statements; Availability, etc.: Gallatin Fossil Plant Surface Impoundment Closure and Restoration Project, 63192-63194 2018-26531 Transportation Department Transportation Department See

Federal Motor Carrier Safety Administration

See

Federal Railroad Administration

See

Maritime Administration

See

Pipeline and Hazardous Materials Safety Administration

Treasury Treasury Department See

Comptroller of the Currency

See

Internal Revenue Service

Separate Parts In This Issue Part II Treasury Department, Internal Revenue Service, 63200-63266 2018-26322 Part III Commerce Department, National Oceanic and Atmospheric Administration, 63268-63381 2018-26460 Reader Aids

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.

To subscribe to the Federal Register Table of Contents electronic mailing list, go to https://public.govdelivery.com/accounts/USGPOOFR/subscriber/new, enter your e-mail address, then follow the instructions to join, leave, or manage your subscription.

83 235 Friday, December 7, 2018 Rules and Regulations OFFICE OF PERSONNEL MANAGEMENT 5 CFR Part 211 RIN 3206-AN47 Veterans' Preference AGENCY:

Office of Personnel Management.

ACTION:

Final rule.

SUMMARY:

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.

DATES:

This rule will be effective January 7, 2019.

FOR FURTHER INFORMATION CONTACT:

Roseanna Ciarlante by telephone on (267) 932-8640, by fax at (202) 606-4430, by TTY at (202) 418-3134, or by email at [email protected]

SUPPLEMENTARY INFORMATION:

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.

Discussion of Comments

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.

Regulatory Impact Analysis

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.

Reducing Regulation and Controlling Regulatory Costs

This final rule is not an E.O. 13771 regulatory action because this rule is not significant under E.O. 12866.

Regulatory Flexibility Act

The Office of Personnel Management certifies that this rule will not have a significant economic impact on a substantial number of small entities.

Unfunded Mandates Act of 1995

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.

Congressional Review Act

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.

Paperwork Reduction Act of 1995

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 Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number.

This rule involves a collection of information subject to the PRA—Standard Form (SF) 15, Application for 10-Point Veteran Preference, OMB No. 3206-0001. OPM is currently reinstating this expired collection with changes to include an expanded population. The systems of record notice for this collection is: OPM GOVT-1 (https://www.opm.gov/information-management/privacy-policy/sorn/opm-sorn-govt-1-general-personnel-records.pdf).

List of Subjects in 5 CFR Part 211

Government employees, Veterans.

U.S. Office of Personnel Management Alexys Stanley, Regulatory Affairs Analyst.

Accordingly, OPM amends part 211 of title 5, Code of Federal Regulations, as follows:

PART 211—VETERAN PREFERENCE 1. The authority citation for part 211 continues to read as follows: Authority:

5 U.S.C. 1302, 2108, 2108a.

2. In § 211.102, revise paragraph (d) introductory text to read as follows:
§ 211.102 Definitions.

(d) Preference eligible means 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.

[FR Doc. 2018-26265 Filed 12-6-18; 8:45 am] BILLING CODE 6325-39-P
OFFICE OF PERSONNEL MANAGEMENT 5 CFR Part 531 RIN 3206-AN64 General Schedule Locality Pay Areas AGENCY:

Office of Personnel Management.

ACTION:

Final rule.

SUMMARY:

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.

DATES:

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.

FOR FURTHER INFORMATION CONTACT:

Joe Ratcliffe by email at [email protected] or by telephone at (202) 606-2838.

SUPPLEMENTARY INFORMATION:

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 Federal Register on behalf of the Pay Agent. (See 83 FR 31694.) The proposed rule proposed linking locality pay area definitions to metropolitan statistical areas (MSAs) and combined statistical areas (CSAs) defined by OMB in OMB Bulletin No. 18-03, and proposed establishing four new locality pay areas: Birmingham-Hoover-Talladega, AL; Burlington-South Burlington, VT; San Antonio-New Braunfels-Pearsall, TX; and Virginia Beach-Norfolk, VA-NC. The proposed rule also proposed adding two “Rest of U.S.” locations to the geographic definitions of two existing locality pay areas and making minor, clarifying changes to the names of two locality pay areas. The proposed rule did not propose modifying the standard commuting and GS employment criteria used in the locality pay program to evaluate, as possible areas of application, locations adjacent to the metropolitan area comprising the basic locality pay area. (A basic locality pay area is an OMB-defined MSA or CSA on which the definition of a locality pay area is based, and an area of application is a location that is not part of a basic locality pay area but is included in the locality pay area. Criteria used to establish areas of application were explained in the proposed rule.)

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 https://www.opm.gov/policy-data-oversight/pay-leave/pay-systems/general-schedule/federal-salary-council/recommedation17.pdf.) Because the Council based that recommendation on the same criteria as used for the four new locality pay areas included in the proposed rule, we have approved the Council's recommendation regarding the two additional locality pay areas. In addition, a number of commenters on the proposed rule supported the establishment of these two additional locality pay areas. Accordingly, these final regulations establish a Corpus Christi-Kingsville-Alice, TX, locality pay area and an Omaha-Council Bluffs-Fremont, NE-IA, locality pay area. As with the four new locality pay areas included in the proposed rule, locality pay rates for the two additional new locality pay areas will be set by the President at a later date after they are established by these final regulations.

Impact and Implementation

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.

Comments on the Proposed Rule

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 https://www.whitehouse.gov/wp-content/uploads/2018/04/OMB-BULLETIN-NO.-18-03-Final.pdf.) Where a locality pay area defined in these regulations lists one or more locations in addition to the MSA or CSA comprising the basic locality pay area, those additional locations are areas of application that meet criteria recommended by the Federal Salary Council and approved by the President's Pay Agent. OPM plans to post the definitions of locality pay areas on its website soon after these final regulations are issued.

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 http://www.opm.gov/policy-data-oversight/pay-leave/pay-and-leave-flexibilities-for-recruitment-and-retention.

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 factors that affect the supply of and demand for labor, and therefore labor costs, in a locality pay area.

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.

Expected Impact of the Final Rule

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.

Regulatory Procedures Executive Order 12866, “Regulatory Planning and Review” and Executive Order 13563, “Improving Regulation and Regulatory Review”

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).

Reducing Regulation and Controlling Regulatory Costs

This rule is not an Executive Order 13771 regulatory action because this rule is related to agency organization, management, or personnel.

Regulatory Flexibility Act

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.

Federalism

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.

Civil Justice Reform

This regulation meets the applicable standard set forth in Executive Order 12988.

Unfunded Mandates Act of 1995

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.

Congressional Review Act

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.

Paperwork Reduction Act

This rule does not impose any new reporting or record-keeping requirements subject to the Paperwork Reduction Act.

List of Subjects in 5 CFR Part 531

Government employees, Law enforcement officers, Wages.

Office of Personnel Management.

Alexys Stanley, Regulatory Affairs Analyst.

Accordingly, OPM is amending 5 CFR part 531 as follows:

PART 531—PAY UNDER THE GENERAL SCHEDULE 1. The authority citation for part 531 continues to read as follows: Authority:

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.

Subpart F—Locality-Based Comparability Payments 2. In § 531.602, the definitions of “CSA” and “MSA” are revised to read as follows:
§ 531.602 Definitions.

CSA means the geographic scope of a Combined Statistical Area, as defined by the Office of Management and Budget (OMB) in OMB Bulletin No. 18-03.

MSA means the geographic scope of a Metropolitan Statistical Area, as defined by the Office of Management and Budget (OMB) in OMB Bulletin No. 18-03.

3. In § 531.603, paragraph (b) is revised to read as follows:
§ 531.603 Locality pay areas.

(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.

[FR Doc. 2018-26519 Filed 12-3-18; 11:15 am] BILLING CODE 6325-39-P
DEPARTMENT OF AGRICULTURE Office of the Secretary 7 CFR Part 12 [NRCS-2018-0010] RIN 0578-AA65 Highly Erodible Land and Wetland Conservation AGENCY:

Office of the Secretary, USDA.

ACTION:

Interim rule with request for comments.

SUMMARY:

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.

DATES:

Effective December 7, 2018. Comments must be received February 5, 2019.

ADDRESSES:

Comments should be submitted, identified by Docket Number NRCS-2018-0010, using any of the following methods:

Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.

Mail or hand-delivery: Public Comments Processing, Attention: National Leader for Wetland and Highly Erodible Land Conservation, USDA, Natural Resources Conservation Service, 1400 Independence Avenue SW, Washington, DC 20250.

NRCS will post all comments on http://www.regulations.gov. In general, personal information provided with comments will be posted. If your comment includes your address, phone number, email, or other personal identifying information (PII), your comments, including PII, may be available to the public. You may ask in your comment that your PII be withheld from public view, but this cannot be guaranteed.

This rule also may be accessed, and comments submitted, via the internet.

FOR FURTHER INFORMATION CONTACT:

For specific questions about this document, please contact Jason Outlaw at (202) 720-7838 or [email protected].

SUPPLEMENTARY INFORMATION:

Regulatory Certifications Executive Order 12866

This rule is not a “significant regulatory action” under Executive Order 12866.

Regulatory Flexibility Act

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.

Environmental Evaluation

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 [email protected]

Executive Order 12372

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.

Executive Order 12988

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.

Executive Order 13132

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 on the distribution of power and responsibilities among the various levels of government, nor does this rule impose substantial direct compliance costs on State and local governments; therefore, consultation with the States is not required.

Executive Order 13175

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.

Unfunded Mandates Reform Act of 1995

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.

Federal Assistance Programs

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.

Paperwork Reduction Act

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).

E-Government Act Compliance

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.

Discussion of Provisions

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.

Wetland Determination Criteria—Policy and Regulatory Clarifications The Complexity of Identification of Wetlands in the Agricultural Landscape

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.

Overview of Wetland Determination Procedures

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.

Step One—Wetland Identification. During the first step of wetland identification, NRCS determines whether the site meets the 1985 Act's definition of wetland “under normal circumstances.” Normal circumstances are those conditions (vegetation, soils, and hydrology) that would occur in the absence of any post-1985 drainage actions, without regard to whether the vegetation has been removed or significantly altered, and during the wet portion of the growing season under normal climatic conditions.

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 Level 1 determination is the use of only off-site resources to confirm the presence or absence of a prevalence of hydrophytic vegetation, a predominance of hydric soil, and the occurrence of wetland hydrology. Each of the three factors is assessed independently of the others. In some States, NRCS augments the Corps Level 1 methods with State Off-Site Methods (SOSM), tailored to unique wetland identification challenges in the State. SOSM identify additional off-site indicators and processes that can be used to assist in the determinations of hydrophytic vegetation, hydric soils, and wetland hydrology.

• A Level 2 determination is based on the use of on-site methods from the Corps Manual and field indicators from the regional supplements for each of the three factors. As appropriate, the FSA Procedures augment the Corps methods. If a Level 2 approach is used, SOSM would not be used since SOSM are designed to augment off-site methods.

• A Level 3 determination is a combination of the use of on-site and off-site indicators or methods among the three factors, but not within a single factor. For example, a Level 3 determination might utilize off-site methods or indicators for soils, then utilize on-site methods and indicators for vegetation and hydrology. If applicable, SOSM would be limited to the factor(s) where a decision is made exclusively from off-site methods/resources, so in this example, SOSM would be used for soils, but not for vegetation or hydrology.

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.

Step 2—Determination of Food Security Act Exemptions/Labels. In this step, NRCS utilizes the wetland/non-wetland base map produced from Step 1 to assign WC labels. WC labels are based on exemptions to the WC provisions, as provided in § 12.5(b) of this part.

Step 3—Sizing of Wetlands. The last step is to determine the size of each area delineated and assigned a WC label. The delineations, WC labels, and sizes of each delineation are documented on the certified wetland determination map provided to the program participant.

Determining Normal Precipitation

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. “Normal circumstances” as used in the statutory wetland definition is not defined in § 12.2 (Definitions) of this part but is discussed in § 12.31(b) only as it relates to a determination of hydrophytic vegetation. In the FSA Procedures, the term is defined as it relates to the entire wetland identification process. The consideration of normal circumstances includes assessing how disturbance (e.g., tillage, mowing, grazing, application of herbicides, and drainage) might alter the site conditions, and how climate (e.g., dry season, wet season, snow pack, drought, and excessive precipitation) might alter the site conditions. NRCS policy requires the consideration of normal circumstances for each of the three wetland diagnostic factors.

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.

Use of Corps Manual

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 1982, the Army Corps of Engineers and EPA published a joint rule and provided their definition of a wetland as:

“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 Technical Report Y-87-1 Corps of Engineers Wetlands Delineation Manual and Wetland Identification and Delineation Manual (EPA 1988 Manual).

In the 1985 Act, Congress defined wetlands subject to the WC provisions as:

land that has a predominance of hydric soils and that is inundated or saturated by surface or groundwater at a frequency and duration sufficient to support, and that under normal circumstances does support, a prevalence of hydrophytic vegetation typically adapted for life in saturated soil conditions. In the Urgent Supplemental Appropriation Act, 1986, Congress added the following to the wetland definition: this term shall not include lands in Alaska identified as having high potential for agricultural development which have a predominance of permafrost soils.

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.

Definition of Pothole, Playa, and Pocosin

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.

Hydrology Criteria for Farmed Wetland, Farmed Wetland Pasture, and Prior Converted Cropland

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.

Best Drained Condition

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.

Wetland Hydrology

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.

Tract Versus Field

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, NRCS is replacing the term “tract” with the term “field or sub-field” in 7 CFR 12.30(c), so that it is clear that all wetland determinations will be done on a field or sub-field basis and will be considered certified wetland determinations.

Wetland Minimal Effect Determinations

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.

Wetland Determination Certification

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.

List of Subjects in 7 CFR Part 12

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:

PART 12—HIGHLY ERODIBLE LAND CONSERVATION AND WETLAND CONSERVATION 1. The authority citation for part 12 continues to read as follows: Authority:

16 U.S.C. 3801, 3811-12, 3812a, 3813-3814, and 3821-3824.

2. Amend § 12.2(a) as follows: a. Add definitions, for “Best drained condition”, “Normal climatic conditions”, “Playa”, “Pocosin”, and “Pothole”, in alphabetical order; b. Revise paragraphs (4), (5), and (8) of the definition for “Wetland determination”; and c. Add the definition of “Wetland hydrology”, in alphabetic order.

The additions and revision read as follows:

§ 12.2 Definitions.

(a) * * *

Best drained condition means the hydrologic conditions with respect to depth, duration, frequency, and timing of soil saturation or inundation resulting from drainage manipulations that occurred prior to December 23, 1985, and that exist during the wet portion of the growing season during normal climatic conditions.

Normal climatic conditions means the normal range of hydrologic inputs on a site as determined by the bounds provided in the Climate Analysis for Wetlands Tables or methods posted in the Field Office Technical Guide.

Playa means a usually dry and nearly level lake plain that occupies the lowest parts of closed depressions (basins). Temporary inundation occurs primarily in response to precipitation-runoff events. Playas may or may not be characterized by high water table and saline conditions. They occur primarily in the Southern Great Plains.

Pocosin means a wet area on nearly level interstream divides in the Atlantic Coastal Plain. Soils are generally organic but may include some areas of high organic mineral soils.

Pothole means a closed depression, generally circular, elliptical, or linear in shape, occurring in glacial outwash plains, moraines, till plains, and glacial lake plains.

Wetland determination * * *

(4) Farmed wetland is a wetland that prior to December 23, 1985, was manipulated and used to produce an agricultural commodity, and on December 23, 1985, did not support woody vegetation, and met the following hydrologic criteria:

(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) Farmed-wetland pasture is wetland that was manipulated and managed for pasture or hayland prior to December 23, 1985, and on December 23, 1985, experienced inundation or ponding for 7 or more consecutive days during the growing season in most years (50-percent chance or 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:

(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) Prior-converted cropland is a converted wetland where the conversion occurred prior to December 23, 1985, an agricultural commodity had been produced at least once before December 23, 1985, and as of December 23, 1985, the converted wetland did not support woody vegetation and did not meet the hydrologic criteria for farmed wetland.

Wetland hydrology means inundation or saturation by surface or groundwater during a growing season at a frequency and duration sufficient to support a prevalence of hydrophytic vegetation.

3. Amend § 12.21 by revising paragraph (c) to read as follows:
§ 12.21 Identification of highly erodible lands criteria.

(c) Potentially highly erodible. Whenever a soil map unit description contains a range of a slope length and steepness characteristics that produce a range of LS values that result in RKLS/T quotients both above and below 8, the soil map unit will be entered on the list of highly erodible soil map units as “potentially highly erodible.” The final determination of erodibility for an individual field containing these soil map unit delineations will be made by an on-site investigation, or by use of Light Detection and Ranging or other elevation data of an adequate resolution to make slope length and steepness measurements. In any case where a person disagrees with an off-site determination on potentially highly erodible soils, a determination will be made on-site.

4. Amend § 12.30 by revising paragraph (c)(1), and adding paragraph (c)(7), to read as follows:
§ 12.30 NRCS responsibilities regarding wetlands.

(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. Determinations made after November 28, 1990, and before July 3, 1996, are considered certified if the determination was issued on the June 1991 version of form NRCS-CPA-026 or SCS-CPA-026, the person was notified that the determination had been certified, and the map document was of sufficient quality to determine ineligibility for program benefits. If issued on a different version of the form, a determination will be considered certified if there is other documentation that the person was notified of the certification, provided appeal rights, and the map document was of sufficient quality to make the determination.

(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.

5. Amend § 12.31 by revising the section heading, redesignating paragraphs (c) through (e) as paragraphs (d) through (f), adding a new paragraph (c), and revising newly redesignated paragraph (e) to read as follows:
§ 12.31 Wetland identification procedures.

(c) Wetland Hydrology. (1) Wetland Hydrology consists of inundation or saturation by surface or groundwater during a growing season at a frequency and duration sufficient to support a prevalence of hydrophytic vegetation.

(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) Minimal effect determination. For the purposes of § 12.5(b)(1)(v), NRCS shall determine whether the effect of any action of a person associated with the conversion of a wetland, the conversion of wetland and the production of an agricultural commodity on converted wetland, or the combined effect of the production of an agricultural commodity on a wetland converted by someone else has a minimal effect on the functions and values of wetlands in the area. Such determination shall be based upon a functional assessment of functions and values of the subject wetland and other related wetlands in the area. The assessment of functions and values of the subject wetland will be made through an on-site evaluation. Such an assessment of related wetlands in the area may be made based on a general knowledge of wetland conditions in the area. A request for such determination will be made prior to the beginning of activities that would convert the wetland. If a person has converted a wetland and then seeks a determination that the effect of such conversion on wetland was minimal, the burden will be upon the person to demonstrate to the satisfaction of NRCS that the effect was minimal.

(2) Scope of minimal-effect determination. The production of an agricultural commodity on any portion of a converted wetland in conformance with a minimal-effect determination by NRCS is exempt under § 12.5(b)(1)(v). However, any additional action of a person that will change the functions and values of a wetland for which a minimal-effect determination has been made shall be reported to NRCS for a determination of whether the effect continues to be minimal. The loss of a minimal-effect determination will cause a person who produces an agricultural commodity on the converted wetland after such change in status to be ineligible, under § 12.4, for certain program benefits. In situations where the wetland values, acreage, and functions are replaced by the restoration, enhancement, or creation of a wetland in accordance with a mitigation plan approved by NRCS, the exemption provided by the determination will be effective after NRCS determines that all practices in a mitigation plan are being implemented.

Dated: November 28, 2018. Stephen L. Censky, Deputy Secretary.
[FR Doc. 2018-26521 Filed 12-6-18; 8:45 am] BILLING CODE 3410-16-P
DEPARTMENT OF AGRICULTURE Food Safety and Inspection Service 9 CFR Parts 317 and 381 [Docket No. FSIS-2018-0049] RIN 0583-AD77 Uniform Compliance Date for Food Labeling Regulations AGENCY:

Food Safety and Inspection Service, USDA.

ACTION:

Final rule.

SUMMARY:

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.

DATES:

This rule is effective December 7, 2018. Comments on this final rule must be received on or before January 7, 2019.

ADDRESSES:

FSIS invites interested persons to submit comments on this final rule. Comments may be submitted by one of the following methods:

Federal eRulemaking Portal: This website provides the ability to type short comments directly into the comment field on this web page or attach a file for lengthier comments. Go to http://www.regulations.gov. Follow the on-line instructions at that site for submitting comments.

Mail, including CD-ROMs, etc.: Send to Docket Clerk, U.S. Department of Agriculture, Food Safety and Inspection Service, 1400 Independence Avenue SW, Mailstop 3758, Room 6065, Washington, DC 20250-3700.

Hand- or courier-delivered submittals: Deliver to 1400 Independence Avenue SW, Room 6065, Washington, DC 20250-3700.

Instructions: All items submitted by mail or electronic mail must include the Agency name and docket number FSIS-2018-0049. Comments received in response to this docket will be made available for public inspection and posted without change, including any personal information, to http://www.regulations.gov.

Docket: For access to background documents or comments received, call (202)720-5627 to schedule a time to visit the FSIS Docket Room at 1400 Independence Avenue SW, Room 6065, Washington, DC 20250-3700.

FOR FURTHER INFORMATION CONTACT:

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.

SUPPLEMENTARY INFORMATION:

Background

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 Final Rule

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, and the Regulatory Flexibility Act

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).

Additional Public Information

Public awareness of all segments of rulemaking and policy development is important. Consequently, FSIS will announce this Federal Register publication online through the FSIS web page located at: http://www.fsis.usda.gov/federal-register.

FSIS also will make copies of this publication available through the FSIS Constituent Update, which is used to provide information regarding FSIS policies, procedures, regulations, Federal Register notices, FSIS public meetings, and other types of information that could affect or would be of interest to our constituents and stakeholders. The Constituent Update is available on the FSIS web page. Through the web page, FSIS is able to provide information to a much broader, more diverse audience. In addition, FSIS offers an email subscription service, which provides automatic and customized access to selected food safety news and information. This service is available at: http://www.fsis.usda.gov/subscribe. Options range from recalls to export information, regulations, directives, and notices. Customers can add or delete subscriptions themselves, and have the option to password protect their accounts.

USDA Non-Discrimination Statement

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.

How To File a Complaint of Discrimination

To file a complaint of discrimination, complete the USDA Program Discrimination Complaint Form, which may be accessed online at http://www.ocio.usda.gov/sites/default/files/docs/2012/Complain_combined_6_8_12.pdf, or write a letter signed by you or your authorized representative.

Send your completed complaint form or letter to USDA by mail, fax, or email:

Mail: U.S. Department of Agriculture, Director, Office of Adjudication, 1400 Independence Avenue SW, Washington, DC 20250-9410.

Fax: (202) 690-7442.

Email: [email protected]

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.

Paul Kiecker, Acting Administrator.
[FR Doc. 2018-26526 Filed 12-6-18; 8:45 am] BILLING CODE 3410-DM-P
FEDERAL HOUSING FINANCE AGENCY 12 CFR Part 1271 RIN 2590-AA99 Miscellaneous Federal Home Loan Bank Operations and Authorities—Financing Corporation Assessments AGENCY:

Federal Housing Finance Agency.

ACTION:

Final rule.

SUMMARY:

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.

DATES:

The rule is effective on January 7, 2019.

FOR FURTHER INFORMATION CONTACT:

Louis M. Scalza, Associate Director, Examinations, Office of Safety & Soundness Examinations, [email protected], (202) 649-3710; Winston Sale, Assistant General Counsel, [email protected], (202) 649-3081; or Neil R. Crowley, Deputy General Counsel, [email protected], (202) 649-3055 (these are not toll-free numbers), Federal Housing Finance Agency, 400 Seventh Street SW, Washington, DC 20219. The telephone number for the Telecommunications Device for the Hearing Impaired is (800) 877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

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.1 FHFA also is responsible for overseeing FICO. The Competitive Equality Banking Act of 1987 2 amended the Federal Home Loan Bank Act (Bank Act) and authorized FHFA's predecessor to establish FICO, and authorizes the FHFA Director to select the two Bank presidents that serve on its directorate, to prescribe such regulations as are necessary to carry out the statutory provisions relating to FICO, and to oversee the dissolution of FICO.3

1 12 U.S.C. 4511.

2 Public Law 100-86, 101 Stat. 552.

3See 12 U.S.C. 1441(a) (establishment of FICO), (b)(1)(B) (selection of directors), (i) (dissolution, and authority for FHFA to exercise any FICO powers, needed to conclude its affairs), and (j) (authority to prescribe regulations).

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).4 The Recapitalization Act's purpose was to recapitalize the FSLIC insurance fund, which had been significantly depleted by a wave of savings and loan (S&L) failures during the S&L crisis of the 1980s. FICO's mission was to provide funding for FSLIC (and later for the FSLIC Resolution Fund after FSLIC's insolvency and later abolishment by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA)) by selling bonds to the public. FICO's operations are managed by a directorate composed of the Director of the Office of Finance and two Bank presidents who rotate after serving one year terms.5 FICO has no permanent staff and utilizes Office of Finance staff to execute its day-to-day functions.

4See 12 U.S.C. 1441(a).

5See 12 U.S.C. 1441(b).

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.6 FICO used the proceeds from the stock issuances to purchase U.S. Treasury zero-coupon securities (Zeros), which were to be the sole source of repayment of the principal of the bonds to be issued by FICO. Between 1987 and 1989 FICO issued 14 separate series of 30-year bonds (Obligations) in an aggregate principal amount of approximately $8.2 billion. FICO conveyed the proceeds of the Obligations to FSLIC, to finance its resolution of failed S&Ls.7 FICO is required by statute to hold the Zeros in a segregated account until they are used to pay the principal due on the Obligations at their maturity.8 The Obligations began to mature in 2017, and the last Obligation will mature in September 2019.

6See 12 U.S.C. 1441(d)(4). FICO issued the stock in a series of transactions between 1987 and 1989, each in anticipation of an issuance of a particular series of the FICO bonds.

7 FICO used the net proceeds from the first 13 series of its Obligations to purchase nonredeemable capital certificates and nonredeemable nonvoting capital stock issued by the FSLIC. After the FSLIC was abolished in 1989, FICO used the proceeds from its final series of Obligations to purchase nonredeemable capital certificates issued by the FSLIC Resolution Fund, the statutory successor to the FSLIC. See 12 U.S.C. 1821a (establishment of FSLIC Resolution Fund). Those instruments have no value and have been charged to FICO's capital.

8See 12 U.S.C 1441(g)(2).

The Recapitalization Act established a different source for providing the funds needed to service the semiannual interest payments on the FICO Obligations.9 The statute initially authorized FICO to assess FSLIC-insured depository institutions for the funds needed to pay the interest due on the FICO Obligations.10 The Deposit Insurance Funds Act of 1996 authorized FICO to assess against institutions with deposits insured by both the Bank Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF).11 Pursuant to the Federal Deposit Insurance Reform Act of 2005, effective March 31, 2006, the BIF and SAIF were merged into the newly created Deposit Insurance Fund (DIF), and thus FICO may assess institutions insured by the DIF.12 FICO is authorized to assess insured depository institutions only for three purposes: For making interest payments on the FICO Obligations; paying issuance costs for the FICO Obligations; and paying custodial fees associated with the FICO Obligations. The Bank Act, as amended by FIRREA, further provides that FICO is to conduct its assessments in the same manner that the FDIC uses when assessing its insured depository institutions for deposit insurance purposes.13 FICO and the FDIC entered into a memorandum of understanding in 1997 (Memorandum of Understanding), as amended in 1999, pursuant to which the FDIC collects FICO's assessments from its insured depository institutions quarterly, as agent for FICO.

9 Interest on each FICO Obligation is paid on the anniversary of its issuance date, and six months after that date each year.

10 Public Law 100-86, sec, 302, 101 Stat. 552, 591-592.

11 Public Law 104-208, sec. 2703, 110 Stat. 3009-479, 3009-485.

12 Public Law 109-171, sec. 2102, 120 Stat. 9.

13 12 U.S.C. 1441(f)(2).

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.14

14See 12 U.S.C. 1817(e)(1) (addressing refunds of overpayments of FDIC assessments).

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.15 Insured depository institutions submit payment for their FDIC and FICO assessments to the FDIC via Automated Clearing House (ACH). The FDIC then transfers the aggregate FICO collections to an account that FICO maintains at the Federal Reserve Bank of New York, from which FICO pays the interest that is due on the FICO Obligations.

15 The FDIC provides to each institution a Quarterly Certified Statement Invoice that specifies the total amount of that quarter's assessment, including the FDIC assessment and the FICO assessment for that calendar quarter.

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.16 Pursuant to the Memorandum of Understanding, overpayments arising from amended call reports are generally credited against the next quarter's FICO assessment and underpayments are added to the next quarter's FICO assessment.

16See 12 U.S.C. 1817(g)(2) (establishing a three-year statute of limitations on actions by insured depository institutions to recover overpayments from FDIC, and on actions by FDIC to recover underpayments from the insured institutions).

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.17 To the extent overpayment credits exceed underpayment collections, such shortfall is made up the following quarter by increasing the total collection amount accordingly. Moreover, because the determination of the quarterly multiplier for setting the FICO assessment involves rounding, any quarterly collection of the FICO assessment may yield slightly more money than the initially projected assessment amount. Pursuant to the Memorandum of Understanding with the FDIC, FICO also maintains a cash reserve that is available to make up modest shortfalls that might arise during a quarterly collection. FICO has never needed to use the cash reserve, because it has always collected sufficient funds to make all required interest payments when due. FHFA anticipates that FICO will draw down the monies in its cash reserve to fund a portion of the remaining interest payments on its Obligations as they come due, which also would reduce the amount needed to be assessed and collected from insured depository institutions during 2019.

17 The number of call report amendments submitted during a particular calendar quarter that will affect a FICO assessment will vary, but is small in comparison to the number of insured depository institutions filing call reports with FDIC. Generally speaking, the dollar amounts of the gross FICO refunds and FICO additional collections for any calendar quarter are also small, and the net amounts of such adjustments during a particular quarter often are less than $100,000.

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 2019.18 FHFA anticipates that the FDIC, as agent for FICO, will collect one FICO assessment during 2019 and that the amounts received by FICO from the March 2019 collection will be sufficient (when combined with any other available funds that FICO will have on hand) to make all remaining interest payments due during 2019. Accordingly, once the final FICO assessment has been collected, there will be no subsequent billing cycle through which an insured depository institution could have a prior FICO assessment adjusted, i.e., the FDIC, which will cease to be collection agent for FICO, will no longer invoice institutions for FICO assessments that could be adjusted to reflect increases or decreases attributable to amendments to their prior period call reports. Because FICO assessments are collected in the same manner as FDIC assessments, the FDIC's billing practices, as agent for FICO, have long included the above-described adjustment provision for the FICO assessments. Thus, FHFA has determined that it is appropriate, as FICO's regulator, to adopt a rule to make clear that such adjustments must cease after FICO has collected its final assessment from the insured depository institutions, and that FICO has no obligation to make any adjustments to prior FICO assessments.

18 Two interest payments, in the approximate amount of $28 million each, are due during March 2019, and FICO will collect monies needed to make those payments during the December 2018 collection. The remaining three interest payments, in the approximate amounts of $26 million each, are due during April, June, and September 2019, and FICO will collect monies needed to make those payments during the March 2019 collection.

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.

II. The Proposed Rule

On September 26, 2018, FHFA published in the Federal Register a Notice of Proposed Rulemaking (proposed rule) to amend 12 CFR 1271.37 of the FHFA regulations, which governs the assessment and collection of monies from FDIC-insured institutions to pay interest on the FICO Obligations. The 30-day comment period for the proposed rule ended on October 26, 2018. FHFA received no comments on the substance of the proposed rule or on its discussion relating to the applicability of the Regulatory Flexibility Act. FHFA's interpretation of the facts and legal authorities governing FICO's assessments in view of its impending dissolution remain unchanged. Thus, this final rule adopts without change all of the regulatory additions set forth in the proposed rule.

III. The Final Rule

Content of the Final Rule. The final rule does four things. First, it provides that all FICO assessments collected during 2019 will be final, meaning that there will be no possibility of any subsequent adjustments to those assessment amounts. Second, it provides that after the collection of the final FICO assessment (which is expected to occur on March 29, 2019) no insured depository institution will be entitled to any adjustment of any prior FICO assessment that arises as a result of an amendment to the call report on which the prior assessment had been based. This recognizes the fact that adjustments to prior FICO assessments can only be made as part of the process of collecting a subsequent FICO assessment. Third, it preserves the existing adjustment practice through the final FICO assessment collection, i.e., it would allow the FDIC, as agent for FICO, to adjust the March 2019 FICO assessment for any institution to reflect amendments that the institution has made to its call reports for any calendar quarters prior to and including the fourth quarter of 2018. This provision is phrased in terms of setting March 26, 2019—the projected date as of which the FDIC will finalize the amounts due for the March 2019 FICO assessment—as the last date for any such call report amendments to affect the institution's FICO assessments.19 Fourth, this final rule includes a provision that is intended to address the possibility, which FHFA believes to be small, that FICO may need to conduct another assessment in June 2019, which would occur only if the March collection did not yield sufficient monies to make the remaining interest payments on the FICO bonds. This provision has been drafted to preserve the current practice of allowing an insured depository institution to amend the call report on which its June FICO assessments will be based up until the date on which the FDIC finalizes the amounts due from each institution for that quarter. This paragraph provides that any amendments to the call reports for the calendar quarter ending on March 31, 2019 that are submitted after June 25, 2019, the anticipated date on which the FDIC would finalize payments for the collection, will not affect the institution's FICO assessment. Any amended call reports for the first quarter of 2019 submitted prior to that date will be used to calculate the June assessments. This is consistent with current practice for FICO assessments, under which payment amounts for FICO assessments are finalized three days prior to the date of collection.

19 For example, an insured depository institution that amends a prior period call report on or before March 26, 2019 will receive an appropriate adjustment to the assessment amount anticipated to be collected on March 29, 2019. An institution that amends a prior period call report after that date will not receive any adjustment to its prior FICO assessment because there is not expected to be another FICO assessment after that date.

Analysis. In the absence of an ongoing FICO assessment process continuing after March 2019, there will be no funding mechanism for FICO to provide an insured depository institution a credit for any overpayment of a prior FICO assessment or to bill it for any underpayment of a prior assessment. FHFA has therefore determined to provide clarity and finality by affirmatively declaring the FICO assessment adjustment practices terminated, effective with the collection of the final FICO assessment. FHFA is mindful of the statutory requirement that FICO should assess the depository institutions for its interest costs in the same manner as the FDIC assesses those institutions for deposit insurance purposes. FHFA also understands, however, that the FDIC has an established practice of allowing insured depository institutions to have adjustments made to their prior FDIC assessments if they later amend the call report data on which those assessments were based, provided it occurs within the three-year statutory period, a practice that will not be available when the FICO assessments cease.

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, i.e., the final rule would preserve the existing FDIC adjustment process through and including what is expected to be the final collection of the FICO assessment in March 2019. Until that final collection has been completed, all insured depository institutions that are eligible to be credited a refund for any prior overpayment of their FICO assessment or to be billed for any prior underpayment of their FICO assessment will be able to continue to have the appropriate adjustment included in the calculation of the amount they are required to pay.

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 other institutions because its authority is limited to assessing the institutions only for monies needed for interest payments, issuance costs, and custodial fees. Finally, Congress has mandated that FHFA dissolve FICO as soon as practicable after it has repaid the last of its Obligations, which evidences an intent that FICO may not undertake any new activities, such as facilitating collections from and payments to insured institutions, after FICO has repaid its Obligations.

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, i.e., the insured depository institutions generally owe more for underpayments than they are entitled to receive in refunds. From mid-2011 through the last 2017 assessment period, the average net quarterly adjustment of prior FICO assessments resulting from all institutions' amendments to their prior call reports was approximately $95,000 of additional collections of prior FICO underpayments. As noted previously, and notwithstanding the typically modest numbers involved, this final rule has been drafted so as to preserve, through the date of the final FICO collection, the current practice of allowing all insured depository institutions to have their FICO assessments adjusted to reflect amendments to their prior call reports up until the date that FDIC finalizes the amount of each institution's final FICO assessment in March 2019.

IV. Paperwork Reduction Act

The Paperwork Reduction Act (44 U.S.C. 3501 et seq.) requires that regulations involving the collection of information receive clearance from the Office of Management and Budget (OMB). This rule contains no such collection of information requiring OMB approval under the Paperwork Reduction Act. Consequently, no information has been submitted to OMB for review.

V. Regulatory Flexibility Act

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.20 A Final Regulatory Flexibility Act analysis is not required, however, if the agency certifies that the rule will not have a significant economic effect on a substantial number of small entities, and publishes its certification and a short explanatory statement in the Federal Register together with the final rule. The SBA has defined “small entities” to include banking organizations with total assets less than or equal to $550 million.21 As discussed further below, FHFA certifies that this final rule will not have a significant impact on a substantial number of FDIC-insured small entities.

20 5 U.S.C. 601 et seq.

21 13 CFR 121.201 (as amended, effective December 2, 2014).

Description of Need and Policy Objectives

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.

Description of the Final Rule

A description of this final rule is presented in Section III: Final Rule. Please refer to it for further information.

Other Federal Rules

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.

Economic Impacts on Small Entities

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.22 Each insured depository institution's share of the FICO assessment is based on the insured depository institution's self-reported call report data, which the depository institution may amend after their initial filing with the FFIEC. Because decisions to amend previously filed call reports are solely within the control of the insured depository institution, it is not possible to predict how many depository institutions may amend a prior period call report during any calendar quarter, how many of those institutions amending a prior call report would be small entities for RFA purposes, whether the call report amendments would affect the calculation of an individual institution's prior FICO assessment, the dollar amount by which a prior FICO assessment had changed as a result of an amended call report, or the net amount of all such changes for all insured depository institutions, i.e., whether the dollar amount of all refunds for prior overpayments was greater or less than the dollar amount of all billings for prior underpayments. Based on historical FFIEC data relating to call report amendments that affected individual institution FICO assessments, however, it appears that this final rule will not affect a substantial number of small entities, and that the economic effect on those small entities that may be affected by this final rule will not be significant. Indeed, the potential net economic effect on those small entities will most likely be positive, meaning that more of them would receive a financial benefit—being relieved of the obligation to pay for any prior underpayment of a FICO assessment—than would experience the negative effect of losing refunds for prior overpayment of FICO assessments.

22 Call Report data as of March 31, 2018.

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, i.e., where an institution amended call reports for each of the twelve calendar quarters in the three year period and was entitled to an overpayment credit for each quarter of $1,350 each, the potential cost to that institution would be $16,200. In a similar fashion, assuming the largest possible estimated billings, i.e., where the institution amended its twelve most recent call reports and had underpaid each of the FICO assessments for those periods, the potential savings to that institution would be $28,440. These figures indicate that this final rule will likely not have a significant economic effect on even the smallest banking entities. When viewed in the aggregate, it appears that the most likely net effect on all FDIC insured institutions, including small entities, will be positive because the available data indicates that most adjustments to prior FICO assessments result in the depository institution paying additional amounts to make up for prior underpayments of its prior period FICO assessments, and that the amounts of such billings are greater than the amounts of any 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.

Alternatives Considered

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.

List of Subjects in 12 CFR Part 1271

Accounting, Community development, Credit, Federal home loan banks, Government securities, Housing, Miscellaneous federal home loan bank operations and authorities, Reporting and recordkeeping requirements.

Authority and Issuance

Accordingly, for reasons stated in the SUPPLEMENTARY INFORMATION and under the authority of 12 U.S.C. 1431(a), 1432(a), 4511(b), 4513, 4526(a), FHFA amends subchapter D of chapter XII of title 12 of the Code of Federal Regulations as follows:

PART 1271—MISCELLANEOUS FEDERAL HOME LOAN BANK OPERATIONS AND AUTHORITIES 1. The authority citation for part 1271 continues to read as follows: Authority:

12 U.S.C. 1430, 1431, 1432, 1441(b)(8), (c), (j), 1442, 4511(b), 4513(a), 4526.

2. Amend § 1271.37 by adding paragraph (d) to read as follows:
§ 1271.37 Non-administrative expenses; assessments.

(d)(1) Final assessments. All Financing Corporation assessments collected during 2019 shall be final. Subsequent to March 29, 2019, no insured depository institution shall have any right to receive refunds for any overpayment of any prior Financing Corporation assessments nor shall it be billed for any underpayment of any prior Financing Corporation assessments that arise as a result of an amendment to any Consolidated Reports of Condition and Income on which the prior Financing Corporation assessment had been based.

(2) Amendments to call reports. Amendments to an institution's Consolidated Reports of Condition and Income for quarters prior to and including the fourth quarter of 2018 shall not affect an institution's Financing Corporation assessments after March 26, 2019.

(3) June 2019 assessment. In the event Financing Corporation assessments are collected in June 2019, amendments to an institution's first quarter 2019 Consolidated Reports of Condition and Income that are submitted after June 25, 2019 shall not affect the institution's Financing Corporation assessment.

Dated: November 26, 2018. Melvin L. Watt, Director, Federal Housing Finance Agency.
[FR Doc. 2018-26449 Filed 12-6-18; 8:45 am] BILLING CODE 8070-01-P
DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 165 [Docket Number USCG-2018-0843] RIN 1625-AA00 Safety Zone; Barters Island Bridge, Back River, Barters Island, ME AGENCY:

Coast Guard, DHS.

ACTION:

Temporary final rule.

SUMMARY:

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.

DATES:

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.

ADDRESSES:

To view documents mentioned in this preamble as being available in the docket, go to https://www.regulations.gov, type USCG-2018-0843 in the “SEARCH” box and click “SEARCH.” Click on Open Docket Folder on the line associated with this rule.

FOR FURTHER INFORMATION CONTACT:

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 [email protected]

SUPPLEMENTARY INFORMATION:

I. Table of Abbreviations CFR Code of Federal Regulations COTP Captain of the Port DHS Department of Homeland Security FR Federal Register NPRM Notice of proposed rulemaking § Section U.S.C. United States Code MEDOT Maine Department of Transportation II. Background, Purpose, and Legal Basis

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 Federal Register. Delaying the effective date of this rule would be impracticable because immediate action is needed to respond to the potential safety hazards associated with demolition, subsequent removal, and replacement of the Barters Island Bridge and a temporary bridge.

III. Legal Authority and Need for Rule

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.

IV. Discussion of Comments, Changes, and the Rule

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 Federal Register, the Local Notice to Mariners, and Broadcast Notice to Mariners via marine Channel 16 (VHF-FM) in advance of any enforcement.

V. Regulatory Analyses

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.

A. Regulatory Planning and Review

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).

B. Impact on Small Entities

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 FOR FURTHER INFORMATION CONTACT section. The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

C. Collection of Information

This rule would not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

D. Federalism and Indian Tribal Governments

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 FOR FURTHER INFORMATION CONTACT section.

E. Unfunded Mandates Reform Act

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.

F. Environment

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 Record of Environmental Consideration supporting this determination is available in the docket where indicated under ADDRESSES.

G. Protest Activities

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places, or vessels.

List of Subjects in 33 CFR Part 165

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:

PART 165—REGULATED NAVIGATION AREAS AND LIMITED ACCESS AREAS 1. The authority citation for part 165 continues to read as follows: Authority:

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.

2. Add § 165.T01-0843 to read as follows:
§ 165.T01-0843 Safety Zone; Barters Island Bridge, Back River, Barters Island, ME.

(a) Location. The following area is a safety zone: All navigable waters on Back River, within a 50-yard radius of the center point of the Barters Island Bridge that spans Back River between Barters Island and Hodgdon Island in position 43°52′51″ N, 069°40′19″ W (NAD 83).

(b) Definitions. As used in this section:

Designated representative means any Coast Guard commissioned, warrant, petty officer, or any federal, state, or local law enforcement officer who has been designated by the Captain of the Port (COTP) Northern New England, to act on his or her behalf. The designated representative may be on an official patrol vessel or may be on shore and will communicate with vessels via VHF-FM radio or loudhailer. In addition, members of the Coast Guard Auxiliary may be present to inform vessel operators of this regulation.

Official patrol vessels means any Coast Guard, Coast Guard Auxiliary, state, or local law enforcement vessels assigned or approved by the COTP Northern New England to enforce this section.

(c) Effective and enforcement period. This rule is effective without actual notice from December 7, 2018 through 11:59 p.m. on January 31, 2021. For the purposes of enforcement, actual notice will be used from 12:01 a.m. on December 1, 2018 through December 7, 2018. This rule will only be enforced during operations on replacement of the Barters Island Bridge or other instances which may cause a hazard to navigation, or when deemed necessary by the Captain of the Port (COTP), Northern New England.

(d) Regulations. The general regulations contained in § 165.23, as well as the following regulations, apply:

(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.

Dated: November 30, 2018. B.J. LeFebvre, Captain, U.S. Coast Guard, Captain of the Port, Sector Northern New England.
[FR Doc. 2018-26578 Filed 12-6-18; 8:45 am] BILLING CODE 9110-04-P
LIBRARY OF CONGRESS Copyright Office 37 CFR Parts 201, 203, and 210 [Docket No. 2018-10] Notices of Intention and Statements of Account Under Compulsory License To Make and Distribute Phonorecords of Musical Works AGENCY:

U.S. Copyright Office, Library of Congress.

ACTION:

Interim rule with request for comments.

SUMMARY:

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.

DATES:

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.

ADDRESSES:

For reasons of government efficiency, the Copyright Office is using the regulations.gov system for the submission and posting of public comments in this proceeding. All comments are therefore to be submitted electronically through regulations.gov. Specific instructions for submitting comments are available on the Copyright Office's website at https://www.copyright.gov/rulemaking/mma-115-techamend/. If electronic submission of comments is not feasible due to lack of access to a computer and/or the internet, please contact the Office using the contact information below for special instructions.

FOR FURTHER INFORMATION CONTACT:

Regan A. Smith, General Counsel and Associate Register of Copyrights, by email at [email protected], Steve Ruwe, Assistant General Counsel, by email at [email protected], or Jason E. Sloan, Assistant General Counsel, by email at [email protected] Each can be contacted by telephone by calling (202) 707-8350.

SUPPLEMENTARY INFORMATION:

I. Background

On October 11, 2018, the president signed into law the Orrin G. Hatch-Bob Goodlatte Music Modernization Act (“MMA”).1 This bipartisan and unanimously enacted legislation represents the realization of years of effort by a wide array of policymakers and stakeholders, as well as the U.S. Copyright Office, to update the music licensing landscape to better facilitate legal licensing of music by digital services.2

1 Public Law 115-264, 132 Stat. 3676 (2018).

2See S. Rep. No. 115-339, at 1-2 (2018); Report and Section-by-Section Analysis of H.R. 1551 by the Chairmen and Ranking Members of Senate and House Judiciary Committees, at 1 (2018), https://judiciary.house.gov/wp-content/uploads/2018/04/Music-Modernization-Act.pdf; see also H.R. Rep. No. 115-651, at 2-3 (2018) (detailing the House Judiciary Committee's efforts to review music copyright laws).

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.3

3See 17 U.S.C. 115(b)(1), (c)(5) (2017); U.S. Copyright Office, Copyright and the Music Marketplace 28-31 (2015), https://www.copyright.gov/policy/musiclicensingstudy/copyright-and-the-music-marketplace.pdf (describing operation of prior section 115 license).

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.4 Instead of licensing one song at a time by serving NOIs on individual copyright owners, the blanket license will cover all musical works available for compulsory licensing and will be centrally administered by a new entity called the mechanical licensing collective (“MLC”), to be designated by the Register of Copyrights.5 Under the MMA, compulsory licensing of phonorecords that are not DPDs (e.g., CDs, vinyl, tapes, and other types of physical phonorecords) continues to operate on a per-work, song-by-song basis, the same as before.6

4 17 U.S.C. 115(d)(1), (e)(7); see H.R. Rep. No. 115-651, at 4-6 (describing operation of the blanket license and the new mechanical licensing collective); S. Rep. No. 115-339, at 3-6 (same).

5 17 U.S.C. 115(d)(1), (3).

6Id. 115(b)(1); see H.R. Rep. No. 115-651, at 3 (noting “[t]his is the historical method by which record labels have obtained compulsory licenses”); S. Rep. No. 115-339, at 3 (same); see also U.S. Copyright Office, Orrin G. Hatch-Bob Goodlatte Music Modernization Act, https://www.copyright.gov/music-modernization/.

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, 2021.7 Until that time, the MMA “creates a transition period in order to move from the current work-by-work license to the new blanket license.” 8 During this current transition period, anyone seeking to obtain a compulsory license to make DPDs must continue to do so on a song-by-song basis by serving NOIs on copyright owners “if the identity and location of the musical work copyright owner is known,” and paying them applicable royalties accompanied by statements of account.9 If the musical work copyright owner is unknown, a digital music provider may no longer file a NOI with the Copyright Office, but must “continue[] to search for the musical work copyright owner” using good-faith, commercially reasonable efforts.10 The digital music provider must eventually either account for and pay accrued royalties to the relevant musical work copyright owner(s) when found or, if they are not found before the end of the transition period, account for and transfer the royalties to the MLC at that time.11 A digital music provider complying with these requirements can avail itself of a limitation on liability for making an unauthorized DPD to the royalties that would be due under the compulsory license.12

7 17 U.S.C. 115(d)(2)(B), (e)(15).

8 H.R. Rep. No. 115-651, at 10; S. Rep. No. 115-339, at 10.

9 17 U.S.C. 115(b)(2)(A), (c)(2)(I); H.R. Rep. No. 115-651, at 4; S. Rep. No. 115-339, at 3.

10 17 U.S.C. 115(b)(2)(A), (d)(9)(D)(i), (d)(10)(A)-(B); H.R. Rep. No. 115-651, at 4, 10; S. Rep. No. 115-339, at 3, 10, 22.

11 17 U.S.C. 115(d)(10)(B); see H.R. Rep. No. 115-651, at 4, 10; S. Rep. No. 115-339, at 3, 10.

12 17 U.S.C. 115(d)(10)(A)-(B); see H.R. Rep. No. 115-651, at 4, 10; S. Rep. No. 115-339, at 3, 10.

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”).13 As the legislative history notes, the MMA “maintains the `pass-through' license for record labels to obtain and pass through mechanical license rights for individual permanent downloads,” but eliminates the pass-through license for digital music providers “to engage in activities related to interactive streams or limited downloads.” 14

13 17 U.S.C. 115(b)(2)(B), (b)(3), (e)(12); see H.R. Rep. No. 115-651, at 4; S. Rep. No. 115-339, at 3-4.

14 H.R. Rep. No. 115-651, at 4; S. Rep. No. 115-339, at 4.

II. Interim Rule

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.15 The Office declines at this time to substantively amend the existing regulations beyond the statutorily required updates. The intent of the legislation does not signal to the Office that it should be overhauling its existing regulations during the transition period before the blanket license becomes available; such changes could alter private companies' long-established business practices and expectations with respect to NOIs and royalty statements during the transition period beyond what the statute requires. Having said that, the Office welcomes public comment on these amendments and any other specific technical amendments that stakeholders would like the Office to consider.

15 This interim rule also makes minor technical changes to other provisions relating to section 115, such as updating the description of the Office's Licensing Division in its FOIA-related regulations. The Office is also taking this opportunity to make an additional technical update to its FOIA-related regulations to reflect the Office's current organizational structure.

A. Notices of Intention

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 (i.e., physical phonorecords such as CDs, vinyl, or tapes) may still be served on copyright owners or, if the registration or other public records of the Copyright Office do not identify the copyright owner and include an address at which the NOI can be served, filed with the Copyright Office, the same as before enactment of the MMA; (2) NOIs pertaining to DPDs (e.g., permanent downloads, limited downloads, or interactive streams) may still be served on copyright owners until the license availability date, but not afterward, except in the case of a record company seeking an individual download license; and (3) NOIs pertaining to DPDs can no longer be filed with the Copyright Office under any circumstances.16 The definition of “digital phonorecord delivery” is also updated in the regulation to match the amended definition in the MMA.

16 17 U.S.C. 115(b), (d)(9)(D)(i).

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.17 The interim rule acknowledges this electronic form. Second, the interim rule clarifies the Office's current practice, as detailed in a 2017 policy statement, of charging a filing fee for so-called “returned-to-sender NOIs” 18 submitted to the Office.19 Of course, both of these updates only apply to NOIs pertaining to phonorecords that are not DPDs.

17See Section 115 NOIs May Now Be Filed With Office In Bulk Electronic Form, U.S. Copyright Office NewsNet No. 618 (Apr. 13, 2016), https://www.copyright.gov/newsnet/2016/618.html.

18 A “returned-to-sender NOI” is one that is sent to the last address for the copyright owner shown by the Office's records, but that is returned to the sender because the copyright owner is no longer located at that address or refused to accept delivery. In such cases, the original NOI can be filed with the Office. See 37 CFR 201.18(f)(2).

19See 82 FR 52221, 52223 (Nov. 13, 2017).

B. Statements of Account

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.20 This means that the regulations will not apply to digital music providers reporting and paying royalties under a blanket license (such activity will be the subject of a separate, future rulemaking).21

20See 17 U.S.C. 115(b)(3).

21See id. 115(d)(4)(A)(i).

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.22 If the digital music provider has not located the musical work copyright owner by the license availability date, the accrued royalties and cumulative statement must be provided to the MLC.23 The interim regulations follow the statute, specifying that the digital music provider must pay royalties and provide cumulative statements under subpart B of part 210 as if they were a compulsory licensee. In providing these cumulative statements, the interim rule also requires digital music providers to identify the total period covered by the cumulative statement and the total royalty payable for the period. This addition is meant to assist the copyright owner or the MLC, as the case may be, to quickly ascertain the sum of the contents of the cumulative statement. As mandated by the MMA, the interim rule also requires that such cumulative statements include the certification required for monthly statements of account under Copyright Office regulations.24

22Id. 115(d)(10)(B)(iv)(II)(aa).

23Id. 115(d)(10)(B)(iv)(III)(aa).

24See id. 115(d)(10)(B)(iv)(II)(aa), (III)(aa) (cumulative statements to be provided “in accordance with this section and applicable regulations, including the requisite certification under subsection (c)(2)(I)”).

III. Request for Comments

These interim regulations will go into effect immediately after publication of this document in the Federal Register. Comments will be due 45 days thereafter. The Copyright Office is issuing these interim regulations after finding, for good cause, that notice and comment prior to their issuance would be contrary to the public interest.25 The changes to section 115 made by the MMA were effective on October 11, 2018, and this interim rule conforms the regulations to the new law and clarifies for the public the operation of the Office's existing section 115-related regulations during the current transition period before the license availability date. The rule also must be issued without delay because it specifies the information to be contained in statements of account provided by digital music providers seeking to avail themselves of the limitation on liability available during this transition period. Moreover, the amendments made by this interim rule are meant to be technical in nature, as they are largely non-discretionary and merely make statutorily mandated modifications to existing rules.

25 In the past, the Copyright Office has similarly issued interim rules upon the enactment of legislation before soliciting public comments. See, e.g., Filing of Schedules by Rights Owners and Contact Information by Transmitting Entities Relating to Pre-1972 Sound Recordings, 83 FR 52150, 52153 (Oct. 16, 2018) (issuing interim rule regarding certain new types of filings because “[t]he MMA requires swift action by the Office” and “a prompt interim rule best serves the legal interests of all relevant stakeholders as well as the general public”); Freedom of Information Act Regulations, 82 FR 9505, 9506 (Feb. 7, 2017) (issuing interim rule to implement the FOIA Improvement Act of 2016 because “allowing for notice and public procedure prior to the issuance of . . . interim regulations would be impracticable”); Designation of Agent to Receive Notification of Claimed Infringement, 63 FR 59233, 59234 (Nov. 3, 1998) (issuing interim rule regarding designation of agent after enactment of the Digital Millennium Copyright Act because “online service providers may wish immediately to designate agents to receive notification of claimed infringement”).

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.

List of Subjects 37 CFR Part 201

Copyright, General provisions.

37 CFR Part 203

Freedom of information.

37 CFR Part 210

Copyright, Phonorecords, Recordings.

Interim Regulations

For the reasons set forth in the preamble, the Copyright Office amends 37 CFR parts 201, 203, and 210 as follows:

PART 201—GENERAL PROVISIONS 1. The authority citation for part 201 continues to read as follows: Authority:

17 U.S.C. 702.

2. Amend § 201.18 as follows: a. Revise paragraphs (a)(1) and (2). b. In paragraph (a)(3): i. Remove “is each” and add in its place “means each”. ii. Remove “which results” and add in its place “that results”. iii. Remove “nondramatic”. iv. Add two sentences at the end of the paragraph. c. In paragraph (a)(4) introductory text: i. Remove “A Notice of Intention shall” and add in its place “As eligible under paragraph (a)(2) of this section, a Notice of Intention shall”. ii. Remove “(f)(3)” and add in its place “(f)(2) or (3)”. d. In paragraph (a)(6), remove “Notwithstanding paragraph (a)(2) of this section, a” and add in its place “A”. e. Revise paragraph (c). f. In paragraph (d)(1)(iii), remove “(for example: a record company or digital music service)”. g. In paragraph (d)(1)(v)(D), remove “delivery, or” and add in its place “delivery (if eligible under paragraph (a)(2) of this section), or”. h. In paragraph (f)(1): i. Remove “If the” and add in its place “As eligible under paragraph (a)(2) of this section, if the”. ii. Remove the second sentence. i. In paragraph (f)(2): i. Remove “If the Notice is” and add in its place “If a Notice of Intention seeking a compulsory license to make and distribute phonorecords of a musical work other than by means of digital phonorecord delivery is”. ii. Remove “accompanied by a” and add in its place “accompanied by the fee specified in § 201.3(e) and a”. j. In paragraph (f)(3), remove “in the Notice of Intention, the” and add in its place “in a Notice of Intention seeking a compulsory license to make and distribute phonorecords of a musical work other than by means of digital phonorecord delivery, the”. k. In paragraph (f)(4), remove “section 115(b)(1) of title 17 of the United States Code” and add in its place “17 U.S.C. 115(b)”. l. In paragraph (g), add three sentences at the end of the paragraph. m. In paragraph (h), remove “section 115(b)(1) of title 17 of the United States Code” and add in its place “17 U.S.C. 115(b)”.

The revisions and additions read as follows:

§ 201.18 Notice of intention to obtain a compulsory license for making and distributing phonorecords of nondramatic musical works.

(a) General. (1) A “Notice of Intention” is a Notice identified in section 115(b) of title 17 of the United States Code. If the eligibility requirements of 17 U.S.C. 115(a) are satisfied, then, subject to 17 U.S.C. 115(b), a person may serve on a copyright owner or file with the Copyright Office, as applicable, a Notice of Intention and thereby obtain a compulsory license pursuant to 17 U.S.C. 115.

(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) Form. The Copyright Office does not provide physical printed forms for the use of persons serving or filing Notices of Intention, but Notices filed electronically must be submitted to the Office in the form and manner prescribed in instructions on the Office's website.

(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.

PART 203—FREEDOM OF INFORMATION ACT: POLICIES AND PROCEDURES 3. The authority citation for part 203 continues to read as follows: Authority:

5 U.S.C. 552.

4. Amend § 203.3 as follows: a. Remove paragraph (b)(2). b. Redesignate paragraph (b)(3) as paragraph (b)(2). c. Revise paragraphs (h) and (i).

The revisions read as follows:

§ 203.3 Organization.

(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 U.S. Copyright Office, including resources, communications, stakeholder engagement, and business project management. The CMO ensures that modernization activities are continuously aligned with the Office's and the Library of Congress's strategic goals, and collaborates with the Office and the Library to drive modernization efforts. The CMO provides project management, data management/analytics, and business analysis. It also serves as the primary liaison with the Library of Congress's Office and Chief Information Officer (“OCIO”) and serves in a leadership function on the Office's Modernization Governance Board.

(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).

PART 210—COMPULSORY LICENSE FOR MAKING AND DISTRIBUTING PHYSICAL AND DIGITAL PHONORECORDS OF NONDRAMATIC MUSICAL WORKS 5. The authority citation for part 210 continues to read as follows: Authority:

17 U.S.C. 115, 702.

6. Amend subpart B by revising the heading to read as follows: Subpart B—Royalties and Statements of Account Under Non-Blanket Compulsory License 7. Amend § 210.11 by adding a sentence at the end of the paragraph to read as follows:
§ 210.11 General.

* * * 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).

§ 210.12 [Amended]
8. Amend § 210.12 as follows: a. In paragraphs (a) and (b), remove “115(c)(5)” and add in its place “115(c)(2)(I)”. b. In paragraph (c): i. Remove “is each” and add in its place “means each”. ii. Remove “which results” and add in its place “that results”. iii. Remove “nondramatic”. iv. Add two sentences at the end of the paragraph. c. Add paragraphs (k) through (o).

The additions read as follows:

§ 210.12 Definitions.

(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 license availability date shall have the meaning given in 17 U.S.C. 115(e)(15).

(l) The term digital music provider shall have the meaning given in 17 U.S.C. 115(e)(8).

(m) The term blanket license shall have the meaning given in 17 U.S.C. 115(e)(5).

(n) The term record company shall have the meaning given in 17 U.S.C. 115(e)(26).

(o) The term individual download license shall have the meaning given in 17 U.S.C. 115(e)(12).

§ 210.16 [Amended]
9. Amend § 210.16(d)(3) by removing “115(c)(5)” and adding in its place “115(c)(2)(I)”.
§ 210.19 [Amended]
10. Amend § 210.19 by removing “115(c)(6)” and adding in its place “115(c)(2)(J)”. 11. Add §§ 210.20 and 210.21 to read as follows:
§ 210.20 Statements required for limitation on liability for digital music providers for the transition period prior to the license availability date.

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 which the copyright owner was identified and located, and for all other accounting periods prior to the license availability date, provide Monthly Statements of Account and pay royalties to the copyright owner as a compulsory licensee in accordance with this subpart; and

(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.

§ 210.21 Record companies using individual download licenses.

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.

Dated: November 30, 2018. Karyn A. Temple, Acting Register of Copyrights and Director of the U.S. Copyright Office.

Approved by:

Carla D. Hayden, Librarian of Congress.
[FR Doc. 2018-26579 Filed 12-6-18; 8:45 am] BILLING CODE 1410-30-P
ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 9 and 721 [EPA-HQ-OPPT-2018-0649; FRL-9987-43] RIN 2070-AB27 Significant New Use Rules on Certain Chemical Substances; Withdrawal AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Withdrawal of direct final rule.

SUMMARY:

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.

DATES:

The direct final rule published at 83 FR 50838 on October 10, 2018 (FRL-9984-65) is withdrawn effective December 7, 2018.

ADDRESSES:

The docket for this action, identified by docket identification (ID) number EPA-HQ-OPPT-2018-0649, is available at http://www.regulations.gov or at the Office of Pollution Prevention and Toxics Docket (OPPT Docket), Environmental Protection Agency Docket Center (EPA/DC), West William Jefferson Clinton Bldg., Rm. 3334, 1301 Constitution Ave. NW, Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the OPPT Docket is (202) 566-0280. Please review the visitor instructions and additional information about the docket available at http://www.epa.gov/dockets.

FOR FURTHER INFORMATION CONTACT:

For technical information contact: Kenneth Moss, Chemical Control Division (7405M), Office of Pollution Prevention and Toxics, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001; telephone number: (202) 564-9232; email address: [email protected]

For general information contact: The TSCA-Hotline, ABVI-Goodwill, 422 South Clinton Ave., Rochester, NY 14620; telephone number: (202) 554-1404; email address: [email protected]

SUPPLEMENTARY INFORMATION:

I. Does this action apply to me?

A list of potentially affected entities is provided in the Federal Register of October 10, 2018 (83 FR 50838) (FRL-9984-65). If you have questions regarding the applicability of this action to a particular entity, consult the technical person listed under FOR FURTHER INFORMATION CONTACT.

II. What direct final SNURs are being withdrawn?

In the Federal Register of October 10, 2018 (83 FR 50838) (FRL-9984-65), EPA issued direct final SNURs for 28 chemical substances that are identified in the document. Because the Agency received adverse comments regarding the SNURs identified in the document, EPA is withdrawing the direct final SNURs issued for these 28 chemical substances, which were the subject of PMNs. In addition to the Direct Final SNURs, elsewhere in the same issue of the Federal Register of October 10, 2018 (83 FR 50872) (FRL-9984-67), EPA issued proposed SNURs covering these 28 chemical substances. EPA will address all adverse public comments in a subsequent final rule, based on the proposed rule.

III. Good Cause Finding

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 Federal Register. This document must publish on or before the effective date of the direct final rule containing the direct final SNURs being withdrawn.

IV. Statutory and Executive Order Reviews

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 otherwise. The statutory and Executive Order review requirements applicable to the direct final rules were discussed in the October 10, 2018 Federal Register (83 FR 50838). Those review requirements do not apply to this action because it is a withdrawal and does not contain any new or amended requirements.

V. Congressional Review Act (CRA)

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. This action is not a “major rule” as defined by 5 U.S.C. 804(2). Section 808 of the CRA allows the issuing agency to make a rule effective sooner than otherwise provided by CRA if the agency makes a good cause finding that notice and public procedure is impracticable, unnecessary, or contrary to the public interest. As required by 5 U.S.C. 808(2), this determination is supported by a brief statement in Unit III.

List of Subjects 40 CFR Part 9

Environmental protection, Reporting and recordkeeping requirements.

40 CFR Part 721

Environmental protection, Chemicals, Hazardous substances, Reporting and recordkeeping requirements.

Dated: November 30, 2018. Lance Wormell, Acting Director, Chemical Control Division, Office of Pollution Prevention and Toxics.

Accordingly, the amendments to 40 CFR parts 9 and 721 published on October 10, 2018 (83 FR 50838), are withdrawn effective December 10, 2018.

[FR Doc. 2018-26686 Filed 12-6-18; 8:45 am] BILLING CODE 6560-50-P
ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 300 [EPA-HQ-SFUND-1990-0011; FRL-9987-05-Region 5] National Oil and Hazardous Substances Pollution Contingency Plan; National Priorities List: Partial Deletion of the Beloit Corporation Superfund Site AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Final rule.

SUMMARY:

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.

DATES:

This action is effective December 7, 2018.

ADDRESSES:

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 https://www.regulations.gov website. Although listed in the index, some information may not be publicly available, i.e., Confidential Business Information or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically through https://www.regulations.gov or in hard copy at the site information repositories. Locations, contacts, phone numbers and viewing hours are:

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.

FOR FURTHER INFORMATION CONTACT:

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 [email protected]

SUPPLEMENTARY INFORMATION:

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 Federal Register on July 16, 2018 (83 FR 32825). A Direct final rule approving the deletion was concurrently published in the Federal Register (83 FR 32798). The partial deletion was to automatically take effect on September 14, 2018, if no adverse public comments were received.

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 www.regulations.gov, and in the local information repositories listed above.

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.

List of Subjects in 40 CFR Part 300

Environmental protection, Air pollution control, Chemicals, Hazardous waste, Hazardous substances, Intergovernmental relations, Penalties, Reporting and recordkeeping requirements, Superfund, Water pollution control, Water supply.

Dated: October 29, 2018. Cathy Stepp, Regional Administrator, Region 5.

For the reasons set out in the preamble, 40 CFR part 300 is amended as follows:

PART 300—NATIONAL OIL AND HAZARDOUS SUBSTANCES POLLUTION CONTINGENCY PLAN 1. The authority citation for part 300 continues to read as follows: Authority:

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.

2. Table 1 of Appendix B to part 300 is amended by revising the entry “IL”, “Beloit Corp.”, “Rockton” to read as follows: Appendix B to Part 300—[Amended] Table 1—General Superfund Section State Site name City/county Notes (a) *         *         *         *         *         *         * IL Beloit Corp Rockton * P *         *         *         *         *         *         * (a) * * * * P = Sites with partial deletion(s).
[FR Doc. 2018-26480 Filed 12-6-18; 8:45 am] BILLING CODE 6560-50-P
ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 300 [EPA-HQ-SFUND-1987-0002; FRL-9987-16-Region 5] National Oil and Hazardous Substances Pollution Contingency Plan; National Priorities List: Deletion of the Tomah Armory Landfill Superfund Site AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Direct final rule.

SUMMARY:

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.

DATES:

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 Federal Register informing the public that the direct final deletion will not take effect.

ADDRESSES:

Submit your comments, identified by Docket ID No. EPA-HQ-SFUND-1987-0002, by one of the following methods: https://www.regulations.gov. Follow the on-line instructions for submitting comments. Once submitted, comments cannot be edited or removed from Regulations.gov. EPA may publish any comment received to its public docket. Do not submit electronically any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. EPA will generally not consider comments or comment contents located outside of the primary submission (i.e., on the web, cloud, or other file sharing system). For additional submission methods, the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit https://www2.epa.gov/dockets/commenting-epa-dockets.

Email: [email protected]

Mail: Randolph Cano, NPL Deletion Coordinator, U.S. Environmental Protection Agency Region 5 (SR-6J), 77 West Jackson Boulevard, Chicago, IL 60604, (312) 886-6036.

Hand deliver: Superfund Records Center, U.S. Environmental Protection Agency Region 5, 77 West Jackson Boulevard, 7th Floor South, Chicago, IL 60604, (312) 886-0900. Such deliveries are only accepted during the Docket's normal hours of operation, and special arrangements should be made for deliveries of boxed information. The normal business hours are Monday through Friday, 8 a.m. to 4 p.m., excluding Federal holidays.

Instructions: Direct your comments to Docket ID no. EPA-HQ-SFUND-1987-0002. EPA's policy is that all comments received will be included in the public docket without change and may be made available online at http://www.regulations.gov, including any personal information provided, unless the comment includes information claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Do not submit information that you consider to be CBI or otherwise protected through https://www.regulations.gov or email. The https://www.regulations.gov website is an “anonymous access” system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an email comment directly to EPA without going through https://www.regulations.gov, your email address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD-ROM you submit. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters, any form of encryption, and be free of any defects or viruses.

Docket: All documents in the docket are listed in the https://www.regulations.gov index. Although listed in the index, some information is not publicly available, e.g., CBI or other information whose disclosure is restricted by statue. Certain other material, such as copyrighted material, will be publicly available only in hard copy. Publicly available docket materials are available either electronically in https://www.regulations.gov or in hard copy at:

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.

FOR FURTHER INFORMATION CONTACT:

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 [email protected]

SUPPLEMENTARY INFORMATION:

Table of Contents I. Introduction II. NPL Deletion Criteria III. Deletion Procedures IV. Basis for Site Deletion V. Deletion Action I. Introduction

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.

II. NPL Deletion Criteria

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.

III. Deletion Procedures

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 Federal Register.

(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.

IV. Basis for Site Deletion

The following information provides EPA's rationale for deleting the Tomah Armory Site from the NPL:

Site Background and History

The Tomah Armory Site (CERCLS ID: WID980610299) is approximately 9.6 acres and is located in the northeastern section of the City of Tomah, Monroe County, Wisconsin. The Tomah Armory Site is bordered on the north by the former City of Tomah sewage disposal and treatment facility, to the east by Mill Street and a residential area, to the south by Arthur Street and a mixed use residential and business area, and to the west by Woodard Avenue, which separates the Tomah Armory Site from open fields and an apartment complex. The original landfill area covered the majority of the Armory property, a portion of the former City of Tomah sewage treatment plant property, a portion of a former museum property which is currently commercial, and a small area west of Woodard Avenue. See Tomah Armory Site Map, Docket Document ID No. EPA-HQ-SFUND-1987-0002-0389 in the Docket.

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.

Remedial Investigation (RI) and Feasibility Study (FS)

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 (10−4 to 10−6) under a residential use scenario, and the calculated exposure point concentrations of lead in surface soil were below EPA's residential soil screening levels. None of the subsurface soil contaminants exceeded risk-based concentrations for non-carcinogenic effects or the cancer risk range. Subsurface soil exposure point concentrations for lead were above EPA's residential soil screening level of 400 milligrams/kilogram (mg/kg), but were below the site-specific industrial risk-based concentration for lead in surface soil of 36,000 mg/kg calculated using the adult lead cleanup model and assuming an exposure frequency of 28 days/year at the Tomah Armory Site.

The risk assessment noted that waste material underlay the surface of the Tomah Armory Site and that groundwater under the landfill did not meet the AL level for lead. The concentrations of lead outside the landfill, however, did not exceed the AL, and the organic groundwater contamination detected in groundwater below the landfill was due to an upgradient source.

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.

Selected Remedy

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”.

Response Actions

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.

Cleanup Levels

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.

Operation and Maintenance

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 multiple layers of protection at the Tomah Armory Site.

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.

Five Year Review

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.

Community Involvement

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 Tomah Armory Site in the information repository and at EPA's Region 5 office.

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: http://www.epa.gov/superfund/tomah-armory.

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 Federal Register.

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 http://www.regulations.gov.

Determination That the Tomah Armory Site Meets the Criteria for Deletion From the NCP

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 Guidance for Management of Superfund Remedies in Post Construction (OLEM Directive 9200.3-105, February 2017), and Close Out Procedures for National Priorities List Sites (OLEM Directive 9320.2-22, May, 2011).

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.

V. Deletion Action

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.

List of Subjects in 40 CFR Part 300

Environmental protection, Air pollution control, Chemicals, Hazardous waste, Hazardous substances, Intergovernmental relations, Penalties, Reporting and recordkeeping requirements, Superfund, Water pollution control, Water supply.

Dated: October 30, 2018. Cathy Stepp, Regional Administrator, Region 5.

For the reasons set out in the preamble, 40 CFR part 300 is amended as follows:

PART 300—NATIONAL OIL AND HAZARDOUS SUBSTANCES POLLUTION CONTINGENCY PLAN 1. The authority citation for part 300 continues to read as follows: Authority:

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.

Appendix B to Part 300—[Amended] 2. Table 1 of Appendix B to part 300 is amended by removing the entry “WI”, “Tomah Armory”, “Tomah”.
[FR Doc. 2018-26486 Filed 12-6-18; 8:45 am] BILLING CODE 6560-50-P
FEDERAL COMMUNICATIONS COMMISSION 47 CFR Part 0 [MD Docket No. 18-3; FCC 18-7] Establishment of the Office of Economics and Analytics AGENCY:

Federal Communications Commission.

ACTION:

Final rule.

SUMMARY:

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.

DATES:

Effective December 7, 2018.

FOR FURTHER INFORMATION CONTACT:

Wayne Leighton, 202-418-0950.

SUPPLEMENTARY INFORMATION:

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 https://docs.fcc.gov/public/attachments/FCC-18-7A1.pdf. Key objectives of this organizational change are to expand and deepen the use of economic analysis into Commission policy making, to enhance the development and use of auctions, and to implement consistent and effective agency-wide data practices and policies.

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.

Paperwork Reduction Act

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, see 44 U.S.C. 3506(c)(4).

Congressional Review Act

The Commission will not send a copy of this Order pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A), because the adopted rules of agency organization, procedure, or practice that do not “substantially affect the rights or obligations of non-agency parties.”

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 Federal Register.

Ordering Clauses

Accordingly, it is ordered that, pursuant to sections 1, 4, 5(b), 5(c), 201(b), and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154, 155(b), 155(c), 201(b), 303(r), this Order is adopted.

It is further ordered that part 0 of the Commission rules is amended as set forth in the Final Rules section.

It is further ordered that this Order will become effective December 7, 2018 in accordance with paragraph 7 of the Order (MD Docket No. 18-3; FCC 18-7, adopted on January 30, 2018 and released on January 31, 2018).

List of Subjects in 47 CFR Part 0

Classified information, Freedom of information, Government publications, Infants and children, Organization and functions (Government agencies), Postal Service, Privacy, Reporting and recordkeeping requirements, Sunshine Act.

Federal Communications Commission. Katura Jackson, Federal Register Liaison Officer, Office of the Secretary. Final Rules

For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR part 0 as follows:

PART 0—COMMISSION ORGANIZATION 1. The authority citation for part 0 continues to read as follows: Authority:

Secs. 5, 48 Stat. 1068, as amended; 47 U.S.C. 155, 225, unless otherwise noted.

2. Amend § 0.5 by revising paragraph (a)(4) to read as follows:
§ 0.5 General description of Commission organization and operations.

(a) * * *

(4) Office of Economics and Analytics.

3. Revise § 0.21 and the undesignated center heading immediately preceding it to read as follows: Office of Economics and Analytics
§ 0.21 Functions of the Office.

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 de novo review of decisions of the Administrative Council for Terminal Attachments regarding technical criteria pursuant to § 68.614.

(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.

4. Amend § 0.31 by revising paragraph (g) to read as follows:
§ 0.31 Functions of the Office.

(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 with respect to rule making matters and proceedings affecting more than one Bureau.

5. Amend § 0.91 by revising paragraph (p) to read as follows:
§ 0.91 Functions of the Office.

(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.

6. Amend § 0.131 by revising paragraphs (a), (c), and (r) to read as follows:
§ 0.131 Functions of the Bureau

(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.

7. Revise § 0.271 and the undesignated center heading immediately preceding it to read as follows: Office of Economics and Analytics
§ 0.271 Authority delegated.

(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.

8. Add § 0.272 to read as follows:
§ 0.272 Record of actions taken.

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.

9. Add § 0.273 to read as follows:
§ 0.273 Actions taken under delegated authority.

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.

[FR Doc. 2018-26423 Filed 12-6-18; 8:45 am] BILLING CODE 6712-01-P
FEDERAL COMMUNICATIONS COMMISSION 47 CFR Parts 1 and 96 [GN Docket No. 17-258; FCC 18-149] Promoting Investment in the 3550-3700 MHz Band AGENCY:

Federal Communications Commission.

ACTION:

Final rule.

SUMMARY:

In this document, the Federal Communications Commission (Commission) adopts limited changes to the rules governing Priority Access Licenses (PALs) that will be issued in the 3500-3700 MHz Band (3.5 GHz band)—including larger license areas, longer license terms, renewability, and performance requirements—as well as changes to the competitive bidding rules for the issuance of PALs and to the ability to partition and disaggregate areas within PALs. These changes are consistent with the rules that helped foster the development of 4G and LTE services in the United States, and adopting similar rules in this band will help promote additional investment in the next generation of wireless services. The Commission also adopts changes to the technical rules to facilitate transmissions over wider bandwidth channels without significant power reduction and changes to the information security requirements to better safeguard commercially sensitive information and protect critical infrastructure. These targeted changes will spur additional investment and broader deployment in the band, promote robust and efficient spectrum use, and help ensure the rapid deployment of advanced wireless technologies—including 5G—in the United States.

DATES:

Effective Date: January 7, 2019.

Compliance Date: Compliance will not be required for § 96.23(a) or for § 96.25(b) or for § 96.32(b) until after approval by the Office of Management and Budget. The Commission will publish a document in the Federal Register announcing that compliance date.

FOR FURTHER INFORMATION CONTACT:

Jessica Greffenius at [email protected], of the Wireless Telecommunications Bureau, Mobility Division, (202) 418-2896.

SUPPLEMENTARY INFORMATION:

This is a summary of the Commission's Report and Order in GN Docket No. 17-258, FCC 18-148 adopted October 23, 2018 and released October 24, 2018. The full text of the Report and Order, including all Appendices, is available for inspection and copying during normal business hours in the FCC Reference Center, 445 12th Street SW, Room CY-A157, Washington, DC 20554, or by downloading the text from the Commission's website at https://docs.fcc.gov/public/attachments/FCC-18-149A1.pdf. Alternative formats are available for people with disabilities (Braille, large print, electronic files, audio format), by sending an email to [email protected] or calling the Consumer and Government Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

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

Synopsis I. Background

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 ex parte communications, and they received comments and reply comments from more than 120 parties.

3. On October 24, 2017, the Commission issued a Notice of Proposed Rulemaking (82 FR 56193, Nov. 28, 2017) (2017 NPRM) seeking comment on potential changes to the PAL rules, including significantly larger geographic license areas, longer license terms, PAL renewability, and changes to the way in which PALs are assigned and auctioned. The Commission also sought comment on relaxing the emissions limits for Citizens Broadband Radio Service Devices (CBSDs) and/or End User Devices to allow operation over wider bandwidths without power reduction. The Commission simultaneously adopted an Order Terminating the Petitions, in which it declined to seek comment on discrete proposals from T-Mobile's Petition that would have fundamentally altered the sharing framework of the band, including its proposal to reapportion the amount of spectrum available for GAA versus PAL use and designating the entire band for PAL use.

4. The Commission received nearly 200 comments and 40 reply comments in response to the 2017 NPRM, including from mobile wireless service providers, Wireless Internet Service Providers (WISPs) and other fixed wireless service providers, cable providers, Internet of Things (IoT) providers, energy and utility associations, and consumer groups.

III. Discussion A. PAL Licensing Rules 1. Geographic Licensing Area

5. Background. In the 2015 Report and Order (80 FR 36164, June 23, 2015), the Commission defined the geographic license area for each PAL as one census tract. In the 2017 NPRM, the Commission proposed to increase the geographic license area to “stimulate additional investment, promote innovation, and encourage efficient use of spectrum resources.” The Commission sought comment on petitioners' specific request to increase the license size to Partial Economic Areas (PEAs), asking whether the larger size and the ability to combine and partition licenses would strike the right balance between supporting targeted deployments and incentivizing additional investment in the band. Noting concerns in the record about whether PEAs would incent diverse auction participants, differing technologies, and rural deployments, the Commission also sought comment on alternative or hybrid approaches, such as licensing PEAs in urban areas and census tracts in rural areas, or offering PALs of different sizes in each market.

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. Discussion. After review of the extensive record on this issue and in light of the changed circumstances since adoption of the 2015 rules, the Commission finds that increasing the size of the PAL license area to counties will better serve the public interest.

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 (i.e., from 3,200 counties to 416 PEAs) could disproportionately favor mobile use cases and hinder investment in innovative fixed networks and localized deployments. The 3.5 GHz band will be the first mid-band spectrum suited for 5G uses that will be made available domestically, and the band will play a key role as part of the low-, mid-, and high-band spectrum toolkit for 5G uses. While census tracts seemed like an appropriate “middle ground” in 2015, since that time, the balance has shifted.

9. First, given the increasing importance of mid-band spectrum for 5G—and the importance of maximizing auction participation to ensure this band is put to its highest and best use—it is important for the size of PAL license areas not to preclude a mobile 5G use case. The record in this proceeding now demonstrates that retaining census tracts as the size of the PAL license areas would cause significant difficulties in deployment of large-scale networks for mobile 5G use. In light of this, it is necessary to reassess the Commission's decision in the 2015 Report and Order that census tract-sized PALs were large enough to support a variety of use cases. After reviewing the record, the Commission finds that increasing the size of PAL license areas to counties is more likely to ensure that mobile 5G deployments are feasible in the 3.5 GHz band.

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 Commission would be improperly tipping the scales towards one use case over others rather than allowing a neutral market mechanism—an auction—to ensure that this valuable spectrum is put to its highest and best use.

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. Second, county-based licensing will allow Priority Access Licensees to take advantage of economies of scale, which will reduce deployment costs. Economic analysis submitted in the record suggests that the population of a census tract is likely not sufficiently large to take advantage of possible economies of scale for many of the potential uses of the band, particularly for the deployment of 5G. Counties—in contrast—are large enough for network deployers to achieve scale economies for both fixed and mobile services. Indeed, counties cover a large enough geographic footprint to incentivize investment in wider area geographic deployments that take full advantage of the CBSD power limits in the 3.5 GHz band, a particularly important issue for 5G networks.

17. Third, counties will service the needs of rural communities and will allow new and innovative services to reach underserved and unserved communities, consistent with the Act's objectives. County-sized PALs will provide small, rural providers with a reasonable opportunity to obtain spectrum and promote more effective use of spectrum for actual service delivery in rural areas. Senators of Montana, Wyoming, and Alaska argue that use of counties for licensing PALs in rural areas would serve the needs of their rural communities because it will provide small carriers with an opportunity to access PALs that best fit their targeted service at a price that fits their budget. Several small, rural carriers note that census tract licensing would render the spectrum useless for many small carriers in rural areas, arguing that county-sized licenses will make logical sense in rural communities. And many commenters support using counties to license at least some PALs, particularly in rural communities. The Commission agrees with this ample record that county-based license areas will enable a wide variety of use cases needed to ensure deployment of the 3.5 GHz band in rural areas.

18. Fourth, the Commission finds that counties will serve a variety of innovative use cases for urban, suburban, and rural deployments, including IoT deployments and those by new entrants. Several parties stress the importance of access to PALs for IoT and other innovative spectrum uses in suburban and urban areas, and they note that 5G will be replete with these type of targeted uses cases regardless of whether the community is urban or more rural. These commenters argue that counties strike a balance between enabling efficient deployment of services and remaining small enough to ensure economic viability for a variety of businesses and technical plans. Other commenters also note that while they may prefer other license sizes, counties would nonetheless be compatible with their business cases. The Commission agrees that the Priority Access licensing structure should be flexible enough to support and encourage next-generation applications like 5G and IoT and believes that county-based licensing will help to accomplish this goal. Licensing PALs by county will help foster flexible and innovative use of the 3.5 GHz band in all areas by providing a consistent, relatively small license size appropriate for a wide range of possible network deployments. Indeed, the Commission adopted county-size PALs for the 28 GHz band for these same reasons, which likewise will be an important part of the next generation wireless ecosystem, including 5G and IoT applications. In that proceeding, the Commission found that “a county-based license affords a licensee the flexibility to develop localized services, allows for targeted deployments based on market forces and customer demand, and facilitates access by both smaller and larger carriers.” As in that context, the Commission anticipates that this approach in the 3.5 GHz band will support diverse network deployments and business models and will fulfill the Act's objectives by fostering the development and rapid deployment of new technologies, promoting economic opportunity and competition, and disseminating licenses among a wide variety of applicants.

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. Fifth, the Commission finds that licensing PALs on a county basis will simplify the licensing regime in a way that minimizes burdens imposed on licensees, and that promotes administrative and spectral efficiency consistent with its statutory objectives including speeding the “development and rapid deployment of new technologies, products, and services” and “efficient and intensive use” of the spectrum. With just 3,200 counties nationwide (compared to about 74,000 census tracts), the Commission can reduce the administrative burden more than 20-fold by using counties as the PAL license area. It anticipates that this reduction, in turn, will reduce network design complexity and minimize border coordination issues.

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. Sixth, international developments confirm the importance of creating an environment that encourages domestic investment in next generation mobile networks in the 3.5 GHz band to effectively leverage the economies of scale created by international investments in the band. Numerous other countries have begun to auction spectrum in the 3.5 GHz range and several others are poised to do so in the near future. It is important for the United States to create a robust marketplace in the band, particularly as the band is standardized for next-generation, 5G technology. By making sure that the PAL license area will foster investment in the band, including by those seeking to use it for mobile 5G use, the Commission is better aligning itself with global developments and preparing to be a leader in the 5G ecosystem, as it has been in the LTE space. Service providers often determine their investments on a global scale, not just a domestic one, and adjustments to the Commission's approach on the geographic licensing area will better facilitate service providers including offerings to U.S. customers in their plans. Specifically, the Commission finds that its revised approach to the geographic licensing area will better align the band with global developments, and with other bands in the U.S. that the Commission has found will play a role in the 5G ecosystem, including the millimeter wave bands and the 3.7-4.2 GHz band. This consistent approach will ensure that the 3.5 GHz band in the United States is ripe for robust investment.

25. Finally, while no approach to license sizes will satisfy all stakeholders, counties represent a more appropriate middle ground that will address many of the concerns raised by stakeholders in this proceeding. The Commission finds that adopting counties as the geographic unit for PAL licensing balances the concerns that some commenters have raised about licensing PALs as small as a census tract with the concerns that other commenters have raised about licensing PALs as large as a PEA. In fact, across the various compromise proposals and hybrid approaches submitted in this proceeding, the main commonality is support for the use of counties as part of the PAL licensing scheme. As such, the Commission finds that increasing the size of the geographic license area from census tracts to counties will be more likely to unlock the potential for existing and new technologies and services to thrive in the 3.5 GHz band, while preserving the incentives and ability of smaller innovators to make use of PALs, reserved GAA spectrum, and unreserved GAA use as appropriate.

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 Report and Order also opens up the PAL market to partitioning and disaggregation, which should provide additional secondary market avenues for targeted uses and users. And the decision to impose end-of-term performance requirements will incentivize Priority Access Licensees to enter into the commercial transactions with entities that have targeted-sized uses that fall within their license areas.

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.

2. License Term and Renewal

32. Background. The rules adopted in the 2015 Report and Order established a three-year license term for PALs. Under the current rules, during the first application window, an applicant may apply for up to two consecutive three-year terms for a given PAL. During subsequent regular application windows, however, an applicant will be able to apply for only a single three-year license term for any given PAL.

33. In the 2017 NPRM, the Commission proposed to revise its rules by increasing the PAL license term from three years to 10 years and eliminating the requirement that PALs automatically terminate at the end of the license term. The Commission sought comment on this change and on the appropriate performance requirements and renewal standards for PALs. The Commission noted that its proposed approach was consistent with other wireless services and would afford licensees sufficient time to design and acquire the necessary equipment and devices and to deploy facilities across the license area.

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 2016 Report and Order (81 FR 49024, July 26, 2016), the Commission extended this licensing paradigm to the millimeter wave spectrum bands that make up the Upper Microwave Flexible Use Service (UMFUS), which, like the 3.5 GHz band, has been identified as important spectrum for 5G deployment.

35. Discussion. The Commission finds that it is in the public interest to extend PAL license terms to 10 years and make such licenses renewable. The service rules for the 3.5 GHz band must create incentives for investment, encourage efficient spectrum use, support a variety of different use cases, and promote network deployments in both urban and rural communities. As the Commission determined with regard to the license area size, it finds that the rapid changes in the mobile marketplace, including the growing importance of mid-band spectrum for large-scale 5G mobile service, necessitate that it revises the license term for PALs to best advance these goals. Since the Commission adopted the 3.5 GHz band licensing rules in 2015, it has become apparent that supporting the rapid deployment of next generation mobile networks, including 5G, will require a combination of low-, mid-, and high-band spectrum, and that the 3.5 GHz band will play a significant role as one of the core mid-range bands for 5G network deployments throughout the world, as well as the first mid-band spectrum to be commercially available in this country for such deployments. Considering the critical importance this band will play in the United States' competitiveness in the global 5G arena, it is also important to ensure that the Commission's rules for the 3.5 GHz band support robust investment in large scale mobile deployments like 5G, as well as other use cases. For the reasons discussed below, the Commission concludes that 10-year renewable license terms will strike the right balance of providing the certainty needed to foster robust investment in next generation wireless networks—including 5G networks—while still maintaining the flexibility needed to support innovative and localized opportunities for a wide variety of entrants.

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 Spectrum Frontiers (81 FR 79909, Nov. 14, 2016) proceeding that this framework was particularly appropriate for a band important for 5G, finding that “a 10-year license term will give licensees sufficient certainty to invest in their systems, particularly as the new technology is still nascent and will require time to fully develop.” The record in this proceeding reaffirms that conclusion. Further, the next generation flexible use deployments envisioned for this band—including 5G networks—involve large numbers of small cells, which add complexity and siting delays to roll out, particularly given that these deployments will often require new sites (e.g., street lights, billboards, sides of buildings) with new power and backhaul requirements. Longer, renewable license terms will provide time for licensees to contend with these complexities and challenges, and help to position the band for robust network development.

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 Spectrum Frontiers, for which the Commission also adopted a ten-year renewable license term, and find that a longer period is appropriate to ensure a sufficient return-on-investment.

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 in the Report and Order as further evidence that a 10-year, renewable term will serve a wide diversity of entrants. Regarding access by rural providers in particular, the Commission's Mobility Fund II, which funds wireless broadband buildout, provides support in 10-year terms “in light of the significant capital and effort needed to deploy and upgrade broadband networks and [because it] is consistent with the timeframe used by rural carriers to plan and schedule network upgrades.” Indeed, some commenters maintain that longer license terms and renewability are necessary to incentivize rural service providers and utilities to invest in 3.5 GHz band networks.

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 WRS Renewals Second Report and Order (82 FR 41531, Sept. 1, 2017) that “uniform renewal rules [across different Wireless Radio Services] will promote the efficient use of spectrum resources, serve the public interest by providing licensees certainty regarding their license renewal requirements, encourage licensees to invest in new facilities and services, and facilitate their business and network planning.” In this band, such an approach “will provide incentives for licensees to continue to provide service” over their license terms.

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.

3. Performance Requirements

46. Background. In the 2015 Report and Order, the Commission determined that, in light of the three-year license term and non-renewability of PALs, the rules permitting opportunistic GAA use, and the relatively inexpensive deployment costs, “winning bidders for PAL licenses at auction will have sufficient incentive to deliver service so as to avoid the need for prescribing any further performance requirements.” In the 2017 NPRM, the Commission sought comment on whether to adopt performance requirements for PALs, and if so, which type, if they are licensed with a longer term and renewability.

47. Discussion. The Commission finds that, given the changes to PALs adopted in the Report and Order (i.e., longer license terms, larger license areas, and renewability), it is in the public interest to revise its rules to adopt new end-of-term performance requirements for PALs. Specifically, Priority Access Licensees will be required to provide a bona fide communications service that meets a “substantial service” standard of performance, and the Commission adopts two specific safe harbors to meet this standard, one for mobile or point-to-multipoint services and a second for point-to-point services. A licensee providing a mobile service or point-to-multipoint service may demonstrate substantial service by showing that it provides reliable signal coverage and offers service over at least 50 percent of the population in the license area. A licensee deploying a point-to-point service may demonstrate substantial service by showing that it has constructed and operates, using Category B CBSDs, at least four links in license areas with 134,000 population or less, and at least one link per 33,500 population (rounded up) in license areas with greater population. Licensees may fulfill their performance requirements by showing that they meet at least one of these safe harbors, or they may make an individualized showing of substantial service by relying, for example, on a combination of different services for which there is a safe harbor or on services for which there is no defined safe harbor.

48. New performance requirements are warranted given the other changes to the PALs that adopted in this Report and Order. Performance requirements promote the productive use of spectrum, encourage licensees to provide service in a timely manner, and promote the provision of innovative services and technologies in unserved areas, particularly rural ones. Further, Section 309(j)(4)(B) of the Act requires that the Commission, in establishing rules for auctioned licenses, must “include performance requirements, such as appropriate deadlines and penalties for performance failures . . . .” These considerations have led the Commission to require licensees to meet a particular standard or metric for performance in numerous other bands. The Commission found in 2015 that Priority Access Licensees had sufficient incentive to use their licensed spectrum that similar requirements were not necessary, in part due to the short license term and non-renewability. Given that the revised PALs will have a longer license term and renewability, as well as larger license areas, the Commission finds that the revised PALs are comparable to licenses in the other bands for which it has adopted a standard or metric for performance. Consistent with these past Commission actions, the Commission adopts such a performance requirement for the revised PALs to meet its obligations under Section 309(j)(4)(B), to reduce warehousing, and to promote timely and efficient use of spectrum, including in rural areas.

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 (i.e., only from the PAL Protection Area surrounding a deployed CBSD). Given the other changes to PALs (e.g., 10-year license terms, renewability, larger license areas), the Commission does not believe that opportunistic GAA use is, in itself, sufficient to prevent warehousing and encourage robust spectrum use. Absent performance requirements, the revisions to PALs likely will increase incentives for parties to seek PALs for speculative investment or warehousing. Such conduct could prevent intensive use of the band and reduce overall investment notwithstanding the option of GAA use. Notably, a lack of PAL performance would increase the uncertainty for GAA users surrounding long term spectrum availability. Potential GAA users would have little idea regarding when, where, and with what technology Priority Access Licensees may ultimately choose to deploy, which could reduce the incentive for GAA users to invest and innovate in the band. Further, the record indicates that there is significant demand for 3.5 GHz spectrum that is contingent on the ability to obtain interference protection, and while an unused PAL will not foreclose GAA use, it can preclude others from deploying in that area with the benefit of priority access. Adopting performance requirements in the 3.5 GHz band will encourage Priority Access Licensees to make timely and productive use of their licenses, and to the extent they choose not to do so, will incentivize them to make priority access to spectrum available to others through secondary market transactions. Accordingly, the Commission finds that adopting performance requirements in this band is in the public interest.

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 imposed in other bands in order to reduce coexistence challenges and with the expectation that deployment in the 3.5 GHz band would often focus on innovative low-power technologies. The adopted power limits and the technologies that the Commission anticipates will be appropriate for them may bring significant localized benefits such as increased network capacity, but they may be less suitable for wide-area coverage as compared to other bands. A more flexible safe harbor will therefore better accommodate these technologies and promote the innovation anticipated in the band. In addition, the Commission's rules incorporate several other measures to facilitate coexistence that may introduce some uncertainty in the timing, cost, interference management, or technical specifics of deployment, such as limitations on commercial operations to protect incumbent users, the SAS authority to require, in specific cases, power reduction below the rule limits (and potentially other technical restrictions), and the potential for dynamic spectrum re-assignments or even cessation of operations to which licensees will be subject to protect incumbent operations. These unique aspects of the licensing and authorization regime in the 3.5 GHz band generally supports providing licensees with greater flexibility in deployment than the Commission has provided in some other bands.

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 2017 NPRM concerning the possible performance metrics provide little discussion of a metric or approach for fixed point-to-point services. The Commission has adopted a link-based metric for fixed point-to-point services in many other bands, however. In the absence of commenter proposals, the Commission draws on the link-based metric adopted for fixed point-to-point services in the 2.3 GHz Band. Specifically, in the WCS Report and Order (75 FR 45058, Aug. 2, 2010), the Commission required 2.3 GHz licensees using the spectrum for point-to-point service to construct and operate a minimum number of links within each license area equal to the population of the license area divided by 33,500 and rounded up to the nearest whole number. The Commission found that this metric was “achievable” and would “further our goal of ensuring meaningful wireless deployment.” A similar metric is generally a reasonable safe harbor for such services in the 3.5 GHz band. However, for license areas with 134,000 population or less, licensees must construct and operate a minimum of four links to meet the safe harbor, which will be an achievable minimum given the geographic license areas adopted. Further, the Commission limits the safe harbor to links that operate using registered Category B CBSDs. Category B CBSDs must be deployed outdoors and have higher maximum power limits in comparison with Category A CBSDs. Links using Category B CBSDs are therefore likely to be more consistent with the traditional point-to-point services the Commission intends for this safe harbor, and they will avoid the possibility that a licensee could satisfy its performance requirement for an entire license area with a single in-building IoT deployment such as a sensor network.

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 the end of the license term, and that requiring licensees to provide “substantial service” by both the end-of-term and some earlier interim point would create significant regulatory uncertainty as to the difference between the interim and end-of-term requirements, raise the risk of arbitrary and inconsistent results between licensees, and be unlikely to incentivize more rapid or extensive deployment in the band. Indeed, there is little support in the record for either of these approaches. In addition, the still-nascent status of 5G and other innovative wireless technologies anticipated for this band and the unique aspects of the 3.5 GHz sharing regime support providing Priority Access Licensees with additional flexibility in the timeframe provided to develop and deploy services in the band.

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 (e.g., for mobile services, where in the license area the licensee offers the service at a reliable signal level), supporting technical documentation, population-related assumptions if relevant, and any other information as the Wireless Telecommunications Bureau may prescribe by public notice. The Commission further concludes that licensees, in demonstrating service coverage, may rely on the PAL Protection Areas of the relevant CBSDs they use to provide the service. They must, however, specify the CBSDs and certify that they actually are being used to provide service, either to customers or for internal use. In any case, licensees may not claim service coverage outside of these PAL Protection Areas or deployments that are not reflected in SAS records of CBSD registrations. This approach appropriately leverages the SASs to help ensure consistency and accuracy in performance demonstrations, reduce administrative burdens on licensees and the Commission, and speed compliance and renewal review. The Commission delegates authority to the Wireless Telecommunications Bureau to specify the format of submissions, consistent with these determinations.

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 de facto transfer leasing arrangements, may be counted toward meeting the performance requirement, either under the safe harbors or as part of an individualized showing of substantial service. Doing so is consistent with the general rules for spectrum leasing, and the Commission finds that it will encourage parties to enter into secondary market transactions while ensuring that performance requirements will be met for the license overall. Consistent with the general short term de facto transfer leasing rule (covering de facto transfer leasing arrangements of one year or less), a licensee in such an arrangement will not be permitted to attribute to itself the activities of its spectrum lessee when seeking to establish that performance or build-out requirements applicable to the licensee have been met. The Commission rejects proposals that it credit licensees for merely making spectrum available for leasing on a spectrum exchange or otherwise, which would undermine the purposes of the performance requirement discussed above.

B. Competitive Bidding Procedures 1. Applicability of Part 1 Competitive Bidding Rules

62. PAL Applications Subject to Competitive Bidding. Consistent with its proposals to lengthen the term of a PAL, to make a PAL renewable, and to increase the size of a PAL's geographic area, the Commission proposed in the 2017 NPRM to employ its standard practice for finding mutual exclusivity among accepted applications. It also proposed to eliminate the rule that made available one less PAL than the total number of PALs in a license area for which all applicants had applied. The Commission further proposed to assign a PAL even when only one applicant has applied for a PAL in a specific license area, subject to the applicant's being otherwise qualified, rather than to adhere to its decision in the 2015 Report and Order not to assign any PAL for such a license area.

63. Given the other modifications the Commission adopts for PALs in this Report and Order, it eliminates the rule that made available one less PAL than the total number of PALs for which all applicants had applied in a given geographic license area. By making a PAL renewable, increasing the size of its geographic area, and lengthening its license term to 10 years, the Commission anticipates that the rights conferred by a PAL will be more beneficial to a wider range of potential users. The previous rule, which was adopted to limit the number of PALs available in a given license area, was premised on the view that GAA use should be easy to access and sufficient for many applications in the 3.5 GHz band, but that PALs should be available for those limited applications that required greater certainty as to interference protection because they would suffer in a congested use environment. The changes adopted in this Report and Order ensure that PALs will support all technologies and foster additional investment from a wide variety of users in the 3.5 GHz band, thereby expanding the potential use cases by Priority Access Licensees, and based on the record, the Commission agrees with the argument that GAA use is less likely to provide sufficient access for many application in the 3.5 GHz band. Therefore, it can no longer conclude that the similar use cases for PALs and the GAA that existed under the prior rules provide a reasoned basis on which to limit the number of PALs available in a given geographic area. The Commission therefore agrees with commenters that the public interest will not be served by limiting the availability of PALs within a given geographic area in the 3.5 GHz band. Rather, by eliminating this rule, the Commission can better achieve a licensing process that will promote the “efficient and intensive use” of this spectrum and the “development and rapid deployment of new technologies, products, and services for the benefit of the public, including those residing in rural areas,” that “recover[s] for the public . . . a portion of the value of the public spectrum resource made available for commercial use, and achieves the other goals of Section 309(j).”

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 Report and Order, if there is only one applicant seeking a PAL in an area, that applicant will be able to acquire a PAL outside of the auction process. Given that the decisions in this item make PALs similar in many ways to licenses in other services, the Commission concludes that it should follow this approach as it does in other services. In light of this decision and given the limited record received on the issue, the Commission further concludes that it need not address the issue of whether an application for a PAL in a given geographic area should be considered to be mutually exclusive with an application for GAA use in the same area.

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 Report and Order allow subsequent determination of specific final auction procedures. The pre-auction process will be initiated by the release of an auction Comment Public Notice, which will solicit public input on final auction procedures, and which will include specific proposals for auction components, such as minimum opening bids and bidding credit caps. Thereafter, an auction Procedures Public Notice will specify final procedures, including dates, deadlines, and other final details of the application and bidding processes. Accordingly, issues involving bidding procedures, like those raised by commenters, will be addressed at that time, and the Commission will seek public input on the competitive bidding procedures to be used for a particular auction of PALs. The Commission's practice of finalizing auction procedures in the pre-auction process provides time for interested participants both to comment on the final procedures and to develop business plans in advance of the auction.

67. Bidding on Specific PAL License Blocks. Under the current rules, Priority Access Licensees do not bid on specific spectrum blocks. Rather, the SAS assigns frequencies based on the amount of spectrum that a PAL licensee is authorized to use in a given license area. Licensees may request a particular channel or frequency range from the SAS, but they are not guaranteed a particular assignment. The SAS will “assign geographically contiguous PALs held by the same Priority Access Licensee to the same channels in each geographic area” and “assign multiple channels held by the same Priority Access Licensee to contiguous frequencies within the same License Area” when it is feasible to do so.

68. In the 2017 NPRM, the Commission sought comment on the feasibility and desirability of allowing PAL licensees to bid on specific channel assignments. Specifically, the Commission sought comment on how it could allow bidding on specific license blocks given the constraints of the band and the need to protect incumbents. The Commission sought comment on whether the Incentive Auction could provide a model for a separate, voluntary channel assignment phase of the auction, and, if so, what changes to the Incentive Auction framework might be necessary to accommodate interference protection of federal incumbents by PALs. It also sought comment on possible alternative auction methodologies that might be appropriate.

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 to effective spectrum sharing between the three tiers of authorized users in the band.” Coupled with the requirement that CBSDs be capable of operating across the entire 3.5 GHz band, SAS-controlled assignments will ensure that individual users are provided with flexible, stable access to the band. In assigning frequencies for Priority Access, the SAS must assign multiple channels held by the same Priority Access Licensee to contiguous channels in the same license area. Likewise, an SAS will be required to maintain consistent and contiguous frequency assignments for licensees with multiple PALs in the same or adjacent license areas whenever feasible. A wide variety of commenters support the current framework of SAS-assigned PAL channels.

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 Report and Order, the SAS will be able to reassign the Priority Access Licensee dynamically, ensuring prioritized access to 10 megahertz of spectrum. A flexible channel assignment plan where the SAS can reassign a PAL dynamically when an incumbent is using a specific channel, will lead to better coordination and co-existence between PAL holders and incumbents. For this reason, the Commission rejects the argument that a predictable, static spectral environment provides the certainty needed for network deployments, and concludes that the approach the Commission adopted in 2015 supports a wide variety of use cases in the 3.5 GHz band. As the Commission previously explained, by having the SAS assign all channels, its rules aim to create a flexible, responsive spectral environment while retaining much of the stability of traditional static channel assignments. As the Commission has previously observed, modern networks typically have control features that allow for automated or managed channel selection. On balance, the flexibility afforded by the assignment of channels by the SAS allows the Commission to ensure protection to the Incumbent tier, including federal users, exclusivity to the Priority Access tier, and access to GAA users.

2. Bidding Credits for PALs

71. In the 2017 NPRM, the Commission revisited its decision not to offer bidding credits in the 3.5 GHz band and sought comment on whether it should consider adopting such provisions for certain bidders or areas if it increased the size of a PAL's license area. Specifically, the Commission sought comment on whether it should adopt the bidding credits it used in the 600 MHz Band auction (Incentive Auction).

72. Small Business Bidding Credit. Based on the significant changes adopted for PALs in the Report and Order, as well as the Commission's experience with the use of bidding credits in recent spectrum auctions, the Commission concludes that utilizing bidding credits in competitive bidding for the 3.5 GHz band will provide it with an effective tool to achieve its statutory objective of promoting the participation of designated entities in the provision of spectrum-based service. Section 309(j)(4) of the Communications Act requires that when the Commission prescribes regulations to establish a methodology for the grant of licenses through the use of competitive bidding, it must “ensure that small businesses, rural telephone companies, and businesses owned by members of minority groups and women are given the opportunity to participate in the provision of spectrum-based services, and, for such purposes, consider the use of . . . bidding preferences.” In addition, Section 309(j)(3)(B) provides that in establishing eligibility criteria and bidding methodologies, the Commission shall promote “economic opportunity and competition . . . by avoiding excessive concentration of licenses and by disseminating licenses among a wide variety of applicants, including small businesses, rural telephone companies, and businesses owned by members of minority groups and women.” Historically, one of the principal means by which the Commission fulfills this mandate is through “bidding preferences” in the form of bidding credits to small businesses.

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 2017 NPRM, the Commission sought comment on using the same small business size standards and bidding credits for the 3.5 GHz band as the Commission offered in the 600 MHz Band. In adopting competitive bidding rules for the 600 MHz Band, and more recently in the UMFUS bands, the Commission offered bidding credits to promote opportunities for small businesses, rural telephone companies, and businesses owned by members of minority groups and women to participate in the provision of spectrum-based services. Specifically, for the 600 MHz and UMFUS band auctions, the Commission adopted two small business definitions, the highest two of the three thresholds included in the Commission's part 1 standardized schedule of bidding credits.

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 participating in competitive bidding in the 3.5 GHz band.

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. Rural Service Provider Bidding Credit. In the auction of 600 MHz Band licenses, the Commission also offered, for the first time, a rural service provider (RSP) bidding credit to counter the fact that rural service providers have often faced “challenges in their efforts to obtain financing because the rural areas they seek to serve are not as profitable as more densely-populated markets.” The RSP bidding credit provides a 15 percent bidding credit to eligible entities that predominantly serve rural areas and have fewer than 250,000 combined wireless, wireline, broadband and cable subscribers. Here too, the record supports the conclusion that an RSP bidding credit should provide an adequate tool to enable rural service providers to compete for 3.5 GHz band spectrum licenses at auction and in doing so, will support the statutory objectives to disseminate licenses among a wide variety of applicants, ensure that rural telephone companies have an opportunity to participate in the provision of spectrum-based services, and promote the availability of innovative services to rural America.

78. Tribal Lands Bidding Credit. The Commission also made tribal lands bidding credits available to winning bidders of licenses in the 600 MHz auction. In light of the record support for having similar bidding credits here as the Commission offered in the 600 MHz Band auction, and the modifications adopted for PALs that, as explained above, may cause designated entities to have less opportunity to obtain spectrum in this band, the Commission concludes that it should revise its earlier determination not to offer tribal lands bidding credits in competitive bidding for the 3.5 GHz band. The Commission generally has determined that such a credit should be available where wireless licenses are subject to the Commission's part 1 competitive bidding rules, and wireless providers are willing to offer service to qualifying tribal lands. Accordingly, a winning bidder for a market will be eligible to receive a credit for serving qualifying Tribal lands within that market, provided it complies with the applicable competitive bidding rules.

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.

C. Partitioning and Disaggregation of PALs on the Secondary Market

80. Background. In the 2016 Report and Order, the Commission prohibited Priority Access Licensees from partitioning or disaggregating their licenses because the Commission found that the typical reasons for permitting partitioning and disaggregation in more traditionally licensed bands were not present in the 3.5 GHz band. The Commission noted that the licensing rules that it adopted in the 2015 Report and Order did not have the same characteristics as other bands where partitioning and disaggregation were permitted, such as longer license terms, larger license areas, and construction obligations. In other bands, partitioning and disaggregation were needed to promote key policy goals such as access to spectrum and flexibility of use, which in turn could result in greater service to consumers.

81. In the 2016 Report and Order, the Commission also determined that a light-touch leasing process could achieve the goal of making PAL spectrum use rights available in secondary markets—on a targeted, flexible basis—without the need for the Commission oversight required for partitioning and disaggregation. The Commission modified its streamlined part 1 spectrum manager lease rules to create a process tailored to the 3.5 GHz band. Under this streamlined process, parties contemplating spectrum manager lease arrangements with Priority Access Licensees may submit the required, non-lease specific certifications, including ownership information, to the Commission at any time prior to reaching a spectrum manger lease agreement with a Priority Access Licensee. The Commission will expeditiously process these certifications and provide SASs with confirmation that the putative lessee meets the corresponding eligibility criteria for a spectrum manager lease. Once the lessee notifies the SAS of a spectrum manager leasing agreement with a Priority Access Licensee, the SAS may then quickly complete the spectrum manager lease notification process for that lease, and provide confirmation to the parties. The lessee may then immediately begin operating under the lease.

82. In the 2017 NPRM, the Commission proposed to allow partitioning and disaggregation of PALs in secondary market transactions. It noted that such a modification would be consistent with proposals to lengthen the license term and enlarge the geographic area of PALs, and that it also would be consistent with the licensing paradigm for other similarly licensed services. The Commission anticipated that, when coupled with a longer license term or larger license area for PALs, the ability to partition and disaggregate a PAL would be an effective way to improve spectral efficiency and facilitate targeted network deployments.

83. Discussion. The Commission adopts the proposal in the 2017 NPRM to allow partitioning and disaggregation of PALs in the 3.5 GHz band, because it will promote investment, encourage robust use of the band by a wide variety of stakeholders, and help to ensure that spectrum is used efficiently. The Commission consistently has found that the flexibility afforded by partitioning and disaggregation facilitates the efficient use of spectrum by enabling licensees to make offerings directly responsive to market demands for particular types of services, increasing competition by allowing new entrants to enter markets, and expediting provision of services that might not otherwise be provided in the near term. Particularly here, where the Commission has decided to license the 3.5 GHz band in larger geographic areas for longer, renewable license terms, allowing secondary market transactions will allow licensees and the marketplace to determine the correct size of licenses on a market-specific and needs-based basis. These licensing changes also bring the 3.5 GHz band in line with other bands where partitioning and disaggregation are allowed. Thus, the unique features of PALs that had previously militated against allowing partitioning and disaggregation in the band—small census tract licenses with three-year, non-renewable terms—are no longer present. Partitioning and disaggregation of licenses in the 3.5 GHz band must comply with § 1.950 of the Commission's rules. Accordingly, each party to a partitioning or disaggregation agreement must have a clear construction and operation requirement and each party will face license termination, in the event of failure to meet these requirements. Allowing partitioning and disaggregation will not alter the light-touch leasing rules adopted in the 2016 Report and Order.

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 Report and Order. These entities maintain that the flexibility afforded by partitioning and disaggregation will encourage a thriving secondary market, facilitate “right sizing” PALs for any local market, and increase the likelihood that a greater percentage of the whole PEA ultimately will receive service.” These rationales all support the Commission's decision to allow PAL partitioning and disaggregation in the 3.5 GHz band.

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 per se. Some commenters that oppose increased license sizes in the band contend that partitioning and disaggregation offer some benefits, particularly in rural areas where even census tract-sized licenses can be very large. For the reasons discussed above, the Commission determines that licensing PALs on a county basis serves the public interest. It agrees, however, that partitioning and disaggregation are important tools which will help it fulfill its statutory mandate to make spectrum available across the United States, in all markets from urban to rural.

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 Report and Order, will best balance the statutory objectives to promote competition, the efficient use of spectrum, and the deployment of innovative services to consumers—including those in rural areas. The Commission's decision to adopt performance requirements for PALs also advances its efforts to fulfill the statutory obligations under section 309(j) by helping to ensure that spectrum won't lie fallow.

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 de facto leasing rules remain in effect for PALs, thus affording potential entrants to the band a variety of options for accessing this spectrum.

D. PAL Spectrum Aggregation Limit

91. Background. In the 2015 Report and Order, the Commission adopted an in-band spectrum aggregation limit of 40 megahertz (i.e., four PALs) of the possible 70 megahertz per license area at any given point in time. The Commission concluded that the benefits of facilitating competition, innovation, and the efficient use of the 3.5 GHz band outweighed any harms of imposing such an aggregation limit. In the 2017 NPRM, the Commission asked whether it should modify or eliminate the PAL aggregation limit, in the event it determined to change the geographic license area or make other changes to the PAL licensing scheme.

92. Discussion. The record largely supports retaining the PAL aggregation limit. For the reasons articulated in the 2015 Report and Order, the Commission finds that the current framework for auction, assignment, and operation of the 3.5 GHz band is sufficient to incentivize investment and participation by a broader range of participants. The other changes made to the PAL licensing regime do not alter the Commission's underlying rationale that the 40 megahertz PAL aggregation limit will provide a minimum degree of diversity among users that likely will be operating in this band, and foster competition and innovation in both PAL and GAA uses. Accordingly, the Commission maintains the PAL aggregation limit for both licensees and lessees.

E. Confidentiality of CBSD Registration Information

93. Background. In the 2015 Report and Order, the Commission required that all CBSDs register with and be authorized by an SAS prior to initial service transmission. The SAS ensures spectral efficiency, non-discriminatory coexistence, and the minimalization of interference among GAA users, by such means as managing the frequencies in a manner to avoid assignment of the same frequency to multiple GAA users at the same location to the extent possible. CBSD registration must include detailed information specifying the location and characteristics of the CBSD. In addition, the CBSD must send an update to the SAS within 60 seconds of any change in the registration information. The Commission required SAS Administrators to disclose CBSD registration information in three circumstances. First, SAS Administrators must immediately respond to requests from Commission personnel for information stored or maintained by the SAS. Second, SAS Administrators must make available to other SAS Administrators all information necessary to effectively coordinate operations between and among CBSDs. Third, SAS Administrators must make CBSD registration information available to the general public. However, due to concerns raised by commenters about the potential for public disclosure of confidential business information that could compromise personal privacy or affect competitive interests, the Commission required SAS Administrators to “obfuscate the identities of the licensees providing the information for any public disclosures.”

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 2017 NPRM to amend the rules to prohibit an SAS from disclosing publicly any CBSD registration information that may compromise the security of critical network deployments or be considered competitively sensitive. The Commission noted that it was not proposing any change in SAS-to-SAS information sharing requirements. The Commission sought comment, inter alia, on the potential risks presented by the public disclosure requirement, how to balance these potential risks against potential users' need for information to plan future GAA and/or PAL deployments, and whether there was a mechanism short of public disclosure for potential users to plan future GAA and/or PAL deployments, such as by communicating with an SAS on a confidential basis. It further sought comment on whether there was certain information an SAS could publicly provide while balancing data sensitivity and security concerns.

95. Discussion. After careful consideration of the record, the Commission finds that it is in the public interest to protect CBSD registration information from public disclosure while still ensuring that aggregated data on spectrum use is made available to the public. Specifically, the Commission prohibits SAS Administrators from disclosing disaggregated CBSD registration data to the public except where such disclosure is authorized by the registrant. However, it also requires SAS Administrators to make aggregated spectrum usage data for any particular area of interest available to the public, 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. This approach will effectively balance the interests in protecting sensitive network information and the legitimate needs that parties—including potential GAA operators—may have for information on the local spectrum environment. The Commission is not modifying the current requirements governing SAS-to-SAS information exchange.

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, and under what circumstances access would or would not be provided. The Commission finds that, on the record before it, the revised public disclosure requirement it adopts in this Report and Order is the best choice because it will ensure that all potential users have certain and convenient access to aggregate data on the spectrum environment for the area of interest while substantially reducing any legitimate concerns regarding the sensitivity of network data. The Commission acknowledges that aggregate spectrum usage data might in some circumstances implicitly reveal some provider- or CBSD-specific information (such as in cases where a 3.5 GHz Priority Access Licensee has deployed CBSDs in a particular geographic area with no other deployments in the band). It finds, however, that the benefits of the revised public disclosure requirement and its importance to the success of the shared model in the 3.5 GHz band far outweigh any remaining concerns from the potential for such inferred disclosures.

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 2016 Order on Reconsideration (81 FR 49038, July 26, 2016). Among other distinctions in the case of 3.5 GHz, the Commission noted that “[t]he licensed nature of the service coupled with industry certification requirements for professional installers provides a higher degree of accountability for Citizens Broadband Radio Service users and SAS Administrators, ensuring that CBSD locations are accurately reported and verified.” It further noted that SASs “will have capabilities and responsibilities that exceed those of White Spaces database administrators,” including rules that require authentication of CBSDs with an SAS and require that SAS Administrators maintain the accuracy of CBSD records, which “places a duty on SAS Administrators to take reasonable steps to validate newly entered data and to purge obsolete data.” Accordingly, the Commission finds there is not the same benefit from public disclosures in helping to ensure registration accuracy in this context as was present in the white space service.

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.

F. Emissions Limits for CBSDs and End User Devices

107. Background. The Commission's rules include the following emissions limits for CBSDs and End User Devices operating in the 3.5 GHz band:

• −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 2017 NPRM, the Commission sought comment on two alternative emission masks to address concerns about the need to reduce transmit power for channels wider than 10 megahertz under the emissions mask set forth in § 96.41(e) of the Commission's rules. Both alternative emission masks would extend the width of the −13 dBm/MHz transition step. Instead of the fixed 10 megahertz wide transition step in § 96.41(e)(1), each alternative emission mask would extend the total transition bandwidth to be the bandwidth (B) of the fundamental transmission in megahertz. The first alternative emission mask (the Qualcomm Mask) has a single transition step at a level of −13 dBm/MHz. The second alternative emission mask (the Graduated Mask) has two steps with a steeper reduction of adjacent emission power, −13 dBm/MHz from 0 to B/2 megahertz from the channel edge, and −20 dBm/MHz from B/2 to B megahertz from the channel edge. The Commission sought comment on these two alternative emission masks and specifically requested quantitative analysis of the tradeoffs between the use of wider channels and the risk of higher interference to users in adjacent channels.

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 (e.g., 2.2 dB) for channels with high resource utilization, but the Graduated Mask requires 0.8 dB-2.5 dB additional power reduction than the Qualcomm Mask for channels with low resource utilization. Thus, Qualcomm argues that its mask will more effectively facilitate wider bandwidth operations with less impact on transmit power. In ex parte presentations on March 6, 12, and 14, 2018, Qualcomm further asserted that with its proposed mask, emission reduction is achieved by power reduction resulting from both the spectrum emission mask (SEM) and the 3GPP Adjacent Channel Leakage Ratio (ACLR) requirement of 30 dB for user devices. In some cases, the ACLR requirement (and not the SEM) determines the amount of emission reduction, and in other cases the SEM requirement (and not the ACLR) determines the amount of emission reduction.

111. Discussion. After review of the record, the Commission concludes, first, that it should make no changes to the OOBE limits outside the 3.5 GHz band, specifically at or beyond the 3550 and 3700 MHz band edges. Second, it is not convinced that any change is needed in the emissions mask for Category A and B CBSDs to facilitate next generation wireless deployments, including 5G channels up to 40 megahertz wide. Third, it finds that some relaxation in the emissions mask for uplinks from End User Devices is warranted to accommodate wider bandwidths. This change will help facilitate wide-network deployments, consistent with the other changes adopted herein.

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 to ensure interference protection for fixed satellite services operating above the band and federal operations below the band. These important adjacent band coexistence issues have not changed since the rules were adopted and, as such, there is no need to reconsider the Commission's prior findings on this matter.

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 (i.e., base stations).

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 (i.e., 10 megahertz outside the channel). In its March 14, 2018 filing, Qualcomm demonstrated that for End User Devices, neither the Qualcomm Mask nor the Graduated Mask is sufficient, in some cases, to ensure that adjacent channel leakage is at least 30 dB below the fundamental channel power (i.e., 3GPP ACLR limit of 30 dB). This necessitates maximum power reduction based on an ACLR limit, to ensure that adjacent channel emission power is sufficiently minimized. Qualcomm performed software simulation of End User Device transmitter emission performance for many combinations of uplink sub-carrier assignments, for inner channels, for edge channels, and for different configurations of contiguous and non-contiguous spectrum assignments. Their analysis showed the power back-off required to meet 3GPP performance standards for edge channels and inner channels, for the current mask, the Qualcomm Mask, and the Graduated Mask. Based on this analysis, the Commission believes that adopting the two emission requirements assessed by Qualcomm—the Qualcomm emission mask and ACLR—would allow for wider transmission bandwidths, and ensure that in-band noise is appropriately limited for all End User Devices, not just 3GPP user equipment. Therefore, it adopts the Qualcomm Mask and an adjacent channel leakage requirement of −30 dBc for End User Devices.

116. Some commenters expressed concern that changes to the emission limits could make some channels in the band (i.e., those furthest from the band edges) more desirable than others. While wider bandwidth operations using spectrum near the upper and lower edges of the 3.5 GHz band may need to make adjustments—including operating at lower power—to use those parts of the band, the Commission does not believe this makes these parts of the band any less usable. The 3.5 GHz band will likely be used by a variety of different operators, each with unique spectrum needs. These operators should have the flexibility to use the band at a variety of different bandwidths and operational power levels suited to their particular business. For example, parties seeking to use the lower 10 megahertz channel may also seek to use it together with adjacent channels for wider aggregated bandwidth. They can also choose to employ devices with better filtering, slightly reduce power, or aggregate non-contiguous individual channels. The Commission is also cognizant that there is apt to be wide variability in the ability of multiple contiguous channels at any given location because it will depend on factors such as which channels have different licensees and the extent of other deployments 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).

IV. Procedural Matters

118. Paperwork Reduction Analysis.—This Report and Order contains new and modified information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. It will be submitted to the Office of Management and Budget (OMB) for review under section 3507(d) of the PRA. OMB, the general public, and other Federal agencies will be invited to comment on the new and modified information collection requirements contained in the proceeding. In addition, the Commission notes that pursuant to the Small Business Paperwork Relief Act of 2002, it previously sought specific comment on how we might “further reduce the information collection burden for small business concerns with fewer than 25 employees.” It has described impacts that might affect small businesses, which includes most businesses with fewer than 25 employees, in the Final Regulatory Flexibility Analysis (FRFA), in Appendix B of the Report and Order.

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

120. Regulatory Flexibility Act.—The Regulatory Flexibility Act of 1980, as amended (RFA), requires that an agency prepare a regulatory flexibility analysis for notice and comment rulemakings, unless the agency certifies that “the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities.” Accordingly, the Commission has prepared a FRFA, set forth in Appendix B of the Report and Order, concerning the possible impact of the rule changes.

V. Ordering Clauses

121. Accordingly, it is ordered that, pursuant to Sections 1, 2, 4(i), 4(j), 5(c), 302, 303, 304, 307(e), and 316 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i), 154(j), 155(c), 302, 303, 304, 307(e), and 316, this Report and Order in GN Docket No. 17-258 is hereby adopted.

122. It is further ordered that the amendments of the Commission's rules as set forth in the Final Rules section are adopted, effective thirty (30) days after publication in the Federal Register. Sections 96.23(a), 96.25(b)(4), and 96.32(b) contain new or modified information collection requirements that require review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act. The Commission directs the Bureau to announce the effective date of those information collections in a document published in the Federal Register after the Commission receives OMB approval, and directs the Bureau to cause §§ 96.23(d), 96.25(b)(5), and 96.32(d) to be revised accordingly.

123. It is further ordered that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Report and Order, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

124. It is further ordered that this Report and Order shall be sent to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

List of Subjects in 47 CFR Parts 1 and 96

Telecommunications, Radio.

Federal Communications Commission. Katura Jackson, Federal Register Liaison Officer, Office of the Secretary. Final Rules

For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR parts 1 and part 96 as follows:

PART 1—PRACTICE AND PROCEDURE 1. The authority citation for part 1 is revised to read as follows: Authority:

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.

2. Amend § 1.907 by revising the definition of “Covered Geographic Licenses” to read as follows:
§ 1.907 Definitions.

Covered Geographic Licenses. Covered Geographic Licenses consist of the following services: 1.4 GHz Service (part 27, subpart I, of this chapter); 1.6 GHz Service (part 27, subpart J); 24 GHz Service and Digital Electronic Message Services (part 101, subpart G, of this chapter); 218-219 MHz Service (part 95, subpart F, of this chapter); 220-222 MHz Service, excluding public safety licenses (part 90, subpart T, of this chapter); 600 MHz Service (part 27, subpart N); 700 MHz Commercial Services (part 27, subparts F and H); 700 MHz Guard Band Service (part 27, subpart G); 800 MHz Specialized Mobile Radio Service (part 90, subpart S); 900 MHz Specialized Mobile Radio Service (part 90, subpart S); Advanced Wireless Services (part 27, subparts K and L); Air-Ground Radiotelephone Service (Commercial Aviation) (part 22, subpart G, of this chapter); Broadband Personal Communications Service (part 24, subpart E, of this chapter); Broadband Radio Service (part 27, subpart M); Cellular Radiotelephone Service (part 22, subpart H); Citizens Broadband Radio Service (part 96, subpart C, of this chapter); Dedicated Short Range Communications Service, excluding public safety licenses (part 90, subpart M); H Block Service (part 27, subpart K); Local Multipoint Distribution Service (part 101, subpart L); Multichannel Video Distribution and Data Service (part 101, subpart P); Multilateration Location and Monitoring Service (part 90, subpart M); Multiple Address Systems (EAs) (part 101, subpart O); Narrowband Personal Communications Service (part 24, subpart D); Paging and Radiotelephone Service (part 22, subpart E; part 90, subpart P); VHF Public Coast Stations, including Automated Maritime Telecommunications Systems (part 80, subpart J, of this chapter); Upper Microwave Flexible Use Service (part 30 of this chapter); and Wireless Communications Service (part 27, subpart D).

3. Amend § 1.949 by revising paragraph (c) to read as follows:
§ 1.949 Application for renewal of authorization.

(c) Implementation. Covered Site-based Licenses, except Common Carrier Fixed Point-to-Point Microwave Service (part 101, subpart I, of this chapter), and Covered Geographic Licenses in the 600 MHz Service (part 27, subpart N, of this chapter); 700 MHz Commercial Services (part 27, subpart F); Advanced Wireless Services (part 27, subpart L) (AWS-3 (1695-1710 MHz, 1755-1780 MHz, and 2155-2180 MHz) and AWS-4 (2000-2020 MHz and 2180-2200 MHz) only); Citizens Broadband Radio Service (part 96, subpart C, of this chapter); and H Block Service (part 27, subpart K) must comply with paragraphs (d) through (h) of this section. All other Covered Geographic Licenses must comply with paragraphs (d) through (h) of this section beginning on January 1, 2023. Common Carrier Fixed Point-to-Point Microwave Service (part 101, subpart I) must comply with paragraphs (d) through (h) of this section beginning on October 1, 2018.

PART 96—CITIZENS BROADBAND RADIO SERVICE 4. The authority citation for part 96 continues to read as follows: Authority:

47 U.S.C. 154(i), 303, and 307.

5. Amend § 96.3 by: a. Adding the definitions of “Adjacent Channel Leakage Ratio” and “Aggregated Channel Bandwidth” in alphabetical order; b. Removing the definition of “Census tract”; c. Adding the definitions of “County” in alphabetical order; and d. Revising the definition of “License area.”

The additions and revision read as follows:

§ 96.3 Definitions.

Adjacent Channel Leakage Ratio. The Adjacent Channel Leakage Ratio (ACLR) is the ratio of the filtered mean power over the assigned Aggregated Channel Bandwidth to the filtered mean power over the equivalent adjacent channel bandwidth. The power in the assigned Aggregated Channel Bandwidth and its equivalent adjacent channel bandwidth are measured with rectangular filters with measurement bandwidths equal to the Aggregated Channel Bandwidth.

Aggregated Channel Bandwidth. The Aggregated Channel Bandwidth is the bandwidth of a single channel, or in the case of multiple contiguous channels, the bandwidth between the upper and lower limits of the combined contiguous channels.

County. For purposes of this part, counties shall be defined using the United States Census Bureau's data reflecting county legal boundaries and names valid through January 1, 2017.

License area. The geographic component of a PAL. A License Area consists of one county.

6. Amend § 96.23 by revising paragraph (a) introductory text and adding paragraph (d) to read as follows:
§ 96.23 Authorization.

(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 Federal Register announcing that compliance date and revising this paragraph (d) accordingly.

7. Amend § 96.25 by revising paragraph (b)(3) and adding paragraphs (b)(4) and (5) to read as follows:
§ 96.25 Priority access licenses.

(b) * * *

(3) License term. Each PAL has a ten-year license term. Licensees must file a renewal application in accordance with the provisions of § 1.949 of this chapter.

(4) Performance requirement. Priority Access Licensees must provide substantial service in their license area by the end of the initial license term. “Substantial” service is defined as service which is sound, favorable, and substantially above the level of mediocre service which might minimally warrant renewal. Failure by any licensee to meet this requirement will result in forfeiture of the license without further Commission action, and the licensee will be ineligible to regain it. Licensees shall demonstrate compliance with the performance requirement by filing a construction notification with the Commission in accordance with the provisions set forth in § 1.946(d) of this chapter. The licensee must certify whether it has met the performance requirement, and file supporting documentation, including description and demonstration of the bona fide service provided, electronic maps accurately depicting the boundaries of the license area and where in the license area the licensee provides service that meets the performance requirement, supporting technical documentation, any population-related assumptions or data used in determining the population covered by a service to the extent any were relied upon, and any other information the Wireless Telecommunications Bureau may prescribe by public notice. A licensee's showing of substantial service may not rely on service coverage outside of the PAL Protection Areas of registered CBSDs or on deployments that are not reflected in SAS records of CBSD registrations.

(i) Safe harbor for mobile or point-to-multipoint service. A Priority Access Licensee providing a mobile service or point-to-multipoint service may demonstrate substantial service by showing that it provides signal coverage and offers service, either to customers or for internal use, over at least 50 percent of the population in the license area.

(ii) Safe harbor for fixed point-to-point service. A Priority Access Licensee providing a fixed point-to-point service may demonstrate substantial service by showing that it has constructed and operates at least four links, either to customers or for internal use, in license areas with 134,000 population or less and in license areas with greater population, a minimum number of links equal to the population of the license area divided by 33,500 and rounded up to the nearest whole number. To satisfy this provision, such links must operate using registered Category B CBSDs.

(5) Compliance date. Paragraph (b)(4) 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 Federal Register announcing that compliance date and revising this paragraph (b)(5) accordingly.

§ 96.27 [Removed and Reserved]
8. Remove and reserve § 96.27. 9. Section 96.29 is revised to read as follows:
§ 96.29 Competitive bidding procedures.

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.

10. Section 96.30 is added to read as follows:
§ 96.30 Designated entities in the Citizens Broadband Radio Service.

(a) Small business. (1) A 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 $55 million for the preceding three (3) years.

(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) Eligible rural service provider. For purposes of this section, an eligible rural service provider is an entity that meets the criteria specified in § 1.2110(f)(4) of this chapter.

(c) Bidding credits. (1) A winning bidder that qualifies as a small business as defined in this section or a consortium of small businesses may use a bidding credit of 15 percent, as specified in § 1.2110(f)(2)(i)(C) of this chapter. A winning bidder that qualifies as a very small business as defined in this section or a consortium of very small businesses may use a bidding credit of 25 percent, as specified in § 1.2110(f)(2)(i)(B) of this chapter.

(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.

11. Amend § 96.32 by revising paragraph (b) and adding paragraph (d) to read as follows:
§ 96.32 Priority access assignments of authorization, transfer of control, and leasing arrangements.

(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 Federal Register announcing that compliance date and revising this paragraph (d) accordingly.

12. Amend § 96.41 by revising paragraphs (e)(1) and (2) and (e)(3)(i) to read as follows:
§ 96.41 General radio requirements.

(e) 3.5 GHz Emissions and Interference Limits—(1) General protection levels.

ER07DE18.009

(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) Additional protection levels. Notwithstanding paragraph (e)(1) of this section, for CBSDs and End User Devices, the conducted power of emissions below 3540 MHz or above 3710 MHz shall not exceed −25 dBm/MHz, and the conducted power of emissions below 3530 MHz or above 3720 MHz shall not exceed −40dBm/MHz.

(3) Measurement procedure. (i) Compliance with this provision is based on the use of measurement instrumentation employing a resolution bandwidth of 1 megahertz or greater. However, in the 1 megahertz bands immediately outside and adjacent to the licensee's authorized frequency channel, a resolution bandwidth of no less than one percent of the fundamental emission bandwidth may be employed. A narrower resolution bandwidth is permitted in all cases to improve measurement accuracy provided the measured power is integrated over the full reference bandwidth (i.e., 1 MHz or 1 percent of emission bandwidth, as specified). The fundamental emission bandwidth is defined as the width of the signal between two points, one below the carrier center frequency and one above the carrier center frequency, outside of which all emissions are attenuated at least 26 dB below the transmitter power.

13. Amend § 96.55 by revising paragraph (a)(3) to read as follows:
§ 96.55 Information gathering and retention.

(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.

[FR Doc. 2018-25795 Filed 12-6-18; 8:45 am] BILLING CODE 6712-01-P
FEDERAL COMMUNICATIONS COMMISSION 47 CFR Part 20 [WT Docket No. 17-228; FCC 18-167] Reporting Requirements Governing Hearing Aid-Compatible Mobile Handsets AGENCY:

Federal Communications Commission.

ACTION:

Final rule.

SUMMARY:

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.

DATES:

Effective Date: January 7, 2019.

Compliance Date: Compliance will not be required for § 20.19(e), (h), and (i), until after approval by the Office of Management and Budget. We will publish a document in the Federal Register announcing the compliance date.

FOR FURTHER INFORMATION CONTACT:

Weiren Wang, Wireless Telecommunications Bureau, (202) 418-7275, email [email protected], and Michael Rowan, Wireless Telecommunications Bureau, (202) 418-1883, email [email protected]

SUPPLEMENTARY INFORMATION:

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, http://www.bcpiweb.com; or by calling (800) 378-3160, facsimile (202) 488-5563, or email [email protected] Copies of the Order also may be obtained via the Commission's Electronic Comment Filing System (ECFS) by entering the docket number WT Docket 17-228. Additionally, the complete item is available on the Federal Communications Commission's website at http://www.fcc.gov.

Synopsis I. Report and order

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.

A. Improvements to Service Provider Website Requirements

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 de minimis service providers, which remain exempt from website requirements) will now be required to post to their websites the following additional information:

(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 (e.g., when a handset is first offered and no longer offered). Posting this information to their websites and/or retaining it for their records should impose on providers only a minimal additional burden. This conclusion is confirmed by the record in this proceeding showing that service providers already post some of this newly required information and the willingness of the Joint Consensus filers to endorse a similar approach.

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.

B. Adoption of Service Provider Certification Requirement To Replace Annual Reporting Requirements

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 to all service providers including de minimis service providers. It will assure the public and the Commission that service providers have a strong incentive to comply fully with all of the Commission's hearing aid compatibility requirements, including deployment, website, labeling, and disclosure requirements, among others. Under this new rule, service providers will be required to file a certification by January 15 of each calendar year using the existing electronic interface for the FCC Form 655 and stating as follows:

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 de minimis exception.

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 2018, compared to the reports from the four largest carriers (which serve more than 98% of wireless subscribers), 209 smaller providers filed annual Form 655 status reports. Even for nationwide carriers, the costs of reporting are no longer justified given their high level of compliance with deployment benchmarks and the information the Commission already collects from device manufacturers.

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.

C. Transition and Implementation Issues

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 Federal Register, it observes that the exception to the Administrative Procedure Act to adopt a “substantive rule which . . . relieves a restriction” supports its recognition of the public interest served by its grant of this waiver. The Commission therefore finds it in the public interest to waive the annual reporting requirements for service providers.

26. The Commission also provides for a transition for the revised website and data retention obligations. Thirty days following publication in the Federal Register of a notice that OMB has approved the information collection requirements related to the new website posting rule, service providers will be required to post and retain the prescribed handset model information. This information will include posting information on all handsets currently offered, retaining information on handsets previously offered starting January 1, 2018 and thereafter, as well as either posting information on handsets previously offered starting on January 1, 2018 or providing a link to the GARI website with previously offered handset information.

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 Federal Register announcing the effective date once OMB approves.

II. Procedural Matters A. Final Regulatory Flexibility Analysis

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.

1. Need for, and Objectives of, the Proposed Rules

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.

2. Summary of Significant Issues Raised by Public Comments in Response to the IRFA

34. There were no comments filed that specifically addressed the rules and policies proposed in the IRFA.

3. Response to Comments by the Chief Counsel for Advocacy of the Small Business Administration

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.

4. Description and Estimate of the Number of Small Entities to Which the Rules Will Apply

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. Small Businesses, Small Organizations, Small Governmental Jurisdictions. The Commission's actions, over time, may affect small entities that are not easily categorized at present. The Commission therefore describe here, at the outset, three broad groups of small entities that could be directly affected herein. First, while there are industry specific size standards for small businesses that are used in the regulatory flexibility analysis, according to data from the SBA's Office of Advocacy, in general a small business is an independent business having fewer than 500 employees. These types of small businesses represent 99.9% of all businesses in the United States which translates to 28.8 million businesses.

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. Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing. This industry comprises establishments primarily engaged in manufacturing radio and television broadcast and wireless communications equipment, including unlicensed devices. Examples of products made by these establishments are: Transmitting and receiving antennas, cable television equipment, GPS equipment, pagers, cellular phones, mobile communications equipment, radio and television studio and broadcasting equipment. The Small Business Administration has established a size standard for this industry of 750 employees or less. U.S. Census data for 2012, shows that 841 establishments operated in this industry in that year. Of that number, 828 establishments operated with fewer than 1,000 employees, 7 establishments operated with between 1,000 and 2,499 employees and 6 establishments operated with 2,500 or more employees. Based on this data, the Commission concludes that a majority of manufacturers in this industry is small.

42. Part 15 Handset Manufacturers. The Commission has not developed a definition of small entities applicable to unlicensed communications handset manufacturers. The SBA category of Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing is the closest NAICS code category for Part 15 Handset Manufacturers. The Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing industry is comprised of establishments primarily engaged in manufacturing radio and television broadcast and wireless communications equipment. Examples of products made by these establishments are: Transmitting and receiving antennas, cable television equipment, GPS equipment, pagers, cellular phones, mobile communications equipment, and radio and television studio and broadcasting equipment.” The SBA has developed a small business size standard for Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing, as firms having 750 or fewer employees. U.S. Census data for 2012, shows that 841 establishments operated in this industry in that year. Of that number, 828 establishments operated with fewer than 1,000 employees, 7 establishments operated with between 1,000 and 2,499 employees and 6 establishments operated with 2,500 or more employees. Thus, under this size standard, the majority of firms can be considered small.

43. Wireless Telecommunications Carriers (except Satellite). This industry comprises establishments engaged in operating and maintaining switching and transmission facilities to provide communications via the airwaves. Establishments in this industry have spectrum licenses and provide services using that spectrum, such as cellular phone services, paging services, wireless internet access, and wireless video services.” The appropriate size standard under SBA rules is for the category Wireless Telecommunications Carriers (except Satellite) is that a business is small if it has 1,500 or fewer employees. For this industry, U.S. Census data for 2012 shows that there were 967 firms that operated for the entire year. Of this total, 955 firms had employment of 999 or fewer employees and 12 had employment of 1000 employees or more. Thus, under this category and the associated size standard, the Commission estimates that the majority of wireless telecommunications carriers (except satellite) are small entities.

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

5. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements for Small Entities

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 Form 655 filing requirement for all service providers, the Commission eliminates an unnecessary and outdated reporting requirement and streamlines its collection of information regarding the status of hearing aid-compatible handsets. In addition, the Commission finds that the elimination of the reporting requirement will allow service providers to utilize the cost savings in time and money to maintain and improve their websites and other outreach materials that are more readily accessible to consumers.

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.

6. Steps Proposed To Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered

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 Federal Register. Therefore, service providers will benefit from the Commission's new rules almost immediately while the new website posting, and certification requirements will be effective 30 days following notice of OMB approval of the relevant information collection requirements. This approach affords service providers sufficient time to make any necessary preparations required by the new certification approach.

7. Report to Congress

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 Federal Register.

B. Paperwork Reduction Act

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.

C. Congressional Review Act

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 pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

III. Ordering Clauses

56. Accordingly, it is ordered, pursuant to sections 4(i), 303(r), and 710 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303(r), and 610, this Report and Order is hereby adopted.

57. It is further ordered that Part 20 of the Commission's rules is amended as set forth in Appendix B.

58. It is further ordered that the amendments of the Commission's rules as set forth in Appendix B are adopted, effective thirty days from the date of publication in the Federal Register. Section 20.19, paragraphs (e), (h) and (i) contain new or modified information collection requirements that require review by the OMB under the PRA. The Commission directs the Bureau to announce the compliance date for those information collections in a document published in the Federal Register after the Commission receives OMB approval and directs the Bureau to cause section 20.19(m) to be revised accordingly.

59. It is further ordered that, pursuant to the authority of section 4(i) of the Communications Act, as amended, 47 U.S.C. 154(i), and section 1.3 of the Commission's rules, 47 CFR 1.3, the requirements of section 20.19(i) of the Commission's rules, 47 CFR 20.19(i), are waived to the extent described herein.

60. It is further ordered that the Commission's Consumer & Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Report and Order, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the SBA.

List of Subjects in 47 CFR Part 20

Communications common carriers, Communications equipment, Radio.

Federal Communications Commission. Katura Jackson, Federal Register Liaison, Office of the Secretary. Final Rules

For the reasons set forth in the preamble, part 20 of title 47 of the Code of Federal Regulations is amended as follows:

PART 20—COMMERCIAL MOBILE RADIO SERVICES 1. The authority citation for part 20 continues to read as follows: Authority:

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.

2. Section 20.19 is amended by revising paragraphs (c)(4)(ii), (d)(4)(ii), (e)(1)(i), (h), (i)(1), (i)(3), and (i)(4), and adding paragraph (m) to read as follows:
§ 20.19 Hearing aid-compatible mobile handsets.

(c) * * *

(4) * * *

(ii) Offering models with differing levels of functionality. Each service provider must offer its customers a range of hearing aid-compatible models with differing levels of functionality (e.g., operating capabilities, features offered, prices). Each provider may determine the criteria for determining these differing levels of functionality.

(d) * * *

(4) * * *

(ii) Offering models with differing levels of functionality. Each service provider must offer its customers a range of hearing aid-compatible models with differing levels of functionality (e.g., operating capabilities, features offered, prices). Each provider may determine the criteria for determining these differing levels of functionality.

(e) De minimis exception. (1)(i) Manufacturers or service providers that offer two or fewer digital wireless handsets in an air interface in the United States are exempt from the requirements of this section in connection with that air interface, except with regard to the reporting and certification requirements in paragraph (i) of this section. Service providers that obtain handsets only from manufacturers that offer two or fewer digital wireless handset models in an air interface in the United States are likewise exempt from the requirements of this section other than paragraph (i) of this section in connection with that air interface.

(h) Website and record retention requirements—(1) Each manufacturer and service provider that operates a publicly-accessible website must make available on its website a list of all hearing aid-compatible models currently offered, the ratings of those models, and an explanation of the rating system. Each service provider must also specify on its website, based on the levels of functionality and rating that the service provider has defined, the level that each hearing aid-compatible model falls under, as well as an explanation of how the functionality of the handsets varies at the different levels. Each service provider must also include on its website: A list of all non-hearing aid-compatible models currently offered, including the level of functionality that each of those models falls under, an explanation of how the functionality of the handsets varies at the different levels as well as a link to the current FCC web page containing information about the wireless hearing aid compatibility rules and service providers' obligations. Each service provider must also include the marketing model name/number(s) and FCC ID number of each hearing aid-compatible and non-hearing aid-compatible model currently offered.

(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 the current calendar month/year and was last offered in January 2018 or later).

(i) Reporting and certification requirements—(1) Reporting and certification dates. Manufacturers shall submit reports on efforts toward compliance with the requirements of this section on an annual basis on July 15. Service providers shall submit certifications on their compliance with the requirements of this section by January 15 of each year. Information in each report and certification must be up-to-date as of the last day of the calendar month preceding the due date of each report and certification.

(3) Content of service provider certifications. Certifications filed by service providers must include:

(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) Format. The Wireless Telecommunications Bureau is delegated authority to approve or prescribe formats and methods for submission of the reports and certifications required by this section. Any format that the Bureau may approve or prescribe shall be made available on the Bureau's website.

(m) Compliance date. Paragraphs (e), (h), and (i) of this section contain new or modified information-collection and recordkeeping requirements adopted in FCC 18-167. Compliance with these information-collection and recordkeeping requirements will not be required until after approval by the Office of Management and Budget. The Commission will publish a document in the Federal Register announcing that compliance date and revising this paragraph accordingly.

[FR Doc. 2018-26037 Filed 12-6-18; 8:45 am] BILLING CODE 6712-01-P
DEPARTMENT OF TRANSPORTATION Federal Railroad Administration 49 CFR Part 270 [Docket No. FRA-2011-0060, Notice No. 9] RIN 2130-AC79 System Safety Program AGENCY:

Federal Railroad Administration (FRA), Department of Transportation (DOT).

ACTION:

Final rule; stay of regulations.

SUMMARY:

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.

DATES:

Effective December 4, 2018, the stay of 49 CFR part 270 is extended until September 4, 2019.

ADDRESSES:

Docket: For access to the docket to read background documents or comments received, go to http://www.regulations.gov and follow the online instructions for accessing the docket.

FOR FURTHER INFORMATION CONTACT:

Elizabeth A. Gross, Attorney, U.S. Department of Transportation, Federal Railroad Administration, Office of Chief Counsel; telephone: 202-493-1342; email: [email protected]

SUPPLEMENTARY INFORMATION:

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. See 81 FR 53850. On February 10, 2017, FRA stayed the SSP final rule's requirements until March 21, 2017, consistent with the new Administration's guidance issued January 20, 2017, intended to provide the Administration an adequate opportunity to review new and pending regulations. See 82 FR 10443 (Feb. 13, 2017). To provide additional time for that review, FRA extended the stay until May 22, 2017, June 5, 2017, December 4, 2017, and then December 4, 2018. See 82 FR 14476 (Mar. 21, 2017); 82 FR 23150 (May 22, 2017); 82 FR 26359 (June 7, 2017); and 82 FR 56744 (Nov. 30, 2017).1 In that November 2017 document, FRA stated that the stays of the rule's requirements did not affect the SSP final rule's information protection provisions in 49 CFR 270.105, which took effect on August 14, 2017, for information a railroad compiles or collects after that date solely for SSP purposes.

1 FRA notes it inadvertently published two notifications in the Federal Register identified as Notice No. 6 for this docket. See 82 FR 23150 (May 22, 2017), Docket No. FRA-2011-0060-0043; and 82 FR 26359 (June 7, 2017), Docket No. FRA-2011-0060-0044. Before identifying the duplication, FRA published a subsequent Notice No. 7. See 82 FR 56744 (Nov. 30, 2017), Docket No. FRA-2011-0060-0047. FRA is numbering this document as Notice No. 9, to reflect that it is actually the ninth notification published for this docket.

FRA's review included petitions for reconsideration of the SSP final rule (Petitions). Various rail labor organizations (Labor Organizations) filed a single joint petition.2 State and local transportation departments and authorities (States) filed the three other petitions, one of which was a joint petition (State Joint Petition).3 The State Joint Petition requested that FRA stay the SSP final rule, and NCDOT specifically requested that FRA stay the rule while FRA was considering the petitions. All Petitions were available for public comment in the docket for the SSP rulemaking. On November 15, 2016, the Massachusetts Department of Transportation submitted a comment supporting the State Joint Petition, also asking FRA to stay the SSP final rule. FRA did not receive any public comments opposing the States' requests for a stay.

2 The labor organizations that filed the joint petition are: The American Train Dispatchers Association (ATDA), Brotherhood of Locomotive Engineers and Trainmen (BLET), Brotherhood of Maintenance of Way Employes Division (BMWED), the Brotherhood of Railroad Signalmen (BRS), Brotherhood Railway Carmen Division (TCU/IAM), and Transport Workers Union of America (TWU).

3 The Capitol Corridor Joint Powers Authority (CCJPA), Indiana Department of Transportation (INDOT), Northern New England Passenger Rail Authority (NNEPRA), and San Joaquin Joint Powers Authority (SJJPA) filed a joint petition (Joint Petition). The North Carolina Department of Transportation (NCDOT) and State of Vermont Agency of Transportations (VTrans) each filed separate petitions.

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.4 FRA specifically invited its state partners to this meeting, which was also open to the public. This meeting was necessary for FRA to receive input from industry and the public, and to discuss potential paths forward to respond to the Petitions prior to FRA taking final action. During the meeting, a representative from the Oregon Department of Transportation asked whether the SSP final rule would be further stayed pending FRA's development of a response to the Petitions and public input received at the meeting. An FRA representative indicated that he anticipated a further stay of the rule to provide time to resolve the issues raised by the petitions. None of the meeting participants expressed opposition to a further stay. See generally FRA-2011-0060-0046.

4 Attendees at the October 30, 2017, meeting included representatives from the following organizations: ADS System Safety Consulting, LLC; American Association of State Highway and Transportation Officials (AASHTO); American Public Transportation Association (APTA); American Short Line and Regional Railroad Association (ASLRRA); ATDA; Association of American Railroads (AAR); BLET; BMWED; BRS; CCJPA; The Fertilizer Institute; Gannett Fleming Transit and Rail Systems; International Brotherhood of Electrical Workers; Metropolitan Transportation Authority (MTA); National Railroad Passenger Corporation (Amtrak); National Transportation Safety Board (NTSB); NCDOT; NNEPRA; San Joaquin Regional Rail Commission/Altamont Corridor Express; Sheet Metal, Air, Rail, and Transportation Workers (SMART); and United States Department of Transportation—Transportation Safety Institute. During the meeting, an attorney from Kaplan Kirsch & Rockwell, LLP representing AASHTO indicated he was authorized to speak on behalf of all the State petitioners.

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) 5 provided, and FRA uploaded to the rulemaking docket, proposed revisions to the draft rule text. See FRA-2011-0060-0050. FRA is reviewing and considering these suggested revisions in formulating its response to the petitions for reconsideration.

5 SPRC's website indicates it is an “alliance of State and Regional Transportation Officials,” and each state petitioner appears to be an SPRC member. See https://www.s4prc.org/state-programs.

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.

Regulatory Impact and Notices Executive Orders 12866 and 13771, and DOT Regulatory Policies and Procedures

This final rule is a non-significant deregulatory action within the meaning of Executive Order 12866 and DOT policies and procedures. See 44 FR 11034 (Feb. 26, 1979. The final rule is considered an E.O. 13771 deregulatory action. Details on the estimated cost savings are below.

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.

Present
  • value
  • (7%)
  • Present
  • value
  • (3%)
  • 2016 Final Rule, total cost $2,327,223 $3,412,649 Cost savings from nine-month delay 246,360 255,928 2016 Final Rule, total cost with cost savings from nine-month delay 2,080,863 3,156,721
    Regulatory Flexibility Act and Executive Order 13272

    The Regulatory Flexibility Act of 1980, 5 U.S.C. 601 et seq., and Executive Order 13272, 67 FR 53461 (Aug. 16, 2002), require agency review of proposed and final rules to assess their impact on small entities. An agency must prepare an Initial Regulatory Flexibility Analysis unless it determines and certifies that a rule, if promulgated, would not have a significant impact on a substantial number of small entities. Pursuant to the Regulatory Flexibility Act of 1980, 5 U.S.C. 605(b), the FRA Administrator certifies that this final rule will not have a significant economic impact on a substantial number of small entities.

    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. See “Size Eligibility Provisions and Standards,” 13 CFR part 121, subpart A. Additionally, 5 U.S.C. 601(5) defines as “small entities” governments of cities, counties, towns, townships, villages, school districts, or special districts with populations less than 50,000. Federal agencies may adopt their own size standards for small entities, in consultation with SBA and in conjunction with public comment. Pursuant to that authority, FRA has published a final statement of agency policy that formally establishes “small entities” or “small businesses” as being railroads, contractors, and hazardous materials shippers that meet the revenue requirements of a Class III railroad as set forth in 49 CFR 1201.1-1, which is $20 million or less in inflation-adjusted annual revenues, and commuter railroads or small governmental jurisdictions that serve populations of 50,000 or less. See 68 FR 24891 (May 9, 2003), codified at appendix C to 49 CFR part 209. The $20-million limit is based on the Surface Transportation Board's revenue threshold for a Class III railroad. Railroad revenue is adjusted for inflation by applying a revenue deflator formula in accordance with 49 CFR 1201.1-1. FRA is using this definition for this rulemaking.

    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.

    Paperwork Reduction Act

    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 et seq., an information collection submission to the Office of Management and Budget (OMB) is not required. The record keeping and reporting requirements already contained in the SSP final rule were approved by OMB on October 5, 2016. The information collection requirements thereby became effective when they were approved by OMB. The OMB approval number is OMB No. 2130-0599, and OMB approval expires on October 31, 2019.

    Federalism Implications

    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.

    Environmental Assessment

    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 et seq.), other environmental statutes, Executive Orders, and related regulatory requirements. FRA has determined that this rule is not a major FRA action (requiring the preparation of an environmental impact statement or environmental assessment) because it is categorically excluded from detailed environmental review pursuant to section 4(c)(20) of FRA's Procedures. See 64 FR 28547, May 26, 1999.

    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.

    Unfunded Mandates Reform Act of 1995

    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.

    Energy Impact

    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. See 82 FR 16093 (Mar. 31, 2017). FRA determined this regulatory action will not burden the development or use of domestically produced energy resources.

    List of Subjects in 49 CFR Part 270

    Penalties, Railroad safety, Reporting and recordkeeping requirements, System safety.

    Authority:

    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.

    Mathew M. Sturges, Deputy Administrator.
    The Rule In consideration of the foregoing, FRA extends the stay of the SSP final rule published August 12, 2016 (81 FR 53850) until September 4, 2019.
    [FR Doc. 2018-26447 Filed 12-4-18; 8:45 am] BILLING CODE 4910-06-P
    83 235 Friday, December 7, 2018 Proposed Rules DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency 12 CFR Part 34 [Docket No. OCC-2018-0038] RIN 1557-AE57 FEDERAL RESERVE SYSTEM 12 CFR Part 225 [Docket No. R-1639] RIN 7100-AF30 FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Part 323 RIN 3064-AE87 Real Estate Appraisals AGENCY:

    Office of the Comptroller of the Currency, Treasury (OCC); Board of Governors of the Federal Reserve System (Board); and Federal Deposit Insurance Corporation (FDIC).

    ACTION:

    Notice of proposed rulemaking and request for comment.

    SUMMARY:

    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.

    DATES:

    Comments must be received by February 5, 2019.

    ADDRESSES:

    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:

    Office of the Comptroller of the Currency: You may submit comments to the OCC by any of the methods set forth below. Commenters are encouraged to submit comments through the Federal eRulemaking Portal or email, if possible. Please use the title “Real Estate Appraisals” to facilitate the organization and distribution of the comments. You may submit comments by any of the following methods:

    Federal eRulemaking Portal—“Regulations.gov”: Go to www.regulations.gov. Enter “Docket ID OCC-2018-0038” in the Search Box and click “Search.” Click on “Comment Now” to submit public comments.

    • Click on the “Help” tab on the Regulations.gov home page to get information on using Regulations.gov, including instructions for submitting public comments.

    Email: [email protected]

    Mail: Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, 400 7th Street SW, Suite 3E-218, Washington, DC 20219.

    Hand Delivery/Courier: 400 7th Street SW, Suite 3E-218, Washington, DC 20219.

    Fax: (571) 465-4326.

    Instructions: You must include “OCC” as the agency name and “Docket ID OCC-2018-0038” in your comment. In general, the OCC will enter all comments received into the docket and publish the comments on the Regulations.gov website without change, including any business or personal information that you provide such as name and address information, email addresses, or phone numbers. Comments received, including attachments and other supporting materials, are part of the public record and subject to public disclosure. Do not include any information in your comment or supporting materials that you consider confidential or inappropriate for public disclosure.

    You may review comments and other related materials that pertain to this rulemaking action by any of the following methods:

    Viewing Comments Electronically: Go to www.regulations.gov. Enter “Docket ID OCC-2018-0038” in the Search box and click “Search.” Click on “Open Docket Folder” on the right side of the screen. Comments and supporting materials can be viewed and filtered by clicking on “View all documents and comments in this docket” and then using the filtering tools on the left side of the screen.

    • Click on the “Help” tab on the Regulations.gov home page to get information on using Regulations.gov. The docket may be viewed after the close of the comment period in the same manner as during the comment period.

    Viewing Comments Personally: You may personally inspect comments at the OCC, 400 7th Street SW, Washington, DC 20219. For security reasons, the OCC requires that visitors make an appointment to inspect comments. You may do so by calling (202) 649-6700 or, for persons who are deaf or hearing impaired, TTY, (202) 649-5597. Upon arrival, visitors will be required to present valid government-issued photo identification and submit to security screening in order to inspect comments.

    Board of Governors of the Federal Reserve System: You may submit comments, identified by Docket No. R-1639 and RIN 7100-AF30, by any of the following methods:

    Agency Website: http://www.federalreserve.gov. Follow the instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.

    Email: [email protected] Include the docket number and RIN number in the subject line of the message.

    Fax: (202) 452-3819 or (202) 452-3102.

    Mail: Address to Ann E. Misback, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue NW, Washington, DC 20551.

    All public comments will be made available on the Board's website at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted, unless modified for technical reasons or to remove personally identifiable information at the commenter's request. Accordingly, comments will not be edited to remove any identifying or contact information. Public comments may also be viewed electronically or in paper in Room 3515, 1801 K Street NW (between 18th and 19th Streets NW), between 9:00 a.m. and 5:00 p.m. on weekdays.

    Federal Deposit Insurance Corporation: You may submit comments, identified by RIN 3064-AE87, by any of the following methods:

    Agency Website: https://www.FDIC.gov/regulations/laws/federal.

    Mail: Robert E. Feldman, Executive Secretary, Attention: Comments/Legal ESS, Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 20429.

    Hand Delivery/Courier: The guard station at the rear of the 550 17th Street NW, building (located on F Street) on business days between 7:00 a.m. and 5:00 p.m.

    Email: [email protected] Comments submitted must include “FDIC” and “RIN 3064-AE87—Real Estate Appraisals.” Comments received will be posted without change to https://www.FDIC.gov/regulations/laws/federal, including any personal information provided.

    FOR FURTHER INFORMATION CONTACT:

    OCC: G. Kevin Lawton, Appraiser and Real Estate Specialist, (202) 649-6670, or Mitchell E. Plave, Special Counsel, (202) 649-5490, for persons who are deaf or hearing impaired, TTY, (202) 649-5597, or Joanne Phillips, Counsel, (202) 649-5500, Office of the Comptroller of the Currency, 400 7th Street SW, Washington, DC 20219.

    Board: Anna Lee Hewko, Associate Director, (202) 530-6260, or Peter Clifford, Manager Risk Policy Section, (202) 785-6057, or Carmen Holly, Senior Supervisory Financial Analyst, (202) 973-6122, Division of Supervision and Regulation; or Laurie Schaffer, Associate General Counsel, (202) 452-2272, Gillian Burgess, Senior Counsel, (202) 736-5564, Matthew Suntag, Counsel, (202) 452-3694, or Kirin Walsh, Attorney, (202) 452-3058, Legal Division, Board of Governors of the Federal Reserve System, 20th and C Streets NW, Washington, DC 20551. For the hearing impaired only, Telecommunications Device for the Deaf (TDD) users may contact (202) 263-4869.

    FDIC: Beverlea S. Gardner, Senior Examination Specialist, Division of Risk Management and Supervision, (202) 898-3640, [email protected]; Benjamin K. Gibbs, Counsel, (202) 898-6726; Lauren Whitaker, Senior Attorney, (202) 898-3872; or Ryan M. Goodstein, Senior Financial Economist, (202) 898-6863, Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 20429. For the hearing impaired only, TDD users may contact (202) 925-4618.

    SUPPLEMENTARY INFORMATION: I. Introduction

    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 1 (rural residential appraisal exemption), and would fulfill the requirement to add appraisal review to the minimum standards for an appraisal, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).2

    1 Public Law 115-174, Title I, section 103, codified at 12 U.S.C. 3356. Effective May 24, 2018, section 103 provides that a Title XI appraisal is not required if the real property or interest in real property is located in a rural area, as described in 12 CFR 1026.35(b)(2)(iv)(A), and if the transaction value is $400,000 or less. In addition, the mortgage originator or its agent, directly or indirectly must have contacted not fewer than three state certified or state licensed appraisers, as applicable, on the mortgage originator's approved appraiser list in the market area, in accordance with 12 CFR part 226, not later than three days after the date on which the Closing Disclosure was provided to the consumer and documented that no state certified or state licensed appraiser, as applicable, was available within five business days beyond customary and reasonable fee and timeliness standards for comparable appraisal assignments.

    2See Dodd-Frank Act, § 1473(e), Public Law 111-203, 124 Stat. 1376, 2191.

    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) 3 process, and the rulemaking to increase the appraisal threshold for commercial real estate appraisals (CRE Final Rule). The agencies believe that the proposed increase to the appraisal threshold for residential real estate transactions would reduce burden in a manner that is consistent with federal public policy interests in real estate-related transactions and the safety and soundness of regulated institutions.

    3 Public Law 104-208, Div. A, Title II, section 2222, 110 Stat. 3009-414, (1996) (codified at 12 U.S.C. 3311). EGRPRA requires that, not less than once every 10 years, the Federal Financial Institutions Examination Council (FFIEC), Board, OCC, and FDIC conduct a review of their regulations to identify outdated or otherwise unnecessary regulatory requirements imposed on insured depository institutions.

    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).4 Adding this definition would not change any substantive requirement, but would provide clarity to the regulation. The agencies are also proposing to add the rural residential appraisal exemption 5 to the list of transactions that do not require appraisals. The proposed rule would require evaluations for transactions exempted from the agencies' appraisal requirement by this exemption, which is consistent with the requirement for regulated institutions to obtain an evaluation for certain other exempt residential real estate transactions (which in practice are generally retained in their portfolios). This proposed requirement reflects the agencies' judgment that valuation information concerning the real estate collateral for these transactions assists financial institutions in making informed lending decisions and is consistent with safe and sound banking practices.6

    4 12 U.S.C. 3331 et seq.

    5See supra note 1.

    6See 59 FR 29482 (June 7, 1994) (adopting the $250,000 threshold and the requirement for evaluations for certain exempt transactions).

    Further, the agencies are proposing to implement the appraisal review provision in Section 1473(e) of the Dodd-Frank Act,7 which amended Title XI to require that the agencies' appraisal regulations include a requirement for institutions to subject appraisals for federally related transactions to appropriate review for compliance with the Uniform Standards of Professional Appraisal Practice (USPAP).8 The proposed rule would implement this statutory requirement, which is consistent with the agencies' long-standing recognition of the importance of appropriate appraisal reviews for safety and soundness.9

    7 Dodd-Frank Act, § 1473(e).

    8 USPAP is written and interpreted by the Appraisal Standards Board of the Appraisal Foundation. USPAP contains generally recognized ethical and performance standards for the appraisal profession in the United States, including real estate, personal property, and business appraisals. See http://www.appraisalfoundation.org/imis/TAF/Standards/Appraisal_Standards/Uniform_Standards_of_Professional_Appraisal_Practice/TAF/USPAP.aspx?hkey=a6420a67-dbfa-41b3-9878-fac35923d2af.

    9See Interagency Appraisal and Evaluation Guidelines (Guidelines), at Section XV, 75 FR 77450 (December 10, 2010) (addressing appraisal review).

    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.10 Accordingly, the agencies are consulting with the BCFP regarding the proposed threshold increase and will continue this consultation in developing the final rule.

    10 Dodd-Frank Act, § 1473(a), Public Law 111-203, 124 Stat. 2190 (amending 12 U.S.C. 3341(b)).

    A. Background

    Title XI directs each Federal financial institutions regulatory agency 11 to require regulated institutions to obtain appraisals meeting minimum standards (Title XI appraisals) for certain real estate-related transactions. The purpose of Title XI is to protect federal financial and public policy interests 12 in real estate-related transactions 13 by requiring that Title XI appraisals be performed in accordance with uniform standards by individuals whose competency has been demonstrated and whose professional conduct will be subject to effective supervision.14

    11 The term “Federal financial institutions regulatory agencies” means the Board, the FDIC, the OCC, the National Credit Union Administration (NCUA), and, formerly, the Office of Thrift Supervision. 12 U.S.C. 3350(6).

    12 These interests include those stemming from the federal government's roles as regulator and deposit insurer of financial institutions that engage in real estate lending and investment, guarantor or lender on mortgage loans, and as a direct party in real-estate related financial transactions. These federal financial and public policy interests have been described in predecessor legislation and accompanying Congressional reports. See Real Estate Appraisal Reform Act of 1988, H.R. Rep. No. 100-1001, pt. 1, at 19 (1988); 133 Cong. Rec. 33047-33048 (1987).

    13 A real estate-related financial transaction is defined as any transaction that involves: (i) The sale, lease, purchase, investment in or exchange of real property, including interests in property, or financing thereof; (ii) the refinancing of real property or interests in real property; and (iii) the use of real property or interests in real property as security for a loan or investment, including mortgage-backed securities. 12 U.S.C. 3350(5).

    14 12 U.S.C. 3331.

    Title XI directs the agencies to prescribe appropriate standards for Title XI appraisals under the agencies' respective jurisdictions.15 At a minimum, Title XI appraisals must be: (1) Performed in accordance with USPAP; (2) written appraisals, as defined by the statute; and (3) subject to appropriate review for compliance with USPAP.

    15 12 U.S.C. 3339. The agencies' Title XI appraisal regulations apply to transactions entered into by the agencies or by institutions regulated by the agencies that are depository institutions or bank holding companies or subsidiaries of depository institutions or bank holding companies. OCC: 12 CFR 34, subpart C; Board: 12 CFR 225.61(b); 12 CFR part 208, subpart E; FDIC: 12 CFR part 323.

    A federally related transaction 16 is a real estate-related financial transaction that the agencies or a financial institution regulated by the agencies engages in or contracts for, for which the agencies require a Title XI appraisal. The agencies have authority to determine those real estate-related financial transactions that do not require Title XI appraisals. Real estate-related financial transactions that are exempt from the agencies' appraisal requirement are not federally related transactions under the agencies' appraisal regulations. The agencies have exercised this authority by exempting several categories of real estate-related financial transactions from the agencies' appraisal requirement, including transactions at or below certain designated thresholds.17 Other significant exemptions include exemptions for 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.18

    16 12 U.S.C. 3350(4).

    17See OCC: 12 CFR 34.43(a); Board: 12 CFR 225.63(a); FDIC: 12 CFR 323.3(a). The agencies have determined that these categories of transactions do not require appraisals by state certified or state licensed appraisers in order to protect federal financial and public policy interests or to satisfy principles of safe and sound banking.

    18See OCC: 12 CFR 34.43(a)(9) and (10); Board: 12 CFR 225.63(a)(9) and (10); and FDIC: 12 CFR 323.3(a)(9) and (10). The NCUA also exempts these loans from its appraisal requirements. See 12 CFR 722.3(a)(7) and (8).

    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.19 Under the current thresholds, residential real estate transactions 20 with a transaction value 21 of $250,000 or less, certain real estate-secured business loans (qualifying business loans) 22 with a transaction value of $1 million or less, and commercial real estate (CRE) transactions with a transaction value of $500,000 or less do not require Title XI appraisals.23 The appraisal threshold applicable to residential real estate transactions has not been changed since 1994.24

    19 12 U.S.C. 3341(b).

    20 While the $250,000 threshold explicitly applies to all real estate-related financial transactions with transaction values of $250,000 or less, it effectively only applies to residential real estate transactions because all other real estate-related financial transactions are subject to higher thresholds.

    21 For loans and extensions of credit, the transaction value is the amount of the loan or extension of credit. For sales, leases, purchases, investments in or exchanges of real property, the transaction value is the market value of the real property. For the pooling of loans or interests in real property for resale or purchase, the transaction value is the amount of each loan or the market value of each real property, respectively. See OCC: 12 CFR 34.42(m); Board: 12 CFR 225.62(m); and FDIC: 12 CFR 323.2(m).

    22 Qualifying business loans are business loans that are real estate-related financial transactions and that are not dependent on the sale of, or rental income derived from, real estate as the primary source of repayment. The Title XI appraisal regulations define “business loan” to mean a loan or extension of credit to any corporation, general or limited partnership, business trust, joint venture, pool, syndicate, sole proprietorship, or other business entity. See OCC: 12 CFR 34.42(d); Board: 12 CFR 225.62(d); and FDIC: 12 CFR 323.2(d).

    23See OCC: 12 CFR 34.43(a)(1), (5), and (13); Board: 12 CFR 225.63(a)(1), (5), and (14); and FDIC: 12 CFR 323.3(a)(1), (5), and (13).

    24See 59 FR 29482 (June 7, 1994). The NCUA promulgated a similar rule with similar thresholds in 1995. 60 FR 51889 (October 4, 1995). The OCC, Board, and FDIC had previously raised the appraisal threshold to $100,000. OCC: 57 FR 12190-02 (April 9, 1992); Board: 55 FR 27762 (July 5, 1990); FDIC: 57 FR 9043-02 (March 16, 1992).

    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,25 the Title XI appraisal regulations require regulated institutions to obtain an appropriate evaluation of the real property collateral that is consistent with safe and sound banking practices.26 An evaluation should contain sufficient information and analysis to support the financial institution's decision to engage in the transaction.27

    25 Transactions that involve an existing extension of credit at the lending institution are exempt from the agencies' appraisal requirement, but are required to have evaluations, provided that there has been no obvious and material change in market conditions or physical aspects of the property that threatens the adequacy of the institution's real estate collateral protection after the transaction, even with the advancement of new monies; or there is no advancement of new monies, other than funds necessary to cover reasonable closing costs. See OCC: 12 CFR 34.43(a)(7) and (b); Board: 12 CFR 225.63(a)(7) and (b); and FDIC: 12 CFR 323.3(a)(7) and (b).

    26See OCC: 12 CFR 34.43(b); Board: 12 CFR 225.63(b); and FDIC: 12 CFR 323.3(b). An evaluation is not required when real estate-related financial transactions meet the threshold criteria and also qualify for another exemption from the agencies' appraisal requirement where no evaluation is required by the regulation.

    27 Evaluations are not required to be performed in accordance with USPAP or by state certified or state licensed appraisers by federal law. The agencies have provided supervisory guidance for conducting evaluations in a safe and sound manner in the Guidelines and the Interagency Advisory on the Use of Evaluations in Real Estate-Related Financial Transactions (Evaluations Advisory). See 75 FR 77450 (December 10, 2010); OCC Bulletin 2016-8 (March 4, 2016); Board SR Letter 16-5 (March 4, 2016); and Supervisory Expectations for Evaluations, FDIC FIL-16-2016 (March 4, 2016).

    In preparing the proposed rule, the agencies conducted analyses using 2017 data reported under the Home Mortgage Disclosure Act (HMDA),28 which requires a variety of financial institutions to maintain, report, and publicly disclose loan-level information about residential mortgage originations.29 Information reported under HMDA includes various data points relevant to the agencies' analyses, including loan size, loan type, property type, property location, and secondary market purchaser. While the HMDA data has limitations, including that certain low-volume originators and originators located in rural areas are not required to report,30 the agencies believe it provides a reasonably representative sample of the universe of mortgage originations, including transactions subject to the agencies' appraisal requirement. In addition, the agencies are not aware of any other data source that would better inform these analyses.

    28 12 U.S.C. 2801 et seq.

    29See FFIEC, Home Mortgage Disclosure Act, www.ffiec.gov/hmda/.

    30 Although originators located in rural areas are not required to report HMDA information, originators not located in rural areas that make loans in rural areas are required to report.

    As described in further detail below, the agencies used the 2017 HMDA data 31 to estimate the coverage of the proposed threshold increase in terms of number of transactions and dollar volume of transactions that would be affected relative to: (1) Total HMDA originations 32 and (2) only those transactions originated by FDIC-insured institutions and affiliated institutions 33 that were not sold to the government-sponsored enterprises (GSEs) or otherwise insured or guaranteed by a U.S. government agency 34 (regulated transactions).35 The agencies compared these coverage estimates with the coverage of the current threshold both now and when the current threshold was adopted in 1994. The agencies used these analyses to estimate the number and dollar volume of loans that could be affected by the threshold increase, including the expected number and dollar volume of loans in rural areas, and to assess the potential impact of the threshold increase on burden reduction and on the safety and soundness of financial institutions.

    31 The HMDA analyses described in this document are limited to first-lien originations secured by single-family residential mortgage properties. Originations with loan amounts greater than $20 million are excluded.

    32 The total number of first-lien, single-family originations reported under HMDA in 2017 is approximately 6.9 million.

    33 FDIC-insured institutions and affiliated institutions include those that report under HMDA to the OCC, the Board, the FDIC, or the BCFP (excluding institutions that are not supervised by the OCC, Board, or FDIC).

    34 Some loans sold to the GSEs may not be observable in HMDA, for example if the sale occurred after calendar year 2017, or if the loan was sold to another entity that in turn sold the loan to a GSE.

    35 Regulated transactions are the only residential real estate transactions subject to the appraisal threshold, because transactions originated by regulated institutions but sold to the GSEs or otherwise insured or guaranteed by a U.S. government agency are separately exempted from the agencies' appraisal requirement and transactions originated by non-regulated institutions are not subject to the agencies' appraisal regulations.

    B. Reducing Burden Associated With Appraisals

    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) 36 that a change to the current $250,000 appraisal threshold for residential real estate transactions would not be appropriate at that time, citing three reasons: A limited impact on burden reduction due to appraisals still being required for the vast majority of these transactions pursuant to the rules of other federal government agencies and the GSEs; safety and soundness concerns; and consumer protection concerns.37 However, the EGRPRA Report stated that the agencies would continue to consider possibilities for relieving burden related to appraisals for residential mortgage loans.38

    36See EGRPRA Report, available at https://www.ffiec.gov/pdf/2017_FFIEC_EGRPRA_Joint-Report_to_Congress.pdf. The NCUA is also named on the EGRPRA Report, though it was not required to participate in the review process. NCUA elected to participate in the EGRPRA review, conducted its own parallel review of its regulations, and included its own report in a separate part of the EGRPRA Report. The NCUA is not a participant in this rulemaking.

    37Id.

    38Id.

    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).39 In connection with the CRE NPR, the agencies restated the reasons set forth in the EGRPRA Report for declining to propose an increase to the residential threshold, and invited comment on other factors that should be considered in evaluating the appraisal threshold for residential real estate transactions and on whether the threshold can and should be raised, consistent with consumer protection, safety and soundness, and reduction of unnecessary regulatory burden.40

    39 82 FR 35478 (July 31, 2017).

    40 82 FR 35478, 35481-82, 35487 (July 31, 2017).

    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.41 Some of the commenters supported the agencies' decision not to propose an increase in the appraisal threshold for residential real estate transactions. Other commenters supported increasing the appraisal threshold for residential real estate transactions to reduce regulatory burden.

    41See, e.g., 83 FR 15019, 15029-30 (April 9, 2018).

    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.42 The agencies estimate that increasing the appraisal threshold from $250,000 to $400,000 would have exempted an additional 214,000 residential real estate originations 43 at regulated institutions from the agencies' appraisal requirement, which represent only three percent of total HMDA originations (first-lien, single-family) in 2017. However, they represent 16 percent of regulated transactions. This increase in the number of loans that would no longer require appraisals would provide meaningful burden reduction for regulated institutions.

    42 As noted earlier, for this SUPPLEMENTARY INFORMATION section, regulated transactions are residential mortgage originations by FDIC-insured institutions and affiliated institutions that were not sold to the GSEs or otherwise insured or guaranteed by a U.S. government agency.

    43 The 214,000 originations represent transactions originated by FDIC-insured institutions or affiliated institutions, excluding transactions that were sold to the GSEs or otherwise insured or guaranteed by a U.S. government agency; transactions for which the value was equal to or below the current $250,000 appraisal threshold; and transactions that exceeded the proposed $400,000 threshold.

    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.

    Cost and Time Savings. Commenters to the EGRPRA process and in response to the CRE NPR that supported a residential threshold increase noted that obtaining an appraisal for a residential real estate transaction adds to the cost of the transaction, which is often passed on to the consumer, and can delay the closing of a transaction when an appraiser cannot complete the appraisal on the preferred schedule and increase the consumer's costs. Thus, reducing regulatory burden by increasing the appraisal threshold for residential real estate transactions may provide both transaction cost and time savings for both regulated institutions and consumers.

    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.44 Further, some of the comments to the CRE NPR indicated that evaluations in general cost substantially less than appraisals.45

    44 82 FR at 35487 (July 31, 2017).

    45 82 FR at 15028 (April 9, 2018).

    The United States Department of Veterans Affairs' appraisal fee schedule 46 for a single-family residence reflects that the typical cost of an appraisal generally ranges from $375 to $900, depending on the location of the property. The limited information available on the cost of evaluations and appraisals suggests that there could be material cost savings in connection with the valuation of the property for regulated institutions and consumers where an evaluation, as opposed to an appraisal, is obtained.

    46See VA Appraisal Fee Schedules and Timeliness Requirements, available at https://www.benefits.va.gov/HOMELOANS/appraiser_fee_schedule.asp.

    Question 1. The agencies invite comment on the cost data for evaluations and appraisals detailed above. Should the agencies consider other data and data sources in assessing the costs of appraisals and evaluations to regulated institutions and consumers?

    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.47 The agencies estimate that, on average, the review process for an evaluation would take substantially less time than the review process for an appraisal.48 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.

    47 Guidelines, 75 FR at 77461.

    48 The agencies have heard from commenters that evaluations can, in some cases, require more time to review than appraisals due to the limited information contained in some evaluations.

    Question 2. The agencies invite comment on the time associated with performing and reviewing appraisals versus evaluations. Should the agencies consider other data and data sources in assessing the time associated with performing and reviewing appraisals and evaluations?

    In considering the aggregate effect of this proposed rule, the agencies considered the number of affected transactions. As discussed in the Coverage of the Threshold section below, the agencies estimate that under the proposed rule, the share of the number of regulated transactions exempted from the agencies' appraisal requirement would increase from 56 percent to 72 percent. Thus, while the precise number of affected transactions and the precise cost reduction per transaction is difficult to determine, the proposed rule is expected to lead to cost and time savings for regulated institutions and could benefit consumers.

    Consumer Protection. Through the EGRPRA process and in response to the CRE NPR, the agencies received comments stating that appraisals provide some measure of consumer protection, and that increasing the appraisal threshold for residential real estate transactions could raise consumer protection issues. Indeed, the Dodd-Frank Act's amendment to Title XI adding the BCFP to the group of agencies assigned a role in the appraisal threshold-setting process indicates Congressional views that appraisals can play a role in providing protection to consumers who purchase 1-to-4 unit single-family residences.49 The agencies recognize that appraisals can provide protection to consumers by helping to ensure that the estimated value of the property supports the purchase price and the mortgage amount. Consumer protection considerations contributed to the agencies' reluctance to propose increasing the appraisal threshold for residential real estate transactions immediately after the EGRPRA process.50

    49 12 U.S.C. 3341(b). The Dodd-Frank Act also required the BCFP to engage in rulemakings under amendments to Title XI, including standards for appraisal management companies (12 U.S.C. 3353) and automated valuation models (12 U.S.C. 3354). In addition, as discussed further in this Supplementary Information, the Dodd-Frank Act amended two consumer protection laws,—the Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq., and Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691 et seq.—to establish new requirements for appraisals and other valuation types. See 15 U.S.C. 1639e and 1639h (TILA) and 15 U.S.C. 1691e (ECOA).

    50See EGRPRA Report, available at https://www.ffiec.gov/pdf/2017_FFIEC_EGRPRA_Joint-Report_to_Congress.pdf.

    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 51 and should contain sufficient information and analysis to support the decision to engage in the transaction,52 although it may be less structured than an appraisal. The agencies noted in the Guidelines 53 and the Evaluations Advisory that individuals preparing evaluations should be qualified, competent, and independent of the transaction and the loan production function of the institution. The agencies believe that evaluations prepared accordingly could provide a level of consumer protection for transactions at or below the proposed appraisal threshold.

    51 OCC: 12 CFR 34.43(b); Board: 12 CFR 225.63(b); and FDIC: 12 CFR 323.3(b).

    52 Guidelines, 75 FR at 77461.

    53 Guidelines, 75 FR at 77457-58.

    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 54 (ECOA) to require creditors to provide applicants free copies of appraisals and other types of valuations prepared in connection with first-lien transactions secured by a dwelling, which include evaluations.55 When obtained, evaluations must be provided to consumers and, thus, provide some consumer protection.56

    54 15 U.S.C. 1691 et seq.

    55See 15 U.S.C. 1691(e), implemented by the BCFP at 12 CFR 1002.14. The Dodd-Frank Act also amended TILA to require creditors to provide applicants free copies of appraisals prepared in connection with certain higher-priced mortgage loans (HPMLs). See 15 U.S.C. 1639h(c), implemented jointly by the OCC, Board, FDIC, NCUA, Federal Housing Finance Agency (FHFA), and BCFP at OCC: 12 CFR 34.203(f); Board: 12 CFR 226.43(f); BCFP: 12 CFR 1026.35(c)(6); NCUA: 12 CFR 722.3(f); FHFA: 12 CFR 1222, subpart A (HPML Appraisal Rule). The FDIC adopted the HPML Appraisal Rule as published in the BCFP's regulation. See 78 FR 78520, 10370, 10415 (December 26, 2013).

    56 12 CFR 1002.14.

    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.57 Consumers also may voluntarily obtain an appraisal before engaging in the transaction. Consumers can use this valuation information to become better informed before entering into an agreement to purchase a specific property.

    57 Some states (or counties within states) do not publish sale amounts, but do provide estimates based on loan amounts or mortgage transfer taxes, which could be substantially different from the actual sale amount.

    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.

    Question 3. What valuation information, if any, would consumers lose in practice if more evaluations are performed rather than appraisals? What additional comments, if any, are there relative to the presentation or content of evaluations for residential real estate transactions in practice? Please provide data or other evidence to support any comments.

    Question 4. To what extent do appraisals or evaluations provide benefits or protections for consumers that are purchasing 1-to-4 unit single-family residences? What are the nature and magnitude of the differences, if any, in consumer protection, including any differences in credibility, arising from the use of evaluations rather than appraisals, especially with respect to residential real estate transactions of $400,000 or less? For example, are there any differences with respect to negotiating the price of a home or canceling a transaction when an evaluation rather than an appraisal is obtained? Please provide data or other evidence to support any comments.

    Question 5. To what extent is useful property valuation information readily available to consumers through public sources?

    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,58 and state appraisal regulatory agencies have authority to discipline appraisers that violate USPAP.59

    58 The Dodd-Frank Act instituted a number of reforms to ensure the legitimacy, independence, and oversight of appraisals. See Dodd-Frank Act, Title XIV, Subtitle F—Appraisal Activities, Public Law 111-203, 124 Stat. 1376, 2185.

    59 USPAP is written and interpreted by the Appraisal Standards Board of the Appraisal Foundation. USPAP contains generally recognized ethical and performance standards for the appraisal profession in the United States, including real estate, personal property, and business appraisals. See http://www.appraisalfoundation.org/imis/TAF/Standards/Appraisal_Standards/Uniform_Standards_of_Professional_Appraisal_Practice/TAF/USPAP.aspx?hkey=a6420a67-dbfa-41b3-9878-fac35923d2af.

    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.60 In addition, appraisals would still be required, regardless of transaction amount, for certain HPMLs, pursuant to the HPML Appraisal Rule.61

    60See 15 U.S.C. 1691(e), implemented by the BCFP at 12 CFR 1002.14.

    61See supra note 55. Transactions covered by the HPML Appraisal Rule are limited due to significant exemptions from the requirements, including an exemption for qualified mortgages. See, e.g., 78 FR 10368, 10418-20 (February 13, 2013).

    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.62 Creditors using evaluations for transactions covered by this rule must meet standards for independence that carry civil liability, regardless of transaction size. On this point, the agencies note that one of the benefits of evaluations over appraisals that institutions have cited is that they can more readily be performed in-house. There are concerns, however, that ensuring the independence of financial institution staff performing evaluations from the loan production function might be difficult to achieve in practice, particularly in smaller institutions.

    62 The Board issued the IFR on Valuation Independence in 2010 (effective April 2011) establishing independence rules for consumer purpose residential mortgage loans secured by a consumer's primary dwelling. See 75 FR 66554 (October 28, 2010) and 75 FR 80675 (December 23, 2010) (implementing Dodd-Frank Act amendments to TILA at 15 U.S.C. 1639e); Board: 12 CFR 226.42; and BCFP: 12 CFR 1026.42. Under the Dodd-Frank Act, the IFR on Valuation Independence is deemed to have been prescribed jointly by the OCC, Board, FDIC, NCUA, BCFP and FHFA. See 15 U.S.C. 1639e(g)(2).

    In the Evaluations Advisory, the agencies also observed that evaluations may be completed by a bank employee or by a third party.63 The agencies further observed that, in smaller communities, bankers and third-party real estate professionals have access to local market information and may be qualified to prepare evaluations for an institution.64 The evaluation preparer should be knowledgeable, competent, and independent of the transaction.

    63 Evaluations Advisory at 2.

    64See id.

    Question 6. How often do institutions use their own internal staff to prepare evaluations? What challenges, if any, to meeting requirements and standards for independence, particularly in smaller institutions, do internally-prepared evaluations present? Similarly, what challenges, if any, to meeting requirements and standards for independence are presented by evaluations prepared by third parties?

    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.65 Other federal agencies, such as the U.S. Department of Housing and Urban Development, the U.S. Department of Veterans Affairs, and the Rural Housing Service of the U.S. Department of Agriculture, and the GSEs, which are regulated by the Federal Housing Finance Agency (FHFA), have their own authority to establish appraisal rules and standards, and generally require appraisals by a certified or licensed appraiser for residential real estate transactions that they originate, acquire, insure, or guarantee, regardless of the value of the loan. The percentage of the market comprising loans subject to the requirements of these other entities has fluctuated historically. Currently, these loans account for more than 6 in 10 of all first-lien, single-family mortgage originations in the United States, a level considerably higher than the share in the years prior to the most recent financial recession.66

    65See supra note 18.

    66 This figure is based on an analysis the agencies conducted using 2017 HMDA data. See supra note 29. See also Housing Finance at a Glance, Monthly Chartbook, The Urban Institute, October 2018, p.8. According to this source, between 2001 and 2017, the share of first-lien originations sold to the GSEs or guaranteed or insured by the FHA or VA ranged from about 35 percent in 2005 to nearly 90 percent in 2009. See id.

    Question 7. Are there any other consumer protection concerns raised by the proposal that the agencies should consider?

    Burden Relief in Rural Areas. Many commenters in the EGRPRA process and to the CRE NPR noted that the requirement to obtain appraisals has increased costs and resulted in delays, particularly in rural areas. With the rural residential appraisal exemption, Congress added an exemption to the agencies' appraisal requirement for certain mortgage loans under $400,000 secured by property in rural areas, but the exemption is only available where regulated institutions can document that they are unable to obtain an appraisal at a reasonable cost and within a reasonable timeframe, among other requirements.67 The proposed rule is broader in scope and would eliminate the agencies' appraisal requirement for all residential real estate transactions at or below $400,000. The proposed threshold would include all such transactions in rural areas without requiring regulated institutions to meet the other criteria of the rural residential appraisal exemption.

    67See supra note 1.

    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.68

    68 Estimates based on 2017 HMDA. For the purposes of the HMDA analysis, a property is considered to be located in a “rural” area if it is in a county that is neither in a metropolitan statistical area nor in a micropolitan statistical area that is adjacent to a metropolitan statistical area, based on 2013 Urban Influence Codes (UIC) published by the United States Department of Agriculture. Any loans from Census tracts that are missing geographical identifiers or undefined in the 2013 UIC have been excluded from the analysis of burden relief in rural areas.

    II. Revisions to the Title XI Appraisal Regulations A. Threshold Increase for Residential Real Estate Transactions Level of Appraisal Threshold Increase

    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) 69 and the FHFA Index,70 as well as the Consumer Price Index (CPI).71

    69 The Case-Shiller Index reflects changes in home prices from a base of $250,000 in June 1994, based on the Standard & Poor's Case-Shiller Home Price Index. See Standard & Poor's CoreLogic Case-Shiller Home Price Indices, available at https://us.spindices.com/index-family/real-estate/sp-corelogic-case-shiller.

    70 The FHFA Index reflects changes in home prices from a base of $250,000 in June 1994, based on the FHFA House Price Index. See FHFA House Price Index, available at https://www.fhfa.gov/DataTools/Downloads/Pages/House-Price-Index.aspx.

    71 The CPI, which is published by the Bureau of Labor Statistics, is a measure of the average change over time in the prices paid by urban consumers for a market basket of goods and services. See https://www.bls.gov/cpi/.

    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.

    Table 1—Inflation Adjustments of $250,000 at June 30, 1994, for the Case-Shiller Index and the FHFA Index, and July 1, 1994 for the CPI Index Table 1 year Case-Shiller FHFA CPI 1994 250,000 250,000 250,000 2006 578,813 511,636 341,109 2011 445,152 414,629 379,997 2018 641,191 611,700 424,031

    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.

    Question 8. Is the proposed level of $400,000 for the threshold at or below which regulated institutions would not be required to obtain appraisals for residential real estate transactions appropriate?

    Safety and Soundness Considerations for Increasing the Appraisal Threshold for Residential Real Estate Transactions

    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.72 As noted in the Coverage of the Threshold section below, the agencies estimate that approximately 72 percent of regulated transactions in 2017 would have been exempt from the appraisal requirement under the proposal. However, analysis of supervisory experience and available data, taking into account the continuing evaluation requirement for transactions that would be exempted by the threshold, indicates that the proposed threshold level of $400,000 for residential real estate transactions is unlikely to pose a threat to the safety and soundness of financial institutions. Specifically, the agencies examined data reported on the Consolidated Reports of Condition and Income (Call Report) 73 to determine net charge-off rates 74 for residential real estate transactions. The agencies also examined the number and dollar volume of residential real estate transactions covered by the existing threshold and the increased threshold.

    72 12 U.S.C. 3341(b).

    73 The agencies used data reported on Schedule RC-C of the Call Report, which includes the dollar volume of all loans secured by real estate, including loans secured by residential properties with fewer than five dwelling units (RCFD 1797, 5367, and 5368). See FFIEC, Consolidated Reports of Condition and Income for a Bank with Domestic and Foreign Offices—FFIEC 031, available at https://www.ffiec.gov/pdf/FFIEC_forms/FFIEC031_201703_f.pdf.

    74 Net charge-offs are charge-offs minus recoveries. Net charge-offs represent losses to financial institutions, which, in the aggregate, can pose a threat to safety and soundness.

    Supervisory Experience

    Based on supervisory experience and analysis of material loss reviews,75 the agencies observe that the substantial increase in losses on residential real estate transactions 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 the expanded use of higher risk loan products. For example, prior to the onset of the most recent recession, the financial industry expanded its use of non-traditional mortgage products that did not consider borrowers' ability to repay on a fully indexed and fully amortizing basis. An FDIC study notes, “Many of the banks that failed did so because management relaxed underwriting standards and did not implement adequate oversight and controls. For their part, many borrowers who engaged in commercial or residential lending arrangements did not always have the capacity to repay loans.” 76

    75 Section 38(k) of the Federal Deposit Insurance Act, as amended, provides that if the Deposit Insurance Fund incurs a “material loss” with respect to an insured depository institution (IDI), the Inspector General of the appropriate regulator (which for the OCC is the Inspector General of the Department of the Treasury) shall prepare a report to that agency, identifying the cause of failure and reviewing the agency's supervision of the institution. 12 U.S.C. 1831o(k).

    76See FDIC, Office of the Inspector General (OIG), EVAL-13-002, Comprehensive Study on the Impact of the Failure of Insured Depository Institutions 50, Table 6 (January 2013), available at https://www.fdicoig.gov/sites/default/files/publications/13-002EV.pdf.

    Similar concerns are detailed in the material loss review for Downey Savings and Loan,77 which partly attributed its failure to management engaging in higher risk underwriting practices, such as offering option adjustable rate mortgages (which give borrowers the option of making monthly payments that do not cover the interest charges accrued), reducing or not requiring any documentation of borrowers' income or assets, accepting lower borrower credit scores, and layering two or more of these features in the same loan product. Likewise, the material loss review of IndyMac Bank, FSB 78 listed poor loan underwriting, such as offering nontraditional mortgage products, failing to verify borrowers' income or assets, and lending to borrowers with poor credit histories, among the core weaknesses that ultimately caused the thrift to fail. Both material loss reviews also noted some concerns with appraisals.

    77See Audit Report OIG-09-039, Material Loss Review of Downey Savings and Loan, FA (June 15, 2009), available at https://www.treasury.gov/about/organizational-structure/ig/Documents/OIG09039.pdf .

    78See Audit Report OIG-09-032, Material Loss Review of IndyMac Bank, FSB (Feb. 26, 2009), available at https://www.treasury.gov/about/organizational-structure/ig/Documents/oig09032.pdf.

    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.79 As noted earlier, among Congressional measures taken in response to the crisis, the Dodd-Frank Act instituted a number of reforms to ensure the legitimacy, independence, and oversight of appraisals.80 The federal financial institution regulatory agencies also issued the Interagency Guidance on Nontraditional Mortgage Product Risks 81 in response to concerns with the higher risk attributes of nontraditional mortgage products.

    79 Financial Crisis Inquiry Commission, The Financial Crisis Inquiry Report: Final Report of the National Commission on the Causes of the Financial and Economic Crisis in the United States, available at https://www.thefederalregister.org/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf.

    80 Dodd-Frank Act, Title XIV, Subtitle F--Appraisal Activities, Public Law 111-203, 124 Stat. 1376, 2185.

    81See 71 FR 58609 (October 4, 2006).

    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.82 Accordingly, the agencies' supervisory experience suggests that an increase in the threshold is unlikely to pose a safety and soundness risk to financial institutions.

    82 Estimates based on first-lien, single-family mortgage transactions reported in 2017 HMDA data.

    Analysis of Charge-Off Rates

    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.

    Coverage of the Threshold

    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.

    Table 2 83—Regulated Transactions by Transaction Amount Exempted by
  • current threshold of $250,000
  • Newly exempted by proposed
  • increase to $400,000
  • Total exempted by proposed
  • increase to $400,000
  • Total not
  • exempted by
  • proposed
  • increase to
  • $400,000
  • Number of Transactions Number of Transactions 750,000 214,000 965,000 379,000 % of Total 56% 16% 72% 28% Dollar Volume Dollar Volume ($billions) 96 68 164 305 % of Total 20% 14% 35% 65%

    As shown, the agencies estimate that increasing the residential appraisal threshold to $400,000 would raise the share of the number of regulated transactions that would be exempt from 56 percent to 72 percent and the share of the dollar volume of regulated transactions from 20 percent to 35 percent. Thus, the aggregate dollar volume of exempted transactions would remain a modest percentage of regulated transactions.

    83 Numbers and dollar volumes are based 2017 HMDA data, and include first lien, conventional originations on single-family residential properties by FDIC-insured institutions and affiliated institutions that are not sold to the GSEs or otherwise insured or guaranteed by a U.S. government agency. Originations with loan amounts greater than $20 million are excluded. Subtotals may not add to totals due to rounding.

    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.84 Thus, the agencies expect the proposed threshold level to have a much smaller impact on the dollar volume of transactions and, therefore would be less likely to pose a safety and soundness risk than the current threshold level did when it was introduced in 1994.

    84 59 FR at 29486 (June 7, 1994).

    Question 9. Is the data used in this analysis appropriate? Are there alternative sources of data that would be appropriate for this analysis?

    Evaluation Requirement

    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.85 Regulated institutions and consumers also may voluntarily obtain appraisals for exempt transactions when deemed appropriate such as higher risk transactions that may pose a threat to safety and soundness. The agencies also retain the ability to require an appraisal whenever “necessary to address safety-and-soundness concerns.” 86 The agencies expect regulated institutions to follow general guidelines for safety and soundness found in the Interagency Guidelines for Real Estate Lending Policies 87 and the Interagency Guidelines Establishing Standards for Safety and Soundness.88

    85E.g., Guidelines, Evaluations Advisory and Frequently Asked Questions on the Appraisal Regulations and the Interagency Appraisal and Evaluation Guidelines (October 16, 2018), OCC Bulletin 2018-39; Board SR Letter 18-9; FDIC FIL-62-2018.

    86See, OCC: 12 CFR 34.43(c); Board: 12 CFR 225.63(c); and FDIC: 12 CFR 323.3(c).

    87 OCC: 12 CFR part 34, subpart D; Board: 12 CFR part 208.51 and part 208, Appendix C; and FDIC: 12 CFR part 365, subpart A, Appendix A.

    88 OCC: 12 CFR part 30, Appendix A; Board: 12 CFR 208 subpart E and Appendix C and D-1; FDIC: 12 CFR part 364, Appendix A.

    B. Use of 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.89 An evaluation provides an estimate of the market value of real estate, but is not subject to the same requirements as a Title XI appraisal. An evaluation should provide appropriate information to enable the institution to make a prudent decision regarding the transaction. Through the Guidelines, the agencies have provided guidance to regulated institutions on their expectations regarding when and how evaluations should be used.

    89 Guidelines, 75 FR at 77460.

    The Guidelines provide guidance on obtaining appropriate evaluations that are consistent with safe and sound banking practices.90 As described in the Guidelines, evaluations should be performed by persons who are competent and have the relevant experience and knowledge of the market, location, and type of real property being valued.91 Evaluations may be completed by an independent bank employee or by a third party, as explained by the Guidelines 92 and the Evaluations Advisory.93 Guidance on achieving independence in the collateral valuation program can be found in the Guidelines, among other sources.94 The Guidelines state that an evaluation should provide an estimate of the property's market value and have sufficient information and analysis to support the credit decision.95 The Guidelines also describe the content that an evaluation should contain.96

    90Id., at 77461.

    91Id., at 77458.

    92Id.

    93 Evaluations Advisory at 2.

    94 Guidelines, 75 FR at 77457-58. See also Valuation Independence rules in Regulation Z, which apply to all creditors and cover extensions of consumer credit that are or will be secured by a consumer's principal dwelling: Board: 12 CFR 226.42; BCFP: 12 CFR 1026.42.

    95 Guidelines, 75 FR at 77457.

    96Id., at 77461.

    Question 10. Will institutions expand their use of evaluations if the proposal to raise the residential threshold is finalized or continue to use appraisals for the additional residential real estate transactions of $400,000 or less that are eligible for this exemption? How frequently do lenders obtain evaluations for eligible residential real estate transactions in practice? For what types of eligible residential real estate transactions are lenders likely to obtain evaluations? Please provide data or other evidence to support any comments.

    C. Conforming and Technical Amendments

    Definition of Residential Real Estate Transaction. In the CRE Final Rule, the agencies defined a CRE transaction as a real estate-related financial transaction that is not secured by a single 1-to-4 family residential property. The agencies are proposing to extend this definitional framework by defining “residential real estate transaction” as a real estate-related financial transaction that is secured by a single 1-to-4 family residential property. The agencies are also proposing to clarify in the regulatory text that the proposed $400,000 threshold applies to residential real estate transactions. The agencies are proposing this approach to provide regulatory clarity and believe that this change would not affect any substantive requirement.

    Question 11. Is the proposed definition of a residential real estate transaction appropriate?

    Increase in the threshold for the use of state certified appraisers for complex residential real estate transactions and other conforming changes. The agencies' appraisal regulations require that all complex 1-to-4 family residential property appraisals rendered in connection with federally related transactions shall have a state certified appraiser if the transaction value is $250,000 or more.97 In order to make this paragraph consistent with the other proposed changes to the agencies' appraisal regulations, the agencies are proposing changes to its wording to incorporate the proposed definition of “residential real estate transaction,” to introduce the $400,000 threshold, and to make other technical and conforming changes. The agencies are also proposing to amend the definitional term “complex 1-to-4 family residential property appraisal” to “complex appraisal for a residential real estate transaction” to conform to the definition of residential real estate transaction. The amendments to these provisions would be conforming changes that would not alter any substantive requirements.

    97 OCC: 12 CFR 34.43(d)(3); Board: 12 CFR 225.63(d)(3); FDIC: 12 CFR 323.3(d)(3).

    Evaluations for transactions exempted by the rural residential appraisal exemption. Congress recently amended Title XI to exclude loans made by a financial institution from the requirement to obtain a Title XI appraisal if certain conditions are met.98 The property must be located in a rural area; the transaction value must be less than $400,000; the financial institution must retain the loan in portfolio, subject to exceptions; and not later than three days after the Closing Disclosure is given to the consumer, the financial institution or its agent must have contacted not fewer than three state certified or state licensed appraisers, as applicable, and documented that no such appraiser was available within five business days beyond customary and reasonable fee and timeliness standards for comparable appraisal assignments.99

    98See supra note 1.

    99 12 U.S.C. 3356. The mortgage originator must be subject to oversight by a Federal financial institutions regulatory agency. Further, the exemption does not apply to loans that are high-cost mortgages, as defined in section 103 of TILA, or if a Federal financial institutions regulatory agency requires an appraisal because it believes it is necessary to address safety and soundness concerns. Id.

    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.

    Question 12. What challenges, if any, are posed by using evaluations for transactions that are exempt from the agencies' appraisal requirement due to the rural residential appraisal exemption?

    Appraisal review. Section 1473(e) of the Dodd-Frank Act amended Title XI to add that appraisals be subject to appropriate review for compliance with USPAP to the minimum standards that the agencies must require for appraisal for federally related transactions.100 The proposed rule would make a conforming amendment to the minimum requirements in the agencies' appraisal regulations to add appraisal review. The agencies propose to mirror the statutory language for this standard. As outlined in the Guidelines, which provide guidance on the review process, the agencies have long recognized that appraisal review is consistent with safe and sound banking practices.101

    100 Dodd-Frank Act, section 1473, Public Law 111-203, 124 Stat. 1376.

    101 Guidelines, 75 FR at 77461.

    Question 13. What, if any, concerns are posed by adding a requirement to review appraisals that is consistent with the statutory language for this standard to the minimum requirements for an appraisal?

    III. Request for Comments

    The agencies invite comment on all aspects of the proposed rulemaking.

    IV. Regulatory Analysis A. Proposed Waiver of Delayed Effective Date

    The agencies propose to make all provisions of the rule, other than the evaluation requirement for transactions exempted by the rural residential appraisal exemption 102 and the appraisal review provision (as discussed below), effective the first day after publication of the final rule in the Federal Register. The agencies propose to waive the 30-day delayed effective date required under the Administrative Procedure Act (APA) for these provisions, pursuant to 5 U.S.C. 553(d)(1), which provides for waiver when a substantive rule grants or recognizes an exemption or relieves a restriction. The amendments proposed to increase the residential threshold would exempt additional transactions from the agencies' appraisal requirement, which would have the effect of relieving restrictions. Consequently, the agencies propose that all provisions of this rule, except the evaluation requirement for transactions exempted by the rural residential appraisal exemption and the appraisal review provision, meet the requirements for waiver set forth in the APA.

    102See supra note 1.

    B. Regulatory Flexibility Act

    OCC: The Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq., generally requires that, in connection with a rulemaking, an agency prepare and make available for public comment a regulatory flexibility analysis that describes the impact of the rule on small entities. However, the regulatory flexibility analysis otherwise required under the RFA is not required if an agency certifies that the rule will not have a significant economic impact on a substantial number of small entities (defined in regulations promulgated by the Small Business Administration (SBA) to include commercial banks and savings institutions, and trust companies, with assets of $550 million or less and $38.5 million or less, respectively) and publishes its certification and a brief explanatory statement in the Federal Register together with the rule.

    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.103 The OCC estimates that the proposed rule may impact approximately 797 of these small entities.

    103 The OCC bases this estimate of the number of small entities on the SBA's size thresholds for commercial banks and savings institutions, and trust companies, which are $550 million and $38.5 million, respectively. Consistent with the General Principles of Affiliation, 13 CFR 121.103(a), the OCC includes the assets of affiliated financial institutions when determining whether to classify an OCC-supervised institution as a small entity. The OCC used December 31, 2017, to determine size because a “financial institution's assets are determined by averaging the assets reported in its four quarterly financial statements for the preceding year.” See footnote 8 of the U.S. Small Business Administration's Table of Size Standards.

    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.104 For this reason, substituting evaluations for appraisals may reduce burden for institutions in areas with appraiser shortages.105

    104See EGRPRA Report, available at https://www.ffiec.gov/pdf/2017_FFIEC_EGRPRA_Joint-Report_to_Congress.pdf.

    105 While the proposed threshold may decrease costs for institutions, the extent to which institutions will employ evaluations instead of appraisals is uncertain, given that institutions retain the option of using appraisals for below-threshold transactions.

    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 de minimis. Therefore, the OCC certifies that the proposal, if adopted, would not have a significant economic impact on a substantial number of small entities.

    Board: The Regulatory Flexibility Act (RFA),106 requires an agency either to provide an initial regulatory flexibility analysis with a proposed rule or certify that the proposed rule will not have a significant economic impact on a substantial number of small entities. The proposed threshold increase applies to certain IDIs and non-bank entities that make loans secured by residential real estate.107 The SBA establishes size standards that define which entities are small businesses for purposes of the RFA.108 The size standard to be considered a small business is: $550 million or less in assets for banks and other depository institutions; and $38.5 million or less in annual revenues for the majority of non-bank entities that are likely to be subject to the proposed regulation.109 Based on the Board's analysis, and for the reasons stated below, the proposed rule may have a significant positive economic impact on a substantial number of small entities. Accordingly, the Board is publishing an initial regulatory flexibility analysis. The Board will consider whether to conduct a final regulatory flexibility analysis after consideration of comments received during the public comment period.

    106 5 U.S.C. 601 et seq.

    107 For its RFA analysis, the Board considered all Board-regulated creditors to which the proposed rule would apply.

    108 U.S. SBA, Table of Small Business Size Standards Matched to North American Industry Classification System Codes, available at https://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf.

    109 Asset size and annual revenues are calculated according to SBA regulations. See 13 CFR 121 et seq.

    The Board requests public comment on all aspects of this analysis.

    A. Reasons for the Proposed Rule

    As discussed in sections I and II of the Supplementary Information, the agencies are proposing to increase the threshold from $250,000 to $400,000 at or below which a Title XI appraisal is not required for residential real estate transactions in order to reduce regulatory burden in a manner that is consistent with the safety and soundness of financial institutions. To ensure that the safety and soundness of regulated institutions is protected, the agencies are proposing to require evaluations for transactions that qualify for the residential appraisal threshold exemption and rural residential appraisal exemption. In order to fulfill the agencies' statutory responsibility under the Dodd-Frank Act, the agencies are proposing to add the requirement that appraisals be subject to appropriate review for compliance with USPAP.

    B. Legal Basis

    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.110 For transactions exempted by the proposed residential appraisal threshold increase and the rural residential appraisal exemption, the agencies are proposing to require evaluations pursuant to their authority to prescribe standards for safe and sound banking practices, including for credit underwriting and real estate lending,111 under the Federal Deposit Insurance Act. For transactions that remain subject to the agencies' appraisal requirement, the agencies are proposing to add the requirement that such appraisals be subject to appropriate review for USPAP, as required by Title XI.112

    110 12 U.S.C. 3341(b).

    111 12 U.S.C. 1831p-1; 12 U.S.C. 1844(b).

    112 12 U.S.C. 3339(1).

    C. Projected Reporting, Recordkeeping and Other Compliance Requirements

    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.113 The Board expects this percentage to be higher for small entities, because a higher percentage of their loan portfolios are likely to be made up of small, below-threshold loans than those of larger entities. Thus, while the precise number of transactions that will be affected and the precise cost reduction per transaction cannot be determined, the proposed rule may have a significant positive economic impact on small entities that engage in residential real estate lending.

    113 As shown in Table 2, approximately 750,000 transactions are exempted under the current $250,000 threshold, and an additional 214,000 transactions would be exempted under the proposed $400,000 threshold, representing an increase of approximately 29 percent over the number of transactions exempted by the current threshold.

    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.

    D. Identification of Duplicative, Overlapping, or Conflicting Federal Regulations

    The Board has not identified any federal statutes or regulations that would duplicate, overlap, or conflict with the proposed revisions.

    E. Discussion of Significant Alternatives

    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.

    FDIC: The Regulatory Flexibility Act (RFA) generally requires that, in connection with a proposed rule, an agency prepare and make available for public comment an initial regulatory flexibility analysis describing the impact of the rulemaking on small entities.114 A regulatory flexibility analysis is not required, however, if the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. The Small Business Administration (SBA) has defined “small entities” to include banking organizations with total assets less than or equal to $550 million.115 The FDIC supervises 3,643 depository institutions,116 of which 2,840 are defined as small banking entities by the terms of the RFA.117 In 2017, 1,216 small, FDIC-supervised institutions reported originating residential real estate loans. However, beginning in 2017, FDIC-supervised institutions ceased reporting residential loan origination data in compliance with HMDA if they originated less than 25 loans per year. Therefore, in order to more accurately assess the number of institutions that could be affected by the proposed rule we counted the number of existing institutions who reported any residential loan origination in 2015, 2016, or 2017. Thus, of the 2,840 small, FDIC-supervised entities, 1,524 (53.6 percent) are estimated to be affected by the proposed rule.118

    114 5 U.S.C. 601 et seq.

    115 The SBA defines a small banking organization as having $550 million or less in assets, where “a financial institution's assets are determined by averaging the assets reported on its four quarterly financial statements for the preceding year.” 13 CFR 121.201 n.8 (2018). “SBA counts the receipts, employees, or other measure of size of the concern whose size is at issue and all of its domestic and foreign affiliates. . . .” 13 CFR 121.103(a)(6) (2018). Following these regulations, the FDIC uses a covered entity's affiliated and acquired assets, averaged over the preceding four quarters, to determine whether the covered entity is “small” for the purposes of RFA.

    116 FDIC-supervised institutions are set forth in 12 U.S.C. 1813(q)(2).

    117 Call Report, December 31, 2017.

    118 HMDA data, December 2015-2017.

    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.119 The estimated reduction in costs would be smaller if lenders opt to not utilize an evaluation and require an appraisal on residential real estate transaction greater than $250,000 but not more than $400,000. The cost savings per institution represents less than 0.01 percent of non-interest expense per small, FDIC-supervised institution.120 Thus, the FDIC believes the proposed rule will not have a significant economic impact on small, FDIC-supervised institutions.

    119 4.5 hours * $71.50 per hour = $321.75. 4.5 hours * $71.50 per hour = $321.75. The FDIC estimates that the average hourly compensation for a loan officer is $71.50 an hour. The hourly compensation estimate is based on published compensation rates for Credit Counselors and Loan Officers ($44.70). The estimate includes the May 2017 75th percentile hourly wage rate reported by the Bureau of Labor Statistics, National Industry-Specific Occupational Employment and Wage Estimates for the Depository Credit Intermediation sector. The reported hourly wage rate is grossed up by 159.9 percent to account for non-monetary compensation as reported by the June 2018 Employer Costs for Employee Compensation Data. 4.5 hours * $71.50 per hour = $321.75. 4.5 hours * $71.50 per hour = $321.75.

    120 Call Report, December 31, 2017.

    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 121 for a single-family residence reflects that the cost of an appraisal generally ranges from $375 to $900, depending on the location of the property. While the FDIC does not have definitive information on the cost of evaluations, some of the comments from financial institutions and their trade associations to the CRE NPR indicated that evaluations cost substantially less than appraisals. For example, one commenter noted that third-party evaluations cost approximately 25 percent of the cost of an appraisal. Therefore, making more residential real estate transactions eligible for evaluations instead of appraisals is likely to reduce transaction valuation-related costs. However, the FDIC assumes that most, if not all, of these costs reductions are passed on to residential real estate buyers. Therefore, this effect of the proposed rule is likely to have little or no effect on small, FDIC-supervised entities.

    121See https://www.benefits.va.gov/HOMELOANS/appraiser_fee_schedule.asp.

    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 relative distributional effects of the proposed rule for small, FDIC-supervised institutions engaging in residential real estate transactions in rural areas is difficult to accurately estimate because it depends on the current and future characteristics of rural residential real estate markets, future characteristics of residential collateral involved in transactions, the propensity of lenders to require an appraisal for transactions between $250,000 but not more than $400,000, among other things.

    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.122

    122 $325/$597,147 = 0.0544 percent; $900/$597,147 = 0.1507 percent.

    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?

    C. Paperwork Reduction Act

    In accordance with the requirements of the Paperwork Reduction Act of 1995 (PRA), 123 the agencies may not conduct or sponsor, and a respondent is not required to respond to, an information collection unless it displays a currently-valid Office of Management and Budget (OMB) control number. The agencies have reviewed this proposed rule and determined that it would not introduce any new or revise any collection of information pursuant to the PRA. Therefore, no submissions will be made to OMB for review.

    123 44 U.S.C. 3501-3521.

    D. Riegle Community Development and Regulatory Improvement Act of 1994

    Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act (RCDRIA),124 in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on IDIs, each Federal banking agency must consider, consistent with principles of safety and soundness and the public interest, any administrative burdens that such regulations would place on depository institutions, including small depository institutions, and customers of depository institutions, as well as the benefits of such regulations. In addition, section 302(b) of RCDRIA requires new regulations and amendments to regulations that impose additional reporting, disclosures, or other new requirements on IDIs generally to take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form.125

    124 12 U.S.C. 4802(a).

    125Id. at 4802(b).

    The agencies recognize that the requirement to obtain an evaluation for transactions exempted by the rural residential appraisal exemption 126 could be considered a new requirement for IDIs, despite the longstanding requirements for IDIs to obtain evaluations for transactions exempt from agencies' appraisal requirement under a threshold exemption. The agencies also recognize that the requirement for an appraisal review could be considered a new requirement for IDIs. Accordingly, with respect to the requirement that financial institutions obtain evaluations for transactions exempted by the rural residential appraisal exemption and the requirement for appraisal review, the agencies are proposing an effective date of the first day of a calendar quarter which begins on or after the date on which the regulations are published in final form, consistent with RCDRIA.

    126See supra note 1.

    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 (i.e., residential real estate transactions between $250,000 and $400,000), lenders would be required to get an evaluation if they chose not to get an appraisal. However, the agencies do not view the option to obtain an evaluation instead of an appraisal as a new or additional requirement for purposes of RCDRIA. First, the process of obtaining an evaluation is not new since IDIs already obtain evaluations for transactions at or below the current $250,000-threshold. Second, for residential real estate transactions between $250,000 and $400,000, IDIs could continue to obtain appraisals instead of evaluations. Because the proposed rule would impose no new requirements on IDIs, the agencies are not required by RCDRIA to consider the administrative burdens and benefits of the rule or delay its effective date (other than the evaluation provision for transactions exempted by the rural residential appraisal exemption or and the appraisal review provision, as discussed above).

    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 Federal Register. Additionally, although not required by RCDRIA, the agencies did consider the administrative costs and benefits of the rule while developing the proposal. In designing the scope of the threshold increase, the agencies chose to align the definition of residential real estate transaction with industry practice, regulatory guidance, and the categories used in the Call Report in order to reduce the administrative burden of determining which transactions were exempted by the rule. The agencies also considered the cost savings that IDIs would experience by obtaining evaluations instead of appraisals and set the proposed threshold at a level designed to provide significant burden relief without sacrificing safety and soundness.

    The agencies note that comment on these matters has been solicited in the Supplementary Information, and that the requirements of RCDRIA will be considered as part of the overall rulemaking process. In addition, the agencies invite any other comments that further will inform the agencies' consideration of RCDRIA.

    E. Solicitation of Comments on Use of Plain Language

    Section 722 of the Gramm-Leach-Bliley Act 127 requires the Federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. The agencies have sought to present the proposed rule in a simple and straightforward manner and invite comment on the use of plain language. For example:

    127 Public Law 106-102, section 722, 113 Stat. 1338, 1471 (1999).

    • 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?

    F. Unfunded Mandates Act OCC Unfunded Mandates Reform Act of 1995 Determination

    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 de minimis. Therefore, the OCC concludes that the proposed rule, if adopted as final, would not result in an expenditure of $100 million or more annually by state, local, and tribal governments, or by the private sector.

    List of Subjects 12 CFR Part 34

    Appraisal, Appraiser, Banks, Banking, Consumer protection, Credit, Mortgages, National banks, Reporting and recordkeeping requirements, Savings associations, Truth in lending.

    12 CFR Part 225

    Administrative practice and procedure, Banks, banking, Federal Reserve System, Capital planning, Holding companies, Reporting and recordkeeping requirements, Securities, Stress testing

    12 CFR Part 323

    Banks, banking, Mortgages, Reporting and recordkeeping requirements, Savings associations.

    DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency 12 CFR Part 34

    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:

    PART 34—REAL ESTATE LENDING AND APPRAISALS 1. The authority citation for part 34 continues to read as follows: Authority:

    12 U.S.C. 1, 25b, 29, 93a, 371, 1462a, 1463, 1464, 1465, 1701j-3, 1828(o), 3331 et seq., 5101 et seq., and 5412(b)(2)(B), and 15 U.S.C. 1639h.

    2. Section 34.42 is amended by: a. Revising paragraph (f); b. Redesignating paragraphs (k) through (n) as (l) through (o), respectively; and c. Adding a new paragraph (k).

    The revisions and addition read as set forth below.

    § 34.42 Definitions.

    (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.

    3. Section 34.43 is amended by: a. Revising paragraphs (a)(1), (b), and (d)(3); b. Removing the word “or” at the end of paragraph (a)(12); c. Removing the period at the end of paragraph (a)(13) and adding “; or” in its place; and d. Adding paragraph (a)(14).

    The addition and revisions read as set forth below.

    § 34.43 Appraisals required; transactions requiring a State certified or licensed appraiser.

    (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) Evaluations required. For a transaction that does not require the services of a State certified or licensed appraiser under paragraph (a)(1), (a)(5), (a)(7), (a)(13), or (a)(14) of this section, the institution shall obtain an appropriate evaluation of real property collateral that is consistent with safe and sound banking practices.

    (d) * * *

    (3) Complex appraisals for residential real estate transactions of more than $400,000. All complex appraisals for residential real estate transactions rendered in connection with federally related transactions shall require a State certified appraiser if the transaction value is more than $400,000. A regulated institution may presume that appraisals for residential real estate transactions are not complex, unless the institution has readily available information that a given appraisal will be complex. The regulated institution shall be responsible for making the final determination of whether the appraisal is complex. If during the course of the appraisal a licensed appraiser identifies factors that would result in the property, form of ownership, or market conditions being considered atypical, then either:

    (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.

    4. Section 34.44 is amended by: a. Republishing the introductory text b. Redesignating paragraphs (c), (d), and (e) as (d), (e), and (f), respectively; and c. Adding a new paragraph (c).

    The addition reads as set forth below.

    § 34.44 Minimum appraisal standards.

    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;

    Federal Reserve Board

    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:

    PART 225—BANK HOLDING COMPANIES AND CHANGE IN BANK CONTROL (REGULATION Y) 5. The authority citation for part 225 continues to read as follows: Authority:

    12 U.S.C. 1817(j)(13), 1818, 1828(o), 1831i, 1831p-1, 1843(c)(8), 1844(b), 1972(l), 3106, 3108, 3310, 3331 et seq., 3906, 3907, and 3909; 15 U.S.C. 1681s, 1681w, 6801 and 6805.

    6. Section 225.62 is amended by: a. Revising paragraph (f); b. Redesignating paragraphs (k) through (n) as (l) through (o), respectively; and c. Adding a new paragraph (k).

    The revisions and addition read as set forth below.

    § 225.62 Definitions.

    (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.

    7. Section 225.63 is amended by: a. Revising paragraphs (a)(1), (b), and (d)(3); b. Removing the word “or” at the end of paragraph (a)(13); c. Removing the period at the end of paragraph (a)(14) and adding “; or” in its place; and d. Adding paragraph (a)(15).

    The addition and revisions read as set forth below.

    § 225.63 Appraisals required; transactions requiring a State certified or licensed appraiser.

    (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) Evaluations required. For a transaction that does not require the services of a State certified or licensed appraiser under paragraph (a)(1), (a)(5), (a)(7), (a)(14), or (a)(15) of this section, the institution shall obtain an appropriate evaluation of real property collateral that is consistent with safe and sound banking practices.

    (d) * * *

    (3) Complex appraisals for residential real estate transactions of more than $400,000. All complex appraisals for residential real estate transactions rendered in connection with federally related transactions shall require a State certified appraiser if the transaction value is more than $400,000. A regulated institution may presume that appraisals for residential real estate transactions are not complex, unless the institution has readily available information that a given appraisal will be complex. The regulated institution shall be responsible for making the final determination of whether the appraisal is complex. If during the course of the appraisal a licensed appraiser identifies factors that would result in the property, form of ownership, or market conditions being considered atypical, then either:

    (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.

    8. Section 225.64 is amended by: a. Republishing the introductory text; b. Redesignating paragraphs (c), (d), and (e) as (d), (e), and (f), respectively; and c. Adding a paragraph (c).

    The revisions and addition read as set forth below.

    § 225.64 Minimum appraisal standards.

    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;

    Federal Deposit Insurance Corporation

    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:

    PART 323—APPRAISALS 9. The authority citation for part 323 continues to read as follows: Authority:

    12 U.S.C. 1818, 1819(a) (“Seventh” and “Tenth”), 1831p-1 and 3331 et seq.

    10. Section 323.2 is amended by: a. Revising paragraph (f); b. Redesignating paragraphs (k) through (n) as (l) through (o), respectively; and c. Adding a new paragraph (k).

    The revisions and addition read as set forth below.

    § 323.2 Definitions.

    (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.

    11. In Subpart A, section 323.3 is amended by: a. Revising paragraphs (a)(1), (b), and (d)(3); b. Removing the word “or” at the end of paragraph (a)(12); c. Removing the period at the end of paragraph (a)(13) and adding “; or” in its place; and d. Adding paragraph (a)(14).

    The addition and revisions read as set forth below.

    § 323.3 Appraisals required; transactions requiring a State certified or licensed appraiser.

    (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) Evaluations required. For a transaction that does not require the services of a State certified or licensed appraiser under paragraph (a)(1), (a)(5), (a)(7), (a)(13), or (a)(14) of this section, the institution shall obtain an appropriate evaluation of real property collateral that is consistent with safe and sound banking practices.

    (d) * * *

    (3) Complex appraisals for residential real estate transactions of more than $400,000. All complex appraisals for residential real estate transactions rendered in connection with federally related transactions shall require a State certified appraiser if the transaction value is more than $400,000. A regulated institution may presume that appraisals for residential real estate transactions are not complex, unless the institution has readily available information that a given appraisal will be complex. The regulated institution shall be responsible for making the final determination of whether the appraisal is complex. If during the course of the appraisal a licensed appraiser identifies factors that would result in the property, form of ownership, or market conditions being considered atypical, then either:

    (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.

    12. Section 323.4 is amended by a. Republishing the introductory text; b. Redesignating paragraphs (c), (d), and (e) as (d), (e), and (f), respectively; and c. Adding a paragraph (c).

    The addition reads as set forth below.

    § 323.4 Minimum appraisal standards.

    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;

    Dated: November 15, 2018 Joseph M. Otting Comptroller of the Currency

    By order of the Board of Governors of the Federal Reserve System.

    Margaret McCloskey Shanks, Deputy Secretary of the Board. Dated at Washington, DC, on November 20, 2018.

    By order of the Board of Directors.

    Federal Deposit Insurance Corporation. Robert E. Feldman, Executive Secretary.
    [FR Doc. 2018-26507 Filed 12-6-18; 8:45 am] BILLING CODE 4810-33-6210-01;6714-14-P
    DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Part 860 [Docket No. FDA-2018-N-0236] RIN 0910-AH53 Medical Device De Novo Classification Process AGENCY:

    Food and Drug Administration, HHS.

    ACTION:

    Proposed rule.

    SUMMARY:

    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.

    DATES:

    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.

    ADDRESSES:

    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 https://www.regulations.gov electronic filing system will accept comments until 11:59 p.m. Eastern Time at the end of March 7, 2019. Comments received by mail/hand delivery/courier (for written/paper submissions) will be considered timely if they are postmarked or the delivery service acceptance receipt is on or before that date.

    Electronic Submissions

    Submit electronic comments in the following way:

    Federal eRulemaking Portal: https://www.regulations.gov. Follow the instructions for submitting comments. Comments submitted electronically, including attachments, to https://www.regulations.gov will be posted to the docket unchanged. Because your comment will be made public, you are solely responsible for ensuring that your comment does not include any confidential information that you or a third party may not wish to be posted, such as medical information, your or anyone else's Social Security number, or confidential business information, such as a manufacturing process. Please note that if you include your name, contact information, or other information that identifies you in the body of your comments, that information will be posted on https://www.regulations.gov.

    • 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”).

    Written/Paper Submissions

    Submit written/paper submissions as follows:

    Mail/Hand delivery/Courier (for written/paper submissions): Dockets Management Staff (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

    • 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.”

    Instructions: All submissions received must include the Docket No. FDA-2018-N-0236 for Medical Device De Novo Classification Process. Received comments, those filed in a timely manner (see ADDRESSES), will be placed in the docket and, except for those submitted as “Confidential Submissions,” publicly viewable at https://www.regulations.gov or at the Dockets Management Staff between 9 a.m. and 4 p.m., Monday through Friday.

    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 https://www.regulations.gov. Submit both copies to the Dockets Management Staff. If you do not wish your name and contact information to be made publicly available, you can provide this information on the cover sheet and not in the body of your comments and you must identify this information as “confidential.” Any information marked as “confidential” will not be disclosed except in accordance with 21 CFR 10.20 and other applicable disclosure law. For more information about FDA's posting of comments to public dockets, see 80 FR 56469, September 18, 2015, or access the information at: https://www.thefederalregister.org/fdsys/pkg/FR-2015-09-18/pdf/2015-23389.pdf.

    Docket: For access to the docket to read background documents or the electronic and written/paper comments received, go to https://www.regulations.gov and insert the docket number, found in brackets in the heading of this document, into the “Search” box and follow the prompts and/or go to the Dockets Management Staff, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

    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 [email protected]. All comments should be identified with the title, “Medical Device De Novo Classification Process.”

    FOR FURTHER INFORMATION CONTACT:

    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.

    SUPPLEMENTARY INFORMATION: Table of Contents I. Executive Summary A. Purpose of the Proposed Rule B. Summary of the Major Provisions of the Proposed Rule C. Legal Authority D. Costs and Benefits II. Table of Abbreviations/Commonly Used Acronyms in This Document III. Background IV. Statutory Framework and Authority V. Proposed Rule A. Scope (Proposed Subpart D and § 860.1) B. Definitions (Proposed § 860.3) C. Confidentiality of Information and Data Related to a De Novo Request (Proposed § 860.5) D. De Novo Classification—General (Proposed § 860.201) E. De Novo Request Format (Proposed § 860.223) F. De Novo Request Content (Proposed § 860.234) G. Accepting a De Novo Request (Proposed § 860.245) H. Procedures for Review of a De Novo Request (Proposed § 860.256) I. Withdrawal of a De Novo Request (Proposed § 860.267) J. Granting or Declining a De Novo Request (Proposed § 860.289) VI. Proposed Effective Date VII. Economic Analysis of Impacts VIII. Analysis of Environmental Impact IX. Consultation and Coordination With Indian Tribal Governments X. Paperwork Reduction Act of 1995 XI. Federalism XII. References I. Executive Summary A. Purpose of the Proposed Rule

    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.

    B. Summary of the Major Provisions of the Proposed Rule

    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.

    C. Legal Authority

    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).)

    D. Costs and Benefits

    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 range from $0.0 million to $0.08 million with a 7 percent discount rate, and range from $0.0 million to $0.03 million with a 3 percent discount rate.

    II. Table of Abbreviations/Commonly Used Acronyms in This Document Table 1—Abbreviations and Acronyms Abbreviation or acronym What it means 510(k) Premarket Notification. CFR Code of Federal Regulations. EUA Emergency Use Authorization. FDA Food and Drug Administration. FD&C Act Federal Food, Drug, and Cosmetic Act. FR Federal Register. GLP Good Laboratory Practice. HDE Humanitarian Device Exemption. IDE Investigational Device Exemption. MDR Medical Device Reporting. NSE Not Substantially Equivalent. OMB Office of Management and Budget. PMA Premarket Approval Application. PRA Paperwork Reduction Act of 1995. Pub. L. Public Law. Ref. Reference. RFD Requests for Designation under § 3.7. SE Substantially Equivalent. U.S.C. United States Code. III. Background

    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.

    IV. Statutory Framework and Authority

    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 regulation is exempted from premarket notification (“510(k)-exempt device”). A device removed from the market at the initiative of the Commissioner of Foods and Drugs or that has been determined by judicial order to be misbranded or adulterated cannot serve as a predicate device (section 513(i)(2) of the FD&C Act and § 807.100(b)(3)).

    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 Federal Register announcing this classification.1

    1 The FD&C Act provides that a class I device is generally exempt from 510(k) requirements (section 510(l) of the FD&C Act (21 U.S.C. 360(l))). FDA also may exempt a class II device from 510(k) requirements if FDA determines that 510(k) is not necessary to provide reasonable assurance of the safety and effectiveness of the device (section 510(m) of the FD&C Act (21 U.S.C. 360(m))). The process to exempt a class II device from 510(k) requirements is separate from FDA's consideration and granting of a De Novo request. For more information about procedures for class II device exemptions from premarket notification, see FDA's guidance “Procedures for Class II Device Exemptions from Premarket Notification, Guidance for Industry and CDRH Staff” (Ref. 2).

    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).

    V. Proposed Rule

    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.

    A. Scope (Adding Proposed Subpart D to Part 860 and Modifying § 860.1)

    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 Federal Register announcing the new classification and codifying it in the CFR.

    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(l) (21 U.S.C. 360j(l)) of the FD&C Act). FDA proposes to update the scope to add “advisory committees,” to authorize such committees to provide panel recommendations as to the classification or reclassification of medical devices. (§ 860.1(b).)

    B. Definitions (Proposed § 860.3)

    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.

    FDA proposes to add the term, classification regulation, to the definitions section. FDA proposes to define classification regulation to mean a regulation that identifies the generic type of device and its class. The proposed definition explains that FDA's medical device classification regulations are in parts 862 through 892 of FDA's regulations (21 CFR parts 862-892).

    FDA proposes to add the term, De Novo request, to the definitions section. FDA proposes to define De Novo request to mean the information that is submitted as part of a request to FDA to issue an order to classify a device under the De Novo classification section of the FD&C Act (section 513(f)(2) of the FD&C Act). The proposed definition explains that information submitted as part of a De Novo request includes information incorporated into that request by reference.

    For convenience, we propose to add a definition of FDA. FDA proposes to define FDA as the Food and Drug Administration. This addition is intended to remove the need to further define this term in the proposed De Novo regulation, as well as in the other subparts of medical device classification procedures regulations (part 860).

    FDA proposes to add a definition of general controls. This proposed definition harmonizes with the definition in the FD&C Act and the definition of Class I currently listed in the definitions section of the medical device classification procedures regulations (section 513(a)(1)(A) of the FD&C Act and § 860.3). While the meaning of general controls has been provided in guidance, adding the definition to this regulation will provide another opportunity to explain which controls are included as general controls.

    FDA proposes to add a definition of special controls. This proposed definition harmonizes with the definition in section of the FD&C Act and the definition of Class II currently listed in the definitions section of the medical device classification procedures regulations, and is intended to clarify the regulatory significance of special controls as the controls necessary to provide reasonable assurance of safety and effectiveness for a type of device classified as class II (section 513(a)(1)(B) of the FD&C Act and § 860.3). Special controls may include such things as performance standards, performance testing (e.g., biocompatibility testing, sterilization validation, clinical investigations), postmarket surveillance, patient registries, and development and dissemination of guidelines (including guidelines for the submission of clinical data in premarket notification submissions in accordance with premarket notification of the FD&C Act). While explanations of special controls have been provided in guidance, adding the definition to this regulation will provide another opportunity to clarify which controls are special controls.

    C. Confidentiality of Information and Data Related to a De Novo Request (Proposed § 860.5)

    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).

    D. De Novo Classification—General (Proposed § 860.201)

    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 reasonable basis for review of SE exists. (The substantial equivalence section of the FD&C Act provides the criteria for FDA to determine SE (section 513(i) of the FD&C Act).)

    E. De Novo Request Format (Proposed § 860.223)

    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.

    F. De Novo Request Content (Proposed § 860.234)

    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 which a device achieves its intended use. This information would be used during FDA's review of the De Novo request to help determine whether the device is of a type that has been previously classified.

    FDA is proposing that the device description include FDA assigned reference numbers (e.g., 510(k) number, classification regulation number) for any legally marketed devices (including accessories) that are intended to be used with the device (§ 860.234(a)(6)(v)).

    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 controls, well-documented case histories conducted by qualified experts, and reports of significant human experience with a marketed device, from which it can fairly and responsibly be concluded by qualified experts that there is reasonable assurance of the safety and effectiveness of a device under its conditions of use (§ 860.7(c)(2)). The proposed benefit and risk considerations section would expressly require that, pursuant to the determination of safety and effectiveness section of the regulations, a discussion be included demonstrating that, 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 (i.e., a discussion demonstrating the safety and effectiveness of the device) when the device is used according to its labeling (§ 860.234(a)(14)(ii) and § 860.7). Factors to consider in discussing benefits and risks are discussed in the guidance FDA issued on August 24, 2016, entitled, “Factors to Consider When Making Benefit-Risk Determinations in Medical Device Premarket Approval and De Novo Classifications, Guidance for Industry and CDRH Staff” (Ref. 6).

    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,2 as appropriate (§ 860.234(a)(15)(i)). The information for the proposed technical sections would be required to include a statement that each study was conducted in compliance with the Good Laboratory Practice (GLP) for nonclinical laboratory studies (§ 860.234(a)(15)(i) and part 58). If the study is not compliant with GLP, the proposed technical section would require that the De Novo requester provide a brief statement explaining the reason for noncompliance with GLP. (§ 860.234(a)(15)(i)). The brief statement would assist FDA in determining whether the non-compliance may relate to potential bias or credibility of the study.

    2 FDA supports the principles of the “3Rs,” to reduce, refine, and replace animal use in testing. We encourage sponsors to consult with us if they wish to use a non-animal testing method they believe is suitable, adequate, validated, and feasible. We will consider if such an alternative method could be assessed for equivalency to an animal test method.

    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 (e.g., any unfavorable response that caused or has potential to cause an injury) or complications related to the use of the device. An adverse reaction may occur as part of the effect of the device or may occur unpredictably. Frequency data and severity data are particularly useful in safety and effectiveness determinations. FDA would review the rates of complications in clinical investigations in assessing the safety and effectiveness of the device. The applicability of the adverse event information depends on the existing safety information and whether the population or use presents a new or serious safety issue.

    • 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. Without such a control, i.e., if a subject or an investigator were able to decide whether to include a subject's data, depending on whether a subject discontinues participation in the trial, the potential for bias could impact the credibility of the data.

    • 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 (e.g., a statement providing that the device is limited to prescription use only). This includes information regarding any special care to be exercised by a practitioner or patient for the safe and effective use of the device. This section should describe situations in which the device should not be used because the risk of use exceeds the benefit.

    • 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 proposed labeling and advertisements would have to be sufficient to describe the device and its intended use, and provide adequate directions for its use. Photographs or engineering drawings would be required, where applicable.

    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 (e.g., testimonials from patients who were treated with or used the subject device). Patient preference information that may be used by FDA staff in decision making related to De Novo requests is discussed in the guidance FDA issued on August 24, 2016, entitled, “Patient Preference Information—Voluntary Submission, Review in Premarket Approval Applications, Humanitarian Device Exemption Applications, and De Novo Requests, and Inclusion in Decision Summaries and Device Labeling, Guidance for Industry, Food and Drug Administration Staff, and Other Stakeholders” (Ref. 9).

    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)).

    G. Accepting a De Novo Request (Proposed § 860.245)

    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 (e.g., for each FDA additional information request, the requester has not provided a supplement or amendment to their De Novo request containing all information requested by FDA) to deficiencies identified by FDA in previous submissions for the same device, including those submissions described in the regulatory history, or the requester has failed to provide a rationale for not responding to those deficiencies as set out in proposed § 860.234(a)(3).

    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.

    H. Procedures for Review of a De Novo Request (Proposed § 860.256)

    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 review are referred to as amendments or supplements. If the requested information is not received within the timeframe specified in FDA's request for information, or the information is incomplete, the De Novo request would be placed on hold until the information is received. If additional information is submitted at the De Novo requester's own initiative, the reason for the additional information and the reference number for the original De Novo request should be included. Additional information may be used by FDA, or an advisory committee if appropriate, during review of the De Novo request.

    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.

    I. Withdrawal of a De Novo Request (Proposed § 860.267)

    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.

    J. Granting or Declining a De Novo Request (Proposed § 860.289)

    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 Federal Register announcing the classification order (§ 860.289(a)(2) and section 513(f)(2)(C) of the FD&C Act). This announcement would codify the classification of the device and establish the device type.

    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 (i.e., abbreviated new drug application, new drug application, or biologics license application). We welcome comment on this issue.

    • 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 requirements is provided, the practices used in the study do not support the validity of the study (part 58).

    • 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.2

    3 This interpretation is also consistent with FDA's historical use of the De Novo sections and the legislative history of the FD&C Act provisions on postabendments device relclassification.

    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, e.g., published literature.

    VI. Proposed Effective Date

    FDA proposes that this rule would go into effect 90 days after publication of a final rule.

    VII. Economic Analysis of Impacts

    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.

    Table 2—Summary of Benefits, Costs and Distributional Effects of the Proposed Rule Category Primary
  • estimate
  • Low
  • estimate
  • High
  • estimate
  • Units Year dollars Discount rate
  • (percent)
  • Period
  • covered
  • (years)
  • Notes
    Benefits: Annualized 2016 7 10 Monetized $millions/year 2016 3 10 Annualized 2016 7 10 Quantified 2016 3 10 Qualitative Costs: Annualized $0.04 $0.0 $0.08 2016 7 10 Monetized $millions/year $0.02 $0.0 $0.03 2016 3 10 Annualized 2016 7 10 Quantified 2016 3 10 Qualitative Transfers: Federal 2016 7 10 Annualized 2016 3 10 Monetized $millions/year From: To: Other 2016 7 10 Annualized 2016 3 10 Monetized $millions/year From: To: Effects: State, Local or Tribal Government: None. Small Business: None. Wages: None. Growth: None.

    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.

    Table 3—Executive Order 13771 Summary Table [In $ million 2016 dollars over an infinite time horizon] Lower bound
  • (7%)
  • Primary
  • (7%)
  • Upper bound
  • (7%)
  • Lower bound
  • (3%)
  • Primary
  • (3%)
  • Upper bound
  • (3%)
  • Present Value of Costs $0.0 $0.6 $1.1 $0.0 $0.6 $1.1 Present Value of Cost-Savings 0.0 0.0 0.0 0.0 0.0 0.0 Present Value of Net Costs 1 0.0 0.6 1.1 0.0 0.6 1.1 Annualized Costs 0.0 0.0 0.0 0.0 0.0 0.0 Annualized Cost-Savings 0.0 0.0 0.0 0.0 0.0 0.0 Annualized Net Costs 1 0.0 0.0 0.0 0.0 0.0 0.0 1 We calculate net costs as costs minus cost savings.

    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 https://www.fda.gov/AboutFDA/ReportsManualsForms/Reports/EconomicAnalyses/default.htm.

    VIII. Analysis of Environmental Impact

    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.

    IX. Consultation and Coordination With Indian Tribal Governments

    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.

    X. Paperwork Reduction Act of 1995

    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 Description section of this document with an estimate of the annual reporting burden. Included in the estimate is the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing each collection of information.

    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.

    Title: Medical Device De Novo Classification Process (OMB Control Number 0910-0844)—Revision.

    Description: This proposed rule implements the medical device De Novo classification process under section 513(f)(2) of the FD&C Act, 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)).

    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.

    Description of Respondents: Respondents to the information collection are medical device manufacturers seeking to market medical device products that have been classified into class III under section 513(f)(2) of the FD&C Act.

    Table 1—Estimated Annual Reporting Burden Activity; 21 CFR section Number of
  • respondents
  • Number of
  • responses per
  • respondent
  • Total annual
  • responses
  • Average
  • burden per
  • response
  • Total hours Total
  • operating and
  • maintenance
  • costs
  • De Novo request—proposed 860.201, 860.223, 860.234, 860.245, 860.256(b) 60 1 60 182 10,920 $7,278 Written notice of withdrawal—proposed 860.267(a)(4) 5 1 5 10 50 5 Total 10,970 7,283

    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 ADDRESSES). All comments should be identified with the title of the information collection.

    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 Federal Register.

    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 guidance document entitled “De Novo Classification Process (Evaluation of Automatic Class III Designation)” have been approved under OMB control number 0910-0844; the collections of information in the guidance document entitled “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; the collections of information in the guidance documents entitled “Guidance for Industry and Food and Drug Administration Staff—User Fees for 513(g) Requests for Information” and “FDA and Industry Procedures for Section 513(g) Requests for Information under the Federal Food, Drug, and Cosmetic Act—Guidance for Industry and Food and Drug Administration Staff” have been approved under OMB control number 0910-0705; and the collections of information in the guidance document entitled “Emergency Use Authorization of Medical Products and Related Authorities” have been approved under OMB control number 0910-0595. The collections of information in Title 21 of the Code of Federal Regulations (CFR) are approved under the following OMB control numbers: Part 3 under 0910-0523; parts 50 and 56 under 0910-0755; part 54 under 0910-0396; part 58 under 0910-0119; parts 801 and 809 under 0910-0485; part 807, subpart E, under 0910-0120; part 812 under 0910-0078; part 814, subparts A through E under 0910-0231; part 814, subpart H under 0910-0332; part 820 under 0910-0073; part 860, subpart C under 0910-0138.

    XI. Federalism

    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.

    XII. References

    The following references are on display in the Dockets Management Staff (see ADDRESSES) and are available for viewing by interested persons between 9 a.m. and 4 p.m., Monday through Friday; they are also available electronically at https://www.regulations.gov.

    FDA has verified the website addresses, as of the date this document publishes in the Federal Register, but websites are subject to change over time.

    1. FDA's guidance “De Novo Classification Process (Evaluation of Automatic Class III Designation)” available at https://www.fda.gov/ucm/groups/fdagov-public/@fdagov-meddev-gen/documents/document/ucm080197.pdf. 2. FDA's guidance “Procedures for Class II Device Exemptions from Premarket Notification, Guidance for Industry and CDRH Staff'” available at https://www.fda.gov/downloads/MedicalDevices/DeviceRegulationandGuidance/GuidanceDocuments/UCM080199.pdf. 3. FDA's guidance “eCopy Program for Medical Device Submissions” available at https://www.fda.gov/ucm/groups/fdagov-public/@fdagov-meddev-gen/documents/document/ucm313794.pdf. 4. FDA's guidance “Collection of Race and Ethnicity Data in Clinical Trials,” available at https://www.fda.gov/downloads/regulatoryinformation/guidances/ucm126396.pdf. 5. FDA's guidance “Evaluation and Reporting of Age-, Race-, and Ethnicity-Specific Data in Medical Device Clinical Studies,” available at https://www.fda.gov/downloads/MedicalDevices/DeviceRegulationandGuidance/GuidanceDocuments/UCM507278.pdf. 6. FDA's guidance “Factors to Consider When Making Benefit-Risk Determinations in Medical Device Premarket Approval and De Novo Classifications, Guidance for Industry and CDRH Staff,” available at (https://www.fda.gov/ucm/groups/fdagov-public/@fdagov-meddev-gen/documents/document/ucm517504.pdf. 7. FDA's guidance “Use of International Standard ISO-10993, “Biological evaluation of medical devices—Part 1: Evaluation and testing within a risk management process,”) available at https://www.fda.gov/downloads/medicaldevices/deviceregulationandguidance/guidancedocuments/ucm348890.pdf. 8. FDA's guidance “Guidance for the Content of Premarket Submissions for Software Contained in Medical Devices,” available at https://www.fda.gov/MedicalDevices/DeviceRegulationandGuidance/GuidanceDocuments/ucm089543.htm. 9. FDA's guidance “Patient Preference Information—Voluntary Submission, Review in Premarket Approval Applications, Humanitarian Device Exemption Applications, and De Novo Requests, and Inclusion in Decision Summaries and Device Labeling, Guidance for Industry, Food and Drug Administration Staff, and Other Stakeholders” available at https://www.fda.gov/ucm/groups/fdagov-public/@fdagov-meddev-gen/documents/document/ucm446680.pdf. 10. FDA's full preliminary analysis of economic impacts is available in the Docket No. FDA-2018-N-0236 for this proposed rule and at https://www.fda.gov/AboutFDA/ReportsManualsForms/Reports/EconomicAnalyses/default.htm. List of Subjects in 21 CFR Part 860

    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:

    PART 860—MEDICAL DEVICE CLASSIFICATION PROCEDURES 1. The authority citation for part 860 is revised to read as follows: Authority:

    21 U.S.C. 321(h), 360c, 360d, 360e, 360i, 360j, 371, 374.

    2. Amend § 860.1 by revising paragraph (b) to read as follows:
    § 860.1 Scope.

    (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.

    3. Revise § 860.3 to read as follows:
    § 860.3 Definitions.

    For the purposes of this part:

    Class means one of the three categories of regulatory control for medical devices, defined as follows:

    Class I means the class of devices that are subject only to the general controls authorized by or under sections 501 (adulteration), 502 (misbranding), 510 (registration), 516 (banned devices), 518 (notification and other remedies), 519 (records and reports), and 520 (general provisions) of the Federal Food, Drug, and Cosmetic Act. A device is in class I if:

    (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.

    Class II means the class of devices that is or eventually will be subject to special controls. A device is in class II if general controls alone are insufficient to provide reasonable assurance of its safety and effectiveness and there is sufficient information to establish special controls, including promulgation of performance standards, postmarket surveillance, patient registries, development and dissemination of guidance documents (including guidance on the submission of clinical data in premarket notification submissions in accordance with section 510(k) of the Federal Food, Drug, and Cosmetic Act), recommendations, and other appropriate actions, as the Commissioner deems necessary to provide such assurance. For a device that is purported or represented to be for use in supporting or sustaining human life, the Commissioner shall examine and identify the special controls, if any, which are necessary to provide adequate assurance of safety and effectiveness, and describe how such controls provide such assurance.

    Class III means the class of devices for which premarket approval is or will be required in accordance with section 515 of the Federal Food, Drug, and Cosmetic Act. A device is in class III if insufficient information exists to determine that general controls are sufficient to provide reasonable assurance of its safety and effectiveness, or that application of special controls described in the definition of “Class II” in this section in addition to general controls, would provide such assurance, and if, in addition, the device is life-supporting or life-sustaining, or for a use which is of substantial importance in preventing impairment of human health, or if the device presents a potential unreasonable risk of illness or injury.

    Classification panel means one of the several advisory committees established by the Commissioner under section 513 of the Federal Food, Drug, and Cosmetic Act and part 14 of this chapter for the purpose of making recommendations to the Commissioner on the classification and reclassification of devices and for other purposes prescribed by the Federal Food, Drug, and Cosmetic Act or by the Commissioner.

    Classification questionnaire means a specific series of questions prepared by the Commissioner for use as guidelines by classification panels preparing recommendations to the Commissioner regarding classification and by petitioners submitting petitions for reclassification. The questions relate to the safety and effectiveness characteristics of a device and the answers are designed to help the Commissioner determine the proper classification of the device.

    Classification regulation means a section under parts 862 through 892 of this chapter that contains the identification (general description and intended use) and classification (class I, II or III) of a single device type or more than one related device type(s).

    Commissioner means the Commissioner of Food and Drugs, Food and Drug Administration, United States Department of Health and Human Services, or the Commissioner's designee.

    De Novo request means any submission under section 513(f)(2) of the Federal Food, Drug, and Cosmetic Act for a medical device, requesting classification into class I or class II, including all information submitted with or incorporated by reference therein.

    FDA means the Food and Drug Administration.

    General controls mean the controls authorized by or under sections 501 (adulteration), 502 (misbranding), 510 (registration, listing, and premarket notification), 516 (banned devices), 518 (notification and other remedies), 519 (records, reports and unique device identification) and 520 (general provisions) of the Federal Food, Drug, and Cosmetic Act.

    Generic type of device means 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.

    Implant means a device that is placed into a surgically or naturally formed cavity of the human body. A device is regarded as an implant for the purpose of this part only if it is intended to remain implanted continuously for a period of 30 days or more, unless the Commissioner determines otherwise in order to protect human health.

    Life-supporting or life-sustaining device means a device that is essential to, or that yields information that is essential to, the restoration or continuation of a bodily function important to the continuation of human life.

    Petition means a submission seeking reclassification of a device in accordance with § 860.123.

    Special controls mean the controls necessary to provide reasonable assurance of safety and effectiveness for a generic type of device that is class II. Special controls include performance standards, performance testing, postmarket surveillance, patient registries, development and dissemination of guidelines (including guidelines for the submission of clinical data in premarket notification submissions in accordance with section 510(k) of the Federal Food, Drug, and Cosmetic Act), recommendations, and other appropriate actions, as the Commissioner deems necessary to provide such assurance.

    Supplemental data sheet means information compiled by a classification panel or submitted in a petition for reclassification, including:

    (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, e.g., whether the device requires special labeling, should be banned, or should be used only upon authorization of a practitioner licensed by law to administer or use such device; and

    (8) Any known existing standards applicable to the device, device components, or device materials.

    4. Amend § 860.5 by adding paragraph (g) to read as follows:
    § 860.5 Confidentiality and use of data and information submitted in connection with classification and reclassification.

    (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.

    5. Add subpart D, consisting of §§ 860.201 through 860.289, to read as follows: Subpart D—De Novo Classification Sec. 860.201 Purpose and applicability. 860.223 De Novo request format. 860.234 De Novo request content. 860.245 Accepting a De Novo request. 860.256 Procedures for review of a De Novo request. 860.267 Withdrawal of a De Novo request. 860.289 Granting or declining a De Novo request. Subpart D—De Novo Classification
    § 860.201 Purpose and applicability.

    (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.

    § 860.223 De Novo request format.

    (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 https://www.fda.gov/cdrhsubmissionaddress.

    (ii) For devices regulated by the Center for Biologics Evaluation and Research, be sent to the current mailing address displayed on the website https://www.fda.gov/BiologicsBloodVaccines/default.htm.

    (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.

    § 860.234 De Novo request content.

    (a) Unless the requester justifies an omission in accordance with paragraph (c) of this section, a De Novo request must include:

    (1) Table of contents. A table of contents that specifies the volume and page number for each item.

    (2) Administrative information. The name, address, phone, fax, and email address of the requester and U.S. representative, if applicable. The establishment registration number, if applicable, of the owner or operator submitting the De Novo request.

    (3) Regulatory history. Identify any prior submissions to FDA for the device, including, but not limited to, any premarket notifications (510(k)s) submitted under part 807 of this chapter, applications for premarket approval (PMAs) submitted under part 814 of this chapter, applications for humanitarian use exemption (HDE) submitted under part 814 of this chapter, applications for investigational device exemption (IDEs) submitted under part 812 of this chapter, requests for designation (RFD) under § 3.7 of this chapter, applications for emergency use authorization (EUA) under section 564 of the Federal Food, Drug, and Cosmetic Act, pre-submissions, or previously submitted De Novo requests, or state that there have been no prior submissions.

    (4) Device name. The generic name of the device as well as any proprietary name or trade name.

    (5) Indications for use. A general description of the disease or condition the device is intended to diagnose, treat, prevent, cure or mitigate, or affect the structure or function of the body, including a description of the patient population for which the device is intended. The indications for use include all the labeled patient uses of the device, including if it is prescription or over-the-counter.

    (6) Device description. A complete description of:

    (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) Alternative practices and procedures. A description of known or reasonably known existing alternative practices or procedures used in 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.

    (8) Classification summary. (i) For devices not the subject of a previous submission under section 510(k) of the Federal Food, Drug, and Cosmetic Act, a complete description of:

    (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 (HUDs), HDEs, premarket notifications (510(k)s), EUAs, and/or product codes regarding devices that are potentially similar to the subject device.

    (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) Classification recommendation. The recommended class (I or II) must be identified and must be supported by a description of why general controls, or general and special controls, are adequate to provide reasonable assurance of safety and effectiveness.

    (10) Proposed special controls. If the classification recommendation from paragraph (a)(9) of this section is class II, then the summary must include an initial draft proposal for applicable special controls and a description of how those special controls provide reasonable assurance of safety and effectiveness.

    (11) Summary of risks and mitigations. A summary of known or reasonably known probable risks to health associated with use of the device and the proposed mitigations, including general controls and, if the classification recommendation from paragraph (a)(9) of this section is class II, special controls for each risk. For each mitigation measure that involves specific performance testing or labeling, the De Novo request must provide a reference to the associated section or pages for the supporting information in the De Novo request.

    (12) Standards. Reference to any published voluntary consensus standards that are relevant to any aspect of the safety or effectiveness of the device and that are known or should reasonably be known to the requester. Such standards include voluntary consensus standards whether recognized or not yet recognized under section 514(c) of the Federal Food, Drug, and Cosmetic Act. Provide adequate information to demonstrate how the device meets, or justify any deviation from, the referenced standard.

    (13) Summary of studies. An abstract of any information or report described in the De Novo request under paragraph (a)(16)(ii) of this section and a summary of the results of technical data submitted under paragraph (a)(15) of this section. Each such study summary must include a description of the objective of the study, a description of the experimental design of the study, a brief description of how the data were collected and analyzed, and a brief description of the results, whether positive, negative, or inconclusive. This section must also include the following:

    (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) Benefit and risk considerations. A discussion demonstrating that:

    (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) Technical sections. The following technical sections, which must contain data and information in sufficient detail to permit FDA to determine whether to grant or decline the De Novo request:

    (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 or inability to comply with these requirements does not justify failure to provide information on a relevant clinical investigation.

    (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) Other information. (i) A bibliography of all published reports not submitted under paragraph (a)(15) of this section, whether adverse or supportive, known to or that should reasonably be known to the requester and that concern the safety or effectiveness of the device.

    (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) Samples. If requested by FDA, one or more samples of the device and its components. If it is impractical to submit a requested sample of the device, the requester must name the location at which FDA may examine and test one or more of the devices.

    (18) Labeling and advertisements. Labels, labeling, and advertisements sufficient to describe the device, its intended use, and the directions for its use. Where applicable, photographs or engineering drawings must be supplied.

    (19) Other information. Such other information as is necessary to determine whether general controls or general and special controls provide reasonable assurance of safety and effectiveness of the device.

    (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.

    § 860.245 Accepting a De Novo request.

    (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.

    § 860.256 Procedures for review of a De Novo request.

    (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) or an order declining the De Novo request under 860.289(b).

    (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.

    § 860.267 Withdrawal of a De Novo request.

    (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.

    § 860.289 Granting or declining a De Novo request.

    (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 Federal Register a notice of the classification order, including any special controls.

    (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.

    6. In part 860, remove all references to “the act” and add in their place “the Federal Food, Drug, and Cosmetic Act”. Dated: November 27, 2018. Scott Gottlieb, Commissioner of Food and Drugs.
    [FR Doc. 2018-26378 Filed 12-4-18; 8:45 am] BILLING CODE 4164-01-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 300 [EPA-HQ-SFUND-1987-0002; FRL-9987-15-Region 5] National Oil and Hazardous Substances Pollution Contingency Plan; National Priorities List: Deletion of the Tomah Armory Landfill Superfund Site AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Proposed rule; notification of intent.

    SUMMARY:

    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 List (NPL) and requests public comments on this proposed action. 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). EPA and the State of Wisconsin, through the Wisconsin Department of Natural Resources (WDNR), have 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.

    DATES:

    Comments must be received by January 7, 2019.

    ADDRESSES:

    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 ADDRESSES section of the direct final rule located in the “Rules and Regulations” section of this Federal Register.

    FOR FURTHER INFORMATION CONTACT:

    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: [email protected]

    SUPPLEMENTARY INFORMATION:

    In the “Rules and Regulations” section of today's Federal Register, we are publishing a direct final Notice of Deletion of the Tomah Armory Superfund Site without prior Notice of Intent to Delete because EPA views this as a noncontroversial revision and anticipates no adverse comment. We have explained our reasons for this deletion in the preamble to the direct final Notice of Deletion, and those reasons are incorporated herein. If we receive no adverse comment(s) on this deletion action, we will not take further action on this Notice of Intent to Delete. If we receive adverse comment(s), we will withdraw the direct final Notice of Deletion, and it will not take effect. We will, as appropriate, address all public comments in a subsequent final Notice of Deletion based on this Notice of Intent to Delete. We will not institute a second comment period on this Notice of Intent to Delete. Any parties interested in commenting must do so at this time.

    For additional information, see the direct final Notice of Deletion which is located in the “Rules and Regulations” section of this Federal Register.

    List of Subjects in 40 CFR Part 300

    Environmental protection, Air pollution control, Chemicals, Hazardous waste, Hazardous substances, Intergovernmental relations, Penalties, Reporting and recordkeeping requirements, Superfund, Water pollution control, Water supply.

    Authority:

    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.

    Dated: October 30, 2018. Cathy Stepp, Regional Administrator, Region 5.
    [FR Doc. 2018-26492 Filed 12-6-18; 8:45 am] BILLING CODE 6560-50-P
    83 235 Friday, December 7, 2018 Notices DEPARTMENT OF AGRICULTURE Performance Review Board Membership AGENCY:

    Office of Human Resource Management, Departmental Administration, USDA.

    ACTION:

    Notice of Performance Review Board appointments.

    SUMMARY:

    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.

    DATES:

    The board membership is applicable beginning on November 20, 2018.

    FOR FURTHER INFORMATION CONTACT:

    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.

    SUPPLEMENTARY INFORMATION:

    In accordance with 5 U.S.C. 4314(c)(4), the USDA PRB members are named below:

    Adcock, Rebeckah; Bucknall, Janet; Christensen, Thomas; Dixon, Antoine; Fontinato, Jessica; Hafemeister, Jason; Hamer Jr., Hubert; Harwood, Joy; Hohenstein, William; Jacobs-Young, Chavonda; Jiron, Daniel; Kiecker, Paul; Kriviski, Diane; Leland, Arlean; Liu, Simon; Lyons, Margaret; Mattoo, Autar; McLean, Christopher; McMichael, Stanley; Morris, Erin; Ponti-Lazaruk, Jacqueline; Ricci, Carrie; Wear, David; Williams, Duane; Zakarka, Christine; and Zehren, Christopher J. Mary Pletcher Rice, Chief Human Capital Officer, Office of Human Resources Management.
    [FR Doc. 2018-26255 Filed 12-6-18; 8:45 am] BILLING CODE 3410-96-P
    DEPARTMENT OF AGRICULTURE Farm Service Agency Information Collection Request; Agricultural Foreign Investment Disclosure Act Report AGENCY:

    Farm Service Agency, USDA.

    ACTION:

    Notice; request for comments.

    SUMMARY:

    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.

    DATES:

    We will consider comments that we receive by February 5, 2019.

    ADDRESSES:

    We invite you to submit comments on the notice. In your comments, include date, volume, and page number of this issue of the Federal Register. You may submit comments by any of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting comments.

    Mail: Philip Sronce, Branch Chief, Agricultural Foreign Investment Disclosure Act (AFIDA), Data Analysis Branch, Economic and Policy Analysis Division, USDA, FSA, STOP 0508, 1400 Independence Avenue SW, Washington, DC 20250-0531.

    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.

    FOR FURTHER INFORMATION CONTACT:

    Philip Sronce, (202) 720-2711.

    SUPPLEMENTARY INFORMATION:

    Title: Agricultural Foreign Investment Disclosure Act Report.

    OMB Control Number: 0560-0097.

    Expiration Date of Approval: April 30, 2019.

    Type of Request: Extension of a currently approved information collection.

    Abstract: AFIDA requires foreign persons who hold, acquire, or dispose of any interest in U.S. agricultural land to report the transactions and holdings to FSA on an AFIDA report (FSA-153). The information collected is made available to States. Also, although not required by law, the information collected from the AFIDA reports is used to prepare an annual report to Congress and the President concerning the effect of foreign investment upon family farms and rural communities so that Congress may review the annual report and decide if further regulatory action is required. There is no change to the numbers in the collection.

    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.

    Estimate of Respondent Burden: Public reporting burden for the information collection is estimated to average 0.476 hours per response.

    Respondents: Individuals or households, businesses or other for profit farms.

    Estimated Annual Number of Respondents: 5,525.

    Estimated Number of Reponses per Respondent: 1.

    Estimated Total Annual Responses: 5,525.

    Estimated Average Time per Response: 0.476 hours.

    Estimated Total Annual Burden on Respondents: 2,631.25 hours.

    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.

    Steve Peterson, Acting Administrator, Farm Service Agency.
    [FR Doc. 2018-26504 Filed 12-6-18; 8:45 am] BILLING CODE 3410-05-P
    DEPARTMENT OF AGRICULTURE Farm Service Agency Information Collection Request; Request for Special Priorities Assistance AGENCY:

    Farm Service Agency, USDA.

    ACTION:

    Notice; request for comments.

    SUMMARY:

    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.

    DATES:

    We will consider comments that we receive by February 5, 2019.

    ADDRESSES:

    We invite you to submit comments on the notice. In your comments, include date, volume, and page number of this issue of the Federal Register. You may submit comments by any of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting comments.

    Mail: David Weschsler, USDA/FPAC/HS, 1400 Independence Ave. SW, Room 0092-S, Mail Stop 0560, Washington, DC 20250-0567.

    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.

    FOR FURTHER INFORMATION CONTACT:

    David Wechsler, (202) 720-2929.

    SUPPLEMENTARY INFORMATION:

    Title: Request for Special Priorities Assistance for APAS.

    OMB Control Number: 0560-0280.

    Expiration Date of Approval: March 31, 2019.

    Type of Request: Extension of a currently approved information collection.

    Abstract: APAS would efficiently place priority ratings on contracts or orders of agriculture commodities up through the wholesale levels, agriculture production equipment, allocate resources, and handle food claims within its authority as specified in the Defense Production Act (DPA) of 1950, as amended, when necessary to promote national defense. It was determined that food is a scarce and critical commodity essential to the national defense (including civil emergency preparedness and response). Unless its production, processing, storage, and wholesale distribution are regulated during times of emergencies, the national defense requirement for food and food production may not be met without creating hardship in the civilian marketplace. Applicants (Government agencies or private individuals with a role in emergency preparedness, response, and recovery functions) will request authorization from USDA to place a rating on a contract for items to support national defense activities. Priority rating request procedures and forms can be found on USDA's website. Applicants must supply, at time of request, their name, location, contact information, items for which the applicant is requesting assistance on, quantity, and delivery date. Applicants can submit the request by mail or fax. There are no changes to the burden hours since the last OMB approval.

    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.

    Estimate of Respondent Burden: Public reporting burden for the information collection is estimated to average 30 minutes (0.50) per response.

    Respondents: Individuals, businesses, and agencies with responsibilities for emergency preparedness and response.

    Estimated Annual Number of Respondents: 100.

    Estimated Number of Reponses per Respondent: 0.95.

    Estimated Total Annual Responses: 95.

    Estimated Average Time per Response: 0.5 hours.

    Estimated Total Annual Burden on Respondents: 50 hours.

    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.

    Steven Peterson, Acting Administrator, Farm Service Agency.
    [FR Doc. 2018-26505 Filed 12-6-18; 8:45 am] BILLING CODE 3410-05-P
    DEPARTMENT OF AGRICULTURE Rural Utilities Service Cardinal-Hickory Creek 345-kV Transmission Line Project AGENCY:

    Rural Utilities Service, USDA.

    ACTION:

    Notice of availability of a draft environmental impact statement; notice of public meetings; and section 106 notification to the public.

    SUMMARY:

    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 to Dairyland Power Cooperative (DPC). Further, in accordance with section 106 of the National Historic Preservation Act (NHPA) and pursuant to the regulations participation in the section 106 process and coordination with the National Environmental Policy Act, RUS is using its procedures for public involvement under NEPA to meet its responsibilities to solicit and consider the views of the public during the section 106 review for the proposed project. RUS would be providing financial assistance to DPC for its share in the construction of a proposed 345-kilovolt (kV) transmission line and associated infrastructure connecting the Hickory Creek Substation in Dubuque County, Iowa, with the Cardinal Substation in the Town of Middleton, Wisconsin (near Madison, Wisconsin). The Project also includes a new intermediate 345/138-kV substation near the Village of Montfort in either Grant County or Iowa County, Wisconsin. The total length of the 345- kV transmission lines associated with the proposed project will be approximately 125 miles. DPC and the other project participants have identified proposed and alternate segments and locations for transmission lines and associated facilities and for the intermediate substation. Dairyland Power Cooperative is requesting RUS to provide financing for its portion of the proposed project. DPC is participating in the proposed project with two other utilities, American Transmission Company LLC, and ITC Midwest LLC (Utilities).

    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.

    DATES:

    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 Federal Register. RUS will conduct six formal public meetings in the project area. A court reporter will be available to record agency and public comments.

    Date Location Time Venue January 22, 2019 Peosta, IA 1:00-3:00 p.m Peosta Community Center, 7896 Burds Road, Peosta, IA 52068. January 22, 2019 Guttenberg, IA 6:00-8:00 p.m Guttenberg Municipal Bldg., 502 First St., Guttenberg, IA 52052. January 23, 2019 Cassville, WI 5:00-7:00 p.m Cassville Middle School Cafeteria, 715 E Amelia St., Cassville, WI 53806. January 24, 2019 Dodgeville, WI 5:00-7:00 p.m Dodgeville Bowl Banquet Hall, 318 King St., Dodgerville, WI 53533. January 28, 2019 Barneveld, WI 5:00-8:00 p.m Deer Valley Lodge, 401 West Industrial Drive, Barneveld, WI 53507. January 29, 2019 Middleton, WI 5:00-8:00 p.m Madison Marriott West, 1313 John Q. Hammonds Drive, Middleton, WI 53562. ADDRESSES:

    A copy of the Draft EIS may be viewed online at the following website: https://www.rd.usda.gov/publications/environmental-studies/impact-statements/cardinal-%E2%80%93-hickory-creek-transmission-line and Dairyland Power Cooperative, 3521 East Avenue South, La Crosse, WI 54602 and at 13 local libraries in the project area and the USFWS McGregor District Office in Prairie du Chien, WI.

    FOR FURTHER INFORMATION CONTACT:

    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 [email protected] or [email protected]

    SUPPLEMENTARY INFORMATION:

    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 Federal Register at 81 FR 71697, on October 18, 2016 to initiate a 30-day public scoping period. Four public scoping meetings for the EIS were held in the project area in October and November 2016, and the public comment was extended to 81 days and comments were accepted from October 18, 2016 through January 6, 2017. On November 22, 2016 RUS published a second NOI announcing a second round of public scoping meetings in December 2017. RUS issued a Scoping Report in May 2018.

    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 Substation: A new 50- to 70-mile (depending on the final route) 345-kV transmission line;

    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 Federal Register and in local newspapers.

    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).

    Dated: November 8, 2018. Christopher A. McLean, Assistant Administrator, Electric Programs, Rural Utilities Service.
    [FR Doc. 2018-26558 Filed 12-6-18; 8:45 am] BILLING CODE 3410-15-P
    DEPARTMENT OF COMMERCE Census Bureau Submission for OMB Review; Comment Request

    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.

    Agency: U.S. Census Bureau.

    Title: Annual Survey of Manufactures.

    OMB Control Number: 0607-0449.

    Form Number(s): MA-10000.

    Type of Request: Reinstatement, with change of an expired collection.

    Number of Respondents: 55,000.

    Average Hours per Response: 3.5 hours.

    Burden Hours: 192,500.

    Needs and Uses: The Census Bureau is requesting a reinstatement with changes of the expired collection for the Annual Survey of Manufactures (ASM). The Census Bureau has conducted the ASM since 1949 to provide key measures of manufacturing activity during intercensal periods. In census years ending in “2” and “7,” we mail and collect the ASM as part of the Economic Census covering the Manufacturing Sector.

    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:

    a. Elimination of the MA-10000(S)

    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 single-establishment firms in the sample were asked to report on the MA-10000(S). In 2014, approximately 3,000 out of 51,000 sampled establishments received the MA-10000(S). This change will impact less than 6% of respondents. The MA-10000(S) was an abbreviated version of the MA-10000(L), and collected significantly less detailed data. Data not collected on the MA-10000(S) were imputed. Imputation rates and estimates will improve by eliminating the MA-10000(S). The MA-10000(L) will be renamed MA-10000 and all ASM establishments will be required to complete the MA-10000.

    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.

    b. Elimination of Item 5B, Exports and Item 11, Inventories Outside the U.S.

    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 Federal Register. Eliminating collection of these items has no impact on data users since these data items were not published as part of the ASM. Historically, exports data was used to publish the Exports from Manufacturing report, funded by ITA. This report was published by the U.S. Census Bureau and sponsored by ITA. https://www.census.gov/manufacturing/exports/. The Exports from Manufacturing report was discontinued by ITA in 2012, due to lack of funding.

    c. Addition of Item 17, Principal Business Activity

    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.

    d. Change in Item 22, Product Classification

    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). https://www.census.gov/eos/www/napcs/.

    e. Elimination of Item 22, Miscellaneous Receipts

    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.

    f. Addition of Item 28, Special Inquiry on Robotic Use

    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.

    g. Item 29, Burden Estimate

    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.

    Affected Public: Businesses or other for-profit.

    Frequency: Annually.

    Respondent's Obligation: Mandatory.

    Legal Authority: Title 13 U.S.C., Sections 131 and 182.

    This information collection request may be viewed at www.reginfo.gov. Follow the instructions to view Department of Commerce collections currently under review by OMB.

    Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to [email protected] or fax to (202)395-5806.

    Sheleen Dumas, Departmental Lead PRA Officer, Office of the Chief Information Officer, Commerce Department.
    [FR Doc. 2018-26537 Filed 12-6-18; 8:45 am] BILLING CODE 3510-07-P
    DEPARTMENT OF COMMERCE Census Bureau Submission for OMB Review; Comment Request

    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.

    Agency: U.S. Census Bureau.

    Title: Automated Export System.

    OMB Control Number: 0607-0152.

    Form Number(s): Automated Commercial Environment (ACE) AESDirect Record Formats and related documents, including the AES Letter of Intent, ACE Exporter Account Application and Quick Reference Guide, AES Certification Statements, and the ACE AESDirect User Guide.

    Type of Request: Revision of a currently approved collection.

    Number of Respondents: 287,314 filers who submit 17,315,950 shipments annually through the AES.

    Average Hours per Response: 3 minutes per AES transaction.

    Burden Hours: 865,798.

    Needs and Uses: The Census Bureau requires mandatory filing of all export information via the AES. This requirement is mandated through Public Law 107-228 of the Foreign Trade Relations Act of 2003. This law authorizes the Secretary of Commerce with the concurrences of the Secretary of State and the Secretary of Homeland Security to require all persons who file export information according to Title 13, United States Code (U.S.C.), Chapter 9, to file such information through the AES.

    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 authority to enforce the FTR to the BIS's Office of Export Enforcement and the Department of Homeland Security's CBP and Immigrations and Customs Enforcement. The mandatory use of the AES also facilitates the enforcement of the Export Administration Regulations for the detection and prevention of exports of high technology commodities to unauthorized destinations by the BIS and the CBP; the International Traffic in Arms Regulations by the U.S. Department of State for the exports of munitions; and the validation of the Kimberly Process Certificate for the exports of rough diamonds.

    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.

    Affected Public: Individuals, Businesses.

    Frequency: On occasion.

    Respondent's Obligation: Mandatory.

    Legal Authority: Title 13 United States Code, Chapter 9, Section 301.

    This information collection request may be viewed at www.reginfo.gov. Follow the instructions to view Department of Commerce collections currently under review by OMB.

    Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to [email protected] or fax to (202) 395-5806.

    Sheleen Dumas, Departmental Lead PRA Officer, Office of the Chief Information Officer, Commerce Department.
    [FR Doc. 2018-26538 Filed 12-6-18; 8:45 am] BILLING CODE 3510-07-P
    DEPARTMENT OF COMMERCE Foreign-Trade Zones Board [B-49-2018] Foreign-Trade Zone (FTZ) 18—San Jose, California, Authorization of Production Activity, Tesla, Inc. (Electric Passenger Vehicles and Components), Fremont and Palo Alto, California

    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 Federal Register inviting public comment (83 FR 40226, August 14, 2018). On November 29, 2018, the applicant was notified of the FTZ Board's decision that no further review of the activity is warranted at this time. The production activity described in the notification was authorized, subject to the FTZ Act and the FTZ Board's regulations, including Section 400.14.

    Dated: November 29, 2018. Andrew McGilvray, Executive Secretary.
    [FR Doc. 2018-26547 Filed 12-6-18; 8:45 am] BILLING CODE 3510-DS-P
    DEPARTMENT OF COMMERCE Foreign-Trade Zones Board [B-76-2018] 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

    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 to be admitted to FTZs in privileged foreign status (19 CFR 146.41).

    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 www.trade.gov/ftz.

    For further information, contact Elizabeth Whiteman at [email protected] or (202) 482-0473.

    Dated: November 29, 2018. Andrew McGilvray, Executive Secretary.
    [FR Doc. 2018-26549 Filed 12-6-18; 8:45 am] BILLING CODE 3510-DS-P
    DEPARTMENT OF COMMERCE Foreign-Trade Zones Board [S-165-2018] Approval of Subzone Status, Mayfield Consumer Products, Mayfield and Hickory, Kentucky

    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 Federal Register inviting public comment (83 FR 52382-52383, October 17, 2018). The FTZ staff examiner reviewed the application and determined that it meets the criteria for approval. Pursuant to the authority delegated to the FTZ Board Executive Secretary (15 CFR Sec. 400.36(f)), the application to establish Subzone 294A was approved on November 30, 2018, subject to the FTZ Act and the Board's regulations, including Section 400.13, and further subject to FTZ 294's 2,000-acre activation limit.

    Dated: November 30, 2018. Andrew McGilvray, Executive Secretary.
    [FR Doc. 2018-26548 Filed 12-6-18; 8:45 am] BILLING CODE 3510-DS-P
    DEPARTMENT OF COMMERCE Foreign-Trade Zones Board [S-160-2018] Approval of Subzone Status, Winpak Heat Seal Corporation, Pekin, Illinois

    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 Federal Register inviting public comment (83 FR 51926, October 15, 2018). The FTZ staff examiner reviewed the application and determined that it meets the criteria for approval. Pursuant to the authority delegated to the FTZ Board Executive Secretary (15 CFR Sec. 400.36(f)), the application to establish Subzone 114G was approved on November 30, 2018, subject to the FTZ Act and the Board's regulations, including Section 400.13, and further subject to FTZ 114's 990-acre activation limit.

    Dated: November 30, 2018. Andrew McGilvray, Executive Secretary.
    [FR Doc. 2018-26550 Filed 12-6-18; 8:45 am] BILLING CODE 3510-DS-P
    DEPARTMENT OF COMMERCE International Trade Administration [A-489-501] Welded Carbon Steel Standard Pipe and Tube Products From Turkey: Final Results of Antidumping Duty Administrative Review; 2016-2017 AGENCY:

    Enforcement and Compliance, International Trade Administration, Department of Commerce.

    SUMMARY:

    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.

    DATES:

    Applicable December 7, 2018.

    FOR FURTHER INFORMATION CONTACT:

    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.

    SUPPLEMENTARY INFORMATION:

    Background

    On June 11, 2018, Commerce published the preliminary results of the administrative review of the antidumping duty order on pipe and tube from Turkey.1 The review covers the following producers/exporters of the subject merchandise: Borusan Istikbal Ticaret T.A.S. (Borusan Istikbal) and Borusan Mannesmann Boru Sanayi ve Ticaret A.S. (Borusan Mannesmann) (collectively, Borusan); 2 Toscelik Profil ve Sac Endustrisi A.S., Tosyali Dis Ticaret A.S., and Toscelik Metal Ticaret A.S. (Toscelik Metal) (collectively, Toscelik); 3 Borusan Birlesik Boru Fabrikalari San ve Tic (Borusan Birlesik); Borusan Gemlik Boru Tesisleri A.S. (Borusan Gemlik); Borusan Ihracat Ithalat ve Dagitim A.S. (Borusan Ihracat); Borusan Ithicat ve Dagitim A.S. (Borusan Ithicat); Tubeco Pipe and Steel Corporation (Tubeco); Erbosan Erciyas Boru Sanayi ve Ticaret A.S. (Erbosan); and Yücel Boru ve Profil Endustrisi A.S. (Yücel Boru), Yücel boru Ihracat Ithalat ve Pazarlama A.S. (Yücel boru), and Cayirova Boru Sanayi ve Ticaret A.S. (Cayirova) (collectively, “Yücel Group”).

    1See Welded Carbon Steel Standard Pipe and Tube Products from Turkey: Preliminary Results of Antidumping Duty Administrative Review and Preliminary Determination of No Shipments; 2016-2017, 83 FR 26951 (June 11, 2018) (Preliminary Results) and accompanying Preliminary Decision Memorandum.

    2 As explained in the Preliminary Results, Commerce treated Borusan Mannesmann Boru Sanayi ve Ticaret A.S. and Borusan Istikbal Ticaret T.A.S. as a single entity in this administrative review. See Preliminary Decision Memorandum at 1, n.1.

    3 In prior segments of this proceeding, we treated Toscelik Profil ve Sac Endustrisi A.S., Tosyali Dis Ticaret A.S., and Toscelik Metal as a single entity. See, e.g., Welded Carbon Steel Standard Pipe and Tube Products from Turkey: Final Results of Antidumping Duty Administrative Review; 2012-2013, 79 FR 71087, 71088 n.8 (December 1, 2014). However, in a prior review, we found that Toscelik Metal has ceased to exist. Id. There is no record evidence that warrants altering this treatment. Therefore, for these final results, we are treating Toscelik and Tosyali as a single entity, and continue to find that Toscelik Metal no longer exists.

    On June 21, 2018, we placed on the record certain entry documents obtained from U.S. Customs and Border Protection (CBP) 4 and invited interested parties to comment on them. We received comments from the Yücel Group.5 On June 26, 2018, we issued a supplemental questionnaire to Borusan, to which it responded on July 27, 2018.6 We also invited parties to comment on the Preliminary Results. On August 22, 2018, we received case briefs from petitioner Wheatland Tube Company (Wheatland Tube), Borusan, and Toscelik.7 On August 29, 2018, we received a rebuttal brief from the Yücel Group.8

    4See Memorandum, “Customs Entry Documents,” dated June 21, 2018.

    5See Yücel Group's Letter, “Circular Welded Carbon Steel Pipe and Tube from Turkey; Yücel comments on entry documents,” dated June 29, 2018.

    6See Commerce Letter re: “Administrative Review of the Antidumping Duty Order on Welded Carbon Steel Standard Pipe and Tube Products from Turkey: Supplemental Questionnaire,” dated June 26, 2018; Borusan's July 27, 2018 Supplemental Questionnaire Response (Borusan July 27, 2018 SQR).

    7See Petitioner's Case Brief, “Welded Carbon Steel Pipe from Turkey: Case Brief,” dated August 23, 2018 (Petitioner's Case Brief); Borusan's Case Brief, “Circular Welded Carbon Steel Pipes and Tubes from Turkey, Case No. A-489-501: Case Brief,” August 22, 2018 (Borusan Case Brief); Toscelik's Case Brief, “Circular Welded Carbon Steel Standard Pipe and Tube from Turkey; Toscelik case brief,” dated August 22, 2018 (Toscelik Case Brief).

    8See Yücel Group's Rebuttal Brief, “Circular Welded Carbon Steel Pipe and Tube from Turkey; Yücel rebuttal brief,” dated August 29, 2018 (Yücel Group's Rebuttal Brief).

    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.

    Scope of the Order

    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.9

    9 A full written description of the scope of the order is contained in the memorandum to Gary Taverman, “Issues and Decision Memorandum for the Final Results of the Antidumping Duty Administrative Review: Welded Carbon Steel Standard Pipe and Tube Products from Turkey; 2016-2017,” (IDM), dated concurrently with this notice and incorporated herein by reference.

    Final Determination of No Shipments

    In the Preliminary Results, we preliminarily determined that Cayirova, Yücel Boru, Yücel boru, Erbosan, Borusan Birlesik, Borusan Gemlik, Borusan Ihracat, Borusan Ithicat, and Tubeco had no shipments during the POR.10 As we received no comments from interested parties and because the record contains no evidence to the contrary, we continue to find that these companies made no shipments during the POR. Accordingly, consistent with Commerce's practice, we intend to instruct CBP to liquidate any existing entries of merchandise produced by Erbosan, Borusan Birlesik, Borusan Gemlik, Borusan Ihracat, Borusan Ithicat, and Tubeco, but exported by other parties without their own rate, at the all-others rate.11 Further, while Borusan Istikbal submitted a no-shipment certification, we continue to treat it as a single entity with Borusan Mannesmann. As such, we continue to find that the Borusan entity had shipments during this POR and are not making a final determination of no shipments with respect to Borusan Istikbal.12

    10See Preliminary Results, 83 FR at 26952, and accompanying Preliminary Decision Memorandum, at 4-5.

    11See, e.g., Magnesium Metal from the Russian Federation: Preliminary Results of Antidumping Duty Administrative Review, 75 FR 26922, 26923 (May 13, 2010), unchanged in Magnesium Metal from the Russian Federation: Final Results of Antidumping Duty Administrative Review, 75 FR 56989 (September 17, 2010).

    12See Preliminary Decision Memorandum at 5.

    As noted above, we also made a preliminary determination of no shipments with respect to the constituent members of the Yücel Group (i.e., Cayirova, Yücel Boru and Yücel boru). However, since publication of the Preliminary Results, record evidence now indicates that the Yücel Group had shipments that were declared and entered as subject merchandise during the POR. Therefore, we are not making a final determination of no shipments with respect to the Yücel Group.

    Analysis of the Comments Received

    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 via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at http://access.trade.gov and it is available to all parties in the Central Records Unit, Room B8024 of the main Department of Commerce building. In addition, a complete version of the Issues and Decision Memorandum can be accessed directly at http://enforcement.trade.gov/frn/index.html. The signed Issues and Decision Memorandum and the electronic versions of the Issues and Decision Memorandum are identical in content.

    Changes Since the Preliminary Results

    Based on our analysis of the comments received, we made certain changes to the Preliminary Results. For a full discussion of these changes, see Issues and Decision Memorandum.

    Final Rates for Non-Examined Companies

    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 de minimis margins, and any margins determined entirely {on the basis of facts available}.”

    In this review, we have a calculated a weighted-average dumping margin for Borusan that is not zero, de minimis, or determined entirely on the basis of facts available. Accordingly, Commerce assigns to the companies not individually examined the 2.55 percent weighted-average dumping margin calculated for Borusan.

    Final Results of the Review

    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:

    Producer or exporter Weighted-
  • average
  • dumping
  • margin
  • (percent)
  • Borusan Mannesmann Boru Sanayi ve Ticaret A.S./Borusan Istikbal Ticaret T.A.S 2.55 Toscelik Profil ve Sac Endustrisi A.S./Tosyali Dis Ticaret A.S./Toscelik Metal Ticaret A.S 0.00 Cayirova Boru Sanayi ve Ticaret A.S 2.55 Yücel Boru ve Profil Endustrisi A.S 2.55 Yücel boru Ihracat Ithalat ve Pazarlama A.S 2.55
    Disclosure

    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 Federal Register, in accordance with 19 CFR 351.224(b).

    Duty Assessment

    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 de minimis (i.e., less than 0.5 percent), Commerce has calculated importer-specific antidumping duty assessment rates. We calculated importer-specific ad valorem antidumping duty assessment rates by aggregating the total amount of dumping calculated for the examined sales of each importer and dividing each of these amounts by the total entered value associated with those sales. We will instruct CBP to assess antidumping duties on all appropriate entries covered by this review where an importer-specific assessment rate is not zero or de minimis. Pursuant to 19 CFR 351.106(c)(2), we will instruct CBP to liquidate without regard to antidumping duties any entries for which the importer-specific assessment rate is zero or de minimis.

    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.13

    13See Antidumping Proceeding: Calculation of the Weighted-Average Dumping Margin and Assessment Rate in Certain Antidumping Duty Proceedings; Final Modification, 77 FR 8103 (February 14, 2012).

    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.14

    14 For a full discussion of this practice, see Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003).

    We intend to issue instructions to CBP 15 days after publication of the final results of this review.

    Cash Deposit Requirements

    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.15 These deposit requirements, when imposed, shall remain in effect until further notice.

    15See Antidumping Duty Order; Welded Carbon Steel Standard Pipe and Tube Products from Turkey, 51 FR 17784 (May 15, 1986).

    Notification to Importers

    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.16

    16See 19 CFR 351.402(f)(3).

    Administrative Protective Orders

    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.

    Dated: November 30, 2018. Gary Taverman, Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations, performing the non-exclusive functions and duties of the Assistant Secretary for Enforcement and Compliance. Appendix List of Topics Discussed in the Issues and Decision Memorandum 1. Summary 2. Background 3. Scope of the Order 4. Discussion of the Issues Comment 1: Yucel Group's No-Shipments Claim Comment 2: Calculation of Toscelik's Total Cost of Manufacture Comment 3: Calculation of Toscelik's Average Cost of Production Comment 4: Calculation of Borusan's Gross Unit Price 5. Recommendation
    [FR Doc. 2018-26544 Filed 12-6-18; 8:45 am] BILLING CODE 3510-DS-P
    DEPARTMENT OF COMMERCE International Trade Administration [A-520-803] Polyethylene Terephthalate Film, Sheet, and Strip From the United Arab Emirates: Preliminary Results of Antidumping Duty Administrative Review; 2016-2017 AGENCY:

    Enforcement and Compliance, International Trade Administration, Department of Commerce.

    SUMMARY:

    The Department of Commerce (Commerce) preliminarily finds that JBF RAK LLC, the sole producer/exporter subject to this administrative review, has made sales of subject merchandise at less than normal value. Interested parties are invited to comment on these preliminary results.

    DATES:

    Applicable December 7, 2018.

    FOR FURTHER INFORMATION CONTACT:

    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.

    SUPPLEMENTARY INFORMATION:

    Background

    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, 2018.1 This review only covers JBF RAK LLC, a producer and exporter of the subject merchandise. The period of review is November 1, 2016, through October 31, 2017.

    1See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 83 FR 1329, 1333 (January 11, 2018).

    Scope of the Order

    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.2

    2See Memorandum, “Decision Memorandum for the Preliminary Results of Antidumping Duty Administrative Review: Polyethylene Terephthalate Film, Sheet, and Strip from the United Arab Emirates” (Preliminary Decision Memorandum), dated concurrently with this notice.

    Methodology

    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, see the Preliminary Decision Memorandum, which is hereby adopted by this notice.3 A list of topics included in the Preliminary Decision Memorandum is included as an Appendix to this notice. The Preliminary Decision Memorandum is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at https://access.trade.gov and in the Central Records Unit in Room B8024 of the main Commerce building. In addition, a complete version of the Preliminary Decision Memorandum can be accessed directly on the internet at https://enforcement.trade.gov/frn/. The signed Preliminary Decision Memorandum and electronic versions of the Preliminary Decision Memorandum are identical in content.

    3Id.

    Preliminary Results of Review

    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:

    Manufacturer/exporter Weighted-
  • average
  • margin
  • (percent)
  • JBF RAK LLC 57.33
    Disclosure and Public Comment

    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.4 Parties who submit case briefs or rebuttal briefs in this review are requested to submit with each brief: (1) A statement of the issue, (2) a brief summary of the argument, and (3) a table of authorities.5 Executive summaries should be limited to five pages total, including footnotes.6 All briefs must be filed electronically using ACCESS. An electronically filed document must be received successfully in its entirety by the established deadline.

    4See 19 CFR 351.309(d)(1).

    5See 19 CFR 351.309(c)(2), (d)(2).

    6Id.

    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 Federal Register, unless otherwise extended.7

    7See section 751(a)(3)(A) of the Act.

    Assessment Rates

    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 de minimis, we will calculate importer-specific ad valorem duty assessment rates based on the ratio of the total amount of dumping calculated for the importer's examined sales to the total entered value of those same sales in accordance with 19 CFR 351.212(b)(1).8 We will instruct CBP to assess antidumping duties on all appropriate entries covered by this review when the importer-specific assessment rate calculated in the final results of this review is above de minimis. Where either the respondent's weighted-average dumping margin is zero or de minimis, or an importer-specific assessment rate is zero or de minimis, we will instruct CBP to liquidate the appropriate entries without regard to antidumping duties.

    8 In these preliminary results, Commerce applied the calculation methodology adopted in Antidumping Proceedings: Calculation of the Weighted-Average Dumping Margin and Assessment Rate in Certain Antidumping Proceedings: Final Modification, 77 FR 8101 (February 14, 2012).

    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 of this review and for future deposits of estimated duties, where applicable.

    Cash Deposit Requirements

    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 de minimis, no cash deposit will be required); (2) for previously reviewed or investigated companies not listed above, the cash deposit rate will continue to be the company-specific rate published for the most recent period; (3) if the exporter is not a firm covered in this review, a prior review, or the less-than-fair-value investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; and (4) the cash deposit rate for all other manufacturers or exporters will continue to be 4.05 percent, the all-others rate established in the investigation.9 These cash deposit requirements, when imposed, shall remain in effect until further notice.

    9See Polyethylene Terephthalate Film, Sheet, and Strip from Brazil, the People's Republic of China and the United Arab Emirates: Antidumping Duty Orders and Amended Final Determination of Sales at Less Than Fair Value for the United Arab Emirates, 73 FR 66595, 66597 (November 10, 2008).

    Notification to Importers

    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).

    Dated: November 29, 2018. Gary Taverman, Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations, performing the non-exclusive functions and duties of the Assistant Secretary for Enforcement and Compliance. Appendix—List of Topics Discussed in the Preliminary Decision Memorandum 1. Summary 2. Background 3. Scope of the Order 4. Date of Sale 5. Discussion of Methodology 6. Product Comparisons 7. Export Price/Constructed Export Price 8. Normal Value 9. Currency Conversions 10. Conclusion
    [FR Doc. 2018-26545 Filed 12-6-18; 8:45 am] BILLING CODE 3510-DS-P
    DEPARTMENT OF COMMERCE International Trade Administration [C-570-991] Chlorinated Isocyanurates From the People's Republic of China: Preliminary Results of Countervailing Duty Administrative Review; 2016 AGENCY:

    Enforcement and Compliance, International Trade Administration, Department of Commerce.

    SUMMARY:

    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.

    DATES:

    Applicable December 7, 2018.

    FOR FURTHER INFORMATION CONTACT:

    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.

    SUPPLEMENTARY INFORMATION:

    Background

    Commerce published the notice of initiation of this administrative review on January 11, 2018.1 This review covers two producer/exporters: (1) Heze Huayi Chemical Co., Ltd. (Huayi); and (2) Juancheng Kangtai Chemical Co. Ltd. (Kangtai). Commerce postponed the preliminary results of this administrative review and the revised deadline is now November 30, 2018.2 For a complete description of the events that followed the initiation of this administrative review, see Preliminary Decision Memorandum.3

    1See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 83 FR 1329 (January 11, 2018).

    2See Memorandum, “Chlorinated Isocyanurates from the People's Republic of China: Extension of Deadline for Preliminary Results of Third Countervailing Duty Administrative Review,” dated August 2, 2018; see also Memorandum, “Chlorinated Isocyanurates from the People's Republic of China: Extension of Deadline for Preliminary Results of Third Countervailing Duty Administrative Review,” dated October 11, 2018.

    3See Memorandum, “Decision Memorandum for Preliminary Results of Countervailing Duty Administrative Review: Chlorinated Isocyanurates from the People's Republic of China,” dated concurrently with, and hereby adopted by, this notice (Preliminary Decision Memorandum).

    Scope of the Order

    The products covered by the order are chloro isos, which are derivatives are cyanuric acid, described as chlorinated s-triazine triones.4 Chloro isos are currently classifiable under subheadings 2933.69.6015, 2933.69.6021, 2933.69.6050, 3808.50.4000, 3808.94.5000, and 3808.99.9500 of the Harmonized Tariff Schedule of the United States (HTSUS). The HTSUS subheadings are provided for convenience and customs purposes; the written product description of the scope of the order is dispositive.

    4 For a complete description of the Scope of the Order, see Countervailing Duty Administrative Review of Chlorinated Isocyanurates from the People's Republic of China: Decision Memorandum for the Preliminary Results, published concurrently with this notice.

    Methodology

    On November 13, 2014, Commerce published in the Federal Register a countervailing duty (CVD) order on chloro isos from China.5 Commerce is conducting this administrative review in accordance with section 751(a)(1)(A) of the Tariff Act of 1930, as amended (the Act). For each of the subsidy programs found countervailable, we preliminarily find that there is a subsidy, i.e., a financial contribution from an “authority” that gives rise to a benefit to the recipient, and that the subsidy is specific.6 In making this preliminary finding, Commerce relied, in part, on facts otherwise available, with the application of adverse inferences.7 For further information, see “Use of Facts Otherwise Available and Adverse Inferences” in the accompanying Preliminary Decision Memorandum. For a full description of the methodology underlying our preliminary conclusions, including our reliance, in part, on adverse facts available pursuant to sections 776(a) and (b) of the Act, see the Preliminary Decision Memorandum.8 The Preliminary Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at http://access.trade.gov, and is available to all parties in the Central Records Unit, Room B8024 of the main Commerce building. In addition, a complete version of the Preliminary Decision Memorandum can be accessed directly at http://enforcement.trade.gov/frn/. The signed and electronic versions of the Preliminary Decision Memorandum are identical in content.

    5See Chlorinated Isocyanurates from the People's Republic of China: Countervailing Duty Order, 79 FR 67424 (November 13, 2014).

    6See sections 771(5)(B) and (D) of the Act regarding financial contribution; section 771(5)(E) of the Act regarding benefit; and section 771(5A) of the Act regarding specificity.

    7See section 776(a) of the Act.

    8 A list of topics discussed in the Preliminary Decision Memorandum can be found at the Appendix to this notice.

    Preliminary Results of Review

    As a result of this review, we preliminarily determine that the following estimated countervailable subsidy rates exist.

    Company Subsidy rate
  • (percent)
  • Heze Huayi Chemical Co., Ltd 1.71 Juancheng Kangtai Chemical Co., Ltd 1.54
    Disclosure and Public Comment

    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.9 Pursuant to 19 CFR 351.309(c)(2) and (d)(2), parties who submit case briefs or rebuttal briefs in this review are encouraged to submit with each argument: (1) A statement of the issue; (2) a brief summary of the argument; and (3) a table of authorities.

    9See 19 CFR 351.309; see also 19 CFR 351.303 (for general filing requirements).

    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.

    Assessment Rates and Cash Deposit Requirement

    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).

    Dated: November 30, 2018. Gary Taverman, Deputy Assistant Secretary, for Antidumping and Countervailing Duty Operations, performing the non-exclusive functions and duties of the Assistant Secretary for Enforcement and Compliance. Appendix List of Topics Discussed in the Preliminary Decision Memorandum I. Summary II. Background III. Application of CVD Law to Imports From China IV. Subsidies Valuation V. Benchmarks VI. Use of Facts Otherwise Available and Adverse Inferences VII. Analysis of Programs VIII. Disclosure and Public Comment IX. Conclusion
    [FR Doc. 2018-26551 Filed 12-6-18; 8:45 am] BILLING CODE 3510-DS-P
    DEPARTMENT OF EDUCATION [Docket No.: ED-2018-ICCD-0128] Agency Information Collection Activities; Comment Request; Federal Student Aid (FSA) Feedback System AGENCY:

    Federal Student Aid (FSA), Department of Education (ED).

    ACTION:

    Notice.

    SUMMARY:

    In accordance with the Paperwork Reduction Act of 1995, ED is proposing an extension of an existing information collection.

    DATES:

    Interested persons are invited to submit comments on or before February 5, 2019.

    ADDRESSES:

    To access and review all the documents related to the information collection listed in this notice, please use http://www.regulations.gov by searching the Docket ID number ED-2018-ICCD-0128. Comments submitted in response to this notice should be submitted electronically through the Federal eRulemaking Portal at http://www.regulations.gov by selecting the Docket ID number or via postal mail, commercial delivery, or hand delivery. Please note that comments submitted by fax or email and those submitted after the comment period will not be accepted. Written requests for information or comments submitted by postal mail or delivery should be addressed to the Director of the Information Collection Clearance Division, U.S. Department of Education, 550 12th Street SW, PCP, Room 9086, Washington, DC 20202-0023.

    FOR FURTHER INFORMATION CONTACT:

    For specific questions related to collection activities, please contact Beth Grebeldinger, 202-377-4018.

    SUPPLEMENTARY INFORMATION:

    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.

    Title of Collection: Federal Student Aid (FSA) Feedback System.

    OMB Control Number: 1845-0141.

    Type of Review: An extension of an existing information collection.

    Respondents/Affected Public: Individuals or Households.

    Total Estimated Number of Annual Responses: 43,200.

    Total Estimated Number of Annual Burden Hours: 7,344.

    Abstract: This is a request for extension of the current information collection of the FSA Feedback System, OMB Control 1845-0141. On March 10, 2015, the White House issued a Student Aid Bill of Rights. Among the objectives identified was the creation of a centralized complaint system that is now resident and supported via the Federal Student Aid/Customer Engagement Management System. The purpose of the Customer Engagement Management System (CEMS) is to meet the objective: “Create a Responsive Student Feedback System: The Secretary of Education will create a new website by July 1, 2016, to give students and borrowers a simple and straightforward way to file complaints and provide feedback about federal student loan lenders, servicers, collections agencies, and institutions of higher education. Students and borrowers will be able to ensure that their complaints will be directed to the right party for timely resolution, and the Department of Education will be able to more quickly respond to issues and strengthen its efforts to protect the integrity of the student financial aid programs.”

    Dated: December 3, 2018. Kate Mullan, Acting Director, Information Collection Clearance Division, Office of the Chief Privacy Officer, Office of Management.
    [FR Doc. 2018-26542 Filed 12-6-18; 8:45 am] BILLING CODE 4000-01-P
    ENVIRONMENTAL PROTECTION AGENCY [ER-FRL-9042-7] Environmental Impact Statements; Notice of Availability

    Responsible Agency: Office of Federal, Activities, General Information 202-564-5632 or https://www.epa.gov/nepa/.

    Weekly receipt of Environmental Impact Statements Filed 11/26/2018 Through 11/30/2018 Pursuant to 40 CFR 1506.9. Notice

    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: https://cdxnodengn.epa.gov/cdx-enepa-public/action/eis/search.

    EIS No. 20180292, Draft, RUS, WI, Cardinal-Hickory Creek 345-kV Transmission Line Project, Comment Period Ends: 02/05/2019, Contact: Dennis Rankin 202-720-1953. EIS No. 20180293, Final, BLM, ID, Idaho Greater-Sage Grouse Proposed Resource Management Plan, Amendment and Final Environmental Impact Statement, Review Period Ends: 01/07/2019, Contact: Jonathan Beck 208-373-3841. EIS No. 20180294, Final, BLM, NV, Nevada and Northeastern California Greater-Sage Grouse Proposed, Resource Management Plan Amendment and Final Environmental Impact Statement, Review Period Ends: 01/07/2019, Contact: Matt Magaletti 775-861-6400. EIS No. 20180295, Final, BLM, WY, Wyoming Greater-Sage Grouse Proposed Resource Management Plan, Amendment and Final Environmental Impact Statement, Review Period Ends: 01/07/2019, Contact: Jennifer Fleuret 307-775-6329. EIS No. 20180296, Final, BLM, CO, Northwest Colorado Greater-Sage Grouse Proposed Resource Management Plan, Amendment and Final Environmental Impact Statement, Review Period Ends: 01/07/2019, Contact: Bridget Clayton 202-244-3045. EIS No. 20180297, Final, BLM, UT, Utah Greater-Sage Grouse Proposed Resource Management Plan, Amendment and Final Environmental Impact Statement, Review Period Ends: 01/07/2019, Contact: Quincy Bahr 801-539-4122. EIS No. 20180298, Final, BLM, OR, Oregon Greater-Sage Grouse Proposed Resource Management Plan, Amendment and Final Environmental Impact Statement, Review Period Ends: 01/07/2019, Contact: James Regan-Vienop 503-808-6062. EIS No. 20180299, Draft Supplement, FHWA, GSA, ME, New Madawaska Land Port of Entry and International Bridge Project, Comment Period Ends: 01/31/2019, Contact: Alexandria Kelly 617-549-8190. EIS No. 20180300, Final, USACE, CA, Upper Llagas Creek Flood Protection Project, Review Period Ends: 01/11/2019, Contact: Keith D. Hess 707-443-0855. EIS No. 20180301, Final Supplement, FTA, CA, Transbay Transit Center Program, Review Period Ends: 01/07/2019, Contact: Ted Matley 415-734-9468. EIS No. 20180302, Draft Supplement, NMFS, WA, 10 Salmon and Steelhead Hatchery Programs in the Duwamish-Green River Basin, Comment Period Ends: 01/22/2019, Contact: Allyson Purcell 503-736-4736. EIS No. 20180303, Draft, BOEM, MA, Vineyard Wind Offshore Wind Energy Project, Comment Period Ends: 01/21/2019, Contact: Michelle Morin 703-787-1722. EIS No. 20180304, Draft, VA, CA, Draft Programmatic Environmental Impact Statement and National Historic Preservation Act Section 106 Consultation, West Los Angeles Medical Center Campus Proposed Master Plan for Improvements and Reconfiguration, Comment Period Ends: 01/21/2019, Contact: Glenn Elliott 202-632-5879. EIS No. 20180305, Final, FTA, TX, DART Cotton Belt Corridor Regional Rail Project, Review Period Ends: 01/07/2019, Contact: Melissa Foreman 817-978-0554. EIS No. 20180306, Final, Caltrans, CA, SR 710 North Study FEIR/FEIS, Review Period Ends: 01/07/2019, Contact: Jason Roach 213-897-0357. Amended Notices EIS No. 20180244, Draft, USFS, CA, Plumas National Forest Over-Snow Vehicle (OSV) Use Designation, Comment Period Ends: 01/24/2019, Contact: Katherine Carpenter 530-283-7742, Revision to FR Notice Published 10/26/2018; Extending the Comment Period from 12/10/2018 to 01/24/2019. Dated: December 3, 2018. Robert Tomiak, Director, Office of Federal Activities.
    [FR Doc. 2018-26577 Filed 12-6-18; 8:45 am] BILLING CODE 6560-50-P
    FARM CREDIT ADMINISTRATION Sunshine Act Meeting; Farm Credit Administration Board AGENCY:

    Farm Credit Administration.

    ACTION:

    Notice, regular meeting.

    SUMMARY:

    Notice is hereby given, pursuant to the Government in the Sunshine Act, of the regular meeting of the Farm Credit Administration Board (Board).

    DATES:

    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.

    ADDRESSES:

    Farm Credit Administration, 1501 Farm Credit Drive, McLean, Virginia 22102-5090. Submit attendance requests via email to [email protected] See SUPPLEMENTARY INFORMATION for further information about attendance requests.

    FOR FURTHER INFORMATION CONTACT:

    Dale Aultman, Secretary to the Farm Credit Administration Board, (703) 883-4009, TTY (703) 883-4056.

    SUPPLEMENTARY INFORMATION:

    This meeting of the Board will be open to the public (limited space available). Please send an email to [email protected] at least 24 hours before the meeting. In your email include: Name, postal address, entity you are representing (if applicable), and telephone number. You will receive an email confirmation from us. Please be prepared to show a photo identification when you arrive. If you need assistance for accessibility reasons, or if you have any questions, contact Dale Aultman, Secretary to the Farm Credit Administration Board, at (703) 883-4009. The matters to be considered at the meeting are:

    Open Session A. Approval of Minutes • November 8, 2018 B. Reports • Quarterly Report on Economic Conditions and FCS Conditions • Semi-Annual Report on Office of Examination Operations Closed Session * • Office of Examination Quarterly Report Date: December 3, 2018. Dale Aultman, Secretary, Farm Credit Administration Board.

    *Session Closed-Exempt pursuant to 5 U.S.C. 552b(c)(8) and (9).

    [FR Doc. 2018-26718 Filed 12-4-18; 4:15 pm] BILLING CODE 6705-01-P
    FEDERAL DEPOSIT INSURANCE CORPORATION Notice of Termination of Receiverships

    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.

    Notice of Termination of Receiverships Fund Receivership name City State Termination date 4637 First National Bank of Keystone Keystone WV 12/1/2018 10407 Decatur First Bank Decatur GA 12/1/2018 10436 Inter Savings Bank FSB Maple Grove MN 12/1/2018 10458 Truman Bank St. Louis MO 12/1/2018 10521 The Woodbury Banking Company Woodbury GA 12/1/2018

    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.

    Dated at Washington, DC, on December 3, 2018. Federal Deposit Insurance Corporation. Robert E. Feldman, Executive Secretary.
    [FR Doc. 2018-26539 Filed 12-6-18; 8:45 am] BILLING CODE 6714-01-P
    FEDERAL RESERVE SYSTEM Formations of, Acquisitions by, and Mergers of Bank Holding Companies

    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 et seq.) (BHC Act), Regulation Y (12 CFR part 225), and all other applicable statutes and regulations to become a bank holding company and/or to acquire the assets or the ownership of, control of, or the power to vote shares of a bank or bank holding company and all of the banks and nonbanking companies owned by the bank holding company, including the companies listed below.

    The applications listed below, as well as other related filings required by the Board, are available for immediate inspection at the Federal Reserve Bank indicated. The applications will also be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing on the standards enumerated in the BHC Act (12 U.S.C. 1842(c)). If the proposal also involves the acquisition of a nonbanking company, the review also includes whether the acquisition of the nonbanking company complies with the standards in section 4 of the BHC Act (12 U.S.C. 1843). Unless otherwise noted, nonbanking activities will be conducted throughout the United States.

    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.

    A. Federal Reserve Bank of Kansas City (Dennis Denney, Assistant Vice President) 1 Memorial Drive, Kansas City, Missouri 64198-0001:

    1. Amsterdam Bancshares, Inc., Amsterdam, Missouri; to acquire 100 percent of the voting shares of S.T.D. Investments, Inc., and thereby indirectly acquire Bank of Minden, both of Mindenmines, Missouri.

    Board of Governors of the Federal Reserve System, December 3, 2018. Yao-Chin Chao, Assistant Secretary of the Board.
    [FR Doc. 2018-26571 Filed 12-6-18; 8:45 am] BILLING CODE P
    FEDERAL RESERVE SYSTEM Change in Bank Control Notices; Acquisitions of Shares of a Bank or Bank Holding Company

    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.

    A. Federal Reserve Bank of Chicago (Colette A. Fried, Assistant Vice President) 230 South LaSalle Street, Chicago, Illinois 60690-1414:

    1. David L. Howland and Melanie S. Dart, as trustees of the David L. Howland and Melanie S. Dart Revocable Trust dated May 27, 2015, both of Mason, Michigan, Stephanie Noel Howland of Saginaw, Michigan, and Marc Miilu of DeWitt, Michigan; to join the Dart Family Control Group and retain voting shares of Dart Financial Corporation, Mason, Michigan, and thereby indirectly retain shares of Dart Bank, Mason, Michigan.

    Board of Governors of the Federal Reserve System, December 3, 2018. Yao-Chin Chao, Assistant Secretary of the Board.
    [FR Doc. 2018-26572 Filed 12-6-18; 8:45 am] BILLING CODE P
    DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION [OMB Control No. 9000-0197; Docket No. 2018-0003; Sequence No. 19] Submission for OMB Review; Use of Products and Services of Kaspersky Lab AGENCY:

    Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).

    ACTION:

    Notice.

    SUMMARY:

    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.

    DATES:

    Submit comments on or before January 7, 2019.

    ADDRESSES:

    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:

    Regulations.gov: http://www.regulations.gov. Submit comments via the Federal eRulemaking portal by searching for the OMB Control number 9000-0197. Select the link “Comment Now” that corresponds with “Information Collection 9000-0197; Use of Products and Services of Kaspersky Lab”. Follow the instructions on the screen. Please include your name, company name (if any), and “Information Collection 9000-0197; Use of Products and Services of Kaspersky Lab.

    Mail: General Services Administration, Regulatory Secretariat Division (MVCB), 1800 F Street NW, Washington, DC 20405-0001. ATTN: Ms. Mandell/IC 9000-0197; Use of Products and Services of Kaspersky Lab.

    Instructions: Please submit comments only and cite Information Collection 9000-0197; Use of Products and Services of Kaspersky Lab, in all correspondence related to this collection. Comments received generally will be posted without change to http://www.regulations.gov, including any personal and/or business confidential information provided. To confirm receipt of your comment(s), please check www.regulations.gov, approximately two-to-three days after submission to verify posting (except allow 30 days for posting of comments submitted by mail).

    FOR FURTHER INFORMATION CONTACT:

    Ms. Camara Francis, Procurement Analyst, at telephone 202-550-0935, or email [email protected]

    SUPPLEMENTARY INFORMATION: A. Purpose

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA) provides that an agency generally cannot conduct or sponsor a collection of information, and no person is required to respond to, nor be subject to, a penalty for failure to comply with a collection of information, unless that collection has obtained Office of Management and Budget (OMB) approval and displays a currently valid OMB Control Number.

    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, which requires contractors to report covered products identified during performance of a contract.

    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.

    B. Annual Reporting Burden

    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.

    Number of Respondents: 4,882.

    Responses per Respondent: 5.

    Total Responses: 24,410.

    Average Burden Hours per Response: 1.5.

    Total Burden Hours: 36,615.

    C. Public Comments

    A 60-day notice was published in the Federal Register at 83 FR 29116 on June 22, 2018. No comments were received.

    Obtaining Copies of Proposals: Requesters may obtain a copy of the information collection documents from the General Services Administration, Regulatory Secretariat Division (MVCB), 1800 F Street NW, Washington, DC 20405, telephone 202-501-4755. Please cite OMB Control No. 9000-0197, Use of Products and Services of Kaspersky Lab, in all correspondence.

    Dated: November 30, 2018. Janet Fry, Director, Federal Acquisition Policy Division, Office of Governmentwide Acquisition Policy, Office of Acquisition Policy, Office of Governmentwide Policy.
    [FR Doc. 2018-26525 Filed 12-6-18; 8:45 am] BILLING CODE 6820-EP-P
    DEPARTMENT OF HEALTH AND HUMAN SERVICES Administration for Children and Families Submission for OMB Review; Head Start Child and Family Experiences Survey (FACES) (OMB #0970-0151) AGENCY:

    Office of Planning, Research, and Evaluation; Administration for Children and Families; HHS.

    ACTION:

    Request for public comment.

    SUMMARY:

    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).

    DATES:

    Comments due within 30 days of publication. OMB is required to make a decision concerning the collection of information between 30 and 60 days after publication of this document in the Federal Register. Therefore, a comment is best assured of having its full effect if OMB receives it within 30 days of publication.

    ADDRESSES:

    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: [email protected], Attn: Desk Officer for the Administration for Children and Families.

    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: [email protected]

    SUPPLEMENTARY INFORMATION:

    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 Federal Register notice.

    Previous Federal Register notices provided the opportunity for public comment on the proposed Head Start program recruitment and center selection process (FR V.82, pg. 48819 10/20/2017; FR V.83, pg. 7480 02/21/2018). This notice describes the planned data collection activities for the FACES 2019 and AI/AN FACES 2019 data collection. Data collection activities include classroom and child sampling information collection, direct child assessments, parent surveys, teacher child reports, and staff surveys.

    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 reauthorization of the Head Start program (Pub. L. 110-134), which calls for periodic assessments of Head Start's quality and effectiveness.

    Respondents: Head Start children, parents of Head Start children, and Head Start teachers and Head Start staff.

    Annual Burden Estimates Instrument Total number of respondents Annual
  • number of
  • respondents
  • Number of
  • responses
  • per
  • respondent
  • Average
  • burden hours
  • per response
  • Annual burden hours
    FACES 2019 Classroom sampling form from Head Start staff 360 120 1 0.17 20 FACES 2019 Child roster form from Head Start staff 120 40 1 0.33 13 FACES 2019 Parent consent form 2,400 800 1 0.17 136 FACES 2019 Head Start parent survey 2,400 800 2 0.42 672 FACES 2019 Head Start child assessment 2,400 800 2 0.75 1,200 FACES 2019 Head Start teacher child report 240 80 20 0.17 272 FACES 2019 Head Start teacher survey 720 240 1 0.50 120 FACES 2019 Head Start program director survey 180 60 1 0.50 30 FACES 2019 Head Start center director survey 360 120 1 0.50 60 AI/AN FACES 2019 Classroom sampling form from Head Start staff 37 13 1 0.17 2 AI/AN FACES 2019 Child roster form from Head Start staff 37 13 1 0.33 4 AI/AN FACES 2019 Parent consent form 800 267 1 0.17 45 AI/AN FACES 2019 Head Start parent survey 800 267 2 0.50 267 AI/AN FACES 2019 Head Start child assessment 800 267 2 0.75 401 AI/AN FACES 2019 Head Start teacher child report 80 27 20 0.17 92 AI/AN FACES 2019 Head Start teacher survey 80 27 1 0.58 16 AI/AN FACES 2019 Head Start program director survey 22 8 1 0.33 3 AI/AN FACES 2019 Head Start center director survey 37 13 1 0.33 4

    Estimated Total Annual Burden Hours: 3,357.

    Authority: Section 640(a)(2)(D) and section 649 of the Improving Head Start for School Readiness Act of 2007.

    Mary B. Jones, ACF/OPRE Certifying Officer.
    [FR Doc. 2018-26563 Filed 12-6-18; 8:45 am] BILLING CODE 4184-01-P
    DEPARTMENT OF HEALTH AND HUMAN SERVICES Administration for Children and Families Submission for OMB Review; Comment Request

    Title: OCSE-157 Child Support Enforcement Program Annual Data Report.

    OMB No.: 0970-0177.

    Description: The information obtained from this form will be used to: (1) Report Child Support Enforcement activities to the Congress as required by law; (2) calculate incentive measures performance and performance indicators utilized in the program; and (3) assist the Office of Child Support Enforcement (OCSE) in monitoring and evaluating State Child Support programs.

    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.

    Respondents: State, Local or Tribal Government.

    Annual Burden Estimates Instrument Number of
  • respondents
  • Number of
  • responses per
  • respondent
  • Average
  • burden hours
  • per response
  • Total burden
  • hours
  • OCSE-157 54 1 7 378

    Estimated Total Annual Burden Hours: 378.

    Additional Information: 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. Attention Reports Clearance Officer. All requests should be identified by the title of the information collection. Email address: [email protected]

    OMB Comment: OMB is required to make a decision concerning the collection of information between 30 and 60 days after publication of this document in the Federal Register. Therefore, a comment is best assured of having its full effect if OMB receives it within 30 days of publication. 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: [email protected]. Attn: Desk Officer for the Administration for Children and Families.

    Robert Sargis, Reports Clearance Officer.
    [FR Doc. 2018-26535 Filed 12-6-18; 8:45 am] BILLING CODE 4184-01-P
    DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration [Docket No. FDA-2018-D-3380] Developing and Labeling In vitro Companion Diagnostic Devices for a Specific Group or Class of Oncology Therapeutic Products; Draft Guidance for Industry; Availability AGENCY:

    Food and Drug Administration, HHS.

    ACTION:

    Notice of availability.

    SUMMARY:

    The Food and Drug Administration (FDA or Agency) is announcing the availability of a draft guidance for industry entitled “Developing and Labeling In vitro Companion Diagnostic Devices for a Specific Group or Class of Oncology Therapeutic Products.” This draft guidance describes considerations for the development and labeling of in vitro companion diagnostic devices (referred to as companion diagnostics in this document) to support the indicated uses of multiple drug or biologic oncology products (referred to as therapeutic products or oncology therapeutic products in this document), when appropriate. The draft guidance includes factors for considering when broader labeling (i.e., labeling that is expanded) of a companion diagnostic would be appropriate. Oncology companion diagnostics with broader evidence-based indications will optimally facilitate clinical use.

    DATES:

    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.

    ADDRESSES:

    You may submit comments on any guidance at any time as follows:

    Electronic Submissions

    Submit electronic comments in the following way:

    Federal eRulemaking Portal: https://www.regulations.gov. Follow the instructions for submitting comments. Comments submitted electronically, including attachments, to https://www.regulations.gov will be posted to the docket unchanged. Because your comment will be made public, you are solely responsible for ensuring that your comment does not include any confidential information that you or a third party may not wish to be posted, such as medical information, your or anyone else's Social Security number, or confidential business information, such as a manufacturing process. Please note that if you include your name, contact information, or other information that identifies you in the body of your comments, that information will be posted on https://www.regulations.gov.

    • 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”).

    Written/Paper Submissions

    Submit written/paper submissions as follows:

    Mail/Hand delivery/Courier (for written/paper submissions): Dockets Management Staff (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

    • 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.”

    Instructions: All submissions received must include the Docket No. FDA-2018-D-3380 for “Developing and Labeling In vitro Companion Diagnostic Devices for a Specific Group or Class of Oncology Therapeutic Products.” Received comments will be placed in the docket and, except for those submitted as “Confidential Submissions,” publicly viewable at https://www.regulations.gov or at the Dockets Management Staff between 9 a.m. and 4 p.m., Monday through Friday.

    • 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 https://www.regulations.gov. Submit both copies to the Dockets Management Staff. If you do not wish your name and contact information to be made publicly available, you can provide this information on the cover sheet and not in the body of your comments and you must identify this information as “confidential.” Any information marked as “confidential” will not be disclosed except in accordance with 21 CFR 10.20 and other applicable disclosure law. For more information about FDA's posting of comments to public dockets, see 80 FR 56469, September 18, 2015, or access the information at: https://www.thefederalregister.org/fdsys/pkg/FR-2015-09-18/pdf/2015-23389.pdf.

    Docket: For access to the docket to read background documents or the electronic and written/paper comments received, go to https://www.regulations.gov and insert the docket number, found in brackets in the heading of this document, into the “Search” box and follow the prompts and/or go to the Dockets Management Staff, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

    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 SUPPLEMENTARY INFORMATION section for electronic access to the draft guidance document.

    FOR FURTHER INFORMATION CONTACT:

    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 Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Rm. 5680, Silver Spring, MD 20993-0002, 301-796-6179; or Julie Schneider, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 22, Rm. 2208, Silver Spring, MD 20993-0002, 240-402-4658.

    SUPPLEMENTARY INFORMATION:

    I. Background

    FDA is announcing the availability of a draft guidance for industry entitled “Developing and Labeling In vitro Companion Diagnostic Devices for a Specific Group or Class of Oncology Therapeutic Products.” This draft guidance describes considerations for the development and labeling of companion diagnostics to support the indicated uses of multiple therapeutic oncology products, when appropriate. This draft guidance expands on existing policy, surrounding broader labeling, which notes that in some cases, if evidence is sufficient to conclude that the companion diagnostic is appropriate for use with a specific group or class of therapeutic products (as discussed in the draft guidance), the companion diagnostic's intended use/indications for use should name the specific group or class of therapeutic products, rather than specific products. To describe FDA's thinking on the topic, the draft guidance discusses a specific example of companion diagnostics for a specific biomarker, disease, and specimen type (specific epidermal growth factor receptor mutations in tumors of patients with nonsmall cell lung cancer in tissue specimens).

    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 (i.e., one that includes other therapeutic products in the labeling), obtain an additional biopsy(ies) from a patient, or both, to have additional therapy treatment options.

    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 vitro Companion Diagnostic Devices for a Specific Group or Class of Oncology Therapeutic Products.” It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations. This guidance is not subject to Executive Order 12866.

    II. Other Issues for Consideration

    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?

    III. Paperwork Reduction Act of 1995

    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.

    IV. Electronic Access

    Persons with access to the internet may obtain the draft guidance at either https://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/default.htm or https://www.regulations.gov.

    Dated: December 3, 2018. Leslie Kux, Associate Commissioner for Policy.
    [FR Doc. 2018-26554 Filed 12-6-18; 8:45 am] BILLING CODE 4164-01-P
    DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration [Docket No. FDA-2018-N-3458] Food Handler Antiseptic Drug Products for Over-the-Counter Human Use; Request for Data and Information AGENCY:

    Food and Drug Administration, HHS.

    ACTION:

    Notice; request for data and information.

    SUMMARY:

    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 (i.e., antiseptic hand washes or rubs intended for use in food handling settings) for over-the-counter (OTC) human use. We are asking manufacturers of food handler antiseptics and other interested parties to submit safety and effectiveness data on OTC food handler antiseptics marketed 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. We also are inviting comments and requesting data on definitions, eligibility, current conditions of use of food handler antiseptics; safety and effectiveness criteria; as well as test methods to demonstrate the effectiveness of food handler antiseptics. In general, we are seeking input on current use conditions of antiseptics used in the food handler setting and recommended testing to establish the effectiveness of OTC food handler antiseptics. This information and data will inform FDA's ongoing review of OTC antiseptic drug products and will specifically inform our review of food handler antiseptic products.

    DATES:

    Submit either electronic or written comments, data, or information by February 5, 2019.

    ADDRESSES:

    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 https://www.regulations.gov electronic filing system will accept comments until 11:59 p.m. Eastern Time at the end of February 5, 2019. Comments received by mail/hand delivery/courier (for written/paper submissions) will be considered timely if they are postmarked or the delivery service acceptance receipt is on or before that date.

    Electronic Submissions

    Submit electronic comments in the following way:

    Federal eRulemaking Portal: https://www.regulations.gov. Follow the instructions for submitting comments. Comments submitted electronically, including attachments, to https://www.regulations.gov will be posted to the docket unchanged. Because your comment will be made public, you are solely responsible for ensuring that your comment does not include any confidential information that you or a third party may not wish to be posted, such as medical information, your or anyone else's Social Security number, or confidential business information, such as a manufacturing process. Please note that if you include your name, contact information, or other information that identifies you in the body of your comments, that information will be posted on https://www.regulations.gov.

    • 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).

    Written/Paper Submissions

    Submit written/paper submissions as follows:

    Mail/Hand Delivery/Courier (for written/paper submissions): Dockets Management Staff (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

    • 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.”

    Instructions: All submissions received must include the Docket No. FDA-2018-N-3458 for “Food Handler Antiseptic Drug Products for Over-the-Counter Human Use; Request for Data and Information.” Received comments, those filed in a timely manner (see ADDRESSES), will be placed in the docket and, except for those submitted as “Confidential Submissions,” publicly viewable at https://www.regulations.gov or at the Dockets Management Staff between 9 a.m. and 4 p.m., Monday through Friday.

    • 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 https://www.regulations.gov. Submit both copies to the Dockets Management Staff. If you do not wish your name and contact information to be made publicly available, you can provide this information on the cover sheet and not in the body of your comments and you must identify this information as “confidential.” Any information marked as “confidential” will not be disclosed except in accordance with 21 CFR 10.20 and other applicable disclosure law. For more information about FDA's posting of comments to public dockets, see 80 FR 56469, September 18, 2015, or access the information at: https://www.thefederalregister.org/fdsys/pkg/FR-2015-09-18/pdf/2015-23389.pdf.

    Docket: For access to the docket to read background documents or the electronic and written/paper comments received, go to https://www.regulations.gov and insert the docket number, found in brackets in the heading of this document, into the “Search” box and follow the prompts and/or go to the Dockets Management Staff, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

    FOR FURTHER INFORMATION CONTACT:

    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.

    SUPPLEMENTARY INFORMATION:

    Table of Contents I. Introduction II. Table of Abbreviations/Commonly Used Acronyms in This Document III. Background A. Background on Topical Antiseptics B. Regulatory History of Food Handler Antiseptics IV. Proposed Effectiveness Models and Indications for Food Handler Antiseptics A. Health Care Continuum Model B. FDA Comments on the Proposed Health Care Continuum Model C. Inclusion of Antiviral Indications in Food Handler Antiseptics D. FDA Response on the Proposed Model for Antiviral Indications of the Antiseptic Products V. Data VI. Questions for Public Input A. Definition of Food Handler Antiseptics B. Active Ingredients for Food Handler Antiseptic Products C. Safety D. Effectiveness VII. References I. Introduction

    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.

    II. Table of Abbreviations/Commonly Used Acronyms in This Document Abbreviation/ acronym What it means ANPR Advance Notice of Proposed Rule. AOAC Association of Official Analytical Chemists (now “AOAC International”). ASTM American Society for Testing and Materials (now “ASTM International”). ATCC American Type Culture Collection. CDC Centers for Disease Control and Prevention. FDA Food and Drug Administration. FD&C Act Food Drug and Cosmetic Act. FR Federal Register. GRAS/GRAE Generally recognized as safe and effective. HACCP Hazard analysis and critical control point. HCCM Health Care Continuum Model. MIC Minimum Inhibitory Concentration Testing. OTC Over-the-counter. PCPC Personal Care Products Council. RFI Request for information. SDA Soap and Detergent Association. TFM Tentative final monograph. U.S.C. United States Code. III. Background A. Background on Topical 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 (i.e., consumer hand wash); (2) health care personnel hand wash; (3) patient preoperative skin preparation; and (4) surgical hand scrub (59 FR 31402 at 31442).

    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).

    B. Regulatory History on Food Handler Antiseptics

    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 consumed. The intended use of these products (the reduction of microorganisms on the skin for the purpose of preventing disease caused by transfer of microorganism from hands to foods) makes them drugs under the provisions of the Federal, Food, Drug, and Cosmetic Act (FD&C Act), which defines a drug to include an article intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man (section 201(g)(1) of the FD&C Act; 21 U.S.C. 321(g)(1)).

    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.

    IV. Proposed Effectiveness Models and Indications for Food Handler 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. Health Care Continuum Model

    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.

    Table 1—Summary of Industry Proposed Testing of Food Handler Antiseptics [Health Care Continuum Model] Proposed test method Test organisms
  • (American type culture collection strain number (ATCC))
  • Efficacy criteria
    Establish in vitro spectrum of antimicrobial activity of active ingredient (Minimum inhibitory concentration testing (MIC)) Candida albicans. (ATCC 10231). *
  • Enterobacter cloacae. (ATCC 13047).
  • Entercoccus faecalis. (ATCC 19433).
  • Escherichia coli. (ATCC 25922). *
  • Klebsiella pneumoniae (ATCC 10031).
  • None Stated.
    Listeria monocytogenes (ATCC 7644).* Proteus mirabilis (ATCC 7002). Pseudomonas aeruginosa (ATCC 9027). Pseudomonas stutzeri (ATCC 17588). Salmonella choleraesuis (ATCC 10708).* Salmonella enteritidis (ATCC 13076).* Salmonella typhi (ATCC 6539).* Salmonella typhimurium (ATCC 11311).* Shigella dysenteraiae (ATCC 13313) Shigella sonnei (ATCC 11060).* Staphylococcus aureus (ATCC 6538).* Streptococcus pyogenes (ATCC 19615).* Establish in vitro spectrum of antimicrobial activity of end-use formulation (MIC) Escherichia coli (ATCC 25922). *
  • Klebsiella pneumoniae. (ATCC 10031).
  • Listeria monocytogenes. (ATCC 7644). *
  • Pseudomonas stutzeri. (ATCC 17588).
  • None Stated.
    Salmonella choleraesuis (ATCC 10708).* Salmonella enteritidis (ATCC 13076).* Salmonella typhi (ATCC 6539).* Salmonella typhimurium (ATCC 11311).* Shigella sonnei (ATCC 11060).* Staphylococcus aureus (ATCC 6538).* Establish broad spectrum and fast acting claims for formulations (In vitro Time Kill Test) Escherichia coli (ATCC 11229)
  • Klebsiella pneumoniae (ATCC 10031).
  • Listeria monocytogenes (ATCC 7644).*
  • Salmonella typhi (ATCC 6539).*
  • 1 minute: 1 log10 reduction
  • 5 minutes: 2 log10 reduction
  • Must meet criteria for 4 of 5 strains.
  • Staphylococcus aureus (ATCC 6538) General Use Hand Wash Method (Formulation) Serratia marcescens (ATCC 14756) or
  • Escherichia coli (ATCC 11229)
  • 1st wash 1.5 log10 reduction.
  • 5th wash: 2 log10 reduction.
  • American Society for Testing and Materials International (ASTM) Hand Rub Method (Formulation) Serratia marcescens (ATCC 14756) or
  • Escherichia coli (ATCC 11229).
  • Rubs: 2 log10 reduction.
    * Organisms included in the Hazard Analysis and Critical Control Point Principles and Application Guidelines (Ref. 4).

    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).

    B. FDA Comments on the Proposed Health Care Continuum Model

    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, i.e., the amount of fat, grease, blood, and debris associated with food handling, affects the efficacy of antiseptic products (Ref. 8). The transfer of bacteria from contaminated food items and surfaces to hands may also be affected by the organic load contained in such items (Ref. 9). Use conditions vary in both organic and bacterial load, resulting in moderate to high levels of bacterial contamination. These differences are, in some cases, related to the setting in which a product is used. The differences may be related to other factors as well. The proposed HCCM does not take into consideration the wide-ranging use conditions of food handler antiseptics, and it raises the question of how to best address the broad spectrum of situational challenges stemming from these varied uses.

    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 log10 reduction of the test organism. Given the manner in which food handler antiseptics are currently used (i.e., short contact times with use of antiseptics, high bacterial loads, and expectations that these products be effective after a single use), the proposed in vivo effectiveness testing does not appear to reflect food handler antiseptic use situations and raises the question of what criteria best demonstrate the effectiveness of food handler antiseptics.

    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 “Pathogens Transmitted by Food Contaminated by Infected Person Who Handle Food, and Modes of Transmission of Such Pathogens” is available on the Centers for Disease Control and Prevention (CDC) website (https://www.cdc.gov/foodsafety/pdfs/pathogens-by-food-handlers-508c.pdf). The in vitro testing proposed in the HCCM includes only bacterial species. However, in 2014, the CDC reported that bacterial foodborne illness accounted for only 51 percent of food-borne disease outbreaks. Viruses were cited as the second most common cause of disease outbreaks (43 percent). Thus, over one-third of food-borne disease outbreaks included in the CDC report were not caused by bacteria (Ref. 12). Further, norovirus was reported as the most common cause of confirmed, single-etiology outbreaks, accounting for 284 outbreaks (43 percent); its transmission from contaminated hands to food items plays a major role in this foodborne illness. Parasites, including the protozoan species Giardia lamblia, Cryptosporidium species, and Cyclospora cayentanensis, accounted for a much smaller number of outbreaks, but should also be taken into consideration. These consideration