Federal Register Vol. 83, No.235,

On October 7, 2015, the Gold Star Fathers Act of 2015 (the “Act”) was enacted as Public Law 114-62. The Act provides an amendment to the eligibility criteria for veterans' preference purposes by amending subparagraphs (F) and (G) to 5 U.S.C. 2108(3). The amendment provides that fathers of certain permanently disabled or deceased veterans shall be included with mothers of such veterans as preference eligibles for treatment in the civil service. The Act also changes the requirements for parents of such veterans to qualify for this preference.

The Act replaces 5 U.S.C. 2108(3)(F) to state that the parent of an individual who lost his or her life under honorable conditions while serving in the armed forces during a war, in a campaign or expedition for which a campaign badge has been authorized, or during the period beginning April 28, 1952, and ending July 1, 1955, is eligible for preference if the spouse of that parent is totally and permanently disabled; or that parent, when preference is claimed, is unmarried or, if married, legally separated from his or her spouse.

The Act also replaces 5 U.S.C. 2108(3)(G) to state that the parent of a service-connected permanently and totally disabled veteran is eligible for preference if the spouse of that parent is totally and permanently disabled; or that parent, when preference is claimed, is unmarried or, if married, legally separated from his or her spouse.

On December 27, 2016, OPM issued an interim rule at 81 FR 94909, amending 5 CFR 211.102(d) to state that a “preference eligible” is “a veteran, disabled veteran, sole survivor veteran, spouse, widow, widower, or parent who meets the definition of `preference eligible' in 5 U.S.C. 2108.” The amendment replaced the word “mother” with the word “parent” to conform to the statutory definition.

During the 60-day comment period between December 27, 2016 and February 27, 2017, OPM received one comment from an individual. The individual expressed concern that absent oversight, agencies will use this change to (1) replace their older career employees with a non-career workforce, and (2) circumvent unspecified special hiring authorities. The commenter did not articulate how giving the fathers of certain permanently-disabled or deceased veterans the same rights as mothers would have these effects. Because the commenter's concern is unclear and speculative, OPM cannot address it.

OPM acknowledges that oversight of veterans' preference is critical. OPM conducts regular reviews of veterans hiring across the Government to ensure that veterans are receiving the entitlements they have earned in the Federal hiring process. We have identified no systemic abuses or issues with veterans' preference or veterans hiring practices.

OPM has examined the impact of this rule as required by Executive Order 12866 and Executive Order 13563, which directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public, health, and safety effects, distributive impacts, and equity). A regulatory impact analysis must be prepared for major rules with economically significant effects of $100 million or more in any one year. This rule was not designated as a “significant regulatory action,” under Executive Order 12866 and was not reviewed by the Office of Management and Budget.

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

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

This rule will not result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any year and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

This action pertains to agency management, personnel, and organization and does not substantially affect the rights or obligations of nonagency parties and, accordingly, is not a “rule” as that term is used by the Congressional Review Act (Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA)). Therefore, the reporting requirement of 5 U.S.C. 801 does not apply.

Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with a collection of information subject to the requirements of the Paperwork 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).

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

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.

Establishing 6 new locality pay areas will impact about 70,000 GS employees. Locality pay rates now applicable in those areas will not change automatically because locality pay percentages are established by Executive order under the President's authority in 5 U.S.C. 5304 or 5304a, and the President decides each year whether to adjust locality pay percentages. When locality pay percentages are adjusted, past practice has been to allocate a percent of the total GS payroll for locality pay raises and to have the overall dollar cost for such pay raises be the same, regardless of the number of locality pay areas. If a percent of the total GS payroll is allocated for locality pay increases, the addition of new areas results in a somewhat smaller amount to allocate for locality pay increases in existing areas. Implementing higher locality pay rates in the six new locality pay areas could thus result in relatively lower pay increases for employees in existing locality pay areas than they would otherwise receive.

Establishing McKinley County, NM, as an area of application to the Albuquerque-Santa Fe-Las Vegas, NM, locality pay area will impact about 1,600 GS employees. Establishing San Luis Obispo County, CA, as an area of application to the Los Angeles-Long Beach, CA, locality pay area will impact about 100 GS employees.

Using the definitions of MSAs and CSAs in OMB Bulletin No. 18-03 as the basis for locality pay area boundaries will impact about 153 GS employees in the new San Antonio-New Braunfels-Pearsall, TX, locality pay area. However, those GS employees are included in the impact statement above regarding establishment of the six new locality pay areas. No other locality pay areas are impacted by using MSAs and CSAs in OMB Bulletin No. 18-03 as the basis for locality pay area boundaries.

The changes in the names of the Boston-Worcester-Providence, MA-RI-NH-CT-ME and Albany-Schenectady, NY, locality pay areas will have no impact on GS employees because the geographic boundaries of the two locality pay areas affected will remain the same.

OPM received 184 comments on the proposed rule. Most commenters supported the proposed changes in the definitions of locality pay areas.

A number of comments reflected misunderstanding of the proposed rule's definitions of locality pay areas, with some comments indicating a belief that certain counties actually included in a proposed locality pay area were excluded. As explained in the proposed rule, locality pay areas consist of (1) the MSA or CSA comprising the basic locality pay area and, where criteria recommended by the Federal Salary Council and approved by the Pay Agent are met, (2) areas of application. Regarding the MSAs and CSAs comprising basic locality pay areas, these final regulations define MSA as the geographic scope of an MSA as defined in OMB Bulletin No. 18-03 and define CSA as the geographic scope of a CSA as defined in OMB Bulletin No. 18-03. (OMB Bulletin No. 18-03 is posted at 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.

Establishing new locality pay areas could have the long-term effect of increasing pay for Federal employees in affected locations if the President establishes higher locality pay percentages for those new pay areas. In addition, studies do suggest that increasing wages can raise the wages of other workers when employers need to compete for personnel. However, when locality pay percentages are adjusted, the practice has been to allocate a percent of the total GS payroll for locality pay raises and to have the overall cost for such pay raises be the same, regardless of the number of locality pay areas.

OPM expects this final rule to impact approximately 71,700 GS employees. Of the changes this final rule implements, the most significant change in terms of employment results from establishment of the Virginia Beach-Norfolk, VA-NC locality pay area, in which approximately 30,400 GS employees would be affected. Considering the relatively small number of employees affected, OPM does not anticipate this rule will substantially impact local economies or have a large impact in local labor markets. In addition, OPM did not receive any comments expressing concern regarding such impact.

As future locality pay rulemakings may impact higher volumes of employees in geographical areas and could rise to the level of impacting markets, OPM will continue to study the implications of such impacts in E.O. 13771 designations for future rules as needed.

Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distribute impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This final rule has been designated a “significant regulatory action,” although not economically significant, under section 3(f) of Executive Order 12866. Accordingly, the rule has been reviewed by the Office of Management and Budget (OMB).

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

OPM certifies that this rule will not have a significant economic impact on a substantial number of small entities as this rule only applies to Federal agencies and employees.

OPM has examined this rule in accordance with Executive Order 13132, Federalism, and has determined that this rule will not have any negative impact on the rights, roles and responsibilities of State, local, or tribal governments.

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

This rule will not result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any year and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

This action pertains to agency management, personnel, and 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.

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

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

Regulatory Certifications Executive Order 12866

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

The Regulatory Flexibility Act is not applicable to this rule because USDA is not required by 5 U.S.C. 533 or any other provisions of law to publish a notice of proposed rulemaking with respect to the subject matter of this rule.

It has been determined through an environmental assessment that the issuance of this interim final rule will not have a significant impact upon the human environment. Copies of the environmental assessment may be obtained by contacting Karen Fullen at (503) 273-2404 or [email protected].

Executive Order 12372, “Intergovernmental Review of Federal Programs,” requires consultation with State and local officials. The objectives of the Executive Order are to foster an intergovernmental partnership and a strengthened federalism, by relying on State and local processes for State and local government coordination and review of proposed Federal Financial assistance and direct Federal development. This program is not subject to Executive Order 12372, which requires consultation with State and local officials.

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule will not preempt State or local laws, regulations, or policies unless they present an irreconcilable conflict with this rule. Before any judicial action may be brought regarding the provisions of this rule, appeal provisions of 7 CFR parts 11, 614, and 780 must be exhausted.

This rule has been reviewed under Executive Order 13132, “Federalism.” The policies contained in this rule do not have any substantial direct effect on States, on the relationship between the Federal Government and the States, or 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.

This rule has been reviewed in accordance with Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments.” Executive Order 13175 requires Federal agencies to consult and coordinate with Tribes on a government-to-government basis on policies that have Tribal implications, including regulations, legislative comments or proposed legislation, and other policy statements or actions that have substantial direct effects on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes or on the distribution of power and responsibilities between the Federal Government and Indian Tribes.

USDA has assessed the impact of this rule on Indian Tribes and determined that this rule does not, to our knowledge, have Tribal implications that require Tribal consultation under Executive Order 13175. If a Tribe requests consultation, the Natural Resources Conservation Service (NRCS) will work with the USDA Office of Tribal Relations to ensure meaningful consultation is provided.

Pursuant to Title II of the unfunded Mandates Reform Act of 1995, Public Law 104-4, the effects of this rulemaking action on State, local, and Tribal governments, and the public have been assessed. This action does not compel the expenditure of $100 million or more by any State, local, or Tribal governments, or anyone in the private sector; therefore, a statement under Section 202 of the Unfunded Mandates Reform Act of 1995 is not required.

This rule has a potential impact on participants for many programs listed in the Catalog of Federal Domestic Assistance in the Agency Program Index under the Department of Agriculture.

Section 1246 of the Food Security Act of 1985 provides that regulations issued under Title XII are exempt from the requirements of the Paperwork Reduction Act (44 U.S.C. Chapter 35).

USDA is committed to complying with the E-Government Act to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

Title XII of the Food Security Act of 1985, as amended (the 1985 Act), encourages participants in USDA programs to adopt land management measures by linking eligibility for USDA program benefits to farming practices on highly erodible land and wetlands. In particular, the highly erodible land conservation (HELC) provisions of the 1985 Act provide that after December 23, 1985, a program participant is ineligible for certain USDA program benefits for the production of an agricultural commodity on a field in which highly erodible land is predominant. Additionally, the wetland conservation (WC) provisions of the 1985 Act provide that after December 23, 1985, a program participant is ineligible for certain USDA program benefits for the production of an agricultural commodity on a converted wetland, or after November 28, 1990, for the conversion of a wetland that makes the production of an agriculture commodity possible. The Agricultural Act of 2014 amended the 1985 Act to expand the HELC/WC requirements to encompass crop insurance benefits, and thus, producers obtaining Federally reinsured crop insurance must be in compliance with an NRCS-approved conservation plan for all highly erodible land; not plant or produce an agricultural commodity on a wetland converted after February 7, 2014; and not have converted a wetland after February 7, 2014, to make possible the production of an agricultural commodity. The 1985 Act, however, affords relief to program participants who meet certain conditions identified under the 1985 Act by exempting such actions from the ineligibility provisions.

The USDA regulations implementing the HELC and WC provisions of the 1985 Act are found at 7 CFR part 12. The regulations at 7 CFR part 12 list actions that may result in a determination of ineligibility, the program benefits that are at risk, and the conditions under which these activities can occur without losing program eligibility. The regulations are divided into three subparts. Subpart A describes the terms of ineligibility, USDA programs encompassed by its terms, the list of exemptions from ineligibility, the agency responsibilities, and conditions that apply when persons adversely affected by an agency determination request an appeal. Subpart B describes in greater detail the technical aspects of the HELC provisions, including the technical criteria for identification of highly erodible lands, criteria for highly erodible field determinations, and requirements for the development of conservation plans and conservation systems. Subpart C describes in greater detail the technical aspects of the WC provisions, including the criteria for determining a wetland, the criteria for determining a converted wetland, and the uses of wetlands and converted wetlands that can be made without losing program eligibility.

USDA policy guidance regarding implementation of the HELC and WC provisions is found in the current edition of the NRCS National Food Security Act Manual (NFSAM), including the procedures for how to delineate wetlands and make wetland determinations in accordance with Subpart C of 7 CFR part 12. This rule provides transparency to USDA program participants and stakeholders concerning how USDA delineates, determines, and certifies wetlands. It also allows program participants to better understand whether their actions may result in ineligibility for USDA program benefits. USDA requests public comment and will consider incorporating such public comment into its policy guidance.

The complexity of making a wetland determination in highly altered agricultural landscapes requires flexibility in the approach used to identify wetlands. Since 1986, USDA has provided the internal agency policy on making HELC and WC determinations in the NFSAM. In response to multiple statutory changes and changes to the science, those methods have evolved over the decades since passage of the WC provisions. The regulations and internal agency policy have also been revised many times over this 33-year period. The purpose of this interim rule, with request for comment, is to codify many technical portions of the existing agency policy that have not undergone public review and comment.

USDA developed the wetland determination procedures from the statutory framework for the WC provisions. In particular, section 1201(a) of the 1985 Act defines “wetland” as follows:

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.

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.

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:

The 1985 Act definition represents the first time that Congress defined the term “wetland.” Also, for the first time in Federal law, Congress also provided a definition for the terms “hydric soil” and “hydrophytic vegetation.” These three congressional definitions in the 1985 Act only differ slightly from what is used by the Corps and EPA for Section 404 of the Clean Water Act. The Manager's Report to the 1990 Act acknowledges that NRCS used wetland delineation methodology that had been developed in consultation with other Federal and State agencies.

Since the WC provisions contain specific definitions, exemptions, and guidance for its implementation, where these provisions differ from those in the Corps Manual, NRCS identifies these differences in the FSA procedures. Thus, NRCS adopted the use of the Corps methods, but not in their entirety. Where needed to address differences in the two laws, and where needed to address unique challenges of delineating wetlands on agricultural lands, NRCS provides variances to the Corps methods.

To avoid confusion, NRCS clearly informs the program participant that the determinations are for purposes of the WC provisions only, and that the producer should contact the Army Corps of Engineers for clarification about whether a particular activity will require a Clean Water Act Section 404 permit.

Current language in 7 CFR part 12 distinguishes farmed wetland hydrology criteria on whether the area is a pothole, playa, or pocosin. These three landforms are not defined in the regulation. Since it is a critical determination about the scope of the restrictions to which a producer will be subject, there is a need for a regulatory definition to provide consistency in the determination of the presence of these special land forms. NRCS has longstanding definitions in policy, located in the appendix to the NFSAM; however, the appendix was not transferred to the current electronic policy document storage system. NRCS is amending § 12.2 to add these definitions to the WC regulation.

The prior hydrologic criteria for farmed wetland and farmed wetland pasture was based strictly on the quantification of the number of days that the wetland experienced inundation or saturation during the growing season. Further, for farmed wetland, these criteria differed depending on the landscape position of the wetland, with playa, pothole, and pocosin requiring 7 days of inundation or 14 of saturation, and all other landscape positions requiring 15 consecutive days of inundation.

Quantification of a number-based hydrologic criteria is both inefficient and cost prohibitive, and if practiced, requires the installation of monitoring equipment. For this reason, other Federal agencies with responsibilities for wetland conservation or regulation either did not adopt or have since abandoned such an approach in favor of one that uses more readily observable and easily quantifiable criteria. The agency has itself moved from a number-based approach to such an approach, with criteria that are based on observable conditions resulting from such inundation or saturation and is therefore more consistent with the agency's statutory definition of “wetland.” Codifying this indicator-based approach as the current science and approach by NRCS to make a decision on wetland hydrology will improve transparency and understanding by program participants and the general public.

The term “best drained condition” is introduced and defined to provide clarity regarding a long-standing and practiced statutory concept that is fundamental to the identification of wetlands that experienced drainage manipulations prior to enactment of the 1985 Act, and to meet congressional intent to provide certainty to persons concerning the status of such land and its future use. This long-standing concept provides that a person has the statutory right to maintain hydrologic conditions on wetlands that were converted to crop production prior to the 1985 Act, and are not abandoned, to the extent that those conditions existed on or before December 23, 1985.

The definition of wetland requires the presence of hydrology sufficient to support a prevalence of hydrophytic vegetation. Hydrology, as it relates to the definition of “wetland” contained in § 12.2, is further referenced throughout part 12 as a diagnostic factor for which consideration is required during the identification of wetlands. To provide clarification concerning this requirement, the definition of wetland hydrology and its related identification procedures are being incorporated into part 12, with associated reference to the underlying considerations of “best drained condition” and the determination of normal climatic conditions in § 12.31.

Wetland determinations can be conducted on different areas of an agricultural operation. In some cases, the wetland determinations are conducted on a farm tract, while in other instances only specific farm fields or areas within a field are assessed. The USDA program participant initiates the wetland determination with a request submitted to the Farm Service Agency on an AD-1026. If an activity that could potentially result in a determination of ineligibility is planned, the program participant identifies the location of the activity on a map. NRCS will conduct wetland determinations on a field or sub-field basis except when the producer requests a determination for their entire farm tract. To clarify that NRCS will conduct a wetland determination only on the area specified by the USDA program participant, 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.

Part 12 provides for a minimal effect exemption for wetland conversions that have only a minimal effect on the functional hydrological and biological value of the wetland and other wetlands in the area. Current regulatory language requires that the minimal effect determination be based upon a functional assessment made during an on-site evaluation of all wetlands in the area. This requirement is overly burdensome, and on-site evaluations can seldom be made on property not controlled by the subject person. Removing the on-site requirement will better allow USDA to provide this statutory exemption to USDA program participants, and such removal will not provide a substantially different decision as would otherwise occur, especially considering that assessments can be conducted remotely based on a general knowledge of wetland conditions in the area.

NRCS began making wetland determinations subsequent to the enactment of the 1985 Act and the interim final rule for 7 CFR part 12 promulgated in 1986. These wetland determinations were completed utilizing soil surveys, U.S. Fish and Wildlife Service National Wetland Inventory maps, and USDA aerial imagery or site visits. Producers were provided appeal rights with these determinations. In the 1990 Farm Bill, the concept of certification of wetland determinations was incorporated into the WC provisions. In particular, as described in the Manager's Report to the 1990 Farm Bill:

The changes made to 7 CFR part 12 in 1991 included the following incorporation of certification at § 12.30(c) (1991):

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.

For the reasons explained above, USDA amends 7 CFR part 12 as follows:

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 new uniform compliance date will apply only to final FSIS regulations that require changes in the labeling of meat and poultry products and that are published after January 1, 2019, and before December 31, 2020. For each final rule that requires changes in labeling, FSIS will specifically identify January 1, 2022, as the compliance date. All meat and poultry food products that are subject to labeling regulations issued between January 1, 2019, and December 31, 2020, will be required to comply with these regulations on products introduced into commerce on or after January 1, 2022. If any food labeling regulation involves special circumstances that justify a compliance date other than January 1, 2022, the Agency will determine an appropriate compliance date and will publish that compliance date in the rulemaking.

Two-year increments increase industry's ability to make orderly adjustments to new labeling requirements without exposing consumers to outdated labels. This approach allows meat and poultry producers to plan for the use of label inventories and to develop new labeling materials that meet the new requirements. It also serves to reduce the economic impact of changing labels on both producers and consumers.

In the May 4, 2004, proposed rule on uniform compliance dates for labeling requirements, FSIS provided notice and solicited comment (69 FR 24539). In the March 5, 2007, final rule, FSIS received only four comments in response to the proposal, all in support. In the March 5, 2007, final rule, FSIS determined that further rulemaking for uniform compliance dates for labeling requirements is unnecessary (72 FR 9651). The Agency received no comments on the 2007 final rule, the comments FSIS received on the 2012 final rule were outside the scope (77 FR 76824), and FSIS received no comments on the 2014 final rule (79 FR 71007) or the 2016 final rule (81 FR 91670). Consistent with its statement in 2007, FSIS finds that further rulemaking on this matter is unnecessary. However, FSIS is providing an opportunity for comment on the uniform compliance date established in this final rule.

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety benefits, distributive impacts, and equity). Executive Order (E.O.) 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This final rule has been designated as a “non-significant” regulatory action under section 3(f) of E.O. 12866. Accordingly, the final rule has not been reviewed by the Office of Management and Budget under E.O. 12866.

This rule does not have a significant economic impact on a substantial number of small entities; consequently, a regulatory flexibility analysis is not required (5 U.S.C. 601-612).

Public awareness of all segments of rulemaking and policy development is important. Consequently, FSIS will announce this 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.

No agency, officer, or employee of the USDA shall, on the grounds of race, color, national origin, religion, sex, gender identity, sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, or political beliefs, exclude from participation in, deny the benefits of, or subject to discrimination any person in the United States under any program or activity conducted by the USDA.

To file a complaint of discrimination, complete the USDA Program Discrimination Complaint Form, which may be accessed online at 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).

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

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.

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.

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.

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

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.

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.

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.

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.

This rulemaking pertains only to the FICO assessments, which the FDIC collects on behalf of FICO. It does not affect the deposit insurance assessments that the FDIC collects from insured depository institutions, which will continue in their normal manner. The sections below describe the history and content of the final rule.

On September 26, 2018, FHFA published in the 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.

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.

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.

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.

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.

By statute, FHFA must dissolve FICO as soon as practicable after it has made the final payments of principal and interest due on its Obligations, the last of which matures in September 2019. To facilitate FICO's prompt and orderly dissolution, and for the other reasons described in Section III above, this final rule will make all 2019 FICO assessments final and will terminate FICO assessment adjustments as of March 26, 2019.

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

FHFA has exclusive regulatory authority over FICO and has sole responsibility for interpreting and applying the provisions of the Bank Act that govern FICO's operations and dissolution. For the reasons described in Section III, FHFA has determined that the most appropriate way to interpret the provisions of the Bank Act that refer to the manner in which the FDIC conducts its own assessments is to read them as applying only while FICO is conducting its own assessments. FHFA has not identified any likely duplication, overlap, and/or potential conflict between the final rule and any other federal rule.

This final rule applies to FICO and the manner in which it conducts its assessments, and may indirectly affect any FDIC-insured depository institutions that have been assessed to pay interest on the FICO's obligations. As of March 2018, the FDIC insured 5,606 depository institutions, of which 4,492 are defined as small banking entities for purposes of the RFA.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.

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.

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.

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:

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.

The Coast Guard is issuing this rule under authority in 33 U.S.C. 1231. The COTP Northern New England has determined that potential hazards associated with the demolition, subsequent removal, and replacement of the Barters Island Bridge and a temporary bridge will be a safety concern for anyone transiting within a 50 yard radius of the center point of the Barters Island Bridge. The purpose of this rule is to ensure safety of vessels and the navigable waters in the safety zone before, during, and after the bridge demolition, removal, and replacement. During times of enforcement, no vessel or person would be permitted to enter the safety zone without obtaining permission from the COTP Northern New England or a designated representative.

As noted above, we received one comment on our NPRM published October 9, 2018. The comment was not related to this rulemaking nor does it fall within the scope of this rulemaking. There are no changes in the regulatory text of this rule from the proposed rule in the NPRM.

This rule establishes a safety zone from 12:01 a.m. on December 1, 2018 through 11:59 p.m. on January 31, 2021. While the safety zone would be effective throughout this period, it would only be enforced during operations on replacement of the Barters Island Bridge. The safety zone would include all navigable waters from surface to bottom within a 50 yard radius from the center point of the Barters Island Bridge on the Back River, ME. During times of enforcement, no vessel or person would be permitted to enter the safety zone without obtaining permission from the COTP Northern New England or a designated representative. The duration of the zone is intended to ensure the safety of vessels and these navigable waters before, during, and after operations on replacement of the Barters Island Bridge. The Coast Guard will notify the public and local mariners of this safety zone through appropriate means, which may include, but are not limited to, publication in the Federal Register, the Local Notice to Mariners, and Broadcast Notice to Mariners via marine Channel 16 (VHF-FM) in advance of any enforcement.

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

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13771 directs agencies to control regulatory costs through a budgeting process. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, the rule has not been reviewed by the Office of Management and Budget (OMB), and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771.

This regulatory action determination is based on the following reasons: (1) The safety zone only impacts a small designated area of Back River, (2) the safety zone will only be enforced during certain construction activities necessitating a full waterway closure for safety purposes, which is only anticipated to occur on 85 days over a two year period, or if there is an emergency, (3) persons or vessels desiring to enter the safety zone may do so with permission from the COTP Northern New England or a designated representative, (4) the Coast Guard will notify the public of the enforcement of this rule via appropriate means, such as via Local Notice to Mariners and Broadcast Notice to Mariners via marine Channel 16 (VHF-FM).

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard received no comments from the Small Business Administration on this rulemaking. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule would not have a significant economic impact on a substantial number of small entities.

While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section IV.A above, this rule would not have a significant economic impact on any vessel owner or operator.

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

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

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

Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this rule has implications for federalism or Indian tribes, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

We have analyzed this rule under Department of Homeland Security Directive 023-01 and Commandant Instruction M16475.1D, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves a safety zone that would prohibit entry within a 50 yards radius from the center point of the Barters Island Bridge during its removal and replacement over an approximately two year period. It is categorically excluded from further review under paragraph L60 (a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 01. A Record of Environmental Consideration supporting this determination is available in the docket where indicated under ADDRESSES.

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

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:

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

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

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

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

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

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.

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.

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.

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

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

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.

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.

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

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.

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.

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.

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.

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.

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.

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

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.

The NCP establishes the criteria that EPA uses to delete sites from the NPL. In accordance with 40 CFR 300.425(e), sites may be deleted from the NPL where no further response is appropriate. In making such a determination pursuant to 40 CFR 300.425(e), EPA will consider, in consultation with the state, whether any of the following criteria have been met:

i. Responsible parties or other persons have implemented all appropriate response actions required;

ii. all appropriate Fund-financed response under CERCLA has been implemented, and no further response action by responsible parties is appropriate; or

iii. the remedial investigation has shown that the release poses no significant threat to public health or the environment and, therefore, the taking of remedial measures is not appropriate.

Pursuant to CERCLA Section 121(c) and the NCP, EPA conducts five-year reviews to ensure the continued protectiveness of remedial actions where hazardous substances, pollutants, or contaminants remain at a site above levels that allow for unlimited use and unrestricted exposure. EPA conducts such five-year reviews even if a site is deleted from the NPL. EPA may initiate further action to ensure continued protectiveness at a deleted site if new information becomes available that indicates it is appropriate. Whenever there is a significant release from a site deleted from the NPL, the deleted site may be restored to the NPL without application of the hazard ranking system.

The following procedures apply to deletion of the Tomah Armory Site:

(1) EPA consulted with the State of Wisconsin prior to developing this direct final Notice of Deletion and the Notice of Intent to Delete co-published today in the “Proposed Rules” section of the 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.

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

The Tomah Armory Site (CERCLS ID: WID980610299) is approximately 9.6 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.

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.

EPA determined that the contamination at the landfill did not pose any significant risks to human health or the environment under current or reasonably anticipated future land use based upon the results of the Tomah Armory Site investigations and risk assessment. Additionally, institutional controls (ICs) to prevent inappropriate land and groundwater use at the Tomah Armory Site were already in place in the form of restrictive covenants enforceable by the WDNR.

EPA determined that remedial action at the Tomah Armory Site was not warranted, and recommended no action for the Tomah Armory Site. EPA proposed, however, that additional groundwater monitoring be conducted to ensure that groundwater conditions continued to pose no significant risk. EPA issued a Record of Decision (ROD) for no action with groundwater monitoring for the Tomah Armory Site on September 23, 1997.

EPA executed an Explanation of Significant Differences (ESD) modifying the Tomah Armory Site remedy in September 2014. The purpose of the ESD was to document EPA's decision to formally incorporate ICs as part of the remedy and to modify the requirement for groundwater monitoring.

The ESD noted the ICs that were already in place at the Tomah Armory Site, and added additional ICs in the form of Wisconsin Continuing Obligations regulations and a Long-Term Stewardship (LTS) Plan to the selected remedy. The ESD also changed the groundwater monitoring component of the remedy from being “required” to being conducted “as needed”.

WIARNG conducted seven rounds of post-ROD groundwater monitoring at the Tomah Armory Site from May 1999 through April 2011. WIARNG collected the groundwater samples from six monitoring locations around the Tomah Armory Site during the first six rounds of sampling, and follow-up groundwater sampling at three locations during the last round of sampling. WIARNG analyzed the groundwater samples for dissolved lead.

None of the groundwater samples exceeded the lead AL of 15 µg/L. Most of the groundwater monitoring results were at or below the detection limit. The highest value observed was 4.1 µg/L in 2010 at groundwater monitoring well MW-3. WIARNG resampled MW-3 in 2011 and did not detect any lead.

WIARNG collected, analyzed and reviewed all groundwater monitoring data in accordance with the Quality Assurance Project Plan for the Tomah Armory and Tomah Fairgrounds Remedial Investigation (U.S. Environmental Protection Agency, June 1993).

WIARNG conducted a landfill cap evaluation in November 2010. The purpose of the evaluation was to assess areas of potential settlement and areas of potential contamination and stressed vegetation. WIARNG did not find any evidence of settlement or visible contamination in the paved or gravel covered areas of the Tomah Armory Site. WIARNG did not find any evidence of exposed refuse on the surface of the Tomah Armory Site or across the alleyway to the west. There were several areas of stressed vegetation in lawn-covered areas on the west side of the Tomah Armory Site. WIARNG personnel maintain the Tomah Armory Site by mowing the property, filling the occasional depression, and re-seeding areas of stressed vegetation as needed.

WIARNG requested EPA's concurrence with WDNR's recommendations to abandon the remaining monitoring wells around the Tomah Armory Site in December 2015. EPA reviewed WIARNG's request and concurred with removing the wells in April 2016. WIARNG properly abandoned the groundwater monitoring wells in June 2016.

WIARNG completed a Remedial Action (RA) Report in August 2016. The RA Report documents the successful implementation of the Landfill Cap Maintenance Plan and the Institutional Control Plan (ICP), including a Long-Term Stewardship (LTS) Plan for the Tomah Armory Site. A copy of the Landfill Cap Maintenance Plan, the ICP and the LTS Plan are included in Attachment 1 and Appendix H of the 2016 RA Report.

EPA completed a Final Close Out Report (FCOR) documenting the completion of all appropriate response actions at the Tomah Armory Site on February 7, 2018.

The Tomah Armory Site ROD is a no-action ROD with groundwater monitoring and does not establish any cleanup levels for soil or groundwater. During monitoring, EPA compared detected concentrations of lead in the groundwater to the Federal AL and Wisconsin Administrative Code (WAC) Natural Resources (NR) Chapter 140 limit for lead of 15 µg/L.

Eight rounds of groundwater samples collected from six groundwater monitoring locations around the Tomah Armory Site from 1995 to 2010, and a follow-up round of sampling at three wells in 2011, did not detect any lead concentrations above the AL for lead. The majority of the lead results were at or below the detection limit. The highest observed values for lead were 4.7 µg/L at MW-4 in 1996 and 4.1 µg/L in MW-3 in 2010.

Subsequent groundwater samples collected from MW-4 from 1999 to 2010 and from MW-3 in 2010 did not contain lead. The results of the groundwater monitoring confirm that EPA's no action remedy for the Tomah Armory Site selected in the 1997 ROD, as modified by the 2014 ESD, is appropriate. A summary of the groundwater monitoring data for the Tomah Armory Site is provided in Table 3 of the 2018 FCOR, Docket Document ID No. EPA-HQ-SFUND-1987-0002-0384 in the Docket.

WIARNG conducts operation and maintenance (O&M) in accordance with the Landfill Cap Maintenance Plan and the ICP and LTS Plan. WIARNG inspects the Tomah Armory Landfill annually, at a minimum. WIANRG mows and maintains the property throughout the year, and addresses maintenance issues such as filling occasional depressions, re-seeding areas of stressed vegetation, and evaluating the landfill cap for subsidence. If subsidence is observed indicating possible degradation of the landfill cap, the cap will be evaluated and potential problems addressed as soon as possible. Property owners must contact WDNR at least 45 days prior to making any removal, replacement or changes to the landfill cap.

The remedy for the Tomah Armory Site includes ICs to ensure long term protectiveness to human health and the environment. Several types of proprietary and government controls including deed restrictions, zoning, municipal ordinances, and Wisconsin state regulations are in place to provide 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.

The Tomah Armory Site requires statutory five-year reviews (FYRs) because hazardous substances remain at the Tomah Armory Site above levels that allow for unrestricted use and unlimited exposure. EPA conducted FYRs of the Tomah Armory Site in 2001, 2006, 2011, and 2016.

EPA's most recent FYR of the Tomah Armory Site, in August 2016, determined that the remedy at the Tomah Armory Site is protective of human health and the environment. The remedy is functioning as intended, groundwater standards continue to be met, there has been compliance with groundwater and land use restrictions on the property, and no incompatible groundwater or land use has occurred at the Tomah Armory Site. ICs that restrict groundwater use and the disturbance of the cap and buried waste remain in place, and are effectively monitored and maintained through the implementation of the ICP, which includes a LTS Plan.

The FYR did not identify any issues or recommendations that would affect the current or future protectiveness of the remedy for the Tomah Armory Site. The most important tasks to continue are maintaining the landfill cover and ensuring that the ICs remain in place and are effective.

Finally, the FYR recommended deleting the Tomah Armory Site from the NPL.

EPA satisfied public participation activities for the Tomah Armory Site required in Sections 113(k) and 117 of CERCLA, 42 U.S.C. 9613(k) and 9617. EPA hosted a “kick-off” public meeting for the Tomah Armory Site in July 1993 at the Tomah City Hall Council Chambers. During the meeting, EPA informed local residents about the Tomah Armory Site, the Superfund process and the work to be performed as part of the RI.

EPA established an information repository for the Tomah Armory Site in 1993 at the Tomah Public Library, 716 Superior Avenue, Tomah, Wisconsin 54660. EPA maintains a copy of the administrative record documents for the 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.

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.

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.

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

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.

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).

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.

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).

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

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).

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.

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.

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.

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.

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.

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.

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.

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.

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.

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).

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.

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).

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

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.

1. The Commission has witnessed unprecedented growth in the degree to which service providers offer handsets that are hearing aid-compatible. In light of the growth in hearing aid-compatible handsets and decreasing public reliance on reports since they were first adopted by the Commission in 2003, the Commission takes two key steps to reform the hearing-aid compatibility reporting regime. First, the Commission revises its rules to require service providers to post on their websites the most critical information currently submitted on FCC Form 655. By requiring all service providers to post this information on publicly accessible websites that they control, the Commission can ensure that consumers have access to information about the increased numbers of hearing aid-compatible handset models with less burden for both service providers and consumers. This website information also will allow the Commission to continue to evaluate rule compliance without collecting information directly from service providers. Consumers will benefit from having access to the most up-to-date information about each handset model being offered by service providers.

2. Second, the Commission finds that many of the benefits of annual status reporting by service providers have become increasingly outweighed by the burdens that such information collection places on these entities. Instead of requiring providers to submit the FCC Form 655 on an annual basis, the Commission will require providers to submit annual certifications that require only a statement that a service provider is or is not in full compliance with the Commission's hearing aid compatibility rules, and if not, explain why. The action the Commission takes here streamlines the Commission's collection of information while continuing to fulfill the underlying purposes of the current reporting regime.

3. By using streamlined annual certifications combined with website reporting, the Commission ensures that it meets its objectives of monitoring industry and enforcing compliance with the relevant deployment benchmarks and other hearing aid compatibility provisions in the Commission's rules. This approach will ensure that consumers have better access to useful, current information about the hearing aid compatibility of the handset models being offered by service providers.

4. The Commission notes that in a separate docket, it is considering broader changes to the hearing aid compatibility rules that may be appropriate in the event the Commission requires 100% of covered handsets to be hearing aid-compatible. Per the schedule established in that proceeding, which the Commission has no current plan to deviate from, the process through which the Commission would make a determination whether a 100 percent requirement is achievable would conclude at the end of 2022. Revisions to the existing deployment benchmarks and other related rules are outside of the scope of this proceeding, and therefore these requirements will remain in place unless and until the Commission takes further action in that docket. To that end, the Commission's decision here is not predicated on further changes that might be under consideration, and thus, does not prejudge any further steps it may take to modify its reporting rules in that proceeding.

5. The Commission amends its hearing aid compatibility website requirements for service providers to ensure that the objectives of the FCC Form 655 reporting requirement continue to be met. In doing so, the Commission adopts, in part, the proposal put forth by the Joint Consensus filers. Under the Commission's new rules, service providers will continue to comply with the existing website requirements supplemented with additional content that is useful to consumers. In addition, the Commission will carry over to the new website posting obligation limited content from the FCC Form 655 necessary to meet the Commission's information, monitoring, and enforcement goals.

6. In addition to the current website requirements, all service providers that operate publicly accessible websites (other than 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.

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.

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.

30. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the Notice of Proposed Rulemaking (NPRM), released in September 2017. The Commission sought written public comment on the proposals in the NPRM, including comment on the IRFA. The comments received are addressed below in section 2. This present Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.

31. In the Report and Order, the Commission modifies its wireless hearing aid compatibility rules, eliminates unnecessary and outdated reporting requirements, and improves its collection of information regarding the status of hearing aid-compatible handsets. The Commission finds that many of the benefits of annual status reporting by service providers have been realized and increasingly have become outweighed by the burdens that such information collection places on these entities. The Commission's new streamlined approach will continue to serve the underlying purposes of the Commission's annual reporting requirements without the burdens associated with that filing.

32. Specifically, the Commission waives the requirement for service provides to file the FCC Form 655 annual filing by January 15, 2019 and eliminates the requirement in subsequent years. Under the Commission's new approach, only wireless device manufacturers will continue to be obligated to file FCC Form 655 by July 15 of each calendar year. Next, the Commission amends its existing website requirements to ensure that consumers have access to the most up-to-date and useful information about the hearing aid compatibility of the handset models offered by service providers, and the Commission has sufficient information to verify compliance with the benchmark requirements. Only the most critical pieces of information currently submitted as part of the FCC Form 655 must continue to be made available on service providers' websites. The Commission will also require the service providers to file a simple, new, annual certification to enhance the ability of the Commission to enforce the hearing aid compatibility rules. The Commission also requires service providers to retain data regarding handsets no longer offered to verify compliance with its rules.

33. This new light-touch regulatory approach will enable the Commission to fulfill its responsibilities and objectives for wireless hearing aid compatibility. By requiring all service providers to post consistent content and information on their publicly available websites, the Commission ensures that consumers can access the information they need about the hearing aid compatibility of the handsets being offered. This website information will also allow the Commission to evaluate compliance with the relevant benchmarks and other hearing aid compatibility provisions in its rules. In addition to being able to verify compliance with its rules when necessary, the Commission will also be able to monitor the overall status of access to hearing aid-compatible handsets. The Commission's ability to verify and enforce compliance and monitor industry developments will also be served by requiring all service providers to annually file a certification stating whether or not they are in compliance with the Commission's hearing aid compatibility provisions.

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

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

36. The Chief Counsel did not file any comments in response to the proposed rules in this proceeding.

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

38. 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.

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.

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.

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.

54. The requirements in revised section 20.19(e), (h) and (i) constitute new or modified collections subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. They will be submitted to the Office of Management and Budget (OMB) for review under section 3507(d) of the PRA. OMB, the general public, and other Federal agencies are invited to comment on the new information collection requirements contained in this proceeding. This document will be submitted to OMB for review under section 3507(d) of the PRA. In addition, the Commission notes that, pursuant to the Small Business Paperwork Relief Act of 2002, it previously sought, but did not receive, specific comment on how the Commission might further reduce the information collection burden for small business concerns with fewer than 25 employees. The Commission describes impacts that might affect small businesses, which includes more businesses with fewer than 25 employees, in the Final Regulatory Flexibility Analysis in Appendix C.

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

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.

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

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.

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.

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.

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.

Given the request for a continued stay of the rule, the comment received supporting a stay, the lack of opposition to a stay in either the comments or at the public RSAC meeting, and FRA's interest in addressing the issues raised in the State petitions through notice and comment rulemaking prior to requiring full compliance with the SSP final rule, FRA finds notice and comment for this stay to be impracticable and incompatible with the forthcoming NPRM.

This final rule is a non-significant deregulatory action within the meaning of Executive Order 12866 and DOT policies and procedures. 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.

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.

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.

Executive Order 13132, “Federalism” (64 FR 43255, Aug. 10, 1999), requires FRA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” are defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” Under Executive Order 13132, the agency may not issue a regulation with federalism implications that imposes substantial direct compliance costs and that is not required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by State and local governments or the agency consults with State and local government officials early in the process of developing the regulation. Where a regulation has federalism implications and preempts State law, the agency seeks to consult with State and local officials in the process of developing the regulation.

This final rule has been analyzed in accordance with the principles and criteria contained in Executive Order 13132. FRA has determined that this rule does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. In addition, FRA has determined that this rule does not impose substantial direct compliance costs on State and local governments. Therefore, the consultation and funding requirements of Executive Order 13132 do not apply.

FRA has evaluated this rule in accordance with its “Procedures for Considering Environmental Impacts” (FRA's Procedures) (64 FR 28545, May 26, 1999) as required by the National Environmental Policy Act (42 U.S.C. 4321 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.

Pursuant to section 201 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 2 U.S.C. 1531), each Federal agency shall, unless otherwise prohibited by law, assess the effects of Federal regulatory actions on State, local, and tribal governments, and the private sector (other than to the extent that such regulations incorporate requirements specifically set forth in law). Section 202 of the Act (2 U.S.C. 1532) further requires that before promulgating any general notice of proposed rulemaking that is likely to result in the promulgation of any rule that includes any Federal mandate that may result in expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any 1 year, and before promulgating any final rule for which a general notice of proposed rulemaking was published, the agency shall prepare a written statement detailing the effect on State, local, and tribal governments and the private sector. This final rule will not result in such an expenditure, and thus preparation of such a statement is not required.

Executive Order 13211 requires Federal agencies to prepare a Statement of Energy Effects for any “significant energy action.” 66 FR 28355 (May 22, 2001). FRA has evaluated this rule in accordance with Executive Order 13211 and has determined that this regulatory action is not a “significant energy action” within the meaning of Executive Order 13211.

Executive Order 13783, “Promoting Energy Independence and Economic Growth,” requires Federal agencies to review regulations to determine whether they potentially burden the development or use of domestically produced energy resources, with particular attention to oil, natural gas, coal, and nuclear energy resources. See 82 FR 16093 (Mar. 31, 2017). FRA determined this regulatory action will not burden the development or use of domestically produced energy resources.