Federal Register Vol. 83, No.80,

The Administrative Procedure Act (APA), 5 U.S.C. 551 et seq., provides among other things, that “[e]ach agency shall give an interested person the right to petition for the issuance, amendment, or repeal of a rule.” (5 U.S.C. 553(e)) DOE received a petition from AHAM, as described in this document and set forth verbatim below,1 requesting that DOE reconsider its final rule on Test Procedures for Cooking Products, Docket No. EERE-2012-BT-TP-0013, RIN 1904-AC71, 81 FR 91418 (Dec. 16, 2016) (Final Rule). In promulgating this petition for public comment, DOE is seeking views on whether it should grant the petition and undertake a rulemaking to consider the proposal contained in the petition. By seeking comment on whether to grant this petition, DOE takes no position at this time regarding the merits of the suggested rulemaking or the assertions in AHAM's petition.

In its petition, AHAM requests that DOE undertake rulemaking to withdraw the cooking top test procedure, while maintaining the repeal of the oven test procedure that was part of the Final Rule. And, in the interim, AHAM seeks an immediate stay of the effectiveness of the Final Rule, including the requirement that manufacturers use the final test procedure to make energy related claims. Should DOE continue to pursue a revised cooking top test procedure, AHAM asserts that DOE should address repeatability and reproducibility and demonstrate, through round robin testing, that the test is repeatable and reproducible and, for gas cooking tops, accurate. AHAM claims that its analyses show that the test procedure is not representative for gas cooking tops and, for gas and electric cooking tops, has such a high level of variation it will not produce accurate results for certification or enforcement purposes and will not assist consumers in making purchasing decisions based on energy efficiency.

Although DOE welcomes comments on any aspect of the petition for reconsideration, DOE is particularly interested in receiving comments and views of interested parties concerning the following issues:

(1) The repeatability and reproducibility of the test procedure for conventional electric and gas cooking tops. DOE previously presented results from round robin testing completed by the Department and by IEC in the docket of the test procedure rulemaking. DOE seeks comments on that data as well as the new data AHAM has supplied supporting its petition;

(2) The accuracy of determining the simmer setting and turndown temperature;

(3) The impact of heating element cycling during the initial heat-up phase of testing on the overall measured energy consumption of electric cooking tops, and the prevalence of such cycling in units available on the market.

(4) The extent of any warpage which may have been observed at the bottom surface of test vessels during cooking top testing;

(5) The impact of varying gas burner and grate systems on the representativeness of the water-heating test method for gas cooking tops;

(6) The type of control system, heating element, and other product redesigns necessitated by changes in safety standards for electric cooking tops, and the impact of these new product designs on the repeatability, reproducibility, and representativeness of the electric cooking product test procedure;

(7) Characteristics of a representative test sample for electric and gas cooking tops for use in any additional round robin testing to evaluate the applicability of the test procedure to the conventional cooking top market as a whole;

(8) Information on how consumers cook differently on gas cooktops versus electric cooktops;

(9) Information on how consumers use the simmer setting on a gas cooktop; and,

(10) The test burden associated with the test procedure for conventional electric and gas cooking tops, including the ability of testing laboratories to meet the required ambient test conditions.

DOE invites all interested parties to submit in writing by June 25, 2018 comments and information regarding this petition.

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The Secretary of Energy has approved publication of this notification of petition for rulemaking.

The Association of Home Appliance Manufacturers (AHAM) respectfully petitions the Department of Energy (DOE) for reconsideration of its final rule on Test Procedures for Cooking Products, Docket No. EERE-2012-BT-TP-0013 RIN 1904-AC71, 81 Fed. Reg. 91418 (Dec. 16, 2016) (Final Rule).

AHAM believes that, overall, the adoption of a water-boil test procedure for cooking products is the appropriate procedure. And we thank DOE for making changes to its earlier proposed test procedure which would have used a hybrid block after AHAM demonstrated the practical difficulties associated with that test. But DOE adopted a final cooktop test procedure too hastily, especially in light of comments AHAM submitted that demonstrated the test's lack of repeatability and reproducibility and questioned the use of a test procedure meant for electric cooktops for gas cooktops. AHAM has evaluated the Final Rule and conducted additional testing on gas cooktops. Our analyses show that the test procedure is not representative for gas cooktops and, for gas and electric cooktops, has such a high level of variation it will not produce accurate results for certification or enforcement purposes and will not assist consumers in making purchasing decisions based on energy efficiency.

AHAM thus requests that DOE withdraw the cooktop test procedure. And, in the interim, we seek an immediate stay of the effectiveness, including the requirement that manufacturers use the final test procedure to make energy related claims, of the cooktop test procedure. Should DOE continue to pursue an improved cooktop test procedure, DOE should address repeatability and reproducibility and demonstrate, through round robin testing, that the test is repeatable and reproducible and, for gas cooktops, representative.

DOE began revisions to the cooktop test procedure with a notice of proposed rulemaking on January 30, 2013 (January 2013 NOPR) in which DOE proposed amendments to Appendix I to subpart B of 10 C.F.R. part 430 (Appendix I) that would allow for the measuring of active mode energy consumption of induction cooking products. Specifically, DOE proposed to require the use of test equipment—hybrid test blocks comprised of an aluminum body and a stainless steel base—compatible with induction technology.

AHAM objected to DOE's proposed amendments to the test procedure because the amendments did not enhance the accuracy and/or representativeness of the test procedure. See AHAM Comments on DOE's Notice of Proposed Rulemaking on Test Procedures for Conventional Cooking Products With Induction Heating Technology (April 15, 2013). AHAM commented that any test procedure DOE adopts to measure induction heating technology must be both repeatable and reproducible. Id. AHAM cautioned that significant further study was necessary before DOE could adopt a test procedure that accurately measures induction cooktop energy efficiency. Id. More specifically, AHAM opposed the proposed test procedure because the proposal had a number of technical problems and ambiguities (e.g., ambiguous construction of hybrid test block); DOE's data did not clearly identify one method (test block versus water heating) as being preferable to the other for induction units; and the proposed procedure would treat induction technology differently than other technologies, thereby penalizing it. Id. AHAM also questioned whether the test block method in general was representative of actual consumer use. Id.

In response to stakeholder comments, DOE published a supplemental notice of proposed rulemaking modifying its proposal. 79 Fed. Reg. 71894 (Dec. 3, 2014) (December 2014 SNOPR). DOE's modified proposal maintained a hybrid test block approach despite AHAM's comments. DOE proposed to add a layer of thermal grease between the stainless steel base and aluminum body of the hybrid test block to facilitate heat transfer between the two pieces, and DOE proposed additional test equipment for electric surface units with large diameters and gas cooking top burners with high input rates.

AHAM's comments on the December 2014 SNOPR raised serious concerns about the hybrid test blocks and the thermal grease. See AHAM Comments on DOE's Supplemental Notice of Proposed Rulemaking on Test Procedures for Conventional Cooking Products (Feb. 2, 2015). AHAM also raised questions about the testing of flexible cooking zone areas, testing units with flexible concentric burner sizes, and the use of the smallest dimension of a noncircular electric surface unit to determine block size. Id.

Based on comments it received in response to the December 2014 SNOPR and a series of manufacturer interviews DOE conducted in February and March 2015, DOE subsequently withdrew its proposal for testing conventional cooktops with a hybrid test block in yet another supplemental notice of proposed rulemaking. 81 Fed. Reg. 57374 (Aug. 22, 2016) (August 2016 SNOPR). In the August 2016 SNOPR, DOE instead proposed to modify its procedure to incorporate by reference the relevant sections of EN 60350-2:2013 “Household electric cooking appliances Part 2: Hobs—Methods for measuring performance,” which uses a water-heating test method to measure energy consumption of electric cooktops. Despite the fact that the EN test procedure DOE cited applies only to electric cooktops, DOE also proposed to extend that method to gas cooktops.

AHAM generally agreed and continues to agree with DOE that the best test method for cooktops is a water boil test and supported DOE's abandoning of the hybrid test block method. See AHAM Comments on DOE's SNOPR on Test Procedures for Cooking Products (Sept. 21, 2016). Nevertheless, AHAM commented extensively on potential sources of variation with DOE's proposed procedure that needed to be resolved before DOE finalized a cooktop test procedure. Id.

Prior to DOE proposing a water-heating test, AHAM conducted a round robin based on the Second Edition of IEC 60350-2 (2015), Household Electric Cooking Appliances—Part 2: Hobs—Methods for Measuring Performance. Id. The AHAM round robin consisted of four units encompassing a different combination of controls and heating elements. Id. AHAM assessed radiant, coil, and induction heating elements as well as infinite and step controls. Participating labs performed at least three full tests on the three electric technologies. The results demonstrated that the procedure was not reproducible from lab to lab. AHAM data demonstrated significant variation in the proposed test procedure—coefficients of variation of 9.2 percent for electric radiant cooktops, 7.1 percent for electric coil cooktops, and 8.4 percent for induction cooktops. Id.

Based on that testing, AHAM commented that a significant amount of work remained to be done to finalize a test and to demonstrate that the final test is repeatable and reproducible. Id. Specifically, AHAM listed a number of items that needed to be resolved, including several potential sources of test procedure variation, before DOE could finalize the test procedure, and requested that DOE issue a notice of data availability or supplemental notice of proposed rulemaking to provide stakeholders with an opportunity to comment:

• Lack of a tolerance on staying “as close as possible” to 90° C;

• Variability in energy consumption during the simmering phase;

• Variability in determining the turn down temperature;

• Variability in determining the turn down setting;

• Unit cycling;

• Specifying a temperature sensor for measuring the water temperature;

• A proposal to use a moving average for calculating the final result;

• Limited suppliers of test pots;

• No tool or tolerance specified for cooktop diameter measurement;

• Test pots do not accommodate all grate designs;

• Difficulty with placement of pots on gas cooktops;

• Impact of gas burner system, geometry, spacing, and grates on repeatability and reproducibility;

• Impact of using the electric test pots on gas cooktops; and

• Overshoot temperature of the water can reach beyond 90° C for some gas cooktops. Id.

In response to AHAM's comments, DOE sent AHAM a request for data on September 27, 2016. That data request was voluminous and overlapped with the comment period on the proposed standards for cooking products—which ended on November 2, 2016—and DOE proposed in parallel with the August 2016 SNOPR. See Energy Conservation Program: Energy Conservation Standards for Residential Conventional Cooking Products, Supplemental Notice of Proposed Rulemaking; 81 Fed Reg. 60784 (Sept. 2, 2016). Nevertheless, AHAM worked to answer DOE's questions and, on November 23, 2016, filed a detailed response, including a significant amount of raw data DOE requested which AHAM submitted to Navigant Consulting under a confidentiality agreement. See AHAM Comments on DOE's SNOPR on Test Procedures for Cooking Products (dated Nov. 22, 2016).1 AHAM informed DOE in advance that it would be submitting the response. Despite having asked for that data and having been informed AHAM would be providing it, DOE issued a final test procedure on that same day, November 23, 2016, which it published on December 16, 2016.

The Final Rule adopted DOE's proposed test procedure with some changes DOE believed would improve repeatability and reproducibility. In support of the final test procedure, DOE conducted additional testing. DOE conducted testing of five electric cooktops incorporating different heating technologies and control types. For each unit, DOE conducted testing on surface units capturing a range of heating element sizes. DOE conducted two to three tests per surface unit. For each individual test, DOE performed the full surface unit test method, including the preliminary test required to determine the turndown temperature and simmering setting for a given surface unit. DOE varied test operators for surface unit tests, but did not conduct testing in different laboratories. In addition, DOE included test results from previous tests of these units conducted in support of the August 2016 SNOPR. DOE relied on that minimal data to determine that the final test procedure, finalized only two months after DOE received voluminous comments from AHAM concerning a lack of repeatability and reproducibility as demonstrated through 27 tests on three units at three different laboratories.

The Energy Policy and Conservation Act of 1975, as amended (EPCA) requires that test procedures be reasonably designed to produce test results which measure energy efficiency, energy use, or estimated annual operating cost of a covered product during a representative average use cycle and shall not be unduly burdensome to conduct. 42 U.S.C. § 6293(b)(3). This requirement is meaningless if the test procedure is not repeatable and reproducible—only a repeatable and reproducible test procedure can produce accurate results that DOE can rely on for certification and verification purposes and that consumers can rely on to compare energy use or efficiency across products.

AHAM appreciates that DOE made changes from the August 2016 SNOPR to the Final Rule in an attempt to address AHAM's September 21, 2016 comments. AHAM also appreciates that DOE conducted additional testing to further assess the proposed and final test procedure. But DOE did not take the time or do the work necessary to finalize a test procedure that fully or satisfactorily addresses the significant issues AHAM raised in its comments or the data AHAM provided in response to DOE's request. This is further demonstrated based on additional testing and analysis AHAM conducted after the Final Rule was published.

DOE did not support the Final Rule with sufficient data to demonstrate that it is accurate, repeatable, and reproducible. More specifically, as discussed more fully below:

□ DOE has not demonstrated that the test procedure is representative for gas products. DOE did not demonstrate that its deviation from the international approach—testing gas cooktops using a different procedure than is used for testing electric cooktops—was warranted or would produce accurate, representative results. And DOE tested only a small sample that cannot be representative of the many different types of gas models on the market and the result is that the test may not adequately address the different systems available to consumers. Thus, DOE has not demonstrated that the test procedure is representative or accurate for gas products.

□ DOE's testing of electric and gas cooktops was insufficient to evaluate repeatability and reproducibility and, thus, DOE's conclusions are based on results with a low confidence level which is highlighted by AHAM's conflicting results. Accordingly, DOE did not produce sufficient evidence to demonstrate that its test procedure is supported by data.

□ Although DOE tried to address variation by requiring recording of the simmering setting selection, AHAM's testing demonstrates that that requirement does not in fact reduce variation.

□ Although DOE attempted to clarify when the simmering period starts, DOE's clarification does not adequately reduce variation.

□ DOE improperly dismissed unit cycling's contribution to variation.

□ DOE did not account for the fact that electric coil cooktops are currently undergoing significant redesign to comply with voluntary safety standards. It is possible that the new products will not respond the same way to the test.

□ DOE did not investigate the impact of pan warpage on test results. Initial data from a study done for AHAM shows pan warpage will contribute to variation.

□ Based on data from a round robin AHAM conducted with gas cooktops, the test procedure is not repeatable or reproducible for gas cooktops. Within unit and between unit variation also contributes to the total variation and DOE has not accounted for it.

In addition, the test procedure is unduly burdensome to conduct. Based on AHAM's experience to date, it takes on average 20 hours to conduct a single test on a four burner cooktop and requires the testing of every single burner or element individually. And, because the test requires the technician to determine the turn-down temperature before every test and the ambient conditions are quite tight, several runs are often required before a valid run can be achieved. Our testing, which is described more fully below, found that some tests took upward of five days for a single cooktop. Moreover, the test cost is much higher than DOE concluded in its Final Rule on both an up-front and ongoing basis.

Because the final test procedure may not be representative for gas products and is not repeatable or reproducible for either gas or electric cooktops, it does not accurately measure cooktop energy efficiency and will not allow consumers to compare products on that basis. Thus, because the test is also unduly burdensome to conduct, the cooktop test procedure as a whole does not meet EPCA's statutory requirement that test procedures be reasonably designed to produce representative results and are not unduly burdensome to conduct. Moreover, because DOE did not support the conclusions in the Final Rule with sufficient data, DOE's Final Rule could be determined to be arbitrary and capricious. Accordingly, AHAM respectfully requests that DOE withdraw the Final Rule amending the cooktop test procedure. And, in the interim, we seek an immediate stay of the effectiveness, including the requirement that manufacturers use the final test procedure to make energy related claims, of the Final Rule. To be clear, AHAM is not seeking reconsideration regarding DOE's decision to repeal the oven test procedure.

In the August 2016 SNOPR, DOE proposed to extend the electric test procedure in EN 60350-2:2013 “Household electric cooking appliances Part 2: Hobs—Methods for measuring performance” to gas cooktops. AHAM commented in its September 21, 2016 comments that there is no consumer data on the consumer representativeness of that method for gas cooktops. AHAM noted that DOE's proposal, and now Final Rule, is not harmonized with the European approach, which uses a different test procedure and different test pots to test gas cooktops. DOE's methodology is also different than ASTM F152, “Standard Test Methods for Performance of Range Tops,” which DOE reviewed during the test procedure rulemaking and is used by the commercial range industry. DOE dismissed ASTM F1521 because of the BTU range for commercial range tops, and AHAM is not arguing that it is the appropriate procedure for residential products. But the science behind the test setup in ASTM is similar to the EN gas test procedure which demonstrates that the basic methodology for testing gas products is well established.

Accordingly, no manufacturer or third party test laboratory—in the U.S., Europe, or elsewhere in the world—had experience with DOE's proposed test procedure for gas cooktops other than DOE's minimal testing in one laboratory prior to the publishing of the Final Rule. Thus, neither DOE nor manufacturers have knowledge of whether this test will be representative for gas products. Accordingly, DOE does not have the necessary data to justify the use of this method on gas cooktops in the United States, especially in light of the fact that Europe uses a different approach.

In fact, AHAM believes that the evidence supports the opposite conclusion—i.e., that the cooktop test procedure is not representative for gas cooktops. The EN and ASTM standards use a different test procedure for gas cooktops and do so for good reason. Unlike electric cooktops, gas cooktops utilize a system approach—every component and design choice is connected to other components and design choices and they work together. The cooking heat out to the pot depends on the design of the burner, flow of gas, mass of the grate, and height of the grate from the burner.

Gas testing is a science, and DOE did not do sufficient study to determine whether the electric test procedure it adopted would measure representative results for gas cooktops:

1. First, the purpose behind EN 60350-2:2013 was to establish a test to determine minimum energy for electric cooktops. The reason that the working group that developed the test decided to assess simmer for electric cooktops was to show the distinction in energy use between the different electric technologies, i.e. induction, radiant. For electric cooktops, technology has an impact on how much energy is used to get to boil and also how much energy it uses to keep a simmer temperature. Thus, some technologies may appear to be more or less efficient if just a time to boil was assessed. For electric, the simmer portion of the test is needed to accurately show the cooktop's energy use and to allow comparison across the product types. Figure 1 below shows how the test distinguishes between electric technologies.2

2. In an attempt to keep one test method, DOE extended this electric method to gas cooktops. AHAM appreciates the attempt to reduce the number of test methods. But, in this case, there is no reason to use one type of test. There are not different types of gas technologies and so a simmer period is not needed to differentiate between technologies as it is in electric. The significant added burden of including the simmer setting (and the variation it introduces) is not likely balanced by a benefit in terms of energy savings.

In addition, most consumers likely replace their cooktops with the same fuel that is already in their home. Based on a 2010 study conducted for AHAM, the vast majority of consumers surveyed replaced their cooktops and ranges with a similar unit. According to the study, nearly nine in ten households that bought a freestanding single oven range did a direct replacement. Homeowners were even more likely to do a direct replacement of this type of appliance, at 94 percent.3 So, it is unlikely that consumers are comparing gas and electric products.

3. The best comparison for comparing gas cooktops to other gas cooktops would be based on a simple bring to boil test, which is what Europe and the ASTM methods both use. DOE is the first to reinvent the wheel and require gas and electric cooktops to be tested in the same way.

4. On a gas unit, there is very little overshoot which means there is no retained heat. Electric cooktops, on the other hand, often have a significant amount of retained heat. A gas cooktop's ability to maintain simmer in the absence of retained heat is largely a function of grate to burner relationships, burner design, valve design, and pan position. This relationship is not accounted for in the electric cooktop test because it does not need to be. But it does need to be addressed in a test applicable to gas cooktops.

5. More so than electric elements, gas burners are designed for a specific cooking purpose. For example:

a. Small or semi-rapid burners are typically used for simmering. This simmering performance is developed for melting chocolate and fine sauces, not keeping water simmering.

b. Ultra rapid or rapid burners are designed to reduce time to boil, or for frying. Often flame stability suffers at low rates, making simmering results poor.

c. Other high input burners are designed for rapid cooking (i.e. Wok) and are not designed for simmering.

Each of these burner types have been optimized in design to serve a particular cooking function for consumers. Thus, it may not make sense to apply a water boil test to all of them. For example, a consumer would not likely boil water on the small/semi-rapid burner that is meant to be used for melting chocolate or cooking fine sauces—the time to boil on such a burner would be extremely long, perhaps 40 minutes. In addition to not being representative, the test will drive significant variation in the assessment because DOE did not address this in the test procedure. DOE did, however, address this issue for electric cooktops—the test procedure removes certain burners from assessment.

6. Additionally, because DOE extended a test meant for electric cooktops to gas cooktops, the test does not require preheating of the gas burner. A gas system will change rates and how it performs as it warms. The European test for gas products has a 10 minute preheat because the working group that developed that test found that preheating improved the representativeness of the test results as well as repeatability and reproducibility. The ASTM test has a 30 minute stabilization period at 50 percent heat for the same reason. Thus, DOE's failure to include preheating in the gas test ignores the wisdom generated by other groups' extensive testing and experience and likely contributes to the high degree of variation we describe below.

7. The pots specified by the European electric test are different than the pots used in the European gas cooktop test. The gas pots are Aluminum test pans having a matt base and polished walls—that material is of the highest level of conduction. The electric test pans are a very thick stainless steel plate (6 mm) with thin stainless walls (1 mm) that are joined by a heat resistant glue. The pan construction is significantly different which will have an impact on heat transfer from the burner to the pan. The pot spacing of the large flat corner pans designed for electric cooktops will perform differently with the gas burners compared to the EN specified Aluminum pots and will not drive representative results. A gas flame heats a pot differently and this should be accounted for in the test.

DOE did not assess a sufficient variety of gas cooktop designs to conclude that the test procedure it adopted is representative for gas products, especially in light of Europe's use of a different procedure for residential gas products. As highlighted above, the residual heat loss of a gas burner on simmer is significantly different than simmer on electric unit where the electric unit retains heat from the cooktop. DOE also has specified stainless steel pans whereas the European procedure for gas cooktops uses Aluminum, which has a higher level of conduction. The pan construction is also different which will have an impact on heat transfer from the burner to the pan.

AHAM has not been the only commenter to question the representativeness of extending the European electric test procedure to gas cooktops. During the test procedure rulemaking, Southern California Gas Company, San Diego Gas and Electric, and Southern California Edison (collectively, the Southern California investor-owned utilities (SoCal IOUs)) commented that DOE should conduct a sensitivity analysis of the impact of ambient temperature and pressure conditions on the test results for gas and electric cooking products in order to ensure consistent test results across various regions, climates, and altitudes. In addition, the SoCal IOUs commented that validating the ambient condition requirements would address the impact of the proposed correction to the gas heating value to standard temperature and pressure conditions. DOE responded only that it incorporated the ambient air pressure and temperature conditions specified in EN 60350-2:2013 and thus believed that the results “should not” be impacted by tests being conducted in different locations.4 But DOE did not do any additional testing to determine if that is in fact the case and, as discussed below in Section II, AHAM's testing demonstrates reproducibility issues which could be attributed, in part, to these differences. Moreover, efficiency for a gas cooktop depends heavily on the external environment, much more so than for electric products. Simmering is, thus, not the right parameter to measure the ability to keep the control in this technology. That is yet another reason why the European gas test does not include the simmer setting—it will be variable and inaccurate.

In addition, the U.S. market consists of a wide array of grate and burner offerings to consumers and DOE did not sufficiently assess those offerings in developing the test procedure. DOE itself acknowledged 283 gas configurations.5 Yet DOE tested only five units. The varying designs available to consumers, most of which DOE did not assess, have offerings of a sealed/unsealed burner, stacked burner, different burner shapes, a range of grate weight and shape, and different grate materials. DOE has not shown that the test procedure is repeatable and reproducible for the different designs on the marketplace. For DOE to conclude these issues do not exist simply because it did not observe them in its small test sample is illogical. DOE made assumptions that are not supported by sufficient data and are in direct conflict with the technical support for the European gas test and ASTM standard which drove those procedures to have a pre-heat requirement, to exclude a simmer assessment, and to use specifically constructed Aluminum pans. Until and unless DOE can demonstrate that data show the cooktop test procedure is representative of actual U.S. consumer use of gas cooktops and will deliver accurate results, DOE should withdraw the test procedure. Keeping it in place will very likely result in inaccurate information to consumers and is contrary to EPCA's and the Administrative Procedure Act's requirements.

Because of the short comment period on the August 2016 SNOPR, AHAM was not able to conduct a round robin to assess the repeatability and reproducibility of the test procedure for gas products. And DOE had no data regarding repeatability or reproducibility upon which to rely. DOE instead relied on a European Committee of Domestic Equipment Manufacturers (CECED) round robin conducted five years ago on electric cooktops. But, that round robin is irrelevant. As discussed above, Europe does not extend its electric cooktop test procedure to gas cooktops for good reason. DOE would be the first to do that. Thus, there is no historical data for that test procedure. Therefore, AHAM commented that DOE should evaluate its proposed procedure even more carefully and in more detail than the electric cooktop test procedure. Repeatability and reproducibility cannot be established based only on DOE's limited within lab testing and complete lack of lab to lab testing.

In order to address AHAM's concerns, DOE conducted investigative testing on gas cooktops in support of the Final Rule. DOE conducted testing on five gas cooking tops that covered a range of burner input rates, installation widths (two 30 inch and three 36 inch), burner quantities (two four burner, three six burner), and grate weights. To evaluate variation in the test, DOE conducted two to three tests on each burner. For each individual test, DOE performed the full test method, including the preliminary test required to determine the turndown temperature and simmering setting for a given burner. DOE also included test results from previous testing conducted in support of the August 2016 SNOPR. The coefficient of variation DOE observed for the measured AEC for its test sample was, on average 1.0 percent. DOE also noted that the average per-cycle energy consumption coefficient of variation for each burner was 1.7 percent.

DOE based its Final Rule conclusions regarding total variation of the entire plethora of cooktops in the marketplace on only this meager five unit sample and a simulated round robin. DOE's testing did not truly test reproducibility from lab to lab because DOE simply used different technicians for some of its tests. DOE did not conduct testing on the same units in different labs. It makes sense that under those conditions—using the same laboratory equipment and test technicians trained in the same laboratory—variation would be lower. Moreover, this assessment looks at within lab variation and not total variation. As discussed below regarding DOE's electric cooktop testing, DOE's testing is insufficient to support a conclusion that the test procedure for gas cooktops is repeatable and reproducible and, thus, is insufficient to support the final test procedure.

Moreover, because DOE tested such a small sample the confidence level of its results is low (the same is true for electric cooktops). For a sample size of five, trying to represent the millions of units that will be produced and the tens of different labs that will be doing testing this inherently has a large margin of error as shown in Figure 2.6

Based on this sample size, results can vary plus or minus 26 percent. We fully understand that a larger sample size is a function of cost and that there are limitations on the amount of further testing that can be done. Nevertheless, it is important not to lose sight of the fact that DOE's sample size results in as much as 50 percent in variation on the expected results. Thus, it is no surprise that AHAM's testing has shown significant variation that DOE's did not. This large confidence interval, which the difference between DOE's and AHAM's test results bear out, further supports AHAM's request that DOE withdraw the cooktop test procedure. A test procedure that could be required to demonstrate compliance with possible energy conservation standards should not be finalized with such a high confidence interval, particularly when conflicting data has been provided to highlight this high confidence interval. At a minimum, this demonstrates that DOE's data alone and when added together with AHAM's data raises significant questions about whether the test is repeatable and reproducible. Thus, DOE's Final Rule is not supported by adequate data and could be considered arbitrary and capricious.

Moreover, as with electric cooktops and discussed more fully below, DOE did not engage stakeholders—either manufacturer labs or third party labs—in its assessment of the Final Rule. Thus, based on DOE's testing, neither DOE nor stakeholders have any idea what the actual test procedure total variation is.

In order to assess whether the final test procedure for gas cooktops is repeatable and reproducible, after DOE issued the final test procedure rule, AHAM conducted a round robin on gas cooktops. It is likely that even more testing would be helpful in better understanding both the test procedure and its variation, but these results are enough to demonstrate that there is sufficient doubt regarding the gas cooktop test procedure's accuracy such that DOE should withdraw it.

AHAM's gas cooktop round robin included four units (two cooktops and two ranges), with a range of product types.7 Four labs tested the burners with the highest and lowest burner input rates (i.e., one high capacity and one low capacity burner was tested for each unit).8 Each burner was tested three times each using the procedure specified in the DOE Final Rule. Labs recorded the simmering setting selection for the energy test cycle and the first laboratory marked the turn down temperature. AHAM's test plan is attached in Exhibit B and AHAM provided Navigant with raw data under a confidentiality agreement.

We note that some of the tests could not meet the specified ambient temperature requirements. Specifically, some of the laboratories were not able to hold the ambient temperature as required during the duration of the test. Manufacturers ran the tests in the tightest environments that are currently available at +/−5 °F in their laboratories. The Final Rule requires new equipment to maintain +/−2 °F, which is difficult or, in some cases, impossible to do in existing laboratories. Section IV below further discusses this point. The labs that ran the tests have been approved by the safety certification bodies and Canadian Energy Verification organization. We removed the most errant runs and included the test data to show the variation that was noticeable during our tests as it is representative of the current lab capability. Importantly, improving the ability to maintain ambient temperature will involve significant upgrades to laboratories, which will add cost and burden for manufacturers.

As mentioned above, AHAM's test plan called for running the test differently than the DOE test by having the first laboratory mark the turn down temperature it used. AHAM understands that this is not fully consistent with DOE's test procedure. But, because the test procedure is unduly burdensome to conduct, as discussed below, this method was necessary to reduce the test burden—reducing the number of possible settings for the cooktop was seen as a worthwhile experiment. Importantly, it was not always possible for laboratories to use the marked temperature and so, in several instances, laboratories followed DOE's test procedure to the letter. In the end, only half of the labs were able to follow AHAM's test plan. The other half ran the test according to the DOE test procedure as written. Our data below differentiates these methods by referring to the tests that used the marked turndown temperature as the “truncated test” or “preset.”

The DOE test procedure tried to address some of the variation that is not controllable in the methodology of its burdensome test procedure—e.g., heating values, different ambient temperatures, equipment, and technicians. AHAM's methodology was an effort to determine if the extra burden aimed at reducing that variation reduced it enough to justify the extra time, labor, and cost. Our conclusion: it is not. Although neither method showed results with an acceptable level of variation, the runs that used the truncated test resulted in less variation. Regardless, the results cast significant doubt on DOE's small amount of supporting data for the Final Rule and support AHAM's request that DOE withdraw it.

Good lab practice is that within lab variation should clearly be less than two percent. For current data acceptance programs within the appliance industry, it is common practice that data between labs should be no more than three percent variation. DOE's data within its own lab fell within the target zone for variation for four of the five units DOE tested. DOE did not test at different labs, so the Final Rule is not based on any accurate lab-to-lab data showing an acceptable range of lab-to-lab variation.

AHAM's round robin shows similar results to DOE's in terms of within lab variation. Significantly, however, as shown in Table 1, lab-to-lab variation considerably exceeds the three percent maximum lab-to-lab variation target regardless of whether the full DOE test was run or the truncated test was run.

This highlights the significant gap in the data DOE used to justify the rule. DOE assumed that low variation in one lab means repeatability and reproducibility across labs. But AHAM's round robin demonstrates that this is not the case. Our round robin shows reproducibility is not present in the current procedure as demonstrated by only one of the three units, Unit A, having an acceptable coefficient of variation across labs. Notably, the low input rate on that burner is 8,000 BTU. AHAM units B, C, and D all have low capacity burner rates of or about 5,000 BTU. DOE only tested one of its five units with a low capacity burner at 5,000 BTU. DOE's coefficient of variation for that model was 1.40 percent. Some of the best AHAM single lab coefficients of variation for models at that rate are 0.78, 1.59, 1.70, and 1.80 percent. The AHAM data would appear to agree that one lab can repeat the same results, but that is not the full story.

Focusing on the units with low simmer rates and digging deeper into the data, AHAM's data show the following:

• On all units except one, Unit B, the repeatability on the high capacity burner within the lab had acceptable variation but the reproducibility across labs did not. Overall, on the high capacity burner, the variation was higher using the DOE test procedure than it was using the truncated test and none of the variation was within an acceptable range from lab-to-lab.

• On all units, the repeatability on the low capacity burner was marginal—25 percent of the time the variation was greater than the two percent maximum target. There is a distinct difference in the low capacity variation and the three units that had simmer at or near 5,000 BTU had significant repeatability and reproducibility issues. In some cases, using the truncated test actually improved lab-to-lab variation. This demonstrates that the burden associated with determining the turn down temperature in DOE's full test procedure is not always justified—it does not categorically improve repeatability and reproducibility. Thus, not only is DOE's final test procedure rule unsupported by sufficient data to demonstrate its reproducibility, but it is also unduly burdensome to conduct. In addition, this highlights the weakness in the DOE test procedure which conducts a water boil and simmer test on small burners that are not meant for either purpose. As discussed above in Section I, those burners are designed to provide a simmer only cooking function for melting chocolate and cooking sauces, not for boiling or simmering water.

DOE did not evaluate or account for variation within units. There are issues inherent in testing gas cooktops and ranges that contribute significantly to within unit variation. For example, heating value, gas pressure, and atmospheric pressures all have an impact. More specifically, as atmospheric pressure changes due to weather, test results will vary even on the same unit from day to day. Also, gas pressure and atmospheric pressure can vary from run to run, and that can have an impact on how the gas is mixing within the burner port which then impacts burner combustion and energy creation. Moreover, heating values vary within a lab on a daily basis and likely vary greatly between labs. Thus, the same unit tested on different days in the same lab or in different labs will not perform the same unless the heating value of the gas is the same. That is statistically unlikely because values vary every day. It is not likely that the heating value is 1075, so there is a conversion from what it actually was to 1075 and this artificial adjustment induces variation. Each of these factors, among others, individually and collectively contribute to variation from test to test and DOE has made no effort to understand the impact of these factors.

This inherent variation in gas cooking product testing has been known for decades and is the reason the safety test, ANSI Z21.1, requires certified technicians to drill testing orifices. The drilling of orifices achieves precise rates for nominal, high, and low values. Experience shows that certified gas technicians can dial in the precise values for assessment by using number sized drills but there are also factors the technician must manage in this process such as burrs from the drilling. AHAM is not suggesting that DOE require testing orifices be drilled for purposes of energy testing—the burden is significant to say the least and would make the test unduly burdensome to conduct. Although such burden is justified for purposes of ensuring the safety of cooking products, which carry inherent safety risks, it is not justified for purposes of energy testing. And, because safety testing is not similar to energy testing (for example, cooktops are tested on high for hours and products are over-stressed in abnormal conditions), it is not possible to re-use the units tested for safety purposes for energy testing.

In addition, neither DOE nor AHAM have evaluated or accounted for the additional variation inherent in producing gas products, i.e., between unit variation. This is significant because it will add further variation on top of the within lab variation, lab to lab variation, and within unit variation. In order to ensure compliance with any future energy conservation standard, manufacturers will have to take this total variation into account. The result will likely be that it becomes difficult or impossible to meet standards because the buffer needed to ensure accurate ratings will require levels of efficiency that are not economically justified or technologically feasible. AHAM explored this concept in more detail in its comments on DOE's proposed standards, which we hereby incorporate by reference.9

One of the test requirements that will vary within the unit is the simmer setting on gas products. Subsequent to AHAM's round robin, Lab Three conducted some additional investigative testing to determine whether using the same simmering setting improves repeatability. The lab used two different operators to test a unit and provided both with the same instructions, which are identified in Exhibit A. The test plan was as follows:

1. Operator F conducted the test and found the simmer setting and gas flow;

2. Operator M conducted the test independently and found a simmer setting and gas flow;

3. Operator M repeated the test using the Operator F simmer setting; and

4. Operator F repeated the test using the Operator M simmer setting.

The results show that technicians are likely to be able to work to achieve passing results on their own efforts to determine a simmering setting. But when given the target setting, the results show that it is likely that different technicians cannot recreate a first technician's passing result about half of the time.

The data also highlight that there are more issues with finding the right simmer setting on low capacity burners—the Lab Three technicians each failed the first time they tried to set the low capacity burner. Also, see in Exhibit A where an additional experiment was run with one of Lab Four's technicians developing the simmer setting without using the previously provided information. This resulted in different energy average and lower variation values between the two Lab 4 technicians.

According to these results, relying on a given setting actually increased variation and retests due to failing performance. Thus, though recording the turn down temperature as required by the Final Rule may help understand differences in results between labs, it does not reduce variation. And it does not seem that simply following the test procedure to the letter, as DOE suggested in response to AHAM's comments and discussed in Section II below, reduces variation. AHAM's test results demonstrate that additional efforts to reduce variation on turndown settings were unsuccessful—even standardizing the simmering setting does not drive sufficient variation reduction. (Moreover, for gas products, it will not be possible to specify turndown settings for gas products due to orifice variation, which is discussed in more detail below). Accordingly, because DOE's final test procedure does not sufficiently reduce total variation, DOE should withdraw the cooktop test procedure.

As stated previously, DOE's small sample size could not address the full population or total variation. Table 2 below lists the units have been tested to the final test procedure as specified from both DOE's sample and AHAM's sample and Figure 3 shows the samples and their results graphically.

Figure 3 shows the units tested and what their AAEC number is versus their lowest burner capacity rating. It highlights how skewed the DOE sampling was, especially as compared to AHAM's. As discussed above in Section I, DOE identified that nearly half of the models in the market had a 5,000 BTU burner. Yet, DOE selected only one unit with a burner of that capacity. Aside from the fact that DOE's sample inadequately represents the market, this demonstrates that DOE's test procedure will produce inaccurate results for most of the gas products on the market. The test has a high degree of variation for those products, as shown above, and, thus, the test will not allow consumers to compare across products.

Neither DOE nor AHAM have evaluated or accounted for the all of the variation inherent in producing gas products, i.e., total variation across the population. It is a large task and assuming the small amount of work applies to the total picture is not acceptable and further supports the withdrawal of the test procedure.

As discussed above, in response to the August 2016 SNOPR, based on round-robin testing, AHAM identified several sources of potential variation that needed to be resolved prior to DOE finalizing a cooktop test procedure. DOE conducted additional testing in order to evaluate AHAM's concerns and made clarifications to attempt to address many of them. Unfortunately, DOE's testing was not sufficient to demonstrate that the final test procedure significantly reduced the high degree of total variation AHAM identified in its comments. AHAM does not agree that the final test procedure is sufficiently repeatable and reproducible. Accordingly, AHAM respectfully requests that DOE withdraw the cooktop test procedure.

DOE did not do enough testing to verify that its clarifications resulted in a final test procedure that is repeatable and reproducible and, so, the Final Rule is not supported by sufficient data. DOE conducted testing of five electric cooktops incorporating different heating technologies (one coil element cooktop, two radiant element cooktops, and two induction cooktops) and control types (four with step controls and one with infinite). For each unit, DOE conducted testing on surface units capturing a range of heating element sizes. DOE conducted two to three tests per surface unit. For each individual test, DOE performed the full surface unit test method, including the preliminary test required to determine the turndown temperature and simmering setting for a given surface unit. DOE varied test operators for surface unit tests, but did not test at different laboratories. DOE also included test results from previous tests of these units conducted in support of the August 2016 SNOPR.

AHAM appreciates that DOE conducted this testing. But it is not enough to justify finalizing the test procedure. DOE did not complete full tests—it tested only two to three burners. Although that is helpful in assessing potential variation, AHAM is concerned that DOE would finalize a rule based on the results of only partial tests.

DOE's testing demonstrates a low average coefficient of variation of 1.2 percent. It is uncertain whether those results are accurate given that DOE did assess the full IAEC for an entire cooktop. But, assuming that the partial tests do give a reasonable understanding of repeatability and reproducibility, DOE has not identified why DOE's coefficient of variation was so much lower than AHAM's.

One potential reason is that DOE's testing did not truly test reproducibility from lab to lab—DOE simply used different technicians for some of its tests. DOE did not conduct testing on the same units in different labs. It makes sense that under those conditions—using the same laboratory equipment and test technicians trained in the same laboratory—variation would be lower. DOE's test parameters did not accurately simulate reproducibility. The simulation run by DOE only changed the test technician. It is unclear from DOE's analysis if those technicians had previous knowledge of the procedure or were allowed to imprint their interpretation on the execution of the test. DOE did not simulate running the test with different equipment and a different environment, as would be run in a true round robin.

Conversely, AHAM's tests were conducted on the same units in three (now four) different laboratories. Those laboratories have different technicians with different training, different equipment, and, potentially, different interpretations of the test procedure. These true round robin conditions are far more likely to reveal ambiguity in the test and sensitivities that cause variation. They also replicate a real scenario—one lab attempting to verify the results of a different lab. As discussed above in Section II, the testing conducted to date, necessarily, has a low confidence level and the differences between AHAM's and DOE's results demonstrate that. AHAM's testing resulted in significantly higher variation than DOE's and the large confidence interval that results supports AHAM's request for DOE to withdraw the cooktop test procedure.

Moreover, DOE did not engage stakeholders—either manufacturer labs or third party labs—in its assessment of the Final Rule. Thus, based on DOE's testing, neither DOE nor stakeholders have any idea what the actual total test procedure variation is. The test laboratory DOE used to run the tests in support of the proposed and final rules will not be a lab that regularly runs the test procedure when reporting and/or compliance with standards is potentially required. (The labs that participated in AHAM's round robin, will, of course, be conducting testing to demonstrate compliance with any potential future standards). Thus, because DOE's reproducibility testing is essentially theoretical and only simulates a round robin test, DOE's testing is helpful, but not enough to determine the repeatability and reproducibility of the test.

AHAM commented that there is variability in determining the simmering setting for the simmering phase of the test and noted that the simmering setting plays an important role in the overshoot temperature and the ability to maintain a temperature as close as possible to 90 °C during the simmering phase of the test.

DOE responded that it expects that correctly following the methodology—starting with the lowest simmering setting and repeating the test as necessary with the next highest setting until the setting that maintains the water temperature above, but as close as possible to 90 °C, is identified—will result in only a single appropriate simmering setting for a given surface unit.

DOE agreed with AHAM that the selection of the simmering setting has a significant impact on the overall energy consumption of a surface unit and amended Appendix I to require that the simmering setting selection for the energy test cycle of each cooking area/zone be recorded. AHAM appreciates that DOE required recording the simmering setting selection—it will help in enforcement/verification actions to understand differences in test results. Unfortunately, recording the setting will do nothing to decrease variation or prevent false findings of potential noncompliance.

AHAM acknowledges that in its initial round robin, laboratories did not start at the lowest simmering setting—laboratories started at the lowest setting they believed would be able to maintain a water temperature above and as close as possible to 90 °C. AHAM is a proponent of conducting the test that way in order to reduce test burden which, as discussed further below, is already significant.

Nevertheless, in order to understand if variation would decrease by following the letter of the test procedure as DOE suggested in the Final Rule, AHAM, in conducting a round robin on gas cooktops, required participating laboratories to (a) follow the DOE test procedure for selection of the simmering setting; (b) record their simmering setting; and (c) for the first lab, mark the turn down temperature on the unit itself.10 Our data, which are discussed above in Section II, show that following the letter of the test procedure does not sufficiently reduce variation. In particular, lab-to-lab variation remains high for gas cooktops and AHAM's round robin testing for electric cooktops provided data to support a conclusion that it is likely also high for electric cooktops. DOE did not adequately address AHAM's concern in its Final Rule and AHAM's gas testing casts further doubt on this question.

AHAM incorporates by reference the data we submitted to DOE during the rulemaking regarding our electric round robin, which is summarized in the below tables. These data highlight that the simmer setting is a significant source of variation. Because DOE has not yet adequately addressed it, and, thus has not sufficiently demonstrated that its test procedure is valid, DOE should withdraw the cooktop test procedure.

AHAM commented that our round robin demonstrated difficulty in determining when the water temperature first reaches 90 °C to start the 20-minute simmering phase of the test because, when the temperature first reaches that temperature, it may oscillate slightly above or below it. DOE's testing showed similar fluctuations. Thus, DOE amended Appendix I to clarify that the 20-minute simmering period starts when the water temperature first reaches 90 °C and does not drop below 90 °C for more than 20 seconds after initially reaching 90 °C.

AHAM thanks DOE for making this clarification which seems like it could reduce variation. DOE's testing—completed in a single lab and with technicians trained in the same lab—does not, however, adequately demonstrate that this clarification sufficiently reduces variation and improves reproducibility. AHAM's members were not able to dedicate resources to re-performing a round robin to verify DOE's findings on a single unit. Without knowing whether total variation has, in fact, been reduced, DOE should not have finalized the test procedure and DOE cannot rely on assumptions that this change will reduce total variation—to do so could be considered arbitrary and capricious. Total variation is made up of within lab and between lab variations AND within and between units variations. DOE only addressed some of the within lab variation causes, meaning that other causes of variation are unaddressed. DOE does not have sufficient data to demonstrate that the test procedure is reproducible and should withdraw the test.

AHAM commented that cycling of power to the heating element is unpredictable and causes variation in test results. It is unknown if the surface unit will cycle the heating element off during a critical phase of the test—i.e., at the start of the simmering phase or when determining the simmering setting. In response to DOE's September 27, 2016 data request, AHAM provided further data on how this was observed during our testing. DOE could not have reviewed or considered that data in drafting the Final Rule given that the Final Rule was issued the same day AHAM provided the data. AHAM incorporates the data we submitted on November 23, 2016, in this petition by reference.

DOE did, however, examine its own data. DOE indicated that it observed only one electric smooth-radiant cooktop in its sample for which the heater cycled on and off during the heat-up phase of the test. That particular unit cycled back on within a few seconds of cycling off and, as a result, the water temperature continued to rise at a “fairly steady state.” Thus, DOE concluded that it was infrequent for heating elements to cycle during the heat-up phase and, so, it was unlikely that other electric smooth-radiant cooktops would require any substantive amount of heating element cycling to protect the glass surface. DOE indicated that it did not expect any measurable impacts of heating element cycling on the total measured per-cycle energy consumption.

DOE based its conclusions on the single unit in its sample and is guessing that because only one unit in its small sample did not cycle on and off during the heat-up phase, it must not occur frequently and/or if it does, it will not have a measurable impact on the total per-cycle energy consumption. But AHAM also observed element cycling during its testing. Thus, in only the small amount of testing conducted in the U.S. to date, unit cycling during the heat-up phase has been observed twice. That is not insignificant. Almost 20 percent of units in the combined AHAM and DOE tested sample experienced unit cycling.

Moreover, AHAM submitted additional data to DOE regarding the unit cycling it observed. As mentioned in that data submission, AHAM tested two eight-inch coil elements on different cooktops with the same model number to evaluate unit to unit variation. One cooktop cycled during the T70 turndown test and the other did not. The unit that cycled resulted in a higher turn down temperature when compared to the test that did not cycle. The unit did not cycle on either test run during the final T90 simmer test. The high Tc value caused one test run to have a higher overshoot and allowed for a lower turn down during the simmer phase driving unit to unit variation. This resulted in 36 watts less power on the unit with the lower turn down. This is six percent of the normalized power level. Six percent is not insignificant and demonstrates the potential difference between the energy measured on two units of the same construction. DOE should withdraw the Final Rule for cooktops and review and consider the data AHAM submitted. This issue must be addressed in order to reduce total variation.

Furthermore, DOE did not address the arguments AHAM made about the uncertainty regarding how unit cycling will impact test results and test burden—this is a significant concern and could drive redesign of products. Heating element cycling is key to cooking performance for electric ranges because the algorithm that governs heating element cycling controls the temperature of the food being cooked. If the temperature is not properly maintained, the consistency of the food can change. Moreover, for smooth top electric ranges, heating element cycling also serves a safety function. Such cooktops are equipped with a glass break sensor to monitor temperature. That sensor will dictate when a unit needs to cycle down to avoid glass breakage. AHAM is concerned that the test procedure, as finalized by DOE, could drive changes to the algorithm for heating element cycling design. Any such changes will result in significant product development efforts which have not been accounted for in DOE's test procedure rulemaking. A test procedure change should not dictate this sort of design change simply to manage uncertainty and variation.11

For these reasons, DOE should withdraw the cooktop test procedure due to total variation that is not fully understood and, from available data, appears to be at an unacceptable level.

As AHAM has commented to DOE many times, Underwriters Laboratory (UL) Standard 858 will soon require a new test for electric coil element cooktops. The change to the voluntary safety standard, which AHAM developed and proposed to UL with the support of the Consumer Product Safety Commission, will require electric coil element cooktops and ranges to monitor and limit pan bottom temperature and is aimed at reducing the incidences of unattended cooking fires. It represents a major redesign for all electric coil cooktops by every manufacturer. The change will be required to show compliance on coil cooktops with the updated voluntary safety standard as of June 15, 2018.

Given the date of this requirement, it is certain that any cooktop standard DOE may promulgate (and AHAM opposes any change to the existing standards for conventional cooking products) would apply to these newly designed products. But, because these products are still in development, DOE has not done testing on products using these controls and neither have manufacturers. Because company designs to comply with the UL 858 requirements may involve cycling of the element, it is quite possible that heating element cycling will be different than it is for existing products. Thus, DOE's data, even as supplemented by AHAM's data, on heating element cycling may be irrelevant because it does not represent products that will be on the market if the test is required to demonstrate compliance with possible energy conservation standards.

As shown in Figure 4, initial data, based on testing conducted by Primaria LLC to develop UL 858's new requirements, show that though time to boil water may not increase significantly using temperature limiting controls on coil cooktops, the difference could be enough to further impact the current assumptions on variation. And, the control cycling could be somewhat different as well. DOE should understand how the energy test will respond to these new technologies.

Although DOE sought feedback on the degree to which the heating element or cookware may deform and impact the heat transfer between the two surfaces in its rulemaking on energy conservation standards for cooktops, DOE did not investigate the impact of pan warpage on the repeatability and reproducibility of the test procedure.

The UL 858 test for coil cooktops initially required use of an aluminum pan. But, based on manufacturer experience doing significant testing, AHAM proposed a cast iron alternative to aluminum pans for the test. UL published this update in August of 2017. The shift is to account for warping and the variation and lack of repeatability it is driving in the safety assessment. There is no reason to believe this variation will not also extend to energy testing.

The data from the UL 858 work with Primaira show that any variation in pans of the same type will drive variation that the energy testing has not yet shown because the pans have yet to warp substantially. Significantly, using a warped stainless steel pan on a ceramic cooktop did increase the boil time with the cooktop fire mitigation control active (that control cycles the element on and off per an algorithm). And, warpage on stainless steel pans style will cause a difference in energy use on units without a limiting control as shown in Figure 5. DOE's failure to further investigate this issue means that its test procedure is not adequately supported.

The discussion in the sections above highlights several significant burdens associated with conducting DOE's cooktop test procedure that AHAM believes make it unduly burdensome to conduct. Specifically:

• The test procedure takes about 20 hours for an average four burner cooktop and requires the testing of every single burner or element individually. And, because the test requires the technician to determine the turn-down temperature before every test and the ambient conditions are quite tight, several runs are often required before a valid run can be achieved. Our testing found that some tests took upward of five days for a single cooktop.

• As indicated by AHAM's truncated gas test plan, it is burdensome to determine the turn down temperature for each individual test and burner. And doing so does not serve any purpose as it appears that it does not decrease variation.

• The ambient temperature requirements are incredibly tight and it is difficult or impossible for some laboratories to meet them without investing in lab improvements. Some companies had difficulty maintaining the ambient conditions and AHAM could not use their data in its round robin results.

• Test pots will warp during testing and will need to either be repaired or replaced frequently.

• The test procedure variation means that manufacturers will need to add a larger than usual “buffer” to any eventual energy conservation standards ratings, which will effectively increase the stringency of any future standard, probably by a large amount.

In addition to the test burden itself, there is also substantial cost associated with the test procedure. DOE determined that the test procedure would cost $700 per test for labor, with a one-time investment of $2,000 for new test equipment, which was split between test pots and other instrumentation. AHAM collected data from its members on the cost of the test procedure, both ongoing and initial investments. This data is based on company experience with the test through AHAM's round robins and in testing in Europe, on the number of models each company has, and on the potential need for third party testing. AHAM's data show that DOE significantly underestimated the cost associated with running the cooktop test procedure.

Table 3 below shows the difference between DOE's estimates in the Final Rule and AHAM's data.

One of the significant differences between DOE's estimate and AHAM's data is the total number of tests required and the number of models to be tested. It is difficult for manufacturers to determine at this stage how many basic models they would have. DOE's proposed energy conservation standards for cooktops, which AHAM strongly opposes, would be the first time manufacturers would need to certify compliance with standards and determine basic models. To do that may require testing of all models in order to determine likely model families, particularly because cooking products are complex. It will be difficult to determine which models can be grouped together in a basic model. That said, AHAM understands that not each individual model will need to be tested. Thus, it is likely that something between DOE's estimate and AHAM's data would be the actual average total number of models tested.

Nevertheless, the difference in the number of tests and number of models to be tested is shown below in Table 4. DOE cost estimations (particularly for labor) are on a per-test basis. As described above, it is difficult to determine the total number of tests to be performed in the initial year. Comparing the DOE estimation of number of tests to AHAM member data shows a signficant difference or wide range. As a result, total costs are substantially higher when considering the average number of tests required according to AHAM member data.

Another important difference is that DOE did not address upfront investments made in order for manufacturers to be able to perform the test procedure. But those costs should not be ignored. Manufacturers identified significant investments in specialized equipment to perform the test procedure successfully. For example, all respondants to AHAM's survey expressed frustration in obtaining the necessary test pots because the supplier is overseas. Acquiring even one set is difficult, as AHAM has discussed in previous comments, and the cost is about $9,500 excluding shipping and handling. Manufacturers indicated they would require between three and 24 sets to do certification testing.

DOE concluded that it would cost about $500 to fabricate existing testing structures. But manufacturers identified significantly higher costs. AHAM's members consistently cited investments to redesign entire lab stations and expand facility space. These changes would be needed to control for ambient temperature at the tight levels DOE's test requires, cool test units, add new equipment, and account for much higher volumes of testing. AHAM also believes that third party testing (for certification only) could cost over $2,500 per model. Table 5 details the comprehensive costs.

The test and cost burden associated with the cooktop test procedure is not likely justified by any balancing benefit to consumers or the environment. In 2009, DOE determined that none of the trial standards levels that included efficiency standards instead of just prescriptive design standards had benefits that were outweighed by the economic burden that would be placed on consumers. DOE found that the potential economic savings realized by average consumers were outweighed by the risk that certain consumers would not realize the savings and the adverse loss of industry net present value, among other things. Thus, DOE prescribed standards consisting of prescriptive design standards, not energy performance standards. As we have commented previously, AHAM does not believe anything has changed since 2009 to justify amended standards.12 The available technology options have not changed. The energy savings opportunities remain small. Thus, the cooktop test procedure is not necessary and its burden is not balanced by any benefit to consumers.

Given the extraordinary regulatory burden the cooktop test procedure will place on manufacturers, the procedure is an ideal candidate for repeal consistent with Executive Order 13771, Reducing Regulation and Controlling Regulatory Costs, which requires agencies to repeal two regulations for every new one issued and offset the costs. Because, as AHAM has demonstrated above, DOE's cooktop test procedure may be considered arbitrary and capricious because it is not supported by sufficient data and likely has a high degree of total variation, the test procedure does not benefit consumers. It serves only to burden manufacturers who must comply with a test procedure that does not adequately represent products and, due to variation, will require manufacturers to make conservative claims.

Because AHAM's testing shows that DOE did not sufficiently demonstrate that the cooktop test procedure is repeatable or reproducible for gas and electric cooktops, because DOE has yet to demonstrate—as EPCA requires it to do—that the final test procedure is representative for gas cooktops, and because the test procedure is unduly burdensome to conduct, we respectfully request that DOE withdraw the final cooktop test procedure while maintaining the repeal of the oven test procedure that was part of this same Final Rule. Even absent an energy conservation standard for cooktops that requires use of the test procedure, manufacturers are required to report energy use via a test procedure DOE has not demonstrated is representative of consumer use for all product types and AHAM has demonstrated is not reproducible. This means that reported energy values for some products could be inaccurate and, for all products, will not be directly comparable to each other across manufacturers. Thus, consumers could be misled when evaluating and comparing energy claims. Accordingly, we also seek an immediate stay of the effectiveness of the cooktop test procedure, including the requirement that manufacturers use the final test procedure to make energy related claims.

In the Federal Register of March 2, 2018 (83 FR 8953), we published a document announcing the availability of a draft guidance for industry entitled “The Declaration of Added Sugars on Honey, Maple Syrup, and Certain Cranberry Products: Guidance for Industry.” The draft guidance is intended to advise food manufacturers of our intent to exercise enforcement discretion related to the use in the Nutrition Facts label of a symbol “†” immediately after the added sugars percent Daily Value information on certain foods. The symbol would lead the reader to truthful and non-misleading statements outside the Nutrition Facts label to provide additional information regarding the added sugars present in particular foods. The draft guidance explains that we intend to consider exercising enforcement discretion for the use of this symbol on single ingredient packages and/or containers of pure honey or pure maple syrup, and certain dried cranberry and cranberry juice products that are sweetened with added sugars, and that contain total sugars at levels no greater than comparable products with endogenous (inherent) sugars, but no added sugars. We provided a 60-day comment period that was scheduled to close on May 1, 2018.

We have received requests to extend the comment period for the draft guidance (Refs. 1 and 2). The requests conveyed concern that the current 60-day comment period does not allow sufficient time to develop meaningful or thoughtful comments to the draft guidance.

We have considered the requests and are extending the comment period for the draft guidance for 45 additional days, until June 15, 2018. We believe that this extension allows adequate time for interested persons to submit comments without significantly delaying finalizing the guidance.

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

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

On December 27, 2017, the Buffalo Vintage Boat Racing Association and BR Guest Inc., notified the Coast Guard that it will be conducting a boat race from 10:00 a.m. to 4:00 p.m. on July 1, 2018, on the Buffalo Outer Harbor. Hazards from the boat regatta include high speed vessels. The Captain of the Port Buffalo (COTP) has determined that potential hazards associated with the Officer Lehner Memorial Vintage Regatta would be a safety concern for anyone within the designated course encompassed by all waters inside of the Outer Harbor, Buffalo, NY starting at position 42° 52′04″ N, 078° 53′03″ W then South to 42° 51′07″ N, 078° 52′09″ W (NAD 83). The course will extend a minimum of 100 yards from the shore and the breakwall.

The purpose of this rulemaking is to ensure the safety of vessels and the navigable waters within the above stated points before, during, and after the scheduled event. The Coast Guard proposes this rulemaking under authority in 33 U.S.C. 1231.

The COTP proposes to establish a temporary safety zone, enforced intermittently, from 9:45 a.m. to 4:15 p.m. on July 1, 2018. The safety zone will encompass all waters inside of the Outer Harbor, Buffalo, NY starting at position 42° 52′04″ N, 078° 53′03″ W then South to 42° 51′07″ N, 078° 52′09″ W (NAD 83). The course will extend a minimum of 100 yards from the shore and the breakwall. The duration of the zone is intended to ensure the safety of vessels and these navigable waters before, during, and after the scheduled 10:00 a.m. to 4:00 p.m. boat races. No vessel or person would be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative. The regulatory text we are proposing appears at the end of this document.

We developed this proposed 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 NPRM has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, the NPRM 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 size, location, duration, and time-of-day of the safety zone. Vessel traffic would be able to safely transit around this safety zone, which would impact a small designated area of the Buffalo Outer Harbor, by transiting a short distance in Lake Erie. The safety zone would also have built in times where vessels will be able to transit through between race heats. Moreover, the Coast Guard would issue a Broadcast Notice to Mariners via VHF-FM marine channel 16 about the zone, and the rule would allow vessels to seek permission to enter the zone.

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 certifies under 5 U.S.C. 605(b) that this proposed 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 proposed rule would not have a significant economic impact on any vessel owner or operator.

If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see ADDRESSES) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121), we want to assist small entities in understanding this proposed 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 proposed rule or any policy or action of the Coast Guard.

This proposed 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 proposed 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 proposed 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 proposed 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 proposed rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

We have analyzed this proposed rule under Department of Homeland Security Directive 023-01, which guides 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 proposed rule involves an intermittently enforced safety zone lasting 6.5 hours that would prohibit entry into all waters inside of the Outer Harbor, Buffalo, NY starting at position 42° 52′04″ N, 078° 53′03″ W then South to 42° 51′07″ N, 078° 52′09″ W (NAD 83). The course will extend a minimum of 100 yards from the shore and the breakwall. Normally such actions are categorically excluded from further review under paragraph L[61] of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 01. A preliminary Record of Environmental Consideration supporting this determination is available in the docket where indicated under ADDRESSES. We seek any comments or information that may lead to the discovery of a significant environmental impact from this proposed rule.

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

We view public participation as essential to effective rulemaking, and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.

We encourage you to submit comments through the Federal eRulemaking Portal at http://www.regulations.gov. If your material cannot be submitted using http://www.regulations.gov, contact the person in the FOR FURTHER INFORMATION CONTACT section of this document for alternate instructions.

We accept anonymous comments. All comments received will be posted without change to http://www.regulations.gov and will include any personal information you have provided. For more about privacy and the docket, visit http://www.regulations.gov/privacyNotice.

Documents mentioned in this NPRM as being available in the docket, and all public comments, will be in our online docket at http://www.regulations.gov and can be viewed by following that website's instructions. Additionally, if you go to the online docket and sign up for email alerts, you will be notified when comments are posted or a final rule is published.

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

Throughout this document wherever “we,” “us,” or “our” is used, we mean the EPA.

In 2008, we revised the 8-hour ozone primary and secondary national ambient air quality standards (NAAQS) to a level of 0.075 parts per million (ppm) to provide increased protection of public health and the environment (73 FR 16436, March 27, 2008). The HGB area was classified as a marginal ozone nonattainment area for the 2008 8-hour ozone NAAQS and initially given an attainment date of no later than December 31, 2015 (77 FR 30088 and 77 FR 30160, May 21, 2012). The HGB area consists of Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery and Waller counties.

On December 23, 2014, the DC Circuit Court issued a decision rejecting, among other things, our attainment deadlines for the 2008 ozone nonattainment areas, finding that we did not have statutory authority under the CAA to extend those deadlines to the end of the calendar year. NRDC v. EPA, 777 F.3d 456, 464-69 (DC Cir. 2014). Consistent with the court's decision we modified the attainment deadlines for all nonattainment areas for the 2008 ozone NAAQS, and set the attainment deadline for all 2008 ozone marginal nonattainment areas, including the HGB area as July 20, 2015 (80 FR 12264, March 6, 2015). The HGB area qualified for a 1-year extension of the attainment deadline and we revised the attainment deadline to July 20, 2016 (81 FR 26697, May 4, 2016). As the HGB area did not meet the revised attainment deadline of July 20, 2016, we reclassified the area to moderate and set a due date for a revised SIP of January 1, 2017 (81 FR 90207, December 14, 2016). One moderate classification SIP requirement is reasonable further progress (RFP) reductions in volatile organic compound (VOC) and nitrogen oxide (NOX) emissions (CAA sections 172(c)(2) and 182(b)(1) and 40 CFR 51.1110). VOCs and NOX are ozone precursors.

RFP plans must include contingency measures that will take effect without further action by the state or EPA, which includes additional controls that would be implemented if the area fails to reach the RFP milestones (CAA 172(c)(9)). While the CAA does not specify the type of measures or quantity of emissions reductions required, EPA provided guidance interpreting the CAA that implementation of these contingency measures would provide additional emissions reductions of up to 3% of the adjusted base year inventory (or a lesser percentage that will make up the identified shortfall) in the year following the RFP milestone year. For more information on contingency measures, please, see the April 16, 1992 General Preamble (57 FR 13498, 13510) and the November 29, 2005 Phase 2 8-hour ozone standard implementation rule (70 FR 71612, 71650). RFP plans must also include MVEBs, which are the allowable on-road mobile emissions an area can produce and continue to demonstrate RFP (40 CFR 93.101 and 93.118(b)(1)(i)).

On December 29, 2016, Texas submitted a RFP SIP revision for the HGB moderate area. The SIP revision (1) updates the 2011 base year emissions inventory that was approved by EPA (80 FR 9204, February 20, 2015), (2) demonstrates a 15% emissions reduction in ozone precursors from the 2011 base year through the 2017 attainment year, (3) demonstrates a 3% emissions reduction for contingency in 2018 if the reductions for 2017 are missed and (4) sets the NOX and VOC MVEBs for transportation conformity purposes, for a 2017 attainment year.

We reviewed the Texas SIP submittal for consistency with the requirements of the CAA, EPA regulations, and EPA guidance. A summary of our analysis and findings are provided below. For a more detailed discussion of our evaluation, please see our Technical Support Document (TSD) found in regulations.gov (docket EPA-R06-OAR-2017-0056).

An emissions inventory is a comprehensive, accurate, and current inventory of actual emission from all sources. CAA sections 172(c)(3) and 182(b)(1) require that ozone nonattainment SIP revisions include an inventory of NOX and VOC emissions from all sources in the nonattainment area. As noted above we previously approved the 2011 base year. Since that submittal, Texas further refined the inventory to more accurately reflect actual 2011 emissions. We determined that the revised inventory was developed in accordance with EPA guidance and regulations and propose to approve the update. Table 1 summarizes the update to the inventory. For more information, please see the TSD and the Texas SIP submittal.

Texas developed emissions projections for 2017 to demonstrate that NOX and VOC emissions would be reduced by 15%. Table 2 shows the calculations and reductions required to achieve RFP. For more information, please see the TSD and the Texas SIP submittal.

Texas has provided sufficient control measures in their RFP plan to offset growth in emissions by estimating the amount of growth that will occur between 2011 and 2017. The control measures used to achieve the necessary emission reductions to meet the RFP requirements are listed in Table 3.

The projections of growth are labeled as the “Uncontrolled Emissions” for 2017 under (a) in the table below. The State followed our standard guidelines in estimating the growth in emissions and are described in greater detail in the TSD.

As noted earlier in this action, RFP plans for moderate and above nonattainment areas must include contingency measures to be implemented in the event an RFP milestone is missed.

The Texas 3% attainment year RFP contingency measure demonstration is based on a 2% reduction in NOx and a 1% reduction in VOC, to be achieved between 2017 and 2018. Controlled emissions reductions not previously used in the 2017 RFP demonstration may also be used to satisfy contingency requirements, so the excess emissions reductions from the 2017 RFP demonstration are included in the contingency measure demonstration. The 2018 reductions from the federal motor vehicle control program, inspection and maintenance program, and the fuel requirements program were also used in the RFP contingency demonstration.

Texas demonstrated that federal and State measures being implemented are sufficient to reduce emissions by more than 3% and meet the contingency measure requirement for the RFP SIP. We determined that Texas used acceptable methodology to demonstrate that the required emissions reductions are in excess of those needed for RFP and propose to approve the RFP demonstration. Table 4 summarizes the demonstration. For more information, please see the TSD and the Texas SIP submittal.

An RFP plan must establish MVEBs for transportation conformity purposes (40 CFR 93.118(b)(1)(i)). The MVEB is the mechanism to ensure that future transportation activities will not produce new air quality violations, worsen existing violations, delay reaching RFP milestones, or delay timely attainment of the NAAQS. A MVEB establishes the maximum amount of emissions allowed in the SIP for on-road motor vehicles. The MVEBs for 2017 provided by Texas in the SIP revision can be found in Table 6.

For the budgets to be approvable, they must meet, at a minimum, EPA's adequacy criteria (40 CFR 93.118(e)(4)). The availability of these budgets was posted on our website on January 18, 2017, for the purpose of soliciting public comments on their adequacy. The comment period closed on February 17, 2017, and we received no comments. On March 6, 2017, we published the Notice of Adequacy Determination for these MVEBs (88 FR 26091). As a result of such adequacy determination, these MVEBs must be used by state and Federal agencies in determining whether proposed transportation projects conform to the SIP as required by section 176(c) of the CAA. The adequacy determination represents a preliminary finding by EPA of the acceptability of the MVEBs. We are proposing to finalize our finding that these MVEBs are fully consistent with RFP. As the MVEBs sets the allowable on-road mobile emissions the HGB area can produce and continue to demonstrate RFP, we are proposing to approve the MVEBs for the HGB area.

We are proposing to approve the HGB RFP SIP revision submitted on December 29, 2016. Specifically, we are proposing to approve the RFP demonstration, contingency measures, MVEBs and an updated 2011 base year emissions inventory.

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely proposes to approve state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);

• Is not an Executive Order 13771 (82 FR 9339, February 2, 2017) regulatory action because SIP approvals are exempted under Executive Order 12866;

• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);

• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.);

• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• Is not subject to requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and

• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the proposed rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

This is a summary of the Commission's Notice of Proposed Rulemaking (NPRM) in WC Docket Nos. 10-90, 14-58, 07-135, CC Docket No. 01-92; FCC 18-29, adopted on March 14, 2018 and released on March 23, 2018. The full text of this document is available for public inspection during regular business hours in the FCC Reference Center, Room CY-A257, 445 12th Street SW, Washington, DC 20554 or at the following internet address: https://transition.fcc.gov/Daily_Releases/Daily_Business/2018/db0323/FCC-18-29A1.pdf. The Report and Order and Third Order on Reconsideration that was adopted concurrently with the NPRM is published elsewhere in this issue of the Federal Register.

1. Universal service can—and must—play a critical role in helping to bridge the digital divide to ensure that rural America is not left behind as broadband services are deployed. The directive articulated by the Commission in 2011 remains as true today as it did then: “The universal service challenge of our time is to ensure that all Americans are served by networks that support high-speed internet access.” Though the Commission has made progress for rural Americans living in areas served by our nation's largest telecommunications companies, the rules governing smaller, community-based providers—rate-of-return carriers—appear to make it more difficult for these providers to serve rural America. As a result, approximately 11 percent of the housing units in areas served by rate-of-return carriers lack access to 10 Mbps downstream/1 Mbps upstream (10/1 Mbps) terrestrial fixed broadband service while 34 percent lack access to 25 Mbps downstream/3 Mbps upstream (25/3 Mbps). It is time to close this gap and ensure that all of those living in rural America have the high-speed broadband they need to participate fully in the digital economy.

2. By improving access to modern communications services, the Commission can help provide individuals living in rural America with the same opportunities that those in urban areas enjoy. Broadband access fosters employment and educational opportunities, stimulates innovations in health care and telemedicine and promotes connectivity among family and communities. And as important as these benefits are in America's cities, they can be even more important in America's more remote small towns, rural, and insular areas. Rural Americans deserve to reap the benefits of the internet and participate in the 21st century society—not run the risk of falling yet further behind.

3. Today, the Commission takes the next step in closing the digital divide through proposals designed to stimulate broadband deployment in rural areas. To reach its objective, the Commission must continue to reform its existing high-cost universal support programs. Building on earlier efforts to modernize high-cost universal service support, the Commission seeks to offer greater certainty and predictability to rate-of-return carriers and create incentives to bring broadband to the areas that need it most.

4. In the NPRM, the Commission considers further reforms to establish a budget that will allow for robust broadband deployment in rate-of-return areas while minimizing the burden that contributions to the Fund place on ratepayers and to bring greater certainty and stability to rate-of-return high-cost funding, both in the near term and in the future. The Commission also seeks comment on additional reforms to increase broadband deployment, while promoting the efficient use of limited resources. For example, the Commission seeks comment on whether to fully fund existing A-CAM support recipients, afford a new opportunity for legacy providers to elect model-based support, and establish a minimum threshold of support for legacy providers that would not be subject to a budget cap. Lastly, the Commission seeks comment on other reforms, including, for example, exploring the need for caps on capital and operating expenses, using an auction process to address substantial competitive overlaps, and other options for simplifying the legacy rate-of-return mechanism.

5. Discussion. The Commission seeks comment on revising the budget for rate-of-return carriers within the high-cost program. The Commission has not revised the budget since 2011, and as a result, has not accounted for the effects of inflation on the budget. Had the Commission accounted for inflation, the rate-of-return budget would have increased from $2 billion in the 2012 budget year to $2.193 billion in the 2018 budget year.

6. Moreover, since 2011 consumers' expectations and the Commission's requirements regarding broadband speed have continued to increase. The Commission's initial speed benchmark for Connect America Fund (CAF) recipients was 4 Mbps downstream and 1 Mbps upstream, later revised to 10 Mbps downstream and 1 Mbps upstream, and certain CAF recipients are now required to offer 25 Mbps downstream and 3 Mbps upstream. Consumer demand for higher speeds is also evident. Among residential users, the percentage of fixed broadband connections with a “downstream speed of at least 25 Mbps has grown from 24% (or 23 million connections) in June 2013 to 57% (or 59 million connections) in June 2016,” and “slower downstream speeds of less than 3 Mbps has decreased from 18% (or 17 million connections) in June 2013 to 5% (or 5 million connections) in June 2016.” A budget designed to speed the deployment of 4 Mbps/1 Mbps broadband to rural America may be insufficient to encourage the deployment of the high-speed broadband networks that residents of rural America need.

7. In initiating the budget review, the Commission seeks comment on the appropriate level of support—and the Commission notes that the Communications Act of 1934, as amended (Act) requires such support to be “predictable and sufficient . . . to preserve and advance universal service.” Should the Commission establish a separate budget dedicated to High-cost Loop Support (HCLS) and Connect America Fund Broadband Loop Support (CAF BLS)? If so, should the Commission set that budget at $1.23 billion (the current amount available for HCLS and CAF BLS), at $1.35 billion (that amount adjusted by the inflationary ratio that reflects inflation since 2011), or at some other amount? Commenters should submit evidence that labor costs or other costs, such as fiber or electronics, have increased since 2011 due to inflation. Commenters should also submit evidence that those increased costs, if any, have not been offset by savings related to increased labor productivity or the lower cost of network equipment.

8. Alternatively, should the amount of support available for HCLS and CAF BLS continue to be calculated by subtracting Alternative Connect America Cost Model (A-CAM), Alaska Plan, and Connect America Fund Intercarrier Compensation (CAF ICC) support from a single rate-of-return budget? If so, should the Commission increase that rate-of-return budget for the 2018 budget year to $2.193 billion (the inflation-adjusted figure) or adopt some other figure? If the Commission retains a single budget, how should the Commission account for other changes and proposals it makes today? For example, in the concurrently adopted Report and Order, the Commission offers existing A-CAM carriers revised support up to a per-location cap of $146.10 and here seeks comment on making a second A-CAM offer to legacy carriers—should that additional funding come from within a single, combined budget? The Commission notes that any increase in the budget attributable to those carriers now receiving A-CAM could help fully fund the original offer at the $200 per-location cap or incent more legacy carriers to elect a new model offer. Should the Commission adopt a budget that would fully fund a new model offer and fully fund the original A-CAM offer for all existingA-CAM providers? The Commission also proposes to offer model-based support to glide path carriers, which would decline over the 10-year term as transition payments phase down to the model amount. Should that support then be available to carriers continuing to receive HCLS and CAF BLS?

9. In revisiting the budget, how should the Commission take into account the reforms it adopted in the Rate-of-Return Reform Order, 81 FR 24282, April 25, 2016, as well as proposals the Commission makes in this NPRM—reforms and proposals that will bring more predictability to rate-of-return carrier support, while spurring deployment and mitigating regulatory inefficiencies? And how should the Commission account for the fact that recipients of CAF BLS and HCLS are uniquely situated because each recipient effectively determines its own support claims through its behavior (its expenses and capital investments) and each recipient's behavior has a collective effect on all recipients of these funds due to the budget cap. In other words, how should the Commission account for the fact that spending by one legacy carrier could reduce support available to other providers once adjustments are made to ensure that total spending falls below the cap?

10. The Commission is mindful of its obligation to ensure that scarce public resources are spent judiciously. As courts have recognized, too much subsidization could affect the affordability of telecommunications services for those that pay for universal service support, in violation of section 254(b). The Commission also notes that when the Tenth Circuit upheld the budget adopted in 2011, it stated that “the FCC quite clearly rejected any notion that budgetary `sufficiency' is equivalent to `complete' or `full' funding for carrying out the broadband and other obligations imposed upon carriers who are voluntary recipients of USF funds.” The Commission therefore asks commenters to discuss whether the benefits of any budget increase would outweigh the burden on ratepayers from an increase in the contribution factor. The Commission notes that the proposed contribution factor for the second quarter of 2018 is 18.4 percent. The Commission takes seriously its obligations as steward of the Fund and is committed to fiscal responsibility. The Commission also recognizes that increases in the contribution factor raise the costs, directly and indirectly, of service to businesses and consumers. The Commission thus asks that commenters consider its commitment to fiscal responsibility when advocating an appropriate high-cost budget.

11. With any proposed budget, the Commission urges commenters to provide a detailed economic analysis. The Commission would find most helpful comments providing evidence on the amount of support legacy carriers would need to meet mandatory buildout requirements while offering at least one plan at the comparative benchmark rate, and why/if current support levels are insufficient. The Commission also asks that comments quantify how much additional broadband deployment could occur with any budget increase.

12. After the Commission has set a new initial budget, it proposes to increase that budget for inflation going forward and seek comment on this proposal. The Commission believes that adjusting the budget for inflation would account for any increases in the costs of network inputs and allow carriers an opportunity to recover those increased costs. The Commission seeks comment on inflation's impact on the costs of deploying and maintaining a network.

13. For an inflationary factor, the Commission proposes using Gross Domestic Product—Chain Price Index (GDP-CPI), the same factor used for the Rural Growth Factor (RGF). Using the same inflationary factor the Commission uses for the RGF would be administratively efficient. In addition, the Commission has been using the GDP-CPI in other contexts since 1996, and of the two versions used to index federal programs, the GDP-CPI is more accurate in estimating cost of living changes from month to month. Furthermore, in the document, the Commission modifies the operating expense limitation to add GDP-CPI as the inflationary factor, which the industry had requested. Nonetheless, the Commission seeks comment on whether another inflationary factor be more appropriate and, if so, why?

14. The Commission also seeks comment on when it should next revisit the budget. Should the Commission revisit the budget again in six years, as set forth in the USF/ICC Transformation Order, 76 FR 73830, November 29, 2011? Given that current A-CAM funding continues until 2026, would it be more appropriate to revisit the budget in 2026? The Commission asks that commenters consider that any time frame should take into account carriers' needs for a sufficient and predictable funding stream, while providing the flexibility to make adjustments as marketplace circumstances warrant.

15. A-CAM Offer. In the A-CAM Revised Offer Order, 82 FR 4275, January 13, 2017, the Commission recognized that glide path carriers—those carriers electing A-CAM despite an “offer of model-based support . . . less than the legacy support that they received”—leave more funding available in the A-CAM rate-of-return budget to the benefit of consumers and other rate-of-return carriers that elected model support. Here, the Commission proposes to extend a new model offer to carriers willing to accept lower support amounts in exchange for increased certainty of funding—which in turn could create additional headroom for legacy rate-of-return carriers over time. The Commission seeks comment on this proposal.

16. In proposing this new model offer, the Commission first seeks comment on limited adjustments to the cost model that may make participation more favorable to carriers that declined the A-CAM, including the addition of a Tribal Broadband Factor. The Commission next seeks comment on which carriers should be eligible to participate. The Commission then seeks comment on the support amounts available for electing carriers, as well as their accompanying obligations. Finally, the Commission seeks comment on the process used for elections.

17. Revising Model Parameters. The Commission generally proposes to use the A-CAM and the parameters it adopted in the Rate-of-Return Reform Order to provide its new model offers, but the Commission seeks comment on several proposed revisions.

18. First, the Commission proposes to adjust the model to reflect the unique challenges of deploying high-speed broadband to rural, Tribal communities by incorporating a Tribal Broadband Factor into the model. Specifically, the A-CAM incorporates assumptions about take rates and potential average revenues per subscriber that may be unrealistic given the “high concentration of low-income individuals [and] few business subscribers” in many rural, Tribal areas. By reducing the funding threshold by 25 percent for locations in Indian country—in other words, by setting a high-cost funding benchmark of $39.38 on Tribal lands—the Commission believes the revised model will better reflect the business case of deploying high-speed broadband in rural, Tribal areas and therefore spur further broadband deployment there. Because A-CAM support is calculated at the census block level, the Tribal Broadband Factor would efficiently target support to carriers that serve significant Tribal lands, as well as those carriers that serve only a minimal amount of Tribal lands or a small number of housing units on Tribal lands in their study area. The Commission proposes to use the definition of “Tribal lands” that was used in the USF/ICC Transformation Order and later modified in the 2015 Lifeline Reform Order, 80 FR 40923, July 14, 2015. The Commission seeks comment on this proposal.

19. Second, the Commission proposes to include census blocks where an incumbent or its affiliate is providing 10 Mbps/1 Mbps or better broadband using either fiber to the premises (FTTP) or cable technologies. In the Rate-of-Return Reform Order, the Commission excluded these census blocks to focus its limited budget on those carriers most likely to build new networks with new funding. Because the Commission proposes to limit this new offer to glide path carriers, providing model support to maintain and upgrade existing networks is financially feasible and may create an additional incentive for legacy providers to consider shifting to model-based support.

20. Third, consistent with the $146.10 per-location funding cap the Commission is implementing for the original A-CAM electors, it proposes to cap the total amount of support available for the second offer at $146.10 per location instead of $200. The Commission also proposes a $13.12 higher per-location cap on rural, Tribal lands to reflect the high-cost threshold created by applying the Tribal Broadband Factor. The Commission seeks comment on this proposal. The Commission also seeks comment on alternatives. For example, because the Commission proposes to limit eligibility to carriers for whom A-CAM support would be less than legacy support, should the Commission anticipate that the available budget could potentially fund a higher per-location funding cap of $200? If so, should the Commission establish a per-location cap up to that amount? Alternatively, the Commission notes that a single per-location funding cap may unnecessarily exclude some carriers from participating in the new model offer. For example, a carrier might be willing to accept a small loss of support but not a larger loss—meaning a $146.10 per-location funding cap may be, for that carrier, too low to induce participation. In contrast, a carrier might be willing to accept a small loss of support but is not given the chance—because a $146.10 per-location funding cap may result in an increase to that carrier's legacy support. Should the Commission adjust the per-location funding cap for each carrier so that every legacy carrier has an opportunity to accept the new model with only a small loss (5 to 15 percent) of support? If so, should the Commission nonetheless retain a per-location funding cap maximum of $200 or $146.10?

21. Fourth, the Commission proposes to update the broadband coverage data with the most recent publicly available FCC Form 477 data prior to any additional offer of support. The Commission proposes to rely on the certified FCC Form 477 data rather than conducting a time-consuming and administratively burdensome challenge process. In this regard, the Commission notes that in the challenge process for the first A-CAM offer, the Bureau granted only 61 challenges of the more than 250 requests received to change A-CAM coverage. Even with the challenges granted, the coverage data may not have changed to “unserved” in particular census blocks if there were other unsubsidized providers that were not challenged reporting service in those census blocks. The Commission seeks comment on updating the broadband coverage data.

22. Eligibility Requirements. First, the Commission proposes to limit this new model offer to legacy carriers eligible to receive HCLS and CAF BLS, i.e., those rate-of-return carriers that are not recipients of A-CAM support and that are not participants in the Alaska Plan.

23. Second, the Commission proposes to limit this new model offer to carriers that would be glide path carriers, i.e., those for whom the new offer of model support will be below their legacy support. The Commission seeks comment on how to set the baseline level of legacy support for these purposes. Should the Commission use the same baseline it did in authorizing the A-CAM? Should the Commission set the baseline as total support received in calendar year 2017 or budget year 2017? In setting the baseline, should the Commission ignore the parent trap rule where applicable? For instance, if a carrier's legacy support would have been $500,000, but because of the parent trap rule, support is $300,000, which amount should the Commission use?

24. Third, the Commission seeks comment on whether to exclude from this new model offer carriers whose deployment obligations would include no fully funded locations. That is, should the Commission exclude from the new model offer those carriers that would only be obligated to deploy 4/1 Mbps to a certain number of locations, and to provide broadband only upon reasonable request to the remaining locations?

25. In the Rate-of-Return Order, the Commission excluded from the initial A-CAM offer any carrier that had deployed 10/1 Mbps broadband to 90 percent or more of its eligible locations in a state in order to maximize its limited funding toward those areas with less deployment. Because the Commission proposes to limit this new offer to glide path carriers, it declines to propose such a limit because offering model support to such carriers is financially feasible and may create an opportunity for legacy providers to consider shifting to model-based support and increasing their deployment of even higher-speed service. The Commission also seeks comment on any other eligibility criteria that it should consider.

26. Support. The Commission proposes aligning the term of support for this new model offer with the10-year term of the first A-CAM offer. Current A-CAM support recipients began receiving support as of January 1, 2017. If support is authorized pursuant to a second A-CAM offer in 2018, the Commission seeks comment on providing a nine-year term of support that will expire at the end of 2026, with support beginning January 1, 2018. If additional A-CAM recipients are not authorized until late 2018, in 2019, or later, should the Commission offer a shorter term of support or take other measures to align the A-CAM support terms? In addressing an appropriate term of support, commenters are invited to address the Commission's competing goals of providing the certainty needed to stimulate investment with its interest in promoting administrative efficiency and accounting for marketplace developments over time.

27. As adopted by the Commission for current A-CAM recipients, it proposes a three-tiered process to transition electing carriers from the legacy support mechanism to the model. The Commission proposes to base the transition payments on the difference between model support and legacy support, and phase down transition payments over longer periods of time where that difference is greater. If the Commission aligns the term of support for the new model offer with the 10-year term of the original A-CAM offer, the Commission proposes to adjust the percentage reductions also to align with the shorter support term. The Commission seeks comment on this proposal. In the alternative, the Commission seeks comment on modifying the transition payments so that a greater portion of the available budget will be directed to increased broadband deployment obligations. Commenters are also invited to address whether the Commission should modify deployment obligations if a carrier forgoes transition payments or accepts faster transitions.

28. The Commission notes that given that it proposes to extend a new model offer only to those carriers for whom the offer is less than their legacy support, support claims alone will cover theA-CAM support plus transition payments regardless of any per-location cap adopted by the Commission. The Commission therefore proposes to base the budget for a new model offer on the 2017 claims amount contributed by electing carriers.

29. Obligations. The Commission proposes to require the same performance and deployment obligations as the Commission requires for existing A-CAM recipients. Specifically, the Commission proposes to require rate-of-return carriers electing model support to maintain voice and existing broadband service and to offer at least 10/1 Mbps to the number of locations “fully funded” by the model, and at least 25/3 Mbps to a certain percentage of those locations, by the end of the support term. The Commission continues to believe that this approach strikes the appropriate balance in allowing carriers to conduct network planning, while accounting for evolving standards in the future.

30. The Commission proposes to vary the deployment obligations by density, as it did for the previous A-CAM offers. Carriers with a density in the state of more than 10 housing units per square mile would be required to offer 25/3 Mbps to at least 75 percent of the fully funded locations; carriers with 10 or fewer, but more than five, housing units per square mile would be required to offer 25/3 Mbps to at least 50 percent of the fully funded locations; and carriers with five or fewer housing units per square mile would be required to offer 25/3 Mbps to at least 25 percent of the fully funded locations.

31. The Commission also proposes requiring carriers electing model support to offer at least 4/1 Mbps to a defined number of locations that are not fully funded (i.e. with a calculated average cost above the funding cap) by the end of the support term. The Commission proposes that carriers with a density of more than 10 housing units per square mile be required to offer at least 4/1 Mbps to 50 percent of all capped locations; and carriers with a density of 10 or fewer housing units per square mile be required to offer at least 4/1 Mbps to 25 percent of all capped locations. The remaining capped locations would be subject to the reasonable request standard. The Commission seeks comment on these proposed obligations. The Commission also seeks comment on whether it should modify the broadband speed obligations in any way, such as by requiring additional 25/3 Mbps deployment in census blocks that would have been excluded from the original A-CAM offer because of reported cable or fiber deployment.

32. Consistent with CAF requirements for funding recipients, the Commission proposes to require carriers electing the new model offer to offer a minimum usage allowance of the higher of 170 GB per month or one that reflects the average usage of a majority of consumers, using Measuring Broadband America data or a similar data source. In addition, the Commission proposes to require carriers electing to receive model support to certify that 95 percent or more of all peak period measurements of round-trip latency are at or below 100 milliseconds. Because there may be a need for relaxed standards in areas where carriers may use alternative technologies to meet their public interest obligations, the Commission proposes that this latency standard would apply to locations served by terrestrial technologies. The Commission seeks comment on whether to use the high latency metric adopted in the CAF II auction proceeding for any capped locations served by a non-terrestrial technology. Under the high-latency standard, carriers would be required to certify that 95 percent or more of all peak period measurements of round-trip latency are at or below 750 milliseconds, and with respect to voice performance, a score of four or higher using the Mean Opinion Score (MOS). The Commission seeks comment on these proposals.

33. The Commission proposes to require carriers electing a new model offer to meet the same deployment milestones as the Commission requires for existing A-CAM recipients, adjusted for the proposed nine-year term of support or as appropriate. Assuming a nine-year term, the Commission would eliminate the 40 percent benchmark in 2020, and propose to require new A-CAM support recipients to offer at least 10/1 Mbps service to 50 percent of the requisite number of funded locations by the end of 2021, an additional 10 percent each year thereafter, and 100 percent by 2026. In addition, by the end of 2026, the Commission proposes to require these carriers to offer at least 25/3 Mbps and 4/1 Mbps to the requisite percentage of locations, depending on density. The Commission also proposes to provide the same flexibility afforded other A-CAM recipients to deploy to only 95 percent of the required number of fully funded 10/1 Mbps locations by the end of the term of support. The Commission seeks comment on these proposed deployment milestones.

34. Consistent with existing obligations, the Commission proposes to require carriers to report geocoded location information for all newly deployed locations that are capable of delivering broadband meeting or exceeding the speed tiers. The Commission also proposes to adopt defined deployment milestones, so that the same previously adopted non-compliance measures would apply.

35. Election Process. The Commission proposes a single-step process whereby electing carriers make an irrevocable acceptance of the offered amount because no support adjustments will need to be made to address budget targets.

36. Continuing Uniform Collections. The Commission seeks comment on whether it should extend its direction to the Universal Administrative Company (USAC) to forecast total high-cost demand as no less than one quarter of the annual high-cost budget, regardless of actual quarterly demand in order to minimize volatility in contributions. If the Commission maintains an overall cap on the legacy portion of the rate-of-return budget, are there any reasons why demand might shift dramatically, causing unexpected increases to the contribution factor? Are uniform collections with a reserve fund a prudent budgetary practice or an unnecessary change to the Commission's traditional framework?

37. Fully Fund Existing A-CAM. In the concurrently adopted Report and Order, the Commission offers additional support to authorized A-CAM recipients based on a $146.10 per-location cap. Here, the Commission seeks comment on whether to offer A-CAM support to those carriers using a $200 per-location funding cap, and what additional deployment commitments may be appropriate. The Commission also provides information on the amount by which the acceptances for the model exceeded the available funding. The Commission notes that carriers who elected A-CAM offers that were below then-current support levels have already received full funding. To stay within the budget, however, the Bureau revised the offer for all other electing carriers by reducing the funding cap to $146.10 per location, and then further reducing carrier-specific offers by varying amounts based on the percentage of locations lacking 10/1 Mbps.

38. The Commission now seeks comment on using additional headroom in the budget to offer the carriers that accepted the revised offer of A-CAM support in 2017 the fully funded amount, using a per-location funding cap of $200 per location. Providing full funding for the original A-CAM recipients would accelerate broadband deployment in those rural areas for which rate-of-return carriers accepted the first A-CAM offer. If all eligible carriers accept this offer, it anticipates that it would result in approximately $66.6 million more support per year for the 10-year A-CAM term. If the Commission were to move forward with this additional offer, the Bureau would release a public notice announcing the offer and provide carriers 30 days to accept the offer and carriers accepting the fully funded offer be subject to the original deployment obligations. The Commission seeks comment on this option, including any timing considerations that it should bear in mind.

39. An A-CAM Offer for All Legacy Carriers. Encouraged by the response to the first A-CAM offer, the Commission seeks comment on whether to open a new window for all legacy carriers—not just those for whom the offer of model-based support is less than the legacy support they received—to elect to receive specific and predictable model-based support on a state-level basis in exchange for extending broadband service to a pre-determined number of locations in eligible census blocks. Expanding the number of carriers receiving A-CAM support will advance the Commission's longstanding objective to provide high-cost support based on forward-looking, efficient costs to help spur additional broadband deployment in rural areas. If the Commission initiates a broader new model offer, generally propose to use the same process, obligations, and criteria described in this document. Accordingly, when reviewing the proposals and questions the Commission asks in this document, commenters should also consider them in light of a second offer to all legacy carriers. In the following, the Commission discusses and seeks comment on aspects of a new model offer that are not discussed in this document, i.e. those aspects that are applicable only if the Commission makes a new model offer to legacy carriers who might receive more funding than they had received previously.

40. Budget. If the Commission extends a second offer to all legacy rate-of-return carriers, it proposes to direct the Bureau to use a multi-step process for non-glide path carriers, similar to the one used in the first offer, to determine support amounts if the available budget is insufficient to maintain the initial per-location funding cap of $146.10 (or some other amount). The Bureau would first total the amount of model-based support for electing carriers and determine the extent to which, in the aggregate, their model-based support exceeds the total legacy support they received in 2017. The Commission seeks comment on whether it should collect additional contributions to fully fund all electors at this point, rather than calculating a second offer for electors. The Commission seeks comment on this approach.

41. Alternatively, if the Commission does not decide to collect sufficient contributions to fully fund all electors, should it direct the Bureau to reduce the funding cap and/or prioritize support amounts to those areas that have the lowest deployment of broadband? Should the Bureau first reduce the per-location funding cap? If the new model support amounts using this lower funding cap still exceeded the budget, should the Bureau further reduce support offers by varying percentages based on the percentage of locations lacking 10/1 Mbps? Is there a different way to allocate the budget amongst new model electors that would maximize broadband deployment?

42. Election Process. If the Commission extends a new model offer to non-glide path carriers, it proposes to use the same two-step election process the Commission used for the first A-CAM offer. The Bureau would first release a public notice showing the offer of model-based support for each carrier in a state and associated deployment obligations, including the number of fully funded and capped locations. The Commission seeks comment on providing carriers 30 days or 60 days to indicate on a state-by-state basis whether they elect to receive model-based support. The Commission proposes that the elections would be irrevocable if no adjustment to the support amounts would be required either because the support amounts are within the available budget or because the Commission has concluded to collect sufficient amounts to fully fund the offers. If the budget is insufficient, the Commission proposes that it adopts a methodology similar to that used to revise the first A-CAM offers. The Bureau would approve fully funded amounts for glide path carriers. The Bureau would also release a public notice showing the revised offers for all other carriers. Carriers would have 30 days to accept the revised offer. The Commission seeks comment on this option.

43. Threshold Level of Support. In funding support claims affected by the budget control mechanism from July 2017 to June 2018 in the concurrently adopted Report and Order, the Commission provides an opportunity to consider the effects of the budget control mechanism on rate comparability in conjunction with its overall review of the rate-of-return budget. The Commission also acknowledges carriers' claims that unpredictability may make capital planning difficult, potentially resulting in reduced broadband deployment that, in turn, could harm consumers. With each successive annual calculation of the budget control mechanism, the budget adjustment factor has increased and legacy carriers have faced increasing reductions in their support relative to their support claims. Moreover, the Commission notes that reductions can vary from year-to-year and even quarter-to-quarter, given that each carrier's reduction in support is affected by the spending of other carriers.

44. Here, the Commission seeks to address this concern and provide greater long-term stability and predictability for legacy carriers to facilitate planning and help spur deployment. At the same time, the Commission wants to better motivate legacy carriers to operate efficiently. To achieve this result, the Commission proposes two changes to the budget control mechanism.

45. First, the Commission proposes to modify the budget control mechanism to use only a pro rata reduction applied as necessary to achieve the target amount and no longer include a per-line reduction. The Commission's experience thus far with per-line reductions has led to larger and more unpredictable swings in support than might otherwise be expected; accordingly, using only a pro rata reduction may be a more predictable and equitable way to reduce support amounts because all carriers' support is reduced by the same percentage. It is also a less complex mechanism to administer. Accordingly, the Commission proposes that the budget control mechanism would operate in the same manner as the current one, but without the per-line reduction aspect. The Commission seeks comment on this proposal.

46. Second, the Commission proposes to provide legacy providers a threshold level of annual support that would not be subject to a budget cap. Establishing a level of uncapped support may give legacy carriers more predictability, allowing them to make longer term plans while knowing that certain expenses could push them above the uncapped amount and therefore would be less likely to be fully recoverable.

47. The Commission seeks comment on alternatives for establishing a level of high-cost support that would not be subject to the budget control mechanism. One option would be to set the uncapped amount of annual support at 80 percent of the amount a legacy carrier would have received had they elected the new model offer (based on a funding cap of $146.10 per location). In evaluating this option, the Commission seeks comment on whether basing a carrier's uncapped level of support using 80 percent of the revised model is appropriate, as opposed to a different percentage.

48. Another option would be to use the five-year CAF BLS forecast developed by the National Exchange Carrier Association (NECA) for the carrier-specific deployment obligation as the uncapped threshold, but subject any amounts greater than that to a budget control mechanism. A third option could set the uncapped threshold at a specified fraction of each carrier's unconstrained 2016 or 2017 claims amount. If the Commission adopts this approach, would a 70 percent fraction be appropriate? Should it be lower or higher? And should this amount be adjusted to reflect line loss, so that a carrier is not guaranteed a fixed amount to serve a decreasing number of lines? Finally, a fourth option if the Commission does retain the per-line reductions would be to limit any reductions in support due to the budget control mechanism to no more than twice the “budget adjustment factor.” For example, if total demand, prior to the application of the budget control mechanism, was $1.4 billion and the overall legacy rate-of-return budget remains at $1.23 billion, then a 12.1 percent reduction would be applied to CAF BLS and HCLS to stay within the budget. Under this alternative, no carrier would have a reduction in support greater than 24.2 percent.

49. The Commission seeks comment on these alternatives, and any others that parties may propose. What are the benefits and costs of each proposal? Would they result in a threshold level of support that is sufficient or excessive? Should any of these options be adopted as an additional layer to one of the methods of limiting support losses described above? In evaluating the various options, the Commission requests that commenters discuss what factors and goals it should consider. For instance, is the best option the one where the average decrease in support from current levels is the least or is it better to base the guaranteed amount on those carriers the cost model indicates can use it most efficiently? To what extent should the Commission weigh the certainty and predictability of support associated with each option? The Commission also seeks comment on how each option helps to mitigate the inefficiencies of the legacy rate-of-return system, such as the incentive for rate-of-return companies to over-invest capital to increase profits, the Averch-Johnson effect. In addition, the Commission seeks comment on any other mechanisms for calculating an amount of support not subject to a budget control that balances the Commission's objective of providing specific, predictable, and sufficient support, with its goals of spurring rural broadband deployment, all while fairly allocating a finite budget among legacy carriers.

50. The Commission seeks comment on revising deployment obligations should it decide to provide carriers a threshold level of support that is not subject to the budget control mechanism or a cap on overall support, based on the A-CAM model. The deployment obligations adopted in the Rate-of-Return Reform Order were based on each legacy carrier targeting a defined percentage of its five-year forecasted CAF BLS support to the deployment of broadband where the carrier has not already deployed. Deployment obligations were determined by dividing the dollar amount of targeted CAF BLS by a cost-per-location amount. In forecasting the amount of CAF BLS that a carrier would receive, NECA incorporated the impact of the budget control mechanism.

51. Consistent with the Commission's proposal in this document, it seeks comment on revising the deployment obligations to reflect any guaranteed level of support that is not subject to the budget control mechanism. Specifically, the Commission seeks comment on whether each carrier should have a minimum deployment obligation that is based on the number of locations that would be served under the revised A-CAM model at an 80 percent funding level. For example, if the revised A-CAM, at the 80 percent funding level, indicated that a carrier should serve 1,000 locations with broadband service, and it currently serves 900, then it would be required to build out to an additional 100 locations. Each carrier would have further deployment obligations based on any additional support it is forecasted to receive in excess of its uncapped threshold level of support. The forecasted amount and the further obligations could be developed using the same methodology as was initially used after the adoption of the Rate-of-Return Reform Order (i.e., by dividing the amount of targeted CAF BLS in excess of the threshold level by a cost-per-location amount).

52. The Commission seeks comment on this option. Would this buildout requirement better serve the public interest and promote deployment than the current buildout obligations? Does setting deployment obligations consistent with the threshold level of support improve certainty for carriers? Are there any additional benefits or possible concerns regarding setting deployment obligations in this manner? Should deployment obligations be modified to align with the expiration of the A-CAM support mechanism? Are there other ways to improve the determination of deployment obligations?

53. Monthly Per-Line Limit. The Commission seeks comment on lowering the $250 per-line monthly limit on support to $225 or $200. The Commission adopted the monthly limit on support in the USF/ICC Transformation Order, finding that amounts higher than $250 per loop per month (not including CAF ICC) should not be provided to carriers without further justification. In adopting that limit, the Commission noted that only 18 incumbent rate-of-return carriers received more than $250 per loop each month and estimated that only 12 would be subject to the limit after other reforms adopted in the USF/ICC Transformation Order were applied.

54. The Commission's experience suggests that a lower limit may be justified. Currently, approximately 13 study areas are affected by the monthly per-line limit. However, carriers serving only 10 of those study areas have petitioned the Commission to justify higher support amounts, and some withdrew their requests. To date, the Commission has awarded relief in only three instances. This history suggests that the $250 per-line monthly limit has been neither too restrictive nor likely to have a negative impact on the ability of carriers to provide service. Moreover, the Commission notes that a reduction to $200 would currently affect approximately 25 study areas that are not already subject to the $250 per-line monthly limit, and the same waiver process would be available to all affected study areas. Lowering the per-line monthly limit would also free up additional support within the legacy budget for other carriers. The Commission invites comment on whether to adopt a lower per-line monthly limit and, in particular, what amount may be appropriate.

55. 100 Percent Overlap Process. The Commission seeks comment on whether to replace the 100 percent overlap process by which it eliminates support for legacy rate-of-return study areas that are fully served by unsubsidized carriers with a different mechanism. In the USF/ICC Transformation Order, the Commission adopted a rule to eliminate high-cost universal service support in incumbent LEC study areas where an unsubsidized competitor or a combination of unsubsidized competitors offers voice and broadband services that meet the Commission's service obligations throughout the study area. High-cost universal service support for the study areas found to be 100 percent overlapped is frozen at the amount disbursed in the prior calendar year, and support is phased down over three years. The Bureau conducted this biennial review in 2015 and 2017 and found only one study area to be 100 percent overlapped by unsubsidized competitors.

56. The Commission seeks comment on the effectiveness of the 100 percent overlap process. The Commission notes that to date there has been little participation by unsubsidized competitors. This lack of participation likely reflects the absence of incentives to participate. In competitively served rate-of-return areas, a study area is often not completely overlapped by one competitor, but rather multiple competitors covering different parts of the study area. An unsubsidized competitor that only partially overlaps an incumbent may not participate in the current process because there is a cost to doing so (e.g., cost of compiling the information and filing) but other competitor(s) similarly may not participate such that the incumbent's support will not be phased out. In addition, the current process requires Commission staff to weigh the certifications and evidence presented to determine whether all locations are in fact served by voice and broadband, which can be challenging. Does the benefit of eliminating support from study areas 100 percent served by competitors outweigh the cost of conducting this process?

57. In lieu of the current process to determine whether a study area is 100 percent overlapped, the Commission seeks comment on using an auction mechanism to award support to either the incumbent LEC or the competitor(s) in areas where there is significant competitive overlap. Competitive bidding can result in more efficient levels of support. Competitors will have an incentive to bid less than the amount the incumbent currently receives, and incumbents will have an incentive to increase efficiencies by bidding less than the competitor(s). In addition, the Commission anticipates that the competitive overlap process adopted by the Commission in the 2016 Rate-of-Return Reform Order will require substantial Commission resources because it will require the Commission to review evidence regarding each census block that is competitively served individually. An auction procedure is likely to be quicker and more efficient.

58. If the Commission were to conduct auctions, should it focus only on study areas that are 100 percent overlapped according to FCC Form 477 data, or should the Commission focus on some lesser percentage, such as 90 percent overlapped or greater? If a lesser percentage, should the Commission adopt an auction to replace the competitive overlap process adopted by the Commission in the Rate-of-Return Reform Order? Using an auction at the study area level rather than the current process would give competitors an incentive to participate—the opportunity to win support to serve these areas. In the current 100 percent overlap process, the Commission uses the 10/1 Mbps standard to determine whether an area is served by unsubsidized competitors. If a study area is determined to be 100 percent overlapped, then the incumbent's support is phased out, perhaps trapping the area at 10/1 Mbps for the foreseeable future. An auction for support in these areas could increase speeds to the Commission's current standard of 25/3 Mbps, or indeed even higher. If one of the goals of this auction process is to increase speeds in these areas, should the Commission only auction those areas that are overlapped at the 10/1 Mbps level, or any speed less than25/3 Mbps?

59. Other Reforms to Legacy Support Mechanisms. The current legacy support mechanisms are complicated and remain mired in the complexities and disadvantages of rate-of-return regulation. The Commission therefore seeks comment on broader measures that would simplify its legacy support mechanisms while providing flexibility and certainty to carriers. For example, the Commission could rely on its prior HCLS and Interstate Common Line Support (ICLS) mechanisms but treat all lines similarly, regardless of what services customers purchase. Under this scenario, carriers would include certain costs associated with standalone broadband service when calculating HCLS and ICLS and all voice and standalone broadband lines would be counted as working loops when calculating support. Thus, HCLS and ICLS would continue as they had prior to the adoption of the Rate-of-Return Reform Order but would now include standalone broadband costs and lines in the calculations. The Commission seeks comment on whether this approach would be less complex than the CAF BLS program adopted by the Commission in 2016. Alternatively, is there a way to treat voice and broadband lines similarly that could be incorporated into the CAF BLS program? If so, would this approach minimize the effect of the budget control mechanism? Because carriers have long experience with HCLS and ICLS, would using HCLS and ICLS for standalone broadband line support provide more certainty and predictability to support flows?

60. The Commission also seeks comment on whether combining its high-cost support programs into one support stream would be simpler to administer and provide carriers with more flexibility. HCLS and CAF BLS rely on mechanisms originally designed to support voice services. Carriers receiving A-CAM support receive one monthly payment in exchange for meeting specific buildout obligations. Would a single support mechanism that combines current HCLS and CAF BLS resources and focuses on broadband deployment rather than voice services reduce regulatory burdens and provide more certainty and predictability to carriers receiving legacy support? Could such a mechanism be structured to provide incentives for carriers to operate efficiently and minimize the disadvantages of rate-of-return regulation? The Commission seeks comment on how a single high-cost support mechanism could reduce the need for complex cost regulation while encouraging broadband deployment.

61. The Commission seeks comment on whether there are other alternatives it should consider to further enhance the efficiency of the legacy high-cost program and target support to where it is most needed. For example, should the Commission target support not only to high-cost areas but low-income areas as well? Should the Commission adopt means-testing within the high-cost program? Either approach could target support where it is needed most by focusing only on areas or consumers with lower household income. Should the Commission award support for high-cost areas through a portable consumer subsidy or voucher? Would a voucher system increase the choices available to consumers? Should the Commission target support to States with less ability to fund the deployment of broadband in rural areas? How should the Commission identify States that are most in need of support, and how can the Commission do so while avoiding perverse incentives? Are there other alternatives the Commission should consider? Commenters should address considerations of timeliness, ease of administration, and cost effectiveness for each alternative.

62. Modifying Limitations on Capital and Operating Expenditures. The Commission seeks comment on the opex limitation and capital investment allowance. Through this proceeding, the Commission seeks to adopt further reforms to legacy support mechanisms that will simplify administrative processes and provide carriers with greater flexibility to deploy efficient broadband networks. Accordingly, the Commission seeks comment on whether the current limitations on capital and operating expenditures—currently untethered from the budget control mechanism—are successfully curbing unnecessary expenditures and incentivizing prudent investments or instead creating unnecessary burdens or deterring efficient investments. The Commission notes that for NECA to calculate the capital investment allowance, legacy carriers must track every capital expenditure and the number of locations affected by that expenditure. Is that additional administrative work yielding results for ratepayers? Also, given the trade-off many carriers must make between capital and operating expenditures, the Commission seeks comment on whether these limitations might actually lead to greater inefficiencies in overall business operations than would be the case without the constraints.

63. The Commission also seeks comment on the extent to which the limitations on capital and operating expenditures have been effective in promoting efficient spending. Do the company-specific limitations reflect reasonable upper limits on the amount of operating and capital expenses that a carrier need incur? For example, the Commission notes that that the National Tribal Telecommunications Association recently argued that carriers serving Tribal lands incur costs that other rural carriers do not face, resulting in significantly higher operating expenses to serve very sparsely populated service areas. Are there other specific examples that the Commission should take into account? For instance, are there modifications to the process or amounts that would improve operation of these limitations? Alternatively, should the Commission eliminate the opex limitation or the capital investment allowance entirely?

64. Conforming Changes to Information Collection. The Commission seeks comment on proposed changes related to the collection of line count data for rate-of-return carriers. Currently, carriers that receive CAF BLS must use FCC Form 507 to file, on July 31 of each year, their voice and broadband-only line counts as of the prior December 31. Carriers may file, also using FCC Form 507, optional updates on September 30, December 31, and March 31, reporting line counts as of six months prior to the filing. These data are used to apply the monthly $250 per-line cap and to administer the budget control mechanism. In addition, these data are extremely useful in monitoring and analyzing the benefits and efficiency of high-cost universal service.

65. First, the Commission proposes to change the date for mandatory line count filings for CAF BLS to March 31 of each year but to continue to require line counts as of December 31 (i.e., reduce the lag until filing to 3 months). This would ensure that recent line counts are used to apply the monthly cap and administer the budget control mechanism. Currently, when USAC performs the necessary calculations in April of each year, it typically must rely on the carrier's FCC Form 507 from the prior July, which in turn reports line counts as of the prior December 31. In other words, these calculations are based on line counts that are more than 15 months old. Revising the line count reporting process as proposed would mean that USAC would be able to use line count data that is only three months old. The Commission seeks comment on this proposal.

66. The Commission notes that the FCC Form 507 filing deadlines mirror the line count filing deadlines used for HCLS. Would changing the FCC Form 507 deadlines so that they no longer coincided with the HCLS deadlines create significant administrative burdens? Would it be feasible also to revise the HCLS line count deadlines to be consistent with the proposed FCC Form 507 deadlines? If the Commission modifies the filing schedule as proposed, do the optional filings serve any benefit, or could they be eliminated?

67. The Commission also seeks comment regarding whether FCC Form 507 should be mandatory for rate-of-return carriers that do not receive CAF BLS (i.e., carriers that have electedA-CAM) or whether there are alternative sources of this data that would be less burdensome for carriers. Line count data is extremely useful for monitoring and analyzing high-cost universal service programs. Carriers that elected A-CAM were required to file line count data on FCC Form 507 prior to the implementation of A-CAM because they received ICLS, but no longer do so. Requiring the A-CAM carriers to continue to provide line count information would allow the Commission to maintain a frequently used data set for assessing whether the Commission's rules are achieving its universal service goals, while being a minimal burden to A-CAM recipients. The Commission seeks comment on this proposal. The Commission currently estimates that it takes approximately six hours to complete and file FCC Form 507. Is this an accurate estimate of the burden associated with completing this form? Are there alternate sources of these data that the Commission could rely on instead? Would the public benefit of maintaining these data for the purpose of monitoring and analyzing high-cost universal service exceed the burden?

68. In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases, which is codified as Accounting Standards Codification (ASC) Topic 842 (ASC 842). The new standard affects both capital and operating leases. Under this new standard, capital leases are referred to as financing leases and the procedures for expensing amounts recorded for financing leases are the same procedures previously used for capital leases.

69. ASC 842 adopts new requirements for operating leases. For example, ASC 842 requires that operating leases longer than one year be carried on a company's balance sheet along with a corresponding liability to reflect the net present value of future lease commitments. The new standard provides procedures for expensing amounts recorded in the operating lease asset account. A carrier would recognize a lease expense from the operating lease on a straight-line basis over the lease term. Thus, for an operating lease with an escalation clause, ASC 842 would require the recorded operating expense to be higher in the first year than the amount paid in cash. This is different than the current Part 32 treatment of operating leases, which classifies leases as expenses associated with the executory agreements that are recorded as expenses at the time lease payments are made. Pursuant to the current Part 32 treatment, a company would continue to disclose future lease commitments through a footnote to the financial statements. Additional recordkeeping would be necessary if Part 32 were not to adopt the ASC 842 guidelines.

70. The Commission seeks comment on whether to incorporate the ASC 842 guidelines into the Uniform System of Accounts (USOA) contained in Part 32. The differences in the two approaches raise questions regarding how the asset and liability should be recorded and the ability of, and the additional burden on, a carrier to maintain records to support the two approaches. The Commission seeks comment on these questions in general, as well as in connection with the specific issues raised below. The Commission is particularly interested in the additional record-keeping burden that maintaining both the Part 32 and ASC 842 lease accounts would place on carriers if the Commission were not to adopt ASC 842 for Part 32 purposes. A party asserting a burden should address the level of that burden in the context of any ratemaking effects that would occur.

71. If the Commission were to incorporate ASC 842 into Part 32, it proposes to create an asset and a liability account to reflect operating leases. The Commission seeks comment on this proposal. The Commission also invites comment on whether other balance sheet or income statement-related accounts are necessary to account for leasing activities, either financing or operating. If so, parties should specify the additional accounts that are needed. The Commission proposes to adopt new or revised instructions for accounting for leases. Commenters supporting the adoption of ASC 842 are encouraged to provide language for the instructions and other rule revisions needed to implement ACS 842 in Part 32, taking into account the issues raised below.

72. The creation of a new asset account and a new liability account for operating leases raises questions about the treatment of these amounts in the ratemaking context. The operating lease asset would record the discounted value of payments due under operating leases longer than one year. Because there is no current outlay of funding for the operating leases, the Commission proposes that such amounts be excluded from the carrier's rate base. Similarly, because the liability is based on the value in the operating lease account, the Commission proposes that such liability should not be used in calculating the cost of capital. The Commission seeks comment on these two proposals, including whether the proposed treatment is warranted and what effect such treatment would have on a carrier's revenue requirement. Commenters are encouraged to identify and provide specific language to effectuate the changes to Part 65, or other affected provisions in the Commission's rules, that would be needed to implement this proposal.

73. Adopting ASC 842 would also modify the way operating lease expenses are currently calculated pursuant to the Commission's Part 32 rules. As noted earlier, ASC 842 would spread lease payments on a straight-line basis over the term of the operating lease. The Commission seeks comment on any recognition or timing issues between the Part 32 treatment and the treatment under ASC 842. In particular, the Commission seeks comment on how any entries reflecting interest associated with the use of the net present value approach to recording operating leases should be treated for purposes of calculating lease expense. If the Commission adopts ASC 842, it proposes to assign operating lease costs to the expense accounts currently being used to record such amounts. Would any revisions to the separations rules contained in Part 36 would be required under this proposal, and if so, which sections would need to be revised and what specific language should be used?

74. The Commission also seeks comment on the impact any ratemaking changes resulting from this proposed accounting modification would have on the levels or distribution of CAF BLS or other universal service support mechanisms. Commenters should identify any recognition and/or timing issues raised by any change and should, to the extent possible, quantify any difference.

75. ASC 842 becomes effective for fiscal years beginning after December 15, 2018 for public business entities and certain other businesses. For all other entities, it becomes effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The Commission seeks comment on when any changes the Commission adopts should become effective and whether there are any other implementation issues the Commission should address.

76. The NPRM adopted herein contains new, proposed new or modified information collection requirements. The Commission, as part of its continuing effort to reduce paperwork burdens, invites the general public and the Office of Management and Budget (OMB) to comment on the information collection requirements contained in this document, as required by the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, the Commission seeks specific comment on how it might further reduce the information collection burden for small business concerns with fewer than 25 employees.

77. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), the Commission has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on a substantial number of small entities from the policies and rules proposed in the NPRM. The Commission requests written public comment on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments on the NPRM. The Commission will send a copy of the NPRM, including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (SBA). In addition, the NPRM and IRFA (or summaries thereof) will be published in the Federal Register.

78. The proposals in this NPRM seek to build on efforts to modernize high-cost universal service support by offering greater certainty, predictability, and stability to rate-of-return carriers and creating incentives for efficient spending and bringing broadband to the areas that need it most.

79. The Commission reviews the amount of support available to rate-of-return carriers by initiating review of the high-cost universal service support budget, proposing to increase the budget based on inflation, and proposing an offer of model-based support for carriers whose model-based support would be lower than the support they received in 2016. By examining the budget and the support available for rate-of-return carriers, the Commission is looking to bring stability to the program and fulfill its commitment to reexamine the budget. To address some of the shortcomings and inefficiencies in the Commission's existing support programs, it also seeks comment on whether to fully-fund carriers that have elected to receive model-based support, subject to additional build-out obligations, and on providing another opportunity for all legacy rate-of-return carriers still receiving legacy support to elect a voluntary path to model support. For those carriers that choose to remain on legacy support, the Commission proposes to adopt a mechanism whereby legacy carriers would be guaranteed a threshold level of annual support, and the Commission seeks comment on an implementing an individual cap for each legacy carriers. This would alleviate the unpredictability created by the budget control mechanism. The Commission also seeks comment on eliminating limitations on capital, operational, and corporate expenses to minimize the burden these mechanisms put on carriers. Finally, the Commission seeks comment on modifying various rules, including legacy buildout obligations, the methodology for applying the budget constraint, the $250 per-loop, per-month cap, and looking at other reforms to the rate-of-return mechanisms. The Commission also seeks comment on proposals to modify line count data reporting requirements and accounting rules for capital and operating leases.

80. The legal basis for any action that may be taken pursuant to the NPRM is contained in sections 1-4, 5, 201-206, 214, 218-220, 251, 252, 254, 256, 303(r), 332, 403, and 405 of the Communications Act of 1934, as amended, and section 706 of the Telecommunications Act of 1996, 47 U.S.C. 151-155, 201-206, 214, 218-220, 251, 256, 254, 256, 303(r), 403 and 405.

81. The RFA directs agencies to provide a description of, and where feasible, an estimate of the number of small entities that may be affected by the proposed rules, if adopted. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small-business concern” under the Small Business Act. A “small-business concern” is one 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 Small Business Administration (SBA).

82. 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 describes 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.

83. 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 Aug 2016, there were approximately 356,494 small organizations based on registration and tax data filed by nonprofits with the Internal Revenue Service (IRS).

84. 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 indicates 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 shows 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.”

85. Line Count Data. In the NPRM, the Commission seeks comment on proposed changes related to the collection line count data for rate-of-return carriers. Currently, carriers that receive CAF BLS must use FCC Form 507 to file, on July 31st of each year, their voice and broadband-only line counts as of the prior December 31st. Carriers may also file quarterly updates. First, the Commission proposes to change the date for mandatory line count filings for CAF BLS to March 31st of each year, but to continue to require line counts as of December 31st (i.e., reduce the lag until filing to 3 months). Second, the Commission seeks comment regarding whether the FCC Form 507 should be mandatory for rate-of-return carriers that do not receive CAF BLS (i.e., carriers that have elected A-CAM).

86. Accounting for Capital and Operation Leases. In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases, which are codified as Accounting Standards Codification (ASC) Topic 842 (ASC 842). The new standard affects both capital and operating leases. Under this new standard, capital leases are referred to as financing leases and the procedures for expensing amounts recorded for financing leases are the same procedures previously used for capital leases. ASC 842 adopts new requirements for operating leases. The Commission seeks comment on whether to incorporate the ASC 842 guidelines into the Uniform System of Accounts (USOA) contained in Part 32. The changes the Commission proposes would lead to carrier being required to modify certain accounting practices. The Commission is interested in the burden this change would create for carriers.

87. Deployment Obligations. In the NPRM, the Commission seeks comment on whether the number of locations legacy carriers are required to deploy to should change and how based on the new support mechanism proposed.

88. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include (among others) the following four alternatives: (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 or reporting requirements under the rule for 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 small entities. The Commission expects to consider all of these factors when it has received substantive comment from the public and potentially affected entities.

89. Largely, the proposals in the NPRM if adopted would have no impact on or would reduce the economic impact of current regulations on small entities. Certain proposals in this NPRM could have a positive economic impact on small entities; for instance, the Commission seeks comment on fully funding the original A-CAM offer and increasing the budget for rate-of-return carriers based on an inflationary factor.

90. In this NPRM, the Commission seeks comment on making a second offer of A-CAM support. The offer will be voluntary and carriers are not required to accept it or take any action. Therefore, the Commission's proposal for a second A-CAM will not have a significant impact on small entities.

91. The Commission also seeks comment on mechanisms to provide legacy carriers a guaranteed threshold of annual support and a carrier specific cap, which would reduce the unpredictability of the current budget control mechanism. The Commission proposes several alternatives for carriers to evaluate. In addition, because legacy carriers' support amounts could change due to the Commission's proposals, to minimize significant economic impact, the Commission seeks comment on whether or how deployment obligations should change.

92. The Commission also seeks comment on whether it should retain the operating expense limitation, the corporate operations limit, and the capital investment allowance. If the Commission were to eliminate these limitations on expenses and investment, it would be further minimizing the economic impacts on small entities of the Commission's current regulations. In addition, the Commission seeks comment on ways to simplify legacy support mechanisms by making changes to how HCLS and CAF BLS are calculated.

93. The Commission proposes to change the date for mandatory line count filings for CAF BLS to March 31st of each year, but to continue to require line counts as of December 31st (i.e., reduce the lag until filing to 3 months). The Commission also seeks comment regarding whether FCC Form 507 should be mandatory for rate-of-return carriers that do not receive CAF BLS (i.e., carriers that have elected A-CAM). Finally, the Commission seeks comment on whether to incorporate the ASC 842 guidelines into the Uniform System of Accounts (USOA) contained in Part 32. These changes would require carriers to modify certain accounting practices and for certain carriers add a reporting requirement. In the NPRM, the Commission seeks comment on the burden this change would create for carriers and will factor that into its decision.

94. More generally, the Commission expects to consider the economic impact on small entities, as identified in comments filed in response to the NPRM and this IRFA, in reaching its final conclusions and taking action in this proceeding. The proposals and questions laid out in the NPRM were designed to ensure the Commission has a complete understanding of the benefits and potential burdens associated with the different actions and methods.

95. Permit-But-Disclose. The proceeding this NPRM initiates shall be treated as a “permit-but-disclose” proceeding in accordance with the Commission's ex parte rules. Persons making ex parte presentations must file a copy of any written presentation or a memorandum summarizing any oral presentation within two business days after the presentation (unless a different deadline applicable to the Sunshine period applies). Persons making oral ex parte presentations are reminded that memoranda summarizing the presentation must (1) list all persons attending or otherwise participating in the meeting at which the ex parte presentation was made, and (2) summarize all data presented and arguments made during the presentation. If the presentation consisted in whole or in part of the presentation of data or arguments already reflected in the presenter's written comments, memoranda, or other filings in the proceeding, the presenter may provide citations to such data or arguments in his or her prior comments, memoranda, or other filings (specifying the relevant page and/or paragraph numbers where such data or arguments can be found) in lieu of summarizing them in the memorandum. Documents shown or given to Commission staff during ex parte meetings are deemed to be written ex parte presentations and must be filed consistent with rule 1.1206(b). In proceedings governed by rule 1.49(f) or for which the Commission has made available a method of electronic filing, written ex parte presentations and memoranda summarizing oral ex parte presentations, and all attachments thereto, must be filed through the electronic comment filing system available for that proceeding, and must be filed in their native format (e.g., .doc, .xml, .ppt, searchable .pdf). Participants in this proceeding should familiarize themselves with the Commission's ex parte rules.

96. People With Disabilities. To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an email to [email protected] or call the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).

97. Comments and reply comments must include a short and concise summary of the substantive arguments raised in the pleading. Comments and reply comments must also comply with section 1.49 and all other applicable sections of the Commission's rules. The Commission directs all interested parties to include the name of the filing party and the date of the filing on each page of their comments and reply comments. All parties are encouraged to utilize a table of contents, regardless of the length of their submission. The Commission also strongly encourages parties to track the organization set forth in the NPRM in order to facilitate its internal review process.

98. Accordingly, it is ordered that, pursuant to the authority contained in sections 1-4, 5, 201-206, 214, 218-220, 251, 252, 254, 256, 303(r), 332, 403, and 405 of the Communications Act of 1934, as amended, and section 706 of the Telecommunications Act of 1996, 47 U.S.C. 151-155, 201-206, 214, 218-220, 251, 256, 254, 256, 303(r), 403 and 405, this Notice of Proposed Rulemaking IS ADOPTED, effective thirty (30) days after publication of the text or summary thereof in the Federal Register.

99. It is further ordered, Pursuant to Section 220(i) of the Communications Act, 47 U.S.C. 220(i), that notice be given to each state commission of the above rulemaking proceeding, and that the Secretary shall serve a copy of this Notice on each state commission.

100. It is further ordered that, pursuant to the authority contained in sections 1, 2, 4(i), 5, 201-206, 214, 218-220, 251, 252, 254, 256, 303(r), 332, and 403 of the Communications Act of 1934, as amended, and section 706 of the Telecommunications Act of 1996, 47 U.S.C. 151, 152, 154(i), 155, 201-206, 214, 218-220, 251, 252, 254, 256, 303(r), 332, 403, 1302, notice is hereby given of the proposals and tentative conclusions described in this Notice of Proposed Rulemaking.

This rulemaking is issued under the authority of the Office of Federal Procurement Policy (OFPP) Act, which provides the authority for an agency head to issue agency acquisition regulations that implement or supplement the FAR.

VA is proposing to revise the VAAR to add new policy or regulatory requirements and to remove any redundant guidance and guidance that is applicable only to VA's internal operating processes or procedures. Codified acquisition regulations may be amended and revised only through rulemaking. All amendments, revisions, and removals have been reviewed and concurred with by VA's Integrated Product Team of agency stakeholders.

The VAAR uses the regulatory structure and arrangement of the FAR and headings and subject areas are broken up consistent with the FAR content. The VAAR is divided into subchapters, parts (each of which covers a separate aspect of acquisition), subparts, sections, and sections.

The Office of Federal Procurement Policy Act, as codified in 41 U.S.C. 1707, provides the authority for the Federal Acquisition Regulation and for the issuance of agency acquisition regulations consistent with the FAR.

When Federal agencies acquire supplies and services using appropriated funds, the purchase is governed by the FAR, set forth at Title 48 Code of Federal Regulations (CFR), chapter 1, parts 1 through 53, and the agency regulations that implement and supplement the FAR. The VAAR is set forth at Title 48 CFR, chapter 8, parts 801 to 873.

VA proposes to make the following changes to the VAAR in this phase of its revision and streamlining initiative. For procedural guidance cited below that is proposed to be deleted from the VAAR, each section cited for removal has been considered for inclusion in VA's internal agency operating procedures in accordance with FAR 1.301(a)(2). Similarly, delegations of authority that are removed from the VAAR will be included in the VA Acquisition Manual (VAAM) as internal agency guidance.

We propose to revise the part 829 authorities to include the applicable U.S. code citations where the Secretary of the Treasury has exempted spirits and alcohol purchases by the Federal government, pursuant to 26 U.S.C. 5214(a)(2), 26 U.S.C. 5271, and 26 U.S.C. 7510. We also propose to include an updated positive law codification of Title 41 authority—41 U.S.C.1303(a)(2), to reflect additional authority of VA as an executive agency to issue regulations that are essential to implement Government-wide policies and procedures, as well as to issue additional policies and procedures required to satisfy VA's specific needs.

In subpart 829.2, Federal Excise Taxes, we propose to redesignate 829.202-70, Tax exemptions for alcohol products, as 829.203-70, Tax exemptions for alcohol products. We propose to revise paragraphs (a), (b) and (c) to reflect updated legislative and regulatory citations, to include 26 U.S.C. 5214(a)(2), 26 U.S.C. 5271, and 27 CFR parts 1-39. We also propose to remove paragraph (d) since there is no free of tax provision for beer in the Department of the Treasury regulation. This revised structure would conform more closely to the FAR structure of part 29, and moves to the VAAM the internal procedural instructions to the contracting officer regarding obtaining new permits. We also propose to remove the number and title of 829.202, General exemptions, since its sole section is proposed for removal.

We propose to remove 829.302, Application of State and local taxes to the Government, and move it to the VAAM as internal procedural guidance to the contracting officer.

We propose to remove 829.302-70, Purchases made from patients' funds, which prescribes 852.229-70, Sales or Use Taxes, as obsolete and redundant of FAR 52.212-4, Contract Terms and Conditions—Commercial Items clause, paragraph (k), which requires contractors to include “all applicable Federal, State, and local taxes and duties.” While VA uses the personal funds of patients to maintain fiscal controls and accountability, such controls are administrative in nature and unrelated to contracting.

We propose to add 829.303, Application of State and local taxes to Government contractors and subcontractors, to delegate to the Head of the Contracting Activity (HCA), without power of redelegation, the authority to make the determination prescribed in FAR 29.303(a).

In new subpart 846.1, General, we propose to add 846.101, Definition, to explain the term “rejected goods” since that term is the subject of a revised clause at 852.246-71, Rejected goods.

We propose to revise subpart 846.3, Contract Clauses, to remove 846.302-70, Guarantee clause, which prescribes 852.246-70, Guarantee, because there are sufficient FAR warranty clauses that could be used, such as FAR clause 52.246-19, Warranty of Systems and Equipment under Performance Specifications or Design Criteria.

We propose to remove 846.302, Fixed-price supply contracts, and add 846.370, Clauses for supplies, equipment or perishable goods, as the current VAAR numbering convention for subpart 846.3, Contract Clauses, does not align with the FAR subpart 46.3, Contract Clauses.

We propose to revise 846.312, Construction contracts, to remove a duplicate contract clause number.

We propose to add 846.370, Clauses for supplies, equipment or perishable goods. The analysis of the current VAAR revealed that the present VAAR numbering convention for subpart 846.3, Contract Clauses, does not align with FAR subpart 46.3, Contract clauses. For example, FAR 46.302 deals solely with fixed-price supply contracts and the current sections which prescribe these clauses (e.g., 846.302-70, Guarantee clause; 846.302-71, Inspection; 846.302-72, Frozen processed foods; and 846.302-73. Noncompliance with packaging, packing and/or marking requirements) could include both cost and fixed price types of contracts. Therefore, it became necessary to remove these sections and move them to the proposed new section, 846.370, which supplements the FAR coverage at subpart 46.3. Accordingly, we propose to add the following sections prescribing clauses for cost and fixed-price type contracts:

846.370-1, Rejected goods, (formerly 846.302-71, Inspection), which would prescribe the clause 852.246-71, Rejected Goods, and clarify a contractor's obligations to remove goods rejected by the Government.

846.370-2, Frozen processed foods (formerly 846.302-72), which would prescribe clause 852.246-72, Frozen Processed Foods, and describe the requirements for safe handling of frozen foods.

846.370-3, Noncompliance with packaging, packing and/or marking requirements (formerly 846.302-73), which would prescribe clause 852.246-73, Noncompliance with Packaging, Packing and/or Marking Requirements, describing corrective steps for compensating the Government in the case of non-compliance.

We propose to add 846.370-4, Purchase of Shellfish, formerly 870.111-3, to conform to the FAR requirement to place clauses and their prescriptions in the appropriate parts, and would prescribe clause 852.246-76, Purchase of Shellfish, and describe the requirements for safe handling of shellfish.

We propose to revise subpart 846.4, Government Contract Quality Assurance.

In section 846.408, Single-agency assignments of Government contract quality assurance (no text), we propose to remove the single title as it is unnecessary.

We propose to amend 846.408-70, Inspection of subsistence, to remove paragraph (a) since FAR 46.408 identifies the Food and Drug Administration, the Department of Agriculture and the National Maritime Fisheries Service of the Department of Commerce as the entities to perform inspection. We also propose to remove paragraph (c) since it contains procedural guidance that is internal to VA and will be updated and moved to the VAAM, and to simplify the requirements in paragraph (d) that are the contractor's responsibilities, eliminating parts of paragraph (3) and all of (4). Paragraphs throughout the section will be appropriately renumbered.

We propose to remove 846.408-71, Waiver of USDA inspection and specifications, since no other agencies, including the Department of Agriculture, still require this type of inspection for subsistence.

We propose to remove the existing text of 846.471, Determination authority, since the authority it grants is provided to the contracting officer in 846.470. We propose to revise the title of 846.471, to now read, “Food service equipment,” formerly at 870.115. This conforms to the FAR requirement to place clauses and their prescriptions in the appropriate parts, and to require all dietetic food service equipment to meet National Sanitation Foundation (NSF) standards.

We propose to remove 846.472, Inspection of repairs for properties under the Loan Guaranty Program and Direct Loan Programs, and its two sections, 846.472-1, Repairs of $1,000 or less, and 846.472-2, Repairs in excess of $1,000. Such sections are unnecessary given that a private contractor performs such inspection and repair functions on VA's behalf. The contractor's authority to perform these functions is established by other provisions of law.

In subpart 846.7, Warranties, we propose to remove 846.710, Contract clauses, since it redundantly prescribes a clause in FAR. We also propose to delete the two sections: 846.710-70, Special warranties, as repetitive of FAR clause coverage, and 846.710-71, Warranty for construction—guarantee period services, which has been replaced by 846.702-70, Guarantee period services and specifications.

We propose to add 846.702-70, Guarantee period services and specifications, to state VA's policy regarding guarantee period services, and to prescribe a clause, 852.246-75, Warranty of Construction—Guarantee Period Services, in all solicitations and contracts for construction that include the FAR clause 52.246-21, Warranty of Construction.

We propose to amend the authority citation for part 847 to add 41 CFR part 102-117. This CFR reference pertains to “Transportation Management” and it has relevance to part 847.

We propose to add subpart 847.2, Contracts for Transportation or for Transportation-Related Services. This new subpart would be comprised of new section 847.207, Solicitation provisions, contract clauses, and special requirements, and the following sections:

847.207-8, Government responsibilities, which would provide guidance to contracting officers for VA transportation contracts and subsequent payments on those contracts, and 847.207-70, VA solicitation provisions, contract clauses, and special requirements, which would provide guidance on contractual requirements for insurance provisions and contractor personnel performing on VA transportation contracts.

We propose to revise subpart 847.3, Transportation in Supply Contracts, by adding 847.302, Place of delivery—F.o.b. point. This section would specify delivery locations, in addition to referencing a new corresponding clause, to be inserted in supply contracts when it is necessary to specify delivery locations. This new section would help eliminate confusion by specifying exact delivery locations, so there would be a better representation of delivery scheduling and pricing.

Under subpart 847.3, we propose to remove the following sections as they include internal guidance and will be considered for revision and placement in the VAAM:

847.303, Standard delivery terms and contract clauses.

847.303-1, F.o.b. origin.

847.303-70, F.o.b. origin, freight prepaid, transportation charges to be included on the invoice.

Under 847.305, Solicitation provisions, contract clauses, and transportation factors, we propose to add 847.305-10, Packing, marking, and consignment instructions. This new section would specify consignment instructions, and would prescribe new clauses to be included in VAAR Part 852. It would cover those areas of shipping and marking that may not otherwise be covered, and are not covered in the FAR. We propose to add new section 847.305-70, Potential destinations known but quantities unknown, which prescribes clause 852.247-70, Determining Transportation Costs for Evaluation of Offers, when the contracting officer contracts with multiple bidders to provide items directly to VA field installations, on an F.o.b. origin basis.

We propose to add new section 847.305-71, VA contract clauses. This section references new clauses to the VAAR that are used for both free on board (F.o.b.) origin and F.o.b. destination, ensuring proper receipt and documentation of shipments.

We propose to remove 847.306-70, Transportation payment and audit, and replace it with 847.306-70, Records of claims. This new section recommends that the contracting officer use an offeror's record of claims involving loss or damage as an evaluation factor or subfactor for VA transportation contracts.

In subpart 852.2, Texts of Provisions and Clauses, we propose to remove clause 852.229-70, Sales or Use Taxes, as obsolete and redundant of FAR clause 52.212-4, Contract Terms and Conditions—Commercial Items, paragraph (k), which would require contractors to include all applicable Federal, State, and local taxes and duties.

We propose to remove 852.246-70, Guarantee, as redundant of the coverage of warranties by several clauses in FAR sections 52.246-17 through 52.246-21, and to reserve the section number.

We propose to revise 852.246-71, Inspection, to retitle it as “Rejected Goods” to more accurately reflect the content; to revise the citation where it is prescribed; and to make other minor edits for clarity.

We propose to revise 852.246-72, Frozen Processed Foods, to revise the prescription citation.

We propose to revise 852.246-73, Noncompliance with Packaging, Packing, and/or Marking Requirements, to revise the prescription citation, and to make one minor edit.

We propose to remove 852.246-74, Special Warranties, as redundant of the coverage of warranties by several clauses in FAR sections 52.246-17 through 52.246-21, and to reserve the section number.

We propose to amend 852.246-75, Warranty of Construction—Guarantee Period Services, to revise the prescription citation, and to make one minor edit for clarity.

We propose to add 852.246-76, Purchase of Shellfish, formerly 852.270-3, to conform to the FAR requirement to place clauses and their prescriptions in the appropriate parts, and to make one minor edit for clarity.

We propose to amend 852.247-70 to revise its title to “Determining Transportation Costs for Evaluation of Offers” which would make it applicable to negotiated as well as sealed bid contracts.

We propose to add 852.247-71, Delivery Location. This new clause would ensure that the proper delivery locations are included in the contract, for accountability, tracking, and delivery.

We propose to add 852.247-72, Marking Deliverables. This new clause would ensure that packages are properly marked for tracking, delivery, and acceptance purposes.

We propose to add 852.247-73, Packing for Domestic Shipment. This new clause would ensure acceptance by common carriers and safe delivery at destination.

We propose to add 852.247-74, Advance Notice of Shipment. This new clause would be used when the F.o.b. point is destination, and special Government assistance is required in the delivery or receipt of the items.

We propose to add 852.247-75, Bills of Lading, which would define when a commercial or Government bill of lading is to be used when shipments of deliverable items under this contract are F.o.b. origin.

We propose to delete 852.270-2, Bread and Bakery Products—Quantities, as unnecessary since variations in quantities is adequately covered in FAR subpart 11.7, Variation in Quantity, and in its related clauses.

We propose to delete 852.270-3, Purchase of Shellfish, and move it to 852.246-76 to conform to the FAR requirement to place clauses and their prescriptions in the appropriate parts.

We propose to delete 870.111-3, Contract clauses, since paragraph (a) prescribes the clause 852.270-2, Bread and Bakery Products—Quantities, which is unnecessary since variations in quantities is adequately covered in FAR subpart 11.7 and in its related clauses, and paragraph (b), which prescribes the clause 852.270-3, Purchase of Shellfish, and which is proposed to be moved to new section 852.246-76 to conform to the FAR requirement to place clauses and their prescriptions in the appropriate parts.

We propose to remove 870.111-5, Frozen processed food products, which is proposed to be moved to 846.370-2.

We propose to remove 870.115, Food service equipment, which is proposed to be moved to 846.471.

We propose to reserve part 870 since all sections and sections have either been proposed for deletion or removal to other parts of the VAAR.

Title 48, Federal Acquisition Regulations System, Chapter 8, Department of Veterans Affairs, of the Code of Federal Regulations, as proposed to be revised by this rulemaking, would represent VA's implementation of its legal authority and publication of the VAAR for the cited applicable parts. Other than future amendments to this rule or governing statutes for the cited applicable parts, or as otherwise authorized by approved deviations or waivers in accordance with FAR subpart 1.4, Deviations from the FAR, and as implemented by VAAR subpart 801.4, Deviations from the FAR or VAAR, no contrary guidance or procedures would be authorized. All existing or subsequent VA guidance would be read to conform with the rulemaking if possible or, if not possible, such guidance would be superseded by this rulemaking as pertains to the cited applicable VAAR parts.

Executive Orders (E.O.s) 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 effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits of reducing costs, of harmonizing rules, and of promoting flexibility. E.O. 12866, Regulatory Planning and Review, defines “significant regulatory action” to mean any regulatory action that is likely to result in a rule that may: “(1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive order.”

VA has examined the economic, interagency, budgetary, legal, and policy implications of this regulatory action, and it has been determined to be a significant regulatory action under E.O. 12866, because it raises novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive Order. VA's impact analysis can be found as a supporting document at http://www.regulations.gov, usually within 48 hours after the rulemaking document is published. Additionally, a copy of the rulemaking and its impact analysis are available on VA's website at http://www.va.gov/orpm by following the link for VA Regulations Published from FY 2004 Through Fiscal Year to Date. This proposed rule is not expected to be subject to the requirements of E.O. 13771 because this proposed rule is expected to result in no more than de minimis costs.

This proposed rule contains no provisions constituting a collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521).

This proposed rule would not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. The overall impact of the proposed rule would be of benefit to small businesses owned by Veterans or service-disabled Veterans as the VAAR is being updated to remove extraneous procedural information that applies only to VA's internal operating procedures. VA is merely adding existing and current regulatory requirements to the VAAR and removing any guidance that is applicable only to VA's internal operation processes or procedures. VA estimates no cost impact to individual business would result from these rule updates. This rulemaking does not change VA's policy regarding small businesses, does not have an economic impact to individual businesses, and there are no increased or decreased costs to small business entities. On this basis, the proposed rule would not have an economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. Therefore, under 5 U.S.C. 605(b), this regulatory action is exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604.

The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule that may result in the expenditure by State, local, and tribal Governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year. This proposed rule will have no such effect on State, local, and tribal Governments or on the private sector.

The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. Gina S. Farrisee, Deputy Chief of Staff, Department of Veterans Affairs, approved this document on September 1, 2017, for publication.

For the reasons set out in the preamble, VA proposes to amend 48 CFR, chapter 8, parts 829, 846, 847, 852, and 870 as follows:

Authority and Responsibility

Migratory birds are protected under four bilateral migratory bird treaties the United States entered into with Great Britain (for Canada in 1916 as amended in 1999), the United Mexican States (1936 as amended in 1972 and 1999), Japan (1972 as amended in 1974), and the Soviet Union (1978). Regulations allowing the take of migratory birds are authorized by the Migratory Bird Treaty Act (Act; 16 U.S.C. 703-712), which implements the above-mentioned treaties. The Act provides that, subject to and to carry out the purposes of the treaties, the Secretary of the Interior is authorized and directed to determine when, to what extent, and by what means allowing hunting, killing, and other forms of taking of migratory birds, their nests, and eggs is compatible with the conventions. The Act requires the Secretary to implement a determination by adopting regulations permitting and governing those activities.

Canada geese are federally protected by the Act because they are listed as migratory birds in all four treaties. Because Canada geese are covered by all four treaties, regulations must meet the requirements of the most restrictive of the four. For Canada geese, this is the treaty with Canada. All regulations concerning resident Canada geese are compatible with its terms, with particular reference to Articles II, V, and VII.

Each treaty not only permits sport hunting, but permits the take of migratory birds for other reasons, including scientific, educational, propagative, or other specific purposes consistent with the conservation principles of the various Conventions. More specifically, Article VII, Article II (paragraph 3), and Article V of “The Protocol Between the Government of the United States of America and the Government of Canada Amending the 1916 Convention between the United Kingdom and the United States of America for the Protection of Migratory Birds in Canada and the United States” provides specific limitations on allowing the take of migratory birds for reasons other than sport hunting. Article VII authorizes permitting the take, kill, etc., of migratory birds that, under extraordinary conditions, become seriously injurious to agricultural or other interests. Article V relates to the taking of nests and eggs, and Article II, paragraph 3, states that, in order to ensure the long-term conservation of migratory birds, migratory bird populations shall be managed in accord with listed conservation principles.

The other treaties are less restrictive. The treaties with both Japan (Article III, paragraph 1, subparagraph (b)) and the Soviet Union (Article II, paragraph 1, subparagraph (d)) provide specific exceptions to migratory bird take prohibitions for the purpose of protecting persons and property. The treaty with Mexico requires, with regard to migratory game birds, only that there be a “closed season” on hunting and that hunting be limited to 4 months in each year.

Regulations governing the issuance of permits to take, capture, kill, possess, and transport migratory birds are promulgated at title 50, Code of Federal Regulations (CFR), parts 13, 21 and 22, and issued by the Service. The Service annually promulgates regulations governing the take, possession, and transportation of migratory game birds under sport hunting seasons at 50 CFR part 20. Regulations regarding all other take of migratory birds (except for eagles) are published at 50 CFR part 21, and typically are not changed annually.

In November 2005, the U.S. Fish and Wildlife Service (Service or “we”) published a final environmental impact statement on management of resident Canada geese that documented resident Canada goose population levels “that are increasingly coming into conflict with people and causing personal and public property damage.” On August 10, 2006, we published in the Federal Register (71 FR 45964) a final rule establishing regulations at 50 CFR parts 20 and 21 authorizing State wildlife agencies, private landowners, and airports to conduct (or allow) indirect and/or direct population control management activities to reduce, manage, and control resident Canada goose populations in the continental United States and to reduce related damages. Those activities include depredation and control orders that allow destruction of resident Canada goose nests and eggs by authorized personnel between March 1 and June 30, because that timeframe encompassed the period when resident Canada geese typically nested.

In recent years, some resident Canada geese have initiated nests in February, particularly in the southern United States, and it seems likely that in the future nest initiation dates will begin earlier and hatching of eggs will perhaps end later than dates currently experienced. This proposed rule would amend the special permit and depredation and control orders to allow destruction of resident Canada goose nests and eggs at any time of year, thereby affording State agencies, private landowners, and airports greater flexibility to use these methods of controlling local abundances of resident Canada geese.

The current definition of resident Canada geese contained in 50 CFR 20.11 and 21.3 states that “Canada geese that nest within the lower 48 States and the District of Columbia in the months of March, April, May, or June, or reside within the lower 48 States and the District of Columbia in the months of April, May, June, July, or August” are considered resident Canada geese. We are proposing to amend this definition by deleting the phrase, “in the months of March, April, May, or June,” (following the word “Columbia”) to clarify that any Canada geese that nest within lower 48 States and the District of Columbia are resident Canada geese.

In title 50 of the CFR, destruction of resident Canada goose nests and eggs is currently authorized under special Canada goose permits (§ 21.26), a control order for airports and military airfields (§ 21.49), a depredation order specific to nests and eggs (§ 21.50), a depredation order for agricultural facilities (§ 21.51), and a public health control order (§ 21.52). Each of these regulations prescribes the dates during which nests and eggs of resident Canada goose may be destroyed. We propose to remove those date restrictions and allow destruction of Canada goose nests and eggs, as otherwise authorized under these regulations, at any time of year.

Our proposal is based on several factors. First, nest and egg destruction has been an effective tool in reducing local conflicts and damages caused by resident Canada geese. Second, resident Canada geese are identified as such based on where, not when, they nest. Lastly, some Canada geese are already nesting in February in southern States, and it seems likely that nest initiation dates will also advance into February in mid-latitude and perhaps northern States in the future, and hatching of nests may occur later than June 30.

On June 17, 1999, we published in the Federal Register (64 FR 32766) a final rule establishing 50 CFR 21.26, the special Canada goose permit. Special Canada goose permits may be issued to State wildlife agencies authorizing them to conduct certain resident Canada goose management and control activities that are normally prohibited. At that time, we indicated that States may conduct those control activities between March 11 and August 31, but that they should make a concerted effort to limit the take of adult birds to June, July, and August in order to minimize the potential impact on migrant populations. We imposed a date restriction of May 1 through August 31 in some areas in California, Oregon, and Washington inhabited by the threatened Aleutian Canada goose (Branta canadensis leucopareia) pursuant to the Endangered Species Act of 1973, as amended (ESA; 16 U.S.C. 1531 et seq.). The Aleutian Canada goose was listed as endangered in 1967 (32 FR 4001; March 11, 1967) and reclassified to threatened status in 1990 (55 FR 51106; December 12, 1990). Aleutian geese occur in a small numbers within these States, primarily San Joaquin Valley and Sacramento River Delta areas in central California, Humboldt Bay and Crescent City areas on the northern California coast, and Langlois and Pacific City areas on the Oregon coast. We indicated that if this subspecies is delisted, we would review this provision.

On March 20, 2001, we published in the Federal Register (66 FR 15643) a final rule to remove the Aleutian Canada goose from the Federal List of Endangered and Threatened Wildlife, due to recovery. Abundance of this population increased from 790 birds in 1975, to an estimated 156,030 in the winter of 2016. The Pacific Flyway Council's objective for this population is 60,000 geese. Currently, there is no special habitat or other threat that may reduce this population back to levels that may need protection under the ESA. Considering the current status of the Aleutian Canada goose, we propose to remove the May 1 restriction so that management and control activities may be conducted during the same period (March 11 through August 31) throughout all States.

We prepared an environmental assessment (EA) that analyzed two alternative courses of action to address these earlier nesting and later hatching dates and decrease local abundances of Canada geese that nest in the lower 48 States and the District of Columbia:

(1) Maintain the current date restrictions specified in regulations at 50 CFR 21.26, 21.49, 21.50, 21.51, and 21.52 on destruction of resident Canada goose nests and eggs, and no change in the definition of resident Canada geese at 50 CFR 20.11 and 21.3 (No action); and

(2) Revise the definition of resident Canada geese at 50 CFR 20.11 and 21.3, and allow destruction of resident Canada goose nests and eggs at any time of year under 50 CFR 21.26, 21.49, 21.50, 21.51, and 21.52 (Proposed action).

The full EA can be found on our website at http://www.fws.gov/birds or at http://www.regulations.gov at Docket No. FWS-HQ-MB-2018-0012.

We note that the proposed amendment to § 21.26 in regard to accounting for the current status of the Aleutian Canada goose was not addressed in the EA, but is a categorically excluded action (43 CFR 46.210) addressed in an environmental action statement (EAS). The EAS can be found on our website at http://www.fws.gov/birds or at http://www.regulations.gov at Docket No. FWS-HQ-MB-2018-0012.

You may submit your comments and supporting materials by one of the methods listed in ADDRESSES. We will not consider comments sent by email or fax, or written comments sent to an address other than the one listed in ADDRESSES. Comments and materials we receive, as well as supporting documentation we used in preparing this proposed rule, are available for public inspection at http://www.regulations.gov.

We will post your entire comment—including your personal identifying information—on http://www.regulations.gov. You may request at the top of your document that we withhold personal information such as your street address, phone number, or email address from public review; however, we cannot guarantee that we will be able to do so.

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

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

Under the Regulatory Flexibility Act (5 U.S.C. 601 et seq., as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996 (Pub. L. 104-121)), whenever an agency is required to publish a notice of rulemaking for any proposed or final rule, it must prepare and make available for public comment a regulatory flexibility analysis that describes the effects of the rule on small businesses, small organizations, and small government jurisdictions. However, no regulatory flexibility analysis is required if the head of an agency certifies the rule would not have a significant economic impact on a substantial number of small entities.

SBREFA amended the Regulatory Flexibility Act to require Federal agencies to provide a statement of the factual basis for certifying that a rule would not have a significant economic impact on a substantial number of small entities. Thus, for a regulatory flexibility analysis to be required, impacts must exceed a threshold for “significant impact” and a threshold for a “substantial number of small entities.” See 5 U.S.C. 605(b).

The economic impacts of this proposed rule would primarily affect State and local governments and the U.S. Department of Agriculture's Wildlife Services because of the structure of wildlife damage management. Data are not available to estimate the exact number of local governments that would be affected, but it is unlikely to be a substantial number nationally. Therefore, we certify that, if adopted, this rule would not have a significant economic impact on a substantial number of small entities.

This proposed rule is not a major rule under SBREFA (5 U.S.C. 804(2)). It would not have a significant impact on a substantial number of small entities.

This rule would not have an annual effect on the economy of $100 million or more. This rule would not cause a major increase in costs or prices for consumers; individual industries; Federal, State, or local government agencies; or geographic regions.

Finally, this rule would not have significant adverse effects on competition, employment, investment, productivity, innovation, or the abilities of U.S.-based enterprises to compete with foreign-based enterprises.

This proposed rule is expected to be an Executive Order (E.O.) 13771 (82 FR 9339, February 3, 2017) deregulatory action because it would relieve a restriction in 50 CFR parts 20 and 21.

In accordance with the Unfunded Mandates Reform Act (2 U.S.C. 1501 et seq.), we have determined the following:

a. This proposed rule would not “significantly or uniquely” affect small government activities. A small government agency plan is not required.

b. This proposed rule would not produce a Federal mandate on local or State government or private entities. Therefore, this action is not a “significant regulatory action” under the Unfunded Mandates Reform Act.

In accordance with E.O. 12630, this proposed rule does not contain a provision for taking of private property, and would not have significant takings implications. A takings implication assessment is not required.

This proposed rule would not interfere with the States' abilities to manage themselves or their funds. We do not expect any economic impacts to result from this regulations change. This rule would not have sufficient Federalism effects to warrant preparation of a federalism summary impact statement under E.O. 13132.

In accordance with E.O. 12988, the Office of the Solicitor has determined that the proposed rule will not unduly burden the judicial system and meets the requirements of sections 3(a) and 3(b)(2) of the Order.

This proposed rule does not contain new collections of information that require approval by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). OMB has approved the information collection requirements associated with the control and management of resident Canada geese at 50 CFR part 20 and 50 CFR part 21, and assigned OMB Control Number 1018-0133 (expires December 31, 2018).

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.

We have analyzed this proposed rule in accordance with the National Environmental Policy Act (NEPA; 42 U.S.C. 4321 et seq.) and U.S. Department of the Interior regulations at 43 CFR part 46. We have completed an environmental assessment of the proposed amendment of the depredation and control orders that would allow destruction of resident Canada goose nests and eggs at any time of year; that environmental assessment is included in the docket for this proposed rule. We conclude that our proposed action would have the impacts listed below under Environmental Consequences of the Action. The proposed amendment to § 21.26 in regard to accounting for the current status of the Aleutian Canada goose was not addressed in the EA, but is a NEPA categorically excluded action (43 CFR 46.210) addressed in an environmental action statement (EAS), which is also included in the docket for this proposed rule. The docket for this proposed rule is available at http://www.regulations.gov (Docket No. FWS-HQ-MB-2018-0012).

Migrant Canada geese do not nest in the lower 48 States or the District of Columbia; thus, this proposed action (amendments related only to depredation and control orders) is not expected to have any significant impacts on migrant Canada geese. All resident Canada goose population abundances are well above population objectives. Assuming that the number of resident Canada geese that initiate nests in January or February does not exceed the current number that initiate nests in March, we expect that this proposed action would result in destruction of a maximum of 2,749 additional nests in January and February. We expect it is more likely that the proposed action would shift some portion of the current resident Canada goose nest and egg destruction activities occurring in March to either January or February. All populations of resident Canada geese are expected to remain at or above population objective levels.

Socioeconomic. This proposed action is expected to have positive impacts on the socioeconomic environment in localized urban and suburban areas where resident Canada geese are subjected to continued (annual) nest and egg destruction actions that gradually reduce goose numbers and resulting conflicts. It is also expected to reduce crop depredation at some localized agricultural sites where nest destruction can encourage geese to leave the site.

Endangered and threatened species. The proposed rule will not affect endangered or threatened species or critical habitats.

Section 7 of the Endangered Species Act of 1973, as amended (ESA; 16 U.S.C. 1531 et seq.), requires that “The Secretary [of the Interior] shall review other programs administered by him and utilize such programs in furtherance of the purposes of this Act” (16 U.S.C. 1536(a)(1)). It further states that “[e]ach Federal agency shall, in consultation with and with the assistance of the Secretary, insure that any action authorized, funded, or carried out by such agency * * * is not likely to jeopardize the continued existence of any endangered species or threatened species or result in the destruction or adverse modification of [critical] habitat” (16 U.S.C. 1536(a)(2)). The proposed rule would not affect endangered or threatened species or critical habitats.

In accordance with the President's memorandum of April 29, 1994, “Government-to-Government Relations with Native American Tribal Governments” (59 FR 22951), E.O. 13175, and 512 DM 2, we have evaluated potential effects on federally recognized Indian tribes and have determined that there are no potential effects. This proposed rule would not interfere with the tribes' abilities to manage themselves or their funds or to regulate migratory bird activities on tribal lands.

We are required by Executive Orders 12866 and 12988 and by the Presidential Memorandum of June 1, 1998, to write all rules in plain language. This means that each rule we publish must:

(a) Be logically organized;

(b) Use the active voice to address readers directly;

(c) Use clear language rather than jargon;

(d) Be divided into short sections and sentences; and

(e) Use lists and tables wherever possible.

If you feel that we have not met these requirements, send us comments by one of the methods listed in ADDRESSES. To better help us revise the rule, your comments should be as specific as possible. For example, you should tell us the numbers of the sections or paragraphs that are unclearly written, which sections or sentences are too long, the sections where you feel lists or tables would be useful, etc.

E.O. 13211 requires agencies to prepare Statements of Energy Effects when undertaking certain actions. This proposed rule is not a significant regulatory action under E.O. 13211, and would not significantly affect energy supplies, distribution, or use. Therefore, this action is not a significant energy action. No Statement of Energy Effects is required.

For the reasons stated in the preamble, we hereby propose to amend parts 20 and 21, of subchapter B, chapter I, title 50 of the Code of Federal Regulations, as set forth below: