Vol. 84 Monday, No. 249 December 30, 2019

Pages 71735–72226

OFFICE OF THE FEDERAL REGISTER

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Contents Federal Register Vol. 84, No. 249

Monday, December 30, 2019

Agricultural Marketing Service Coast Guard PROPOSED RULES RULES Beef Promotion and Research; Reapportionment, 71829– Regulated Navigation Area: 71832 Lake Washington, Seattle, WA, 71823–71824

Agriculture Department Commerce Department See Agricultural Marketing Service See Census Bureau See Food Safety and Inspection Service See Foreign-Trade Zones Board See International Trade Administration Antitrust Division See National Oceanic and Atmospheric Administration NOTICES Changes Under the National Cooperative Research and Community Living Administration Production Act: NOTICES Advanced Media Workflow Association, Inc., 71977– Agency Information Collection Activities; Proposals, 71978 Submissions, and Approvals: CHEDE–8, 71977 State Health Insurance Assistance Program Data Performance Reports and Information Collection Architectural and Transportation Barriers Compliance Tools, 71954–71956 Board Survey of Group Outreach and Education Events, Formerly the Senior Medicare Program National NOTICES Beneficiary Survey, 71953–71954 Meetings, 71892–71893 Survey of One-on-One Assistance, Formerly the National Beneficiary Survey of State Health Insurance Census Bureau Assistance Program, 71956–71957 NOTICES Agency Information Collection Activities; Proposals, Comptroller of the Currency Submissions, and Approvals, 71894–71895 RULES Agency Information Collection Activities; Proposals, Community Reinvestment Act, 71738–71740 Submissions, and Approvals: Inflation Adjustments for Civil Money Penalties, 71735– State and Local Government Finance Collections, and 71737 Public Employment and Payroll Collections, 71893– Other Real Estate Owned and Technical Amendments; 71894 Correction, 71735 PROPOSED RULES Centers for Medicare & Medicaid Services Margin and Capital Requirements for Covered Swap RULES Entities, 71833–71834 Medicare Program: Consumer Product Safety Commission Advanced Alternative Payment Model (APM) Incentive NOTICES Payment Advisory for Clinicians—Request for Agency Information Collection Activities; Proposals, Current Banking Information for Qualifying APM Submissions, and Approvals: Participants, 71827 Consumer Product Risk Reduction Valuation Study: PROPOSED RULES Cognitive Interviews and Focus Groups, 71902– Medicaid Program: 71904 Medicaid Fiscal Accountability Regulation; Supplement and Extension of Comment Period, 71887–71888 Copyright Royalty Board NOTICES PROPOSED RULES Meetings: Inquiry Regarding Categorization of Claims for Cable or Advisory Panel on Outreach and Education, 71948–71950 Satellite Royalty Funds and Treatment of Ineligible Claims, 71852–71854 Chemical Safety and Hazard Investigation Board NOTICES Corporation for National and Community Service Senior Executive Service Performance Review Board, 71893 NOTICES Agency Information Collection Activities; Proposals, Children and Families Administration Submissions, and Approvals: NOTICES CNCS External Reviewer Application, 71904 Agency Information Collection Activities; Proposals, Submissions, and Approvals: Defense Department Coparenting and Healthy Relationship and Marriage RULES Education for Dads, 71950–71951 Commissary Credit and Debit Card User Fee, 71819–71822 Provision of Child Support Services in IV–D Cases under NOTICES the Hague Child Support Convention; Federally- Agency Information Collection Activities; Proposals, Approved Forms, 71951–71952 Submissions, and Approvals: Tribal TANF Financial Report, 71952–71953 Commerce Patent Regulations, 71947–71948

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Contractor Use of Interagency Fleet Management System Embraer S.A. Airplanes, 71772–71776 Vehicles, 71946–71947 Engine Alliance Turbofan Engines, 71770–71772 Arms Sales, 71904–71907 The Boeing Company Airplanes, 71776–71782, 71792– 71794 Education Department NOTICES Federal Bureau of Investigation Agency Information Collection Activities; Proposals, Submissions, and Approvals: NOTICES 2016/20 Baccalaureate and Beyond Full-Scale Study, Revised User Fee, 71978–71979 71908 Application for Borrower Defense to Loan Repayment Federal Communications Commission Form, 71907–71908 PROPOSED RULES Advanced Methods To Target and Eliminate Unlawful Energy Department Robocalls, Call Authentication Trust Anchor, 71888– See Federal Energy Regulatory Commission 71889 See Western Area Power Administration NOTICES NOTICES Agency Information Collection Activities; Proposals, Environmental Assessments; Availability, etc.: Submissions, and Approvals, 71935–71938 Commercial Disposal of Defense Waste Processing Facility Recycle Wastewater From the Savannah River Site, 71909 Federal Contract Compliance Programs Office PROPOSED RULES Environmental Protection Agency Nondiscrimination Obligations of Federal Contractors and RULES Subcontractors: Air Quality State Implementation Plans; Approvals and Procedures to Resolve Potential Employment Promulgations: Discrimination, 71875–71887 California; Yolo-Solano Air Quality Management District; Stationary Source Permits, 71824–71827 Federal Deposit Insurance Corporation PROPOSED RULES RULES Air Quality State Implementation Plans; Approvals and Community Reinvestment Act, 71738–71740 Promulgations: PROPOSED RULES AL, FL, GA, NC, SC, TN; Interstate Transport (Prongs 1 Margin and Capital Requirements for Covered Swap and 2) for the 2015 8-Hour Ozone Standard, 71854– Entities, 71833–71834 71862 Arizona; Maricopa County; Power Plants, Fuel Burning Equipment, and Internal Combustion Engines, Federal Energy Regulatory Commission 71862–71866 NOTICES GA and NC: Infrastructure Requirements for the 2015 8- Agency Information Collection Activities; Proposals, Hour Ozone National Ambient Air Quality Standard, Submissions, and Approvals, 71912–71913, 71919– 71866–71875 71920 NOTICES Application: High-Priority Substance Designations Under the Toxic Algonquin Northern Maine Generating Co., 71911–71912 Substances Control Act and Initiation of Risk Great Lakes Hydro America, LLC, 71920–71921 Evaluation on High-Priority Substances; Availability, Green Mountain Power Corp., 71916 71924–71935 Port Arthur Pipeline LLC, 71910–71911 Underground Injection Control Program; Hazardous Waste Texas-Kansas-Oklahoma, LLC, 71909–71910 Injection Restrictions; Petition for Exemption Combined Filings, 71914–71917 Reissuance—Class I Hazardous Waste Injection: Initial Market-Based Rate Filings Including Requests for Blanchard Refining Company LLC Texas City, Texas Blanket Section 204 Authorizations: Facility, 71924 Rodan Energy Solutions (USA) Inc., 71910 Great Lakes Chemical Corporation El Dorado, Arkansas Petition for Partial Waiver: Facility, 71923 Old Dominion Electric Cooperative, 71914 Request Under Blanket Authorization: Farm Credit Administration Dominion Energy Transmission, Inc., 71917–71918 PROPOSED RULES Southern Star Central Gas Pipeline, Inc., 71920 Margin and Capital Requirements for Covered Swap Schedule for Environmental Review: Entities, 71833–71834 ANR Pipeline Co.; Grand Chenier XPress Project, 71918– 71919 Federal Aviation Administration RULES Federal Highway Administration Airworthiness Directives: 328 Support Services GmbH (Type Certificate Previously NOTICES Held by AvCraft Aerospace GmbH; Fairchild Dornier Environmental Impact Statements; Availability, etc.: GmbH; Dornier Luftfahrt GmbH) Airplanes, 71782– Brown County, WI, 72111–72112 71785 Airbus SAS Airplanes, 71788–71792 Federal Housing Finance Agency De Havilland Aircraft of Canada Limited (Type Certificate PROPOSED RULES Previously Held by Bombardier, Inc.) Airplanes, Margin and Capital Requirements for Covered Swap 71785–71788 Entities, 71833–71834

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Federal Motor Carrier Safety Administration NOTICES NOTICES Agency Information Collection Activities; Proposals, Qualification of Drivers; Exemption Applications: Submissions, and Approvals: Epilepsy and Seizure Disorders, 72112–72114 Premarket Notification, 71958–71961 Hearing, 72117–72120 Guidance: Vision, 72114–72117, 72120–72121 Importation of Certain Food and Drug Administration- Approved Human Prescription Drugs, Including Federal Railroad Administration Biological Products, Under Section 801(d)(1)(B) of NOTICES the Federal Food, Drug, and Cosmetic Act; Agency Information Collection Activities; Proposals, Correction, 71961–71964 Submissions, and Approvals, 72121–72129 Submission of Plans for Cigarette Packages and Cigarette Advertisements, 71957–71958 Federal Reserve System RULES Food Safety and Inspection Service Community Reinvestment Act, 71738–71740 NOTICES PROPOSED RULES Updated Labeling Guideline on Statements That Margin and Capital Requirements for Covered Swap Bioengineered or Genetically Modified Ingredients or Entities, 71833–71834 Animal Feed Were Not Used in the Production of Meat, NOTICES Poultry, or Egg Products, 71890–71892 Change in Bank Control: Acquisitions of Shares of a Bank or Bank Holding Foreign-Trade Zones Board Company, 71940 NOTICES Formations of, Acquisitions by, and Mergers of Bank Application for Subzone: Holding Companies, 71939–71940 Packard Pipe Terminals, LLC, Foreign-Trade Zone 2, New Formations of, Acquisitions by, and Mergers of Savings and Orleans, LA, 71895 Loan Holding Companies, 71938–71939 Authorization of Production Activity: Modifications to the Federal Reserve Banks’ National Lasko Products, LLC; Foreign-Trade Zone 78; Nashville, Settlement Service and Fedwire Funds Service To TN, 71895 Support Enhancements to the Same-Day ACH Service and Corresponding Changes to the Federal Reserve General Services Administration Policy on Payment System Risk, 71940–71946 NOTICES Proposals To Engage in or To Acquire Companies Engaged Agency Information Collection Activities; Proposals, in Permissible Nonbanking Activities, 71939 Submissions, and Approvals: Financial Crimes Enforcement Network Commerce Patent Regulations, 71947–71948 Contractor Use of Interagency Fleet Management System NOTICES Vehicles, 71946–71947 Agency Information Collection Activities; Proposals, Submissions, and Approvals: Health and Human Services Department Beneficial Ownership Requirements for Legal Entity See Centers for Medicare & Medicaid Services Customers, 72137–72138 See Children and Families Administration Financial Stability Oversight Council See Community Living Administration RULES See Food and Drug Administration Authority To Require Supervision and Regulation of See National Institutes of Health Certain Nonbank Financial Companies, 71740–71770 See Substance Abuse and Mental Health Services Administration Fiscal Service NOTICES Homeland Security Department Prompt Payment Interest Rate; Contract Disputes Act, See Coast Guard 72139–72140 NOTICES Request for Information: Agency Information Collection Activities; Proposals, Surety Companies Doing Business With the United Submissions, and Approvals: States, 72138–72139 Technical Resource for Incident Prevention User Registration and Questionnaire, 71971–71972 Fish and Wildlife Service NOTICES Interior Department Draft Environmental Assessment and Draft Habitat See Fish and Wildlife Service Conservation Plan; Receipt of an Application for an Incidental Take Permit, Blue Creek Wind Farm, Van Internal Revenue Service Wert and Paulding Counties, Ohio, 71972–71975 PROPOSED RULES Source of Income From Certain Sales of Personal Property, Food and Drug Administration 71836–71851 RULES Medical Devices: International Trade Administration Exemptions From Premarket Notification for Class I and NOTICES Class II Devices, 71794–71819 Antidumping or Countervailing Duty Investigations, Orders, PROPOSED RULES or Reviews: Cheeses and Related Cheese Products; Proposal To Permit Certain Hot-Rolled Carbon Steel Flat Products From the the Use of Ultrafiltered Milk, 71834–71836 People’s Republic of China, 71896–71897

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Certain Steel Threaded Rod From the People’s Republic Nonconforming Model Year 2018–2019 Swift Sprite of China, 71900–71902 Alpine 4 Single Axle Camper Trailers are Eligible for Crystalline Silicon Photovoltaic Cells, Whether or Not Importation, 72130–72131 Assembled Into Modules, From the People’s Republic Nonconforming Model Years 2017 Through 2019 of China, 71897–71898 Mercedes Benz Maybach S600 Pullman Passenger Polyester Staple Fiber From Korea, 71899–71900 Cars are Eligible for Importation, 72133–72134 Export Trade Certificate of Review, 71898–71899 National Institutes of Health International Trade Commission NOTICES NOTICES Agency Information Collection Activities; Proposals, Investigations; Determinations, Modifications, and Rulings, Submissions, and Approvals: etc.: PHS Applications and Pre-Award Reporting Certain Pick-Up Truck Folding Bed Cover Systems and Requirements (OD/OPERA), 71967–71968 Components Thereof, 71975–71976 Post-Award Reporting Requirements Including Research Certain Semiconductor Devices and Components Thereof Performance Progress Report Collection, 71965– (I), 71976 71966 Certain Semiconductor Devices, Products Containing the Meetings: Same, and Components Thereof (II), 71977 National Cancer Institute, 71964–71965 Meetings; Sunshine Act, 71976 National Eye Institute, 71965 National Heart, Lung, and Blood Institute, 71969–71970 Justice Department National Institute on Aging, 71965 See Antitrust Division Task Force on Research Specific to Pregnant Women and See Federal Bureau of Investigation Lactating Women, 71967 Prospective Grant of an Exclusive Patent License: Labor Department The Development of Autologous Kita-Kyushu Lung See Federal Contract Compliance Programs Office Cancer Antigen 1 (KK–LC–1) T Cell Receptor (TCR) NOTICES for the Treatment of KK–LC–1 Expressing Human Agency Information Collection Activities; Proposals, Cancer, 71969 Submissions, and Approvals: Plan Asset Transactions Determined by Independent National Oceanic and Atmospheric Administration Qualified Professional Asset Managers Under RULES Prohibited Transaction Exemption 1984–14, 71979– Fisheries of the Exclusive Economic Zone Off Alaska: 71980 Chinook Salmon Prohibited Species Catch Limits in the Prohibited Transaction Class Exemption for Certain Gulf of Alaska, 71828 Transactions Between Investment Companies and NOTICES Employee Benefit Plans, 71980–71981 Agency Information Collection Activities; Proposals, Submissions, and Approvals, 71902 Library of Congress Takes of Marine Mammals: See Copyright Royalty Board Incidental to Construction of the Port of Alaska’s Petroleum and Cement Terminal, Anchorage, AK, Management and Budget Office 72154–72184 NOTICES Draft 2018-2019-2020 Report to Congress on the Benefits National Science Foundation and Costs of Federal Regulations and Agency NOTICES Compliance With the Unfunded Mandates Reform Act, Antarctic Conservation Act Permits, 71981–71982 71981 Pipeline and Hazardous Materials Safety Administration Maritime Administration NOTICES NOTICES Pipeline Safety: Deepwater Port License Application: Random Drug Testing Rate; Management Information Texas COLT LLC, 72129–72130 System Reporting; and Obtaining Drug and Alcohol Management Information System Sign-In National Aeronautics and Space Administration Information, 72134–72135 NOTICES Agency Information Collection Activities; Proposals, Postal Service Submissions, and Approvals: NOTICES Commerce Patent Regulations, 71947–71948 Product Change: Contractor Use of Interagency Fleet Management System Priority Mail Express and Priority Mail Negotiated Vehicles, 71946–71947 Service Agreement, 71982

National Highway Traffic Safety Administration Presidential Documents NOTICES PROCLAMATIONS Meetings: Trade: Federal Advisory Committee National Emergency African Growth and Opportunity Act and for Other Medical Services Advisory Council, 72132–72133 Purposes; Certain Actions (Proc. 9974), 72185–72211 Receipt of Petition for Decision: EXECUTIVE ORDERS Nonconforming Model Year 2015 Porsche 918 Passenger Government Agencies and Employees: Cars are Eligible for Importation, 72131–72132 Rates of Pay; Adjustments (EO 13901), 72213–72225

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Securities and Exchange Commission Transportation Department NOTICES See Federal Aviation Administration Application: See Federal Highway Administration Inter-American Development Bank, 72060–72061 See Federal Motor Carrier Safety Administration Meetings: See Federal Railroad Administration Asset Management Advisory Committee, 72085–72086 See Maritime Administration Self-Regulatory Organizations; Proposed Rule Changes: See National Highway Traffic Safety Administration Cboe BZX Exchange, Inc., 72079–72081 See Pipeline and Hazardous Materials Safety Cboe EDGA Exchange, Inc., 71987–71989 Administration Cboe EDGX Exchange, Inc., 72011–72013 NOTICES Cboe Exchange, Inc., 71994–71997 Meetings: Financial Industry Regulatory Authority, Inc., 71986– Air Ambulance and Patient Billing Advisory Committee, 71987, 72088–72101 72136–72137 Fixed Income Clearing Corp., 72015–72017 Privacy Act; Systems of Records, 72135–72136 Investors Exchange LLC, 71997–72007 Miami International Securities Exchange LLC, 72025– 72043 Treasury Department MIAX Emerald, LLC, 72086–72088 See Comptroller of the Currency MIAX PEARL, LLC, 72061–72063 See Financial Crimes Enforcement Network Nasdaq BX, Inc., 72007–72010 See Fiscal Service Nasdaq GEMX, LLC, 72063–72065, 72075–72079 See Internal Revenue Service Nasdaq ISE, LLC, 72023–72025, 72043–72047 NOTICES Nasdaq MRX, LLC, 72050–72056 Agency Information Collection Activities; Proposals, Nasdaq PHLX LLC, 71989–71993, 72017–72023 Submissions, and Approvals, 72140–72142 New York Stock Exchange LLC, 72047–72050, 72065– 72067, 72081–72085 Veterans Affairs Department NYSE American LLC, 71982–71986 NOTICES NYSE Arca, Inc., 71993–71994, 72071–72075 Funding Availability: NYSE National, Inc., 72067–72071 Homeless Providers Grant and Per Diem Program, 72142– The Nasdaq Stock Market LLC, 72013–72014, 72056– 72152 72060 Small Business Administration Western Area Power Administration NOTICES NOTICES Interest Rates, 72101 Interconnection of the Proposed Rail Tie Wind Project: Wyoming, 71921–71923 State Department NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Separate Parts In This Issue Adoptive Family Relief Act Refund Application, 72101– 72102 Part II Commerce Department, National Oceanic and Atmospheric Substance Abuse and Mental Health Services Administration, 72154–72184 Administration

NOTICES Part III Current List of HHS-Certified Laboratories and Presidential Documents, 72185–72211, 72213–72225 Instrumented Initial Testing Facilities Which Meet Minimum Standards To Engage in Urine and Oral Fluid Drug Testing for Federal Agencies, 71970–71971 Reader Aids Trade Representative, Office of United States Consult the Reader Aids section at the end of this issue for NOTICES phone numbers, online resources, finding aids, and notice Extension of Particular Exclusions Granted Under the of recently enacted public laws. March 2019 Product Exclusion Notice From the $34 To subscribe to the Federal Register Table of Contents Billion Action Pursuant to Section 301: electronic mailing list, go to https://public.govdelivery.com/ China’s Acts, Policies, and Practices Related to accounts/USGPOOFR/subscriber/new, enter your e-mail Technology Transfer, Intellectual Property, and address, then follow the instructions to join, leave, or Innovation, 72102–72111 manage your subscription.

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CFR PARTS AFFECTED IN THIS ISSUE

A cumulative list of the parts affected this month can be found in the Reader Aids section at the end of this issue.

3 CFR 41 CFR Proclamations: Proposed Rules: 9974...... 72187 60-1...... 71875 Executive Orders: 60-2...... 71875 3866 (superceded by 60-300...... 71875 13901) ...... 72213 60-741...... 71875 3901...... 72213 42 CFR 414...... 71827 7 CFR Proposed Rules: Proposed Rules: 430...... 71887 1260...... 71829 433...... 71887 12 CFR 447...... 71887 3...... 71735 455...... 71887 6...... 71735 457...... 71887 19...... 71735 47 CFR 25...... 71738 34...... 71735 Proposed Rules: 46...... 71735 64...... 71888 109...... 71735 50 CFR 160...... 71735 679...... 71828 161...... 71735 163...... 71735 167...... 71735 195...... 71738 228...... 71738 345...... 71738 1310...... 71740 Proposed Rules: 45...... 71833 237...... 71833 349...... 71833 624...... 71833 1221...... 71833 14 CFR 39 (8 documents) ...... 71770, 71772, 71776, 71778, 71782, 71785, 71788, 71792 21 CFR 862...... 71794 864...... 71794 866...... 71794 868...... 71794 870...... 71794 872...... 71794 874...... 71794 876...... 71794 878...... 71794 880...... 71794 882...... 71794 884...... 71794 886...... 71794 888...... 71794 890...... 71794 892...... 71794 Proposed Rules: 133...... 71834 26 CFR Proposed Rules: 1...... 71836 32 CFR 225...... 71819 33 CFR 165...... 71823 37 CFR Proposed Rules: Ch. III ...... 71852 40 CFR 52...... 71824 Proposed Rules: 52 (3 documents) ...... 71854, 71862, 71866

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Rules and Regulations Federal Register Vol. 84, No. 249

Monday, December 30, 2019

This section of the FEDERAL REGISTER OREO final rule’s effective date to Dated: December 20, 2019. contains regulatory documents having general January 1, 2020 (the November 21, 2019, Morris R. Morgan, applicability and legal effect, most of which final rule).2 This document corrects and First Deputy Comptroller, Comptroller of the are keyed to and codified in the Code of supplements the November 21, 2019, Currency. Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510. final rule with the additional regulatory [FR Doc. 2019–28054 Filed 12–27–19; 8:45 am] analyses below. BILLING CODE 4810–33–P The Code of Federal Regulations is sold by the Superintendent of Documents. II. Additional Regulatory Analyses Good Cause To Dispense With Notice DEPARTMENT OF THE TREASURY DEPARTMENT OF TREASURY and Public Procedure Office of the Comptroller of the The OCC ordinarily publishes a notice Currency Office of the Comptroller of the of proposed rulemaking in the Federal Currency 12 CFR Parts 19 and 109 Register to provide for notice and public 12 CFR Parts 3, 6, 34, 46, 160, 161, 163, procedure before the provisions of a rule Notification of Inflation Adjustments and 167 take effect in accordance with section for Civil Money Penalties 553(b) of the Administrative Procedure [Docket ID OCC–2019–0004] Act (5 U.S.C. 553(b)). Nevertheless, an AGENCY: Office of the Comptroller of the Currency, Treasury. RIN 1557–AE50 agency can dispense with this notice and public procedure if it finds, for ACTION: Notification of monetary Other Real Estate Owned and good cause, that the notice and public penalties 2020. Technical Amendments; Correction procedure thereon are impracticable, SUMMARY: The Office of the Comptroller unnecessary, or contrary to the public AGENCY: Office of the Comptroller of the of the Currency (OCC) is providing Currency, Treasury. interest and incorporates a statement of notice of its maximum civil money its findings and reasons in the final rule. ACTION: Final rule; correction. penalties as adjusted for inflation. The The OCC finds that that there is good inflation adjustments are required to SUMMARY: On October 22, 2019, the cause to dispense with notice and implement the Federal Civil Penalties Office of the Comptroller of the public procedure requirements in this Inflation Adjustment Act of 1990, as Currency (OCC) published in the final rule and the November 21, 2019, amended by the Federal Civil Penalties Federal Register a final rule to revise final rule because they are unnecessary. Inflation Adjustment Act Improvements the other real estate owned rule and The November 21, 2019, final rule Act of 2015. make related technical amendments. merely delayed the effective date of the DATES: The adjusted maximum amount The final rule had an effective date of OREO final rule to January 1, 2020, that of civil money penalties in this December 1, 2019. On November 21, was previously subjected to notice and document are applicable to penalties 2019, the OCC published a correction to public procedure. The delayed effective assessed on or after January 1, 2020, for that final rule in the Federal Register date avoids confusion about adopting conduct occurring on or after November amending the final rule’s effective date different effective dates for national 2, 2015. to January 1, 2020. This document banks and Federal savings associations. FOR FURTHER INFORMATION CONTACT: Lee corrects and supplements the November This final rule merely supplements the Walzer, Counsel, Chief Counsel’s Office, 21, 2019, final rule. regulatory analyses for the November (202) 649–5490, or, for persons who are DATES: Effective January 1, 2020. 21, 2019, final rule. Therefore, the OCC deaf or hearing impaired, TTY, (202) 649–5597, Office of the Comptroller of FOR FURTHER INFORMATION CONTACT: finds it unnecessary to undertake the Currency. Kevin Korzeniewski, Counsel, or J. further notice and public procedure SUPPLEMENTARY INFORMATION: William Binkley, Attorney, Chief with respect to this final rule and the This document announces changes to the Counsel’s Office, (202) 649–5490; or for November 21, 2019, final rule. persons who are hearing impaired, TTY, maximum amount of each civil money (202) 649–5597. Congressional Review Act penalty (CMP) within the OCC’s SUPPLEMENTARY INFORMATION: jurisdiction to administer to account for Pursuant to the Congressional Review inflation pursuant to the Federal Civil I. Background Act, the Office of Management and Penalties Inflation Adjustment Act of On October 22, 2019, the OCC Budget will determine if this final rule 1990 (the 1990 Adjustment Act),1 as published in the Federal Register a final and the November 21,2019, final rule amended by the Federal Civil Penalties rule to revise its rule on other real estate are not ‘‘major rules,’’ as defined at 5 Inflation Adjustment Act Improvements owned (OREO) at 12 CFR part 34, U.S.C. 804(2). As required by the Act of 2015 (the 2015 Adjustment Act).2 subpart E, and make related technical Congressional Review Act, the OCC will Under the 1990 Adjustment Act, as amendments (OREO final rule).1 On submit the final rules and other amended, federal agencies must make November 21, 2019, the OCC published appropriate reports to Congress and the a correction to the OREO final rule in Government Accountability Office for 1 Public Law 101–410, Oct. 5, 1990, 104 Stat. 890, review. codified at 28 U.S.C. 2461 note. the Federal Register amending the 2 Public Law 114–74, Title VII, section 701(b), Nov. 2, 2015, 129 Stat. 599, codified at 28 U.S.C. 1 84 FR 56369 (Oct. 22, 2019). 2 84 FR 64193 (Nov. 21, 2019). 2461 note.

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annual adjustments to the maximum agency would need to update that CMPs allowable in 2019 for national amount of each CMP the agency amount by regulation. However, if an banks and Federal savings associations administers. The Office of Management agency has codified the formula for as listed in the 2019 CMP notice 6 to and Budget (OMB) is required to issue making the CMP adjustments, then calculate the maximum amount of CMPs guidance to federal agencies no later subsequent adjustments can be made that may be assessed by the OCC in than December 15 of each year solely by notice.3 In 2018, the OCC 2020.7 There were no new statutory providing an inflation adjustment published a final regulation to remove CMPs administered by the OCC during multiplier (i.e., the inflation adjustment the CMP amounts from its regulations, 2019. factor agencies must use) applicable to while updating those amounts for CMPs assessed in the following year. inflation through the notice process.4 The following charts provide the The agencies are required to publish On December 16, 2019, the OMB inflation-adjusted CMPs for use their CMPs, adjusted pursuant to the issued guidance to affected agencies on beginning on January 1, 2020, pursuant multiplier provided by OMB, by January implementing the required annual to 12 CFR 19.240(b) and 109.103(c)(2) 15 of the applicable year. adjustment, which included the relevant for conduct occurring on or after To the extent an agency has codified inflation multiplier.5 The OCC has November 2, 2015: a CMP amount in its regulations, the applied that multiplier to the maximum PENALTIES APPLICABLE TO NATIONAL BANKS

Maximum Description and tier penalty U.S. Code citation (if applicable) amount (in dollars) 1

12 U.S.C. 93(b) ...... Violation of Various Provisions of the National Bank Act: Tier 1 ...... 10,245 Tier 2 ...... 51,222 Tier 3 ...... 2 2,048,915 12 U.S.C. 164 ...... Violation of Reporting Requirements: Tier 1 ...... 4,098 Tier 2 ...... 40,979 Tier 3 ...... 2 2,048,915 12 U.S.C. 481 ...... Refusal of Affiliate to Cooperate in Examination ...... 10,245 12 U.S.C. 504 ...... Violation of Various Provisions of the Federal Reserve Act: Tier 1 ...... 10,245 Tier 2 ...... 51,222 Tier 3 ...... 2 2,048,915 12 U.S.C. 1817(j)(16) ...... Violation of Change in Bank Control Act: Tier 1 ...... 10,245 Tier 2 ...... 51,222 Tier 3 ...... 2 2,048,915 12 U.S.C. 1818(i)(2) 3 ...... Violation of Law, Unsafe or Unsound Practice, or Breach of Fiduciary Duty: Tier 1 ...... 10,245 Tier 2 ...... 51,222 Tier 3 ...... 2 2,048,915 12 U.S.C. 1820(k)(6)(A)(ii) ...... Violation of Post-Employment Restrictions: Per violation ...... 337,016 12 U.S.C. 1832(c) ...... Violation of Withdrawals by Negotiable or Transferable Instrument for Transfers to Third Parties: Per violation ...... 2,976 12 U.S.C. 1884 ...... Violation of the Bank Protection Act ...... 297 12 U.S.C. 1972(2)(F) ...... Violation of Anti-Tying Provisions regarding Correspondent Accounts, Unsafe or Unsound Prac- tices, or Breach of Fiduciary Duty: Tier 1 ...... 10,245 Tier 2 ...... 51,222 Tier 3 ...... 2 2,048,915 12 U.S.C. 3110(a) ...... Violation of Various Provisions of the International Banking Act (Federal Branches and Agencies) 46,825 12 U.S.C. 3110(c) ...... Violation of Reporting Requirements of the International Banking Act (Federal Branches and Agencies): Tier 1 ...... 3,747 Tier 2 ...... 37,458 Tier 3 ...... 2 1,872,957 12 U.S.C. 3909(d)(1) ...... Violation of International Lending Supervision Act ...... 2,549 15 U.S.C. 78u–2(b) ...... Violation of Various Provisions of the Securities Act, the Securities Exchange Act, the Invest- ment Company Act, or the Investment Advisers Act: Tier 1 (natural person)—Per violation ...... 9,639 Tier 1 (other person)—Per violation ...... 96,384 Tier 2 (natural person)—Per violation ...... 96,384 Tier 2 (other person)—Per violation ...... 481,920 Tier 3 (natural person)—Per violation ...... 192,768 Tier 3 (other person)—Per violation ...... 963,837 15 U.S.C. 1639e(k) ...... Violation of Appraisal Independence Requirements: First violation ...... 11,767 Subsequent violations ...... 23,533

3 See OMB Memorandum M–18–03, 4 83 FR 1517 (Jan. 12, 2018) (final rule); 83 FR 6 See 83 FR 66599 (Dec. 27, 2018). ‘‘Implementation of the 2018 Annual Adjustment 1657 (Jan. 12, 2018) (2018 CMP Notice). 7 Penalties assessed for violations occurring prior Pursuant to the Federal Civil Penalties Inflation 5 The inflation adjustment multiplier for 2020 is to November 2, 2015, will be subject to the Adjustment Act Improvements Act of 2015,’’ at 4, 1.01764. See OMB Memorandum M–20–05, maximum amounts set forth in the OCC’s Implementation of Penalty Inflation Adjustments which permits agencies that have codified the regulations in effect prior to the enactment of the for 2020, Pursuant to the Federal Civil Penalties formula to adjust CMPs for inflation to update the Inflation Adjustment Act Improvements Act of 2015 2015 Adjustment Act. penalties through a notice rather than a regulation. (Dec. 16, 2019).

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PENALTIES APPLICABLE TO NATIONAL BANKS—Continued

Maximum Description and tier penalty U.S. Code citation (if applicable) amount (in dollars) 1

42 U.S.C. 4012a(f)(5) ...... Flood Insurance: Per violation ...... 2,226 1 The maximum penalty amount is per day, unless otherwise indicated. 2 The maximum penalty amount for a national bank is the lesser of this amount or 1 percent of total assets. 3 These amounts also apply to CMPs in statutes that cross-reference 12 U.S.C. 1818, such as 12 U.S.C. 2804, 3108, 3349, 4309, and 4717 and 15 U.S.C. 1607, 1693o, 1681s, 1691c, and 1692l.

PENALTIES APPLICABLE TO FEDERAL SAVINGS ASSOCIATIONS

Maximum penalty U.S. Code citation CMP description amount (in dollars) 1

12 U.S.C. 1464(v) ...... Reports of Condition: 1st Tier ...... 4,098 2nd Tier ...... 40,979 3rd Tier ...... 2 2,048,915 12 U.S.C. 1467(d) ...... Refusal of Affiliate to Cooperate in Examination ...... 10,245 12 U.S.C. 1467a(r) ...... Late/Inaccurate Reports: 1st Tier ...... 4,098 2nd Tier ...... 40,979 3rd Tier ...... 2 2,048,915 12 U.S.C. 1817(j)(16) ...... Violation of Change in Bank Control Act: Tier 1 ...... 10,245 Tier 2 ...... 51,222 Tier 3 ...... 2 2,048,915 12 U.S.C. 1818(i)(2) 3 ...... Violation of Law, Unsafe or Unsound Practice, or Breach of Fiduciary Duty: Tier 1 ...... 10,245 Tier 2 ...... 51,222 Tier 3 ...... 2 2,048,915 12 U.S.C. 1820(k)(6)(A)(ii) ...... Violation of Post-Employment Restrictions: Per violation ...... 337,016 12 U.S.C. 1832(c) ...... Violation of Withdrawals by Negotiable or Transferable Instruments for Transfers to Third Par- ties: Per violation ...... 2,705 12 U.S.C. 1884 ...... Violation of the Bank Protection Act ...... 297 12 U.S.C. 1972(2)(F) ...... Violation of Provisions regarding Correspondent Accounts, Unsafe or Unsound Practices, or Breach of Fiduciary Duty: Tier 1 ...... 10,245 Tier 2 ...... 51,222 Tier 3 ...... 2 2,048,915 15 U.S.C. 78u–2(b) ...... Violations of Various Provisions of the Securities Act, the Securities Exchange Act, the Invest- ment Company Act, or the Investment Advisers Act: 1st Tier (natural person)—Per violation ...... 9,639 1st Tier (other person)—Per violation ...... 96,384 2nd Tier (natural person)—Per violation ...... 96,384 2nd Tier (other person)—Per violation ...... 481,920 3rd Tier (natural person)—Per violation ...... 192,768 3rd Tier (other person)—Per violation ...... 963,837 15 U.S.C. 1639e(k) ...... Violation of Appraisal Independence Requirements: First violation ...... 11,767 Subsequent violations ...... 23,533 42 U.S.C. 4012a(f)(5) ...... Flood Insurance: Per violation ...... 2,226 1 The maximum penalty amount is per day, unless otherwise indicated. 2 The maximum penalty amount for a federal savings association is the lesser of this amount or 1 percent of total assets. 3 These amounts also apply to statutes that cross-reference 12 U.S.C. 1818, such as 12 U.S.C. 2804, 3108, 3349, 4309, and 4717 and 15 U.S.C. 1607, 1681s, 1691c, and 1692l.

Dated: December 19, 2019. Jonathan V. Gould, Senior Deputy Comptroller and Chief Counsel, Office of the Comptroller of the Currency. [FR Doc. 2019–28053 Filed 12–27–19; 8:45 am] BILLING CODE 4810–33–P

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DEPARTMENT OF THE TREASURY 452–3474, Legal Division, Board of supervision of savings and loan holding Governors of the Federal Reserve companies and their non-depository Office of the Comptroller of the System, 20th Street and Constitution subsidiaries from the OTS to the Board, Currency Avenue NW, Washington, DC 20551. and the Board subsequently amended its FDIC: Patience R. Singleton, Senior CRA regulation to reflect this transfer of 12 CFR Parts 25 and 195 Policy Analyst, Supervisory Policy supervisory authority.3 Branch, Division of Depositor and [Docket ID OCC–2019–0025] The threshold for small banks and Consumer Protection, (202) 898–6859; small savings associations was revised RIN 1557–AE72 or Richard M. Schwartz, Counsel, Legal Division, (202) 898–7424, Federal most recently in December 2018 and FEDERAL RESERVE SYSTEM Deposit Insurance Corporation, 550 17th became effective January 1, 2019. 83 FR Street NW, Washington, DC 20429. 66601 (Dec. 27, 2018). The current CRA regulations provide that banks and 12 CFR Part 228 SUPPLEMENTARY INFORMATION: savings associations that, as of [Regulation BB; Docket No. R–1690] Background and Description of the December 31 of either of the prior two Joint Final Rule RIN 7100–AF 68 calendar years, had assets of less than The Agencies’ CRA regulations $1.284 billion are small banks or small FEDERAL DEPOSIT INSURANCE establish CRA performance standards savings associations. Small banks and CORPORATION for small and intermediate small banks small savings associations with assets of and savings associations. The CRA at least $321 million as of December 31 12 CFR Part 345 regulations define small and of both of the prior two calendar years intermediate small banks and savings and less than $1.284 billion as of RIN 3064–AF20 associations by reference to asset-size December 31 of either of the prior two Community Reinvestment Act criteria expressed in dollar amounts, calendar years are intermediate small Regulations and they further require the Agencies to banks or intermediate small savings publish annual adjustments to these associations. 12 CFR 25.12(u)(1), AGENCY: Office of the Comptroller of the dollar figures based on the year-to-year 195.12(u)(1), 228.12(u)(1), and Currency, Treasury (OCC); Board of change in the average of the CPI–W, not 345.12(u)(1). This joint final rule revises Governors of the Federal Reserve seasonally adjusted, for each 12-month these thresholds. System (Board); and Federal Deposit period ending in November, with Insurance Corporation (FDIC). rounding to the nearest million. 12 CFR During the 12-month period ending November 2019, the CPI–W increased ACTION: 25.12(u)(2), 195.12(u)(2), 228.12(u)(2), Joint final rule; technical by 1.62 percent. As a result, the amendment. and 345.12(u)(2). This adjustment formula was first adopted for CRA Agencies are revising 12 CFR SUMMARY: The OCC, the Board, and the purposes by the OCC, the Board, and the 25.12(u)(1), 195.12(u)(1), 228.12(u)(1), FDIC (collectively, the Agencies) are FDIC on August 2, 2005, effective and 345.12(u)(1) to make this annual amending their Community September 1, 2005. 70 FR 44256 (Aug. adjustment. Beginning January 1, 2020, Reinvestment Act (CRA) regulations to 2, 2005). At that time, the Agencies banks and savings associations that, as adjust the asset-size thresholds used to noted that the CPI–W is also used in of December 31 of either of the prior two define ‘‘small bank’’ or ‘‘small savings connection with other federal laws, calendar years, had assets of less than association’’ and ‘‘intermediate small such as the Home Mortgage Disclosure $1.305 billion are small banks or small bank’’ or ‘‘intermediate small savings Act. See 12 U.S.C. 2808; 12 CFR 1003.2. savings associations. Small banks and association.’’ As required by the CRA On March 22, 2007, and effective July 1, small savings associations with assets of regulations, the adjustment to the 2007, the former Office of Thrift at least $326 million as of December 31 threshold amount is based on the Supervision (OTS), the agency then of both of the prior two calendar years annual percentage change in the responsible for regulating savings and less than $1.305 billion as of Consumer Price Index for Urban Wage associations, adopted an annual December 31 of either of the prior two Earners and Clerical Workers (CPI–W). adjustment formula consistent with that calendar years are intermediate small DATES: Effective Date: January 1, 2020. of the other federal banking agencies in banks or intermediate small savings its CRA rule previously set forth at 12 FOR FURTHER INFORMATION CONTACT: associations. The Agencies also publish CFR part 563e. 72 FR 13429 (Mar. 22, OCC: Frances C. Augello, Special current and historical asset-size 2007). thresholds on the website of the Federal Counsel, Emily Boyes, Counsel, or Pursuant to the Dodd-Frank Wall Maria Riegger, Counsel, Chief Counsel’s Financial Institutions Examination Street Reform and Consumer Protection Council at http://www.ffiec.gov/cra/. Office, (202) 649–5490; for persons who Act (Dodd-Frank Act),1 effective July 21, are deaf or hearing impaired, TTY, (202) 2011, CRA rulemaking authority for Administrative Procedure Act and 649–5597; or Vonda Eanes, Director for federal and state savings associations Effective Date CRA and Fair Lending Policy, was transferred from the OTS to the Compliance Risk Policy Division, (202) OCC, and the OCC subsequently Under 5 U.S.C. 553(b)(B) of the 649–5470, Office of the Comptroller of republished, at 12 CFR part 195, the Administrative Procedure Act (APA), an the Currency, 400 7th Street SW, CRA regulations applicable to those agency may, for good cause, find (and Washington, DC 20219. institutions.2 In addition, the Dodd- incorporate the finding and a brief Board: Amal S. Patel, Counsel, (202) Frank Act transferred responsibility for statement of reasons therefore in the 912–7879, or Cathy Gates, Senior Project rules issued) that notice and public Manager, (202) 452–2099, Division of 1 Public Law 111–203, 124 Stat. 1376 (2010). Consumer and Community Affairs; or 2 See OCC interim final rule, 76 FR 48950 (Aug. 3 See Board interim final rule, 76 FR 56508 (Sept. Gavin L. Smith, Senior Counsel, (202) 9, 2011). 13, 2011).

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procedure thereon are impracticable, Paperwork Reduction Act of 1995 302 of RCDRIA does not apply. unnecessary, or contrary to the public The Paperwork Reduction Act of 1995 Nevertheless, the requirements of interest. (44 U.S.C. 3501–3521) states that no section 302 of RCDRIA, and the The amendments to the regulations to agency may conduct or sponsor, nor is administrative burdens and benefits of adjust the asset-size thresholds for small the respondent required to respond to, the final rule, were considered as part and intermediate small banks and an information collection unless it of the overall rulemaking process. savings associations result from the displays a currently valid Office of Congressional Review Act application of a formula established by Management and Budget (OMB) control FDIC a provision in the respective CRA number. The Agencies have determined regulations that the Agencies previously that this final rule does not create any For purposes of Congressional Review published for comment. See 70 FR new, or revise any existing, collections Act, the OMB makes a determination as 12148 (Mar. 11, 2005), 70 FR 44256 of information pursuant to the to whether a final rule constitutes a 6 (Aug. 2, 2005), 71 FR 67826 (Nov. 24, Paperwork Reduction Act. ‘‘major’’ rule. If a rule is deemed a 2006), and 72 FR 13429 (Mar. 22, 2007). Consequently, no information collection ‘‘major rule’’ by the OMB, the As a result, §§ 25.12(u)(1), 195.12(u)(1), request will be submitted to the OMB Congressional Review Act generally 228.12(u)(1), and 345.12(u)(1) of the for review. provides that the rule may not take effect until at least 60 days following its Agencies’ respective CRA regulations Unfunded Mandates Reform Act of publication.7 are amended by adjusting the asset-size 1995 The Congressional Review Act defines thresholds as provided for in Section 202 of the Unfunded a ‘‘major rule’’ as any rule that the §§ 25.12(u)(2), 195.12(u)(2), Mandates Reform Act of 1995 Administrator of the Office of 228.12(u)(2), and 345.12(u)(2). (Unfunded Mandates Act), 2 U.S.C. Information and Regulatory Affairs of Accordingly, the Agencies’ rules 1532, requires the OCC to prepare a the OMB finds has resulted in or is provide no discretion as to the budgetary impact statement before likely to result in—(A) an annual effect computation or timing of the revisions promulgating any final rule for which a on the economy of $100,000,000 or to the asset-size criteria. For this reason, general notice of proposed rulemaking more; (B) a major increase in costs or the Agencies have determined that was published. As discussed above, the prices for consumers, individual publishing a notice of proposed OCC has determined that the industries, Federal, State, or local rulemaking and providing opportunity publication of a general notice of government agencies or geographic for public comment are unnecessary. proposed rulemaking is unnecessary. regions, or (C) significant adverse effects Accordingly, this joint final rule is not on competition, employment, The effective date of this joint final subject to section 202 of the Unfunded investment, productivity, innovation, or rule is January 1, 2020. Under 5 U.S.C. Mandates Act. on the ability of United States-based 553(d)(3) of the APA, the required enterprises to compete with foreign- publication or service of a substantive Riegle Community Development and Regulatory Improvement Act of 1994 based enterprises in domestic and rule shall be made not less than 30 days export markets.8 As required by the before its effective date, except, among Section 302 of the Riegle Community Congressional Review Act, the FDIC other things, as provided by the agency Development and Regulatory will submit the final rule and other for good cause found and published Improvement Act of 1994 (RCDRIA) (12 appropriate reports to Congress and the with the rule. Because this rule adjusts U.S.C. 4802) requires that each Federal Government Accountability Office for asset-size thresholds consistent with the banking agency, in determining the review. procedural requirements of the CRA effective date and administrative rules, the Agencies conclude that it is compliance requirements for new OCC not substantive within the meaning of regulations that impose additional Pursuant to the Congressional Review the APA’s delayed effective date reporting, disclosure, or other Act, OMB’s Office of Information and provision. Moreover, the Agencies find requirements on insured depository Regulatory Affairs designated this rule that there is good cause for dispensing institutions (IDIs), consider, consistent as not a ‘‘major rule,’’ as defined at 5 with the delayed effective date with principles of safety and soundness U.S.C. 804(2). As required by the requirement, even if it applied, because and the public interest, any Congressional Review Act, the OCC will their current rules already provide administrative burdens that such submit the final rule and other notice that the small and intermediate regulations would place on depository appropriate reports to Congress and the small asset-size thresholds will be institutions, including small depository Government Accountability Office for adjusted as of December 31 based on 12- institutions, and customers of review. month data as of the end of November depository institutions, as well as the 4 List of Subjects each year. benefits of such regulations. In addition, new regulations and 12 CFR Part 25 Regulatory Flexibility Act amendments to regulations that impose Community development, Credit, additional reporting, disclosures, or The Regulatory Flexibility Act (RFA) Investments, National banks, Reporting other new requirements on IDIs and recordkeeping requirements. does not apply to a rulemaking when a generally must take effect on the first general notice of proposed rulemaking day of a calendar quarter that begins on 12 CFR Part 195 is not required. 5 U.S.C. 603 and 604. or after the date on which the Community development, Credit, As noted previously, the Agencies have 5 regulations are published in final form. Investments, Reporting and determined that it is unnecessary to Because the final rule does not recordkeeping requirements, Savings publish a general notice of proposed impose additional reporting, disclosure, associations. rulemaking for this joint final rule. or other requirements on IDIs, section Accordingly, the RFA’s requirements 6 5 U.S.C. 801 et seq. relating to an initial and final regulatory 4 12 U.S.C. 4802(a). 7 5 U.S.C. 801(a)(3). flexibility analysis do not apply. 5 12 U.S.C. 4802(b). 8 5 U.S.C. 804(2).

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12 CFR Part 228 that, as of December 31 of either of the ■ 8. Section 345.12 is amended by Banks, Banking, Community prior two calendar years, had assets of revising paragraph (u)(1) to read as development, Credit, Investments, less than $1.305 billion. Intermediate follows: small savings association means a small Reporting and recordkeeping § 345.12 Definitions. requirements. savings association with assets of at least $326 million as of December 31 of * * * * * 12 CFR Part 345 both of the prior two calendar years and (u) * * * less than $1.305 billion as of December (1) Definition. Small bank means a Banks, Banking, Community bank that, as of December 31 of either development, Credit, Investments, 31 of either of the prior two calendar years. of the prior two calendar years, had Reporting and recordkeeping assets of less than $1.305 billion. requirements. * * * * * Intermediate small bank means a small DEPARTMENT OF THE TREASURY FEDERAL RESERVE SYSTEM bank with assets of at least $326 million as of December 31 of both of the prior Office of the Comptroller of the 12 CFR Chapter II two calendar years and less than $1.305 Currency For the reasons set forth in the billion as of December 31 of either of the 12 CFR Chapter I SUPPLEMENTARY INFORMATION section, the prior two calendar years. For the reasons discussed in the Board of Governors of the Federal * * * * * SUPPLEMENTARY INFORMATION Reserve System amends part 228 of section, 12 Dated: December 11, 2019. CFR parts 25 and 195 are amended as chapter II of title 12 of the Code of Jonathan V. Gould, follows: Federal Regulations as follows: Senior Deputy Comptroller and Chief PART 25—COMMUNITY PART 228—COMMUNITY Counsel. REINVESTMENT ACT AND REINVESTMENT (REGULATION BB) By order of the Board of Governors of the INTERSTATE DEPOSIT PRODUCTION Federal Reserve System, acting through the REGULATIONS ■ 5. The authority citation for part 228 Secretary of the Board under delegated continues to read as follows: authority, December 11, 2019. ■ 1. The authority citation for part 25 Authority: 12 U.S.C. 321, 325, 1828(c), Ann E. Misback, continues to read as follows: 1842, 1843, 1844, and 2901 et seq. Secretary of the Board. Authority: 12 U.S.C. 21, 22, 26, 27, 30, 36, ■ 6. Section 228.12 is amended by Dated at Washington, DC, December 11, 93a, 161, 215, 215a, 481, 1814, 1816, 1828(c), revising paragraph (u)(1) to read as 2019. 1835a, 2901 through 2908, and 3101 through follows: Federal Deposit Insurance Corporation. 3111. Annmarie H. Boyd, ■ 2. Section 25.12 is amended by § 228.12 Definitions. Assistant Executive Secretary. revising paragraph (u)(1) to read as * * * * * [FR Doc. 2019–27288 Filed 12–27–19; 8:45 am] follows: (u) * * * BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P (1) Definition. Small bank means a § 25.12 Definitions. bank that, as of December 31 of either * * * * * of the prior two calendar years, had (u) * * * FINANCIAL STABILITY OVERSIGHT assets of less than $1.305 billion. COUNCIL (1) Definition. Small bank means a Intermediate small bank means a small bank that, as of December 31 of either bank with assets of at least $326 million 12 CFR Part 1310 of the prior two calendar years, had as of December 31 of both of the prior RIN 4030–ZA00 assets of less than $1.305 billion. two calendar years and less than $1.305 Intermediate small bank means a small billion as of December 31 of either of the Authority To Require Supervision and bank with assets of at least $326 million prior two calendar years. as of December 31 of both of the prior Regulation of Certain Nonbank * * * * * two calendar years and less than $1.305 Financial Companies billion as of December 31 of either of the FEDERAL DEPOSIT INSURANCE AGENCY: Financial Stability Oversight prior two calendar years. CORPORATION Council. * * * * * 12 CFR Chapter III ACTION: Final interpretive guidance. PART 195—COMMUNITY Authority and Issuance SUMMARY: This final interpretive REINVESTMENT For the reasons set forth in the guidance, which replaces the Financial SUPPLEMENTARY INFORMATION section, the Stability Oversight Council’s existing ■ 3. The authority citation for part 195 Board of Directors of the Federal interpretive guidance on nonbank continues to read as follows: Deposit Insurance Corporation amends financial company determinations, Authority: 12 U.S.C. 1462a, 1463, 1464, part 345 of chapter III of title 12 of the describes the approach the Council 1814, 1816, 1828(c), 2901 through 2908, and Code of Federal Regulations to read as intends to take in prioritizing its work 5412(b)(2)(B). follows: to identify and address potential risks to ■ 4. Section 195.12 is amended by U.S. financial stability using an revising paragraph (u)(1) to read as PART 345—COMMUNITY activities-based approach, and follows: REINVESTMENT enhancing the analytical rigor and transparency in the processes the § 195.12 Definitions. ■ 7. The authority citation for part 345 Council intends to follow if it were to * * * * * continues to read as follows: consider making a determination to (u) * * * Authority: 12 U.S.C. 1814–1817, 1819– subject a nonbank financial company to (1) Definition. Small savings 1820, 1828, 1831u and 2901–2908, 3103– supervision by the Board of Governors association means a savings association 3104, and 3108(a). of the Federal Reserve System.

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DATES: Effective Date: January 29, 2020. supervisory priorities and principles supplemental procedures (the ‘‘2015 FOR FURTHER INFORMATION CONTACT: reflecting the outcome of discussions Supplemental Procedures’’) to the 2012 Howard Adler, Office of Domestic among the member agencies. The Final Rule and Interpretive Guidance.5 Finance, Treasury, at (202) 622–2409; Council’s duties under section 112 also In June 2015, the Council published Eric Froman, Office of the General include making recommendations to staff guidance with details regarding the Counsel, Treasury, at (202) 622–1942; or primary financial regulatory agencies 1 methodologies used in Stage 1 Mark Schlegel, Office of the General to apply new or heightened standards thresholds in connection with the Counsel, Treasury, at (202) 622–1027. and safeguards for financial activities or determination process under section practices that could create or increase 113.6 On November 17, 2017, the SUPPLEMENTARY INFORMATION: risks of significant liquidity, credit, or Department of the Treasury issued a I. Background other problems spreading among report to the President in response to a The statutory purposes of the financial companies and markets. The Presidential Memorandum directing the Financial Stability Oversight Council Council intends to seek to identify, Secretary of the Treasury to conduct a (the ‘‘Council’’) are to identify risks to assess, and address potential risks and thorough review of the determination U.S. financial stability, promote market emerging threats on a system-wide basis and designation processes of the 7 discipline, and respond to emerging by taking an activities-based approach Council. On March 6, 2019, the Council threats to the stability of the U.S. to its work, as further explained below. The Dodd-Frank Act also authorizes approved proposed interpretive financial system. The Council’s the Council to determine that certain guidance (the ‘‘Proposed Guidance’’), authorities to accomplish these statutory nonbank financial companies will be which incorporated certain provisions purposes include authorities to facilitate subject to supervision by the Federal of the 2015 Supplemental Procedures, to information sharing and coordination Reserve and prudential standards. The revise and update the 2012 Interpretive among regulators, monitor the financial Federal Reserve is responsible for Guidance.8 The Proposed Guidance, services marketplace, make establishing the prudential standards which included a request for public recommendations to regulators, and that will be applicable, under section comment and over 40 specific require supervision by the Board of 165 of the Dodd-Frank Act, to nonbank questions, was intended to enhance the Governors of the Federal Reserve financial companies subject to a Council Council’s transparency, analytical rigor, System (the ‘‘Federal Reserve’’) for determination 2 under section 113 of the and public engagement. The comment nonbank financial companies that may Dodd-Frank Act. The Council has period for the Proposed Guidance pose risks to U.S. financial stability. previously issued rules, guidance, and closed on May 13, 2019. Section 111 of the Dodd-Frank Wall other public statements regarding its The Council received 26 comment Street Reform and Consumer Protection process for evaluating nonbank financial letters in response to the Proposed Act (12 U.S.C. 5321) (the ‘‘Dodd-Frank companies for a potential Guidance, of which nine were from Act’’) established the Council. The determination. On April 11, 2012, the companies or trade associations in the purposes of the Council under section Council issued interpretive guidance asset management industry, four were 112 of the Dodd-Frank Act (12 U.S.C. (the ‘‘2012 Interpretive Guidance’’) from trade associations in the insurance 5322) are (A) to identify risks to the regarding the manner in which the industry, three were from other trade financial stability of the United States Council makes determinations under associations, seven were from various that could arise from the material section 113 of the Dodd-Frank Act, as an advocacy groups, one was from two financial distress or failure, or ongoing appendix to a final rule (together, the previous Chairpersons of the Council activities, of large, interconnected bank ‘‘2012 Final Rule and Interpretive and two previous Chairmen of the holding companies or nonbank financial Guidance’’).3 On May 22, 2012, the Federal Reserve, one was from an companies, or that could arise outside Council approved hearing procedures association of state insurance regulators, the financial services marketplace; (B) to relating to the conduct of hearings and one was from a group of academics. promote market discipline, by before the Council in connection with eliminating expectations on the part of proposed determinations regarding 5 Financial Stability Oversight Council shareholders, creditors, and nonbank financial companies and Supplemental Procedures Relating to Nonbank counterparties of such companies that financial market utilities and related Financial Company Determinations (February 4, the Government will shield them from 2015), available at https://www.treasury.gov/ emergency waivers or modifications initiatives/fsoc/designations/Documents/ losses in the event of failure; and (C) to under sections 113 and 804 of the Dodd- Supplemental%20Procedures%20Related%20 respond to emerging threats to the Frank Act (as amended in 2013 and to%20Nonbank%20Financial%20Company%20 stability of the United States financial 2018, the ‘‘Hearing Procedures’’).4 On Determinations%20-%20February%202015.pdf. system. 6 See Council, Staff Guidance Methodologies February 4, 2015, the Council adopted Relating to Stage 1 Thresholds (June 8, 2015), As a threshold matter, the Council available at https://www.treasury.gov/initiatives/ emphasizes the importance of market 1 ‘‘Primary financial regulatory agency’’ is defined fsoc/designations/Documents/FSOC%20Staff%20 discipline, rather than government in section 2(12) of the Dodd-Frank Act, 12 U.S.C. Guidance%20-%20Stage%201%20Thresholds.pdf. intervention, as a mechanism for 5301(12). 7 Treasury, Report to the President of the United addressing potential risks to U.S. 2 Section 113 of the Dodd-Frank Act, 12 U.S.C. States in Response to the Presidential Memorandum 5323, refers to a Council ‘‘determination’’ regarding Issued April 21, 2017: Financial Stability Oversight financial stability posed by financial a nonbank financial company. This release refers to Council Designations (November 17, 2017), companies. The Dodd-Frank Act gives ‘‘determination’’ and ‘‘designation’’ interchangeably available at https://www.treasury.gov/press-center/ the Council broad discretion to for ease of reading. press-releases/documents/pm-fsoc-designations- determine how to respond to potential 3 The 2012 Final Rule and Interpretive Guidance memo-11-17.pdf. added a new part 1310 to title 12 of the Code of 8 84 FR 9028 (March 13, 2019). On the same date, threats to U.S. financial stability. The Federal Regulations, consisting of final rules (12 the Council adopted a final rule stating that the Council’s duties under section 112 of CFR 1310.1–1310.23) and interpretive guidance Council shall not amend or rescind its interpretive the Dodd-Frank Act include monitoring (Appendix A to Part 1310-Financial Stability guidance on nonbank financial company the financial services marketplace in Oversight Council Guidance for Nonbank Financial determinations without providing the public with Company Designations). See 12 CFR part 1310, app. notice and an opportunity to comment in order to identify potential threats to U.S. A (2012). accordance with the procedures applicable to financial stability, and recommending to 4 77 FR 31855 (May 30, 2012); 78 FR 22546 (April legislative rules under the Administrative the Council member agencies general 16, 2013); 83 FR 12010 (March 19, 2018). Procedure Act. See 84 FR 8958 (March 13, 2019).

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(Comment letters are available online at identify, assess, and address potential determination may promote U.S. http://www.regulations.gov/ risks and threats to U.S. financial financial stability. docket?D=FSOC-2019-0001.) Twenty of stability through a process that begins Fifth, the Final Guidance condenses the commenters were generally with an activities-based approach. This the prior three-stage process for a supportive of the proposal, including approach is consistent with the determination under section 113 into the primary focus on the activities-based Council’s priorities of identifying and two stages, by eliminating prior stage 1 approach and analytical enhancements addressing potential risks and emerging (as established by the 2012 Interpretive to the Council’s designation process. Six threats on a system-wide basis, in order Guidance). Under prior stage 1, a set of commenters were generally opposed to to reduce the potential for competitive uniform quantitative metrics was the proposal, arguing it unnecessarily market distortions that could arise from applied to a broad group of nonbank limited the Council’s tools for entity-specific determinations, and financial companies in order to identify addressing systemic risk. Some of the allow relevant financial regulatory nonbank financial companies for further commenters generally opposed to the agencies to address identified potential evaluation and to provide clarity for proposal nonetheless stated that an risks. The Council will pursue entity- other nonbank financial companies that activities-based approach may be specific determinations under section likely would not be subject to appropriate in certain circumstances. 113 of the Dodd-Frank Act only if a evaluation for a potential determination. This final interpretive guidance (the potential risk or threat cannot be The Final Guidance eliminates prior ‘‘Final Guidance’’) replaces in its adequately addressed through an stage 1, because it generated confusion entirety the 2012 Interpretive Guidance. activities-based approach. This among firms and members of the public In addition, in connection with the approach will enable the Council to and is not compatible with the adoption of the Final Guidance, the effectively identify and address the prioritization of an activities-based Council has rescinded the 2015 underlying sources of risks to financial approach. Supplemental Procedures and the 2015 stability on a system-wide basis, rather Sixth, the Final Guidance further staff guidance regarding the Stage 1 than addressing risks only at a enhances the new, two-stage thresholds. The Council’s rules codified particular nonbank financial company determination process by making at 12 CFR 1310.1 to 1310.23 and the that may be designated. numerous procedural improvements Council’s Hearing Procedures remain in Second, before issuing nonbinding and incorporating several provisions of effect. recommendations to a primary financial the 2015 Supplemental Procedures, The Council expects that the Final regulatory agency under section 120 of which were intended to facilitate the Guidance will better enable the Council the Dodd-Frank Act, the Council will Council’s engagement and transparency. to: ascertain whether the primary financial The Final Guidance will increase the Æ Leverage the expertise of financial regulatory agency would be expected to Council’s engagement with companies regulatory agencies; perform a cost-benefit analysis of the and their existing regulators during the Æ Promote market discipline; actions it would take in response to the determination process. One of the goals Æ Maintain competitive dynamics in Council’s contemplated of this enhanced engagement is to affected markets; recommendation. In cases where the provide a company under review with Æ Appropriately tailor regulations to primary financial regulatory agency greater visibility into the aspects of its cost-effectively minimize burdens; and business that may pose risks to U.S. Æ would not be expected to conduct such Ensure the Council’s designation an analysis, the Council itself will— financial stability. Enhanced analyses are rigorous and transparent. prior to making a final engagement will also allow the II. Overview of Final Guidance recommendation—conduct an analysis, company to provide the Council with using empirical data, to the extent relevant information, which will help to The Final Guidance revises the 2012 available, of the benefits and costs of the ensure that the Council is making Interpretive Guidance to ensure that the actions that the primary financial decisions based on a broad set of data Council’s work is clear, transparent, and regulatory agency would be expected to and a rigorous analysis. By making a analytically rigorous, and to enhance take in response to the contemplated company aware early in the review the Council’s engagement with recommendation. When the Council process of the potential risks the companies, regulators, and other conducts its own analysis, the Council Council has identified, the Council stakeholders. By issuing clear and will make a recommendation under seeks to give the company more transparent guidance, the Council seeks section 120 only if it believes that the information and tools to mitigate those to provide the public with sufficient results of its assessment of benefits and risks prior to any Council designation, information to understand the Council’s costs support the recommendation. thereby providing a potential pre- concerns regarding risks to financial Third, in the event the Council designation ‘‘off-ramp.’’ stability, while appropriately protecting considers a nonbank financial company The Final Guidance also includes information submitted by companies for a potential determination under procedures intended to clarify the post- and regulators to the Council. section 113, the Council will perform a designation ‘‘off-ramp.’’ The Final A. Key Changes From 2012 Interpretive cost-benefit analysis prior to making a Guidance provides that in the event the Guidance and Proposed Guidance determination. The Council will make a Council makes a final determination determination under section 113 only if regarding a company, the Council 1. Key Changes From 2012 Interpretive the expected benefits to financial intends to encourage the company or its Guidance stability from the determination justify regulators to take steps to mitigate the The Final Guidance substantially the expected costs that the potential risks identified in the transforms the Council’s previous determination would impose. Council’s written explanation of the procedures. Following are high-level Fourth, under the Final Guidance, the basis for its final determination. Except descriptions of several of the most Council will assess the likelihood of a in cases where new material risks arise important changes, which are explained nonbank financial company’s material over time, if a company adequately in greater detail below. financial distress when evaluating the addresses the potential risks identified First, under the Final Guidance, the firm for a potential determination, in in writing by the Council at the time of Council will prioritize its efforts to order to evaluate the extent to which a the final determination and in

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subsequent reevaluations, the Council on how it will conduct its analysis Guidance, the Council may grant a should generally be expected to rescind under the activities-based approach, the designated nonbank financial its determination regarding the Final Guidance clarifies that the Council company’s request for a reevaluation of company. By clarifying the ‘‘off-ramp’’ will consult with relevant financial the determination before the next to rescission, and taking other steps to regulatory agencies and will take into annual reevaluation, in appropriate promote designated nonbank financial account existing laws and regulations cases. companies’ ability to reduce the threat that may mitigate a potential risk to U.S. Fourth, the Final Guidance has been they could pose to financial stability, financial stability. Among other factors, revised to add greater specificity the Council seeks to both protect the the Final Guidance provides that the regarding the Council’s assessment of U.S. financial system and reduce the Council will also take into account the costs and benefits in connection with a regulatory burden on the companies. risk profiles and business models of determination under section 113 of the Seventh, the Final Guidance market participants engaging in the eliminates the six-category framework Dodd-Frank Act. For example, the Final products, activities, or practices under Guidance states that when possible, the described in the 2012 Interpretive evaluation. Guidance. As noted in the 2012 Council will quantify reasonably Second, the Final Guidance provides estimable benefits and costs, using Interpretive Guidance, the Dodd-Frank additional clarity on the process by Act requires the Council to take into ranges, as appropriate, and based on which the Council may issue empirical data when available. account 10 considerations when recommendations under section 120, evaluating a company for a potential including the Council’s analysis of the Fifth, the description of the Council’s determination, and authorizes the costs and benefits associated with such analytic process for assessing the Council to consider ‘‘any other risk- recommendations. likelihood of a company’s material related factors that the Council deems Third, the Final Guidance has been financial distress has been revised. The appropriate.’’ 9 The 2012 Interpretive Final Guidance provides that to conduct Guidance established an analytic revised in response to comments regarding the proposed interpretation of this assessment, the Council may framework that grouped all relevant consider factors such as leverage (both factors, including the 10 statutory ‘‘nonbank financial company’’ as including any successor of a company on and off balance sheet), potential risks considerations 10 and any additional associated with asset reevaluations risk-related factors, into six categories that is subject to a final determination of the Council. In response to comments (whether such reevaluations arise from (size, interconnectedness, market disruptions or severe substitutability, leverage, liquidity risk that the proposed interpretation was overly broad, the Final Guidance has macroeconomic conditions), reliance on and maturity mismatch, and existing short-term funding or other fragile regulatory scrutiny). The six-category been revised to state, more narrowly, that the Council intends to interpret the funding markets, maturity framework did not prove useful in transformation, and risks from guiding the Council’s evaluations, and statutory term ‘‘nonbank financial company supervised by the Board of exposures to counterparties or other unnecessarily complicated the market participants. framework for the Council’s analysis. As Governors’’ as including any nonbank a result, the Final Guidance eliminates financial company that acquires, Sixth, the Proposed Guidance stated this six-category framework. directly or indirectly, a majority of the that the Council or its Deputies assets or liabilities of a company that is Committee 11 would vote to commence 2. Key Changes From Proposed subject to a final determination of the review of a nonbank financial company Guidance Council. As a result, if a nonbank in Stage 1 of the determination process. Following are high-level descriptions financial company subject to a final In response to public comments, the of several changes in this Final determination of the Council sells or Final Guidance provides that the Guidance from the Proposed Guidance. otherwise transfers a majority of its Council will vote to commence any These changes are explained in greater assets or liabilities, the acquirer will review of a nonbank financial company detail below. succeed to, and become subject to, the in Stage 1. The table below provides a First, in response to comments that Council’s determination. As noted summary of several key transition the Council should provide more detail below and in section V of the Final points under the Final Guidance:

Transition point Persons voting Voting threshold

Begin step one of ABA ...... No required vote ...... N/A. Begin step two of ABA ...... No required vote ...... N/A. Begin Stage 1 of Determination Process ...... Council member vote ...... Majority. Begin Stage 2 of Determination Process ...... Council member vote ...... Majority. Make Proposed Determination ...... Council member vote ...... Two-thirds.12 Make Final Determination ...... Council member vote ...... Two-thirds.

The following sections provide companies for a potential determination rescind the designation of, a nonbank detailed descriptions of (1) the under section 113 of the Dodd-Frank financial company (section D). activities-based approach (section B); (2) Act (section C); and (3) the process that the analytic framework for the Council’s the Council will generally follow when evaluation of nonbank financial determining whether to designate, or

9 See Dodd-Frank Act section 113(a)(2), 12 U.S.C. 11 The Council’s Deputies Committee is 12 Under 12 CFR 1310.10(b)(2), any proposed or 5323(a)(2). composed of senior officials from each Council final determination requires the vote of not fewer 10 See section C(1) below for a list of the 10 member and member agency. It coordinates and than two-thirds of the voting members of the statutory considerations. oversees the work of the Council’s other interagency Council then serving, including the affirmative vote staff committees. of the Chairperson of the Council.

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B. Activities-Based Approach financial companies could create an activities-based approach, but that inefficiencies and competitive the activities-based approach should not 1. Overview disadvantages in capital markets. One be undertaken at the expense of Under the Final Guidance, the commenter stated that primary designation, which the commenter Council will prioritize its efforts to regulators should tailor their regulations stated is an important tool that should identify, assess, and address potential based on the unique attributes of each be used when warranted. risks and threats to U.S. financial company and consider the cumulative The Dodd-Frank Act gives the Council stability through a process that begins effects of regulations on companies. By broad discretion to determine how to with an activities-based approach. The relying on the experience and expertise respond to potential threats to U.S. Council will pursue entity-specific of relevant financial regulatory agencies financial stability. The activities-based determinations under section 113 of the during the activities-based approach, approach is consistent with the Dodd-Frank Act only if a potential risk the Council expects that any response to Council’s priorities of identifying and or threat cannot be adequately an identified risk to financial stability addressing potential risks and emerging addressed through an activities-based will be tailored in a manner that reflects threats on a system-wide basis, allowing approach. This approach reflects two the unique attributes of affected relevant financial regulatory agencies to priorities: (1) Identifying and companies and their existing regulatory address identified potential risks. The addressing, in consultation with framework. One commenter stated that Council retains the authority to relevant financial regulatory agencies,13 the activities-based approach should designate nonbank companies under the potential risks and emerging threats on cover activities, but not products and Final Guidance. The Council recognizes a system-wide basis, thereby reducing practices. The Council believes that the that its authority under section 120 of the potential for competitive distortions activities-based approach would be the Dodd-Frank Act is not a substitute among financial companies and in rendered less effective if it excluded for designations in all circumstances. markets that could arise from entity- products and practices, because However, consistent with the Council’s specific determinations, and (2) activities that may pose risks to prioritization of an activities-based allowing relevant financial regulatory financial stability often involve the approach, the Council’s authority under agencies, which generally possess issuance of products or the conduct of section 120 may be a more effective greater information and expertise with practices. means of addressing certain types of respect to company, product, and Other commenters stated that there potential risks than designating one or market risks, to address potential risks, should be a high bar to Council actions. more individual companies. rather than subjecting the companies to These commenters stated that the Two commenters stated that the new regulatory authorities. The 2012 Council and primary regulators should activities-based approach cannot Final Rule and Interpretive Guidance bear the burden of proof in establishing address risks that are tied to the funding did not address the concept of an the existence of a risk to financial and leverage or combination of activities activities-based approach. stability and of demonstrating that the within a specific firm. Another As part of its activities-based Council’s proposed response to the risk commenter stated that the Federal approach, the Council will examine a is optimal from an effectiveness and Reserve’s regulatory authorities with diverse range of financial products, efficiency standpoint. The Council respect to designated nonbank financial activities, and practices that could pose expects that its analyses will sufficiently companies, such as capital and liquidity risks to U.S. financial stability. The establish the existence of any potential requirements, risk management Council’s annual reports highlight the risk or emerging threat to financial requirements, and stress testing, are not types of activities the Council will stability to which the Council seeks to available through an activities-based evaluate, including activities related to respond. Further, any regulation approach. In the activities-based the extension of credit, maturity and adopted by relevant financial regulatory approach, the Council anticipates liquidity transformation, market making agencies in response to the Council’s identifying risks from activities such as and trading, and other key functions activities-based approach would the use of leverage, and working with critical to support the functioning of generally be subject to existing federal relevant financial regulatory agencies to financial markets.14 or state administrative law respond to identified risks. The Council Most commenters supported the requirements. expects that in many cases, relevant activities-based approach, stating that it Several commenters opposed the financial regulatory agencies will have is the most effective means to address prioritization of the activities-based authority to address risks identified by potential risks that may arise in approach, based on various legal, the Council in the activities-based particular industries and would avoid procedural, analytical, and other approach. However, if a potential threat competitive distortions from the entity- objections. Some commenters noted that to U.S. financial stability cannot be specific approach. Some commenters the Council does not have authority to adequately addressed through an supportive of alternatives to the entity- regulate financial activities, or stated activities-based approach, the Council specific approach stated that that the proposal to rely on primary may consider a nonbank financial designating individual nonbank regulators to address potential risks has company for a potential determination no basis in the Dodd-Frank Act. One under section 113 of the Dodd-Frank 13 References in this preamble and guidance to commenter stated that Congress did not Act. ‘‘relevant financial regulatory agencies’’ may intend the Council’s designation One commenter stated that although encompass a broader range of regulators than those authority to be subordinate to or the Proposed Guidance suggests that the included in the statutory definition of ‘‘primary contingent upon an activities-based activities-based approach will minimize financial regulatory agency.’’ See Dodd-Frank Act section 2(12), 12 U.S.C. 5301(12). approach, and two other commenters competitive distortions that arise from 14 For example, the Council’s 2018 annual report stated that the Council’s authority to firm-specific decisions, large, noted risks such as cybersecurity events associated make recommendations under section systemically important firms actually with the increased use of information technology, 120 of the Dodd-Frank Act cannot serve create competitive distortions, because the concentrations of activities and exposures in central counterparties, and transition issues related as a substitute for designations under of the perception that they will receive to the move away from LIBOR to an alternative, section 113. One commenter stated that a bailout in a situation where their sustainable reference rate. the Council’s analysis should begin with failure could create systemic risk.

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Another commenter stated that effort to identify potential risks to U.S. leverage, including leverage arising from competitive market distortions are not financial stability, the Council intends debt, derivatives, off-balance sheet among the statutory factors that the to monitor diverse financial markets and obligations, and other arrangements; Council is required to consider when market developments, in consultation and the transparency of financial evaluating specific companies for a with relevant financial regulatory markets, such as growth in financial determination. One of the Council’s agencies, to identify products, activities, transactions occurring outside of priorities is to identify and address or practices that could pose risks to regulated sectors, among others. When potential risks and emerging threats to financial stability.15 The Council evaluating the potential risks associated financial stability on a system-wide intends to continue to monitor a broad with a product, activity, or practice, the basis, which, in turn, reduces the scope of financial markets and market Council will take into account these potential for competitive market developments, which may include characteristics and various other factors distortions that could arise from entity- corporate and sovereign debt and loan that may exacerbate or mitigate the specific determinations. The activities- markets, equity markets, new or risks. For example, activities may pose based approach is consistent with this evolving financial products, activities, greater risks if they are complex or system-wide perspective. and practices, and developments opaque, are conducted without effective One commenter objected to the affecting the resiliency of financial risk-management practices, are activities-based approach on the basis market participants. If the Council’s significantly correlated with other that it is easier for regulators to identify monitoring of markets and market financial products, or are either highly systemic firms ex ante than to predict developments identifies a product, concentrated or significant and which activities will threaten financial activity, or practice that could pose a widespread. A trading activity in a stability. Another commenter stated that potential risk to U.S. financial stability, market subject to a significant amount of jurisdictional gaps will impede the the Council, in consultation with the asset valuation risk, for instance, may activities-based approach, including relevant financial regulatory agencies, pose a greater threat to financial with respect to insurance companies, will evaluate the potential risk to stability if the activity is also opaque. In hedge funds, and nonbank financial determine whether it merits further contrast, regulatory requirements or technology companies. By leveraging review or action. The Final Guidance market practices may mitigate risks by, the expertise and regulatory authorities defines a ‘‘risk to financial stability’’ as for example, limiting exposures or of relevant financial regulatory agencies a risk of an event or development that leverage, enhancing risk-management as part of its collaborative engagement could impair financial intermediation or practices, or restricting excessive risk- in the activities-based approach, the financial market functioning to a degree taking. Regulatory requirements Council expects to identify products, that would be sufficient to inflict associated with a lending activity, such activities, and practices that may raise significant damage on the broader as an asset concentration limit or 16 concerns and effectively address any economy. One commenter stated that repayment test, may reduce the jurisdictional gaps. Council members the Council should amend the proposed potential risk to financial stability can, at their discretion, raise potential definition of ‘‘risk to financial stability’’ stemming from the activity. Council risks for consideration by the Council, by evaluating the impact and likelihood members can, at their discretion, raise including with respect to risks that are, of a potential risk, among other potential risks for consideration by the or are migrating, outside a particular attributes. The definition in the Final Council, including with respect to risks regulator’s jurisdiction. Another Guidance is unchanged from the that are, or are migrating, outside a commenter stated that the activities- proposal, because the definition already particular regulator’s jurisdiction. based approach will incentivize firms to addresses the scale of the risk by engage in regulatory arbitrage by seeking reference to the impact on the broader Commenters offered numerous views out activities that have not been economy. The likelihood of the risk regarding the proposed analytical identified or appropriately regulated. arising is more relevant to the components of the first step of the However, actions taken to address consideration of any appropriate activities-based approach. Several potential risks across an entire industry regulatory response than to this commenters stated that the Final or market under the activities-based definition. Guidance should take into account approach may be more effective in In its analysis in the first step of the existing regulations implemented since discouraging regulatory arbitrage than activities-based approach, the Council the financial crisis, or consider the company-specific determinations under will evaluate the extent to which certain existing regulatory framework and work section 113. Two commenters stated characteristics could amplify potential with the primary regulator to harmonize that it would not be possible for the risks to U.S. financial stability arising an approach to evaluating risk. As Council to undertake an activities-based from products, activities, or practices. discussed below, the Final Guidance approach effectively, given the While these characteristics may not has been revised to make clear that the reduction in funding and staff for the themselves present risks to U.S. Council will consult with relevant Office of Financial Research (OFR). The financial stability, the Council will financial regulatory agencies and will Council has confidence that Council consider whether the combination or take into account existing laws and members and member agencies, prominence of such characteristics in regulations that may mitigate a potential including the OFR, will be able to the products, activities, or practices risk to U.S. financial stability. One conduct the market monitoring, risk under evaluation warrants further commenter stated that the Council identification, information sharing, and scrutiny. Such characteristics include should tailor regulation to firms’ risk analysis contemplated by the activities- asset valuation risk or credit risk; profiles. The Council itself does not based approach. adopt financial services regulations, but 15 The Council has a statutory duty to monitor the it expects that actions that relevant 2. First Step of Activities-Based financial services marketplace in order to identify financial regulatory agencies take to Approach potential threats to U.S. financial stability. See address potential risks to financial Dodd-Frank Act section 112(a)(2)(C), 12 U.S.C. The Final Guidance establishes a two- 5322(a)(2)(C). stability will be tailored to respond step process for the Council’s activities- 16 The 2012 Final Rule and Interpretive Guidance effectively and efficiently to the relevant based approach. In the first step, in an did not define ‘‘risk to financial stability.’’ risk. Further, the Final Guidance has

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been revised to state that the Council proposes to issue recommendations financial regulatory agencies when will take into account the risk profiles under section 120 of the Dodd-Frank evaluating the extent to which certain and business models of market Act, the Council will provide public characteristics could amplify potential participants engaging in the products, notice and an opportunity to comment risks to U.S. financial stability arising activities, or practices under evaluation. on proposed recommendations in from products, activities, or practices. Other commenters recommended that accordance with its statutory Such characteristics include leverage, the Council further specify how it will obligations. such as leverage arising from debt, analyze potential risks in the activities- Several commenters raised derivatives, off-balance sheet based approach, such as by clarifying considerations specific to certain obligations, and other arrangements. the criteria or standards the Council will industries. One commenter stated that The Council will give due consideration apply, or establishing an empirical insurance is not inherently a source of to the attributes of particular risks connection between an identified risk systemic risk and can be an effective during this collaboration. and measures to address the risk. As tool of risk mitigation. Another One commenter stated that the discussed below, the Final Guidance commenter stated that property and Council should regularly survey has been revised to make clear that the casualty insurers do not create systemic financial firms on their sources of short- Council will consider available risk due to their low levels of leverage term funding. While the Council does evidence regarding the potential risk and liquidity risk. not believe it is appropriate at this time and the behavior of financial market Several commenters discussed the to impose this additional reporting participants. At the same time, application of the activities-based requirement on market participants, the empirical data may not be available approach to the asset management Council will regularly rely on a wide regarding all potential risks, and the industry. Commenters stated that range of data, research, and analysis type and scope of the Council’s analysis private equity and private credit do not from Council member agencies, the will be tailored to the potential risk pose risks to financial stability, and OFR, and public sources to inform its under consideration. highlighted the existing federal actions. Several commenters provided regulation of such firms. Another recommendations on the types of risks commenter stated that the Final 3. Four Framing Questions in First Step that the Council should focus on. Guidance should state that there is no of Activities-Based Approach Commenters stated that the Council historical evidence demonstrating that The Council’s analysis in the first step should focus on new or emerging risks, traditional asset management activities of the activities-based approach will or on substantially changed activities. have threatened U.S. financial stability. generally focus on four framing Other commenters stated that the One commenter stated that when the questions, which analyze (1) triggers of Council should focus on risks such as: Council evaluates leverage in the potential risks (for example, sharp Key service providers or market investment funds sector, it should defer reductions in the valuation of particular participants that could introduce new to existing regulation regarding funds’ classes of financial assets or significant threats; cross-jurisdictional risks; or asset segregation and derivatives use. credit losses); (2) how adverse effects of historical sources of financial One of the priorities of the activities- the potential risk may be transmitted to disruptions. The Council expects that based approach is to allow relevant financial markets or market participants such risks and activities will be financial regulatory agencies, which (for example, through direct or indirect reviewed as part of the activities-based generally possess greater information exposures in financial markets to the approach. One commenter stated that and expertise with respect to company, potential risk or funding or trading the activities-based approach should product, and market risks, to address pressures that may result from consider risks from sovereign entities, potential risks, rather than subjecting associated declines in asset prices); (3) central banks, government agencies, and companies to new regulatory the effects the potential risk could have cyber threats. The activities-based authorities. The Council believes that on the U.S. financial system (for approach will be sufficiently flexible to this approach will enable the Council, example, the scale and magnitude of enable the Council to consider any working together with financial adverse effects on other companies and relevant risks that may arise from these regulatory agencies, to appropriately markets, and whether such effects could sources. One commenter stated that the consider specific attributes of particular be concentrated or diffused among Council should consider how to address industries, business models, and market participants); and (4) whether risks that arise rapidly and require an existing regulatory frameworks, the adverse effects of the potential risk expedited response from the Council including the factors highlighted in the could impair the U.S. financial system and regulators. The Council will act public comments regarding insurance in a manner that could harm the non- expeditiously, as appropriate, to address and asset management. financial sector of the U.S. economy (for emerging risks to financial stability. Several commenters provided example, through curtailed or One commenter stated that the additional views regarding the Council’s interrupted provision of credit to non- Council should solicit public comment analysis of specific risk factors. One financial companies). when identifying potential risks during commenter stated that the activities- Commenters that expressed a view on the activities-based approach. During based approach should consider risks the four framing questions generally the activities-based approach, the and mitigants for each relevant industry, supported the proposed framework, in Council will engage extensively with since each industry has distinct risk- some cases with suggestions for relevant financial regulatory agencies, mitigation techniques. Another additional factors or steps the Council which are generally in close contact commenter stated that leverage alone should consider. Two commenters with market participants and other does not equal risk, and that some stated that the Council should consult stakeholders. In addition, the Final leverage can decrease risk. One with primary regulators regarding new Guidance notes that the Council may commenter stated that the Final dynamics that could fuel a financial engage with industry participants and Guidance should distinguish between crisis, such as risks that start in the other members of the public as it investor protection concerns and broader economy and propagate to the assesses potential risks. Further, as financial stability concerns. The Council financial system. Another commenter described below, if the Council expects to collaborate with relevant stated that the Council should provide

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more detail on how it will analyze data identified by the Council. Measures that their jurisdictions.18 The Council’s under the four framing questions. In regulators can take to address a authority under section 120 of the addition, three commenters stated that particular risk may vary widely, based Dodd-Frank Act is discussed below. the Council’s analysis under the four on their authorities and the urgency of Several commenters provided views framing questions should be based on the risk. The Council will seek to take regarding the Council’s process and empirical and historical evidence. The advantage of these regulators’ expertise engagement with primary regulators in Final Guidance has been revised to and their regulatory and supervisory the activities-based approach. One clarify that in its evaluation of the four authorities to address the potential risk commenter stated that the Council framing questions, the Council will identified by the Council. Two should separate responsibility among consult with relevant financial commenters stated that the Council the Council staff for investigating an regulatory agencies and will take into should vote on advancing from step one activity from responsibility for account existing laws and regulations to step two of the activities-based determining that the activity poses a that may mitigate a potential risk to U.S. approach. Because of the continued systemic risk. The Council has limited financial stability. The Council will also preliminary nature of any analysis and staff and also relies on the resources of take into account the risk profiles and interagency collaboration at the outset its members and member agencies, and business models of market participants of step two, the Council is not adopting therefore does not propose to restructure engaging in the products, activities, or a requirement to hold a vote at that its staff in this manner. Two practices under evaluation. The Council time. commenters stated that the Council will consider available evidence The Council expects that much of its should rely as much as possible on regarding potential risks. However, the initial identification and assessment of public or existing regulatory data. The Final Guidance notes that empirical risks, and engagement with regulators, Council will regularly rely on data, data may not be available regarding all will be informal and nonpublic in research, and analysis from Council potential risks, and the type and scope nature. The staffs of Council members member agencies, the OFR, industry of the Council’s analysis will be tailored and member agencies will be participants, and other public sources to to the potential risk under responsible for much of the market inform its actions. Consistent with its consideration. monitoring, risk identification, statutory obligations, the Council will, Several other commenters stated that information sharing, and analysis in the the analysis under the four framing whenever possible, rely on information activities-based approach. This available from the OFR or primary questions should include an assessment engagement may yield a range of diverse of the likelihood, significance, dollar financial regulatory agencies before outcomes, including the sharing of data, requiring the submission of reports from value, or magnitude of a potential risk research, and analysis among the to financial stability. The Council any nonbank financial company or bank Council and regulators, or the public holding company that is regulated by a expects that the scale of the adverse issuance of recommendations by the effects a potential risk could have on member agency or primary financial Council in its annual reports. Potential regulatory agency.19 One commenter companies and markets will be part of risks that merit further attention may be its evaluation under the four framing stated that the Council should report raised at meetings of the Council publicly on its activities-based approach questions—particularly the third members or with other stakeholders, question, regarding the effects the evaluations and other Council activities, and, as appropriate, may result in public and include this reporting in the potential risk could have on the U.S. statements or recommendations by the financial system. However, the Council Council annual report. The issues the Council, as described above. does not intend to introduce a separate Council is likely to consider in the The Council anticipates that assessment of the likelihood of a activities-based approach are often appropriate measures it may take to particular risk, which could discussed in the Council’s annual address an identified potential risk will unnecessarily restrict its ability to reports. In the event the Council issues also typically take the form of relatively evaluate the framing questions. recommendations in connection with informal actions, such as information the activities-based approach, such 4. Second Step of Activities-Based sharing among regulators, but as recommendations could also be made in Approach deemed appropriate could also include the Council’s annual report, which If the Council identifies a potential more formal measures, such as the includes the Council’s risk to U.S. financial stability in step Council’s public issuance of recommendations to enhance the one of the activities-based approach, recommendations to regulators or the integrity, efficiency, competitiveness, then in the second step, the Council will public. Such recommendations could be and stability of U.S. financial markets, work with the relevant financial made in the Council’s annual report. to promote market discipline, and to regulatory agencies at the federal and Alternatively, if after engaging with maintain investor confidence. state levels to seek the implementation relevant financial regulatory agencies, the Council finds that those regulators’ One commenter stated that the of appropriate actions to address the Council should consider whether new identified potential risk.17 The goal of actions are inadequate to address the identified potential risk to U.S. financial regulatory requirements could have an this step is for these regulators to take unintended adverse impact on financial appropriate actions such as modifying stability, the Council has authority under section 120 of the Dodd-Frank stability. The Council will coordinate their regulation or supervision of among its members and member companies or markets under their Act to ‘‘provide for more stringent regulation of a financial activity’’ by agencies and will follow up on jurisdiction in order to mitigate supervisory or regulatory actions to potential risks to U.S. financial stability publicly issuing nonbinding recommendations to primary financial ensure the potential risk is adequately addressed, with due consideration for 17 The Council has a statutory duty to regulatory agencies to apply new or ‘‘recommend to the member agencies general heightened standards and safeguards for supervisory priorities and principles reflecting the a financial activity or practice 18 Dodd-Frank Act section 120(a), 12 U.S.C. outcome of discussions among the member 5330(a). agencies.’’ See Dodd-Frank Act section 112(a)(2)(F), conducted by bank holding companies 19 See Dodd-Frank Act section 112(d)(3)(B), 12 12 U.S.C. 5322(a)(2)(F). or nonbank financial companies under U.S.C. 5322(d)(3)(B).

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any identified, unintended adverse various other parties during the which the Council may issue impact. activities-based approach, including recommendations under section 120, One commenter stated that the state insurance regulators, the National and how the costs and benefits Council should further clarify the Association of Insurance Commissioners associated with such recommendations process it will follow during the (NAIC), and other industry stakeholders. will be analyzed. Consistent with activities-based approach. The Council If the Council identifies a potential risk section 120, the Council will make these believes the process set forth in the to U.S. financial stability in step one of recommendations only if it determines Final Guidance provides an appropriate the activities-based approach, then in that the conduct, scope, nature, size, level of specificity while also permitting the second step, the Council will work scale, concentration, or sufficient flexibility for informal with the relevant financial regulatory interconnectedness of the activity or collaboration among financial regulators agencies, including state regulators, to practice could create or increase the risk to identify, assess, and address potential seek the implementation of appropriate of significant liquidity, credit, or other risks. One commenter stated that the actions to address the identified problems spreading among bank Council should publicly issue a written potential risk. holding companies and nonbank provisional determination regarding any Several commenters stated that the financial companies, U.S. financial identified potential risk to financial Council or the relevant primary markets, or low-income, minority, or stability. The Council’s collaboration regulator should undertake a cost- underserved communities. with relevant financial regulatory benefit analysis in connection with the In its recommendations under section agencies in the activities-based activities-based approach. Because the 120, the Council may suggest broad approach may yield a range of diverse Council will not itself be adopting approaches to address the risks it has outcomes, including the sharing of data, regulations or taking supervisory actions identified. When appropriate, the research, and analysis among the to address potential risks to U.S. Council may make a more specific Council and these regulators, or the financial stability identified in the recommendation. To promote analytical public issuance of recommendations by activities-based approach, a cost-benefit rigor and avoid duplication, before the Council in its annual reports. The analysis by the Council during the making any recommendation under approach described in the Final activities-based approach would not section 120, the Council will ascertain Guidance will enable robust analysis generally be appropriate. In addition, whether the relevant primary financial and collaboration, without unduly several commenters recommended that regulatory agency would be expected to restricting the Council’s ability to the Council undertake a cost-benefit perform a cost-benefit analysis of the respond to potential risks to U.S. analysis in connection with any actions it would take in response to the financial stability. recommendation the Council may issue Council’s contemplated A number of commenters provided under section 120 of the Dodd-Frank recommendations about the Council’s recommendation. In cases where the Act. As described below, the Council primary financial regulatory agency engagement with regulators or industry made changes to the Final Guidance in stakeholders in the activities-based would not be expected to conduct such response to these comments, because it an analysis, the Council itself will— approach. Several commenters stated has determined that such an analysis that engagement with primary regulators prior to making a final would increase the rigor of the Council’s recommendation—conduct an analysis, and companies should be a key recommendations under section 120. component of the activities-based using empirical data, to the extent approach, and another stated that the 5. Recommendations Under Section 120 available, of the benefits and costs of the Council should strengthen the role of of the Dodd-Frank Act actions that the primary financial the primary regulator in activities-based Under section 120 of the Dodd-Frank regulatory agency would be expected to approach step one, with a presumption Act, the Council has authority to take in response to the contemplated supporting the primary regulator’s ‘‘provide for more stringent regulation recommendation. Where the Council findings. The Final Guidance makes of a financial activity’’ by publicly conducts its own such analysis, the clear that the Council will seek to take issuing nonbinding recommendations to specificity of its assessment of benefits advantage of existing regulators’ primary financial regulatory agencies to and costs would be commensurate with expertise and regulatory authorities to apply new or heightened standards and the specificity of the contemplated address any potential risk identified by safeguards for a financial activity or recommendation. In general, such an the Council during the activities-based practice conducted by certain financial assessment by the Council will include approach. One commenter stated that companies.20 a consideration of the benefits and costs the Council should communicate with The authority to issue to market participants and to the U.S. the primary regulator about existing recommendations to primary financial financial system and long-term regulations applicable to companies regulatory agencies under section 120 is economic growth. Where the Council engaged in financial activities that may one of the Council’s most formal tools conducts its own analysis, the Council be evaluated in connection with the for responding to potential risks to U.S. will make a recommendation under activities-based approach, any possible financial stability. Given the importance section 120 only if it believes that the changes to such regulations, and of this tool, and consistent with the results of its assessment of benefits and whether it can address the identified public comments on the Proposed costs support the recommendation. risk on an industry-wide basis. As Guidance, the Council believes that a Primary financial regulatory agencies discussed above, the Final Guidance has cost-benefit analysis should be have significant experience, knowledge, been revised to clarify that in its performed and made public in and expertise that can be useful in evaluation, the Council will consult connection with any recommendations determining the most efficient way to with relevant financial regulatory issued under section 120. The Final address a particular risk within their agencies and will take into account Guidance has been revised to provide regulatory jurisdiction. In every case, existing laws and regulations that may additional clarity on the process by prior to issuing a recommendation mitigate a potential risk to U.S. financial under section 120, the Council will stability. Several commenters stated that 20 Dodd-Frank Act section 120(a), 12 U.S.C. consult with the relevant primary the Council should coordinate with 5330(a). financial regulatory agency and provide

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notice to the public and opportunity for determination under section 113 of the C. Analytic Framework for Nonbank comment as required by section 120. Dodd-Frank Act. One commenter Financial Company Determinations In any case in which no primary requested that the Council clarify that The Proposed Guidance stated that financial regulatory agency exists for the activities-based approach is distinct the Council expects to advance beyond one or more nonbank financial from the determination process. The the activities-based approach, and companies conducting financial Final Guidance reflects the fact that the evaluate a nonbank financial company activities or practices identified by the process for evaluating a nonbank for a potential determination under Council as posing risks, the Council can financial company for a potential section 113 of the Dodd-Frank Act, only consider reporting to Congress on determination under section 113 of the in a limited set of circumstances— recommendations for legislation that Dodd-Frank Act is distinct from the namely, if (1) the Council’s would prevent such activities or process for an activities-based approach collaboration and engagement with the practices from threatening U.S. financial 21 under section 112 of the Dodd-Frank relevant financial regulatory agencies stability. The Council intends to make Act. Commenters made a number of using an activities-based approach does recommendations under section 120 of comments intended to ensure that not adequately address the potential risk the Dodd-Frank Act only to the extent sufficient analysis is conducted in the identified by the Council, or if the that its recommendations are consistent activities-based approach before the potential threat to U.S. financial with the statutory mandate of the Council initiates a designation analysis. stability is outside the jurisdiction or relevant primary financial regulatory One commenter stated that before authority of financial regulatory agency. considering a nonbank financial agencies, and (2) the potential threat One commenter stated that the identified by the Council is one that Council should use its authority under company for a potential determination, the Council should explain in writing could be addressed by a Council section 120 of the Dodd-Frank Act after determination regarding one or more informal and nonpublic actions have the empirical basis why the activities- based approach is insufficient. Several nonbank financial companies. Two been tried and deemed insufficient. As commenters stated that the Final noted above, if the Council, after other commenters stated that the Council should only move from the Guidance should be modified to state engaging with relevant financial that the Council may consider a regulatory agencies, believes those activities-based approach to a designation analysis if the primary nonbank financial company for a regulators’ actions are inadequate to potential determination only if a regulator of the relevant nonbank address an identified potential risk to potential threat ‘‘can only be adequately financial company states in writing that U.S. financial stability, the Council may addressed’’ through designation. While it cannot address the risk through an make formal public recommendations to the Council believes that the primary financial regulatory agencies activities-based approach. Other commenters’ proposed language would under section 120. Another commenter commenters recommended that the unduly restrict the Council’s ability to stated that the consent of the primary Council and relevant primary regulator respond to potential threats to financial financial regulatory agency should be prepare a list of the regulator’s findings stability, the Final Guidance has been required before the Council issues a in connection with the transition from revised, with respect to clause (2) above, recommendation under section 120. The the activities-based approach to a to add that the Council will only Council expects to issue designation analysis and that the evaluate a company for a designation if recommendations under section 120 Council should make a ‘‘written the potential threat identified is one that only after engaging with relevant finding’’ that it is moving to a could be effectively addressed by a financial regulatory agencies, but the designation analysis. Council determination. primary financial regulatory agency’s The Proposed Guidance stated that Following is a description of the consent is not required under section the Council or its Deputies Committee substantive analysis the Council would 120, and the Council believes that its would vote to commence review of a undertake regarding any nonbank consultation with regulators will be nonbank financial company in Stage 1. financial company under review for a more effective than the commenter’s Several commenters stated that the potential determination. proposed restriction on the Council’s Council should vote on any decision to discretion. 1. Statutory Standards and commence the review of a nonbank Considerations 6. Transition From Activities-Based financial company for a potential Title I of the Dodd-Frank Act defines Approach to Determination Process determination, and that such a vote a ‘‘nonbank financial company’’ as a The Proposed Guidance stated that if should not be delegable to the Deputies domestic or foreign company that is the activities-based approach did not Committee. In light of the significance ‘‘predominantly engaged’’ in ‘‘financial adequately address a potential risk of a Council determination, the Council activities,’’ other than bank holding identified by the Council, the Council agrees with these comments. companies and certain other types of may evaluate one or more individual Accordingly, the Final Guidance has firms.23 The Dodd-Frank Act provides nonbank financial companies for an been revised to provide that the Council that a company is ‘‘predominantly entity-specific determination under will vote to commence review of a engaged’’ in financial activities if either section 113 of the Dodd-Frank Act. nonbank financial company in Stage 1. (1) the annual gross revenues derived by Commenters provided various The Council’s vote before considering a the company and all of its subsidiaries recommendations on the procedural nonbank financial company for a from financial activities, as well as from steps that should be required for the potential determination will help ensure the ownership or control of insured Council to advance beyond the that sufficient analysis has been depository institutions, represent 85 activities-based approach and conducted in the activities-based percent or more of the consolidated commence an evaluation of a nonbank approach.22 annual gross revenues of the company; financial company for a potential or (2) the consolidated assets of the 22 See also the chart of Council votes that would 21 See Dodd-Frank Act section 120(d)(3), 12 occur at significant transition points in the 23 See Dodd-Frank Act section 102(a)(4), 12 U.S.C. U.S.C. 5330(d)(3). Council’s analysis, in section II(A)(2) above. 5311(a)(4).

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company and all of its subsidiaries on the availability of credit in such in favor of the activities-based approach. related to financial activities, as well as communities; One commenter stated that Congress • related to the ownership or control of The extent to which assets are managed intended that designation be the insured depository institutions, rather than owned by the company, and the mandatory and primary mechanism for extent to which ownership of assets under addressing risks to financial stability. represent 85 percent or more of the management is diffuse; 24 consolidated assets of the company. • The nature, scope, size, scale, Another stated that the Proposed The Dodd-Frank Act requires the concentration, interconnectedness, and mix Guidance imposed conditions that Federal Reserve to establish the of the activities of the company; conflicted with section 113 of the Dodd- requirements for determining whether a • The degree to which the company is Frank Act. Several commenters stated company is ‘‘predominantly engaged in already regulated by one or more primary that the proposed changes would make financial activities’’ for this purpose.25 financial regulatory agencies; designation unworkably lengthy, or • Section 113 of the Dodd-Frank Act The amount and nature of the financial would preclude its use to address authorizes the Council to subject a assets of the company; potential risks in advance of an • The amount and types of the liabilities nonbank financial company to emergency. Other commenters made of the company, including the degree of similar arguments regarding the benefits supervision by the Federal Reserve and reliance on short-term funding; and prudential standards if the Council • Any other risk-related factors that the of nonbank financial company determines that (1) material financial Council deems appropriate. designations. The Final Guidance is distress at the nonbank financial intended to ensure that the Council’s One commenter stated that the company could pose a threat to U.S. work is clear, transparent and Council should make clear that financial stability (the ‘‘First analytically rigorous, and to enhance designation of certain entities, like Determination Standard’’), or (2) the the Council’s engagement with mutual funds and their managers, is nature, scope, size, scale, concentration, companies, regulators, and other inappropriate. Another commenter interconnectedness, or mix of the stakeholders. By issuing clear and stated that designation is the wrong activities of the nonbank financial transparent guidance, the Council seeks approach for capital markets firms, company could pose a threat to U.S. to provide the public with sufficient because it applies rules designed for financial stability (the ‘‘Second information to understand the Council’s banks to non-banks. Several Determination Standard’’). The analytic concerns regarding risks to U.S. commenters stated that the Federal framework in the Final Guidance financial stability, while appropriately Reserve should exempt from focuses primarily on the First protecting information submitted by designation certain types of nonbank Determination Standard, because risks companies and regulators to the financial companies that do not exhibit to financial stability (such as asset fire Council. The Final Guidance does not certain risk factors, pursuant to section sales or financial market disruptions) prohibit the Council from considering a 170 of the Dodd-Frank Act. The Council are most commonly propagated through nonbank financial company for does not intend to provide industry- a nonbank financial company when it is potential designation, in appropriate based exemptions from potential in distress. circumstances. The Final Guidance determinations under section 113 of the The Council is statutorily required to makes clear that the Council may Dodd-Frank Act. The Council would take into account the following pursue entity-specific determinations evaluate industry- or firm-specific considerations in making a under section 113 of the Dodd-Frank factors as part of the assessment of any determination under section 113 of the Act if a potential risk or threat cannot nonbank financial company for Dodd-Frank Act: 26 be adequately addressed through an potential designation. Therefore, based activities-based approach. The Council • The extent of the leverage of the on these comments, the Final Guidance anticipates it would consider a nonbank company; • has been revised to make clear that the financial company for a potential The extent and nature of the off–balance- information relevant to an in-depth determination under section 113 only in sheet exposures of the company; • The extent and nature of the transactions analysis of a nonbank financial rare instances, such as if the products, and relationships of the company with other company may vary based on the activities, or practices of a company that significant nonbank financial companies and nonbank financial company’s pose a potential threat to U.S. financial significant bank holding companies; characteristics. One commenter stated stability are outside the jurisdiction or • The importance of the company as a that the Council should consider how authority of financial regulatory source of credit for households, businesses, the enhanced prudential standards that agencies. Further, the Final Guidance and State and local governments and as a apply to designated nonbank financial does not limit the ability of the Council source of liquidity for the U.S. financial companies should be tailored to specific to waive or modify the procedural system; types of nonbank financial companies. requirements related to nonbank • The importance of the company as a source of credit for low-income, minority, or The Council has statutory authority to financial company designations if the underserved communities, and the impact make recommendations to the Federal Council determines that such action is that the failure of such company would have Reserve concerning the establishment necessary or appropriate to prevent or and refinement of prudential standards mitigate threats posed by a nonbank 24 See Dodd-Frank Act section 102(a)(6), 12 U.S.C. and other requirements applicable to financial company to U.S. financial 5311(a)(6). designated nonbank financial stability.28 25 See Dodd-Frank Act section 102(b), 12 U.S.C. companies; 27 the Council may consider, The Final Guidance clarifies several 5311(b). The Federal Reserve published a final rule terms used in the Dodd-Frank Act that in April 2013 establishing the requirements for at a future date, whether to issue such determining if a company is ‘‘predominantly recommendations. are not defined in the Act, including engaged in financial activities.’’ See 12 CFR 242.3. Several other commenters generally ‘‘company,’’ ‘‘material financial 26 See Dodd-Frank Act section 113(a)(2), 12 U.S.C. opposed to the proposal stated that the distress,’’ and ‘‘threat to the financial 5323(a)(2). This list reflects the statutory Council’s designation authority is a vital stability of the United States.’’ The Final considerations applicable to a determination with respect to a U.S. nonbank financial company. The tool that should not be de-emphasized Guidance defines ‘‘threat to the Council is required to consider corresponding factors in making a determination with respect to 27 See Dodd-Frank Act section 115, 12 U.S.C. 28 See Dodd-Frank Act section 113(f), 12 U.S.C. a foreign nonbank financial company. 5325. 5323(f), 12 CFR 1310.22.

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financial stability of the United States’’ liabilities will not be deemed to become risks at the company with the regulator. by reference to the potential for ‘‘severe subject to the Council determination. At During the determination process, the damage on the broader economy,’’ in the request of the designated nonbank Council will continue to encourage the contrast to the definition in the 2012 financial company, the Council may regulator to address relevant risks using Interpretive Guidance, which refers to engage in discussions with the company the regulator’s existing authorities. ‘‘significant’’ damage. The Council to evaluate the structure of any Other commenters provided specific intends to interpret the term ‘‘company’’ transaction involving a potential analytical recommendations to the to include any corporation, limited successor. Further, as discussed in Council, including that the Council liability company, partnership, business section V of the Final Guidance, a should consider market risks in trust, association, or similar nonbank financial company that is conjunction with the analysis of a organization.29 The Proposed Guidance subject to a final determination of the nonbank financial company’s liquidity stated that the Council intends to Council may request a reevaluation of risk; the Council should assess the interpret ‘‘nonbank financial company’’ the determination before the next ability of financial markets to absorb as including any successor of a required annual reevaluation, in asset fire sales; and, when analyzing company that is subject to a final appropriate cases. The Final Guidance leverage, the Council should distinguish determination of the Council. Several has been revised to make clear that if a between long and short exposures. The commenters stated that the Council nonbank financial company subject to a Council has not revised the Final should either eliminate the ‘‘successor’’ final determination of the Council sells Guidance to address these comments language, or limit successors to those or otherwise transfers a majority of its but intends to consider such factors in entities that succeed to substantially all assets or liabilities, the acquirer can use its analyses as appropriate. the designated company’s assets and this reevaluation process to seek a 2. Transmission Channels liabilities. rescission of the determination upon The Council agrees with commenters consummation of its transaction. The Final Guidance explains that the that the proposed interpretation of Several commenters stated that the Council’s evaluation of a nonbank ‘‘nonbank financial company’’ was Council should add specificity financial company for a potential overly broad. The Final Guidance has regarding certain definitions in the determination will focus primarily on therefore been revised to narrow the Proposed Guidance, such as how the negative effects of the proposed interpretation and further ‘‘impairment of financial intermediation company’s material financial distress, or clarify which entity would be subject to or of financial market functioning,’’ of the nature, scope, size, scale, a Council determination in the event of ‘‘severe damage on the broader concentration, interconnectedness, or a sale that involves the transfer of a economy,’’ ‘‘overall stress in the mix of the company’s activities, could majority, but not all, of a designated financial services industry,’’ and ‘‘weak be transmitted to or affect other firms or nonbank financial company’s assets or macroeconomic environment.’’ The markets, thereby causing a broader liabilities. The Final Guidance states Council believes that these definitions impairment of financial intermediation that the Council intends to interpret the accurately reflect the statutory or of financial market functioning. The statutory term ‘‘nonbank financial requirements and the nature of the Council has identified three company supervised by the Board of threat that the Council’s authority under transmission channels as most likely to Governors’’ as including any nonbank the Dodd-Frank Act seeks to mitigate. facilitate the transmission of these financial company that acquires, Attempting to define them with greater negative effects. These transmission directly or indirectly, a majority of the specificity could unacceptably limit the channels are: (1) The exposure assets or liabilities of a company that is Council’s discretion in a situation that transmission channel; (2) the asset subject to a final determination of the is not precisely foreseeable. liquidation transmission channel; and Council. As a result, if a nonbank The Council received a number of (3) the critical function or service financial company subject to a final comments regarding its analysis in the transmission channel. While these determination of the Council sells or designation context. One commenter transmission channels were also otherwise transfers a majority of its stated that the Council should defer to described in the 2012 Interpretive assets or liabilities, the acquirer, rather the nonbank financial company’s Guidance, the Final Guidance than the remaining small entity, will primary regulator during the analysis, substantially enhances and clarifies the succeed to and become subject to the and another stated that the Council Council’s analyses under these three Council’s determination.30 This new should provide a key role on the channels. The Council may also definition has the benefit of clarity, Council analytic team to staff of the consider other relevant channels because it relies on a simple balance primary regulator, and solicit input from through which risks could be sheet-related test to determine whether industry and academic economists. The transmitted from a particular nonbank an entity succeeds to, and becomes Council will consult with a company’s financial company and thereby pose a subject to, a Council determination. primary financial regulatory agency (if threat to U.S. financial stability. This definition also makes clear that the any) when assessing a company for a. Exposure Transmission Channel acquirer of a minority of a designated potential designation. A company under nonbank financial company’s assets or review in Stage 1 or Stage 2 may Under the exposure transmission voluntarily submit to the Council any channel, the Council will evaluate 29 The statutory definition of ‘‘nonbank financial information it deems relevant to the whether a nonbank financial company’s company’’ excludes bank holding companies and Council’s evaluation. In consideration of creditors, counterparties, investors, or certain other types of companies. Dodd-Frank Act the benefits that the Council will derive other market participants have direct or section 102(a)(4), 12 U.S.C. 5311(a)(4). 30 In narrowing and clarifying its interpretation of from extensive engagement with a indirect exposure to the nonbank ‘‘nonbank financial company supervised by the company’s primary financial regulatory financial company that is significant Board of Governors,’’ the Council is guided by agency, the Council will actively solicit enough to materially and adversely general principles of corporate law under which an the regulator’s views regarding risks at affect those or other creditors, acquirer of another company’s assets may be liable for obligations of the seller in certain situations, the company and potential means to counterparties, investors, or other including if the purchaser is merely a continuation mitigate those risks, and will share its market participants and thereby pose a of the seller. preliminary views regarding potential threat to U.S. financial stability. Among

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other factors, the Council expects to deterioration in asset pricing or market channel, the Council may consider the evaluate the amounts of exposures, the functioning could pressure other nonbank financial company’s activities degree of protection for the counterparty financial firms to sell their holdings of and critical functions and the under the terms of transactions, whether affected assets in order to maintain importance of those activities and the largest counterparties include large adequate capital and liquidity, which, functions to the U.S. financial system, financial institutions, and the in turn, could produce a cycle of asset including how those activities and company’s leverage and size. The sales that could lead to further market functions would be performed by the Council will also consider the exposures disruptions. The Council will also company or other market participants in that counterparties and other market consider the extent to which assets are the event of the company’s material participants have to a nonbank financial managed rather than owned by the financial distress; the competitive company arising from the company’s company. The Council’s analysis of the landscape for markets in which a capital markets activities. The Council asset liquidation transmission channel nonbank financial company participates expects to consider a variety of factors will focus on three central factors: (1) and for the services it provides; the in connection with this analysis, such as Liquidity of the company’s liabilities; company’s market share in specific the amount and nature of, and (2) liquidity of the company’s assets; product lines; and the ability of counterparties to, the company’s and (3) potential fire sale impacts. substitutes to replace a service or outstanding debt (regardless of term) When analyzing the liquidity of the function provided by the company, and other liabilities, derivatives company’s liabilities, the Council will among other factors. transactions (which may be measured assess the company’s liquidity risk by The Council received a number of on the basis of gross notional amount, reviewing factors such as the company’s comments regarding the transmission net fair value, or potential future short-term financial obligations, channels. One commenter stated that exposures), and securities financing financial arrangements that can be the transmission channels should refer transactions, among others. The Council terminated by counterparties and to existing regulations or policies that will also consider applicable factors, therefore become short-term, and long- relate to financial stability. The Council including existing regulatory term liabilities that may come due in a is statutorily required to take into requirements, that may mitigate short-term period, among other factors. account the degree to which the potential risks under the exposure The Council will also evaluate the nonbank financial company is already transmission channel. The Final company’s leverage (for example, by regulated by one or more primary Guidance notes that the Council will assessing total assets and total debt financial regulatory agencies, and this consider the extent to which assets are measured relative to total equity, and analysis will focus on the extent to managed rather than owned by the derivatives liabilities and off-balance which existing regulation of the company, in recognition of the distinct sheet obligations relative to total company mitigates the potential risks to nature of exposure risks when the equity), as well as the company’s short- financial stability identified by the company is acting as an agent rather term debt ratio. When analyzing the Council. than as principal. In particular, in the liquidity of the company’s assets, the One commenter stated that in the case of a nonbank financial company Council will consider which assets the asset liquidation transmission channel, that manages assets on behalf of company could rapidly liquidate, if the Council should establish a basis for customers or other third parties, the necessary, to satisfy its obligations. concluding that a decline in asset third parties’ direct financial exposures Finally, when analyzing potential fire prices, and resulting disruptions or are often to the issuers of the managed sale impacts, the Council will consider losses, poses a threat to financial assets, rather than to the nonbank the potential effects of the company’s stability. The Final Guidance has been financial company managing those asset liquidation on markets and market revised to clarify that, under the asset assets. Finally, the Council will evaluate participants. liquidation channel, the Council will the potential for contagion in consider whether a nonbank financial c. Critical Function or Service company holds assets that, if liquidated conjunction with other factors Transmission Channel summarized above when evaluating risk quickly, could pose a threat to U.S. under this channel. As part of this Finally, under the critical function or financial stability by, for example, assessment, the Council will consider service transmission channel, the causing a fall in asset prices that relevant industry-specific historical Council will consider the potential for significantly disrupts trading or funding examples, the scope of the company’s a nonbank financial company to become in key markets or causes significant interconnectedness with large financial unable or unwilling to provide a critical losses or funding problems for other institutions, and market-based or function or service that is relied upon firms with similar holdings. regulatory factors that may mitigate the by market participants and for which Commenters also stated that the Council risk of contagion, among other factors. there are no ready substitutes and should establish a basis for concluding thereby pose a threat to U.S. financial that the risks identified under each b. Asset Liquidation Transmission stability. This analysis considers the transmission channel could pose a Channel extent to which other firms could threat to financial stability, and should Under the asset liquidation provide similar financial services in a take into account mitigating factors. The transmission channel, the Council will timely manner at a similar price and Final Guidance has been revised to consider whether a nonbank financial quantity if a nonbank financial company provide that the analysis under each company holds assets that, if liquidated withdraws from a particular market, a transmission channel relates to the quickly, could pose a threat to U.S. factor commonly known as potential threat to U.S. financial financial stability by, for example, ‘‘substitutability.’’ Substitutability also stability, and that the Council will causing a fall in asset prices that captures situations in which a nonbank consider applicable factors that may significantly disrupts trading or funding financial company is the primary or mitigate potential threats under each in key markets or causes significant dominant provider of services in a transmission channel. losses or funding problems for other market that the Council determines to Several commenters provided firms with similar holdings. The be essential to U.S. financial stability. industry-specific comments with Council may also consider whether a When evaluating this transmission respect to the transmission channels.

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One commenter stated that the Council that the Final Guidance state that the the Council under section 113 of the should include examples of risk- Council expects to discuss these matters Dodd-Frank Act, because in other cases mitigating features of the insurance with the regulatory agency. The Final doing so would not affect the outcome sector, such as recognizing insurance Guidance notes that the Council will of the Council’s analysis. separate accounts, and mechanisms that consult with the relevant primary The Council will consider the benefits mitigate potential fire sales of assets financial regulatory agency during both of a determination to the U.S. financial resulting from policyholder withdrawals Stage 1 and Stage 2. When consulting system, long-term economic growth, and or surrenders. The Final Guidance has with a company’s primary financial the nonbank financial company due to been revised to make clear that the regulatory agency (if any), the Council additional regulatory and supervisory Council will consider applicable factors expects to discuss the company’s requirements resulting from the that may mitigate potential risks under complexity, opacity, and resolvability, determination, including the benefits of the exposure transmission channel, as well as the likelihood of its material the prudential standards adopted by the such as the use of insurance funds to financial distress, taking into account a Federal Reserve under section 165 of the limit counterparty exposures or other period of overall stress in the financial Dodd-Frank Act. When evaluating transactions that reallocate risk to well- services industry and a weak potential benefits to the U.S. financial capitalized entities. Several commenters macroeconomic environment (discussed system and long-term economic growth supported the statement in the Proposed in detail below). arising from a determination, the Guidance that the Council will consider Council may consider whether the 4. Existing Regulatory Scrutiny the extent to which assets are managed determination enhances U.S. financial rather than owned by the company. Consistent with section 113 of the stability and mitigates the severity of Other comments highlighted factors that Dodd-Frank Act, the Final Guidance economic downturns by reducing the may limit potential risks to financial explains that the Council will consider likelihood or severity of a potential stability arising from asset managers. the degree to which a nonbank financial financial crisis, among other factors. The Final Guidance has been revised to company is already regulated by one or With respect to company-specific make clear that in its analyses under the more primary financial regulatory benefits, a company subject to a transmission channels, the Council will agencies. When considering existing determination may derive benefits from consider applicable factors that may regulatory scrutiny, the Council may anticipated new or increased limit the transmission of risk, such as weigh factors such as the requirements, including, for example, a existing regulatory requirements, comprehensiveness of the regulatory lower cost of capital or higher credit collateralization, bankruptcy-remote regime, the extent to which the ratings upon meeting its post- structures, or guarantee funds that company’s primary financial regulatory designation regulatory and supervisory reduce counterparties’ exposures to the agency has imposed risk-management requirements. nonbank financial company or mitigate standards as relevant to the type of When evaluating the costs of a incentives for customers or company, regulators’ processes for inter- determination, the Council will counterparties to withdraw funding or regulator coordination, and the extent to consider not only the cost to the assets. The Council’s determination which existing regulation of the nonbank financial company from with respect to a nonbank financial company has mitigated the potential anticipated new or increased regulatory company will be based on an evaluation risks to financial stability identified by and supervisory requirements in of whether the nonbank financial the Council. connection with a determination, but also costs to the U.S. economy. Relevant company meets the statutory standards, 5. Cost-Benefit Analysis and Likelihood costs to the company will likely include taking into account the statutory of Material Financial Distress considerations set forth in section 113 of costs related to risk-management the Dodd-Frank Act, and any other risk- a. Cost-Benefit Analysis requirements, supervision and related factors that the Council deems Under the Final Guidance, the examination, and liquidity appropriate. While the Council does not Council will perform a cost-benefit requirements. When evaluating the costs intend to provide industry-based analysis before making any of a determination to the U.S. economy, exemptions from potential determination under section 113. The the Council will assess the impact of the determinations under section 113 of the Council proposes to make a determination on the availability and Dodd-Frank Act, the Council intends to determination under section 113 only if cost of credit or financial products in give these types of mitigating factors the expected benefits justify the relevant U.S. markets, among other due consideration in its analysis of any expected costs that the determination factors. nonbank financial company for a would impose.31 The key elements of The majority of the commenters potential determination. regulatory analysis include (1) a supported the proposal to perform a statement of the need for the proposed cost-benefit analysis before making any 3. Complexity, Opacity, and determination under section 113. Resolvability action, (2) an examination of alternative approaches, and (3) an evaluation of the Several commenters provided In addition to the three transmission benefits and costs of the proposed recommendations regarding the channels, the Final Guidance explains action and the main alternatives.32 The Council’s analysis, including that the that the Council also intends to consider Council will conduct this analysis only Council’s analysis should be empirically a nonbank financial company’s in cases where the Council is based or use historical data (not complexity, opacity, and resolvability concluding that the company meets one assumptions), with estimates of indirect when evaluating whether the company of the standards for a determination by costs. The Final Guidance has been poses a risk to U.S. financial stability. revised to add greater specificity As part of this analysis, the Council may 31 See MetLife, Inc. v. Financial Stability regarding the Council’s cost-benefit assess the complexity of the nonbank Oversight Council, 177 F. Supp.3d 219, 242 (D.D.C. analysis. The Final Guidance makes financial company’s legal, funding, and 2016) (quoting 12 U.S.C. 5323(a)(2)(K) and clear that when possible, the Council Michigan v. Environmental Protection Agency, 135 operational structure, and any obstacles S. Ct. 2699, 2707 (2015)). will quantify reasonably estimable to the rapid and orderly resolution of 32 See Office of Management and Budget Circular benefits and costs, using ranges, as the company. One commenter requested A–4 (Sept. 17, 2003). appropriate, and based on empirical

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data when available. If such benefits or One commenter stated that the costs and that distress is reasonably likely to costs cannot be quantified in this benefits of designation are difficult to occur and that the distress is reasonably manner, the Council will explain why predict in advance, in part because it is likely to inflict severe damage on the such benefits or costs could not be impossible to estimate the likelihood, economy as a whole, using empirical quantified or estimated. The Council magnitude, or timing of a future and historical data. The criterion is not also expects to consider benefits and financial crisis. The Council believes included in the Final Guidance, because costs qualitatively. To the extent that rigorous cost-benefit analysis is it would impose an unduly high burden feasible, the Council will attempt to consistent with thoughtful decision- on the Council’s ability to designate a assess the relative importance of any making, and that it is an important step nonbank financial company. such qualitative elements. At the same to ensure that the Council makes a Several other commenters opposed time, the Final Guidance recognizes that determination under section 113 only if the proposal that the Council will assess it may not be possible to assess with any the expected benefits justify the the likelihood of a company’s material degree of certainty certain potential expected costs of the determination. financial distress. Three commenters benefits or costs, including indirect Finally, two commenters stated that stated that the Dodd-Frank Act does not benefits or costs. requiring cost-benefit analysis will make require that the Council assess the One commenter stated that the it easier for a designated company to likelihood of a company’s material Council should not designate a nonbank litigate its designation. The Council will financial distress. However, the Council financial company unless the Council strive to perform analytically robust believes that performing such a can demonstrate that designation would cost-benefit analysis in a timely manner. likelihood assessment is an important effectively mitigate the risk posed by the part of the Council’s assessment of the firm. Another stated that the Council b. Likelihood of Material Financial extent to which a determination may should make clear that the Council will Distress promote U.S. financial stability. Several not designate a nonbank financial Consistent with sound risk regulation, commenters stated that the Dodd-Frank company unless designation mitigates the Council will consider not only the Act requires the Council to assume the the risk to financial stability better than impact of an identifiable risk, but also material financial distress of a nonbank available alternatives. The Council the likelihood that the risk will be financial company. One commenter believes these concerns are adequately realized. The Council will therefore stated that the Council has a duty to addressed by the activities-based assess the likelihood of a company’s designate a nonbank financial company approach, as well as the Council’s material financial distress, based on its when the Council determines that the approach to making a determination vulnerability to a range of factors, when company could pose a risk to financial under section 113 only if the expected evaluating the overall impact of a stability if it fails, and that the Council benefits justify the expected costs that Council determination for any company does not need to predict the probability the determination would impose. under review under the First of failure or the mechanism for that Several commenters stated that the Determination Standard. The failure. The Council has authority under Council should conduct its cost-benefit description of the Council’s analytical section 113 of the Dodd-Frank Act, analysis based on the specific process for assessing the likelihood of a including under section 113(a)(2)(K), regulations that would apply to a company’s material financial distress which authorizes the Council to nonbank financial company if it were has been revised based on public consider ‘‘any other risk-related factors designated. The Council declines to comments. The Final Guidance provides that the Council deems appropriate,’’ to incorporate this requirement into its that factors the Council may consider consider the vulnerability of a nonbank cost-benefit analysis, because it is not include leverage (both on and off financial company to material financial logistically practicable for the Federal balance sheet), potential risks associated distress as part of the Council’s analysis. Reserve, which must establish such with asset reevaluations (whether such Commenters opposed to the Council’s prudential standards by rule or order, to reevaluations arise from market assessment of the likelihood of material provide this information to the Council disruptions or severe macroeconomic financial distress raised a number of before the relevant company has been conditions), reliance on short-term other objections, including that this designated. Another commenter stated funding or other fragile funding assessment will be a significant barrier that the Council should apply a cost- markets, maturity transformation, and to designation; no accurate metrics exist benefit analysis to any additional risks from exposures to counterparties that would enable the Council to regulation the Council considers. or other market participants. The measure the likelihood of a company’s However, the Council itself does not Council’s assessment may rely upon material financial distress; and it is adopt regulations applicable to historical examples regarding the difficult to anticipate the catalyst, designated nonbank financial characteristics of financial companies dynamics, or timing of a financial crisis. companies. that have experienced financial distress, The Council believes that its analysis, Several commenters opposed the but may also consider other risks that do including its consultations with a proposal to perform a cost-benefit not have historical precedent. The company’s primary financial regulatory analysis before making determinations Council’s analysis of the vulnerability of agency and its assessment of the under section 113. Several commenters a nonbank financial company to statutory considerations, will enable the noted that the Dodd-Frank Act does not material financial distress will be Council to evaluate the likelihood of the discuss a cost-benefit analysis in conducted taking into account a period company’s material financial distress. connection with section 113. Two of overall stress in the financial services Several commenters also stated that the commenters stated that the costs that industry and a weak macroeconomic Council’s determination regarding the will apply to a particular firm will environment. likelihood of a company’s material depend on the supervisory and Several commenters supported the financial distress could publicly signal regulatory regime the Federal Reserve proposal that the Council will assess the concern regarding a firm’s health, which establishes after the designation. One likelihood of a company’s material could harm the company. The Council commenter stated that cost-benefit financial distress. One commenter believes that the marketplace will, in analysis is a burdensome, time- stated that for any determination, the most cases, consider the same consuming, and imprecise methodology. Council should be required to determine fundamental factors that the Council

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evaluates for purposes of independently reevaluations of any such more information and tools to mitigate assessing the likelihood of material determinations. those risks prior to any Council determination. One commenter financial distress at a company that is 1. Stage 1: Preliminary Evaluation of being evaluated for a potential Nonbank Financial Companies recommended that the Final Guidance determination. Finally, several provide greater detail regarding the pre- commenters argued that the Council In the first stage of the determination designation ‘‘off-ramp.’’ The Final should interpret section 113 of the process, the Council will notify Guidance has been revised to clarify Dodd-Frank Act in a manner that is nonbank financial companies identified that the Council will seek to enable a consistent with MetLife v. FSOC,33 as potentially posing risks to U.S. company under review to understand while several others argued it should financial stability. Under the Final the focus of the Council’s analysis, Guidance, the Council will engage not. Where appropriate, the Final which may enable the company to act extensively with the relevant company Guidance reflects the Council’s view to mitigate any threats to U.S. financial and its financial regulators during Stage regarding the extent to which it should stability and thereby potentially avoid 1. The Council’s preliminary analysis becoming subject to a Council adopt the analysis from that judicial will be based on quantitative and 34 determination. One commenter stated decision. qualitative information available to the that the Council should undertake early Council primarily through public and D. Determination and Annual engagement with firms during the regulatory sources. In addition, a Reevaluation Process designation process. The Council company under review in Stage 1 may believes that its approach in Stage 1, as As noted above, the Council will voluntarily submit to the Council any prioritize an activities-based approach information it deems relevant to the described above, addresses this for identifying, assessing, and Council’s evaluation and may, upon comment. addressing potential risks to financial request, meet with staff of Council Following the preliminary evaluation stability. The Council may, however, members and member agencies who are in Stage 1, the Council may decide not subject a nonbank financial company to leading the Council’s analysis. In order to evaluate the company further, or it review for an entity-specific to reduce the burdens of review on the may vote to commence a more detailed determination under section 113 of the company, the Council will not require analysis of the company by advancing it Dodd-Frank Act if the activities-based the company to submit information to Stage 2. One commenter approach would not adequately address during Stage 1. recommended that if a Stage 1 review is potential risks to U.S. financial In consideration of the benefits that terminated, there should be a waiting stability.35 As noted above, the Final the Council will derive from extensive period before Stage 1 can be restarted. Guidance provides that the Council will engagement with a company’s primary Because such a waiting period could vote to commence review of a nonbank financial regulatory agency, the Council prevent the Council from acting to will actively solicit the regulator’s views financial company in Stage 1. address a potential threat to financial regarding risks at the company and stability even if new developments or As proposed, the Final Guidance potential means to mitigate those risks, new information arose, this requested condenses the prior three-stage and will share its preliminary views change has not been made. determination process into two stages regarding potential risks at the company As noted above, the Final Guidance by eliminating prior stage 1, makes with the regulator. The Final Guidance condenses the prior three-stage process other procedural improvements, and notes that the Council will consult with for a determination under section 113 incorporates certain provisions of the the primary financial regulatory agency into two stages, by eliminating prior 2015 Supplemental Procedures.36 during both Stage 1 and Stage 2. Several stage 1, which had been established by Following is a description of the commenters expressed support for this the 2012 Interpretive Guidance. Under processes set forth in the Final approach, and stated that engagement prior stage 1, a set of uniform Guidance for the Council’s evaluation of with primary regulators should be a key quantitative metrics was applied to a a nonbank financial company for a component of the determination broad group of nonbank financial potential determination under section process. companies in order to identify nonbank 113 and the Council’s annual Enhanced engagement in Stage 1 is intended to allow a company under financial companies for further evaluation and to provide clarity for 33 review to provide the Council with 177 F. Supp.3d 219 (D.D.C. 2016). other nonbank financial companies that 34 The U.S. District Court for the District of relevant information, which will help to Columbia in MetLife v. FSOC held that the Council ensure that the Council is making likely would not be subject to had acted in an arbitrary and capricious manner. decisions based on a diverse array of evaluation for a potential determination. Specifically, the court stated that ‘‘FSOC data and rigorous analysis, and to Several commenters expressed views on purposefully omitted any consideration of the cost the elimination of the stage 1 of designation to MetLife. Thus, FSOC assumed the provide the company with greater upside benefits of designation (even without visibility into the aspects of its business thresholds. Prior stage 1 had generated specific standards from the Federal Reserve) but not that may pose risks to U.S. financial confusion among firms and members of the downside costs of its decision.’’ 177 F.Supp.3d stability. Another goal of the enhanced the public and was not compatible with 219, 230. The Final Guidance seeks to ensure that the prioritization of an activities-based future Council determinations comport with the engagement in Stage 1 is to enable the court’s decision and consider costs. company to take actions in response to approach, so it has been eliminated. 35 As noted above, the Council anticipates it the Council’s concerns, thereby 2. Transition From Stage 1 to Stage 2 would consider a determination under section 113 providing a pre-designation ‘‘off-ramp,’’ only in rare instances, such as if the products, activities, or practices of a company that pose a while not burdening a company with The Proposed Guidance did not potential threat to U.S. financial stability are the relatively higher costs that may be specify whether a Council vote would outside the jurisdiction or authority of financial incurred during a Stage 2 evaluation. By be required to advance a nonbank regulatory agencies. making a company aware of the financial company from Stage 1 to Stage 36 As discussed in section II(A)(1) above, the 2. Based on public comments, the Final Proposed Guidance eliminates the six-category potential risks the Council has framework described in the 2012 Interpretive identified during its preliminary review, Guidance has been revised to specify Guidance. the Council seeks to give the company that a Council vote is required to

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advance a company to Stage 2.37 For any submit any other information that it However, the Council expects that any company under review in Stage 1 that deems relevant to the Council’s information that the Council relies on to is regulated by a primary financial evaluation, and the Council will make support a determination regarding a regulatory agency or home country staff representing Council members nonbank financial company under supervisor, the Council will consult available to meet with the section 113 of the Dodd-Frank Act will with the regulator, as appropriate, representatives of the company, to be included in the Council’s written before the Council votes on whether to explain the evaluation process and the explanation of the final determination, advance the company to Stage 2. One framework for the Council’s analysis. If which will be provided to the company. commenter stated that the primary the analysis in Stage 1 has identified Several other commenters stated that regulator should have the primary role specific aspects of the company’s the Council should provide a nonbank in advancing a firm from Stage 1 to operations or activities as the primary financial company under evaluation Stage 2. As described above, the Final focus for the evaluation, staff will notify with a written description of its Guidance provides for extensive the company of those issues. Several potential threat to financial stability in engagement between the Council and commenters stated that the Final Stage 1, or an explanation why an the primary financial regulatory agency Guidance should provide that Council activities-based approach would not during the determination process. The members and their deputies are mitigate the potential threat. The Final Council does not, however, believe it is available to meet with nonbank Guidance provides that during Stage 1, appropriate to give the primary financial financial companies in Stage 1 and the Council intends for staff of Council regulatory agency a specific additional Stage 2. The Final Guidance provides members and member agencies to role in advancing a firm from Stage 1 to for the Council’s Deputies Committee to explain to the company the key risks Stage 2. meet with a company in Stage 2, to that have been identified in the analysis. One commenter requested that the allow the company to present any However, because the review of the Council clarify that there is no information or arguments it deems company is preliminary and continues obligation to advance a nonbank relevant to the Council’s evaluation. In to change until the Council makes a financial company from Stage 1 to Stage addition, individual Council members final determination, these identified 2. The Council confirms that it will may determine that it is appropriate to risks may shift over time, so it is not advance a nonbank financial company meet with a nonbank financial company practicable to provide a company with to Stage 2 only if the Council under review, subject to the need to a written explanation of the potential determines that the company merits maintain a single administrative record threat to financial stability during Stage further review after the analysis in Stage and consistency in the information 1. 1.38 available to each of the Council Several commenters stated that the members. In addition, the Council will Council should share all Council 3. Stage 2: In-Depth Evaluation seek to continue its consultation with information with a nonbank financial In Stage 2, the Council will conduct the company’s primary financial company under review during Stages 1 an in-depth evaluation of any company regulatory agency or home country and 2, including any cost-benefit that the Council has determined in supervisor in a timely manner before the analysis, expert, or regulatory analysis. Stage 1 merits additional review. Under Council makes any proposed or final Due to the preliminary nature of the the Final Guidance, the Council would determination, encouraging the relevant Council’s internal work product during Stages 1 and 2, sharing all of this continue in Stage 2 to engage financial regulator to address relevant information with the company under extensively with the relevant company risks using the regulator’s existing review would impose considerable and its existing regulators. authorities. The Council will notify the burdens on the Council, while not In Stage 2, the Council will request company when the Council believes necessarily providing the company with that the company provide information that the evidentiary record regarding the a clear understanding of the issues the that the Council deems relevant to its company is complete, before the Council is focusing on. Instead, the evaluation, which will involve both Council either makes any proposed Final Guidance reflects numerous qualitative and quantitative data. The determination regarding the company, procedural improvements to the Council will take certain preliminary or alternatively, notifies the company steps before requiring the submission of determination process compared to the that it is no longer being considered for 2012 Interpretive Guidance, which are reports from any nonbank financial a determination at that time. company that is regulated by a Council intended to facilitate the Council’s Several commenters provided engagement and transparency. The Final member agency or any primary financial recommendations regarding the regulatory agency; acting through the Guidance increases the Council’s transparency of the determination engagement with nonbank financial OFR, the Council will coordinate with process and the Council’s procedures these agencies and, whenever possible, companies and their regulators during for providing information to nonbank the determination process, balanced rely on information available from the financial companies under review. Two OFR or these agencies. with the Council’s resources and need commenters stated that the Council to perform the analysis in a timely The Council will take steps to should not consider information from facilitate a transparent review process manner. primary regulators that cannot, due to Several commenters stated that the with the company during Stage 2. confidentiality requirements, also be Council should provide a nonbank During Stage 2, the company may provided to the nonbank financial financial company with a written company under review. The Council explanation of the reasons for advancing 37 Under the Dodd-Frank Act, unless otherwise specified in the statute, the Council must make all expects to rely on data, research, and it from Stage 1 to Stage 2, and an decisions that it is authorized or required to make analysis from Council member agencies opportunity to respond, before by a majority vote of the voting members then and the OFR, among other sources, in advancing it to Stage 2. The process serving. Dodd-Frank Act section 111(f), 12 U.S.C. the determination process. Certain of under the Final Guidance for Stage 1 5321(f). and Stage 2 provides extensive 38 See also the chart of Council votes that would these materials may include internal occur at significant transition points in the work product and analysis that are not opportunities for a company to submit Council’s analysis, in section II(A)(2) above. intended for external distribution. information to the Council and to

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discuss that information with staff of Several commenters requested available to meet with the Council members and member agencies. additional changes to the procedures for representatives of the company. In In particular, the Final Guidance the Council’s hearings for nonbank addition, the Council will seek to provides that if the Council’s analysis in financial companies subject to proposed continue its consultation with the Stage 1 has identified specific aspects of determinations. The Council’s Hearing company’s primary financial regulatory the company’s operations or activities as Procedures, which are not being agency or home country supervisor in a the primary focus for the evaluation, amended at this time, provide for timely manner before the Council makes staff will notify the company of those transparent engagement between the any proposed or final determination, issues, although the issues will be Council and nonbank financial encouraging the relevant financial subject to change based on the ongoing companies. Further, under the Final regulator to address relevant risks using analysis. Further, during Stage 2, a Guidance, a company has extensive the regulator’s existing authorities. company may submit any information opportunities to submit information to These procedures should ensure that it deems relevant to the Council’s the Council and meet with adequate engagement between the evaluation, and the Council will make representatives of Council members and Council, the company under review, staff representing Council members member agencies during the Council’s and its primary financial regulatory available to meet with the review in Stage 2, which will precede agency. representatives of the company, to any proposed determination or hearing. Unchanged from the 2012 Interpretive explain the evaluation process and the The Council is therefore not adopting Guidance, when practicable and framework for the Council’s analysis. further changes related to its hearings. consistent with the purposes of the determination process, the Council will The Final Guidance also provides for 5. Final Determination the Council’s Deputies Committee to provide a nonbank financial company meet with a company in Stage 2, to After making a proposed with a notice of a final determination at allow the company to present any determination and holding any least one business day before publicly information or arguments it deems requested written or oral hearing, the announcing the determination. As a relevant to the Council’s evaluation. Council may make a final determination result, the Council generally will not in accordance with the Dodd-Frank Act issue any public notice regarding its 4. Proposed Determination; Hearing that the company will be subject to determination vote on the day of the The procedural steps related to the supervision by the Federal Reserve and vote; instead, to enable the company prudential standards. If the Council Council’s proposed determinations, adequately to prepare its public makes a final determination regarding hearings, and final determinations are disclosures regarding the Council’s the company, the Council will provide largely specified in section 113 of the determination, the first public the company with a written notice of Dodd-Frank Act. announcement by the Council will the Council’s final determination, generally be the day after the Council’s A nonbank financial company may be including an explanation of the basis for vote. Although this approach will result considered for a proposed the Council’s decision, and will also in a short delay in the public determination based on the analysis provide the company’s primary announcement of a Council vote on a performed in Stage 2. In the event the financial regulatory agency or home final determination, the benefit of Council votes to make a proposed country supervisor with the nonpublic enabling the company to prepare for the determination, the Council will issue a written explanation of the basis of the public announcement, and to review the written notice and explanation of the Council’s final determination, subject to Council’s materials for confidential, proposed determination to the appropriate protections for confidential sensitive business information before company, and will also provide the information. Under the Final Guidance, their public release, warrants the delay. company’s primary financial regulatory the Council expects that its explanation Other commenters provided agency or home country supervisor of the final basis for any determination recommendations related to the (subject to appropriate protections for will highlight the key risks that led to procedural steps for a final confidential information) with the the determination and include clear determination. Several commenters nonpublic written explanation of the guidance regarding the factors that were stated that the Council should separate basis for the proposed determination. In most important in the Council’s Council staff responsible for reviewing a accordance with section 113(e) of the determination. nonbank financial company from those Dodd-Frank Act, a nonbank financial One commenter recommended that responsible for determining whether company that is subject to a proposed the Final Guidance state that the designation is warranted, and one determination may request a nonpublic Council will assess all available commenter stated that the Council hearing before the Council to contest the alternatives before considering any should allow companies to examine the proposed determination. nonbank financial company for Council staff who conducted the Several commenters stated that the potential determination. Two analysis. While staff of the Council Council should provide the full commenters stated that the Council members and member agencies analyze evidentiary record to a nonbank should only designate a nonbank nonbank financial companies, the financial company in Stage 2 at least 30 financial company with the consent of decision makers are the voting members days before a proposed determination, its primary regulator. Under the Final of the Council, and the Council is not and give the company the opportunity Guidance, Stage 2 will include adopting these recommendations to review and comment on the numerous procedures to facilitate a regarding its staffing structure. One materials. The procedures under the robust and transparent review process commenter stated that the Council Final Guidance provide extensive with the company and its primary should allow firms to appeal their opportunities for engagement with financial regulatory agency. For designation to an ‘‘independent companies under review, including example, during Stage 2, the company authority.’’ The Dodd-Frank Act during Stages 1 and 2 and after a may submit any information that it provides that any nonbank financial proposed determination, so the Council deems relevant to the Council’s company subject to a final is not adopting these recommended evaluation, and the Council will make determination may challenge the changes. staff representing Council members Council’s action in court, which

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provides ample opportunity for an intended to incentivize designated process for doing so. The Council independent authority to review the companies to address the key factors believes that the post-designation off- determination.39 Two commenters that led to designation, which would ramp described above provides for a stated that before making a final promote the Council’s goal of reducing robust and streamlined review process. determination regarding a nonbank risks to U.S. financial stability. The As part of its review of a designated financial company, the Council should Council believes that this flexible company, the Council does not believe receive from the Federal Reserve a approach will limit its involvement in a it is appropriate to perform another cost- detailed, company-specific supervisory designated company’s business benefit analysis, in addition to the cost- plan. One of these commenters stated decisions and allow the company, rather benefit analysis performed prior to the that the Council should share the plan than the Council, to identify the most designation, in light of timing and with the relevant nonbank financial appropriate means to mitigate risks. resource constraints in the context of company. This recommendation has not The Final Guidance provides that in annual reevaluations of previous been incorporated into the Final the event the Council makes a final determinations. Guidance because it is not logistically determination regarding a company, the The Final Guidance also underscores practicable for the Federal Reserve, Council intends to encourage the that the Council applies the same which must establish such prudential company and, if appropriate, its standards of review in its annual standards by rule or order, to provide regulators to take steps to mitigate the reevaluations as the standard for an this information to the Council before potential risks identified in the initial determination regarding a the relevant company has been Council’s written explanation of the nonbank financial company: Either the designated. basis for its final determination. Except company’s material financial distress, or Several commenters expressed in cases where new material risks arise the nature, scope, size, scale, support for the greater analytical rigor over time, if a company adequately concentration, interconnectedness, or and process improvements reflected in addresses the potential risks identified mix of the company’s activities, could the Proposed Guidance. For example, in writing by the Council at the time of pose a threat to U.S. financial stability. the Council will provide each the final determination and in If the Council determines that the designated nonbank financial company subsequent reevaluations, the Council company no longer meets those with an opportunity for an oral hearing should generally be expected to rescind standards, the Council will rescind its before the Council once every five years its determination regarding the determination. The Final Guidance also at which the company can contest the company. To facilitate this process, stresses that, while the Council’s annual determination. companies are encouraged during reevaluation of a company subject to a annual reevaluations to submit 6. Annual Reevaluations of Nonbank final determination will generally focus information regarding any changes Financial Company Determinations on changes since the Council’s previous related to the company’s risk profile that review, the ultimate question the For any nonbank financial company mitigate the potential risks identified in Council will seek to assess is whether that is subject to a final determination, the Council’s final determination of the changes in the aggregate since the the Council is required by statute to company and in reevaluations of the company’s designation have caused the reevaluate the determination at least determination. If the company explains company to cease meeting the annually, and to rescind the in detail potential changes it could Determination Standards.40 determination if the Council determines make to its business to address the Several commenters stated that the that the company no longer meets the potential risks previously identified by Council should adopt a framework for statutory standards for a determination. the Council, staff of Council members evaluating the impact of its The Final Guidance incorporates a and Council member agencies will designations, and assess the number of additional procedural steps, endeavor to provide their feedback on effectiveness of designation regularly. not mandated by the Dodd-Frank Act, the extent to which those changes may For any nonbank financial company that for annual reevaluations, in order to address the potential risks. Consistent is subject to a final determination, the enhance engagement with companies with public comments, the Final Council is required by statute to and their regulators, and to increase Guidance provides that if a company reevaluate the determination at least transparency. One of the goals of these contests the Council’s determination annually, and to rescind the changes is to clarify the post- during the Council’s annual determination if the Council determines designation ‘‘off-ramp’’ process for a reevaluation, the Council will provide that the company no longer meets the company, which would enable the the company, its primary financial statutory standards for a designation. company to identify changes it could regulatory agency, and the primary The Final Guidance incorporates a consider making to address the potential financial regulatory agency of its number of additional procedural steps threat to financial stability identified by significant subsidiaries with a notice for annual reevaluations to enhance the Council, and receive feedback explaining the primary basis for any engagement with companies and their regarding whether those changes may decision not to rescind the regulators, and to increase transparency. address the Council’s concerns. One determination. The notice will address The measures should ensure that a commenter opposed to the off-ramp each of the material factors raised by the nonbank financial company is procedures stated that they would company in its submissions to the designated, or remains designated, only involve the Council in firms’ business Council contesting the determination if it meets the statutory standard for decisions, thereby increasing litigation during the annual reevaluation. designation. risk. The Council intends that this Several commenters expressed process should be flexible and tailored support for both the pre-designation and 40 In a reevaluation of a determination, the to the risks posed by designated post-designation ‘‘off-ramps’’. One Council may choose to consider only one companies, rather than hard-wired or commenter also stated that the Council Determination Standard, for example because should de-designate firms if the benefits changes that address the potential threats overly prescriptive. The process is previously identified by the Council under one of designation are not outweighing Determination Standard may also address potential 39 Dodd-Frank Act section 113(h), 12 U.S.C. costs, and another stated that the threats relevant to the other Determination 5323(h). Council should have a streamlined Standard.

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E. Other Comments Received generally intend to treat such authority to issue procedural rules 46 47 Several commenters provided information as confidential and not and policy statements. The Final recommendations about international publicly disclose such information Guidance describes the Council’s issues regarding the Proposed Guidance, without the consent of the providing interpretation of the statutory factors including international regulatory party. However, such information may and provides transparency to the public coordination and the relationship be used by the recipients for as to how the Council intends to between Council designations and the enforcement, examination, resolution exercise its statutory grant of Financial Stability Board’s (FSB’s) planning, or other purposes, subject to discretionary authority. Except to the identification of U.S. nonbank financial any appropriate limitations on the extent that the Final Guidance sets forth companies as global systemically disclosure of such information to third rules of agency organization, procedure, important institutions. The Council parties, taking into account factors or practice, the Council has concluded supports the promotion of regulatory including the need to preserve the that the Final Guidance does not have coordination at the international level, integrity of the supervision and binding effect; does not impose duties but is not expressing a view on its examination process. The Council on, or alter the rights or interests of, any member agencies’ roles in international believes that the additional person; does not change the statutory discussions. confidentiality restrictions suggested by standards for the Council’s decision Several commenters stated that the commenters generally would not making; and does not relieve the Council should commit in the Final materially increase the confidentiality of Council of the need to make entity- Guidance to ensuring the confidentiality information collected by the Council, specific determinations in accordance of all collected information. The Final due to requirements under the FOIA, or with section 113 of the Dodd-Frank Act. would harmfully constrain the Council’s Guidance notes that the Council is IV. Paperwork Reduction Act subject to statutory and regulatory ability to perform its evaluations of requirements to maintain the nonbank financial companies. The collection of information confidentiality of certain information Finally, other commenters raised contained in the Final Guidance has submitted to it by a nonbank financial various comments related to the been reviewed and approved by the company or its regulators.41 Under operations of the Council. One Office of Management and Budget in applicable law and the Council’s rules, commenter recommended that the Final accordance with the Paperwork the Freedom of Information Act (FOIA) Guidance should state that any Reduction Act of 1995 (44 U.S.C. and the applicable exemptions departure from the Final Guidance 3507(d)) under control 1505–0244. An thereunder apply to any data or should be treated as a modification that agency may not conduct or sponsor, and information submitted under the rule. In requires public comment (other than in a person is not required to respond to, addition, the Council’s FOIA rule emergency situations affecting a single a collection of information unless it applies to data and information received company that require immediate displays a valid control number by the Council.42 The Council expects action). The Council previously adopted assigned by the Office of Management that nonbank financial companies’ a rule stating that it will not amend or and Budget. submissions will likely contain or rescind its interpretive guidance on The collection of information under consist of ‘‘trade secrets and commercial nonbank financial company the Final Guidance is found in 12 CFR or financial information obtained from a determinations without soliciting public 1310.20–1310.23, which were added notice and comment,43 which the pursuant to the 2012 Final Rule and person and privileged or confidential’’ 48 and information that is ‘‘contained in or Council believes addresses this concern. Interpretive Guidance. The hours and costs associated with related to examination, operating, or III. Legal Authority of Council and preparing data, information, and reports condition reports prepared by, on behalf Status of the Final Guidance for submission to the Council constitute of, or for the use of an agency The Council has numerous authorities reporting and cost burdens imposed by responsible for the regulation or and tools under the Dodd-Frank Act to the collection of information. The supervision of financial institutions.’’ carry out its statutory purposes.44 The estimated total annual reporting burden These types of information are subject to Council expects that its response to any associated with the collection of withholding under exemptions 4 and 8 potential risk or threat to U.S. financial information in the Final Guidance is 20 of the FOIA (5 U.S.C. 552(b)(4) and (8)). stability will be based on an assessment hours, based on an estimate of one To the extent that nonbank financial of the circumstances. As the agency respondent. We estimate the cost companies’ submissions contain or charged by Congress with broad-ranging associated with this information consist of data or information not responsibilities under sections 112 and collection to be $9,000. These estimates subject to an applicable FOIA 113 of the Dodd-Frank Act, the Council are significantly lower than those in the exemption, that data or information has the inherent authority to promulgate Paperwork Reduction Act discussion in would be releasable under the FOIA. In addition, it should be noted that all interpretive guidance under those the 2012 Final Rule and Interpretive members of the Council, including both provisions that explains and interprets Guidance, because the Council expects its voting and non-voting members, will the statutory factors that the Council treat records of the Council in will consider when employing the standards it intends to apply in exercising its activities-based approach and discretion.’’ See, for example, Production Tool v. accordance with the Council’s FOIA Employment & Training Administration, 688 F.2d undertaking the determination 1161, 1166 (7th Cir. 1982). The Supreme Court has rule. When the Council and its members 45 provide non-public information to each process. The Council also has acknowledged that ‘‘whether or not they enjoy any other in connection with Council express delegation of authority on a particular 43 84 FR 8958 (March 13, 2019). question, agencies charged with applying a statute functions and activities, the recipients 44 See, for example, Dodd-Frank Act sections necessarily make all sorts of interpretive choices.’’ 112(a)(2), 113, 115, 120, 804, 12 U.S.C. 5322(a)(2), See U.S. v. Mead, 533 U.S. 218, 227 (2001). 41 See Dodd-Frank Act section 112(d)(5), 12 5323, 5325, 5330, 5463. 46 See Dodd-Frank Act section 111(e)(2), 12 U.S.C. U.S.C. 5322(d)(5); see also 2012 Final Rule and 45 Courts have recognized that ‘‘an agency 5321(e)(2). Interpretive Guidance at 21648–21649 and 12 CFR charged with a duty to enforce or administer a 47 See Association of Flight Attendants-CWA, 1310.20(e). statute has inherent authority to issue interpretive AFL–CIO v. Huerta, 785 F.3d 710 (D.C. Cir. 2015). 42 See 12 CFR 1310.20(e)(3). rules informing the public of the procedures and 48 See note 3 above.

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that, notwithstanding any additional of Information and Regulatory Affairs relevant financial regulatory agencies 2 to reporting burden that financial within the Office of Management and address identified potential risks. First, the companies participating in the Budget has designated this interpretive Council will monitor markets to identify activities-based approach may incur, the guidance as a ‘‘significant regulatory potential risks to U.S. financial stability and to assess those risks on a system-wide basis. aggregate reporting burden on action’’ under section 3(f) of Executive Second, the Council will then work with companies will be significantly reduced Order 12866. relevant financial regulatory agencies to seek as a result of the Council’s proposal to List of Subjects in 12 CFR Part 1310 the implementation of actions intended to pursue entity-specific determinations address identified potential risks to financial under section 113 of the Dodd-Frank Brokers, Investments, Securities. stability. Section III of this appendix describes the Act only if a potential risk or threat The Financial Stability Oversight cannot be adequately addressed through manner in which the Council intends to Council is amending 12 CFR part 1310 an activities-based approach. apply the statutory standards and as follows: In making this estimate, the Council considerations in making determinations estimates that due to the nature of the under section 113 of the Dodd-Frank Act, if PART 1310—AUTHORITY TO REQUIRE the Council determines that potential risks to information likely to be requested, SUPERVISION AND REGULATION OF U.S. financial stability are not adequately approximately 75 percent of the burden CERTAIN NONBANK FINANCIAL addressed through the activities-based in hours will be carried by financial COMPANIES approach. Section III defines key terms used companies internally at an average cost in the statute, including ‘‘threat to the of $400 per hour, and the remainder ■ 1. The authority citation for part 1310 financial stability of the United States.’’ will be carried by outside professionals continues to read as follows: Section III also includes a detailed retained by financial companies at an description of the analysis that the Council average cost of $600 per hour. In Authority: 12 U.S.C. 5321; 12 U.S.C. 5322; intends to conduct during its reviews, 12 U.S.C. 5323. addition, in determining these including a discussion of channels through which risks from a company may be estimates, the Council considered its ■ 2. Appendix A is revised to read as transmitted to other companies or markets, obligation under 12 CFR 1310.20(b) to, follows: and the Council’s assessment of the whenever possible, rely on information likelihood of the company’s material available from the OFR or any Council Appendix A to Part 1310—Financial financial distress and the benefits and costs member agency or primary financial Stability Oversight Council Guidance of a determination. regulatory agency that regulates a for Nonbank Financial Company Section IV of this appendix outlines a two- nonbank financial company before Determinations stage process that the Council will follow in non-emergency situations when determining requiring the submission of reports from I. Introduction whether to subject a nonbank financial such nonbank financial company. The Section 113 of the Dodd-Frank Wall Street company to Federal Reserve supervision and Council expects that its collection of Reform and Consumer Protection Act (the prudential standards. In the first stage of the information under the Final Guidance ‘‘Dodd-Frank Act’’) 1 authorizes the Financial process, the Council will notify the company will be performed in a manner that Stability Oversight Council (the ‘‘Council’’) and its primary financial regulatory agency attempts to minimize burdens for to determine that a nonbank financial and conduct a preliminary analysis to affected financial companies. The company will be supervised by the Board of determine whether the company should be aggregate burden will be subject to the Governors of the Federal Reserve System (the subject to further evaluation by the Council. number of financial companies that ‘‘Federal Reserve’’) and be subject to During the second stage of the evaluation participate in the activities-based prudential standards in accordance with process, the Council will conduct an in- Title I of the Dodd-Frank Act if either of two depth evaluation if it determines in the first approach or are evaluated in the standards is met. Under the first standard, stage that the nonbank financial company determination process, the extent of the Council may subject a nonbank financial merits additional review. information regarding such companies company to supervision by the Federal The Council’s practices set forth in this that is available to the Council through Reserve and prudential standards if the guidance to address potential risks to U.S. existing public and regulatory sources, Council determines that material financial financial stability are intended to comply and the amount and types of distress at the nonbank financial company with its statutory purposes: (1) To identify information that financial companies could pose a threat to the financial stability risks to U.S. financial stability that could provide to the Council. The Proposed of the United States. Under the second arise from the material financial distress or Guidance requested comment on the standard, the Council may determine that a failure, or ongoing activities, of large, interconnected bank holding companies or estimates and other assumptions in the nonbank financial company will be supervised by the Federal Reserve and nonbank financial companies, or that could proposed collection of information, but subject to prudential standards if the nature, arise outside the financial services no comments were received in response scope, size, scale, concentration, marketplace; (2) to promote market to the questions presented. interconnectedness, or mix of the activities of discipline, by eliminating expectations on the part of shareholders, creditors, and V. Executive Orders 12866 and 13563 the nonbank financial company could pose a threat to U.S. financial stability. Section 113 counterparties of such companies that the Executive Orders 12866 and 13563 of the Dodd-Frank Act also lists government will shield them from losses in direct certain agencies to assess costs considerations that the Council must take the event of failure; and (3) to respond to and benefits of available regulatory into account in making a determination. emerging threats to the stability of the U.S. 3 alternatives and, if regulation is Section II of this document describes the financial system. Council actions seek to necessary, to select regulatory approach the Council intends to take in foster transparency and to avoid competitive distortions in markets for financial services approaches that maximize net benefits prioritizing its work to identify and address potential risks to U.S. financial stability and products. Further, nonbank financial (including potential economic, using an activities-based approach. This environmental, public health and safety approach reflects the Council’s priorities of 2 References in this appendix to ‘‘relevant effects, distributive impacts, and identifying potential risks on a system-wide financial regulatory agencies’’ may encompass a equity). Executive Order 13563 basis, reducing the potential for competitive broader range of regulators than those included in emphasizes the importance of distortions that could arise from entity- the statutory definition of ‘‘primary financial specific determinations, and allowing regulatory agency,’’ which is defined in Dodd-Frank quantifying both costs and benefits, of Act section 2(12), 12 U.S.C. 5301(12). reducing costs, of harmonizing rules, 3 Dodd-Frank Act section 112(a)(1), 12 U.S.C. and of promoting flexibility. The Office 1 See Dodd-Frank Act section 113, 12 U.S.C. 5323. 5322(a)(1).

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companies should not benefit from an for competitive distortions among financial arise in evolving marketplaces. The Council implicit federal financial safety net. companies and in markets that could arise will regularly rely on data, research, and Therefore, the Council emphasizes the from entity-specific determinations, and (2) analysis from Council member agencies, the importance of market discipline as a allowing relevant financial regulatory Office of Financial Research, industry mechanism for addressing potential risks to agencies, which generally possess greater participants, and other public sources. U.S. financial stability posed by financial information and expertise with respect to Consistent with its statutory obligations, the companies. company, product, and market risks, to Council will, whenever possible, rely on This interpretive guidance is not a binding address potential risks, rather than subjecting information available from primary financial rule, except to the extent that it sets forth the companies to new regulatory authorities. regulatory agencies.7 rules of agency organization, procedure, or As part of its activities-based approach, the Evaluating Potential Risks practice. This guidance is intended to assist Council will examine a range of financial financial companies and other market products, activities, or practices that could If the Council’s monitoring of markets and participants in understanding how the pose risks to U.S. financial stability. These market developments identifies a product, activity, or practice that could pose a Council expects to exercise certain of its types of activities are often identified in the potential risk to U.S. financial stability, the authorities under Title I of the Dodd-Frank Council’s annual reports, such as activities Council, in consultation with relevant Act. The Council retains discretion, subject related to (1) the extension of credit, (2) the financial regulatory agencies, will evaluate to applicable statutory requirements, to use of leverage or short-term funding, (3) the the potential risk to determine whether it consider factors relevant to the assessment of provision of guarantees of financial merits further review or action. The Council’s a potential risk or threat to U.S. financial performance, and (4) other key functions work in this step may include efforts such as stability on a case-by-case basis. If the critical to support the functioning of sharing data, research, and analysis among Council were to depart from the financial markets. The Council considers a Council members and member agencies and interpretative guidance, it would need to risk to financial stability to mean a risk of an their staffs; consultations with regulators and provide a reasoned explanation for its action, event or development that could impair other experts regarding the scope of potential which would ordinarily require financial intermediation or financial market risks and factors that may mitigate those acknowledging the change in position.4 functioning to a degree that would be risks; and the collaborative development of sufficient to inflict significant damage on the analyses for consideration by the Council. As II. Activities-Based Approach broader economy. The Council’s activities- part of this work, the Council may also The Dodd-Frank Act gives the Council based approach is intended to identify and engage with industry participants and other broad discretion in determining how to address risks to financial stability using a members of the public as it assesses potential respond to potential threats to U.S. financial two-step approach, described below. stability. A determination to subject a risks. nonbank financial company to Federal a. Step One of Activities-Based Approach: The Council will assess the extent to which Reserve supervision and prudential Identifying Potential Risks From Products, characteristics such as the following could standards under section 113 of the Dodd- Activities, or Practices amplify potential risks to U.S. financial Frank Act is only one of several Council Monitoring Markets stability arising from products, activities, or practices: authorities for responding to potential risks The Council has a statutory duty to • 5 Asset valuation risk or credit risk; to U.S. financial stability. The Council will monitor the financial services marketplace in • prioritize its efforts to identify, assess, and leverage, including leverage arising from order to identify potential threats to U.S. debt, derivatives, off-balance sheet address potential risks and threats to U.S. financial stability.6 In the first step of the financial stability through a process that obligations, and other arrangements; activities-based approach, to enable the • liquidity risk or maturity mismatch, such begins with an activities-based approach, and Council to identify potential risks to U.S. will pursue entity-specific determinations as reliance on funding sources that could be financial stability, the Council, in susceptible to dislocations; under section 113 of the Dodd-Frank Act consultation with relevant financial • counterparty risk and only if a potential risk or threat cannot be regulatory agencies, intends to monitor interconnectedness among financial market adequately addressed through an activities- diverse financial markets and market participants; based approach. The Council anticipates it developments to identify products, activities, • the transparency of financial markets, would consider a nonbank financial or practices that could pose risks to U.S. such as growth in financial transactions company for a potential determination under financial stability. When monitoring occurring outside of regulated sectors; section 113 only in rare instances, such as if potential risks to financial stability, the • operational risks, such as cybersecurity the products, activities, or practices of a Council intends to consider the linkages and operational resilience; or company that pose a potential threat to U.S. across products, activities, and practices, and • the risk of destabilizing markets for financial stability are outside the jurisdiction their interconnectedness across firms and particular types of financial instruments, or authority of financial regulatory agencies. markets. such as trading practices that substantially This approach reflects two priorities: (1) For example, the Council’s monitoring may increase volatility in key markets. Identifying and addressing, in consultation include: Various factors may exacerbate or mitigate with relevant financial regulatory agencies, • Corporate and sovereign debt and loan each of these types of risks. For example, potential risks and emerging threats on a markets; activities may pose greater risks if they are system-wide basis and to reduce the potential • equity markets; complex or opaque, are conducted without • markets for other financial products, effective risk-management practices, are 4 See FCC v. Fox Television Stations, Inc., 556 including structured products and significantly correlated with other financial U.S. 502, 515 (2009). derivatives; products, and are either highly concentrated 5 For example, the Council has authority to make • short-term funding markets; or significant and widespread. In contrast, recommendations to the Federal Reserve • payment, clearing, and settlement regulatory requirements or market practices concerning the establishment and refinement of functions; may mitigate risks by, for example, limiting prudential standards and reporting and disclosure • requirements applicable to nonbank financial new or evolving financial products, exposures or leverage, enhancing risk- companies supervised by the Federal Reserve; make activities, and practices; and management practices, or restricting recommendations to primary financial regulatory • developments affecting the resiliency of excessive risk-taking. agencies to apply new or heightened standards and financial market participants. While the contours of the Council’s initial safeguards for a financial activity or practice To monitor markets and market evaluation of any potential risk will depend conducted by certain financial companies if the developments, the Council will review on the type and scope of analysis relevant to Council determines that such activity or practice information such as historical data, research the particular risk, the Council’s analyses could create or increase certain risks; and designate regarding the behavior of financial market will generally focus on four framing financial market utilities and payment, clearing, and settlement activities that the Council participants, and new developments that questions: determines are, or are likely to become, systemically important. Dodd-Frank Act sections 6 Dodd-Frank Act section 112(a)(2), 12 U.S.C. 7 Dodd-Frank Act section 112(d)(3), 12 U.S.C. 115, 120, 804, 12 U.S.C. 5325, 5330, 5463. 5322(a)(2). 5322(d)(3).

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1. How could the potential risk be the Council relates to a product, activity, or specific recommendation. To promote triggered? For example, could it be triggered practice arising at a limited number of analytical rigor and avoid duplication, before by sharp reductions in the valuation of individual financial companies, the Council making any recommendation under section particular classes of financial assets? nonetheless will prioritize a remedy that 120, the Council will ascertain whether the 2. How could the adverse effects of the addresses the underlying risk across all relevant primary financial regulatory agency potential risk be transmitted to financial companies that engage in the relevant would be expected to perform a cost-benefit markets or market participants? For example, activity. If the Council finds that a particular analysis of the actions it would take in what are the direct or indirect exposures in type of financial product could present risks response to the Council’s contemplated financial markets to the potential risk? to U.S. financial stability, there may be recommendation. In cases where the primary 3. What impact could the potential risk different approaches existing regulators financial regulatory agency would not be have on the financial system? For example, could take, based on their authorities and the expected to conduct such an analysis, the what could be the scale of its adverse effects urgency of the risk, such as restricting or Council itself will—prior to making a final on other companies and markets, and would prohibiting the offering of that product, or recommendation—conduct an analysis, using its effects be concentrated or distributed requiring market participants to take empirical data, to the extent available, of the broadly among market participants? This additional risk-management steps that benefits and costs of the actions that the analysis should take into account factors address the risks. primary financial regulatory agency would be such as existing regulatory requirements or If, after engaging with relevant financial expected to take in response to the market practices that mitigate potential risks. regulatory agencies, the Council believes contemplated recommendation. Where the 4. Could the adverse effects of the potential those regulators’ actions are inadequate to Council conducts its own such analysis, the risk impair the financial system in a manner address the identified potential risk to U.S. specificity of its assessment of benefits and that could harm the non-financial sector of financial stability, the Council has authority costs would be commensurate with the the U.S. economy? to make formal public recommendations to specificity of the contemplated In this evaluation, the Council will consult primary financial regulatory agencies under recommendation. Furthermore, where the with relevant financial regulatory agencies section 120 of the Dodd-Frank Act. Under Council conducts its own analysis, the and will take into account existing laws and section 120, the Council may provide for Council will make a recommendation under regulations that may mitigate a potential risk more stringent regulation of a financial section 120 only if it believes that the results to U.S. financial stability. The Council will activity by issuing nonbinding of its assessment of benefits and costs also take into account the risk profiles and recommendations, following consultation support the recommendation. business models of market participants with the primary financial regulatory agency Primary financial regulatory agencies have engaging in the products, activities, or and public notice inviting comments on significant experience, knowledge, and practices under evaluation, and consider proposed recommendations, to the primary expertise that can be useful in determining available evidence regarding the potential financial regulatory agency to apply new or the most efficient way to address a particular risk. Empirical data may not be available heightened standards or safeguards for a risk within their regulatory jurisdiction. In regarding all potential risks, and the type and financial activity or practice conducted by every case, prior to issuing a scope of the Council’s analysis will be bank holding companies or nonbank recommendation under section 120, the tailored to the potential risk under financial companies under their Council will consult with the relevant consideration. jurisdiction.9 In addition, in any case in primary financial regulatory agency and If a product, activity, or practice creating which no primary financial regulatory agency provide notice to the public and opportunity a potential risk to financial stability is exists for the markets or companies for comment as required by section 120. identified, the Council will work with conducting financial activities or practices relevant financial regulatory agencies to identified by the Council as posing risks, the III. Analytic Framework for Nonbank address the identified risk, as described in Council can consider reporting to Congress Financial Company Determinations section II.b of this appendix. on recommendations for legislation that If the Council’s collaboration and engagement with the relevant financial b. Step Two of Activities-Based Approach: would prevent such activities or practices regulatory agencies during the activities- Working With Regulators To Address from threatening U.S. financial stability. The based approach does not adequately address Identified Risks Council intends to make recommendations under section 120 only to the extent that its a potential threat identified by the Council— If the Council identifies a potential risk to recommendations are consistent with the or if a potential threat to U.S. financial U.S. financial stability in step one of the statutory mandate of the primary financial stability is outside the jurisdiction or activities-based approach, the Council will regulatory agency to which the Council is authority of financial regulatory agencies— work with the relevant financial regulatory making the recommendation. and if the potential threat identified by the agencies at the federal and state levels to seek The authority to issue recommendations to Council is one that could be effectively the implementation of appropriate actions to primary financial regulatory agencies under addressed by a Council determination address the identified potential risk. The section 120 is one of the Council’s most regarding one or more nonbank financial Council will coordinate among its members formal tools for responding to potential risks companies, the Council may evaluate one or and member agencies and will follow up on to U.S. financial stability. The Council will more nonbank financial companies for an supervisory or regulatory actions to ensure make these recommendations only if it entity-specific determination under section the potential risk is adequately addressed. determines that the conduct, scope, nature, 113 of the Dodd-Frank Act, applying the The goal of this step would be for existing size, scale, concentration, or analytic framework described below. This regulators to take appropriate action, such as interconnectedness of the activity or practice section describes the analysis the Council modifying their regulation or supervision of could create or increase the risk of significant will conduct in general regarding individual companies or markets under their liquidity, credit, or other problems spreading nonbank financial companies that are jurisdiction in order to mitigate potential among bank holding companies and nonbank considered for a potential determination, and risks to U.S. financial stability identified by financial companies, U.S. financial markets, section IV of this appendix describes the the Council.8 If a potential risk identified by or low-income, minority, or underserved Council’s process for those reviews. communities. a. Statutory Standards and Considerations 8 The Dodd-Frank Act provides that the Council’s In its recommendations under section 120, duties include to recommend to the member the Council may suggest broad approaches to The Council may determine, by a vote of agencies general supervisory priorities and address the risks it has identified. When not fewer than two-thirds of the voting principles reflecting the outcome of discussions appropriate, the Council may make a more members of the Council then serving, among the member agencies and to make including an affirmative vote by the recommendations to primary financial regulatory Chairperson of the Council, that a nonbank agencies to apply new or heightened standards and companies, and United States financial markets. safeguards for financial activities or practices that Dodd-Frank Act sections 112(a)(2)(F), (K), 12 U.S.C. financial company will be supervised by the could create or increase risks of significant 5322(a)(2)(F), (K). Federal Reserve and be subject to prudential liquidity, credit, or other problems spreading 9 Dodd-Frank Act section 120(a), 12 U.S.C. standards if the Council determines that (1) among bank holding companies, nonbank financial 5330(a). material financial distress at the nonbank

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financial company could pose a threat to the counterparty defaults, decreased funding considerations, and other risk-related factors financial stability of the United States (the availability, and decreased asset prices. The that the Council will take into account. Due ‘‘First Determination Standard’’) or (2) the Council believes this is appropriate because to the unique threat that each nonbank nature, scope, size, scale, concentration, in such a context, the risks posed by a financial company could pose to U.S. interconnectedness, or mix of the activities of nonbank financial company may have a financial stability and the nature of the the nonbank financial company could pose a greater effect on U.S. financial stability. inquiry required by the statutory threat to the financial stability of the United The Dodd-Frank Act requires the Council considerations, the Council expects that its States (the ‘‘Second Determination to consider 10 specific considerations when evaluations of nonbank financial companies Standard,’’ and, together with the First determining whether a nonbank financial will be firm-specific and may include Determination Standard, the ‘‘Determination company satisfies either of the Determination quantitative and qualitative information that Standards’’).10 The analytic framework Standards. These statutory considerations the Council deems relevant to a particular described below focuses primarily on the help the Council to evaluate whether one of nonbank financial company. The First Determination Standard because threats the Determination Standards has been met: 13 transmission channels, sample metrics, and to financial stability (such as asset fire sales • The extent of the leverage of the other factors set forth below are not or financial market disruptions) are most company; exhaustive and may not apply to all nonbank commonly propagated through a nonbank • the extent and nature of the off-balance- financial companies under evaluation. financial company when it is in distress. sheet exposures of the company; b. Transmission Channels Several relevant terms used in the Dodd- • the extent and nature of the transactions Frank Act are not defined in the statute. The and relationships of the company with other The Council’s evaluation of any nonbank Council intends to interpret the term significant nonbank financial companies and financial company under section 113 of the ‘‘company’’ to include any corporation, significant bank holding companies; Dodd-Frank Act will seek to determine limited liability company, partnership, • the importance of the company as a whether a nonbank financial company meets business trust, association, or similar source of credit for households, businesses, one of the Determination Standards organization.11 In addition, the Council and state and local governments and as a described above. In its analysis of a nonbank intends to interpret ‘‘nonbank financial source of liquidity for the U.S. financial financial company, the Council will assess company supervised by the Board of system; how the negative effects of the company’s Governors’’ as including any nonbank • the importance of the company as a material financial distress, or of the nature, financial company that acquires, directly or source of credit for low-income, minority, or scope, size, scale, concentration, indirectly, a majority of the assets or underserved communities, and the impact interconnectedness, or mix of the company’s liabilities of a company that is subject to a that the failure of such company would have activities, could be transmitted to or affect final determination of the Council.12 The on the availability of credit in such other firms or markets, thereby causing a Council intends to interpret the term communities; broader impairment of financial ‘‘material financial distress’’ as a nonbank • the extent to which assets are managed intermediation or of financial market financial company being in imminent danger rather than owned by the company, and the functioning. Such a transmission of risk can of insolvency or defaulting on its financial extent to which ownership of assets under occur through various mechanisms, or obligations. The Council intends to interpret management is diffuse; channels. The Council has identified three the term ‘‘threat to the financial stability of • the nature, scope, size, scale, transmission channels as most likely to the United States’’ as meaning the threat of concentration, interconnectedness, and mix facilitate the transmission of the negative an impairment of financial intermediation or of the activities of the company; effects of a nonbank financial company’s of financial market functioning that would be • the degree to which the company is material financial distress, or of the nature, sufficient to inflict severe damage on the already regulated by one or more primary scope, size, scale, concentration, broader economy. For purposes of financial regulatory agencies; interconnectedness, or mix of the company’s considering whether a nonbank financial • the amount and nature of the financial activities, to other financial firms and company could pose a threat to U.S. financial assets of the company; and markets: Exposure; asset liquidation; and stability under either Determination • the amount and types of the liabilities of critical function or service. These three Standard, the Council intends to assess the the company, including the degree of transmission channels are described below. company in the context of a period of overall reliance on short-term funding. The Council may also consider other relevant stress in the financial services industry and The statute also requires the Council to channels through which risks could be in a weak macroeconomic environment, with take into account any other risk-related transmitted from a particular nonbank market developments such as increased factors that the Council deems appropriate. financial company and thereby pose a threat Any determination by the Council will be to U.S. financial stability. The Council will 10 If the Council is unable to determine whether made based on a company-specific take into account the 10 statutory the financial activities of a U.S. nonbank financial evaluation and an application of the considerations and any other risk-related company pose a threat to the financial stability of standards and considerations set forth in factors the Council deems appropriate as part the United States based on certain information, the section 113 of the Dodd-Frank Act, and of its evaluation of a nonbank financial Council may request the Federal Reserve to conduct taking into account qualitative and company under the three transmission an examination of the U.S. nonbank financial quantitative information the Council deems channels and the other factors described company for the sole purpose of determining relevant to a particular nonbank financial below. Further, in its analyses under the whether the company should be supervised by the transmission channels, the Council will Federal Reserve for purposes of Title I of the Dodd- company. The Council anticipates that the Frank Act. Dodd-Frank Act section 112(d)(4), 12 information relevant to an in-depth analysis consider applicable factors that may limit the U.S.C. 5322(d)(4). of a nonbank financial company may vary transmission of risk, such as existing 11 The statutory definition of ‘‘nonbank financial based on the nonbank financial company’s regulatory requirements, collateralization, company’’ excludes bank holding companies and characteristics. bankruptcy-remote structures, or guarantee certain other types of companies. Dodd-Frank Act The discussion below describes how the funds that reduce counterparties’ exposures section 102(a)(4), 12 U.S.C. 5311(a)(4). Council will apply the Determination to the nonbank financial company or mitigate 12 As a result, if a nonbank financial company Standards in its evaluation of a nonbank incentives for customers or counterparties to subject to a final determination of the Council sells financial company, including how the withdraw funding or assets. or otherwise transfers a majority of its assets or liabilities, the acquirer will succeed to, and become Council will take into account the statutory Exposure Transmission Channel subject to, the Council’s determination. As Under this transmission channel, the discussed in section V below, a nonbank financial 13 Dodd-Frank Act section 113(a)(2), 12 U.S.C. Council will evaluate whether a nonbank company that is subject to a final determination of 5323(a)(2). This list of considerations is applicable financial company’s creditors, the Council may request a reevaluation of the to U.S. nonbank financial companies. With respect counterparties, investors, or other market determination before the next required annual to foreign nonbank financial companies, the reevaluation, in appropriate cases. Such an acquirer Council is required to take into account a similar participants have direct or indirect exposure can use this reevaluation process to seek a list of considerations, in some cases limited to the to the nonbank financial company that is rescission of the determination upon consummation companies’ U.S. business or activities. See Dodd- significant enough to materially and of its transaction. Frank Act section 113(b)(2), 12 U.S.C. 5323(b)(2). adversely affect those or other creditors,

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counterparties, investors, or other market counterparties’ exposure to the nonbank Asset Liquidation Transmission Channel participants and thereby pose a threat to U.S. financial company relative to the Under this transmission channel, the financial stability. counterparties’ capital. The potential risk Council will consider whether a nonbank The Council expects that its analyses under arising under this transmission channel financial company holds assets that, if the exposure transmission channel will depends not only on the number of liquidated quickly, could pose a threat to generally include the factors described counterparties that a nonbank financial U.S. financial stability by, for example, below. The potential threat to U.S. financial company has, but also on the importance of causing a fall in asset prices that significantly stability will generally be greater if the that nonbank financial company to its disrupts trading or funding in key markets or amounts of the exposures are larger; if the counterparties and the extent to which the causes significant losses or funding problems terms of the transactions provide less counterparties are interconnected with other for other firms with similar holdings. This protection for the counterparty; and if the financial firms, the financial system, and the channel would likely be most relevant for a largest counterparties include large financial broader economy. Therefore, the Council will nonbank financial company that could be institutions. focus on exposures of large financial forced to liquidate assets quickly due to its The Council also will consider a institutions to the nonbank financial funding and liquid asset profile. For company’s leverage and size. A company’s company under review. This analysis will example, this could be the case if a nonbank leverage can amplify the risks posed by take into account both individual financial company relies heavily on short- exposures, including off-balance sheet counterparty exposures as well as aggregate term funding. The Council may also consider exposures, by reducing the company’s ability exposures of other financial institutions to whether a deterioration in asset pricing or to satisfy its obligations to creditors in the the company under review. The amount and market functioning could pressure other event of its material financial distress. Size types of other exposures that counterparties financial firms to sell their holdings of is relevant to this analysis, as material and other market participants have to a affected assets in order to maintain adequate financial distress at a larger nonbank nonbank financial company is highly capital and liquidity, which, in turn, could financial company would generally transmit dependent on the nature of the company’s produce a cycle of asset sales that could lead risk on a larger scale than distress at a business. The Council’s analysis will take to further market disruptions. This analysis smaller company. Size may be measured by these other fact-specific considerations into includes an assessment of any maturity the assets, liabilities, and capital of the firm. account. mismatch at the company—the difference As required by statute, the Council will between the maturities of the company’s consider the extent to which assets are The Council also will consider applicable factors, including existing regulatory assets and liabilities. A company’s reliance managed rather than owned by the company on short-term funding to finance longer-term and the extent to which ownership of assets requirements, that may mitigate potential risks under the exposure transmission positions can subject the company to rollover under management is diffuse. The Council’s or refinancing risk that may force it to sell analysis will recognize the distinct nature of channel. For example, collateralization by high-quality, highly liquid securities, such as assets rapidly at low market prices. The exposure risks when the company is acting Council will also consider applicable factors as an agent rather than as principal.14 In U.S. Treasury securities, the use of insurance funds to limit counterparty exposures, or that may mitigate potential risks under the particular, in the case of a nonbank financial asset liquidation transmission channel. As other transactions that reallocate risk to well- company that manages assets on behalf of part of its analysis, the Council will consider capitalized entities, may reduce the potential customers or other third parties, the third the extent to which assets are managed rather for certain exposures to serve as a channel for parties’ direct financial exposures are often to than owned by the company. the transmission of risk. the issuers of the managed assets, rather than The Council’s analyses of the asset Contagion. The negative effects of the to the nonbank financial company managing liquidation transmission channel will focus those assets. material financial distress of a large, on three central factors, described below. The Council will consider the exposures interconnected nonbank financial company Liquidity of the company’s liabilities. The that counterparties and other market are not necessarily limited to the amount of first factor in the Council’s assessment under participants have to a nonbank financial direct losses suffered by the firm’s creditors, this transmission channel is the amount and company arising from the company’s capital counterparties, investors, or other market nature of the company’s liabilities that are, or markets activities. This assessment includes participants. In general, the wider and more could become, short-term in nature. This an evaluation of the company’s relationships interconnected a company’s network of analysis involves an assessment of the with other significant nonbank financial financial counterparties, the greater the company’s liquidity risk. Liquidity risk companies and significant bank holding potential negative effect of the material generally refers to the risk that a company companies. In most cases, the Council will financial distress of the company. Aggregate may not have sufficient funding to satisfy its consider factors such as the amount and exposures to a nonbank financial company short-term needs. For example, relevant nature of, and counterparties to, the can create a potential threat to U.S. financial factors may include: company’s: stability if they lead to contagion among • The company’s short-term financial • Outstanding debt (regardless of term) financial institutions and financial markets obligations (including outstanding and other liabilities (such as guaranteed more broadly. Contagion has the potential to commercial paper). investment contracts issued by an insurance spread distress quickly and seemingly • Financial arrangements that can be company or Federal Home Loan Bank loans). unexpectedly. Such transmission is terminated by counterparties and therefore • Derivatives transactions (which may be associated with opaque balance sheets, become short-term (including callable debt, measured on the basis of gross notional closely correlated markets, and coordination derivatives, securities lending, repurchase amount, net fair value, or potential future failures among investors. In such agreements, and off-balance-sheet exposures). exposures). circumstances, fire sales by a highly • Long-term liabilities that may come due • Securities financing transactions (i.e., leveraged and interconnected nonbank in a short-term period. repurchase agreements and securities lending financial company may result in a loss of • Financial transactions that may require transactions). confidence in other financial companies that the company to provide additional margin or • Lines of credit. are perceived to have similar characteristics. collateral to the counterparty. • Credit-default swaps outstanding for The Council will seek evidence regarding the • Products that allow customers rapidly to which the company or an affiliate is the potential for contagion, including relevant withdraw funds from the company. reference entity (generally focusing on single- industry-specific historical examples and the • Liabilities related to other collateralized name credit-default swaps). scope of the company’s interconnectedness borrowings and deposits. Relevant metrics may include the number, with large financial institutions, among other The Council will quantitatively identify size, and financial strength of a nonbank factors. Various market-based or regulatory the scale of potential liquidity needs that financial company’s counterparties, factors can strongly mitigate the risk of could plausibly arise at the company. As part including the proportion of its contagion. Contagion should be viewed in of this analysis, the Council will apply conjunction with other factors described counterparty and customer withdrawal rates 14 Dodd-Frank Act section 113(a)(2)(F), 12 U.S.C. above when evaluating risk under the based on historical examples and other 5323(a)(2)(F). exposure transmission channel. relevant models to assess the scope of

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plausible withdrawals. In addition, any the Council will apply quantitative models to Critical Function or Service Transmission ability of the company or its financial assess how the company could satisfy the Channel regulators to impose stays on counterparty identified range of potential liquidity needs Under this transmission channel, the terminations or withdrawals is relevant, by rapidly selling its identified liquid assets. Council will consider the potential for a because it may reduce the company’s To assess this factor, the Council will nonbank financial company to become liquidity needs in an event of material compare the volume of the company’s unable or unwilling to provide a critical financial distress. The Council also will potential liquidation of particular categories function or service that is relied upon by consider the company’s internal estimates of of financial instruments with the average market participants and for which there are potential liquidity needs in a context of daily trading volume in the United States of no ready substitutes and thereby pose a material financial distress. those types of instruments. In general, a rapid threat to U.S. financial stability. This factor The company’s leverage and short-term liquidation of a significant amount of is commonly referred to as ‘‘substitutability.’’ debt ratios are relevant to this analysis, as relatively illiquid financial instruments, or Substitutability captures the extent to which instruments that are widely held by other high leverage and reliance on short-term other firms could provide similar financial market participants, will have a greater effect funding can increase the potential for a services in a timely manner at a similar price on the market than a liquidation of the same company to be subject to sudden liquidity and quantity if a nonbank financial company amount of highly liquid instruments or strains that force it rapidly to sell assets. withdraws from a particular market. instruments that are not widely held. The Leverage can be measured by the ratio of Substitutability also captures situations in Council may also conduct an analysis to assets to capital or as a measure of economic which a nonbank financial company is the assess the relative impact of negative shocks risk relative to capital. The latter primary or dominant provider of services in to the equity or assets of certain financial measurement can better capture the effect of a market that the Council determines to be institutions on other financial institutions. derivatives and other products with essential to U.S. financial stability. A risk embedded leverage on the risk undertaken by The Council expects that its analysis will generally focus on potential asset liquidation under this transmission channel may be a nonbank financial company. Comparisons identified if a company provides a critical of leverage to peer financial institutions can periods of 30 to 90 days. The order in which a nonbank financial function or service that may not easily be help indicate the level of risk at the substitutable. The Council’s analysis will company. Metrics that may be used to assess company may liquidate assets is a factor in the extent of any fire sale risk, but is subject also consider applicable factors that may leverage include: mitigate potential risks under the critical • to considerable uncertainties. A company Total assets and total debt measured function or service transmission channel. relative to total equity, which measures could liquidate a significant portion of its highly liquid assets first, in order to reduce Concern about a potential lack of financial leverage. substitutability could be greater if a nonbank • Derivatives liabilities and off-balance the likelihood that the company would be forced to liquidate illiquid assets in the event financial company and its competitors are sheet obligations relative to total equity, of its material financial distress. However, in likely to experience stress at the same time which may show how much off-balance sheet the event of the company’s material financial because they are exposed to the same risks. leverage a nonbank financial company may distress, a company may also be expected to The Council may also analyze the nonbank have. financial company’s activities and critical • seek to maintain compliance with any Securities financing transactions and applicable risk-based capital ratios and other functions and the importance of those funding agreements that provide alternative requirements. Doing so might require a activities and functions to the U.S. financial sources of liquidity or operating income, company to sell a mix of assets across a system and assess how those activities and which indicate the use of operating leverage. functions would be performed by the • number of asset classes, rather than proceed Changes in leverage ratios, which may with the sale of assets in order from most nonbank financial company or other market indicate that a nonbank financial company is liquid to least liquid. Further, in the event of participants in the event of the nonbank increasing or decreasing its risk profile. a significant market disruption, there could financial company’s material financial Liquidity of the company’s assets. The be a meaningful first-mover advantage to distress. The Council also will consider the second factor under the asset liquidation selling less-liquid assets first. For example, substitutability of critical market functions transmission channel is an analysis of the markets for less-liquid assets, such as private that the company provides in the United company’s assets that the company could and public corporate bonds and asset-backed States in the event of material financial rapidly liquidate, if necessary, to satisfy its securities, could be prone to disruption in distress of a foreign parent company. obligations. In particular, the Council expects the event that a seller liquidated a large The analysis of this channel incorporates a that this assessment will focus on the size portion of its portfolio of those assets. Given review of the competitive landscape for and liquidity characteristics of the company’s these potential discounts, in some markets in which a nonbank financial investment portfolio. The Council will assess circumstances a company may be company participates and for the services it the company’s assets, grouped into categories incentivized to sell a portion of its less-liquid provides (including the provision of liquidity such as highly liquid (for example, cash, U.S. assets first and to hold U.S. government to the U.S. financial system, the provision of Treasury securities, and U.S. agency securities and agency mortgage-backed credit to low-income, minority, or mortgage-backed securities) and less-liquid securities, which tend to increase in value underserved communities, or the provision (for example, corporate bonds, non-agency during a period of market turmoil. To the of credit to households, businesses and state mortgage-backed securities, and mortgages extent that a company’s highly liquid assets and local governments), the ability of other and other loans) to determine if it holds cash are encumbered (for example, under firms to replace those services, and the instruments or readily marketable securities securities financing transactions or as nonbank financial company’s market share. that could reasonably be expected to have a collateral for loans), the company would also This analysis may focus on the company’s liquid market in times of broader market need to sell less-liquid assets to satisfy its market share in specific product lines and stress. To the extent that the company’s liquidity needs. Further, a company’s the ability of substitutes to replace a service assets are encumbered, those assets would holdings of liquid assets could be reduced or function provided by the company. The generally not be considered to be available to before the company enters material financial Council’s evaluation of a nonbank financial satisfy short-term obligations. distress. As a result, the Council may take company’s market share regarding a Potential fire sale impacts. The third factor into account company-specific factors in particular product or service may include in the asset liquidation transmission channel assessing the order in which the company assessments of the ability of the nonbank analysis is the potential effects of the might liquidate assets. One approach the financial company’s competitors to expand to company’s asset liquidation on markets and Council may take is to assess the potential meet market needs during a period of overall market participants. As described above, the effects if the company sells pro rata portions stress in the financial services industry or in Council will assess the scale of potential of the more-liquid segments of its investment a weak macroeconomic environment; the liquidity needs that could plausibly arise at portfolio (such as cash and highly liquid costs that market participants would incur if the company and the amount and nature of instruments, U.S. agency securities, forced to switch providers; the timeframe financial assets the company could sell to investment-grade public corporate debt within which a disruption in the provision satisfy its obligations. In this step of the asset securities, publicly traded equity securities, of the product or service would materially liquidation transmission channel analysis, and asset backed-securities). affect market participants or market

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functioning; and the economic implications stability identified by the Council. For cases doing so would not affect the outcome of such a disruption. example, factors that may be used to assess of the Council’s analysis. existing regulatory scrutiny include: Benefits. With respect to the benefits of a c. Complexity and Resolvability • The extent to which the company’s Council determination, the Council will The potential threat a nonbank financial primary financial regulator has imposed risk- consider the benefits of the determination company could pose to U.S. financial management standards such as capital, itself, both to (1) the U.S. financial system stability may be mitigated or aggravated by liquidity, and reporting requirements, as and long-term economic growth and (2) the the company’s complexity, opacity, or relevant to the type of company, and has nonbank financial company due to additional resolvability. In particular, a risk may be authority to supervise, examine, and bring regulatory requirements resulting from the aggravated if a nonbank financial company’s enforcement actions, with respect to the determination, particularly the prudential resolution under ordinary insolvency regimes company and its affiliates. standards adopted by the Federal Reserve could disrupt key markets or have a material • Regulators’ processes for inter-regulator under section 165 of the Dodd-Frank Act. adverse impact on other financial firms or coordination. One of the Council’s statutory purposes is markets. An evaluation of a nonbank • For non-U.S. entities, the extent to which to respond to emerging threats to the stability financial company’s complexity and the company is supervised and subject to of the U.S. financial system.19 The primary resolvability entails an assessment of (1) the prudential standards on a consolidated basis intended benefit of a determination under complexity of the nonbank financial in its home country that are administered section 113 of the Dodd-Frank Act is a company’s legal, funding, and operational and enforced by a comparable foreign reduction in the likelihood or severity of a structure, and (2) any obstacles to the rapid supervisory authority. financial crisis. Therefore, the Council will and orderly resolution of the nonbank consider potential benefits to the U.S. e. Benefits and Costs of Determination; financial company: financial system and the U.S. economy Likelihood of Material Financial Distress • Legal structure factors may include the arising from a Council determination. To the number of jurisdictions the company Determining whether the expected benefits extent that a Council determination reduces operates in, the number of subsidiaries, and of a potential Council determination justify the likelihood or severity of a potential the organizational structure. the expected costs is necessary to ensure that financial crisis, the determination could • Funding structure factors may include the Council’s actions are expected to provide enhance financial stability and mitigate the the degree of interaffiliate dependency for a net benefit to U.S. financial stability and severity of economic downturns. The Council liquidity and funding (such as intercompany are consistent with thoughtful may use various measures of systemic risk to loans or other affiliate support arrangements), decisionmaking.16 Financial stability benefits assess any improvement in financial stability. payment operation (such as treasury may be difficult to quantify, and some of the Such measures include S-Risk (which operations), and risk-management. costs may be difficult to forecast with attempts to quantify the amount of capital a • Operational structure factors may precision. When possible, the Council will financial firm would need to raise in order include the number of employees, the quantify reasonably estimable benefits and to function normally in the event of a severe number of U.S. and non-U.S. locations, and costs, using ranges, as appropriate, and based financial crisis), conditional value at risk, the degree of inter-company dependency in on empirical data when available. If such and certain estimates of fire sale risk, among regard to financial guarantees and support benefits or costs cannot be quantified in this others. To assess the benefit to the U.S. arrangements, the ability to separate manner, the Council will explain why such financial system and the U.S. economy from functions and spin off services or business benefits or costs could not be quantified. The a determination, the Council may also lines, the complexity and resiliency of Council also expects to consider benefits and consider historical analogues to the nonbank 17 intercompany and outsourced services and costs qualitatively. To the extent feasible, under review. In addition, the Council may arrangements in resolution, and the the Council will attempt to assess the relative compare the risks to financial stability posed likelihood of preserving franchise value in a importance of any such qualitative elements. by a particular nonbank to the risks posed by recovery or resolution scenario. The Council will make a determination large bank holding companies, in order to • Cross-border operational factors may under section 113 only if the expected produce an assessment of the relative risks include size and complexity of the benefits to financial stability from Federal the company may pose. Further, the loss of company’s cross-border operations and Reserve supervision and prudential any implicit ‘‘too big to fail’’ or similar impact of potential ring-fencing on an orderly standards justify the expected costs that the subsidy would be considered a benefit to the resolution. determination would impose. As part of this economy, even if it increases the nonbank Factors that would tend to increase the risk analysis, the Council will assess the financial company’s cost of capital. associated with a company’s complexity and likelihood of a firm’s material financial Analysis of the benefits of a determination resolvability include large size or scope of distress, in order to assess the extent to for the relevant nonbank financial company activities; a complex legal or operational which a determination may promote U.S. may include those arising directly from the structure; multi-jurisdictional operations and financial stability. Council’s determination as well as any regulatory regimes; complex funding The key elements of regulatory analysis benefits arising from anticipated new or structures; the potential impact of a loss of include (1) a statement of the need for the increased requirements resulting from the key personnel; and shared services among proposed action, (2) an examination of determination, such as additional affiliates. The opacity of a firm’s structure— alternative approaches, and (3) an evaluation supervision and enhanced capital, liquidity, if the firm’s structure and operations cannot of the benefits and costs (quantitative and or risk-management requirements. For readily or easily be determined—may present qualitative) of the proposed action and the example, a nonbank financial company 18 an obstacle to resolution. main alternatives. The Council will subject to a Council determination may conduct this analysis only in cases where the benefit from a lower cost of capital or higher d. Existing Regulatory Scrutiny Council is concluding that the company credit ratings upon meeting its post- As noted above, one of the considerations meets one of the standards for a determination regulatory requirements. the Council is statutorily required to take into determination by the Council under section Costs. With respect to the costs of a account in making a determination under 113 of the Dodd-Frank Act, because in other Council determination, the Council will section 113 of the Dodd-Frank Act is the consider the costs of the determination itself, degree to which the nonbank financial 16 See MetLife, Inc. v. Financial Stability both to (1) the nonbank financial company company is already regulated by one or more Oversight Council, 177 F. Supp.3d 219, 242 (D.D.C. due to additional regulatory requirements primary financial regulatory agencies.15 In its 2016) (quoting 12 U.S.C. 5323(a)(2)(K) and resulting from the determination, including analysis of this statutory consideration, the Michigan v. Environmental Protection Agency, 135 the costs of the prudential standards adopted S. Ct. 2699, 2707 (2015)). Council will focus on the extent to which by the Federal Reserve under section 165 of 17 The Council will also consider non-quantified existing regulation of the company has benefits and costs. See Office of Management and the Dodd Frank Act; and (2) the U.S. mitigated the potential risks to financial Budget Circular A–4 (Sept. 17, 2003), section (E) economy. (Developing Benefit and Cost Estimates) (7). 15 Dodd-Frank Act section 113(a)(2)(H), 12 U.S.C. 18 See Office of Management and Budget Circular 19 Dodd-Frank Act section 112(a)(1)(C), 12 U.S.C. 5323(a)(2)(H). A–4 (Sept. 17, 2003). 5322(a)(1)(C).

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The Council will consider costs to the This assessment may rely upon historical Determination with respect to the nonbank company arising from anticipated new or examples regarding the characteristics of financial company. If a Proposed increased regulatory requirements resulting financial companies that have experienced Determination is made by the Council, the from the determination related to: financial distress, but may also consider nonbank financial company may request a • Risk-management requirements, such as other risks that do not have historical hearing in accordance with section 113(e) of the costs of capital planning and stress precedent. The Council’s analysis of the the Dodd-Frank Act and § 1310.21(c) of the testing. vulnerability of a nonbank financial company Council’s rule.22 After making a Proposed • Supervision and examination, such as to material financial distress will be Determination and holding any written or compliance costs to the firm of additional conducted taking into account a period of oral hearing if requested, the Council may examination and supervision. overall stress in the financial services vote to make a final determination. • Increased capital requirements, after industry and a weak macroeconomic accounting for offsetting benefits to taxpayers environment. The Council may also consider a. Stage 1: Preliminary Evaluation of and to the holders of the firm’s other the results of any stress tests that have Nonbank Financial Companies liabilities. previously been conducted by the company Stage 1 involves a preliminary analysis of • Liquidity requirements, such as the or by its primary financial regulatory agency. nonbank financial companies to assess the opportunity cost from any requirement to risks they could pose to U.S. financial hold additional high-quality liquid assets, IV. The Determination Process stability. relative to the company’s current investment As described in section II above, the Identification of Company for Review in portfolio. Council will prioritize an activities-based Stage 1 Because the Federal Reserve is required to approach for identifying, assessing, and tailor prudential standards to a nonbank addressing potential risks to financial If, as described in section II, the Council’s financial company subject to a Council stability. However, if a potential risk or threat consultation with and any recommendations determination after the Council has made a to U.S. financial stability cannot be to a nonbank financial company’s primary determination regarding the company, the adequately addressed through an activities- financial regulatory agency do not adequately new regulatory requirements that result from based approach, the Council may consider a address a potential risk identified by the the Council’s determination will not be nonbank financial company for a potential Council, the Council may evaluate one or known to the Council during its analysis of determination under section 113 of the Dodd- more individual nonbank financial the company. In cases where the nonbank Frank Act. The Council anticipates it would companies for an entity-specific financial company under review primarily consider a nonbank financial company for a determination under section 113 of the Dodd- Frank Act. The Council will vote to engages in bank-like activities, the Council potential determination under section 113 commence review of a nonbank financial may consider, as a proxy, the costs that only in rare instances, such as if the company in Stage 1. When evaluating the would be imposed on the nonbank if the products, activities, or practices of a potential risks associated with a nonbank Federal Reserve imposed prudential company that pose a potential threat to U.S. financial company, the Council may consider standards similar to those imposed on bank financial stability are outside the jurisdiction the company and its subsidiaries together. holding companies with at least $250 billion or authority of financial regulatory agencies. This approach enables the Council to in total consolidated assets under section 165 The Council expects generally to follow a consider potential risks arising across the of the Dodd-Frank Act.20 two-stage process of evaluation and analysis, consolidated organization, while retaining The Council also will consider the cost of as described below. the ability to make a determination regarding a determination under section 113 of the In the first stage of the process (‘‘Stage 1’’), either the parent or any individual nonbank Dodd-Frank Act to the U.S. economy by nonbank financial companies identified as financial company subsidiary (or neither), assessing the impact of the determination on potentially posing risks to U.S. financial depending on which entity the Council the availability and cost of credit or financial stability will be notified and subject to a determines could pose a threat to financial products in relevant U.S. markets. To the preliminary analysis, based on quantitative stability. extent that the markets in which the relevant and qualitative information available to the nonbank participates have low concentration, Council primarily through public and Engagement With Company and Regulators the impact that the determination regarding regulatory sources. During Stage 1, the in Stage 1 one firm would have on credit conditions Council will permit, but not require, the The Council will provide a notice to any would generally be immaterial. However, if company to submit relevant information. The nonbank financial company under review in the relevant markets are concentrated, a Council will also consult with the primary Stage 1. In Stage 1, the Council will consider Council determination regarding a significant financial regulatory agency or home country available public and regulatory information; market participant could have a material supervisor, as appropriate. This approach in addition, a company under review in Stage impact on credit conditions in that market. will enable the Council to fulfill its statutory 1 may submit to the Council any information As part of this analysis, the Council may also obligation to rely whenever possible on it deems relevant to the Council’s evaluation consider the extent to which any reduction information available through the Office of and may, upon request, meet with staff of in financial services provided by the Financial Research (the ‘‘OFR’’), Council Council members and member agencies who nonbank financial company under review member agencies, or the nonbank financial are leading the Council’s analysis. In order to would be offset by other market participants. company’s primary financial regulatory reduce the burdens of review on the Likelihood of Material Financial Distress. agencies before requiring the submission of company, the Council will not require the As part of the assessment of the overall reports from any nonbank financial company to submit information during Stage impact of a Council determination for any company.21 1. In addition, staff representing Council company under review under the First Following Stage 1, nonbank financial members will, upon request, provide the Determination Standard, the Council will companies that are selected for additional company with a list of the primary public assess the likelihood of the company’s review will receive notice that they are being sources of information being considered material financial distress based on its considered for a proposed determination that during the Stage 1 analysis, so that the vulnerability to a range of factors. For the company could pose a threat to U.S. company has an opportunity to understand example, these factors may include leverage financial stability (a ‘‘Proposed the information the Council may rely upon (both on- and off-balance sheet), potential Determination’’) and will be subject to in- during Stage 1. Through this engagement, the risks associated with asset reevaluations depth evaluation during the second stage of Council will seek to enable the company (whether such reevaluations arise from review (‘‘Stage 2’’). Stage 2 will involve the under review to understand the focus of the market disruptions or severe macroeconomic evaluation of additional information Council’s analysis, which may enable the conditions), reliance on short-term funding collected directly from the nonbank financial company to act to mitigate any risks to or other fragile funding markets, maturity company. At the end of Stage 2, the Council financial stability and thereby potentially transformation, and risks from exposures to may consider whether to make a Proposed avoid becoming subject to a Council counterparties or other market participants. determination. 21 See Dodd-Frank Act section 112(d)(3), 12 20 Dodd-Frank Act section 165, 12 U.S.C. 5365. U.S.C. 5322(d)(3). 22 See 12 CFR 1310.21(c).

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During the discussions in Stage 1 with the b. Stage 2: In-Depth Evaluation subject to change based on the ongoing company, the Council intends for staff of Stage 2 involves an in-depth evaluation of analysis. In addition, the Council expects 25 Council members and member agencies to any company that the Council has that its Deputies Committee will grant a explain to the company the key risks that determined merits additional review. request to meet with a company in Stage 2 have been identified in the analysis. Because In Stage 2, the Council will review the to allow the company to present any the review of the company is preliminary and relevant company using information information or arguments it deems relevant continues to change until the Council makes collected directly from the nonbank financial to the Council’s evaluation. a final determination, these identified risks company, through the OFR, as well as public During Stage 2 the Council will also seek may shift over time. and regulatory information. The review will to continue its consultation with the The Council will also consider in Stage 1 focus on whether the nonbank financial company’s primary financial regulatory information available from relevant existing company could pose a threat to U.S. financial agency or home country supervisor in a timely manner before the Council makes any regulators of the company. Under the Dodd- stability because of the company’s material proposed or final determination with respect Frank Act, the Council is required to consult financial distress or the nature, scope, size, scale, concentration, interconnectedness, or to such nonbank financial company. The with the primary financial regulatory agency, Council will continue to encourage the if any, for each nonbank financial company mix of the activities of the company. The Council expects that the transmission regulator during the determination process to or subsidiary of a nonbank financial channels and the other factors described address any risks to U.S. financial stability company that is being considered for a above will be used to evaluate a nonbank using the regulator’s existing authorities; as determination before the Council makes any financial company’s potential to pose a threat noted above, if the Council believes the final determination with respect to such to U.S. financial stability. regulator’s actions adequately address the company.23 For any company under review potential risks to U.S. financial stability the Engagement With Company and Regulators in Stage 1 that is regulated by a primary Council has identified, the Council may in Stage 2 financial regulatory agency or home country discontinue its consideration of the firm for supervisor, the Council will notify the Each nonbank financial company to be a potential determination under section 113 regulator or supervisor that the company is evaluated in Stage 2 will receive a notice (a of the Dodd-Frank Act. under review no later than such time as the ‘‘Notice of Consideration’’) that the nonbank Before making a Proposed Determination company is notified. As part of that financial company is under consideration for regarding a nonbank financial company, the consultation process, the Council will a Proposed Determination. The Council also Council will notify the company when the consult with the primary financial regulatory will submit to the company a request that the Council believes that the evidentiary record company provide information that the agency, if any, of each significant subsidiary regarding such nonbank financial company is Council deems relevant to the Council’s of the nonbank financial company, to the complete. The Council will notify any evaluation, and the nonbank financial extent the Council deems appropriate in nonbank financial company in Stage 2 if the company will be provided an opportunity to nonbank financial company ceases to be Stage 1. The Council will actively solicit the 24 submit written materials to the Council. considered for a determination. Any nonbank regulator’s views regarding risks at the This information will generally be collected company and potential mitigants. In order to financial company that ceases to be by the OFR. Before requiring the submission considered at any time in the Council’s enable the regulator to provide relevant of reports from any nonbank financial information, the Council will share its determination process may be considered for company that is regulated by a Council a Proposed Determination in the future at the preliminary views regarding potential risks at member agency or any primary financial Council’s discretion, consistent with the the company, and request that the regulator regulatory agency, the Council, acting processes described above. provide information regarding those specific through the OFR, will coordinate with such risks, including whether the risks are agencies and will, whenever possible, rely on c. Proposed and Final Determination adequately mitigated by factors such as information available from the OFR or such Proposed Determination existing regulation or the company’s business agencies. Council members and their practices. During the determination process, agencies and staffs will maintain the Based on the analysis performed in Stage 2, a nonbank financial company may be the Council will continue to encourage the confidentiality of such information in considered for a Proposed Determination. A regulator to address any risks to U.S. accordance with applicable law. During Stage proposed determination requires a vote of financial stability using the regulator’s 2, the company may also submit any other information that it deems relevant to the two-thirds of the voting members of the existing authorities; if the Council believes Council then serving, including an the regulator’s actions adequately address the Council’s evaluation. Information considered by the Council includes details regarding the affirmative vote by the Chairperson of the potential risks to U.S. financial stability the 26 company’s financial activities, legal Council. Following a Proposed Council has identified, the Council may Determination, the Council will issue a discontinue its consideration of the firm for structure, liabilities, counterparty exposures, resolvability, and existing regulatory written notice of the Proposed Determination a potential determination under section 113 to the nonbank financial company, which of the Dodd-Frank Act. oversight. Information requests likely will involve will include an explanation of the basis of Based on the preliminary evaluation in 27 both qualitative and quantitative data. the Proposed Determination. Promptly after Stage 1, the Council may vote to commence Information relevant to the Council’s analysis the Council votes to make a proposed a more detailed analysis of the company by may include confidential business determination regarding a company, the advancing the company to Stage 2, or it may information such as detailed information Council will provide the company’s primary decide not to evaluate the company further. regarding financial assets, terms of funding financial regulatory agency or home country If the Council determines not to advance a arrangements, counterparty exposure or supervisor (subject to appropriate protections company that has been reviewed in Stage 1 position data, strategic plans, and for confidential information) with the to Stage 2, the Council will notify the interaffiliate transactions. nonpublic written explanation of the basis of company in writing of the Council’s decision. The Council will make staff representing the Council’s proposed or final The notice will clarify that a decision not to Council members available to meet with the determination. The Council also will publish advance the company from Stage 1 to Stage representatives of any company that enters the explanation of the basis of the Proposed 2 at that time does not preclude the Council Stage 2, to explain the evaluation process and Determination, subject to redactions to from reinitiating review of the company in the framework for the Council’s analysis. If Stage 1. For example, the Council may the analysis in Stage 1 has identified specific 25 The Council’s Deputies Committee is reinitiate review of the company if material aspects of the company’s operations or composed of senior officials from each Council changes affecting the firm merit further member and member agency. It coordinates and activities as the primary focus for the oversees the work of the Council’s other interagency evaluation. evaluation, staff will notify the company of staff committees. those issues, although the issues will be 26 12 CFR 1310.10(b). 23 Dodd-Frank Act section 113(g), 12 U.S.C. 27 Dodd-Frank Act section 113(e)(1), 12 U.S.C. 5323(g). 24 See 12 CFR 1310.21(a). 5323(e)(1).

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protect confidential information from the company that is under evaluation prior to a any material changes—including changes at company or its regulators. final determination with respect to such the company, changes in its markets or its Hearing company. However, if a company that is regulation, changes in the Council’s own under review in Stage 1 or Stage 2 publicly analysis, or otherwise—result in the A nonbank financial company that is announces the status of its review by the company no longer meeting the standard for subject to a Proposed Determination may Council, the Council intends, upon the a determination. In light of the frequent request a nonpublic hearing to contest the request of a third party, to confirm the status reevaluations, the Council’s analyses will Proposed Determination in accordance with of the company’s review. In addition, the generally focus on changes since the section 113(e) of the Dodd-Frank Act. If the Council will publicly release the explanation Council’s previous review, but the ultimate nonbank financial company requests a of the Council’s basis for any nonbank question the Council will seek to assess is hearing in accordance with the procedures financial company determination or whether changes in the aggregate since the set forth in § 1310.21(c) of the Council’s 28 rescission of a determination. The Council is Council’s determination regarding the rule, the Council will set a time and place subject to statutory and regulatory company have caused the company to cease for such hearing. The Council has published requirements to maintain the confidentiality meeting the Determination Standards. The hearing procedures on its website.29 In light of certain information submitted to it by a Council expects that its analysis in its annual of the short statutory timeframe for nonbank financial company or its reevaluations will generally be organized conducting a hearing, and the fact that the regulators.32 In light of these confidentiality around the three transmission channels purpose of the hearing is to benefit the obligations, such confidential information described above as well as existing regulatory company, if a company requests that the scrutiny and the company’s complexity and Council waive the statutory deadline for will be redacted from the materials that the resolvability. conducting the hearing, the Council may do Council makes publicly available. Before the Council’s annual reevaluation of so in appropriate circumstances. V. Annual Reevaluations of Nonbank a determination regarding a nonbank Final Determination Financial Company Determinations financial company, the Council will provide After making a Proposed Determination After the Council makes a final the company with an opportunity to meet and holding any requested written or oral determination regarding a company, the with staff of Council members and member hearing, the Council may, by a vote of not Council intends to encourage the company or agencies to discuss the scope and process for fewer than two-thirds of the voting members its regulators to take steps to mitigate the the review and to present information of the Council then serving (including an potential risks identified in the Council’s regarding any change that may be relevant to affirmative vote by the Chairperson of the written explanation of the basis for its final the threat the company could pose to Council), make a final determination that the determination. Except in cases where new financial stability. Staff of Council members company will be subject to supervision by material risks arise over time, if a company and member agencies will also be available the Federal Reserve and prudential adequately addresses the potential risks to meet with the company during the annual standards. If the Council makes a final identified in writing by the Council at the reevaluation, at the company’s request. In determination, it will provide the company time of the final determination and in addition, during an annual reevaluation, a with a written notice of the Council’s final subsequent reevaluations, the Council should company may submit any written determination, including an explanation of generally be expected to rescind its information to the Council the company the basis for the Council’s decision.30 The determination regarding the company. considers relevant to the Council’s analysis. Council will also provide the company’s For any nonbank financial company that is During annual reevaluations, companies are primary financial regulatory agency or home subject to a final determination, the Council encouraged to submit information regarding country supervisor (subject to appropriate is required to reevaluate the determination at any changes related to the company’s risk protections for confidential information) with least annually, and to rescind the profile that mitigate the potential risks the nonpublic written explanation of the determination if the Council determines that previously identified by the Council. Such basis of the Council’s final determination. the company no longer meets the statutory changes could include updates regarding The Council expects that its explanation of standards for a determination. The Council company restructurings, regulatory the final basis for any determination will may also consider a request from a company developments, market changes, or other highlight the key risks that led to the for a reevaluation before the next required factors. If the company has taken steps to determination and include clear guidance annual reevaluation, in the case of an address the potential risks previously regarding the factors that were most extraordinary change that materially identified by the Council, the Council will important in the Council’s determination. decreases the threat the nonbank financial assess whether those risks have been When practicable and consistent with the company could pose to U.S. financial adequately mitigated to merit a rescission of purposes of the determination process, the stability.33 the determination regarding the company. If Council will provide a nonbank financial The Council applies the same standards of the company explains in detail potential company with a notice of a final review in its annual reevaluations as the changes it could make to its business to determination at least one business day standard for an initial determination address the potential risks previously before publicly announcing the regarding a nonbank financial company: identified by the Council, staff of Council determination pursuant to § 1310.21(d)(3), Either the company’s material financial members and member agencies will endeavor § 1310.21(e)(3), or § 1310.22(d)(3) of the distress, or the nature, scope, size, scale, to provide their feedback on the extent to 31 Council’s rule. In accordance with section concentration, interconnectedness, or mix of which those changes may address the 113(h) of the Dodd-Frank Act, a nonbank the company’s activities, could pose a threat potential risks. financial company that is subject to a final to U.S. financial stability. If the Council If a company contests the Council’s determination may bring an action in U.S. determines that the company no longer meets determination during the Council’s annual district court for an order requiring that the those standards, the Council will rescind its reevaluation, the Council will vote on determination be rescinded. determination. whether to rescind the determination and The Council does not intend to publicly The Council’s annual reevaluations provide the company, its primary financial announce the name of any nonbank financial generally assess whether any material regulatory agency, and the primary financial changes since the previous reevaluation and regulatory agency of its significant 28 See 12 CFR 1310.21(c). since the determination justify a rescission of subsidiaries with a notice explaining the 29 Financial Stability Oversight Council Hearing the determination, based on the same primary basis for any decision not to rescind Procedures for Proceedings Under Title I or Title transmission channels and other factors that the determination. If the Council does not VIII of the Dodd-Frank Wall Street Reform and are considered during a determination rescind the determination, the written notice Consumer Protection Act, available at https:// www.treasury.gov/initiatives/fsoc/designations/ decision. The Council expects that its provided to the company will address each Pages/Hearing-Procedures.aspx. reevaluation process will focus on whether of the material factors raised by the company 30 Dodd-Frank Act section 113(e)(3), 12 U.S.C. in its submissions to the Council contesting 5323(e)(3); see also 12 CFR 1310.21(d)(2) and (e)(2). 32 See Dodd-Frank Act section 112(d)(5), 12 the determination during the annual 31 See 12 CFR 1310.21(d)(3) and (e)(3) and U.S.C. 5322(d)(5); see also 12 CFR 1310.20(e). reevaluation. The written notice from the 1310.22(d)(3). 33 See note 12 above. Council will also explain in detail why the

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Council did not find that the company no • Federal eRulemaking Portal: Go to low-cycle fatigue debit that may allow a longer met the standard for a determination https://www.regulations.gov. Follow the crack to initiate and propagate to failure. under section 113 of the Dodd-Frank Act. In instructions for submitting comments. This condition, if not addressed, could general, due to the sensitive nature of its • Fax: 202–493–2251. result in uncontained fan blade release, analyses in annual reevaluations, the Council • may not in all cases publicly release the Mail: U.S. Department of damage to the engine, and damage to the written findings that it provides to the Transportation, Docket Operations, M– airplane. The FAA is issuing this AD to company. 30, West Building Ground Floor, Room address the unsafe condition on these Finally, the Council will provide each W12–140, 1200 New Jersey Avenue SE, products. nonbank financial company subject to a Washington, DC 20590. Related Service Information Under 1 Council determination with an opportunity • Hand Delivery: U.S. Department of CFR Part 51 for an oral hearing before the Council once Transportation, Docket Operations, M– every five years at which the company can 30, West Building Ground Floor, Room The FAA reviewed EA Service contest the determination. W12–140, 1200 New Jersey Avenue SE, Bulletin (SB) EAGP7–A72–426, dated Dated: December 9, 2019. Washington, DC 20590, between 9 a.m. September 30, 2019. The SB describes Howard Adler, and 5 p.m., Monday through Friday, procedures for performing an ultrasonic Deputy Assistant Secretary for the Financial except Federal holidays. inspection of the LPC 1st-stage fan Stability Oversight Council, Department of For service information identified in blades. This service information is the Treasury. this final rule, contact Engine Alliance, reasonably available because the [FR Doc. 2019–27108 Filed 12–27–19; 8:45 am] 411 Silver Lane, East Hartford, CT, interested parties have access to it BILLING CODE 4810–25–P–P 06118; phone: 800–565–0140; email: through their normal course of business [email protected]; website: or by the means identified in the www.engineallianceportal.com. You ADDRESSES section. DEPARTMENT OF TRANSPORTATION may view this service information at the FAA’s Determination FAA, Engine and Propeller Standards The FAA is issuing this AD because Federal Aviation Administration Branch, 1200 District Avenue, Burlington, MA 01803. For information the FAA evaluated all the relevant information and determined the unsafe 14 CFR Part 39 on the availability of this material at the FAA, call 781–238–7759. It is also condition described previously is likely [Docket No. FAA–2019–0912; Product available on the internet at https:// to exist or develop in other products of Identifier 2019–NE–33–AD; Amendment 39– www.regulations.gov by searching for the same type design. 21011; AD 2019–25–13] and locating Docket No. FAA–2019– AD Requirements 0912. RIN 2120–AA64 This AD requires an ultrasonic Examining the AD Docket inspection of the affected LPC 1st-stage Airworthiness Directives; Engine fan blades and replacement of any Alliance Turbofan Engines You may examine the AD docket on the internet at https:// affected fan blades that fail the AGENCY: Federal Aviation www.regulations.gov by searching for inspection. Administration (FAA), DOT. and locating Docket No. FAA–2019– Interim Action 0912; or in person at Docket Operations ACTION: Final rule; request for The FAA considers this AD interim comments. between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. action. The root cause of the LPC 1st- SUMMARY: The FAA is adopting a new The AD docket contains this final rule, stage fan blade fracture is still airworthiness directive (AD) for all the regulatory evaluation, any undetermined and the FAA will Engine Alliance (EA) GP7270 and comments received, and other consider further rulemaking depending GP7277 model turbofan engines with a information. The street address for the on the results of the investigation. certain low-pressure compressor (LPC) Docket Operations is listed above. FAA’s Justification and Determination 1st-stage fan blade installed. This AD Comments will be available in the AD of the Effective Date requires an ultrasonic inspection of the docket shortly after receipt. Since there are currently no domestic affected LPC 1st-stage fan blades and FOR FURTHER INFORMATION CONTACT: operators of this product, notice and replacement of any affected fan blades Matthew Smith, Aerospace Engineer, opportunity for public comment before that fail the inspection. This AD was ECO Branch, FAA, 1200 District issuing this AD are unnecessary. In prompted by a report of an in-flight Avenue, Burlington, MA 01803; phone: addition, for the reason stated above, the shutdown (IFSD) of an engine due to the 781–238–7735; fax: 781–238–7199; FAA finds that good cause exists for fracture of multiple fan blades. The FAA email: [email protected]. making this amendment effective in less is issuing this AD to address the unsafe SUPPLEMENTARY INFORMATION: than 30 days. condition on these products. DATES: This AD is effective January 14, Discussion Comments Invited 2020. The FAA received a report of an IFSD This AD is a final rule that involves The Director of the Federal Register that occurred during a revenue flight on requirements affecting flight safety and approved the incorporation by reference March 10, 2019. The IFSD resulted from was not preceded by notice and an of a certain publication listed in this AD the fracture of two LPC 1st-stage fan opportunity for public comment. as of January 14, 2020. blades. After an analysis of these However, the FAA invites you to send The FAA must receive comments on fractures, the manufacturer determined any written data, views, or arguments this AD by February 13, 2020. the fan blades experienced cracks that about this final rule. Send your ADDRESSES: You may send comments, originated on the internal surface of the comments to an address listed under the using the procedures found in 14 CFR convex airfoil and propagated to the ADDRESSES section. Include the docket 11.43 and 11.45, by any of the following point of failure. The cracks originated in number FAA–2019–0912 and Product methods: a microtexture area that can result in a Identifier 2019–NE–33–AD at the

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beginning of your comments. The FAA personal information you provide. The FAA has determined that it has good specifically invites comments on the FAA will also post a report cause to adopt this rule without notice overall regulatory, economic, summarizing each substantive verbal and comment, RFA analysis is not environmental, and energy aspects of contact received about this final rule. required. this final rule. The FAA will consider Regulatory Flexibility Act Costs of Compliance all comments received by the closing date and may amend this final rule The requirements of the Regulatory The FAA estimates that this AD because of those comments. Flexibility Act (RFA) do not apply when affects 0 engines installed on airplanes The FAA will post all comments an agency finds good cause pursuant to of U.S. registry. received, without change, to https:// 5 U.S.C. 553 to adopt a rule without The FAA estimates the following www.regulations.gov, including any prior notice and comment. Because the costs to comply with this AD:

ESTIMATED COSTS

Cost per Cost on U.S. Action Labor cost Parts cost product operators

Perform ultrasonic inspection for 8 work-hours × $85 per hour = $680 ...... $0 $680 $0 one set of blades.

The FAA estimates the following results of the inspection. The FAA has aircraft that might need these costs to do any necessary replacements no way of determining the number of replacements: that would be required based on the

ON-CONDITION COSTS

Cost per Action Labor cost Parts cost product

Replace fan blade ...... 4 work-hours × $85 per hour = $340 ...... $190,000 $190,340

Authority for This Rulemaking Engine and Propeller Standards Branch, Authority: 49 U.S.C. 106(g), 40113, 44701. Policy and Innovation Division. Title 49 of the United States Code § 39.13 [Amended] specifies the FAA’s authority to issue Regulatory Findings rules on aviation safety. Subtitle I, ■ 2. The FAA amends § 39.13 by adding This AD will not have federalism section 106, describes the authority of the following new airworthiness implications under Executive Order the FAA Administrator. ‘‘Subtitle VII: directive (AD): 13132. This AD will not have a Aviation Programs’’ describes in more substantial direct effect on the States, on 2019–25–13 Engine Alliance: Amendment detail the scope of the Agency’s the relationship between the national 39–21011; Docket No. FAA–2019–0912; authority. Product Identifier 2019–NE–33–AD. The FAA is issuing this rulemaking government and the States, or on the under the authority described in distribution of power and (a) Effective Date Subtitle VII, Part A, Subpart III, Section responsibilities among the various This AD is effective January 14, 2020. levels of government. 44701: ‘‘General requirements.’’ Under (b) Affected ADs that section, Congress charges the FAA For the reasons discussed above, I with promoting safe flight of civil certify that this AD: None. (1) Is not a ‘‘significant regulatory aircraft in air commerce by prescribing (c) Applicability regulations for practices, methods, and action’’ under Executive Order 12866, and This AD applies to Engine Alliance (EA) procedures the Administrator finds GP7270 and GP7277 model turbofan engines necessary for safety in air commerce. (2) Will not affect intrastate aviation in Alaska. with low-pressure compressor (LPC) 1st-stage This regulation is within the scope of fan blades, part number (P/N) 5700531, that authority because it addresses an List of Subjects in 14 CFR Part 39 5702931, 5702931CL1, or 5702931CL2, unsafe condition that is likely to exist or Air transportation, Aircraft, Aviation installed. develop on products identified in this safety, Incorporation by reference, (d) Subject rulemaking action. Safety. This AD is issued in accordance with Joint Aircraft System Component (JASC) authority delegated by the Executive Adoption of the Amendment Code 7230, Turbine Engine Compressor Section. Director, Aircraft Certification Service, Accordingly, under the authority as authorized by FAA Order 8000.51C. delegated to me by the Administrator, (e) Unsafe Condition In accordance with that order, issuance the FAA amends 14 CFR part 39 as This AD was prompted by a report of an of ADs is normally a function of the follows: in-flight shutdown of an engine due to the Compliance and Airworthiness fracture of multiple LPC 1st-stage fan blades. Division, but during this transition PART 39—AIRWORTHINESS The FAA is issuing this AD to prevent failure period, the Executive Director has DIRECTIVES of the fan blade. The unsafe condition, if not delegated the authority to issue ADs addressed, could result in uncontained fan applicable to engines, propellers, and ■ 1. The authority citation for part 39 blade release, damage to the engine, and associated appliances to the Manager, continues to read as follows: damage to the airplane.

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(f) Compliance paragraph under 5 U.S.C. 552(a) and 1 CFR the FAA’s determination that new or Comply with this AD within the part 51. more restrictive airworthiness compliance times specified, unless already (2) You must use this service information limitations are necessary. The FAA is done. as applicable to do the actions required by issuing this AD to address the unsafe this AD, unless the AD specifies otherwise. (g) Required Actions (i) Engine Alliance (EA) Service Bulletin condition on these products. (1) For engines with affected LPC 1st-stage EAGP7–A72–426, dated September 30, 2019. DATES: This AD is effective February 3, fan blades that have 3,250 or more flight (ii) [Reserved] 2020. cycles (FCs) since new as of the effective date (3) For EA service information identified in The Director of the Federal Register of this AD, within 250 FCs after the effective this AD, contact Engine Alliance, 411 Silver approved the incorporation by reference date of this AD, perform an ultrasonic Lane, East Hartford, CT 06118; phone: 800– of certain publications listed in this AD inspection of the LPC 1st-stage fan blades in 565–0140; email: [email protected]; as of February 3, 2020. accordance with the Accomplishment website: www.engineallianceportal.com. The Director of the Federal Register Instructions, ‘‘For Fan Blades Installed In An (4) You may view this service information approved the incorporation by reference Engine,’’ paragraph 1, or ‘‘For Fan Blades Not at the FAA, Engine and Propeller Standards Installed In an Engine,’’ paragraph 1, as Branch, 1200 District Avenue, Burlington, of certain other publications listed in applicable, of EA Service Bulletin (SB) MA 01803. For information on the this AD as of October 11, 2017 (82 FR EAGP7–A72–426, dated September 30, 2019. availability of this material at the FAA, call 42021, September 6, 2017). (2) If the ultrasonic inspection of the 781–238–7759. ADDRESSES: For service information affected fan blades results in a rejectable (5) You may view this service information identified in this final rule, contact ultrasonic indication, remove the fan blade that is incorporated by reference at the Embraer S.A., Technical Publications from service and replace with a part eligible National Archives and Records Section (PC 060), Av. Brigadeiro Faria for installation before further flight. Administration (NARA). For information on Note 1 to paragraph (g)(2): Guidance on the availability of this material at NARA, Lima, 2170—Putim—12227–901 Sa˜o determining a rejectable ultrasonic indication email: [email protected], or go to: Jose dos Campos—SP—Brazil; can be found in Non-Destructive Inspection https://www.archives.gov/federal-register/cfr/ telephone +55 12 3927–5852 or +55 12 Procedure, NDIP–1205, Revision 1—GP7000 ibr-locations.html. 3309–0732; fax +55 12 3927–7546; 1st Stage LPC Rotor (Fan) Blade Assembly email [email protected]; internet Airfoil Ultrasonic Inspection for Cracks (Fan Issued in Burlington, Massachusetts, on December 12, 2019. https://www.flyembraer.com. You may Blades installed or uninstalled), (‘‘NDIP– view this referenced service information 1205’’), dated September 23, 2019. Robert J. Ganley, at the FAA, Transport Standards Manager, Engine and Propeller Standards (h) No Reporting Requirement Branch, Aircraft Certification Service. Branch, 2200 South 216th St., Des No reporting requirement contained within Moines, WA. For information on the [FR Doc. 2019–27889 Filed 12–27–19; 8:45 am] NDIP–1205 is required by this AD. availability of this material at the FAA, BILLING CODE 4910–13–P (i) Credit for Previous Actions call 206–231–3195. It is also available on the internet at https:// You may take credit for the ultrasonic www.regulations.gov by searching for inspection required by paragraph (g)(1) of DEPARTMENT OF TRANSPORTATION this AD if you performed the inspection and locating Docket No. FAA–2019– before the effective date of this AD using Federal Aviation Administration 0519. NDIP–1205, Revision 1, dated September 23, Examining the AD Docket 2019, or Original Issue, dated August 30, 14 CFR Part 39 2019. You may examine the AD docket on [Docket No. FAA–2019–0519; Product the internet at https:// (j) Alternative Methods of Compliance Identifier 2019–NM–089–AD; Amendment (AMOCs) www.regulations.gov by searching for 39–21005; AD 2019–24–16] and locating Docket No. FAA–2019– (1) The Manager, ECO Branch, FAA, has the authority to approve AMOCs for this AD, RIN 2120–AA64 0519; or in person at Docket Operations if requested using the procedures found in 14 between 9 a.m. and 5 p.m., Monday CFR 39.19. In accordance with 14 CFR 39.19, Airworthiness Directives; Embraer S.A. through Friday, except Federal holidays. send your request to your principal inspector Airplanes The AD docket contains this final rule, or local Flight Standards District Office, as AGENCY: Federal Aviation the regulatory evaluation, any appropriate. If sending information directly comments received, and other to the manager of the certification office, Administration (FAA), Department of Transportation (DOT). information. The address for Docket send it to the attention of the person Operations is U.S. Department of identified in paragraph (k) of this AD. You ACTION: Final rule. may email your request to: ANE-AD-AMOC@ Transportation, Docket Operations, M– faa.gov. SUMMARY: The FAA is superseding 30, West Building Ground Floor, Room (2) Before using any approved AMOC, Airworthiness Directive (AD) 2017–16– W12–140, 1200 New Jersey Avenue SE, notify your appropriate principal inspector, 08, which applied to certain Embraer Washington, DC 20590. or lacking a principal inspector, the manager S.A. Model ERJ 190–100 STD, –100 LR, FOR FURTHER INFORMATION CONTACT: of the local flight standards district office/ –100 IGW, and –100 ECJ airplanes; and Krista Greer, Aerospace Engineer, certificate holding district office. Model ERJ 190–200 STD, –200 LR, and International Section, Transport (k) Related Information –200 IGW airplanes. AD 2017–16–08 Standards Branch, FAA, 2200 South For more information about this AD, required revising the existing 216th St., Des Moines, WA 98198; contact Matthew Smith, Aerospace Engineer, maintenance or inspection program, as telephone and fax 206–231–3221. ECO Branch, FAA, 1200 District Avenue, applicable, to incorporate more SUPPLEMENTARY INFORMATION: Burlington, MA 01803; phone: 781–238– restrictive airworthiness limitations. 7735; fax: 781–238–7199; email: This AD requires revising the existing Discussion [email protected]. maintenance or inspection program, as The Ageˆncia Nacional de Aviac¸a˜o (l) Material Incorporated by Reference applicable, to incorporate new or more Civil (ANAC), which is the aviation (1) The Director of the Federal Register restrictive airworthiness limitations. authority for Brazil, has issued Brazilian approved the incorporation by reference This AD also adds airplanes to the AD 2019–05–02, effective May 2, 2019; (IBR) of the service information listed in this applicability. This AD was prompted by corrected July 1, 2019 (‘‘Brazilian AD

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2019–05–02’’) (also referred to after this Comments • Do not add any additional burden as the Mandatory Continuing The FAA gave the public the upon the public than was already Airworthiness Information, or ‘‘the opportunity to participate in developing proposed in the NPRM. MCAI’’), to correct an unsafe condition this final rule. The following presents The FAA also determined that these for certain Embraer S.A. Model ERJ 190– the comment received on the NPRM and changes will not increase the economic 100 STD, –100 LR, –100 ECJ, –100 SR, the FAA’s response to that comment. burden on any operator or increase the and –100 IGW airplanes; and Model ERJ scope of this final rule. Request for Credit for Previously 190–200 STD, –200 LR, and –200 IGW Accomplished Actions Related Service Information Under 1 airplanes. Model ERJ 190–100SR CFR Part 51 airplanes are not on the U.S. Register; Embraer requested that operators be Embraer has issued Appendix A— this AD therefore does not include those allowed to substitute the last Airworthiness Limitations (AL), to the airplanes in the applicability. You may accomplishment of task 53–23–001– EMBRAER 190/195 Maintenance examine the MCAI in the AD docket on 0001, which was included in Revision 11 and earlier of EMBRAER 190/195 Review Board Report, MRB–1928, the internet at https:// Revision 12, dated September 27, 2018. www.regulations.gov by searching for MRB–1928, for the initial accomplishment of task 53–53–001– Embraer has also issued Appendix and locating Docket No. FAA–2019– 0004, which is included in EMBRAER A—Airworthiness Limitations (AL), to 0519. 190/195 MRB–1928, Revision 12. the EMBRAER Lineage 1000/1000E The FAA issued a notice of proposed Embraer justified its request by Maintenance Planning Guide, MPG– rulemaking (NPRM) to amend 14 CFR providing a copy of Brazilian AMOC 2928, Revision 8, dated October 10, part 39 to supersede AD 2017–16–08, No. 632/2019/GCPR/GGCP/SAR–ANAC, 2018. Amendment 39–18985 (82 FR 42021, dated June 13, 2019. The commenter This AD also requires the following September 6, 2017) (‘‘AD 2017–16–08’’). explained that task 53–23–001–0004 documents, which the Director of the AD 2017–16–08 applied to certain was created for EMBRAER 190/195 Federal Register approved for Embraer S.A. Model ERJ 190–100 STD, MRB–1928, Revision 12, by splitting an incorporation by reference as of October –100 LR, –100 ECJ and –100 IGW existing task from previous revisions of 11, 2017 (82 FR 42021, September 6, EMBRAER 190/195 MRB–1928 in order 2017). airplanes and Model ERJ 190–200 STD, • –200 LR, and –200 IGW airplanes. The to increase the interval for certain parts Appendix A—Airworthiness NPRM published in the Federal of the task, reducing the frequency of Limitations (AL), of the EMBRAER ERJ Register on July 5, 2019 (84 FR 32101). access in areas that are difficult to 190/195 Maintenance Review Board Report, MRB–1928, Revision 9, dated The NPRM was prompted by the FAA’s access. In EMBRAER 190/195 August 14, 2015. determination that new or more Maintenance Review Board Report, MRB–1928, Revision 11, and earlier, • Appendix A—Airworthiness restrictive airworthiness limitations are Limitations (AL), of the EMBRAER necessary. The NPRM proposed to task 53–23–001–0001 included the same inspection as task 53–23–001–0004. Lineage 1000/1000E Maintenance require revising the existing ANAC granted Brazilian AMOC No. Planning Guide, MPG–2928, Revision 4, maintenance or inspection program, as 632/2019/GCPR/GGCP/SAR–ANAC, dated July 14, 2014. applicable, to incorporate new or more dated June 13, 2019, to provide credit • EMBRAER MPG—Temporary restrictive airworthiness limitations. for a one time accomplishment of task Revision 4–2, dated February 13, 2015. The NPRM also proposed to add 53–23–001–0001 as a substitution for • EMBRAER MPG—Temporary airplanes to the applicability. The FAA the initial accomplishment of task 53– Revision 4–3, dated October 30, 2015. is issuing this AD to address fatigue 23–001–0004, provided the task was • EMBRAER MRB—Temporary cracking of structural components and accomplished within 5,000 flight cycles Revision 9–1, dated October 27, 2015. • to address failure of certain system since the last accomplishment. EMBRAER MRB—Temporary components, which could result in The FAA agrees with the commenter’s Revision 9–3, dated October 27, 2015 reduced structural integrity and system request for the reason provided and has This service information is reasonably reliability of the airplane. See the MCAI included Brazilian AMOC No. 632/ available because the interested parties for additional background information. 2019/GCPR/GGCP/SAR–ANAC, dated have access to it through their normal June 13, 2019, in paragraph (k)(1)(iii) of course of business or by the means Action Since the NPRM Was Issued this AD to allow accomplishment of task identified in the ADDRESSES section. Since the NPRM was issued ANAC 53–23–001–0001 after the effective date Costs of Compliance published a correction to Brazilian AD of this AD as a substitution for the The FAA estimates that this AD 2019–05–02 to clarify that the initial initial accomplishment of task 53–23– 001–0004, provided this task was affects 107 airplanes of U.S. registry. compliance times identified as The FAA estimates the following ‘‘Threshold’’ or ‘‘T’’ in EMBRAER 190/ accomplished within 5,000 flight cycles since it was last accomplished. costs to comply with this AD. 195 Maintenance Review Board Report, The actions that are required by AD MRB–1928, Revision 12, dated Conclusion 2017–16–08 and retained in this final September 27, 2018 (‘‘EMBRAER 190/ The FAA reviewed the relevant data, rule take about 1 work-hour per 195 MRB–1928, Revision 12’’), are considered the comment received, and product, at an average labor rate of $85 expressed in total flight cycles and total determined that air safety and the per work hour. Required parts cost flight hours. The FAA has revised public interest require adopting this about $0 per product. Based on these paragraph (i)(1)(i) of this AD to state final rule with the change described figures, the estimated cost of the actions ‘‘For the purposes of this AD, the initial previously and minor editorial changes. that were required by AD 2017–16–08 is compliance times (identified as The FAA determined that these minor $85 per product. ‘Threshold’ or ‘T’ in EMBRAER 190/195 changes: The FAA has determined that revising MRB–1928, Revision 12) are expressed • Are consistent with the intent that the existing maintenance or inspection in ‘total flight cycles’ or ‘total flight was proposed in the NPRM for program takes an average of 90 work- hours,’ as applicable.’’ addressing the unsafe condition; and hours per operator, although the agency

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recognizes that this number may vary (3) Will not have a significant (f) Compliance from operator to operator. In the past, economic impact, positive or negative, Comply with this AD within the the FAA has estimated that this action on a substantial number of small entities compliance times specified, unless already takes 1 work-hour per airplane. Since under the criteria of the Regulatory done. operators incorporate maintenance or Flexibility Act. (g) Retained Revision of Maintenance or inspection program changes for their List of Subjects in 14 CFR Part 39 Inspection Program, With No Changes affected fleet(s), the FAA has This paragraph restates the requirements of determined that a per-operator estimate Air transportation, Aircraft, Aviation paragraph (i) of AD 2017–16–08, with no is more accurate than a per-airplane safety, Incorporation by reference, changes. For airplanes having serial numbers estimate. Therefore, the FAA estimates Safety. 19000002, 19000004, 19000006 through the total cost per operator to be $7,650 19000213 inclusive, 19000215 through (90 work-hours × $85 per work-hour). Adoption of the Amendment 19000276 inclusive, 19000278 through 19000466 inclusive, 19000468 through Authority for This Rulemaking Accordingly, under the authority 19000525 inclusive, and 19000527 through delegated to me by the Administrator, 19000696 inclusive, do the revision required Title 49 of the United States Code the FAA amends 14 CFR part 39 as by paragraph (g)(1) or (2) of this AD, as specifies the FAA’s authority to issue follows: applicable. rules on aviation safety. Subtitle I, (1) For Model ERJ 190–100 STD, ERJ 190– section 106, describes the authority of PART 39—AIRWORTHINESS 100 LR, ERJ 190–100 IGW, ERJ 190–200 STD, the FAA Administrator. Subtitle VII: DIRECTIVES ERJ 190–200 LR, and ERJ 190–200 IGW Aviation Programs, describes in more airplanes: Within 90 days after October 11, 2017 (the effective date of AD 2017–16–08), detail the scope of the Agency’s ■ 1. The authority citation for part 39 authority. revise the existing maintenance or inspection continues to read as follows: program, as applicable, to incorporate the The FAA is issuing this rulemaking Authority: 49 U.S.C. 106(g), 40113, 44701. tasks specified in Part 2—Airworthiness under the authority described in Limitation Inspections—Structures, of Subtitle VII, Part A, Subpart III, Section § 39.13 [Amended] Appendix A—Airworthiness Limitations 44701: ‘‘General requirements.’’ Under (AL), of the EMBRAER 190/195 Maintenance that section, Congress charges the FAA ■ 2. The FAA amends § 39.13 by Review Board Report, MRB–1928, Revision 9, with promoting safe flight of civil removing Airworthiness Directive (AD) dated August 14, 2015 (‘‘MRB–1928, aircraft in air commerce by prescribing 2017–16–08, Amendment 39–18985 (82 Revision 9’’); EMBRAER MRB—Temporary regulations for practices, methods, and Revision 9–1, dated October 27, 2015, to Part FR 42021, September 6, 2017), and 2—Airworthiness Limitation Inspections— procedures the Administrator finds adding the following new AD: Structures, and Part 4—Life Limited Items, of necessary for safety in air commerce. 2019–24–16 Embraer S.A.: Amendment 39– Appendix A—Airworthiness Limitations This regulation is within the scope of 21005; Docket No. FAA–2019–0519; (AL), of MRB–1928, Revision 9; and that authority because it addresses an Product Identifier 2019–NM–089–AD. EMBRAER MRB—Temporary Revision 9–3, unsafe condition that is likely to exist or dated October 27, 2015, to Part 2— develop on products identified in this (a) Effective Date Airworthiness Limitation Inspections— rulemaking action. This AD is effective February 3, 2020. Structures, of Appendix A—Airworthiness Limitations (AL), of MRB–1928, Revision 9; This AD is issued in accordance with (b) Affected ADs with the thresholds and intervals stated in authority delegated by the Executive This AD replaces AD 2017–16–08, these documents. The initial compliance Director, Aircraft Certification Service, Amendment 39–18985 (82 FR 42021, times for the tasks are at the later of the times as authorized by FAA Order 8000.51C. September 6, 2017) (‘‘AD 2017–16–08’’). specified in paragraphs (g)(1)(i) and (ii) of In accordance with that order, issuance this AD. of ADs is normally a function of the (c) Applicability (i) Within the applicable times specified in Compliance and Airworthiness This AD applies to Embraer S.A. Model MRB–1928, Revision 9; EMBRAER MRB— Division, but during this transition ERJ 190–100 STD, –100 LR, –100 ECJ, and Temporary Revision 9–1, dated October 27, period, the Executive Director has –100 IGW airplanes; and Model ERJ 190–200 2015, to Part 2—Airworthiness Limitation STD, –200 LR, and –200 IGW airplanes; Inspections—Structures, and Part 4—Life delegated the authority to issue ADs certificated in any category; serial numbers Limited Items, of Appendix A— applicable to transport category 19000002, 19000004, 19000006 through Airworthiness Limitations (AL), of MRB– airplanes and associated appliances to 19000213 inclusive, 19000215 through 1928, Revision 9; and EMBRAER MRB— the Director of the System Oversight 19000276 inclusive, 19000278 through Temporary Revision 9–3, dated October 27, Division. 19000466 inclusive, 19000468 through 2015, to Part 2—Airworthiness Limitation 19000525 inclusive, and 19000527 through Inspections—Structures, of Appendix A— Regulatory Findings 19000758 inclusive. Airworthiness Limitations (AL), of MRB– 1928, Revision 9. Where tasks are listed in The FAA determined that this AD (d) Subject will not have federalism implications both MRB–1928, Revision 9, and a temporary under Executive Order 13132. This AD Air Transport Association (ATA) of revision, the compliance times in the America Codes 27, Flight controls; 28, Fuel; temporary revision take precedence. will not have a substantial direct effect 52, Doors; 53, Fuselage; 54, Nacelles/pylons; (ii) Within 90 days or 600 flight cycles after on the States, on the relationship 55, Stabilizers; 57, Wings; 71, Powerplant; October 11, 2017 (the effective date of AD between the national government and and 78, Exhaust. 2017–16–08), whichever occurs later. the States, or on the distribution of (2) For Model ERJ 190–100 ECJ airplanes: power and responsibilities among the (e) Reason Within 90 days after October 11, 2017 (the various levels of government. This AD was prompted by a determination effective date of AD 2017–16–08), revise the For the reasons discussed above, I that new or more restrictive airworthiness maintenance or inspection program, as certify that this AD: limitations are necessary. The FAA is issuing applicable, to incorporate the tasks specified this AD to address fatigue cracking of in Part 1—Certification Maintenance (1) Is not a ‘‘significant regulatory structural components and to address failure Requirements, Part 2—Airworthiness action’’ under Executive Order 12866, of certain system components, which could Limitation Inspections—Structures, Part 3— (2) Will not affect intrastate aviation result in reduced structural integrity and Fuel System Limitation Items, and Part 4— in Alaska, and system reliability of the airplane. Life Limited Items, of Appendix A—

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Airworthiness Limitations (AL), of the (ii) Within 90 days or 600 flight cycles after a manufacturer, the action must be EMBRAER Lineage 1000/1000E Maintenance the effective date of this AD, whichever accomplished using a method approved by Planning Guide, MPG–2928, Revision 4, occurs later. the Manager, International Section, Transport dated July 14, 2014; EMBRAER MPG— (2) For Model ERJ 190–100 ECJ airplanes: Standards Branch, FAA; or the ANAC; or Temporary Revision 4–2, dated February 13, Within 90 days after the effective date of this ANAC’s authorized Designee. If approved by 2015; and EMBRAER MPG—Temporary AD, revise the existing maintenance or the ANAC Designee, the approval must Revision 4–3, dated October 30, 2015; with inspection program, as applicable, to include the Designee’s authorized signature. the thresholds and intervals stated in these incorporate the tasks specified in Appendix (l) Related Information documents. The initial compliance times for A—Airworthiness Limitations (AL), of the the tasks are at the later of the times specified EMBRAER Lineage 1000/1000E Maintenance (1) Refer to Mandatory Continuing in paragraphs (g)(2)(i) and (ii) of this AD. Planning Guide, MPG–2928, Revision 8, Airworthiness Information (MCAI) Brazilian (i) Within the applicable times specified in dated October 10, 2018 (‘‘EMBRAER Lineage AD 2019–05–02, effective May 2, 2019; Part 1, Certification Maintenance 1000/1000E MPG–2928, Revision 8’’). The corrected July 1, 2019; for related Requirements, Part 2, Airworthiness initial compliance times for the tasks are at information. This MCAI may be found in the Limitation Inspections—Structures, Part 3, the later of the times specified in paragraphs AD docket on the internet at https:// Fuel System Limitation Items, and Part 4, (i)(2)(i) and (ii) of this AD. Accomplishing www.regulations.gov by searching for and Life Limited Items, of Appendix A— the revision required by this paragraph locating Docket No. FAA–2019–0519. (2) For more information about this AD, Airworthiness Limitations (AL), of the terminates the requirements of paragraph contact Krista Greer, Aerospace Engineer, EMBRAER Lineage 1000/1000E Maintenance (g)(2) of this AD. International Section, Transport Standards Planning Guide, MPG–2928, Revision 4, (i) Within the applicable times specified in Branch, FAA, 2200 South 216th St., Des dated July 14, 2014; EMBRAER MPG— EMBRAER Lineage 1000/1000E MPG–2928, Moines, WA 98198; telephone and fax 206– Temporary Revision 4–2, dated February 13, Revision 8. For the purposes of this AD, the 231–3221. 2015; and EMBRAER MPG—Temporary initial compliance times (identified as Revision 4–3, dated October 30, 2015. Where ‘‘Threshold’’ or ‘‘T’’ in EMBRAER Lineage (m) Material Incorporated by Reference tasks are listed in both MPG–2928, Revision 1000/1000E MPG–2928, Revision 8) are (1) The Director of the Federal Register 4, and a temporary revision, the compliance expressed in ‘‘total flight cycles’’ or ‘‘total approved the incorporation by reference times in the temporary revision take flight hours’’ as applicable. (IBR) of the service information listed in this precedence. (ii) Within 90 days or 600 flight cycles after paragraph under 5 U.S.C. 552(a) and 1 CFR (ii) Within 90 days or 600 flight cycles after the effective date of this AD, whichever part 51. October 11, 2017 (the effective date AD occurs later. (2) You must use this service information 2017–16–08), whichever occurs later. (j) No Alternative Actions, Intervals, or as applicable to do the actions required by (h) Retained No Alternative Actions CDCCLs this AD, unless this AD specifies otherwise. Intervals, or Critical Design Configuration (3) The following service information was After the existing maintenance or approved for IBR on February 3, 2020. Control Limitations (CDCCLs), With New inspection program has been revised as Exception (i) Appendix A—Airworthiness required by paragraph (i) of this AD, no Limitations (AL); to the EMBRAER 190/195 This paragraph restates the action required alternative actions (e.g., inspections), Maintenance Review Board Report, MRB– by paragraph (j) of AD 2017–16–08, with a intervals, or CDCCLs may be used unless the 1928, Revision 12, dated September 27, 2018. new exception. Except as required by actions, intervals, and CDCCLs are approved (ii) Appendix A—Airworthiness paragraph (i) of this AD, after as an AMOC in accordance with the Limitations (AL), to the EMBRAER Lineage accomplishment of the revision required by procedures specified in paragraph (k)(1) of 1000/1000E Maintenance Planning Guide, paragraph (g) of this AD, no alternative this AD. MPG–2928, Revision 8, dated October 10, actions (e.g., inspections), intervals, or (k) Other FAA AD Provisions 2018. CDCCLs may be used unless the actions, (4) The following service information was intervals, or CDCCLs are approved as an (1) Alternative Methods of Compliance approved for IBR on October 11, 2017 (82 FR AMOC in accordance with the procedures (AMOCs): The Manager, International 42021, September 6, 2017). specified in paragraph (k)(1) of this AD. Section, Transport Standards Branch, FAA, (i) Appendix A—Airworthiness has the authority to approve AMOCs for this (i) New Requirement of This AD: Limitations (AL), of the EMBRAER ERJ 190/ AD, if requested using the procedures found 195 Maintenance Review Board Report, Maintenance or Inspection Program in 14 CFR 39.19. In accordance with 14 CFR Revision MRB–1928, Revision 9, dated August 14, 39.19, send your request to your principal 2015. (1) For Model ERJ 190–100 STD, ERJ 190– inspector or local Flight Standards District (ii) Appendix A—Airworthiness 100 LR, ERJ 190–100 IGW, ERJ 190–200 STD, Office, as appropriate. If sending information Limitations (AL), of the EMBRAER Lineage ERJ 190–200 LR, and ERJ 190–200 IGW directly to the International Section, send it 1000/1000E Maintenance Planning Guide, airplanes: Within 90 days after the effective to the attention of the person identified in MPG–2928, Revision 4, dated July 14, 2014. date of this AD, revise the existing paragraph (l)(2) of this AD. Information may (iii) EMBRAER MPG—Temporary Revision maintenance or inspection program, as be emailed to 9-ANM-116-AMOC- 4–2, dated February 13, 2015. applicable, to incorporate the information [email protected]. (iv) EMBRAER MPG—Temporary Revision specified in Appendix A—Airworthiness (i) Before using any approved AMOC, 4–3, dated October 30, 2015. Limitations (AL), to the EMBRAER 190/195 notify your appropriate principal inspector, (v) EMBRAER MRB—Temporary Revision Maintenance Review Board Report, MRB– or lacking a principal inspector, the manager 9–1, dated October 27, 2015. 1928, Revision 12, dated September 27, 2018 of the local flight standards district office/ (vi) EMBRAER MRB—Temporary Revision (‘‘EMBRAER 190/195 MRB–1928, Revision certificate holding district office. 9–3, dated October 27, 2015. 12’’). The initial compliance time for doing (ii) FAA AMOC letter AIR–676–18–241, (5) For service information identified in the tasks are at the later of the times specified dated May 14, 2018, approved previously for this AD, contact Embraer S.A., Technical in paragraphs (i)(1)(i) and (ii) of this AD. AD 2017–16–08, is approved as an AMOC for Publications Section (PC 060), Av. Brigadeiro Accomplishing the revision required by this the corresponding provisions of this AD. Faria Lima, 2170—Putim—12227–901 Sa˜o paragraph terminates the requirements of (iii) Brazilian AMOC No. 632/2019/GCPR/ Jose dos Campos—SP—Brasil; telephone +55 paragraph (g)(1) of this AD. GGCP/SAR–ANAC, dated June 13, 2019, is 12 3927–5852 or +55 12 3309–0732; fax +55 (i) Within the applicable times specified in approved as an AMOC for the corresponding 12 3927–7546; email [email protected]; EMBRAER 190/195 MRB–1928, Revision 12. provisions of this AD, provided the task was internet https://www.flyembraer.com. For the purposes of this AD, the initial performed within 5,000 flight cycles since its (6) You may view this service information compliance times (identified as ‘‘Threshold’’ last accomplishment. at the FAA, Transport Standards Branch, or ‘‘T’’ in EMBRAER 190/195 MRB–1928, (2) Contacting the Manufacturer: As of the 2200 South 216th St., Des Moines, WA. For Revision 12) are expressed in ‘‘total flight effective date of this AD, for any requirement information on the availability of this cycles or ‘‘total flight hours’’ as applicable. in this AD to obtain corrective actions from material at the FAA, call 206–231–3195.

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(7) You may view this service information material at the FAA, call 206–231–3195. Effect of Winglets on Accomplishment that is incorporated by reference at the It is also available on the internet at of the Proposed Actions National Archives and Records https://www.regulations.gov by Aviation Partners Boeing stated that Administration (NARA). For information on searching for and locating Docket No. the availability of this material at NARA, accomplishing Supplemental Type email [email protected], or go to: https:// FAA–2019–0487. Certificate (STC) ST01219SE does not www.archives.gov/federal-register/cfr/ibr- Examining the AD Docket affect the actions specified in the locations.html. proposed AD. You may examine the AD docket on Issued in Des Moines, Washington, on The FAA concurs with the December 9, 2019. the internet at https:// commenter. The FAA has redesignated www.regulations.gov by searching for Michael Kaszycki, paragraph (c) of the proposed AD as and locating Docket No. FAA–2019– paragraph (c)(1) of this AD and added Acting Director, System Oversight Division, 0487; or in person at Docket Operations Aircraft Certification Service. paragraph (c)(2) to this AD to state that between 9 a.m. and 5 p.m., Monday installation of STC ST01219SE does not [FR Doc. 2019–28068 Filed 12–27–19; 8:45 am] through Friday, except Federal holidays. BILLING CODE 4910–13–P affect the ability to accomplish the The AD docket contains this final rule, actions required by this AD. Therefore, the regulatory evaluation, any for airplanes on which STC ST01219SE comments received, and other DEPARTMENT OF TRANSPORTATION is installed, a ‘‘change in product’’ information. The address for Docket alternative method of compliance Federal Aviation Administration Operations is U.S. Department of (AMOC) approval request is not Transportation, Docket Operations, M– necessary to comply with the 14 CFR Part 39 30, West Building Ground Floor, Room requirements of 14 CFR 39.17. W12–140, 1200 New Jersey Avenue SE, [Docket No. FAA–2019–0487; Product Washington, DC 20590. Request To Allow Later Revisions to the Identifier 2019–NM–044–AD; Amendment Service Information 39–19810; AD 2019–23–16] FOR FURTHER INFORMATION CONTACT: Payman Soltani, Aerospace Engineer, John Straiton requested that the FAA RIN 2120–AA64 Airframe Section, FAA, Los Angeles revise the proposed AD to allow the use ACO Branch, 3960 Paramount of later revisions to the service Airworthiness Directives; The Boeing Boulevard, Lakewood, CA 90712–4137; information. The commenter pointed Company Airplanes phone: 562–627–5313; fax: 562–627– out that allowing the use of later AGENCY: Federal Aviation 5210; email: [email protected]. revisions would make it easier for the Administration (FAA), DOT. SUPPLEMENTARY INFORMATION: operator to ensure compliance and that ACTION: Final rule. all maintenance is certified to the latest Discussion maintenance data. The commenter also SUMMARY: The FAA is adopting a new The FAA issued a notice of proposed mentioned that allowing the use of later airworthiness directive (AD) for all The rulemaking (NPRM) to amend 14 CFR revisions would make it unnecessary for Boeing Company Model 737–100, –200, part 39 by adding an AD that would operators to wait for new ADs that –200C, –300, –400, and –500 series apply to all The Boeing Company Model include the latest revisions to the airplanes. This AD was prompted by a 737–100, –200, –200C, –300, –400, and service information, or for operators to report of a fuel leak resulting from a –500 series airplanes. The NPRM request an AMOC that allows the use of crack on the left in-spar upper wing published in the Federal Register on the latest revisions to the service skin. This AD requires repetitive surface July 8, 2019 (84 FR 32343). The NPRM information. The commenter stated that high frequency eddy current (HFEC) was prompted by a report of a fuel leak this would reduce the delay in inspections of the left and right upper resulting from a crack on the left in-spar implementation of the latest revisions to wing skin for any crack, repetitive upper wing skin. The NPRM proposed the service information and also reduce general visual inspections of the upper to require repetitive HFEC inspections the maintenance costs associated with wing skin in the adjacent rib bay areas of the left and right upper wing skin for the issuance of AMOCs. The commenter for any crack, and applicable on- any crack, repetitive general visual also pointed out that the European condition actions. The FAA is issuing inspections of the upper wing skin in Union Aviation Safety Agency (EASA) this AD to address the unsafe condition the adjacent rib bay areas for any crack, incorporates similar language in its ADs. on these products. and applicable on-condition actions. The FAA disagrees with the request to DATES: This AD is effective February 3, The FAA is issuing this AD to address allow later revisions to the service 2020. cracks in the upper wing skin, which information. The FAA may not refer to The Director of the Federal Register could grow undetected. This condition, any document that does not yet exist in approved the incorporation by reference if not addressed, could result in the an AD. In general terms, the FAA is of a certain publication listed in this AD inability of the structure to carry limit required by Office of the Federal as of February 3, 2020. load and adversely affect the structural Register (OFR) regulations for approval ADDRESSES: For service information integrity of the airplane. of materials incorporated by reference, identified in this final rule, contact as specified in 1 CFR 51.1(f), to either Boeing Commercial Airplanes, Comments publish the service document contents Attention: Contractual & Data Services The FAA gave the public the as part of the actual AD language; or (C&DS), 2600 Westminster Blvd., MC opportunity to participate in developing submit the service document to the OFR 110–SK57, Seal Beach, CA 90740–5600; this final rule. The following presents for approval as referenced material, in phone: 562–797–1717; internet: https:// the comments received on the NPRM which case the FAA may only refer to www.myboeingfleet.com. You may view and the FAA’s response to each such material in the text of an AD. The this service information at the FAA, comment. AD may refer to the service document Transport Standards Branch, 2200 only if the OFR approved it for South 216th St., Des Moines, WA. For Support for the NPRM incorporation by reference. See 1 CFR information on the availability of this Boeing concurred with the NPRM. part 51.

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To allow operators to use later • Are consistent with the intent that wing skin at wing buttock line 157, revisions of the referenced document was proposed in the NPRM for between stringer 4 and stringer 5 for any (issued after publication of the AD), addressing the unsafe condition; and crack; repetitive general visual either the FAA must revise the AD to • Do not add any additional burden inspections of the upper wing skin in reference specific later revisions, or upon the public than was already the adjacent rib bay areas for any crack; operators must request approval to use proposed in the NPRM. and applicable on-condition actions. later revisions as an alternative method We also determined that these On-condition actions include repair. changes will not increase the economic of compliance with this AD under the This service information is reasonably provisions of paragraph (j) of this AD. burden on any operator or increase the available because the interested parties scope of this final rule. Conclusion have access to it through their normal The FAA reviewed the relevant data, Related Service Information Under 1 course of business or by the means considered the comments received, and CFR Part 51 identified in the ADDRESSES section. determined that air safety and the The FAA reviewed Boeing Alert Costs of Compliance public interest require adopting this Requirements Bulletin 737–57A1344 final rule with the change described RB, dated February 18, 2019. This The FAA estimates that this AD previously and minor editorial changes. service information describes affects 160 airplanes of U.S. registry. The FAA has determined that these procedures for repetitive surface HFEC The agency estimates the following minor changes: inspections of the left and right upper costs to comply with this AD:

ESTIMATED COSTS FOR REQUIRED ACTIONS

Cost on U.S. Action Labor cost Parts cost Cost per product operators

HFEC Inspection and General Vis- 1 work-hour × $85 per hour = $85 per inspection $0 $85 per inspec- $13,600 per in- ual Inspection. cycle. tion cycle. spection cycle.

The FAA has received no definitive airplanes and associated appliances to PART 39—AIRWORTHINESS data that would enable the agency to the Director of the System Oversight DIRECTIVES provide cost estimates for the on- Division. condition repair specified in this AD. ■ 1. The authority citation for part 39 Regulatory Findings continues to read as follows: Authority for This Rulemaking This AD will not have federalism Authority: 49 U.S.C. 106(g), 40113, 44701. Title 49 of the United States Code implications under Executive Order specifies the FAA’s authority to issue § 39.13 February 10, 2020 [Amended] 13132. This AD will not have a rules on aviation safety. Subtitle I, ■ 2. The FAA amends § 39.13 by adding substantial direct effect on the States, on section 106, describes the authority of the following new airworthiness the relationship between the national the FAA Administrator. Subtitle VII: directive (AD): Aviation Programs, describes in more government and the States, or on the distribution of power and 2019–23–16 The Boeing Company: detail the scope of the Agency’s Amendment 39–19810; Docket No. authority. responsibilities among the various FAA–2019–0487; Product Identifier The FAA is issuing this rulemaking levels of government. 2019–NM–044–AD. under the authority described in For the reasons discussed above, I (a) Effective Date Subtitle VII, Part A, Subpart III, Section certify that this AD: This AD is effective February 3, 2020. 44701: ‘‘General requirements.’’ Under (1) Is not a ‘‘significant regulatory (b) Affected ADs that section, Congress charges the FAA action’’ under Executive Order 12866, with promoting safe flight of civil None. (2) Will not affect intrastate aviation aircraft in air commerce by prescribing (c) Applicability regulations for practices, methods, and in Alaska, and procedures the Administrator finds (1) This AD applies to all The Boeing (3) Will not have a significant Company Model 737–100, –200, –200C, necessary for safety in air commerce. economic impact, positive or negative, –300, –400, and –500 series airplanes, This regulation is within the scope of on a substantial number of small entities certificated in any category. that authority because it addresses an under the criteria of the Regulatory (2) Installation of Supplemental Type unsafe condition that is likely to exist or Flexibility Act. Certificate (STC) ST01219SE does not affect develop on products identified in this the ability to accomplish the actions required rulemaking action. List of Subjects in 14 CFR Part 39 by this AD. Therefore, for airplanes on which This AD is issued in accordance with STC ST01219SE is installed, a ‘‘change in Air transportation, Aircraft, Aviation product’’ alternative method of compliance authority delegated by the Executive (AMOC) approval request is not necessary to Director, Aircraft Certification Service, safety, Incorporation by reference, Safety. comply with the requirements of 14 CFR as authorized by FAA Order 8000.51C. 39.17 In accordance with that order, issuance Adoption of the Amendment (d) Subject of ADs is normally a function of the Compliance and Airworthiness Accordingly, under the authority Air Transport Association (ATA) of Division, but during this transition delegated to me by the Administrator, America Code 57, Wings. period, the Executive Director has the FAA amends 14 CFR part 39 as (e) Unsafe Condition delegated the authority to issue ADs follows: This AD was prompted by a report of a fuel applicable to transport category leak resulting from a crack on the left in-spar

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upper wing skin. The FAA is issuing this AD (2) Before using any approved AMOC, DEPARTMENT OF TRANSPORTATION to address cracks in the upper wing skin, notify your appropriate principal inspector, which could grow undetected. This or lacking a principal inspector, the manager Federal Aviation Administration condition, if not addressed, could result in of the local flight standards district office/ the inability of the structure to carry limit certificate holding district office. 14 CFR Part 39 load and adversely affect the structural (3) An AMOC that provides an acceptable integrity of the airplane. [Docket No. FAA–2019–0252; Product level of safety may be used for any (f) Compliance Identifier 2019–NM–048–AD; Amendment inspection, repair, modification, or alteration 39–21007; AD 2019–24–18] Comply with this AD within the required by this AD if it is approved by The compliance times specified, unless already Boeing Company Organization Designation RIN 2120–AA64 done. Authorization (ODA) that has been Airworthiness Directives; the Boeing (g) Required Actions for Group 1 Airplanes authorized by the Manager, Los Angeles ACO Branch, FAA, to make those findings. To be Company Airplanes For airplanes identified as Group 1 in Boeing Alert Requirements Bulletin 737– approved, the inspection, repair method, AGENCY: Federal Aviation 57A1344 RB, dated February 18, 2019: modification deviation, or alteration Administration (FAA), DOT. Within 120 days after the effective date of deviation must meet the certification basis of ACTION: this AD, do a surface high frequency eddy the airplane, and the approval must Final rule. current (HFEC) inspection of the left and specifically refer to this AD. SUMMARY: The FAA is adopting a new right upper wing skin and a general visual inspection of the upper wing skin in the (k) Related Information airworthiness directive (AD) for certain adjacent rib bay areas for any crack, and do For more information about this AD, The Boeing Company Model 727 applicable on-condition actions, using a contact Payman Soltani, Aerospace Engineer, airplanes, Model 757 airplanes, and method approved in accordance with the Airframe Section, FAA, Los Angeles ACO Model 767–200, –300, –300F, and procedures specified in paragraph (j) of this –400ER series airplanes. This AD was AD. Branch, 3960 Paramount Boulevard, Lakewood, CA 90712–4137; phone: 562–627– prompted by reports of nuisance stick (h) Required Actions for Groups 2 and 3 5313; fax: 562–627–5210; email: shaker activation while the airplane Airplanes [email protected]. accelerated to cruise speed at the top of Except as specified by paragraph (i) of this climb. This AD was also prompted by AD: At the applicable times specified in the (l) Material Incorporated by Reference an investigation of those reports that ‘‘Compliance’’ paragraph of Boeing Alert (1) The Director of the Federal Register revealed that the angle of attack (AOA) Requirements Bulletin 737–57A1344 RB, approved the incorporation by reference (also known as angle of airflow) sensor dated February 18, 2019, do all applicable (IBR) of the service information listed in this vanes could not prevent the build-up of actions identified in, and in accordance with, paragraph under 5 U.S.C. 552(a) and 1 CFR ice, causing the AOA sensor vanes to the Accomplishment Instructions of Boeing Alert Requirements Bulletin 737–57A1344 part 51. become immobilized, which resulted in RB, dated February 18, 2019. (2) You must use this service information nuisance stick shaker activation. This as applicable to do the actions required by Note 1 to paragraph (h): Guidance for AD requires a general visual inspection accomplishing the actions required by this this AD, unless the AD specifies otherwise. of the AOA sensors for certain AOA AD can be found in Boeing Alert Service (i) Boeing Alert Requirements Bulletin sensors, and replacement of affected Bulletin 737–57A1344, dated February 18, 737–57A1344 RB, dated February 18, 2019. AOA sensors. The FAA is issuing this 2019, which is referred to in Boeing Alert (ii) [Reserved] AD to address the unsafe condition on Requirements Bulletin 737–57A1344 RB, (3) For service information identified in these products. dated February 18, 2019. this AD, contact Boeing Commercial DATES: This AD is effective February 3, Airplanes, Attention: Contractual & Data (i) Exceptions to Service Information 2020. Specifications Services (C&DS), 2600 Westminster Blvd., The Director of the Federal Register MC 110–SK57, Seal Beach, CA 90740–5600; approved the incorporation by reference (1) Where Boeing Alert Requirements phone: 562–797–1717; internet: https:// Bulletin 737–57A1344 RB, dated February of certain publications listed in this AD www.myboeingfleet.com. 18, 2019, uses the phrase ‘‘the original issue as of February 3, 2020. (4) You may view this service information date of Requirements Bulletin 737–57A1344 ADDRESSES: For service information RB,’’ this AD requires using ‘‘the effective at the FAA, Transport Standards Branch, date of this AD.’’ 2200 South 216th St., Des Moines, WA. For identified in this final rule, contact (2) Where Boeing Alert Requirements information on the availability of this Boeing Commercial Airplanes, Bulletin 737–57A1344 RB, dated February material at the FAA, call 206–231–3195. Attention: Contractual & Data Services 18, 2019, specifies contacting Boeing for (5) You may view this service information (C&DS), 2600 Westminster Blvd., MC repair instructions: This AD requires doing that is incorporated by reference at the 110–SK57, Seal Beach, CA 90740–5600; the repair using a method approved in National Archives and Records telephone 562–797–1717; internet accordance with the procedures specified in Administration (NARA). For information on https://www.myboeingfleet.com. You paragraph (j) of this AD. the availability of this material at NARA, may view this service information at the (j) Alternative Methods of Compliance email [email protected], or go to: https:// FAA, Transport Standards Branch, 2200 (AMOCs) www.archives.gov/federal-register/cfr/ibr- South 216th St., Des Moines, WA. For (1) The Manager, Los Angeles ACO Branch, locations.html. information on the availability of this FAA, has the authority to approve AMOCs material at the FAA, call 206–231–3195. Issued in Des Moines, Washington, on for this AD, if requested using the procedures December 5, 2019. It is also available on the internet at found in 14 CFR 39.19. In accordance with https://www.regulations.gov by 14 CFR 39.19, send your request to your Michael Kaszycki, searching for and locating Docket No. principal inspector or local Flight Standards Acting Director, System Oversight Division, FAA–2019–0252. District Office, as appropriate. If sending Aircraft Certification Service. information directly to the manager of the Examining the AD Docket certification office, send it to the attention of [FR Doc. 2019–28066 Filed 12–27–19; 8:45 am] the person identified in paragraph (k) of this BILLING CODE 4910–13–P You may examine the AD docket on AD. Information may be emailed to: 9-ANM- the internet at https:// [email protected]. www.regulations.gov by searching for

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and locating Docket No. FAA–2019– Revision 1, dated October 1, 2019. This AD. The FAA has not changed this AD 0252; or in person at Docket Operations service information adds airplanes to in this regard. between 9 a.m. and 5 p.m., Monday the effectivity, but specifies that no Request To Reduce Compliance Time through Friday, except Federal holidays. additional work is needed if the actions The AD docket contains this final rule, in Boeing Alert Service Bulletin 727– The Air Line Pilots Association, the regulatory evaluation, any 34A0247, dated January 2, 2019, have International (ALPA) requested the comments received, and other been accomplished. The FAA has added compliance time in the proposed AD be information. The address for Docket paragraph (i) to this AD to provide shortened from within 36 months after Operations is U.S. Department of credit for actions done prior to the the effective date of this AD to within Transportation, Docket Operations, M– effective date of this AD using Boeing 24 months after the effective date of this 30, West Building Ground Floor, Room Alert Service Bulletin 727–34A0247, AD for all airplanes. The ALPA stated W12–140, 1200 New Jersey Avenue SE, dated January 2, 2019. Subsequent that it agrees with the intent of the Washington, DC 20590. paragraphs have been redesignated proposed AD, but does not agree that a 36-month compliance time is sufficient FOR FURTHER INFORMATION CONTACT: accordingly. when considering the publication dates Jeffrey W. Palmer, Aerospace Engineer, Although Boeing Alert Service of the service information, the low Systems and Equipment Section, FAA, Bulletin 727–34A0247, Revision 1, estimated time to complete the repairs, Los Angeles ACO Branch, 3960 dated October 1, 2019, adds airplanes to and the high risk associated with Paramount Boulevard, Lakewood, CA the effectivity, the FAA has not added those airplanes to the applicability of inaccurate AOA readings and nuisance 90712–4137; phone: 562–627–5351; fax: this AD. In paragraph (c) of this AD, the stick shaker indications. 562–627–5210; email: FAA refers to the airplanes identified in The FAA does not agree with the [email protected]. Boeing Alert Service Bulletin 727– request. The FAA has determined that SUPPLEMENTARY INFORMATION: 34A0247, Revision 1, dated October 1, the compliance time specified in this Discussion 2019, except for the additional airplanes AD for each airplane model will (variable numbers QB065, QD191, accommodate the time necessary to The FAA issued a notice of proposed QD192, QD402, QD403, QD407, and accomplish the actions required by this rulemaking (NPRM) to amend 14 CFR QD410). Adding airplanes to the AD and maintain an adequate level of part 39 by adding an AD that would applicability of this AD would safety. In addition, the commenter did apply to certain The Boeing Company necessitate (under the provisions of the not provide adequate data to justify a Model 727 airplanes, Model 757 Administrative Procedure Act) reissuing shortened compliance time. Lastly, the airplanes, and Model 767–200, –300, the notice, reopening the comment suggested compliance time change –300F, and –400ER series airplanes. The period, considering additional would alter the requirements of this AD NPRM published in the Federal comments subsequently received, and to be more restrictive, so additional Register on July 9, 2019 (84 FR 32667). eventually issuing a final rule. In rulemaking would be required, The NPRM was prompted by reports of consideration of the urgency of the ultimately delaying issuance of the AD. nuisance stick shaker activation while unsafe condition identified in this final The FAA finds that delaying this action the airplane accelerated to cruise speed rule, the FAA has determined that delay is inappropriate in light of the identified at the top of climb. The NPRM was also of this final rule is not appropriate. unsafe condition. However, if additional prompted by an investigation of those However, the FAA might consider data are presented that would justify a reports that revealed that the AOA further rulemaking on this issue to shorter compliance time, the FAA may sensor vanes could not prevent the address the additional airplanes. consider further rulemaking on this build-up of ice, causing the AOA sensor issue. The FAA has not changed this AD vanes to become immobilized, which Comments in this regard. resulted in nuisance stick shaker The FAA gave the public the Request To Extend Compliance Time activation. The NPRM proposed to opportunity to participate in developing require a general visual inspection of this final rule. The following presents American Airlines (AAL) and United the AOA sensors for certain AOA the comments received on the NPRM Airlines (UAL) requested that the FAA sensors, and replacement of affected and the FAA’s response to each extend the compliance time for the AOA sensors. comment. Boeing Model 767 fleet from within 36 The FAA is issuing this AD to address months or 3,470 flight hours (FH) after ice build-up in the AOA sensor Effect of Winglets on Accomplishment the effective date of this AD, whichever faceplate and vane, which may of the Proposed Actions occurs first, to match the compliance immobilize the AOA sensor vanes, and Aviation Partners Boeing (APB) stated time of the Boeing Model 757 fleet, could result in inaccurate or unreliable that they have reviewed the NPRM and which is within 36 months or 9,960 FH AOA sensor data being transmitted to have determined that the installation of after the effective date of this AD, airplane systems and consequent loss of winglets per Supplemental Type whichever occurs first. AAL reasoned controllability of the airplane. Certificate (STC) ST01518SE (for Model that the Boeing Model 757 and 767 757 airplanes) and STC ST01920SE (for fleets share the same parts for both the Changes Since the NPRM Was Issued Model 767 airplanes) do not affect the AOA sensors and air data computers The FAA has reviewed Boeing Alert accomplishment of the manufacturer’s and operate similar missions with Service Bulletin 727–34A0247, Revision service instructions. similar cold-soak times on the AOA 1, dated October 1, 2019 (the FAA The FAA agrees with the commenter vanes, and argued that the risk should referred to Boeing Alert Service Bulletin that STC ST01518SE and STC be the same. AAL asserted that 727–34A0247, dated January 2, 2019, as ST01920SE do not affect the matching the FH compliance times will an appropriate source of service accomplishment of the manufacturer’s ensure that accomplishing this proposed information for accomplishing the service instructions. Therefore, the AD can be effectively and economically actions specified in the NPRM) and installation of STC ST01518SE or STC planned, while allowing for the have revised this AD to refer to Boeing ST01920SE does not affect the ability to components to be handled the same Alert Service Bulletin 727–34A0247, accomplish the actions required by this regardless of fleet. AAL concluded this

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method would maintain an equivalent within its airplane maintenance records, To allow operators to use later level of safety. and the installation of the new AOA revisions of the referenced document UAL also pointed out that UAL’s sensor P/N 0861FL1 (new Boeing P/N (issued after publication of the AD), Boeing Model 757 and 767 fleets are S233T913–5) on each airplane can be either the FAA must revise the AD to equipped with equivalent AOA sensors traced by reviewing its airplane reference specific later revisions, or and air data computers, and the maintenance records. operators must request approval to use operation and cold-soak times of the The FAA agrees with the commenter’s later revisions as an AMOC with this AOA sensors are the same. UAL argued request to add a records review. The AD under the provisions of paragraph (j) that changing the FH compliance time FAA has added paragraph (h)(2) to this of this AD. for Model 767 airplanes to match the FH AD to allow a review of airplane compliance time for Model 757 maintenance records in lieu of the Request To Clarify the Impact of Case airplanes would provide an equivalent inspections for the AOA sensor P/Ns. Heaters on Unsafe Condition level of safety, stating that the AOA The FAA also notes that paragraph (f) of The commenter, Alan Peterson, sensors of both airplane models are this AD states to accomplish the FedEx, stated that the proposed AD does exposed to the same adverse conditions required actions within the compliance not address the possibility that the case in the air and on the ground. times specified, ‘‘unless already done.’’ heaters within the AOA sensor may be The FAA does not agree with the Therefore, if operators have contributing to the unsafe condition, request. The FAA has determined that accomplished the actions required for noting specifically that the proposed AD the flight-hour compliance times compliance with this AD before the does not address the case heaters within identified in the service information, effective date of this AD and have the AOA sensors for Captain and First without a time threshold, will not records that show the actions were done officer positions on FedEx’s large fleet ensure that the identified unsafe as specified in the AD, no further action of Boeing Model 757 and 767 airplanes. condition is addressed in a timely is necessary. The commenter pointed out that the manner. In developing an appropriate case heaters keep the dampening fluid compliance time for this AD, the FAA Request To Reference Later Revisions of Service Information inside the body of the AOA sensor from considered the degree of urgency getting cold-soaked in flight and on the AAL requested that the applicability, associated with addressing the subject ground. The commenter explained that unsafe condition, the average utilization required actions, and exceptions to the wiring of the case heater is in of the affected fleet, and the time service information in the proposed AD parallel with the AOA vane heater, so in necessary to perform the modifications. be revised to include any future FAA a scenario where the case heater fails, In light of all of these factors, the FAA approved revisions of service the AOA sensor vane would continue finds the compliance times specified in information. AAL requested that the working, but the AOA sensor would the applicable service information, or FAA add the phrase ‘‘or later FAA become slow to move once it becomes within 36 months after the effective date approved revisions’’ to Boeing Alert cold-soaked due to the lack of heat from of this AD, whichever occurs first, Service Bulletin 757–34A0611, Revision the case heater within the AOA sensor. represents an appropriate interval of 1, dated March 22, 2019; and Boeing The commenter described this as a time for affected airplanes to continue to Alert Service Bulletin 767–34A0828, operate without compromising safety. dated December 6, 2018. AAL suggested critical oversight in the proposed AD However, under the provisions of that any requirement that references because both the case heater and the paragraph (j) of this AD, the FAA will service information would state, for AOA vane heater must work correctly consider requests for approval of an example, ‘‘Boeing Alert Service Bulletin for the AOA vanes to function properly. extension of the compliance time if 757–34A0611, Revision 1, dated March The commenter stated that, in his sufficient data are submitted to 22, 2019, or later FAA approved experience, an operator may check the substantiate that the new compliance revisions.’’ AAL argued that allowing resistance of the case heater wiring on time would provide an acceptable level later FAA approved revisions of service both AOA sensor vanes to verify that it of safety. The FAA has not changed the information would avoid extra work and is within the tolerance specified by the AD in this regard. delays in implementation required for component maintenance manual (CMM) an alternative method of compliance and verify the wiring is not burnt due Request To Include Records Review (AMOC) approval should either service to an open circuit. The commenter All Nippon Airways (ANA) requested information require a revision due to an stated that this check was accomplished that the FAA add a statement to the error or omission of data. on the Boeing Model 757 and 767 fleet, proposed AD that allows a review of the The FAA does not agree with the and, if a discrepancy was discovered airplane maintenance records for the request. The FAA may not refer to any during the resistance check or revealed part number (P/N) of the AOA sensor, document that does not yet exist. In evidence of an open circuit in the case if the P/N of the AOA sensor can be general terms, the FAA is required by heater, the AOA vane would then be conclusively determined from that Office of the Federal Register (OFR) replaced. The commenter noted that a review. ANA stated that they have regulations for approval of materials malfunction with the case heater would installed AOA sensor P/N 0861FL1 incorporated by reference, as specified not be registered by the engine- (new Boeing P/N S233T913–5) on their in 1 CFR 51.1(f), to either publish the indicating and crew-alerting system Boeing Model 767 fleet because it began service document contents as part of the (EICAS) because the system only accomplishing Boeing Alert Service actual AD language; or submit the monitors the AOA vane heaters, and Bulletin 767–34A0828, dated December service document to the OFR for suggested that a malfunctioning case 6, 2018, since the issue date of the approval as referenced material, in heater could affect reactive windshear, service information. ANA argued that which case the FAA may only refer to reduced vertical separation minimum the proposed AD would require them to such material in the text of an AD. The (RVSM), and stall warning. The FAA repeat accomplishment of Boeing Alert AD may refer to the service document infers that the commenter is requesting Service Bulletin 767–34A0828, dated only if the OFR approved it for that the FAA clarify the impact of case December 6, 2018. ANA stated that it incorporation by reference. See 1 CFR heaters within the AOA sensors on the manages the P/N of the AOA sensor part 51. unsafe condition.

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The FAA agrees to clarify. One of the determined that air safety and the 1, dated March 22, 2019; and Boeing specific mitigating design changes in public interest require adopting this Alert Service Bulletin 767–34A0828, this AD is the position of the case final rule with the changes described dated December 6, 2018. The service heater. Although the case heaters in the previously and minor editorial changes. information describes procedures for a AOA vane assembly are not specifically The FAA has determined that these general visual inspection of the AOA mentioned in the preamble of the minor changes: sensors for certain AOA sensors, and • proposed AD, the new AOA sensors Are consistent with the intent that replacement of affected AOA sensors. with supplier P/N 0861FL1 (new Boeing was proposed in the NPRM for These documents are distinct since they P/N S233T913–5) have a repositioned addressing the unsafe condition; and apply to different airplane models. case heater specifically designed to • Do not add any additional burden mitigate the unsafe condition of upon the public than was already This service information is reasonably moisture build-up and freezing. AOA proposed in the NPRM. available because the interested parties sensors with supplier P/N 2566A–21 The FAA also determined that these have access to it through their normal (new Boeing P/N 10–60878–3), 2566A– changes will not increase the economic course of business or by the means 30 (new Boeing P/N 10–60878–4), and burden on any operator or increase the identified in the ADDRESSES section. 0861FL (new Boeing P/N S233T913–4), scope of this final rule. Costs of Compliance mitigate the unsafe condition using an Related Service Information Under 1 improved vane design. The FAA has not CFR Part 51 The FAA estimates that this AD changed the AD in this regard. affects 1,287 airplanes of U.S. registry. The FAA reviewed Boeing Alert The FAA estimates the following costs Conclusion Service Bulletin 727–34A0247, Revision The FAA reviewed the relevant data, 1, dated October 1, 2019; Boeing Alert to comply with this AD: considered the comments received, and Service Bulletin 757–34A0611, Revision

ESTIMATED COSTS FOR REQUIRED ACTIONS

Cost per Cost on U.S. Action Labor cost Parts cost product operators

Inspection ...... 1 work-hour × $85 per hour = $85 ...... $0 ...... $85 ...... $109,395. Replacement ..... Up to 3 work-hours × $85 per hour = Up to $255 Up to $54,000 ..... Up to $54,255 ..... Up to $69,826,185.

Authority for This Rulemaking the Director of the System Oversight PART 39—AIRWORTHINESS Title 49 of the United States Code Division. DIRECTIVES specifies the FAA’s authority to issue Regulatory Findings rules on aviation safety. Subtitle I, ■ 1. The authority citation for part 39 section 106, describes the authority of This AD will not have federalism continues to read as follows: the FAA Administrator. Subtitle VII: implications under Executive Order Authority: 49 U.S.C. 106(g), 40113, 44701. Aviation Programs, describes in more 13132. This AD will not have a detail the scope of the Agency’s substantial direct effect on the States, on § 39.13 [Amended] the relationship between the national authority. ■ 2. The FAA amends § 39.13 by adding The FAA is issuing this rulemaking government and the States, or on the the following new airworthiness under the authority described in distribution of power and directive (AD): Subtitle VII, Part A, Subpart III, Section responsibilities among the various 44701: ‘‘General requirements.’’ Under levels of government. 2019–24–18 The Boeing Company: that section, Congress charges the FAA For the reasons discussed above, I Amendment 39–21007; Docket No. with promoting safe flight of civil FAA–2019–0252; Product Identifier certify that this AD: 2019–NM–048–AD. aircraft in air commerce by prescribing (1) Is not a ‘‘significant regulatory regulations for practices, methods, and action’’ under Executive Order 12866, (a) Effective Date procedures the Administrator finds (2) Will not affect intrastate aviation This AD is effective February 3, 2020. necessary for safety in air commerce. in Alaska, and (b) Affected ADs This regulation is within the scope of that authority because it addresses an (3) Will not have a significant None. unsafe condition that is likely to exist or economic impact, positive or negative, (c) Applicability develop on products identified in this on a substantial number of small entities under the criteria of the Regulatory This AD applies to The Boeing Company rulemaking action. airplanes, identified in paragraphs (c)(1) This AD is issued in accordance with Flexibility Act. through (3) of this AD, certificated in any authority delegated by the Executive List of Subjects in 14 CFR Part 39 category. Director, Aircraft Certification Service, (1) Model 727, 727C, 727–100, 727–100C, as authorized by FAA Order 8000.51C. Air transportation, Aircraft, Aviation 727–200, and 727–200F series airplanes, as In accordance with that order, issuance safety, Incorporation by reference, identified in Boeing Alert Service Bulletin of ADs is normally a function of the Safety. 727–34A0247, Revision 1, dated October 1, Compliance and Airworthiness 2019; except for airplanes having variable Adoption of the Amendment numbers QB065, QD191, QD192, QD402, Division, but during this transition QD403, QD407, and QD410. period, the Executive Director has Accordingly, under the authority (2) Model 757–200, –200PF, –200CB, and delegated the authority to issue ADs delegated to me by the Administrator, –300 series airplanes, as identified in Boeing applicable to transport category the FAA amends 14 CFR part 39 as Alert Service Bulletin 757–34A0611, airplanes and associated appliances to follows: Revision 1, dated March 22, 2019.

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(3) Model 767–200, –300, –300F, and sensors, a review of the airplane maintenance (k) Related Information –400ER series airplanes, as identified in records is acceptable in lieu of those actions For more information about this AD, Boeing Alert Service Bulletin 767–34A0828, if the part number of the installed AOA contact Jeffrey W. Palmer, Aerospace dated December 6, 2018. sensors can be conclusively determined Engineer, Systems and Equipment Section, (d) Subject during that review to have a new or FAA, Los Angeles ACO Branch, 3960 serviceable AOA sensor part number Paramount Boulevard, Lakewood, CA 90712– Air Transport Association (ATA) of identified in Boeing Alert Service Bulletin 4137; phone: 562–627–5351; fax: 562–627– America Code 34, Navigation. 727–34A0247, Revision 1, dated October 1, 5210; email: [email protected]. (e) Unsafe Condition 2019; Boeing Alert Service Bulletin 757– (l) Material Incorporated by Reference This AD was prompted by reports of 34A0611, Revision 1, dated March 22, 2019; (1) The Director of the Federal Register nuisance stick shaker activation while the or Boeing Alert Service Bulletin 767– approved the incorporation by reference airplane accelerated to cruise speed at the top 34A0828, dated December 6, 2018; as of climb. This AD was also prompted by an applicable. (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR investigation of those reports that revealed (i) Credit for Previous Actions that the angle of attack (AOA) (also known part 51. as angle of airflow) sensor vanes could not This paragraph provides credit for actions (2) You must use this service information prevent the build-up of ice, causing the AOA specified in paragraph (g) of this AD, if those as applicable to do the actions required by sensor vanes to become immobilized, which actions were performed before the effective this AD, unless the AD specifies otherwise. resulted in nuisance stick shaker activation. date of this AD using Boeing Alert Service (i) Boeing Alert Service Bulletin 727– The FAA is issuing this AD to address ice Bulletin 727–34A0247, dated January 2, 34A0247, Revision 1, dated October 1, 2019. build-up in the AOA sensor faceplate and 2019. (ii) Boeing Alert Service Bulletin 757– vane, which may immobilize the AOA sensor 34A0611, Revision 1, dated March 22, 2019. vanes, and could result in inaccurate or (j) Alternative Methods of Compliance (iii) Boeing Alert Service Bulletin 767– unreliable AOA sensor data being (AMOCs) 34A0828, dated December 6, 2018. transmitted to airplane systems and (1) The Manager, Los Angeles ACO Branch, (3) For service information identified in consequent loss of controllability of the FAA, has the authority to approve AMOCs this AD, contact Boeing Commercial airplane. for this AD, if requested using the procedures Airplanes, Attention: Contractual & Data found in 14 CFR 39.19. In accordance with Services (C&DS), 2600 Westminster Blvd., (f) Compliance 14 CFR 39.19, send your request to your MC 110–SK57, Seal Beach, CA 90740–5600; Comply with this AD within the principal inspector or local Flight Standards telephone 562–797–1717; internet https:// www.myboeingfleet.com. compliance times specified, unless already District Office, as appropriate. If sending (4) You may view this service information done. information directly to the manager of the at the FAA, Transport Standards Branch, certification office, send it to the attention of (g) Required Actions 2200 South 216th St., Des Moines, WA. For the person identified in paragraph (k) of this Except as specified in paragraph (h) of this information on the availability of this AD: Within 36 months after the effective date AD. Information may be emailed to: 9-ANM- material at the FAA, call 206–231–3195. of this AD or at the applicable times specified [email protected]. (5) You may view this service information in paragraph 1.E., ‘‘Compliance,’’ of Boeing (2) Before using any approved AMOC, that is incorporated by reference at the Alert Service Bulletin 727–34A0247, notify your appropriate principal inspector, National Archives and Records Revision 1, dated October 1, 2019; Boeing or lacking a principal inspector, the manager Administration (NARA). For information on Alert Service Bulletin 757–34A0611, of the local flight standards district office/ the availability of this material at NARA, Revision 1, dated March 22, 2019; or Boeing certificate holding district office. email [email protected], or go to: https:// Alert Service Bulletin 767–34A0828, dated (3) An AMOC that provides an acceptable www.archives.gov/federal-register/cfr/ibr- December 6, 2018; as applicable, whichever level of safety may be used for any repair, locations.html. occurs first, do all applicable actions modification, or alteration required by this Issued in Des Moines, Washington, on identified as ‘‘RC’’ (required for compliance) AD if it is approved by The Boeing Company December 9, 2019. in, and in accordance with, the Organization Designation Authorization Accomplishment Instructions of Boeing Alert (ODA) that has been authorized by the Michael Kaszycki, Service Bulletin 727–34A0247, Revision 1, Manager, Los Angeles ACO Branch, FAA, to Acting Director, System Oversight Division, dated October 1, 2019; Boeing Alert Service make those findings. To be approved, the Aircraft Certification Service. Bulletin 757–34A0611, Revision 1, dated repair method, modification deviation, or [FR Doc. 2019–27887 Filed 12–27–19; 8:45 am] March 22, 2019; or Boeing Alert Service alteration deviation must meet the BILLING CODE 4910–13–P Bulletin 767–34A0828, dated December 6, certification basis of the airplane, and the 2018; as applicable. All replacements of the approval must specifically refer to this AD. affected AOA sensors must be done before (4) For service information that contains DEPARTMENT OF TRANSPORTATION further flight. steps that are labeled as Required for (h) Exceptions to Service Information Compliance (RC), the provisions of Federal Aviation Administration Specifications paragraphs (j)(4)(i) and (ii) of this AD apply. (1) Where Boeing Alert Service Bulletin (i) The steps labeled as RC, including 14 CFR Part 39 727–34A0247, Revision 1, dated October 1, substeps under an RC step and any figures 2019; Boeing Alert Service Bulletin 757– identified in an RC step, must be done to [Docket No. FAA–2019–0674; Product 34A0611, Revision 1, dated March 22, 2019; comply with the AD. If a step or substep is Identifier 2019–NM–079–AD; Amendment or Boeing Alert Service Bulletin 767– labeled ‘‘RC Exempt,’’ then the RC 39–21003; AD 2019–24–14] 34A0828, dated December 6, 2018; as requirement is removed from that step or RIN 2120–AA64 applicable, uses the phrase ‘‘the original substep. An AMOC is required for any issue date of this service bulletin,’’ this AD deviations to RC steps, including substeps requires using ‘‘the effective date of this AD.’’ and identified figures. Airworthiness Directives; 328 Support (2) Where Boeing Alert Service Bulletin (ii) Steps not labeled as RC may be Services GmbH (Type Certificate 727–34A0247, Revision 1, dated October 1, deviated from using accepted methods in Previously Held by AvCraft Aerospace 2019; Boeing Alert Service Bulletin 757– accordance with the operator’s maintenance GmbH; Fairchild Dornier GmbH; 34A0611, Revision 1, dated March 22, 2019; or inspection program without obtaining Dornier Luftfahrt GmbH) Airplanes or Boeing Alert Service Bulletin 767– approval of an AMOC, provided the RC steps, 34A0828, dated December 6, 2018; specify to including substeps and identified figures, can AGENCY: Federal Aviation accomplish a general visual inspection of the still be done as specified, and the airplane Administration (FAA), Department of AOA sensors and to replace affected AOA can be put back in an airworthy condition. Transportation (DOT).

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ACTION: Final rule. between 9 a.m. and 5 p.m., Monday support arms of the flaps, which could through Friday, except Federal holidays. result in reduced structural integrity of SUMMARY: The FAA is adopting a new The AD docket contains this final rule, the airplane. See the MCAI for airworthiness directive (AD) for certain the regulatory evaluation, any additional background information. 328 Support Services GmbH Model comments received, and other Comments 328–100 airplanes. This AD was information. The address for Docket prompted by a report of missing rivets Operations is U.S. Department of The FAA gave the public the on landing flap support arm 2. This AD Transportation, Docket Operations, M– opportunity to participate in developing requires an inspection of the landing 30, West Building Ground Floor, Room this final rule. The agency received no flap support arms for missing rivets and W12–140, 1200 New Jersey Avenue SE, comments on the NPRM or on the corrective actions if necessary, as Washington, DC 20590. determination of the cost to the public. specified in a European Union Aviation FOR FURTHER INFORMATION CONTACT: Conclusion Safety Agency (EASA) AD, which is Todd Thompson, Aerospace Engineer, incorporated by reference. The FAA is International Section, Transport The FAA reviewed the relevant data issuing this AD to address the unsafe Standards Branch, FAA, 2200 South and determined that air safety and the condition on these products. 216th St., Des Moines, WA 98198; public interest require adopting this DATES: This AD is effective February 3, phone and fax: 206–231–3228. final rule as proposed, except for minor 2020. SUPPLEMENTARY INFORMATION: editorial changes. The FAA has The Director of the Federal Register determined that these minor changes: approved the incorporation by reference Discussion • Are consistent with the intent that of a certain publication listed in this AD The EASA, which is the Technical was proposed in the NPRM for as of February 3, 2020. Agent for the Member States of the addressing the unsafe condition; and ADDRESSES: For the material European Union, has issued EASA AD • Do not add any additional burden incorporated by reference (IBR) in this 2019–0096, dated April 30, 2019 upon the public than was already AD, contact the EASA, Konrad- (‘‘EASA AD 2019–0096’’) (also referred proposed in the NPRM. Adenauer-Ufer 3, 50668 Cologne, to as the Mandatory Continuing Related IBR Material Under 1 CFR Part Germany; phone: +49 221 89990 1000; Airworthiness Information, or ‘‘the 51 email: [email protected]; internet: MCAI’’), to correct an unsafe condition www.easa.europa.eu. You may find this for certain 328 Support Services GmbH EASA AD 2019–0096 describes IBR material on the EASA website at Model 328–100 airplanes. procedures for an inspection of the https://ad.easa.europa.eu. You may The FAA issued a notice of proposed landing flap support arms for missing view this IBR material at the FAA, rulemaking (NPRM) to amend 14 CFR rivets, which includes a special detailed Transport Standards Branch, 2200 part 39 by adding an AD that would inspection (eddy current) of the landing South 216th St., Des Moines, WA. For apply to certain 328 Support Services flap support 2 arm along the edges and information on the availability of this GmbH Model 328–100 airplanes. The around the rivets for cracks, and material at the FAA, call 206–231–3195. NPRM published in the Federal corrective actions. Corrective actions It is also available in the AD docket on Register on September 9, 2019 (84 FR include installing rivets and repairing the internet at https:// 47173). The NPRM was prompted by a cracks. This material is reasonably www.regulations.gov by searching for report of missing rivets on landing flap available because the interested parties and locating Docket No. FAA–2019– support arm 2. The NPRM proposed to have access to it through their normal 0674. require an inspection of the landing flap course of business or by the means support arms for missing rivets and identified in the ADDRESSES section. Examining the AD Docket corrective actions if necessary. You may examine the AD docket on The FAA is issuing this AD to address Costs of Compliance the internet at https:// missing rivets, which could lead to the The FAA estimates that this AD www.regulations.gov by searching for loss of one of two load paths, reducing affects 22 airplanes of U.S. registry. The and locating Docket No. FAA–2019– the fatigue life of the affected flap arms FAA estimates the following costs to 0674; or in person at Docket Operations and leading to fatigue cracking of the comply with this AD:

ESTIMATED COSTS FOR REQUIRED ACTIONS

Cost per Cost on U.S. Labor cost Parts cost product operators

6 work-hours × $85 per hour = $510 ...... $0 $510 $11,220

The FAA estimates the following based on the results of any required might need this on-condition costs to do any necessary on-condition actions. The FAA has no way of installation: installation that would be required determining the number of aircraft that

ESTIMATED COSTS OF ON-CONDITION INSTALLATION

Cost per Labor cost Parts cost product

4 work-hours × $85 per hour = $340 ...... $27 $367

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The FAA has received no definitive List of Subjects in 14 CFR Part 39 (2) The ‘‘Remarks’’ section of EASA AD 2019–0096 does not apply to this AD. data that would enable the FAA to Air transportation, Aircraft, Aviation provide cost estimates for the on- safety, Incorporation by reference, (i) Corrective Action for Cracking condition crack repairs specified in this Safety. If any crack is found during any inspection AD. required by paragraph (2) of EASA AD 2019– Adoption of the Amendment Authority for This Rulemaking 0096: Before further flight, repair using a Accordingly, under the authority method approved by the Manager, Title 49 of the United States Code delegated to me by the Administrator, International Section, Transport Standards specifies the FAA’s authority to issue the FAA amends 14 CFR part 39 as Branch, FAA; or the EASA; or 328 Support follows: Services GmbH’s EASA Design Organization rules on aviation safety. Subtitle I, Approval (DOA). If approved by the DOA, section 106, describes the authority of PART 39—AIRWORTHINESS the approval must include the DOA- the FAA Administrator. Subtitle VII: authorized signature. Aviation Programs, describes in more DIRECTIVES (j) No Reporting Requirement detail the scope of the Agency’s ■ 1. The authority citation for part 39 authority. Although the service information continues to read as follows: referenced in EASA AD 2019–0096 specifies The FAA is issuing this rulemaking Authority: 49 U.S.C. 106(g), 40113, 44701. to submit certain information to the under the authority described in manufacturer, this AD does not include that Subtitle VII, Part A, Subpart III, Section § 39.13 [Amended] requirement. 44701: ‘‘General requirements.’’ Under ■ 2. The FAA amends § 39.13 by adding (k) Other FAA AD Provisions that section, Congress charges the FAA the following new airworthiness with promoting safe flight of civil The following provisions also apply to this directive (AD): AD: aircraft in air commerce by prescribing (1) Alternative Methods of Compliance regulations for practices, methods, and 2019–24–14 328 Support Services GmbH (Type Certificate previously held by (AMOCs): The Manager, International procedures the Administrator finds AvCraft Aerospace GmbH; Fairchild Section, Transport Standards Branch, FAA, necessary for safety in air commerce. Dornier GmbH; Dornier Luftfahrt has the authority to approve AMOCs for this This regulation is within the scope of GmbH): Amendment 39–21003; Docket AD, if requested using the procedures found that authority because it addresses an No. FAA–2019–0674; Product Identifier in 14 CFR 39.19. In accordance with 14 CFR unsafe condition that is likely to exist or 2019–NM–079–AD. 39.19, send your request to your principal develop on products identified in this inspector or local Flight Standards District (a) Effective Date Office, as appropriate. If sending information rulemaking action. This AD is effective February 3, 2020. directly to the International Section, send it This AD is issued in accordance with to the attention of the person identified in authority delegated by the Executive (b) Affected ADs paragraph (l) of this AD. Information may be Director, Aircraft Certification Service, None. emailed to: 9-ANM-116-AMOC-REQUESTS@ faa.gov. Before using any approved AMOC, as authorized by FAA Order 8000.51C. (c) Applicability In accordance with that order, issuance notify your appropriate principal inspector, This AD applies to 328 Support Services or lacking a principal inspector, the manager of ADs is normally a function of the GmbH Model 328–100 airplanes, certificated of the local flight standards district office/ Compliance and Airworthiness in any category, serial numbers 3032 through certificate holding district office. Division, but during this transition 3063 inclusive. (2) Contacting the Manufacturer: For any period, the Executive Director has requirement in this AD to obtain instructions delegated the authority to issue ADs (d) Subject from a manufacturer, the instructions must applicable to transport category Air Transport Association (ATA) of be accomplished using a method approved airplanes and associated appliances to America Code 57, Wings. by the Manager, International Section, Transport Standards Branch, FAA; or EASA; the Director of the System Oversight (e) Reason or 328 Support Services GmbH’s EASA DOA. Division. This AD was prompted by a report of If approved by the DOA, the approval must Regulatory Findings missing rivets on landing flap support arm 2. include the DOA-authorized signature. The FAA is issuing this AD to address (l) Related Information This AD will not have federalism missing rivets, which could lead to the loss implications under Executive Order of one of two load paths, reducing the fatigue For more information about this AD, contact Todd Thompson, Aerospace 13132. This AD will not have a life of the affected flap arms and leading to fatigue cracking of the support arms of the Engineer, International Section, Transport substantial direct effect on the States, on flaps, which could result in reduced Standards Branch, FAA, 2200 South 216th the relationship between the national structural integrity of the airplane. St., Des Moines, WA 98198; phone and fax: government and the States, or on the 206–231–3228. (f) Compliance distribution of power and (m) Material Incorporated by Reference responsibilities among the various Comply with this AD within the levels of government. compliance times specified, unless already (1) The Director of the Federal Register done. approved the incorporation by reference For the reasons discussed above, I (IBR) of the service information listed in this certify that this AD: (g) Requirements paragraph under 5 U.S.C. 552(a) and 1 CFR (1) Is not a ‘‘significant regulatory Except as specified in paragraph (h) of this part 51. (2) You must use this service information action’’ under Executive Order 12866, AD: Comply with all required actions and compliance times specified in, and in as applicable to do the actions required by (2) Will not affect intrastate aviation accordance with, European Union Aviation this AD, unless this AD specifies otherwise. in Alaska, and Safety Agency (EASA) AD 2019–0096, dated (i) European Union Aviation Safety Agency April 30, 2019 (‘‘EASA AD 2019–0096’’). (EASA) AD 2019–0096, dated April 30, 2019. (3) Will not have a significant (ii) [Reserved] economic impact, positive or negative, (h) Exceptions to EASA AD 2019–0096 (3) For information about EASA AD 2019– on a substantial number of small entities (1) Where EASA AD 2019–0096 refers to its 0096, contact the EASA, Konrad-Adenauer- under the criteria of the Regulatory effective date, this AD requires using the Ufer 3, 50668 Cologne, Germany; phone: +49 Flexibility Act. effective date of this AD. 221 89990 6017; email: [email protected];

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internet: www.easa.europa.eu. You may find of certain publications listed in this AD apply to certain Bombardier, Inc., Model this EASA AD on the EASA website at as of February 3, 2020. DHC–8–401 and –402 airplanes. The https://ad.easa.europa.eu. ADDRESSES: For Bombardier, Inc., or De NPRM published in the Federal (4) You may view this material at the FAA, Havilland Aircraft of Canada Limited Register on September 9, 2019 (84 FR Transport Standards Branch, 2200 South 47170). The NPRM was prompted by a 216th St., Des Moines, WA. For information service information identified in this on the availability of this material at the final rule, contact De Havilland Aircraft report that certain fuselages were FAA, call 206–231–3195. This material may of Canada Limited, Q-Series Technical delivered with non-conforming keel be found in the AD docket on the internet at Help Desk, 123 Garratt Boulevard, tension fittings and stringer end fittings. https://www.regulations.gov by searching for Toronto, Ontario M3K 1Y5, Canada; The NPRM proposed to require a and locating Docket No. FAA–2019–0674. phone: 416–375–4000; fax: 416–375– detailed visual inspection of stringer (5) You may view this material that is 4539; email: [email protected]; end fittings and keel fittings for loose or incorporated by reference at the National internet: https://dehavilland.com. You working fasteners, signs of wear, and Archives and Records Administration may view this service information at the corrosion, and repair if necessary; and a (NARA). For information on the availability general visual inspection of the keel of this material at NARA, email fedreg.legal@ FAA, Transport Standards Branch, 2200 nara.gov, or go to: https://www.archives.gov/ South 216th St., Des Moines, WA. For tension fitting and stringer end fittings, federal-register/cfr/ibr-locations.html. information on the availability of this as applicable, and repairs and material at the FAA, call 206–231–3195. replacement of the keel and stringer end Issued in Des Moines, Washington, on fittings if necessary. The FAA is issuing December 9, 2019. It is also available on the internet at this AD to address non-conforming keel Michael Kaszycki, https://www.regulations.gov by searching for and locating Docket No. tension fittings and stringer end fittings, Acting Director, System Oversight Division, FAA–2019–0675. which could lead to premature cracking Aircraft Certification Service. and corrosion in several locations and [FR Doc. 2019–28067 Filed 12–27–19; 8:45 am] Examining the AD Docket compromise the structural integrity of BILLING CODE 4910–13–P You may examine the AD docket on the fuselage joints. See the MCAI for the internet at https:// additional background information. www.regulations.gov by searching for DEPARTMENT OF TRANSPORTATION Comments and locating Docket No. FAA–2019– The FAA gave the public the Federal Aviation Administration 0675; or in person at Docket Operations between 9 a.m. and 5 p.m., Monday opportunity to participate in developing this final rule. The following presents 14 CFR Part 39 through Friday, except Federal holidays. The AD docket contains this final rule, the comments received on the NPRM [Docket No. FAA–2019–0675; Product the regulatory evaluation, any and the FAA’s response to each Identifier 2019–NM–068–AD; Amendment comments received, and other comment. 39–19815; AD 2019–24–12] information. The address for Docket Request To Update the Design Approval RIN 2120–AA64 Operations is U.S. Department of Holder (DAH) for the Affected Transportation, Docket Operations, M– Airplanes Airworthiness Directives; De Havilland 30, West Building Ground Floor, Room Aircraft of Canada Limited (Type W12–140, 1200 New Jersey Avenue SE, Horizon Air requested that the FAA Certificate Previously Held by Washington, DC 20590. update the DAH for the affected airplanes. Horizon Air pointed out that Bombardier, Inc.) Airplanes FOR FURTHER INFORMATION CONTACT: De Havilland Aircraft of Canada Limited Andrea Jimenez, Aerospace Engineer, AGENCY: Federal Aviation is now the DAH for the Model DHC–8– Airframe and Propulsion Section, FAA, Administration (FAA), Department of 401 and –402 airplanes. Transportation (DOT). New York ACO Branch, 1600 Stewart The FAA agrees with the commenter ACTION: Final rule. Avenue, Suite 410, Westbury, NY for the reasons provided and has 11590; phone: 516–228–7330; fax: 516– updated this final rule accordingly. SUMMARY: The FAA is adopting a new 794–5531; email: 9-avs-nyaco-cos@ airworthiness directive (AD) for certain faa.gov. Request To Include Revised Service Information and Credit for Previous De Havilland Aircraft of Canada Limited SUPPLEMENTARY INFORMATION: Model DHC–8–401 and –402 airplanes. Revision This AD was prompted by a report that Discussion Horizon Air requested that the FAA certain fuselages were delivered with Transport Canada Civil Aviation update the final rule to include revised nonconforming keel tension fittings and (TCCA), which is the aviation authority service information. Horizon Air stringer end fittings. This AD requires a for Canada, has issued Canadian AD mentioned that De Havilland Aircraft of detailed visual inspection of stringer CF–2019–06, dated February 18, 2019 Canada Limited has issued Service end fittings and keel fittings for loose or (also referred to as the Mandatory Bulletin 84–53–75, Revision A, dated working fasteners, signs of wear, and Continuing Airworthiness Information, August 2, 2019. Horizon Air also corrosion, and repair if necessary; and a or ‘‘the MCAI’’), to correct an unsafe requested that the FAA give credit for general visual inspection of the keel condition for certain De Havilland accomplishment of the required actions tension fitting and stringer end fittings, Aircraft of Canada Limited Model DHC– prior to the effective date of this AD as applicable, and repairs and 8–401 and –402 airplanes. You may using Bombardier Service Bulletin 84– replacement of the keel and stringer end examine the MCAI in the AD docket on 53–75, dated August 29, 2018. fittings if necessary. The FAA is issuing the internet at https:// The FAA agrees with the commenter this AD to address the unsafe condition www.regulations.gov by searching for for the reasons provided and has on these products. and locating Docket No. FAA–2019– updated this final rule to refer to De DATES: This AD is effective February 3, 0675. Havilland Aircraft of Canada Limited 2020. The FAA issued a notice of proposed Service Bulletin 84–53–75, Revision A, The Director of the Federal Register rulemaking (NPRM) to amend 14 CFR dated August 2, 2019. The FAA has approved the incorporation by reference part 39 by adding an AD that would determined that no additional work is

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required for airplanes on which the • Are consistent with the intent that replacement of the keel and stringer end actions specified in Bombardier Service was proposed in the NPRM for fittings. Bulletin 84–53–75, dated August 29, addressing the unsafe condition; and • Service Bulletin 84–53–75, Revision 2018, have already been done. The FAA • Do not add any additional burden A, dated August 2, 2019. This service has added paragraph (k) to this AD to upon the public than was already information describes procedures for a provide credit for accomplishment of proposed in the NPRM. detailed visual inspection of stringer end fittings and keel fittings, in the the required actions prior to the The FAA also determined that these passenger compartment at stations effective date of this AD using changes will not increase the economic X373.15 and X428.50, for loose or Bombardier Service Bulletin 84–53–75, burden on any operator or increase the working fasteners, signs of wear, and dated August 29, 2018. scope of this final rule. corrosion. Conclusion Related Service Information Under 1 This service information is reasonably CFR Part 51 available because the interested parties The FAA reviewed the relevant data, have access to it through their normal considered the comments received, and De Havilland Aircraft of Canada course of business or by the means determined that air safety and the Limited has issued the following service identified in the ADDRESSES section. public interest require adopting this information. final rule with the changes described • Bombardier Service Bulletin 84–53– Costs of Compliance previously and minor editorial changes. 74, dated August 29, 2018. This service The FAA estimates that this AD We have determined that these minor information describes procedures for a affects 1 airplane of U.S. registry. The changes: general visual inspection of the keel and FAA estimates the following costs to stringer end fittings, repair, and comply with this AD:

ESTIMATED COSTS FOR REQUIRED ACTIONS

Cost per Cost on U.S. Labor cost Parts cost product operators

33 work-hours × $85 per hour = $2,805 ...... $0 $2,805 $2,805

The FAA has received no definitive condition replacements specified in this data that would enable the agency to AD. provide cost estimates for the on-

ESTIMATED COSTS OF ON-CONDITION REPLACEMENTS

Cost per Labor cost Parts cost product

46 work-hours × $85 per hour = $3,910 ...... $54,649 $58,559

Authority for This Rulemaking Director, Aircraft Certification Service, (1) Is not a ‘‘significant regulatory Title 49 of the United States Code as authorized by FAA Order 8000.51C. action’’ under Executive Order 12866, specifies the FAA’s authority to issue In accordance with that order, issuance (2) Will not affect intrastate aviation rules on aviation safety. Subtitle I, of ADs is normally a function of the in Alaska, and (3) Will not have a significant section 106, describes the authority of Compliance and Airworthiness economic impact, positive or negative, the FAA Administrator. Subtitle VII: Division, but during this transition on a substantial number of small entities Aviation Programs, describes in more period, the Executive Director has under the criteria of the Regulatory detail the scope of the Agency’s delegated the authority to issue ADs Flexibility Act. authority. applicable to transport category The FAA is issuing this rulemaking airplanes and associated appliances to List of Subjects in 14 CFR Part 39 under the authority described in the Director of the System Oversight Air transportation, Aircraft, Aviation Subtitle VII, Part A, Subpart III, Section Division. safety, Incorporation by reference, 44701: ‘‘General requirements.’’ Under Safety. that section, Congress charges the FAA Regulatory Findings Adoption of the Amendment with promoting safe flight of civil This AD will not have federalism aircraft in air commerce by prescribing implications under Executive Order Accordingly, under the authority regulations for practices, methods, and 13132. This AD will not have a delegated to me by the Administrator, procedures the Administrator finds substantial direct effect on the States, on the FAA amends 14 CFR part 39 as necessary for safety in air commerce. the relationship between the national follows: This regulation is within the scope of government and the States, or on the that authority because it addresses an PART 39—AIRWORTHINESS distribution of power and unsafe condition that is likely to exist or DIRECTIVES develop on products identified in this responsibilities among the various ■ rulemaking action. levels of government. 1. The authority citation for part 39 This AD is issued in accordance with For the reasons discussed above, I continues to read as follows: authority delegated by the Executive certify that this AD: Authority: 49 U.S.C. 106(g), 40113, 44701.

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§ 39.13 [Amended] (h) General Visual Inspection, Repair, and installation too close to the fillet radius) in Replacement of the Stringer End Fittings and accordance with paragraph 3.B. of the ■ 2. The FAA amends § 39.13 by adding Keel Fittings Accomplishment Instructions of Bombardier the following new airworthiness Except for airplanes identified in Service Bulletin 84–53–74, dated August 29, directive (AD): paragraph (i) of this AD: Before accumulating 2018. If any non-conformance condition is found, before further flight, replace the 2019–24–12 De Havilland Aircraft of 40,000 total flight cycles or within 12 months stringer end fittings at fuselage stations Canada Limited (Type Certificate after the effective date of this AD, whichever X373.15 and X428.50, including doing all Previously Held by Bombardier, Inc.): occurs later, do the inspections specified in applicable repairs and an eddy current or Amendment 39–19815; Docket No. paragraphs (h)(1) and (2) of this AD. (1) Do a general visual inspection of the fluorescent dye penetrant inspection for FAA–2019–0675; Product Identifier keel tension fittings at fuselage stations cracks of all blended areas and fasteners, in 2019–NM–068–AD. X373.15 and X428.50 for non-conformance accordance with paragraph 3.B. of the (a) Effective Date conditions (oversize, elongated, and off angle Accomplishment Instructions of Bombardier conditions) in accordance with paragraph This AD is effective February 3, 2020. Service Bulletin 84–53–74, dated August 29, 3.B. of the Accomplishment Instructions of 2018; except where Bombardier Service (b) Affected ADs Bombardier Service Bulletin 84–53–74, dated Bulletin 84–53–74, dated August 29, 2018, August 29, 2018. If any non-conformance None. specifies to contact Bombardier, before condition is found, before further flight, further flight, repair using a method (c) Applicability replace the keel tension fittings at fuselage approved by the Manager, New York ACO stations X373.15 and X428.50, including This AD applies to De Havilland Aircraft Branch, FAA; or TCCA; or De Havilland doing all applicable repairs, in accordance of Canada Limited (Type Certificate Aircraft of Canada Limited’s TCCA DAO. If with paragraph 3.B. of the Accomplishment Previously Held by Bombardier, Inc.) Model approved by the DAO, the approval must Instructions of Bombardier Service Bulletin include the DAO-authorized signature. DHC–8–401 and –402 airplanes, certificated 84–53–74, dated August 29, 2018; except in any category, serial numbers 4327, 4330, where Bombardier Service Bulletin 84–53– (j) Corrective Action for Eddy Current and 4337, 4342, 4350, 4352, 4362, 4367, 4372, 74, dated August 29, 2018, specifies to Fluorescent Dye Penetrant Inspections 4375, 4376, 4378, 4383, 4384, 4385, 4388, contact Bombardier, before further flight, If, during any eddy current or fluorescent 4391, 4392, 4396, and 4397. repair using a method approved by the dye penetrant inspection required by (d) Subject Manager, New York ACO Branch, FAA; or paragraph (h)(2) or (i) of this AD, any TCCA; or De Havilland Aircraft of Canada cracking is found, before further flight, repair Air Transport Association (ATA) of Limited’s TCCA DAO. If approved by the using a method approved by the Manager, America Code 53, Fuselage. DAO, the approval must include the DAO- New York ACO Branch, FAA; or TCCA; or De authorized signature. (e) Reason (2) Do a general visual inspection of the Havilland Aircraft of Canada Limited’s TCCA This AD was prompted by a report that stringer end fittings at fuselage stations DAO. If approved by the DAO, the approval certain fuselages were delivered with non- X373.15 and X428.50 for non-conformance must include the DAO-authorized signature. conforming keel tension fittings and stringer conditions (i.e., excessive depth Hi-Lite (k) Credit for Previous Actions end fittings. The FAA is issuing this AD to fastener hole chamfers and installation too This paragraph provides credit for actions address non-conforming keel tension fittings close to the fillet radius), in accordance with required by paragraph (g) of this AD, if those and stringer end fittings which could lead to paragraph 3.B. of the Accomplishment actions were performed before the effective premature cracking and corrosion in several Instructions of Bombardier Service Bulletin date of this AD using Bombardier Service locations and compromise the structural 84–53–74, dated August 29, 2018. If any non- Bulletin 84–53–75, dated August 29, 2018. integrity of the fuselage joints. conformance condition is found, before further flight, replace the stringer end fittings (l) Other FAA AD Provisions (f) Compliance at fuselage stations X373.15 and X428.50, The following provisions also apply to this Comply with this AD within the including doing all applicable repairs and an eddy current or fluorescent dye penetrant AD: compliance times specified, unless already (1) Alternative Methods of Compliance done. inspection for cracks of all blended areas and fasteners, in accordance with paragraph 3.B. (AMOCs): The Manager, New York ACO (g) Detailed Visual Inspection of the Stringer of the Accomplishment Instructions of Branch, FAA, has the authority to approve End Fittings and Keel Fittings and Repair Bombardier Service Bulletin 84–53–74, dated AMOCs for this AD, if requested using the August 29, 2018; except where Bombardier procedures found in 14 CFR 39.19. In Within 8,000 flight hours or 5 years after accordance with 14 CFR 39.19, send your the effective date of this AD, whichever Service Bulletin 84–53–74, dated August 29, 2018, specifies to contact Bombardier, before request to your principal inspector or local occurs first: Do a detailed visual inspection Flight Standards District Office, as of the stringer end fittings and keel fittings further flight, repair using a method approved by the Manager, New York ACO appropriate. If sending information directly at fuselage stations X373.15 and X428.50 for to the manager of the certification office, loose and working fasteners, signs of wear, Branch, FAA; or TCCA; or De Havilland Aircraft of Canada Limited’s TCCA DAO. If send it to ATTN: Program Manager, and corrosion in accordance with paragraph Continuing Operational Safety, FAA, New 3.B. of the Accomplishment Instructions of approved by the DAO, the approval must include the DAO-authorized signature. York ACO Branch, 1600 Stewart Avenue, De Havilland Aircraft of Canada Limited Suite 410, Westbury, NY 11590; phone: 516– Service Bulletin 84–53–75, Revision A, dated (i) Rework for Airplanes That Have 228–7300; fax: 516–794–5531. Before using August 2, 2019. If any loose or working Accomplished Bombardier Service Bulletin any approved AMOC, notify your appropriate fasteners, signs of wear, or corrosion are 84–53–69 Prior to the Effective Date of This principal inspector, or lacking a principal found during any inspection required by this AD inspector, the manager of the local flight paragraph, before further flight, repair using For airplanes on which the actions standards district office/certificate holding a method approved by the Manager, New specified in Bombardier Service Bulletin 84– district office. York ACO Branch, FAA; or Transport Canada 53–69 have been accomplished prior to the (2) Contacting the Manufacturer: For any Civil Aviation (TCCA); or De Havilland effective date of this AD: Before requirement in this AD to obtain corrective Aircraft of Canada Limited’s TCCA Design accumulating 40,000 total flight cycles or actions from a manufacturer, the action must Approval Organization (DAO). If approved by within 12 months after the effective date of be accomplished using a method approved the DAO, the approval must include the this AD, whichever occurs later, do a general by the Manager, New York ACO Branch, DAO-authorized signature. Doing the actions visual inspection of the stringer end fittings FAA; or TCCA; or De Havilland Aircraft of specified in Bombardier Service Bulletin 84– at fuselage stations X373.15 and X428.50 for Canada Limited’s TCCA DAO. If approved by 53–66 does not constitute compliance with non-conformance conditions (i.e., excessive the DAO, the approval must include the the actions specified in this paragraph. depth Hi-Lite fastener hole chamfers and DAO-authorized signature.

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(m) Related Information DEPARTMENT OF TRANSPORTATION Examining the AD Docket (1) Refer to Mandatory Continuing You may examine the AD docket on Federal Aviation Administration Airworthiness Information (MCAI) Canadian the internet at https:// AD CF–2019–06, dated February 18, 2019, for www.regulations.gov by searching for 14 CFR Part 39 related information. This MCAI may be and locating Docket No. FAA–2019– found in the AD docket on the internet at 0481; or in person at Docket Operations https://www.regulations.gov by searching for [Docket No. FAA–2019–0481; Product between 9 a.m. and 5 p.m., Monday and locating Docket No. FAA–2019–0675. Identifier 2019–NM–058–AD; Amendment through Friday, except Federal holidays. (2) For more information about this AD, 39–21002; AD 2019–24–13] The AD docket contains this final rule, contact Andrea Jimenez, Aerospace Engineer, the regulatory evaluation, any Airframe and Propulsion Section, FAA, New RIN 2120–AA64 comments received, and other York ACO Branch, 1600 Stewart Avenue, information. The address for Docket Suite 410, Westbury, NY 11590; phone: 516– Airworthiness Directives; Airbus SAS Operations is U.S. Department of 228–7330; fax: 516–794–5531; email: 9-avs- Airplanes Transportation, Docket Operations, M– [email protected]. 30, West Building Ground Floor, Room (3) Service information identified in this AGENCY: Federal Aviation Administration (FAA), Department of W12–140, 1200 New Jersey Avenue SE, AD that is not incorporated by reference is Washington, DC 20590. available at the addresses specified in Transportation (DOT). FOR FURTHER INFORMATION CONTACT: paragraphs (n)(3) and (4) of this AD. ACTION: Final rule. Sanjay Ralhan, Aerospace Engineer, (n) Material Incorporated by Reference SUMMARY: The FAA is adopting a new International Section, Transport (1) The Director of the Federal Register airworthiness directive (AD) for certain Standards Branch, FAA, 2200 South approved the incorporation by reference Airbus SAS Model A318 series 216th St., Des Moines, WA 98198; (IBR) of the service information listed in this airplanes, Model A319–111, –112, –113, telephone and fax 206–231–3223. paragraph under 5 U.S.C. 552(a) and 1 CFR –114, –115, –131, –132, and –133 SUPPLEMENTARY INFORMATION: part 51. airplanes; Model A320–211, –212, –214, Discussion (2) You must use this service information –216, –231, –232, and –233 airplanes; as applicable to do the actions required by and Model A321–111, –112, –131, –211, The EASA, which is the Technical this AD, unless this AD specifies otherwise. –212, –213, –231, and –232 airplanes. Agent for the Member States of the (i) Bombardier Service Bulletin 84–53–74, This AD was prompted by a report that European Union, has issued EASA AD dated August 29, 2018. during a maintenance check, cracks 2019–0067R1, dated September 11, 2019 (ii) De Havilland Aircraft of Canada were found in a stiffener of a certain (‘‘EASA AD 2019–0067R1’’) (also Limited Service Bulletin 84–53–75, Revision lateral window frame. This AD requires referred to as the Mandatory Continuing A, dated August 2, 2019. repetitive high frequency eddy current Airworthiness Information, or ‘‘the (3) For Bombardier, Inc., or De Havilland (HFEC) inspections for cracking of a MCAI’’), to correct an unsafe condition Aircraft of Canada Limited service stiffener of a certain lateral window for certain Airbus SAS Model A318 information identified in this AD, contact De frame, and applicable related series airplanes, Model A319–111, –112, Havilland Aircraft of Canada Limited, Q- investigative and corrective actions, as –113, –114, –115, –131, –132, and –133 Series Technical Help Desk, 123 Garratt specified in a European Union Aviation airplanes; Model A320–211, –212, –214, Boulevard, Toronto, Ontario M3K 1Y5, Safety Agency (EASA) AD, which is –215, –216, –231, –232, and –233 Canada; phone: 416–375–4000; fax: 416–375– incorporated by reference. The FAA is airplanes; and Model A321–111, –112, 4539; email: [email protected]; internet: issuing this AD to address the unsafe –131, –211, –212, –213, –231, and –232 https://dehavilland.com. condition on these products. airplanes. Model A320–215 airplanes (4) You may view this service information are not on the U.S. Register; this AD DATES: at the FAA, Transport Standards Branch, This AD is effective February 3, therefore does not include those 2200 South 216th St., Des Moines, WA. For 2020. airplanes in the applicability. information on the availability of this The Director of the Federal Register The FAA issued a notice of proposed material at the FAA, call 206–231–3195. approved the incorporation by reference rulemaking (NPRM) to amend 14 CFR (5) You may view this service information of a certain publication listed in this AD part 39 by adding an AD that would that is incorporated by reference at the as of February 3, 2020. apply to all Airbus SAS Model A318 National Archives and Records ADDRESSES: For the material series airplanes, Model A319–111, –112, Administration (NARA). For information on incorporated by reference (IBR) in this –113, –114, –115, –131, –132, and –133 the availability of this material at NARA, AD, contact the EASA, Konrad- airplanes; Model A320–211, –212, –214, email [email protected], or go to: https:// Adenauer-Ufer 3, 50668 Cologne, –216, –231, –232, and –233 airplanes; www.archives.gov/federal-register/cfr/ibr- Germany; telephone +49 221 89990 and Model A321–111, –112, –131, –211, locations.html. 1000; email [email protected]; –212, –213, –231, and –232 airplanes. Issued in Des Moines, Washington, on internet www.easa.europa.eu. You may The NPRM published in the Federal November 27, 2019. find this IBR material on the EASA Register on June 24, 2019 (84 FR 29426). Michael Kaszycki, website at https://ad.easa.europa.eu. The NPRM was prompted by a report You may view this IBR material at the Acting Director, System Oversight Division, that during a maintenance check, cracks Aircraft Certification Service. FAA, Transport Standards Branch, 2200 were found in a stiffener of a certain South 216th St., Des Moines, WA. For lateral window frame. The NPRM [FR Doc. 2019–28072 Filed 12–27–19; 8:45 am] information on the availability of this proposed to require repetitive HFEC BILLING CODE 4910–13–P material at the FAA, call 206–231–3195. inspections for cracking of a stiffener of It is also available in the AD docket on a certain lateral window frame, and the internet at https:// applicable related investigative and www.regulations.gov by searching for corrective actions. and locating Docket No. FAA–2019– The FAA is issuing this AD to address 0481. cracking of the horizontal upper

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stiffener of the lateral window frame, First Request To Revise the Compliance that may be necessary. This AD has not which could reduce the structural Time for Reporting been revised regarding this issue. integrity of the fuselage. See the MCAI American Airlines (AAL) and United Request To Include Methods for for additional background information. Airlines (UAL) requested that the Reporting and OMB Control Number Comments compliance time for reporting be revised DAL requested that the FAA The FAA gave the public the to match that of EASA AD 2019–0067, specifically include a ‘‘Reporting opportunity to participate in developing which is 90 days instead of 30 days as Requirements’’ paragraph in the this final rule. The following presents specified in the proposed AD. AAL proposed AD and provide the largest the comments received on the NPRM stated that the requirement to submit number of methods for submitting the and the FAA’s response to each inspection results within 30 days would report (e.g., email, fax, letter, Airbus comment. put an undue burden on its operations. Tech Request, service bulletin reporting The FAA agrees with the commenters’ on the Airbus website). DAL stated that Request To Revise the Applicability request. The FAA’s standard the reporting requirement paragraph Emirates Airlines (EAD) requested compliance time for an AD reporting should also include the ‘‘AD Manual’’ that the FAA exclude Model A319–115 requirement is 30 days; however, the identifying the ‘‘what, how, and when,’’ VIP airplanes from the applicability. FAA has determined that 90 days is and that the ‘‘OMB 2120–0056 EAD commented that the proposed acceptable for this AD. Therefore, the approved’’ statement should be inspection requirements are related to compliance times in paragraphs (h)(3)(i) included in the regulatory text of the airworthiness limitations (ALI) task and (ii) of this AD have been revised to proposed AD, instead of the preamble. 531105–02–1 and ALI task 531105–01– 90 days, which matches the compliance The FAA would like to clarify that the 1. EAD also commented that these ALI time for reporting in EASA AD 2019– specific reporting requirements are tasks are not applicable to Model A319– 0067R1. specified in paragraph (h)(3) of this AD 115 VIP airplanes, and after reporting Second Request To Revise the and paragraph (7) of EASA AD 2019– this to EASA, EASA confirmed that this Compliance Time for Reporting 0067R1. For clarification, this AD is correct. EAD stated that the EASA AD allows the reporting methods that are has been revised to remove Model DAL requested that the NPRM allow specified in the service information A319–115 VIP airplanes from the up to 30 days following the return-to- identified in EASA AD 2019–0067R1, applicability. service date of the visit instead of 30 including the methods mentioned by The FAA agrees with the commenter’s days from the finding to comply with DAL. When reporting is required, the request. This AD now references EASA the reporting requirement. DAL stated FAA currently includes the OMB AD 2019–0067R1. The applicability in that while the visit is ongoing, all of the Control Number in both the preamble paragraph (c) of this AD is now limited paperwork remains with the airplane, so and regulatory text of an AD. OMB to the airplanes identified in AD 2019– while engineering may be aware of the Control Number 2120–0056 is included 0067R1, which excludes certain Model finding, it may not yet have access to in paragraph (i)(4) of this AD. This AD A318 and A319 airplanes, including the details of the finding or repair until has not been revised regarding this those identified by EAD. It has been after the visit is closed and the files are issue. determined that certain Model A318 sent to the central repository. Request To Revise Certain Language in and A319 airplane configurations could The FAA disagrees with the the Proposed AD be removed from the applicability of commenter’s request. Each operator has this AD as the compliance time for the a unique AD management program, DAL requested that the language in initial inspection is beyond the which comprises methods for the proposed AD reflect the corrosion maintenance program publication demonstrating compliance with the AD inhibiting compound (CIC) control in trigger for those configurations. in accordance with the applicable the corrosion prevention control operational regulations; therefore, the program (CPCP) with a statement such Request To Clarify the Applicability FAA cannot prescribe or modify an AD as ‘‘Reapplication of CICs may be Delta Airlines (DAL) asked whether based on an individual operator’s controlled by the operator’s CPCP all manufacturer serial numbers are unique methods of preparing the program instead of this SB’’ or affected regardless of the applicability airplane for compliance. As noted ‘‘Reapplication of CICs is not an RC specified in EASA AD 2019–0067. DAL previously, the compliance time for [Required for Compliance] step.’’ DAL stated that in ‘‘Required Action(s) and reporting has been changed from 30 to stated that this proposed language could Compliance Time(s)’’ of EASA AD 90 days in this AD. In addition, be added to the ‘‘Requirements’’ 2019–0067, operators are instructed to operators may request approval of an paragraph, the ‘‘Exceptions to EASA AD accomplish a special detailed inspection alternative method of compliance 2019–0067’’ paragraph, or the ‘‘Other of each affected part ‘‘in accordance (AMOC) using the procedures in FAA AD Provisions’’ paragraph in the with’’ the instructions of the applicable paragraph (i)(1) of this AD to request a proposed AD. service information. DAL commented different compliance time. This AD has DAL commented that the service that the referenced service information not been revised regarding this issue. information states that all steps in the is missing several airplane manufacturer ‘‘Procedure and Test’’ sections are RC. Request Regarding No Findings serial numbers. DAL added that some of those The FAA agrees to clarify. If there is DAL requested that inspections with procedural steps include re-applying a discrepancy between the applicability no findings not be required to be CICs. DAL also stated that the of this AD and the effectivity of the reported. referenced service information is not service information, then this AD takes The FAA disagrees with the related to corrosion, and these steps precedence. As noted previously, the commenter’s request. Reporting all might be part of the modification but applicability of this AD is now limited findings from the inspections is should not be RC. DAL commented that to the airplanes identified in EASA AD necessary to assess the extent of the since the choice of CICs is under the 2019–0067R1. This AD has not been problem in the affected fleet and to operators’ control within their CPCP revised regarding this issue. develop any additional corrective action program, operators may have to request

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approval of an AMOC to use their airplane configuration’’ will result in previously and minor editorial changes. standard CIC rather than what is accomplishing the inspections while the The FAA has determined that these specified in the service information. airplane is not on jacks. DAL also stated minor changes: DAL also commented that an operator that it has many visits requiring the • Are consistent with the intent that may have to use an old or out-of-date airplane to be jacked and routinely was proposed in the NPRM for CIC because it is listed in older service accomplishes multiple tasks addressing the unsafe condition; and information. simultaneously during service visits. • The FAA disagrees with the DAL commented that requiring the Do not add any additional burden commenter’s request. The EASA and service information to be accomplished upon the public than was already Airbus approved the applicable during that portion of the visit with the proposed in the NPRM. protective finish as a required step to weight on wheels limits the ability for The FAA also determined that these mitigate the risk addressed in this AD, the operator to perform the work. changes will not increase the economic and the FAA agrees that this step should The FAA disagrees with the burden on any operator or increase the be required. DAL has not proposed an commenter’s request. The FAA cannot scope of this final rule. alternative CIC or justified the need for prescribe or modify an AD based on an an alternative CIC to complete the individual operator’s unique methods of Related IBR Material Under 1 CFR Part protective finish step. Each operator has preparing the airplane for compliance. 51 its own unique CPCP, which may not The FAA encourages DAL to work with EASA AD 2019–0067R1 describes contain information relative to the FAA certificate management office procedures for repetitive HFEC mitigating the risk addressed in this AD. in establishing methods needed to inspections of the horizontal upper Operators may request approval of an prepare the airplane for AD-related stiffener of the lateral window frame on AMOC using the procedures in work using either Airbus service the right-hand (RH) and left-hand (LH) paragraph (i)(1) of this AD for using an information, or equivalent, in sides for any cracking, and applicable alternative CIC. This AD has not been accordance with DAL’s maintenance or related investigative and corrective revised regarding this issue. inspection program. If necessary, actions. This material is reasonably operators may request approval of an Request To Work on the Airplane available because the interested parties AMOC using the procedures specified Under Certain Circumstances have access to it through their normal in paragraph (i)(1) of this AD. The AD course of business or by the means DAL requested that the FAA revise has not been changed in this regard. the proposed AD to allow work on the identified in the ADDRESSES section. Conclusion airplane while it is on jacks, and to Costs of Compliance define when the operator can or cannot The FAA reviewed the relevant data, move it (the jacks). DAL stated that considered the comments received, and The FAA estimates that this AD since the accomplishment of the determined that air safety and the affects 1,291 airplanes of U.S. registry. proposed AD must be ‘‘in accordance public interest require adopting this The FAA estimates the following costs with’’ the service information, ‘‘basic final rule with the changes described to comply with this AD:

ESTIMATED COSTS FOR REQUIRED ACTIONS

Cost per Cost on U.S. Labor cost Parts cost product operators

9 work-hours × $85 per hour = $765 ...... $0 $765 $987,615

The FAA estimates the following the results of any required actions. The number of aircraft that might need these costs to do any necessary on-condition FAA has no way of determining the on-condition actions: actions that would be required based on

ESTIMATED COSTS OF ON-CONDITION ACTIONS *

Cost per Labor cost Parts cost product

Up to 13 work-hours × $85 per hour = Up to $1,105 ...... $0 Up to $1,105. * Table does not include estimated costs for reporting and on-condition repairs. The FAA has received no definitive data that would enable the agency to provide cost estimates for the on-condition repairs specified in this AD.

The FAA estimates that it would take Paperwork Reduction Act number for the collection of information about 1 work-hour per product to required by this AD is 2120–0056. The comply with the on-condition reporting A federal agency may not conduct or paperwork cost associated with this AD requirement in this AD. The average sponsor, and a person is not required to has been detailed in the Costs of labor rate is $85 per hour. Based on respond to, nor shall a person be subject Compliance section of this document these figures, the FAA estimates the cost to penalty for failure to comply with a and includes time for reviewing of reporting the inspection results on collection of information subject to the instructions, as well as completing and U.S. operators to be $85 per product. requirements of the Paperwork reviewing the collection of information. Reduction Act unless that collection of Therefore, all reporting associated with information displays a current valid this AD is mandatory. Send comments OMB control number. The control regarding this burden estimate or any

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other aspect of this collection of List of Subjects in 14 CFR Part 39 (h) Exceptions to EASA AD 2019–0067R1 information, including suggestions for Air transportation, Aircraft, Aviation (1) For purposes of determining reducing this burden to Information safety, Incorporation by reference, compliance with the requirements of this AD: Collection Clearance Officer, Federal Safety. Where EASA AD 2019–0067R1 refers to its Aviation Administration, 10101 effective date, this AD requires using the Hillwood Parkway, Fort Worth, TX Adoption of the Amendment effective date of this AD. (2) The ‘‘Remarks’’ section of EASA AD 76177–1524. Accordingly, under the authority 2019–0067R1 does not apply to this AD. Authority for This Rulemaking delegated to me by the Administrator, (3) Paragraph (7) of EASA AD 2019– the FAA amends 14 CFR part 39 as 0067R1 specifies to report certain inspection Title 49 of the United States Code follows: results to Airbus. For this AD, report those specifies the FAA’s authority to issue inspection results at the applicable time rules on aviation safety. Subtitle I, PART 39—AIRWORTHINESS specified in paragraph (h)(3)(i) or (ii) of this section 106, describes the authority of DIRECTIVES AD. the FAA Administrator. Subtitle VII: (i) If the inspection was done on or after Aviation Programs, describes in more ■ 1. The authority citation for part 39 the effective date of this AD: Submit the continues to read as follows: report within 90 days after the inspection. detail the scope of the Agency’s (ii) If the inspection was done before the authority. Authority: 49 U.S.C. 106(g), 40113, 44701. effective date of this AD: Submit the report The FAA is issuing this rulemaking § 39.13 [Amended] within 90 days after the effective date of this under the authority described in AD. ■ 2. The FAA amends § 39.13 by adding Subtitle VII, Part A, Subpart III, Section (i) Other FAA AD Provisions 44701: ‘‘General requirements.’’ Under the following new airworthiness that section, Congress charges the FAA directive (AD): The following provisions also apply to this AD: with promoting safe flight of civil 2019–24–13 Airbus SAS: Amendment 39– (1) Alternative Methods of Compliance aircraft in air commerce by prescribing 21002; Docket No. FAA–2019–0481; (AMOCs): The Manager, International regulations for practices, methods, and Product Identifier 2019–NM–058–AD. Section, Transport Standards Branch, FAA, procedures the Administrator finds (a) Effective Date has the authority to approve AMOCs for this necessary for safety in air commerce. AD, if requested using the procedures found This AD is effective February 3, 2020. This regulation is within the scope of in 14 CFR 39.19. In accordance with 14 CFR that authority because it addresses an (b) Affected ADs 39.19, send your request to your principal unsafe condition that is likely to exist or inspector or local Flight Standards District None. Office, as appropriate. If sending information develop on products identified in this (c) Applicability directly to the International Section, send it rulemaking action. to the attention of the person identified in This AD applies to Airbus SAS airplanes This AD is issued in accordance with paragraph (j) of this AD. Information may be identified in paragraphs (c)(1) through (4) of emailed to: 9-ANM-116-AMOC-REQUESTS@ authority delegated by the Executive this AD, certificated in any category, as faa.gov. Before using any approved AMOC, Director, Aircraft Certification Service, identified in European Union Aviation Safety notify your appropriate principal inspector, as authorized by FAA Order 8000.51C. Agency (EASA) AD 2019–0067R1, dated or lacking a principal inspector, the manager In accordance with that order, issuance September 11, 2019 (‘‘EASA AD 2019– of the local flight standards district office/ of ADs is normally a function of the 0067R1’’). certificate holding district office. (1) Model A318–111, –112, –121, and –122 Compliance and Airworthiness (2) Contacting the Manufacturer: For any airplanes. Division, but during this transition requirement in this AD to obtain instructions (2) Model A319–111, –112, –113, –114, period, the Executive Director has from a manufacturer, the instructions must –115, –131, –132, and –133 airplanes. delegated the authority to issue ADs be accomplished using a method approved (3) Model A320–211, –212, –214, –216, by the Manager, International Section, applicable to transport category –231, –232, and –233 airplanes. Transport Standards Branch, FAA; or EASA; airplanes and associated appliances to (4) Model A321–111, –112, –131, –211, or Airbus SAS’s EASA Design Organization the Director of the System Oversight –212, –213, –231, and –232 airplanes. Division. Approval (DOA). If approved by the DOA, (d) Subject the approval must include the DOA- Regulatory Findings Air Transport Association (ATA) of authorized signature. America Code 53, Fuselage. (3) Required for Compliance (RC): For any This AD will not have federalism service information referenced in EASA AD implications under Executive Order (e) Reason 2019–0067R1 that contains RC procedures 13132. This AD will not have a This AD was prompted by a report that and tests: Except as required by (i)(2) of this substantial direct effect on the States, on during a maintenance check, cracks were AD, RC procedures and tests must be done the relationship between the national found in an upper stiffener of the lateral to comply with this AD; any procedures or government and the States, or on the window frame at the frame 4 upper tests that are not identified as RC are distribution of power and attachment. The FAA is issuing this AD to recommended. Those procedures and tests responsibilities among the various address cracking of the horizontal upper that are not identified as RC may be deviated stiffener of the lateral window frame, which from using accepted methods in accordance levels of government. with the operator’s maintenance or For the reasons discussed above, I could reduce the structural integrity of the fuselage. inspection program without obtaining certify that this AD: approval of an AMOC, provided the (1) Is not a ‘‘significant regulatory (f) Compliance procedures and tests identified as RC can be action’’ under Executive Order 12866, Comply with this AD within the done and the airplane can be put back in an (2) Will not affect intrastate aviation compliance times specified, unless already airworthy condition. Any substitutions or in Alaska, and done. changes to procedures or tests identified as RC require approval of an AMOC. (3) Will not have a significant (g) Requirements (4) Paperwork Reduction Act Burden economic impact, positive or negative, Except as specified in paragraph (h) of this Statement: A federal agency may not conduct on a substantial number of small entities AD: Comply with all required actions and or sponsor, and a person is not required to under the criteria of the Regulatory compliance times specified in, and in respond to, nor shall a person be subject to Flexibility Act. accordance with, EASA AD 2019–0067R1. a penalty for failure to comply with a

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collection of information subject to the DEPARTMENT OF TRANSPORTATION at https://www.regulations.gov by requirements of the Paperwork Reduction searching for and locating Docket No. Act unless that collection of information Federal Aviation Administration FAA–2019–0980. displays a current valid OMB Control Number. The OMB Control Number for this 14 CFR Part 39 Examining the AD Docket information collection is 2120–0056. Public [Docket No. FAA–2019–0980; Product You may examine the AD docket on reporting for this collection of information is the internet at https:// estimated to be approximately 1 hour per Identifier 2019–NM–180–AD; Amendment 39–21004; AD 2019–24–15] www.regulations.gov by searching for response, including the time for reviewing and locating Docket No. FAA–2019– instructions, completing and reviewing the RIN 2120–AA64 0980; or in person at the Docket collection of information. All responses to this collection of information are mandatory. Airworthiness Directives; The Boeing Management Facility between 9 a.m. Send comments regarding this burden Company Airplanes and 5 p.m., Monday through Friday, estimate or any other aspect of this collection except Federal holidays. The AD docket of information, including suggestions for AGENCY: Federal Aviation contains this final rule, the regulatory reducing this burden to Information Administration (FAA), DOT. evaluation, any comments received, and Collection Clearance Officer, Federal ACTION: Final rule; request for other information. The street address for Aviation Administration, 10101 Hillwood comments. Docket Operations is listed above. Parkway, Fort Worth, TX 76177–1524. Comments will be available in the AD SUMMARY: The FAA is adopting an docket shortly after receipt. (j) Related Information airworthiness directive (AD) for certain FOR FURTHER INFORMATION CONTACT: For more information about this AD, The Boeing Company Model 737–900ER Allie Buss, Aerospace Engineer, Cabin contact Sanjay Ralhan, Aerospace Engineer, series airplanes. This AD requires Safety and Environmental Systems International Section, Transport Standards replacement of nonconforming head Branch, FAA, 2200 South 216th St., Des Section, FAA, Seattle ACO Branch, 2200 strike pads with conforming head strike South 216th St., Des Moines, WA 98198; Moines, WA 98198; telephone and fax 206– pads. This AD was prompted by a report 231–3223. phone and fax: 206–231–3564; email: of nonconforming head strike pads on [email protected]. (k) Material Incorporated by Reference the left and right mid exit doors. The SUPPLEMENTARY INFORMATION: (1) The Director of the Federal Register FAA is issuing this AD to address the approved the incorporation by reference unsafe condition on these products. Discussion (IBR) of the service information listed in this DATES: This AD is effective January 14, The FAA has received a report paragraph under 5 U.S.C. 552(a) and 1 CFR 2020. indicating that nonconforming head part 51. The Director of the Federal Register strike pads were installed on the left (2) You must use this service information approved the incorporation by reference and right mid exit doors in the as applicable to do the actions required by of a certain publication listed in this AD passenger compartment of certain this AD, unless this AD specifies otherwise. as of January 14, 2020. (i) European Union Aviation Safety Agency Boeing Model 737–900ER series The FAA must receive comments on airplanes. The nonconforming head (EASA) AD 2019–0067R1, dated September this AD by February 13, 2020. 11, 2019. strike pads were fabricated using eight 1 (ii) [Reserved] ADDRESSES: You may send comments, bonded layers of ⁄8-inch-thick foam, (3) For information about EASA AD 2019– using the procedures found in 14 CFR instead of the required 1-inch-thick 0067R1, contact the EASA, Konrad- 11.43 and 11.45, by any of the following continuous foam. This condition, if not Adenauer-Ufer 3, 50668 Cologne, Germany; methods: addressed, could result in injury to telephone +49 221 89990 6017; email ADs@ • Federal eRulemaking Portal: Go to passengers in an otherwise survivable easa.europa.eu; internet https://www.regulations.gov. Follow the emergency landing and potentially www.easa.europa.eu. You may find this instructions for submitting comments. block passenger egress. EASA AD on the EASA website at https:// • Fax: 202–493–2251. ad.easa.europa.eu. • Mail: U.S. Department of Related Service Information Under 1 (4) You may view this material at the FAA, Transportation, Docket Operations, M– CFR Part 51 Transport Standards Branch, 2200 South 30, West Building Ground Floor, Room The FAA reviewed Boeing Special 216th St., Des Moines, WA. For information W12–140, 1200 New Jersey Avenue SE, Attention Requirements Bulletin 737– on the availability of this material at the Washington, DC 20590. 25–1831 RB, dated September 24, 2019. FAA, call 206–231–3195. This material may • Hand Delivery: Deliver to Mail This service information describes be found in the AD docket on the internet at address above between 9 a.m. and 5 procedures for replacement of https://www.regulations.gov by searching for p.m., Monday through Friday, except nonconforming head strike pads with and locating Docket No. FAA–2019–0481. Federal holidays. conforming head strike pads on the left (5) You may view this material that is For service information identified in incorporated by reference at the National and right mid exit doors. This service this AD, contact Boeing Commercial Archives and Records Administration information is reasonably available (NARA). For information on the availability Airplanes, Attention: Contractual & Data because the interested parties have of this material at NARA, email fedreg.legal@ Services (C&DS), 2600 Westminster access to it through their normal course nara.gov, or go to: https://www.archives.gov/ Blvd., MC 110–SK57, Seal Beach, CA of business or by the means identified federal-register/cfr/ibr-locations.html. 90740–5600; phone: 562–797–1717; in the ADDRESSES section. internet: https:// Issued in Des Moines, Washington, on www.myboeingfleet.com. You may view FAA’s Determination December 4, 2019. this referenced service information at The FAA is issuing this AD because Michael Kaszycki, the FAA, Transport Standards Branch, the FAA evaluated all the relevant Acting Director, System Oversight Division, 2200 South 216th St., Des Moines, WA. information and determined the unsafe Aircraft Certification Service. For information on the availability of condition described previously is likely [FR Doc. 2019–28069 Filed 12–27–19; 8:45 am] this material at the FAA, call 206–231– to exist or develop in other products of BILLING CODE 4910–13–P 3195. It is also available on the internet the same type design.

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AD Requirements between the FAA and Boeing. The about this final rule. Send your This AD requires accomplishment of initiative resulted in the development of comments to an address listed under the the actions identified in Boeing Special a new process in which the service ADDRESSES section. Include the docket Attention Requirements Bulletin 737– information more clearly identifies the number FAA–2019–0980 and Product 25–1831 RB, dated September 24, 2019, actions needed to address the unsafe Identifier 2019–NM–180–AD at the described previously, except for any condition in the ‘‘Accomplishment beginning of your comments. The FAA differences identified as exceptions in Instructions.’’ The new process results specifically invite comments on the the regulatory text of this AD. in a Boeing Requirements Bulletin, overall regulatory, economic, For information on the procedures which contains only the actions needed environmental, and energy aspects of and compliance times, see this service to address the unsafe condition (i.e., this final rule. The FAA will consider information at https:// only the RC actions). all comments received by the closing www.regulations.gov by searching for FAA’s Justification and Determination date and may amend this final rule and locating Docket No. FAA–2019– of the Effective Date because of those comments. 0980. The FAA will post all comments, Since there are currently no domestic without change, to https:// Explanation of Requirements Bulletin operators of this product, notice and www.regulations.gov, including any The FAA worked in conjunction with opportunity for public comment before personal information you provide. The industry, under the Airworthiness issuing this AD are unnecessary. In Directive Implementation Aviation addition, for the reasons stated above, FAA will also post a report Rulemaking Committee (AD ARC), to the FAA finds that good cause exists for summarizing each substantive verbal enhance the AD system. One making this amendment effective in less contact the agency receives about this enhancement is a process for annotating than 30 days. final rule. which steps in the service information Comments Invited Costs of Compliance are ‘‘required for compliance’’ (RC) with an AD. Boeing has implemented this RC This AD is a final rule that involves Currently, there are no affected U.S.- concept into Boeing service bulletins. requirements affecting flight safety and registered airplanes. If an affected In an effort to further improve the was not preceded by notice and an airplane is imported and placed on the quality of ADs and AD-related Boeing opportunity for public comment. U.S. Register in the future, the FAA service information, a joint process However, the FAA invites you to send provides the following cost estimates to improvement initiative was worked any written data, views, or arguments comply with this AD:

ESTIMATED COSTS FOR REQUIRED ACTIONS

Cost per Action Labor cost Parts cost product

Replacement ...... 1 work-hour × $85 per hour = $85 ...... Up to $7,080 ...... Up to $7,165.

According to the manufacturer, some that authority because it addresses an For the reasons discussed above, I or all of the costs of this AD may be unsafe condition that is likely to exist or certify that this AD: covered under warranty, thereby develop on products identified in this (1) Is not a ‘‘significant regulatory reducing the cost impact on affected rulemaking action. action’’ under Executive Order 12866, individuals. The FAA does not control This AD is issued in accordance with (2) Will not affect intrastate aviation warranty coverage for affected authority delegated by the Executive in Alaska, and individuals. As a result, the FAA has Director, Aircraft Certification Service, (3) Will not have a significant included all known costs in the cost as authorized by FAA Order 8000.51C. estimate. economic impact, positive or negative, In accordance with that order, issuance on a substantial number of small entities Authority for This Rulemaking of ADs is normally a function of the under the criteria of the Regulatory Compliance and Airworthiness Title 49 of the United States Code Flexibility Act. Division, but during this transition specifies the FAA’s authority to issue List of Subjects in 14 CFR Part 39 rules on aviation safety. Subtitle I, period, the Executive Director has section 106, describes the authority of delegated the authority to issue ADs Air transportation, Aircraft, Aviation the FAA Administrator. ‘‘Subtitle VII: applicable to transport category safety, Incorporation by reference, Aviation Programs’’ describes in more airplanes and associated appliances to Safety. the Director of the System Oversight detail the scope of the Agency’s Adoption of the Amendment authority. Division. The FAA is issuing this rulemaking Regulatory Findings Accordingly, under the authority under the authority described in delegated to me by the Administrator, Subtitle VII, Part A, Subpart III, Section This AD will not have federalism the FAA amends 14 CFR part 39 as 44701: ‘‘General requirements.’’ Under implications under Executive Order follows: that section, Congress charges the FAA 13132. This AD will not have a with promoting safe flight of civil substantial direct effect on the States, on PART 39—AIRWORTHINESS aircraft in air commerce by prescribing the relationship between the national DIRECTIVES regulations for practices, methods, and government and the States, or on the procedures the Administrator finds distribution of power and ■ 1. The authority citation for part 39 necessary for safety in air commerce. responsibilities among the various continues to read as follows: This regulation is within the scope of levels of government. Authority: 49 U.S.C. 106(g), 40113, 44701.

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§ 39.13 [Amended] 14 CFR 39.19, send your request to your DEPARTMENT OF HEALTH AND ■ 2. The FAA amends § 39.13 by adding principal inspector or local Flight Standards HUMAN SERVICES District Office, as appropriate. If sending the following new airworthiness information directly to the manager of the Food and Drug Administration directive (AD): certification office, send it to the attention of the person identified in paragraph (j) of this 2019–24–15 The Boeing Company: 21 CFR Parts 862, 864, 866, 868, 870, Amendment 39–21004; Docket No. AD. Information may be emailed to: 9-ANM- FAA–2019–0980; Product Identifier [email protected]. 872, 874, 876, 878, 880, 882, 884, 886, 2019–NM–180–AD. (2) Before using any approved AMOC, 888, 890, and 892 notify your appropriate principal inspector, [Docket Nos. FDA–2017–N–1129 and FDA– (a) Effective Date or lacking a principal inspector, the manager 2017–N–1610] This AD is effective January 14, 2020. of the local flight standards district office/ certificate holding district office. Medical Devices; Exemptions From (b) Affected ADs (3) An AMOC that provides an acceptable None. level of safety may be used for any repair, Premarket Notification for Class I and modification, or alteration required by this Class II Devices (c) Applicability AD if it is approved by The Boeing Company This AD applies to The Boeing Company Organization Designation Authorization AGENCY: Food and Drug Administration, Model 737–900ER series airplanes, (ODA) that has been authorized by the HHS. certificated in any category, as identified in Manager, Seattle ACO Branch, FAA, to make ACTION: Final amendment; final order. Boeing Special Attention Requirements those findings. To be approved, the repair Bulletin 737–25–1831 RB, dated September method, modification deviation, or alteration SUMMARY: The Food and Drug 24, 2019. deviation must meet the certification basis of Administration (FDA, Agency, or we) (d) Subject the airplane, and the approval must identified a list of class I devices and specifically refer to this AD. Air Transport Association (ATA) of class II devices that are now exempt America Code 25, Equipment/furnishings. (j) Related Information from premarket notification requirements, subject to certain (e) Unsafe Condition For more information about this AD, contact Allie Buss, Aerospace Engineer, limitations. FDA published the lists of This AD was prompted by a report of Cabin Safety and Environmental Systems final determinations in accordance with nonconforming head strike pads on the mid Section, FAA, Seattle ACO Branch, 2200 procedures established by the 21st exit doors. The FAA is issuing this AD to South 216th St., Des Moines, WA 98198; Century Cures Act (Cures Act). address nonconforming head strike pads phone and fax: 206–231–3564; email: Although each classification regulation which could result in injury to passengers in [email protected]. an otherwise survivable emergency landing for each such type of device shall be and potentially block passenger egress. (k) Material Incorporated by Reference deemed amended to incorporate such exemption, we are publishing this final (f) Compliance (1) The Director of the Federal Register approved the incorporation by reference order to amend the codified language for Comply with this AD within the (IBR) of the service information listed in this each listed class I and class II device’s compliance times specified, unless already paragraph under 5 U.S.C. 552(a) and 1 CFR classification regulation to reflect the done. part 51. final determinations. FDA’s action (g) Required Actions (2) You must use this service information decreases regulatory burden on the as applicable to do the actions required by Except as specified by paragraph (h) of this medical device industry and eliminates this AD, unless the AD specifies otherwise. AD: At the applicable times specified in the private costs and expenditures required ‘‘Compliance’’ paragraph of Boeing Special (i) Boeing Special Attention Requirements Bulletin 737–25–1831 RB, dated September to comply with certain Federal Attention Requirements Bulletin 737–25– regulations. 1831 RB, dated September 24, 2019, do all 24, 2019. applicable actions identified in, and in (ii) [Reserved] DATES: This order is effective December accordance with, the Accomplishment (3) For service information identified in 30, 2019. Instructions of Boeing Special Attention this AD, contact Boeing Commercial Airplanes, Attention: Contractual & Data FOR FURTHER INFORMATION CONTACT: Requirements Bulletin 737–25–1831 RB, Karen Fikes, Center for Devices and dated September 24, 2019. Services (C&DS), 2600 Westminster Blvd., MC 110–SK57, Seal Beach, CA 90740–5600; Radiological Health (CDRH), Food and Note 1 to paragraph (g): Guidance for phone: 562–797–1717; internet: https:// Drug Administration, 10903 New accomplishing the actions required by this www.myboeingfleet.com. AD can be found in Boeing Special Attention Hampshire Ave., Bldg. 66, Rm. 5502, (4) You may view this service information Service Bulletin 737–25–1831, dated Silver Spring, MD 20993, 301–796– at the FAA, Transport Standards Branch, September 24, 2019, which is referred to in 9603, email: [email protected]. 2200 South 216th St., Des Moines, WA. For Boeing Special Attention Requirements information on the availability of this SUPPLEMENTARY INFORMATION: Bulletin 737–25–1831 RB, dated September material at the FAA, call 206–231–3195. 24, 2019. I. Background (5) You may view this service information (h) Exceptions to Service Information that is incorporated by reference at the The Cures Act (Pub. L. 114–255) was Specifications National Archives and Records signed into law on December 13, 2016. Administration (NARA). For information on Where Boeing Special Attention Under the Cures Act, section 3054 the availability of this material at NARA, amended section 510(l) and (m) of the Requirements Bulletin 737–25–1831 RB, email [email protected], or go to: https:// dated September 24, 2019, uses the phrase Federal Food, Drug, and Cosmetic Act www.archives.gov/federal-register/cfr/ibr- ‘‘the original issue date of the Requirements (FD&C Act) (21 U.S.C. 360(l) and (m)). locations.html. Bulletin 737–25–1831 RB,’’ this AD requires As amended, section 510(l)(2) of the using ‘‘the effective date of this AD.’’ Issued in Des Moines, Washington, on FD&C Act requires FDA to identify December 9, 2019. (i) Alternative Methods of Compliance through publication in the Federal (AMOCs) Michael Kaszycki, Register, any type of class I device that Acting Director, System Oversight Division, (1) The Manager, Seattle ACO Branch, the Agency determines no longer Aircraft Certification Service. FAA, has the authority to approve AMOCs requires a report under section 510(k) of for this AD, if requested using the procedures [FR Doc. 2019–28070 Filed 12–27–19; 8:45 am] the FD&C Act to provide reasonable found in 14 CFR 39.19. In accordance with BILLING CODE 4910–13–P assurance of safety and effectiveness.

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FDA shall publish this determination Following publication of the notices, we exempted product code MNG, within 120 days of the date of FDA determined that it is unnecessary ‘‘External Urethral Occluder, Urinary enactment of the Cures Act and at least to update three classification regulations Incontinence-Control, Female’’ and once every 5 years thereafter, as FDA (21 CFR 872.4565, 21 CFR 878.4014, removed the current limitation language determines appropriate. Further, section and 21 CFR 880.6320) included in the regarding ‘‘use on females.’’ Therefore, 510(l)(2) provides that upon the date of class I notice, 82 FR 17841. Five product FDA is revising the name of the publication of the Agency’s codes corresponding to these three classification regulation to read determination in the Federal Register, a classification regulations (EGI and EIB ‘‘Urological clamp’’ to ensure clarity. 510(k) will no longer be required for (21 CFR 872.4565), OVR (21 CFR II. Criteria for Exemption these devices and the classification 878.4014), KZF and PEQ (21 CFR regulation applicable to each such type 880.6320)) were identified for As amended by the Cures Act, section of device shall be deemed amended to exemption in 82 FR 17841; however, the 510(l) now has two provisions, 510(l)(1) incorporate such exemption. corresponding classification regulations and (2). Under 510(1)(1), a class I device As amended, section 510(m)(1)(A) of were already class I, exempt from is exempt from the premarket the FD&C Act provides that, within 90 premarket notification procedures in notification requirements under section days after enactment of the Cures Act subpart E of part 807 (21 CFR part 807, 510(k) of the FD&C Act, unless the and at least once every 5 years subpart E) subject to the limitations in device is intended for a use which is of thereafter, FDA shall publish in the the corresponding ‘‘.9’’ regulations (i.e., substantial importance in preventing Federal Register a notice containing a 21 CFR 872.9, 21 CFR 878.9 or 21 CFR impairment of human health or it list of each type of class II device that 880.9); and, therefore, no revisions to presents a potential unreasonable risk of FDA determines no longer requires a the codified are necessary. Additionally, illness or injury. Based on these criteria, report under section 510(k) of the FD&C we determined that it is unnecessary to FDA evaluated all class I devices to Act to provide reasonable assurance of update 21 CFR 876.5820 included in the determine which device types should be safety and effectiveness. This notice class II notice, 82 FR 13609. The exempt from premarket notification shall provide at least a 60-day comment product code within this classification requirements. For class II devices, there are a period. Within 210 days of enactment of regulation (FKI) was identified for number of factors FDA may consider to the Cures Act, FDA shall publish in the exemption in 82 FR 13609. However, determine whether a 510(k) is necessary Federal Register a list representing its this device type is specifically identified to provide reasonable assurance of the final determination regarding exemption within the class I paragraph of this safety and effectiveness of a class II of devices that were contained in the classification regulation (21 CFR device. These factors are discussed in proposed list published under 876.5820(b)(2)) and already exempt 510(m)(1)(A) of the FD&C Act. Further, the January 21, 1998, Federal Register from premarket notification procedures notice (63 FR 3142) and subsequently in section 510(m)(3) of the FD&C Act in subpart E of part 807 subject to the provides that upon the date of the guidance we issued on February 19, limitations in 21 CFR 876.9. Therefore, 1998, entitled ‘‘Procedures for Class II publication of the final list in the no revisions to the codified are Federal Register, a 510(k) will no longer Device Exemptions From Premarket necessary. Notification, Guidance for Industry and be required for these devices and the We are also making a revision to CDRH Staff ’’.2 classification regulation applicable to correct a misidentified classification each such device shall be deemed regulation in 82 FR 31976. The notice III. Limitations on Exemptions amended to incorporate such incorrectly listed the classification exemption. Although FDA exempted the types of regulation 21 CFR 868.1400 ‘‘Carbon class I and class II devices from the In the Federal Register of April 13, dioxide gas analyzer’’ as corresponding 2017 (82 FR 17841), in accordance with premarket notification requirements with product code LLK; however, the under section 510(k) of the FD&C Act in the amendments to 510(l)(2), FDA correct classification regulation issued a notice of final determination to accordance with the provisions under associated with product code LLK is 21 510(l) and (m), an exemption from the exempt a list of class I devices from CFR 880.5780 ‘‘Medical Support premarket notification requirements requirement of premarket notification Stocking’’. Therefore, 21 CFR 868.1400 does not mean the device is exempt under section 510(k) of the FD&C Act, remains unchanged, and 21 CFR subject to certain limitations. In the from any other statutory or regulatory 880.5780(a)(2) is revised to reflect the requirements, unless such exemption is Federal Register of March 14, 2017 (82 exemption. FR 13609), in accordance with the explicitly provided by order or We are revising the name of one regulation. FDA’s determination that amendments to 510(m)(1)(A), FDA classification regulation, currently issued a notice proposing to exempt a premarket notification is unnecessary to entitled ‘‘Urological clamp for males’’, provide a reasonable assurance of safety list of class II devices from premarket in response to FDA’s exemption in 82 notification requirements under section and effectiveness is based, in part, on FR 17841. Part 876.5160 is currently the assurance of safety and effectiveness 510(k) of the FD&C Act, subject to entitled ‘‘Urological clamp for males,’’ that other regulatory controls, such as certain limitations. After a 60-day which was previously exempt from current good manufacturing practice comment period, in the Federal Register premarket notification procedures ‘‘. . . requirements, provide. of July 11, 2017 (82 FR 31976), FDA Except when intended for internal use In addition to being subject to the issued a notice of final determination to or use on females . . .’’. In 82 FR 17841, general limitations to the exemptions exempt class II devices provided in the found in 21 CFR 862.9 to 892.9, FDA proposed list. Through this action, FDA order,’’ rather than ‘‘Final order.’’ Beginning in has also partially limited some is now amending the codified language December 2019, this editorial change was made to exemptions from premarket notification for each listed classification regulation indicate that the document ‘‘amends’’ the Code of requirements to specific devices within to reflect final determinations for these Federal Regulations. The change was made in 1 accordance with the Office of Federal Register’s class I and class II exemptions. (OFR) interpretations of the Federal Register Act (44 2 Available at: https://www.fda.gov/regulatory- U.S.C. chapter 15), its implementing regulations (1 information/search-fda-guidance-documents/ 1 FDA notes that the ‘‘ACTION’’ caption for this CFR 5.9 and parts 21 and 22), and the Document procedures-class-ii-device-exemptions-premarket- final order is styled as ‘‘Final amendment; final Drafting Handbook. notification-guidance-industry-and-cdrh-staff.

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the listed device type. In such situations PART 862—CLINICAL CHEMISTRY premarket notification procedures in where a partial exemption limitation AND CLINICAL TOXICOLOGY subpart E of part 807 of this chapter has been identified, FDA has DEVICES subject to the limitations in § 862.9. The determined that premarket notification special controls for this device are: ■ is necessary to provide a reasonable 1. The authority citation for part 862 * * * * * continues to read as follows: assurance of safety and effectiveness for ■ 8. In § 862.1410, revise paragraph (b) these devices. Authority: 21 U.S.C. 351, 360, 360c, 360e, to read as follows: IV. Analysis of Environmental Impact 360j, 360l, 371. ■ 2. In § 862.1020, revise paragraph (b) § 862.1410 Iron (non-heme) test system. The Agency has determined under 21 to read as follows: * * * * * CFR 25.30(h) that this action is of a type (b) Classification. Class I (general that does not individually or § 862.1020 Acid phosphatase (total or controls). The device is exempt from the cumulatively have a significant effect on prostatic) test system. premarket notification procedures in the human environment. Therefore, * * * * * subpart E of part 807 of this chapter neither an environmental assessment (b) Classification. Class II (special subject to the limitations in § 862.9. nor an environmental impact statement controls). The device is exempt from the ■ 9. In § 862.1415, revise paragraph (b) is required. premarket notification procedures in to read as follows: subpart E of part 807 of this chapter V. Paperwork Reduction Act of 1995 subject to the limitations in § 862.9. § 862.1415 Iron-binding capacity test This final order refers to previously ■ 3. In § 862.1090, revise paragraph (b) system. approved FDA collections of to read as follows: * * * * * information. These collections of (b) Classification. Class I (general information are subject to review by the § 862.1090 Angiotensin converting enzyme controls). The device is exempt from the Office of Management and Budget (A.C.E.) test system. premarket notification procedures in (OMB) under the Paperwork Reduction * * * * * subpart E of part 807 of this chapter Act of 1995 (44 U.S.C. 3501–3521). The (b) Classification. Class II (special subject to the limitations in § 862.9. collections of information in part 807, controls). The device is exempt from the ■ 10. In § 862.1445, revise paragraph (b) subpart E, regarding premarket premarket notification procedures in to read as follows: notification submissions, have been subpart E of part 807 of this chapter approved under OMB control number subject to the limitations in § 862.9. § 862.1445 Lactate dehydrogenase isoenzymes test system. 0910–0120; the collections of ■ 4. In § 862.1100, revise paragraph (b) information in 21 CFR parts 801 and to read as follows: * * * * * 809, regarding labeling, have been (b) Classification. Class II (special § 862.1100 Aspartate amino transferase controls). The device is exempt from the approved under OMB control number (AST/SGOT) test system. 0910–0485; and the collections of premarket notification procedures in information in 21 CFR part 820, * * * * * subpart E of part 807 of this chapter (b) Classification. Class II (special regarding quality system regulation, subject to the limitations in § 862.9. controls). The device is exempt from the have been approved under OMB control ■ 11. In § 862.1509, revise paragraph (b) premarket notification procedures in number 0910–0073. to read as follows: subpart E of part 807 of this chapter List of Subjects subject to the limitations in § 862.9. § 862.1509 Methylmalonic acid ■ (nonquantitative) test system. 21 CFR Parts 862, 868, 870, 872, 874, 5. In § 862.1150, revise paragraph (b) * * * * * 876, 878, 880, 882, 884, 888, and 890 to read as follows: (b) Classification. Class II (special Medical devices. § 862.1150 Calibrator. controls). The device is exempt from the * * * * * premarket notification procedures in 21 CFR Part 864 (b) Classification. Class II (special subpart E of part 807 of this chapter Blood, Medical devices, Packaging controls). The device is exempt from the subject to the limitations in § 862.9. and Containers. premarket notification procedures in ■ 12. In § 862.1580, revise paragraph (b) subpart E of part 807 of this chapter to read as follows: 21 CFR Part 866 subject to the limitations in § 862.9. Biologics, Laboratories, Medical ■ 6. In § 862.1345, revise paragraph (b) § 862.1580 Phosphorous (inorganic) test system. devices. to read as follows: * * * * * 21 CFR Part 886 § 862.1345 Glucose test system. (b) Classification. Class I (general Medical devices, Ophthalmic goods * * * * * controls). The device is exempt from the and services. (b) Classification. Class II (special premarket notification procedures in controls). The device is exempt from the subpart E of part 807 of this chapter 21 CFR Part 892 premarket notification procedures in subject to the limitations in § 862.9. Medical devices, Radiation subpart E of part 807 of this chapter ■ 13. In § 862.1660, revise paragraph (b) protection, X-rays. subject to the limitations in § 862.9. to read as follows: ■ 7. In § 862.1350, revise paragraph (b) Therefore, under the Federal Food, introductory text to read as follows: § 862.1660 Quality control material Drug, and Cosmetic Act and under (assayed and unassayed). authority delegated to the Commissioner § 862.1350 Continuous glucose monitor * * * * * of Food and Drugs, 21 CFR parts 862, secondary display. (b) Classification. Class I (general 864, 866, 868, 870, 872, 874, 876, 878, * * * * * controls). Except when intended for use 880, 882, 884, 886, 888, 890, and 892 are (b) Classification. Class II (special in donor screening tests, quality control amended as follow: controls). The device is exempt from the materials (assayed and unassayed) are

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exempt from the premarket notification § 862.3050 Breath-alcohol test system. testing programs. The device is exempt procedures in subpart E of part 807 of * * * * * from the premarket notification this chapter subject to the limitations in (b) Classification. Class I (general procedures in subpart E of part 807 of § 862.9. controls). The device is exempt from the this chapter subject to the limitations in ■ 14. In § 862.1685, revise paragraph (b) premarket notification procedures in § 862.9, provided the test system is as follows: subpart E of part 807 of this chapter intended for employment and insurance subject to the limitations in § 862.9. testing and includes a statement in the § 862.1685 Thyroxine-binding globulin test ■ 20. In § 862.3100, revise paragraph (b) labeling that the device is intended system. to read as follows: solely for use in employment and * * * * * insurance testing, and does not include § 862.3100 Amphetamine test system. (b) Classification. Class II (special devices intended for Federal drug controls). The device is exempt from the * * * * * testing programs (e.g., programs run by premarket notification procedures in (b) Classification. Class II (special the Substance Abuse and Mental Health subpart E of part 807 of this chapter controls). An amphetamine test system Services Administration (SAMHSA), the subject to the limitations in § 862.9. is not exempt if it is intended for any Department of Transportation (DOT), use other than employment or insurance and the U.S. military). ■ 15. In § 862.1700, revise paragraph (b) testing or is intended for Federal drug as follows: ■ 23. In § 862.3200, revise paragraph (b) testing programs. The device is exempt to read as follows: § 862.1700 Total thyroxine test system. from the premarket notification procedures in subpart E of part 807 of § 862.3200 Clinical toxicology calibrator. * * * * * this chapter subject to the limitations in (b) Classification. Class II (special * * * * * § 862.9, provided the test system is (b) Classification. Class II (special controls). The device is exempt from the intended for employment and insurance controls). The device is exempt from the premarket notification procedures in testing and includes a statement in the premarket notification procedures in subpart E of part 807 of this chapter labeling that the device is intended subpart E of part 807 of this chapter subject to the limitations in § 862.9. solely for use in employment and subject to the limitations in § 862.9. ■ 16. In § 862.1775, revise paragraph (b) insurance testing, and does not include ■ 24. In § 862.3220, revise paragraph (b) to read as follows: devices intended for Federal drug to read as follows: testing programs (e.g., programs run by § 862.1775 Uric acid test system. the Substance Abuse and Mental Health § 862.3220 Carbon monoxide test system. * * * * * Services Administration (SAMHSA), the * * * * * (b) Classification. Class I (general Department of Transportation (DOT), (b) Classification. Class I (general controls). The device is exempt from the and the U.S. military). controls). The device is exempt from the premarket notification procedures in ■ 21. In § 862.3150, revise paragraph (b) premarket notification procedures in subpart E of part 807 of this chapter to read as follows: subpart E of part 807 of this chapter subject to the limitations in § 862.9. subject to the limitations in § 862.9. § 862.3150 Barbiturate test system. ■ 17. In § 862.2265, revise paragraph (b) ■ 25. In § 862.3240, revise paragraph (b) introductory text to read as follows: * * * * * to read as follows: (b) Classification. Class II (special § 862.2265 High throughput genomic controls). A barbiturate test system is § 862.3240 Cholinesterase test system. sequence analyzer for clinical use. not exempt if it is intended for any use * * * * * * * * * * other than employment or insurance (b) Classification. Class I (general (b) Classification. Class II (special testing or is intended for Federal drug controls). The device is exempt from the controls). The device is exempt from the testing programs. The device is exempt premarket notification procedures in premarket notification procedures in from the premarket notification subpart E of part 807 of this chapter subpart E of part 807 of this chapter procedures in subpart E of part 807 of subject to the limitations in § 862.9. subject to the limitations in § 862.9. The this chapter subject to the limitations in ■ 26. In § 862.3250, revise paragraph (b) special controls for this device are: § 862.9, provided the test system is to read as follows: * * * * * intended for employment and insurance testing and includes a statement in the § 862.3250 Cocaine and cocaine ■ 18. In § 862.2570, revise paragraph (b) labeling that the device is intended metabolite test system. to read as follows: solely for use in employment and * * * * * (b) Classification. Class II (special § 862.2570 Instrumentation for clinical insurance testing, and does not include multiplex test systems. devices intended for Federal drug controls). A cocaine and cocaine metabolite test system is not exempt if * * * * * testing programs (e.g., programs run by the Substance Abuse and Mental Health it is intended for any use other than (b) Classification. Class II (special Services Administration (SAMHSA), the employment or insurance testing or is controls). The device is exempt from the Department of Transportation (DOT), intended for Federal drug testing premarket notification procedures in and the U.S. military). programs. The device is exempt from subpart E of part 807 of this chapter ■ the premarket notification procedures in subject to the limitations in § 862.9. The 22. In § 862.3170, revise paragraph (b) to read as follows: subpart E of part 807 of this chapter special control is FDA’s guidance subject to the limitations in § 862.9, document entitled ‘‘Class II Special § 862.3170 Benzodiazepine test system. provided the test system is intended for Controls Guidance Document: * * * * * employment and insurance testing and Instrumentation for Clinical Multiplex (b) Classification. Class II (special includes a statement in the labeling that Test Systems.’’ See § 862.1(d) for the controls). A benzodiazepine test system the device is intended solely for use in availability of this guidance document. is not exempt if it is intended for any employment and insurance testing, and ■ 19. In § 862.3050, revise paragraph (b) use other than employment or insurance does not include devices intended for to read as follows: testing or is intended for Federal drug Federal drug testing programs (e.g.,

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programs run by the Substance Abuse Department of Transportation (DOT), § 862.9, provided the test system is and Mental Health Services and the U.S. military). intended for employment and insurance Administration (SAMHSA), the ■ 30. In § 862.3610, revise paragraph (b) testing and includes a statement in the Department of Transportation (DOT), to read as follows: labeling that the device is intended and the U.S. military). solely for use in employment and § 862.3610 Methamphetamine test system. ■ 27. In § 862.3270, revise paragraph (b) insurance testing, and does not include to read as follows: * * * * * devices intended for Federal drug (b) Classification. Class II (special testing programs (e.g., programs run by § 862.3270 Codeine test system. controls). A methamphetamine test the Substance Abuse and Mental Health * * * * * system is not exempt if it is intended for Services Administration (SAMHSA), the (b) Classification. Class II (special any use other than employment or Department of Transportation (DOT), controls). A codeine test system is not insurance testing or is intended for and the U.S. military). exempt if it is intended for any use Federal drug testing programs. The ■ 33. In § 862.3640, revise paragraph (b) other than employment or insurance device is exempt from the premarket to read as follows: notification procedures in subpart E of testing or is intended for Federal drug § 862.3640 Morphine test system. testing programs. The device is exempt part 807 of this chapter subject to the from the premarket notification limitations in § 862.9, provided the test * * * * * system is intended for employment and (b) Classification. Class II (special procedures in subpart E of part 807 of insurance testing and includes a controls). A morphine test system is not this chapter subject to the limitations in statement in the labeling that the device exempt if it is intended for any use § 862.9, provided the test system is is intended solely for use in other than employment or insurance intended for employment and insurance employment and insurance testing, and testing or is intended for Federal drug testing and includes a statement in the does not include devices intended for testing programs. The device is exempt labeling that the device is intended Federal drug testing programs (e.g., from the premarket notification solely for use in employment and programs run by the Substance Abuse procedures in subpart E of part 807 of insurance testing, and does not include and Mental Health Services this chapter subject to the limitations in devices intended for Federal drug Administration (SAMHSA), the § 862.9, provided the test system is testing programs (e.g., programs run by Department of Transportation (DOT), intended for employment and insurance the Substance Abuse and Mental Health and the U.S. military). testing and includes a statement in the Services Administration (SAMHSA), the ■ labeling that the device is intended Department of Transportation (DOT), 31. In § 862.3620, revise paragraph (b) to read as follows: solely for use in employment and and the U.S. military). insurance testing, and does not include ■ 28. In § 862.3280, revise paragraph (b) § 862.3620 Methadone test system. devices intended for Federal drug to read as follows: * * * * * testing programs (e.g., programs run by (b) Classification. Class II (special the Substance Abuse and Mental Health § 862.3280 Clinical toxicology control controls). A methadone test system is material. Services Administration (SAMHSA), the not exempt if it is intended for any use Department of Transportation (DOT), * * * * * other than employment or insurance and the U.S. military). (b) Classification. Class I (general testing or is intended for Federal drug ■ 34. In § 862.3650, revise paragraph (b) controls). The device is exempt from the testing programs. The device is exempt to read as follows: premarket notification procedures in from the premarket notification subpart E of part 807 of this chapter procedures in subpart E of part 807 of § 862.3650 Opiate test system. subject to the limitations in § 862.9. this chapter subject to the limitations in * * * * * ■ 29. In § 862.3580, revise paragraph (b) § 862.9, provided the test system is (b) Classification. Class II (special to read as follows: intended for employment and insurance controls). An opiate test system is not testing and includes a statement in the exempt if it is intended for any use § 862.3580 Lysergic acid diethylamide labeling that the device is intended other than employment or insurance (LSD) test system. solely for use in employment and testing or is intended for Federal drug * * * * * insurance testing, and does not include testing programs. The device is exempt (b) Classification. Class II (special devices intended for Federal drug from the premarket notification controls). A lysergic acid diethylamide testing programs (e.g., programs run by procedures in subpart E of part 807 of (LSD) test system is not exempt if it is the Substance Abuse and Mental Health this chapter subject to the limitations in intended for any use other than Services Administration (SAMHSA), the § 862.9, provided the test system is employment or insurance testing or is Department of Transportation (DOT), intended for employment and insurance intended for Federal drug testing and the U.S. military). testing and includes a statement in the programs. The device is exempt from ■ 32. In § 862.3630, revise paragraph (b) labeling that the device is intended the premarket notification procedures in to read as follows: solely for use in employment and subpart E of part 807 of this chapter insurance testing, and does not include subject to the limitations in § 862.9, § 862.3630 Methaqualone test system. devices intended for Federal drug provided the test system is intended for * * * * * testing programs (e.g., programs run by employment and insurance testing and (b) Classification. Class II (special the Substance Abuse and Mental Health includes a statement in the labeling that controls). A methaqualone test system is Services Administration (SAMHSA), the the device is intended solely for use in not exempt if it is intended for any use Department of Transportation (DOT), employment and insurance testing, and other than employment or insurance and the U.S. military). does not include devices intended for testing or is intended for Federal drug ■ 35. In § 862.3700, revise paragraph (b) Federal drug testing programs (e.g., testing programs. The device is exempt to read as follows: programs run by the Substance Abuse from the premarket notification and Mental Health Services procedures in subpart E of part 807 of § 862.3700 Propoxyphene test system. Administration (SAMHSA), the this chapter subject to the limitations in * * * * *

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(b) Classification. Class II (special Federal drug testing programs (e.g., subpart E of part 807 of this chapter controls). A propoxyphene test system programs run by the Substance Abuse subject to the limitations in § 864.9. is not exempt if it is intended for any and Mental Health Services ■ 44. In § 864.7300, revise paragraph (b) use other than employment or insurance Administration (SAMHSA), the to read as follows: testing or is intended for Federal drug Department of Transportation (DOT), testing programs. The device is exempt and the U.S. military). § 864.7300 Fibrin monomer from the premarket notification paracoagulation test. procedures in subpart E of part 807 of PART 864—HEMATOLOGY AND * * * * * this chapter subject to the limitations in PATHOLOGY DEVICES (b) Classification. Class II (special § 862.9, provided the test system is ■ controls). The device is exempt from the intended for employment and insurance 38. The authority citation for part 864 continues to read as follows: premarket notification procedures in testing and includes a statement in the subpart E of part 807 of this chapter labeling that the device is intended Authority: 21 U.S.C. 351, 360, 360c, 360e, subject to the limitations in § 864.9. The solely for use in employment and 360j, 360l, 371. special control for this device is FDA’s insurance testing, and does not include ■ 39. In § 864.5400, revise paragraph (b) ‘‘In Vitro Diagnostic Fibrin Monomer devices intended for Federal drug to read as follows: Paracoagulation Test.’’ See § 864.1(d) for testing programs (e.g., programs run by information on obtaining this document. the Substance Abuse and Mental Health § 864.5400 Coagulation instrument. ■ Services Administration (SAMHSA), the * * * * * 45. In § 864.7340, revise paragraph (b) Department of Transportation (DOT), (b) Classification. Class II (special to read as follows: and the U.S. military). controls). A fibrometer or coagulation § 864.7340 Fibrinogen determination ■ 36. In § 862.3870, revise paragraph (b) timer intended for use with a system. to read as follows: coagulation instrument is exempt from * * * * * the premarket notification procedures in § 862.3870 Cannabinoid test system. (b) Classification. Class II (special subpart E of part 807 of this chapter controls). A control or fibrinogen * * * * * subject to the limitations in § 864.9. (b) Classification. Class II (special standard intended for use with a ■ 40. In § 864.5425, revise paragraph (b) fibrinogen determination system is controls). A cannabinoid test system is to read as follows: not exempt if it is intended for any use exempt from the premarket notification other than employment or insurance § 864.5425 Multipurpose system for in procedures in subpart E of part 807 of testing or is intended for Federal drug vitro coagulation studies. this chapter subject to the limitations in testing programs. The device is exempt * * * * * § 864.9. from the premarket notification (b) Classification. Class II (special ■ 46. In § 864.7375, revise paragraph (b) procedures in subpart E of part 807 of controls). A control intended for use to read as follows: this chapter subject to the limitations in with a multipurpose system for in vitro § 864.7375 Glutathione reductase assay. § 862.9, provided the test system is coagulation studies is exempt from the intended for employment and insurance premarket notification procedures in * * * * * testing and includes a statement in the subpart E of part 807 of this chapter (b) Classification. Class II (special labeling that the device is intended subject to the limitations in § 864.9. controls). The device is exempt from the solely for use in employment and ■ 41. In § 864.6550, revise paragraph (b) premarket notification procedures in insurance testing, and does not include to read as follows: subpart E of part 807 of this chapter devices intended for Federal drug subject to the limitations in § 864.9. testing programs (e.g., programs run by § 864.6550 Occult blood test. ■ 47. In § 864.7415, revise paragraph (b) the Substance Abuse and Mental Health * * * * * to read as follows: Services Administration (SAMHSA), the (b) Classification. Class II (special Department of Transportation (DOT), controls). A control intended for use § 864.7415 Abnormal hemoglobin assay. and the U.S. military). with an occult blood test is exempt from * * * * * ■ 37. In § 862.3910, revise paragraph (b) the premarket notification procedures in (b) Classification. Class II (special to read as follows: subpart E of part 807 of this chapter controls). A control intended for use subject to the limitations in § 864.9. with an abnormal hemoglobin assay is § 862.3910 Tricyclic antidepressant drugs ■ test system. 42. In § 864.7040, revise paragraph (b) exempt from the premarket notification to read as follows: procedures in subpart E of part 807 of * * * * * this chapter subject to the limitations in (b) Classification. Class II (special § 864.7040 Adenosine triphosphate § 864.9. controls). A tricyclic antidepressant release assay. ■ drugs test system is not exempt if it is * * * * * 48. In § 864.7455, revise paragraph (b) intended for any use other than (b) Classification. Class I (general to read as follows: employment or insurance testing or is controls). The device is exempt from the § 864.7455 Fetal hemoglobin assay. intended for Federal drug testing premarket notification procedures in * * * * * programs. The device is exempt from subpart E of part 807 of this chapter the premarket notification procedures in subject to the limitations in § 864.9. (b) Classification. Class II (special subpart E of part 807 of this chapter ■ controls). A fetal hemoglobin stain 43. In § 864.7275, revise paragraph (b) intended for use with a fetal hemoglobin subject to the limitations in § 862.9, to read as follows: provided the test system is intended for assay is exempt from the premarket employment and insurance testing and § 864.7275 Euglobulin lysis time tests. notification procedures in subpart E of includes a statement in the labeling that * * * * * part 807 of this chapter subject to the the device is intended solely for use in (b) Classification. Class II (special limitations in § 864.9. employment and insurance testing, and controls). The device is exempt from the ■ 49. In § 864.7500, revise paragraph (b) does not include devices intended for premarket notification procedures in to read as follows:

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§ 864.7500 Whole blood hemoglobin ■ 55. In § 864.8185, revise paragraph (b) document entitled ‘‘Class II Special assays. to read as follows: Controls Guidance Document: * * * * * Norovirus Serological Reagents.’’ See § 864.8185 Calibrator for red cell and white § 866.1(e) for the availability of this (b) Classification. Class II (special cell counting. controls). An acid hematin intended for guidance document. * * * * * use with whole blood hemoglobin ■ (b) Classification. Class II (special 61. In § 866.5210, revise paragraph (b) assays is exempt from the premarket controls). The device is exempt from the to read as follows: notification procedures in subpart E of premarket notification procedures in part 807 of this chapter subject to the § 866.5210 Ceruloplasmin immunological subpart E of part 807 of this chapter limitations in § 864.9. test system. subject to the limitations in § 864.9. ■ * * * * * 50. In § 864.7720, revise paragraph (b) ■ 56. In § 864.8625, revise paragraph (b) to read as follows: (b) Classification. Class II (special to read as follows: controls). The device is exempt from the § 864.7720 Prothrombin consumption test. § 864.8625 Hematology quality control premarket notification procedures in * * * * * mixture. subpart E of part 807 of this chapter subject to the limitations in § 866.9. (b) Classification. Class II (special * * * * * controls). The device is exempt from the (b) Classification. Class II (special ■ 62. In § 866.5470, revise paragraph (b) premarket notification procedures in controls). Except when intended for use to read as follows: subpart E of part 807 of this chapter in blood components, the device is § 866.5470 Hemoglobin immunological subject to the limitations in § 864.9. exempt from the premarket notification test system. ■ procedures in subpart E of part 807 of 51. In § 864.7735, revise paragraph (b) * * * * * to read as follows: this chapter subject to the limitations in § 864.9. (b) Classification. Class II (special controls). The device is exempt from the § 864.7735 Prothrombin-proconvertin test ■ 57. In § 864.9400, revise paragraph (b) and thrombotest. premarket notification procedures in to read as follows: * * * * * subpart E of part 807 of this chapter subject to the limitations in § 866.9. (b) Classification. Class II (special § 864.9400 Stabilized enzyme solution. controls). The device is exempt from the * * * * * ■ 63. In § 866.5620, revise paragraph (b) premarket notification procedures in (b) Classification. Class II (special to read as follows: controls). The device is exempt from the subpart E of part 807 of this chapter § 866.5620 Alpha-2-macroglobulin subject to the limitations in § 864.9. premarket notification procedures in immunological test system. ■ 52. In § 864.8150, revise paragraph (b) subpart E of part 807 of this chapter subject to the limitations in § 864.9. * * * * * to read as follows: (b) Classification. Class II (special § 864.8150 Calibrator for cell indices. PART 866—IMMUNOLOGY AND controls). The device is exempt from the MICROBIOLOGY DEVICES premarket notification procedures in * * * * * subpart E of part 807 of this chapter (b) Classification. Class II (special ■ 58. The authority citation for part 866 subject to the limitations in § 866.9. controls). The device is exempt from the continues to read as follows: ■ premarket notification procedures in 64. In § 866.5630, revise paragraph (b) Authority: 21 U.S.C. 351, 360, 360c, 360e, to read as follows: subpart E of part 807 of this chapter 360j, 360l, 371. subject to the limitations in § 864.9. § 866.5630 Beta-2-microglobulin ■ 59. In § 866.2900, revise paragraph (b) ■ 53. In § 864.8165, revise paragraph (b) immunological test system. to read as follows: to read as follows: * * * * * § 866.2900 Microbiological specimen (b) Classification. Class II (special § 864.8165 Calibrator for hemoglobin or collection and transport device. controls). The device is exempt from the hematocrit measurement. * * * * * premarket notification procedures in * * * * * (b) Classification. Class I (general subpart E of part 807 of this chapter (b) Classification. Class II (special controls). The device is exempt from the subject to the limitations in § 866.9. controls). The device is exempt from the premarket notification procedures in ■ 65. In § 866.5750, revise paragraph (b) premarket notification procedures in subpart E of part 807 of this chapter to read as follows: subpart E of part 807 of this chapter subject to the limitations in § 866.9. subject to the limitations in § 864.9. ■ 60. In § 866.3395, revise paragraph (b) § 866.5750 Radioallergosorbent (RAST) immunological test system. ■ 54. In § 864.8175, revise paragraph (b) to read as follows: to read as follows: * * * * * § 866.3395 Norovirus serological reagents. (b) Classification. Class II (special § 864.8175 Calibrator for platelet counting. * * * * * controls). The device, when intended to * * * * * (b) Classification. Class II (special detect any of the allergens included in (b) Classification. Class II (special controls). The device is exempt from the Table 1 in this paragraph, is exempt controls). The device is exempt from the premarket notification procedures in from the premarket notification premarket notification procedures in subpart E of part 807 of this chapter procedures in subpart E of part 807 of subpart E of part 807 of this chapter subject to the limitations in § 866.9. The this chapter subject to the limitations in subject to the limitations in § 864.9. special control is FDA’s guidance § 866.9.

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TABLE 1—CLASS II EXEMPT ALLERGENS UNDER § 866.5750—RADIOALLERGOSORBENT (RAST) IMMUNOLOGICAL TEST SYSTEMS

Source Allergen code Allergen product (taxonomical name)

Grass Pollens

g1 ...... Sweet vernal grass ...... Anthoxanthum odoratum. g3 ...... Cocksfoot grass, Orchard grass ...... Dactylis glomerata. g4 ...... Meadow fescue ...... Festuca elatior. g5 ...... Rye-grass (perennial rye grass) ...... Lolium perenne. g7 ...... Common reed (common reed grass) ...... Phragmites communis. g8 ...... Meadow grass, Kentucky blue (June grass) ...... Poa pratensis. g9 ...... Redtop, Bentgrass ...... Agrostis stolonifera, Agrostis gigantea (Agrostis alba). g11 ...... Brome grass ...... Bromus inermis. g12 ...... Cultivated rye (cultivated rye grass) ...... Secale cereale. g13 ...... Velvet grass ...... Holcus lanatus. g14 ...... Cultivated oat (cultivated oat grass) ...... Avena sativa. g15 ...... Cultivated wheat (cultivated wheat grass) ...... Triticum aestivum (Triticum spp.). g16 ...... Meadow foxtail (meadow foxtail grass) ...... Alopecurus pratensis. g17 ...... Bahia grass ...... Paspalum notatum. g24 ...... Wheat grass, Western ...... Agropyron smithii (Elymus smithii). g30 ...... Bluegrass, annual ...... Poa annua. g70 ...... Wild rye grass ...... Elymus triticoides Elymus condensatus. g71 ...... Canary grass ...... Phalaris arundinacea. g201 ...... Barley, cultivated ...... Hordeum vulgare. g202 ...... Maize, corn (cultivated corn) ...... Zea mays. g203 ...... Salt grass ...... Distichlis spicata. g204 ...... False oat-grass ...... Arrhenatherum elatius. g216 ...... Cyn d 1 ...... Cynodon dactylon. g701 ...... Phl p 1.0102, Phl p 5.0101 ...... Phleum pratense. g702 ...... Phl p 7.0101 ...... Phleum pratense. g703 ...... Phl p 12.0101 ...... Phleum pratense.

Weed Pollens

w2 ...... Western ragweed ...... Ambrosia psilostachya. w4 ...... False ragweed ...... Ambrosia acanthicarpa (Franseria acanthicarpa). w5 ...... Wormwood ...... Artemisia absinthium Artemisia annua. w6 ...... Mugwort ...... Artemisia vulgaris. w7 ...... Marguerite, ox-eye daisy ...... Chrysanthemum leucanthemum. w8 ...... Dandelion ...... Taraxacum vulgare, Taraxacum officinale. w9 ...... Plantain (English), Ribwort ...... Plantago lanceolata. w10 ...... Goosefoot, lamb’s quarters ...... Chenopodium album. w11 ...... Saltwort (prickly), Russian thistle ...... Salsola kali (Salsola pestifer). w12 ...... Goldenrod ...... Solidago virgaurea (Solidago spp.). w13 ...... Cocklebur, common ...... Xanthium commune. w14 ...... Common pigweed (rough pigweed) ...... Amaranthus retroflexus. w15 ...... Scale, Lenscale ...... Atriplex lentiformis. w16 ...... Rough marsh elder ...... Iva ciliate, Iva annua. w17 ...... Firebush (Kochia) ...... Kochia scoparia. w18 ...... Sheep sorrel ...... Rumex acetosella. w19 ...... Wall pellitory ...... Parietaria officinalis. w20 ...... Nettle (Common stinging nettle) ...... Urtica dioica. w21 ...... Wall pellitory ...... Parietaria judaica. w22 ...... Japanese hop (careless weed) ...... Humulus japonicas (Humulus scandens). w23 ...... Yellow dock, Yellow dockweed ...... Rumex crispus. w24 ...... Spiny pigweed ...... Amaranthus spinosus. w27 ...... Carnation ...... Dianthus spp. w28 ...... Rose ...... Rosa rugosa. w33 ...... Clover ...... Trifolium pratense. w35 ...... Mexican tea ...... Chenopodium ambrosioides. w36 ...... Rabbit bush ...... Ambrosia deltoidea (Franseria deltoides). w37 ...... Salt bush, annual ...... Atriplex wrightii. w39 ...... Water hemp, Western ...... Amaranthus rudis (Acnida tamariscina). w41 ...... Burrobrush ...... Hymenoclea salsola. w42 ...... Poverty weed ...... Baccharis neglecta. w43 ...... Common sagebrush ...... Artemisia tridentata. w45 ...... Alfalfa ...... Medicago sativa. w46 ...... Dog fennel ...... Eupatorium capillifolium. w53 ...... Geranium ...... Geranium spp. w67 ...... Groundsel bush ...... Baccharis halimifolia. w69 ...... Iodine bush ...... Allenrolfea occidentalis. w70 ...... Ragweed, slender ...... Ambrosia confertiflora. w75 ...... Wing scale (wingscale) ...... Atriplex canescens.

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TABLE 1—CLASS II EXEMPT ALLERGENS UNDER § 866.5750—RADIOALLERGOSORBENT (RAST) IMMUNOLOGICAL TEST SYSTEMS—Continued

Source Allergen code Allergen product (taxonomical name)

w82 ...... Careless weed ...... Amaranthus palmeri, Amaranthus hybridus. w90 ...... Japanese hop ...... Humulus japonicas (Humulus scandens). w203 ...... Rape (rape pollen) ...... Brassica napus. w204 ...... Sunflower ...... Helianthus annuus. w206 ...... Camomile ...... Matricaria chamomilla. w207 ...... Lupin ...... Lupinus spp. w210 ...... Sugar-beet ...... Beta vulgaris. w211 ...... Par j 2.0101 ...... Parietaria judaica. w231 ...... Art v 1 ...... Artemisia vulgaris (Mugwort). w232 ...... Sal k 1 ...... Salsola kali. w233 ...... Art v 3 ...... Artemisa vulgaris (LTP, Mugwort). w234 ...... Pla l 1 ...... Plantago lanceolata. w235 ...... Che a 1.0101 ...... Chenopodium album. w236 ...... Mer a 1.0101 ...... Mercurialis annua. a753 ...... Art v 1 ...... Artemisia vulgaris (Mugwort weed).

Tree Pollens

t1 ...... Box-elder (Maple) ...... Acer negundo, Acer saccharum. t2 ...... Gray alder, speckled alder (alder) ...... Alnus incana. t4 ...... Hazel, hazelnut ...... Corylus avellana, Corylus americana. t5 ...... American beech (beech) ...... Fagus grandifolia (Fagus americana). t6 ...... Mountain juniper, Mountain cedar ...... Juniperus ashei (Juniperus sabinoides). t8 ...... Elm ...... Ulmus americana. t9 ...... Olive ...... Olea europaea. t10 ...... Walnut ...... Juglans californica, Juglans nigra. t11 ...... Maple leaf sycamore, London plane, Plane tree ...... Platanus acerifolia. t61 ...... Sycamore ...... Platanus occidentalis. t12 ...... Willow ...... Salix caprea, Salix nigra. t14 ...... Cottonwood (Eastern Cottonwood/Black Cottonwood) ...... Populus deltoides. t15 ...... White ash ...... Fraxinus americana. t16 ...... White pine ...... Pinus strobus. t18 ...... Eucalyptus, gum-tree ...... Eucalyptus globulus (Eucalyptus spp.). t19/t26 ...... Acacia ...... Acacia longifolia (Acacia spp.). t20 ...... Mesquite ...... Prosopis glandulosa/Prosopis juliflora. t21 ...... Melaleuca, cajeput tree ...... Melaleuca quinquenervia (Melaleuca leucadendron). t22 ...... Pecan, hickory ...... Carya illinoinensis (Carya pecan). t23 ...... Italian/Mediterranean/funeral cypress ...... Cupressus sempervirens. t24 ...... Japanese cypress ...... Chamaecyparis obtusa (Chamaecyparis spp.). t25 ...... Ash ...... Fraxinus excelsior. t27 ...... Maple, red ...... Acer rubrum. t29 ...... Acacia ...... Acacia spp. t30 ...... Birch, white ...... Betula populifolia. t32 ...... Willow, black ...... Salix nigra. t33 ...... Ash, Arizona ...... Fraxinus velutina. t35 ...... Cedar, salt ...... Tamarix gallica. t37 ...... Bald cypress (white bald cypress) ...... Taxodium distichum. t38 ...... Elm, Chinese/Siberian ...... Ulmus pumila. t40 ...... Hazelnut tree ...... Corylus americana. t41 ...... White hickory ...... Carya alba (Carya tomentosa). t42 ...... Oak, red ...... Quercus rubra. t43 ...... Loblolly pine ...... Pinus taeda. t44 ...... Hackberry ...... Celtis occidentalis. t45 ...... Cedar elm ...... Ulmus crassifolia. t47 ...... Juniper, one seed ...... Juniperus monosperma. t48 ...... Pine, lodgepole ...... Pinus contorta. t49 ...... Pine, ponderosa ...... Pinus ponderosa. t50 ...... Beech, European ...... Fagus sylvatica. t51 ...... Tree of Heaven ...... Ailanthus altissima. t52 ...... Western white pine ...... Pinus monticola. t54 ...... Russian olive ...... Elaeagnus angustifolia. t55 ...... Scotch broom ...... Cytisus scoparius. t56 ...... Bayberry ...... Myrica cerifera. t57 ...... Red cedar ...... Juniperus virginiana. t60 ...... Western juniper ...... Juniperus occidentalis. t61 ...... Sycamore ...... Platanus occidentalis. t70 ...... Mulberry (white mulberry) ...... Morus alba. t71 ...... Red mulberry ...... Morus rubra. t72 ...... Queen palm ...... Arecastrum romanzoffiamon. t73 ...... Australian pine ...... Casuarina equisetifolia.

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TABLE 1—CLASS II EXEMPT ALLERGENS UNDER § 866.5750—RADIOALLERGOSORBENT (RAST) IMMUNOLOGICAL TEST SYSTEMS—Continued

Source Allergen code Allergen product (taxonomical name)

t77 ...... Oak mix (red, white, black) ...... Quercus spp. t80 ...... Japanese cypress ...... Chamaecyparis obtusa. t81 ...... Japanese alder ...... Alnus japonica. t83 ...... Mango tree ...... Mangifera indica. t90 ...... Walnut, black ...... Juglans nigra. t96 ...... Poplar, white (poplar) ...... Populus alba. t103/t218 ...... Virginia live oak (live oak) ...... Quercus virginiana. t105 ...... Pepper tree ...... Schinus molle. t110 ...... Orange tree ...... Citrus sinensis. t201 ...... Spruce, Norway spruce ...... Picea abies (Picea excelsa). t202 ...... Alder, smooth ...... Alnus incana spp. Rugosa (Alnus rugosa). t203 ...... Horse chestnut ...... Aesculus hippocastanum. t205 ...... Elder ...... Sambucus nigra. t206 ...... Chestnut ...... Castanea sativa. t207 ...... Douglas fir ...... Pseudotsuga menziesii (Pseudotsuga taxifolia). t208 ...... Linden ...... Tilia cordata. t209 ...... Horn beam ...... Carpinus betulus. t210 ...... Privet ...... Ligustrum vulgare. t211 ...... Sweet gum ...... Liquidambar styraciflua. t212 ...... Cedar ...... Libocedrus decurrens. t213 ...... Pine ...... Pinus radiata. t214 ...... Date palm ...... Phoenix canariensis. t215 ...... Lilac ...... Syringa vulgaris. t217 ...... Pepper tree ...... Schinus molle. t217 ...... Red alder ...... Alnus rubra. t218 ...... Virginia live oak ...... Quercus virginiana. t218 ...... Bayberry (bayberry/sweet gale) ...... Myrica gale. t219 ...... Palo verde ...... Cercidium floridum. t219 ...... Red cedar ...... Juniperus virginiana. t220 ...... Bet v 4 ...... Betula verrucosa (Birch). t221 ...... Bet v 2.0101, Bet v 4 ...... Betula verrucosa (Birch). t222 ...... Cypress (Arizona cypress) ...... Cupressus arizonica. t223 ...... Oil palm ...... Elaeis guineensis. t224 ...... Ole e 1 ...... Olea europaea. t225 ...... Bet v 6 ...... Betula verrucosa (Birch). t226 ...... Cup a 1 ...... Cupressus arizonica. t227 ...... Ole e 7 ...... Olea Europaea. t228 ...... Aspen, quaking ...... Populus tremuloides. t229 ...... Eastern hemlock ...... Tsuga canadensis. t230 ...... Redwood (sequoia) ...... Sequoia sempervirens. t232 ...... Pussy willow ...... Salix discolor. t240 ...... Ole e 9.0101 ...... Olea Europaea. t241 ...... Pla a 1.0101 ...... Platanus acerifolia. t242 ...... Pla a 2 ...... Platanus acerifolia. t243 ...... Pla a 3.0101 ...... Platanus acerifolia. t244 ...... Cor a 1.0103 ...... Corylus avellana. t245 ...... Aln g 1.0101 ...... Alnus glutinosa. t246 ...... Cry j 1 ...... Cryptomeria japonica. t280 ...... Locust tree ...... Robinia pseudoacacia. t401 ...... Brazilian peppertree ...... Schinus terebinthifolius. t402 ...... Mastic tree ...... Pistacia lentiscus. t404 ...... Tree of heaven ...... Ailanthus altissima. t406 ...... Date palm ...... Phoenix dactylifera. a482 ...... Ole e 1 ...... Olea europaea (Olive Oil).

Mites

d207 ...... Blo t 5.0101 ...... Blomia tropicalis. d208 ...... Lep d 2.0101 ...... Lepidoglyphus destructor.

Microorganisms, Molds, Yeast

m1 ...... Penicillium chrysogenum (Penicillium notatum) ...... Penicillium chrysogenum (Penicillium notatum). m2 ...... Cladosporium herbarum (Hormodendrum) ...... Cladosporium herbarum (Hormodendrum). m3 ...... Aspergillus fumigatus ...... Aspergillus fumigatus. m4 ...... Mucor racemosus ...... Mucor racemosus. m5 ...... Candida albicans ...... Candida albicans. m7 ...... Botrytis cinerea ...... Botrytis cinerea. m8 ...... Drechslera halodes (Setomelanomma rostrata, Drechslera halodes (Setomelanomma rostrata, Helminthosporium halodes, Helminthosporium Helminthosporium halodes. interseminatum).

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TABLE 1—CLASS II EXEMPT ALLERGENS UNDER § 866.5750—RADIOALLERGOSORBENT (RAST) IMMUNOLOGICAL TEST SYSTEMS—Continued

Source Allergen code Allergen product (taxonomical name)

m9 ...... Fusarium moniliforme (Fusarium proliferatum) ...... Fusarium moniliforme (Fusarium proliferatum). m10 ...... Stemphylium botryosum ...... Stemphylium herbarum (Stemphylium botryosum). m11 ...... Rhizopus nigricans ...... Rhizopus nigricans. m12 ...... Aureobasidium pullulans ...... Aureobasidium pullulans. m13 ...... Phoma betae ...... Phoma betae. m14 ...... Epicoccum purpurascens ...... Epicoccum purpurascens (Epicoccum nigrum). m15 ...... Trichoderma viride ...... Trichoderma viride. m16 ...... Curvularia lunata ...... Curvularia lunata, Curvularia specifera (K923044). m17 ...... Cladosporium fulvum ...... Cladosporium fulvum. m18 ...... Fusarium culmorum ...... Fusarium culmorum. m19 ...... Aspergillus versicolor ...... Aspergillus versicolor. m20 ...... Mucor mucedo ...... Mucor mucedo. m21 ...... Aspergillus clavatus ...... Aspergillus clavatus. m22 ...... Micropolyspora faeni ...... Saccharopolyspora rectivirgula (Micropolyspora faeni). m23 ...... Thermoactinomyces vulgaris ...... Thermoactinomyces vulgaris. m24 ...... Stachybotrys atra ...... Stachybotrys chartarum (Stachybotrys atra). m24 ...... Paecilomyces spp ...... Paecilomyces spp. m25 ...... Aspergillus versicolor ...... Aspergillus versicolor. m25 ...... Penicillium brevicompactum ...... Penicillium brevicompactum. m26 ...... Cladosporium cladosporioides ...... Cladosporium cladosporioides. m26 ...... Penicillium citrinum ...... Penicillium citrinum. m27 ...... Penicillium spp ...... Penicillium spp. m29 ...... Aspergillus repens ...... Aspergillus repens. m30 ...... Penicillium roqueforti ...... Penicillium roqueforti. m32 ...... Cladosporium cladosporioides ...... Cladosporium cladosporioides. m34 ...... Serpula lacrymans ...... Serpula lacrymans. m36 ...... Aspergillus terreus ...... Aspergillus terreus. m37 ...... Trichophyton mentagrophytes ...... Trichophyton mentagrophytes. m40 ...... Aspergillus amstelodami ...... Aspergillus amstelodami. m43 ...... Saccharomyces Carlsberg ...... Saccharomyces carlsbergensis. m44 ...... Saccharomyces cerevisiae ...... Saccharomyces cerevisiae. m45 ...... Hormodendrum hordei ...... Hormodendrum hordei. m46 ...... Bipolaris spicifera ...... Bipolaris spicifera. m47 ...... Aspergillus nidulans ...... Aspergillus nidulans. m48 ...... Aspergillus oryzae ...... Aspergillus oryzae. m49 ...... Fusarium oxysporum ...... Fusarium oxysporum. m50 ...... Micropolyspora faeni ...... Saccharopolyspora rectivirgula (Micropolyspora faeni). m51 ...... Thermoactinomyces vulgaris ...... Thermoactinomyces vulgaris. m53 ...... Microspora canis ...... Microsporum canis (Microspora canis). m54 ...... Aspergillus flavus ...... Aspergillus flavus. m63 ...... Helminthosporium intersemin ...... Helminthosporium intersemin. m66 ...... Mucor plumbeus ...... Mucor plumbeus. m67 ...... Mycogone ...... Mycogone perniciosa. m68 ...... Nigrospora oryzae ...... Nigrospora oryzae. m69 ...... Rhodotorula ...... Rhodotorula rubra (Rhodotorula mucilaginosa). m70 ...... Malassezia furfur (Pityrosporum orbiculare) ...... Malassezia furfur (Pityrosporum orbiculare). m71 ...... Spondylocladium ...... Spondylocladium spp. m72 ...... Epidermophyton ...... Epidermophyton floccosum. m73 ...... Epicoccum nigrum ...... Epicoccum purpurascens (Epicoccum nigrum). m80 ...... Staphylococcal enterotoxin A (Sta a SEA) ...... Staphylococcus aureus. m80 ...... Helminthosporium spp ...... Helminthosporium spp. m81 ...... Staphylococcal enterotoxin B (Sta a SEB) ...... Staphylococcus aureus. m88 ...... Stemphylium solani ...... Stemphylium solani. m93 ...... Gliocladium fimbriatum ...... Gliocladium fimbriatum. m94 ...... Phycomyces blakesleeanus ...... Phycomyces blakesleeanus. m201 ...... Tilletia tritici (Ustilago nuda, Ustilago tritici) (Barley smut) .... Tilletia tritici (Ustilago nuda, Ustilago tritici). m202 ...... Acremonium kiliense (Cephalosporium acremonium) ...... Acremonium kiliense (Cephalosporium acremonium). m203 ...... Trichosporon pullulans ...... Trichosporon pullulans. m204 ...... Ulocladium chartarum ...... Ulocladium chartarum. m205 ...... Trichophyton rubrum ...... Trichophyton rubrum. m207 ...... Aspergillus niger ...... Aspergillus niger. m208 ...... Chaetomium globosum ...... Chaetomium globosum. m209 ...... Penicillium frequentans ...... Penicillium glabrum (Penicillium frequentans). m209 ...... Stachybotrys chartarum ...... Stachybotrys chartarum (Stachybotrys atra). m210 ...... Trichophyton mentagrophytes var. goetzii ...... Trichophyton mentagrophytes var. goetzii. m211 ...... Trichophyton mentagrophytes var. interdigitale ...... Trichophyton mentagrophytes var. interdigitale. m211 ...... Oat smut ...... Ustilago avenae. m212 ...... Micropolyspora faeni ...... Saccharopolyspora rectivirgula (Micropolyspora faeni). m212 ...... Geotrichum candidum ...... Geotrichum candidum. m213 ...... Bermuda grass smut ...... Ustilago cynodontis.

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TABLE 1—CLASS II EXEMPT ALLERGENS UNDER § 866.5750—RADIOALLERGOSORBENT (RAST) IMMUNOLOGICAL TEST SYSTEMS—Continued

Source Allergen code Allergen product (taxonomical name)

m214 ...... Johnson grass smut ...... Sphacelotheca cruenta. m215 ...... Corn smut ...... Ustilago maydis. m218 ...... Asp f 1.0101 ...... Aspergillus fumigatus. a3050 ...... Asp r 1 ...... Aspergillus restrictus. m219 ...... Asp f 2 ...... Aspergillus fumigatus. m220 ...... Asp f 3.0101 ...... Aspergillus fumigatus. m221 ...... Asp f 4 ...... Aspergillus fumigatus. m222 ...... Asp f 6.0101 ...... Aspergillus fumigatus. m223 ...... Staphylococcal enterotoxin C (Sta a SEC) ...... Staphylococcus aureus. m224 ...... Staphylococcal enterotoxin D (Sta a SED) ...... Staphylococcus aureus. m226 ...... Staphylococcal enterotoxin TSST (Sta a TSST) ...... Staphylococcus aureus. m227 ...... Malassezia spp. (Pityrosporum spp.) ...... Malassezia spp. (Pityrosporum spp.). m228 ...... Aspergillus flavus.. m229 ...... Alt a 1.0101 ...... Alternaria alternata (Alternaria tenuis). m230 ...... Alt a 6.0101 ...... Alternaria alternata (Alternaria tenuis). m231 ...... Cla h 8.0101 ...... Cladosporium herbarum (Hormodendrum). m300 ...... Eurotium spp ...... Eurotium spp. m304 ...... Aspergillus oryzae ...... Aspergillus oryzae. m305 ...... Penicillium brevicompactum ...... Penicillium brevicompactum. m309 ...... Aspergillus terreus ...... Aspergillus terreus. m310 ...... Aspergillus nidulans ...... Aspergillus nidulans. m311 ...... Aspergillus flavus ...... Aspergillus flavus. m312 ...... Aspergillus clavatus ...... Aspergillus clavatus.

Epidermal & Animal

e6 ...... Guinea pig epithelium ...... Cavia porcellus. e7 ...... Pigeon droppings ...... Columba palumbus, Columba livia. e25 ...... Chicken serum ...... Gallus domesticus (Gallus gallus domesticus; Gallus spp.). e26 ...... Parrot serum ...... Psittacoidea spp. e62 ...... Camel ...... Camelus dromedaries. e70 ...... Goose feathers ...... Anser anser. e71 ...... Mouse epithelium ...... Mus musculus (Mus spp.). e73 ...... Rat epithelium ...... Rattus norvegicus. e74 ...... Rat urine proteins ...... Rattus norvegicus, Rattus rattus. e75 ...... Rat serum proteins ...... Rattus norvegicus, Rattus rattus. e76 ...... Mouse serum proteins ...... Mus musculus (Mus spp.). e77 ...... Budgerigar droppings ...... Melopsittacus undulatus. e78 ...... Budgerigar feathers ...... Melopsittacus undulatus. e79 ...... Budgerigar serum proteins ...... Melopsittacus undulatus. e80 ...... Goat epithelium ...... Capra hircus. e81 ...... Sheep epithelium ...... Ovis aries (Ovis spp.). e82 ...... Rabbit epithelium ...... Oryctolagus cuniculus (Oryctolagus spp.). e83 ...... Swine epithelium ...... Sus scrofa (Sus scrofa domesticus; Sus spp.). e84 ...... Hamster epithelium ...... Cricetus cricetus, Mesocricetus auratus, and Phodopus sungorus. e85 ...... Chicken feathers ...... Gallus domesticus (Gallus gallus domesticus; Gallus spp.). e86 ...... Duck feathers ...... Anas platyrhynchos. e87 ...... Rat epithelium, serum proteins, and urine proteins ...... Rattus norvegicus Rattus rattus. e88 ...... Mouse epithelium, serum proteins, and urine proteins Mus musculus (Mus spp.). (mouse). e89 ...... Turkey feathers ...... Meleagris gallopavo. e90 ...... Budgerigar serum proteins, feathers, and droppings ...... Melopsittacus undulatus. e91 ...... Pigeon serum proteins, feathers, and droppings ...... Streptopelia roseogrisea, Psittacidae spp. e92 ...... Parrot serum proteins, feathers, and droppings ...... Ara spp. e93 ...... Pigeon serum proteins ...... Streptopelia roseogrisea. e94 ...... Fel d 1.0101 ...... Felis domesticus. a345 ...... Fel d 1 ...... Felis domesticus. e98 ...... Parrot droppings ...... Psittacoidea spp. e101 ...... Can f 1.0101 ...... Canis familiaris (Canis domesticus). a174 ...... Can f 1 ...... Canis familiaris (Canis domesticus). e102 ...... Can f 2.0101 ...... Canis familiaris (Canis domesticus). e196 ...... Parakeet feathers ...... Nymphicus hollandicus. e197 ...... Parakeet droppings ...... Nymphicus hollandicus. e198 ...... Parakeet serum ...... Nymphicus hollandicus. e199 ...... Canary bird serum ...... Serinus canarius. e200 ...... Canary bird droppings ...... Serinus canarius. e201 ...... Canary bird feathers (Canary feathers) ...... Serinus canarius. e202 ...... Reindeer epithelium ...... Rangifer tarandus. e203 ...... Mink epithelium ...... Mustela spp.

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TABLE 1—CLASS II EXEMPT ALLERGENS UNDER § 866.5750—RADIOALLERGOSORBENT (RAST) IMMUNOLOGICAL TEST SYSTEMS—Continued

Source Allergen code Allergen product (taxonomical name)

e204 ...... Bos d 6 ...... Bos domesticus (Bos taurus; Bos spp.). e205 ...... Horse, serum proteins ...... Equus caballus (Equus spp.). e206 ...... Rabbit, serum proteins ...... Oryctolagus cuniculus (Oryctolagus spp.). e208 ...... Chinchilla epithelium ...... Chinchilla laniger. e209 ...... Gerbil epithelium ...... Meriones unguiculatus. e210 ...... Fox epithelium ...... Vulpes vulpes. e211 ...... Rabbit, urine proteins ...... Oryctolagus cuniculus (Oryctolagus spp.). e212 ...... Swine, urine proteins ...... Sus scrofa (Sus scrofa domesticus; Sus spp.). e213 ...... Parrot feathers ...... Ara spp. e214 ...... Finch feathers ...... Lonchura domestica. e215 ...... Pigeon feathers ...... Streptopelia roseogrisea (Streptopelia spp.), Columbia spp. e216 ...... Deer epithelium ...... Dama dama. e217 ...... Ferret epithelium ...... Mustela putorius. e218 ...... Chicken droppings ...... Gallus domesticus (Gallus gallus domesticus; Gallus spp.). e219 ...... Chicken, serum proteins ...... Gallus domesticus (Gallus gallus domesticus; Gallus spp.). e220 ...... Fel d 2, Cat serum albumin ...... Felis domesticus. e221 ...... Can f 3 ...... Canis familiaris (Canis domesticus) (Dog serum albumin). e222 ...... Swine serum albumin (Sus s PSA) ...... Sus scrofa (Sus scrofa domesticus; Sus spp.). e225 ...... Lovebird feathers ...... Psittacoidea agapomis. e226 ...... Can f 5.0101 ...... Canis familiaris. e227 ...... Equ c 1.0101 ...... Equus caballus. e228 ...... Fel d 4.0101 ...... Felis domesticus. e230 ...... Equ c 3 ...... Equus caballus. e231 ...... Mus m 1 ...... Mus musculus.

Food

f9 ...... Rice ...... Oryza sativa. f12 ...... Pea (green pea) ...... Pisum sativum. f15 ...... White bean ...... Phaseolus vulgaris. f19 ...... Cayenne pepper ...... Capsicum frutescens (Capsicum annum). f21 ...... Sugar cane ...... Saccharum officinarum. f22 ...... Raspberry ...... Rubus idaeus. f26 ...... Pork ...... Sus scrofa (Sus scrofa domesticus; Sus spp.). f29 ...... Watermelon ...... Citrullus lanatus (Citrullus vulgaris). f31 ...... Carrot ...... Daucus carota. f32 ...... Oyster mushroom ...... Pleurotus ostreatus. f33 ...... Orange ...... Citrus sinensis. f35 ...... Potato ...... Solanum tuberosum. f43 ...... Mother’s milk ...... Homo sapiens. f44 ...... Strawberry ...... Fragaria vesca (Fragaria spp.). f45 ...... Yeast, baker’s ...... Saccharomyces cerevisiae. f46 ...... Pepper, Red ...... Capsicum annuum. f47 ...... Garlic ...... Allium sativum. f48 ...... Onion ...... Allium cepa. f49 ...... Apple ...... Malus x domestica (Malus spp.). f51 ...... Bamboo shoot ...... Phyllostachys pubescens. f52 ...... Cacao/chocolate ...... Theobroma cacao. f54 ...... Sweet potato ...... Ipomoea batatas. f55 ...... Common millet ...... Panicum miliaceum. f56 ...... Foxtail millet ...... Setaria italica. f57 ...... Japanese millet ...... Echinochloa crus-galli. f58 ...... Pacific squid ...... Todarodes pacificus. f59 ...... Octopus ...... Octopus vulgaris (Octopus spp.). f63 ...... Kefir ...... NA. f67 ...... Parmesan cheese ...... NA. f81 ...... Cheese, cheddar type ...... NA. f82 ...... Cheese, mold type ...... NA. f83 ...... Chicken ...... Gallus domesticus (Gallus gallus domesticus; Gallus spp.). f86 ...... Parsley ...... Petroselinum crispum. f87 ...... Melon ...... Cucumis melo Cucumis melo + Citrullus lanatus. f88 ...... Mutton (lamb) ...... Ovis aries (Ovis spp.). f90 ...... Malt ...... Hordeum vulgare. f92 ...... Banana ...... Musa spp. f93 ...... Cacao ...... Theobroma cacao. f94 ...... Pear ...... Pyrus communis (Pyrus spp.). f97 ...... Yam ...... Dioscorea spp. Dioscorea opposita. f97 ...... Chamomile tea ...... Matricaria chamomilla. f98 ...... Gliadin ...... Triticum aestivum (Triticum spp.). f102 ...... Cantaloupe ...... Cucumis melo var. cantalupensis.

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TABLE 1—CLASS II EXEMPT ALLERGENS UNDER § 866.5750—RADIOALLERGOSORBENT (RAST) IMMUNOLOGICAL TEST SYSTEMS—Continued

Source Allergen code Allergen product (taxonomical name)

f105 ...... Chocolate ...... Theobroma cacao. f109 ...... Cottonseed ...... Gossypium hirsutum. f110 ...... Giant radish ...... Raphanus sativus. f118 ...... Zucchini ...... Cucurbita pepo. f119 ...... Radish ...... Raphanus sativus. f120 ...... Venison ...... Capreolus capeolus. f121 ...... Pinto bean ...... Phaseolus vulgaris. f122 ...... Cheese, American ...... NA. f127 ...... Black-eyed pea ...... Vigna unguiculata. f131 ...... Black Olive ...... Olea europaea. f136 ...... Red beet ...... Beta vulgaris var. conditiva. f139 ...... Goat’s Cheese ...... Capra aegagrus. f140 ...... Bran ...... NA. f141 ...... Corn (vegetables) ...... Zea mays. f152 ...... Green bell pepper ...... Capsicum annuum. f155 ...... Brewer’s yeast ...... Saccharomyces carlsbergensis. f157 ...... Duck ...... Anas domesticus. f158 ...... Goose ...... Anser anser. f160 ...... Camembert cheese ...... NA. f162 ...... Nectarine ...... Prunus persica var. nucipersica. f163 ...... Kohlrabi ...... Brassica oleracea var. gongylodes. f65 ...... Perch. f166 ...... Leek ...... Allium porrum. f170 ...... Cheese (Switzerland) (Swiss cheese) ...... NA. f174 ...... Fig ...... Ficus carica. f177 ...... Cranberry ...... Vaccinium macrocarpon. f179 ...... Raisin ...... Vitis spp. f182 ...... Lima bean ...... Phaseolus lunatus. f198 ...... Flaxseed (bruised grain) ...... Linum usitatissimum. f199 ...... Untreated native milk ...... Bos domesticus (Bos taurus; Bos spp.). f208 ...... Lemon ...... Citrus limon. f209 ...... Grapefruit ...... Citrus paradisi. f210 ...... Pineapple ...... Ananas comosus. f211 ...... Blackberry ...... Rubus fruticosus. f212 ...... Mushroom (champignon) ...... Agaricus hortensis (Agaricus spp.). f213 ...... Rabbit ...... Oryctolagus cuniculus (Oryctolagus spp.). f214 ...... Spinach ...... Spinacia oleracea. f215 ...... Lettuce ...... Lactuca sativa. f216 ...... Cabbage ...... Brassica oleracea var. capitata. f217 ...... Brussels sprouts ...... Brassica oleracea var. gem. f218 ...... Paprika, sweet pepper ...... Capsicum annuum. f219 ...... Fennel seed ...... Foeniculum vulgare. f219 ...... Sage ...... Salvia officinalis. f220 ...... Cinnamon ...... Cinnamomum spp. f221 ...... Coffee ...... Coffea spp. f222 ...... Tea ...... Camellia sinensis. f223 ...... Green olive ...... Olea europaea. f225 ...... Summer squash, pumpkin ...... Cucurbita pepo. f225 ...... Pumpkin ...... Cucurbita maxima. f226 ...... Pumpkin seed ...... Cucurbita pepo. f227 ...... Sugar-beet seed ...... Beta vulgaris. f229 ...... Safflower Seed ...... Carthamus tinctorius. f231 ...... Milk, boiled ...... Bos domesticus (Bos taurus; Bos spp.). f234 ...... Vanilla ...... Vanilla planifolia. f237 ...... Apricot ...... Prunus armeniaca. f241 ...... Gouda cheese ...... NA. f242 ...... Cherry ...... Prunus avium. f244 ...... Cucumber ...... Cucumis sativus. f246 ...... Guar, guar gum ...... Cyamopsis tetragonoloba. f247 ...... Honey ...... NA. f248 ...... Rosemary ...... Rosmarinus officinalis. f254 ...... Plaice ...... Pleuronectes platessa. f255 ...... Plum ...... Prunus domestica, Prunus americana. f258 ...... Squid ...... Loligo spp. f259 ...... Grape ...... Vitis vinifera (Vitis spp.). f260 ...... Broccoli ...... Brassica oleracea var. italica (Brassica oleracea var. cultivar). f261 ...... Asparagus ...... Asparagus officinalis. f262 ...... Aubergine, eggplant ...... Solanum melongena. f263 ...... Green pepper ...... Piper nigrum, Capsicum annuum.

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TABLE 1—CLASS II EXEMPT ALLERGENS UNDER § 866.5750—RADIOALLERGOSORBENT (RAST) IMMUNOLOGICAL TEST SYSTEMS—Continued

Source Allergen code Allergen product (taxonomical name)

f264 ...... Eel ...... Anguilla anguilla. f265 ...... Caraway ...... Carum carvi. f265 ...... Cumin ...... Cuminum cyminum. f266 ...... Mace ...... Myristica fragrans. f267 ...... Cardamon ...... Elettaria cardamomum. f268 ...... Clove ...... Syzygium aromaticum. f269 ...... Basil ...... Ocimum basilicum. f270 ...... Ginger ...... Zingiber officinale. f271 ...... Anise ...... Pimpinella anisum. f272 ...... Tarragon ...... Artemisia dracunculus. f273 ...... Thyme ...... Thymus vulgaris. f274 ...... Marjoram ...... Origanum majorana. f275 ...... Lovage ...... Levisticum officinale. f276 ...... Fennel, fresh ...... Foeniculum vulgare. f277 ...... Dill ...... Anethum graveolens. f278 ...... Bay leaf ...... Laurus nobilis. f279 ...... Chili pepper ...... Capsicum frutescens. f280 ...... Black pepper ...... Piper nigrum. f281 ...... Curry (Santa Maria) ...... NA. f282 ...... Nutmeg ...... Myristica fragrans. f283 ...... Oregano ...... Origanum vulgare. f284 ...... Turkey meat ...... Meleagris gallopavo. f285 ...... Elk/moose meat ...... Alces spp. f286 ...... Mare’s milk ...... Equus caballus (Equus spp.). f287 ...... Red kidney bean ...... Phaseolus vulgaris. f288 ...... Blueberry ...... Vaccinium myrtillus (Vaccinium spp.). f289 ...... Date ...... Phoenix dactylifera. f291 ...... Cauliflower ...... Brassica oleracea var. botrytis. f292 ...... Guava ...... Psidium guajava. f293 ...... Papaya ...... Carica papaya. f294 ...... Passion fruit, Maracuja ...... Passiflora edulis (Passiflora spp.). f295 ...... Carambola ...... Averrhoa carambola. f296 ...... Carob ...... Ceratonia siliqua. f297 ...... Gum Arabic ...... Acacia senegal (Acacia spp.). f298 ...... Tragacanth ...... Astragalus spp. f299 ...... Sweet chestnut (chestnut) ...... Castanea sativa. f300 ...... Pinto bean ...... Phaseolus spp. f301 ...... Persimmon (kaki fruit, sharon) ...... Diospyros kaki. f302 ...... Mandarin (tangerine, clementine, satsumas) ...... Citrus reticulata. f305 ...... Fenugreek ...... Trigonella foenum-graecum. f306 ...... Lime ...... Citrus aurantifolia. f307 ...... Hake ...... Merluccius merluccius. f308 ...... Sardine (pilchard) ...... Sardina pilchardus. f310 ...... Blue vetch ...... Lathyrus sativus. f311 ...... Megrim ...... Lepidorhombus whiffiagonis. f315 ...... Green bean ...... Phaseolus vulgaris. f316 ...... Rape seed ...... Brassica napus. f317 ...... Coriander ...... Coriandrum sativum. f318 ...... Jack fruit ...... Artocarpus heterophyllus. f319 ...... Beetroot ...... Beta vulgaris. f320 ...... Crayfish ...... Astacus astacus. f321 ...... Horse meat ...... Equus caballus (Equus spp.). f322 ...... Red currant ...... Ribes sylvestre. f324 ...... Hop (fruit cone) ...... Humulus lupulus. f325 ...... Saffron ...... Colchicum autumnale. f328 ...... Fig ...... Ficus carica. f329 ...... Watermelon ...... Citrullus lanatus. f330 ...... Rose hip ...... Rosa spp. f331 ...... Saffron ...... Crocus sativus. f332 ...... Mint ...... Mentha piperita. f333 ...... Linseed ...... Linum usitatissimum. f336 ...... Jujube ...... Ziziphus jujuba. f336 ...... Wine vinegar ...... Vitis vinifera (Vitis spp.). f337 ...... Sole ...... Solea solea. f337 ...... English sole ...... Parophrys vetulus. f338 ...... Wine, white ...... Vitis vinifera (Vitis spp.). f339 ...... Allspice ...... Pimenta dioica. f339 ...... Wine, red ...... Vitis vinifera (Vitis spp.). f341 ...... Cranberry ...... Vaccinium oxycoccus, Vaccinium macrocarpon. f342 ...... Olive (black, fresh) ...... Olea europaea.

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TABLE 1—CLASS II EXEMPT ALLERGENS UNDER § 866.5750—RADIOALLERGOSORBENT (RAST) IMMUNOLOGICAL TEST SYSTEMS—Continued

Source Allergen code Allergen product (taxonomical name)

f343 ...... Raspberry ...... Rubus idaeus. f344 ...... Sage ...... Salvia officinalis. f346 ...... Chives ...... Allium schoenoprasum. f347 ...... Quinoa ...... Chenopodium quinoa. f348 ...... Litchi ...... Litchi chinensis. f349 ...... Chum salmon roe ...... Oncorhynchus keta. f358 ...... Artichoke ...... Cynara scolymus. f360 ...... Yogurt ...... NA. f368 ...... Black bass ...... Micropterus dolomieu (Micropterus dolomieui). f374 ...... Karaya gum ...... Sterculia urens. f375 ...... Horseradish ...... Armoracia rusticana. f377 ...... Maple syrup ...... NA. f379 ...... Okra ...... Abelmoschus esculentus. f382 ...... Beet, sugar ...... Beta vulgaris var. altissima. f401 ...... Loquat ...... Eriobotrya japonica. f402 ...... Fig ...... Ficus carica. f403 ...... Brewer’s yeast ...... Saccharomyces cerevisiae. f405 ...... Mint ...... Mentha spp. f406 ...... Arugula ...... Eruca vesicaria.

House Dust

h1 ...... Greer Labs., Inc ...... NA. h2 ...... Hollister-Stier Labs ...... NA. h6 ...... Japan ...... NA.

Venoms & Insects

i7 ...... Midge ...... Chironomus yoshimatsui. i8 ...... Moth ...... Bombyx mori, Heterocera spp. i47 ...... Water flea ...... Daphnia spp. i49 ...... Deer fly ...... Chrysops spp. i51 ...... Black ant ...... Camponotus pennsylvanicus. i54 ...... Flea mix (dog/cat), common flea ...... Ctenocephalides spp. i71 ...... Mosquito ...... Aedes communis, Aedes spp. and Culex spp. i72 ...... Green nimitti ...... Cladotanytarsus lewisi. i73 ...... Blood worm ...... Chironomus thummi, Chironomusri parius, Chironomus spp. i75 ...... European hornet ...... Vespa crabro. i76 ...... Berlin beetle ...... Trogoderma angustum. i77 ...... European paper wasp ...... Polistes dominulus. i78 ...... Fly ...... Musca domestica. i80 ...... Bumblebee ...... Bombus pennsylvanicus. i201 ...... Horse bot fly ...... Gasterophilus intestinalis. i202 ...... Grain weevil ...... Sitophilus granarius. i203 ...... Mediterranean flour moth ...... Ephestia kuehniella (Anagasta kuehniella). i204 ...... Horse fly ...... Tabanus spp. i205 ...... Bumblebee ...... Bombus terrestris. i208 ...... Api m 1.0101 ...... Apis mellifera. a45 ...... Api m 1 ...... Apis mellifera. i209 ...... Ves v 5.0101 ...... Vespula vulgaris. a670 ...... Ves v 5 ...... Vespula vulgaris. i210 ...... Pol d 5.0101 ...... Polistes dominulus. i211 ...... Ves v 1.0101 ...... Vespula vulgaris. i213 ...... Api m 4 ...... Apis mellifera. i214 ...... Api m 2 ...... Apis mellifera. i215 ...... Api m 3 ...... Apis mellifera. i216 ...... Api m 5 ...... Apis mellifera. i217 ...... Api m 10 ...... Apis mellifera. i220 ...... Bla g 1.0101 ...... Blattella germanica. i221 ...... Bla g 2.0101 ...... Blattella germanica. i222 ...... Bla g 5.0101 ...... Blattella germanica. i223 ...... Bla g 7 ...... Blattella germanica. a46 ...... Api m 2 ...... Apis mellifera.

Miscellaneous

o1 ...... Cotton, crude fibers ...... Gossypium spp. o3 ...... Cotton (treated) ...... Gossypium spp. o70 ...... Seminal fluid ...... Homo sapiens. o71 ...... Staphylococcus aureus ...... Staphylococcus aureus.

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TABLE 1—CLASS II EXEMPT ALLERGENS UNDER § 866.5750—RADIOALLERGOSORBENT (RAST) IMMUNOLOGICAL TEST SYSTEMS—Continued

Source Allergen code Allergen product (taxonomical name)

o72 ...... Pichia pastoris crude extract customer specific ...... Pichia pastoris. o72 ...... Sperm-sediment ...... Homo sapiens. o73 ...... Pichia pastoris crude extr. vector customer specific ...... Pichia pastoris. o74 ...... Pichia pastoris with vector customer specific ...... Pichia pastoris. o201 ...... Tobacco leaf, tobacco dust ...... Nicotiana tabacum. o202 ...... Artemia salina, fish feed ...... Artemia salina. o203 ...... Tetramin, fish feed ...... NA. o207 ...... Daphnia, fish feed ...... Daphnia spp. o211 ...... Mealworm ...... Tenebrio molitor. o212 ...... Streptavidin ...... Streptomyces avidini. o213 ...... MBP (maltose binding protein) ...... Escherichia coli. o214 ...... CCD; MUXF3 from bromelain ...... Ananas comosus. o72 ...... Enterotoxin A (Sta a SEA) ...... Staphylococcus aureus. o73 ...... Enterotoxin B (Sta a SEB) ...... Staphylococcus aureus.

Parasites

p1 ...... Ascaris ...... Ascaris suum. p2 ...... Echinococcus ...... Echinococcus granulosus. p3 ...... Schistosoma ...... Schistosoma mansoni. p4 ...... Anisakis (Herring Worm) ...... Anisakis simplex (Anisakis spp.). p5 ...... Toxocara canis ...... Toxocara canis. p10 ...... Ani s 3.0101 ...... Anisakis simplex (Anisakis spp.). p11 ...... Ani s 1 ...... Anisakis simplex (Anisakis spp.).

Occupational

k4 ...... Threshing dust ...... NA. k5 ...... Flax ...... NA. k7 ...... Hay Dust ...... NA. k8 ...... Hop (hops) ...... Humulus lupulus. k12 ...... Grain mill dust ...... NA. k14 ...... Kapok ...... NA. k20 ...... Sheep’s wool (treated) (wool) ...... Ovis aries (Ovis spp.). k21 ...... Sheep’s wool (Untreated) ...... Ovis aries (Ovis spp.). k23 ...... Straw Dust ...... NA. k33 ...... Oak ...... NA. k70 ...... Green coffee bean ...... Coffea spp. k71 ...... Castor bean ...... Ricinus communis. k72 ...... Ispaghula ...... Plantago psyllium/Plantago ovata. k73 ...... Silk waste ...... NA. k74 ...... Silk ...... Bombyx mori. k75 ...... Isocyanate TDI (Toluene diisocyanate) ...... NA. k76 ...... Isocyanate MDI (Diphenylmethane diisocyanate) ...... NA. k77 ...... Isocyanate HDI (Hexamethylen diisocyanate) ...... NA. k78 ...... Ethylene oxide ...... NA. k79 ...... Phthalic anhydride ...... NA. k80 ...... Formaldehyde/Formalin ...... NA. k81 ...... Ficus ...... Ficus benjamina (Ficus spp.). k83 ...... Cotton seed ...... Gossypium hirsutum. k84 ...... Sunflower seed ...... Helianthus annuus. k85 ...... Chloramin T ...... NA. k86 ...... Trimellitic anhydride, TMA ...... NA. k87 ...... Asp o 21, alpha-amylase ...... Aspergillus oryzae. k89 ...... Orris root ...... Iris florentina. k99 ...... HSA (Human Serum Albumin) (Hom s HSA) ...... Homo sapiens. k201 ...... Car p 1, Papain ...... Carica papaya. k202 ...... Ana c 2, Bromelain ...... Ananas comosus. k204 ...... Maxatase ...... Bacillus licheniformis. k205 ...... Alcalase ...... Bacillus spp. k206 ...... Savinase, Protease 1 (Bac l Subtilisin) ...... Bacillus spp. k208 ...... Gal d 4, Lysozyme ...... Gallus domesticus (Gallus gallus domesticus; Gallus spp.). k209 ...... Hexahydrophtalic anhydrid ...... NA. k210 ...... Maleic anhydride ...... NA. k211 ...... Methyltetrahydrophtalic anhydrid ...... NA. k212 ...... Abachi wood dust ...... Triplochiton scleroxylon. k213 ...... Pepsin (Sus s Pepsin) ...... Sus scrofa (Sus scrofa domesticus; Sus spp.). k213 ...... TCPA ...... NA. k214 ...... Bougainvillea ...... Bougainvillea spp. k225 ...... Horse radish peroxidase (Arm r HRP) ...... Armoracia rusticana.

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TABLE 1—CLASS II EXEMPT ALLERGENS UNDER § 866.5750—RADIOALLERGOSORBENT (RAST) IMMUNOLOGICAL TEST SYSTEMS—Continued

Source Allergen code Allergen product (taxonomical name)

k226 ...... Ascorbate oxidase (Cuc p ascorbate oxidase) ...... Cucurbita pepo. k301 ...... Flour dust ...... Triticum spp. k501 ...... Savinase customer specific ...... Proprietary knowledge of customer. k502 ...... Lipolase customer specific ...... Proprietary knowledge of customer. k503 ...... Termamyl customer specific ...... Proprietary knowledge of customer. k504 ...... Clazinase customer specific ...... Proprietary knowledge of customer.

■ 66. In § 866.5910, revise paragraph (b) Analyzer.’’ See § 868.1(e) for the Authority: 21 U.S.C. 351, 360, 360c, 360e, to read as follows: availability of this guidance document. 360j, 360l, 371. ■ ■ § 866.5910 Quality control material for 70. In § 868.2500, revise paragraph (b) 75. In § 870.1330, revise paragraph (b) cystic fibrosis nucleic acid assays. to read as follows: to read as follows: * * * * * § 868.2500 Cutaneous oxygen (PcO2) § 870.1330 Catheter guide wire. (b) Classification. Class II (special monitor. * * * * * controls). The device is exempt from the * * * * * (b) Classification. Class II (special premarket notification procedures in (b) Classification. Class II (special controls). The device, when it is a subpart E of part 807 of this chapter controls). The device is exempt from the torque device that is manually operated, subject to the limitations in § 866.9. The premarket notification procedures in non-patient contacting, and intended to special control is FDA’s guidance subpart E of part 807 of this chapter manipulate non-cerebral vascular guide document entitled ‘‘Class II Special subject to the limitations in § 868.9. The wires, is exempt from the premarket Controls Guidance Document: Quality special control is FDA’s ‘‘Class II notification procedures in subpart E of Control Material for Cystic Fibrosis Special Controls Guidance Document: part 807 of this chapter subject to the Nucleic Acid Assays.’’ See § 866.1(e) for Cutaneous Carbon Dioxide (PcCO2) and limitations in § 870.9. the availability of this guidance Oxygen (PcO2) Monitors; Guidance for document. ■ 76. In § 870.1390, revise paragraph (b) Industry and FDA.’’ See § 868.1(e) for to read as follows: the availability of this guidance PART 868—ANESTHESIOLOGY document. § 870.1390 Trocar. DEVICES ■ 71. In § 868.2550, revise paragraph (b) * * * * * ■ 67. The authority citation for part 868 to read as follows: (b) Classification. Class II (special continues to read as follows: controls). Except for trocars that are § 868.2550 Pneumotachometer. reprocessed for multiple use, the device Authority: 21 U.S.C. 351, 360, 360c, 360e, * * * * * 360j, 360l, 371. is exempt from the premarket (b) Classification. Class II (special notification procedures in subpart E of ■ 68. In § 868.1040, revise paragraph (b) controls). The device is exempt from the part 807 of this chapter subject to the to read as follows: premarket notification procedures in limitations in § 870.9. § 868.1040 Powered algesimeter. subpart E of part 807 of this chapter ■ subject to the limitations in § 868.9. 77. In § 870.1650, revise paragraph (b) * * * * * ■ to read as follows: (b) Classification. Class II (special 72. In § 868.5180, revise paragraph (b) controls). The device is exempt from the to read as follows: § 870.1650 Angiographic injector and syringe. premarket notification procedures in § 868.5180 Rocking bed. * * * * * subpart E of part 807 of this chapter * * * * * subject to the limitations in § 868.9. (b) Classification. Class II (special (b) Classification. Class II (special controls). The device, when it is a non- ■ 69. In § 868.2385, revise paragraph (b) controls). The device is exempt from the to read as follows: patient contacting balloon inflation premarket notification procedures in syringe intended only to inflate/deflate § 868.2385 Nitrogen dioxide analyzer. subpart E of part 807 of this chapter balloon catheters and monitor pressure subject to the limitations in § 868.9. * * * * * within the balloon, is exempt from the (b) Classification. Class II (special ■ 73. In § 868.6250, revise paragraph (b) premarket notification procedures in controls). The device, when it is a to read as follows: subpart E of part 807 of this chapter standalone nitrogen dioxide analyzer § 868.6250 Portable air compressor. subject to the limitations in § 870.9. and not those that are components of ■ * * * * * 78. In § 870.1875, revise paragraph nitric oxide delivery systems intended (b) Classification. Class II (special (b)(2) to read as follows: to monitor nitrogen dioxide levels controls). The device is exempt from the during inhaled nitric oxide therapy, is § 870.1875 Stethoscope. premarket notification procedures in exempt from the premarket notification * * * * * subpart E of part 807 of this chapter procedures in subpart E of part 807 of (b) * * * subject to the limitations in § 868.9. this chapter subject to the limitations in (2) Classification. Class II (special § 868.9. The special control is FDA’s PART 870—CARDIOVASCULAR controls). The device, when it is a lung ‘‘Guidance Document for Premarket DEVICES sound monitor, is exempt from the Notification Submissions for Nitric premarket notification procedures in Oxide Administration Apparatus, Nitric ■ 74. The authority citation for part 870 subpart E of part 807 of this chapter Oxide Analyzer, and Nitrogen Dioxide continues to read as follows: subject to the limitations in § 870.9.

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■ 79. In § 870.2675, revise paragraph (b) blood filters, is exempt from the § 872.3540 OTC denture cushion or pad. to read as follows: premarket notification procedures in * * * * * subpart E of part 807 of this chapter (b) * * * § 870.2675 Oscillometer. subject to the limitations in § 870.9. (2) Class II (special controls) if the * * * * * ■ 85. In § 870.4420, revise paragraph (b) OTC denture cushion or pad is made of (b) Classification. Class II (special to read as follows: a material other than wax-impregnated controls). The device is exempt from the cotton cloth or if the intended use of the premarket notification procedures in § 870.4420 Cardiopulmonary bypass device differs from that described in subpart E of part 807 of this chapter cardiotomy return sucker. paragraph (b)(1) of this section. The subject to the limitations in § 870.9. * * * * * device is exempt from the premarket ■ 80. In § 870.2770, revise paragraph (b) (b) Classification. Class II (special notification procedures in subpart E of to read as follows: controls). The device is exempt from the part 807 of this chapter subject to the premarket notification procedures in limitations in § 872.9. The special § 870.2770 Impedance plethysmograph. subpart E of part 807 of this chapter controls for this device are FDA’s: * * * * * subject to the limitations in § 870.9. * * * * * (b) Classification. Class II (special ■ 86. In § 870.4430, revise paragraph (b) ■ 92. In § 872.3560, revise paragraph (b) controls). The device, when it is a body to read as follows: composition analyzer which is not introductory text to read as follows: § 870.4430 Cardiopulmonary bypass intended to diagnose or treat any § 872.3560 OTC denture reliner. intracardiac suction control. medical condition, is exempt from the * * * * * premarket notification procedures in * * * * * (b) Classification. Class II (special (b) Classification. Class II (special subpart E of part 807 of this chapter controls). The device is exempt from the subject to the limitations in § 870.9. controls). The device is exempt from the premarket notification procedures in premarket notification procedures in ■ 81. In § 870.4280, revise paragraph (b) subpart E of part 807 of this chapter to read as follows: subpart E of part 807 of this chapter subject to the limitations in § 870.9. subject to the limitations in § 872.9. The § 870.4280 Cardiopulmonary prebypass special controls for this device are filter. PART 872—DENTAL DEVICES FDA’s: * * * * * * * * * * ■ 87. The authority citation for part 872 (b) Classification. Class II (special ■ 93. In § 872.3590, revise paragraph (b) continues to read as follows: controls). The device is exempt from the to read as follows: premarket notification procedures in Authority: 21 U.S.C. 351, 360, 360c, 360e, 360j, 360l, 371. § 872.3590 Preformed plastic denture subpart E of part 807 of this chapter tooth. subject to the limitations in § 870.9. ■ 88. In § 872.1720, revise paragraph (b) * * * * * ■ to read as follows: 82. In § 870.4290, revise paragraph (b) (b) Classification. Class II (special to read as follows: § 872.1720 Pulp tester. controls). The device is exempt from the § 870.4290 Cardiopulmonary bypass * * * * * premarket notification procedures in adaptor, stopcock, manifold, or fitting. (b) Classification. Class II (special subpart E of part 807 of this chapter * * * * * controls). The device is exempt from the subject to the limitations in § 872.9. (b) Classification. Class II (special premarket notification procedures in ■ 94. In § 872.3600, revise paragraph (b) controls). The device is exempt from the subpart E of part 807 of this chapter introductory text to read as follows: premarket notification procedures in subject to the limitations in § 872.9. § 872.3600 Partially fabricated denture kit. subpart E of part 807 of this chapter ■ 89. In § 872.3260, revise paragraph (b) subject to the limitations in § 870.9. to read as follows: * * * * * (b) Classification. Class II (special ■ 83. In § 870.4340, revise paragraph (b) § 872.3260 Cavity varnish. controls). The device is exempt from the to read as follows: * * * * * premarket notification procedures in § 870.4340 Cardiopulmonary bypass level (b) Classification. Class II (special subpart E of part 807 of this chapter sensing monitor and/or control. controls). The device, when it is an subject to the limitations in § 872.9. The * * * * * external cleaning solution, is exempt special controls for this device are (b) Classification. Class II (special from the premarket notification FDA’s: controls). The device is exempt from the procedures in subpart E of part 807 of * * * * * premarket notification procedures in this chapter subject to the limitations in ■ 95. In § 872.3890, revise paragraph (b) subpart E of part 807 of this chapter § 872.9. to read as follows: subject to the limitations in § 870.9. ■ 90. In § 872.3300, revise paragraph (b) ■ 84. In § 870.4400, revise paragraph (b) to read as follows: § 872.3890 Endodontic stabilizing splint. to read as follows: * * * * * § 872.3300 Hydrophilic resin coating for (b) Classification. Class II (special § 870.4400 Cardiopulmonary bypass blood dentures. controls). The device is exempt from the reservoir. * * * * * premarket notification procedures in * * * * * (b) Classification. Class II (special subpart E of part 807 of this chapter (b) Classification. Class II (special controls). The device is exempt from the subject to the limitations in § 872.9. controls), except that a reservoir that premarket notification procedures in ■ 96. In § 872.5550, revise paragraph contains a defoamer or filter is classified subpart E of part 807 of this chapter (b)(2) to read as follows: into the same class as the defoamer or subject to the limitations in § 872.9. filter. The device, when it is a ■ 91. In § 872.3540, revise paragraph § 872.5550 Teething ring. cardiopulmonary bypass blood reservoir (b)(2) introductory text to read as * * * * * that does not contain defoamers or follows: (b) * * *

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(2) Class II (special controls) if the subpart E of part 807 of this chapter for single use; a diagnostic incandescent teething ring contains a fluid, such as subject to the limitations in § 874.9. light source; a fiberoptic photographic water. The device is exempt from the ■ 103. In § 874.3320, revise paragraph light source; a routine fiberoptic light premarket notification procedures in (b) to read as follows: source; an endoscopic sponge carrier; a subpart E of part 807 of this chapter xenon arc endoscope light source; an subject to the limitations in § 872.9. § 874.3320 Group hearing aid or group endoscope transformer; an LED light auditory trainer. ■ 97. In § 872.6770, revise paragraph (b) source; or a gastroenterology-urology to read as follows: * * * * * endoscopic guidewire, is exempt from (b) Classification. Class II (special the premarket notification procedures in § 872.6770 Cartridge syringe. controls). The device is exempt from the subpart E of part 807 of this chapter * * * * * premarket notification procedures in subject to the limitations in § 876.9. (b) Classification. Class II (special subpart E of part 807 of this chapter * * * * * subject to the limitations in § 874.9. controls). The device is exempt from the ■ ■ 109. In § 876.4020, revise paragraph premarket notification procedures in 104. In § 874.3330, revise paragraph (b) to read as follows: subpart E of part 807 of this chapter (b) to read as follows: subject to the limitations in § 872.9. § 876.4020 Fiberoptic light ureteral § 874.3330 Master hearing aid. catheter. PART 874—EAR, NOSE, AND THROAT * * * * * * * * * * DEVICES (b) Classification. Class II (special (b) Classification. Class II (special controls). The device is exempt from the controls). The device is exempt from the ■ 98. The authority citation for part 874 premarket notification procedures in premarket notification procedures in continues to read as follows: subpart E of part 807 of this chapter subpart E of part 807 of this chapter Authority: 21 U.S.C. 351, 360, 360c, 360e, subject to the limitations in § 874.9. subject to the limitations in § 876.9. ■ 360j, 360l, 371. 105. In § 874.3430, revise paragraph ■ 110. In § 876.4270, revise paragraph (b) to read as follows: ■ 99. In § 874.1090, revise paragraph (b) (b) to read as follows: § 874.3430 Middle ear mold. to read as follows: § 876.4270 Colostomy rod. § 874.1090 Auditory impedance tester. * * * * * * * * * * (b) Classification. Class II (special (b) Classification. Class II (special * * * * * controls). The device is exempt from the controls). The device is exempt from the (b) Classification. Class II (special premarket notification procedures in premarket notification procedures in controls). The device, when it is a subpart E of part 807 of this chapter subpart E of part 807 of this chapter tympanometer or auditory impedance subject to the limitations in § 874.9. tester that complies with FDA- subject to the limitations in § 876.9. ■ 106. In § 874.3730, revise paragraph recognized consensus standard ANSI ■ 111. In § 876.4400, revise paragraph (b) to read as follows: S3.39, is exempt from the premarket (b) to read as follows: notification procedures in subpart E of § 874.3730 Laryngeal prosthesis (Taub § 876.4400 Hemorrhoidal ligator. part 807 of this chapter subject to the design). limitations in § 874.9. * * * * * * * * * * ■ 100. In § 874.1120, revise paragraph (b) Classification. Class II (special (b) Classification. Class II (special (b) to read as follows: controls). The device, when it is a voice controls). Except for a hemostatic metal amplification device, is exempt from the clip intended for use in the § 874.1120 Electronic noise generator for premarket notification procedures in gastrointestinal tract, the device is audiometric testing. subpart E of part 807 of this chapter exempt from the premarket notification * * * * * subject to the limitations in § 874.9. procedures in subpart E of part 807 of (b) Classification. Class II (special this chapter subject to the limitations in controls). The device is exempt from the PART 876—GASTROENTEROLOGY– § 876.9. premarket notification procedures in UROLOGY DEVICES ■ 112. In § 876.4500, revise paragraph subpart E of part 807 of this chapter (b) to read as follows: subject to the limitations in § 874.9. ■ 107. The authority citation for part § 876.4500 Mechanical lithotriptor. ■ 101. In § 874.1325, revise paragraph 876 continues to read as follows: (b) to read as follows: Authority: 21 U.S.C. 351, 360, 360c, 360e, * * * * * 360j, 360l, 371. (b) Classification. Class II (special § 874.1325 Electroglottograph. ■ 108. In § 876.1500, revise paragraph controls). The device, when it is a * * * * * (b)(1) to read as follows: biliary mechanical lithotripter, is (b) Classification. Class II (special exempt from the premarket notification controls). The device is exempt from the § 876.1500 Endoscope and accessories. procedures in subpart E of part 807 of premarket notification procedures in * * * * * this chapter subject to the limitations in subpart E of part 807 of this chapter (b) * * * § 876.9. subject to the limitations in § 874.9. (1) Class II (special controls). The ■ 113. In § 876.4770, revise paragraph ■ 102. In § 874.3310, revise paragraph device, when it is an endoscope (b) to read as follows: (b) to read as follows: disinfectant basin, which consists solely of a container that holds disinfectant § 876.4770 Urethrotome. § 874.3310 Hearing aid calibrator and and endoscopes and accessories; an * * * * * analysis system. endoscopic magnetic retriever intended (b) Classification. Class II (special * * * * * for single use; sterile scissors for controls). The device is exempt from the (b) Classification. Class II (special cystoscope intended for single use; a premarket notification procedures in controls). The device is exempt from the disposable, non-powered endoscopic subpart E of part 807 of this chapter premarket notification procedures in grasping/cutting instrument intended subject to the limitations in § 876.9.

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■ 114. In § 876.5010, revise paragraph (b) Classification. Class II (special sheet drape with self-retaining finger (b) to read as follows: controls). The following accessories are cot, a disposable urological drape, a exempt from the premarket notification Kelly pad, an ophthalmic patient drape, § 876.5010 Biliary catheter and procedures in subpart E of part 807 of an ophthalmic microscope drape, an accessories. this chapter subject to the limitations in internal drape retention ring (wound * * * * * § 876.9: A catheter finger grip that is protector), or a surgical drape that does (b) Classification. Class II (special non-patient contacting and intended for not include an antimicrobial agent, is controls). The device, when it is a bile single use with a peritoneal catheter; a exempt from the premarket notification collecting bag or a surgical biliary continuous ambulatory peritoneal procedures in subpart E of part 807 of catheter that does not include a balloon dialysis (CAPD) belt; and a catheter this chapter subject to the limitations in component, is exempt from the stand that does not include weigh § 878.9. premarket notification procedures in scales. ■ 125. In § 878.4495, revise paragraph subpart E of part 807 of this chapter ■ 120. In § 876.5665, revise paragraph (b) to read as follows: subject to the limitations in § 876.9. (b) to read as follows: ■ 115. In § 876.5025, revise paragraph § 878.4495 Stainless steel suture. (b) introductory text to read as follows: § 876.5665 Water purification system for * * * * * hemodialysis. (b) Classification. Class II (special § 876.5025 Vibrator for climax control of * * * * * controls). The device, when it is a steel premature ejaculation. (b) Classification. Class II (special monofilament suture that is uncoated * * * * * controls). The device, when it is a water and does not incorporate barbs, is (b) Classification. Class II (special purification subsystem disinfectant, is exempt from the premarket notification controls). The device is exempt from the exempt from the premarket notification procedures in subpart E of part 807 of premarket notification procedures in procedures in subpart E of part 807 of this chapter subject to the limitations in subpart E of part 807 of this chapter this chapter subject to the limitations in § 878.9. The special control for this subject to the limitations in § 876.9. The § 876.9. device is FDA’s ‘‘Class II Special special controls for this device are: ■ 121. In § 876.5895, revise paragraph Controls Guidance Document: Surgical * * * * * (b) to read as follows: Sutures; Guidance for Industry and ■ FDA.’’ See § 878.1(e) for the availability 116. In § 876.5160, revise the section § 876.5895 Ostomy irrigator. heading and paragraph (b) to read as of this guidance document. * * * * * ■ 126. In § 878.4580, revise paragraph follows: (b) Classification. Class II (special (b) to read as follows: § 876.5160 Urological clamp. controls). The device is exempt from the * * * * * premarket notification procedures in § 878.4580 Surgical lamp. (b) Classification. Class I (general subpart E of part 807 of this chapter * * * * * controls). Except when intended for subject to the limitations in § 876.9. (b) Classification. Class II (special internal use, the device is exempt from ■ 122. In § 876.5980, revise paragraph controls). The device, when it is an the premarket notification procedures in (b)(1) to read as follows: operating room lamp, a surgical subpart E of part 807 of this chapter § 876.5980 Gastrointestinal tube and instrument light, a surgical floor subject to the limitations in § 876.9. accessories. standing light, an endoscopic surgical light, a surgical light connector, a ■ 117. In § 876.5365, revise paragraph * * * * * (b) to read as follows: (b) * * * ceiling mounted surgical light, a (1) Class II (special controls). The surgical light carrier, surgical light § 876.5365 Esophageal dilator. barium enema retention catheter and tip accessories, a surgical lamp, a remote * * * * * with or without a bag that is a illuminator, or an incandescent surgical (b) Classification. Class II (special gastrointestinal tube and accessory or a lamp, is exempt from the premarket controls). The device is exempt from the gastronomy tube holder accessory is notification procedures in subpart E of premarket notification procedures in exempt from the premarket notification part 807 of this chapter subject to the subpart E of part 807 of this chapter procedures in subpart E of part 807 of limitations in § 878.9. subject to the limitations in § 876.9. this chapter subject to the limitations in ■ 127. In § 878.5070, revise paragraph ■ 118. In § 876.5520, revise paragraph § 876.9. (b) to read as follows: (b)(1) to read as follows: * * * * * § 878.5070 Air-handling apparatus for a surgical operating room. § 876.5520 Urethral dilator. PART 878—GENERAL AND PLASTIC * * * * * SURGERY DEVICES * * * * * (b) * * * (b) Classification. Class II (special (1) Class II (special controls). Except ■ 123. The authority citation for part controls). The device, when it is an air when it is a mechanical urethral dilator, 878 continues to read as follows: handling bench apparatus, an air the device is exempt from the premarket handling room apparatus, or an air Authority: 21 U.S.C. 351, 360, 360c, 360e, handling enclosure apparatus, is exempt notification procedures in subpart E of 360j, 360l, 371. part 807 of this chapter subject to the from the premarket notification ■ 124. In § 878.4370, revise paragraph limitations in § 876.9. procedures in subpart E of part 807 of (b) to read as follows: this chapter subject to the limitations in * * * * * § 878.9. ■ 119. In § 876.5630, revise paragraph § 878.4370 Surgical drape and drape (b) to read as follows: accessories. PART 880—GENERAL HOSPITAL AND * * * * * PERSONAL USE DEVICES § 876.5630 Peritoneal dialysis system and (b) Classification. Class II (special accessories. controls). The device, when it is an ear, ■ 128. The authority citation for part * * * * * nose, and throat surgical drape, a latex 880 continues to read as follows:

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Authority: 21 U.S.C. 351, 360, 360c, 360e, lubricant, it is exempt from the (b) Classification. Class II (special 360j, 360l, 371. premarket notification procedures in controls). The device is exempt from the ■ 129. In § 880.5580, revise paragraph subpart E of part 807 of this chapter premarket notification procedures in (b) introductory text to read as follows: subject to the limitations in § 880.9. subpart E of part 807 of this chapter ■ 134. In § 880.6760, revise paragraph subject to the limitations in § 882.9. § 880.5580 Acupuncture needle. (b) to read as follows: ■ 140. In § 882.1560, revise paragraph * * * * * (b) to read as follows: § 880.6760 Protective restraint. (b) Classification. Class II (special controls). The device, when it is an * * * * * § 882.1560 Skin potential measurement device. acupuncture point locator or a single (b) Classification. Class I (general use acupuncture needle, is exempt from controls). The device is exempt from the * * * * * the premarket notification procedures in premarket notification procedures in (b) Classification. Class II (special subpart E of part 807 of this chapter subpart E of part 807 of this chapter controls). The device is exempt from the subject to the limitations in § 880.9. subject to the limitations in § 880.9. premarket notification procedures in subpart E of part 807 of this chapter Acupuncture needles must comply with PART 882—NEUROLOGICAL DEVICES the following special controls: subject to the limitations in § 882.9. ■ * * * * * ■ 135. The authority citation for part 141. In § 882.1855, revise paragraph (b) to read as follows: ■ 130. In § 880.5680, revise paragraph 882 continues to read as follows: (b) to read as follows: Authority: 21 U.S.C. 351, 360, 360c, 360e, § 882.1855 Electroencephalogram (EEG) 360j, 360l, 371. telemetry system. § 880.5680 Pediatric position holder. ■ * * * * * * * * * * 136. In § 882.1020, revise paragraph (b) to read as follows: (b) Classification. Class II (special (b) Classification. Class I (general controls). The device is exempt from the controls). Except when the device is an § 882.1020 Rigidity analyzer. premarket notification procedures in infant positioner for prescription use in * * * * * subpart E of part 807 of this chapter highly monitored settings or an infant (b) Classification. Class II (special subject to the limitations in § 882.9. sleep position holder, it is exempt from controls). The device is exempt from the ■ 142. In § 882.4060, revise paragraph the premarket notification procedures in premarket notification procedures in (b) to read as follows: subpart E of part 807 of this chapter subpart E of part 807 of this chapter subject to the limitations in § 880.9. The subject to the limitations in § 882.9. § 882.4060 Ventricular cannula. device is exempt from the good ■ 137. In § 882.1030, revise paragraph * * * * * manufacturing practice regulation in (b) to read as follows: (b) Classification. Class I (general part 820 of this chapter, with the controls). The device is exempt from the exception of § 820.180, with respect to § 882.1030 Ataxiagraph. premarket notification procedures in general requirements concerning * * * * * subpart E of part 807 of this chapter records, and § 820.198, with respect to (b) Classification. Class I (general subject to the limitations in § 882.9. complaint files. controls). Except when the device is ■ 143. In § 882.4545, revise paragraph ■ 131. In § 880.5780, revise paragraph intended to provide an interpretation or (b) to read as follows: (a)(2) to read as follows: a clinical implication of the measurement, it is exempt from the § 882.4545 Shunt system implantation § 880.5780 Medical support stocking. premarket notification procedures in instrument. (a) * * * subpart E of part 807 of this chapter * * * * * (2) Classification. Class II (special subject to the limitations in § 882.9. (b) Classification. Class I (general controls). The device is exempt from the ■ 138. In § 882.1470, revise paragraph controls). The device is exempt from the premarket notification procedures in (b) introductory text to read as follows: premarket notification procedures in subpart E of part 807 of this chapter subpart E of part 807 of this chapter subject to the limitations in § 880.9. § 882.1470 Computerized cognitive subject to the limitations in § 882.9. assessment aid. * * * * * ■ 144. In § 882.5895, revise paragraph ■ 132. In § 880.6250, revise paragraph * * * * * (b) introductory text to read as follows: (b) to read as follows: (b) Classification. Class II (special controls). Except when the § 882.5895 Vibratory counter-stimulation § 880.6250 Non-powdered patient computerized cognitive assessment aid device. examination glove. is intended for diagnostic assessment of * * * * * * * * * * specific diseases or conditions and (b) Classification. Class II (special (b) Classification. Class I (general relies on inputs from visual cues, controls). The device is exempt from the controls). The device, when it is a finger auditory cues, and/or functional use of premarket notification procedures in cot, is exempt from the premarket the hand, the device is exempt from the subpart E of part 807 of this chapter notification procedures in subpart E of premarket notification procedures in subject to the limitations in § 882.9. The part 807 of this chapter subject to the subpart E of part 807 of this chapter special controls for this device are: limitations in § 880.9. subject to the limitations in § 882.9. The * * * * * ■ 133. In § 880.6375, revise paragraph special control(s) for this device are: (b) to read as follows: * * * * * PART 884—OBSTETRICAL AND ■ 139. In § 882.1540, revise paragraph GYNECOLOGICAL DEVICES § 880.6375 Patient lubricant. (b) to read as follows: * * * * * ■ 145. The authority citation for part (b) Classification. Class I (general § 882.1540 Galvanic skin response 884 continues to read as follows: controls). Except when the device is a measurement device. Authority: 21 U.S.C. 351, 360, 360c, 360e, vaginal patient lubricant or an oral * * * * * 360j, 360l, 371.

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■ 146. In § 884.1630, revise paragraph notification procedures in subpart E of (b) Classification. Class I (general (b) to read as follows: part 807 of this chapter subject to the controls). The device is exempt from the limitations in § 884.9. premarket notification procedures in § 884.1630 Colposcope. * * * * * subpart E of part 807 of this chapter * * * * * ■ subject to the limitations in § 884.9 only (b) Classification. Class II (special 151. In § 884.4900, revise paragraph (b) to read as follows: when the device is made of common controls). The device, when it is a cellulosic and synthetic material with standard colposcope (or § 884.4900 Obstetric table and an established safety profile. colpomicroscope) that uses only a white accessories. ■ 157. In § 884.6120, revise paragraph light source, does not use filters other * * * * * (b) to read as follows: than a green filter, does not include (b) Classification. Class II (special image analysis software, and is not controls). The device is exempt from the § 884.6120 Assisted reproduction accessories. smartphone-based, is exempt from the premarket notification procedures in premarket notification procedures in subpart E of part 807 of this chapter * * * * * subpart E of part 807 of this chapter subject to the limitations in § 884.9. (b) Classification. Class II (special subject to the limitations in § 884.9. controls) (design specifications, labeling ■ 152. In § 884.5200, revise paragraph ■ requirements, and clinical testing). The 147. In § 884.2990, revise paragraph (b) introductory text to read as follows: (b) to read as follows: device, when it is a simple embryo § 884.5200 Hemorrhoid prevention incubator with only temperature, gas, § 884.2990 Breast lesion documentation pressure wedge. and humidity control; a syringe pump; system. * * * * * a collection tube warmer; a dish/plate/ * * * * * (b) Classification. Class II (special microscope stage warmer; or a (b) Classification. Class II (special controls). The device is exempt from the controlled-rate cryopreservation freezer, controls). The device, when it is a breast premarket notification procedures in is exempt from the premarket examination recording sheet, is exempt subpart E of part 807 of this chapter notification procedures in subpart E of from the premarket notification subject to the limitations in § 884.9. The part 807 of this chapter subject to the procedures in subpart E of part 807 of special controls for this device are: limitations in § 884.9. this chapter subject to the limitations in ■ * * * * * 158. In § 884.6130, revise paragraph § 884.9. The special control is FDA’s (b) to read as follows: guidance entitled ‘‘Class II Special ■ 153. In § 884.5390, revise paragraph Controls Guidance Document: Breast (b) to read as follows: § 884.6130 Assisted reproduction Lesion Documentation System.’’ See microtools. § 884.5390 Perineal heater. § 884.1(e) for the availability of this * * * * * guidance document. * * * * * (b) Classification. Class II (special (b) Classification. Class II (special ■ 148. In § 884.3200, revise paragraph controls) (mouse embryo assay controls). The device is exempt from the (b) to read as follows: information, endotoxin testing, premarket notification procedures in sterilization validation, design § 884.3200 Cervical drain. subpart E of part 807 of this chapter specifications, labeling requirements, * * * * * subject to the limitations in § 884.9. and clinical testing). The device, when (b) Classification. Class II (special ■ 154. In § 884.5400, revise paragraph the assisted reproduction microtools controls). The device is exempt from the (b) to read as follows: (pipettes) are manufactured from glass, premarket notification procedures in is exempt from the premarket § 884.5400 Menstrual cup. subpart E of part 807 of this chapter notification procedures in subpart E of subject to the limitations in § 884.9. * * * * * part 807 of this chapter subject to the ■ 149. In § 884.4400, revise paragraph (b) Classification. Class II (special limitations in § 884.9. (b) to read as follows: controls). The device is exempt from the ■ 159. In § 884.6150, revise paragraph premarket notification procedures in (b) to read as follows: § 884.4400 Obstetric forceps. subpart E of part 807 of this chapter * * * * * subject to the limitations in § 884.9. § 884.6150 Assisted reproduction (b) Classification. Class II (special ■ 155. In § 884.5425, revise paragraph micromanipulators and microinjectors. controls). The device is exempt from the (b)(2) to read as follows: * * * * * premarket notification procedures in (b) Classification. Class II (special subpart E of part 807 of this chapter § 884.5425 Scented or scented deodorized controls) (design specifications, labeling subject to the limitations in § 884.9. menstrual pad. requirements, and clinical testing). The ■ 150. In § 884.4530, revise paragraph * * * * * device is exempt from the premarket (b)(1) to read as follows: (b) * * * notification procedures in subpart E of (2) Class II (special controls) for part 807 of this chapter subject to the § 884.4530 Obstetric-gynecologic scented or scented deodorized limitations in § 884.9. specialized manual instrument. menstrual pads made of materials not ■ 160. In § 884.6160, revise paragraph * * * * * described in paragraph (b)(1). The (b) to read as follows: (b) * * * device is exempt from the premarket (1) Class II (special controls). The notification procedures in subpart E of § 884.6160 Assisted reproduction labware. device, when it is an umbilical clamp part 807 of this chapter subject to the * * * * * with or without a cutter, a uterine limitations in § 884.9. (b) Classification. Class II (special tenaculum which is sterile and does not ■ 156. In § 884.5435, revise paragraph controls) (mouse embryo assay use suction and is intended for single (b) to read as follows: information, endotoxin testing, use, a nonmetal vaginal speculum, or a sterilization validation, design fiberoptic nonmetal vaginal speculum, § 884.5435 Unscented menstrual pad. specifications, labeling requirements, is exempt from the premarket * * * * * and clinical testing). The device, when

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it is a dish or plate intended for general this chapter subject to the limitations in (b) Classification. Class II (special assisted reproduction technology § 886.9. controls). The device, when it is procedures, is exempt from the * * * * * phacofragmentation unit replacement premarket notification procedures in ■ 166. In § 886.1850, revise paragraph tubing, is exempt from the premarket subpart E of part 807 of this chapter (b) to read as follows: notification procedures in subpart E of subject to the limitations in § 884.9. part 807 of this chapter subject to the § 886.1850 AC-powered slitlamp limitations in § 886.9. PART 886—OPHTHALMIC DEVICES biomicroscope. ■ 171. In § 886.4250, revise paragraph * * * * * ■ (b) to read as follows: 161. The authority citation for part (b) Classification. Class II (special 886 continues to read as follows: controls). The device, when it is § 886.4250 Ophthalmic electrolysis unit. Authority: 21 U.S.C. 351, 360, 360c, 360e, intended only for the visual * * * * * 360j, 360l, 371. examination of the anterior segment of (b) Classification. (1) Class I (general the eye, is classified as Group 1 per controls) for the battery-powered device. ■ 162. In § 886.1120, revise paragraph FDA-recognized consensus standard The battery-powered device is exempt (b) to read as follows: ANSI Z80.36, does not provide any from the premarket notification § 886.1120 Ophthalmic camera. quantitative output, and is not intended procedures in subpart E of part 807 of * * * * * for screening or automated diagnostic this chapter subject to the limitations in (b) Classification. Class II (special indications, is exempt from the § 886.9. controls). The device, when it is a premarket notification procedures in (2) Class II (special controls) for the photorefractor or a general-use subpart E of part 807 of this chapter AC-powered device. The AC-powered ophthalmic camera, is exempt from the subject to the limitations in § 886.9. device is exempt from the premarket premarket notification procedures in ■ 167. In § 886.1945, revise paragraph notification procedures in subpart E of subpart E of part 807 of this chapter (b) to read as follows: part 807 of this chapter subject to the subject to the limitations in § 886.9. limitations in § 886.9. § 886.1945 Transilluminator. ■ 172. In § 886.4335, revise paragraph ■ 163. In § 886.1250, revise paragraph * * * * * (b) to read as follows: (b) to read as follows: (b) Classification. (1) Class I (general § 886.4335 Operating headlamp. § 886.1250 Euthyscope. controls) for the battery-powered device. * * * * * * * * * * The battery-powered device is exempt from the premarket notification (b) Classification. (1) Class I (general (b) Classification. (1) Class I (general procedures in subpart E of part 807 of controls) for the battery-powered device. controls) for the battery-powered device. this chapter subject to the limitations in The battery-powered device is exempt The battery-powered device is exempt § 886.9. from the premarket notification from the premarket notification (2) Class II (special controls) for the procedures in subpart E of part 807 of procedures in subpart E of part 807 of AC-powered device. The AC-powered this chapter subject to the limitations in this chapter subject to the limitations in device is exempt from the premarket § 886.9. § 886.9. notification procedures in subpart E of (2) Class II (special controls) for the (2) Class II (special controls) for the part 807 of this chapter subject to the AC-powered device. The AC-powered AC-powered device. The AC-powered limitations in § 886.9. device is exempt from the premarket device is exempt from the premarket ■ notification procedures in subpart E of notification procedures in subpart E of 168. In § 886.3320, revise paragraph (b) to read as follows: part 807 of this chapter subject to the part 807 of this chapter subject to the limitations in § 886.9. limitations in § 886.9. § 886.3320 Eye sphere implant. ■ 173. In § 886.4400, revise paragraph ■ 164. In § 886.1570, revise paragraph * * * * * (b) to read as follows: (b) to read as follows: (b) Classification. Class II (special § 886.4400 Electronic metal locator. § 886.1570 Ophthalmoscope. controls). The device, when it is an ocular peg which is supplied sterile * * * * * * * * * * only, is exempt from the premarket (b) Classification. Class II (special (b) Classification. Class II (special notification procedures in subpart E of controls). The device is exempt from the controls). The device, when it is an AC- part 807 of this chapter subject to the premarket notification procedures in powered opthalmoscope, a battery- limitations in § 886.9. subpart E of part 807 of this chapter powered opthalmoscope, or a hand-held ■ 169. In § 886.4070, revise paragraph subject to the limitations in § 886.9. ophthalmoscope replacement battery, is (b) to read as follows: ■ 174. In § 886.4440, revise paragraph exempt from the premarket notification (b) to read as follows: procedures in subpart E of part 807 of § 886.4070 Powered corneal burr. this chapter subject to the limitations in * * * * * § 886.4440 AC-powered magnet. § 886.9. (b) Classification. Class I (general * * * * * ■ 165. In § 886.1780, revise paragraph controls). The device is exempt from the (b) Classification. Class II (special (b)(1) to read as follows: premarket notification procedures in controls). The device is exempt from the subpart E of part 807 of this chapter premarket notification procedures in § 886.1780 Retinoscope. subject to the limitations in § 886.9. subpart E of part 807 of this chapter * * * * * ■ 170. In § 886.4150, revise paragraph subject to the limitations in § 886.9. (b) * * * (b) to read as follows: ■ 175. In § 886.4790, revise paragraph (1) Class II (special controls) for the (b) to read as follows: AC-powered device. The device is § 886.4150 Vitreous aspiration and cutting exempt from the premarket notification instrument. § 886.4790 Ophthalmic sponge. procedures in subpart E of part 807 of * * * * * * * * * *

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(b) Classification. Class II (special (b) Classification. Class II (special part 807 of this chapter subject to the controls). The device is exempt from the controls). The device is exempt from the limitations in § 892.9. premarket notification procedures in premarket notification procedures in ■ 189. In § 892.1560, revise paragraph subpart E of part 807 of this chapter subpart E of part 807 of this chapter (b) to read as follows: subject to the limitations in § 886.9. subject to the limitations in § 890.9. § 892.1560 Ultrasonic pulsed echo imaging ■ 183. In § 890.5250, revise paragraph PART 888—ORTHOPEDIC DEVICES system. (b) to read as follows: * * * * * ■ 176. The authority citation for part § 890.5250 Moist steam cabinet. (b) Classification. Class II (special 888 continues to read as follows: * * * * * controls). A biopsy needle guide kit Authority: 21 U.S.C. 351, 360, 360c, 360e, (b) Classification. Class II (special intended for use with an ultrasonic 360j, 360l, 371. controls). The device is exempt from the pulsed echo imaging system only is exempt from the premarket notification ■ premarket notification procedures in 177. In § 888.1240, revise paragraph procedures in subpart E of part 807 of (b) to read as follows: subpart E of part 807 of this chapter subject to the limitations in § 890.9. this chapter subject to the limitations in § 892.9. § 888.1240 AC-powered dynamometer. ■ 184. In § 890.5360, revise paragraph * * * * * (b) to read as follows: ■ 190. In § 892.1610, revise paragraph (b) Classification. Class II (special (b) to read as follows: § 890.5360 Measuring exercise equipment. controls). The device is exempt from the § 892.1610 Diagnostic x-ray beam-limiting premarket notification procedures in * * * * * device. subpart E of part 807 of this chapter (b) Classification. Class II (special controls). The device, when it is a * * * * * subject to the limitations in § 888.9. (b) Classification. Class II (special measuring exerciser, is exempt from the ■ 178. In § 888.4580, revise paragraph controls). The device is exempt from the premarket notification procedures in (b) to read as follows: premarket notification procedures in subpart E of part 807 of this chapter subpart E of part 807 of this chapter § 888.4580 Sonic surgical instrument and subject to the limitations in § 890.9. accessories/attachments. subject to the limitations in § 892.9. ■ 185. In § 890.5500, revise paragraph ■ 191. In § 892.1650, revise paragraph * * * * * (b) to read as follows: (b) Classification. Class II (special (b) to read as follows: § 890.5500 Infrared lamp. controls). The device is exempt from the § 892.1650 Image-intensified fluoroscopic premarket notification procedures in * * * * * x-ray system. subpart E of part 807 of this chapter (b) Classification. Class II (special * * * * * subject to the limitations in § 888.9. controls). The device, when it is an (b) Classification. Class II (special infrared therapeutic heating lamp, is controls). An anthrogram tray or PART 890—PHYSICAL MEDICINE exempt from the premarket notification DEVICES radiology dental tray intended for use procedures in subpart E of part 807 of with an image-intensified fluoroscopic this chapter subject to the limitations in ■ 179. The authority citation for part x-ray system only is exempt from the § 890.9. 890 continues to read as follows: premarket notification procedures in ■ 186. In § 890.5575, revise paragraph subpart E of part 807 of this chapter Authority: 21 U.S.C. 351, 360, 360c, 360e, (b) to read as follows: subject to the limitations in § 892.9. In 360j, 360l, 371. addition, when intended as an accessory ■ § 890.5575 Powered external limb overload 180. In § 890.1450, revise paragraph warning device. to the device described in paragraph (a) (b) to read as follows: of this section, the fluoroscopic * * * * * compression device is exempt from the § 890.1450 Powered reflex hammer. (b) Classification. Class II (special premarket notification procedures in * * * * * controls). The device is exempt from the subpart E of part 807 of this chapter (b) Classification. Class II (special premarket notification procedures in subject to the limitations in § 892.9. subpart E of part 807 of this chapter controls). The device is exempt from the ■ 192. In § 892.1670, revise paragraph subject to the limitations in § 890.9. premarket notification procedures in (b) to read as follows: subpart E of part 807 of this chapter subject to the limitations in § 890.9. PART 892—RADIOLOGY DEVICES § 892.1670 Spot-film device. ■ 181. In § 890.5100, revise paragraph ■ 187. The authority citation for part * * * * * (b) to read as follows: 892 continues to read as follows: (b) Classification. Class II (special controls). The device is exempt from the § 890.5100 Immersion hydrobath. Authority: 21 U.S.C. 351, 360, 360c, 360e, premarket notification procedures in * * * * * 360j, 360l, 371. subpart E of part 807 of this chapter (b) Classification. Class II (special ■ 188. In § 892.1000, revise paragraph subject to the limitations in § 892.9. controls). The device, when it is a (b) to read as follows: ■ 193. In § 892.1680, revise paragraph hydromassage bath or a powered sitz (b) to read as follows: bath, is exempt from the premarket § 892.1000 Magnetic resonance diagnostic notification procedures in subpart E of device. § 892.1680 Stationary x-ray system. part 807 of this chapter subject to the * * * * * * * * * * limitations in § 890.9. (b) Classification. Class II (special (b) Classification. Class II (special ■ 182. In § 890.5110, revise paragraph controls). A magnetic resonance imaging controls). A radiographic contrast tray (b) to read as follows: disposable kit intended for use with a or radiology diagnostic kit intended for magnetic resonance diagnostic device use with a stationary x-ray system only § 890.5110 Paraffin bath. only is exempt from the premarket is exempt from the premarket * * * * * notification procedures in subpart E of notification procedures in subpart E of

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part 807 of this chapter subject to the ■ 200. In § 892.2030, revise paragraph Defense Authorization Act for Fiscal limitations in § 892.9. (b) to read as follows: Year 2019 expanding patronage for ■ commissary, exchange, and revenue- 194. In § 892.1730, revise paragraph § 892.2030 Medical image digitizer. (b) to read as follows: generating morale, welfare, and * * * * * recreation (MWR) facilities. As part of § 892.1730 Photofluorographic x-ray (b) Classification. Class II (special DOD’s implementation the Department system. controls; voluntary standards—Digital is required to collect a user fee when * * * * * Imaging and Communications in these new populations utilize a credit or (b) Classification. Class II (special Medicine (DICOM) Std., Joint debit card that creates a cost to the controls). A discography kit intended Photographic Experts Group (JPEG) Department of the Treasury for for use with a photofluorographic x-ray Std.). The device is exempt from the processing these transactions. As it system only is exempt from the premarket notification procedures in related to this Section, such costs are premarket notification procedures in subpart E of part 807 of this chapter only generated by credit or debit card subpart E of part 807 of this chapter subject to the limitations in § 892.9. transactions at Defense Commissary subject to the limitations in § 892.9. ■ 201. In § 892.2040, revise paragraph Agency (DeCA) facilities. ■ 195. In § 892.1820, revise paragraph (b) to read as follows: DATES: Effective date: This interim final (b) to read as follows: § 892.2040 Medical image hardcopy rule is effective on December 30, 2019. § 892.1820 Pneumoencephalographic device. Comment date: Comments will be chair. * * * * * received by February 28, 2020. * * * * * (b) Classification. Class II (special Applicability date: Per the deadline in (b) Classification. Class II (special controls; voluntary standards—Digital the statute and as implemented in this controls). The device is exempt from the Imaging and Communications in rule, these user fees go into effect on premarket notification procedures in Medicine (DICOM) Std., Joint January 1, 2020. subpart E of part 807 of this chapter Photographic Experts Group (JPEG) Std., ADDRESSES: You may submit comments, subject to the limitations in § 892.9. Society of Motion Picture and identified by docket number and or ■ 196. In § 892.1850, revise paragraph Television Engineers (SMPTE) Test Regulatory Information Number (RIN) (b) to read as follows: Pattern). The device is exempt from the and title, by any of the following premarket notification procedures in methods: § 892.1850 Radiographic film cassette. subpart E of part 807 of this chapter • Federal Rulemaking Portal: http:// * * * * * subject to the limitations in § 892.9. www.regulations.gov. Follow the (b) Classification. Class II (special ■ 202. In § 892.5730, revise paragraph instructions for submitting comments. controls). The device is exempt from the (b) to read as follows: • Mail: Department of Defense, Office premarket notification procedures in of the Chief Management Officer, subpart E of part 807 of this chapter § 892.5730 Radionuclide brachytherapy Directorate for Oversight and subject to the limitations in § 892.9. source. Compliance, 4800 Mark Center Drive, ■ 197. In § 892.1860, revise paragraph * * * * * Mailbox #24, Suite 08D09, Alexandria, (b) to read as follows: (b) Classification. Class II (special VA 22350–1700. controls). A prostate seeding kit Instructions: All submissions received § 892.1860 Radiographic film/cassette intended for use with a radionuclide must include the agency name and changer. brachytherapy source only is exempt docket number or RIN. The general * * * * * from the premarket notification policy for comments and other (b) Classification. Class II (special procedures in subpart E of part 807 of submissions from members of the public controls). The device is exempt from the this chapter subject to the limitations in is to make these submissions available premarket notification procedures in § 892.9. at http://www.regulations.gov as they subpart E of part 807 of this chapter Dated: December 13, 2019. are received without change, including subject to the limitations in § 892.9. Lowell J. Schiller, any personal identifiers or contact ■ 198. In § 892.1870, revise paragraph Principal Associate Commissioner for Policy. information. (b) to read as follows: [FR Doc. 2019–27394 Filed 12–27–19; 8:45 am] FOR FURTHER INFORMATION CONTACT: Jane § 892.1870 Radiographic film/cassette BILLING CODE 4164–01–P Westbay, (571) 372–6579, changer programmer. [email protected]. * * * * * SUPPLEMENTARY INFORMATION: DEPARTMENT OF DEFENSE (b) Classification. Class II (special Summary of New and Amendatory controls). The device is exempt from the Office of the Secretary Regulatory Provisions and Their premarket notification procedures in Impact subpart E of part 807 of this chapter subject to the limitations in § 892.9. 32 CFR Part 225 This rule implements Section 621 of ■ 199. In § 892.1900, revise paragraph [Docket ID: DOD–2019–OS–0131] the John S. McCain National Defense (b) to read as follows: Authorization Act for Fiscal Year 2019 RIN 0790–AK92 (Purple Heart and Disabled Veterans § 892.1900 Automatic radiographic film Equal Access Act of 2018), codified at Commissary Credit and Debit Card processor. Section 1065 of Title 10, United States User Fee * * * * * Code. Section 621 expands patronage (b) Classification. Class II (special AGENCY: Department of Defense (DoD). for commissary, exchange, and revenue- controls). The device is exempt from the ACTION: Interim final rule. generating morale, welfare, and premarket notification procedures in recreation (MWR) facilities. By January subpart E of part 807 of this chapter SUMMARY: This rule implements Section 1, 2020, the Department of Defense is subject to the limitations in § 892.9. 621 of the John S. McCain National directed to:

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• Extend commissary and MWR processing these cards is negligible (0.01 In line with supermarket industry facility privileges, including exchange, percent) and does not merit imposition statistics available at https:// military MWR recreation lodging, and of a user fee under the requirements of www.creditcards.com/credit-card-news/ other revenue-generating MWR this legislation. This user fee will also payment-method-statistics-1276.php, facilities, on the same basis as a member not apply to cash, personal check, or the Department expects 85 percent of of the armed forces entitled to retired or MILITARY STAR card transactions as these new shoppers (1,045,500 shoppers retainer pay. Section 621 applies to these forms of payment do not = 1.23 million × 85%) to pay for their veterans who contribute to the expenses of the purchases with credit or debit cards, • were awarded the Purple Heart. Treasury for processing card causing an increase in processing costs • are Medal of Honor recipients. transactions. • to the Treasury. Of the 1.23 million are former prisoners of war. In addition to this rule, a expected users, 23 percent are expected • have a Department of Veterans corresponding internal policy, to pay with credit cards (282,900 credit Affairs-documented service-connected ‘‘Expansion of Patronage for Certain card users = 1.23 million × 23%) and 62 disability rating. • Veterans and Certain Caregivers for percent are expected to pay with debit Impose a user fee on individuals Veterans,’’ will be available at: https:// who are eligible solely under the statute cards (762,600 debit card users = 1.23 www.esd.whs.mil/DD/. × to cover any increase in expenses borne million 62%). Card network rules by the Department of Treasury Expected Impact of the Interim Rule prevent charging fees in amounts greater than the average cost to process (Treasury) on behalf of commissary As part of the implementation plan stores for processing credit or debit transactions, so the Department, in for program expansion, DoD performed conjunction with the Treasury, analyzed cards for payment. an impact assessment to identify • Deposit commissary credit/debit current processing costs for commissary potential high volume locations based credit and debit card transactions to card user fees collected in the General on veteran density and general cost of determine the initial fees (see Table 1— Fund of the Treasury. living. As part of the Department’s • Provide briefing to the Committees DECA Payment Card Processing assessment, DoD gathered veteran data on Armed Services of the Senate and Summary). Rather than charging a from VA National Center for Veterans House of Representatives on the plan to different rate for every brand of credit or Analysis, the VA Office of the Actuary, implement Section 1065 of Title 10, no debit card used, the Department, in the DoD Office of the Actuary, U.S. later than October 1, 2019. conjunction with the Treasury, opted to Census Bureau, Defense Manpower Data Section 621 also applies to caregivers set one rate for credit and signature Center, Defense Commissary Agency, and family caregivers for veterans as debit cards (which are processed like and Military Service exchanges. The defined in Section 1720G of Title 38, credit cards) and a different fee for U.S.C. Department found a higher impact at locations with a high veterans density personal identification number (PIN) Background and Legal Basis for This (e.g., San Antonio, Tampa, San Diego) as debit cards. If the Department had opted Rule well as a higher impact at locations with to charge only one fee, then the lowest average card rate that could be used This rule implements a patronage a high cost of living (e.g., Hawaii, Alaska, Puerto Rico, Guam, San would have been the rate for PIN debit expansion pursuant to 10 U.S.C. 1065 as cards (0.51 percent), which would not modified by Section 621 of the John S. Francisco Bay Area, New York City). As such, these locations are informed and have recovered a significant portion of McCain National Defense Authorization the Treasury’s processing costs. The Act for Fiscal Year 2019. This Section’s preparing for the new volume of usage. The Department found many credit card fee was set at the lowest provisions apply when using a credit or average rate of all of the credit card debit card to pay for commissary conditions impact patronage including the following factors. brands (1.9 percent), and the debit card purchases. As card network rules place fee was set just below the average debit limitations on the user fees that can be • Time, distance, and effort to access installations. card rate (0.5 percent). On an average set for credit cards and debit cards, the basket of groceries from the commissary Department has elected to set user fees • Time and distance from VA medical ($66), credit card users would pay $1.25 as a flat rate at or below the current facilities (farther = less likely to obtain ($66 × 1.9%) and debit card users would average cost to the Treasury to process a Veteran Health Identification Card that pay $0.33 ($66 × 0.5%). If each new user credit cards and debit cards. Initially, would facilitate installation and shopped four times per month, credit and in consultation with the card shopping access). card users would pay approximately processing operations of the Treasury, • Personal mobility/transportation. $60 annually in fees ($1.25 × 4 × 12) and the initial rate established by the • Personal financial circumstances. debit card users would pay Department will be 1.9 percent of an • Local economic conditions. approximately $15.84 annually in fees individual’s total sales amount for the • Off-installation and online ($0.33 × 4 × 12). Total amounts collected use of a credit card, and 0.5 percent of shopping competition. for the credit and debit card user fee an individual’s total sales amount for • Established shopping habits and would be $29,053,584 (($60 × 282,900) the use of a debit card. On a periodic brand loyalty. × basis, the Department plans to review • Eligibility of the primary shopper + ($15.84 762,600)). with Treasury actual costs incurred by for the household. Even with this user fee, these newly- the Treasury on credit card and debit Based on DoD’s current user eligible commissary shoppers will enjoy card use by individuals who are eligible patronage, the proximity of these new an average overall grocery basket solely under the statute and adjust users to military installations, and savings of over 20 percent compared to corresponding user fees as necessary. established shopping patterns, the commercial grocery stores. Commissary User fees will not be imposed on the use Department expects only 30 percent of stores are required to deliver an average of electronic benefit transfer (EBT) cards the 4.1 million newly eligible users worldwide savings of 23.7 percent over like the Supplemental Nutrition (1.23 million actual users = 4.1 million commercial grocery stores, so imposing Assistance Program or the Women, × 30%) to shop at DoD commissary a 0.5 to 1.9 percent user fee on Infant, and Children as the rate for stores. commercial debit and credit card

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purchases still nets a 23.2 to 22.8 by the Treasury for the new patron card type/network, sales per transaction percent overall savings to the consumer. groups. The following data elements for (‘ticket value’’), cost per transaction, and The Department of the Treasury, DeCA FY2018 were captured: cost per $1 in sales. These data elements Bureau of the Fiscal Service administers Transaction count and sales volumes by for DeCA’s FY2018 payment card the Card Acquiring Service (CAS) and all card types (i.e., credit, debit, EBT/ activity are disclosed in the table below. evaluated DeCA’s FY2018 payment card WIC); volume breakout by card brand/ For each card type/network, the data usage (the most recent annual period at network within credit volumes (i.e., was used to calculate an ‘‘effective the time of the request) as the best American Express, Discover, rate,’’ which approximates the related available proxy for projecting card MasterCard, and Visa); and average per processing costs borne by the Treasury. processing costs that would be incurred

TABLE 1—DECA PAYMENT CARD PROCESSING SUMMARY FY2018

% of net sales Avg . ticket Avg. cost per Avg. cost per Card type/network % of net sales amount Effective rate value tran dollar

EBT ...... 0.96 1.25 0.01 $85 $0.01 $0.0001 PIN ...... 56.09 55.15 0.51 65 0.33 0.0051 Amex ...... 4.63 4.90 1.90 70 1.44 0.0207 Discover ...... 1.30 1.51 2.40 76 1.82 0.0240 Visa ...... 31.97 31.74 1.91 65 1.24 0.0191 MasterCard ...... 5.05 5.46 1.93 71 1.37 0.0193

100 100 1.13 66 0.74 0.0113

Waiver of Proposed Rulemaking Homeland Security (Coast Guard) and outcome would be contrary to the public interest. DoD is issuing this rulemaking as an the Treasury; to communicate with interim final rule and has determined potential new patrons about eligibility, For these reasons, DoD has that, under the Administrative access, and authorized facilities; and determined that the public notice and Procedure Act (APA), 5 U.S.C. development of outreach content to participation that the APA ordinarily 553(b)(B), it would be impracticable, include handouts, news releases, fact requires would, in this case, be unnecessary, and contrary to the public sheets, and blog and social media impracticable, unnecessary, and interest to delay a final regulation until content. contrary to the public interest and that a public notice and comment process In addition, it is unnecessary as it is good cause exists for waiving proposed has been completed. a lost opportunity to expand patronage rulemaking and delaying its solicitation The conclusion of a public notice and by the effective date of January 1, 2020. of comments from the public until after comment period before the rule is Missing this date would result in it issues an interim final rule. DoD will finalized would be impracticable confusion to the affected population. consider those comments received upon because it would impede due and Not collecting the fee from January 1st its interim final rulemaking in a timely execution of DoD’s function to would lead to a shortage in subsequent final rule. provide patronage to these new groups. reimbursement to the Treasury for the Executive Order 12866, ‘‘Regulatory Since the NDAA was signed August 13, additional expense incurred for Planning and Review’’ and Executive 2018, DOD and the Department of processing credit and debit card Order 13563, ‘‘Improving Regulation Treasury have worked in coordination transactions made by these new users. and Regulatory Review’’ on a number of actions necessary to DoD is required to collect this fee implement the law. Before DoD could specifically to reimburse the Treasury Executive Orders 13556 and 12866 begin any rulemaking implementation, for the additional expenses incurred for direct agencies to assess all costs and an impact assessment requiring data processing credit and debit cards used benefits of available regulatory from VA, Commerce, and other agencies by this population. The Department has alternatives and, if regulation is as well on ongoing discussions with the no way to collect the fee retroactively. necessary, to select regulatory Department of the Treasury needed to If the Department does not begin approaches that maximize net benefits be completed. This has left DoD with collecting the fee on January 1, new (including potential economic, insufficient time to prepare and patrons could only pay for their environmental, public health and safety complete a full public notice and commissary purchases by cash, check, effects, distribute impacts, and equity). comment rulemaking proceeding and to electronic benefit transfer (EBT) card, Executive Order 13563 emphasizes the timely complete a final rule before the MILITARY STAR card, or other form of importance of quantifying both costs statutory start date of January 1, 2020. payment that does not cause a cost to and benefits, of reducing costs, of To the extent that an NPRM would the Treasury. This would be difficult for harmonizing rules, and of promoting furnish general public information for DoD to enforce as supermarket shopper flexibility. This rule is not a significant the intended new audiences, it is behavior statistics available at https:// regulatory action under section 3(f) of unnecessary in light of the extensive www.creditcards.com/credit-card-news/ Executive Order 12866. outreach already undertaken by DoD, payment-method-statistics-1276.php Executive Order 13771, ‘‘Reducing which provided more specific and more reveal that 85 percent of shoppers pay Regulation and Controlling Regulatory detailed notice to these affected for grocery purchases with credit and Costs’’ beneficiaries than an NPRM would debit cards. Imposing a cash or check- provide. Outreach included identifying only policy for these new patron groups This rule is not expected to be an E.O. the eligible population; joint efforts with would create an unrealistic and unfair 13771 action, because it is not Departments of Veterans Affairs, condition for these shoppers. This significant under E.O. 12866.

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Public Law 96–354, ‘‘Regulatory 225.2 Applicability. caregiver or family caregiver for a Flexibility Act’’ (5 U.S.C. 601) 225.3 Definitions. veteran. 225.4 Policy. The Department of Defense certifies 225.5 Responsibilities. § 225.5 Responsibilities. that this interim final rule is not subject 225.6 Procedures. to the Regulatory Flexibility Act (5 DIRECTOR, DeCA. Under the Authority: 10 U.S.C. 1065 U.S.C. 601) because it would not, if authority, direction, and control of the promulgated, have a significant § 225.1 Purpose. Under Secretary of Defense for Personnel and Readiness through the economic impact on a substantial This part establishes policy, assigns Assistant Secretary of Defense for number of small entities. Therefore, the responsibilities, and provides Manpower and Reserve Affairs, the Regulatory Flexibility Act, as amended, procedures for the implementation of Director, DeCA: does not require us to prepare a patronage expansion pursuant to 10 regulatory flexibility analysis. U.S.C. 1065. (a) Establishes processes and updates Congressional Review Act systems necessary to collect and deposit § 225.2 Applicability. with U.S. Treasury, user fees related to The Congressional Review Act, 5 This part applies to veterans who are commercial debit/credit card use in U.S.C. 801 et seq., as amended by the Purple Heart recipients, veterans who commissaries in accordance with Small Business Regulatory Enforcement are former prisoners of war, veterans section 225.6 of this part. Fairness Act of 1996, generally provides who have a Department of Veterans (b) Implements commissary credit/ that before a rule may take effect, the Affairs-documented service-connected debit card user fee requirements. agency promulgating the rule must disability rating between 0–90 percent, submit a rule report, which includes a and individuals approved and § 225.6 Procedures. copy of the rule, to each House of the designated as the caregiver or family (a) Commissary Credit/Debit Card Congress and to the Comptroller General caregiver of an eligible veteran under a User Fee. (1) Only patrons of groups of the United States. DoD will submit a formalized Department of Veterans newly authorized privileges by this part report containing this rule and other Affairs caregiver program (as of January must pay a user fee when using a credit required information to the U.S. Senate, 1, 2020, authorized caregivers are the or debit card to pay for commissary the U.S. House of Representatives, and primary family caregiver of an eligible purchases to offset additional costs the Comptroller General of the United veteran under the Program of charged to the U.S. Treasury associated States. This interim final rule is not a Comprehensive Assistance for Family with credit or debit card use. ‘‘major rule’’ as defined by 5 U.S.C. Caregivers). 804(2). (2) The user fee will be set as a § 225.3 Definitions. transaction-based flat rate, calculated Sec. 202, Public Law 104–4, ‘‘Unfunded Unless otherwise noted, these terms within a range of the average annual Mandates Reform Act’’ and their definitions are for the purpose rates of credit and debit card transaction This interim final rule will not of this part. costs incurred by the Department of mandate any requirements for State, Caregiver. Defined in 38 U.S.C. Treasury on behalf of DeCA and in local, or tribal governments, nor will 1720G(d) compliance with applicable card affect private sector costs. Family Caregiver. Defined in 38 network rules. One rate will be set for Public Law 96–511, ‘‘Paperwork U.S.C. 1720G(d) credit and signature debit card Reduction Act’’ (44 U.S.C. Chapter 35) Former POW. Defined in 38 U.S.C. transactions, which are processed as 101 credit cards. Another rate will be set for It has been determined that 32 CFR Service-connected. Defined in 38 personal identification number debit part 225 does not impose reporting or U.S.C. 101 card transactions. These rates will be recordkeeping requirements under the Veteran. Defined in 38 U.S.C. 101 reviewed annually and adjustments may Paperwork Reduction Act of 1995. be made as necessary to meet the § 225.4 Policy. Executive Order 13132, ‘‘Federalism’’ requirements of 10 U.S.C. 1065. In accordance with 10 U.S.C. 1065, Executive Order 13132 establishes (3) Purchases made with electronic the following new patron groups are benefit transfer cards (e.g., Women, certain requirements that an agency authorized access to DoD commissary, must meet when it promulgates a Infants, and Children or Supplemental exchange, and morale, welfare, and Nutrition Assistance Program) and the proposed rule (and subsequent final recreation (MWR) revenue generating rule) that imposes substantial direct MILITARY STAR card are not subject to activities on the same basis as a member this credit/debit card user fee. requirement costs on State and local of the Military Services entitled to governments, preempts State law, or retired or retainer pay, effective January (4) No user fee reimbursement will be otherwise has Federalism implications. 1, 2020: made on customer return of This interim final rule will not have a (a) Veterans who were awarded the merchandise. substantial effect on State and local Purple Heart. (5) All credit/debit card user fee governments. (b) Veterans who are former prisoners amounts collected in commissary stores List of Subjects in 32 CFR Part 225 of war (POWs). will be deposited in the General Fund (c) Veterans classified by the of the Treasury. Commissary, Credit, Debit, User fee. Department of Veterans Affairs (VA) as (b) [Reserved] ■ Accordingly 32 CFR Part 225 is added having a service-connected disability to read as follows: rating below 100 percent. Dated: December 20, 2019. (d) Caregivers or family caregivers for Aaron T. Siegel, PART 225—Commissary Credit and veterans under the VA caregiver Alternate OSD Federal Register Liaison Debit Card User Fee program. These caregivers are only Officer, Department of Defense. Sec. eligible for these privileges during their [FR Doc. 2019–28018 Filed 12–27–19; 8:45 am] 225.1 Purpose. period of active enrollment as the BILLING CODE 5001–06–P

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DEPARTMENT OF HOMELAND to vessels and swimmers in the area. A. Regulatory Planning and Review SECURITY Coast Guard action is needed to restrict vessel movement prior to and after Executive Orders 12866 and 13563 Coast Guard Seafair events where significant marine direct agencies to assess the costs and traffic endanger the safety of swimmers benefits of available regulatory 33 CFR Part 165 and vessels proximate to the log boom. alternatives and, if regulation is necessary, to select regulatory [Docket Number USCG–2019–0296] In response, on May 28, 2019, the approaches that maximize net benefits. Coast Guard published a notice of RIN 1625–AA11 Executive Order 13771 directs agencies proposed rulemaking (NPRM) titled to control regulatory costs through a Regulated Navigation Area; Lake Regulated Navigation Area; Lake budgeting process. This NPRM has not Washington, Seattle, WA Washington, Seattle, WA 84 FR 24418. been designated a ‘‘significant There we stated why we issued the regulatory action,’’ under Executive AGENCY: Coast Guard, DHS. NPRM, and invited comments on our Order 12866. Accordingly, the NPRM ACTION: Final rule. proposed regulatory action related to has not been reviewed by the Office of this regulated navigation area. During Management and Budget (OMB), and SUMMARY: The Coast Guard is proposing the comment period that ended June 27, pursuant to OMB guidance it is exempt to establish a permanent regulated 2019, we received no comments. from the requirements of Executive navigation area for certain waters of Order 13771. Lake Washington. The regulated III. Legal Authority and Need for Rule navigation area is intended to protect This regulatory action determination The Coast Guard is issuing this rule is based on the size, location, duration personnel and vessels from potential under authority in 46 U.S.C. 70034 hazards created by excessive vessel and time-of-day of the regulated (previously 33 U.S.C. 1231). The Coast navigation area. Vessel traffic will be wake prior to and following high traffic Guard Thirteenth District Commander Seafair events. able to transit through the regulated has determined that there are potential navigation area, and the regulation will DATES: This rule is effective January 29, hazards associated with Seafair only impact a small designated area of 2020. activities, which usually occur on Lake Lake Washington for less than four days. ADDRESSES: To view documents Washington during the last week of July Moreover, the Coast Guard will issue a mentioned in this preamble as being and the first two weeks of August. The Broadcast Notice to Mariners via VHF– available in the docket, go to https:// purpose of this rule is to ensure safety FM marine channel 16 about the www.regulations.gov, type USCG–2019– of vessels and the navigable waters in regulated navigation area. 0296 in the ‘‘SEARCH’’ box and click the regulated navigation area prior to ‘‘SEARCH.’’ Click on Open Docket and after Seafair activities. B. Impact on Small Entities Folder on the line associated with this IV. Discussion of Comments, Changes The Regulatory Flexibility Act of rule. and the Rule 1980, 5 U.S.C. 601–612, as amended, FOR FURTHER INFORMATION CONTACT: If requires Federal agencies to consider you have questions on this rule, call or As noted above, we received no the potential impact of regulations on email Lieutenant Ellie Wu, Sector Puget comments on our NPRM published May small entities during rulemaking. The Sound Waterways Management, Coast 28, 2019. There are no changes in the term ‘‘small entities’’ comprises small Guard; telephone 206–217–6051, regulatory text of this rule from the businesses, not-for-profit organizations [email protected]. proposed rule in the NPRM. that are independently owned and SUPPLEMENTARY INFORMATION: The regulated navigation area will operated and are not dominant in their fields, and governmental jurisdictions I. Table of Abbreviations cover all navigable waters within Lake Washington south of the Interstate 90 with populations of less than 50,000. CFR Code of Federal Regulations floating Bridge and north of a line The Coast Guard received no comments DHS Department of Homeland Security between Bailey Peninsula and Mercer from the Small Business Administration FR Federal Register Island. The duration of the regulated on this rulemaking. The Coast Guard NPRM Notice of proposed rulemaking navigation area is intended to protect certifies under 5 U.S.C. 605(b) that this § Section rule will not have a significant U.S.C. United States Code personnel and vessels in these navigable waters from excessive wake associated economic impact on a substantial II. Background Information and with vessels before and after high traffic number of small entities. Regulatory History Seafair events. Vessels transiting the While some owners or operators of The Coast Guard was notified by the area will be required to create minimum vessels intending to transit the regulated Mercer Island Police Department of wake, at speeds of 7 miles per hour or navigation area may be small entities, hazardous conditions associated with less, unless a higher minimum speed is for the reasons stated in section IV.A increased vessel and swimmer necessary to maintain bare steerageway. above, this rule will not have a congestion after high traffic Seafair Enforcement periods for this rule will significant economic impact on any marine events, which can make routine occur daily prior to and immediately vessel owner or operator. navigation for persons and vessels following Seafair events. Under section 213(a) of the Small unsafe. The Seafair event draws an V. Regulatory Analyses Business Regulatory Enforcement extraordinary amount of boaters and Fairness Act of 1996 (Public Law 104– persons to the waterway to observe We developed this rule after 121), we want to assist small entities in several high traffic events, such as the considering numerous statutes and understanding this rule. If the rule Seafair Hydroplane Races and Seafair Executive orders related to rulemaking. would affect your small business, Air Shows. The wakes created by Below we summarize our analyses organization, or governmental transiting vessels near the vicinity of based on a number of these statutes and jurisdiction and you have questions vessels moored to the log boom during Executive orders, and we discuss First concerning its provisions or options for high traffic events pose a safety concern Amendment rights of protestors. compliance, please contact the person

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listed in the FOR FURTHER INFORMATION would not result in such an 90 Floating West Bound Bridge and CONTACT section. expenditure, we do discuss the effects of north of the points between Bailey Small businesses may send comments this rule elsewhere in this preamble. Peninsula at 47°33′14.4″ N, 122°14′47.3″ on the actions of Federal employees W and Mercer Island at 47°33′24.5″ N, F. Environment who enforce, or otherwise determine 122°13′52.5″ W. compliance with, Federal regulations to We have analyzed this rule under (b) Definitions. As used in this the Small Business and Agriculture Department of Homeland Security section, designated representative Regulatory Enforcement Ombudsman Directive 023–01 and Environmental means a Coast Guard Patrol and the Regional Small Business Planning COMDTINST 5090.1 (series), Commander, including a Coast Guard Regulatory Fairness Boards. The which guide the Coast Guard in coxswain, petty officer, or other officer Ombudsman evaluates these actions complying with the National operating a Coast Guard vessel and a annually and rates each agency’s Environmental Policy Act of 1969(42 Federal, State, and local officer responsiveness to small business. If you U.S.C. 4321–4370f), and have designated by or assisting the Captain of wish to comment on actions by determined that this action is one of a the Port Puget Sound (COTP) in the employees of the Coast Guard, call 1– category of actions that do not enforcement of the regulated navigation 888–REG–FAIR (1–888–734–3247). The individually or cumulatively have a zone. Coast Guard will not retaliate against significant effect on the human (c) Regulations. All vessels and small entities that question or complain environment. This rule involves a persons transiting the regulated about this rule or any policy or action regulated navigation area enforced navigation area described in paragraph of the Coast Guard. annually for a total of less than 4 days (a) of this section must proceed at a that would restrict vessel speed. It is C. Collection of Information speed which creates minimum wake, 7 categorically excluded from further miles per hour or less, unless a higher This rule will not call for a new review under paragraph L60(a) in Table minimum speed is necessary to collection of information under the 3–1 of U.S. Coast Guard Environmental maintain bare steerageway. Paperwork Reduction Act of 1995 (44 Planning Implementing Procedures (d) Enforcement periods. This section U.S.C. 3501–3520). 5090.1. A Record of Environmental will be enforced annually immediately D. Federalism and Indian Tribal Consideration supporting this before and after Seafair events which Governments determination is available in the docket usually occurs during the last week in where indicated under ADDRESSES. July and the first two weeks of August. A rule has implications for federalism The event will be one week or less in under Executive Order 13132, G. Protest Activities duration and the specific dates and Federalism, if it has a substantial direct The Coast Guard respects the First times of the enforcement periods will be effect on the States, on the relationship Amendment rights of protesters. published in a notice of enforcement in between the national government and Protesters are asked to contact the the Federal Register. the States, or on the distribution of person listed in the FOR FURTHER Dated: September 26, 2019. power and responsibilities among the INFORMATION CONTACT section to various levels of government. We have coordinate protest activities so that your A.J. Vogt, analyzed this rule under that Order and message can be received without RADM, U.S. Coast Guard, Commander, have determined that it is consistent jeopardizing the safety or security of Thirteenth Coast Guard District. with the fundamental federalism people, places, or vessels. [FR Doc. 2019–27985 Filed 12–27–19; 8:45 am] principles and preemption requirements BILLING CODE 9110–04–P described in Executive Order 13132. List of Subjects in 33 CFR Part 165 Also, this rule does not have tribal Harbors, Marine safety, Navigation implications under Executive Order (water), Reporting and recordkeeping ENVIRONMENTAL PROTECTION 13175, Consultation and Coordination requirements, Security measures, AGENCY with Indian Tribal Governments, Waterways. because it would not have a substantial For the reasons discussed in the 40 CFR Part 52 direct effect on one or more Indian preamble, the Coast Guard amends 33 tribes, on the relationship between the [EPA–R09–OAR–2019–0165; FRL–10002– CFR part 165 as follows: 05–Region 9] Federal Government and Indian tribes, or on the distribution of power and PART 165—REGULATED NAVIGATION Air Plan Approval; California; Yolo- responsibilities between the Federal AREAS AND LIMITED ACCESS AREAS Solano Air Quality Management Government and Indian tribes. If you District; Stationary Source Permits believe this rule has implications for ■ 1. The authority citation for part 165 federalism or Indian tribes, please continues to read as follows: AGENCY: Environmental Protection contact the person listed in the FOR Authority: 46 U.S.C. 70034, 70051; 33 CFR Agency (EPA). FURTHER INFORMATION CONTACT section. 1.05–1, 6.04–1, 6.04–6, and 160.5; ACTION: Final rule. E. Unfunded Mandates Reform Act Department of Homeland Security Delegation No. 0170.1. SUMMARY: The Environmental Protection The Unfunded Mandates Reform Act ■ 2. Add § 165.1341 before the Agency (EPA) is finalizing action on a of 1995 (2 U.S.C. 1531–1538) requires undesignated center heading revision to the Yolo-Solano Air Quality Federal agencies to assess the effects of ‘‘Fourteenth Coast Guard District’’ to Management District (YSAQMD or ‘‘the their discretionary regulatory actions. In read as follows: District’’) portion of the California State particular, the Act addresses actions Implementation Plan (SIP) to approve a that may result in the expenditure by a § 165. 1341 Regulated Navigation Area; rule governing issuance of permits for State, local, or tribal government, in the Lake Washington, Seattle, WA. stationary sources emitting fine aggregate, or by the private sector of (a) Location. The following area is a particulate matter (PM2.5) and PM2.5 $100,000,000 (adjusted for inflation) or regulated navigation area: All waters of precursors, including review and more in any one year. Though this rule Lake Washington south of the Interstate permitting of major sources and major

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modifications under part D of title I of Information (CBI) or other information SUPPLEMENTARY INFORMATION: the Clean Air Act (CAA or ‘‘the Act’’). whose disclosure is restricted by statute. Throughout this document, the terms Specifically, the approval pertains to Certain other material, such as ‘‘we,’’ ‘‘us,’’ and ‘‘our’’ refer to the EPA. YSAQMD Rule 3.25, ‘‘Federal New copyrighted material, is not placed on Table of Contents Source Review for New and Modified the internet and will be publicly Major PM2.5 Sources.’’ available only in hard copy form. I. Proposed Action Publicly available docket materials are II. Public Comments and EPA Responses DATES: This rule is effective on January available through https:// III. EPA Action 29, 2020. www.regulations.gov, or please contact IV. Incorporation by Reference ADDRESSES: The EPA has established a the person identified in the FOR FURTHER V. Statutory and Executive Order Reviews docket for this action under Docket ID INFORMATION CONTACT section for I. Proposed Action No. EPA–R09–OAR–2019–0165. All additional availability information. documents in the docket are listed on FOR FURTHER INFORMATION CONTACT: On July 11, 2019 (84 FR 33030), the the https://www.regulations.gov Margaret Waldon, EPA Region IX, 75 EPA proposed to fully approve the website. Although listed in the index, Hawthorne St., San Francisco, CA following rule that was submitted for some information is not publicly 94105. By phone: (415) 972–3987 or by incorporation in the YSAQMD portion available, e.g., Confidential Business email at [email protected]. of the California SIP.

TABLE 1 SUBMITTED RULE

Rule No. Rule title Amended Submitted

3.25 ...... Federal New Source Review for New and Modified Major PM2.5 Sources ...... 05/15/19 06/04/19

We proposed approval of this rule 3.25’s definition of ‘‘significant’’ is part to regulate NOX (and volatile organic because we determined that the rule of the evaluation of whether a project compounds) as an ozone precursor.3 meets the statutory requirements for SIP will increase emissions of PM2.5 and/or And, because Rule 3.4 contains the revisions as specified in section 110(l) PM2.5 precursors beyond specified EPA’s requirements for ozone of the CAA, as well as the substantive thresholds, thereby triggering nonattainment areas classified as severe, statutory and regulatory requirements requirements applicable to ‘‘major Rule 3.4 regulates NOX as an ozone found in CAA sections 110(a)(2), 172, modifications,’’ such as those for precursor at lower applicability 173, and 189(e), and 40 CFR 51.160– pollution controls and offsets. In thresholds and higher offset ratios than 51.165. considering the comment, we reviewed the EPA’s requirements for NOX as a YSAQMD’s SIP-approved permitting II. Public Comments and EPA PM2.5 precursor that apply in PM2.5 rules to determine whether there might Responses nonattainment areas classified as be a mechanism other than Rule 3.25 moderate (such as the PM2.5 We received one (1) comment from that properly regulates increases of NOX nonattainment area regulated by the Center for Biological Diversity emissions resulting from physical or YSAQMD). In other words, Rule 3.4 regarding our proposed approval of Rule operational changes at a stationary regulates NOX more stringently than the 3.25 into the Yolo-Solano AQMD source. We found that SIP-approved EPA’s regulations or Rule 3.25 regulate portion of the California SIP. The YSAQMD Rule 3.4, ‘‘New Source NOX as a PM2.5 precursor. We provide commenter stated that the definition of Review,’’ provides such a mechanism. additional explanation below regarding the term ‘‘significant’’ found in The EPA approved Rule 3.4, which Rule 3.4’s regulation of NOX as a YSAQMD’s Rule 3.25, section 212.3, is implements permitting requirements for precursor to PM2.5, consistent with inconsistent with the significant new and modified stationary sources, federal requirements. emissions rate found in 40 CFR 1 into the California SIP in 1997. As part First, we note that Rule 3.4’s 51.165(a)(1)(x)(A). The commenter of its approval of Rule 3.4, the EPA definition of ‘‘major stationary source’’ stated that section 212.3 incorrectly determined that the rule meets all specifies a threshold of 25 tons per year defines a significant emission rate for federal requirements for nonattainment (tpy) for NO emissions, whereas the nitrogen dioxide (NO ) rather than X 2 New Source Review (NNSR) definitions of ‘‘major stationary source’’ nitrogen oxides (NO ). The commenter 2 X permitting. Rule 3.4 contains in the EPA’s NNSR regulations and Rule stated that by defining a significant requirements to evaluate emission 3.25 specify a threshold of 100 tpy for emission rate for NO instead of NO , 2 X increases of NOX as a nonattainment PM precursors such as NO .4 Rule the YSAQMD ignored the technical 2.5 X pollutant and imposes NNSR 3.4’s lower threshold means that all distinction under federal law and the requirements applicable to major broader class of regulated NOX species. modifications, such as requirements for 3 The commenter stated that the EPA At the time of the EPA’s action on Rule 3.4, pollution controls and offsets, that the areas within YSAQMD’s jurisdiction were classified should not approve Rule 3.25 until the EPA has determined meet federal as severe nonattainment for the 1979 1-hour ozone YSAQMD corrects the discrepancy in requirements. Moreover, because NAAQS. Currently, these areas are classified as section 212.3. YSAQMD’s jurisdiction includes areas severe nonattainment for the 2008 8-hour ozone The EPA agrees with the commenter designated nonattainment for ozone as NAAQS and moderate nonattainment for the 2015 8-hour ozone NAAQS. 40 CFR 81.305. that Rule 3.25’s definition of well as PM2.5, YSAQMD uses Rule 3.4 4 Compare the definition of ‘‘major stationary ‘‘significant’’ specifies an emission rate source’’ in Rule 3.4, section 222 (25 tpy NOX), with for NO2, whereas the EPA’s definition of 1 The EPA approved Rule 3.4 into the California the EPA’s definition of ‘‘major stationary source’’ ‘‘significant’’ at 40 CFR SIP on July 7, 1997. 62 FR 36214. (100 tpy of NOX for PM2.5 nonattainment areas 51.165(a)(1)(x)(A) specifies an emission 2 Id. Requirements for a NNSR program include classified as moderate). 40 CFR 51.165(a)(1)(iv)(1). application of the lowest achievable emission rate Rule 3.25’s definition of ‘‘major stationary source’’ rate for NOX. This discrepancy warrants (LAER) and providing offsets for emission also specifies a threshold of 100 tpy. Rule 3.25, careful consideration because Rule increases. section 206.

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modification projects at major stationary major stationary sources that increase • Is not a ‘‘significant regulatory sources that would be required to be NOX emissions are already required to action’’ subject to review by the Office reviewed under the EPA’s NNSR be evaluated under Rule 3.4 for reasons of Management and Budget under requirements for NOX as a PM2.5 related to ozone nonattainment.8 Executive Orders 12866 (58 FR 51735, precursor are in fact subject to review. Finally, we note that, despite the October 4, 1993) and 13563 (76 FR 3821, The EPA also compared Rule 3.4’s overlap with Rule 3.4, Rule 3.25 is a January 21, 2011); definition of ‘‘major modification’’ with necessary addition to the YSAQMD SIP • Is not an Executive Order 13771 (82 definitions in the EPA’s regulations and because it regulates PM2.5 and PM2.5 FR 9339, February 2, 2017) regulatory Rule 3.25.5 Rule 3.4’s definition of precursors not regulated by Rule 3.4— action because SIP approvals are ‘‘major modification’’ specifies a lower specifically, sulfur dioxide and exempted under Executive Order 12866; • threshold for NOX than the EPA’s PM2.5 ammonia. We therefore find that Does not impose an information NNSR regulations or Rule 3.25; finalization of our action as proposed is collection burden under the provisions specifically, Rule 3.4 sets an appropriate. of the Paperwork Reduction Act (44 applicability threshold for NOX at 25 U.S.C. 3501 et seq.); tpy, whereas the EPA’s regulations for III. EPA Action • Is certified as not having a NOX as a PM2.5 precursor and Rule We received one (1) adverse comment significant economic impact on a 3.25’s regulation of NO2 set the regarding the proposed of Rule 3.25 into substantial number of small entities applicability threshold at 40 tpy.6 the YSAQMD portion of the California under the Regulatory Flexibility Act (5 Therefore, Rule 3.4’s lower threshold U.S.C. 601 et seq.); SIP. However, for the reasons set forth • ensures that any modification that in our proposed action and above in Does not contain any unfunded would result in a significant emission Section II, as authorized in section mandate or significantly or uniquely increase of NOX will be subject to NNSR 110(k)(3) and 301(a) of the Act, the EPA affect small governments, as described requirements (such as those for is approving Rule 3.25 ‘‘Federal New in the Unfunded Mandates Reform Act pollution controls and offsets) Source Review for New and Modified of 1995 (Pub. L. 104–4); • Does not have federalism consistent with the EPA’s NNSR Major PM Sources’’ into the YSAQMD 2.5 implications as specified in Executive requirements for NOX as a PM2.5 portion of the California SIP. precursor and Rule 3.25. Order 13132 (64 FR 43255, August 10, In addition, the EPA compared offset IV. Incorporation by Reference 1999); requirements in Rule 3.4 with offset • Is not an economically significant In this rule, the EPA is finalizing requirements in the EPA’s regulations regulatory action based on health or regulatory text that includes and Rule 3.25. Rule 3.4’s required offset safety risks subject to Executive Order incorporation by reference. In ratio for NO is 1:1.3, whereas the offset 13045 (62 FR 19885, April 23, 1997); X accordance with requirements of 1 CFR • ratio required by the EPA’s NNSR Is not a significant regulatory action 51.5, the EPA is finalizing the regulations for NO as a PM precursor subject to Executive Order 13211 (66 FR X 2.5 incorporation by reference the and Rule 3.25 is 1:1.7 Rule 3.4’s higher 28355, May 22, 2001); YSAQMD rule listed in Table 1 of this • ratio means that Rule 3.4 requires more Is not subject to requirements of notice. The EPA has made, and will offsets for NO than the EPA’s NNSR Section 12(d) of the National X continue to make, this document requirements for NO as a PM Technology Transfer and Advancement X 2.5 available electronically through https:// precursor or Rule 3.25. Act of 1995 (15 U.S.C. 272 note) because www.regulations.gov and in hard copy Accordingly, because the application of those requirements would at the EPA Region IX Office (please requirements for a NNSR program be inconsistent with the Clean Air Act; contact the person identified in the FOR applicable to NO as a PM precursor and X 2.5 • are already satisfied by SIP-approved FURTHER INFORMATION CONTACT section of Does not provide the EPA with the this preamble for more information). discretionary authority to address Rule 3.4, the reference to NO2 in Rule 3.25’s definition of ‘‘significant’’ has no V. Statutory and Executive Order disproportionate human health or practical impact. We note that the Reviews environmental effects with practical, implementation of Rule 3.4 in appropriate, and legally permissible conjunction with Rule 3.25 should not Under the Clean Air Act, the methods under Executive Order 12898 present undue difficulty because Administrator is required to approve a (59 FR 7629, February 16, 1994). YSAQMD’s jurisdiction is classified as SIP submission that complies with the In addition, the SIP is not approved nonattainment for the 2008 and 2015 provisions of the Act and applicable to apply on any Indian reservation land ozone NAAQS; therefore, projects at federal regulations. 42 U.S.C. 7410(k); or in any other area where the EPA or 40 CFR 52.02(a). Thus, in reviewing SIP an Indian tribe has demonstrated that a 5 The term ‘‘major modification’’ in Rule 3.25 submissions, the EPA’s role is to tribe has jurisdiction. In those areas of includes the term ‘‘significant emissions increase’’ approve state choices, provided that Indian country, the rule does not have and therefore relates directly to the commenter’s they meet the criteria of the CAA. tribal implications and will not impose concern regarding Rule 3.25’s definition of Accordingly, this action merely substantial direct costs on tribal ‘‘significant.’’ governments or preempt tribal law as 6 Compare the definition of ‘‘major modification’’ approves state law as meeting federal in Rule 3.4, section 221 (25 tpy threshold), with the requirements and does not impose specified by Executive Order 13175 (65 EPA’s definition of ‘‘major modification’’ (40 tpy of additional requirements beyond those FR 67249, November 9, 2000). NOX for PM2.5 nonattainment areas). 40 CFR imposed by state law. For that reason, The Congressional Review Act, 5 51.165(a)(1)(x)(A). As noted by the commenter, Rule this action: U.S.C. 801 et seq., as added by the Small 3.25’s definition of ‘‘significant’’ is 40 tpy of NO2, which means that Rule 3.25’s definition of ‘‘major Business Regulatory Enforcement modification,’’ which uses the term ‘‘significant,’’ 8 Rule 3.4’s applicability is not tied to the area’s Fairness Act of 1996, generally provides also applies a threshold of 40 tpy for NO2. Rule nonattainment status with respect to ozone. For that before a rule may take effect, the 3.25, sections 205 and 212. example, if the ozone nonattainment area within agency promulgating the rule must 7 Compare Rule 3.4, section 303 (1:1.3 offset YSAQMD’s jurisdiction were redesignated to ratio), with the EPA’s offset ratio of 1:1. 40 CFR attainment for ozone but remained nonattainment submit a rule report, which includes a 51.165(a)(9)(i). Rule 3.25 also requires an offset ratio for PM2.5, Rule 3.4’s NNSR requirements would copy of the rule, to each House of the of 1:1. Rule 3.25, section 302. remain applicable to NOX as a PM2.5 precursor. Congress and to the Comptroller General

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of the United States. The EPA will DEPARTMENT OF HEALTH AND II. Provisions of the Advisory submit a report containing this action HUMAN SERVICES CMS is issuing this advisory to notify and other required information to the the QPs who are eligible for a 2019 APM U.S. Senate, the U.S. House of Centers for Medicare & Medicaid Incentive Payment and are listed at Representatives, and the Comptroller Services https://qpp-cm-prod- General of the United States prior to content.s3.amazonaws.com/uploads/ publication of the rule in the Federal 42 CFR Part 414 757/2019%20QP%20Notice%20for% Register. A major rule cannot take effect 20APM%20Incentive%20Payment.pdf until 60 days after it is published in the [CMS–5530–N] that after several attempts to identify Federal Register. This action is not a current banking information through ‘‘major rule’’ as defined by 5 U.S.C. Medicare Program; Advanced which to make the disbursement, we 804(2). Alternative Payment Model (APM) have been unable to do so. Eligible Incentive Payment Advisory for List of Subjects in 40 CFR Part 52 clinicians who are on the referenced list Clinicians—Request for Current should follow the directions for Banking Information for Qualifying Environmental protection, Air contacting CMS and to provide updated APM Participants pollution control, Incorporation by information as specified at https://qpp- reference, Intergovernmental relations, AGENCY: Centers for Medicare & cm-prod-content.s3.amazonaws.com/ Particulate Matter, Reporting and Medicaid Services (CMS), HHS. uploads/757/2019 recordkeeping requirements. %20QP%20Notice%20for% ACTION: Payment advisory. Authority: 42 U.S.C. 7401 et seq. 20APM%20Incentive%20Payment.pdf and must do so no later than February SUMMARY: Dated: November 1, 2019. This advisory is to alert 28, 2020. certain clinicians who are Qualifying Deborah Jordan, We note that our regulation at APM participants (QPs) and eligible to Acting Regional Administrator, Region IX. § 414.1450(d) provides that CMS will receive an Advanced Alternative make the CY 2019 APM Incentive Part 52, chapter I, title 40 of the Code Payment Model (APM) Incentive Payment no later than December 31, of Federal Regulations is amended as Payment that CMS does not have the 2019. We acknowledge that pursuant to follows: current banking information needed to this advisory, CMS anticipates disburse the payment. This advisory disbursing the APM Incentive Payment PART 52—APPROVAL AND provides information to these clinicians to some QPs after December 31, 2019. PROMULGATION OF on how to update their banking We have made every effort to make all IMPLEMENTATION PLANS information to receive this payment. CY 2019 APM Incentive Payments on or DATES: This advisory is effective on before December 31, 2019. However, CY ■ 1. The authority citation for Part 52 December 30, 2019. 2019 was the inaugural year us to issue continues to read as follows: FOR FURTHER INFORMATION CONTACT: the APM Incentive Payments. As we Authority: 42 U.S.C. 7401 et seq. Brittany LaCouture, (410) 786–0481. identified the QPs who are the subject of this advisory, we made continued SUPPLEMENTARY INFORMATION: Subpart F—California efforts, but still have not located current I. Background banking information for them. We ■ 2. Section 52.220 is amended by believe it is necessary and appropriate Under the Medicare Quality Payment adding paragraph (c)(524) to read as to afford the identified QPs the Program, an eligible clinician who follows: opportunity to provide us with their participates in Advanced Alternative current banking information and receive § 52.220 Identification of plan—in part. Payment Models (APMs) and meets the their CY 2019 APM Incentive Payments. applicable payment amount or patient * * * * * Therefore, we are extending the count thresholds for a performance year payment process into CY 2020 by giving (c) * * * is a Qualifying APM Participant (QP) for the identified individuals the (524) New additional materials for the that year. QPs earn a 5 percent lump opportunity to provide us the necessary following AQMD was submitted on June sum APM Incentive Payment in the information by February 28, 2020, the 4, 2019 by the Governor’s designee. payment years 2019 through 2024 based deadline provided in this advisory, and on the QP Performance Period 2 years (i) Incorporation by reference. (A) appropriately disbursing the CY 2019 prior. The amount of the APM Incentive Yolo-Solano Air Quality Management APM Incentive Payments thereafter as Payment is 5 percent of the payments District. soon as practicable. We fully expect, for Part B covered professional services after this inaugural year of the (1) Rule 3.25, ‘‘Federal New Source paid for the calendar year immediately Advanced APM Incentive Payment, to Review for New and Modified Major preceding the payment year. PM2.5 Sources,’’ amended May 15, 2019. make all payments within the timeframe We began disbursing the 2019 APM specified in regulation. (2) [Reserved] Incentive Payment on September 26, Dated: December 19, 2019. (B) [Reserved] 2019, and these disbursements are ongoing. The 2019 APM Incentive Seema Verma, (ii) [Reserved] Payment is for eligible clinicians who Administrator, Centers for Medicare & * * * * * were determined to be QPs based on Medicaid Services. [FR Doc. 2019–27541 Filed 12–27–19; 8:45 am] their participation in Advanced APMs [FR Doc. 2019–28010 Filed 12–26–19; 8:45 am] BILLING CODE 6560–50–P in the 2017 QP Performance Period. BILLING CODE 4120–01–P

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DEPARTMENT OF COMMERCE Plan for Groundfish of the Gulf of and 10,026 Chinook salmon for vessels Alaska (FMP) prepared by the North participating in the directed fishery for National Oceanic and Atmospheric Pacific Fishery Management Council pollock in the Western Regulatory area Administration under authority of the Magnuson- of the GOA (6,684 plus 3,342 Chinook Stevens Fishery Conservation and salmon). 50 CFR Part 679 Management Act. Regulations governing Classification [Docket No. 180831813–9170–02; RTID fishing by U.S. vessels in accordance 0648–XY062] with the FMP appear at subpart H of 50 This action responds to the best CFR part 600 and 50 CFR part 679. available information recently obtained Fisheries of the Exclusive Economic The 2019 Chinook salmon prohibited from the fishery. The Assistant Zone Off Alaska; Chinook Salmon species catch (PSC) limit for vessels Administrator for Fisheries, NOAA Prohibited Species Catch Limits in the directed fishing for pollock using trawl (AA), finds good cause to waive the Gulf of Alaska gear in the Western Regulatory Area of requirement to provide prior notice and the GOA is 6,684 Chinook salmon opportunity for public comment AGENCY: National Marine Fisheries (§ 679.21(h)(2)(i)). pursuant to the authority set forth at 5 Service (NMFS), National Oceanic and The 2019 Chinook salmon PSC limit U.S.C. 553(b)(B) as such requirement is Atmospheric Administration (NOAA), for vessels directed fishing for pollock impracticable and contrary to the public Commerce. using trawl gear in the Central interest. This requirement is ACTION: Temporary rule; inseason Regulatory Area of the GOA is 18,316 impracticable and contrary to the public adjustment. Chinook salmon (§ 679.21(h)(2)(ii)). interest as it would prevent NMFS from responding to the most recent fisheries SUMMARY: NMFS is reapportioning the The Administrator, Alaska Region, projected unused amount, 3,342 NMFS, (Regional Administrator) has data in a timely fashion. NMFS was Chinook salmon prohibited species determined that the vessels unable to publish a notice providing catch limit, from the vessels participating in directed fishing for time for public comment because the participating in directed fishing for pollock in the Central Regulatory area of most recent, relevant data only became pollock in the Central Regulatory area of the GOA will not require 3,342 Chinook available as of December 18, 2019. the Gulf of Alaska (GOA) to vessels salmon of the Chinook salmon PSC limit The AA also finds good cause to participating in directed fishing for allocated to those vessels under waive the 30-day delay in the effective pollock in the Western Regulatory area § 679.21(h)(2)(ii)). Therefore, in date of this action under 5 U.S.C. of the GOA. This action is consistent accordance with § 679.21(h)(5)(iii) and 553(d)(3). This finding is based upon with the goals and objectives of the taking into account the need of the the reasons provided above for waiver of Fishery Management Plan for sectors for Chinook salmon PSC, and prior notice and opportunity for public Groundfish of the Gulf of Alaska. following the limits set forth in comment. § 679.21(h)(5)(iv)(A), NMFS DATES: Effective 1200 hours, Alaska This action is required by § 679.20 reapportions 3,342 Chinook salmon PSC local time (A.l.t.), December 23, 2019, and is exempt from review under limit to vessels participating in the until 2400 hours A.l.t., December 31, Executive Order 12866. directed fishery for pollock in the 2019. Authority: 16 U.S.C. 1801 et seq. Western Regulatory area of the GOA. FOR FURTHER INFORMATION CONTACT: Josh The 2019 Chinook salmon PSC limits Dated: December 23, 2019. Keaton, 907–586–7228. are revised as follows: 14,974 Chinook Alan D. Risenhoover, SUPPLEMENTARY INFORMATION: NMFS salmon for vessels participating in Director, Office of Sustainable Fisheries, manages the groundfish fishery in the directed fishing for pollock in the National Marine Fisheries Service. GOA exclusive economic zone Central Regulatory area of the GOA [FR Doc. 2019–28132 Filed 12–23–19; 4:15 pm] according to the Fishery Management (18,316 minus 3,342 Chinook salmon) BILLING CODE 3510–22–P

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Proposed Rules Federal Register Vol. 84, No. 249

Monday, December 30, 2019

This section of the FEDERAL REGISTER FOR FURTHER INFORMATION CONTACT: Kahl governments or significant Tribal contains notices to the public of the proposed Sesker, Research and Promotion implications. issuance of rules and regulations. The Division, at (202) 253–8253; fax (202) Paperwork Reduction Act purpose of these notices is to give interested 720–1125; or by email at Kahl.Sesker@ persons an opportunity to participate in the usda.gov. In accordance with OMB regulations rule making prior to the adoption of the final SUPPLEMENTARY INFORMATION: (5 CFR 1320) that implement the rules. Paperwork Reduction Act of 1995 (44 Executive Orders 12866, 13563, and U.S.C. part 35), the information 13771 DEPARTMENT OF AGRICULTURE collection and recordkeeping Executive Orders 12866 and 13563 requirements contained in the Order Agricultural Marketing Service direct agencies to assess all costs and and accompanying Rules and benefits of available regulatory Regulations have previously been 7 CFR Part 1260 alternatives and, if regulation is approved by OMB and were assigned necessary, to select regulatory OMB control number 0581–0093. [No. AMS–LP–19–0012] approaches that maximize net benefits Background and Proposed Action (including potential economic, Beef Promotion and Research; The Board was initially appointed on Reapportionment environmental, public health, and safety effects; distributive impacts; and August 4, 1986, pursuant to the AGENCY: Agricultural Marketing Service, equity). Executive Order 13563 provisions of the Act (7 U.S.C. 2901– USDA. emphasizes the importance of 2911), and the Order issued thereunder. Domestic representation on the Board is ACTION: Proposed rule. quantifying both costs and benefits, reducing costs, harmonizing rules, and based on cattle inventory numbers, SUMMARY: This proposed rule would promoting flexibility. This rule does not while importer representation is based adjust representation on the Cattlemen’s meet the definition of a significant on the conversion of the volume of Beef Promotion and Research Board regulatory action contained in section imported cattle, beef, and beef products (Board), established under the Beef 3(f) of Executive Order 12866 and into live animal equivalencies. Promotion and Research Act of 1985 therefore, the Office of Management and Reapportionment (Act), to reflect changes in domestic Budget (OMB) has waived review of this cattle inventories as well as changes in action. Additionally, because this rule Section 1260.141(b) of the Order levels of imported cattle, beef, and beef does not meet the definition of a provides that the Board shall be products that have occurred since the significant regulatory action, it does not composed of cattle producers and Board was last reapportioned in July trigger the requirements contained in importers appointed by the Secretary 2017. These adjustments are required by Executive Order 13771. See OMB’s from nominations submitted by certified the Beef Promotion and Research Order Memorandum titled ‘‘Interim Guidance producer and importer organizations. A (Order) and, if adopted, would result in Implementing Section 2 of the Executive producer may only be nominated to an increase in Board membership from Order of January 30, 2017, titled represent the State or unit in which that 99 to 101, effective with the Secretary of ‘Reducing Regulation and Controlling producer is a resident. Agriculture’s (Secretary) appointments Regulatory Costs’ ’’ (February 2, 2017). Section 1260.141(c) of the Order for terms beginning early in the year provides that at least every 3 years, but Executive Order 12988 2021. not more than every 2 years, the Board This proposed rule has been reviewed shall review the geographic distribution DATES: Submit comments on or before under Executive Order 12988, Civil of cattle inventories throughout the February 28, 2020. Justice Reform. This rule is not intended United States and the volume of ADDRESSES: Comments should be posted to have retroactive effect. imported cattle, beef, and beef products online at www.regulations.gov. Section 11 of the Act (7 U.S.C. 2910) and, if warranted, shall reapportion Comments received will be posted provides that nothing in the Act may be units and/or modify the number of without change, including any personal construed to preempt or supersede any Board members from units in order to information provided. All comments other program relating to beef reflect the geographic distribution of should reference the docket number promotion organized and operated cattle production volume in the United AMS–LP–19–0012, the date of under the laws of the U.S. or any State. States and the volume of cattle, beef, or submission, and the page number of this There are no administrative proceedings beef products imported into the United issue of the Federal Register. Comments that must be exhausted prior to any States. may also be sent to Kahl Sesker, judicial challenge to the provisions of Section 1260.141(d) of the Order Agricultural Marketing Specialist; this rule. authorizes the Board to recommend to Research and Promotion Division; the Secretary modifications to the Livestock and Poultry Program, AMS, Executive Order 13175 number of cattle per unit necessary for USDA; Room 2610–S, STOP 0251, 1400 This action has been reviewed in representation on the Board. Independence Avenue SW; Washington, accordance with the requirements of Section 1260.141(e)(1) provides that DC 20250–0251; or via fax to (202) 720– Executive Order 13175, Consultation each geographic unit or State that 1125. Comments will be made available and Coordination with Indian Tribal includes a total cattle inventory equal to for public inspection at the above Governments. The review reveals that or greater than 500,000 head of cattle address during regular business hours or this regulation would not have shall be entitled to one representative via the internet at www.regulations.gov. substantial and direct efforts on Tribal on the Board. Section 1260.141(e)(2)

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provides that States that do not have equivalents for imported beef and beef would increase the number of total cattle inventories equal to or products. representatives on the Board from 99 to greater than 500,000 head shall be In considering reapportionment, the 101. From the Board’s analysis of USDA grouped, to the extent practicable, into Board reviewed cattle inventories as of cattle inventories and import geographically-contiguous units, each of January 1 in 2017, 2018, and 2019, as equivalencies, Nebraska would gain one which have a combined total inventory well as cattle, beef, and beef product Board seat, Texas would gain one Board of not less than 500,000 head. Such import data for the period of January 1, seat, and Wisconsin would gain one grouped units are entitled to at least one 2016, to December 31, 2018. The Board Board seat. Geographic changes would representative on the Board. Each unit determined that an average of the include dissolving the Southeast Unit so is entitled to an additional Board inventory of cattle on January 1 in 2017, that Alabama and Georgia would be member for each additional 1 million 2018, and 2019 best reflect the number stand-alone States that have enough head of cattle within the unit, as of cattle in each State or unit since inventory to each qualify for a position provided in § 1260.141(e)(4). Further, as publication of the last reapportionment on the Board. South Carolina would be provided in § 1260.141(e)(3), importers rule in 2017 (82 FR 27611). The Board added to the Mid-Atlantic Unit. are represented by a single unit, with reviewed data published by ERS to Maryland would move from the Mid- determine proper importer their number of Board members based Atlantic Unit to the Northeast Unit, on a conversion of the total volume of representation. The Board leaving South Carolina and West imported cattle, beef, or beef products recommended the use of the average of Virginia to make up the new Mid- into live animal equivalencies. a combined total of the 2016, 2017, and Atlantic Unit, which would qualify for The proposed producer representation 2018 cattle import data and the average one member. The new Northeast Unit is based on an average of the inventory of the 2016, 2017, and 2018 live animal would qualify for one member and be of cattle in the various States on January equivalents for imported beef products. composed of Connecticut, Delaware, 1 in 2017, 2018, and 2019 as reported The method used to calculate the total Maine, Maryland, Massachusetts, New by USDA’s National Agricultural number of live animal equivalents was Statistics Service (NASS). The proposed the same as that used in the previous Hampshire, New Jersey, Rhode Island, importer representation is based on a reapportionment of the Board. The live and Vermont. Importer representation combined total average of the 2016, animal equivalent weight was changed would remain at seven. 2017, and 2018 live cattle imports as in 2006 from 509 pounds to 592 pounds The States and units affected by the published by USDA’s Economic (71 FR 47074). reapportionment plan and the current Research Service (ERS) and the average The Board’s recommended and proposed member representation of the 2016, 2017, and 2018 live animal reapportionment plan, if adopted, per unit are as follows:

Current rep- Revised rep- State/unit Increase/decrease resentation resentation

Alabama ...... +1 (moved from Southeast Unit) ...... 0 1 Georgia ...... +1 (moved from Southeast Unit) ...... 0 1 Nebraska ...... +1 ...... 6 7 Texas ...... +1 ...... 12 13 Wisconsin ...... +1 ...... 3 4 Mid-Atlantic Unit ...... No change ...... 1 1 Northeast Unit ...... No change ...... 1 1 Southeast Unit ...... ¥3 ...... 3 0 Net Change ...... +2 ...... Note: The Southeast Unit would dissolve. Alabama and Georgia, formerly of SE Unit will each have one member on the Board. South Caro- lina, formerly of SE Unit, moves to Mid-Atlantic Unit. Maryland moves from the Mid-Atlantic Unit and to the Northeast Unit leaving South Carolina and West Virginia to make up the new Mid-Atlantic Unit and qualify for one member. The new Northeast Unit continues to qualify for one mem- ber. In summary, the Board will be composed of 101 members (99¥3 + 5 = 101).

The Board reapportionment as Initial Regulatory Flexibility Act to such actions in order that small proposed by this rulemaking would take Pursuant to the requirements set forth businesses will not be unduly burdened. effect, if adopted, with the Secretary’s in the Regulatory Flexibility Act (RFA) Effective August 19, 2019, the SBA appointments to fill positions early in (5 U.S.C. 601 et seq.), AMS considered published an interim final rule (RIN the year 2021. the economic effect of this action on 3245–AH17) that adjusts the monetary- A 60-day comment period is provided small entities and determined that this based size standards for inflation. As a to allow interested persons to respond proposed rule would not have a result of this rule, the size classification to this proposal. significant economic impact on a for small beef, veal, and cattle importing substantial number of small entities. firms changed from sales of $750,000 or The purpose of RFA is to fit regulatory less to sales of $1,000,000 or less. actions to the scale of businesses subject

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According to the NASS 2017 Census chain, specifically the size distribution information and services, and for other of Agriculture, the number of operations of meat and meat product wholesalers purposes. in the United States with cattle totaled (NAICS 42447).4 These data show that USDA has not identified any relevant 882,692.1 The most recent (2017) 18 percent of firms in the industry Federal rules that duplicate, overlap, or Census of Agriculture data show that classification of meat and meat product conflict with this rule. roughly 4 percent of producers with wholesalers are considered small cattle, or 31,601 operations, have annual businesses. List of Subjects in 7 CFR Part 1260 receipts of $1,000,000 or more.2 Recent import trade data was also Administrative practice and Therefore, the vast majority of cattle considered for understanding the procedure, Advertising, Agricultural producers, 96 percent, would be overall dynamics of this industry research, Imports, Meat and meat considered small businesses with the segment. The USDA Foreign products, Reporting and recordkeeping new SBA guidance. It should be noted Agricultural Service reports monthly requirements. that producers are only indirectly trade data for traded agricultural For the reasons set forth in the impacted by the proposed rule. products by product type. An analysis Cattle, beef, and veal importers are preamble, AMS proposes to amend 7 of these data over a five-year period CFR part 1260 as follows: directly impacted by the proposed rule. show only minor changes in the annual The original number of importing firms import values for both beef and veal PART 1260—BEEF PROMOTION AND was determined in consultation with the importers and cattle importers, RESEARCH Meat Import Council of America. AMS suggesting little change in the sector estimates that approximately 270 firms overall. ■ 1. The authority citation for 7 CFR import beef or beef products, and veal part 1260 continues to read as follows: and veal products into the United The proposed rule imposes no new States, and about 198 firms import live burden on the industry, as it only Authority: 7 U.S.C. 2901–2911 and 7 cattle into the United States. The 2012 adjusts representation on the Board to U.S.C. 7401. Economic Census, produced by the U.S. reflect changes in domestic cattle ■ 2. Revise § 1260.141 paragraph (a) to Commerce Department, and accessible inventory, as well as in cattle and beef read as follows: through the American Fact Finder imports. The adjustments are required website, provides the most recent data by the Order and would result in an § 1260.141 Membership of Board. on firm size by sales revenue.3 However, increase in Board membership from 99 (a) Beginning with the 2020 Board data on the firm size of beef, veal, and to 101. nominations and the associated cattle importers are not available in this AMS is committed to complying with appointments effective early in the year or other economic databases, as there is the E-Government Act of 2002 to 2021, the United States shall be divided no NAICS code specific enough for this promote the use of the internet and into 38 geographical units and 1 unit industry segment. other information technologies to representing importers, for a total of 39 The 2012 Economic Census does have provide increased opportunities for units. The number of Board members information on the broader marketing citizen access to government from each unit shall be as follows:

TABLE 1 TO PARAGRAPH (a): CATTLE AND CALVES 1

State/unit (1,000 Head) Directors

1. Alabama ...... 1,313 1 2. Arizona ...... 1,003 1 3. Arkansas ...... 1,763 2 4. Colorado ...... 2,850 3 5. Florida ...... 1,670 2 6. Georgia ...... 1,080 1 7. Idaho ...... 2,430 2 8. Illinois ...... 1,190 1 9. Indiana ...... 877 1 10. Iowa ...... 3,950 4 11. Kansas ...... 6,350 6 12. Kentucky ...... 2,153 2 13. Louisiana ...... 800 1 14. Michigan ...... 1,163 1 15. Minnesota ...... 2,360 2 16. Mississippi ...... 907 1 17. Missouri ...... 4,317 4 18. Montana ...... 2,567 3 19. Nebraska ...... 6,683 7 20. New Mexico ...... 1,473 1 21. New York ...... 1,477 1 22. North Carolina ...... 810 1 23. North Dakota ...... 1,837 2 24. Ohio ...... 1,303 1 25. Oklahoma ...... 5,133 5 26. Oregon ...... 1,303 1 27. Pennsylvania ...... 1,613 2

1 https://www.nass.usda.gov/AgCensus/ 2 https://quickstats.nass.usda.gov/results/ 4 Source: U.S. Census Bureau, 2012 Economic index.php. EC7DF8E2-6791-347F-BC4F-3F81988D7DDB. Census, Search code EC1242SSSZ1_with_ann. 3 https://factfinder.census.gov.

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TABLE 1 TO PARAGRAPH (a): CATTLE AND CALVES 1—Continued

State/unit (1,000 Head) Directors

28. South Dakota ...... 3,967 4 29. Tennessee ...... 1,820 2 30. Texas ...... 12,600 13 31. Utah ...... 807 1 32. Virginia ...... 1,480 1 33. Wisconsin ...... 3,500 4 34. Wyoming ...... 1,317 1 35. Northwest Unit ...... • Alaska ...... 15 ...... • Hawaii ...... 143 ...... • Washington ...... 1,163 ...... Total ...... 1,321 1 36. Northeast Unit ...... • Connecticut ...... 48 ...... • Delaware ...... 16 ...... • Maine ...... 81 ...... • Maryland ...... 192 ...... • Massachusetts ...... 38 ...... • New Hampshire ...... 35 ...... • New Jersey ...... 29 ...... • Rhode Island ...... 5 ...... • Vermont ...... 260 ...... Total ...... 702 1 37. Mid-Atlantic Unit ...... • South Carolina ...... 342 ...... • West Virginia ...... 397 ...... Total ...... 738 1 38. Southwest Unit ...... • California ...... 5,167 ...... • Nevada ...... 460 ...... Total ...... 5,627 6 39. Importers Unit 2 ...... 6,874 7 1 2017, 2018, and 2019 average of January 1 cattle inventory data. 2 2016, 2017, and 2018 average of annual import data.

* * * * * Dated: December 20, 2019. Bruce Summers, Administrator, Agricultural Marketing Service. [FR Doc. 2019–28057 Filed 12–27–19; 8:45 am] BILLING CODE 3410–02–P

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DEPARTMENT OF THE TREASURY DATES: The comment period for the 649–3685, Christopher.Vincent@ notice of proposed rulemaking fhfa.gov, or James P. Jordan, Associate Office of the Comptroller of the published on November 7, 2019 at 84 General Counsel, Office of General Currency FR 59970, is reopened from December 9, Counsel, (202) 649–3075, 2019, to January 23, 2020. [email protected], Federal Housing 12 CFR Part 45 ADDRESSES: You may submit comments Finance Agency, Constitution Center, [Docket No. OCC–2019–0023] by any of the methods identified in the 400 7th St. SW, Washington, DC 20219. notice of proposed rulemaking, except The telephone number for the RIN 1557–AE69 that the FCA is no longer accepting Telecommunications Device for the comments through the Federal Hearing Impaired is (800) 877–8339. FEDERAL RESERVE SYSTEM eRulemaking Portal at www.regulations.gov. Commenters may SUPPLEMENTARY INFORMATION: 12 CFR Part 237 submit comments to the FCA through I. Background [Docket No. R–1682] any of the other methods that FCA identified in the notice of proposed On November 7, 2019, the agencies RIN 7100–AF62 rulemaking. published in the Federal Register a notice of proposed rulemaking (the FOR FURTHER INFORMATION CONTACT: FEDERAL DEPOSIT INSURANCE NPR) that would amend the agencies’ CORPORATION OCC: Chris McBride, Director for Market Risk, Treasury and Market Risk regulations that require swap dealers and security-based swap dealers under 12 CFR Part 349 Policy, (202) 649–6402, or Allison Hester-Haddad, Counsel, Chief the agencies’ respective jurisdictions to RIN 3064–AF08 Counsel’s Office, (202) 649–5490, for exchange margin with their persons who are deaf or hearing counterparties for swaps that are not FARM CREDIT ADMINISTRATION impaired, TTY (202) 649–5597, Office of centrally cleared (Swap Margin Rule).1 the Comptroller of the Currency, 400 7th Specifically, the NPR proposed to make 12 CFR Part 624 Street SW, Washington, DC 20219. the following changes to the Swap RIN 3052–AD38 Board: Constance Horsley, Deputy Margin Rule: Associate Director, (202) 452–5239, First, the proposal would provide FEDERAL HOUSING FINANCE Lesley Chao, Lead Financial Institution relief by allowing legacy swaps—swaps AGENCY Policy Analyst, (202) 974–7063, or John that were entered into before the Feid, Principal Economist, (202) 452– applicable compliance date of the Swap 12 CFR Part 1221 2385, Division of Supervision and Margin Rule– to be amended to replace Regulation; Patricia Yeh, Senior RIN 2590–AB03 existing interest rate provisions based Counsel, (202) 452–3089, Jason Shafer, on certain interbank offered rates Margin and Capital Requirements for Senior Counsel, (202) 728–5811, or (IBORs) and other interest rates that are Covered Swap Entities Justyna Bolter, Senior Attorney, (202) reasonably expected to be discontinued 452–2686, Legal Division; for users of or are reasonably determined to have Telecommunication Devices for the Deaf AGENCY: Office of the Comptroller of the lost their relevance as a reliable (TDD) only, contact 202–263–4869; Currency, Treasury (OCC); Board of benchmark due to a significant Governors of the Federal Reserve Board of Governors of the Federal impairment, without such swaps losing System (Board); Federal Deposit Reserve System, 20th and C Streets NW, their legacy status. Insurance Corporation (FDIC); Farm Washington, DC 20551. Credit Administration (FCA); and the FDIC: Irina Leonova, Senior Policy Second, the proposal would amend Federal Housing Finance Agency Analyst, [email protected], Capital the Swap Margin Rule’s requirements (FHFA). Markets Branch, Division of Risk for inter-affiliate swaps. The proposal ACTION: Proposed rule; reopening of Management Supervision, (202) 898– would repeal the requirement for a comment period. 3843; Thomas F. Hearn, Counsel, covered swap entity to collect initial [email protected], Legal Division, margin from its affiliates, but would SUMMARY: The OCC, Board, FDIC, FCA, Federal Deposit Insurance Corporation, retain the requirement that variation and FHFA (collectively, the agencies) 550 17th Street NW, Washington, DC margin be exchanged for affiliate are reopening the comment period for 20429. transactions. the notice of proposed rulemaking FCA: Jeremy R. Edelstein, Associate Third, the proposal would add an Director, Finance & Capital Market published in the Federal Register on additional initial margin compliance Team, Timothy T. Nerdahl, Senior November 7, 2019, to amend the period for certain smaller agencies’ regulations that require swap Policy Analyst, Clayton D. Milburn, counterparties, and clarify the existing dealers and security-based swap dealers Senior Financial Analyst, Office of trading documentation requirements in under the agencies’ respective Regulatory Policy, (703) 883–4414, TTY § __.10 of the Rule. jurisdictions to exchange margin with (703) 883–4056, or Richard A. Katz, their counterparties for swaps that are Senior Counsel, Office of General Fourth, the proposal would amend not centrally cleared (Proposed Swap Counsel, (703) 883–4020, TTY (703) the Swap Margin Rule to permit Margin Amendments). Reopening the 883–4056, Farm Credit Administration, amendments caused by conducting comment period that closed on 1501 Farm Credit Drive, McLean, VA certain routine life-cycle activities that December 9, 2019, will allow interested 22102–5090. covered swap entities may conduct for persons additional time to analyze and FHFA: Christopher Vincent, Senior legacy swaps, such as reduction of comment on the Proposed Swap Margin Financial Analyst, Office of Financial Amendments. Analysis, Modeling & Simulations, (202) 1 84 FR 59970 (Nov. 7, 2019).

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notional amounts and portfolio DEPARTMENT OF HEALTH AND including attachments, to https:// compression exercises, without HUMAN SERVICES www.regulations.gov will be posted to triggering margin requirements. the docket unchanged. Because your Food and Drug Administration comment will be made public, you are II. Reopening of Comment Period and solely responsible for ensuring that your Request for Comment 21 CFR Part 133 comment does not include any confidential information that you or a The original comment period for the [Docket No. FDA–2008–P–0086] third party may not wish to be posted, NPR closed on December 9, 2019.2 The Cheeses and Related Cheese such as medical information, your or agencies received public comments Products; Proposal To Permit the Use anyone else’s Social Security number, or requesting an extension of the comment of Ultrafiltered Milk; Reopening the confidential business information, such period, noting that the commenters did Comment Period as a manufacturing process. Please note not have sufficient time to analyze fully that if you include your name, contact the agencies’ notice of proposed AGENCY: Food and Drug Administration, information, or other information that rulemaking during the original 30-day HHS. identifies you in the body of your comment period. To give these, and ACTION: Proposed rule; reopening of the comments, that information will be similarly situated, commenters comment period. posted on https://www.regulations.gov. additional time, the agencies are re- • If you want to submit a comment SUMMARY: The Food and Drug with confidential information that you opening the comment period through Administration (FDA or we) is do not wish to be made available to the January 23, 2020, until which time reopening the comment period for the public, submit the comment as a interested parties may submit public proposed rule published in the Federal written/paper submission and in the comments on the rule amendments Register of October 19, 2005, entitled manner detailed (see ‘‘Written/Paper proposed and the questions presented in ‘‘Cheeses and Related Cheese Products; Submissions’’ and ‘‘Instructions’’). the NPR. Proposal to Permit the Use of Dated: December 20, 2019. Ultrafiltered Milk.’’ The proposed rule Written/Paper Submissions Jonathan V. Gould, would amend our regulations to provide Submit written/paper submissions as for the use of fluid ultrafiltered (UF) follows: Senior Deputy Comptroller and Chief milk in the manufacture of standardized • Counsel, Office of the Comptroller of the Mail/Hand delivery/Courier (for cheeses and related cheese products. We Currency. written/paper submissions): Dockets are reopening the comment period to By order of the Board of Governors of the Management Staff (HFA–305), Food and receive new information and further Drug Administration, 5630 Fishers Federal Reserve System, acting through the comment on current industry practices Secretary of the Board under delegated Lane, Rm. 1061, Rockville, MD 20852. regarding the use of fluid UF milk and • For written/paper comments authority, December 20, 2019. fluid UF nonfat milk in the manufacture submitted to the Dockets Management Margaret McCloskey Shanks, of standardized cheeses and related Staff, FDA will post your comment, as Deputy Secretary of the Board. cheese products, and the declaration of well as any attachments, except for Federal Deposit Insurance Corporation. fluid UF milk and fluid UF nonfat milk information submitted, marked and Dated at Washington, DC, on December 19, when used as ingredients in identified, as confidential, if submitted 2019. standardized cheeses and related cheese as detailed in ‘‘Instructions.’’ products. Annmarie H. Boyd, Instructions: All submissions received DATES: FDA is reopening the comment must include the Docket No. FDA– Assistant Executive Secretary. period on the proposed rule published 2008–P–0086 for ‘‘Cheeses and Related By order of the Board of the Farm Credit on October 19, 2005 (70 FR 60751). Cheese Products; Proposal to Permit the Administration. Submit either electronic or written Use of Ultrafiltered Milk.’’ Received Dated at McLean, VA, this 20th day of comments by March 30, 2020. comments, those filed in a timely December, 2019. ADDRESSES: You may submit comments manner (see ADDRESSES), will be Dale L. Aultman, as follows. Please note that late, placed in the docket and, except for Secretary. untimely filed comments will not be those submitted as ‘‘Confidential Submissions,’’ publicly viewable at December 12, 2019. considered. Electronic comments must https://www.regulations.gov or at the Mark A. Calabria, be submitted on or before March 30, 2020. The https://www.regulations.gov Dockets Management Staff between 9 Director, Federal Housing Finance Agency. electronic filing system will accept a.m. and 4 p.m., Monday through [FR Doc. 2019–28052 Filed 12–27–19; 8:45 am] comments until 11:59 p.m. Eastern Time Friday. • BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P; at the end of March 30, 2020. Comments Confidential Submissions—To 8070–01–P; 6705–01–P received by mail/hand delivery/courier submit a comment with confidential (for written/paper submissions) will be information that you do not wish to be considered timely if they are made publicly available, submit your postmarked or the delivery service comments only as a written/paper acceptance receipt is on or before that submission. You should submit two date. copies total. One copy will include the information you claim to be confidential Electronic Submissions with a heading or cover note that states Submit electronic comments in the ‘‘THIS DOCUMENT CONTAINS following way: CONFIDENTIAL INFORMATION.’’ We • Federal eRulemaking Portal: will review this copy, including the https://www.regulations.gov. Follow the claimed confidential information, in our instructions for submitting comments. consideration of comments. The second 2 See 84 FR 59970 (November 7, 2019). Comments submitted electronically, copy, which will have the claimed

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confidential information redacted/ the finished food as ‘‘ultrafiltered milk’’ seek comment on the following blacked out, will be available for public or ‘‘ultrafiltered nonfat milk.’’ questions: viewing and posted on https:// This proposal was issued in response 1. We would like to understand www.regulations.gov. Submit both to citizen petitions from the American whether there is variable use of fluid UF copies to the Dockets Management Staff. Dairy Products Institute and the milk or fluid UF nonfat milk in the If you do not wish your name and National Cheese Institute, the Grocery production of standardized cheeses and contact information to be made publicly Manufacturers of America, Inc., and the related cheese products. For example, if available, you can provide this National Food Processors Association. a company uses fluid UF milk in the information on the cover sheet and not Interested persons were originally given production of a standardized cheese, in the body of your comments and you until January 17, 2006, to comment. We does the amount of fluid UF milk must identify this information as subsequently reopened the comment remain constant, or does the amount ‘‘confidential.’’ Any information marked period to seek further comment on two vary depending on certain factors (such as ‘‘confidential’’ will not be disclosed specific issues raised by the comments as the cost of fluid UF milk)? Please except in accordance with 21 CFR 10.20 concerning the proposed ingredient explain whether the amount of fluid UF and other applicable disclosure law. For declaration (72 FR 70251, December 11, milk or fluid UF nonfat milk varies for more information about FDA’s posting 2007); the reopened comment period specific standardized cheeses and of comments to public dockets, see 80 was scheduled to end on February 11, related cheese products and the factors FR 56469, September 18, 2015, or access 2008. In the Federal Register of that influence the variability. To the information at: https://www.gpo.gov/ February 11, 2008 (73 FR 7692), we maintain the essential characteristics of fdsys/pkg/FR-2015-09-18/pdf/2015- extended the comment period until the standardized cheese or cheese 23389.pdf. April 11, 2008. product, is the amount of fluid UF milk In the Federal Register of August 14, or fluid UF nonfat milk limited to a Docket: For access to the docket to 2017 (82 FR 37815), we announced the range (i.e., a minimum and maximum read background documents or the availability of a guidance for industry amount)? Please identify the specific electronic and written/paper comments entitled ‘‘Ultrafiltered Milk in the standardized cheese or cheese product received, go to https:// Production of Standardized Cheeses and and provide any ranges or amounts and www.regulations.gov and insert the Related Cheese Products.’’ In the explain your reasoning. docket number, found in brackets in the guidance, we notified manufacturers 2. (a) We invite comment on why heading of this document, into the who wish to use UF milk or UF nonfat manufacturers may sometimes produce ‘‘Search’’ box and follow the prompts milk in the production of standardized their particular brands of standardized and/or go to the Dockets Management cheeses and related cheese products of cheeses and related cheese products Staff, 5630 Fishers Lane, Rm. 1061, our intent to exercise enforcement with fluid UF milk or fluid UF nonfat Rockville, MD 20852. discretion regarding the use of fluid UF milk and sometimes without fluid UF FOR FURTHER INFORMATION CONTACT: milk and fluid UF nonfat milk in the milk or fluid UF nonfat milk. Please Daniel Reese, Center for Food Safety production of standardized cheeses and explain your reasoning. and Applied Nutrition, Food and Drug related cheese products, provided that (b) Given that manufacturers may Administration, 5001 Campus Dr., the physical, chemical, and organoleptic sometimes choose to produce these College Park, MD 20740, 240–402–2371. properties of the cheese or cheese products with or without fluid UF milk product are not affected. We also stated or fluid UF nonfat milk, we are SUPPLEMENTARY INFORMATION: our intent to exercise enforcement interested in how ingredient labeling of I. Background discretion with respect to the labeling of these standardized cheeses and related fluid UF milk and fluid UF nonfat milk cheese products could be addressed. In the Federal Register of October 19, in recognition of the costs and logistics Our understanding is that fluid UF 2005, we proposed to amend our involved in label changes; however, we milk and fluid UF nonfat milk, when regulations to provide for the use of encouraged industry to identify these used as ingredients in cheese, are fluid UF milk in the manufacture of ingredients as ‘‘ultrafiltered milk’’ and always used in lesser amounts by standardized cheeses and related cheese ‘‘ultrafiltered nonfat milk’’ to the extent weight than milk and nonfat milk in products. Specifically, the proposed feasible and appropriate. We further order to avoid affecting the physical, rule, if finalized, for standardized explained that we intend to exercise chemical, and organoleptic properties of cheeses and related cheese products, enforcement discretion until we have the cheese. For example, a manufacturer would (1) Amend the definitions of completed a rulemaking process might use milk and fluid UF milk, but ‘‘milk’’ and ‘‘nonfat milk’’ in § 133.3 (21 amending our regulations with respect our understanding is that the amount of CFR 133.3) to provide for ultrafiltration to the issues covered by the guidance or fluid UF milk will be less than that of of milk and nonfat milk; and (2) define announced our determination not to milk. As such, milk would be the ultrafiltered milk and ultrafiltered proceed with such a rulemaking. predominant ingredient and declared nonfat milk in § 133.3 as raw or first in the ingredient statement, per pasteurized milk or nonfat milk that is II. Additional Issues for Consideration FDA’s regulations that require passed over one or more semipermeable To inform our decision on whether to ingredients to be declared by their membranes to partially remove water, proceed with the rulemaking initiated in common or usual names in descending lactose, minerals, and water-soluble the October 19, 2005, proposal, we seek order of predominance by weight (21 vitamins without altering the casein-to- new information and public comment CFR 101.4(a)). Fluid UF milk, if used, whey protein ratio of the milk or nonfat on current industry practices regarding would be declared thereafter. milk and resulting in a liquid product. the use of fluid UF milk and fluid UF Based on our understanding, we are FDA also proposed that the name of nonfat milk in the manufacture of considering whether, when fluid UF such treated milk be ‘‘ultrafiltered milk’’ standardized cheeses and related cheese milk and fluid UF nonfat milk are or ‘‘ultrafiltered nonfat milk,’’ as products, and the declaration of fluid sometimes used as ingredients, the appropriate. Consequently, when this UF milk and fluid UF nonfat milk in the labeling of standardized cheeses and type of milk is used, it would be labeling of these products when used as cheese products may alternatively declared in the ingredient statement of ingredients. Of particular interest, we declare ‘‘milk or milk and ultrafiltered

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milk’’ or ‘‘nonfat milk or nonfat milk DEPARTMENT OF THE TREASURY Background and ultrafiltered nonfat milk’’ in the These regulations (the ‘‘proposed Internal Revenue Service ingredient statements. We invite regulations’’) contain proposed comment on this consideration and amendments to 26 CFR part 1 revising 26 CFR Part 1 whether such declarations would the rules under section 863 of the indicate that fluid UF milk or fluid UF Internal Revenue Code (the ‘‘Code’’) for nonfat milk may be an ingredient, but [REG–100956–19] determining the source of gross income not as predominant as milk or nonfat from sales of certain property, and milk, and also enable manufacturers to RIN 1545–BP16 under section 864 for treating foreign avoid relabeling costs if they use source income as effectively connected varying amounts of fluid UF milk or Source of Income From Certain Sales with the conduct of a trade or business fluid UF nonfat milk. Please discuss of Personal Property within the United States. Conforming revisions are made to current whether such declarations would be AGENCY: Internal Revenue Service (IRS), regulations that reference section 863. informative (or, conversely, potentially Treasury. misleading to consumers) and please The proposed regulations also provide ACTION: explain your reasoning. Notice of proposed rulemaking. guidance under section 865(e)(2) and (3) regarding the source of income from the 3. We also are interested in issues SUMMARY: This document contains sale of personal property, including related to the costs of printing different proposed regulations modifying the inventory property, within the meaning product labels and the logistics involved rules for determining the source of of section 865(i)(1) (‘‘inventory’’), by in label changes when fluid UF milk income from sales of inventory nonresidents. and fluid UF nonfat milk are sometimes produced within the United States and The Tax Cuts and Jobs Act, Pub. L. used as ingredients in the production of sold without the United States or vice 115–97 (2017) (the ‘‘Act’’), enacted on a manufacturer’s standardized cheese or versa. These proposed regulations also December 22, 2017, amended section cheese product. For example, what contain new rules for determining the 863 of the Code, which provides special impacts, if any, would a label statement source of income from sales of personal rules for determining the source of of ‘‘milk or milk and ultrafiltered milk’’ property (including inventory) by income, including income partly from or ‘‘nonfat milk or nonfat milk and nonresidents that are attributable to an within and partly from without the ultrafiltered nonfat milk’’ have on office or other fixed place of business United States. Specifically, section labeling costs? How would these costs that the nonresident maintains in the 14303 of the Act amended section compare if fluid UF milk and fluid UF United States. Finally, these proposed 863(b) to allocate or apportion income regulations modify certain rules for nonfat milk are declared only when from the sale or exchange of inventory determining whether foreign source used in the standardized cheese or property produced (in whole or in part) income is effectively connected with the by a taxpayer within and sold or cheese product? Please explain your conduct of a trade or business within reasoning. exchanged without the United States or the United States. produced (in whole or in part) by the 4. Ultrafiltered milk is being used in DATES: Comments and requests for a taxpayer without and sold or exchanged a greater number of food products than public hearing must be received by within the United States (collectively, in the past. There are dairy products in February 28, 2020. ‘‘Section 863(b)(2) Sales’’) solely on the the marketplace, which appear to have ADDRESSES: Submit electronic basis of production activities with gained consumer acceptance, where submissions via the Federal respect to that inventory. Before the Act, ‘‘ultrafiltered milk’’ has appeared in the eRulemaking Portal at section 863(b) provided that income statement of identity or declared in the www.regulations.gov (indicate IRS and from Section 863(b)(2) Sales would be ingredient statement on the product REG–100956–19) by following the treated as derived partly from sources label. Are there any situations where online instructions for submitting within and partly from sources without retailers or consumers would not comments. Once submitted to the the United States without providing the purchase standardized cheeses or Federal eRulemaking Portal, comments basis for such allocation or cheese products labeled as containing cannot be edited or withdrawn. The apportionment. ‘‘ultrafiltered milk’’ as an ingredient? Department of the Treasury (‘‘Treasury Current § 1.863–3 provides rules for Please describe such situations and Department’’) and the IRS will publish allocating or apportioning gross income provide any recent consumer data or for public availability any comment from Section 863(b)(2) Sales. Those market analyses you may have to received to its public docket, whether rules provide several methods for explain your reasoning. submitted electronically or in hard determining the amount of gross income from Section 863(b)(2) Sales that is Dated: December 19, 2019. copy. Send hard copy submissions to: CC:PA:LPD:PR (REG–100956–19), Room attributable to production activity and Lowell J. Schiller, 5203, Internal Revenue Service, P.O. the amount of gross income attributable Principal Associate Commissioner for Policy. Box 7604, Ben Franklin Station, to sales activity, with different rules [FR Doc. 2019–28145 Filed 12–27–19; 8:45 am] Washington, DC 20044. then applying to source the portion of BILLING CODE 4164–01–P the income derived from production FOR FURTHER INFORMATION CONTACT: activity versus sales activity. See current Concerning the proposed regulations § 1.863–3(b). Current § 1.863–3(f) Brad McCormack, (202) 317–6911 or provides rules for gains, profits, and Anisa Afshar, (202) 317–4999; income that are treated as derived partly concerning submissions of comments from sources within the United States and requests for a public hearing, and partly from sources within a Regina L. Johnson, (202) 317–6901 (not possession of the United States toll free numbers). (generally referred to herein as a ‘‘U.S. SUPPLEMENTARY INFORMATION: territory’’).

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With respect to production activity, inventory passes from the seller to the income is ‘‘derived from assets’’ used in current § 1.863–3(c)(1)(ii) provides a buyer. See § 1.861–7(c). the non-U.S. person’s trade or business formula for allocating or apportioning Section 865(c) provides special rules or whether the activities of the trade or gross income where there is production for sourcing gain from the sale of business were a ‘‘material factor’’ in the activity both within and without the depreciable personal property. Under realization of the income. Section United States. Current § 1.863– section 865(c)(1), gain from the sale of 864(c)(3) generally treats U.S. source 3(c)(1)(ii)(A) determines the amount of depreciable personal property that is not income not described in section income from sources without the United in excess of depreciation adjustments is 864(c)(2) as effectively connected with a States by multiplying all the income allocated between sources within and non-U.S. person’s trade or business attributable to taxpayer’s production without the United States by treating the within the United States. Section activities by a fraction, the numerator of same proportion of such gain as sourced 864(c)(4)(B) sets forth additional rules which is the average adjusted basis of within the United States as the United that treat certain foreign source income production assets that are located States depreciation adjustments (as as effectively connected with the defined in section 865(c)(3)) with outside the United States and the conduct of a U.S. trade or business if a respect to such property bear to the total denominator of which is the average non-U.S. person has an office or other depreciation adjustments, and by fixed place of business within the adjusted basis of all the production treating the remaining portion of such United States to which the income is assets located within and without the gain as sourced without the United attributable, including income from United States. For purposes of applying States. Under section 865(c)(2), gain in certain sales of inventory as described this formula, the adjusted basis of excess of the depreciation adjustments in section 864(c)(4)(B)(iii). production assets is determined under is sourced as if such property were Section 864(c)(5)(A) provides rules for section 1011, which is adjusted under inventory. determining whether a non-U.S. person section 1016 for depreciation Section 865(e)(2) provides a further has an office or other fixed place of deductions allowed. Section 13201 of overlay to these rules with respect to all business to which section 864(c)(4)(B) the Act amended section 168(k) to allow sales of personal property (including may apply as the result of the presence an additional first-year depreciation inventory) by nonresidents, as that term of an agent in the United States, and deduction of 100 percent of the basis of is defined in section 865(g)(1)(B), section 864(c)(5)(B) provides a threshold certain property placed in service after attributable to an office or other fixed requirement for determining whether September 27, 2017, and before January place of business in the United States. any income is attributable to such an 1, 2023. Therefore, certain new and Section 865(e)(2)(A) generally provides office or other fixed place of business. used production assets placed in service that income from any sale of personal Once it is determined that an office or and used predominantly within the property attributable to such an office or other fixed place of business in the United States during this period may other fixed place of business is sourced United States exists and income is have an adjusted basis of zero. After in the United States. An exception is attributable thereto, section 864(c)(5)(C) December 31, 2022, qualifying property provided in section 865(e)(2)(B) for a provides that the amount of income so placed in service before January 1, 2027 sale of inventory for use, disposition, or attributable is generally the amount that (or, in the case of certain property, consumption outside the United States is properly allocable to the office or January 1, 2028), is still subject to if a foreign office of the nonresident other fixed place of business. Section accelerated depreciation for an amount ‘‘materially participated’’ in the sale. 864(c)(5)(C) further provides that, with equal to the applicable percentage of the Section 865(e)(3) provides that the respect to certain sales of inventory basis of the property. Section 168(k)(1) ‘‘principles of section 864(c)(5) shall described in section 864(c)(4)(B)(iii), the and (6). However, production assets apply’’ to determine whether a amount attributable to the office or fixed placed in service or used predominantly nonresident has an office or other fixed place of business cannot exceed the without the United States, or both, do place of business and whether a sale is income that would otherwise have been not qualify for this accelerated attributable to such office or other fixed U.S. source had the sale been made in depreciation and must be depreciated place of business. Where applicable, the United States. As noted, the using the straight line method under the section 865(e)(2) applies principles of section 864(c)(5) apply in alternative depreciation system (‘‘ADS’’) ‘‘[n]otwithstanding any other the context of section 865(e)(2) pursuant of section 168(g)(2). See section provisions’’ of subchapter N, part I, to section 865(e)(3). 168(g)(1)(A). including sections 863(b), 861(a)(6), and 862(a)(6). Explanation of Provisions Section 865, added to the Code as part Section 864(c) provides the general Consistent with the Act’s changes to of the Tax Reform Act of 1986, Pub. L. rules for determining whether income is section 863(b)(2), these proposed 99–514 (1986) (the ‘‘TRA’’), provides treated as effectively connected with the regulations amend § 1.863–3 in order to rules for sourcing sales of personal conduct of a trade or business within properly allocate or apportion gross property. The general rule of section the United States. Nonresident alien income from Section 863(b)(2) Sales 865(a)(1) is that income from a sale of individuals, foreign corporations, and based solely on production activity, and personal property is sourced based on bona fide residents of a U.S. territory remove the methods for allocating or the residence of the seller. Section (‘‘non-U.S. persons’’) engaged in a trade apportioning gross income between 865(b) excepts inventory from this rule or business within the United States are production and sales activity. In and sources income from the sale of generally subject to U.S. net basis addition, because of the Act’s change to inventory generally based on either the taxation on income that is effectively section 168(k) to allow accelerated place of sale (for purchased inventory connected with that trade or business. depreciation in some circumstances, under section 861(a)(6) or 862(a)(6)) or Section 864(c)(2) provides that income these proposed regulations provide a based on the allocation and described in section 871(a)(1) or (h) or new rule for computing the adjusted apportionment rules of section 863 (for section 881(a) or (c), as well as U.S. basis of production assets for purposes inventory produced by the taxpayer). source capital gains or losses, are of applying the formula for allocating or The place of sale rules typically depend determined to be effectively connected apportioning gross income where there upon the location where title to the or not based on two tests—whether the is production activity both within and

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without the United States. These electing one of these methods and the the existing rules in current § 1.863– proposed regulations also contain related information that a taxpayer must 3(c)(1)(ii) for sourcing gross income conforming amendments to other disclose on a tax return. from production activity where there is regulations that allocate or apportion The Act amended section 863(b) to production activity both within and income between production and sales source income from Section 863(b)(2) without the United States. The proposed activity. In addition, these proposed Sales solely on the basis of the regulations do not amend current regulations make minor changes to production activity with respect to the § 1.863–3(c)(1)(ii)(A), which determines §§ 1.937–2, 1.937–3, and 1.1502–13 to inventory sold, and as a result sales the amount of foreign source income in update relevant cross references and activity is no longer a relevant factor for such cases by multiplying the total gross examples. allocating or apportioning income under income from Section 863(b)(2) Sales by These regulations also add proposed that section. Therefore, these proposed a fraction, the numerator of which is the § 1.865–3 to clarify the proper scope and regulations remove the three methods in average adjusted basis of production application of section 865(e)(2), as well paragraph (b) and the related election assets located outside the United States as the interaction between section rules in paragraph (e). Proposed and the denominator of which is all 865(e)(2) and section 865(c) regarding § 1.863–3(b) requires sourcing of Section production assets within and without the sourcing of income from the sale of 863(b)(2) Sales based solely on the the United States. The remaining certain depreciable personal property. location of production activities, income is treated as U.S. source. The proposed regulations also clarify consistent with section 863(b)(2), as Because of the Act’s change to section the interaction between the section amended. Given the elimination of the 168(k) to allow accelerated depreciation 865(e)(2) rules and the rules governing 50/50 method, the proposed regulations in some circumstances, the Treasury effectively connected income under no longer provide for the apportionment Department and the IRS have section 864(c)(4)(B)(iii) and (c)(5). The of expenses based solely on relative determined that a new rule is needed in proposed regulations amend § 1.864– gross income from U.S. and foreign current § 1.863–3(c)(1)(ii)(B) for 6(c), the current rules for determining sources. Instead, the proposed computing the adjusted basis of the amount of foreign source effectively regulations provide that expenses are production assets for purposes of the connected income attributable to an allocated and apportioned based on the formula for allocating or apportioning office or other fixed place of business generally-applicable rules in §§ 1.861–8 gross income where there is production within the United States, to be through 1.861–17. activity both within and without the United States. Absent a change to the consistent with the proposed sourcing B. Proposed Changes to § 1.863–3(e) rules applicable to produced inventory rules of current § 1.863–3(c)(1)(ii)(B), Proposed § 1.863–3(e) (which replaces sales under section 865(e)(2). the Act’s modifications to the current § 1.863–3(f)) does not provide a depreciation treatment of U.S. I. Modification of Current § 1.863–3 and specific rule for sourcing gross income production assets will have the Other Regulations To Reflect the derived from the sale of inventory unintended effect of skewing the Amendments of Section 863(b) and produced (in whole or in part) by the apportionment formula in favor of Section 168(k) taxpayer within the United States and foreign source income because non-U.S. sold within a U.S. territory, or produced A. Proposed Changes to § 1.863–3 To production assets (relative to U.S. (in whole or in part) by a taxpayer in a Reflect the Amendment of Section production assets) will generally have a U.S. territory and sold within the 863(b) higher adjusted basis. Therefore, these United States. Instead, proposed proposed regulations modify the Before amendment by the Act, section § 1.863–3(e) provides a cross-reference measurement of the basis of U.S. 863(b)(2) provided that gains, profits, directing taxpayers to source such production assets under current and income from Section 863(b)(2) Sales income under the rules provided by § 1.863–3(c)(1)(ii)(B) for purposes of the were sourced partly from sources within proposed § 1.863–3(c). Proposed apportionment formula of proposed and partly from sources without the § 1.863–3(e) modifies the rule for § 1.863–3(c)(2)(i). The proposed United States, but did not prescribe a sourcing gross income derived from the regulations measure the basis of U.S. particular method of allocating or purchase of personal property within a production assets based on ADS under apportioning between these two U.S. territory and its sale within the section 168(g)(2) so that the basis of sources. Accordingly, current § 1.863–3 United States under section 863(b)(3). both U.S. and non-U.S. production provides allocation or apportionment Consistent with proposed § 1.863–3(b), assets is measured consistently on a methods for Section 863(b)(2) Sales. proposed § 1.863–3(e) removes the straight line method over the same Under those regulations, a taxpayer books and records method provided by recovery period. must allocate or apportion gross income current § 1.863–3(f)(3)(i)(B). Instead, The Treasury Department and the IRS from Section 863(b)(2) Sales between proposed § 1.863–3(e)(3)(i) requires have determined that requiring the use production activity and sales activity sourcing such income based solely upon of ADS for purposes of proposed using one of three methods described in the taxpayer’s business activity. § 1.863–3 is consistent with other current § 1.863–3(b): The 50/50 method provisions of the Act that require the described in paragraph (b)(1), the C. Proposed Changes to § 1.863–3 To use of ADS. For example, sections independent factory price (‘‘IFP’’) Reflect the Amendment of Section 951A(d)(3) and 250(b)(2)(B) (by cross method described in paragraph (b)(2), or 168(k) reference to section 951A(d)) both the books and records method described Notwithstanding the changes to require the use of ADS for purposes of in paragraph (b)(3). Current § 1.863–3(d) section 863(b) required by the Act, there determining qualified business asset provides rules for allocating and remains a need for rules to allocate or investment to calculate global intangible apportioning expenses to gross income apportion gross income from Section low-taxed income and foreign-derived from Section 863(b)(2) Sales, including 863(b)(2) Sales between U.S. and foreign intangible income, respectively. The use a requirement to apportion expenses pro sources where, with respect to of ADS is also consistent with the rata based on the source of gross income inventory, there is production activity interest allocation rules in § 1.861– where the 50/50 method has been used. both within and without the United 9(i)(1)(i). Nevertheless, the Treasury Current § 1.863–3(e) provides rules for States. The proposed regulations retain Department and the IRS request

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comments regarding the suitability of natural resources, to sales activity, the 863(b)(2) to allocate or apportion any using ADS for these purposes and proposed regulations modify current gross income from sales of inventory whether there is a more appropriate way § 1.863–1(b) to remove the export produced by a taxpayer (including to compare U.S. and non-U.S. terminal rule so that, where there is no production in space or international production assets for purposes of additional production activity with water) to sales activity, the proposed proposed § 1.863–3, such as the relative respect to the natural resource, all gross regulations modify current § 1.863– U.S. and non-U.S. production assets income from sales of natural resources 8(b)(3)(ii) to remove the 50/50 method reported on the taxpayer’s financial inventory is based on the location of the and replace it with a rule that allocates statements. farm, mine, oil or gas well, other natural gross income solely on the basis of The proposed regulations do not deposit, or uncut timber from which the production activity. otherwise modify the rules in current natural resource is derived. In other § 1.863–3 for determining the location words, where there are no additional E. Proposed Changes to Regulations or existence of production activity, a production activities, the location of the Under Section 1502 To Reflect the topic the Treasury Department and the farm, mine, oil or gas well, other natural Changes to § 1.863–3 IRS may address in future guidance. The deposit, or uncut timber is considered To reflect section 863(b)(2), as Treasury Department and the IRS the place of production generally.1 amended by the Act, and the proposed request comments regarding other Where there are additional production regulations’ amendments to § 1.863–3, potential approaches to determine the activities with respect to the natural the proposed regulations also amend location or existence of production resource either within or without the example 14 of § 1.1502–13(c)(7)(ii)(N). activity or other modifications to jurisdiction from which the natural This example illustrates the interaction current or proposed § 1.863–3 that may resource is derived, the gross income is between the intercompany transaction be appropriate. allocated or apportioned first to the rules under current § 1.1502–13 and the jurisdiction where the farm, mine, oil or D. Proposed Changes to Other sourcing rules in section 863. As revised gas well, other natural deposit, or uncut Regulations Under Section 863 To by the proposed regulations, the timber is located, in an amount equal to Reflect the Changes to § 1.863–3 example continues to illustrate the same the fair market value of the product matching principles for intercompany The proposed regulations also modify before the additional production transactions under proposed § 1.1502– current § 1.863–1, current § 1.863–2, activities. Any income in excess of that 13 while updating the facts and analysis and current § 1.863–8 to reflect the fair market value is then allocated or to reflect the changes in section changes to current § 1.863–3. Proposed apportioned between sources within 863(b)(2) and § 1.863–3. § 1.863–1(b) provides special rules for and without the United States under allocating or apportioning gross income proposed § 1.863–3 principles based on II. Proposed Rules for Sales of Personal from the sale of natural resources, the location of the assets used in the Property by Nonresidents which can be a subset of inventory additional production activities. See A. Proposed Source Rules Under generally. See proposed § 1.863–2(b). proposed § 1.863–1(b)(2). § 1.865–3 To Take Into Account Section Current § 1.863–1(b)(1) provides a In the case of sales of natural 863(b) general ‘‘export terminal’’ rule that resources by a nonresident that are allocates sales income at the export attributable to an office or other fixed 1. Interaction of Section 863(b), as terminal, sourcing gross receipts equal place of business in the United States of Amended, With Section 865(e)(2) to the fair market value of the natural such nonresident, the foregoing rules In light of the changes made by the resources at the export terminal to the are subject to the rules of section Act to section 863(b), the Treasury location of the farm, mine, well, deposit, 865(e)(2) and proposed § 1.865–3. Department and the IRS are concerned or uncut timber, and gross receipts in Current § 1.863–8(b)(3)(ii) provides a that nonresident taxpayers may take an excess of that amount either to the place special rule for allocating and improper position that these changes of sale or according to the rules in apportioning income under section override the application of section § 1.863–3, depending on the 863(d) derived from sales of property 865(e)(2) as it applies to sales 2 of circumstances. (including inventory) produced by a inventory 3 produced by a nonresident Current § 1.863–1(b)(2) provides a taxpayer if the property is produced or taxpayer and sold through a U.S. sales special rule for taxpayers performing sold, at least in part, in space or office, despite the fact that section additional production activities before international water. This rule requires 865(e)(2) applies ‘‘[n]otwithstanding any the relevant product is shipped from the the taxpayer to allocate gross income other provisions in [sections 861 export terminal. The gross receipts are from such sales between production and through 865].’’ To address this improper allocated between sources within and sales activity under a 50/50 method, interpretation of section 865(e)(2), and without the United States based on the whereby half of the taxpayer’s gross to provide guidance for the application fair market value of the product income will be considered income of section 865(e)(2) in general, the immediately before the additional allocable to production activity and the proposed regulations add proposed production activities. Gross receipts remaining half of such gross income § 1.865–3. equal to the fair market value of the will be considered income allocable to Section 865, enacted in 1986 as part natural resources immediately before sales activity. As it is generally no of the TRA, provides special sourcing the additional production activities are longer appropriate under section rules for sales of personal property. In sourced to the location of the farm, particular, section 865(e)(2) provides 1 mine, well, deposit or uncut timber, and Treasury Decision 8687, 1996–2 C.B. 47, added that ‘‘[n]otwithstanding any other the gross receipts in excess of that fair the export terminal rule in current § 1.863–1(b) partly in response to the decision in Phillips provisions of this part,’’ if a nonresident market value are sourced based on Petroleum Co. v. Commissioner, 97 T.C. 30 (1991), has an office or other fixed place of § 1.863–3. aff’d without published opinion, 70 F.3d 1282 (10th business in the United States, ‘‘income As it is generally no longer Cir. 1995). These proposed regulations follow Phillips Petroleum in treating natural resources, appropriate under section 863(b)(2) to 2 once extracted, in the same way as other types of As defined in section 865(i)(2). allocate or apportion any gross income inventory and therefore subject to section 863(b)(2), 3 Inventory property, as defined in section from sales of inventory, including as amended. 865(i)(1).

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from any sale of personal property On the other hand, section 865 production activities. Following the Act, (including inventory property) concerns the source of income, gain, which did not amend section 865(e)(2), attributable to such office or other fixed and loss, and section 865(e)(3) refers to the Treasury Department and the IRS place of business’’ is U.S. source. ‘‘the principles of section 864(c)(5),’’ continue to believe that this clause has Accordingly, to the extent that which determines ‘‘income, gain or no relevance to the determination of inventory income described in section loss’’ attributable to an office or other how much income is attributable to 863(b)(2) is considered to be derived fixed place of business in the United sales activities or to sales governed by from a sale by a nonresident attributable States (as noted in subparagraphs section 865(e)(2). to an office or other fixed place of 864(c)(5)(B) and 864(c)(5)(C), which By incorporating the principles of business in the United States, section operate together). On this basis, the section 864(c)(5), section 865(e)(3) thus 865(e)(2) must be given effect in Treasury Department and the IRS have authorizes regulations that would determining the source of the income. determined that section 864(c)(5) may bifurcate the income from a sale of For purposes of section 865(e)(2), serve not only as the basis to attribute inventory property produced by a section 865(e)(3) provides that the a sale to an office or other fixed place nonresident outside the United States ‘‘principles of section 864(c)(5)’’ apply of business in the United States within and sold through an office or other fixed in determining ‘‘whether a taxpayer has the meaning of section 865(e)(2), but place of business in the United States so an office or other fixed place of also as the basis, in the context of that only the ‘‘properly allocable’’ business’’ and ‘‘whether a sale is section 865(e)(2) as applicable to amount of income from that sale is attributable’’ thereto. As described in Section 863(b)(2) Sales, for allowing a attributable to an office or other fixed the Background section of this limitation on the amount of income and place of business in the United States preamble, section 864(c)(5)(A) provides gain from sales of inventory property and treated as U.S. source. In such a rules for determining whether a non- attributable to such office or other fixed case, this amount reflects the U.S. person has an office or other fixed place of business and, therefore, sourced nonresident’s sales activity, not its place of business to which section in the United States. In particular, as production activities, with respect to the 864(c)(4)(B) may apply as the result of relevant here, section 864(c)(5)(C) limits personal property sale, which is the the presence of an agent in the United the amount of ‘‘income, gain, or loss’’ portion of the income that Congress States, section 864(c)(5)(B) provides a from sales that meet the ‘‘material intended to treat as U.S. source when it threshold requirement for determining factor’’ threshold of section 864(c)(5)(B) enacted section 865(e)(2) in 1986.5 H.R. whether any income is attributable to to the amount of income ‘‘properly Rep. No. 99–426, at 360–61 (1985). such an office or other fixed place of allocable’’ to the office or other fixed The 1986 legislative history of section business, and section 864(c)(5)(C) place of business in the United States 4 865(e)(2) shows that Congress intended, addresses the extent to which the (which is a lesser amount of income by enacting that provision, to repeal (in income, gain, or loss is attributable to an than would be allocated based on such certain cases) the title passage rule that office or other fixed place of business sale under a literal reading of section formerly controlled the source of the and includes a limitation that for sales 865(e)(2) (the entire amount of income)). ‘‘sales income’’ from the sale of personal of inventory, the income attributable to The last clause of section 864(c)(5)(C) property, regardless of where the ‘‘sales an office or other fixed place of business also imposes a limitation in the case of activities’’ occurred. See H.R. Rep. No. within the United States cannot exceed sales described in section 99–426, at 360 (1985) (providing that ‘‘the income which would be derived 864(c)(4)(B)(iii) (sales outside the ‘‘[a]lthough the title passage rule from sources within the United States if United States made through an office or operates clearly, it is manipulable’’); see the sale or exchange were made in the other fixed place of business in the also S. Rep. No. 99–313, at 330–33 United States.’’ United States) that ‘‘the income which (1986). The legislative history shows Section 865(e)(2) may properly be shall be treated as attributable to an that Congress rather sought to tax read to treat all income from a sale of office or other fixed place of business ‘‘income derived from sales’’ based on personal property by a nonresident as within the United States shall not the ‘‘location of the economic activity U.S. source so long as the sale is exceed the income which would be generating the income.’’ See S. Rep. No. ‘‘attributable’’ to the nonresident’s office derived from sources within the United 99–313, at 330 (1986); H.R. Rep. No. 99– or other fixed place of business in the States if the sale or exchange were made 426, at 360 (1985). ‘‘If the seller United States. By its terms, section in the United States.’’ Before the maintains a fixed place of business 865(e)(3) does not necessarily change enactment of section 865(e)(2), which outside the seller’s country of residence this result because it references section generally caused such sales to result in which materially participates in a sale, 864(c)(5) only for purposes of (1) U.S. source income and hence fall . . . the committee generally believes determining whether a taxpayer has an outside the scope of section that the level of economic activity with office or other fixed place of business 864(c)(4)(B)(iii), this clause was respect to the sale that is associated and (2) whether a sale is attributable to intended to limit the application of with that place of business is high such office or other fixed place of section 864(c)(4)(B) to income from enough such that the location of that business. Section 865(e)(3) does not by sales activities, thus excluding income place of business should govern the its terms reference section 864(c)(5) for from production activities. The clause source of the sales income.’’ H.R. Rep. determining the amount of income did not determine how much income No. 99–426, at 360–61 (1985). These attributable to such office or other fixed was attributable to sales versus statements show, both individually and place of business. On this basis, section 4 Section 864(c)(5)(C) actually states ‘‘the income, 5 In the case of inventory property purchased 865(e) may fairly be read to override gain or loss property [sic] allocable thereto.’’ Based outside the United States (other than in a U.S. section 863(b) where Section 863(b)(2) on the legislative history behind The Foreign territory of the United States) and sold through an Sales of a nonresident are attributable to Investors Tax Act, Public Law 89–809 (1966), which office or other fixed place of business in the United an office or other fixed place of business added section 864(c) to the Code, the use of States, section 863(b) has no application and hence, ‘‘property’’ in the final bill appears to be a regardless of where title passage occurs, all of the in the United States, with the result that typographical error. The Senate Report that added income is considered attributable to such office or all of the income from such sales is this provision used the word ‘‘properly’’ not other fixed place of business and sourced in the sourced within the United States. ‘‘property.’’ See S. Rep. No. 1707 at 1275 (1966). United States.

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in the aggregate, that Congress enacted Blue Book explains that although States and subject to section 865(e)(2) to section 865(e)(2) with a focus upon sections 863(b) and 865(e)(2) may be foreign source to the same extent that sourcing income from sales activity appear to conflict, in the case of a it would be foreign source under section based on the economic location of the nonresident manufacturing property 863(b), standing alone, which would activity, rather than the location of title without the United States for sale cause the sourcing of both the sales and passage. The principles of section within the United States, the result is production income from the disposition 864(c)(5) (and in particular that ‘‘the income generally is partly to be based on the location of subparagraph (C) thereof) give effect to U.S.-source and partly foreign- production activities. Such a reading this intent through section 865(e)(3) by source.’’ 6 Id. at 328 n.1519. cannot be correct, because it would limiting the application of section Further, despite the changes to inappropriately construe a provision 865(e)(2) to sales income properly section 863(b) in the Act, structurally, (section 865(e)(2)) intended as a allocable to the office or other fixed the bifurcated approach is maintained, separate restriction on the source rule place of business in the United States. and section 863(b)(2) continues to refer under section 863(b)(2) (and which Before the issuance of these proposed to inventory that is produced within the literally can be read as entirely regulations, the Treasury Department United States and sold without the overriding that rule) to be determined and the IRS had never issued formal United States, or produced without the solely by reference to the terms of such guidance on the sourcing rules of United States and sold within the source rule itself (rather than at most in section 865(e)(2) in the case of inventory United States. The statutory provision a manner giving effect to both rules). property produced outside the United preserves the distinction between sales Further, such a construction would States and sold within the United and production economic activity. If cause section 865(e)(2) to have no effect States. Nevertheless, in light of the Congress intended to eliminate the sales with respect to sales of inventory that statutory text of section 865(e)(2) and (3) versus production dichotomy for all are also described in section 863(b)(2), (as well as section 864(c)(5)(C) by purposes, it presumably would have contrary to longstanding statutory reference) and the legislative history of deleted those phrases as the new flush construction principles. See, e.g., Watt these provisions, in practice, the IRS has language (that any sale of manufactured v. Alaska, 451 U.S. 259, 267 (1981) historically interpreted section 865(e)(2) inventory property is sourced in whole (statutes should be read to give effect to to include a limitation that treated as based on the location of production each if it can be done so while U.S. source only the sales income activities) would have made them preserving their sense and purpose). allocable to the office or other fixed surplusage. Moreover, such a reading would, in place of business in the United States In light of Congress’s decision to effect, import the change in section reflecting the sales activity from the retain the underlying structure of 863(b) from the Act into section transaction. See, e.g., 1996 Field Service section 863(b)(2) and append the flush 865(e)(2), which Congress did not do. Advice (FSA) LEXIS 68 (Sept. 24, 1996); language as an overlay, the IRS’s As noted, section 865(e)(2) applies 1996 FSA LEXIS 465 (Feb. 29, 1996). longstanding interpretation of the ‘‘[n]otwithstanding any other This historical interpretation utilized relationship of sections 863(b)(2) and provisions.’’ Section 865(e)(3) applies the rules of section 863(b) before 865(e)(2) under pre-Act law, and the fact the ‘‘principles’’ of section 864(c)(5), amendment by the Act (referenced in that section 865(e)(2) was left unaltered which reflects the sometimes imprecise current § 1.864–6(c)) to determine the by the Act, the Treasury Department fit between sections 864(c)(5) and amount of income allocable to the office and the IRS have determined that the 865(e)(2), such as the fact that section or other fixed place of business in the relationship between section 863(b)(2) 864(c)(5) refers to ‘‘income, gain or United States, thereby allowing and section 865(e)(2) should not be loss,’’ rather than a ‘‘sale,’’ attributable taxpayers to apply, among other rules, a interpreted differently before and after to an office or other fixed place of 50/50 split between U.S. source income the Act. Thus, section 865(e)(2) should business in the United States. The (allocable to the office or other fixed continue to apply to inventory property relevant principles referenced in section place of business in the United States sales income ‘‘properly allocable’’ to an 865(e)(3) are those that apply for and reflective of sales activity) and office or other fixed place of business in purposes of determining the income, foreign source income (reflective of the United States (reflecting sales gain, or loss attributable to an office or production activity) for sales subject to activity rather than production activity) fixed place of business in the United section 865(e)(2) (the ‘‘50/50 method’’). just as before the Act. States. As discussed previously in this The IRS has historically allowed the 50/ As noted, the Treasury Department section of the Explanation of Provisions, 50 method for establishing the amount and the IRS understand that some the last clause of section 864(c)(5)(C) is allocable to the office or other fixed nonresident taxpayers may be taking the not relevant to that determination and place of business in the United States position that, applied after the Act, the therefore is not relevant to the (and the sales activity) under section last clause of section 864(c)(5)(C) application of sections 863(b) or 864(c)(5). Section 865(e)(3) incorporates (limiting the income treated as 865(e)(2). The principles of section into section 865(e)(2) the principles of attributable to an office or other fixed 864(c)(5) are those self-contained in the section 864(c)(5), and so the 50/50 place of business in the United States to words of the provision itself (‘‘properly method approximated the effect of the amount that would be U.S. source if allocable’’), and not the limitation applying the principles of section the sale were made in the United States) provided in the last clause of section 864(c)(5) under section 865(e)(2). causes the income from the sale of 864(c)(5)(C) that serves a different Although the Act amended section inventory produced outside the United purpose. The amendment to section 863(b), it made no changes to section 863(b)(2) did not change the traditional 865(e)(2), which does not explicitly 6 This statement appears to conflict with another analysis regarding the attribution of reference or depend upon section 863. statement in the 2018 Blue Book with respect to inventory sales to an office or other The 2018 Blue Book notes the absence prior law to the effect that the application of section fixed place of business in the United of any change to section 865(e)(2). See 865(e)(2) to a sale of personal property made by a States. nonresident attributable to its office or fixed place 2018 Blue Book at 397 n.1798. of business in the United States results in all In light of the foregoing, these Consistent with historical IRS practice, income from the sale being sourced in the United proposed regulations clarify the in its description of prior law, the 2018 States. Id. at 396–97. application of the principles of section

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864(c)(5) in the context of section Commissioner upon request. To the source income. See H.R. Rep. No. 99– 865(e)(2) and provide that sales of extent income from either type of 426, at 364 (1985); S. Rep. No. 99–313, inventory produced outside the United inventory sale is treated as U.S. source at 331–32 (1986); Joint Committee on States and sold through an office under proposed § 1.865–3(d)(2) or (3), Taxation, General Explanation of the maintained by the nonresident in the the income will generally be effectively Tax Reform Act of 1986 (Pub. L. 99– United States must be sourced in the connected with the conduct of a U.S. 514), JCS–10–87, at 63 (1987). Thus, United States in part. trade or business under section Congress intended to apply the 864(c)(3). recapture rule to source gain, not in 2. Overview of the Proposed Regulations Proposed § 1.865–3(e) provides a excess of depreciation, from a sale of Under Section 865(e)(2) cross reference to the rules in §§ 1.882– depreciable personal property (as Section 865(e)(2) sources the amount 4 and 1.882–5, which determine the opposed to sourcing that gain based on of income from sales described in amount of expenses that are properly the location of the taxpayer’s office). section 865(e)(2)(A) to which the allocated and apportioned to gross Consistent with this legislative exception in section 865(e)(2)(B) does income effectively connected with the history, the Treasury Department and not apply (Section 865(e)(2) Sales) that conduct of a trade or business in the the IRS have determined that, to the is determined to be properly allocable to United States. extent a nonresident previously the nonresident’s office or other fixed allocated depreciation deductions 3. The Proposed Rules for Non- place of business in the United States against foreign source income, in the Inventory Property under the principles of section event of a sale of such property through 864(c)(5)(C) as referenced by section Section 864(c)(2) applies to determine an office or other fixed place of business 865(e)(3). In cases where a sale of whether U.S. source gain from the sale in the United States, the associated gain personal property is not a Section of non-inventory property and other is not ‘‘properly allocable’’ to an office 865(e)(2) Sale, other sourcing provisions capital assets by a non-U.S. person is or other fixed place of business in the continue to apply. effectively connected with the conduct United States under the principles of Proposed § 1.865–3(a) sets forth the of a U.S. trade or business. The section 864(c)(5), and therefore to such general rule in section 865(e)(2)(A), and proposed regulations implement section extent the sale (and gain) is not proposed § 1.865–3(b) sets forth the 865 and provide source rules for attributable to a nonresident’s office or exception in section 865(e)(2)(B) and determining whether gain is U.S. source other fixed place of business in the cross-references the rules of § 1.864– for purposes of section 864(c)(2). United States under section 865(e)(2). 6(b)(3) to determine if a foreign office In the case of income derived from the Therefore, in the case of income subject materially participated in the sale. sale of depreciable personal property, to section 865(e)(2) from the sale of Proposed § 1.865–3(c) sets forth the section 865(c) distinguishes between depreciable personal property, the rules for determining whether a gain not in excess of depreciation amount of gain, not in excess of nonresident has an office or other fixed adjustments and gain in excess of depreciation deductions, that is place of business in the United States by depreciation adjustments, and bifurcates allocable to the nonresident’s office or incorporating the principles of § 1.864– the gain not in excess of depreciation fixed place of business within the 7, and whether a sale of personal adjustments pro rata to depreciation United States is the amount of gain that property is attributable to that office or deductions allowable in computing would be attributable to United States other fixed place of business in the taxable income from sources within the depreciation deductions under the United States by incorporating the United States and without the United recapture rule of section 865(c)(1). To principles of § 1.864–6(b) and (c), as States. Section 865(c)(1). Gain in excess the extent the gain exceeds prior U.S. amended. of depreciation is sourced as if such and non-U.S. depreciation deductions, Proposed § 1.865–3(d) then provides property were inventory property. sections 865(c)(2) and 865(e)(2) apply rules for determining the amount of Section 865(c)(2) and proposed § 1.865– and source that gain as if the property income that is treated as U.S. source; the 3(d)(4). See section II.A.4 of this were inventory. Thus, the residual gain rules depend on whether the property Explanation of Provisions for discussion in excess of depreciation deductions is sold is inventory (including property of the sourcing of inventory property. sourced under the rules of section treated as inventory under section The legislative history of section 865(c), 865(e)(2) as described in proposed 865(c)(2)) or other personal property of which was enacted at the same time as § 1.865–3(d)(2) (for produced inventory, a nonresident sold in a sale attributable section 865(e)(2), indicates that the 50/50 method and the books and to an office or other fixed place of Congress intended to create a special records method) and (d)(3) (for business in the United States of the rule for depreciable personal property to purchased inventory, 100 percent U.S. nonresident. Proposed § 1.865–3(d) source the income derived from the sale source income). provides separate source rules for of depreciable personal property, to the income from sales of inventory subject extent of prior depreciation deductions, 4. The Proposed Rules for Inventory to section 865(e)(2), dependent on under a recapture principle. Under this With respect to inventory purchased whether the nonresident produced the rule, gain from the sale of depreciable and sold by a nonresident in a sale inventory (either the default 50/50 personal property, to the extent of prior attributable to an office or other fixed method in paragraph (d)(2)(i) or the depreciation deductions, is sourced place of business in the United States elective books and records method in within the United States in proportion and subject to section 865(e)(2), none of paragraph (d)(2)(ii)), or purchased the to the extent of the depreciation the income from the sale is attributable inventory, 100 percent U.S. source deductions that were previously to production activity, and therefore, income in paragraph (d)(3). Proposed allocated against U.S. source income. unless the exception in section § 1.865–3(d)(2)(ii) provides the books On the other hand, the gain, to the 865(e)(2)(B) applies, all of the income and records method that a taxpayer can extent of prior depreciation deductions, from the sale is properly allocable to the elect to apply in lieu of the default 50/ is sourced without the United States in office or other fixed place of business in 50 method, including the rules for proportion to the extent of the the United States. Thus, the proposed making that election and the records depreciation deductions that were regulations clarify that in these cases that must be provided to the previously allocated against foreign section 865(e)(2) causes all of the gross

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income derived from the disposition to 865(e)(2), 50 percent of the gross income was the most administrable of the be U.S. source. See § 1.865–3(d)(3). is U.S. source income allocable to the permissible means of applying section With respect to inventory produced U.S. sales office or other fixed place of 865(e)(2) through the application of and sold by a nonresident in a sale business, and the remaining 50 percent section 864(c)(5)(C) and current § 1.864– attributable to an office or other fixed is foreign source income. 6(c)(2) before the Act. Therefore, these place of business in the United States In prescribing the 50/50 method for proposed regulations adopt the 50/50 and subject to section 865(e)(2), the dividing gross income from Section method as the default method for Treasury Department and the IRS have 865(e)(2) Sales between production and allocating or apportioning gross income determined that the disposition sales activity, the Treasury Department attributable to Section 865(e)(2) Sales continues to give rise to gross income and the IRS appreciate that this method between sources within and without the that is partly allocable to the may not correspond precisely to the United States. nonresident’s office or other fixed place economic genesis of the gross income Nevertheless, the Treasury of business in the United States with respect to the sales and production Department and the IRS are aware that (representative of the sales activity with activity involved. Nevertheless, the some taxpayers may be able to more respect to the transaction) and sourced Treasury Department and the IRS have precisely allocate or apportion their under section 865(e)(2), with the determined that this is an appropriate gross income between sales and remainder allocable to production and administrable way to give effect to production activities based on their activity and sourced under section the principles of section 864(c)(5) in books of account. Taxpayers, at their 863(b). Therefore, these proposed allocating income to the office or other election, have historically used such a regulations provide a rule specifically fixed place of business in the United ‘‘books and records’’ method under for Section 865(e)(2) Sales involving States (and focusing on sales activity) current § 1.863–3(b)(3) to allocate or inventory produced by the nonresident when applying section 865(e)(2). First, apportion their gross income from sales that distinguishes generally between the 50/50 method has historically been of inventory between production and sales and production activities in recognized as a reasonable method for sales activities. Therefore, as an elective determining the source of the income allocating income between production alternative to the default 50/50 method, from sales of produced inventory and is and sales activity. Before the Act, taxpayers may continue to use a books consistent with the overall structure of section 863(b) specified that income and records method as provided in subchapter N, part I (sections 861–865). these proposed regulations. However, The Treasury Department and the IRS from Section 863(b)(2) Sales ‘‘be treated the proposed regulations include more understand that Congress intended for as derived partly from sources within detailed guidance regarding the the source rules to ‘‘operate clearly and partly from sources without the requirements that must be met before a without the necessity for burdensome United States,’’ and imposed no taxpayer will be permitted to use this factual determinations.’’ H.R. Rep. No. standard for allocating or apportioning 99–426, at 360 (1985). Additionally, it is the income. As discussed, the 50/50 method. noteworthy that the ‘‘principles’’ of method was a commonly used and well- A taxpayer electing the books and section 864(c)(5)(C), rather than the understood sourcing method that records method must prepare and exact rules thereof, apply in the section ensured some income was allocated or maintain records that are in existence 865(e)(2) context. Finally, the Treasury apportioned to sales activity and some when its return is filed regarding the Department and the IRS are mindful of to production activity under section allocation of gross income between sales the fact that section 865(e)(2) was not 863(b). For example, in 1984 the and production activities in its books of modified by the Act. Before the Act, by Treasury Department stated that account and indicate in a statement applying the principles of current ‘‘[g]enerally, [income derived from the attached to its tax return that it elects to § 1.863–3(b) to determine the amount of manufacture and sale of property] is apply this method. As part of its records income allocable to the office or other allocated one-half on the basis of the that exist when its return is filed, the fixed place of business in the United place of manufacture and half on the taxpayer must include an explanation of States, the 50/50 method allowed for a basis of the place of sale.’’ Treasury how such allocation clearly reflects the 50 percent U.S. source result with Department, Tax Reform for Fairness, taxpayer’s income from production and respect to sales of produced inventory. Simplicity, and Economic Growth, Nov. sales activities under the principles of Based on the foregoing 1984 at 364. The House, Senate, and section 482. The Treasury Department considerations, these proposed Conference Committees each stated with and the IRS intend the taxpayer’s regulations continue to apply the 50/50 respect to the TRA that ‘‘[under the 50/ explanation to allow a potential method as the general rule to treat 50 50 method], half of such income examiner to have a roadmap for percent of a nonresident’s income with generally is sourced in the country of understanding the method by which the respect to produced inventory sold manufacture, and half of the income is taxpayer determined the allocation of through an office or other fixed place of sourced on the basis of the place of gross income between the U.S. sales business in the United States as U.S. sale.’’ H.R. Rep. No. 99–426, at 359 activities and the foreign production source income attributable to the sales (1985); S. Rep. No. 99–313, at 329 activities, respectively. The use of activity of the office maintained by the (1986); H.R. Rep. No. 99–841, at 917 section 482 in the proposed regulations nonresident. The remaining 50 percent (1986) (‘‘Conf. Rep.’’). Finally, the staff is not intended to imply that the of the income is allocated or of the Joint Committee on Taxation has taxpayer’s explanation must satisfy the apportioned between U.S. and foreign referred to the 50/50 method as the documentation requirements of section sources by applying section 863(b) and ‘‘production/marketing split’’ and stated 6662(e) and § 1.6662–6(d). The taxpayer the regulations thereunder (as amended that under this method ‘‘50 percent of must make available its books and by these proposed regulations) based such income generally is attributed to records for both its sales activities and upon the location of production the place of production.’’ Joint its production activities and the related activities. Thus, where inventory is Committee on Taxation, Factors explanation upon request of the produced entirely outside the United Affecting International Competitiveness Commissioner. If a taxpayer fails to States and sold through a U.S. sales of the United States, JCS–6–91, at 148– satisfy these requirements in full, the office in a transaction subject to section 149 (1991). Second, the 50/50 method default 50/50 method will apply.

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These proposed regulations, however, Committee on Taxation, Description of section 865(e)(2), the proposed do not also provide for an elective IFP the Technical Correction Act of 1988, regulations remove any current method as allowed by current § 1.863– JCS–10–88, at 250 (1988); TAMRA 1988 references in § 1.864–6(c)(2) to section 3(b)(2). The Treasury Department and (section 1012(d)(7) restored section 863(b) and § 1.863–3, thereby clarifying the IRS have determined that this 864(c)(4)(B)(iii)). that the rules of section 863(b) and method is applicable only in very The Treasury Department and the IRS § 1.863–3 do not apply in the context of narrow circumstances when an IFP have thus determined that where both section 864(c)(4)(B)(iii) to treat exists and therefore has rarely been provisions potentially could apply, as in inventory sales as exclusively giving elected by taxpayers in practice. Any the case of foreign corporations and rise to foreign source income if the taxpayer that wishes to continue using most nonresident alien individuals, inventory sold was produced an IFP could generally continue to reach section 865(e)(2) takes precedence over exclusively outside of the United States. a similar result by electing the books section 864(c)(4)(B)(iii) because section The proposed regulations do not modify and records method and basing the 865(e)(2) applies ‘‘[n]otwithstanding any the treatment of sales by these allocation or apportionment in its books other provisions of this part.’’ individuals of intangible personal and records on the IFP. Nevertheless, Consistent with the TAMRA 1988 property described in § 1.864–5(b)(1) or the Treasury Department and the IRS legislative history, the Treasury of stock or securities described in request comments on whether the IFP or Department and the IRS have § 1.864–5(b)(2), which continue to be any other methods for allocating or determined that section 864(c)(4)(B)(iii) governed by § 1.864–6(c)(1). Current and apportioning gross income attributable applies solely to nonresident alien proposed § 1.864–6(c)(2) implement the to Section 865(e)(2) Sales between individuals (defined in section 7701(b)) rule in section 864(c)(5)(C) that applies sources within and without the United who under section 865(g)(1) have a tax solely to sales of personal property States should be included in these home (as defined in section 911(d)(3)) in described in section 864(c)(4)(B)(iii) and regulations. the United States (and whose inventory § 1.864–5(b)(3). sales thus would not be subject to These proposed regulations also may B. Modification of Current § 1.864– section 865(e)(2) as those individuals impact the determination of qualified 6(c)(2) To Ensure Consistency With would not be ‘‘nonresidents’’ under business income for purposes of section § 1.865–3 section 865(g)(1)(B)). Note that these 199A. Section 199A(c)(3)(A)(i) provides Section 864(c)(4)(B)(iii) generally nonresident alien individuals would be that ‘‘qualified items of income, gain, provides that income derived from the subject to section 864(c)(4)(B)(iii) and deduction, and loss’’ under section sale of inventory (outside the United section 864(c)(5) only with respect to 199A(c)(3) are those items that are, States) by a non-U.S. person through an income from inventory sales that is among other things, effectively office or other fixed place of business in determined to be foreign source after connected with the conduct of a trade the United States may be effectively application of sections 861(a)(6), or business in the United States within connected income, notwithstanding that 862(a)(6), and 863(b) pursuant to section the meaning of section 864(c) (subject to it would be foreign source income under 865(b). Thus, for example, a nonresident certain modifications). The Treasury the title passage rules in § 1.861–7(c). It alien individual engaged in a U.S. trade Department and the IRS continue to provides an exception for inventory sold or business, with a tax home in the study the application of section 864(c) for use or consumption outside the United States, who purchases inventory in the context of section 199A, and United States, similar to the exception outside the United States and resells request comments on this topic. in section 865(e)(2)(B). inventory attributable to a U.S. office Accordingly, sections 864(c)(4)(B)(iii) (with title passing offshore) would have C. U.S. Income Tax Treaties and 865(e)(2), as a statutory matter, foreign source income under section The Treasury Department and the IRS appear to overlap in their treatment of 862(a)(6) (by reference from section are aware that under U.S. income tax sales of inventory by non-U.S. persons 865(b)), but that foreign source income treaties, the business profits of foreign through an office or other fixed place of would then be subject to section treaty residents may be taxable in the business in the United States. This was 864(c)(4)(B)(iii) and section 864(c)(5) to United States only if the profits are not the case, however, in 1986 because determine the amount of the attributable to a permanent Congress removed section individual’s foreign source effectively establishment in the United States. With 864(c)(4)(B)(iii) from the Code when connected income. respect to taxpayers entitled to the section 865(e)(2) was added. The Tax Although the scope of section benefits of an income tax treaty, the Reform Act of 1986, Public Law 99–514 864(c)(4)(B)(iii) is narrow, the Treasury amount of profits attributable to a U.S. (1986) (section 1211(a) added section Department and the IRS have permanent establishment will not be 865, while section 1211(b)(2) removed determined that income from sales of affected by these regulations. section 864(c)(4)(B)(iii)). Two years inventory by these individuals should later, however, in the Technical and be taxable as effectively connected Proposed Applicability Date Miscellaneous Revenue Act of 1988 income to the same extent as if The regulations are proposed to apply (‘‘TAMRA 1988’’), Congress added inventory sales by these individuals to taxable years ending on or after section 864(c)(4)(B)(iii) back to the were governed by section 865(e)(2), December 23, 2019. As proposed, the Code, with the Senate Report to TAMRA depending on whether the inventory regulations will permit taxpayers to 1988 explaining that the provision was was either purchased abroad or apply the rules therein in their entirety reinstated because it ‘‘is necessary to produced abroad. Section 1.864– for taxable years beginning after ensure that foreign persons who have a 6(c)(2)is therefore modified so that it December 31, 2017, and before these substantial presence in the United applies exclusively to this distinct class regulations apply. States, who may be treated as U.S. of nonresident aliens, those with a tax In addition, taxpayers may rely on the residents for source rule purposes but as home in the United States who are not rules in the proposed regulations for nonresidents for general purposes, are covered under section 865(e)(2). taxable years beginning after December taxed on income derived from sales of Further, in order for these individuals to 31, 2017, and before the final inventory property.’’ S. Rep. No. 100– be subject to tax to the same extent as regulations are applicable, provided that 445, at 239 (1988); see also Joint other nonresident taxpayers under the taxpayer and persons that are related

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(within the meaning of section 267 or comments on the impact of this rule on potential approaches to determine the 707) to the taxpayer apply the proposed small entities. location or existence of production regulations in their entirety. For taxable The other regulations in this activity, or other modifications to years before these regulations apply, the publication (other than changes to § 1.863–3 that may be appropriate; IRS may, where appropriate, challenge ensure consistency with section 863(b)) related to whether there are other certain positions described in this are the proposed regulations in suitable methods for allocating or preamble, including that following the §§ 1.864–6 and 1.865–3. These proposed apportioning income attributable to amendment to section 863(b)(2) income regulations solely affect non-U.S. Section 865(e)(2) Sales between U.S. earned by nonresidents from sales of taxpayers, which are not subject to the and foreign sources; and related to the personal property produced outside the Regulatory Flexibility Act. impact of these proposed regulations on United States and sold through an office Pursuant to section 7805(f), this the determination of qualified business or other fixed place of business in the notice of proposed rulemaking has been income for purposes of section 199A, United States is 100 percent foreign submitted to the Chief Counsel for respectively). All comments will be source. Advocacy of the Small Business available at www.regulations.gov or Administration for comment on its Special Analyses upon request. A public hearing will be impact on small businesses. scheduled if requested in writing by any The Administrator of the Office of II. Unfunded Mandates Reform Act person that timely submits comments. If Information and Regulatory Affairs a public hearing is scheduled, notice of (OIRA), Office of Management and Section 202 of the Unfunded the date, time, and place for the public Budget, has determined that this Mandates Reform Act of 1995 requires hearing will be published in the Federal proposed rule is not a significant that agencies assess anticipated costs Register. regulatory action, as that term is defined and benefits and take certain other in section 3(f) of Executive Order 12866. actions before issuing a final rule that Drafting Information Therefore, OIRA has not reviewed this includes any Federal mandate that may The principal authors of the proposed proposed rule pursuant to section result in expenditures in any one year regulations are Brad McCormack and 6(a)(3)(A) of Executive Order 12866 and by a state, local, or tribal government, in Anisa Afshar of the Office of Associate the April 11, 2018, Memorandum of the aggregate, or by the private sector, of Chief Counsel (International). However, Agreement between the Treasury $100 million in 1995 dollars, updated other personnel from the Treasury Department and the Office of annually for inflation. In 2019, that Department and the IRS participated in Management and Budget (‘‘OMB’’). threshold is approximately $154 their development. I. Regulatory Flexibility Act million. These proposed regulations do not include any Federal mandate that List of Subjects in 26 CFR Part 1 Pursuant to the Regulatory Flexibility may result in expenditures by state, Act (5 U.S.C. chapter 6), it is hereby Income taxes, Reporting and local, or tribal governments, or by the recordkeeping requirements. certified that these proposed private sector in excess of that regulations, if adopted, will not have a threshold. Proposed Amendments to the significant economic impact on a Regulations substantial number of small entities. III. Executive Order 13132: Federalism Although data are not readily available Executive Order 13132 (entitled Accordingly, 26 CFR part 1 is to assess the number of small entities ‘‘Federalism’’) prohibits an agency from proposed to be amended as follows: potentially affected, any economic publishing any rule that has federalism PART 1—INCOME TAXES impact of these regulations is unlikely implications if the rule either imposes to be significant. Specifically, the substantial, direct compliance costs on ■ Paragraph 1. The authority citation regulations in §§ 1.863–1 and 1.863–3 state and local governments, and is not for part 1 is amended by: (with conforming changes in cross- required by statute, or preempts state ■ referencing regulations) implement the 1. Revising the entries for §§ 1.863–1, law, unless the agency meets the 1.863–2, 1.863–3, and 1.863–8. statutory change made to section 863(b) consultation and funding requirements ■ 2. Adding an entry for § 1.865–3 in by the Act. This change affects sales of of section 6 of the Executive Order. numerical order. inventory property by any taxpayer These proposed regulations do not have ■ where the taxpayer produces the federalism implications and do not 3. Revising the entries for §§ 1.937–2, inventory (in whole or in part) within impose substantial direct compliance 1.937–3, and 1.1502–13. the United States and sells that costs on state and local governments or The revisions and addition read in inventory without the United States, or preempt state law within the meaning of part as follows: vice versa. The change in sourcing for the Executive Order. Authority: 26 U.S.C. 7805 * * *. those entities is attributable to the Section 1.863–1 also issued under 26 change in section 863(b) made by the Comments and Requests for Public U.S.C. 863(a). Act. Proposed §§ 1.863–1 and 1.863–3 Hearing Section 1.863–2 also issued under 26 merely implement the statutory change Before the proposed regulations are U.S.C. 863(a). with limited additional guidance. The adopted as final regulations, Section 1.863–3 also issued under 26 Treasury Department and the IRS do not consideration will be given to any U.S.C. 863(a). anticipate that any differences between comments that are submitted timely to * * * * * the changes in section 863(b) made by the IRS as prescribed in this preamble Section 1.863–8 also issued under 26 U.S.C. 863(a). the Act and the changes in proposed under ADDRESSES. The Treasury §§ 1.863–1 and 1.863–3 made by these Department and the IRS request * * * * * proposed regulations will have a comments on all aspects of the proposed Section 1.865–3 also issued under 26 significant economic impact on a rules. See also sections I.C, II.A.4, and U.S.C. 865(j). substantial number of small entities. II.B of the Explanation of Provisions * * * * * Notwithstanding this certification, the (requesting specific comments related to Section 1.937–2 also issued under 26 Treasury Department and the IRS invite the suitability of using ADS, other U.S.C. 937(b).

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Section 1.937–3 also issued under 26 meaning of section 865(i)(1) (inventory), before the additional production U.S.C. 937(b). generally, and section 865(e)(2) and activities in the United States is $40x * * * * * § 1.865–3 for sourcing income from the and that U.S. Gold ultimately sells the Section 1.1502–13 also issued under 26 sale of personal property (including gold jewelry in Country Y for $100x. U.S.C. 1502. inventory) by a nonresident that is Under paragraph (b)(2) of this section, $40x of U.S. Gold’s gross receipts will * * * * * attributable to the nonresident’s office ■ Par. 2. Section 1.863–1 is amended as or other fixed place of business in the be allocated to sources without the follows: United States. * * * United States, and the remaining $60x ■ 1. In paragraph (a): (b) * * * of gross receipts will be U.S. source ■ i. Revising the third sentence. (1) * * * Notwithstanding any other under § 1.863–3. ■ ii. Removing ‘‘§ 1.863–3(g)’’ and provision of this part, except to the (iv) Example 4. Production in United adding in its place ‘‘§ 1.863–3(f)’’. extent provided in paragraph (b)(2) of States. U.S. Oil, a domestic corporation, ■ 2. In paragraph (b)(1): this section or § 1.865–3, gross receipts extracts oil in Country X, transports the ■ i. Removing ‘‘, must be allocated from the sale within the United States oil via a pipeline to the United States, between sources within and without the of products derived from the ownership refines the oil using production assets United States based on the fair market or operation of any farm, mine, oil or located in the United States, and sells value of the product at the export gas well, other natural deposit, or timber the refined product in the United States terminal (as defined in paragraph outside the United States shall be to unrelated persons. Assume that the (b)(3)(iii) of this section)’’ from the first treated as attributable to production fair market value of the oil before sentence and adding in its place ‘‘shall activities without the United States and refinement in the United States is $80x be treated as income from sources therefore treated as income from sources and U.S. Oil ultimately sells the refined within the United States’’. without the United States. product for $100x. Under paragraph ■ ii. Revising the second sentence. * * * * * (b)(2) of this section, $80 of gross ■ iii. Removing the third, fourth, and (7) * * * receipts will be allocated to sources fifth sentences. (i) Example 1. No additional without the United States, and the ■ 3. Removing paragraphs (b)(1)(i) and production. U.S. Mines, a domestic remaining $20 of gross receipts will be (ii). corporation, operates a copper mine and allocated to sources within the United ■ 4. In paragraph (b)(2): mill in Country X. U.S. Mines extracts States. ■ i. Removing ‘‘prior to export terminal’’ copper-bearing rocks from the ground * * * * * ■ from the heading and adding in its place and transports the rocks to the mill Par. 3. Section 1.863–2 is amended as ‘‘activities’’. where the rocks are ground and follows: ■ ■ ii. Removing ‘‘before the relevant processed to produce copper-bearing 1. Removing ‘‘(and that is treated as product is shipped from the export concentrate. The concentrate is derived partly from sources within and terminal’’ from the first sentence. transported to a port where it is dried partly from sources without the United ■ 5. Removing ‘‘§§ 1.1502–13 or 1.863– in preparation for export, stored, and States)’’ from the third sentence of 3(g)(2)’’ from paragraph (b)(3)(i) and then shipped to purchasers in the paragraph (a) and adding a colon at the adding in its place ‘‘§ 1.1502–13 or United States. Because there is no end of the paragraph. ■ 2. Revising paragraph (b). § 1.863–3(f)(2)’’. additional production, paragraph ■ The revision reads as follows: 6. Removing ‘‘to or from the export (b)(3)(ii) of this section does not apply, terminal’’ from the third sentence of and under paragraph (b)(1) of this § 1.863–2 Allocation and apportionment of paragraph (b)(3)(ii). section, gross receipts from the sale of taxable income. ■ 7. Removing paragraph (b)(3)(iii). ■ the concentrate will be from sources * * * * * 8. In paragraph (b)(6), removing ‘‘this without the United States. (b) Determination of source of taxable paragraph (b)’’ from the first sentence (ii) Example 2. No additional income. Income treated as derived from and adding in its place ‘‘paragraph (b)(2) production. U.S. Gas, a domestic sources partly within and partly without of this section’’. corporation, extracts natural gas within the United States under paragraph (a) of ■ 9. Designating Examples 1, 2, 3, 4, and the United States, and transports the this section may be allocated or 5 of paragraph (b)(7) as paragraphs natural gas to a Country X port where apportioned to sources within and (b)(7)(i) through (v). it is liquefied in preparation for without the United States pursuant to ■ 10. Revising newly designated shipment. The liquefied natural gas is §§ 1.863–1, 1.863–3, 1.863–4, 1.863–8, paragraphs (b)(7)(i) through (iv). then transported via freighter and sold and 1.863–9. To determine the source of ■ 11. In newly designated paragraph without additional production activities certain types of income described in (b)(7)(v): ■ i. Removing ‘‘Example 1’’ from the in a foreign country. Liquefaction of paragraph (a)(1) of this section, see first sentence and adding ‘‘paragraph natural gas is not an additional § 1.863–4. To determine the source of (b)(7)(i) of this section (Example 1)’’. production activity because liquefaction gross income described in paragraph ■ ii. Removing ‘‘country’’ from the first prepares the natural gas for (a)(2) of this section, see § 1.863–1 for sentence and adding in its place transportation. Therefore, under natural resources and § 1.863–3 for all ‘‘Country’’. paragraph (b)(1) of this section, gross other sales of inventory property. ■ iii. Removing ‘‘Mine’s’’ from the receipts from the sale of the liquefied Section 1.865–3 may apply instead of seventh sentence and adding in its place natural gas will be from sources within the provisions in this part to source ‘‘Mines’’’. the United States. gross income from sales of personal The revisions read as follows: (iii) Example 3. Production in United property (including inventory property) States. U.S. Gold, a domestic by nonresidents attributable to an office § 1.863–1 Allocation of gross income corporation, mines gold in Country X, or other fixed place of business in the under section 863(a). produces gold jewelry using production United States. To determine the source (a) * * * See also section 865(b) for assets located in the United States, and of income partly from sources within a rules for sourcing income from the sale sells the jewelry in Country Y. Assume possession of the United States, of inventory property, within the that the fair market value of the gold including income described in

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paragraph (a)(3) of this section, see ■ 12. In newly designated paragraph ■ i. Removing ‘‘(f)(3)(ii)’’ from the § 1.863–3(e). (c)(4)(i): introductory text and adding in its place * * * * * ■ i. Removing ‘‘production’’ from the ‘‘(e)(3)(ii)’’; and ■ Par. 4. Section 1.863–3 is amended as heading and adding in its place ‘‘gross’’; ■ ii. Designating Examples 1 and 2 as follows: and paragraphs (e)(4)(i) and (ii). ■ 1. Revising paragraphs (a) and (b). ■ ii. Redesignating paragraphs (c)(1)(i)(i) ■ 28. In newly designated paragraph ■ 2. Removing ‘‘and sales activity’’ from and (ii) as paragraphs (c)(4)(i)(A) and (e)(4)(i), redesignating paragraphs the heading in paragraph (c). (B). (e)(4)(i)(i) and (ii) as paragraphs ■ 3. In paragraph (c)(1)(i)(A): ■ 13. In newly redesignated paragraph (e)(4)(i)(A) and (B). ■ i. Removing ‘‘(g)(2)(ii)’’ and adding in (c)(4)(i)(A), removing the ninth ■ 29. In newly designated paragraph its place ‘‘(f)(2)(ii)’’; sentence. (e)(4)(ii), redesignating paragraphs ■ ii. Removing ‘‘the income attributable ■ 14. In newly redesignated paragraph (e)(4)(ii)(i) and (ii) as paragraphs to production activity’’ and adding in its (c)(4)(i)(B): (e)(4)(ii)(A) and (B). place ‘‘gross income’’; and ■ i. Removing ‘‘production’’, ‘‘one half ■ 30. In newly redesignated paragraph ■ iii. Removing ‘‘(c)(1)(ii)’’ and adding of’’, and ‘‘or $6,’’ from the first sentence; (e)(4)(ii)(A), removing ‘‘Example 1’’ and in its place ‘‘(c)(2)’’. ■ ii. Removing ‘‘production’’ from the adding ‘‘paragraph (e)(4)(i)(A) of this ■ 4. Removing ‘‘(g)(2)(ii)’’ from second sentence; and section (Example 1)’’. paragraph (c)(1)(i)(B) and adding in its ■ iii. In the last sentence, removing ‘‘$2’’ ■ 31. Removing ‘‘(f)’’ from newly place ‘‘(f)(2)(ii)’’. and ‘‘$6’’ and adding in their places redesignated paragraph (e)(5) and ■ 5. Removing ‘‘within the United ‘‘$4’’ and ‘‘$12’’, respectively. adding in its place ‘‘(e)’’ and removing States and within foreign countries’’ ■ 15. In newly designated paragraph ‘‘(g)’’ and adding in its place ‘‘(f)’’. from the heading to paragraph (c)(1)(ii) (c)(4)(ii): ■ 32. Removing newly redesignated and adding in its place ‘‘within and ■ i. Removing ‘‘Example 1’’ from the paragraph (e)(6). without the United States’’. first sentence and adding in its place ‘‘in ■ 33. Redesignating paragraph (g) as ■ 6. Removing ‘‘income attributable to paragraph (c)(4)(i)(A) of this section paragraph (f). the taxpayer’s production activity’’ from (Example 1)’’; and ■ 34. In newly redesignated paragraph paragraph (c)(1)(ii)(A) and adding in its ■ ii. Removing ‘‘from production (f)(1), removing ‘‘(g)(2)’’ and adding in place ‘‘gross income’’. activity’’ from the second sentence. its place ‘‘(f)(2)’’. ■ 7. In paragraph (c)(1)(iii): ■ 16. In newly designated paragraph ■ 35. In newly redesignated paragraph ■ i. Removing ‘‘(c)(1)’’ from the first and (c)(4)(iii), redesignating paragraphs (f)(2)(ii), removing ‘‘(g)(2)(i)’’ and adding second sentences and adding in its (c)(4)(iii)(i) and (ii) as paragraphs in its place ‘‘(f)(2)(i)’’ and removing place ‘‘(c)’’; (c)(4)(iii)(A) and (B). ‘‘(c)(1)(ii)(B)’’ and adding in its place ■ ii. Removing ‘‘by manipulating the ■ 17. In newly redesignated paragraph ‘‘(c)(2)(ii)’’. formula described in paragraph (c)(4)(iii)(A): ■ 36. Removing newly redesignated (c)(1)(ii)(A) of this section’’; ■ i. Removing ‘‘Example 1’’ from the paragraph (f)(2)(iv). ■ iii. Removing ‘‘production income’’ first sentence and adding in its place ‘‘in ■ 37. In newly redesignated paragraph and adding in its place ‘‘gross income’’; paragraph (c)(4)(i)(A) of this section (f)(3): and (Example 1)’’; and ■ i. Removing ‘‘(g)’’ from the ■ iv. Removing ‘‘income from ■ ii. Removing ‘‘(c)(1)(ii)’’ and introductory text and adding in its place production activity’’ and adding in its ‘‘production income’’ from the fourth ‘‘(f)’’; and place ‘‘gross income’’. sentence and adding in their places ■ ii. Designating Examples 1 and 2 as ■ 8. Removing paragraph (c)(2) and the ‘‘(c)(2)’’ and ‘‘gross income’’, paragraphs (f)(3)(i) and (ii). paragraph designation and heading for respectively. ■ 38. In newly designated paragraph (c)(1); ■ 18. In newly redesignated paragraph (f)(3)(ii): ■ 9. In paragraphs (c)(i) through (iv), (c)(4)(iii)(B): ■ i. Removing ‘‘Example 1’’ from the redesignating the paragraphs in the first ■ i. Removing ‘‘(c)(1)(ii)(A)’’ from the first sentence and adding in its place column as the paragraphs in the second first sentence and adding in its place ‘‘paragraph (f)(3)(i) of this section column: ‘‘(c)(2)(i)’’; and (Example 1)’’; ■ ii. Removing ‘‘production income’’ ■ ii. Removing ‘‘these regulations’’ in Old paragraphs New paragraphs from the second sentence and adding in the fourth sentence and adding in its its place ‘‘gross income’’. place ‘‘this section’’; (c)(i) ...... (c)(1) ■ 19. Revising paragraph (d). ■ (c)(i)(A) ...... (c)(1)(i) iii. Removing the fifth sentence; and ■ 20. Removing paragraph (e). ■ iii. Removing ‘‘(1)’’ from the last (c)(i)(B) ...... (c)(1)(ii) ■ (c)(i)(C) ...... (c)(1)(iii) 21. Redesignating paragraph (f) as sentence. (c)(ii) ...... (c)(2) paragraph (e). ■ 39. Redesignating paragraph (h) as (g) ■ (c)(ii)(A) ...... (c)(2)(i) 22. Revising newly redesignated and revising newly redesignated (c)(ii)(B) ...... (c)(2)(ii) paragraphs (e)(1) and (2) and (e)(3)(i). paragraph (g). (c)(iii) ...... (c)(3) ■ 23. Removing ‘‘(f)(3)(ii)’’ from newly The revisions read as follows: (c)(iv) ...... (c)(4) redesignated paragraph (e)(3)(ii)(B) introductory text and adding in its place § 1.863–3 Allocation and apportionment of ■ 10. Revising newly redesignated ‘‘(e)(3)(ii)’’. income from certain sales of inventory. paragraph (c)(2)(ii). ■ 24. Revising newly redesignated (a) In general—(1) Scope. Subject to ■ 11. In newly redesignated paragraph paragraph (e)(3)(ii)(C)(1). the rules of § 1.865–3, paragraphs (a) (c)(4): ■ 25. Removing newly redesignated through (d) of this section apply to ■ i. In the introductory text, removing paragraph (e)(4). determine the source of income derived ‘‘(c)(1)’’ and adding in its place ‘‘(c)’’; ■ 26. Further redesignating paragraph from the sale of inventory property and (e)(3)(iii) as paragraph (e)(4). (inventory) that a taxpayer produces (in ■ ii. Designating Examples 1, 2, and 3 as ■ 27. In newly redesignated paragraph whole or in part) within the United paragraphs (c)(4)(i) through (iii). (e)(4): States and sells without the United

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States, or that a taxpayer produces (in in section 168(g)(2) for the entire period States and sold within a possession, or whole or in part) without the United that such property has been in service. produced (in whole or in part) by a States and sells within the United States The adjusted basis of the production taxpayer in a possession and sold (Section 863(b)(2) Sales). See section assets is determined without regard to within the United States (Possession 865(i)(1) for the definition of inventory. the election to expense certain Production Sales). It also applies to Paragraph (b) of this section provides depreciable assets under section 179 determine the source of income derived that the source of gross income from the and without regard to any additional from the purchase of personal property sale or exchange of inventory in Section first-year depreciation provision (for within a possession of the United States 863(b)(2) Sales is based solely on the example, sections 168(k), 168(l), and and its sale within the United States production activities with respect to the 168(m), and former sections 1400L(b) (Possession Purchase Sales). A taxpayer inventory. Paragraph (c) of this section and 1400N(d)). The average adjusted subject to this paragraph (e) must describes how to determine source basis is computed by averaging the apportion gross income from Section based on production activity, including adjusted basis of the asset at the 863 Possession Sales under paragraph where inventory is produced partly beginning and end of the taxable year, (e)(2) of this section (in the case of within the United States and partly unless by reason of material changes Possession Production Sales) or using without the United States. Paragraph (d) during the taxable year such average the business activity method described of this section determines taxable does not fairly represent the average for in paragraph (e)(3)(i) of this section (in income from Section 863(b)(2) Sales. such year. In this event, the average the case of Possession Purchase Sales). Paragraph (e) of this section applies to adjusted basis is determined upon a The source of gross income from each determine the source of certain income more appropriate basis. type of activity from Possession derived from a possession of the United (B) Production assets used to produce Purchase Sales must then be determined States. Paragraph (f) of this section other property. If a production asset is under paragraph (e)(3)(ii) of this section. provides special rules for partnerships used to produce inventory sold in The source of taxable income from for all sales subject to §§ 1.863–1 Section 863(b)(2) Sales and also used to Possession Production Sales is through 1.863–3. Paragraph (g) of this produce other property during the determined under paragraph (c) of this section provides applicability dates for taxable year, the portion of its adjusted section. The source of taxable income the rules in this section. basis that is included in the fraction from Section 863 Possession Sales is (2) Cross references. To determine the described in paragraph (c)(2)(i) of this determined under paragraph (d) of this source of income derived from the sale section will be determined under any section. of personal property (including method that reasonably reflects the (2) Allocation or apportionment for inventory) by a nonresident that is portion of the asset that produces Possession Production Sales. The source attributable to the nonresident’s office inventory sold in Section 863(b)(2) of gross income from Possession or other fixed place of business in the Sales. For example, the portion of such Production Sales is determined under United States under section 865(e)(2), an asset that is included in the formula the rules of paragraph (c) of this section, the rules of § 1.865–3 apply, and the may be determined by multiplying the except that the term possession of the rules of this section do not apply. To asset’s average adjusted basis by a United States is substituted for foreign determine the source of income from fraction, the numerator of which is the country wherever it appears. sales of property produced by the gross receipts from sales of inventory (3) Allocation or apportionment for taxpayer, when the property is either from Section 863(b)(2) Sales produced Possession Purchase Sales—(i) produced in whole or in part in space by the asset, and the denominator of Determination of source of gross income or on or under water not within the which is the gross receipts from all for Possession Purchase Sales. Gross jurisdiction (as recognized by the property produced by that asset. income from Possession Purchase Sales United States) of a foreign country, is allocated in its entirety to the possession of the United States, or the * * * * * taxpayer’s business activity, and is then United States (in international water), or (d) Determination of source of taxable apportioned between sources within the is sold in space or international water, income. Once the source of gross United States and sources within a the rules of § 1.863–8 apply, and the income has been determined under possession of the United States under rules of this section do not apply except paragraph (c) of this section, the paragraph (e)(3)(ii) of this section. to the extent provided in § 1.863–8. taxpayer must properly allocate and (ii) * * * (b) Sourcing based solely on apportion under §§ 1.861–8 through (C) * * * production activities. Subject to the 1.861–14T and 1.861–17 its expenses, (1) Sales activity. The source of the rules of § 1.865–3, all gain, profit, and losses and other deductions to its taxpayer’s income that is attributable to income derived from Section 863(b)(2) respective amounts of gross income sales activity will be determined under Sales is allocated and apportioned from sources within and without the the provisions of § 1.861–7(c). solely on the basis of the production United States from its Section 863(b)(2) Notwithstanding any other provision of activities with respect to the inventory. Sales. (c) * * * (e) Income partly from sources within this part, for rules regarding the source (2) * * * a possession of the United States—(1) In of income when a sale takes place in (ii) Adjusted basis of production general. This paragraph (e) relates to space or international water, the rules of assets—(A) In general. For purposes of certain sales that give rise to gains, § 1.863–8 apply, and the rules of this paragraph (c)(2)(i) of this section, the profits, and income that are treated as section do not apply except to the extent adjusted basis of an asset is determined derived partly from sources within the provided in § 1.863–8. by using the alternative depreciation United States and partly from sources * * * * * system under section 168(g)(2). The within a possession of the United States (g) Applicability dates. This section adjusted basis of all production assets (Section 863 Possession Sales). This applies to taxable years ending on or for purposes of paragraph (c)(2)(i) of this paragraph (e) applies to determine the after December 23, 2019. However, section is determined as though such source of income derived from the sale taxpayers may apply this section in its production assets were subject to the of inventory produced (in whole or in entirety for taxable years beginning after alternative depreciation system set forth part) by the taxpayer within the United December 31, 2017, and ending before

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December 23, 2019, provided that the activities with respect to such property, (3) Examples. The application of this taxpayer and persons that are related and the source of that income will be paragraph (c) may be illustrated by the (within the meaning of section 267 or determined under paragraph (b)(3)(ii)(B) following examples— 707) to the taxpayer apply this section or (C) of this section. To determine the (i) Example 1. Nonresident alien in its entirety. source of income derived from the sale individual A, who has a tax home in the ■ Par. 5. Section 1.863–8 is amended as of personal property (including United States, manufactures machinery follows: inventory) by a nonresident that is in a foreign country and sells the ■ 1. Revising paragraph (b)(3)(ii)(A). attributable to the nonresident’s office machinery outside the United States ■ 2. In paragraph (b)(3)(ii)(B), removing or other fixed place of business in the through A’s sales office in the United ‘‘allocable to production activity’’ United States under section 865(e)(2), States for use in foreign countries. Title wherever it appears and by removing the rules of § 1.865–3 apply, and the to the property sold is transferred to the ‘‘§ 1.863–3(c)(1)’’ from the second rules of this section do not apply. foreign purchaser outside the United sentence and adding in its place * * * * * States, but no office or other fixed place ‘‘§ 1.863–3(c)’’. (f) * * * of business of A in a foreign country ■ 3. In paragraph (b)(3)(ii)(C), removing (6) * * * participates materially in the sale made ‘‘allocable to production activity’’ (ii) Analysis. The collection of data through its U.S. office. By reason of its wherever it appears and by removing and creation of images in space is sales activities in the United States, A ‘‘§ 1.863–3(c)(1)’’ from the fifth sentence characterized as the creation of property is engaged in business in the United and adding in its place ‘‘§ 1.863–3(c)’’. in space. Because S both produces and States during the taxable year. During ■ 4. Removing paragraph (b)(3)(ii)(D). sells the data, the source of the gross the taxable year, A derives a total ■ 5. Designating Examples 1 through 14 income from the sale of the data is income of $250,000x from these sales. of paragraph (f) as paragraphs (f)(1) determined under paragraph (b)(3)(ii) of Under section 865(b)(2), all of A’s through (14). this section (by reference to § 1.863– income from these sales is foreign ■ 6. In newly designated paragraphs 3(c)) solely on the basis of the source as production occurs outside the (f)(1) through (14), removing the period production activities. The source of S’s United States. Under paragraph (c)(2) of between the second and third level gross income is determined under this section, the amount of income that paragraph headings and adding an em- § 1.863–3(c)(2) because production is allocable to A’s U.S. office is dash in its place. activities occur both in space and on determined under § 1.865–3(d)(2). The ■ 7. Removing ‘‘Example 4’’ from newly land. * * * taxpayer does not allocate income from designated paragraph (f)(4)(i) and (11) * * * the sale under the books and records adding in its place ‘‘paragraph (f)(4)(i) (ii) Analysis. Because S’s rights, title, method described in § 1.865–3(d)(2)(ii). (Example 4)’’. and interest in the satellite pass to the Thus, 50 percent of A’s foreign source ■ 8. Removing ‘‘Example 4’’ from newly customer in space, the sale takes place income, plus any additional income designated paragraph (f)(5)(i) and in space under § 1.861–7(c), and the sale allocable based on the location of adding in its place ‘‘paragraph (f)(4)(i) of transaction is space activity under production activities under §§ 1.863– this section (Example 4)’’. paragraph (d)(1)(i) of this section. The 3(b) and 1.865–3(d)(2)(i) (in this case, ■ 9. Revising the first, second, and third source of income derived from the sale $0x), is effectively connected for the sentences of newly designated of the satellite in space is determined taxable year with the conduct of A’s paragraphs (f)(6)(ii). under paragraph (b)(3)(ii) of this section U.S. trade or business, or $125,000x. ■ 10. Removing ‘‘Example 8’’ from (by reference to § 1.863–3(c)) solely on (ii) Example 2. Nonresident alien newly designated paragraph (f)(9)(i) and the basis of the production activities individual B, who has a tax home in the adding in its place ‘‘in paragraph (f)(8)(i) with respect to the satellite. United States, has an office in a foreign of this section (Example 8)’’. * * * * * country that purchases merchandise and ■ 11. Removing ‘‘Example 8’’ from ■ Par. 6. Section 1.864–6 is amended by sells it through B’s sales office in the newly designated paragraph (f)(9)(ii) revising paragraphs (c)(2) and (3) and United States for use in various foreign and adding in its place ‘‘paragraph adding paragraph (c)(4) to read as countries, with title to the property (f)(8)(i) of this section (Example 8)’’. follows: passing outside the United States. No ■ 12. Revising newly designated other office of B participates materially paragraph (f)(11)(ii). § 1.864–6 Income, gain, or loss attributable in these sales made through its U.S. ■ 13. In paragraph (g)(1), removing to an office or other fixed place of business office. By reason of its sales activities in in the United States. ‘‘(C)’’ from the first sentence. the United States, B is engaged in ■ 14. In paragraph (g)(4) introductory * * * * * business in the United States during the text, removing ‘‘(C)’’ from the first (c) * * * taxable year. During the taxable year, B (2) Special limitation in case of sales sentence. derives income of $300,000x from these of goods or merchandise through U.S. The revisions read as follows: sales made through its U.S. sales office. office. Notwithstanding paragraph (c)(1) Under section 865(b), all of B’s income § 1.863–8 Source of income derived from of this section, the special rules from these sales is foreign source as title space and ocean activity under section described in this paragraph (c)(2) apply to the merchandise passes outside the 863(d). with respect to a sale of goods or United States. The amount of income * * * * * merchandise specified in § 1.864– properly allocable to B’s US office (b) * * * 5(b)(3), to which paragraph (b)(3)(i) of determined under § 1.865–3(d)(3) is (3) * * * this section does not apply. In the case $300,000x. (ii) Sales of property produced by the of a nonresident alien with a tax home (iii) Example 3. The facts are the same taxpayer—(A) General. If the taxpayer within the United States, as defined in as in paragraph (c)(3)(ii) of this section both produces property and sells such section 911(d)(3), the amount of income (Example 2), except that B has an office property, the taxpayer must allocate and from the sale of goods or merchandise in a foreign country which participates apportion all gain, profit, and income that is properly allocable to the materially in the sales which are made derived from sales of such property individual’s U.S. office is determined through its U.S. office. The income solely on the basis of the production under § 1.865–3(d). which is allocable to B’s U.S. sales

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office is not effectively connected for the United States, the principles of United States office or other fixed place the taxable year with the conduct of a section 864(c)(5)(A) as prescribed in of business and the nonresident trade or business in the United States by § 1.864–7 apply, including the rules of taxpayer’s other offices). The gross that corporation. paragraph (d) of that section regarding income allocable to sales activity under (4) Applicability date. Paragraphs the office or fixed place of business of this method is treated as properly (c)(2) and (3) of this section, to the a dependent agent of the nonresident. allocable to the office or other fixed extent they apply to sales of inventory (d) Amount of income or loss on sale place of business in the United States. described in section 864(c)(4)(B)(iii), of personal property attributable to a The gross income allocable to apply to sales occurring in taxable years U.S. office—(1) In general. Subject to the production activities is sourced in ending on or after December 23, 2019. special rules described in paragraphs accordance with § 1.863–3. However, taxpayers may apply this (d)(2), (3), and (4) of this section, the (B) Election and reporting rules—(1) section in its entirety for taxable years amount of income, gain, or loss from the In general. A taxpayer making an beginning after December 31, 2017, and sale of personal property attributable to allocation of gross income under the ending before December 23, 2019, an office or other fixed place of business books and records method in paragraph provided that the taxpayer and persons in the United States is determined (d)(2)(ii)(A) of this section must satisfy that are related (within the meaning of under § 1.864–6(c)(1). the requirements of paragraphs section 267 or 707) to the taxpayer (2) Produced inventory property—(i) (d)(2)(ii)(B)(2) and (3) of this section. apply this section in its entirety. In general. With respect to income from Failure to satisfy the requirements in ■ Par. 7. Section 1.865–3 is added to the sale of inventory property subject to paragraphs (d)(2)(ii)(B)(2) and (3) in full read as follows: paragraph (a) of this section that is and to the satisfaction of the produced by a nonresident, 50 percent Commissioner will result in application § 1.865–3 Source of income from sales of of the gross income from such sale is of the 50/50 method specified in personal property (including inventory properly allocable to the office or fixed paragraph (d)(2)(i) of this section. property) by a nonresident attributable to place of business in the United States. (2) Required records. A taxpayer an office or other fixed place of business in The remaining 50 percent of the gross electing the books and records method the United States. income is allocable to production under paragraph (d)(2)(ii)(A) of this (a) In general. Notwithstanding any activities and is sourced in accordance section must prepare and maintain other provisions of sections 861 through with § 1.863–3 (the ‘‘50/50 method’’). records that are in existence when its 865 or the regulations in this part except However, in lieu of the 50/50 method, return is filed regarding the allocation of paragraph (b) of this section, if a a taxpayer may elect to allocate income gross income between sales and nonresident, as defined in section from the sale of inventory property that production activities in its books of 865(g)(1)(B), maintains an office or other is produced by a nonresident under the account. The taxpayer must also prepare fixed place of business in the United books and records method described in an explanation of how such allocation States, income from any sale of personal paragraph (d)(2)(ii) of this section, clearly reflects the taxpayer’s income property (including inventory property) provided it satisfies all of the from production and sales activities attributable to such office or other fixed requirements described in that under the principles of section 482. The place of business (as determined under paragraph to the satisfaction of the taxpayer must make available such paragraph (c) of this section) is sourced Commissioner. For purposes of this explanation and records for both the in the United States in an amount paragraph (d)(2)(i), the term ‘‘produced’’ U.S. sales office and the entity or described in paragraph (d) of this includes created, fabricated, entities that perform the production section. See section 865(i)(1) for the manufactured, extracted, processed, activities upon request of the definition of inventory property. cured, and aged. See section 864(a) and Commissioner, generally within 30 days (b) Exceptions for inventory property. § 1.864–1. or some other time period as agreed Paragraph (a) of this section does not (ii) Books and records method—(A) between the Commissioner and the apply with respect to the income Method. A taxpayer may elect to taxpayer. derived by a nonresident from any sale determine the amount of its gross (3) Disclosure on a tax return. A of inventory property that is sold for income from the sale of inventory taxpayer who chooses to apply the use, disposition, or consumption property subject to paragraph (a) of this books and records method under outside the United States if an office or section and produced by a nonresident paragraph (d)(2)(ii)(A) of this section other fixed place of business of the that is allocable to production and sales must indicate in a statement attached to nonresident in a foreign country activities for the taxable year based a timely filed return (including materially participated in the sale. See upon its books of account. The taxpayer extensions) that it elects to apply such § 1.864–6(b)(3) to determine whether a must establish that the taxpayer, in good method and has prepared the records foreign office materially participated in faith and unaffected by considerations described in paragraph (d)(2)(ii)(B)(2) of the sale and whether the property was of tax liability, regularly employs in its this section. destined for foreign use. books of account a detailed allocation of (3) Purchased inventory property. (c) Attribution of a sale to a United receipts and expenditures that clearly With respect to income from the sale of States office. In determining whether a reflects the amount of the taxpayer’s inventory property subject to paragraph sale of personal property by a gross income from its inventory sales (a) of this section that is purchased by nonresident is attributable to an office that is attributable to its sales activities, the nonresident, the entire income from or other fixed place of business in the and gross income from sales that is such sale is properly allocable to the United States, the principles of section attributable to its production activities office or other fixed place of business in 864(c)(5)(B) as prescribed in § 1.864– under the principles of section 482. For the United States. 6(b) and (c) apply. The rule in this purposes of this paragraph (d)(2)(ii)(A), (4) Depreciable personal property. paragraph (c) applies without regard to section 482 principles will apply as if With respect to income from the sale of whether the property is described in the office or fixed place of business in depreciable personal property subject to § 1.864–5(b)(3)(iii). In determining the United States were a separate paragraph (a) of this section— whether a nonresident maintains an taxpayer from the nonresident (whether (i) The gain not in excess of the office or other fixed place of business in or not payments are made between the depreciation adjustments is allocable to

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an office or other fixed place of business (7) * * * treatment, $15x of B’s sales income that in the United States to the same extent (ii) * * * would be treated as foreign source that the gain would be allocated to (N) Example (14): Source of income income on a separate entity basis is sources within the United States under under section 863—(1) Intercompany redetermined to be U.S. source income. the rules of section 865(c)(1). The sale—(i) Facts. S manufactures Under paragraph (c)(1)(i) of this section, remaining gain not in excess of the inventory property solely in the United attributes are redetermined only to the depreciation adjustments is allocated to States, and recognizes $75x of income extent of the $15x necessary to achieve sources without the United States in on sales to B in Year 1. B conducts the same effect as if S and B were accordance with section 865(c)(1). further production activity on the divisions of a single corporation. Under However, notwithstanding the inventory property solely in Country Y paragraph (c)(4)(ii) of this section, the preceding sentences, if the property was and then sells the inventory property to redetermined attribute must be allocated predominantly used in the United X in Country Y and recognizes $25x of between S and B using a reasonable States, within the meaning of section income on the sale to X, also in Year 1. method. In this case, only B would have 865(c)(3)(B)(i), for a specific year, all of Title passes from S to B, and from B to foreign source income on a separate the gain not in excess of depreciation for X, in Country Y. Assume that applying entity basis, and thus $15x of B’s foreign that year is allocated to sources within § 1.863–3 on a single entity basis, source income must be recharacterized the United States. including the formula for as U.S. source income. (ii) The gain in excess of the apportionment of multi-country (2) Sale of property reflecting depreciation adjustments is treated as if production activities by reference to the intercompany services or intangibles— such property were inventory and is basis of production assets, $10x is (i) Facts. S earns $10x of income sourced under paragraph (d)(2) or (3) of treated as foreign source income and performing services in the United States this section as applicable. $90x is treated as U.S. source income (e) Determination of source of taxable (that is, 10 percent of the production for B. B capitalizes S’s fees into the basis income. For rules allocating and occurred outside the United States and of inventory property that it apportioning expenses to income 90 percent occurred within the United manufactures in the United States and effectively connected with the conduct States, as measured by the basis of sells to an unrelated person in Year 1 at of a trade or business in the United assets used in production activities with a $90x profit, with title passing in States, see §§ 1.882–4 and 1.882–5. respect to the property). Assume further Country Y. Assume that on a single (f) Export trade corporations. This that, on a separate entity basis, S would entity basis, $100x is treated as U.S. section is not applicable for purposes of have $0 of foreign source income and source income and $0 is treated as defining an export trade corporation $75x of U.S. source income and all of foreign source income. Further assume under section 971. B’s $25x of income would be foreign that on a separate entity basis, S would (g) Applicability date. This section source income. have $10x of U.S. source income, and B applies to sales occurring in taxable (ii) Analysis. Under the matching rule, would have $90x of U.S. source income, years ending on or after December 23, both S’s $75x intercompany income and with neither having any foreign source 2019. However, taxpayers may apply B’s $25x corresponding income are income. this section in its entirety for taxable taken into account in Year 1. In (ii) Analysis. Under the matching rule, determining the source of S and B’s years beginning after December 31, S’s $10x income and B’s $90x income income from the inventory property 2017, and ending before December 23, are taken into account in Year 1. In sales, the attributes of S’s intercompany 2019, provided that the taxpayer and determining the source of S and B’s item and B’s corresponding item are persons that are related (within the income, the attributes of S’s redetermined to the extent necessary to meaning of section 267 or 707) to the intercompany item and B’s produce the same effect on consolidated taxpayer apply this section in its corresponding item are redetermined to entirety. taxable income (and consolidated tax liability) as if S and B were divisions of the extent necessary to produce the same effect on consolidated taxable § 1.937–2 [Amended] a single corporation. See paragraph income (and consolidated tax liability) ■ (c)(1)(i) of this section. On a separate Par. 8. Section 1.937–2 is amended by as if S and B were divisions of a single removing ‘‘§ 1.863–3(f)’’ from paragraph entity basis, S would have $75x of U.S. source income because the product corporation, such that section 863 (d) and adding in its place ‘‘§ 1.863– applies as if $100x were earned from 3(e)’’. would be treated as produced wholly in the United States and sold outside the manufacturing in the United States and § 1.937–3 [Amended] United States, and B would have $25x selling in Country Y. Because the results are the same on a single entity basis and ■ Par. 9. Section 1.937–3 is amended by of foreign source income because the a separate entity basis ($100x of U.S. removing ‘‘§ 1.863–3(f)’’ from paragraph product would be treated as produced source income and $0x of foreign source (d) and adding in its place ‘‘§ 1.863– wholly outside the United States and income), the attributes are not 3(e)’’. sold outside the United States. On a redetermined under paragraph (c)(1)(i) ■ Par. 10. Section 1.1502–13, as single entity basis, S and B are treated of this section. proposed to be amended at 83 FR 67490 as divisions of a single corporation, and (December 28, 2018), is further amended section 863 applies as if $100x of * * * * * by revising paragraph (c)(7)(ii)(N) to income were recognized from producing Sunita Lough, read as follows: partly in the United States and partly in Country Y and selling in Country Y. Deputy Commissioner for Services and § 1.1502–13 Intercompany transactions. This results in $10x of foreign source Enforcement. * * * * * income and $90x of U.S. source income. [FR Doc. 2019–27813 Filed 12–23–19; 4:15 pm] (c) * * * Accordingly, under single entity BILLING CODE 4830–01–P

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LIBRARY OF CONGRESS by telephone at (202) 707–7658 or email made it clear that their adoption of the at [email protected]. claimants’ categories has never Copyright Royalty Board SUPPLEMENTARY INFORMATION: constituted a finding by the Judges. See Memorandum Opinion and Order 37 CFR Chapter III I. Background following Preliminary Hearing on [Docket No. 19–CRB–0014–RM] Each year cable systems and satellite Validity of Claims, Docket No. 2008–2 carriers submit royalties to the CRB 2000–2003 (Phase II), at 14 (Mar. Notice of Inquiry Regarding Copyright Office under the sections 111 21, 2013); id. (Phase I), 6/11/09 Tr. 41– Categorization of Claims for Cable or and 119 statutory licenses for the 42 (former Chief Judge Sledge noting Satellite Royalty Funds and Treatment retransmission to their subscribers of that the categories were the result of a of Ineligible Claims over-the-air television broadcast signals. ‘‘stipulation’’ and ‘‘have never been 17 U.S.C. 111 and 119. These royalties determined’’ or the subject of a AGENCY: Copyright Royalty Board, are, in turn, distributed in one of two ‘‘finding.’’). Library of Congress. ways to copyright owners whose works In the 1978 Proceeding, the CRT also ACTION: Notice of inquiry. were included in a retransmission of an considered a separate issue—whether to over-the-air television broadcast signal address the economic impact of SUMMARY: The Copyright Royalty Judges and who timely filed a claim for unclaimed funds in Phase I or in Phase (Judges) publish a notice of inquiry royalties with the Copyright Royalty II. The CRT stated: ‘‘During Phase I regarding categorization of claims for Board. Either the copyright owners may there was some random testimony to the cable or satellite royalty funds and negotiate the terms of a settlement as to effect that not all eligible claimants had treatment of royalties associated with the division of the royalty funds or the submitted claims. The [CRT] invalid claims. Judges may conduct a proceeding to determined that this subject was not DATES: Comments are due no later than determine the distribution of the appropriate to Phase I, but that it would January 29, 2020. royalties that remain in controversy. See be considered subsequently in the ADDRESSES: You may submit comments 17 U.S.C. Chapter 8. Eligibility to proceeding. The [CRT] therefore and proposals, identified by docket receive copyright royalties paid by cable determined that the Phase I allocations number 19–CRB–0014–RM, by any of systems and satellite carriers is to categories should be made as if all the following methods: contingent upon the submission of a eligible claimants in each category had CRB’s electronic filing application: properly filed claim. See 17 U.S.C. 111 filed.’’ 1978 Proceeding at 63042 Submit comments and proposals online and 119. (emphasis added). in eCRB at https://app.crb.gov/. In 1980, the Copyright Royalty The CRT requested and received U.S. mail: Copyright Royalty Board, Tribunal (CRT), a predecessor of the further briefing on the legal issues P.O. Box 70977, Washington, DC 20024– Judges, ruled that cable distribution regarding unclaimed funds, and, in 0977; or proceedings would be conducted in two Phase II, the CRT ‘‘accorded each Overnight service (only USPS Express phases, determining in Phase I the claimant the opportunity to present any Mail is acceptable): Copyright Royalty allocation of cable royalties to specific relevant evidence on this subject . . . Board, P.O. Box 70977, Washington, DC groups (Phase I/Allocation) and [but] [n]o claimant presented any such 20024–0977; or determining in Phase II the distribution evidence.’’ Id. After reviewing the legal Commercial courier: Address package of those royalties to individual briefing, the CRT—without referencing to: Copyright Royalty Board, Library of claimants within each group (Phase II/ any of the legal points briefed— Congress, James Madison Memorial Distribution). See In re 1978 Cable Building, LM–403, 101 Independence Royalty Distribution Determination, 45 Basketball Association, Office of the Commissioner Avenue SE, Washington, DC 20559– FR 63026, 63027 (Sep. 23, 1980) (1978 of Baseball, and National Collegiate Athletic 6000. Deliver to: Congressional Courier Determination) (summarizing a Association); (3) ‘‘Commercial Broadcasters’’— Acceptance Site, 2nd Street NE and D copyright owners of broadcast television and radio February 14, 1980 ruling by the CRT). In programming produced by local commercial Street NE, Washington, DC; or the 1978 Cable Royalty Distribution Hand delivery: Library of Congress, broadcasters and represented by the National Proceeding, and in all subsequent Phase Association of Broadcasters, Inc. (‘‘NAB’’); (4) James Madison Memorial Building, LM– I/Allocation proceedings, the division of ‘‘Devotional Claimants’’—copyright owners of 401, 101 Independence Avenue SE, religious broadcast programming produced; (5) royalties was accomplished through a Washington, DC 20559–6000. ‘‘Public Television’’ or ‘‘PBS’’—copyright owners of categorization of claims that was the Instructions: Unless submitting television programs broadcast on public television product of a stipulation among the stations represented by the Public Broadcasting online, commenters must submit an proposed allocation claimants. These Service; (6) ‘‘Canadian Claimants’’—various original, two paper copies, and an Canadian copyright owners whose programs are categorizations were adopted by the electronic version on a CD. All broadcast on Canadian television stations and CRT and its successors by their submissions must include a reference to retransmitted by cable systems located near the adoption of the participants’ U.S./Canada border; (7) ‘‘NPR’’—copyright owners the CRB and this docket number. All stipulations (subject, on occasion, to of radio programming transmitted by National submissions will be posted without Public Radio and public radio stations; and (8) minor modifications).1 The Judges have change to eCRB at https://app.crb.gov/ ‘‘Music Claimants’’—songwriters and music including any personal information publishers represented by the American Society of 1 The categories into which copyright owners Composers, Authors and Publishers (‘‘ASCAP’’), provided. have divided themselves in Phase I cable Broadcast Music, Inc. (‘‘BMI’’) and SESAC, Inc.. Docket: For access to the docket to proceedings have remained largely consistent over See, e.g., Distribution of 1998 and 1999 Cable read submitted background documents time: (1) ‘‘Program Suppliers’’—copyright owners of Royalty Funds, Docket No. 2001–8 CARP CD 98–99, or comments, go to eCRB, the Copyright movies and syndicated television programs 69 FR 3606, 3607 (Jan. 26, 2004); see also 1989 represented by the Motion Picture Association, Inc. Cable Royalty Distribution Proceeding, Docket No. Royalty Board’s electronic filing and (‘‘MPA’’) (formerly the Motion Picture Association CRT 91–2–89 CD, 57 FR 15286, 15287 (Apr. 27, case management system, at https:// of America, Inc. (‘‘MPAA’’)); (2) ‘‘Joint Sports 1992) ((1) Program Suppliers; (2) Sports; (3) U.S. app.crb.gov/, and search for docket Claimants’’—copyright owners of live broadcasts of Noncommercial Television (PBS); (4) U.S. number 19–CRB–0014–RM. professional and college team sporting events Commercial Television (NAB); (5) Music; (6) (largely consisting of member teams of the National Devotional Claimants; (7) Canadian Claimants; (8) FOR FURTHER INFORMATION CONTACT: Football League, National Hockey League, National Non-Commercial Radio (NPR); and (9) Commercial Anita Blaine, CRB Program Specialist, Basketball Association, Women’s National Radio)).

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concluded that it would not consider No. 16–CRB–0009–CD (2014–17), at 2 Judges understand there may be unclaimed funds in determining Phase (Apr. 19, 2019); see also Joint Comments reasonable concerns that if the effect of I allocations. Specifically, the CRT of 2014–12 Satellite Participants on the stipulated categories is to aggregate stated that royalties would be ‘‘allocated Allocation Phase Claimant Category programs within categories in a manner to categories of claimants as if all Definitions, Docket No. 16–CRB–0010– inconsistent with the cable system eligible claimants in each category had SD (2014–17), at 2 (same); see also operators’ usual decision making filed valid claims.’’ Id. (emphasis generally Program Suppliers’ Brief process, the valuation process may be added). The CRT found that the record Regarding Proposed Claimant Group affected adversely. In this regard, the before it ‘‘provid[ed] no objective basis Definitions, Docket No. 16–CRB–0009– dollar amount of royalties that a for redistribution of royalty fees among CD (2014–17), (Apr. 19, 2019) copyright owner of a program receives categories of claimants to[] reflect (proposing that current claimant-centric could vary significantly, and without unclaimed royalties in particular categories be retained with some relationship to relative values, categories,’’ and concluded that its modifications); Program Suppliers’ Brief depending upon whether the program disposition of unclaimed royalties Regarding Proposed Claimant Group was placed within one category versus constituted an ‘‘equitable allocation.’’ Definitions, Docket No. 16–CRB–0010– another. Such concerns regarding the Id. (emphasis added). The CRT further SD (2014–17) (same). These participants historically-stipulated categories appear noted that its ruling ‘‘may not describe the effect of their proposed pertinent with regard to both cable and necessarily control any subsequent structure as establishing ‘‘a manageably satellite royalty distribution distribution proceeding.’’ Id. finite number of industry groups, each proceedings. In a recent proceeding for the with the scope and incentive to pursue The failure of all participants to Distribution of Cable Royalty Funds the interests of a broad group of stipulate to claimant categories as well (Docket No. 16–CRB–0009 CD (2014– constituents, undertake the complex job as the stated concerns with the 17)), and in the parallel proceeding for of gathering the necessary data and historically-stipulated category the Distribution of Satellite Royalty resources, identifying all claimants, definitions underscore the need for a Funds (Docket No. 16–CRB–0010–SD establishing their respective Allocation procedure by which copyright owners (2014–17)), the Judges sought input Phase shares, and distributing all of the and their representatives are afforded 2 from the participants on the claimant category’s royalties.’’ Joint Responsive the opportunity to propose specific categories to be used in each Brief of Certain 2014–12 Cable category definitions and provide legal proceeding. See Notice of Participants Participants on Allocation Phase and economic arguments and factual and Order for Preliminary Action to Claimant Category Definitions, Docket evidence to support their respective Address Categories of Claims, Docket No. 16–CRB–0009–CD (2014–17), at 2– positions, enabling the Judges to act on No. Docket No. 16–CRB–0009 CD 3 (May 3, 2019) (footnote omitted). the basis of an adequate administrative (2014–17), at 2 (Mar. 20, 2019); Notice One participant in the proceeding, record. Pursuant to the authority set of Participants and Order for however, asserted that the historically- forth in 17 U.S.C. 803(b)(6) to establish Preliminary Action to Address stipulated categories and relevant regulations governing the Judges’ Categories of Claims, Docket No. Docket definitions are arbitrary, produce proceedings, the Judges seek comment No. 16–CRB–0010 SD (2014–17), at 2 counterintuitive results, and are to inform and guide their intent to 3 (Mar. 20, 2019). Instead of stipulating contrary to common understanding. See publish a formal notice of proposed to the definitions of the Allocation Multigroup Claimants’ Comments on rulemaking to establish specific category Phase categories as they had in past Claimant Category Definitions and definitions applicable to both cable and proceedings, the participants filed briefs Proposed Modification, Docket Nos. 16– satellite distribution proceedings. advocating different category CRB–0009–CD (2014–17) & 16–CRB– II. Subjects of Inquiry definitions. 0010–SD (2014–17), at 6 (Apr. 19, 2019). Most participants advocated use of This participant asserted that the A. The Identification of the Allocation the claimant-centric categories that had claimant-centric categories used in past Phase Categories been used in prior distribution proceedings was not aligned with the proceedings, arguing that doing so In light of the need to establish way in which system operators decide would provide ‘‘efficiency and certainty Allocation categories, for use in both to retransmit broadcast television both in the preparation of evidence . . . cable and satellite distribution signals. See id. at 13. The participant and in the ultimate distribution of proceedings, the Judges now seek input royalties to all eligible claimants.’’ Joint proposed a new program-centric on how the Allocation Phase categories Comments of 2014–17 Cable category definition, but only for the should be defined. Because the evidence Participants on Allocation Phase sports programming category. See id. at of relative value across categories in the Claimant Category Definitions, Docket 7–12. Allocation Phase reflects the value The Judges have recently allocated assigned to program categories by the cable royalty percentages in the 2 The Phase I/Allocation participants in satellite cable system operators/satellite carriers distribution proceedings have used the same or very Allocation Phase based on: (i) Evidence (as demonstrated most recently by similar categories as participants in cable from surveys of cable system operators survey and/or regression evidence), the proceedings. See, e.g., Notice requesting comments, regarding their ranking of types of Judges inquire as to the merit of Distribution of Satellite Royalty Funds, Docket 16– programming; and (ii) evidence from CRB–0010–SD (2014–17), 84 FR 33979, 33980 n.1 aggregating the Allocation Phase (Jul 16, 2019) (‘‘Program Suppliers, Joint Sports regressions identifying the actual mix of categories by program type rather than Claimants, Broadcaster Claimants Group, Music programming on stations that cable by claimant groups, and whether doing Claimants (represented by American Society of system operators chose to retransmit, in so may result in a distribution of Composers, Authors and Publishers, Broadcast both cases based on the categories Music, Inc., and SESAC, Inc.), and Devotional 4 royalties that more accurately reflects Claimants.’’). stipulated by the participants. The the relative value of different 3 Members of the public may access all programming. submissions in those proceedings through eCRB by 4 The Judges have never conducted a satellite searching for Docket Nos. 16–CRB–0009–CD (2014– allocation phase proceeding that resulted in a final The Judges also inquire as to the 17) and 16–CRB–0010–SD (2014–17). Registration is determination; rather the allocation phase parties likely impact any particular set of not required. have always settled. Allocation Phase categories may have

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on (a) the cost and efficiency of part 351. Commenters should include Information (CBI) or other information distribution proceedings and (b) the relevant facts, legal and economic the disclosure of which restricted by likelihood of achieving settlements to analyses, and citation to authority for statute. Multimedia submissions (audio, resolve both Allocation Phase and each proposed regulatory provision. video, etc.) must be accompanied by a Distribution Phase controversies. After considering the proposals, the written comment. The written comment In addition, the Judges inquire as to Judges intend to publish a formal notice is considered the official comment and the need for mechanisms and standards of proposed rulemaking in accordance should include discussion of all points to resolve any disputes as to the identity with the provisions of the you wish to make. EPA will generally of participants seeking to represent a Administrative Procedures Act. not consider comments or comment particular Allocation Phase category in Dated: December 20, 2019. contents located outside of the primary an Allocation Phase proceeding. submission (i.e., on the web, cloud, or Jesse M. Feder, B. The Identification of Invalid Claims other file sharing system). For Chief Copyright Royalty Judge. additional submission methods, the full The Judges are in agreement with the [FR Doc. 2019–27970 Filed 12–27–19; 8:45 am] EPA public comment policy, CRT observation that its 1980 ruling BILLING CODE 1410–72–P information about CBI or multimedia with respect to ineligible claims ‘‘may submissions, and general guidance on not necessarily control any subsequent making effective comments, please visit distribution proceeding.’’ 1978 ENVIRONMENTAL PROTECTION http://www2.epa.gov/dockets/ Proceeding at 63042 (emphasis added). AGENCY commenting-epa-dockets. Therefore, the Judges also revisit the FOR FURTHER INFORMATION CONTACT: identification and treatment of funds 40 CFR Part 52 Evan Adams of the Air Regulatory that are unclaimed because a filed claim [EPA–R04–OAR–2019–0156; FRL–10003– Management Section, Air Planning and is invalid or not validly represented in 69–Region 4] Implementation Branch, Air and a distribution proceeding (invalid Radiation Division, U.S. Environmental claims). The Judges request that Air Plan Approval; AL, FL, GA, NC, SC, Protection Agency, Region 4, 61 Forsyth commenters provide an adequate factual TN; Interstate Transport (Prongs 1 and Street SW, Atlanta, Georgia 30303–8960. record to support their positions as to 2) for the 2015 8-Hour Ozone Standard Mr. Adams can be reached by telephone the necessity and feasibility of proposed AGENCY: Environmental Protection at (404) 562–9009, or via electronic mail approaches to the identification and at [email protected]. treatment of invalid claims, and the Agency (EPA). consonance of their proposed ACTION: Proposed rule. Table of Contents approaches with the establishment of SUMMARY: The Clean Air Act (CAA) I. Background relative value. Commenters should requires each State Implementation Plan II. Southeast States’ Submissions and EPA’s address how the treatment of invalid (SIP) to contain adequate provisions Analysis of the Southeast States’ claims may interrelate with the prohibiting emissions that will have Submissions establishment of Allocation Phase A. Analysis related to all Southeast States certain adverse air quality effects in categories. For instance, one rationale B. Alabama other states. The Environmental for intra-category re-apportionment of C. Florida Protection Agency (EPA or Agency) is royalties attributable to invalid claims D. Georgia proposing to approve State E. North Carolina (the status quo) is that the invalidly- Implementation Plan (SIP) revisions F. South Carolina claimed programs have more in from Alabama, Florida, Georgia, North G. Tennessee common in terms of value creation with Carolina, South Carolina, and Tennessee III. Proposed Actions the validly-claimed programs in the IV. Statutory and Executive Order Reviews (collectively, Southeast States) same category than with the validly- addressing the Clean Air Act (CAA or I. Background claimed programs in the other categories Act) good neighbor interstate transport (which also implicates the above-stated On October 1, 2015, EPA promulgated infrastructure SIP requirements for the inquiry regarding whether the categories a revision to the ozone NAAQS (2015 2015 8-hour ozone National Ambient should be claimant-centric or program- ozone NAAQS), lowering the level of Air Quality Standard (NAAQS). EPA is centric). If the former, the argument for both the primary and secondary proposing to approve the submission as maintaining intra-category re-allocations standards to 0.070 parts per million meeting the requirement that each SIP 1 of invalid claims may be weaker, (ppm). Section 110(a)(1) of the CAA contain adequate provisions to prohibit because claimant-centric categorization requires states to submit, within 3 years emissions that will significantly is based on common representation, not after promulgation of a new or revised contribute to nonattainment or interfere common relative program value. standard, SIPs meeting the applicable The Judges also inquire as to the with maintenance of the 2015 ozone requirements of section 110(a)(2).2 One likely impact any proposed rule for the NAAQS in any other state. of these applicable requirements is identification and treatment of ineligible DATES: Written comments must be found in section 110(a)(2)(D)(i)(I), claims may have on (a) the cost and received on or before January 29, 2020. otherwise known as the good neighbor efficiency of distribution proceedings ADDRESSES: Submit your comments, provision, which generally requires SIPs and (b) the likelihood of achieving identified by Docket ID No. EPA–R04– settlements to resolve both Allocation OAR–2019–0156 at 1 National Ambient Air Quality Standards for www.regulations.gov. Follow the online Ozone, Final Rule, 80 FR 65292 (October 26, 2015). Phase and Distribution Phase Although the level of the standard is specified in controversies. instructions for submitting comments. the units of ppm, ozone concentrations are also Once submitted, comments cannot be described in parts per billion (ppb). For example, III. Submissions edited or removed from Regulations.gov. 0.070 ppm is equivalent to 70 ppb. With respect to both of the subjects of EPA may publish any comment received 2 SIP revisions that are intended to meet the applicable requirements of section 110(a)(1) and (2) inquiry, commenters should provide to its public docket. Do not submit of the CAA are often referred to as infrastructure narrative responses and proposed electronically any information you SIPs and the applicable elements under 110(a)(2) regulatory language amending 37 CFR consider to be Confidential Business are referred to as infrastructure requirements.

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to contain adequate provisions to ozone NAAQS: 7 (1) Identify downwind downwind air quality problems with prohibit in-state emissions activities air quality problems; (2) identify respect to the 2015 ozone NAAQS (step from having certain adverse air quality upwind states that impact those 1 of the four-step framework). effects on other states due to interstate downwind air quality problems The March 2018 memorandum transport of pollution. There are four so- sufficiently such that they are included newly available contribution called ‘‘prongs’’ within CAA section considered ‘‘linked’’ and therefore modeling results to assist states in 110(a)(2)(D)(i): Section 110(a)(2)(D)(i)(I) warrant further review and analysis; (3) evaluating their impact on potential contains prongs 1 and 2, while section identify the emissions reductions downwind air quality problems (step 2 110(a)(2)(D)(i)(II) includes prongs 3 and necessary (if any), considering cost and of the four-step framework) in their 4. This action addresses the first two air quality factors, to prevent linked efforts to develop good neighbor SIPs for prongs under section 110(a)(2)(D)(i)(I). upwind states identified in step 2 from the 2015 ozone NAAQS to address their Under prongs 1 and 2 of the good contributing significantly to interstate transport obligations.11 EPA neighbor provision, a SIP for a new or nonattainment or interfering with subsequently issued two more revised NAAQS must contain adequate maintenance of the NAAQS at the memoranda in August and October provisions prohibiting any source or locations of the downwind air quality 2018, providing guidance to states other type of emissions activity within problems; and (4) adopt permanent and developing good neighbor SIPs for the the state from emitting air pollutants in enforceable measures needed to achieve 2015 ozone NAAQS concerning, amounts that will significantly those emissions reductions. respectively, potential contribution contribute to nonattainment of the EPA has released several documents thresholds that may be appropriate to NAAQS in another state (prong 1) or containing information relevant to apply in step 2 and considerations for from interfering with maintenance of evaluating interstate transport with identifying downwind areas that may the NAAQS in another state (prong 2). respect to the 2015 ozone NAAQS. First, have problems maintaining the standard Under section 110(a)(2)(D)(i)(I) of the on January 6, 2017, EPA published a (under prong 2 of the good neighbor CAA, EPA and states must give notice of data availability (NODA) with provision) at step 1 of the framework.12 independent significance to prong 1 and preliminary interstate ozone transport The March 2018 memorandum prong 2 when evaluating downwind air modeling with projected ozone design describes the process and results of the quality problems under section values for 2023, on which EPA updated photochemical and source 110(a)(2)(D)(i)(i)(I).3 requested comment.8 The year 2023 was apportionment modeling used to project EPA notes that the Agency has used as the analytic year for this ambient ozone concentrations for the addressed the interstate transport preliminary modeling because that year year 2023 and the state-by state impacts requirements of CAA section aligns with the expected attainment year on those concentrations. The March 110(a)(2)(D)(i)(I) with respect to prior for Moderate ozone nonattainment 2018 memorandum also explains that ozone NAAQS in several regional areas.9 On October 27, 2017, EPA the selection of the 2023 analytic year regulatory actions, including the Cross- released a memorandum (2017 aligns with the 2015 ozone NAAQS State Air Pollution Rule (CSAPR), memorandum) containing updated attainment year for Moderate which addressed interstate transport modeling data for 2023, which nonattainment areas. As described in with respect to the 1997 ozone NAAQS incorporated changes made in response more detail in the 2017 and March 2018 as well as the 1997 and 2006 fine to comments on the NODA.10 Although memoranda, EPA used the particulate matter standards, and the the 2017 memorandum also released Comprehensive Air Quality Model with Cross-State Air Pollution Rule Update data for a 2023 modeling year, EPA Extensions (CAMx version 6.40) to for the 2008 ozone NAAQS (CSAPR specifically stated that the modeling model average and maximum design Update).4 These actions only addressed may be useful for states developing SIPs values in 2023 to identify potential interstate transport in the eastern United to address remaining good neighbor nonattainment and maintenance States 5 and did not address the 2015 obligations for the 2008 ozone NAAQS receptors (i.e., monitoring sites that are ozone NAAQS. but did not address the 2015 ozone projected to have problems attaining or Through the development and NAAQS. Additionally, on March 27, maintaining the 2015 ozone NAAQS). implementation of CSAPR, the CSAPR 2018, EPA issued a memorandum The March 2018 memorandum presents Update, and previous regional (March 2018 memorandum) indicating design values calculated in two ways: rulemakings pursuant to the good the same 2023 modeling data released in First, following EPA’s historic ‘‘3 x 3’’ 6 neighbor provision, EPA, working in the 2017 memorandum would also be partnership with states, developed the useful for evaluating potential 11 See Information on the Interstate Transport following four-step interstate transport State Implementation Plan Submissions for the framework to address the requirements 2015 Ozone National Ambient Air Quality 7 The four-step interstate framework has also been Standards under Clean Air Act Section of the good neighbor provision for the used to address requirements of the good neighbor 110(a)(2)(D)(i)(I), March 27, 2018, available at provision for some previous particulate matter and https://www.epa.gov/interstate-air-pollution- 3 See North Carolina v. EPA, 531 F.3d 896, 909– ozone NAAQS, including in the Western United transport/interstate-air-pollution-transport-memos- 911 (D.C. Cir. 2008). States. See, e.g., 83 FR 30380 (June 28, 2018) and and-notices. 4 See 76 FR 48208 (August 8, 2011) (i.e., CSAPR) 83 FR 5375, 5376–77 (February 7, 2018). 12 See Analysis of Contribution Thresholds for and 81 FR 74504 (October 26, 2016) (i.e., CSAPR 8 See Notice of Availability of the Environmental Use in Clean Air Act Section 110(a)(2)(D)(i)(I) Update). Protection Agency’s Preliminary Interstate Ozone Interstate Transport State Implementation Plan 5 For purposes of CSAPR and the CSAPR Update Transport Modeling Data for the 2015 Ozone Submissions for the 2015 Ozone National Ambient action, the Western U.S. (or the West) was National Ambient Air Quality Standard (NAAQS), Air Quality Standards, August 31, 2018) (‘‘August considered to consist of the 11 western contiguous 82 FR 1733 (January 6, 2017). 2018 memorandum’’), and Considerations for states of Arizona, California, Colorado, Idaho, 9 See 82 FR 1735. Identifying Maintenance Receptors for Use in Clean Montana, Nevada, New Mexico, Oregon, Utah, 10 See Information on the Interstate Transport Air Act Section 110(a)(2)(D)(i)(I) Interstate Washington, and Wyoming. The Eastern U.S. (or the State Implementation Plan Submissions for the Transport State Implementation Plan Submissions East) was considered to consist of the 37 states east 2008 Ozone National Ambient Air Quality for the 2015 Ozone National Ambient Air Quality of the 11 Western states. Standards under Clean Air Act Section Standards, October 19, 2018 (‘‘October 2018 6 Other regional rulemakings addressing ozone 110(a)(2)(D)(i)(I), October 27, 2017, available at memorandum’’), available at https://www.epa.gov/ transport include the NOX SIP Call, 63 FR 57356 https://www.epa.gov/interstate-air-pollution- airmarkets/memo-and-supplemental-information- (October 27, 1998), and the Clean Air Interstate transport/interstate-air-pollution-transport-memos- regarding-interstate-transport-sips-2015-ozone- Rule (CAIR), 70 FR 25162 (May 12, 2005). and-notices. naaqs.

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approach to evaluating all sites; and information resulting from the source- While the March 2018 memorandum second, following a modified approach apportionment modeling in Attachment presented information regarding EPA’s for coastal monitoring sites in which C to the March 2018 memorandum. For latest analysis of ozone transport ‘‘overwater’’ modeling data were not more specific information on the following the approaches EPA has taken included in the calculation of future modeling and analysis, please see the in prior regional rulemaking actions, year design values (referred to as the 2017 and March 2018 memoranda, the EPA has not made any final ‘‘no water’’ approach).13 NODA for the preliminary interstate determinations regarding how states For purposes of identifying potential transport assessment, and the should identify downwind receptors nonattainment and maintenance supporting technical documents. with respect to the 2015 ozone NAAQS receptors in 2023, EPA applied the same In the CSAPR and the CSAPR Update, at step 1 of the four-step framework. approach used in the CSAPR Update, EPA used a threshold of one percent of Rather, EPA noted that states have wherein EPA considered a combination the NAAQS to determine whether a flexibility in developing their own SIPs of monitoring data and modeling given upwind state was ‘‘linked’’ at step to follow different analytical approaches projections to identify monitoring sites 2 of the four-step framework and would than EPA’s, so long as their chosen that are projected to have problems therefore contribute to downwind approach has an adequate technical attaining or maintaining the NAAQS. nonattainment and maintenance sites justification and is consistent with the Specifically, EPA identified identified in step 1. If a state’s impact requirements of the CAA. nonattainment receptors as those did not equal or exceed the one percent II. Southeast States’ Submissions and monitoring sites with measured threshold, the upwind state was not values 14 exceeding the NAAQS that EPA’s Analysis of the Southeast States’ ‘‘linked’’ to a downwind air quality Submissions also have projected (i.e., in 2023) problem, and EPA therefore concluded average design values exceeding the the state will not significantly The following discussion summarizes NAAQS. EPA identified maintenance contribute to nonattainment or interfere EPA’s analyses for the submissions from receptors as those monitoring sites with with maintenance of the NAAQS in the the Southeast States intended to meet prongs 1 and 2 requirements of projected maximum design values downwind states. However, if a state’s 110(a)(2)(D)(i)(I) for the 2015 8-hour exceeding the NAAQS. This included impact equaled or exceeded the one Ozone NAAQS. sites with measured values below the percent threshold, the state’s emissions NAAQS but with projected average and were further evaluated in step 3, taking A. Analysis Related to All Southeast maximum design values exceeding the into account both air quality and cost States NAAQS, and monitoring sites with considerations, to determine what, if EPA is proposing to rely on the 2023 projected average design values below any, emissions reductions might be the NAAQS but with projected modeling data identifying downwind necessary to address the good neighbor receptors and upwind state maximum design values exceeding the provision. NAAQS. EPA included the design contributions, as released in the March As noted previously, on August 31, values and monitoring data for all 2018 memorandum, to evaluate the 2018, EPA issued a memorandum (the monitoring sites projected to be Southeast States’ good neighbor August 2018 memorandum) providing potential nonattainment or maintenance obligation with respect to the 2015 guidance concerning potential receptors based on the updated 2023 ozone NAAQS. On September 13, 2019, contribution thresholds that may be modeling in Attachment B to the March the United States Court of Appeals for 2018 memorandum. appropriate to apply with respect to the the District of Columbia Circuit (D.C. After identifying potential downwind 2015 ozone NAAQS in step 2. Circuit) issued its decision in Wisconsin nonattainment and maintenance Consistent with the process for selecting v. EPA addressing legal challenges to receptors, EPA next performed the one percent threshold in CSAPR and the CSAPR Update, in which EPA nationwide, state-level ozone source the CSAPR Update, the memorandum partially addressed certain upwind apportionment modeling to estimate the included analytical information states’ good neighbor obligations for the expected impact from each state to each regarding the degree to which potential 2008 ozone NAAQS. 938 F.3d 303. nonattainment and maintenance air quality thresholds would capture the While the court generally upheld the receptor.15 EPA included contribution collective amount of upwind rule as to most of the challenges raised contribution from upwind states to in the litigation, the court remanded the 13 See March 2018 memorandum, p. 4, for more downwind receptors for the 2015 ozone CSAPR Update to the extent it failed to detail on modeling approach. For the no water NAAQS. The August 2018 require upwind states to eliminate their approach, EPA eliminated from the design value memorandum indicated that, based on calculations those modeling data in grid cells that significant contributions in accordance are dominated by water (i.e., more than 50 percent EPA’s analysis of its most recent with the attainment dates found in CAA of the area in the grid cell is water) and that do not modeling data, the amount of upwind section 181 by which downwind states contain a monitoring site (i.e., if a grid cell is more collective contribution captured using a must come into compliance with the than 50 percent water but contains an air quality 1 ppb threshold is generally monitor, that cell would remain in the calculation). NAAQS. Id. at 313. In light of the For this action, EPA used no water averages to comparable, overall, to the amount court’s decision, EPA is providing identify each state’s impact on any downwind captured using a threshold equivalent to further explanation regarding why it nonattainment or maintenance receptor, which can one percent of the 2015 ozone NAAQS. be found in Attachment C of the March 2018 proposes to find that it is appropriate memorandum. Accordingly, EPA indicated that it may and consistent with the statute—as well 14 EPA used 2016 ozone design values, based on be reasonable and appropriate for states as the legal precedent—to use the 2023 2014–2016 measured data, which were the most to use a 1 ppb contribution threshold, as analytic year for assessing good current data at the time of the analysis. See an alternative to the one percent attachment B of the March 2018 memorandum, p. neighbor obligations for the 2015 ozone B–1. threshold, at step 2 of the four-step NAAQS. 15 As discussed in the March 2018 memorandum, framework in developing their SIP EPA believes that 2023 is an EPA performed source-apportionment model runs revisions addressing the good neighbor appropriate year for analysis of good for a modeling domain that covers the 48 provision for the 2015 ozone NAAQS.16 neighbor obligations for the 2015 ozone contiguous United States and the District of Columbia, and adjacent portions of Canada and NAAQS because the 2023 ozone season Mexico. 16 See August 2018 memorandum, p. 4. is the last relevant ozone season during

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which achieved emissions reductions in upwind good neighbor obligations with [172(c)(9)] of this title (relating to linked upwind states could assist later attainment dates applicable for contingency measures) shall not apply downwind states with meeting the Moderate or higher classifications. to Marginal Areas’’). August 2, 2024 Moderate area Under the CAA, states with areas Existing regulations—either local, attainment date for the 2015 ozone designated nonattainment are generally state, or federal—are typically a part of NAAQS. EPA recognizes that the required to submit, as part of their state the reason why ‘‘additional’’ local attainment date for nonattainment areas implementation plan, an ‘‘attainment controls are not needed to bring classified as Marginal for the 2015 demonstration’’ that shows, usually Marginal nonattainment areas into ozone NAAQS is August 2, 2021, which through air quality modeling, how an attainment. As described in EPA’s currently applies in several downwind area will attain the NAAQS by the record for its final rule defining area nonattainment areas evaluated in EPA’s applicable attainment date. See CAA classifications for the 2015 ozone modeling.17 However, as explained section 172(c)(1).18 Such plans must NAAQS and establishing associated below, EPA does not believe that either also include, among other things, the attainment dates, history has shown that the statute or applicable case law adoption of all ‘‘reasonably available’’ the majority of areas classified as requires the evaluation of good neighbor control measures on existing sources, a Marginal for prior ozone standards obligations in a future year aligned with demonstration of ‘‘reasonable further attained the respective standards by the the attainment date for nonattainment progress’’ toward attainment, and Marginal area attainment date (i.e., areas classified as Marginal. contingency measures, which are without being re-classified to a The good neighbor provision instructs specific controls that will take effect if Moderate designation). See 83 FR EPA and states to apply its requirements the area fails to attain by its attainment 10376. As part of a historical lookback, ‘‘consistent with the provisions of’’ title date or fails to make reasonable further EPA calculated that by the relevant I of the CAA. CAA section progress toward attainment. See, e.g., attainment date for areas classified as 110(a)(2)(D)(i); see also North Carolina CAA section 172(c)(1); 172(c)(2); Marginal, 85 percent of such areas v. EPA, 531 F.3d 896, 911–12 (D.C. Cir. 172(c)(9). Ozone nonattainment areas attained the 1979 1–hour ozone 2008). This consistency instruction classified as Marginal are excepted from NAAQS, and 64 percent attained the 20 follows the requirement that plans these general requirements under the 2008 ozone NAAQS. Based on these ‘‘contain adequate provisions CAA—unlike other areas designated historical data, EPA expects that many prohibiting’’ certain emissions in the nonattainment under the Act (including areas classified Marginal for the 2015 good neighbor provision. As the D.C. for other NAAQS pollutants), Marginal ozone NAAQS will also attain by the Circuit held in North Carolina, and ozone nonattainment areas are relevant attainment date as a result of more recently in Wisconsin, the good specifically exempted from submitting emissions reductions that are already neighbor provision must be applied in an attainment demonstration and are expected to occur through a manner consistent with the not required to implement any specific implementation of existing local, state, designation and planning requirements emissions controls at existing sources in and federal emissions reduction in title I that apply in downwind states order to meet the planning requirements programs. To the extent states have and, in particular, the timeframe within applicable to such areas. See CAA concerns about meeting their attainment which downwind states are required to section 182(a) (‘‘The requirements of date for a Marginal area, the CAA under implement specific emissions control this subsection shall apply in lieu of any section 181(b)(3) provides authority for measures in nonattainment areas and requirement that the State submit a them to voluntarily request a higher classification for individual areas, if submit plans demonstrating how those demonstration that the applicable needed. areas will attain, relative to the implementation plan provides for Areas that are classified as Moderate applicable attainment dates. See North attainment of the ozone standard by the typically have more pronounced air Carolina, 896 F.3d at 912 (holding that applicable attainment date in any quality problems than Marginal areas or the good neighbor provision’s reference 19 Marginal Area.’’) Marginal ozone have been unable to attain the NAAQS to title I requires consideration of both nonattainment areas are also exempted under the minimal requirements that procedural and substantive provisions from demonstrating reasonable further apply to Marginal areas. See CAA in title I); Wisconsin, 938 F.3d at 313– progress towards attainment and sections 181(a)(1) (classifying areas 18. submitting contingency measures. See based on the degree of nonattainment While EPA recognizes, as the court CAA section 182(a) (does not include a relative to the NAAQS) and (b)(2) held in North Carolina and Wisconsin, reasonable further progress requirement (providing for reclassification to the that upwind emissions-reduction and specifically notes that ‘‘Section next highest designation upon failure to obligations therefore must generally be attain the standard by the attainment aligned with downwind receptors’ 18 Part D of title I of the CAA provides the plan date). Thus, unlike Marginal areas, the attainment dates, unique features of the requirements for all nonattainment areas. Subpart 1, statute explicitly requires a state with an statutory requirements associated with which includes section 172(c), applies to all nonattainment areas. Congress provided in subparts ozone nonattainment area classified as the Marginal area planning 2–5 additional requirements specific to the various Moderate or higher to develop an requirements and attainment date under NAAQS pollutants that nonattainment areas must attainment plan demonstrating how the CAA section 182 lead EPA to conclude meet. 19 States with Marginal nonattainment areas are state will address the more significant that it is more reasonable and air quality problem, which generally appropriate to require the alignment of required to implement new source review permitting for new and modified sources, but the requires the application of various purpose of those requirements is to ensure that control measures to existing sources of 17 The Marginal area attainment date is not potential emissions increases do not interfere with applicable for nonattainment areas already progress towards attainment, as opposed to emissions located in the nonattainment classified as Moderate or higher, such as the New reducing existing emissions. Moreover, EPA York Metropolitan Area. For the status of all acknowledges that states within ozone transport 20 See Response to Comments on Implementation nonattainment areas under the 2015 ozone NAAQS, regions must implement certain emission control of the 2015 National Ambient Air Quality Standards see U.S. EPA, 8-Hour Ozone (2015) Designated measures at existing sources in accordance with for Ozone: Nonattainment Area Classifications Area/State Information, https://www3.epa.gov/ CAA section 184, but those requirements apply Approach (February 26, 2018), at section A.2.4, airquality/greenbook/jbtc.html (last updated Sept. regardless of the applicable area designation or available at https://www.regulations.gov/ 30, 2019). classification. document?D=EPA-HQ-OAR-2016-0202-0122.

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area. See generally CAA sections 172(c) Wisconsin court do not arise with definitions applied in the CSAPR and 182(b)–(e). respect to downwind areas subject to Update and using both the ‘‘3 x 3’’ and Given that downwind states are not the Marginal area attainment date. the ‘‘no water’’ approaches to required to demonstrate attainment by The distinction between planning calculating future year design values. the attainment date or impose obligations for Marginal nonattainment The March 2018 memorandum additional controls on existing sources areas and higher classifications was not identifies 57 potential nonattainment in a Marginal nonattainment area, EPA before the court in Wisconsin. Rather, and maintenance receptors in the West believes that it would be inconsistent to the court was considering whether EPA, in Arizona (2), California (49), and interpret the good neighbor provision as in implementing its obligation to Colorado (6).22 The March 2018 requiring EPA to evaluate the necessity promulgate federal implementation memorandum also provides for upwind state emissions reductions plans under CAA section 110(c), was contribution data regarding the impact based on air quality modeled in a future required to fully resolve good neighbor of other states on the potential year aligned with the Marginal area obligations by the 2018 Moderate area receptors. For purposes of evaluating attainment date. Rather, EPA believes it attainment date for the 2008 ozone the Southeast States’ 2015 ozone is more appropriate and consistent with NAAQS. See 938 F.3d at 312–13. NAAQS interstate transport SIP the nonattainment planning provisions Although the court noted that submission, we propose that, at least in title I to evaluate downwind air petitioners had not ‘‘forfeited’’ an where a state’s impacts are less than one quality and upwind state contributions, argument with respect to the Marginal percent to downwind nonattainment and, therefore, the necessity for upwind area attainment date, see id. at 314, the and maintenance sites, it is reasonable state emissions reductions, in a year court did not address whether its to conclude that the state’s impact will aligned with an area classification in holding with respect to the 2018 not significantly contribute to connection with which downwind Moderate area date would have applied nonattainment or interfere with states are also required to demonstrate with equal force to the Marginal area maintenance of the NAAQS in any other attainment and implement controls on attainment date because that date had state. EPA notes, nonetheless, that existing sources—i.e., with the already passed. Thus, the court did not consistent with the August 2018 Moderate area attainment date, rather have the opportunity to consider these memorandum, it may be reasonable and than the Marginal area date. With differential planning obligations in appropriate for states to use a 1 ppb respect to the 2015 ozone NAAQS, the reaching its decision regarding EPA’s contribution threshold, as an alternative Moderate area attainment date will be in obligations relative to the then- to a one percent threshold, at step 2 of the summer of 2024, and the last full applicable 2018 Moderate area the four-step framework in developing year of monitored ozone-season data attainment date because such their SIP revisions addressing the good that will inform attainment considerations were not applicable to neighbor provision for the 2015 ozone demonstrations is, therefore, 2023. the case before the court.21 For the NAAQS. However, for the reasons EPA’s interpretation of the good reasons discussed here, the equitable discussed below, it is unnecessary for neighbor requirements in relation to the concerns supporting the Wisconsin EPA to determine whether it may be Marginal area attainment date is court’s holding as to upwind state appropriate to apply a 1 ppb threshold consistent with the Wisconsin opinion. obligations relative to the Moderate area for purposes of this action.23 For the reasons explained below, the attainment date also support EPA’s Further, EPA notes that—due to large court’s holding does not contradict interpretation of the good neighbor distance and a general prevailing west EPA’s view that 2023 is an appropriate provision relative to the Marginal area to east wind flow—there is no evidence analytic year in evaluating good attainment date. Thus, EPA proposes to that any of the Southeastern States will neighbor SIPs for the 2015 ozone 24 conclude that its reliance on an impact potential receptors in the West. NAAQS. The court in Wisconsin was evaluation of air quality in the 2023 concerned that allowing upwind B. Alabama analytical year for purposes of assessing emission reductions to be implemented On August 20, 2018, Alabama good neighbor obligations with respect after the applicable attainment date submitted a SIP revision addressing the to the 2015 ozone NAAQS is based on would require downwind states to CAA section 110(a)(2)(D)(i)(I) interstate a reasonable interpretation of the CAA obtain more emissions reductions than transport requirements for the 2015 and legal precedent. the Act requires of them, to make up for ozone NAAQS. Alabama relied on the As previously discussed, the March the absence of sufficient emissions results of EPA’s modeling for the 2015 2018 memorandum identifies potential reductions from upwind states. See 938 ozone NAAQS, contained in the March downwind nonattainment and F.3d at 316. As discussed previously, maintenance receptors, using the however, this equitable concern only 22 The number of receptors in the identified arises for nonattainment areas classified western states is 57, irrespective of whether the ‘‘3 21 The D.C. Circuit, in a short judgment, x 3’’ or ‘‘no water’’ approach is used. Further, as Moderate or higher for which subsequently vacated and remanded EPA’s action although EPA has indicated that states may have downwind states are required by the purporting to fully resolve good neighbor flexibilities to apply a different analytic approach CAA to develop attainment plans obligations for certain states for the 2008 ozone to evaluating interstate transport, including securing reductions from existing NAAQS, referred to as the CSAPR Close-Out, 83 FR identifying downwind air quality problems, 65878 (Dec. 21, 2018). New York v. EPA, No. 19– because EPA is also concluding in this proposed sources and demonstrating how such 1019 (Oct. 1, 2019). That result necessarily followed action that the Southeast States will have an areas will attain by the attainment date. from the Wisconsin decision, because as EPA insignificant impact on any potential receptors See, e.g., CAA section 182(b)(1) & (2) conceded, the Close-Out ‘‘relied upon the same identified in its analysis, these Southeast States (establishing ‘‘reasonable further statutory interpretation of the Good Neighbor need not definitively determine whether the Provision’’ rejected in Wisconsin. Id. slip op. at 3. identified monitoring sites should be treated as progress’’ and ‘‘reasonably available In the Close-Out, EPA had analyzed the year 2023, receptors for the 2015 ozone standard. control technology’’ requirements for which was two years after the Serious area 23 As further discussed below, because none of Moderate nonattainment areas). Ozone attainment date for the 2008 ozone NAAQS and not Southeast States’ impacts exceed 0.70 ppb, they nonattainment areas classified as aligned with any attainment date for that NAAQS. necessarily also do not exceed the 1 ppb Id. at 2. In New York, as in Wisconsin, the court contribution threshold discussed in the August Marginal are not required to meet these was not faced with addressing specific issues 2018 memorandum. same planning requirements, and thus associated with the unique planning requirements 24 See footnote 5, above, regarding states the equitable concerns raised by the associated with the Marginal area attainment date. considered to be in the West.

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2018 memorandum, to identify maintenance of the NAAQS in any other 0.21 ppb and 0.53 ppb, respectively.29 downwind nonattainment and state. These values are less than 0.70 ppb (one percent of the 2015 ozone NAAQS),30 maintenance receptors that may be C. Florida impacted by emissions from sources in and as a result, demonstrate that 27 Alabama. The Alabama Department of On September 18, 2018, Florida emissions from Florida are not linked to Environmental Management (ADEM) submitted a SIP revision addressing the any 2023 downwind potential reviewed EPA’s preliminary 2023 CAA section 110(a)(2)(D)(i)(I) interstate nonattainment and maintenance modeling and determined that the transport requirements for the 2015 receptors identified in the March 2018 ozone NAAQS. Florida relied on the future year projections are appropriate memorandum. As discussed above, results of EPA’s modeling for the 2015 for the purposes of evaluating there is no evidence that emissions from ozone NAAQS, contained in the March Florida will impact receptors in the Alabama’s impact on nonattainment and 2018 memorandum, to identify maintenance receptors in other states. West. Accordingly, EPA proposes to downwind nonattainment and conclude that emissions from Florida Alabama concurred with EPA’s maintenance receptors that may be preliminary photochemical modeling will not contribute to any potential impacted by emissions from sources in receptors, and thus, the State will not results, which indicate that Alabama Florida. Based on Florida’s review of significantly contribute to does not contribute above one percent to EPA’s modeling assumptions and model nonattainment or interfere with any downwind nonattainment and performance evaluation, Florida maintenance of the NAAQS in any other maintenance sites. The August 20, 2018, determined that EPA’s future year state. submittal from Alabama also included projections were appropriate for additional programs that have led to the purposes of evaluating Florida impact D. Georgia reduction of ozone in the state. on attainment and maintenance of the On September 19, 2018,31 the Georgia Therefore, ADEM concluded that 2015 ozone NAAQS in other states. For Environmental Protection Division (GA emissions from Alabama sources will example, Florida found that EPA’s EPD) submitted a SIP revision not significantly contribute to modeling used emissions inventory addressing the CAA section nonattainment or interfere with projections that were reasonable 110(a)(2)(D)(i)(I) interstate transport maintenance of the 2015 ozone NAAQS considering the projected future decline requirements for the 2015 ozone in any other state. in Florida NOX emissions. Thus, Florida NAAQS. Georgia relied on the results of concurred with EPA’s photochemical EPA’s updated 2023 modeling EPA’s modeling for the 2015 ozone modeling results that indicate Florida’s discussed in the March 2018 NAAQS, contained in the March 2018 greatest impacts on any potential memorandum, to identify downwind memorandum indicates that Alabama’s downwind nonattainment or largest impact on any potential nonattainment and maintenance maintenance receptor would be 0.21 receptors that may be impacted by downwind nonattainment and 28 ppb and 0.53 ppb, respectively. emissions from sources in Georgia.32 maintenance receptor in the East are Florida compared these values to a Based on Georgia’s review of EPA’s 0.37 ppb and 0.49 ppb, respectively.25 screening threshold of 0.70 ppb, modeling assumptions and model These values are less than 0.70 ppb (one representing one percent of the 2015 26 performance evaluation, Georgia percent of the 2015 ozone NAAQS), ozone NAAQS, and concluded that determined that EPA’s future year and as a result, demonstrate that because none of Florida’s impacts projections were appropriate for emissions from Alabama are not linked exceed this threshold, emissions from purposes of evaluating Georgia’s impact to any 2023 downwind potential Florida sources will not significantly on attainment and maintenance of the nonattainment and maintenance contribute to nonattainment or interfere 2015 ozone NAAQS in other states. receptors identified in the March 2018 with maintenance of the 2015 ozone Thus, Georgia concurred with EPA’s memorandum. As discussed above, NAAQS in any other state. Additionally, photochemical modeling results that there is no evidence that emissions from Florida’s submission identifies SIP- indicate Georgia’s greatest impact on Alabama will impact receptors in the approved regulations that both directly any potential downwind nonattainment West. Accordingly, EPA proposes to and indirectly regulate sources of ozone or maintenance receptor would be 0.26 conclude that emissions from Alabama precursor emissions that contribute to will not contribute to any potential ozone concentrations in ambient air. 29 EPA’s analysis indicates that Florida will have receptors, and thus, the State will not EPA’s updated 2023 modeling a 0.21 ppb impact at the potential nonattainment significantly contribute to discussed in the March 2018 receptor in Brazoria, Texas (Site ID 480391004), which has a 2023 projected average design value of nonattainment or interfere with memorandum indicates that Florida’s largest impact on any potential 74.0 ppb, a 2023 projected maximum design value of 74.9 ppb, and had a 2014–2016 design value of downwind nonattainment and 25 EPA’s analysis indicates that Alabama will 75 ppb. EPA’s analysis further indicates that Florida have a 0.37 ppb impact at the potential maintenance receptor in the East are will have a 0.53 ppb impact at a potential nonattainment receptor in Tarrant, Texas (Site ID maintenance receptor in Harris, Texas (Site ID 484392003), which has a 2023 projected average 27 EPA notes that the Florida submission was 482011034), which has which has a projected 2023 design value of 72.5 ppb, a 2023 projected received by EPA on September 26, 2018. projected average design value of 70.8 ppb, a 2023 maximum design value of 74.8 ppb, and had a 28 EPA’s analysis indicates that Florida will have projected maximum design value of 71.6 ppb, and 2014–2016 design value of 73 ppb. EPA’s analysis a 0.21 ppb impact at the potential nonattainment had a 2014–2016 design value of 73 ppb. See the further indicates that Alabama will have a 0.49 ppb receptor in Brazoria, Texas (Site ID 480391004), March 2018 memorandum, attachments B, C. impact at a potential maintenance receptor in which has a 2023 projected average design value of 30 Because none of Florida’s impacts exceed 0.70 Denton, Texas (Site ID 481210034), which has 74.0 ppb, a 2023 projected maximum design value ppb, they necessarily also do not exceed the 1 ppb which has a projected 2023 average design value of of 74.9 ppb, and had a 2014–2016 design value of contribution threshold discussed in the August 69.7 ppb, a 2023 projected maximum design value 75 ppb. EPA’s analysis further indicates that Florida 2018 memorandum. of 72.0 ppb, and had a 2014–2016 design value of will have a 0.53 ppb impact at a potential 31 EPA notes that the Georgia submission was 80 ppb. See the March 2018 memorandum, maintenance receptor in Harris, Texas (Site ID received by EPA on September 24, 2018. attachment C. 482011034), which has which has a projected 2023 32 See Table A–1 and Table A–2 in Appendix A 26 Because none of Alabama’s impacts equal or projected average design value of 70.8 ppb, a 2023 of Georgia’s submittal. EPD highlights Georgia’s exceed 0.70 ppb, they necessarily also do not equal projected maximum design value of 71.6 ppb, and impact to nonattainment and maintenance sites in or exceed the 1 ppb contribution threshold had a 2014–2016 design value of 73 ppb. See the the East. They also note that all values are less than discussed in the August 2018 memorandum. March 2018 memorandum, attachments C. the defined threshold of 0.70 ppb.

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ppb and 0.34 ppb, respectively. Georgia North Carolina. Based on North conclude that emissions from North compared these values to a screening Carolina’s review of EPA’s modeling Carolina will not contribute to any threshold and concluded that emissions assumptions, the State determined that potential receptors, and thus, the State from Georgia sources will not EPA’s future year projections were will not significantly contribute to significantly contribute to conservative for purposes of evaluating nonattainment or interfere with nonattainment or interfere with North Carolina’s impact on attainment maintenance of the NAAQS in any other maintenance of the 2015 ozone NAAQS and maintenance of the 2015 ozone state. in any other state. Additionally, the NAAQS in other states. Thus, North F. South Carolina Georgia submittal identified regulations Carolina concurred with EPA’s that have been approved into the photochemical modeling results that On September 7, 2018, South Carolina Georgia SIP to provide for the control of indicate North Carolina’s greatest submitted a SIP revision addressing the NOX and VOCs, which are precursors impact on any potential downwind CAA section 110(a)(2)(D)(i)(I) interstate that contribute to ambient ozone nonattainment or maintenance receptor transport requirements for the 2015 concentrations. would be 0.43 ppb and 0.42 ppb, ozone NAAQS. South Carolina relied on EPA’s updated 2023 modeling respectively. North Carolina compared the results of EPA’s modeling for the discussed in the March 2018 these values to a screening threshold of 2015 ozone NAAQS, contained in the memorandum indicates that Georgia’s 0.70 ppb, representing one percent of March 2018 memorandum, to identify largest impact on any potential the 2015 ozone NAAQS, and concluded downwind nonattainment and downwind nonattainment and that because North Carolina’s impacts to maintenance receptors that may be maintenance receptor in the East are neighboring states are projected to be impacted by emissions from sources in 0.26 ppb and 0.34 ppb, respectively.33 less than 0.70 ppb, emissions from South Carolina. Based on South These values are less than 0.70 ppb (one North Carolina sources will not Carolina’s review of EPA’s modeling percent of the 2015 ozone NAAQS),34 significantly contribute to assumptions, techniques, and data, and as a result, demonstrate that nonattainment or interfere with South Carolina determined that EPA’s emissions from Georgia are not linked to maintenance of the 2015 ozone NAAQS future year projections were appropriate any 2023 downwind potential in any other state. North Carolina for purposes of evaluating South nonattainment and maintenance further performed back trajectory Carolina’s impact on attainment and receptors identified in the March 2018 analyses to confirm that North Carolina maintenance of the 2015 ozone NAAQS memorandum. As discussed above, did not significantly contribute to ozone in other states. Thus, South Carolina there is no evidence that emissions from exceedances at ozone monitors in the concurred with EPA’s photochemical Georgia will impact receptors in the East, and identified SIP-approved modeling results that indicate South West. Accordingly, EPA proposes to regulations that both directly and Carolina’s greatest impact on any conclude that emissions from Georgia indirectly impact ozone concentrations potential downwind nonattainment or will not contribute to any potential in the State. maintenance receptor would be 0.12 receptors, and thus, the State will not EPA’s updated 2023 modeling and 0.14 ppb, respectively. South significantly contribute to discussed in the March 2018 Carolina compared these values to a nonattainment or interfere with memorandum indicates that North screening threshold of 0.70 ppb, maintenance of the NAAQS in any other Carolina’s largest impact on any representing one percent of the 2015 state. potential downwind nonattainment and ozone NAAQS, and concluded that maintenance receptor in the East are because none of South Carolina’s E. North Carolina 0.43 ppb and 0.42 ppb, respectively.35 impacts exceed this threshold, On September 27, 2018, North These values are less than 0.70 ppb (one emissions from South Carolina sources Carolina submitted a SIP revision percent of the 2015 ozone NAAQS),36 will not significantly contribute to addressing the CAA section and as a result, demonstrate that nonattainment or interfere with 110(a)(2)(D)(i)(I) interstate transport emissions from North Carolina are not maintenance of the 2015 ozone NAAQS requirements for the 2015 ozone linked to any 2023 downwind potential in any other state. The South Carolina NAAQS. North Carolina relied on the nonattainment and maintenance SIP also includes several regulations results of EPA’s modeling for the 2015 receptors identified in the March 2018 that address the attainment, ozone NAAQS, contained in the March memorandum. As discussed above, nonattainment and maintenance of the 2018 memorandum, to identify there is no evidence that emissions from ozone NAAQS. downwind nonattainment and North Carolina will impact receptors in EPA’s updated 2023 modeling maintenance receptors that may be the West. Accordingly, EPA proposes to discussed in the March 2018 impacted by emissions from sources in memorandum indicates that South 35 EPA’s analysis indicates that North Carolina Carolina’s largest impact on any 33 EPA’s analysis indicates that Georgia will have will have a 0.43 ppb impact at the potential potential downwind nonattainment and a 0.26 ppb impact at the potential nonattainment nonattainment receptor in Fairfield, Connecticut receptor in Tarrant, Texas (Site ID 484392003), (Site ID 90019003), which has a 2023 projected maintenance receptor in the East are 37 which has a 2023 projected average design value of average design value of 73.0 ppb, a 2023 projected 0.12 ppb and 0.14 ppb, respectively. 72.5 ppb, a 2023 projected maximum design value maximum design value of 75.9 ppb, and had a of 74.8 ppb, and had a 2014–2016 design value of 2014–2016 design value of 85.0 ppb. EPA’s analysis 37 EPA’s analysis indicates that South Carolina 73 ppb. EPA’s analysis further indicates that further indicates that North Carolina will have a will have a 0.12 ppb impact at the potential Georgia will have a 0.34 ppb impact at a potential 0.42 ppb impact at a potential maintenance receptor nonattainment receptor in Fairfield, Connecticut maintenance receptor in Denton, Texas (Site ID in Harford, Maryland (Site ID 240251001), which (Site ID 90019003), which has a 2023 projected 481210034), which has which has a projected 2023 has which has a projected 2023 projected average average design value of 73.0 ppb, a 2023 projected projected average design value of 69.7 ppb, a 2023 design value of 70.9 ppb, a 2023 projected maximum design value of 75.9 ppb, and had a projected maximum design value of 72.0 ppb, and maximum design value of 73.3 ppb, and had a 2014–2016 design value of 85 ppb. EPA’s analysis had a 2014–2016 design value of 80 ppb. See the 2014–2016 design value of 73.0 ppb. See the March further indicates that South Carolina will have a March 2018 memorandum, attachments B, C. 2018 memorandum, attachments B, C. 0.14 ppb impact at a potential maintenance receptor 34 Because none of Georgia’s impacts exceed 0.70 36 Because none of North Carolina’s impacts in Harris, Texas (Site ID 482010024), which has ppb, they necessarily also do not exceed the 1 ppb exceed 0.70 ppb, they necessarily also do not which has a projected 2023 projected average contribution threshold discussed in the August exceed the 1 ppb contribution threshold discussed design value of 70.4 ppb, a 2023 projected 2018 memorandum. in the August 2018 memorandum. maximum design value of 72.8 ppb and had a 2014–

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These values are less than 0.70 ppb (one maintenance receptor in the East are IV. Statutory and Executive Order percent of the 2015 ozone NAAQS),38 0.31 ppb and 0.65 ppb, respectively.39 Reviews and as a result, demonstrate that These values are less than 0.70 ppb (one Under the CAA, the Administrator is emissions from South Carolina are not percent of the 2015 ozone NAAQS),40 required to approve a SIP submission linked to any 2023 downwind potential and as a result, demonstrate that that complies with the provisions of the nonattainment and maintenance emissions from Tennessee are not CAA and applicable federal regulations. receptors identified in the March 2018 linked to any 2023 downwind potential 42 U.S.C. 7410(k); 40 CFR 52.02(a). memorandum. As discussed above, nonattainment and maintenance Thus, in reviewing SIP submissions, there is no evidence that emissions from receptors identified in the March 2018 EPA’s role is to approve state choices, South Carolina will impact receptors in memorandum. As discussed above, provided that they meet the criteria of the West. Accordingly, EPA proposes to there is no evidence that emissions from the CAA. Accordingly, these actions conclude that emissions from South merely approve state law as meeting Carolina will not contribute to any Tennessee will impact receptors in the federal requirements and does not potential receptors, and thus, the State West. Accordingly, EPA proposes to impose additional requirements beyond will not significantly contribute to conclude that emissions from Tennessee those imposed by state law. For that nonattainment or interfere with will not contribute to any potential maintenance of the NAAQS in any other receptors, and thus, the State will not reason, these actions: • Are not significant regulatory state. significantly contribute to nonattainment or interfere with actions subject to review by the Office G. Tennessee maintenance of the NAAQS in any other of Management and Budget under On September 13, 2018, Tennessee state. Executive Orders 12866 (58 FR 51735, submitted a SIP revision addressing the October 4, 1993) and 13563 (76 FR 3821, CAA section 110(a)(2)(D)(i)(I) interstate III. Proposed Actions January 21, 2011); • transport requirements for the 2015 Are not Executive Order 13771 (82 As discussed in the previous sections, ozone NAAQS. Tennessee relied on the FR 9339, February 2, 2017) regulatory each of the Southeast States (Alabama, results of EPA’s modeling for the 2015 actions because SIP approvals are ozone NAAQS, contained in the March Florida, Georgia, North Carolina, South exempted under Executive Order 12866; • 2018 memorandum, to identify Carolina, and Tennessee) concluded Do not impose an information downwind nonattainment and that emissions from sources in the states collection burden under the provisions maintenance receptors that may be will not significantly contribute to of the Paperwork Reduction Act (44 impacted by emissions from sources in nonattainment or interfere with U.S.C. 3501 et seq.); Tennessee. Based on Tennessee’s review maintenance of the 2015 ozone NAAQS • Are certified as not having a of EPA’s modeling assumptions, in any other state. EPA’s evaluation of significant economic impact on a Tennessee determined that EPA’s future the Southeast States’ submissions, substantial number of small entities year projections were appropriate for discussed above, confirms this finding. under the Regulatory Flexibility Act (5 purposes of evaluating Tennessee’s Therefore, EPA is proposing to approve U.S.C. 601 et seq.); • impact on attainment and maintenance the interstate transport portions of the Do not contain any unfunded of the 2015 ozone NAAQS in other infrastructure SIP submissions from mandate or significantly or uniquely states. Thus, Tennessee concurred with Alabama, Florida, Georgia, North affect small governments, as described EPA’s photochemical modeling results Carolina, South Carolina, and Tennessee in the Unfunded Mandates Reform Act that indicate Tennessee’s greatest as meeting CAA section 110(a)(2)(D)(i)(I) of 1995 (Pub. L. 104–4); • Do not have Federalism impact on any potential downwind requirements for the 2015 ozone implications as specified in Executive nonattainment or maintenance receptor NAAQS. EPA is requesting comments Order 13132 (64 FR 43255, August 10, would be 0.31 ppb and 0.65 ppb, on the proposed approvals. respectively. Tennessee compared these 1999); values to a screening threshold of 0.70 • Are not economically significant 39 EPA’s analysis indicates that Tennessee will regulatory actions based on health or ppb, representing one percent of the have a 0.31 ppb impact at three potential 2015 ozone NAAQS, and concluded that nonattainment receptors: Fairfield, Connecticut safety risks subject to Executive Order because none of Tennessee’s impacts (Site ID 90013007), which has a 2023 projected 13045 (62 FR 19885, April 23, 1997); exceed this threshold, emissions from average design value of 71.0 ppb, a 2023 projected • Are not significant regulatory Tennessee sources will not significantly maximum design value of 75.0 ppb, and had a actions subject to Executive Order contribute to nonattainment or interfere 2014–2016 design value of 81 ppb; Milwaukee, 13211 (66 FR 28355, May 22, 2001); Wisconsin (Site ID 550790085), which has a 2023 • with maintenance of the 2015 ozone projected average design value of 71.2 ppb, a 2023 Are not subject to requirements of NAAQS in any other state. Additionally, projected maximum design value of 73 ppb and had Section 12(d) of the National the Tennessee SIP includes several a 2014–2016 design value of 71 ppb; and Technology Transfer and Advancement regulations that address the attainment, Sheboygan, Wisconsin (Site ID 551170006), which Act of 1995 (15 U.S.C. 272 note) because has a 2023 projected average design value of 72.8 nonattainment, and maintenance of the ppb, a 2023 projected maximum design value of application of those requirements would ozone NAAQS. 75.1 ppb and had a 2014–2016 design value of 79 be inconsistent with the CAA; and EPA’s updated 2023 modeling ppb. EPA’s analysis further indicates that • Do not provide EPA with the discussed in the March 2018 Tennessee will have a 0.65 ppb impact at a discretionary authority to address, as memorandum indicates that potential maintenance receptor Allegan, Michigan appropriate, disproportionate human (Site ID 260050003), which has which has a Tennessee’s largest impact on any projected 2023 projected average design value of health or environmental effects, using potential downwind nonattainment and 69.0 ppb, a 2023 projected maximum design value practicable and legally permissible of 71.7 ppb and had a 2014–2016 design value of methods, under Executive Order 12898 2016 design value of 79 ppb. See the March 2018 75 ppb. See the March 2018 memorandum, (59 FR 7629, February 16, 1994). memorandum, attachments B, C. attachments B, C. In addition, for Alabama, Florida, 38 Because none of South Carolina’s impacts 40 Because none of Tennessee’s impacts exceed exceed 0.70 ppb, they necessarily also do not 0.70 ppb, they necessarily also do not exceed the Georgia, North Carolina, and Tennessee, exceed the 1 ppb contribution threshold discussed 1 ppb contribution threshold discussed in the the SIP is not approved to apply on any in the August 2018 memorandum. August 2018 memorandum. Indian reservation land or in any other

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area where EPA or an Indian tribe has ENVIRONMENTAL PROTECTION make. The EPA will generally not demonstrated that a tribe has AGENCY consider comments or comment jurisdiction. In those areas of Indian contents located outside of the primary country, the rule does not have tribal 40 CFR Part 52 submission (i.e. on the web, cloud, or implications and will not impose [EPA–R09–OAR–2019–0321; FRL–10003– other file sharing system). For substantial direct costs on tribal 74–Region 9] additional submission methods, please governments or preempt tribal law as contact the person identified in the FOR specified by Executive Order 13175 (65 Air Plan Conditional Approval and FURTHER INFORMATION CONTACT section. FR 67249, November 9, 2000). Disapproval; Arizona; Maricopa For the full EPA public comment policy, For South Carolina, because this County; Power Plants, Fuel Burning information about CBI or multimedia proposed action merely proposes to Equipment, and Internal Combustion submissions, and general guidance on approve state law as meeting Federal Engines making effective comments, please visit http://www.epa.gov/dockets/ requirements and does not impose AGENCY: Environmental Protection additional requirements beyond those Agency (EPA). commenting-epa-dockets. imposed by state law, this proposed ACTION: Proposed rule. FOR FURTHER INFORMATION CONTACT: action for the State of South Carolina Kevin Gong, EPA Region IX, 75 does not have Tribal implications as SUMMARY: The Environmental Protection Hawthorne St., San Francisco, CA specified by Executive Order 13175 (65 Agency (EPA) is proposing to 94105. By phone: (415) 972–3073 or by FR 67249, November 9, 2000). conditionally approve two revisions to email at [email protected]. Therefore, this proposed action will not the Maricopa County portion of the SUPPLEMENTARY INFORMATION: impose substantial direct costs on Tribal Arizona State Implementation Plan (SIP) Throughout this document, ‘‘we,’’ ‘‘us,’’ governments or preempt Tribal law. The concerning fuel-burning equipment and and ‘‘our’’ refer to the EPA. Catawba Indian Nation (CIN) internal combustion engines. The EPA Reservation is located within the is also proposing to disapprove one Table of Contents boundary of York County, South revision to the Maricopa County portion I. The State’s Submittal Carolina. Pursuant to the Catawba of the Arizona SIP concerning power A. What rules did the State submit? Indian Claims Settlement Act, S.C. Code plants. We are proposing action on B. Are there other versions of these rules? Ann. 27–16–120 (Settlement Act), ‘‘all Maricopa County rules that regulate C. What is the purpose of the submitted state and local environmental laws and these emission sources under the Clean rule revisions? regulations apply to the [Catawba Indian Air Act (CAA or the ‘‘Act’’). We are II. EPA’s Evaluation and Action taking comments on these proposals and A. How is the EPA evaluating the rules? Nation] and Reservation and are fully B. Do the rules meet the evaluation enforceable by all relevant state and plan to follow with final actions. criteria? local agencies and authorities.’’ The CIN DATES: Any comments must arrive by C. What are the deficiencies? also retains authority to impose January 29, 2020. D. EPA Recommendations To Further regulations applying higher ADDRESSES: Submit your comments, Improve the Rules environmental standards to the identified by Docket ID No. EPA–R09– E. Proposed Action and Public Comment Reservation than those imposed by state OAR–2019–0321 at http:// III. Incorporation by Reference law or local governing bodies, in www.regulations.gov. For comments IV. Statutory and Executive Order Reviews accordance with the Settlement Act. submitted at Regulations.gov, follow the I. The State’s Submittal List of Subjects in 40 CFR Part 52 online instructions for submitting comments. Once submitted, comments A. What rules did the State submit? Environmental protection, Air cannot be edited or removed from On June 22, 2017, the Arizona pollution control, Incorporation by Regulations.gov. The EPA may publish Department of Environmental Quality reference, Intergovernmental relations, any comment received to its public (ADEQ, or the ‘‘State’’) electronically Nitrogen dioxide, Ozone, Reporting and docket. Do not submit electronically any submitted a SIP revision from the recordkeeping requirements, Volatile information you consider to be Maricopa County Air Quality organic compounds. Confidential Business Information (CBI) Department (MCAQD, or the ‘‘County’’) Authority: 42 U.S.C. 7401 et seq. or other information whose disclosure is revising several rules. Table 1 lists the restricted by statute. Multimedia rules on which the EPA is proposing Dated: December 12, 2019. submissions (audio, video, etc.) must be action, with the dates they were revised Mary S. Walker, accompanied by a written comment. by the MCAQD, the dates they were Regional Administrator, Region 4. The written comment is considered the submitted by the ADEQ, and the type of [FR Doc. 2019–27695 Filed 12–27–19; 8:45 am] official comment and should include action that the EPA is proposing in this BILLING CODE 6560–50–P discussion of all points you wish to notice.

TABLE 1—SUBMITTED RULES

Proposed Rule No. Rule title Revised Submitted action

322 ...... Power Plant Operations ...... November 2, 2016 ...... June 22, 2017 ...... Disapproval. 323 ...... Fuel Burning Equipment from Industrial/Commer- November 2, 2016 ...... June 22, 2017 ...... Conditional cial/Institutional (ICI) Sources. Approval. 324 ...... Stationary Reciprocating Internal Combustion En- November 2, 2016 ...... June 22, 2017 ...... Conditional gines (RICE). Approval.

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On December 22, 2017, the submittal classified as Moderate for the 2008 8- ‘‘commitment letter’’), the County containing the rules listed in Table 1 hour ozone standard (40 CFR 81.303). enumerated certain rule deficiencies was deemed by operation of law to meet Maricopa County’s ‘‘Analysis of and committed to revise those the completeness criteria in 40 CFR part Reasonably Available Control provisions in accordance with EPA 51 Appendix V, which must be met Technology For The 2008 8-Hour Ozone guidance, and submit the revised rules before formal EPA review. National Ambient Air Quality Standard within eleven months of a conditional (NAAQS) State Implementation Plan approval.1 On February 25, 2019, the B. Are there other versions of these (RACT SIP),’’ adopted December 5, ADEQ provided its own commitment to rules? 2016, submitted June 22, 2017 (the submit the County’s revised rules to the We approved earlier versions of the ‘‘2016 RACT SIP’’), identified all of the EPA within one month after the rules listed in Table 1 into the SIP on major sources of NOX within the County’s action and request for SIP October 14, 2009 (74 FR 52693, 40 CFR County’s portion of the Phoenix-Mesa revision.2 On December 5, 2019, the 52.120, paragraph (c), Table 4—EPA- nonattainment area, and concluded that County provided a supplement to the Approved Maricopa County Air there were major sources within the commitment letter to resolve further Pollution Control Regulations). The Maricopa County portion of the deficiencies in the submitted rules.3 ADEQ previously submitted these rules Phoenix-Mesa nonattainment area The EPA proposes to disapprove Rule in a SIP revision on December 19, 2016, subject to each of these rules. 322 because it includes provisions that along with the County’s reasonably Accordingly, all three of the submitted do not meet our evaluation criteria, and available control technology (RACT) rules must establish RACT levels of the deficiencies in the rule as submitted demonstration. However, this submittal control for these major sources. may cause a weakening from the current did not include documentation that Guidance and policy documents that SIP-approved rule. These issues are showed the entirety of the County’s SIP we use to evaluate enforceability, summarized below and discussed revision had met the public notice revision/relaxation and rule stringency further in our TSD evaluating Rule 322. requirements required for completeness requirements for the applicable criteria The EPA also proposes to under 40 CFR part 51 Appendix V. The pollutants include the following: conditionally approve Rules 323 and County addressed the public notice 1. ‘‘Issues Relating to VOC Regulation 324, because they strengthen the SIP. requirement and the State resubmitted Cutpoints, Deficiencies, and The County has committed to adopt the submittal on June 22, 2017, and Deviations,’’ EPA, May 25, 1988 (the specific enforceable measures to remedy withdrew the December 19, 2016 Bluebook, revised January 11, 1990). the identified rule deficiencies in these submittal on May 17, 2019. 2. ‘‘Guidance Document for Correcting rules, and the State has committed to Common VOC & Other Rule submit those updated rules as SIP C. What is the purpose of the submitted Deficiencies,’’ EPA Region 9, August 21, revisions. Our TSDs for Rules 323 and rule revisions? 2001 (the Little Bluebook). 324 provide further details on our Oxides of nitrogen (NOX) helps 3. ‘‘Alternative Control Techniques evaluation for these conditional produce ground-level ozone, smog and Document—NOX Emissions from approvals. particulate matter which harm human Stationary Gas Turbines,’’ EPA 453/R– C. What are the deficiencies? health and the environment. Section 93–007, January 1993. 110(a) of the CAA requires states to 4. ‘‘Alternative Control Techniques 1. Deficiencies in Rule 322 submit regulations that control NOX Document—NOX Emissions from Rule 322’s provisions do not satisfy emissions. The rules in Table 1 were Industrial, Commercial & Institutional the requirements of section 110 and part submitted to control NOX emissions Boilers,’’ EPA 453/R–94–022, March D of title I of the Act and prevent full from power plants, process heaters, 1994. approval of the SIP revision for the boilers, stationary turbines, and internal 5. ‘‘Alternative Control Techniques following reasons. combustion engines. The EPA’s Document—NOX Emissions from a. Rule 322 contains provisions that technical support documents (TSDs) Stationary Reciprocating Internal constitute unacceptable and have more information about these Combustion Engines,’’ EPA 453/R–93– unenforceable director’s discretion. rules. 032, July 1993. Specifically, the rule provides for the 6. ‘‘De Minimis Values for NOX County’s Air Pollution Control Officer II. EPA’s Evaluation and Action RACT,’’ Memorandum from G. T. to approve as RACT alternative control A. How is the EPA evaluating the rules? Helms, Group Leader, Ozone Policy and strategies that differ from the rule’s Strategies Group, U.S. EPA, January 1, existing emission limits or requirements SIP rules must be enforceable (see 1995. without further approval from the EPA. CAA section 110(a)(2)), must not 7. ‘‘Cost-Effective Nitrogen Oxides This director’s discretion conflicts with interfere with applicable requirements (NOX) Reasonably Available Control long-standing EPA policy. Although the concerning attainment and reasonable Technology (RACT),’’ Memorandum County has committed to revise this further progress or other CAA from D. Ken Berry, Acting Director, Air provision, the EPA cannot conditionally requirements (see CAA section 110(l)), Quality Management Division, US. EPA, and must not modify certain SIP control March 16, 1994. 1 Letter dated January 28, 2019, from Philip A. requirements in nonattainment areas McNeely, Director, Maricopa County Air Control without ensuring equivalent or greater B. Do the rules meet the evaluation Quality Department, to Misael Cabrera, Director, emissions reductions (see CAA section criteria? Arizona Department of Environmental Quality. 193). Rules 322, 323 and 324 apply to 2 Letter dated February 25, 2019, from Timothy S. Franquist, Director, Air Quality Division, Arizona Generally, SIP rules must require various emission sources that are major Department of Environmental Quality, to Michael RACT for each major source of NOX in sources of NOX in the Phoenix-Mesa Stoker, Regional Administrator, U.S. EPA, Region ozone nonattainment areas classified as area. We find that the County’s IX. Moderate or above (see CAA sections submissions are largely consistent with 3 Letter dated December 5, 2019, from Philip A. McNeely, Director, Maricopa County Air Control 182(b)(2) and 182(f)). Maricopa County the applicable CAA requirements, with Quality Department, to Doris Lo, Manager, Rules regulates a portion of the Phoenix-Mesa the exceptions identified below. In a Office, Air and Radiation Division, U.S. EPA Region ozone nonattainment area, which is letter dated January 28, 2019 (the IX.

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approve Rule 322 because these the submitted Rule 322 is not constitute RACT for these emission alternative control strategies may appropriate for a conditional approval. sources. constitute a weakening of the SIP- Our TSD for Rule 322 contains our d. The rule allows operators to approved rule. discussion and analysis for all the comply with the limits in this rule by b. Rule 322’s NOX emission limits are deficiencies and the County’s installing an emission control system not demonstrated to meet RACT for commitments. but does not include any requirement to steam generating units that are verify the effectiveness of that system in applicable to this rule. The County must 2. Deficiencies in Rule 323 and the meeting the emission limits. The County revise the limits for these units or County’s and State’s Commitments has committed to revise the rule to make provide sufficient justification as to why The provisions for Rule 323 do not clear that any unit on which an these limits constitute RACT for these satisfy the requirements of section 110 emission control system is installed emission sources. and part D of title I of the Act and must comply with the numeric RACT c. Two provisions in Rule 322 exempt prevent full approval of the SIP limit. units from specific requirements when revision. However, the submitted rule e. The operations and maintenance firing on emergency fuel. These strengthens the SIP and the County’s plan requirements for emissions control exemptions are overly broad. First, and State’s commitment letters include systems are only approved by the unlike in other jurisdictions, the rule specific and enforceable commitments Control Officer. This constitutes does not limit the duration in which to address the deficiencies, which serve unacceptable director’s discretion. The emergency fuel can be used. Rule 322 as the basis for today’s proposed County has committed to codify must specify a maximum length of time conditional approval. Our conditional additional requirements for acceptable that emergency fuel can be used per approval of the SIP revision for Rule 323 operations and maintenance plans into year. Second, the rule exempts units is based on the following deficiencies the rule that would constrain the from all emission limits while testing and County and State commitments: discretion of the director in approving operations for using emergency fuel. As a. Much like deficiency (c) for Rule or denying these plans. written, the language could be 322, the emergency fuel use exemptions f. The Rule specifies that boilers larger interpreted to mean that any unit that in the rule are overly broad. In Rule 323, than 100 MMBtu/hr must source test test fires on emergency fuel would be the total allowable length of emergency triennially but does not describe a exempt from all emission limits all of fuel burning must be limited and must testing frequency for other units. Other the time. The County must clarify that require that the facility owner/operator units must be tested at least triennially. the exemption only applies during the notify the County when switching to The County has committed to require a testing period. emergency fuel. The language in the minimum testing frequency for these d. The compliance schedule rule exempting units firing emergency units. requirements for units that are currently fuel for testing purposes could be g. The rule lacks a definition for not complying with the limits in the interpreted to allow for the exemption ‘‘boiler,’’ and for ‘‘continuous emissions rule may be extended by the Control during any operating period so long as monitoring system.’’ The County has Officer as needed or could be extended there was a testing period. The County committed to include these definitions by the County’s inaction or delay to has committed to clarify that the in the rule. approve a compliance schedule. The exemptions only apply during the Our TSD for Rule 323 contains further County must include an enforceable testing period. discussion and analysis of these deadline by which a facility must b. All major sources of NOX must be deficiencies and the County’s and comply with the rule. subject to RACT limits or requirements. State’s commitments. e. Rule 322 currently does not include In Rule 323, all turbines and all boilers a compliance determination rated larger than 100 million British 3. Deficiencies in Rule 324 and the requirement, such as requiring regular thermal units per hour (MMBtu/hr) County’s and State’s Commitments stack tests or the use of continuous must comply with emission limits in the The provisions for Rule 324 also do emission monitoring systems. The rule. Boiler units rated between 10 not satisfy the requirements of section County must include enforceable MMBtu/hr and 100 MMBtu/hr may opt 110 and part D of title I of the Act and compliance determination schedules to to comply with the emission limits or prevent full approval of the SIP verify that facilities are complying with tune the units annually. The burner revision. The County’s and State’s the emission limits in the rule. maintenance requirements in the rule’s commitment letters included specific Although the District and State tuning requirements are not RACT, as and enforceable commitments to provided commitment letters addressing many other jurisdictions regulating address these deficiencies. Our some of the listed deficiencies, the rule units in this size category are able to proposed conditional approval of the as submitted is not SIP-strengthening achieve numeric limits or have more SIP revision for Rule 324 is based on the because deficiency (a) above could stringent tuning requirements. As the following deficiencies and the County’s allow for a source to apply for an rule is written, major source units in the and State’s commitments to correct alternative control strategy that results nonattainment area are only required to them: in weakened emission limits or controls tune the engine instead of complying a. The current structure of rule without the EPA’s concurrent approval with a RACT NOX limit. The County has applicability and emission limits does that this alternative is RACT. Although committed to clarify that larger units not clearly outline a RACT limit for the existing SIP-approved version of shall comply with Rule 323 by meeting NOX and VOC emissions from all Rule 322 contains less stringent limits a NOX limit. applicable internal combustion (IC) and applies to fewer sources than the c. Rule 323’s NOX emission limits are engines. The County must include submitted version of Rule 322, this new not demonstrated to meet RACT for control requirements or limits for provision could allow any existing non-turbine combustion equipment that engines otherwise subject to federal source to apply to the County for an are applicable to this rule. The County requirements and standards in 40 CFR alternative RACT determination that has committed to revise the limits for part 60, subparts IIII and JJJJ. The Clean may or may not be consistent with the these units or provide sufficient Air Act requires that RACT limitations existing or new NOX limits. Therefore justification as to why these limits be approved into the federally-

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enforceable SIP. It is inappropriate to that we recommend for the next time We will accept comments from the rely on requirements outside of the SIP, the County modifies the rules that do public on the proposed disapproval and such as the Standards of Performance not constitute approvability issues at conditional approvals for the next 30 for New Stationary Sources found in 40 this time. days. CFR part 60. The County has committed E. Proposed Action and Public III. Incorporation by Reference to include applicable numeric limits or Comment other requirements directly in the rule In this document, the EPA is language. As authorized in section 110(k)(3) of proposing to include in a final EPA rule b. The current rule only applies to the Act, we are proposing full regulatory text that includes engines rated greater than 250 brake disapproval of the submitted MCAQD incorporation by reference. In horsepower (bhp), and to engines rated Rule 322. If the disapproval for Rule 322 accordance with the requirements of 1 greater than 50 bhp or greater when is finalized, this action would trigger the CFR 51.5, the EPA is proposing to operating at a facility whose units sum 2-year clock for the federal incorporate by reference MCAQD Rule to more than 250 bhp. The County implementation plan (FIP) requirement 323, ‘‘Fuel Burning Equipment from should lower the applicability threshold under CAA section 110(c)(1). Final Industrial/Commercial/Institutional for all engines to 50 bhp to be in line disapproval would also trigger sanctions (ICI) Sources,’’ as revised on November with other jurisdictions’ RACT rules. under CAA section 179(a)(2) and 40 2, 2016, and MCAQD Rule 324 The current rule also does not clearly CFR 52.31 unless the EPA approves ‘‘Stationary Reciprocating Internal state compliance requirements for 50 subsequent SIP revisions that correct the Combustion Engines (RICE),’’ as revised bhp engines summed at a 250 bhp rule deficiencies within 18 months of on November 2, 2016. The EPA has facility. The County has committed to the effective date of the final action. made, and will continue to make, these lower the applicability threshold and to In addition, section 110(k)(4) materials available through https:// clarify requirements for those smaller authorizes the EPA to conditionally www.regulations.gov and at the EPA engines. approve SIP revisions based on a Region IX Office (please contact the c. The current rule allows for commitment by the state to adopt person identified in the FOR FURTHER unacceptable flexibility in the treatment specific enforceable measures by a date INFORMATION CONTACT section of this of replacement engines and emergency certain but not later than one year after preamble for more information). engines. Emergency engines that serve the date of the plan’s conditional as backup to replace non-emergency approval. 42 U.S.C. 7410(k)(4). In this IV. Statutory and Executive Order engines may do so until the non- instance, the enforceable measures that Reviews emergency engine is repaired, but this the State must submit are new or Additional information about these time span is otherwise unbounded, and revised rules that correct the rule statutes and Executive Orders can be the emergency engines may operate deficiencies identified above for found at https://www.epa.gov/laws- above RACT limits. Current rule MCAQD Rules 323 and 324. As noted regulations/laws-and-executive-orders. provisions also allow for engines that above, the County transmitted letters on are deemed equivalent or identical to January 28, 2019, and December 5, 2019, A. Executive Order 12866: Regulatory replace existing engines and then be committing to adopt revisions that Planning and Review and Executive treated the same as the engine being would address the deficiencies Order 13563: Improving Regulation and replaced; but there are no requirements identified in Rules 323 and 324. Regulatory Review for replacement engines to quantify Accordingly, we are proposing to This action is not a significant emissions equivalency or reductions. conditionally approve Rules 323 and regulatory action and was therefore not The County has committed to limit the 324. If these proposed conditional submitted to the Office of Management total amount of time that these types of approvals are finalized as proposed, and and Budget (OMB) for review. emergency engines can operate, to the County or the State fails to comply B. Executive Order 13771: Reducing modify the definitions of ‘‘emergency with these commitments for either rule, Regulations and Controlling Regulatory engine’’ and ‘‘identical replacement the conditional approval for that rule Costs engine,’’ and to remove the definition would convert to a disapproval and start for ‘‘equivalent replacement engine.’’ an 18-month clock for sanctions under This action is not an Executive Order d. The current rule does not specify CAA section 179(a)(2) and a two year 13771 regulatory action because actions a compliance determination interval for clock for a FIP under CAA section such as SIP approvals are exempted engines, other than at the Control 110(c)(1). under Executive Order 12866. Officer’s discretion. The County has Note that the submitted rules have C. Paperwork Reduction Act (PRA) committed to require compliance been adopted by the MCAQD, and the determination performance tests every EPA’s final conditional approvals and This action does not impose an two years for non-emergency engines full disapproval would not prevent the information collection burden under the located at major sources. The County County from enforcing them. The PRA, because this proposed SIP has also committed to require conditional approvals also would not disapproval and conditional approval, if compliance determination requirements prevent any portion of rules 323 and finalized, will not in-and-of itself create for certified non-emergency engines and 324 from being incorporated by any new information collection for non-emergency engines. reference into the federally enforceable burdens, but will simply disapprove or Our TSD for Rule 324 contains further SIP as discussed in a Memorandum conditionally approve certain State discussion and analysis of these dated July 9, 1992, from John Calcagni, requirements for inclusion in the SIP. Director, Air Quality Management deficiencies and the County’s and D. Regulatory Flexibility Act (RFA) State’s commitments. Division, U.S. EPA to EPA Regional Air Directors, Regions I–X, Subject: I certify that this action will not have D. EPA Recommendations To Further ‘‘Processing of State Implementation a significant economic impact on a Improve the Rules Plan (SIP) Submittals,’’ found at: https:// substantial number of small entities The TSDs for Rules 322, 323, and 324 www.epa.gov/sites/production/files/ under the RFA. This action will not also describe additional rule revisions 2015-07/documents/procsip.pdf. impose any requirements on small

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entities. This proposed SIP disapproval I. Executive Order 13211: Actions That their respective SIPs. This proposal and conditional approval, if finalized, Significantly Affect Energy Supply, pertains to the infrastructure will not in-and-of itself create any new Distribution, or Use requirements of the Clean Air Act (CAA requirements but will simply This action is not subject to Executive or Act) for the 2015 8-hour ozone disapprove or conditionally approve Order 13211, because it is not a national ambient air quality standard certain State requirements for inclusion significant regulatory action under (NAAQS). Whenever EPA promulgates a in the SIP. Executive Order 12866. new or revised NAAQS, the CAA requires that each state adopt and E. Unfunded Mandates Reform Act J. National Technology Transfer and submit a SIP for the implementation, (UMRA) Advancement Act (NTTAA) maintenance and enforcement of each This action does not contain any Section 12(d) of the NTTAA directs NAAQS promulgated by EPA. Georgia unfunded mandate as described in the EPA to use voluntary consensus and North Carolina certified that their UMRA, 2 U.S.C. 1531–1538, and does standards in its regulatory activities SIPs contain provisions that ensure the not significantly or uniquely affect small unless to do so would be inconsistent 2015 8-hour ozone NAAQS is governments. This action proposes to with applicable law or otherwise implemented, enforced, and maintained disapprove or conditionally approve impractical. The EPA believes that this in their State. EPA is proposing to pre-existing requirements under State or action is not subject to the requirements determine that the Georgia and North local law, and imposes no new of section 12(d) of the NTTAA because Carolina infrastructure SIP submissions requirements. Accordingly, no application of those requirements would satisfy certain required infrastructure additional costs to State, local, or tribal be inconsistent with the CAA. elements for the 2015 8-hour ozone governments, or to the private sector, NAAQS. result from this action. K. Executive Order 12898: Federal Actions To Address Environmental DATES: Comments must be received on F. Executive Order 13132: Federalism Justice in Minority Populations and or before January 29, 2020. This action does not have federalism Low-Income Population ADDRESSES: Submit your comments, implications. It will not have substantial The EPA lacks the discretionary identified by Docket ID No. EPA–R04– direct effects on the states, on the authority to address environmental OAR–2019–0503 at http:// relationship between the national justice in this rulemaking. www.regulations.gov. Follow the online government and the states, or on the instructions for submitting comments. List of Subjects in 40 CFR Part 52 distribution of power and Once submitted, comments cannot be responsibilities among the various Environmental protection, Air edited or removed from Regulations.gov. levels of government. pollution control, Incorporation by EPA may publish any comment received reference, Intergovernmental relations, to its public docket. Do not submit G. Executive Order 13175: Coordination Nitrogen dioxide, Ozone, Particulate electronically any information you With Indian Tribal Governments matter, Reporting and recordkeeping consider to be Confidential Business This action does not have tribal requirements, Volatile organic Information (CBI) or other information implications, as specified in Executive compounds. whose disclosure is restricted by statute. Multimedia submissions (audio, video, Order 13175, because the SIP revisions Authority: 42 U.S.C. 7401 et seq. that the EPA is proposing to disapprove etc.) must be accompanied by a written Dated: December 16, 2019. or conditionally approve would not comment. The written comment is apply on any Indian reservation land or Deborah Jordan, considered the official comment and in any other area where the EPA or an Acting Regional Administrator, Region IX. should include discussion of all points Indian tribe has demonstrated that a [FR Doc. 2019–27843 Filed 12–27–19; 8:45 am] you wish to make. EPA will generally tribe has jurisdiction, and will not BILLING CODE 6560–50–P not consider comments or comment impose substantial direct costs on tribal contents located outside of the primary governments or preempt tribal law. submission (i.e., on the web, cloud, or Thus, Executive Order 13175 does not ENVIRONMENTAL PROTECTION other file sharing system). For apply to this action. AGENCY additional submission methods, the full EPA public comment policy, H. Executive Order 13045: Protection of 40 CFR Part 52 information about CBI or multimedia Children From Environmental Health [EPA–R04–OAR–2019–0503; FRL–10003– submissions, and general guidance on Risks and Safety Risks 70–Region 4] making effective comments, please visit The EPA interprets Executive Order http://www2.epa.gov/dockets/ Air Plan Approval; GA and NC: 13045 as applying only to those commenting-epa-dockets. Infrastructure Requirements for the regulatory actions that concern FOR FURTHER INFORMATION CONTACT: 2015 8-Hour Ozone National Ambient environmental health or safety risks that Tiereny Bell, Air Regulatory Air Quality Standard the EPA has reason to believe may Management Section, Air Planning and disproportionately affect children, per AGENCY: Environmental Protection Implementation Branch, Air and the definition of ‘‘covered regulatory Agency (EPA). Radiation Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth action’’ in section 2–202 of the ACTION: Proposed rule. Executive Order. This action is not Street SW, Atlanta, Georgia 30303–8960. subject to Executive Order 13045 SUMMARY: The Environmental Protection Ms. Bell can be reached via telephone because this proposed SIP disapproval Agency (EPA) is proposing to approve at (404) 562–9088 or via electronic mail and conditional approval, if finalized, portions of the Georgia and North at [email protected]. will not in-and-of itself create any new Carolina State Implementation Plan SUPPLEMENTARY INFORMATION: regulations, but will simply disapprove (SIP) submissions provided on or conditionally approve certain State September 24, 2018 and September 27, Table of Contents requirements for inclusion in the SIP. 2018, respectively, for inclusion into I. Background and Overview

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II. What elements are required under sources under sections 110(a)(2)(C), • 110(a)(2)(A): Emission Limits and Sections 110(a)(1) and 110(a)(2)? 110(a)(2)(D)(i)(II), and 110(a)(2)(J), EPA Other Control Measures III. What is EPA’s approach to the review of will address these provisions in separate • 110(a)(2)(B): Ambient Air Quality infrastructure SIP submissions? rulemaking actions. Monitoring/Data System IV. What is EPA’s analysis of how Georgia • 110(a)(2)(C): Programs for and North Carolina addressed the II. What elements are required under Enforcement of Control Measures and elements of the Section 110(a)(1) and (2) Sections 110(a)(1) and 110(a)(2)? ‘‘Infrastructure’’ Provisions? for Construction or Modification of V. Proposed Action Section 110(a) of the CAA requires Stationary Sources 5 VI. Statutory and Executive Order Reviews states to submit SIPs to provide for the • 110(a)(2)(D)(i)(I) and (II): Interstate implementation, maintenance, and Pollution Transport I. Background and Overview enforcement of a new or revised • 110(a)(2)(D)(ii): Interstate Pollution On October 1, 2015, EPA promulgated NAAQS within three years following Abatement and International Air a revised primary and secondary the promulgation of such NAAQS, or Pollution NAAQS for ozone, revising the 8-hour within such shorter period as EPA may • 110(a)(2)(E): Adequate Resources and ozone standards from 0.075 parts per prescribe. Section 110(a) imposes the Authority, Conflict of Interest, and million (ppm) to a new more protective obligation upon states to make a SIP Oversight of Local Governments and level of 0.070 ppm. See 80 FR 65292 submission to EPA for a new or revised Regional Agencies (October 26, 2015). Pursuant to section NAAQS, but the contents of that • 110(a)(2)(F): Stationary Source 110(a)(1) of the CAA, states are required submission may vary depending upon Monitoring and Reporting to submit SIP revisions meeting the the facts and circumstances. In • 110(a)(2)(G): Emergency Powers applicable requirements of section particular, the data and analytical tools • 110(a)(2)(H): SIP Revisions 110(a)(2) within three years after available at the time the state develops • 110(a)(2)(I): Plan Revisions for promulgation of a new or revised and submits the SIP for a new or revised Nonattainment Areas 6 NAAQS or within such shorter period NAAQS affects the content of the • 110(a)(2)(J): Consultation with as EPA may prescribe. Section 110(a)(2) submission. The contents of such SIP Government Officials, Public requires states to address basic SIP submissions may also vary depending Notification, and PSD and Visibility elements such as requirements for upon what provisions the state’s Protection • monitoring, basic program requirements existing SIP already contains.3 110(a)(2)(K): Air Quality Modeling and legal authority that are designed to More specifically, section 110(a)(1) and Submission of Modeling Data assure attainment and maintenance of provides the procedural and timing • 110(a)(2)(L): Permitting fees • the NAAQS. This particular type of SIP requirements for SIPs. Section 110(a)(2) 110(a)(2)(M): Consultation and is commonly referred to as an lists specific elements that states must Participation by Affected Local ‘‘infrastructure SIP.’’ States were meet for infrastructure SIP requirements Entities required to submit such SIPs for the related to a newly established or revised III. What is EPA’s approach to the 2015 8-hour ozone NAAQS to EPA no NAAQS. As mentioned above, these review of infrastructure SIP later than October 1, 2018.1 requirements include basic SIP elements submissions? EPA is proposing to approve Georgia’s such as requirements for monitoring, September 24, 2018 SIP revision basic program requirements, and legal EPA is acting upon portions of the SIP provided to EPA through the Georgia authority that are designed to assure submissions from Georgia and North Environmental Protection Division (GA attainment and maintenance of the Carolina that address certain EPD) and North Carolina’s September NAAQS. The requirements of section infrastructure requirements of CAA 27, 2018 2 SIP revision provided to EPA 110(a)(2) are described in EPA’s sections 110(a)(1) and 110(a)(2) for the through the North Carolina Department September 13, 2013, memorandum 2015 8-hour ozone NAAQS. Whenever of Environmental Quality (NC DEQ) for entitled ‘‘Guidance on Infrastructure EPA promulgates a new or revised the applicable requirements of the 2015 State Implementation Plan (SIP) NAAQS, CAA section 110(a)(1) requires 8-hour ozone NAAQS, with the Elements under Clean Air Act Sections states to make SIP submissions to exception of interstate transport 110(a)(1) and 110(a)(2)’’ (hereinafter provide for the implementation, provisions of section 110(a)(2)(D)(i)(I) ‘‘2013 Guidance’’) are listed below and maintenance, and enforcement of the pertaining to contribution to summarized in section IV of this NAAQS, commonly referred to as an nonattainment or interference with rulemaking: 4 ‘‘infrastructure SIP.’’ These maintenance in other states, and infrastructure SIP submissions must prevention of significant deterioration 3 Throughout this rulemaking, the term ‘‘North meet the various requirements of CAA (PSD) provisions related to major Carolina Administrative Code (NCAC)’’ indicates section 110(a)(2), as applicable. Due to sources under sections 110(a)(2)(C), that the cited regulation has been approved into ambiguity in some of the language of North Carolina’s SIP, unless otherwise indicated. CAA section 110(a)(2), EPA believes 110(a)(2)(D)(i)(II), and 110(a)(2)(J). With The term ‘‘North Carolina General Statutes (NCGS)’’ respect to the interstate transport cites to the North Carolina state statutes, which are provisions of section 110(a)(2)(D)(i)(I) not a part of the SIP unless otherwise indicated. For Submissions required by section 110(a)(2)(C) to the Georgia, the term ‘‘Georgia’s Air Quality Control extent that subsection refers to a permit program as and PSD provisions related to major Rule’’ indicates that the cited regulation has been required in part D, title I of the CAA; and (2) approved into Georgia’s SIP, unless otherwise submissions required by section 110(a)(2)(I) which 1 In these infrastructure SIP submissions, states indicated. The term ‘‘Georgia Air Quality Act pertain to the nonattainment planning requirements generally certify evidence of compliance with Article: Air Quality (O.C.G.A.)’’ cites to Georgia of part D, title I of the CAA. This proposed sections 110(a)(1) and (2) of the CAA through a state statutes, which are not part of the SIP unless rulemaking does not address infrastructure combination of state regulations and statutes, some otherwise indicated. elements related to section 110(a)(2)(I) or the Part of which have been incorporated into the SIP. In 4 Two elements identified in section 110(a)(2) are D nonattainment permitting requirements of addition, certain federally-approved, non-SIP not governed by the three-year submission deadline 110(a)(2)(C). regulations may also be appropriate for of section 110(a)(1) because SIPs incorporating 5 As mentioned above, the Part D permit program demonstrating compliance with sections 110(a)(1) necessary local nonattainment area controls are not for construction and modification of major and (2). due within three years after promulgation of a new stationary sources is not relevant to this proposed 2 The September 27, 2018, SIP submission or revised NAAQS, but rather are due at the time rulemaking. provided by NC DEQ’s Division of Air Quality the nonattainment area plan requirements are due 6 As also mentioned above, this element is not (DAQ) was received by EPA on October 10, 2018. pursuant to section 172. These requirements are: (1) relevant to this proposed rulemaking.

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that it is appropriate to interpret these Amended.’’ collectively establish North Carolina provisions in the specific context of enforceable emissions limitations and North Carolina’s NCGS 143– acting on infrastructure SIP other control measures, means, or 215.107(a)(2)—Air quality standards submissions. EPA has previously techniques for activities that contribute and classifications provides the EMC provided comprehensive guidance on to ozone concentrations in the ambient with the statutory authority ‘‘To the application of these provisions air, and provide authority for GA EPD determine by means of field sampling through a guidance document for to establish such limits and measures as and other studies, including the infrastructure SIP submissions and well as schedules for compliance examination of available data collected through regional actions on through SIP-approved permits to meet by any local, State or federal agency or infrastructure submissions.7 Unless the applicable requirements of the CAA. any person, the degree of air otherwise noted below, EPA is North Carolina contamination and air pollution in the following that existing approach in State and the several areas of the State.’’ acting on these submissions. In CAA section 110(a)(2)(A) addition, in the context of acting on requirements are met through several Ambient Monitoring Network Plans such infrastructure submissions, EPA North Carolina Administrative Code Annually, states develop and submit evaluates the submitting state’s SIP for (NCAC) regulations. Specifically, 15A to EPA for approval statewide ambient facial compliance with statutory and NCAC 2D .0500 Emission Control monitoring network plans consistent regulatory requirements, not for the Standards establishes emission limits with the requirements of 40 CFR parts state’s implementation of its SIP.8 EPA for ozone precursor pollutants. The 50, 53, and 58. The annual network plan has other authority to address any issues following SIP-approved rules address involves an evaluation of any proposed concerning a state’s implementation of additional control measures, means and changes to the monitoring network and the rules, regulations, consent orders, techniques: 15A NCAC 2D .0600— includes the annual ambient monitoring etc. that comprise its SIP. Monitoring: Recordkeeping: Reporting, network design plan and a certified IV. What is EPA’s analysis of how 15A NCAC 2D .0900—Volatile Organic evaluation of the agency’s ambient Georgia and North Carolina addressed Compounds, 15A NCAC 2D .1400— monitors and auxiliary support the elements of the Section 110(a)(1) Nitrogen Oxides, and 15A NCAC 2D equipment.9 and (2) ‘‘Infrastructure’’ provisions? .2600—Source Testing. In addition, On June 29, 2018, and June 13, 2019, Georgia’s and North Carolina’s North Carolina General Statutes North Carolina and Georgia submitted infrastructure SIP submissions address (NCGS)143–215.107(a)(5)—Air quality their monitoring network plans to EPA, certain provisions of sections 110(a)(1) standards and classifications, provides respectively. On October 22, 2018, and and (2) as described below. the North Carolina Environmental October 3, 2019, EPA approved these 1. 110(a)(2)(A) Emission Limits and Management Commission (EMC) with monitoring network plans for North Other Control Measures: Section the statutory authority, ‘‘[t]o develop Carolina and Georgia, respectively. 110(a)(2)(A) requires that each and adopt emission control standards as Georgia’s and North Carolina’s approved implementation plan include in the judgment of the Commission may monitoring network plans are available enforceable emission limitations and be necessary to prohibit, abate, or in the docket for this proposed action. other control measures, means, or control air pollution commensurate EPA has made the preliminary techniques (including economic with established air quality standards.’’ determination that Georgia’s and North EPA has made the preliminary incentives such as fees, marketable Carolina’s SIPs and practices are determination that the provisions permits, and auctions of emissions adequate for the ambient air quality contained in Georgia’s and North rights), as well as schedules and monitoring and data system Carolina’s SIP-approved state timetables for compliance, as may be requirements related to the 2015 8-hour regulations and state statutes are necessary or appropriate to meet the ozone NAAQS. applicable requirements. Several adequate for enforceable emission 3. 110(a)(2)(C) Programs for regulations within Georgia’s and North limitations and other control measures, Enforcement of Control Measures and Carolina’s SIPs include enforceable means, or techniques, as well as for Construction or Modification of emission limitations and other control schedules and timetables for Stationary Sources: This element measures. EPA provides more detail compliance to satisfy the requirements consists of three sub-elements: below for each state addressed in this of section 110(a)(2(A) for the 2015 8- Enforcement, state-wide regulation of proposed rulemaking. hour ozone NAAQS in each of the new and modified minor sources and states. minor modifications of major sources, Georgia 2. 110(a)(2)(B) Ambient Air Quality and preconstruction permitting of major Monitoring/Data System: Section Georgia’s Air Quality Control Rules sources and major modifications in 110(a)(2)(B) requires SIPs to provide for 391–3–1–.01—‘‘Definitions. Amended.’’, areas designated attainment or establishment and operation of 391–3–1–.02,—‘‘Provisions. Amended.’’, unclassifiable for a NAAQS as required appropriate devices, methods, systems, and 391–3–1–.03—‘‘Permits. by CAA title I part C (i.e., the major and procedures necessary to: (i) source PSD program). Georgia’s and Monitor, compile, and analyze data on 7 EPA explains and elaborates on these North Carolina’s 2015 8-hour ozone ambient air quality, and (ii) upon ambiguities and its approach to address them in its NAAQS infrastructure SIP submissions September 13, 2013 Infrastructure SIP Guidance request, make such data available to the cite a number of SIP provisions to (available at https://www3.epa.gov/airquality/ Administrator. EPA provides more urbanair/sipstatus/docs/Guidance_on_ address these requirements. EPA’s detail below for each state addressed in Infrastructure_SIP_Elements_Multipollutant_ rationale for its proposed action _ _ this proposed rulemaking. FINAL Sept 2013.pdf), as well as in numerous regarding each sub-element is described agency actions, including EPA’s prior actions on Georgia and North Carolina infrastructure SIPs to Georgia below. address the 2010 Nitrogen Dioxide NAAQS. See 81 Georgia’s authority to monitor FR 41905 (June 28, 2016) and 81 FR 47115 (July 20, 9 On occasion, proposed changes to the 2016), respectively. ambient air quality is found in the monitoring network are evaluated outside of the 8 See Mont. Envtl. Info. Ctr. v. Thomas, 902 F.3d Georgia Air Quality Act Article 1: Air network plan approval process in accordance with 971 (9th Cir. 2018). Quality (O.C.G.A. Section 12–9–6(b)(2)). 40 CFR part 58.

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Georgia related to the programs for visibility in other states, satisfying the Enforcement: Georgia’s enforcement preconstruction PSD permitting for requirements of prong 4 of section program covers mobile and stationary major sources, EPA is not proposing any 110(a)(2)(D)(i)(II) for the 2015 8-hour sources, consumer products, and fuels. action in this rulemaking. EPA will ozone NAAQS. consider these requirements in relation The enforcement requirements are met North Carolina through two of Georgia’s Air Quality to North Carolina’s 2015 8-hour ozone North Carolina’s SIP contains a fully- Control Rules: 391–3–1–.07— NAAQS infrastructure submission in a approved regional haze plan (81 FR ‘‘Inspections and Investigations. separate rulemaking. 58400, August 25, 2016). EPA’s Amended.’’ and 391–3–1–.09— EPA has made the preliminary approval of North Carolina regional ‘‘Enforcement. Amended.’’ Georgia also determination that Georgia’s and North haze SIP ensures that emissions from cites to enforcement authority found in Carolina’s SIPs are adequate for North Carolina are not interfering with O.C.G.A. Section 12–9–13 in its enforcement of control measures and measures to protect visibility in other submittal, which provides the director regulation of minor sources and with the authority to issue orders to modifications related to the 2015 8-hour states, satisfying the requirements of remedy violations of rules and ozone NAAQS. prong 4 of section 110(a)(2)(D)(i)(II) for 4. 110(a)(2)(D)(i)(I) and (II) Interstate regulations. Collectively, these the 2015 8-hour ozone NAAQS. Pollution Transport: Section EPA has made the preliminary regulations and State statute provide for 110(a)(2)(D)(i) has two components: determination that Georgia’s and North enforcement of ozone emission limits 110(a)(2)(D)(i)(I) and 110(a)(2)(D)(i)(II). Carolina’s SIPs meet the requirements of and control measures. Regulation of minor sources and Each of these components has two prong 4 of section 110(a)(2)(D)(i)(II) for modifications: Georgia’s SIP-approved subparts resulting in four distinct the 2015 8-hour ozone NAAQS. 5. 110(a)(2)(D)(ii) Interstate Air Quality Control Rule 391–3–1– components, commonly referred to as .03(1)—‘‘Construction (SIP) Permit.’’ ‘‘prongs,’’ that must be addressed in Pollution Abatement and International governs the preconstruction permitting infrastructure SIP submissions. The first Air Pollution: Section 110(a)(2)(D)(ii) of modifications, construction of minor two prongs, which are codified in requires SIPs to include provisions stationary sources, and minor section 110(a)(2)(D)(i)(I), are provisions ensuring compliance with section 115 modifications of major stationary that prohibit any source or other type of and 126 of the Act, relating to sources. emissions activity in one state from notification to nearby states, and Preconstruction PSD Permitting for contributing significantly to interstate and international pollution Major Sources: With regard to section nonattainment of the NAAQS in another abatement. state (‘‘prong 1’’) and interfering with 110(a)(2)(C) related to the programs for Georgia preconstruction PSD permitting for maintenance of the NAAQS in another The following two Georgia Air major sources, EPA is not proposing any state (‘‘prong 2’’). The third and fourth Quality Control Rules provide Georgia action in this rulemaking. EPA will prongs, which are codified in section with the authority to conduct certain consider these requirements in relation 110(a)(2)(D)(i)(II), are provisions that to Georgia’s 2015 8-hour ozone NAAQS prohibit emissions activity in one state actions in support of this infrastructure infrastructure submission in a separate from interfering with measures required element: 391–3–1–.02(7) for the State’s rulemaking. to prevent significant deterioration of air PSD regulations and 391–3–1–.03(8) for quality in another state (‘‘prong 3’’), or the State’s permitting regulations. North Carolina to protect visibility in another state Georgia’s Air Quality Control Rules Enforcement: NC DAQ’s SIP-approved (‘‘prong 4’’). 391–3–1–.02.(7)—‘‘Provisions. regulations provide for enforcement of 110(a)(2)(D)(i)(I)—prongs 1, 2, and 3: Amended,’’ and 391–3–1–.03.(8)— ozone emission limits and control EPA is not proposing any action in this ‘‘Permits. Amended,’’ collectively, measures through enforceable permits. rulemaking related to the interstate require any new major source or major North Carolina’s infrastructure SIP transport provisions pertaining to the modification to undergo PSD or submission also cited to the following contribution to nonattainment or nonattainment new source review statutory provisions as supporting this interference with maintenance in other (NNSR) permitting, and provide element: NCGS 143–215.108—Control states of section 110(a)(2)(D)(i)(I) notification to other potentially affected of sources of air pollution; permits (prongs 1 and 2) or the PSD element Federal, state, and local government required and NCGS 143–215.107(a)(7)— (prong 3). EPA will consider these agencies, which satisfies the notification Air quality standards and requirements in relation to Georgia’s requirements of section 126(a). In classifications. In addition, North and North Carolina’s 2015 8-hour ozone addition, Georgia does not have any Carolina cited NCGS 143–215.6A, 6B, NAAQS infrastructure submission in a pending obligation under section 115 or and 6C—Enforcement procedures: civil separate rulemaking. 126(b) of the CAA related to penalties, criminal penalties, and 110(a)(2)(D)(i)(II)—prong 4: Section international or interstate pollution injunctive relief, which provides NC 110(a)(2)(D)(i)(II) requires that the SIP abatement. contain adequate provisions to protect DAQ with the statutory authority to seek North Carolina civil and criminal penalties and visibility in other states. For any injunctive relief to enforce air quality relevant NAAQS, a state may satisfy the North Carolina’s State regulations: rules. prong 4 requirement by relying on a 15A NCAC 2D .0530—‘‘Prevention of Regulation of minor sources and fully-approved regional haze SIP. Significant Deterioration’’ and 15A modifications: NC DAQ’s Regulation NCAC 2D .0531—‘‘Sources in Georgia 15A NCAC 2Q .0300—Construction and Nonattainment Areas’’ provide how NC Operation Permits governs the Georgia’s SIP contains a fully- DAQ will notify neighboring states of preconstruction permitting of minor approved regional haze plan (83 FR potential impacts from new or modified modifications and construction of minor 19637, May 4, 2018). EPA’s approval of sources. These regulations require NC stationary sources. Georgia’s regional haze SIP ensures that DAQ to provide an opportunity for a PSD Permitting for Major Sources: emissions from Georgia are not public hearing to the public, which With regard to section 110(a)(2)(C) interfering with measures to protect includes state or local air pollution

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control agencies, ‘‘whose lands may be requirements, air quality planning, and As further evidence of the adequacy affected by emissions from the source or applicable requirements related to the of NC DAQ’s resources, EPA submitted modification’’ in North Carolina. In NAAQS. There were no outstanding a letter to North Carolina on May 2, addition, North Carolina does not have issues in relation to the SIP for fiscal 2019, outlining CAA section 105 grant any pending obligation under sections year 2018, therefore, GA EPD’s grants commitments and the current status of 115 or 126(b) of the CAA related to were finalized and closed out. these commitments for fiscal year 2018. international or interstate pollution Section 110(a)(2)(E)(ii) requires that The letter EPA submitted to North abatement. the state comply with section 128 of the Carolina can be accessed at EPA has made the preliminary CAA. Section 128 requires that the SIP www.regulations.gov using Docket ID determination that Georgia’s and North contain requirements providing that: No. EPA–R04–OAR–2019–0503. Carolina’s SIPs and practices are (a)(1) The majority of members of the Annually, states update these grant adequate for ensuring compliance with state board or body which approves commitments based on current SIP the applicable requirements relating to permits or enforcement orders represent requirements, air quality planning, and interstate and international pollution the public interest and do not derive applicable requirements related to the abatement for the 2015 8-hour ozone any significant portion of their income NAAQS. North Carolina satisfactorily NAAQS. from persons subject to permitting or met all commitments agreed to in the 6. 110(a)(2)(E) Adequate Resources enforcement orders under the CAA; and Air Planning Agreement for fiscal year and Authority, Conflict of Interest, and (a)(2) any potential conflicts of interest 2018; therefore, North Carolina’s grants Oversight of Local Governments and by such board or body, or the head of were finalized and closed out. Regional Agencies: Section 110(a)(2)(E) an executive agency with similar Collectively, these rules and requires that each implementation plan powers be adequately disclosed. To commitments provide evidence that NC provide: (i) Necessary assurances that meet these requirements, Georgia’s DAQ has adequate personnel, funding, the state will have adequate personnel, infrastructure SIP submission cites to and legal authority to carry out the funding, and authority under state law O.C.G.A. Section 12–9–5—Powers and State’s implementation plan and related to carry out its implementation plan, (ii) duties of Board of Natural Resources as issues. EPA has made the preliminary that the state comply with the to air quality generally which provides determination that North Carolina has requirements respecting state boards the powers and duties of the Board of adequate resources and authority to pursuant to section 128 of the Act, and satisfy sections 110(a)(2)(E)(i) and (iii) of (iii) necessary assurances that, where Natural Resources as to air quality and provides that at least a majority of the 2015 8-hour ozone NAAQS. the state has relied on a local or regional With respect to the requirements of members of this board represent the government, agency, or instrumentality section 110(a)(2)(E)(ii),10 North Carolina public interest and not derive any for the implementation of any plan is not subject to section 128(a)(1) significant portion of income from provision, the state has responsibility because it has no boards or bodies with persons subject to permits or for ensuring adequate implementation authority over air pollution permits or enforcement orders, and that potential of such plan provisions. EPA’s rationale enforcement actions. The initial conflicts of interest will be adequately respecting each sub-element for which authority to approve CAA permits or disclosed. This provision has been EPA is proposing action in this enforcement orders are instead approved into the SIP. rulemaking is described below. delegated to the Secretary of NC DEQ Georgia North Carolina and his/her designee. Final authority to approve permits and enforcement orders In support of sub-elements In support of sub-elements on appeal resides with administrative 110(a)(2)(E)(i) and (iii), Georgia’s 110(a)(2)(E)(i) and (iii), North Carolina’s law judges (ALJs). infrastructure SIP submission infrastructure SIP submission cites On November 3, 2015 (80 FR 67645), demonstrates that it has adequate several regulations. Rule 15A NCAC 2Q. EPA approved North Carolina’s section authority for promulgating rules and 0200—‘‘Permit Fees,’’ provides the 128(a)(2) conflict of interest disclosure regulations for the NAAQS, emissions mechanism by which stationary sources requirements for the Secretary of NC standards and general policies, a system that emit air pollutants pay a fee based DEQ and his/her designee, and ALJs. of permits, fee schedules for the review on the quantity of emissions, which is ALJs 11 meet these requirements through of plans, and other planning needs. In authorized by State statute NCGS 143– NCGS 7A–754 which contains its SIP submittal, Georgia cites to its 215.3—General powers of Commission provisions related to the Office of authority for section 110(a)(2)(E)(i) as and Department: Auxiliary powers. Administrative Hearings addressing the CAA section 105 grant process, NCGS 143–215.107(a)(1)—Air quality these requirements for the ALJs. NCGS O.C.G.A. 12–9–10, and Georgia’s Air standards and classifications, provide 7A–754 requires ALJs to act impartially, Quality Control Rule 391–3–1–.03(9) the EMC with the statutory authority which broadly includes financial which establish Georgia’s Air Permit ‘‘[t]o prepare and develop, after proper considerations, relationships, and other Fee System. For section 110(a)(2)(E)(iii), study, a comprehensive plan or plans associations. ALJs are prohibited from the State does not rely on localities in for the prevention, abatement and participating in any matter in which the Georgia for specific SIP implementation. control of air pollution in the State or ALJ’s impartiality might reasonably be As evidence of the adequacy of GA in any designated area of the State.’’ questioned or the ALJ must disclose the EPD’s resources with respect to sub- NCGS 143–215.112—Local air pollution potential conflict of interest on the elements (i) and (iii), EPA submitted a control programs, provides the EMC record in the proceeding. In the case of letter to Georgia on March 25, 2019, with the statutory authority ‘‘to review outlining CAA section 105 grant and have general oversight and 10 See the description of the section 128 commitments and the current status of supervision over all local air pollution requirements provided above regarding the these commitments for fiscal year 2018. control programs.’’ North Carolina has proposed action on this element. The letter EPA submitted to GA EPD is three local air agencies located in 11 EPA has determined that ALJs in North Carolina are authorized to approve permits and available in the docket for this proposed Buncombe (Western North Carolina), enforcement orders on appeal and that the ALJs action. Annually, states update these Forsyth, and Mecklenburg Counties that must therefore meet the conflict of interest grant commitments based on current SIP implement the SIP in these areas. disclosure requirements of section 128(a)(2).

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such disclosures, the parties to the Georgia NAAQS, develop control and matter must agree that the disclosed Georgia’s infrastructure SIP maintenance strategies, identify sources conflict of interest is immaterial before submission describes the establishment and general emission levels, and the ALJ may continue to participate in of requirements for compliance testing determine compliance with emission the matter. The Secretary of NC DEQ by emissions sampling and analysis, regulations and additional EPA and his/her designee must file an and for emissions and operation requirements. The following North annual certification disclosing potential monitoring to ensure the quality of data Carolina rules require monitoring of conflicts, amend the certification if in the State. emissions from stationary sources: 15A circumstances change, and must The following SIP-approved rules NCAC 2D .0604—Exceptions to additionally disclose any potential enable Georgia to meet the requirements ‘‘Monitoring and Reporting conflict for each final action. of this element: Georgia Air Quality Requirements;’’ 15A NCAC 2D .0605— EPA has made the preliminary Control Rules 391–3–1–.02(3)— General Recordkeeping and Reporting determination that Georgia’s and North ‘‘Sampling.’’; 391–3–1–.02(6)(b)— Requirements; 15A NCAC 2D .0611— Carolina’s SIPs have adequately ‘‘Source Monitoring.’’; 391–3–1– ‘‘Monitoring Emissions from Other addressed the requirements of section .02(11)—‘‘Compliance Assurance Sources;’’ 15A NCAC 2D .0612— 128(a), and accordingly have met the Monitoring.’’; and 391–3–1–.03— ‘‘Alternative Monitoring and Reporting requirements of section 110(a)(2)(E)(ii) ‘‘Permits. Amended.’’ Also, O.C.G.A. Procedures;’’ 15A NCAC 2D .0613— with respect to infrastructure SIP 12–9–5(b)(6) provides the State with the ‘‘Quality Assurance Program;’’ and 15A requirements. EPA is proposing to authority to conduct actions regarding NCAC 2D .0614—‘‘Compliance approve Georgia’s and North Carolina’s stationary source emissions monitoring Assurance Monitoring.’’ NCGS 143– infrastructure SIP submissions as and reporting in support of this 215.107(a)(4)—Air quality standards meeting the requirements of sub- infrastructure element. These rules and classifications provide the EMC elements 110(a)(2)(E)(i), (ii), and (iii). collectively require emissions with the statutory authority ‘‘To collect 7. 110(a)(2)(F) Stationary Source monitoring and reporting for activities information or to require reporting from Monitoring and Reporting: Section that contribute to ozone concentrations classes of sources which, in the 110(a)(2)(F) requires SIPs to meet in the air, including requirements for judgment of the [EMC], may cause or applicable requirements addressing: (i) the installation, calibration, contribute to air pollution.’’ Stationary The installation, maintenance, and maintenance, and operation of sources are required to submit periodic replacement of equipment, and the equipment for continuously monitoring emissions reports to the State by Rule implementation of other necessary or recording emissions, and provide 15A NCAC 2Q .0207—‘‘Annual steps, by owners or operators of authority for GA EPD to establish such Emissions Reporting.’’ Also, 15A NCAC stationary sources to monitor emissions emissions monitoring and reporting 2D .0605(c)—‘‘General Recordkeeping and Reporting Requirements’’ allows for from such sources, (ii) periodic reports requirements through SIP-approved the use of credible evidence. In the on the nature and amounts of emissions permits and require reporting of 2015 8- event that the NC DAQ Director has and emissions related data from such hour ozone precursor emissions. evidence that a source is violating an sources, and (iii) correlation of such Georgia’s most recently published emission standard or permit condition, reports by the state agency with any triennial compiled emissions the Director may require that the owner emission limitations or standards information is available as part of the or operator of any source submit to the established pursuant to this section, 2014 NEI. EPA compiles the emissions Director any information necessary to which reports shall be available at data, supplementing it where necessary, determine the compliance status of the reasonable times for public inspection. and releases it to the public through the source. In addition, EPA is unaware of EPA’s rules regarding how SIPs need to website: https://www.epa.gov/air- emissions-inventories/2014-national- any provision preventing the use of address source monitoring requirements credible evidence in the North Carolina at 40 CFR 51.212 require SIPs to exclude emissions-inventory-nei-data. Georgia’s Air Quality Control Rule SIP. any provision that would prevent the North Carolina’s most recently use of credible evidence of 391–3–1–.02(3)—‘‘Sampling,’’ cites to the State’s ‘‘Procedures for Testing and published triennial compiled emissions noncompliance. information is available as part of the Additionally, states are required to Monitoring Sources of Air Pollutants,’’ 12 which allows the use of 2014 NEI. EPA compiles the emissions submit emissions data to EPA for data, supplementing it where necessary, purposes of the National Emissions all available information to determine compliance under its Compliance with and releases it to the public through the Inventory (NEI), pursuant to Subpart A website: https://www.epa.gov/air- to 40 CFR part 51—‘‘Air Emissions Standards and Maintenance Requirements provisions. In addition, emissions-inventories/2014-national- Reporting Requirements.’’ The NEI is emissions-inventory-nei-data. EPA is unaware of any provision EPA’s central repository for air EPA has made the preliminary preventing the use of credible evidence emissions data. All states are required to determination that Georgia’s and North submit a comprehensive emission in the Georgia SIP. Carolina’s SIPs and practices are inventory every three years and report North Carolina adequate for the stationary source emissions for certain larger sources North Carolina’s infrastructure SIP monitoring and reporting requirements annually through EPA’s online submission identifies requirements related to the 2015 8-hour ozone Emissions Inventory System. States providing how the State establishes NAAQS. Accordingly, EPA is proposing report emissions data for the six criteria requirements for emissions compliance to approve Georgia’s and North pollutants and the precursors that form testing and emissions sampling and Carolina’s infrastructure SIP them—nitrogen oxides, sulfur dioxides, analysis. NC DAQ uses these data to submissions with respect to section ammonia, lead, carbon monoxide, track progress towards maintaining the 110(a)(2)(F). particulate matter, and volatile organic 8. 110(a)(2)(G) Emergency Powers: compounds. Many states also 12 These ‘‘Procedures for Testing and Monitoring This section requires that states voluntarily report emissions of Sources of Air Pollutants’’ are not incorporated into demonstrate authority comparable with hazardous air pollutants. Georgia’s SIP. section 303 of the CAA and adequate

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contingency plans to implement such Georgia’s Air Quality Control Rule standard, and (ii) whenever the authority. 391–3–1–.04—‘‘Air Pollution Episodes’’ Administrator finds that the plan is provides that the Director of GA EPD substantially inadequate to attain the Georgia ‘‘will proclaim that an Air Pollution NAAQS or to otherwise comply with Georgia’s infrastructure SIP Alert, Air Pollution Warning, or Air any additional applicable requirements. submission cites to O.C.G.A. Sections Pollution Emergency exists when the Georgia 12–9–2—Declaration of public policy, meteorological conditions are such that 12–9–6—Powers and duties of director an air stagnation condition is in GA EPD is responsible for adopting as to air quality generally, 12–9–12— existence and/or the accumulation of air air quality rules and revising SIPs as Injunctive relief, 12–9–13—Proceedings contaminants in any place is attaining needed to attain or maintain the for enforcement, and 12–9–14—Powers or has attained levels which could, if NAAQS in Georgia. The State has the of director in situations involving such levels are sustained or exceeded, ability and authority to respond to calls imminent and substantial danger to lead to a substantial threat to the health for SIP revisions and has provided SIP public health), and Air Quality Control of persons in the specific area affected.’’ revisions over the years for Rule 391–3–1–.04—‘‘Air Pollution Collectively the cited provisions implementation of the NAAQS. Episodes.’’ O.C.G.A. Section 12–9–2 provide that Georgia demonstrates O.C.G.A. Sections 12–9–6(b)(12) and provides ‘‘[i]t is declared to be the authority comparable with section 303 12–9–6(b)(13) provide Georgia with the public policy of the state of Georgia to of the CAA and adequate contingency authority to conduct certain actions in preserve, protect, and improve air plans to implement such authority in support of this infrastructure element. quality . . . to attain and maintain the State. O.C.G.A. Section 12–9–6(b)(13) provides ambient air quality standards so as to authority to GA EPD to develop, amend, safeguard the public health, safety, and North Carolina modify, and submit a comprehensive welfare.’’ O.C.G.A. Section 12–9– North Carolina’s infrastructure SIP plan or plans sufficient to comply with 6(b)(10) provides the Director of GA submission cites to 15A NCAC 2D the CAA. O.C.G.A. Section 12–9–6(b)(l2) EPD authority to ‘‘issue orders as may .0300—‘‘Air Pollution Emergencies’’ as authorizes GA EPD to exercise all be necessary to enforce compliance with identifying air pollution emergency incidental powers necessary to carry out [the Georgia Air Quality Act Article 1: episodes and preplanned abatement the Georgia Air Quality Act, which Air Quality (O.C.G.A)] and all rules and strategies and provides the means to includes achieving and maintaining regulations of this article.’’ O.C.G.A. implement emergency air pollution NAAQS. Section 12–9–12 provides that episode measures. Under NCGS 143– North Carolina ‘‘[w]henever in the judgment of the 215.3(a)(12)—General powers of director any person has engaged in or is Commission and Department; auxiliary NC DAQ is responsible for adopting about to engage in any act or practice powers, if NC DENR finds that such a air quality rules and revising SIPs as which constitutes or will constitute an ‘‘condition of . . . air pollution exists needed to attain or maintain the unlawful action under [the Georgia Air and that it creates an emergency NAAQS in North Carolina. NCGS 143– Quality Act Article 1: Air Quality requiring immediate action to protect 215.107(a)(1) and (a)(10) grant NC DAQ (O.C.G.A)], he may make application to the public health and safety or to protect with the authority to prepare and the superior court of the county in fish and wildlife, the Secretary of the develop, after proper study, a which the unlawful act or practice has Department [NC DEQ] with the comprehensive plan for the prevention been or is about to be engaged in, or in concurrence of the Governor, shall order of air pollution and implement the which jurisdiction is appropriate, for an persons causing or contributing to the CAA, respectively. These provisions order enjoining such act or practice or . . . air pollution in question to reduce provide NC DAQ the ability and for an order requiring compliance with or discontinue immediately the authority to respond to calls for SIP this article. Upon a showing by the emission of air contaminants or the revisions, and North Carolina has director that such person has engaged in discharge of wastes.’’ In addition, NCGS provided number of SIP revisions over or is about to engage in any such act or 143–215.3(a)(12) provides NC DEQ with the years for implementation of the practice, a permanent or temporary the authority to declare an emergency NAAQS. In addition, 15A NCAC 2D injunction, restraining order, or other when it finds that a generalized .2401(d) states that ‘‘[t]he EMC may order shall be granted without the condition of water or air pollution specify through rulemaking a specific necessity of showing lack of an adequate which is causing imminent danger to emission limit lower than that remedy of law.’’ O.C.G.A. Section 12– the health or safety of the public. established under this rule for a specific 19–13 specifically pertains to EPA has made the preliminary source if compliance with the lower enforcement proceedings when the determination that Georgia’s and North emission limit is required to attain or Director of GA EPD has reason to Carolina’s SIPs and state laws are maintain the ambient air quality believe that a violation of any provision adequate for emergency powers related standard for ozone or any other ambient of the Georgia Air Quality Act Article 1: to the 2015 8-hour ozone NAAQS. air quality standard in Section 15A Air Quality (O.C.G.A), or environmental Accordingly, EPA is proposing to NCAC 2D .0400.’’ rules, regulations, or orders have approve Georgia’s and North Carolina’s EPA has made the preliminary occurred. O.C.G.A. Section 12–9–14 also infrastructure SIP submission with determination that Georgia and North provides that the Governor may issue respect to section 110(a)(2)(G). Carolina adequately demonstrate a orders as necessary to protect the health 9. 110(a)(2)(H) SIP Revisions: commitment to provide future SIP of persons who are, or may be, affected Section 110(a)(2)(H), in summary, revisions related to the 2015 8-hour by a pollution source or facility after requires each SIP to provide for ozone NAAQS when necessary. ‘‘consult[ation] with local authorities in revisions of such plan: (i) As may be Accordingly, EPA is proposing to order to confirm the correctness of the necessary to take account of revisions of approve Georgia’s and North Carolina’s information on which action proposed such national primary or secondary infrastructure SIP submissions with to be taken is based and to ascertain the ambient air quality standard or the respect to section 110(a)(2)(H). action which such authorities are or will availability of improved or more 10. 110(a)(2)(J) Consultation with be taking.’’ expeditious methods of attaining such government officials, public

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notification, and PSD and visibility implementation of transportation state-wide consultation procedures for protection: conformity which includes the the implementation of transportation EPA is proposing to approve Georgia’s development of mobile inventories for conformity. Implementation of and North Carolina’s infrastructure SIPs SIP development. Required partners transportation conformity as outlined in for the 2015 8-hour ozone NAAQS with covered by Georgia’s consultation the consultation procedures requires NC respect to the general requirement in procedures include federal, state, and DAQ to consult with Federal, state, and section 110(a)(2)(J) to include a program local transportation and air quality local transportation and air quality in the SIP that complies with the agency officials. agency officials on the development of applicable consultation requirements of Public notification: With respect to motor vehicle emissions budgets. The section 121 and the public notification public notification, section 110(a)(2)(J) Regional Haze SIP provides for requirements of section 127. of the CAA requires states to notify the consultation between appropriate state, With regard to the visibility public of NAAQS exceedances and local, and tribal air pollution control protection element of section associated health hazards, and to agencies as well as the corresponding 110(a)(2)(J), EPA’s 2013 Guidance notes enhance public awareness of measures FLMs. that it does not treat the visibility that can prevent such exceedances. GA Public notification: With respect to protection aspects of section 110(a)(2)(J) EPD has public notice mechanisms in public notification, section 110(a)(2)(J) as applicable for purposes of the place to notify the public of instances or of the CAA requires states to notify the infrastructure SIP approval process. areas exceeding the NAAQS along with public of NAAQS exceedances and EPA recognizes that Georgia and North associated health effects through the Air associated health hazards, and to Carolina are subject to visibility Quality Index reporting system in enhance public awareness of measures protection and regional haze program required areas. GA EPD’s Ambient that can prevent such exceedances. Rule requirements under part C of the Act Monitoring web page 15A NCAC 2D .0300—‘‘Air Pollution (which includes sections 169A and (www.georgiaair.org/amp) provides Emergencies’’ provides North Carolina 169B). However, there are no newly information regarding current and with the authority to declare an applicable visibility protection historical air quality across the State. emergency and notify the public obligations after the promulgation of a Daily air quality forecasts may also be accordingly when it finds a generalized new or revised NAAQS. As such, disseminated to the public in Atlanta condition of water or air pollution Georgia’s and North Carolina’s through the Georgia Department of which is causing imminent danger to infrastructure SIP submissions related to Transportation’s electronic billboards. the health or safety of the public. the 2015 8-hour ozone NAAQS do not In its SIP submission, Georgia also notes Additionally, NC DAQ has the North address the visibility protection element that the non-profit organization in Carolina Air Awareness Program which of section 110(a)(2)(J). Georgia named ‘‘Clean Air Campaign’’ is a program to educate the public on air With regard to consultation, Section disseminates statewide air quality quality issues and promote voluntary 110(a)(2)(J) of the CAA requires states to information and ways to reduce air emission reduction measures. NC DAQ provide a process for consultation with pollution. Georgia Rule 391–3–1–.04— also features a web page providing local governments, designated ‘‘Air Pollution Episodes’’ enables the ambient monitoring information organizations, and Federal Land State to conduct certain actions in regarding current and historical air Managers (FLMs) carrying out NAAQS support of this infrastructure element. quality across the State at http:// implementation requirements pursuant In addition, the following State statutes www.ncair.org/monitor/. North Carolina to section 121 relative to consultation provide Georgia with the authority to participates in EPA’s Air NOW program, requirements of section 121, the public make public declarations about air which enhances public awareness of air notification requirements of section 127, pollution episodes in support of this quality in North Carolina and and PSD. EPA’s rationale for the infrastructure element. O.C.G.A. 12–9– throughout the country. remaining sub-elements for Georgia and 6(b)(8) provides authority to the Georgia PSD: With regard to the PSD element North Carolina are described below. Board of Natural Resources ‘‘[t]o collect of section 110(a)(2)(J), EPA is not proposing any action in this rulemaking. Georgia and disseminate information and to provide for public notification in EPA will consider these requirements in Consultation with government matters relating to air quality’’. relation to North Carolina’s 2015 8-hour officials (121 consultation): GA EPD PSD: With regard to the PSD element ozone NAAQS infrastructure cited to O.C.G.A. Section 12–9–5(b)(17), of section 110(a)(2)(J), EPA is not submission in a separate rulemaking. Georgia Administrative Procedures Act proposing any action in this rulemaking. EPA has made the preliminary (O.C.G.A. § 50–13–4), and Georgia’s Air EPA will consider these requirements in determination that Georgia’s and North Quality Control Rule 391–3–1–.02(7) as relation to Georgia’s 2015 8-hour ozone Carolina’s SIPs and practices adequately it relates to visibility protection for this NAAQS infrastructure submission in a demonstrate that the States meets requirement. O.C.G.A. Section 12–9– separate rulemaking. applicable requirements related to 5(b)(17) states that the Board of Natural consultation with government officials, Resources is to ‘‘establish satisfactory North Carolina and the ability to provide public processes of consultation and Consultation with government notification of section 110(a)(2)(J) for the cooperation with local governments or officials (121 consultation): Rules 15A 2015 8-hour ozone NAAQS. Thus, EPA other designated organizations of NCAC 2D.1600—General Conformity, is proposing to approve Georgia’s and elected officials or federal agencies for 15A NCAC 2D .2000—‘‘Transportation North Carolina’s infrastructure SIPs for the purpose of planning, implementing, Conformity,’’ and 15A NCAC 2D .0531— the 2015 8-hour ozone NAAQS with and determining requirements under ‘‘Sources in Nonattainment Areas,’’ respect to the general requirement in this article to the extent required by the along with the State’s Regional Haze section 110(a)(2)(J) for these provisions. federal act.’’ Georgia also cited to Implementation Plan, provide for 11. 110(a)(2)(K) Air Quality transportation conformity SIP revisions consultation with government officials Modeling and Submission of Modeling approved by EPA on April 7, 2000 (see whose jurisdictions might be affected by Data: Section 110(a)(2)(K) of the CAA 65 FR 18245)—that contain state-wide SIP development activities. Regarding requires that SIPs provide for consultation procedures for the conformity, North Carolina adopted performing air quality modeling so that

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effects on air quality of emissions from pollutant for which a NAAQS has been reviewing and acting upon PSD and NAAQS pollutants can be predicted and promulgated, and to provide such NNSR permits. submission of such data to EPA can be information to EPA upon request. EPA has made the preliminary made. EPA has made the preliminary determination that Georgia’s and North determination that Georgia’s and North Georgia Carolina’s SIP submissions and Carolina’s SIP submissions and practices adequately provide for O.C.G.A. Section 12–9–6(b)(13) practices adequately demonstrate the permitting fees related to the 2015 8- provides GA EPD with the authority to States’ ability to provide for air quality hour ozone NAAQS, when necessary. conduct modeling actions and to submit modeling, along with analysis of the Accordingly, EPA is proposing to air quality modeling data to EPA in associated data, related to the 2015 8- approve Georgia’s and North Carolina’s support of this element as part of hour ozone NAAQS. Accordingly, EPA infrastructure SIP submissions with comprehensive planning to achieve and is proposing to approve Georgia’s and respect to section 110(a)(2)(L). maintain the NAAQS. GA EPD also North Carolina’s infrastructure SIP 13. 110(a)(2)(M) Consultation and states that it has personnel with training submissions with respect to section Participation by Affected Local Entities: and experience to conduct 110(a)(2)(K). Section 110(a)(2)(M) of the Act requires photochemical modeling to assess 12. 110(a)(2)(L) Permitting Fees: states to provide for consultation and attainment of the ozone NAAQS. This section requires the owner or participation in SIP development by Additionally, Georgia supports a operator of each major stationary source regional effort to coordinate the local political subdivisions affected by to pay to the permitting authority, as a the SIP. development of emissions inventories condition of any permit required under and conduct regional modeling for the CAA, a fee sufficient to cover: (i) Georgia several NAAQS, including the 2015 8- The reasonable costs of reviewing and Consultation and participation by hour ozone NAAQS, for the acting upon any application for such a Southeastern states. Taken as a whole, affected local entities is authorized by permit, and (ii) if the owner or operator O.C.G.A. 12–9–5(b)(17), which provides Georgia’s submission demonstrates that receives a permit for such source, the Georgia has the authority to provide authority for the Board of Natural reasonable costs of implementing and Resources to establish processes for relevant data for the purpose of enforcing the terms and conditions of predicting the effect on ambient air consultation and cooperation with local any such permit (not including any entities for purposes of planning and quality of the 2015 8-hour ozone court costs or other costs associated NAAQS. implementing the CAA, Georgia’s Air with any enforcement action), until Quality Control Rule 391–3–1–.15— North Carolina such fee requirement is superseded with ‘‘Transportation Conformity’’ defines Rule 15A NCAC 2D .0600— respect to such sources by EPA’s the consultation procedures for areas ‘‘Monitoring: Recordkeeping: Reporting’’ approval of a fee program under title V. subject to transportation conformity. (authorized under NCGS 143– Georgia Furthermore, GA EPD has demonstrated consultation with, and participation by, 215.107(a)(4)) requires sources to Georgia’s PSD and NNSR permitting affected local entities through its work provide information needed to model programs are funded with title V fees. with local political subdivisions during potential impacts on air quality. NCGS Georgia Rule 391–3–1–.03(9)—‘‘Permit the development of its Transportation 143–215.107(a) also provides authority Fees.’’ incorporates EPA-approved title Conformity SIP and has worked with for the EMC to determine by means of V fee program. Georgia’s authority to the FLMs as a requirement of the field sampling and other studies, the mandate funding for processing PSD regional haze rule. degree of air contamination and air and NNSR permits is found in O.C.G.A. pollution in the state. Collectively, these 12–9–10. The State notes that these title North Carolina regulations demonstrate that North V operating program fees cover the Under the North Carolina Carolina has the authority to perform air reasonable cost of implementation and Administrative Procedures Act, all state quality modeling and to provide enforcement of PSD and NNSR permits rules go through a public review process relevant data for the purpose of after they have been issued. predicting the effect on ambient air (NCGS 150B–21.1 and 150B–21.2). Also, quality of the 2015 8-hour ozone North Carolina 15A NCAC 2D .2000—‘‘Transportation NAAQS. The submittal also states that North Carolina’s infrastructure SIP Conformity’’ requires a consultation DAQ currently has personnel with submission cites to 15A NCAC 02Q with all affected partners to be training and experience to conduct .0200—‘‘Permit Fees,’’ which requires implemented for transportation source-oriented dispersion modeling the owner or operator of source holding conformity determinations. that would likely be used in PM2.5 a permit to pay to the permitting Furthermore, NC DAQ has NAAQS applications with models authority a sufficient fee to cover the demonstrated consultation with, and approved by EPA. costs of the permitting program. The participation by, affected local entities Additionally, North Carolina 15A NCAC 2Q .0500 rules contain the through its work with local political participates in a regional effort to State’s title V program 13 and conditions subdivisions during the development of coordinate the development of which include provisions to implement its Transportation Conformity SIP, emissions inventories and conduct and enforce PSD and NNSR permits Regional Haze Implementation Plan, regional modeling for several NAAQS, once these permits have been issued. and the 8-Hour Ozone Attainment including the 2015 8-hour ozone NCGS 143–215.3—General powers of Demonstration for the North Carolina NAAQS, for the Southeastern states. Commission and Department; auxiliary portion of the Charlotte-Gastonia-Rock Taken as a whole, North Carolina’s air Powers, provides authority for NC DAQ Hill NC–SC nonattainment area. quality regulations and practices to require a processing fee in an amount EPA has made the preliminary demonstrate that DAQ has the authority sufficient for the reasonable cost of determination that Georgia’s and North to provide relevant data for the purpose Carolina’s SIP submissions and of predicting the effect on ambient air 13 Title V program regulations are federally- practices adequately demonstrate quality of any emissions of any approved but not incorporated into the SIP. consultation with affected local entities

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related to the 2015 8-hour ozone Order 13132 (64 FR 43255, August 10, SUMMARY: The Office of Federal Contract NAAQS when necessary. 1999); Compliance Programs (‘‘OFCCP’’ or ‘‘the • Are not an economically significant agency’’) proposes to codify procedures V. Proposed Action regulatory actions based on health or that the agency currently uses to resolve With the exception of interstate safety risks subject to Executive Order potential discrimination and other transport provisions of section 13045 (62 FR 19885, April 23, 1997); material violations of these laws by 110(a)(2)(D)(i)(I) and (II) (prongs 1 and • Are not significant regulatory federal contractors and subcontractors; 2) pertaining to contribution to actions subject to Executive Order add clarifying definitions to specify the nonattainment or interference with 13211 (66 FR 28355, May 22, 2001); types of evidence OFCCP will use to • maintenance in other states, and PSD Are not subject to requirements of support its discrimination findings; and, provisions related to major sources Section 12(d) of the National correct the title of OFCCP’s agency under sections 110(a)(2)(C), Technology Transfer and Advancement head. 110(a)(2)(D)(i)(II) (prong 3), and Act of 1995 (15 U.S.C. 272 note) because DATES: To be assured of consideration, 110(a)(2)(J), EPA is proposing to application of those requirements would comments must be received on or before approve Georgia’s and North Carolina’s be inconsistent with the CAA; and • January 29, 2020. September 24, 2018 and September 27, Do not provide EPA with the 2018, SIP submissions for the 2015 8- discretionary authority to address, as ADDRESSES: Comments may be hour ozone NAAQS for the above appropriate, disproportionate human submitted, identified by Regulatory described infrastructure SIP health or environmental effects, using Information Number (RIN) 1250–AA10, practicable and legally permissible by any of the following methods: requirements, respectively. EPA is • proposing to approve Georgia’s and methods, under Executive Order 12898 Electronically: The Federal North Carolina’s infrastructure SIP (59 FR 7629, February 16, 1994). eRulemaking portal: http:// submissions for certain requirements The SIPs subject to these proposed www.regulations.gov. Follow the related to the 2015 8-hour ozone actions, are not approved to apply on instructions found on that website for NAAQS because the submissions are any Indian reservation land or in any submitting comments. • Mail, Hand Delivery, or Courier: consistent with section 110 of the CAA. other area where EPA or an Indian tribe has demonstrated that a tribe has Addressed to Harvey D. Fort, Deputy VI. Statutory and Executive Order jurisdiction. In those areas of Indian Director, Division of Policy and Program Reviews country, the rule does not have tribal Development, Office of Federal Contract Under the CAA, the Administrator is implications as specified by Executive Compliance Programs, 200 Constitution required to approve a SIP submission Order 13175 (65 FR 67249, November 9, Avenue NW, Room C–3325, that complies with the provisions of the 2000), nor will it impose substantial Washington, DC 20210. Act and applicable Federal regulations. direct costs on tribal governments or Instructions: Please submit one copy See 42 U.S.C. 7410(k); 40 CFR 52.02(a). preempt tribal law. of your comments by only one method. For faster submission, we encourage Thus, in reviewing SIP submissions, List of Subjects in 40 CFR Part 52 EPA’s role is to approve state choices, commenters to transmit their comment Environmental protection, Air provided that they meet the criteria of electronically via the pollution control, Incorporation by the CAA. These actions merely propose www.regulations.gov website. reference, Intergovernmental relations, to approve state law as meeting Federal Comments that are mailed to the Nitrogen dioxide, Ozone, Reporting and requirements and do not impose address provided above must be recordkeeping requirements, Volatile additional requirements beyond those postmarked before the close of the organic compounds. imposed by state law. For that reason, comment period. All submissions these proposed actions: Authority: 42 U.S.C. 7401 et seq. received must include OFCCP’s name • Are not significant regulatory Dated: December 12, 2019. and RIN for this rulemaking. Comments submitted in response to the notice, actions subject to review by the Office Mary S. Walker, of Management and Budget under including any personal information Regional Administrator, Region 4. provided, become a matter of public Executive Orders 12866 (58 FR 51735, [FR Doc. 2019–27691 Filed 12–27–19; 8:45 am] October 4, 1993) and 13563 (76 FR 3821, record and will be posted on BILLING CODE 6560–50–P January 21, 2011); www.regulations.gov. Receipt of • Are not Executive Order 13771 (82 submissions will not be acknowledged; FR 9339, February 2, 2017) regulatory however, the sender may request actions because SIP approvals are DEPARTMENT OF LABOR confirmation that a submission was exempted under Executive Order 12866; received by telephoning OFCCP at (202) • Office of Federal Contract Compliance 693–0103 (voice) or (202) 693–1337 Do not impose an information Programs collection burden under the provisions (TTY) (these are not toll-free numbers). of the Paperwork Reduction Act (44 The Department will make all 41 CFR Parts 60–1, 60–2, 60–300, and comments received, including any U.S.C. 3501 et seq.); 60–741 • Are certified as not having a personal information provided, significant economic impact on a RIN 1250–AA10 available for public inspection during substantial number of small entities normal business hours at Room C–3325, under the Regulatory Flexibility Act (5 Nondiscrimination Obligations of 200 Constitution Avenue NW, U.S.C. 601 et seq.); Federal Contractors and Washington, DC 20210. If you need • Do not contain any unfunded Subcontractors: Procedures To assistance to review the comments, the mandate or significantly or uniquely Resolve Potential Employment Department will provide you with affect small governments, as described Discrimination appropriate aids such as readers or print in the Unfunded Mandates Reform Act AGENCY: Office of Federal Contract magnifiers. Copies of this notice may be of 1995 (Pub. L. 104–4); Compliance Programs (OFCCP), Labor. obtained in alternative formats (large • Do not have Federalism print, braille, audio recording) upon ACTION: Notice of proposed rulemaking. implications as specified in Executive request by calling the numbers listed

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above. To schedule an appointment to This proposed rule is expected to be information collected during a review the comments and/or to obtain an Executive Order (E.O.) 13771 compliance evaluation. Such findings, this Notice of Proposed Rulemaking regulatory action. Details on the in most cases, must be supported by (NPRM) in an alternate format, please estimated costs of this proposed rule statistical evidence. contact OFCCP at the telephone can be found in the rule’s economic Preliminary findings of numbers or address listed above. analysis. discrimination in a compliance evaluation trigger OFCCP’s resolution FOR FURTHER INFORMATION CONTACT: II. Background procedures. When OFCCP finds Harvey D. Fort, Deputy Director, OFCCP administers and enforces E.O. Division of Policy and Program sufficient evidence of discrimination, 11246, section 503, and VEVRAA, and the agency sends a PDN to inform the Development, Office of Federal Contract their implementing regulations. Compliance Programs, 200 Constitution contractor of the agency’s preliminary Collectively, these laws require federal findings.5 To determine whether the Avenue NW, Room C–3325, contractors to take affirmative action to Washington, DC 20210. Telephone: evidence of discrimination is sufficient ensure equal employment opportunity, to warrant a PDN, OFCCP considers (202) 693–0103 (voice) or (202) 693– and not discriminate on the basis of 1337 (TTY). whether an employment or race, color, religion, sex, sexual compensation disparity identified SUPPLEMENTARY INFORMATION: orientation, gender identity, national during the compliance evaluation is origin, disability, or status as a protected I. Overview both practically and statistically veteran. Additionally, E.O. 11246 significant.6 OFCCP uses a number of The goal of this proposed rule is to prohibits a contractor from discharging tests to determine whether an provide federal contractors and or otherwise discriminating against employment selection or compensation subcontractors 1 with greater certainty applicants or employees who inquire practice has enough statistical about the procedures that OFCCP about, discuss, or disclose their significance to support a conclusion of follows during compliance evaluations compensation or that of others, subject discrimination.7 The most familiar test to resolve employment discrimination to certain limitations. is the standard deviation test. The OFCCP determines whether a federal and other material violations found standard deviation test represents a contractor has met these legal under Executive Order 11246, as standardized measure of the difference obligations during a compliance amended (E.O. 11246); section 503 of between two selection rates, and evaluation.2 The agency uses a neutral the Rehabilitation Act, as amended, 29 employment discrimination case law process to schedule contractors for U.S.C. 793 (section 503); and the has adopted confidence levels that are compliance evaluations.3 A compliance Vietnam Era Veterans’ Readjustment similar to those accepted among social evaluation consists of one or any Assistance Act of 1974, as amended, 38 scientists. The U.S. Supreme Court has combination of the following U.S.C. 4212 (VEVRAA); and, their described an outcome as ‘‘suspect to a investigative procedures, as set forth in implementing regulations. The social scientist’’ when a statistic from OFCCP’s implementing regulations: proposed rule would codify procedures ‘‘large samples’’ falls more than ‘‘two or Compliance review, offsite review of for two formal notices that OFCCP uses three standard deviations’’ from its records, compliance check, or focused when the agency finds potential expected value under a null hypothesis review.4 With the exception of the violations: The Predetermination Notice of neutrality.8 The greater the number of (PDN) and the Notice of Violation compliance check, the purpose of which is solely to determine whether the (NOV). Since 1988, these procedures 5 See Directive 2018–01, ‘‘Use of have been embedded in the Federal contractor maintains required records, Predetermination Notices (PDN)’’ (Feb. 27, 2018). OFCCP may find that a contractor OFCCP issued this directive to ensure that PDNs be Contract Compliance Manual (FCCM), used in all compliance evaluations with the primary document used by agency discriminated in hiring, promotion, termination, compensation, or other preliminary discrimination findings, both staff as a procedural framework to individual and systemic. OFCCP directives are execute quality and timely compliance employment practices based on available at https://www.dol.gov/ofccp/regs/ evaluations and complaint compliance/directives/dirindex.htm (last accessed 2 OFCCP also ensures compliance with these laws Aug. 5, 2019). Prior to the directive, use of PDNs investigations. Additionally, the by investigating complaints filed by applicants and was discretionary and reserved for systemic proposal promotes efficiency by employees who believe that a federal contractor discrimination findings. See FCCM, Chapter 8, clarifying that contractors have the discriminated against them. However, the Resolution of Noncompliance (Oct. 2014) (detailing option to expedite OFCCP’s normal resolution procedures for complaints differ from the procedures that OFCCP follows for issuing compliance evaluations and would not be altered PDNs). resolution procedures for discrimination by this proposed rule. For complaint resolution 6 In the EEO context, practical significance refers findings by entering directly into a procedures, see FCCM Chapter 6 and 41 CFR 60– to whether an observed disparity in employment conciliation agreement prior to issuance 1.24, 41 CFR 60–300.61, and 41 CFR 60–741.61. opportunities or outcomes reflects meaningful harm of a PDN or NOV, allowing for The FCCM is available at https://www.dol.gov/ to the disfavored group. The concept focuses on the ofccp/regs/compliance/fccm/fccmanul.htm (last contextual impact or importance of the disparity expedited conclusion to OFCCP’s accessed Aug. 5, 2019). rather than its likelihood of occurring by chance. compliance evaluations. The proposed 3 The majority of OFCCP’s compliance OFCCP recently published guidance on how it rule also clarifies the strength of evaluations are for supply and service contractors. applies statistical and practical significance to evidence agency staff must find before OFCCP increased the number of contractors on its evaluate compliance evaluations with potential supply and service scheduling list over the past discrimination. See OFCCP’s Practical Significance issuing a PDN or NOV. Finally, the three fiscal years, from 801 in FY 2017 to 3,500 in Frequently Asked Questions at https:// proposed rule would replace outdated FY 2019. A description of OFCCP’s current www.dol.gov/ofccp/regs/compliance/faqs/Practical references to the official title of OFCCP’s scheduling methodology for supply and service SignificanceEEOFAQs.htm#Q5 (last accessed agency head, from ‘‘Deputy Assistant contractors is available on the agency’s website at October 1, 2019). https://www.dol.gov/ofccp/scheduling/ (last 7 Some examples of the statistical measures that Secretary’’ to ‘‘Director.’’ accessed Aug. 12, 2019). The neutral scheduling OFCCP may use are the Chi square, Fisher’s exact, process for construction contractors is currently Z-test, and standard deviation. 1 Hereinafter, the terms ‘‘contractor’’ and ‘‘federal under review by OFCCP. 8 See Castaneda v. Partida, 430 U.S. 482, 496 n.17 contractor’’ are used to refer to contractors and 4 See 41 CFR 60–1.20(a), 60–300.60(a) and 60– (1977) (‘‘As a general rule for large samples, if the subcontractors with direct federal contracts and/or 741.60(a). The resolution procedures described in difference between the expected value and the federally assisted construction contracts, unless this proposed rule would not apply to compliance observed number is greater than two or three otherwise expressly stated. checks. standard deviations, then the hypothesis that the

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standard deviations, the less likely the clarity and transparency in OFCCP’s NOV.13 A conciliation agreement is a difference was produced by chance (e.g., methods. OFCCP requests comments for binding written agreement between a 5.0 standard deviations represents a less improving certainty in setting contractor and OFCCP that details than 1 in 1.7 million probability that the parameters for statistical evidence, specific contractor commitments, occurrence happened by chance). including methodologies, minimum actions, or both to resolve the violations OFCCP conducts regression analyses of sample sizes, data groupings, set forth in the agreement.14 hiring and compensation outcomes methodological limitations, and ways to Conciliation agreements were codified which control for major, measurable improve objectivity. in OFCCP’s regulations in 1979.15 If the variables, to determine the probability Before issuing a PDN, the agency also contractor is unwilling to enter into a of hiring and compensation outcomes considers whether nonstatistical conciliation agreement to correct the occurring by chance. OFCCP will issue evidence, such as a cohort analysis, violations, OFCCP issues a show cause PDNs in matters premised on statistical demonstrates an intent to discriminate. notice (SCN) requiring the contractor to evidence only if the variable of interest In some cases, however, when statistical provide reasons demonstrating why is statistically significant and the evidence is very strong, OFCCP may formal enforcement proceedings by the probability value (‘‘p value’’) is less than issue the PDN without nonstatistical Solicitor of Labor or other appropriate 0.05 (roughly equivalent to two standard evidence. There may be other factors action should not be instituted.16 This deviations) if there is corroborating applicable in a particular case which proposed rule would codify the PDN nonstatistical evidence, or 0.01 (roughly explain why OFCCP could not uncover and NOV as procedures that have equivalent to three standard deviations) nonstatistical evidence during its proven effective to remedy findings of in the absence of corroborating investigation despite the strength of the discrimination.17 nonstatistical evidence.9 This approach statistical evidence. Additionally, Similarly, material violations that are is in keeping with—neither compelled OFCCP may find similar patterns of not discriminatory in nature also trigger nor prohibited by—Title VII and OFCCP disparity in multiple years or at OFCCP’s resolution procedures for case law, which generally holds that multiple establishments of a federal compliance evaluations.18 Rather than two or more standard deviations is contractor that warrant issuing a PDN initiating resolution with a PDN for sufficient to establish a prima facie case without nonstatistical evidence. In violations that do not involve of discrimination.10 practice, as an exercise of enforcement discrimination, OFCCP generally begins Statistical evidence plays a crucial discretion, OFCCP will pursue matters the process with a NOV before role in OFCCP’s enforcement. The where the statistical data are not proceeding to a conciliation agreement, proposed rule is intended to provide corroborated by nonstatistical evidence or the SCN as a last resort.19 With this of discrimination only if the statistical proposed rule, OFCCP would codify use jury drawing was random would be suspect to a evidence is exceptionally strong.11 of the NOV for all material violations. social scientist.’’). See also Hazelwood School Dist. Additionally, this proposed rule v. United States, 433 U.S. 299, 311 n.17 (1977) OFCCP issues the PDN to encourage (providing that ‘‘a fluctuation of more than two or communication with contractors and clarifies that federal contractors have three standard deviations would undercut the provide them an opportunity to respond hypothesis that decisions were being made to preliminary findings prior to the 13 In rare circumstances, OFCCP may determine randomly with respect to race’’). that settlement is not appropriate and refer a matter 9 The p value confidence level is similar to the issuance of a more formal NOV. If a at this stage directly to the Office of the Solicitor confidence level associated with the standard contractor does not sufficiently rebut of Labor to pursue formal enforcement proceedings deviation test. A p value of less than 0.05 indicates the preliminary findings identified in rather than pursuing a conciliation agreement. See that there is a less than five percent likelihood that the PDN that evidence of unlawful 41 CFR 60–1.26(b), 60–300.62, 60–300.65(a), 60– an observed disparity occurred by chance, and a discrimination exists, OFCCP issues the 741.62(a). 60–741.65(a). standard deviation of two shows a less than 4.55 14 See FCCM, Key Terms and Phrases and 41 CFR percent likelihood that an observed disparity NOV to notify the contractor that the 60–1.33, 60–300.62, and 60–741.62. occurred by chance. agency found discrimination violations 15 See Compliance Responsibility for Equal 10 See fn 8, supra; see also, e.g., Adams v. of one or more of the laws it enforces. Employment Opportunity, 44 FR 77000 (Dec. 28 Ameritech Servs., Inc., 231 F.3d 414, 424 (7th Cir. The NOV, also a letter, lists the 1979). 2000) (‘‘Two standard deviations is normally corrective actions that are required to 16 See 41 CFR 60–1.28, 60–300.64, and 60–741.64. enough to . . . giv[e] rise to a reasonable inference See also, FCCM Chapter 8, Resolution of that the hiring was not race-neutral; the more resolve those violations, and invites Noncompliance. standard deviations away, the less likely the factor 12 conciliation. After issuing the NOV, 17 The NOV and PDN have been included in the in question played no role in the decisionmaking OFCCP generally pursues a written FCCM since 1988. As an example of their process.’’); Malave v. Potter, 320 F.3d 321, 327 (2d effectiveness, OFCCP obtained $44 million for more Cir. 2003) (vacating summary judgment for conciliation agreement with any than 37,000 employees and job seekers between employer and instructing district court to determine contractor willing to correct the January 2017 and December 2019 using these whether the plaintiff can show ‘‘a statistically violation or deficiency identified in the significant disparity of two standard deviations’’); resolution procedures. Anderson v. Zubieta, 180 F.3d 339–40 (D.C. Cir. 18 FCCM Chapter 8F00, When to Use a Notice of 1999) (‘‘Many of the disparities are far in excess of 11 The proposed rule clarifies that, absent Violation and Chapter 8H00, When to Use a 1.96 standard deviations. Under our case law, this nonstatistical evidence, OFCCP will only pursue a Conciliation Agreement (Oct. 2014). For example, level of statistical significance is sufficient to matter when discrimination is indicated by OFCCP may issue a NOV and enter into a CA for establish a prima facie case of both disparate statistically significant evidence at the 99 percent failure to maintain records in accordance with 41 treatment and disparate impact.’’ (citations confidence level (i.e., three standard deviations, or CFR 60–1.12, 41 CFR 60–300.80, and 41 CFR 60– omitted)); OFCCP v. Bank of America, No. 1997– a p value of 0.01 or less). Note, however, that for 741.80, or for failure to maintain affirmative action OFC–016, slip op. at 9, 2016 WL 2941106 (Dep’t of multiple findings of discrimination without programs as required by 41 CFR part 60–2, 41 CFR Labor Apr. 21, 2016) (‘‘Courts have consistently nonstatistical evidence present at a given contractor part 60–300, subpart C, and 41 CFR part 60–741, found significance in disparities exceeding the two establishment, or at multiple facilities of the same subpart C. standard deviation mark. See Hazelwood School contractor, OFCCP may issue a PDN where at least 19 In some instances, OFCCP issues the SCN Dist. v. U.S., 433 U.S. 299, 308, n.14 (1977); Adams one finding is supported by statistically significant without first issuing a NOV for material violations v. Ameritech, 231 F.3d 414, 424 (7th Cir. evidence at the 99 percent confidence level and that are non-discriminatory in nature. See FCCM 2000).... The more severe the statistical may include additional findings that are supported Chapter 8D01, When a Show Cause Notice is disparity, the less additional evidence is needed to by statistically significant evidence at the 95 Required (Oct. 2014) (explaining that OFCCP issues prove that the reason was race discrimination. Very percent confidence level (i.e., two standard the SCN without first issuing a NOV when a extreme cases of statistical disparity may permit the deviations, or a p value of 0.05 or less) or above. contractor fails to provide the records, information, trier of fact to conclude intentional race 12 See FCCM Chapter 8, Resolution of or data requested in the scheduling letter and when discrimination occurred without needing additional Noncompliance and Key Terms and Phrases (Oct. the contractor refuses to provide access to its evidence.’’ (citations omitted)). 2014). premises for an onsite review).

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the option to bypass the PDN and NOV ‘‘statistical evidence’’ provides a in excess of $10,000; (2) has Federal procedures to enter directly into a nonexhaustive list of variables contracts or subcontracts that combined conciliation agreement when there are frequently used by employers that total in excess of $10,000 in any 12- preliminary findings of material OFCCP’s regression analyses will month period; or (3) holds Government violations, regardless of whether those control for, as appropriate, in its bills of lading, serves as a depository of violations involve discrimination. This analyses. This provides greater clarity to Federal funds, or is an issuing and option for conciliation may suit the contractor community regarding paying agency for U.S. savings bonds contractors who wish to expedite the OFCCP’s analytical methods while and notes in any amount. Supply and resolution of discrimination or other providing OFCCP the flexibility to service contractors with 50 or more material violations. Recently, OFCCP exclude variables from its analyses that, employees and a single Federal contract has sought to incentivize the efficient consistent with established statistical or subcontract of $50,000 or more also resolution of material violations for methods, may be inappropriate to must develop and maintain an multi-establishment federal contractors include, such as those that are affirmative action program that with early resolution procedures.20 The discriminatory. complies with 41 CFR part 60–2. proposed rule would further the In addition to codifying resolution Construction contractors have different agency’s efforts to improve efficiency, procedures, the proposed rule replaces affirmative action requirements under codifying an expedited option for outdated references to the official title of E.O. 11246 at 41 CFR part 60–4. resolution that would apply to OFCCP’s agency head in E.O. 11246 Enacted in 1973, and amended since, compliance reviews in their early stages. regulations, from ‘‘Deputy Assistant the purpose of section 503 is twofold. To further these efficiency objectives Secretary’’ to ‘‘Director.’’ OFCCP made First, section 503 prohibits employment and to provide greater certainty to the same change to the regulations discrimination on the basis of disability federal contractors, the proposed rule implementing VEVRAA and section 503 by Federal contractors and 22 also defines ‘‘statistical evidence’’ and through final rules in 2013. OFCCP subcontractors. Second, it requires each ‘‘nonstatistical evidence’’ to clarify the made this change after the Department covered Federal contractor and different types of evidence OFCCP will of Labor abolished the Employment subcontractor to take affirmative action use to support a PDN or NOV. Standards Administration. This to employ and advance in employment Specifically, statistical evidence should restructuring resulted in the change of qualified individuals with disabilities. be based on hypothesis testing related to title for OFCCP’s agency head, from The requirements in section 503 the probability of the allegedly ‘‘Deputy Assistant Secretary’’ (reporting generally apply to any business or discriminatory outcome occurring by to the head of the Employment organization that holds a single Federal chance, at the confidence levels Standards Administration) to ‘‘Director’’ contract or subcontract in excess of accepted in relevant employment reporting directly to the Secretary of $15,000.23 Contractors with 50 or more discrimination case law.21 The standard Labor. employees and a single Federal contract deviation represents a standardized III. Statement of Legal Authority or subcontract of $50,000 or more also measure of the difference between two must develop and maintain an rates. As mentioned above, the greater Issued in 1965, and amended several affirmative action program that the number of standard deviations, the times in the intervening years, E.O. complies with 41 CFR part 60–741, less likely the difference was produced 11246 has two principal purposes. First, subpart C. by chance (e.g., 5.0 standard deviations it prohibits covered Federal contractors represents a less than 1 in 1.7 million and subcontractors from discriminating Enacted in 1974 and amended in the probability that the occurrence against employees and applicants intervening years, the purpose of happened by chance). In support of an because of race, color, religion, sex, VEVRAA is twofold. First, VEVRAA OFCCP discrimination PDN or NOV, a sexual orientation, gender identity, prohibits federal contractors and statistician can conclude that a variable national origin, or because they inquire subcontractors from discriminating of interest is statistically significant if, about, discuss, or disclose their against employees and applicants controlling for major, measurable compensation or that of others subject to because of status as a protected veteran variables, a disparity exists that is certain limitations. Second, it requires (defined by the statute to include greater than two standard deviations covered Federal contractors and disabled veterans, recently separated (equivalent to a p value of less than 0.05 subcontractors to take affirmative action veterans, Armed Forces Service Medal and a confidence value of 95 percent or to ensure equal employment Veterans, and active duty wartime or higher). As noted in the proposed opportunity. The nondiscrimination and campaign badge veterans).24 Second, it regulatory text and preamble discussion affirmative action obligations of Federal requires each covered Federal contractor regarding predetermination notices, for contractors and subcontractors cover all and subcontractor to take affirmative matters without nonstatistical evidence, aspects of employment. action to employ and advance in OFCCP will only pursue matters if the The requirements in E.O. 11246 employment these veterans. The statistical evidence shows a disparity of generally apply to any business or requirements in VEVRAA generally at least three standard deviations or a p organization that (1) holds a single apply to any business or organization value of .01 or less. The definition of Federal contract, subcontract, or that holds a single Federal contract or federally assisted construction contract 20 See Directive 2019–02, ‘‘Early Resolution 23 Effective October 1, 2010, the coverage Procedures’’ (Nov. 30, 2018), available at https:// 22 Affirmative Action and Nondiscrimination threshold under Section 503 increased from www.dol.gov/ofccp/regs/compliance/directives/ Obligations of Contractors and Subcontractors $10,000 to $15,000, in accordance with the dirindex.htm (last accessed Sept. 27, 2019). The Regarding Special Disabled Veterans, Veterans of inflationary adjustment requirements in 41 U.S.C. proposed rule would not codify OFCCP’s early the Vietnam Era, Disabled Veterans, Recently 1908. See, Federal Acquisition Regulation; Inflation resolution procedures per se. It would, however, Separated Veterans, Active Duty Wartime or Adjustment of Acquisition-Related Thresholds, 75 allow OFCCP and contractors to explore expedited Campaign Badge Veterans, and Armed Forces FR 53129 (Aug. 30, 2010). conciliation options, such as the early resolution Service Medal Veterans, 78 FR 58613 (Sept. 24, 24 Since the statute was enacted, OFCCP’s procedures set forth in Directive 2019–02. 2013), and Affirmative Action and regulations have further defined ‘‘protected 21 Castaneda v. Partida, 430 U.S. 482, 496 n.17 Nondiscrimination Obligations of Contractors and veteran’’ to include ‘‘active duty wartime or (1977); Hazelwood School Dist. v. United States, Subcontractors Regarding Individuals With campaign badge veterans.’’ See, 41 CFR 60–300.2(a) 433 U.S. 299, 311 n.17 (1977). Disabilities, 78 FR 58681 (Sept. 24, 2013). and (q).

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subcontract in excess of $150,000.25 60–1 to the current title for the head of throughout this part with the term Contractors with 50 or more employees OFCCP. ‘‘Director.’’ Specifically, the following and a single Federal contract or sections will be revised: §§ 60–2.1, 60– Subpart A—Preliminary Matters; Equal subcontract of $150,000 or more also 2.2, and 60–2.31. These revisions would Opportunity Clause; Compliance must develop and maintain an correct part 60–2 to the current title for Reports affirmative action program that the head of OFCCP. complies with 41 CFR part 60–300, Section 60–1.3 Definitions 41 CFR Part 60–300—Affirmative Action subpart C. For this section, the NPRM proposes and Nondiscrimination Obligations of Pursuant to these laws, receiving a to add two definitions and replace a Federal Contractors and Subcontractors Federal contract comes with a number definition. The term ‘‘Nonstatistical Regarding Disabled Veterans, Recently of responsibilities. Contractors are evidence’’ would be added to codify the Separated Veterans, Active Duty required to comply with all provisions 29 definition OFCCP uses in guidance. Wartime or Campaign Badge Veterans, of these laws as well as the rules, The term ‘‘Statistical evidence’’ clarifies and Armed Forces Service Medal regulations, and relevant orders of the the necessary support for OFCCP to Veterans Secretary of Labor. Where OFCCP finds determine that there is a statistically potential noncompliance concerns significant disparity caused by an Subpart A—Preliminary Matters; Equal under any of the three laws or their employment action or compensation Opportunity Clause implementing regulations it utilizes decision. Both terms are germane to the Section 60–300.2 Definitions established procedures to either resolution procedures that this NPRM facilitate resolution,26 or proceed to proposes to codify. For this section, the NPRM proposes administrative enforcement as necessary OFCCP would also replace the to add definitions. The terms to secure compliance.27 A contractor definition of ‘‘Deputy Assistant ‘‘Nonstatistical evidence’’ and found in violation who fails to engage Secretary’’ in this section with the ‘‘Statistical evidence’’ would be added in appropriate resolution procedures definition of ‘‘Director’’ published in for the same reasons as proposed for may have its contracts canceled, OFCCP’s regulations implementing section 60–1.3. terminated, or suspended and/or may be VEVRAA and section 503.30 Subpart D—General Enforcement and subject to debarment after the Complaint Procedures opportunity for a hearing.28 Subpart B—General Enforcement; Compliance Review and Complaint Section 60–300.62 Conciliation IV. Proposed Revisions Procedure Agreements This rulemaking proposes to update Section 60–1.33 Conciliation The NPRM proposes to revise section outdated references to the head of the Agreements 60–300.62 in the same manner as agency from ‘‘Deputy Assistant section 60–1.33: changing the title to Secretary’’ to the correct title of The NPRM proposes to revise § 60– 1.33 by changing the title to ‘‘Resolution ‘‘Resolution Procedures,’’ and ‘‘Director’’ throughout the entirety of 41 incorporating three new subsections: CFR parts 60–1 and 60–2. It also Procedures’’, and incorporating three new subsections: ‘‘Predetermination ‘‘Predetermination Notice,’’ ‘‘Notice of proposes to add two new definitions Violation,’’ and ‘‘Expedited Conciliation and revise a definition in part 60–1, and Notice,’’ ‘‘Notice of Violation,’’ and ‘‘Expedited Conciliation Option.’’ The Option.’’ The resolution procedures update parts 60–1, 60–300 and 60–741 would be in the following order: to codify established policy and resolution procedures would be in the following order: ‘‘Predetermination ‘‘Predetermination Notice,’’ ‘‘Notice of procedures for resolving discrimination Violation,’’ ‘‘Conciliation Agreements,’’ and other material violations. Notice,’’ ‘‘Notice of Violation,’’ ‘‘Conciliation Agreements’’, and and ‘‘Expedited Conciliation Option.’’ Revised Sections ‘‘Expedited Conciliation Option.’’ 41 CFR Part 60–741—Affirmative Action This revised section would bring the 41 CFR Part 60–1—Obligations of and Nondiscrimination Obligations of resolution procedures described in the Contractors and Subcontractors Federal Contractors and Subcontractors regulations in line with the Regarding Individuals With Disabilities Several sections will be revised longstanding resolution procedures that throughout 41 CFR part 60–1 because all OFCCP utilizes. The update would Subpart A—Preliminary Matters; Equal instances of ‘‘Deputy Assistant codify use of the PDN to resolve Opportunity Clause Secretary’’ would be replaced with the discrimination violations, would codify Section 60–741.2 Definitions term ‘‘Director.’’ The revised sections the use of the NOV and an expedited would include 41 CFR 60–1.2, 60–1.5, conciliation option to resolve For this section, the NPRM proposes 60–1.7, 60–1.9, 60–1.10, 60–1.21, 60– discrimination and other material to add definitions. The terms 1.23, 60–1.24, 60–1.25, 60–1.26, 60– violations, and would codify the types ‘‘Nonstatistical evidence’’ and 1.27, 60–1.28, 60–1.29, 60–1.30, 60– of evidence necessary to find ‘‘Statistical evidence’’ would be added 1.31, 60–1.41, 60–1.42, 60–1.43, and 60– discrimination violations for a PDN or for the same reasons as proposed for 1.46. These revisions would correct part NOV. section 60–1.3. Subpart D—General Enforcement and 25 41 CFR Part 60–2—Affirmative Action Effective October 1, 2015, the coverage Complaint Procedures threshold under VEVRAA increased from $100,000 Programs to $150,000, in accordance with the inflationary All instances of ‘‘Deputy Assistant Section 60–741.62 Conciliation adjustment requirements in 41 U.S.C. 1908. See, Agreements Federal Acquisition Regulation; Inflation Secretary’’ and ‘‘DAS’’ will be replaced Adjustment of Acquisition-Related Thresholds, 80 The NPRM proposes to revise section FR 38293 (July 2, 2015). 29 Directive 2018–05, ‘‘Analysis of Contractor 60–741.62 in the same manner as 26 FCCM Chapter 8, Directive 2018–01, Directive Compensation Practices During a Compliance section 60–1.33: changing the title to 2019–02, 41 CFR 60–1.28, 60–1.33, 60–300.62, 60– Evaluation’’ (Aug. 24, 2018), available at https:// 300.64, 60–741.62, and 60–741.64. www.dol.gov/ofccp/regs/compliance/directives/ ‘‘Resolution Procedures,’’ and 27 41 CFR 60–1.26, 60–300.65, and 60–741.65. dirindex.htm (last accessed May 16, 2019). incorporating three new subsections: 28 41 CFR 60–1.27, 60–300.66, and 60–741.66. 30 41 CFR parts 60–300 and 60–741, respectively. ‘‘Predetermination Notice,’’ ‘‘Notice of

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Violation,’’ and ‘‘Expedited Conciliation during compliance evaluations to Resources Managers (SOC 11–3121) is Option.’’ The resolution procedures resolve employment discrimination and $60.91.33 The Department adjusted this would be in the following order: other material violations. The proposed wage rate to reflect fringe benefits such ‘‘Predetermination Notice,’’ ‘‘Notice of rule is designed to codify procedures for as health insurance and retirement Violation,’’ ‘‘Conciliation Agreements,’’ two formal notices, the PDN and the benefits, as well as overhead costs such ‘‘Remedial Benchmarks,’’ and NOV, used by OFCCP when the agency as rent, utilities, and office equipment. ‘‘Expedited Conciliation Option.’’ finds potential violations. The proposal The Department used a fringe benefits promotes efficiency by clarifying that 34 Executive Order 12866 (Regulatory rate of 46 percent and an overhead contractors have the option to expedite 35 Planning and Review) and Executive rate of 17 percent, resulting in a fully OFCCP’s normal resolution procedures Order 13563 (Improving Regulation loaded hourly compensation rate for for discrimination findings by entering and Regulatory Review) Human Resources Managers of $99.28 directly into a conciliation agreement ($60.91 + ($60.91 × 46 percent) + Under Executive Order 12866, OMB’s prior to issuance of a PDN or NOV, ($60.91 × 17 percent)). Office of Information and Regulatory allowing for a quicker conclusion to Affairs (OIRA) determines whether a OFCCP’s compliance evaluations. Cost of Rule Familiarization regulatory action is significant and, Discussion of Impacts The Department acknowledges that 5 therefore, subject to the requirements of CFR 1320.3(b)(1)(i) requires agencies to Executive Order 12866 and OMB In this section, the Department include in the burden analysis for a new review. Section 3(f) of Executive Order presents a summary of the costs information collection requirement the 12866 defines a ‘‘significant regulatory associated with the clarified procedures estimated time it takes for contractors to action’’ as an action that is likely to proposed in this notice of proposed review and understand the instructions result in a rule that: (1) Has an annual rulemaking. The Department for compliance. To minimize the effect on the economy of $100 million determined that there are approximately burden, OFCCP will publish compliance or more, or adversely affects in a 420,000 entities registered in the assistance materials such as a fact sheet material way a sector of the economy, General Services Administration’s and answers to frequently asked productivity, competition, jobs, the System for Award Management (SAM) questions. 31 environment, public health or safety, or database. Entities registered in the The Department believes that human State, local or tribal governments or SAM database consist of contractor resources managers at each contractor communities (also referred to as firms, and other entities such as state firm would be the employees economically significant); (2) creates and local governments and other responsible for understanding the new serious inconsistency or otherwise organizations that are interested in regulation. Therefore, the Department interferes with an action taken or federal contracting opportunities, and estimates that it will take a minimum of planned by another agency; (3) other forms of federal financial 30 minutes (1⁄2 hour) for a human materially alters the budgetary impacts assistance. The total number of entities resources manager at each contractor of entitlement grants, user fees, or loan in the SAM database fluctuates and is firm to either read the proposed rule, or programs, or the rights and obligations posted on a monthly basis. The current read the compliance assistance of recipients thereof; or (4) raises novel database includes approximately materials provided by OFCCP to learn legal or policy issues arising out of legal 420,000 entities. Thus, the Department more about the codified procedures. mandates, the President’s priorities, or determines that 420,000 entities are a Consequently, the estimated burden for reasonable representation of the number the principles set forth in Executive rule familiarization is 210,000 hours Order 12866. The Office of Management of entities that may or may not be (420,000 contractor firms × 1⁄2 hour). affected by the proposed rule. This SAM and Budget has determined that this The Department calculates the total number, however, likely results in an proposed rule is a significant regulatory estimated cost of rule familiarization as overestimation for two reasons: The action under Executive Order 12866 and $20,848,800 (210,000 hours × $99.28/ system captures firms that do not meet has reviewed the proposed rule. hour) in the first year, which amounts Executive Order 13563 directs the jurisdictional dollar thresholds for to a 10-year annualized cost of agencies to propose or adopt a the three laws that OFCCP enforces, and $2,372,928 at a discount rate of 3 regulation only upon a reasoned it captures contractor firms for work percent (which is $5.65 per contractor determination that its benefits justify its performed outside the United States by firm) or $2,774,206 at a discount rate of costs; tailor the regulation to impose the individuals hired outside the United 7 percent (which is $6.61 per contractor least burden on society, consistent with States, over which OFCCP does not have firm). The Department seeks public obtaining the regulatory objectives; and authority. On the other hand, there is at comments regarding the estimated in choosing among alternative least one reason to believe that the data number of firms that would review this regulatory approaches, select those may result in an underestimation rule, the estimated time to review the approaches that maximize net benefits. because SAM data does not include all rule, and whether human resources Executive Order 13563 recognizes that subcontractors.32 The estimated labor cost to some benefits are difficult to quantify 33 BLS, Occupational Employment Statistics, and provides that, where appropriate contractors is reflected in Table 1, Occupational Employment and Wages, May 2018, and permitted by law, agencies may below. The mean hourly wage of Human https://www.bls.gov/oes/current/oes_nat.htm (last consider and discuss qualitatively accessed Aug. 13, 2019). values that are difficult or impossible to 31 U.S. General Services Administration, System 34 BLS, Employer Costs for Employee for Award Management, data released in monthly Compensation, https://www.bls.gov/ncs/data.htm. quantify, including equity, human files, available at https://www.sam.gov (last Wages and salaries averaged $24.26 per hour dignity, fairness, and distributive accessed Aug. 13, 2019). The SAM database is an worked in 2017, while benefit costs averaged impacts. estimate with the most recent download of data $11.26, which is a benefits rate of 46 percent. occurring August 2019. 35 Cody Rice, U.S. Environmental Protection The Need for the Regulation 32 However, this underestimation may be partially Agency, ‘‘Wage Rates for Economic Analyses of the offset because of the overlap among contractors and Toxics Release Inventory Program,’’ (June 10, 2002), The proposed regulatory changes are subcontractors; a firm may have a subcontract on https://www.regulations.gov/document?D=EPA-HQ- needed to provide certainty regarding some activities but have a contract on others and OPPT-2014-0650-0005 (last accessed Aug. 13, the procedures that OFCCP follows thus in fact be included in the SAM data. 2019).

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managers would be the most likely staff certainty on the agency’s resolution of the business organizations and members to review the rule. Table 1, procedures; governmental jurisdictions subject to below, reflects the estimated regulatory • Providing more efficient remedies regulation.’’ Public Law 96–354. The familiarization costs for the proposed to workers victimized by employment RFA requires agencies to consider the rule. discrimination by effectuating impact of a proposed regulation on a corporate-wide corrective actions in wide-range of small entities including TABLE 1—REGULATORY conciliation agreements that may reach small businesses, not-for-profit FAMILIARIZATION COST more victims than standard organizations, and small governmental establishment-based conciliation jurisdictions. Total number of contractors ...... 420,000 agreements; and Agencies must review whether a Time to review rule ...... 30 minutes • Facilitating a more efficient option proposed or final rule would have a Human Resources Managers fully for contractors to resolve potential significant economic impact on a loaded hourly compensation ...... $99.28 Regulatory familiarization cost in discrimination by providing notice of substantial number of small entities. See the first year ...... $20,848,800 OFCCP’s preliminary findings earlier in 5 U.S.C. 603. If the rule would, then the Annualized cost with 3 percent dis- the compliance review process. agency must prepare a regulatory counting ...... $2,372,928 flexibility analysis as described in the Annualized cost per contractor with Analysis of Rulemaking Alternatives 36 3 percent discounting ...... $5.65 RFA. Annualized cost with 7 percent dis- In addition to the approach proposed However if an agency determines that counting ...... $2,774,206 in the NPRM, OFCCP considered the rule would not be expected to have Annualized cost per contractor with alternative approaches. OFCCP a significant economic impact on a 7 percent discounting ...... $6.61 considered leaving its resolution substantial number of small entities, procedures described only in agency then the head of the agency may so The proposed rule does not include any subregulatory guidance. Though OFCCP certify and the RFA does not require a additional costs because it adds no new codified ‘‘conciliation agreements’’ in regulatory flexibility analysis See 5 requirements. The perpetual annualized 1979, the agency’s other resolution U.S.C. 605. The certification must cost at 7 percent discounting is procedures, namely the PDN and NOV, include a statement providing the $1,068,622 in 2016 dollars. have only been explained in factual basis for this determination and Cost Savings subregulatory guidance. Maintaining the the reasoning should be clear. status quo has led OFCCP to The Department must determine the The Department expects contractors inconsistent use of the PDN across compliance costs of this proposed rule impacted by the rule will experience agency offices, creating inefficiencies on small contractor firms, and whether cost savings. Specifically, the clarity and leading to greater uncertainty for these costs will be significant for a provided in the new definitions, as well federal contractors. Though the agency substantial number of small contractor as the clarity of OFCCP’s procedures has taken recent subregulatory measures firms (i.e., small firms that enter into related to resolution of material to increase consistency and certainty, contracts with the federal government). violations, provides certainty to codifying these agency resolution If the estimated compliance costs for contractors of what is required as well procedures would have a stronger affected small contractor firms are less as an option for contractors to more impact and promote more efficient than 3 percent of small contractor firms’ expeditiously resolve the violations. enforcement of Executive Order 11246 revenues, the Department considers it If the proposed rule increases clarity than the status quo alternative. appropriate to conclude that this for federal contractors, this impact most OFCCP also considered revising its proposed rule will not have a significant likely will yield cost savings to resolution procedures, but decided to economic impact on small contractor taxpayers (if contractor fees decrease codify them without modification. firms. because they do not need to engage Creating new procedures would create A threshold of 3 percent of revenues third party representatives to interpret new costs to train agency staff and has been used in prior rulemakings for OFCCP’s procedures and requirements). familiarize contractors on the new the definition of significant economic In addition, by increasing clarity for procedures. Additionally, the impact. See, e.g., 79 FR 60634 (October both contractors and for OFCCP longstanding procedures have proven 7, 2014, Establishing a Minimum Wage enforcement, the proposed rule may effective as a means for the agency to for Contractors) and 81 FR 39108 (June reduce the number and costs of communicate its findings to contractors 15, 2016, Discrimination on the Basis of enforcement proceedings by making it and providing contractors an Sex). This threshold is also consistent clearer to both sides at the outset what opportunity to respond, facilitating with that sometimes used by other is required by the regulation. greater understanding and ultimately agencies. See, e.g., 79 FR 27106 (May Benefits resolution. OFCCP seeks comments on 12, 2014, Department of Health and other possible alternatives that would Human Services rule stating that under Executive Order 13563 recognizes that minimize the impact of this NPRM its agency guidelines for conducting some rules have benefits that are while still accomplishing the goals of regulatory flexibility analyses, actions difficult to quantify or monetize but are this rule. that do not negatively affect costs or nevertheless important, and states that revenues by more than 3 percent Regulatory Flexibility Act and agencies may consider such benefits. annually are not economically Executive Order 13272 (Consideration This rule has equity and fairness significant). The Department believes of Small Entities) benefits, which are explicitly recognized that its use of a 3 percent of revenues in Executive Order 13563. The NPRM is The Regulatory Flexibility Act of 1980 significance criterion is appropriate. designed to achieve these benefits by: (RFA), 5 U.S.C. 601 et seq., establishes A standard definition of ‘‘substantial’’ • Supporting more effective ‘‘as a principle of regulatory issuance impact has not been established; enforcement of the prohibition against that agencies shall endeavor, consistent however, the EPA provided a employment discrimination; with the objectives of the rule and determination chart to decide whether a • Increasing fairness for contractors applicable statutes, to fit regulatory and by providing more transparency and informational requirements to the scale 36 Id.

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substantial impact exists. If the (SUSB).40 Since federal contractors are percentage of receipts of less than 3 percentage of all small entities subject to not limited to specific industries, the percent. For instance, the first year cost the rule that are experiencing a given Department assessed the impact of this for the construction industry is economic impact (in this case 3 percent proposed rule across 19 industrial estimated to range from 0.00 percent of of revenue or greater) is greater than or classifications. Because data limitations revenue for firms that have average equal to 15 percent of all entities within do not allow the Department to annual receipts of approximately $35.3 that industry, then the economic impact determine which of the small firms million to 0.09 percent of revenue for should be considered substantial. The within these industries are federal firms that have average annual receipts Department has used a threshold of 15 contractors, the Department assumes below $52,000. Likewise, the percent of small entities in prior that these small firms are not annualized cost for the construction rulemakings for the definition of significantly different from the small industry is estimated to range from 0.00 substantial number of small entities. federal contractors that will be directly percent of revenue for firms that have See, e.g., 79 FR 60633 (October 7, 2014, affected by the proposed rule. average annual receipts of Establishing a Minimum Wage for The Department used the following approximately $35.3 million to 0.01 Contractors). According to the Small steps to estimate the cost of the percent of revenue for firms that have proposed rule per small contractor firm Business Administration’s (SBA’s) average annual receipts below $52,000. as measured by a percentage of total Guide for Government Agencies: How to Management of companies and annual receipts. First, the Department Comply with the Regulatory Flexibility enterprises is the industry with the used Census SUSB data that highest relative first year costs, with a Act, the determination of what disaggregates industry information by constitutes a substantial number of range of 0.00 percent for firms that have firm size in order to perform a robust average annual receipts of small entities is open to interpretation, analysis of the impact on small and is primarily dependent on the size approximately $2.3 million to 0.15 contractor firms. The Department percent for firms that have average of the industry.37 Analysts should applied the SBA small-business size annual receipts below $31,000. With determine both the total number and standards to the SUSB data to determine respect to the annualized costs for the percentage of regulated small entities the number of small firms in the management of companies and experiencing significant economic affected industries. Then the enterprises industry, the impact as a impacts when determining whether a Department used receipts data from the percentage of revenue ranges from 0.00 substantial number of small entities may SUSB to calculate the cost per firm as percent for firms that have average be significantly affected.38 a percentage of total receipts by dividing annual receipts of approximately $2.3 To analyze the proposed rule’s impact the estimated first year cost and the million to 0.02 percent for firms that on small contractor firms, the annualized cost per firm discounted at have average annual receipts below Department used as data sources the a 7 percent rate by the average annual $31,000. SBA’s Table of Small Business Size receipts per firm. The methodology and Therefore, the Department does not Standards 39 and the U.S. Census results of two industries (construction expect this rule to have a significant Bureau’s Statistics of U.S. Businesses and management of companies and economic impact on a substantial enterprises) are presented in Tables 2 number of small entities. The and 3. 37 Small Business Administration, A Guide for annualized cost at a discount rate of 7 Government Agencies: How to Comply with the In sum, the increased first year cost percent for rule familiarization is $6.61 Regulatory Flexibility Act (August 2017), https:// and annualized cost of compliance per entity ($46.39 in the first year) www.sba.gov/sites/default/files/advocacy/How-to- resulting from the proposed rule are de which is far less than 1 percent of the Comply-with-the-RFA-WEB.pdf. minimis relative to the revenue at small 38 annual revenue of the smallest of the Final Guidance for EPA Rulewriters: Regulatory contractor firms no matter their size. All Flexibility Act (November 2006), section 2.7.2, small entities affected by the proposed of the industries had a first year cost https://www.epa.gov/sites/production/files/2015- rule. Accordingly, OFCCP certifies that and annualized cost per firm as a 06/documents/guidance-regflexact.pdf (last the proposed rule would not have a accessed Sept. 27, 2019). significant economic impact on a 39 See https://www.sba.gov/sites/default/files/ 40 See https://www.census.gov/data/tables/2012/ files/Size_Standards_Table.pdf (last accessed Sept. econ/susb/2012-susb-annual.html (last accessed substantial number of small entities. 27, 2019). Sept. 27, 2019). BILLING CODE 4510–CM–P

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BILLING CODE 4510–CM–C authority of the Paperwork Reduction Executive Order 13175 (Consultation Paperwork Reduction Act Act. and Coordination With Indian Tribal Governments) The Paperwork Reduction Act of 1995 Unfunded Mandates Reform Act of requires that OFCCP consider the 1995 This proposed rule does not have tribal implications under Executive impact of paperwork and other For purposes of the Unfunded Order 13175 that requires a tribal information collection burdens imposed Mandates Reform Act of 1995, 2 U.S.C. summary impact statement. The on the public. See 44 U.S.C. 3507(d). An 1532, this proposed rule does not proposed rule does not have substantial agency may not collect or sponsor the include any Federal mandate that may direct effects on one or more Indian collection of information or impose an result in excess of $100 million in tribes, on the relationship between the information collection requirement expenditures by state, local, and tribal unless the information collection Federal Government and Indian tribes, governments in the aggregate or by the instrument displays a currently valid or on the distribution of power and private sector. OMB control number. See 5 CFR responsibilities between the Federal 1320.5(b)(1). Executive Order 13132 (Federalism) Government and Indian tribes. OFCCP has determined that there is OFCCP has reviewed this proposed List of Subjects no new requirement for information rule in accordance with Executive Order collection associated with this proposed 41 CFR Parts 60–1 and 60–2 13132 regarding federalism, and has rule. The information collection determined that it does not have Administrative practice and contained in the existing Executive ‘‘federalism implications.’’ This rule procedure, Civil rights, Discrimination, Order 11246 regulations are currently will not ‘‘have substantial direct effects approved under OMB Control Number Employment, Equal employment 1250–0001 (Construction Recordkeeping on the States, on the relationship opportunity, Government contracts, and Reporting Requirements) and OMB between the national government and Government procurement, Labor. the States, or on the distribution of Control Number 1250–0003 41 CFR Parts 60–300 and 60–741 (Recordkeeping and Reporting power and responsibilities among the Requirements—Supply and Service). various levels of government.’’ Administrative practice and Consequently, this proposed rule does procedure, Civil rights, Discrimination, not require review by the Office of Employment, Equal employment Management and Budget under the opportunity, Government contracts,

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Government procurement, Individuals and reputation of credentialing violation of the equal opportunity with disabilities, Labor, Veterans. institutions, etc.), related to the clause, and probability of outcomes occurring by (1) If the contractor, subcontractor or Craig E. Leen, chance and/or analyses reflecting bidder is willing to correct the Director, Office of Federal Contract statements concluding that a difference violations and/or deficiencies, and Compliance Programs. in employment selection rates or (2) If OFCCP or its representative For the reasons stated in the compensation decisions is statistically determines that settlement (rather than preamble, the Office of Federal Contract significant by reference to any one of referral for consideration of formal Compliance Programs proposes to these statements: enforcement) is appropriate, a written amend 41 CFR parts 60–1, 60–2, 60– (1) The disparity is two or more times agreement shall be required. The 300, and 60–741 as follows: larger than its standard error (i.e., a agreement shall provide for such standard deviation of two or more); remedial action as may be necessary to PART 60–1 [AMENDED] (2) The Z statistic has a value greater correct the violations and/or than two; or deficiencies noted, including, where ■ 1. The authority citation for part 60– (3) The probability value is less than appropriate (but not necessarily limited 1 continues to read as follows: 0.05. to), remedies such as back pay and Authority: Sec. 201, E.O. 11246, 30 FR * * * * * retroactive seniority. 12319, 3 CFR, 1964–1965 Comp., p. 339, as ■ 4. Revise section 60–1.33 to read as (d) Expedited Conciliation Option. A amended by E.O. 11375, 32 FR 14303, 3 CFR, follows: contractor may waive the procedures set 1966–1970 Comp., p. 684, E.O. 12086, 43 FR forth in paragraphs (a) and/or (b) of this 46501, 3 CFR, 1978 Comp., p. 230, E.O. § 60–1.33 Resolution Procedures. section to enter directly into a 13279, 67 FR 77141, 3 CFR, 2002 Comp., p. (a) Predetermination Notice. If a conciliation agreement. 258 and E.O. 13672, 79 FR 42971. compliance review or other review by ■ 2. In part 60–1, remove the words OFCCP indicates preliminary findings PART 60–2—AFFIRMATIVE ACTION ‘‘Deputy Assistant Secretary’’ and of discrimination, OFCCP will only PROGRAMS adding in their place the word issue a predetermination notice after ■ 5. The authority citation for part 60– ‘‘Director’’. first considering these factors: Whether 2 continues to read as follows: ■ 3. Amend § 60–1.3 by removing the the unexplained disparity is both definition for ‘‘Deputy Assistant practically and statistically significant Authority: Sec. 201, E.O. 11246, 30 FR Secretary’’ and adding definitions for (as described in this part’s definition of 12319, E.O. 11375, 32 FR 14303, as amended ‘‘Director’’, ‘‘Nonstatistical evidence’’ by E.O. 12086, 43 FR 46501, and E.O. 13672, ‘‘Statistical evidence’’) and, where 79 FR 42971. and ‘‘Statistical evidence’’ in relevant, whether nonstatistical alphabetical order to read as follows: evidence demonstrates an intent to § 60–2.1 [Amended] discriminate. If OFCCP cannot ■ § 60–1.3 Definitions. 6. Amend § 60–2.1 by removing the corroborate statistical evidence with words ‘‘Deputy Assistant Secretary’’ and * * * * * nonstatistical evidence, OFCCP will adding in their place ‘‘Director’’. Director means the Director, Office of issue a predetermination notice only Federal Contract Compliance Programs when the statistical evidence is § 60–2.2 [Amended] of the United States Department of significant at a confidence level of 99% ■ 7. Amend § 60–2.2 by removing the Labor, or his or her designee. or higher, which equates to three or words ‘‘Deputy Assistant Secretary’’ and * * * * * more standard deviations or a p value of adding in their place ‘‘Director’’. Nonstatistical evidence may include 0.01 or less. A contractor must respond § 60–2.31 [Amended] testimony about biased statements, to a predetermination notice within 15 ■ 8. Amend § 60–2.31 by removing the remarks, attitudes, or acts based upon calendar days of receipt of the notice, words ‘‘Deputy Assistant Secretary’’ and membership in a protected class; which OFCCP may extend for good adding in their place ‘‘Director.’’ differential treatment through review of cause. comparators, cohorts, or summary data (b) Notice of Violation. If a PART 60–300—AFFIRMATIVE ACTION reflecting differential selections, compliance review or other review by AND NONDISCRIMINATION compensation and/or qualifications; OFCCP indicates preliminary findings OBLIGATIONS OF FEDERAL testimony about individuals denied or of discrimination or other material CONTRACTORS AND given misleading or contradictory violations of the equal opportunity SUBCONTRACTORS REGARDING information about employment or clause, OFCCP may issue a notice of DISABLED VETERANS, RECENTLY compensation practices; testimony violation to provide notice to the SEPARATED VETERANS, ACTIVE about the extent of discretion or contractor requiring corrective action DUTY WARTIME OR CAMPAIGN subjectivity involved in making and inviting conciliation through a BADGE VETERANS, AND ARMED employment decisions; or other written agreement. For discrimination FORCES SERVICE MEDAL VETERANS anecdotal or supporting evidence. violations, OFCCP may issue the notice * * * * * of violation following issuance of a ■ 9. The authority citation for part 60– Statistical evidence means hypothesis predetermination notice if the 300 continues to read as follows: testing, controlling for the major, contractor does not respond or provide Authority: 29 U.S.C. 793; 38 U.S.C. 4211 measureable parameters and variables a sufficient response within 15 calendar and 4212; E.O. 11758 (3 CFR, 1971–1975 used by employers (including, as days of receipt of the notice, unless Comp., p. 841). appropriate, other demographic OFCCP has extended the ■ 10. Amend section 60–300.2 by variables, test scores, geographic predetermination notice response time adding definitions for ‘‘Nonstatistical variables, performance evaluations, for good cause shown. evidence’’ and ‘‘Statistical evidence’’ in years of experience, quality of (c) Conciliation Agreement. If a alphabetical order to read as follows: experience, years of service, quality and compliance review, complaint reputation of previous employers, years investigation or other review by OFCCP § 60–300.2 Definitions. of education, years of training, quality or its representative indicates a material * * * * *

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Nonstatistical evidence may include more standard deviations or a p value of § 60–741.2 Definitions. testimony about biased statements, 0.01 or less. A contractor must respond * * * * * remarks, attitudes, or acts based upon to a predetermination notice within 15 Nonstatistical evidence may include membership in a protected class; calendar days of receipt of the notice, testimony about biased statements, differential treatment through review of which OFCCP may extend for good remarks, attitudes, or acts based upon comparators, cohorts, or summary data cause. membership in a protected class; reflecting differential selections, (b) Notice of Violation. If a differential treatment through review of compensation and/or qualifications; compliance review or other review by comparators, cohorts, or summary data testimony about individuals denied or OFCCP indicates preliminary findings reflecting differential selections, given misleading or contradictory of discrimination or other material compensation and/or qualifications; information about employment or violations of the equal opportunity testimony about individuals denied or compensation practices; testimony clause, OFCCP may issue a notice of given misleading or contradictory about the extent of discretion or violation to provide notice to the information about employment or subjectivity involved in making contractor requiring corrective action compensation practices; testimony employment decisions; or other and inviting conciliation through a about the extent of discretion or anecdotal or supporting evidence. written agreement. For discrimination subjectivity involved in making * * * * * violations, OFCCP may issue the notice employment decisions; or other Statistical evidence means hypothesis of violation following issuance of a anecdotal or supporting evidence. testing, controlling for the major, predetermination notice if the * * * * * measureable parameters and variables contractor does not respond or provide Statistical evidence means hypothesis used by employers (including, as a sufficient response within 15 calendar testing, controlling for the major, appropriate, other demographic days of receipt of the notice, unless measureable parameters and variables variables, test scores, geographic OFCCP has extended the used by employers (including, as variables, performance evaluations, predetermination notice response time appropriate, other demographic years of experience, quality of for good cause shown. variables, test scores, geographic experience, years of service, quality and (c) Conciliation Agreement. If a variables, performance evaluations, reputation of previous employers, years compliance review, complaint years of experience, quality of of education, years of training, quality investigation or other review by OFCCP experience, years of service, quality and and reputation of credentialing or its representative indicates a material reputation of previous employers, years institutions, etc.), related to the violation of the equal opportunity of education, years of training, quality probability of outcomes occurring by clause, and and reputation of credentialing chance and/or analyses reflecting (1) If the contractor, subcontractor or institutions, etc.), related to the statements concluding that a difference bidder is willing to correct the probability of outcomes occurring by in employment selection rates or violations and/or deficiencies, and chance and/or analyses reflecting compensation decisions is statistically (2) If OFCCP or its representative statements concluding that a difference significant by reference to any one of determines that settlement (rather than in employment selection rates or these statements: referral for consideration of formal compensation decisions is statistically (1) The disparity is two or more times enforcement) is appropriate, a written significant by reference to any one of larger than its standard error (i.e., a agreement shall be required. The these statements: standard deviation of two or more); agreement shall provide for such (1) The disparity is two or more times (2) The Z statistic has a value greater remedial action as may be necessary to larger than its standard error (i.e., a than two; or correct the violations and/or standard deviation of two or more); (3) The probability value is less than (2) The Z statistic has a value greater deficiencies noted, including, where 0.05. than two; or appropriate (but not necessarily limited (3) The probability value is less than * * * * * to), remedies such as back pay and ■ 0.05. 11. Revise section 60–300.62 to read retroactive seniority. as follows: * * * * * (d) Expedited Conciliation Option. A ■ contractor may waive the procedures set 14. Revise section 60–741.62 to read § 60–300.62 Resolution Procedures. as follows: (a) Predetermination Notice. If a forth in paragraphs (a) and/or (b) of this compliance review or other review by section to enter directly into a § 60–741.62 Resolution Procedures. OFCCP indicates preliminary findings conciliation agreement. (a) Predetermination Notice. If a of discrimination, OFCCP will only PART 60–741—AFFIRMATIVE ACTION compliance review or other review by issue a predetermination notice after AND NONDISCRIMINATION OFCCP indicates preliminary findings first considering these factors: Whether OBLIGATIONS OF FEDERAL of discrimination, OFCCP will only the unexplained disparity is both CONTRACTORS AND issue a predetermination notice after practically and statistically significant SUBCONTRACTORS REGARDING first considering these factors: Whether (as described in this part’s definition of INDIVIDUALS WITH DISABILITIES the unexplained disparity is both ‘‘Statistical evidence’’) and, where practically and statistically significant relevant, whether nonstatistical ■ 12. The authority citation for part 60– (as described in this part’s definition of evidence demonstrates an intent to 741 continues to read as follows: ‘‘Statistical evidence’’) and, where discriminate. If OFCCP cannot relevant, whether nonstatistical corroborate statistical evidence with Authority: 29 U.S.C. 705 and 793; E.O. evidence demonstrates an intent to 11758 (3 CFR, 1971–1975 Comp., p. 841). nonstatistical evidence, OFCCP will discriminate. If OFCCP cannot issue a predetermination notice only ■ 13. Amend section 60–741.2 by corroborate statistical evidence with when the statistical evidence is adding definitions for ‘‘Nonstatistical nonstatistical evidence, OFCCP will significant at a confidence level of 99% evidence’’ and ‘‘Statistical evidence’’ in issue a predetermination notice only or higher, which equates to three or alphabetical order to read as follows: when the statistical evidence is

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significant at a confidence level of 99% DEPARTMENT OF HEALTH AND SUPPLEMENTARY INFORMATION: In the or higher, which equates to three or HUMAN SERVICES ‘‘Medicaid Program; Medicaid Fiscal more standard deviations or a p value of Accountability Regulation’’ proposed 0.01 or less. A contractor must respond Centers for Medicare & Medicaid rule that appeared in the November 18, to a predetermination notice within 15 Services 2019 Federal Register (84 FR 63722), we calendar days of receipt of the notice, solicited public comments on proposed which OFCCP may extend for good 42 CFR Parts 430, 433, 447, 455, and policies that aim to promote cause. 457 transparency by establishing new (b) Notice of Violation. If a [CMS–2393–N] reporting requirements for states to provide CMS with certain information compliance review or other review by RIN 0938–AT50 OFCCP indicates preliminary findings on supplemental payments to Medicaid of discrimination or other material providers, including supplemental Medicaid Program; Medicaid Fiscal payments approved under either violations of the equal opportunity Accountability Regulation; Supplement clause, OFCCP may issue a notice of Medicaid state plan or demonstration and Extension of Comment Period authority, and on applicable upper violation to provide notice to the payment limits. Additionally, the contractor requiring corrective action AGENCY: Centers for Medicare & proposed rule would establish and inviting conciliation through a Medicaid Services (CMS), HHS. requirements to ensure that state plan written agreement. For discrimination ACTION: Proposed rule; supplement and amendments proposing new violations, OFCCP may issue the notice extension of comment period. supplemental payments are consistent of violation following issuance of a SUMMARY: with the proper and efficient operation predetermination notice if the This document extends the of the state plan and with efficiency, contractor does not respond or provide comment period for the proposed rule economy, and quality of care. This a sufficient response within 15 calendar entitled ‘‘Medicaid Program; Medicaid Fiscal Accountability Regulation’’ that proposed rule addresses the financing of days of receipt of the notice, unless supplemental and base Medicaid OFCCP has extended the appeared in the November 18, 2019 Federal Register. The comment period payments through the non-federal share, predetermination notice response time including states’ uses of health care- for good cause shown. for the proposed rule, which would end on January 17, 2020, is extended 15 related taxes and bona fide provider- (c) Conciliation Agreement. If a days to February 1, 2020. We related donations, as well as the compliance review, complaint additionally note that based on public requirements necessary to properly investigation or other review by OFCCP comments received on this proposed implement the non-federal share of any or its representative indicates a material rule, we will adjust the effective dates Medicaid payment. violation of the equal opportunity of our policies to allow for adequate Since the issuance of the proposed clause, and implementation timelines, as rule, we have received inquiries from a (1) If the contractor, subcontractor or appropriate. variety of stakeholders, including healthcare provider organizations and bidder is willing to correct the DATES: The comment period for the violations and/or deficiencies, and industry representatives requesting an proposed rule published November 18, extension to the comment period. We (2) If OFCCP or its representative 2019 (84 FR 63722), is extended to 5 also recognize that the comment period determines that settlement (rather than p.m., eastern daylight time, on February for the proposed rule crosses over referral for consideration of formal 1, 2020. several federal holidays, which may enforcement) is appropriate, a written ADDRESSES: You may submit comments hinder the ability of the public to agreement shall be required. The as outlined in the November 18, 2019 provide meaningful comment on the agreement shall provide for such proposed rule (84 FR 63722). Please proposed rule. In order to maximize the remedial action as may be necessary to choose only one method listed. opportunity for the public to provide correct the violations and/or FOR FURTHER INFORMATION CONTACT: meaningful input to CMS, we believe deficiencies noted, including, where Andrew Badaracco, (410) 786–4589, that it is important to allow additional appropriate (but not necessarily limited Richard Kimball, (410) 786–2278, and time for the public to prepare comments to), remedies such as back pay and Daniil Yablochnikov, (410) 786–8912, on the proposed rule. In addition, we retroactive seniority. for Medicaid Provider Payments, believe that granting an extension to the (d) Remedial benchmarks. The Supplemental Payments, Upper public comment period in this instance remedial action referenced in paragraph Payment Limits, Provider Categories, would further our overall objective to (c) of this section may include the Intergovernmental Transfers, and obtain public input on the proposed establishment of benchmarks for the Certified Public Expenditures. provisions to promote transparency and contractor’s outreach, recruitment, Timothy Davidson, (410) 786–1167, oversight on payments made in the hiring, or other employment activities. Jonathan Endelman, (410) 786–4738, Medicaid program. Therefore, we are The purpose of such benchmarks is to and Stuart Goldstein, (410) 786–0694, extending the comment period for the create a quantifiable method by which for Health Care-Related Taxes, Provider- proposed rule for an additional 15 days. the contractor’s progress in correcting Related Donations, and Disallowances. While we believe it is in the best identified violations and/or deficiencies Lia Adams, (410) 786–8258, Charlie interest of the public and our proposed can be measured. Arnold, (404) 562–7425, Richard Cuno, policies to extend the comment period (410) 786–1111, and Charles Hines, for this proposed rule, we also (e) Expedited Conciliation Option. A (410) 786–0252, for Medicaid acknowledge that stakeholders require contractor may waive the procedures set Disproportionate Share Hospital appropriate implementation timelines forth in paragraphs (a) and/or (b) of this Payments and Overpayments. that could be impacted by this section to enter directly into a Jennifer Clark, (410) 786–2013 and extension. Therefore, we note that we conciliation agreement. Deborah McClure, (410) 786–3128, for will take this comment period extension [FR Doc. 2019–27258 Filed 12–27–19; 8:45 am] Children’s Health Insurance Program into account in determining the BILLING CODE 4510–CM–P (CHIP). effective date(s) of the policies in any

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final rule, to allow for adequate Secretary, Federal Communications 3. Availability of Call-Blocking Tools. implementation timelines as Commission. The Bureau seeks data and other appropriate. D People with Disabilities: Contact the information on the availability of call- Dated: December 19, 2019. FCC to request reasonable blocking tools offered to consumers. What tools are available to consumers? Seema Verma, accommodations (accessible format documents, sign language interpreters, Do voice service providers or others Administrator, Centers for Medicare & offer multiple versions of their tool from Medicaid Services. CART, etc.) by email: [email protected] or phone: 202–418–0530 or TTY: 202– which consumers may choose? Are such [FR Doc. 2019–28179 Filed 12–26–19; 4:15 pm] 418–0432. tools offered on an opt-in basis or opt- BILLING CODE 4120–01–P For detailed instructions for out basis? Do the tools block calls at the submitting comments and additional network level, the device level, or information on the rulemaking process, elsewhere in the call path? Are such FEDERAL COMMUNICATIONS see the SUPPLEMENTARY INFORMATION tools offered by a third party directly to COMMISSION section of this document. the consumer or by the service provider? What fees, if any, do 47 CFR Part 64 FOR FURTHER INFORMATION CONTACT: Karen Schroeder, Consumer Policy providers or third parties charge for [CG Docket No. 17–59, WC Docket No. 17– Division, CGB, at (202) 418–0654, email: these tools? What proportion of 97; DA 19–1312; FRS 16377] [email protected]. consumers subscribe to a provider that offers and/or enables call-blocking SUPPLEMENTARY INFORMATION: This is a Advanced Methods To Target and tools? How many subscribers avail summary of the Commission’s Public Eliminate Unlawful Robocalls, Call themselves of the tools? Are new tools Notice, in CG Docket No. 17–59, WC Authentication Trust Anchor under development? Docket No. 17–97; document DA 19– 4. Effectiveness of Call-Blocking AGENCY: Federal Communications 1312, released on December 20, 2019. Tools. The Bureau seeks data and other Commission. This matter shall be treated as a information on the effectiveness of call- ACTION: Notice. ‘‘permit-but-disclose’’ proceeding in blocking tools offered to consumers. accordance with the Commission’s ex What are the most appropriate metrics SUMMARY: In this document, the parte rules. 47 CFR 1.1200 et seq. Consumer and Governmental Affairs to measure the effectiveness of call- Persons making oral ex parte blocking tools, e.g., by fraction of illegal Bureau (Bureau), in consultation with presentations are reminded that the Wireline Competition Bureau (WCB) calls blocked? How effective are memorandum summarizing the available tools at blocking illegal and and Public Safety and Homeland presentations must contain summaries Security Bureau (PSHSB), solicits input unwanted calls? What tools, if any, send of the substance of the presentations an intercept message for blocked calls? for the first staff report on call blocking, and not merely a listing of the subjects as directed by the Federal How do blocking tools define false discussed. More than a one or two positives? What is the rate of false Communications Commission (FCC or sentence description of the views and Commission). The Bureau seeks data positives? How do the tools remedy arguments presented is generally false positives? What is the rate of false and other information on the required. See 47 CFR 1.1206(b). Other availability and effectiveness of call- negatives (illegal or unwanted calls that rules pertaining to oral and written ex reach consumers)? What is the number blocking tools offered to consumers, the parte presentations in permit-but- of illegal robocalls transiting the impact of FCC actions on illegal calls, disclose proceedings are set forth in nation’s phone system? How is that the impact of call blocking on 911 § 1.1206(b) of the Commission’s rules, number determined? services and public safety, and any 47 CFR 1.1206(b). 5. Impact of FCC Actions. How have other information that may inform the Synopsis voice service providers responded to the Commission’s analysis of the state of Commission’s actions to empower them deployment of advanced methods and 1. In June 2019, the FCC took action to protect their customers from illegal tools to eliminate illegal and unwanted to further protect consumers from illegal calls, such as by blocking calls from calls. and unwanted robocalls. The phone numbers on a Do-Not-Originate DATES: Comments are due on or before Commission also directed the Bureau, in list and those that purport to be from January 29, 2020, and reply comments consultation with WCB and PSHSB, to invalid, unallocated, or unused are due on or before February 28, 2020. report on the implementation and numbers? What initiatives have voice ADDRESSES: You may submit comments, effectiveness of blocking measures. The service providers implemented as a identified by CG Docket No. 17–59 and Commission specified that the Bureau result of these and other actions by the WC Docket No. 17–97, by any of the address, among other things, the Commission? Do voice service providers following methods: availability to consumers of call- block Do-Not-Originate calls? Have D FCC’s website: http://apps.fcc.gov/ blocking solutions, the effectiveness of consumers seen a corresponding ecfs/. Follow the instructions for various categories of call-blocking tools, reduction in scam calls from numbers submitting comments. and the impact of previous Commission on the Do-Not-Originate list, such as D Paper Mail: Parties who choose to rule changes to allow voice service Internal Revenue Service and Social file by paper must file an original and providers to block calls from phone Security Administration numbers that one copy of each filing. Filers must numbers on a Do-Not-Originate list and unauthorized callers have fraudulently submit two additional copies for each those that purport to be from invalid, spoofed? Have voice service providers additional docket or rulemaking unallocated, or unused numbers. The implemented the blocking of calls that number. Filings can be sent by hand or Commission also asked that the Bureau purport to be from invalid, unallocated, messenger delivery, by commercial study information on the impact of call or unused numbers? Do voice service overnight courier, or by first-class or blocking on 911 and public safety. providers offer opt-out call-blocking overnight U.S. Postal Service mail. All 2. In the Public Notice, the Bureau programs? If so, how many consumers filings must be addressed to the solicits input for the first staff report on have opted out? Do voice service Commission’s Secretary, Office of the call blocking. providers offer opt-in white-list

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blocking? If so, how many consumers with their mission? Have voice service treatment. Where information could be have requested such blocking? providers or others blocked unwanted competitively sensitive or could 6. Impact on 911 Services and Public calls at the request of state or local law interfere with efforts to enforce Safety. The Bureau seeks data and other enforcement? What processes, manual compliance with the requirements of the information on the impact of call or automatic, do voice service providers Communications Act or the blocking on 911 services and public or others use to facilitate blocking Commission’s rules (e.g., by allowing safety. Are legitimate calls to or from harassing calls to 911 or public safety unlawful callers to circumvent filtering emergency numbers, either 911 or administrative numbers? Do voice mechanisms), providers and industry service providers or others perceive any groups may aggregate information public safety ‘‘administrative numbers,’’ legal impediments in the Commission’s without attributing practices or data to ever blocked? Emergency call centers rules or otherwise to blocking such individual entities. Commenters may generally employ protocols by which calls? provide links to publicly available data they will call back a number when a 911 or include Excel spreadsheets when call is dropped or otherwise terminated 7. Other Relevant Information. they file their comments. The Bureau without a resolution. Do voice service Finally, the Bureau seeks comment on requests both data for 2019 and providers or others employ call-blocking any other information that may inform projected data through June 2020, if tools that may purposefully or the Commission’s analysis of the state of available. inadvertently block a call back from a deployment of advanced methods and public safety answering point? Is there tools to eliminate illegal and unwanted Federal Communications Commission. a means to ensure call backs from public calls. Eliot Greenwald, safety numbers are completed? How are 8. Confidential Treatment. Deputy Chief, Disability Rights Office, blocked calls reported and resolved? Do Commenters seeking confidential Consumer and Governmental Affairs Bureau. public safety entities experience treatment for all or part of their [FR Doc. 2019–28136 Filed 12–27–19; 8:45 am] unwanted or illegal calls that interfere submissions should request such BILLING CODE 6712–01–P

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Notices Federal Register Vol. 84, No. 249

Monday, December 30, 2019

This section of the FEDERAL REGISTER and Egg Products Inspection Act (21 were not fed bioengineered or GM feed. contains documents other than rules or U.S.C. 601 et seq.; 21 U.S.C. 451 et seq.; As stated in the summary, for purposes proposed rules that are applicable to the 21 U.S.C. 1031 et seq.) (the Acts), FSIS of this guidance document and public. Notices of hearings and investigations, develops and implements regulations hereinafter, these claims are referred to committee meetings, agency decisions and and policies to ensure that the labels of as ‘‘negative claims.’’ rulings, delegations of authority, filing of After reviewing the comments petitions and applications and agency meat, poultry, and egg products are statements of organization and functions are truthful and not misleading. Under the received, the Agency has revised the examples of documents appearing in this Acts, the Secretary of Agriculture, who guideline to clarify that FSIS approves section. has delegated this authority to FSIS, negative claims verified under a third- must approve the labels of meat, party certifying organization the same poultry, and egg products before the way it approves other special statements DEPARTMENT OF AGRICULTURE products can enter commerce (21 U.S.C. or claims and will not limit claims to 601(d); 21 U.S.C. 457(c); 21 U.S.C. those consistent with AMS’s definition Food Safety and Inspection Service 1036(b)). of bioengineering, in Pub. L. 114–216. [Docket No. FSIS–2018–0048] FSIS has a prior-approval program for FSIS also added information about the labeling.1 FSIS allows certain labels that certification and labeling for certified Updated Labeling Guideline on bear only mandatory labeling features organic products. Specifically, certified Statements That Bioengineered or and that comply with the Agency’s organic products may be labeled with Genetically Modified Ingredients or labeling regulations to be generically negative claims without additional Animal Feed Were Not Used in the approved (9 CFR 412.2(a)(1)). However, third-party certification or Production of Meat, Poultry, or Egg a label with a special statement or documentation when the negative claim Products claim,2 including a negative claim, must is connected with an asterisk or other be submitted to FSIS for approval before symbol to the explanatory statement AGENCY: Food Safety and Inspection it may be used on a product distributed ‘‘Produced in compliance with the Service, USDA. in commerce (9 CFR 412.1(c)(3) and USDA Organic Regulations’’ and that ACTION: Notice of availability and 412.1(e)). A label bearing a negative the website of the certifying entity does response to comments. claim must be submitted to the Office of not always need to appear on the label. Policy and Program Development, The revised guideline is posted at: SUMMARY: The Food Safety and Labeling and Program Delivery Staff, in http://www.fsis.usda.gov/wps/portal/ Inspection Service (FSIS) is announcing FSIS, with necessary documentation to fsis/topics/regulatory-compliance/ the availability of an updated version of support the special statement or claim. compliance-guides-index. Although its guideline on how establishments can Examples of negative claims include but comments will no longer be accepted make label claims concerning the fact are not limited to: ‘‘Product contains no through www.regulations.gov on this that bioengineered or genetically- genetically-modified ingredients,’’ and guideline, FSIS will update this modified (GM) ingredients or animal ‘‘Product made from poultry that were document as necessary if new feed were not used in the production of not fed genetically-engineered feed.’’ information becomes available. meat, poultry, or egg products. For On August 24, 2016, FSIS announced purposes of this guidance document, the availability of and requested Comments and FSIS Responses these claims are referred to as ‘‘negative comments on its Labeling Guideline on FSIS received 201 comments on the claims.’’ The updated document reflects Statements That Bioengineered or Labeling Guideline on Statements That changes made in response to comments Genetically-Modified Ingredients or Bioengineered or Genetically-Modified received after announcement of the Animal Feed Were Not Used in Meat, Ingredients or Animal Feed Were Not guideline in an August 2016 Federal Poultry, or Egg Products (81 FR 57879). Used in Meat, Poultry, or Egg Products. Register notice. FSIS developed the guideline for Most comments were submitted by ADDRESSES: A downloadable version of establishments that want to make label individuals who strongly supported the compliance guideline is available to claims concerning the fact that food labeling for genetically engineered view and print at http:// bioengineered or GM ingredients were foods. In addition, FSIS received 12 www.fsis.usda.gov/Regulations_&_ not used in a meat, poultry, or egg comments from consumer-advocacy Policies/Compliance_Guides_Index/ product. The guideline also provides organizations, agriculture-specific trade index.asp. No hard copies of the information on how establishments can coalitions/associations, organic farmers, compliance guideline have been make label claims that a product was and a trade association representing the published. produced from livestock or poultry that poultry industry. Many of the issues raised in the more FOR FURTHER INFORMATION CONTACT: 1 See FSIS Directive 7221.1 at https:// detailed comments concerned how the Terri Nintemann, Assistant www.fsis.usda.gov/wps/wcm/connect/9a2ebc76- statutory definition of ‘‘bioengineering’’ Administrator, Office of Policy and 2d43-4658-841a-f810b1f65f04/ in Pub. L. 114–216 3 should be Program Development by telephone at 7221.1.pdf?MOD=AJPERES. 2 Special statements and claims are claims, logos, interpreted and applied by USDA’s (202) 205–0495. trademarks, and other symbols on labels that are Agricultural Marketing Service (AMS). SUPPLEMENTARY INFORMATION: generally not defined in FSIS regulations or the FSIS believes these comments are Food Standards and Labeling Policy Book. For beyond the scope of the guideline. Background specific examples, see Appendix 1 at https:// www.fsis.usda.gov/wps/wcm/connect/bf170761- Under the Federal Meat Inspection 33e3-4a2d-8f86-940c2698e2c5/Label-Approval- 3 Available at https://www.congress.gov/bill/ Act, Poultry Products Inspection Act, Guide.pdf?MOD=AJPERES. 114th-congress/senate-bill/764.

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However, the same issues were raised in definition the third-party certifier’s argued FSIS should only allow negative responses to questions posted in 2017 program is based. They argued this claims on products that do not contain by AMS as part of the development of results in negative claims that are bioengineered ingredients and that are the proposed National Bioengineered inconsistent and potentially misleading derived from livestock or poultry that Food Disclosure Standard (NBFDS). On to consumers. were not fed bioengineered or GM feed December 21, 2018, AMS addressed Response: FSIS recognizes that because it reflects consumer these and other issues in the NBFDS negative claims may reflect different expectations for these claims. final rule (83 FR 19860).4 standards depending on the certifying Response: FSIS disagrees. The Following is a summary of the entity’s standards for the claim. guideline explains that, for FSIS to relevant issues raised in the comments However, FSIS disagrees that these approve a negative claim on product and FSIS’s responses. differences result in claims that are labeling, the label must also bear a website address where consumers can Applicability misleading or confusing to consumers. As noted above, the labeling obtain additional information regarding Comment: Comments from consumer- requirements for meat, poultry, and egg the claim and the third-party advocacy organizations and agriculture- products in the Acts and implementing organization’s certification process. specific trade coalitions/associations regulations are aimed at preventing With this approach, the labeling strongly opposed the statement in the product misbranding. To prevent includes the information consumers 2016 guidance document—‘‘FSIS will labeling claims that are false and need if unaware of the specific utilize the definition of misleading, any label with a special standards on which the negative claim ‘‘bioengineering’’ in Public Law 114– statement or claim, including a negative is based. Thus, FSIS will continue 216 when evaluating negative claims’’ claim, must be submitted to FSIS for allowing negative claims on products (AMS’s definition). The comments said prior-approval (9 CFR 412.1(c)(3) and that do not contain bioengineered FSIS should not use AMS’s definition 412.1(e)). FSIS comprehensively ingredients and/or that are derived from because it directly conflicts with evaluates label approval applications on livestock or poultry that did not Section 294(c) of Public Law 114–216, a case-by-case basis. Further, FSIS often consume bioengineered feed when the creates consumer confusion, and may consults with its Federal partners, e.g., producing establishment provides complicate international trade. the AMS and FDA, to decide whether evidence that substantiates the claim. According to the comments, FSIS the documentation submitted in support Likewise, FSIS will continue to allow should instead use the Food and Drug of a claim provides the level of detail the use of synonymous terms such as Administration’s (FDA’s) definition of needed to ensure that the claim is ‘‘genetically engineered’’ or ‘‘GE.’’ ‘‘modern biotechnology.’’ They said the truthful and not misleading. Comment: Comments from a trade FDA definition is widely accepted and For FSIS to approve a label with a association representing the poultry matches the definition recognized by negative claim related to bioengineering, industry and consumers urged FSIS to key trade partners. the producing establishment must clarify in the guideline that an animal Response: It was never FSIS’s submit documentation that supports it is not considered genetically engineered intention to limit negative claims to is complying with standards established merely because it consumed genetically those consistent with the definition of by a third-party certifying organization, engineered feed. ‘‘bioengineering’’ in Public Law 114– the third-party certifier’s standards must Response: Public Law 114–216 216. FSIS has been and will continue to be publicly available on a website, and prohibits a food derived from an animal approve negative claims verified by a the label must disclose a website ‘‘to be considered a bioengineered food third-party certifying organization with address where consumers can obtain solely because the animal consumed standards based on FDA’s definition of additional information regarding the feed produced from, containing, or ‘‘modern biotechnology’’ or with claim and the third-party’s certification consisting of a bioengineered standards based on AMS’s definition of process.5 substance’’ (7 U.S.C. 1639b(b)(2)(A)). ‘‘bioengineering.’’ However, in response FSIS considers its current procedure FSIS agrees this means that the animal to these comments, FSIS has updated of comprehensively evaluating approval from which the meat or poultry the guideline by removing the statement requests for labels bearing negative component was derived would not be in question and to clarify that we claims on a case-by-case basis as considered bioengineered solely on the approve negative claims consistent with sufficient to provide assurance that basis of the animal’s feed. However, our longstanding practice for other these labels are truthful and not FSIS believes this information is outside special statements and claims verified misleading. Moreover, under the the scope of the guideline, as the by a third-party certifying organization. conditions described in the guideline, guideline provides only for negative If the negative claim is truthful and the the labeling includes the information claims that pertain to the non-animal producing establishment submits that consumers need to determine ingredients, e.g., ‘‘no GMO ingredients’’ documentation demonstrating that the whether the negative claim meets their or ‘‘made without GE ingredients.’’ third-party certifying organization’s expectations for the claim. Minimum Standards program for the claim is being followed, We note establishments do not have FSIS will approve the negative claim. to use any of the negative claims listed Comment: Comments from consumer- Comment: Several comments in the guideline, and that an advocacy organizations, agriculture- contained details about how AMS’s establishment’s decision to use a specific trade coalitions/associations, definition of ‘‘bioengineering’’ differs particular third-party certifier is a and individuals said FSIS should set from FDA’s definition of ‘‘modern voluntary business decision. minimum standards in the guideline for biotechnology.’’ The comments said that Comment: Comments from consumer- negative claims and not allow negative because of the differences, the same advocacy organizations and agriculture- claims on products that do not meet negative claim may reflect different specific trade coalitions/associations these standards. standards depending on which Response: FSIS does not regulate 5 Products certified as ‘‘organic’’ would not need biotechnologies and, thus, does not have 4 Available at https://www.govinfo.gov/content/ to disclose a website address on the label, except the expertise to determine whether a pkg/FR-2018-12-21/pdf/2018-27283.pdf. when the address is required under 7 CFR part 205. particular third-party certifying

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organization’s standards should subscription service which provides SUMMARY: The Architectural and represent a particular negative claim. To automatic and customized access to Transportation Barriers Compliance ensure negative claims continue to selected food safety news and Board (Access Board) plans to hold its accurately reflect the standards on information. This service is available at: regular committee and Board meetings which they are based, FSIS will http://www.fsis.usda.gov/subscribe. in Washington, DC, Monday through continue to evaluate labels bearing these Options range from recalls to export Wednesday, January 13–15, 2020, at the claims on a case-by-case basis and, information, regulations, directives, and times and location listed below. when needed, consult with Federal notices. Customers can add or delete DATES: The schedule of events is as agencies with expertise in the matter. subscriptions themselves and have the follows: FSIS will approve a negative claim if it option to password protect their is truthful and adequately substantiated accounts. Monday, January 13, 2020 by the producing establishment. 1:30 p.m.–2:30 p.m. Ad Hoc USDA Non-Discrimination Statement Organic Certification Committee on Frontier Issues No agency, officer, or employee of the Comment: Comments from organic USDA shall, on the grounds of race, Tuesday, January 14, 2020 farmers and agriculture-specific trade color, national origin, religion, sex, 2:30 p.m.–3:00 p.m. Ad Hoc associations urged FSIS to update the gender identity, sexual orientation, Committee on Design Guidance guideline to clarify that the Organic disability, age, marital status, family/ 3:00 p.m.–4:00 p.m. Updates on Certificate is sufficient support for parental status, income derived from a Onboard Wheelchair Guidance and negative claims, such as ‘‘non-GMO’’ public assistance program, or political Rail Vehicles Rulemaking (Closed) and ‘‘not bioengineered.’’ The beliefs, exclude from participation in, Wednesday, January 15, 2020 comments also said a website is deny the benefits of, or subject to unnecessary on certified-organic discrimination, any person in the 9:30 a.m.–10:00 a.m. Budget product labels. United States under any program or Committee Response: FSIS agrees. For food activity conducted by the USDA. 10:00 a.m.–10:30 a.m. Planning and certified under the USDA organic Evaluation regulations, Public Law 114–216 states, How To File a Complaint of 10:30 a.m.–11:00 a.m. Technical ‘‘the certification shall be considered Discrimination Programs sufficient to make a claim regarding the To file a complaint of discrimination, 1:30 p.m.–3:00 p.m. Board Meeting absence of bioengineering in the food, complete the USDA Program ADDRESSES: Meetings will be held at the such as ‘‘not bioengineered’’, ‘‘non- Discrimination Complaint Form, which Access Board Conference Room, 1331 F GMO’’, or another similar claim.’’ may be accessed online at: http:// Street, NW, suite 800, Washington, DC Furthermore, certified-organic products www.ocio.usda.gov/sites/default/files/ 20004. _ _ _ _ would not need to disclose a website docs/2012/Complain combined 6 8 FOR FURTHER INFORMATION CONTACT: For address on the label, except when the 12.pdf, or write a letter signed by you further information regarding the address is required under 7 CFR part or your authorized representative. meetings, please contact David Capozzi, 205. FSIS has updated the guideline by Send your completed complaint form Executive Director, (202) 272–0010 or adding this information. or letter to USDA by mail, fax, or email: [email protected]. Congressional Review Act Mail: U.S. Department of Agriculture, SUPPLEMENTARY INFORMATION: At the Director, Office of Adjudication, 1400 Board meeting scheduled on the Pursuant to the Congressional Review Independence Avenue SW, Washington, Act at 5 U.S.C. 801 et seq., the Office of afternoon of Wednesday, January 15, the DC 20250–9410. Access Board will consider the Information and Regulatory Affairs has Fax: (202) 690–7442. determined that this notice is not a following agenda items: Email: [email protected]. • Approval of Minutes: September 11, ‘‘major rule,’’ as defined by 5 U.S.C. Persons with disabilities who require 804(2). 2019; November 6, 2019—(vote) alternative means for communication • Ad Hoc Committee Reports: Design Additional Public Notification (Braille, large print, audiotape, etc.), Guidance; Frontier Issues Public awareness of all segments of should contact USDA’s TARGET Center • Planning and Evaluation Committee rulemaking and policy development is at (202) 720–2600 (voice and TDD). • Technical Programs Committee important. Consequently, FSIS will Done in Washington, DC. • Budget Committee announce this Federal Register Carmen M. Rottenberg, • Election Assistance Commission publication online through the FSIS Administrator. Report • web page located at: http:// [FR Doc. 2019–27993 Filed 12–27–19; 8:45 am] Executive Director’s Report • Public Comment (final 15 minutes of www.fsis.usda.gov/federal-register. FSIS BILLING CODE 3410–DM–P also will make copies of this publication the meeting) available through the FSIS Constituent Members of the public can provide Update, which is used to provide comments either in-person or over the information regarding FSIS policies, ARCHITECTURAL AND telephone during the final 15 minutes of procedures, regulations, Federal TRANSPORTATION BARRIERS the Board meeting on Wednesday, Register notices, FSIS public meetings, COMPLIANCE BOARD January 15. Any individual interested in and other types of information that providing comment is asked to pre- could affect or would be of interest to Architectural and Transportation register by sending an email to bunales@ our constituents and stakeholders. The Barriers Compliance Board; Meetings access-board.gov with the subject line Constituent Update is available on the AGENCY: Architectural and ‘‘Access Board meeting—Public FSIS web page. Through the web page, Transportation Barriers Compliance Comment’’ with your name, FSIS is able to provide information to a Board. organization, state, and topic of much broader, more diverse audience. comment included in the body of your ACTION: Notice of meetings. In addition, FSIS offers an email email. All emails to register for public

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comment must be received by SUPPLEMENTARY INFORMATION: 5 U.S.C. ADDRESSES: Direct all written comments Wednesday, January 8. Commenters will 4314(c)(1) requires each agency to to Thomas Smith, PRA Liaison, U.S. be provided with a call-in number and establish, in accordance with Census Bureau, 4600 Silver Hill Road, passcode before the meeting. regulations prescribed by the Office of Room 7K250A, Washington, DC 20233 Commenters will be called on in the Personnel Management, a performance (or via the internet at PRAcomments@ order by which they are pre-registered. review board (PRB). The PRB reviews doc.gov). You may also submit Due to time constraints, each initial performance ratings of members comments, identified by Docket Number commenter is limited to two minutes. of the Senior Executive Service (SES) USBC–2019–0018, to the Federal e- The Board will listen respectfully to and makes recommendations on Rulemaking Portal: http:// comments; however, they will not performance ratings and awards for www.regulations.gov. All comments engage in dialogue or answer questions. senior executives. Because the CSB is a received are part of the public record. The purpose of the public comments is small independent Federal agency, the No comments will be posted to http:// to hear the public’s views. Commenters SES members of the CSB’s PRB are www.regulations.gov for public viewing on the telephone will be in a listen-only being drawn from other Federal until after the comment period has capacity until they are called on. agencies. closed. Comments will generally be All meetings are accessible to persons The CSB Board Member Delegated posted without change. All Personally with disabilities. An assistive listening Interim Executive and Administrative Identifiable Information (for example, system, Communication Access Authority has appointed the following name and address) voluntarily Realtime Translation (CART), and sign individuals to serve as members of the submitted by the commenter may be language interpreters will be available at CSB Senior Executive Service PRB: publicly accessible. Do not submit the Board meeting and committee David M. Capozzi, Director of Technical Confidential Business Information or meetings. and Information Services, United States otherwise sensitive or protected Persons attending Board meetings are Access Board; Dolline L. Hatchett, information. You may submit requested to refrain from using perfume, Director, Office of Safety attachments to electronic comments in cologne, and other fragrances for the Recommendations and Microsoft Word, Excel, or Adobe PDF comfort of other participants (see Communications, National file formats. www.access-board.gov/the-board/ Transportation Safety Board; and Jessica FOR FURTHER INFORMATION CONTACT: policies/fragrance-free-environment for S. Bartlett, Regional Director, Federal Requests for additional information or more information). Labor Relations Authority, Washington copies of the information collection You may view the Wednesday, Regional Office. instrument(s) and instructions should January 15, 2020 meeting through a live Authority: 5 U.S.C. 4314. be directed to Kimberly Moore, Chief, webcast from 1:30 p.m. to 3:00 p.m. at: Economy-Wide Statistics Division, U.S. Dated: December 23, 2019. www.access-board.gov/webcast. Census Bureau, Room 8K154, 4600 Raymond Porfiri, David M. Capozzi, Silver Hill Road, Washington, DC Deputy General Counsel, Chemical Safety and 20233; or by email Kimberly.P.Moore@ Executive Director. Hazard Investigation Board. census.gov. [FR Doc. 2019–28078 Filed 12–27–19; 8:45 am] [FR Doc. 2019–28114 Filed 12–27–19; 8:45 am] SUPPLEMENTARY INFORMATION: BILLING CODE 8150–01–P BILLING CODE 6350–01–P I. Abstract The Census Bureau plans to request CHEMICAL SAFETY AND HAZARD clearance for the collection tools DEPARTMENT OF COMMERCE INVESTIGATION BOARD necessary to conduct the public finance Census Bureau and the public employment and payroll Senior Executive Service Performance programs, which consists of the annual Review Board Proposed Information Collection; collections of information and a AGENCY: Chemical Safety and Hazard Comment Request; State and Local quinquennial collection in the census Investigation Board. Government Finance Collections, and years ending in ‘‘2’’ and ‘‘7’’. This ACTION: Notice of members of Senior Public Employment and Payroll clearance and all future clearances will Executive Service Performance Review Collections combine all Census of Governments Board. programs and their related Annual AGENCY: U.S. Census Bureau, programs, which were previously SUMMARY: This notice announces the Commerce. submitted separately. During the membership of the Chemical Safety and ACTION: Notice. upcoming three years, we intend to Hazard Investigation Review Board conduct the 2020 and 2021 Annual SUMMARY: (CSB) Senior Executive Service (SES) The Department of Surveys of State and Local Government Performance Review Board (PRB). Commerce, as part of its continuing Finances and the 2021 Survey of Public effort to reduce paperwork and Employment and Payroll and the 2022 DATES: These appointments were respondent burden, invites the general effective on December 3, 2019. Census of Governments—Finance and public and other Federal agencies to 2022 Census of Governments— ADDRESSES: Send comments concerning take this opportunity to comment on Employment. this notice to: Maurice Hawthorne, proposed revisions to the State and The Census of Governments—Finance Chemical Safety and Hazard Local Government Finance Collections and Annual Surveys of State and Local Investigation Board, 1750 Pennsylvania and Public Employment and Payroll Government Finances collect data on Ave. NW, Suite 910, Washington, DC Collections, as required by the state government finances and estimates 20006. Paperwork Reduction Act of 1995. of local government revenue, FOR FURTHER INFORMATION CONTACT: DATES: To ensure consideration, written expenditure, debt, assets, and pension Maurice Hawthorne, Human Resources comments must be submitted on or systems nationally and within state Director, CSB, (202) 261–7600. before February 28, 2020. areas. The surveys include the Annual

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Survey of State Government Finances, plans, adding these questions to the sample year; For F-forms 3.00, For E- the Annual Survey of Local Government survey for locally-administered plans forms: .82 hours/census year; Total: 3.87 Finances, the Annual Survey of State and differentiating between hours/sample year, 3.82 hours/census Tax Collections and the Annual Survey administrative costs and investment year. of Public Pensions. The Census of costs. These updates reflect changes in Estimated Total Annual Burden Governments—Employment and accounting standards and the needs of Hours: For F-forms: 40,755, For E-forms: Annual Survey of Public Employment data users inside and outside the federal 14,164 hours/sample year; For F-forms: and Payroll collects state and local statistical system. 177,826 hours, For E-forms: 81,299 government data on full-time and part- hours/census year; Total: 54,919/sample time employment, part-time hours II. Method of Collection year, 258,585/census year. worked, full-time equivalent These surveys use multiple modes for Estimated Total Annual Cost to employment, and payroll statistics by data collection including internet Public: $0. (This is not the cost of governmental function. Data are collection with a mailed invitation, respondents’ time, but the indirect costs collected for all agencies, departments, telephone, and central collection. Other respondents may incur for such things and institutions of the fifty state methods used to collect data and as purchases of specialized software or governments and for a sample of all maximize response include collecting hardware needed to report, or local governments (counties, state and local government data through expenditures for accounting or records municipalities, townships, and special submitted financial audits, state maintenance services required districts). Data for school districts are financial reports, and comprehensive specifically by the collection.) collected under a separate survey. In the financial reports and via electronic or Respondent’s Obligation: Voluntary. census year, equivalent data are mailed files and/or records. Legal Authority: Title 13 U.S.C. collected from all local governments. The Census Bureau developed central Sections 161 and 182. These separate data collections are collection agreements with state and necessary to create the comprehensive large local government officials to IV. Request for Comments financial and employment picture for collect the data from their dependent Comments are invited on: (a) Whether state and local governments. The agencies and report to the Census the proposed collection of information combined data are released as part of Bureau as a central respondent. These is necessary for the proper performance the State and Local Government Finance arrangements eliminate the need for a of the functions of the agency, including and Public Employment & Payroll mail invitation for approximately 5,500 whether the information shall have statistical series. The collections also governmental units, approximately practical utility; (b) the accuracy of the produce individual data products that 3,716 state agencies and 158 school agency’s estimate of the burden focus on state governments, local systems in a sample year and 36,000 (including hours and cost) of the governments, public pensions and during the year of the Census of proposed collection of information; (c) public employment in greater detail Governments. The arrangements reduce ways to enhance the quality, utility, and than the combined financial and burden by greatly reducing the number clarity of the information to be employment series as a by-product of of respondents who have to complete an collected; and (d) ways to minimize the their collections for the combined data on-line form as the data are acquired burden of the collection of information series. The Census Bureau provides from a centralized source instead of on respondents, including through the these data to the Bureau of Economic multiple sources. Currently, the Census use of automated collection techniques Analysis to develop the public sector Bureau has central collection or other forms of information components of the National Income and arrangements to collect local technology. Product Accounts and for constructing government data with 27 states, four Comments submitted in response to the functional payrolls in the public local school district governments and this notice will be summarized and/or sector of the Gross Domestic Product, state government data from all 50 states. included in the request for OMB payroll being the single largest The Census Bureau continues to expand approval of this information collection; component of current operations, and to the conversion of paper submissions they also will become a matter of public the Federal Reserve Board for use in the into electronic formats by collaborating record. Flow of Funds Accounts. Other Federal with state and local governments Sheleen Dumas, agencies that make use of the data regarding electronic reporting of central Department PRA Clearance Officer, Office of include the Council of Economic collection data, and encouraging Advisers, the Agency for Healthcare the Chief Information Officer, Commerce electronic responses from individual Department. Research and Quality, the Government governments. Accountability Office, and the [FR Doc. 2019–28015 Filed 12–27–19; 8:45 am] Department of Justice. State and local III. Data BILLING CODE 3510–07–P governments and related organizations, OMB Control Number: 0607–0585. public policy groups, public interest Form Number(s): F–5, F–11, F–12, F– groups, private research organizations, 13, F–28, F–29, F–32, E–1, E–2, E–3, E– DEPARTMENT OF COMMERCE and private sector businesses also use 4, E–5, E–6, E–7, E–8, E–9, E–10. Census Bureau these data. Type of Review: Regular submission. The program has collected Affected Public: State and local Submission for OMB Review; comprehensive and comparable governments. Comment Request government financial and employment Estimated Number of Respondents: statistics since 1940. For F-forms: 13,440, For E-forms: The Department of Commerce will Starting with the 2020 data collection 16,872/sample year; For F-forms 59,259 submit to the Office of Management and for the Annual Survey of Public For E-forms: 99,402/census year; Total: Budget (OMB) for clearance the Pensions, the Census Bureau proposes 30,312/sample year, 158,661/census following proposal for collection of modifying the existing questions year. information under the provisions of the concerning actuarial funding of public Estimated Time Per Response: For F- Paperwork Reduction Act. pension plans for state-administered forms: 3.03, For E-forms: .84 hours/ Agency: U.S. Census Bureau.

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Title: Survey of Construction Urban Development (HUD) and the Dated: December 19, 2019. Questionnaire for Building Permit National Association of Home Builders Andrew McGilvray, Official. (NAHB) use the information for Executive Secretary. OMB Control Number: 0607–0125. estimating the demand for housing, [FR Doc. 2019–28035 Filed 12–27–19; 8:45 am] Form Number(s): SOC–QBPO. building materials and the many BILLING CODE 3510–DS–P Type of Request: Extension of a products used in new housing and to currently approved collection. schedule production, distribution, and Number of Respondents: 1,017. sales efforts. The financial community DEPARTMENT OF COMMERCE Average Hours per Response: 15 uses the data to estimate the demand for minutes. short-term (construction loans) and Foreign-Trade Zones Board Burden Hours: 254. long-term (mortgages) borrowing. Needs and Uses: The U.S. Census Affected Public: State, local or Tribal [S–261–2019] Bureau is requesting an extension of the government. currently approved collection for the Frequency: Annually. Survey of Construction Questionnaire Foreign-Trade Zone 2—New Orleans, Respondent’s Obligation: Voluntary. Louisiana; Application for Subzone; for the Building Permit Official (SOC– Legal Authority: The SOC and this QBPO). The information collected on Packard Pipe Terminals, LLC. Belle collection are authorized under Title 13, Chasse, Louisiana the SOC–QBPO is necessary to carry out United States Code, Sections 131 and the sampling for the Survey of Housing 182. An application has been submitted to Starts, Sales and Completions (OMB This information collection request the Foreign-Trade Zones Board (the number 0607–0110), also known as the may be viewed at www.reginfo.gov. Board) by the Board of Commissioners Survey of Construction (SOC). Follow the instructions to view of the Port of New Orleans, grantee of Government agencies and private Department of Commerce collections FTZ 2, requesting subzone status for the companies use statistics from the SOC currently under review by OMB. facility of Packard Pipe Terminals, LLC, to monitor and evaluate the large and Written comments and located in Belle Chasse, Louisiana. The dynamic housing construction industry. recommendations for the proposed application was submitted pursuant to The SOC–QBPO is an electronic information collection should be sent the provisions of the Foreign-Trade questionnaire. Census Bureau field within 30 days of publication of this Zones Act, as amended (19 U.S.C. 81a– representatives (FRs) either call or visit _ notice to OIRA Submission@ 81u), and the regulations of the Board permit offices to enter their survey omb.eop.gov or fax to (202)395–5806. (15 CFR part 400). It was formally responses into a laptop computer using docketed on December 19, 2019. the Computer Assisted Personal Sheleen Dumas, Interviewing (CAPI) software formatted Department PRA Clearance Officer, Office of The proposed subzone (6 acres) is for the SOC–QBPO. The FRs use the the Chief Information Officer, Commerce located at 806 Engineers Road, Belle Department. SOC–QBPO to obtain information on the Chasse (Plaquemines Parish), Louisiana. operating procedures of a permit office. [FR Doc. 2019–28092 Filed 12–27–19; 8:45 am] No authorization for production activity This enables them to locate, classify, BILLING CODE 3510–07–P has been requested at this time. The list, and sample building permits for proposed subzone would be subject to the existing activation limit of FTZ 2. residential construction. These permits DEPARTMENT OF COMMERCE are used as the basis for the sample In accordance with the Board’s regulations, Camille Evans of the FTZ selected for SOC. The Census Bureau Foreign-Trade Zones Board also uses the information to verify and Staff is designated examiner to review update the geographic coverage of [B–54–2019] the application and make permit offices. The questions asked recommendations to the Executive Foreign-Trade Zone (FTZ) 78— Secretary. during the interview and the size of the Nashville, Tennessee; Authorization of Public comment is invited from sample will not change. Production Activity; Lasko Products, Failure to collect this information interested parties. Submissions shall be LLC; (Small Consumer Appliances— would make it difficult, if not addressed to the Board’s Executive Fans, Heaters, Humidifiers); Franklin, impossible, to accurately classify and Secretary and sent to: [email protected]. The Tennessee sample building permits for the SOC. closing period for their receipt is Data for two principal economic On August 21, 2019, Lasko Products, February 10, 2020. Rebuttal comments indicators are produced from the SOC: LLC (Lasko) submitted a notification of in response to material submitted New Residential Construction (housing proposed production activity to the FTZ during the foregoing period may be starts and housing completions) and Board for its facility within FTZ 78, in submitted during the subsequent 15-day New Residential Sales. Government Franklin, Tennessee. period to February 24, 2020. agencies use these statistics to evaluate The notification was processed in A copy of the application will be economic policy, measure progress accordance with the regulations of the available for public inspection in the towards the national housing goal, make FTZ Board (15 CFR part 400), including ‘‘Reading Room’’ section of the Board’s policy decisions, and formulate notice in the Federal Register inviting website, which is accessible via legislation. For example, the Board of public comment (84 FR 47240, www.trade.gov/ftz. Governors of the Federal Reserve September 9, 2019). On December 19, For further information, contact System uses data from this survey to 2019, the applicant was notified of the Camille Evans at Camille.Evans@ evaluate the effect of interest rates in FTZ Board’s decision that no further trade.gov or (202) 482–2350. this interest-rate sensitive area of the review of the activity is warranted at economy. The Bureau of Economic this time. The production activity Dated: December 19, 2019. Analysis (BEA) uses the data in described in the notification was Andrew McGilvray, developing the Gross Domestic Product authorized, subject to the FTZ Act and Executive Secretary. (GDP). The private sector and other data the FTZ Board’s regulations, including [FR Doc. 2019–28036 Filed 12–27–19; 8:45 am] users from Department of Housing and Section 400.14. BILLING CODE 3510–DS–P

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DEPARTMENT OF COMMERCE China covering the period November 1, review of the NME entity.6 Because no 2017 to October 31, 2018.3 party requested a review of the China- International Trade Administration wide entity, and we have not self- Scope of the Order initiated a review of the China-wide [A–570–865] The products covered by the order are entity, the entity is not under review, hot-rolled steel from China. For a and the entity’s rate is not subject to Certain Hot-Rolled Carbon Steel Flat complete description of the scope of the change. Accordingly, the pre-existing Products From the People’s Republic Order, see the Preliminary Decision China-wide rate of 90.83 percent will of China: Preliminary Results of Memorandum.4 apply to the entity’s entries of subject Antidumping Duty Administrative merchandise into the United States Review; 2017–2018 Methodology during the POR. Commerce is conducting this review In addition, Nucor submitted AGENCY: Enforcement and Compliance, in accordance with section 751(a)(1)(B) comments and information in support of International Trade Administration, of the Tariff Act of 1930, as amended its assertion that the data from U.S. Department of Commerce. (the Act), and 19 CFR 351.213. For a full Customs and Border Protection (CBP) SUMMARY: The Department of Commerce description of the methodology released by Commerce for respondent (Commerce) preliminarily determines underlying our conclusions, see the selection purposes may be incomplete that all companies subject to this Preliminary Decision Memorandum. due to the failure of importers to administrative review of the The Preliminary Decision Memorandum properly report entries of subject antidumping duty (AD) order on certain is a public document and is on file merchandise as ‘‘Type 03’’ entries in hot-rolled carbon steel flat products electronically via Enforcement and order to avoid paying antidumping (hot-rolled steel) from the People’s Compliance’s Antidumping and duties.7 As explained in further detail in Republic of China (China) are part of the Countervailing Duty Centralized the Preliminary Decision Memorandum, China-wide entity because none filed a Electronic Service System (ACCESS). Commerce intends to refer the matter of separate rate application (SRA) or ACCESS is available to registered users potential misclassification and fraud to separate rate certification (SRC). The at http://access.trade.gov, and to all CBP. period of review (POR) is November 1, parties in the Central Records Unit, Public Comment 2017 through October 31, 2018. We Room B8024 of the main Commerce invite interested parties to comment on building. In addition, a complete Interested parties are invited to these preliminary results. version of the Preliminary Decision comment on these preliminary results and may submit case briefs and/or DATES: Applicable December 30, 2019. Memorandum can be accessed at http:// enforcement.trade.gov/frn/. The signed written comments, filed electronically FOR FURTHER INFORMATION CONTACT: via ACCESS, within 30 days after the and electronic versions of the Matthew Renkey, AD/CVD Operations, date of publication of these preliminary Preliminary Decision Memorandum are Office V, Enforcement and Compliance, results of review.8 Rebuttal briefs, identical in content. International Trade Administration, limited to issues raised in the case U.S. Department of Commerce, 1401 Preliminary Results of Review briefs, must be filed within five days Constitution Avenue NW, Washington, after the time limit for filing case briefs.9 DC 20230; telephone: (202) 482–2312. None of the companies subject to this review filed a SRA or SRC, or made a Parties who submit case or rebuttal SUPPLEMENTARY INFORMATION: claim of no shipments. Thus, Commerce briefs in this proceeding are requested to submit with each argument a Background preliminarily determines that these companies have not demonstrated their statement of the issue, a brief summary On November 29, 2001, Commerce of the argument, and a table of eligibility for separate rate status. As 10 published in the Federal Register an such, Commerce preliminarily authorities. Interested parties who wish to request antidumping duty order on hot-rolled determines that the companies subject 1 a hearing, or to participate if one is steel from China. On November 30, to review are part of the China-wide requested, must submit a written 2018, Nucor Corporation (Nucor) entity. submitted a request for an request to Commerce within 30 days of Commerce’s policy regarding administrative review of multiple the date of publication of this notice.11 conditional review of the China-wide companies.2 On February 6, 2019, Requests should contain: (1) The party’s entity applies to this administrative Commerce published a notice of name, address, and telephone number; review.5 Accordingly, the non-market initiation of an administrative review of (2) the number of participants; and (3) economy (NME) entity will not be under the AD order on hot-rolled steel from a list of issues to be discussed. Issues review unless Commerce specifically raised in the hearing will be limited to receives a request for, or self-initiates, a 1 See Notice of the Antidumping Duty Order: those raised in the respective case and Certain Hot-Rolled Carbon Steel Flat Products from rebuttal briefs. If a request for a hearing the People’s Republic of China, 66 FR 59561 3 See Initiation of Antidumping and (November 29, 2001) (Order). Countervailing Duty Administrative Reviews, 84 FR 6 In accordance with 19 CFR 351.213(b)(1), parties 2 2159 (February 6, 2019). See Nucor’s Letter, ‘‘Certain Hot-Rolled Carbon should specify that they are requesting a review of 4 See Memorandum, ‘‘Decision Memorandum for Steel Flat Products from the People’s Republic of entries from exporters comprising the entity, and to the Preliminary Results of the 2017–2018 China: Request for Administrative Review,’’ dated the extent possible, include the names of such Antidumping Duty Administrative Review: Certain November 30, 2018. Because no party is challenging exporters in their request. the prior collapsing determination, we continue to Hot-Rolled Carbon Steel Flat Products from the 7 See Nucor’s Letter, ‘‘Certain Hot-Rolled Carbon collapse Baosteel Group Corporation, Shanghai People’s Republic of China,’’ issued concurrently Steel Flat Products from the People’s Republic of Baosteel International Economic & Trading Co., with, and hereby adopted by, this notice China: Comments on CBP Data and Respondent Ltd., and Baoshan Iron and Steel Co., Ltd. (Preliminary Decision Memorandum). Selection,’’ dated April 25, 2019. (collectively, Baosteel). See Certain Hot-Rolled 5 See Antidumping Proceedings: Announcement 8 Carbon Steel Flat Products from the People’s of Change in Department Practice for Respondent See 19 CFR 351.309(c)(1)(ii). Republic of China: Final No Shipments Selection in Antidumping Duty Proceedings and 9 See 19 CFR 351.309(d)(1) and (2). Determination of Antidumping Duty Administrative Conditional Review of the Nonmarket Economy 10 See 19 CFR 351.309(c) and (d); see also 19 CFR Review; 2012–2013; 79 FR 67415 (November 13, Entity in NME Antidumping Duty Proceedings, 78 351.303 (for general filing requirements). 2014). FR 65963, 65970 (November 4, 2013). 11 See 19 CFR 351.310(c).

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is made, parties will be notified of the exporter. These deposit requirements, solar cells), from the People’s Republic time and date for the hearing to be held when imposed, shall remain in effect of China (China). Pursuant to the CIT’s at the U.S. Department of Commerce, until further notice. final judgment, the effective date of 1401 Constitution Avenue NW, Commerce’s Timken Notice relative to Notification to Importers Washington, DC 20230.12 certain entries of subject merchandise Unless otherwise extended, This notice also serves as a reminder exported by Sumec Hardware Tools Co., Commerce intends to issue the final to importers of their responsibility Ltd.’s (Sumec Hardware) is November results of this administrative review, under 19 CFR 315.402(f)(2) to file a 23, 2015, which is the date of which will include the results of our certificate regarding the reimbursement publication of the Timken Notice in the analysis of all issues raised in the case of antidumping duties prior to Federal Register. Accordingly, briefs, within 120 days of publication of liquidation of the relevant entries Commerce intends to instruct U.S. these preliminary results in the Federal during this review period. Failure to Customs and Border Protection (CBP) to Register, pursuant to section comply with this requirement could liquidate entries of subject merchandise 751(a)(3)(A) of the Act. result in Commerce’s presumption that exported by Sumec Hardware and reimbursement of antidumping duties Assessment Rates produced by Phono Solar Technology occurred and the subsequent assessment Co., Ltd., and imported by Sumecht NA, Upon issuance of the final results of of double antidumping duties. doing business as Sumec North America this review, Commerce will determine, Notification to Interested Parties (Sumecht), which were entered, or and CBP shall assess, antidumping withdrawn from warehouse, for duties on all appropriate entries of We are issuing and publishing these consumption on or after October 15, subject merchandise covered by this preliminary results in accordance with 13 2015, which is ten days after the CIT’s review. We intend to instruct CBP to sections 751(a)(1) and 777(i) of the Act, decision, through November 22, 2015, liquidate entries containing subject and 19 CFR 351.213. which is the day before the date of merchandise exported by the companies Dated: December 19, 2019. publication of Commerce’s Timken under review that we determine in the Jeffrey I. Kessler, Notice in the Federal Register, at the final results to be part of the China-wide separate rate of 13.18 percent. entity at the China-wide entity rate of Assistant Secretary for Enforcement and Compliance. 90.83 percent. Commerce intends to DATES: Applicable December 30, 2019. issue assessment instructions to CBP 15 Appendix FOR FURTHER INFORMATION CONTACT: Krisha Hill, AD/CVD Operations, Office days after the date of publication of this List of Topics Discussed in the Preliminary notice in the Federal Register.14 IV, Enforcement and Compliance, Decision Memorandum International Trade Administration, Cash Deposit Requirements I. Summary U.S. Department of Commerce, 1401 The following cash deposit II. Background Constitution Avenue NW, Washington, requirements will be effective upon III. Scope of the Order DC 20230; telephone: (202) 482–4037. IV. Discussion of the Methodology publication of the final results of this V. Recommendation SUPPLEMENTARY INFORMATION: review for shipments of the subject merchandise from China entered, or [FR Doc. 2019–28033 Filed 12–27–19; 8:45 am] Background withdrawn from warehouse, for BILLING CODE 3510–DS–P Commerce initiated an AD consumption on or after the publication investigation of certain solar cells from date, as provided by sections China on November 16, 2011.1 In the DEPARTMENT OF COMMERCE 751(a)(2)(C) of the Act: (1) For investigation, Commerce assigned a companies that have a separate rate, the International Trade Administration separate AD rate of 24.48 percent to cash deposit rate will be that established Sumec Hardware,2 and determined a in the final results of this review [A–570–979] China-wide rate of 249.96 percent for (except, if the rate is zero or de minimis, exporters that did not demonstrate Crystalline Silicon Photovoltaic Cells, then zero cash deposit will be required); eligibility for separate-rate status. Whether or Not Assembled Into (2) for previously investigated or Commerce amended the Final Modules, From the People’s Republic reviewed Chinese and non-Chinese Determination on December 7, 2012, of China: Notice of Court Decision exporters that received a separate rate in which it published along with the AD a prior segment of this proceeding, the AGENCY: Enforcement and Compliance, order. cash deposit rate will continue to be the International Trade Administration, The U.S. domestic producers existing exporter-specific rate; (3) for all Department of Commerce. challenged the Final Determination Chinese exporters of subject SUMMARY: On September 6, 2019, the before the CIT, including Sumec merchandise that have not been found Court of International Trade (CIT) Hardware’s separate-rate status. The CIT to be entitled to a separate rate, the cash entered its final judgment in Sumecht deposit rate will be that for the China- NA, Inc. v. United States, Court No. 17– 1 See Crystalline Silicon Photovoltaic Cells, wide entity (i.e., 90.83 percent); and (4) 00244, finding that the United States Whether or Not Assembled Into Modules, From the for all non-Chinese exporters of subject People’s Republic of China: Initiation of Department of Commerce (Commerce) Antidumping Duty Investigation, 76 FR 70960 merchandise which have not received erred in setting the effective date of its (November 16, 2011). their own rate, the cash deposit rate will Notice of Court Decision Not in 2 See Crystalline Silicon Photovoltaic Cells, be the rate applicable to the Chinese Harmony with a Final Determination Whether or Not Assembled into Modules, from the exporter that supplied that non-Chinese People’s Republic of China: Final Determination of and Notice of Amendment Final Sales at Less Than Fair Value, and Affirmative Determination of Investigation Pursuant Final Determination of Critical Circumstances, in 12 See 19 CFR 310(d). to Court Decision (Timken Notice) Part, 77 FR 63791 (October 17, 2012); see also 13 See 19 CFR 351.212(b)(1). pertaining to the antidumping duty (AD) Crystalline Silicon Photovoltaic Cells, Whether or 14 For a full discussion of this practice, see Non- Not Assembled Into Modules, From the People’s Market Economy Antidumping Proceedings: investigation of certain crystalline Republic of China: Amended Final Determination Assessment of Antidumping Duties, 76 FR 65694 silicon photovoltaic cells, whether or of Sales at Less Than Fair Value, and Antidumping (October 24, 2011). not assembled into modules (certain Duty Order, 77 FR 7,018 (December 7, 2012).

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remanded the Final Determination, at On December 30, 2015, in accordance the Section 129 Implementation, i.e., Commerce’s request, to re-examine the with Jiangsu Jiasheng III and the 13.18 percent. separate rates assigned to four associated Timken Notice, Commerce Dated: December 17, 2019. respondents, including Sumec issued amended cash deposit Jeffrey I. Kessler, Hardware.3 On remand, Commerce instructions to CBP, notifying CBP that determined that Sumec Hardware did Assistant Secretary for Enforcement and Sumec Hardware was no longer eligible Compliance. not meet the criteria for a separate rate for a separate rate. Commerce instructed [FR Doc. 2019–28032 Filed 12–27–19; 8:45 am] and found it to be part of the China- CBP to collect cash deposits at the wide entity.4 China-wide entity rate, 238.95 percent, BILLING CODE 3510–DS–P While that litigation was pending for shipments of subject merchandise before the CIT, in response to World produced by Phono Solar Technology DEPARTMENT OF COMMERCE Trade Organization (WTO) dispute Co., Ltd. and exported by Sumec settlement findings, and at the direction Hardware that entered, or were International Trade Administration of the United States Trade withdrawn from warehouse, for Representative, Commerce implemented consumption on or after ‘‘10/15/2015,’’ [Application No. 11–1A001] final determinations under Section 129 the tenth day after the Court’s October Export Trade Certificate of Review of the Uruguay Round Agreements Act 5, 2015 decision in Jiangsu Jiasheng III. (URAA) in several investigations, On March 14, 2016, because no party ACTION: Notice of issuance of an including the AD investigation of requested a review of the China-wide amended Export Trade Certificate of certain solar cells from China.5 Pursuant entity or of Sumec Hardware for the Review to Latin American Multichannel to the Section 129 Implementation, period December 1, 2014 through Advertising Council, Inc. (‘‘LAMAC’’), Commerce revised Sumec Hardware’s November 30, 2015, Commerce issued Application No. 11–1A001. cash deposit rate to 13.18 percent for automatic liquidation instructions to entries made on or after August 2, 2015, CBP. Commerce instructed CBP to SUMMARY: The Secretary of Commerce, the effective date of the Section 129 liquidate entries during the specified through the Office of Trade and Implementation. Commerce issued period at the cash deposit in effect on Economic Analysis (‘‘OTEA’’), issued an corresponding cash deposit instructions the date of entry. For Sumec Hardware, amended Export Trade Certificate of to CBP in October 2015. this rate was 238.95 percent (i.e., the Review Certificate to LAMAC on On October 5, 2015, the CIT issued a rate that resulted from this Court’s December 20, 2019. confidential opinion sustaining decision in Jiangsu Jiasheng III). FOR FURTHER INFORMATION CONTACT: Commerce’s Remand Results in the On September 6, 2019, in a separate Joseph Flynn, Director, OTEA, Jiangsu Jiasheng litigation, including challenge—Sumecht NA, Inc. v. United International Trade Administration, by Commerce’s determination assigning States—the CIT held that Commerce telephone at (202) 482–5131 (this is not Sumec Hardware the China-wide rate.6 erred in setting the effective date of the a toll-free number) or email at etca@ Commerce published the Timken Notice Timken Notice, amended cash deposit trade.gov. following the final CIT judgment in instructions, and automatic instructions Jiangsu Jiasheng III on November 23, SUPPLEMENTARY INFORMATION: Title III of to thirty-nine days before publication of 2015.7 In the amended final the Export Trading Company Act of the Timken Notice.10 The CIT directed determination, Commerce set the cash 1982 (15 U.S.C. Sections 4001–21) (‘‘the Commerce to ‘‘reliquidate’’ Sumec deposit rate for Sumec Hardware, now Act’’) authorizes the Secretary of Hardware’s entries in a manner part of the China-wide entity, at 238.95 Commerce to issue Export Trade consistent with its opinion.11 percent.8 Commerce set the effective Certificates of Review. An Export Trade date for the Timken Notice as October Implementation of Court Decision Certificate of Review protects the holder 15, 2015, which was the tenth day after and the members identified in the Consistent with the CIT’s final the CIT’s decision.9 Certificate from State and Federal judgment in Sumecht, Commerce government antitrust actions and from intends to instruct CBP to liquidate 3 Jiangsu Jiasheng Photovoltaic Tech. Co. v. private treble damage antitrust actions shipments of crystalline silicon United States, 28 F. Supp. 3d 1317, 1338–43 (Ct. for the export conduct specified in the Int’l Trade 2014) (Jiangsu Jiasheng). photovoltaic cells, whether or not Certificate and carried out in 4 See Final Results of Redetermination Pursuant assembled into modules, from the China compliance with its terms and to Court Order, Jiangsu Jiasheng Photovoltaic produced by Phono Solar Technology Technology Co., Ltd. v. United States, Consol. Court conditions. The regulations Co., Ltd., exported by Sumec Hardware No. 13–00012 (April 20, 2015) (Remand Results). implementing Title III are found at 15 5 Tools Co., Ltd., and imported by See Implementation of Determinations Under CFR part 325. OTEA is issuing this Section 129 of the URAA, 80 FR 48812 (August 14, Sumecht NA, doing business as Sumec notice pursuant to 15 CFR 325.6(b), 2015) (Section 129 Implementation). North America, which were entered, or 6 which requires the Secretary of Jiangsu Jiasheng Photovoltaic Tech. Co. v. withdrawn from warehouse, for United States, 121 F. Supp. 3d 1263 (Ct. Int’l Trade Commerce to publish a summary of the consumption on or after October 15, 2015) (Jiangsu Jiasheng III). The CIT issued the certification in the Federal Register. public version of its decision on December 22, 2015 through November 22, 2015, at the Under Section 305(a) of the Act and 15 2015. See the CIT’s website, ‘‘Slip Opinions—2015’’ separate rate implemented with respect CFR 325.11(a), any person aggrieved by (https://www.cit.uscourts.gov/SlipOpinions/ to the AD investigation, as revised by SlipOps-2015.html). the Secretary’s determination may, 7 Crystalline Silicon Photovoltaic Cells, Whether within 30 days of the date of this notice, or Not Assembled Into Modules, From the People’s 10 Sumecht NA, Inc. v. United States, 399 F. Republic of China: Notice of Court Decision Not in Supp. 3d 1370, 1379 (Ct. Int’l Trade 2019) bring an action in any appropriate Harmony With Final Determination of Investigation (Sumecht). district court of the United States to set and Notice of Amended Final Determination of 11 Id. CBP has not yet liquidated the affected aside the determination on the ground Investigation Pursuant to Court Decision, 80 FR entries. The liquidation of the entries has been that the determination is erroneous. 72950 (November 23, 2015) (Timken Notice). enjoined as a result of an injunction that is in place 8 Id.; see also Section 129 Implementation, 80 FR with respect to litigation before the CIT involving Description of Certified Conduct at 48818. a corresponding countervailing duty proceeding. 9 Id.; see also section 516A(e) of the Tariff Act of See Sumec Hardware & Tools Co., Ltd. v. United LAMAC’s Export Trade Certificate of 1930, as amended (the Act). States, Court No. 18–00186. Review was amended as follows:

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1. The following companies were DEPARTMENT OF COMMERCE administrative review of Toray.5 On added as new Members of the Certificate August 1, 2019, the petitioners within the meaning of section 325.2(l) of International Trade Administration withdrew their request for an 6 the Regulations (15 CFR 325.2(l)): [A–580–839] administrative reviews of Huvis. On August 2, 2019, Huvis withdrew its • NBCUniversal Networks International Polyester Staple Fiber From Korea; request for an administrative review of Spanish Latin America, LLC Rescission of Antidumping Duty itself.7 • MTV Networks Latin America Inc. Administrative Review; 2018–2019 Rescission of Review • AMC Networks Latin America LLC AGENCY: Enforcement and Compliance, Pursuant to 19 CFR 351.213(d)(1), • Lifetime Latin America, LLC International Trade Administration, Commerce will rescind an Department of Commerce. 2. The following company was administrative review, in whole or in SUMMARY: The Department of Commerce deleted as a Member of the Certificate: part, if a party that requested a review (Commerce) is rescinding the withdraws the request within 90 days of • E! Entertainment Television Latin administrative review of the the publication date of the notice of America Partners, L.P. antidumping duty (AD) order on initiation of the requested review. The polyester staple fiber from Korea for the petitioners and Huvis withdrew their 3. The names of the following period of review (POR) May 1, 2018 Members of the Certificate were requests within 90 days of the through April 30, 2019, based on the publication date of the notice of changed: timely withdrawal of the requests for initiation. No other parties requested an • From NGC Networks Latin America, review. administrative review of the order. LLC to NGC Network Latin America, DATES: Applicable December 30, 2019. Therefore, in accordance with 19 CFR LLC FOR FURTHER INFORMATION CONTACT: 351.213(d)(1), we are rescinding this • From Turner Broadcasting System Theodore Pearson, AD/CVD Operations, review in its entirety. Latin America, Inc. to Turner Office I, Enforcement and Compliance, Assessment International Latin America, Inc. International Trade Administration, U.S. Department of Commerce, 1401 Commerce intends to instruct U.S. • From History Channel Latin America, Constitution Avenue NW, Washington, Customs and Border Protection (CBP) to LLC to The History Channel Latin DC 20230; telephone: (202) 482–2631. assess antidumping duties on all America, LLC appropriate entries of polyester staple SUPPLEMENTARY INFORMATION: • From Fox Latin American Channel, fiber from Korea. Antidumping duties Inc. to Fox Latin American Channel Background shall be assessed at rates equal to the LLC On May 1, 2019, Commerce published cash deposit of estimated antidumping a notice of opportunity to request an duties required at the time of entry, or LAMAC’s Membership under the administrative review of the AD order withdrawal from warehouse, for amended Export Trade Certificate of on polyester staple fiber from Korea for consumption in accordance with 19 Review is as follows: the POR of May 1, 2018, through April CFR 351.212(c)(1)(i). Commerce intends 1 to issue appropriate assessment 1. Discovery Latin America, LLC 30, 2018. On May 31, 2019, Commerce received timely-filed requests from DAK instructions to CBP 15 days after the 2. Fox Latin American Channel LLC Americas LLC and Auriga Polymers, date of publication of this notice in the 3. NGC Network Latin America, LLC Inc. (the petitioners) 2 for administrative Federal Register. 4. Turner International Latin America, reviews of Huvis Corporation (Huvis) Notification Regarding Administrative Inc. and Toray Chemical Korea, Inc. (Toray) Protective Orders and from Huvis 3 for administrative This notice also serves as a reminder 5. A&E Mundo, LLC review of itself, in accordance with to all parties subject to administrative 6. The History Channel Latin America, section 751(a) of the Tariff Act of 1930, protective order (APO) of their LLC as amended (the Act), and 19 CFR responsibility concerning the 351.213(b). Commerce received no other 7. NBCUniversal Networks International disposition of proprietary information requests for administrative review. Spanish Latin America, LLC disclosed under APO in accordance On July 15, 2019, pursuant to these with 19 CFR 351.305, which continues 8. MTV Networks Latin America Inc. requests and in accordance with 19 CFR to govern business proprietary 9. AMC Networks Latin America LLC 351.221(c)(1)(i), Commerce published a information. Timely written notification notice initiating an administrative 10. Lifetime Latin America, LLC of the return/destruction of APO review of the antidumping duty order materials or conversion to judicial The effective date of the amended on polyester staple fiber from Korea.4 protective order is hereby requested. certificate is October 3, 2019, the date On July 18, 2019, the petitioners Failure to comply with the regulations on which LAMAC’s application to withdrew their request for an amend was deemed submitted. and terms of an APO is a violation 1 which is subject to sanction. Dated: December 20, 2019. See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity Amanda Reynolds, to Request Administrative Review, 84 FR 18479 5 See the petitioners’ Letter, ‘‘Polyester Staple International Economist, Office of Trade and (May 1, 2019). Fiber from Korea—Withdrawal of Review Request 2 Economic Analysis, International Trade See the petitioners’ Letter, ‘‘Polyester Staple for Toray Chemical Korea,’’ dated July 18, 2019. Fiber—Review Request,’’ dated May 31, 2019. 6 See the petitioners’ Letter, ‘‘Polyester Staple Administration, U.S. Department of 3 See Huvis’s Letter, ‘‘Certain Polyester Staple Fiber from Korea—Withdrawal of Review Request Commerce. fiber from Korea; Request for Administrative for Huvis Corporation,’’ dated August 1, 2019. [FR Doc. 2019–28062 Filed 12–27–19; 8:45 am] Review for 2018–2019 Period,’’ dated May 31, 2019. 7 See Huvis’s Letter, ‘‘Certain Polyester Staple 4 See Initiation of Antidumping and Fiber from Korea; Withdrawal of Request for BILLING CODE 3510–DR–P Countervailing Duty Administrative Reviews, 84 FR Administrative Review for 2018–2019 Period,’’ 33739 (July 15, 2019). dated August 2, 2019.

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This notice is issued and published in 15, 2019, RMB/IFI 3 submitted a no additional information regarding this accordance with sections 751(a)(1) and shipments certification and a separate determination, see the Preliminary 777(i)(1) of the Act, and 19 CFR rate certification.4 Decision Memorandum. Consistent with 351.213(d)(4). For a complete description of the our assessment practice in non-market Dated: December 20, 2019. events that followed the initiation of economy (NME) administrative reviews, this administrative review, see the Commerce is not rescinding this review James Maeder, Preliminary Decision Memorandum.5 A for these companies, but intends to Deputy Assistant Secretary for Antidumping list of topics included in the complete the review and issue and Countervailing Duty Operations. Preliminary Decision Memorandum is appropriate instructions to Customs and [FR Doc. 2019–28094 Filed 12–27–19; 8:45 am] included as Appendix II to this notice. Border Protection (CBP) based on the BILLING CODE 3510–DS–P The Preliminary Decision Memorandum final results of the review.7 is a public document and is on file electronically via Enforcement and Separate Rates DEPARTMENT OF COMMERCE Compliance’s Antidumping and Because no other company under review submitted a separate rate International Trade Administration Countervailing Duty Centralized Electronic Service System (ACCESS). application or certification, Commerce [A–570–932] ACCESS is available to registered users preliminarily determines that these at https://access.trade.gov, and to all companies have not demonstrated their Certain Steel Threaded Rod From the parties in the Central Records Unit, eligibility for a separate rate.8 For People’s Republic of China: Room B8024 of the main Department of additional information, see the Preliminary Results of the Commerce building. In addition, a Preliminary Decision Memorandum. Antidumping Duty Administrative complete version of the Preliminary China-Wide Entity Review and Preliminary Determination Decision Memorandum can be accessed of No Shipments; 2018–2019 directly at http://enforcement.trade.gov/ Commerce’s policy regarding frn/. The signed and the electronic conditional review of the China-wide AGENCY: Enforcement and Compliance, entity applies to this administrative International Trade Administration, versions of the Preliminary Decision Memorandum are identical in content. review.9 Under this policy, the China- Department of Commerce. wide entity will not be under review SUMMARY: The Department of Commerce Scope of the Order unless a party specifically requests, or (Commerce) preliminarily determines The product covered by this review is Commerce self-initiates, a review of the that RMB Fasteners Ltd. and IFI & STR from China. For a full description entity. Because no party requested a Morgan Ltd. (collectively, RMB/IFI) and of the scope, see the Preliminary review of the China-wide entity, and we Certified Products International Inc. Decision Memorandum, dated did not self-initiate a review, the China- (CPI) did not have any shipments of concurrently with and hereby adopted wide entity rate (i.e., 206.00 percent) 10 subject merchandise during the period by this notice.6 is not subject to change as a result of of review (POR), and that the 172 Methodology this review. Aside from the companies remaining companies subject to this discussed above, Commerce considers administrative review should be treated Commerce is conducting this review all other companies for which a review as part of the China-wide entity because in accordance with section 751(a)(1)(B) was requested 11 to be part of the China- they failed to demonstrate their of the Tariff Act of 1930, as amended wide entity. For additional information, eligibility for a separate rate. The POR (the Act), and 19 CFR 351.213. see the Preliminary Decision is April 1, 2018 through March 31, 2019. Preliminary Determination of No Memorandum. DATES: Applicable December 30, 2019. Shipments Public Comment FOR FURTHER INFORMATION CONTACT: Based on the available record In accordance with 19 CFR Benito Ballesteros, AD/CVD Operations, information, Commerce preliminarily Office V, Enforcement and Compliance, 351.309(c), case briefs or other written determines that these companies had no comments may be submitted to the International Trade Administration, shipments during the POR. For U.S. Department of Commerce, 1401 Assistant Secretary for Enforcement and Compliance no later than 30 days after Constitution Avenue NW, Washington, 3 During the investigation, Commerce found the date of publication of the DC 20230; telephone: (202) 482–7425. RMB/IFI to be a single entity, and because there preliminary determination, unless the SUPPLEMENTARY INFORMATION: were no changes during the POR to the facts that supported that determination, we continue to find Secretary alters the time limit. Rebuttal Background that these companies are a part of a single entity briefs, limited to issues raised in case for this administrative review. See Certain Steel On June 13, 2019, Commerce Threaded Rod from the People’s Republic of China: 7 See Non-Market Economy Antidumping published the notice of initiation of the Preliminary Determination of Sales at Less Than Fair Value, 73 FR 58931 (October 8, 2008), Proceedings: Assessment of Antidumping Duties, 76 administrative review of the unchanged in Certain Steel Threaded Rod from the FR 65694, 65694–95 (October 24, 2011); see also the antidumping duty order on certain steel Peoples Republic of China: Final Determination of ‘‘Assessment Rates’’ section, infra. threaded rod (STR) from China.1 On Sales at Less Than Fair Value, 74 FR 8907 8 We note that RMB/IFI submitted a separate rate June 21, 2019, CPI reported that it had (February 27, 2009). certification (SRC). However, this filing is moot 4 because we determined that RMB/IFI had no 2 See RMB/IFI’s Letter, ‘‘Steel Threaded Rod from no shipments during the POR. On July the People’s Republic of China—No Sales reviewable shipments during the POR. Certification and Separate Rate Certification,’’ dated 9 See Antidumping Proceedings: Announcement 1 See Initiation of Antidumping and July 15, 2019. of Change in Department Practice for Respondent Countervailing Duty Administrative Reviews, 84 FR 5 See Memorandum, ‘‘Decision Memorandum for Selection in Antidumping Duty Proceedings and 27587 (June 13, 2019). the Preliminary Results of the 2018–2019 Conditional Review of the Nonmarket Economy 2 See CPI’s Letter, ‘‘No Shipment Letter for Antidumping Duty Administrative Review: Certain Entity in NME Antidumping Duty Proceedings, 78 Certified Products International Inc.: Tenth Annual Steel Threaded Rod from the People’s Republic of FR 65963 (November 4, 2013). Administrative Review of the Antidumping Duty China,’’ dated concurrently with, and hereby 10 See Certain Steel Threaded Rod from the Order on Certain Steel Threaded Rod from the adopted by, this notice (Preliminary Decision People’s Republic of China: Notice of Antidumping People’s Republic of China, A–570–932 (POR: 04/ Memorandum). Duty Order, 74 FR 17154 (April 14, 2009). 01/18–03/31/19),’’ dated June 21, 2019. 6 Id. 11 See Appendix I.

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briefs, may be submitted no later than companies that have a separate rate, the Technology Limited five days after the deadline date for case cash deposit rate will be that established 17. D.M.D. International Co. Ltd. briefs.12 Pursuant to 19 CFR in the final results of this review (except 18. Da Cheng Hardware Products Co., Ltd. 351.309(c)(2) and (d)(2), parties who that if the rate is zero or de minimis, 19. Dalian Xingxin Steel Fabrication 20. Dongxiang Accuracy Hardware Co., Ltd. submit case briefs or rebuttal briefs in then zero cash deposit will be required); 21. Ec International (Nantong) Co. Ltd. this investigation are encouraged to (2) for previously investigated or 22. Fastco (Shanghai) Trading Co., Ltd. submit with each argument: (1) A reviewed Chinese and non-Chinese 23. Fasten International Co., Ltd. statement of the issue; (2) a brief exporters not listed above that received 24. Fastenal Canada Ltd. summary of the argument; and (3) a a separate rate in a prior segment of this 25. Fastwell Industry Co. Ltd. table of authorities. proceeding, the cash deposit rate will 26. Fook Shing Bolts & Nuts Co. Ltd. Pursuant to 19 CFR 351.310(c), continue to be the existing exporter- 27. Fuda Xiongzhen Machinery Co., Ltd. interested parties who wish to request a specific rate; (3) for all Chinese 28. Fuller Shanghai Co. Ltd. 29. Gem-Year Industrial Co. Ltd. hearing, limited to issues raised in the exporters of subject merchandise that case and rebuttal briefs, must submit a 30. Guangdong Honjinn Metal & Plastic Co., have not been found to be entitled to a Ltd. written request to the Assistant separate rate, the cash deposit rate will 31. Hainan Zhongyan United Development Secretary for Enforcement and be that for the China-wide entity (i.e., Co. Compliance, U.S. Department of 206.00 percent); and (4) for all non- 32. Haining Hifasters Industrial Co. Commerce, within 30 days after the date Chinese exporters of subject 33. Haining Shende Imp. & Exp. Co. Ltd. of publication of this notice. Requests merchandise which have not received 34. Haining Zhongda Fastener Co., Ltd. should contain the party’s name, their own rate, the cash deposit rate will 35. Haiyan Ai&Lun Standard Fastener Co. address, and telephone number, the 36. Haiyan Chaoqiang Standard Fastener be the rate applicable to the Chinese 37. Haiyan Dayu Fasteners Co., Ltd. number of participants, whether any exporter that supplied that non-Chinese participant is a foreign national, and a 38. Haiyan Evergreen Standard Parts Co. Ltd. exporter. These deposit requirements, 39. Haiyan Fuxin High Strength Fastener list of the issues to be discussed. If a when imposed, shall remain in effect 40. Haiyan Hatehui Machinery Hardware request for a hearing is made, Commerce until further notice. 41. Haiyan Hurras Import & Export Co. Ltd. intends to hold the hearing at the U.S. 42. Haiyan Jianhe Hardware Co. Ltd. Department of Commerce, 1401 Notification to Importers 43. Haiyan Julong Standard Part Co. Ltd. Constitution Avenue NW, Washington, This notice also serves as a reminder 44. Haiyan Shangchen Imp. & Exp. Co. DC 20230, at a time and date to be to importers of their responsibility 45. Haiyan Yuxing Nuts Co. Ltd. determined. Parties should confirm by under 19 CFR 315.402(f)(2) to file a 46. Hangzhou Everbright Imp. & Exp. Co. Lt telephone the date, time, and location of certificate regarding the reimbursement 47. Hangzhou Grand Imp. & Exp. Co., Ltd. 48. Hangzhou Great Imp. & Exp. Co. Ltd. the hearing two days before the of antidumping duties prior to scheduled date. 49. Hangzhou Lizhan Hardware Co. Ltd. liquidation of the relevant entries 50. Hangzhou Prostar Enterprises Ltd. Assessment Rates during this review period. Failure to 51. Hangzhou Tongwang Machinery Co., Ltd. comply with this requirement could 52. Hilti (China) Ltd. Upon issuance of the final results of result in Commerce’s presumption that 53. Hong Kong Sunrise Fasteners Co. Ltd. this review, Commerce will determine, reimbursement of antidumping duties 54. Hong Kong Yichen Co. Ltd. and CBP shall assess, antidumping occurred and the subsequent assessment 55. Honoble Precision (China) Mfg. duties on all appropriate entries of of double antidumping duties. 56. Intech Industries Shanghai Co., Ltd. subject merchandise covered by this 57. Jiangsu Innovo Precision Machinery review.13 We intend to instruct CBP to Notification to Interested Parties 58. Jiangsu Jinhuan Fastener Co., Ltd. liquidate entries containing subject We are issuing and publishing these 59. Jiangsu Zhongweiyu Communication Equipment Co. Ltd. merchandise exported by the companies preliminary results in accordance with under review that we determine in the 60. Jiashan Steelfit Trading Co. Ltd. sections 751(a)(1) and 777(i) of the Act, 61. Jiashan Zhongsheng Metal Products Co., final results to be part of the China-wide and 19 CFR 351.213(h) and Ltd. entity at the China-wide rate of 206.00 351.221(b)(4). 62. Jiaxing Allywin Mfg. Co., Ltd. percent. Commerce intends to issue Dated: December 19, 2019. 63. Jiaxing Brother Standard Part Co., Ltd assessment instructions to CBP 15 days 64. Jiaxing Chinafar Standard Jeffrey I. Kessler, after the date of publication of the final 65. Jiaxing Jinhow Import & Export Co., Ltd. results of this review in the Federal Assistant Secretary, for Enforcement and 66. Jiaxing Sini Fastener Co., Ltd. Compliance. Register.14 67. Jiaxing Xinyue Standard Part Co. Ltd. Appendix I 68. Jiaxing Yaoliang Import & Export Co. Ltd. Cash Deposit Requirements 69. Jinan Banghe Industry & Trade Co., Ltd. The following cash deposit Companies Not Granted a Separate Rate 70. Kinfast Hardware (Shenzhen) Ltd. requirements will be effective upon 1. Aerospace Precision Corp. (Shanghai) 71. King Socket Screw Company Ltd. 72. L&W Fasteners Company publication of the notice of final results Industry Co., Ltd 2. Aihua Holding Group Co. Ltd. 73. Macropower Industrial Inc. of this administrative review for 3. Autocraft Industry (Shanghai) Ltd. 74. Mai Seng International Trading Co., Ltd. shipments of subject merchandise from 4. Autocraft Industry Ltd. 75. MB Services Company China entered, or withdrawn from 5. Billion Land Ltd. 76. Midas Union Co., Ltd. warehouse, for consumption on or after 6. Billion Technology Ltd 77. Nanjing Prosper Import & Export the publication date, as provided by 7. Billiongold Hardware Co. Ltd Corporation Ltd. sections 751(a)(2)(C) of the Act: (1) For 8. BOLT Mfg. Trade Ltd. 78. Nantong Runyou Metal Products 9. Brighton Best International (Taiwan) Inc. 79. New Pole Power System Co. Ltd. 80. Ningbiao Bolts & Nuts Manufacturing Co. 12 See 19 CFR 351.309; see also 19 CFR 351.303 10. Brother Holding Group Co. Ltd. (for general filing requirements). 11. C and H International Corporation 81. Ningbo Abc Fasteners Co., Ltd. 13 See 19 CFR 351.212(b)(1). 12. Catic Fujian Co., Ltd. 82. Ningbo Beilun Milfast Metalworks Co. 14 For a full discussion of this practice, see Non- 13. Cci International Ltd. Ltd. Market Economy Antidumping Proceedings: 14. Century Distribution Systems Inc 83. Ningbo Beilun Pingxin Hardware Co., Assessment of Antidumping Duties, 76 FR 65694 15. Changshu City Standard Parts Factory Ltd. (October 24, 2011). 16. China Friendly Nation Hardware 84. Ningbo Dexin Fastener Co. Ltd.

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85. Ningbo Dongxin High-Strength Nut Co., 142. T and C Fastener Co. Ltd. Type of Request: Regular (revision of Ltd. 143. T and L Industry Co. Ltd. a currently approved collection). 86. Ningbo Exact Fasteners Co., Ltd. 144. Taizhou Maixing Machinery Co. Number of Respondents: 60 new 87. Ningbo Fastener Factory 145. Telsto Development Co., Ltd. applications, 251 annual respondents. 88. Ningbo Fengya Imp. and Exp. Co. Ltd. 146. The Hoffman Group International 89. Ningbo Fourway Co., Ltd. 147. Tianjin Port Free Trade Zone Tianjin Average Hours per Response: 10 90. Ningbo Haishu Holy Hardware Import Star International Trade Co., Ltd. hours for new applications, 2 hours for and Export Co. Ltd. 148. Tong Ming Enterprise Co., Ltd. annual responses. 91. Ningbo Haishu Wit Import & Export Co. 149. Tong Win International Co., Ltd. Burden Hours: 1,102. Ltd. 150. Tri Steel Co., Ltd. Needs and Uses: NOAA’s Fisheries 92. Ningbo Haishu Yixie Import & Export Co. 151. Wisechain Trading Limited Finance Program (FFP) is a direct loan Ltd. 152. Wuxi Metec Metal Co. Ltd. program that receives an annual loan 93. Ningbo Jinding Fastening Piece Co., Ltd. 153. Xiamen Hua Min Imp. and Exp. Co. Ltd. authority from Congress to provide long- 94. Ningbo MPF Manufacturing Co. Ltd. 154. Xiamen Rongxinda Industry Co., Ltd. term loans to the commercial fishing 95. Ningbo Panxiang Imp. & Exp. Co. Ltd. 155. Xiamen Yuhui Import & Export Co., Ltd. 96. Ningbo Qianjiu Instrument Case Factory 156. Yogendra International and aquaculture industries. Many of 97. Ningbo Seduno Imp. Exp. Co., Ltd. 157. Yuyao Hualun Imp. & Exp. Co., Ltd. these loans are guaranteed by 98. Ningbo Yili Import & Export Co., Ltd. 158. Zhangjiagang Ever Faith Industry Co. companies and/or people (guarantors) 99. Ningbo Yinzhou Dongxiang Accuracy 159. Zhejiang Heirrmu Mechanical and associated with the loan applicant. Hardware Co., Ltd. Electrical Equipment Manufacturing Co These guarantors may not be required to 100. Ningbo Yinzhou Foreign Trade Co., Ltd. Ltd. sign the loan application. These new 101. Ningbo Yinzhou Woafan Industry & 160. Zhejiang Heiter Industries Co., Ltd, forms (Guarantor Authorization to Trade Co., Ltd. 161. Zhejiang Heiter Mfg & Trade Co. Ltd. Obtain Consumer Credit Report and 102. Ningbo Zhenghai Yongding Fastener 162. Zhejiang Jin Zeen Fasteners Co. Ltd. Co., Ltd. 163. Zhejiang Junyue Standard Part Co., Ltd. Conduct a Credit Inquiry) grant the FFP, 103. Ningbo Zhenhai Beisuda Equipment Co. 164. Zhejiang Junyue Standard Parts Co., Ltd. in writing, permission to conduct a 104. Ningbo Zhenhai Dingli Fastener Screw 165. Zhejiang Laibao Precision Technology credit investigation on the guarantors. Co., Ltd. Co. Ltd. Affected Public: People offering to 105. Ningbo Zhenhai Jinhuan Fasteners 166. Zhejiang Metals & Minerals Imp & Exp guarantee a loan made by the FFP. 106. Ningbo Zhongjiang High Strength Bolts Co. Ltd. Frequency: Once, at the time of Co. Ltd. 167. Zhejiang Morgan Brother Technology application. 107. Ningbo Zhongjiang Petroleum Pipes & Co. Ltd. Respondent’s Obligation: Required to Machinery Co. Ltd. 168. Zhejiang New Century Imp & Exp Co. Ltd. obtain or retain benefits. 108. Orient International Holding Shanghai This information collection request Rongheng Intl Trading Co. Ltd. 169. Zhejiang New Oriental Fastener Co., Ltd. 109. Orient Rider Corporation Ltd. 170. Zhejiang Zhenglian Industry may be viewed at reginfo.gov. Follow 110. Panxiang Imp. & Exp. Co., Ltd. Development Co., Ltd. the instructions to view Department of 111. Pol Shin Fastener (Zhejiang) Co. 171. Zhongsheng Metal Co., Ltd. Commerce collections currently under 112. Prosper Business and Industry Co., Ltd. 172. Zhoushan Zhengyuan Standard Parts review by OMB. 113. Qingdao Free Trade Zone Health Intl. Co., Ltd. Written comments and 114. Qingdao Top Steel Industrial Co. Ltd. Appendix II recommendations for the proposed 115. Sampulse Industrial Co., Ltd. information collection should be sent 116. Shaanxi Succeed Trading Co., Ltd. List of Topics Discussed in the Preliminary within 30 days of publication of this 117. Shanghai Autocraft Co., Ltd. Decision Memorandum notice to OIRA_Submission@ 118. Shanghai Beitra Fasteners Co., Ltd. I. Summary omb.eop.gov or fax to (202) 395–5806. 119. Shanghai East Best Foreign Trade Co. II. Background 120. Shanghai East Best International III. Scope of the Order Sheleen Dumas, Business Development Co., Ltd. IV. Discussion of the Methodology Department PRA Clearance Officer, Office of 121. Shanghai E-Heng Imp. & Exp. Co. Ltd. V. Recommendation the Chief Information Officer, Commerce 122. Shanghai Fortune International Co. Ltd. Department. 123. Shanghai Furen International Trading [FR Doc. 2019–28034 Filed 12–27–19; 8:45 am] 124. Shanghai Hunan Foreign Economic Co., BILLING CODE 3510–DS–P [FR Doc. 2019–28103 Filed 12–27–19; 8:45 am] Ltd. BILLING CODE 3510–22–P 125. Shanghai Jiabao Trade Development Co. Ltd. DEPARTMENT OF COMMERCE 126. Shanghai Nanshi Foreign Economic Co. CONSUMER PRODUCT SAFETY 127. Shanghai Overseas International Trading National Oceanic and Atmospheric COMMISSION Co. Ltd. Administration 128. Shanghai Prime Machinery Co. Ltd. [Docket No. CPSC–2019–0035] 129. Shanghai Printing & Dyeing and Knitting Submission for OMB Review; Mill Comment Request Agency Information Collection 130. Shanghai Printing & Packaging Activities; Proposed Collection; Machinery Corp The Department of Commerce will Comment Request; Consumer Product 131. Shanghai Recky International Trading submit to the Office of Management and Risk Reduction Valuation Study: Co., Ltd. Budget (OMB) for clearance the Cognitive Interviews & Focus Groups 132. Shanghai Sinotex United Corp. Ltd. following proposal for collection of 133. Shanghai Strong Hardware Co. Li information under the provisions of the AGENCY: Consumer Product Safety 134. Shanghai Wisechain Fasteners Ltd. Commission. 135. Shenzhen Fenda Technology Co., Ltd. Paperwork Reduction Act (44 U.S.C. 136. Shenzhen Haozhenghao Technology Co. Chapter 35). ACTION: Notice. 137. Shijiazhuang Huitongxiang Li Trade Agency: National Oceanic and SUMMARY: 138. Soyoung Industrial Co., Ltd. Atmospheric Administration (NOAA). The Consumer Product Safety 139. SRC Metal (Shanghai) Co. Ltd. Title: Fisheries Finance Program Commission (CPSC) is announcing an 140. untec Industries Co., Ltd. Requirements. opportunity for public comment on a 141. Suzhou Henry International Trading Co., OMB Control Number: 0648–0012. new proposed collection of information Ltd. Form Number(s): NOAA Form 88–1. by the agency. Under the Paperwork

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Reduction Act of 1995 (PRA), federal 504–7037, or by email to: BGriffin@ absence of children from labor markets agencies are required to publish notice cpsc.gov. and the lack of observable market data, in the Federal Register for each SUPPLEMENTARY INFORMATION: Under the the majority of the studies employ proposed collection of information and PRA (44 U.S.C. 3501–3520), federal stated preference methods. That method to allow 60 days for public comment in agencies must obtain approval from the asks individuals, usually through response to the notice. This notice Office of Management and Budget questionnaires, the economic value that solicits comments on a proposed (OMB) for each collection of they attach to a perceived risk based on collection to conduct cognitive information they conduct or sponsor. constructed or hypothetical markets. interviews and focus groups that will ‘‘Collection of information’’ is defined Although the existing studies suggest assess consumer comprehension of risk in 44 U.S.C. 3502(3) and 5 CFR higher values for reducing risks to associated with consumer products. 1320.3(c) and includes cognitive children than reductions to adults, they DATES: Submit written or electronic interviews and focus groups. Section do not adequately determine the extent comments on the collection of 3506(c)(2)(A) of the PRA (44 U.S.C. to which values for fatal risk reductions information by February 28, 2020. 3506(c)(2)(A)) requires federal agencies differ for adults versus children for risks associated with consumer products or ADDRESSES: You may submit comments, to provide a 60-day notice in the Federal Register concerning each adequately explain the level of identified by Docket No. CPSC–2019– respondent comprehension of relevant 0035, by any of the following methods: proposed collection of information before submitting the collection to OMB risk concepts. Electronic Submissions: Submit for approval. Accordingly, CPSC is CPSC seeks to conduct additional electronic comments to the Federal publishing notice of the proposed research to evaluate whether reductions eRulemaking Portal at: http:// collection of information set forth in in consumer product-related risks are www.regulations.gov. Follow the this document. valued differently when the beneficiary instructions for submitting comments. of the reduction is a child versus an CPSC does not accept comments A. Consumer Product Risk Reduction adult. In order to assess comprehension submitted by electronic mail (email), Valuation Study of risk concepts, CPSC intends to except through www.regulations.gov. CPSC is authorized under section 5(a) conduct qualitative pretesting, in the CPSC encourages you to submit of the Consumer Product Safety Act form of cognitive interviews and focus electronic comments by using the (CPSA), 15 U.S.C. 2054(a), to conduct groups based on best practices used in Federal eRulemaking Portal, as studies and investigations relating to the stated-preference study design. CPSC described above. causes and prevention of deaths, will conduct an initial set of eight Mail/Hand Delivery/Courier accidents, injuries, illnesses, other cognitive interviews aimed specifically Submissions: Submit comments by health impairments, and economic at topics related to risk communication mail/hand delivery/courier to: Division losses associated with consumer and risk comprehension from of the Secretariat, Consumer Product products. Section 5(b) of the CPSA, 15 homeowners with at least one child Safety Commission, Room 820, 4330 U.S.C. 2054(b), further provides that under the age of 12. Based on the results East-West Highway, Bethesda, MD CPSC may conduct research, studies, of the initial cognitive interviews, CPSC 20814; telephone (301) 504–7923. and investigations on the safety of will inform OMB of any changes that are Instructions: All submissions received consumer products or test consumer made for conducting a subsequent set of must include the agency name and products and develop product safety focus groups. Those focus groups will docket number for this notice. All test methods and testing devices. consist of 40 respondents and 16 comments received may be posted CPSC issues regulations to reduce the additional cognitive interviews that will without change, including any personal risk of fatal injuries or illnesses query the respondents on fatal identifiers, contact information, or other associated with the use of consumer household risks related to consumer personal information provided, to: products. To value reductions in the products. The interviews and focus http://www.regulations.gov. Do not risk of fatalities, CPSC and other federal groups are designed to assess submit confidential business agencies rely on estimates of the value respondents’ comprehension of risk information, trade secret information, or per statistical life (VSL), which are concepts and to inform the CPSC on the other sensitive or protected information derived from research on individuals’ feasibility of developing a future survey that you do not want to be available to willingness to pay (WTP), consistent instrument that will identify the best the public. If furnished at all, such with the conceptual framework for methods or approaches to communicate information should be submitted by benefit-cost analysis. Most of the studies risk concepts related to consumer mail or hand delivery/courier. on which these estimates are based products. Docket: For access to the docket to calculate WTP by evaluating tradeoffs read background documents or made by workers in risky occupations, B. Burden Hours comments received, go to: http:// and thus, concentrate on certain The estimated annual burden hours www.regulations.gov, and insert the populations (working-age males). are as follows: docket number, CPSC–2019–0035, into However, the type of risks and the ‘‘Search’’ box, and follow the populations that are often addressed by Environmental and Resource Economics, 49(4): prompts. A copy of the draft supporting CPSC regulations involve children. 511–538; Gerking, S., M. Dickie, and M. Veronesi. Although there are few completed 2014. Valuation of Human Health: An Integrated statement titled ‘‘Risk Valuation Study Model of WTP for Mortality and Morbidity Risk Supporting Statement’’ is available at: studies that address the value of risk Reductions. Journal of Environmental Economics https://www.regulations.gov under reductions that accrue to children, the and Management, 68(1): 20–45; Hammitt, J.K. and Docket No. CPSC–2019–0035, available literature is limited and largely K. Haninger. 2010. Valuing Fatal Risk to Children unrelated to the types of risks addressed and Adults: Effects of Disease, Latency and Risk Supporting and Related Material. Aversion. Journal of Risk and Uncertainty, 40: 57– by CPSC rulemakings.1 Due to the FOR FURTHER INFORMATION CONTACT: 83; Hammitt, J.K. and D. Herrera. 2017. Peeling Back the Onion: Using Latent Class Analysis to Bretford Griffin, Consumer Product 1 See, e.g., Alberini, A. and M. Sˇ cˇasny´. 2011. Uncover Heterogeneous Responses to Stated Safety Commission, 4330 East-West Context and the VSL: Evidence from a Stated Preference Surveys. Journal of Environmental Highway, Bethesda, MD 20814; (301) Preference Study in Italy and Czech Republic. Economics and Management, in press.

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Estimated Number of burden per Total burden Activity responses respondent (hours) (hours)

Cognitive Interviews I (Risk Communication and Comprehension) ...... 8 1.5 12 Focus Group Sessions (Household Risks and Consumer Products) ...... 40 2 80 Cognitive Interviews II (Household Risks and Consumer Products) ...... 16 1.5 24

Total ...... 116

We estimate the total annual dollar ACTION: Notice. Comments value of this collection to be $4,265. A 60-day Notice requesting public SUMMARY: This estimate is based on an average of The Corporation for National comment was published in the Federal $36.77/hr. compensation, including and Community Service (CNCS) has Register on August 15, 2019 at 84 FR benefits, from the National submitted a public information 41707 Page Number 41707. This Compensation Survey published by the collection request (ICR) entitled CNCS comment period ended October 15, Bureau of Labor Statistics (U.S. Bureau External Reviewer Application for 2019. Zero public comments were of Labor Statistics, ‘‘Employer Costs for review and approval in accordance with received from this Notice. Employee Compensation by the Paperwork Reduction Act. Title of Collection: CNCS External ownership,’’ Dec. 2018, Table 1, total DATES: Written comments must be Reviewer Application. compensation for civilian workers: submitted to the individual and office OMB Control Number: 3045–0090. http://www.bls.gov/ncs/). The total cost listed in the ADDRESSES section by Type of Review: Renewal. to the federal government for the January 29, 2020. Respondents/Affected Public: contract to design and conduct the Individuals and Households. proposed survey is $117,458. ADDRESSES: Direct written comments Total Estimated Number of Annual and/or suggestions regarding the items Responses: 500. C. Request for Comments contained in this Notice to the Total Estimated Number of Annual CPSC invites comments on these Attention: CNCS Desk Officer, Office of Burden Hours: 250 hours (Average 30 topics: Information and Regulatory Affairs, minutes per response). • Whether the proposed collection of Office of Management and Budget, 725 Abstract: The External Reviewer information is necessary for the proper 17th Street NW, Washington, DC 20503 Application is used by individuals who performance of CPSC’s functions, or by fax to (202) 395–5806. Provide wish to serve as External Reviewers or including whether the information will written comments within 30 days of External Panel Coordinators for CNCS have practical utility; Notice publication. when external reviewers are needed to • The accuracy of CPSC’s estimate of FOR FURTHER INFORMATION CONTACT: review grant applications. The the burden of the proposed collection of Copies of this ICR, with applicable information collected will be used by information, including the validity of supporting documentation, may be CNCS to select review participants for the methodology and assumptions used; obtained by calling the Corporation for each grant competition. The information • Ways to enhance the quality, utility, National and Community Service, Amy is collected electronically using CNCS’s and clarity of the information to be Hetrick, at 202–606–6856 or by email to web-based system. CNCS seeks to renew collected; and [email protected]. the current information collection. • Ways to minimize the burden of the CNCS also seeks to continue using the SUPPLEMENTARY INFORMATION: The OMB collection of information on current application until the revised is particularly interested in comments respondents, including through the use application is approved by OMB. The which: of automated collection techniques, current application is due to expire on • when appropriate, and other forms of Evaluate whether the proposed December 31, 2019. information technology. collection of information is necessary for the proper performance of the Dated: December 23, 2019. Alberta E. Mills, functions of CNCS, including whether Amy Borgstrom, Secretary, Consumer Product Safety the information will have practical Associate Director of Policy. Commission. utility; [FR Doc. 2019–28148 Filed 12–27–19; 8:45 am] [FR Doc. 2019–28116 Filed 12–27–19; 8:45 am] • Evaluate the accuracy of the BILLING CODE 6050–28–P BILLING CODE 6355–01–P agency’s estimate of the burden of the proposed collection of information, including the validity of the DEPARTMENT OF DEFENSE CORPORATION FOR NATIONAL AND methodology and assumptions; Office of the Secretary COMMUNITY SERVICE • Propose ways to enhance the quality, utility, and clarity of the [Transmittal No. 19–53] Agency Information Collection information to be collected; and Activities; Submission to the Office of • Arms Sales Notification Management and Budget for Review Propose ways to minimize the and Approval; Comment Request; burden of the collection of information AGENCY: Defense Security Cooperation CNCS External Reviewer Application; on those who are to respond, including Agency, Department of Defense. Proposed Information Collection; through the use of appropriate ACTION: Arms sales notice. Comment Request automated, electronic, mechanical, or other technological collection SUMMARY: The Department of Defense is AGENCY: Corporation for National and techniques or other forms of information publishing the unclassified text of an Community Service. technology. arms sales notification.

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FOR FURTHER INFORMATION CONTACT: section 155 of Public Law 104–164 Dated: December 19, 2019. Karma Job at [email protected] dated July 21, 1996. The following is a Aaron T. Siegel, or (703) 697–8976. copy of a letter to the Speaker of the Alternate OSD Federal Register Liaison SUPPLEMENTARY INFORMATION: This House of Representatives, Transmittal Officer, Department of Defense. 36(b)(1) arms sales notification is 19–53 with attached Policy Justification BILLNG CODE 5001–06–P published to fulfill the requirements of and Sensitivity of Technology.

BILLNG CODE 5001–06–C

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Transmittal No. 19-53 *As defined in Section 47(6) of the The principal contractors will be Notice of Proposed Issuance of Letter of Arms Export Control Act. Boeing Helicopters Aircraft Company in Ridley Park, Pennsylvania; Honeywell Offer Pursuant to Section 36(b)(1) of the POLICY JUSTIFICATION Arms Export Control Act, as amended Engine Company in Phoenix, Arizona; United Arab Emirates (UAE)—CH-47F Science and Engineering Services in (i) Prospective Purchaser: Government Chinook Cargo Helicopters Huntsville, Alabama. There are no of the United Arab Emirates known offset agreements in connection (ii) Total Estimated Value: The Government of the United Arab with this potential sale. Major Defense Equip- $503.8 million Emirates has requested to buy ten (10) Implementation of this proposed sale ment *. CH-47F Chinook cargo helicopters; will require an estimated ten (10) U.S. Other ...... $326.5 million twenty-six (26) T55-GA-714A Engines; Government and contractor twenty-four (24) Embedded Global representatives to travel to UAE for up TOTAL ...... $830.3 million Positioning Systems with Inertial to 60 months for equipment de- (iii) Description and Quantity or Navigation System (GPS/INS); twelve processing, fielding, system checkout, Quantities of Articles or Services under (12) AN/AAR-57 Common Missile training and technical logistics support. Consideration for Purchase: Warning Systems (CMWS); twenty (20) There will be no adverse impact on Major Defense Equipment (MDE): M134D-H Mini Guns; and twenty (20) U.S. defense readiness as a result of this Ten (10) CH-47F Chinook Cargo M240H Machine Guns. Also included proposed sale. Helicopters are aircraft survivability equipment to Twenty-six (26) T55-GA-714A Engines include: APR-39A(V)l, AN/ARC-231, Transmittal No. 19-53 (20 installed, 6 spares) Harris RF-7850A-MR, Thales 5400NS, Notice of Proposed Issuance of Letter of Twenty-four (24) Embedded Global Tetra THR9i, AN/APX-123A, WESCAM Offer Pursuant to Section 36(b)(1) of the Positioning Systems with Inertial MX-l5HDi, ARN-147 VOR/ILS, ARN-153 Arms Export Control Act Navigation System (GPS/INS) (20 TACAN, APN-209 Receiver Annex installed, 4 spares) Transmitters, APN-209 Indicator, AN/ Twelve (12) AN/AAR-57 Common ARC-220; Infrared Suppression System Item No. vii Missile Warning Systems (CMWS) (10 (IRSS); Fast Rope Insertion/Extraction (vii) Sensitivity of Technology: installed, 2 spares) System (FRIES); Extended Range Fuel 1. The CH-47F Chinook Cargo Twenty (20) M134D-H Mini Guns System (ERFS); Fire Fighting Helicopter is a medium lift aircraft that Twenty (20) M240H Machine Guns Equipment; Ballistic Armor Protection includes two T55-GA-714A Engines and Non-MDE: System; air worthiness support; spare an advanced cockpit that features five Also included are aircraft and repair parts; communications multi- function displays, a four-axis survivability equipment to include: equipment; personnel training and coupled flight director, digital map, and APR-39A(V)l, AN/ARC-231, Harris RF- training equipment; site surveys; tool Dual Embedded Global Positioning 7850A-MR, Thales 5400NS, Tetra and test equipment; ground support System/Inertial Navigation System THR9i, AN/APX-123A, WESCAM MX- equipment; repair and return; (GPS/INS) (EGI). l5HDi, ARN-147 VOR/ILS, ARN-153 publications and technical a. Embedded Global Positioning TACAN, APN-209 Receiver documentation; Quality Assurance System/Inertial Navigation System Transmitters, APN-209 Indicator, AN/ Team (QAT); U.S. Government and (GPS/INS) (EGI) - The EGI is a Selective ARC-220; Infrared Suppression System contractor engineering, technical and Availability Anti-Spoofing Module (IRSS); Fast Rope Insertion/Extraction logistics support services; and other (SAASM) based navigation platform that System (FRIES); Extended Range Fuel related elements of logistics and combines an inertial sensor assembly System (ERFS); Fire Fighting program support. The estimated cost is with a fixed reception pattern antenna Equipment; Ballistic Armor Protection $830.3 million. GPS receiver. The EGI system is the System; air worthiness support; spare This proposed sale will support the primary source for position information and repair parts; communications foreign policy and national security of and is UNCLASSIFIED. The GPS crypto equipment; personnel training and the United States by helping to improve variables needed for the highest GPS training equipment; site surveys; tool the security of an important partner in accuracy are classified up to SECRET. b. AN/AAR-57 Common Missile and test equipment; ground support the region. This sale is consistent with Warning System (CMWS) - The CMWS equipment; repair and return; U.S. initiatives to provide key partners detects threat missiles in flight, publications and technical in the region with modem systems that evaluates potential false alarms, documentation; Quality Assurance will enhance interoperability with U.S. declares validity of threat and selects Team (QAT); U.S. Government and forces and increase security. contractor engineering, technical and the appropriate Infrared logistics support services; and other The proposed sale will expand the Countermeasure (IRCM). Each platform related elements of logistics and UAE’s helicopter fleet. Further, it will includes: Electro Optical Missile program support. enhance the UAE’s operational and Sensors, an Electronic Control Unit (iv) Military Department: Army (AE-B- defensive capabilities to better defend (ECU), Sequencer, and the Improved ZAP) U.S. and UAE national security interests Countermeasures Dispenser (ICMD). (v) Prior Related Cases, if any: AE-B- in the region, and increase the UAE’s The hardware is classified ZAF contributions to any future joint or CONFIDENTIAL. Releasable technical (vi) Sales Commission, Fee, etc., Paid, coalition efforts requiring helicopter manuals for operation and maintenance Offered, or Agreed to be Paid: None support. The UAE will have no are classified SECRET. (vii) Sensitivity of Technology difficulty absorbing these defense c. AN/APR-39A Radar Warning Contained in the Defense Article or articles and services into its armed System - This radar signal detecting set Defense Services Proposed to be Sold: forces. provides warning of a radar directed air See Attached Annex The proposed sale of these helicopters defense threat to allow appropriate (viii) Date Report Delivered to will not alter the basic military balance countermeasures. Hardware is classified Congress: November 7, 2019 in the region. CONFIDENTIAL when programmed

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with U.S. threat data. Releasable which may lead to a significant threat to submitted by fax or email and those technical manuals for operation and future U.S. military operations. If a submitted after the comment period will maintenance are classified technologically advanced adversary not be accepted. Written requests for CONFIDENTIAL. Releasable technical were to obtain knowledge of the specific information or comments submitted by data (technical performance) are hardware and software elements, the postal mail or delivery should be classified SECRET. The system can be information could be used to develop addressed to the Director of the Strategic programmed with threat data provided countermeasures or equivalent systems, Collections and Clearance Governance by the purchasing country. which might reduce weapon system and Strategy Division, U.S. Department d. The U.S. Army will provide the RT- effectiveness or be used in the of Education, 400 Maryland Ave. SW, 1749 exportable version of the AN/ARC- development of a system with similar or LBJ, Room 6W–208D, Washington, DC 220 radio. This radio is fully digital and advanced capabilities. 20202–4537. made specifically for rotary wing 4. A determination has been made FOR FURTHER INFORMATION CONTACT: For applications allowing crew members to that UAE can provide substantially the specific questions related to collection communicate at non line of sight same degree of protection for this activities, please contact Beth distances. technology as the U.S. Government. Grebeldinger, 202–377–4018. e. The AN/PYQ-10 (C) Simple Key This proposed sale is necessary in Loader (SKL) is a ruggedized, portable, SUPPLEMENTARY INFORMATION: The furtherance of the U.S. foreign policy Department of Education (ED), in hand-held fill device used for securely and national security objectives receiving, storing, and transferring accordance with the Paperwork outlined in the Policy Justification. Reduction Act of 1995 (PRA) (44 U.S.C. electronic key material and data 5. All of the defense articles and 3506(c)(2)(A)), provides the general between compatible end cryptographic services listed in this transmittal have public and Federal agencies with an units (ECU) and communications been authorized for release and export opportunity to comment on proposed, equipment. It supports both the DS-101 to the United Arab Emirates. and DS-102 interfaces, as well as the revised, and continuing collections of Crypto Ignition Key and is compatible [FR Doc. 2019–28048 Filed 12–27–19; 8:45 am] information. This helps the Department with existing ECUs. BILLING CODE 5001–06–P assess the impact of its information f. The MX-15 HDi imaging system is collection requirements and minimize a multi-sensor, multi-spectral imaging the public’s reporting burden. It also system with a range of features and DEPARTMENT OF EDUCATION helps the public understand the Department’s information collection benefits to include long range laser [Docket No. ED–2019–ICCD–0136] illumination. The MX-15 HDi is ideal requirements and provide the requested for medium-altitude covert Intelligence, Agency Information Collection data in the desired format. ED is Surveillance and Reconnaissance (ISR) Activities; Submission to the Office of soliciting comments on the proposed and Search and Rescue (SAR) missions, Management and Budget for Review information collection request (ICR) that and it can be integrated into aerostat, and Approval; Comment Request; is described below. The Department of fixed-wing, rotary wing and Unmanned Application for Borrower Defense to Education is especially interested in Aerial Vehicle aircraft. The MX-15 HDi Loan Repayment Form public comment addressing the system can include up to six imaging following issues: (1) Is this collection and laser sensors, HD Thermal Imager, AGENCY: Department of Education (ED), necessary to the proper functions of the Color Low-Light Continuous Zoom, Federal Student Aid (FSA). Department; (2) will this information be Daylight Step-Zoom Spotter, Short ACTION: Notice. processed and used in a timely manner; Wave Infrared (SWIR) Imager, Laser (3) is the estimate of burden accurate; Rangefinder (LRF), and Laser SUMMARY: In accordance with the (4) how might the Department enhance Illuminator (LI). The MX-15 HDi offers Paperwork Reduction Act of 1995, ED is the quality, utility, and clarity of the superior high-definition imaging proposing an extension of an existing information to be collected; and (5) how resolution from Electro-Optical (EO) and information collection. might the Department minimize the Infrared (IR) cameras. The system boasts DATES: Interested persons are invited to burden of this collection on the user-friendly technologies that improve submit comments on or before January respondents, including through the use operator effectiveness such as a color 29, 2020. of information technology. Please note low-light, wide-angle zoom EO imager, ADDRESSES: To access and review all the that written comments received in and outstanding range performance documents related to the information response to this notice will be during limited visibility due to collection listed in this notice, please considered public records. atmospherics, real-time image use http://www.regulations.gov by Title of Collection: Application for enhancement for EO day, EO night and searching the Docket ID number ED– Borrower Defense to Loan Repayment IR. This MX-15 HDi imaging system is 2019–ICCD–0136. Comments submitted Form. a highlyeffective system that utilizes the in response to this notice should be OMB Control Number: 1845–0146. most recent developments in imaging submitted electronically through the Type of Review: An extension of an technology. Federal eRulemaking Portal at http:// existing information collection. 2. Software, hardware, and other data/ www.regulations.gov by selecting the Respondents/Affected Public: information that is classified or Docket ID number or via postal mail, Individuals or Households. sensitive is reviewed prior to release to commercial delivery, or hand delivery. Total Estimated Number of Annual protect system vulnerabilities, design If the regulations.gov site is not Responses: 96,000. data, and performance parameters. available to the public for any reason, Total Estimated Number of Annual Some end-item hardware, software, and ED will temporarily accept comments at Burden Hours: 48,000. other data identified above are classified [email protected]. Please include the Abstract: The Department of at the CONFIDENTIAL level. docket ID number and the title of the Education (the Department) requests 3. Loss of this hardware, software, information collection request when approval of this extension without documentation and/or data could requesting documents or submitting change of the Application for Borrower permit development of information comments. Please note that comments Defense to Loan Repayment form

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(‘‘Universal Borrower Defense Form’’) to comments. Please note that comments studies. The B&B studies of the ensure that all borrowers have a submitted by fax or email and those education, work, financial, and personal consistent platform to petition for relief, submitted after the comment period will experiences of individuals who have and to facilitate the Department’s not be accepted. Written requests for completed a bachelor’s degree at a given receipt of clear and complete information or comments submitted by point in time are a series of longitudinal information necessary to process postal mail or delivery should be studies. Every 8 years, students are applications efficiently. This form will addressed to the Director of the Strategic identified as bachelor’s degree facilitate processing claims from student Collections and Clearance Governance recipients through the National borrowers who believe that they have a and Strategy Division, U.S. Department Postsecondary Student Aid Study Borrower Defense claim regarding their of Education, 400 Maryland Ave. SW, (NPSAS). B&B:16/20 is the second Federal Loans. The form will provide LBJ, Room 6W–208B, Washington, DC follow-up of a panel of baccalaureate borrowers with an easily accessible and 20202–4537. degree recipients identified in the 2015– clear method to provide the information FOR FURTHER INFORMATION CONTACT: For 16 NPSAS, and part of the fourth cohort necessary for the Department to review specific questions related to collection (B&B:16) of the B&B series. NPSA:16 is and process claim applications activities, please contact Kashka the base year for B&B:16 follow-up efficiently. A successful Borrower Kubzdela, 202–245–7377 or email interviews in 2017, 2020, and 2026 Defense claim would provide a full or [email protected]. (anticipated). B&B cohorts prior to B&B:16 were approved under OMB# partial discharge of a borrower’s loans, SUPPLEMENTARY INFORMATION: The 1850–0729. The B&B:16 cohort is and if appropriate, reimbursement of Department of Education (ED), in submitted and reviewed under OMB# amounts previously paid. accordance with the Paperwork 1850–0926. The primary purposes of the Dated: December 23, 2019. Reduction Act of 1995 (PRA) (44 U.S.C. B&B studies are to describe the post- Kate Mullan, 3506(c)(2)(A)), provides the general baccalaureate paths of new college PRA Coordinator, Strategic Collections and public and Federal agencies with an graduates, with a focus on their Clearance, Governance and Strategy Division, opportunity to comment on proposed, experiences in the labor market and Office of Chief Data Officer. revised, and continuing collections of post-baccalaureate education, and their [FR Doc. 2019–28093 Filed 12–27–19; 8:45 am] information. This helps the Department education-related debt. B&B also focuses BILLING CODE 4000–01–P assess the impact of its information on the continuing education paths of collection requirements and minimize science, technology, engineering, and the public’s reporting burden. It also mathematics (STEM) graduates, as well DEPARTMENT OF EDUCATION helps the public understand the as the experiences of those who have Department’s information collection [Docket No. ED–2019–ICCD–0162] begun careers in education of students requirements and provide the requested through the 12th grade. Since Agency Information Collection data in the desired format. ED is graduating from college in 2014–15 for Activities; Comment Request; 2016/20 soliciting comments on the proposed the field test, and 2015–16 for the full- Baccalaureate and Beyond (B&B:16/ information collection request (ICR) that scale study, members of this B&B:16 20) Full-Scale Study is described below. The Department of cohort will begin moving into and out Education is especially interested in AGENCY: National Center for Education of the workforce, enrolling in additional public comment addressing the undergraduate and graduate education, Statistics (NCES), Department of following issues: (1) Is this collection Education (ED). forming families, and repaying necessary to the proper functions of the undergraduate education-related debt. ACTION: Notice. Department; (2) will this information be Documenting these choices and processed and used in a timely manner; SUMMARY: In accordance with the pathways, along with individual, (3) is the estimate of burden accurate; institutional, and employment Paperwork Reduction Act of 1995, ED is (4) how might the Department enhance proposing a revision of an existing characteristics that may be related to the quality, utility, and clarity of the those choices, provides critical information collection. information to be collected; and (5) how DATES: Interested persons are invited to information on the costs and benefits of might the Department minimize the a bachelor’s degree in today’s workforce. submit comments on or before February burden of this collection on the 28, 2020. B&B studies include both traditional-age respondents, including through the use and non-traditional-age college ADDRESSES: To access and review all the of information technology. Please note documents related to the information graduates, whose education options and that written comments received in choices often diverge considerably, and collection listed in this notice, please response to this notice will be use http://www.regulations.gov by allow study of the paths taken by these considered public records. different graduates. B&B:16/20 panel searching the Docket ID number ED– Title of Collection: 2016/20 maintenance activities were cleared in 2019–ICCD–0162. Comments submitted Baccalaureate and Beyond (B&B:16/20) July 2019 and are currently scheduled to in response to this notice should be Full-Scale Study. continue through February 2020. This submitted electronically through the OMB Control Number: 1850–0926. request is for the full-scale study Federal eRulemaking Portal at http:// Type of Review: A revision of an student interview data collection www.regulations.gov by selecting the existing information collection. scheduled to take place from July 2020 Docket ID number or via postal mail, Respondents/Affected Public: through March 2021. commercial delivery, or hand delivery. Individuals or Households. If the regulations.gov site is not Total Estimated Number of Annual Dated: December 23, 2019. available to the public for any reason, Responses: 34,682. Stephanie Valentine, ED will temporarily accept comments at Total Estimated Number of Annual PRA Coordinator, Strategic Collections and [email protected]. Please include the Burden Hours: 10,435. Clearance, Governance and Strategy Division, docket ID number and the title of the Abstract: The National Center for Office of Chief Data Officer. information collection request when Education Statistics (NCES) conducts [FR Doc. 2019–28134 Filed 12–27–19; 8:45 am] requesting documents or submitting the Baccalaureate and Beyond (B&B) BILLING CODE 4000–01–P

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DEPARTMENT OF ENERGY Waste and Materials Management (EM– distribution service across the state line 4.2), 1000 Independence Avenue SW, flowing from southwestern Kansas into Extension of the Public Comment Washington, DC 20585. Email: in a limited geographic area in northern Period for the Draft Environmental [email protected]. Oklahoma. The subject distribution Assessment for the Commercial SUPPLEMENTARY INFORMATION: On facilities, which provide natural gas Disposal of Defense Waste Processing December 10, 2019, DOE published a service to TKO’s irrigation customers, Facility Recycle Wastewater From the notice in the Federal Register (84 FR originate in Kansas and continue into Savannah River Site 67438) on the publication of the Draft Oklahoma. TKO also requests a finding that qualifies for treatment as an LDC for AGENCY: Office of Environmental SRS DWPF Recycle Wastewater EA. The Management, U.S. Department of Draft SRS DWPF Recycle Wastewater purposes of Section 311 of the Natural Energy. EA evaluates the potential impacts from Gas Policy Act and a waiver of various a proposed action to retrieve, stabilize, Commission requirements as ACTION: Extension of public comment appropriate and consistent with the period. and dispose of up to 10,000 gallons of Defense Waste Processing Facility requested determination. All relevant SUMMARY: The U.S. Department of (DWPF) recycle wastewater from information is more fully set forth in the Energy (DOE) is extending the public Savannah River Site (SRS) at a application, which is on file with the comment period for the request of commercial low-level radioactive waste Commission and open to public public comments on the Draft disposal facility located outside of inspection. The filing may also be Environmental Assessment for the South Carolina, licensed by either the viewed on the web at http:// Commercial Disposal of Defense Waste Nuclear Regulatory Commission (NRC) www.ferc.gov using the ‘‘eLibrary’’ link. Processing Facility Recycle Wastewater or an Agreement State under NRC’s Enter the docket number excluding the from the Savannah River Site (DOE/EA– regulations regarding licensing last three digits in the docket number 2115) (Draft SRS DWPF Recycle requirements for land disposal of field to access the document. For Wastewater EA). DOE published a radioactive waste. If implemented, this assistance, contact FERC at notice in the Federal Register on proposal would provide alternative [email protected] or call December 10, 2019, establishing a 30- treatment and disposal options for up to toll-free, (866) 208–3676 or TTY, (202) day public comment period ending on 10,000 gallons of DWPF recycle 502–8659. January 9, 2020. DOE is extending the wastewater through the use of existing, Any questions regarding this public comment period for 32 days, licensed, off-site commercial facilities. application should be directed to Mike ending on February 10, 2020. DOE has determined that an extension McEvers, Texas-Kansas-Oklahoma, LLC, of the public comment period on the P.O. Box 1194, Dalhart, TX 79202; DATES: The comment period for the Draft SRS DWPF Recycle Wastewater Phone: (806) 244–4210; Email: tko@ Notice published on December 10, 2019 EA is appropriate, and is hereby tkogas.com, and copied to C. Edward (84 FR 67438) is extended. DOE will extending the comment period an Watson, II, Foulston Siefkin, LLP, 1551 consider all comments received or additional 32 days with the public N Waterfront Pkwy, Suite 100, Wichita, postmarked by February 10, 2020. comment period ending on February 10, KS 67206; Phone: (316) 291–9589; ADDRESSES: Please direct written 2020. Email: [email protected]. comments on the Draft DWPF SRS Pursuant to section 157.9 of the Recycle Wastewater EA to: Signed at Washington, DC, on December 20, 2019. Commission’s rules, 18 CFR 157.9, (a) Email: [email protected]. within 90 days of this Notice the Mark S. Senderling, Please submit comments in Commission staff will either: Complete MicrosoftTM Word or PDF file format Deputy Assistant Secretary for Waste and its environmental assessment (EA) and and avoid the use of encryption. Materials Management, Office of Regulatory and Policy Affairs, Office of Environmental place it into the Commission’s public (b) Mail: James Joyce, U.S. Department record (eLibrary) for this proceeding; or of Energy, Office of Environmental Management, U.S. Department of Energy. [FR Doc. 2019–28224 Filed 12–27–19; 8:45 am] issue a Notice of Schedule for Management, EM–4.21, 1000 Environmental Review. If a Notice of BILLING CODE 6450–01–P Independence Avenue SW, Washington, Schedule for Environmental Review is DC 20585. issued, it will indicate, among other Because your comments will be made DEPARTMENT OF ENERGY milestones, the anticipated date for the public, you are solely responsible for Commission staff’s issuance of the EA ensuring that your comments do not Federal Energy Regulatory for this proposal. The filing of the EA include any confidential information Commission in the Commission’s public record for that you or a third party may not wish this proceeding or the issuance of a to be posted. [Docket No. CP20–20–000] Notice of Schedule for Environmental FOR FURTHER INFORMATION CONTACT: For Notice of Application; Texas-Kansas- Review will serve to notify federal and information related to Draft SRS DWPF Oklahoma LLC state agencies of the timing for the Recycle Wastewater EA, please contact completion of all necessary reviews, and James Joyce, U.S. Department of Energy, Take notice that on December 6, 2019, the subsequent need to complete all Office of Environmental Management, Texas-Kansas-Oklahoma LLC. (TKO), federal authorizations within 90 days of Office of Waste and Materials 1318 David Lane, Dalhart, TX, 79022 the date of issuance of the Commission Management (EM–4.2), 1000 filed in Docket No. CP20–20–000, an staff’s FEIS or EA. Independence Avenue SW, Washington, application pursuant to section 7(f) of There are two ways to become DC 20585. Email: [email protected]. the Natural Gas Act and Part 157 of the involved in the Commission’s review of Telephone: (301) 903–2151. For Commission’s regulations requesting this project. First, any person wishing to information related to DOE’s high-level that the Commission grant it a obtain legal status by becoming a party radioactive waste (HLW) interpretation, determination of service area within to the proceedings for this project please contact Theresa Kliczewski, U.S. which TKO may, without further should, on or before the comment date Department of Energy, Office of Commission authorization, own and stated below, file with the Federal Environmental Management, Office of operate facilities to provide natural gas Energy Regulatory Commission, 888

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First Street NE, Washington, DC 20426, good cause why the time limitation service, persons with internet access a motion to intervene in accordance should be waived, and should provide who will eFile a document and/or be with the requirements of the justification by reference to factors set listed as a contact for an intervenor Commission’s Rules of Practice and forth in Rule 214(d)(1) (18 CFR must create and validate an Procedure (18 CFR 385.214 or 385.211) 385.214(d)(1)) of the Commission’s eRegistration account using the and the Regulations under the NGA (18 Rules and Regulations. eRegistration link. Select the eFiling CFR 157.10). A person obtaining party The Commission strongly encourages link to log on and submit the status will be placed on the service list electronic filings of comments, protests intervention or protests. maintained by the Secretary of the and interventions in lieu of paper using Persons unable to file electronically Commission and will receive copies of the eFiling link at http://www.ferc.gov. should submit an original and 5 copies all documents filed by the applicant and Persons unable to file electronically of the intervention or protest to the by all other parties. A party must submit should submit an original and 3 copies Federal Energy Regulatory Commission, 3 copies of filings made with the of the protest or intervention to the 888 First Street NE, Washington, DC Commission and must provide a copy to Federal Energy Regulatory Commission, 20426. the applicant and to every other party in 888 First Street NE, Washington, DC The filings in the above-referenced the proceeding. Only parties to the 20426. proceeding are accessible in the proceeding can ask for court review of Comment Date: January 7, 2020 Commission’s eLibrary system by Commission orders in the proceeding. clicking on the appropriate link in the However, a person does not have to Dated: December 17, 2019. above list. They are also available for intervene in order to have comments Nathaniel J. Davis, Sr., electronic review in the Commission’s considered. The second way to Deputy Secretary. Public Reference Room in Washington, participate is by filing with the [FR Doc. 2019–28063 Filed 12–27–19; 8:45 am] DC. There is an eSubscription link on Secretary of the Commission, as soon as BILLING CODE 6717–01–P the website that enables subscribers to possible, an original and two copies of receive email notification when a comments in support of or in opposition document is added to a subscribed to this project. The Commission will DEPARTMENT OF ENERGY docket(s). For assistance with any FERC consider these comments in Online service, please email determining the appropriate action to be Federal Energy Regulatory [email protected]. or call taken, but the filing of a comment alone Commission (866) 208–3676 (toll free). For TTY, call will not serve to make the filer a party [Docket No. ER20–635–000] (202) 502–8659. to the proceeding. The Commission’s Dated: December 20, 2019. rules require that persons filing Rodan Energy Solutions (USA) Inc.; Kimberly D. Bose, Supplemental Notice That Initial comments in opposition to the project Secretary. provide copies of their protests only to Market-Based Rate Filing Includes the party or parties directly involved in Request for Blanket Section 204 [FR Doc. 2019–28119 Filed 12–27–19; 8:45 am] the protest. Authorization BILLING CODE 6717–01–P Persons who wish to comment only This is a supplemental notice in the on the environmental review of this DEPARTMENT OF ENERGY project should submit an original and above-referenced proceeding of Rodan two copies of their comments to the Energy Solutions (USA) Inc.’s application for market-based rate Federal Energy Regulatory Secretary of the Commission. Commission Environmental commenters will be authority, with an accompanying rate placed on the Commission’s tariff, noting that such application [Docket Nos. CP20–21–000; CP18–7–000] environmental mailing list and will be includes a request for blanket authorization, under 18 CFR part 34, of Notice of Application; Port Arthur notified of any meetings associated with Pipeline LLC the Commission’s environmental review future issuances of securities and process. Environmental commenters assumptions of liability. Take notice that on December 9, 2019, will not be required to serve copies of Any person desiring to intervene or to Port Arthur Pipeline LLC (Port Arthur) filed documents on all other parties. protest should file with the Federal 2925 Briarpark, Suite 900, Houston, However, the non-party commenters Energy Regulatory Commission, 888 Texas 77042, filed in Docket No. CP20– will not receive copies of all documents First Street NE, Washington, DC 20426, 21–000, an application pursuant to filed by other parties or issued by the in accordance with Rules 211 and 214 section 7(c) of the Natural Gas Act and Commission and will not have the right of the Commission’s Rules of Practice Part 157 of the Commission’s to seek court review of the and Procedure (18 CFR 385.211 and regulations to request an amendment to Commission’s final order. 385.214). Anyone filing a motion to the certificate of public convenience As of the February 27, 2018 date of intervene or protest must serve a copy and necessity granted by the the Commission’s order in Docket No. of that document on the Applicant. Commission by order issued on April CP16–4–001, the Commission will Notice is hereby given that the 18, 2019 in Docket No. CP18–7–000 apply its revised practice concerning deadline for filing protests with regard authorizing Port Arthur Pipeline to out-of-time motions to intervene in any to the applicant’s request for blanket construct, own, and operate a new new Natural Gas Act section 3 or section authorization, under 18 CFR part 34, of natural gas pipeline system, including a 7 proceeding.1 Persons desiring to future issuances of securities and new compressor station, metering and become a party to a certificate assumptions of liability, is January 9, regulating stations, and appurtenant proceeding are to intervene in a timely 2020. facilities (Louisiana Connector Project).1 manner. If seeking to intervene out-of- The Commission encourages The Amendment Application time, the movant is required to show electronic submission of protests and proposes to amend Port Arthur interventions in lieu of paper, using the 1 Tennessee Gas Pipeline Company, L.L.C., 162 FERC Online links at http:// 1 See Port Arthur LNG, LLC, 167 FERC 61,052 FERC 61,167 at 50 (2018). www.ferc.gov. To facilitate electronic (2019).

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Pipeline’s Louisiana Connector Project with the requirements of the justification by reference to factors set to relocate the compressor station Commission’s Rules of Practice and forth in Rule 214(d)(1) of the associated with the pipeline from a Procedure (18 CFR 385.214 or 385.211) Commission’s Rules and Regulations.3 location in Allen Parish, Louisiana at and the Regulations under the NGA (18 The Commission strongly encourages pipeline milepost (MP) 96.2 to a CFR 157.10). A person obtaining party electronic filings of comments, protests location in Beauregard Parish, Louisiana status will be placed on the service list and interventions in lieu of paper using at MP 72.3. Also, the Amendment maintained by the Secretary of the the eFiling link at http://www.ferc.gov. Application proposes to relocate the site Commission and will receive copies of Persons unable to file electronically of one previously-approved all documents filed by the applicant and should submit an original and 3 copies interconnection with Texas Eastern by all other parties. A party must submit of the protest or intervention to the Transmission and to construct 3 copies of filings made with the Federal Energy regulatory Commission, appurtenant facilities and add Commission and must provide a copy to 888 First Street NE, Washington, DC interconnection facilities with three the applicant and to every other party in 20426. additional interstate pipeline the proceeding. Only parties to the Comment Date: 5:00 p.m. Eastern companies, Cameron Interstate Pipeline, proceeding can ask for court review of Time on January 10, 2020. Transcontinental Gas Pipe Line, and LA Commission orders in the proceeding. Dated: December 20, 2019. Storage Pipeline, all as more fully set However, a person does not have to forth in the application, which is on file intervene in order to have comments Kimberly D. Bose, with the Commission and open to considered. The second way to Secretary. public inspection. participate is by filing with the [FR Doc. 2019–28117 Filed 12–27–19; 8:45 am] The filing may also be viewed on the Secretary of the Commission, as soon as BILLING CODE 6717–01–P web at http://www.ferc.gov using the possible, an original and two copies of eLibrary link. Enter the docket number comments in support of or in opposition excluding the last three digits in the to this project. The Commission will DEPARTMENT OF ENERGY docket number field to access the consider these comments in document. For assistance, contact FERC determining the appropriate action to be Federal Energy Regulatory at [email protected] or call taken, but the filing of a comment alone Commission toll-free, (866) 208–3676 or TTY, (202) will not serve to make the filer a party [Project No. 2368–059] 502–8659. to the proceeding. The Commission’s Any questions regarding this rules require that persons filing Notice of Application Tendered for application should be directed to Jerrod comments in opposition to the project Filing With the Commission and L. Harrison, 488 8th Avenue, San Diego, provide copies of their protests only to Establishing Procedural Schedule for CA 92101, (619) 696–2987, jharrison@ the party or parties directly involved in Licensing and Deadline for sempraglobal.com. the protest. Submission of Final Amendments; Pursuant to section 157.9 of the Persons who wish to comment only Algonquin Northern Maine Generating Commission’s rules, 18 CFR 157.9, on the environmental review of this Company within 90 days of this Notice the project should submit an original and Commission staff will either: Complete two copies of their comments to the Take notice that the following its environmental assessment (EA) and Secretary of the Commission. hydroelectric application has been filed place it into the Commission’s public Environmental commentors will be with the Commission and is available record (eLibrary) for this proceeding; or placed on the Commission’s for public inspection. issue a Notice of Schedule for environmental mailing list and will be a. Type of Application: Subsequent Environmental Review. If a Notice of notified of any meetings associated with Minor License. Schedule for Environmental Review is the Commission’s environmental review b. Project No.: 2368–059. issued, it will indicate, among other process. Environmental commentors c. Date Filed: December 3, 2019. milestones, the anticipated date for the will not be required to serve copies of d. Applicant: Algonquin Northern Commission staff’s issuance of the final filed documents on all other parties. Maine Generating Company environmental impact statement (FEIS) However, the non-party commentors (Algonquin). or EA for this proposal. The filing of the will not receive copies of all documents e. Name of Project: Scopan EA in the Commission’s public record filed by other parties or issued by the Hydroelectric Project. for this proceeding or the issuance of a Commission and will not have the right f. Location: The existing project is Notice of Schedule for Environmental to seek court review of the located on Scopan Stream in the Town Review will serve to notify federal and Commission’s final order. of Masardis in Aroostook County, state agencies of the timing for the As of the February 27, 2018 date of Maine. The project does not affect completion of all necessary reviews, and the Commission’s order in Docket No. federal lands. the subsequent need to complete all CP16–4–001, the Commission will g. Filed Pursuant to: Federal Power federal authorizations within 90 days of apply its revised practice concerning Act, 16 U.S.C. 791(a)–825(r). the date of issuance of the Commission out-of-time motions to intervene in any h. Applicant Contact: Ian MacRobbie, staff’s FEIS or EA. new Natural Gas Act section 3 or section Vice President, Operations, Algonquin There are two ways to become 7 proceeding.2 Persons desiring to Northern Maine Generating Company, involved in the Commission’s review of become a party to a certificate 26 Canal Bank, Windsor Locks, this project. First, any person wishing to proceeding are to intervene in a timely Connecticut 06096; Telephone (905) obtain legal status by becoming a party manner. If seeking to intervene out-of- 465–6119. to the proceedings for this project time, the movant is required to ‘‘show i. FERC Contact: John Baummer, (202) should, on or before the comment date good cause why the time limitation 502–6837 or [email protected]. stated below, file with the Federal should be waived,’’ and should provide j. This application is not ready for Energy Regulatory Commission, 888 environmental analysis at this time. First Street NE, Washington, DC 20426, 2 Tennessee Gas Pipeline Company, L.L.C., 162 a motion to intervene in accordance FERC ¶ 61,167 at ¶ 50 (2018). 3 18 CFR 385.214(d)(1).

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k. Project Description: The existing the full pond levels to protect and November 15, maintain the water Scopan Hydroelectric Project consists enhance fisheries, wetlands, wildlife elevation of Scopan Lake above 601.0 of: (1) A 750-foot-long dam that and recreational resources. Algonquin feet NGVD; (d) limit winter drawdowns includes: (a) A 330-foot-long, 45-foot- manages the project to augment flows in of Scopan Lake to no lower than 595.3 high earthen embankment section (north the Aroostook River downstream of the feet NGVD from November 16 to May embankment) with a 194-foot-long, 49- project for generation at the Aroostook 14; (2) limit the maximum discharge foot-high concrete retaining wall at the River Project No. 2367 and the Tinker from the project to not more than 600 downstream end of the embankment; (b) Falls Project, the latter of which is cfs from June 1 to November 30; and (3) a 24-foot-long, 45-foot-high concrete located in New Brunswick Canada and continue to release a continuous gravity spillway section with a crest is not a FERC-licensed project. The minimum flow of 21 cfs including elevation of 590 feet National Geodetic Scopan Project had an average annual leakage from the minimum flow valves Vertical Datum of 1929 (NGVD) and a generation of approximately 878,913 unless water levels in Scopan Lake fall single 13.5-foot-high spillway gate with kilowatt-hours from 2012 through 2018. below 601.5 feet NGVD from May 16 two 10-inch-diameter minimum flow The project’s current license requires through November 30, in which case butterfly valves; (c) a 26-foot-long, 48- Algonquin to: (1) To maintain Scopan one valve would be closed. foot-high concrete intake and Lake water levels as follows: (a) From l. Locations of the Application: A powerhouse section that includes: (i) May 15 to July 31, fluctuate Scopan copy of the application is available for Two 12-inch-wide head gates and Lake by no more than one foot; (b) from review at the Commission in the Public trashracks with 3-inch clear-bar spacing; July 16 to Labor Day, target Scopan Lake Reference Room or may be viewed on and (ii) a 26-foot-long, 49-foot-high between 601.0 to 603.0 feet NGVD; and the Commission’s website at http:// concrete powerhouse with a single 1.5- (c) from October 1 to November 15, www.ferc.gov using the eLibrary link. megawatt vertical propeller turbine- maintain Scopan Lake at or above 601.0 Enter the docket number excluding the generator unit; and (d) a 370-foot-long, feet NGVD; (2) release minimum flows last three digits in the docket number of 21 cubic feet per second (cfs) from 45-foot-high earthen embankment field to access the document. For December 1 through May 15, and 25 cfs section (south embankment) with a assistance, please contact FERC Online from May 16 through November 30; (3) 135.5-foot-long, 45-foot-high concrete Support at FERCOnlineSupport@ close one of the two minimum flow retaining wall at the downstream end of ferc.gov, (866) 208–3676 (toll free), or valves if Scopan Lake falls below 601.5 the embankment; (2) an approximately (202) 502–8659 (TTY). A copy is also feet NGVD; (4) close both minimum 15-mile-long, 5,000-acre impoundment available for inspection and flow valves if Scopan Lake falls below (Scopan Lake) with a useable storage reproduction the Ashland Community 601 feet NGVD; and (5) limit the volume of 57,920 acre-feet between Library, 57 Exchange Street, Ashland, maximum discharge from the project to elevations 590.5 and 603.2 feet NGVD; Maine 04732. not more than 600 cfs from April 1 to (3) three 13.45/2.4-kilovolt transformers November 30. m. You may also register online at and switch gear that connect the Algonquin proposes to: (1) Maintain http://www.ferc.gov/docs-filing/ generator to Emera, Maine’s regional Scopan Lake water surface elevations as esubscription.asp to be notified via transmission line; and (4) appurtenant follows: (a) From June 1 to July 31 limit email of new filings and issuances facilities. water level fluctuations in Scopan Lake related to this or other pending projects. The project operates in a store and to no more than 0.5 vertical foot upward For assistance, contact FERC Online release mode in which the or 1.0 vertical foot downward within Support. impoundment is drawdown from any 28-day period from June 1 through n. Procedural Schedule: The January through March of each year to July 31;(b) from August 1 through Labor application will be processed according meet electricity demand in the winter. Day, maintain the water elevation of to the following preliminary Hydro During the spring and summer, the Scopan Lake between 601.0 and 603.0 Licensing Schedule. Revisions to the impoundment is maintained at or near feet NGVD; (c) from October 1 through schedule may be made as appropriate.

Milestone Target Date

Notice of Acceptance/Notice of Ready for Environmental Analysis ...... April 2020. Filing of recommendations, preliminary terms and conditions, and fishway prescriptions ...... June 2020. Commission issues Environmental Assessment ...... September 2020. Comments on the EA ...... October 2020. Modified terms and conditions ...... December 2020.

o. Final amendments to the DEPARTMENT OF ENERGY SUMMARY: In compliance with the application must be filed with the requirements of the Paperwork Commission no later than 30 days from Federal Energy Regulatory Reduction Act of 1995, the Federal the issuance date of the notice of ready Commission Energy Regulatory Commission for environmental analysis. [Docket No. IC20–5–000] (Commission or FERC) is soliciting public comment on the requirements Dated: December 17, 2019. Commission Information Collection and burden of the information Nathaniel J. Davis, Sr., Activities (FERC–923); Comment collection described below. Deputy Secretary. Request; Extension DATES [FR Doc. 2019–28071 Filed 12–27–19; 8:45 am] : Comments on the collection of AGENCY: Federal Energy Regulatory information are due February 28, 2020. BILLING CODE 6717–01–P Commission, DOE. ADDRESSES: You may submit comments ACTION: Notice of information collection (identified by Docket No. IC20–5–000) and request for comments. by either of the following methods:

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• eFiling at Commission’s Website: requirements described below with no energy in interstate commerce to http://www.ferc.gov/docs-filing/ changes to the current reporting voluntarily share non-public, efiling.asp. requirements. operational information with each other • Mail/Hand Delivery/Courier: Comments: Comments are invited on: for the purpose of promoting reliable Federal Energy Regulatory Commission, (1) Whether the collection of service and operational planning on Secretary of the Commission, 888 First information is necessary for the proper either the pipeline’s or public utility’s Street NE, Washington, DC 20426. performance of the functions of the system. This helped ensure the Please identify the specific Commission, including whether the reliability of natural gas pipeline and information collection number and/or information will have practical utility; public utility transmission services by title in your comments. (2) the accuracy of the agency’s permitting transmission operators to Instructions: All submissions must be estimates of the burden and cost of the share with each other the information formatted and filed in accordance with collection of information, including the that they deem necessary to promote the submission guidelines at: http:// validity of the methodology and reliability and integrity of their systems. www.ferc.gov/help/submission- assumptions used; (3) ways to enhance FERC removed actual or perceived guide.asp. For user assistance contact the quality, utility and clarity of the prohibitions to the information sharing FERC Online Support by email at information collection; and (4) ways to and communications between industry [email protected], or by phone minimize the burden of the collection of entities. The communications of at: (866) 208–3676 (toll-free), or (202) information on those who are to information are not submitted to FERC. 502–8659 for TTY. respond, including the use of automated Rather, the non-public information is Docket: Users interested in receiving collection techniques or other forms of shared voluntarily between industry automatic notification of activity in this information technology. entities. FERC does not prescribe the docket or in viewing/downloading FERC–923, Communication of content, medium, format, or frequency comments and issuances in this docket Operational Information between for the information sharing and may do so at http://www.ferc.gov/docs- Natural Gas Pipelines and Electric communications. Those decisions are filing/docs-filing.asp. Transmission Operators made by the industry entities, FOR FURTHER INFORMATION CONTACT: depending on their needs and the OMB Control No.: 1902–0265. situation. Ellen Brown may be reached by email Abstract: In 2013, the Federal Energy at [email protected], telephone Regulatory Commission (FERC or Type of Respondent: Natural gas at (202) 502–8663, and fax at (202) 273– Commission) revised its regulations to pipelines and public utilities. 0873. provide explicit authority to interstate Estimate of Annual Burden: 1 The SUPPLEMENTARY INFORMATION: natural gas pipelines and public utilities Commission estimates the annual public Type of Request: Three-year extension that own, operate, or control facilities reporting burden and cost 2 for FERC– of the information collection used for the transmission of electric 923 as: FERC–923

Total annual Annual Average burden hours Cost per Number of number of Total number burden hours & total respondent respondents responses per of responses & cost ($) annual cost ($) respondent per response ($)

(1) (2) (1) * (2) = (3) (4) (3) * (4) = (5) (5) ÷ (1)

Public Utility Transmission Oper- 3 165 12 1,980 0.5 hrs.; $40 ..... 990 hrs.; $79,200 .. $480 ator, communications. Interstate Natural Gas Pipelines, 4 181 12 2,172 0.5 hrs.; $40 ..... 1,086 hrs.; $86,880 480 communications.

Total ...... 4,152 ...... 2,076 hrs.; ...... $166,080.

Dated: December 20, 2019. Kimberly D. Bose, Secretary. [FR Doc. 2019–28120 Filed 12–27–19; 8:45 am BILLING CODE 6717–01–P

1 Burden is defined as the total time, effort, or comparable to the Commission’s skill set. The FERC December 6, 2019, minus the Transmission financial resources expended by persons to 2019 average salary plus benefits for one FERC full- Operators within ERCOT. generate, maintain, retain, or disclose or provide time equivalent (FTE) is $167,091/year (or $80/hour 4 The estimate is based on the number of information to or for a federal agency. See 5 CFR [rounded]). respondents to the 2018 FERC Forms 2 and 2A 1320 for additional information on the definition of 3 information collection burden. The estimate for the number of respondents is (Major and Non-major Natural Gas Pipeline Annual based on the North American Electric Reliability Reports). 2 Commission staff estimates that the industry’s skill set (wages and benefits) for FERC–923 is Corporation (NERC) Compliance Registry as of

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DEPARTMENT OF ENERGY eSubscription link on the website that Comments Due: 5 p.m. ET 1/10/20. enables subscribers to receive email Docket Numbers: ER20–665–000. Federal Energy Regulatory notification when a document is added Applicants: Midcontinent Commission to a subscribed docket(s). For assistance Independent System Operator, Inc. [Docket No. EL20–13–000] with any FERC Online service, please Description: § 205(d) Rate Filing: email [email protected], or 2019–12–20_Optimal Achievable Notice of Petition for Partial Waiver; call (866) 208–3676 (toll free). For TTY, Output filing to be effective 3/1/2020. Old Dominion Electric Cooperative call (202) 502–8659. Filed Date: 12/20/19. Comments: 5:00 p.m. Eastern Time on Accession Number: 20191220–5312. Take notice that on December 20, January 10, 2020. 2019, pursuant to section 292.402 of the Comments Due: 5 p.m. ET 1/10/20. Federal Energy Regulatory Dated: December 20, 2019. Docket Numbers: ER20–666–000. Commission’s (Commission) Rules and Kimberly D. Bose, Applicants: Gulf Power Company. Regulations,1 Old Dominion Electric Secretary. Description: § 205(d) Rate Filing: Cooperative (ODEC), filed a petition for [FR Doc. 2019–28118 Filed 12–27–19; 8:45 am] Florida Public Utilities Company partial waiver on behalf of its electric BILLING CODE 6717–01–P NITSA/NOA to be effective 1/1/2020. distribution cooperative member- Filed Date: 12/20/19. owners (collectively, the Members),2 of Accession Number: 20191220–5313. certain obligations imposed on ODEC DEPARTMENT OF ENERGY Comments Due: 5 p.m. ET 1/10/20. and the Members under Sections Docket Numbers: ER20–667–000. 292.303(a) and 292.303(b) of the Federal Energy Regulatory Applicants: Gulf Power Company. Commission’s Regulations 3 Commission Description: Tariff Cancellation: implementing section 210 of the Public Cancellation of SA No. 3 FPU NITSA/ Combined Notice of Filings #2 Utility Regulatory Policies Act of 1978, NOA to be effective 1/1/2020. as amended (PURPA),4 all as more fully Take notice that the Commission Filed Date: 12/20/19. explained in the petition. received the following electric rate Accession Number: 20191220–5315. Any person desiring to intervene or to filings: Comments Due: 5 p.m. ET 1/10/20. protest this filing must file in Docket Numbers: ER10–1728–013; Docket Numbers: ER20–668–000. accordance with Rules 211 and 214 of ER16–930–007; ER13–1544–010; ER11– Applicants: Midcontinent the Commission’s Rules of Practice and 2036–013; ER19–1597–002. Independent System Operator, Inc. Procedure (18 CFR 385.211, 385.214). Applicants: The Dayton Power and Description: § 205(d) Rate Filing: Protests will be considered by the Light Company, AES Ohio Generation, 2019–12–20_Module D Remove Commission in determining the LLC, AES ES Tait, LLC, AES Laurel Physical Withholding Exemption filing appropriate action to be taken, but will Mountain, LLC, AES Integrated Energy, to be effective 3/1/2020. not serve to make protestants parties to LLC. Filed Date: 12/20/19. the proceeding. Any person wishing to Description: Triennial Market Power Accession Number: 20191220–5319. become a party must file a notice of Update for the Northeast Region of AES Comments Due: 5 p.m. ET 1/10/20. intervention or motion to intervene, as MBR Affiliates, et al. appropriate. Such notices, motions, or Docket Numbers: ER20–669–000. Filed Date: 12/20/19. protests must be filed on or before the Applicants: Midcontinent Accession Number: 20191220–5173. comment date. Anyone filing a motion Independent System Operator, Inc. Comments Due: 5 p.m. ET 2/18/20. to intervene or protest must serve a copy Description: § 205(d) Rate Filing: _ of that document on the Petitioner. Docket Numbers: ER20–405–001. 2019–12–20 Revisions to Enhance The Commission encourages Applicants: Golden Spread Electric Module D filing to be effective 3/1/2020. electronic submission of protests and Cooperative, Inc. Filed Date: 12/20/19. interventions in lieu of paper using the Description: Tariff Amendment: Accession Number: 20191220–5326. eFiling link at http://www.ferc.gov. Amendment ER20–405 Filing to be Comments Due: 5 p.m. ET 1/10/20. Persons unable to file electronically effective 1/1/2020. The filings are accessible in the should submit an original and 5 copies Filed Date: 12/20/19. Commission’s eLibrary system by of the protest or intervention to the Accession Number: 20191220–5285. clicking on the links or querying the Federal Energy Regulatory Commission, Comments Due: 5 p.m. ET 12/30/19. docket number. 888 First Street NE, Washington, DC Docket Numbers: ER20–663–000. Any person desiring to intervene or 20426. Applicants: New York Independent protest in any of the above proceedings This filing is accessible on-line at System Operator, Inc. must file in accordance with Rules 211 http://www.ferc.gov, using the eLibrary Description: § 205(d) Rate Filing: and 214 of the Commission’s link and is available for review in the NYISO 205 filing of CEE tariff revisions Regulations (18 CFR 385.211 and Commission’s Public Reference Room in to be effective 2/19/2020. 385.214) on or before 5:00 p.m. Eastern Washington, DC. There is an Filed Date: 12/20/19. time on the specified comment date. Accession Number: 20191220–5208. Protests may be considered, but 1 18 CFR 292.402 (2019). Comments Due: 5 p.m. ET 1/10/20. intervention is necessary to become a 2 ODEC’s 11 Members are A&N Electric Docket Numbers: ER20–664–000. party to the proceeding. Cooperative, BARC Electric Cooperative, Choptank Electric Cooperative, Inc., Community Electric Applicants: California Independent eFiling is encouraged. More detailed Cooperative, Delaware Electric Cooperative, Inc., System Operator Corporation. information relating to filing Mecklenburg Electric Cooperative, Northern Neck Description: § 205(d) Rate Filing: requirements, interventions, protests, Electric Cooperative, Prince George Electric 2019–12–20 Nodal Pricing Model service, and qualifying facilities filings Cooperative, Rappahannock Electric Cooperative, Shenandoah Valley Electric Cooperative, and Agreement with Pacificorp to be can be found at: http://www.ferc.gov/ Southside Electric Cooperative. effective 3/1/2020. docs-filing/efiling/filing-req.pdf. For 3 18 CFR 292.303(a), 292.303(b) (2019). Filed Date: 12/20/19. other information, call (866) 208–3676 4 16 U.S.C. 824a–3. Accession Number: 20191220–5309. (toll free). For TTY, call (202) 502–8659.

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Dated: December 20, 2019. 2032–008; ER10–2033–008; ER15–190– Accession Number: 20191219–5214. Kimberly D. Bose, 011; ER12–2313–005; ER10–1330–007; Comments Due: 5 p.m. ET 1/9/20. Secretary. ER18–2465–001; ER18–2466–001; Docket Numbers: ER20–649–000. [FR Doc. 2019–28124 Filed 12–27–19; 8:45 am] ER19–2343–002; ER17–2336–005. Applicants: AEP Energy Partners, Inc. BILLING CODE 6717–01–P Applicants: Colonial Eagle Solar, LLC, Description: § 205(d) Rate Filing: MBR Conetoe II Solar, LLC, Duke Energy Tariff, FERC Electric Tariff for Market Beckjord Storage, LLC, Duke Energy Based Sales to be effective 1/1/2020. DEPARTMENT OF ENERGY Kentucky, Inc., Duke Energy Ohio, Inc., Filed Date: 12/19/19. Duke Energy Renewable Services, LLC, Accession Number: 20191219–5216. Federal Energy Regulatory Laurel Hill Wind Energy, LLC, North Comments Due: 5 p.m. ET 1/9/20. Commission Allegheny Wind, LLC, Federal Way Docket Numbers: ER20–650–000. Powerhouse LLC, Potter Road Combined Notice of Filings #1 Applicants: El Paso Electric Company. Powerhouse LLC, 2018 ESA Project Description: § 205(d) Rate Filing: Take notice that the Commission Company, LLC, Shoreham Solar Service Agreement No. 325, Large received the following electric corporate Commons LLC. Generator Interconnection Agreement filings: Description: Triennial Market Power with EDF to be effective 12/31/9998. Update for the Northeast Region of Duke Filed Date: 12/19/19. Docket Numbers: EC20–26–000. MBR Sellers. Applicants: Krayn Wind LLC, Accession Number: 20191219–5220. Filed Date: 12/20/19. Comments Due: 5 p.m. ET 1/9/20. Cambria Wind, LLC. Accession Number: 20191220–5165. Description: Joint Application for Comments Due: 5 p.m. ET 2/18/20. Docket Numbers: ER20–651–000. Authorization Under Section 203 of the Applicants: El Paso Electric Company. Federal Power Act, et al. of Krayn Wind Docket Numbers: ER19–2305–000. Description: § 205(d) Rate Filing: Applicants: Valencia Power, LLC. LLC, et al. Service Agreement No. 326, Long-Term Description: Supplement to June 28, Filed Date: 12/19/19. Conditional Firm PTP Agreement with 2019 Valencia Power, LLC Updated Accession Number: 20191219–5337. EDF to be effective. 12/21/2019. Market Power Analysis for the SW Comments Due: 5 p.m. ET 1/9/20. Filed Date: 12/19/19. Region. Accession Number: 20191219–5221. Take notice that the Commission Filed Date: 12/20/19. Comments Due: 5 p.m. ET 1/9/20. received the following electric rate Accession Number: 20191220–5148. filings: Comments Due: 5 p.m. ET 1/10/20. Docket Numbers: ER20–652–000. Applicants: Public Service Company Docket Numbers: ER10–2806–004; Docket Numbers: ER19–2707–002; of Oklahoma, Southwestern Electric ER10–2818–004; ER10–2847–004; ER10–2822–016; ER16–1238–003; Power Company. ER14–963–004. ER16–1250–008; ER17–1392–003; Description: § 205(d) Rate Filing: Applicants: TransAlta Energy ER10–3158–009; ER12–308–009; ER10– Market-Based Rates Tariff to be effective Marketing (U.S.) Inc., TransAlta Energy 3162–009; ER10–3161–009; ER17–1242– 1/1/2020. Marketing Corporation, TransAlta 002. Filed Date: 12/19/19. Centralia Generation, LLC, TransAlta Applicants: Poseidon Wind, LLC, Accession Number: 20191219–5231. Wyoming Wind LLC. Atlantic Renewable Projects II LLC, Comments Due: 5 p.m. ET 1/9/20. Description: Triennial Market Power Avangrid Arizona Renewables, LLC, Update Analysis for Northwest Region Avangrid Renewables, LLC, El Cabo Docket Numbers: ER20–653–000. of the TransAlta Northwest MBR Wind LLC, Dillon Wind LLC, Manzana Applicants: Great Bay Solar I, LLC. Sellers, et al. Wind LLC, Mountain View Power Description: § 205(d) Rate Filing: Filed Date: 12/19/19. Partners III, LLC, Shiloh I Wind Project, Shared Facilities Agreement to be Accession Number: 20191219–5280. LLC, Tule Wind LLC. effective 12/20/2019. Comments Due: 5 p.m. ET 2/18/20. Description: Notice of Change in Filed Date: 12/19/19. Docket Numbers: ER10–3079–016; Status of Poseidon Wind, LLC and the Accession Number: 20191219–5232. ER11–2539–006; ER11–2540–006; Avangrid Southwest MBR Sellers. Comments Due: 5 p.m. ET 1/9/20. ER11–2542–006. Filed Date: 12/19/19. Docket Numbers: ER20–654–000. Applicants: Tyr Energy, LLC, Plains Accession Number: 20191219–5275. Applicants: MidAmerican Central End, LLC, Plains End II, LLC, Rathdrum Comments Due: 5 p.m. ET 1/9/20. California Transco, LLC. Power, LLC. Docket Numbers: ER20–647–000. Description: § 205(d) Rate Filing: Description: Updated Market Power Applicants: Midcontinent Annual TRBAA Update to be effective Analysis for Northwest Region of Tyr Independent System Operator, Inc. 1/1/2020. Energy, LLC, et al. Description: § 205(d) Rate Filing: Filed Date: 12/20/19. Filed Date: 12/20/19. 2019–12–19_MISO–PJM JOA revisions Accession Number: 20191220–5003. Accession Number: 20191220–5104. on Constraint Relaxation to be effective Comments Due: 5 p.m. ET 1/10/20. Comments Due: 5 p.m. ET 2/18/20. 2/18/2020. Docket Numbers: ER20–655–000. Docket Numbers: ER11–2154–010. Filed Date: 12/19/19. Applicants: New York State Applicants: Twin Eagle Resource Accession Number: 20191219–5211. Reliability Council, L.L.C. Management, LLC. Comments Due: 5 p.m. ET 1/9/20. Description: Informational Filing of Description: Triennial Market Power Docket Numbers: ER20–648–000. the Revised Installed Capacity Update for the Southwest Region of Applicants: PJM Interconnection, Requirement for the New York Control Twin Eagle Resource Management, LLC. L.L.C. Area by the New York State Reliability Filed Date: 12/19/19. Description: § 205(d) Rate Filing: Council, L.L.C. Accession Number: 20191219–5274. Revisions to the MISO–PJM JOA re Filed Date: 12/19/19. Comments Due: 5 p.m. ET 2/18/20. Constraint Relaxation to be effective 2/ Accession Number: 20191219–5276. Docket Numbers: ER16–355–003; 18/2020. Comments Due: 5 p.m. ET 1/9/20. ER16–141–005; ER15–255–004; ER10– Filed Date: 12/19/19. Docket Numbers: ER20–656–000.

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Applicants: Southwest Power Pool, Protests may be considered, but agency regulations thereunder at 50 CFR Inc. intervention is necessary to become a part 402; and NOAA Fisheries under Description: § 205(d) Rate Filing: party to the proceeding. section 305(b) of the Magnuson-Stevens 1313R13 Oklahoma Gas and Electric eFiling is encouraged. More detailed Fishery Conservation and Management Company NITSA NOA to be effective information relating to filing Act and implementing regulations at 50 12/1/2019. requirements, interventions, protests, CFR 600.920. We are also initiating Filed Date: 12/20/19. service, and qualifying facilities filings consultation with the Vermont State Accession Number: 20191220–5015. can be found at: http://www.ferc.gov/ Historic Preservation Officer, as Comments Due: 5 p.m. ET 1/10/20. docs-filing/efiling/filing-req.pdf. For required by section 106 of the National Docket Numbers: ER20–657–000. other information, call (866) 208–3676 Historic Preservation Act, and the Applicants: Southwest Power Pool, (toll free). For TTY, call (202) 502–8659. implementing regulations of the Inc. Dated: December 20, 2019. Advisory Council on Historic Description: § 205(d) Rate Filing: Kimberly D. Bose, Preservation at 36 CFR 800.2. 1628R17 Western Farmers Electric Secretary. l. With this notice, we are designating Cooperative NITSA NOA to be effective Green Mountain as the Commission’s [FR Doc. 2019–28123 Filed 12–27–19; 8:45 am] 12/1/2019. non-federal representative for carrying BILLING CODE 6717–01–P Filed Date: 12/20/19. out informal consultation pursuant to Accession Number: 20191220–5019. section 7 of the Endangered Species Act Comments Due: 5 p.m. ET 1/10/20. DEPARTMENT OF ENERGY and section 305(b) of the Magnuson- Docket Numbers: ER20–658–000. Stevens Fishery Conservation and Applicants: Fortistar North Federal Energy Regulatory Management Act; and consultation Tonawanda Inc. Commission pursuant to section 106 of the National Historic Preservation Act. Description: Compliance filing: Notice [Project No. 2489–048] of Succession and New eTariff Baseline m. On October 30, 2019, Green Tariff to be effective 12/21/2019. Green Mountain Power Corporation; Mountain filed a Pre-Application Filed Date: 12/20/19. Notice of Intent To File License Document (PAD; including a proposed Accession Number: 20191220–5020. Application, Filing of Pre-Application process plan and schedule) with the Comments Due: 5 p.m. ET 1/10/20. Document, and Approving Use of the Commission, pursuant to 18 CFR 5.6 of Docket Numbers: ER20–659–000. Traditional Licensing Process the Commission’s regulations. Applicants: New York Independent n. A copy of the PAD is available for System Operator, Inc. a. Type of Filing: Notice of Intent to review at the Commission in the Public Description: Compliance filing: File License Application and Request to Reference Room or may be viewed on NYISO compliance filing re: Fast-Start Use the Traditional Licensing Process the Commission’s website (http:// Resources to be effective 12/31/9998. b. Project No.: 2489–048 www.ferc.gov), using the eLibrary link. Filed Date: 12/20/19. c. Date Filed: October 30, 2019 Enter the docket number, excluding the Accession Number: 20191220–5087. d. Submitted By: Green Mountain last three digits in the docket number Comments Due: 5 p.m. ET 1/10/20. Power Corporation (Green Mountain) field to access the document. For e. Name of Project: Cavendish assistance, contact FERC Online Docket Numbers: ER20–660–000. Hydroelectric Project Support at FERConlineSupport@ Applicants: Bolt Energy Marketing, f. Location: On the Black River, in ferc.gov, (866) 208–3676 (toll free), or LLC. Windsor County, Vermont. No federal (202) 502–8659 (TTY). A copy is also Description: Baseline eTariff Filing: lands are occupied by the project works available for inspection and Application for Market-Based Rate or located within the project boundary. reproduction at the address in Authorization and Request for Waivers g. Filed Pursuant to: 18 CFR 5.3 and paragraph h. to be effective. 1/1/2020. 5.5 of the Commission’s regulations. Filed Date: 12/20/19. o. The licensee states its unequivocal h. Potential Applicant Contact: John intent to submit an application for a Accession Number: 20191220–5107. Greenan, Green Mountain Power Comments Due: 5 p.m. ET 1/10/20. subsequent license for Project No. 2489. Corporation, 2152 Post Road, Rutland, Pursuant to 18 CFR 16.20, each Docket Numbers: ER20–661–000. VT 05701; (802) 770–2195; email at application for a subsequent license and Applicants: Tucson Electric Power John.Greenan@ any competing license applications Company. greenmountainpower.com. must be filed with the Commission at Description: § 205(d) Rate Filing: i. FERC Contact: John Baummer at least 24 months prior to the expiration Concurrences to Navajo Project (202) 502–6837; or email at of the existing license. All applications Agreements to be effective 12/23/2019. [email protected]. for license for this project must be filed Filed Date: 12/20/19. j. Green Mountain filed its request to by October 31, 2022. Accession Number: 20191220–5164. use the Traditional Licensing Process on p. Register online at http:// Comments Due: 5 p.m. ET 1/10/20. October 30, 2019 and provided public www.ferc.gov/docs-filing/ The filings are accessible in the notice of the request on October 23, esubscription.asp to be notified via Commission’s eLibrary system by 2019. In a letter dated December 20, email of new filings and issuances clicking on the links or querying the 2019, the Director of the Division of related to this or other pending projects. docket number. Hydropower Licensing approved Green For assistance, contact FERC Online Any person desiring to intervene or Mountain’s request to use the Support. protest in any of the above proceedings Traditional Licensing Process. must file in accordance with Rules 211 k. With this notice, we are initiating Dated: December 20, 2019. and 214 of the Commission’s informal consultation with the U.S. Fish Kimberly D. Bose, Regulations (18 CFR 385.211 and and Wildlife Service and NOAA Secretary. 385.214) on or before 5:00 p.m. Eastern Fisheries under section 7 of the [FR Doc. 2019–28122 Filed 12–27–19; 8:45 am] time on the specified comment date. Endangered Species Act and the joint BILLING CODE 6717–01–P

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DEPARTMENT OF ENERGY Description: § 4(d) Rate Filing: Non- Richmond, Virginia 23219, filed in the Conforming—Patriots Energy Group— above referenced docket, a prior notice Federal Energy Regulatory PSFT—Removal to be effective 1/19/ request pursuant to sections 157.205, Commission 2020. 157.208, and 157.210 of the Filed Date: 12/19/19. Commission’s regulations under the Combined Notice of Filings Accession Number: 20191219–5188. Natural Gas Act (NGA) and Dominion’s Take notice that the Commission has Comments Due: 5 p.m. ET 12/31/19. blanket certificate issued in Docket No. received the following Natural Gas Docket Numbers: RP20–349–000. CP82–537–000, for authorization to (1) Pipeline Rate and Refund Report filings: Applicants: Transcontinental Gas construct approximately 1.7 miles of 20- inch diameter pipeline lateral south of Docket Numbers: RP20–342–000. Pipe Line Company. Dominion’s existing Gilmore M&R Applicants: NGO Transmission, Inc. Description: § 4(d) Rate Filing: Station in Tuscarawas County, OH (TL– Description: § 4(d) Rate Filing: Negotiated Rates—FTP—Who Dat MC 653 OH Lateral); (2) re-wheel the Negotiated Rate Filing to be effective 547—Update to be effective 11/1/2019. compressors on three existing 1/1/2020. Filed Date: 12/19/19. Filed Date: 12/19/19. Accession Number: 20191219–5198. centrifugal compression sets at Accession Number: 20191219–5027. Comments Due: 5 p.m. ET 12/31/19. Dominion’s existing Newark Comments Due: 5 p.m. ET 12/31/19. Docket Numbers: RP20–350–000. Compressor Station in Licking County, Applicants: Southern Star Central Gas OH; and (3) construct a new M&R site Docket Numbers: RP20–343–000. and associated equipment at the end of Applicants: East Tennessee Natural Pipeline, Inc. the new TL–653 OH Lateral in Gas, LLC. Description: § 4(d) Rate Filing: Vol. Tuscarawas County, OH (Tri-West Description: § 4(d) Rate Filing: ETNG 2—Amendment of Negotiated Rate Project). The project will allow Duke Energy Progress releases beginning Agreement—Scout Energy to be Dominion to provide 120,000 01–01–2020 to be effective 1/1/2020. effective 1/1/2020. dekatherms per day of firm natural gas Filed Date: 12/19/19. Filed Date: 12/19/19. transportation service from Accession Number: 20191219–5033. Accession Number: 20191219–5206. Comments Due: 5 p.m. ET 12/31/19. Comments Due: 5 p.m. ET 12/31/19. Pennsylvania to Ohio for delivery to Tennessee Gas Pipeline Company, all as Docket Numbers: RP20–344–000. The filings are accessible in the Commission’s eLibrary system by more fully set forth in the application Applicants: Transcontinental Gas which is on file with the Commission Pipe Line Company. clicking on the links or querying the docket number. and open to public inspection. The Description: Compliance filing Refund filing may also be viewed on the web at Report-Flow Through of Texas Eastern Any person desiring to intervene or protest in any of the above proceedings http://www.ferc.gov using the OFO Penalty Sharing to S–2 Customers ‘‘eLibrary’’ link. Enter the docket to be effective N/A. must file in accordance with Rules 211 and 214 of the Commission’s number excluding the last three digits in Filed Date: 12/19/19. the docket number field to access the Accession Number: 20191219–5034. Regulations (18 CFR 385.211 and document. For assistance, please contact Comments Due: 5 p.m. ET 12/31/19. 385.214) on or before 5:00 p.m. Eastern FERC Online Support at time on the specified comment date. Docket Numbers: RP20–345–000. [email protected] or toll Protests may be considered, but Applicants: Algonquin Gas free at (866) 208–3676, or TTY, contact intervention is necessary to become a Transmission, LLC. (202) 502–8659. Description: § 4(d) Rate Filing: party to the proceeding. Any questions regarding this prior eFiling is encouraged. More detailed Cleanup Filing—Scheduling of Service notice request should be directed to to be effective 1/19/2020. information relating to filing Matthew R. Bley, Director, Gas Filed Date: 12/19/19. requirements, interventions, protests, Transmission Certificates, Dominion Accession Number: 20191219–5071. service, and qualifying facilities filings Energy Transmission, Inc., 707 East Comments Due: 5 p.m. ET 12/31/19. can be found at: http://www.ferc.gov/ Main Street, Richmond, VA 23219, Docket Numbers: RP20–346–000. docs-filing/efiling/filing-req.pdf. For phone: (866) 319–3382, email: Applicants: SG Resources Mississippi, other information, call (866) 208–3676 [email protected] L.L.C. (toll free). For TTY, call (202) 502–8659. or Sharon L. Burr, Deputy General Description: § 4(d) Rate Filing: SG Dated: December 20, 2019. Counsel, Dominion Energy Services, Resources Mississippi, L.L.C.—Filing of Kimberly D. Bose, Inc., 120 Tredegar Street, Richmond, VA Tariff Modifications to be effective 1/20/ Secretary. 23219, phone: (804) 819–2171, email: 2020. [FR Doc. 2019–28125 Filed 12–27–19; 8:45 am] [email protected]. Filed Date: 12/19/19. Any person or the Commission’s staff BILLING CODE 6717–01–P Accession Number: 20191219–5129. may, within 60 days after the issuance Comments Due: 5 p.m. ET 12/31/19. of the instant notice by the Commission, Docket Numbers: RP20–347–000. DEPARTMENT OF ENERGY file pursuant to Rule 214 of the Applicants: Pine Prairie Energy Commission’s Procedural Rules (18 CFR Center, LLC. Federal Energy Regulatory 385.214) a motion to intervene or notice Description: § 4(d) Rate Filing: Pine Commission of intervention. Any person filing to Prairie Energy Center, LLC—Filing of intervene, or the Commission’s staff Tariff Modifications to be effective 1/20/ [Docket No. CP20–23–000] may, pursuant to section 157.205 of the 2020. Notice of Request Under Blanket Commission’s Regulations under the Filed Date: 12/19/19. Authorization; Dominion Energy NGA (18 CFR 157.205) file a protest to Accession Number: 20191219–5133. Transmission, Inc the request. If no protest is filed within Comments Due: 5 p.m. ET 12/31/19. the time allowed therefore, the proposed Docket Numbers: RP20–348–000. Take notice that on December 10, activity shall be deemed to be Applicants: Transcontinental Gas 2019, Dominion Energy Transmission, authorized effective the day after the Pipe Line Company. Inc (Dominion), 120 Tredegar Street, time allowed for protest. If a protest is

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filed and not withdrawn within 30 days DEPARTMENT OF ENERGY (Mermentau Compressor Station) in after the time allowed for filing a Jefferson Davis Parish, Louisiana; Federal Energy Regulatory protest, the instant request shall be • modifications of the existing Commission treated as an application for Dresser-Rand compressor unit and authorization pursuant to section 7 of [Docket No. CP20–8–000] installation of 42 feet of above ground the NGA. piping at the Grand Chenier Compressor Pursuant to section 157.9 of the ANR Pipeline Company; Notice of Station in Cameron Parish, Louisiana; Schedule for Environmental Review of Commission’s rules, 18 CFR 157.9, and the Grand Chenier Xpress Project within 90 days of this Notice the • modifications of the Mermentau Commission staff will either: Complete On October 28, 2019, ANR Pipeline River GCX Meter Station under ANR’s its environmental assessment (EA) and Company (ANR), filed an application in blanket certificate (CP82–480–000), place it into the Commission’s public Docket No. CP20–8–000 requesting a including the installation of an record (eLibrary) for this proceeding; or Certificate of Public Convenience and additional meter run and related issue a Notice of Schedule for Necessity pursuant to sections 7(b) and appurtenant facilities in order to Environmental Review. If a Notice of 7(c) of the Natural Gas Act to abandon, increase the delivery capability from Schedule for Environmental Review is construct, and operate certain natural 700 million cubic feet per day to 1.1 issued, it will indicate, among other gas pipeline facilities. The proposed billion cubic feet per day. milestones, the anticipated date for the project is known as the Grand Chenier Background Commission staff’s issuance of the EA XPress Project (Project), and includes for this proposal. The filing of the EA facilities in Acadia, Jefferson Davies, On December 5, 2019, the in the Commission’s public record for and Cameron Parishes, Louisiana. The Commission issued a Notice of Intent to Project would provide open access firm this proceeding or the issuance of a Prepare an Environmental Assessment transportation service of 400 million Notice of Schedule for Environmental for the Proposed Grand Chenier XPress cubic feet per day of incremental Review will serve to notify federal and Project and Request for Comments on capacity from ANR’s Southeast Head state agencies of the timing for the Environmental Issues (NOI). The NOI station 1 to the Mermentau River GCX was sent to affected landowners; federal, completion of all necessary reviews, and Meter Station. state, and local government agencies; the subsequent need to complete all On November 6, 2019, the Federal elected officials; environmental and federal authorizations within 90 days of Energy Regulatory Commission public interest groups; Native American the date of issuance of the Commission (Commission or FERC) issued its Notice tribes; other interested parties; and local staff’s EA. of Application for the Project. Among libraries and newspapers. All Persons who wish to comment only other things, that notice alerted agencies substantive comments will be addressed on the environmental review of this issuing federal authorizations of the in the EA. project should submit an original and requirement to complete all necessary two copies of their comments to the reviews and to reach a final decision on Additional Information Secretary of the Commission. a request for a federal authorization Environmental commenters will be within 90 days of the date of issuance In order to receive notification of the placed on the Commission’s of the Commission staff’s Environmental issuance of the EA and to keep track of environmental mailing list and will be Assessment (EA) for the Project. This all formal issuances and submittals in specific dockets, the Commission offers notified of any meetings associated with instant notice identifies the FERC staff’s a free service called eSubscription. This the Commission’s environmental review planned schedule for the completion of can reduce the amount of time you process. Environmental commenters the EA for the Project. spend researching proceedings by will not be required to serve copies of Schedule for Environmental Review automatically providing you with filed documents on all other parties. Issuance of EA: March 27, 2020. notification of these filings, document However, the non-party commenters 90-day Federal Authorization summaries, and direct links to the will not receive copies of all documents Decision Deadline: June 25, 2020. documents. Go to www.ferc.gov/docs- filed by other parties or issued by the If a schedule change becomes filing/esubscription.asp. Commission and will not have the right necessary, additional notice will be to seek court review of the Additional information about the provided so that the relevant agencies Project is available from the Commission’s final order. are kept informed of the Project’s Commission’s Office of External Affairs progress. The Commission strongly encourages at (866) 208–FERC or on the FERC electronic filings of comments, protests, Project Description website (www.ferc.gov). Using the and interventions via the internet in lieu The Grand Chenier XPress Project eLibrary link, select General Search of paper. See 18 CFR 385.2001(a)(1)(iii) would consist of the following facilities: from the eLibrary menu, enter the and the instructions on the • Modifications of ANR’s existing selected date range and Docket Number Commission’s website (http:// Eunice Compressor Station in Acadia excluding the last three digits (i.e., www.ferc.gov) under the ‘‘e-Filing’’ link. Parish, Louisiana, to increase the total CP20–8), and follow the instructions. Dated: December 17, 2019. certificated horsepower (hp) from For assistance with access to eLibrary, the helpline can be reached at (866) Nathaniel J. Davis, Sr., 24,000 hp to 39,370 hp, and 208–3676, TTY (202) 502–8659, or at Deputy Secretary. abandonment of an existing reciprocating compressor in place; [email protected]. The [FR Doc. 2019–28064 Filed 12–27–19; 8:45 am] • construction of a new 23,470 hp eLibrary link on the FERC website also BILLING CODE 6717–01–P greenfield compressor station provides access to the texts of formal documents issued by the Commission, 1 ANR’s Head Station is a pooling point where such as orders, notices, and rule natural gas is aggregated from many receipt points. makings.

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Dated: December 20, 2019. A copy of the comments should also FERC–515 to implement the statutory Kimberly D. Bose, be sent to the Commission, in Docket provisions of section 23(b) of the Secretary. No. IC19–35–000, by either of the Federal Power Act (FPA).1 section 23(b) following methods: authorizes the Commission to make a [FR Doc. 2019–28126 Filed 12–27–19; 8:45 am] • BILLING CODE 6717–01–P eFiling at Commission’s Web site: determination as to whether it has http://www.ferc.gov/docs-filing/ jurisdiction over a proposed water efiling.asp project 2 not affecting navigable waters 3 • DEPARTMENT OF ENERGY Mail: Federal Energy Regulatory but across, along, over, or in waters over Commission, Secretary of the which Congress has jurisdiction under Federal Energy Regulatory Commission, 888 First Street NE, its authority to regulate commerce with Commission Washington, DC 20426. foreign nations and among the several Instructions: All submissions must be States. Section 23(b) requires that any [Docket No. IC19–35–000] formatted and filed in accordance with person intending to construct project submission guidelines at: http:// works on such waters must file a Commission Information Collection www.ferc.gov/help/submission- declaration of their intention with the Activities (FERC–515); Comment guide.asp. For user assistance, contact Commission. If the Commission finds Request; Extension FERC Online Support by email at the proposed project will have an [email protected], or by phone AGENCY: Federal Energy Regulatory impact on interstate or foreign at: (866) 208–3676 (toll-free), or (202) Commission, DOE. commerce, then the entity intending to 502–8659 for TTY. construct the project must obtain a ACTION: Notice of information collection Docket: Users interested in receiving and request for comments. Commission license or exemption automatic notification of activity in this before starting construction.4 docket or in viewing/downloading SUMMARY: In compliance with the The information is collected in the comments and issuances in this docket requirements of the Paperwork form of a written application, containing may do so at http://www.ferc.gov/docs- Reduction Act of 1995 (PRA), the sufficient details to allow the filing/docs-filing.asp. Federal Energy Regulatory Commission Commission staff to research the (Commission or FERC) is soliciting FOR FURTHER INFORMATION CONTACT: jurisdictional aspects of the project. public comment on the currently Ellen Brown may be reached by email This research includes examining maps approved information collection FERC– at [email protected], telephone and land ownership records to establish 515 (Declaration of Intention) and at (202) 502–8663, and fax at (202) 273– whether or not there is Federal submitting the information collection to 0873. jurisdiction over the lands and waters the Office of Management and Budget SUPPLEMENTARY INFORMATION: affected by the project. A finding of non- (OMB) for review. Any interested Title: FERC–515 (Declaration of jurisdictional by the Commission person may file comments directly with Intention) eliminates a substantial paperwork OMB and should address a copy of OMB Control No.: 1902–0079 burden for the applicant who might Type of Request: Three-year extension those comments to the Commission as otherwise have to file for a license or of the FERC–515 information collection explained below. exemption application. The requirements with no changes to the Commission implements these filing DATES: Comments on the collection of current reporting requirements. information are due January 29, 2020. Abstract: On October 16, 2019, the requirements under 18 CFR part 24. ADDRESSES: Comments filed with OMB, Commission published a Notice in the Type of Respondents: Persons identified by OMB Control No. 1902– Federal Register (84 FR 55313) in intending to construct project works on 0079, should be sent via email to the Docket No. IC19–35–000 requesting certain waters described above. Office of Information and Regulatory public comments. The Commission Estimate of Annual Burden.5 The Affairs: [email protected], received no public comments. Commission estimates the annual public Attention: Federal Energy Regulatory The Commission uses the information reporting burden and cost 6 for the Commission Desk Officer. collected under the requirements of information collection as:

FERC–515: DECLARATION OF INTENTION

Annual Average Total annual Number of re- number of Total burden hours & burden hours & Cost per spondents responses per number of cost ($) per total annual cost respondent respondent responses response ($) ($)

(1) (2) (1)*(2) = (3) (4) (3)*(4) = (5) (5)÷(1)

6 ...... 1 6 80 hrs.; $6,400 ...... 480 hrs.; $38,400 ...... $6,400

Comments: Comments are invited on: information is necessary for the proper Commission, including whether the (1) Whether the collection of performance of the functions of the information will have practical utility;

1 16 U.S.C. 817. dam and no public lands or reservations are 1320 for additional information on the definition of 2 Dams or project works (16 U.S.C. 817). affected, permission is granted upon compliance information collection burden. 6 3 See 16 U.S.C. 796 (8) for the definition of with State laws. Commission staff considers resources Navigable Waters. 5 Burden is defined as the total time, effort, or completing the FERC–515 to be compensated at rates similar to FERC employees. Therefore we are 4 financial resources expended by persons to Upon a finding of non-jurisdictional by the using the 2019 FERC average hourly cost (for wages generate, maintain, retain, or disclose or provide Commission, and if the project does not utilize and benefits for one full-time employee) of $80.00/ surplus water or waterpower from a government information to or for a federal agency. See 5 CFR hour (or $167,091/year).

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(2) the accuracy of the agency’s the instant notice by the Commission, the Federal Energy Regulatory estimates of the burden and cost of the file pursuant to Rule 214 of the Commission, 888 First Street NE, collection of information, including the Commission’s Procedural Rules (18 CFR Washington, DC 20426. validity of the methodology and 385.214) a motion to intervene or notice Dated: December 17, 2019. assumptions used; (3) ways to enhance of intervention and pursuant to section Nathaniel J. Davis, Sr., the quality, utility and clarity of the 157.205 of the regulations under the Deputy Secretary. information collection; and (4) ways to NGA (18 CFR 157.205), a protest to the minimize the burden of the collection of request. If no protest is filed within the [FR Doc. 2019–28073 Filed 12–27–19; 8:45 am] information on those who are to time allowed therefore, the proposed BILLING CODE 6717–01–P respond, including the use of automated activity shall be deemed to be authorized effective the day after the collection techniques or other forms of DEPARTMENT OF ENERGY information technology. time allowed for filing a protest. If a Dated: December 17, 2019. protest is filed and not withdrawn Federal Energy Regulatory within 30 days after the allowed time Commission Nathaniel J. Davis, Sr., for filing a protest, the instant request Deputy Secretary. shall be treated as an application for [P–2311–068] [FR Doc. 2019–28065 Filed 12–27–19; 8:45 am] authorization pursuant to section 7 of BILLING CODE 6717–01–P the NGA. Great Lakes Hydro America, LLC; Pursuant to section 157.9 of the Notice of Application Accepted for Commission’s rules, 18 CFR 157.9, Filing and Soliciting Comments, DEPARTMENT OF ENERGY within 90 days of this Notice the Motions To Intervene, and Protests Commission staff will either: complete Take notice that the following Federal Energy Regulatory its environmental assessment (EA) and Commission hydroelectric application has been filed place it into the Commission’s public with the Commission and is available [Docket No. CP20–22–000] record (eLibrary) for this proceeding, or for public inspection. issue a Notice of Schedule for a. Type of Application: Temporary Notice of Request Under Blanket Environmental Review. If a Notice of variance of reservoir elevation. Authorization: Southern Star Central Schedule for Environmental Review is b. Project No.: 2311–068. Gas Pipeline, Inc. issued, it will indicate, among other c. Date Filed: November 26, 2019, and milestones, the anticipated date for the Take notice that on December 9, 2019, supplemented December 3, 2019. Commission staff’s issuance of the final d. Applicant: Great Lakes Hydro Southern Star Central Gas Pipeline, Inc. environmental impact statement (FEIS) America, LLC. (Southern Star), 4700 State Highway 56, or EA for this proposal. The filing of the e. Name of Project: Goreham Owensboro, Kentucky 42301, filed in EA in the Commission’s public record Hydroelectric Project. Docket No. CP20–22–000 a prior notice for this proceeding or the issuance of a f. Location: The project is located on request pursuant to sections 157.205, Notice of Schedule for Environmental the Androscoggin River in Coo¨s County, and 157.208 of the Commission’s Review will serve to notify federal and New Hampshire. regulations under the Natural Gas Act state agencies of the timing for the g. Filed Pursuant to: Federal Power (NGA), and Southern Star’s blanket completion of all necessary reviews, and Act, 16 U.S.C. 791 (a)–825(r). certificate issued in Docket No. CP82– the subsequent need to complete all h. Applicant Contact: Mr. Kyle 479–000, to increase the maximum federal authorizations within 90 days of Murphy, 972 Main Street, Berlin, NH allowable operating pressure on the date of issuance of the Commission 03570, (207) 458–5861. Southern Star’s Lines TLB (Hobart staff’s FEIS or EA. i. FERC Contact: Mr. Steven Sachs, Ranch Lateral), TLB–001, TLB–002, Persons who wish to comment only (202) 502–8666, [email protected]. TLB–004, and TLB–005 in Hemphill on the environmental review of this j. Deadline for filing comments, County, Texas, all as more fully set forth project should submit an original and motions to intervene, and protests is 30 in the application which is on file with two copies of their comments to the days from the issuance of this notice by the Commission and open to public Secretary of the Commission. the Commission. The Commission inspection. Environmental commenters will be strongly encourages electronic filing. The filing may also be viewed on the placed on the Commission’s Please file comments, motions to web at http://www.ferc.gov using the environmental mailing list, and will be intervene, and protests using the ‘‘eLibrary’’ link. Enter the docket notified of any meetings associated with Commission’s eFiling system at http:// number excluding the last three digits in the Commission’s environmental review www.ferc.gov/docs-filing/efiling.asp. the docket number field to access the process. Environmental commenters Commenters can submit brief comments document. For assistance, please contact will not be required to serve copies of up to 6,000 characters, without prior FERC Online Support at filed documents on all other parties. registration, using the eComment system [email protected] or toll However, the non-party commenters, at http://www.ferc.gov/doc-sfiling/ free at (866) 208–3676, or TTY, contact will not receive copies of all documents ecomment.asp. You must include your (202) 502–8659. filed by other parties or issued by the name and contact information at the end Any questions concerning this Commission and will not have the right of your comments. For assistance, application may be directed to Cindy C. to seek court review of the please contact FERC Online Support at Thompson, Manager, Regulatory, Commission’s final order. [email protected], (866) Southern Star Central Gas Pipeline, Inc., The Commission strongly encourages 208–3676 (toll free), or (202) 502–8659 4700 State Highway 56, Owensboro, electronic filings of comments, protests (TTY). In lieu of electronic filing, please Kentucky 42301, by telephone at (270) and interventions in lieu of paper using send a paper copy to: Secretary, Federal 852–4655, or by email at the eFiling link at http://www.ferc.gov. Energy Regulatory Commission, 888 [email protected]. Persons unable to file electronically First Street NE, Washington, DC 20426. Any person or the Commission’s staff should submit an original and two The first page of any filing should may, within 60 days after issuance of copies of the protest or intervention to include docket number P–2311–068.

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The Commission’s Rules of Practice comment date for the particular DATES: The public scoping period starts and Procedure require all intervenors application. with the publication of this notice and filing documents with the Commission o. Filing and Service of Responsive ends on January 29, 2020. To initiate the to serve a copy of that document on Documents: Any filing must (1) bear in public involvement process, each person on the official service list all capital letters the title COMMENTS, informational/public scoping meetings for the project. Further, if an intervenor MOTION TO INTERVENE, or PROTEST will be held in Laramie, Wyoming, near files comments or documents with the as applicable; (2) set forth in the the Project site. Public notice of the Commission relating to the merits of an heading the name of the applicant and date, time, and place of the meetings issue that may affect the responsibilities the project number(s) of the application will be posted on the Project website at of a particular resource agency, they to which the filing responds; (3) furnish https://www.wapa.gov/transmission/ must also serve a copy of the document the name, address, and telephone EnvironmentalReviewNEPA/Pages/rail- on that resource agency. number of the person intervening or tie-wind-project.aspx. All known k. Description of Request: The protesting; and (4) otherwise comply interested parties, agencies, tribes, and applicant requests a temporary variance with the requirements of 18 CFR the public will be notified of the to operate the reservoir elevation below 385.2001 through 385.2005. All meetings directly via the Project mailing its normal maximum elevation of 813.3 comments, motions to intervene, or list, and via paid advertising, news feet U.S. Geological Survey (USGS) protests must set forth their evidentiary releases, or other appropriate means. datum, to prevent damage to a power basis. A copy of all other filings in WAPA will consider all comments on canal embankment. The applicant reference to this application must be the scope of the EIS received or would maintain a minimum elevation of accompanied by proof of service on all postmarked by the end of the scoping 808.6 feet USGS datum from June 16 persons listed in the service list period. The public is invited to submit through the last day of February, and prepared by the Commission in this comments on the proposed Project for maintain a minimum elevation of 809.1 proceeding, in accordance with 18 CFR WAPA’s consideration at any time feet USGS datum from March 1 through 385.2010. during the EIS process. June 15. The project would return to Dated: December 20, 2019. ADDRESSES: Oral or written comments normal operation by the end of Kimberly D. Bose, may be provided at the public scoping September 2020. meetings or mailed or emailed to Mark Secretary. l. Locations of the Applications: A Wieringa, NEPA Document Manager, copy of the application is available for [FR Doc. 2019–28121 Filed 12–27–19; 8:45 am] Headquarters, Western Area Power inspection and reproduction at the BILLING CODE 6717–01–P Administration, P.O. Box 281213, Commission’s Public Reference Room, Lakewood, CO 80228–8213, email located at 888 First Street NE, Room 2A, [email protected], telephone (720) DEPARTMENT OF ENERGY Washington, DC 20426, or by calling 962–7448. (202) 502–8371. The filing may also be Western Area Power Administration FOR FURTHER INFORMATION CONTACT: For viewed on the Commission’s website at additional information on the scoping http://www.ferc.gov/docs-filing/ Interconnection of the Proposed Rail meeting, proposed Project, the EIS elibrary.asp. Enter the docket number Tie Wind Project, Wyoming (DOE/EIS– process, or to receive a copy of the Draft excluding the last three digits in the 0543) EIS when it is published, contact Mark docket number field to access the Wieringa using the information above. AGENCY: document. You may also register online Western Area Power For general information on DOE’s NEPA at http://www.ferc.gov/docs-filing/ Administration, DOE. review process, contact Brian Costner, esubscription.asp to be notified via ACTION: Notice of Intent to prepare an Office of NEPA Policy and Compliance, email of new filings and issuances Environmental Impact Statement and to GC–54, U.S. Department of Energy, 1000 related to this or other pending projects. conduct scoping meetings; notice of Independence Avenue SW, Washington, For assistance, call 1–866–208–3676 or floodplain and wetlands involvement. DC 20585–0119, email AskNEPA@ email [email protected], for hq.doe.gov, telephone (202) 586–4600 or TTY, call (202) 502–8659. A copy is also SUMMARY: ConnectGen Albany County (800) 472–2756, facsimile (202) 586– available for inspection and LLC applied to interconnect their 7031. reproduction at the address in item (h) proposed Rail Tie Wind Project (Project) above. with the Western Area Power SUPPLEMENTARY INFORMATION: WAPA is m. Individuals desiring to be included Administration’s (WAPA) existing Ault- a Federal power marketing on the Commission’s mailing list should Craig 345-kilovolt (kV) transmission line administration within the DOE that so indicate by writing to the Secretary in Albany County, Wyoming. WAPA markets and delivers Federal wholesale of the Commission. will prepare an environmental impact electric power (principally hydroelectric n. Comments, Motions to Intervene, or statement (EIS) on the proposal to power) to municipalities, rural electric Protests: Anyone may submit interconnect the Project in accordance cooperatives, public utilities, irrigation comments, a motion to intervene, or a with the National Environmental Policy districts, Federal and State agencies, protest in accordance with the Act of 1969 (NEPA), U.S. Department of and Native American tribes in 15 requirements of Rules of Practice and Energy (DOE) NEPA Implementing western and central States. The Procedure, 18 CFR 385.210, .211, .214. Procedures, and the Council on proposed Project would be located In determining the appropriate action to Environmental Quality (CEQ) within WAPA’s Rocky Mountain take, the Commission will consider all regulations for implementing NEPA. Region, which operates in Arizona, protests or other comments filed, but Portions of the proposed Project may Colorado, most of Wyoming, and only those who file a motion to affect floodplains and wetlands, so this portions of Kansas, Nebraska, New intervene in accordance with the Notice of Intent (NOI) also serves as a Mexico, and Utah. ConnectGen applied Commission’s Rules may become a notice of proposed floodplain or to interconnect up to 504 megawatts party to the proceeding. Any comments, wetland action in accordance with DOE (MW), via two 252–MW applications, motions to intervene, or protests must floodplain and wetland environmental with WAPA’s existing Ault-Craig 345- be received on or before the specified review requirements. kV transmission line in Albany County,

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Wyoming. The Ault-Craig transmission communications gear, supervisory Up to 105 miles of 34.5-kV collection line passes through the proposed Project control and data acquisition (SCADA) lines would connect the transformers at area, which is located south of Laramie capability, and related equipment. The each turbine to the Project substations. and north of the Colorado state line, on switchyard would be eight to ten acres The collection lines would typically be either side of U.S. Highway 287. The in size, surfaced with gravel or crushed 34.5 kV, and would likely be a proposed Project would be located on rock and enclosed by security fencing. combination of buried electrical cables private and State lands; no federally- and overhead lines on poles 30 to 50 Alternatives managed land would be affected. There feet tall. To the extent practicable, the are no designated cooperating agencies WAPA will evaluate location options collection lines would parallel Project at this time, but cooperating agencies for its interconnection switchyard access roads to limit environmental could be identified at a later date. within the proposed Project area along disturbance and facilitate maintenance. WAPA will prepare an EIS on the the existing Ault-Craig transmission The proposed Project would also interconnection of the proposed Project line. Under the No Action Alternative, include eight 105-meter-tall permanent in accordance with NEPA (42 U.S.C. WAPA would not approve the meteorological towers, four on either 4321 et seq.); DOE NEPA Implementing interconnection request or construct the side of the highway, each located so as Procedures (10 CFR part 1021), and the interconnection facility. to best capture wind and other weather CEQ regulations for implementing Applicant’s Proposed Project data. The towers would likely be of the NEPA (40 CFR parts 1500–1508). self-supported, lattice-mast type, to ConnectGen’s proposed Project would eliminate the bird collision risk posed Purpose and Need for Agency Action consist of up to 84 to 151 wind turbine by guy wires. WAPA needs to consider generators with a generating capability An approximately 7,000-square-foot ConnectGen’s interconnection request of 3 to 6 MW each, for a combined total operations and maintenance (O&M) under its Open Access Transmission generating capacity of up to 504 MW. building would be constructed to Service Tariff (Tariff), which provides The wind turbines would be located support the proposed Project. The O&M for open access to its transmission within an approximately 26,000-acre building would include water, sanitary, system through an interconnection if site in southeast Albany County, and electrical services, and would house there is available capacity in the Wyoming, roughly centered on the town equipment for monitoring turbine transmission system. This EIS will of Tie Siding and bisected by U.S. operation and performance and a shop address WAPA’s Federal action of Highway 287. The turbines would be area for repair and maintenance. The interconnecting the proposed Project to located in a varying number of generally O&M building would be located within WAPA’s transmission system, north-south oriented strings of varying an approximately five-acre security- constructing an interconnection lengths, with the strings being fenced area, which would provide a switchyard on the existing Ault-Craig approximately one-half mile apart. secure yard for vehicle parking and transmission line, and making any Separation between turbines, between spare components. necessary system modifications to turbine strings, and the number of Several temporary laydown yards of accommodate the interconnection of turbine strings would vary with approximately 15 acres each would be ConnectGen’s proposed Project. different turbine sizes. Each turbine sited after biological and cultural Preliminary studies indicate that the would have a maximum height of up to resources surveys were completed to power system can accommodate the 675 feet to the blade tip, and a avoid sensitive areas. The sites would proposed interconnection without permanent footprint including base, be temporarily gravel-surfaced and negatively affecting system reliability or transformer, and associated pads of would serve as vehicle parking and power deliveries to existing customers. about one-tenth of an acre. staging areas for construction equipment The transmission system may require In addition to the turbines, temporary and turbine and collection line network and/or transmission system access roads and permanent all-weather components and materials. These sites upgrades as determined in the final access roads to each turbine location would be reclaimed after completion of studies. would be required. To the extent construction. Although mobile concrete possible, existing roads and trails would WAPA’s Proposed Action mixing batch plants are not proposed at be incorporated into the access road this time, it is possible they could be Subject to compliance with the system and upgraded as necessary. It is employed. As with the laydown yards, provisions of the Tariff and after estimated that approximately 60 miles any batch plant sites would be surveyed consideration of the impacts identified of new permanent all-weather access before use, and reclaimed after in the Final EIS, WAPA will consider roads would be needed for the proposed construction was completed. approving ConnectGen’s Project. Although WAPA’s Federal action is to interconnection request and Two 345-kV Project substations, one consider the interconnection request constructing a 345-kV interconnection on either side of U.S. Highway 287 and the physical interconnection to switchyard on the Ault-Craig would be constructed. The substation WAPA’s existing transmission system, transmission line. By taking this action, sites would be about five acres in size, the EIS will also identify and analyze power generated by the proposed and each would contain one or two the environmental impacts of Project would use WAPA’s transmission main power transformers, breakers and ConnectGen’s entire proposed Project. system to reach the market. If WAPA’s switches, control buildings, SCADA and ConnectGen would complete necessary decision is to approve the metering equipment, a permanent coordination with State and local interconnection request, WAPA would meteorological tower, and other related agencies to permit their proposed construct, own, operate, and maintain a equipment. The substations would be Project, while WAPA would be 345-kV interconnection switchyard gravel- or crushed rock-surfaced, and responsible for its interconnection located adjacent to the Ault-Craig enclosed by security fencing. switchyard. transmission line. The interconnection Approximately four miles of 345-kV switchyard would consist of a line single circuit transmission line would Floodplain or Wetland Involvement interconnection, switching equipment connect the two Project substations with Since the proposed Project may and breakers, a control house, WAPA’s interconnection switchyard. involve action in floodplains or

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wetlands, this NOI also serves as a Governments (65 FR 67249), the ACTION: Notice of a final decision on a notice of proposed floodplain or President’s memorandum of April 29, UIC no migration petition reissuance. wetland action. The EIS will include a 1994, Government-to-Government floodplain/wetland assessment and Relations with Native American Tribal SUMMARY: Notice is hereby given that a floodplain/wetland statement of Governments (59 FR 22951), DOE- reissuance of an exemption to the Land findings following DOE regulations for specific guidance on tribal interactions, Disposal Restrictions, under the 1984 compliance with floodplain and and applicable natural and cultural Hazardous and Solid Waste wetlands environmental review (10 CFR resources laws and regulations. Amendments to the Resource Public informational/scoping part 1022). Conservation and Recovery Act, has meetings will be held as described been granted to GLCC for two Class I Environmental Issues under DATES and ADDRESSES sections at The location of the proposed Project the beginning of this notice. The hazardous waste injection wells located is in a sparsely populated portion of meetings will be informal, and attendees at their El Dorado, Arkansas facility. southeastern Wyoming. Available will be able to speak directly with The company has adequately overview information indicates this area WAPA and ConnectGen representatives demonstrated to the satisfaction of the has a relatively low probability of about the proposed Project. The public Environmental Protection Agency (EPA) substantial natural resources conflicts. is encouraged to provide information by the petition reissuance application This information includes the 2012 and comments on issues it believes and supporting documentation that, to a Draft EIS for the Hermosa West Wind WAPA should address in the EIS. reasonable degree of certainty, there will Energy Project (DOE/EIS–0438), which Comments may be broad in nature or be no migration of hazardous analyzed an area largely included in the restricted to specific areas of concern, constituents from the injection zone for proposed Project west of U.S. Highway but should be directly relevant to as long as the waste remains hazardous. 287. ConnectGen’s siting process for the Project issues, the NEPA process, or This final decision allows the wind turbine strings and associated expected resource impacts. After underground injection by GLCC of the facilities will consider sensitive gathering comments on the scope of the specific restricted hazardous wastes resources, and the proposed Project EIS during the 30-day scoping period, identified in this exemption reissuance would be designed to avoid these areas. WAPA will address the issues raised in request, into Class I hazardous waste The EIS will evaluate the level of impact the EIS. Comments on WAPA’s injection wells WDW–5 and WDW–6 proposed action and ConnectGen’s WAPA’s proposed action and until December 31, 2026, unless the proposed Project will be accepted and ConnectGen’s proposed Project EPA moves to terminate this exemption. considered at any time during the EIS alternatives would have on Additional conditions included in this environmental resources within the process, and may be directed to WAPA final decision may be reviewed by approximately 26,000-acre site, which as described under the ADDRESSES contacting the EPA Region 6 Ground may lead to modifications in the section. proposed Project to further avoid or WAPA’s EIS process will include the Water/UIC Section. A public notice was minimize resource impacts. Although public scoping meetings; consultation issued October 7, 2019, and the public no substantive resource conflicts have and coordination with appropriate comment period closed on November been identified thus far, the EIS will Federal, State, county, and local 22, 2019, and no comments were analyze the potential impacts on agencies and tribal governments; received. This decision constitutes final potentially affected environmental involvement with affected landowners; Agency action and there is no resources. Wind turbine power distribution of and public review and Administrative appeal. generation projects are generally known comment on the Draft EIS; a public hearing or hearings on the Draft EIS; DATES: This action is effective as of to have visual and noise effects, and December 12, 2019. may affect birds and bats. distribution of a published Final EIS; and publication of WAPA’s Record of ADDRESSES: Copies of the petition Public Participation Decision in the Federal Register. reissuance and all pertinent information Interested parties are invited to Dated: December 17, 2019. relating thereto are on file at the participate in the scoping process to Mark A. Gabriel, following location: Environmental help define the important resources and Administrator. Protection Agency, Region 6, Water issues to be analyzed in depth, and to [FR Doc. 2019–28222 Filed 12–27–19; 8:45 am] Division, Safe Drinking Water Branch eliminate from detailed study issues BILLING CODE 6450–01–P (6WDD), 1201 Elm Street, Suite 500, that are not pertinent. The scoping Dallas, Texas 75270–2102. process will involve all interested FOR FURTHER INFORMATION CONTACT: agencies (Federal, State, county, and ENVIRONMENTAL PROTECTION Philip Dellinger, Chief, Ground Water/ local), Native American tribes, public AGENCY interest groups, businesses, affected UIC Section, EPA—Region 6, telephone landowners, and individual members of [FRL–10003–84–Region 6] (214) 665–8324. the public. Underground Injection Control Dated: December 12, 2019. WAPA will consult with potentially Program; Hazardous Waste Injection affected tribes to jointly evaluate and James R. Brown, Restrictions; Petition for Exemption address the potential Project effects on Associate Director, Safe Drinking Water Reissuance—Class I Hazardous Waste cultural resources, traditional cultural Branch. Injection; Great Lakes Chemical properties, or other resources important [FR Doc. 2019–28209 Filed 12–27–19; 8:45 am] Corporation (GLCC) El Dorado, to the tribes. These consultations will be BILLING CODE 6560–50–P Arkansas Facility conducted in accordance with Executive Order 13175, Consultation and AGENCY: Environmental Protection Coordination with Indian Tribal Agency (EPA).

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ENVIRONMENTAL PROTECTION Dated: December 3, 2019. 0488; EPA–HQ–OPPT–2018–0438; AGENCY Charles W. Maguire, EPA–HQ–OPPT–2018–0430; EPA–HQ– Director, Water Division. OPPT–2018–0462; EPA–HQ–OPPT– [FRL–10003–86–Region 6] [FR Doc. 2019–28218 Filed 12–27–19; 8:45 am] 2018–0458; EPA–HQ–OPPT–2018– BILLING CODE 6560–50–P 0459; EPA–HQ–OPPT–2018–0421; and Underground Injection Control EPA–HQ–OPPT–2018–0476. The Public Program; Hazardous Waste Injection Reading Room is open from 8:30 a.m. to Restrictions; Petition for Exemption ENVIRONMENTAL PROTECTION 4:30 p.m., Monday through Friday, Reissuance—Class I Hazardous Waste AGENCY excluding legal holidays. The telephone Injection; Blanchard Refining number for the Public Reading Room is [EPA–HQ–OPPT–2019–0131; FRL–10003– (202) 566–1744, and the telephone Company LLC (Blanchard) Texas City, 15] Texas Facility number for the OPPT Docket is (202) High-Priority Substance Designations 566–0280. Please review the visitor AGENCY: Environmental Protection Under the Toxic Substances Control instructions and additional information Agency (EPA). Act (TSCA) and Initiation of Risk about the dockets available at http:// www.epa.gov/dockets. ACTION: Notice of a final decision on a Evaluation on High-Priority UIC no migration petition reissuance. Substances; Notice of Availability FOR FURTHER INFORMATION CONTACT: For technical information about the SUMMARY: Notice is hereby given that a AGENCY: Environmental Protection High-Priority Substances contact: Ana reissuance of an exemption to the Land Agency (EPA). Corado, Chemical Control Division, Disposal Restrictions, under the 1984 ACTION: Notice. Office of Pollution Prevention and Hazardous and Solid Waste Toxics, Office of Chemical Safety and Amendments to the Resource SUMMARY: As required under section Pollution Prevention, Environmental Conservation and Recovery Act, has 6(b) of the Toxic Substances Control Act Protection Agency (Mailcode 7408M), been granted to Blanchard for three (TSCA) and implementing regulations, 1200 Pennsylvania Ave. NW, Class I hazardous waste injection wells EPA is designating 20 chemical Washington, DC 20460–0001; telephone located at their Texas City, Texas substances as High-Priority Substances number: (202) 564–0140; email address: facility. The company has adequately for risk evaluation. This document [email protected]. demonstrated to the satisfaction of the identifies the final designations and For general information contact: The Environmental Protection Agency (EPA) Agency rationale for the chemical TSCA-Hotline, ABVI-Goodwill, 422 by the petition reissuance application substances and provides instructions on South Clinton Ave., Rochester, NY and supporting documentation that, to a how to access the chemical-specific 14620; telephone number: (202) 554– reasonable degree of certainty, there will information, analysis and basis used by 1404; email address: TSCA-Hotline@ be no migration of hazardous EPA to support final designations for epa.gov. constituents from the injection zone for the chemical substances. A designation SUPPLEMENTARY INFORMATION: as long as the waste remains hazardous. of a substance as a High-Priority I. Executive Summary This final decision allows the Substance is not a finding of underground injection by Blanchard of unreasonable risk. However, the A. Does this action apply to me? the specific restricted hazardous wastes designation of these chemical substances as high-priority substances This action is directed to the public identified in this exemption reissuance in general and may be of interest to request, into Class I hazardous waste constitutes the initiation of the risk evaluations on the substances. entities that currently or may injection wells WDW–80, 127 and 128 manufacture (including import) a until December 31, 2037, unless the DATES: The designations of High-Priority chemical substance regulated under EPA moves to terminate this exemption. Substances for risk evaluation in this TSCA (e.g., entities identified under Additional conditions included in this notice are effective December 20, 2019. North American Industrial final decision may be reviewed by ADDRESSES: The docket for this action, Classification System (NAICS) codes contacting the EPA Region 6 Ground identified by docket identification (ID) 325 and 324110). The action may also Water/UIC Section. The public number EPA–HQ–OPPT–2019–0131, is be of interest to chemical processors, comment period for this decision was available at http://www.regulations.gov distributors in commerce, and users; from 9/30–11/15/19 and no comments or at the Office of Pollution Prevention non-governmental organizations in the were received. This decision constitutes and Toxics Docket (OPPT Docket), environmental and public health final Agency action and there is no Environmental Protection Agency sectors; state and local government Administrative appeal. Docket Center (EPA/DC), West William agencies; and members of the public. DATES: This action is effective as of Jefferson Clinton Bldg., Rm. 3334, 1301 Since other entities may also be December 3, 2019. Constitution Ave. NW, Washington, DC. interested, the Agency has not In addition, the docket ID numbers for attempted to describe all the specific ADDRESSES: Copies of the petition the individual chemical substances entities and corresponding NAICS codes reissuance and all pertinent information designated in Unit IV. are: EPA–HQ– for entities that may be interested in or relating thereto are on file at the OPPT–2018–0451; EPA–HQ–OPPT– affected by this action. following location: Environmental 2018–0501; EPA–HQ–OPPT–2018– Protection Agency, Region 6, Water 0503; EPA–HQ–OPPT–2018–0444; B. What action is the Agency taking? Division, Safe Drinking Water Branch EPA–HQ–OPPT–2018–0446; EPA–HQ– EPA is finalizing the designation 20 (6WDD), 1201 Elm Street, Suite 500, OPPT–2018–0426; EPA–HQ–OPPT– chemical substances as High-Priority Dallas, Texas 75270–2102. 2018–0427; EPA–HQ–OPPT–2018– Substances for risk evaluation pursuant FOR FURTHER INFORMATION CONTACT: 0465; EPA–HQ–OPPT–2018–0428; to section 6(b) of TSCA, 15 U.S.C. Philip Dellinger, Chief, Ground Water/ EPA–HQ–OPPT–2018–0504; EPA–HQ– 2605(b). This document includes a UIC Section, EPA—Region 6, telephone OPPT–2018–0433; EPA–HQ–OPPT– summary of comments received during (214) 665–8324. 2018–0434; EPA–HQ–OPPT–2018– the two 90-day comment periods during

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which the public submitted comments EPA to make the proposed designation and (3) overall workload (the Agency on EPA’s initiation of prioritization (Ref. for each chemical substance. will be mindful of the complexity 1) and the proposed designations of Under TSCA section 6(b)(1)(B) and associated with the assessment of the High-Priority Substances for risk implementing regulations (40 CFR chemical substance to ensure timely evaluation (Ref. 2), as well as the 702.3), a High-Priority Substance is completion of prioritization and risk Agency responses to those comments defined as ‘‘a chemical substance that evaluation of each substance) (Ref. 5). (Ref. 3). [EPA] concludes, without consideration A more detailed discussion of the of costs or other nonrisk factors, may information, analysis and basis used to C. Why is the Agency taking this action? present an unreasonable risk of injury to support the proposed High-Priority TSCA section 6(b) and implementing health or the environment because of a Substance designation can be found in regulations at 40 CFR part 702, subpart potential hazard and a potential route of Unit IV.A of the August 23, 2019 notice A require EPA to carry out a exposure under the conditions of use, (Ref. 2). prioritization process for chemical including an unreasonable risk to a As described in 40 CFR 702.9(b), in substances that may be designated as potentially exposed or susceptible conducting the screening review during high priority for risk evaluation. TSCA subpopulation identified as relevant by the prioritization process, EPA section 6(b)(2)(B) requires that EPA [EPA].’’ considered sources of reasonably ‘‘ensure that risk evaluations are being A designation of a substance as a available information relevant to the conducted’’ on at least 20 High-Priority High-Priority Substance is not a finding review criteria as outlined in the statute Substances no later than three and one- of unreasonable risk. Rather, when (TSCA section 6(b)(1)(A)) and half years after the June 22, 2016 date prioritization is complete, for those implementing regulations (40 CFR of enactment of the Frank R. Lautenberg chemicals designated as High-Priority 702.9(a)) and consistent with the Chemical Safety for the 21st Century Substances, the Agency will have scientific standards of TSCA section Act (Pub. L. 114–182). EPA is finalizing evidence on hazards and exposures that 26(h), including, as appropriate, sources for hazard and exposure data listed in the designation of the 20 chemical supports a finding that the substances Appendices A and B of the TSCA Work substances as High-Priority Substances may present an unreasonable risk of Plan Chemicals: Methods Document for risk evaluation that EPA identified injury to health or the environment (February 2012), and did not consider as candidates for High-Priority under the conditions of use. Final costs or other non-risk factors in making Substance designation when EPA designation of a High-Priority Substance a proposed High Priority Substance initiated the prioritization process on initiates the risk evaluation process (40 designation (see TSCA Section 6(b) and March 21, 2019 (Ref. 1). EPA provided CFR 702.17), which culminates in a finding of whether or not the chemical 40 CFR 702.9). two 90-day comment periods during This document is intended to fulfill which the public submitted comments substance presents an unreasonable risk of injury to health or the environment the requirement in TSCA section on the list of candidate High-Priority 6(b)(1)(C)(ii) that the Administrator Substances at the initiation of under the conditions of use. As described in the notice proposing designate 20 chemical substances as prioritization (Ref. 1) and the High-Priority Substances for risk documents supporting the proposed to designate the 20 chemical substances as High-Priority Substances for risk evaluation after conducting a review, as designations of High-Priority Substances required by TSCA section 6(b)(1)(A) (see for risk evaluation (Ref. 2). The two evaluation (Ref. 2), ‘‘EPA will generally use reasonably available information to also 40 CFR 702.9(a)). After considering comment periods are required by TSCA additional information collected from section 6(b)(1)(C) and implementing screen the candidate chemical substances against the following criteria the proposed designation process, regulations (40 CFR 702.7(d) and described in Unit III., EPA is finalizing 702.9(g)). and considerations: • The chemical substance’s hazard the High-Priority Substance D. What is the Agency’s authority for and exposure potential; designations of the same 20 chemical taking this action? • The chemical substance’s substance proposed for High-Priority persistence and bioaccumulation; Substance designations, consistent with This document is issued pursuant to • Potentially exposed or susceptible the scientific standards of TSCA section TSCA section 6(b)(1). subpopulations; 26(h) and (i). EPA did not consider costs II. Background • Storage of the chemical substance or other non-risk factors in making the near significant sources of drinking final priority designations. Instructions TSCA section 6(b)(1) requires EPA to water; on how to access the chemical-specific prioritize chemical substances for risk • The chemical substance’s information, analysis, and basis used by evaluation. In accordance with TSCA conditions of use or significant changes EPA to support the final designation for section 6(b) and 40 CFR 702.7, on March in conditions of use; each chemical substance can be found 21, 2019 (Ref. 1) EPA initiated the • The chemical substance’s in Unit IV. A general statement of the prioritization process for 20 chemical production volume or significant condition(s) of use that were the substances identified as candidates for changes in production volume; and primary basis for each designation is High-Priority Substance designation. On • Other risk-based criteria that EPA contained in Unit IV. In accordance August 23, 2019, EPA proposed to determines to be relevant to the with TSCA section 6(b)(3)(C) and 40 designate the same 20 chemical designation of the chemical substance’s CFR 702.11(d), these designations will substances as High-Priority Substances priority’’ 40 CFR 702.9(a). When fulfill the statutory requirement to for risk evaluation (Ref. 2). That notice selecting candidates for prioritization, designate at least one high-priority included a summary of the approach the Agency also generally intends to substance upon the completion of the used by EPA to support the proposed consider (1) Agency priorities (with first 10 chemicals selected to undergo designations, links to the proposed consideration of the priorities of other risk evaluations from the 2014 Update designation document for each of the Federal agencies), (2) quantity and to the TSCA Work Plan pursuant to chemical substances, and instructions quality of information (to ensure that TSCA section 6(b)(2)(A), as announced on how to access the chemical-specific the information necessary to prioritize on December 19, 2016. Pursuant to information, analysis and basis used by the substance is reasonably available), TSCA section 6(b)(3)(A), the designation

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of these chemical substances as High- designations, including additional comments received for the candidate Priority Substances constitutes the information relevant to the chemical High-Priority Substance designations initiation of the risk evaluations on the substances. (Ref. 3). The response to comments substances. To the extent that comments from the document (Ref. 3) is included in docket first phase provided information on ID number EPA–HQ–OPPT–2019–0131 III. Information and Comments additional conditions of use for the and available at https:// Received candidate High-Priority Substances, www.regulations.gov. A synopsis of A. Overview of Public Comments those conditions of use were discussed comments received related to the in the proposed designation documents For the candidate High-Priority prioritization process, and Agency for each chemical substance. Other Substances, comments were received in responses follows. Comments received, submitted information specific to High- two phases: and Agency responses on the topics of (1) A 90-day comment period Priority Substances (e.g., relevant ‘‘Request to Revise the 2014 Update of studies and assessments) was following the initiation of the the TSCA Work Plan,’’ ‘‘Risk considered when making the final prioritization process for the 20 Evaluation,’’ and ‘‘Risk Management’’ priority designations and will be chemical substances identified as are included in the full response to considered in subsequent phases of the candidates for High-Priority Substance comments document (Ref. 3). chemical-specific risk evaluations. designation. Under TSCA section EPA created one general docket to B. Comments on Candidate High- 6(b)(1)(C)(i), EPA must ‘‘request receive comments regarding the Priority Designations interested persons to submit relevant prioritization process and additional i. Overall Prioritization Process information on a chemical substance individual chemical dockets to receive a. Agency Approach and Rationale that [EPA] has initiated the chemical-specific information. From prioritization process on, before both comment periods and all 21 Several commenters requested that proposing a priority designation for the dockets, EPA received 229 submissions; EPA clearly explain its approach to chemical substance, and provide 90 however, some commenters opted for applying the statutory considerations days for such information to be one submission describing all their and criteria of TSCA section 6(b)(1)(A) provided’’ (Ref. 1). At initiation of the comments and submitted it to multiple during the screening review of the prioritization process, EPA published a dockets while other commenters chose candidate chemical substances, as well Federal Register notice identifying the to submit different comments to each as its rationale for proposed priority chemical substances and providing a chemical-specific docket. Therefore, designations. Specific concerns general explanation for why the Agency EPA considered 106 unique comment included how EPA would address chose to initiate prioritization of these submissions. EPA received submissions instances where new data indicated that chemical substances. During this from 52 different entities, including 11 some Work Plan chemicals identified as comment period, the public was invited from private citizens, 26 from high-priority candidates might not to submit relevant information on the potentially affected businesses or trade satisfy the statutory criteria, including chemical substances undergoing associations, 8 from environmental and the TSCA section 26 science standards; prioritization, including, but not limited public health advocacy groups and how EPA ascertains whether the hazard to, any information that may inform the academia (some submissions were potential information used to support screening review conducted pursuant to signed by more than one group), 6 from the 2014 TSCA Work Plan is consistent 40 CFR 702.9(a). The information other organizations, and 1 from a state with the scientific standards of TSCA received was considered when government. Comments addressed the section 26(h); and that ‘‘EPA should developing the proposed designations overall prioritization process (e.g., the establish risk-based screening process for the High-Priority Substances. collection and consideration of relevant and criteria’’ and ‘‘should not decouple (2) a second 90-day comment period information), the review process (e.g., the hazard and exposure elements from following the proposed High-Priority the use of data and approaches for the risk equation and transform them Substance designations of the same 20 screening review), information specific into independent considerations.’’ chemical substances identified as to the candidate chemical substances As required by Congress and codified candidates for a High-Priority Substance (e.g., relevant studies, assessments and in the ‘‘Procedures for Prioritization of designation. Under TSCA section conditions of use), and topics beyond Chemicals for Risk Evaluation Under 6(b)(1)(C)(ii), EPA must ‘‘publish each this prioritization process or not related the Toxic Substances Control Act’’ Rule proposed designation of a chemical to the prioritization process in general (40 CFR 702.1–702.17), there are two substance as a high- or low-priority (e.g., scheduling future chemicals for comment opportunities during the substance, along with an identification prioritization, risk evaluation, risk prioritization process, so that the public of the information, analysis, and basis management, and concerns about risk would have time to submit relevant used to make the proposed designations, evaluation fees). All comments received information on the chemical substances and provide 90 days for public comment are identified by docket ID number considered for prioritization. EPA on each such proposed designation’’ EPA–HQ–OPPT–2019–0131, or by considered the information submitted as (Ref. 2). The Federal Register notice docket ID numbers for the 20 individual part of its proposed and final proposing the designations of these High-Priority Substances (see Unit IV.), designations, in accordance with substances as high priority for risk and available at https:// applicable statutory and regulatory evaluation identified how to access the www.regulations.gov. requirements. chemical-specific information, analysis, EPA responded to comments related EPA considered several approaches and basis used to support the proposed to the High-Priority Substance and tools for identifying potential designations and announced the designations in two general ways: (1) candidate chemicals for prioritization. availability of a proposed designation General comments, including These approaches were presented at a document for each of the chemical overarching and cross-cutting policy December 11, 2017 public meeting (Ref. substance undergoing prioritization. and process comments, received for the 4), and there was general support for Interested persons were invited to candidate High-Priority Substance using the 2014 Work Plan chemicals as submit comments on EPA’s proposed designations; and (2) chemical-specific the starting point for identifying

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potential high-priority candidates. subpopulations,’’ to support the infants and the elderly, among others TSCA section 6(b)(2)(B) further requires proposed designation. (Ref. 6). The Agency will continue to that 50 percent of all ongoing risk EPA considered the information use and refine its processes for risk evaluations be drawn from the 2014 submitted during the two comment evaluations to determine risks to TSCA Work Plan for Chemical periods when making its proposed and potentially exposed or susceptible Assessments. EPA described its final designations, in accordance with subpopulations. Human health and prioritization in the document, ‘‘A applicable statutory and regulatory environmental hazards, as well as Working Approach for Identifying requirements. To the extent that environmental and human exposures, Potential Candidate Chemicals for comments from the first phase provided including potentially exposed or Prioritization’’ (Ref. 5). As presented information on additional conditions of susceptible subpopulations, will be during the meeting, selection of a use of the candidate High-Priority further considered during the chemical substance from the 2014 Work Substances, those conditions of use development of the TSCA scope Plan as a candidate for High-Priority were discussed in the proposed documents for all High-Priority Substance designation does not designation document for each chemical Substances. ‘‘Potentially exposed or constitute a finding of risk. These substance. Other submitted information susceptible subpopulations’’ could chemicals will be subject to the specific to High-Priority Substances include subpopulations with unique prioritization process for determination (e.g., relevant studies and assessments) lifeways, such as tribes, and will be of high-priority designation. EPA was considered when making the final considered as part of the risk evaluation recognizes that additional information priority designations. EPA is not process for each of the High-Priority may have been identified or developed revising the proposed designation Substances. In addition to requirements for chemicals on the 2014 Work Plan documents; however, information under TSCA regarding ‘‘potentially since its issuance. As each chemical was received during the two comment exposed or susceptible subpopulations,’’ considered for prioritization, EPA has periods does not need to be re- the Agency is committed to consultation identified and reviewed reasonably submitted and will be considered in and coordination with Tribes (e.g., EPA available information, including any subsequent phases of the chemical- Policy on Consultation and new information and public comments, specific risk evaluations. Coordination with Indian Tribes, to ensure that information is consistent TSCA section 6(b)(1)(A) requires EPA https://www.epa.gov/tribal/forms/ with the TSCA scientific standards. to determine whether a chemical may consultation-and-coordination-tribes). present unreasonable risk ‘‘because of a In the review conducted for the final For prioritization, EPA considered potential hazard and a potential route of designations, EPA considered sources of information consistent with exposure’’ under the conditions of use. reasonably available information to the scientific standards in TSCA section EPA interpreted this as a requirement to identify the relevant potentially exposed 26(h), including the sources listed in consider hazard and exposure as or susceptible subpopulations, such as Appendices A and B of the ‘‘TSCA separate factors that together inform the children, women of reproductive age, Work Plan Chemicals Methods risk-based priority designations. EPA workers or consumers. EPA analyzed Document’’ (February 2012), as required also clarifies that the prioritization processing and use information reported by the ‘‘Procedures for Prioritization of process did not include an update of the under the Chemical Data Reporting Chemicals for Risk Evaluation Under 2014 Update to the TSCA Work Plan for (CDR) Rule, which—among other data the Toxic Substances Control Act rule Chemical Assessments. elements reported—captures (40 CFR 702.9(b)).’’ EPA has used the manufacturer-reported information most recent information from those b. Potentially Exposed or Susceptible Subpopulations regarding a chemical in children’s sources. products. These data provide an EPA developed a proposed A commenter urged EPA to identify indication about whether children or designation document for each relevant potentially exposed or other susceptible subpopulations may candidate chemical substance to susceptible subpopulations (PESS), be potentially exposed to the reported identify the information, analysis and including infants, children, pregnant chemical. EPA also used human health basis used to support the proposed women, workers, the elderly, and hazard information to identify designation as a High-Priority people living in proximity to sources of potentially exposed or susceptible Substance. These documents are contamination, as well as consider subpopulations. available in the respective dockets of environmental justice concerns in the each chemical substance with a prioritization process. Another c. Selection of Candidate Chemicals for proposed designation as a High-Priority commenter indicated that ‘‘Tribes must Prioritization Substance. Also included in each be considered as a sensitive Some commenters offered thoughts on document is an explanation of the subpopulation under TSCA’’ given the future efforts to select candidate approach used by EPA to conduct the ‘‘unique lifeways that place them at chemicals for prioritization, including review of the candidate chemical different risk due to multiple exposure urging EPA to allow data to drive the substances. Each document includes an pathways not experienced by the priority designation, to merge the high- overview of the requirements in TSCA general population,’’ such as diet, and low-priority considerations into a section 6(b)(1)(A) and in the regulation housing, worker safety protocols, singular section for potential candidates addressing the ‘‘screening review untreated drinking water, daily and for prioritization, and to give preference criteria’’ and considerations for ceremonial steam baths, artisanal in designating High-Priority Substances proposed priority designations (40 CFR activities, subsistence activities, and to the substances identified by TSCA 702.9). Those documents describe how recreational activities.’’ section 6(b)(2)(D). EPA considered each of the applicable While ‘‘potentially exposed or Generally, EPA intends to use statutory and regulatory requirements susceptible subpopulations’’ is a new reasonably available information in the and criteria, including those related to definition in TSCA, EPA has, in prioritization process. EPA generally the ‘‘conditions of use or significant practice, evaluated risks across expects to provide an explanation in changes in conditions of use’’ and populations, with particular attention to proposed designation documents for ‘‘potentially exposed or susceptible workers, pregnant women, children, why it chose to initiate the process for

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the particular chemical substance (e.g., ‘‘encourages submission of the most chemical substances designated as High- whether EPA views this as a potential relevant information,’’ providing Priority Substances. candidate for a High- or Low-Priority ‘‘greater transparency and clarity’’ and e. Designation Terminology Substance) (Ref. 7). This is to avoid ‘‘more information to ascertain what sending strong signals to the public information [EPA] already has and what The Agency received comments regarding potential risks, even if certain information is needed,’’ and stating that related to designation terminology, uses of that chemical did not prompt the ‘‘transparency and information including a request to clarify the initiation of prioritization. Note that a exchange is critical to the success of definition of what is a High-Priority proposed or final priority designation is future prioritization efforts.’’ Other Substance and that a high-priority not a finding of unreasonable risk by the commenters indicated shortcomings designation indicates neither risk nor Agency. In addition, EPA further notes with the transparency of the process unreasonable risk, given the potential that the two comment periods provided and/or provided recommendations for for marketplace stigmatization for a an opportunity for any interested person improvements, including placing all the chemical substance. to submit additional information before ‘‘reasonably available information’’ in The Agency is not elaborating on or EPA finalized a designation for a the dockets for public review, increasing modifying statutory standards for High- candidate chemical substance. transparency about the information Priority and Low-Priority Substances In the Federal Register notice received during the initiation of public (Ref. 6). The Agency believes it is initiating the prioritization process (Ref. comment period and indicating if EPA appropriate to rely on the statutory 1) and ‘‘A Working Approach for used that information to screen the standards for designating High-Priority Identifying Potential Candidate chemical against the criteria for and Low-Priority Substances. These Chemicals for Prioritization’’ (Ref. 5), proposing a priority designation, so that definitions have been codified in 40 EPA described the three factors that the members of the public can comment on CFR 702.3 as: Agency generally intends to consider for such information during the proposed High-priority substance means a chemical selecting candidates for prioritization. designation comment period. substance that EPA determines, without These are (1) Agency priorities (with EPA appreciates the feedback consideration of costs or other non-risk consideration of the priorities of other regarding engaging with stakeholders factors, may present an unreasonable risk of Federal agencies), (2) quantity and and transparency. Regarding the process injury to health or the environment because quality of information (to ensure that and criteria used, as described in Unit of a potential hazard and a potential route of exposure under the conditions of use, the information necessary to prioritize III.A. of the Federal Register notice including an unreasonable risk to potentially the substance is reasonably available), initiating prioritization of the exposed or susceptible subpopulations and (3) overall workload to inform the candidates for a high priority identified as relevant by EPA. selection of candidates (the Agency will designation (Ref. 1), EPA used the 2014 Low-priority substance means a chemical be mindful of the complexity associated Update to the TSCA Work Plan for substance that EPA concludes, based on with the assessment of the chemical Chemical Assessments as the starting information sufficient to establish, without substance to ensure timely completion point for identifying potential consideration of costs or other non-risk of prioritization and risk evaluation of candidates: (1) Agency priorities (with factors, does not meet the standard for a High-Priority Substance. each substance) (Ref. 5). TSCA requires consideration of the priorities of other that EPA give preference to chemical Federal agencies), (2) quantity and However, the commenters are correct substances listed in the 2014 TSCA quality of information (to ensure that that designation as a High-Priority Work Plan for Chemical Assessments the information necessary to prioritize Substance is not a finding of that are persistent and bioaccumulative; the substance is reasonably available), unreasonable risk; rather a final known human carcinogens; and/or and (3) overall workload (the Agency designation as a High-Priority Substance highly toxic, based on scores and will be mindful of the complexity will initiate the risk evaluation for the criteria documented in the 2014 update associated with the assessment of the chemical substance. It is through the of the TSCA Work Plan for Chemical chemical substance to ensure timely risk evaluation process that EPA Assessments and the Work Plans completion of prioritization and risk determines whether or not the chemical Methods Document. TSCA section evaluation of each substance) (Ref. 5). substance presents an unreasonable risk 6(b)(2)(B) further requires that 50 EPA’s intention was to engage with of injury to health or the environment percent of all ongoing risk evaluations stakeholders in a transparent manner by under the conditions of use (Ref. 2). be drawn from the 2014 TSCA Work publishing the notice initiating the EPA has included clear language for the Plan for Chemical Assessments. Aside prioritization process and the notice final designations of High-Priority from these statutory preferences, with the proposed priority designation, Chemical Substances in that regard. however, TSCA does not specifically as well as to seek relevant reasonably f. Timeframe for Providing Chemical limit how EPA must ultimately select a available information from the public Substance Information chemical substance for prioritization. In (Ref. 7). EPA developed a proposed practice, EPA strives to designate as designation document for each Commenters described the challenges High-Priority Substances those candidate chemical substance to in collecting, identifying, assessing, and chemicals with the greatest hazard and identify the information, analysis and submitting specific chemical data in the exposure potential first, consistent with basis used to support the proposed 90-day comment period following the the policy objectives codified in 40 CFR High-Priority Substance designations. initiation of the prioritization process 702.5(a) (Ref. 6). These documents also include citations including challenges gathering for all references used in the literature information that resides with d. Stakeholder Engagement and review of each of these chemical international downstream suppliers, Transparency substances, as requested by the limitations of available data gathering Several commenters supported commenters, and links to those tools, and time and resource stakeholder engagement and references that are publicly available. requirements, including a call for transparency during the prioritization EPA’s commitment to public additional time during the comment process, including maintaining an open engagement will continue throughout period. Another commenter agreed that and transparent process that the risk evaluation process of the 20 EPA ‘‘could use its authority under

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TSCA 4(a)(1)(A)(i) [to require the early as possible in the process and quantity and quality of information, and development of new information before notes that, for High-Priority Substances, overall workload) to inform the initiating prioritization] and that it the risk evaluation process includes selection of candidates (Ref. 8). Mercury could also use its authority under additional opportunities for comment. and mercury compounds were not 4(a)(1)(A)(ii) for chemicals that meet the Regarding the Agency’s data included in the 2014 Update to the statutory criteria of being produced and collection authority, 40 CFR 702.9 TSCA Work Plan because, as stated in potentially released in substantial outlines the type of information sources the 2014 Work Plan Update document, quantities or if there is potentially EPA will use to inform the screening their hazards are already well significant exposure,’’ while noting the review described in 40 CFR 702.9. For characterized and the Agency has a ‘‘difficulty in making a may present the 20 chemicals identified as strong risk reduction effort in place. unreasonable risk finding as required candidates for High-Priority Designation, EPA initiated the i. General Support of the Prioritization under 4(a)(1)(A)(i) was among the Process or Proposed Designation motivations for amending TSCA, and prioritization process with reasonably this difficulty would still need to be available information necessary to Several commenters supported overcome.’’ The commenter then stated complete the prioritization assessment ‘‘EPA’s selection of the substances that ‘‘timing requirements might indeed and make final priority designations and subject to this notice for prioritization be difficult to meet in some cases, [but] considered additional information for risk evaluation under TSCA’’ and the such difficulty does not remove the submitted during the two comment pragmatic approach to initiating clear requirement under 4(a)(2)(B)(i) to periods when making its proposed and prioritization using the 2014 TSCA make a priority designation within 90 final designations, in accordance with Work Plan for Chemical Assessments days of receipt of any information applicable statutory and regulatory list and the approach to consideration of requested.’’ requirements. In future prioritization reasonably available information on exposure potential. Other commenters EPA understands such challenges and actions, EPA may identify data needs and may use the Agency’s TSCA indicated that the proposed designation has been committed to giving the public documents for the 20 High-Priority and interested stakeholders ample authority under TSCA sections 4, 8, or 11, as appropriate. EPA may also candidate substances establish that the opportunity to provide relevant chemicals ‘‘may present an chemical substance information and exercise these authorities for risk evaluation purposes. unreasonable risk of injury to health or comment on key aspects of the the environment because of a potential prioritization process in general, as well g. Confidential Business Information hazard and potential route of exposure as for a particular chemical substance. One commenter urged EPA to under the conditions of use’’ and that The prioritization process was designed, implement the requirements of TSCA the proposed chemicals meet the High- by law, to take no fewer than nine section 14 when prioritizing chemical Priority Substance definition. months, and no greater than 12 substances, urging adherence to the The Agency appreciates this feedback months—a timeframe set by Congress to requirements for disclosure of certain regarding the prioritization process and be long enough for interested information by the Agency and the the proposed designations. stakeholders to provide the Agency with timing for confidentiality claims and relevant, necessary information, but not j. Designation Conclusions for Specific substantiations. Chemicals so long as to stigmatize the chemical EPA is committed to meeting its substance for being on an EPA list statutory obligations, including those in EPA received various comments without undergoing a formal risk TSCA section 26(j), to make information related to its conclusions for designating evaluation. Therefore, EPA does not available to the public relating to its the High-Priority Substances, including have the discretion to adjust the basis for priority designations, including trans-1,2-dichloroethylene, ethylene timeframe for prioritization beyond the identification of the information and dibromide, Di-ethylhexyl phthalate 12-month limit established by Congress. analysis used. EPA generally expects to (DEHP), formaldehyde, and 1,3,4,6,7,8- Within that nine- to 12-month make the information it uses for Hexahydro-4,6,6,7,8,8- timeframe under the statute, there are decision making publicly available, hexamethylcyclopenta [g]-2-benzopyran two three-month comment periods consistent with the requirements of (HHCB). (following initiation and proposed TSCA section 14. Based on the criteria and designation for the substances), for a considerations set forth in 40 CFR 702.9, total of six months for public comment h. International Obligations EPA determined that all candidate High- during the prioritization process. In One commenter suggested that EPA Priority Substances may present an advance of that process, to facilitate the designate mercury as a High-Priority unreasonable risk of injury to health or sharing of information by stakeholders Substance to enable the United States to the environment because of a potential and the general public, EPA opened meet its international obligations to hazard and a potential route of exposure dockets for each of the 2014 TSCA Work reduce mercury use in product under the conditions of use, which is Plan chemicals and an additional manufacturing and industrial processes. required for designating a chemical general docket to provide the public As indicated by the commenter, EPA substance as high priority. With respect with a venue for submitting use, hazard, agrees that it may take into to chemical-specific comments and exposure information on these consideration relevant international (including those on trans-1,2- chemicals (Ref. 8). As an additional step actions, such as multilateral dichloroethylene, ethylene dibromide, to expedite information sharing, EPA environmental agreements, global and and DEHP), EPA referenced information has also separately met with regional partnerships, and bilateral or submitted by commenters in the stakeholders interested in providing international commitments. However, proposed designation documents and information; summaries of those for this first prioritization, EPA decided considered additional information meetings are docketed for each relevant to focus on chemicals listed in the 2014 submitted regarding the proposed chemical. EPA encourages interested Update to the TSCA Work Plan for designations when making the final persons to provide chemical substance Chemical Assessments and considered priority designations. EPA will describe information and other comments as three factors (i.e., Agency priorities, the hazards, exposures, conditions of

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use, and potentially exposed or available information that is consistent As part of the process of using susceptible subpopulations that EPA with 15 U.S.C. 2625(k) in conducting its systematic review in the development of expects to consider in each risk review, including information identified risk evaluations, EPA will conduct a evaluation during the scoping phase of by commenters. Furthermore, EPA comprehensive search of the reasonably the respective TSCA risk evaluations. described in detail its approach to available information about the human Any determination of unreasonable risk determine the quantity and quality of health and environmental hazards, as for a condition of use will occur as part information reasonably available for well as environmental exposures and of the risk evaluation process and will prioritization in the document ‘‘A exposure to the general population, to be presented with the draft risk Working Approach for Identifying consumers, workers, and other evaluation for which the public and Potential Candidate Chemicals for potentially exposed or susceptible peer reviewers will be given an Prioritization’’ (Ref. 5), and in the subpopulations, for each of the 20 High- opportunity to review and comment on. discussion of the Agency’s working Priority substances. After this data With respect to comments related to approach to selecting candidates for gathering effort, the Agency will specific candidate High-Priority designation as High-Priority Substances, evaluate the quality of the information Substances, additional responses are as described in Unit III.A of the Federal and integrate the evidence to form included in the Agency’s full response Register notice initiating prioritization overall conclusions about the potential to comments document (Ref. 3). of the candidates for a high priority hazards and exposures to support the designation (Ref. 1). risk characterization for each of the 20 ii. Review Process for Priority High-Priority substances in the TSCA Designation For the 20 chemicals identified as candidates for High-Priority risk evaluation documents. This a. Types of Information Considered for Designation, EPA initiated the systematic review process will be Prioritization prioritization process with reasonably documented and made public. EPA expects to make the information it uses Commenters urged the Agency to available information to complete the for decision-making publicly available, consider a variety of information prioritization assessment and make final consistent with the requirements of sources and to outline the types and priority designations and considered TSCA section 14. quality of data required when listing a additional information submitted during chemical for the prioritization process, the two comment periods when making b. Agency Efforts to Describe Data Needs including EPA resources and programs, its proposed and final designations, in Commenters urged EPA to ‘‘continue those administered by other domestic accordance with applicable statutory explicitly outlining the types and and international governmental and regulatory requirements. In future quality of data required when listing a agencies, and information from other prioritization actions, EPA may identify chemical for the prioritization process’’ public and private entities. In particular, data needs and may use the Agency’s and to provide such information from several commenters called on the authority under TSCA sections 4, 8 or the outset so that stakeholders may Agency to rely on reasonably available 11, as appropriate. EPA may also contribute information sooner rather information and strive to use the best exercise these authorities for risk than later. Another commenter cited the available science; to provide notice, evaluation purposes. Human health and data supporting the EPA’s chemical specifications, and transparency should environmental hazards, as well as prioritization process in stating that new data be required to be developed; environmental exposures and human ‘‘EPA has provided only the barest of and to rely on manufacturer-conducted exposures including potentially exposed rationale for high priority selection, in studies ‘‘only if it has access to and or susceptible subpopulations, will be most cases reiterating data used in independently evaluates all available further considered development of the support of the TSCA workplan listings’’ underlying data and discloses the full TSCA scope documents for all High- and that access was lacking to adequate studies to the public without material Priority Substances. data to understand EPA’s rationale in redaction as required by section 14(b) of Through the prioritization and risk order to comment on this process in a TSCA’’ and industry-generated evaluation processes, EPA generally meaningful way. summaries that ‘‘faithfully reflect the considers reasonably available The Agency points to the discussion study findings.’’ information consistent with the TSCA of its working approach to selecting EPA determined that the 20 chemical scientific standards. For prioritization, candidates for designation as High- substances were suitable candidates for EPA considered sources of information Priority Substances: ‘‘A Working the High-Priority designation based on consistent with the scientific standards Approach for Identifying Potential the Agency’s review of the reasonably in TSCA section 26(h) and (i), including Candidate Chemicals for Prioritization’’ available information, including the sources listed in Appendices A and (Ref. 5) and the explanation that EPA relevant information received from the B of the ‘‘TSCA Work Plan Chemicals surveyed the information and checked public and other information, as Methods Document’’ (February 2012), as quality data elements in a step-wise appropriate and cited in the proposed required by the ‘‘Procedures for approach, which ensured responsible designation documents. The reasonably Prioritization of Chemicals for Risk and timely completion of the available information was reviewed Evaluation Under the Toxic Substances prioritization process according to against the criteria and considerations Control Act’’ rule (40 CFR 702.11). EPA TSCA timelines, and opened dockets to set forth in 40 CFR 702.9 and supported used the most recent information from allow for public comment on the a finding that each substance may those sources. Also, EPA recognizes that prioritization of each of the chemicals. present unreasonable risk. additional information may have been EPA developed a proposed While EPA appreciates the developed for certain chemicals on the designation document for each suggestions on information sources that 2014 Work Plan, and EPA considered substance to identify the information, EPA should use in its prioritization updated information as appropriate analysis, and basis used to support the process, the Agency does not believe it during the prioritization process. EPA proposed designation as a High-Priority would be appropriate to limit its cited the references used in each of the Substance for risk evaluation. The analysis to certain specific data sources. proposed designation documents for proposed designation documents are EPA expects to consider the reasonably High-Priority Substances. available in the docket of each of the

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High-Priority Substances. Moreover, unreasonable risk at all, stating this for designating a chemical substance as these documents describe how EPA approach would ‘‘prevent stigmatizing a high priority for risk evaluation. considered applicable statutory and large number of chemicals by EPA identified non-TSCA uses that regulatory requirements and criteria for incorrectly suggesting that entire were reported or known to EPA in the the prioritization process and supported categories of chemicals are unsafe for proposed designation documents to the High-Priority designations. any type of use, regardless of exposure provide interested persons with a Specifically, EPA conducted reviews of potential.’’ Conversely, another comprehensive description of the uses each of the candidate chemical commenter indicated that EPA could of the individual chemical substances substances against the criteria and designate a chemical substance as High- undergoing prioritization. However, in considerations set forth in 40 CFR 702.9 Priority for risk evaluation based on the scope documents for each High- and found that each chemical substance only a few conditions of use. Other Priority Substance, EPA will present the ‘‘may present unreasonable risk’’ under commenters offered specific suggestions conditions of use covered under TSCA the conditions of use. The information for EPA’s consideration of conditions of that EPA expects to consider in the risk sources used are relevant to the use, including: Exempting the import of evaluation. applicable criteria and considerations, articles and fluids, adhesives, greases, Designation as a High-Priority and consistent with the scientific etc. contained within articles and not Substance is not a finding of standards of TSCA section 26(h), and designed to be released during the use unreasonable risk; rather, a final the sources include, as appropriate, of the article; as well as a similar designation as a High-Priority Substance hazard and exposure data listed in exemption for replacement parts; initiates the risk evaluation for such Appendices A and B of the ‘‘TSCA clarifying about the conditions of use on chemical substance. Furthermore, Work Plan Chemicals: Methods which a chemical is proposed as a High- during the risk evaluation process, EPA Document’’ (February 2012) (40 CFR Priority Substance and whether uses will determine whether or not the 702.9(b)). Therefore, final designation of ‘‘surrounding’’ pesticides, food chemical substance presents an each chemical substance as a High- additives, drugs or cosmetics exclude unreasonable risk of injury to health or Priority Substance is consistent with them from the TSCA definition of a the environment under the conditions of TSCA section 26(h) and (i) as required chemical substance; and consulting use. If unreasonable risk is identified, under 40 CFR 702.11. These documents with downstream users to complement then the Agency will initiate any also include citations for all references the information and to engage necessary risk management actions to used in the literature review of each of stakeholders to develop a process to address such risks. At that point, TSCA these chemical substances and links to improve the understanding of section 6(g) exemptions could be those references that are publicly conditions of use. A commenter considered. EPA is also clarifying that the prioritization process did not available. supported the use of physical/chemical include an update of the 2014 Update to The final designation as a High- characteristics and environmental fate the TSCA Work Plan for Chemical Priority Substance immediately initiates data as indicators for ascertaining the Assessments. the risk evaluation process as described potential for persistence and in 40 CFR 702.17. EPA will conduct a bioaccumulation for prioritization d. Reasonably Available Information for systematic review to further characterize purposes. The commenter Prioritization the hazards and exposures resulting recommended that EPA consider more A commenter called upon the Agency from the relevant TSCA conditions of recent developments in understanding use during the scoping phase of the to define ‘‘sufficiency of information’’ of persistence and bioaccumulation and TSCA risk evaluations for chemicals and clarify how the Agency would treat update the criteria applied to the 2014 designated as High-Priority Substances. exposure data gaps before initiating the TSCA Work Plan for Chemical prioritization process to ‘‘help industry c. Identification of Conditions of Use Assessments. submit necessary information during the and Persistence/Bioaccumulation for EPA developed a proposed prioritization process.’’ Similarly, other Prioritization Purposes designation document for each commenters stated that a lack of One commenter supported the substance to identify the information, information should not lead to an comprehensive identification of the analysis and basis used to support the assumption that a potential hazard or a conditions of use in commerce for proposed designation as a High-Priority route of exposure is absent and offered chemicals during prioritization and Substance for risk evaluation. The suggestions on minimum amounts and/ urged EPA to ‘‘ensure that the proposed designation documents are or specific kinds of data EPA would conditions of use are clearly available in the docket of each of the need to make determinations for distinguished from those that may cause High-Priority Priority Substances (see developmental toxicity, reproductive a chemical to meet the definition for Unit IV.). These documents describe toxicity, carcinogenicity, and adverse high priority for risk evaluation’’ by a how EPA considered applicable endocrine effects. comprehensive identification of the statutory and regulatory requirements EPA has purposefully decided not to conditions of use and identification of and criteria for the prioritization process establish a threshold for ‘‘sufficient information needs, as early as possible; and supported the High-Priority information.’’ The Agency does not consideration of incidental presence of designations. Specifically, EPA wish to create a bright line that could a chemical as an impurity or releases to presented the reviews of each of the lead to High-Priority designations and the aquatic environment or air candidate chemical substances against the initiation of risk evaluations because emissions; and identifying uses with no the criteria and considerations set forth EPA bound itself to an inflexible unreasonable risk as early as possible. in 40 CFR 702.9 and found that each ‘‘sufficiency’’ standard (Ref. 6). For the Similarly, another commenter chemical substance ‘‘may present 20 chemicals identified as candidates recommended that EPA evaluate unreasonable risk’’ under the conditions for High-Priority Designation, EPA chemicals in such a way as to identify of use. EPA determined that all initiated the prioritization process with the conditions of use that meet the high candidate High-Priority Substances may reasonably available information priority criteria and identify conditions present unreasonable risk for at least necessary to complete the prioritization of use that do not present an one condition of use, which is required assessment and make final priority

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designations and considered additional considered the chemical substance’s dibromophenol] (TBBPA); [d]ibutyl information submitted during the two potential human health hazards, phthalate (DBP); HHCB; formaldehyde; comment periods when making its including to potentially exposed or Butyl benzyl phthalate (BBP)—1,2- proposed and final designations, in susceptible subpopulations, by Benzene- dicarboxylic acid, 1- butyl accordance with applicable statutory identifying existing National Primary 2(phenylmethyl) ester; phthalic and regulatory requirements. In future Drinking Water Regulations under the anhydride; 1,2-dichloroethane; and 1,3- prioritization actions, EPA may identify Safe Drinking Water Act (SDWA; 40 butadiene. With respect to comments data needs and may use the Agency’s CFR part 141) and regulations under the related to specific candidate High- authority under TSCA sections 4, 8 or [Clean Water Act] (40 CFR 401.15). In Priority Substances, additional 11, as appropriate. EPA may also addition, EPA considered the information submitted is included in exercise these authorities for risk consolidated list of chemical substances the Agency’s full response to comments evaluation purposes. Furthermore, EPA subject to reporting requirements under document (Ref. 3). notes that section 4(a)(2)(1)(ii) indicates: [the Emergency Planning and EPA appreciates the chemical-specific ‘‘information required by the Community Right-to-Know Act] information submitted during the two Administrator under this subparagraph (Section 302 Extremely Hazardous comment periods. EPA referenced shall not be required for the purposes of Substances and Section 313 Toxic chemical-specific information submitted establishing or implementing a Chemicals), [the Comprehensive by commenters after initiation in the minimum information requirement of Environmental Response, proposed designation documents and broader applicability.’’ Compensation, and Liability Act] considered additional information (Hazardous Substances), and [the Clean submitted regarding the proposed e. Storage Near Significant Sources of designations when making the final Drinking Water Air Act] (Section 112(r) Regulated Chemicals for Accidental Release priority designations. While EPA is not One commenter asked the Agency to Prevention). Regulation by one of these revising the proposed designation define ‘‘near’’ and ‘‘significant’’ in the authorities is an indication that the documents, all information received context of ‘‘near significant sources of substance is a potential health or will be considered in the chemical- drinking water’’ and suggested the use environmental hazard which, if released specific risk evaluation process. EPA of EPA’s ‘‘Drinking Water Mapping near a significant source of drinking will describe the hazards, exposures, Application to Protect Source Waters water, could present unreasonable risk conditions of use, and potentially (DWMAPS)’’ to do so. Another of injury to health or the environment.’’ exposed or susceptible subpopulations commenter indicated that EPA used a EPA has also considered suggestions that EPA expects to consider in each reasonable approach for screening the for how ‘‘storage near significant risk evaluation during the scoping phase first 20 chemicals as High-Priority sources of drinking water’’ might be of the respective TSCA risk evaluations. Substances; however, EPA should interpreted and applied (Ref. 6). As Any determination of unreasonable risk consider use of improved exposure necessary, EPA will consider for a condition of use will occur as part models that can better predict fate and overarching Agency priorities in of the risk evaluation process and will environmental partitioning into water selecting chemicals for prioritization, be presented with the draft risk sources. Another commenter urged the including information and analysis evaluation that the public and peer Office of Pollution Prevention and conducted by the Office of Ground reviewers will be given an opportunity Toxics within EPA’s Office of Chemical Water and Drinking Water. EPA’s to review and comment on. Safety and Pollution Prevention EPA identified reasonably available document, ‘‘A Working Approach for (OCSPP) to coordinate with the Office of environmental and human health Identifying Potential Candidate Ground Water and Drinking Water to hazard information to evaluate potential Chemicals for Prioritization’’ (Ref. 5), ‘‘effectively prioritize chemicals which hazard of the chemical, including states that the process to select have the potential of impacting drinking studies reporting developmental toxicity chemicals ‘‘may include . . . chemicals water sources, both ground water and and neurotoxicity. EPA will conduct a that other EPA program offices have surface water.’’ systematic review to further characterize deemed a priority for their program and EPA believes that Congress included the hazards and exposures resulting suitable for current prioritization.’’ ‘‘storage near significant sources of from the relevant TSCA conditions of drinking water’’ as a potential human iii. Submitted Data and Information use during the scoping phase of the health hazard and exposure TSCA risk evaluations for chemicals consideration, given that chemicals that a. Data and Information on Hazard and Exposure Potential designated as High-Priority Substances. are stored near water have a greater In the Procedures for Prioritization of potential to enter that water (Ref. 6). In A commenter provided information Chemicals for Risk Evaluation Under each proposed designation document, for all candidate chemicals for High- the Toxic Substances Control Act Final EPA explains its analysis of the ‘‘storage Priority designation regarding: (1) Rule (Ref. 7), EPA agreed that the near significant sources of drinking Assessments conducted by other federal consideration of alternatives is most water’’ under 40 CFR 702.9 as follows: agencies/countries, (2) information from appropriately considered as part of any ‘‘The statute specifically requires the ChemView, (3) availability of workplace risk management rule. Agency to consider the chemical exposure data in OSHA’s database, and substance’s storage near significant (4) Registration, Evaluation, b. Data and Information on Potentially sources of drinking water, which EPA Authorisation and Restriction of Exposed or Susceptible Subpopulations interprets as direction to focus on the Chemicals registration and evaluation A commenter stated ‘‘[t]he general chemical substance’s potential human information. The commenter population, as well as vulnerable health hazard and exposure. EPA highlighted the dermal test data for p- subpopulations, are commonly exposed reviewed reasonably available dichlorobenzene, 1,2-dichlorobenzene, to formaldehyde through both indoor information, specifically looking to and 1,2-dichloropropane. Other and outdoor air pollution (e.g., identify certain types of existing commenters submitted chemical- industrial processes and automotive regulations or protections for the specific information for: 4,4′-(1- exhaust). Workplace exposures are also proposed chemical substances. EPA Methylethylidene)bis[2, 6- a significant concern, given the breadth

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of industries in which formaldehyde is • A variety of uses in the aerospace establish a predictable and routine known to be used or otherwise present.’’ industry for most of the candidate High- schedule and to continue to engage Another commenter supported EPA’s Priority Substances; stakeholders to articulate and clearly high-priority designation of 1,3- • Use of trans-1,2-dichloroethylene in define its binning process. Another butadiene and also supports designating the formulation of products ‘‘which are commenter requested that the Agency firefighters and emergency medical distributed and sold to industrial end ‘‘finalize and release its [‘]proof of personnel as susceptible populations, users, primarily for use in the area of concept[’] white paper on [‘]longer citing classification of 1,3-butadiene as medium and heavy-duty solvent term[’] prioritization soon.’’ carcinogenic to humans. Another precision cleaning, rinsing, and drying;’’ The Agency appreciates this feedback commenter provided technical reports • Use of ethylene dibromide is and will take this information into for some of the proposed High-Priority involved in the production of fuels; and consideration as it develops a longer- Substances that provide an overview of • Uses in automobiles for 15 of 20 of term prioritization strategy. As EPA potentially exposed or susceptible the proposed High-Priority Substances stated in the document, ‘‘A Working subpopulations for these chemicals. (o-dichlorobenzene, trans-1,2-DCE, 1,2- Approach for Identifying Potential Another commenter provided additional dichloroethane, 1,1,2-trichloroethane, Candidate Chemicals for Prioritization’’ information regarding uses, production DBP, BBP, DEHP, Di-isobutyl phthalate, (Ref. 5), the approach for identifying volume, production sites, and Dicyclohexyl phthalate, TBBPA, Tris(2- candidates for prioritization is expected impurities for phthalic anhydride, butyl chloroethyl) phosphate, TPP, 1,3- to evolve over time as EPA develops benzyl phthalate, formaldehyde and 1,3- butadiene, formaldehyde and phthalic expertise in identifying chemicals to butadiene. With respect to comments anhydride). enter prioritization, as well as in related to specific candidate High- EPA referenced information conducting prioritization and risk Priority Substances, additional submitted by commenters in the evaluations. information is included in the Agency’s proposed designation documents and For the long-term, EPA’s goal is to full response to comments document considered reasonably available develop a procedure to inform selection (Ref. 3). information, including public of candidates for prioritization that integrates information from new- EPA will consider reasonably comments, when making the final approach methodologies (NAMs) using available information to characterize the priority designations. EPA will consider alternative testing data and information environmental and human exposures, the relevant information on conditions from traditional studies (e.g., hazard, including potentially exposed or of use submitted by commenters during exposure, engineering, fate), and that susceptible subpopulations, resulting the scoping phase of the respective builds on the TSCA Work Plan for from the conditions of use during the TSCA risk evaluations. Any Chemical Assessments methodology. scoping phase of the TSCA risk determination of unreasonable risk for a Consistent with the Working Approach evaluations for chemicals designated as condition of use will occur as part of the risk evaluation process and will be document, EPA also will consider High-Priority Substances. federal government priorities and other As indicated in the proposed presented with the draft risk evaluation that the public and peer reviewers will interests when considering candidates designation documents, when relevant, for prioritization. workers will be considered potentially be given an opportunity to review and exposed or susceptible subpopulations, comment on. b. Use of Categories such as firefighters and emergency In the preamble for the Procedures for One commenter indicated that in medical personnel. EPA will also Prioritization of Chemicals for Risk future efforts EPA may select categories consider human health hazard Evaluation Under the Toxic Substances of similar chemicals to prioritize information to identify potentially Control Act Final Rule (Ref. 7), EPA together and, because of difficulties exposed or susceptible subpopulations, agreed that the consideration of associated with categories of similar such as developmental effects, uterine alternatives is most appropriately chemicals, urged EPA to ‘‘make sure cancer, or reproductive system effects. addressed as part of any risk that the categories have clear and well- With respect to concerns raised management rule. With respect to defined boundaries . . . [and] further regarding workplace exposures to comments related to specific candidate clarify the criteria used to define formaldehyde, workers were identified High-Priority Substances, the full chemical categories, such as similarities as a subpopulation that may be comment and description of information on structure, biology, or use . . . [and] potentially exposed or susceptible submitted are included in the Agency’s provide a CAS Number for each subpopulation in the proposed full response to comments document chemical in the entire category . . . designation document for (Ref. 3). [and ensure] that the chemical formaldehyde. iv. Comments Related to the Long-Term accurately depicts the level of concern c. Conditions of Use or Significant Prioritization Process appropriate for all the other chemicals Changes in Conditions of Use associated with the category.’’ a. Future and Long-Term Process To As stated in the preamble for the EPA received various comments Select Candidate Substances for Procedures for Prioritization of offering information related to condition Prioritization Chemicals for Risk Evaluation Under of use for candidate High-Priority A commenter stated that ‘‘[i]t is the Toxic Substances Control Act Final Substances, including: critical that the approaches EPA adopts Rule (Ref. 7), ‘‘TSCA section 26 • Uses of phthalic anhydride, for the selection of high priority and low provides EPA with authority to take formaldehyde, 1,3-butadiene, BBP, priority candidates for further action on categories of chemical diisobutyl phthalate, dicyclohexyl evaluation be consistent with the intent substances.’’ Furthermore, ‘‘. . . should phthalate, triphenyl phosphate, 1,1,2- of the Lautenberg Chemical Safety Act EPA determine to prioritize a category trichloroethane, 1,2-dichloroethane, . . . , because it will set precedent for of chemical substances, EPA would dibutyl phthalate, diethylhexyl how EPA identifies, evaluates and describe the basis for such a phthalate, and TBBPA in paints, regulates chemicals in the future.’’ determination in the Federal Register coatings, sealants and adhesives; Other commenters urged EPA to notice published to initiate

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prioritization’’ and ‘‘EPA will provide 13. Ethylene dibromide (Ethane, 1,2- three-year process that will culminate in an explanation of the rationale for dibromo-), CASRN 106–93–4, Docket ID a finding of whether or not the chemical initiating the process on the chemical number: EPA–HQ–OPPT–2018–0488. substance presents an unreasonable risk substance, thus ensuring the public has 14. Formaldehyde, CASRN 50–00–0, of injury to health or the environment Docket ID number: EPA–HQ–OPPT–2018– notice and an opportunity to comment 0438. under the conditions of use. The on any decision to prioritize a category 15. 1,3,4,6,7,8-Hexahydro-4,6,6,7,8,8- chemical-specific designation of chemical substances.’’ hexamethylcyclopenta [g]-2-benzopyran documents containing the information, analysis and basis used to support the IV. Designation as High-Priority (HHCB), CASRN 1222–05–5, Docket ID number: EPA–HQ–OPPT–2018–0430. proposed designations are located in the Substances for Risk Evaluation 16. 4,4′-(1-Methylethylidene)bis[2, 6- docket for each chemical substance. As Based on the information provided in dibromophenol] (TBBPA), CASRN 79–94–7, previously discussed, to the extent that Docket ID number: EPA–HQ–OPPT–2018– the August 2019 proposed designation comments provided information on 0462. additional conditions of use for the documents, as referenced in the August 17. Phosphoric acid, triphenyl ester (TPP) 23, 2019 notice (Ref. 2), and public CASRN 115–86–6, Docket ID number: EPA– candidate High-Priority Substances for comments received, including HQ–OPPT–2018–0458. risk evaluation, those conditions of use information pertaining to individual 18. Phthalic anhydride (1,3- were noted in the proposed designation chemical substances, EPA is designating Isobenzofurandione), CASRN 85–44–9, documents for each chemical substance the same 20 chemicals as High-Priority Docket ID number: EPA–HQ–OPPT–2018– and will be reflected in the draft scope Substances for risk evaluation. Pursuant 0459. of the risk evaluation for each chemical to 40 CFR 702.11, which states: ‘‘For 19. 1,1,2-Trichloroethane, CASRN 79–00–5, substance, which will include the Docket ID number: EPA–HQ–OPPT–2018– High-Priority Substances, EPA generally conceptual model and analysis plan for 0421. carrying out the evaluation. As such, expects to indicate which condition(s) 20. Tris(2-chloroethyl) phosphate (TCEP) of use were the primary basis for such (Ethanol, 2-chloro-, 1,1′,1″-phosphate), EPA will not amend the proposed designations.’’ For all 20 High-Priority CASRN 115–96–8, Docket ID number: EPA– designation documents. Instead, Substances the manufacturing, HQ–OPPT–2018–0476. additional submitted information processing, and conditions of use The designations are based on the specific to High-Priority Substances formed the primary basis for the conclusion that each chemical (e.g., relevant studies and assessments) designation. The final High-Priority substance satisfies the definition of will be considered in subsequent phases Substance designations are: High-Priority Substance in TSCA of risk evaluation, including draft scope 1. 1,3-Butadiene, CASRN 106–99–0, Docket section 6(b)(1)(B) and 40 CFR 702.3. documents and draft risk evaluation ID number: EPA–HQ–OPPT–2018–0451. EPA developed a document for each documents, both of which will be 2. Butyl benzyl phthalate (BBP) (1,2- substance to identify the information, subject to public comment Benzenedicarboxylic acid, 1-butyl 2- analysis and basis used to support the opportunities. (phenylmethyl) ester), CASRN 85–68–7, proposed designations as a High-Priority V. References Docket ID number: EPA–HQ–OPPT–2018– Substance for risk evaluation. These 0501. documents are available in the docket of The following is a listing of the 3. Dibutyl phthalate (DBP) (1,2- each of the chemical substances with a documents that are specifically Benzenedicarboxylic acid, 1,2-dibutyl ester), proposed designation as a High-Priority referenced in this document. The docket CASRN 84–74–2, Docket ID number: EPA– for this action includes these documents HQ–OPPT–2018–0503. Substance for risk evaluation. Also 4. o-Dichlorobenzene (Benzene, 1,2- included in each document is an and other information considered by dichloro-), CASRN 95–50–1, Docket ID explanation of the approach used by EPA, including documents that are number: EPA–HQ–OPPT–2018–0444. EPA to conduct the review. Each of the referenced within the documents that 5. p-Dichlorobenzene (Benzene, 1,4- documents includes an overview of the are included in the docket. For dichloro-), CASRN 106–46–7, Docket ID requirements in TSCA section 6(b)(1)(A) assistance in locating these referenced number: EPA–HQ–OPPT–2018–0446. and the regulatory section addressing documents, please consult the technical 6. 1,1-Dichloroethane, CASRN 75–34–3, the following review criteria and person listed under FOR FURTHER Docket ID number: EPA–HQ–OPPT–2018– considerations (40 CFR 702.9). INFORMATION CONTACT. 0426. These designated High-Priority 1. EPA. Initiation of Prioritization Under 7. 1,2-Dichloroethane, CASRN 107–06–2, Substances will fulfill the statutory the Toxic Substances Control Act (TSCA). Docket ID number: EPA–HQ–OPPT–2018– requirement to designate at least one Notice. Federal Register. (84 FR 10491, 0427. March 21, 2019) (FRL–9991–06). 8. trans-1,2-Dichloroethylene (Ethene, 1,2- high-priority substance upon the completion of the first 10 chemical 2. EPA. Proposed High-Priority Substance dichloro-, (1E)-), CASRN 156–60–5, Docket ID Designations Under the Toxic Substances number: EPA–HQ–OPPT–2018–0465. substances selected to undergo risk evaluations from the 2014 Update to the Control Act (TSCA). Federal Register. (84 FR 9. 1,2-Dichloropropane, CASRN 78–87–5, 44300, August 23, 2019) (FRL–9998–29). Docket ID number: EPA–HQ–OPPT–2018– TSCA Work Plan pursuant to TSCA 3. EPA. EPA’s Responses to Public 0428. section 6(b)(2)(A), as announced on Comments Received on the ‘‘Proposed High- 10. Dicyclohexyl phthalate (1,2- December 19, 2016 (see TSCA section Priority Substance Designations Under the Benzenedicarboxylic acid, 1,2-dicyclohexyl 6(b)(3)(C)). Pursuant to TSCA section Toxic Substances Control Act (TSCA).’’ ester), CASRN 84–61–7, Docket ID number: 6(b)(3)(A), the designation of these December 20, 2019. EPA–HQ–OPPT–2018–0504. chemical substances as High-Priority 4. EPA. Meetings: New Chemicals Review 11. Di-ethylhexyl phthalate (DEHP) (1,2- Substances constitutes the initiation of Program Implementation, etc. Federal Benzenedicarboxylic acid, 1,2-bis(2- the risk evaluations on the substances. Register. (82 FR 51415; November 6, 2017) ethylhexyl) ester), CASRN 117–81–7, Docket A designation of a chemical substance (FRL–9970–34). ID number: EPA–HQ–OPPT–2018–0433. 5. EPA. ‘‘A Working Approach for 12. Di-isobutyl phthalate (DIBP) (1,2- as a High-Priority Substance is not a Identifying Potential Candidate Chemicals for Benzenedicarboxylic acid, 1,2-bis(2- finding of unreasonable risk; rather, a Prioritization.’’ (https://www.epa.gov/sites/ methylpropyl) ester), CASRN 84–69–5, final designation as a High-Priority production/files/2018-09/documents/ Docket ID number: EPA–HQ–OPPT–2018– Substance initiates the risk evaluation preprioritization_white_paper_9272018.pdf). 0434. for the chemical substance. This is a September 27, 2018.

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6. EPA. ‘‘Procedures for Prioritization of comply with a collection of information Total Annual Cost: No Cost. Chemicals for Risk Evaluation under subject to the PRA that does not display Privacy Act Impact Assessment: No TSCA’’—Response to Public Comments a valid Office of Management and impact(s). (EPA–HQ–OPPT–2016–0636–0076). June 21, Budget (OMB) control number. Nature and Extent of Confidentiality: 2017. DATES: Written PRA comments should The Commission will consider the 7. EPA. Procedures for Prioritization of potential confidentiality of any Chemicals for Risk Evaluation Under the be submitted on or before January 29, Toxic Substances Control Act. Federal 2020. information submitted, particularly where public release of such Register. (82 FR 33753, July 20, 2017) (FRL– ADDRESSES: Direct all PRA comments to 9964–24). information could raise security Nicholas A. Fraser, OMB, via email concerns (e.g., granular location 8. EPA. A Working Approach for _ _ Identifying Potential Candidate Chemicals for Nicholas A. [email protected]; and information). We expect, however, that Prioritization; Notice of Availability. Federal to Nicole Ongele, FCC, via email PRA@ the public interest in knowing whether Register. (83 FR 50366, October 5, 2018) fcc.gov and to [email protected]. a carrier uses or owns equipment or (FRL–9983–38). Include in the comments the Title as services from Huawei or ZTE would (Authority: 15 U.S.C. 2601 et seq.) shown in the ‘‘Supplementary significantly outweigh any interest the Dated: December 20, 2019. Information’’ section below. carrier would have in keeping such Andrew R. Wheeler, FOR FURTHER INFORMATION CONTACT: For information confidential. Respondents additional information about the Administrator. may request materials or information information collection, contact Nicole submitted to the Commission or to the [FR Doc. 2019–28225 Filed 12–27–19; 8:45 am] Ongele, (202) 418–2991. Administrator be withheld from public BILLING CODE 6560–50–P SUPPLEMENTARY INFORMATION: The inspection under 47 CFR 0.459 of the Commission is requesting emergency Commission’s rules. OMB processing of the information Needs and Uses: The Commission FEDERAL COMMUNICATIONS collection requirement(s) contained in will submit this new information COMMISSION this notice and has requested OMB collection to the Office of Management [OMB 3060–XXXX; FRS 16361] approval no later than 32 days after the and Budget (OMB) under their collection is received at OMB. To view emergency processing procedures. Information Collection Being a copy of this information collection Under this information collection, the Submitted to the Office of Management request (ICR) submitted to OMB: (1) Go Commission proposes to collect and Budget for Emergency Review and to the web page http://www.reginfo.gov/ information to determine the extent to Approval public/do/PRAMain, (2) look for the which potentially prohibited equipment section of the web page called exists in current networks and the costs AGENCY: Federal Communications ‘‘Currently Under Review,’’ (3) click on associated with removing such Commission. the downward-pointing arrow in the equipment and replacing it with ACTION: Notice and request for ‘‘Select Agency’’ box below the equivalent equipment. The comments. ‘‘Currently Under Review’’ heading, (4) Communications Act of 1934, as select ‘‘Federal Communications amended, requires the ‘‘preservation SUMMARY: As part of its continuing effort Commission’’ from the list of agencies and advancement of universal service.’’ to reduce paperwork burdens, and as 47 U.S.C. 254(b). The information required by the Paperwork Reduction presented in the ‘‘Select Agency’’ box, (5) click the ‘‘Submit’’ button to the collection requirements reported under Act (PRA) of 1995, the Federal this collection are the result of Communications Commission (FCC or right of the ‘‘Select Agency’’ box, (6) when the list of Commission ICRs Commission actions to promote the the Commission) invites the general Act’s universal service goals. On public and other Federal agencies to currently under review appears, look for the Title of this ICR and then click on November 22, 2019, the Commission take this opportunity to comment on the adopted a Report and Order, Further following information collection. the ICR Reference Number. A copy of the FCC submission to OMB will be Notice of Proposed Rulemaking, and Comments are requested concerning: Order, WC Docket No. 18–89, FCC 19– Whether the proposed collection of displayed. OMB Control Number: 3060–XXXX. 121 (Protecting Against National information is necessary for the proper Title: Protecting National Security Security Threats to the Communications performance of the functions of the Through FCC Program. Supply Chain Through FCC Programs). Commission, including whether the Form Number: N/A. The Report and Order prohibits future information shall have practical utility; Type of Review: New information use of Universal Service Fund (USF) the accuracy of the Commission’s collection. monies to purchase, maintain, improve, burden estimate; ways to enhance the Respondents: Business or other for- modify, obtain, or otherwise support quality, utility, and clarity of the profit. any equipment or services produced or information collected; ways to minimize Number of Respondents and provided by a company that poses a the burden of the collection of Responses: 2,257 respondents; 2,257 national security threat to the integrity information on the respondents, responses. of communications networks or the including the use of automated Estimated Time per Response: 3 communications supply chain. It also collection techniques or other forms of hours. initially designates two entities— information technology; and ways to Frequency of Response: One-time Huawei Technologies Company further reduce the information reporting requirement. (Huawei) and ZTE Corporation (ZTE), collection burden on small business Obligation to Respond: Required to along with their affiliates, subsidiaries, concerns with fewer than 25 employees. obtain or retain benefits. Statutory and parents—as covered companies The Commission may not conduct or authority for this information collection posing such a national security threat. sponsor a collection of information is contained in 47 U.S.C. sections In the Further Notice, the Commission unless it displays a currently valid 1.4(b)(1), 1.103(a), 151–154, 201(b), 229, proposes to make the requirement to control number. No person shall be 254, and 1004. remove covered equipment and services subject to any penalty for failing to Total Annual Burden: 6,771 hours. from carriers’ networks contingent on

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the availability of a funded FOR FURTHER INFORMATION CONTACT: For Estimated Time per Response: 0.5–80 reimbursement program, in an effort to additional information or copies of the hours. mitigate the impact on affected entities. information collection, contact Cathy Frequency of Response: On occasion, The information will guide the Williams at (202) 418–2918. To view a one time, and annual reporting Commission’s next steps in the copy of this information collection requirements; third-party disclosure underlying proceeding. request (ICR) submitted to OMB: (1) Go requirement; recordkeeping requirement. Federal Communications Commission. to the web page http://www.reginfo.gov/ public/do/PRAMain, (2) look for the Obligation to Respond: Required to Cecilia Sigmund, section of the web page called obtain or retain benefits. The Federal Register Liaison Officer. ‘‘Currently Under Review,’’ (3) click on Commission has statutory authority for [FR Doc. 2019–28131 Filed 12–27–19; 8:45 am] the downward-pointing arrow in the the information collection requirements BILLING CODE 6712–01–P ‘‘Select Agency’’ box below the under 47 U.S.C. 154, 301, 302, 303, 307, ‘‘Currently Under Review’’ heading, (4) 309, 310, 319, 332, 605, and 721. select ‘‘Federal Communications Total Annual Burden: 44,992 hours. FEDERAL COMMUNICATIONS Commission’’ from the list of agencies Total Annual Cost: $16,612,586. COMMISSION presented in the ‘‘Select Agency’’ box, Privacy Act Impact Assessment: No (5) click the ‘‘Submit’’ button to the impact(s). [OMB 3060–0678 and OMB 3060–1167; FRS Nature and Extent of Confidentiality: 16372] right of the ‘‘Select Agency’’ box, (6) when the list of FCC ICRs currently There is no need for confidentiality Information Collections Being under review appears, look for the Title pertaining to the information collection Submitted for Review and Approval to of this ICR and then click on the ICR requirements in this collection. Needs and Uses: On August 2, 2019, Office of Management and Budget Reference Number. A copy of the FCC the Commission released a Report and submission to OMB will be displayed. AGENCY: Federal Communications Order, FCC 19–81, in IB Docket No. 18– Commission. SUPPLEMENTARY INFORMATION: As part of 86, titled ‘‘Streamlining Licensing its continuing effort to reduce ACTION: Notice and request for Procedures for Small Satellites’’ (Small comments. paperwork burdens, as required by the Satellite Report and Order). In this Paperwork Reduction Act (PRA) of 1995 Report and Order, the Commission SUMMARY: As part of its continuing effort (44 U.S.C. 3501–3520), the FCC invited adopted a new alternative, optional to reduce paperwork burdens, as the general public and other Federal licensing process for small satellites and required by the Paperwork Reduction Agencies to take this opportunity to spacecraft, called the ‘‘Part 25 Act (PRA) of 1995, the Federal comment on the following information streamlined small satellite process.’’ Communications Commission (FCC or collection. Comments are requested This new process allows qualifying the Commission) invites the general concerning: (a) Whether the proposed applicants for small satellites and public and other Federal Agencies to collection of information is necessary spacecraft to take advantage of an easier take this opportunity to comment on the for the proper performance of the application process, a lower application following information collection. functions of the Commission, including fee, and a shorter timeline for review Pursuant to the Small Business whether the information shall have than currently exists for applicants Paperwork Relief Act of 2002, the FCC practical utility; (b) the accuracy of the under the Commission’s existing Part 25 seeks specific comment on how it might Commission’s burden estimates; (c) satellite licensing rules. The ways to enhance the quality, utility, and ‘‘further reduce the information Commission limited the regulatory clarity of the information collected; and collection burden for small business burdens borne by applicants, while (d) ways to minimize the burden of the concerns with fewer than 25 promoting orbital debris mitigation and collection of information on the employees.’’ efficient use of spectrum. The respondents, including the use of The Commission may not conduct or Commission’s action supports and automated collection techniques or sponsor a collection of information encourages the increasing innovation in other forms of information technology. unless it displays a currently valid the small satellite sector and helps to Pursuant to the Small Business Office of Management and Budget preserve U.S. leadership in space-based Paperwork Relief Act of 2002, Public (OMB) control number. No person shall services and operations. This Law 107–198, see 44 U.S.C. 3506(c)(4), be subject to any penalty for failing to information collection will provide the the FCC seeks specific comment on how comply with a collection of information Commission and the public with it might ‘‘further reduce the information subject to the PRA that does not display necessary information about the collection burden for small business a valid OMB control number. operations of this growing area of concerns with fewer than 25 DATES: Written comments should be satellite operations. While this submitted on or before January 29, 2020. employees.’’ OMB Control No.: 3060–0678. information collection represents an If you anticipate that you will be Title: Part 25 of the Commission’s overall increase in the burden hours, the submitting comments but find it Rules Governing the Licensing of, and increase is due to an anticipated overall difficult to do so with the period of time Spectrum Usage by, Satellite Network increase in number of applications as a allowed by this notice, you should Stations and Space Stations. result of additional applications being advise the contacts listed below as soon Form No: FCC Form 312, FCC Form filed under the streamlined process as possible. 312–EZ, FCC Form 312–R and adopted in the Small Satellite Report ADDRESSES: Direct all PRA comments to Schedules A, B and S. and Order. This information collection Nicholas A. Fraser, OMB, via email Type of Review: Revision of a represents a decrease in the paperwork [email protected]; and currently approved collection. burdens for individual operators of non- to Cathy Williams, FCC, via email PRA@ Respondents: Business or other for- geostationary orbit (NGSO) satellites fcc.gov and to [email protected]. profit entities and Not-for-profit who may now qualify for streamlined Include in the comments the OMB institutions. processing as small satellites, and serves control number as shown in the Number of Respondents: 6,524 the public interest by streamlining the SUPPLEMENTARY INFORMATION below. respondents; 6,573 responses. collection of information and allowing

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the Commission to authorize small h. For small satellite applications Commission grants related to the satellites and spacecraft under the new filed under section 25.122, a proposed operations (e.g., experimental process established in the Report and certification that the space station(s) license grants, other space station or Order. will be disposed of through atmospheric earth station applications or grants). Specifically, FCC 19–81 contains new re-entry, and that the probability of (2) The informational requirements or modified information collection human casualty from portions of the listed in section 25.137 for requests for requirements listed below: spacecraft surviving re-entry and U.S.-market access through non-U.S.- (1) Space station application reaching the surface of the Earth is zero licensed space stations were also requirements for qualifying small as calculated using current NASA modified to refer to sections 25.122 and satellites and small spacecraft have been software or higher fidelity models. This 25.123, for those applicants seeking U.S. specified in new sections 25.122 and certification will not apply to small market access under the small satellite 25.123, respectively. These new spacecraft applications filed under or spacecraft process. sections, including the certifications, section 25.123. This collection is also used by staff in incorporate some existing information i. A certification that operations of the carrying out United States treaty requirements from other sections, but space station(s) will be compatible with obligations under the World Trade eliminate the need for small satellite existing operations in the authorized Organization (WTO) Basic Telecom and spacecraft applicants to provide frequency band(s) and will not Agreement. The information collected is much of the information that part 25 materially constrain future space station used for the practical and necessary space station applicants would typically entrants from using the authorized purposes of assessing the legal, be required to provide in narrative frequency bands. technical, and other qualifications of format under section 25.114(d). The j. A certification that the space applicants; determining compliance by new or modified informational station(s) can be commanded by applicants, licensees, and other grantees requirements in sections 25.122 and command originating from the ground with Commission rules and the terms 25.123 are listed as follows: to immediately cease transmissions and and conditions of their grants; and a. For small satellite applications filed the licensee will have the capability to concluding whether, and under what under section 25.122, a certification that eliminate harmful interference when conditions, grant of an authorization the space stations will operate in non- required under the terms of the license will serve the public interest, geostationary orbit, or for small or other applicable regulations. convenience, and necessity. k. A certification that each space spacecraft applications filed under As technology advances and new station is 10 cm or larger in its smallest section 25.123, a certification that the spectrum is allocated for satellite use, dimension. applicants for satellite service will space station(s) will operate and be l. For small satellite applications filed disposed of beyond Earth’s orbit. continue to submit the information under section 25.122, a certification that required in 47 CFR part 25 of the b. A certification that the total in-orbit each space station will have a mass of lifetime for any individual space station Commission’s rules. Without such 180 kg or less, including any propellant. information, the Commission could not will be six years or less. For small spacecraft applications filed c. For small satellite applications filed determine whether to permit under section 25.123, a certification that respondents to provide under 25.122, a certification that the each space station will have a mass of space station(s) will either be deployed telecommunication services in the 500 kg of less, including any propellant. United States. Therefore, the at an orbital altitude of 600 km or m. A description of means by which below, or will maintain a propulsions Commission would be unable to fulfill requested spectrum could be shared its statutory responsibilities in system and have the ability to make with both current and future operators collision avoidance and deorbit accordance with the Communications (e.g., how ephemeris data will be Act of 1934, as amended, and the maneuvers using propulsion. This shared, antenna design, earth station certification will not apply to small obligations imposed on parties to the geographic locations) thereby not WTO Basic Telecom Agreement. spacecraft applications filed under materially constraining other operations section 25.123. OMB Control Number: 3060–1167. in the requested frequency bands. Title: Accessible Telecommunications d. A certification that each space n. For space stations with any means and Advanced Communications station will be identifiable by a unique of maneuverability, including both Services and Equipment. signal-based telemetry marker active and passive means, a description Form Number: N/A. distinguishing it from other space of the design and operation of Type of Review: Revision of a stations or space objects. maneuverability and deorbit systems, currently approved collection. e. A certification that the space and a description of the anticipated Respondents: Individuals or station(s) will release no operational evolution over time of the orbit of the households; business or other for-profit debris. proposed satellite or satellites. entities; not-for-profit institutions. f. A certification that the space station o. In any instances where spacecraft Number of Respondents and operator has assessed and limited the capable of having crew aboard will be Responses: 3,541 respondents; 42,106 probability of accidental explosions located at or below the deployment responses. resulting from the conversion of energy orbital altitude of the space station Estimated Time per Response: .50 sources on board the space station(s) seeking a license, a description of the hours (30 minutes) to 40 hours. into energy that fragments the design and operational strategies that Frequency of Response: Annual, one spacecraft. will be used to avoid in-orbit collision time, and on occasion reporting g. A certification that the probability with such crewed spacecraft shall be requirements; recordkeeping of a collision between each space station furnished at the time of application. requirement; third-party disclosure and any other large object (10 This narrative requirement will not requirement. centimeters or larger) during the orbital apply to space stations that will operate Obligation to Respond: Mandatory. lifetime of the space station is 0.001 or beyond Earth’s orbit. Statutory authority for this information less as calculated using current NASA p. A list of the FCC file numbers or collection is contained in sections 1–4, software or other higher fidelity model. call signs for any known applications or 255, 303(r), 403, 503, 716, 717, and 718

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of the Communications Act, as requires internet browsers built into Therefore, the Commission extracted amended, 47 U.S.C. 151–154, 255, mobile phones to be accessible to and those burdens from the collection found 303(r), 403, 503, 617, 618, and 619. usable by individuals who are blind or in OMB control number 3060–1167. Total Annual Burden: 120,999 hours. have a visual impairment, unless doing Federal Communications Commission. Total Annual Cost: $17,800. so is not achievable. 47 U.S.C. 619. Cecilia Sigmund, Nature and Extent of Confidentiality: In document FCC 11–151, the Confidentiality is an issue to the extent Commission adopted rules relating to Federal Register Liaison Officer. that individuals and households the following: [FR Doc. 2019–28044 Filed 12–27–19; 8:45 am] provide personally identifiable (a) Service providers and equipment BILLING CODE 6712–01–P information, which is covered under the manufacturers that are subject to FCC’s system of records notice (SORN), sections 255, 716, and 718 of the Act FCC/CGB–1, ‘‘Informal Complaints, must ensure that the information and Inquiries and Requests for Dispute documentation that they provide is FEDERAL RESERVE SYSTEM Assistance,’’ which became effective on accessible to individuals with September 24, 2014. In addition, upon disabilities. Formations of, Acquisitions by, and the service of an informal or formal (b) Service providers and equipment Mergers of Savings and Loan Holding complaint, a service provider or manufacturers may seek waivers from Companies equipment manufacturer must produce the accessibility obligations of section The companies listed in this notice to the Commission, upon request, 716 of the Act for services or equipment have applied to the Board for approval, records covered by 47 CFR 14.31(a) of that are designed for multiple purposes, pursuant to the Home Owners’ Loan Act the Commission’s rules that are directly including advanced communications (12 U.S.C. 1461 et seq.) (HOLA), relevant to the equipment or service that services, but are designed primarily for Regulation LL (12 CFR part 238), and is the subject of such complaint and purposes other than using advanced may assert a statutory request for communications services. Regulation MM (12 CFR part 239), and confidentiality for these records. All (c) Service providers and equipment all other applicable statutes and other information submitted to the manufacturers that are subject to regulations to become a savings and Commission pursuant to Subpart D of sections 255, 716, and 718 of the Act loan holding company and/or to acquire Part 14 of the Commission’s rules or to must maintain records of their efforts to the assets or the ownership of, control any other request by the Commission implement those sections. of, or the power to vote shares of a may be submitted pursuant to a request (d) Service providers and equipment savings association. for confidentiality in accordance with manufacturers that are subject to The applications listed below are 47 CFR 0.459 of the Commission’s rules. sections 255, 716, and 718 of the Act available for immediate inspection at Privacy Impact Assessment: The FCC must certify annually to the the Federal Reserve Bank indicated. The completed a Privacy Impact Assessment Commission that records are kept in applications also will be available for (PIA) on June 28, 2007. The PIA may be accordance with the recordkeeping inspection at the offices of the Board of reviewed at https://www.fcc.gov/ requirements. The certification must Governors. Interested persons may general/privacy-act-information. The include contact details of the person(s) express their views in writing on FCC is in the process of updating the authorized to resolve accessibility whether the proposed transaction PIA to incorporate various revisions complaints and the agent designated for complies with the standards made to the SORN. service of process. enumerated in the HOLA (12 U.S.C. Needs and Uses: In 2011, in (e) The Commission established 1467a(e)). document FCC 11–151, the FCC adopted procedures to facilitate the filing of Unless otherwise noted, comments rules to implement sections 716 and 717 formal and informal complaints alleging regarding each of these applications of the Communications Act of 1934 (the violations of sections 255, 716, or 718 of must be received at the Reserve Bank Act), as amended, which were added to the Act. Those procedures include a indicated or the offices of the Board of the Act by the Twenty-First Century nondiscretionary pre-filing notice Governors Ann E. Misback, Secretary of Communications and Video procedure to facilitate dispute the Board, 20th Street and Constitution Accessibility Act of 2010 (CVAA). See resolution, that is, as a prerequisite to Avenue NW, Washington, DC 20551– Public Law 111–260, 104. Section 716 of filing an informal complaint, 0001, not later than January 21, 2020. the Act requires providers of advanced complainants must first request dispute A. Federal Reserve Bank of communications services and assistance from the Consumer and Philadelphia (William Spaniel, Senior manufacturers of equipment used for Governmental Affairs Bureau’s Vice President) 100 North 6th Street, advanced communications services to Disability Rights Office. Philadelphia, Pennsylvania 19105– make their services and equipment In 2013, in document FCC 13–57, the 1521. Comments can also be sent accessible to individuals with FCC adopted rules to implement section electronically to disabilities, unless doing so is not 718 of the Act. In 2015, in document [email protected]: achievable. 47 U.S.C. 617. Section 717 FCC 15–24, the FCC reclassified 1. Columbia Bank, MHC and of the Act established new broadband internet access service Columbia Financial, Inc., both of Fair recordkeeping requirements and (BIAS) as a telecommunications service Lawn, New Jersey; to acquire RSB enforcement procedures for service that is subject to the Commission’s Bancorp, MHC and RSB Bancorp, Inc., providers and equipment manufacturers regulatory authority under Title II of the and thereby indirectly acquire Roselle that are subject to sections 255, 716, and Act and applying section 255 of the Act Bank, all of Roselle, New Jersey. 718 of the Act. 47 U.S.C. 618. Section and the Commission’s implementing 255 of the Act requires rules to providers of BIAS and Board of Governors of the Federal Reserve telecommunications and interconnected manufacturers of equipment used for System, December 17, 2019. VoIP services and equipment to be BIAS. In 2017, in document FCC 17– Yao-Chin Chao, accessible to individuals with 166, the Commission reinstated the Assistant Secretary of the Board. disabilities, if readily achievable. 47 information service classification of [FR Doc. 2019–28107 Filed 12–27–19; 8:45 am] U.S.C. 255. Section 718 of the Act BIAS. BILLING CODE 6210–01–P

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FEDERAL RESERVE SYSTEM FEDERAL RESERVE SYSTEM 225), and all other applicable statutes and regulations to become a bank Formations of, Acquisitions by, and Notice of Proposals To Engage in or holding company and/or to acquire the Mergers of Savings and Loan Holding To Acquire Companies Engaged in assets or the ownership of, control of, or Companies Permissible Nonbanking Activities the power to vote shares of a bank or bank holding company and all of the The companies listed in this notice The companies listed in this notice banks and nonbanking companies have given notice under section 4 of the owned by the bank holding company, have applied to the Board for approval, Bank Holding Company Act (12 U.S.C. including the companies listed below. pursuant to the Home Owners’ Loan Act 1843) (BHC Act) and Regulation Y, (12 (12 U.S.C. 1461 et seq.) (HOLA), The applications listed below, as well CFR part 225) to engage de novo, or to as other related filings required by the Regulation LL (12 CFR part 238), and acquire or control voting securities or Regulation MM (12 CFR part 239), and Board, if any, are available for assets of a company, including the immediate inspection at the Federal all other applicable statutes and companies listed below, that engages regulations to become a savings and Reserve Bank indicated. The either directly or through a subsidiary or applications will also be available for loan holding company and/or to acquire other company, in a nonbanking activity the assets or the ownership of, control inspection at the offices of the Board of that is listed in § 225.28 of Regulation Y Governors. Interested persons may of, or the power to vote shares of a (12 CFR 225.28) or that the Board has express their views in writing on the savings association. determined by Order to be closely standards enumerated in the BHC Act The applications listed below, as well related to banking and permissible for (12 U.S.C. 1842(c)). as other related filings required by the bank holding companies. Unless Comments regarding each of these Board, if any, are available for otherwise noted, these activities will be applications must be received at the immediate inspection at the Federal conducted throughout the United States. Reserve Bank indicated or the offices of Each notice is available for inspection Reserve Bank indicated. The the Board of Governors, Ann E. at the Federal Reserve Bank indicated. applications also will be available for Misback, Secretary of the Board, 20th The notice also will be available for inspection at the offices of the Board of Street and Constitution Avenue NW, inspection at the offices of the Board of Governors. Interested persons may Washington, DC 20551–0001, not later Governors. Interested persons may than January 27, 2020. express their views in writing on express their views in writing on the whether the proposed transaction A. Federal Reserve Bank of St. Louis question whether the proposal complies (David L. Hubbard, Senior Manager) complies with the standards with the standards of section 4 of the enumerated in the HOLA (12 U.S.C. P.O. Box 442, St. Louis, Missouri BHC Act. 63166–2034. Comments can also be sent 1467a(e)). Unless otherwise noted, comments electronically to Unless otherwise noted, comments regarding the applications must be [email protected]: regarding each of these applications received at the Reserve Bank indicated 1. Genesis Bancorp, Inc., Benoit, must be received at the Reserve Bank or the offices of the Board of Governors, Mississippi; to become a bank holding indicated or the offices of the Board of Ann E. Misback, Secretary of the Board, company by acquiring Bank of Benoit, Governors Ann E. Misback, Secretary of 20th Street and Constitution Avenue Benoit, Mississippi. NW, Washington, DC 20551–0001, not the Board, 20th Street and Constitution Board of Governors of the Federal Reserve Avenue NW, Washington DC 20551– later than January 13, 2020. System, December 23, 2019. A. Federal Reserve Bank of Chicago 0001, not later than January 27, 2020. Ann Misback, (Colette A. Fried, Assistant Vice A. Federal Reserve Bank of President) 230 South LaSalle Street, Secretary of the Board. Philadelphia (William Spaniel, Senior Chicago, Illinois 60690–1414: [FR Doc. 2019–28178 Filed 12–27–19; 8:45 am] Vice President) 100 North 6th Street, 1. FCN Banc Corp, Brookville, BILLING CODE 6210–01–P Philadelphia, Pennsylvania 19105– Indiana; to acquire DSA Financial 1521. Comments can also be sent Corporation and thereby indirectly electronically to acquire Dearborn Savings Bank, both of FEDERAL RESERVE SYSTEM [email protected]: Lawrenceburg, Indiana, and thereby Formations of, Acquisitions by, and 1. RSB Bancorp, MHC, and RSB operate a savings association pursuant Mergers of Bank Holding Companies Bancorp, Inc., both of Roselle, New to section 4(c)(8) of the BHC Act. The companies listed in this notice Jersey; to become a savings and loan Board of Governors of the Federal Reserve have applied to the Board for approval, holding company and a mid-tier savings System, December 20, 2019. Michele Taylor Fennell, pursuant to the Bank Holding Company and loan holding company, Act of 1956 (12 U.S.C. 1841 et seq.) Assistant Secretary of the Board. respectively, in connection with the (BHC Act), Regulation Y (12 CFR part conversion of Roselle Bank, Roselle, [FR Doc. 2019–28001 Filed 12–27–19; 8:45 am] 225), and all other applicable statutes New Jersey, from a New Jersey state- BILLING CODE P and regulations to become a bank chartered stock savings bank to a New holding company and/or to acquire the Jersey state-chartered stock savings assets or the ownership of, control of, or FEDERAL RESERVE SYSTEM association. the power to vote shares of a bank or Board of Governors of the Federal Reserve Formations of, Acquisitions by, and bank holding company and all of the System, December 23, 2019. Mergers of Bank Holding Companies banks and nonbanking companies Ann Misback, owned by the bank holding company, The companies listed in this notice including the companies listed below. Secretary of the Board. have applied to the Board for approval, The applications listed below, as well [FR Doc. 2019–28167 Filed 12–27–19; 8:45 am] pursuant to the Bank Holding Company as other related filings required by the BILLING CODE 6210–01–P Act of 1956 (12 U.S.C. 1841 et seq.) Board, if any, are available for (BHC Act), Regulation Y (12 CFR part immediate inspection at the Federal

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Reserve Bank indicated. The The applications listed below, as well Banks will modify the practice of applications will also be available for as other related filings required by the maintaining a 2-hour window between inspection at the offices of the Board of Board, if any, are available for the closing and reopening of the Governors. Interested persons may immediate inspection at the Federal Fedwire Funds Service to maintain only express their views in writing on the Reserve Bank indicated. The a 90-minute window, and will increase standards enumerated in the BHC Act applications will also be available for the $1 billion value threshold for (12 U.S.C. 1842(c)). inspection at the offices of the Board of extending the closing of the Fedwire Comments regarding each of these Governors. Interested persons may Funds Service to $3 billion. Finally, the applications must be received at the express their views in writing on the Board has approved corresponding Reserve Bank indicated or the offices of standards enumerated in paragraph 7 of changes to the Federal Reserve Policy the Board of Governors, Ann E. the Act. on Payment System Risk (PSR policy). Misback, Secretary of the Board, 20th Comments regarding each of these DATES: Implementation date: March 19, Street and Constitution Avenue NW, applications must be received at the 2021. Washington, DC 20551–0001, not later Reserve Bank indicated or the offices of FOR FURTHER INFORMATION CONTACT: than January 23, 2020. the Board of Governors, Ann E. Michael Ballard, Senior Financial A. Federal Reserve Bank of St. Louis Misback, Secretary of the Board, 20th Institution and Policy Analyst (202– (David L. Hubbard, Senior Manager) and Constitution Avenue NW, 452–2384); Ann Sun, Lead Financial P.O. Box 442, St. Louis, Missouri Washington, DC 20551–0001, not later Institution and Policy Analyst (202– 63166–2034. Comments can also be sent than January 8, 2020. 912–7938), Division of Reserve Bank electronically to A. Federal Reserve Bank of Kansas Operations and Payment Systems; or [email protected]: City (Dennis Denney, Assistant Vice Evan H. Winerman, Senior Counsel 1. First Horizon National Corporation, President) 1 Memorial Drive, Kansas (202–872–7578), Legal Division; for Memphis, Tennessee; to acquire City, Missouri 64198–0001: users of Telecommunication Devices for IBERIABANK Corporation and thereby 1. Susan Chapman Plumb, the Deaf (TDD) only, contact (202–263– indirectly acquire IBERIABANK, both of Tahlequah, Oklahoma; to retain voting 4869). shares of Grandview Bankshares, Inc., Lafayette, Louisiana. SUPPLEMENTARY INFORMATION: B. Federal Reserve Bank of New York and thereby indirectly retain voting (Ivan Hurwitz, Senior Vice President) 33 shares of Cherokee County Bancshares, I. Background Liberty Street, New York, New York Inc. and Bank of Cherokee County, all On May 16, 2019, the Board 10045–0001. Comments can also be sent of Hulbert, Oklahoma. published a Federal Register notice electronically to Board of Governors of the Federal Reserve (Notice) seeking public comment on [email protected]: System, December 20, 2019. modifications to the Reserve Banks’ 1. Barclays US Holdings Limited, New Michele Taylor Fennell, payment services to facilitate adoption York, New York; a company organized Assistant Secretary of the Board. of a later same-day ACH processing and 1 under the laws of the Cayman Islands, [FR Doc. 2019–27999 Filed 12–27–19; 8:45 am] settlement window. As described more to become a bank holding company by BILLING CODE P fully in the Notice, the ACH network is acquiring Barclays US LLC, also of New made up of two network operators: The York, New York, and thereby indirectly Reserve Banks, which operate the acquire Barclays Bank Delaware, FEDERAL RESERVE SYSTEM FedACH® service, and The Clearing Wilmington, Delaware. In addition, House Payments Company L.L.C. (TCH), [Docket No. OP–1692] Barclays PLC and Barclays Bank PLC, which operates the Electronic Payments both of London, England, to retain Modifications to the Federal Reserve Network (EPN) service.2 The ACH Barclays US Holdings Limited and Banks’ National Settlement Service network is governed by the rules of the thereby indirectly acquire Barclays US and Fedwire® Funds Service To ACH operators, which generally LLC and Barclays Bank Delaware. Support Enhancements to the Same- incorporate the Nacha Operating Rules Board of Governors of the Federal Reserve Day ACH Service and Corresponding System, December 20, 2019. Changes to the Federal Reserve Policy 1 84 FR 22123 (May 16, 2019). In addition, the Board has announced that the Federal Reserve Michele Taylor Fennell, on Payment System Risk intends to explore further expanded hours for NSS Assistant Secretary of the Board. and the Fedwire Funds Service, up to 24 × 7 × 365, AGENCY: Board of Governors of the [FR Doc. 2019–28000 Filed 12–27–19; 8:45 am] to support a wide range of payment activities, Federal Reserve System. including liquidity management in private-sector BILLING CODE P ACTION: Notice. real-time gross settlement services for faster payments. See 84 FR 39297 (August 9, 2019). The Board is analyzing the risk, operational, and policy SUMMARY: The Board of Governors FEDERAL RESERVE SYSTEM implications of further expanding operating hours (Board) has approved modifications to of NSS and the Fedwire Funds Service. Change in Bank Control Notices; the Federal Reserve Banks’ (Reserve 2 The Reserve Banks settle all ACH transactions Banks) payment services to facilitate that are originated or received by FedACH Acquisitions of Shares of a Bank or customers, including transactions that are Bank Holding Company adoption of a later same-day automated exchanged between the two operators. TCH clearinghouse (ACH) processing and arranges settlement for only those ACH transactions The notificants listed below have settlement window. Specifically, the that are originated and received by EPN customers applied under the Change in Bank Reserve Banks will extend the daily (that is, transactions within the EPN network). The Reserve Banks settle ACH transactions by posting Control Act (Act) (12 U.S.C. 1817(j)) and operating hours of the National credits and debits to the sending and receiving § 225.41 of the Board’s Regulation Y (12 Settlement Service (NSS) and the banks’ Federal Reserve accounts at the settlement CFR 225.41) to acquire shares of a bank Fedwire® Funds Service. To mitigate time and date provided in the FedACH processing or bank holding company. The factors the risk that these modified hours will schedule. TCH uses NSS to settle its in-network ACH transactions in participants’ Federal Reserve that are considered in acting on the cause more frequent delays to the 9:00 accounts, typically sending NSS files at the same notices are set forth in paragraph 7 of p.m. eastern time (ET) reopening of the times the Reserve Banks settle FedACH the Act (12 U.S.C. 1817(j)(7)). Fedwire Funds Service, the Reserve transactions.

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and Guidelines adopted by Nacha’s p.m. ET and (2) an afternoon window from 6:00 p.m. ET to 6:45 p.m. ET, and members.3 Nacha amended its operating with a submission deadline at 2:45 p.m. (3) extending the closing of the Fedwire rules on September 13, 2018, to ET and settlement at 5:00 p.m. ET.6 The Funds Service by 30 minutes, from 6:30 implement a later same-day ACH later same-day ACH processing and p.m. ET to 7:00 p.m. ET. These window.4 The amended operating rules, settlement window outlined in the proposed changes were intended to however, are contingent on changes to Notice would have an afternoon allow sufficient time for depository Reserve Bank services that would enable submission deadline of 4:45 p.m. ET institutions and their customers to TCH, the private-sector ACH operator, and settlement at 6:00 p.m. ET, which reposition balances and manage using NSS, to settle transactions is later than the current operating hours liquidity between the closing of NSS, between its customers during this later of NSS.7 the Fedwire Funds third-party cutoff, same-day ACH window.5 The Board requested comment on (1) Currently, there are three ACH extending the closing time of NSS by and the closing of the Fedwire Funds processing and settlement windows: one hour, from 5:30 p.m. ET to 6:30 p.m. Service. Table 1 summarizes the One next-day window and two same- ET, (2) extending the cutoff time for proposed changes to closings and day windows. The two current same- Reserve Bank account holders to initiate cutoffs for Reserve Bank services, while day windows consist of (1) a morning transfers on behalf of third parties via Table 2 illustrates the proposed changes window with a submission deadline at the Fedwire Funds Service (Fedwire in times between service closings and 10:30 a.m. ET and settlement at 1:00 Funds third-party cutoff) by 45 minutes, cutoffs.

TABLE 1—PROPOSED CHANGES TO CLOSINGS AND CUTOFFS FOR RESERVE BANK SERVICES

Current closings/cutoffs Proposed closings/cutoffs

NSS closing ...... 5:30 p.m. ET ...... 6:30 p.m. ET. Fedwire Funds third-party cutoff ...... 6:00 p.m. ET ...... 6:45 p.m. ET. Fedwire Funds Service closing ...... 6:30 p.m. ET ...... 7:00 p.m. ET.

TABLE 2—PROPOSED CHANGES IN TIMES BETWEEN SERVICE CLOSINGS AND CUTOFFS

Current time Proposed time between between closings/cutoffs closings/cutoffs

Time between closing of NSS and Fedwire Funds third-party cutoff ...... 30 minutes 15 minutes. Time between Fedwire Funds third-party cutoff and closing of Fedwire Funds Service ...... 30 minutes 15 minutes. Time between closing of NSS and closing of Fedwire Funds Service ...... 60 minutes 30 minutes.

The Board requested comment on Funds Service (for the next funds- A. Supporting the Third Same-Day ACH how depository institutions and their transfer business day) and (2) the Processing and Settlement Window customers might use a third same-day Reserve Banks’ dollar value threshold ACH window and the extended NSS/ for providing extensions to the Fedwire Most commenters supported a third Fedwire Funds Service hours. The Funds Service hours. Finally, the Board same-day ACH processing and Board also requested comment on requested comment on corresponding settlement window alongside the whether reducing the time between changes to the PSR policy. proposed operating changes to Reserve service closings and cutoffs would Banks’ payment services, emphasizing II. Summary of Comments and Analysis increase risks and costs for depository the potential benefits to banks and institutions and their customers. The Board received 77 comments customers located outside the eastern Additionally, the Board requested from small and midsize banks, large time zone. These commenters believed comment on certain operational and banks, banking trade associations, end that making same-day ACH available policy changes to reduce the risk that users and associations representing end during greater portions of the business the proposed changes to service closings users, payment trade associations day could make the service more and cutoffs would increase the (including national and regional attractive for time-sensitive payments, frequency of delays to the reopening of payment associations), third-party particularly for banks and customers the Fedwire Funds Service. Specifically, processors and service providers, TCH, located in the mountain and Pacific 8 the Board requested comment on Nacha, and other interested parties. time zones. These commenters also modifying (1) the practice of Sixty-five commenters generally suggested that a third same-day ACH maintaining a 2-hour window between supported the Board’s proposed window may encourage more banks to the closing of the Fedwire Funds changes, 10 commenters did not support offer same-day ACH services to Service (for one funds-transfer business the proposed changes, and 2 day) and the reopening of the Fedwire commenters took no clear position. customers.

3 Nacha’s membership consists of insured deadline and either distribute the transactions to 8 Duplicate submissions or similar comments financial institutions and regional payment the receiving depository financial institutions from the same commenter were treated as a single associations. (RDFIs) that are their direct customers or exchange submission. Throughout this notice, the term with each other the ACH transactions that are 4 See https://www.Nacha.org/news/same-day-ach- ‘‘bank’’ will be used to refer to any type of destined to RDFIs that are customers of the other depository institution. Depository institutions will-be-enhanced-meet-ach-end-user-needs. operator. 5 include commercial banks, savings banks, savings See n.2, supra. 7 The actual schedules and timing are determined 6 During each window, the ACH operators process by each ACH operator and are not set by the Nacha and loan associations, and credit unions. the transactions received by the submission Operating Rules and Guidelines.

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Some commenters also noted the Supportive commenters generally ET.10 While the Board did not receive benefits of extending NSS and Fedwire indicated that the changes and costs any comments raising concerns related Funds Service hours for reasons associated with extending the operating to the timing for repositioning securities unrelated to same-day ACH. hours of NSS and the Fedwire Funds relative to expanding the operating Commenters suggested that extended Service would not be significant. While hours of the Fedwire Funds Service, NSS and Fedwire Funds Service hours the supportive commenters noted that Reserve Bank staff intends to engage would provide further flexibility for they would need to modify internal with Fedwire Securities Service their customers to use these services processes and procedures, staffing, and participants to determine, in later in the business day. Additionally, certain technological systems and consultation with the Board, if a change commenters suggested that these applications, these commenters did not to the closing time for repositioning changes would incrementally improve believe that these modifications would securities free of payment in the the ability to transfer funds between be extensive. These commenters relevant Operating Circular would be Federal Reserve accounts for a private- indicated that they would be able to warranted. At this time, based on the sector real-time gross settlement service make the necessary changes by March low amount of past usage of the for faster payments. 19, 2021, which is Nacha’s current repositioning window, the Board Ten commenters did not support a effective date for implementing the later believes that any potential changes to third same-day ACH window because of same-day ACH window. As noted the closing time for repositioning potential staffing costs associated with a previously, some small and mid-size securities free of payment at 7:00 p.m. longer operating day and, by extension, bank commenters were not supportive ET would not have a long-run effect on did not support the proposed changes to of the third same-day ACH window or the payment system, because that period the cutoff and closing times for NSS and the proposed changes to the cutoff and is generally used for intraparticipant the Fedwire Funds Service. Most of closing times for NSS and the Fedwire repositioning and therefore would not these commenters were small and Funds Service. necessarily warrant public comment. midsize banks located in the eastern or central time zones that would need to Six commenters, including two large C. Reducing the Risk of More Frequent modify staffing hours to cover a third banks, noted that the compressed end- Delays to the Reopening of the Fedwire same-day ACH window. These banks of-day timeline may increase the Funds Service noted that they generally do not frequency of requests to extend the Fedwire Funds Service operating originate same-day ACH transactions. At closing of the Fedwire Funds Service hours currently begin at 9:00 p.m. ET on the same time, 21 small and midsize operating day; conversely, seven the preceding calendar day and end at banks (many located in the Pacific time commenters, including one large bank, 6:30 p.m. ET, Monday through Friday. zone) supported the proposed changes. stated that the compressed end-of-day The Reserve Banks currently strive to The Board recognizes that adding a timeline would not increase the maintain at least a 2-hour window third same-day ACH window may frequency of extension requests. between the closing and reopening of incrementally increase costs for certain The Board has approved the proposed the Fedwire Funds Service to allow banks. The Board, however, believes extensions to the operating hours of Fedwire participants sufficient time to that adding a third-same day ACH NSS, the Fedwire Funds third-party complete their end-of-day cycles and window will enhance the availability of cutoff, and the closing of the Fedwire processing.11 With a change to the the same-day ACH service nationwide, Funds Service. When the Reserve Banks closing time of the Fedwire Funds particularly for banks and customers in implement these changes on March 19, Service from 6:30 p.m. ET to 7:00 p.m. the mountain and Pacific and time 2021, NSS will close at 6:30 p.m. ET, ET, the window between the closing zones, enabling those banks to receive the Fedwire Funds third-party cutoff and reopening of the Fedwire Funds advantages similar to those already will occur at 6:45 p.m. ET, and the Service would be reduced from 2 hours experienced by banks in eastern or Fedwire Funds Service will close at 7:00 and 30 minutes to 2 hours. Accordingly, central time zones. In addition, p.m. ET. The Reserve Banks will if the Reserve Banks maintain their supporting a third same-day ACH monitor for any increased frequency of current practice of providing a 2-hour window would advance the Federal extension requests resulting from this window between the closing and Reserve’s ongoing objective to improve compressed end-of-day timeline. As reopening of the Fedwire Funds Service, the speed and efficiency of the payment described further below, the Reserve any extension granted to the closing of system in the United States. Banks will take certain steps to reduce the Fedwire Funds Service would result B. Extending the Operating Hours of the risk that extension requests will in the delayed reopening of the Fedwire NSS and the Fedwire Funds Service result in more frequent delays to the Funds Service for the next business reopening of the Fedwire Funds Service. day.12 As described above, to accommodate The Reserve Banks allow participants a third same-day ACH window, the In addition, as the Board analyzed the to request extensions to the Fedwire Board proposed that the Reserve Banks changes further, it examined the Funds third-party cutoff or the Fedwire extend the operating hours of NSS, the interplay between extending the Fedwire Funds third-party cutoff, and operating hours for the Fedwire Funds 10 See Operating Circular 7, appendix B at https:// the operating hours of the Fedwire Service alongside the time frame for www.frbservices.org/assets/resources/rules- Funds Service. The Board requested repositioning securities free of payment regulations/operating-circular-7-102917.pdf. within the Fedwire Securities Service. 11 See https://www.frbservices.org/resources/ comment on whether the reduction in financial-services/wires/extension-guidelines.html. time between the closing of NSS, the Currently, the closing time for the See also 68 FR 28826, 28827 (May 27, 2003) (‘‘In Fedwire Funds Service third-party Fedwire Securities Service for general, the Federal Reserve Banks will work to cutoff, and the closing of the Fedwire repositioning free of payment is 7:00 maintain a two-hour interim period between the Funds Service would pose challenges p.m. ET, 30 minutes after the close of close and open of Fedwire each business day’’). 12 For example, a 15-minute extension to the 9 the Fedwire Funds Service at 6:30 p.m. for banks’ end-of-day processes. Fedwire Funds Service closing (from 7:00 p.m. ET to 7:15 p.m. ET) would result in a 15-minute delay 9 End-of-day cycles and processing typically systems for the next cycle date as well as the to the reopening of the Fedwire business day (from involve the reconciliation and preparation of production of customer statements. 9:00 p.m. ET to 9:15 p.m. ET).

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Funds Service closing time if, among in the delayed reopening of the Fedwire i. Changing the Practice of Maintaining other things, the dollar value of delayed Funds Service for the next business day. a 2-Hour Window Between the Closing 13 transfers would exceed $1 billion. The Delays to the reopening of the and Reopening of the Fedwire Funds Reserve Banks also allow participants to Fedwire Funds Service could affect Service request extensions to the NSS closing, Fedwire Funds Service participants that Seventeen commenters addressed the although such requests are wish to send payment orders at the start option of modifying the current practice uncommon.14 Extensions to the Fedwire of the Fedwire Funds Service business of maintaining a 2-hour window Funds third-party cutoff, the Fedwire between the closing and reopening of Funds Service closing time, or both day. On average, $35 billion is settled over the Fedwire Funds Service during the Fedwire Funds Service to allow only currently occur approximately twice per a 90-minute window. Sixteen month and, in most cases, do not affect the first hour of the Fedwire Funds Service business day (9:00 p.m. ET to commenters, including six large banks, the reopening time of the Fedwire three small and midsize banks, three 10:00 p.m. ET). Seven commenters, Funds Service for the next business payment trade associations, two banking 15 including five large banks, emphasized day. Given the compressed end-of-day trade associations, TCH, and Nacha, time frame, any extension to the closing the importance of preserving the supported the reduction to a 90-minute of NSS or the Fedwire Funds third-party consistent and regular opening of the window. One commenter (a midsize cutoff will require an extension to the Fedwire Funds Service at 9:00 p.m. ET. bank) did not support this option, 16 Fedwire Funds Service closing time. If These commenters noted that the suggesting that a 90-minute window ® the Reserve Banks maintain their CHIPS funds-transfer system, a large- may not be adequate for institutions to current practice of providing a 2-hour value payment system that is owned perform their end-of-day processes. window between the closing and and operated by TCH, relies on the While the Board recognizes that reopening of the Fedwire Funds Service, Fedwire Funds Service for prefunding at certain banks may need to make any extension granted to the closing of 9:00 p.m. ET.17 These commenters also operational adjustments to the Fedwire Funds Service would result noted that the 9:00 p.m. ET opening of accommodate a 90-minute window the Fedwire Funds Service has helped between the closing and reopening of 13 See Operating Circular 6, section 10.3, and the Fedwire Funds Service, the Board https://www.frbservices.org/resources/financial- U.S. banks remain competitive in services/wires/extension-guidelines.html. providing U.S. dollar (USD) payment believes that reducing this window will Additionally, if the Fedwire Funds Service services to clients in the Asia-Pacific provide a crucial 30-minute buffer (as experiences an operational disruption, the Reserve market, consistent with the Federal exists today) for the Reserve Banks to Banks may extend the Fedwire Funds Service extend the closing of the Fedwire Funds closing time regardless of the dollar value still to Reserve’s original rationale for opening Service(when necessary to prevent be sent. the Fedwire Funds Service at 9:00 p.m. 14 significant market disruptions) without Operating Circular 12, section 5.8, provides ET.18 Commenters further stated that, if discretion to a Reserve Bank to extend the NSS delaying the reopening of the Fedwire settlement window. While extensions to the closing delays to the reopening of the Fedwire Funds Service. This buffer would limit of NSS are uncommon, such extensions could be Funds Service were to become more the potential increase in delays to the required when system outages or problems prevent frequent, customers in the Asia-Pacific the submission or processing of NSS files. 9:00 p.m. ET reopening of the Fedwire 15 Over a 43-month period from January 2016 markets could switch to offshore USD Funds Service, which would reduce through July 2019, the Reserve Banks granted 47 clearing systems or could transact in disruptions and liquidity strains for extensions to the closing of the Fedwire Funds non-USD currencies. institutions that expect payments at 9:00 Service, ultimately resulting in seven delays to the reopening of the Fedwire Funds Service. Thirty- The Board believes it is important to p.m. ET and shortly thereafter. The three of these extensions were a result of extensions limit, if possible, the increase of delays Board has approved this modification, granted to the Fedwire Funds third-party cutoff. to the reopening of the Fedwire Funds which the Reserve Banks will The Reserve Banks also granted 23 extensions to the implement on March 19, 2021. Fedwire Funds third-party cutoff that did not Service for the reasons discussed by require extensions to the closing of the Fedwire commenters. As described below, the ii. Changing the Guidelines for Funds Service. Currently, the Reserve Banks can Reserve Banks will adopt certain provide up to a 45-minute extension to the Fedwire Providing Extensions to the Fedwire Funds third-party cutoff (from 6:00 p.m. ET to 6:45 operational and policy changes to limit Fund Service p.m. ET) without delaying the reopening of the the increase in delays to the reopening Twenty commenters addressed the Fedwire Funds Service. In such circumstances, the of the Fedwire Funds Service. Reserve Banks also can provide a 30-minute proposed option of modifying the extension to the closing of Fedwire Funds Service guidelines for granting extensions to the (from 6:30 p.m. to 7:00 p.m. ET) and still maintain 17 Through October 31, 2019, CHIPS cleared and Fedwire Funds Service hours (which (a) a 15-minute window between the Fedwire settled nearly $1.7 trillion in domestic and have been in effect since 1997) by Funds third-party cutoff and the closing of the international payments on average per day. See Fedwire Funds Service and (b) a 2-hour window increasing the dollar value threshold https://www.theclearinghouse.org/-/media/new/tch/ from $1 billion to $5 billion.19 Nine between the closing and reopening of the Fedwire documents/payment-systems/chips-volume_v2.pdf. Funds Service. TCH noted in a comment letter that 12 percent of commenters, including four payment 16 The Federal Reserve has long provided at least CHIPS transaction volume and 5 percent of daily trade associations, two small and 30 minutes between the last NSS settlement and the midsize banks, a large bank, a banking closing of the Fedwire Funds Service, recognizing transaction value are sent to CHIPS during the first that ‘‘the Fedwire funds transfer service is the hour of CHIPS processing, from 9:00 p.m. to 10:00 trade organization, and Nacha, primary alternative for orderly and efficient p.m. ET. supported the Board’s proposed settlement of bilateral obligations in case a 18 In May 2003, the Board approved the increase of the dollar value threshold to settlement arrangement is unable to complete its expansion of the operating hours for the Fedwire $5 billion. Five commenters supported multilateral settlement through NSS.’’ See 63 FR Funds Service by changing the opening of the 60000, 60004 (Nov. 6, 1998). The Fedwire Funds the notion of increasing the threshold service from 12:30 a.m. ET to 9:00 p.m. ET on the but did not support the Board’s third-party cutoff was established to stop the flow previous calendar day. The Federal Reserve of customer transactions and allow financial adopted these expanded hours in response to proposed $5 billion threshold. Of those institutions a settlement period to conduct bank-to- commenters, two commenters bank transfers to adjust master account positions industry requests for greater overlap of U.S. before the closing of the Fedwire Funds Service. wholesale payment system operating hours with supported increasing the threshold to $2 The current Fedwire Funds third-party cutoff of those of the Asia-Pacific markets, including 6:00 p.m. ET was established in 1990. See 55 FR Australia, Hong Kong, Japan, and New Zealand. See 19 One of these commenters, TCH, addressed this 18755, 18758 (May 4, 1990). 68 FR 28826, 28828 (May 27, 2003). option but did not take a position.

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billion; one commenter supported approved in this notice, the Reserve implement the options described above increasing the threshold by some Banks would have granted simultaneously—that is, whether the amount less than $5 billion but did not approximately 20 extensions per year, Reserve Banks should simultaneously take a position on the amount; and two approximately 7 of which would have reduce the 2-hour window to 90 commenters proposed alternative required a delay to the reopening of the minutes and increase the dollar structures or measures for modifying the Fedwire Funds Service. If the Reserve threshold for extensions. One threshold. These commenters proposed Banks had adopted a value threshold of commenter recommended an options that involved (1) increasing the $3 billion over that same period with incremental approach in which the threshold to account for inflation and expanded operating hours of NSS and Reserve Banks would first increase the observed changes in the average daily the Fedwire Funds Service, the Reserve dollar threshold and subsequently value of Fedwire Funds Service Banks would have granted reduce the window between the closing transactions; (2) creating a tiered approximately 13 extensions per year, and reopening of the Fedwire Funds threshold, with a lower threshold for an approximately 5 of which would have Service. The commenter suggested that initial extension and a higher threshold required a delay to the reopening. an incremental approach would give for subsequent extension requests from Finally, if the Reserve Banks had financial institutions more time to the same requestor on the same day; or adopted a value threshold of $5 billion enhance the efficiency of their end-of- (3) maintaining the current threshold of over that period with expanded day processing. The Board believes that $1 billion for the first two fifteen-minute operating hours of NSS and the Fedwire implementing both options extension requests and increasing the Funds Service, the Reserve Banks would simultaneously is necessary to reduce to threshold to $5 billion for subsequent have granted approximately 10 the extent possible delays to the extensions. extensions per year, approximately 4 of reopening of the Fedwire Funds Service. Finally, five commenters did not which would have required a delay to If the Reserve Banks were to follow an support increasing the threshold, the reopening of the Fedwire Funds incremental approach and raise the including three commenters who did Service. dollar threshold before reducing the 2- not provide a rationale for this position. The Board also analyzed adjusting the hour window to 90 minutes, the Reserve The other two commenters noted that $1 billion threshold to account for Banks would grant fewer extensions to the current $1 billion threshold inflation since 1997, but that adjustment the closing of the Fedwire Funds represents ‘‘material value’’ to Fedwire would raise the value threshold to an Service, but each extension would Funds Service participants, that the $1 amount less than $2 billion, which require a delay to the reopening of the billion threshold provides benefits to would not materially reduce the number Fedwire Funds Service. sending and receiving banks and to their of extensions granted, and by extension, The Board has approved these respective customers, and that a higher not reduce the number of delayed modifications for implementation threshold may result in more wire reopenings of the Fedwire Funds simultaneously on March 19, 2021. transfers being delayed until the next Service. Further, the Board believes that business day. changing the structure of the threshold D. Related Changes to the PSR Policy In light of these comments, the Board as suggested by certain commenters (for The Board also proposed conforming further assessed a range of options and example, adopting a tiered threshold) changes to Part II of the PSR policy, scenarios for increasing the dollar value would add unnecessary complexity to which governs the provision of intraday threshold for extensions to the Fedwire the process the Reserve Banks use to credit by the Reserve Banks and Fund Service. The Board’s analysis administer extensions. establishes procedures—called ‘‘posting assumed that the Reserve Banks would The Board has approved an increase rules’’—for the settlement of debits and modify the policy of maintaining a two- to the Reserve Banks’ dollar value credits to institutions’ Federal Reserve hour window between the closing and threshold for extension requests for the accounts for different payment types, to reopening of the Fedwire Funds Service Fedwire Funds Service hours to $3 enable adding a third same-day ACH to maintain only 90 minutes. billion, starting on March 19, 2021. The window.22 The Board used data from a 43-month Board believes that increasing the Specifically, adopting a third period, from January 2016 through July extension threshold to $3 billion will same-day ACH processing window 2019, to analyze whether changing the limit the increase in disruptive delays to requires that the Board modify the PSR dollar-value threshold would reduce the the 9:00 p.m. ET reopening of the policy by adding a 6:00 p.m. ET posting risk of more-frequent delays to the Fedwire Funds Service while time for settlement of commercial and reopening of the Fedwire Funds Service. recognizing the concerns of commenters government same-day ACH transactions From January 2016 through July 2019, who favored a threshold lower than $5 and removing the current 5:30 p.m. ET the Reserve Banks granted billion. The Reserve Banks will closely posting time for ACH return approximately 13 extensions per year to monitor delays in reopening the transactions, because these return the Fedwire Funds Service hours, Fedwire Funds Service and will transactions will post at the new 6:00 approximately 2 of which required the p.m. ET posting time for same-day ACH determine, in consultation with the 23 Reserve Banks to delay the 9:00 p.m. ET Board, whether further increases to the transactions. Additionally, extending the closing time of the Fedwire Funds reopening of the Fedwire Funds threshold are warranted.21 Service.20 Over that same period, if the Service will increase slightly the fee that Reserve Banks had maintained a $1 iii. Implementing Both Options an institution pays for daylight billion threshold but expanded the Simultaneously overdrafts, because (under section II.C operating hours of NSS and the Fedwire The Board requested comment on of the PSR policy) the Reserve Banks Funds Service as the Board has whether the Reserve Banks should calculate the daylight overdraft fees

20 Over the 43-month period from January 2016 21 The Reserve Banks will continue to use 22 The PSR policy is available at https:// through July 2019, the Reserve Banks cumulatively discretion when granting extensions. Also, given www.federalreserve.gov/paymentsystems/files/psr_ granted 47 extensions to the Fedwire Funds Service the comments received through this notice, the policy.pdf. hours, 7 of which required the Reserve Banks to Board does not believe that a potential future 23 Posting of paper returns of same-day forward delay the 9:00 p.m. ET reopening of the Fedwire change to the extension threshold would items that currently post at 5:30 p.m. ET will also Funds Service. necessarily warrant public comment. move to the new 6:00 p.m. ET posting time.

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based on the length of the standard broadly and resulting in increased differences.26 The Board believes that Fedwire operating day. adoption of same-day ACH payments.25 there will be no adverse effects to other Commenters supported the proposed Increased usage would further advance service providers resulting from conforming changes to the PSR policy. the Federal Reserve’s ongoing objective extending the operating hours of NSS These changes will take effect when the to improve the speed and efficiency of and the Fedwire Funds Service. As Reserve Banks implement the related the payment system in the United described earlier, the changes to NSS changes to NSS and the Fedwire Funds States. Further, the Board believes that and the Fedwire Funds Service will Service on March 19, 2021. extending the operating hours for NSS allow TCH, the private-sector ACH III. Criteria for Evaluating the Federal and the Fedwire Funds Service offers operator, to implement the third same- Reserve’s Role in the Payment System public benefits for reasons unrelated to day ACH window. This would promote a third same-day ACH window. For competitive fairness between the two As described in the Notice, the ACH operators. modifications to operating hours for example, these extended operating NSS and the Fedwire Funds Service are hours will allow banks to offer V. Conclusion each considered major service increased availability of the Fedwire As described above, the Board has enhancements. Any potential new Funds Service during the day to their approved the following modifications payment service or major enhancements customers. and enhancements to NSS and the to an existing service must meet the The Board recognizes, however, that Fedwire Funds Service and the Reserve following criteria: The Federal Reserve extending operating hours may increase Banks will implement the changes on must expect to achieve full recovery of certain risks and costs for banks and March 19, 2021. Additionally, the Board costs over the long run; the Federal their customers, including risks and has approved changes to the PSR policy Reserve must expect that its providing costs related to additional staffing, that will take effect when the Reserve the service will yield a clear public compression of end-of-day processing Banks implement the related changes to benefit; and the service should be one activities, decreased availability of NSS and the Fedwire Funds Service. that other providers alone cannot be extensions to operating hours, and expected to provide with reasonable A. Fedwire Funds Service Operating more-frequent delays to the reopening of Hours effectiveness, scope, and equity.24 the Fedwire Funds Service. As The Board expects that, over the long described in this notice, the Board has The Fedwire Funds third-party cutoff will occur at 6:45 p.m. ET and the run, the Reserve Banks will be able to approved a modification to the Reserve recover the costs associated with the closing of the Fedwire Funds Service Banks practice of maintaining a 2-hour extended operating hours. Extending the will occur at 7:00 p.m. ET. The opening window between the closing and the operating hours for NSS and the time for the Fedwire Funds Service will reopening of the Fedwire Funds Service Fedwire Funds Service requires remain at 9 p.m. ET on the previous relatively minor technical changes and to maintain only a 90-minute window as calendar day. The service will be additional staffing during the extended well as an increase to the Reserve Banks available for business days Monday business day, resulting in minimal one- threshold for granting extensions to the through Friday, except for specified time implementation costs and ongoing Fedwire Funds Service closing time holidays observed by the Reserve Banks. additional staffing costs. The Reserve from $1 billion to $3 billion to mitigate B. National Settlement Service Banks anticipate recovering these costs these risks and costs. Operating Hours through existing fees charged for NSS Finally, the Board does not expect and the Fedwire Funds Service. that other providers alone could provide The closing of the National Settlement The Board also expects that extending the enhanced services with reasonable Service will occur at 6:30 p.m. ET. The operating hours for NSS and the effectiveness, scope, and equity. TCH opening time for the National Fedwire Funds Service to support a relies on NSS to settle its in-network Settlement Service will remain at 7:30 third same-day ACH window will offer ACH transactions, including same-day a.m. ET. public benefits. Same-day ACH ACH transactions, and so would be C. Window Between the Closing and transactions are used for payroll unable to offer a third same-day ACH Reopening of the Fedwire Funds Service (especially emergency payroll), window with settlement at 6:00 p.m. ET business-to-business payments, The Reserve Banks will modify their if the Reserve Banks did not extend the current practice of maintaining a 2-hour consumer bill payments, and consumer closing time of NSS. account-to-account payments. As window between the closing and the expressed in the feedback received from IV. Competitive Impact Analysis reopening of the Fedwire Funds Service commenters, by allowing banks to to maintain only a 90-minute window. When considering changes to an submit same-day ACH transactions later D. Fedwire Funds Service Extension existing service, the Board conducts a in the business day, the third same-day Threshold ACH window could encourage more competitive impact analysis to banks (particularly those in the determine whether there will be a direct The Reserve Banks will raise the mountain and Pacific time zones) to and material adverse effect on the threshold for granting extensions to the offer same-day ACH to their customers, ability of other service providers to Fedwire Funds Service closing time potentially increasing usage more compete effectively with the Federal from $1 billion to $3 billion. The Reserve in providing similar services Reserve Banks, in consultation with the 24 Clear public benefits include promoting the due to differing legal powers or the Board, will determine whether further integrity of the payment system, improving the Federal Reserve’s dominant market increases to the threshold are warranted effectiveness of financial markets, reducing the risk position deriving from such legal to maintain the regular and consistent associated with payment and securities-transfer open of the Fedwire Funds Service at services, or improving the efficiency of the payment system. Board of Governors of the Federal Reserve 25 In the ACH network, RDFIs are defined as 9:00 p.m. ET. System, ‘‘Federal Reserve in the Payment System,’’ entities that receive ACH transactions, while Issued 1984; revised 1990. Available at http:// Originating Depository Financial Institutions 26 See The Federal Reserve in the Payments www.federalreserve.gov/paymentsystems/pfs_ (ODFIs) are defined as those entities that originate System (issued 1984; revised 1990), Federal Reserve frpaysys.htm. ACH transactions. Regulatory Service 9–1558.

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E. PSR Policy Revisions to Section II.C of the PSR calculated by dividing the annual 74 The Board is amending part II of the Policy penalty rate by 360. The daylight- PSR policy to add a new 6:00 p.m. ET The Board will revise section II.C, overdraft penalty rate applies to the posting time for same-day ACH paragraph 3 of the PSR policy as institution’s daily average daylight transactions, remove the current 5:30 follows: overdraft in its Federal Reserve account. p.m. ET posting time for ACH return The daylight-overdraft penalty rate is C. Pricing transactions, and make conforming charged in lieu of, not in addition to, the changes to the daylight overdraft fee * * * * * rate used to calculate daylight overdraft calculation. Daylight overdraft fees for fees for institutions described in this uncollateralized overdrafts (or the section. VI. Federal Reserve Policy on Payment uncollateralized portion of a partially By order of the Board of Governors of the System Risk (PSR) collateralized overdraft) are calculated Federal Reserve System, December 20, 2019. The Board amends part II of the PSR using an annual rate of 50 basis points, Ann Misback, policy. quoted on the basis of a 24-hour day and Secretary of the Board. a 360-day year. To obtain the effective [FR Doc. 2019–28002 Filed 12–27–19; 8:45 am] Revisions to Section II.A of the PSR annual rate for the standard Fedwire BILLING CODE P Policy operating day, the 50-basis-point annual Revise Section II.A, Opening balance rate is multiplied by the fraction of a 24- (previous day’s closing balance), as hour day during which Fedwire is DEPARTMENT OF DEFENSE follows: scheduled to operate. For example, A. Daylight Overdraft Definition and under a 22-hour scheduled Fedwire GENERAL SERVICES Measurement operating day, the effective annual rate ADMINISTRATION used to calculate daylight overdraft fees * * * * * equals 45.83 basis points (50 basis NATIONAL AERONAUTICS AND Post by 1:00 p.m. eastern time: 55 points multiplied by 22/24). The SPACE ADMINISTRATION +/¥ Commercial check transactions, effective daily rate is calculated by including returned checks dividing the effective annual rate by [OMB Control No. 9000–0032; Docket No. ¥ +/ Government and commercial 360.56 An institution’s daily daylight 2019–0003; Sequence No. 30] FedACH SameDay Service overdraft charge is equal to the effective Submission for OMB Review; transactions, including return daily rate multiplied by the institution’s 34 Contractor Use of Interagency Fleet items average daily uncollateralized daylight Management System Vehicles + Same-day Treasury investments. overdraft. Post at 5:00 p.m. eastern time: AGENCY: Department of Defense (DOD), ¥ * * * * * +/ Government and commercial General Services Administration (GSA), Revisions to Section II.F of the PSR FedACH SameDay Service and National Aeronautics and Space Policy transactions, including return Administration (NASA). items 35 Revise section II.F, paragraph 3 as ACTION: Notice. + Treasury checks, postal money follows: orders, and savings bond SUMMARY: Under the provisions of the F. Special Situations redemptions in separately sorted Paperwork Reduction Act, the deposits; these items must be * * * * * Regulatory Secretariat Division has deposited by the latest applicable Certain institutions are subject to a submitted to the Office of Management deposit deadline preceding the daylight-overdraft penalty fee levied and Budget (OMB) a request to review posting time against the average daily daylight and approve a revision and renewal of + Local Federal Reserve Bank checks; overdraft incurred by the institution. a previously approved information these items must be presented These include Edge and agreement collection requirement regarding before 3:00 p.m. eastern time corporations, bankers’ banks that are not contractor use of Interagency Fleet Post at 5:30 p.m. eastern time: subject to reserve requirements, and Management System vehicles. ¥ +/ Commercial check transactions, limited-purpose trust companies. The DATES: Submit comments on or before including returned checks annual rate used to determine the January 29, 2020. daylight-overdraft penalty fee is equal to Post at 6:00 p.m. eastern time: ADDRESSES: ¥ the annual rate applicable to the Submit comments regarding +/ Government and commercial this burden estimate or any other aspect FedACH SameDay Service daylight overdrafts of other institutions (50 basis points) plus 100 basis points of this collection of information, transactions, including return including suggestions for reducing this items 36 multiplied by the fraction of a 24-hour day during which Fedwire is scheduled burden to: Office of Information and * * * * * to operate (currently 22/24). The daily Regulatory Affairs of OMB, Attention: daylight-overdraft penalty rate is Desk Officer for GSA, Room 10236, 34 With the exception of paper returns and paper NEOB, Washington, DC 20503 or at notifications of change (NOCs) of prior-dated items _ that only post at 5:00 p.m.; paper returns of same- 8:30 a.m. and 5:00 p.m., depending on when the Oira [email protected]. day forward items that only post at 6:00 p.m.; and item is received by Reserve Banks. Additionally submit a copy to GSA by FedLine Web returns and FedLine Web NOCs that 55 A change in the length of the scheduled any of the following methods: only post at 8:30 a.m. and 5:00 p.m., depending on Fedwire operating day should not significantly • Federal eRulemaking Portal: This when the item is received by Reserve Banks. change the amount of fees charged because the website provides the ability to type 35 With the exception of paper returns of same- effective daily rate is applied to average daylight day forward items that only post at 6:00 p.m. overdrafts, the calculation of which would also short comments directly into the 36 With the exception of paper returns and paper reflect the change in the operating day. notifications of change (NOCs) of prior-dated items 56 Under the current 22-hour Fedwire operating 74 Under the current 22-hour Fedwire operating that only post at 5:00 p.m.; and FedLine Web day, the effective daily daylight-overdraft rate is day, the effective daily daylight-overdraft penalty returns and FedLine Web NOCs that only post at truncated to 0.0000127. rate is truncated to 0.0000382.

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comment field or attach a file for Authorized contractors shall submit and approve a revision and renewal of lengthier comments. Go to http:// requests for IFMS vehicles and related a previously approved information www.regulations.gov and follow the services in writing to the appropriate collection requirement regarding instructions on the site. GSA point of contact in accordance with commerce patent regulations. • Mail: General Services the FAR. Contractors’ requests must DATES: Submit comments on or before Administration, Regulatory Secretariat include: (1) Two copies of the agency January 29, 2020. Division (MVCB), 1800 F Street NW, authorization; (2) The number of ADDRESSES: Submit comments regarding Washington, DC 20405. ATTN: Lois vehicles and related services required this burden estimate or any other aspect Mandell/IC 9000–0032, Contractor Use and period of use; (3) A list of of this collection of information, of Interagency Fleet Management employees who are authorized to including suggestions for reducing this System Vehicles. request the vehicles or related services; burden to: Office of Information and Instructions: All items submitted (4) A listing of equipment authorized to Regulatory Affairs of OMB, Attention: must cite Information Collection 9000– be serviced; and (5) Billing instructions 0032, Contractor Use of Interagency Desk Officer for GSA, Room 10236, and address. NEOB, Washington, DC 20503 or at Fleet Management System Vehicles. _ Comments received generally will be C. Annual Burden Oira [email protected]. Additionally submit a copy to GSA by posted without change to http:// Respondents: 132. www.regulations.gov, including any any of the following methods: Total Annual Responses: 132. • Federal eRulemaking Portal: This personal and/or business confidential Total Burden Hours: 132. information provided. To confirm website provides the ability to type receipt of your comment(s), please D. Public Comment short comments directly into the check www.regulations.gov, A 60-day notice was published in the comment field or attach a file for approximately two to three days after Federal Register at 84 FR 53730, on lengthier comments. Go to http:// submission to verify posting (except October 8, 2019. No comments were www.regulations.gov and follow the instructions on the site. allow 30 days for posting of comments received. • submitted by mail). Obtaining Copies: Requesters may Mail: General Services Administration, Regulatory Secretariat FOR FURTHER INFORMATION CONTACT: Mr. obtain a copy of the information Division (MVCB), 1800 F Street NW, Michael O. Jackson, Procurement collection documents from the General Washington, DC 20405. ATTN: Lois Analyst, at telephone 202–208–4949, or Services Administration, Regulatory Mandell/IC 9000–0095, Commerce email at [email protected]. Secretariat Division (MVCB), 1800 F Patent Regulations. SUPPLEMENTARY INFORMATION: Street NW, Washington, DC 20405, telephone 202–501–4755. Please cite Instructions: All items submitted A. OMB Control Number, Title, and any OMB Control No. 9000–0032, Contractor must cite Information Collection 9000– Associated Form(s) Use of Interagency Fleet Management 0095, Commerce Patent Regulations. Comments received generally will be 9000–0032, Contractor Use of System Vehicles, in all correspondence. posted without change to http:// Interagency Fleet Management System Dated: December 23, 2019. Vehicles. www.regulations.gov, including any Janet Fry, personal and/or business confidential B. Needs and Uses Director, Federal Acquisition Policy Division, information provided. To confirm Federal Acquisition Regulation (FAR) Office of Governmentwide Acquisition Policy, receipt of your comment(s), please Office of Acquisition Policy, Office of check www.regulations.gov, 51.203 and the clause at FAR 52.251–2, Governmentwide Policy. Interagency Fleet Management System approximately two to three days after (IFMS) Vehicles and Related Services, [FR Doc. 2019–28162 Filed 12–27–19; 8:45 am] submission to verify posting (except are to be used in solicitations and BILLING CODE 6820–EP–P allow 30 days for posting of comments contracts when a cost-reimbursement submitted by mail). contract is contemplated and the FOR FURTHER INFORMATION CONTACT: DEPARTMENT OF DEFENSE contracting officer may authorize, if in Zenaida Delgado, Procurement Analyst, the best interest of the Government, the GENERAL SERVICES at telephone 202–969–7207, or contractor to use IFMS vehicles and ADMINISTRATION [email protected]. related services. Before such an SUPPLEMENTARY INFORMATION: authorization, the contracting officer NATIONAL AERONAUTICS AND A. OMB Control Number, Title, and must have, among other requirements: SPACE ADMINISTRATION (1) A written statement that the Any Associated Form(s) contractor will assume, without the [OMB Control No. 9000–0095; Docket No. 9000–0095, Commerce Patent right of reimbursement from the 2019–0003; Sequence No. 31] Regulations. Government, the cost or expense of any Submission for OMB Review; use of the IFMS vehicles and services B. Needs and Uses Commerce Patent Regulations not related to the performance of the The Federal Acquisition Regulation contract; (2) Evidence that the AGENCY: Department of Defense (DOD), (FAR) subpart 27.3, Patents Rights contractor has obtained motor vehicle General Services Administration (GSA), under Government Contracts, liability insurance covering bodily and National Aeronautics and Space implements the Department of injury and property damage, with limits Administration (NASA). Commerce regulation (37 CFR 401) of liability as required or approved by ACTION: Notice. based on chapter 18 of title 35 U.S.C., the agency, protecting the contractor Presidential Memorandum on and the Government against third-party SUMMARY: Under the provisions of the Government Patent Policy to the Heads claims arising from the ownership, Paperwork Reduction Act, the of Executive Departments and Agencies, maintenance, or use of an IFMS vehicle; Regulatory Secretariat Division has dated February 18, 1983, and Executive and (3) Considered any submitted to the Office of Management Order 12591, Facilitating Access to recommendations of the contractor. and Budget (OMB) a request to review Science and Technology, dated April

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10, 1987. Under the subpart, a DEPARTMENT OF HEALTH AND ADDRESSES section of this notice by the contracting officer may insert the clause HUMAN SERVICES date listed in the ‘‘DATES’’ section of at FAR 52.227–11, Patent Rights- this notice. Ownership by the Contractor, or Centers for Medicare & Medicaid FOR FURTHER INFORMATION CONTACT: Lisa 52.227–13, Patent Rights-Ownership by Services Carr, Designated Federal Official, Office the Government, in solicitations and [CMS–7057–N] of Communications, 200 Independence contracts pertaining to inventions made Avenue SW, Mailstop 325G HHH, in the performance of experimental, Announcement of the Advisory Panel Washington, DC 20201, 202–690–5742, developmental, or research work. on Outreach and Education (APOE); or via email at [email protected]. In accordance with the clauses, a January 15, 2020 Meeting Additional information about the APOE Government contractor must report all is available at: http://www.cms.gov/ AGENCY: subject inventions to the contracting Centers for Medicare & Regulations-and-guidance/Guidance/ officer, submit a disclosure of the Medicaid Services (CMS), HHS. FACA/APOE.html. Press inquiries are invention, and identify any publication, ACTION: Notice. handled through the CMS Press Office sale, or public use of the invention (FAR at (202) 690–6145. SUMMARY: This notice announces the 52.227–11(c), 52.227–13(e)(1)). The SUPPLEMENTARY INFORMATION: next meeting of the APOE (the Panel) in contracting officer may modify FAR accordance with the Federal Advisory I. Background and Charter Renewal 52.227–11(e) or otherwise supplement Committee Act. The Panel advises and Information the clause to require contractors to makes recommendations to the submit periodic or interim and final A. Background Secretary of the U.S. Department of reports listing subject inventions (FAR Health and Human Services (HHS) and The Advisory Panel for Outreach and 27.303(b)(2)(i) and (ii)). In order to the Administrator of the Centers for Education (APOE) (the Panel) is ensure that subject inventions are Medicare & Medicaid Services (CMS) on governed by the provisions of the reported, the contractor is required to opportunities to enhance the Federal Advisory Committee Act establish and maintain effective effectiveness of consumer education (FACA) (Pub. L. 92–463), as amended (5 procedures for identifying and strategies concerning the Health U.S.C. Appendix 2), which sets forth disclosing subject inventions (FAR Insurance Marketplace, Medicare, standards for the formation and use of 52.227–11, Alternate IV; 52.227– Medicaid, and the Children’s Health federal advisory committees. The Panel 13(e)(1)). In addition, the contractor Insurance Program (CHIP). This meeting is authorized by section 1114(f) of the must require its employees, by written is open to the public. Social Security Act (42 U.S.C. 1314(f)) agreements, to disclose subject and section 222 of the Public Health DATES: inventions (FAR 52.227–11(e)(2); Meeting Date: Wednesday, Service Act (42 U.S.C. 217a). 52.227–13(e)(4)). The contractor also has January 15, 2020 8:30 a.m. to 4:00 p.m. The Secretary of the U.S. Department an obligation to utilize the subject eastern standard time (e.s.t). of Health and Human Services (HHS) invention, and agree to report, upon Deadline for Meeting Registration, (the Secretary) signed the charter request, the utilization or efforts to Presentations, Special Accommodations establishing the Citizen’s Advisory utilize the subject invention (FAR and Comments: Tuesday, January 7, Panel on Medicare Education 1 (the 52.227–11(f); 52.227–13(c)(1)(iii)). 2020, 5:00 p.m. eastern standard time predecessor to the APOE) on January 21, (e.s.t). 1999 (64 FR 7899) to advise and make C. Annual Burden ADDRESSES: Meeting Location: U.S. recommendations to the Secretary and Respondents: 3,379. Department of Health & Human the Administrator of the Centers for Total Annual Responses: 13,200. Services, Hubert H. Humphrey Building, Medicare & Medicaid Services (CMS) on Total Burden Hours: 52,800. 200 Independence Avenue, SW, Room the effective implementation of national 505A, Washington, DC 20201. Medicare education programs, including D. Public Comment Presentations and Written Comments: with respect to the Medicare+Choice (M+C) program added by the Balanced A 60-day notice was published in the Presentations and written comments Budget Act of 1997 (Pub. L. 105–33). Federal Register at 84 FR 56192, on should be submitted to: Lisa Carr, Designated Federal Official (DFO), The Medicare Prescription Drug, October 21, 2019. No comments were Improvement, and Modernization Act of received. Office of Communications, Centers for Medicare & Medicaid Services, 200 2003 (MMA) (Pub. L. 108–173) Obtaining Copies: Requesters may Independence Avenue SW, Mailstop expanded the existing health plan obtain a copy of the information 325G HHH, Washington, DC 20201, options and benefits available under the collection documents from the General 202–690–5742, or via email at APOE@ M+C program and renamed it the Services Administration, Regulatory cms.hhs.gov. Medicare Advantage (MA) program. Secretariat Division (MVCB), 1800 F Registration: The meeting is open to CMS has had substantial responsibilities Street NW, Washington, DC 20405, the public, but attendance is limited to to provide information to Medicare telephone 202–501–4755. Please cite the space available. Persons wishing to beneficiaries about the range of health OMB Control No. 9000–0095, attend this meeting must register at the plan options available and better tools Commerce Patent Regulations, in all website https://www.eventbrite.com/e/ to evaluate these options. The correspondence. apoe-january-15–2020-meeting-tickets- successful MA program implementation Dated: December 23, 2019. 81969951331 or by contacting the DFO required CMS to consider the views and Janet Fry, listed in the FOR FURTHER INFORMATION policy input from a variety of private Director, Federal Acquisition Policy Division, CONTACT section of this notice, by the sector constituents and to develop a Office of Governmentwide Acquisition Policy, date listed in the ‘‘DATES’’ section of Office of Acquisition Policy, Office of this notice. Individuals requiring sign 1 We note that the Citizen’s Advisory Panel on Governmentwide Policy. Medicare Education is also referred to as the language interpretation or other special Advisory Panel on Medicare Education (65 FR [FR Doc. 2019–28163 Filed 12–27–19; 8:45 am] accommodations should contact the 4617). The name was updated in the Second BILLING CODE 6820–EP–P DFO at the address listed in the Amended Charter approved on July 24, 2000.

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broad range of public-private charter was most recently renewed on • Drawing the program link between partnerships. January 19, 2019, and will terminate on outreach and education, promoting In addition, Title I of the MMA January 19, 2021 unless renewed by consumer understanding of health care authorized the Secretary and the appropriate action. coverage choices, and facilitating Administrator of CMS (by delegation) to consumer selection/enrollment, which B. Charter Renewal establish the Medicare prescription drug in turn support the overarching goal of benefit. The drug benefit allows In accordance with the January 19, improved access to quality care, beneficiaries to obtain qualified 2019, charter, the APOE will advise the including prevention services, prescription drug coverage. In order to HHS and CMS on developing and envisioned under the Affordable Care effectively administer the MA program implementing education programs that Act. and the Medicare prescription drug support individuals who are enrolled in The current members of the Panel as benefit, we have substantial or eligible for Medicare, Medicaid, of November 18, 2019 are: Angie responsibilities to provide information CHIP, or coverage available through the Boddie, Director of Health Programs, to Medicare beneficiaries about the Health Insurance MarketplaceSM and National Caucus and Center on Black range of health plan options and other CMS programs. The scope of this Aging, Inc.; Julie Carter, Senior Federal benefits available, and to develop better Federal Advisory Committee Act Policy Associate, Medicare Rights tools to evaluate these plans and (FACA) group also includes advising on Center; Scott Ferguson, Director of Care benefits. education of providers and stakeholders Transitions and Population Health, The Patient Protection and Affordable with respect to health care reform and Mount Sinai St. Luke’s Hospital; Leslie Care Act (Pub. L. 111–148) and Health certain provisions of the HITECH Act Fried, Senior Director, Center for Care and Education Reconciliation Act enacted as part of the ARRA. Benefits Access, National Council on of 2010 (Pub. L. 111–152) (collectively The charter will terminate on January Aging; David Goldberg, President and referred to as the Affordable Care Act) 19, 2021, unless renewed by appropriate CEO of Mon Health System; Jean- expanded the availability of other action. The APOE was chartered under Venable R. Goode, Professor, options for health care coverage and 42 U.S.C. 217a, section 222 of the Public Department of Pharmacotherapy and enacted a number of changes to Health Service Act, as amended. The Outcomes Science, School of Pharmacy, Medicare as well as to Medicaid and APOE is governed by provisions of Pub. Virginia Commonwealth University; CHIP. Qualified individuals and L. 92–463, as amended (5 U.S.C. Louise Scherer Knight, Director, Harry J. qualified employers are now able to Appendix 2), which sets forth standards Duffey Family Patient and Family purchase private health insurance for the formation and use of advisory Services Program, Johns Hopkins coverage through a competitive committees. Sidney Kimmel Comprehensive Cancer marketplace, called an Affordable In accordance with the renewed Center; Cheri Lattimer, Executive Insurance Exchange (also called Health charter, the APOE will advise the Director, National Transitions of Care Insurance MarketplaceSM, or Secretary of Health and Human Services Coalition; Michael Minor, National MarketplaceSM 2). In order to effectively and the CMS Administrator concerning Director, H.O.P.E. HHS Partnership, implement and administer these optimal strategies for the following: • National Baptist Convention USA, changes, we must provide information Developing and implementing Incorporated; Cathy Phan, Business to consumers, providers, and other education and outreach programs for Development Coordinator, Asian stakeholders through education and individuals enrolled in, or eligible for, American Health Coalition dba HOPE outreach programs regarding how Medicare, Medicaid, the CHIP, and Clinic; Margot Savoy, Chair, Department existing programs will change and the coverage available through the Health of Family and Community Medicine, SM expanded range of health coverage Insurance Marketplace and other Temple University Physicians; CMS programs. options available, including private • Congresswoman Allyson Schwartz, health insurance coverage through the Enhancing the federal government’s President and CEO, Better Medicare MarketplaceSM. The APOE (the Panel) effectiveness in informing Medicare, Alliance; and Tobin Van Ostern, Co- allows us to consider a broad range of Medicaid, CHIP, or the Health Insurance SM Founder, Young Invincibles Advisors; views and information from interested Marketplace consumers, issuers, Tia Whitaker, Statewide Director, audiences in connection with this effort providers, and stakeholders, pursuant to Outreach and Enrollment, Pennsylvania and to identify opportunities to enhance education and outreach programs of Association of Community Health the effectiveness of education strategies issues regarding these programs, Centers. concerning the Affordable Care Act. including the appropriate use of public- The scope of this Panel also includes private partnerships to leverage the II. Provisions of this Notice advising on issues pertaining to the resources of the private sector in In accordance with section 10(a) of education of providers and stakeholders educating beneficiaries, providers, the FACA, this notice announces a partners and stakeholders. meeting of the APOE. The agenda for with respect to the Affordable Care Act • and certain provisions of the Health Expanding outreach to vulnerable the January 15, 2020 meeting will Information Technology for Economic and underserved communities, include the following: and Clinical Health (HITECH) Act including racial and ethnic minorities, • Welcome and listening session with enacted as part of the American in the context of Medicare, Medicaid, CMS leadership Recovery and Reinvestment Act of 2009 the CHIP and the Health Insurance • Recap of the previous (November SM (ARRA) (Pub.L. 111–5). Marketplace education programs, and 14, 2019) meeting other CMS programs as designated. • CMS programs, initiatives, and On January 21, 2011, the Panel’s • charter was renewed and the Panel was Assembling and sharing an priorities information base of ‘‘best practices’’ for • An opportunity for public comment renamed the Advisory Panel for • Outreach and Education. The Panel’s helping consumers evaluate health Meeting summary, review of coverage options. recommendations, and next steps • 2 Health Insurance MarketplaceSM and Building and leveraging existing Individuals or organizations that wish MarketplaceSM are service marks of the U.S. community infrastructures for to make a 5-minute oral presentation on Department of Health & Human Services. information, counseling, and assistance. an agenda topic should submit a written

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copy of the oral presentation to the DFO presentation or to support a DATES: Comments due within 30 days of at the address listed in the ADDRESSES presentation, are subject to inspection. publication. OMB is required to make a section of this notice by the date listed We cannot assume responsibility for decision concerning the collection of in the DATES section of this notice. The coordinating the receipt, transfer, information between 30 and 60 days number of oral presentations may be transport, storage, set up, safety, or after publication of this document in the limited by the time available. timely arrival of any personal Federal Register. Therefore, a comment Individuals not wishing to make an oral belongings or items used for is best assured of having its full effect presentation may submit written presentation or to support a if OMB receives it within 30 days of comments to the DFO at the address presentation. publication. listed in the ADDRESSES section of this Note: Individuals who are not ADDRESSES: Written comments and notice by the date listed in the DATES registered in advance will not be recommendations for the proposed section of this notice. permitted to enter the building and will information collection should be sent be unable to attend the meeting. III. Security, Building, and Parking directly to the following: Office of Guidelines IV. Collection of Information Management and Budget, Paperwork _ The meeting is open to the public, but This document does not impose Reduction Project, Email: OIRA attendance is limited to the space information collection requirements, [email protected], Attn: available. Persons wishing to attend this that is, reporting, recordkeeping, or Desk Officer for the Administration for meeting must register by contacting the third-party disclosure requirements. Children and Families. DFO at the address listed in the Consequently, there is no need for Copies of the proposed collection may ADDRESSES section of this notice or by review by the Office of Management and be obtained by writing to the telephone at the number listed in the Budget under the authority of the Administration for Children and FOR FURTHER INFORMATION CONTACT Paperwork Reduction Act of 1995 (44 Families, Office of Planning, Research section of this notice by the date U.S.C. Chapter 35). and Evaluation, 330 C Street SW, specified in the DATES section of this Washington, DC 20201, Attn: OPRE notice. This meeting will be held in a Authority: Sec. 1114(f) of the Social Reports Clearance Officer. All requests Security Act (42 U.S.C. 1314(f)), sec. 222 of federal government building, the Hubert the Public Health Service Act (42 U.S.C. should be identified by the title of the H. Humphrey (HHH) Building; 217a), and sec. 10(a) of Pub. L. 92–463 (5 information collection. Email address: therefore, federal security measures are U.S.C. App. 2, sec. 10(a) and 41 CFR part [email protected]. applicable. 102–3). SUPPLEMENTARY INFORMATION: The REAL ID Act of 2005 (Pub. L. Dated: December 19, 2019. 109–13) establishes minimum standards Description: The proposed for the issuance of state-issued driver’s Seema Verma, information collection will examine licenses and identification (ID) cards. It Administrator, Centers for Medicare & how fatherhood programs include prohibits federal agencies from Medicaid Services. HMRE and coparenting content, the accepting an official driver’s license or [FR Doc. 2019–28004 Filed 12–27–19; 8:45 am] types of activities programs use to ID card from a state for any official BILLING CODE 4120–01–P promote fathers’ healthy romantic purpose unless the Secretary of the relationships and coparenting Department of Homeland Security relationships, barriers to addressing determines that the state meets these DEPARTMENT OF HEALTH AND healthy romantic relationships and standards. Beginning October 2015, HUMAN SERVICES coparenting in fatherhood programs, the photo IDs (such as a valid driver’s relevance and success of addressing Administration for Children and healthy romantic relationships and license) issued by a state or territory not Families in compliance with the Real ID Act will coparenting with fathers alone versus not be accepted as identification to enter with couples or both parents, fathers’ Submission for OMB Review; and coparents’ reactions to this federal buildings. Visitors from these Coparenting and Healthy Relationship states/territories will need to provide programming, curriculum developers’ and Marriage Education for Dads (New perspectives on the curricula used, and alternative proof of identification (such Collection) as a valid passport) to gain entrance into what types of partnerships fatherhood federal buildings. The current list of AGENCY: Office of Planning, Research, programs have with other agencies to states from which a federal agency may and Evaluation; Administration for promote fathers’ healthy romantic accept driver’s licenses for an official Children and Families; HHS. relationships and coparenting. This purpose is found at http://www.dhs.gov/ ACTION: Request for public comment. information will be collected through real-id-enforcement-brief. semi-structured interviews with We recommend that confirmed SUMMARY: The Administration for fatherhood program staff, community registrants arrive reasonably early, but Children and Families (ACF), Office of partners, fathers who are no longer no earlier than 45 minutes prior to the Planning, Research, and Evaluation participating in the programs, and start of the meeting, to allow additional (OPRE) proposes to collect information curriculum developers; and through time to clear security. Security measures as part of the Coparenting and Healthy focus groups with current program include the following: Relationship and Marriage Education for participants (fathers) and coparents. • Presentation of a government-issued Dads (CHaRMED) study. The purpose of This information will inform future photographic identification to the the CHaRMED study is to better efforts to promote healthy romantic Federal Protective Service or Guard understand the services that fatherhood relationships and coparenting through Service personnel. programs provide in the areas of fatherhood programming. • Inspection, via metal detector or Healthy Marriage and Relationship Respondents: Federal and non-federal other applicable means, of all persons Education (HMRE) and coparenting to fatherhood program staff (e.g., program entering the building. We note that all learn what strategies hold promise for directors and facilitators), community items brought into HHH Building, promoting active engagement in these partners, fathers, coparents, and whether personal or for the purpose of services. curriculum developers.

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ANNUAL BURDEN ESTIMATES

Number of Average Total/annual responses burden hours Annual Instrument number of per per burden hours respondents respondent response

Screener for selecting fatherhood programs for visits ...... 28 1 6 168 Semi-structured interviews with program staff ...... 48 1 2 96 Semi-structured interviews with partner organization staff ...... 14 1 2 28 Semi-structured interviews with non-participating fathers ...... 20 1 1.5 30 Focus groups with participating fathers ...... 104 1 2 208 Focus groups with coparents ...... 48 1 2 96 Discussions with curriculum developers ...... 7 1 1 7 Demographic questionnaire -fathers ...... 124 1 .25 31 Demographic questionnaire—coparents ...... 48 1 .25 12

Estimated Total Annual Burden DATES: Comments due within 30 days of This multilateral Convention contains Hours: 676 publication. OMB is required to make a groundbreaking provisions that, on a Authority: Title IV, Part A, Section decision concerning the collection of worldwide scale, establish uniform, 403(a)(2) of the Social Security Act [42 U.S.C. information between 30 and 60 days simple, fast, and inexpensive 603(a)(2)]. after publication of this document in the procedures for the processing of Federal Register. Therefore, a comment Mary B. Jones, international child support cases. Under is best assured of having its full effect the Convention, U.S. states process ACF/OPRE Certifying Officer. if OMB receives it within 30 days of child support cases with other countries [FR Doc. 2019–28108 Filed 12–27–19; 8:45 am] publication. that have ratified the Convention under BILLING CODE 4184–01–P ADDRESSES: Written comments and the requirements of the Convention and recommendations for the proposed Article 7 of the Uniform Interstate DEPARTMENT OF HEALTH AND information collection should be sent Family Support Act (UIFSA 2008). In HUMAN SERVICES directly to the following: Office of order to comply with the Convention, Management and Budget, Paperwork the U.S. implements the Convention’s Administration for Children and Reduction Project, Email: OIRA_ case processing forms. Families [email protected], Attn: State and Federal law require states to Desk Officer for the Administration for use federally approved case processing Submission for OMB Review; Children and Families. Provision of Child Support Services in forms. Section 311(b) of UIFSA 2008, Copies of the proposed collection may which has been enacted by all 50 states, IV–D Cases Under the Hague Child be obtained by emailing infocollection@ the District of Columbia, Guam, Puerto Support Convention; Federally- acf.hhs.gov. Alternatively, copies can Rico, and the Virgin Islands, requires Approved Forms (OMB #0970–0488) also be obtained by writing to the states to use forms mandated by Federal Administration for Children and AGENCY: Office of Child Support law. 45 CFR 303.7 also requires child Families, Office of Planning, Research, Enforcement, Administration for support programs to use federally Children and Families, HHS. and Evaluation, 330 C Street SW, Washington, DC 20201, Attn: OPRE approved forms in intergovernmental ACTION: Request for public comment. Reports Clearance Officer. All requests, IV–D cases unless a country has provided alternative forms as a part of SUMMARY: The Office of Child Support emailed or written, should be identified its chapter in a Caseworker’s Guide to Enforcement (OCSE), Administration for by the title of the information collection. Processing Cases with Foreign Children and Families (ACF) is SUPPLEMENTARY INFORMATION: requesting a three-year extension of the Description: On January 1, 2017, the Reciprocating Countries. Hague Child Support Forms (OMB 2007 Hague Convention on the Respondents: State agencies #0970–0488, expiration 4/30/2020). International Recovery of Child Support administering a child support program There are no changes requested to the and Other Forms of Family Maintenance under title IV–D of the Social Security form. entered into force for the United States. Act.

ANNUAL BURDEN ESTIMATES

Total Average Total number of burden Total Instrument number of responses per hours per burden respondents respondent response hours

Annex I: Transmittal form under Article 12(2) ...... 54 45 1 2,430 Annex II: Acknowledgment form under Article 12(3) ...... 54 90 .5 2,430 Annex A: Application for Recognition and Enforcement, including restricted information on the applicant ...... 54 18 .5 486 Annex A: Abstract of Decision ...... 54 4 1 216 Annex A: Statement of Enforceability of Decision ...... 54 18 0.17 165 Annex A: Statement of Proper Notice ...... 54 4 .5 108 Annex A: Status of Application Report—Article 12 ...... 54 36 .33 642 Annex B: Application for Enforcement of a Decision Made or Recognized in the Requested State, including restricted information on the applicant ...... 54 18 .5 486

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ANNUAL BURDEN ESTIMATES—Continued

Total Average Total number of burden Total Instrument number of responses per hours per burden respondents respondent response hours

Annex B: Status of Application Report—Article 12 ...... 54 36 .33 642 Annex C: Application for Establishment of a Decision, including restricted information on the Applicant ...... 54 4 .5 108 Annex C: Status of Application Report—Article 12 ...... 54 9 .33 160 Annex D: Application for Modification of a Decision, including Restricted In- formation on the Applicant ...... 54 4 .5 108 Annex D: Status of Application Report—Article 12 ...... 54 9 .33 160 Annex E: Financial Circumstances Form ...... 54 45 2 4,860

Estimated Total Annual Burden award amounts, and assess compliance the Personal Responsibility and Work Hours: 13,001. with statutory and regulatory Opportunity Reconciliation Act of 1996, Authority: 42 U.S.C. 654(20) and 666(f). requirements. ACF is requesting an Public Law 104–193. Tribal entities extension with no changes to the form with approved tribal plans for Mary B. Jones, and minor updates to the instructions. implementation of the TANF program ACF/OPRE Certifying Officer. DATES: Comments due within 60 days of are required under Section 412(h) of the [FR Doc. 2019–28109 Filed 12–27–19; 8:45 am] publication. In compliance with the Social Security Act to report financial BILLING CODE 4184–41–P requirements of Section 3506(c)(2)(A) of data. Form ACF–196T provides for the the Paperwork Reduction Act of 1995, collection of data regarding federal the Administration for Children and expenditures. Failure to collect this data DEPARTMENT OF HEALTH AND Families is soliciting public comment would seriously compromise ACF’s HUMAN SERVICES on the specific aspects of the ability to monitor expenditures. This Administration for Children and information collection described above. information is also used to estimate Families ADDRESSES: Copies of the proposed outlays and may be used to prepare ACF collection of information can be budget submissions to Congress. Proposed Information Collection obtained and comments may be Financial management of the program Activity; Form ACF–196T, Tribal TANF forwarded by emailing infocollection@ would be seriously compromised if the Financial Report (OMB #0970–0345) acf.hhs.gov. Alternatively, copies can expenditure data were not collected. 45 also be obtained by writing to the CFR part 286 Subpart E requires the AGENCY: Office of Family Assistance; Administration for Children and strictest controls on funding Administration for Children and Families, Office of Planning, Research, requirements, which necessitates review Families; HHS. and Evaluation (OPRE), 330 C Street of documentation in support of tribal ACTION: Request for public comment. SW, Washington, DC 20201, Attn: ACF expenditures for reimbursement. SUMMARY: Form ACF–196T is used by Reports Clearance Officer. All requests, Comments received from previous tribes to report expenditures for the emailed or written, should be identified efforts to implement a similar Tribal Tribal Temporary Assistance for Needy by the title of the information collection. TANF Report Form ACF–196T were Families (TANF) grant. The SUPPLEMENTARY INFORMATION: used to guide ACF in the development Administration for Children and Description: Tribes use Form ACF– of the product presented with this Families (ACF) will use the financial 196T to report expenditures for the submittal. data provided by tribes to estimate Tribal TANF grant. Authority to collect Respondents: All approved Tribal quarterly funding needs, calculate and report this information is found in TANF Agencies.

ANNUAL BURDEN ESTIMATES

Average Total number Number of burden Annual burden Form of responses per hours per hours respondents respondent response

ACF–196T ...... 72 4 1.5 432

Estimated Total Annual Burden information can be obtained and The Department specifically requests Hours: 432. comments may be forwarded by writing comments on (a) whether the proposed Comments: In compliance with the to the Administration for Children and collection of information is necessary requirements of Section 506(c)(2)(A) of Families, Office of Planning, Research for the proper performance of the the Paperwork Reduction Act of 1995, and Evaluation, 330 C Street SW, functions of the agency, including the Administration for Children and Washington, DC 20201. Attn: ACF whether the information shall have Families is soliciting public comment Reports Clearance Officer. Email practical utility; (b) the accuracy of the on the specific aspects of the address: [email protected]. All agency’s estimate of the burden of the information collection described above. requests should be identified by the title proposed collection of information; (c) Copies of the proposed collection of of the information collection. the quality, utility, and clarity of the

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information to be collected; and (d) Living, Washington, DC 20201, 202– Medicare beneficiaries. Grant funds ways to minimize the burden of the 795–7461, [email protected]. were made available to support collection of information on SUPPLEMENTARY INFORMATION: Under the information, counseling, and assistance respondents, including through the use PRA, Federal agencies must obtain activities related to Medicare, Medicaid, of automated collection techniques or approval from the Office of Management and other health insurance options. other forms of information technology. and Budget (OMB) for each collection of The Senior Medicare Patrol (SMP) Consideration will be given to information they conduct or sponsor. program was authorized in 1997 under comments and suggestions submitted ‘‘Collection of information’’ is defined Titles II and IV of the Older Americans within 60 days of this publication. in 44 U.S.C. 3502(3) and 5 CFR Act, the Omnibus Consolidated Appropriation Act of 1997 and the Authority: U.S.C. Section 402 of the Social 1320.3(c) and includes agency requests Security Act (42 U.S.C. 602). or requirements that members of the Health Insurance Portability and public submit reports, keep records, or Accountability Act of 1996. The SMP Mary B. Jones, provide information to a third party. mission is to empower and assist ACF/OPRE Certifying Officer. The PRA requires Federal agencies to Medicare beneficiaries, their families, [FR Doc. 2019–28090 Filed 12–27–19; 8:45 am] provide a 60-day notice in the Federal and caregivers, to prevent, detect, and BILLING CODE 4184–36–P Register concerning each proposed report suspected healthcare fraud, collection of information, including errors, and abuse through outreach, each proposed extension of an existing counseling, and education. SMP grantees support ACL’s goals of DEPARTMENT OF HEALTH AND collection of information, before promoting increased choice and greater HUMAN SERVICES submitting the collection to OMB for independence among older adults and Administration for Community Living approval. To comply with this individuals with disabilities. SMP requirement, ACL is publishing a notice activities enhance the financial, Agency Information Collection of the proposed collection of emotional, physical, and mental well- Activities; Proposed Collection; information set forth in this document. being of older adults, thereby increasing Comment Request; SHIP–SMP Survey With respect to the following their capacity to maintain security in of Group Outreach and Education collection of information, ACL invites retirement and make better financial Events, Formerly the ‘‘Senior Medicare comments on our burden estimates or and healthcare choices. Program National Beneficiary Survey’’, any other aspect of this collection of SHIP–SMP grantees provide group OMB #0985–0056 information, including: (1) Whether the outreach and education through proposed collection of information is presentation events, and this collection AGENCY: Administration for Community necessary for the proper performance of will survey the attendees of those Living, HHS. ACL’s functions, including whether the events. The SHIP–SMP Survey of Group ACTION: Notice. information will have practical utility; Outreach and Education Events will (2) the accuracy of ACL’s estimate of the focus on group outreach and education SUMMARY: The Administration for burden of the proposed collection of events and the individuals who attend Community Living (ACL) is announcing information, including the validity of them, to determine if the target audience an opportunity for the public to the methodology and assumptions used is satisfied with the information they are comment on the proposed collection of to determine burden estimates; (3) ways receiving. This is a renewal of the information listed above. Under the to enhance the quality, utility, and existing Senior Medicare Program Paperwork Reduction Act of 1995 (the clarity of the information to be National Beneficiary Survey, which PRA), Federal agencies are required to collected; and (4) ways to minimize the received clearance on August 28, 2017, publish a notice in the Federal Register burden of the collection of information with ICR Reference Number 201702– concerning each proposed collection of on respondents, including through the 0985–003 and OMB Control Number information, including each proposed use of automated collection techniques 0985–0056. That survey was conducted extension of an existing collection of when appropriate, and other forms of over a three-year period beginning on information, and to allow 60 days for information technology. October 1, 2017, and will conclude on public comment in response to the The SHIP–SMP Survey of Group March 30, 2020. To date, the Senior notice. Outreach and Education Events is a Medicare Program National Beneficiary This notice solicits comments on the survey of individuals who attend Survey has generated over 5000 Proposed Revision and solicits outreach and education events provided responses, all of which were submitted comments on the information collection by the State Health Insurance Assistance anonymously and voluntarily. requirements related to the ‘‘National Program (SHIP) or Senior Medicare ACL requests renewal of the survey to SHIP–SMP Beneficiary Survey of Group Patrol (SMP). These events help continue the collection performed in Outreach and Education Events’’. Medicare beneficiaries understand their Fiscal Years 2018, 2019, and 2020. Medicare benefits and options. These DATES: Comments on the collection of Reports developed for FY18 and FY19 information must be submitted events also increase the ability of participants have provided an overall electronically by 11:59 p.m. (EST) or beneficiaries to identify fraud, waste, measure of presentation attendee postmarked by February 28, 2020. and abuse within health care programs satisfaction and have provided insight generally, and Medicare/Medicaid into the relationship between ADDRESSES: Submit electronic specifically. presentation inputs (information comments on the collection of The State Health Insurance Assistance provided, access to presentations) and information to: Sara Vogler. Submit Program (SHIP) was created under the overall satisfaction. The renewed survey written comments on the collection of Omnibus Budget Reconciliation Act of will include both SHIP and SMP information to Administration for 1990. This section of the law authorized presentations and will survey every Community Living, Washington, DC the Department of Health and Human participating state and territory at least 20201, Attention: Sara Vogler. Services (HHS) to make grants to states once each year. FOR FURTHER INFORMATION CONTACT: Sara to establish and maintain health To generate a sample with a 95% Vogler, Administration for Community insurance advisory service programs for confidence level at the national level

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400 responses will be required, which is In the first three years of the existing The proposed data collection tools based on over 500,000 group outreach survey states and territories had the may be found on the ACL website for and education event attendees in 2018. opportunity to exceed the minimum review at https://www.acl.gov/about- ACL will draw a representative sample requirements, in order to collect a larger acl/public-input. of event attendees by surveying each of overall dataset for their state or territory. Estimated Program Burden the 54 participating states and territories This opportunity will continue with the at least once. An average event surveyed renewed survey. Assuming that an ACL estimates the burden associated in FY18 or FY19 generated 11 average state or territory collects 100 with this collection of information as completed surveys, resulting in an surveys per year, the maximum burden follows: estimated minimal collection of 600 estimate is 5400 responses per year. responses.

Number of Responses Respondent/data collection activity respondents per Hours per Annual (minimum) respondent response burden hours

Survey, Stratified Random Sample ...... 600 1 5/60 50

Total ...... 600 1 5/60 50

Number of Responses Respondent/data collection activity respondents per Hours per Annual (maximum) respondent response burden hours

Survey, Stratified Random Sample ...... 5400 1 5/60 450

Total ...... 5400 1 5/60 450

Dated: December 19, 2019. and use of the Data Performance Reports collection to OMB for approval. To Mary Lazare, and Information Collection tools for the comply with this requirement, ACL is Principal Deputy Administrator. State Health Insurance Assistance publishing a notice of the proposed [FR Doc. 2019–28104 Filed 12–27–19; 8:45 am] Program (SHIP) under OMB 0985–0040 collection of information set forth in BILLING CODE 4154–01–P that expires March 31, 2020. this document. DATES: Comments on the collection of With respect to the following information must be submitted collection of information, ACL invites DEPARTMENT OF HEALTH AND electronically by 11:59 p.m. (EST) or comments on our burden estimates or HUMAN SERVICES postmarked by February 28, 2020. any other aspect of this collection of ADDRESSES: Submit electronic information, including: Administration for Community Living comments on the collection of (1) Whether the proposed collection of information is necessary for the [OMB# 0985–0040] information to: Office of Healthcare Information and Counseling, OHIC@ proper performance of ACL’s functions, Agency Information Collection acl.hhs.gov, the collection of including whether the information will Activities; Proposed Collection; Public information to Administration for have practical utility; Comment Request; State Health Community Living, Washington, DC (2) the accuracy of ACL’s estimate of Insurance Assistance Program (SHIP) 20201, Attention: Rebecca Kinney. the burden of the proposed collection of information, including the validity of Data Performance Reports and FOR FURTHER INFORMATION CONTACT: the methodology and assumptions used Information Collection Tools Rebecca Kinney, Office of Healthcare to determine burden estimates; Information and Counseling (OHIC), AGENCY: Administration for Community (3) ways to enhance the quality, Administration for Community Living, Living, HHS. utility, and clarity of the information to Washington, DC 20201, Phone: 202– ACTION: Notice. be collected; and 795–7397, E-Mail: Rebecca.Kinney@ (4) ways to minimize the burden of SUMMARY: The Administration for acl.hhs.gov. the collection of information on Community Living (ACL) is announcing SUPPLEMENTARY INFORMATION: Under the respondents, including the use of an opportunity for the public to PRA, Federal agencies must obtain automated collection techniques when comment on the proposed collection of approval from the Office of Management appropriate, and other forms of information listed above. Under the and Budget (OMB) for each collection of information technology. Paperwork Reduction Act of 1995 (the information they conduct or sponsor. The purpose of this data collection is PRA), Federal agencies are required to ‘‘Collection of information’’ is defined to collect performance data from publish a notice in the Federal Register as and includes agency requests or grantees, grantee team members, and concerning each proposed collection of requirements that members of the public partners. Congress requires this data information, including each proposed submit reports, keep records, or provide collection for program monitoring and revision of an existing collection of information to a third party. The PRA Government Performance Results Act information, and to allow 60 days for requires Federal agencies to provide a (GPRA) purposes. This data collection public comment in response to the 60-day notice in the Federal Register allows the Administration for notice. concerning each proposed collection of Community Living (ACL) and the Center This is a revision request for the information, including each proposed for Innovation and Partnership (CIP) to Office of Management and Budget revision of an existing collection of communicate with Congress and the (OMB) approval for the modification information, before submitting the public on the State Health Insurance

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Assistance Program (SHIP), the Senior Program (SHIP) and requires the Among other requirements, it directed Medicare Patrol (SMP) program, the Secretary to provide a series of reports the Administration for Community Medicare Improvements for Patients & to the U.S. Congress on the performance Living to work with the Office of Providers Act (MIPPA) program, and of the SHIP program annually. The law Inspector General (OIG) and the Aging and Disability Resource Centers also requires ACL to report on the Government Accountability Office (ADRC) activities. In addition to the program’s impact on beneficiaries and (GAO), to assess the performance of the SHIP Data Performance Reports and to obtain important feedback from program. The Administration for Information Collection (OMB #0985– beneficiaries. Community Living has worked with 0040), this revision incorporates the This tool captures the information HHS/OIG to develop project-level expired SMP Report collection (OMB and data necessary for ACL to meet performance measures. #0985–0024) and the ADRC collection these Congressional requirements, as The HHS/OIG has collected SMP (OMB #0985–0062) into one tool. well as, capturing performance data on performance data and issued SMP The SHIP, SMP, MIPPA, and ADRC individual grantees providing ACL performance reports since 1997. The programs are located in each of the 50 essential insight for monitoring and information from the current collection states, the District of Columbia, Puerto technical assistance purposes. is reported by the OIG to Congress and Rico, Guam and the U.S. Virgin Islands. In addition, the Medicare the public. This information is also used In order to ensure that grantees’ report Improvements for Patients and by ACL as the primary method for activity accurately and consistently it is Providers Act (MIPPA), initially passed monitoring the SMP Projects. imperative that these data collection in 2008, provided targeted funding for tools remain active. The respondents for the SHIPs, area agencies on aging ADRC Data Collection (OMB #0985– this data collection are grantees, grantee (AAAs), and Aging and Disability 0062) Resource Centers (ADRC) to conduct team members, and partners who meet The Aging and Disability Resource enrollment assistance to Medicare with Medicare beneficiaries and older Center (ADRC) collects data for the No beneficiaries for the Low Income adults’ in-group settings and in one-on- Wrong Door (NWD) System initiative. Subsidy (LIS) and Medicare Savings one sessions to educate them on the This tool is tethered to the ADRC Program (MSP). These activities, importance of being aware of Medicare program and seeks to connect collectively known as the MIPPA fraud, error and abuse, and having the fragmentation in the network and Program, have been funded nearly knowledge to protect the Medicare furthermore supports the need for early annually through a series of funding or system. community-based interventions. ACL is proposing to combine these extenders bills. Most recently, the three collection tools to reduce burden Consolidated Appropriations Act, 2018 ACL uses this collection to support on the grantees, grantee team members, extended funding for MIPPA to FY 2018 states in better coordinating and and partners as many of the individuals and FY 2019. This tool also collects integrating their existing long-term working on these programs, collecting performance and outcome data on the services and supports (LTSS) access information, and reporting results are MIPPA Program providing ACL functions to develop a new interface the same at the local level. Combining necessary information for monitoring that would make it easier for people to these tools will reduce the need for and oversight. learn about and quickly access options duplicate or triplicate reporting of that meet their needs. These programs SMP Data Collection (OMB #0985– activities in separate tools further operate throughout the United States 0024) reducing the time and effort in reporting and represent a nationally recognized outcomes and activities. In addition, Under Public Law 104–208, the network. this combination will allow for further Omnibus Consolidated Appropriations The proposed data collection tools clarification on when, where, and how Act of 1997, Congress established the may be found on the ACL website for activities are being conducted across Senior Medicare Patrol Projects in order review at https://www.acl.gov/about- these ACL programs further informing to further curb losses to the Medicare acl/public-input. program. The Senate Committee noted performance outcomes. Estimated Program Burden that retired professionals, with SHIP and MIPPA Data Collection (OMB appropriate training, could serve as ACL estimates the burden associated #0985–0040) educators and resources to assist with this collection of information as Section 4360(f) of OBRA 1990 created Medicare beneficiaries and others to follows: The burden hours are based on the State Health Insurance Assistance detect and report error, fraud and abuse. the number of projects for ACL grantees.

Average Form/report Number of Number of burden per Total burden Type of respondent name respondents responses per response hours respondent (in minutes)

SMP Grantees ...... Media Outreach & Education ...... 216 46 15 2,484 SMP Grantees ...... Group Outreach & Education ...... 6,935 4 4 1,849.33 SMP Grantees ...... Individual Interaction ...... 6,935 41 5 23,694.58 SMP Grantees ...... Team Member ...... 216 31 5 558 SMP Grantees ...... OIG Report ...... 0 0 0 0 SMP Grantees ...... Time Spent Report ...... 0 0 0 0 SHIP/MIPPA Grantees ...... Media Outreach & Education ...... 3,750 15 15 14,062.5 SHIP/MIPPA Grantees ...... Group Outreach & Education ...... 3,750 15 4 3,750 SHIP/MIPPA Grantees ...... SHIP Team Member ...... 216 75 5 1,350 SHIP/MIPPA Grantees ...... Beneficiary Contact ...... 15,000 233 5 291,250 SHIP/MIPPA Grantees ...... Training ...... 216 75 15 1,620 SHIP/MIPPA Grantees ...... SHIP Performance Report ...... 0 0 0 0 SHIP/MIPPA Grantees ...... Resource Report ...... 0 0 0 0 SHIP/MIPPA Grantees ...... MIPPA Performance Report ...... 0 0 0 0

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Average Form/report Number of Number of burden per Total burden Type of respondent name respondents responses per response hours respondent (in minutes)

ADRC/NWD ...... NWD Management Tool data collection and 556 2 60 112 entry—Local Level. ADRC/NWD ...... NWD Management Tool data collection and 996 2 240 7,968 entry—State Level. ADRC/NWD ...... NWD Management Tool data collection and 400 12 30 2,400 entry—Local Level. SHIP/SMP/MIPPA ...... Summary Reports ...... 0 0 0 0 SHIP/MIPPA Grantees ...... Part D Enrollment outcomes Report ...... 0 0 0 0

...... Totals ...... 39,186 551 403 351,098

Dated: December 19, 2019. Community Living, Washington, DC The SHIP–SMP Survey of One-on-One Mary Lazare, 20201, Attention: Sara Vogler. Assistance is a survey of individuals Principal Deputy Administrator. FOR FURTHER INFORMATION CONTACT: Sara who meet with team members from the [FR Doc. 2019–28105 Filed 12–27–19; 8:45 am] Vogler, Administration for Community State Health Insurance Assistance BILLING CODE 4154–01–P Living, Washington, DC 20201, 202– Program (SHIP) or the Senior Medicare 795–7461, [email protected]. Patrol (SMP). These services help SUPPLEMENTARY INFORMATION: Under the Medicare beneficiaries understand their DEPARTMENT OF HEALTH AND PRA, Federal agencies must obtain Medicare benefits and options. These HUMAN SERVICES approval from the Office of Management services also increase the ability of and Budget (OMB) for each collection of beneficiaries to identify and report Administration for Community Living information they conduct or sponsor. fraud, waste, and abuse within health ‘‘Collection of information’’ is defined care programs generally, and Medicare/ Agency Information Collection in 44 U.S.C. 3502(3) and 5 CFR Medicaid specifically. Activities; Proposed Collection; 1320.3(c) and includes agency requests The State Health Insurance Assistance Comment Request; SHIP–SMP Survey or requirements that members of the Program (SHIP) was created under the of One-on-One Assistance, Formerly public submit reports, keep records, or Omnibus Budget Reconciliation Act of the ‘‘National Beneficiary Survey of provide information to a third party. 1990. This section of the law authorized State Health Insurance Assistance The PRA requires Federal agencies to the Department of Health and Human Program (SHIP)’’, OMB #0985–0057 provide a 60-day notice in the Federal Services (HHS) to make grants to states to establish and maintain health AGENCY: Administration for Community Register concerning each proposed insurance advisory service programs for Living, HHS. collection of information, including each proposed extension of an existing Medicare beneficiaries. Grant funds ACTION: Notice. collection of information, before were made available to support information, counseling, and assistance SUMMARY: The Administration for submitting the collection to OMB for Community Living (ACL) is announcing approval. To comply with this activities related to Medicare, Medicaid, an opportunity for the public to requirement, ACL is publishing a notice and other health insurance options. comment on the proposed collection of of the proposed collection of SHIP grantees provide free, in-depth, information listed above. Under the information set forth in this document. unbiased, one-on-one health insurance Paperwork Reduction Act of 1995 (the With respect to the following counseling and assistance to Medicare PRA), Federal agencies are required to collection of information, ACL invites beneficiaries, their families, and publish a notice in the Federal Register comments on our burden estimates or caregivers. The Senior Medicare Patrol (SMP) concerning each proposed collection of any other aspect of this collection of program was authorized in 1997 under information, including each proposed information, including: Titles II and IV of the Older Americans extension of an existing collection of (1) Whether the proposed collection Act, the Omnibus Consolidated information, and to allow 60 days for of information is necessary for the Appropriation Act of 1997 and the public comment in response to the proper performance of ACL’s functions, Health Insurance Portability and notice. including whether the information will Accountability Act of 1996. The SMP This notice solicits comments on the have practical utility; mission is to empower and assist Proposed Revision and solicits (2) the accuracy of ACL’s estimate of Medicare beneficiaries, their families, comments on the information collection the burden of the proposed collection of and caregivers, to prevent, detect, and requirements related to the ‘‘SHIP–SMP information, including the validity of report suspected healthcare fraud, Survey of One-on-One Assistance’’. the methodology and assumptions used to determine burden estimates; errors, and abuse through outreach, DATES: Comments on the collection of (3) ways to enhance the quality, counseling, and education. information must be submitted utility, and clarity of the information to SMP grantees support ACL’s goals of electronically by 11:59 p.m. (EST) or be collected; and promoting increased choice and greater postmarked by February 28, 2020. (4) ways to minimize the burden of independence among older adults and ADDRESSES: Submit electronic the collection of information on individuals with disabilities. SMP comments on the collection of respondents, including through the use activities also serve to enhance the information to: Sara Vogler. Submit of automated collection techniques financial, emotional, physical, and written comments on the collection of when appropriate, and other forms of mental well-being of older adults, information to Administration for information technology. thereby increasing their capacity to

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maintain security in retirement and ACL requests renewal of the survey to each program (n = 2,000,000 SHIP one- make better financial and healthcare continue the collection performed in on-one assistance sessions in 2018; n = choices. SMP team members provide Fiscal Years 2018, 2019, and 2020. 275,000 SMP one-on-one assistance one-on-one assistance, and when Reports developed for FY18 and FY19 sessions in 2018). needed, serve as consumer advocates to participants have provided an overall ACL will draw a representative resolve billing disputes/issues. measure of satisfaction with SHIP’s one- The SHIP–SMP Survey of One-on-One sample of customers who received on-one assistance services and have assistance from each program by Assistance will gauge individuals’ provided insight into the relationship satisfaction with the services provided focusing only on non-redundant between inputs (information provided, by SHIP and SMP team members. This individuals (i.e., a random sample time between initial contact and survey is a renewal of the existing without replacement of individuals who ‘‘National Beneficiary Survey of State services received) and overall receive SHIP and/or SMP one-on-one Health Insurance Assistance Program satisfaction. The renewed collection assistance). will survey recipients of both SHIP and (SHIP)’’, which received clearance on The proposed data collection tools SMP one-on-one assistance but will not August 28, 2017, with ICR Reference may be found on the ACL website for Number 201702–0985–002 and OMB increase the number of surveys collected. The renewed survey will review at https://www.acl.gov/about- Control Number 0985–0057. That acl/public-input. survey was conducted over a three-year provide an annual collection at the period beginning on October 1, 2017, national level, with an estimated Estimated Program Burden and will conclude on March 30, 2020. collection of 800 responses per year. To To date, this survey has generated over generate a sample with a 95% ACL estimates the burden associated 2500 responses, all of which were confidence level at the national level with this collection of information as submitted voluntarily. 400 responses will be required from follows:

Responses Respondent/data collection activity Number of per Hours per Annual respondents respondent response burden hours

Survey, Stratified Random Sample ...... 800 1 6/60 80

Total ...... 800 1 6/60 80

Dated: December 19, 2019. DATES: Submit either electronic or manner detailed (see ‘‘Written/Paper Mary Lazare, written comments on the draft guidance Submissions’’ and ‘‘Instructions’’). by January 29, 2020. Principal Deputy Administrator. Written/Paper Submissions [FR Doc. 2019–28101 Filed 12–27–19; 8:45 am] ADDRESSES: You may submit comments Submit written/paper submissions as BILLING CODE 4154–01–P on any guidance at any time as follows: follows: • Electronic Submissions Mail/Hand Delivery/Courier (for DEPARTMENT OF HEALTH AND written/paper submissions): Dockets HUMAN SERVICES Submit electronic comments in the Management Staff (HFA–305), Food and following way: Drug Administration, 5630 Fishers Food and Drug Administration • Federal eRulemaking Portal: Lane, Rm. 1061, Rockville, MD 20852. • For written/paper comments [Docket No. FDA–2019–D–5364] https://www.regulations.gov. Follow the instructions for submitting comments. submitted to the Dockets Management Submission of Plans for Cigarette Comments submitted electronically, Staff, FDA will post your comment, as Packages and Cigarette including attachments, to https:// well as any attachments, except for Advertisements; Draft Guidance for www.regulations.gov will be posted to information submitted, marked and Industry; Availability the docket unchanged. Because your identified, as confidential, if submitted comment will be made public, you are as detailed in ‘‘Instructions.’’ Instructions: All submissions received AGENCY: Food and Drug Administration, solely responsible for ensuring that your must include the Docket No. FDA– HHS. comment does not include any 2019–D–5364 for ‘‘Submission of Plans ACTION: Notice of availability. confidential information that you or a for Cigarette Packages and Cigarette third party may not wish to be posted, SUMMARY: The Food and Drug Advertisements.’’ Received comments Administration (FDA) is announcing the such as medical information, your or will be placed in the docket and, except availability of a draft guidance for anyone else’s Social Security number, or for those submitted as ‘‘Confidential industry entitled ‘‘Submission of Plans confidential business information, such Submissions,’’ publicly viewable at for Cigarette Packages and Cigarette as a manufacturing process. Please note https://www.regulations.gov or at the Advertisements.’’ This guidance, when that if you include your name, contact Dockets Management Staff office finalized, would assist those required to information, or other information that between 9 a.m. and 4 p.m., Monday submit cigarette plans for cigarette identifies you in the body of your through Friday. packages and cigarette advertisements comments, that information will be • Confidential Submissions—To by providing recommendations related posted on https://www.regulations.gov. submit a comment with confidential to those submissions, including • If you want to submit a comment information that you do not wish to be information on what should be in a with confidential information that you made publicly available, submit your cigarette plan, who should submit a do not wish to be made available to the comments only as a written/paper cigarette plan, and when to submit a public, submit the comment as a submission. You should submit two cigarette plan. written/paper submission and in the copies total. One copy will include the

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information you claim to be confidential I. Background The draft guidance, when finalized, will with a heading or cover note that states FDA is announcing the availability of represent the current thinking of FDA ‘‘THIS DOCUMENT CONTAINS a draft guidance for industry entitled regarding the submission of cigarette CONFIDENTIAL INFORMATION.’’ The ‘‘Submission of Plans for Cigarette plans for cigarette packages and Agency will review this copy, including Packages and Cigarette advertisements. It does not establish any the claimed confidential information, in Advertisements.’’ The Family Smoking rights for any person and is not binding its consideration of comments. The Prevention and Tobacco Control Act on FDA or the public. You can use an second copy, which will have the (Tobacco Control Act) (Pub. L. 111–31) alternative approach if it satisfies the claimed confidential information was enacted on June 22, 2009, and requirements of the applicable statutes and regulations. redacted/blacked out, will be available granted FDA important new authority to for public viewing and posted on regulate the manufacture, marketing, III. Paperwork Reduction Act of 1995 https://www.regulations.gov. Submit and distribution of tobacco products. both copies to the Dockets Management This draft guidance refers to proposed The Tobacco Control Act also amended collections of information described in Staff. If you do not wish your name and section 4 of the Federal Cigarette contact information to be made publicly FDA’s August 16, 2019, proposed rule Labeling and Advertising Act (FCLAA) on ‘‘Tobacco Products; Required available, you can provide this to direct FDA to issue regulations Warnings for Cigarette Packages and information on the cover sheet and not requiring each cigarette package and Advertisements’’, which this draft in the body of your comments and you advertisement to bear a new textual guidance is intended to interpret. The must identify this information as warning label statement accompanied proposed collections of information in ‘‘confidential.’’ Any information marked by color graphics depicting the negative the proposed rule are subject to review as ‘‘confidential’’ will not be disclosed health consequences of smoking by the Office of Management and except in accordance with 21 CFR 10.20 (section 201 of the Tobacco Control Budget (OMB) under the Paperwork and other applicable disclosure law. For Act). In enacting this legislation, Reduction Act of 1995 (PRA) (44 U.S.C. more information about FDA’s posting Congress also provided that FDA may 3501–3521). As required by the PRA, of comments to public dockets, see 80 adjust the required warnings if FDA FDA has published an analysis of the FR 56469, September 18, 2015, or access found that such a change would information collection provisions of the the information at: https://www.gpo.gov/ promote greater public understanding of proposed rule (84 FR 42754 at 42787) fdsys/pkg/FR-2015-09-18/pdf/2015- the risks associated with the use of and has submitted them for OMB 23389.pdf. tobacco products (section 202 of the approval. Docket: For access to the docket to Tobacco Control Act). The Tobacco read background documents or the Control Act also modified the IV. Electronic Access electronic and written/paper comments requirements of the FCLAA regarding Persons with access to the internet received, go to https:// the submission of cigarette plans for the may obtain an electronic version of the www.regulations.gov and insert the random and equal display and draft guidance at either https:// docket number, found in brackets in the distribution of required warnings on www.regulations.gov or https:// heading of this document, into the cigarette packaging and quarterly www.fda.gov/TobaccoProducts/ ‘‘Search’’ box and follow the prompts rotation of required warnings in GuidanceComplianceRegulatory and/or go to the Dockets Management cigarette advertising. It also requires that Information/default.htm. Staff, 5630 Fishers Lane, Rm. 1061, such cigarette plans be submitted to Dated: December 20, 2019. FDA for review and approval, rather Rockville, MD 20852. Lowell J. Schiller, than to the Federal Trade Commission. You may submit comments on any FDA issued a proposed rule entitled Principal Associate Commissioner for Policy. guidance at any time (see 21 CFR ‘‘Tobacco Products; Required Warnings [FR Doc. 2019–27991 Filed 12–27–19; 8:45 am] 10.115(g)(5)). for Cigarette Packages and BILLING CODE 4164–01–P Submit written requests for single Advertisements’’ on August 16, 2019 (84 copies of this draft guidance to the FR 42754). The proposed rule, once Center for Tobacco Products, Food and finalized, would specify the color DEPARTMENT OF HEALTH AND Drug Administration, Document Control graphics that must accompany the new HUMAN SERVICES Center, Bldg. 71, Rm. G335, 10903 New textual warning statements and Food and Drug Administration Hampshire Ave., Silver Spring, MD establish marketing requirements for 20993–0002. Send one self-addressed cigarette packages and advertisements. [Docket No. FDA–2013–N–0804] adhesive label to assist that office in The marketing requirements would processing your request or include a fax require, among other things, submission Agency Information Collection number to which the draft guidance of a cigarette plan that provides for the Activities; Proposed Collection; may be sent. See the SUPPLEMENTARY random and equal display and Comment Request; Premarket INFORMATION section for information on distribution of the required warnings on Notification electronic access to the draft guidance. cigarette packaging and quarterly AGENCY: Food and Drug Administration, FOR FURTHER INFORMATION CONTACT: rotation of the required warnings in HHS. Lauren Belcher or Annette Marthaler, cigarette advertising, as described under ACTION: Notice. Center for Tobacco Products, Food and section 4 of FCLAA. This draft guidance SUMMARY: The Food and Drug Drug Administration, 10903 New provides recommendations related to Administration (FDA, Agency, or we) is Hampshire Ave., Document Control preparing and submitting those cigarette announcing an opportunity for public Center, Bldg. 71, Rm. G335, 10903 New plans. comment on the proposed collection of Hampshire Ave., Silver Spring, MD II. Significance of Draft Guidance certain information by the Agency. 20993–0002, 1–877–287–1373, email: FDA is issuing this draft guidance Under the Paperwork Reduction Act of [email protected]. consistent with FDA’s good guidance 1995 (PRA), Federal Agencies are SUPPLEMENTARY INFORMATION: practices regulation (21 CFR 10.115). required to publish notice in the

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Federal Register concerning each • For written/paper comments FOR FURTHER INFORMATION CONTACT: proposed collection of information, submitted to the Dockets Management Amber Sanford, Office of Operations, including each proposed extension of an Staff, FDA will post your comment, as Food and Drug Administration, Three existing collection of information, and well as any attachments, except for White Flint North, 10A–12M, 11601 to allow 60 days for public comment in information submitted, marked and Landsdown St., North Bethesda, MD response to the notice. This notice identified, as confidential, if submitted 20852, 301–796–8867, PRAStaff@ solicits comments on information as detailed in ‘‘Instructions.’’ fda.hhs.gov. Instructions: All submissions received collection associated with medical SUPPLEMENTARY INFORMATION: Under the must include the Docket No. FDA– device premarket notification (510(k)). PRA (44 U.S.C. 3501–3521), Federal 2013–N–0804 for ‘‘Agency Information DATES: Submit either electronic or Agencies must obtain approval from the Collection Activities; Proposed written comments on the collection of Office of Management and Budget information by February 28, 2020. Collection; Comment Request; Premarket Notification.’’ Received (OMB) for each collection of ADDRESSES: You may submit comments comments, those filed in a timely information they conduct or sponsor. ‘‘Collection of information’’ is defined as follows. Please note that late, manner (see ADDRESSES), will be placed untimely filed comments will not be in the docket and, except for those in 44 U.S.C. 3502(3) and 5 CFR considered. Electronic comments must submitted as ‘‘Confidential 1320.3(c) and includes Agency requests be submitted on or before February 28, Submissions,’’ publicly viewable at or requirements that members of the 2020. The https://www.regulations.gov https://www.regulations.gov or at the public submit reports, keep records, or electronic filing system will accept Dockets Management Staff between 9 provide information to a third party. comments until 11:59 p.m. Eastern Time a.m. and 4 p.m., Monday through Section 3506(c)(2)(A) of the PRA (44 at the end of February 28, 2020. Friday. U.S.C. 3506(c)(2)(A)) requires Federal Comments received by mail/hand • Confidential Submissions—To Agencies to provide a 60-day notice in delivery/courier (for written/paper submit a comment with confidential the Federal Register concerning each submissions) will be considered timely information that you do not wish to be proposed collection of information, if they are postmarked or the delivery made publicly available, submit your including each proposed extension of an service acceptance receipt is on or comments only as a written/paper existing collection of information, before that date. submission. You should submit two before submitting the collection to OMB for approval. To comply with this Electronic Submissions copies total. One copy will include the information you claim to be confidential requirement, FDA is publishing notice Submit electronic comments in the with a heading or cover note that states of the proposed collection of following way: ‘‘THIS DOCUMENT CONTAINS information set forth in this document. • Federal eRulemaking Portal: CONFIDENTIAL INFORMATION.’’ The With respect to the following https://www.regulations.gov. Follow the Agency will review this copy, including collection of information, FDA invites instructions for submitting comments. the claimed confidential information, in comments on these topics: (1) Whether Comments submitted electronically, its consideration of comments. The the proposed collection of information including attachments, to https:// second copy, which will have the is necessary for the proper performance www.regulations.gov will be posted to claimed confidential information of FDA’s functions, including whether the docket unchanged. Because your redacted/blacked out, will be available the information will have practical comment will be made public, you are for public viewing and posted on utility; (2) the accuracy of FDA’s solely responsible for ensuring that your https://www.regulations.gov. Submit estimate of the burden of the proposed comment does not include any both copies to the Dockets Management collection of information, including the confidential information that you or a Staff. If you do not wish your name and validity of the methodology and third party may not wish to be posted, contact information to be made publicly assumptions used; (3) ways to enhance such as medical information, your or available, you can provide this the quality, utility, and clarity of the anyone else’s Social Security number, or information on the cover sheet and not information to be collected; and (4) confidential business information, such in the body of your comments and you ways to minimize the burden of the as a manufacturing process. Please note must identify this information as collection of information on that if you include your name, contact ‘‘confidential.’’ Any information marked respondents, including through the use information, or other information that as ‘‘confidential’’ will not be disclosed of automated collection techniques, identifies you in the body of your except in accordance with 21 CFR 10.20 when appropriate, and other forms of comments, that information will be and other applicable disclosure law. For information technology. posted on https://www.regulations.gov. more information about FDA’s posting Premarket Notification—21 CFR Part • If you want to submit a comment of comments to public dockets, see 80 807, Subpart E OMB Control Number with confidential information that you FR 56469, September 18, 2015, or access 0910–0120—Extension do not wish to be made available to the the information at: https:// public, submit the comment as a www.govinfo.gov/content/pkg/FR-2015- Section 510(k) of the Federal Food, written/paper submission and in the 09-18/pdf/2015-23389.pdf. Drug, and Cosmetic Act (FD&C Act) (21 manner detailed (see ‘‘Written/Paper Docket: For access to the docket to U.S.C. 360(k)) and the implementing Submissions’’ and ‘‘Instructions’’). read background documents or the regulation under part 807 (21 CFR part electronic and written/paper comments 807, subpart E) require a person who Written/Paper Submissions received, go to https:// intends to market a medical device to Submit written/paper submissions as www.regulations.gov and insert the submit a 510(k) submission to FDA at follows: docket number, found in brackets in the least 90 days before proposing to begin • Mail/Hand Delivery/Courier (for heading of this document, into the the introduction, or delivery for written/paper submissions): Dockets ‘‘Search’’ box and follow the prompts introduction into interstate commerce, Management Staff (HFA–305), Food and and/or go to the Dockets Management for commercial distribution of a device Drug Administration, 5630 Fishers Staff, 5630 Fishers Lane, Rm. 1061, intended for human use. Based on the Lane, Rm. 1061, Rockville, MD 20852. Rockville, MD 20852. information provided in the

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notification, FDA must determine of the device. Section 807.87 lists the Under § 807.87(h), each 510(k) whether the new device is substantially information required in each 510(k). submitter must include in the 510(k) equivalent to a legally marketed device, Form FDA 3514, a summary cover either a summary of the information in as defined in § 807.92(a)(3) (21 CFR sheet form, assists respondents in the 510(k) as required by § 807.92 807.92(a)(3)). If the device is determined categorizing administrative 510(k) (510(k) summary) or a statement to be not substantially equivalent to a information for submission to FDA. This certifying that the submitter will make legally marketed device, it must have an form also assists respondents in available upon request the information approved premarket approval categorizing information for other FDA in the 510(k) with certain exceptions as application (PMA), product medical device programs such as PMAs, per § 807.93 (510(k) statement). development protocol, humanitarian investigational device exemptions, De Section 745A(b) of the FD&C Act, device exemption (HDE), request for an Novo requests, HDEs, etc. amended by section 207 of the FDA evaluation of automatic class III Reauthorization Act of 2017 (FDARA) Section 204 of the Food and Drug (Pub. L. 115–52), requires that designation (De Novo request), or be Administration Modernization Act of reclassified into class I or class II before submissions for devices under section 1997 (FDAMA) (Pub. L. 105–115) 510(k), among other submission types, being marketed (see OMB control amended section 514 of the FD&C Act numbers 0910–0231, 0910–0332, 0910– be submitted in electronic format (21 U.S.C. 360d). Amended section 514 specified by FDA. In addition, in the 0844, and 0910–0138). FDA makes the of the FD&C Act allows FDA to final decision of whether a device is Medical Device User Fee Amendments recognize consensus standards of 2017 (MDUFA IV) Commitment substantially equivalent or not developed by international and national substantially equivalent. Letter from the Secretary of Health and organizations for use in satisfying Human Services to Congress,1 FDA Section 807.81 states when a 510(k) is portions of device premarket review committed to developing ‘‘electronic required. A 510(k) is required to be submissions including 510(k) or other submission templates that will serve as submitted by a person who is: (1) requirements. FDA has published and guided submission preparation tools for Introducing a device to the market for updated regularly the list of recognized industry to improve submission the first time; (2) introducing a device standards since enactment of FDAMA consistency and enhance efficiency in into commercial distribution for the first and has allowed 510(k) submitters to the review process.’’ The Electronic time by a person who is required to certify conformance to recognized Submission Template and Resource register; or (3) introducing or standards to meet the requirements of (eSTAR) is such an electronic reintroducing a device that is § 807.87. submission template for 510(k) significantly changed or modified in Under § 807.90(a)(3), inquiries submissions to facilitate the preparation design, components, method of regarding a 510(k) submission should be of submissions in electronic format. manufacturer, or the intended use that in writing and sent to one of the FDA estimates the burden of this could affect the safety and effectiveness addresses in § 807.90(a). collection of information as follows:

TABLE 1—ESTIMATED ANNUAL REPORTING BURDEN 1

Number of Activity and 21 CFR part/ Number of Total annual Average burden per 2 Form number responses per 2 Total hours section respondents respondent responses response

510(k) submission (807 FDA 3881 3,800 1 3,800 79.25 ...... 301,150 subpart E). Summary cover sheet FDA 3514 1,906 1 1,906 0.5 ...... 953 (807.87). Status request ...... 1 1 1 0.25...... 1 (807.90(a)(3)). 510(k) summary (807.92) ...... 2,725 1 2,725 4 ...... 10,900 510(k) statement (807.93) ...... 215 1 215 10 ...... 2,150 510(k) submission (807 FDA 4062 100 1 100 40 ...... 4,000 subpart E)—via eSTAR.

eSTAR setup—(one-time ...... 80 1 80 0.08 (5 minutes) ...... 6 burden).

Total ...... 319,160 1 There are no capital costs or operating and maintenance costs associated with this collection of information. 2 Numbers have been rounded.

Upon review of this information Devices’’ (83 FR 7366; February 21, statement as described in § 807.87(j)(1). collection, we have made the following 2018) (approved under OMB control For clinical investigations conducted changes: number 0910–0741). Section 807.87 was outside the United States, submitters are • We have updated the burden amended to address requirements for required to submit the information as estimate consistent with new provisions 510(k) submissions supported by described in § 807.87(j)(2). Consistent in § 807.87(j) regarding ‘‘Human Subject clinical data. For clinical investigations with our estimate in OMB control Protection; Acceptance of Data from conducted in the United States, number 0910–0741, this revision Clinical Investigations for Medical submitters are required to submit a increases our burden estimate for a

1 See 163 CONG. REC. S4729–S4736 (daily ed. User Fee Reauthorization), also available at https:// August 2, 2017) (Food and Drug Administration www.fda.gov/media/102699/download.

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510(k) submission by 15 minutes per premarket approval applications (OMB Dated: December 13, 2019. submission. control number 0910–0231), Lowell J. Schiller, • We corrected the burden table to investigational device exemptions (OMB Principal Associate Commissioner for Policy. include a line for the ‘‘510(k) Summary’’ control number 0910–0078), [FR Doc. 2019–28098 Filed 12–27–19; 8:45 am] under § 807.92. This section was humanitarian device exemptions BILLING CODE 4164–01–P inadvertently removed from the (control number 0910–0332), CLIA previous version of the information waivers (OMB control number 0910– collection request (ICR). DEPARTMENT OF HEALTH AND • 0598), Q-Submissions (OMB control We are making available Form FDA number 0910–0756), De Novo requests HUMAN SERVICES 3881 ‘‘Indications for Use’’ that (OMB control number 0910–0844), respondents include as part of a medical Emergency Use Authorizations (OMB Food and Drug Administration device 510(k). The information provided control number 0910–0595), 513(g) via the form is already approved under [Docket No. FDA–2019–D–5743] requests (OMB control number 0910– this ICR. The form does not ask for new 0705); and Appeals (OMB control information and does not bear on the Importation of Certain Food and Drug underlying program or on the hour or number 0910–0738). Administration-Approved Human cost burden associated with the • Certain revisions to Form FDA Prescription Drugs, Including information collection, rather it 3514, as previously described, eliminate Biological Products, Under Section provides a fillable, 508-compliant the need for Form FDA 3654, 801(d)(1)(B) of the Federal Food, Drug, format for respondents to use for the ‘‘Standards Data Report for 510(k)s.’’ and Cosmetic Act; Draft Guidance for ‘‘Indications for Use’’ portion of their Additionally, the ability for Form FDA Industry; Availability; Correction 510(k) submission. 3514 to be expandable for the number • AGENCY: Food and Drug Administration, We updated the guidance ‘‘Refuse of standards cited will increase HHS. to Accept Policy for 510(k)s’’ to awareness of actual standards in a explicitly recommend providing an ACTION: Notice of availability; submission and how they were used on correction. Acceptance Checklist in the 510(k) a single form (compared to including submission. The guidance previously several Form FDA 3654 documents). In SUMMARY: This document corrects the provided the checklist as an example of the rare occasions where the sponsor Notice of Availability from the Food and a tool that FDA staff use when elects to not use Form FDA 3514 for Drug Administration (FDA, Agency, or reviewing a 510(k) submission. While it standards, this would not have any we) announcing the availability of a was not explicitly recommended, effect on the review outcome, with draft guidance for industry entitled respondents had used the example and regard to standards, as the form serves ‘‘Importation of Certain FDA-Approved had included it with their 510(k) as a means to identify what standards Human Prescription Drugs, Including submission. We believe the checklist are cited, how they are used, and where Biological Products, under Section can be a helpful tool for both reviewers in the submission they are located. 801(d)(1)(B) of the Federal Food, Drug, and 510(k) submitters and have and Cosmetic Act,’’ which published in therefore updated the guidance to • We have removed Form FDA 3541, the Federal Register on Monday, explicitly recommend inclusion of the ‘‘Status Request.’’ In practice, Form FDA December 23, 2019. This draft guidance checklist in the 510(k) submission. 3541 is rarely used. We have adjusted describes procedures to obtain a Because most submitters included the the burden estimate to reflect this National Drug Code (NDC) for an FDA- checklist on their own initiative and removal. Under § 807.90(a)(3), all approved prescription drug that is because it may simplify preparation of inquiries regarding a premarket imported into the United States in the 510(k), we do not believe adding the notification submission should be in compliance with the Federal Food, checklist to this ICR affects the overall writing and sent to one of the addresses Drug, and Cosmetic Act (FD&C Act), burden for a 510(k) submission. listed in § 807.90(a). which would provide an additional Additionally, we have updated the • We have added burden estimates avenue through which drugs could be checklist to include combination for the eSTAR and eSTAR setup (one- products, as appropriate. The estimated sold at a lower cost in the U.S. market. time burden). Under section 745A(b) of This draft guidance is intended to number of responses as updated with FD&C Act, amended by section 207 of current data in this submission, reflects address certain challenges in the private FDARA (Pub. L. 115–52), and consistent market faced by manufacturers seeking the inclusion of combination products. with the MDUFA IV Commitment • We revised and reformatted Form to sell their drugs at lower costs. The Letter, FDA has developed the eSTAR FDA 3514, ‘‘CDRH Premarket Review Notice was published with two (eSTAR, Form FDA 4062) for 510(k) Submission Cover Sheet,’’ to improve omissions. This document corrects submissions to facilitate the preparation usability and to be inclusive of most those omissions by republishing the of submissions in electronic format. We medical device product submission Notice in its entirety to include the types. Form FDA 3514, a summary expect to receive approximately 100 omitted language. cover sheet form, assists respondents in 510(k) submissions via eSTAR per year. DATES: Submit either electronic or categorizing 510(k) information for We estimate that eSTAR submissions written comments on the draft guidance submission to FDA. This form also will take approximately 40 hours per by February 21, 2020, to ensure that the assists respondents in categorizing submission. Additionally, we’ve Agency considers your comment on this information for other FDA medical estimated a one-time setup burden of 5 draft guidance before it begins work on device programs. The total burden for minutes for approximately 80 new the final version of the guidance. eSTAR users annually. Form FDA 3514 and for the 510(k) ADDRESSES: You may submit comments program is estimated in this ICR. The The adjustments and revisions on any guidance at any time as follows: burden for the other medical device previously mentioned have resulted in a programs listed on Form FDA 3514 are 39,473-hour decrease in the total hour Electronic Submissions approved under the corresponding burden estimate since the last OMB Submit electronic comments in the product submission ICRs as follows: approval. following way:

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• Federal eRulemaking Portal: submission. You should submit two 20993–0002, 301–796–7605, or Stephen https://www.regulations.gov. Follow the copies total. One copy will include the Ripley, Center for Biologics Evaluation instructions for submitting comments. information you claim to be confidential and Research, Food and Drug Comments submitted electronically, with a heading or cover note that states Administration, 10903 New Hampshire including attachments, to https:// ‘‘THIS DOCUMENT CONTAINS Ave., Bldg. 71, Rm. 7301, Silver Spring, www.regulations.gov will be posted to CONFIDENTIAL INFORMATION.’’ The MD 20993–0002, 240–402–7911. the docket unchanged. Because your Agency will review this copy, including SUPPLEMENTARY INFORMATION: comment will be made public, you are the claimed confidential information, in solely responsible for ensuring that your its consideration of comments. The I. Background comment does not include any second copy, which will have the FDA is announcing the availability of confidential information that you or a claimed confidential information a draft guidance for industry entitled third party may not wish to be posted, redacted/blacked out, will be available ‘‘Importation of Certain FDA-Approved such as medical information, your or for public viewing and posted on Human Prescription Drugs, Including anyone else’s Social Security number, or https://www.regulations.gov. Submit Biological Products, under Section confidential business information, such both copies to the Dockets Management 801(d)(1)(B) of the Federal Food, Drug, as a manufacturing process. Please note Staff. If you do not wish your name and and Cosmetic Act,’’ which, when that if you include your name, contact contact information to be made publicly finalized, will represent the Agency’s information, or other information that available, you can provide this current thinking on the importation of identifies you in the body of your information on the cover sheet and not multi-market approved (MMA) comments, that information will be in the body of your comments and you products. This draft guidance describes posted on https://www.regulations.gov. must identify this information as procedures to obtain an NDC for an • If you want to submit a comment ‘‘confidential.’’ Any information marked FDA-approved prescription drug that is with confidential information that you as ‘‘confidential’’ will not be disclosed imported into the United States in do not wish to be made available to the except in accordance with 21 CFR 10.20 compliance with section 801 of the public, submit the comment as a and other applicable disclosure law. For FD&C Act (21 U.S.C. 381), which would written/paper submission and in the more information about FDA’s posting provide an additional avenue through manner detailed (see ‘‘Written/Paper of comments to public dockets, see 80 which drugs could be sold at a lower Submissions’’ and ‘‘Instructions’’). FR 56469, September 18, 2015, or access cost in the U.S. market. In recent years, the information at: https:// Written/Paper Submissions FDA has become aware that some drug www.govinfo.gov/content/pkg/FR-2015- manufacturers may be interested in Submit written/paper submissions as 09-18/pdf/2015-23389.pdf. offering certain of their drugs at lower follows: Docket: For access to the docket to costs and that obtaining additional • Mail/Hand Delivery/Courier (for read background documents or the NDCs for these drugs may help them to written/paper submissions): Dockets electronic and written/paper comments address certain challenges in the private Management Staff (HFA–305), Food and received, go to https:// market. This guidance is not intended to Drug Administration, 5630 Fishers www.regulations.gov and insert the address the applicability of the Lane, Rm. 1061, Rockville, MD 20852. docket number, found in brackets in the Medicaid drug rebate program for • For written/paper comments heading of this document, into the manufacturers, which may be addressed submitted to the Dockets Management ‘‘Search’’ box and follow the prompts in further guidance from other Staff, FDA will post your comment, as and/or go to the Dockets Management components of HHS. This guidance is well as any attachments, except for Staff, 5630 Fishers Lane, Rm. 1061, intended to outline a potential pathway information submitted, marked and Rockville, MD 20852. by which manufacturers could obtain an identified, as confidential, if submitted You may submit comments on any additional NDC for an FDA-approved as detailed in ‘‘Instructions.’’ guidance at any time (see 21 CFR drug that was originally intended to be Instructions: All submissions received 10.115(g)(5)). marketed in a foreign country. This must include the Docket No. FDA– Submit written requests for single guidance specifically addresses the 2019–D–5743 for ‘‘Importation of copies of the draft guidance to the importation of FDA-approved drugs that Certain FDA-Approved Human Division of Drug Information, Center for were also authorized for sale in a foreign Prescription Drugs, Including Biological Drug Evaluation and Research, Food country in which the drugs were Products, under Section 801(d)(1)(B) of and Drug Administration, 10001 New originally intended to be marketed the Federal Food, Drug, and Cosmetic Hampshire Ave., Hillandale Building, (‘‘MMA product’’). This guidance Act.’’ 1 Received comments will be 4th Floor, Silver Spring, MD 20993– describes: (1) The process for submitting placed in the docket and, except for 0002 or the Office of Communication, a supplement to an approved FDA those submitted as ‘‘Confidential Outreach, and Development, Center for application for an MMA product; (2) the Submissions,’’ publicly viewable at Biologics Evaluation and Research, recommended labeling for an MMA https://www.regulations.gov or at the Food and Drug Administration, 10903 product; (3) the process for registration Dockets Management Staff between 9 New Hampshire Ave., Bldg. 71, Rm. and listing and for obtaining an NDC for a.m. and 4 p.m., Monday through 3128, Silver Spring, MD 20993–0002. the MMA product; (4) the requirements Friday. Send one self-addressed adhesive label of section 582 of the FD&C Act (21 • Confidential Submissions—To to assist that office in processing your U.S.C. 360eee–1) as added by the Drug submit a comment with confidential requests. See the SUPPLEMENTARY Supply Chain Security Act (DSCSA) information that you do not wish to be INFORMATION section for electronic (Title II of Pub. L. 113–54); (5) made publicly available, submit your access to the draft guidance document. recommendations related to procedures comments only as a written/paper FOR FURTHER INFORMATION CONTACT: for importation of the MMA product; Lyndsay Hennessey, Center for Drug and (6) other FDA requirements 1 In the Federal Register of December 23, 2019 applicable to MMA products. (84 FR 70557), FDA issued a Notice of Availability Evaluation and Research, Food and for this guidance, the subject of this correction Drug Administration, 10903 New This guidance, when finalized, will notice. Hampshire Ave., Silver Spring, MD help ensure manufacturers are aware of

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procedures to provide access to lower- understandable? Is there another term approach for generic drugs from those cost drugs in the United States.2 The that would provide more clarity described in the draft guidance, input is guidance details procedures that will regarding the products discussed in the requested on that as well. enable manufacturers to obtain an guidance? 7. There are complex considerations additional NDC for the MMA product, 3. The draft guidance describes how that impact biosimilar development, which could allow greater pricing an NDC could be obtained for MMA market entry, and uptake. We are flexibility for a drug or biological products. What is the effect of a interested in the possible impacts of product. The additional NDC also will manufacturer using a new labeler code MMA products that are biological support pharmacovigilance, accurate as opposed to a new product code to products on biosimilar development, billing and reimbursement, and distinguish these products, such as for market entry, and uptake. facilitate clearance of the MMA reimbursement? 8. Similarly, there are complex products through customs. This draft 4. The draft guidance recommends a considerations impacting generic drug guidance is not final nor is it in effect labeling statement in the FDA-approved market entry. We are interested in the at this time. labeling for the MMA product, possible impacts of MMA products on This draft guidance is being issued including the carton and container generic drug development and market consistent with FDA’s good guidance label, to assist pharmacists and others in entry. practices regulation (21 CFR 10.115). accurately identifying, dispensing, and 9. Are there voluntary steps a billing for these products. FDA seeks The draft guidance, when finalized, will manufacturer may take in addition to comment on the specific wording that represent the current thinking of FDA the requirements in the DSCSA to could be included in the statement to on the importation of MMA products. It ensure the security of the supply chain differentiate MMA products from other does not establish any rights for any for products imported pursuant to the drugs that are not the subject of the person and is not binding on FDA or the guidance? public. You can use an alternative guidance, if finalized, and to help 10. Are there any potential risks approach if it satisfies the requirements ensure MMA products are easily associated with the importation of of the applicable statutes and identifiable to pharmacists and not products as described in the draft regulations. confusing to patients. FDA also seeks comment on other types of guidance that could be addressed by a II. Issues for Consideration distinguishing characteristics on the rulemaking? For example, to what As previously noted, FDA is carton and container label that would extent, if any, are there additional interested in receiving comments on the further enable pharmacists to identify procedures that might better protect draft guidance. Regarding the approach an MMA product and distinguish it against entities seeking to introduce set forth in the draft guidance, in from other packages of the FDA- counterfeit drugs in the United States? addition to any other issues addressed, approved drug, without confusing If so, please be specific about the FDA requests that commenters consider patients and consistent with other potential risk and how it could be the following issues when submitting applicable requirements relating to addressed through rulemaking. comments: carton and container labeling. 11. The draft guidance describes a 1. Are there additional considerations Additionally, would other possible pathway that manufacturers could use for certain types of drug products with mechanisms, such as a Dear Healthcare to offer their products to Americans at special handling, such as sterile Provider letter, provide further clarity a lower price. FDA is interested in the injectables, drugs with boxed warnings, and reduce confusion for pharmacists factors that could contribute to the drugs with REMS (Risk Evaluation and and other healthcare providers as well decision to use this pathway and Mitigation Strategy), controlled as patients? whether there are reasons to use this substances, or drugs that do not meet 5. We request comment about how pathway other than the ability to sell the definition of ‘‘product’’ under the much, on average, the labeling and products at a lower price. DSCSA (21 U.S.C. 360eee(13))? Are packaging changes described in the draft III. Paperwork Reduction Act of 1995 there additional considerations for guidance would cost drug combination products related to the manufacturers and repackagers or FDA has tentatively concluded that content of the guidance (e.g., relabelers. Are there other ways to there are no new collections of supplement, labeling, NDC) that would distinguish the appearance of an MMA information in this draft guidance. This warrant additional guidance for use of product? We also request comment draft guidance refers to previously this approach for those products? To the about alternative labeling approaches approved collections of information extent that interested parties believe that would display the required found in the FD&C Act and FDA that different or additional information with equal prominence but regulations. These collections of considerations from those described in may result in lower costs. information are subject to review by the the draft guidance should apply to such 6. The draft guidance describes Office of Management and Budget an approach for combination products, procedures for manufacturers of drug (OMB) under the Paperwork Reduction we are interested in input on that, as products approved under new drug Act of 1995 (44 U.S.C. 3501–3521). In well. applications or biologics license accordance with the Paperwork 2. The draft guidance uses ‘‘MMA applications to obtain an additional Reduction Act, if FDA’s tentative product’’ to describe FDA-approved NDC for an MMA product. FDA is conclusion changes, prior to publication drugs that were originally intended to interested as to whether manufacturers of any final guidance document FDA be marketed in a foreign country and of generic drugs approved under an intends to solicit public comment and also authorized for sale in that foreign abbreviated new drug application obtain OMB approval for any country. Is this new term adequate and confront similar pricing issues such that information collections recommended it would be appropriate to provide in this guidance that are new or that 2 In the Federal Register of December 23, 2019 guidance on a similar approach for would represent material modifications (84 FR 70796), FDA issued a Notice of Proposed Rulemaking under 21 U.S.C. 384 to offer a pathway generic drugs. To the extent that to those previously approved collections for importation of drugs from Canada without the interested parties believe that different of information found in FDA regulations authorization of the manufacturer. considerations should apply to such an or guidances.

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The collections of information in 21 and/or contract proposals and the 7W108, Rockville, MD 20850 (Telephone CFR part 314 (new drug applications) discussions could disclose confidential Conference Call). have been approved under OMB control trade secrets or commercial property Contact Person: Clifford W. Schweinfest, number 0910–0001; the collections of such as patentable material, and Ph.D., Scientific Review Officer, Special information in 21 CFR part 601 personal information concerning Review Branch, Division of Extramural (biologics license applications) have individuals associated with the grant Activities, National Cancer Institute, NIH, been approved under OMB control applications and/or contract proposals, 9609 Medical Center Drive, Room 7W108, number 0910–0338; the collections of the disclosure of which would Bethesda, MD 20892–8329, 240–276–6343, [email protected]. information in 21 CFR part 207 constitute a clearly unwarranted (domestic and foreign facility invasion of personal privacy. Name of Committee: National Cancer Institute Special Emphasis Panel; NCI Predoc registration, including assignment of an Name of Committee: National Cancer NDC) have been approved under OMB to Postdoc Fellow Transition Award (F99/ Institute Special Emphasis Panel; K00). control number 0910–0045; the Collaborative Partnerships in Cancer Date: March 3–4, 2020. Research P20. collections of information in 21 CFR Time: 8:00 a.m. to 5:00 p.m. Date: February 25, 2020. part 1 (general enforcement regulations) Agenda: To review and evaluate grant have been approved under OMB control Time: 1:00 p.m. to 4:00 p.m. Agenda: To review and evaluate grant applications. number 0910–0046; the collections of Place: Gaithersburg Marriott information in 21 CFR part 201 applications. Place: National Cancer Institute Shady Washingtonian Center, 9751 Washingtonian (labeling) have been approved under Grove, 9609 Medical Center Drive, Room Blvd., Gaithersburg, MD 20878. OMB control number 0910–0572; the 7W606, Rockville, MD 20850, (Telephone Contact Person: Scott A. Chen, Ph.D., collections of information pertaining to Conference Call). Scientific Review Officer, National Cancer current good manufacturing practice Contact Person: Timothy C. Meeker, M.D., Institute, 9609 Medical Center Drive, RM requirements for finished Ph.D., Scientific Review Officer, Special 7W604, Rockville, MD 20850, 240–276–6038, pharmaceuticals and combination Review Branch, Division of Extramural [email protected]. products under 21 CFR parts 4, 210, Activities, National Cancer Institute, NIH, Name of Committee: National Cancer 9609 Medical Center Drive, 7W606, 211, 610, and 680 have been approved Institute Special Emphasis Panel; NCI Rockville, MD 20850, 240–276–6464, under OMB control numbers 0910–0139 [email protected]. Research Specialist Award (R50). Date: March 5, 2020. and 0910–0834; and the collections of Name of Committee: National Cancer Time: 1:00 p.m. to 4:00 p.m. information pertaining to suspect Institute Special Emphasis Panel; TEP–10: product identification and notification SBIR Contract Review Meeting. Agenda: To review and evaluate grant under section 582 of the FD&C Act have Date: February 26, 2020. applications. been approved under OMB control Time: 11:00 a.m. to 5:30 p.m. Place: National Cancer Institute Shady number 0910–0806. Agenda: To review and evaluate contract Grove, 9609 Medical Center Drive, Room proposals. 7W242, Rockville, MD 20850 (Telephone IV. Electronic Access Place: National Cancer Institute Shady Conference Call). Persons with access to the internet Grove, 9609 Medical Center Drive, Room Contact Person: Zhiqiang Zou, M.D., Ph.D., may obtain the draft guidance at https:// 7W032, Rockville, MD 20850 (Telephone Scientific Review Officer, Special Review Conference Call). Branch, Division of Extramural Activities, www.fda.gov/Drugs/Guidance Contact Person: Klaus B. Piontek, Ph.D., ComplianceRegulatoryInformation/ National Cancer Institute, NIH, 9609 Medical Scientific Review Officer, Research Programs Center Drive, 7W242, Bethesda, MD 20892, Guidances/default.htm, https:// Review Branch, Division of Extramural 240–276–6372, [email protected]. www.fda.gov/vaccines-blood-biologics/ Activities, 9609 Medical Center Drive, Room guidance-compliance-regulatory- 7W116, National Cancer Institute, Rockville, Name of Committee: National Cancer information-biologics/biologics- MD 20892–9750, 240–276–5413, Institute Special Emphasis Panel; SEP–1: NCI Clinical and Translational R21 and Omnibus guidances, or https:// [email protected]. R03. www.regulations.gov. Name of Committee: National Cancer Institute Special Emphasis Panel; Validation Date: March 16, 2020. Dated: December 23, 2019. of Cancer Markers (UH2/UH3). Time: 1:00 p.m. to 4:00 p.m. Lowell J. Schiller, Date: February 26, 2020. Agenda: To review and evaluate grant Principal Associate Commissioner for Policy. Time: 1:00 p.m. to 3:00 p.m. applications. [FR Doc. 2019–28141 Filed 12–27–19; 8:45 am] Agenda: To review and evaluate grant Place: National Cancer Institute Shady applications. Grove, 9609 Medical Center Drive, Room BILLING CODE 4164–01–P Place: National Cancer Institute Shady 7W606, Rockville, MD 20850 (Telephone Grove, 9609 Medical Center Drive, Room Conference Call). 7W240, Rockville, MD 20850 (Telephone Contact Person: Timothy C. Meeker, M.D., DEPARTMENT OF HEALTH AND Conference Call). HUMAN SERVICES Ph.D., Scientific Review Officer, Special Contact Person: Hasan Siddiqui, Ph.D., Review Branch, Division of Extramural Scientific Review Officer, Special Review National Institutes of Health Activities, National Cancer Institute, NIH, Branch, Division of Extramural Activities, 9609 Medical Center Drive, 7W606, National Cancer Institute, NIH, 9609 Medical National Cancer Institute; Notice of Rockville, MD 20850, 240–276–6464, Center Drive, Room 7W240, Rockville, MD [email protected]. Closed Meetings 20850, 240–276–5122, hasan.siddiqui@ nih.gov. (Catalogue of Federal Domestic Assistance Pursuant to section 10(d) of the Program Nos. 93.392, Cancer Construction; Name of Committee: National Cancer Federal Advisory Committee Act, as 93.393, Cancer Cause and Prevention amended, notice is hereby given of the Institute Special Emphasis Panel; Utilizing the PLCO Biospecimens Resources (U01). Research; 93.394, Cancer Detection and following meetings. Date: February 27, 2020. Diagnosis Research; 93.395, Cancer The meetings will be closed to the Time: 11:00 a.m. to 3:00 p.m. Treatment Research; 93.396, Cancer Biology public in accordance with the Agenda: To review and evaluate grant Research; 93.397, Cancer Centers Support; provisions set forth in sections applications. 93.398, Cancer Research Manpower; 93.399, 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., Place: National Cancer Institute Shady Cancer Control, National Institutes of Health, as amended. The grant applications Grove, 9609 Medical Center Drive, Room HHS)

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Dated: December 23, 2019. Date: February 28, 2020. Dated: December 20, 2019. Ronald J. Livingston, Jr., Time: 8:00 a.m. to 2:00 p.m. Miguelina Perez, Program Analyst, Office of Federal Advisory Agenda: To review and evaluate grant Program Analyst, Office of Federal Advisory Committee Policy. applications. Committee Policy. Place: Admiral Fell Inn, Conference Room, [FR Doc. 2019–28151 Filed 12–27–19; 8:45 am] Admiral Ballroom, 888 South Broadway, [FR Doc. 2019–28152 Filed 12–27–19; 8:45 am] BILLING CODE 4140–01–P Baltimore, MD 21231. BILLING CODE 4140–01–P Contact Person: Greg Bissonette, Ph.D., Scientific Review Officer, Scientific Review DEPARTMENT OF HEALTH AND Branch, National Institute on Aging, National DEPARTMENT OF HEALTH AND HUMAN SERVICES Institutes of Health, 7201 Wisconsin Avenue, HUMAN SERVICES Gateway Building, Suite 2W200, Bethesda, National Institutes of Health MD 20892, 301–402–1622, bissonettegb@ National Institutes of Health mail.nih.gov. National Institute on Aging; Notice of (Catalogue of Federal Domestic Assistance Submission for OMB Review; 30-Day Closed Meetings Program Nos. 93.866, Aging Research, Comment Request Post-Award National Institutes of Health, HHS) Reporting Requirements Including Pursuant to section 10(d) of the Dated: December 20, 2019. Research Performance Progress Federal Advisory Committee Act, as Report Collection (OD/OPERA) amended, notice is hereby given of the Miguelina Perez, following meetings. Program Analyst, Office of Federal Advisory AGENCY: National Institutes of Health, The meetings will be closed to the Committee Policy. HHS. public in accordance with the [FR Doc. 2019–28155 Filed 12–27–19; 8:45 am] ACTION: Notice. provisions set forth in sections BILLING CODE 4140–01–P 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., SUMMARY: In compliance with the as amended. The grant applications and Paperwork Reduction Act of 1995, the the discussions could disclose DEPARTMENT OF HEALTH AND National Institutes of Health (NIH) has confidential trade secrets or commercial HUMAN SERVICES submitted to the Office of Management property such as patentable material, and Budget (OMB) a request for review and personal information concerning National Institutes of Health and approval of the information individuals associated with the grant collection listed below. National Eye Institute; Notice of Closed applications, the disclosure of which DATES: Comments regarding this Meeting would constitute a clearly unwarranted information collection are best assured invasion of personal privacy. of having their full effect if received Pursuant to section 10(d) of the within 30-days of the date of this Name of Committee: National Institute on Federal Advisory Committee Act, as publication. Aging Special Emphasis Panel; Exploratory amended, notice is hereby given of the Alzheimer’s Disease Research Centers following meeting. ADDRESSES: Written comments and/or Evaluation. suggestions regarding the item(s) Date: January 31, 2020. The meeting will be closed to the contained in this notice, especially Time: 12:00 p.m. to 5:00 p.m. public in accordance with the regarding the estimated public burden Agenda: To review and evaluate grant provisions set forth in sections applications. and associated response time, should be 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., directed to the: Office of Management Place: National Institute on Aging, as amended. The grant applications and Gateway Building, 7201 Wisconsin Avenue, and Budget, Office of Regulatory Affairs, Bethesda, MD 20892 (Telephone Conference the discussions could disclose [email protected] or by Call). confidential trade secrets or commercial fax to 202–395–6974, Attention: Desk Contact Person: Maurizio Grimaldi, MD, property such as patentable material, Officer for NIH. Ph.D., Scientific Review Officer, Scientific and personal information concerning FOR FURTHER INFORMATION CONTACT: To Review Branch, National Institute on Aging, individuals associated with the grant National Institutes of Health, 7201 Wisconsin request more information on the applications, the disclosure of which proposed project or to obtain a copy of Avenue, Gateway Building, Suite 2W200, would constitute a clearly unwarranted Bethesda, MD 20892, 301–496–9374, the data collection plans and [email protected]. invasion of personal privacy. instruments, contact: Ms. Mikia P. Name of Committee: National Institute on Name of Committee: National Eye Institute Currie, Project Clearance Branch, Office Aging Special Emphasis Panel; Marmoset Special Emphasis Panel—BRAIN Initiative: of Policy for Extramural Research Model U34 Review. New Concepts and Early-Stage Research for Administration, NIH, Rockledge 1 Date: February 18, 2020. Large-Scale Recording and Modulation in the Building, Room 803–C, 6705 Rockledge Time: 12:00 p.m. to 3:00 p.m. Nervous System (R21). Date: January 23, 2020. Drive, Bethesda, MD 20892–7974, or Agenda: To review and evaluate grant call non-toll-free number (301) 435– applications. Time: 12:00 p.m. to 3:30 p.m. Place: National Institute on Aging, Agenda: To review and evaluate grant 0941, or email your request, including Gateway Building, 7201 Wisconsin Avenue, applications. your address to: Bethesda, MD 20892 (Telephone Conference Place: National Eye Institute 6700B [email protected]. Call). Rockledge Drive Bethesda, MD 20818 SUPPLEMENTARY INFORMATION: This Contact Person: Birgit Neuhuber, Ph.D., (Virtual Meeting). proposed information collection was Scientific Review Officer, Scientific Review Contact Person: Brian Hoshaw, Ph.D., previously published in the Federal Acting Review Chief, National Eye Institute, Branch, National Institute on Aging, National Register on April 12, 2019, Volume 84, Institutes of Health, 7201 Wisconsin Avenue, National Institutes of Health, Division of Gateway Building, Suite 2W200, Bethesda, Extramural Research, 6700 B Rockledge Dr., No. 71 pages 14958–14959 and allowed MD 20892, 301–480–1266, neuhuber@ Ste. 3400, Rockville, MD 20892, (301) 451– 60 days for public comment. One public ninds.nih.gov. 2020, [email protected]. comment was received. The purpose of Name of Committee: National Institute on (Catalogue of Federal Domestic Assistance this notice is to allow an additional 30 Aging Special Emphasis Panel; Microbiome Program Nos. 93.867, Vision Research, days for public comment. The Office of and Aging Meeting. National Institutes of Health, HHS) the Director, NIH, may not conduct or

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sponsor, and the respondent is not within a competitive segment. The changes to the collection here are required to respond to, an information phased transition to the RPPR required related. Clinical trials are complex and collection that has been extended, the maintenance of dual reporting challenging research activities. revised, or implemented on or after processes for a period of time. Oversight systems and tools are critical October 1, 1995, unless it displays a Continued use of the PHS Non- for NIH to ensure participant safety, currently valid OMB control number. competing Continuation Progress Report data integrity, and accountability of the In compliance with Section (PHS 2590), exists for a small group of use of public funds. NIH has been 3507(a)(1)(D) of the Paperwork grantees. This collection also includes engaged in a multi-year effort to Reduction Act (PRA) of 1995, the NIH other PHS post-award reporting examine how clinical trials are has submitted to the Office of requirements: PHS 416–7 NRSA supported and the level of oversight Management and Budget (OMB) a Termination Notice, PHS 2271 needed. The collection of more request for review and approval of the Statement of Appointment, 6031–1 structured information in the PHS information collection listed below. NRSA Annual Payback Activities applications and pre-award reporting Proposed Collection: Public Health Certification, HHS 568 Final Invention requirements as well as continued Service (PHS) Post-award Reporting Statement and Certification, iEdison, monitoring and update during the post- Requirements Revision, OMB 0925– and PHS 3734 Statement Relinquishing award reporting requirements will 0002, Expiration Date 3/31/2020, Office Interests and Rights in a PHS Research facilitate NIH’s oversight of clinical of the Director (OD), National Institutes Grant. The PHS 416–7, 2271, and 6031– trials. In addition, some of the data of Health (NIH). This collection reported in the RPPR will ultimately be represents eliminating the Final 1 are used by NRSA recipients to activate, terminate, and provide for accessible to investigators to update Progress Report form as the form has certain sections of forms when payback of a NRSA. Closeout of an been incorporated into the Final RPPR. registering or reporting their trials with award requires a Final Invention Competing applications in the future ClinicalTrials.gov. may be updated to reflect related Statement (HHS 568) and Final Progress Human Fetal Tissue (HFT) information. Report. iEdison allows grantees and Frequency of response: Applicants Need and Use of Information Federal agencies to meet statutory may submit applications for published Collection: The RPPR is required to be requirements for reporting inventions receipt dates. For NRSA awards, used by all NIH, Food and Drug and patents. The PHS 3734 serves as the fellowships are activated, and trainees Administration, Centers for Disease official record of grantee relinquishment appointed. Control and Prevention, and Agency for of a PHS award when an award is OMB approval is requested for 3 Healthcare Research and Quality transferred from one grantee institution years. There are no costs to respondents (AHRQ) grantees. Interim progress to another. Pre-award reporting other than their time. The total reports are required to continue support requirements are simultaneously estimated annualized burden hours are of a PHS grant for each budget year consolidated under 0925–0001 and the 517,408. ESTIMATED ANNUALIZED BURDEN HOURS

Number of Average Number of responses burden per Total annual Information collection forms respondents per response burden respondent (in hours) hours

Reporting

PHS 416–7 ...... 12,580 1 30/60 6,290 PHS 6031–1 ...... 1,778 1 20/60 593 PHS 568 ...... 11,180 1 5/60 932 iEdison ...... 5,697 1 15/60 1,424 PHS 2271 ...... 22,035 1 15/60 5,509 PHS 2590 ...... 243 1 18 4,374 RPPR—Core Data ...... 32,098 1 8 256,784 Biosketch (Part of RPPR) ...... 2,544 1 2 5,088 Data Tables (Part of RPPR) ...... 758 1 4 3,032 Trainee Diversity Report (Part of RPPR) ...... 480 1 15/60 120 PHS Human Subjects and Clinical Trial Information (Part of RPPR, includes inclusion enrollment report) ...... 6,420 1 4 25,680 Publication Reporting ...... 97,023 3 5/60 8,085 Final RPPR—Core Data ...... 18,000 1 10 180,000 Data Tables (Part of Final RPPR) ...... 758 1 4 3,032 Trainee Diversity Report (Part of Final RPPR) ...... 480 1 15/60 120 PHS Human Subjects and Clinical Trial Information (Part of Final RPPR, includes inclusion/enrollment) ...... 3,600 1 4 14,400 PHS 374 ...... 479 1 30/60 240 SBIR/STTR Phase II Final Progress Report ...... 1,330 1 1 1,330 SBIR/STTR Life Cycle Certification ...... 1,500 1 15/60 375

Total ...... 218,983 ...... 517,408

Dated: December 20, 2019. Lawrence A. Tabak, Principal Deputy Director, National Institutes of Health. [FR Doc. 2019–28130 Filed 12–27–19; 8:45 am] BILLING CODE 4140–01–P

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DEPARTMENT OF HEALTH AND made during the meeting and any written SUPPLEMENTARY INFORMATION: This HUMAN SERVICES comments will be formatted to be posted on proposed information collection was the PRGLAC website for the record. previously published in the Federal National Institutes of Health Registration Link: http://tiny.cc/ Register on April 12, 2019, Volume 84, PRGLAC0220. No.212 pages 14956–14957 and allowed Office of the Secretary Notice of Please note: This meeting will be available 60 days for public comment. One public Meeting through NIH Videocast. If you are planning on watching the videocast remotely, please comment was received. The purpose of Pursuant to section 10(a) of the select this option on the registration form. this notice is to allow an additional 30 Federal Advisory Committee Act, as Dated: December 23, 2019. days for public comment. The Office of amended, notice is hereby given of a the Director, NIH, may not conduct or Ronald J. Livingston, Jr., meeting of the Task Force on Research sponsor, and the respondent is not Program Analyst, Office of Federal Advisory Specific to Pregnant Women and required to respond to, an information Committee Policy. Lactating Women. collection that has been extended, [FR Doc. 2019–28156 Filed 12–27–19; 8:45 am] The meeting will be open to the revised, or implemented on or after BILLING CODE 4140–01–P public, with attendance limited to space October 1, 1995, unless it displays a available. Individuals who plan to currently valid OMB control number. attend and need special assistance, such DEPARTMENT OF HEALTH AND as sign language interpretation or other In compliance with Section HUMAN SERVICES reasonable accommodations, should 3507(a)(1)(D) of the Paperwork Reduction Act of 1995, the NIH has notify the Contact Person listed below National Institutes of Health in advance of the meeting. submitted to the Office of Management Submission for OMB Review; 30-Day and Budget (OMB) a request for review Name of Committee: Task Force on and approval of the information Research Specific to Pregnant Women and Comment Request PHS Applications Lactating Women. and Pre-Award Reporting collection listed below. Date: February 3, 2020. Requirements (OD/OPERA) Proposed Collection: Public Health Time: 8:30 a.m. to 4:45 p.m. Service (PHS) Applications and Pre- AGENCY: National Institutes of Health, Agenda: The Task Force is charged with award Reporting Requirements. HHS. providing advice and guidance to the Revision, OMB 0925–0001, Expiration Secretary of HHS, regarding Federal activities ACTION: Notice. related to identifying and addressing gaps in Date 3/31/2020. Form numbers: PHS 398, PHS416–1, 416–5, and PHS 6031. knowledge and research regarding safe and SUMMARY: In compliance with the effective therapies for pregnant women and Paperwork Reduction Act of 1995, the This collection represents a lactating women, including the development National Institutes of Health (NIH) has consolidation of PHS applications and of such therapies and the collaboration on pre-award reporting requirements into a and coordination of such activities. submitted to the Office of Management and Budget (OMB) a request for review revised data collection under the PRA. 8:00 a.m. Registration and approval of the information This collection includes the proposed 8:30 a.m.–4:45 p.m. Open Session collection listed below. use of a new PHS Human Subjects and Place: NICHD Offices, Multipurpose Room Clinical Trial Information form. 1425/1427 (1st Floor), 6710B Rockledge DATES: Comments regarding this Drive, Bethesda, MD 20892. information collection are best assured Need and Use of Information Contact Person: Lisa Kaeser, Executive of having their full effect if received Collection: NIH has received approval to Secretary, Office of Legislation and Public within 30-days of the date of this require applicants and recipients to Policy, Eunice Kennedy Shriver, National publication. address Human Fetal Tissue Institute of Child Health and Human requirements within the SF–424 R&R ADDRESSES: Written comments and/or Development, Bethesda, MD 20892, (301) and the Research Performance Progress 496–0536, [email protected]. suggestions regarding the item(s) contained in this notice, especially Report due to Congressional ((Sections Public comments are welcome either by 498A and 498B of the PHS Act (42 filing written comments in advance and/or regarding the estimated public burden providing oral comments at the meeting. and associated response time, should be U.S.C. 289g–1 and 289g–2)) and Written comments to be included at the directed to the: Office of Management Department of Health and Human meeting should be sent to Lisa Kaeser by 5:00 and Budget, Office of Regulatory Affairs, Services (45 CFR 46.204 and 46.206) p.m. on Friday, January 24, 2020. Brief oral [email protected] or by mandates regarding human fetal tissue comments from the public may occur during fax to 202–395–6974, Attention: Desk research. Applicants and recipients will the discussion periods following each of the Officer for NIH. be required to comply with Federal and four working group presentations. FOR FURTHER INFORMATION CONTACT: To state laws concerning the acquisition of In the interest of security, NIH has human fetal tissue (including cell lines) instituted stringent procedures for entrance request more information on the onto NIH federal property. Visitors will be proposed project or to obtain a copy of obtained from elective abortions as well asked to show one form of identification (for the data collection plans and as include a description of the proposed example, a government-issued photo ID, instruments, contact: Ms. Mikia P. characteristics of the human fetal cells/ driver’s license, or passport) and to state the Currie, Project Clearance Branch, Office tissue outlining the procurement budget purpose of their visit. of Policy for Extramural Research details, and how the applicants/ Details and additional information about Administration, NIH, Rockledge 1 recipients will document the processes this meeting, prior meetings, and the Task Building, Room 803–C, 6705 Rockledge for how they will use the human fetal Force’s 2018 Report and Recommendations tissues and cells. Additionally, this can be found at the NICHD website for the Drive, Bethesda, MD 20892–7974, or Task Force on Research Specific to Pregnant call non-toll-free number (301) 435– revision will clarify information Women and Lactating Women (PRGLAC): 0941, or email your request, including regarding an institutional commitment https://www.nichd.nih.gov/about/advisory/ your address to: to ensuring that proper policies, PRGLAC/Pages/index.aspx Presentations [email protected]. procedures, and oversight are in place to

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prevent discriminatory harassment and 31/2018. Post-award reporting Innovation Research and Small Business other discriminatory practices. requirements are simultaneously Technology Transfer (SBIR/STTR) This collection also continues to consolidated under 0925–0002, and Funding Agreement Certifications are include PHS applications and pre-award include the Research Performance used by small business applicants. reporting requirements: PHS 398 (paper) Progress Report (RPPR). The PHS 398 Oversight systems and tools are critical Public Health Service Grant Application and SF424 applications are used by for the NIH to ensure participant safety, forms and instructions; PHS 398 applicants to request federal assistance data integrity, and accountability of the (electronic) PHS Grant Application funds for traditional investigator- use of public funds. The NIH has been component forms and agency specific initiated research projects and to request engaged in a multi-year effort to instructions used in combination with access to databases and other PHS examine how clinical trials are the SF424 (R&R); PHS Fellowship resources. The PHS 416–1 is used only supported and the level of oversight Supplemental Form and agency specific for a change of sponsoring institution needed. The collection of more instructions used in combination with application. PHS Fellowship the SF424 (R&R) forms/instructions for Supplemental Form and agency specific structured information about proposed Fellowships [electronic]; PHS 416–1 instructions is used in combination with clinical trials in the PHS applications Ruth L. Kirschstein National Research the SF424 (R&R) forms/instructions for and pre-award reporting requirements Service Award (NRSA) Individual Fellowships and is used by individuals will facilitate the NIH’s oversight of Fellowship Application Instructions to apply for direct research training clinical trials as well as assist in and Forms used only for a change of support. Awards are made to individual understanding where needs in the NIH sponsoring institution application applicants for specified training research portfolio may exist. In (paper); Instructions for a Change of proposals in biomedical and behavioral addition, some of the data collected here Sponsoring Institution for NRSA research, selected as a result of a will ultimately be accessible to Fellowships (F30, F31, F32 and F33) national competition. The PHS 416–5 is investigators to pre-populate certain and non-NRSA Fellowships; PHS 416– used by individuals to indicate the start sections of forms when registering their 5 Ruth L. Kirschstein National Research of their NRSA awards. The PHS 6031 trials with ClinicalTrials.gov. Service Award Individual Fellowship Payback Agreement is used by OMB approval is requested for 3 Activation Notice; and PHS 6031 individuals at the time of activation to Payback Agreement. The PHS 398 certify agreement to fulfill the payback years. There are no costs to respondents (paper and electronic), PHS 416–1, 416– provisions. The Venture Capital other than their time. The total 5, and PHS 6031 are currently approved Operating Companies (VCOC) estimated annualized burden hours are under 0925–0001. All forms expire 10/ Certification and the Small Business 2,150,389. ESTIMATED ANNUALIZED BURDEN HOURS

Number of Average Number of responses burden per Total annual Information collection forms respondents per response burden respondent (in hours) hours

PHS 398—Paper ...... 4,247 1 35 148,645 PHS 398/424—Electronic: PHS Assignment Request Form ...... 37,120 1 30/60 18,560 PHS 398 Cover Page Supplement ...... 74,239 1 1 74,239 PHS 398 Modular Budget ...... 56,693 1 1 56,693 PHS 398 Training Budget ...... 1,122 1 2 2,244 PHS 398 Training Subaward Budget Attachment(s) Form ...... 561 1 90/60 842 PHS 398 Research Plan ...... 70,866 1 10 708,660 PHS 398 Research Training Program Plan ...... 1,122 1 10 11,220 Data Tables ...... 1,515 1 4 6,060 PHS 398 Career Development Award Supplemental Form ...... 2,251 1 10 22,510 PHS Human Subjects and Clinical Trial Information (includes inclusion enrollment report) ...... 54,838 1 14 767,732 Biosketch (424 Electronic) ...... 80,946 1 2 161,892 PHS Fellowship—Electronic: PHS Fellowship Supplemental Form (includes F reference letters) ...... 6,707 1 12.5 83,838 PHS Assignment Request Form ...... 3,354 1 30/60 1,677 PHS Human Subjects and Clinical Trial Information (includes inclusion enrollment report) ...... 5,030 1 14 70,420 Biosketch (Fellowship) ...... 6,707 1 2 13,414 416–1 ...... 29 1 10 290 PHS 416–5 ...... 6,707 1 5/60 559 PHS 6031 ...... 6,217 1 5/60 518 VCOC Certification ...... 6 1 5/60 1 SBIR/STTR Funding Agreement Certification ...... 1,500 1 15/60 375

Total ...... 421,777 ...... 2,150,389

Dated: December 19, 2019. Lawrence A. Tabak, Principal Deputy Director, National Institutes of Health. [FR Doc. 2019–28129 Filed 12–27–19; 8:45 am] BILLING CODE 4140–01–P

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DEPARTMENT OF HEALTH AND US–06], and U.S. and foreign patent Dated: December 19, 2019. HUMAN SERVICES applications claiming priority to the Richard U. Rodriguez, aforementioned applications. Associate Director, Technology Transfer National Institutes of Health The patent rights in these inventions Center, National Cancer Institute. Prospective Grant of an Exclusive have been assigned and/or exclusively [FR Doc. 2019–28150 Filed 12–27–19; 8:45 am] Patent License: The Development of licensed to the government of the BILLING CODE 4140–01–P Autologous Kita-Kyushu Lung Cancer United States of America. Antigen 1 (KK–LC–1) T Cell Receptor The prospective exclusive license DEPARTMENT OF HEALTH AND (TCR) for the Treatment of KK–LC–1 territory may be worldwide and the HUMAN SERVICES Expressing Human Cancer field of use may be limited to: AGENCY: National Institutes of Health, The development, manufacture and National Institutes of Health HHS. commercialization of autologous ACTION: Notice. (meaning one individual is both the National Heart, Lung, and Blood donor and the recipient), peripheral Institute; Notice of Closed Meeting SUMMARY: The National Cancer Institute, blood T cell therapy products an institute of the National Institutes of engineered by retrovirus (including Pursuant to section 10(d) of the Health, Department of Health and lentivirus) to express T cell receptors Federal Advisory Committee Act, as Human Services, is contemplating the (TCR) reactive to Kita-Kyushu Lung amended, notice is hereby given of the grant of an Exclusive Patent License to Cancer Antigen 1 (KK–LC–1) wherein following meeting. practice the inventions embodied in the the TCR has: Patents and Patent Applications listed The meeting will be closed to the 1. A single antigen specificity; and in the SUPPLEMENTARY INFORMATION public in accordance with the section of this notice to T-Cure 2. a binding domain with provisions set forth in sections Biosciences, Inc. (T-Cure), located in complementary determining region 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., Sherman Oaks, California. (CDR) sequences of as amended. The grant applications DATES: Only written comments and/or CASSLGTGGYNEQFF (beta chain) and and/or contract proposals and the applications for a license which are CAGQLVYGNKLVF (alpha chain); for discussions could disclose confidential received by the National Cancer the treatment of KK–LC–1 expressing trade secrets or commercial property Institute’s Technology Transfer Center cancers. such as patentable material, and on or before January 14, 2020 will be This technology discloses TCRs that personal information concerning considered. are specific for the cell surface domain individuals associated with the grant ADDRESSES: Requests for copies of the of KK–LC–1. The TCRs can potentially applications and/or contract proposals, patent application, inquiries, and be used for the treatment of triple the disclosure of which would comments relating to the contemplated negative breast cancer, gastric cancer, constitute a clearly unwarranted an Exclusive Patent License should be and lung cancer. In the subject situation, invasion of personal privacy. directed to: Abritee Dhal, Ph.D., the TCRs can lead to the selective Name of Committee: National Heart, Lung, Technology Transfer Manager, NCI destruction of the cancerous cells. and Blood Institute Special Emphasis Panel; Technology Transfer Center, 9609 This notice is made in accordance Transcatheter Trileaflet Tricuspid Suture Medical Center Drive, RM 3W610 MSC with 35 U.S.C. 209 and 37 CFR part 404. Repair System—Phase II. 9702, Bethesda, MD 20892–9702 (for The prospective exclusive license will Date: January 21, 2020. business mail), Rockville, MD 20850– be royalty bearing, and the prospective Time: 11:00 a.m. to 12:00 p.m. 9702, Telephone: (240) 276–6154; exclusive license may be granted unless Agenda: To review and evaluate contract Facsimile: (240) 276–5504; Email: within fifteen (15) days from the date of proposals. [email protected]. this published notice, the National Place: NIH RKL II, 6701 Rockledge Drive, SUPPLEMENTARY INFORMATION: Cancer Institute receives written Bethesda, MD 21892 (Telephone Conference Call). Intellectual Property evidence and argument that establishes that the grant of the license would not Contact Person: Kristen Page, Ph.D., U.S. Provisional Patent Application be consistent with the requirements of Scientific Review Officer, Office of Scientific 62/327,529 entitled ‘‘Anti-KK–LC–1 T 35 U.S.C. 209 and 37 CFR part 404. Review/DERA, National Heart, Lung, and Cell Receptors’’ [HHS Ref. E–153–2016– Blood Institute, 6701 Rockledge Drive, Room 0–US–01], PCT Patent Application PCT/ In response to this Notice, the public 7185, Bethesda, MD 20892, 301–435–0725, US2017/027865 entitled ‘‘Anti-KK–LC– may file comments or objections. [email protected]. Comments and objections, other than 1 T Cell Receptors’’ [HHS Ref. E–153– (Catalogue of Federal Domestic Assistance those in the form of a license 2016–0–PCT–02], Australian Patent Program Nos. 93.233, National Center for application, will not be treated Application 2017258745 entitled ‘‘Anti- Sleep Disorders Research; 93.837, Heart and confidentially, and may be made KK–LC–1 T Cell Receptors’’ [HHS Ref. Vascular Diseases Research; 93.838, Lung publicly available. E–153–2016–0–AU–03], Canadian Diseases Research; 93.839, Blood Diseases Patent Application 3021898 entitled License applications submitted in and Resources Research, National Institutes ‘‘Anti-KK–LC–1 T Cell Receptors’’ [HHS response to this Notice will be of Health, HHS) Ref. E–153–2016–0–CA–04], European presumed to contain business Dated: December 23, 2019. Patent Application 1733120.4 entitled confidential information and any release ‘‘Anti-KK–LC–1 T Cell Receptors’’ [HHS of information in these license Ronald J. Livingston, Jr., Ref. E–153–2016–0–EP–05], United applications will be made only as Program Analyst, Office of Federal Advisory States Patent Application 16/096,118, required and upon a request under the Committee Policy. entitled ‘‘Anti-KK–LC–1 T Cell Freedom of Information Act, 5 U.S.C. [FR Doc. 2019–28153 Filed 12–27–19; 8:45 am] Receptors’’ [HHS Ref. E–153–2016–0– 552. BILLING CODE 4140–01–P

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DEPARTMENT OF HEALTH AND ACTION: Notice. drug testing only. The Mandatory HUMAN SERVICES Guidelines using Urine have since been SUMMARY: The Department of Health and revised, and new Mandatory Guidelines National Institutes of Health Human Services (HHS) notifies federal allowing for oral fluid drug testing have agencies of the laboratories and been published. The Mandatory National Heart, Lung, and Blood Instrumented Initial Testing Facilities Guidelines require strict standards that Institute; Notice of Closed Meeting (IITFs) currently certified to meet the laboratories and IITFs must meet in standards of the Mandatory Guidelines Pursuant to section 10(d) of the order to conduct drug and specimen for Federal Workplace Drug Testing validity tests on specimens for federal Federal Advisory Committee Act, as Programs using Urine or Oral Fluid amended, notice is hereby given of the agencies. HHS does not allow IITFs for (Mandatory Guidelines). oral fluid testing. following meeting. A notice listing all currently HHS- The meeting will be closed to the certified laboratories and IITFs is To become certified, an applicant public in accordance with the published in the Federal Register laboratory or IITF must undergo three provisions set forth in sections during the first week of each month. If rounds of performance testing plus an 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., any laboratory or IITF certification is on-site inspection. To maintain that as amended. The grant applications and suspended or revoked, the laboratory or certification, a laboratory or IITF must the discussions could disclose IITF will be omitted from subsequent participate in a quarterly performance confidential trade secrets or commercial lists until such time as it is restored to testing program plus undergo periodic, property such as patentable material, full certification under the Mandatory on-site inspections. and personal information concerning Guidelines. Laboratories and IITFs in the individuals associated with the grant If any laboratory or IITF has applicant stage of certification are not to applications, the disclosure of which withdrawn from the HHS National be considered as meeting the minimum would constitute a clearly unwarranted Laboratory Certification Program (NLCP) requirements described in the HHS invasion of personal privacy. during the past month, it will be listed Mandatory Guidelines using Urine and/ Name of Committee: National Heart, Lung, at the end and will be omitted from the or Oral Fluid. An HHS-certified and Blood Institute Special Emphasis Panel; monthly listing thereafter. laboratory or IITF must have its letter of Neutrophil Lineage in Inflammation. This notice is also available on the certification from HHS/SAMHSA Date: February 10, 2020. internet at https://www.samhsa.gov/ (formerly: HHS/NIDA), which attests Time: 8:30 a.m. to 12:30 p.m. workplace/resources/drug-testing/ that the test facility has met minimum Agenda: To review and evaluate grant certified-lab-list. standards. HHS does not allow IITFs for applications. Place: Crystal City Marriott at Reagan FOR FURTHER INFORMATION CONTACT: oral fluid testing. National Airport, 1999 Richmond Highway, Anastasia Donovan, Division of HHS-Certified Laboratories Certified To Arlington, VA 22202. Workplace Programs, SAMHSA/CSAP, Conduct Oral Fluid Drug Testing Contact Person: Michael P. Reilly, Ph.D., 5600 Fishers Lane, Room 16N06B, Scientific Review Officer, Office of Scientific Rockville, Maryland 20857; 240–276– In accordance with the Mandatory Review, National Heart, Lung, and Blood 2600 (voice). Guidelines using Oral Fluid dated Institute, National Institutes of Health, 6701 SUPPLEMENTARY INFORMATION: The October 25, 2019 (84 FR 57554), the Rockledge Drive, Room 7200, Bethesda, MD following HHS-certified laboratories 20892, 301–827–7975, reillymp@ Department of Health and Human nhlbi.nih.gov. Services (HHS) notifies federal agencies meet the minimum standards to conduct drug and specimen validity tests on oral (Catalogue of Federal Domestic Assistance of the laboratories and Instrumented Program Nos. 93.233, National Center for Initial Testing Facilities (IITFs) fluid specimens: Sleep Disorders Research; 93.837, Heart and currently certified to meet the standards At this time, there are no laboratories Vascular Diseases Research; 93.838, Lung of the Mandatory Guidelines for Federal certified to conduct drug and specimen Diseases Research; 93.839, Blood Diseases Workplace Drug Testing Programs validity tests on oral fluid specimens. and Resources Research, National Institutes of Health, HHS) (Mandatory Guidelines) using Urine and HHS-Certified Instrumented Initial of the laboratories currently certified to Testing Facilities Certified To Conduct Dated: December 23, 2019. meet the standards of the Mandatory Urine Drug Testing Ronald J. Livingston, Jr., Guidelines using Oral Fluid. Program Analyst, Office of Federal Advisory The Mandatory Guidelines using In accordance with the Mandatory Committee Policy. Urine were first published in the Guidelines using Urine dated January [FR Doc. 2019–28154 Filed 12–27–19; 8:45 am] Federal Register on April 11, 1988 (53 23, 2017 (82 FR 7920), the following BILLING CODE 4140–01–P FR 11970), and subsequently revised in HHS-certified IITFs meet the minimum the Federal Register on June 9, 1994 (59 standards to conduct drug and specimen FR 29908); September 30, 1997 (62 FR validity tests on urine specimens: DEPARTMENT OF HEALTH AND 51118); April 13, 2004 (69 FR 19644); Dynacare, 6628 50th Street NW, HUMAN SERVICES November 25, 2008 (73 FR 71858); Edmonton, AB Canada T6B 2N7, 780– December 10, 2008 (73 FR 75122); April 784–1190, (Formerly: Gamma- Substance Abuse and Mental Health 30, 2010 (75 FR 22809); and on January Dynacare Medical Laboratories) Services Administration 23, 2017 (82 FR 7920). HHS-Certified Laboratories Certified to The Mandatory Guidelines using Oral Current List of HHS-Certified Conduct Urine Drug Testing Laboratories and Instrumented Initial Fluid were first published in the Testing Facilities Which Meet Minimum Federal Register on October 25, 2019 In accordance with the Mandatory Standards To Engage in Urine and Oral (84 FR 57554) with an effective date of Guidelines using Urine dated January Fluid Drug Testing for Federal January 1, 2020. 23, 2017 (82 FR 7920), the following Agencies The Mandatory Guidelines were HHS-certified laboratories meet the initially developed in accordance with minimum standards to conduct drug AGENCY: Substance Abuse and Mental Executive Order 12564 and section 503 and specimen validity tests on urine Health Services Administration, HHS. of Public Law 100–71 and allowed urine specimens:

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Alere Toxicology Services, 1111 Newton Southaven, MS 38671, 866–827–8042/ laboratories and participate in the NLCP St., Gretna, LA 70053, 504–361–8989/ 800–233–6339, (Formerly: LabCorp certification maintenance program. 800–433–3823, (Formerly: Kroll Occupational Testing Services, Inc.; Anastasia Marie Donovan, Laboratory Specialists, Inc., MedExpress/National Laboratory Laboratory Specialists, Inc.) Center) Policy Analyst. Alere Toxicology Services, 450 LabOne, Inc. d/b/a Quest Diagnostics, [FR Doc. 2019–28149 Filed 12–27–19; 8:45 am] Southlake Blvd., Richmond, VA 10101 Renner Blvd., Lenexa, KS BILLING CODE 4162–20–P 23236, 804–378–9130, (Formerly: 66219, 913–888–3927/800–873–8845, Kroll Laboratory Specialists, Inc., (Formerly: Quest Diagnostics Scientific Testing Laboratories, Inc.; Incorporated; LabOne, Inc.; Center for Kroll Scientific Testing Laboratories, DEPARTMENT OF HOMELAND Laboratory Services, a Division of SECURITY Inc.) LabOne, Inc.) Clinical Reference Laboratory, Inc., 8433 Technical Resource for Incident Quivira Road, Lenexa, KS 66215– Legacy Laboratory Services—MetroLab, Prevention (TRIPwire) User 2802, 800–445–6917 1225 NE 2nd Ave., Portland, OR Cordant Health Solutions, 2617 East L 97232, 503–413–5295/800–950–5295 Registration and Questionnaire Street, Tacoma, WA 98421, 800–442– MedTox Laboratories, Inc., 402 W AGENCY: Infrastructure Security Division 0438, (Formerly: STERLING Reference County Road D, St. Paul, MN 55112, (ISD), Cybersecurity and Infrastructure Laboratories) 651–636–7466/800–832–3244 Security Agency (CISA), Department of Desert Tox, LLC, 10221 North 32nd Minneapolis Veterans Affairs Medical Homeland Security (DHS). Street, Suite J, Phoenix, AZ 85028, Center, Forensic Toxicology ACTION: 602–457–5411 30-Day notice and request for Laboratory, 1 Veterans Drive, comments; revision, 1670–0028. DrugScan, Inc., 200 Precision Road, Minneapolis, MN 55417, 612–725– Suite 200, Horsham, PA 19044, 800– 2088, Testing for Veterans Affairs SUMMARY: DHS CISA ISD will submit 235–4890 (VA) Employees Only the following information collection Dynacare *, 245 Pall Mall Street, Pacific Toxicology Laboratories, 9348 request (ICR) to the Office of London, ONT, Canada N6A 1P4, 519– DeSoto Ave., Chatsworth, CA 91311, Management and Budget (OMB) for 679–1630, (Formerly: Gamma- 800–328–6942, (Formerly: Centinela review and clearance in accordance Dynacare Medical Laboratories) ElSohly Laboratories, Inc., 5 Industrial Hospital Airport Toxicology with the Paperwork Reduction Act of Park Drive, Oxford, MS 38655, 662– Laboratory) 1995. CISA previously published this 236–2609 Pathology Associates Medical ICR for a 60-day public comment Laboratory Corporation of America Laboratories, 110 West Cliff Dr., period. No comments were received by Holdings, 7207 N Gessner Road, Spokane, WA 99204, 509–755–8991/ CISA. The purpose of this notice is to Houston, TX 77040, 713–856–8288/ 800–541–7891x7 allow an additional 30 days for public 800–800–2387 Phamatech, Inc., 15175 Innovation comments. Laboratory Corporation of America Drive, San Diego, CA 92128, 888– DATES: Comments are due by January Holdings, 69 First Ave., Raritan, NJ 635–5840 29, 2020. 08869, 908–526–2400/800–437–4986, Quest Diagnostics Incorporated, 1777 ADDRESSES: Interested persons are (Formerly: Roche Biomedical Montreal Circle, Tucker, GA 30084, invited to submit written comments on Laboratories, Inc.) 800–729–6432, (Formerly: SmithKline the proposed information collection to Laboratory Corporation of America Beecham Clinical Laboratories; the Office of Information and Regulatory Holdings, 1904 TW Alexander Drive, SmithKline Bio-Science Laboratories) Affairs, OMB. Comments should be Research Triangle Park, NC 27709, addressed to the OMB Desk Officer, 919–572–6900/800–833–3984, Quest Diagnostics Incorporated, 400 Egypt Road, Norristown, PA 19403, Department of Homeland Security and (Formerly: LabCorp Occupational sent via electronic mail to Testing Services, Inc., CompuChem 610–631–4600/877–642–2216, (Formerly: SmithKline Beecham [email protected]. All Laboratories, Inc.; CompuChem submissions must include the words Laboratories, Inc., A Subsidiary of Clinical Laboratories; SmithKline Bio- Science Laboratories) ‘‘Department of Homeland Security’’ Roche Biomedical Laboratory; Roche and the OMB Control Number 1670– Redwood Toxicology Laboratory, 3700 CompuChem Laboratories, Inc., A 0028. Westwind Blvd., Santa Rosa, CA Member of the Roche Group) Comments submitted in response to Laboratory Corporation of America 95403, 800–255–2159 this notice may be made available to the Holdings, 1120 Main Street, US Army Forensic Toxicology Drug public through relevant websites. For Testing Laboratory, 2490 Wilson St., this reason, please do not include in * The Standards Council of Canada (SCC) voted Fort George G. Meade, MD 20755– to end its Laboratory Accreditation Program for your comments information of a Substance Abuse (LAPSA) effective May 12, 1998. 5235, 301–677–7085, Testing for confidential nature, such as sensitive Laboratories certified through that program were Department of Defense (DoD) personal information or proprietary accredited to conduct forensic urine drug testing as Employees Only required by U.S. Department of Transportation information. If you send an email (DOT) regulations. As of that date, the certification Upon finding a Canadian laboratory to comment, your email address will be of those accredited Canadian laboratories will be qualified, HHS will recommend that automatically captured and included as continue under DOT authority. The responsibility DOT certify the laboratory (Federal part of the comment that is placed in the for conducting quarterly performance testing plus periodic on-site inspections of those LAPSA- Register, July 16, 1996) as meeting the public docket and made available on the accredited laboratories was transferred to the U.S. minimum standards of the Mandatory internet. Please note that responses to HHS, with the HHS’ NLCP contractor continuing to Guidelines published in the Federal this public comment request containing have an active role in the performance testing and Register on January 23, 2017 (82 FR any routine notice about the laboratory inspection processes. Other Canadian laboratories wishing to be considered for the NLCP 7920). After receiving DOT certification, confidentiality of the communication may apply directly to the NLCP contractor just as the laboratory will be included in the will be treated as public comments that U.S. laboratories do. monthly list of HHS-certified may be made available to the public

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notwithstanding the inclusion of the Annually, users are revalidated based 4. Minimize the burden of the routine notice. on the information provided during collection of information on those who FOR FURTHER INFORMATION CONTACT: their registration. For revalidation, users are to respond, including through the Dennis Molloy, 703–235–9388, and employment references receive a use of appropriate automated, [email protected]. system generated email to validate that electronic, mechanical, or other SUPPLEMENTARY INFORMATION: The CISA access is still required and their technological collection techniques or ISD Office of Bombing Prevention (OBP) information is still accurate. other forms of information technology, OBP sends registered users a quarterly has a leading role in implementation of e.g., permitting electronic submissions questionnaire seeking feedback as to the national counter-IED policy, of responses. how registrants use TRIPwire articulated through Presidential Policy Title of Collection: Technical information, products, and tools. OBP Directive 17 (PPD–17) Countering IEDs), Resource for Incident Prevention uses the information collected during a serving as the Deputy Administrator of (TRIPwire) User Registration and quarterly questionnaire to review and the federal interagency Joint Program Questionnaire. improve the effectiveness and adequacy Office for Countering Improvised OMB Control Number: 1670–0028. of the TRIPwire content and system Explosive Devices (JPO C–IED) and Frequency: Annually. features. working in close collaboration with the Affected Public: State, Local, Tribal, TRIPwire registration is user-driven and Territorial Governments and Private White House National Security Council. and is completed electronically via the The JPO C–IED coordinates and tracks Sector Individuals. secure TRIPwire interface. Users are Number of Annualized Respondents: Federal government progress in building required to have a computer and access national counter-IED capabilities. OBP 4,333. to the internet. The registration process Estimated Time per Respondent: 0.17 also leads the DHS in implementation of requires users to provide their full the national counter-IED policy, serving hours, 0.017 hours, 0.083 hours. name, assignment, citizenship, job title, Total Annualized Burden Hours: 422 as the DHS Counter-IED Program employer name, professional address Management Office and chairing the hours. and contact information, as well as an Total Annualized Respondent DHS IED Working Group. Employment Verification Contact and OBP is instrumental in aligning DHS Opportunity Cost: $13,736. their contact information. Notifications and national counter-IED efforts through Total Annualized Respondent Out-of- regarding the user registration are centralized and effective coordination of Pocket Cost: $0. handled via electronic submission ongoing programs with national policy Total Annualized Government Cost: responses and/or email. In addition to and strategy goals, resulting in better $7,447. electronic registration, TRIPwire uses resource allocation within OBP and automated notifications to registered Evette Maynard-Noel, across DHS and our Federal, state, local, users when/if their account or password Deputy Chief Information Security Officer. tribal, territorial and private sector is set to expire as well as annual re- [FR Doc. 2019–28133 Filed 12–27–19; 8:45 am] partners. verification of users’ need for access to BILLING CODE 9110–09–P TRIPwire (Technical Resource for TRIPwire. Incident Prevention) is the DHS online, The TRIPwire Questionnaire is also collaborative information-sharing collected electronically via a Survey DEPARTMENT OF THE INTERIOR network for bomb technicians, first Monkey link that is emailed to responders, military personnel, respondents. The Survey Monkey Fish and Wildlife Service government officials, intelligence settings selected ensure that analysts, and select private sector [Docket No. FWS–R3–ES–2019–0107; submissions are anonymous, and that an FXES11130300000–201–FF03E00000] security professionals to increase IP address is not collected. awareness of evolving IED tactics, The changes to the collection since Draft Environmental Assessment and techniques, and procedures, as well as the previous OMB approval include: Draft Habitat Conservation Plan; incident lessons learned and counter- updating the collection title, updating Receipt of an Application for an IED preparedness information. the TRIPwire User registration page, Incidental Take Permit, Blue Creek Users from Federal, State, local, and clarifying the revalidation burden, and Wind Farm, Van Wert and Paulding tribal government entities, as well as adding a TRIPwire Questionnaire. Counties, Ohio business and/or other for-profit Overall, these changes result in a industries, can elect to register for decrease in burden estimates and costs. AGENCY: Fish and Wildlife Service, TRIPwire access. The TRIPwire portal This is a revision and renewal of an Interior. contains sensitive information related to information collection. ACTION: Notice of availability; request terrorist use of explosives and therefore OMB is particularly interested in for comments. user information is needed to verify comments that: eligibility and access to the system. 1. Evaluate whether the proposed SUMMARY: We, the U.S. Fish and There are three main instruments collection of information is necessary Wildlife Service, have received an within this collection: TRIPwire User for the proper performance of the application from Blue Creek Wind Registrations, TRIPwire Revalidations, functions of the agency, including Farm, LLC (applicant), for an incidental and TRIPwire Questionnaire. The whether the information will have take permit (ITP) under the Endangered information collected during the practical utility; Species Act of 1973, as amended, for its TRIPwire user registration process is 2. Evaluate the accuracy of the Blue Creek Wind Farm project. If reviewed electronically by the OBP to agency’s estimate of the burden of the approved, the ITP would authorize the validate the user’s ‘‘need to know,’’ proposed collection of information, incidental take of the Indiana bat and which determines their eligibility for including the validity of the the northern long-eared bat. The and access to TRIPwire. OBP verifies methodology and assumptions used; applicant has prepared a draft habitat users need for access by confirming that 3. Enhance the quality, utility, and conservation plan (HCP), which is a valid email address is used to register clarity of the information to be available for public review. We also and checking employment references. collected; and announce the availability of a draft

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environmental assessment, which has approximately 40,426-acre area in Purpose and Need for Action been prepared in accordance with the Paulding and Van Wert Counties, Ohio. In accordance with NEPA, the Service requirements of the National The draft HCP describes the following: has prepared a draft environmental Environmental Policy Act. We request 1. Permit duration; assessment (DEA) to analyze the 2. Covered lands; public comment on the application and impacts to the human environment that 3. Covered species; associated documents. would occur if the requested ITP were 4. Project description and covered DATES: We will accept comments issued and the associated HCP were activities; received or postmarked on or before implemented. January 29, 2020. 5. Environmental baseline and affected species; ADDRESSES: Obtaining documents: Proposed Action 6. Impact assessment and take Electronic copies of the documents this Section 9 of the ESA prohibits the authorization request for Indiana bats notice announces will be available ‘‘taking’’ of threatened and endangered and northern long-eared bats; online in Docket No. FWS–R3–ES– species. However, provided certain 7. Conservation plan, which includes 2019–0107 at http:// criteria are met, the Service is the Biological Goals and Objectives, and www.regulations.gov. Public comments authorized to issue permits under measures to avoid, minimize, and will also be available online at http:// section 10(a)(1)(B) of the ESA for take of mitigate the impact of the taking; www.regulations.gov. 8. Monitoring and adaptive federally listed species when, among Paper copies of the documents this management; other things, such a taking is incidental notice announces will be available at 9. Funding assurances; to, and not the purpose of, otherwise the following libraries: Brumback 10. Alternatives to the taking; and lawful activities. Under the ESA, the Library, 215 W. Main St., Van Wert, OH 11. Changed and unforeseen term ‘‘take’’ means to harass, harm, 45891; and Paulding County Carnegie circumstances. pursue, hunt, shoot, wound, kill, trap, Library, 205 S. Main St., Paulding, OH Under the National Environmental capture, or collect endangered and 45879. Policy Act (NEPA; 43 U.S.C. 4321 et threatened species, or to attempt to Submitting comments: Please specify seq.) and the ESA, the Service engage in any such conduct. Our whether your comment addresses the announces that we have gathered the implementing regulations in title 50 of draft HCP, DEA, or any combination of information necessary to: the Code of Federal Regulations define the aforementioned documents, or other 1. Determine the impacts and ‘‘harm’’ as an act which actually kills or supporting documents. Please submit formulate alternatives for an EA related injures wildlife, and such act may written comments by one of the to: include significant habitat modification following methods: or degradation that results in death or • a. Issuance of an ITP to the applicant Online: http://www.regulations.gov. for the take of the Indiana bat and the injury to listed species by significantly Search for and submit comments on northern long-eared bat, and impairing essential behavioral patterns, Docket No. FWS–R3–ES–2019–0107. including breeding, feeding, or • b. Implementation of the associated By hard copy: Submit comments by HCP; and sheltering (50 CFR 17.3). U.S. mail or hand delivery to Public 2. Evaluate the application for ITP The HCP analyzes, and the ITP would Comments Processing, Attn: Docket No. issuance, including the HCP, which authorize, take from killing of bats due FWS–R3–ES–2019–0107; U.S. Fish and provides measures to minimize and to the operation of the Blue Creek Wildlife Service; 5275 Leesburg Pike, mitigate the effects of the proposed project. If issued, the ITP would MS: JAO/lN; Falls Church, VA 22041– incidental take of the Indiana bat and authorize incidental take consistent 3803. the northern long-eared bat. with the applicant’s HCP and the ITP. FOR FURTHER INFORMATION CONTACT: To issue the ITP, the Service must find Megan Seymour, Wildlife Biologist, or Background that the application, including its HCP, Patrice Ashfield, Ohio Ecological The Blue Creek project includes 152 satisfies the criteria of section Services Office Project Leader, via operating 2.0-megawatt (MW) Gamesa 10(a)(1)(B) of the ESA and the Service’s phone at 614–416–8993, via the Federal G90 wind turbines with a total energy implementing regulations at 50 CFR part Relay Service at 800–877–8339, or via generating capacity of 304 MW. The 13 and § 17.22. If the ITP is issued, the U.S. mail at the U.S. Fish and Wildlife project achieved commercial operation applicant would receive assurances Service, Ohio Field Office, 4625 Morse in June 2012. The need for the proposed under the Service’s No Surprises policy, Road, Suite 104, Columbus, OH 43230. action (i.e., issuance of an ITP) is based as codified at 50 CFR 17.22(b)(5). SUPPLEMENTARY INFORMATION: We, the on the potential that operation of the The applicant proposes to operate a U.S. Fish and Wildlife Service (Service), Blue Creek Wind Farm could result in maximum of 152 wind turbines and have received an application from Blue take of Indiana bats and northern long- associated facilities for a period of 35 Creek Wind Farm, LLC (applicant), for eared bats. years in Paulding and Van Wert an incidental take permit (ITP) under The HCP provides a detailed Counties, Ohio. The project consists of the Endangered Species Act (ESA; 16 conservation plan to ensure that the wind turbines, associated gravel pads U.S.C. 1531 et seq.). If approved, the ITP incidental take caused by the operation and access roads, underground and would be for a 35-year period and of the project will not appreciably aboveground electrical collection would authorize incidental take of the reduce the likelihood of the survival circuits, two substations, two permanent endangered Indiana bat (Myotis sodalis) and recovery of the Indiana bat and un-guyed meteorological towers, and an and the threatened northern long-eared northern long-eared bat, and provides Operations and Maintenance Facility bat (Myotis septentrionalis). mitigation to fully offset the impact of consisting of an approximately 5,000- The applicant has prepared a draft the taking. Further, the HCP provides a square-foot building. habitat conservation plan (HCP), which long-term monitoring and adaptive The draft HCP describes the impacts covers the operation of the Blue Creek management strategy to ensure that the of take associated with the operation of Wind Farm (project). The project ITP terms are satisfied, and to account the Blue Creek Wind Farm and includes consists of a wind-powered electric for changed and unforeseen measures to avoid, minimize, mitigate, generation facility located in an circumstances. and monitor the impacts of incidental

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take on the Indiana bat and the northern permit to the applicant, and the project up to 6.5 m/s. In this alternative, take of long-eared bat. The applicant will turbines would be feathered until wind 1.4 Indiana bats per year, for a total of mitigate for take and associated impacts speeds reach 6.9 m/s from a half-hour 49 Indiana bats over the 35-year permit through one or more methods including before sunset to a half-hour after sunrise term, and take of 1 northern long-eared restoration, if necessary, and permanent during the entirety of the fall migration bat per year, for a total of 34.1 northern protection of documented maternity season (August 1 through October 31) long-eared bats over the 35-year permit colony habitat and/or swarming habitat, and spring migration season (March 15 term, would be permitted; (4) Less and/or gating of a hibernaculum within through May 15), under which Restrictive Operations alternative, in the State of Ohio. Habitat mitigation, conditions take of listed species is which the Service would issue an ITP including any restored habitat, will unlikely to occur; (2) the Applicant’s for the HCP, but turbine operations occur on private land and be Proposed Project alternative in which would be different than the Applicant’s permanently protected by a the Service would issue an ITP to Proposed Project. All turbines would be conservation easement, fee simple authorize incidental take of Covered feathered when the ambient temperature ° acquisition with deed restrictions, or Species associated with the project’s is above 10 C based on a 5-minute another site protection instrument that operations as described in the rolling average from one half-hour provides an equivalent level of applicant’s HCP. In this alternative, the before sunset to one half-hour after protection, and will be approved by the project turbines would be feathered sunrise during the spring migration Service. Chapter 5 of the HCP describes until wind speeds reach 3.0 m/s during season and summer (April 1 through the Conservation Plan, including details the spring migration season and summer July 31) up to 3.0 m/s, and during the of avoidance and minimization (April 1 through July 31) from a half- fall migration season (August 1 through measures and compensatory mitigation hour before sunset to a half-hour after October 15) up to 4.0 m/s. In this that will limit and mitigate for the take sunrise, and during the fall migration alternative, take of 2.6 Indiana bats per of Indiana bats and northern long-eared season (August 1 through October 15) year, for a total of 91 Indiana bats over bats. Chapter 6 of the HCP describes project turbines would be feathered the 35-year permit term, and take of 1.8 Monitoring and Adaptive Management until wind speeds reach 5.0 m/s when northern long-eared bats per year, for a to ensure take stays within permitted temperatures are greater than 10 degrees total of 62.2 northern long-eared bats levels and mitigation sites are Celsius (°C), from a half-hour before over the 35-year permit term, would be maintained as suitable habitat for the sunset to a half-hour after sunrise. In permitted. The quantity of mitigation Indiana bat and northern long-eared bat. this alternative, the applicant estimated needed to offset the impact of the taking The Service is soliciting information take of Indiana and northern long-eared and the level of effort of monitoring regarding the adequacy of the HCP to bats using an approach that addresses varies between the alternatives, avoid, minimize, mitigate, and monitor inherent uncertainty in take estimates although mitigation, monitoring, the proposed incidental take of the by incorporating a 70 percent adaptive management, and funding covered species and to provide for confidence bound around the mean assurances are components of all three adaptive management. In compliance estimate, and a 30 percent reduction in action alternatives. The DEA considers the direct, with section 10(c) of the ESA (16 U.S.C. take from application of the proposed indirect, and cumulative effects of the 1539(c)), the Service is making the ITP cut-in speed regime. Under this alternatives, including any measures application materials available for alternative, 4.39 Indiana bats per year, intended to minimize and mitigate such public review and comment as for a total of 154 Indiana bats over the impacts. The DEA also identifies described above. 35-year permit term, and take of 2.96 We invite comments and suggestions additional alternatives that were northern long-eared bats per year, for a from all interested parties on the draft considered but were eliminated from total of 103 northern long-eared bats documents associated with the ITP analysis as detailed in section 2.4 of the over the 35-year permit term, would be application (HCP and HCP Appendices), DEA. permitted. To be consistent and and request that comments be as The Service invites comments and comparable in our analysis of all NEPA specific as possible. In particular, we suggestions from all interested parties alternatives, the Service used a request information and comments on on the content of the DEA. In particular, simplified method to estimate take the following topics: information and comments regarding 1. Whether adaptive management, across this and all other alternatives, the following topics are requested: mitigation, and monitoring provisions which generated a take estimate for this 1. The direct, indirect, or cumulative in the proposed action alternative are alternative of 2.5 Indiana bats per year, effects that implementation of any sufficient; for a total of 87.5 Indiana bats over the alternative could have on the human 2. Any threats to the Indiana bat and permit term, and take of 1.6 northern environment; the northern long-eared bat that may long-eared bats per year, for a total of 2. Whether or not the significance of influence their populations over the life 57.7 northern long-eared bats over the the impact on various aspects of the of the ITP that are not addressed in the permit term; (3) More Restrictive human environment has been draft HCP or DEA; Operations alternative, in which the adequately analyzed; and 3. Any new information on white- Service would issue an ITP for the HCP, 3. Any other information pertinent to nose syndrome effects on the Indiana but turbine operations would be evaluating the effects of the proposed bat and the northern long-eared bat; and different than the Applicant’s Proposed action on the human environment. 4. Any other information pertinent to Project. All turbines would be feathered Public Comments evaluating the effects of the proposed when the ambient temperature is above action on the Indiana bat and the 10°C based on a 5-minute rolling You may submit your comments and northern long-eared bat. average from one half-hour before materials related to the draft HCP, DEA, sunset to one half-hour after sunrise, or other supporting documents by one Alternatives in the Draft EA during the spring migration season and of the methods listed in ADDRESSES. We The DEA contains an analysis of four summer (April 1 through July 31) up to request you send comments using only alternatives: (1) No Action alternative, 3.0 m/s, and during the fall migration one of the methods described in in which the Service would not issue a season (August 1 through October 15) ADDRESSES.

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Comments and materials we receive, further alleges that an industry in the Procedure, 19 CFR 210.10(b)(1), the as well as documents associated with United States exists as required by the plain language description of the the notice, will be available for public applicable Federal Statute. accused products or category of accused inspection by appointment, during The complainants request that the products, which defines the scope of the normal business hours, at the Ohio Commission institute an investigation investigation, is ‘‘folding cover Ecological Services Field Office in and, after the investigation, issue a assemblies for pick-up truck cargo boxes Columbus, Ohio (see FOR FURTHER general exclusion order, or in the and components thereof’’; INFORMATION CONTACT). Before including alternative a limited exclusion order, (3) For the purpose of the your address, phone number, email and cease and desist orders. investigation so instituted, the following address, or other personal identifying ADDRESSES: The complaint, except for are hereby named as parties upon which information in your comment, you any confidential information contained this notice of investigation shall be should be aware that your entire therein, is available for inspection served: comment—including your personal during official business hours (8:45 a.m. (a) The complainants are: identifying information—may be made to 5:15 p.m.) in the Office of the Extang Corporation, 5400 S. State publicly available at any time. While Secretary, U.S. International Trade Road, Ann Arbor, MI 48108. you can ask us in your comment to Commission, 500 E Street SW, Room Laurmark Enterprises, Inc., d/b/a BAK withhold your personal identifying 112, Washington, DC 20436, telephone Industries, 5400 Data Court, Ann Arbor, information from public review, we (202) 205–2000. Hearing impaired MI 48108. (b) The respondents are the following cannot guarantee that we will be able to individuals are advised that information entities alleged to be in violation of do so. on this matter can be obtained by section 337, and is/are the parties upon contacting the Commission’s TDD Authority which the complaint is to be served: terminal on (202) 205–1810. Persons Tyger Auto Inc., 2615 West We provide this notice under section with mobility impairments who will 10(c) of the ESA (16 U.S.C.1539(c)) and Renaissance Parkway, Rialto, CA 92376. need special assistance in gaining access Cixi City Liyuan Auto Parts Co. Ltd., its implementing regulations (50 CFR to the Commission should contact the 17.22) and the NEPA (42 U.S.C. 4321 et No. 72 Haiwei Avenue, West District, Office of the Secretary at (202) 205– Guanhaiwei Industrial Park, Cixi City, seq.) and its implementing regulations 2000. General information concerning (40 CFR 1506.6; 43 CFR part 46). Zhejiang Province, China 315145. the Commission may also be obtained Hong Kong Car Start Industries Co., Lori Nordstrom, by accessing its internet server at Limited Shidai Xinju, Building NG No. Assistant Regional Director. https://www.usitc.gov. The public 681, West Huancheng Road, Haishu [FR Doc. 2019–28112 Filed 12–27–19; 8:45 am] record for this investigation may be District, Zhejian Province, China viewed on the Commission’s electronic BILLING CODE 4333–15–P 315000. docket (EDIS) at https://edis.usitc.gov. (c) The Office of Unfair Import FOR FURTHER INFORMATION CONTACT: Investigations, U.S. International Trade INTERNATIONAL TRADE Pathenia M. Proctor, The Office of Commission, 500 E Street SW, Suite COMMISSION Unfair Import Investigations, U.S. 401, Washington, DC 20436; and International Trade Commission, (4) For the investigation so instituted, [Investigation No. 337–TA–1188] telephone (202) 205–2560. the Chief Administrative Law Judge, SUPPLEMENTARY INFORMATION: U.S. International Trade Commission, Certain Pick-Up Truck Folding Bed Authority: The authority for shall designate the presiding Cover Systems and Components institution of this investigation is Administrative Law Judge. Thereof Institution of Investigation contained in section 337 of the Tariff Responses to the complaint and the AGENCY: U.S. International Trade Act of 1930, as amended, 19 U.S.C. notice of investigation must be Commission 1337, and in section 210.10 of the submitted by the named respondents in ACTION: Notice Commission’s Rules of Practice and accordance with section 210.13 of the Procedure, 19 CFR 210.10 (2019). Commission’s Rules of Practice and SUMMARY: Notice is hereby given that a Scope of Investigation: Having Procedure, 19 CFR 210.13. Pursuant to complaint was filed with the U.S. considered the complaint, the U.S. 19 CFR 201.16(e) and 210.13(a), such International Trade Commission on International Trade Commission, on responses will be considered by the November 26, 2019, under section 337 December 20, 2019, ORDERED THAT— Commission if received not later than 20 of the Tariff Act of 1930, as amended, (1) Pursuant to subsection (b) of days after the date of service by the on behalf of Extang Corporation of Ann section 337 of the Tariff Act of 1930, as Commission of the complaint and the Arbor, Michigan and Laurmark amended, an investigation be instituted notice of investigation. Extensions of Enterprises, Inc. d/b/a BAK Industries of to determine whether there is a time for submitting responses to the Ann Arbor, Michigan. Supplements to violation of subsection (a)(1)(B) of complaint and the notice of the complaint were filed on November section 337 in the importation into the investigation will not be granted unless 27, 2019 and December 16, 2019. The United States, the sale for importation, good cause therefor is shown. complaint, as supplemented, alleges or the sale within the United States after Failure of a respondent to file a timely violations of section 337 based upon the importation of certain products response to each allegation in the importation into the United States, the identified in paragraph (2) by reason of complaint and in this notice may be sale for importation, and the sale within infringement of one or more of claims deemed to constitute a waiver of the the United States after importation of 1–4 of the ’788 patent and claims 2 and right to appear and contest the certain pick-up truck folding bed cover 3 of the ’758 patent; and whether an allegations of the complaint and this systems and components thereof by industry in the United States exists as notice, and to authorize the reason of infringement of certain claims required by subsection (a)(2) of section administrative law judge and the of U.S. Patent No. 7,484,788 (‘‘the ’788 337; Commission, without further notice to patent’’) and U.S. Patent No. 8,061,758 (2) Pursuant to section 210.10(b)(1) of the respondent, to find the facts to be as (‘‘the ’758 patent’’). The complaint the Commission’s Rules of Practice and alleged in the complaint and this notice

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and to enter an initial determination supplementation thereto filed by disclosure of the unredacted version of and a final determination containing Globalfoundries U.S. Inc. the confidential settlement agreement to such findings, and may result in the (‘‘Globalfoundries’’) of Santa Clara, the settling parties and Commission issuance of an exclusion order or a cease California. 84 FR 52125–26 (Oct. 1, staff. Id. at 3. and desist order or both directed against 2019). The complaint, as supplemented, No petitions to review the subject ID the respondent. alleges violations of 19 U.S.C. 1337, as were filed. The Commission has By order of the Commission. amended (‘‘Section 337’’), based upon determined not to review the subject ID. Issued: December 20, 2019. the importation into the United States, The investigation is terminated. sale for importation, and sale in the Lisa Barton, The authority for the Commission’s United States after importation of determination is contained in Section Secretary to the Commission. certain semiconductor devices, products [FR Doc. 2019–28006 Filed 12–27–19; 8:45 am] 337 of the Tariff Act of 1930, as containing the same, and components amended (19 U.S.C. 1337), and in part BILLING CODE 7020–02–P thereof that allegedly infringe one or 210 of the Commission’s Rules of more of the asserted claims of U.S. Practice and Procedure (19 CFR part Patent Nos. 8,912,603; 7,750,418; and 210). INTERNATIONAL TRADE 8,936,986. Id. The complaint also COMMISSION alleges the existence of a domestic By order of the Commission. [Investigation No. 337–TA–1176] industry. Id. The notice of investigation Issued: December 20, 2019. named 22 respondents (collectively, Lisa Barton, Certain Semiconductor Devices and ‘‘Respondents’’), including Taiwan Secretary to the Commission. Components Thereof (I); Commission Semiconductor Manufacturing Co. of [FR Doc. 2019–28041 Filed 12–27–19; 8:45 am] Determination Not To Review an Initial Hsinchu, Taiwan and TSMC North BILLING CODE 7020–02–P Determination (Order No. 7) America of San Jose, California Terminating an Investigation Due to a (collectively, ‘‘TSMC’’). Id. at 52126. Settlement Agreement; Termination of The Office of Unfair Import INTERNATIONAL TRADE Investigation Investigations (‘‘OUII’’) was also named COMMISSION as a party. Id. AGENCY: U.S. International Trade On November 8, 2019, [USITC SE–19–047] Commission. Globalfoundries and all 22 Respondents ACTION: Notice. filed a joint motion to terminate the Sunshine Act Meetings SUMMARY: Notice is hereby given that investigation based on a settlement the U.S. International Trade agreement (including a patent cross- AGENCY HOLDING THE MEETING: United Commission (the ‘‘Commission’’) has license agreement) reached between States International Trade Commission. Globalfoundries and TSMC that determined not to review an initial TIME AND DATE: January 10, 2020 at purportedly resolves all of the issues determination (‘‘ID’’) (Order No. 7) 11:00 a.m. terminating the investigation due to a with respect to all of the Respondents in this investigation. The joint motion PLACE: Room 101, 500 E Street SW, settlement agreement. The investigation Washington, DC 20436; Telephone: is terminated. includes an unredacted, confidential copy of the patent cross-license (202) 205–2000. FOR FURTHER INFORMATION CONTACT: Carl agreement, which the parties request be STATUS: Open to the public. P. Bretscher, Office of the General disclosed only to Globalfoundries, MATTERS TO BE CONSIDERED: Counsel, U.S. International Trade TSMC, and Commission staff. The 1. Agendas for future meetings: None. Commission, 500 E Street SW, parties also confirmed that there are no Washington, DC 20436, telephone (202) other agreements, written or oral, 2. Minutes. 205–2382. Copies of non-confidential express or implied, between 3. Ratification List. documents filed in connection with this Globalfoundries and Respondents 4. Vote on Inv. No. 731–TA–1443 investigation are or will be available for relating to the subject matter of the (Final) (Carbon and Alloy Steel inspection during official business investigation. On November 20, 2019, Threaded Rod from Taiwan). The hours (8:45 a.m. to 5:15 p.m.) in the OUII filed a response supporting the Commission is currently scheduled to Office of the Secretary, U.S. motion and the request to limit complete and file its determination and International Trade Commission, 500 E disclosure of the patent cross-license views of the Commission by January 23, Street SW, Washington, DC 20436, agreement. 2020. telephone (202) 205–2000. General On November 25, 2019, the presiding 5. Outstanding action jackets: None. information concerning the Commission administrative law judge (‘‘ALJ’’) The Commission is holding the may also be obtained by accessing its entered the subject ID (Order No. 7) meeting under the Government in the internet server (https://www.usitc.gov). granting the joint motion to terminate Sunshine Act, 5 U.S.C. 552(b). In The public record for this investigation the investigation. The ID agrees with the accordance with Commission policy, may be viewed on the Commission’s parties that Commission policy and the subject matter listed above, not disposed Electronic Docket Information System public interest generally favors of at the scheduled meeting, may be (‘‘EDIS’’) (https://edis.usitc.gov). settlements. Order No. 7 at 2 (Nov. 25, carried over to the agenda of the Hearing-impaired persons are advised 2019). The ID further finds that following meeting. that information on this matter can be termination of the investigation will not obtained by contacting the impose any undue burdens on the By order of the Commission. Commission’s TDD terminal, telephone public health and welfare, competitive Issued: December 20, 2019. (202) 205–1810. conditions in the United States William Bishop, SUPPLEMENTARY INFORMATION: On economy, production of like or directly Supervisory Hearings and Information October 1, 2019, the Commission competitive articles in the United Officer. instituted the present investigation States, or U.S. consumers. Id. The ID [FR Doc. 2019–28251 Filed 12–26–19; 11:15 am] based on a complaint and also grants the parties’ request to limit BILLING CODE 7020–02–P

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INTERNATIONAL TRADE complaint filed on behalf of 6(a) of the National Cooperative COMMISSION Globalfoundries U.S. Inc. Research and Production Act of 1993, (‘‘Globalfoundries’’) of Santa Clara, 15 U.S.C. 4301 et seq. (‘‘the Act’’), [Investigation No. 337–TA–1177] California. 84 FR 52535–36 (Oct. 2, CHEDE–8 (‘‘CHEDE–8’’) has filed Certain Semiconductor Devices, 2019). The complaint alleges violations written notifications simultaneously Products Containing the Same, and of section 337 of the Tariff Act of 1930, with the Attorney General and the Components Thereof (II); Commission as amended, 19 U.S.C. 1337, based upon Federal Trade Commission disclosing Determination Not To Review an Initial the importation into the United States, (1) the identities of the parties to the Determination Terminating the the sale for importation, and the sale venture and (2) the nature and Investigation in its Entirety Based on a within the United States after objectives of the venture. The Settlement Agreement; Termination of importation of certain semiconductor notifications were filed for the purpose the Investigation devices, products containing the same, of invoking the Act’s provisions limiting and components thereof by reason of the recovery of antitrust plaintiffs to AGENCY: U.S. International Trade infringement of certain claims of U.S. actual damages under specified Commission. Patent Nos. 8,823,178; 9,105,643; circumstances. ACTION: Notice. 7,378,357; and 9,082,877. The Pursuant to Section 6(b) of the Act, Commission’s notice of investigation the identities of the parties to the SUMMARY: Notice is hereby given that names all Respondents. The Office of venture are: Cummins, Columbus, IN; the U.S. International Trade Unfair Import Investigations (‘‘OUII’’) is Eaton, Marshall, MI; Garret Advancing Commission has determined not to participating in the investigation. Motion, Torrance, CA; Guangxi Yuchai review an initial determination (‘‘ID’’) On November 12, 2019, Machinery, Guangxi, PEOPLE’S (Order No. 5) of the presiding Globalfoundries and Respondents REPUBLIC OF CHINA; Hyundai Motor administrative law judge (‘‘ALJ’’) jointly moved to terminate the Group, Gyeonggi-do, REPUBLIC OF terminating the investigation as to all investigation based on a settlement KOREA; Isuzu, Tokyo, JAPAN; Lubrizol respondents, Taiwan Semiconductor agreement between Globalfoundries and Corporation, Wickliffe, OH; Superturbo Manufacturing Co., Ltd. of Hsinchu, TSMC that resolves all issues as to all Technologies, Loveland, CO; Volvo Taiwan; TSMC North America and Respondents in the investigation. On Powertrain North America, Hagerstown, TSMC Technology, Inc. of San Jose, November 18, 2019, OUII filed a MD; and Weichai Power Co. Ltd., California (collectively, ‘‘TSMC’’); response in support of the motion. Weifang, PEOPLE’S REPUBLIC OF Broadcom Inc., Broadcom Corporation, On November 25, 2019, the ALJ CHINA. and Cisco Systems, Inc., all of San Jose, issued the subject ID (Order No. 5), The general area of CHEDE–8’s California; NVIDIA Corporation and granting the joint motion to terminate planned activity is to develop new and Arista Networks, Inc., both of Santa the investigation in its entirety based on novel technologies that provide clean Clara, California; Apple Inc. of the settlement agreement. The ID finds and efficient engine systems; to research Cupertino, California; ASUSTeK that the motion for termination satisfied diesel powertrain systems for the heavy Computer Inc. of Taipei, Taiwan; and Commission Rules 210.21(a)(2) and duty segment that can achieve the Lenovo Group Ltd. of Beijing, China (b)(1) (19 CFR 210.21(a)(2), (b)(1)) and newly proposed California Air (collectively, ‘‘Respondents’’), based on that termination of the investigation is Resources Board (CARB) Low NOX a settlement agreement. The not contrary to the public interest. No standard of 0.02 g/bhp-hr with 2027 investigation is terminated. party petitioned for review. Greenhouse Gas (GHG) emissions; to FOR FURTHER INFORMATION CONTACT: The Commission has determined not demonstrate a clean diesel powertrain Clint Gerdine, Esq., Office of the to review the subject ID. The system capable of meeting the potential General Counsel, U.S. International investigation is terminated. Euro 7 NOX standard and 2030 CO2 Trade Commission, 500 E Street SW, The authority for the Commission’s limits for the light duty segment; and to Washington, DC 20436, telephone (202) determination is contained in section focus on advanced combustion and 708–2310. Copies of non-confidential 337 of the Tariff Act of 1930, as engine design concepts that have the documents filed in connection with this amended, 19 U.S.C. 1337, and in Part potential to disrupt diesel engines in the investigation are or will be available for 210 of the Commission’s Rules of future. inspection during official business Practice and Procedure, 19 CFR part Suzanne Morris, hours (8:45 a.m. to 5:15 p.m.) in the 210. Chief, Premerger and Division Statistics Unit, Office of the Secretary, U.S. By order of the Commission. Antitrust Division. International Trade Commission, 500 E Issued: December 20, 2019. [FR Doc. 2019–28144 Filed 12–27–19; 8:45 am] Street SW, Washington, DC 20436, Lisa Barton, BILLING CODE 4410–11–P telephone (202) 205–2000. General information concerning the Commission Secretary to the Commission. may also be obtained by accessing its [FR Doc. 2019–28043 Filed 12–27–19; 8:45 am] DEPARTMENT OF JUSTICE internet server at https://www.usitc.gov. BILLING CODE 7020–02–P The public record for this investigation Antitrust Division may be viewed on the Commission’s electronic docket (EDIS) at https:// DEPARTMENT OF JUSTICE Notice Pursuant to the National edis.usitc.gov. Hearing-impaired Cooperative Research and Production persons are advised that information on Antitrust Division Act of 1993—Advanced Media this matter can be obtained by Workflow Association, Inc. Notice Pursuant to the National contacting the Commission’s TDD Notice is hereby given that, on terminal on (202) 205–1810. Cooperative Research and Production Act of 1993—CHEDE–8 December 12, 2019, pursuant to Section SUPPLEMENTARY INFORMATION: The 6(a) of the National Cooperative Commission instituted this investigation Notice is hereby given that, on Research and Production Act of 1993, on October 2, 2019, based on a December 4, 2019, pursuant to Section 15 U.S.C. 4301 et seq. (‘‘the Act’’),

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Advanced Media Workflow Association, resource costs associated with providing As a result of the fee study, the Inc. has filed written notifications these name check services have been contractor recommended that the FBI simultaneously with the Attorney calculated to ensure full reimbursement combine the current fee categories, General and the Federal Trade to the FBI. The FBI is also authorized to which have been in effect since 2010, Commission disclosing changes in its charge an additional amount to defray into a single fee. This recommendation membership. The notifications were expenses required to update and was based on three factors: filed for the purpose of extending the improve the NNCP’s technological • Improvement in information Act’s provisions limiting the recovery of infrastructure, which supports the technology capabilities: The NNCP’s antitrust plaintiffs to actual damages automation of processes involving new web interface enables all customers under specified circumstances. name-based background checks. This to submit name checks electronically Specifically, Rhode & Schwartz GmbH & notice explains the methodology used to with options to adjust their priority. The Co. KG., Munich, GERMANY, has been calculate revised fees and also provides technology advancements have resulted added as a party to this venture. the new fee schedule. The NNCP is in the elimination of the Manual Also, Telstra, Melbourne, replacing its current multiple fee submission type and have so drastically AUSTRALIA; Suitcase TV, Ipswich, structure with a single user fee. reduced the number of expedited submissions that they no longer warrant UNITED KINGDOM; and Philip Soares DATES: This fee schedule is effective (individual member), Bellevue, WA, their own fee categories. February 1, 2020. • have withdrawn as parties to this Lack of customer choice: Under the FOR FURTHER INFORMATION CONTACT: Mr. venture. existing fee schedule, NNCP customers Antony A. Jung, Section Chief, National do not choose between an Electronic or No other changes have been made in Name Check Program Section, Records either the membership or planned File Analysis level of service and the Management Division, FBI, 170 Marcel associated fee. Rather, NNCP performs activity of the group research project. Drive, Winchester, Virginia 22602. Membership in this group research an electronic name-based background project remains open, and Advanced SUPPLEMENTARY INFORMATION: check on all requests. If the automated search algorithm identifies the presence Media Workflow Association, Inc. I. Background intends to file additional written of a record, then NNCP’s analysts notifications disclosing all changes in On June 7, 2010, the FBI published conduct file analysis and the program membership. the Final Rule (75 FR 24796) setting charges an additional fee. While every On March 28, 2000, Advanced Media forth the FBI Director’s authority to name check request begins with an Workflow Association, Inc. filed its establish and collect fees for providing Electronic Batch level of service, original notification pursuant to Section name-based background checks approximately 40% also require an 6(a) of the Act. The Department of conducted by the NNCP of the Records additional File Analysis level of service, which comes with the additional fee. Justice published a notice in the Federal Management Division. The Final Rule Neither the customer nor NNCP know Register pursuant to Section 6(b) of the explains the methodology used to which level of service will be required Act on June 29, 2000 (65 FR 40127). calculate the fees and provides that until after the customer has submitted The last notification was filed with future fee adjustments will be made by the name check request and NNCP has the Department on September 13, 2019. notice published in the Federal completed its services. This lack of A notice was published in the Federal Register. In accordance with the certainty has rendered it challenging for Register pursuant to Section 6(b) of the requirements of 28 CFR 20.31(e)(3), the customers to budget for name check Act on October 17, 2019 (84 FR 55585). FBI is required to periodically review the amount it collects for the NNCP in services. The new, single fee will Suzanne Morris, order to determine the current cost of provide customers with more certainty Chief, Premerger and Division Statistics Unit, processing name checks for non- as to how much they will owe based on Antitrust Division. criminal justice purposes. their estimated volume of name check [FR Doc. 2019–28146 Filed 12–27–19; 8:45 am] requests each year. II. Revised Fee • BILLING CODE 4410–11–P Less administrative burden: A In October of 2018, the FBI retained single fee reduces the administrative a contractor to conduct an independent burden associated with the billing and DEPARTMENT OF JUSTICE user fee study for the NNCP. The NNCP collections of multiple fee categories currently charges different fees, and simplifies the budgeting process. Federal Bureau of Investigation depending on whether the request is Information Used To Calculate the [Docket No. FBI–155] submitted manually or electronically or Revised Fee if expedited processing is required. The Federal Bureau of Investigation; fee charged for electronic submissions Using Fiscal Year (FY) 2018 cost Records Management Division; also varies depending on the level of information, the FBI conducted a fee National Name Check Program analysis that the NNCP must perform. study to determine its cost for Section; Revised User Fee The current fee structure is as follows: conducting name-based background checks. Once that study was complete, AGENCY: Federal Bureau of Investigation NNCP’S CURRENT USER FEE the FBI conducted further analysis to (FBI), Justice. SCHEDULE account for anticipated programmatic ACTION: Notice. changes and staffing levels moving Current forward in FY 2020, as well as SUMMARY: This notice establishes a Service fee forecasted production volumes to revised user fee for federal agencies determine future automation and requesting name-based, non-criminal Electronic Submission: enhancement costs. The FBI used these justice background checks of the Federal Batch Process Only ...... $2.50 inputs to project total costs for name- Bureau of Investigation’s (FBI) Central Batch + File Analysis ...... 42.00 based, non-criminal justice name checks Manual Submission ...... 66.50 Records System through the National Expedited Submission ...... 66.50 for FY 2020. The single fee structure Name Check Program (NNCP). The total simplifies this calculation by dividing

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total costs by total volume to arrive at DATES: The OMB will consider all transactions involving places of public a single fee for each name check request. written comments that agency receives accommodation owned by a managed on or before January 29, 2020. fund. QPAMs are permitted to manage FY 2020 ADDRESSES: A copy of this ICR with an investment fund containing the Product/service volume assets of the QPAM’s own plan or an forecast applicable supporting documentation; including a description of the likely affiliate’s plan. FBI Investigative Files Check 3,313,844 respondents, proposed frequency of This information collection is subject response, and estimated total burden to the PRA. A Federal agency generally may be obtained free of charge from the cannot conduct or sponsor a collection Forecasted of information, and the public is Cost pool FY 2020 cost RegInfo.gov website at http:// www.reginfo.gov/public/do/ generally not required to respond to an Cost of Name-Based Checks $63,225,188 PRAViewICR?ref_nbr=201909-1210-007 information collection, unless the OMB Automation and Enhance- (this link will only become active on the under the PRA approves it and displays ment ...... 6,414,111 day following publication of this notice) a currently valid OMB Control Number. or by contacting Frederick Licari by In addition, notwithstanding any other Total ...... $69,639,299 telephone at 202–693–8073, TTY 202– provisions of law, no person shall 693–8064, (these are not toll-free generally be subject to penalty for Unit costs (cost pool divided by numbers) or by email at DOL_PRA_ failing to comply with a collection of volume) and the corresponding fee rate [email protected]. information that does not display a are rounded up to the nearest $0.25 Submit comments about this request valid Control Number. See 5 CFR increment. by mail to the Office of Information and 1320.5(a) and 1320.6. The DOL obtains Regulatory Affairs, Attn: OMB Desk OMB approval for this information Cost pool categories Unit rate Officer for DOL–EBSA, Office of collection under Control Number 1210– 0128. Cost of Name-Based Checks $19.25 Management and Budget, Room 10235, 725 17th Street NW, Washington, DC OMB authorization for an ICR cannot Automation and Enhance- be for more than three (3) years without ment ...... 2.00 20503; by Fax: 202–395–5806 (this is FBI Investigative Files Check 21.25 not a toll-free number); or by email: renewal, and the current approval for [email protected]. this collection is scheduled to expire on This revised fee, of $21.25 per check, Commenters are encouraged, but not December 31, 2019. The DOL seeks to will become effective on February 1, required, to send a courtesy copy of any extend PRA authorization for this 2020. comments by mail or courier to the U.S. information collection for three (3) more Department of Labor-OASAM, Office of years, without any change to existing Dated: December 19, 2019. requirements. The DOL notes that Christopher A. Wray, the Chief Information Officer, Attn: Departmental Information Compliance existing information collection Director, Federal Bureau of Investigation. Management Program, Room N1301, requirements submitted to the OMB [FR Doc. 2019–28165 Filed 12–27–19; 8:45 am] 200 Constitution Avenue NW, receive a month-to-month extension BILLING CODE 4410–02–P Washington, DC 20210; or by email: while they undergo review. For [email protected]. additional substantive information about this ICR, see the related notice FOR FURTHER INFORMATION CONTACT: published in the Federal Register on DEPARTMENT OF LABOR Frederick Licari by telephone at 202– March 27, 2019 (84 FR 11573). 693–8073, TTY 202–693–8064, (these Interested parties are encouraged to Office of the Secretary are not toll-free numbers) or by email at _ _ send comments to the OMB, Office of Agency Information Collection DOL PRA [email protected]. Information and Regulatory Affairs at Activities; Submission for OMB SUPPLEMENTARY INFORMATION: This ICR the address shown in the ADDRESSES Review; Comment Request; Plan Asset seeks to extend PRA authority for the section within thirty-(30) days of Transactions Determined by Plan Asset Transactions Determined by publication of this notice in the Federal Independent Qualified Professional Independent Qualified Professional Register. In order to help ensure Asset Managers Under Prohibited Asset Managers under Prohibited appropriate consideration, comments Transaction Exemption 1984–14 Transaction Exemption 1984–14 should mention OMB Control Number information collection. PTE 84–14, a 1210–0128. The OMB is particularly ACTION: Notice of availability; request class exemption that permits various interested in comments that: for comments. parties that are related to employee • Evaluate whether the proposed benefit plans to engage in transactions collection of information is necessary SUMMARY: The Department of Labor involving plan assets if, among other for the proper performance of the (DOL) is submitting the Employee conditions, the assets are managed by functions of the agency, including Benefits Security Administration ‘‘qualified professional asset managers’’ whether the information will have (EBSA) sponsored information (QPAMs) that are independent of the practical utility: collection request (ICR) titled, ‘‘Plan parties in interest and which meet • Evaluate the accuracy of the Asset Transactions Determined by specified financial standards. The agency’s estimate of the burden of the Independent Qualified Professional exemption provides additional proposed collection of information, Asset Managers under Prohibited exemptive relief for employers to including the validity of the Transaction Exemption 1984–14,’’ to the furnish limited amounts of goods and methodology and assumptions used. Office of Management and Budget services to a managed fund in the • Enhance the quality, utility, and (OMB) for review and approval for ordinary course of business. Limited clarity of the information to be continued use, without change, in relief also is provided for leases of office collected; and accordance with the Paperwork or commercial space between managed • Minimize the burden of the Reduction Act of 1995 (PRA). Public funds and QPAMs or contributing collection of information on those who comments on the ICR are invited. employers. Finally, relief is provided for are to respond, including through the

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use of appropriate automated, response, and estimated total burden including the nature and extent of any electronic, mechanical, or other may be obtained free of charge from the differential between the rates of such technological collection techniques or RegInfo.gov website at http:// fees, the reasons why the fiduciary/ other forms of information technology, www.reginfo.gov/public/do/ investment adviser may consider such e.g., permitting electronic submission of PRAViewICR?ref_nbr=201909-1210-005 purchases to be appropriate for the plan, responses. (this link will only become active on the and whether there are any limitations Agency: DOL–EBSA. day following publication of this notice) on the fiduciary/investment adviser Title of Collection: Plan Asset or by contacting Frederick Licari by with respect to which plan assets may Transactions Determined by telephone at 202–693–8073, TTY 202– be invested in shares of the investment Independent Qualified Professional 693–8064, (these are not toll-free company and, if so, the nature of such Asset Managers under Prohibited numbers) or by email at DOL_PRA_ limitations. Delivery of a ‘‘summary Transaction Exemption 1984–14. [email protected]. prospectus’’ may be used to satisfy the OMB Control Number: 1210–0128. Submit comments about this request condition in section II(d) of PTE 77–4 Affected Public: Private Sector: by mail to the Office of Information and requiring the delivery of a mutual fund’s Businesses or other for-profits. Regulatory Affairs, Attn: OMB Desk prospectus to the second fiduciary if the Total Estimated Number of Officer for DOL–EBSA, Office of summary prospectus meets the Respondents: 4,031. Management and Budget, Room 10235, requirements of the Securities and Total Estimated Number of 725 17th Street NW, Washington, DC Exchange Commission’s (SEC) revised Responses: 4,071. 20503; by Fax: 202–395–5806 (this is disclosure provisions for mutual funds Total Estimated Annual Time Burden: not a toll-free number); or by email: including a summary prospectus rule 96,774 hours. [email protected]. that were published in 2009. Pursuant Total Estimated Annual Other Costs Commenters are encouraged, but not to the SEC’s revised disclosure Burden: $40,311,395. required, to send a courtesy copy of any provisions, mutual funds also are Authority: 44 U.S.C. 3507(a)(1)(D). comments by mail or courier to the U.S. required to send the full prospectus to Department of Labor-OASAM, Office of the investor upon an investor’s request Dated: December 20, 2019. the Chief Information Officer, Attn: and to provide the full prospectus on- Frederick Licari, Departmental Information Compliance line at a specified internet site. Departmental Clearance Officer. Management Program, Room N1301, This information collection is subject [FR Doc. 2019–28049 Filed 12–27–19; 8:45 am] 200 Constitution Avenue NW, to the PRA. A Federal agency generally BILLING CODE 4510–29–P Washington, DC 20210; or by email: cannot conduct or sponsor a collection [email protected]. of information, and the public is generally not required to respond to an FOR FURTHER INFORMATION CONTACT: information collection, unless the OMB DEPARTMENT OF LABOR Frederick Licari by telephone at 202– under the PRA approves it and displays 693–8073, TTY 202–693–8064, (these Office of the Secretary a currently valid OMB Control Number. are not toll-free numbers) or by email at In addition, notwithstanding any other [email protected]. Agency Information Collection provisions of law, no person shall Activities; Submission for OMB SUPPLEMENTARY INFORMATION: This ICR generally be subject to penalty for Review; Comment Request; Prohibited seeks to extend PRA authority for the failing to comply with a collection of Transaction Class Exemption for Prohibited Transaction Class Exemption information that does not display a Certain Transactions Between for Certain Transactions Between valid Control Number. See 5 CFR Investment Companies and Employee Investment Companies and Employee 1320.5(a) and 1320.6. The DOL obtains Benefit Plans (PTE 1977–4) Benefit Plans (PTE 1977–4) information OMB approval for this information collection. Prohibited Transaction collection under Control Number 1210– ACTION: Notice of availability; request Exemption (PTE) 77–4 provides relief 0049. for comments. from the restrictions of section 406 of OMB authorization for an ICR cannot ERISA and from the sanctions resulting be for more than three (3) years without SUMMARY: The Department of Labor from the application of section 4975 of renewal, and the current approval for (DOL) is submitting the Employee the Code, for an employee benefit plan’s Benefits Security Administration this collection is scheduled to expire on purchase or sale of shares of an openend December 31, 2019. The DOL seeks to (EBSA) sponsored information investment company registered under extend PRA authorization for this collection request (ICR) titled, the Investment Company Act of 1940 information collection for three (3) more ‘‘Prohibited Transaction Class (mutual fund) when an investment years, without any change to existing Exemption for Certain Transactions advisor for the mutual fund or its requirements. The DOL notes that Between Investment Companies and affiliate is: (1) A plan fiduciary; and (2) existing information collection Employee Benefit Plans (PTE 1977–4),’’ not an employer of employees covered requirements submitted to the OMB to the Office of Management and Budget by the plan. Section II(d) of PTE 77–4 receive a month-to-month extension (OMB) for review and approval for contains certain conditions for the while they undergo review. For continued use, without change, in exemptive relief and provides, in additional substantive information accordance with the Paperwork pertinent part, that: A second fiduciary about this ICR, see the related notice Reduction Act of 1995 (PRA). Public with respect to the plan, who is published in the Federal Register on comments on the ICR are invited. independent of and unrelated to the March 27, 2019 (84 FR 11573). DATES: The OMB will consider all fiduciary/investment adviser or any Interested parties are encouraged to written comments that agency receives affiliate thereof, receives a current send comments to the OMB, Office of on or before January 29, 2020. prospectus issued by the investment Information and Regulatory Affairs at ADDRESSES: A copy of this ICR with company, and full and detailed written the address shown in the ADDRESSES applicable supporting documentation; disclosure of the investment advisory section within thirty-(30) days of including a description of the likely and other fees charged to or paid by the publication of this notice in the Federal respondents, proposed frequency of plan and the investment company, Register. In order to help ensure

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appropriate consideration, comments SUMMARY: The Office of Management Budget to prepare an annual Report to should mention OMB Control Number and Budget (OMB) requests comments Congress on the Benefits and Costs of 1210–0049. The OMB is particularly on its Draft 2018–2019–2020 Report to Federal Regulations. Specifically, interested in comments that: Congress on the Benefits and Costs of Section 628 of the FY 2000 Treasury • Evaluate whether the proposed Federal Regulations and Agency and General Government collection of information is necessary Compliance with the Unfunded Appropriations Act, also known as the for the proper performance of the Mandates Reform Act, available at: ‘‘Regulatory Right-to-Know Act,’’ functions of the agency, including https://www.whitehouse.gov/omb/ requires OMB to submit a report on the whether the information will have information-regulatory-affairs/reports/. benefits and costs of Federal regulations practical utility: The Draft Report is divided into two together with recommendations for • Evaluate the accuracy of the parts, the first of which is further reform. It states that the report should agency’s estimate of the burden of the divided into three chapters. Part I, contain estimates of the costs and proposed collection of information, Chapter I examines the benefits and benefits of regulations in the aggregate, including the validity of the costs of major Federal regulations issued by agency and agency program, and by methodology and assumptions used. in fiscal years 2017, 2018 and 2019. Part major rule, as well as an analysis of • Enhance the quality, utility, and I, Chapter II discusses regulatory impacts of Federal regulation on State, clarity of the information to be impacts on State, Local, and tribal local, and tribal governments, small collected; and governments, small business, wages and businesses, wages, and economic • Minimize the burden of the employment, and economic growth. Part growth. The Regulatory Right-to-Know collection of information on those who I, Chapter III offers recommendations for Act also states that the report should be are to respond, including through the regulatory reform. Part II summarizes subject to notice and comment and to use of appropriate automated, agency compliance with the Unfunded peer review. Additionally, in electronic, mechanical, or other Mandates Reform Act. OMB requests accordance the Unfunded Mandates technological collection techniques or that comments be submitted Reform Act of 1995 (UMRA), OMB other forms of information technology, electronically to OMB by February 20, reports on agency compliance with e.g., permitting electronic submission of 2020, through www.regulations.gov UMRA Title II, which generally requires responses. using Docket ID OMB–2019–0004. that an agency conduct a cost-benefit Agency: DOL–EBSA. DATES: To ensure consideration of analysis, and identify and consider a Title of Collection: Prohibited comments as OMB prepares this Draft reasonable number of regulatory Transaction Class Exemption for Certain Report for submission to Congress, alternatives, before proposing or Transactions Between Investment comments must be in writing and finalizing a rule that may result in Companies and Employee Benefit Plans received by February 20, 2020. expenditures of more than $100 million (PTE 1977–4). ADDRESSES: Submit comments by one of (adjusted for inflation) in at least one OMB Control Number: 1210–0049. the following methods: year by State, local, and tribal Affected Public: Private Sector: Not- • www.regulations.gov: Direct governments, or by the private sector; for-profit institutions; Businesses or comments to Docket ID OMB–2019– each agency must also seek input from other for-profits. 0004. State, local, and tribal governments. Total Estimated Number of • Fax: (202) 395–7285 Dominic J. Mancini, Respondents: 846. • Mail: Office of Information and Total Estimated Number of Regulatory Affairs, Office of Acting Administrator, Office of Information and Regulatory Affairs. Responses: 279,653. Management and Budget, New Total Estimated Annual Time Burden: Executive Office Building, 9th Floor, [FR Doc. 2019–28060 Filed 12–27–19; 8:45 am] 23,728 hours. 725 17th Street NW, Washington, DC BILLING CODE 3110–01–P Total Estimated Annual Other Costs 20503. To ensure that your comments Burden: $117,954. are received, we recommend that NATIONAL SCIENCE FOUNDATION Authority: 44 U.S.C. 3507(a)(1)(D). comments on this draft report be electronically submitted. Dated: December 20, 2019. All comments submitted in response to Notice of Permit Applications Received Frederick Licari, this notice will be made available to the Under the Antarctic Conservation Act Departmental Clearance Officer. public. For this reason, please do not of 1978 [FR Doc. 2019–28045 Filed 12–27–19; 8:45 am] include in your comments information AGENCY: National Science Foundation. BILLING CODE 4510–29–P of a confidential nature, such as ACTION: Notice of Permit Applications sensitive personal information or Received. proprietary information. The OFFICE OF MANAGEMENT AND www.regulations.gov website is an SUMMARY: The National Science BUDGET ‘‘anonymous access’’ system, which Foundation (NSF) is required to publish means OMB will not know your identity a notice of permit applications received Draft 2018–2019–2020 Report to or contact information unless you to conduct activities regulated under the Congress on the Benefits and Costs of provide it in the body of your comment. Antarctic Conservation Act of 1978. Federal Regulations and Agency FOR FURTHER INFORMATION CONTACT: Italy NSF has published regulations under Compliance With the Unfunded Martin, Office of Information and the Antarctic Conservation Act in the Mandates Reform Act Regulatory Affairs, Office of Code of Federal Regulations. This is the Management and Budget, New required notice of permit applications AGENCY: Office of Management and received. Budget, Executive Office of the Executive Office Building, 9th Floor, President. 725 17th Street NW, Washington, DC DATES: Interested parties are invited to 20503. Telephone: (202) 395–1046. submit written data, comments, or ACTION: Notice of availability and SUPPLEMENTARY INFORMATION: Congress views with respect to this permit request for comments. directed the Office of Management and application by January 29, 2020. This

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application may be inspected by ACTION: Notice. I. Self-Regulatory Organization’s interested parties at the Permit Office, Statement of the Terms of Substance of address below. SUMMARY: The Postal Service gives the Proposed Rule Change notice of filing a request with the Postal ADDRESSES: Comments should be The Exchange proposes to amend its addressed to Permit Office, Office of Regulatory Commission to add a domestic shipping services contract to NYSE American Equities Price List and Polar Programs, National Science Fee Schedule (‘‘Price List’’) and the the list of Negotiated Service Foundation, 2415 Eisenhower Avenue, NYSE American Options Fee Schedule Agreements in the Mail Classification Alexandria, Virginia 22314. (‘‘Fee Schedule’’) to extend for one year Schedule’s Competitive Products List. FOR FURTHER INFORMATION CONTACT: a fee discount for the Partial Cabinet Nature McGinn, ACA Permit Officer, at DATES: Date of required notice: Solution bundles offered in connection the above address, 703–292–8030, or December 30, 2019. with the Exchange’s co-location [email protected]. FOR FURTHER INFORMATION CONTACT: services. The proposed change is SUPPLEMENTARY INFORMATION: The Sean Robinson, 202–268–8405. available on the Exchange’s website at National Science Foundation, as SUPPLEMENTARY INFORMATION: The www.nyse.com, at the principal office of directed by the Antarctic Conservation United States Postal Service® hereby the Exchange, and at the Commission’s Act of 1978 (Pub. L. 95–541, 45 CFR gives notice that, pursuant to 39 U.S.C. Public Reference Room. 671), as amended by the Antarctic 3642 and 3632(b)(3), on December 20, II. Self-Regulatory Organization’s Science, Tourism and Conservation Act 2019, it filed with the Postal Regulatory Statement of the Purpose of, and of 1996, has developed regulations for Commission a USPS Request to Add Statutory Basis for, the Proposed Rule the establishment of a permit system for Priority Mail Express & Priority Mail Change various activities in Antarctica and Contract 110 to Competitive Product designation of certain animals and List. Documents are available at In its filing with the Commission, the certain geographic areas a requiring www.prc.gov, Docket Nos. MC2020–80, self-regulatory organization included special protection. The regulations CP2020–79. statements concerning the purpose of, establish such a permit system to and basis for, the proposed rule change designate Antarctic Specially Protected Sean Robinson, and discussed any comments it received Areas. Attorney, Corporate and Postal Business Law. on the proposed rule change. The text [FR Doc. 2019–28047 Filed 12–27–19; 8:45 am] of those statements may be examined at Application Details BILLING CODE 7710–12–P the places specified in Item IV below. Permit Application: 2020–026 The Exchange has prepared summaries, set forth in sections A, B, and C below, 1. Applicant: Brandon Savory, 662 of the most significant parts of such SECURITIES AND EXCHANGE Ash St, Prescott, AZ 86305. statements. Activity for Which Permit Is COMMISSION Requested: Waste management. A. Self-Regulatory Organization’s Applicant requests that the yacht SV [Release No. 34–87841; File No. SR– Statement of the Purpose of, and the Cool Change be allowed to operate in NYSEAMER–2019–58] Statutory Basis for, the Proposed Rule the Antarctic Treaty area, to cruise along Self-Regulatory Organizations; NYSE Change the Antarctic Peninsula for tourism and American LLC; Notice of Filing and 1. Purpose sightseeing purposes. Applicant Immediate Effectiveness of Proposed proposes to make select stops at non- The Exchange proposes to amend the Change To Amend Its NYSE American Price List and Fee Schedule related to protected area landings, for day-time Equities Price List and Fee Schedule sightseeing. Garbage and food waste co-location 4 services to extend a fee and the NYSE American Options Fee discount for the Partial Cabinet Solution would be stored onboard the vessel and Schedule To Extend for One Year a Fee disposed of outside Antarctica. Human (‘‘PCS’’) bundles that the Exchange Discount for the Partial Cabinet offers Users.5 waste generated during shore excursions Solution Bundles Offered in would be contained, stored on the There are four PCS bundles, each of Connection With the Exchange’s Co- which includes a partial cabinet; access vessel, and disposed of outside location Services Antarctica. Should it be absolutely 4 necessary, greywater and blackwater December 23, 2019. The Exchange initially filed rule changes relating to its co-location services with the would be released at least 12 miles Pursuant to Section 19(b)(1) 1 of the Securities and Exchange Commission offshore and while the vessel maintains Securities Exchange Act of 1934 (the (‘‘Commission’’) in 2010. See Securities Exchange a speed of at least four knots. ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 Act Release No. 62961 (September 21, 2010), 75 FR Location: Antarctic Peninsula region. notice is hereby given that, on December 59299 (September 27, 2010) (SR–NYSEAmex–2010– Dates of Permitted Activities: January 80). The Exchange operates a data center in 16, 2019, NYSE American LLC (‘‘NYSE Mahwah, New Jersey (the ‘‘data center’’) from 1–February 28, 2020. American’’ or the ‘‘Exchange’’) filed which it provides co-location services to Users. 5 Erika N. Davis, with the Securities and Exchange For purposes of the Exchange’s co-location Commission (the ‘‘Commission’’) the services, a ‘‘User’’ means any market participant Program Specialist, Office of Polar Programs. that requests to receive co-location services directly [FR Doc. 2019–28097 Filed 12–27–19; 8:45 am] proposed rule change as described in from the Exchange. See Securities Exchange Act Items I, II, and III below, which Items Release No. 76009 (September 29, 2015), 80 FR BILLING CODE 7555–01–P have been prepared by the self- 60213 (October 5, 2015) (SR–NYSEMKT–2015–67). regulatory organization. The As specified in the Price List and Fee Schedule, a User that incurs co-location fees for a particular co- Commission is publishing this notice to POSTAL SERVICE location service pursuant thereto would not be solicit comments on the proposed rule subject to co-location fees for the same co-location change from interested persons. service charged by the Exchange’s affiliates the New Product Change—Priority Mail Express York Stock Exchange LLC, NYSE Arca, Inc., NYSE and Priority Mail Negotiated Service Chicago, Inc. and NYSE National, Inc. (collectively, Agreement 1 15 U.S.C. 78s(b)(1). the ‘‘Affiliate SROs’’). See Securities Exchange Act 2 15 U.S.C. 78a. Release No. 70176 (August 13, 2013), 78 FR 50471 AGENCY: Postal ServiceTM. 3 17 CFR 240.19b–4. (August 19, 2013) (SR–NYSEMKT–2013–67).

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to the Liquidity Center Network those for which the costs attendant with proposes to extend the 50% fee (‘‘LCN’’) and internet protocol (‘‘IP’’) having a dedicated cabinet or greater reduction to those Users that purchase network, the local area networks network connection bandwidth are too a PCS bundle on or before December 31, available in the data center; two fiber burdensome.7 2020.9 The Exchange does not propose cross connections; and connectivity to The Exchange offers Users that to amend the length of the discount one of two time feeds.6 The PCS purchase a PCS bundle on or before period. bundles were designed to attract smaller December 31, 2019 a 50% reduction in The amended portions of the Price Users, including those with minimal the monthly recurring charges (‘‘MRC’’) List and Fee Schedule would read as power or cabinet space demands or for the first 24 months.8 The Exchange follows:

Type of service Description Amount of charge

Partial Cabinet Solution bundles Option A: 1 kW partial cabinet, 1 LCN connection (1 $7,500 initial charge per bundle plus monthly charge Note: A User and its Affiliates are limited to one Par- Gb), 1 IP network connection (1 Gb), 2 fiber cross per bundle as follows: tial Cabinet Solution bundle at a time. A User and connections and either the Network Time Protocol • For Users that order on or before December 31, its Affiliates must have an Aggregate Cabinet Foot- Feed or Precision Timing Protocol. 2020: $3,000 monthly for first 24 months of serv- print of 2 kW or less to qualify for a Partial Cabinet ice, and $6,000 monthly thereafter. Solution bundle. See Note 2 under ‘‘General • For Users that order after December 31, 2020: Notes.’’. $6,000 monthly. Option B: 2 kW partial cabinet, 1 LCN connection (1 $7,500 initial charge per bundle plus monthly charge Gb), 1 IP network connection (1 Gb), 2 fiber cross per bundle as follows: connections and either the Network Time Protocol • For Users that order on or before December 31, Feed or Precision Timing Protocol. 2020: $3,500 monthly for first 24 months of serv- ice, and $7,000 monthly thereafter. • For Users that order after December 31, 2020: $7,000 monthly. Option C: 1 kW partial cabinet, 1 LCN connection (10 $10,000 initial charge per bundle plus monthly Gb LX), 1 IP network connection (10 Gb), 2 fiber charge per bundle as follows: cross connections and either the Network Time • For Users that order on or before December 31, Protocol Feed or Precision Timing Protocol. 2020: $7,000 monthly for first 24 months of serv- ice, and $14,000 monthly thereafter. • For Users that order after December 31, 2020: $14,000 monthly. Option D: 2 kW partial cabinet, 1 LCN connection (10 $10,000 initial charge per bundle plus monthly Gb LX), 1 IP network connection (10 Gb), 2 fiber charge per bundle as follows: cross connections and either the Network Time • For Users that order on or before December 31, Protocol Feed or Precision Timing Protocol. 2020: $7,500 monthly for first 24 months of serv- ice, and $15,000 monthly thereafter. • For Users that order after December 31, 2020: $15,000 monthly.

Application and Impact of the Proposed are called ‘‘Hosting Users,’’ and their especially beneficial for potential Users Change customers are ‘‘Hosted Customers.’’ 10 with minimal power or cabinet space Based on conversations with Users demands or those for which the costs The proposed change would apply to and potential customers, the Exchange attendant with having a dedicated all PCS bundles. The proposed change believes that Hosting Users offer cabinet or greater network connection would not apply differently to distinct bundles (‘‘Hosting User Bundles’’) that bandwidth are too burdensome.12 types or sizes of market participants. include cabinet space and space on The Exchange operates in a highly Rather, it would apply to all Users shared LCN and IP network competitive market in which exchanges equally. connections—and that the Hosting User and other vendors (i.e., Hosting Users) Users that require other sizes or Bundles provide their end users with a offer co-location services as a means to facilitate the trading and other market combinations of cabinets, network service similar to that of the PCS activities of those market participants connections and cross connects could bundles, but with a lower cost and latency.11 who believe that co-location enhances still request them. As is currently the The Exchange believes that, by the efficiency of their operations. The case, the purchase of any colocation extending the existing eligibility for a Commission has repeatedly expressed service, including PCS bundles, is 50% MRC reduction for another year, its preference for competition over completely voluntary and the Price List the proposed change may make PCS regulatory intervention in determining and Fee Schedule are applied uniformly bundles more competitive with the prices, products, and services in the to all Users. services that Hosting Users offer. securities markets. Specifically, in Competitive Environment Importantly, the proposed extension Regulation NMS, the Commission would provide potential Users with a highlighted the importance of market A User may host another entity in its wider range of choices for the period of forces in determining prices and SRO space within the data center. Such Users the extension, which would be revenues and recognized that current

6 See Securities Exchange Act Release No. 77071 58465 (December 12, 2017) (SR–NYSEAmer–2017– Release No. 76009 (September 29, 2015), 80 FR (February 5, 2016), 81 FR 7382 (February 11, 2016) 35); and 79717 (December 30, 2016), 82 FR 1767 60213 (October 5, 2015) (SR–NYSEMKT–2015–67). (SR–NYSEMKT–2015–89). (January 6, 2017) (SR–NYSEMKT–2016–123). 11 Because Hosting Users’ services are not 7 Id., at 7384. 10 A Hosting User is required to be a User, but regulated, they may offer differentiated pricing and 8 See Securities Exchange Act Release No. 84925 because only Users can be Hosting Users, a Hosted are not required to make their pricing public or disclose it to the Exchange. The Exchange therefore (December 21, 2018), 83 FR 67754 (December 31, Customer is not able to provide hosting services to 2019) (SR–NYSEAMER–2018–55). does not have direct visibility into the specific any other entities in the space in which it is hosted. 9 The Exchange previously extended the MRC range of options, or cost thereof, offered by Hosting The Exchange allows Users to act as Hosting Users reduction for one year. See Securities Exchange Act Users, and relies on third parties for information. Release Nos. 82224 (December 6, 2017), 82 FR for a monthly fee. See Securities Exchange Act 12 See supra note 7.

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regulation of the market system ‘‘has Exchange also believes that the services that Hosting Users offer. The been remarkably successful in proposed rule change is consistent with proposed extension would continue to promoting market competition in its Section 6(b)(4) of the Act,18 because it provide potential Users with a wider broader forms that are most important to provides for the equitable allocation of range of choices for the period of the investors and listed companies.’’ 13 reasonable dues, fees, and other charges extension. among its members, issuers and other General The Proposed Change Is an Equitable persons using its facilities and does not Allocation of Fees and Credits As is the case with all Exchange co- unfairly discriminate between location arrangements, (i) neither a User customers, issuers, brokers or dealers. The Exchange believes its proposal nor any of the User’s customers would equitably allocates its fees among its be permitted to submit orders directly to The Proposed Change Is Not Unfairly market participants. the Exchange unless such User or Discriminatory The proposed change would not customer is a member organization, a The Exchange believes its proposal is apply differently to distinct types or Sponsored Participant or an agent not unfairly discriminatory. sizes of market participants. Rather, it thereof (e.g., a service bureau providing The proposed change would not would apply to all Users equally. The order entry services); (ii) use of the co- apply differently to distinct types or Exchange would continue to offer the location services proposed herein would sizes of market participants. Rather, it four different PCS bundles with be completely voluntary and available would apply to all Users equally. The different cabinet footprints and network to all Users on a non-discriminatory Exchange would continue to offer the connections options. Users that require basis; 14 and (iii) a User would only four different PCS bundles with other sizes or combinations of cabinets, incur one charge for the particular co- different cabinet footprints and network network connections and cross connects location service described herein, connections options. Users that require could still request them. As is currently regardless of whether the User connects other sizes or combinations of cabinets, the case, the purchase of any colocation only to the Exchange or to the Exchange network connections and cross connects service, including PCS bundles, would and one or more of the Affiliate SROs.15 could still request them. As is currently be completely voluntary. the case, the purchase of any colocation Having the change apply to all PCS 2. Statutory Basis service, including PCS bundles, would bundles would ensure that all Users that The Exchange believes that the be completely voluntary. order a bundle on or before December proposed rule change is consistent with The proposed change would ensure 31, 2020 would have their MRC reduced Section 6(b) of the Act,16 in general, and that all Users that order a bundle on or by 50% for the first 24 months. furthers the objectives of Section 6(b)(5) before December 31, 2020 would have Extending the period would make it of the Act,17 in particular, because it is their MRC reduced by 50% for the first more cost effective for current or designed to prevent fraudulent and 24 months. Extending the period would potential Users to utilize co-location by manipulative acts and practices, to make it more cost effective for current continuing to offer a cost effective, promote just and equitable principles of or potential Users to utilize co-location convenient way to create a colocation trade, to foster cooperation and by offering a cost effective, convenient environment, through the choice among coordination with persons engaged in way to create a colocation environment, PCS bundles with different cabinet regulating, clearing, settling, processing through the choice among PCS bundles footprints and network connections information with respect to, and with different cabinet footprints and options. The Exchange expects that such facilitating transactions in securities, to network connections options. The Users would include those with remove impediments to, and perfect the Exchange expects that such Users would minimal power or cabinet space mechanisms of, a free and open market include those with minimal power or demands and Users for which the costs and a national market system and, in cabinet space demands and Users for attendant with having a dedicated general, to protect investors and the which the costs attendant with having a cabinet or greater network connection public interest and does not unfairly dedicated cabinet or greater network bandwidth are too burdensome. discriminate between customers, connection bandwidth are too Without this proposed rule change, issuers, brokers, or dealers. The burdensome. potential Users choosing between a PCS bundle and a Hosting User Bundle The Proposed Change Is Reasonable 13 See Securities Exchange Act Release No. 51808 would have fewer attractive options. (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). The Exchange believes its proposal is This would be a detriment for them, 14 As is currently the case, Users that receive co- reasonable. especially for potential Users with location services from the Exchange will not receive The Exchange believes that it is minimal power or cabinet space any means of access to the Exchange’s trading and execution systems that is separate from, or superior reasonable to extend the period of demands or those for which the costs to, that of other Users. In this regard, all orders sent eligibility for a 50% MRC reduction as attendant with having a dedicated to the Exchange enter the Exchange’s trading and an incentive to Users to utilize PCS cabinet or greater network connection execution systems through the same order gateway, bundles. Extending the existing bandwidth are too burdensome.19 regardless of whether the sender is co-located in the data center or not. In addition, co-located Users do eligibility for a 50% MRC reduction for Finally, the Exchange believes that it not receive any market data or data service product another year would provide smaller is subject to significant competitive that is not available to all Users, although Users that current or potential Users with minimal forces, as described below in the receive co-location services normally would expect power or cabinet space demands with Exchange’s statement regarding the reduced latencies, as compared to Users that are not co-located, in sending orders to, and receiving additional time to purchase a PCS burden on competition. market data from, the Exchange. bundle at a discounted rate. For the reasons above, the proposed 15 See 78 FR 50471, supra note 5, at 50471. Each The Exchange believes that, by changes do not unfairly discriminate of the Affiliate SROs has submitted substantially extending the existing eligibility for a between or among market participants the same proposed rule change to propose the 50% MRC reduction for another year, that are otherwise capable of satisfying changes described herein. See SR–NYSE–2019–72, SR–NYSEArca–2019–97, SR–NYSECHX–2019–27, the proposed change may make PCS any applicable co-location fees, and SR–NYSENAT–2019–32. bundles more competitive with the requirements, terms and conditions 16 15 U.S.C. 78f(b). 17 15 U.S.C. 78f(b)(5). 18 15 U.S.C. 78f(b)(4). 19 See supra note 7.

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established from time to time by the 50% reduction for the MRC for the PCS that current regulation of the market Exchange. bundles, would apply to all Users). system ‘‘has been remarkably successful in promoting market competition in its For these reasons, the Exchange Intermarket Competition believes that the proposal is consistent broader forms that are most important to with the Act. The Exchange does not believe that investors and listed companies.’’ 21 the proposed fee would impose any For the reasons described above, the B. Self-Regulatory Organization’s burden on intermarket competition that Exchange believes that the proposed Statement on Burden on Competition is not necessary or appropriate. The rule changes reflect this competitive proposed change is not meant to affect The proposed rule changes will not environment. impose any burden on competition that competition among national securities is not necessary or appropriate in exchanges. Rather, the Exchange C. Self-Regulatory Organization’s furtherance of the purposes of Section believes that the proposed change is a Statement on Comments on the 6(b)(8) of the Act.20 reasonable attempt to maintain a more Proposed Rule Change Received From level playing field between the Members, Participants, or Others Intramarket Competition Exchange and the Hosting Users, who No written comments were solicited The Exchange does not believe that compete for Hosted Customer business. or received with respect to the proposed the proposed change would place any Because Hosting Users’ services are not rule change. burden on intramarket competition that regulated, they may offer differentiated is not necessary or appropriate. The pricing and are not required to make III. Date of Effectiveness of the proposed changes would enhance their pricing public. The Exchange Proposed Rule Change and Timing for competition by extending the period of believes that the proposed change may Commission Action eligibility for a 50% MRC reduction to make PCS bundles more attractive to all Users that order a bundle on or potential Users who might otherwise The foregoing rule change is effective before December 31, 2020. Such change opt to become Hosted Customers. upon filing pursuant to Section The Exchange operates in a highly 22 would make it more cost effective for 19(b)(3)(A) of the Act and competitive market in which exchanges 23 current or potential Users to utilize co- subparagraph (f)(2) of Rule 19b–4 offer co-location services as a means to location by offering a cost effective, thereunder, because it establishes a due, facilitate the trading and other market convenient way to create a colocation fee, or other charge imposed by the activities of those market participants environment, through the choice among Exchange. who believe that co-location enhances PCS bundles with different cabinet At any time within 60 days of the the efficiency of their operations. footprints and network connections filing of such proposed rule change, the Accordingly, fees charged for co- options. The Exchange believes that, by Commission summarily may location services are constrained by the temporarily suspend such rule change if extending the period of eligibility, the active competition for the order flow of, it appears to the Commission that such proposed change may make PCS and other business from, such market bundles more attractive to potential participants. If a particular exchange action is necessary or appropriate in the Users who might otherwise opt to charges excessive fees for co-location public interest, for the protection of become Hosted Customers, and thus services, affected market participants investors, or otherwise in furtherance of enhance the competitive environment will opt to terminate their co-location the purposes of the Act. If the for potential Users (who would then arrangements with that exchange, and Commission takes such action, the have more options from which to Commission shall institute proceedings adopt a possible range of alternative 24 select). strategies, including placing their under Section 19(b)(2)(B) of the Act to Importantly, the proposed extension servers in a physically proximate determine whether the proposed rule would provide potential Users with a location outside the exchange’s data change should be approved or wider range of choices for the period of center (which could be a competing disapproved. the extension, which would be exchange), or pursuing strategies less IV. Solicitation of Comments especially beneficial for potential Users dependent upon the lower exchange-to- with minimal power or cabinet space participant latency associated with co- Interested persons are invited to demands or those for which the costs location. Accordingly, the exchange submit written data, views, and attendant with having a dedicated charging excessive fees would stand to arguments concerning the foregoing, cabinet or greater network connection lose not only co-location revenues but including whether the proposed rule bandwidth are too burdensome. At the also the liquidity of the formerly co- change is consistent with the Act. same time, however, no potential User located trading firms, which could have Comments may be submitted by any of would be obligated to purchase a PCS additional follow-on effects on the the following methods: bundle, and it would still have the market share and revenue of the affected Electronic Comments options offered by Hosting Users. exchange. In such an environment, the PCS bundles allow Users to select Exchange must continually review, and • Use the Commission’s internet their desired cabinet footprint and consider adjusting, its services and comment form (http://www.sec.gov/ network connections at a reduced MRC related fees and credits to remain rules/sro.shtml); or for the first 24 months. Such Users may competitive with other exchanges. • Send an email to rule-comments@ choose, in turn, to pass on such cost The Commission has repeatedly sec.gov. Please include File Number SR– savings to their customers. In addition expressed its preference for competition NYSEAMER–2019–58 on the subject to the proposed services being over regulatory intervention in line. completely voluntary, they are available determining prices, products, and to all Users on an equal basis (i.e. the services in the securities markets. 21 See Securities Exchange Act Release No. 51808 same products and services are available Specifically, in Regulation NMS, the (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). to all Users, and the extension of the Commission highlighted the importance 22 15 U.S.C. 78s(b)(3)(A). of market forces in determining prices 23 17 CFR 240.19b–4(f)(2). 20 15 U.S.C. 78f(b)(8). and SRO revenues and, also, recognized 24 15 U.S.C. 78s(b)(2)(B).

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Paper Comments SECURITIES AND EXCHANGE Material .01 to FINRA Rule 6750 provides that, notwithstanding FINRA • COMMISSION Send paper comments in triplicate Rule 6750(c), FINRA may publish or to Secretary, Securities and Exchange [Release No. 34–87837; File No. SR–FINRA– distribute aggregated transaction 2019–028] Commission, 100 F Street NE, information and statistics on non- Washington, DC 20549–1090. Self-Regulatory Organizations; disseminated TRACE-Eligible Securities All submissions should refer to File Financial Industry Regulatory other than U.S. Treasury Securities at no charge, unless FINRA submits a rule Number SR–NYSEAMER–2019–58. This Authority, Inc.; Order Approving filing to the Commission imposing a fee file number should be included on the Proposed Rule Change To Allow for such data. subject line if email is used. To help the FINRA To Publish or Distribute Aggregated Transaction Information FINRA has proposed to amend Commission process and review your Supplementary Material .01 to FINRA comments more efficiently, please use and Statistics on U.S. Treasury Securities Rule 6750 to provide that FINRA may only one method. The Commission will publish or distribute weekly aggregated post all comments on the Commission’s December 20, 2019. transaction information and statistics on internet website (http://www.sec.gov/ non-disseminated TRACE-Eligible rules/sro.shtml). Copies of the I. Introduction Securities that are U.S. Treasury submission, all subsequent On November 12, 2019, the Financial Securities. Pursuant to the proposed amendments, all written statements Industry Regulatory Authority, Inc. rule change, the aggregated U.S. with respect to the proposed rule (‘‘FINRA’’) filed with the Securities and Treasury Securities data would not be change that are filed with the Exchange Commission (‘‘Commission’’), published or distributed by individual Commission, and all written pursuant to Section 19(b)(1) of the security, except for aggregated data that communications relating to the Securities Exchange Act of 1934 includes on-the-run U.S. Treasury 1 2 proposed rule change between the (‘‘Act’’) and Rule 19b–4 thereunder, a Securities that may have had only one Commission and any person, other than proposed rule change to amend FINRA on-the-run security during the 6 those that may be withheld from the Rule 6750 to allow FINRA to publish or aggregated period. In addition, the distribute aggregated transaction aggregated data would not identify public in accordance with the information and statistics on U.S. individual market participants or provisions of 5 U.S.C. 552, will be Treasury Securities. The proposed rule transactions. FINRA has proposed to available for website viewing and change was published for comment in provide the aggregated data on U.S. printing in the Commission’s Public the Federal Register on November 20, Treasury Securities at no charge, unless Reference Room, 100 F Street NE, 2019.3 The Commission received no FINRA first establishes a fee for such Washington, DC 20549 on official comment letters on the proposed rule data by submitting an appropriate rule business days between the hours of change. This order approves the filing, as is the case with the aggregated 10:00 a.m. and 3:00 p.m. Copies of the proposed rule change. data for TRACE-Eligible Securities that filing also will be available for are not U.S. Treasury Securities. inspection and copying at the principal II. Description of the Proposal FINRA has stated that the proposed office of the Exchange. All comments Existing FINRA Rule 6750(a) provides rule change will become effective on the received will be posted without change. that FINRA will publicly disseminate date of Commission approval.7 Persons submitting comments are information regarding a transaction in a 4 III. Discussion and Commission cautioned that we do not redact or edit TRACE-Eligible Security immediately Findings personal identifying information from upon receipt of a transaction report, After careful consideration, the comment submissions. You should unless an exception applies. FINRA Commission finds that the proposed submit only information that you wish Rule 6750(c)(5) specifies that FINRA rule change is consistent with the to make available publicly. All will not disseminate information on a transaction in a TRACE-Eligible requirements of the Act and the rules submissions should refer to File and regulations thereunder applicable to Number SR–NYSEAMER–2019–58 and Security that is a U.S. Treasury Security.5 Currently, Supplementary a national securities association.8 In should be submitted on or before particular, the Commission finds that January 21, 2020. 1 15 U.S.C. 78s(b)(1). the proposed rule change is consistent For the Commission, by the Division of 2 17 CFR 240.19b–4. with Section 15A(b)(6) of the Act,9 Trading and Markets, pursuant to delegated 3 See Securities Exchange Act Release No. 87540 authority.25 (November 14, 2019), 84 FR 64147 (November 20, separate principal and interest components of a 2019) (‘‘Notice’’). U.S. Treasury Security that have been separated Eduardo A. Aleman, 4 FINRA Rule 6710(a) defines a ‘‘TRACE-Eligible pursuant to the Separate Trading of Registered Deputy Secretary. Security’’ as a debt security that is U.S. dollar- Interest and Principal of Securities (STRIPS) denominated and is: (1) Issued by a U.S. or foreign program operated by the Treasury Department. See [FR Doc. 2019–28169 Filed 12–27–19; 8:45 am] private issuer, and, if a ‘‘restricted security’’ as FINRA Rule 6710(p). BILLING CODE 8011–01–P defined in Securities Act of 1933 Rule 144(a)(3), 6 In the Notice, FINRA stated that it intends to sold pursuant to Securities Act of 1933 Rule 144A; publish weekly volume information aggregated by (2) issued or guaranteed by an Agency, as defined U.S. Treasury Security subtype (e.g., Bills, Floating in FINRA Rule 6710(k) or a Government-Sponsored Rate Notes, Treasury Inflation-Protected Securities, Enterprise as defined in FINRA Rule 6710(n); or (3) and Nominal Coupons). FINRA further stated that a U.S. Treasury Security, as defined in FINRA Rule the volume information may be grouped within 6710(p). ‘‘TRACE-Eligible Security’’ does not dealer-to-customer, ATS and dealer-to-dealer, include a debt security that is issued by a foreign remaining years to maturity, or other categories. See sovereign or a Money Market Instrument, as defined Notice, 84 FR at 64148. in FINRA Rule 6710(o). 7 See id. 5 ‘‘U.S. Treasury Security’’ means a security, other 8 In approving this proposal, the Commission has than a savings bond, issued by the U.S. Department considered the proposed rule’s impact on of the Treasury (‘‘Treasury Department’’) to fund efficiency, competition, and capital formation. See the operations of the federal government or to retire 15 U.S.C. 78c(f). 25 17 CFR 200.30–3(a)(12). such outstanding securities. The term also includes 9 15 U.S.C. 78o–3(b)(6).

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which requires, among other things, that IV. Conclusion prior calendar quarter’s volume on the FINRA rules be designed to prevent It is therefore ordered, pursuant to Exchange. fraudulent and manipulative acts and Section 19(b)(2) of the Act,14 that the The text of the proposed rule change practices, to promote just and equitable proposed rule change (SR–FINRA– is provided in Exhibit 5. principles of trade, and, in general, to 2019–028) is approved. The text of the proposed rule change protect investors and the public interest. is also available on the Exchange’s For the Commission, by the Division of The Commission believes that the website (http://markets.cboe.com/us/ Trading and Markets, pursuant to delegated _ proposal will benefit investors and authority.15 equities/regulation/rule filings/edga/), market participants by facilitating J. Matthew DeLesDernier, at the Exchange’s Office of the greater transparency in the U.S. Assistant Secretary. Secretary, and at the Commission’s Treasury Security market by making Public Reference Room. [FR Doc. 2019–28084 Filed 12–27–19; 8:45 am] publicly available aggregate trading BILLING CODE 8011–01–P II. Self-Regulatory Organization’s volume for transactions in U.S. Treasury Statement of the Purpose of, and Securities that are reported to TRACE. Statutory Basis for, the Proposed Rule The Commission believes that the SECURITIES AND EXCHANGE Change proposal is reasonably designed to COMMISSION preserve the confidentiality of In its filing with the Commission, the individual market participants and [Release No. 34–87847; File No. SR– Exchange included statements transactions. The Commission also CboeEDGA–2019–023] concerning the purpose of and basis for the proposed rule change and discussed notes that the proposed rule change Self-Regulatory Organizations; Cboe any comments it received on the would not impose any new cost on EDGA Exchange, Inc.; Notice of Filing proposed rule change. The text of these FINRA members, because any aggregate and Immediate Effectiveness of a statements may be examined at the statistics that are published or Proposed Rule Change To Amend places specified in Item IV below. The distributed by FINRA pursuant to this Interpretation and Policy .01 of Rule Exchange has prepared summaries, set rule change would be derived from 2.4 To Allow the Exchange To Provide forth in sections A, B, and C below, of information that members are already Annual Notification to Individual required to report to TRACE. Members That Are Subject to the most significant aspects of such statements. Pursuant to Section 19(b)(5) of the Paragraph (b) of Rule 2.4 Act,10 the Commission consulted with A. Self-Regulatory Organization’s December 23, 2019. and considered the views of the Statement of the Purpose of, and Pursuant to Section 19(b)(1) of the Treasury Department in determining to Statutory Basis for, the Proposed Rule Securities Exchange Act of 1934 (the approve the proposed rule change. The Change ‘‘Act’’),1 and Rule 19b–4 thereunder,2 Treasury Department indicated its 1. Purpose 11 notice is hereby given that on December support for the proposal. Pursuant to 20, 2019, Cboe EDGA Exchange, Inc. 12 The Exchange proposes to amend Section 19(b)(6) of the Act, the (the ‘‘Exchange’’ or ‘‘EDGA’’) filed with Commission has considered the Interpretation and Policy .01 of Rule 2.4 the Securities and Exchange to allow the Exchange to provide annual sufficiency and appropriateness of Commission (the ‘‘Commission’’) the existing laws and rules applicable to notification to individual Members that proposed rule change as described in are subject to paragraph (b) of Rule 2.4, government securities brokers, Items I and II below, which Items have which requires certain Members to government securities dealers, and their been prepared by the Exchange. The connect to the Exchange’s backup associated persons in approving the Exchange filed the proposal as a ‘‘non- systems and participate in functional proposal. Currently there is not controversial’’ proposed rule change and performance testing based on the available, to the public or otherwise, a pursuant to Section 19(b)(3)(A)(iii) of prior calendar quarter’s volume on the comprehensive source of aggregated the Act 3 and Rule 19b–4(f)(6) Exchange. volume data that reflects all major thereunder.4 The Commission is As background, Regulation Systems segments of the market for U.S. Treasury publishing this notice to solicit 13 Compliance and Integrity (‘‘Regulation Securities. The proposed rule change comments on the proposed rule change SCI’’) 5 would promote transparency in the from interested persons. applies to certain self-regulatory market for U.S. Treasury Securities by organizations (including the Exchange), enabling FINRA to publish or distribute I. Self-Regulatory Organization’s alternative trading systems (‘‘ATSs’’), certain aggregate information regarding Statement of the Terms of Substance of plan processors, and exempt clearing transactions in U.S. Treasury Securities the Proposed Rule Change agencies (collectively, ‘‘SCI entities’’). that are reported to TRACE. The Exchange proposes to amend Specifically, Rule 1004 of Regulation Interpretation and Policy .01 of Rule 2.4 SCI states that each SCI entity shall 10 15 U.S.C. 78s(b)(5) (providing that the to allow the Exchange to provide annual establish standards for the designation Commission ‘‘shall consult with and consider the notification to individual Members that of Members that are necessary for the views of the Secretary of the Treasury prior to are subject to paragraph (b) of Rule 2.4, maintenance of fair and orderly markets approving a proposed rule filed by a registered in the event of the activation of the securities association that primarily concerns which requires certain Members to conduct related to transactions in government connect to the Exchange’s backup business continuity and disaster securities, except where the Commission systems and participate in functional recovery plans, designate such Members determines that an emergency exists requiring and performance testing based on the in scheduled functional and expeditious or summary action and publishes its performance testing of the operation of reasons therefor’’). 14 such plans no less than once every 12 11 Email from Treasury Department staff to 15 U.S.C. 78s(b)(2). Michael Gaw, Assistant Director, Division of 15 17 CFR 200.30–3(a)(12). months, and coordinate the testing of Trading and Markets, Commission (December 18, 1 15 U.S.C. 78s(b)(1). 2019). 2 17 CFR 240.19b–4. 5 See Securities Exchange Act Release No. 73639 12 15 U.S.C. 78s(b)(6). 3 15 U.S.C. 78s(b)(3)(A)(iii). (November 19, 2014), 79 FR 72252 (December 5, 13 See Notice, 84 FR at 64149. 4 17 CFR 240.19b–4(f)(6). 2014) (‘‘SCI Adopting Release’’).

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such plans on an industry- or sector- but still require the Exchange to provide occurs in October, which the Exchange wide basis with other SCI entities. such notice at least three months prior believes would: (i) Simplify the Member In order to comply with the to the anticipated functional and designation and notice process; (ii) coordination requirement among SCI performance testing; and (iv) strengthen allow the Exchange to require only entities, the Exchange has conducted the Exchange’s coordination with other those Members that meet the the required operational testing in SCI entities by harmonizing the requirements under Rule 2.4(b)(1) in the parallel with the industry-led testing frequency of such notifications with designated quarter to participate in such program coordinated by the Securities other self-regulatory organizations, testing; (iii) provide the Exchange with Industry and Financial Markets which do not provide quarterly greater flexibility as to the timing that it Association (‘‘SIFMA’’), which occurs notifications of Member designations.6 would provide Members with notice of on an annual basis. Currently, As the proposed amendment provides their designation pursuant to paragraph Interpretation and Policy .01 to Rule 2.4 the Exchange with greater flexibility in (b), but still require the Exchange to requires the Exchange to identify and selecting the relevant quarter’s trade provide such notice at least three provide notice to designated Members data for which the designated Members months prior to the anticipated under paragraph (b) on a quarterly basis will be identified, the designated functional and performance testing; and based on trade activity during the Members may be identified based on (iv) strengthen the Exchange’s previous quarter on the Exchange. Any more recent trading activity, rather than coordination with other SCI entities by Member that receives such notice is trade activity that potentially occurred harmonizing the frequency of such required to participate in the next more than one year prior to such testing notifications with other self-regulatory annual functional and performance and thus would more accurately testing, which generally occurs in represent the Members who met the organizations, which do not provide October. As such, a Member that requirements set forth in paragraph quarterly notifications of Member receives notice in the third and/or (b)(1) of Rule 2.4. designations. The proposed amendment fourth quarter of the preceding year or will harmonize Exchange rules with the first and/or second quarters of the 2. Statutory Basis those of other self-regulatory current year will be required to The Exchange believes the proposed organizations in furtherance of the participate in the annual functional and rule change is consistent with the coordination of testing among SCI performance testing. As a result, Securities Exchange Act of 1934 (the entities required by Rule 1004(c) of Members would be notified in October, ‘‘Act’’) and the rules and regulations Regulation SCI. As set forth in January, April, and/or July of their thereunder applicable to the Exchange Regulation SCI, ‘‘SROs have the requirement to connect to the and, in particular, the requirements of authority, and legal responsibility, Exchange’s backup systems and Section 6(b) of the Act. Specifically, the under Section 6 of the Exchange Act, to participate in functional and Exchange believes the proposed rule adopt and enforce rules (including rules performance testing scheduled for change is consistent with the Section to comply with Regulation SCI’s October, which means that certain 6(b)(5) requirements that the rules of an requirements relating to BC/DR testing) Members receive notification of their exchange be designed to prevent applicable to their members or designation and requirement to connect fraudulent and manipulative acts and participants that are designed to, among and participate in functional and practices, to promote just and equitable other things, foster cooperation and performance testing only three months principles of trade, to foster cooperation coordination with persons engaged in prior to the scheduled operational and and coordination with persons engaged regulating, clearing, settling, processing functional testing. Further, a Member in regulating, clearing, settling, information with respect to, and that had been designated in any of the processing information with respect to, facilitating transactions in securities, to four preceding quarters would be and facilitating transactions in remove impediments to and perfect the required to participate in the functional securities, to remove impediments to mechanism of a free and open market and performance testing even if that and perfect the mechanism of a free and and a national market system, and, in Member did not meet the designation open market and a national market general, to protect investors and the requirements of subparagraphs (b)(1) in system, and, in general, to protect public interest.’’ 7 The Exchange the most recent quarter (i.e., the second investors and the public interest. believes that the proposal is consistent quarter). In particular, the Exchange believes with such authority and legal As proposed, the amendment would the proposal is consistent with the Act responsibility. allow the Exchange to identify because, as noted above, the proposal designated Members based on trade would allow the Exchange to identify B. Self-Regulatory Organization’s activity during a single quarter for a designated Members based on activity Statement on Burden on Competition given year, and to issue one annual during a single quarter for a given year The Exchange does not believe that notification to the designated Members and to issue one annual notification to the proposed rule change will impose in preparation for the anticipated the designated Members in preparation functional and performance testing, for the anticipated functional and any burden on competition that is not which generally occurs in October. As performance testing, which generally necessary or appropriate in furtherance such, the proposal would: (i) Simplify of the purposes of the Act. The the Member designation and notice 6 See Cboe Exchange, Inc. (‘‘Cboe’’) Rule 5.24, proposed rule change is not a process; (ii) allow the Exchange to which states ‘‘[Cboe] provides [ ] Trading Permit competitive proposal as it is intended to require only those Members that meet Holders with reasonable advance notice that they coordinate notification of Member must participate in the testing described in participation requirements in the the volume requirements under Rule paragraph (b) of this Rule 5.24.’’ See also New York 2.4(b)(1) in the designated quarter to Stock Exchange (‘‘NYSE’’) Rule 49(b)(4), which Exchange’s testing of business participate in such testing; (iii) provide states ‘‘[a]t least three (3) months prior to a continuity and disaster recovery plans the Exchange with greater flexibility as scheduled functional and performance testing of the with the annual industry-wide testing Exchange’s business continuity and disaster program. to the timing that it would provide recovery plans, the Exchange will . . . notify those Members with notice of their member organizations that are required to designation pursuant to paragraph (b), participate based on such criteria.’’ 7 See supra note 6.

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C. Self-Regulatory Organization’s Commission summarily may personal identifying information from Statement on Comments on the temporarily suspend such rule change if comment submissions. You should Proposed Rule Change Received From it appears to the Commission that such submit only information that you wish Members, Participants, or Others action is necessary or appropriate in the to make available publicly. All The Exchange neither solicited nor public interest, for the protection of submissions should refer to File received comments on the proposed investors, or otherwise in furtherance of Number SR–CboeEDGA–2019–023 and rule change. the purposes of the Act. If the should be submitted on or before Commission takes such action, the January 21, 2020. III. Date of Effectiveness of the Commission shall institute proceedings For the Commission, by the Division of Proposed Rule Change and Timing for to determine whether the proposed rule Trading and Markets, pursuant to delegated Commission Action change should be approved or authority.13 Because the proposed rule change disapproved. Eduardo A. Aleman, does not: (i) Significantly affect the IV. Solicitation of Comments Deputy Secretary. protection of investors or the public Interested persons are invited to [FR Doc. 2019–28175 Filed 12–27–19; 8:45 am] interest; (ii) impose any significant submit written data, views, and BILLING CODE 8011–01–P burden on competition; and (iii) become arguments concerning the foregoing, operative for 30 days from the date on including whether the proposed rule which it was filed, or such shorter time SECURITIES AND EXCHANGE change is consistent with the Act. as the Commission may designate, it has COMMISSION Comments may be submitted by any of become effective pursuant to Section 8 the following methods: [Release No. 34–87822; File No. SR-Phlx- 19(b)(3)(A) of the Act and Rule 19b– 2019–54) 4(f)(6) thereunder.9 Electronic Comments A proposed rule change filed • Use the Commission’s internet Self-Regulatory Organizations; Nasdaq pursuant to Rule 19b–4(f)(6) under the comment form (http://www.sec.gov/ PHLX LLC; Notice of Filing and 10 Act normally does not become rules/sro.shtml); or Immediate Effectiveness of Proposed operative for 30 days after the date of its • Send an email to rule-comments@ Rule Change To Adopt a New Rule filing. However, Rule 19b–4(f)(6)(iii) 11 sec.gov. Please include File Number SR– Titled ‘‘Off-Exchange RWA Transfers’’ permits the Commission to designate a CboeEDGA–2019–023 on the subject at Phlx Rule 1045 shorter time if such action is consistent line. with the protection of investors and the December 20, 2019. public interest. The Exchange has asked Paper Comments Pursuant to Section 19(b)(1) of the the Commission to waive the 30-day • Send paper comments in triplicate Securities Exchange Act of 1934 operative delay so that the proposal may to Secretary, Securities and Exchange (‘‘Act’’),1 and Rule 19b–4 thereunder,2 become operative upon filing. The Commission, 100 F Street NE, notice is hereby given that on December Exchange states that a waiver of the Washington, DC 20549–1090. 17, 2019, Nasdaq PHLX LLC (‘‘Phlx’’ or operative delay is consistent with the All submissions should refer to File ‘‘Exchange’’) filed with the Securities protection of investors and the public Number SR–CboeEDGA–2019–023. This and Exchange Commission (‘‘SEC’’ or interest because it would eliminate file number should be included on the ‘‘Commission’’) the proposed rule potential confusion across self- subject line if email is used. To help the change as described in Items I, II, and regulatory organizations and simplify Commission process and review your III, below, which Items have been and clarify the process of notification to comments more efficiently, please use prepared by the Exchange. The designated Members pursuant to only one method. The Commission will Commission is publishing this notice to paragraph (b) of Rule 2.4. The post all comments on the Commission’s solicit comments on the proposed rule Commission believes that waiver of the internet website (http://www.sec.gov/ change from interested persons. 30-day operative delay is consistent rules/sro.shtml). Copies of the I. Self-Regulatory Organization’s with the protection of investors and the submission, all subsequent Statement of the Terms of Substance of public interest. Therefore, the amendments, all written statements the Proposed Rule Change Commission hereby waives the with respect to the proposed rule The Exchange proposes to adopt a operative delay and designates the change that are filed with the new rule titled ‘‘Off-Exchange RWA proposed rule change operative upon Commission, and all written filing.12 Transfers’’ at Phlx Rule 1045. communications relating to the The text of the proposed rule change At any time within 60 days of the proposed rule change between the filing of the proposed rule change, the is available on the Exchange’s website at Commission and any person, other than http://nasdaqphlx.cchwallstreet.com/, those that may be withheld from the at the principal office of the Exchange, 8 15 U.S.C. 78s(b)(3)(A). public in accordance with the 9 and at the Commission’s Public 17 CFR 240.19b–4(f)(6). In addition, Rule19b– provisions of 5 U.S.C. 552, will be 4(f)(6)(iii) requires a self-regulatory organization to Reference Room. give the Commission written notice of its intent to available for website viewing and file the proposed rule change, along with a brief printing in the Commission’s Public II. Self-Regulatory Organization’s description and text of the proposed rule change, Reference Room, 100 F Street NE, Statement of the Purpose of, and at least five business days prior to the date of filing Washington, DC 20549 on official Statutory Basis for, the Proposed Rule of the proposed rule change, or such shorter time as designated by the Commission. The Exchange business days between the hours of Change has satisfied this requirement. 10:00 a.m. and 3:00 p.m. Copies of the In its filing with the Commission, the 10 17 CFR 240.19b–4(f)(6). filing also will be available for Exchange included statements 11 17 CFR 240.19b–4(f)(6)(iii). inspection and copying at the principal concerning the purpose of and basis for 12 For purposes only of waiving the 30-day office of the Exchange. All comments operative delay, the Commission also has considered the proposed rule’s impact on received will be posted without change. 13 17 CFR 200.30–3(a)(12). efficiency, competition, and capital formation. See Persons submitting comments are 1 15 U.S.C. 78s(b)(1). 15 U.S.C. 78c(f). cautioned that we do not redact or edit 2 17 CFR 240.19b–4.

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the proposed rule change and discussed Act.8 Pursuant to this mandate, the participants with an efficient any comments it received on the Board of Governors of the Federal mechanism to transfer their open proposed rule change. The text of these Reserve System, the Office of the options positions from one clearing statements may be examined at the Comptroller of the Currency, and the account to another clearing account and places specified in Item IV below. The Federal Deposit Insurance Corporation thereby increase liquidity in the listed Exchange has prepared summaries, set have approved a regulatory capital options market. Phlx currently has no forth in sections A, B, and C below, of framework for subsidiaries of U.S. bank mechanism that firms may use to the most significant aspects of such holding company clearing firms.9 transfer positions between clearing statements. Generally, these rules, among other accounts without having to effect a things, impose higher minimum capital transaction with another party and close A. Self-Regulatory Organization’s and higher asset risk weights than were a position. Statement of the Purpose of, and previously mandated for Clearing The proposed rule provides that Statutory Basis for, the Proposed Rule Members that are subsidiaries of U.S. existing positions in options listed on Change bank holding companies under the Net the Exchange of a Member or non- 1. Purpose Capital Rules. Furthermore, the new Member (including an affiliate of a rules do not fully permit deductions for The Exchange proposes to adopt a Member) may be transferred on, from, or hedged securities or offsetting options new rule titled, ‘‘Off-Exchange RWA to the books of a Clearing Member off positions.10 Rather, capital charges Transfers’’ at Phlx Rule 1045, which is the Exchange if the transfer establishes under these standards are, in large part, currently reserved. This proposal is a net reduction of RWA attributable to based on the aggregate notional value of substantially the same as Cboe those options positions (an ‘‘RWA 3 short positions regardless of offsets. As Transfer’’). Proposed paragraph (a)(1) Exchange, Inc. (‘‘Cboe’’) Rule 6.8. a result, in general, Clearing Members Proposed Rule 1045 is intended to adds examples of two transfers that that are subsidiaries of U.S. bank facilitate the reduction of risk-weighted would be deemed to establish a net holding companies must hold assets (‘‘RWA’’) attributable to open reduction of RWA, and thus qualify as substantially more bank regulatory a permissible RWA Transfer: options positions. SEC Rule 15c3–1 (Net capital than would otherwise be • Capital Requirements for Brokers or A transfer of options positions from required under the Net Capital Rules. Clearing Corporation member A to Dealers) (‘‘Net Capital Rules’’) requires The Exchange is concerned with the registered broker-dealers, unless Clearing Corporation member B that net ability of Registered Options Traders 11 (offset) with positions held at Clearing otherwise excepted, to maintain certain and Specialists 12 (collectively ‘‘Market 4 Corporation member B, and thus closes specified minimum levels of capital. Makers’’) to provide liquidity in their The Net Capital Rules are designed to all or part of those positions (as appointed classes. The Exchange 13 protect securities customers, demonstrated in the example below) ; believes that permitting market and counterparties, and creditors by participants to efficiently transfer • requiring that broker-dealers have A transfer of options positions from existing options positions through an a bank-affiliated Clearing Corporation sufficient liquid resources on hand, at off-exchange transfer process would all times, to meet their financial member to a non-bank-affiliated likely have a beneficial effect on 14 obligations. Notably, hedged positions, Clearing Corporation member. continued liquidity in the options These transfers will not result in a including offsetting futures and options market without adversely affecting change in ownership, as they must contract positions, result in certain net market quality. Liquidity in the listed occur between accounts of the same capital requirement reductions under options market is critically important. Person. the Net Capital Rules.5 The Exchange believes that the ‘‘Person’’ is defined within proposed Subject to certain exceptions, Clearing proposed rule change provides market Rule 1045(a) as an individual, Members 6 are subject to the Net Capital partnership (general or limited), joint Rules.7 However, a subset of Clearing 8 H.R. 4173 (amending section 3(a) of the stock company, corporation, limited Members are subsidiaries of U.S. bank Securities Exchange Act of 1934 (the ‘‘Act’’) (15 liability company, trust or holding companies, which, due to their U.S.C. 78c(a))). unincorporated organization, or any affiliations with their parent U.S.-bank 9 12 CFR 50; 79 FR 61440 (Liquidity Coverage governmental entity or agency or holding companies, must comply with Ratio: Liquidity Risk Measurement Standards). 10 Many options strategies, including relatively political subdivision thereof. additional bank regulatory capital simple strategies often used by retail customers and In other words, RWA transfers may requirements pursuant to rulemaking more sophisticated strategies used by broker- only occur between the same individual required under the Dodd-Frank Wall dealers, are risk limited strategies or options spread or legal entity. These are merely Street Reform and Consumer Protection strategies that employ offsets or hedges to achieve certain investment outcomes. Such strategies transfers from one clearing account to typically involve the purchase and sale of multiple another, both of which are attributable 3 See Securities Exchange Act Release No. 87374 options (and may be coupled with purchases or to the same individual or legal entity. A (October 21, 2019), 84 FR 57542 (October 25, 2019) sales of the underlying securities), executed (SR–Cboe–2019–044). simultaneously as part of the same strategy. In market participant effecting an RWA 4 17 CFR § 240.15c3–1. many cases, the potential market exposure of these Transfer is analogous to an individual 5 In addition, the Net Capital Rules permit various strategies is limited and defined. transferring funds from a checking offsets under which a percentage of an option 11 See Rule 1000(b)(57). A ‘‘Registered Options account to a savings account, or from an position’s gain at any one valuation point is Trader’’ shall mean a Streaming Quote Trader or a allowed to offset another position’s loss at the same Remote Streaming Quote Trader who enters account at one bank to an account at valuation point (e.g. vertical spreads). quotations for his own account electronically into 6 The term Clearing Member is defined within the System. 13 This transfer would establish a net reduction of Rule 1000(b)(3). All Clearing Members must also be 12 See Rule 1000(b)(58). A ‘‘Specialist’’ shall RWA attributable to the transferring Person, clearing members of The Options Clearing mean a member who is registered as an options because there would be fewer open positions and Corporation (‘‘Clearing Corporation’’ or ‘‘OCC’’). Specialist pursuant to Rule 1020(a). A Specialist thus fewer assets subject to Net Capital Rules. 7 In the event federal regulators modify bank includes a Remote Specialist which is defined as a 14 This transfer would establish a net reduction of capital requirements in the future, the Exchange Specialist in one or more classes that does not have RWA attributable to the transferring Person, will reevaluate the proposed rule change at that a physical presence on an Exchange’s trading floor because the non-bank-affiliated Clearing time to determine whether any corresponding and is approved by the Exchange pursuant to Rule Corporation member would not be subject to Net changes to the proposed rule are appropriate. 501. Capital Rules, as described above.

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another bank—the money still belongs manner.18 In the above example, if would be automatically transferred on to the same person, who is just holding Market Maker A had initially given up their trade date into one central Market it in a different account for personal Clearing Member Y rather than Clearing Maker account (commonly referred to as financial reasons. Member X on the transactions that a ‘‘universal account’’) at the Clearing For example, Market Maker A clears resulted in the 1000 long calls in class Corporation. Positions cleared into a transactions on the Exchange into an ABC, or had changed the give-up or universal account would automatically account it has with Clearing Member X, CMTA to Clearing Member Y pursuant net against each other. which is affiliated with a U.S-bank to Rule 1045 the ultimate result would While RWA Transfers are not have been the same. There are a variety holding company. Market Maker A occurring because of limitations related of reasons why firms give up or CMTA opens a clearing account with Clearing to trading on different exchanges, transactions to certain clearing firms Member Y, which is not affiliated with similar reasoning for the above (and not to non-bank affiliate clearing a U.S.-bank holding company. Clearing exception applies to why netting should firms) at the time of a transaction, and Member X has informed Market Maker be permissible for the limited purpose the proposed rule change provides firms A that its open positions may not of reducing RWA. Firms may maintain with a mechanism to achieve the same exceed a certain amount at the end of different clearing accounts for a variety result at a later time. a calendar month, or it will be subject of reasons, such as the structure of their Proposed paragraph (a)(2) states RWA businesses, the manner in which they to restrictions on new positions it may Transfers may occur on a routine, open the following month. On August trade, their risk management recurring basis. As noted in the example procedures, and for capital purposes. If 28, Market Maker A reviews the open above, clearing firms may impose positions in its Clearing Member X a Market Maker clears all transactions restrictions on the amount of open into a universal account, offsetting clearing account and determines it must positions. Permitting transfers on a reduce its open positions to satisfy positions would automatically net. routine, recurring basis will provide However, if a Market Maker has Clearing Member X’s requirements by market participants with the flexibility the end of August. It determines that multiple accounts into which its to comply with these restrictions when transactions cleared, they would not transferring out 1000 short calls in class necessary to avoid position limits on ABC will sufficiently reduce the RWA automatically net. While there are times future options activity. Additionally, when a firm may not want to close out capital requirements in the account with proposed paragraph (a)(6) provides that Clearing Member X to avoid additional open positions to reduce RWA, there are no prior written notice to the Exchange other times when a firm may determine position limits in September. Market is required for RWA Transfers. Because Maker A wants to retain the positions in it is appropriate to close out positions of the potential routine basis on which to accomplish a reduction in RWA. accordance with its risk profile. RWA Transfers may occur, and because In the example above, suppose after Pursuant to the proposed rule change, of the need for flexibility to comply making the RWA Transfer described on August 31, Market Maker A transfers with the restrictions described above, above, Market Maker A effects a 1000 short calls in class ABC to its the Exchange believes it may interfere transaction on September 25 that results clearing account with Clearing Member with the ability of investors firms to in 1000 long calls in class ABC, which Y. As a result, Market Maker A can comply with any Clearing Member clears into its account with Clearing continue to provide the same level of restrictions described above, and may be Member X. If Market Maker A had not liquidity in class ABC during September burdensome to provide notice for these effected its RWA Transfer in August, the as it did in previous months. routine transfers. 1000 long calls would have offset A Member must give up a Clearing Proposed paragraph (a)(3) states RWA against the 1000 short calls, eliminating Member for each transaction it effects Transfers may result in the netting of both positions and thus any RWA on the Exchange, which identifies the positions. Netting occurs when long capital requirements associated with Clearing Member through which the positions and short positions in the them. At the end of August, Market transaction will clear.15 A Member may same series ‘‘offset’’ against each other, Maker A did not want to close out the change the give up for a transaction leaving no or a reduced position. For 1000 short calls when it made its RWA within a specified period of time.16 example, if there were 100 long calls in Transfer. However, given changed Additionally, a Member may also one account, and 100 short calls of the circumstances in September, Market change the Clearing Member 17 for a same option series were added to that Maker A has determined it no longer specific transaction. The transfer of account, the positions would offset, wants to hold those positions. The positions from an account with one leaving no open positions. Currently, proposed rule change would permit clearing firm to the account of another the Exchange permits off-exchange Market Maker A to effect an RWA clearing firm pursuant to the proposed transfers on behalf of a Market Maker Transfer of the 1000 short calls from its rule change has a similar result as account for transactions in multiply account with Clearing Member Y to its changing a give up or CMTA, as it listed options series on different account with Clearing Member X (or results in a position that resulted from exchanges, but only if the Market Maker vice versa), which results in elimination a transaction moving from the account nominees are trading for the same of those positions (and a reduction in of one clearing firm to another, just at Member, and the options transactions RWA associated with them). As noted a different time and in a different on the different options exchanges clear above, such netting would have into separate exchange-specific accounts occurred if Market Maker A cleared the 15 because they cannot easily clear into the See Phlx Rule 1043. September transaction directly into its 16 See Phlx Rule 1037. same Market Maker account at OCC. In account with Clearing Member Y, or had 17 The Clearing Member Trade Assignment such instances, all Market Maker not effected an RWA Transfer in August. (‘‘CMTA’’) process at OCC facilitates the transfer of positions in the exchange-specific option trades/positions from one OCC clearing Netting provides market participants accounts for the multiply listed class member to another in an automated fashion. with appropriate flexibility to conduct Changing a CMTA for a specific transaction would their businesses as they see fit while allocate the trade to a different OCC clearing 18 The transferred positions will continue to be member than the one initially identified on the subject to OCC rules, as they will continue to be having the ability to reduce RWA trade. held in an account of an OCC member. capital requirements when necessary.

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RWA Transfers may not result in clearing firms. This will permit market in no change in ownership, and thus preferential margin or haircut participants to respond to then-current they do not constitute trades with a treatment.19 Additionally, RWA market conditions, including volatility counterparty (and thus eliminating the Transfers may only be effected for and increased volume, by reducing the need for a counterparty guarantee). The options listed on the Exchange and will RWA capital requirements associated transactions that resulted in the open be subject to applicable laws, rules, and with any new positions they may open positions to be transferred as an RWA regulations, including rules of other while those conditions exist. Given the Transfer were already guaranteed by an self-regulatory organizations (including additional capital that may become OCC clearing member, and the positions OCC).20 available to market participants as a will continue to be subject to OCC rules, 2. Statutory Basis result of the RWA Transfers, market as they will continue to be held in an participants will be able to continue to account with an OCC clearing member. The Exchange believes that its provide liquidity to the market, even The narrow scope of the proposed rule proposal is consistent with Section 6(b) during periods of increased volume and change and the limited, beneficial 21 of the Act, in general, and furthers the volatility, which liquidity ultimately purpose of RWA Transfers make 22 objectives of Section 6(b)(5) of the Act, benefits investors. It is not possible for allowing RWA Transfers to occur off the in particular, in that it is designed to market participants to predict what floor appropriate and important to promote just and equitable principles of market conditions will exist at a specific support the provision of liquidity in the trade, to remove impediments to and time, and when volatility will occur. listed options market. perfect the mechanism of a free and The proposed rule change to permit The proposed rule change does not open market and a national market routine, recurring RWA Transfers (and unfairly discriminate against market system, and, in general to protect to not provide prior written notice) will participants, as all Members and non- investors and the public interest. provide market participants with the Members with open positions in options Additionally, the Exchange believes the ability to respond to these conditions listed on the Exchange may use the proposed rule change is consistent with whenever they occur. Permitting proposed off-exchange transfer process the Section 6(b)(5) 23 requirement that transfers on a routine, recurring basis to reduce the RWA capital requirements the rules of an exchange not be designed will provide market participants with of Clearing Members. to permit unfair discrimination between the flexibility to comply with these customers, issuers, brokers, or dealers. restrictions when necessary to avoid B. Self-Regulatory Organization’s The Exchange’s proposal is substantially position limits on future options Statement on Burden on Competition the same as Cboe Rule 6.8 [sic]. activity. In addition, with respect to In particular, the Exchange believes The Exchange does not believe that netting, as discussed above, firms may the proposed rule change to permit the proposed rule change will impose maintain different clearing accounts for RWA Transfers will remove any burden on competition that is not a variety of reasons, such as the impediments to and perfect the necessary or appropriate in furtherance structure of their businesses, the manner mechanism of a free and open market of the purposes of the Act. in which they trade, their risk and a national market system by The Exchange does not believe that management procedures, and for capital providing liquidity in the listed options the proposed rule change will impose purposes. Netting may otherwise occur market. The Exchange believes any burden on competition that is not with respect to a firm’s positions if it providing market participants with an necessary or appropriate in furtherance structured its clearing accounts efficient process to reduce RWA capital of the purposes of the Act. This process differently, such as by using a universal requirements attributable to open is not intended to be a competitive account. Therefore, the proposed rule positions in clearing accounts with U.S. trading tool. The Exchange does not change will permit netting while bank-affiliated clearing firms may believe that the proposed rule change allowing firms to continue to maintain contribute to additional liquidity in the will impose any burden on intra-market different clearing accounts in a manner listed options market, which, in general, competition that is not necessary or consistent with their businesses. protects investors and the public appropriate in furtherance of the interest. The Exchange recognizes the purposes of the Act, as use of the The proposed rule change, in numerous benefits of executing options proposed process is voluntary. All particular the proposed changes to transactions occur on an exchanges, Members and non-Members with open permit RWA transfers to occur on a including price transparency, potential positions in options listed on the routine, recurring basis and result in price improvement, and a clearing Exchange may use the proposed off- netting, also provides market guarantee. However, the Exchange exchange transfer process to reduce the participants with sufficient flexibility to believes it is appropriate to permit RWA RWA capital requirements attributable reduce RWA capital requirements at Transfers to occur off the exchange, as to those positions. The Exchange does times necessary to comply with these benefits are inapplicable to RWA not believe that the proposed rule requirements imposed on them by Transfers. RWA Transfers have a narrow change will impose any burden on scope and are intended to achieve a intermarket competition that is not 19 See proposed paragraph (a)(4). limited, benefit purpose. RWA Transfers necessary or appropriate in furtherance 20 See proposed introductory paragraph and are not intended to be a competitive of the purposes of the Act. RWA proposed paragraph (a)(7). Transfers of non- trading tool. There is no need for price Transfers have a limited purpose, which Exchange listed options and other financial discovery or improvement, as the is to reduce RWA attributable to open instruments are not governed by this proposed rule. Any RWA transfers will be subject to all applicable purpose of the transfer is to reduce positions in listed options in order to recordkeeping requirements applicable to Members RWA asset capital requirements free up capital. The Exchange believes and Clearing Members under the Securities attributable to a market participants’ the proposed rule change may relieve Exchange Act of 1934, and the rules and regulations positions. Unlike trades on an exchange, the burden on liquidity providers in the thereunder (the ‘‘Act’’), such as Rule 17a–3 and 17a–4. the price at which an RWA Transfers options market by reducing the RWA 21 15 U.S.C. 78f(b). occurs is immaterial—the resulting attributable to their open positions. As 22 15 U.S.C. 78f(b)(5). reduction in RWA is the critical part of a result, market participants may be able 23 Id. the transfer. RWA Transfers will result to increase liquidity they provide to the

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market, which liquidity benefits all All submissions should refer to File SECURITIES AND EXCHANGE market participants. Number SR–Phlx–2019–54. This file COMMISSION C. Self-Regulatory Organization’s number should be included on the subject line if email is used. To help the [Release No. 34–87813; File No. SR– Statement on Comments on the NYSEArca–2019–39] Proposed Rule Change Received From Commission process and review your Members, Participants, or Others comments more efficiently, please use Self-Regulatory Organizations; NYSE only one method. The Commission will No written comments were either Arca, Inc.; Notice of Designation of a post all comments on the Commission’s solicited or received. Longer Period for Commission Action internet website (http://www.sec.gov/ on Proceedings To Determine Whether III. Date of Effectiveness of the rules/sro.shtml). Copies of the to Approve or Disapprove a Proposed Proposed Rule Change and Timing for submission, all subsequent Rule Change, as Modified by Commission Action amendments, all written statements Amendment No. 1, To Amend NYSE Because the foregoing proposed rule with respect to the proposed rule Arca Rule 8.201–E (Commodity-Based change does not: (i) Significantly affect change that are filed with the Trust Shares) and to List and Trade the protection of investors or the public Commission, and all written Shares of the United States Bitcoin interest; (ii) impose any significant communications relating to the and Treasury Investment Trust Under burden on competition; and (iii) become proposed rule change between the NYSE Arca Rule 8.201–E operative for 30 days from the date on Commission and any person, other than December 20, 2019. which it was filed, or such shorter time those that may be withheld from the On June 12, 2019, NYSE Arca, Inc. as the Commission may designate, it has public in accordance with the (‘‘NYSE Arca’’ or ‘‘Exchange’’) filed become effective pursuant to Section provisions of 5 U.S.C. 552, will be 24 with the Securities and Exchange 19(b)(3)(A)(iii) of the Act and available for website viewing and Commission (‘‘Commission’’), pursuant subparagraph (f)(6) of Rule 19b–4 printing in the Commission’s Public 25 to Section 19(b)(1) of the Securities thereunder. Reference Room, 100 F Street NE, At any time within 60 days of the Exchange Act of 1934 (‘‘Act’’) 1 and Rule Washington, DC 20549, on official filing of the proposed rule change, the 19b–4 thereunder,2 a proposed rule Commission summarily may business days between the hours of change to amend NYSE Arca Rule temporarily suspend such rule change if 10:00 a.m. and 3:00 p.m. Copies of the 8.201–E (Commodity-Based Trust it appears to the Commission that such filing also will be available for Shares) and to list and trade shares of action is necessary or appropriate in the inspection and copying at the principal the United States Bitcoin and Treasury public interest, for the protection of office of the Exchange. All comments Investment Trust under NYSE Arca Rule investors, or otherwise in furtherance of received will be posted without change. 8.201–E. The proposed rule change was the purposes of the Act. If the Persons submitting comments are published for comment in the Federal Commission takes such action, the cautioned that we do not redact or edit Register on July 1, 2019.3 Commission shall institute proceedings personal identifying information from On August 12, 2019, pursuant to to determine whether the proposed rule comment submissions. You should Section 19(b)(2) of the Act,4 the should be approved or disapproved. submit only information that you wish Commission designated a longer period to make available publicly. All within which to approve the proposed IV. Solicitation of Comments submissions should refer to File rule change, disapprove the proposed Interested persons are invited to Number SR–Phlx–2019–54 and should rule change, or institute proceedings to submit written data, views, and be submitted on or before January 21, determine whether to disapprove the 5 arguments concerning the foregoing, 2020. proposed rule change. On September including whether the proposed rule 24, 2019, the Commission instituted change is consistent with the Act. For the Commission, by the Division of proceedings under Section 19(b)(2)(B) of Comments may be submitted by any of Trading and Markets, pursuant to delegated the Act 6 to determine whether to 26 the following methods: authority. approve or disapprove the proposed J. Matthew DeLesDernier, 7 Electronic Comments rule change. On October 4, 2019, the Assistant Secretary. Exchange filed Amendment No. 1 to the • Use the Commission’s internet [FR Doc. 2019–28030 Filed 12–27–19; 8:45 am] proposed rule change, which replaced comment form (http://www.sec.gov/ and superseded the proposed rule rules/sro.shtml); or BILLING CODE 8011–01–P • Send an email to rule-comments@ 1 15 U.S.C. 78s(b)(1). sec.gov. Please include File Number SR– 2 17 CFR 240.19b–4. Phlx–2019–54 on the subject line. 3 See Securities Exchange Act Release No. 86195 Paper Comments (June 25, 2019), 84 FR 31373 (July 1, 2019). 4 15 U.S.C. 78s(b)(2). • Send paper comments in triplicate 5 See Securities Exchange Act Release No. 86631 to Secretary, Securities and Exchange (Aug. 12, 2019), 84 FR 42028 (Aug. 16, 2019). Commission, 100 F Street NE, 6 15 U.S.C. 78s(b)(2)(B). Washington, DC 20549–1090. 7 See Securities Exchange Act Release No. 87071 (Sept. 24, 2019), 84 FR 51646 (Sept. 30, 2019). Specifically, the Commission instituted proceedings 24 15 U.S.C. 78s(b)(3)(A)(iii). to allow for additional analysis of the proposed rule 25 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– change’s consistency with Section 6(b)(5) of the 4(f)(6) requires a self-regulatory organization to give Act, which requires, among other things, that the the Commission written notice of its intent to file rules of a national securities exchange be ‘‘designed the proposed rule change at least five business days to prevent fraudulent and manipulative acts and prior to the date of filing of the proposed rule practices, to promote just and equitable principles change, or such shorter time as designated by the of trade,’’ and ‘‘to protect investors and the public Commission. The Exchange has satisfied this interest.’’ See id. at 51647 (citing 15 U.S.C. requirement. 26 17 CFR 200.30–3(a)(12). 78f(b)(5)).

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change as originally filed.8 The SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s proposed rule change, as modified by COMMISSION Statement of the Purpose of, and Amendment No. 1, was published in the Statutory Basis for, the Proposed Rule Federal Register on October 21, 2019.9 [Release No. 34–87846; File No. SR–CBOE– Change 2019–118] The Commission has received comment 1. Purpose letters on the proposed rule change.10 Self-Regulatory Organizations; Cboe In 2016, the Exchange’s parent Section 19(b)(2) of the Act 11 provides Exchange, Inc.; Notice of Filing and company, Cboe Global Markets, Inc. that, after initiating disapproval Immediate Effectiveness of a Proposed (formerly named CBOE Holdings, Inc.) proceedings, the Commission shall issue Rule Change To Correct Certain (‘‘Cboe Global’’), which is also the an order approving or disapproving the Erroneous Cross-References, Add parent company of Cboe C2 Exchange, proposed rule change not later than 180 Inadvertently Omitted Rule Text, and Inc. (‘‘C2’’), acquired Cboe EDGA days after the date of publication of Conform the Use of Certain Defined Exchange, Inc. (‘‘EDGA’’), Cboe EDGX notice of filing of the proposed rule Terms Exchange, Inc. (‘‘EDGX’’ or ‘‘EDGX change. The Commission may extend Options’’), Cboe BZX Exchange, Inc. December 23, 2019. the period for issuing an order (‘‘BZX’’ or ‘‘BZX Options’’), and Cboe Pursuant to Section 19(b)(1) of the approving or disapproving the proposed BYX Exchange, Inc. (‘‘BYX’’ and, Securities Exchange Act of 1934 rule change, however, by not more than 1 2 together with Cboe Options, C2, EDGX, (‘‘Act’’), and Rule 19b–4 thereunder, EDGA, and BZX, the ‘‘Cboe Affiliated 60 days if the Commission determines notice is hereby given that on December that a longer period is appropriate and Exchanges’’). On October 7, 2019, Cboe 19, 2019, Cboe Exchange, Inc. Options migrated its trading platform to publishes the reasons for such (‘‘Exchange’’ or ‘‘Cboe Options’’) filed determination. The date of publication the same system used by the Cboe with the Securities and Exchange Affiliated Exchanges. In connection of notice of filing of the proposed rule Commission (‘‘Commission’’) the change was July 1, 2019. December 28, with this technology migration, Cboe proposed rule change as described in Options updated and reorganized its 2019, is 180 days from that date, and Items I and II below, which Items have February 26, 2020, is 240 days from that entire Rulebook (the ‘‘post-migration been prepared by the Exchange. The Rulebook’’), which became effective date. Commission is publishing this notice to upon the technology migration. The Commission finds it appropriate solicit comments on the proposed rule First, the proposed rule change to designate a longer period within change from interested persons. corrects cross-reference errors in Rules which to issue an order approving or I. Self-Regulatory Organization’s 5.1, 5.4, 5.6, 5.33, 5.36, 5.37, 5.38, 5.50, disapproving the proposed rule change Statement of the Terms of Substance of 5.52, 5.54, 5.55, and 5.56 that so that it has sufficient time to consider the Proposed Rule Change inadvertently occurred as a result of the this proposed rule change. Accordingly, total restructuring of its Rulebook. Cboe Exchange, Inc. (the ‘‘Exchange’’ the Commission, pursuant to Section Second, the proposed rule change or ‘‘Cboe Options’’) proposes to correct 19(b)(2) of the Act,12 designates adds rule text that was unintentionally certain erroneous cross-references, add omitted from the post-migration February 26, 2020, as the date by which inadvertently omitted rule text, and the Commission shall either approve or Rulebook. The proposed rule change conforms the use of certain defined amends Rule 5.83(a)(2) to add Penny disapprove the proposed rule change terms. The text of the proposed rule (File No. SR–NYSEArca–2019–39). Cabinet and Sub-Penny Cabinet orders change is provided in Exhibit 5. to the list of types of order instructions For the Commission, by the Division of The text of the proposed rule change available for PAR routing for manual Trading and Markets, pursuant to delegated is also available on the Exchange’s handling and open outcry trading on the authority.13 website (http://www.cboe.com/ Exchange. Currently, Rule 5.85(h) J. Matthew DeLesDernier, AboutCBOE/ governs cabinet trading on the Exchange CBOELegalRegulatoryHome.aspx), at Assistant Secretary. and states that cabinet orders (i.e., the Exchange’s Office of the Secretary, penny cabinet and sub-penny cabinet [FR Doc. 2019–28023 Filed 12–27–19; 8:45 am] and at the Commission’s Public BILLING CODE 8011–01–P orders) may only execute on the Reference Room. Exchange’s trading floor in open outcry. II. Self-Regulatory Organization’s Therefore, penny cabinet and sub-penny Statement of the Purpose of, and cabinet orders are types of order Statutory Basis for, the Proposed Rule instructions that are available for open Change outcry trading. However, when the Exchange proposed Rule 5.83(h) and In its filing with the Commission, the incorporated it into the post-migration Exchange included statements Rulebook,3 it inadvertently did not concerning the purpose of and basis for include these cabinet order instructions the proposed rule change and discussed

any comments it received on the 3 8 Amendment No. 1 is available at: https:// See Securities and Exchange Act Release No. proposed rule change. The text of these 86994 (September 17, 2019), 84 FR 49774 www.sec.gov/comments/sr-nysearca-2019-39/ statements may be examined at the (September 23, 2019) (Proposed Rule Change To srnysearca201939-6255643-192909.pdf. places specified in Item IV below. The Amend the Exchange’s Rules Regarding Cabinet 9 See Securities Exchange Act Release No. 87301 Trading Upon the Migration of the Exchange’s (Oct. 15, 2019), 84 FR 56219 (Oct. 21, 2019). Exchange has prepared summaries, set Trading Platform to the Same System Used by the 10 Comments on the proposed rule change can be forth in sections A, B, and C below, of Cboe Affiliated Exchanges) (SR–CBOE–2019–058); found at: https://www.sec.gov/comments/sr- the most significant aspects of such see also Securities and Exchange Act Release No. nysearca-2019-39/srnysearca201939.htm. statements. 87224 (October 4, 2019), 84 FR 54652 (October 10, 2019) (SR–CBOE–2019–081), which relocated the 11 15 U.S.C. 78s(b)(2). cabinet trading rule in the post-migration Rulebook 12 Id. 1 15 U.S.C. 78s(b)(1). from Rule 5.12 to Rule 5.85(h) where it is currently 13 17 CFR 200.30–3(a)(57). 2 17 CFR 240.19b–4. located.

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in Rule 5.83(a)(2), which the Exchange thus incorporates Exchange on a class basis makes it explicit that the now proposes to include. determinations on a group basis among Exchange may continue to set the The proposed rule change also the list of other bases in Rule 1.5(b), default buffer with the same flexibility reinstates a provision from former Rule which allows the Exchange to make in order to appropriately address 8.14.01(c) 4 that was inadvertently not determinations on different bases that different trading characteristics, market included in the post-migration differ between GTH and RTH, as SPX models, and investor base of each class. Rulebook.5 Specifically, the Exchange and VIX are available for trading during Because the different characteristics relocated the provision under former both sessions. The Exchange also notes among classes may cause what would be Rule 8.14 that allows the Exchange to that because trading characteristics considered a potentially erroneous price determine to list SPX or VIX on a group during RTH may be different than those to differ among classes, the Exchange basis to post-migration Rule 4.13(f), as during GTH (such as lower trading believes it is appropriate to continue to well as removed other provisions under levels, reduced liquidity, and fewer this class-based flexibility in the former rule that had been previously participants), the Exchange believes it is determining the buffer amount for the moved to other rules as part of the appropriate to continue this flexibility fat finger check, as well as allow Users migration.6 As a result of the for determinations on a group basis. to establish class based buffer amounts restructuring, the Exchange In addition, the Exchange also notes that differ from the Exchange’s class inadvertently did not include former that it inadvertently did not include the based default amounts. The Exchange Rule 8.14.01(c) in the post-migration provision in former Rule 6.12(a)(3),8 Rulebook, which required the Exchange notes that in prior Rule 6.12(a)(3), which allowed it to determine the fat though it allowed the Exchange to to determine System trading parameters finger buffer amount on a class-by-class on a group basis to the extent the Rules determine a fat finger buffer amount on basis. The proposed rule change to Rule a class-by-class basis, it had been silent otherwise provide for such parameters 5.34(c)(1), which governs the limit order to be established on a class basis. The as to User-established buffer amounts. fat finger check, reinstates the provision The Exchange adopted language, that a Exchange continues to establish such that allows the Exchange to continue to User may establish a higher or lower parameters on a group basis, and determine a default buffer amount for amount than the Exchange default, for reinstating this provision in Rule 1.5(c) the fat finger check on a class-by-class the migration in order to make the ensures that the post-migration basis. The Exchange notes that the fat Exchange’s fat finger rule consistent Rulebook accurately reflects the manner finger check is designed to prevent limit with the corresponding fat finger rules in which the Exchange applies System orders from executing at potentially of the Affiliated Exchanges.9 Therefore, parameters to classes the Exchange lists erroneous prices, and that the Exchange the Exchange believes that the proposed on a group basis. The Exchange notes currently maintains the same class basis rule change to mirror Users’ ability to that groups of SPX and VIX series flexibility pursuant to certain other exhibit different trading characteristics price protection and risk control rules. establish buffer amounts that differ from from series listed by class, and the This flexibility allows the Exchange to the Exchange’s default buffer on a class Exchange generally establishes market apply different settings and parameters basis would provide consistency in models for options classes and groups of to address the specific characteristics of manner in which a User may establish SPX and VIX series based on the that class and its market. For example, buffer amounts around the Exchange- characteristics that most fit the product Rule 5.34(a)(2) (market order NBBO established default buffer amounts. which benefits investors. As such, the width protection), (a)(4)(B) (drill- Finally, the proposed rule change proposed rule change is designed to through protection for order that conforms the use of certain defined make it explicit in the Rules that the execute or post to the Book), and (c)(11) terms in the post-migration Rulebook. Exchange will continue to establish (buy-write/married put check) each The proposed rule change removes the System parameters on a group basis in allow the Exchange to determine the term ‘‘Hybrid System’’ from Rule 8.20, order to tailor such parameters to fit the respective price check buffer amounts and replaces it with the term ‘‘System,’’ group product characteristics. Likewise, on a class basis. As such, the proposed which is the correct defined term in the as a result of the restructuring, the rule change to reinstate the flexibility to post-migration Rulebook for the Exchange also inadvertently did not determine of the fat finger default buffer Exchange’s trading System.10 The include the former provision(s) that allowed the Exchange to make proposed rule change also capitalizes allowed, that differed between GTH and RTH, determinations on a group basis that the terms ‘‘Penny Cabinet’’ orders, including on a class-by-class or series-by-series ‘‘Sub-Penny Cabinet’’ orders, and differed between Global Trading Hours basis. Former Rule 8.14.01(c) allowed the Exchange (‘‘GTH’’) and Regular Trading Hours to determine System trading parameters on a group ‘‘Reporting Authority’’ throughout the (‘‘RTH’’).7 The proposed rule change basis to the extent the Rules otherwise provide for post-migration Rulebook. The proposed such parameters to be established on a class basis. change makes these terms uniformly Likewise, other former rules provided it could also 4 formatted in the post-migration Former Rule 8.14.01(c) provided that System make determinations on a group basis where it was trading parameters will be established by the permitted to make determinations on a class basis Rulebook, as they are currently defined Exchange on a group basis to the extent the Rules (e.g., former Rule 6.2.05 (for Exchange terms in the Rules and are capitalized in otherwise provide for such parameters to be determinations related to the opening auction some Rules but not in others.11 established on a class basis. process), and former Rule 6.45 (for Exchange 5 See Securities Exchange Act Release No. 87024 determinations related to order and quote priority 9 See Securities Exchange Act Release No. 86923 (September 19, 2019), 84 FR 50545 (September 25, and allocation). Therefore, as a whole, these (September 10, 2019), 84 FR 48664 (September 16, 2019) (Proposed Rule Change To Amend Certain provisions allowed the Exchange to make 2019) (SR–CBOE–2019–057); see also C2 Rule Rules Relating To Market-Makers Upon Migration determinations on a group basis that differed to the Trading System Used by Cboe Affiliated between trading sessions. 6.14(c)(1); and EDGX Options Rule 21.17(b)(7). 10 Exchanges) (SR–CBOE–2019–059), which removed 8 Former Rule 6.12(a)(3) provided, in part, that an See Rule 1.1. The Exchange also notes that the Rule 8.14.01, but did not relocate it to the post- acceptable tick distance would be determined by term ‘‘Hybrid class’’ is no longer a relevant migration Rulebook. the Exchange on a class-by-class basis (or a distinction because, as of 2018, all classes listed for 6 See Securities Exchange Act Release No. 87337 premium basis, which was intentionally removed trading on the Exchange now trade on the same (October 17, 2019), 84 FR 56879 (October 23, 2019) from the rule to coincide with planned migration platform (prior to that, certain classes traded on the (SR–CBOE–2019–092). functionality). The Exchange notes that the fat Exchange’s Hybrid 3.0 platform, while most classes 7 Former Rule 6.1A(i) allowed the Exchange to finger buffer amount was referred to as the traded on the Exchange’s Hybrid platform). make a determination, to the extent the Rules ‘‘acceptable tick distance’’ in this former provision. 11 See Rule 1.1.

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2. Statutory Basis B. Self-Regulatory Organization’s become operative immediately upon The Exchange believes the proposed Statement on Burden on Competition filing. The Exchange states that waiver rule change is consistent with the The Exchange does not believe that of the operative delay would allow the Securities Exchange Act of 1934 (the the proposed rule change will impose Exchange to immediately correct ‘‘Act’’) and the rules and regulations any burden on competition that is not inaccuracies that resulted from the recent restructuring of the Exchange’s thereunder applicable to the Exchange necessary or appropriate in furtherance Rulebook, reinstate rule text that was and, in particular, the requirements of of the purposes of the Act. The inadvertently omitted from the post- Section 6(b) of the Act.12 Specifically, proposed rule change is not intended as migration Rulebook, and update and the Exchange believes the proposed rule a competitive filing, as it merely uniformly format certain defined terms. change is consistent with the Section updates the Rules to accurately The Commission finds that it is 6(b)(5) 13 requirements that the rules of reference the current, post-migration consistent with the protection of an exchange be designed to prevent Rules. The proposed rule change is investors and the public interest to fraudulent and manipulative acts and corrective in nature. The proposed rule waive the 30-day operative delay to practices, to promote just and equitable change generally makes no substantive allow the Exchange to correct changes to the rules (one change merely principles of trade, to foster cooperation inaccuracies and inadvertent omissions updates a Rule to provide consistency and coordination with persons engaged from the rules, which may help prevent between inadvertently omitted in regulating, clearing, settling, investor confusion. The Commission functionality now being reinstated and processing information with respect to, notes that the proposed change does not correlated functionality which had been and facilitating transactions in raise new or novel regulatory issues. adopted post-migration), and thus will securities, to remove impediments to Accordingly, the Commission hereby have no impact on trading on the and perfect the mechanism of a free and waives the operative delay and Exchange. open market and a national market designates the proposal operative upon system, and, in general, to protect C. Self-Regulatory Organization’s filing.19 investors and the public interest. Statement on Comments on the At any time within 60 days of the Additionally, the Exchange believes the Proposed Rule Change Received From filing of the proposed rule change, the proposed rule change is consistent with Members, Participants, or Others Commission summarily may the Section 6(b)(5) 14 requirement that temporarily suspend such rule change if The Exchange neither solicited nor the rules of an exchange not be designed it appears to the Commission that such received comments on the proposed to permit unfair discrimination between action is necessary or appropriate in the rule change. customers, issuers, brokers, or dealers. public interest, for the protection of The proposed rule change is generally III. Date of Effectiveness of the investors, or otherwise in furtherance of intended to correct inaccuracies that Proposed Rule Change and Timing for the purposes of the Act. If the resulted from the recent restructuring of Commission Action Commission takes such action, the the Exchange’s Rulebook. The proposed Commission shall institute proceedings corrections to correct inaccurate cross- Because the foregoing proposed rule change does not: (i) Significantly affect to determine whether the proposed rule references within various Rules, should be approved or disapproved. reinstating rule text that was the protection of investors or the public inadvertently omitted from the post- interest; (ii) impose any significant IV. Solicitation of Comments migration Rulebook (majority of which burden on competition; and (iii) become Interested persons are invited to will allow the Exchange to continue to operative for 30 days after the date of submit written data, views, and tailor certain settings to address the filing, or such shorter time as the arguments concerning the foregoing, different product characteristics and Commission may designate, the including whether the proposed rule market conditions, thereby protecting proposed rule change has become change is consistent with the Act. investors), updating a Rule to provide effective pursuant to 19(b)(3)(A) of the 15 16 Comments may be submitted by any of consistency in connection with Act and Rule 19b–4(f)(6) the following methods: functionality available pre-migration thereunder. Electronic Comments (and being reinstated in the Rules) that A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the • Use the Commission’s internet is directly associated with functionality 17 now available as of post-migration, and Act normally does not become comment form (http://www.sec.gov/ updating or uniformly formatting operative for 30 days after the date of its rules/sro.shtml); or filing. However, Rule 19b–4(f)(6)(iii) • Send an email to rule-comments@ certain defined terms are designed to 18 protect investors by ensuring that these under the Act permits the sec.gov. Please include File Number SR– Rules accurately reference and reflect Commission to designate a shorter time CBOE–2019–118 on the subject line. if such action is consistent with the the current, post-migration Rules in Paper Comments place, thereby mitigating any potential protection of investors and the public • Send paper comments in triplicate investor confusion. The proposed rule interest. The Exchange has asked the to Secretary, Securities and Exchange change will have no impact on trading Commission to waive the 30-day Commission, 100 F Street NE, on the Exchange, as almost all of the operative delay so that the proposal may Washington, DC 20549–1090. proposed rule changes are non- 15 15 U.S.C. 78s(b)(3)(A). substantive in nature (as stated above, All submissions should refer to File 16 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– Number SR–CBOE–2019–118. This file one proposed change merely updates a 4(f)(6) requires a self-regulatory organization to give Rule to provide consistency in the Commission written notice of its intent to file number should be included on the connection functionality now correlated the proposed rule change at least five business days subject line if email is used. To help the with it as of post-migration). prior to the date of filing of the proposed rule change, or such shorter time as designated by the 19 For purposes only of waiving the 30-day Commission. The Exchange has satisfied this operative delay, the Commission has also 12 15 U.S.C. 78f(b). requirement. considered the proposed rule’s impact on 13 15 U.S.C. 78f(b)(5). 17 17 CFR 240.19b–4(f)(6). efficiency, competition, and capital formation. See 14 Id. 18 17 CFR 240.19b–4(f)(6)(iii). 15 U.S.C. 78c(f).

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Commission process and review your Securities and Exchange Commission quotations (‘‘NBBO’’),7 representing the comments more efficiently, please use (‘‘SEC’’ or ‘‘Commission’’) the proposed best displayed bid and offer prices that only one method. The Commission will rule change as described in Items I and are available in the market at any point post all comments on the Commission’s II below, which Items have been in time. By sending orders to ‘‘take internet website (http://www.sec.gov/ prepared by the Exchange. The liquidity’’ against orders that are resting rules/sro.shtml). Copies of the Commission is publishing this notice to on exchanges or other trading venues in submission, all subsequent solicit comments on the proposed rule very small windows of time, generally amendments, all written statements change from interested persons. no more than a few milliseconds before with respect to the proposed rule an anticipated change in the NBBO, change that are filed with the I. Self-Regulatory Organization’s trading firms seeking to exploit these Commission, and all written Statement of the Terms of Substance of speed and information asymmetry communications relating to the the Proposed Rule Change advantages can profit, to the proposed rule change between the (a) Pursuant to the provisions of corresponding disadvantage of Commission and any person, other than Section 19(b)(1) under the Act,4 and institutional investors and other those that may be withheld from the Rule 19b–4 thereunder,5 IEX is filing participants, whose resting orders are public in accordance with the with the Commission a proposed rule ‘‘picked off’’ by these faster firms at provisions of 5 U.S.C. 552, will be change to add a new Discretionary Limit ‘‘stale’’ prices. available for website viewing and order type (a ‘‘D-Limit’’ order). IEX further believes that this trading printing in the Commission’s Public The text of the proposed rule change activity creates a substantial Reference Room, 100 F Street NE, is available at the Exchange’s website at disincentive to market participants to Washington, DC 20549 on official www.iextrading.com, at the principal provide exchange quotes and other business days between the hours of office of the Exchange, and at the orders that rest on exchanges’ order 10:00 a.m. and 3:00 p.m. Copies of the Commission’s Public Reference Room. books. To compensate for the resulting filing also will be available for adverse selection, among other reasons, inspection and copying at the principal II. Self-Regulatory Organization’s many exchanges employ maker-taker office of the Exchange. All comments Statement of the Purpose of, and style fee schedules which pay rebates to received will be posted without change. Statutory Basis for, the Proposed Rule liquidity providers that trade on their Persons submitting comments are Change markets (‘‘Maker-Taker’’). cautioned that we do not redact or edit This phenomenon, commonly In its filing with the Commission, the personal identifying information from referred to as ‘‘latency arbitrage,’’ has self-regulatory organization included comment submissions. You should led to proposals by equity and futures statements concerning the purpose of submit only information that you wish markets specifically designed to provide and basis for the proposed rule change to make available publicly. All protection for resting orders in order to and discussed any comments it received submissions should refer to File incentivize market makers and other on the proposed rule change. The text Number SR–CBOE–2019–118 and liquidity providers to maintain tighter of these statements may be examined at should be submitted on or before spreads with larger size. Most recently, the places specified in Item IV below. January 21, 2020. Cboe EDGA Exchange, Inc. (‘‘EDGA’’) The self-regulatory organization has proposed a four-millisecond For the Commission, by the Division of prepared summaries, set forth in asymmetrical delay mechanism or Trading and Markets, pursuant to delegated Sections A, B, and C below, of the most authority.20 ‘‘speed bump’’ that would apply only to significant aspects of such statements. Eduardo A. Aleman, incoming executable orders.8 As set Deputy Secretary. A. Self-Regulatory Organization’s forth in its rule change proposal seeking [FR Doc. 2019–28174 Filed 12–27–19; 8:45 am] Statement of the Purpose of, and Commission approval of this BILLING CODE 8011–01–P Statutory Basis for, the Proposed Rule asymmetrical speedbump, EDGA states Change that the purpose of the asymmetrical speed bump is to provide ‘‘an 1. Purpose SECURITIES AND EXCHANGE opportunity for liquidity providers to COMMISSION The Exchange proposes to introduce a process cross-asset signals, and update their published quotations accordingly, [Release No. 34–87814; File No. SR–IEX– new order type, a Discretionary Limit or 2019–15] ‘‘D-Limit’’ order, that is designed to before trading at stale prices with orders protect liquidity providers from submitted by opportunistic trading Self-Regulatory Organizations: potential adverse selection by latency firms that benefit from a latency Investors Exchange LLC; Notice of arbitrage trading strategies.6 advantage.’’ 9 The EDGA proposal describes the challenges for liquidity Filing of Proposed Rule Change To Background Add a New Discretionary Limit Order providers as follows: Type IEX believes that in the current Today, liquidity providers are frequently market environment, market unable to adjust their displayed quotes based December 20, 2019. participants that have access to the on changes in market information . . . before 1 Pursuant to Section 19(b)(1) of the fastest and most complete view of the fastest trading firms can trade against Securities Exchange Act of 1934 (the market data from all the major their quotes. Market makers and other 2 3 ‘‘Act’’), and Rule 19b–4 thereunder, exchanges are able to predict imminent liquidity providers use sophisticated pricing notice is hereby given that on December changes to national best bid and offer 16, 2019, the Investors Exchange LLC 7 The term ‘‘NBBO’’ means the national best bid (‘‘IEX’’ or the ‘‘Exchange’’) filed with the or offer, as set forth in Rule 600(b) of Regulation 4 15 U.S.C. 78s(b)(1). NMS under the Act, determined as set forth in IEX 5 17 CFR 240.19b–4. Rule 11.410(b). See IEX Rule 1.160(u). 20 17 CFR 200.30–3(a)(12). 6 As proposed, a D-Limit order is also eligible to 8 See Securities Exchange Act Release No. 86168 1 15 U.S.C. 78s(b)(1). take resting liquidity on entry. If not executed on (June 20, 2019), 84 FR 30282 (June 26, 2019) (SR– 2 15 U.S.C. 78a. entry, the order will post to the Order Book and be CboeEDGA–2019–012). 3 17 CFR 240.19b–4. available to provide liquidity. 9 See supra note 8, at 30283.

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algorithms to determine how to price executed at stale prices when incoming Quotations 17 and a proprietary securities in the often hundreds or thousands orders by other exchange participants mathematical calculation (the ‘‘quote of equity securities that they quote. . . . The with the advantage of a more current instability calculation’’) to assess the potential for trading at stale prices increases risk for firms that wish to provide liquidity view of market prices seek to execute probability of an imminent change to to the market, and harms market quality by against resting pegged orders on IEX. the current Protected NBB to a lower causing liquidity providers to enter quotes The speed bump works together with price or Protected NBO to a higher price that are wider or for a smaller size than they certain non-displayed order types that for a particular security (‘‘quote may otherwise be willing to trade.10 are designed to provide further instability factor’’). When the quoting As discussed more fully below, IEX’s protection to non-displayed orders and activity meets predefined criteria and proposal to establish a D-Limit order encourage brokers to place those orders the quote instability factor calculated is type is designed to protect liquidity on IEX. These include Discretionary greater than the Exchange’s defined providers, institutional investors as well Peg 13 (‘‘DPeg’’), which, in its current quote instability threshold, the as market makers, from potential iteration, is an order pegged to trade at System 18 treats the quote as unstable adverse selection by latency arbitrage one minimum price variation, or ‘‘tick,’’ and the CQI is on at that price level for trading strategies in a fair and below the national best bid (‘‘NBB’’),14 up to two milliseconds (hereafter nondiscriminatory manner, without, as in the case of buy orders, or one tick referred to as the ‘‘quote instability some commenters have mentioned, above the national best offer (‘‘NBO’’),15 determination price level’’ or the ‘‘CQI introducing concerns around in the case of sell orders, unless the Price’’). During all other times, the quote unnecessary complexity, disparate submitter of the order has specified a is considered stable, and the CQI is off. treatment, and fair access by limit price that is less aggressive than The System independently assesses the institutional investors to displayed this default resting price. For most stability of the Protected NBB and quotations that have been voiced with stocks, the minimum tick under Protected NBO for each security.19 regard to the EDGA asymmetrical speed Commission rules is one cent. In most When IEX determines, pursuant to the bump proposal.11 circumstances, DPeg orders can also CQI methodology, that the current Since before and after it became an trade at a more aggressive price (one market for a security is unstable— exchange, IEX has sought to design its more favorable to the counterparty), but meaning there is a heightened market in a way that creates a only to the midpoint, when there are probability of an imminent quote transparent and level playing field incoming orders that are willing to trade change at the NBB or NBO—IEX’s where both investors and market at that price. System will prevent DPeg and PPeg professionals can participate and have Similarly, the primary peg 16 (‘‘PPeg’’) orders on that side of the market from confidence in the fairness of the system. order type is pegged to one tick below exercising discretion and trading at a In general, these aspects of our market the NBB, for a buy order, and one tick price that is more aggressive than their involve ways to counter or reduce speed above the NBO, for a sell order, but is default resting prices. In this way, IEX advantages that can harm investors by also available to trade at a price up to seeks to protect these orders from being exposing them to execution at stale the NBB or down to the NBO, unless executed at unfavorable prices during prices when their orders are traded further restricted by the order’s limit these very short periods of time when against by traders with more complete price. When DPeg and PPeg orders are they face a high risk that the market and timely information about market eligible to trade at prices more price will immediately move against prices. aggressive than their default prices, they them, and IEX’s System allows them to These aspects include the use of a so- are said to be ‘‘exercising discretion’’ to trade at more aggressive prices, with a called ‘‘speed bump,’’ a symmetrical trade at these more aggressive prices. higher probability of execution, in all delay mechanism consisting of a length In addition, IEX uses a proprietary other circumstances. of coiled optical fiber, which, together mathematical calculation, the crumbling DPeg and PPeg orders have been with the physical distance from the quote indicator (‘‘CQI’’), to determine widely adopted by a diverse group of location where members connect to the when its pegged order types are eligible IEX Members. During September 2019, IEX systems where orders are matched, to exercise discretion. The CQI is a such orders constituted 38% of overall delays all incoming orders by 350 transparent formula, codified in IEX’s IEX traded volume (DPeg volume was microseconds. The speed bump is rulebook, designed to predict whether a 35% and PPeg volume was 3%) and designed to protect non-displayed particular quote is unstable or 55% of liquidity adding volume (DPeg orders, typically placed on behalf of ‘‘crumbling,’’ meaning that the NBB is volume was 49% and PPeg volume was institutional investors, that are likely about to decline or the NBO is 6%). 70 of 145 IEX Members traded ‘‘pegged’’ to a given price, often the likely about to increase. As set forth in using DPeg or PPeg orders (these midpoint of the NBBO, i.e., the IEX Rule 11.190(g), the Exchange Members represent 90% of the total 12 Midpoint Price. The speed bump utilizes real time relative quoting volume traded on IEX), with 84% of this allows IEX’s matching engine to update activity of certain Protected volume originating from full-service the prices of resting pegged orders in firms, 9% from proprietary trading line with price changes on other 13 See IEX Rule 11.190(b)(10). IEX has two other markets to lessen the possibility of order types that are based on the DPeg order type: 17 Pursuant to IEX Rule 11.190(g), references to adverse selection when a new Midpoint The Retail Liquidity Provider order and the ‘‘Protected Quotations’’ include quotations from the Price is established. By repricing the Corporate Discretionary Peg order. See Rule New York Stock Exchange LLC (‘‘NYSE’’); The order based on the current market, 11.190(b)(14) and (16). Nasdaq Stock Market LLC (‘‘Nasdaq’’); NYSE Arca, 14 The term ‘‘NBB’’ shall mean the national best Inc. (‘‘NYSE Arca’’); Nasdaq BX, Inc. (‘‘Nasdaq resting orders are less likely to be bid, as set forth in Rule 600(b) of Regulation NMS BX’’); Cboe BZX Exchange, Inc. (‘‘Cboe BZX’’); Cboe under the Act, determined as set forth in IEX Rule BYX Exchange, Inc. (‘‘Cboe BYX’’); Cboe EDGX 10 See supra note 8, at 30283. 11.410(b). See Rule 1.160(u). Exchange, Inc. (‘‘EDGX’’); and EDGA. 11 See comments on Release No. 34–86168; File 15 The term ‘‘NBO’’ shall mean the national best 18 See IEX Rule 1.160(nn). No. SR–CboeEDGA–2019–012 available at: https:// offer, as set forth in Rule 600(b) of Regulation NMS 19 IEX has revised the CQI formula twice since its www.sec.gov/comments/sr-cboeedga-2019-012/ under the Act, determined as set forth in IEX Rule exchange launch in order to enhance the accuracy srcboeedga2019012.htm. 11.410(b). See Rule 1.160(u). of the CQI in predicting quote instability and 12 See IEX Rule 1.160(t). 16 See IEX Rule 11.190(b)(8). increasing the protection provided to pegged orders.

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firms, and 7% from agency firms.20 IEX when the CQI is on, compared to only The Exchange further believes that believes that this usage evidences that a 3% of nondisplayed volume during providing such protection would large range of market participants with September 2019. As discussed in detail incentivize the entry of liquidity diverse business models have a high below, IEX trading data reveals that providing orders on IEX by protecting degree of confidence in the utility of the liquidity-providing orders that are such orders from adverse selection by CQI formula. executed while the CQI is on are subject market participants leveraging All of these aspects of IEX’s design— to significant differences in short term sophisticated latency arbitrage strategies the speed bump, the pegged order types, markouts,23 compared to liquidity- to exploit informational advantages and the CQI—are designed to work providing orders executed when the CQI when IEX’s probabilistic model together to provide better execution is off, and the significant volume of determines that the market appears to be opportunities for these orders, which orders that are sent during these very moving adversely to them. are favored by institutional investors, by small time intervals (on IEX as well as Accordingly, IEX is proposing the D- protecting them from being executed at other exchanges) accentuates this Limit order type as an alternative means inferior prices in narrow time windows impact. of encouraging market makers and other when the NBBO is in transition. As Maker-Taker exchanges use rebate participants, including institutional described further below, these features payments to induce participants to post investors, to provide liquidity, by have provided substantial benefits in quotes and other resting orders on adjusting the price of these orders in the terms of execution outcomes to exchanges notwithstanding these narrow time windows when the CQI is investors and other participants using negative impacts. A variety of on, to better protect them from being these IEX order types. significant concerns have been raised ‘‘picked off’’ during those intervals. IEX In addition to these other features of regarding the effect of paying rebates as believes that D-Limit represents a IEX’s market, since January 1, 2018, IEX compensation to a relatively small logical extension of its efforts to date to has imposed an additional fee on number of liquidity providers, which create a trading platform that Members that send more than a certain include conflicts of interest, increased encourages participation by investors threshold of their orders to take market fragmentation, effectiveness, and and market professionals and liquidity during periods when the CQI adding unnecessary complexity to maximizes opportunities for investors to is on (the ‘‘CQ Remove Fee’’). The CQ overall equity market structure by trade at a fair price. D-Limit orders Remove Fee is intended to incentivize incentivizing market participants to would be available to all IEX Members participants to send orders to provide attempt to continually readjust their in a fair and nondiscriminatory manner. liquidity to IEX by reducing the volume order routing to navigate a multitude of As discussed further below, IEX of orders involving trading strategies constantly changing transaction fee believes that exchanges must be allowed that seek to exploit information schedules.24 The Commission has to innovate in narrowly targeted ways to advantages while the NBBO is in adopted a transaction fee pilot, to assess protect resting orders from being transition. The CQ Remove Fee has these concerns about existing exchange unfairly exploited by information resulted in an incremental reduction in fee structures, which is designed to test asymmetries. IEX also believes such the use of such strategies on IEX. IEX potential improvements to market measures are important to enhance the believes the limited impact from the fee quality from reducing access fees and value and integrity of protected quotes is a result of the fact that the potential prohibiting rebates on all exchanges.25 generally, and that D-Limit will benefit profits from the use of such strategies Moreover, the substantial use of ‘‘Taker- market quality by leading to deeper substantially exceed the profits lost Maker’’ exchange fee models, which liquidity, displayed and non-displayed, from the CQ Remove Fee.21 charge fees to liquidity providing orders and increased opportunities for The innovations IEX has introduced participants interacting with this have succeeded in providing new and pay rebates to liquidity taking orders, evidences that exchanges can liquidity to receive favorable execution opportunities for investors, executions. particularly through the use of the compete for displayed order flow pegged order types described above, and without paying rebates. Proposal they have provided IEX participants In view of these factors, the Exchange The Exchange proposes to amend IEX with opportunities for improved believes that it is appropriate to also Rule 11.190(b)(7), which is currently executions compared to other venues.22 leverage the CQI to expand the IEX reserved, to add a D-Limit order which At the same time, IEX believes that the protective design to displayed and non- 26 may be a displayed or non-displayed willingness of market participants to pegged non-displayed limit orders. limit order that upon entry and when provide liquidity through other order 27 23 posting to the Order Book, is priced to types, including displayed orders, is The term markouts refers to changes in the midpoint of the NBBO measured from the be equal to and ranked at the order’s substantially negatively affected by the perspective of either the liquidity providing resting limit price,28 but will be adjusted to a trading strategies described above. order or liquidity removing taking order over a less-aggressive price during periods of Without an order type that leverages the specified period of time following the time of quote instability, as defined in IEX Rule protective features of the CQI, 24% of execution. 24 See generally, transcript of Commission 11.190(g), as described more fully displayed volume on IEX is executed ‘‘Roundtable on Market Data Products, Market Access Services, and their Associated Fees’’ pegged order. See IEX Rule 11.190(b)(3). 20 See infra note 58 and accompanying text for a (October 25, 2018) available at: https:// Furthermore, pegged orders can be submitted with discussion of IEX’s classification of its Members’ www.sec.gov/spotlight/equity-market-structure- or without a limit price, with the exception of logical order entry ports. roundtables/roundtable-market-data-market- Market Maker Peg orders, which must be limit 21 The Exchange is effectively limited in setting access-102518-transcript.pdf. orders. See IEX Rule 11.190(b)(8), (9), (10), (13), and the CQ Remove Fee by Rule 610(c) of Regulation 25 See Securities Exchange Act Release 84875 (16). NMS. 17 CFR 242.610(c). (December 19, 2018); 84 FR 5202 (February 20, 27 See IEX Rule 1.160(p). 22 See, e.g., Wah, Elaine, et al. ‘‘A Comparison of 2019). 28 A non-displayed D-Limit order with a limit Execution Quality across U.S. Stock Exchanges,’’ 26 IEX currently allows limit orders to be either price more aggressive than the Midpoint Price will (April 19, 2017), available at https://iextrading.com/ ‘‘displayed, non-displayed, or partially displayed.’’ be subject to the Midpoint Price Constraint and be docs/A%20Comparison%20 See IEX Rule 11.190(a)(1). Displayed orders must be booked and ranked on the Order Book at a price of%20Execution%20Quality%20 limit orders, see IEX Rule 11.190(b)(1), but non- equal to the Midpoint Price pursuant to IEX Rule across%20U.S.%20Stock%20Exchanges.pdf. displayed orders can be either a market, limit, or 11.190(h)(2).

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below. Otherwise, a D-Limit order will market condition changes such that the price of 10.05 is resting on the IEX Order operate in the same manner as a condition necessitating the price sliding Book at its limit price. A quote instability displayed or non-displayed limit order, is no longer applicable.34 determination is made at the PBB 42 of 10.05. as applicable. Pursuant to proposed IEX Rule Because the limit (and displayed) price of the D-Limit order is equal to the CQI Price, the As proposed, if upon entry of a D- 11.190(b)(7), a D-Limit order: price of the order is adjusted to 10.04. Limit buy (sell) order the CQI is on and (A) Must be submitted with a limit price. 2. The PBBO in XYZ is 10.05–10.10 and a the order has a limit price equal to or (B) May have a TIF of DAY, GTX, SYS or displayed D-Limit order to buy with a limit higher (lower) than the quote instability GTT. price of 10.04 is resting on the IEX Order determination price level (i.e., the CQI (C) Is not eligible for routing pursuant to Book at its limit price. A quote instability Price), the price of the order will be IEX Rule 11.230(b) and (c)(2). determination is made at the PBB of 10.05. automatically adjusted by the System to (D) May not be an ISO.35 Because the limit and displayed price of the one (1) MPV 29 lower (higher) than the (E) Is eligible to trade only during the D-Limit order is less than the CQI Price, the Regular Market Session.36 A D-Limit order price of the order is not adjusted. CQI price. Similarly, when unexecuted marked with a TIF of DAY that is submitted 3. Following the order adjustment in shares of a D-Limit buy (sell) order are to the System before the opening of the Example 1, the PBB reverts to 10.05. The posted to the Order Book, if a quote Regular Market Session will be queued by the order remains displayed at its adjusted limit instability determination is made and System until the start of the Regular Market price of 10.04 because a D-Limit order that such shares are ranked and displayed Session; a D-Limit order marked with a TIF has been adjusted continues to be ranked and (in the case of a displayed order) by the other than DAY will be rejected when displayed at its adjusted price, regardless of System at a price equal to or higher submitted to the System during the Pre- a change in the PBB, unless subject to 37 (lower) than the CQI Price, the price of Market Session. A D-Limit order submitted another automatic adjustment. into the System after the closing of the 4. Following the order adjustment in the order will be automatically adjusted Regular Market Session will be rejected. Example 1, a new quote instability by the System to one (1) MPV lower (F) May not be a minimum quantity determination is made at the PBB of 10.04. (higher) than the CQI Price. A D-Limit order.38 Because the limit and displayed price of the order that is subject to an automatic (G) May be an odd lot, round lot, or mixed D-Limit order is equal to the CQI Price, the adjustment will not revert to the price lot. However, a D-Limit order marked for price of the order is adjusted again to 10.03. at which it was previously ranked and display will not be displayed unless it is at 5. Following the order adjustment in displayed (in the case of a displayed least one round lot. If a D-Limit order marked Example 1, the PBB reverts to 10.05 and a order). Once the price of a D-Limit order for display is submitted with, or decremented new quote instability determination is made either by execution or the User order at the PBB of 10.05. Because the limit and that has been posted to the Order Book amendment to an order quantity of less than displayed price of the D-Limit order is lower is automatically adjusted by the System, one round lot, it will be treated as an odd lot than the CQI Price, the price of the order is the order will continue to be ranked and order which is, by definition, non-displayed not adjusted. displayed (in the case of a displayed and will receive a new time stamp, pursuant 6. The PBBO in XYZ is 10.05–10.10 and a order) at the adjusted price, unless to IEX Rule 11.220(a)(3). non-displayed D-Limit order to buy with a subject to another automatic adjustment, (H) May not be a Reserve Order.39 limit price of 10.06 is resting on the IEX or if the order is subject to the price (I) Displayed Discretionary Limit orders are Order Book at its limit price. A quote sliding provisions of IEX Rule 11.190(h). not eligible to be invited by the System to instability determination is made at the PBB Recheck as described in IEX Rule of 10.05. Because the limit price of the D- When the price of a D-Limit order is 11.230(a)(4)(D). Limit order is higher than the CQI Price, the adjusted the order will receive a new (J) Discretionary Limit orders are subject to price of the order is adjusted to 10.04. time priority. If multiple D-Limit orders the Price Sliding provisions of IEX Rule 7. The PBBO in XYZ is 10.05–10.10 and a are adjusted at the same time, their 11.190(h). non-displayed D-Limit order to buy with a relative time priority will be The proposed rule change would thus limit price of 10.05 is resting on the IEX maintained. Further, when the price of Order Book at its limit price. A quote extend the protective features of the CQI instability determination is made at the PBB a D-Limit order is adjusted, the Member to displayed and non-displayed D-Limit that entered the order will receive an of 10.05. Because the limit price of the D- orders to protect such orders from Limit order is equal to the CQI Price, the order restatement message from the potential adverse selection by price of the order is adjusted to 10.04. Exchange notifying the Member of the Subsequently, the PBB moves to 10.03 and a 30 preventing them from trading at a price price adjustment. that IEX’s CQI formula predicts is new quote instability determination is made D-Limit orders are subject to the price unstable and thus imminently stale. at the PBB of 10.03. The price of the order sliding provisions of IEX Rule 11.190(h), The following examples illustrate the is adjusted to a price of 10.02. as noted above. This provision provides 8. The PBBO in XYZ is 10.05–10.10 and operation of the price adjustment the quote instability determination is in for price sliding in the event of a locked functionality of D-Limit orders: 40 or crossed market, to enforce the effect for the PBB at 10.05. A D-Limit order Midpoint Price Constraint,31 to comply 1. The PBBO 41 in XYZ is 10.05–10.10 and to buy XYZ with a limit price of 10.05 enters a displayed D-Limit order to buy with a limit the IEX Order Book. Because the limit price with the display or execution of the order is equal to the CQI Price in effect, requirements for a short sale order not 34 See IEX Rule 11.190(h) for a complete the price of the order is adjusted to and marked short exempt during a Short description of the price sliding provisions. See also booked at 10.04.43 Sale Period,32 or to comply with the note 28 supra regarding applicability of the 9. The PBBO in XYZ is 10.05–10.10 and Limit Up-Limit Down Price Midpoint Price Constraint. the quote instability determination is in Constraint.33 As set forth in IEX Rule 35 See IEX Rule 11.190(b)(12). 11.190(h), an order that has been subject 36 See IEX Rule 1.160(gg). set forth in IEX Rule 11.410(b). See IEX Rule 37 See IEX Rule 1.160(z). 1.160(cc). to price sliding will be repriced back to 38 its more aggressive limit price when the See IEX Rule 11.190(b)(11). 42 The term ‘‘PBB’’ refers to the national best bid 39 See IEX Rule 11.190(b)(2). that is a protected quotation, determined as set forth 40 The following examples all describe D-Limit in IEX Rule 11.410(b). See IEX Rule 1.160(cc). 29 See IEX Rule 11.210. buy orders. Each of the examples also applies to a 43 The order is not executable on entry at 10.04 30 A restatement notice is an automated message D-Limit sell order, except that any price because of the Midpoint Price Constraint. Pursuant from the Exchange System informing the Member adjustments to a D-Limit sell order would adjust the to IEX Rule 11.190(h)(2), a non-displayed limit that the price of its order has been adjusted. order price to one MPV above the CQI Price in order posting to the Order Book which has a limit 31 See note 28 supra. effect. price more aggressive than the Midpoint Price will 32 See IEX Rule 11.290(d). 41 The term ‘‘PBBO’’ refers to the national best bid be booked and ranked on the Order Book non- 33 See IEX Rule 11.190(h)(5). or offer that is a protected quotation, determined as displayed at a price equal to the Midpoint Price.

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effect for the PBB at 10.05. A D-Limit order adjust an order in the brief time period profile on the Exchange to the benefit of to buy XYZ with a limit price of 10.04 enters that an incoming order is delayed. all market participants. Based on market the IEX Order Book. Because the limit price IEX is not proposing any changes to data analysis during September 2019, of the order is lower than the CQI Price in IEX Rule 11.240(c) which specifies that the Exchange identified that there are effect, the price of the order is not adjusted.44 10. The PBBO in XYZ is 10.05–10.10 and the System operates as an ‘‘automated significant differences in short term the quote instability determination is in market center’’ and displays ‘‘automated markouts (and pro forma profit and effect for the PBB at 10.05. A D-Limit order quotations’’ within the meaning of loss) 55 for resting and taking orders to buy XYZ with a limit price of 10.06 enters Regulation NMS, except in the event between executions when the CQI is on the IEX Order Book. Because the limit price that a systems malfunction renders the and off, regardless of whether the NBB of the order is higher than the CQI Price in System incapable of displaying (NBO) moves lower (higher) within two effect, the price of the order is adjusted to automated quotations. Automated milliseconds of the Exchange’s and booked at 10.04.45 11. The PBBO in XYZ is 10.05–10.10 and quotations of an automated trading determination of quote instability. the quote instability determination is in center are protected quotations pursuant Specifically, when the CQI is on, effect for the PBB at 10.05. The PBB crumbles to Rule 600(b)(62) of Regulation NMS 50 liquidity removing orders that execute to 10.04 but the quote instability and entitled to trade-through protection on IEX (trading with a liquidity determination is still in effect at 10.05. A D- pursuant to Rule 611 of Regulation providing order resting on the Order Limit order to buy XYZ with a limit price of NMS 51 (the ‘‘Order Protection Rule’’). Book, including but not limited to 10.05 enters the IEX Order Book. Because the Consequently, displayed D-Limit orders Discretionary Peg and primary peg limit price of the order is equal to the CQI will qualify as automated quotations orders) experience positive price Price in effect, the price of the order is adjusted to and booked at 10.04.46 within the meaning of Regulation NMS markouts one second after the trade on 12. The PBBO in XYZ is 10.04–10.10 and (except in the event that a systems a share basis 76% of the time, compared the quote instability determination is in malfunction renders the System to 23.5% of the time when the CQI is effect at 10.05 (the prior PBB). A D-Limit incapable of displaying automated off. Correspondingly, resting liquidity order to buy XYZ with a limit price of 10.05 quotations).52 providing orders that trade when the enters the IEX Order Book. Because the limit CQI is on experience negative price 2. Statutory Basis price of the order is equal to the CQI Price markouts one second after the trade in effect, the price of the order is adjusted to IEX believes that the proposed rule 76% of the time, compared to 23.5% of and booked at 10.04.47 change is consistent with the provisions the time when CQI is off. Similarly, 13. The PBBO in XYZ is 10.04–10.10 and of Section 6(b) 53 of the Act in general, the quote instability determination is in 55.9% of all orders received when the effect at 10.05 (the prior PBB). A D-Limit and furthers the objectives of Section CQI is on (whether or not executed on order to buy XYZ with a limit price of 10.06 6(b)(5) of the Act 54 in particular, in that IEX) arrive immediately prior to a enters the IEX Order Book. Because the limit it is designed to prevent fraudulent and favorable price move (based on one price of the order is higher than the CQI Price manipulative acts and practices, to second markouts), compared to 19.5% in effect, the price of the order is adjusted to promote just and equitable principles of of orders received when the CQI is off. 48 and booked at 10.04. trade, to remove impediments to and Moreover, the breakdown of orders 14. The PBBO in XYZ is 10.04–10.10 and perfect the mechanism of a free and entered and shares removed when the the quote instability determination is in open market and a national market effect at 10.05 (the prior PBB). A D-Limit CQI is on or off evidences that certain order to buy XYZ with a limit price of 10.04 system, and, in general, to protect trading strategies appear to involve enters the IEX Order Book. Because the limit investors and the public interest. entering liquidity taking orders targeting price of the order is lower than the CQI Price Specifically, the Exchange believes the resting orders at prices that are likely to in effect, the price of the order is booked at proposed rule change is consistent with imminently move adversely from the 10.04.49 the protection of investors and the perspective of the resting order. Across D-Limit orders would be available to public interest because it is designed to all approximately 8,000 symbols all Members on a fair and impartial protect resting D-Limit orders from available for trading on IEX, the CQI is basis and no particular technology or adverse selection associated with on only 1.64 seconds per symbol per access to high speed connectivity or latency arbitrage by limiting execution day on average (0.007% of the time market data is necessary to obtain the to one MPV lower than the CQI Price during regular market hours),56 but protective benefits of a D-Limit order. (for buy orders) or one MPV higher than 33.7% of marketable orders 57 are The Exchange will adjust the price of a the CQI Price (for sell orders) when the received during those time periods, D-Limit order based on the transparent, Exchange’s probabilistic model which indicates that certain types of rule-based CQI formula. In contrast, the identifies that the NBB or NBO appears trading strategies are seeking to use of ‘‘asymmetric’’ speed bumps to be moving adversely to them, thereby (those imposed only on the taker of reducing the potential to execute at an 55 For purposes of this analysis, a pro forma profit liquidity) in order to provide a benefit imminently stale price. or loss is calculated as the difference between the midpoint of the NBBO at the time of the execution to resting orders, requires access to In addition, the Exchange believes that the proposed rule change is compared to one second after. sophisticated technology, connectivity 56 On a volume weighted basis, the CQI is on for and market data in order to cancel or consistent with the protection of 5.9 seconds per day per symbol, 0.025% of the time investors and the public interest during regular market hours. IEX plans to file a proposed rule change with the Commission shortly 44 The order is not executable on entry. See supra because it is designed to incentivize the to incrementally optimize and enhance the note 43. entry of additional resting orders, effectiveness of the quote instability calculation in 45 The order is not executable on entry. See supra including displayed orders on the determining whether the CQI is on. Based on a note 43. Exchange, thereby enhancing price modeling analysis, IEX estimates that the updated 46 The order is not executable on entry. See supra discovery and the overall liquidity calculation will result in the CQI being on 0.009% note 43. of the time during regular market hours, on average, 47 The order is not executable on entry. See supra and incrementally increase the expected number of 50 note 43. 17 CFR 242.600(b)(62). CQI determinations by approximately 20%. 51 48 The order is not executable on entry. See supra 17 CFR 242.611. 57 An order is considered marketable for this note 43. 52 17 CFR 242.602(a)(3)(i). analysis if it was a market order or its limit price 49 The order is not executable on entry. See supra 53 15 U.S.C. 78f. is at or more aggressive than the contra-side note 43. 54 15 U.S.C. 78f(b)(5). quotation.

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aggressively target liquidity providers Moreover, for displayed limit orders above, IEX believes that these pricing during periods of quote instability. that added liquidity during September schemes can contribute to a number of Further, based upon IEX’s 2019, the disparity in markouts between conflicts of interest and market classification of its Members’ logical such orders that traded when the CQI distortions including, among others, order entry ports (also known as was on versus off was material and conflicts of interests, excess ‘‘sessions’’) as originating from evident of latency arbitrage.59 For such intermediation and potential adverse proprietary trading firms, full service orders that traded when the CQI was on, selection, market fragmentation, broker-dealers, or agency broker- the average markouts were negative complexity, the proliferation of new dealers,58 proprietary trading firms are $.0036 per share ten milliseconds after order types to enable avoidance of fees, more likely to seek to trade against IEX trade time. In contrast, when the CQI and elevated fees to subsidize rebates.61 resting orders while the CQI is on, while was off, the average markouts were In contrast, IEX seeks to incentivize sessions classified as full-service and positive $.0045 at 10 milliseconds, a liquidity providing orders through agency are more likely to seek to trade performance difference of $.0081 per superior execution quality, but this against IEX resting orders during the share at 10 milliseconds post trade. incentive can be undercut by trading remainder of the day. Within the two From one second through five minutes strategies that target resting orders millisecond periods following CQI the performance difference between CQI during periods of quote instability. determinations, proprietary trading on vs CQI off trades was never smaller Thus, IEX believes that additional firms submit 6.8 times as many than $.0048 per share. approaches to incentivize displayed marketable-to-mid shares (i.e., shares The Exchange believes that this data liquidity are warranted, and that the D- priced at least as aggressively as the is particularly significant and evidences Limit order type is one reasonable midpoint and eligible to trade) that Members entering liquidity taking approach to compete with other venues compared to full-service and agency orders when the CQI is on appear to be for liquidity providing order flow firms; while outside of those two able to engage in a form of latency without relying on rebates and tiered millisecond periods, the situation is arbitrage by leveraging fast proprietary pricing. As discussed above, the market data feeds and connectivity reversed, with full-service and agency widespread adoption of DPeg and PPeg along with predictive strategies to chase firms submitting 3.4 times as many order types that utilize the CQI formula short-term price momentum and marketable-to-mid shares compared to evidences that a diverse group of successfully target resting orders at proprietary trading firms (based on daily Members have confidence in the utility unstable prices. IEX believes that these averages from September 2019). of the CQI and its protective features. types of trading strategies, with IEX believes that, as a result, a similarly When looking at the impact of trading concentrated and aggressive tactics when the CQI is on and off for non- diverse group of Members are likely to during moments of quote instability, are use D-Limit orders. pegged limit orders, the data strongly detrimental to the experience of other supports that such orders are The Exchange further believes that the IEX participants. As further discussed proposed rule change is consistent with systematically subjected to adverse below, IEX believes that such trading impacts of latency arbitrage strategies. the Act because it would be available to strategies create disparate burdens on all Members on a fair, equal and During September 2019, non-pegged resting orders, particularly limit orders limit orders accounted for 17% of nondiscriminatory basis. All Members, that do not currently benefit from the regardless of their technological volume traded on IEX (13% of traded CQI or the speedbump. volume was from displayed limit sophistication, can enter D-Limit orders The Exchange believes that IEX data and benefit from their protection against orders). In the aggregate, these orders thus demonstrates that displayed and latency arbitrage. More specifically, a experienced significant differences in non-displayed limit orders are subject to Member using a D-Limit order would short term markouts (and pro forma systematic adverse impacts from latency not need to be able to have the profit and loss) between executions arbitrage strategies. The Exchange technological capability (e.g., through when the CQI is on and off, regardless believes that these adverse impacts the use of high speed connectivity and of whether the NBB (NBO) moves lower constitute an implicit tax on liquidity market data purchased from other (higher) within two milliseconds of the providers that operates to disincentivize exchanges) to identify that the quote is Exchange’s determination of quote market participants from entering limit unstable and send an order message to instability. Resting limit orders that orders that contribute to meaningful cancel or reprice its resting order faster trade when the CQI is on experience price discovery. Other exchanges use negative price markouts one second rebates and volume tiers to essentially than another Member with such after the trade 76% of the time, compensate market makers and other technological capability can trade compared to 34% of the time when CQI liquidity providers for posting against the order. The Exchange will is off. In addition, for marketable aggressive limit orders.60 As discussed adjust the price of a D-Limit order based incoming orders to take liquidity that on the transparent, rule-based CQI formula. arrive when IEX has a displayed quote, 59 See Stockland, Eric. ‘‘Modern Day Latency IEX believes the fact that the D-Limit 21% arrive during the 0.007% of the Arbitrage: Predicting Price Changes,’’ (April 10, 2017), available at https://medium.com/boxes-and- order is specifically designed to trading day when the CQI is on. lines/modern-day-latency-arbitrage-predicting- disincentivize trading strategies seeking price-changes-738edc25a28d. to take liquidity while the CQI is on 58 On a best efforts basis, IEX classifies 60 See, e.g., NYSE Price List 2019, available at proprietary trading firms as those that are trading https://www.nyse.com/publicdocs/nyse/markets/ does not amount to ‘‘unfair for their own account rather than acting in an nyse/NYSE_Price_List.pdf; see also Nasdaq General discrimination between customers, agency capacity for an independent beneficial Equity and Options Rule, Equity 7 Section 118(a)(1) issuers, brokers, or dealers,’’ within the owner. Agency broker-dealers are firms that trade available at http://nasdaq.cchwallstreet.com/ meaning of the Act. The existing equity on behalf of customers that are independent NASDAQTools/PlatformViewer.asp?selectednode= beneficial owner but do not commit capital to chp%5F1%5F1%5F2%5F2& market structure is replete with facilitate their customers’ orders. Full-service manual=%2Fnasdaq%2Fmain%2 broker-dealers are also trading on behalf of an Fnasdaq%2Dllcrules%2F; Cboe BZX U.S. Equities 61 See Wah, Elaine, ‘‘Gone in Sixty Seconds’’ independent beneficial owner but they also have Exchange Fee Schedule, available at https:// (September 21, 2018) available at: https:// the ability to commit capital to facilitate a customer markets.cboe.com/us/equities/membership/fee_ medium.com/boxes-and-lines/gone-in-sixty- order. schedule/bzx/. seconds-22094adeb0de.

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examples of exchange rules that seek to designed to protect impacted order to and including the midpoint of the incentivize, disincentivize, or deter types during these very narrow NBBO or the order’s limit price.66 A various types of trading activity. Maker- windows of time. Even if IEX enhances MidPoint Discretionary order can be Taker price structures, which are used the CQI formula (as noted above), the displayed or non-displayed. In the case by all the largest exchanges, by their nature of the CQI will remain intact— of a displayed MidPoint Discretionary nature provide more favorable exchange it will continue to focus on protecting order, the order’s display price is economics to liquidity-providing impacted orders against latency adjusted in response to changes in the compared to liquidity-taking activity. arbitrage trading strategies during very NBB (for buy orders) or NBO (for sell Nasdaq charges ‘‘excess order fees’’ on narrow windows of time. Even though orders) which can result in a displayed certain members that have a relatively D-Limit orders may not be accessible to order being adjusted to a less aggressive high ratio of orders entered away from other market participants during these price than it was previously displayed the NBBO to orders that are executed, narrow timeframes, the Exchange does at if the NBB or NBO moves to a less subject to carve-outs for certain low- not believe that this impact is unfairly aggressive price. Thus, displayed volume members and certain registered discriminatory because during the vast MidPoint Discretionary orders are market makers.62 Nasdaq justified the majority of time D-Limit quotes will be subject to quote fading if the NBB or fee based on its design to improve the accessible. Moreover, the purpose of NBO, as applicable, moves to a less quality of displayed liquidity to the limiting such accessibility is to aggressive price. IEX believes that this benefit of all market participants.63 incentivize liquidity providers to post price adjustment functionality is Further, IEX’s CQI Remove Fee is displayed orders on IEX by protecting substantially similar to the proposed D- expressly designed to benefit and them as discussed above. To the extent Limit price adjustment functionality in incentivize the placing of resting, non- that such incentive is successful, all that both order types will adjust to a less displayed orders by limiting the market participants, including takers of aggressive price in response to certain profitability of the same trading liquidity, will benefit. objective criteria. The displayed price of strategies that motivate the current The CQI formula used to determine a MidPoint Discretionary order will proposal. Moreover, IEX’s existing whether and when to adjust an order’s move to a less aggressive price if the speed bump is designed to limit price is codified in IEX Rule 11.190(g) NBB or NBO moves to a less aggressive executions of non-displayed, pegged and is, on average, on for only 0.007% price, while the displayed price of a D- orders before the Exchange has the of the trading day for each security. Limit order will move to a less ability to update and reprice those During the remaining 99.993% of the aggressive price if IEX’s CQI formula orders based on its own view of market trading day, D-Limit orders would be predicts that the NBB or NBO is likely prices. In approving the speed bump, available to trade at their resting price to move to a less aggressive price. the Commission found that: in the same manner as any other limit EDGA adopted the MidPoint order. In contrast, whether an order will Discretionary order through an IEX’s [speed bump] is thus narrowly be cancelled or adjusted in an exchange 67 designed to allow IEX to update the prices of immediately effective rule filing. Four non-displayed resting pegged orders so that with an asymmetrical speed bump years later, EDGA’s affiliate, EDGX filed they can achieve their intended purpose— would not be transparent or predictable an immediately effective rule filing to pricing that is accurately benchmarked to the since such changes are determined adopt a comparable MidPoint NBBO.... The Commission thus finds that exclusively by the market participant Discretionary order type, the displayed IEX’s ability to update the prices of resting that entered the order. Further, the price version of which is also pegged to the pegged orders . . . is not designed to unfairly of a D-Limit order would only be same-side NBB or NBO and thus subject discriminate among members to the adjusted when the CQI formula predicts to price adjustments to a less aggressive detriment of investors or the public interest that the relevant quote is unstable while and is intended to benefit investors that post price when the NBBO moves to such a pegged orders.’’ 64 an asymmetrical speed bump enables a price.68 Neither the EDGA nor EDGX market participant to cancel or adjust rule filings raised any issues or concerns The Exchange believes that it is the price of an order on an ad hoc basis regarding quote fading of displayed similarly not unfairly discriminatory to for any reason and frequency. MidPoint Discretionary orders. In use a narrowly tailored means to Notwithstanding that D-Limit orders addition, Nasdaq offers a discretionary provide protection to and encourage the will be subject to price adjustment when order type for which the display price placing of displayed limit orders on IEX the CQI is on, IEX believes that this can be pegged to a floating price range 69 by investors and market makers by functionality is consistent with the and NYSE Arca and NYSE each offers providing them a measure of protection ‘‘firm quote’’ requirements of Regulation a primary pegged order type that has a from the trading strategies documented NMS Rule 602(b) 65 in that it will not above. The Exchange further believes result in a meaningful amount of quote 66 See EDGA Equity Rule 11.8(e). that the proposed rule change is ‘‘fading’’ compared to the quote fading, 67 See Securities Exchange Act Release No. 67226 consistent with the protection of both explicit and implicit, that exists (June 20, 2012), 77 FR 38113 (June 26, 2012) (SR– investors and the public interest and is permitted today. This quote EDGA–2012–022) (Notice of Filing and Immediate because the circumstances under which fading falls into three broad categories. Effectiveness to Amend EDGA Rules to Add the MidPoint Discretionary order). Two years later, in a D-Limit order will be adjusted are First, several other exchanges offer 2014, EDGA filed another rule change proposal to narrowly tailored, transparent and displayed order types that are pegged to restructure its order type rules, including the predictable. As discussed above, the the NBBO and thus are subject to price MidPoint Discretionary order. See Securities CQI is only on for an extremely small adjustments, including to a less Exchange Act Release No. 73592 (November 13, 2014), 79 FR 68937 (November 19, 2014) (SR– percentage of the trading day and is aggressive price as the NBBO changes EDGA–2014–020). (i.e., explicit quote fading). EDGA, for 68 See Securities Exchange Act Release No. 84327 62 See Nasdaq General Equity and Options Rule, example, offers a MidPoint (October 1, 2018), 83 FR 50416 (October 5, 2018) Equity 7 Section 118(m). Discretionary order that is pegged to the (SR–CboeEDGX–2018–041). 63 See Securities Exchange Act Release No. 66951 same-side NBB or NBO with discretion 69 See Nasdaq Rule 4703(g) and Section 3.3.2 of (May 9, 2012), 77 FR 28647 (May 15, 2012) (SR– Nasdaq’s SUMO FIX Programming Specification for NASDAQ–2012–055). to execute at more aggressive prices up FIX 4.2 available at: https://nasdaqtrader.com/ 64 Securities Exchange Act Release No. 78101 content/technicalsupport/specifications/ (June 17, 2016), 81 FR 41142, 41157 (June 23, 2016). 65 17 CFR 242.602(b). TradingProducts/fix_orders_sb.pdf.

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working price pegged to the same-side formula which itself is based on participants engaged in sophisticated PBBO that must include a minimum of publicly available market data inputs latency arbitrage efforts. one round lot displayed.70 Thus, these and designed to protect liquidity Third, an example of implicit quote displayed pegged orders will also be providers from adverse selection by fading is the manner in which other adjusted to a less aggressive price when latency arbitrage trading strategies. exchanges offer expensive, high-speed the same-side NBBO or PBBO, as Although such protection is designed to proprietary market data feeds and applicable, moves to a less aggressive benefit liquidity providers, IEX believes connectivity products that sophisticated price. Similarly, the Commission’s that it will also benefit liquidity takers market participants can leverage (along approval of a Nasdaq rule filing that to the extent that the protection results with predictive strategies) to not only includes adoption of its displayed in more resting liquidity available to target resting orders at unstable prices discretionary order type does not liquidity takers. Consequently, IEX but to cancel or adjust resting orders include any discussion of potential believes that its D-Limit order type more quickly than market participants quote fading issues.71 proposal is approvable in accordance not using such products and strategies Data for September 2019 identified with this precedent. can access their resting orders. As a that there were approximately 5,500 Second, explicit quote fading exists result, when the market for a particular volume-weighted average NBBO quote on options exchanges, which offer security is in transition, these changes per symbol each day to a less several mechanisms to assist their sophisticated market participants are aggressive price, compared to 5,427 members in managing risk and avoiding often able to cancel resting orders before volume-weighted average CQI unintended executions. These less sophisticated market participants determinations per symbol each day. mechanisms include risk management can access them.74 IEX believes that this data evidences functionality that will automatically Thus, the Exchange believes that D- that D-Limit orders would be subject to cancel resting orders and quotes based Limit orders will operate in a manner a comparable number of changes to a on member configured triggers such as consistent with the ‘‘firm quote’’ less aggressive price as order types of total traded volume, percent traded requirements of Regulation NMS Rule 75 other exchanges that peg to the near side volume, notional, net Delta or Vega 602(b) and with existing order types, NBBO or PBBO. And as discussed exposure.72 Notably, the automatic practices and precedent for protected earlier, the CQI is on for only 1.64 triggers appear to occur inside the quotations under the Order Protection seconds per symbol per day on average exchange matching engine as opposed Rule, as discussed above. D-Limit orders (0.007% of the time during regular to requiring an order or cancel message will be subject to execution at their market hours). Thus, IEX believes that from the member. Other exchanges also ranked and displayed price (if this data supports that D-Limit, like the offer order and quote purge displayable) at the time an incoming other exchanges’ order types discussed functionality that is designed to help order reaches the Exchange for execution against the D-Limit order. above, is a narrowly tailored approach members manage risk by providing Any price adjustment that occurs must to provide for price adjustments to a less dedicated (and effectively faster) ports occur before that point in time. This is aggressive price for displayed orders to enter mass cancellations of multiple 73 similar to the EDGA displayed MidPoint pursuant to transparent and objective resting orders. While IEX appreciates Discretionary order type, which is criteria. IEX believes that order types that market makers and other market subject to price adjustment to a less that are subject to repricing in response participants posting displayed orders on aggressive displayed price in response to an exchange determining that the options exchanges face materially to NBBO changes. As a result, a NBBO has changed provide relevant greater risks than on equities markets, in displayed MidPoint Discretionary order precedent to repricing based on an view of the enormous number of individual option series available for may not be available for execution at its exchange determining—pursuant to a previously displayed price by the time transparent formula—that the NBBO is quoting on options markets, IEX believes that they nonetheless provide an incoming order reaches the exchange likely in the process of changing. In for execution. Although a D-Limit both cases, the repricing trigger is based relevant precedent for the risk management protections that D-Limit displayed order would be adjusted to a on the NBBO. Although D-Limit orders less aggressive price than the NBBO, would be repriced based on a orders would provide. Market participants on both options and while a MidPoint Discretionary order transparent formula predicting an will be adjusted to a less aggressive imminent change to the NBBO, rather equities markets face significant challenges in cancelling or adjusting price that has become the same-side than an exchange’s determination that NBBO, in both cases the order is no the NBBO has changed, the formula is resting orders during times of market transition, in the face of other market longer available for execution at its narrowly tailored, designed to provide previously displayed price. Further, protection to market participants at all options exchanges cancel quotes and levels of sophistication, and codified in 72 See, e.g., NYSE Arca Rule 6.40–O; Nasdaq ISE, LLC Options 3, Section 15(a)(3)(B); Nasdaq GEMX, displayed orders as a result of an IEX rule. And in both cases, the LCC Options 3, Section 15(a)(3)(B); Nasdaq MRX, automated risk management automatic change to the quote’s price is LLC Options 3, Section 15(a)(3)(B); Miami functionality or enable cancellation explicitly intended to prevent International Securities Exchange LLC (‘‘MIAX’’) through faster purge ports. In those executions at the originally displayed Rule 519A; Nasdaq Rule 6130; Market Maker Risk Management Information Sheet for Nasdaq PHLX price. While the D-Limit proposal is LLC (‘‘Nasdaq PHLX’’)/Nasdaq Options Market 74 See, e.g., Malinova, Katya and Park, Andreas, novel in that it would provide an (‘‘NOM’’)/Nasdaq BX available at https:// ‘‘Does High Frequency Trading Add Noise to exchange with flexibility to reprice a www.nasdaq.com/docs/ Prices?’’ (April 17, 2017) at 5, available at https:// displayed order, that flexibility is MarketMakerRiskManagement_PHLX_NOM_ www.rsm.nl/fileadmin/home/Department_of _ BX.pdf; and Order Risk Management Information Finance_VG5_/LQ2017/Malinova_Katya.pdf limited by the narrowly tailored CQI Sheet for Nasdaq PHLX/NOM/Nasdaq BX available (‘‘When someone trades against their quotes on one at https://www.nasdaq.com/docs/ venue, market makers rush to cancel their quotes 70 See NYSE Arca Rule 7.31–E(h)(2) and NYSE OrderRiskManagement_PHLX_NOM_BX.pdf. on the other venue; if the market maker is very fast, Rule 7.31(h)(2). 73 See ‘‘CBOE Purge Ports Frequently Asked it may be able to cancel the other quote before 71 See Securities Exchange Act Release No. 75252 Questions’’ available at https://cdn.cboe.com/ portions of a presumed multi-market order reach (June 22, 2015), 80 FR 36865 (June 26, 2015) (SR– resources/features/Cboe_USO_PurgePortsFAQs.pdf the other venue.’’). NASDAQ–2015–024). and MIAX Rule 519C. 75 See supra note 65.

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situations, an order or quote that was Commission determined that IEX’s 350 has been repriced by the exchange in previously displayed may not be microsecond ‘‘speed bump,’’ which is the time between the transmission of the available for execution by the time an applied to incoming and outbound order and its receipt and processing by incoming order reaches the exchange messages, is ‘‘well within the range of the exchange’s systems. The potential engine for execution. Moreover, all geographic and technological latencies that this will occur depends on various resting displayed orders may be that market participants experience factors, including, among others, the unavailable in the event that another today’’ and therefore is ‘‘comparable distance between the point where the order or a cancel message is actionable to—and even less than—delays sender transmits the order to the prior to an incoming order reaching the attributable to other markets that exchange’s systems and how quickly engine, particularly when targeted by a currently are included in the NBBO.’’ 79 those systems update their sophisticated market participant The Commission thus concluded that, understanding of the NBBO relative to engaged in latency arbitrage. And, as because IEX’s speed bump is de the speed at which they process orders noted above, D-Limit orders will only be minimis, its displayed quotes were to take liquidity. subject to price adjustment on average immediately accessible and entitled to Because the use of a de minimis delay for 0.007% of the trading day, while the protected quotation status.80 does not affect the ability of a displayed frequency of order cancellation or non- Access to D-Limit quotes will not be order to qualify as a protected quotation, availability attributable to the existing subject to any delay beyond that to there is no reason it should lose that exchange mechanisms and practices is which all IEX’s orders, displayed and status because its price is adjusted determined by each market participant non-displayed, are now subject. automatically by the exchange in and not subject to any transparent Accordingly, all D-Limit quotes will be response to changes in the NBBO, as is limitations. immediately accessible under the case with the EDGA Midpoint Further, IEX believes that displayed Regulation NMS. Discretionary Order or the Nasdaq D-Limit orders would clearly qualify as Moreover, based on precedent, the displayed discretionary order. IEX does ‘‘automated quotations’’ and therefore fact that D-Limit displayed orders are not believe that there are any material ‘‘protected quotations’’ under subject to automatic repricing based on differences in this regard between Regulation NMS, as discussed in the changes in market prices does not affect repricing that occurs in response to an Purpose section. This conclusion is their status as protected quotations. For exchange determining the NBBO has supported by two key considerations. example, as discussed above, EDGA has changed, and repricing based on an First, IEX will not impose any delay on an approved Midpoint Discretionary exchange determining—pursuant to a orders seeking to access D-Limit Order, which allows members to post transparent formula—that the NBBO is quotations beyond that which the displayed or non-displayed liquidity at likely in the process of changing. In Commission has already approved as the NBBO with discretion to execute at either case, the automatic change to the consistent with the requirements for prices extending to and including the quote’s price is explicitly intended to ‘‘automated quotations.’’ Second, 81 NBBO midpoint. This EDGA order prevent executions at the originally adjusting prices of D-Limit displayed type automatically reprices the order displayed price. orders when the CQI is on is consistent based on changes in the NBBO D-Limit orders are differentiated with well-established precedent (including to a less aggressive price), because they are explicitly designed to allowing other exchanges to which benefits market participants that prevent executions in small time automatically adjust the prices of use the order type by helping to assure increments when the CQI is on. While protected quotations based on changes they are not executed at ‘‘stale’’ prices this functionality discriminates against in overall market prices. as well as to provide an opportunity for Under Rule 611 of Regulation NMS,76 the use of trading strategies with more those orders to execute at a more complete and timely information about ‘‘trade-through’’ protections are aggressive NBBO when prices move in extended to each protected bid or offer, market prices that intentionally seek to that direction. Similarly, various trade against resting orders during these which is defined in relevant part as ‘‘an exchanges, including IEX, have received automated quotation that is the best bid time periods at stale prices, IEX believes approval for ‘‘market maker peg’’ order that the D-Limit functionality is not or best offer of a national securities types, which automatically reprice 77 unfairly discriminatory within the exchange.’’ The term ‘‘automated orders to allow market makers to meet quotation’’ is defined as one that meaning of the Act because it is a their quoting obligations on those narrowly tailored means of protecting, permits an incoming order to be marked exchanges by automatically repricing as immediate-or-cancel (‘‘IOC’’) and that and thereby encouraging the use of, those orders to within a designated displayed quotations by both investors ‘‘immediately and automatically’’ 82 percentage away from the NBBO. and market makers. Moreover, for the executes an IOC order against the All these order types allow an displayed quotation up to its full size, reasons discussed in the Purpose exchange to automatically reprice section, the Exchange believes that the cancels any unexecuted portion, resting orders based on determinations transmits to the sender a message proposed D-Limit order type may result by the individual exchanges, in reading in market participants entering more indicating the action taken, and updates price updates from all exchanges, that the quotation to reflect a change to its displayed and other resting limit orders the NBBO has changed. With respect to on IEX, and at more aggressive prices, material terms.78 the automated quotation definition, a In approving IEX’s exchange sizes and duration, which would benefit participant seeking to access a Midpoint all market participants and thereby application, in response to arguments Discretionary Order or market maker that federal securities regulations did further the purposes of the Act. peg order displayed at any one time may Further, IEX believes that the not permit exchanges to impose any fail to execute at that price if the order intentional delay, however small, on specified order attributes for D-Limit orders are consistent with the Act access to protected quotations, the 79 See note 64 supra at 41161. 80 See note 64 supra at 41162. because they are structured to facilitate 76 17 CFR 242.611. 81 See note 66 supra. efficient execution of D-Limit orders in 77 17 CFR 242.600(b)(61)(iii). 82 See, e.g., IEX Rule 11.190(b)(13); Cboe BZX a manner consistent with existing 78 17 CFR 242.600(b)(4). Rule 11.9(c)(15); Nasdaq Rule 4702(b)(7). functionality and order types.

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Additionally, IEX believes that the market participants, in part to avoid protections offered by the D-Limit order proposal is consistent with protection of being subject to adverse latency type, as proposed, are intended in part investors and the public interest in that arbitrage. While the proposed rule to incentivize additional resting limit the D-Limit order type is designed to change will not enable counter-party orders to be entered on the Exchange, assist Members in obtaining best selection, IEX believes that to the degree which would provide additional execution for their customers by it is successful in reducing the impact available liquidity to all Members. providing an opportunity to execute at of latency arbitrage strategies targeting C. Self-Regulatory Organization’s the NBBO, but limiting executions at the resting orders at stale prices, it may Statement on Comments on the NBBO when the NBBO appears to be reduce the need for counter-party Proposed Rule Change Received From unstable, thereby reducing the potential selection and thereby incentivize such Members, Participants, or Others to execute at an imminently stale price. market participants to post displayed In conclusion, IEX believes that the and other limit orders on IEX. Written comments were neither proposed new D-Limit order type is Accordingly, the Exchange also believes solicited nor received. that the proposed rule change will not consistent with the protection of III. Date of Effectiveness of the result in any burden on inter-market investors and the public interest Proposed Rule Change and Timing for competition that is not necessary or purposes of the Act in that it is designed Commission Action to protect liquidity providers from appropriate in furtherance of the certain adverse impacts of latency purposes of the Act. Within 45 days of the date of arbitrage strategies, and thereby With regards to intra-market publication of this notice in the Federal incentivize the entry of additional competition, D-Limit orders will be Register or within such longer period resting orders, including displayed available to all Members on a fair, up to 90 days (i) as the Commission may orders on the Exchange, thus enhancing impartial and nondiscriminatory basis. designate if it finds such longer period price discovery and the overall liquidity While the proposed rule change is to be appropriate and publishes its profile on the Exchange to the benefit of designed to provide certain protections reasons for so finding or (ii) as to which all market participants. to limit orders, all Members are eligible the Exchange consents, the Commission to enter D-Limit orders on the same shall: B. Self-Regulatory Organization’s terms and the protections will be (a) By order approve or disapprove Statement on Burden on Competition available to all Members on the same such proposed rule change, or IEX does not believe that the terms. Moreover, the Exchange does not (b) institute proceedings to determine proposed rule change will result in any believe that the proposed change will whether the proposed rule change burden on competition that is not result in any burden on Members should be disapproved. necessary or appropriate in furtherance seeking to cross the spread and execute IV. Solicitation of Comments of the purposes of the Act. To the at the far side quote (the NBO (NBB) for contrary, the proposal is designed to buy (sell) orders) or to Members seeking Interested persons are invited to enhance IEX’s competitiveness by to conduct a market wide sweep with submit written data, views, and incentivizing the entry of increased intermarket sweep orders. D-Limit arguments concerning the foregoing, liquidity. With regards to inter-market orders will only be subject to potential including whether the proposed rule competition, other exchanges are free to adjustment for an extremely small change is consistent with the Act. adopt similar order types to the extent percentage of the trading day and the Comments may be submitted by any of that the proposed changes pose a rest of the time will be available for the following methods: competitive threat to their business. In execution, if consistent with the order’s Electronic Comments this regard, the Exchange notes that limit price, at the far side quote. To the • Use the Commission’s internet NYSE American LLC (‘‘NYSE Amex’’) extent that a D-Limit order is adjusted comment form (http://www.sec.gov/ previously adopted a rule copying an to a less aggressive price while a Member is seeking to access the full rules/sro.shtml); or earlier iteration of the Exchange’s • Send an email to rule-comments@ Discretionary Peg order type and quote displayed size of the order at the prior 83 more aggressive price with an sec.gov. Please include File Number SR– stability calculation. IEX–2019–15 on the subject line. In addition, the Exchange believes intermarket sweep order, the Member that the proposed rule change will would be permitted to trade-through the Paper Comments D-Limit order at the more aggressive enhance its ability to compete with • Send paper comments in triplicate alternative trading systems (‘‘ATSs’’). In price pursuant to Rule 611(b)(6) of Regulation NMS.85 Moreover, the to Secretary, Securities and Exchange this regard, IEX believes that a Commission, 100 F Street NE, meaningful segment of market proposed change would provide potential benefits to such Members to Washington, DC 20549–1090. participants choose to rest orders on All submissions should refer to File non-displayed ATSs in order to obtain the extent there is more liquidity available on IEX as a result of the Number SR–IEX–2019–15. This file protection from latency arbitrage number should be included on the strategies. As opposed to exchanges, protections provided to users of D-Limit orders. As discussed above, the subject line if email is used. To help the ATSs can be structured to enable Commission process and review your counter-party selection so that 85 comments more efficiently, please use participants can choose to avoid Regulation NMS Rule 611(b)(6) provides an exception to its trade-through requirements if the only one method. The Commission will interacting with certain counterparties transaction that constituted the trade-through was post all comments on the Commission’s deemed to be undesirable.84 The effected by a trading center that simultaneously routed an intermarket sweep order to execute internet website (http://www.sec.gov/ Exchange believes that counter-party rules/sro.shtml). Copies of the selection is important to some of these against the full displayed size of any protected quotation in the NMS stock that was traded submission, all subsequent through. See 17 CFR 242.611(b); see also Question amendments, all written statements 83 See NYSE Amex Rule 7.31E(h)(3)(D). 4.06 in ‘‘Responses to Frequently Asked Questions 84 See Securities Exchange Act Release No. 83663 Concerning Rule 611 and 610 of Regulation NMS’’ with respect to the proposed rule (July 18, 2018), 83 FR 38768, 38853 (August 7, (April 4, 2008), available at https://www.sec.gov/ change that are filed with the 2018). divisions/marketreg/nmsfaq610-11.htm. Commission, and all written

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communications relating to the I. Self-Regulatory Organization’s Subject to certain exceptions, Clearing proposed rule change between the Statement of the Terms of Substance of Participants 6 are subject to the Net Commission and any person, other than the Proposed Rule Change Capital Rules.7 However, a subset of those that may be withheld from the The Exchange proposes to adopt a Clearing Participants are subsidiaries of public in accordance with the new rule titled ‘‘Off-Exchange RWA U.S. bank holding companies, which, provisions of 5 U.S.C. 552, will be Transfers’’ at BX Options 6, Section 6. due to their affiliations with their parent available for website viewing and The text of the proposed rule change U.S.-bank holding companies, must printing in the Commission’s Public is available on the Exchange’s website at comply with additional bank regulatory Reference Room, 100 F Street, NE, http://nasdaqbx.cchwallstreet.com/, at capital requirements pursuant to Washington, DC 20549 on official the principal office of the Exchange, and rulemaking required under the Dodd- business days between the hours of at the Commission’s Public Reference Frank Wall Street Reform and Consumer 8 10:00 a.m. and 3:00 p.m. Copies of the Room. Protection Act. Pursuant to this filing also will be available for mandate, the Board of Governors of the inspection and copying at the principal II. Self-Regulatory Organization’s Federal Reserve System, the Office of offices of the Exchange. All comments Statement of the Purpose of, and the Comptroller of the Currency, and the received will be posted without change. Statutory Basis for, the Proposed Rule Federal Deposit Insurance Corporation Persons submitting comments are Change have approved a regulatory capital cautioned that we do not redact or edit In its filing with the Commission, the framework for subsidiaries of U.S. bank 9 personal identifying information from Exchange included statements holding company clearing firms. comment submissions. You should concerning the purpose of and basis for Generally, these rules, among other submit only information that you wish the proposed rule change and discussed things, impose higher minimum capital to make available publicly. All any comments it received on the and higher asset risk weights than were submissions should refer to File proposed rule change. The text of these previously mandated for Clearing Number SR–IEX–2019–15, and should statements may be examined at the Participants that are subsidiaries of U.S. be submitted on or before January 21, places specified in Item IV below. The bank holding companies under the Net Capital Rules. Furthermore, the new 2020. Exchange has prepared summaries, set forth in sections A, B, and C below, of rules do not fully permit deductions for For the Commission, by the Division of the most significant aspects of such hedged securities or offsetting options Trading and Markets, pursuant to delegated 10 statements. positions. Rather, capital charges authority.86 under these standards are, in large part, J. Matthew DeLesDernier, A. Self-Regulatory Organization’s based on the aggregate notional value of Assistant Secretary. Statement of the Purpose of, and short positions regardless of offsets. As Statutory Basis for, the Proposed Rule [FR Doc. 2019–28024 Filed 12–27–19; 8:45 am] a result, in general, Clearing Participants Change that are subsidiaries of U.S. bank BILLING CODE 8011–01–P 1. Purpose holding companies must hold substantially more bank regulatory The Exchange proposes to adopt a capital than would otherwise be SECURITIES AND EXCHANGE new rule titled, ‘‘Off-Exchange RWA COMMISSION required under the Net Capital Rules. Transfers’’ at BX Options 6, Section 6. The Exchange is concerned with the This proposal is substantially the same ability of Market Makers to provide [Release No. 34–87817; File No. SR–BX– as Cboe Exchange, Inc. (‘‘Cboe’’) Rule liquidity in their appointed classes. The 2019–042] 6.8.3 Exchange believes that permitting Proposed Options 6, Section 6 is market participants to efficiently Self-Regulatory Organizations; Nasdaq intended to facilitate the reduction of transfer existing options positions BX, Inc.; Notice of Filing and risk-weighted assets (‘‘RWA’’) through an off-exchange transfer process Immediate Effectiveness of Proposed attributable to open options positions. Rule Change To Adopt a New Rule SEC Rule 15c3–1 (Net Capital allowed to offset another position’s loss at the same Titled ‘‘Off-Exchange RWA Transfers’’ Requirements for Brokers or Dealers) valuation point (e.g. vertical spreads). at BX Options 6, Section 6 (‘‘Net Capital Rules’’) requires registered 6 The term Clearing Participant is defined within broker-dealers, unless otherwise Options 1, Section 1(a)(16). All Clearing December 20, 2019. Participants must also be clearing members of The excepted, to maintain certain specified Options Clearing Corporation (‘‘OCC’’). Pursuant to Section 19(b)(1) of the minimum levels of capital.4 The Net 7 In the event federal regulators modify bank Securities Exchange Act of 1934 Capital Rules are designed to protect capital requirements in the future, the Exchange 1 2 will reevaluate the proposed rule change at that (‘‘Act’’), and Rule 19b–4 thereunder, securities customers, counterparties, time to determine whether any corresponding notice is hereby given that on December and creditors by requiring that broker- changes to the proposed rule are appropriate. 17, 2019, Nasdaq BX, Inc. (‘‘BX’’ or dealers have sufficient liquid resources 8 H.R. 4173 (amending section 3(a) of the ‘‘Exchange’’) filed with the Securities on hand, at all times, to meet their Securities Exchange Act of 1934 (the ‘‘Act’’) (15 and Exchange Commission (‘‘SEC’’ or financial obligations. Notably, hedged U.S.C. 78c(a))). 9 12 CFR 50; 79 FR 61440 (Liquidity Coverage ‘‘Commission’’) the proposed rule positions, including offsetting futures Ratio: Liquidity Risk Measurement Standards). change as described in Items I, II, and and options contract positions, result in 10 Many options strategies, including relatively III, below, which Items have been certain net capital requirement simple strategies often used by retail customers and prepared by the Exchange. The reductions under the Net Capital Rules.5 more sophisticated strategies used by broker- dealers, are risk limited strategies or options spread Commission is publishing this notice to strategies that employ offsets or hedges to achieve 3 solicit comments on the proposed rule See Securities Exchange Act Release No. 87374 certain investment outcomes. Such strategies change from interested persons. (October 21, 2019), 84 FR 57542 (October 25, 2019) typically involve the purchase and sale of multiple (SR–Cboe–2019–044). options (and may be coupled with purchases or 4 17 CFR 240.15c3–1. sales of the underlying securities), executed 86 17 CFR 200.30–3(a)(12). 5 In addition, the Net Capital Rules permit various simultaneously as part of the same strategy. In 1 15 U.S.C. 78s(b)(1). offsets under which a percentage of an option many cases, the potential market exposure of these 2 17 CFR 240.19b–4. position’s gain at any one valuation point is strategies is limited and defined.

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would likely have a beneficial effect on or legal entity. These are merely positions from an account with one continued liquidity in the options transfers from one clearing account to clearing firm to the account of another market without adversely affecting another, both of which are attributable clearing firm pursuant to the proposed market quality. Liquidity in the listed to the same individual or legal entity. A rule change has a similar result as options market is critically important. market participant effecting an RWA changing a give up or CMTA, as it The Exchange believes that the Transfer is analogous to an individual results in a position that resulted from proposed rule change provides market transferring funds from a checking a transaction moving from the account participants with an efficient account to a savings account, or from an of one clearing firm to another, just at mechanism to transfer their open account at one bank to an account at a different time and in a different options positions from one clearing another bank—the money still belongs manner.17 In the above example, if account to another clearing account and to the same person, who is just holding Market Maker A had initially given up thereby increase liquidity in the listed it in a different account for personal Clearing Participant Y rather than options market. BX currently has no financial reasons. Clearing Participant X on the mechanism that firms may use to For example, Market Maker A clears transactions that resulted in the 1000 transfer positions between clearing transactions on the Exchange into an long calls in class ABC, or had changed accounts without having to effect a account it has with Clearing Participant the give-up or CMTA to Clearing transaction with another party and close X, which is affiliated with a U.S-bank Participant Y pursuant to Options 6, a position. holding company. Market Maker A Section 1 the ultimate result would have The proposed rule provides that opens a clearing account with Clearing been the same. There are a variety of existing positions in options listed on Participant Y, which is not affiliated reasons why firms give up or CMTA the Exchange of a Participant or non- with a U.S.-bank holding company. transactions to certain clearing firms Participant (including an affiliate of a Clearing Participant X has informed (and not to non-bank affiliate clearing Participant) may be transferred on, from, Market Maker A that its open positions firms) at the time of a transaction, and or to the books of a Clearing Participant may not exceed a certain amount at the the proposed rule change provides firms off the Exchange if the transfer end of a calendar month, or it will be with a mechanism to achieve the same establishes a net reduction of RWA subject to restrictions on new positions result at a later time. attributable to those options positions it may open the following month. On Proposed paragraph (a)(2) states RWA (an ‘‘RWA Transfer’’). Proposed August 28, Market Maker A reviews the Transfers may occur on a routine, paragraph (a)(1) adds examples of two open positions in its Clearing recurring basis. As noted in the example transfers that would be deemed to Participant X clearing account and above, clearing firms may impose establish a net reduction of RWA, and determines it must reduce its open restrictions on the amount of open thus qualify as a permissible RWA positions to satisfy Clearing Participant positions. Permitting transfers on a Transfer: X’s requirements by the end of August. routine, recurring basis will provide • A transfer of options positions from It determines that transferring out 1000 market participants with the flexibility Clearing Corporation 11 member A to short calls in class ABC will sufficiently to comply with these restrictions when Clearing Corporation member B that net reduce the RWA capital requirements in necessary to avoid position limits on (offset) with positions held at Clearing the account with Clearing Participant X future options activity. Additionally, Corporation member B, and thus closes to avoid additional position limits in proposed paragraph (a)(6) provides that all or part of those positions (as September. Market Maker A wants to no prior written notice to the Exchange demonstrated in the example below);12 retain the positions in accordance with is required for RWA Transfers. Because and its risk profile. Pursuant to the proposed • of the potential routine basis on which A transfer of options positions from rule change, on August 31, Market RWA Transfers may occur, and because a bank-affiliated Clearing Corporation Maker A transfers 1000 short calls in of the need for flexibility to comply member to a non-bank-affiliated class ABC to its clearing account with with the restrictions described above, 13 Clearing Corporation member. Clearing Participant Y. As a result, the Exchange believes it may interfere These transfers will not result in a Market Maker A can continue to provide with the ability of investors firms to change in ownership, as they must the same level of liquidity in class ABC comply with any Clearing Participant occur between accounts of the same during September as it did in previous restrictions describe above, and may be Person. months. burdensome to provide notice for these ‘‘Person’’ is defined within proposed A Participant must give up a Clearing Options 6, Section 6(a) as an individual, routine transfers. Participant for each transaction it effects Proposed paragraph (a)(3) states RWA partnership (general or limited), joint on the Exchange, which identifies the Transfers may result in the netting of stock company, corporation, limited Clearing Participant through which the positions. Netting occurs when long liability company, trust or 14 transaction will clear. A Participant positions and short positions in the unincorporated organization, or any may change the give up for a transaction same series ‘‘offset’’ against each other, governmental entity or agency or 15 within a specified period of time. leaving no or a reduced position. For political subdivision thereof. Additionally, a Participant may also example, if there were 100 long calls in In other words, RWA transfers may change the Clearing Participant 16 for a only occur between the same individual one account, and 100 short calls of the specific transaction. The transfer of same option series were added to that account, the positions would offset, 11 The term Clearing Corporation is defined 14 See Options 6B, Section 2. leaving no open positions. Currently, within Options 1, Section 1(a)(15). 15 See Options 6, Section 1. 12 This transfer would establish a net reduction of 16 The Clearing Member Trade Assignment the Exchange permits off-exchange RWA attributable to the transferring Person, (‘‘CMTA’’) process at The Options Clearing transfers on behalf of a Market Maker because there would be fewer open positions and Corporation (‘‘OCC’’) facilitates the transfer of account for transactions in multiply thus fewer assets subject to Net Capital Rules. option trades/positions from one OCC clearing listed options series on different 13 This transfer would establish a net reduction of member to another in an automated fashion. RWA attributable to the transferring Person, Changing a CMTA for a specific transaction would because the non-bank-affiliated Clearing allocate the trade to a different OCC clearing 17 The transferred positions will continue to be Corporation member would not be subject to Net member than the one initially identified on the subject to OCC rules, as they will continue to be Capital Rules, as described above. trade. held in an account of an OCC member.

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exchanges, but only if the Market Maker would have occurred if Market Maker A bank-affiliated clearing firms may nominees are trading for the same cleared the September transaction contribute to additional liquidity in the Participant, and the options transactions directly into its account with Clearing listed options market, which, in general, on the different options exchanges clear Participant Y, or had not effected an protects investors and the public into separate exchange-specific accounts RWA Transfer in August. Netting interest. because they cannot easily clear into the provides market participants with The proposed rule change, in same Market Maker account at OCC. In appropriate flexibility to conduct their particular the proposed changes to such instances, all Market Maker businesses as they see fit while having permit RWA transfers to occur on a positions in the exchange-specific the ability to reduce RWA capital routine, recurring basis and result in accounts for the multiply listed class requirements when necessary. netting, also provides market would be automatically transferred on RWA Transfers may not result in participants with sufficient flexibility to their trade date into one central Market preferential margin or haircut reduce RWA capital requirements at Maker account (commonly referred to as treatment.18 Additionally, RWA times necessary to comply with a ‘‘universal account’’) at the Clearing Transfers may only be effected for requirements imposed on them by Corporation. Positions cleared into a options listed on the Exchange and will clearing firms. This will permit market universal account would automatically be subject to applicable laws, rules, and participants to respond to then-current net against each other. regulations, including rules of other market conditions, including volatility While RWA Transfers are not self-regulatory organizations (including and increased volume, by reducing the occurring because of limitations related OCC).19 RWA capital requirements associated to trading on different exchanges, Finally, the Exchange notes it is with any new positions they may open similar reasoning for the above reserving Sections 5 and 7 of Options 6 while those conditions exist. Given the exception applies to why netting should for consistency in rule numbering with additional capital that may become be permissible for the limited purpose Nasdaq affiliated markets. available to market participants as a of reducing RWA. Firms may maintain result of the RWA Transfers, market 2. Statutory Basis different clearing accounts for a variety participants will be able to continue to of reasons, such as the structure of their The Exchange believes that its provide liquidity to the market, even businesses, the manner in which they proposal is consistent with Section 6(b) during periods of increased volume and trade, their risk management of the Act,20 in general, and furthers the volatility, which liquidity ultimately procedures, and for capital purposes. If objectives of Section 6(b)(5) of the Act,21 benefits investors. It is not possible for a Market Maker clears all transactions in particular, in that it is designed to market participants to predict what into a universal account, offsetting promote just and equitable principles of market conditions will exist at a specific positions would automatically net. trade, to remove impediments to and time, and when volatility will occur. However, if a Market Maker has perfect the mechanism of a free and The proposed rule change to permit multiple accounts into which its open market and a national market routine, recurring RWA Transfers (and transactions cleared, they would not system, and, in general to protect to not provide prior written notice) will automatically net. While there are times investors and the public interest. provide market participants with the when a firm may not want to close out Additionally, the Exchange believes the ability to respond to these conditions open positions to reduce RWA, there are proposed rule change is consistent with whenever they occur. Permitting other times when a firm may determine the Section 6(b)(5) 22 requirement that transfers on a routine, recurring basis it is appropriate to close out positions the rules of an exchange not be designed will provide market participants with to accomplish a reduction in RWA. to permit unfair discrimination between the flexibility to comply with these In the example above, suppose after customers, issuers, brokers, or dealers. restrictions when necessary to avoid making the RWA Transfer described The Exchange’s proposal is substantially position limits on future options above, Market Maker A effects a the same as Cboe Rule 6.8 activity. In addition, with respect to transaction on September 25 that results In particular, the Exchange believes netting, as discussed above, firms may in 1000 long calls in class ABC, which the proposed rule change to permit maintain different clearing accounts for clears into its account with Clearing RWA Transfers will remove a variety of reasons, such as the Participant X. If Market Maker A had impediments to and perfect the structure of their businesses, the manner not effected its RWA Transfer in August, mechanism of a free and open market in which they trade, their risk the 1000 long calls would have offset and a national market system by management procedures, and for capital against the 1000 short calls, eliminating providing liquidity in the listed options purposes. Netting may otherwise occur both positions and thus any RWA market. The Exchange believes with respect to a firm’s positions if it capital requirements associated with providing market participants with an structured its clearing accounts them. At the end of August, Market efficient process to reduce RWA capital differently, such as by using a universal Maker A did not want to close out the requirements attributable to open account. Therefore, the proposed rule 1000 short calls when it made its RWA positions in clearing accounts with U.S. change will permit netting while Transfer. However, given changed allowing firms to continue to maintain circumstances in September, Market 18 See proposed paragraph (a)(4). different clearing accounts in a manner Maker A has determined it no longer 19 See proposed introductory paragraph and consistent with their businesses. wants to hold those positions. The proposed paragraph (a)(7). Transfers of non- The Exchange recognizes the proposed rule change would permit Exchange listed options and other financial numerous benefits of executing options instruments are not governed by this proposed rule. Market Maker A to effect an RWA Any RWA transfers will be subject to all applicable transactions occur on an exchanges, Transfer of the 1000 short calls from its recordkeeping requirements applicable to including price transparency, potential account with Clearing Participant Y to Participants and Clearing Participants under the price improvement, and a clearing its account with Clearing Participant X Securities Exchange Act of 1934, and the rules and guarantee. However, the Exchange regulations thereunder (the ‘‘Act’’), such as Rule (or vice versa), which results in 17a–3 and 17a–4. believes it is appropriate to permit RWA elimination of those positions (and a 20 15 U.S.C. 78f(b). Transfers to occur off the exchange, as reduction in RWA associated with 21 15 U.S.C. 78f(b)(5). these benefits are inapplicable to RWA them). As noted above, such netting 22 Id. Transfers. RWA Transfers have a narrow

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scope and are intended to achieve a necessary or appropriate in furtherance Electronic Comments limited, benefit purpose. RWA Transfers of the purposes of the Act. RWA • are not intended to be a competitive Transfers have a limited purpose, which Use the Commission’s internet trading tool. There is no need for price is to reduce RWA attributable to open comment form (http://www.sec.gov/ discovery or improvement, as the positions in listed options in order to rules/sro.shtml); or purpose of the transfer is to reduce free up capital. The Exchange believes • Send an email to rule-comments@ RWA asset capital requirements the proposed rule change may relieve sec.gov. Please include File Number SR– attributable to a market participants’ the burden on liquidity providers in the BX–2019–042 on the subject line. positions. Unlike trades on an exchange, options market by reducing the RWA the price at which an RWA Transfers attributable to their open positions. As Paper Comments occurs is immaterial—the resulting a result, market participants may be able • Send paper comments in triplicate reduction in RWA is the critical part of to increase liquidity they provide to the to Secretary, Securities and Exchange the transfer. RWA Transfers will result market, which liquidity benefits all in no change in ownership, and thus market participants. Commission, 100 F Street NE, they do not constitute trades with a Washington, DC 20549–1090. counterparty (and thus eliminating the C. Self-Regulatory Organization’s Statement on Comments on the All submissions should refer to File need for a counterparty guarantee). The Number SR–BX–2019–042. This file transactions that resulted in the open Proposed Rule Change Received From Members, Participants, or Others number should be included on the positions to be transferred as an RWA subject line if email is used. To help the Transfer were already guaranteed by an No written comments were either Commission process and review your OCC clearing member, and the positions solicited or received. will continue to be subject to OCC rules, comments more efficiently, please use as they will continue to be held in an III. Date of Effectiveness of the only one method. The Commission will account with an OCC clearing member. Proposed Rule Change and Timing for post all comments on the Commission’s The narrow scope of the proposed rule Commission Action internet website (http://www.sec.gov/ change and the limited, beneficial rules/sro.shtml). Copies of the Because the foregoing proposed rule purpose of RWA Transfers make submission, all subsequent change does not: (i) Significantly affect allowing RWA Transfers to occur off the amendments, all written statements the protection of investors or the public floor appropriate and important to with respect to the proposed rule interest; (ii) impose any significant support the provision of liquidity in the change that are filed with the burden on competition; and (iii) become listed options market. Commission, and all written operative for 30 days from the date on The proposed rule change does not communications relating to the which it was filed, or such shorter time unfairly discriminate against market proposed rule change between the as the Commission may designate, it has participants, as all Participants and non- Commission and any person, other than Participants with open positions in become effective pursuant to Section 19(b)(3)(A)(iii) of the Act 23 and those that may be withheld from the options listed on the Exchange may use public in accordance with the the proposed off-exchange transfer subparagraph (f)(6) of Rule 19b–4 thereunder.24 provisions of 5 U.S.C. 552, will be process to reduce the RWA capital available for website viewing and requirements of Clearing Participants. At any time within 60 days of the printing in the Commission’s Public filing of the proposed rule change, the B. Self-Regulatory Organization’s Commission summarily may Reference Room, 100 F Street NE, Statement on Burden on Competition temporarily suspend such rule change if Washington, DC 20549, on official The Exchange does not believe that it appears to the Commission that such business days between the hours of the proposed rule change will impose action is necessary or appropriate in the 10:00 a.m. and 3:00 p.m. Copies of the any burden on competition that is not public interest, for the protection of filing also will be available for necessary or appropriate in furtherance investors, or otherwise in furtherance of inspection and copying at the principal of the purposes of the Act. the purposes of the Act. If the office of the Exchange. All comments The Exchange does not believe that Commission takes such action, the received will be posted without change. the proposed rule change will impose Commission shall institute proceedings Persons submitting comments are any burden on competition that is not to determine whether the proposed rule cautioned that we do not redact or edit necessary or appropriate in furtherance should be approved or disapproved. personal identifying information from of the purposes of the Act. This process comment submissions. You should IV. Solicitation of Comments is not intended to be a competitive submit only information that you wish trading tool. The Exchange does not Interested persons are invited to to make available publicly. All believe that the proposed rule change submit written data, views, and submissions should refer to File will impose any burden on intra-market arguments concerning the foregoing, Number SR–BX–2019–042 and should competition that is not necessary or including whether the proposed rule be submitted on or before January 21, appropriate in furtherance of the change is consistent with the Act. 2020. purposes of the Act, as use of the Comments may be submitted by any of For the Commission, by the Division of proposed process is voluntary. All the following methods: Participants and non-Participants with Trading and Markets, pursuant to delegated open positions in options listed on the authority.25 23 15 U.S.C. 78s(b)(3)(A)(iii). Exchange may use the proposed off- 24 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– J. Matthew DeLesDernier, exchange transfer process to reduce the 4(f)(6) requires a self-regulatory organization to give Assistant Secretary. RWA capital requirements attributable the Commission written notice of its intent to file [FR Doc. 2019–28025 Filed 12–27–19; 8:45 am] to those positions. The Exchange does the proposed rule change at least five business days prior to the date of filing of the proposed rule BILLING CODE 8011–01–P not believe that the proposed rule change, or such shorter time as designated by the change will impose any burden on Commission. The Exchange has satisfied this 25 17 CFR 200.30–3(a)(12). intermarket competition that is not requirement.

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SECURITIES AND EXCHANGE II. Self-Regulatory Organization’s requires the Exchange to identify and COMMISSION Statement of the Purpose of, and provide notice to designated Members Statutory Basis for, the Proposed Rule under paragraph (b) on a quarterly basis [Release No. 34–87848; File No. SR- Change based on trade activity during the CboeEDGX–2019–075] In its filing with the Commission, the previous quarter on the Exchange. Any Exchange included statements Member that receives such notice is Self-Regulatory Organizations; Cboe concerning the purpose of and basis for required to participate in the next EDGX Exchange, Inc.; Notice of Filing the proposed rule change and discussed annual functional and performance and Immediate Effectiveness of a any comments it received on the testing, which generally occurs in Proposed Rule Change To Amend proposed rule change. The text of these October. As such, a Member that Interpretation and Policy .01 of Rule statements may be examined at the receives notice in the third and/or 2.4 To Allow the Exchange To Provide places specified in Item IV below. The fourth quarter of the preceding year or Annual Notification to Individual Exchange has prepared summaries, set the first and/or second quarters of the Members That Are Subject to forth in sections A, B, and C below, of current year will be required to Paragraph (b) of Rule 2.4 the most significant aspects of such participate in the annual functional and statements. performance testing. As a result, December 23, 2019. A. Self-Regulatory Organization’s Members would be notified in October, Pursuant to Section 19(b)(1) of the Statement of the Purpose of, and January, April, and/or July of their Securities Exchange Act of 1934 (the Statutory Basis for, the Proposed Rule requirement to connect to the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 Change Exchange’s backup systems and participate in functional and notice is hereby given that on December 1. Purpose 20, 2019, Cboe EDGX Exchange, Inc. performance testing scheduled for (the ‘‘Exchange’’ or ‘‘EDGX’’) filed with The Exchange proposes to amend October, which means that certain the Securities and Exchange Interpretation and Policy .01 of Rule 2.4 Members receive notification of their Commission (the ‘‘Commission’’) the to allow the Exchange to provide annual designation and requirement to connect notification to individual Members that proposed rule change as described in and participate in functional and are subject to paragraph (b) of Rule 2.4, performance testing only three months Items I and II below, which Items have which requires certain Members to prior to the scheduled operational and been prepared by the Exchange. The connect to the Exchange’s backup functional testing. Further, a Member Exchange filed the proposal as a ‘‘non- systems and participate in functional that had been designated in any of the controversial’’ proposed rule change and performance testing based on the four preceding quarters would be pursuant to Section 19(b)(3)(A)(iii) of prior calendar quarter’s volume on the required to participate in the functional the Act 3 and Rule 19b–4(f)(6) Exchange. and performance testing even if that thereunder.4 The Commission is As background, Regulation Systems Member did not meet the designation publishing this notice to solicit Compliance and Integrity (‘‘Regulation requirements of subparagraphs (b)(1) in comments on the proposed rule change 5 SCI’’) applies to certain self-regulatory the most recent quarter (i.e., the second from interested persons. organizations (including the Exchange), quarter). alternative trading systems (‘‘ATSs’’), I. Self-Regulatory Organization’s plan processors, and exempt clearing As proposed, the amendment would Statement of the Terms of Substance of agencies (collectively, ‘‘SCI entities’’). allow the Exchange to identify the Proposed Rule Change Specifically, Rule 1004 of Regulation designated Members based on trade activity during a single quarter for a The Exchange proposes to amend SCI states that each SCI entity shall given year, and to issue one annual Interpretation and Policy .01 of Rule 2.4 establish standards for the designation notification to the designated Members to allow the Exchange to provide annual of Members that are necessary for the in preparation for the anticipated notification to individual Members that maintenance of fair and orderly markets functional and performance testing, are subject to paragraph (b) of Rule 2.4, in the event of the activation of the business continuity and disaster which generally occurs in October. As which requires certain Members to recovery plans, designate such Members such, the proposal would: (i) Simplify connect to the Exchange’s backup in scheduled functional and the Member designation and notice systems and participate in functional performance testing of the operation of process; (ii) allow the Exchange to and performance testing based on the such plans no less than once every 12 require only those Members that meet prior calendar quarter’s volume on the months, and coordinate the testing of the volume requirements under Rule Exchange. such plans on an industry- or sector- 2.4(b)(1) in the designated quarter to The text of the proposed rule change wide basis with other SCI entities. participate in such testing; (iii) provide is provided in Exhibit 5. In order to comply with the the Exchange with greater flexibility as The text of the proposed rule change coordination requirement among SCI to the timing that it would provide is also available on the Exchange’s entities, the Exchange has conducted Members with notice of their the required operational testing in website (http://markets.cboe.com/us/ designation pursuant to paragraph (b), parallel with the industry-led testing options/regulation/rule_filings/edgx/), but still require the Exchange to provide program coordinated by the Securities at the Exchange’s Office of the such notice at least three months prior Industry and Financial Markets to the anticipated functional and Secretary, and at the Commission’s Association (‘‘SIFMA’’), which occurs Public Reference Room. performance testing; and (iv) strengthen on an annual basis. Currently, the Exchange’s coordination with other Interpretation and Policy .01 to Rule 2.4 1 15 U.S.C. 78s(b)(1). SCI entities by harmonizing the 2 frequency of such notifications with 17 CFR 240.19b–4. 5 See Securities Exchange Act Release No. 73639 3 15 U.S.C. 78s(b)(3)(A)(iii). (November 19, 2014), 79 FR 72252 (December 5, other self-regulatory organizations, 4 17 CFR 240.19b–4(f)(6). 2014) (‘‘SCI Adopting Release’’). which do not provide quarterly

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notifications of Member designations.6 would provide Members with notice of III. Date of Effectiveness of the As the proposed amendment provides their designation pursuant to paragraph Proposed Rule Change and Timing for the Exchange with greater flexibility in (b), but still require the Exchange to Commission Action selecting the relevant quarter’s trade provide such notice at least three Because the proposed rule change data for which the designated Members months prior to the anticipated does not: (i) Significantly affect the will be identified, the designated functional and performance testing; and protection of investors or the public Members may be identified based on (iv) strengthen the Exchange’s interest; (ii) impose any significant more recent trading activity, rather than coordination with other SCI entities by burden on competition; and (iii) become trade activity that potentially occurred harmonizing the frequency of such operative for 30 days from the date on more than one year prior to such testing notifications with other self-regulatory which it was filed, or such shorter time and thus would more accurately organizations, which do not provide as the Commission may designate, it has represent the Members who met the quarterly notifications of Member become effective pursuant to Section requirements set forth in paragraph designations. The proposed amendment 19(b)(3)(A) of the Act 8 and Rule 19b– (b)(1) of Rule 2.4. will harmonize Exchange rules with 4(f)(6) thereunder.9 2. Statutory Basis those of other self-regulatory A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the The Exchange believes the proposed organizations in furtherance of the Act 10 normally does not become rule change is consistent with the coordination of testing among SCI operative for 30 days after the date of its Securities Exchange Act of 1934 (the entities required by Rule 1004(c) of filing. However, Rule 19b–4(f)(6)(iii) 11 ‘‘Act’’) and the rules and regulations Regulation SCI. As set forth in permits the Commission to designate a thereunder applicable to the Exchange Regulation SCI, ‘‘SROs have the shorter time if such action is consistent and, in particular, the requirements of authority, and legal responsibility, with the protection of investors and the Section 6(b) of the Act. Specifically, the under Section 6 of the Exchange Act, to public interest. The Exchange has asked Exchange believes the proposed rule adopt and enforce rules (including rules the Commission to waive the 30-day change is consistent with the Section to comply with Regulation SCI’s operative delay so that the proposal may 6(b)(5) requirements that the rules of an requirements relating to BC/DR testing) become operative upon filing. The exchange be designed to prevent applicable to their members or fraudulent and manipulative acts and Exchange states that a waiver of the participants that are designed to, among operative delay is consistent with the practices, to promote just and equitable other things, foster cooperation and principles of trade, to foster cooperation protection of investors and the public coordination with persons engaged in interest because it would eliminate and coordination with persons engaged regulating, clearing, settling, processing in regulating, clearing, settling, potential confusion across self- information with respect to, and regulatory organizations and simplify processing information with respect to, facilitating transactions in securities, to and facilitating transactions in and clarify the process of notification to remove impediments to and perfect the designated Members pursuant to securities, to remove impediments to mechanism of a free and open market and perfect the mechanism of a free and paragraph (b) of Rule 2.4. The and a national market system, and, in open market and a national market Commission believes that waiver of the general, to protect investors and the system, and, in general, to protect 30-day operative delay is consistent public interest.’’ 7 The Exchange investors and the public interest. with the protection of investors and the In particular, the Exchange believes believes that the proposal is consistent public interest. Therefore, the the proposal is consistent with the Act with such authority and legal Commission hereby waives the because, as noted above, the proposal responsibility. operative delay and designates the would allow the Exchange to identify proposed rule change operative upon B. Self-Regulatory Organization’s filing.12 designated Members based on activity Statement on Burden on Competition during a single quarter for a given year At any time within 60 days of the and to issue one annual notification to The Exchange does not believe that filing of the proposed rule change, the the designated Members in preparation the proposed rule change will impose Commission summarily may for the anticipated functional and any burden on competition that is not temporarily suspend such rule change if it appears to the Commission that such performance testing, which generally necessary or appropriate in furtherance action is necessary or appropriate in the occurs in October, which the Exchange of the purposes of the Act. The public interest, for the protection of believes would: (i) Simplify the Member proposed rule change is not a investors, or otherwise in furtherance of designation and notice process; (ii) competitive proposal as it is intended to the purposes of the Act. If the allow the Exchange to require only coordinate notification of Member Commission takes such action, the those Members that meet the participation requirements in the requirements under Rule 2.4(b)(1) in the Exchange’s testing of business 8 designated quarter to participate in such 15 U.S.C. 78s(b)(3)(A). continuity and disaster recovery plans 9 17 CFR 240.19b–4(f)(6). In addition, Rule19b– testing; (iii) provide the Exchange with with the annual industry-wide testing 4(f)(6)(iii) requires a self-regulatory organization to greater flexibility as to the timing that it program. give the Commission written notice of its intent to file the proposed rule change, along with a brief 6 See Cboe Exchange, Inc. (‘‘Cboe’’) Rule 5.24, C. Self-Regulatory Organization’s description and text of the proposed rule change, which states ‘‘[Cboe] provides [] Trading Permit at least five business days prior to the date of filing Statement on Comments on the of the proposed rule change, or such shorter time Holders with reasonable advance notice that they Proposed Rule Change Received From must participate in the testing described in as designated by the Commission. The Exchange paragraph (b) of this Rule 5.24.’’ See also New York Members, Participants, or Others has satisfied this requirement. Stock Exchange (‘‘NYSE’’) Rule 49(b)(4), which 10 17 CFR 240.19b–4(f)(6). states ‘‘[a]t least three (3) months prior to a The Exchange neither solicited nor 11 17 CFR 240.19b–4(f)(6)(iii). scheduled functional and performance testing of the received comments on the proposed 12 For purposes only of waiving the 30-day Exchange’s business continuity and disaster rule change. operative delay, the Commission also has recovery plans, the Exchange will . . . notify those considered the proposed rule’s impact on member organizations that are required to efficiency, competition, and capital formation. See participate based on such criteria.’’ 7 See supra note 6. 15 U.S.C. 78c(f).

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Commission shall institute proceedings For the Commission, by the Division of statements may be examined at the to determine whether the proposed rule Trading and Markets, pursuant to delegated places specified in Item IV below. The change should be approved or authority.13 Exchange has prepared summaries, set disapproved. Eduardo A. Aleman, forth in sections A, B, and C below, of Deputy Secretary the most significant aspects of such IV. Solicitation of Comments [FR Doc. 2019–28176 Filed 12–27–19; 8:45 a.m.] statements. Interested persons are invited to BILLING CODE 8011–01–P submit written data, views, and A. Self-Regulatory Organization’s arguments concerning the foregoing, Statement of the Purpose of, and Statutory Basis for, the Proposed Rule including whether the proposed rule SECURITIES AND EXCHANGE Change change is consistent with the Act. COMMISSION Comments may be submitted by any of 1. Purpose the following methods: [Release No. 34–87831; File No. SR– NASDAQ–2019–100] The purpose of this filing is to amend Electronic Comments Options 3, Section 3 to extend the Self-Regulatory Organizations; The • Use the Commission’s internet Penny Pilot through June 30, 2020 or the Nasdaq Stock Market LLC; Notice of 3 comment form (http://www.sec.gov/ date of permanent approval, if earlier. Filing and Immediate Effectiveness of rules/sro.shtml); or Under the Penny Pilot, the minimum • Send an email to rule-comments@ Proposed Rule Change to Extend price variation for all participating sec.gov. Please include File Number SR– Through June 30, 2020 or the Date of options classes, except for options CboeEDGX–2019–075 on the subject Permanent Approval, if Earlier, the overlying the PowerShares QQQ Trust line. Penny Pilot Program (‘‘QQQQ’’), the SPDR S&P 500 Exchange Traded Fund (‘‘SPY’’) and the iShares Paper Comments December 20, 2019. Russell 2000 Index Fund (‘‘IWM’’), is • Send paper comments in triplicate Pursuant to Section 19(b)(1) of the $0.01 for all quotations in options series Securities Exchange Act of 1934 that are quoted at less than $3 per to Secretary, Securities and Exchange 1 2 Commission, 100 F Street NE, (‘‘Act’’), and Rule 19b–4 thereunder, contract and $0.05 for all quotations in Washington, DC 20549–1090. notice is hereby given that on December options series that are quoted at $3 per 13, 2019, The Nasdaq Stock Market LLC All submissions should refer to File contract or greater. Options overlying (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the Number SR–CboeEDGX–2019–075. This QQQQ, SPY and IWM are quoted in Securities and Exchange Commission file number should be included on the $0.01 increments for all options series. (‘‘SEC’’ or ‘‘Commission’’) the proposed subject line if email is used. To help the The Penny Pilot is currently scheduled rule change as described in Items I and 4 Commission process and review your to expire on December 31, 2019. The II, below, which Items have been comments more efficiently, please use Exchange now proposes to extend the prepared by the Exchange. The only one method. The Commission will time period of the Penny Pilot through Commission is publishing this notice to post all comments on the Commission’s June 30, 2020 or the date of permanent solicit comments on the proposed rule internet website (http://www.sec.gov/ approval, if earlier. change from interested persons. rules/sro.shtml). Copies of the This filing does not propose any submission, all subsequent I. Self-Regulatory Organization’s substantive changes to the Penny Pilot amendments, all written statements Statement of the Terms of Substance of Program; all classes currently with respect to the proposed rule the Proposed Rule Change participating in the Penny Pilot will change that are filed with the remain the same and all minimum The Exchange proposes to amend increments will remain unchanged. The Commission, and all written Options 3, Section 3 (Minimum communications relating to the Exchange believes the benefits to public Increments) to extend through June 30, customers and other market participants proposed rule change between the 2020 or the date of permanent approval, Commission and any person, other than who will be able to express their true if earlier, the Penny Pilot Program in prices to buy and sell options have been those that may be withheld from the options classes in certain issues (‘‘Penny public in accordance with the demonstrated to outweigh the potential Pilot’’ or ‘‘Pilot’’). increase in quote traffic. provisions of 5 U.S.C. 552, will be The text of the proposed rule change available for website viewing and is available on the Exchange’s website at 2. Statutory Basis printing in the Commission’s Public http://nasdaq.cchwallstreet.com, at the The Exchange believes that its Reference Room, 100 F Street NE, principal office of the Exchange, and at proposal is consistent with Section 6(b) Washington, DC 20549 on official the Commission’s Public Reference of the Act,5 business days between the hours of in general, and furthers the Room. 6 10:00 a.m. and 3:00 p.m. Copies of the objectives of Section 6(b)(5) of the Act, filing also will be available for II. Self-Regulatory Organization’s in particular, in that it is designed to inspection and copying at the principal Statement of the Purpose of, and prevent fraudulent and manipulative office of the Exchange. All comments Statutory Basis for, the Proposed Rule acts and practices, to promote just and received will be posted without change. Change equitable principles of trade, to foster cooperation and coordination with Persons submitting comments are In its filing with the Commission, the cautioned that we do not redact or edit Exchange included statements 3 The options exchanges in the U.S. that have personal identifying information from concerning the purpose of and basis for pilot programs similar to the Penny Pilot (together comment submissions. You should the proposed rule change and discussed ‘‘pilot programs’’) are currently working on a submit only information that you wish any comments it received on the proposal for permanent approval of the respective to make available publicly. All pilot programs. proposed rule change. The text of these 4 See Securities Exchange Act Release No. 86153 submissions should refer to File (June 19, 2019), 84 FR 29903 (June 25, 2019) (SR– Number SR–CboeEDGX–2019–075 and 13 17 CFR 200.30–3(a)(12). NASDAQ–2019–051). should be submitted on or before 1 15 U.S.C. 78s(b)(1). 5 15 U.S.C. 78f(b). January 21, 2020. 2 17 CFR 240.19b–4. 6 15 U.S.C. 78f(b)(5).

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persons engaged in facilitating significantly affect the protection of including whether the proposed rule transactions in securities, and to remove investors or the public interest; (ii) change is consistent with the Act. impediments to and perfect the impose any significant burden on Comments may be submitted by any of mechanism of a free and open market competition; and (iii) become operative the following methods: and a national market system and, in for 30 days from the date on which it Electronic comments general, to protect investors and the was filed, or such shorter time as the public interest. Commission may designate, it has • Use the Commission’s internet In particular, the proposed rule become effective pursuant to Section comment form (http://www.sec.gov/ change, which extends the Penny Pilot 19(b)(3)(A) of the Act 9 and Rule 19b– rules/sro.shtml); or for an additional six months through 4(f)(6) 10 thereunder. • Send an email to rule-comments@ June 30, 2020 or the date of permanent A proposed rule changed filed under sec.gov. Please include File Number SR– approval, if earlier, will enable public Rule 19b–4(f)(6) 11 normally does not NASDAQ–2019–100 on the subject line. become operative prior to 30 days after customers and other market participants Paper comments to express their true prices to buy and the date of filing. However, pursuant to • sell options for the benefit of all market Rule 19b–4(f)(6),12 the Commission may Send paper comments in triplicate participants. This is consistent with the designate a shorter time if such action to Secretary, Securities and Exchange Act. is consistent with the protection of Commission, 100 F Street NE, investors and the public interest. The Washington, DC 20549–1090. B. Self-Regulatory Organization’s Exchange has asked the Commission to All submissions should refer to File Statement on Burden on Competition waive the 30-day operative delay so that Number SR–NASDAQ–2019–100. This The Exchange does not believe that the proposal may become operative file number should be included on the the proposed rule change will impose immediately upon filing. The subject line if email is used. To help the any burden on competition not Commission believes that waiving the Commission process and review your necessary or appropriate in furtherance 30-day operative delay is consistent comments more efficiently, please use of the purposes of the Act. To the with the protection of investors and the only one method. The Commission will contrary, this proposal is pro- public interest because doing so will post all comments on the Commission’s competitive because it allows Penny allow the Pilot Program to continue internet website (http://www.sec.gov/ Pilot issues to continue trading on the without interruption in a manner that is rules/sro.shtml). Exchange. consistent with the Commission’s prior Copies of the submission, all Moreover, the Exchange believes that approval of the extension and expansion subsequent amendments, all written the proposed rule change will allow for of the Pilot Program.13 Accordingly, the statements with respect to the proposed further analysis of the Pilot and a Commission designates the proposed rule change that are filed with the determination of how the Pilot should rule change as operative upon filing Commission, and all written be structured in the future; and will with the Commission.14 communications relating to the serve to promote regulatory clarity and At any time within 60 days of the proposed rule change between the consistency, thereby reducing burdens filing of the proposed rule change, the Commission and any person, other than on the marketplace and facilitating Commission summarily may those that may be withheld from the investor protection. temporarily suspend such rule change if public in accordance with the The Pilot is an industry-wide it appears to the Commission that such provisions of 5 U.S.C. 552, will be initiative supported by all other option action is necessary or appropriate in the available for website viewing and exchanges. The Exchange believes that public interest, for the protection of printing in the Commission’s Public extending the Pilot will allow for investors, or otherwise in furtherance of Reference Room, 100 F Street NE, continued competition between market the purposes of the Act. If the Washington, DC 20549, on official participants on the Exchange trading Commission takes such action, the business days between the hours of similar products as their counterparts Commission shall institute proceedings 10:00 a.m. and 3:00 p.m. Copies of the on other exchanges, while at the same to determine whether the proposed rule filing also will be available for time allowing the Exchange to continue should be approved or disapproved. inspection and copying at the principal to compete for order flow with other IV. Solicitation of Comments office of the Exchange. All comments exchanges in option issues trading as received will be posted without change. part of the Pilot. Interested persons are invited to Persons submitting comments are submit written data, views, and cautioned that we do not redact or edit C. Self-Regulatory Organization’s arguments concerning the foregoing, Statement on Comments on the personal identifying information from comment submissions. You should Proposed Rule Change Received From 9 15 U.S.C. 78s(b)(3)(A). submit only information that you wish Members, Participants, or Others 10 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give to make available publicly. All No written comments were either the Commission written notice of its intent to file submissions should refer to File solicited or received. the proposed rule change at least five business days Number SR–NASDAQ–2019–100 and prior to the date of filing of the proposed rule should be submitted on or before III. Date of Effectiveness of the change or just shorter time as designated by the Proposed Rule Change and Timing for Commission. The Exchange has satisfied this January 21, 2020. Commission Action requirement. For the Commission, by the Division of 11 17 CFR 240.19b–4(f)(6). Trading and Markets, pursuant to delegated The Exchange filed the proposed rule 12 17 CFR 240.19b–4(f)(6)(iii). authority.15 change pursuant to Section 19(b)(3)(A) 13 See Securities Exchange Act Release No. 61061 J. Matthew DeLesDernier, of the Act 7 and Rule 19b–4(f)(6) 8 (November 24, 2009), 74 FR 62857 (December 1, thereunder. Because the foregoing 2009) (SR–NYSEArca–2009–44) Assistant Secretary. proposed rule change does not (i) 14 For purposes only of waiving the operative [FR Doc. 2019–28079 Filed 12–27–19; 8:45 am] delay for this proposal, the Commission has considered the proposed rule’s impact on BILLING CODE 8011–01–P 7 15 U.S.C. 78s(b)(3)(A). efficiency, competition, and capital formation. See 8 17 CFR 240.19b–4(f)(6). 15 U.S.C. 78c(f). 15 17 CFR 200.30–3(a)(12).

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SECURITIES AND EXCHANGE an updated opinion on home country and FICC’s outside U.S. counsel. As COMMISSION law (and if applicable, other non- such, in this current process, both the domestic law), or a letter from their applicant and FICC are incurring [Release No. 34–87834; File No. SR–FICC– outside counsel indicating that there duplicative legal costs. 2019–006] have been no material changes in home In addition, GSD and MBSD currently require direct non-U.S. members (i.e., Self-Regulatory Organizations; Fixed country law (or other applicable non- those not participating through a U.S. Income Clearing Corporation; Notice of domestic law) since the date of issuance branch or agency) to provide bring- Filing and Immediate Effectiveness of of the most recent opinion submitted to down opinions annually. Again, FICC a Proposed Rule Change To Include a FICC (hereinafter referred to as the 7 hires its own outside U.S. counsel to New Foreign Legal Opinion Fee ‘‘bring-down opinion’’). review the bring-down opinions. Applicable to Non-U.S. Membership II. Clearing Agency’s Statement of the Applicants, and Delete a Requirement Purpose of, and Statutory Basis for, the Proposed Process for Direct Non-U.S. Members Relating Proposed Rule Change In order to address the legal costs for to Annual Opinion Updates In its filing with the Commission, the the review of the non-U.S. legal December 20, 2019. clearing agency included statements opinions for non-U.S. membership applicants, FICC proposes to modify the Pursuant to Section 19(b)(1) of the concerning the purpose of and basis for current process for obtaining non-U.S. Securities Exchange Act of 1934 the proposed rule change and discussed legal opinions and implement a new (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 any comments it received on the foreign legal opinion fee (‘‘Foreign Legal notice is hereby given that on December proposed rule change. The text of these Opinion Fee’’). Such fee would be non- 16, 2019, Fixed Income Clearing statements may be examined at the places specified in Item IV below. The refundable regardless of the outcome of Corporation (‘‘FICC’’) filed with the the application process. Securities and Exchange Commission clearing agency has prepared (‘‘Commission’’) the proposed rule summaries, set forth in sections A, B, Proposed Rule Changes and C below, of the most significant change as described in Items I, II and III Pursuant to the proposed rule aspects of such statements. below, which Items have been prepared changes, FICC would select outside by the clearing agency. FICC filed the (A) Clearing Agency’s Statement of the counsel to provide a foreign insolvency proposed rule change pursuant to Purpose of, and Statutory Basis for, the and netting opinion satisfactory to FICC Section 19(b)(3)(A) of the Act 3 and Proposed Rule Change regarding the laws of the applicable Rules 19b–4(f)(2) and (f)(4) thereunder.4 non-U.S. jurisdiction. This would The Commission is publishing this 1. Purpose alleviate the burden from membership notice to solicit comments on the The purpose of the proposed rule applicants of having to hire their own proposed rule change from interested change is to amend the GSD Rules and outside counsel to prepare the opinion. persons. the MBSD Rules to: (i) Include a new Also pursuant to this proposal, the FICC I. Clearing Agency’s Statement of the foreign legal opinion fee in the FICC Fee Fee Schedules would be amended to Schedules applicable to non-U.S. provide that the initial non-U.S. Terms of Substance of the Proposed 8 Rule Change membership applicants, and (ii) delete membership applicant (including one the requirement for direct non-U.S. participating through a U.S. branch or The proposed rule change consists of members to submit a bring-down agency) from a given jurisdiction would a proposal to amend the FICC opinion on an annual basis. be advised of a ‘‘Maximum Estimated Government Securities Division Background Charge’’ based on the estimated amount (‘‘GSD’’) Rulebook (‘‘GSD Rules’’) and provided to FICC by FICC’s outside the FICC Mortgage-Backed Securities Under FICC’s current process counsel with respect to obtaining the Division (‘‘MBSD’’) Clearing Rules applicable to both GSD and MBSD, a foreign insolvency and netting opinion (‘‘MBSD Rules’’) 5 to: (i) Include a new non-U.S. foreign applicant, including an for that jurisdiction. The estimate would foreign legal opinion fee in the GSD Fee applicant that is a U.S. branch or agency be prepared on an as-needed basis and Structure, and the MBSD Schedule of of a non-U.S. bank, provides an would not be based on a pre-existing Charges Broker Account Group and extensive legal opinion addressing schedule. FICC would advise the non- MBSD Schedule of Charges Dealer complex issues such as netting, U.S. applicant of the Maximum Account Group (with the GSD Fee bankruptcy, and choice of law issues Estimated Charge in writing. Structure, collectively referred to as the under the law of the applicant’s home The amount of the Foreign Legal ‘‘FICC Fee Schedules’’) applicable to jurisdiction (the ‘‘foreign insolvency Opinion Fee charged to the applicant non-U.S. Netting Member and non-U.S. and netting opinion’’).9 The foreign would be the lesser of a Maximum Clearing Member membership insolvency and netting opinion is Estimated Charge and the actual costs applicants,6 and (ii) delete the provided by outside counsel hired by charged to FICC by outside counsel requirement for direct non-U.S. the applicant. The opinion is then providing a legal opinion in form and members to submit, on an annual basis, reviewed (and negotiated with the substance satisfactory to FICC regarding applicant’s counsel, as needed) by FICC the laws of the non-U.S. jurisdiction. If 1 15 U.S.C. 78s(b)(1). within five (5) business days after FICC 2 17 CFR 240.19b–4. 7 The annual bring-down opinion requirement advises the non-U.S. membership 3 15 U.S.C. 78s(b)(3)(A). does not apply to non-U.S. members participating 4 17 CFR 240.19b–4(f)(2) and (f)(4). through U.S. branches or agencies. applicant of the Maximum Estimated 5 Capitalized terms not defined herein are defined 8 Supra note 6. Charge, as described above, the non-U.S. in the GSD Rules and MBSD Rules, available at 9 Section 5 of GSD Rule 2A and Section 3 of applicant notifies FICC in writing that it http://www.dtcc.com/legal/rules-and-procedures. MBSD Rule 2A reference opinions as one of the will terminate its application, the non- 6 The proposed fee would also be applicable to possible required documents in the application U.S. applicant will not be charged the applicants that are U.S. branches and agencies of submission. See GSD Rule 2A and MBSD Rule 2A, non-U.S. banks because such applicants are also supra note 5. The application requirements sheet Foreign Legal Opinion Fee. If the required to submit a foreign legal opinion as part provided to potential GSD and MBSD members application is terminated, the Maximum of their application. outlines the types of opinions required. Estimated Charge would no longer

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apply and FICC would obtain a new (5) business days of FICC advising it of netting and insolvency opinion from Maximum Estimated Charge from the amount of the Foreign Legal FICC outside counsel for all new non- FICC’s outside counsel if it receives a Opinion Fee, then the applicant would U.S. membership applicants domiciled subsequent application from that be billed accordingly. Payment by the within a jurisdiction, rather than jurisdiction. If the initial non-U.S. Non-U.S. Participant Applicant of the requiring each applicant to obtain an membership applicant does not full amount of the Foreign Legal opinion from its own outside counsel in terminate its application within five (5) Opinion Fee would be due within ten its jurisdiction, would provide for business days of FICC advising it of the (10) business days of the applicant’s enhanced consistency in the review Maximum Estimated Charge, then the receipt of an invoice, including payment performed by FICC by eliminating the non-U.S. applicant would be billed for instructions, from FICC. need for it to review multiple legal the Foreign Legal Opinion Fee in the Pursuant to the proposed rule change, opinions submitted by each applicant amount that would be determined as FICC would delete from GSD Rule 3, individually. Similarly, FICC believes described above. Promptly after FICC’s Section 2 and MBSD Rule 3, Section 2 that removing the annual bring-down outside counsel has provided to FICC a the requirement for direct foreign opinion requirement would provide for final invoice stating the actual amount members to submit the annual bring- enhanced consistency in FICC’s review to be charged to FICC for the foreign down opinions. FICC will instead of material changes in applicable non- legal opinion, FICC would send an periodically monitor to identify any U.S. law and would eliminate the invoice to the applicant. Payment by the significant changes in relevant non-U.S. situation whereby multiple direct non-U.S. membership applicant would jurisdictions that may be of interest to foreign members from the same be due within ten (10) business days of FICC. FICC would not charge members jurisdiction are each submitting separate the non-U.S. applicant’s receipt of an for this monitoring service. bring-down opinions/letters. Therefore, invoice, including payment 2. Statutory Basis FICC believes that the proposed rule instructions, from FICC. change would not permit unfair The FICC Fee Schedules would not Section 17A(b)(3)(D) of the Act discrimination in the admission of expressly include an absolute maximum requires that the GSD Rules and MBSD members in the use of FICC, and is amount for the Foreign Legal Opinion Rules provide for the equitable consistent with the provisions of Fee because, based on FICC’s experience allocation of reasonable dues, fees, and Section 17A(b)(3)(F).13 in reviewing foreign legal opinions, the other charges among its participants.10 Rule 17Ad–22(e)(18) under the Act level of review required for FICC to gain FICC believes the proposed Foreign requires that FICC establish, implement, comfort that the law of the applicant’s Legal Opinion Fee would be equitably maintain and enforce written policies jurisdiction does not provide material allocated because in accordance with and procedures reasonably designed to impediments to enforcement of the GSD the amendment to the FICC Fee establish objective, risk-based, and Rules and MBSD Rules, as applicable, Schedules as described above, a Foreign publicly disclosed criteria for can vary significantly by jurisdiction, Legal Opinion Fee in the same amount participation, which permit fair and resulting in significant variance in would be charged to all subsequent open access by direct and, where counsel costs to FICC. The FICC Fee applicants domiciled in the jurisdiction relevant, indirect participants and other Schedules would not include an for which an applicable foreign legal financial market utilities, require absolute minimum amount for the opinion was obtained. In addition, FICC participants to have sufficient financial Foreign Legal Opinion Fee because FICC believes that the proposed Foreign Legal resources and robust operational would not charge an applicant a Foreign Opinion Fee would be reasonable capacity to meet obligations arising from Legal Opinion Fee that is in an amount because (i) it would be capped in the participation in the clearing agency, and that is higher than the actual amount amount of the Maximum Estimated monitor compliance with such billed by FICC’s outside counsel to Charge, as described above, (ii) the participation requirements on an provide the applicable foreign amount of a Foreign Legal Opinion Fee ongoing basis.14 FICC believes that the insolvency and netting opinion. charged to an applicant would not be proposed rule changes regarding the Each subsequent non-U.S. greater than the costs FICC may incur in Foreign Legal Opinion Fee and membership applicant (‘‘Subsequent connection with obtaining the elimination of the annual bring-down Non-U.S. Applicant’’) from the same applicable foreign legal opinion, as requirement have been designed to meet jurisdiction would be charged a Foreign described above, and (iii) it would the applicable provisions of Rule 17Ad– Legal Opinion Fee in an amount equal eliminate the cost to FICC associated 22(e)(18). This is because the netting to the Foreign Legal Opinion Fee with the review of foreign legal and insolvency opinion requirement for charged to the first non-U.S. opinions. Therefore, FICC believes that non-U.S. applicants, which is a risk- membership applicant from the same the proposed rule change would provide based requirement in that it allows FICC jurisdiction that was charged a Foreign for the equitable allocation of reasonable to learn and address any potential legal Legal Opinion Fee. FICC would notify fees among its participants, and is risk arising from a non-U.S. each Subsequent Non-U.S. Applicant in consistent with Section 17A(b)(3)(D).11 jurisdiction’s laws, would remain under writing of the amount of the Foreign Section 17A(b)(3)(F) of the Act, the proposed rule changes. The Legal Opinion Fee that was determined requires, inter alia, that the GSD Rules proposed rule change would not as described above. If within five (5) and MBSD Rules are not designed to adversely affect fair and open access business days after FICC advises the permit unfair discrimination in the because the requirement for such legal Subsequent Non-U.S. Participant admission of participants in the use of opinion exists today in that non-U.S. Applicant of the applicable Foreign the clearing agency.12 FICC believes the applicants must procure and pay for Legal Opinion Fee, the applicant proposed rule changes are consistent their own opinion currently. Moreover, notifies FICC in writing that it will with this provision because the proposal the Foreign Legal Opinion Fee would terminate its membership application, for FICC to obtain a single foreign constitute a publicly disclosed the applicant would not be charged a requirement for applying as a non-U.S. Foreign Legal Opinion Fee. If the 10 15 U.S.C. 78q–1(b)(3)(D). Subsequent Non-U.S. Applicant does 11 Id. 13 Id. not terminate its application within five 12 15 U.S.C. 78q–1(b)(3)(F). 14 17 CFR 240.17Ad–22(e)(18).

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applicant to GSD and MBSD. Finally, the Commission of any written business days between the hours of while the proposal would eliminate the comments received by FICC. 10:00 a.m. and 3:00 p.m. Copies of the bring-down opinion requirement, FICC filing also will be available for III. Date of Effectiveness of the would continue to periodically monitor inspection and copying at the principal Proposed Rule Change, and Timing for in order to identify any significant office of FICC and on DTCC’s website Commission Action changes in relevant non-U.S. (http://dtcc.com/legal/sec-rule- jurisdictions that may be of interest to The foregoing rule change has become filings.aspx). All comments received FICC. effective pursuant to Section 19(b)(3)(A) will be posted without change. Persons of the Act 17 and paragraph (f) of Rule submitting comments are cautioned that (B) Clearing Agency’s Statement on 19b–4 thereunder.18 At any time within Burden on Competition we do not redact or edit personal 60 days of the filing of the proposed rule identifying information from comment FICC believes that the proposed change, the Commission summarily may submissions. You should submit only changes to the FICC Fee Schedules to temporarily suspend such rule change if information that you wish to make impose the Foreign Legal Opinion Fee it appears to the Commission that such available publicly. All submissions could impose a burden on competition action is necessary or appropriate in the should refer to File Number SR–FICC– because it would implement a new fee public interest, for the protection of 2019–006 and should be submitted on payable by a non-U.S. applicant in investors, or otherwise in furtherance of or before January 21, 2020. connection with a membership the purposes of the Act. application to FICC, which currently For the Commission, by the Division of does not exist in the FICC Fee IV. Solicitation of Comments Trading and Markets, pursuant to delegated authority.19 Schedules. FICC does not believe that Interested persons are invited to any burden on competition imposed by submit written data, views and J. Matthew DeLesDernier, the changes to the FICC Fee Schedules arguments concerning the foregoing, Assistant Secretary. would be significant because the including whether the proposed rule [FR Doc. 2019–28087 Filed 12–27–19; 8:45 am] Foreign Legal Opinion Fee is unlikely to change is consistent with the Act. BILLING CODE 8011–01–P cause a material impact to a non-U.S. Comments may be submitted by any of membership applicant’s overall cost of the following methods: applying for FICC membership due to SECURITIES AND EXCHANGE Electronic Comments the fact that, absent the proposal, these COMMISSION • Use the Commission’s internet applicants would have incurred the cost [Release No. 34–87811; File No. SR–Phlx– of obtaining the foreign legal opinion comment form (http://www.sec.gov/ 2019–56] themselves. FICC believes that any rules/sro.shtml); or • burden on competition that is created by Send an email to rule-comments@ Self-Regulatory Organizations; Nasdaq the proposed changes to the FICC Fee sec.gov. Please include File Number SR– PHLX LLC; Notice of Filing and Schedules would be necessary in FICC–2019–006 on the subject line. Immediate Effectiveness of Proposed furtherance of the purposes of the Act 15 Paper Comments Rule Change To Amend Rules 1000, in order to cover costs to FICC • 1014, 1034, 1068, 1080, 1087, 1090, and associated with obtaining the foreign Send paper comments in triplicate 1093 legal opinion that is necessary for FICC to Secretary, Securities and Exchange to determine whether it would face legal Commission, 100 F Street NE, December 20, 2019. risks in connection with admitting a Washington, DC 20549. Pursuant to Section 19(b)(1) of the foreign membership applicant. FICC All submissions should refer to File Securities Exchange Act of 1934 also believes that any burden that is Number SR–FICC–2019–006. This file (‘‘Act’’),1 and Rule 19b–4 thereunder,2 created by the Foreign Legal Opinion number should be included on the notice is hereby given that on December Fee would be appropriate in furtherance subject line if email is used. To help the 19, 2019, Nasdaq PHLX LLC (‘‘Phlx’’ or of the Act 16 because it would be capped Commission process and review your ‘‘Exchange’’) filed with the Securities at the Maximum Estimated Charge and comments more efficiently, please use and Exchange Commission would not be greater than the costs FICC only one method. The Commission will (‘‘Commission’’) the proposed rule may incur in connection with obtaining post all comments on the Commission’s change as described in Items I and II the applicable foreign legal opinion. internet website (http://www.sec.gov/ below, which Items have been prepared FICC believes that the elimination of rules/sro.shtml). Copies of the by the Exchange. The Commission is the annual bring-down requirement submission, all subsequent publishing this notice to solicit could promote competition because it amendments, all written statements comments on the proposed rule change would eliminate the cost of obtaining with respect to the proposed rule from interested persons. change that are filed with the the bring-down opinion/letter currently I. Self-Regulatory Organization’s incurred by direct foreign members, Commission, and all written communications relating to the Statement of the Terms of Substance of potentially lowering their operating the Proposed Rule Change costs. proposed rule change between the Commission and any person, other than The Exchange proposes to amend (C) Clearing Agency’s Statement on those that may be withheld from the Rule 1000, ‘‘Applicability, Definitions Comments on the Proposed Rule public in accordance with the and References,’’ Rule 1014, Change Received From Members, provisions of 5 U.S.C. 552, will be ‘‘Obligations of Market Makers,’’ Rule Participants, or Others available for website viewing and 1034, ‘‘Minimum Increments,’’ Rule Written comments relating to the printing in the Commission’s Public 1068, ‘‘Directed Orders,’’ Rule 1080, proposed rule changes have not been Reference Room, 100 F Street NE, ‘‘Electronic Acceptance of Quotes and solicited or received. FICC will notify Washington, DC 20549 on official 19 17 CFR 200.30–3(a)(12). 15 15 U.S.C. 78q–1(b)(3)(I). 17 15 U.S.C. 78s(b)(3)(A). 1 15 U.S.C. 78s(b)(1). 16 Id. 18 17 CFR 240.19b–4(f). 2 17 CFR 240.19b–4.

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Orders,’’ Rule 1087, ‘‘Price Exchange proposes to create a qualify as a Directed Order, an order Improvement XL (‘‘PIXL’’),’’ Rule 1090, Commentary section to Rule 1034 and must be delivered to the Exchange via ‘‘Mass Cancellation of Trading Interest,’’ relocate all exceptions to Rule 1034(a) the System.’’ The Exchange proposes to and Rule 1093 titled ‘‘Away Markets in the Commentary. The Exchange remove the limitation for a stop or stop- and Order Routing. would amend Rule 1034(a) to state, limit order. The System will allow any The text of the proposed rule change except as provided in the Commentary order to be considered a Directed Order. is available on the Exchange’s website at and then also amend the words Today, Nasdaq ISE, LLC permits all http://nasdaqphlx.cchwallstreet.com/, ‘‘quoting’’ to ‘‘trading’’ and eliminate order types to be Preferenced.3 at the principal office of the Exchange, the word ‘‘decimals.’’ The Exchange Price Improvement XL (‘‘PIXL’’) and at the Commission’s Public notes that executions are considered Reference Room. when determining the minimum price The Exchange proposes to amend variations of options which have prices Rule 1087 to make clear at the beginning II. Self-Regulatory Organization’s of the Rule which provisions apply to Statement of the Purpose of, and at $3.00 or higher or are priced under $3.00. The word ‘‘quoting’’ is not as Public Customer-to-Public Customer Statutory Basis for, the Proposed Rule Cross Orders. Today, Phlx Rule 1087(a) 4 Change precise as word ‘‘trading.’’ The Exchange utilizes executions to enforce and (f) 5 permit Public Customer-to- In its filing with the Commission, the minimum increments submitted by the Public Customer Cross Orders to be Exchange included statements member. While the word ‘‘quoting’’ is entered into PIXL. Today Public concerning the purpose of and basis for not incorrect, the Exchange believes Customer-to-Public Customer Cross the proposed rule change and discussed ‘‘trading’’ is more understandable and is Orders may only be entered into PIXL. any comments it received on the similarly utilized by Nasdaq ISE, LLC This new sentence makes clear which proposed rule change. The text of these (‘‘ISE’’), Nasdaq GEMX, LLC (‘‘GEMX’’) provisions govern Public Customer-to- statements may be examined at the and Nasdaq MRX, LLC (‘‘MRX’’) at Public Customer Cross Orders. The places specified in Item IV below. The Options 3, Section 3 of those Rulebooks. Exchange proposes to capitalize the Exchange has prepared summaries, set Similarly, the Exchange is removing the term ‘‘Public Customer-to-Public forth in sections A, B, and C below, of word ‘‘decimals’’ and similar to ISE, Customer Cross Orders’’ within Rules the most significant aspects of such GEMX and MRX at Options 3, Section 1014(e) and Rule 1080(e) to conform to statements. 3, stating ‘‘at a price’’ because the the proposed defined term. A. Self-Regulatory Organization’s Exchange believes this language makes Mass Cancellation of Trading Interest Statement of the Purpose of, and clear the intent. These changes do not result in a System change, rather they The Exchange proposes to adopt a Statutory Basis for, the Proposed Rule new Rule 1090 titled ‘‘Mass Change represent the Exchange’s current System operation. Cancellation of Trading Interest.’’ The 1. Purpose The Exchange proposes to renumber Nasdaq Options Market LLC (‘‘NOM’’) The Exchange proposes to amend current Rule 1034(a)(i)(A) as Rule and Nasdaq BX, Inc. (‘‘BX’’) Rules at Rule 1000, ‘‘Applicability, Definitions 1034(a)(1), without change. The Chapter VII, Section 11 permit and References,’’ Rule 1014, Exchange proposes to renumber current Participants on those markets to contact ‘‘Obligations of Market Makers,’’ Rule Rule 1034(a)(i)(C) as Rule 1034(a)(2) and market operations and manually request 1034, ‘‘Minimum Increments,’’ Rule change the words ‘‘Phlx XL II system’’ to simply the defined term ‘‘System.’’ 3 See Nasdaq ISE, LLC Rules at Options 2, Section 1068, ‘‘Directed Orders,’’ Rule 1080, 10. ‘‘Electronic Acceptance of Quotes and The Exchange proposes to renumber 4 Phlx Rule 1087(a) provides, ‘‘Auction Eligibility Orders,’’ Rule 1087, ‘‘Price current Rule 1034(a)(v) as Rule Requirements. All options traded on the Exchange Improvement XL (‘‘PIXL’’),’’ Rule 1090, 1034(a)(3) and remove the text are eligible for PIXL. A member (the ‘‘Initiating ‘‘Mass Cancellation of Trading Interest,’’ ‘‘However’’ and instead add language to Member’’) may initiate an Auction provided all of exclude paragraph (a) similar to ISE, the following are met:’’ . . . Pursuant to Rule and Rule 1093 titled ‘‘Away Markets 1087(f), the Exchange will allow a Public Customer- and Order Routing.’’ Each rule change GEMX and MRX Rules at Options 3, to-Public Customer PIXL Order to trade on either will be discussed below. Section 3. The Exchange proposes to the bid or offer, if the NBBO is $0.01 wide, relocate current Rule 1034(a)(i)(b) as provided (1) the execution price is equal to or Applicability, Definitions and Commentary .01 and add the title within the NBBO, (2) there is no resting Public References Customer at the execution price, and (3) $0.01 is the ‘‘Penny Pilot Program’’ before the rule Minimum Price Variation (MPV) of the option. The The Exchange proposes to define a text. The Exchange proposes to relocate Exchange will continue to reject a PIXL Order to ‘‘bid’’ and an ‘‘offer’’ within Phlx Rule current Rules 1034(a)(ii), (iii), and (iv) buy (sell) if the NBBO is only $0.01 wide and the 1000(b). The Exchange proposes to state as Commentary .02, .03 and .04, Agency order is stopped on the bid (offer) if there is a resting order on the bid (offer).’’ the term ‘‘bid’’ means a quote or limit respectively. 5 Phlx Rule 1087(f) provides, ‘‘In lieu of the order to buy one or more options The Exchange believes that these rule procedures in paragraphs (a)–(b) above, an Initiating contracts within Rule 1000(b)(62). The changes will bring greater clarity to the Member may enter a PIXL Order for the account of Exchange proposes to state, the term Rule. a Public Customer paired with an order for the ‘‘offer’’ means a quote or limit order to account of a Public Customer and such paired Directed Orders orders will be automatically executed without a sell one or more options contracts PIXL Auction, provided there is not currently an within Rule 1000(b)(63). The Exchange The Exchange proposes to remove Auction in progress in the same series or same believes that the addition of these rule text within Rule 1068(a)(i)(A) with strategy, in which case the orders will be rejected. respect to Directed Orders. The current The execution price for such a PIXL Order (except definitions will bring greater if it is a Complex Order) must be expressed in the transparency to the Exchange’s Rules. rule text provides, ‘‘The term ‘‘Directed quoting increment applicable to the affected series. Order’’ means any order (other than a Such an execution may not trade through the better Minimum Increments stop or stop-limit order as defined in of the NBBO or Reference BBO or at the same price The Exchange proposes to amend Options 8, Section 32) to buy or sell as any resting Public Customer order. The execution price for such a Complex Order PIXL may be in .01 Rule 1034 regarding minimum which has been directed to a particular increments and may not trade at a price equal to increments. The Exchange proposes to Specialist, RSQT, or SQT by an Order or through the cPBBO or at the same price as a reorganize and update the rule. The Flow Provider, as defined below. To resting Public Customer Complex Order.’’

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cancellation of interest. The Exchange interacting with such a resting DNR 9:45:00:00:75—Phlx Market Maker proposes to adopt a rule which also order will execute at the ABBO price, Order to Sell 5 @ 1.09 permits members to contact market unless the ABBO is improved to a price 9:45:00:00:76—Market Maker Order operations and request the Exchange to which crosses the DNR’s displayed immediately executes against DNR manually cancel interest. The proposed price, in which case the incoming order Order 5 contracts @ 1.12 (1.12 being new rule would state, ‘‘A member may will execute at the previous ABBO the ‘previous’ ABBO price cancel any bids, offers, and orders in price.’’ The Exchange proposes to disseminated by CBOE before the any series of options by requesting Phlx amend this language to: (1) Clarify the receipt of the DNR Order that was Market Operations 6 staff to effect such current scenario to more accurately subsequently and illegally crossed by cancellation as per the instructions of capture the order of events; and (2) add MIAX’s 2nd quote) the Member.’’ This new rule reflects the another scenario that is not 9:45:00:00:77—OPRA disseminates Exchange’s current practice of allowing contemplated by the current rule text. PHLX BBO updates: 1.10 × 1.15 members to contact Phlx Market The Exchange proposes to clarify the (reverts back to BBO set by Phlx Local Operations and request the Exchange to current rule text to provide, ‘‘Any Quote since the DNR Order has cancel any bid, offer or order in any incoming order interacting with such a executed) series of options. The Exchange would resting DNR Order will execute at the The Exchange also proposes to add a cancel such bid, offer or order pursuant ABBO price, unless (1) the ABBO is new scenario to the above-referenced to the member’s instruction. The improved to a price which crosses the sentence to state, ‘‘or (2) the ABBO is Exchange desires to memorialize the DNR Order’s already displayed price, in improved to a price which locks the availability of this service. which case the incoming order will DNR Order’s displayed price, in which execute at the previous ABBO price as Routing case the incoming order will execute at the away market crossed a displayed The Exchange filed a proposal to the DNR Order’s displayed price.’’ The price . . .’’. This proposed new text Exchange is adding the scenario where amend Rule 1093 7 as ‘‘Away Markets intends to make clear that if the and Order Routing’’ in April 2019.8 At the ABBO is improved to a price which Exchange’s System is executing an locks the DNR Order’s displayed price. this time the Exchange proposes further incoming order against a resting DNR amendment to this rule to mirror In this added scenario, the incoming Order which is displayed, it would not order will execute at the DNR Order’s changes that were proposed to NOM’s consider an updated ABBO which Rule at Chapter VI, Section 11.9 The displayed price. The Exchange notes crossed the displayed DNR Order. The that this scenario is not contained in the changes proposed herein are not System would not take into account the changes to the System, rather the current rule text. Adding this scenario is away market order or quote which consistent with the Act because it will Exchange proposes to add other crossed the DNR Order’s displayed scenarios that may be possible during bring greater transparency to the routing price. The Exchange is not trading- rule and inform members about this Routing and make the current rule text through an away market in this more clear to provide market potential outcome if a member elects to scenario, rather an away market is mark their order as ‘‘DNR.’’ participants with clear expectations crossing Phlx’s displayed market and regarding orders that are marked ‘‘DNR’’ The Exchange also proposes to amend therefore that market has the obligation the next sentence within Rule and orders that route. not to trade-through Phlx’s displayed Currently, Rule 1093(a) states, ‘‘When 1093(a)(iii)(A) which currently price. A similar change is being made to provides, ‘‘Should the best away market checking the Order Book, the System the last sentence of Rule will seek to execute at the price at change its price to an inferior price 1093(a)(iii)(B)(5) for FIND Orders and level, the DNR Order will automatically which it would send the order to an the last sentence Rule 1093(a)(iii)(C)(6) away market.’’ The Exchange proposes re-price from its one minimum price for SRCH Orders. By way of example, variation inferior to the original away to remove this sentence because the consider the following sequence of price at which the order would route in best bid/offer price to one minimum events in the System: trading increment away from the new explained in greater detail within Rule × 9:45:00:00:00—MIAX Quote 0.95 1.20 away best bid/offer price or its original 1093(a)(iii). Also, this sentence is 9:45:00:00:10—OPRA updates MIAX confusing because the price at which an × limit price, and expose such orders at BBO 0.95 1.20 the ABBO to participants only if the re- order would execute is dependent on 9:45:00:00:20—Phlx Local BBO Quote the scenario within which an order × priced order locks or crosses the ABBO. 1.00 1.15 Once priced at its original limit price, it would route. Removing this sentence 9:45:00:00:30—OPRA disseminates will remain at that price until executed will remove any confusion related to the PHLX BBO updates: 1.10 × 1.15 price at which the order would route. 9:45:00:00:35: CBOE Quote 1.00 × 1.12 or cancelled.’’ The Exchange proposes The Exchange proposes to amend rule 9:45:00:00:45—OPRA disseminates to amend this rule text to provide, text within Rule 1093(a)(iii)(A) related CBOE BBO 1.00 × 1.12 ‘‘Should the best away market move to to DNR Orders. Today, current rule text 9:45:00:00:50—DNR Order: Buy 5 @ an inferior price level, the DNR Order provides, ‘‘Any incoming order 1.15 (exposes @ ABBO of 1.12, will automatically re-price from its one displays 1 MPV from ABBO @ 1.11) MPV inferior to the original ABBO and 6 The request to Market Operations is a manual 9:45:00:00:51—OPRA disseminates display one MPV away from the new request which is made telephonically. PHLX BBO updates: 1.11 × 1.15 (1.11 ABBO or its original limit price, and 7 The Exchange notes that the amendments to being the DNR Order displaying 1 expose such orders at the new ABBO Rule 1093 reflect the current operation of the only if the re-priced order locks or System. The purpose of the amendment is to align MPV from ABBO) the rule to the specific operation of the routing 9:45:00:00:60—MIAX Quote updates to crosses the new ABBO.’’ The Exchange functionality on Phlx. 1.00 × 1.10 (1.10 crosses the displayed is amending the current rule text to 8 See Securities Exchange Act Release No. 85655 DNR Order price, violating locked/ replace the phrase ‘‘change its price’’ (April 16, 2019), 77 FR 16709 (April 22, 2019) (SR– crossed market rules; henceforth, we with ‘‘move’’ and use the defined term Phlx–2019–06). ‘‘MPV.’’ The Exchange is further 9 See Securities Exchange Act Release No. 87030 need not protect this price) (September 19, 2019), 84 FR 50495 (September 25, 9:45:00:00:65—OPRA disseminates amending this sentence to expand on 2019) (SR–NASDAQ–2019–077). MIAX BBO 1.00 × 1.10 the re-pricing. In this scenario, the

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Exchange has already re-priced the DNR new interest arrives opposite the FIND believes that this rule text will bring Order and is re-pricing the DNR Order Order or SRCH Order that is marketable greater clarity to the Exchange’s Rules. again because the best away market against the FIND Order or SRCH Order Other Amendment moved to an inferior price level. In this such interest will trade against the FIND situation, the DNR Order will Order or SRCH Order at the ABBO price The Exchange also proposes to amend automatically re-price from its one MPV unless the ABBO is improved to a price Rule 1096, Entry and Display of Orders, inferior to the original ABBO and which crosses the FIND Order’s or to correct the citation of Rule 1099 to display one MPV away from the new SRCH Order’s displayed price, in which Rule 1070. ABBO price or its original limit price. case the incoming order will execute at The DNR Order will also expose such the previous ABBO price as the away 2. Statutory Basis orders at the new ABBO, only if the re- market crossed a displayed price. The The Exchange believes that its priced order locks or crosses the new above example for a DNR Order is proposal is consistent with Section 6(b) ABBO. Once booked at its original limit applicable to the FIND Order and SRCH of the Act,10 in general, and furthers the price, it will remain at that price until Order as well. objectives of Section 6(b)(5) of the Act,11 executed or cancelled. The Exchange The Exchange offers the following in particular, in that it is designed to believes that this language provides example when there exists a locked promote just and equitable principles of more context to the manner in which a ABBO at the time the FIND Order or trade and to protect investors and the DNR Order will be handled by the SRCH Order is entered into the Order public interest because the Exchange is Exchange’s System. The Exchange Book to demonstrate the manner in adding more detail to its routing rule to believes that this additional rule text is which Phlx posts and displays a FIND provide market participants with greater consistent with the Act as the DNR Order or SRCH Order. In this example, transparency. The Exchange believes the Order is exposed at the re-priced price assume Away Market A has displayed × added scenarios will provide more if the Order locked or crossed the its market at 1.00 1.20. Subsequent to context to routing in general and for the ABBO. Additionally, orders marked Away Market A displaying it market, specific routing strategies for the benefit ‘‘DNR’’ would book at their original Away Market B displays its market at × of investors and the public interest. The limit price and remain on the Order .80 1.00. The option series is now Exchange continues to offer various Book. Providing this additional locked at 1.00. Next, assume Phlx choices to its market participants with transparency will assist members in receives a FIND Order or SRCH Order at respect to routing. determining if they want their orders $2.00 to buy. In this example, Phlx routed. would post the FIND Order or SRCH Applicability, Definitions and As noted above, these changes to the Order into the Phlx Order Book at $1.00 References DNR Orders represent current System to buy and display the FIND Order at The Exchange’s proposal to define a functionality. The Exchange also $0.95 to avoid locking the market in this ‘‘bid’’ and an ‘‘offer’’ within Phlx Rule proposes to capitalize the term ‘‘Order’’ option series. within Rule 1093(a)(iii)(A). The addition of this language to the 1000(b) is consistent with the Act as With respect to FIND Orders within FIND Order and SRCH Order rule text these terms will bring greater Rule 1093(a)(iii)(B) as well as SRCH represents current System functionality. transparency to the Exchange’s Rules. Orders within Rule 1093(a)(iii)(C) the This scenario is not currently described Minimum Increments Exchange proposes to add a scenario within the current routing rule with that is not currently contemplated respect to either a FIND Order or a The Exchange’s proposal to amend within the Rule. Specifically, the SRCH Order that is not marketable after Rule 1034 to reorganize and update the Exchange proposes to add a scenario a Route Timer has commenced. The rule is consistent with the Act because that provides, if during the Route Timer, Exchange’s rule seeks to provide the change to the rule text as well as the ABBO markets move such that the members with the specific handling of reorganized format should make clear FIND Order or SRCH Order is no longer a routable order in various scenarios the standards for minimum increments. marketable against the ABBO it provides during intra-day trading. The Exchange The amendment to Rule 1034(a) to the various scenarios that may occur. believes that the addition of this replace the word ‘‘quoting’’ to ‘‘trading’’ The FIND Order or SRCH Order may: (i) scenario is consistent with the Act. The will make the rule text more precise as Trade at the next PBBO price (or prices) FIND Order or SRCH Order, once it is executions are considered for if the FIND Order SRCH Order price is not marketable against the ABBO, will enforcement of minimum increments. locking or crossing that price (or prices), trade at the next PBBO if the order is Removing the word ‘‘decimals’’ and and/or (ii) be entered into the Order locked or crossed. The FIND Order or discussing price is also more precise Book at its limit price if not locking or SRCH Order would book at its limit rule text. The Exchange also notes that crossing the PBBO. A FIND Order or price, provided it is not locking or the proposed rule text conforms the SRCH Order will be included in the crossing the PBBO. The Exchange’s rule wording to similar wording within displayed PBBO at its limit price, unless must account for trade-through and will Nasdaq ISE, LLC, Nasdaq GEMX, LLC the FIND Order or SRCH Order locks or consider potential executions for the and Nasdaq MRX, LLC Options 3, crosses the ABBO, in which case it will order consistent with routing Section 3. These changes do not result be entered into the Order Book at the instructions. The proposed rule text in a System change, rather they ABBO price and displayed one MPV describes scenarios where it will be represent the Exchange’s current System inferior to the ABBO. Further, the displayed at one MPV inferior to the operation. The remainder of the Exchange proposes a scenario where ABBO or display at the locked ABBO amendments to reorganize and there exists a locked ABBO when the price, as described in the above renumber the Rule are non-substantive. FIND Order or SRCH Order is entered example. This rule text also is intended The Exchange believes that these onto the Order Book, the FIND Order or to demonstrate that if the ABBO is amendments will bring greater clarity to SRCH Order will be entered into the improved to a price which crosses the the Rule. Order Book at the ABBO price and FIND Order’s displayed price, the displayed one MPV inferior to the incoming order will execute at the 10 15 U.S.C. 78f(b). ABBO. If during the Route Timer any previous ABBO price. The Exchange 11 15 U.S.C. 78f(b)(5).

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Directed Orders Trading Interest rule within Options 3, remove any confusion related to the The Exchange’s proposal to remove Section 19 is consistent with the Act price at which the order would route. rule text within Rule 1068(a)(i)(A) will because permitting Members to contact The proposed rule would also add make clear that, today, both stop and Market Operations as a manual additional detail about the scenarios stop-limit orders can be directed to a alternative to automated functionality under which an order would route particular Specialist, RSQT, or SQT by which similarly allows Members to away. The Exchange’s proposal to amend an Order Flow Provider. The rule text cancel interest provides Members the sentence within Rule 1093(a)(iii)(A) limitation is not accurate because the experiencing their own system issues related to DNR Orders which provides, System permits a stop and stop-limit with a means to manage risk. Today, ‘‘Any incoming order interacting with order to be directed. Removing the Members are able to cancel interest, in such a resting DNR order will execute limitation and allowing all order types an automated fashion through 15 16 at the ABBO price, unless the ABBO is to be directed allows members greater protocols and the Kill Switch. This is a voluntary services offered to all improved to a price which crosses the flexibility in choosing how to submit DNR’s displayed price, in which case their orders. The Exchange notes that members. The Exchange notes that offering this the incoming order will execute at the this amendment is consistent with the service, which permits members to previous ABBO price,’’ is consistent Act because the Exchange is not limiting cancel interest, will not diminish a with the Act. The Exchange proposes to the use of the stop order as a Directed Registered Options Trader’s obligation amend this rule text to clarify the Order. Today, Nasdaq ISE, LLC permits with respect to providing two-sided current rule text and add another all order types to be Preferenced.12 quotations and this rule is not scenario that is not currently within the Price Improvement XL (‘‘PIXL’’) inconsistent with other firm quote rule text. The Exchange proposes to The Exchange’s proposal to amend obligations of the Registered Options state, ‘‘Any incoming order interacting Rule 1087 to point out at the top of the Trader. Upon the request of a member, with such a resting DNR order will Rule which provisions apply to Public Phlx Market Operations will manually execute at the ABBO price, unless (1) Customer-to-Public Customer Cross input a mass cancellation message into prior to execution, while the incoming Orders will make the Rule clear. Today, the System consistent with the order is matched with the resting DNR Phlx Rule 1087(a) 13 and (f) 14 permit member’s instruction to cancel trading Order, the ABBO is improved to a price Public Customer-to-Public Customer interest. Once the mass cancellation which crosses the DNR’s displayed Cross Orders to be entered into PIXL. message is entered into the System by price, in which case the incoming order This amendment is consistent with the Phlx Market Operations, the message will execute at the ABBO price which Act because market participants will be will be accepted by the System in the was available upon arrival of the more aware of which provisions govern order of receipt in the queue such that incoming order which matched with the Public Customer-to-Public Customer the interest that was already accepted DNR Order; or (2) the ABBO is Cross Orders. into the System will be processed prior improved to a price which locks the to the mass cancellation message. In DNR’s displayed price, in which case Mass Cancellation of Trading Interest addition, mass cancellation messages the incoming order will execute at the The Exchange’s proposal to entered into the System by Phlx Market DNR’s displayed price.’’ The System memorialize the Mass Cancellation of Operations are handled by the System would not take into account the away through the same queuing mechanism market order or quote which crossed the 12 See Nasdaq ISE, LLC Options 2, Section 10. that a quote or order message is handled DNR’s displayed price. The Exchange is 13 Phlx Rule 1087(a) provides, ‘‘Auction by the System. The Exchange notes its not trading-through an away market in Eligibility Requirements. All options traded on the processing of a mass cancellation this scenario, rather an away market is Exchange are eligible for PIXL. A member (the message inputted by Phlx Market crossing Phlx’s displayed market and ‘‘Initiating Member’’) may initiate an Auction provided all of the following are met:’’. . . Pursuant Operations and handled by the System therefore that market has the obligation to Rule 1087(f), the Exchange will allow a Public is consistent with firm quote and order not to trade-through Phlx’s displayed Customer-to-Public Customer PIXL Order to trade handling rules. price. on either the bid or offer, if the NBBO is $0.01 wide, As noted above, NOM and BX Rules The Exchange is also adding a provided (1) the execution price is equal to or within the NBBO, (2) there is no resting Public at Chapter VII, Section 11 allow NOM scenario where the ABBO is improved Customer at the execution price, and (3) $0.01 is the and BX Participants to also contact to a price which locks the DNR’s Minimum Price Variation (MPV) of the option. The market operations and request displayed price. In this added scenario, Exchange will continue to reject a PIXL Order to cancellations of interest. This new rule the incoming order will execute at the buy (sell) if the NBBO is only $0.01 wide and the DNR’s displayed price. The Exchange Agency order is stopped on the bid (offer) if there reflects the Exchange’s current practice. notes that this scenario is not contained is a resting order on the bid (offer).’’ Routing 14 Phlx Rule 1087(f) provides, ‘‘In lieu of the in the current rule text. Adding this procedures in paragraphs (a)–(b) above, an Initiating The Exchange’s proposal to remove scenario is consistent with the Act Member may enter a PIXL Order for the account of the following sentence from Rule because it will bring greater a Public Customer paired with an order for the 1093(a), ‘‘When checking the Order account of a Public Customer and such paired transparency to the routing rule and orders will be automatically executed without a Book, the System will seek to execute at inform members about this potential PIXL Auction, provided there is not currently an the price at which it would send the outcome if a member elects to mark Auction in progress in the same series or same order to an away market,’’ is consistent their order as DNR. Additionally, strategy, in which case the orders will be rejected. with the Act because this sentence is 17 The execution price for such a PIXL Order (except amending a sentence within Rule if it is a Complex Order) must be expressed in the vague. The price at which an order quoting increment applicable to the affected series. would execute is dependent on the 17 The current sentence within Rule Such an execution may not trade through the better scenario within which an order would 1093(a)(iii)(A) states, ‘‘Should the best away market of the NBBO or Reference BBO or at the same price route. Removing this sentence will change its price to an inferior price level, the DNR as any resting Public Customer order. The execution Order will automatically re-price from its one price for such a Complex Order PIXL may be in .01 minimum price variation inferior to the original increments and may not trade at a price equal to 15 See Options 3 at Supplementary Material .03 to away best bid/offer price to one minimum trading or through the cPBBO or at the same price as a Section 7. increment away from the new away best bid/offer resting Public Customer Complex Order.’’ 16 See Rule 1073. Continued

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1093(a)(iii)(A) to provide, ‘‘Should the ABBO, will either trade at the next change will make market participants best away market move to an inferior PBBO, if the order locks or crosses the more aware of which provisions govern price level, the DNR Order will FIND Order or SRCH Order, or it would Public Customer-to-Public Customer automatically re-price from its one MPV be booked at its limit price, providing it Cross Orders. inferior to the original ABBO and is not locking or crossing the PBBO. The Mass Cancellation of Trading Interest display one MPV away from the new Exchange’s rule must account for trade- ABBO or its original limit price, and through and will consider potential The Exchange’s proposal to expose such orders at the new ABBO executions for an order consistent with memorialize the Mass Cancellation of only if the re-priced order locks or routing instructions. The Exchange Trading Interest rule within Rule 1090 crosses the new ABBO’’ is consistent believes that this rule text will bring does not impose an undue burden on with the Act because the additional greater clarity to the Exchange’s Rules. competition because all members may language expands on the current re- The amendments to Phlx Rule 1093 utilize this service. This new rule pricing that exists today. The Exchange represent current System functionality. reflects the Exchange’s current practice. These rules are similar to current rule believes that this language provides Routing more context to the manner in which a text on NOM at Chapter VI, Section DNR Order will be handled by the 11.18 The Exchange believes that adding Exchange’s System. The Exchange greater detail to its rules concerning B. Self-Regulatory Organization’s routing of orders does not impose an believes that this additional rule text is Statement on Burden on Competition consistent with the Act as the DNR undue burden on competition, rather it Order would re-price again from its one The Exchange does not believe that provides greater transparency as to the MPV inferior to the original ABBO the proposed rule change will impose potential outcomes when utilizing because the best away market moved to any burden on competition not different routing strategies. Further, the an inferior price level. The DNR Order necessary or appropriate in furtherance Exchange notes that market participants would display one MPV away from the of the purposes of the Act. may elect not to route their orders. The new ABBO price or its original limit Applicability, Definitions and Exchange continues to offer various price. Also, the DNR Order would References options to its market participants with expose such orders at the new ABBO, respect to routing. only if the re-priced order locks or The Exchange’s proposal to define a ‘‘bid’’ and an ‘‘offer’’ within Phlx Rule C. Self-Regulatory Organization’s crosses the new ABBO. Once booked at Statement on Comments on the its original limit price, it will remain on 1000(b) does not impose an undue burden on competition, rather these Proposed Rule Change Received From the Order Book at that price until Members, Participants, or Others executed or cancelled. Providing this terms will bring greater transparency to the Exchange’s Rules. additional transparency will assist No written comments were either members in determining if they want Minimum Increments solicited or received. their orders routed. The Exchange’s proposal to amend III. Date of Effectiveness of the With respect to FIND Orders within Rule 1034 to reorganize and update the Proposed Rule Change and Timing for Rule 1093(a)(iii)(B) as well as SRCH rule does not impose an undue burden Commission Action Orders within Rule 1093(a)(iii)(C) the on competition because all market Because the foregoing proposed rule amendments are consistent with the Act participants are subject to Rule 1034. as they propose a scenario that is not change does not: (i) Significantly affect The language will properly reflect that the protection of investors or the public currently within the Rules. The the standard for submitting orders with Exchange proposes to add a scenario interest; (ii) impose any significant minimum increments into the System. burden on competition; and (iii) become that provides, if during the Route Timer, The remainder of the amendments to the ABBO markets move such that the operative for 30 days from the date on reorganize and renumber the Rule are which it was filed, or such shorter time FIND Order or SRCH Order is no longer non-substantive. marketable against the ABBO it provides as the Commission may designate, it has the various scenarios that may occur. Directed Orders become effective pursuant to Section 19(b)(3)(A) of the Act 19 and Rule 19b– Also, if there exists a locked ABBO The Exchange’s proposal to remove 20 when the FIND Order or SRCH Order is 4(f)(6) thereunder. rule text within Rule 1068(a)(i)(A) does A proposed rule change filed under entered onto the Order Book and if not impose an undue burden on Rule 19b–4(f)(6) 21 normally does not during the Route Timer any new interest competition as Stop Order and Stop- become operative prior to 30 days after arrives opposite the FIND Order or Limit Orders may be Directed Orders the date of the filing. However, Rule SRCH Order that is marketable against similar to all other order types. 19b–4(f)(6)(iii) 22 permits the the FIND Order or SRCH Order. Removing the limitation and allowing Commission to designate a shorter time Scenarios are provided for each of these all order types to be directed allows if such action is consistent with the situations within the new rule text. The members greater flexibility in choosing protection of investors and the public new text seeks to clearly provide a how to submit their orders. interest. The Exchange has asked the member with the specific handling of a routable order for various scenarios Price Improvement XL (‘‘PIXL’’) 19 15 U.S.C. 78s(b)(3)(A). during intra-day trading. The Exchange The Exchange’s proposal to amend 20 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– believes that the addition of these Rule 1087 to point out at the top of the 4(f)(6)(iii) requires a self-regulatory organization to scenarios is consistent with the Act as Rule which provisions apply to Public give the Commission written notice of its intent to the order, which was marked routable as Customer-to-Public Customer Cross file the proposed rule change, along with a brief description and text of the proposed rule change, either a FIND Order or SRCH Order, Orders does not impose an undue at least five business days prior to the date of filing once it is not marketable against the burden on competition. This rule of the proposed rule change, or such shorter time as designated by the Commission. The Exchange price or its original limit price, and expose such 18 See Securities Exchange Act Release No. 87030 has satisfied this requirement. orders at the ABBO to participants only if the re- (September 19, 2019), 84 FR 50495 (September 25, 21 17 CFR 240.19b–4(f)(6). priced order locks or crosses the ABBO.’’ 2019) (SR–NASDAQ–2019–077). 22 17 CFR 240.19b–4(f)(6)(iii).

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Commission to waive the 30-day submission, all subsequent comments on the proposed rule change operative delay so that the proposed amendments, all written statements from interested persons. rule change may become effective and with respect to the proposed rule I. Self-Regulatory Organization’s operative immediately upon filing. The change that are filed with the Statement of the Terms of Substance of Commission believes that waiving the Commission, and all written the Proposed Rule Change 30-day operative delay is consistent communications relating to the with the protection of investors and the proposed rule change between the The Exchange proposes to adopt a public interest, as it will allow the Commission and any person, other than new rule at Options 3, Section 19 titled Exchange to immediately provide those that may be withheld from the ‘‘Mass Cancellation of Trading Interest.’’ members with greater information and public in accordance with the The Exchange also proposes to amend transparency on mass cancellation provisions of 5 U.S.C. 552, will be definitions within General 1, Section 1, procedures and order routing strategies available for website viewing and adopt a new definition for ‘‘Away Best available on the Exchange. For this printing in the Commission’s Public Bid or Offer’’ within Options 1, Section reason, the Commission hereby waives Reference Room, 100 F Street, NE, 1, and update rule citations in various the 30-day operative delay and Washington, DC 20549, on official other rules. designates the proposed rule change as business days between the hours of The text of the proposed rule change operative upon filing.23 10:00 a.m. and 3:00 p.m. Copies of the is available on the Exchange’s website at At any time within 60 days of the filing also will be available for http://ise.cchwallstreet.com/, at the filing of the proposed rule change, the inspection and copying at the principal principal office of the Exchange, and at Commission summarily may office of the Exchange. All comments the Commission’s Public Reference temporarily suspend such rule change if received will be posted without change. Room. it appears to the Commission that such Persons submitting comments are II. Self-Regulatory Organization’s action is necessary or appropriate in the cautioned that we do not redact or edit Statement of the Purpose of, and public interest, for the protection of personal identifying information from Statutory Basis for, the Proposed Rule investors, or otherwise in furtherance of comment submissions. You should Change the purposes of the Act. If the submit only information that you wish Commission takes such action, the to make available publicly. All In its filing with the Commission, the Commission shall institute proceedings submissions should refer to File Exchange included statements to determine whether the proposed rule Number SR–Phlx–2019–56 and should concerning the purpose of and basis for change should be approved or be submitted on or before January 21, the proposed rule change and discussed disapproved. 2020. any comments it received on the proposed rule change. The text of these IV. Solicitation of Comments For the Commission, by the Division of statements may be examined at the Trading and Markets, pursuant to delegated places specified in Item IV below. The Interested persons are invited to authority.24 Exchange has prepared summaries, set submit written data, views, and J. Matthew DeLesDernier, arguments concerning the foregoing, forth in sections A, B, and C below, of Assistant Secretary. including whether the proposed rule the most significant aspects of such change is consistent with the Act. [FR Doc. 2019–28022 Filed 12–27–19; 8:45 am] statements. BILLING CODE 8011–01–P Comments may be submitted by any of A. Self-Regulatory Organization’s the following methods: Statement of the Purpose of, and Electronic Comments SECURITIES AND EXCHANGE Statutory Basis for, the Proposed Rule Change • Use the Commission’s internet COMMISSION comment form (http://www.sec.gov/ [Release No. 34–87843; File No. SR–ISE– 1. Purpose rules/sro.shtml); or 2019–32] • The Exchange proposes to adopt a Send an email to rule-comments@ new rule at Options 3, Section 19 titled Self-Regulatory Organizations; Nasdaq sec.gov. Please include File Number SR– ‘‘Mass Cancellation of Trading Interest.’’ ISE, LLC; Notice of Filing and Phlx–2019–56 on the subject line. The Exchange also proposes to amend Immediate Effectiveness of Proposed definitions within General 1, Section 1, Paper Comments Rule Change To Adopt a Mass adopt a new definition for ‘‘Away Best • Send paper comments in triplicate Cancellation Rule and Amend Other Bid or Offer within Options 1, Section to Secretary, Securities and Exchange Sections of the Rulebook 1, and update rule citations in various Commission, 100 F Street NE, other rules. Washington, DC 20549–1090. December 23, 2019. Pursuant to Section 19(b)(1) of the All submissions should refer to File Mass Cancellation of Trading Interest Securities Exchange Act of 1934 Number SR–Phlx–2019–56. This file (‘‘Act’’),1 and Rule 19b–4 thereunder,2 The Exchange proposes to adopt a number should be included on the notice is hereby given that on December new rule at Options 3, Section 19 titled subject line if email is used. To help the 9, 2019, Nasdaq ISE, LLC (‘‘ISE’’ or ‘‘Mass Cancellation of Trading Interest.’’ Commission process and review your ‘‘Exchange’’) filed with the Securities The Nasdaq Options Market LLC comments more efficiently, please use and Exchange Commission (‘‘SEC’’ or (‘‘NOM’’) and Nasdaq BX, Inc. (‘‘BX’’) only one method. The Commission will ‘‘Commission’’) the proposed rule rules at Chapter VII, Section 11 permit post all comments on the Commission’s change as described in Items I and II Participants on those markets to contact internet website (http://www.sec.gov/ below, which Items have been prepared market operations and manually request rules/sro.shtml). Copies of the by the Exchange. The Commission is cancellation of interest. The Exchange publishing this notice to solicit proposes to adopt a rule which also 23 For purposes only of waiving the 30-day permits Members to contact market operative delay, the Commission has also considered the proposed rule’s impact on 24 17 CFR 200.30–3(a)(12). operations and request the Exchange to efficiency, competition, and capital formation. See 1 15 U.S.C. 78s(b)(1). manually cancel interest. The proposed 15 U.S.C. 78c(f). 2 17 CFR 240.19b–4. new rule would state, ‘‘A Member may

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cancel any bids, offers, and orders in mentioned and was incorrectly updated the System consistent with the any series of options by requesting ISE to only cite Customer Cross Orders. Member’s instruction to cancel trading Market Operations 3 staff to effect such These rules were all relocated within interest. Once the mass cancellation cancellation as per the instructions of Supplementary .08 to Rule 722 and then message is entered into the System by the Member.’’ This new rule reflects the later relocated to separate rules. The ISE Market Operations, the message will Exchange’s current practice of allowing Exchange proposes updating the rule to be accepted by the System in the order Members to contact ISE Market note the location of each rule of receipt in the queue such that the Operations and request the Exchange to mentioned. With the relocation of rules interest that was already accepted into cancel any bid, offer or order in any within the Rulebook, the reference was the System will be processed prior to series of options. The Exchange would not updated. the mass cancellation message. In cancel such bid, offer or order pursuant Other Changes addition, mass cancellation messages to the Member’s instruction. The entered into the System by ISE Market Exchange desires to memorialize the The Exchange proposes to reserve Operations are handled by the System 6 availability of this service. certain rules in connection with a through the same queuing mechanism Rulebook harmonization project which Definitions that a quote or order message is handled organizes the rules of the Nasdaq by the System. The Exchange notes its The Exchange proposes to make a affiliated markets. The Exchange processing of a mass cancellation technical amendment to General 1, proposes to amend Options 7, Section 1 message inputted by ISE Market Section 1(a)(6) to note the acronym for to change a reference from ‘‘Schedule of Operations and handled by the System an Electronic Access Member, an Fees’’ to ‘‘Pricing Schedule’’ to properly is consistent with firm quote and order ‘‘EAM’’ within the definition. The reference the rule. handling rules. acronym is utilized throughout the 2. Statutory Basis As noted above, NOM and BX Rules Rulebook. Defining the acronym within at Chapter VII, Section 11 allow NOM The Exchange believes that its the definition will add transparency to and BX Participants to also contact proposal is consistent with Section 6(b) the Rulebook. market operations and request of the Act,7 in general, and furthers the The Exchange proposes to add the cancellations of interest. This new rule objectives of Section 6(b)(5) of the Act,8 definition of an ‘‘Away Best Bid or reflects the Exchange’s current practice. Offer’’ or ‘‘ABBO’’ within Options 1, in particular, in that it is designed to Section 1(a)(4). This term is utilized promote just and equitable principles of Definitions throughout the Rulebook. Defining this trade, to remove impediments to and The Exchange’s proposal to add the term will bring greater transparency to perfect the mechanism of a free and acronym for an Electronic Access the Rulebook. open market and a national market Member, an ‘‘EAM’’ within General 1, The Exchange proposes to amend the system, and, in general to protect Section 1, add the definition of an defined term ‘‘offer’’ to remove the investors and the public interest. ‘‘Away Best Bid or Offer’’ or ‘‘ABBO’’ phrase ‘‘except that with respect to an Mass Cancellation of Trading Interest within Options 1, Section 1(a)(4), and Equity Security it means an order to sell The Exchange’s proposal to amend the term ‘‘offer’’ within Options such security.’’ The term ‘‘Equity 1, Section 1(a)(26) are consistent with Security’’ is not defined within the ISE memorialize the Mass Cancellation of Trading Interest rule within Options 3, the Act because these amendments will Rulebook and that particular phrase has add transparency to the Rulebook. no meaning relevant to the trading of Section 19 is consistent with the Act options. because permitting Members to contact Other Changes The Exchange proposes to alphabetize Market Operations as a manual The Exchange’s proposal to correct the defined term ‘‘proprietary trading.’’ alternative to automated functionality, several incorrect references to Options The Exchange also proposes to update which similarly allows Members to 5, update the reference within Options the numbering in the remainder of the cancel interest, provides Members 3, Section 16(b) to refer to Options 3, rule and also update cross-references experiencing their own system issues Section 12 not just 12(a), amend a term 4 throughout the Rulebook as a result of with a means to manage risk. Today, within Options 7, Section 1 and add the renumbering. Members are able to cancel interest, in cross-references to the Solicited Order an automated fashion through Options 3, Section 16 9 10 Mechanism and Price Improvement protocols and the Kill Switch. This is Mechanism within Options 3, Section The Exchange proposes to correct a voluntary services offered to all 16 are consistent with the Act and add several incorrect references to Options 5 Members. greater clarity to the Rules. The within Options 3, Section 16. The The Exchange notes that offering this remainder of the changes to correct reference should have been to Options service, which permits Members to numbering and citations are non- 3. Also, within Options 3, Section 16(b) cancel interest, will not diminish a substantive. the reference to Customer Cross Orders Market Maker’s obligation with respect was originally to Supplementary to providing two-sided quotations and B. Self-Regulatory Organization’s Material .08 to this Rule 722. The this rule is not inconsistent with other Statement on Burden on Competition citation was updated to reflect rules firm quote obligations of the Market The Exchange does not believe that which were relocated with a rule Maker. Upon the request of a Member, the proposed rule change will impose 5 change. The Exchange believes that the ISE Market Operations will manually any burden on competition that is not citation should have been updated to input a mass cancellation message into necessary or appropriate in furtherance reflect a separate citation for each rule of the purposes of the Act. 6 Options 2, Section 3, Options 3, Section 28 and 3 The request to Market Operations is a manual Options 6E, Section 9 are being reserved. Mass Cancellation of Trading Interest 7 15 U.S.C. 78f(b). request which is made telephonically. The Exchange’s proposal to 4 See Options 3, Sections 10 and 20, Options 5 at 8 15 U.S.C. 78f(b)(5). Supplementary Material .01 and .02 and Options 7. 9 See Options 3 at Supplementary Material .03 to memorialize the Mass Cancellation of 5 See Securities Exchange Act Release No. 85308 Section 7. Trading Interest rule within Options 3, (March 13, 2019), 84 FR 10136 (SR–ISE–2019–05). 10 See Options 3, Section 17. Section 19 does not impose an undue

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burden on competition because all the date of the filing. However, pursuant Commission process and review your Members may utilize this service. This to Rule 19b–4(f)(6)(iii),14 the comments more efficiently, please use new rule reflects the Exchange’s current Commission may designate a shorter only one method. The Commission will practice. time if such action is consistent with the post all comments on the Commission’s protection of investors and the public Definitions internet website (http://www.sec.gov/ interest. The Exchange requests that the rules/sro.shtml). Copies of the The Exchange’s proposal to add the Commission waive the 30-day operative submission, all subsequent acronym for an Electronic Access delay so that the proposal may become amendments, all written statements Member, an ‘‘EAM’’ within General 1, operative immediately upon filing. The with respect to the proposed rule Section 1, add the definition of an Exchange notes that NOM and BX change that are filed with the ‘‘Away Best Bid or Offer’’ or ‘‘ABBO’’ currently have rules that permit NOM Commission, and all written within Options 1, Section 1(a)(4), and and BX Participants to cancel interest,15 communications relating to the amend the term ‘‘offer’’ within Options and that the Exchange proposes the proposed rule change between the 1, Section 1(a)(26) do not impose an additional changes to provide greater Commission and any person, other than undue burden on competition because clarity in its rules. The Commission those that may be withheld from the these amendments will add believes that waiving the 30-day public in accordance with the transparency to the Rulebook. operative delay is consistent with the provisions of 5 U.S.C. 552, will be Other Changes protection of investors and the public available for website viewing and interest. Accordingly, the Commission printing in the Commission’s Public The Exchange’s proposal to correct waives the 30-day operative delay and Reference Room, 100 F Street NE, several incorrect references to Options designates the proposed rule change Washington, DC 20549, on official 5, update the reference within Options operative upon filing.16 business days between the hours of 3, Section 16(b) to refer to Options 3, At any time within 60 days of the 10:00 a.m. and 3:00 p.m. Copies of the Section 12 not just 12(a), and add cross- filing of the proposed rule change, the filing also will be available for references to the Solicited Order Commission summarily may inspection and copying at the principal Mechanism and Price Improvement temporarily suspend such rule change if office of the Exchange. All comments Mechanism within Options 3, Section it appears to the Commission that such received will be posted without change. 16 do not impose an undue burden on action is necessary or appropriate in the Persons submitting comments are competition, rather these changes brings public interest, for the protection of cautioned that we do not redact or edit greater clarity to the Rules. The investors, or otherwise in furtherance of personal identifying information from remainder of the changes to correct the purposes of the Act. If the comment submissions. You should numbering and citations are non- Commission takes such action, the submit only information that you wish substantive. Commission shall institute proceedings to make available publicly. All C. Self-Regulatory Organization’s to determine whether the proposed rule submissions should refer to File Statement on Comments on the should be approved or disapproved. Number SR–ISE–2019–32 and should be Proposed Rule Change Received From IV. Solicitation of Comments submitted on or before January 21, 2020. Members, Participants, or Others Interested persons are invited to For the Commission, by the Division of No written comments were either submit written data, views, and Trading and Markets, pursuant to delegated solicited or received. arguments concerning the foregoing, authority.17 III. Date of Effectiveness of the including whether the proposed rule Eduardo A. Aleman, Proposed Rule Change and Timing for change is consistent with the Act. Deputy Secretary. Commission Action Comments may be submitted by any of [FR Doc. 2019–28171 Filed 12–27–19; 8:45 am] the following methods: Because the foregoing proposed rule BILLING CODE 8011–01–P change does not: (i) Significantly affect Electronic Comments the protection of investors or the public • Use the Commission’s internet SECURITIES AND EXCHANGE interest; (ii) impose any significant comment form (http://www.sec.gov/ COMMISSION burden on competition; and (iii) become rules/sro.shtml); or operative for 30 days from the date on • Send an email to rule-comments@ which it was filed, or such shorter time sec.gov. Please include File Number SR– [Release No. 34–87830; File No. SR–MIAX– as the Commission may designate, it has ISE–2019–32 on the subject line. 2019–50] become effective pursuant to Section 19(b)(3)(A)(iii) of the Act 11 and Paper Comments Self-Regulatory Organizations: Miami subparagraph (f)(6) of Rule 19b–4 • Send paper comments in triplicate International Securities Exchange LLC; thereunder.12 to Secretary, Securities and Exchange Notice of Filing and Immediate A proposed rule change filed under Commission, 100 F Street NE, Effectiveness of a Proposed Rule Rule 19b–4(f)(6) 13 normally does not Washington, DC 20549–1090. Change To Amend, Reorganize and become operative prior to 30 days after All submissions should refer to File Enhance Its Membership, Registration Number SR–ISE–2019–32. This file and Qualification Rules and 11 15 U.S.C. 78s(b)(3)(A)(iii). number should be included on the Consolidate These Rules Into New 12 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– subject line if email is used. To help the Chapter XIX Registration, Qualification 4(f)(6) requires the Exchange to give the and Continuing Education Commission written notice of its intent to file the 14 17 CFR 240.19b–4(f)(6)(iii). proposed rule change, along with a brief description December 20, 2019. and text of the proposed rule change, at least five 15 See NOM and BX Rules at Chapter VII, Section business days prior to the date of filing of the 11. Pursuant to Section 19(b)(1) of the proposed rule change, or such shorter time as 16 For purposes only of waiving the 30-day Securities Exchange Act of 1934 designated by the Commission. The Exchange has operative delay, the Commission has considered the satisfied this requirement. proposed rule’s impact on efficiency, competition, 13 17 CFR 240.19b–4(f)(6). and capital formation. See 15 U.S.C. 78c(f). 17 17 CFR 200.30–3(a)(12).

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(‘‘Act’’),1 and Rule 19b–4 thereunder,2 levels of competence and knowledge FINRA representative-level qualification notice is hereby given that on December pertinent to their function. In general, examinations, creating a general 10, 2019, Miami International Securities the Exchange’s current rules require that knowledge examination and specialized Exchange, LLC (‘‘MIAX Options’’ or the persons engaged in a Member’s 4 knowledge examinations, allowing ‘‘Exchange’’) filed with the Securities securities business who are to function permissive registration, establishing an and Exchange Commission (‘‘SEC’’ or as representatives 5 or principals 6 examination waiver process for persons ‘‘Commission’’) the proposed rule register with the Exchange in each working for a financial services affiliate change as described in Items I and II category of registration appropriate to of a Member, and amending certain below, which Items have been prepared their functions by passing one or more continuing education (‘‘CE’’) by the Exchange. The Commission is qualification examinations 7 and exempt requirements (collectively, the ‘‘FINRA publishing this notice to solicit specified associated persons from the Rule Changes’’).11 comments on the proposed rule change registration requirements.8 They also The Exchange now proposes to from interested persons. prescribe ongoing continuing education amend, reorganize and enhance its own requirements for registered persons.9 membership, registration and I. Self-Regulatory Organization’s The Exchange proposes to amend, qualification requirements rules in Statement of the Terms of Substance of reorganize and enhance its rules response to the FINRA Rule Changes. In the Proposed Rule Change regarding registration, qualification addition, the Exchange proposes to The Exchange is filing a proposal to examinations and continuing education, enhance its registration rules by adding amend, reorganize and enhance its as described below. a new registration requirement membership, registration and In 2017, the Commission approved a applicable to developers of algorithmic qualification rules and to make Financial Industry Regulatory trading systems similar to a requirement conforming changes to certain other Authority, Inc. (‘‘FINRA’’) proposed rule adopted by FINRA pursuant to a 2016 rules. change consolidating and adopting prior FINRA rule change.12 The text of the proposed rule change National Association of Securities As part of the Exchange’s proposed is available on the Exchange’s website at Dealers, Inc. (‘‘NASD’’) rules and rules rule change, current Exchange Rule 203, http://www.miaxoptions.com/rule- incorporated from the New York Stock Qualification and Registration of filings/ at MIAX Options’ principal Exchange (‘‘NYSE’’) relating to Members and Associated Persons, office, and at the Commission’s Public qualification and registration Exchange Rule 1303, Termination of Reference Room. requirements into the Consolidated 10 II. Self-Regulatory Organization’s FINRA Rulebook, restructuring the 11 See Securities Exchange Act Release No. 81098 (July 7, 2017), 82 FR 32419 (July 13, 2017) (SR– Statement of the Purpose of, and FINRA–2017–007) (Order Approving Proposed Rule Statutory Basis for, the Proposed Rule 4 The term ‘‘Member’’ means an individual or organization approved to exercise the trading rights Change to Adopt Consolidated Registration Rules, Change associated with a Trading Permit. Members are Restructure the Representative-Level Qualification Examination Program, Allow Permissive In its filing with the Commission, the deemed ‘‘members’’ under the Exchange Act. See Exchange Rule 100. Registration, Establish Exam Waiver Process for Exchange included statements Persons Working for Financial Services Affiliate of 5 A ‘‘representative’’ is any person associated Member, and Amend the Continuing Education concerning the purpose of and basis for with a Member, including assistant officers other Requirements). See also FINRA Regulatory Notice the proposed rule change and discussed than principals, who is engaged in the Member’s 17–30 (SEC Approves Consolidated FINRA securities business, such as supervision, any comments it received on the Registration Rules, Restructured Representative- solicitation, conduct of business in securities or the proposed rule change. The text of these Level Qualification Examinations and Changes to training of persons associated with a Member for Continuing Education Requirements) (October statements may be examined at the any of these functions. See proposed Exchange Rule 2017). FINRA articulated its belief that the places specified in Item IV below. The 1901. proposed rule change would streamline, and bring 6 Exchange has prepared summaries, set A ‘‘principal’’ is any person associated with a consistency and uniformity to, its registration rules, forth in sections A, B, and C below, of Member, including, but not limited to, sole which would, in turn, assist FINRA members and the most significant aspects of such proprietor, officer, partner, manager of office of their associated persons in complying with the supervisory jurisdiction, director or other person statements. rules and improve regulatory efficiency. FINRA also occupying a similar status or performing similar determined to enhance the overall efficiency of its functions, who is actively engaged in the representative-level examinations program by A. Self-Regulatory Organization’s management of the Member’s securities business, Statement of the Purpose of, and eliminating redundancy of subject matter content such as supervision, solicitation, conduct of across examinations, retiring several outdated Statutory Basis for, the Proposed Rule business in securities or the training of persons representative-level registrations, and introducing a Change associated with a Member for any of these general knowledge examination that could be taken functions. Such persons shall include, among other by all potential representative-level registrants and 1. Purpose persons, a Member’s chief executive officer and the general public. FINRA amended certain aspects chief financial officer (or equivalent officers). A Overview of its continuing education rule, including by ‘‘principal’’ also includes any other person codifying existing guidance regarding the effect of The Exchange adopted registration associated with a Member who is performing failing to complete the Regulatory Element on a functions or carrying out responsibilities that are registered person’s activities and compensation. requirements to ensure that associated required to be performed or carried out by a 12 See Securities Exchange Act Release No. 77551 persons 3 attain and maintain specified principal under Exchange rules. See proposed (April 7, 2016), 81 FR 21914 (April 13, 2016) (SR– Exchange Rule 1901. FINRA–2016–007) (Order Approving a Proposed 7 1 15 U.S.C. 78s(b)(1). See proposed Exchange Rule 1901, Registration Rule Change to Require Registration as Securities 2 17 CFR 240.19b–4. Categories, and Exchange Rule 1302, Registration of Traders of Associated Persons Primarily Representatives. 3 The term ‘‘associated person’’ or ‘‘person Responsible for the Design, Development, 8 associated with a Member’’ means any partner, See proposed Exchange Rule 1902, Associated Significant Modification of Algorithmic Trading officer, director, or branch manager of a Member (or Persons Exempt from Registration. Strategies or Responsible for the Day-to-Day any person occupying a similar status or performing 9 See proposed Exchange Rule 1903, Continuing Supervision of Such Activities). In that rule change, similar functions), any person directly or indirectly Education Requirements. FINRA addressed the increasing significance of controlling, controlled by, or under common 10 The current FINRA rulebook consists of: (1) algorithmic trading strategies by amending its rules control with a Member, or any employee of a FINRA rules; (2) NASD rules; and (3) rules to require registration, as Securities Traders, of Member. See Exchange Rule 100. In accordance incorporated from the NYSE (the ‘‘Incorporated associated persons primarily responsible for the with other proposed changes in this filing, and as NYSE rules’’). While the NASD rules generally design, development or significant modification of further described below, the Exchange proposes to apply to all FINRA members, the Incorporated algorithmic trading strategies, or who are amend the terms ‘‘associated person’’ or ‘‘person NYSE rules apply only to those members of FINRA responsible for the day-to-day supervision or associated with a Member.’’ that are also members of the NYSE. direction of such activities.

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Registered Persons, and Exchange Rule persons engaged, or to be engaged, in a Member demonstrates conclusively 1304, Continuing Education for the securities business of a Member to that only one individual acting in one Registered Persons, are proposed to be be registered with the Exchange in the or more of these capacities should be deleted. These current Exchange rule category of registration appropriate to required to register. A Member or provisions are incorporated into the the function to be performed as Member organization that conducts new proposed 1900 Series of Exchange prescribed by the Exchange.16 proprietary trading only and has 25 or rules, as further described below. Proposed Exchange Rule 1900 fewer registered persons may be Additionally, the Exchange proposes provides that each person engaged in required to have one officer or partner to amend Exchange Rule 100, the securities business of a Member who is registered in this capacity.18 Definitions, Exchange Rule 601, must register with the Exchange as a The Exchange proposes to delete Registered Option Traders, Exchange representative or principal in each these requirements and in their place Rule 1000, Disciplinary Jurisdiction, category of registration appropriate to adopt new Exchange Rule 1900, Exchange Rule 1014, Imposition of his or her functions and responsibilities Interpretation and Policy .01. The Fines for Minor Rule Violations, as specified in proposed Exchange Rule proposed rule would provide firms that Exchange Rule 1301, Registration of 1901, unless exempt from registration limit the scope of their business with Options Principals, Exchange Rule pursuant to proposed Exchange Rule flexibility in satisfying the two-principal 1302, Registration of Representatives, 1902.17 Proposed Exchange Rule 1900 requirement. In particular, proposed Exchange Rule 1306, Branch Offices, also provides that such person is not Exchange Rule 1900, Interpretation and Exchange Rule 1307, Opening of qualified to function in any registered Policy .01, would require each Member, Accounts, Exchange Rule 1309, capacity other than that for which the except a Member with only one Suitability of Recommendations, person is registered, unless otherwise associated person, to have at least two Exchange Rule 1310, Discretionary stated in the rules. officers or partners who are registered as Accounts, and Exchange Rule 1319, General Securities Principals, provided B. Minimum Number of Registered Profit Sharing. that a Member that is limited in the Principals (Proposed Exchange Rule In place of the deleted rules, and parts scope of its activities may instead have 1900, Interpretation and Policy .01) of the amended rules, the Exchange two officers or partners who are proposes to adopt new Chapter XIX, Exchange Rule 203, Interpretation and registered in a principal category that Registration, Qualification and Policy .07, requires Members to register corresponds to the scope of the Continuing Education, in the with the Exchange in a heightened Member’s activities.19 For instance, if a Exchange’s Rulebook, together with capacity each individual acting in any firm’s business is limited to securities conforming changes to certain existing of the following capacities: (a) Officer; trading, the firm may have two Exchange rules. In the new Chapter XIX (b) partner; (c) director; (d) supervisor of Securities Trader Principals, instead of series of rules, the Exchange would, proprietary trading, market making or two General Securities Principals. among other things, recognize brokerage activities; and/or (e) Additionally, proposed Exchange Rule additional associated person registration supervisor of those engaged in 1900, Interpretation and Policy .01, categories, recognize a new general proprietary trading, market-making or would provide that any Member with knowledge examination, permit the brokerage activities with respect to only one associated person is excluded maintenance of permissive registrations, those activities. Each Member or from the two principal requirement. and require Securities Trader Member organization must register with Proposed Exchange Rule 1900, registration of developers of algorithmic the Exchange at least two individuals Interpretation and Policy .01, would trading strategies consistent with a acting in one or more of these capacities provide that existing Members as well comparable, existing FINRA registration (the ‘‘two-principal requirement’’). The as new applicants may request a waiver requirement.13 Exchange may waive this requirement if of the two-principal requirement, The Exchange notes that the structure consistent with current Exchange Rule 16 of this rule filing, as well as newly In general the 1900 Series would conform the 203, Interpretation and Policy .07. proposed Chapter XIX series of rules, is Exchange’s rules to FINRA’s rules as revised in the FINRA Rule Changes, with modifications tailored to Finally, the Exchange proposes to retain based on a recent rule filing by the the business of the Exchange. However, the the existing provision in Exchange Rule Nasdaq Stock Market, LLC (‘‘Nasdaq Exchange also proposes to adopt Exchange Rule 203 permitting a proprietary trading 14 Stock Market’’). The similar Nasdaq 1900, Interpretation and Policy .12, based upon a firm with 25 or fewer registered Stock Market filing also amended, current Nasdaq Stock Market rule. See Nasdaq Stock Market, General 4, Section 1, Rule 1.1210, representatives to have just one reorganized and enhanced membership, Supplementary Material .12; see also Securities registered principal. The FINRA Rule registration and qualification rules for Exchange Act Release No. 84386 (October 9, 2018), Changes do not include this provision.20 the Nasdaq Stock Market, and was based 83 FR 51988 (October 15, 2018) (SR–NASDAQ– on the FINRA Rule Changes.15 2018–078). These provisions govern the process for applying for registration and amending the 18 Currently, Exchange Rule 203, Interpretation New Proposed Rules and Proposed registration application, as well as for notifying the and Policy .08, describes when a Member is Exchange of termination of the Member’s considered to be conducting only proprietary Changes to Current Exchange Rules association with a person registered with the trading of the Member. Because the Exchange now A. Registration Requirements (Proposed Exchange. The Exchange proposes to adopt proposes to delete Exchange Rule 203 in its Exchange Rule 1900, Interpretation and Policy .12, entirety, Interpretation and Policy .08 of that rule Exchange Rule 1900) in order to have uniform processes and would be reworded and relocated to Exchange Rule Exchange Rule 203(a) currently requirements in this area across the Exchange. 100, Definitions, as a defined term. requires individuals and associated 17 Because the Exchange’s proposed registration 19 The principal registration categories are rules focus solely on securities trading activity, the described in greater detail below. proposed rules differ from the FINRA Rule Changes 20 The Exchange does not propose to adopt 13 See id. by omitting references to investment banking in provisions comparable to FINRA Rule 1210.01, 14 See Securities Exchange Act Release No. 84386 proposed Exchange Rules 1900, Interpretations and which requires that all FINRA members have a (October 9, 2018), 83 FR 51988 (October 15, 2018) Policies .03 and .10 of Exchange Rule 1900, Principal Financial Officer and a Principal (SR–NASDAQ–2018–078) (Notice of Filing and Exchange Rules 1901 and 1903, and also by Operations Officer, because the Exchange believes Immediate Effectiveness of Proposed Rule Change omitting as unnecessary from proposed Exchange that its proposed Exchange Rule 1901(b)(3), to Amend, Reorganize and Enhance Its Rule 1901, a limitation on the qualification of a Financial and Operations Principal, is sufficient. As Membership, Registration and Qualification Rules) General Securities Sales Supervisor to supervise the described herein, proposed Exchange Rule 15 See id. origination and structuring of an underwriting. Continued

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C. Permissive Registrations (Proposed with the Member. Further, proposed supervisor to this person who would be Exchange Rule 1900, Interpretation and Exchange Rule 1900, Interpretation and responsible for periodically contacting Policy .02) Policy .02, would allow an individual such individual’s direct supervisor to Current Exchange Rule 203(a) engaged in the securities business of a verify that the individual is not acting prohibits a Member from maintaining a foreign securities affiliate or subsidiary outside the scope of his or her assigned registration with the Exchange for any of a Member to obtain and maintain any functions. If such individual is person (1) who is no longer active in the registration permitted by the Member. permissively registered as a Member’s securities business, (2) who is The Exchange proposes to permit the representative, the registered supervisor no longer functioning in the registered registration of such individuals for must be registered as a representative or capacity, or (3) where the sole purpose several reasons. First, a Member may principal. If the individual is is to avoid the examination requirement. foresee a need to move a former permissively registered as a principal, Current Exchange Rule 203(a) further representative or principal who has not the registered supervisor must be 22 prohibits a Member from making an been registered for two or more years registered as a principal. application for the registration of any back into a position that would require such person to be registered. Currently, D. Qualification Examinations and person where there is no intent to Waivers of Examinations (Proposed employ that person in the Member’s such persons are required to requalify (or obtain a waiver of the applicable Exchange Rule 1900, Interpretation and securities business. A Member may, Policy .03) however, maintain or make application qualification examinations) and reapply Current Exchange Rule 203(a) for the registration of an individual who for registration. Second, the proposed provides that before a registration can performs legal, compliance, internal rule change would allow Members to become effective, the individual audit, back-office operations, or similar develop a depth of associated persons Member or individual associated person responsibilities for the Member, or a with registrations in the event of shall submit the appropriate application person who performs administrative unanticipated personnel changes. Third, for registration, pass the Securities support functions for registered allowing registration in additional Industry Essentials Examination personnel, or a person engaged in the categories encourages greater regulatory (‘‘SIE’’), pass a qualification securities business of a foreign understanding. Finally, the proposed securities affiliate or subsidiary of the rule change would eliminate an examination appropriate to the category Member. inconsistency in the current rules, of registration as prescribed by the The Exchange proposes to replace which permit some associated persons Exchange and submit any required these provisions with proposed of a Member to obtain permissive registration and examination fees. The Exchange Rule 1900, Interpretation and registrations, but not others who equally Exchange proposes to replace this rule Policy .02. The Exchange also proposes are engaged in the Member’s business. language with new Exchange Rule 1900, to expand the scope of permissive Individuals maintaining a permissive Interpretation and Policy .03, registrations and to clarify a Member’s registration under the proposed rule Qualification Examinations and Waivers obligations regarding individuals who change would be considered registered of Examinations. are maintaining such registrations. persons and subject to all Exchange As part of the FINRA Rule Changes, Specifically, proposed Exchange Rule rules, to the extent relevant to their FINRA adopted a restructured 1900, Interpretation and Policy .02, activities. For instance, an individual representative-level qualification would allow any associated person to working solely in an administrative examination program whereby apply for or maintain any registration capacity would be able to maintain a representative-level registrants would be permitted by the Member. For instance, General Securities Representative required to take a general knowledge an associated person of a Member registration and would be considered a examination (the SIE) and a specialized working solely in a clerical or registered person for purposes of rules knowledge examination appropriate to ministerial capacity, such as in an relating to borrowing from or lending to the representative’s job functions at the administrative capacity, would be able customers, but the rule would have no firm with which he or she is to obtain and maintain a General practical application to his or her associating.23 Therefore, proposed Securities Representative registration conduct because he or she would not Exchange Rule 1900, Interpretation and with the Member. As another example, have any customers. Policy .03, provides that before the an associated person of a Member who Consistent with the Exchange’s registration of a person as a is registered, and functioning solely as supervision rules, Members would be representative can become effective a General Securities Representative, required to have adequate supervisory under proposed Exchange Rule 1900, would be able to obtain and maintain a systems and procedures reasonably such person must pass the SIE and an General Securities Principal registration designed to ensure that individuals with appropriate representative-level permissive registrations do not act qualification examination as specified 1901(b)(3), requires Member firms operating outside the scope of their assigned in proposed Exchange Rule 1901(c). 21 pursuant to certain provisions of the Commission’s functions. With respect to an Proposed Exchange Rule 1900, rules to designate at least one Financial and individual who solely maintains a Interpretation and Policy .03, also Operations Principal. Further, the Exchange does permissive registration, such as an not propose to adopt FINRA Rule 1210.01, which provides that before the registration of a requires that (1) a member engaged in investment individual working exclusively in an person as a principal can become banking activities have an Investment Banking administrative capacity, the individual’s effective under proposed Exchange Rule Principal, (2) a member engaged in research direct supervisor is not required to be a 1900, such person must pass an activities have a Research Principal, or (3) a registered person. Members would be member engaged in options activities with the public have a Registered Options Principal. The required to assign a registered 22 In either case, the registered supervisor of an Exchange does not propose to recognize the individual who solely maintains a permissive Investment Banking Principal or the Research 21 FINRA Rule 1210.02 specifically cites FINRA’s registration would not be required to be registered Principal registration categories, and the Registered supervisory system rule, FINRA Rule 3110, by in the same representative or principal registration Options Principal registration requirement is set number. Proposed Exchange Rule 1900, category as the permissively-registered individual. forth in proposed Exchange Rule 1901(b)(7), and its Interpretation and Policy .02, refers generally to the See proposed Exchange Rule 1900, Interpretation inclusion is therefore unnecessary in proposed Exchange’s supervision rules rather than identifying and Policy .02. Exchange Rule 1900. them by number. 23 See supra note 11.

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appropriate principal-level qualification Individuals who had been registered the same day, provided the individual is examination as specified in proposed within the past two years prior to the able to reserve space at one of FINRA’s Rule 1901(b). operative date of the proposed rule designated testing centers. Further, proposed Exchange Rule change would also be eligible to Finally, under current Exchange Rule 1900, Interpretation and Policy .03, maintain those registrations without 203, Interpretation and Policy .05, the provides that if the job functions of a being subject to any additional Exchange may, in exceptional cases and registered representative change and he requirements, provided that they where good cause is shown, waive the or she needs to become registered in reregister with the Exchange within two applicable qualification examination another representative-level category, he years from the date of their last and accept other standards as evidence or she would not need to pass the SIE registration. of an applicant’s qualifications for again. Rather, the registered person Further, registered representatives registration. The Exchange proposes to would need to pass only the appropriate would be considered to have passed the replace Exchange Rule 203, representative-level qualification SIE in the CRD system, and thus if they Interpretation and Policy .05, with examination.24 Thus under the wish to register in any other proposed Exchange Rule 1900, proposed rule change, individuals representative category after the Interpretation and Policy .03, with seeking registration in two or more operative date of the proposed rule changes that track FINRA Rule 1210.03. representative-level categories would change, could do so by taking only the The proposed rule provides that the experience a net decrease in the total appropriate specialized knowledge Exchange will only consider number of exam questions they would examination.25 However, with respect to examination waiver requests submitted be required to answer because the SIE an individual who is not registered on by a firm for individuals associated with content would be tested only once. the operative date of the proposed rule the firm who are seeking registration in The proposed rule change solely change but was registered within the a representative-level or principal-level impacts the representative-level past two years prior to the operative registration category. Moreover, qualification requirements. The date of the proposed rule change, the proposed Exchange Rule 1900, proposed rule change does not change individual’s SIE status in the CRD Interpretation and Policy .03, states that the scope of the activities permitted system would be administratively the Exchange will consider waivers of under the existing representative terminated if such individual does not the SIE alone or the SIE and the categories. For instance, after the register within four years from the date representative-level and principal-level operative date of the proposed rule of the individual’s last registration.26 examination(s) for such individuals. change, a previously unregistered In addition, individuals who had been individual registering as a Securities registered as representatives two or E. Requirements for Registered Persons Trader for the first time would be more years, but less than four years, Functioning as Principals for a Limited required to pass the SIE and an prior to the operative date of the Period (Proposed Exchange Rule 1900, appropriate specialized knowledge proposed rule change would also be Interpretation and Policy .04) examination. However, such individual considered to have passed the SIE and The Exchange proposes to adopt new may engage only in those activities in designated as such in the CRD system. Exchange Rule 1900, Interpretation and which a current Securities Trader may Moreover, if such individuals re-register Policy .04, which provides that subject engage under current Exchange Rules. with a firm after the operative date of to the requirements of proposed Individuals who are registered on the the proposed rule change and within Exchange Rule 1901, Interpretation and operative date of the proposed rule four years of having been previously Policy .03, a Member may designate any change would be eligible to maintain registered, they would only need to pass person currently registered, or who those registrations without being subject the specialized knowledge examination becomes registered, with the Member as to any additional requirements. associated with that registration a representative to function as a position. However, if they do not principal for a period of 120 calendar 24 FINRA stated that the SIE would assess basic register within four years from the date days prior to passing an appropriate product knowledge; the structure and function of of their last registration, their SIE status principal qualification examination, the securities industry markets, regulatory agencies and their functions; and regulated and prohibited in the CRD system would be provided that such person has at least practices. Proposed Exchange Rule 1900, administratively terminated. Similar to 18 months of experience functioning as Interpretation and Policy .03, provides that all the current process for registration, a registered representative within the associated persons, such as associated persons firms would continue to use the CRD five-year period immediately preceding whose functions are solely and exclusively clerical or ministerial, are eligible to take the SIE. Proposed system to request registrations for the designation and has fulfilled all Rule 1900, Interpretation and Policy .03, also representatives. An individual would be prerequisite registration, fee and provides that individuals who are not associated able to schedule both the SIE and examination requirements prior to persons of firms, such as members of the general specialized knowledge examinations for designation as principal. These public, are eligible to take the SIE. FINRA stated its belief that expanding the pool of individuals who requirements apply to any principal are eligible to take the SIE would enable 25 Under the proposed rule change, only category, including those categories that prospective securities industry professionals to individuals who have passed an appropriate are not subject to a prerequisite demonstrate to prospective employers a basic level representative-level examination would be representative-level registration of knowledge prior to submitting a job application. considered to have passed the SIE. Registered requirement, such as the Financial and Further, this approach would allow for more principals who do not hold an appropriate flexibility and career mobility within the securities representative-level registration would not be Operations Principal registration industry. While all associated persons of firms as considered to have passed the SIE. For example, an category.27 Similarly, the proposed rule well as individuals who are not associated persons individual who is registered solely as a Financial would permit a Member to designate would be eligible to take the SIE pursuant to and Operations Principal (Series 27) today would any person currently registered, or who proposed Exchange Rule 1900, Interpretation and have to take the Series 7 to become registered as a Policy .03, passing the SIE alone would not qualify General Securities Representative. Under the becomes registered, with the Member as them for registration with the Exchange. Rather, to proposed rule change, in the future, this individual be eligible for registration with the Exchange, an would have to pass the SIE and the specialized 27 In this regard, the Exchange notes that individual would be required to pass an applicable Series 7 examination to obtain registration as a qualifying as a registered representative is currently representative or principal qualification General Securities Representative. a prerequisite to qualifying as a principal on the examination and complete the other requirements 26 As discussed below, the Exchange proposes a Exchange except with respect to the Financial and of the registration process. four-year expiration period for the SIE. Operations Principal.

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a principal to function in another violation of Exchange rules requiring examination until 180 calendar days has principal category for a period of 120 observance of high standards of elapsed from the date of the person’s calendar days prior to passing an commercial honor or just and equitable last attempt to pass that examination. appropriate qualification examination as principles of trade, such as Exchange These waiting periods would apply to specified under proposed Rule 1901.28 Rule 301.30 Further, if the Exchange the SIE and the representative and This provision, which has no determines that an associated person principal examinations.33 counterpart in the Exchange’s current has violated the SIE Rules of Conduct or H. Continuing Education (‘‘CE’’) rules, is intended to provide flexibility the Rules of Conduct for representative Requirements (Proposed Exchange Rule to Members in meeting their principal and principal examinations, the 1900, Interpretation and Policy .07) requirements on a temporary basis. associated person may forfeit the results of the examination and may be subject Pursuant to Exchange Rule 203, F. Rules of Conduct for Taking to disciplinary action by the Exchange. Interpretation and Policy .04, each Examinations and Confidentiality of Proposed Exchange Rule 1900, individual required to register under Examinations (Proposed Exchange Rule Interpretation and Policy .05, also states Exchange Rule 203 is required to satisfy 1900, Interpretation and Policy .05) that the Exchange considers all of the the continuing education requirements Before taking an examination, FINRA qualification examinations’ content to set forth in Exchange Rule 1304, currently requires each candidate to be highly confidential. The removal of Continuing Education for Registered agree to the SIE Rules of Conduct for examination content from an Persons, or any other applicable taking a qualification examination. examination center, reproduction, continuing education requirements as Among other things, the examination disclosure, receipt from or passing to prescribed by the Exchange. Under Rules of Conduct require each candidate any person, or use for study purposes of Exchange Rule 1304, the CE to attest that he or she is in fact the any portion of such qualification requirements applicable to registered person who is taking the examination. examination or any other use that would persons consist of a Regulatory The Rules of Conduct also require that compromise the effectiveness of the Element 34 and a Firm Element.35 The each candidate agree that the examinations and the use in any manner Regulatory Element applies to registered examination content is the intellectual and at any time of the questions or persons and must be completed within property of FINRA and that the content answers to the examinations shall be prescribed time frames.36 Pursuant to cannot be copied or redistributed by any prohibited and shall be deemed to be a current Exchange Rule 1304, means. If FINRA discovers that a violation of Exchange rules requiring Interpretation and Policy .01, a candidate has violated the Rules of observance of high standards of ‘‘registered person’’ means any Member, Conduct for taking a qualification commercial honor or just and equitable representative or other person registered examination, the candidate may forfeit principles of trade. Finally, proposed or required to be registered under the the results of the examination and may Exchange Rule 1900, Interpretation and Exchange’s rules.37 The Firm Element be subject to disciplinary action by Policy .05, would prohibit an applicant consists of annual, member-developed FINRA. For instance, for cheating on a from receiving assistance while taking and administered training programs qualification examination, the FINRA the examination, and require the designed to keep covered registered Sanction Guidelines recommend barring applicant to certify that no assistance persons current regarding securities the individual.29 was given to or received by him or her products, services and strategies offered Effective October 1, 2018, FINRA during the examination.31 codified the requirements relating to the 33 FINRA Rule 1210.06 requires individuals Rules of Conduct for examinations G. Waiting Periods for Retaking a Failed taking the SIE who are not associated persons to Examination (Proposed Exchange Rule agree to be subject to the same waiting periods for under FINRA Rule 1210.05. FINRA also retaking the SIE. The Exchange does not propose to adopted Rules of Conduct for taking the 1900, Interpretation and Policy .06) include this language in proposed Exchange Rule SIE for associated persons and non- The Exchange proposes to adopt new 1900, Interpretation and Policy .06, as the Exchange associated persons who take the SIE. Exchange Rule 1900, Interpretation and will not apply the proposed 1900 Series of rules in The Exchange proposes to adopt its any event to individuals who are not associated Policy .06, which provides that any persons of Members. own proposed Exchange Rule 1900, person who fails to pass a qualification 34 See Exchange Rule 1304(a) Interpretation and Policy .05, which examination prescribed by the Exchange 35 See Exchange Rule 1304(b). would provide that associated persons may retake that examination again after 36 Pursuant to Rule 1304(a), each registered taking the SIE are subject to the SIE a period of 30 calendar days from the person is required to complete the Regulatory Rules of Conduct, and that associated Element initially within 120 days after the person’s date of the person’s last attempt to pass second registration anniversary date and, thereafter, persons taking any representative or that examination.32 Proposed Exchange within 120 days after every third registration principal examination are subject to the Rule 1900, Interpretation and Policy .06, anniversary date. Unless otherwise determined by Rules of Conduct for representative and further provides that if a person fails an the Exchange, a registered person who has not principal examinations. Under the completed the Regulatory Element program within examination three or more times in the prescribed time frames will have their proposed rule, a violation of the SIE succession within a two-year period, the registrations deemed inactive until such time as the Rules of Conduct or the Rules of person is prohibited from retaking that requirements of the program have been satisfied. Conduct for representative and Any person whose registration has been deemed inactive under Rule 1304(a) must cease all activities principal examinations by an associated 30 Exchange Rule 301, Just and Equitable as a registered person and is prohibited from person would be deemed to be a Principles of Trade, prohibits Members from performing any duties and functioning in any engaging in acts or practices inconsistent with just capacity requiring registration. A person whose 28 Proposed Exchange Rule 1900, Interpretation and equitable principles of trade. Persons registration is so terminated may reactivate the and Policy .04, omits the reference in FINRA Rule associated with Members have the same duties and registration only by reapplying for registration and 1210.04 to Foreign Associates, which is a obligations as Members under Exchange Rule 301. meeting the qualification requirements of the registration category not recognized by the 31 The Exchange does not propose to adopt applicable provisions of the Exchange’s rules. The Exchange, but otherwise tracks the language of portions of FINRA Rule 1210.05, which apply to Exchange may, upon application and a showing of FINRA Rule 1210.04. non-associated persons, over whom the Exchange good cause, allow for additional time for a 29 See FINRA Sanction Guidelines (March 2019), would in any event have no jurisdiction. registered person to satisfy the program VII. Qualification and Membership, pg. 38, at 32 Proposed Exchange Rule 1900, Interpretation requirements. https://www.finra.org/sites/default/files/Sanctions_ and Policy .06, has no counterpart in existing 37 See Exchange Rule 1304, Interpretation and Guidelines.pdf. Exchange rules. Policy .01.

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by the Member. For purposes of the the SIE or who was last registered as a J. Waiver of Examinations for Firm Element, the term ‘‘covered Representative, whichever occurred last, Individuals Working for a Financial registered persons’’ is defined as any four or more years immediately Services Industry Affiliate of a Member registered person who has direct contact preceding the date of receipt by the (Proposed Exchange Rule 1900, with customers in the conduct of the Exchange of a new application for Interpretation and Policy .09) Member’s securities sales, trading or registration as a Representative shall be The Exchange proposes to adopt investment banking activities, and to the required to pass the SIE in addition to Exchange Rule 1900, Interpretation and immediate supervisors of such a representative qualification persons.38 Policy .09, to provide a process whereby examination appropriate to his or her individuals working for a financial The Exchange proposes to delete category of registration. The two year services industry affiliate of a Member 40 Exchange Rule 203, Interpretation and period is calculated from the Policy .04, which CE requirements the would be able to terminate their termination date to the date the registrations with the Member and be Exchange proposes to reorganize, Exchange receives a new application for renumber and adopt as proposed granted a waiver of their requalification registration. The Exchange proposes to requirements upon re-registering with a Exchange Rule 1903. The Exchange delete Exchange Rule 203(h), and believes that all registered persons, Member, provided the firm that is replace it with proposed Exchange Rule requesting the waiver and the regardless of their activities, should be 1900, Interpretation and Policy .08, subject to the Regulatory Element of the individual satisfy the criteria for a Lapse of Registration and Expiration of Financial Services Affiliate (‘‘FSA’’) CE requirements so that they can keep SIE. their knowledge of the securities waiver.41 The purpose of the FSA industry current. Therefore, the Proposed Exchange Rule 1900, waiver is to provide a firm greater Exchange proposes to adopt Exchange Interpretation and Policy .08, contains flexibility to move personnel, including Rule 1900, Interpretation and Policy .07, language comparable to that of senior and middle management, to clarify that all registered persons, Exchange Rule 203(h) but also clarifies between the firm and its financial including those who solely maintain a that, for purposes of the proposed rule, services affiliate(s) so that they may gain permissive registration, are required to an application would not be considered organizational skills and better satisfy the Regulatory Element, as to have been received by the Exchange knowledge of products developed by the specified in proposed Exchange Rule if that application does not result in a affiliate(s) without the individuals 1903, as discussed below.39 Individuals registration. Proposed Exchange Rule having to requalify by examination each who have passed the SIE but not a 1900, Interpretation and Policy .08, also time they return to the firm.42 representative or principal-level sets forth the expiration period of the Under the waiver process in proposed examination and do not hold a SIE. Based on the content covered on Exchange Rule 1900, Interpretation and registered position would not be subject the SIE, the Exchange proposes that a Policy .09, the first time a registered to any CE requirements. Consistent with passing result on the SIE be valid for person is designated as eligible for a current practice, proposed Exchange four years. Therefore, under the waiver based on the FSA criteria, the Rule 1900, Interpretation and Policy .07, proposed rule change, an individual Member with which the individual is would also provide that if a person who passes the SIE and is an associated registered would notify the Exchange of registered with a Member has a CE person of a firm at the time would have the FSA designation. The Member deficiency with respect to that up to four years from the date he or she would concurrently file a full Form U5 registration, such person shall not be passes the SIE to pass a representative- terminating the individual’s registration permitted to be registered in another level examination to register as a with the firm, which would also registration category with the Exchange representative with that firm, or a terminate the individual’s other SRO under proposed Exchange Rule 1901 subsequent firm, without having to and state registrations. with that Member or to be registered in retake the SIE. In addition, an To be eligible for initial designation as any registration category with the individual who passes the SIE and is an FSA-eligible person by a Member, an Exchange under proposed Exchange not an associated person at the time individual must have been registered for Rule 1901 with another Member, until would have up to four years from the a total of five years within the most the person has satisfied the deficiency. date he or she passes the SIE to become recent 10-year period prior to the I. Lapse of Registration and Expiration an associated person of a firm, pass a designation, including for the most of SIE (Proposed Exchange Rule 1900, representative-level examination and recent year with that Member.43 An Interpretation and Policy .08) register as a representative without Current Exchange Rule 203(h) states having to retake the SIE. 40 Proposed Exchange Rule 1900, Interpretation and Policy .09, defines a ‘‘financial services that any person whose registration has Moreover, an individual holding a industry affiliate of a Member’’ as a legal entity that been revoked by the Exchange as a representative-level registration who controls, is controlled by or is under common disciplinary sanction or whose most leaves the industry after the operative control with a Member and is regulated by the recent registration has been terminated date of the proposed rule change would Commission, Commodity Futures Trading Commission (‘‘CFTC’’), state securities authorities, for two or more years immediately have up to four years to re-associate federal or state banking authorities, state insurance preceding the date of receipt by the with a firm and register as a authorities, or substantially equivalent foreign Exchange of a new application shall be representative without having to retake regulatory authorities. required to pass a qualification the SIE. However, the four-year 41 There is no counterpart to proposed Exchange examination appropriate to the category expiration period in the proposed rule Rule 1900, Interpretation and Policy .09, in the Exchange’s existing rules. FINRA Rule 1210.09 was of registration as prescribed by the change extends only to the SIE, and not adopted as a new waiver process for FINRA Exchange. Any person who last passed the representative-level and principal- registration, as part of the FINRA Rule Changes. See level registrations. The representative- supra note 11. 38 See Exchange Rule 1304(b)(1). level and principal-level registrations 42 See supra note 11. 43 39 The Exchange proposes to delete Exchange would continue to be subject to a two For purposes of this requirement, a five year Rule 203, Interpretation and Policy .04, in period of registration with the Exchange, with connection with the adoption of proposed Exchange year expiration period as is the case FINRA or with another self-regulatory organization Rule 1900, Interpretation and Policy .07. today. would be sufficient.

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individual would have to satisfy these corresponding changes in proposed who has been designated as an FSA- preconditions only for purposes of his Exchange Rule 1903 (which the eligible person by a Member would not or her initial designation as an FSA- Exchange proposes will replace current be able to take additional examinations eligible person, and not for any Exchange Rule 1304, Continuing to gain additional registrations while subsequent FSA designation(s). Education for Registered Persons). working for a financial services affiliate Thereafter, the individual would be Upon registering an FSA-eligible of a Member. eligible for a waiver for up to seven person, a firm would file a Form U4 and K. Status of Persons Serving in the years from the date of initial request the appropriate registration(s) Armed Forces of the United States designation 44 provided that the other for the individual. The firm would also (Proposed Exchange Rule 1900, conditions of the waiver, as described submit an examination waiver request Interpretation and Policy .10) below, have been satisfied. to the Exchange,46 similar to the process Consequently, a Member other than the used today for waiver requests, and it The Exchange proposes to adopt Member that initially designated an would represent that the individual is Exchange Rule 1900, Interpretation and individual as an FSA-eligible person eligible for an FSA waiver based on the Policy .10, Status of Persons Serving in may request a waiver for the individual conditions set forth below. The the Armed Forces of the United States.48 and more than one Member may request Exchange would review the waiver Proposed Exchange Rule 1900, a waiver for the individual during the request and make a determination of Interpretation and Policy .10(a), would seven-year period.45 whether to grant the request within 30 permit a registered person of a Member An individual designated as an FSA- calendar days of receiving the request. who volunteers for or is called into eligible person would be subject to the The Exchange would summarily grant active duty in the Armed Forces of the Regulatory Element of CE while working the request if the following conditions United States to be placed, after proper for a financial services industry affiliate are met: notification to the Exchange, on inactive of a Member. The individual would be (1) Prior to the individual’s initial status. The registered person would not subject to a Regulatory Element program designation as an FSA-eligible person, need to be re-registered by such Member that correlates to his or her most recent the individual was registered for a total upon his or her return to active registration category, and CE would be of five years within the most recent 10- employment with the Member. The based on the same cycle had the year period, including for the most registered person would remain eligible individual remained registered. If the recent year with the Member that to receive transaction-related individual fails to complete the initially designated the individual as an compensation, including continuing prescribed Regulatory Element during FSA-eligible person; commissions, and the employing the 120-day window for taking the (2) The waiver request is made within Member may allow the registered session, he or she would lose FSA seven years of the individual’s initial person to enter into an arrangement eligibility (i.e., the individual would designation as an FSA-eligible person with another registered person of the have the standard two-year period after by a Member; Member to take over and service the termination to re-register without (3) The initial designation and any person’s accounts and to share having to retake an examination). The subsequent designation(s) were made transaction-related compensation based Exchange also proposes to make concurrently with the filing of the upon the business generated by such individual’s related Form U5; accounts. However, because such 44 Individuals would be eligible for a single, fixed (4) The individual continuously persons would be inactive, they could seven-year period from the date of initial worked for the financial services not perform any of the functions and designation, and the period would not be tolled or responsibilities performed by a renewed. affiliate(s) of a Member since the last 45 The following examples illustrate this point: Form U5 filing; registered person, nor would they be Example 1. Firm A designates an individual as an (5) The individual has complied with required to complete either the FSA-eligible person by notifying the Exchange and the Regulatory Element of CE; and continuing education Regulatory files a Form U5. The individual joins Firm A’s (6) The individual does not have any Element or Firm Element set forth in financial services affiliate. Firm A does not submit a waiver request for the individual. After working pending or adverse regulatory matters, proposed Exchange Rule 1903 during 49 for Firm A’s financial services affiliate for three or terminations, that are reportable on the pendency of such inactive status. years, the individual directly joins Firm B’s the Form U4, and has not otherwise financial services affiliate for three years. Firm B been subject to a statutory Member for three years and re-registers the then submits a waiver request to register the disqualification while the individual individual, the Member could subsequently file a individual. Form U5 and re-designate the individual as an FSA- Example 2. Same as Example 1, but the was designated as an FSA-eligible eligible person. Moreover, if the individual works individual directly joins Firm B after working for person with a Member. with a financial services affiliate of the Member for Firm A’s financial services affiliate, and Firm B Following the Form U5 filing, an another three years, the Member could submit a submits a waiver request to register the individual second waiver request and re-register the individual at that point in time. individual could move between the upon returning to the Member. Example 3. Firm A designates an individual as an financial services affiliates of a Member 48 There is no counterpart to proposed Exchange FSA-eligible person by notifying the Exchange and so long as the individual is Rule 1900, Interpretation and Policy .10, in the files a Form U5. The individual joins Firm A’s continuously working for an affiliate. Exchange’s current rules. financial services affiliate for three years. Firm A Further, a Member could submit 49 The relief provided in proposed Exchange Rule then submits a waiver request to reregister the 1900, Interpretation and Policy .10(a), would be individual. After working for Firm A in a registered multiple waiver requests for the available to a registered person during the period capacity for six months, Firm A re-designates the individual, provided that the waiver that such person remains registered with the individual as an FSA-eligible person by notifying requests are made during the course of Member with which he or she was registered at the FINRA and files a Form U5. The individual rejoins the seven-year period.47 An individual beginning of active duty in the Armed Forces of the Firm A’s financial services affiliate for two years, United States, regardless of whether the person after which the individual directly joins Firm B’s returns to active employment with another Member financial services affiliate for one year. Firm B then 46 The Exchange would consider a waiver of the upon completion of his or her active duty. The submits a waiver request to register the individual. representative-level qualification examination(s), relief would apply only to a person registered with Example 4. Same as Example 3, but the the principal-level qualification examination(s) and a Member and only while the person remains on individual directly joins Firm B after the second the SIE, as applicable. active military duty. Further, the Member with period of working for Firm A’s financial services 47 For example, if a Member submits a waiver which such person is registered would be required affiliate, and Firm B submits a waiver request to request for an FSA-eligible person who has been to promptly notify the Exchange of such person’s register the individual at that point in time. working for a financial services affiliate of the return to active employment with the Member.

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Pursuant to proposed Exchange Rule proposed Exchange Rule 1900, as representative or principal where the 1900, Interpretation and Policy .10(b), a Interpretation and Policy .08, reduced Member does not intend to employ the Member that is a sole proprietor who by the period of time between the person in its securities business. These temporarily closes his or her business person’s termination of registration and prohibitions do not apply to the current by reason of volunteering for or being beginning of active service in the Armed permissive registration categories called into active duty in the Armed Forces of the United States. identified in Exchange Rule 203(a). Forces of the United States, shall be Further, under proposed Exchange In light of proposed Exchange Rule placed, after proper notification to the Rule 1900, Interpretation and Policy 1900, Interpretation and Policy .02, Exchange, on inactive status while the .10(c), if a person placed on inactive Permissive Registrations, discussed Member remains on active military status while serving in the Armed above, the Exchange proposes to delete duty, would not be required to pay dues Forces of the United States ceases to be these provisions of current Exchange or assessments during the pendency of registered with a Member, the Exchange Rule 203(a) and instead adopt proposed such inactive status and would not be would defer the lapse of registration Exchange Rule 1900, Interpretation and required to pay an admission fee upon requirements set forth in proposed Policy .11, prohibiting a Member from return to active participation in the Exchange Rule 1900, Interpretation and registering or maintaining the securities business. This relief would be Policy .08 (i.e., toll the two-year registration of a person unless the available only to a sole proprietor expiration period for representative and registration is consistent with the Member and only while the person principal qualification examinations), requirements of proposed Exchange remains on active military duty, and the and the lapse of the SIE (i.e., toll the Rule 1900.51 sole proprietor would be required to four-year expiration period for the SIE) during the pendency of his or her active M. Registration Categories (Proposed promptly notify the Exchange of his or Exchange Rule 1901) her return to active participation in the service in the Armed Forces of the securities business. United States. The Exchange would The Exchange proposes to adopt new and revised registration category rules Pursuant to proposed Exchange Rule defer the lapse of registration and related definitions in proposed 1900, Interpretation and Policy .10(c), if requirements based on existing Exchange Rule 1901, Registration a person who was formerly registered information in the CRD system, Categories.52 with a Member volunteers for or is provided that the Exchange is properly called into active duty in the Armed notified of the person’s period of active 1. Definitions (Proposed Exchange Rule Forces of the United States at any time military service within two years 1901(a)) 53 within two years after the date the following his or her completion of active service or upon his or her re- The Exchanges proposes to adopt person ceased to be registered with a Exchange Rule 1901(a) to define certain Member, the Exchange shall defer the registration with a Member, whichever occurs first. The deferral would registration categories and terms used lapse of registration requirements set throughout the Exchange’s new forth in proposed Exchange Rule 1900, terminate 90 days following the person’s completion of active service in the proposed 1900s Series of rules. First, the Interpretation and Policy .08 (i.e., toll Exchange proposes to adopt a definition the two-year expiration period for Armed Forces of the United States. Accordingly, if such person did not re- for the term ‘‘actively engaged in the representative and principal management of the Member’s securities qualification examinations), and the register with a Member within 90 days following completion of active service, business,’’ which is used to describe the lapse of the SIE (i.e., toll the four-year functions of a ‘‘principal,’’ as more fully expiration period for the SIE). The the amount of time in which the person must become re-registered with a discussed below.54 The Exchange Exchange would defer the lapse of proposes that the term ‘‘actively registration requirements and the SIE Member without being subject to a representative or principal qualification engaged in the management of the commencing on the date the person Member’s securities business’’ means begins actively serving in the Armed examination or the SIE would consist of the standard two-year period for the management of, and the Forces of the United States, provided implementation of corporate policies that the Exchange is properly notified of representative and principal qualification examinations or the related to, such business, as well as the person’s period of active military managerial decision-making authority service within 90 days following his or standard four-year period for the SIE, her completion of active service or upon whichever is applicable, as provided in proposed Exchange Rule 1900, 51 As discussed above, the Exchange also his or her re-registration with a Member, proposes to adopt Exchange Rule 1900, 50 whichever occurs first. The deferral will Interpretation and Policy .08. Interpretation and Policy .12, Application for terminate 90 days following the person’s Registration and Jurisdiction, which is not included L. Impermissible Registrations in FINRA Rule 1210. Proposed Exchange Rule 1900, completion of active service in the (Proposed Exchange Rule 1900, Interpretation and Policy .12, is based upon Armed Forces of the United States. Interpretation and Policy .11) portions of current Exchange Rules 203 and 1301. Accordingly, if such person does not re- See also supra note 16. Current Exchange Rule 203(a) register with a Member within 90 days 52 For ease of reference, the Exchange proposes to prohibits a Member from maintaining a following his or her completion of adopt as Exchange Rule 1901, Interpretation and registration with the Exchange for any Policy .07, in chart form, a Summary of active service in the Armed Forces of person (1) who is no longer active in the Qualification Requirements for each of the the United States, the amount of time in Exchange’s permitted registration categories Member’s securities business, (2) who is which the person must become re- discussed below. no longer functioning in the registered 53 registered with a Member without being The Exchange notes that proposed Exchange capacity, or (3) where the sole purpose Rule 1901 differs from the Nasdaq Stock Market subject to a representative or principal is to avoid an examination requirement. rule filing in that the Exchange has consolidated the qualification examination or the SIE This rule also prohibits a Member from definitions for various registration categories into shall consist of the standard two-year one section, proposed Exchange Rule 1901(a), applying for the registration of a person period for representative and principal whereas the Nasdaq Stock Market filing includes the registration category definition in each qualification examinations or the 50 See Nasdaq Stock Market, General 4 individual section pertaining to that specific standard four-year period for the SIE, Regulation, Section 1 Registration, Qualification registration category type. See supra note 14. whichever is applicable, as provided in and Continuing Education, Rule 1.1210.10(c). 54 See also supra note 6.

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with respect to the Member’s securities ‘‘representative,’’ although Exchange Proposed Exchange Rule 1901(b)(1)(ii) business and management-level Rule 1302(b) states that persons who requires that an individual registering as responsibilities for supervising any perform duties for the Member which a General Securities Principal satisfy the aspect of such business, such as serving are customarily performed by sales General Securities Representative as a voting member of the Member’s representatives or branch office prerequisite registration and pass the executive, management or operations managers shall be designated as General Securities Principal committees. representatives of the Member. The qualification examination. Next, the Exchange proposes to adopt Exchange now proposes to delete The Exchange does not propose to a definition for the term ‘‘Financial and Exchange Rule 1302(b), as more fully adopt FINRA Rule 1220(a)(2)(B), which Operations Principal,’’ which the discussed herein, and adopt a definition permits an individual registering as a Exchange proposes to mean a person of the term ‘‘representative’’ in proposed General Securities Principal after associated with a Member whose duties Exchange Rule 1901(a). Proposed October 1, 2018 to register as a General include (i) final approval and Exchange Rule 1901(a) would define the Securities Sales Supervisor and to pass responsibility for the accuracy of term ‘‘representative’’ as any person the General Securities Principal Sales financial reports submitted to any duly associated with a Member, including Supervisor Module qualification established securities industry assistant officers other than principals, examination. The Exchange believes regulatory body; (ii) final preparation of who is engaged in the Member’s that individuals registering as General such reports; (iii) supervision of securities business, such as supervision, Securities Principals should be required individuals who assist in the solicitation, conduct of business in to demonstrate their competence for that preparation of such reports; (iv) securities or the training of persons role by passing the General Securities supervision of and responsibility for associated with a Member for any of Principal qualification examination.58 individuals who are involved in the these functions. ii. Compliance Official (Proposed actual maintenance of the Member’s Exchange Rule 1901(b)(2)) books and records from which such 2. Principal Registration Categories reports are derived; (v) supervision and/ (Proposed Exchange Rule 1901(b)) Currently, Exchange Rule 203(f) or performance of the Member’s i. General Securities Principal (Proposed requires each Member and Member responsibilities under all financial Rule 1901(b)(1)) organization that is a registered broker- dealer to designate a Chief Compliance responsibility rules promulgated The Exchange currently does not Officer on Schedule A of Form BD and pursuant to the provisions of the Act; impose a General Securities Principal requires individuals designated as a (vi) overall supervision of and registration obligation. The Exchange Chief Compliance Officer to register responsibility for the individuals who proposes to adopt Exchange Rule with the Exchange and pass the are involved in the administration and 1901(b)(1), which would establish an appropriate heightened qualification maintenance of the Member’s back obligation to register as a General examination(s) as prescribed by the office operations; and (vii) any other Securities Principal, subject to certain Exchange.59 matter involving the financial and exceptions.55 Proposed Exchange Rule operational management of the Member. 1901(b)(1) states that each principal is it does not offer various limited registration Next, the Exchange proposes to adopt required to register with the Exchange a definition for the term ‘‘principal’’ and categories provided for in FINRA Rule as a General Securities Principal, except 1220(a)(2)(A). The Exchange therefore proposes to include it in newly proposed Exchange that if a principal’s activities are limited reserve Exchange Rules 1901(b)(1)(i)(B) and (D). Rule 1901(a). The Exchange proposes to to the functions of a Compliance 58 Proposed Exchange Rule 1901(b)(1) generally adopt a definition of ‘‘principal,’’ which tracks FINRA Rule 1220(a)(2), except that it omits Official, a Financial and Operations references to a number of registration categories would mean any person associated with Principal, a Securities Trader Principal, a Member, including, but not limited to, which FINRA recognizes but that the Exchange a Securities Trader Compliance Officer, does not, and it includes a reference to the sole proprietor, officer, partner, manager or a Registered Options Principal, then Securities Trader Compliance Officer category of office of supervisory jurisdiction, which the Exchange proposes to recognize, but the principal shall appropriately register director or other person occupying a which FINRA does not. Additionally, proposed in one or more of those categories.56 Rule 1901(b)(1)(i)(A) extends that provision’s similar status or performing similar Proposed Exchange Rule 1901(b)(1)(i)(C) exception to the General Securities Principal functions, who is actively engaged in further provides that if a principal’s registration requirement to certain principals whose the management of the Member’s activities are ‘‘limited to’’ (rather than ‘‘include’’) activities are limited solely to the securities business, such as supervision, the functions of a more limited principal. The functions of a General Securities Sales Exchange believes that activities ‘‘limited to’’ solicitation, conduct of business in Supervisor, then the principal may expresses the intent of that exception more securities or the training of persons appropriately register in that category in accurately than activities that ‘‘include.’’ associated with a Member for any of 59 Exchange Rule 203(f) further provides that a these functions. Such persons shall lieu of registering as a General person who has been designated as a Chief include, among other persons, a Securities Principal, provided, however, Compliance Officer on Schedule A of Form BD for at least two years immediately prior to January 1, Member’s chief executive officer and that if the principal is engaged in options sales activities, he or she would 2002, and who has not been subject within the last chief financial officer (or equivalent ten years to: (1) Any statutory disqualification as officers). The term ‘‘principal’’ also be required to register as a General defined in Section 3(a)(39) of the Act; (2) a includes any other person associated Securities Sales Supervisor or as a suspension; (3) the imposition of a fine of $5,000 Registered Options Principal.57 or more for a violation of any provision of any with a Member who is performing securities law or regulation, or any agreement with, rule or standard of conduct of any securities functions or carrying out 55 responsibilities that are required to be There is no counterpart to proposed Exchange governmental agency, or securities self-regulatory Rule 1901(b)(1) in the Exchange’s current rules. organization; or (4) the imposition of a fine of performed or carried out by a principal 56 The Exchange proposes to recognize the $5,000 or more by any such regulatory or self- under Exchange rules. General Securities Principal registration category regulatory organization in connection with a Finally, the Exchange proposes to for the first time in this proposed rule change. disciplinary proceeding; shall be required to adopt a definition for the term 57 See Nasdaq Stock Market, General 4, register in this heightened category of registration Regulation, Section 1, Registration, Qualification as prescribed by the Exchange, but shall be exempt ‘‘representative’’ in proposed Exchange and Continuing Education, Rule 1.1220(a)(2)(A)(i)– from the requirement to pass the heightened Rule 1901(a). Currently, the Exchange’s (iv). Proposed Exchange Rule 1901(b)(1) deviates qualification examination as prescribed by the rules do not define the term somewhat from the counterpart FINRA rule in that Exchange.

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The Exchange proposes to delete iii. Financial and Operations Principal iv. Investment Banking Principal Exchange Rule 203(f) and adopt (Proposed Exchange Rule 1901(b)(3)) (Proposed Exchange Rule 1901(b)(4)) Exchange Rule 1901(b)(2) in its place. Current Exchange Rule 203(e) The Exchange does not recognize the Proposed Exchange Rule 1901(b)(2) provides that each Member subject to Investment Banking Principal would provide that each person Rule 15c3–1 of the Act must designate registration category and proposes to designated as a Chief Compliance a Financial/Operations Principal. It reserve Exchange Rule 1901(b)(4), Officer on Schedule A of Form BD shall specifies that the duties of a Financial/ retaining the caption solely to facilitate be required to register with the Operations Principal shall include comparison with FINRA’s rules. taking appropriate actions to assure that Exchange as a General Securities v. Research Principal (Proposed the Member complies with applicable Principal, provided that such person Exchange Rule 1901(b)(5)) may instead register as a Compliance financial and operational requirements Official if his or her duties do not under the Rules and the Act, including The Exchange does not recognize the include supervision of trading. All but not limited to those requirements Research Principal registration category and proposes to reserve Exchange Rule individuals registering as Compliance relating to the submission of financial reports and the maintenance of books 1901(b)(5), retaining the caption solely Official would be required, prior to or to facilitate comparison with FINRA’s concurrent with such registration, to and records. It requires Financial/ Operations Principal to have rules. pass the Compliance Official successfully completed the Financial qualification examination. However, vi. Securities Trader Principal and Operations Principal Examination (Proposed Exchange Rule 1901(b)(6)) pursuant to Exchange Rule (Series 27 Exam). It further provides that 1901(b)(2)(iii), an individual designated each Financial/Operations Principal Current Exchange Rule 203(c) as a Chief Compliance Officer on designated by a Member shall be provides that Members that are Schedule A of Form BD of a Member registered in that capacity with the individuals and associated persons of that is engaged in limited securities Exchange as prescribed by the Members included within the definition business may be registered in a Exchange, and that a Financial/ of Option Principal in Exchange Rule principal category under proposed Operations Principal of a Member may 100 and who will have supervisory Exchange Rule 1901(b) that corresponds be a full-time employee, a part-time responsibility over the securities trading to the limited scope of the Member’s employee or independent contractor of activities described in Exchange Rule business. the Member. 203(d) shall become qualified and registered as a Securities Trader Additionally, proposed Exchange The Exchange proposes to delete Exchange Rule 203(e) and adopt in its Principal. To qualify for registration as Rule 1901(b)(2)(iv) would provide that place Exchange Rule 1901(b)(3). Under a Securities Trader Principal, such an individual designated as a Chief the new rule, every Member of the person shall become qualified and Compliance Officer on Schedule A of Exchange that is operating pursuant to registered as a Securities Trader under Form BD may register and qualify as a the provisions of Rules 15c3–1(a)(1)(ii), Rule 1302(e) and pass the SIE and Securities Trader Compliance Officer if, (a)(2)(i) or (a)(8) of the Commission, General Securities Principal with respect to transactions in equity, shall designate at least one Financial qualification examination (Series 24). A preferred or convertible debt securities, and Operations Principal who shall be person who is qualified and registered or options such person is engaged in responsible for performing the duties as a Securities Trader Principal under proprietary trading, the execution of described in paragraph (a) of proposed this provision may only have transactions on an agency basis, or the Exchange Rule 1901. In addition, each supervisory responsibility over the direct supervision of such activities person associated with a Member who Securities Trader activities specified in other than a person associated with a performs such duties shall be required Exchange Rule 203(d), unless such Member whose trading activities are to register as a Financial and Operations person is separately qualified and conducted principally on behalf of an Principal with the Exchange. registered in another appropriate principal registration category, such as investment company that is registered Proposed Exchange Rule 1901(b)(3)(ii) the General Securities Principal with the SEC pursuant to the Investment would require all individuals registering registration category. Current Exchange Company Act and that controls, is as a Financial and Operations Principal to pass the Financial and Operations Rule 203(c)(2) provides that a person controlled by, or is under common who is registered as a General Securities control with a Member. All individuals Principal qualification examination before such registration may become Principal shall not be qualified to registering as Securities Trader supervise the trading activities Compliance Officers would be required effective. Finally, proposed Exchange Rule 1901(b)(3)(iii) would prohibit a described in Exchange Rule 203(d), to first become registered pursuant to unless such person has also become paragraph (c)(3) as a Securities Trader, person registered solely as a Financial and Operations Principal from qualified and registered as a Securities and to pass the Compliance Official Trader under Exchange Rule 1302(e) functioning in a principal capacity with qualification exam.60 and become registered as a Securities responsibility over any area of business Trader Principal. activity not described in paragraph (a) of 60 The Exchange proposes to delete Proposed Exchange Rule 1901(b)(2) differs from the rule for a Financial and Operations FINRA Rule 1220(a)(3), Compliance Officer, as the 61 Exchange Rule 203(c) and adopt in its Exchange does not recognize the Compliance Principal. place Exchange Rule 1901(b)(6), Officer registration category. Similarly, FINRA does Securities Trader Principal. Proposed not recognize the Compliance Official or the 61 FINRA Rule 1220(a)(4) differs from proposed Securities Trader Compliance Officer registration Exchange Rule 1901(b)(3) in that it includes an Exchange Rule 1901(b)(6) would require categories which the Exchange proposes to Introducing Broker-Dealer Financial and Operations recognize. However, FINRA Rule 1220(a)(3), like Principal registration requirement. Additionally, Further, as discussed above, the Exchange does not proposed Exchange Rule 1901(b)(2), offers an proposed Exchange Rule 1901(b)(3) contains a propose to adopt a Principal Financial Officer or exception pursuant to which a Chief Compliance requirement, which the FINRA rule does not, that Principal Operations Officer requirement similar to Officer designated on Schedule A of Form BD may each person associated with a Member who FINRA Rule 1220(a)(4)(B), as it believes the register in a principal category that corresponds to performs the duties of a Financial and Operations Financial and Operations Principal requirement is the limited scope of the Member’s business. Principal must register as such with the Exchange. sufficient.

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that a principal responsible for Pursuant to proposed Exchange Rule viii. Government Securities Principal supervising the securities trading 1901(b)(7)(ii), subject to the lapse of (Proposed Exchange Rule 1901(b)(8)) activities specified in proposed registration provisions in proposed Exchange Rule 1901(c)(3) 62 register as a Exchange Rule 1900, Interpretation and The Exchange does not recognize the Securities Trader Principal. The Policy .08, each person registered with Government Securities Principal proposed rule requires individuals the Exchange as a Registered Options registration category and proposes to registering as Securities Trader Principal on October 1, 2018 and each reserve Exchange Rule 1901(b)(8), Principals to be registered as Securities person who was registered as a retaining the caption solely to facilitate Traders and to pass the General Registered Options Principal within two comparison with FINRA’s rules. Securities Principal qualification years prior to October 1, 2018 would be ix. General Securities Sales Supervisor examination. qualified to register as a Registered (Proposed Exchange Rules 1901(b)(9) Options Principal without passing any vii. Registered Options Principal and Interpretation and Policy .04) additional qualification examinations. (Proposed Exchange Rule 1901(b)(7)) All other individuals registering as The Exchange proposes to adopt The Exchange proposes to adopt Registered Options Principals after Exchange Rule 1901(b)(9), General Exchange Rule 1901(b)(7), Registered October 1, 2018 would, prior to or Securities Sales Supervisor, as well as Options Principal, which would require concurrent with such registration, be Interpretation and Policy .04 to that each Member that is engaged in required to become registered pursuant Exchange Rule 1901, which explains the transactions in options with the public to proposed Exchange Rule 1901(c)(1) as purpose of the General Securities Sales have at least one Registered Options a General Securities Representative and Supervisor registration category.66 63 Principal. Currently, Exchange Rule pass the Registered Options Principal Proposed Exchange Rule 1901(b)(9) 100, Definitions, provides a definition qualification examination.65 provides that each principal, as defined for an ‘‘Options Principal.’’ In in proposed paragraph (a) of this Rule, accordance with the proposal to adopt communications, shall be designated as Options may register with the Exchange as a Exchange Rule 1901(b)(7), Registered Principals and are required to qualify as an Options General Securities Sales Supervisor if Options Principal, the Exchange Principal by passing the SIE, the General Securities Representative qualification examination (Series 7) his or her supervisory responsibilities in proposes to delete the definition for and the Registered Options Principal Qualification the securities business of a Member are ‘‘Options Principal’’ in Exchange Rule Examination (Series 4). The foregoing provisions of limited to the securities sales activities 100. As discussed below, the Exchange Exchange Rule 1301 are specific to conducting an options business with the public and are not of the Member, including the approval proposes to adopt a corresponding of customer accounts, training of sales definition for a ‘‘Registered Options proposed to be amended in this proposed rule change, other than conforming all references to and sales supervisory personnel and the Principal’’ in Exchange Rule 100, which ‘‘Options Principal’’ with ‘‘Registered Options maintenance of records of original entry would refer to proposed Exchange Rule Principal,’’ as more fully discussed herein. or ledger accounts of the Member 1901(b)(7). In addition, each principal However, Exchange Rules 1301(b) and (c) contain provisions regarding submission of Forms U4 and required to be maintained in branch as defined in proposed Exchange Rule U5 to WebCRD that are duplicative of the proposed offices by Exchange Act record-keeping 1901(a) who is responsible for 1900 Series of rules, in particular proposed rules. Further, a person registered solely supervising a Member’s options sales Exchange Rule 1900, Interpretation and Policy .12, as a General Securities Sales Supervisor practices with the public would be Application for Registration and Jurisdiction, and proposed Exchange Rule 1904, Electronic Filing would not be qualified to perform any required to register with the Exchange Requirements for Electronic Forms, and are of the following activities: (i) as a Registered Options Principal, with therefore proposed to be deleted. Current Exchange Supervision of market making one exception, as follows. If a Rule 1301(d) provides that individuals engaged in commitments; (ii) supervision of the principal’s options activities are limited the supervision of options sales practices and designated as Options Principals are required to custody of broker-dealer or customer solely to those activities that may be qualify as an Options Principal by passing the funds or securities for purposes of supervised by a General Securities Sales Registered Options Principals Qualification Exchange Act Rule 15c3–3; or (iii) Supervisor, then such person may Examination (Series 4) or the Sales Supervisor supervision of overall compliance with register as a General Securities Sales Qualification Examination (Series 9/10), and is proposed to be deleted in view of proposed financial responsibility rules for broker- Supervisor pursuant to paragraph (b)(9) Exchange Rule 1901(b)(7). Exchange Rule 203(g), dealers promulgated pursuant to the of this Rule in lieu of registering as a which merely serves as a cross-reference to provisions of the Exchange Act.67 Registered Options Principal.64 Exchange Rules 1301 and 1302, is unnecessary and is therefore proposed to be deleted with the rest of Each person seeking to register as a Exchange Rule 203. 62 Proposed Exchange Rule 1901(c)(3), discussed 65 Although the Exchange does not currently list General Securities Sales Supervisor below, provides for representative-level registration security futures products, it also proposes to adopt would be required, prior to or in the ‘‘Securities Trader’’ category. Exchange Rule 1901, Interpretation and Policy .02, concurrent with such registration, to 63 Proposed Exchange Rule 1901(b)(7) differs from which provides that each person who is registered become registered pursuant to proposed FINRA Rule 1220(a)(8) in that it omits certain with the Exchange as a General Securities references to other specific FINRA rules. Representative, Registered Options Principal, or Exchange Rule 1901(c)(1) of the rule as 64 Current Exchange Rule 1301(a) provides that General Securities Sales Supervisor shall be eligible a General Securities Representative and no Member shall be approved to transact options to engage in security futures activities as a principal pass the General Securities Sales business with the public until those associated provided that such individual completes a Firm persons who are designated as Options Principals Element program as set forth in proposed Exchange otherwise unable to perform the duties of a have been approved by and registered with the Rule 1903 that addresses security futures products Registered Options Principal, and imposes certain Exchange. Persons engaged in the supervision of before such person engages in security futures restrictions on the Member’s options business in options sales practices or a person to whom the activities. Unlike FINRA Rule 1220.02, proposed that event. designated general partner or executive officer Exchange Rule 1901, Interpretation and Policy .02, 66 Proposed Exchange Rule 1901(b)(9) has no (pursuant to Rule 1308) or another Registered omits references to United Kingdom Securities counterpart in the Exchange’s current rules. Options Principal delegates the authority to Representatives and Canada Securities 67 Proposed Exchange Rule 1901(b)(9), however, supervise options sales practices shall be Representatives, which are registration categories designated as Options Principals. Exchange Rule the Exchange does not recognize. In addition, the omits the FINRA Rule 1220(a)(10) prohibition 1301(e) provides that individuals who are delegated Exchange also proposes to adopt Exchange Rule against supervision of the origination and responsibility pursuant to Rule 1308 for the 1901, Interpretation and Policy .03, which requires structuring of underwritings as unnecessary, as this acceptance of discretionary accounts, for approving notification to the Exchange in the event a kind activity does not fall within the scope of exceptions to a Member’s criteria or standards for Member’s sole Registered Options Principal is ‘‘securities trading’’ covered by the Exchange’s new uncovered options accounts, and for approval of terminated, resigns, becomes incapacitated or is 1900 Series of rules.

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Supervisor qualification Further, consistent with the proposed individuals and associated persons of examinations.68 restructuring of the representative-level Members must register with the examinations, proposed Exchange Rule Exchange as a Securities Trader if, with x. Investment Company and Variable 1901(c)(1)(ii) would require that respect to transactions in equity, Contracts Products Principal (Proposed individuals registering as General preferred or convertible debt securities, Exchange Rule 1901(b)(10)) Securities Representatives pass the SIE or foreign currency options on the The Exchange does not recognize the and the General Securities Exchange, such person is engaged in Investment Company and Variable Representative examination except that proprietary trading, the execution of Contracts Products Principal category individuals registered as a General transactions on an agency basis, or the and is reserving proposed Exchange Securities Representatives within two direct supervision of such activities, Rule 1901(b)(10), retaining the caption years prior to October 1, 2018 would be other than any person associated with a solely to facilitate comparison with qualified to register as General Member whose trading activities are FINRA’s rules. Securities Representatives without conducted principally on behalf of an passing any additional qualification investment company that is registered xi. Direct Participation Programs examinations.69 with the Commission pursuant to the Principal (Proposed Exchange Rule In addition, the Exchange proposes to Investment Company Act of 1940 and 1901(b)(11)) adopt Exchange Rule 1901, that controls, is controlled by or is The Exchange does not recognize the Interpretation and Policy .01, to provide under common control, with the Direct Participation Programs Principal certain individuals who are associated Member. In addition, an applicant must registration category and is reserving persons of firms and who hold specific become qualified as a Securities Trader proposed Exchange Rule 1901(b)(11), foreign registrations an alternative, more by passing the Securities Trader retaining the caption solely to facilitate flexible, process to obtain an Exchange Qualification examination (Series 57) as comparison with FINRA’s rules. representative-level registration. The stated in current Exchange Rule 1302(e). Exchange believes that there is The Exchange proposes to delete xii. Private Securities Offerings sufficient overlap between the SIE and Exchange Rule 203(d), and replace it Principal (Proposed Exchange Rule these foreign qualification requirements with proposed Exchange Rule 1901(b)(12)) to permit them to act as exemptions to 1901(c)(3).70 Proposed Exchange Rule The Exchange does not recognize the the SIE. In particular, pursuant to 1901(c)(3) would require each Private Securities Offerings Principal proposed Exchange Rule 1901, representative as defined in paragraph registration category and is reserving Interpretation and Policy .01, (a) of this Rule to register with the proposed Exchange Rule 1901(b)(12), individuals who are in good standing as Exchange as a Securities Trader if, with retaining the caption solely to facilitate representatives with the Financial respect to transactions in equity, comparison with FINRA’s rules. Conduct Authority in the United preferred or convertible debt securities, Kingdom or with a Canadian stock or options such person is engaged in xiii. Supervisory Analyst (Proposed exchange or securities regulator would proprietary trading, the execution of Exchange Rule 1901(b)(13)) be exempt from the requirement to pass transactions on an agency basis, or the The Exchange does not recognize the the SIE, and thus would be required direct supervision of such activities Supervisory Analyst registration only to pass a specialized knowledge other than a person associated with a category and is reserving proposed examination to register with the Member whose trading activities are Exchange Rule 1901(b)(13), retaining the Exchange as a representative. This conducted principally on behalf of an caption solely to facilitate comparison proposed rule would provide investment company that is registered with FINRA’s rules. individuals with a United Kingdom or with the Commission pursuant to the Canadian qualification more flexibility Investment Company Act of 1940 and 3. Representative Registration Categories to obtain an Exchange representative- that controls, is controlled by, or is (Proposed Exchange Rule 1901(c)) level registration. under common control with a Member. i. General Securities Representative ii. Operations Professional (Proposed Additionally, proposed Exchange (Proposed Exchange Rule 1901(c)(1)) Exchange Rule 1901(c)(2)) Rule 1901(c)(3)(i) would require each person associated with a Member who The Exchange proposes to adopt The Exchange does not recognize the is: (i) Primarily responsible for the Exchange Rule 1901(c)(1), General Operations Professional registration design, development or significant Securities Representative. Proposed category for its associated persons. The modification of an algorithmic trading Exchange Rule 1901(c)(1)(i) would state Exchange therefore proposes to reserve strategy relating to equity, preferred or that each representative as defined in Exchange Rule 1901(c)(2), Operations convertible debt securities or options; or proposed Exchange Rule 1901(a) is Professional, and related Interpretation (ii) responsible for the day-to-day required to register with the Exchange and Policy .05 to proposed Exchange supervision or direction of such as a General Securities Representative, Rule 1901, Scope of Operations activities to register with the Exchange subject to the exception that if a Professional Requirement, retaining the as a Securities Trader.71 representative’s activities include the caption solely to facilitate comparison functions of a Securities Trader, as with FINRA’s rules. 70 Proposed Exchange Rule 1901(c)(3)(i) differs specified in this Rule, then such person from FINRA Rule 1220(b)(4)(A) in that it applies to iii. Securities Trader (Proposed trading on the Exchange while the FINRA rule is shall appropriately register as a Exchange Rule 1901(c)(3)) Securities Trader. limited to the specified trading which is ‘‘effected Pursuant to current Exchange Rule otherwise than on a securities exchange.’’ Additionally, the FINRA rule does not specifically 68 Unlike FINRA Rule 1220.04, proposed 203(d)(1) and (2), Members that are extend to options trading. Exchange Rule 1901, Interpretation and Policy .04, 71 As noted above, this new registration refers to ‘‘multiple exchanges’’ rather than listing 69 Proposed Exchange Rule 1901(c)(1)(i) differs requirement was added to the FINRA rulebook. The the various exchanges where a sales principal might from FINRA Rule 1220(b)(2)(A) in that it omits Exchange has determined to add a parallel be required to qualify in the absence of the General references to various registration categories which requirement to its own rules, but also to add Securities Sales Supervisor registration category. It FINRA recognizes but which the Exchange does not options to the scope of products within the also omits FINRA internal cross-references. propose to recognize. Continued

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For purposes of this proposed new developer who liaises with a head trader Securities Trader qualification registration requirement an ‘‘algorithmic regarding the head trader’s desired examination. trading strategy’’ would be an algorithmic trading strategy and is Further, the Exchange proposes to automated system that generates or primarily responsible for the delete Exchange Rule 1302(e) in supervision of the development of the routes orders (or order-related messages) connection with its proposal to adopt but does not include an automated algorithm to meet such objectives must Exchange Rule 1901(c)(3), which system that solely routes orders received be registered under the proposal as the defines the requirements and in their entirety to a market center. The associated person primarily responsible proposed registration requirement for the development of the algorithmic qualifications for a Securities Trader, as applies to orders and order related trading strategy and supervising or well as its proposal to amend Exchange messages whether ultimately routed or directing the team of developers. Rule 100 to insert definitions for sent to be routed to an exchange or over Individuals under the lead developer’s ‘‘proprietary trading’’ and ‘‘proprietary the counter. An order router alone supervision would not be required to trading firm,’’ as described below. would not constitute an algorithmic register under the proposal if they are Accordingly, Exchange Rule 1302(e) is trading strategy. However, an order not primarily responsible for the repetitive and no longer necessary in router that performs any additional development of the algorithmic trading light of the Exchange’s other proposed functions would be considered an strategy or are not responsible for the changes. algorithmic trading strategy. An day-to-day supervision or direction of iv. Investment Banking Representative algorithm that solely generates trading others on the team. Under this scenario, (Proposed Exchange Rule 1901(c)(4)) ideas or investment allocations— the person on the business side that is including an automated investment primarily responsible for the design of The Exchange does not recognize the the algorithmic trading strategy, as service that constructs portfolio Investment Banking Representative communicated to the lead developer, recommendations—but that is not registration category for its associated also would be required to register. In the equipped to automatically generate persons. The Exchange therefore orders and order-related messages to event of a significant modification to the algorithm, Members, likewise, would be proposes to reserve Exchange Rule effectuate such trading ideas into the 1901(c)(4), Investment Banking market—whether independently or via a required to ensure that the associated person primarily responsible for the Representative, retaining the caption linked router—would not constitute an solely to facilitate comparison with algorithmic trading strategy.72 significant modification (or the The FINRA’s rules. associated persons covered by the associated person supervising or expanded registration requirement directing such activity), is registered as v. Research Analyst (Proposed Exchange would be required to pass the requisite a Securities Trader. Rule 1901(c)(5)) qualification examination and be subject A Member employing an algorithm is to the same continuing education responsible for the algorithm’s activities The Exchange does not recognize the requirements that are applicable to whether the algorithm is designed or Research Analyst registration category individual Securities Traders. The developed in house or by a third-party. for its associated persons. The Exchange Exchange believes that potentially Thus, in all cases, robust supervisory therefore proposes to reserve Exchange problematic conduct stemming from procedures, both before and after Rule 1901(c)(5), Research Analyst, deployment of an algorithmic trading algorithmic trading strategies—such as retaining the caption solely to facilitate strategy, are a key component in failure to check for order accuracy, comparison with FINRA’s rules. protecting against problematic behavior inappropriate levels of messaging traffic, stemming from algorithmic trading. In vi. Investment Company and Variable and inadequate risk management addition, associated persons responsible controls—could be reduced or Products Representative (Proposed for monitoring or reviewing the prevented, in part, through improved Exchange Rule 1901(c)(6)) performance of an algorithmic trading education regarding securities strategy must be registered, and a The Exchange does not recognize the regulations for the specified individuals Member’s trading activity must always Investment Company and Variable involved in the algorithm design and be supervised by an appropriately Products Representative registration development process. registered person. Therefore, even category for its associated persons. The The proposal is intended to ensure where a firm purchases an algorithm off- Exchange therefore proposes to reserve the registration of one or more the-shelf and does not significantly Exchange Rule 1901(c)(6), Investment associated persons that possesses modify the algorithm, the associated Company and Variable Products knowledge of, and responsibility for, person responsible for monitoring or Representative, retaining the caption both the design of the intended trading reviewing the performance of the strategy and the technological solely to facilitate comparison with algorithm would be required to be FINRA’s rules. implementation of the strategy, registered. sufficient to evaluate whether the Pursuant to proposed Exchange Rule vii. Direct Participation Programs resulting product is designed to achieve 1901(c)(3)(ii), each person registered as Representative (Proposed Exchange regulatory compliance in addition to a Securities Trader on October 1, 2018 Rule 1901(c)(7)) business objectives. For example, a lead and each person who was registered as a Securities Trader within two years The Exchange does not recognize the proposed rule’s coverage. See Securities Exchange prior to October 1, 2018 would be Direct Participation Programs Act Release No. 77551 (April 7, 2016), 81 FR 21914 Representative registration category for (April 13, 2016) (SR–FINRA–2016–007) (Order qualified to register as a Securities Approving a Proposed Rule Change to Require Trader without passing any additional its associated persons. The Exchange Registration as Securities Traders of Associated qualification examinations. All other therefore proposes to reserve Exchange Persons Primarily Responsible for the Design, individuals registering as Securities Rule 1901(c)(7), Direct Participation Development, Significant Modification of Algorithmic Trading Strategies or Responsible for Traders after October 1, 2018 would be Programs Representative, retaining the the Day-to-Day Supervision of Such Activities). required, prior to or concurrent with caption solely to facilitate comparison 72 See supra note 12. such registration, to pass the SIE and the with FINRA’s rules.

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viii. Private Securities Offerings date of the proposed rule change would securities business, associated persons Representative (Proposed Exchange be qualified to register in the proposed whose functions are related only to a Rule 1901(c)(8)) corresponding registration categories Member’s need for nominal corporate The Exchange does not recognize the without having to take any additional officers or associated persons whose Private Securities Offerings examinations. functions are related only to a Member’s need for capital participation is Representative registration category for N. Associated Persons Exempt From consistent with this analytical its associated persons. The Exchange Registration (Proposed Exchange Rules framework.74 The Exchange therefore therefore proposes to reserve Exchange 1902 and 1902, Interpretation and proposes to delete these exemptions. Rule 1901(c)(8), Private Securities Policy .01) Exchange Rule 203(b)(4)(iii) further Offerings Representative, retaining the Current Exchange Rule 203(b) exempts from registration associated caption solely to facilitate comparison currently provides that the following persons whose functions are related with FINRA’s rules. individual Members and individual solely and exclusively to effecting 4. Eliminated Registration Categories associated persons of Members are not transactions on the floor of another (Proposed Exchange Rule 1901, required to register: national securities exchange as long as Interpretation and Policy .06) (1) Individual associated persons they are registered as floor members whose functions are solely and with such exchange. Because exchanges Proposed Exchange Rule 1901, exclusively clerical or ministerial; have registration categories other than Interpretation and Policy .06, has no (2) individual Members and the floor member category, proposed practical relevance to the Exchange, but individual associated persons who are Exchange Rule 1902 clarifies that the is included because the Exchange not actively engaged in the securities exemption applies to associated persons proposes to adopt rules similar to business; solely and exclusively effecting FINRA’s 1200 Series, on a near uniform (3) individual associated persons transactions on the floor of another basis. Accordingly, proposed Exchange whose functions are related solely and national securities exchange, provided Rule 1901, Interpretation and Policy .06, exclusively to the Member’s need for they are appropriately registered with provides that, subject to the lapse of nominal corporate officers or for capital such exchange.75 Additionally, the registration provisions in proposed participation; Exchange proposes to adopt paragraph Exchange Rule 1900, Interpretation and (4) individual associated persons (c) of proposed Exchange Rule 1902, Policy .08, individuals who are whose functions are related solely and pursuant to which persons associated registered with the Exchange in any exclusively to: with a Member that are not citizens, capacity recognized by the Exchange (i) Transactions in commodities; nationals, or residents of the United immediately prior to October 1, 2018, (ii) transactions in security futures; States or any of its territories or and each person who was registered and/or possessions, that will conduct all of with the Exchange in such categories (iii) effecting transactions on the floor their securities activities in areas within two years prior to October 1, of another securities exchange and who outside the jurisdiction of the United 2018, shall be eligible to maintain such are registered floor members with such States, and that will not engage in any registrations with the Exchange. exchange. securities activities with or for any The Exchange proposes to delete However, if individuals registered in citizen, national or resident of the Exchange Rule 203(b) and adopt such categories terminate their United States need not register with the provisions of Exchange Rule 203(b) in registration with the Exchange and the Exchange.76 registration remains terminated for two the newly proposed Exchange Rule The Exchange proposes to adopt or more years, they would not be able 1902, subject to certain changes. Current Exchange Rule 1902, Interpretation and to re-register in that category. Exchange Rule 203(b)(2) exempts from Policy .01, to clarify that the function of registration those individual Members 5. Grandfathering Provisions accepting customer orders is not and individual associated persons of considered a clerical or ministerial In addition to the grandfathering Members who are not actively engaged function and that associated persons provisions in proposed Exchange Rule in the securities business. Exchange who accept customer orders under any 1901(b)(1)(ii) (relating to General Rule 203(b)(3) also exempts from circumstances are required to be Securities Principals) and proposed registration those associated persons Exchange Rule 1901, Interpretation and whose functions are related solely and 74 The Exchange also proposes to delete Exchange Policy .06 (relating to the eliminated exclusively to a Member’s need for Rule 203, Interpretation and Policy .06, which registration categories), the Exchange nominal corporate officers or for capital specifies circumstances in which the Exchange proposes to include grandfathering participation.73 The Exchange believes considers an individual Member or an individual associated person to be engaged in the securities provisions in proposed Exchange Rule that the determination of whether an business of a Member or Member organization. The 1901(b)(7) (Registered Options associated person is required to register Exchange believes these determinations may be Principal), Exchange Rule 1901(c)(1) must be based on an analysis of the made on case by case basis, depending upon facts (General Securities Representative), and person’s activities and functions in the and circumstances. Exchange Rule 1901(c)(3) (Securities context of the various registration 75 Proposed Exchange Rule 1902 differs from FINRA Rule 1230 in that it contains a number of Trader). Specifically, the proposed categories. The Exchange does not additional exemptions, based upon current Nasdaq grandfathering provisions provide that, believe that categorical exemptions for Stock Market Rule 1.1230, which are not included subject to the lapse of registration individual Members and individual in FINRA Rule 1230. See Nasdaq Stock Market, provisions in proposed Exchange Rule associated persons who are not General 4, Regulations, Section 1, Registration, Qualification and Continuing Education, Rule 1900, Interpretation and Policy .08, ‘‘actively engaged’’ in a Member’s 1.1230. individuals who are registered in 76 Individuals described by paragraph (c) of specified registration categories on the 73 These exemptions generally apply to associated proposed Exchange Rule 1902 who are associated operative date of the proposed rule persons who are corporate officers of a Member in with FINRA members may be registered with name only to meet specific corporate legal FINRA as Foreign Associates pursuant to FINRA change and individuals who had been obligations or who only provide capital for a Rule 1220.06. FINRA eliminated this registration registered in such categories within the Member, but have no other role in a Member’s category effective October 1, 2018, and the past two years prior to the operative business. Exchange never recognized it.

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appropriately registered. However, the Rule 1900, Interpretation and Policy .09. to options principals and proposed rule provides that an In addition, consistent with proposed representatives, as well a Form U5 associated person is not accepting a Exchange Rule 1900, Interpretation and requirement applicable to Members customer order where occasionally, Policy .09, proposed Exchange Rule upon termination of employment of any when an appropriately registered person 1903(a)(1) provides that an FSA-eligible of their registered persons, are found in is unavailable, the associated person person would be subject to a Regulatory Exchange Rules 1301, 1302, and 1303. transcribes the order details and the Element program that correlates to his The Exchange proposes to delete registered person contacts the customer or her most recent registration category, current Exchange Rule 203, to confirm the order details before and CE would be based on the same Interpretations and Policies .01–.03, and entering the order. cycle had the individual remained the electronic filing requirements of registered. The proposed rule also Exchange Rules 1301, 1302 and 1303, O. Changes to Continuing Education provides that if an FSA-eligible person and to replace them with proposed Requirements (Proposed Exchange Rule fails to complete the Regulatory Element Exchange Rule 1904, Electronic Filing 1903) during the prescribed time frames, he or Requirements for Uniform Forms, which As described above, current Exchange she would lose FSA eligibility. will consolidate Form U4 and Form U5 Rule 1304, Continuing Education for Further, the Exchange proposes to add electronic filing requirements into a Registered Persons, includes a a rule to address the impact of failing to single rule. The proposed rule provides Regulatory Element and a Firm Element. complete the Regulatory Element on a that all forms required to be filed under The Regulatory Element applies to registered person’s activities and the Exchange’s registration rules registered persons and consists of compensation. Specifically, proposed including the Exchange Rule 1900 periodic computer-based training on Exchange Rule 1903(a)(2) provides that Series shall be filed through an regulatory, compliance, ethical, any person whose registration has been electronic process or such other process supervisory subjects and sales practice deemed inactive under the rule may not as the Exchange may prescribe to the standards. The Firm Element consists of accept or solicit business or receive any Central Registration Depository. It also at least annual, member-developed and compensation for the purchase or sale of would impose certain new administered training programs securities. However, like the FINRA requirements. designed to keep covered registered rule, the proposed rule provides that Under proposed Exchange Rule persons current regarding securities such person may receive trail or 1904(b), each Member would be products, services and strategies offered residual commissions resulting from required to designate registered by the Member. The CE requirements set transactions completed before the principal(s) or corporate officer(s) who forth in Exchange Rule 1304 have been inactive status, unless the Member with are responsible for supervising a firm’s reorganized and renumbered, and are which the person is associated has a electronic filings. The registered now proposed to be adopted with policy prohibiting such trail or residual principal(s) or corporate officer(s) who amendments as proposed Exchange commissions. has or have the responsibility to review Rule 1903.77 and approve the forms filed pursuant to 2. Firm Element the rule would be required to 1. Regulatory Element The Exchange believes that training in acknowledge, electronically, that he or The Exchange proposes to replace the ethics and professional responsibility she is filing this information on behalf term ‘‘registered person’’ in current should apply to all covered registered of the Member and the Member’s Exchange Rule 1304(a) with the term persons. Therefore, proposed Exchange associated persons. Under proposed ‘‘covered person’’ and make conforming Rule 1903(b)(2)(ii), which provides that Exchange Rule 1904, Interpretation and changes to proposed Exchange Rule the Firm Element training programs Policy .01, the registered principal(s) or 1903(a). For purposes of the Regulatory must cover applicable regulatory corporate officer(s) could delegate filing Element, the Exchange proposes to requirements, would also require that a responsibilities to an associated person define the term ‘‘covered person’’ in firm’s training program cover training in (who need not be registered) but could proposed Exchange Rule 1903(a)(5), as ethics and professional responsibility. not delegate any of the supervision, any person registered pursuant to review, and approval responsibilities P. Electronic Filing Requirements for proposed Exchange Rule 1900, mandated in proposed Exchange Rule Uniform Rules (Proposed Exchange Rule including any person who is 1904(b). The registered principal(s) or 1904) permissively registered pursuant to corporate officer(s) would be required to proposed Exchange Rule 1900, Current Exchange Rule 203, take reasonable and appropriate action Interpretation and Policy .02, and any Interpretations and Policies .01–.03, to ensure that all delegated electronic person who is designated as eligible for state that each individual required to filing functions were properly executed an FSA waiver pursuant to proposed register shall electronically file a and supervised. Exchange Rule 1900, Interpretation and Uniform Application for Securities Pursuant to proposed Exchange Rule Policy .09. The purpose of this change Industry Registration (‘‘Form U4’’) 1904(c)(1), every initial and transfer is to ensure that all registered persons, through the Central Registration electronic Form U4 filing and any including those with permissive Depository system (‘‘Web CRD’’) amendments to the disclosure registrations, keep their knowledge of operated by FINRA and to electronically information on Form U4 must be based the securities industry current. The submit to Web CRD any required on a manually signed Form U4 provided inclusion of persons designated as amendments to Form U4. Further, any to the Member or applicant for eligible for an FSA waiver under the Member or Member organization that membership by the person on whose term ‘‘covered persons’’ corresponds to discharges or terminates the behalf the Form U4 is being filed. As the requirements of proposed Exchange employment or retention of an part of the Member’s recordkeeping individual required to register must requirements, it would be required to 77 Proposed Exchange Rule 1903 also differs comply with certain termination filing retain the person’s manually signed slightly from FINRA Rule 1240 in that it omits references to certain registration categories which requirements, which include the filing Form U4 or amendments to the the Exchange does not recognize as well as an of a Form U5. Form U4 and Form U5 disclosure information on Form U4 in internal cross reference to FINRA Rule 4517. electronic filing requirements applicable accordance with Exchange Act Rule

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17a–4(e)(1) under the Act and make complying with the requirements of the through the Member’s own accounts; them available promptly upon Rule. (iii) the Member does not, and will not, regulatory request. An applicant for have customers; and (iv) all persons Q. Exchange Rule 100, Definitions membership must also retain every registered on behalf of the Member manually signed Form U4 it receives The Exchange proposes to amend acting or to be acting in the capacity of during the application process and Exchange Rule 100, Definitions, to a trader must be owners of, employees make them available promptly upon amend the term ‘‘associated person’’ or of, or contractors to the Member. regulatory request. Proposed Exchange ‘‘person associated with a Member.’’ The Exchange proposes that the term Rule 1904(c)(2) and Interpretations and Currently, the term associated person or ‘‘proprietary trading firm’’ for the Policies .03 and .04 to proposed person associated with a Member means purpose of proposed Exchange Rule Exchange Rule 1904, provide for the any partner, officer, director, or branch 1900, means a Member organization or electronic filing of Form U4 manager of a Member (or any person applicant with the following amendments without the individual’s occupying a similar status or performing characteristics: (i) The applicant is not manual signature, subject to certain similar functions), any person directly required by Section 15(b)(8) of the Act safeguards and procedures. or indirectly controlling, controlled by, to become a FINRA Member but is a Proposed Exchange Rule 1904(d) or under common control with a Member of another registered securities provides that upon filing an electronic Member, or any employee of a Member. exchange not registered solely under Form U4 on behalf of a person applying The Exchange proposes to amend the Section 6(g) of the Act; (ii) all funds for registration, a Member must term associated person or person used or proposed to be used by the promptly submit fingerprint information associated with a Member to insert, at applicant for trading are the applicant’s for that person and that the Exchange the end of the definition, the phrase own capital, traded through the may make a registration effective ‘‘except that any person associated with applicant’s own accounts; (iii) the pending receipt of the fingerprint a Member whose functions are solely applicant does not, and will not have information. It further provides that if a clerical or ministerial shall not be customers; and (iv) all principals and Member fails to submit the fingerprint included in the meaning of such term representatives of the applicant acting information within 30 days after filing for purposes of these Rules.’’ With the or to be acting in the capacity of a trader of an electronic Form U4, the person’s proposed change, the definition for must be owners of, employees of, or registration will be deemed inactive, associated person or person associated contractors to the applicant. As described above, in connection requiring the person to immediately with a Member would be as follows: with the Exchange’s proposal to adopt cease all activities requiring registration The term ‘‘associated person’’ or ‘‘person Exchange Rule 1901(b)(7), Registered or performing any duties and associated with a Member’’ means any Options Principal, the Exchange functioning in any capacity requiring partner, officer, director, or branch manager proposes to delete the definition for registration. Under this proposed rule, of a Member (or any person occupying a ‘‘Options Principal’’ from Exchange the Exchange must administratively similar status or performing similar Rule 100 in order to provide consistency terminate a registration that is inactive functions), any person directly or indirectly controlling, controlled by, or under common and clarity within the rule text. In for a period of two years. A person control with a Member, or any employee of proposed Exchange Rule 1901(b)(7), the whose registration is administratively a Member, except that any person associated Exchange sets forth the requirements terminated could reactivate the with a Member whose functions are solely and qualifications for a ‘‘Registered registration only by reapplying for clerical or ministerial shall not be included Options Principal,’’ which incorporates, registration and meeting the in the meaning of such term for purposes of and adds to, the rule text for the these Rules. qualification requirements of the Exchange’s current definition for applicable provisions of proposed Additionally, the Exchange proposes ‘‘Options Principal.’’ Accordingly, the Exchange Rule 1901. Upon application to amend Exchange Rule 100, Exchange proposes to delete the term and a showing of good cause, the Definitions to adopt definitions for the ‘‘Options Principal’’ and replace all Exchange could extend the 30-day following terms: Person, proprietary references in the rule text to ‘‘Options period. trading, and proprietary trading firm. Principal’’ with the new proposed term Proposed Exchange Rule 1904(e) The Exchange proposes that the term ‘‘Registered Options Principal.’’ The would require initial filings and ‘‘person’’ shall refer to a natural person, proposed changes would be to amendments of Form U5 to be corporation, partnership (general or references to ‘‘Options Principal’’ that submitted electronically. As part of the limited), limited liability company, are currently in Exchange Rules 1301, Member’s recordkeeping requirements, association, joint stock company, trust, 1306, 1307, 1309, 1310 and 1319. The it would be required to retain such trustee of a trust fund, or any organized Exchange also proposes to adopt a records for a period of not less than group of persons whether incorporated definition for a ‘‘Registered Options three years, the first two years in an or not and a government or agency or Principal’’ in Exchange Rule 100, that easily accessible place, in accordance political subdivision thereof. will provide a cross-reference to with Rule 17a–4 under the Act, and to The Exchange proposes that the term Exchange Rule 1901(b)(7). make such records available promptly ‘‘proprietary trading’’ for the purpose of upon regulatory request. proposed Exchange Rule 1900, means R. Exchange Rule 601, Registered Finally, under proposed Exchange trading done by a Member having the Options Traders Rule 1904, Interpretation and Policy .02, following characteristics: (i) The In accordance with the proposed a Member could enter into an agreement Member is not required by Section change to delete Exchange Rule 203 in with a third party pursuant to which the 15(b)(8) of the Act to become a FINRA its entirety, revise and relocate the third party agrees to file the required member but is a Member of another provisions of Exchange Rule 203 to the forms electronically on behalf of the registered securities exchange not newly proposed 1900 Series, the Member and the Member’s associated registered solely under Section 6(g) of Exchange proposes to amend a cross- persons. Notwithstanding the existence the Act; (ii) all funds used or proposed reference in Exchange Rule 601(b)(2). of such an agreement, the Member to be used by the Member are the Currently, Exchange Rule 601(b)(2) has would remain responsible for trading member’s own capital, traded a cross-reference to Exchange Rule

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203(a). The Exchange proposes to the Exchange believes the proposed rule any circumstances, which will enhance amend that cross-reference to proposed change is consistent with the Section investor protection. Exchange Rule 1900. 6(b)(5) 79 requirements that the rules of The Exchange believes that, with the an exchange be designed to prevent introduction of the SIE and expansion of S. Exchange Rule 1000, Disciplinary fraudulent and manipulative acts and the pool of individuals who are eligible Jurisdiction practices, to promote just and equitable to take the SIE, the proposed rule In accordance with the proposed principles of trade, to foster cooperation change has the potential of enhancing change to delete several provisions of and coordination with persons engaged the pool of prospective securities Exchange Rule 1302, revise and relocate in regulating, clearing, settling, industry professionals by introducing those provisions to the newly proposed processing information with respect to, them to securities laws, rules and 1900 Series, the Exchange proposes to and facilitating transactions in regulations and appropriate conduct amend a cross-reference in Exchange securities, to remove impediments to before they join the industry in a Rule 1000(c). Currently, Exchange Rule and perfect the mechanism of a free and registered capacity. 1000(c) has a cross-reference to open market and a national market The extension of the Securities Trader Exchange Rule 1302. The Exchange system, and, in general, to protect registration requirement to developers proposes to amend that cross-reference investors and the public interest. of algorithmic trading strategies requires to proposed Exchange Rule 1900, Additionally, the Exchange believes the associated persons primarily Interpretation and Policy .12. proposed rule change is consistent with responsible for the design, development the Section 6(b)(5) 80 requirement that or significant modification of an T. Exchange Rule 1014, Imposition of algorithmic trading strategy or Fines for Minor Rule Violations the rules of an exchange not be designed to permit unfair discrimination between responsible for the day-to-day The Exchange proposes to amend the customers, issuers, brokers, or dealers. supervision or direction of such cross-references in Exchange Rule activities to register and meet a 1014(d)(14) that are to current The Exchange believes that the minimum standard of knowledge Exchanges Rules 1301, 1302 and 1303. proposed rule changes will streamline, regarding the securities rules and With the proposed changes described and bring consistency and uniformity regulations applicable to the Member above to delete Exchange Rule 1303 and to, the Exchange’s registration rules. The employing the algorithmic trading selection provisions of Exchange Rules Exchange believes that this will, in turn, strategy. This minimum standard of 1301 and 1302, the Exchange proposes assist Members and their associated knowledge is identical to the standard to amend the cross-references in persons in complying with these rules of knowledge currently applicable to Exchange 1014(d)(14) that are to and improve regulatory efficiency. The traditional securities traders. The Exchange Rules 1301, 1302 and 1303 to proposed rule changes will also improve Exchange believes that improved the newly proposed Exchange Rule the efficiency of the examination education of firm personnel may reduce 1904, which incorporates that deleted program, without compromising the the potential for problematic market rule text. Accordingly, the Exchange qualification standards, by eliminating conduct and manipulative trading proposes to amend the cross-reference duplicative testing of general securities activity. in Exchange Rule 1014(d)(14) to now be knowledge on examinations and by The proposed rule changes, including to proposed Exchange Rule 1904. removing examinations that currently additional definitions and changes to have limited utility. In addition, the cross-references, make organizational U. Exchange Rule 1301, Registration of proposed rule changes will expand the changes to the Exchange’s registration Options Principals scope of permissive registrations, and qualification rules, in order to As described above, the Exchange which, among other things, will allow prevent unnecessary regulatory burdens proposes to delete subparagraphs (b), Members to develop a depth of and to promote efficient administration (c), and (d) of Exchange Rule 1301 and associated persons with registrations to of the rules. The change also makes relocate those provisions to the respond to unanticipated personnel minor updates and corrections to the proposed 1900 Series of rules. In changes and will encourage greater Exchange’s rules which improve particular, subparagraphs (b) and (c) are regulatory understanding. Further, the readability. incorporated into proposed Exchange proposed rule changes will provide a more streamlined and effective waiver B. Self-Regulatory Organization’s Rule 1900, Interpretation and Policy .12. Statement on Burden on Competition Subparagraph (d) is incorporated into process for individuals working for a proposed Exchange Rule 1901(b)(7). financial services industry affiliate of a The Exchange does not believe that Accordingly, the Exchange proposes to Member, and it will require such the proposed rule changes will impose renumber Exchange Rule 1301(e) to individuals to maintain specified levels any burden on competition not conform to the hierarchical heading of competence and knowledge while necessary or appropriate in furtherance scheme used throughout the Exchange’s working in areas ancillary to the of the purposes of the Act. The rulebook to provide consistency and securities business. The proposed rule proposed rule changes are designed to clarity. The Exchange proposes to changes will improve the supervisory ensure that all associated persons of renumber Exchange Rule 1301(e) to be structure of firms by imposing an Members engaged in a securities Exchange Rule 1301(b). experience requirement for business are, and will continue to be, representatives that are designated by properly trained and qualified to 2. Statutory Basis firms to function as principals for a 120- perform their functions, will be The Exchange believes the proposed day period before having to pass an supervised, and can be identified by rule change is consistent with the Act appropriate principal qualification regulators. The proposed new 1900 and the rules and regulations examination. The proposed rule change Series of rules, which are similar in thereunder applicable to the Exchange will also prohibit unregistered persons many respects to the registration-related and, in particular, the requirements of from accepting customer orders under requirements adopted by FINRA Section 6(b) of the Act.78 Specifically, effective October 1, 2018, should 79 15 U.S.C. 78f(b)(5). enhance the ability of member firms to 78 15 U.S.C. 78f(b). 80 Id. comply with the Exchange’s rules as

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well as with the Federal securities laws. (i) Significantly affect the protection filing also will be available for Additionally, as described above, the of investors or the public interest; inspection and copying at the principal Exchange intends the amendments (ii) impose any significant burden on offices of the Exchange. All comments described herein to eliminate competition; and received will be posted without change. inconsistent registration-related (iii) become operative for 30 days Persons submitting comments are requirements across the Exchange, from the date on which it was filed, or cautioned that we do not redact or edit thereby promoting uniformity of such shorter time as the Commission personal identifying information from regulation across markets. The proposed may designate, it has become effective comment submissions. You should 1900 Series of rules should in fact pursuant to Section 19(b)(3)(A) of the submit only information that you wish remove administrative burdens that Act and Rule 19b–4(f)(6) thereunder. to make available publicly. All currently exist for Members seeking to At any time within 60 days of the submissions should refer to File register associated persons on the filing of the proposed rule change, the Number SR–MIAX–2019–50, and Exchange featuring varying registration- Commission summarily may should be submitted on or before related requirements. Additionally, all temporarily suspend such rule change if January 21, 2020. similarly-situated associated persons of it appears to the Commission that such action is necessary or appropriate in the For the Commission, by the Division of Members will be treated similarly under Trading and Markets, pursuant to delegated the new 1900 Series of rules in terms of public interest, for the protection of authority.81 investors, or otherwise in furtherance of standards of training, experience and J. Matthew DeLesDernier, the purposes of the Act. competence for persons associated with Assistant Secretary. Exchange Members. IV. Solicitation of Comments [FR Doc. 2019–28089 Filed 12–27–19; 8:45 am] With respect in particular to Interested persons are invited to BILLING CODE 8011–01–P registration of developers of algorithmic submit written data, views, and trading strategies, the Exchange arguments concerning the foregoing, recognizes that the proposal would including whether the proposed rule SECURITIES AND EXCHANGE impose costs on member firms change is consistent with the Act. COMMISSION employing associated persons engaged Comments may be submitted by any of in the activity subject to the registration the following methods: [Release No. 34–87819; File No. SR–ISE– requirement. Specifically, among other 2019–31] things, additional associated persons Electronic Comments would be required to become registered • Use the Commission’s internet Self-Regulatory Organizations; Nasdaq under the proposal, and the firm would comment form (http://www.sec.gov/ ISE, LLC; Notice of Filing and need to establish policies and rules/sro.shtml); or Immediate Effectiveness of Proposed procedures to monitor compliance with • Send an email to rule-comments@ Rule Change To Adopt a New Rule the proposed requirement on an ongoing sec.gov. Please include File Number SR– Titled ‘‘Off-Exchange RWA Transfers’’ basis. However, given the prevalence MIAX–2019–50 on the subject line. at ISE Options 6, Section 6 and importance of algorithmic trading strategies in today’s markets, the Paper Comments December 20, 2019. Exchange believes that associated • Send paper comments in triplicate Pursuant to Section 19(b)(1) of the persons engaged in the activities to Secretary, Securities and Exchange Securities Exchange Act of 1934 covered by this proposal must meet a Commission, 100 F Street NE, (‘‘Act’’),1 and Rule 19b–4 thereunder,2 minimum standard of knowledge Washington, DC 20549–1090. notice is hereby given that on December regarding the applicable securities rules All submissions should refer to File 17, 2019, Nasdaq ISE, LLC (‘‘ISE’’ or and regulations. To mitigate the costs Number SR–MIAX–2019–50. This file ‘‘Exchange’’) filed with the Securities imposed on member firms, the proposed number should be included on the and Exchange Commission (‘‘SEC’’ or rule change limits the scope of subject line if email is used. To help the ‘‘Commission’’) the proposed rule registration requirement by excluding Commission process and review your change as described in Items I, II, and technological or development support comments more efficiently, please use III, below, which Items have been personnel who are not primarily only one method. The Commission will prepared by the Exchange. The responsible for the covered activities. It post all comments on the Commission’s Commission is publishing this notice to also excludes supervisors who are not internet website (http://www.sec.gov/ solicit comments on the proposed rule responsible for the covered activities. It rules/sro.shtml). Copies of the change from interested persons. also excludes supervisors who are not submission, all subsequent I. Self-Regulatory Organization’s responsible for the ‘‘day-to-day’’ amendments, all written statements Statement of the Terms of Substance of supervision or direction of the covered with respect to the proposed rule the Proposed Rule Change activities. change that are filed with the The Exchange proposes to adopt a C. Self-Regulatory Organization’s Commission, and all written new rule titled ‘‘Off-Exchange RWA Statement on Comments on the communications relating to the Transfers’’ at ISE Options 6, Section 6. Proposed Rule Change Received From proposed rule change between the Members, Participants, or Others Commission and any person, other than The text of the proposed rule change those that may be withheld from the is available on the Exchange’s website at No written comments were either public in accordance with the http://ise.cchwallstreet.com/, at the solicited or received. provisions of 5 U.S.C. 552, will be principal office of the Exchange, and at available for website viewing and III. Date of Effectiveness of the the Commission’s Public Reference printing in the Commission’s Public Proposed Rule Change and Timing for Room. Reference Room, 100 F Street NE, Commission Action Washington, DC 20549 on official 81 17 CFR 200.30–3(a)(12). Because the foregoing proposed rule business days between the hours of 1 15 U.S.C. 78s(b)(1). change does not: 10:00 a.m. and 3:00 p.m. Copies of the 2 17 CFR 240.19b–4.

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II. Self-Regulatory Organization’s holding companies, which, due to their mechanism that firms may use to Statement of the Purpose of, and affiliations with their parent U.S.-bank transfer positions between clearing Statutory Basis for, the Proposed Rule holding companies, must comply with accounts without having to effect a Change additional bank regulatory capital transaction with another party and close In its filing with the Commission, the requirements pursuant to rulemaking a position. Exchange included statements required under the Dodd-Frank Wall The proposed rule provides that concerning the purpose of and basis for Street Reform and Consumer Protection existing positions in options listed on 8 the proposed rule change and discussed Act. Pursuant to this mandate, the the Exchange of a Member or non- any comments it received on the Board of Governors of the Federal Member (including an affiliate of a proposed rule change. The text of these Reserve System, the Office of the Member) may be transferred on, from, or statements may be examined at the Comptroller of the Currency, and the to the books of a Clearing Member off places specified in Item IV below. The Federal Deposit Insurance Corporation the Exchange if the transfer establishes Exchange has prepared summaries, set have approved a regulatory capital a net reduction of RWA attributable to forth in sections A, B, and C below, of framework for subsidiaries of U.S. bank those options positions (an ‘‘RWA 9 the most significant aspects of such holding company clearing firms. Transfer’’). Proposed paragraph (a)(1) statements. Generally, these rules, among other adds examples of two transfers that things, impose higher minimum capital would be deemed to establish a net A. Self-Regulatory Organization’s and higher asset risk weights than were reduction of RWA, and thus qualify as Statement of the Purpose of, and previously mandated for Clearing a permissible RWA Transfer: Statutory Basis for, the Proposed Rule Members that are subsidiaries of U.S. • A transfer of options positions from Change bank holding companies under the Net Clearing Corporation11 member A to 1. Purpose Capital Rules. Furthermore, the new Clearing Corporation member B that net rules do not fully permit deductions for The Exchange proposes to adopt a (offset) with positions held at Clearing hedged securities or offsetting options Corporation member B, and thus closes new rule titled, ‘‘Off-Exchange RWA positions.10 Rather, capital charges Transfers’’ at ISE Options 6, Section 6. all or part of those positions (as under these standards are, in large part, 12 This proposal is substantially the same demonstrated in the example below); based on the aggregate notional value of and as Cboe Exchange, Inc. (‘‘Cboe’’) Rule short positions regardless of offsets. As • 6.8.3 A transfer of options positions from a result, in general, Clearing Members a bank-affiliated Clearing Corporation Proposed Options 6, Section 6 is that are subsidiaries of U.S. bank intended to facilitate the reduction of member to a non-bank-affiliated holding companies must hold Clearing Corporation member.13 risk-weighted assets (‘‘RWA’’) substantially more bank regulatory attributable to open options positions. These transfers will not result in a capital than would otherwise be change in ownership, as they must SEC Rule 15c3–1 (Net Capital required under the Net Capital Rules. Requirements for Brokers or Dealers) occur between accounts of the same The Exchange is concerned with the Person. (‘‘Net Capital Rules’’) requires registered ability of Market Makers to provide broker-dealers, unless otherwise ‘‘Person’’ is defined within proposed liquidity in their appointed classes. The Options 6, Section 6(a) as an individual, excepted, to maintain certain specified Exchange believes that permitting minimum levels of capital.4 The Net partnership (general or limited), joint market participants to efficiently stock company, corporation, limited Capital Rules are designed to protect transfer existing options positions liability company, trust or securities customers, counterparties, through an off-exchange transfer process unincorporated organization, or any and creditors by requiring that broker- would likely have a beneficial effect on governmental entity or agency or dealers have sufficient liquid resources continued liquidity in the options political subdivision thereof. on hand, at all times, to meet their market without adversely affecting In other words, RWA transfers may financial obligations. Notably, hedged market quality. Liquidity in the listed only occur between the same individual positions, including offsetting futures options market is critically important. or legal entity. These are merely and options contract positions, result in The Exchange believes that the transfers from one clearing account to certain net capital requirement proposed rule change provides market another, both of which are attributable reductions under the Net Capital Rules.5 participants with an efficient Subject to certain exceptions, Clearing mechanism to transfer their open to the same individual or legal entity. A Members 6 are subject to the Net Capital options positions from one clearing market participant effecting an RWA Rules.7 However, a subset of Clearing account to another clearing account and Transfer is analogous to an individual Members are subsidiaries of U.S. bank thereby increase liquidity in the listed transferring funds from a checking options market. ISE currently has no account to a savings account, or from an 3 See Securities Exchange Act Release No. 87374 account at one bank to an account at (October 21, 2019), 84 FR 57542 (October 25, 2019) 8 H.R. 4173 (amending section 3(a) of the another bank—the money still belongs (SR–Cboe–2019–044). Securities Exchange Act of 1934 (the ‘‘Act’’) (15 to the same person, who is just holding 4 17 CFR 240.15c3–1. U.S.C. 78c(a))). it in a different account for personal 5 In addition, the Net Capital Rules permit various 9 12 CFR 50; 79 FR 61440 (Liquidity Coverage financial reasons. offsets under which a percentage of an option Ratio: Liquidity Risk Measurement Standards). position’s gain at any one valuation point is 10 Many options strategies, including relatively 11 allowed to offset another position’s loss at the same simple strategies often used by retail customers and The term Clearing Corporation is defined valuation point (e.g. vertical spreads). more sophisticated strategies used by broker- within General 1, Section 1(a)(2). 6 The term Clearing Member is defined within dealers, are risk limited strategies or options spread 12 This transfer would establish a net reduction of General 1, Section 1(a)(3). All Clearing Members strategies that employ offsets or hedges to achieve RWA attributable to the transferring Person, must also be clearing members of The Options certain investment outcomes. Such strategies because there would be fewer open positions and Clearing Corporation (‘‘OCC’’). typically involve the purchase and sale of multiple thus fewer assets subject to Net Capital Rules. 7 In the event federal regulators modify bank options (and may be coupled with purchases or 13 This transfer would establish a net reduction of capital requirements in the future, the Exchange sales of the underlying securities), executed RWA attributable to the transferring Person, will reevaluate the proposed rule change at that simultaneously as part of the same strategy. In because the non-bank-affiliated Clearing time to determine whether any corresponding many cases, the potential market exposure of these Corporation member would not be subject to Net changes to the proposed rule are appropriate. strategies is limited and defined. Capital Rules, as described above.

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For example, Market Maker A clears Clearing Member Y rather than Clearing universal account would automatically transactions on the Exchange into an Member X on the transactions that net against each other. account it has with Clearing Member X, resulted in the 1000 long calls in class While RWA Transfers are not which is affiliated with a U.S-bank ABC, or had changed the give-up or occurring because of limitations related holding company. Market Maker A CMTA to Clearing Member Y pursuant to trading on different exchanges, opens a clearing account with Clearing to Options 6, Section 1 the ultimate similar reasoning for the above Member Y, which is not affiliated with result would have been the same. There exception applies to why netting should a U.S.-bank holding company. Clearing are a variety of reasons why firms give be permissible for the limited purpose Member X has informed Market Maker up or CMTA transactions to certain of reducing RWA. Firms may maintain A that its open positions may not clearing firms (and not to non-bank different clearing accounts for a variety exceed a certain amount at the end of affiliate clearing firms) at the time of a of reasons, such as the structure of their a calendar month, or it will be subject transaction, and the proposed rule businesses, the manner in which they to restrictions on new positions it may change provides firms with a trade, their risk management open the following month. On August mechanism to achieve the same result at procedures, and for capital purposes. If 28, Market Maker A reviews the open a later time. a Market Maker clears all transactions positions in its Clearing Member X Proposed paragraph (a)(2) states RWA into a universal account, offsetting clearing account and determines it must Transfers may occur on a routine, positions would automatically net. reduce its open positions to satisfy recurring basis. As noted in the example However, if a Market Maker has Clearing Member X’s requirements by above, clearing firms may impose multiple accounts into which its the end of August. It determines that restrictions on the amount of open transactions cleared, they would not transferring out 1000 short calls in class positions. Permitting transfers on a automatically net. While there are times ABC will sufficiently reduce the RWA routine, recurring basis will provide when a firm may not want to close out capital requirements in the account with market participants with the flexibility open positions to reduce RWA, there are Clearing Member X to avoid additional to comply with these restrictions when other times when a firm may determine position limits in September. Market necessary to avoid position limits on it is appropriate to close out positions Maker A wants to retain the positions in future options activity. Additionally, to accomplish a reduction in RWA. accordance with its risk profile. proposed paragraph (a)(6) provides that In the example above, suppose after Pursuant to the proposed rule change, no prior written notice to the Exchange making the RWA Transfer described on August 31, Market Maker A transfers is required for RWA Transfers. Because above, Market Maker A effects a 1000 short calls in class ABC to its of the potential routine basis on which transaction on September 25 that results clearing account with Clearing Member RWA Transfers may occur, and because in 1000 long calls in class ABC, which Y. As a result, Market Maker A can of the need for flexibility to comply clears into its account with Clearing with the restrictions described above, continue to provide the same level of Member X. If Market Maker A had not the Exchange believes it may interfere liquidity in class ABC during September effected its RWA Transfer in August, the with the ability of investors firms to as it did in previous months. 1000 long calls would have offset A Member must give up a Clearing comply with any Clearing Member against the 1000 short calls, eliminating Member for each transaction it effects restrictions describe above, and may be both positions and thus any RWA on the Exchange, which identifies the burdensome to provide notice for these capital requirements associated with Clearing Member through which the routine transfers. them. At the end of August, Market transaction will clear.14 A Member may Proposed paragraph (a)(3) states RWA Maker A did not want to close out the change the give up for a transaction Transfers may result in the netting of 1000 short calls when it made its RWA within a specified period of time.15 positions. Netting occurs when long Transfer. However, given changed Additionally, a Member may also positions and short positions in the circumstances in September, Market change the Clearing Member 16 for a same series ‘‘offset’’ against each other, Maker A has determined it no longer specific transaction. The transfer of leaving no or a reduced position. For wants to hold those positions. The positions from an account with one example, if there were 100 long calls in proposed rule change would permit clearing firm to the account of another one account, and 100 short calls of the Market Maker A to effect an RWA clearing firm pursuant to the proposed same option series were added to that Transfer of the 1000 short calls from its rule change has a similar result as account, the positions would offset, account with Clearing Member Y to its changing a give up or CMTA, as it leaving no open positions. Currently, account with Clearing Member X (or results in a position that resulted from the Exchange permits off-exchange vice versa), which results in elimination a transaction moving from the account transfers on behalf of a Market Maker of those positions (and a reduction in of one clearing firm to another, just at account for transactions in multiply RWA associated with them). As noted a different time and in a different listed options series on different above, such netting would have manner.17 In the above example, if exchanges, but only if the Market Maker occurred if Market Maker A cleared the Market Maker A had initially given up nominees are trading for the same Member, and the options transactions September transaction directly into its account with Clearing Member Y, or had 14 See Options 6B, Section 2. on the different options exchanges clear 15 See Options 6, Section 1. into separate exchange-specific accounts not effected an RWA Transfer in August. 16 The Clearing Member Trade Assignment because they cannot easily clear into the Netting provides market participants (‘‘CMTA’’) process at The Options Clearing same Market Maker account at OCC. In with appropriate flexibility to conduct Corporation (‘‘OCC’’) facilitates the transfer of such instances, all Market Maker their businesses as they see fit while option trades/positions from one OCC clearing having the ability to reduce RWA member to another in an automated fashion. positions in the exchange-specific Changing a CMTA for a specific transaction would accounts for the multiply listed class capital requirements when necessary. allocate the trade to a different OCC clearing would be automatically transferred on RWA Transfers may not result in member than the one initially identified on the their trade date into one central Market preferential margin or haircut trade. treatment.18 Additionally, RWA 17 The transferred positions will continue to be Maker account (commonly referred to as subject to OCC rules, as they will continue to be a ‘‘universal account’’) at the Clearing held in an account of an OCC member. Corporation. Positions cleared into a 18 See proposed paragraph (a)(4).

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Transfers may only be effected for clearing firms. This will permit market in no change in ownership, and thus options listed on the Exchange and will participants to respond to then-current they do not constitute trades with a be subject to applicable laws, rules, and market conditions, including volatility counterparty (and thus eliminating the regulations, including rules of other and increased volume, by reducing the need for a counterparty guarantee). The self-regulatory organizations (including RWA capital requirements associated transactions that resulted in the open OCC).19 with any new positions they may open positions to be transferred as an RWA Finally, the Exchange notes it is while those conditions exist. Given the Transfer were already guaranteed by an reserving Sections 5 and 7 of Options 6 additional capital that may become OCC clearing member, and the positions for consistency in rule numbering with available to market participants as a will continue to be subject to OCC rules, Nasdaq affiliated markets. result of the RWA Transfers, market as they will continue to be held in an 2. Statutory Basis participants will be able to continue to account with an OCC clearing member. provide liquidity to the market, even The narrow scope of the proposed rule The Exchange believes that its during periods of increased volume and change and the limited, beneficial proposal is consistent with Section 6(b) volatility, which liquidity ultimately purpose of RWA Transfers make 20 of the Act, in general, and furthers the benefits investors. It is not possible for allowing RWA Transfers to occur off the 21 objectives of Section 6(b)(5) of the Act, market participants to predict what floor appropriate and important to in particular, in that it is designed to market conditions will exist at a specific support the provision of liquidity in the promote just and equitable principles of time, and when volatility will occur. listed options market. trade, to remove impediments to and The proposed rule change to permit The proposed rule change does not perfect the mechanism of a free and routine, recurring RWA Transfers (and unfairly discriminate against market open market and a national market to not provide prior written notice) will participants, as all Members and non- system, and, in general to protect provide market participants with the Members with open positions in options investors and the public interest. ability to respond to these conditions Additionally, the Exchange believes the listed on the Exchange may use the whenever they occur. Permitting proposed rule change is consistent with proposed off-exchange transfer process transfers on a routine, recurring basis the Section 6(b)(5) 22 requirement that to reduce the RWA capital requirements will provide market participants with the rules of an exchange not be designed of Clearing Members. the flexibility to comply with these to permit unfair discrimination between restrictions when necessary to avoid B. Self-Regulatory Organization’s customers, issuers, brokers, or dealers. position limits on future options Statement on Burden on Competition The Exchange’s proposal is substantially activity. In addition, with respect to the same as Cboe Rule 6.8 [sic] The Exchange does not believe that In particular, the Exchange believes netting, as discussed above, firms may the proposed rule change will impose the proposed rule change to permit maintain different clearing accounts for any burden on competition that is not RWA Transfers will remove a variety of reasons, such as the necessary or appropriate in furtherance impediments to and perfect the structure of their businesses, the manner of the purposes of the Act. mechanism of a free and open market in which they trade, their risk The Exchange does not believe that and a national market system by management procedures, and for capital the proposed rule change will impose providing liquidity in the listed options purposes. Netting may otherwise occur any burden on competition that is not market. The Exchange believes with respect to a firm’s positions if it necessary or appropriate in furtherance providing market participants with an structured its clearing accounts of the purposes of the Act. This process efficient process to reduce RWA capital differently, such as by using a universal is not intended to be a competitive requirements attributable to open account. Therefore, the proposed rule trading tool. The Exchange does not positions in clearing accounts with U.S. change will permit netting while believe that the proposed rule change bank-affiliated clearing firms may allowing firms to continue to maintain will impose any burden on intra-market contribute to additional liquidity in the different clearing accounts in a manner competition that is not necessary or listed options market, which, in general, consistent with their businesses. appropriate in furtherance of the protects investors and the public The Exchange recognizes the purposes of the Act, as use of the interest. numerous benefits of executing options proposed process is voluntary. All The proposed rule change, in transactions occur on an exchanges, Members and non-Members with open particular the proposed changes to including price transparency, potential positions in options listed on the permit RWA transfers to occur on a price improvement, and a clearing Exchange may use the proposed off- routine, recurring basis and result in guarantee. However, the Exchange exchange transfer process to reduce the netting, also provides market believes it is appropriate to permit RWA RWA capital requirements attributable participants with sufficient flexibility to Transfers to occur off the exchange, as to those positions. The Exchange does reduce RWA capital requirements at these benefits are inapplicable to RWA not believe that the proposed rule times necessary to comply with Transfers. RWA Transfers have a narrow change will impose any burden on requirements imposed on them by scope and are intended to achieve a intermarket competition that is not limited, benefit purpose. RWA Transfers necessary or appropriate in furtherance 19 See proposed introductory paragraph and are not intended to be a competitive of the purposes of the Act. RWA proposed paragraph (a)(7). Transfers of non- trading tool. There is no need for price Transfers have a limited purpose, which Exchange listed options and other financial discovery or improvement, as the is to reduce RWA attributable to open instruments are not governed by this proposed rule. Any RWA transfers will be subject to all applicable purpose of the transfer is to reduce positions in listed options in order to recordkeeping requirements applicable to Members RWA asset capital requirements free up capital. The Exchange believes and Clearing Members under the Securities attributable to a market participants’ the proposed rule change may relieve Exchange Act of 1934, and the rules and regulations positions. Unlike trades on an exchange, the burden on liquidity providers in the thereunder (the ‘‘Act’’), such as Rule 17a–3 and 17a–4. the price at which an RWA Transfers options market by reducing the RWA 20 15 U.S.C. 78f(b). occurs is immaterial—the resulting attributable to their open positions. As 21 15 U.S.C. 78f(b)(5). reduction in RWA is the critical part of a result, market participants may be able 22 Id. the transfer. RWA Transfers will result to increase liquidity they provide to the

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market, which liquidity benefits all All submissions should refer to File ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 market participants. Number SR–ISE–2019–31. This file notice is hereby given that, on December number should be included on the 13, 2019, New York Stock Exchange C. Self-Regulatory Organization’s subject line if email is used. To help the LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed Statement on Comments on the Commission process and review your with the Securities and Exchange Proposed Rule Change Received From comments more efficiently, please use Commission (the ‘‘Commission’’) the Members, Participants, or Others only one method. The Commission will proposed rule change as described in No written comments were either post all comments on the Commission’s Items I, II, and III below, which Items solicited or received. internet website (http://www.sec.gov/ have been prepared by the self- III. Date of Effectiveness of the rules/sro.shtml). Copies of the regulatory organization. The Proposed Rule Change and Timing for submission, all subsequent Commission is publishing this notice to Commission Action amendments, all written statements solicit comments on the proposed rule with respect to the proposed rule change from interested persons. Because the foregoing proposed rule change that are filed with the I. Self-Regulatory Organization’s change does not: (i) Significantly affect Commission, and all written Statement of the Terms of Substance of the protection of investors or the public communications relating to the the Proposed Rule Change interest; (ii) impose any significant proposed rule change between the burden on competition; and (iii) become Commission and any person, other than The Exchange proposes to amend operative for 30 days from the date on those that may be withheld from the certain of its listing fees. The proposed which it was filed, or such shorter time public in accordance with the rule change is available on the as the Commission may designate, it has provisions of 5 U.S.C. 552, will be Exchange’s website at www.nyse.com, at become effective pursuant to Section available for website viewing and the principal office of the Exchange, and 19(b)(3)(A)(iii) of the Act 23 and printing in the Commission’s Public at the Commission’s Public Reference subparagraph (f)(6) of Rule 19b–4 Reference Room, 100 F Street NE, Room. thereunder.24 Washington, DC 20549, on official At any time within 60 days of the II. Self-Regulatory Organization’s business days between the hours of Statement of the Purpose of, and filing of the proposed rule change, the 10:00 a.m. and 3:00 p.m. Copies of the Commission summarily may Statutory Basis for, the Proposed Rule filing also will be available for Change temporarily suspend such rule change if inspection and copying at the principal it appears to the Commission that such office of the Exchange. All comments In its filing with the Commission, the action is necessary or appropriate in the received will be posted without change. self-regulatory organization included public interest, for the protection of Persons submitting comments are statements concerning the purpose of, investors, or otherwise in furtherance of cautioned that we do not redact or edit and basis for, the proposed rule change the purposes of the Act. If the personal identifying information from and discussed any comments it received Commission takes such action, the comment submissions. You should on the proposed rule change. The text Commission shall institute proceedings submit only information that you wish of those statements may be examined at to determine whether the proposed rule to make available publicly. All the places specified in Item IV below. should be approved or disapproved. submissions should refer to File The Exchange has prepared summaries, set forth in sections A, B, and C below, IV. Solicitation of Comments Number SR–ISE–2019–31and should be submitted on or before January 21, 2020. of the most significant parts of such Interested persons are invited to statements. submit written data, views, and For the Commission, by the Division of Trading and Markets, pursuant to delegated A. Self-Regulatory Organization’s arguments concerning the foregoing, authority.25 Statement of the Purpose of, and the including whether the proposed rule J. Matthew DeLesDernier, Statutory Basis for, the Proposed Rule change is consistent with the Act. Change Comments may be submitted by any of Assistant Secretary. the following methods: [FR Doc. 2019–28027 Filed 12–27–19; 8:45 am] 1. Purpose BILLING CODE 8011–01–P Electronic Comments The Exchange proposes to amend certain of its listing fees set forth in • Use the Commission’s internet Chapter 9 of the Manual, in each case comment form (http://www.sec.gov/ SECURITIES AND EXCHANGE with effect from the beginning of the rules/sro.shtml); or COMMISSION • Send an email to rule-comments@ calendar year commencing on January 1, [Release No. 34–87832; File No. SR–NYSE– 2020. These amendments only reflect sec.gov. Please include File Number SR– 2019–63] ISE–2019–31 on the subject line. changes in the amounts charged for Self-Regulatory Organizations; New listed securities and do not reflect any Paper Comments York Stock Exchange LLC; Notice of change in the services provided to the • Send paper comments in triplicate Filing and Immediate Effectiveness of issuer in connection with such listing. to Secretary, Securities and Exchange a Proposed Rule Change Amending Annual Fees for Common Equity Commission, 100 F Street NE, Annual Listing Fees for Equity Securities Washington, DC 20549–1090. Securities, Debt Securities, and Listed Structured Products Traded on NYSE The annual fee set forth in Section 902.03 of the Manual will increase from 23 15 U.S.C. 78s(b)(3)(A)(iii). Bonds 24 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– $0.00110 per share to $0.00113 per 4(f)(6) requires a self-regulatory organization to give December 20, 2019. share for each of the following: A the Commission written notice of its intent to file Pursuant to Section 19(b)(1) 1 of the primary class of common shares the proposed rule change at least five business days (including Equity Investment Tracking prior to the date of filing of the proposed rule Securities Exchange Act of 1934 (the change, or such shorter time as designated by the Commission. The Exchange has satisfied this 25 17 CFR 200.30–3(a)(12). 2 15 U.S.C. 78a. requirement. 1 15 U.S.C. 78s(b)(1). 3 17 CFR 240.19b–4.

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Stocks); each additional class of If the issuer has at least 11 and no more Exchange believes it is appropriate to common shares (including tracking than 15 listed NYSE Bonds Securities: charge the same initial and annual stock); a primary class of preferred stock $75,000 listing fees for all NYSE Bond (if no class of common shares is listed); If the issuer has more than 15 listed Securities, regardless of whether the each additional class of preferred stock NYSE Bonds Securities: $100,000 issuer’s common equity is listed on the (whether primary class is common or It has been the Exchange’s experience Exchange. preferred stock); and each class of that there are both regulatory and Waiver of Initial Listing Fee and warrants. In addition, the minimum customer service efficiencies in dealing Prorated Annual Fee for Transfers annual fee will be increased from with multiple classes of such securities The Exchange proposes to waive $68,000 to $71,000 for each of (i) a listed by the same issuer. In light of initial listing fees and the prorated primary class of common shares these facts, the Exchange believes that annual listing fee with respect to the (including Equity Investment Tracking the proposed tiered approach to annual first part year of listing for any NYSE Stocks) and (ii) a primary class of fees under Section 902.08 better reflects Bonds Security that lists upon transfer preferred stock (if no class of common the Exchange’s resource allocation and from another national securities shares is listed). costs than is the case with the current The Exchange proposes to make the exchange. The Exchange notes that fee structure. The revised fee schedule aforementioned fee increases in Section companies transferring in mid-year will will be applied to all issuers of NYSE 902.03 to better reflect the Exchange’s already have paid listing fees for that Bond Securities in the same manner. costs related to listing equity securities year to the exchange on which they The proposed tiering structure will and the corresponding value of such were previously listed and that the result in issuers that have larger listing to issuers. The Exchange’s costs double payment the Exchange’s initial numbers of listed issuances of NYSE of servicing the listing of an equity listing fee and prorated annual fee Bond Securities paying a lower effective security include the resources devoted imposes on them imposes a significant annual fee rate per issuance. The to the required regulatory oversight, the financial burden and acts as a Exchange believes that this fee processing of corporate actions, and the disincentive to transferring. The differential is appropriate in light of the maintenance of the client relationship. Exchange also notes that the proposed efficiencies described above. While the Many of these costs have increased due waivers are consistent with the Exchange recognizes that this will result to inflation and other factors over the approach taken by the NYSE itself and in a significant reduction in the amount period since the current fee levels were the other national securities exchanges paid per listed security by some issuers, adopted. The revised fees will be with respect to the waiver of fees in it believes this reduction reasonably applied in the same manner to all connection with the transfer of common reflects the incremental resources issuers with listed securities in the equity securities from another national devoted to listing additional securities affected categories and the changes will securities exchange. not disproportionately affect any of the same issuer. The tiering approach The Exchange proposes to make a specific category of issuers. will also enable the Exchange to conforming change to Section 902.02 to respond to a changing and increasingly reflect the fact that the Exchange will Annual Fees for Securities Subject to competitive landscape for the listing of Section 902.08 provide the proposed waivers set forth these types of securities. above. The Exchange proposes to amend its Initial Listing Fees for Bonds of Non- The proposed rule change would not annual fees for structured products NYSE Issuers affect the Exchange’s commitment of listed under Section 703.19 and traded resources to its regulatory oversight of on NYSE Bonds and all debt securities In addition to adopting the same the listing process or its regulatory listed under Sections 102.03 and 103.05 tiering approach to annual fees for debt programs. (excluding non-listed debt of NYSE of non-NYSE listed companies as for issuers and affiliate companies and debt of NYSE listed companies, the 2. Statutory Basis domestic listed debt of issuers exempt Exchange also proposes to reduce the The Exchange believes that the from registration under the Exchange initial listing fee for debt of non-NYSE proposed rule change is consistent with Act) (collectively ‘‘NYSE Bonds listed companies from $45,000 to Section 6(b) of the Act,5 in general, and Securities’’) with effect in the calendar $25,000, which is the same rate charged furthers the objectives of Section year starting January 1, 2020. Under the to NYSE listed companies. While the 6(b)(4) 6 of the Act, in particular, in that current rule, an issuer must pay a Exchange has previously adopted a it is designed to provide for the separate annual fee for each listed NYSE separate fee schedule for the listing of equitable allocation of reasonable dues, Bonds Security at a flat rate of $25,000 bonds of non-NYSE issuers on the fees, and other charges. The Exchange per listed issuance (except that non- grounds that it believed the cost of also believes that the proposed rule NYSE issuers 4 listing debt securities servicing those listings was change is consistent with Section 6(b)(5) under Sections 102.03 and 103.05 are meaningfully higher, the Exchange has of the Act,7 in that it is designed to charged a $45,000 annual fee). The concluded based on its more recent promote just and equitable principles of proposed annual fee schedule for all observation that the regulatory and trade, to foster cooperation and NYSE Bonds Securities (including debt other resources it expends in servicing coordination with persons engaged in of non-NYSE issuers) is as follows: the listing of a debt issuance of a non- regulating, clearing, settling, processing If the issuer has at least one and no more NYSE listed issuer are not actually information with respect to, and than five listed NYSE Bonds meaningfully greater at this time than facilitating transactions in securities, to Securities: $25,000 those expended in relation to the listed remove impediments to and perfect the If the issuer has at least six and no more debt of an NYSE company. The mechanism of a free and open market than 10 listed NYSE Bonds Securities: proposed fee reduction will also enable and a national market system, and, in $50,000 the Exchange to respond to a changing and increasingly competitive landscape 5 15 U.S.C. 78f(b). 4 I.e., companies that do not have their common for the listing of these types of 6 15 U.S.C. 78f(b)(4). equity securities listed on the Exchange. securities. For the foregoing reasons, the 7 15 U.S.C. 78f(b)(5).

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general, to protect investors and the The Proposal is an Equitable Allocation Exchange’s fees are unreasonable it can public interest and is not designed to of Fees decide either not to list its securities or permit unfair discrimination between The Exchange believes its proposal to list them on an alternative venue. As customers, issuers, brokers, or dealers. equitably allocates its fees among its discussed above under ‘‘Purpose,’’ the Exchange believes that the proposed The Proposed Change is Reasonable market participants. The Exchange believes that the tiered approach to annual fees under The Exchange operates in a highly proposed amendments to the annual Section 902.08 better reflects the Exchange’s resource allocation and costs competitive marketplace for the listing fees for equity securities are equitable than is the case with the current fee of both the various categories of equity because they do not change the existing structure. securities affected by the proposed fee framework for such fees, but simply Finally, the Exchange believes that it adjustment and the categories of increase the minimum fees and per unit is subject to significant competitive securities listed and traded on NYSE rates by a small amount to reflect forces, as described below in the Bonds. The Commission has repeatedly increased operating costs. Similarly, as the fee structure remains effectively Exchange’s statement regarding the expressed its preference for competition burden on competition. over regulatory intervention in unchanged apart from small increases in For the foregoing reasons, the determining prices, products, and the rates paid by all issuers, in the Exchange’s view, the changes to annual Exchange believes that the proposal is services in the securities markets. fees for equity securities neither target consistent with the Act. The Exchange believes that the ever- nor will they have a disparate impact on B. Self-Regulatory Organization’s shifting market share among the any particular category of issuer. Statement on Burden on Competition exchanges with respect to new listings The Exchange believes that the and the transfer of existing listings proposed amendments to the annual The Exchange does not believe that between competitor exchanges fees for securities listed and traded on the proposed rule change will impose demonstrates that issuers can choose NYSE Bonds (and to the initial and any burden on competition that is not different listing markets in response to annual fees for bonds of non-NYSE necessary or appropriate in furtherance fee changes. Accordingly, competitive issuers) are equitable because they of the purposes of the Act. The forces constrain exchange listing fees. reflect the similar costs efficiencies proposed rule change is designed to Stated otherwise, changes to exchange experienced by the Exchange in listing ensure that the fees charged by the listing fees can have a direct effect on multiple securities of similar categories Exchange accurately reflect the services the ability of an exchange to compete for of a single issuer, as well as the similar provided and benefits realized by listed new listings and retain existing listings. costs associated with servicing the companies. The market for listing listing of bonds of non-NYSE issuers to services is extremely competitive. Each Given this competitive environment, those associated with listed bonds of listing exchange has a different fee in the Exchange’s view, the small NYSE listed companies. While issuers schedule that applies to issuers seeking increase to the annual fees for various with multiple classes of eligible to list securities on its exchange. Issuers categories of equity securities represent securities will benefit from lower fees, have the option to list their securities on a reasonable attempt to address the the Exchange believes that there will be these alternative venues based on the Exchange’s increased costs in servicing no disparate impact on any category of fees charged and the value provided by these listings while continuing to attract issuers, because the fee paid in each listing. Because issuers have a and retain listings. Similarly, the connection with the listing of a single choice to list their securities on a Exchange believes that the proposed class of securities will remain different national securities exchange, tiering of annual fees for securities unchanged and no issuer will be the Exchange does not believe that the listed on NYSE Bonds represents a required to pay an increased fee rate. proposed fee changes impose a burden reasonable attempt to attract and retain The Exchange believes that the waiver on competition. listings of those categories of securities, of initial listing fees and the prorated Intramarket Competition while also representing a reasonable annual fee for the first year of listing for approach in light of the efficiencies securities transferring from another The proposed amended fees will be associated with listing multiple classes national securities exchange is not charged to all listed issuers on the same of securities of the same issuer. The inequitable as it expects will be basis. The Exchange does not believe Exchange believes that the proposal to available to a small number of issuers that the proposed amended fees will have any meaningful effect on the charge the same fees with respect to and is being implemented solely to competition among issuers listed on the bonds of non-NYSE issuers as are relieve these issuers of the burden of Exchange. charged for bonds of NYSE companies duplicative payments to two exchanges. is reasonable because the cost of The Proposal Is Not Unfairly Intermarket Competition servicing those securities is comparable Discriminatory The Exchange operates in a highly to the cost of servicing similar securities The Exchange believes that the competitive market in which issuers can of NYSE listed companies. The proposal is not unfairly discriminatory. readily choose to list new securities on Exchange believes that the proposal to The proposed fee changes are not other exchanges and transfer listings to waive initial listing fees and the first unfairly discriminatory because the other exchanges if they deem fee levels year’s prorated annual fees for NYSE same fee schedule will apply to all at those other venues to be more Bonds Securities transferring from listed issuers. Further, the Exchange favorable. Because competitors are free another national securities exchange is operates in a competitive environment to modify their own fees in response, reasonable because the cost of paying and its fees are constrained by and because issuers may change their listing fees to both the NYSE and the competition in the marketplace. Other chosen listing venue, the Exchange does predecessor exchange imposes a venues currently list all of the categories not believe its proposed fee change can significant financial burden and acts as of securities covered by the proposed impose any burden on intermarket a disincentive to transferring. fees and if a company believes that the competition.

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C. Self-Regulatory Organization’s rules/sro.shtml). Copies of the Commission is publishing this notice to Statement on Comments on the submission, all subsequent solicit comments on the proposed rule Proposed Rule Change Received From amendments, all written statements change from interested persons. Members, Participants, or Others with respect to the proposed rule I. Self-Regulatory Organization’s No written comments were solicited change that are filed with the Commission, and all written Statement of the Terms of Substance of or received with respect to the proposed the Proposed Rule Change rule change. communications relating to the proposed rule change between the The Exchange proposes to adopt a III. Date of Effectiveness of the Commission and any person, other than new rule titled ‘‘Off-Exchange RWA Proposed Rule Change and Timing for those that may be withheld from the Transfers’’ at MRX Options 6, Section. Commission Action public in accordance with the The text of the proposed rule change The foregoing rule change is effective provisions of 5 U.S.C. 552, will be is available on the Exchange’s website at upon filing pursuant to Section available for website viewing and http://nasdaqmrx.cchwallstreet.com/, at 19(b)(3)(A) 8 of the Act and printing in the Commission’s Public the principal office of the Exchange, and subparagraph (f)(2) of Rule 19b–4 9 Reference Room, 100 F Street NE, at the Commission’s Public Reference thereunder, because it establishes a due, Washington, DC 20549 on official Room. fee, or other charge imposed by the business days between the hours of II. Self-Regulatory Organization’s Exchange. 10:00 a.m. and 3:00 p.m. Copies of the Statement of the Purpose of, and At any time within 60 days of the filing also will be available for Statutory Basis for, the Proposed Rule filing of such proposed rule change, the inspection and copying at the principal Change Commission summarily may office of the Exchange. All comments temporarily suspend such rule change if received will be posted without change. In its filing with the Commission, the it appears to the Commission that such Persons submitting comments are Exchange included statements action is necessary or appropriate in the cautioned that we do not redact or edit concerning the purpose of and basis for public interest, for the protection of personal identifying information from the proposed rule change and discussed investors, or otherwise in furtherance of comment submissions. You should any comments it received on the the purposes of the Act. If the submit only information that you wish proposed rule change. The text of these Commission takes such action, the to make available publicly. All statements may be examined at the Commission shall institute proceedings submissions should refer to File places specified in Item IV below. The under Section 19(b)(2)(B) 10 of the Act to Number SR–NYSE–2019–63 and should Exchange has prepared summaries, set determine whether the proposed rule be submitted on or before January 21, forth in sections A, B, and C below, of change should be approved or 2020. the most significant aspects of such disapproved. For the Commission, by the Division of statements. Trading and Markets, pursuant to delegated IV. Solicitation of Comments authority.11 A. Self-Regulatory Organization’s Interested persons are invited to J. Matthew DeLesDernier, Statement of the Purpose of, and submit written data, views, and Assistant Secretary. Statutory Basis for, the Proposed Rule Change arguments concerning the foregoing, [FR Doc. 2019–28077 Filed 12–27–19; 8:45 am] including whether the proposed rule BILLING CODE 8011–01–P 1. Purpose change is consistent with the Act. Comments may be submitted by any of The Exchange proposes to adopt a the following methods: SECURITIES AND EXCHANGE new rule titled, ‘‘Off-Exchange RWA COMMISSION Transfers’’ at MRX Options 6, Section 6. Electronic Comments This proposal is substantially the same • Use the Commission’s internet [Release No. 34–87826; File No. SR–MRX– as Cboe Exchange, Inc. (‘‘Cboe’’) Rule comment form (http://www.sec.gov/ 2019–24] 6.8.3 rules/sro.shtml); or Proposed Options 6, Section 6 is • Self-Regulatory Organizations; Nasdaq Send an email to rule-comments@ MRX, LLC; Notice of Filing and intended to facilitate the reduction of sec.gov. Please include File Number SR– Immediate Effectiveness of Proposed risk-weighted assets (‘‘RWA’’) NYSE–2019–63 on the subject line. Rule Change To Adopt a New Rule attributable to open options positions. Paper Comments Titled ‘‘Off-Exchange RWA Transfers’’ SEC Rule 15c3–1 (Net Capital Requirements for Brokers or Dealers) • at MRX Options 6, Section 6 Send paper comments in triplicate (‘‘Net Capital Rules’’) requires registered to Secretary, Securities and Exchange December 20, 2019. broker-dealers, unless otherwise Commission, 100 F Street NE, Pursuant to Section 19(b)(1) of the excepted, to maintain certain specified Washington, DC 20549–1090. Securities Exchange Act of 1934 minimum levels of capital.4 The Net All submissions should refer to File (‘‘Act’’),1 and Rule 19b–4 thereunder,2 Capital Rules are designed to protect Number SR–NYSE–2019–63. This file notice is hereby given that on December securities customers, counterparties, number should be included on the 17, 2019, Nasdaq MRX, LLC (‘‘MRX’’ or and creditors by requiring that broker- subject line if email is used. To help the ‘‘Exchange’’) filed with the Securities dealers have sufficient liquid resources Commission process and review your and Exchange Commission (‘‘SEC’’ or on hand, at all times, to meet their comments more efficiently, please use ‘‘Commission’’) the proposed rule financial obligations. Notably, hedged only one method. The Commission will change as described in Items I, II, and positions, including offsetting futures post all comments on the Commission’s III, below, which Items have been and options contract positions, result in internet website (http://www.sec.gov/ prepared by the Exchange. The 3 See Securities Exchange Act Release No. 87374 8 15 U.S.C. 78s(b)(3)(A). 11 17 CFR 200.30–3(a)(12). (October 21, 2019), 84 FR 57542 (October 25, 2019) 9 17 CFR 240.19b–4(f)(2). 1 15 U.S.C. 78s(b)(1). (SR–Cboe–2019–044). 10 15 U.S.C. 78s(b)(2)(B). 2 17 CFR 240.19b–4. 4 17 CFR 240.15c3–1.

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certain net capital requirement liquidity in their appointed classes. The governmental entity or agency or reductions under the Net Capital Rules.5 Exchange believes that permitting political subdivision thereof. Subject to certain exceptions, Clearing market participants to efficiently In other words, RWA transfers may Members 6 are subject to the Net Capital transfer existing options positions only occur between the same individual Rules.7 However, a subset of Clearing through an off-exchange transfer process or legal entity. These are merely Members are subsidiaries of U.S. bank would likely have a beneficial effect on transfers from one clearing account to holding companies, which, due to their continued liquidity in the options another, both of which are attributable affiliations with their parent U.S.-bank market without adversely affecting to the same individual or legal entity. A holding companies, must comply with market quality. Liquidity in the listed market participant effecting an RWA additional bank regulatory capital options market is critically important. Transfer is analogous to an individual requirements pursuant to rulemaking The Exchange believes that the transferring funds from a checking required under the Dodd-Frank Wall proposed rule change provides market account to a savings account, or from an Street Reform and Consumer Protection participants with an efficient account at one bank to an account at Act.8 Pursuant to this mandate, the mechanism to transfer their open another bank—the money still belongs Board of Governors of the Federal options positions from one clearing to the same person, who is just holding Reserve System, the Office of the account to another clearing account and it in a different account for personal Comptroller of the Currency, and the thereby increase liquidity in the listed financial reasons. Federal Deposit Insurance Corporation options market. MRX currently has no For example, Market Maker A clears have approved a regulatory capital mechanism that firms may use to transactions on the Exchange into an framework for subsidiaries of U.S. bank transfer positions between clearing account it has with Clearing Member X, holding company clearing firms.9 accounts without having to effect a which is affiliated with a U.S-bank Generally, these rules, among other transaction with another party and close holding company. Market Maker A things, impose higher minimum capital a position. opens a clearing account with Clearing and higher asset risk weights than were The proposed rule provides that Member Y, which is not affiliated with previously mandated for Clearing existing positions in options listed on a U.S.-bank holding company. Clearing Members that are subsidiaries of U.S. the Exchange of a Member or non- Member X has informed Market Maker bank holding companies under the Net Member (including an affiliate of a A that its open positions may not Capital Rules. Furthermore, the new Member) may be transferred on, from, or exceed a certain amount at the end of rules do not fully permit deductions for to the books of a Clearing Member off a calendar month, or it will be subject hedged securities or offsetting options the Exchange if the transfer establishes to restrictions on new positions it may positions.10 Rather, capital charges a net reduction of RWA attributable to open the following month. On August under these standards are, in large part, those options positions (an ‘‘RWA 28, Market Maker A reviews the open based on the aggregate notional value of Transfer’’). Proposed paragraph (a)(1) positions in its Clearing Member X short positions regardless of offsets. As adds examples of two transfers that clearing account and determines it must a result, in general, Clearing Members would be deemed to establish a net reduce its open positions to satisfy that are subsidiaries of U.S. bank reduction of RWA, and thus qualify as Clearing Member X’s requirements by a permissible RWA Transfer: the end of August. It determines that holding companies must hold • substantially more bank regulatory A transfer of options positions from transferring out 1000 short calls in class 11 capital than would otherwise be Clearing Corporation member A to ABC will sufficiently reduce the RWA required under the Net Capital Rules. Clearing Corporation member B that net capital requirements in the account with The Exchange is concerned with the (offset) with positions held at Clearing Clearing Member X to avoid additional ability of Market Makers to provide Corporation member B, and thus closes position limits in September. Market all or part of those positions (as Maker A wants to retain the positions in 12 5 In addition, the Net Capital Rules permit various demonstrated in the example below); accordance with its risk profile. offsets under which a percentage of an option and Pursuant to the proposed rule change, • position’s gain at any one valuation point is A transfer of options positions from on August 31, Market Maker A transfers allowed to offset another position’s loss at the same a bank-affiliated Clearing Corporation valuation point (e.g. vertical spreads). 1000 short calls in class ABC to its 6 member to a non-bank-affiliated clearing account with Clearing Member The term Clearing Member is defined within 13 General 1, Section 1(a)(4). All Clearing Members Clearing Corporation member. Y. As a result, Market Maker A can must also be clearing members of The Options These transfers will not result in a continue to provide the same level of Clearing Corporation (‘‘OCC’’). change in ownership, as they must 7 liquidity in class ABC during September In the event federal regulators modify bank occur between accounts of the same as it did in previous months. capital requirements in the future, the Exchange Person. will reevaluate the proposed rule change at that A Member must give up a Clearing time to determine whether any corresponding ‘‘Person’’ is defined within proposed Member for each transaction it effects changes to the proposed rule are appropriate. Options 6, Section 6(a) as an individual, on the Exchange, which identifies the 8 H.R. 4173 (amending section 3(a) of the partnership (general or limited), joint Clearing Member through which the Securities Exchange Act of 1934 (the ‘‘Act’’) (15 stock company, corporation, limited transaction will clear.14 A Member may U.S.C. 78c(a))). liability company, trust or 9 change the give up for a transaction 12 CFR 50; 79 FR 61440 (Liquidity Coverage unincorporated organization, or any Ratio: Liquidity Risk Measurement Standards). within a specified period of time.15 10 Many options strategies, including relatively 11 Additionally, a Member may also simple strategies often used by retail customers and The term Clearing Corporation is defined change the Clearing Member 16 for a more sophisticated strategies used by broker- within General 1, Section 1(a)(3). dealers, are risk limited strategies or options spread 12 This transfer would establish a net reduction of strategies that employ offsets or hedges to achieve RWA attributable to the transferring Person, 14 See Options 6B, Section 2. certain investment outcomes. Such strategies because there would be fewer open positions and 15 See Options 6, Section 1. typically involve the purchase and sale of multiple thus fewer assets subject to Net Capital Rules. 16 The Clearing Member Trade Assignment options (and may be coupled with purchases or 13 This transfer would establish a net reduction of (‘‘CMTA’’) process at The Options Clearing sales of the underlying securities), executed RWA attributable to the transferring Person, Corporation (‘‘OCC’’) facilitates the transfer of simultaneously as part of the same strategy. In because the non-bank-affiliated Clearing option trades/positions from one OCC clearing many cases, the potential market exposure of these Corporation member would not be subject to Net member to another in an automated fashion. strategies is limited and defined. Capital Rules, as described above. Continued

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specific transaction. The transfer of the Exchange permits off-exchange vice versa), which results in elimination positions from an account with one transfers on behalf of a Market Maker of those positions (and a reduction in clearing firm to the account of another account for transactions in multiply RWA associated with them). As noted clearing firm pursuant to the proposed listed options series on different above, such netting would have rule change has a similar result as exchanges, but only if the Market Maker occurred if Market Maker A cleared the changing a give up or CMTA, as it nominees are trading for the same September transaction directly into its results in a position that resulted from Member, and the options transactions account with Clearing Member Y, or had a transaction moving from the account on the different options exchanges clear not effected an RWA Transfer in August. of one clearing firm to another, just at into separate exchange-specific accounts Netting provides market participants a different time and in a different because they cannot easily clear into the with appropriate flexibility to conduct manner.17 In the above example, if same Market Maker account at OCC. In their businesses as they see fit while Market Maker A had initially given up such instances, all Market Maker having the ability to reduce RWA Clearing Member Y rather than Clearing positions in the exchange-specific capital requirements when necessary. Member X on the transactions that accounts for the multiply listed class RWA Transfers may not result in resulted in the 1000 long calls in class would be automatically transferred on preferential margin or haircut ABC, or had changed the give-up or their trade date into one central Market treatment.18 Additionally, RWA CMTA to Clearing Member Y pursuant Maker account (commonly referred to as Transfers may only be effected for to Options 6, Section 1 the ultimate a ‘‘universal account’’) at the Clearing options listed on the Exchange and will result would have been the same. There Corporation. Positions cleared into a be subject to applicable laws, rules, and are a variety of reasons why firms give universal account would automatically regulations, including rules of other up or CMTA transactions to certain net against each other. self-regulatory organizations (including clearing firms (and not to non-bank While RWA Transfers are not OCC).19 affiliate clearing firms) at the time of a occurring because of limitations related Finally, the Exchange notes it is transaction, and the proposed rule to trading on different exchanges, reserving Sections 5 and 7 of Options 6 change provides firms with a similar reasoning for the above for consistency in rule numbering with mechanism to achieve the same result at exception applies to why netting should Nasdaq affiliated markets. a later time. be permissible for the limited purpose 2. Statutory Basis Proposed paragraph (a)(2) states RWA of reducing RWA. Firms may maintain Transfers may occur on a routine, different clearing accounts for a variety The Exchange believes that its recurring basis. As noted in the example of reasons, such as the structure of their proposal is consistent with Section 6(b) above, clearing firms may impose businesses, the manner in which they of the Act,20 in general, and furthers the restrictions on the amount of open trade, their risk management objectives of Section 6(b)(5) of the Act,21 positions. Permitting transfers on a procedures, and for capital purposes. If in particular, in that it is designed to routine, recurring basis will provide a Market Maker clears all transactions promote just and equitable principles of market participants with the flexibility into a universal account, offsetting trade, to remove impediments to and to comply with these restrictions when positions would automatically net. perfect the mechanism of a free and necessary to avoid position limits on However, if a Market Maker has open market and a national market future options activity. Additionally, multiple accounts into which its system, and, in general to protect proposed paragraph (a)(6) provides that transactions cleared, they would not investors and the public interest. no prior written notice to the Exchange automatically net. While there are times Additionally, the Exchange believes the is required for RWA Transfers. Because when a firm may not want to close out proposed rule change is consistent with of the potential routine basis on which open positions to reduce RWA, there are the Section 6(b)(5) 22 requirement that RWA Transfers may occur, and because other times when a firm may determine the rules of an exchange not be designed of the need for flexibility to comply it is appropriate to close out positions to permit unfair discrimination between with the restrictions described above, to accomplish a reduction in RWA. customers, issuers, brokers, or dealers. the Exchange believes it may interfere In the example above, suppose after The Exchange’s proposal is substantially with the ability of investors firms to making the RWA Transfer described the same as Cboe Rule 6.8 [sic]. comply with any Clearing Member above, Market Maker A effects a In particular, the Exchange believes restrictions described above, and may be transaction on September 25 that results the proposed rule change to permit burdensome to provide notice for these in 1000 long calls in class ABC, which RWA Transfers will remove routine transfers. clears into its account with Clearing impediments to and perfect the Proposed paragraph (a)(3) states RWA Member X. If Market Maker A had not mechanism of a free and open market Transfers may result in the netting of effected its RWA Transfer in August, the and a national market system by positions. Netting occurs when long 1000 long calls would have offset providing liquidity in the listed options positions and short positions in the against the 1000 short calls, eliminating market. The Exchange believes same series ‘‘offset’’ against each other, both positions and thus any RWA providing market participants with an leaving no or a reduced position. For capital requirements associated with example, if there were 100 long calls in them. At the end of August, Market 18 See proposed paragraph (a)(4). one account, and 100 short calls of the Maker A did not want to close out the 19 See proposed introductory paragraph and same option series were added to that 1000 short calls when it made its RWA proposed paragraph (a)(7). Transfers of non- Transfer. However, given changed Exchange listed options and other financial account, the positions would offset, instruments are not governed by this proposed rule. leaving no open positions. Currently, circumstances in September, Market Any RWA transfers will be subject to all applicable Maker A has determined it no longer recordkeeping requirements applicable to Members Changing a CMTA for a specific transaction would wants to hold those positions. The and Clearing Members under the Securities allocate the trade to a different OCC clearing proposed rule change would permit Exchange Act of 1934, and the rules and regulations thereunder (the ‘‘Act’’), such as Rule 17a–3 and member than the one initially identified on the Market Maker A to effect an RWA trade. 17a–4. 17 The transferred positions will continue to be Transfer of the 1000 short calls from its 20 15 U.S.C. 78f(b). subject to OCC rules, as they will continue to be account with Clearing Member Y to its 21 15 U.S.C. 78f(b)(5). held in an account of an OCC member. account with Clearing Member X (or 22 Id.

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efficient process to reduce RWA capital Transfers to occur off the exchange, as not believe that the proposed rule requirements attributable to open these benefits are inapplicable to RWA change will impose any burden on positions in clearing accounts with U.S. Transfers. RWA Transfers have a narrow intermarket competition that is not bank-affiliated clearing firms may scope and are intended to achieve a necessary or appropriate in furtherance contribute to additional liquidity in the limited, benefit purpose. RWA Transfers of the purposes of the Act. RWA listed options market, which, in general, are not intended to be a competitive Transfers have a limited purpose, which protects investors and the public trading tool. There is no need for price is to reduce RWA attributable to open interest. discovery or improvement, as the positions in listed options in order to The proposed rule change, in purpose of the transfer is to reduce free up capital. The Exchange believes particular the proposed changes to RWA asset capital requirements the proposed rule change may relieve permit RWA transfers to occur on a attributable to a market participants’ the burden on liquidity providers in the routine, recurring basis and result in positions. Unlike trades on an exchange, options market by reducing the RWA netting, also provides market the price at which an RWA Transfers attributable to their open positions. As participants with sufficient flexibility to occurs is immaterial—the resulting a result, market participants may be able reduce RWA capital requirements at reduction in RWA is the critical part of to increase liquidity they provide to the times necessary to comply with the transfer. RWA Transfers will result market, which liquidity benefits all requirements imposed on them by in no change in ownership, and thus market participants. clearing firms. This will permit market they do not constitute trades with a participants to respond to then-current counterparty (and thus eliminating the C. Self-Regulatory Organization’s market conditions, including volatility need for a counterparty guarantee). The Statement on Comments on the and increased volume, by reducing the transactions that resulted in the open Proposed Rule Change Received From RWA capital requirements associated positions to be transferred as an RWA Members, Participants, or Others with any new positions they may open Transfer were already guaranteed by an No written comments were either while those conditions exist. Given the OCC clearing member, and the positions solicited or received. additional capital that may become will continue to be subject to OCC rules, available to market participants as a as they will continue to be held in an III. Date of Effectiveness of the result of the RWA Transfers, market account with an OCC clearing member. Proposed Rule Change and Timing for participants will be able to continue to The narrow scope of the proposed rule Commission Action provide liquidity to the market, even change and the limited, beneficial Because the foregoing proposed rule during periods of increased volume and purpose of RWA Transfers make change does not: (i) Significantly affect volatility, which liquidity ultimately allowing RWA Transfers to occur off the the protection of investors or the public benefits investors. It is not possible for floor appropriate and important to interest; (ii) impose any significant market participants to predict what support the provision of liquidity in the burden on competition; and (iii) become market conditions will exist at a specific listed options market. operative for 30 days from the date on time, and when volatility will occur. The proposed rule change does not which it was filed, or such shorter time The proposed rule change to permit unfairly discriminate against market as the Commission may designate, it has routine, recurring RWA Transfers (and participants, as all Members and non- become effective pursuant to Section to not provide prior written notice) will Members with open positions in options 19(b)(3)(A)(iii) of the Act 23 and provide market participants with the listed on the Exchange may use the subparagraph (f)(6) of Rule 19b–4 ability to respond to these conditions proposed off-exchange transfer process thereunder.24 whenever they occur. Permitting to reduce the RWA capital requirements At any time within 60 days of the transfers on a routine, recurring basis of Clearing Members. filing of the proposed rule change, the will provide market participants with B. Self-Regulatory Organization’s Commission summarily may the flexibility to comply with these Statement on Burden on Competition temporarily suspend such rule change if restrictions when necessary to avoid it appears to the Commission that such The Exchange does not believe that position limits on future options action is necessary or appropriate in the the proposed rule change will impose activity. In addition, with respect to public interest, for the protection of any burden on competition that is not netting, as discussed above, firms may investors, or otherwise in furtherance of necessary or appropriate in furtherance maintain different clearing accounts for the purposes of the Act. If the a variety of reasons, such as the of the purposes of the Act. The Exchange does not believe that Commission takes such action, the structure of their businesses, the manner Commission shall institute proceedings in which they trade, their risk the proposed rule change will impose any burden on competition that is not to determine whether the proposed rule management procedures, and for capital should be approved or disapproved. purposes. Netting may otherwise occur necessary or appropriate in furtherance with respect to a firm’s positions if it of the purposes of the Act. This process IV. Solicitation of Comments is not intended to be a competitive structured its clearing accounts Interested persons are invited to trading tool. The Exchange does not differently, such as by using a universal submit written data, views, and believe that the proposed rule change account. Therefore, the proposed rule arguments concerning the foregoing, will impose any burden on intra-market change will permit netting while including whether the proposed rule competition that is not necessary or allowing firms to continue to maintain change is consistent with the Act. different clearing accounts in a manner appropriate in furtherance of the purposes of the Act, as use of the consistent with their businesses. 23 15 U.S.C. 78s(b)(3)(A)(iii). The Exchange recognizes the proposed process is voluntary. All 24 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– numerous benefits of executing options Members and non-Members with open 4(f)(6) requires a self-regulatory organization to give transactions occur on an exchanges, positions in options listed on the the Commission written notice of its intent to file including price transparency, potential Exchange may use the proposed off- the proposed rule change at least five business days prior to the date of filing of the proposed rule price improvement, and a clearing exchange transfer process to reduce the change, or such shorter time as designated by the guarantee. However, the Exchange RWA capital requirements attributable Commission. The Exchange has satisfied this believes it is appropriate to permit RWA to those positions. The Exchange does requirement.

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Comments may be submitted by any of SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s the following methods: COMMISSION Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Electronic Comments [Release No. 34–87845; File No. SR–MRX– Change • Use the Commission’s internet 2019–25] 1. Purpose comment form (http://www.sec.gov/ rules/sro.shtml); or Self-Regulatory Organizations; Nasdaq The Exchange proposes to adopt a • Send an email to rule-comments@ MRX, LLC; Notice of Filing and new rule at Options 3, Section 19 titled sec.gov. Please include File Number SR– Immediate Effectiveness of Proposed ‘‘Mass Cancellation of Trading Interest.’’ MRX–2019–24 on the subject line. Rule Change To Adopt a Mass The Exchange also proposes to amend Cancellation Rule and Amend Other definitions within General 1, Section 1, Paper Comments Sections of the Rulebook adopt a new definition for ‘‘Away Best • Send paper comments in triplicate December 23, 2019. Bid or Offer within Options 1, Section to Secretary, Securities and Exchange 1, and update rule citations in various Pursuant to Section 19(b)(1) of the Commission, 100 F Street NE, other rules. Securities Exchange Act of 1934 Washington, DC 20549–1090. (‘‘Act’’),1 and Rule 19b–4 thereunder,2 Mass Cancellation of Trading Interest All submissions should refer to File notice is hereby given that on December The Exchange proposes to adopt a Number SR–MRX–2019–24. This file 9, 2019, Nasdaq MRX, LLC (‘‘MRX’’ or new rule at Options 3, Section 19 titled number should be included on the ‘‘Exchange’’) filed with the Securities ‘‘Mass Cancellation of Trading Interest.’’ subject line if email is used. To help the and Exchange Commission (‘‘SEC’’ or Commission process and review your ‘‘Commission’’) the proposed rule The Nasdaq Options Market LLC comments more efficiently, please use change as described in Items I and II (‘‘NOM’’) and Nasdaq BX, Inc. (‘‘BX’’) only one method. The Commission will below, which Items have been prepared rules at Chapter VII, Section 11 permit post all comments on the Commission’s by the Exchange. The Commission is Participants on those markets to contact internet website (http://www.sec.gov/ publishing this notice to solicit market operations and manually request rules/sro.shtml). Copies of the comments on the proposed rule change cancellation of interest. The Exchange submission, all subsequent from interested persons. proposes to adopt a rule which also amendments, all written statements permits Members to contact market I. Self-Regulatory Organization’s with respect to the proposed rule operations and request the Exchange to Statement of the Terms of Substance of change that are filed with the manually cancel interest. The proposed the Proposed Rule Change Commission, and all written new rule would state, ’’A Member may cancel any bids, offers, and orders in communications relating to the The Exchange proposes to adopt a proposed rule change between the any series of options by requesting MRX new rule at Options 3, Section 19 titled 3 Commission and any person, other than ‘‘Mass Cancellation of Trading Interest.’’ Market Operations staff to effect such those that may be withheld from the The Exchange also proposes to amend cancellation as per the instructions of public in accordance with the definitions within General 1, Section 1, the Member.’’ This new rule reflects the provisions of 5 U.S.C. 552, will be adopt a new definition for ‘‘Away Best Exchange’s current practice of allowing available for website viewing and Bid or Offer’’ within Options 1, Section Members to contact MRX Market printing in the Commission’s Public 1, and update rule citations in various Operations and request the Exchange to Reference Room, 100 F Street, NE, other rules. cancel any bid, offer or order in any Washington, DC 20549, on official series of options. The Exchange would business days between the hours of The text of the proposed rule change cancel such bid, offer or order pursuant 10:00 a.m. and 3:00 p.m. Copies of the is available on the Exchange’s website at to the Member’s instruction. The http://nasdaqmrx.cchwallstreet.com/, at filing also will be available for Exchange desires to memorialize the the principal office of the Exchange, and inspection and copying at the principal availability of this service. office of the Exchange. All comments at the Commission’s Public Reference received will be posted without change. Room. Definitions Persons submitting comments are II. Self-Regulatory Organization’s The Exchange proposes to make a cautioned that we do not redact or edit Statement of the Purpose of, and technical amendment to General 1, personal identifying information from Statutory Basis for, the Proposed Rule Section 1(a)(6) to note the acronym for comment submissions. You should Change an Electronic Access Member, an submit only information that you wish In its filing with the Commission, the ‘‘EAM’’ within the definition. The to make available publicly. All acronym is utilized throughout the submissions should refer to File Exchange included statements Rulebook. Defining the acronym within Number SR–MRX–2019–24 and should concerning the purpose of and basis for the definition will add transparency to be submitted on or before January 21, the proposed rule change and discussed the Rulebook. 2020. any comments it received on the proposed rule change. The text of these The Exchange proposes to add the For the Commission, by the Division of statements may be examined at the definition of an ‘‘Away Best Bid or Trading and Markets, pursuant to delegated authority.25 places specified in Item IV below. The Offer’’ or ‘‘ABBO’’ within Options 1, Exchange has prepared summaries, set Section 1(a)(4). This term is utilized J. Matthew DeLesDernier, forth in sections A, B, and C below, of throughout the Rulebook. Defining this Assistant Secretary. the most significant aspects of such term will bring greater transparency to [FR Doc. 2019–28076 Filed 12–27–19; 8:45 am] statements. the Rulebook. BILLING CODE 8011–01–P 1 15 U.S.C. 78s(b)(1). 3 The request to Market Operations is a manual 25 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4. request which is made telephonically.

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Other Changes that a quote or order message is handled Section 19 does not impose an undue The Exchange proposes to reserve by the System. The Exchange notes its burden on competition because all certain rules 4 in connection with a processing of a mass cancellation Members may utilize this service. This Rulebook harmonization project which message inputted by MRX Market new rule reflects the Exchange’s current organizes the rules of the Nasdaq Operations and handled by the System practice. is consistent with firm quote and order affiliated markets. Definitions handling rules. 2. Statutory Basis The Exchange notes that offering this The Exchange’s proposal to add the The Exchange believes that its service which permits Members to acronym for an Electronic Access proposal is consistent with Section 6(b) cancel interest will not diminish a Member, an ‘‘EAM’’ within General 1, of the Act,5 in general, and furthers the Member’s obligation with respect to Section 1 and add the definition of an objectives of Section 6(b)(5) of the Act,6 providing two-sided quotations and this ‘‘Away Best Bid or Offer’’ or ‘‘ABBO’’ in particular, in that it is designed to rule is not inconsistent with other firm within Options 1, Section 1(a)(4) do not promote just and equitable principles of quote obligations of the Member. The impose an undue burden on trade, to remove impediments to and Kill Switch message will be accepted by competition because these amendments perfect the mechanism of a free and the System in the order of receipt in the will add transparency to the Rulebook. queue and will be processed in that open market and a national market Other Changes system, and, in general to protect order so that interest that is already investors and the public interest. accepted into the System will be The Exchange’s proposal to update processed prior to the Kill Switch the reference within Options 3, Section Mass Cancellation of Trading Interest message. Messages sent to the System by 16(b) to refer to Options 3, Section 12 The Exchange’s proposal to the Kill Switch are processed in the not just 12(a), and add cross-references memorialize the Mass Cancellation of order they are received by the matching to the Solicited Order Mechanism and Trading Interest rule within Options 3, engine, through the same queuing Price Improvement Mechanism within Section 19 is consistent with the Act mechanism that a quote or order Options 3, Section 16 do not impose an because permitting Members to contact message is processed. MRX Market undue burden on competition. The Market Operations as a manual Operations would process the remainder of the changes to correct alternative to automated functionality cancellation request when received. numbering and citations are non- which similarly allows Members to As noted above, NOM and BX Rules substantive. cancel interest provides Members at Chapter VII, Section 11 allow NOM and BX Participants to also contact C. Self-Regulatory Organization’s experiencing their own system issues Statement on Comments on the with a means to manage risk. Today, market operations and request cancellations of interest. This new rule Proposed Rule Change Received From Members are able to cancel interest, in Members, Participants, or Others an automated fashion through reflects the Exchange’s current practice. protocols 7 and the Kill Switch.8 This is Definitions No written comments were either a voluntary services offered to all solicited or received. The Exchange’s proposal to add the Members. III. Date of Effectiveness of the The Exchange notes that offering this acronym for an Electronic Access Member, an ‘‘EAM’’ within General 1, Proposed Rule Change and Timing for service, which permits Members to Commission Action cancel interest, will not diminish a Section 1 and add the definition of an Market Maker’s obligation with respect ‘‘Away Best Bid or Offer’’ or ‘‘ABBO’’ Because the foregoing proposed rule to providing two-sided quotations and within Options 1, Section 1(a)(4) are change does not: (i) Significantly affect this rule is not inconsistent with other consistent with the Act because these the protection of investors or the public firm quote obligations of the Market amendments will add transparency to interest; (ii) impose any significant Maker. Upon the request of a Member, the Rulebook. burden on competition; and (iii) become MRX Market Operations will manually Other Changes operative for 30 days from the date on input a mass cancellation message into which it was filed, or such shorter time The Exchange’s proposal to update the System consistent with the as the Commission may designate, it has the reference within Options 3, Section Member’s instruction to cancel trading become effective pursuant to Section 16(b) to refer to Options 3, Section 12 interest. Once the mass cancellation 19(b)(3)(A)(iii) of the Act 9 and not just 12(a), and add cross-references message is entered into the System by subparagraph (f)(6) of Rule 19b–4 to the Solicited Order Mechanism and MRX Market Operations, the message thereunder.10 Price Improvement Mechanism within will be accepted by the System in the A proposed rule change filed under Options 3, Section 16, are consistent order of receipt in the queue such that Rule 19b–4(f)(6) 11 normally does not with the Act and add greater clarity to the interest that was already accepted become operative prior to 30 days after the Rules. into the System will be processed prior the date of the filing. However, pursuant to the mass cancellation message. In B. Self-Regulatory Organization’s to Rule 19b–4(f)(6)(iii),12 the addition, mass cancellation messages Statement on Burden on Competition entered into the System by MRX Market The Exchange does not believe that 9 15 U.S.C. 78s(b)(3)(A)(iii). Operations are handled by the System the proposed rule change will impose 10 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– through the same queuing mechanism 4(f)(6) requires the Exchange to give the any burden on competition that is not Commission written notice of its intent to file the necessary or appropriate in furtherance proposed rule change, along with a brief description 4 Options 2, Section 3 and Options 3, Section 28 of the purposes of the Act. and text of the proposed rule change, at least five are being reserved. business days prior to the date of filing of the 5 15 U.S.C. 78f(b). Mass Cancellation of Trading Interest proposed rule change, or such shorter time as 6 15 U.S.C. 78f(b)(5). designated by the Commission. The Exchange has 7 See Options 3 at Supplementary Material .03 to The Exchange’s proposal to satisfied this requirement. Section 7. memorialize the Mass Cancellation of 11 17 CFR 240.19b–4(f)(6). 8 See Options 3, Section 17. Trading Interest rule within Options 3, 12 17 CFR 240.19b–4(f)(6)(iii).

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Commission may designate a shorter post all comments on the Commission’s and III, below, which Items have been time if such action is consistent with the internet website (http://www.sec.gov/ prepared by the Exchange. The protection of investors and the public rules/sro.shtml). Copies of the Commission is publishing this notice to interest. The Exchange requests that the submission, all subsequent solicit comments on the proposed rule Commission waive the 30-day operative amendments, all written statements change from interested persons. delay so that the proposal may become with respect to the proposed rule I. Self-Regulatory Organization’s operative immediately upon filing. The change that are filed with the Statement of the Terms of Substance of Exchange notes that NOM and BX Commission, and all written the Proposed Rule Change currently have rules that permit NOM communications relating to the and BX Participants to cancel interest,13 proposed rule change between the The Exchange proposes to adopt a and that the Exchange proposes the Commission and any person, other than new rule titled ‘‘Off-Exchange RWA additional changes to provide greater those that may be withheld from the Transfers’’ at The Nasdaq Options clarity in its rules. The Commission public in accordance with the Market LLC (‘‘NOM’’) Rules at Options believes that waiving the 30-day provisions of 5 U.S.C. 552, will be 6, Section 6. The text of the proposed operative delay is consistent with the available for website viewing and rule change is available on the protection of investors and the public printing in the Commission’s Public Exchange’s website at http:// interest. Accordingly, the Commission Reference Room, 100 F Street NE, nasdaq.cchwallstreet.com, at the waives the 30-day operative delay and Washington, DC 20549, on official principal office of the Exchange, and at designates the proposed rule change business days between the hours of the Commission’s Public Reference operative upon filing.14 10:00 a.m. and 3:00 p.m. Copies of the Room. At any time within 60 days of the filing also will be available for II. Self-Regulatory Organization’s filing of the proposed rule change, the inspection and copying at the principal Statement of the Purpose of, and Commission summarily may office of the Exchange. All comments Statutory Basis for, the Proposed Rule temporarily suspend such rule change if received will be posted without change. Change it appears to the Commission that such Persons submitting comments are action is necessary or appropriate in the cautioned that we do not redact or edit In its filing with the Commission, the public interest, for the protection of personal identifying information from Exchange included statements investors, or otherwise in furtherance of comment submissions. You should concerning the purpose of and basis for the purposes of the Act. If the submit only information that you wish the proposed rule change and discussed Commission takes such action, the to make available publicly. All any comments it received on the Commission shall institute proceedings submissions should refer to File proposed rule change. The text of these to determine whether the proposed rule Number SR–MRX–2019–25 and should statements may be examined at the should be approved or disapproved. be submitted on or before January 21, places specified in Item IV below. The 2020. Exchange has prepared summaries, set IV. Solicitation of Comments For the Commission, by the Division of forth in sections A, B, and C below, of Interested persons are invited to Trading and Markets, pursuant to delegated the most significant aspects of such submit written data, views, and authority.15 statements. arguments concerning the foregoing, Eduardo A. Aleman, A. Self-Regulatory Organization’s including whether the proposed rule Deputy Secretary. Statement of the Purpose of, and change is consistent with the Act. [FR Doc. 2019–28173 Filed 12–27–19; 8:45 am] Statutory Basis for, the Proposed Rule Comments may be submitted by any of BILLING CODE 8011–01–P Change the following methods: 1. Purpose Electronic Comments SECURITIES AND EXCHANGE The Exchange proposes to adopt a • Use the Commission’s internet COMMISSION new rule titled, ‘‘Off-Exchange RWA comment form (http://www.sec.gov/ Transfers’’ at NOM Options 6, Section 6. rules/sro.shtml); or [Release No. 34–87820; File No. SR– • Send an email to rule-comments@ NASDAQ–2019–097] This proposal is substantially the same as Cboe Exchange, Inc. (‘‘Cboe’’) Rule sec.gov. Please include File Number SR– 3 MRX–2019–25 on the subject line. Self-Regulatory Organizations; The 6.8. Nasdaq Stock Market LLC; Notice of Proposed Options 6, Section 6 is Paper Comments Filing and Immediate Effectiveness of intended to facilitate the reduction of • Send paper comments in triplicate Proposed Rule Change To Adopt a risk-weighted assets (‘‘RWA’’) to Secretary, Securities and Exchange New Rule Titled ‘‘Off-Exchange RWA attributable to open options positions. Commission, 100 F Street NE, Transfers’’ at Options 6, Section 6 SEC Rule 15c3–1 (Net Capital Washington, DC 20549–1090. Requirements for Brokers or Dealers) December 20, 2019. All submissions should refer to File (‘‘Net Capital Rules’’) requires registered Pursuant to Section 19(b)(1) of the broker-dealers, unless otherwise Number SR–MRX–2019–25. This file Securities Exchange Act of 1934 number should be included on the excepted, to maintain certain specified (‘‘Act’’),1 and Rule 19b–4 thereunder,2 minimum levels of capital.4 The Net subject line if email is used. To help the notice is hereby given that on December Commission process and review your Capital Rules are designed to protect 17, 2019, The Nasdaq Stock Market LLC securities customers, counterparties, comments more efficiently, please use (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the only one method. The Commission will and creditors by requiring that broker- Securities and Exchange Commission dealers have sufficient liquid resources (‘‘SEC’’ or ‘‘Commission’’) the proposed on hand, at all times, to meet their 13 See NOM and BX Rules at Chapter VII, Section rule change as described in Items I, II, 11. 14 For purposes only of waiving the 30-day 3 See Securities Exchange Act Release No. 87374 operative delay, the Commission has considered the 15 17 CFR 200.30–3(a)(12). (October 21, 2019), 84 FR 57542 (October 25, 2019) proposed rule’s impact on efficiency, competition, 1 15 U.S.C. 78s(b)(1). (SR–Cboe–2019–044). and capital formation. See 15 U.S.C. 78c(f). 2 17 CFR 240.19b–4. 4 17 CFR 240.15c3–1.

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financial obligations. Notably, hedged capital than would otherwise be ‘‘Person’’ is defined within proposed positions, including offsetting futures required under the Net Capital Rules. Options 6, Section 6(a) as an individual, and options contract positions, result in The Exchange is concerned with the partnership (general or limited), joint certain net capital requirement ability of Market Makers to provide stock company, corporation, limited reductions under the Net Capital Rules.5 liquidity in their appointed classes. The liability company, trust or Subject to certain exceptions, Clearing Exchange believes that permitting unincorporated organization, or any Participants 6 are subject to the Net market participants to efficiently governmental entity or agency or Capital Rules.7 However, a subset of transfer existing options positions political subdivision thereof. Clearing Participants are subsidiaries of through an off-exchange transfer process In other words, RWA transfers may U.S. bank holding companies, which, would likely have a beneficial effect on only occur between the same individual due to their affiliations with their parent continued liquidity in the options or legal entity. These are merely U.S.-bank holding companies, must market without adversely affecting transfers from one clearing account to comply with additional bank regulatory market quality. Liquidity in the listed another, both of which are attributable capital requirements pursuant to options market is critically important. to the same individual or legal entity. A The Exchange believes that the rulemaking required under the Dodd- market participant effecting an RWA proposed rule change provides market Frank Wall Street Reform and Consumer Transfer is analogous to an individual participants with an efficient Protection Act.8 Pursuant to this transferring funds from a checking mechanism to transfer their open mandate, the Board of Governors of the account to a savings account, or from an options positions from one clearing Federal Reserve System, the Office of account at one bank to an account at account to another clearing account and the Comptroller of the Currency, and the another bank—the money still belongs thereby increase liquidity in the listed Federal Deposit Insurance Corporation to the same person, who is just holding options market. NOM currently has no have approved a regulatory capital it in a different account for personal mechanism that firms may use to framework for subsidiaries of U.S. bank financial reasons. transfer positions between clearing holding company clearing firms.9 accounts without having to effect a For example, Market Maker A clears Generally, these rules, among other transaction with another party and close transactions on the Exchange into an things, impose higher minimum capital a position. account it has with Clearing Participant and higher asset risk weights than were The proposed rule provides that X, which is affiliated with a U.S-bank previously mandated for Clearing existing positions in options listed on holding company. Market Maker A Participants that are subsidiaries of U.S. the Exchange of a Participant or non- opens a clearing account with Clearing bank holding companies under the Net Participant (including an affiliate of a Participant Y, which is not affiliated Capital Rules. Furthermore, the new Participant) may be transferred on, from, with a U.S.-bank holding company. rules do not fully permit deductions for or to the books of a Clearing Participant Clearing Participant X has informed hedged securities or offsetting options Market Maker A that its open positions 10 off the Exchange if the transfer positions. Rather, capital charges establishes a net reduction of RWA may not exceed a certain amount at the under these standards are, in large part, attributable to those options positions end of a calendar month, or it will be based on the aggregate notional value of (an ‘‘RWA Transfer’’). Proposed subject to restrictions on new positions short positions regardless of offsets. As paragraph (a)(1) adds examples of two it may open the following month. On a result, in general, Clearing Participants transfers that would be deemed to August 28, Market Maker A reviews the that are subsidiaries of U.S. bank establish a net reduction of RWA, and open positions in its Clearing holding companies must hold thus qualify as a permissible RWA Participant X clearing account and substantially more bank regulatory Transfer: determines it must reduce its open • A transfer of options positions from positions to satisfy Clearing Participant 5 In addition, the Net Capital Rules permit various Clearing Corporation 11 member A to X’s requirements by the end of August. offsets under which a percentage of an option It determines that transferring out 1000 position’s gain at any one valuation point is Clearing Corporation member B that net allowed to offset another position’s loss at the same (offset) with positions held at Clearing short calls in class ABC will sufficiently valuation point (e.g., vertical spreads). Corporation member B, and thus closes reduce the RWA capital requirements in 6 The term Clearing Participant is defined within all or part of those positions (as the account with Clearing Participant X Chapter I, Section 1(a)(9). All Clearing Participants demonstrated in the example below) 12; to avoid additional position limits in must also be clearing members of The Options September. Market Maker A wants to Clearing Corporation (‘‘OCC’’). and 7 In the event federal regulators modify bank • A transfer of options positions from retain the positions in accordance with capital requirements in the future, the Exchange a bank-affiliated Clearing Corporation its risk profile. Pursuant to the proposed will reevaluate the proposed rule change at that member to a non-bank-affiliated rule change, on August 31, Market time to determine whether any corresponding Clearing Corporation member.13 Maker A transfers 1000 short calls in changes to the proposed rule are appropriate. class ABC to its clearing account with 8 H.R. 4173 (amending section 3(a) of the These transfers will not result in a Securities Exchange Act of 1934 (the ‘‘Act’’) (15 change in ownership, as they must Clearing Participant Y. As a result, U.S.C. 78c(a))). occur between accounts of the same Market Maker A can continue to provide 9 12 CFR 50; 79 FR 61440 (Liquidity Coverage Person. the same level of liquidity in class ABC Ratio: Liquidity Risk Measurement Standards). during September as it did in previous 10 Many options strategies, including relatively 11 months. simple strategies often used by retail customers and The term Clearing Corporation is defined more sophisticated strategies used by broker- within Chapter I, Section 1(a)(8). A Participant must give up a Clearing 12 dealers, are risk limited strategies or options spread This transfer would establish a net reduction of Participant for each transaction it effects strategies that employ offsets or hedges to achieve RWA attributable to the transferring Person, certain investment outcomes. Such strategies because there would be fewer open positions and on the Exchange, which identifies the typically involve the purchase and sale of multiple thus fewer assets subject to Net Capital Rules. Clearing Participant through which the options (and may be coupled with purchases or 13 This transfer would establish a net reduction of transaction will clear.14 A Participant sales of the underlying securities), executed RWA attributable to the transferring Person, may change the give up for a transaction simultaneously as part of the same strategy. In because the non-bank-affiliated Clearing many cases, the potential market exposure of these Corporation member would not be subject to Net strategies is limited and defined. Capital Rules, as described above. 14 See Options 5, Section 102.

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within a specified period of time.15 positions and short positions in the circumstances in September, Market Additionally, a Participant may also same series ‘‘offset’’ against each other, Maker A has determined it no longer change the Clearing Participant16 for a leaving no or a reduced position. For wants to hold those positions. The specific transaction. The transfer of example, if there were 100 long calls in proposed rule change would permit positions from an account with one one account, and 100 short calls of the Market Maker A to effect an RWA clearing firm to the account of another same option series were added to that Transfer of the 1000 short calls from its clearing firm pursuant to the proposed account, the positions would offset, account with Clearing Participant Y to rule change has a similar result as leaving no open positions. Currently, its account with Clearing Participant X changing a give up or CMTA, as it the Exchange permits off-exchange (or vice versa), which results in results in a position that resulted from transfers on behalf of a Market Maker elimination of those positions (and a a transaction moving from the account account for transactions in multiply reduction in RWA associated with of one clearing firm to another, just at listed options series on different them). As noted above, such netting a different time and in a different exchanges, but only if the Market Maker would have occurred if Market Maker A manner.17 In the above example, if nominees are trading for the same cleared the September transaction Market Maker A had initially given up Participant, and the options transactions directly into its account with Clearing Clearing Participant Y rather than on the different options exchanges clear Participant Y, or had not effected an Clearing Participant X on the into separate exchange-specific accounts RWA Transfer in August. Netting transactions that resulted in the 1000 because they cannot easily clear into the provides market participants with long calls in class ABC, or had changed same Market Maker account at OCC. In appropriate flexibility to conduct their the give-up or CMTA to Clearing such instances, all Market Maker businesses as they see fit while having Participant Y pursuant to Options 6, positions in the exchange-specific the ability to reduce RWA capital Section 1 the ultimate result would have accounts for the multiply listed class requirements when necessary. been the same. There are a variety of would be automatically transferred on reasons why firms give up or CMTA their trade date into one central Market RWA Transfers may not result in transactions to certain clearing firms Maker account (commonly referred to as preferential margin or haircut (and not to non-bank affiliate clearing a ‘‘universal account’’) at the Clearing treatment.18 Additionally, RWA firms) at the time of a transaction, and Corporation. Positions cleared into a Transfers may only be effected for the proposed rule change provides firms universal account would automatically options listed on the Exchange and will with a mechanism to achieve the same net against each other. be subject to applicable laws, rules, and result at a later time. While RWA Transfers are not regulations, including rules of other Proposed paragraph (a)(2) states RWA occurring because of limitations related self-regulatory organizations (including Transfers may occur on a routine, to trading on different exchanges, OCC).19 recurring basis. As noted in the example similar reasoning for the above Finally, the Exchange notes it is above, clearing firms may impose exception applies to why netting should reserving Sections 5 and 7 of Options 6 restrictions on the amount of open be permissible for the limited purpose for consistency in rule numbering with positions. Permitting transfers on a of reducing RWA. Firms may maintain Nasdaq affiliated markets. routine, recurring basis will provide different clearing accounts for a variety market participants with the flexibility of reasons, such as the structure of their 2. Statutory Basis to comply with these restrictions when businesses, the manner in which they necessary to avoid position limits on trade, their risk management The Exchange believes that its future options activity. Additionally, procedures, and for capital purposes. If proposal is consistent with Section 6(b) proposed paragraph (a)(6) provides that a Market Maker clears all transactions of the Act,20 in general, and furthers the no prior written notice to the Exchange into a universal account, offsetting objectives of Section 6(b)(5) of the Act,21 is required for RWA Transfers. Because positions would automatically net. in particular, in that it is designed to of the potential routine basis on which However, if a Market Maker has promote just and equitable principles of RWA Transfers may occur, and because multiple accounts into which its trade, to remove impediments to and of the need for flexibility to comply transactions cleared, they would not perfect the mechanism of a free and with the restrictions described above, automatically net. While there are times open market and a national market the Exchange believes it may interfere when a firm may not want to close out system, and, in general to protect with the ability of investors firms to open positions to reduce RWA, there are investors and the public interest. comply with any Clearing Participant other times when a firm may determine Additionally, the Exchange believes the restrictions describe above, and may be it is appropriate to close out positions proposed rule change is consistent with burdensome to provide notice for these to accomplish a reduction in RWA. the Section 6(b)(5) 22 requirement that routine transfers. In the example above, suppose after the rules of an exchange not be designed Proposed paragraph (a)(3) states RWA making the RWA Transfer described to permit unfair discrimination between Transfers may result in the netting of above, Market Maker A effects a customers, issuers, brokers, or dealers. positions. Netting occurs when long transaction on September 25 that results in 1000 long calls in class ABC, which 18 See proposed paragraph (a)(4). 19 15 See Chapter VI, Section 14. clears into its account with Clearing See proposed introductory paragraph and proposed paragraph (a)(7). Transfers of non- 16 The Clearing Member Trade Assignment Participant X. If Market Maker A had Exchange listed options and other financial (‘‘CMTA’’) process at The Options Clearing not effected its RWA Transfer in August, instruments are not governed by this proposed rule. Corporation (‘‘OCC’’) facilitates the transfer of the 1000 long calls would have offset option trades/positions from one OCC clearing Any RWA transfers will be subject to all applicable member to another in an automated fashion. against the 1000 short calls, eliminating recordkeeping requirements applicable to Changing a CMTA for a specific transaction would both positions and thus any RWA Participants and Clearing Participants under the allocate the trade to a different OCC clearing capital requirements associated with Securities Exchange Act of 1934, and the rules and regulations thereunder (the ‘‘Act’’), such as Rule member than the one initially identified on the them. At the end of August, Market trade. 17a–3 and 17a–4. a [sic] 17 The transferred positions will continue to be Maker A did not want to close out the 20 15 U.S.C. 78f(b). subject to OCC rules, as they will continue to be 1000 short calls when it made its RWA 21 15 U.S.C. 78f(b)(5). held in an account of an OCC member. Transfer. However, given changed 22 Id.

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The Exchange’s proposal is substantially change will permit netting while will impose any burden on intra-market the same as Cboe Rule 6.8 [sic] allowing firms to continue to maintain competition that is not necessary or In particular, the Exchange believes different clearing accounts in a manner appropriate in furtherance of the the proposed rule change to permit consistent with their businesses. purposes of the Act, as use of the RWA Transfers will remove The Exchange recognizes the proposed process is voluntary. All impediments to and perfect the numerous benefits of executing options Participants and non-Participants with mechanism of a free and open market transactions occur on an exchanges, open positions in options listed on the and a national market system by including price transparency, potential Exchange may use the proposed off- providing liquidity in the listed options price improvement, and a clearing exchange transfer process to reduce the market. The Exchange believes guarantee. However, the Exchange RWA capital requirements attributable providing market participants with an believes it is appropriate to permit RWA to those positions. The Exchange does efficient process to reduce RWA capital Transfers to occur off the exchange, as not believe that the proposed rule requirements attributable to open these benefits are inapplicable to RWA change will impose any burden on positions in clearing accounts with U.S. Transfers. RWA Transfers have a narrow intermarket competition that is not bank-affiliated clearing firms may scope and are intended to achieve a necessary or appropriate in furtherance contribute to additional liquidity in the limited, benefit purpose. RWA Transfers of the purposes of the Act. RWA listed options market, which, in general, are not intended to be a competitive Transfers have a limited purpose, which protects investors and the public trading tool. There is no need for price is to reduce RWA attributable to open interest. discovery or improvement, as the positions in listed options in order to The proposed rule change, in purpose of the transfer is to reduce free up capital. The Exchange believes particular the proposed changes to RWA asset capital requirements the proposed rule change may relieve permit RWA transfers to occur on a attributable to a market participants’ the burden on liquidity providers in the routine, recurring basis and result in positions. Unlike trades on an exchange, options market by reducing the RWA netting, also provides market the price at which an RWA Transfers attributable to their open positions. As participants with sufficient flexibility to occurs is immaterial—the resulting a result, market participants may be able reduce RWA capital requirements at reduction in RWA is the critical part of to increase liquidity they provide to the times necessary to comply with the transfer. RWA Transfers will result market, which liquidity benefits all requirements imposed on them by in no change in ownership, and thus market participants. clearing firms. This will permit market they do not constitute trades with a participants to respond to then-current counterparty (and thus eliminating the C. Self-Regulatory Organization’s market conditions, including volatility need for a counterparty guarantee). The Statement on Comments on the and increased volume, by reducing the transactions that resulted in the open Proposed Rule Change Received From RWA capital requirements associated positions to be transferred as an RWA Members, Participants, or Others with any new positions they may open Transfer were already guaranteed by an No written comments were either while those conditions exist. Given the OCC clearing member, and the positions solicited or received. additional capital that may become will continue to be subject to OCC rules, available to market participants as a as they will continue to be held in an III. Date of Effectiveness of the result of the RWA Transfers, market account with an OCC clearing member. Proposed Rule Change and Timing for participants will be able to continue to The narrow scope of the proposed rule Commission Action provide liquidity to the market, even change and the limited, beneficial Because the foregoing proposed rule during periods of increased volume and purpose of RWA Transfers make change does not: (i) Significantly affect volatility, which liquidity ultimately allowing RWA Transfers to occur off the the protection of investors or the public benefits investors. It is not possible for floor appropriate and important to interest; (ii) impose any significant market participants to predict what support the provision of liquidity in the burden on competition; and (iii) become market conditions will exist at a specific listed options market. operative for 30 days from the date on time, and when volatility will occur. The proposed rule change does not which it was filed, or such shorter time The proposed rule change to permit unfairly discriminate against market as the Commission may designate, it has routine, recurring RWA Transfers (and participants, as all Participants and non- become effective pursuant to Section to not provide prior written notice) will Participants with open positions in 19(b)(3)(A)(iii) of the Act 23 and provide market participants with the options listed on the Exchange may use subparagraph (f)(6) of Rule 19b–4 ability to respond to these conditions the proposed off-exchange transfer thereunder.24 whenever they occur. Permitting process to reduce the RWA capital At any time within 60 days of the transfers on a routine, recurring basis requirements of Clearing Participants. filing of the proposed rule change, the will provide market participants with Commission summarily may the flexibility to comply with these B. Self-Regulatory Organization’s temporarily suspend such rule change if restrictions when necessary to avoid Statement on Burden on Competition it appears to the Commission that such position limits on future options The Exchange does not believe that action is necessary or appropriate in the activity. In addition, with respect to the proposed rule change will impose public interest, for the protection of netting, as discussed above, firms may any burden on competition that is not investors, or otherwise in furtherance of maintain different clearing accounts for necessary or appropriate in furtherance the purposes of the Act. If the a variety of reasons, such as the of the purposes of the Act. structure of their businesses, the manner The Exchange does not believe that 23 15 U.S.C. 78s(b)(3)(A)(iii). in which they trade, their risk the proposed rule change will impose 24 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– management procedures, and for capital any burden on competition that is not 4(f)(6) requires a self-regulatory organization to give purposes. Netting may otherwise occur necessary or appropriate in furtherance the Commission written notice of its intent to file with respect to a firm’s positions if it of the purposes of the Act. This process the proposed rule change at least five business days prior to the date of filing of the proposed rule structured its clearing accounts is not intended to be a competitive change, or such shorter time as designated by the differently, such as by using a universal trading tool. The Exchange does not Commission. The Exchange has satisfied this account. Therefore, the proposed rule believe that the proposed rule change requirement.

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Commission takes such action, the For the Commission, by the Division of Washington, DC 20549–1090. Commission shall institute proceedings Trading and Markets, pursuant to delegated Applicant, Inter-American Development to determine whether the proposed rule authority.25 Bank, 1300 New York Avenue NW should be approved or disapproved. Washington, DC 20577. J. Matthew DeLesDernier, FOR FURTHER INFORMATION CONTACT: IV. Solicitation of Comments Assistant Secretary. Benjamin Kalish, Senior Counsel, or Interested persons are invited to [FR Doc. 2019–28028 Filed 12–27–19; 8:45 am] Parisa Haghshenas, Branch Chief, at submit written data, views, and BILLING CODE P 202–551–6825 (Division of Investment arguments concerning the foregoing, Management, Chief Counsel’s Office). including whether the proposed rule change is consistent with the Act. SECURITIES AND EXCHANGE SUPPLEMENTARY INFORMATION: The Comments may be submitted by any of COMMISSION following is a summary of the application. The complete application the following methods: [Investment Advisers Act Release No. 5420; File No. 803–00248] may be obtained via the Commission’s Electronic Comments website either at http://www.sec.gov/ • Use the Commission’s internet Inter-American Development Bank; rules/iareleases.shtml or by calling (202) comment form (http://www.sec.gov/ Notice of Application 551–8090. rules/sro.shtml); or Applicant’s Representations • Send an email to rule-comments@ December 20, 2019. sec.gov. Please include File Number SR– AGENCY: Securities and Exchange 1. The IDB was established by NASDAQ–2019–097 on the subject line. Commission (‘‘Commission’’). international treaty with the principal ACTION: Notice. purpose to contribute to the acceleration Paper Comments of the process of economic and social SUMMARY: • Send paper comments in triplicate Notice of application for an development in Latin America and the to Secretary, Securities and Exchange exemption under section 202(a)(11)(H) Caribbean. The IDB’s principal activities Commission, 100 F Street NE, of the Investment Advisers Act of 1940 are providing loans and credit Washington, DC 20549–1090. (‘‘Advisers Act’’). guarantees, and technical assistance to Applicant: Inter-American support development projects in its All submissions should refer to File Development Bank (‘‘IDB’’ or developing member countries. The IDB Number SR–NASDAQ–2019–097. This ‘‘Applicant’’). file number should be included on the Relevant Advisers Act Sections: has operated since 1959 under an subject line if email is used. To help the Exemption requested under section agreement signed by the governments of Commission process and review your 202(a)(11)(H) of the Advisers Act from its member countries, including the comments more efficiently, please use section 202(a)(11) of the Advisers Act. U.S., and its member countries own all only one method. The Commission will Summary of Application: The of its capital stock. post all comments on the Commission’s Applicant requests that the Commission 2. The Applicant provides substantial internet website (http://www.sec.gov/ issue an order declaring it to be a person technical assistance to the governments rules/sro.shtml). Copies of the not within the intent of Section of its member countries as part of or in submission, all subsequent 202(a)(11) of the Advisers Act, which parallel to a loan or guarantee, or amendments, all written statements defines the term ‘‘investment adviser.’’ independently. The purpose of IDB’s with respect to the proposed rule Filing Dates: The application was technical assistance activities is both to change that are filed with the filed on June 7, 2019, and amended on improve the operations of the member Commission, and all written October 1, 2019. government as they relate to economic communications relating to the Hearing or Notification of Hearing: An and social development and to proposed rule change between the order granting the application will be contribute to knowledge transfer and Commission and any person, other than issued unless the Commission orders a capacity building of developing member those that may be withheld from the hearing. Interested persons may request countries. Technical assistance includes public in accordance with the a hearing by writing to the assisting member countries to improve provisions of 5 U.S.C. 552, will be Commission’s Secretary and serving the their asset and liability management available for website viewing and Applicant with a copy of the request, techniques and advice for member printing in the Commission’s Public personally or by mail. Hearing requests countries on adopting sound portfolio Reference Room, 100 F Street NE, should be received by the Commission management techniques. Washington, DC 20549, on official by 5:30 p.m. on January 14, 2019, and 3. The Applicant seeks to expand its business days between the hours of should be accompanied by proof of services to meet requests from member 10:00 a.m. and 3:00 p.m. Copies of the service on the Applicant, in the form of countries to help them strengthen the filing also will be available for an affidavit or, for lawyers, a certificate management of their reserves and to inspection and copying at the principal of service. Pursuant to Rule 0–5 under bring their treasury operations in line office of the Exchange. All comments the Advisers Act, hearing requests with current capital and financial received will be posted without change. should state the nature of the writer’s markets best practices. The Applicant Persons submitting comments are interest, any facts bearing upon the would provide these treasury-related cautioned that we do not redact or edit desirability of a hearing on the matter, services only to IDB member countries, personal identifying information from the reason for the request, and the issues their central banks, other governmental comment submissions. You should contested. Persons may request institutions of such member countries, submit only information that you wish notification of a hearing by writing to and other international organizations to make available publicly. All the Commission’s Secretary. owned entirely by their sovereign nation submissions should refer to File ADDRESSES: Secretary, Securities and members, substantially all of which Number SR–NASDAQ–2019–097 and Exchange Commission, 100 F Street NE, members are also members of the IDB should be submitted on or before (collectively ‘‘Potential Clients’’). The January 21, 2020. 25 17 CFR 200.30–3(a)(12). Applicant would provide its services

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only with respect to government and/or applicable to the ‘‘United States, a State, the Securities and Exchange public assets. or any political subdivision of a State, Commission (‘‘Commission’’) a 4. Member countries have requested or any agency, authority, or proposed rule change as described in that the Applicant provide them with instrumentality of any one or more of Items I and II below, which Items have asset management and related services the foregoing, or any corporation which been prepared by the Exchange. The (back office, risk, accounting, advisory is wholly owned directly or indirectly Commission is publishing this notice to and other support services) to help them by any one or more of the foregoing, or solicit comments on the proposed rule develop additional internal capacities. any officer, agent, or employee of any of change from interested persons. The Applicant would exercise the foregoing acting as such in the discretionary authority with respect to course of his official duty, unless such I. Self-Regulatory Organization’s the assets, acting as the agent for provision makes specific reference Statement of the Terms of Substance of Potential Clients. thereto.’’ While the Applicant the Proposed Rule Change 5. Member countries have also acknowledges that the Advisers Act The Exchange is filing a proposal to requested advice and instruction does not expressly exempt international amend Rule 100, Definitions; Exchange relating to hedging activities and to organizations made up solely of Rule 503, Openings on the Exchange; capital markets borrowings. The sovereign nations, the Applicant argues Exchange Rule 515, Execution of Applicant proposes to provide detailed that the Advisers Act seems clearly Orders; Exchange Rule 516, Order advice on debt management, hedging intended not to apply to such Types; and Exchange Rule 521, techniques for specific transactions, and organizations. Nullification and Adjustment of Options capital markets borrowings. The 5. The Applicant acknowledges that a Transactions Including Obvious Errors. Applicant also proposes to provide foreign individual or corporation would The text of the proposed rule change targeted training seminars and courses reasonably expect the protections of the is available on the Exchange’s website at at the IDB’s offices, at Potential Clients’ U.S. securities laws to apply when http://www.miaxoptions.com/rule- locations, or online. doing business with an investment filings/pearl at MIAX PEARL’s principal 6. The Applicant expects to charge a adviser resident in the United States. office, and at the Commission’s Public fee for the activities/services it provides The Applicant asserts, however, that, Reference Room. that would allow it to recover the given the particular nature of the IDB, associated costs. its unique purposes, and the nature of II. Self-Regulatory Organization’s its constituent members, recipients of Statement of the Purpose of, and Applicants’ Legal Analysis the proposed investment advice would Statutory Basis for, the Proposed Rule 1. Section 202(a)(11) of the Advisers not reasonably expect the Advisers Act Change Act defines ‘‘investment adviser’’ to to apply to those services. In its filing with the Commission, the mean ‘‘any person who, for For the Commission, by the Division of Exchange included statements compensation, engages in the business Investment Management, under delegated concerning the purpose of and basis for of advising others . . . as to the value authority. the proposed rule change and discussed of securities or as to the advisability of J. Matthew DeLesDernier, any comments it received on the investing in, purchasing, or selling Assistant Secretary. proposed rule change. The text of these securities, or who, for compensation [FR Doc. 2019–28050 Filed 12–27–19; 8:45 am] statements may be examined at the and as a part of a regular business, BILLING CODE 8011–01–P places specified in Item IV below. The issues or promulgates analyses or Exchange has prepared summaries, set reports concerning securities . . . .’’ forth in sections A, B, and C below, of 2. The Applicant proposes to offer SECURITIES AND EXCHANGE the most significant aspects of such asset management and advisory services COMMISSION statements. on a regular, recurring basis and to charge recipients a fee for these services. [Release No. 34–87829; File No. SR– A. Self-Regulatory Organization’s Accordingly, the Applicant would be PEARL–2019–35] Statement of the Purpose of, and ‘‘in the business of’’ providing Statutory Basis for, the Proposed Rule Self-Regulatory Organizations; MIAX investment advice for compensation and Change PEARL, LLC; Notice of Filing and would be an ‘‘investment adviser’’ for Immediate Effectiveness of a Proposed 1. Purpose purposes of the Advisers Act. 3. Section 202(a)(11)(H) of the Rule Change To Amend Exchange The Exchange proposes to amend Rule 100, Definitions, Exchange Rule Advisers Act authorizes the Exchange Rule 100, Definitions; 503, Openings on the Exchange, Commission to exclude from the Exchange Rule 503, Openings on the Exchange Rule 515, Execution of definition of ‘‘investment adviser’’ Exchange; Exchange Rule 515, Orders, Exchange Rule 516, Order persons that are not within the intent of Execution of Orders; Exchange Rule Types, and Exchange Rule 521, section 202(a)(11). The Applicant 516, Order Types; and Exchange Rule Nullification and Adjustment of requests that the Commission issue an 521, Nullification and Adjustment of Options Transactions Including order under section 202(a)(11)(H) Options Transactions Including Obvious Obvious Errors declaring it to be a person not within Errors, to make non-substantive edits to the intent of section 202(a)(11). December 20, 2019. update internal cross references in the 4. The Applicant argues that the Pursuant to Section 19(b)(1) of the Exchange’s rulebook. Advisers Act contemplates the Securities Exchange Act of 1934 The Exchange is an affiliate of the regulation of private sector entities and (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 Miami International Securities was not intended to regulate an entity notice is hereby given that on December Exchange, LLC (‘‘MIAX’’) and that is an organization of sovereign 19, 2019, MIAX PEARL, LLC (‘‘MIAX incorporates by reference a number of nations providing investment advice to PEARL’’ or the ‘‘Exchange’’) filed with MIAX Exchange rules into its rulebook. Potential Clients. The Applicant states MIAX Exchange recently amended Rule that section 202(b) of the Advisers Act 1 15 U.S.C. 78s(b)(1). 1400, Definitions, found in Chapter XIV provides that the Advisers Act is not 2 17 CFR 240.19b–4. of the MIAX Exchange rules, which are

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its rules pertaining to the Options Order remove impediments to and perfect the burden on competition; and (iii) become Protection and Locked and Crossed mechanisms of a free and open market operative for 30 days from the date on Market Plan.3 The MIAX Exchange and a national market system and, in which it was filed, or such shorter time adopted a definition for Complex Trade general, to protect investors and the as the Commission may designate, it has which, when inserted into its proper public interest. become effective pursuant to Section alphabetical position in MIAX Exchange The Exchange believes that the 19(b)(3)(A) of the Act and subparagraph Rule 1400, caused the subsequent proposed non-substantive rule changes (f)(6) of Rule 19b–4 thereunder. following definitions to be renumbered to update internal cross-references A proposed rule change filed (e.g., the existing subparagraph (d) within the Exchange’s Rules promotes pursuant to Rule 19b–4(f)(6) under the became new subparagraph (e); existing just and equitable principles of trade Act 7 normally does not become subparagraph (e) became new and removes impediments to and operative for 30 days after the date of its subparagraph (f), etc . . .). As a result perfects the mechanism of a free and filing. However, Rule 19b–4(f)(6)(iii) 8 of the change to the MIAX Exchange open market and a national market permits the Commission to designate a Rule 1400, a number of internal cross system and, in general, protects shorter time if such action is consistent references contained in the Exchange’s investors and the public interest by with the protection of investors and the rulebook must be updated. providing additional clarity and public interest. The Exchange has Specifically, the internal cross- precision in the Exchange’s rules. The requested that the Commission waive reference to Eligible Exchanges in the Exchange believes it is in the public the 30-day operative delay so that the definition of ABBO or Away Best Bid or interest for rules to be accurate and proposed rule change may become Offer, in Exchange Rule 100, must be precise so as to eliminate the potential operative upon filing. Waiver of the updated from Rule 1400(f) to Rule for confusion. operative delay would allow the 1400(g). The internal cross-reference to B. Self-Regulatory Organization’s Exchange to immediately harmonize its Eligible Exchanges in Exchange Rule Statement on Burden on Competition rules to MIAX Options to ensure that 503(a)(5) must be updated from Rule the internal cross-references in the 1400(f) to Rule 1400(g). The internal The Exchange does not believe that Exchange’s rulebook are correct. cross-reference to the NBBO in the proposed rule change will impose Therefore, the Commission believes that Exchange Rule 515(a) must be updated any burden on competition that is not waiver of the 30-day operative delay is from Rule 1400(j) to Rule 1400(k). The necessary or appropriate in furtherance consistent with the protection of internal cross-reference to Intermarket of the purposes of the Act. investors and the public interest. Sweep Orders in Exchange Rule 516(f) The Exchange does not believe that Accordingly, the Commission hereby must be updated from Rule 1400(h) to the proposed rule change will impose waives the operative delay and Rule 1400(i). Similarly in Rule 516(f) any burden on intermarket competition designates the proposed rule change the internal cross-references to as the proposed change is non- operative upon filing.9 Protected Quotations and Eligible substantive in nature. The non- At any time within 60 days of the Exchanges must be updated from substantive edits to update internal filing of the proposed rule change, the 1400(p) and (f) to 1400(q) and (g) cross-references in the Exchange’s Commission summarily may respectively. Lastly, in Rule 516(f), the rulebook provides precision and temporarily suspend such rule change if internal cross-reference to Protected Bid accuracy in the Exchange’s rules. it appears to the Commission that such or Protected Offer must be updated from The Exchange does not believe that action is necessary or appropriate in the 1400(o) to 1400 (p). Finally, the internal the proposed rule change will impose public interest, for the protection of cross-reference to the Options Order any burden on intramarket competition investors, or otherwise in furtherance of Protection and Locked/Crossed Market as the non-substantive edits to update the purposes of the Act. If the Plan in Exchange Rule 521(j) must be internal cross-references in the Commission takes such action, the updated from Rule 1400(n) to Rule Exchange’s rulebook provide additional Commission shall institute proceedings 1400(o). detail and clarity in the Exchange’s to determine whether the proposed rule The Exchange believes that these non- rules, which apply equally to all 6 change should be approved or substantive changes will add clarity and Exchange Members. disapproved. precision to the Exchange’s rules. C. Self-Regulatory Organization’s IV. Solicitation of Comments 2. Statutory Basis Statement on Comments on the Proposed Rule Change Received From Interested persons are invited to MIAX PEARL believes that its Members, Participants, or Others submit written data, views, and proposed rule change is consistent with arguments concerning the foregoing, 4 Written comments were neither Section 6(b) of the Act in general, and including whether the proposed rule solicited nor received. furthers the objectives of Section 6(b)(5) change is consistent with the Act. of the Act 5 in particular, in that it is III. Date of Effectiveness of the Comments may be submitted by any of designed to prevent fraudulent and Proposed Rule Change and Timing for the following methods: manipulative acts and practices, to Commission Action promote just and equitable principles of Electronic Comments Because the proposed rule change trade, to foster cooperation and • Use the Commission’s internet coordination with persons engaged in does not: (i) Significantly affect the protection of investors or the public comment form (http://www.sec.gov/ regulating, clearing, settling, processing rules/sro.shtml); or information with respect to, and interest; (ii) impose any significant

facilitating transactions in, securities, to 7 6 The term ‘‘Member’’ means an individual or 17 CFR 240.19b–4(f)(6). organization that is registered with the Exchange 8 17 CFR 240.19b–4(f)(6)(iii). 3 See Securities Exchange Act Release No. 87693 pursuant to Chapter II of the MIAX PEARL Rules 9 For purposes only of waiving the 30-day (December 9, 2019), 84 FR 68264 (December 13, for purposes of trading on the Exchange as an operative delay, the Commission also has 2019) (SR–MIAX–2019–48). ‘‘Electronic Exchange Member’’ or ‘‘Market Maker.’’ considered the proposed rule’s impact on 4 15 U.S.C. 78f(b). Members are deemed ‘‘members’’ under the efficiency, competition, and capital formation. See 5 15 U.S.C. 78f(b)(5). Exchange Act. See Exchange Rule 100. 15 U.S.C. 78c(f).

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• Send an email to rule-comments@ SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s sec.gov. Please include File Number SR– COMMISSION Statement of the Purpose of, and PEARL–2019–35 on the subject line. Statutory Basis for, the Proposed Rule Change Paper Comments [Release No. 34–87844; File No. SR–GEMX– 2019–18] 1. Purpose • Send paper comments in triplicate Self-Regulatory Organizations; Nasdaq The Exchange proposes to adopt a to Secretary, Securities and Exchange new rule at Options 3, Section 19 titled Commission, 100 F Street NE, GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed ‘‘Mass Cancellation of Trading Interest.’’ Washington, DC 20549–1090. The Exchange also proposes to amend Rule Change To Adopt a Mass definitions within General 1, Section 1, All submissions should refer to File Cancellation Rule and Amend Other adopt a new definition for ‘‘Away Best Number SR–PEARL–2019–35. This file Sections of the Rulebook number should be included on the Bid or Offer within Options 1, Section subject line if email is used. To help the December 23, 2019. 1, and update rule citations in various other rules. Commission process and review your Pursuant to Section 19(b)(1) of the comments more efficiently, please use Securities Exchange Act of 1934 Mass Cancellation of Trading Interest only one method. The Commission will (‘‘Act’’),1 and Rule 19b–4 thereunder,2 The Exchange proposes to adopt a post all comments on the Commission’s notice is hereby given that on December new rule at Options 3, Section 19 titled internet website (http://www.sec.gov/ 9, 2019, Nasdaq GEMX, LLC (‘‘GEMX’’ ‘‘Mass Cancellation of Trading Interest.’’ rules/sro.shtml). Copies of the or ‘‘Exchange’’) filed with the Securities The Nasdaq Options Market LLC submission, all subsequent and Exchange Commission (‘‘SEC’’ or (‘‘NOM’’) and Nasdaq BX, Inc. (‘‘BX’’) amendments, all written statements ‘‘Commission’’) the proposed rule rules at Chapter VII, Section 11 permit with respect to the proposed rule change as described in Items I and II Participants on those markets to contact change that are filed with the below, which Items have been prepared market operations and manually request Commission, and all written by the Exchange. The Commission is cancellation of interest. The Exchange communications relating to the publishing this notice to solicit proposes to adopt a rule which also proposed rule change between the comments on the proposed rule change permits Members to contact market Commission and any person, other than from interested persons. operations and request the Exchange to those that may be withheld from the manually cancel interest. The proposed public in accordance with the I. Self-Regulatory Organization’s new rule would state, ‘‘A Member may provisions of 5 U.S.C. 552, will be Statement of the Terms of Substance of cancel any bids, offers, and orders in available for website viewing and the Proposed Rule Change any series of options by requesting printing in the Commission’s Public GEMX Market Operations 3 staff to effect The Exchange proposes to amend Reference Room, 100 F Street NE, such cancellation as per the instructions definitions within General 1, Section 1, Washington, DC 20549, on official of the Member.’’ This new rule reflects adopt a new definition for ‘‘Away Best business days between the hours of the Exchange’s current practice of Bid or Offer’’ within Options 1, Section 10:00 a.m. and 3:00 p.m. Copies of the allowing Members to contact GEMX 1, and update rule citations in various filing also will be available for Market Operations and request the other rules. Exchange to cancel any bid, offer or inspection and copying at the principal order in any series of options. The office of the Exchange. All comments The text of the proposed rule change is available on the Exchange’s website at Exchange would cancel such bid, offer received will be posted without change. or order pursuant to the Member’s Persons submitting comments are http://nasdaqgemx.cchwallstreet.com/, at the principal office of the Exchange, instruction. The Exchange desires to cautioned that we do not redact or edit memorialize the availability of this and at the Commission’s Public personal identifying information from service. comment submissions. You should Reference Room. Definitions submit only information that you wish II. Self-Regulatory Organization’s to make available publicly. All Statement of the Purpose of, and The Exchange proposes to make a submissions should refer to File Statutory Basis for, the Proposed Rule technical amendment to General 1, Number SR–PEARL–2019–35 and Change Section 1(a)(6) to note the acronym for should be submitted on or before an Electronic Access Member, an January 21, 2020. In its filing with the Commission, the ‘‘EAM’’ within the definition. The acronym is utilized throughout the For the Commission, by the Division of Exchange included statements Rulebook. Defining the acronym within Trading and Markets, pursuant to delegated concerning the purpose of and basis for the definition will add transparency to authority.10 the proposed rule change and discussed the Rulebook. J. Matthew DeLesDernier, any comments it received on the proposed rule change. The text of these The Exchange proposes to add the Assistant Secretary. statements may be examined at the definition of an ‘‘Away Best Bid or [FR Doc. 2019–28085 Filed 12–27–19; 8:45 am] places specified in Item IV below. The Offer’’ or ‘‘ABBO’’ within Options 1, Section 1(a)(4). This term is utilized BILLING CODE 8011–01–P Exchange has prepared summaries, set throughout the Rulebook. Defining this forth in sections A, B, and C below, of term will bring greater transparency to the most significant aspects of such the Rulebook. The Exchange also statements. proposes to update the numbering in the remainder of the rule and also update

1 15 U.S.C. 78s(b)(1). 3 The request to Market Operations is a manual 10 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4. request which is made telephonically.

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cross-references throughout the to the mass cancellation message. In C. Self-Regulatory Organization’s Rulebook 4 as a result of the addition, mass cancellation messages Statement on Comments on the renumbering. entered into the System by GEMX Proposed Rule Change Received From Market Operations are handled by the Members, Participants, or Others Other Changes System through the same queuing No written comments were either The Exchange proposes to reserve mechanism that a quote or order solicited or received. certain rules 5 in connection with a message is handled by the System. The Rulebook harmonization project which Exchange notes its processing of a mass III. Date of Effectiveness of the organizes the rules of the Nasdaq cancellation message inputted by GEMX Proposed Rule Change and Timing for affiliated markets. Market Operations and handled by the Commission Action 2. Statutory Basis System is consistent with firm quote Because the foregoing proposed rule and order handling rules. The Exchange believes that its change does not: (i) Significantly affect As noted above, NOM and BX Rules proposal is consistent with Section 6(b) the protection of investors or the public at Chapter VII, Section 11 allow NOM of the Act,6 in general, and furthers the interest; (ii) impose any significant and BX Participants to also contact objectives of Section 6(b)(5) of the Act,7 burden on competition; and (iii) become market operations and request in particular, in that it is designed to operative for 30 days from the date on cancellations of interest. This new rule promote just and equitable principles of which it was filed, or such shorter time reflects the Exchange’s current practice. trade, to remove impediments to and as the Commission may designate, it has become effective pursuant to Section perfect the mechanism of a free and Definitions 10 open market and a national market 19(b)(3)(A)(iii) of the Act and The Exchange’s proposal to add the system, and, in general to protect subparagraph (f)(6) of Rule 19b–4 acronym for an Electronic Access 11 investors and the public interest. thereunder. Member, an ‘‘EAM’’ within General 1, A proposed rule change filed under Mass Cancellation of Trading Interest Section 1 and add the definition of an Rule 19b–4(f)(6) 12 normally does not The Exchange’s proposal to ‘‘Away Best Bid or Offer’’ or ‘‘ABBO’’ become operative prior to 30 days after memorialize the Mass Cancellation of within Options 1, Section 1(a)(4) are the date of the filing. However, pursuant Trading Interest rule within Options 3, consistent with the Act because these to Rule 19b–4(f)(6)(iii),13 the Section 19 is consistent with the Act amendments will add transparency to Commission may designate a shorter because permitting Members to contact the Rulebook. time if such action is consistent with the protection of investors and the public Market Operations as a manual Other Changes alternative to automated functionality interest. The Exchange requests that the which similarly allows Members to The remainder of the changes to Commission waive the 30-day operative cancel interest provides Members correct numbering and citations are delay so that the proposal may become experiencing their own system issues non-substantive. operative immediately upon filing. The Exchange notes that NOM and BX with a means to manage risk. Today, B. Self-Regulatory Organization’s currently have rules that permit NOM Members are able to cancel interest, in Statement on Burden on Competition an automated fashion through and BX Participants to cancel interest,14 protocols 8 and the Kill Switch.9 This is The Exchange does not believe that and that the Exchange proposes the a voluntary services offered to all the proposed rule change will impose additional changes to provide greater Members. any burden on competition that is not clarity in its rules. The Commission The Exchange notes that offering this necessary or appropriate in furtherance believes that waiving the 30-day service, which permits Members to of the purposes of the Act. operative delay is consistent with the protection of investors and the public cancel interest, will not diminish a Mass Cancellation of Trading Interest Market Maker’s obligation with respect interest. Accordingly, the Commission to providing two-sided quotations and The Exchange’s proposal to waives the 30-day operative delay and this rule is not inconsistent with other memorialize the Mass Cancellation of designates the proposed rule change firm quote obligations of the Market Trading Interest rule within Options 3, operative upon filing.15 Maker. Upon the request of a Member, Section 19 does not impose an undue At any time within 60 days of the GEMX Market Operations will manually burden on competition because all filing of the proposed rule change, the input a mass cancellation message into Members may utilize this service. This Commission summarily may the System consistent with the new rule reflects the Exchange’s current temporarily suspend such rule change if Member’s instruction to cancel trading practice. it appears to the Commission that such interest. Once the mass cancellation Definitions message is entered into the System by 10 15 U.S.C. 78s(b)(3)(A)(iii). GEMX Market Operations, the message The Exchange’s proposal to add the 11 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– acronym for an Electronic Access 4(f)(6) requires the Exchange to give the will be accepted by the System in the Commission written notice of its intent to file the order of receipt in the queue such that Member, an ‘‘EAM’’ within General 1, proposed rule change, along with a brief description the interest that was already accepted Section 1 and add the definition of an and text of the proposed rule change, at least five into the System will be processed prior ‘‘Away Best Bid or Offer’’ or ‘‘ABBO’’ business days prior to the date of filing of the within Options 1, Section 1(a)(4) do not proposed rule change, or such shorter time as designated by the Commission. The Exchange has 4 See Options 3, Section 10 and Options 7, impose an undue burden on satisfied this requirement. Section 1. competition because these amendments 12 17 CFR 240.19b–4(f)(6). 5 Options 2, Section 3 and Options 3, Section 28 will add transparency to the Rulebook. 13 17 CFR 240.19b–4(f)(6)(iii). are being reserved. 14 See NOM and BX Rules at Chapter VII, Section 6 15 U.S.C. 78f(b). Other Changes 11. 7 15 U.S.C. 78f(b)(5). 15 For purposes only of waiving the 30-day 8 See Options 3 at Supplementary Material .03 to The remainder of the changes to operative delay, the Commission has considered the Section 7. correct numbering and citations are proposed rule’s impact on efficiency, competition, 9 See Options 3, Section 17. non-substantive. and capital formation. See 15 U.S.C. 78c(f).

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action is necessary or appropriate in the Number SR–GEMX–2019–18 and The proposed rule change is available public interest, for the protection of should be submitted on or before on the Exchange’s website at investors, or otherwise in furtherance of January 21, 2020. www.nyse.com, at the principal office of the purposes of the Act. If the For the Commission, by the Division of the Exchange, and at the Commission’s Commission takes such action, the Trading and Markets, pursuant to delegated Public Reference Room. Commission shall institute proceedings 16 authority. II. Self-Regulatory Organization’s to determine whether the proposed rule Eduardo A. Aleman, should be approved or disapproved. Statement of the Purpose of, and Deputy Secretary. Statutory Basis for, the Proposed Rule IV. Solicitation of Comments [FR Doc. 2019–28172 Filed 12–27–19; 8:45 am] Change BILLING CODE 8011–01–P Interested persons are invited to In its filing with the Commission, the submit written data, views, and self-regulatory organization included arguments concerning the foregoing, SECURITIES AND EXCHANGE statements concerning the purpose of, including whether the proposed rule COMMISSION and basis for, the proposed rule change change is consistent with the Act. and discussed any comments it received Comments may be submitted by any of [Release No. 34–87821; File No. SR–NYSE– 2019–67] on the proposed rule change. The text the following methods: of those statements may be examined at Electronic Comments Self-Regulatory Organizations; New the places specified in Item IV below. • Use the Commission’s internet York Stock Exchange LLC; Notice of The Exchange has prepared summaries, comment form (http://www.sec.gov/ Filing of Proposed Rule Change, as set forth in sections A, B, and C below, rules/sro.shtml); or Modified by Amendment No. 1, To of the most significant parts of such • Send an email to rule-comments@ Amend Chapter One of the Listed statements. sec.gov. Please include File Number SR– Company Manual To Modify the A. Self-Regulatory Organization’s GEMX–2019–18 on the subject line. Provisions Relating to Direct Listings Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Paper Comments December 20, 2019. Change • Send paper comments in triplicate Pursuant to Section 19(b)(1)1 of the to Secretary, Securities and Exchange Securities Exchange Act of 1934 1. Purpose (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 Commission, 100 F Street NE, Section 102.01B of the Manual notice is hereby given that on December Washington, DC 20549–1090. includes initial listing requirements for 11, 2019, New York Stock Exchange All submissions should refer to File a company that has not previously had LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed Number SR–GEMX–2019–18. This file its common equity securities registered with the Securities and Exchange number should be included on the under the Act, to list its common equity Commission (‘‘Commission’’) a subject line if email is used. To help the securities on the Exchange at the time proposed rule change. On December 13, Commission process and review your of effectiveness of a registration 2019, the Exchange filed Amendment comments more efficiently, please use statement filed solely for the purpose of No. 1 to the proposed rule change, only one method. The Commission will allowing existing shareholders to sell which amended and replaced the post all comments on the Commission’s their shares (a ‘‘Selling Shareholder proposed rule change in its entirety. The internet website (http://www.sec.gov/ Direct Floor Listing’’).5 To allow a proposed rule change, as modified by rules/sro.shtml). Copies of the company to sell shares on its own behalf Amendment No. 1, is described in Items submission, all subsequent in connection with its initial listing I, II, and III below, which Items have amendments, all written statements upon effectiveness of a registration been prepared by the Exchange. The with respect to the proposed rule statement, without a traditional Commission is publishing this notice to change that are filed with the underwritten public offering, the solicit comments on the proposed rule Commission, and all written Exchange proposes to amend Section change, as modified by Amendment No. communications relating to the 102.01B. The proposed change would 1, from interested persons. proposed rule change between the allow a company that has not previously Commission and any person, other than I. Self-Regulatory Organization’s had its common equity securities those that may be withheld from the Statement of the Terms of Substance of registered under the Act, to list its public in accordance with the the Proposed Rule Change common equity securities on the provisions of 5 U.S.C. 552, will be The Exchange proposes to amend Exchange at the time of effectiveness of available for website viewing and Chapter One of the Listed Company a registration statement pursuant to printing in the Commission’s Public Manual (the ‘‘Manual’’) to modify the which the company will sell shares in Reference Room, 100 F Street NE, provisions relating to direct listings.4 the opening auction on the first day of Washington, DC 20549, on official trading on the Exchange (a ‘‘Primary business days between the hours of 16 17 CFR 200.30–3(a)(12). Direct Floor Listing’’). The proposal 10:00 a.m. and 3:00 p.m. Copies of the 1 15 U.S.C. 78s(b)(1). would permit a company to conduct a filing also will be available for 2 15 U.S.C. 78a. Primary Direct Floor Listing in addition inspection and copying at the principal 3 17 CFR 240.19b–4. to, or instead of, a Selling Shareholder office of the Exchange. All comments 4 The Exchange has previously filed a proposed Direct Floor Listing. received will be posted without change. rule change to amend Chapter One of the Manual to modify the provisions related to direct listings. Persons submitting comments are See SR–NYSE–2019–67. The Exchange is now filing together with the market value of shares sold by the cautioned that we do not redact or edit this Amendment No. 1 to SR–NYSE–2019–67 to company in the opening auction totals at least $250 personal identifying information from make clear in Exhibit 5 to this filing that a company million. This Amendment No.1 to SR–NYSE–2019– comment submissions. You should conducting a Primary Direct Floor Listing in which 67 replaces SR–NYSE–2019–67 as originally filed the company sells shares in the opening auction and supersedes such filing in its entirety. submit only information that you wish with a market value of less than $100 million will 5 Securities Exchange Act Release No. 82627 to make available publicly. All be eligible to list if the aggregate of the market value (February 2, 2018), 83 FR 5650 (February 8, 2018) submissions should refer to File of publicly-held shares immediately prior to listing (SR–NYSE–2017–30).

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In considering the initial listing of a accounts to meet the Exchange’s Currently, a company listing in company in connection with a Selling distribution standards. However, in the connection with a Selling Shareholder Shareholder Direct Floor Listing, absence of an underwritten transaction Direct Floor Listing is required to Section 102.01B currently provides that at the time of listing, the initial listing demonstrate at the time of initial listing the Exchange will determine that such distribution standards may represent that it has at least 400 round lot holders company has met the applicable $100 more of a challenge for a private and (i) at least $100 million in market million aggregate market value of company contemplating listing in value of publicly-held shares based on publicly-held shares requirement based connection with a Selling Shareholder the lower of a Valuation or the most on a combination of both (i) an Direct Floor Listing or a Primary Direct recent trading price in a Private independent third-party valuation of the Floor Listing. Placement Market or (ii) at least $250 company (a ‘‘Valuation’’) and (ii) the The Exchange believes that a Primary million in market value of publicly-held most recent trading price for the Direct Floor Listing in which the shares. The Exchange proposes that a company’s common stock in a trading company sells at least $250 million of company with $350 million in market system for unregistered securities its stock in the opening auction on the value of publicly-held shares (including operated by a national securities day of listing would provide an in the case of a company listing in exchange or a registered broker-dealer (a appropriately liquid trading market and connection with a Primary Direct Floor ‘‘Private Placement Market’’). The make highly likely that the company Listing where the aggregate of the shares Exchange will attribute a market value would meet the initial listing sold by the company in the opening of publicly-held shares to the company distribution standards quickly after auction and the market value of the equal to the lesser of (i) the value initial listing. Consequently, the publicly-held shares outstanding calculable based on the Valuation and Exchange proposes to amend Section immediately before the listing is at least (ii) the value calculable based on the 102.01A to provide that any company $350 million) may list and commence most recent trading price in a Private listing in connection with a Primary trading on the basis that the company Placement Market. Alternatively, in the Direct Floor Listing in which the would have to demonstrate compliance absence of any recent trading in a company sells at least $250 million in with the distribution requirements Private Placement Market, Section market value of shares in the opening within 90 trading days of the listing 102.01B provides that the Exchange will auction on the initial listing date may date. The Exchange notes that the determine that such company has met list and commence trading on the basis market value of publicly-held shares its market value of publicly-held shares that the company would have to requirement for listings other than requirement if the company provides a demonstrate compliance with the direct floor listings and IPOs is $100 Valuation evidencing a market value of distribution requirements within 90 million, so the $350 million public float publicly-held shares of at least $250 trading days of the listing date (the that would be required under this million. With respect to this ‘‘Distribution Standard Compliance proposal to use the Distribution requirement, the Exchange is proposing Period’’). Any company that fails to Compliance Period is far higher than the following: meet the distribution standards by the what a newly-listed company would • The Exchange proposes that a have to demonstrate under other end of the Distribution Standard company would qualify for listing in circumstances. The Exchange believes Compliance Period would be deemed to connection with a Primary Direct Floor that this heightened standard be below compliance. In that case, the Listing by selling at least $100 million significantly increases the likelihood company would have the opportunity to in market value of shares in the opening that a liquid trading market will develop submit a compliance plan as set forth in auction. after a Selling Shareholder Direct Floor the applicable procedures in Sections • The Exchange proposes that a Listing or Primary Direct Floor Listing 802.02 and 802.03 of the Manual, but company would qualify for listing in and therefore makes it likely that these will not be granted a plan period that connection with a Primary Direct Floor companies will meet the initial extends more than six months from the Listing if the aggregate of the market distribution standards within the value of publicly-held shares end of the Distribution Standard Distribution Standard Compliance immediately prior to listing together Compliance Period. If a company does Period. with the market value of shares sold by not meet the initial listing distribution the company in the opening auction standards by the end of the maximum 2. Statutory Basis totals at least $250 million. six month compliance period, it would The Exchange believes that the The Exchange also proposes to modify be subject to immediate suspension and proposed rule change is consistent with the distribution requirements for listing delisting. Section 6(b) of the Exchange Act,6 in in connection with a Selling In addition, the Exchange proposes to general, and furthers the objectives of Shareholder Direct Floor Listing or a provide the benefit of the same Section 6(b)(5) of the Exchange Act,7 in Primary Direct Floor Listing. Pursuant Distribution Standard Compliance particular in that it is designed to to Section 102.1A of the Manual, any Period in the case of: (i) A company promote just and equitable principles of company listing in connection with listing in connection with a Selling trade, to foster cooperation and either a Selling Shareholder Direct Floor Shareholder Direct Floor Listing that coordination with persons engaged in Listing or a Primary Direct Floor Listing demonstrates $350 million in market regulating, clearing, settling, processing is required to have at least 400 round lot value of publicly-held shares; and (ii) a information with respect to, and holders and 1.1 million publicly-held Primary Direct Floor Listing in which facilitating transactions in securities, to shares at the time of listing. Private the company sells less than $250 remove impediments to and perfect the companies generally do not have as million of its stock in the opening mechanism of a free and open market many as 400 round lot shareholders, but auction but has a market value of and a national market system, and, in this is typically not a barrier to listing publicly-held shares immediately prior general, to protect investors and the for a company undertaking an initial to listing together with the market value public interest and is not designed to public offering as the underwriters are of shares sold by the company in the able to ensure that the shares sold in the opening auction totaling at least $350 6 15 U.S.C. 78f(b). IPO are distributed to sufficient million. 7 15 U.S.C. 78f(b)(5).

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permit unfair discrimination between III. Date of Effectiveness of the filing also will be available for customers, issuers, brokers, or dealers. Proposed Rule Change and Timing for inspection and copying at the principal The Exchange believes that the Commission Action office of the Exchange. All comments proposed amendment is consistent with Within 45 days of the date of received will be posted without change. Persons submitting comments are the protection of investors. The proposal publication of this notice in the Federal cautioned that we do not redact or edit would require that a company in a Register or up to 90 days (i) as the Commission may designate if it finds personal identifying information from Primary Direct Floor Listing must either comment submissions. You should such longer period to be appropriate sell at least $100 million of its listed submit only information that you wish and publishes its reasons for so finding securities in the opening auction or to make available publicly. All or (ii) as to which the self-regulatory demonstrate that the sum of its market submissions should refer to File organization consents, the Commission value of publicly-held shares Number SR–NYSE–2019–67, and will: immediately prior to listing and the should be submitted on or before (A) By order approve or disapprove market value of shares sold by the January 21, 2020. company in the opening auction is at the proposed rule change, or (B) institute proceedings to determine For the Commission, by the Division of least $250 million. These requirements whether the proposed rule change Trading and Markets, pursuant to delegated would provide that any company 8 should be disapproved. authority. conducting a Primary Direct Floor J. Matthew DeLesDernier, Listing would be of a suitable size for IV. Solicitation of Comments Assistant Secretary. Exchange listing and that there would Interested persons are invited to [FR Doc. 2019–28029 Filed 12–27–19; 8:45 am] be sufficient liquidity for the security to submit written data, views, and BILLING CODE 8011–01–P be suitable for auction market trading. arguments concerning the foregoing, The proposal to provide a limited including whether the proposed rule grace period for companies to meet the change, as modified by Amendment No. SECURITIES AND EXCHANGE COMMISSION initial distribution requirements in 1, is consistent with the Act. Comments connection with a Selling Shareholder may be submitted by any of the [Release No. 34–87838; File No. SR– Direct Floor Listing or a Primary Direct following methods: NYSENAT–2019–32] Floor Listing is consistent with the Electronic Comments Self-Regulatory Organizations; NYSE protection of investors because the • Use the Commission’s internet National, Inc.; Notice of Filing and enhanced public float requirements of comment form (http://www.sec.gov/ Immediate Effectiveness of Proposed $350 million for Selling Shareholder rules/sro.shtml); or Rule Change To Amend Its Price List Direct Floor Listings and Primary Direct • Send an email to rule-comments@ To Extend for One Year a Fee Discount Floor Listings in which the company sec.gov. Please include File Number SR– for the Partial Cabinet Solution sells less than $250 million in market NYSE–2019–67 on the subject line. Bundles Offered in Connection With value of shares in the opening auction the Exchange’s Co-Location Services and the $250 million minimum opening Paper Comments trade requirement for all other Primary • Send paper comments in triplicate December 23, 2019. Direct Floor Listings would make it to Secretary, Securities and Exchange Pursuant to Section 19(b)(1) 1 of the probable that there would be a quick Commission, 100 F Street NE, Securities Exchange Act of 1934 (the 2 3 development of a liquid trading market Washington, DC 20549–1090. ‘‘Act’’) and Rule 19b–4 thereunder, notice is hereby given that, on December and that the company would comply All submissions should refer to File 16, 2019, NYSE National, Inc. (‘‘NYSE with the initial listing distribution Number SR–NYSE–2019–67. This file National’’ or the ‘‘Exchange’’) filed with standards within the Distribution number should be included on the the Securities and Exchange Standard Compliance Period. subject line if email is used. To help the Commission (the ‘‘Commission’’) the Commission process and review your proposed rule change as described in B. Self-Regulatory Organization’s comments more efficiently, please use Items I, II, and III below, which Items Statement on Burden on Competition only one method. The Commission will have been prepared by the self- post all comments on the Commission’s The Exchange does not believe that regulatory organization. The internet website (http://www.sec.gov/ the proposed rule change would impose Commission is publishing this notice to rules/sro.shtml). Copies of the any burden on competition that is not solicit comments on the proposed rule submission, all subsequent necessary or appropriate in furtherance change from interested persons. amendments, all written statements of the purposes of the Act. The with respect to the proposed rule I. Self-Regulatory Organization’s proposed amendments would not change that are filed with the Statement of the Terms of Substance of impose any burden on competition, but Commission, and all written the Proposed Rule Change would rather increase competition by communications relating to the The Exchange proposes to amend its providing new pathways for companies proposed rule change between the to access the public markets. Price List to extend for one year a fee Commission and any person, other than discount for the Partial Cabinet Solution C. Self-Regulatory Organization’s those that may be withheld from the bundles offered in connection with the Statement on Comments on the public in accordance with the Exchange’s co-location services. The Proposed Rule Change Received From provisions of 5 U.S.C. 552, will be proposed rule change is available on the Members, Participants, or Others available for website viewing and Exchange’s website at www.nyse.com, at printing in the Commission’s Public No written comments were solicited Reference Room, 100 F Street NE, 8 17 CFR 200.30–3(a)(12). or received with respect to the proposed Washington, DC 20549, on official 1 15 U.S.C. 78s(b)(1). rule change. business days between the hours of 2 15 U.S.C. 78a. 10:00 a.m. and 3:00 p.m. Copies of such 3 17 CFR 240.19b–4.

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the principal office of the Exchange, and A. Self-Regulatory Organization’s Users, including those with minimal at the Commission’s Public Reference Statement of the Purpose of, and the power or cabinet space demands or Room. Statutory Basis for, the Proposed Rule those for which the costs attendant with Change having a dedicated cabinet or greater II. Self-Regulatory Organization’s network connection bandwidth are too Statement of the Purpose of, and 1. Purpose burdensome.7 Statutory Basis for, the Proposed Rule The Exchange proposes to amend the The Exchange offers Users that Change Price List related to co-location 4 purchase a PCS bundle on or before In its filing with the Commission, the services to extend a fee discount for the December 31, 2019 a 50% reduction in self-regulatory organization included Partial Cabinet Solution (‘‘PCS’’) the monthly recurring charges (‘‘MRC’’) statements concerning the purpose of, bundles that the Exchange offers Users.5 for the first 24 months.8 The Exchange and basis for, the proposed rule change There are four PCS bundles, each of proposes to extend the 50% fee and discussed any comments it received which includes a partial cabinet; access on the proposed rule change. The text to the Liquidity Center Network reduction to those Users that purchase a PCS bundle on or before December 31, of those statements may be examined at (‘‘LCN’’) and internet protocol (‘‘IP’’) 9 the places specified in Item IV below. network, the local area networks 2020. The Exchange does not propose The Exchange has prepared summaries, available in the data center; two fiber to amend the length of the discount set forth in sections A, B, and C below, cross connections; and connectivity to period. of the most significant parts of such one of two time feeds.6 The PCS The amended portion of the Price List statements. bundles were designed to attract smaller would read as follows:

Type of service Description Amount of charge

Partial Cabinet Solution bundles. Note: A User Option A: 1 kW partial cabinet, 1 LCN con- $7,500 initial charge per bundle plus monthly and its Affiliates are limited to one Partial nection (1 Gb), 1 IP network connection (1 charge per bundle as follows: Cabinet Solution bundle at a time. A User Gb), 2 fiber cross connections and either • For Users that order on or before Decem- and its Affiliates must have an Aggregate the Network Time Protocol Feed or Preci- ber 31, 2020: $3,000 monthly for first 24 Cabinet Footprint of 2 kW or less to qualify sion Timing Protocol. months of service, and $6,000 monthly for a Partial Cabinet Solution bundle. See thereafter. Note 2 under ‘‘General Notes.’’ • For Users that order after December 31, 2020: $6,000 monthly. Option B: 2 kW partial cabinet, 1 LCN con- $7,500 initial charge per bundle plus monthly nection (1 Gb), 1 IP network connection (1 charge per bundle as follows: Gb), 2 fiber cross connections and either • For Users that order on or before Decem- the Network Time Protocol Feed or Preci- ber 31, 2020: $3,500 monthly for first 24 sion Timing Protocol. months of service, and $7,000 monthly thereafter. • For Users that order after December 31, 2020: $7,000 monthly. Option C: 1 kW partial cabinet, 1 LCN con- $10,000 initial charge per bundle plus monthly nection (10 Gb LX), 1 IP network connec- charge per bundle as follows: tion (10 Gb), 2 fiber cross connections and • For Users that order on or before Decem- either the Network Time Protocol Feed or ber 31, 2020: $7,000 monthly for first 24 Precision Timing Protocol. months of service, and $14,000 monthly thereafter. • For Users that order after December 31, 2020: $14,000 monthly. Option D: 2 kW partial cabinet, 1 LCN con- $10,000 initial charge per bundle plus monthly nection (10 Gb LX), 1 IP network connec- charge per bundle as follows: tion (10 Gb), 2 fiber cross connections and • For Users that order on or before Decem- either the Network Time Protocol Feed or ber 31, 2020: $7,500 monthly for first 24 Precision Timing Protocol. months of service, and $15,000 monthly thereafter. • For Users that order after December 31, 2020: $15,000 monthly.

4 The Exchange initially filed rule changes that requests to receive co-location services directly 7 See Securities Exchange Act Release No. 77072 relating to its co-location services with the from the Exchange. See id. at note 10. As specified (February 5, 2016), 81 FR 7394 (February 11, 2016) Securities and Exchange Commission in the Price List, a User that incurs co-location fees (SR–NYSE–2015–53). (‘‘Commission’’) in May 2018. See Securities for a particular co-location service pursuant thereto 8 See Securities Exchange Act Release No. 84895 Exchange Act Release No. 83351 (May 31, 2018), 83 would not be subject to co-location fees for the (December 20, 2018), 83 FR 67405 (December 28, FR 26314 (June 6, 2018) (SR–NYSENAT–2018–07) same co-location service charged by the Exchange’s 2019) (SR–NYSENAT–2018–26). (‘‘Co-location Notice’’). The Exchange operates a 9 affiliates the New York Stock Exchange LLC, NYSE Affiliate SROs previously extended the MRC data center in Mahwah, New Jersey (the ‘‘data American LLC, NYSE Arca, Inc., and NYSE reduction for one year. See Securities Exchange Act center’’) from which it provides co-location services Release Nos. 82223 (December 6, 2017) 82 FR 58459 Chicago, Inc. (collectively, the ‘‘Affiliate SROs’’). to Users. (December 12, 2017) (SR–NYSE–2017–62); and 5 For purposes of the Exchange’s co-location See id. at note 12. 79715 (December 30, 2016), 82 FR 1777 (January. services, a ‘‘User’’ means any market participant 6 See id. at 26317. 6, 2017) (SR–NYSE–2016–91).

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Application and Impact of the Proposed who believe that co-location enhances coordination with persons engaged in Change the efficiency of their operations. The regulating, clearing, settling, processing The proposed change would apply to Commission has repeatedly expressed information with respect to, and all PCS bundles. The proposed change its preference for competition over facilitating transactions in securities, to would not apply differently to distinct regulatory intervention in determining remove impediments to, and perfect the types or sizes of market participants. prices, products, and services in the mechanisms of, a free and open market Rather, it would apply to all Users securities markets. Specifically, in and a national market system and, in equally. Regulation NMS, the Commission general, to protect investors and the Users that require other sizes or highlighted the importance of market public interest and does not unfairly combinations of cabinets, network forces in determining prices and SRO discriminate between customers, connections and cross connects could revenues and recognized that current issuers, brokers, or dealers. The still request them. As is currently the regulation of the market system ‘‘has Exchange also believes that the case, the purchase of any colocation been remarkably successful in proposed rule change is consistent with 18 service, including PCS bundles, is promoting market competition in its Section 6(b)(4) of the Act, because it completely voluntary and the Price List broader forms that are most important to provides for the equitable allocation of is applied uniformly to all Users. investors and listed companies.’’ 13 reasonable dues, fees, and other charges among its members, issuers and other Competitive Environment General persons using its facilities and does not A User may host another entity in its As is the case with all Exchange co- unfairly discriminate between space within the data center. Such Users location arrangements, (i) neither a User customers, issuers, brokers or dealers. nor any of the User’s customers would are called ‘‘Hosting Users,’’ and their The Proposed Change is Not Unfairly 10 be permitted to submit orders directly to customers are ‘‘Hosted Customers.’’ Discriminatory Based on conversations with Users the Exchange unless such User or and potential customers, the Exchange customer is a member organization, a The Exchange believes its proposal is believes that Hosting Users offer Sponsored Participant or an agent not unfairly discriminatory. bundles (‘‘Hosting User Bundles’’) that thereof (e.g., a service bureau providing The proposed change would not include cabinet space and space on order entry services); (ii) use of the co- apply differently to distinct types or shared LCN and IP network location services proposed herein would sizes of market participants. Rather, it connections—and that the Hosting User be completely voluntary and available would apply to all Users equally. The Bundles provide their end users with a to all Users on a non-discriminatory Exchange would continue to offer the service similar to that of the PCS basis; 14 and (iii) a User would only four different PCS bundles with bundles, but with a lower cost and incur one charge for the particular co- different cabinet footprints and network latency.11 location service described herein, connections options. Users that require The Exchange believes that, by regardless of whether the User connects other sizes or combinations of cabinets, extending the existing eligibility for a only to the Exchange or to the Exchange network connections and cross connects 50% MRC reduction for another year, and one or more of the Affiliate SROs.15 could still request them. As is currently the case, the purchase of any colocation the proposed change may make PCS 2. Statutory Basis bundles more competitive with the service, including PCS bundles, would services that Hosting Users offer. The Exchange believes that the be completely voluntary. Importantly, the proposed extension proposed rule change is consistent with The proposed change would ensure would provide potential Users with a Section 6(b) of the Act,16 in general, and that all Users that order a bundle on or wider range of choices for the period of furthers the objectives of Section 6(b)(5) before December 31, 2020 would have the extension, which would be of the Act,17 in particular, because it is their MRC reduced by 50% for the first especially beneficial for potential Users designed to prevent fraudulent and 24 months. Extending the period would with minimal power or cabinet space manipulative acts and practices, to make it more cost effective for current demands or those for which the costs promote just and equitable principles of or potential Users to utilize co-location attendant with having a dedicated trade, to foster cooperation and by offering a cost effective, convenient cabinet or greater network connection way to create a colocation environment, bandwidth are too burdensome.12 13 See Securities Exchange Act Release No. 51808 through the choice among PCS bundles The Exchange operates in a highly (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). with different cabinet footprints and 14 As is currently the case, Users that receive co- network connections options. The competitive market in which exchanges location services from the Exchange will not receive and other vendors (i.e., Hosting Users) any means of access to the Exchange’s trading and Exchange expects that such Users would offer co-location services as a means to execution systems that is separate from, or superior include those with minimal power or facilitate the trading and other market to, that of other Users. In this regard, all orders sent cabinet space demands and Users for to the Exchange enter the Exchange’s trading and which the costs attendant with having a activities of those market participants execution systems through the same order gateway, regardless of whether the sender is co-located in the dedicated cabinet or greater network 10 A Hosting User is required to be a User, but data center or not. In addition, co-located Users do connection bandwidth are too because only Users can be Hosting Users, a Hosted not receive any market data or data service product burdensome. Customer is not able to provide hosting services to that is not available to all Users, although Users that any other entities in the space in which it is hosted. receive co-location services normally would expect The Proposed Change is Reasonable The Exchange allows Users to act as Hosting Users reduced latencies, as compared to Users that are not The Exchange believes its proposal is for a monthly fee. See Co-location Notice, supra co-located, in sending orders to, and receiving note 4, at 26318. market data from, the Exchange. reasonable. 11 Because Hosting Users’ services are not 15 See Co-location Notice, supra note 4, at 26315. The Exchange believes that it is regulated, they may offer differentiated pricing and Each of the Affiliate SROs has submitted reasonable to extend the period of are not required to make their pricing public or substantially the same proposed rule change to eligibility for a 50% MRC reduction as disclose it to the Exchange. The Exchange therefore propose the changes described herein. See SR– an incentive to Users to utilize PCS does not have direct visibility into the specific NYSE–2019–72, SR–NYSEAmer–2019–58, SR– range of options, or cost thereof, offered by Hosting NYSEArca–2019–97, and SR–NYSECHX–2019–27. bundles. Extending the existing Users, and relies on third parties for information. 16 15 U.S.C. 78f(b). 12 See supra note 7. 17 15 U.S.C. 78f(b)(5). 18 15 U.S.C. 78f(b)(4).

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eligibility for a 50% MRC reduction for Finally, the Exchange believes that it PCS bundles allow Users to select another year would provide smaller is subject to significant competitive their desired cabinet footprint and current or potential Users with minimal forces, as described below in the network connections at a reduced MRC power or cabinet space demands with Exchange’s statement regarding the for the first 24 months. Such Users may additional time to purchase a PCS burden on competition. choose, in turn, to pass on such cost bundle at a discounted rate. For the reasons above, the proposed savings to their customers. In addition The Exchange believes that, by changes do not unfairly discriminate to the proposed services being extending the existing eligibility for a between or among market participants completely voluntary, they are available 50% MRC reduction for another year, that are otherwise capable of satisfying to all Users on an equal basis (i.e. the the proposed change may make PCS any applicable co-location fees, same products and services are available bundles more competitive with the requirements, terms and conditions to all Users, and the extension of the services that Hosting Users offer. The established from time to time by the 50% reduction for the MRC for the PCS proposed extension would continue to Exchange. bundles, would apply to all Users). provide potential Users with a wider For these reasons, the Exchange Intermarket Competition range of choices for the period of the believes that the proposal is consistent extension. with the Act. The Exchange does not believe that the proposed fee would impose any The Proposed Change is an Equitable B. Self-Regulatory Organization’s burden on intermarket competition that Allocation of Fees and Credits Statement on Burden on Competition is not necessary or appropriate. The The Exchange believes its proposal The proposed rule changes will not proposed change is not meant to affect equitably allocates its fees among its competition among national securities impose any burden on competition that market participants. exchanges. Rather, the Exchange is not necessary or appropriate in The proposed change would not believes that the proposed change is a furtherance of the purposes of Section apply differently to distinct types or reasonable attempt to maintain a more 6(b)(8) of the Act.20 sizes of market participants. Rather, it level playing field between the would apply to all Users equally. The Intramarket Competition Exchange and the Hosting Users, who Exchange would continue to offer the compete for Hosted Customer business. The Exchange does not believe that four different PCS bundles with Because Hosting Users’ services are not the proposed change would place any different cabinet footprints and network regulated, they may offer differentiated burden on intramarket competition that connections options. Users that require pricing and are not required to make is not necessary or appropriate. The other sizes or combinations of cabinets, their pricing public. The Exchange proposed changes would enhance network connections and cross connects believes that the proposed change may competition by extending the period of could still request them. As is currently make PCS bundles more attractive to eligibility for a 50% MRC reduction to the case, the purchase of any colocation potential Users who might otherwise service, including PCS bundles, would all Users that order a bundle on or opt to become Hosted Customers. be completely voluntary. before December 31, 2020. Such change The Exchange operates in a highly Having the change apply to all PCS would make it more cost effective for competitive market in which exchanges bundles would ensure that all Users that current or potential Users to utilize co- offer co-location services as a means to order a bundle on or before December location by offering a cost effective, facilitate the trading and other market 31, 2020 would have their MRC reduced convenient way to create a colocation activities of those market participants by 50% for the first 24 months. environment, through the choice among who believe that co-location enhances Extending the period would make it PCS bundles with different cabinet the efficiency of their operations. more cost effective for current or footprints and network connections Accordingly, fees charged for co- potential Users to utilize co-location by options. The Exchange believes that, by location services are constrained by the continuing to offer a cost effective, extending the period of eligibility, the active competition for the order flow of, convenient way to create a colocation proposed change may make PCS and other business from, such market environment, through the choice among bundles more attractive to potential participants. If a particular exchange PCS bundles with different cabinet Users who might otherwise opt to charges excessive fees for co-location footprints and network connections become Hosted Customers, and thus services, affected market participants options. The Exchange expects that such enhance the competitive environment will opt to terminate their co-location Users would include those with for potential Users (who would then arrangements with that exchange, and minimal power or cabinet space have more options from which to adopt a possible range of alternative demands and Users for which the costs select). strategies, including placing their attendant with having a dedicated Importantly, the proposed extension servers in a physically proximate cabinet or greater network connection would provide potential Users with a location outside the exchange’s data bandwidth are too burdensome. wider range of choices for the period of center (which could be a competing Without this proposed rule change, the extension, which would be exchange), or pursuing strategies less potential Users choosing between a PCS especially beneficial for potential Users dependent upon the lower exchange-to- bundle and a Hosting User Bundle with minimal power or cabinet space participant latency associated with co- would have fewer attractive options. demands or those for which the costs location. Accordingly, the exchange This would be a detriment for them, attendant with having a dedicated charging excessive fees would stand to especially for potential Users with cabinet or greater network connection lose not only co-location revenues but minimal power or cabinet space bandwidth are too burdensome. At the also the liquidity of the formerly co- demands or those for which the costs same time, however, no potential User located trading firms, which could have attendant with having a dedicated would be obligated to purchase a PCS additional follow-on effects on the cabinet or greater network connection bundle, and it would still have the market share and revenue of the affected bandwidth are too burdensome.19 options offered by Hosting Users. exchange. In such an environment, the Exchange must continually review, and 19 See supra note 7. 20 15 U.S.C. 78f(b)(8). consider adjusting, its services and

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related fees and credits to remain Electronic Comments SECURITIES AND EXCHANGE competitive with other exchanges. • COMMISSION The Commission has repeatedly Use the Commission’s internet comment form (http://www.sec.gov/ [Release No. 34–87839; File No. SR– expressed its preference for competition NYSEARCA–2019–97] over regulatory intervention in rules/sro.shtml); or determining prices, products, and • Send an email to rule-comments@ Self-Regulatory Organizations; NYSE services in the securities markets. sec.gov. Please include File Number SR– Arca, Inc.; Notice of Filing and Specifically, in Regulation NMS, the NYSENAT–2019–32 on the subject line. Immediate Effectiveness of Proposed Commission highlighted the importance Rule Change To Amend the NYSE Arca of market forces in determining prices Paper Comments Options Fees and Charges and the and SRO revenues and, also, recognized • Send paper comments in triplicate NYSE Arca Equities Fees and Charges that current regulation of the market to Secretary, Securities and Exchange To Extend for One Year a Fee Discount system ‘‘has been remarkably successful for the Partial Cabinet Solution in promoting market competition in its Commission, 100 F Street NE, Washington, DC 20549–1090. Bundles Offered in Connection With broader forms that are most important to the Exchange’s Co-location Services investors and listed companies.’’ 21 All submissions should refer to File For the reasons described above, the Number SR–NYSENAT–2019–32. This December 23, 2019. 1 Exchange believes that the proposed file number should be included on the Pursuant to Section 19(b)(1) of the rule changes reflect this competitive subject line if email is used. To help the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 environment. Commission process and review your notice is hereby given that, on December comments more efficiently, please use C. Self-Regulatory Organization’s 16, 2019, NYSE Arca, Inc. (‘‘NYSE Statement on Comments on the only one method. The Commission will Arca’’ or the ‘‘Exchange’’) filed with the Proposed Rule Change Received From post all comments on the Commission’s Securities and Exchange Commission Members, Participants, or Others internet website (http://www.sec.gov/ (the ‘‘Commission’’) the proposed rule No written comments were solicited rules/sro.shtml). Copies of the change as described in Items I, II, and or received with respect to the proposed submission, all subsequent III below, which Items have been rule change. amendments, all written statements prepared by the self-regulatory with respect to the proposed rule organization. The Commission is III. Date of Effectiveness of the change that are filed with the publishing this notice to solicit Proposed Rule Change and Timing for Commission, and all written comments on the proposed rule change Commission Action communications relating to the from interested persons. The foregoing rule change is effective proposed rule change between the I. Self-Regulatory Organization’s upon filing pursuant to Section Commission and any person, other than Statement of the Terms of Substance of 19(b)(3)(A) 22 of the Act and those that may be withheld from the the Proposed Rule Change subparagraph (f)(2) of Rule 19b–4 23 public in accordance with the thereunder, because it establishes a due, provisions of 5 U.S.C. 552, will be The Exchange proposes to amend the fee, or other charge imposed by the available for website viewing and NYSE Arca Options Fees and Charges Exchange. printing in the Commission’s Public (the ‘‘Options Fee Schedule’’) and the At any time within 60 days of the Reference Room, 100 F Street NE, NYSE Arca Equities Fees and Charges (the ‘‘Equities Fee Schedule’’ and, filing of such proposed rule change, the Washington, DC 20549 on official together with the Options Fee Schedule, Commission summarily may business days between the hours of temporarily suspend such rule change if the ‘‘Fee Schedules’’) to extend for one 10:00 a.m. and 3:00 p.m. Copies of the year a fee discount for the Partial it appears to the Commission that such filing also will be available for action is necessary or appropriate in the Cabinet Solution bundles offered in inspection and copying at the principal public interest, for the protection of connection with the Exchange’s co- office of the Exchange. All comments investors, or otherwise in furtherance of location services. The proposed rule the purposes of the Act. If the received will be posted without change. change is available on the Exchange’s Commission takes such action, the Persons submitting comments are website at www.nyse.com, at the Commission shall institute proceedings cautioned that we do not redact or edit principal office of the Exchange, and at under Section 19(b)(2)(B) 24 of the Act to personal identifying information from the Commission’s Public Reference determine whether the proposed rule comment submissions. You should Room. submit only information that you wish change should be approved or II. Self-Regulatory Organization’s to make available publicly. All disapproved. Statement of the Purpose of, and submissions should refer to File Statutory Basis for, the Proposed Rule IV. Solicitation of Comments Number SR–NYSENAT–2019–32 Change Interested persons are invited to andshould be submitted on or before submit written data, views, and January 21, 2020. In its filing with the Commission, the self-regulatory organization included arguments concerning the foregoing, For the Commission, by the Division of including whether the proposed rule statements concerning the purpose of, Trading and Markets, pursuant to delegated and basis for, the proposed rule change change is consistent with the Act. authority.25 Comments may be submitted by any of and discussed any comments it received the following methods: Eduardo A. Aleman, on the proposed rule change. The text Deputy Secretary. of those statements may be examined at 21 See Securities Exchange Act Release No. 51808 [FR Doc. 2019–28166 Filed 12–27–19; 8:45 am] the places specified in Item IV below. (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). BILLING CODE 8011–01–P 22 15 U.S.C. 78s(b)(3)(A). 1 15 U.S.C. 78s(b)(1). 23 17 CFR 240.19b–4(f)(2). 2 15 U.S.C. 78a. 24 15 U.S.C. 78s(b)(2)(B). 25 17 CFR 200.30–3(a)(12). 3 17 CFR 240.19b–4.

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The Exchange has prepared summaries, Partial Cabinet Solution (‘‘PCS’’) network connection bandwidth are too set forth in sections A, B, and C below, bundles that the Exchange offers Users.5 burdensome.7 of the most significant parts of such There are four PCS bundles, each of The Exchange offers Users that statements. which includes a partial cabinet; access purchase a PCS bundle on or before to the Liquidity Center Network December 31, 2019 a 50% reduction in A. Self-Regulatory Organization’s (‘‘LCN’’) and internet protocol (‘‘IP’’) the monthly recurring charges (‘‘MRC’’) Statement of the Purpose of, and the network, the local area networks for the first 24 months.8 The Exchange Statutory Basis for, the Proposed Rule available in the data center; two fiber proposes to extend the 50% fee Change cross connections; and connectivity to reduction to those Users that purchase 6 1. Purpose one of two time feeds. The PCS a PCS bundle on or before December 31, bundles were designed to attract smaller 2020.9 The Exchange does not propose The Exchange proposes to amend the Users, including those with minimal to amend the length of the discount Fee Schedules related to co-location 4 power or cabinet space demands or period. services to extend a fee discount for the those for which the costs attendant with The amended portions of the Fee having a dedicated cabinet or greater Schedules would read as follows:

Type of service Description Amount of charge

Partial Cabinet Solution bundles Note: A User Option A: 1 kW partial cabinet, 1 LCN con- $7,500 initial charge per bundle plus monthly and its Affiliates are limited to one Partial nection (1 Gb), 1 IP network connection (1 charge per bundle as follows: Cabinet Solution bundle at a time. A User Gb), 2 fiber cross connections and either • For Users that order on or before Decem- and its Affiliates must have an Aggregate the Network Time Protocol Feed or Preci- ber 31, 2020: $3,000 monthly for first 24 Cabinet Footprint of 2 kW or less to qualify sion Timing Protocol. months of service, and $6,000 monthly for a Partial Cabinet Solution bundle. See thereafter. Note 2 under ‘‘General Notes.’’ • For Users that order after December 31, 2020: $6,000 monthly. Option B: 2 kW partial cabinet, 1 LCN con- $7,500 initial charge per bundle plus monthly nection (1 Gb), 1 IP network connection (1 charge per bundle as follows: Gb), 2 fiber cross connections and either • For Users that order on or before Decem- the Network Time Protocol Feed or Preci- ber 31, 2020: $3,500 monthly for first 24 sion Timing Protocol. months of service, and $7,000 monthly thereafter. • For Users that order after December 31, 2020: $7,000 monthly. Option C: 1 kW partial cabinet, 1 LCN con- $10,000 initial charge per bundle plus monthly nection (10 Gb LX), 1 IP network connec- charge per bundle as follows: tion (10 Gb), 2 fiber cross connections and • For Users that order on or before Decem- either the Network Time Protocol Feed or ber 31, 2020: $7,000 monthly for first 24 Precision Timing Protocol. months of service, and $14,000 monthly thereafter. • For Users that order after December 31, 2020: $14,000 monthly. Option D: 2 kW partial cabinet, 1 LCN con- $10,000 initial charge per bundle plus monthly nection (10 Gb LX), 1 IP network connec- charge per bundle as follows: tion (10 Gb), 2 fiber cross connections and • For Users that order on or before Decem- either the Network Time Protocol Feed or ber 31, 2020: $7,500 monthly for first 24 Precision Timing Protocol. months of service, and $15,000 monthly thereafter. • For Users that order after December 31, 2020: $15,000 monthly.

Application and Impact of the Proposed Rather, it would apply to all Users service, including PCS bundles, is Change equally. completely voluntary and the Fee Users that require other sizes or Schedules are applied uniformly to all The proposed change would apply to Users. all PCS bundles. The proposed change combinations of cabinets, network would not apply differently to distinct connections and cross connects could types or sizes of market participants. still request them. As is currently the case, the purchase of any colocation

4 The Exchange initially filed rule changes Release No. 76010 (September 29, 2015), 80 FR 6 See Securities Exchange Act Release No. 77070 relating to its co-location services with the 60197 (October 5, 2015) (SR–NYSEArca–2015–82). (February 5, 2016), 81 FR 7401 (February 11, 2016) Securities and Exchange Commission As specified in the Fee Schedules, a User that (SR–NYSEArca–2015–102). (‘‘Commission’’) in 2010. See Securities Exchange incurs co-location fees for a particular co-location 7 Id., at 7402. Act Release No. 63275 (November 8, 2010), 75 FR service pursuant thereto would not be subject to co- 8 See Securities Exchange Act Release No. 84898 70048 (November 16, 2010) (SR–NYSEArca–2010– location fees for the same co-location service (December 20, 2018), 83 FR 67397 (December 28, 100). The Exchange operates a data center in charged by the Exchange’s affiliates the New York 2019) (SR–NYSEArca–2018–93). Mahwah, New Jersey (the ‘‘data center’’) from 9 Stock Exchange LLC, NYSE American LLC, NYSE The Exchange previously extended the MRC which it provides co-location services to Users. Chicago, Inc. and NYSE National, Inc. (collectively, reduction for one year. See Securities Exchange Act 5 For purposes of the Exchange’s co-location Release Nos. 82226 (December 6, 2017), 82 FR the ‘‘Affiliate SROs’’). See Securities Exchange Act services, a ‘‘User’’ means any market participant 58462 (December 12, 2017) (SR–NYSEArca–2017– that requests to receive co-location services directly Release No. 70173 (August 13, 2013), 78 FR 50459 134); and 79716 (December 30, 2016), 82 FR 1774 from the Exchange. See Securities Exchange Act (August 19, 2013) (SR–NYSEArca–2013–80). (January 6, 2017) (SR–NYSEArca–2016–168).

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Competitive Environment broader forms that are most important to provides for the equitable allocation of investors and listed companies.’’ 13 reasonable dues, fees, and other charges A User may host another entity in its among its members, issuers and other General space within the data center. Such Users persons using its facilities and does not are called ‘‘Hosting Users,’’ and their As is the case with all Exchange co- unfairly discriminate between customers are ‘‘Hosted Customers.’’ 10 location arrangements, (i) neither a User customers, issuers, brokers or dealers. Based on conversations with Users nor any of the User’s customers would be permitted to submit orders directly to The Proposed Change is Not Unfairly and potential customers, the Exchange Discriminatory believes that Hosting Users offer the Exchange unless such User or bundles (‘‘Hosting User Bundles’’) that customer is a member organization, a The Exchange believes its proposal is include cabinet space and space on Sponsored Participant or an agent not unfairly discriminatory. The proposed change would not shared LCN and IP network thereof (e.g., a service bureau providing apply differently to distinct types or connections—and that the Hosting User order entry services); (ii) use of the co- sizes of market participants. Rather, it Bundles provide their end users with a location services proposed herein would be completely voluntary and available would apply to all Users equally. The service similar to that of the PCS to all Users on a non-discriminatory Exchange would continue to offer the bundles, but with a lower cost and basis; 14 and (iii) a User would only four different PCS bundles with latency.11 incur one charge for the particular co- different cabinet footprints and network The Exchange believes that, by location service described herein, connections options. Users that require extending the existing eligibility for a regardless of whether the User connects other sizes or combinations of cabinets, 50% MRC reduction for another year, only to the Exchange or to the Exchange network connections and cross connects the proposed change may make PCS and one or more of the Affiliate SROs.15 could still request them. As is currently bundles more competitive with the the case, the purchase of any colocation 2. Statutory Basis services that Hosting Users offer. service, including PCS bundles, would Importantly, the proposed extension The Exchange believes that the be completely voluntary. would provide potential Users with a proposed rule change is consistent with The proposed change would ensure wider range of choices for the period of Section 6(b) of the Act,16 in general, and that all Users that order a bundle on or the extension, which would be furthers the objectives of Section 6(b)(5) before December 31, 2020 would have especially beneficial for potential Users of the Act,17 in particular, because it is their MRC reduced by 50% for the first with minimal power or cabinet space designed to prevent fraudulent and 24 months. Extending the period would demands or those for which the costs manipulative acts and practices, to make it more cost effective for current attendant with having a dedicated promote just and equitable principles of or potential Users to utilize co-location cabinet or greater network connection trade, to foster cooperation and by offering a cost effective, convenient bandwidth are too burdensome.12 coordination with persons engaged in way to create a colocation environment, regulating, clearing, settling, processing The Exchange operates in a highly through the choice among PCS bundles information with respect to, and with different cabinet footprints and competitive market in which exchanges facilitating transactions in securities, to and other vendors (i.e., Hosting Users) network connections options. The remove impediments to, and perfect the Exchange expects that such Users would offer co-location services as a means to mechanisms of, a free and open market facilitate the trading and other market include those with minimal power or and a national market system and, in cabinet space demands and Users for activities of those market participants general, to protect investors and the who believe that co-location enhances which the costs attendant with having a public interest and does not unfairly dedicated cabinet or greater network the efficiency of their operations. The discriminate between customers, Commission has repeatedly expressed connection bandwidth are too issuers, brokers, or dealers. The burdensome. its preference for competition over Exchange also believes that the regulatory intervention in determining proposed rule change is consistent with The Proposed Change is Reasonable prices, products, and services in the 18 Section 6(b)(4) of the Act, because it The Exchange believes its proposal is securities markets. Specifically, in reasonable. Regulation NMS, the Commission 13 See Securities Exchange Act Release No. 51808 The Exchange believes that it is highlighted the importance of market (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). reasonable to extend the period of 14 forces in determining prices and SRO As is currently the case, Users that receive co- eligibility for a 50% MRC reduction as revenues and recognized that current location services from the Exchange will not receive any means of access to the Exchange’s trading and an incentive to Users to utilize PCS regulation of the market system ‘‘has execution systems that is separate from, or superior bundles. Extending the existing been remarkably successful in to, that of other Users. In this regard, all orders sent eligibility for a 50% MRC reduction for promoting market competition in its to the Exchange enter the Exchange’s trading and execution systems through the same order gateway, another year would provide smaller regardless of whether the sender is co-located in the current or potential Users with minimal 10 A Hosting User is required to be a User, but data center or not. In addition, co-located Users do power or cabinet space demands with because only Users can be Hosting Users, a Hosted not receive any market data or data service product Customer is not able to provide hosting services to that is not available to all Users, although Users that additional time to purchase a PCS any other entities in the space in which it is hosted. receive co-location services normally would expect bundle at a discounted rate. The Exchange allows Users to act as Hosting Users reduced latencies, as compared to Users that are not The Exchange believes that, by for a monthly fee. See Securities Exchange Act co-located, in sending orders to, and receiving extending the existing eligibility for a Release No. 76010 (September 29, 2015), 80 FR market data from, the Exchange. 50% MRC reduction for another year, 60197 (October 5, 2015) (SR–NYSEArca–2015–82). 15 See 78 FR 50459, supra note 5, at 50459. Each 11 Because Hosting Users’ services are not of the Affiliate SROs has submitted substantially the proposed change may make PCS regulated, they may offer differentiated pricing and the same proposed rule change to propose the bundles more competitive with the are not required to make their pricing public or changes described herein. See SR–NYSE–2019–72, services that Hosting Users offer. The disclose it to the Exchange. The Exchange therefore SR–NYSEAmer–2019–58, SR–NYSECHX–2019–27, proposed extension would continue to does not have direct visibility into the specific and SR–NYSENAT–2019–32. range of options, or cost thereof, offered by Hosting 16 15 U.S.C. 78f(b). provide potential Users with a wider Users, and relies on third parties for information. 17 15 U.S.C. 78f(b)(5). range of choices for the period of the 12 See supra note 7. 18 15 U.S.C. 78f(b)(4). extension.

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The Proposed Change is an Equitable B. Self-Regulatory Organization’s is not necessary or appropriate. The Allocation of Fees and Credits Statement on Burden on Competition proposed change is not meant to affect The Exchange believes its proposal The proposed rule changes will not competition among national securities equitably allocates its fees among its impose any burden on competition that exchanges. Rather, the Exchange market participants. is not necessary or appropriate in believes that the proposed change is a The proposed change would not furtherance of the purposes of Section reasonable attempt to maintain a more apply differently to distinct types or 6(b)(8) of the Act.20 level playing field between the Exchange and the Hosting Users, who sizes of market participants. Rather, it Intramarket Competition would apply to all Users equally. The compete for Hosted Customer business. Exchange would continue to offer the The Exchange does not believe that Because Hosting Users’ services are not four different PCS bundles with the proposed change would place any regulated, they may offer differentiated different cabinet footprints and network burden on intramarket competition that pricing and are not required to make connections options. Users that require is not necessary or appropriate. The their pricing public. The Exchange proposed changes would enhance other sizes or combinations of cabinets, believes that the proposed change may competition by extending the period of network connections and cross connects make PCS bundles more attractive to could still request them. As is currently eligibility for a 50% MRC reduction to all Users that order a bundle on or potential Users who might otherwise the case, the purchase of any colocation opt to become Hosted Customers. service, including PCS bundles, would before December 31, 2020. Such change be completely voluntary. would make it more cost effective for The Exchange operates in a highly Having the change apply to all PCS current or potential Users to utilize co- competitive market in which exchanges bundles would ensure that all Users that location by offering a cost effective, offer co-location services as a means to order a bundle on or before December convenient way to create a colocation facilitate the trading and other market 31, 2020 would have their MRC reduced environment, through the choice among activities of those market participants by 50% for the first 24 months. PCS bundles with different cabinet who believe that co-location enhances Extending the period would make it footprints and network connections the efficiency of their operations. more cost effective for current or options. The Exchange believes that, by Accordingly, fees charged for co- potential Users to utilize co-location by extending the period of eligibility, the location services are constrained by the continuing to offer a cost effective, proposed change may make PCS active competition for the order flow of, bundles more attractive to potential convenient way to create a colocation and other business from, such market Users who might otherwise opt to environment, through the choice among become Hosted Customers, and thus participants. If a particular exchange PCS bundles with different cabinet enhance the competitive environment charges excessive fees for co-location footprints and network connections for potential Users (who would then services, affected market participants options. The Exchange expects that such have more options from which to will opt to terminate their co-location Users would include those with select). arrangements with that exchange, and minimal power or cabinet space Importantly, the proposed extension adopt a possible range of alternative demands and Users for which the costs would provide potential Users with a strategies, including placing their attendant with having a dedicated wider range of choices for the period of servers in a physically proximate cabinet or greater network connection the extension, which would be location outside the exchange’s data bandwidth are too burdensome. especially beneficial for potential Users center (which could be a competing Without this proposed rule change, with minimal power or cabinet space exchange), or pursuing strategies less potential Users choosing between a PCS demands or those for which the costs dependent upon the lower exchange-to- bundle and a Hosting User Bundle attendant with having a dedicated participant latency associated with co- would have fewer attractive options. cabinet or greater network connection This would be a detriment for them, location. Accordingly, the exchange bandwidth are too burdensome. At the charging excessive fees would stand to especially for potential Users with same time, however, no potential User minimal power or cabinet space lose not only co-location revenues but would be obligated to purchase a PCS also the liquidity of the formerly co- demands or those for which the costs bundle, and it would still have the located trading firms, which could have attendant with having a dedicated options offered by Hosting Users. cabinet or greater network connection PCS bundles allow Users to select additional follow-on effects on the bandwidth are too burdensome.19 their desired cabinet footprint and market share and revenue of the affected Finally, the Exchange believes that it network connections at a reduced MRC exchange. In such an environment, the is subject to significant competitive for the first 24 months. Such Users may Exchange must continually review, and forces, as described below in the choose, in turn, to pass on such cost consider adjusting, its services and Exchange’s statement regarding the savings to their customers. In addition related fees and credits to remain burden on competition. to the proposed services being competitive with other exchanges. For the reasons above, the proposed completely voluntary, they are available The Commission has repeatedly changes do not unfairly discriminate to all Users on an equal basis (i.e. the expressed its preference for competition between or among market participants same products and services are available over regulatory intervention in that are otherwise capable of satisfying to all Users, and the extension of the any applicable co-location fees, determining prices, products, and 50% reduction for the MRC for the PCS services in the securities markets. requirements, terms and conditions bundles, would apply to all Users). established from time to time by the Specifically, in Regulation NMS, the Exchange. Intermarket Competition Commission highlighted the importance For these reasons, the Exchange The Exchange does not believe that of market forces in determining prices believes that the proposal is consistent the proposed fee would impose any and SRO revenues and, also, recognized with the Act. burden on intermarket competition that that current regulation of the market system ‘‘has been remarkably successful 19 See supra note 7. 20 15 U.S.C. 78f(b)(8). in promoting market competition in its

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broader forms that are most important to All submissions should refer to File (‘‘Act’’),1 and Rule 19b–4 thereunder,2 investors and listed companies.’’ 21 Number SR–NYSEARCA–2019–97. This notice is hereby given that on December For the reasons described above, the file number should be included on the 17, 2019, Nasdaq GEMX, LLC (‘‘GEMX’’ Exchange believes that the proposed subject line if email is used. To help the or ‘‘Exchange’’) filed with the Securities rule changes reflect this competitive Commission process and review your and Exchange Commission (‘‘SEC’’ or environment. comments more efficiently, please use ‘‘Commission’’) the proposed rule C. Self-Regulatory Organization’s only one method. The Commission will change as described in Items I, II, and Statement on Comments on the post all comments on the Commission’s III, below, which Items have been Proposed Rule Change Received From internet website (http://www.sec.gov/ prepared by the Exchange. The Members, Participants, or Others rules/sro.shtml). Copies of the Commission is publishing this notice to submission, all subsequent solicit comments on the proposed rule No written comments were solicited amendments, all written statements change from interested persons. or received with respect to the proposed with respect to the proposed rule I. Self-Regulatory Organization’s rule change. change that are filed with the Statement of the Terms of Substance of Commission, and all written III. Date of Effectiveness of the the Proposed Rule Change Proposed Rule Change and Timing for communications relating to the Commission Action proposed rule change between the The Exchange proposes to adopt a Commission and any person, other than new rule titled ‘‘Off-Exchange RWA The foregoing rule change is effective those that may be withheld from the Transfers’’ at GEMX Options 6, Section upon filing pursuant to Section public in accordance with the 6. 19(b)(3)(A) 22 of the Act and provisions of 5 U.S.C. 552, will be The text of the proposed rule change subparagraph (f)(2) of Rule 19b–423 available for website viewing and is available on the Exchange’s website at thereunder, because it establishes a due, printing in the Commission’s Public http://nasdaqgemx.cchwallstreet.com/, fee, or other charge imposed by the Reference Room, 100 F Street NE, at the principal office of the Exchange, Exchange. Washington, DC 20549 on official and at the Commission’s Public At any time within 60 days of the Reference Room. filing of such proposed rule change, the business days between the hours of Commission summarily may 10:00 a.m. and 3:00 p.m. Copies of the II. Self-Regulatory Organization’s temporarily suspend such rule change if filing also will be available for Statement of the Purpose of, and it appears to the Commission that such inspection and copying at the principal Statutory Basis for, the Proposed Rule action is necessary or appropriate in the office of the Exchange. All comments Change public interest, for the protection of received will be posted without change. Persons submitting comments are In its filing with the Commission, the investors, or otherwise in furtherance of Exchange included statements the purposes of the Act. If the cautioned that we do not redact or edit personal identifying information from concerning the purpose of and basis for Commission takes such action, the the proposed rule change and discussed Commission shall institute proceedings comment submissions. You should submit only information that you wish any comments it received on the under Section 19(b)(2)(B) 24 of the Act to proposed rule change. The text of these determine whether the proposed rule to make available publicly. All submissions should refer to File statements may be examined at the change should be approved or places specified in Item IV below. The disapproved. Number SR–NYSEARCA–2019–97 and should be submitted on or before Exchange has prepared summaries, set IV. Solicitation of Comments January 21, 2020. forth in sections A, B, and C below, of the most significant aspects of such Interested persons are invited to For the Commission, by the Division of statements. submit written data, views, and Trading and Markets, pursuant to delegated arguments concerning the foregoing, authority.25 A. Self-Regulatory Organization’s including whether the proposed rule Eduardo A. Aleman, Statement of the Purpose of, and change is consistent with the Act. Deputy Secretary. Statutory Basis for, the Proposed Rule Comments may be submitted by any of [FR Doc. 2019–28168 Filed 12–27–19; 8:45 am] Change the following methods: BILLING CODE 8011–01–P 1. Purpose Electronic Comments The Exchange proposes to adopt a • Use the Commission’s internet SECURITIES AND EXCHANGE new rule titled, ‘‘Off-Exchange RWA comment form (http://www.sec.gov/ COMMISSION Transfers’’ at GEMX Options 6, Section rules/sro.shtml); or 6. This proposal is substantially the • Send an email to rule-comments@ same as Cboe Exchange, Inc. (‘‘Cboe’’) sec.gov. Please include File Number SR– [Release No. 34–87818; File No. SR–GEMX– Rule 6.8.3 2019–17] NYSEARCA–2019–97 on the subject Proposed Options 6, Section 6 is line. Self-Regulatory Organizations; Nasdaq intended to facilitate the reduction of risk-weighted assets (‘‘RWA’’) Paper Comments GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed attributable to open options positions. • Send paper comments in triplicate Rule Change To Adopt a New Rule SEC Rule 15c3–1 (Net Capital to Secretary, Securities and Exchange Titled ‘‘Off-Exchange RWA Transfers’’ Requirements for Brokers or Dealers) Commission, 100 F Street NE, at GEMX Options 6, Section 6 (‘‘Net Capital Rules’’) requires registered Washington, DC 20549–1090. broker-dealers, unless otherwise December 20, 2019. 21 See Securities Exchange Act Release No. 51808 Pursuant to Section 19(b)(1) of the 1 15 U.S.C. 78s(b)(1). (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). 2 17 CFR 240.19b–4. 22 Securities Exchange Act of 1934 15 U.S.C. 78s(b)(3)(A). 3 See Securities Exchange Act Release No. 87374 23 17 CFR 240.19b–4(f)(2). (October 21, 2019), 84 FR 57542 (October 25, 2019) 24 15 U.S.C. 78s(b)(2)(B). 25 17 CFR 200.30–3(a)(12). (SR–Cboe–2019–044).

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excepted, to maintain certain specified under these standards are, in large part, These transfers will not result in a minimum levels of capital.4 The Net based on the aggregate notional value of change in ownership, as they must Capital Rules are designed to protect short positions regardless of offsets. As occur between accounts of the same securities customers, counterparties, a result, in general, Clearing Members Person. and creditors by requiring that broker- that are subsidiaries of U.S. bank ‘‘Person’’ is defined within proposed dealers have sufficient liquid resources holding companies must hold Options 6, Section 6(a) as an individual, on hand, at all times, to meet their substantially more bank regulatory partnership (general or limited), joint financial obligations. Notably, hedged capital than would otherwise be stock company, corporation, limited positions, including offsetting futures required under the Net Capital Rules. liability company, trust or and options contract positions, result in The Exchange is concerned with the unincorporated organization, or any certain net capital requirement ability of Market Makers to provide governmental entity or agency or reductions under the Net Capital Rules.5 liquidity in their appointed classes. The political subdivision thereof. Subject to certain exceptions, Clearing Exchange believes that permitting In other words, RWA transfers may Members 6 are subject to the Net Capital market participants to efficiently only occur between the same individual Rules.7 However, a subset of Clearing transfer existing options positions or legal entity. These are merely Members are subsidiaries of U.S. bank through an off-exchange transfer process transfers from one clearing account to holding companies, which, due to their would likely have a beneficial effect on another, both of which are attributable affiliations with their parent U.S.-bank continued liquidity in the options to the same individual or legal entity. A holding companies, must comply with market without adversely affecting market participant effecting an RWA additional bank regulatory capital market quality. Liquidity in the listed Transfer is analogous to an individual requirements pursuant to rulemaking options market is critically important. transferring funds from a checking required under the Dodd-Frank Wall The Exchange believes that the account to a savings account, or from an Street Reform and Consumer Protection proposed rule change provides market account at one bank to an account at Act.8 Pursuant to this mandate, the participants with an efficient another bank—the money still belongs Board of Governors of the Federal mechanism to transfer their open to the same person, who is just holding Reserve System, the Office of the options positions from one clearing it in a different account for personal Comptroller of the Currency, and the account to another clearing account and financial reasons. Federal Deposit Insurance Corporation thereby increase liquidity in the listed For example, Market Maker A clears have approved a regulatory capital options market. GEMX currently has no transactions on the Exchange into an framework for subsidiaries of U.S. bank mechanism that firms may use to account it has with Clearing Member X, holding company clearing firms.9 transfer positions between clearing which is affiliated with a U.S-bank Generally, these rules, among other accounts without having to effect a holding company. Market Maker A things, impose higher minimum capital transaction with another party and close opens a clearing account with Clearing and higher asset risk weights than were a position. Member Y, which is not affiliated with previously mandated for Clearing The proposed rule provides that a U.S.-bank holding company. Clearing Members that are subsidiaries of U.S. existing positions in options listed on Member X has informed Market Maker bank holding companies under the Net the Exchange of a Member or non- A that its open positions may not Capital Rules. Furthermore, the new Member (including an affiliate of a exceed a certain amount at the end of rules do not fully permit deductions for Member) may be transferred on, from, or a calendar month, or it will be subject hedged securities or offsetting options to the books of a Clearing Member off to restrictions on new positions it may positions.10 Rather, capital charges the Exchange if the transfer establishes open the following month. On August a net reduction of RWA attributable to 28, Market Maker A reviews the open 4 17 CFR 240.15c3–1. those options positions (an ‘‘RWA positions in its Clearing Member X 5 In addition, the Net Capital Rules permit various Transfer’’). Proposed paragraph (a)(1) clearing account and determines it must offsets under which a percentage of an option adds examples of two transfers that reduce its open positions to satisfy position’s gain at any one valuation point is Clearing Member X’s requirements by allowed to offset another position’s loss at the same would be deemed to establish a net valuation point (e.g. vertical spreads). reduction of RWA, and thus qualify as the end of August. It determines that 6 The term Clearing Member is defined within a permissible RWA Transfer: transferring out 1000 short calls in class General 1, Section 1(a)(4). All Clearing Members • A transfer of options positions from ABC will sufficiently reduce the RWA must also be clearing members of The Options Clearing Corporation 11 member A to capital requirements in the account with Clearing Corporation (‘‘OCC’’). Clearing Member X to avoid additional 7 In the event federal regulators modify bank Clearing Corporation member B that net capital requirements in the future, the Exchange (offset) with positions held at Clearing position limits in September. Market will reevaluate the proposed rule change at that Corporation member B, and thus closes Maker A wants to retain the positions in time to determine whether any corresponding all or part of those positions (as accordance with its risk profile. changes to the proposed rule are appropriate. demonstrated in the example below) 12; Pursuant to the proposed rule change, 8 H.R. 4173 (amending section 3(a) of the on August 31, Market Maker A transfers Securities Exchange Act of 1934 (the ‘‘Act’’) (15 and U.S.C. 78c(a))). • A transfer of options positions from 1000 short calls in class ABC to its 9 12 CFR 50; 79 FR 61440 (Liquidity Coverage a bank-affiliated Clearing Corporation clearing account with Clearing Member Ratio: Liquidity Risk Measurement Standards). member to a non-bank-affiliated Y. As a result, Market Maker A can 10 Many options strategies, including relatively Clearing Corporation member.13 continue to provide the same level of simple strategies often used by retail customers and liquidity in class ABC during September more sophisticated strategies used by broker- dealers, are risk limited strategies or options spread 11 The term Clearing Corporation is defined as it did in previous months. strategies that employ offsets or hedges to achieve within General 1, Section 1(a)(3). A Member must give up a Clearing certain investment outcomes. Such strategies 12 This transfer would establish a net reduction of Member for each transaction it effects typically involve the purchase and sale of multiple RWA attributable to the transferring Person, on the Exchange, which identifies the options (and may be coupled with purchases or because there would be fewer open positions and sales of the underlying securities), executed thus fewer assets subject to Net Capital Rules. Clearing Member through which the simultaneously as part of the same strategy. In 13 This transfer would establish a net reduction of many cases, the potential market exposure of these RWA attributable to the transferring Person, Corporation member would not be subject to Net strategies is limited and defined. because the non-bank-affiliated Clearing Capital Rules, as described above.

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transaction will clear.14 A Member may Proposed paragraph (a)(3) states RWA Maker A did not want to close out the change the give up for a transaction Transfers may result in the netting of 1000 short calls when it made its RWA within a specified period of time.15 positions. Netting occurs when long Transfer. However, given changed Additionally, a Member may also positions and short positions in the circumstances in September, Market change the Clearing Member 16 for a same series ‘‘offset’’ against each other, Maker A has determined it no longer specific transaction. The transfer of leaving no or a reduced position. For wants to hold those positions. The positions from an account with one example, if there were 100 long calls in proposed rule change would permit clearing firm to the account of another one account, and 100 short calls of the Market Maker A to effect an RWA clearing firm pursuant to the proposed same option series were added to that Transfer of the 1000 short calls from its rule change has a similar result as account, the positions would offset, account with Clearing Member Y to its changing a give up or CMTA, as it leaving no open positions. Currently, account with Clearing Member X (or results in a position that resulted from the Exchange permits off-exchange vice versa), which results in elimination a transaction moving from the account transfers on behalf of a Market Maker of those positions (and a reduction in of one clearing firm to another, just at account for transactions in multiply RWA associated with them). As noted a different time and in a different listed options series on different above, such netting would have manner.17 In the above example, if exchanges, but only if the Market Maker occurred if Market Maker A cleared the Market Maker A had initially given up nominees are trading for the same September transaction directly into its Clearing Member Y rather than Clearing Member, and the options transactions account with Clearing Member Y, or had Member X on the transactions that on the different options exchanges clear not effected an RWA Transfer in August. resulted in the 1000 long calls in class into separate exchange-specific accounts Netting provides market participants ABC, or had changed the give-up or because they cannot easily clear into the with appropriate flexibility to conduct CMTA to Clearing Member Y pursuant same Market Maker account at OCC. In their businesses as they see fit while to Options 6, Section 1 the ultimate such instances, all Market Maker having the ability to reduce RWA result would have been the same. There positions in the exchange-specific capital requirements when necessary. are a variety of reasons why firms give accounts for the multiply listed class RWA Transfers may not result in up or CMTA transactions to certain would be automatically transferred on preferential margin or haircut clearing firms (and not to non-bank their trade date into one central Market treatment.18 Additionally, RWA affiliate clearing firms) at the time of a Maker account (commonly referred to as Transfers may only be effected for transaction, and the proposed rule a ‘‘universal account’’) at the Clearing options listed on the Exchange and will change provides firms with a Corporation. Positions cleared into a be subject to applicable laws, rules, and mechanism to achieve the same result at universal account would automatically regulations, including rules of other a later time. net against each other. self-regulatory organizations (including Proposed paragraph (a)(2) states RWA While RWA Transfers are not OCC).19 Transfers may occur on a routine, occurring because of limitations related Finally, the Exchange notes it is recurring basis. As noted in the example to trading on different exchanges, reserving Sections 5 and 7 of Options 6 above, clearing firms may impose similar reasoning for the above for consistency in rule numbering with restrictions on the amount of open exception applies to why netting should Nasdaq affiliated markets. positions. Permitting transfers on a be permissible for the limited purpose routine, recurring basis will provide of reducing RWA. Firms may maintain 2. Statutory Basis market participants with the flexibility different clearing accounts for a variety The Exchange believes that its to comply with these restrictions when of reasons, such as the structure of their proposal is consistent with Section 6(b) necessary to avoid position limits on businesses, the manner in which they of the Act,20 in general, and furthers the future options activity. Additionally, trade, their risk management objectives of Section 6(b)(5) of the Act,21 proposed paragraph (a)(6) provides that procedures, and for capital purposes. If in particular, in that it is designed to no prior written notice to the Exchange a Market Maker clears all transactions promote just and equitable principles of is required for RWA Transfers. Because into a universal account, offsetting trade, to remove impediments to and of the potential routine basis on which positions would automatically net. perfect the mechanism of a free and RWA Transfers may occur, and because However, if a Market Maker has open market and a national market of the need for flexibility to comply multiple accounts into which its system, and, in general to protect with the restrictions described above, transactions cleared, they would not investors and the public interest. the Exchange believes it may interfere automatically net. While there are times Additionally, the Exchange believes the with the ability of investors firms to when a firm may not want to close out proposed rule change is consistent with comply with any Clearing Member open positions to reduce RWA, there are the Section 6(b)(5) 22 requirement that restrictions describe above, and may be other times when a firm may determine the rules of an exchange not be designed burdensome to provide notice for these it is appropriate to close out positions to permit unfair discrimination between routine transfers. to accomplish a reduction in RWA. customers, issuers, brokers, or dealers. In the example above, suppose after 14 See Options 6B, Section 2. making the RWA Transfer described 18 See proposed paragraph (a)(4). 15 See Options 6, Section 1. above, Market Maker A effects a 19 See proposed introductory paragraph and 16 The Clearing Member Trade Assignment transaction on September 25 that results proposed paragraph (a)(7). Transfers of non- (‘‘CMTA’’) process at The Options Clearing in 1000 long calls in class ABC, which Exchange listed options and other financial instruments are not governed by this proposed rule. Corporation (‘‘OCC’’) facilitates the transfer of clears into its account with Clearing option trades/positions from one OCC clearing Any RWA transfers will be subject to all applicable member to another in an automated fashion. Member X. If Market Maker A had not recordkeeping requirements applicable to Members Changing a CMTA for a specific transaction would effected its RWA Transfer in August, the and Clearing Members under the Securities allocate the trade to a different OCC clearing 1000 long calls would have offset Exchange Act of 1934, and the rules and regulations thereunder (the ‘‘Act’’), such as Rule 17a–3 and member than the one initially identified on the against the 1000 short calls, eliminating trade. 17a–4. 17 The transferred positions will continue to be both positions and thus any RWA 20 15 U.S.C. 78f(b). subject to OCC rules, as they will continue to be capital requirements associated with 21 15 U.S.C. 78f(b)(5). held in an account of an OCC member. them. At the end of August, Market 22 Id.

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The Exchange’s proposal is substantially change will permit netting while will impose any burden on intra-market the same as Cboe Rule 6.8 [sic]. allowing firms to continue to maintain competition that is not necessary or In particular, the Exchange believes different clearing accounts in a manner appropriate in furtherance of the the proposed rule change to permit consistent with their businesses. purposes of the Act, as use of the RWA Transfers will remove The Exchange recognizes the proposed process is voluntary. All impediments to and perfect the numerous benefits of executing options Members and non-Members with open mechanism of a free and open market transactions occur on an exchanges, positions in options listed on the and a national market system by including price transparency, potential Exchange may use the proposed off- providing liquidity in the listed options price improvement, and a clearing exchange transfer process to reduce the market. The Exchange believes guarantee. However, the Exchange RWA capital requirements attributable providing market participants with an believes it is appropriate to permit RWA to those positions. The Exchange does efficient process to reduce RWA capital Transfers to occur off the exchange, as not believe that the proposed rule requirements attributable to open these benefits are inapplicable to RWA change will impose any burden on positions in clearing accounts with U.S. Transfers. RWA Transfers have a narrow intermarket competition that is not bank-affiliated clearing firms may scope and are intended to achieve a necessary or appropriate in furtherance contribute to additional liquidity in the limited, benefit purpose. RWA Transfers of the purposes of the Act. RWA listed options market, which, in general, are not intended to be a competitive Transfers have a limited purpose, which protects investors and the public trading tool. There is no need for price is to reduce RWA attributable to open interest. discovery or improvement, as the positions in listed options in order to The proposed rule change, in purpose of the transfer is to reduce free up capital. The Exchange believes particular the proposed changes to RWA asset capital requirements the proposed rule change may relieve permit RWA transfers to occur on a attributable to a market participants’ the burden on liquidity providers in the routine, recurring basis and result in positions. Unlike trades on an exchange, options market by reducing the RWA netting, also provides market the price at which an RWA Transfers attributable to their open positions. As participants with sufficient flexibility to occurs is immaterial—the resulting a result, market participants may be able reduce RWA capital requirements at reduction in RWA is the critical part of to increase liquidity they provide to the times necessary to comply with the transfer. RWA Transfers will result market, which liquidity benefits all requirements imposed on them by in no change in ownership, and thus market participants. clearing firms. This will permit market they do not constitute trades with a participants to respond to then-current counterparty (and thus eliminating the C. Self-Regulatory Organization’s market conditions, including volatility need for a counterparty guarantee). The Statement on Comments on the and increased volume, by reducing the transactions that resulted in the open Proposed Rule Change Received From RWA capital requirements associated positions to be transferred as an RWA Members, Participants, or Others with any new positions they may open Transfer were already guaranteed by an No written comments were either while those conditions exist. Given the OCC clearing member, and the positions solicited or received. additional capital that may become will continue to be subject to OCC rules, available to market participants as a as they will continue to be held in an III. Date of Effectiveness of the result of the RWA Transfers, market account with an OCC clearing member. Proposed Rule Change and Timing for participants will be able to continue to The narrow scope of the proposed rule Commission Action provide liquidity to the market, even change and the limited, beneficial Because the foregoing proposed rule during periods of increased volume and purpose of RWA Transfers make change does not: (i) Significantly affect volatility, which liquidity ultimately allowing RWA Transfers to occur off the the protection of investors or the public benefits investors. It is not possible for floor appropriate and important to interest; (ii) impose any significant market participants to predict what support the provision of liquidity in the burden on competition; and (iii) become market conditions will exist at a specific listed options market. operative for 30 days from the date on time, and when volatility will occur. The proposed rule change does not which it was filed, or such shorter time The proposed rule change to permit unfairly discriminate against market as the Commission may designate, it has routine, recurring RWA Transfers (and participants, as all Members and non- become effective pursuant to Section to not provide prior written notice) will Members with open positions in options 19(b)(3)(A)(iii) of the Act 23 and provide market participants with the listed on the Exchange may use the subparagraph (f)(6) of Rule 19b–4 ability to respond to these conditions proposed off-exchange transfer process thereunder.24 whenever they occur. Permitting to reduce the RWA capital requirements At any time within 60 days of the transfers on a routine, recurring basis of Clearing Members. filing of the proposed rule change, the will provide market participants with Commission summarily may the flexibility to comply with these B. Self-Regulatory Organization’s temporarily suspend such rule change if restrictions when necessary to avoid Statement on Burden on Competition it appears to the Commission that such position limits on future options The Exchange does not believe that action is necessary or appropriate in the activity. In addition, with respect to the proposed rule change will impose public interest, for the protection of netting, as discussed above, firms may any burden on competition that is not investors, or otherwise in furtherance of maintain different clearing accounts for necessary or appropriate in furtherance the purposes of the Act. If the a variety of reasons, such as the of the purposes of the Act. structure of their businesses, the manner The Exchange does not believe that 23 15 U.S.C. 78s(b)(3)(A)(iii). in which they trade, their risk the proposed rule change will impose 24 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– management procedures, and for capital any burden on competition that is not 4(f)(6) requires a self-regulatory organization to give purposes. Netting may otherwise occur necessary or appropriate in furtherance the Commission written notice of its intent to file with respect to a firm’s positions if it of the purposes of the Act. This process the proposed rule change at least five business days prior to the date of filing of the proposed rule structured its clearing accounts is not intended to be a competitive change, or such shorter time as designated by the differently, such as by using a universal trading tool. The Exchange does not Commission. The Exchange has satisfied this account. Therefore, the proposed rule believe that the proposed rule change requirement.

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Commission takes such action, the For the Commission, by the Division of calendar quarter’s volume or Commission shall institute proceedings Trading and Markets, pursuant to delegated participation as Lead Market Maker 25 to determine whether the proposed rule authority. (‘‘LMM’’) on the Exchange. The text of should be approved or disapproved. J. Matthew DeLesDernier, the proposed rule change is provided in Assistant Secretary. Exhibit 5. IV. Solicitation of Comments [FR Doc. 2019–28026 Filed 12–27–19; 8:45 am] The text of the proposed rule change Interested persons are invited to BILLING CODE 8011–01–P is also available on the Exchange’s submit written data, views, and website (http://markets.cboe.com/us/ arguments concerning the foregoing, equities/regulation/rule_filings/bzx/), at including whether the proposed rule SECURITIES AND EXCHANGE the Exchange’s Office of the Secretary, change is consistent with the Act. COMMISSION and at the Commission’s Public Comments may be submitted by any of [Release No. 34–87824; File No. SR– Reference Room. the following methods: CboeBZX–2019–108] II. Self-Regulatory Organization’s Electronic Comments Statement of the Purpose of, and Self-Regulatory Organizations; Cboe • Statutory Basis for, the Proposed Rule Use the Commission’s internet BZX Exchange, Inc.; Notice of Filing Change comment form (http://www.sec.gov/ and Immediate Effectiveness of a rules/sro.shtml); or Proposed Rule Change To Amend In its filing with the Commission, the • Send an email to rule-comments@ Interpretation and Policy .01 of Rule Exchange included statements sec.gov. Please include File Number SR– 2.4 To Allow the Exchange To Provide concerning the purpose of and basis for GEMX–2019–17 on the subject line. Annual Notification to Individual the proposed rule change and discussed Members That are Subject to any comments it received on the Paper Comments Paragraph (b) of Rule 2.4 proposed rule change. The text of these • Send paper comments in triplicate statements may be examined at the to Secretary, Securities and Exchange December 20, 2019. places specified in Item IV below. The Commission, 100 F Street NE, Pursuant to Section 19(b)(1) of the Exchange has prepared summaries, set Washington, DC 20549–1090. Securities Exchange Act of 1934 (the forth in sections A, B, and C below, of ‘‘Act’’),1 and Rule 19b–4 thereunder,2 the most significant aspects of such All submissions should refer to File notice is hereby given that on December statements. Number SR–GEMX–2019–17. This file 13, 2019, Cboe BZX Exchange, Inc. (the number should be included on the A. Self-Regulatory Organization’s ‘‘Exchange’’ or ‘‘BZX’’) filed with the subject line if email is used. To help the Statement of the Purpose of, and Securities and Exchange Commission Commission process and review your Statutory Basis for, the Proposed Rule (the ‘‘Commission’’) the proposed rule comments more efficiently, please use Change change as described in Items I and II only one method. The Commission will below, which Items have been prepared 1. Purpose post all comments on the Commission’s by the Exchange. The Exchange filed the internet website (http://www.sec.gov/ The Exchange proposes to amend proposal as a ‘‘non-controversial’’ rules/sro.shtml). Copies of the Interpretation and Policy .01 of Rule 2.4 proposed rule change pursuant to submission, all subsequent to allow the Exchange to provide annual Section 19(b)(3)(A)(iii) of the Act 3 and amendments, all written statements notification to individual Members that Rule 19b–4(f)(6) thereunder.4 The with respect to the proposed rule are subject to paragraph (b) of Rule 2.4, Commission is publishing this notice to change that are filed with the which requires certain Members to solicit comments on the proposed rule Commission, and all written connect to the Exchange’s backup change from interested persons. communications relating to the systems and participate in functional proposed rule change between the I. Self-Regulatory Organization’s and performance testing based on the Commission and any person, other than Statement of the Terms of Substance of prior calendar quarter’s volume or those that may be withheld from the the Proposed Rule Change participation as LMM on the Exchange. As background, Regulation Systems public in accordance with the Cboe BZX Exchange, Inc. (‘‘BZX’’ or provisions of 5 U.S.C. 552, will be Compliance and Integrity (‘‘Regulation the ‘‘Exchange’’) is filing with the 6 available for website viewing and SCI’’) applies to certain self-regulatory Securities and Exchange Commission organizations (including the Exchange), printing in the Commission’s Public (the ‘‘Commission’’) a proposed rule Reference Room, 100 F Street NE, alternative trading systems (‘‘ATSs’’), change to amend Interpretation and plan processors, and exempt clearing Washington, DC 20549, on official Policy .01 of Rule 2.4 to allow the business days between the hours of agencies (collectively, ‘‘SCI entities’’). Exchange to provide annual notification Specifically, Rule 1004 of Regulation 10:00 a.m. and 3:00 p.m. Copies of the 5 to individual Members that are subject SCI states that each SCI entity shall filing also will be available for to paragraph (b) of Rule 2.4, which inspection and copying at the principal establish standards for the designation requires certain Members to connect to of Members that are necessary for the office of the Exchange. All comments the Exchange’s backup systems and received will be posted without change. maintenance of fair and orderly markets participate in functional and in the event of the activation of the Persons submitting comments are performance testing based on the prior cautioned that we do not redact or edit business continuity and disaster recovery plans, designate such Members personal identifying information from 25 17 CFR 200.30–3(a)(12). in scheduled functional and comment submissions. You should 1 15 U.S.C. 78s(b)(1). performance testing of the operation of submit only information that you wish 2 17 CFR 240.19b–4. to make available publicly. All 3 15 U.S.C. 78s(b)(3)(A)(iii). such plans no less than once every 12 submissions should refer to File 4 17 CFR 240.19b–4(f)(6). months, and coordinate the testing of Number SR–GEMX–2019–17 and 5 The term ‘‘Member’’ is defined as ‘‘any registered broker or dealer that has been admitted 6 See Securities Exchange Act Release No. 73639 should be submitted on or before to membership in the Exchange.’’ See Exchange (November 19, 2014), 79 FR 72252 (December 5, January 21, 2020. Rule 1.5(n). 2014) (‘‘SCI Adopting Release’’).

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such plans on an industry- or sector- designation pursuant to paragraph (b), performance testing, which generally wide basis with other SCI entities. but still require the Exchange to provide occurs in October, which the Exchange In order to comply with the such notice at least three months prior believes would: (i) Simplify the Member coordination requirement among SCI to the anticipated functional and designation and notice process; (ii) entities, the Exchange has conducted performance testing; and (iv) strengthen allow the Exchange to require only the required operational testing in the Exchange’s coordination with other those Members that meet the parallel with the industry-led testing SCI entities by harmonizing the requirements under Rule 2.4(b)(1) in the program coordinated by the Securities frequency of such notifications with designated quarter to participate in such Industry and Financial Markets other self-regulatory organizations, testing; (iii) provide the Exchange with Association (‘‘SIFMA’’), which occurs which do not provide quarterly greater flexibility as to the timing that it on an annual basis. Currently, notifications of Member designations.7 would provide Members with notice of Interpretation and Policy .01 to Rule 2.4 As the proposed amendment provides their designation pursuant to paragraph requires the Exchange to identify and the Exchange with greater flexibility in (b), but still require the Exchange to provide notice to designated Members selecting the relevant quarter’s trade provide such notice at least three under paragraph (b) on a quarterly basis data for which the designated Members months prior to the anticipated based on trade activity during the will be identified, the designated functional and performance testing; and previous quarter or a Member’s Members may be identified based on (iv) strengthen the Exchange’s participation as LMM on the Exchange. more recent trading activity, rather than coordination with other SCI entities by Any Member that receives such notice trade activity that potentially occurred harmonizing the frequency of such is required to participate in the next more than one year prior to such testing notifications with other self-regulatory annual functional and performance and thus would more accurately organizations, which do not provide testing, which generally occurs in represent the Members who met the quarterly notifications of Member October. As such, a Member that requirements set forth in paragraph designations. The proposed amendment receives notice in the third and/or (b)(1) of Rule 2.4. will harmonize Exchange rules with fourth quarter of the preceding year or 2. Statutory Basis those of other self-regulatory the first and/or second quarters of the organizations in furtherance of the current year will be required to The Exchange believes the proposed coordination of testing among SCI participate in the annual functional and rule change is consistent with the entities required by Rule 1004(c) of performance testing. As a result, Securities Exchange Act of 1934 (the Regulation SCI. As set forth in ‘‘Act’’) and the rules and regulations Members would be notified in October, Regulation SCI, ‘‘SROs have the thereunder applicable to the Exchange January, April, and/or July of their authority, and legal responsibility, and, in particular, the requirements of requirement to connect to the under Section 6 of the Exchange Act, to Section 6(b) of the Act. Specifically, the Exchange’s backup systems and adopt and enforce rules (including rules Exchange believes the proposed rule participate in functional and to comply with Regulation SCI’s change is consistent with the Section performance testing scheduled for requirements relating to BC/DR testing) 6(b)(5) requirements that the rules of an October, which means that certain applicable to their members or exchange be designed to prevent Members receive notification of their participants that are designed to, among fraudulent and manipulative acts and designation and requirement to connect other things, foster cooperation and practices, to promote just and equitable and participate in functional and coordination with persons engaged in performance testing only three months principles of trade, to foster cooperation regulating, clearing, settling, processing prior to the scheduled operational and and coordination with persons engaged information with respect to, and functional testing. Further, a Member in regulating, clearing, settling, facilitating transactions in securities, to that had been designated in any of the processing information with respect to, remove impediments to and perfect the four preceding quarters would be and facilitating transactions in mechanism of a free and open market required to participate in the functional securities, to remove impediments to and a national market system, and, in and performance testing even if that and perfect the mechanism of a free and general, to protect investors and the Member did not meet the designation open market and a national market public interest.’’ 8 The Exchange requirements of subparagraphs (b)(1) in system, and, in general, to protect believes that the proposal is consistent the most recent quarter (i.e., the second investors and the public interest. quarter). In particular, the Exchange believes with such authority and legal As proposed, the amendment would the proposal is consistent with the Act responsibility. allow the Exchange to identify because, as noted above, the proposal B. Self-Regulatory Organization’s designated Members based on trade would allow the Exchange to identify Statement on Burden on Competition activity during a single quarter for a designated Members based on activity given year, and to issue one annual during a single quarter for a given year The Exchange does not believe that notification to the designated Members and to issue one annual notification to the proposed rule change will impose in preparation for the anticipated the designated Members in preparation any burden on competition that is not functional and performance testing, for the anticipated functional and necessary or appropriate in furtherance which generally occurs in October. As of the purposes of the Act. The such, the proposal would: (i) Simplify 7 See Cboe Exchange, Inc. (‘‘Cboe’’) Rule 5.24, proposed rule change is not a the Member designation and notice which states ‘‘[Cboe] provides [ ] Trading Permit competitive proposal as it is intended to process; (ii) allow the Exchange to Holders with reasonable advance notice that they coordinate notification of Member must participate in the testing described in participation requirements in the require only those Members that meet paragraph (b) of this Rule 5.24.’’ See also New York the volume requirements under Rule Stock Exchange (‘‘NYSE’’) Rule 49(b)(4), which Exchange’s testing of business 2.4(b)(1) in the designated quarter to states ‘‘[a]t least three (3) months prior to a continuity and disaster recovery plans participate in such testing; (iii) provide scheduled functional and performance testing of the with the annual industry-wide testing Exchange’s business continuity and disaster program. the Exchange with greater flexibility as recovery plans, the Exchange will . . . notify those to the timing that it would provide member organizations that are required to Members with notice of their participate based on such criteria.’’ 8 See supra note 6.

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C. Self-Regulatory Organization’s Commission summarily may comment submissions. You should Statement on Comments on the temporarily suspend such rule change if submit only information that you wish Proposed Rule Change Received From it appears to the Commission that such to make available publicly. All Members, Participants, or Others action is necessary or appropriate in the submissions should refer to File The Exchange neither solicited nor public interest, for the protection of Number SR–CboeBZX–2019–108 and received comments on the proposed investors, or otherwise in furtherance of should be submitted on or before rule change. the purposes of the Act. If the January 21, 2020. Commission takes such action, the For the Commission, by the Division of III. Date of Effectiveness of the Commission shall institute proceedings Trading and Markets, pursuant to delegated Proposed Rule Change and Timing for to determine whether the proposed rule authority.14 Commission Action change should be approved or J. Matthew DeLesDernier, Because the proposed rule change disapproved. Assistant Secretary. does not: (i) Significantly affect the IV. Solicitation of Comments protection of investors or the public [FR Doc. 2019–28083 Filed 12–27–19; 8:45 am] Interested persons are invited to interest; (ii) impose any significant BILLING CODE 8011–01–P submit written data, views, and burden on competition; and (iii) become arguments concerning the foregoing, operative for 30 days from the date on including whether the proposed rule which it was filed, or such shorter time SECURITIES AND EXCHANGE change is consistent with the Act. as the Commission may designate, it has COMMISSION Comments may be submitted by any of become effective pursuant to Section the following methods: 19(b)(3)(A) of the Act 9 and Rule 19b– [Release No. 34–87842; File No. SR–NYSE– 4(f)(6) thereunder.10 Electronic Comments 2019–72] A proposed rule change filed • Use the Commission’s internet Self-Regulatory Organizations; New pursuant to Rule 19b–4(f)(6) under the comment form (http://www.sec.gov/ 11 York Stock Exchange LLC; Notice of Act normally does not become rules/sro.shtml); or operative for 30 days after the date of its • Send an email to rule-comments@ Filing and Immediate Effectiveness of filing. However, Rule 19b–4(f)(6)(iii) 12 sec.gov. Please include File Number SR– Proposed Rule Change To Amend Its permits the Commission to designate a CboeBZX–2019–108 on the subject line. Price List To Extend for One Year a shorter time if such action is consistent Fee Discount for the Partial Cabinet with the protection of investors and the Paper Comments Solution Bundles Offered in public interest. The Exchange has asked • Send paper comments in triplicate Connection With the Exchange’s Co- the Commission to waive the 30-day to Secretary, Securities and Exchange Location Services operative delay so that the proposal may Commission, 100 F Street NE, become operative upon filing. The Washington, DC 20549–1090. December 23, 2019. Exchange states that a waiver of the All submissions should refer to File Pursuant to Section 19(b)(1) 1 of the operative delay is consistent with the Number SR–CboeBZX–2019–108. This Securities Exchange Act of 1934 (the protection of investors and the public file number should be included on the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 interest because it would eliminate subject line if email is used. To help the notice is hereby given that, on December potential confusion across self- Commission process and review your 16, 2019, New York Stock Exchange regulatory organizations and simplify comments more efficiently, please use LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed and clarify the process of notification to only one method. The Commission will with the Securities and Exchange designated Members pursuant to post all comments on the Commission’s Commission (the ‘‘Commission’’) the paragraph (b) of Rule 2.4. The internet website (http://www.sec.gov/ proposed rule change as described in Commission believes that waiver of the rules/sro.shtml). Copies of the Items I, II, and III below, which Items 30-day operative delay is consistent submission, all subsequent have been prepared by the self- with the protection of investors and the amendments, all written statements regulatory organization. The public interest. Therefore, the with respect to the proposed rule Commission is publishing this notice to Commission hereby waives the change that are filed with the solicit comments on the proposed rule operative delay and designates the Commission, and all written change from interested persons. proposed rule change operative upon communications relating to the I. Self-Regulatory Organization’s filing.13 proposed rule change between the Statement of the Terms of Substance of At any time within 60 days of the Commission and any person, other than the Proposed Rule Change filing of the proposed rule change, the those that may be withheld from the public in accordance with the The Exchange proposes to amend its 9 15 U.S.C. 78s(b)(3)(A). provisions of 5 U.S.C. 552, will be Price List to extend for one year a fee 10 17 CFR 240.19b–4(f)(6). In addition, Rule19b– available for website viewing and 4(f)(6)(iii) requires a self-regulatory organization to discount for the Partial Cabinet Solution give the Commission written notice of its intent to printing in the Commission’s Public bundles offered in connection with the file the proposed rule change, along with a brief Reference Room, 100 F Street NE, Exchange’s co-location services. The description and text of the proposed rule change, Washington, DC 20549 on official proposed rule change is available on the at least five business days prior to the date of filing business days between the hours of of the proposed rule change, or such shorter time Exchange’s website at www.nyse.com, at as designated by the Commission. The Exchange 10:00 a.m. and 3:00 p.m. Copies of the the principal office of the Exchange, and has satisfied this requirement. filing also will be available for at the Commission’s Public Reference 11 17 CFR 240.19b–4(f)(6). inspection and copying at the principal Room. 12 17 CFR 240.19b–4(f)(6)(iii). office of the Exchange. All comments 13 For purposes only of waiving the 30-day received will be posted without change. 14 17 CFR 200.30–3(a)(12). operative delay, the Commission also has 1 15 U.S.C. 78s(b)(1). considered the proposed rule’s impact on Persons submitting comments are 2 efficiency, competition, and capital formation. See cautioned that we do not redact or edit 15 U.S.C. 78a. 15 U.S.C. 78c(f). personal identifying information from 3 17 CFR 240.19b–4.

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II. Self-Regulatory Organization’s A. Self-Regulatory Organization’s Users, including those with minimal Statement of the Purpose of, and Statement of the Purpose of, and the power or cabinet space demands or Statutory Basis for, the Proposed Rule Statutory Basis for, the Proposed Rule those for which the costs attendant with Change Change having a dedicated cabinet or greater 1. Purpose network connection bandwidth are too In its filing with the Commission, the burdensome.7 self-regulatory organization included The Exchange proposes to amend the The Exchange offers Users that statements concerning the purpose of, Price List related to co-location 4 services to extend a fee discount for the purchase a PCS bundle on or before and basis for, the proposed rule change December 31, 2019 a 50% reduction in and discussed any comments it received Partial Cabinet Solution (‘‘PCS’’) bundles that the Exchange offers Users.5 the monthly recurring charges (‘‘MRC’’) on the proposed rule change. The text for the first 24 months.8 The Exchange of those statements may be examined at There are four PCS bundles, each of which includes a partial cabinet; access proposes to extend the 50% fee the places specified in Item IV below. to the Liquidity Center Network reduction to those Users that purchase The Exchange has prepared summaries, (‘‘LCN’’) and internet protocol (‘‘IP’’) a PCS bundle on or before December 31, set forth in sections A, B, and C below, 9 network, the local area networks 2020. The Exchange does not propose of the most significant parts of such available in the data center; two fiber to amend the length of the discount statements. cross connections; and connectivity to period. one of two time feeds.6 The PCS The amended portion of the Price List bundles were designed to attract smaller would read as follows:

Type of service Description Amount of charge

Partial Cabinet Solution bundles Note: A User Option A: 1 kW partial cabinet, 1 LCN con- $7,500 initial charge per bundle plus monthly and its Affiliates are limited to one Partial nection (1 Gb), 1 IP network connection (1 charge per bundle as follows: Cabinet Solution bundle at a time. A User Gb), 2 fiber cross connections and either • For Users that order on or before Decem- and its Affiliates must have an Aggregate the Network Time Protocol Feed or Preci- ber 31, 2020: $3,000 monthly for first 24 Cabinet Footprint of 2 kW or less to qualify sion Timing Protocol. months of service, and $6,000 monthly for a Partial Cabinet Solution bundle. See thereafter. Note 2 under ‘‘General Notes.’’. • For Users that order after December 31, 2020: $6,000 monthly. Option B: 2 kW partial cabinet, 1 LCN con- $7,500 initial charge per bundle plus monthly nection (1 Gb), 1 IP network connection (1 charge per bundle as follows: Gb), 2 fiber cross connections and either • For Users that order on or before Decem- the Network Time Protocol Feed or Preci- ber 31, 2020: $3,500 monthly for first 24 sion Timing Protocol. months of service, and $7,000 monthly thereafter. • For Users that order after December 31, 2020: $7,000 monthly. Option C: 1 kW partial cabinet, 1 LCN con- $10,000 initial charge per bundle plus monthly nection (10 Gb LX), 1 IP network connec- charge per bundle as follows: tion (10 Gb), 2 fiber cross connections and • For Users that order on or before Decem- either the Network Time Protocol Feed or ber 31, 2020: $7,000 monthly for first 24 Precision Timing Protocol. months of service, and $14,000 monthly thereafter. • For Users that order after December 31, 2020: $14,000 monthly. Option D: 2 kW partial cabinet, 1 LCN con- $10,000 initial charge per bundle plus monthly nection (10 Gb LX), 1 IP network connec- charge per bundle as follows: tion (10 Gb), 2 fiber cross connections and • For Users that order on or before Decem- either the Network Time Protocol Feed or ber 31, 2020: $7,500 monthly for first 24 Precision Timing Protocol. months of service, and $15,000 monthly thereafter. • For Users that order after December 31, 2020: $15,000 monthly.

4 The Exchange initially filed rule changes Release No. 76008 (September 29, 2015), 80 FR 6 See Securities Exchange Act Release No. 77072 relating to its co-location services with the 60190 (October 5, 2015) (SR–NYSE–2015–40). As (February 5, 2016), 81 FR 7394 (February 11, 2016) Securities and Exchange Commission specified in the Price List, a User that incurs co- (SR–NYSE–2015–53). (‘‘Commission’’) in 2010. See Securities Exchange location fees for a particular co-location service 7 Id., at 7396. Act Release No. 62960 (September 21, 2010), 75 FR pursuant thereto would not be subject to co-location 8 See Securities Exchange Act Release No. 84893 59310 (September 27, 2010) (SR–NYSE–2010–56). fees for the same co-location service charged by the (December 20, 2018), 83 FR 67455 (December 28, The Exchange operates a data center in Mahwah, Exchange’s affiliates NYSE American LLC, NYSE 2019) (SR–NYSE–2018–63). New Jersey (the ‘‘data center’’) from which it 9 Arca, Inc., NYSE Chicago, Inc. and NYSE National, The Exchange previously extended the MRC provides co-location services to Users. Inc. (collectively, the ‘‘Affiliate SROs’’). See reduction for one year. See Securities Exchange Act 5 For purposes of the Exchange’s co-location Release Nos. 82223 (December 6, 2017) 82 FR 58459 Securities Exchange Act Release No. 70206 (August services, a ‘‘User’’ means any market participant (December 12, 2017) (SR–NYSE–2017–62); and that requests to receive co-location services directly 15, 2013), 78 FR 51765 (August 21, 2013) (SR– 79715 (December 30, 2016), 82 FR 1777 (January 6, from the Exchange. See Securities Exchange Act NYSE–2013–59). 2017) (SR–NYSE–2016–91).

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Application and Impact of the Proposed activities of those market participants trade, to foster cooperation and Change who believe that co-location enhances coordination with persons engaged in The proposed change would apply to the efficiency of their operations. The regulating, clearing, settling, processing all PCS bundles. The proposed change Commission has repeatedly expressed information with respect to, and would not apply differently to distinct its preference for competition over facilitating transactions in securities, to types or sizes of market participants. regulatory intervention in determining remove impediments to, and perfect the Rather, it would apply to all Users prices, products, and services in the mechanisms of, a free and open market equally. securities markets. Specifically, in and a national market system and, in Users that require other sizes or Regulation NMS, the Commission general, to protect investors and the combinations of cabinets, network highlighted the importance of market public interest and does not unfairly connections and cross connects could forces in determining prices and SRO discriminate between customers, still request them. As is currently the revenues and recognized that current issuers, brokers, or dealers. The case, the purchase of any colocation regulation of the market system ‘‘has Exchange also believes that the been remarkably successful in proposed rule change is consistent with service, including PCS bundles, is 18 completely voluntary and the Price List promoting market competition in its Section 6(b)(4) of the Act, because it is applied uniformly to all Users. broader forms that are most important to provides for the equitable allocation of investors and listed companies.’’ 13 reasonable dues, fees, and other charges Competitive Environment among its members, issuers and other General A User may host another entity in its persons using its facilities and does not space within the data center. Such Users As is the case with all Exchange co- unfairly discriminate between are called ‘‘Hosting Users,’’ and their location arrangements, (i) neither a User customers, issuers, brokers or dealers. nor any of the User’s customers would customers are ‘‘Hosted Customers.’’ 10 The Proposed Change Is Not Unfairly be permitted to submit orders directly to Based on conversations with Users Discriminatory and potential customers, the Exchange the Exchange unless such User or believes that Hosting Users offer customer is a member organization, a The Exchange believes its proposal is bundles (‘‘Hosting User Bundles’’) that Sponsored Participant or an agent not unfairly discriminatory. The proposed change would not include cabinet space and space on thereof (e.g., a service bureau providing apply differently to distinct types or shared LCN and IP network order entry services); (ii) use of the co- sizes of market participants. Rather, it connections—and that the Hosting User location services proposed herein would would apply to all Users equally. The Bundles provide their end users with a be completely voluntary and available Exchange would continue to offer the service similar to that of the PCS to all Users on a non-discriminatory 14 four different PCS bundles with bundles, but with a lower cost and basis; and (iii) a User would only different cabinet footprints and network latency.11 incur one charge for the particular co- connections options. Users that require The Exchange believes that, by location service described herein, other sizes or combinations of cabinets, extending the existing eligibility for a regardless of whether the User connects network connections and cross connects 50% MRC reduction for another year, only to the Exchange or to the Exchange 15 could still request them. As is currently the proposed change may make PCS and one or more of the Affiliate SROs. the case, the purchase of any colocation bundles more competitive with the 2. Statutory Basis service, including PCS bundles, would services that Hosting Users offer. The Exchange believes that the be completely voluntary. Importantly, the proposed extension The proposed change would ensure would provide potential Users with a proposed rule change is consistent with Section 6(b) of the Act,16 in general, and that all Users that order a bundle on or wider range of choices for the period of before December 31, 2020 would have the extension, which would be furthers the objectives of Section 6(b)(5) 17 their MRC reduced by 50% for the first especially beneficial for potential Users of the Act, in particular, because it is designed to prevent fraudulent and 24 months. Extending the period would with minimal power or cabinet space make it more cost effective for current demands or those for which the costs manipulative acts and practices, to promote just and equitable principles of or potential Users to utilize co-location attendant with having a dedicated by offering a cost effective, convenient cabinet or greater network connection 13 12 See Securities Exchange Act Release No. 51808 way to create a colocation environment, bandwidth are too burdensome. (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). through the choice among PCS bundles The Exchange operates in a highly 14 As is currently the case, Users that receive co- with different cabinet footprints and competitive market in which exchanges location services from the Exchange will not receive network connections options. The and other vendors (i.e., Hosting Users) any means of access to the Exchange’s trading and Exchange expects that such Users would offer co-location services as a means to execution systems that is separate from, or superior to, that of other Users. In this regard, all orders sent include those with minimal power or facilitate the trading and other market to the Exchange enter the Exchange’s trading and cabinet space demands and Users for execution systems through the same order gateway, which the costs attendant with having a 10 A Hosting User is required to be a User, but regardless of whether the sender is co-located in the because only Users can be Hosting Users, a Hosted data center or not. In addition, co-located Users do dedicated cabinet or greater network Customer is not able to provide hosting services to not receive any market data or data service product connection bandwidth are too any other entities in the space in which it is hosted. that is not available to all Users, although Users that burdensome. The Exchange allows Users to act as Hosting Users receive co-location services normally would expect for a monthly fee. See Securities Exchange Act reduced latencies, as compared to Users that are not The Proposed Change Is Reasonable Release No. 76008 (September 29, 2015), 80 FR co-located, in sending orders to, and receiving 60190 (October 5, 2015) (SR–NYSE–2015–40). market data from, the Exchange. The Exchange believes its proposal is 11 Because Hosting Users’ services are not 15 See 78 FR 51765, supra note 5, at 51766. Each reasonable. regulated, they may offer differentiated pricing and of the Affiliate SROs has submitted substantially The Exchange believes that it is are not required to make their pricing public or the same proposed rule change to propose the reasonable to extend the period of disclose it to the Exchange. The Exchange therefore changes described herein. See SR–NYSEAmer– eligibility for a 50% MRC reduction as does not have direct visibility into the specific 2019–58, SR–NYSEArca–2019–97, SR–NYSECHX– range of options, or cost thereof, offered by Hosting 2019–27, and SR–NYSENAT–2019–32. an incentive to Users to utilize PCS Users, and relies on third parties for information. 16 15 U.S.C. 78f(b). 12 See supra note 7. 17 15 U.S.C. 78f(b)(5). 18 15 U.S.C. 78f(b)(4).

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bundles. Extending the existing cabinet or greater network connection bundle, and it would still have the eligibility for a 50% MRC reduction for bandwidth are too burdensome.19 options offered by Hosting Users. another year would provide smaller Finally, the Exchange believes that it PCS bundles allow Users to select current or potential Users with minimal is subject to significant competitive their desired cabinet footprint and power or cabinet space demands with forces, as described below in the network connections at a reduced MRC additional time to purchase a PCS Exchange’s statement regarding the for the first 24 months. Such Users may bundle at a discounted rate. burden on competition. choose, in turn, to pass on such cost For the reasons above, the proposed savings to their customers. In addition The Exchange believes that, by changes do not unfairly discriminate to the proposed services being extending the existing eligibility for a between or among market participants completely voluntary, they are available 50% MRC reduction for another year, that are otherwise capable of satisfying to all Users on an equal basis (i.e. the the proposed change may make PCS any applicable co-location fees, same products and services are available bundles more competitive with the requirements, terms and conditions to all Users, and the extension of the services that Hosting Users offer. The established from time to time by the 50% reduction for the MRC for the PCS proposed extension would continue to Exchange. bundles, would apply to all Users). provide potential Users with a wider For these reasons, the Exchange Intermarket Competition range of choices for the period of the believes that the proposal is consistent extension. with the Act. The Exchange does not believe that the proposed fee would impose any The Proposed Change Is an Equitable B. Self-Regulatory Organization’s burden on intermarket competition that Allocation of Fees and Credits Statement on Burden on Competition is not necessary or appropriate. The The Exchange believes its proposal The proposed rule changes will not proposed change is not meant to affect equitably allocates its fees among its impose any burden on competition that competition among national securities market participants. is not necessary or appropriate in exchanges. Rather, the Exchange furtherance of the purposes of Section believes that the proposed change is a The proposed change would not 6(b)(8) of the Act.20 reasonable attempt to maintain a more apply differently to distinct types or level playing field between the sizes of market participants. Rather, it Intramarket Competition Exchange and the Hosting Users, who would apply to all Users equally. The The Exchange does not believe that compete for Hosted Customer business. Exchange would continue to offer the the proposed change would place any Because Hosting Users’ services are not four different PCS bundles with burden on intramarket competition that regulated, they may offer differentiated different cabinet footprints and network is not necessary or appropriate. The pricing and are not required to make connections options. Users that require proposed changes would enhance their pricing public. The Exchange other sizes or combinations of cabinets, competition by extending the period of believes that the proposed change may network connections and cross connects eligibility for a 50% MRC reduction to make PCS bundles more attractive to could still request them. As is currently all Users that order a bundle on or potential Users who might otherwise the case, the purchase of any colocation before December 31, 2020. Such change opt to become Hosted Customers. service, including PCS bundles, would would make it more cost effective for The Exchange operates in a highly be completely voluntary. current or potential Users to utilize co- competitive market in which exchanges Having the change apply to all PCS location by offering a cost effective, offer co-location services as a means to bundles would ensure that all Users that convenient way to create a colocation facilitate the trading and other market order a bundle on or before December environment, through the choice among activities of those market participants 31, 2020 would have their MRC reduced PCS bundles with different cabinet who believe that co-location enhances by 50% for the first 24 months. footprints and network connections the efficiency of their operations. Extending the period would make it options. The Exchange believes that, by Accordingly, fees charged for co- more cost effective for current or extending the period of eligibility, the location services are constrained by the potential Users to utilize co-location by proposed change may make PCS active competition for the order flow of, continuing to offer a cost effective, bundles more attractive to potential and other business from, such market convenient way to create a colocation Users who might otherwise opt to participants. If a particular exchange charges excessive fees for co-location environment, through the choice among become Hosted Customers, and thus services, affected market participants PCS bundles with different cabinet enhance the competitive environment will opt to terminate their co-location footprints and network connections for potential Users (who would then arrangements with that exchange, and options. The Exchange expects that such have more options from which to adopt a possible range of alternative Users would include those with select). strategies, including placing their minimal power or cabinet space Importantly, the proposed extension servers in a physically proximate demands and Users for which the costs would provide potential Users with a location outside the exchange’s data attendant with having a dedicated wider range of choices for the period of center (which could be a competing cabinet or greater network connection the extension, which would be exchange), or pursuing strategies less bandwidth are too burdensome. especially beneficial for potential Users with minimal power or cabinet space dependent upon the lower exchange-to- Without this proposed rule change, demands or those for which the costs participant latency associated with co- potential Users choosing between a PCS attendant with having a dedicated location. Accordingly, the exchange bundle and a Hosting User Bundle cabinet or greater network connection charging excessive fees would stand to would have fewer attractive options. bandwidth are too burdensome. At the lose not only co-location revenues but This would be a detriment for them, same time, however, no potential User also the liquidity of the formerly co- especially for potential Users with would be obligated to purchase a PCS located trading firms, which could have minimal power or cabinet space additional follow-on effects on the demands or those for which the costs 19 See supra note 7. market share and revenue of the affected attendant with having a dedicated 20 15 U.S.C. 78f(b)(8). exchange. In such an environment, the

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Exchange must continually review, and Comments may be submitted by any of SECURITIES AND EXCHANGE consider adjusting, its services and the following methods: COMMISSION related fees and credits to remain Electronic Comments [Release No. 34–87835; File No. 265–33] competitive with other exchanges. The Commission has repeatedly • Use the Commission’s internet Asset Management Advisory expressed its preference for competition comment form (http://www.sec.gov/ Committee over regulatory intervention in rules/sro.shtml); or AGENCY: determining prices, products, and • Securities and Exchange services in the securities markets. Send an email to rule-comments@ Commission. sec.gov. Please include File Number SR– Specifically, in Regulation NMS, the ACTION: Notice of meeting. Commission highlighted the importance NYSE–2019–72 on the subject line. of market forces in determining prices Paper Comments SUMMARY: Notice is being provided that and SRO revenues and, also, recognized the Securities and Exchange that current regulation of the market • Send paper comments in triplicate Commission Asset Management system ‘‘has been remarkably successful to Secretary, Securities and Exchange Advisory Committee will hold a public in promoting market competition in its Commission, 100 F Street NE, meeting on January 14, 2020, in Multi- broader forms that are most important to Washington, DC 20549–1090. Purpose Room LL–006 at the 21 Commission’s headquarters, 100 F investors and listed companies.’’ All submissions should refer to File Street NE, Washington, DC. The meeting For the reasons described above, the Number SR–NYSE–2019–72. This file will begin at 9:00 a.m. (ET) and will be Exchange believes that the proposed number should be included on the open to the public. The meeting will be rule changes reflect this competitive subject line if email is used. To help the webcast on the Commission’s website at environment. Commission process and review your www.sec.gov. The Committee will have comments more efficiently, please use C. Self-Regulatory Organization’s an administrative work session during only one method. The Commission will Statement on Comments on the lunch. Persons needing special post all comments on the Commission’s Proposed Rule Change Received From accommodations to take part because of internet website (http://www.sec.gov/ Members, Participants, or Others a disability should notify the contact rules/sro.shtml). Copies of the No written comments were solicited person listed below. The public is submission, all subsequent or received with respect to the proposed invited to submit written statements to amendments, all written statements rule change. the Committee. The meeting will with respect to the proposed rule include a discussion of various aspects change that are filed with the III. Date of Effectiveness of the of the asset management industry as Commission, and all written Proposed Rule Change and Timing for well as administrative items. Commission Action communications relating to the proposed rule change between the DATES: The public meeting will be held The foregoing rule change is effective on January 14, 2020. Written statements upon filing pursuant to Section Commission and any person, other than those that may be withheld from the should be received on or before January 19(b)(3)(A) 22 of the Act and 9, 2020. subparagraph (f)(2) of Rule 19b–4 23 public in accordance with the ADDRESSES: The meeting will be held at thereunder, because it establishes a due, provisions of 5 U.S.C. 552, will be available for website viewing and the Commission’s headquarters, 100 F fee, or other charge imposed by the Street NE, Washington, DC. Written Exchange. printing in the Commission’s Public Reference Room, 100 F Street NE, statements may be submitted by any of At any time within 60 days of the the following methods: filing of such proposed rule change, the Washington, DC 20549 on official Commission summarily may business days between the hours of Electronic Statements 10:00 a.m. and 3:00 p.m. Copies of the temporarily suspend such rule change if • filing also will be available for Use the Commission’s internet it appears to the Commission that such submission form (http://www.sec.gov/ action is necessary or appropriate in the inspection and copying at the principal office of the Exchange. All comments rules/other.shtml); or public interest, for the protection of • Send an email message to rule- investors, or otherwise in furtherance of received will be posted without change. Persons submitting comments are [email protected]. Please include File the purposes of the Act. If the Number 265–33 on the subject line; or Commission takes such action, the cautioned that we do not redact or edit Commission shall institute proceedings personal identifying information from Paper Statements comment submissions. You should under Section 19(b)(2)(B) 24 of the Act to • Send paper statements in triplicate determine whether the proposed rule submit only information that you wish to make available publicly. All to Vanessa Countryman, Federal change should be approved or Advisory Committee Management disapproved. submissions should refer to File Number SR–NYSE–2019–72 and should Officer, Securities and Exchange IV. Solicitation of Comments be submitted on or before January 21, Commission, 100 F Street NE, Washington, DC 20549–1090. Interested persons are invited to 2020. All submissions should refer to File No. submit written data, views, and For the Commission, by the Division of 265–33. This file number should be arguments concerning the foregoing, Trading and Markets, pursuant to delegated included on the subject line if email is including whether the proposed rule authority.25 used. To help us process and review change is consistent with the Act. Eduardo A. Aleman, your statement more efficiently, please Deputy Secretary. 21 use only one method. The Commission See Securities Exchange Act Release No. 51808 [FR Doc. 2019–28170 Filed 12–27–19; 8:45 am] (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). will post all statements on the 22 15 U.S.C. 78s(b)(3)(A). BILLING CODE 8011–01–P Commission’s internet website at SEC 23 17 CFR 240.19b–4(f)(2). website at (http://www.sec.gov/ 24 15 U.S.C. 78s(b)(2)(B). 25 17 CFR 200.30–3(a)(12). comments/265–33/265–33.htm).

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Statements also will be available for change as described in Items I and II incorporates by reference a number of website viewing and printing in the below, which Items have been prepared MIAX Exchange rules into its rulebook. Commission’s Public Reference Room, by the Exchange. The Commission is The MIAX Exchange recently amended 100 F Street NE, Room 1580, publishing this notice to solicit Rule 1400, Definitions, found in Chapter Washington, DC 20549, on official comments on the proposed rule change XIV of the MIAX Exchange rules, which business days between the hours of from interested persons. are its rules pertaining to the Options 10:00 a.m. and 3:00 p.m. All statements Order Protection and Locked and I. Self-Regulatory Organization’s received will be posted without change. Crossed Market Plan.3 The MIAX Statement of the Terms of Substance of Persons submitting comments are Exchange adopted a definition for the Proposed Rule Change cautioned that we do not redact or edit Complex Trade which, when inserted personal identifying information from The Exchange is filing a proposal to into its proper alphabetical position in submissions. You should submit only amend Exchange Rule 100, Definitions; MIAX Exchange Rule 1400, caused the information that you wish to make Exchange Rule 503, Openings on the subsequent following definitions to be available publicly. Exchange; Exchange Rule 515, renumbered (e.g., the existing FOR FURTHER INFORMATION CONTACT: Execution of Orders and Quotes; subparagraph (d) became new Christian Broadbent or Mark Uyeda, Exchange Rule 516, Order Types subparagraph (e); existing subparagraph Senior Special Counsels, or Sirimal Defined; Exchange Rule 517, Quote (e) became new subparagraph (f), Mukerjee, Senior Counsel, at (202) 551– Types Defined; Exchange Rule 518, etc . . .). As a result of the change to 6720, Division of Investment Complex Orders; and Exchange Rule MIAX Exchange Rule 1400, a number of Management, Securities and Exchange 521, Nullification and Adjustment of non-substantive amendments must be Commission, 100 F Street NE, Options Transactions Including Obvious made to correct internal cross references Washington, DC 20549–3628. Errors. within the Exchange’s rulebook. Specifically, the internal cross- SUPPLEMENTARY INFORMATION: In The text of the proposed rule change reference to Eligible Exchanges in the accordance with Section 10(a) of the is available on the Exchange’s website at definition of ABBO or Away Best Bid or Federal Advisory Committee Act, 5 http://www.miaxoptions.com/rule- Offer, in Exchange Rule 100, must be U.S.C.—App. 1, and the regulations filings/emerald at MIAX Emerald’s updated from Rule 1400(f) to Rule thereunder, Dalia Blass, Designated principal office, and at the 1400(g). The internal cross-reference to Federal Officer of the Committee, has Commission’s Public Reference Room. Eligible Exchanges in Exchange Rule ordered publication of this notice. II. Self-Regulatory Organization’s 503(e)(1)(iii) must be updated from Rule Dated: December 20, 2019. Statement of the Purpose of, and 1400(f) to Rule 1400(g). The internal Vanessa A. Countryman, Statutory Basis for, the Proposed Rule cross-reference to Intermarket Sweep Committee Management Officer. Change Orders in Rule 503(f)(2)(iv)(A)2. must be [FR Doc. 2019–28003 Filed 12–27–19; 8:45 am] In its filing with the Commission, the updated from Rule 1400(h) to Rule BILLING CODE 8011–01–P Exchange included statements 1400(i). The internal cross-reference to concerning the purpose of and basis for the NBBO in Exchange Rule 515(a) must the proposed rule change and discussed be updated from Rule 1400(j) to Rule SECURITIES AND EXCHANGE any comments it received on the 1400(k). The internal cross-reference to COMMISSION proposed rule change. The text of these Intermarket Sweep Orders in Exchange [Release No. 34–87823; File No. SR– statements may be examined at the Rule 516(f) must be updated from Rule EMERALD–2019–038] places specified in Item IV below. The 1400(h) to Rule 1400(i). Similarly in Exchange has prepared summaries, set Rule 516(f) the internal cross-references Self-Regulatory Organizations: MIAX forth in sections A, B, and C below, of to Protected Quotes and Eligible Emerald, LLC; Notice of Filing and the most significant aspects of such Exchanges must be updated from Immediate Effectiveness of a Proposed statements. 1400(p) and (f) to 1400(q) and (g) Rule Change To Amend Exchange respectively. Lastly, in Rule 516(f), the Rule 100, Definitions; Exchange Rule A. Self-Regulatory Organization’s internal cross-reference to Protected Bid 503, Openings on the Exchange; Statement of the Purpose of, and or Protected Offer must be updated from Exchange Rule 515, Execution of Statutory Basis for, the Proposed Rule 1400(o) to 1400 (p). The internal cross- Orders and Quotes; Exchange Rule Change references to Protected Bid and 516, Order Types Defined; Exchange 1. Purpose Protected Offer in Exchange Rule Rule 517, Quote Types Defined; 517(a)(2)(v) must be updated from The Exchange proposes to amend Exchange Rule 518, Complex Orders; 1400(o) to 1400(p). The internal cross- Exchange Rule 100, Definitions; and Exchange Rule 521, Nullification reference to Eligible Exchanges in Exchange Rule 503, Openings on the and Adjustment of Options Exchange Rule 518(a)(1) must be Exchange; Exchange Rule 515, Transactions Including Obvious Errors updated from Rule 1400(f) to Rule Execution of Orders and Quotes; 1400(g). Finally, the internal cross- Exchange Rule 516, Order Types December 20, 2019. reference to the Options Order Defined; Exchange Rule 517, Quote Pursuant to Section 19(b)(1) of the Protection and Locked/Crossed Market Types Defined; Exchange Rule 518, Securities Exchange Act of 1934 (the Plan in Exchange Rule 521(j) must be 1 2 Complex Orders; and Exchange Rule ‘‘Act’’), and Rule 19b–4 thereunder, updated from Rule 1400(n) to Rule 521, Nullification and Adjustment of notice is hereby given that on December 1400(o). 19, 2019, MIAX Emerald, LLC (‘‘MIAX Options Transactions Including Obvious The Exchange believes these changes Emerald’’ or ‘‘Exchange’’) filed with the Errors, to make minor non-substantive add clarity and precision to the Securities and Exchange Commission edits to update internal cross references Exchange’s rules. (the ‘‘Commission’’) the proposed rule in the Exchange’s rulebook. The Exchange is an affiliate of the 3 See Securities Exchange Act Release No. 87693 1 15 U.S.C. 78s(b)(1). Miami International Securities (December 9, 2019), 84 FR 68264 (December 13, 2 17 CFR 240.19b–4. Exchange, LLC (‘‘MIAX’’) and 2019) (SR–MIAX–2019–48).

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2. Statutory Basis C. Self-Regulatory Organization’s action is necessary or appropriate in the MIAX Emerald believes that its Statement on Comments on the public interest, for the protection of proposed rule change is consistent with Proposed Rule Change Received From investors, or otherwise in furtherance of Section 6(b) of the Act 4 in general, and Members, Participants, or Others the purposes of the Act. If the furthers the objectives of Section 6(b)(5) Written comments were neither Commission takes such action, the Commission shall institute proceedings of the Act 5 in particular, in that it is solicited nor received. to determine whether the proposed rule designed to prevent fraudulent and III. Date of Effectiveness of the change should be approved or manipulative acts and practices, to Proposed Rule Change and Timing for disapproved. promote just and equitable principles of Commission Action trade, to foster cooperation and IV. Solicitation of Comments Because the proposed rule change coordination with persons engaged in Interested persons are invited to does not: (i) Significantly affect the regulating, clearing, settling, processing submit written data, views, and protection of investors or the public information with respect to, and arguments concerning the foregoing, interest; (ii) impose any significant facilitating transactions in, securities, to including whether the proposed rule burden on competition; and (iii) become remove impediments to and perfect the change is consistent with the Act. operative for 30 days from the date on mechanisms of a free and open market Comments may be submitted by any of which it was filed, or such shorter time and a national market system and, in the following methods: general, to protect investors and the as the Commission may designate, it has public interest. become effective pursuant to Section Electronic Comments The Exchange believes that the 19(b)(3)(A) of the Act 7 and • Use the Commission’s internet proposed non-substantive rule changes subparagraph (f)(6) of Rule 19b–4 comment form (http://www.sec.gov/ to update internal cross-references thereunder.8 rules/sro.shtml); or within the Exchange’s Rules promotes A proposed rule change filed • Send an email to rule-comments@ just and equitable principles of trade pursuant to Rule 19b–4(f)(6) under the sec.gov. Please include File Number SR– and removes impediments to and Act 9 normally does not become EMERALD–2019–038 on the subject perfects the mechanism of a free and operative for 30 days after the date of its line. filing. However, Rule 19b–4(f)(6)(iii) 10 open market and a national market Paper Comments system and, in general, protects permits the Commission to designate a • investors and the public interest by shorter time if such action is consistent Send paper comments in triplicate providing additional clarity and with the protection of investors and the to Secretary, Securities and Exchange precision in the Exchange’s rules. The public interest. The Exchange has Commission, 100 F Street NE, Exchange believes it is in the public requested that the Commission waive Washington, DC 20549–1090. interest for rules to be accurate and the 30-day operative delay so that the All submissions should refer to File precise so as to eliminate the potential proposed rule change may become Number SR–EMERALD–2019–038. This for confusion. operative upon filing. Waiver of the file number should be included on the operative delay would allow the subject line if email is used. To help the B. Self-Regulatory Organization’s Exchange to immediately harmonize its Commission process and review your Statement on Burden on Competition rules to MIAX Options to ensure that comments more efficiently, please use The Exchange does not believe that the internal cross-references in the only one method. The Commission will the proposed rule change will impose Exchange’s rulebook are correct. post all comments on the Commission’s any burden on competition that is not Therefore, the Commission believes that internet website (http://www.sec.gov/ necessary or appropriate in furtherance waiver of the 30-day operative delay is rules/sro.shtml). Copies of the of the purposes of the Act. consistent with the protection of submission, all subsequent The Exchange does not believe that investors and the public interest. amendments, all written statements the proposed rule change will impose Accordingly, the Commission hereby with respect to the proposed rule any burden on intermarket competition waives the operative delay and change that are filed with the as the proposed change is non- designates the proposed rule change Commission, and all written substantive in nature. The non- operative upon filing.11 communications relating to the substantive edits to update internal At any time within 60 days of the proposed rule change between the cross-references in the Exchange’s filing of the proposed rule change, the Commission and any person, other than rulebook provides precision and Commission summarily may those that may be withheld from the accuracy in the Exchange’s rules. temporarily suspend such rule change if public in accordance with the The Exchange does not believe that it appears to the Commission that such provisions of 5 U.S.C. 552, will be the proposed rule change will impose available for website viewing and any burden on intramarket competition 7 15 U.S.C. 78s(b)(3)(A). printing in the Commission’s Public 8 17 CFR 240.19b–4(f)(6). In addition, Rule19b– Reference Room, 100 F Street NE, as the non-substantive edits to update 4(f)(6)(iii) requires a self-regulatory organization to internal cross-references in the give the Commission written notice of its intent to Washington, DC 20549 on official Exchange’s rulebook provide additional file the proposed rule change, along with a brief business days between the hours of detail and clarity in the Exchange’s description and text of the proposed rule change, 10:00 a.m. and 3:00 p.m. Copies of the at least five business days prior to the date of filing filing also will be available for rules, which apply equally to all of the proposed rule change, or such shorter time 6 Exchange Members. as designated by the Commission. The Exchange inspection and copying at the principal has satisfied this requirement. office of the Exchange. All comments 4 15 U.S.C. 78f(b). 9 17 CFR 240.19b–4(f)(6). received will be posted without change. 5 15 U.S.C. 78f(b)(5). 10 17 CFR 240.19b–4(f)(6)(iii). Persons submitting comments are 6 The term ‘‘Member’’ means an individual or 11 For purposes only of waiving the 30-day cautioned that we do not redact or edit organization approved to exercise the trading rights operative delay, the Commission also has associate with a Trading Permit. Members are considered the proposed rule’s impact on personal identifying information from deemed ‘‘members’’ under the Exchange Act. See efficiency, competition, and capital formation. See comment submissions. You should Exchange Rule 100. 15 U.S.C. 78c(f). submit only information that you wish

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to make available publicly. All Specifically, the proposed rule change proposed rule change and discussed any submissions should refer to File would: (1) Amend Rule 1014 comments it received on the proposed Number SR–EMERALD–2019–038 and (Department Decision) to: (a) Create a rule change. The text of these statements should be submitted on or before rebuttable presumption that an may be examined at the places specified January 21, 2020. application for new membership should in Item IV below. FINRA has prepared For the Commission, by the Division of be denied if the applicant or its summaries, set forth in sections A, B, Trading and Markets, pursuant to delegated associated persons are subject to a and C below, of the most significant authority.12 pending arbitration claim, and (b) aspects of such statements. permit an applicant to overcome a J. Matthew DeLesDernier, A. Self-Regulatory Organization’s presumption of denial by demonstrating Assistant Secretary. Statement of the Purpose of, and its ability to satisfy an unpaid [FR Doc. 2019–28086 Filed 12–27–19; 8:45 am] Statutory Basis for, the Proposed Rule arbitration award, other adjudicated Change BILLING CODE 8011–01–P customer award, unpaid arbitration settlement or pending arbitration claim; 1. Purpose SECURITIES AND EXCHANGE (2) adopt a new requirement for a Background COMMISSION member, that is not otherwise required to submit an application for continuing The MAP rules govern the way in [Release No. 34–87810; File No. SR–FINRA– membership for a specified change in which FINRA reviews a new 2019–030] ownership, control or business membership application (‘‘NMA’’) and a operations, including business continuing membership application Self-Regulatory Organizations; expansion, to seek a materiality (‘‘CMA’’).5 These rules require an Financial Industry Regulatory consultation if the member or its applicant to demonstrate its ability to Authority, Inc.; Notice of Filing of a associated persons have a defined comply with applicable securities laws Proposed Rule Change To Amend the ‘‘covered pending arbitration claim,’’ and FINRA rules, including observing Membership Application Program unpaid arbitration award, or an unpaid high standards of commercial honor and (‘‘MAP’’) Rules To Address the Issue of arbitration settlement; (3) amend Rule just and equitable principles of trade. Pending Arbitration Claims 1017 (Application for Approval of FINRA evaluates an applicant’s Change in Ownership, Control, or financial, operational, supervisory and December 20, 2019. compliance systems to ensure that the Pursuant to Section 19(b)(1) of the Business Operations) to require a member to demonstrate its ability to applicant meets the standards set forth Securities Exchange Act of 1934 in the MAP rules. Among other factors, (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 satisfy an unpaid arbitration award or unpaid settlement related to an the MAP rules require FINRA to notice is hereby given that on December consider whether persons associated 13, 2019, Financial Industry Regulatory arbitration before effecting the proposed change thereunder; (4) amend Rule 1013 with an applicant have material Authority, Inc. (‘‘FINRA’’) filed with the (New Member Application and disciplinary actions taken against them Securities and Exchange Commission Interview) and Rule 1017 to require an by industry authorities, customer (‘‘SEC’’ or ‘‘Commission’’) the proposed applicant to provide prompt written complaints, adverse arbitrations, rule change as described in Items I, II, notification of any pending arbitration pending arbitration claims, unpaid and III below, which Items have been claim that is filed, awarded, settled or arbitration awards, pending or substantially prepared by FINRA. The becomes unpaid before a decision on an unadjudicated matters, civil actions, Commission is publishing this notice to application constituting final action on remedial actions imposed or other solicit comments on the proposed rule FINRA is served on the applicant; and industry-related matters that could pose change from interested persons. 6 (5) make other non-substantive and a threat to public investors. I. Self-Regulatory Organization’s technical changes in the specified MAP FINRA is proposing to amend the Statement of the Terms of Substance of rules due to the proposed amendments.4 MAP rules in several ways. First, FINRA the Proposed Rule Change The text of the proposed rule change is proposing to amend one standard for admission and the corresponding factors FINRA is proposing to amend the is available on FINRA’s website at http://www.finra.org, at the principal therein relating to the presumption to Membership Application Program deny an application for new or (‘‘MAP’’) rules to help further address office of FINRA and at the Commission’s Public Reference Room. continuing membership. Second, FINRA the issue of pending arbitration claims, is proposing to clarify the various ways as well as arbitration awards and II. Self-Regulatory Organization’s in which an applicant for new or settlement agreements related to Statement of the Purpose of, and continuing membership may arbitrations that have not been paid in Statutory Basis for, the Proposed Rule demonstrate its ability to satisfy an full in accordance with their terms.3 Change unpaid arbitration award, other In its filing with the Commission, adjudicated customer award, unpaid 12 17 CFR 200.30–3(a)(12). FINRA included statements concerning arbitration settlement, or a pending 1 15 U.S.C. 78s(b)(1). arbitration claim during the application 2 the purpose of and basis for the 17 CFR 240.19b–4. review process, and to preclude an 3 Effective May 8, 2019, FINRA adopted the NASD Rule 1010 Series (Membership Proceedings), would also update cross-references and make other applicant from effecting any among other rules, in the consolidated FINRA non-substantive, technical changes, and make contemplated change in ownership, rulebook, without substantive change. The MAP corresponding changes to the Forms NMA and control or business operations until rules now reside under the FINRA Rule 1000 Series CMA. FINRA is separately developing changes to such demonstration is made and FINRA (Member Application and Associated Person the MAP rules in connection with the retrospective Registration) as FINRA Rules 1011 through 1019. review of this rule set. See Regulatory Notice 18– approves the application. Third, FINRA See Securities Exchange Act Release No. 85589 23 (July 2018) (‘‘Notice 18–23’’) (requesting (April 10, 2019), 84 FR 15646 (April 16, 2019) comment on a proposal regarding the MAP rules). 5 Unless otherwise specified, the term (Notice of Filing and Immediate Effectiveness of 4 For example, the proposed rule change would ‘‘application’’ refers to either an NMA (or Form File No. SR–FINRA–2019–009). For purposes of this require the renumbering of some paragraphs in NMA) or CMA (or Form CMA), depending on filing, all references to the MAP rules are to the Rules 1011 and 1014 and the updating of cross- context. FINRA Rule 1000 Series. The proposed rule change references. 6 See generally Rules 1014(a)(3) and 1014(a)(10).

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is proposing to mandate a member firm determining whether to approve an Accordingly, FINRA is proposing to to seek a materiality consultation in two application. Currently, Rule 1014(a)(3) amend Rule 1014(b)(1) to specify that a situations in which specified pending (‘‘Standard 3’’) requires FINRA to presumption of denial would exist if a arbitration claims, unpaid arbitration determine whether an applicant for new new member applicant or its associated awards, or unpaid arbitration or continuing membership and its persons are the subject of a pending settlements are involved. Finally, associated persons ‘‘are capable of arbitration claim. Creating a FINRA is proposing to require an complying with’’ the federal securities presumption of denial in connection applicant for new or continuing laws, the rules and regulations with a pending arbitration claim for an membership to notify FINRA of any thereunder, and FINRA rules. Standard NMA would shift the burden to the new pending arbitration claim that is filed, 3 sets forth six factors that FINRA must member applicant to demonstrate how awarded, settled or becomes unpaid consider in making that determination.8 its pending arbitration claims would be before FINRA renders a decision on the One factor, set forth under Rule paid should they go to award or result application. 1014(a)(3)(B), requires FINRA to in a settlement. In addition, the FINRA believes that these proposed consider whether an applicant’s or its proposed amendment would spotlight amendments to select portions of the associated person’s record reflects a the firm’s supervision of individuals MAP rules would enable FINRA to take sales practice event, a pending with pending arbitration claims. This a stronger approach to addressing the arbitration, or a pending private civil presumption of denial for a pending issue of pending arbitration claims, as action. Another factor appears under arbitration claim would not apply to an well as arbitration awards and Rule 1014(a)(3)(C) and requires FINRA existing member firm filing a CMA. settlement agreements related to to consider, among other regulatory Instead, consistent with today’s arbitrations that have not been paid in history, whether an applicant, its practice, FINRA would continue to full in accordance with their terms, in control persons, principals, registered consider whether an applicant’s or its connection with the application review representatives, other associated associated persons are the subject of a process. In addition, the proposed persons, any lender of five percent or pending arbitration claim in amendments would enable FINRA to more of the applicant’s net capital, and determining whether the applicant for consider the adequacy of the any other member with respect to which continuing membership is ‘‘capable of supervision of individuals with pending these persons were a controlling person complying with’’ applicable federal arbitration claims. As described below, or a five percent lender of its net capital, securities laws and FINRA rules.11 the proposed amendments are intended is subject to unpaid arbitration awards, 2. Evidence of Ability To Satisfy Unpaid to address concerns regarding situations other adjudicated customer awards, or Arbitration Awards, Other Adjudicated where: (1) A FINRA member firm hires unpaid arbitration settlements. individuals with pending arbitration Further, under Rule 1014(b)(1), where Customer Awards, Unpaid Arbitration claims, where there are concerns about an applicant or its associated person is Settlements, or for New Member the payment of those claims should they subject to certain regulatory history Applications, Pending Arbitration go to award or result in a settlement, enumerated in Standard 3, ‘‘a Claims (Proposed IM–1014–1) and concerns about the supervision of presumption exists that the application Proposed IM–1014–1 would provide those individuals; and (2) a member should be denied.’’ 9 Rule 1014(a)(3)(C) that an applicant may demonstrate its firm with substantial arbitration claims is one of several factors that trigger the ability to satisfy an unpaid arbitration seeks to avoid payment of the claims presumption. The existence of such an award, other adjudicated customer should they go to award or result in a event ‘‘[raises] a question of capacity to award, unpaid arbitration settlement or settlement by shifting its assets, which comply with the federal securities laws a pending arbitration claim, through an are typically customer accounts, or its and the rules of [FINRA],’’ which escrow agreement, insurance coverage, a managers and owners, to another firm should result in a rebuttable clearing deposit, a guarantee, a reserve and closing down. presumption to deny the application.10 fund, or the retention of proceeds from The proposed rule change would However, the existence of a record of a an asset transfer, or such other forms of impact members that have elected to be pending arbitration, as set forth in Rule documentation that FINRA may treated as capital acquisition brokers 1014(a)(3)(B), is currently not among the determine to be acceptable.12 In (‘‘CABs’’) and are subject to CAB rules. enumerated factors that trigger the addition, under the proposed CAB Rules 111 through 118 incorporate presumption to deny an application. interpretive material, an applicant may by reference several MAP rules, 1. Rebuttable Presumption to Deny an including Rules 1011, 1013, 1014 and 11 For purposes of determining whether an NMA (Proposed Rule 1014(b)(1)) 1017.7 The proposed amendments applicant meets Standard 3, FINRA’s consideration would make conforming changes to FINRA is concerned about of an applicant’s or associated person’s pending prospective applicants for new arbitration claim would be separated from Rule CAB Rules 111 through 118, as 1014(a)(3)(B) and moved to proposed Rule applicable. membership hiring principals and 1014(a)(3)(E). registered persons with pending 12 FINRA expects to make conforming Proposed Rule Change arbitration claims without having to amendments to Forms NMA and CMA. FINRA A. Rule 1014(a)(3)—Compliance with demonstrate how those claims would be notes that Form CMA currently instructs the paid if they go to award or result in a applicant to provide supporting documentation to Industry Rules, Regulations, and Laws show that such applicant is able to meet Standard settlement. In addition, FINRA is Rule 1014(a) sets forth 14 standards 3. Specifically, if the CMA involves a transfer of concerned about a new member’s assets with no corresponding transfer of associated for admission FINRA must consider in supervision of such individuals who liabilities, and there are pending arbitration claims may have a history of noncompliance. or closed or settled arbitration matters, Form CMA 7 See generally CAB Rule 111 (Membership requires the applicant to provide a written Proceedings) (referencing Rule 1011), CAB Rule 112 ‘‘Arbitration Plan,’’ explaining, among other things, (New Member Application and Interview) 8 See Rule 1014(a)(3)(A)–(F). how the applicant will handle the arbitrations and (referencing Rule 1013), CAB Rule 113 (Department 9 See also Rule 1017(h)(1), which pertains to awards that may result. An applicant may show that Decision) (referencing Rule 1014), and CAB Rule CMAs and contains language identical to Rule it has a reserve fund or will retain the proceeds of 116 (Application for Approval of Change in 1014(b)(1). FINRA would make conforming changes the asset transfer to satisfy the award. See Form Ownership, Control, or Business Operations) to Rule 1017(h)(1). CMA, Standard 3, Question 2.d. (within the section (referencing Rule 1017). 10 See Notice to Members 04–10 (February 2004). titled, ‘‘Provide supporting documents’’).

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provide a written opinion of an financial, operational, supervisory and events that require a CMA are a independent, reputable U.S. licensed compliance systems can accommodate ‘‘material change in business counsel knowledgeable in the area as to the contemplated change.15 Through operations,’’ which is defined to the value of the arbitration claims this consultation, FINRA may include, but is not limited to: (1) (which might be zero). Proposed IM– communicate with the member to obtain Removing or modifying a membership 1014–1 would also provide that to further documents and information agreement restriction; (2) market overcome the presumption to deny the regarding the contemplated change and making, underwriting or acting as a application, the applicant must its anticipated impact on the member. dealer for the first time; and (3) adding guarantee that any funds used to Where FINRA determines that a business activities that require a higher evidence the applicant’s ability to contemplated change is material, FINRA minimum net capital under SEA Rule satisfy any awards, settlements, or will instruct the member to file a CMA 15c3–1.19 In addition, a CMA is claims will be used for that purpose. if it intends to proceed with such required for business expansions to Any demonstration by an applicant of change. Ultimately, the member is increase the number of associated its ability to satisfy these outstanding responsible for compliance with Rule persons involved in sales, offices, or obligations would be subject to a 1017. If FINRA determines during the markets made that are a material change reasonableness assessment by FINRA. materiality consultation that the in business operations.20 However, IM– contemplated business change is 1011–1 (Safe Harbor for Business B. Materiality Consultation material, then the member potentially Expansions) creates a safe harbor for A member is required to file a CMA could be subject to disciplinary action incremental increases in these three when it plans to undergo an event for failure to file a CMA under Rule categories of business expansions that specified under Rule 1017 (e.g., 1017.16 will be presumed not to be material. acquisition or transfer of the member’s To help further incentivize payment Under this safe harbor provision, a assets, or a business expansion). In some of arbitration awards and settlements, member, subject to specified conditions cases, a change contemplated by a firm FINRA is proposing to preclude a and thresholds, may undergo such may not clearly fall within one of the member from effecting specified business expansions without filing a events described in Rule 1017, and so changes in ownership, control, or CMA.21 before taking steps to prepare a CMA, a business operations, including business FINRA is concerned that the changes member has the option of seeking expansions involving a ‘‘covered in a member firm’s ownership, control, guidance, or a materiality consultation, pending arbitration claim’’ (as defined or business operations as currently from FINRA on whether such proposed under proposed Rule 1011(c)), unpaid described in Rule 1017, and the event would require a CMA.13 The arbitration award, or unpaid settlement availability of the safe harbor for a materiality consultation process is related to an arbitration without first business expansion to increase the voluntary, and FINRA has published seeking a materiality consultation from number of associated persons involved guidelines about this process on FINRA as described below.17 in sales could allow a member to, for FINRA.org.14 A request for a materiality example, hire principals and registered 1. Mandatory Materiality Consultation consultation, for which there is no fee, representatives with substantial pending for Business Expansion To Add One or is a written request from a member firm arbitration claims without giving More Associated Persons Involved in for FINRA’s determination on whether a consideration to how the firm would Sales (Proposed IM–1011–2 and contemplated change in business supervise such individual or the Proposed Rules 1011(c)(1) and operations or activities is material and potential financial impact on the firm if 1017(a)(6)(B)) would therefore require a CMA or the individual, while employed at the whether the contemplated change can Rule 1017 specifies the changes in a hiring firm, engages in additional fit within the framework of the firm’s member’s ownership, control, or potential misconduct that results in a current activities and structure without business operations that require a CMA customer arbitration. Accordingly, the need to file a CMA for FINRA’s and FINRA’s approval.18 Among the FINRA is proposing to add new approval. The characterization of a interpretive material, IM–1011–2 contemplated change as material 15 See Notice 00–73. (Business Expansions and Covered depends on an assessment of all the 16 See Notice 00–73. Pending Arbitration Claims), to provide relevant facts and circumstances, 17 In a separate proposal, FINRA is proposing to mandate materiality consultations under other that if a member is contemplating to add including, among others, the nature of circumstances. See Notice 18–23 (seeking comment one or more associated persons involved the contemplated change, the effect the on a proposal to the MAP rules that would, among in sales and one or more of those contemplated change may have on the other things, codify the materiality consultation associated persons has a ‘‘covered firm’s capital, the qualifications and process and mandate a consultation under specified circumstances such as where an applicant seeks to experience of the firm’s personnel, and engage in, for the first time, retail foreign currency unless both the seller and acquirer are members of the degree to which the firm’s existing exchange activities, variable life settlement sales to the NYSE; (4) a change in the equity ownership or retail customers, options activities, or municipal partnership capital of the member that results in 13 See IM–1011–1 (stating, ‘‘[f]or any expansion securities activities). one person or entity directly or indirectly owning beyond these [safe harbor] limits, a member should 18 See Rule 1017(a). The events that require a or controlling 25 percent or more of the equity or contact its district office prior to implementing the member to file a CMA for approval before effecting partnership capital; or (5) a material change in change to determine whether the proposed the proposed event are: (1) a merger of the member business operations as defined in Rule 1011(k). expansion requires an application under Rule with another member, unless both members are 19 See Rule 1011(k). 1017.’’); see also Notice to Members 00–73 (October members of the New York Stock Exchange, Inc. 20 See Rule 1017(b)(2)(C) (stating, ‘‘If the 2000) (‘‘Notice 00–73’’) (stating, whether, based (‘‘NYSE’’) or the surviving entity will continue to application requests approval of an increase in upon all the facts and circumstances, a change and be a member of the NYSE; (2) a direct or indirect Associated Persons involved in sales, offices, or expansion that falls outside of the safe harbor acquisition by the member of another member, markets made, the application shall set forth the provisions are material, ‘‘[a] member may, but is not unless the acquiring member is a member of the increases in such areas during the preceding 12 required to, contact the District Office to obtain NYSE; (3) direct or indirect acquisitions or transfers months.’’). guidance on this issue.’’). of 25 percent or more in the aggregate of the 21 The safe harbor is unavailable to a member that 14 See The Materiality Consultation Process for member’s assets or any asset, business or line of has a membership agreement that contains a Continuing Membership Applications, https:// operation that generates revenues composing 25 specific restriction as to one or more of the three www.finra.org/rules-guidance/guidance/materiality- percent or more in the aggregate of the member’s areas of expansion or to a member that has a consultation-process. earnings measured on a rolling 36-month basis, ‘‘disciplinary history’’ as defined in IM–1011–1.

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pending arbitration claim’’ (as that term capital. For purposes of this definition, addition, FINRA invites comment on is defined under proposed Rule the claim would include only claimed the proposed definition. 1011(c)(1)), an unpaid arbitration award compensatory loss amounts, not 2. Mandatory Materiality Consultation or an unpaid settlement related to an requests for pain and suffering, punitive for Any Acquisition or Transfer of arbitration, and the member is not damages or attorney’s fees, and shall be otherwise required to file a CMA, the the maximum amount for which the Member’s Assets (Proposed Rule member may not effect the associated person is potentially liable 1017(a)(6)(A) and Proposed Rule contemplated business expansion regardless of whether the claim was 1011(c)(2)) unless the member complies with the brought against additional persons or Rule 1017(a) requires a member to file requirements in proposed Rule the associated person reasonably a CMA for direct or indirect acquisitions 1017(a)(6)(B). expects to be indemnified, share or transfers of 25 percent or more in the Proposed Rule 1017(a)(6)(B) would liability or otherwise lawfully avoid aggregate of the member’s assets or any require a member firm to file a CMA for being held responsible for all or part of asset, business or line of operation that approval of the business expansion such maximum amount. generates revenues composing 25 described in proposed IM–1011–2 FINRA believes that the definition of percent or more in the aggregate of the unless the member first submits a a ‘‘covered pending arbitration claim’’ member’s earnings measured on a written request to FINRA seeking a for purposes of a business expansion as rolling 36-month basis, unless both the materiality consultation for the described in proposed IM–1011–2 and seller and acquirer are NYSE contemplated business expansion. The proposed Rule 1017(a)(6)(B) is members.23 written request must address the issues appropriate because if an individual has FINRA is concerned that this 25 that are central to the materiality substantial arbitration claims, those percent threshold could permit a firm consultation. As part of the materiality claims could be an indication that the with pending arbitration claims that consultation, FINRA would consider the individual may engage in future ultimately produce awards or written request and other information or potential misconduct that could result 22 settlements to avoid satisfying those documents the member provides to in additional arbitration claims. Under awards or settlements by transferring determine in the public interest and the such circumstances, if the customer assets without encumbrance and then protection of investors that either: (1) names the hiring member firm in any closing down. Accordingly, FINRA is The member is not required to file a such additional arbitration claims, proposing to amend Rule 1017(a) to add CMA in accordance with Rule 1017 and FINRA is concerned whether a hiring new subparagraph (6)(A) to provide that may effect the contemplated business member firm with low excess net capital if a member is contemplating any direct expansion; or (2) the member is required would be able to satisfy any obligation or indirect acquisition or transfer of a to file a CMA in accordance with Rule that may result from the arbitration member’s assets or any asset, business 1017 and the member may not effect the claims including a customer award or or line of operation where the contemplated business expansion settlement. By requiring a materiality transferring member or an associated unless FINRA approves the CMA. consultation if a member firm is person of the transferring member has a A materiality consultation for this contemplating hiring an individual with covered pending arbitration claim (as type of business expansion would allow a ‘‘covered pending arbitration claim,’’ that term is defined under proposed FINRA to, among other things, assess FINRA would be able to assess, among Rule 1011(c)(2)), an unpaid arbitration the nature of the anticipated activities of other things, the adequacy of any the principals and registered supervisory plan the member firm has award or an unpaid settlement related to representatives with arbitration claims, in place for the individual. In addition, an arbitration, and the member is not unpaid arbitration awards or arbitration the materiality consultation would otherwise required to file a CMA, the settlements; the impact on the firm’s allow FINRA to discuss with the member may not effect the supervisory and compliance structure, member firm the potential impact on its contemplated transaction unless the personnel and finances; and any other finances if the member firm hires the member first submits a written request impact on investor protection raised by individual and the individual engages to FINRA seeking a materiality adding such individuals. If FINRA in future potential misconduct while consultation for the contemplated determines that a member must file a employed at the member firm that acquisition or transfer. Similar to CMA, it would be subject to the results in an arbitration claim against proposed subparagraph (6)(B) in Rule application review process set forth the member firm. 1017(a), the written request must under the MAP rules, including a If the SEC approves the proposed rule address the issues that are central to the review of any record of a pending change, FINRA will reassess the materiality consultation. As part of the arbitration claim and the presumption definition of ‘‘covered pending materiality consultation, FINRA would of denial with respect to any unpaid arbitration claim’’ for purposes of consider the written request and other arbitration awards, other adjudicated proposed IM–1011–2 and proposed Rule information or documents provided by customer awards, or unpaid arbitration 1017(a)(6)(B) after FINRA has had the member to determine in the public settlements. experience with the application of the interest and the protection of investors For purposes of a business expansion rule to determine its impact and if the that either: (1) The member is not to add one or more associated persons definition requires modification. In required to file a CMA in accordance involved in sales, FINRA is proposing to with Rule 1017 and may effect the define, under proposed Rule 1011(c)(1), 22 Recent academic studies provide evidence that contemplated acquisition or transfer; or a ‘‘covered pending arbitration claim’’ the past disciplinary and other regulatory events (2) the member is required to file a CMA associated with a firm or individual can be in accordance with Rule 1017 and the as: (1) An investment-related, consumer- predictive of similar future events. See Hammad initiated claim filed against the Qureshi and Jonathan Sokobin, Do Investors Have member may not effect the associated person in any arbitration Valuable Information About Brokers? (FINRA Office contemplated business acquisition or forum that is unresolved; and (2) whose of the Chief Economist Working Paper, August transfer unless FINRA approves the 2015). See also Mark Egan, Gregor Matvos, and CMA. claim amount (individually or, if there Amit Seru, The Market for Financial Adviser is more than one claim, in the aggregate) Misconduct, J. Pol. Econ. 127, No. 1 (February exceeds the hiring member’s excess net 2019): 233–295. 23 See supra note 18.

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During the course of this consultation, any direct or indirect acquisition or 2. Timing and Conditions for Effecting FINRA would consider, among other transfer involving a ‘‘covered pending Change Under Rule 1017 relevant facts and circumstances, arbitration claim,’’ FINRA would be able Rule 1017(c) describes the timing and whether the contemplated acquisition or to assess, among other things, the conditions for effecting a change under transfer could result in non-payment of adequacy of any plan the member firm Rule 1017.26 Rule 1017(c)(1) requires a an arbitration claim should it go to has in place to satisfy pending member to file a CMA for approval of award or result in a settlement, or the arbitration claims, unpaid arbitration a change in ownership or control at least continued non-payment of such awards, or unpaid arbitration 30 days before the change is expected to arbitration award or settlement. If settlements. occur. While a member may effect the FINRA determines that a member must As noted above, FINRA invites change prior to the conclusion of file a CMA, it would be subject to the comment on the proposed definition application review process set forth FINRA’s review of the CMA, FINRA under the MAP rules, including a and if the SEC approves the proposed may place interim restrictions on the review of any record of a pending rule change, FINRA will reassess the member based upon the standards in definition of ‘‘covered pending Rule 1014 pending a final arbitration claim and the presumption 27 of denial with respect to any unpaid arbitration claim’’ for purposes of determination. Under Rule 1017(c)(2), arbitration awards, other adjudicated proposed Rule 1017(a)(6)(A) after a member may file a CMA to remove or customer awards or unpaid arbitration FINRA has had experience with the modify a membership agreement settlements. application of the rule to determine its restriction at any time, but any such For purposes of this proposed impact and if the definition requires existing restriction shall remain in effect amendment, FINRA is proposing to modification. during the pendency of the proceeding. Finally, Rule 1017(c)(3) permits a define, under proposed Rule 1011(c)(2), C. Other Proposed Amendments a ‘‘covered pending arbitration claim’’ member to file a CMA for approval of as: (1) An investment-related, consumer- 1. Notification of Changes a material change in business operations initiated claim filed against the at any time, but the member may not transferring member or its associated Rule 1013(a) sets forth a detailed list effect such change until the conclusion persons in any arbitration forum that is of items that must be submitted with an of the proceeding, unless FINRA and the 24 unresolved; and (2) whose claim NMA. Rule 1017(b) sets forth the member otherwise agree. amount (individually or, if there is more documents or information required to FINRA is proposing to amend Rule than one claim, in the aggregate) accompany a CMA, depending on the 1017(c) by adding new subparagraph (4) exceeds the transferring member’s nature of the CMA. FINRA is proposing to provide that, notwithstanding the excess net capital. For purposes of this to amend Rules 1013 and 1017 to add existing timing and conditions for definition, the claim amount would new paragraphs that would appear as effecting a change as described under include only claimed compensatory loss proposed Rules 1013(c) and 1017(h), to Rule 1017(c)(1) through (3), where a amounts, not requests for pain and require an applicant to provide prompt member or an associated person has an suffering, punitive damages or notification, in writing, of any pending unpaid arbitration award or unpaid attorney’s fees, and shall be the arbitration claim involving the applicant settlement related to an arbitration at maximum amount for which the or its associated persons that is filed, the time of filing a CMA, the member associated person is potentially liable awarded, settled or becomes unpaid may not effect such change until regardless of whether the claim was before a decision on the application demonstrating that it has the ability to brought against additional persons or constituting final action of FINRA is satisfy such obligations in accordance the associated person reasonably served on the applicant.25 Thus, any with Rule 1014 and proposed IM–1014– expects to be indemnified, share such unpaid arbitration award, other 1, as discussed above, and obtaining liability or otherwise lawfully avoid adjudicated customer award, unpaid approval of the CMA.28 being held responsible for all or part of arbitration settlement, or pending such maximum amount. arbitration claim (for a new member 26 In a separate proposal, FINRA is considering FINRA believes that the definition of applicant only) that comes to light in whether to eliminate the timing considerations for a ‘‘covered pending arbitration claim’’ this manner during the application filing a CMA depending upon the type of for purposes of a direct or indirect contemplated change or event to require that any review process would result in FINRA change specified under Rule 1017 should not be acquisition or transfer as described in being able to presumptively deny the permitted until such time as the CMA has been proposed Rule 1017(a)(6)(A) is an application under the applicable factors approved by FINRA. See Notice 18–23 (seeking appropriate measure because a member set forth in Standard 3 and the ability comment on a proposal to the MAP rules that with substantial arbitration claims that would, among other things, delete Rule 1017(c) in of the applicant to overcome such its entirety). is seeking to transfer its assets could be presumption by demonstrating its 27 Interim restrictions are meant for the protection an indication of attempts to insulate ability to satisfy the obligation, as of investors and ordinarily would not prevent a itself from responsibility for the discussed above. transaction from moving forward. However, there payment of pending arbitration claims, may be some instances where the protection of unpaid arbitration awards, or unpaid investors will require that interim restrictions will 24 The list of items set forth under Rule 1013(a) prohibit or delay a transaction from closing. See arbitration settlements particularly includes, among other things, documentation of Notice to Members 02–54 (August 2002). when there is no corresponding transfer disciplinary history and certain regulatory, civil, 28 FINRA expects to make conforming changes to of liabilities. Under such circumstances, and criminal actions, arbitrations, and customer Forms NMA and CMA. FINRA notes that where an FINRA is concerned whether a complaints for the applicant and its associated applicant is seeking FINRA’s approval of a CMA to persons. transfer assets with no corresponding transfer of transferring member firm with low 25 FINRA expects to make conforming changes to associated liabilities, and there is an unpaid excess net capital would be able to Forms NMA and CMA, but notes that Form CMA arbitration award, Form CMA currently requires the satisfy any obligation that may result currently requires the applicant seeking approval of applicant to provide proof that the award was from the arbitration claims, including a an asset transfer to promptly update the information satisfied in full and in the case of an unpaid award, provided regarding arbitration claims. Such update the applicant must pay the award in full before customer award or settlement. By should include new arbitrations filed, settlements closing the transaction. See Form CMA, Standard 3, requiring a materiality consultation made and awards granted against the applicant. See Question 2.a. (within the section titled, ‘‘Provide where a member firm is contemplating Form CMA, Standard 3, Question 4.b. supporting documents’’).

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If the Commission approves the B. Self-Regulatory Organization’s and associated persons. The proposed proposed rule change, FINRA will Statement on Burden on Competition amendments would also affect the announce the effective date of the FINRA does not believe that the current and future customers of proposed rule change in a Regulatory proposed rule change will result in any prospective and existing member firms Notice to be published no later than 60 burden on competition that is not including those that have brought or days following Commission approval. necessary or appropriate in furtherance may bring claims against member firms The effective date will be no later than of the purposes of the Act. and associated persons. 120 days following publication of the A. NMAs Regulatory Notice announcing 1. Economic Impact Assessment Commission approval of the proposed FINRA has undertaken an economic In order to get a better understanding rule change. impact assessment, as set forth below, to of the potential scope of the proposed analyze the regulatory need for the amendments, FINRA reviewed 317 2. Statutory Basis proposed rule change, its potential NMAs that it received from January 31 FINRA believes that the proposed rule economic impacts, including 2015 through December 2017. Among change is consistent with the provisions anticipated costs, benefits, and these applications, FINRA identified of Section 15A(b)(6) of the Act,29 which distributional and competitive effects, few new member applicants or their requires, among other things, that relative to the current baseline, and the associated persons as having a pending FINRA rules must be designed to alternatives FINRA considered in arbitration claim at the time of FINRA’s 32 prevent fraudulent and manipulative assessing how best to meet its regulatory receipt of the NMA. Among the 317 acts and practices, to promote just and objectives. NMAs, FINRA identified 13 NMAs (or four percent) where the new member equitable principles of trade, and, in 2. Regulatory Need general, to protect investors and the applicant or its associated persons had The MAP rules are intended to a pending arbitration claim at the time public interest. FINRA believes that the 33 proposed rule change will allow FINRA promote investor protection by applying of receipt of the application. Under to better take into account the issue of uniform standards for admission and by the proposed amendments, FINRA pending arbitration claims, as well as reviewing changes to ownership, could have presumptively denied these arbitration awards and settlement control, or business operations. While NMAs. FINRA also identified one NMA agreements related to arbitrations that the current MAP rules give FINRA the as relating to a customer claim that have not been paid in full in accordance ability to review pending arbitration resulted in an award that went unpaid.34 with their terms, in connection with the claims, unpaid arbitration awards, and NMA or CMA processes. FINRA unpaid arbitration settlements in B. CMAs determining whether to grant or deny an believes that the proposed amendments FINRA also reviewed 1,051 CMAs will strengthen FINRA’s ability to application, the proposed amendments would strengthen the MAP rules when that it received from January 2015 consider the adequacy of the through December 2017.35 This sample supervision of individuals with pending claimants may need additional protections. Currently, claimants may be of CMAs only provides a potential arbitration claims and, therefore, who indication of the member firms that may have a history of noncompliance, at risk if the individuals or firms responsible actively maneuver to avoid and how a member firm will address the 31 These NMAs were either approved in whole or payment of an existing or potential payment of awards (e.g., by joining or with restrictions, denied, withdrawn, rejected, or arbitration claim should it go to award transferring assets to a different member lapsed. 30 or result in a settlement. In addition, firm). 32 The statistics on pending arbitration claims in this discussion relate only to claims in the FINRA believes that the proposed 3. Economic Baseline arbitration forum administered by FINRA. The amendments will give FINRA the The economic baseline for the proposed amendments also would apply to claims authority to carefully assess, at an in other venues. Information describing claims in proposed amendments is the current set earlier stage of a member’s other arbitration forums, however, is generally not of MAP rules and related guidance, and available. FINRA’s estimates of the number of firms contemplated business transaction or FINRA practices. The current rules that may be impacted by the proposed amendments expansion, the relevant facts and include unpaid arbitration awards and are therefore likely lower than the true number. circumstances surrounding pending Further, FINRA is not able to estimate the total settlements, but not pending arbitration arbitration claims. amount of monetary compensation claimants claims, in the presumption of denial; received from the arbitration cases discussed Among other things, the proposed the definition of a material change in because information that identifies the settlement amendments will help address concerns business operations and the availability amount relating to a particular case is not available. 33 regarding situations where: (1) A FINRA of a safe harbor for some business Among these 13 NMAs, there were seven member firm hires individuals with pending customer arbitration claims filed against expansions; and the requirements for a associated persons prior to FINRA’s receipt of the pending arbitration claims, where there member firm to file a CMA relating to application, and among these seven customer are concerns about the payment of those asset acquisitions or transfers. The claims, three resulted in a settlement, one closed by claims should they go to award or result proposed amendments would affect hearing, and three were withdrawn. The total in a settlement, and the adequacy of the amount of compensatory damages sought by prospective and existing member firms, customers was over $1.9 million (including the supervision of those individuals; and (2) claims that resulted in a settlement). In the case a member firm with substantial 30 FINRA identified five customer arbitration closed by hearing, the customer was awarded arbitration claims seeks to avoid claims that (a) closed between 2015 and 2017 and compensatory damages of approximately $76,000. payment of the claims should they go to resulted in an award that went unpaid and (b) the 34 The firm withdrew the NMA. The customer award or result in a settlement by associated persons responsible for the unpaid arbitration claim resulted in an award prior to awards transitioned from one member firm to FINRA’s receipt of the NMA. The amount of the shifting its assets, which are typically another while the claim was pending. The total damages that went unpaid is approximately customer accounts, or its managers and amount of unpaid awards relating to the five $250,000. The associated person who failed to pay owners, to another firm and closing customer claims was $2.5 million. Three of the four the awarded damages has been suspended by down. associated persons relating to the unpaid awards FINRA. were suspended or barred from the industry by 35 The CMAs were either approved in whole or FINRA. The fourth associated person declared with restrictions, denied, withdrawn, rejected, or 29 15 U.S.C. 78o–3(b)(6). bankruptcy but was no longer registered as a broker. lapsed.

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could be impacted by the proposed amendments, the pending customer a pending arbitration claim. By amendments. A member firm may elect arbitration claims for 25 of the 44 CMAs establishing a presumption of denial, to proceed with effecting a change in would have been considered covered the proposed rule change would shift business operations because it pending arbitration claims. FINRA also the burden to the new member independently determines, without identified five of the CMAs as relating applicant to demonstrate how pending seeking guidance from FINRA through a to six customer claims that resulted in arbitration claims would be paid if they materiality consultation, that such an award that went unpaid.39 go to an award. Proposed Rule contemplated change falls within the 1014(b)(1) would impose both direct safe harbor parameters or that such 4. Economic Impact and indirect costs on new member transaction does not represent a material FINRA believes that the proposed applicants. change in business operations that amendments to the MAP rules would New member applicants with pending would require a CMA. In these cases, a enhance the review of applications by arbitration claims would incur direct member firm is not obligated to strengthening the MAP rules in relation costs. The costs include the time and proactively notify FINRA of the to pending arbitration claims and expense of firm staff and outside experts independent determination.36 Thus, the unpaid arbitration awards and to demonstrate the ability to satisfy the number of member firms that settlements. claims. The costs would be in addition potentially may be subject to the The proposed amendments would to the costs new member applicants proposed amendments, including those benefit claimants and potential incur to demonstrate their ability to that effect an increase in the number of claimants by decreasing the risk that meet the 14 standards for admission associated persons involved in sales firms are avoiding the payment of under Rule 1014(a). In addition, new under the safe harbor or effect some awards or settlements by transferring member applicants and their associated other change in business operations that their assets, including capital and persons may incur the opportunity costs is, in the member firm’s view, not customer accounts, to another firm. associated with setting aside funds that material, may be different than the Firms can shift their assets to another may otherwise be used for new member firms that filed a CMA and are firm by starting a new firm, or by selling business. A new member applicant may part of the sample. or transferring assets to an existing firm. incur more opportunity costs than is Of the 1,051 CMAs, 65 involved the A decrease in the ability of firms to necessary if it sets aside more capital hiring of associated persons. FINRA avoid satisfying their arbitration awards than the actual amount of the award. identified four of the 65 CMAs where or settlements in this manner may result New member applicants may also the associated person being hired had a in a higher likelihood that they are paid incur indirect costs if the rebuttal pending customer arbitration claim. in full in accordance with their terms. process delays the applicant’s ability to Under the proposed amendments, the The proposed amendments could also begin earning revenues or otherwise pending customer arbitration claims for benefit the current and future customers negatively impacts the business. The all four of the CMAs would have been of new member applicants and member magnitude of these costs is related to the considered covered pending arbitration firms that seek a materiality ability of the new member applicant and claims.37 An additional 154 of the 1,051 consultation by increasing FINRA’s FINRA to adequately gauge the CMAs were identified as relating to ability to assess, among other things, the likelihood and size of an award or asset acquisitions (17) or transfers (137). adequacy of the supervisory plan the settlement. However, as noted above, FINRA identified 44 CMAs (29 percent member firm has in place for the FINRA estimates that few associated of 154) where the transferring member associated persons who may have a persons related to new member or an associated person of the history of non-compliance. applicants will have pending arbitration transferring member had a pending claims at the time of the filing.40 The customer arbitration claim at the time of A. Rebuttable Presumption To Deny an majority of new member applicants are the filing.38 Under the proposed NMA therefore unlikely to be affected by the Proposed Rule 1014(b)(1) would proposed amendments. 36 Under IM–1011–1, a firm would remain specify that a presumption of denial B. Materiality Consultations obligated to keep records of increases in personnel, would exist if a new member applicant offices, and markets made to determine whether The proposed amendments would or its associated persons are subject to they are within the safe harbor. also mandate a member firm to seek a 37 From January 2015 to December 2017, among materiality consultation for specified all member firms, 480 associated persons were the 300 pending arbitration claims, 184 resulted in hired with a pending arbitration claim at the time a settlement, 48 closed by hearing or on the papers, business changes—hiring an associated of hiring. These pending claims would have been 52 closed by other means including 32 that were person involved in sales, or any direct considered ‘‘covered pending arbitration claims’’ withdrawn, and 16 remained open. Customers or indirect acquisition or transfer of under the proposed amendments for 186 of the requested a total of $311.3 million in compensatory assets—where the member firm or associated persons (39 percent of 480) and would relief (including the claims that resulted in a not have been considered covered pending settlement); and in the claims resulting in an associated person, as applicable, has an arbitration claims for the remaining 294 associated arbitration award in favor of customers, customers unpaid arbitration award or settlement persons (or 61 percent of 480). FINRA does not were awarded approximately $9.9 million in related to an arbitration, or a defined know how many of the associated persons were compensatory damages. covered pending arbitration claim, involved in sales. This estimate, therefore, provides 39 Three of the CMAs were withdrawn, and two an upper bound for the number of materiality were approved. Three of the six customer claims unless the member firm is otherwise consultations member firms would have been were closed prior to the filing of the CMA, whereas required to file a CMA. FINRA believes required to seek under the proposed amendments. the other three were still pending. For the two that an unpaid arbitration award or See supra note 30 for a discussion of the unpaid approved CMAs, the cases which resulted in an settlement poses a severe risk to awards relating to associated persons who unpaid customer award closed at least one year transitioned from one member firm to another while after the decision was served. Five of the six claimants that would warrant a the claim was pending. customer awards went unpaid by a member firm, materiality consultation under any 38 Thirty-four of the CMAs were approved, and 10 whereas the other went unpaid by an associated circumstances. FINRA also believes that were withdrawn or not substantially completed and person. The total amount of damages that went the proposed definition of a covered therefore rejected. There were 300 pending unpaid is approximately $3.4 million. The member customer arbitration claims as of the receipt of the firms have either cancelled their membership or pending arbitration claim, which CMAs. The pending claims included claims made were expelled by FINRA, and the associated person against the applicant or its associated persons. Of has been suspended by FINRA. 40 See supra note 33 and accompanying text.

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focuses on investment-related, Business activities that decrease the risks to claimants are low (e.g., the consumer-initiated claims (individually amount of excess net capital available amount settled or eventually awarded is or, if there is more than one claim, in may increase the likelihood that a small percentage of the amount the aggregate) that exceed the excess net member firms would be required to seek claimed), then the greater costs to capital of the transferring or hiring a materiality consultation. In response, member firms to file a CMA would not member firm (as applicable), represents member firms may constrain business also result in a similar increase in an objective benchmark that would activities to maintain a level of excess customer protections. provide FINRA the opportunity to net capital in order to demonstrate their The proposed amendments are not review the specified business changes to ability to pay pending arbitration claims designed to impose disproportionate assess whether they may adversely (or pay unpaid awards or settlements) in costs based on firm size. Instead, the affect former, current or future the event a materiality consultation is costs the proposed amendments would customers in a material way. required. As described in the Economic impose are dependent on the For a member firm transferring assets, Baseline, a number of CMAs relate to compensatory loss amounts of pending FINRA believes that the relative size of the hiring of an associated person with customer arbitration claims, or the covered pending arbitration claims may a covered pending arbitration claim or presence of an unpaid arbitration award signal that the firm may be attempting the acquisition or transfer of a member’s or an unpaid settlement related to an to avoid the payment of awards or assets where the transferring member or arbitration, and the financial capacity of settlements by transferring assets, an associated person of the transferring the member firm. In addition, the costs including capital and customer member had a covered pending member firms may incur to seek a accounts, to another firm. For member arbitration claim.42 materiality consultation (and potentially firms adding one or more associated FINRA may require member firms that file a CMA) as a result of the proposed persons involved in sales, the relative seek a materiality consultation to file a amendments, including any burden on size of the covered pending arbitration CMA. FINRA would then consider competition, are borne at their claims may foreshadow future potential whether the member firm meets each of discretion, in their decision to hire or misconduct by such individuals that the 14 standards under Rule 1014. acquire or transfer the member’s assets. could result in additional arbitration These members would therefore incur Member firms would incur the claims.41 Under such circumstances, if costs in addition to the costs to seek a additional costs if they choose to hire an the customer names the hiring member materiality consultation. This includes associated person involved in sales who firm in any such additional arbitration the fees associated with a CMA, time of has a covered pending arbitration claim, claims, FINRA is concerned whether a firm staff, and submission of additional or where the transferring member or an hiring member firm with low excess net documentation. The filing of a CMA associated person of the transferring capital would be able to satisfy any would also cause an additional delay to member has a covered pending obligation that may result from the effectuate the contemplated expansion arbitration claim. arbitration claims, including a customer or transaction. This may cause member The member firms that would be award or settlement. firms, associated persons and the required to seek a materiality Member firms that would be required customers of member firms to lose the consultation (and potentially file a to seek a materiality consultation would benefits associated with the business CMA) as a result of the proposed incur direct costs. Similar to the opportunities. A determination that a amendments may range in size.44 For additional direct costs associated with CMA must be filed, however, would example, as described in the Economic NMAs, the costs may include the time indicate that the risks to claimants, and Baseline, FINRA identified four member and expense of firm staff and outside therefore the potential benefits of a firms that filed a CMA relating to the experts to provide information and closer examination, are high. An hiring of an associated person with a documents that demonstrate the ability examination may include the regulatory covered pending arbitration claim. All to satisfy the unpaid awards or history of a member to determine four member firms were small.45 settlements, or covered pending whether it is able to satisfy any pending Similarly, FINRA identified 25 CMAs as arbitration claims. Member firms that arbitration claims should they go to relating to the asset acquisitions or would be required to seek a materiality award, as well as the adequacy of any transfers of 26 member firms where the consultation and their associated supervisory plan for an individual with transferring members had covered persons may also incur the opportunity a pending arbitration claim that the firm pending customer arbitration claims. costs associated with setting aside funds 43 is contemplating hiring. If the actual Among the 26 transferring members, 13 that may otherwise be used for new members were small, nine members business. 42 See the discussion in the Economic Baseline. Member firms that seek a materiality Customers may have an incentive to file an consultation may also incur costs arbitration claim for the sole purpose of disrupting could result in additional arbitration claims, a contemplated transaction. This incentive could including claims that name the hiring member. See relating to a delay in effecting the increase the number of member firms that would be supra note 22. contemplated expansion or transaction. required to seek a materiality consultation and 44 The definition of firm size is based on Article A delay may negatively impact the potentially file a CMA and incur the associated I of the FINRA By-Laws. A firm is defined as value of the expansion or transaction costs. FINRA has no reasonable basis on which to ‘‘small’’ if it has at least one and no more than 150 predict the frequency of this occurring if the registered persons, ‘‘mid-size’’ if it has at least 151 and may lead to a loss of business proposed amendments are adopted. SIFMA and no more than 499 registered persons, and opportunities. Given the experience of suggested that the definition of a covered pending ‘‘large’’ if it has 500 or more registered persons. FINRA, this delay is anticipated to be arbitration claim should be limited to claims filed 45 During the sample period and among all small as the time for a materiality prior to the public announcement of the member firms, FINRA also identified 186 associated contemplated transaction. FINRA would review persons who were hired with a covered pending consultation has recently averaged 12 customer claims as part of a materiality arbitration claim at the time of the hiring. See supra days; this time period, however, may consultation and consider the facts and note 37. The percentage of small member firms that lengthen depending on the complexity circumstances of the case as well as its timing. The hired the 186 associated persons (90 percent) is of the contemplated expansion or potential disruption to contemplated transactions similar to the proportion of small member firms from these claims, therefore, is expected to be industry-wide as of year-end 2017 (90 percent). See transaction. limited. 2018 FINRA Industry Snapshot, https:// 43 Individuals with pending arbitration claims www.finra.org/sites/default/files/2018_finra_ 41 See supra note 22. may engage in future potential misconduct that industry_snapshot.pdf.

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were mid-size, and four members were similar changes to the status of a FINRA would examine the regulatory large.46 pending arbitration claim.48 history of a member firm to determine An associated person, as a respondent Second, the proposed amendments whether it is able to satisfy pending to a pending claim, may also incur costs would clarify the manner in which an arbitration claims should they go to as a result of the proposed amendments. applicant may demonstrate its ability to award, as well as the adequacy of any supervisory plan for an individual with New member applicants and existing satisfy pending arbitration claims or a pending arbitration claim that the firm member firms may be less likely to hire unpaid arbitration awards or is contemplating hiring.49 The associated persons with a pending claim settlements. The clarification would improve the efficiency of the MAP additional protections from extending a in order to avoid the costs associated process by increasing the ability of presumption of denial for pending with the proposed amendments. An applicants to anticipate the information arbitration claims to CMAs, therefore, associated person, as a respondent to a necessary to demonstrate their ability to may not justify the additional costs to pending claim, may therefore satisfy outstanding obligations, and member firms.50 experience fewer career opportunities reduce the need for applicants to submit Other alternatives to the proposed within the brokerage industry. additional information after the initial amendments include expanding or C. Other Proposed Amendments filing. narrowing the conditions for member firms to seek a materiality consultation Two other proposed amendments 5. Alternatives Considered or file a CMA.51 Expanding (narrowing) would have additional economic effects. FINRA considered a range of the requirements for member firms to First, the proposed amendments would suggestions in developing the proposed seek a materiality consultation or to file require applicants to provide prompt amendments as set forth in Regulatory a CMA may decrease (increase) the notification of a pending arbitration Notice 18–06. The proposed ability of firms to avoid satisfying their claim that is filed, awarded, settled, or amendments reflect the changes that outstanding obligations by transferring becomes unpaid before a decision on FINRA believes at this time to be the their assets to another firm. By the application is served. These most appropriate for the reasons expanding (narrowing) the notifications would further improve the discussed herein. requirements, however, additional ability of FINRA to oversee and review An alternative to the proposed (fewer) member firms would incur the the pending arbitrations of applicants to amendments includes a rebuttable associated costs. FINRA believes that ensure that arbitration awards and presumption of denial for a CMA if the the requirements under the proposed settlements are paid in full in applicant or its associated persons are amendments for member firms to seek a accordance with their terms. Applicants the subject of a pending arbitration materiality consultation provide for the that provide notification would incur claim. This alternative would increase additional investor protections but minimize the costs when the risk of additional costs including the time of the costs to member firms that file a members not satisfying their firm staff and the expense to submit CMA, including member firms that outstanding obligations is low. additional documentation. initially sought a materiality consultation under the proposed A number of the applicants for new C. Self-Regulatory Organization’s amendments. Member firms may incur Statement on Comments on the membership or member firms that filed costs to demonstrate their ability to a CMA during the sample period would Proposed Rule Change Received From satisfy the claims. This includes the Members, Participants, or Others have been required to promptly notify opportunity costs associated with FINRA of changes to pending arbitration setting aside funds that may otherwise The proposed rule change was claims. FINRA identified 13 of the 317 be used for other business published for comment in Regulatory NMAs (or four percent) from January opportunities. Notice 18–06 (February 2018) 2015 through December 2017 as having A presumption of denial would (‘‘Notice’’). FINRA received nine changes in the status of a pending reduce the risks associated with firms comment letters in response to the arbitration claim involving the applicant avoiding the payment of claims should 49 See supra note 22. or its associated persons before a they go to award. As part of a decision constituting final action was 50 Several commenters suggested alternatives to materiality consultation, however, the proposed amendments that would require a served on the applicant (or the presumption of denial when pending arbitration application was otherwise 48 The arbitration claims consisted of 913 claims exceed certain thresholds. See GSU, PIABA, withdrawn),47 and 156 of the 1,051 customer claims of which 497 resulted in a and UNLV. Although member firms with pending CMAs (or 15 percent) as also having settlement, 184 closed by hearing or on the papers, arbitration claims that exceed the thresholds may be 174 were closed by other means including 95 that at higher risk of nonpayment, FINRA believes that were withdrawn, and 58 remained open. The total it would still be able to adequately assess these 46 As a result of the safe harbor provision, the amount of compensatory damages sought by firms’ ability to pay the claims should they go to member firms that would have been subject to the customers was $856.0 million. In the cases closed award without the presumption of denial. proposed amendments during the sample period by hearing or on the papers, the customer was 51 For example, commenters suggested expanding may be different than the member firms that filed awarded compensatory damages of approximately the requirement to seek materiality consultations a CMA. The number and composition of member $20.5 million. Two of the customer cases resulted for business expansions. Suggestions include firms that would have been required to file a in an award that went unpaid. One of the cases is omitting the qualifying term ‘‘involved in sales’’ materiality consultation under the proposed rule referred to above in the discussion in the Economic (NASAA) and expanding to principals, control change is therefore not known. Baseline. The other case relates to two associated persons, or officers (GSU). Another commenter, 47 The arbitration claims consisted of 11 customer persons who left the applicant before a decision however, suggested excluding business expansions claims and one intra-industry claim. Among the 11 constituting final action was served. The amount of from the requirement to seek a materiality customer claims, three resulted in a settlement, the awarded damages that went unpaid is consultation if the expansion is in connection with three closed by hearing, four were withdrawn, and approximately $70,000. The associated persons who another corporate event such as a merger, one remained open. The total amount of failed to pay the awarded damages have been acquisition, or asset transfer (FSI). Commenters also compensatory damages sought by customers was suspended or barred by FINRA. The CMA was suggested narrowing the requirement to seek $5.8 million (including the cases closed by approved with restrictions. For applicants with materiality consultations for asset acquisitions or settlement). In the cases closed by hearing, the changes to a pending arbitration claim before a transfers. Suggestions include permitting smaller customers were awarded compensatory damages of decision constituting final action was served (or the acquisitions or transfers to proceed without a approximately $146,000. None of the awarded application was otherwise withdrawn), the median materiality consultation (GSU) or excluding covered damages went unpaid. number of changes is two. pending arbitration claims altogether (FSI).

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Notice. A copy of the Notice is attached triggered when the applicant or its denial. UNLV recommended that the as Exhibit [sic] 2a. A list of the comment associated person has a pending presumption apply to a CMA where letters received in response to the Notice arbitration claim or unpaid settlement there is a covered pending arbitration is attached as Exhibit [sic] 2b.52 Copies for an amount exceeding $15,000, claim. of the comment letters received in contending that such dollar limit would The existence of a specified regulatory response to the Notice are attached as provide some balance to the proposed history currently enumerated under Exhibit [sic] 2c. rule change by tying the presumption to Standard 3 that triggers the presumption Eight commenters supported the CMAs with claims that are required to to deny an application is intended to proposal as set forth in the Notice either be reported to FINRA. PIABA encourage compliance with unpaid absolutely or with some recommended that two preconditions arbitration awards, other unpaid qualifications.53 One commenter raised for the presumption to deny a CMA adjudicated customer awards and concerns outside the scope of the should apply—one for the associated unpaid arbitration settlements, and their Notice.54 A summary of the comments person and the other for the member existence raise the question of an and FINRA’s responses are discussed firm. With respect to the associated applicant’s capacity to comply with below.55 person, PIABA stated that the applicable securities laws and presumption to deny a CMA should be regulations, and with applicable FINRA 1. Rebuttable Presumption to Deny an triggered when more than five claims rules.59 Standard 3, as proposed, would NMA are pending against any control person, not diminish FINRA’s ability to assess FINRA is proposing to amend principal, registered representative, or whether the applicant and its associated Standard 3 to create a rebuttable other associated person of the member, persons are able to meet this standard. presumption to deny an NMA where the as such number of claims may signal FINRA would continue to consider an applicant or its associated person is problems within the member and may applicant’s or its associated person’s subject to a pending arbitration claim. be an indicator of potential future pending arbitration claims, among other Three commenters expressly supported investor harm. If the member can regulatory history, in determining the proposed amendment.56 No overcome the presumptive denial of a whether an applicant for continuing commenters opposed this proposed CMA, and it still desires to hire or membership is ‘‘capable of complying amendment. continue the employment of individuals with’’ the federal securities laws and 2. Rebuttable Presumption to Deny a with five or more pending arbitration FINRA rules. Accordingly, while FINRA CMA claims, PIABA recommended that those appreciates the commenters’ individuals with such claims pending recommendations, FINRA has In the Notice, FINRA requested against them should be subject to determined, at this time, not to apply comment on whether the presumption heightened supervision and not be the presumption of denial for pending of denial in connection with a pending permitted to serve in a supervisory arbitration claims to a CMA. arbitration claim should be applied to a capacity until all pending arbitration CMA as well. Six commenters 3. Evidence of Ability to Satisfy Unpaid claims against them have in fact been Arbitration Awards, Other Adjudicated responded with three expressing resolved, and the corresponding awards 57 Customer Awards, Unpaid Arbitration opposition to this approach. In or settlements, if any, have been paid in general, these three commenters noted Settlements, or Pending Arbitration full. PIABA further stated that following Claims that a CMA already requires an the conclusion of such proceedings, the applicant to provide information decision related to an individual’s A. Types of Evidence pertaining to pending arbitration claims supervision or supervisory capacity Proposed IM–1014–1 would provide and how an applicant will handle the should rest with the member, and that an applicant may demonstrate, in a arbitrations and the awards that may recommended that FINRA’s rules variety of ways, that it has the financial result. NASAA further expressed the should be modified to ensure that such resources to satisfy an unpaid belief that creating a presumption to individual is not permitted to move arbitration award, other adjudicated deny a CMA may disincentivize a firm from one firm to another without regard customer award, unpaid arbitration from taking on potential liability to problems that occurred at the former settlement, or a pending arbitration through an acquisition, which could firm. claim. Some examples include an result in more unpaid arbitration As for the member firm, PIABA stated escrow agreement, insurance coverage, a awards. that the presumption should be applied clearing deposit, a guarantee, a reserve The other three commenters based upon the aggregate amount of fund, or the retention of proceeds from supported extending the presumption to damages pleaded in all pending an asset transfer. deny an application with pending arbitration claims, taking the nature and With the exception of SIFMA, none of arbitration claims to a CMA but quality of those claims into account, the commenters expressed views on the recommended various conditions on compared to the value of cash assets and types of documentation an applicant when the presumption should apply.58 insurance held by the member firm. If may present to evidence the ability to GSU recommended that the this ratio indicates a substantial risk of satisfy an award, settlement or claim. presumption to deny a CMA should be insolvency or presents the inability to SIFMA expressed concern about proposed IM–1014–1 requiring an 52 All references to commenters are to the pay all pending legitimate claims in full, comment letters as listed in Exhibit [sic] 2b. then the presumption should apply. 59 53 See Colorado, Cornell, GSU, FSI, NASAA, PIABA further stated that FINRA should See Rule 1014(a)(3)(C) (providing, in part, that PIABA, SIFMA, and UNLV. a presumption of denial applies if the applicant, its be permitted to look beyond the control persons, principals, registered 54 See IBN. damages described in a statement of representatives, other associated persons, any 55 Comments that speak to the economic impacts claim, and discuss the issues related to lender of five percent or more of the applicant’s net of the proposed rule change are addressed in Item damages directly with investors, their capital, and any other member with respect to B above. which these persons were a control person or a five 56 See SIFMA, Cornell, and GSU. representative and FINRA members and percent lender of its net capital is subject to unpaid 57 See Cornell, NASAA, and SIFMA. their counsel, in confidential sessions, arbitration awards, other adjudicated customer 58 See GSU, PIABA, and UNLV. prior to applying a presumptive CMA awards or unpaid arbitration settlements).

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applicant to show proof of insurance FINRA’s rules should allow an 1 should compel an applicant to obtain coverage, asserting that having applicant the flexibility to amend its a written opinion of a legal or financial insurance coverage does not necessarily application and designate a different expert to support the applicant’s correspond to having the ability to pay source of available funds to satisfy assertion that it can satisfy an unpaid the award, settlement or claim. FINRA pending claims or unpaid arbitration award or settlement obligation it intends notes that the supporting awards or settlements if necessary. to assume, rather than giving the documentation listed in the proposed In light of the comments received, applicant the discretion to provide such interpretive material are examples of FINRA has modified proposed IM– opinion. what an applicant may produce to 1014–1 to provide that to overcome the FINRA believes that it would be FINRA to evidence the ability to satisfy presumption to deny the application, appropriate and consistent with current the award, settlement or claim, and is the applicant must guarantee that any FINRA Rules to provide a member with not intended to be an exhaustive list by funds used to evidence the applicant’s the option to derive support for the which a member can show its financial ability to satisfy any awards, valuation of an arbitration claim resources.60 settlements, or claims, will be used for through a legal opinion from an that purpose. As proposed, IM–1014–1 B. Guarantee independent, reputable U.S. licensed would not preclude an applicant from counsel knowledgeable as to the value In the Notice, FINRA requested designating a different source of funds of such arbitration claim.66 comment on whether an applicant, if it to satisfy an award, settlement or claim, designates a clearing deposit or the provided the source of funds is 4. Materiality Consultations proceeds from an asset transfer for acceptable to FINRA. Moreover, Section A. The Process purposes of showing the ability to 1(c) of Article IV of the FINRA By-Laws Proposed IM–1011–2 and proposed satisfy a pending arbitration claim, already requires an applicant to keep its Rule 1017(a)(6) would require a member should be required to provide some application current by submitting to seek a materiality consultation under form of guarantee that such funds will supplementary amendments as specified circumstances. FSI, while not be used to satisfy the award, settlement 64 necessary. A change in source of expressly opposed to the underlying or claim. Three commenters expressed available funds to satisfy pending their general support for a guarantee,61 concept of mandating materiality arbitration claims or unpaid arbitration consultations, stated that the proposed with two of these commenters making awards or settlements would require the additional recommendations.62 rules do not set forth clear parameters application to be updated in accordance around the process, such as the time in Emphasizing the need to secure funds with the FINRA By-Laws. or to prevent them from being depleted which FINRA must issue a decision and for other purposes, PIABA C. Valuation of Claim Through the remedy a member firm has if it does recommended that applicants hold the Independent Legal Counsel not agree with FINRA’s decision on the funds in an escrow account with clear Proposed IM–1014–1 would also materiality consultation. FINRA notes instructions to the third party escrow permit an applicant to provide a written that the materiality consultation process agent (unaffiliated with the member opinion of an independent, reputable is well established, and a description of firm) to disburse the funds under U.S. licensed counsel knowledgeable as the process and the information that specified circumstances.63 PIABA also to the value of the arbitration claim in should be included in a request for a suggested strict penalties in the event of materiality consultation, among other an effort to lend support to the 67 a breach of that guarantee, such as the applicant’s ability to demonstrate that it information, is detailed on FINRA.org. immediate suspension of a member’s has the financial resources to satisfy the In addition, FINRA notes that if this broker-dealer license. NASAA noted claim, award or settlement. Two proposed rule change is approved by the that circumstances sometimes change commenters suggested that the proposed Commission, FINRA will update the during the pendency of a planned provision should not require that materiality consultation process as business transaction and that an counsel be ‘‘independent.’’ 65 FSI stated detailed on its website as necessary. applicant may need to reallocate the that a firm should be able to rely on the B. Mandatory Materiality Consultation prior designated funds. To account for opinion of in-house counsel as such for Business Expansion To Add One or potentially changing business counsel would be more familiar with More Associated Persons Involved in circumstances and given the fungibility the firm and its risk profile, adding that Sales With Covered Pending Arbitration of money, NASAA stated that an obtaining an opinion from external legal Claims applicant should not be duty bound to counsel could be costly and would not satisfy an arbitration award or As set forth in the Notice, proposed increase the regulatory value of the IM–1011–2 would require a member to settlement from the funds they may opinion offered. NASAA stated that it have initially identified. Instead, seek a materiality consultation before did not believe that the expert opinion effecting a business expansion that necessarily needed to be from an 60 would involve adding one or more FINRA notes that similar examples appear in ‘‘independent’’ source and instead, other FINRA rules. See, e.g., Section 4(i)(3) of associated persons involved in sales Schedule A to the FINRA By-Laws (describing the FINRA should have the authority to with a covered pending arbitration circumstances under which a CMA for an assess the veracity and reasonableness claim, unpaid arbitration award, or acquisition or transfer of 25 percent or more of the of an offered expert opinion on a case- member’s assets may qualify for a fee waiver where unpaid settlement related to an the applicant can demonstrate in the CMA the by-case basis and to require such ability to satisfy in full any unpaid customer-related qualifications and degree of 66 See, e.g., FINRA Rule 2040 (Payments to claim (e.g., sufficient capital or escrow funds, proof independence from the applicant as Unregistered Persons) (providing in supplementary of adequate insurance for customer related claims)). FINRA reasonably believes warranted in material that a member, if uncertain about whether Form CMA also includes various examples. See each instance. In addition, NASAA an unregistered person may be required to be supra note 12. registered under SEA Section 15(a), can derive 61 See NASAA, PIABA, and UNLV. recommended that proposed IM–1014– support from the member’s determination by, 62 See NASAA and PIABA. among other things, a legal opinion from 63 PIABA’s other recommendation was to have 64 See Section 1(c) of Article IV of the FINRA By- independent, reputable U.S. licensed counsel the guarantee secured by a lien in favor of FINRA Laws. knowledgeable in the area). or the investor. 65 See FSI and NASAA. 67 See supra note 14 and accompanying text.

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arbitration.68 Thus, a member would not potentially compelled to undergo an individual and the individual engages be permitted to effect the contemplated application review process so that in future potential misconduct while business expansion until FINRA FINRA can assess the member’s employed at the member firm that determined whether or not a CMA decision to hire one registered person results in an arbitration claim against would be required for such with a pending arbitration claim, the member firm. FINRA notes that, in contemplated business expansion. particularly when the claim is general, materiality consultations are Four commenters expressed support unsubstantiated. FSI noted that the not lengthy processes, taking on average for this proposed requirement,69 with proposed provision would have a 12 days. some commenters suggesting negative impact on a member’s In addition, FINRA notes that with modifications. For example, NASAA recruiting efforts by overreaching into a respect to pending arbitration claims, a recommended omitting the qualifying member’s routine hiring decisions. materiality consultation would only be term ‘‘involved in sales’’ so that the As noted above, proposed IM–1011–2 required if those claims individually or proposed rule would apply to any is intended to address situations in in the aggregate are substantial, i.e., associated person, irrespective of the which a member wants to hire an exceed the hiring firm’s excess net nature of his or her employment at the associated person who engages in sales capital. As described above, mandating member firm, who is subject to a claim, with the public and has a covered a materiality consultation where a award or settlement, explaining that pending arbitration claim, unpaid member is seeking to increase the firms may assign an associated person arbitration award, or unpaid settlement number of associated persons involved with pending claims or unpaid awards related to an arbitration and, therefore, in sales with covered pending to administrative, non-sales roles in may have a history of noncompliance. arbitration claims, unpaid arbitration order to circumvent a materiality In the Notice, proposed IM–1011–2 also awards or unpaid settlements is to consultation. GSU suggested that included a description of the possible provide FINRA the opportunity to proposed IM–1011–2 should be outcomes of FINRA’s determination on assess the relevant facts and expanded to apply to principals, control a materiality consultation; that is, either circumstances of hiring such persons or officers as occasionally, a member firm would not be required to individuals and the impact, if any, on associated persons from problematic file a CMA in accordance with Rule the member’s supervisory and firms may move on to become officers 1017 and may effect the contemplated compliance structure, among other at larger firms.70 If a materiality business expansion or the member must considerations. file a CMA in accordance with Rule consultation results in the requirement C. Mandatory Materiality Consultation 1017 and would not be permitted to to file a CMA, Cornell recommended for Any Acquisition or Transfer of effect the contemplated business that proposed IM–1011–2 should Member’s Assets (Proposed Rule expansion without FINRA’s approval of require the member to file the CMA 1017(a)(6)(A)) within a specified timeframe (e.g., 30 the CMA. days after FINRA’s finding of For clarity, FINRA has modified the Proposed Rule 1017(a)(6)(A) would materiality).71 language in proposed IM–1011–2 in two require a member to seek a materiality FSI raised a concern that proposed ways. First, proposed IM–1011–2 consultation before effecting any direct IM–1011–2 could require a member to expressly states that the safe harbor for or indirect acquisition or transfer of a undergo a materiality consultation to business expansions in IM–1011–1 is member’s assets or any asset, business add a single registered person with a not available if a member firm is seeking or line of operation where the pending arbitration claim. FSI to add one or more associated persons transferring member or an associated recommended that proposed IM–1011– involved in sales with a covered person of the transferring member has a 2 should exclude such a business pending arbitration claim (as defined in covered pending arbitration claim, proposed Rule 1011(c)(1)), unpaid unpaid arbitration award, or unpaid expansion when adding associated 72 persons involved in sales to a member’s arbitration award, or unpaid settlement settlement related to an arbitration. roster if done in connection with related to an arbitration. Second, The proposed rule would require a another corporate event such as a proposed IM–1011–2, as modified, member to wait for FINRA’s merger, acquisition, asset transfer or directs member firms to proposed Rule determination on whether or not a CMA would be required for the contemplated some other business expansion. FSI also 1017(a)(6)(B) under which the acquisition or transfer. recommended that the proposed rule description of the possible outcomes of FINRA’s determination on a materiality Several commenters supported exclude pending arbitration claims, proposed Rule 1017(a)(6)(A) either explaining that a member should not be consultation now resides. Proposed IM– 1011–2, as modified, and proposed Rule unequivocally or with a minor qualification.73 GSU expressed its 68 FINRA notes that the term, ‘‘associated person 1017(a)(6)(B) are intended to clarify that involved in sales’’ as used in proposed IM–1011– a member firm, before it considers support for the proposed provision 2 and proposed Rule 1017(a)(6)(B) is derived from hiring one or more associated persons insofar as it would prevent a member the safe harbor provision under IM–1011–1. involved in sales with a covered from acquiring or transferring a large 69 See SIFMA, NASAA, GSU, and Cornell. pending arbitration claim (as defined in amount of assets without first 70 FINRA notes that the proposed amendments proposed Rule 1011(c)(1)), unpaid undergoing a materiality consultation in relating to requiring a materiality consultation for asset acquisitions or transfers would apply to arbitration award, or unpaid settlement situations involving covered pending principals, control persons or officers with covered related to an arbitration, must first seek arbitration claims, unpaid arbitration pending arbitration claims, unpaid arbitration a materiality consultation from FINRA. awards or settlements, but awards, or unpaid arbitration settlements moving Requiring a materiality consultation recommended that smaller acquisitions between firms. or transfers involving such claims, 71 FINRA does not believe that it is necessary to in this situation would give FINRA the require the applicant to file the CMA within a opportunity to assess, among other awards or settlements should be specified time period because if a CMA is required, things, the adequacy of any supervisory the applicant would not be able to effect the plan the member firm has in place for 72 In the Notice, this provision previously transaction without FINRA’s approval of the CMA appeared as proposed paragraph (a)(4) in Rule 1017. and, therefore, FINRA believes the applicant would the individual, and to discuss with the The proposed rule change would renumber this be incentivized to file the CMA for approval as soon member firm the potential impact on its provision as paragraph (a)(6)(A) in Rule 1017. as possible. finances if the member firm hires the 73 See, e.g., Cornell, GSU, NASAA, and SIFMA.

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permitted to proceed without a FINRA has determined not to limit purposes of determining whether a materiality consultation or CMA. proposed Rule 1017(a)(6)(A) to asset materiality consultation would be Specifically, GSU recommended that acquisitions or transfers involving required or not. The term is not FINRA should set a threshold of 10 principals, control persons or officers. intended to speak to whether the percent, explaining that this threshold FINRA believes that to help further member would be responsible for would allow the ‘‘occasional transfer’’ of address the issue of unpaid arbitration satisfying the covered pending customer accounts from one firm to awards, the proposal should apply more arbitration claim. another, but not allow an associated broadly. In the Notice, FINRA requested person to move a ‘‘meaningful comment on whether the definition of D. Definition of ‘‘Covered Pending ‘‘covered pending arbitration claim’’ percentage of his accounts to another Arbitration Claim’’ firm.’’ should be limited to claims filed prior FSI stated that proposed Rule The Notice defined the term ‘‘covered to a specified time period or event such 1017(a)(6)(A) should exclude covered pending arbitration claim’’ for business as a public announcement of the pending arbitration claims, noting that expansions, and asset acquisitions and contemplated transaction. Two asset transfers that do not require a transfers as: (1) An investment-related, commenters addressed this question.76 CMA under the current MAP rules consumer-initiated claim filed against SIFMA stated that the definition should should not be required to undergo a the associated person (for business include only those pending arbitration materiality consultation solely because expansions), or filed against the claims filed prior to public the member or its associated person has transferring member or its associated announcement of the contemplated a pending arbitration claim. FSI stated persons (for asset acquisitions and transaction. PIABA stated that the that proposed Rule 1017(a)(6)(A) could transfers) that is unresolved; and (2) definition should be broad and not be be interpreted as requiring a member whose claim amount (individually or, if limited to claims filed prior to a specific that transfers any asset, no matter how there is more than one claim, in the date, but if a date is specified, then immaterial, to undergo a materiality aggregate) exceeds the member’s excess FINRA should require that any funds consultation and then potentially, a net capital. Under both circumstances, received in consideration for the the definition provided that such claim CMA, where the member or any of its transaction be frozen or subject to a lien amount would include only claimed associated persons may be subject to in favor of the investor, pending the compensatory loss amounts, not unsubstantiated, pending, investor resolution of all pending arbitration requests for pain and suffering, punitive arbitration claims. claims filed within a certain period damages or attorney’s fees. While FINRA appreciates the following the transaction closing. Two commenters discussed this FINRA has determined not to limit commenters’ recommendation and definition.75 FSI stated that the nexus concerns, FINRA has determined not to the proposed definition to only those between an associated person’s pending claims filed prior to a specified date. At modify the proposal. As noted above, arbitration claim and a firm’s excess net FINRA believes that the definition of a this time, FINRA believes that the capital is unclear as the firm at which definition of a covered pending covered pending arbitration claim is the misconduct occurred would be the sufficiently narrowly tailored to limit arbitration claim is sufficiently narrowly one to cover the claim, not the firm that tailored without adding a time the extent to which a member would is obligated to file the materiality have to seek a materiality consultation, limitation relating to when the consultation. NASAA recommended arbitration claims are filed. but would also capture those that the definition should expressly transactions that could result in state that it includes all investment- 5. Written Notification of Any Pending investors not being paid should the related arbitration claims filed in any Arbitration Claim That Is Filed, claims go to award. arbitration forum (e.g., FINRA Awarded, Settled or Becomes Unpaid In the Notice, FINRA requested arbitration forum, a private alternative Before Final Action Is Served on comment on whether proposed Rule dispute resolution forum) or judicial Applicant 1017(a)(6)(A) should be limited to asset (state or federal) forum). In addition, FINRA is proposing to add a new acquisitions or transfers involving a NASAA stated that the ‘‘claim amount’’ provision to the application review principal, control person or officer who was unclear as to its treatment of process to require an applicant to has a covered pending arbitration claim, pending claims for which there may be provide prompt notification, in writing, unpaid arbitration award, or unpaid joint liability between more than one of any pending arbitration claim that is arbitration settlement. Two commenters person or for which an associated filed, awarded, settled or becomes responded, opposing such limitation person reasonably expects to be unpaid before a decision constituting because it may provide an opportunity indemnified, explaining that pending final action of FINRA is served on the 74 for circumvention. NASAA stated that claims with joint liability should be applicant. Two commenters expressed narrowing the scope of the proposed assessed to each respondent maximally, their views on proposed Rules 1013(c) provision could allow a member to as if no other person could be and 1017(h).77 make staffing changes by temporarily potentially liable. Cornell noted that the proposed shifting its principals, control persons In response to comments, FINRA has provisions would enhance FINRA’s or officers into administrative or other modified the definition to clarify that a ability to monitor when pending positions that fall outside the proposed covered pending arbitration claim arbitration claims are filed or when provision. PIABA stated that a member’s would include those filed in any awards become unpaid during the solvency may be jeopardized by an arbitration forum, and that a pending application review process. NASAA associated person who is not a claim with joint liability would be recommended moving the language principal, control person or officer, but assessed to each respondent, as if no from proposed Rule 1013(c) to Rule who may be engaged in selling away other person could be potentially liable. 1013(a)(1)(H), which currently provides activities or ‘‘running a large scheme’’ In addition, FINRA emphasizes that the that an NMA must include without the member’s knowledge. definition would be applied only for 76 See PIABA and SIFMA. 74 See NASAA and PIABA. 75 See FSI and NASAA. 77 See Cornell and NASAA.

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documentation of disciplinary history Electronic Comments SMALL BUSINESS ADMINISTRATION and certain regulatory, civil, and • criminal actions, arbitrations, and Use the Commission’s internet Interest Rates customer complaints for the applicant comment form (http://www.sec.gov/ The Small Business Administration and its associated persons, unless such rules/sro.shtml); or publishes an interest rate called the history has been reported to the Central • Send an email to rule-comments@ optional ‘‘peg’’ rate (13 CFR 120.214) on Registration Depository (CRD®). At this sec.gov. Please include File Number SR– a quarterly basis. This rate is a weighted time, FINRA intends to retain the FINRA–2019–030 on the subject line. average cost of money to the language as a standalone provision government for maturities similar to the under proposed Rule 1013(c) to Paper Comments average SBA direct loan. This rate may maintain clear parity with the language • Send paper comments in triplicate be used as a base rate for guaranteed appearing under proposed Rule 1017(h). to Secretary, Securities and Exchange fluctuating interest rate SBA loans. This However, FINRA will consider rate will be 1.88 percent for the NASAA’s recommendation in Commission, 100 F Street NE, January–March quarter of FY 2020. connection with its separate proposal to Washington, DC 20549–1090. Pursuant to 13 CFR 120.921(b), the substantially restructure the MAP All submissions should refer to File maximum legal interest rate for any rules.78 Number SR–FINRA–2019–030. This file third party lender’s commercial loan 6. Other Comments number should be included on the which funds any portion of the cost of subject line if email is used. To help the a 504 project (see 13 CFR 120.801) shall UNLV recommended that FINRA Commission process and review your be 6% over the New York Prime rate or, consider proposing a rule to protect comments more efficiently, please use if that exceeds the maximum interest investors when FINRA members try to only one method. The Commission will rate permitted by the constitution or convert themselves into another area of post all comments on the Commission’s laws of a given State, the maximum the securities industry while facing internet website (http://www.sec.gov/ interest rate will be the rate permitted covered pending arbitration claims or rules/sro.shtml). Copies of the by the constitution or laws of the given outstanding unpaid arbitration awards. submission, all subsequent State. IBN expressed the view that amendments, all written statements Dianna L. Seaborn, ‘‘[a]rbitration has nothing to do with the with respect to the proposed rule law it is about feelings[,]’’ suggesting Director, Office of Financial Assistance. change that are filed with the that there needs to be two sets of [FR Doc. 2019–28188 Filed 12–27–19; 8:45 am] Commission, and all written rulebooks, one for small firms and the BILLING CODE 8025–01–P other for large firms. While FINRA communications relating to the acknowledges the commenters’ proposed rule change between the Commission and any person, other than concerns, their recommendations are DEPARTMENT OF STATE beyond the scope of this proposed those that may be withheld from the rulemaking and, therefore, FINRA has public in accordance with the [Public Notice: 10986] not addressed them here. provisions of 5 U.S.C. 552, will be available for website viewing and 30 Day Notice of Proposed Information III. Date of Effectiveness of the printing in the Commission’s Public Collection: Adoptive Family Relief Act Proposed Rule Change and Timing for Reference Room, 100 F Street NE, Refund Application Commission Action Washington, DC 20549, on official ACTION: Notice of request for public Within 45 days of the date of business days between the hours of comment and submission to OMB of publication of this notice in the Federal 10:00 a.m. and 3:00 p.m. Copies of such proposed collection of information. Register or within such longer period (i) filing also will be available for as the Commission may designate up to inspection and copying at the principal SUMMARY: The Department of State is 90 days of such date if it finds such office of FINRA. All comments received seeking Office of Management and longer period to be appropriate and will be posted without change. Persons Budget (OMB) approval for the publishes its reasons for so finding or submitting comments are cautioned that information collection described below. (ii) as to which the self-regulatory we do not redact or edit personal In accordance with the Paperwork organization consents, the Commission identifying information from comment Reduction Act of 1995, we are will: submissions. You should submit only requesting comments on this collection (A) By order approve or disapprove information that you wish to make from all interested individuals and such proposed rule change, or available publicly. All submissions organizations. The purpose of this (B) institute proceedings to determine should refer to File Number SR–FINRA– Notice is to allow 30 days for public whether the proposed rule change 2019–030 and should be submitted on comment. should be disapproved. or before January 21, 2020. DATES: Submit comments directly to the IV. Solicitation of Comments For the Commission, by the Division of Office of Management and Budget Trading and Markets, pursuant to delegated (OMB) up to January 29, 2020. Interested persons are invited to authority.79 ADDRESSES: Direct comments to the submit written data, views and J. Matthew DeLesDernier, Department of State Desk Officer in the arguments concerning the foregoing, Assistant Secretary. Office of Information and Regulatory including whether the proposed rule [FR Doc. 2019–28021 Filed 12–27–19; 8:45 am] Affairs at the Office of Management and change is consistent with the Act. Budget (OMB). You may submit BILLING CODE 8011–01–P Comments may be submitted by any of comments by the following methods: the following methods: • Email: oira_submission@ omb.eop.gov. You must include the DS 78 See Notice 18–23. 79 17 CFR 200.30–3(a)(12). form number, information collection

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title, and the OMB control number in adopted by a United States citizen, The U.S. Trade Representative initiated the subject line of your message. subject to criteria prescribed by the the exclusion process in July 2018 and • Fax: 202–395–5806. Attention: Desk Secretary of State. Over 350 American granted multiple sets of exclusions. The Officer for Department of State. families have successfully adopted second set of exclusions was granted in FOR FURTHER INFORMATION CONTACT: children from the Democratic Republic March 2019, and are scheduled to Direct requests for additional of the Congo. However, since September expire on March 25, 2020. The U.S. information regarding the collection 25, 2013, they have not been able to Trade Representative has decided to listed in this notice, including requests bring their adoptive children home to consider a possible extension for up to for copies of the proposed collection the United States because the 12 months of particular exclusions instrument and supporting documents, Democratic Republic of the Congo granted in March 2019. The Office of the to Jorge Abudei, who may be reached at suspended the issuance of ‘‘exit U.S. Trade Representative (USTR) 202–485–8915 or at [email protected]. permits’’ for these children. As the invites public comment on whether to SUPPLEMENTARY INFORMATION: permit suspension drags on, however, extend particular exclusions. • Title of Information Collection: American families are repeatedly paying DATES: January 15, 2020 at 12:01 a.m. Adoptive Family Relief Act Refund visa renewal and related fees, while also ET: The docket (USTR–2019–0024) will Application. continuing to be separated from their open for submitting comments on the • OMB Control Number: 1405–0223. adopted children. possible extension of particular • Type of Request: Extension of a The waiver or refund provides exclusions. Currently Approved Collection. support and relief to American families February 15, 2020 at 11:59 p.m. ET: • Originating Office: CA/C. seeking to bring their adoptive children To be assured of consideration, submit • Form Number: DS–7781. home to the United States from the written comments by February 15, 2020. • Respondents: Immigrant Visa Democratic Republic of the Congo and ADDRESSES: Submit public comments Petitioners. families in situations similar to the one through the Federal eRulemaking Portal: • Estimated Number of Respondents: stipulated above. This form collects https://www.regulations.gov. The docket 20. information to determine the extra fees number is USTR–2019–0024. USTR • Estimated Number of Responses: these families have paid and refund strongly encourages all commenters to 20. them in accordance with the Adoptive use Form A in submitting comments. If • Average Time Per Response: 5 Family Relief Act. applicable, Form B (which requests Minutes. Methodology Business Confidential Information • (BCI)), along with a copy of the Total Estimated Burden Time: 1.6 The collection will be hosted on the Hours. corresponding Form A, must be • Department of State website to be submitted via email at Frequency: On Occasion. printed, filled out, and eventually sent • Obligation to respond: Required to [email protected]. See to the consular section where the the submission instructions below. Obtain or Retain a Benefit. adoption case was originally processed. We are soliciting public comments to FOR FURTHER INFORMATION CONTACT: For permit the Department to: Douglass R. Benning, questions about this notice, contact • Evaluate whether the proposed Deputy Assistant Secretary. USTR Assistant General Counsels Philip information collection is necessary for [FR Doc. 2019–28017 Filed 12–27–19; 8:45 am] Butler or Benjamin Allen at (202) 395– the proper functions of the Department. BILLING CODE 4710–05–P 5725. • Evaluate the accuracy of our SUPPLEMENTARY INFORMATION: estimate of the time and cost burden for A. Background this proposed collection, including the OFFICE OF THE UNITED STATES validity of the methodology and TRADE REPRESENTATIVE For background on the proceedings in assumptions used. this investigation, please see the prior • Enhance the quality, utility, and [Docket Number USTR–2019–0024] notices issued in the investigation, clarity of the information to be including 82 FR 40213 (August 23, Request for Comments Concerning the collected. 2017), 83 FR 14906 (April 6, 2018), 83 Extension of Particular Exclusions • Minimize the reporting burden on FR 28710 (June 20, 2018), 83 FR 40823 Granted Under the March 2019 Product those who are to respond, including the (August 16, 2018), 83 FR 47974 Exclusion Notice From the $34 Billion use of automated collection techniques (September 21, 2018), 83 FR 65198 Action Pursuant to Section 301: or other forms of information (December 19, 2018), 84 FR 7966 (March China’s Acts, Policies, and Practices technology. 5, 2019), 84 FR 20459 (May 9, 2019), 84 Related to Technology Transfer, Please note that comments submitted FR 43304 (August 20, 2019), and 84 FR Intellectual Property, and Innovation in response to this Notice are public 45821 (August 30, 2019). record. Before including any detailed AGENCY: Office of the United States Effective July 6, 2018, the U.S. Trade personal information, you should be Trade Representative. Representative imposed additional 25 aware that your comments as submitted, ACTION: Notice and request for percent duties on goods of China including your personal information, comments. classified in 818 8-digit subheadings of will be available for public review. the Harmonized Tariff Schedule of the SUMMARY: Effective July 6, 2018, the U.S. United States (HTSUS), with an Abstract of Proposed Collection Trade Representative imposed approximate annual trade value of $34 The Adoptive Family Relief Act (Pub. additional duties on goods of China billion. See 83 FR 28710. The U.S. L. 114–70) amended Section 221(c) of with an annual trade value of Trade Representative’s determination the Immigration and Nationality Act approximately $34 billion as part of the included a decision to establish a (INA), 8 U.S.C. 1201(c), to allow for the action in the Section 301 investigation process by which U.S. stakeholders can waiver or refund certain immigrant visa of China’s acts, policies, and practices request exclusion of particular products fees for a lawfully adopted child, or a related to technology transfer, classified within an 8-digit HTSUS child coming to the United States to be intellectual property, and innovation. subheading covered by the $34 billion

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action from the additional duties. The In addition to submitting Form A, • Whether the commenter will be U.S. Trade Representative issued a commenters who are importers and/or submitting Form B. notice setting out the process for the purchasers of the products covered by As indicated above, information product exclusions, and opened a the exclusion also should complete submitted on Form B will not be public docket. See 83 FR 32181 (the July Form B (which will be posted on publically available. Form B requires 11 notice). USTR’s website by the time the docket commenters who are importers and/or The July 11 notice required opens) and submit it, along with a copy purchasers of the products covered by submission of requests for exclusion of their completed Form A, via email at the exclusion to provide the following from the $34 billion action no later than [email protected]. Form information: October 9, 2018, and noted that the U.S. A must be submitted via email with • The efforts you have undertaken Trade Representative periodically Form B and submitted as a single since July 2018 to source the product would announce decisions. The U.S. document (without Form B) to docket from the United States or third Trade Representative granted multiple USTR–2019–0024 at https:// countries. sets of exclusions. The second set of www.regulations.gov. • The value and quantity of the exclusions was granted in March 2019, Form B requests BCI information, and Chinese-origin product covered by the and are scheduled to expire on March will not be posted on the public docket. specific exclusion request purchased in 25, 2020. See 84 FR 11152 (March 25, To facilitate advance preparation of 2018, the first half of 2018, and the first 2019) (March 2019 notice). submissions, facsimiles of Forms A and half of 2019. Whether these purchases B are annexed to this notice and will be are from a related company, and if so, B. Possible Extensions of Particular available electronically at https:// the name of and relationship to the Product Exclusions ustr.gov/issue-areas/enforcement/ related company. The U.S. Trade Representative has section-301-investigations/section-301- • Whether Chinese suppliers have decided to consider a possible extension china/34-billion-trade-action. lowered their prices for products for up to 12 months of particular Set forth below is a summary of the covered by the exclusion following the exclusions granted in the March 2019 information to be entered on Form A: imposition of duties. notice. Accordingly, USTR invites • Contact information, including the • The value and quantity of the public comments on whether to extend full legal name of the organization product covered by the exclusion particular exclusions granted in the making the comment, whether the purchased from domestic and third March 2019 notice. At this time, USTR commenter is a third party (e.g., law country sources in 2018, the first half of is not considering comments concerning firm, trade association, or customs 2018, and the first half of 2019. possible extensions of exclusions broker) submitting on behalf of an • If applicable, the commenter’s gross granted under any other product organization or industry, and the name revenue for 2018, the first half of 2018, exclusion notice. of the third party organization, if and the first half of 2019. USTR will evaluate the possible applicable. • Whether the Chinese-origin product extension of each exclusion on a case- • The publication date of the Federal of concern is sold as a final product or by-case basis. The focus of the Register notice containing the exclusion as an input. evaluation will be whether, despite the on which you are commenting. Since • Whether the imposition of duties on first imposition of these additional USTR at this time only is considering the products covered by the exclusion duties in July 2018, the particular exclusions granted by the March 2019 will result in severe economic harm to product remains available only from notice, this field must specify March 25, the commenter or other U.S. interests. China. In addressing this factor, 2019. • Any additional information in commenters should address specifically: • The full article description for the support or in opposition of the • Whether the particular product exclusion you are commenting on and extending the exclusion. and/or a comparable product is the 10-digit code, as provided in the Commenters also may provide any available from sources in the United Federal Register notice granting the other information or data that they States and/or in third countries. exclusion. Please indicate if the consider relevant. • Any changes in the global supply exclusion is a 10-digit HTSUS code chain since July 2018 with respect to the (covering all products under a single 10- C. Submission Instructions particular product or any other relevant digit HTSUS number). To be assured of consideration, you industry developments. • Whether the product or products must submit your comment between the • The efforts, if any, the importers or covered by the exclusion are subject to opening of the docket on January 15, U.S. purchasers have undertaken since an antidumping or countervailing duty 2020, and the February 15, 2020 July 2018 to source the product from the order issued by the U.S. Department of submission deadline. By submitting a United States or third countries. Commerce. comment, you are certifying that the In addition, USTR will continue to • Whether you support or oppose information provided is complete and consider whether the imposition of extending the exclusion and an correct to the best of your knowledge. additional duties on the products explanation of your rationale. covered by the exclusion will result in Commenters must provide a public D. Paperwork Reduction Act severe economic harm to the commenter version of their rationale, even if the In accordance with the requirements or other U.S. interests. commenter also is submitting a Form B of the Paperwork Reduction Act of 1995 USTR strongly encourages that with more detailed, confidential (PRA) and its implementing regulations, commenters complete Form A (which information. USTR submitted a request to the Office will be posted on USTR’s website by the • Whether the products covered by of Management and Budget (OMB) for time the docket opens) and submit the the exclusion or comparable products emergency review and clearance of this completed Form A to https:// are available from sources in the U.S. or information collection request (ICR) www.regulations.gov. The docket in third countries. Please include titled 301 Exclusion Requests. OMB number is USTR–2019–0024. USTR will information concerning any changes in assigned control number 0350–0015. post completed Form A’s on the public the global supply chain since July 2018 USTR issued notice and requested docket. with respect to the particular product. comments regarding its intent to seek

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approval of a three-year extension of the 58802. OMB currently is reviewing the control number is valid during the control number for the information USTR’s submission for a three-year pendency of its review. request on August 22, 2019 and extension and has informed USTR that Joseph Barloon, November 1, 2019. 84 FR 43853, 84 FR General Counsel, Office of the U.S. Trade Representative. BILLING CODE 3290–F0–P

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[FR Doc. 2019–28088 Filed 12–27–19; 8:45 am] DEPARTMENT OF TRANSPORTATION ACTION: Revised notice of intent to BILLING CODE 3290–F0–C prepare an Environmental Impact Federal Highway Administration Statement.

Revised Notice of Intent To Prepare a SUMMARY: The FHWA is revising the Tier 1 Environmental Impact March 11, 2008 Notice of Intent which Statement: Brown County, Wisconsin advised the public that an Environmental Impact Statement (EIS) AGENCY: Federal Highway would be prepared for proposed Administration (FHWA), DOT. transportation improvements in the southern part of the Green Bay metropolitan area in Brown County, Wisconsin. The FHWA will now

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prepare a Tier 1 EIS to evaluate the Lawrence. The development that is (Catalog of Federal Domestic Assistance proposed improvements. planned to occur is projected to generate Program Number 20.205, Highway Planning and Construction. The regulations FOR FURTHER INFORMATION CONTACT: Ian traffic which will strain the capacity of the area’s existing transportation implementing Executive Order 12372 Chidister, Environmental Program regarding intergovernmental consultation on Manager, Federal Highway infrastructure. The project will study Federal programs and activities apply to this Administration, 525 Junction Road, the traffic operations, capacity, and program.) Suite 8000, Madison, WI 53717, safety of the transportation telephone: (608) 829–7503, email: infrastructure along with existing and Authority: 23 CFR 771.123 [email protected]; Bryan Lipke, P.E., planned development in the study area, Dated: December 20, 2019. Planning Project Manager, Wisconsin system linkages, and local planning Ian Chidister, Department of Transportation, Northeast efforts. Environmental Program Manager, FHWA, Region, 944 Vanderperren Way, Green A Tier 1 Draft EIS is anticipated for Madison, Wisconsin. Bay, WI 54304, telephone: (920) 492– completion in summer 2020 with a [FR Doc. 2019–28046 Filed 12–27–19; 8:45 am] 5703, email: [email protected]; combined Final EIS and Record of BILLING CODE 4910–RY–P Cole Runge, Principal Planner/MPO Decision (ROD) in fall 2020. Letters Director, Brown County Planning describing the proposed action and Commission/Green Bay MPO, 305 E. soliciting comments have been sent to DEPARTMENT OF TRANSPORTATION Walnut Street Room 320, PO Box 23600, appropriate Federal, State, and local Green Bay, WI 54305, telephone (920) agencies, and Native American Tribes. Federal Motor Carrier Safety 448–6480, email: Cole.Runge@ An agency scoping meeting and a public Administration browncountywi.gov. involvement meeting were held on [Docket No. FMCSA–2006–25854; FMCSA– SUPPLEMENTARY INFORMATION: The December 11, 2019 with the appropriate 2013–0108; FMCSA–2014–0382; FMCSA– FHWA, in cooperation with the agencies and the general public. 2015–0115; FMCSA–2015–0116; FMCSA– Wisconsin Department of Public involvement is a critical 2015–0119; FMCSA–2017–0252] Transportation (WisDOT) and Brown component of the National County (the Lead Agencies), will Environmental Policy Act (NEPA) Qualification of Drivers; Exemption prepare a Tier 1 EIS in accordance with process, and it will be integrated with Applications; Epilepsy and Seizure 23 Code of Federal Regulations (CFR) the process to develop the Tier 1 EIS. Disorders All environmental documents will be 771.111(g) and 40 CFR 1502.20. The AGENCY: Federal Motor Carrier Safety made available for review by federal and Lead Agencies previously issued a Administration (FMCSA), DOT. Notice of Intent on March 11, 2008, state resource agencies and the public. ACTION: Notice of renewal of advising agencies and the public that an Specific efforts will be made to exemptions; request for comments. EIS would be prepared to study encourage involvement by, and solicit comments from minority and low- proposed transportation improvements SUMMARY: FMCSA announces its income populations in the project study to address existing and future decision to renew exemptions for 11 area, with public involvement meetings transportation demand in the southern individuals from the requirement in the held throughout the NEPA process. portion of the Green Bay metropolitan Federal Motor Carrier Safety Public notice will be given regarding the area. Regulations (FMCSRs) that interstate time and place of public involvement Since the previous Notice of Intent commercial motor vehicle (CMV) meetings. A public hearing will be held was issued, the Lead Agencies drivers have ‘‘no established medical after the completion of the Tier 1 Draft developed a Draft Coordination Plan, history or clinical diagnosis of epilepsy EIS. Project information will be posted Draft Impact Assessment or any other condition which is likely on the Brown County website (https:// Methodologies, draft purpose and need, to cause loss of consciousness or any www.browncountywi.gov/departments/ and a preliminary range of alternatives. loss of ability to control a CMV.’’ The planning-and-land-services/planning/ The Lead Agencies also convened two exemptions enable these individuals transportation/). Inquiries about the meetings with a Project Stakeholder who have had one or more seizures and project may be sent to the contacts listed Committee, held three public scoping/ are taking anti-seizure medication to above. To ensure the full range of issues involvement meetings, and held continue to operate CMVs in interstate related to the proposed action are meetings with participating and commerce. cooperating agencies to obtain addressed and all significant issues are DATES: Each group of renewed concurrence for the purpose and need identified, comments and suggestions exemptions were applicable on the and the alternatives retained for detailed are invited from all interested parties. dates stated in the discussions below study. The Lead Agencies will Projects receiving Federal funds must and will expire on the dates stated in coordinate with stakeholders, agencies, comply with Title VI of the Civil Rights the discussions below. Comments must and the public to revisit and update Act and Executive Order 12898 ‘‘Federal be received on or before January 29, documentation and decisions from Actions to Address Environmental 2020. previous EIS development efforts. Justice in Minority Populations and The proposed project will identify the Low-Income Populations.’’ Federal law ADDRESSES: You may submit comments most appropriate transportation prohibits discrimination on the basis of identified by the Federal Docket improvements for addressing existing race, color, age, sex, or country of Management System (FDMS) Docket No. transportation demand and demand national origin in the implementation of FMCSA–2006–25854, Docket No. generated by the planned development this project. It is also Federal policy to FMCSA–2013–0108, Docket No. in the southern part of the Green Bay identify and address any FMCSA–2014–0382, Docket No. metropolitan area. The study area disproportionately high and adverse FMCSA–2015–0115, Docket No. includes the City of De Pere, the effects of Federal projects on the health FMCSA–2015–0116, Docket No. Villages of Allouez, Bellevue, Hobart, or environment of minority and low- FMCSA–2015–0119, or Docket No. and Ashwaubenon, and the Towns of income populations to the greatest FMCSA–2017–0252 using any of the Glenmore, Ledgeview, Rockland, and extent practicable and permitted by law. following methods:

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• Federal eRulemaking Portal: Go to into the text box on the following The physical qualification standard http://www.regulations.gov. Follow the screen. Choose whether you are for drivers regarding epilepsy found in online instructions for submitting submitting your comment as an 49 CFR 391.41(b)(8) states that a person comments. individual or on behalf of a third party is physically qualified to drive a CMV • Mail: Docket Operations; U.S. and then submit. if that person has no established Department of Transportation, 1200 If you submit your comments by mail medical history or clinical diagnosis of New Jersey Avenue SE, West Building or hand delivery, submit them in an epilepsy or any other condition which Ground Floor, Room W12–140, unbound format, no larger than 81⁄2 by is likely to cause the loss of Washington, DC 20590–0001. 11 inches, suitable for copying and consciousness or any loss of ability to • Hand Delivery: West Building electronic filing. If you submit control a CMV. Ground Floor, Room W12–140, 1200 comments by mail and would like to In addition to the regulations, FMCSA New Jersey Avenue SE, Washington, know that they reached the facility, has published advisory criteria 1 to DC, between 9 a.m. and 5 p.m., ET, please enclose a stamped, self-addressed assist medical examiners (MEs) in Monday through Friday, except Federal postcard or envelope. determining whether drivers with Holidays. certain medical conditions are qualified • FMCSA will consider all comments Fax: (202) 493–2251. and material received during the to operate a CMV in interstate To avoid duplication, please use only comment period. commerce. one of these four methods. See the The 11 individuals listed in this ‘‘Public Participation’’ portion of the B. Viewing Documents and Comments notice have requested renewal of their SUPPLEMENTARY INFORMATION section for exemptions from the epilepsy and To view comments, as well as any instructions on submitting comments. seizure disorders prohibition in documents mentioned in this notice as § 391.41(b)(8), in accordance with FOR FURTHER INFORMATION CONTACT: Ms. being available in the docket, go to FMCSA procedures. Accordingly, Christine A. Hydock, Chief, Medical http://www.regulations.gov. Insert the FMCSA has evaluated these Programs Division, 202–366–4001, docket number, FMCSA–2006–25854; applications for renewal on their merits [email protected], FMCSA, FMCSA–2013–0108; FMCSA–2014– and decided to extend each exemption Department of Transportation, 1200 0382; FMCSA–2015–0115; FMCSA– for a renewable 2-year period. New Jersey Avenue SE, Room W64–224, 2015–0116; FMCSA–2015–0119; Washington, DC 20590–0001. Office FMCSA–2017–0252, in the keyword III. Request for Comments hours are from 8:30 a.m. to 5 p.m., ET, box, and click ‘‘Search.’’ Next, click the Monday through Friday, except Federal Interested parties or organizations ‘‘Open Docket Folder’’ button and possessing information that would holidays. If you have questions choose the document to review. If you regarding viewing or submitting otherwise show that any, or all, of these do not have access to the internet, you drivers are not currently achieving the material to the docket, contact Docket may view the docket online by visiting Operations, (202) 366–9826. statutory level of safety should Docket Operations in Room W12–140 immediately notify FMCSA. The SUPPLEMENTARY INFORMATION: on the ground floor of the DOT West Agency will evaluate any adverse I. Public Participation Building, 1200 New Jersey Avenue SE, evidence submitted and, if safety is Washington, DC 20590, between 9 a.m. being compromised or if continuation of A. Submitting Comments and 5 p.m., ET, Monday through Friday, the exemption would not be consistent If you submit a comment, please except Federal holidays. with the goals and objectives of 49 include the docket number for this C. Privacy Act U.S.C. 31136(e) and 31315(b), FMCSA notice (Docket No. FMCSA–2006– will take immediate steps to revoke the 25854; FMCSA–2013–0108; FMCSA– In accordance with 5 U.S.C. 553(c), exemption of a driver. 2014–0382; FMCSA–2015–0115; DOT solicits comments from the public FMCSA–2015–0116; FMCSA–2015– to better inform its rulemaking process. IV. Basis for Renewing Exemptions 0119; FMCSA–2017–0252), indicate the DOT posts these comments, without In accordance with 49 U.S.C. 31136(e) specific section of this document to edit, including any personal information and 31315(b), each of the 11 applicants which each comment applies, and the commenter provides, to has satisfied the renewal conditions for provide a reason for each suggestion or www.regulations.gov, as described in obtaining an exemption from the recommendation. You may submit your the system of records notice (DOT/ALL– epilepsy and seizure disorders comments and material online or by fax, 14 FDMS), which can be reviewed at prohibition. The 11 drivers in this mail, or hand delivery, but please use www.dot.gov/privacy. notice remain in good standing with the Agency, have maintained their medical only one of these means. FMCSA II. Background recommends that you include your monitoring and have not exhibited any name and a mailing address, an email Under 49 U.S.C. 31136(e) and medical issues that would compromise address, or a phone number in the body 31315(b), FMCSA may grant an their ability to safely operate a CMV of your document so that FMCSA can exemption from the FMCSRs for no during the previous 2-year exemption contact you if there are questions longer than a 5-year period if it finds period. In addition, for Commercial regarding your submission. such exemption would likely achieve a Driver’s License (CDL) holders, the To submit your comment online, go to level of safety that is equivalent to, or Commercial Driver’s License http://www.regulations.gov, put the greater than, the level that would be Information System and the Motor docket number, FMCSA–2006–25854; achieved absent such exemption. The Carrier Management Information System FMCSA–2013–0108; FMCSA–2014– statute also allows the Agency to renew are searched for crash and violation 0382; FMCSA–2015–0115; FMCSA– exemptions at the end of the 5-year 2015–0116; FMCSA–2015–0119; period. FMCSA grants medical 1 These criteria may be found in APPENDIX A TO FMCSA–2017–0252, in the keyword exemptions from the FMCSRs for a 2- PART 391—MEDICAL ADVISORY CRITERIA, section H. Epilepsy: § 391.41(b)(8), paragraphs 3, 4, box, and click ‘‘Search.’’ When the new year period to align with the maximum and 5, which is available on the internet at https:// screen appears, click on the ‘‘Comment duration of a driver’s medical www.gpo.gov/fdsys/pkg/CFR-2015-title49-vol5/pdf/ Now!’’ button and type your comment certification. CFR-2015-title49-vol5-part391-appA.pdf.

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data. For non-CDL holders, the Agency V. Conditions and Requirements ACTION: Notice of applications for reviews the driving records from the The exemptions are extended subject exemption; request for comments. State Driver’s Licensing Agency. These to the following conditions: (1) Each SUMMARY: FMCSA announces receipt of factors provide an adequate basis for driver must remain seizure-free and predicting each driver’s ability to applications from 11 individuals for an maintain a stable treatment during the exemption from the vision requirement continue to safely operate a CMV in 2-year exemption period; (2) each driver interstate commerce. Therefore, FMCSA in the Federal Motor Carrier Safety must submit annual reports from their Regulations (FMCSRs) to operate a concludes that extending the exemption treating physicians attesting to the for each renewal applicant for a period commercial motor vehicle (CMV) in stability of treatment and that the driver interstate commerce. If granted, the of 2 years is likely to achieve a level of has remained seizure-free; (3) each safety equal to that existing without the exemptions will enable these driver must undergo an annual medical individuals to operate CMVs in exemption. examination by a certified ME, as In accordance with 49 U.S.C. 31136(e) interstate commerce without meeting defined by § 390.5; and (4) each driver the vision requirement in one eye. and 31315(b), the following groups of must provide a copy of the annual drivers received renewed exemptions in DATES: Comments must be received on medical certification to the employer for or before January 29, 2020. the month of December and are retention in the driver’s qualification ADDRESSES: discussed below. file, or keep a copy of his/her driver’s You may submit comments As of December 16, 2019, and in qualification file if he/she is self- identified by the Federal Docket accordance with 49 U.S.C. 31136(e) and employed. The driver must also have a Management System (FDMS) Docket No. 31315(b), the following five individuals copy of the exemption when driving, for FMCSA–2019–0019 using any of the have satisfied the renewal conditions for presentation to a duly authorized following methods: • Federal eRulemaking Portal: Go to obtaining an exemption from the Federal, State, or local enforcement http://www.regulations.gov/ epilepsy and seizure disorders official. The exemption will be docket?D=FMCSA-2019-0019. Follow prohibition in the FMCSRs for interstate rescinded if: (1) The person fails to the online instructions for submitting CMV drivers: comply with the terms and conditions William Brown (NC) comments. of the exemption; (2) the exemption has • Robert J. Forney (WI) Mail: Docket Operations; U.S. resulted in a lower level of safety than Department of Transportation, 1200 Curtis Alan Hartman (MD) was maintained before it was granted; or Wendell F. Headley (MO) New Jersey Avenue SE, West Building (3) continuation of the exemption would Ground Floor, Room W12–140, Marion Legg (MD) not be consistent with the goals and The drivers were included in docket Washington, DC 20590–0001. objectives of 49 U.S.C. 31136(e) and • Hand Delivery: West Building numbers FMCSA–2015–0115, FMCSA– 31315(b). 2015–0116, and FMCSA–2015–0119. Ground Floor, Room W12–140, 1200 Their exemptions are applicable as of VI. Preemption New Jersey Avenue SE, Washington, DC, between 9 a.m. and 5 p.m., ET, December 16, 2019, and will expire on During the period the exemption is in Monday through Friday, except Federal December 16, 2021. effect, no State shall enforce any law or Holidays. As of December 23, 2019, and in regulation that conflicts with this • accordance with 49 U.S.C. 31136(e) and Fax: (202) 493–2251. exemption with respect to a person To avoid duplication, please use only 31315(b), the following five individuals operating under the exemption. one of these four methods. See the have satisfied the renewal conditions for ‘‘Public Participation’’ portion of the obtaining an exemption from the VII. Conclusion SUPPLEMENTARY INFORMATION section for epilepsy and seizure disorders Based on its evaluation of the 11 instructions on submitting comments. prohibition in the FMCSRs for interstate exemption applications, FMCSA renews CMV drivers: the exemptions of the aforementioned FOR FURTHER INFORMATION CONTACT: Ms. Christine A. Hydock, Chief, Medical Gary Freeman (WI) drivers from the epilepsy and seizure Programs Division, (202) 366–4001, Aaron Gillette (SD) disorders prohibition in § 391.41(b)(8). David Kestner (VA) In accordance with 49 U.S.C. 31136(e) [email protected], FMCSA, Chad Smith (MA) and 31315(b), each exemption will be Department of Transportation, 1200 Trever Williams (MN) valid for 2 years unless revoked earlier New Jersey Avenue SE, Room W64–224, Washington, DC 20590–0001. Office The drivers were included in docket by FMCSA. hours are 8:30 a.m. to 5 p.m., ET, number FMCSA–2006–25854, FMCSA– Issued on: December 20, 2019. Monday through Friday, except Federal 2013–0108, and FMCSA–2014–0382. Larry W. Minor, holidays. If you have questions Their exemptions are applicable as of Associate Administrator for Policy. regarding viewing or submitting December 23, 2019, and will expire on [FR Doc. 2019–28159 Filed 12–27–19; 8:45 am] material to the docket, contact Docket December 23, 2021. BILLING CODE 4910–EX–P Operations, (202) 366–9826. As of December 28, 2019, and in accordance with 49 U.S.C. 31136(e) and SUPPLEMENTARY INFORMATION: 31315(b), the following individual has DEPARTMENT OF TRANSPORTATION I. Public Participation satisfied the renewal conditions for A. Submitting Comments obtaining an exemption from the Federal Motor Carrier Safety epilepsy and seizure disorders Administration If you submit a comment, please prohibition in the FMCSRs for interstate include the docket number for this CMV drivers: David Pamperin (WI). [Docket No. FMCSA–2019–0019] notice (Docket No. FMCSA–2019–0019), This driver was included in docket Qualification of Drivers; Exemption indicate the specific section of this number FMCSA–2017–0252. His Applications; Vision document to which each comment exemption is applicable as of December applies, and provide a reason for each 28, 2019, and will expire on December AGENCY: Federal Motor Carrier Safety suggestion or recommendation. You 28, 2021. Administration (FMCSA), DOT. may submit your comments and

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material online or by fax, mail, or hand exemptions at the end of the 5-year FMCSA believes it can properly apply delivery, but please use only one of period. FMCSA grants medical the principle to monocular drivers, these means. FMCSA recommends that exemptions from the FMCSRs for a 2- because data from the Federal Highway you include your name and a mailing year period to align with the maximum Administration’s (FHWA) former waiver address, an email address, or a phone duration of a driver’s medical study program clearly demonstrated the number in the body of your document certification. driving performance of experienced so that FMCSA can contact you if there The 11 individuals listed in this monocular drivers in the program is are questions regarding your notice have requested an exemption better than that of all CMV drivers submission. from the vision requirement in 49 CFR collectively.1 The fact that experienced To submit your comment online, go to 391.41(b)(10). Accordingly, the Agency monocular drivers demonstrated safe http://www.regulations.gov/ will evaluate the qualifications of each driving records in the waiver program docket?D=FMCSA-2019-0019. Click on applicant to determine whether granting supports a conclusion that other the ‘‘Comment Now!’’ button and type an exemption will achieve the required monocular drivers, meeting the same your comment into the text box on the level of safety mandated by statute. qualifying conditions as those required following screen. Choose whether you The physical qualification standard by the waiver program, are also likely to are submitting your comment as an for drivers regarding vision found in have adapted to their vision deficiency individual or on behalf of a third party § 391.41(b)(10) states that a person is and will continue to operate safely. and then submit. physically qualified to drive a CMV if The first major research correlating If you submit your comments by mail that person has distant visual acuity of past and future performance was done or hand delivery, submit them in an at least 20/40 (Snellen) in each eye in England by Greenwood and Yule in unbound format, no larger than 81⁄2 by without corrective lenses or visual 1920. Subsequent studies, building on 11 inches, suitable for copying and acuity separately corrected to 20/40 that model, concluded that crash rates electronic filing. If you submit (Snellen) or better with corrective for the same individual exposed to comments by mail and would like to lenses, distant binocular acuity of at certain risks for two different time know that they reached the facility, least 20/40 (Snellen) in both eyes with periods vary only slightly (See Bates please enclose a stamped, self-addressed or without corrective lenses, field of and Neyman, University of California ° postcard or envelope. vision of at least 70 in the horizontal Publications in Statistics, April 1952). FMCSA will consider all comments Meridian in each eye, and the ability to Other studies demonstrated theories of and material received during the recognize the colors of traffic signals predicting crash proneness from crash comment period. and devices showing standard red, history coupled with other factors. green, and amber. These factors—such as age, sex, B. Viewing Documents and Comments On July 16, 1992, the Agency first geographic location, mileage driven and To view comments, as well as any published the criteria for the Vision conviction history—are used every day documents mentioned in this notice as Waiver Program, which listed the by insurance companies and motor being available in the docket, go to conditions and reporting standards that vehicle bureaus to predict the http://www.regulations.gov/ CMV drivers approved for participation probability of an individual docket?D=FMCSA-2019-0019 and would need to meet (57 FR 31458). The experiencing future crashes (See Weber, choose the document to review. If you current Vision Exemption Program was Donald C., ‘‘Accident Rate Potential: An do not have access to the internet, you established in 1998, following the Application of Multiple Regression may view the docket online by visiting enactment of amendments to the Analysis of a Poisson Process,’’ Journal the Docket Operations in Room W12– statutes governing exemptions made by of American Statistical Association, 140 on the ground floor of the DOT § 4007 of the Transportation Equity Act June 1971). A 1964 California Driver West Building, 1200 New Jersey Avenue for the 21st Century (TEA–21), Public Record Study prepared by the California SE, Washington, DC 20590, between 9 Law 105–178, 112 Stat. 107, 401 (June Department of Motor Vehicles a.m. and 5 p.m., ET, Monday through 9, 1998). Vision exemptions are concluded that the best overall crash Friday, except Federal holidays. considered under the procedures predictor for both concurrent and established in 49 CFR part 381 subpart C. Privacy Act nonconcurrent events is the number of C, on a case-by-case basis upon single convictions. This study used application by CMV drivers who do not In accordance with 5 U.S.C. 553(c), three consecutive years of data, meet the vision standards of DOT solicits comments from the public comparing the experiences of drivers in to better inform its rulemaking process. § 391.41(b)(10). To qualify for an exemption from the the first two years with their DOT posts these comments, without experiences in the final year. edit, including any personal information vision requirement, FMCSA requires a the commenter provides, to person to present verifiable evidence III. Qualifications of Applicants that he/she has driven a commercial www.regulations.gov, as described in Brian K. Boyd the system of records notice (DOT/ALL– vehicle safely in intrastate commerce 14 FDMS), which can be reviewed at with the vision deficiency for the past Mr. Boyd, 56, has had amblyopia in www.dot.gov/privacy. three years. Recent driving performance his left eye since childhood. The visual is especially important in evaluating acuity in his right eye is 20/20, and in II. Background future safety, according to several his left eye, 20/150. Following an Under 49 U.S.C. 31136(e) and research studies designed to correlate examination in 2019, his optometrist 31315(b), FMCSA may grant an past and future driving performance. stated, ‘‘In my medical opinion Mr. exemption from the FMCSRs for no Results of these studies support the Boyd’s condition is stable, non- longer than a 5-year period if it finds principle that the best predictor of deteriorating and has sufficient vision to such exemption would likely achieve a future performance by a driver is his/her level of safety that is equivalent to, or past record of crashes and traffic 1 A thorough discussion of this issue may be found in a FHWA final rule published in the greater than, the level that would be violations. Copies of the studies may be Federal Register on March 26, 1996 and available achieved absent such exemption. The found at https://www.regulations.gov/ on the internet at https://www.govinfo.gov/content/ statute also allows the Agency to renew docket?D=FMCSA-1998-3637. pkg/FR-1996-03-26/pdf/96-7226.pdf.

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perform the driving tasks required to Travis London vehicle.’’ Mr. Padron reported that he operate a commercial vehicle.’’ Mr. Mr. London, 43, has had optic has driven straight trucks for 13 years, Boyd reported that he has driven neuropathy in his right eye since 2006. accumulating 52,000 miles. He holds an straight trucks for two years, The visual acuity in his right eye is 20/ operator’s license from Florida. His accumulating 21,000 miles, and tractor- 200, and in his left eye, 20/20. driving record for the last three years trailer combinations for 20 years, Following an examination in 2019, his shows no crashes and no convictions for accumulating 1.98 million miles. He optometrist stated, ‘‘In my opinion, I moving violations in a CMV. holds a Class AM CDL from Texas. His feel there is no ocular contraindication Charles J. Rowsey driving record for the last three years to driving a commercial or recreational shows no crashes and no convictions for vehicle.’’ Mr. London reported that he Mr. Rowsey, 56, has a prosthetic in moving violations in a CMV. has driven straight trucks for six years, his right eye due to a traumatic incident accumulating 30,000 miles, and tractor- Gary E. Collins in 1985. The visual acuity in his right trailer combinations for 15 years, eye is no light perception, and in his left Mr. Collins, 59, has had amblyopia in accumulating 1.13 million miles. He eye, 20/20. Following an examination in holds a Class A3 CDL from North his left eye since childhood. The visual 2019, his optometrist stated, ‘‘In my Carolina. His driving record for the last acuity in his right eye is 20/20, and in opinion, Mr. Rowsey has sufficient three years shows no crashes and no his left eye, 20/200. Following an vision to perform the task required to convictions for moving violations in a examination in 2019, his optometrist CMV. operate a commercial vehicle.’’ Mr. stated, ‘‘In my medical opinion, Mr. Rowsey reported that he has driven Collins has sufficient vision to perform Vincent M. Najera straight trucks for 32 years, the driving tasks required to operate a Mr. Najera, 62, has had amblyopia in accumulating 2.2 million miles, and commercial vehicle.’’ Mr. Collins his right eye since birth. The visual tractor-trailer combinations for 32 years, reported that he has driven tractor- acuity in his right eye is 20/70, and in accumulating 1 million miles. He holds trailer combinations for 37 years, his left eye, 20/20. Following an a Class A CDL from North Carolina. His accumulating 2.4 million miles. He examination in 2019, his optometrist driving record for the last three years holds a Class AM CDL from Georgia. His stated, ‘‘Mr. Najera has sufficient vision shows no crashes and no convictions for driving record for the last three years to perform the driving tasks required moving violations in a CMV. shows no crashes and no convictions for operate a commercial vehicle.’’ Mr. Kenneth C. Stump moving violations in a CMV. Najera reported that he has driven straight trucks for 25 years, Anthony A. DeCarlo Mr. Stump, 50, has a macular scar in accumulating 375,000 miles, and his left eye since 2016. The visual acuity Mr. DeCarlo, 58, has had a retinal vein tractor-trailer combinations for 25 years, in his right eye is 20/20, and in his left accumulating 1.8 million miles. He occlusion in his right eye since 2015. eye, 20/100. Following an examination holds a Class A CDL from California. The visual acuity in his right eye is 20/ in 2019, his ophthalmologist stated, ‘‘In His driving record for the last three 400, and in his left eye, 20/20. my opinion the patient has sufficient years shows no crashes and no Following an examination in 2019, his convictions for moving violations in a vision to perform the driving tasks ophthalmologist stated, ‘‘In my medical CMV. required to operate a commercial opinion, the patient has sufficient vision vehicle as long as he is wearing his to perform the driving tasks required to Jameson A. Otto glasses at the time.’’ Mr. Stump reported operate a commercial vehicle.’’ Mr. Mr. Otto, 44, has had optic nerve that he has driven tractor-trailer DeCarlo reported that he has driven hypoplasia in his left eye since birth. combinations for six years, tractor-trailer combinations for 30 years, The visual acuity in his right eye is 20/ accumulating 1 million miles. He holds accumulating 1.9 million miles. He 20, and in his left eye, no light a Class A CDL from Florida. His driving holds a Class A CDL from North perception. Following an examination record for the last three years shows no Carolina. His driving record for the last in 2019, his optometrist stated, ‘‘I certify crashes and no convictions for moving three years shows no crashes and no that he has sufficient vision to operate violations in a CMV. convictions for moving violations in a a commercial vehicle.’’ Mr. Otto Jose M. Vasquez CMV. reported that he has driven straight trucks for one year, accumulating 18,000 Darrel G. Jenkins Mr. Vasquez, 50, has macular scarring miles, and tractor-trailer combinations in his left eye due to an infection in Mr. Jenkins, 61, has a prosthetic in his for seven years, accumulating 672,000 childhood. The visual acuity in his right miles. He holds a Class A CDL from right eye due to a tumor in 2015. The eye is 20/20, and in his left eye, California. His driving record for the last visual acuity in his right eye is no light counting fingers. Following an three years shows no crashes and no perception, and in his left eye, 20/20. examination in 2019, his convictions for moving violations in a ophthalmologist stated, ‘‘Based on the Following an examination in 2019, his CMV. ophthalmologist stated, ‘‘In my Snellen Visual Acuity Scale, and my professional medical opinion, the Gerardo A. Padron professional opinion, the patient has patient is visually able to safely operate Mr. Padron, 39, has a corneal scar in sufficient vision to perform tasks of a commercial vehicle.’’ Mr. Jenkins his left eye due to an infection in operating a commercial vehicle.’’ Mr. reported that he has driven tractor- childhood. The visual acuity in his right Vasquez reported that he has driven trailer combinations for 41 years, eye is 20/20, and in his left eye, 20/50. straight trucks for 18 years, accumulating 3 million miles. He holds Following an examination in 2019, his accumulating 129,000 miles. He holds a a Class DA CDL from Kentucky. His optometrist stated, ‘‘In my opinion, Mr. Class B CDL from New York. His driving driving record for the last three years Padron Portilla [sic] has sufficient record for the last three years shows no shows no crashes and no convictions for vision to perform the driving tasks crashes and no convictions for moving moving violations in a CMV. required to operate a commercial violations in a CMV.

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IV. Request for Comments New Jersey Avenue SE, Washington, FMCSA will consider all comments In accordance with 49 U.S.C. 31136(e) DC, between 9 a.m. and 5 p.m., ET, and material received during the and 31315(b), FMCSA requests public Monday through Friday, except Federal comment period. comment from all interested persons on Holidays. • B. Viewing Documents and Comments the exemption petitions described in Fax: (202) 493–2251. this notice. We will consider all To avoid duplication, please use only To view comments, as well as any comments and material received before one of these four methods. See the documents mentioned in this notice as the close of business on the closing date ‘‘Public Participation’’ portion of the being available in the docket, go to indicated under the DATES section of the SUPPLEMENTARY INFORMATION section for http://www.regulations.gov/ notice. instructions on submitting comments. docket?D=FMCSA-2014-0385 or http:// FOR FURTHER INFORMATION CONTACT: Ms. www.regulations.gov/docket?D=FMCSA- Issued on: December 20, 2019. 2014-0387 or http:// Larry W. Minor, Christine A. Hydock, Chief, Medical Programs Division, 202–366–4001, www.regulations.gov/docket?D=FMCSA- Associate Administrator for Policy. [email protected], FMCSA, 2017-0058 and choose the document to [FR Doc. 2019–28161 Filed 12–27–19; 8:45 am] Department of Transportation, 1200 review. If you do not have access to the BILLING CODE 4910–EX–P New Jersey Avenue SE, Room W64–224, internet, you may view the docket Washington, DC 20590–0001. Office online by visiting the Docket Operations in Room W12–140 on the ground floor DEPARTMENT OF TRANSPORTATION hours are from 8:30 a.m. to 5 p.m., ET, Monday through Friday, except Federal of the DOT West Building, 1200 New holidays. If you have questions Jersey Avenue SE, Washington, DC Federal Motor Carrier Safety 20590, between 9 a.m. and 5 p.m., ET, Administration regarding viewing or submitting material to the docket, contact Docket Monday through Friday, except Federal [Docket No. FMCSA–2014–0385; FMCSA– Operations, (202) 366–9826. holidays. 2014–0387; FMCSA–2017–0058] SUPPLEMENTARY INFORMATION: C. Privacy Act Qualification of Drivers; Exemption I. Public Participation In accordance with 5 U.S.C. 553(c), Applications; Hearing DOT solicits comments from the public A. Submitting Comments AGENCY: Federal Motor Carrier Safety to better inform its rulemaking process. Administration (FMCSA), DOT. If you submit a comment, please DOT posts these comments, without ACTION: Notice of renewal of include the docket number for this edit, including any personal information exemptions; request for comments. notice (Docket No. FMCSA–2014–0385; the commenter provides, to FMCSA–2014–0387; FMCSA–2017– www.regulations.gov, as described in SUMMARY: FMCSA announces its 0058), indicate the specific section of the system of records notice (DOT/ALL– decision to renew exemptions for 34 this document to which each comment 14 FDMS), which can be reviewed at individuals from the hearing applies, and provide a reason for each www.dot.gov/privacy. suggestion or recommendation. You requirement in the Federal Motor II. Background Carrier Safety Regulations (FMCSRs) for may submit your comments and interstate commercial motor vehicle material online or by fax, mail, or hand Under 49 U.S.C. 31136(e) and (CMV) drivers. The exemptions enable delivery, but please use only one of 31315(b), FMCSA may grant an these hard of hearing and deaf these means. FMCSA recommends that exemption from the FMCSRs for no individuals to continue to operate CMVs you include your name and a mailing longer than a 5-year period if it finds in interstate commerce. address, an email address, or a phone such exemption would likely achieve a DATES: The exemptions were applicable number in the body of your document level of safety that is equivalent to, or on December 26, 2019. The exemptions so that FMCSA can contact you if there greater than, the level that would be expire on December 26, 2021. are questions regarding your achieved absent such exemption. The Comments must be received on or submission. statute also allows the Agency to renew before January 29, 2020. To submit your comment online, go to exemptions at the end of the 5-year ADDRESSES: You may submit comments http://www.regulations.gov/ period. FMCSA grants medical identified by the Federal Docket docket?D=FMCSA-2014-0385 or http:// exemptions from the FMCSRs for a 2- Management System (FDMS) Docket No. www.regulations.gov/docket?D=FMCSA- year period to align with the maximum FMCSA–2014–0385, FMCSA–2014– 2014-0387 or http:// duration of a driver’s medical 0387, or FMCSA–2017–0058 using any www.regulations.gov/docket?D=FMCSA- certification. of the following methods: 2017-0058. Click on the ‘‘Comment The physical qualification standard • Federal eRulemaking Portal: Go to Now!’’ button and type your comment for drivers regarding hearing found in http://www.regulations.gov/ into the text box on the following 49 CFR 391.41(b)(11) states that a docket?D=FMCSA-2014-0385 or http:// screen. Choose whether you are person is physically qualified to drive a www.regulations.gov/docket?D=FMCSA- submitting your comment as an CMV if that person first perceives a 2014-0387 or http:// individual or on behalf of a third party forced whispered voice in the better ear www.regulations.gov/docket?D=FMCSA- and then submit. at not less than 5 feet with or without 2017-0058. Follow the online If you submit your comments by mail the use of a hearing aid or, if tested by instructions for submitting comments. or hand delivery, submit them in an use of an audiometric device, does not • Mail: Docket Operations; U.S. unbound format, no larger than 81⁄2 by have an average hearing loss in the Department of Transportation, 1200 11 inches, suitable for copying and better ear greater than 40 decibels at 500 New Jersey Avenue SE, West Building electronic filing. If you submit Hz, 1,000 Hz, and 2,000 Hz with or Ground Floor, Room W12–140, comments by mail and would like to without a hearing aid when the Washington, DC 20590–0001. know that they reached the facility, audiometric device is calibrated to • Hand Delivery: West Building please enclose a stamped, self-addressed American National Standard (formerly Ground Floor, Room W12–140, 1200 postcard or envelope. ASA Standard) Z24.5—1951.

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This standard was adopted in 1970 Daryl A. Broker (MN) regulation that conflicts with this and was revised in 1971 to allow drivers Justin Brooks (WA) exemption with respect to a person to be qualified under this standard Christa Butner (NC) operating under the exemption. while wearing a hearing aid, 35 FR William Darnell (AZ) VII. Conclusion 6458, 6463 (April 22, 1970) and 36 FR Travis K. Davisson (IA) 12857 (July 3, 1971). Sean M. Dearsman (OH) Based upon its evaluation of the 34 The 34 individuals listed in this Mitchell R. Estill (MO) exemption applications, FMCSA renews notice have requested renewal of their Lucius Fowler (IL) the exemptions of the aforementioned Buddy Gann (IN) drivers from the hearing requirement in exemptions from the hearing standard Teela Gilmore (GA) in § 391.41(b)(11), in accordance with John Grebenc (MN) § 391.41 (b)(11). In accordance with 49 FMCSA procedures. Accordingly, Clint Homom (IL) U.S.C. 31136(e) and 31315(b), each FMCSA has evaluated these Paul Hoover (PA) exemption will be valid for 2 years applications for renewal on their merits Amy Ivins (NE) unless revoked earlier by FMCSA. and decided to extend each exemption Thomas Jensen (IA) Issued on: December 23, 2019. for a renewable 2-year period. Charles J. Jernigan, Jr. (SC) Larry W. Minor, James M. Johnson (MN) III. Request for Comments Wayne A. Kramas (WI) Associate Administrator for Policy. Interested parties or organizations Daniel Krytosek (MN) [FR Doc. 2019–28157 Filed 12–27–19; 8:45 am] possessing information that would Nicholas Kulasa (IL) BILLING CODE 4910–EX–P otherwise show that any, or all, of these Aaron S. Leader (AZ) drivers are not currently achieving the John R. Martikainen (CT) James E. Redmond (IL) DEPARTMENT OF TRANSPORTATION statutory level of safety should Dustin Sargent (TX) immediately notify FMCSA. The Michael Singleton (TX) Federal Motor Carrier Safety Agency will evaluate any adverse Marshall Smith (TX) Administration evidence submitted and, if safety is Michael Swetnam (TX) being compromised or if continuation of Courtney D. Turner (VA) [Docket No. FMCSA–2019–0110] the exemption would not be consistent Edward J. Zozaya (AZ) Qualification of Drivers; Exemption with the goals and objectives of 49 The drivers were included in docket Applications; Hearing U.S.C. 31136(e) and 31315(b), FMCSA number FMCSA–2014–0385, FMCSA– will take immediate steps to revoke the 2014–0387, or FMCSA–2017–0058. AGENCY: Federal Motor Carrier Safety exemption of a driver. Christa Butner was previously Administration (FMCSA), DOT. IV. Basis for Renewing Exemptions published under the name Christa ACTION: Notice of final disposition. Coppley. Their exemptions are In accordance with 49 U.S.C. 31136(e) applicable as of December 26, 2019, and SUMMARY: FMCSA announces its and 31315(b), each of the 34 applicants will expire on December 26, 2021. decision to exempt 29 individuals from has satisfied the renewal conditions for the hearing requirement in the Federal obtaining an exemption from the V. Conditions and Requirements Motor Carrier Safety Regulations hearing requirement. The 34 drivers in The exemptions are extended subject (FMCSRs) to operate a commercial this notice remain in good standing with to the following conditions: (1) Each motor vehicle (CMV) in interstate the Agency. In addition, for Commercial driver must report any crashes or commerce. The exemptions enable these Driver’s License (CDL) holders, the accidents as defined in § 390.5; and (2) hard of hearing and deaf individuals to Commercial Driver’s License report all citations and convictions for operate CMVs in interstate commerce. Information System and the Motor disqualifying offenses under 49 CFR 383 DATES: The exemptions were applicable Carrier Management Information System and 49 CFR 391 to FMCSA; and (3) each on November 19, 2019. The exemptions are searched for crash and violation driver prohibited from operating a expire on November 19, 2021. data. For non-CDL holders, the Agency motorcoach or bus with passengers in FOR FURTHER INFORMATION CONTACT: Ms. reviews the driving records from the interstate commerce. The driver must Christine A. Hydock, Chief, Medical State Driver’s Licensing Agency. These also have a copy of the exemption when Programs Division, (202) 366–4001, factors provide an adequate basis for driving, for presentation to a duly [email protected], FMCSA, predicting each driver’s ability to authorized Federal, State, or local Department of Transportation, 1200 continue to safely operate a CMV in enforcement official. In addition, the New Jersey Avenue SE, Room W64–224, interstate commerce. Therefore, FMCSA exemption does not exempt the Washington, DC 20590–0001. Office concludes that extending the exemption individual from meeting the applicable hours are from 8:30 a.m. to 5 p.m., ET, for each of these drivers for a period of CDL testing requirements. Each Monday through Friday, except Federal 2 years is likely to achieve a level of exemption will be valid for 2 years holidays. If you have questions safety equal to that existing without the unless rescinded earlier by FMCSA. The regarding viewing or submitting exemption. exemption will be rescinded if: (1) The material to the docket, contact Docket As of December 26, 2019, and in person fails to comply with the terms Operations, (202) 366–9826. accordance with 49 U.S.C. 31136(e) and and conditions of the exemption; (2) the SUPPLEMENTARY INFORMATION: 31315(b), the following 34 individuals exemption has resulted in a lower level have satisfied the renewal conditions for of safety than was maintained before it I. Public Participation obtaining an exemption from the was granted; or (3) continuation of the A. Viewing Documents and Comments hearing requirement in the FMCSRs for exemption would not be consistent with interstate CMV drivers: the goals and objectives of 49 U.S.C. To view comments, as well as any Mario Alvarado (CA) 31136(e) and 31315(b). documents mentioned in this notice as being available in the docket, go to Kasseth Andrews (MA) VI. Preemption Randy Bailey (NJ) http://www.regulations.gov/ Ivan Batista (NJ) During the period the exemption is in docket?D=FMCSA-2019-0110 and Joseph Bence (OH) effect, no State shall enforce any law or choose the document to review. If you

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do not have access to the internet, you online status indication tool to help conclusions regarding the matter of may view the docket online by visiting applicants better understand where hearing loss and CMV driver safety: (1) the Docket Operations in Room W12– their application is in the hearing No studies that examined the 140 on the ground floor of the DOT exemption process. He would also like relationship between hearing loss and West Building, 1200 New Jersey Avenue FMCSA to provide a step-by-step guide crash risk exclusively among CMV SE, Washington, DC 20590, between 9 to help applicants have a better drivers were identified; and (2) evidence a.m. and 5 p.m., ET, Monday through understanding of how the process from studies of the private driver’s Friday, except Federal holidays. works. FMCSA acknowledges Mr. license holder population does not Wassels’ concerns and has updated the B. Privacy Act support the contention that individuals hearing application packages located on with hearing impairment are at an In accordance with 5 U.S.C. 553(c), the FMCSA website with an overview of increased risk for a crash. In addition, DOT solicits comments from the public the exemption process to assist the Agency reviewed each applicant’s to better inform its rulemaking process. applicants in understanding the process driving record found in the Commercial DOT posts these comments, without and what specific information must be Driver’s License Information System, for edit, including any personal information submitted. Dain Covington of commercial driver’s license (CDL) the commenter provides, to Williamsburg, Virginia encourages those holders, and inspections recorded in the www.regulations.gov, as described in who are Deaf and Hard of Hearing and Motor Carrier Management Information the system of records notice (DOT/ALL– interested in operating a CMV to apply System. For non-CDL holders, the 14 FDMS), which can be reviewed at for a hearing exemption from FMCSA in Agency reviewed the driving records www.dot.gov/privacy. order to obtain a CDL. He also from the State Driver’s Licensing recommended FMCSA reduce the II. Background Agency. Each applicant’s record waiting time for those who apply for a On October 16, 2019, FMCSA demonstrated a safe driving history. hearing exemption to speed up the Based on an individual assessment of published a notice announcing receipt process of obtaining a CDL. FMCSA each applicant that focused on whether of applications from 29 individuals processes hearing exemptions as quickly an equal or greater level of safety is requesting an exemption from the as possible. However, the Agency is likely to be achieved by permitting each hearing requirement in 49 CFR required to publish a Federal Register of these drivers to drive in interstate 391.41(b)(11) to operate a CMV in notice allowing the public 30 days to commerce as opposed to restricting him interstate commerce and requested comment on the application for each comments from the public (FR 84 exemption prior to making a final or her to driving in intrastate commerce, 55375). The public comment period determination whether to grant or deny the Agency believes the drivers granted ended on November 15, 2019, and four each exemption. J. T. Stryszyk provided this exemption have demonstrated that comments were received. two identical comments in support of they do not pose a risk to public safety. FMCSA has evaluated the eligibility Deaf and Hard of Hearing individuals Consequently, FMCSA finds that in of these applicants and determined that being able to obtain a hearing exemption each case exempting these applicants granting exemptions to these so that they can operate a CMV in from the hearing standard in individuals would achieve a level of interstate commerce. An anonymous § 391.41(b)(11) is likely to achieve a safety equivalent to, or greater than, the commenter also provided support. level of safety equal to that existing level that would be achieved by Nicole Neft of Driver and Vehicle without the exemption. complying with § 391.41(b)(11). Services, State of Minnesota commented The physical qualification standard that Minnesota has no objections to IV. Conditions and Requirements for drivers regarding hearing found in Ryan Arrington and Abdiwahab Olow The terms and conditions of the § 391.41(b)(11) states that a person is receiving a hearing exemption to drive exemption are provided to the physically qualified to drive a CMV if in interstate commerce. applicants in the exemption document that person first perceives a forced Basis for Exemption Determination and includes the following: (1) Each whispered voice in the better ear at not driver must report any crashes or Under 49 U.S.C. 31136(e) and less than 5 feet with or without the use accidents as defined in § 390.5; (2) each 31315(b), FMCSA may grant an of a hearing aid or, if tested by use of driver must report all citations and an audiometric device, does not have an exemption from the FMCSRs for no longer than a 5-year period if it finds convictions for disqualifying offenses average hearing loss in the better ear under 49 CFR 383 and 49 CFR 391 to greater than 40 decibels at 500 Hz, 1,000 such exemption would likely achieve a level of safety that is equivalent to, or FMCSA; and (3) each driver is Hz, and 2,000 Hz with or without a prohibited from operating a motorcoach hearing aid when the audiometric greater than, the level that would be achieved absent such exemption. The or bus with passengers in interstate device is calibrated to American commerce. The driver must also have a National Standard (formerly ASA statute also allows the Agency to renew exemptions at the end of the 5-year copy of the exemption when driving, for Standard) Z24.5—1951. presentation to a duly authorized This standard was adopted in 1970 period. FMCSA grants medical Federal, State, or local enforcement and was revised in 1971 to allow drivers exemptions from the FMCSRs for a 2- official. In addition, the exemption does to be qualified under this standard year period to align with the maximum not exempt the individual from meeting while wearing a hearing aid, 35 FR duration of a driver’s medical the applicable CDL testing 6458, 6463 (April 22, 1970) and 36 FR certification. requirements. 12857 (July 3, 1971). The Agency’s decision regarding these exemption applications is based on V. Preemption III. Discussion of Comments current medical information and FMCSA received six comments in this literature, and the 2008 Evidence During the period the exemption is in proceeding. Edward Wassels from St. Report, ‘‘Executive Summary on effect, no State shall enforce any law or Louis Missouri commented that the Hearing, Vestibular Function and regulation that conflicts with this hearing exemption process is unclear Commercial Motor Driving Safety.’’ The exemption with respect to a person and would like FMCSA to provide an evidence report reached two operating under the exemption.

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VI. Conclusion SUMMARY: FMCSA announces its comment period ended on December 2, Based upon its evaluation of the 29 decision to exempt 11 individuals from 2019, and two comments were received. exemption applications, FMCSA the vision requirement in the Federal FMCSA has evaluated the eligibility exempts the following drivers from the Motor Carrier Safety Regulations of these applicants and determined that hearing standard, § 391.41(b)(11), (FMCSRs) to operate a commercial granting the exemptions to these subject to the requirements cited above: motor vehicle (CMV) in interstate individuals would achieve a level of commerce. They are unable to meet the Jeremy T. Albright (CA) safety equivalent to, or greater than, the vision requirement in one eye for Byron S. Allen (FL) level that would be achieved by Carlos Arellano (CA) various reasons. The exemptions enable complying with § 391.41(b)(10). Ryan Arrington (MN) these individuals to operate CMVs in The physical qualification standard Jeffrey A. Barbuto NH) interstate commerce without meeting for drivers regarding vision found in Dain Covington (VA) the vision requirement in one eye. § 391.41(b)(10) states that a person is Tymekia L. Crawford (TX) DATES: The exemptions were applicable physically qualified to drive a CMV if Brian J. Davlin (NV) on December 3, 2019. The exemptions that person has distant visual acuity of John Fazio (OH) expire on December 3, 2021. at least 20/40 (Snellen) in each eye Alvin Grasty (PA) FOR FURTHER INFORMATION CONTACT: Ms. without corrective lenses or visual Derek Hawkins (NH) acuity separately corrected to 20/40 Emil Iontchev (IL) Christine A. Hydock, Chief, Medical Programs Division, (202) 366–4001, (Snellen) or better with corrective Shane Kennedy (FL) lenses, distant binocular acuity of a least Lacey Mathis (TN) [email protected], FMCSA, Department of Transportation, 1200 20/40 (Snellen) in both eyes with or Billy Joe McClain (NY) without corrective lenses, field of vision Danny W. McGowan (WV) New Jersey Avenue SE, Room W64–224, ° Washington, DC 20590–0001. Office of at least 70 in the horizontal meridian Allan Mitchell (NY) in each eye, and the ability to recognize Ronald Misner (CA) hours are from 8:30 a.m. to 5 p.m., ET, the colors of traffic signals and devices Matthew Moore (TX) Monday through Friday, except Federal Abdiwahab S. Olow (MN) holidays. If you have questions showing red, green, and amber. Timothy Roberts (TN) regarding viewing or submitting III. Discussion of Comments Gilbert L. Swagger (TX) material to the docket, contact Docket Teddy R. Tice (NY) Operations, (202) 366–9826. FMCSA received two comments in this proceeding. Taylor Deist submitted Cameron Thomas (IA) SUPPLEMENTARY INFORMATION: Tyler Turner (TN) a comment disagreeing with the Jerry Ward (NC) I. Public Participation Agency’s decision to grant exemptions Edward Wessels (MO) to the 11 individuals, citing safety A. Viewing Documents and Comments Joseph Williams (MD) concerns related to their vision. The Thomas E. Wray (NC) To view comments, as well as any basis for granting the exemptions is In accordance with 49 U.S.C. documents mentioned in this notice as explained in Section IV of this 31315(b), each exemption will be valid being available in the docket, go to document. FMCSA has evaluated each for 2 years from the effective date unless http://www.regulations.gov/ applicant and determined that granting revoked earlier by FMCSA. The docket?D=FMCSA–2019–0017 and an exemption is likely to achieve a level exemption will be revoked if the choose the document to review. If you of safety greater than, or equal to, that following occurs: (1) The person fails to do not have access to the internet, you which would be achieved absent such comply with the terms and conditions may view the docket online by visiting exemption. of the exemption; (2) the exemption has the Docket Operations in Room W12– Tara Coffey submitted a comment resulted in a lower level of safety than 140 on the ground floor of the DOT disagreeing with the Agency’s decision was maintained prior to being granted; West Building, 1200 New Jersey Avenue to grant exemptions to the 11 or (3) continuation of the exemption SE, Washington, DC 20590, between 9 individuals, citing safety concerns would not be consistent with the goals a.m. and 5 p.m., ET, Monday through related to their vision. The basis for and objectives of 49 U.S.C. 31136(e) and Friday, except Federal holidays. granting exemptions is explained in 31315(b). Section IV of this document. FMCSA B. Privacy Act has determined that all of the Issued on: December 20, 2019. In accordance with 5 U.S.C. 553(c), individuals listed in this notice meet the Larry W. Minor, DOT solicits comments from the public criteria required for an exemption. Associate Administrator for Policy. to better inform its rulemaking process. IV. Basis for Exemption Determination [FR Doc. 2019–28158 Filed 12–27–19; 8:45 am] DOT posts these comments, without BILLING CODE 4910–EX–P edit, including any personal information Under 49 U.S.C. 31136(e) and the commenter provides, to 31315(b), FMCSA may grant an www.regulations.gov, as described in exemption from the FMCSRs for no DEPARTMENT OF TRANSPORTATION the system of records notice (DOT/ALL– longer than a 5-year period if it finds such exemption would likely achieve a Federal Motor Carrier Safety 14 FDMS), which can be reviewed at level of safety that is equivalent to, or Administration www.dot.gov/privacy. greater than, the level that would be II. Background [Docket No. FMCSA–2019–0017] achieved absent such exemption. The On October 31, 2019, FMCSA statute also allows the Agency to renew Qualification of Drivers; Exemption published a notice announcing receipt exemptions at the end of the 5-year Applications; Vision of applications from 11 individuals period. FMCSA grants medical AGENCY: Federal Motor Carrier Safety requesting an exemption from vision exemptions from the FMCSRs for a 2- Administration (FMCSA), DOT. requirement in 49 CFR 391.41(b)(10) year period to align with the maximum and requested comments from the duration of a driver’s medical ACTION: Notice of final disposition. public (84 FR 58441). The public certification.

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The Agency’s decision regarding these in careers ranging for 5 to 72 years. In Matthew J. Morrison (MD) exemption applications is based on the past three years, no drivers were Frederick L. PeLong (IA) medical reports about the applicants’ involved in crashes, and no drivers were Martin S. Reese (CA) vision, as well as their driving records convicted of moving violations in Devin M. Smith (OH) and experience driving with the vision CMVs. All the applicants achieved a Anthony C. White (AL). deficiency. The qualifications, record of safety while driving with their In accordance with 49 U.S.C. 31136(e) experience, and medical condition of vision impairment that demonstrates the and 31315(b), each exemption will be each applicant were stated and likelihood that they have adapted their valid for 2 years from the effective date discussed in detail in the October 31, driving skills to accommodate their unless revoked earlier by FMCSA. The 2019, Federal Register notice (84 FR condition. As the applicants’ ample exemption will be revoked if the 58441) and will not be repeated here. driving histories with their vision following occurs: (1) The person fails to FMCSA recognizes that some drivers deficiencies are good predictors of comply with the terms and conditions do not meet the vision requirement but future performance, FMCSA concludes of the exemption; (2) the exemption has have adapted their driving to their ability to drive safely can be resulted in a lower level of safety than accommodate their limitation and projected into the future. was maintained prior to being granted; demonstrated their ability to drive Consequently, FMCSA finds that in or (3) continuation of the exemption safely. The 11 exemption applicants each case exempting these applicants would not be consistent with the goals listed in this notice are in this category. from the vision requirement in and objectives of 49 U.S.C. 31136(e) and They are unable to meet the vision § 391.41(b)(10) is likely to achieve a 31315(b). requirement in one eye for various level of safety equal to that existing Issued on: December 20, 2019. reasons, including amblyopia, cataract, without the exemption. complete loss of vision, corneal scar, Larry W. Minor, glaucoma, optic nerve atrophy, partial V. Conditions and Requirements Associate Administrator for Policy. optic nerve atrophy, prosthesis, and The terms and conditions of the [FR Doc. 2019–28160 Filed 12–27–19; 8:45 am] retinal detachment. In most cases, their exemption are provided to the BILLING CODE 4910–EX–P eye conditions did not develop recently. applicants in the exemption document Six of the applicants were either born and includes the following: (1) Each with their vision impairments or have driver must be physically examined DEPARTMENT OF TRANSPORTATION had them since childhood. The five every year (a) by an ophthalmologist or individuals that developed their vision optometrist who attests that the vision Federal Railroad Administration conditions as adults have had them for in the better eye continues to meet the [Docket No. FRA–2019–0004–N–20] a range of 6 to 25 years. Although each standard in § 391.41(b)(10) and (b) by a applicant has one eye that does not meet certified medical examiner (ME) who Proposed Agency Information the vision requirement in attests that the individual is otherwise Collection Activities; Comment § 391.41(b)(10), each has at least 20/40 physically qualified under § 391.41; (2) Request corrected vision in the other eye, and, each driver must provide a copy of the AGENCY: Federal Railroad in a doctor’s opinion, has sufficient ophthalmologist’s or optometrist’s Administration (FRA), U.S. Department vision to perform all the tasks necessary report to the ME at the time of the of Transportation (DOT). to operate a CMV. annual medical examination; and (3) Doctors’ opinions are supported by each driver must provide a copy of the ACTION: Notice of information collection; the applicants’ possession of a valid annual medical certification to the request for comment. license to operate a CMV. By meeting employer for retention in the driver’s SUMMARY: Under the Paperwork State licensing requirements, the qualification file, or keep a copy in his/ applicants demonstrated their ability to Reduction Act of 1995 (PRA) and its her driver’s qualification file if he/she is implementing regulations, FRA is operate a CMV with their limited vision self-employed. The driver must also in intrastate commerce, even though informing the public that FRA proposes have a copy of the exemption when to make three minor revisions to the their vision disqualified them from driving, for presentation to a duly driving in interstate commerce. We Quarterly Positive Train Control (PTC) authorized Federal, State, or local Progress Report Form (Form FRA F believe that the applicants’ intrastate enforcement official. driving experience and history provide 6180.165) and Annual PTC Progress an adequate basis for predicting their VI. Preemption Report Form (Form FRA F 6180.166), ability to drive safely in interstate During the period the exemption is in which the Office of Management and commerce. Intrastate driving, like effect, no State shall enforce any law or Budget (OMB) previously approved on interstate operations, involves regulation that conflicts with this September 24, 2018, under its regular substantial driving on highways on the exemption with respect to a person processing procedures. In addition, FRA interstate system and on other roads operating under the exemption. is now proposing to require host built to interstate standards. Moreover, railroads operating FRA-certified PTC driving in congested urban areas VII. Conclusion systems to submit a Statutory exposes the driver to more pedestrian Based upon its evaluation of the 11 Notification of PTC System Failures and vehicular traffic than exists on exemption applications, FMCSA (Form FRA F 6180.177) to fulfill the interstate highways. Faster reaction to exempts the following drivers from the temporary reporting requirement under traffic and traffic signals is generally vision requirement, § 391.41(b)(10), the Positive Train Control Enforcement required because distances between subject to the requirements cited above: and Implementation Act of 2015 (PTCEI them are more compact. These Willie V. Brannon, Jr. (OK) Act), and FRA is proposing an conditions tax visual capacity and Benjamin E. Brown (WY) alternative reporting frequency and driver response just as intensely as Charles L. Gaines (NC) reporting location, as the statutory interstate driving conditions. James L. Houser (NE) mandate authorizes FRA to establish. The applicants in this notice have Andrew J. Kite III (GA) Before submitting this revised driven CMVs with their limited vision Sean P. McSperitt (OR) information collection request (ICR) to

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OMB for regular clearance and approval, Avenue SE, Washington, DC 20590 assess the resources expended to FRA is soliciting public comment on (telephone: (202) 493–6132). retrieve and produce information specific aspects of the proposed ICR SUPPLEMENTARY INFORMATION: requested. See 44 U.S.C. 3501. described below. I. Public Comment Under the PRA II. Background on the Quarterly and DATES: Interested persons are invited to Annual PTC Progress-Related The PRA, 44 U.S.C. 3501–3520, and submit comments on or before February Reporting Requirements 28, 2020. its implementing regulations, 5 CFR part 1320, require Federal agencies to Under the PTCEI Act, each railroad ADDRESSES: Submit written comments provide 60-days’ notice to the public to subject to 49 U.S.C. 20157(a) must on the ICR activities by mail to either: allow comment on information submit an annual progress report to FRA Ms. Hodan Wells, Information collection activities before seeking OMB by March 31, 2016, and annually Collection Clearance Officer, Office of approval of the activities. See 44 U.S.C. thereafter, until it has fully Railroad Safety, Regulatory Analysis 3506, 3507; 5 CFR 1320.8–1320.12. implemented an FRA-certified and Division, FRA, 1200 New Jersey Avenue Specifically, FRA invites interested interoperable PTC system. 49 U.S.C. SE, Washington, DC 20590; or Ms. Kim parties to comment on the following ICR 20157(c)(1). The PTCEI Act specifically Toone, Information Collection Clearance regarding: (1) Whether the information requires each railroad to provide certain Officer, Office of Information collection activities are necessary for information in the annual reports Technology, FRA, 1200 New Jersey FRA to properly execute its functions, regarding its progress toward Avenue SE, Washington, DC 20590. including whether the activities will implementing a PTC system, in addition Commenters requesting FRA to have practical utility; (2) the accuracy of to any other information FRA requests. acknowledge receipt of their respective FRA’s estimates of the burden of the See id. Further, 49 U.S.C. 20157(c)(2) comments must include a self-addressed information collection activities, requires FRA to conduct compliance stamped postcard stating, ‘‘Comments including the validity of the reviews at least annually to ensure each on OMB Control Number 2130–0553,’’ methodology and assumptions used to railroad is complying with its revised and should also include the title of the determine the estimates; (3) ways for PTC Implementation Plan (PTCIP), ICR. Alternatively, comments may be FRA to enhance the quality, utility, and including any FRA-approved emailed to Ms. Wells at hodan.wells@ clarity of the information being amendments. The PTCEI Act requires dot.gov, or Ms. Toone at kim.toone@ collected; and (4) ways for FRA to railroads to provide information to FRA dot.gov. Please refer to the assigned minimize the burden of information that FRA determines is necessary to OMB control number in any collection activities on the public, adequately conduct such compliance correspondence submitted. FRA will including the use of automated reviews. 49 U.S.C. 20157(c)(2). summarize comments received in collection techniques or other forms of Accordingly, under its statutory and response to this notice in a subsequent information technology. See 44 U.S.C. regulatory authority, FRA currently notice and include them in its 3506(c)(2)(A); 5 CFR 1320.8(d)(1). requires, and seeks to continue information collection submission to FRA believes that soliciting public requiring, each subject railroad to OMB for approval. comment may reduce the administrative submit Quarterly PTC Progress Reports FOR FURTHER INFORMATION CONTACT: Ms. and paperwork burdens associated with (Form FRA F 6180.165) and Annual Hodan Wells, Information Collection the collection of information that PTC Progress Reports (Form FRA F Clearance Officer, Office of Railroad Federal statutes and regulations 6180.166), until the railroad finishes Safety, Regulatory Analysis Division, mandate. In summary, FRA reasons that fully implementing an FRA-certified FRA, 1200 New Jersey Avenue SE, comments received will advance three and interoperable PTC system on its Washington, DC 20590 (telephone: (202) objectives: (1) Reduce reporting required main lines. See 49 U.S.C. 493–0440); or Ms. Kim Toone, burdens; (2) organize information 20157(c)(1)–(2); see also 49 CFR Information Collection Clearance collection requirements in a ‘‘user- 236.1009(h). Each subject railroad must Officer, Office of Information friendly’’ format to improve the use of submit these quarterly reports by the Technology, FRA, 1200 New Jersey such information; and (3) accurately due dates in the following table: 1

Coverage period Due dates for quarterly PTC progress reports

Q1 ...... January 1–March 31 ...... April 30. Q2 ...... April 1–June 30 ...... July 31. Q3 ...... July 1–September 30 ...... October 31. Q4 ...... October 1–December 31 ...... January 31.

Each applicable railroad must submit law, only 35 railroads 2 (including 32 and Annual PTC Progress Reports (Form its Quarterly PTC Progress Reports on host railroads and 3 tenant-only FRA F 6180.166). Form FRA F 6180.165 and its Annual commuter railroads) are currently III. Proposed Revisions to the Quarterly PTC Progress Reports on Form FRA F required to submit Quarterly PTC and Annual PTC Progress Report Forms 6180.166 on FRA’s Secure Information Progress Reports (Form FRA F 6180.165) Repository at https://sir.fra.dot.gov. By On September 24, 2018, OMB approved the Quarterly PTC Progress

1 As stated on the cover page of the Quarterly PTC which the railroad completes full PTC system that by law, such reporting requirements no longer Progress Report (Form FRA F 6180.165), ‘‘A railroad implementation.’’ See 49 U.S.C. 20157(c)(2). apply to the 4 host railroads that fully implemented must submit quarterly reports until a PTC system 2 Currently, 42 railroads are directly subject to the PTC systems as of December 31, 2018, and 3 other is fully implemented on all required main lines statutory mandate to implement a PTC system. tenant-only commuter railroads that fully under 49 U.S.C. 20157 and 49 CFR part 236, subpart However, only 35 railroads are currently subject to implemented their PTC systems to date. I, including a quarterly report for the quarter in these progress-related reporting requirements, given

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Report (Form FRA F 6180.165) and hardware for the implementation of its drop-down menu in Section 6 (entitled Annual PTC Progress Report (Form FRA PTC system, consistent with the ‘‘Update on Interoperability Progress’’) F 6180.166) for a period of 18 months, governing FRA-approved PTCIP. This of both forms to include the same expiring on March 31, 2020. The current would encompass nearly all railroads options: ‘‘Not Started,’’ ‘‘Installing,’’ Quarterly PTC Progress Report Form subject to the statutory mandate that are ‘‘Pre-field Testing,’’ ‘‘Field Testing,’’ and Annual PTC Progress Report Form, still in the process of fully ‘‘Revenue Service Demonstration,’’ 4 and as approved through March 31, 2020, implementing their PTC systems— ‘‘Operational/Complete.’’ can be accessed and downloaded in including the railroads currently field Third, in Section 6 (entitled ‘‘Update FRA’s eLibrary at: https:// testing their PTC systems, conducting on Interoperability Progress’’) of both www.fra.dot.gov/eLib/details/L17365 revenue service demonstration (RSD) or the quarterly form and the annual form, and https://www.fra.dot.gov/eLib/ expanding RSD to additional main lines, FRA proposes revising the heading of details/L17366, respectively. These and conducting interoperability testing the last column in the table to state, versions of the forms took into account with their PTC-required tenant ‘‘Current Tenant Interoperability prior comments from the Association of railroads—given that railroads generally Status,’’ instead of ‘‘Current Tenant American Railroads (AAR) on behalf of needed to finish acquiring spectrum and Implementation Status,’’ to help ensure itself and its member railroads; the installing PTC system hardware by proper interpretation. For example, at American Public Transportation December 31, 2018, to qualify for and least one commuter railroad has Association on behalf of the Northeast obtain FRA’s approval of an alternative improperly listed the status of a Class I Illinois Commuter Rail System (Metra), schedule and sequence by law. See 49 tenant railroad’s progress toward fully the Utah Transit Authority, the Tri- U.S.C. 20157(a)(3)(B). implementing a PTC system on the County Metropolitan Transportation The only railroads for which the Class I railroad’s own main lines (so as District of Oregon, and the Fort Worth above sections—Sections 2, 3.1, and a host railroad), instead of the Class I Transportation Authority; and industry 3.3—would remain mandatory are those railroad’s status specifically as a tenant stakeholders during FRA’s public railroads that are still in the spectrum railroad on that commuter railroad’s meeting on April 19, 2016. FRA acquisition or hardware installation required main lines. FRA expects that published minutes from the public phases, which is the case for certain this minor revision might make this meeting on www.regulations.gov under railroads that, for example: (A) heading clearer. Docket No. FRA 2016–0002–N–17.3 Commenced regularly scheduled Railroads’ submission of Quarterly Following the 60-day public comment intercity passenger or commuter rail PTC Progress Reports (Form FRA F period after this notice is published, service after December 31, 2018, and 6180.165) and Annual PTC Progress FRA will request OMB’s re-approval of therefore did not need to qualify for or Reports (Form FRA F 6180.166)— the forms, with the three changes obtain FRA’s approval of an alternative consistent with the reporting described below. First, per the schedule; (B) are in the process of requirements under the PTCEI Act— industry’s and OMB’s previous constructing new main lines subject to enables FRA to effectively monitor recommendations, FRA has considered the statutory mandate; or (C) have one railroads’ progress toward fully ways in which it can phase out certain or more lines that are subject to a implementing FRA-certified and requirements of the Quarterly PTC temporary main line track exception interoperable PTC systems on the Progress Report (Form FRA F 6180.165) and must still implement a PTC system. approximately 57,855 route miles and Annual PTC Progress Report (Form In those three cases, FRA would still subject to the statutory mandate. Such need to obtain updates regarding such FRA F 6180.166), while railroads reporting also enables FRA to identify railroads’ progress toward acquiring all continue to fully implement their PTC railroad-specific and industry-wide necessary spectrum and installing all systems on the required main lines. obstacles to full PTC system Although many of the specific necessary PTC system hardware. Second, in Section 4 (entitled implementation and to provide timely reporting requirements are statutorily ‘‘Installation/Track Segment Progress’’) technical assistance. Moreover, this required under 49 U.S.C. of both the quarterly form and the reporting framework enables FRA to 20157(c)(1)(A)–(G), FRA is amenable to annual form, FRA proposes adding a provide the public and Congress with making certain sections of both forms new option to the drop-down menus. data-driven status reports on industry’s optional for most railroads, at this stage. Currently, the options include only: progress toward implementing this Specifically, FRA is proposing to make ‘‘Not Started,’’ ‘‘Installing,’’ ‘‘Field mandated technology on a regular basis, the following sections of both the Testing,’’ ‘‘Revenue Service which will be especially important Quarterly PTC Progress Report (Form Demonstration,’’ and ‘‘Operational/ throughout 2020, as the statutory FRA F 6180.165) and Annual PTC Complete.’’ Given that some railroads deadline for most mandated railroads to Progress Report (Form FRA F 6180.166) are beyond the installation phase, but fully implement PTC systems is optional for most railroads: Section 2 not yet at the field testing phase on December 31, 2020. (‘‘Update on Spectrum’’); Section 3.1 multiple track segments, FRA proposes IV. Proposal for a New Mandatory (‘‘Locomotive Status’’), except the to add a new option to the drop-down software-related narrative section; and Form—Statutory Notification of PTC menu, specifically labeled, ‘‘Pre-field System Failures (Form FRA F 6180.177) Section 3.3 (‘‘Infrastructure/Wayside Testing.’’ That way, such railroads will Status’’). not need to select ‘‘Installing’’ or ‘‘Field Under the Early Adoption provisions FRA proposes that those sections Testing,’’ neither of which would in the PTCEI Act, the statutory mandate would be optional for any railroad that accurately represent the actual status of explicitly recognizes that certain PTC previously demonstrated to FRA it had a railroad’s specific track segment. This system failures (e.g., initialization finished acquiring all necessary minor revision to the forms will help failures, cut outs, and malfunctions) spectrum and installing all PTC system ensure clearer and more accurate will occur while, and even after, reporting, without imposing an 3 For a summary of past oral and written 4 Previously, the relevant part of the drop-down comments and FRA’s responses to the comments, additional reporting burden. For menu allowed a host railroad to indicate only that please see 81 FR 28140 (May 9, 2016); 81 FR 65702 consistency with Section 4, FRA also a tenant railroad was generally conducting (Sept. 23, 2016); and 83 FR 39152 (Aug. 8, 2018). proposes to update the corresponding ‘‘testing,’’ without specifying the stage of testing.

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railroads fully implement FRA-certified submit a notification to the appropriate explicitly required under 49 U.S.C. and interoperable PTC systems on the FRA regional office within 7 days of the 20157(j)(4) and as described below. mandated main lines. See 49 U.S.C. system failure, and the notification must With respect to the default reporting 20157(j)(1)–(4). The PTCEI Act include a description of the safety deadline under the PTCEI Act (i.e., temporarily prohibits FRA from measures the railroad has in place. within 7 days of each occurrence), many imposing or enforcing the operational However, the PTCEI Act also authorizes railroads have stressed that notifying restrictions (e.g., speed restrictions) FRA to establish an alternative reporting FRA each time an FRA-certified PTC under FRA’s regulations governing deadline (instead of within 7 days of system fails to initialize, cuts out, or signal and train control systems each occurrence) and an alternative malfunctions would be extremely (specifically, 49 CFR 236.567) and reporting location (instead of submitting burdensome, given the frequency of FRA’s PTC regulations (specifically, 49 the notifications to the appropriate FRA such occurrences. As an example, one CFR 236.1029), ‘‘provided that such region). See 49 U.S.C. 20157(j)(4); 49 commuter railroad reported more than carrier operates at an equivalent or CFR 1.89. 75 instances of initialization failures, greater level of safety than the level To be clear, FRA is authorized to cut outs, and malfunctions, during a achieved immediately prior to the use or establish only an alternative reporting one-week period in October 2019. FRA implementation of its [PTC] system.’’ 49 deadline and an alternative reporting proposes requiring that a railroad U.S.C. 20157(j)(1). location, and the statutory mandate does consolidate such information prior to This statutory prohibition specifying not permit FRA to change either the submission, rather than notifying FRA that ‘‘any railroad . . . shall not be scope of this temporary reporting within 7 days of each occurrence and subject to the operational restrictions’’ requirement or the information that submitting such data in a piecemeal under 49 CFR 236.567 or 236.1029 is in must be submitted. At multiple industry manner, which could occur under the effect from October 29, 2015, to meetings, FRA proactively sought default requirement in 49 U.S.C. approximately December 31, 2021.5 See railroads’ input regarding possible 20157(j)(4). 49 U.S.C. 20157(j)(1). In addition, the alternative reporting deadlines and Acknowledging railroads’ concerns PTCEI Act established a new reporting locations, focusing on options that about the burdens associated with the requirement that applies only during would be reasonable and consistent default reporting frequency under 49 that period and only to PTC systems with the statutory reporting framework.6 U.S.C. 20157(j)(4), FRA proposes that FRA has certified and have been At the industry meetings, FRA and instead a two-tiered or bifurcated implemented, including on a subset of industry stakeholders generally reached reporting deadline/frequency for this a railroad’s mandated main lines. 49 a consensus about a reasonable temporary reporting requirement, where U.S.C. 20157(j)(4). For example, alternative for a reporting location. the reporting frequency would depend acknowledging the incremental nature Accordingly, FRA proposes that the on whether or not the host railroad has of implementation, the PTCEI Act Statutory Notification of PTC System fully implemented an FRA-certified and required Class I railroads to demonstrate Failures, under 49 U.S.C. 20157(j)(4), interoperable PTC system on all its they had ‘‘implemented a [PTC] system must be submitted to FRA’s required route miles. First, if a host or initiated revenue service headquarters, using an electronic, web- railroad is operating an FRA-certified demonstration on the majority of [PTC- based form, instead of notifying each PTC system but the railroad is still in mandated] territories . . . or route miles applicable FRA region. Such centralized the process of fully implementing the that are owned or controlled by such reporting would better enable FRA to PTC system on its required main lines, carrier[s],’’ to qualify for an alternative aggregate and analyze the required data FRA proposes that such railroads must schedule and sequence by law. 49 regarding PTC system initialization submit a quarterly notification of the U.S.C. 20157(a)(3)(B)(vi) (emphasis failures, cut outs, and malfunctions. PTC system’s initialization failures, cut added). FRA is currently designing and outs, and malfunctions, during the As a default, the reporting developing a web-based form for the ongoing implementation process. Such requirement under 49 U.S.C. 20157(j)(4) Statutory Notification of PTC System quarterly notifications would be due on specifies that when an FRA-certified Failures (Form FRA F 6180.177), and the same dates as the Quarterly PTC PTC system ‘‘fails to initialize, cuts out, FRA notes that the electronic form will Progress Reports (Form FRA F or malfunctions,’’ the railroad must contain fields for the information 6180.165):

Due dates for quarterly notifica- Coverage period tions of PTC system failures

Q1 ...... January 1–March 31 ...... April 30. Q2 ...... April 1–June 30 ...... July 31. Q3 ...... July 1–September 30 ...... October 31. Q4 ...... October 1–December 31 ...... January 31.

For example, this would mean that will be in the process of fully railroads to submit failure-related most host railroads that have obtained implementing FRA-certified and notifications on a quarterly basis PTC System Certification to date would interoperable PTC systems on their (instead of within 7 days of each submit quarterly notifications until mandated main lines until December 31, occurrence) during the implementation January 31, 2021, as most host railroads 2020. FRA believes that requiring host process is reasonable, given that such

5 Specifically, the PTCEI Act states that the Early 6 For example, FRA solicited input about the several AAR PTC Executive Committee meetings, Adoption period ends one year after the last Class statutory failure-related reporting requirement at including participation by the Class I railroads, I railroad obtains PTC System Certification from FRA’s first PTC symposium on June 15, 2018; two Amtrak, Metra, the Southern California Regional FRA and finishes fully implementing a PTC system of FRA’s three PTC collaboration sessions during Rail Authority (Metrolink), and other host railroads on all of its required main lines. 2019, on February 6, 2019, and October 2, 2019; and subject to the statutory mandate.

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host railroads are concurrently focusing Notifications of PTC System Failures monitor trends in PTC system reliability on activating their FRA-certified PTC throughout 2020, and then monthly throughout the country and focus its systems on their remaining required notifications throughout 2021.8 resources, for example, on any areas main lines and achieving As noted above, the PTCEI Act where such failures are occurring at a interoperability with their tenant authorizes FRA to establish only an high rate. FRA seeks comment about railroads by December 31, 2020. FRA alternative reporting deadline (instead this proposed aspect of the information believes that receiving the failure- of within 7 days of each occurrence) and collection. Although a categorization of related data on a quarterly basis would an alternative reporting location such information by state and still enable FRA to compile and analyze (instead of submitting the notifications subdivision is FRA’s preference, FRA the data to understand and monitor the to the appropriate FRA region). The may modify its approach based on performance and reliability of PTC proposed Statutory Notification of PTC industry’s comments submitted during systems over time. System Failures (Form FRA F 6180.177) the 60-day comment period. Please note, Second, once a host railroad has fully would, by necessity, contain a table in however, that absent a breakdown by implemented its FRA-certified and which the host railroad would identify state and subdivision, FRA would interoperable PTC system on all its the number of times each type of PTC require host railroads to identify the required main lines, FRA proposes that system failure identified in the statutory number of PTC system initialization the host railroad must submit the mandate occurred during the reporting failures, cut outs, and malfunctions per Statutory Notification of PTC System period: Any failure to initialize, any cut FRA region,10 at a minimum. That Failures (Form FRA F 6180.177) out, and any malfunction, as defined alternative approach would retain the monthly, instead of quarterly. This is below. 49 U.S.C. 20157(j)(4). During same minimum level of geographical still significantly less burdensome than FRA’s industry meetings to date, information about where such PTC the default reporting deadline under 49 railroads have requested clarification system failures are occurring, as U.S.C. 20157(j)(4)—i.e., within 7 days of regarding the meaning and scope of explicitly required under the default each discrete occurrence. For example, these statutory terms. Given that the reporting requirement under 49 U.S.C. upon FRA’s receipt of OMB’s approval, statutory mandate requires railroads to 20157(j)(4). each of the four host railroads that fully notify FRA any time a PTC system ‘‘fails Also, based on railroads’ input at implemented FRA-certified and to initialize, cuts out, or malfunctions,’’ industry meetings, FRA notes that the interoperable PTC systems by December FRA interprets these terms reasonably proposed Statutory Notification of PTC 31, 2018,7 would immediately begin broadly and in accordance with their System Failures (Form FRA F 6180.177) submitting monthly notifications, rather plain language meaning, to encompass would additionally require a host than piecemeal notifications within 7 the following, for purposes of this railroad to list a percentage, days each time its PTC system fails to temporary reporting requirement: demonstrating how the occurrences of initialize, cuts out, or malfunctions. • Failure to Initialize: Any PTC system initialization failures, cut FRA proposes that the due date for the locomotive or train that departs the outs, and malfunctions compare to all monthly notification would be the 15th initial terminal without being governed operations on that host railroad’s PTC- of the following month, so, for example, by a PTC system. • governed main lines.11 Several railroads the notification regarding PTC system Cut Out: Any cut out of a PTC have commented that, without such a initialization failures, cut outs, and system en route, including when the percentage or context, the frequency of malfunctions during March 2020 would PTC system cuts out on its own or a these failures might otherwise seem be due by April 15, 2020, for the subset person cuts out the system, unless the high, and a percentage would help of host railroads that have fully cut out was necessary to exit PTC- convey the actual rate of such failures. implemented an FRA-certified PTC governed territory and enter non-PTC territory. In addition, at industry meetings to system. • The other host railroads subject to the Malfunction: Any failure of a PTC date, multiple railroads have expressed statutory mandate that are operating system, subsystem, or component that that FRA should not require tenant FRA-certified PTC systems but that are prevents, or could prevent, the PTC railroads to submit this failure-related still in the process of fully system from performing the functions information directly to FRA, but via implementing their PTC systems (e.g., 6 mandated under 49 U.S.C. 20157(i)(5) their host railroads. Accordingly, FRA Class I railroads, Amtrak, and the and 49 CFR part 236, subpart I. proposes that only host railroads subject The proposed web-based form (Form Southeastern Pennsylvania to the statutory mandate (currently 36 FRA F 6180.177) would require host Transportation Authority, as of host railroads) would submit the railroads to identify the number of PTC November 1, 2019, and any other host Statutory Notification of PTC System system initialization failures, cut outs, railroad that obtains PTC System Failures (Form FRA F 6180.177), and and malfunctions by state and Certification going forward) would these notifications would encompass subdivision 9 to enable FRA to closely transition from submitting the Statutory both a host railroad’s and its tenant railroads’ PTC system initialization Notifications of PTC System Failures 8 By law, this temporary reporting requirement 12 (Form FRA F 6180.177) on a quarterly under 49 U.S.C. 20157(j)(4) sunsets on failures, cut outs, and malfunctions. basis to a monthly basis, when they approximately December 31, 2021—or more finish fully implementing their PTC specifically, one year after the last Class I railroad 10 For a map outlining FRA’s eight regions, please systems on their required main lines. obtains PTC System Certification from FRA and see: https://railroads.dot.gov/divisions/regional- finishes fully implementing an FRA-certified and offices/regional-offices. For simplicity, in general, this two- interoperable PTC system on all its required main 11 FRA recognizes that this specific type of tiered reporting framework would mean lines. information is not required under 49 U.S.C. that most host railroads that have 9 Or any other categorization a host railroad uses 20157(j)(4), and FRA would be collecting such obtained PTC System Certification in its timetables, including district, territory, main information under its general authority under 49 line, branch, or corridor. FRA recognizes that this CFR 236.1009(h). would submit quarterly Statutory specific type of information (i.e., a breakdown by 12 This approach would be consistent with the state and subdivision) is not required under 49 existing regulatory requirement specifying that a 7 Metrolink, the North County Transit District, the U.S.C. 20157(j)(4), and FRA would be collecting tenant railroad must report a PTC system failure or Port Authority Trans-Hudson, and Portland & such information under its general authority under cut out to ‘‘a designated railroad officer of the host Western Railroad. 49 CFR 236.1009(h). Continued

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However, FRA seeks comments about V. Overview of Information Collection Affected Public: Businesses. how to structure this element of the FRA will submit this ICR to OMB for Frequency of Submission: On web-based form in a way that would regular clearance as required by the occasion (depending on the specific both minimize the reporting burden and PRA. reporting requirement). distinctly represent the number of PTC Type of Request: Revision of a Respondent Universe: 35 railroads 14 system initialization failures, cut outs, currently approved information (including 32 host railroads and 3 and malfunctions per tenant railroad. collection. tenant-only commuter railroads) for the Finally, as noted above, 49 U.S.C. Title: Positive Train Control and Quarterly PTC Progress Report (Form 20157(j)(4) explicitly requires a railroad Other Signal Systems (including the FRA F 6180.165) and Annual PTC to provide in the notification ‘‘a Quarterly Positive Train Control Progress Report (Form FRA F 6180.166); description of the safety measures the Progress Report, the Annual Positive 36 host railroads for the Statutory affected railroad . . . has in place,’’ so Train Control Progress Report, and the Notification of PTC System Failures the table in the web-based Statutory Statutory Notification of Positive Train (Form FRA F 6180.177); and varies for Notification of PTC System Failures Control System Failures).13 other information collections under (Form FRA F 6180.177) would contain OMB Control Number: 2130–0553. OMB Control No. 2130–0553, as noted fields for a host railroad to enter such Form(s): FRA F 6180.165, FRA F in the table below. information. 6180.166, and FRA F 6180.177. Respondent Burden:

Total annual CFR section/subject Respondent universe Total annual responses Average time per response Total annual dollar cost burden hours equivalent

235.6(c)—Expedited application for approval of certain 42 railroads ...... 10 expedited applications ...... 5 hours ...... 50 3,800 changes described in this section. —Copy of expedited application to labor union ...... 42 railroads ...... 10 copies ...... 30 minutes ...... 5 380 —Railroad letter rescinding its request for expedited applica- 42 railroads ...... 1 letter ...... 6 hours ...... 6 456 tion of certain signal system changes. —Revised application for certain signal system changes ...... 42 railroads ...... 1 application ...... 5 hours ...... 5 380 —Copy of railroad revised application to labor union ...... 42 railroads ...... 1 copy ...... 30 minutes ...... 5 38 236.1—Railroad maintained signal plans at all interlockings, 700 railroads ...... 25 plan changes ...... 15 minutes ...... 6.3 479 automatic signal locations, and controlled points, and up- dates to ensure accuracy. 236.15—Designation of automatic block, traffic control, train 700 railroads ...... 10 timetable instructions ...... 30 minutes ...... 5 380 stop, train control, cab signal, and PTC territory in time- table instructions. 236.18—Software management control plan—New railroads 2 railroads ...... 2 plans ...... 160 hours ...... 320 24,320 236.23(e)—The names, indications, and aspects of roadway 700 railroads ...... 2 modifications ...... 1 hour ...... 2 152 and cab signals shall be defined in the carrier’s Operating Rule Book or Special Instructions. Modifications shall be filed with FRA within 30 days after such modifications be- come effective. 236.587(d)—Certification and departure test results ...... 742 railroads ...... 4,562,500 train departures ..... 5 seconds ...... 6,337 481,612 236.905(a)—Railroad Safety Program Plan (RSPP)—New 2 railroads ...... 2 RSPPs ...... 40 hours ...... 80 6,080 railroads. 236.913(a)—Filing and approval of a joint Product Safety 742 railroads ...... 1 joint plan ...... 2,000 hours ...... 2,000 230,000 Plan (PSP). (c)(1)—Informational filing/petition for special approval ...... 742 railroads ...... 5 filings/approval petitions .... 50 hours ...... 25 1,900 (c)(2)—Response to FRA’s request for further data after in- 742 railroads ...... 25 data calls/documents ...... 5 hours ...... 1 hour 76 formational filing. (d)(1)(ii)—Response to FRA’s request for further information 742 railroads ...... 25 data calls/documents ...... 1 hour ...... 25 19 within 15 days after receipt of the Notice of Product Devel- opment (NOPD). (d)(1)(iii)—Technical consultation by FRA with the railroad on 742 railroads ...... 25 technical consultations ..... 5 hours ...... 1.3 hour 99 the design and planned development of the product. (d)(1)(v)—Railroad petition to FRA for final approval of 742 railroads ...... 25 petitions ...... 1 hour ...... 25 19 NOPD. (d)(2)(ii)—Response to FRA’s request for additional informa- 742 railroads ...... 1 request ...... 50 hours ...... 50 3,800 tion associated with a petition for approval of PSP or PSP amendment. (e)—Comments to FRA on railroad informational filing or 742 railroads ...... 5 comments/letters ...... 10 hours ...... 5 380 special approval petition. (h)(3)(i)—Railroad amendment to PSP ...... 742 railroads ...... 2 amendments ...... 20 hours ...... 40 3,040 (j)—Railroad field testing/information filing document ...... 742 railroads ...... 1 field test document ...... 100 hours ...... 100 7,600 236.917(a)—Railroad retention of records: results of tests 13 railroads with PSP ...... 13 PSP safety results ...... 160 hours ...... 2,080 158,080 and inspections specified in the PSP. (b)—Railroad report that frequency of safety-relevant haz- 13 railroads ...... 1 report ...... 40 hours ...... 40 3,040 ards exceeds threshold set forth in PSP. (b)(3)—Railroad final report to FRA on the results of the 13 railroads ...... 1 report ...... 10 hours ...... 10 760 analysis and countermeasures taken to reduce the fre- quency of safety-relevant hazards. 236.919(a)—Railroad Operations and Maintenance Manual 13 railroads ...... 1 OMM update ...... 40 hours ...... 40 3,040 (OMM). (b)—Plans for proper maintenance, repair, inspection, and 13 railroads ...... 1 plan update ...... 40 hours ...... 40 3,040 testing of safety-critical products. (c)—Documented hardware, software, and firmware revisions 13 railroads ...... 1 revision ...... 40 hours ...... 40 3,040 in OMM. 236.921 and 923(a)—Railroad Training and Qualification 13 railroads ...... 1 program ...... 40 hours ...... 40 3,040 Program. 236.923(b)—Training records retained in a designated loca- 13 railroads ...... 350 records ...... 10 minutes ...... 58 4,408 tion and available to FRA upon request. Form FRA F 6180.165—Quarterly PTC Progress Report 35 railroads ...... 140 reports/forms ...... 23.22 hours ...... 3,251 247,076 Form (49 U.S.C. 20157(c)(2)).

railroad as soon as safe and practicable.’’ See 49 14 Currently, 42 railroads are directly subject to apply to the 4 host railroads that fully implemented CFR 236.1029(b)(4) (emphasis added). the statutory mandate to implement a PTC system. PTC systems as of December 31, 2018, and 3 other 13 FRA makes a technical correction to the title of However, only 35 railroads are currently subject to tenant-only commuter railroads that fully these progress-related reporting requirements, given OMB Control Number 2130–0553. implemented their PTC systems to date. that by law, such reporting requirements no longer

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Total annual CFR section/subject Respondent universe Total annual responses Average time per response Total annual dollar cost burden hours equivalent

Form FRA F 6180.166—Annual PTC Progress Report Form 35 railroads ...... 35 reports/forms ...... 40.12 hours ...... 1,404 106,704 (49 U.S.C. 20157(c)(1) and 49 CFR 236.1009(a)(5)). Form FRA F 6180.177—Statutory Notification of PTC Sys- 36 railroads ...... 190 reports/forms ...... 1 hour ...... 190 14,440 tem Failures (*New Form* Under 49 U.S.C. 20157(j)(4)). 236.1001(b)—A railroad’s additional or more stringent rules 36 railroads ...... 1 rule or instruction ...... 40 hours ...... 40 4,600 than prescribed under 49 CFR part 236, subpart I. 236.1005(b)(4)(iii)—A railroad’s request for a de minimis ex- 7 Class I railroads ...... 1 exception request ...... 40 hours ...... 40 3,040 ception, in a PTCIP or an RFA, based on a minimal quan- tity of PIH materials traffic. (g)(1)(i)—A railroad’s request to temporarily reroute trains 36 railroads ...... 45 rerouting extension re- 8 hours ...... 360 27,360 not equipped with a PTC system onto PTC-equipped quests. tracks and vice versa during certain emergencies. (g)(1)(ii)—A railroad’s written or telephonic notice to the ap- 36 railroads ...... 45 written or telephonic no- 2 hours ...... 90 6,840 plicable FRA Regional Administrator of the conditions ne- tices. cessitating emergency rerouting and other required infor- mation under 236.1005(i). (g)(2)—A railroad’s temporary rerouting request due to 36 railroads ...... 720 requests ...... 8 hours ...... 5,760 437,760 planned maintenance not exceeding 30 days. (h)(1)—A response to any request for additional information 36 railroads ...... 10 requests ...... 2 hours ...... 20 1,520 from the FRA Regional Administrator or Associate Admin- istrator, prior to commencing rerouting due to planned maintenance. (h)(2)—A railroad’s request to temporarily reroute trains due 36 railroads ...... 160 requests ...... 8 hours ...... 1,280 97,280 to planned maintenance exceeding 30 days. 236.1006(b)(4)(iii)(B)—A progress report due by December 36 railroads ...... 5 reports ...... 16 hours ...... 80 6,080 31, 2020, and by December 31, 2022, from any Class II or III railroad utilizing a temporary exception under this sec- tion. 236.1007(c)—An HSR–125 document accompanying a host 36 railroads ...... 1 HSR–125 document ...... 3,200 hours ...... 3,200 368,000 railroad’s PTCSP, for operations over 125 mph. (c)(1)—A railroad’s request for approval to use foreign serv- 36 railroads ...... 1 request ...... 8,000 hours ...... 8,000 608,000 ice data, prior to submission of a PTCSP. (d) (formerly (e))—A railroad’s request in a PTCSP that FRA 36 railroads ...... 1 request ...... 1,000 hours ...... 1,000 115,000 excuse compliance with one or more of this section’s re- quirements. 236.1009(a)(2)—A PTCIP if a railroad becomes a host rail- 264 railroads ...... 1 PTCIP ...... 535 hours ...... 535 61,525 road of a main line requiring the implementation of a PTC system, including the information under 49 U.S.C. 20157(a)(2) and 49 CFR 236.1011. (a)(3)—Any new PTCIPs jointly filed by a host railroad and a 264 railroads ...... 1 joint PTCIP ...... 267 hours ...... 267 30,705 tenant railroad. (b)(1)—A host railroad’s submission, individually or jointly 264 railroads ...... 1 document ...... 8 hours ...... 8 608 with a tenant railroad or PTC system supplier, of an un- modified Type Approval. (b)(2)—A host railroad’s submission of a PTC Development 264 railroads ...... 1 PTCDP ...... 2,000 hours ...... 2,000 152,000 Plan (PTCDP) with the information required under 49 CFR 236.1013, requesting a Type Approval for a PTC system that either does not have a Type Approval or has a Type Approval that requires one or more variances. (e)(3)—Any request for full or partial confidentiality of a 42 railroads ...... 10 confidentiality requests ..... 8 hours ...... 80 6,080 PTCIP, Notice of Product Intent (NPI), PTCDP, or PTCSP. (h)—Any responses or documents submitted in connection 36 railroads ...... 36 interviews and documents 4 hours ...... 144 10,944 with FRA’s use of its authority to monitor, test, and inspect processes, procedures, facilities, documents, records, de- sign and testing materials, artifacts, training materials and programs, and any other information used in the design, development, manufacture, test, implementation, and oper- ation of the PTC system, including interviews with railroad personnel. (j)(2)(iii)—Any additional information provided in response to 36 railroads ...... 20 documents ...... 400 hours ...... 8,000 608,000 FRA’s consultations or inquiries about a PTCDP or PTCSP. 236.1011(e)—Any public comment on PTCIPs, NPIs, 36 railroads ...... 2 public comments ...... 8 hours ...... 16 1,216 PTCDPs, and PTCSPs. 236.1015—Any new host railroad’s PTCSP meeting all con- 264 railroads ...... 1 PTCSP ...... 8,000 hours ...... 8,000 608,000 tent requirements under 49 CFR 236.1015. (g)—A PTCSP for a PTC system replacing an existing cer- 36 railroads ...... 1 PTCSP ...... 3,200 hours ...... 3,200 243,200 tified PTC system. (h)—A quantitative risk assessment, if FRA requires one to 36 railroads ...... 1 assessment ...... 3,200 hours ...... 3,200 243,200 be submitted. 236.1017(a)—An independent third-party assessment, if FRA 21 railroads ...... 1 assessment ...... 1,600 hours ...... 1,600 184,000 requires one to be conducted and submitted. (b)—A railroad’s written request to confirm whether a specific 21 railroads ...... 1 written request ...... 8 hours ...... 8 608 entity qualifies as an independent third party. —Further information provided to FRA upon request ...... 21 railroads ...... 1 set of additional information 20 hours...... 20 1,520 (d)—A request not to provide certain documents otherwise 21 railroads ...... 1 request ...... 20 hours ...... 20 1,520 required under Appendix F for an independent, third-party assessment. (e)—A request for FRA to accept information certified by a 21 railroads ...... 1 request ...... 32 hours ...... 32 2,432 foreign regulatory entity for purposes of 49 CFR 236.1017 and/or 236.1009(i). 236.1019(b)—A request for a passenger terminal main line 37 railroads ...... 1 MTEA ...... 160 hours ...... 160 12,160 track exception (MTEA). (c)(1)—A request for a limited operations exception (based 37 railroads ...... 1 request and/or plan ...... 160 hours ...... 160 12,160 on restricted speed, temporal separation, or a risk mitiga- tion plan). 236.1021(a)–(d)—Any request for amendment (RFA) to a 36 railroads ...... 10 RFAs ...... 160 hours ...... 1,600 121,600 railroad’s PTCIP, PTCDP, and/or PTCSP. (e)—Any public comments, if an RFA includes a request for 5 interested parties ...... 10 RFA public comments ...... 16 hours ...... 160 12,160 approval of a discontinuance or material modification of a signal or train control system and a FEDERAL REGISTER no- tice is published. 236.1023(a)—A railroad’s PTC Product Vendor List, which 36 railroads ...... 2 updated lists ...... 8 hours ...... 16 1,216 must be continually updated.

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Total annual CFR section/subject Respondent universe Total annual responses Average time per response Total annual dollar cost burden hours equivalent

(b)(2)–(3)—A vendor’s or supplier’s notification, upon receipt 10 vendors ...... 5 notifications ...... 8 hours ...... 4 304 of a report of any safety-critical failure of its product, to any railroads using the product. (d)—A railroad’s submission, to the applicable vendor or 36 railroads ...... 2.5 notifications ...... 16 hours ...... 40 3,040 supplier, of the railroad’s procedures for action upon notifi- cation of a safety-critical failure, upgrade, patch, or revi- sion to the PTC system and actions to be taken until it is adjusted, repaired, or replaced. (e)—A railroad’s database of all safety-relevant hazards, 36 railroads ...... 36 database updates ...... 16 hours ...... 576 43,776 which must be maintained after the PTC system is placed in service. (e)(1)—A railroad’s notification to the vendor or supplier and 36 railroads ...... 5 notifications ...... 8 hours ...... 4 304 FRA if the frequency of a safety-relevant hazard exceeds the threshold set forth in the PTCDP and PTCSP, and about the failure, malfunction, or defective condition that decreased or eliminated the safety functionality. (e)(2)—Continual updates about any and all subsequent fail- 36 railroads ...... 5 updates ...... 8 hours ...... 4 304 ures. (g)—A railroad’s and vendor’s or supplier’s report, upon FRA 36 railroads ...... 5 reports ...... 40 hours ...... 20 1,520 request, about an investigation of an accident or service difficulty due to a manufacturing or design defect and their corrective actions. (h)—A PTC system vendor’s or supplier’s reports of any 10 vendors ...... 5 reports ...... 8 hours ...... 4 304 safety-relevant failures, defective conditions, previously unidentified hazards, recommended mitigation actions, and any affected railroads. 236.1029(b)(4)—A report of an en route failure, other failure, 36 railroads ...... 1,000 reports ...... 30 minutes ...... 500 38,000 or cut out to a designated railroad officer of the host rail- road. (h)—An annual report of PTC system failures due April 16th 36 railroads ...... 36 reports ...... 8 hours ...... 288 21,888 each year after a railroad’s applicable deadline for full PTC system implementation. 236.1031(a)–(d)—A railroad’s Request for Expedited Certifi- 36 railroads ...... 1 REC letter + supporting 8 hours ...... 8 608 cation (REC). documentation. 236.1035(a)–(b)—A railroad’s request for authorization to 36 railroads ...... 10 requests ...... 40 hours ...... 400 30,400 field test an uncertified PTC system and any responses to FRA’s testing conditions. 236.1037(b)—Results of inspections and tests specified in a 36 railroads ...... 800 records ...... 1 hour ...... 800 60,800 railroad’s PTCSP and PTCDP. (c)—A contractor’s records related to the testing, mainte- 36 railroads ...... 1,600 records ...... 10 minutes ...... 267 20,292 nance, or operation of a PTC system maintained at a des- ignated office. (d)(3)—A railroad’s final report of the results of the analysis 36 railroads ...... 5 final reports ...... 160 hours ...... 80 6,080 and countermeasures taken to reduce the frequency of safety-related hazards below the threshold set forth in the PTCSP. 236.1039(a)–(c), (e)—A railroad’s PTC Operations and Main- 36 railroads ...... 2 OMM updates ...... 10 hours ...... 20 1,520 tenance Manual (OMM), which must be maintained and available to FRA upon request. (d)—A railroad’s identification of a PTC system’s safety-crit- 36 railroads ...... 1 identified new component ... 1 hour ...... 1 76 ical components, including spare equipment. 236.1041(a)–(b) and 236.1043(a)—A railroad’s PTC Training 36 railroads ...... 2 programs ...... 10 hours ...... 20 1,520 and Qualification Program (i.e., a written plan). 236.1043(b)—Training records retained in a designated loca- 36 railroads ...... 500 PTC training records ...... 1 minute ...... 8 608 tion and available to FRA upon request. Total ...... N/A ...... 4,568,393 responses ...... N/A ...... 68,373 5,533,356

Total Estimated Annual Responses: Authority: 44 U.S.C. 3501–3520; 49 U.S.C. SUMMARY: Under the Paperwork 4,568,393. 20157. Reduction Act of 1995 (PRA) and its Total Estimated Annual Burden: Brett A. Jortland, implementing regulations, FRA seeks 68,373 hours. approval of the Information Collection Acting Chief Counsel. Total Estimated Annual Burden Hour Request (ICR) abstracted below. Before Dollar Cost Equivalent: [FR Doc. 2019–28096 Filed 12–27–19; 8:45 am] submitting this ICR to the Office of 5,533,356.15.15 16 BILLING CODE 4910–06–P Management and Budget (OMB) for Under 44 U.S.C. 3507(a) and 5 CFR approval, FRA is soliciting public 1320.5(b) and 1320.8(b)(3)(vi), FRA comment on specific aspects of the DEPARTMENT OF TRANSPORTATION informs all interested parties that it may activities identified in the ICR. not conduct or sponsor, and a Federal Railroad Administration DATES: Interested persons are invited to respondent is not required to respond submit comments on or before February to, a collection of information unless it [Docket No. FRA–2019–0004–N–24] 28, 2020. displays a currently valid OMB control ADDRESSES: Submit written comments number. Proposed Agency Information on the ICR activities by mail to either: Collection Activities; Comment Ms. Hodan Wells, Information 15 The dollar equivalent cost is derived from the Collection Clearance Officer, Office of Surface Transportation Board’s Full Year Wage A&B Request data series using the appropriate employee group Railroad Safety, Regulatory Analysis hourly wage rate that includes a 75-percent AGENCY: Federal Railroad Division, Federal Railroad overhead charge. Administration (FRA), U.S. Department Administration, 1200 New Jersey 16 Form FRA F 6180.177: This temporary of Transportation (DOT). Avenue SE, Washington, DC 20590; or reporting requirement would expire by law on Ms. Kim Toone, Information Collection approximately December 31, 2021, as further ACTION: Notice of information collection; Clearance Officer, Office of Information explained in Section IV of this notice. See 49 U.S.C. request for comment. 20157(j). Technology, Federal Railroad

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Administration, 1200 New Jersey SUPPLEMENTARY INFORMATION: The PRA, the collection of information that Avenue SE, Washington, DC 20590. 44 U.S.C. 3501–3520, and its Federal regulations mandate. In Commenters requesting FRA to implementing regulations, 5 CFR part summary, FRA reasons that comments acknowledge receipt of their respective 1320, require Federal agencies to received will advance three objectives: comments must include a self-addressed provide 60-days’ notice to the public to (1) Reduce reporting burdens; (2) stamped postcard stating, ‘‘Comments allow comment on information organize information collection on OMB Control Number 2130–0537,’’ collection activities before seeking OMB requirements in a ‘‘user-friendly’’ format and should also include the title of the approval of the activities. See 44 U.S.C. to improve the use of such information; ICR. Alternatively, comments may be 3506, 3507; 5 CFR 1320.8 through and (3) accurately assess the resources faxed to 202–493–6216 or 202–493– 1320.12. Specifically, FRA invites expended to retrieve and produce 6497, or emailed to Ms. Wells at interested parties to comment on the information requested. See 44 U.S.C. [email protected], or Ms. Toone at following ICR regarding: (1) Whether the 3501. [email protected]. Please refer to the information collection activities are The summary below describes the ICR assigned OMB control number in any necessary for FRA to properly execute that FRA will submit for OMB clearance correspondence submitted. FRA will its functions, including whether the as the PRA requires: summarize comments received in activities will have practical utility; (2) Title: Railroad Police Officers. response to this notice in a subsequent the accuracy of FRA’s estimates of the OMB Control Number: 2130–0537. notice and include them in its burden of the information collection Abstract: FRA regulations in 49 CFR information collection submission to activities, including the validity of the part 207 require railroads to notify OMB for approval. methodology and assumptions used to States of all designated police officers FOR FURTHER INFORMATION CONTACT: Ms. determine the estimates; (3) ways for who perform duties outside of their Hodan Wells, Information Collection FRA to enhance the quality, utility, and respective jurisdictions. This is Clearance Officer, Office of Railroad clarity of the information being necessary to verify proper police Safety, Regulatory Analysis Division, collected; and (4) ways for FRA to authority. Federal Railroad Administration, 1200 minimize the burden of information Type of Request: Extension with New Jersey Avenue SE, Washington, DC collection activities on the public, change (revised estimates) of a currently 20590 (telephone: (202) 493–0440) or including the use of automated approved collection. Ms. Kim Toone, Information Collection collection techniques or other forms of Affected Public: Businesses. Clearance Officer, Office of Information information technology. See 44 U.S.C. Form(s): N/A. Technology, Federal Railroad 3506(c)(2)(A); 5 CFR 1320.8(d)(1). Respondent Universe: 746 railroads. Administration, 1200 New Jersey FRA believes that soliciting public Frequency of Submission: On Avenue SE, Washington, DC 20590 comment may reduce the administrative occasion. (telephone: 202–493–6132). and paperwork burdens associated with Reporting Burden:

Total annual Average time Total annual Total cost CFR section Respondent universe per responses 1 responses (minutes) burden hours equivalent

207.4(a)—RR Notice to State Officials— 746 railroads ...... 35 written notices ...... 15 9 $684 Written notice of RR police officer’s com- mission to each State in which the RR police officer shall protect the railroad’s property, personnel, passengers, and cargo. 207.4(b)—RR copy of written notices to 746 railroads ...... 35 records ...... 2 1 76 State officials. 207.6—Transfers—Application by RR police 746 railroads ...... 40 records ...... 2 1 76 officers for new State certification/com- mission when transferring primary em- ployment or residence from one State to another.

Total ...... 746 railroads ...... 110 responses ...... N/A 11 836 1 The hourly wage rate is obtained from the Surface Transportation Board’s Full Year Wage A&B data series using the appropriate employee group hourly wage rate that includes 75-percent overhead charges.

Total Estimated Annual Responses: displays a currently valid OMB control DEPARTMENT OF TRANSPORTATION 110. number. Maritime Administration Total Estimated Annual Burden: 11 Authority: 44 U.S.C. 3501–3520. hours. Brett A. Jortland, [Docket No. MARAD–2019–0012] Total Estimated Annual Burden Hour Acting Chief Counsel. Dollar Cost Equivalent: $836. [FR Doc. 2019–28128 Filed 12–27–19; 8:45 am] Deepwater Port License Application: Texas COLT LLC Under 44 U.S.C. 3507(a) and 5 CFR BILLING CODE 4910–06–P 1320.5(b) and 1320.8(b)(3)(vi), FRA AGENCY: Maritime Administration, U.S. informs all interested parties that it may Department of Transportation. not conduct or sponsor, and a ACTION: Notice of application respondent is not required to respond withdrawal. to, a collection of information unless it

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SUMMARY: The Maritime Administration By Order of the Maritime Administrator. Comments must be written in the (MARAD) and the U.S. Coast Guard T. Mitchell Hudson, Jr., English language, and be no greater than (USCG) announce the cancellation of all Secretary, Maritime Administration. 15 pages in length, although there is no actions related to the processing of a [FR Doc. 2019–28137 Filed 12–27–19; 8:45 am] limit to the length of necessary license application for the proposed BILLING CODE 4910–81–P attachments to the comments. If Texas COLT LLC deepwater port. The comments are submitted in hard copy action announced here includes form, please ensure that two copies are cancellation of all activities related to DEPARTMENT OF TRANSPORTATION provided. If you wish to receive the preparation of an Environmental confirmation that comments you have Impact Statement that was announced National Highway Traffic Safety submitted by mail were received, please on Friday, March 8, 2019, in Federal Administration enclose a stamped, self-addressed Register Volume 84 Number 46 (Notice [Docket No. NHTSA–2019–0046; Notice 1] postcard along with the comments. Note of Intent; Notice of Public Meeting; that all comments received will be Request for Comments). The action is Notice of Receipt of Petition for posted without change to https:// taken in response to the applicant’s Decision That Nonconforming Model www.regulations.gov, including any decision to withdraw the application. Year 2018–2019 Swift Sprite Alpine 4 personal information provided. Single Axle Camper Trailers Are All comments and supporting DATES: The cancellation of all actions Eligible for Importation materials received before the close of related to this deepwater port license business on the closing date indicated AGENCY: application was effective December 10, National Highway Traffic above will be filed in the docket and 2019. Safety Administration, Department of will be considered. All comments and Transportation (DOT). ADDRESSES: supporting materials received after the The public docket for the ACTION: Receipt of petition. COLT deepwater port license closing date will also be filed and will application is maintained by the U.S. SUMMARY: This document announces the be considered to the fullest extent Department of Transportation, Docket National Highway Traffic Safety possible. Management Facility, West Building, Administration (NHTSA) receipt of a All comments, background Ground Floor, Room W12–140, 1200 petition for a decision that model year documentation, and supporting New Jersey Avenue SE, Washington, DC (MY) 2018–2019 Swift Sprite Alpine 4 materials submitted to the docket may 20590. The docket may be viewed single axle camper trailers that were not be viewed by anyone at the address and electronically at www.regulations.gov originally manufactured to comply with times given above. The documents may under the docket number for this all applicable Federal motor vehicle also be viewed on the internet at https:// project, which is MARAD–2019–0012. safety standards (FMVSS), are eligible www.regulations.gov by following the The Federal Docket Management for importation into the United States online instructions for accessing the Facility’s telephone number is 202–366– because they are capable of being dockets. The docket ID number for this petition is shown in the heading of this 9317 or 202–366–9826, the fax number readily altered to conform to the notice. is 202–493–2251. standards. DOT’s complete Privacy Act DATES: The closing date for comments FOR FURTHER INFORMATION CONTACT: Mr. Statement is available for review in a Ken Smith, USCG, telephone: 202–372– on the petition January 29, 2020. Federal Register notice published on 1413, email: [email protected]; or ADDRESSES: Interested persons are April 11, 2000, (65 FR 19477–78). invited to submit written data, views, Mr. Linden Houston, MARAD, FOR FURTHER INFORMATION CONTACT: and arguments on this petition. telephone: 202–366–4839, email: Robert Mazurowski, Office of Vehicle Comments must refer to the docket and [email protected]. Safety Compliance, NHTSA (202–366– notice number cited in the title of this 1012). SUPPLEMENTARY INFORMATION: On notice and may be submitted by any of December 10, 2019, MARAD received the following methods: SUPPLEMENTARY INFORMATION: • notification from the applicant of the Mail: Send comments by mail Background withdrawal of its application to own, addressed to the U.S. Department of construct, and operate a deepwater port Transportation, Docket Operations, M– Under 49 U.S.C. 30141(a)(1)(A), a for a liquefied natural gas deepwater 30, West Building Ground Floor, Room motor vehicle that was not originally port facility, located approximately 27.8 W12–140, 1200 New Jersey Avenue SE, manufactured to conform to all nautical miles off the coast of Brazoria Washington, DC 20590. applicable FMVSS shall be refused County, Texas in a water depth of • Hand Delivery: Deliver comments admission into the United States unless approximately 110 feet and connected by hand to the U.S. Department of NHTSA has decided that the motor to existing offshore pipelines. Transportation, Docket Operations, M– vehicle is substantially similar to a Consequently, MARAD has terminated 30, West Building Ground Floor, Room motor vehicle originally manufactured all activities pertaining to COLT’s W12–140, 1200 New Jersey Avenue SE, for importation into and sale in the deepwater port license application. All Washington, DC 20590. The Docket United States, certified under 49 U.S.C. agency records and documents related Section is open on weekdays from 10 30115, and of the same MY as the model to the COLT deepwater port license a.m. to 5 p.m. except for Federal of the motor vehicle to be compared, application will be preserved and Holidays. and is capable of being readily altered retained by MARAD and USCG. Further • Electronically: Submit comments to conform to all applicable FMVSS. information pertaining to this electronically by logging onto the Petitions for eligibility decisions may application may be found in the public Federal Docket Management System be submitted by either manufacturers or docket (see ADDRESSES). (FDMS) website at https:// importers who have registered with www.regulations.gov/. Follow the online NHTSA pursuant to 49 CFR part 592. As (Authority: 33 U.S.C. 1501 et seq., 49 CFR instructions for submitting comments. specified in 49 CFR 593.7, NHTSA 1.93(h)). • Comments may also be faxed to publishes notice of each petition that it Dated: December 23, 2019. (202) 493–2251. receives in the Federal Register, and

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affords interested persons an Authority: 49 U.S.C. 30141(a)(1)(A), • Electronically: Submit comments opportunity to comment on the petition. (a)(1)(B), and (b)(1); 49 CFR 593.7; delegation electronically by logging onto the At the close of the comment period, of authority at 49 CFR 1.95 and 501.8. Federal Docket Management System NHTSA decides, on the basis of the Otto G. Matheke III, (FDMS) website at https:// petition and any comments that it has Director, Office of Vehicle Safety Compliance. www.regulations.gov/. Follow the online received, whether the vehicle is eligible instructions for submitting comments. [FR Doc. 2019–28138 Filed 12–27–19; 8:45 am] for importation. The agency then • Comments may also be faxed to BILLING CODE 4910–59–P publishes this decision in the Federal (202) 493–2251. Register. Comments must be written in the America’s Import & Export Authority DEPARTMENT OF TRANSPORTATION English language, and be no greater than Inc., (Registered Importer R–17–423), of 15 pages in length, although there is no Fort Myers, Florida has petitioned National Highway Traffic Safety limit to the length of necessary NHTSA to decide whether Administration attachments to the comments. If nonconforming MY 2018–2019 Swift [Docket No. NHTSA–2019–0115; Notice 1] comments are submitted in hard copy Sprite Alpine 4 single axle camper form, please ensure that two copies are trailers are eligible for importation into Notice of Receipt of Petition for provided. If you wish to receive the United States. The vehicles which Decision That Nonconforming Model confirmation that comments you have America’s Import & Export Authority Year 2015 Porsche 918 Passenger Cars submitted by mail were received, please Inc. believes are capable of being readily Are Eligible for Importation enclose a stamped, self-addressed altered to conform to all applicable postcard along with the comments. Note FMVSS. AGENCY: National Highway Traffic that all comments received will be America’s Import & Export Authority Safety Administration, Department of posted without change to https:// Inc. submitted information with its Transportation (DOT). www.regulations.gov, including any petition intended to demonstrate that ACTION: Receipt of petition. personal information provided. non-U.S. certified MY 2018–2019 Swift All comments and supporting SUMMARY: Sprite Alpine 4 single axle camper This document announces the materials received before the close of trailers, as originally manufactured, National Highway Traffic Safety business on the closing date indicated conform to many applicable FMVSS, or Administration (NHTSA) receipt of a above will be filed in the docket and are capable of being readily altered to petition for a decision that model year will be considered. All comments and conform to those standards. (MY) 2015 Porsche 918 passenger cars supporting materials received after the Specifically, the petitioner claims that (PCs) that were not originally closing date will also be filed and will the non-U.S. certified MY 2018–2019 manufactured to comply with all be considered to the fullest extent Swift Sprite Alpine 4 single axle camper applicable Federal motor vehicle safety possible. standards (FMVSS), are eligible for trailers, as originally manufactured, are All comments, background importation into the United States only subject to: FMVSS Nos. 108, documentation, and supporting because they are substantially similar to Lamps, Reflective Devices and materials submitted to the docket may vehicles that were originally Associated Equipment, 109, New be viewed by anyone at the address and manufactured for sale in the United pneumatic and certain specialty tires, times given above. The documents may States and that were certified by their 110, Tire Selection and Rims and Motor also be viewed on the internet at https:// manufacturer as complying with the Home/Recreation Vehicle Trailer Load www.regulations.gov by following the safety standards (the U.S.-certified Carrying Capacity Information for Motor online instructions for accessing the version of the 2015 Porsche 918 PCs) Vehicles with a GVWR of 4,536 dockets. The docket ID number for this and are capable of being readily altered kilograms (10,000 pounds) or Less. The petition is shown in the heading of this to conform to the standards. petitioner also contends that the subject notice. DATES: non-U.S. certified vehicles are capable The closing date for comments DOT’s complete Privacy Act of being readily altered to meet the on the petition is January 29, 2020. Statement is available for review in a following FMVSS, in the manner ADDRESSES: Interested persons are Federal Register notice published on indicated: invited to submit written data, views, April 11, 2000, (65 FR 19477–78). FMVSS No. 108, Lamps, Reflective and arguments on this petition. FOR FURTHER INFORMATION CONTACT: Devices and Associated Equipment: Comments must refer to the docket and Robert Mazurowski, Office of Vehicle Installation of rear reflectors, side notice number cited in the title of this Safety Compliance, NHTSA (202–366– markers, side reflectors, clearance notice and may be submitted by any of 1012). lamps, identification lamps and upper the following methods: lights, front side marker lamps and • Mail: Send comments by mail SUPPLEMENTARY INFORMATION: reflectors, intermediate side marker addressed to the U.S. Department of Background lamps and reflectors, and license plate Transportation, Docket Operations, M– lamp. 30, West Building Ground Floor, Room Under 49 U.S.C. 30141(a)(1)(A), a FMVSS No. 109, New pneumatic and W12–140, 1200 New Jersey Avenue SE, motor vehicle that was not originally certain specialty tires: Installation of tire Washington, DC 20590. manufactured to conform to all placard with certification label. • Hand Delivery: Deliver comments applicable FMVSS shall be refused FMVSS No. 110, Tire Selection and by hand to the U.S. Department of admission into the United States unless Rims and Motor Home/Recreation Transportation, Docket Operations, M– NHTSA has decided that the motor Vehicle Trailer Load Carrying Capacity 30, West Building Ground Floor, Room vehicle is substantially similar to a Information for Motor Vehicles with a W12–140, 1200 New Jersey Avenue SE, motor vehicle originally manufactured GVWR of 4,536 kilograms (10,000 Washington, DC 20590. The Docket for importation into and sale in the pounds) or Less: The petitioner claims Section is open on weekdays from 10 United States, certified under 49 U.S.C. the tires rims are within conformity of a.m. to 5 p.m. except for Federal 30115, and of the same MY as the model this standard. Holidays. of the motor vehicle to be compared,

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and is capable of being readily altered Electronic Stability Control Systems for DEPARTMENT OF TRANSPORTATION to conform to all applicable FMVSS. light vehicles, 135, Light Vehicle Brake Petitions for eligibility decisions may Systems, 138, Tire Pressure Monitoring National Highway Traffic Safety be submitted by either manufacturers or Systems, 201, Occupant Protection in Administration importers who have registered with Interior Impact, 202, Head Restraints; [Docket No. NHTSA–2019–0101] NHTSA pursuant to 49 CFR part 592. As Applicable at the Manufacturers Option specified in 49 CFR 593.7, NHTSA until September 1, 2009, 203, Impact Federal Advisory Committee National publishes notice of each petition that it Protection for the Driver from the Emergency Medical Services Advisory receives in the Federal Register, and Steering Control System, 204, Steering Council; Notice of Meeting affords interested persons an Control Rearward Displacement, 205, opportunity to comment on the petition. AGENCY: National Highway Traffic At the close of the comment period, Glazing Materials, 206, Door Locks and Safety Administration (NHTSA), U.S. NHTSA decides, on the basis of the Door Retention Components, 207, Department of Transportation (DOT). Seating Systems, 209, Seat Belt petition and any comments that it has ACTION: Meeting notice—National received, whether the vehicle is eligible Assemblies, 210, Seat Belt Assembly Emergency Medical Services Advisory for importation. The agency then Anchorages, 212, Windshield Mounting, Council. publishes this decision in the Federal 214, Side Impact Protection, 216, Roof Register. Crush Resistance; Applicable unless a SUMMARY: NHTSA announces a meeting Wallace Environmental Testing Vehicle is Certified to § 571.216a, 219, of the National Emergency Medical Laboratories, Inc. (WETL), (Registered Windshield Zone Intrusion, 225, Child Services Advisory Council (NEMSAC) Importer R–90–005), of Houston, Texas Restraint Anchorage Systems, 301, Fuel to be held at DOT Headquarters in has petitioned NHTSA to decide System Integrity, and 302, Flammability Washington, DC. This notice announces whether nonconforming 2015 Porsche of Interior Materials. the date, time, and location of the 918 PCs are eligible for importation into meeting, which will be open to the The petitioner also contends that the the United States. The vehicles which public, as well as provide opportunities Wallace Environmental Testing subject non-U.S certified vehicles are for public input to the NEMSAC. The Laboratories, Inc. believes are capable of being readily altered to meet purpose of NEMSAC, a nationally substantially similar are MY 2015 the following FMVSS, in the manner recognized council of emergency Porsche 918 PCs sold in the United indicated: medical services representatives and States and certified by their FMVSS No. 101, Controls and consumers, is to advise and consult manufacturer as conforming to all Displays: Programming of the with DOT and the Federal Interagency applicable FMVSS. speedometer and addition of the word Committee on Emergency Medical The petitioner claims that it compared ‘‘BRAKE’’ to the instrument cluster. Services (FICEMS) on matters relating to non-U.S. certified MY 2015 Porsche 918 FMVSS No. 108, Lamps, Reflective emergency medical services (EMS). PCs to their U.S. certified counterparts, Devices, and Associated Equipment: DATES: The NEMSAC meeting will be and found the vehicles to be Replacement of headlamps and held on January 14, 2020, from 9 a.m. substantially similar with respect to taillamps. FMVSS No. 111, Rear to 5 p.m. EDT, on January 15, 2020, compliance with most FMVSS. from 9 a.m. to 12 p.m. EDT and on Wallace Environmental Testing Visibility: Inscription of the required January 16, 2020 from 9 a.m. to 4 p.m. Laboratories, Inc. submitted information warning statement on the face of the EDT. Pre-registration is requested no with its petition intended to passenger mirror. FMVSS No. 208, later than January 6, 2020, 5 p.m. EDT. demonstrate that non-U.S. certified MY Occupant Crash Protection: Addition of A public comment period will take 2015 Porsche 918 PCs, as originally knee bolsters. FMVSS No. 401, Internal place on January 14, 2020, between 2 manufactured, conform to many Trunk Release: Addition of a trunk p.m. and 2:30 p.m. EDT, January 15, applicable FMVSS in the same manner release. 2020, between 11 a.m. and 11:30 a.m. as their U.S.-certified counterparts, or The petitioner additionally states that EDT and January 16, 2020, between 11 are capable of being readily altered to a vehicle identification plate must be conform to those standards. a.m. and 11:30 a.m. EDT. Requests to affixed to the vehicle, near the left speak during the meeting must submit Specifically, the petitioner claims that windshield pillar, to meet the the non-U.S. certified MY 2015 Porsche a written copy of their remarks to DOT requirements of 49 CFR part 565, as well 918 PCs, as originally manufactured, by January 6, 2020. Written comments as, a reference and certification label conform to: FMVSS Nos. 102, may be submitted to the committee at Transmission Shift Position Sequence, added to the left front door post area to any time. If you wish for the committee Starter Interlock, and Transmission meet the requirements of 49 CFR part to review the comments before the Braking Effect, 103, Windshield 567. meeting, submit them no later than Defrosting and Defogging Systems, 104, Authority: 49 U.S.C. 30141(a)(1)(A), January 6, 2020. Requests for Windshield Wiping and Washing (a)(1)(B), and (b)(1); 49 CFR 593.7; delegation accommodations to a disability must be Systems, 106, Brake Hoses, 109, New of authority at 49 CFR 1.95 and 501.8. received by January 6, 2020. Meeting Pneumatic and Certain Specialty Tires, materials will also be available to the 110, Tire Selection and Rims and Motor Otto G. Matheke III, public online on or before January 6, Home/Recreation Vehicle Trailer Load Director, Office of Vehicle Safety Compliance. 2020. Carrying Capacity Information for Motor [FR Doc. 2019–28139 Filed 12–27–19; 8:45 am] ADDRESSES: The meetings will be held at Vehicles with a GVWR of 4,536 BILLING CODE 4910–59–P the DOT Headquarters, 1200 New Jersey kilograms (10,000 pounds) or Less, 113, Avenue SE, Washington, DC 20590. Hood Latch System, 114, Theft Written comments may be submitted by Protection, 116, Motor Vehicle Brake either one of the following methods: (1) Fluids, 118, Power-Operated Window, You may submit comments by email: Partition, and Roof Panel System, 124, [email protected] or (2) you may submit Accelerator Control Systems, 126, comments by fax: 202–366–7149.

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Teleconference and webcast information (2) Committee Reports and Discussion of petition for a decision that model year for this meeting will be posted on NEMSAC Recommendations and (MY) 2017–2019 Mercedes Benz www.EMS.gov. Meeting materials will Advisories for 2019—2020 (9:15 a.m. to Maybach S600 Pullman passenger cars also be available to the public on 11 a.m. EDT) (PCs) that were not originally (3) Public Comment (11 a.m. to 11:30 a.m. www.EMS.gov. EDT) manufactured to comply with all FOR FURTHER INFORMATION CONTACT: Eric (4) Lunch (11:30 a.m. to 12:30 p.m. EDT) applicable Federal motor vehicle safety Chaney, DOT, Office of Emergency (5) Action on Proposed Advisories (12:30 standards (FMVSS), are eligible for Medical Services, 1200 New Jersey p.m. to 3:45 p.m. EDT) importation into the United States Avenue SE, NPD–400, Washington, DC (6) Review of Action Items and Wrap-Up because they are substantially similar to 20590, [email protected] or 202–366– (3:45 p.m. to 4 p.m. EDT) vehicles that were originally 0257. Please contact Eric for registration Public Participation: The meeting will manufactured for sale in the United and all meeting related inquires. be open to the public on a first-come, States and that were certified by their manufacturer as complying with the SUPPLEMENTARY INFORMATION: Notice of first served basis, as space is limited. safety standards (the U.S.-certified the NEMSAC meeting is given under the Members of the public who wish to version of the 2017–2019 Mercedes Federal Advisory Committee Act, Pub. attend in person must register with the Benz Maybach S600 PCs) and are L. 92–463, as amended (5 U.S.C. App. person listed in the FOR FURTHER capable of being readily altered to 2). The NEMSAC is authorized under INFORMATION CONTACT section with your conform to the standards. Section 31108 of the Moving Ahead name and affiliation. Members of the with Progress in the 21st Century Act of public are encouraged to comment DATES: The closing date for comments 2012. directly to the NEMSAC during on the petition is January 29, 2020. designated public comment periods. ADDRESSES: Interested persons are Tentative Agenda of the National EMS Attendees should plan to arrive 10–15 invited to submit written data, views, Advisory Council Meeting minutes early to clear security. In order and arguments on this petition. The NEMSAC agenda includes the to allow as many people as possible to Comments must refer to the docket and following: speak, speakers are requested to limit notice number cited in the title of this their remarks to 5 minutes. Written Tuesday, January 14, 2020 (9 a.m. to 5 p.m. notice and may be submitted by any of EDT) comments from members of the public the following methods: will be distributed to NEMSAC at the • Mail: Send comments by mail (1) Call to Order, Introductions, and Opening meeting. addressed to the U.S. Department of Remarks (9 a.m. to 9:30 a.m. EDT) NHTSA is committed to providing (2) Approval of September 2019 NEMSAC Transportation, Docket Operations, M– Meeting Minutes (9:30 a.m. to 9:45 a.m. equal access to this meeting for all 30, West Building Ground Floor, Room EDT) participants. If you need alternative W12–140, 1200 New Jersey Avenue SE, (3) Federal Liaison Update (9:45 a.m. to 10 formats or services because of a Washington, DC 20590. a.m. EDT) disability, please contact Eric Chaney at • Hand Delivery: Deliver comments (4) EMS Personnel Safety (10 a.m. to 10:45 the email or phone number listed in the by hand to the U.S. Department of a.m. EDT) FOR FURTHER INFORMATION CONTACT Transportation, Docket Operations, M– (5) Break (10:45 a.m. to 11 a.m. EDT) section with your request by January 10, 30, West Building Ground Floor, Room (6) FICEMS Strategic Plan Update/Revision 2020. (11 a.m. to 12 p.m. EDT) W12–140, 1200 New Jersey Avenue SE, (7) Lunch (12 p.m. to 1:15 p.m. EDT) Authority: 44 U.S.C. Section 3506(c)(2)(A). Washington, DC 20590. The Docket Section is open on weekdays from 10 (8) CMS Emergency Triage, Treat and Issued in Washington, DC. Transport (ET3) Model (1:15 p.m. to 2 a.m. to 5 p.m. except for Federal Jon Krohmer, p.m. EDT) Holidays. (9) Public Comment (2 p.m. to 2:30 p.m. EDT) Associate Administrator, Acting Research • Electronically: Submit comments (10) Review of Ongoing NHTSA Projects and Program Development. electronically by logging onto the (2:30 p.m. to 3 p.m. EDT) [FR Doc. 2019–28147 Filed 12–27–19; 8:45 am] Federal Docket Management System (11) Nomenclature of the EMS Profession— BILLING CODE 4910–59–P (FDMS) website at https:// White Paper Update (3 p.m. to 4 p.m. www.regulations.gov/. Follow the online EDT) instructions for submitting comments. (12) NFPA 451 Community Health Programs DEPARTMENT OF TRANSPORTATION • (4 p.m. to 4:45 p.m. EDT) Comments may also be faxed to (13) Review of Action Items (4:45 p.m. to 5 National Highway Traffic Safety (202) 493–2251. p.m. EDT) Administration Comments must be written in the English language, and be no greater than Wednesday, January 15, 2020 (9 a.m. to 5 [Docket No. NHTSA–2019–0117; Notice 1] p.m. EDT) 15 pages in length, although there is no limit to the length of necessary (1) Reconvene and Instructions (9 a.m. to Notice of Receipt of Petition for attachments to the comments. If 9:15 a.m. EDT) Decision That Nonconforming Model comments are submitted in hard copy (2) Review of EMS Nomenclature and Years 2017 Through 2019 Mercedes National EMS Education Standards form, please ensure that two copies are Benz Maybach S600 Pullman provided. If you wish to receive Revision (9:15 a.m. to 10 a.m. EDT) Passenger Cars Are Eligible for (3) FARS Presentation (10 a.m. to 11 a.m. confirmation that comments you have EDT) Importation submitted by mail were received, please (4) Public Comment (11 a.m. to 11:30 a.m. AGENCY: National Highway Traffic enclose a stamped, self-addressed EDT) Safety Administration, Department of postcard along with the comments. Note (5) NHTSA Updates (11:30 a.m. to 12 p.m. that all comments received will be EDT) Transportation (DOT). ACTION: Receipt of petition. posted without change to https:// Thursday, January 16, 2020 (9 a.m. to 4 p.m. www.regulations.gov, including any EDT) SUMMARY: This document announces the personal information provided. (1) Committee Instructions (9 a.m. to 9:15 National Highway Traffic Safety All comments and supporting a.m. EDT) Administration (NHTSA) receipt of a materials received before the close of

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business on the closing date indicated are substantially similar are MY 2017– FMVSS No. 101, Controls and above will be filed in the docket and 2019 Mercedes Benz Maybach S600 PCs Displays: Programming of the will be considered. All comments and sold in the United States and certified speedometer for units of miles per hour. supporting materials received after the by their manufacturer as conforming to FMVSS No. 108, Lamps, Reflective closing date will also be filed and will all applicable FMVSS. The S600 Devices and Associated Equipment: be considered to the fullest extent Pullman is a limousine based on the Replacement of headlamps and front possible. S600 sedan and manufactured by and rear side marker assemblies. All comments, background BRABUS GmbH. FMVSS No. 110, Tire Selection and documentation, and supporting The petitioner claims that it compared Rims: Addition of tire information materials submitted to the docket may non-U.S. certified MY 2017–2019 placard. FMVSS No. 111, Rear Mirrors: be viewed by anyone at the address and Mercedes Benz Maybach S600 Pullman Inscription of the required warning times given above. The documents may PCs to their U.S. certified counterparts, statement on the face of the passenger also be viewed on the internet at https:// and found the vehicles to be mirror. FMVSS No. 301, Fuel System www.regulations.gov by following the substantially similar with respect to Integrity: Inspect and if necessary online instructions for accessing the compliance with most FMVSS. replace with U.S. companion model dockets. The docket ID number for this G&K Automotive Conversion, Inc. components. FMVSS No. 401, Interior petition is shown in the heading of this submitted information with its petition Trunk Release: Addition of a trunk notice. intended to demonstrate that non-U.S. release. DOT’s complete Privacy Act certified MY 2017–2019 Mercedes Benz The petitioner additionally states that Statement is available for review in a Maybach S600 Pullman PCs, as a vehicle identification plate must be Federal Register notice published on originally manufactured, conform to affixed to the vehicle, near the left April 11, 2000, (65 FR 19477–78). many applicable FMVSS in the same windshield pillar, to meet the FOR FURTHER INFORMATION CONTACT: manner as their U.S.-certified requirements of 49 CFR part 565, as well Robert Mazurowski, Office of Vehicle counterparts, or are capable of being as, a reference and certification label Safety Compliance, NHTSA (202–366– readily altered to conform to those added to the left front door post area to 1012). standards. Specifically, the petitioner meet the requirements of 49 CFR part 567. SUPPLEMENTARY INFORMATION: claims that the non-U.S. certified MY 2017–2019 Mercedes Benz Maybach Authority: 49 U.S.C. 30141(a)(1)(A), Background S600 Pullman PCs, as originally (a)(1)(B), and (b)(1); 49 CFR 593.7; delegation Under 49 U.S.C. 30141(a)(1)(A), a manufactured, conform to: FMVSS Nos. of authority at 49 CFR 1.95 and 501.8. 102, Transmission Shift Position motor vehicle that was not originally Otto G. Matheke III, Sequence, Starter Interlock, and manufactured to conform to all Director, Office of Vehicle Safety Compliance. applicable FMVSS shall be refused Transmission Braking Effect, 103, [FR Doc. 2019–28140 Filed 12–27–19; 8:45 am] admission into the United States unless Windshield Defrosting and Defogging NHTSA has decided that the motor Systems, 104, Windshield Wiping and BILLING CODE 4910–59–P vehicle is substantially similar to a Washing Systems, 106, Brake Hoses, 113, Hood Latch System, 114, Theft motor vehicle originally manufactured DEPARTMENT OF TRANSPORTATION for importation into and sale in the Protection and Rollaway Prevention, United States, certified under 49 U.S.C. 116, Motor Vehicle Brake Fluids, 118, Pipeline and Hazardous Materials 30115, and of the same MY as the model Power-Operated Window, Partition, and Safety Administration of the motor vehicle to be compared, Roof Panel System, 124, Accelerator and is capable of being readily altered Control Systems, 126, Electronic [Docket No. PHMSA–2019–0208] Stability Control Systems, 135, Light to conform to all applicable FMVSS. Pipeline Safety: Random Drug Testing Petitions for eligibility decisions may Vehicle Brake Systems, 138, Tire Rate; Management Information System be submitted by either manufacturers or Pressure Monitoring Systems, 139, New Reporting; and Obtaining Drug and importers who have registered with Pneumatic Radial Tires, 201, Occupant Alcohol Management Information NHTSA pursuant to 49 CFR part 592. As Protection in Interior Impact, 202, Head System Sign-In Information specified in 49 CFR 593.7, NHTSA Restraints; Applicable at the publishes notice of each petition that it Manufacturers Option until September AGENCY: Pipeline and Hazardous receives in the Federal Register, and 1, 2009, 204, Steering Control Rearward Materials Safety Administration affords interested persons an Displacement, 205, Glazing Materials, (PHMSA), DOT. opportunity to comment on the petition. 206, Door Locks and Door Retention ACTION: Notice of calendar year 2020 At the close of the comment period, Components, 207, Seating Systems, 208, minimum annual percentage rate for NHTSA decides, on the basis of the Occupant Crash Protection, 209, Seat random drug testing, reminder for petition and any comments that it has Belt Assemblies, 210, Seat Belt operators to report contractor received, whether the vehicle is eligible Assembly Anchorages, 212, Windshield Management Information System (MIS) for importation. The agency then Mounting, 214, Side Impact Protection, data, and reminder of method for publishes this decision in the Federal 216, Roof Crush Resistance; Applicable operators to obtain user name and Register. unless a Vehicle is Certified to password for electronic reporting. G&K Automotive Conversion, Inc., § 571.216a, 219, Windshield Zone (Registered Importer R–90–007), of Intrusion, 225, Child Restraint SUMMARY: PHMSA has determined that Santa Ana, California has petitioned Anchorage Systems, and 302, the minimum random drug testing rate NHTSA to decide whether Flammability of Interior Materials. for covered employees will remain at 50 nonconforming 2017–2019 Mercedes The petitioner also contends that the percent during calendar year 2020. Benz Maybach S600 Pullman PCs are subject non-U.S. certified vehicles are Operators are reminded that drug and eligible for importation into the United capable of being readily altered to meet alcohol testing information must be States. The vehicles which G&K the following FMVSS, in the manner submitted for contractors who are Automotive Conversion, Inc. believes indicated: performing or are ready to perform

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covered functions. For calendar year employee testing data in separate MIS Issued in Washington, DC, on December 2019 reporting, the ‘‘user name’’ and reports to avoid duplicative reporting 19, 2019, under authority delegated in 49 ‘‘password’’ for the Drug and Alcohol and inaccurate data that could affect the CFR 1.97. Management Information System positive rate for the entire industry. Alan K. Mayberry, (DAMIS) will be available in the Associate Administrator for Pipeline Safety. PHMSA Portal. Reminder of Method for Operators To [FR Doc. 2019–27992 Filed 12–27–19; 8:45 am] Obtain User Name and Password for DATES: Effective January 1, 2020, BILLING CODE 4910–60–P through December 31, 2020. Electronic Reporting FOR FURTHER INFORMATION CONTACT: By early January 2020, the user name DEPARTMENT OF TRANSPORTATION Wayne Lemoi, Drug & Alcohol Program and password required for an operator Manager, Office of Pipeline Safety, by to access DAMIS and enter calendar Office of the Secretary phone at 909–937–7232 or by email at year 2019 data will be available to all [email protected]. operator staff with access to the PHMSA Privacy Act of 1974: System of SUPPLEMENTARY INFORMATION: Portal. Pipeline operators have been Records Notice of Calendar Year 2020 Minimum submitting reports required by 49 CFR AGENCY: Federal Motor Carrier Safety Annual Percentage Rate for Random parts 191 and 195 through the PHMSA Administration, U.S. Department of Drug Testing Portal (https://portal.phmsa.dot.gov/ Transportation. pipeline) since 2011. PHMSA Operators of natural gas, hazardous ACTION: Rescindment of a system of determined that distributing records notice. liquid, and carbon dioxide pipelines information via the Portal would be and operators of liquefied natural gas more effective than the previous mailing SUMMARY: In accordance with the and underground natural gas storage process. Privacy Act of 1974, the Department of facilities must randomly select and test When the DAMIS user name and Transportation proposes to rescind a a percentage of all covered employees system of records under the Privacy Act password are available in the PHMSA for prohibited drug use in accordance of 1974 entitled DOT/FMCSA 006 Portal, all registered users will receive with 49 CFR part 199. Pursuant to SAFETYNET. This system of records an email to that effect. If operator staff § 199.105(c)(1), the PHMSA minimum facilitates authorized sharing of annual random drug testing rate for all responsible for submitting MIS reports Department of Transportation Federal covered employees is 50 percent. The do not receive the DAMIS information, Motor Carrier Administration records of Administrator can adjust this random they should coordinate with other companies and drivers of commercial drug testing rate based on the reported registered PHMSA Portal users within motor vehicles and shipping and positive rate in the pipeline industry’s their company to obtain the DAMIS user freight-forwarding companies registered random drug tests, which is submitted name and password. Registered PHMSA with FMCSA collected and maintained in operators’ annual Management Portal users for an operator typically in the Motor Carrier Information Information System (MIS) reports as include operator staff or consultants Management System (MCMIS). required by § 199.119(a). In accordance who submit annual and incident reports DATES: Written comments should be with § 199.105(c)(3), if the reported through PHMSA F 7000- and 7100- submitted on or before January 29, 2020. positive drug test rate is below 1 percent series forms. Operators that have not The Department may publish an for 2 consecutive years, the previously registered staff in the amended SORN in light of any Administrator can reduce the random PHMSA Portal for the reporting comments received. This new system drug testing rate to 25 percent of all purposes of parts 191 and 195 can will be effective January 29, 2020. covered employees. In calendar year register users by following the ADDRESSES: You may submit comments, 2018, the random drug test positive rate instructions at: https:// identified by docket number Docket No. for the entire pipeline industry was portal.phmsa.dot.gov/PHMSAPortal2/ INSERT: Docket Number, by one of the reported at greater than 1 percent; staticContentRedesign/howto/ following methods: therefore, the minimum annual random PortalAccountCreation.pdf. • Federal e-Rulemaking Portal: http:// drug testing rate for calendar year 2020 Pursuant to §§ 199.119(a) and www.regulations.gov. Follow the is maintained at 50 percent of all 199.229(a), operators with more than 50 instructions for submitting comments. covered employees. • covered employees, including both Mail: Docket Management Facility, Reminder for Operators To Report operator and contractor staff, are Department of Transportation, 1200 Contractor MIS Data required to submit annual MIS reports. New Jersey Ave. SE, West Building Ground Floor, Room W12–140, On January 19, 2010, (75 FR 2926) Operators with 50 or fewer total covered employees are required to submit MIS Washington, DC 20590. PHMSA published an advisory bulletin • Hand Delivery or Courier: West reports only upon written request from notifying operators of the appropriate Building Ground Floor, Room W12–140, PHMSA. If an operator with 50 or fewer methodology for the annual collection 1200 New Jersey Ave. SE, between 9 total covered employees has submitted of contractor MIS drug and alcohol a.m. and 5 p.m. ET, Monday through an MIS report in or after calendar year testing data to avoid duplicative Friday, except Federal Holidays. reporting when a contractor works for 2017, the PHMSA Portal message may • Fax: 202–493–2251. multiple operators. If an operator is state that no MIS report is required for Instructions: All submissions received required to submit a MIS report in calendar year 2019. If an operator with must include the agency name and accordance with part 199, that report is 50 or fewer covered employees has docket number insert docket number. not complete until PHMSA receives MIS grown to more than 50 covered All comments received will be posted data for each tested contractor that employees during calendar year 2019, without change to http:// performed covered functions as defined the PHMSA Portal message will include www.regulations.gov, including any in § 199.3. As explained in the 2010 instructions for how to obtain a DAMIS personal information provided. Advisory Bulletin, operators must user name and password for the 2019 Privacy Act: Anyone is able to search submit operator and contractor calendar year reporting period. the electronic form of all comments

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received in any of our dockets by the HISTORY: I. Background name of the individual submitting the 71 FR 35727, June 21, 2006. The AAPB Advisory Committee was comment (or signing the comment, if Issued in Washington, DC. created under the Federal Advisory submitted on behalf of an association, Committee Act (FACA), in accordance business, labor union, etc.). You may Claire W. Barrett, Chief Privacy Officer. with Section 418 of the FAA review DOT’s complete Privacy Act Reauthorization Act of 2018, to review [FR Doc. 2019–28099 Filed 12–27–19; 8:45 am] statement in the Federal Register options to improve the disclosure of published on April 11, 2000 (65 FR BILLING CODE 4901–9X–P charges and fees for air medical 19477–78), or you may visit http:// services, better inform consumers of DocketsInfo.dot.gov. DEPARTMENT OF TRANSPORTATION insurance options for such services, and Docket: For access to the docket to protect consumers from balance billing. read background documents or Office of the Secretary comments received, go to http:// II. Agenda www.regulations.gov or to the street The first meeting of the AAPB [DOT–OST–2018–0206] address listed above. Follow the online Advisory Committee is designed to instructions for accessing the docket. Air Ambulance and Patient Billing gather foundational background FOR FURTHER INFORMATION CONTACT: For Advisory Committee; Notice of Public information on the air ambulance general questions, please contact: Meeting industry, insurance and billing Director, Office of Information practices, and consumer issues such as Technology, FMCSA, 1200 New Jersey AGENCY: Office of the Secretary, disclosure of fees and balance billing. At Avenue SW, Washington, DC 20590. For Department of Transportation. the meeting, the agenda will cover the privacy issues, please contact: Claire W. following topics: ACTION: Notice of public meeting. • Barrett, Departmental Chief Privacy Overview of the air ambulance Officer, Department of Transportation, industry; SUMMARY: This notice announces a • Washington, DC 20590, (202–366–8135, Air ambulance costs and billing; meeting of the Air Ambulance and • [email protected]). Patient Billing Advisory Committee Insurance and air ambulance (AAPB Advisory Committee). payment systems; and SUPPLEMENTARY INFORMATION: FMCSA • Disclosure and separation of uses SAFETYNET to share records DATES: The meeting will be held on charges, cost shifting, and balance maintained in the Motor Carrier January 15, 2020, from 9:30 a.m. to 5:00 billing. Information Management System p.m., and on January 16, 2020, from 9:00 (MCMIS) with FMCSA field offices and a.m. to 4:00 p.m. Requests to speak III. Public Participation state and local law enforcement during the meeting must be received by The meeting will be open to the officials. These records contain January 8, 2020. Requests to attend the public on a first-come, first served basis. information on companies and drivers meeting must be received by January 13, As space is limited and access to the of commercial motor vehicles and 2020. Requests for accommodations of a DOT Headquarters building is shipping and freight-forwarding disability must be received by January controlled for security purposes, companies registered with FMCSA. In 13, 2020. members of the public who wish to addition, some state and or local law FOR FURTHER INFORMATION CONTACT: attend in person must RSVP to the enforcement entities may maintain Robert Gorman, Senior Trial Attorney, person listed in the FOR FURTHER complaint records in their local versions Office of Aviation Enforcement and INFORMATION CONTACT section with your of SAFETYNET, however those records Proceedings, U.S. Department of name and affiliation. The U.S. are not federal records and are outside Transportation (DOT), at Department of Transportation is the bounds of the Department’s Privacy [email protected] or 202–366– committed to providing equal access to Act notices. FMCSA does not maintain 9350. Any committee-related request this meeting for all participants. If you complaint information in SAFETYNET. should be sent to the person listed in need alternative formats or services MCMIS is the authoritative system of this section. because of a disability, such as sign records for these records and is covered language, interpretation, or other by the Privacy Act system of records ADDRESSES: The meeting will be held at ancillary aids, please contact the person notice DOT/FMCSA–001, Motor Carrier the DOT Headquarters at 1200 New listed in the FOR FURTHER INFORMATION Information Management System. All Jersey Avenue SE, Washington, DC CONTACT section. records in SAFETYNET are inputs to or 20590. Copies of the meeting minutes Oral comments from members of the duplicate copies of MCMIS records will be available at https:// public joining the meeting may be subject to the DOT/FMCSA–001 system www.regulations.gov. After entering the allowed if time permits. The time for of records notice, therefore a separate docket number (DOT–OST–2018–0206), each commenter may be limited. notice is not required. Records click on the link to ‘‘Open Docket Individuals wishing to reserve speaking transmitted to MCMIS via SAFETYNET Folder’’ and choose the document to time during the meeting must submit a and the authoritative copy received review. Written materials may be request at the time of registration, as from MCMIS will continue to be submitted to this docket. If you do not well as the name, address, and updated on a daily basis. The have access to the internet, you may organizational affiliation of the rescindment of this notice ensures that view the docket by visiting the Docket proposed speaker. Speakers are the Department applies the fair Management Facility in Room W12–140 requested to submit a written copy of information practice principles and on the ground floor of the DOT’s West their prepared remarks for inclusion in Privacy Act protections afforded by the Building, 1200 New Jersey Avenue SE, the meeting records and for circulation MCMIS notice in a consistent manner. Washington, DC 20590, between 9 a.m. to AAPB Advisory Committee members. and 5 p.m., E.T., Monday through Any member of the public may submit SYSTEM NAME AND NUMBER: Friday, except Federal holidays. a written statement to the committee DOT/FMCSA 006, SAFETYNET. SUPPLEMENTARY INFORMATION: through the docket at any time.

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Issued this 19th day of December, 2019, in matter of public record. Therefore, you information required by the form by Washington, DC. should submit only information that another means, provided the individual Blane A. Workie, you wish to make publicly available. certifies the accuracy of the information. Assistant General Counsel for Aviation FOR FURTHER INFORMATION CONTACT: The Covered financial institutions must also Enforcement and Proceedings, U.S. FinCEN Resource Center at 1–800–767– maintain a record of the identifying Department of Transportation. 2825 or electronically at [email protected]. information obtained, and a description [FR Doc. 2019–27943 Filed 12–27–19; 8:45 am] SUPPLEMENTARY INFORMATION: of any document relied on, of any non- BILLING CODE 4910–9X–P documentary methods and results of I. Statutory and Regulatory Provisions any measures undertaken, and the FinCEN exercises regulatory functions resolutions of substantive discrepancies. DEPARTMENT OF THE TREASURY primarily under the Currency and These requirements will assist law Financial Transactions Reporting Act of enforcement in financial investigations, Financial Crimes Enforcement Network 1970, as amended by the USA PATRIOT advance counterterrorism and broader national security interests, improve Agency Information Collection Act of 2001 and other legislation. This legislative framework is commonly financial institutions’ ability to assess Activities; Proposed Renewal; and mitigate risk, help prevent evasion Comment Request; Renewal Without referred to as the ‘‘Bank Secrecy Act’’ 1 of targeted financial sanctions, facilitate Change of the Beneficial Ownership (‘‘BSA’’). The Secretary of the Treasury has delegated to the Director of FinCEN tax compliance, enhance financial Requirements for Legal Entity transparency of legal entities, and Customers the authority to implement, administer, and enforce compliance with the BSA advance U.S. compliance with AGENCY: Financial Crimes Enforcement and associated regulations.2 Pursuant to international standards and Network (‘‘FinCEN’’), Treasury. this authority, FinCEN may issue commitments. ACTION: Notice and request for regulations requiring financial II. Paperwork Reduction Act (‘‘PRA’’) 6 comments. institutions to keep records and file Title: 31 CFR 1010.230—Beneficial reports that ‘‘have a high degree of SUMMARY: As part of its continuing effort Ownership Requirements for Legal usefulness in criminal, tax, or regulatory Entity Customers. to reduce paperwork and respondent investigations or proceedings, or in the burden, FinCEN invites comment on the OMB Control Number: 1506–0070. conduct of intelligence or Form Number: Appendix A to proposed renewal, without change, to a counterintelligence activities, including currently approved information § 1010.230—Certification Regarding analysis, to protect against international Beneficial Owners of Legal Entity collection relating to beneficial terrorism.’’ 3 Additionally, FinCEN is ownership requirements for legal entity Customers. authorized to impose regulations to Abstract: FinCEN is issuing this customers of covered financial maintain procedures to ensure notice to renew the OMB control institutions. Under Bank Secrecy Act compliance with the BSA and FinCEN’s number for the regulations contained in regulations, covered financial implementing regulations, and to guard 31 CFR 1010.230 that require covered institutions are required to collect, and against money laundering, which financial institutions to collect, and to to maintain records of, the information includes imposing on financial maintain records of, the information used to identify and verify the identity institutions customer due diligence used to identify and verify the identity of the names of the beneficial owners of requirements within the anti-money of the names of the beneficial owners of their legal entity customers, subject to laundering (‘‘AML’’) program their legal entity customers. certain exclusions and exemptions. This requirements.4 Type of Review: Renewal without request for comment is made pursuant Under 31 CFR 1010.230 covered change of a currently approved to the Paperwork Reduction Act of 1995. financial institutions 5 are required to information collection. DATES: Written comments are welcome establish and maintain written Affected Public: Business and other and must be received on or before procedures that are reasonably designed for-profit institutions and non-profit February 28, 2020. to identify and verify beneficial owners institutions. ADDRESSES: Comments may be of new accounts opened by legal entity Frequency: As required. submitted by any of the following customers and to include such Burden: methods: procedures in their AML programs. a. Update and maintain beneficial • Federal E-rulemaking Portal: http:// Covered financial institutions may ownership identification procedures: 20 www.regulations.gov. Follow the obtain the required identifying minutes.7 instructions for submitting comments. information by either obtaining a b. Customer identification, Refer to Docket Number FINCEN–2019– prescribed certification form from the verification, and review and 0007 and the specific Office of individual opening the account on recordkeeping of the beneficial Management and Budget (‘‘OMB’’) behalf of a legal entity customer, or by ownership information: A range of 20 to control number 1506–0070. obtaining from the individual the 40 minutes per legal entity customer (an • Mail: Policy Division, Financial average of 30 minutes per legal entity Crimes Enforcement Network, P.O. Box 1 The BSA is codified at 12 U.S.C. 1829b, 12 customer). 39, Vienna, VA 22183. Refer to Docket U.S.C. 1951–1959, 31 U.S.C. 5311–5314 and 5316– 5332 and notes thereto, with implementing 6 Public Law 104–13, 44 U.S.C. 3506(c)(2)(A). Number FINCEN–2019–0007 and OMB regulations at 31 CFR Chapter X. See 31 CFR 7 The final rule recognized a burden of 56 hours control number 1506–0070. 1010.100(e). to develop the initial procedures (40 hours for small 2 Please submit comments by one Treasury Order 180–01 (Jul. 1, 2014). entities). (See 81 FR 29398, May 11, 2016). Once method only. Comments will also be 3 31 U.S.C. 5311. procedures are developed, an annual burden of 20 incorporated into FinCEN’s 4 31 U.S.C. 5318(a) and (h). minutes is recognized for revisions to and retrospective regulatory review process, 5 Covered financial institutions include banks, maintenance of such procedures. Covered financial brokers or dealers in securities, mutual funds, and institutions were required to comply with this rule as mandated by Executive Orders 12866 futures commission merchants and introducing by May 11, 2018, so no burden hours are included and 13563. All comments submitted in brokers in commodities. See 31 CFR 1010.230(f) in this analysis for the initial development of response to this notice will become a and 31 CFR 1010.605(e)(1). procedure.

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Estimated Number of Respondents: information to be collected; (d) ways to number FISCAL–2019–0002. In general, 23,615.8 minimize the burden of the collection of comments received will be published on Estimated Total Annual Responses: information on respondents, including www.regulations.gov without change, 8,855,625.9 through the use of automated collection including any business or personal Estimated Recordkeeping Burden: techniques or other forms of information information provided. Do not disclose 4,435,685 hours.10 technology; and (e) estimates of capital any information in your comment or An agency may not conduct or or start-up costs and costs of operation, supporting materials that you consider sponsor, and a person is not required to maintenance and purchase of services to confidential or inappropriate for public respond to, a collection of information provide information. disclosure. Comments will not be edited unless it displays a valid control to remove any identifying or contact Jamal El Hindi, number assigned by OMB. Records information. required to be retained under the BSA Deputy Director, Financial Crimes FOR FURTHER INFORMATION CONTACT: must be retained for five years. Enforcement Network. Melvin Saunders, at (202) 874–5283 or Generally, information collected [FR Doc. 2019–28037 Filed 12–27–19; 8:45 am] [email protected]; or pursuant to the BSA is confidential but BILLING CODE 4810–02–P Dwayne Boothe, at (304) 480–5244 or may be shared as provided by law with [email protected]. regulatory and law enforcement authorities. DEPARTMENT OF THE TREASURY SUPPLEMENTARY INFORMATION: Congress Request for Comments: authorized the Secretary of the Treasury Comments submitted in response to Fiscal Service (the Secretary) in 31 U.S.C. 9304–9305 this notice will be summarized and/or [FISCAL–2019–0002] to certify a surety company to do included in the request for OMB business with the United States if the RIN 1530–AA20 approval. All comments will become a Secretary determines that the company matter of public record. Comments are Surety Companies Doing Business meets certain conditions and is able to invited on: (a) Whether the collection of With the United States; Request for carry out its contracts. The Secretary has information is necessary for the proper Information delegated authority to Fiscal Service to performance of the functions of the administer the program. agency, including whether the AGENCY: Bureau of the Fiscal Service, Fiscal Service evaluates the financial information shall have practical utility; Treasury. condition of companies applying to be (b) the accuracy of the agency’s estimate ACTION: Notice of request for certified as a surety or as a reinsurer of of the burden of the collection of information; request for comment. federal surety bonds. Fiscal Service information; (c) ways to enhance the issues a ‘‘certificate of authority’’ to SUMMARY: The U.S. Department of the quality, utility, and clarity of the approved companies. Under the Treasury, Bureau of the Fiscal Service program, Fiscal Service also evaluates (Fiscal Service) administers the 8 The above Estimated Number of Respondents is companies applying for recognition as based on sum of the following numbers: corporate federal surety bond program admitted reinsurers for excess risk that • 5,358 banks [Federal Deposit Insurance (‘‘the program’’), under which Fiscal does not run to the United States. Fiscal Corporation, Key Statistics web page, April 25, Service processes and evaluates Service has published its requirements 2019]; applications from companies seeking to • for companies applying to underwrite or 5,375 federally-insured credit unions [National underwrite or reinsure federal surety Credit Union Administration, Quarterly Credit reinsure federal surety bonds and for Union Data Summary, December 31, 2018]; bonds. Fiscal Service is considering companies applying to be recognized as • 125 privately-insured credit unions [General modernizing and improving the admitted reinsurers at 31 CFR part 223, Accountability Office, PRIVATE DEPOSIT program. To support this effort, Fiscal and in annual letters posted to its INUSRANCE: Credit Unions Largely Complied with Service requests information from Disclosure Rules, but Rules Should Be Clarified, website at fiscal.treasury.gov/surety- March 2017]; stakeholders on these topics, including bonds. Fiscal Service publishes lists of • 1,130 introducing brokers [National Futures views regarding the application process companies receiving certificates of Association website, March 31, 2019]; for certificates of authority, the data that authority to underwrite or reinsure • 64 futures commission merchants [National Fiscal Service should consider, and the federal surety bonds, and of those Futures Association website, March 31, 2019]; analytical methods it should use when • companies recognized as admitted 3,607 securities firms [Financial Industry evaluating an applicant’s financial Regulatory Authority website, December 31, 2018]; reinsurers, on its website annually. and, condition. Once a company is certified to • 7,956 U.S. mutual funds [Investment Company DATES: Submit written comments on or underwrite or reinsure federal surety Institute, 2018 Factbook, 2018]. bonds, it must submit quarterly 9 before February 13, 2020. Based on research conducted to publish the financial reports to Fiscal Service final rule in 2016, it is estimated that each covered ADDRESSES: You may submit comments, financial institution will open, on average, 1.5 new identified by docket FISCAL–2019– demonstrating that the company legal entity accounts per business day. There are 0002, using the following methods: remains in good financial standing. 250 business days per year. (23,615 financial • Federal eRulemaking Portal: (http:// Fiscal Service is exploring ways to institutions × 1.5 accounts per day × 250 business modernize and improve how it days per year = 8,855,625 new legal entity accounts www.regulations.gov). Follow the opened per year). instructions on the website for evaluates the financial condition of 10 8,855,625 new legal entity accounts × 30 submitting comments. companies seeking to underwrite and minutes per account established ÷ 60 minutes per • Email: surety.bonds@ reinsure federal surety bonds or to act hour = 4,427,813 burden hours to identify and fiscal.treasury.gov. Include docket as admitted reinsurers, as well as its verify beneficial owners of new legal entity accounts per year. 20 minutes to update and FISCAL–2019–0002 in the subject line requirements for the application or maintain beneficial ownership identification and of the message. renewal of certificates of authority. A verification procedures within a financial • Mail: Surety Bond Branch, Bureau number of changes in the regulation of institution’s AML program multiplied by 23,615 of the Fiscal Service, 3201 Pennsy the insurance industry that have an covered financial institutions and divided by 60 minutes = 7,872 burden hours annually. The total Drive, Building E, Landover, MD 20785. indirect effect on the program and annual burden hours estimate for this information Instructions: All submissions received companies applying for certification (or collection is (4,427,813 + 7,872) 4,435,685. must refer to Fiscal Service and docket to be recognized as an admitted

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reinsurer) have taken place in the years requirements imposed by relevant and provide the rationale for those since Fiscal Service last significantly regulatory authorities. revisions. updated the program’s regulatory 2. What different methodologies, if Timothy E. Gribben, requirements and its financial analysis any, should Fiscal Service consider methodology. For instance, the passage using when evaluating applications Commissioner, Bureau of the Fiscal Service. of the Nonadmitted and Reinsurance from companies that are part of an [FR Doc. 2019–28193 Filed 12–27–19; 8:45 am] Reform Act of 2010 and the adoption by insurance group’s pooling agreement? BILLING CODE 4810–AS–P U.S. states of the 2011 amendments to Please provide your views on whether the National Association of Insurance Fiscal Service should analyze such Commissioners’ Credit for Reinsurance applicants’ financial condition at the DEPARTMENT OF THE TREASURY Model Law and Model Regulation have group level rather than, or in Fiscal Service impacted the form and extent of surety conjunction with, analysis at the companies’ reliance on reinsurers not individual company level. Please Prompt Payment Interest Rate; domiciled in the United States. In 2010, address the benefits and risks to the Contract Disputes Act Congress created the Federal Insurance federal government of performing the Office (‘‘FIO’’) in the Department of the financial analysis at the group level. AGENCY: Bureau of the Fiscal Service, Treasury to, among other things, 3. Should Fiscal Service consider Treasury. monitor and report on the regulation of changing the approach or methodology ACTION: Notice of prompt payment the insurance industry. Additionally, it uses to determine the credit allowed interest rate; Contract Disputes Act. pursuant to the authorities set forth in for reinsurance and, if so, what changes SUMMARY: For the period beginning the Federal Insurance Office Act of should it consider? Please address both January 1, 2020, and ending on June 30, 2010, the Department of the Treasury, reinsurance of federal surety bonds and 2020, the prompt payment interest rate led by the FIO, and the Office of the of non-federal risks, and provide the is 21⁄8 per centum per annum. United States Trade Representative have rationale for any proposed changes. DATES: negotiated a covered agreement with the 4. Should Fiscal Service consider Effective January 1, 2020, to June European Union, providing for (among changing any aspects of the approach or 30, 2020. other things) the elimination of methodology it uses to determine ADDRESSES: Comments or inquiries may collateral requirements, under specified recognition of a company as an admitted be mailed to: E-Commerce Division, conditions, for reinsurers from EU reinsurer? In your response, please Bureau of the Fiscal Service, 401 14th member states assuming business from address Fiscal Service’s treatment of Street SW, Room 306F, Washington, DC U.S. ceding insurers. While these and both domestic and alien reinsurers, and 20227. Comments or inquiries may also other developments are not the sole discuss the benefits and risks to the be emailed to PromptPayment@ impetus for Fiscal Service’s federal government of any proposed fiscal.treasury.gov. consideration of modernizing and changes. FOR FURTHER INFORMATION CONTACT: improving program requirements, the 5. Should Fiscal Service consider Thomas M. Burnum, E-Commerce questions below should be viewed in changing the permissible methods, as Division, (202) 874–6430; or Thomas light of these changes that have described in the program’s regulations Kearns, Attorney-Advisor, Office of the occurred in the regulation of the and annual letters published on its Chief Counsel, (202) 874–7036. insurance industry. Throughout this website, for limiting risk in excess of a SUPPLEMENTARY INFORMATION: An agency process, Fiscal Service will consult and surety company’s underwriting that has acquired property or service coordinate with FIO. limitation? In your response, please from a business concern and has failed You are invited to answer the address permissible methods for to pay for the complete delivery of following questions and provide general limiting risk in excess of the property or service by the required comments on any other aspect of the underwriting limitation relative to both payment date shall pay the business program’s regulations and requirements. federal surety bonds and to non-federal concern an interest penalty. 31 U.S.C. Please include in your comments how risks. 3902(a). The Contract Disputes Act of any recommended actions would 6. Should Fiscal Service consider 1978, Sec. 12, Public Law 95–563, 92 protect the financial interests of the changing the schedule and the Stat. 2389, and the Prompt Payment Act, United States and otherwise improve documentation required for issuing and 31 U.S.C. 3902(a), provide for the the program. renewing certificates of authority and, if calculation of interest due on claims at Request for Comment: While Fiscal so, what changes should it consider? As the rate established by the Secretary of Service is particularly interested in an example, but not a limitation on the the Treasury. responses to the following questions, scope of the foregoing question, should The Secretary of the Treasury has the commenters may supply other Fiscal Service consider issuing authority to specify the rate by which information pertaining to Fiscal certificates of authority that are valid for the interest shall be computed for Service’s requirements not explicitly more than one year based on a interest payments under section 12 of referenced below. company’s financial condition? Please the Contract Disputes Act of 1978 and 1. Should Fiscal Service consider address the benefits and risks to the under the Prompt Payment Act. Under changing the approach or methodology federal government of implementing the Prompt Payment Act, if an interest it uses to value the assets and liabilities such proposed changes, including penalty is owed to a business concern, of a company applying to be certified as issuing certificates of authority that are the penalty shall be paid regardless of an insurer or reinsurer, or to be valid for more than one year. whether the business concern requested recognized as an admitted reinsurer? In 7. Please recommend any other payment of such penalty. 31 U.S.C. particular, please consider commenting revisions to the program regulations as 3902(c)(1). Agencies must pay the on the following items: (a) Admissible addressed in 31 CFR part 223 or the interest penalty calculated with the versus non-admissible assets; (b) capital annual letters published on Fiscal interest rate, which is in effect at the requirements; (c) underwriting Service’s website that are consistent time the agency accrues the obligation limitation; and (d) comparison to with protecting the federal government, to pay a late payment interest penalty.

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31 U.S.C. 3902(a). ‘‘The interest penalty Treasury Departmental Officers (DO) Affected Public: Businesses or other shall be paid for the period beginning 1. Title: Troubled Asset Relief for-profits. on the day after the required payment Program—Making Home Affordable Estimated Number of Respondents: date and ending on the date on which Participants. 150,000. payment is made.’’ 31 U.S.C. 3902(b). OMB Control Number: 1505–0216. Frequency of Response: Annually. Therefore, notice is given that the Type of Review: Extension without Estimated Total Number of Annual Secretary of the Treasury has change of a currently approved Responses: 150,000. determined that the rate of interest collection. Estimated Time per Response: 15 applicable for the period beginning Description: Authorized under the minutes. January 1, 2020, and ending on June 30, Emergency Economic Stabilization Act Estimated Total Annual Burden 2020, is 21⁄8 per centum per annum. (EESA) of 2008 (Public Law 110–343), Hours: 37,000. the Department of the Treasury has Authority: 44 U.S.C. 3501 et seq. Timothy E. Gribben, implemented several aspects of the Commissioner, Bureau of the Fiscal Service. Troubled Asset Relief Program. Among Dated: December 23, 2019. [FR Doc. 2019–28192 Filed 12–27–19; 8:45 am] these components is a voluntary Spencer W. Clark, BILLING CODE 4810–AS–P foreclosure prevention program, Making Treasury PRA Clearance Officer. Home Affordable (MHA) program, [FR Doc. 2019–28143 Filed 12–27–19; 8:45 am] under which the Department will use BILLING CODE 4810–25–P DEPARTMENT OF THE TREASURY TARP capital to lower the mortgage payments of qualifying borrowers. The Agency Information Collection Treasury will do this through DEPARTMENT OF THE TREASURY Activities; Submission for OMB agreements with mortgage servicers to Review; Comment Request; Multiple modify loans on their systems. All Agency Information Collection Treasury Information Collection servicers were eligible to participate in Activities; Submission for OMB Requests the program. Review; Comment Request; Multiple Form: None. Fiscal Service Information Collection AGENCY: Departmental Offices, U.S. Affected Public: Businesses or other Requests Department of the Treasury. for-profits. AGENCY: Departmental Offices, U.S. Estimated Number of Respondents: ACTION: Notice. Department of the Treasury. 140. Frequency of Response: Monthly. ACTION: Notice. SUMMARY: The Department of the Estimated Total Number of Annual SUMMARY: The Department of the Treasury will submit the following Responses: 1,680. Treasury will submit the following information collection requests to the Estimated Time per Response: 187.5 information collection requests to the Office of Management and Budget hours for large servicers and 2 hours for Office of Management and Budget (OMB) for review and clearance in small servicers. accordance with the Paperwork Estimated Total Annual Burden (OMB) for review and clearance in Reduction Act of 1995, on or after the Hours: 47,880. accordance with the Paperwork date of publication of this notice. The 2. Title: Annual Performance Report Reduction Act of 1995, on or after the public is invited to submit comments on and Certification for Section 1603: date of publication of this notice. The these requests. Payments for Specified Renewable public is invited to submit comments on these requests. DATES: Comments should be received on Energy Property in Lieu of Tax Credits. or before January 29, 2020 to be assured OMB Control Number: 1505–0221. DATES: Comments should be received on of consideration. Type of Review: Extension without or before January 29, 2020 to be assured change of a currently approved of consideration. ADDRESSES: Send comments regarding collection. ADDRESSES: Send comments regarding the burden estimate, or any other aspect Description: Authorized under the the burden estimate, or any other aspect of the information collection, including American Recovery and Reinvestment of the information collection, including suggestions for reducing the burden, to Act (ARRA), of 2009 (Pub. L. 111–5), the suggestions for reducing the burden, to (1) Office of Information and Regulatory Department of the Treasury is (1) Office of Information and Regulatory Affairs, Office of Management and implementing several provisions of the Affairs, Office of Management and Budget, Attention: Desk Officer for Act, more specifically Division B-Tax, Budget, Attention: Desk Officer for Treasury, New Executive Office Unemployment, Health, State Fiscal Treasury, New Executive Office Building, Room 10235, Washington, DC Relief, and Other Provisions. Among _ Building, Room 10235, Washington, DC 20503, or email at OIRA Submission@ these components is a program which 20503, or email at OIRA_Submission@ OMB.EOP.gov and (2) Treasury PRA requires Treasury, in lieu of a tax credit, OMB.EOP.gov and (2) Treasury PRA Clearance Officer, 1750 Pennsylvania to reimburse persons who place in Clearance Officer, 1750 Pennsylvania Ave. NW, Suite 8100, Washington, DC service certain specified energy Ave. NW, Suite 8100, Washington, DC 20220, or email at [email protected]. properties. The collection of 20220, or email at [email protected]. information is necessary to properly FOR FURTHER INFORMATION CONTACT: FOR FURTHER INFORMATION CONTACT: monitor compliance with program Copies of the submissions may be Copies of the submissions may be requirements. Applicants for Section obtained from Spencer W. Clark by obtained from Spencer W. Clark by 1603 payments commit in the Terms emailing [email protected], calling emailing [email protected], calling and Conditions that are part of the (202) 927–5331, or viewing the entire (202) 927–5331, or viewing the entire application to submitting an annual information collection request at information collection request at report for five years from the date the www.reginfo.gov. www.reginfo.gov. energy property is placed in service. SUPPLEMENTARY INFORMATION: Form: None. SUPPLEMENTARY INFORMATION:

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Bureau of the Fiscal Service (BFS) DEPARTMENT OF THE TREASURY Frequency of Response: Annually. Estimated Total Number of Annual 1. Title: FS Form 2887—Application Agency Information Collection Responses: 30. Form for U.S. Department of the Activities; Submission for OMB Estimated Time per Response: 6 Treasury Stored Value Card (SVC) Review; hours. Program. Estimated Total Annual Burden OMB Control Number: 1530–0013. Comment Request; Multiple Internal Hours: 180. Type of Review: Revision of a Revenue Service Information 2. Title: Disclosure of returns and currently approved collection. Collection Requests return information. Description: This collection of forms OMB Control Number: 1545–2154. is used to collect information from AGENCY: Departmental Offices, U.S. Type of Review: Extension without individuals requesting enrollment in the Department of the Treasury. change of a currently approved Treasury SVC program along with ACTION: Notice. collection. supplemental information for Description: Subject to such contractors choosing to participate in SUMMARY: The Department of the requirements and conditions as the the program, to obtain authorization to Treasury will submit the following Secretary may prescribe by regulation, initiate debit and credit entries to their information collection requests to the section 6103 (c) of the Internal Revenue bank or credit union accounts, and to Office of Management and Budget Code authorizes the Internal Revenue facilitate collection of any delinquent (OMB) for review and clearance in Service to disclose a taxpayer’s return or amounts. Disclosure of the information accordance with the Paperwork return information to such person or requested on the forms is voluntary; Reduction Act of 1995, on or after the persons as the taxpayer may designate however, failure to furnish the date of publication of this notice. The in a request for or consent to such requested information may significantly public is invited to submit comments on disclosure, or to any other person at the delay or prevent participation in the these requests. taxpayer’s request to the extent Treasury SVC program. DATES: Comments should be received on necessary to comply with the taxpayer’s Form: FS Forms 2887, 2889 and 5752. or before January 29, 2020 to be assured request to such other person for Affected Public: Individuals and of consideration. information or assistance. This households. ADDRESSES: Send comments regarding regulation (§ 301.6103(c)–1), contains Estimated Number of Respondents: the burden estimate, or any other aspect the requirements that must be met 102,030. of the information collection, including before, and the conditions under which, Frequency of Response: On occasion. suggestions for reducing the burden, to the Internal Revenue Service may make Estimated Total Number of Annual (1) Office of Information and Regulatory such disclosures. Responses: 102,030. Affairs, Office of Management and Individuals can use Form 4506T–EZ Estimated Time per Response: 10 Budget, Attention: Desk Officer for to request a tax return transcript that minutes for FS Forms 2887 & 2889, 1 Treasury, New Executive Office includes most lines of the original tax minute for FS Form 5752. Building, Room 10235, Washington, DC return. The tax return transcript will not Estimated Total Annual Burden 20503, or email at OIRA_Submission@ show payments, penalty assessments, or Hours: 17,001. OMB.EOP.gov and (2) Treasury PRA adjustments made to the originally filed 2. Title: Release (FS Form 2001). Clearance Officer, 1750 Pennsylvania return. Form 4506T–EZ (SP) is the OMB Control Number: 1530–0053. Ave. NW, Suite 8100, Washington, DC Spanish translated version of the Form Type of Review: Extension without 20220, or email at [email protected]. 4506T–EZ. It is also used to request a change of a currently approved FOR FURTHER INFORMATION CONTACT: tax return transcript that includes most collection. Copies of the submissions may be lines of the original tax return. Description: It may be necessary for a obtained from Spencer W. Clark by Form: 4506T–EZ, 4506T–EZ (SP). Affected Public: Individuals and registered owner/co-owner of savings emailing [email protected], calling bonds or a TreasuryDirect account households. (202) 927–5331, or viewing the entire Estimated Number of Respondents: holder to waive a claim as the result of information collection request at an unauthorized payment to person(s) 5,277,136. www.reginfo.gov. Frequency of Response: On occasion. not entitled and then release the SUPPLEMENTARY INFORMATION: Estimated Total Number of Annual Government of any liability. Responses: 5,277,136. Form: FS Form 2001. Internal Revenue Service (IRS) Estimated Time per Response: 47 Affected Public: Individuals and 1. Title: Notice 2009–83—Credit for minutes. households. Carbon Dioxide Sequestration Under Estimated Total Annual Burden Estimated Number of Respondents: Section 45Q. Hours: 4,143,302. 25. OMB Control Number: 1545–2153. 3. Title: Production Tax Credit for Frequency of Response: On occasion. Type of Review: Extension without Refined Coal. Estimated Total Number of Annual change of a currently approved OMB Control Number: 1545–2158. Responses: 25. collection. Type of Review: Extension without Estimated Time per Response: 6 Description: This notice sets forth change of a currently approved minutes. interim guidance, pending the issuance collection. Estimated Total Annual Burden of regulations, relating to the credit for Description: This notice sets forth Hours: 3. carbon dioxide sequestration (CO2 interim guidance pending the issuance Authority: 44 U.S.C. 3501 et seq. sequestration credit) under § 45Q of the of regulations relating to the tax credit under § 45 of the Internal Revenue Code Dated: December 23, 2019. Internal Revenue Code. Form: None. (Code) for refined coal. Taxpayer must Spencer W. Clark, Affected Public: Businesses or other file certification that its refined coal has Treasury PRA Clearance Officer. for-profits. achieved ’qualified emissions reduction’ [FR Doc. 2019–28177 Filed 12–27–19; 8:45 am] Estimated Number of Respondents: with its tax return in order to claim the BILLING CODE 4810–AS–P 30. production tax credit for refined coal.

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Form: None. authorized when consistent with the AND the amount must be specifically Affected Public: Businesses or other basic public obligations of the IRS. identified in the settlement agreement for-profits. Form: 14417, 14417–A. or court order as restitution, Estimated Number of Respondents: Affected Public: Businesses or other remediation or to come into compliance 100. for-profits, State, local & foreign with the law. Frequency of Response: On occasion. governments. Any amount paid or incurred as Estimated Total Number of Annual Estimated Number of Respondents: reimbursement to the Government for Responses: 100. 300. the costs of any investigation or Estimated Time per Response: 15. Frequency of Response: On occasion. litigation are not deductible under one Estimated Total Annual Burden Estimated Total Number of Annual of the exceptions (under prior law, these Hours: 1,500. Responses: 310. amounts were often considered 4. Title: Extended Carryback of Losses Estimated Time per Response: 30 compensatory and deductible). to or from a Consolidated Group (TD minutes for Form 14417 and 1 hour for The 2017 Tax Cuts and Jobs Act also 9490—Final). Form 14417–A. enacted IRC section 6050X, which OMB Control Number: 1545–2171. Estimated Total Annual Burden requires government agencies or Type of Review: Extension without Hours: 160. specified nongovernmental regulatory change of a currently approved 6. Title: Revenue Procedure 141793– entities to file certain information collection. 11 (Rev. Proc. 2014–49). returns. Notice 2018–23 provides Description: This document contains OMB Control Number: 1545–2237. information for section 6050X and final and temporary regulations under Type of Review: Extension without transitional guidance under IRC § 162(f). section 1502 that affect corporations change of a currently approved Form: 1098–F. filing consolidated returns. These collection. Affected Public: Businesses or other regulations contain rules regarding the Description: This revenue procedure for-profits. implementation of section 172(b)(1)(H) provides guidance to State housing Estimated Number of Respondents: within a consolidated group. These credit agencies (Agencies) and owners 200. regulations also permit certain acquiring of low-income buildings (Owners) Frequency of Response: Annually, On consolidated groups to elect to waive all regarding the suspension of certain occasion. or a portion of the pre-acquisition income limitation requirements under Estimated Total Number of Annual carryback period pursuant to section section 42 of the Internal Revenue Code Responses: 47,200. 172(b)(1)(H) for specific losses for certain low-income housing tax Estimated Time per Response: 7 attributable to certain acquired credit properties affected by major minutes. members. This project amends § 1.1502– disaster areas declared by the President Estimated Total Annual Burden 21 to implement the revisions to Code under the Robert T. Stafford Disaster Hours: 5,664. section 172(b)(1)(H), which extend the Relief and Emergency Assistance Act, Authority: 44 U.S.C. 3501 et seq. carryback period for NOLs to five years, 42 U.S.C. 5121 et seq. (Stafford Act). enacted by the Worker, Form: None. Dated: December 23, 2019. Homeownership, and Business Affected Public: Individuals and Spencer W. Clark, Assistance Act of 2009 (‘‘WHBAA’’) that households. Treasury PRA Clearance Officer. the President signed on Nov. 6, 2009 Estimated Number of Respondents: [FR Doc. 2019–28111 Filed 12–27–19; 8:45 am] (Pub. L. 111–92). 3,500. BILLING CODE 4830–01–P Form: None. Frequency of Response: On occasion. Affected Public: Businesses or other Estimated Total Number of Annual Responses: 3,500. for-profits. DEPARTMENT OF VETERANS Estimated Time per Response: 30 Estimated Number of Respondents: AFFAIRS 4,000. minutes. Frequency of Response: Annually. Estimated Total Annual Burden Funding Availability: Homeless Estimated Total Number of Annual Hours: 1,750. Providers Grant and Per Diem Program Responses: 4,000. 7. Title: Transitional Guidance Under Estimated Time per Response: 15 Sections 162(f) and 6050X with Respect AGENCY: Department of Veterans Affairs. minutes. To Certain Fines, Penalties, and Other ACTION: Notice of Funding Availability Estimated Total Annual Burden Amounts. (NOFA). Hours: 1,000. OMB Control Number: 1545–2284. 5. Title: Form 14417—Reimbursable Type of Review: Revision of a SUMMARY: The Department of Veterans Agreement—Non-Federal Entities; Form currently approved collection. Affairs (VA) is announcing the 14417–A—Statistics of Income—User Description: The collection covers the availability of per diem funds to eligible Fee. new information reporting requirements entities to provide transitional housing OMB Control Number: 1545–2235. under IRC 162(f) and new 6050X, which beds or service centers for Veterans who Type of Review: Extension without was added by the Tax Cuts and Jobs Act are homeless or at risk for becoming change of a currently approved (TCJA). homeless under VA’s Homeless collection. Generally, no deduction is allowed for Providers GPD Program models. VA Description: Information collected any amount paid to, or at the direction expects to fund approximately 11,500 with this form will be used by the IRS of, a government or specified beds and approximately 20 service to enter into cost reimbursable nongovernmental entity for the violation center applications with this Notice of agreements with state, local, foreign of any law, except in certain cases laid Funding Availability (NOFA) for government, and commercial entities. out in the statute. To be deductible applicants who will offer one (1) or a The authority to perform services on a under an exception, the Taxpayer must combination of the transitional housing cost reimbursable basis is contained in establish that an amount required to be bed models (i.e., Bridge Housing, Low Section 6103(p) of the Internal Revenue paid is for restitution, remediation or to Demand, Hospital-to-Housing, Clinical Code. Performance of services is come into compliance with the law, Treatment and Service-Intensive

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Transitional Housing) and for applicants Funding Opportunity Title: GPD Per their own ability and the particular who will offer service centers. Funding Diem Only Grant Program (PDO). needs of the community. is based on a variety of factors including Announcement Type: Initial. • All service center(s) being proposed the quantity and quality of applications Funding Opportunity Number: VA– by the applicant for the VAMC as well as the availability of funding. GPD–PDO–FY2020. catchment area must be included within DATES: Applications for grants under the Catalog of Federal Domestic a single application. GPD Program must be received by the Assistance Number: 64.024, VA • If more than one (1) application per GPD National Program Office by 4:00 Homeless Providers Grant and Per Diem VAMC catchment area per applicant’s p.m. Eastern Time on March 2, 2020. In Program. EIN is received by the due date and time, VA will consider only one (1) the interest of fairness to all competing I. Funding Opportunity Description applicants, this deadline is firm as to application. VA reserves the right to date and hour. VA will treat as A. Purpose: This NOFA announces select which application to consider ineligible for consideration any the availability of per diem funding to based on the submission dates and application that is received after the 501(c)(3) and 501(c)(19) non-profit times or based on other factors. deadline. Applicants should take this organizations, state and local Note: Applications for transitional practice into account and submit their governments, and recognized Indian housing beds and applications for materials early to avoid the risk of Tribal governments. Each application service center(s) do not have to include unanticipated delays, computer service must request either transitional housing coverage for the entire VAMC catchment outages or other submission-related bed model(s) or service center(s). area in the application. The coverage problems that might result in Although transitional housing area; however, must not exceed the ineligibility. applications and service center VAMC catchment area identified in the applications are standalone application. If an applicant does not ADDRESSES: applications, they will be reviewed, For a Copy of the Application know their VAMC catchment area, they Package: The required documentation scored and selected for funding can contact the local medical facility: for applications is outlined under the together. They will be selected based on https://www.va.gov/directory/guide/ Application Documentation Required their ranked order among all the allstate.asp and ask to speak with the sections of this NOFA. Note: There is an applications submitted in response to Homeless Program. Application Documentation Required this NOFA. Applicants agree to meet the applicable requirements of 38 CFR part section for applications for transitional Transitional Housing Applications housing bed models and a separate 61. In addition, all applicants need to • Applications are limited to up to Application Documentation Required demonstrate low barriers to accessing one (1) transitional housing application section for applications for service services and have policies and per VA Medical Center (VAMC) centers. Questions should be referred to procedures for working with Veterans catchment area per applicant’s the GPD National Program Office at who relapse. Employer Identification Number (EIN). B. Definitions: 38 CFR part 61 [email protected]. For detailed GPD • Applications must include a contains definitions of terms used in the Program information and requirements, minimum of five (5) transitional GPD Program that are applicable to this see Title 38, Code of Federal housing beds per model. NOFA. Regulations (CFR) part 61 (38 CFR part • Applications may include any C. Eligibility Information: To be 61). combination of one, some or all Submission of Application Package: eligible, an applicant must be a 501(c)(3) transitional housing bed models. or 501(c)(19) non-profit organization, Applicants must submit applications • Choice of a model or combination electronically following instructions state or local government, or recognized of models is at the applicant’s Indian Tribal government that meets the found at www.va.gov/homeless/gpd.asp. discretion. Applicants are encouraged to Applications may not be mailed, requirements in 38 CFR 61.1. tailor the proposed model(s) to factors D. Cost Sharing or Matching: None. emailed or sent by fax. Applications such as their own ability and the E. Authority: Funding under this must be received by the GPD National particular needs of the community. NOFA is authorized by 38 U.S.C. 2011, Program Office by 4:00 p.m. Eastern • All housing model(s), site(s) and 2012. Time on the application deadline date. beds being proposed by the applicant F. Transitional Housing Models and Applications must be submitted as a for the VAMC catchment area must be Service Center Descriptions: complete package. Materials arriving included within a single application. Note: For each of the model separately will not be included in the • If more than one (1) application per descriptions below that have Required application package for consideration VAMC catchment area per applicant’s Minimum Performance Metrics/Targets, and may result in the application being EIN is received by the due date and targets are set for the initial funding year rejected or not funded. time, VA will consider only one (1) of this award (October 1, 2020– Technical Assistance: Information application. VA reserves the right to September 30, 2021). VA may, at its regarding how to obtain technical select which application to consider discretion, update these targets during assistance with the preparation of a based on the submission dates and the option year renewal process. Any grant application is available on the times or based on other factors. new targets will be stated in the option GPD Program website at: www.va.gov/ year grant agreement. homeless/gpd.asp. Service Center(s) Applications FOR FURTHER INFORMATION CONTACT: • Applications are limited to up to Bridge Housing Jeffery Quarles, Director, Grant and Per one (1) service center application per Targeted Population—Homeless Diem Program (673/GPD), VA National VAMC catchment area per applicant’s Veterans who have been offered and Grant and Per Diem Program Office, EIN. have accepted a permanent housing 10770 N. 46th Street Suite C–200, • Choice of site(s) and service(s) is at intervention but are not able to Tampa, FL 33617, (813) 979–3570. (This the applicant’s discretion. Applicants immediately enter the permanent is not a toll-free number). are encouraged to tailor their proposed housing. For purposes of this housing SUPPLEMENTARY INFORMATION: site(s) and service(s) to factors such as model, a Veteran is considered accepted

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for a permanent housing intervention if, treatment services or may have been Hospital-to-Housing for example, the Veteran has been unsuccessful in traditional housing Targeted Population—Homeless accepted for case management as part of programs. These Veterans may have not Veterans who are identified and the Department of Housing and Urban yet fully committed to sobriety and evaluated at inpatient care settings and Development-VA Supportive Housing treatment. emergency departments for suitability (HUD–VASH) program even if the Model Overview—Low-Demand for direct transfer to a designated GPD Veteran has not yet received the HUD– housing uses a high-engagement/harm- program for transitional housing and VASH voucher. Similarly, a Veteran is reduction model to better accommodate supportive care. Veterans served under considered accepted for a permanent chronically homeless Veterans and this model must be able to receive housing intervention if, for example, the Veterans who were unsuccessful in healthcare services from VA as a Veteran has been accepted into a traditional treatment settings. Homeless Patient Aligned Care Team Supportive Services for Veterans Programming does not require sobriety (H–PACT), or other appropriate care Families (SSVF) but has not yet started or compliance with mental health team, will facilitate the ongoing care services. Other permanent housing may treatment as a condition of admission or needs while in transitional housing. also be identified (e.g., purchase of a continued stay. Overall, demands are Model Overview—Hospital-to- home, an apartment lease). Applicants kept to a minimum; however, services Housing is a model to address the should review the availability of the are made widely available and are housing and recuperative care needs of community’s permanent housing prior actively promoted by program staff as homeless Veterans who have been to applying under this model to avoid needed. The goal is to establish hospitalized. not being able to move Veterans to permanent housing in the community, Characteristics & Standards—Project permanent housing as quickly as while providing for the safety of staff is small (typically 10 beds or less). possible. and residents. Model Overview—Bridge housing is Housing sites are expected to be near intended to be a short-term stay in Characteristics & Standards—Project the referring medical center so that transitional housing for Veterans with is small in size (typically 20 beds or ongoing clinical care, including pre-identified permanent housing less). Services must include case specialty care, can continue to be destinations. management, substance-use, and provided. Characteristics & Standards—Goals in mental-health treatment. Referrals for Have a post-discharge care plan as the Individual Service Plan (ISP) should benefits are made available as Veterans pre-requisite to program placement that be short-term with the focus on the engage. addresses ongoing physical, mental move to permanent housing, rather than Must provide the participant an health, substance-use disorder and the completion of treatment goals. orientation that sets the expectations of social work needs as well as care Veterans are expected to receive case performance for the participant. Must management plans to transition the management and support, which should have 24/7, paid, appropriately trained, Veteran to permanent housing upon be coordinated with the HUD–VASH, on-site staffing at the same location as clinical stabilization. SSVF or other available community- the location of the program participant. The VA H–PACT, or other appropriate based programs. Grantees will assist (Using resident managers is not care team, will facilitate and coordinate Veterans with accessing services as allowed.) the ongoing care needs upon transition. needed/requested by the Veteran and Must have a method to monitor A Memorandum of Understanding must make available to participants a participants’ and guests’ comings and (MOU) must be in place with the local menu of available services. goings. VAMC that details participation in the Length of Stay (LOS) will be Must have a system in place for Hospital-to-Housing program. Included individually determined based on need, managing contraband. in this should be a detailing of acceptance criteria for Veterans being but in general, is expected to average 90 Must be willing to retain Veterans days. referred from local inpatient care who commit minor infractions of rules settings and emergency departments, a Admission Criteria—Veterans must and who cannot and/or will not stop have been offered and accepted a detailing of how follow-up care with the drinking and/or using legal or illegal medical center is organized, and a permanent housing intervention prior to substances. admission with documentation to be commitment to engaging enrolled Must be committed to keeping the completed within the first 14 days of Veterans in permanent housing as part Veterans housed, staying continuously admission. of program objectives. engaged with each Veteran and Required Minimum Performance Admission Criteria—Individual must providing services as needed. Metrics/Targets—Discharge to be functional, able to perform permanent housing target is 75 percent. Must have procedures to ensure safety independent Activities of Daily Living Negative exits target is less than 20 of staff and residents. The grantee (ADL), not require acute detoxification, percent. Negative exits are defined as agency must participate in calls twice have no apparent psychosis and have a those exits from a GPD program for a per month and in an annual fidelity post discharge plan coordinating care violation of program rules, failure to assessment process as established by with the VAMC (e.g., H–PACT Team, comply with program requirements or VA. Mental Health, Substance Abuse). leaving the program without consulting Required Minimum Performance Required Minimum Performance staff. Metrics/Targets—Discharge to Metrics/Targets—Discharge to permanent housing target is 60 percent. permanent housing target is 65 percent. Low Demand Negative exits target is less than 20 Negative exits target is less than 20 Targeted Population—Homeless percent. Negative exits are defined as percent. Negative exits are defined as Veterans who suffer from mental-health those exits from a GPD program for a those exits from a GPD program for a or substance-use problems or who violation of program rules, failure to violation of program rules, failure to struggle with maintaining sobriety; and comply with program requirements or comply with program requirements or Veterans with multiple treatment leaving the program without consulting leaving the program without consulting failures who may have never received staff. staff.

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Clinical Treatment increase the Veteran’s income through September 30, 2021, with options for Targeted Population—Homeless employment and/or benefits and VA to offer up to two (2) additional Veterans with a specific diagnosis obtaining permanent housing. Services years dependent upon factors such as: related to a substance-use disorder and/ provided, and strategies used by the Funding availability, the recipient or mental-health diagnosis. Veteran applicant will vary based on the meeting the performance goals actively chooses to engage in clinical individualized needs of the Veteran and established in the grant agreement, services. resources available in the community. utilization rates of beds or services, Model Overview—Clinically focused The applicants are encouraged to statutory and regulatory requirements treatment is provided in conjunction provide an array of comprehensive and the results of the VA inspection. with services effective in helping services and/or to connect Veterans to Continuation funding is not guaranteed. homeless Veterans secure permanent resources available in the community. B. Funding Restrictions: No part of an housing and increase income through Applicants specify the staffing levels award under this NOFA may be used to benefits and/or employment. and range of services to be provided. facilitate capital improvements or to Characteristics & Standards— See Funding Limitations section of this purchase vans or real property. Although the programming and services NOFA for the maximum number of Questions should be directed to VA’s have a strong clinical focus, permanent Service-Intensive beds allowed per GPD National Program Office at the housing and increased income are a application. email address listed in the contact required outcome of the program. Required Minimum Performance section of the NOFA. Applicants may Treatment programs must incorporate Metrics/Targets—Discharge to not receive funding to replace funds strategies to increase income and permanent housing target is 70 percent. provided by any Federal, state or local housing attainment. Employment of individuals at discharge government agency or program to assist Individualized assessment, services target is 55 percent. Negative exits target homeless persons. and treatment plan are tailored to is less than 20 percent. Negative exits C. Funding Limitations: achieve optimal results in a time are defined as those exits from a GPD 1. For all applications: VA’s decisions efficient manner and are consistent with program for a violation of program rules, will be based on factors such as need, sound clinical practice. failure to comply with program geographic dispersion and availability Program stays are to be individualized requirements or leaving the program of funding. 2. For applications for transitional based upon the ISP for the Veteran (not without consulting staff. program driven). housing bed models: Applicants are Staff are to be licensed and/or Service Centers encouraged to consider the need in their credentialed to perform the substance- Targeted Population—Homeless community for transitional housing use disorder/mental health services Veterans who are seeking assistance models that are more focused (i.e., provided as directed by state and local with obtaining housing, employment, Bridge, Low Demand, Hospital-to- law. Treatment services must be medical care or benefits. Housing and/or Clinical Treatment) over provided by the applicant or through Model Overview—Provides services the transitional housing model that is contract arrangement. (VA staff cannot and information to engage and aid more general (i.e., Service-Intensive). To be the treatment provider for this homeless Veterans obtain housing and that end, applicants may request up to model.) services. Veterans in GPD or in 15 Service-Intensive beds per Veterans are offered a variety of Healthcare for Homeless Veterans application. If more than 15 Service- treatment service modalities (e.g., (HCHV) transitional housing programs Intensive beds are requested within the individual and group counseling/ are not eligible to be billed under a same application, then at least 60 therapy, family support groups/family service center because GPD and HCHV percent of the additional beds beyond therapy, psychoeducation). housing programs already include an 15 must be for a transitional housing Required Minimum Performance array of services to facilitate obtaining bed model(s) other than Service- Metrics/Targets—Discharge to housing, employment or benefits. Intensive. For example, an applicant permanent housing target is 65 percent. Characteristics & Standards—Scope applying for 50 total beds must allocate Employment of individuals at discharge of services should incorporate tactics to at least 21 of those beds to a housing target is 55 percent. Negative exits target engage and aid the Veteran. Services model(s) that is not Service-Intensive is less than 20 percent. Negative exits provided and strategies used by the (i.e., 50 total beds requested minus 15 are defined as those exits from a GPD applicant will vary based on the Service-Intensive beds = 35 beds times program for a violation of program rules, individualized needs of the Veteran and 60 percent = 21 non-Service-Intensive failure to comply with program resources available in the community. beds, leaving 14 beds out of the total 50 requirements or leaving the program Applicants specify the staffing levels beds for additional Service-Intensive without consulting staff. and range of services to be provided. beds and/or other beds at the applicant’s See 38 CFR 61.80 for additional discretion). Service-Intensive Transitional Housing information about service centers. A reminder that the minimum Targeted Population—Homeless number of beds an applicant can request Veterans who choose a supportive Other is five (5) beds per transitional housing transitional housing environment Transition in Place (TIP) grantees do model. A reminder that a separate providing services prior to entering not need to respond to this NOFA. A application is required per VAMC permanent housing. separate NOFA will be published to catchment area per each applicant’s Model Overview—Provides announce availability of funding for TIP EIN. Applicants are encouraged to transitional housing and robust services grants. review their proposed bed numbers that facilitate individual stabilization, carefully to make sure their request increased income and movement to II. Award Information meets the requirements of the NOFA. permanent housing as rapidly as A. Allocation of Funds: Awards 3. For applications that include a clinically appropriate. provided under this NOFA will be for request for Hospital-to-Housing beds: Characteristics & Standards—Scope a period of one (1) year, beginning on Applications that do not include a MOU of services should incorporate tactics to October 1, 2020, and ending on from the local VAMC will not be

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awarded any Hospital-to-Housing beds rate for indirect costs if they meet the (e.g., children, women, permanent even if the application is otherwise definitions and requirements of 2 CFR housing, contract care). selected for funding. part 200. All other allowable costs will E. Applicant Contact Information: 4. For applications for service be considered only if they are direct 1. Location of the administrative center(s): VA expects to fund costs. office where correspondence can be sent approximately 20 service center B. Eligibility: State/local government to the Executive Director/President/CEO applications based on a variety of entities must provide as an attachment (no P.O. Boxes). Include complete factors including the quantity and to the application a copy of any address, city, state, zip code + four-digit quality of applications as well as the comments or recommendations by extension, county and congressional availability of funding. approved state and (areawide) district. clearinghouses pursuant to Executive 2. Organization Primary Contact: III. Application and Submission Include the name, title, phone and email Information Order 12372. C. System for Award Management address. Note: This contact is assigned A. To Obtain a Grant Application: (SAM): Applicants must provide a to the organization, not a specific grant Applicants must submit applications current Data Universal Numbering award, and is normally someone who electronically following instructions System (DUNS) number, Unique Entity signs grant agreements or makes found at www.va.gov/homeless/gpd.asp. Identifier (UEI) and SAM expiration executive decisions for the organization. The required documentation for an date. This is most often the CEO, the President or the Executive Director. application submission is outlined D. Project Summary: Organizations with multiple awards can below in the Application 1. Name of the VAMC whose only have one (1) Organization Contact. Documentation Required section of this catchment area includes the transitional NOFA. Standard forms, which must be 3. Grant Contact #1: Include the housing location(s) requested in this name, title, phone and email address. included as part of a complete application. If requesting multiple sites, application package, may be Note: This contact is specific to this all sites must fall within the same grant application and may be a Program downloaded directly from VA’s GPD VAMC catchment area. If requesting Program website at: www.va.gov/ Manager, Director, Case Manager, Grant multiple sites, applicants should make Administrator or other position homeless/gpd.asp. Questions should be sure each proposed site is strongly referred to the GPD National Program overseeing the GPD grant project. justified and well developed. The 4. Provide as an attachment to the Office at [email protected]. For quality of each site will impact the detailed GPD Program information and application a complete listing of your overall score of the application. agency’s officers of the Board of requirements, see 38 CFR part 61. 2. Name(s) and number(s) of the B. Content and Form of Application: Directors and each person’s address, Continuum of Care (CoC) where the VA is seeking to focus resources to phone and email address. transitional housing requested in this assist Veterans who are homeless or at 5. Describe your participation with application will be located. If requesting risk of becoming homeless. If your the local Homeless Management sites in multiple CoCs, applicants agency is unclear as to how to apply, Information System (HMIS). should make sure sites in each CoC are contact the GPD National Program Background: HMIS is a locally- strongly justified and well developed. Office for clarification prior to administered web-based data system The quality of sites in each CoC will submission of any application to ensure used to record and analyze both impact the overall score of the it is submitted in the correct format. program and client information at the application. Applicants should ensure that they local CoC level. It is used by Federal include all required documents in their 3. Number of beds per housing model partners, including VA, to measure electronic application submission, for which your agency is requesting per project performance and participate in carefully follow the format and provide diem in this application. benchmarking of the national effort to the information requested and described 4. Location of housing provided under end homelessness. Currently, using below. Submission of an incorrect, this application. Identify the address, HMIS is optional for GPD grantees. incomplete or incorrectly formatted city, state, zip code + four-digit F. Project Abstract: In approximately application package will result in the extension, county, congressional 500 words, provide a brief abstract of application being rejected or not district, the model(s) and number of the proposed project. As applicable, funded. GPD beds at each location and gender(s) include a discussion of multiple served. models, co-located models, multiple IV. Application Documentation 5. Per location, a description of how sites, multiple CoCs and/or other Required for Transitional Housing Bed the facility’s participant living space information relevant to an Models will be configured within the model(s) understanding of the overall project. Note: Refer to section V below for requested. Include the square footage of G. Detailed Application Design: This Application Documentation Required the room or bay, the number of beds in is the portion of the application that for Service Centers. that square footage and if the beds will describes your proposed program. VA A. Standard Forms and budget be bunked (e.g., Single room occupancy, reviewers will focus on how the information: 100 square feet, no bunk beds, bridge detailed application design addresses 1. Application for Federal Assistance and service-intensive; Open bay, 900 the areas of outreach, project plan, (SF–424) square feet, 12 beds, 4 sets of bunk beds, model specific questions, ability, need 2. Indirect cost information: service-intensive; Apartments, 1500 and coordination in relation to the Applicants that have a negotiated square feet, 1, 2, or 3 bedrooms, no bunk selected model(s) including how indirect cost rate agreement must beds, bridge). Identify any differences support services will be coordinated in provide a copy as an attachment to this among models, if applicable. relationship to the selected model(s). application if they wish to charge 6. Per location, description of any Note: There are some questions that indirect costs to the grant. Applicants additional populations or types of only apply to specific models (i.e., without a negotiated indirect cost rate housing being provided from other non- Bridge, Low Demand, Hospital-to- agreement may request the de minimis GPD sources of funding at this location Housing, Clinical Treatment, Service-

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Intensive). Applicants applying for provide a list of the supportive services how participant relapse will be handled these models must include responses to offered. This list should include a brief and how these policies will impact these questions in the application. Note: description of the service; the minimum admission and discharge criteria. The word count suggestions below frequency that the service will be 13. Project Plan—In approximately account for space needed for offered; and the job title, including 500 words, provide and describe the applications with multiple models. It is minimum credentials of the type and implementation of the understood that applications with one individual(s) that will be providing the medication control system that will be or few models generally would use less service. used in this project (e.g., Medication space than the suggested limit. 3. Project Plan—VA places emphasis Management, Medication Monitoring, VA expects applicants awarded under on lowering barriers to admissions. In individual storage). For reference, this NOFA will meet the VA approximately 500 words, describe your applicants may review these performance metrics for the selected admission criteria and the specific requirements at: www.va.gov/homeless/ model(s). With those metrics in mind, process for deciding which Veterans are gpd.asp. and in response to the following appropriate for admission for each 14. Project Plan—In approximately sections, please include strategies to housing model named in Project 250 words, describe program polices meet or exceed VA’s national metric Summary question IV.D.3. regarding participant agreements, targets. The requirements in this section 4. Project Plan—In approximately 500 including any leases and subleases, if are consistent with 38 CFR part 61. words, address whether the project will used. (a) Outreach (see 38 CFR 61.13(c)): serve mixed gender populations in a 15. Project Plan—In approximately This is the portion of the application single facility and/or individual with 250 words, describe program polices where applicants will discuss how the children. Provide a listing and regarding extracurricular fees, resident outreach plan is tailored to the specific explanation of any gender-specific rent fees or other fees that will be model(s) chosen and how services will services. Identify any differences among charged. be provided for Veterans living in places the models, if applicable. 16. Project Plan—In approximately not ordinarily meant for human 5. Project Plan—In approximately 500 500 words, describe how you will aid habitation (e.g., streets, parks, words, describe how the safety, security Veterans who seek increased income or abandoned buildings, automobiles, and privacy of participants will be benefits. emergency shelters). Applications will ensured. 17. Project Plan—In approximately be scored on responses to the following 6. Project Plan—In approximately 500 500 words, address how your agency questions: words, provide your agency’s ISP will facilitate the provision of 1. Outreach—In approximately 250 methodology and the core items to be nutritional meals for the Veterans. Be words, describe your agency’s plan to addressed in the ISP. sure to describe how Veterans with little conduct outreach, including frequency 7. Project Plan—In approximately 500 or no income will be assisted. of outreach, to your selected Veteran words, describe how, when and by 18. Project Plan—VA puts great population(s) living in places not whom participants’ progress toward emphasis on placing Veterans in the ordinarily meant for human habitation meeting their individual goals will be most appropriate housing situation as (e.g., streets, parks, abandoned monitored, evaluated and documented. rapidly as possible. In approximately buildings, automobiles, emergency Include descriptions of your agency’s 500 words, provide a timeline noting shelters). expectations regarding the frequency of specific services that support housing 2. Outreach—In approximately 1,000 progress notes and case conferencing stabilization from admission through words, describe per housing model and how this will be documented. exit. Include evidence of coordination of named in Project Summary question 8. Project Plan—In approximately 500 transition services your agency expects IV.D.3, where your organization will words, describe how permanent to offer. target and tailor its outreach efforts to affordable housing will be identified, 19. Project Plan—In approximately identify appropriate Veterans for this documented in the ISP and be made 250 words, describe how you will program. known to participants who plan on facilitate transportation of the Veteran 3. Outreach—In approximately 500 leaving the supportive housing. participants with and without income to words, describe your agency’s 9. Project Plan—In approximately 500 appointments, employment and involvement in the Coordinated words, describe how necessary follow- supportive services. Assessment/Entry efforts of the CoC(s) up services will be provided, for (c) Model Specific Questions: named in Project Summary question example, how often they will occur and Applicants must respond to the IV.D.2. How does the plan fit into each the duration of the follow-up. following questions only for the CoC’s plan to end homelessness? 10. Project Plan—In approximately model(s) named in Project Summary (b) Project Plan (see 38 CFR 61.13(b)): 500 words, describe how Veteran question IV.D.3. Applicants should VA wishes to provide the most participants will have a voice and aid in make sure each proposed model is appropriate housing based on the needs operating and maintaining the housing strongly justified and well developed. of the individual Veteran. Applicants (e.g., volunteer time, paid positions, The quality of each model will impact will be asked to answer questions based community governance meetings, peer the overall score of the application. on the specific model(s) chosen for this support). 1. Bridge Housing Model—The application. Applications will be scored 11. Project Plan—In approximately availability of permanent housing on responses to the following questions: 500 words, if your agency plans to use options is key to this model. In 1. Project Plan—In approximately 500 any subrecipient(s) and/or contractor(s) approximately 500 words, describe how words, describe how you will ensure for operating and/or maintaining the your bridge housing is coordinated with that homeless Veterans will be offered housing, describe the responsibilities of permanent housing resources as part of available permanent housing resources the subrecipient(s) and/or contractor(s). a Housing First plan for homeless prior to entering the program. 12. Project Plan—In approximately Veterans. Be sure to describe how your 2. Project Plan—In approximately 500 words, describe program policies project will be coordinated with local 2,000 words, by housing model named regarding a clean and sober HUD–VASH, Housing Coalition/CoC, in Project Summary question IV.D.3, environment. Include in the description and/or SSVF programs.

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2. Bridge Housing Model—In 250 words, describe how your agency 10. Clinical Treatment Model—In approximately 250 words, describe the will coordinate messaging about the approximately 500 words, describe if referral to permanent housing process. availability of services to maximize the proposed project will provide 3. Bridge Housing Model—In appropriate referrals. services to Veterans with substance approximately 250 words, describe how 9. Hospital-to-Housing Model— abuse disorders and/or with mental ongoing care will be coordinated while Applicants for this model must attach to health diagnoses. Also, describe the in GPD with the local permanent the application an MOU between the approaches used to treat the selected housing providers. local VAMC (i.e., the VAMC Director or population(s). Include evidence-based 4. Low Demand Model—In the appropriate authorized VAMC approaches when possible. Confirm that approximately 500 words, how will representative per the local VAMC’s VA staff will not be the treatment your agency manage a safe environment practice) and the applicant. The MOU provider. if a Veteran return to the project must demonstrate the local VAMC’s 11. Clinical Treatment Model—In impaired? Describe the safe detailed participation in the Hospital-to- approximately 500 words, describe how environment including your agency’s Housing program. Included in the MOU you will ensure that permanent housing plan for using resources in a crisis (e.g., should be a detailing of acceptance and employment/income improvements a sober lounge, a safe room). Describe criteria for Veterans being referred from will occur and lead to successful how monitoring will be achieved. local inpatient care settings and local outcomes. 5. Low Demand Model—In emergency departments, a detailing of 12. Service-Intensive Model—In approximately 250 words, describe how how follow-up care with the VAMC is approximately 500 words, describe how 24/7, paid, appropriately trained, on-site organized, and a commitment to you will ensure that permanent housing supervision required for this model will engaging enrolled Veterans in and employment/income improvements be provided. Be sure to discuss coverage permanent housing as part of the will occur and lead to successful during evenings, weekends, holidays program. Failure to submit an MOU will outcomes. and other irregular scheduling times. result in this model not being approved (d) Ability (see 38 CFR 61.13): This is 6. Low Demand Model—In for funding even if the application is the portion of the application where approximately 250 words, describe the otherwise selected for funding. applicants demonstrate experience approaches that will be used to keep the Applicants are strongly encouraged to regarding the selected population(s). Veterans engaged in services. allow as much time as possible, and no Applications will be scored on 7. Hospital-to-Housing Model—In less than 30 days, for a VAMC to responses to the following questions: approximately 250 words, describe the provide an MOU. All application 1. Ability—Provide as an attachment assessment process for identifying materials must be submitted together in to the application a table or spreadsheet potential candidates. a single package by the due date and of the staffing plan for this project (see 8. Hospital-to-Housing Model— time. Any materials arriving separately example 1). Do not include resumes. Because this model depends on referrals or late will not be accepted as part of the from the local VAMC, in approximately application. Example 1

Hours per week allo- Brief (1–2 sentence) cated to GPD project Amount of annual Amount of salary Job title description of respon- Educational level (40 hours equals full- salary allocated to for the full-time sibilities time) the GPD project position

Case manager ...... Responsible for work- BSW ...... 30 hours ...... $60,000 $80,000 ing with the Veteran to develop and mon- itor an individual service plan and to adjust the plan as needed. Coordinates support with other community agencies..

2. Ability—In approximately 500 supportive service resources and licensed to provide clinical services? If words, describe your agency’s previous entitlement benefits to homeless yes, describe your agency’s experience assessing and providing for Veterans under your chosen model(s) as accreditation and/or licensure. the housing needs of homeless Veterans. named in Project Summary question 7. Ability—In approximately 500 If applicable, include a description of IV.D.3. words, describe the organization’s staff previous experience under your chosen 5. Ability—In approximately 500 development plan to help staff gain and model(s) as named in Project Summary words, describe your agency’s previous maintain the knowledge, skills and question IV.D.3. experience with evaluating the progress abilities to provide culturally competent 3. Ability—In approximately 250 of both individual participants and and relevant related services to people words, describe your agency’s ability to overall program effectiveness through impacted by racial inequity. Include get the project started within 180 days using quality and performance data to details on how staff will participate in from the potential award date. Describe make changes. Describe your agency’s specific training activities. the start-up activities, the timing experience with meeting past (e) Need (see 38 CFR 61.13): This is involved and when the project would be performance goals. Do not include with the portion of the application where expected to be fully functional. the application past inspection forms or applicants demonstrate that the 4. Ability—In approximately 500 past VA performance reports. proposed project is necessary. words, describe your agency’s previous 6. Ability—In approximately 250 Applications will be scored on experience in assessing and providing words, is your agency accredited and/or responses to the following questions:

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1. Need—In approximately 500 wish to provide a letter of coordination 3. Estimated number of hourly service words, describe how this project’s from the local VAMC must attach a center visits to be provided annually for proposed model(s) and bed numbers are letter at the end of the application. all service center(s) for which your tailored to the particular needs of the Applicants are strongly encouraged to agency is requesting per diem in this CoC(s). Describe how this project will fit allow as much time as possible, and no application. with the strategy of the CoC(s) to end less than 30 days, for a VAMC to 4. Location of services provided under homelessness. Cite reliable data from provide a letter of coordination. All this application. Identify the address, surveys of homeless populations or application materials must be submitted city, state, zip code + four-digit other reports or data-gathering together in a single package by the due extension, county, other counties served mechanisms. Note: If multiple CoCs are date and time. Any materials arriving and congressional district. named in the Project Summary question separately or late will not be accepted E. Applicant Contact Information: IV.D.2, your response here should as part of the application. 1. Location of the administrative discuss each of those CoCs. office where correspondence can be sent 2. Need—In approximately 500 V. Application Documentation to the Executive Director/President/CEO words, describe with whom you Required for Service Centers (no P.O. Boxes). Include complete consulted outside of your agency to Note: Refer to section IV above for address, city, state, zip code + four-digit determine the need for the proposed Application Documentation Required extension, county and congressional transitional housing model(s) and bed for Transitional Housing Bed Models. district. numbers within the CoC(s). Note: If A. Standard Forms and budget 2. Organization Primary Contact: multiple CoCs are named in the Project information: Include the name, title, phone and email Summary question IV.D.2, your 1. Application for Federal Assistance address. Note: This contact is assigned response here should discuss each of (SF–424) to the organization, not a specific grant those CoCs. 2. Indirect cost information: award, and is normally someone who (f) Coordination (see 38 CFR 61.13): Applicants that have a negotiated signs grant agreements or makes This is the portion of the application indirect cost rate agreement must executive decisions for the organization. where applicants will demonstrate their provide a copy as an attachment to this This is most often the CEO, the involvement in the homeless Veteran application if they wish to charge President or the Executive Director. continuum. Applications will be scored indirect costs to the grant. Applicants Organizations with multiple awards can on responses to the following questions: without a negotiated indirect cost rate only have one (1) Organization Contact. 1. Coordination—In approximately agreement may request the de minimis 3. Grant Contact #1: Include the 500 words, describe how your agency is rate for indirect costs if they meet the name, title, phone and email address. part of an ongoing community-wide definitions and requirements of 2 CFR Note: This contact is specific to this planning process to end Veteran part 200. All other allowable costs will grant application and may be a Program homelessness. Note: If multiple CoCs be considered only if they are direct Manager, Director, Case Manager, Grant are named in the Project Summary costs. Administrator or other position question IV.D.2, your response here B. Eligibility: State/local government overseeing the GPD grant project. should discuss each of those CoCs. entities must provide as an attachment 4. Provide as an attachment to the 2. Coordination—In approximately to the application a copy of any application a complete listing of your 500 words, describe how your process is comments or recommendations by agency’s officers of the Board of designed to share information on approved state and (areawide) Directors and each person’s address, available resources and reduce clearinghouses pursuant to Executive phone and email address. duplication among programs that serve Order 12372. 5. Describe your participation with homeless Veterans. Note: If multiple C. System for Award Management the local HMIS. Background: HMIS is a CoCs are named in the Project Summary (SAM): Applicants must provide a locally-administered web-based data question IV.D.2, your response here current Data Universal Numbering system used to record and analyze both must discuss each of those CoCs. System (DUNS) number, Unique Entity program and client information at the Applicants who wish to provide a Identifier (UEI) and SAM expiration local CoC level. It is used by Federal letter(s) of coordination from the local date. partners, including VA, to measure CoC(s) may attach a letter(s) at the end D. Project Summary: project performance and participate in of the application. Applicants are 1. Name of the VAMC whose benchmarking of the national effort to strongly encouraged to allow as much catchment area includes the service end homelessness. Currently, using time as possible, and no less than 30 center location(s) requested in this HMIS is optional for GPD grantees. days, for a CoC to provide a letter of application. If requesting multiple sites, F. Project Abstract: In approximately coordination. All application materials all sites must fall within the same 500 words, provide a brief abstract of must be submitted together in a single VAMC catchment area. If requesting the proposed project. As applicable, package by the due date and time. Any multiple sites, applicants should make include a discussion of multiple sites, materials arriving separately or late will sure each proposed site is strongly multiple CoCs and/or other information not be accepted as part of the justified and well developed. The relevant to an understanding of the application. quality of each site will impact the overall project. 3. Coordination—In approximately overall score of the application. G. Detailed Application Design: This 250 words, describe how your agency 2. Name(s) and number(s) of the is the portion of the application that consulted directly with the VAMC CoC(s) of where the service center(s) describes your proposed grant. VA Director (or the appropriate authorized requested in this application will be reviewers will focus on how the VAMC representative per the local located. If requesting sites in multiple detailed application design addresses VAMC’s practice) regarding CoCs, applicants should make sure sites the areas of outreach, project plan, coordination of services for project in each CoC are strongly justified and ability, need and coordination in participants. Provide your plan to assure well developed. The quality of sites in relation to the proposed service access to healthcare, case management each CoC will impact the overall score center(s) including how support and other care services. Applicants who of the application. services will be coordinated.

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VA expects applicants awarded under (b) Project Plan (see 38 CFR 61.13): program will be evaluated on an this NOFA will meet the standards VA wishes to provide the most ongoing basis. described in their applications for appropriate services based on the needs 4. Project Plan—In approximately 500 populations served, services provided of the individual Veteran. Applicants words, describe how the nutritional and visits annually. See also 38 CFR seeking a service center(s) should focus needs of Veterans will be met. 61.80 for VA performance requirements on what they are providing in the for service centers. Keep this in mind service center(s). For instance, most 5. Project Plan—In approximately 500 when responding to the following service centers do not begin ISPs on words, describe how the agency will sections. The requirements in this drop-in individuals because the focus is ensure a clean and sober environment. section are consistent with 38 CFR part on engagement. Instead, applicants 6. Project Plan—In approximately 500 61. could respond by stating how the words, describe how the proposed (a) Outreach (see 38 CFR 61.13): This individual is identified for follow-up or project will be implemented in a timely is the portion of the application where additional service. Applications will be fashion. applicants will discuss how the scored on responses to the following 7. Project Plan—The success of outreach plan is tailored to the service questions: service centers is predicated upon the center(s) and how services will be 1. Project Plan—In approximately 500 provided for Veterans living in places engagement of the homeless Veteran words, describe how you will ensure community. In approximately 500 not ordinarily meant for human homeless Veterans will be offered habitation (e.g., streets, parks, words, describe how your agency will available permanent housing resources engage and influence homeless Veterans abandoned buildings, automobiles, prior to entering the program. emergency shelters). Applications will in how they will address their housing, be scored on responses to the following 2. Project Plan—List the supportive physical, medical and mental health question: services provided and by whom to help needs. 1. Outreach—In 1,000 words, describe participants achieve residential (c) Ability (see 38 CFR 61.13): This is your agency’s plan to conduct outreach, stability, increase skill level and/or the portion of the application where including frequency of outreach, to income and become involved in making applicants demonstrate experience Veteran populations living in places not life decisions that will increase self- regarding the selected population(s) or ordinarily meant for human habitation determination. In addition to the list, services. Applications will be scored on (e.g., streets, parks, abandoned describe in approximately 2,000 words responses to the following questions: buildings, automobiles, emergency the services, the hours per week the services will be available and the job 1. Ability—Provide as an attachment shelters). Include a description of your to the application a table or spreadsheet agency’s involvement in the title of the position that will provide the service. of the staffing plan for this project (see Coordinated Assessment/Entry efforts of example 2). Do not include resumes. the CoC(s) named in Project Summary 3. Project Plan—In approximately 500 question V.D.2. words, describe how the success of the Example 2

Hours per week allo- Brief (1–2 sentence) cated to GPD project Amount of annual Amount of salary Job Title description of respon- Educational Level (40 hours equals full- salary allocated to for the full-time sibilities time) the GPD project position

Case manager ...... Responsible for work- BSW ...... 30 hours ...... $60,000 $80,000 ing with the Veteran to provide supportive services and to ad- just the services as needed. Coordinates support with other community agencies..

2. Ability—In approximately 500 details on how staff will participate in V.D.2, your response here should words, describe your agency’s previous specific training activities. discuss each of those CoCs. experience operating a service center. (d) Need (see 38 CFR 61.13): This is 2. Need—In approximately 500 3. Ability—In approximately 500 the portion of the application where words, describe with whom you words, describe your agency’s previous applicants demonstrate that the consulted outside of your agency to experience assessing and providing proposed project is necessary. determine the need for the proposed supportive services to homeless services. Note: If multiple CoCs are Applications will be scored on Veterans. Include a discussion of your named in the Project Summary question responses to the following questions: ability to facilitate access to job training, V.D.2, your response here should benefits, mental health services, 1. Need—In approximately 500 discuss each of those CoCs. substance abuse supports and legal words, describe how this project is (e) Coordination (see 38 CFR 61.13): services. tailored to the particular needs of the This is the portion of the application 4. Ability—In approximately 500 CoC(s). Describe how this project will fit where applicants will demonstrate their words, describe the organization’s staff with the strategy of the CoC(s) to end involvement in the homeless Veteran development plan to help staff gain and homelessness. Cite reliable data from continuum. Applications will be scored maintain the knowledge, skills and surveys of homeless populations or on responses to the following questions: abilities to provide culturally competent other reports or data-gathering 1. Coordination—In approximately and relevant related services to people mechanisms. Note: If multiple CoCs are 500 words, describe how your agency is impacted by racial inequity. Include named in the Project Summary question part of an ongoing community-wide

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planning process to end Veteran VA may non-select the applicant and C. Grantees must ensure staff homelessness. Note: If multiple CoCs may use the funding for another supported by grant funds are trained are named in the Project Summary applicant(s). VA may negotiate bed regarding suicide prevention and how to question V.D.2, your response here numbers, model(s) and/or service center address situations where Veterans should discuss each of those CoCs. arrangements with conditionally demonstrate suicidal ideation. Standard 2. Coordination—In approximately selected applicants and will incorporate operating procedures are to be 500 words, describe how your agency any changes into the grant agreement. developed, in consultation with your has coordinated GPD services with other VA reserves the right to adjust the local VA medical facility, surrounding programs offered in the CoC(s) named in amount of a grant or elect not to suicide prevention. the Project Summary question V.D.2. continue funding for subsequent years. D. Payment: Per diem will be paid in 3. Coordination—In approximately VA reserves the right to make a method that is in accordance with VA 250 words, describe how your agency adjustments up or down (e.g., to bed and other Federal fiscal requirements. consulted directly with the VAMC numbers, to housing models, to The per diem payment calculation may Director (or the appropriate authorized locations) as needed within the intent of be found at 38 CFR 61.33. Awardees VAMC representative per the local the NOFA based on a variety of factors will be subject to requirements of this VAMC’s practice) regarding including the quantity and quality of NOFA, GPD regulations, 2 CFR part 200 coordination of services for project applications as well as the availability and other Federal grant requirements. A participants. Provide your plan to assure of funding. Upon signature of the grant full copy of the regulations governing access to healthcare, case management agreement by the Secretary, or the GPD Program is available at the GPD and other care services. Applicants who designated representative, final website at: www.va.gov/homeless/ wish to provide a letter of coordination selection will be completed, and the gpd.asp. Awardees will be required to from the local VAMC must attach a grant funds will be obligated for the support their request for payments with letter at the end of the application. funding period. adequate fiscal documentation as to Applicants are strongly encouraged to VII. Award Administration Information project income and expenses. Awardees allow as much time as possible, and no that have a negotiated indirect cost rate A. Award Notice: Although subject to less than 30 days, for a VAMC to agreement must provide GPD with an change, the GPD Program Office expects provide a letter of coordination. All updated copy annually or when to announce grant awards in the fourth application materials must be submitted available. quarter of FY 2020. Awards will be for together in a single package by the due E. Reporting: date and time. Any materials arriving one (1) year with the possibility of up 1. Upon execution of a grant separately or late will not be accepted to two (2) option years. Continuation agreement with VA, grantees will have as part of the application. funding is not guaranteed. VA reserves the right in option years to make a liaison appointed from a nearby VI. Application Review Information adjustments up or down (e.g., to bed VAMC to provide oversight and monitor A. Criteria for Grants: Although numbers, to housing models, to services provided to homeless Veterans transitional housing applications and locations) as needed within the intent of in the program. service center applications are the NOFA based on a variety of factors 2. Monitoring will include, at a standalone applications, they will be including availability of funding and minimum, a quarterly review of each reviewed, scored and selected for performance. The initial announcement per diem program’s progress toward funding together based on their ranked will be made via news release which meeting VA’s performance metrics, order among all the applications will be posted on VA’s GPD National helping Veterans attain housing submitted in response to this NOFA. Program website at: www.va.gov/ stability, adequate income support and Submission of an incorrect, incomplete homeless/gpd.asp. Following the initial self-sufficiency as identified in the or incorrectly formatted application announcement, the GPD Office will application. Monitoring may also package will result in the application send notification letters to the grant include a review of the agency’s income being rejected at threshold. Applications recipients. Applicants who are not and expenses as they relate to this that meet threshold will be scored selected will be sent a declination letter. project to ensure payment is accurate according to the rating criteria described B. Administrative and National and to ensure compliance with program in 38 CFR 61.32. Policy: VA places great emphasis on requirements. The grantee will be B. Review and Selection Process: The responsibility and accountability. VA expected to demonstrate adherence to review and selection process may be has procedures in place to monitor the grantee’s proposed program concept, found at 38 CFR 61.13 and 38 CFR services provided to homeless Veterans as described in the grantee’s 61.32. and outcomes associated with the application. All grantees are subject to C. Tie Score: In the event of a tie score services provided under this GPD audits conducted by VA or its between applications, VA will program. All awardees that are selected representative. determine at its discretion how to in response to this NOFA must meet the 3. Flexibility of Beds: For those handle selection decisions (e.g., requirements of the current edition of applicants that are successfully funded selecting multiple applications for the Life Safety Code of the National Fire for multiple models under this NOFA, award, awarding for less than Protection Association as it relates to VA will allow, without a change of requested). their specific facility (38 CFR 61.80). scope, a flex of beds between the D. Funding Actions: Funding is not Applicants should note that all facilities applicant’s models at the same VAMC. guaranteed. Conditionally selected are to be protected throughout by an This flex will be up to five (5) beds per applicants will be asked to submit approved automatic sprinkler system grant award. Successful applicants who additional information as necessary unless a facility is specifically exempted seek a greater number of flex beds than according to 38 CFR 61.32. Applicants under the Life Safety Code. Applicants what is allowed must receive prior will be notified of the deadline to should consider this when submitting written approval from the GPD National submit such information. If an applicant their grant applications as no funds will Program Office. Bed utilization rates can is unable to meet any conditions for the be made available for capital impact future award decisions in grant award within the specified time, improvements under this NOFA. potential option year(s).

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4. Each funded program will September 30, 2021). VA may, at its an official document of the Department participate in VA’s national program discretion, update these targets during of Veterans Affairs. Pamela Powers, monitoring and evaluation as these the option year renewal process. Any Chief of Staff, Department of Veterans procedures will be used to determine new targets will be stated in the option Affairs, approved this document on successful accomplishment of housing, year grant agreement. December 19, 2019, for publication. employment and self-sufficiency Signing Authority Luvenia Potts, outcomes for each per diem-funded Regulation Development Coordinator, Office program. Note: For each of the model The Secretary of Veterans Affairs of Regulation Policy & Management, Office descriptions above that have Required approved this document and authorized of the Secretary, Department of Veterans Minimum Performance Metrics/Targets, the undersigned to sign and submit the Affairs. the targets are set for the initial funding document to the Office of the Federal [FR Doc. 2019–28095 Filed 12–27–19; 8:45 am] year of this award (October 1, 2020– Register for publication electronically as BILLING CODE 8320–01–P

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Part II

Department of Commerce

National Oceanic and Atmospheric Administration Takes of Marine Mammals Incidental to Specified Activities; Taking Marine Mammals Incidental to Construction of the Port of Alaska’s Petroleum and Cement Terminal, Anchorage, Alaska; Notice

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DEPARTMENT OF COMMERCE received are a part of the public record and reporting of such takings are set and will generally be posted online at forth. The definitions of all applicable National Oceanic and Atmospheric https://www.fisheries.noaa.gov/permit/ MMPA statutory terms cited above are Administration incidental-take-authorizations-under- included in the relevant sections below. [RTID 0648–XR027] marine-mammal-protection-act without National Environmental Policy Act change. All personal identifying Takes of Marine Mammals Incidental to information (e.g., name, address) To comply with the National Specified Activities; Taking Marine voluntarily submitted by the commenter Environmental Policy Act of 1969 Mammals Incidental to Construction of may be publicly accessible. Do not (NEPA; 42 U.S.C. 4321 et seq.) and the Port of Alaska’s Petroleum and submit confidential business NOAA Administrative Order (NAO) Cement Terminal, Anchorage, Alaska information or otherwise sensitive or 216–6A, NMFS must review our protected information. proposed action (i.e., the issuance of an AGENCY: National Marine Fisheries incidental harassment authorization) FOR FURTHER INFORMATION CONTACT: with respect to potential impacts on the Service (NMFS), National Oceanic and Jaclyn Daly, Office of Protected human environment. Atmospheric Administration (NOAA), Resources, NMFS, (301) 427–8401. Commerce. Accordingly, NMFS is preparing an Electronic copies of the application and Environmental Assessment (EA) to ACTION: Notice; proposed incidental supporting documents, as well as a list harassment authorization; request for consider the environmental impacts of the references cited in this document, associated with the issuance of the comments on proposed authorization may be obtained online at: https:// and possible renewal. proposed IHA. NMFS’ EA will be made www.fisheries.noaa.gov/permit/ available at https:// incidental-take-authorizations-under- SUMMARY: NMFS has received a request www.fisheries.noaa.gov/permit/ marine-mammal-protection-act. In case from the Port of Alaska (POA) for incidental-take-authorizations-under- of problems accessing these documents, authorization to take marine mammals marine-mammal-protection-act. We will please call the contact listed above. incidental to pile driving associated review all comments submitted in with the construction of a new SUPPLEMENTARY INFORMATION: response to this notice prior to Petroleum and Cement Terminal (PCT) Background concluding our NEPA process or making in Knik Arm, Alaska. Pursuant to the a final decision on the IHA request. The MMPA prohibits the ‘‘take’’ of Marine Mammal Protection Act Summary of Request (MMPA), NMFS is requesting comments marine mammals, with certain on its proposal to issue two successive exceptions. Sections 101(a)(5)(A) and On November 28, 2018, NMFS incidental harassment authorizations (D) of the MMPA (16 U.S.C. 1361 et received a request from the POA for an (IHAs) to incidentally take marine seq.) direct the Secretary of Commerce IHA to take marine mammals incidental mammals during the specified activities. (as delegated to NMFS) to allow, upon to pile driving associated with the NMFS is also requesting comments on request, the incidental, but not construction of the PCT. On June 19, possible one-year renewals that could be intentional, taking of small numbers of 2019, the POA submitted a subsequent, issued under certain circumstances and marine mammals by U.S. citizens who after request realizing the project would if all requirements are met, as described engage in a specified activity (other than take two construction seasons (April– in Request for Public Comments at the commercial fishing) within a specified November) to complete. Because of this end of this notice. NMFS will consider geographical region if certain findings modified construction schedule, the public comments prior to making any are made and either regulations are POA submitted a new application on final decision on the issuance of the issued or, if the taking is limited to July 19, 2019 and a revised application requested MMPA authorizations and harassment, a notice of a proposed on August 9, 2019. Although NMFS agency responses will be summarized in incidental take authorization may be disagreed with some of the analysis in the final notice of our decision. provided to the public for review. Under the application (as described later in the MMPA, ‘‘take’’ is defined as this document), we deemed it adequate DATES: Comments and information must meaning to harass, hunt, capture, or kill, and complete on August 28, 2019, be received no later than January 29, or attempt to harass, hunt, capture, or because it contained all the information 2020. kill any marine mammal. necessary for us to conduct our MMPA ADDRESSES: Comments should be Authorization for incidental takings analysis. The POA submitted a addressed to Jolie Harrison, Chief, shall be granted if NMFS finds that the subsequent revised application on Permits and Conservation Division, taking will have a negligible impact on October 15, 2019, which is available at Office of Protected Resources, National the species or stock(s) and will not have https://www.fisheries.noaa.gov/permit/ Marine Fisheries Service. Physical an unmitigable adverse impact on the incidental-take-authorizations-under- comments should be sent to 1315 East- availability of the species or stock(s) for marine-mammal-protection-act. The West Highway, Silver Spring, MD 20910 taking for subsistence uses (where POA’s request is for take of small and electronic comments should be sent relevant). Further, NMFS must prescribe numbers of six species of marine to [email protected]. the permissible methods of taking and mammals, by Level B harassment. Four Instructions: NMFS is not responsible other ‘‘means of effecting the least of the species could also be taken by for comments sent by any other method, practicable adverse impact’’ on the Level A harassment. Neither the POA to any other address or individual, or affected species or stocks and their nor NMFS expects serious injury or received after the end of the comment habitat, paying particular attention to mortality to result from this activity; period. Comments received rookeries, mating grounds, and areas of therefore, an IHA is appropriate. electronically, including all similar significance, and on the NMFS previously issued IHAs and attachments, must not exceed a 25- availability of such species or stocks for Letters of Authorization (LOAs) to the megabyte file size. Attachments to taking for certain subsistence uses POA for pile driving (73 FR 41318, July electronic comments will be accepted in (referred to in shorthand as 18, 2008; 74 FR 35136, July 20, 2009; Microsoft Word or Excel or Adobe PDF ‘‘mitigation’’); and requirements and 81 FR 15048; March 21, 2016). The file formats only. All comments pertaining to the mitigation, monitoring POA complied with all the requirements

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(e.g., mitigation, monitoring, and The POA will install three breasting 20,000 square kilometers (km2; 7,700 reporting) of all previous incidental take dolphins and six mooring dolphins as square miles [mi2]) in area, with authorizations and did not exceed well as a new loading platform and approximately 1,350 linear kilometers authorized take. Information regarding catwalks. In addition to these (840 miles) of coastline (Rugh et al. their monitoring results may be found in permanent structures, temporary access 2000) and an average depth of the Effects of the Specified Activity on trestles will be installed and approximately 100 meters (330 feet). Marine Mammals and their Habitat and subsequently removed. Pile installation Cook Inlet is generally divided into Estimated Take sections. will occur in water depths that range upper and lower regions by the East and Description of Proposed Activity from a few feet or dry conditions nearest West Forelands. Northern Cook Inlet the shore to approximately 80 feet at the bifurcates into Knik Arm to the north Overview outer face of the loading platform, and Turnagain Arm to the east. The The POA proposes to construct a new depending on tidal stage. Various work POA is located in the southeastern PCT comprised of a pile-supported boats and barges will be utilized to shoreline of Knik Arm (Figure 1). structure located along the support construction. Work will be Knik Arm is generally considered to southernmost shoreline of the POA (see completed over two construction begin at Point Woronzof, 7.4 kilometers Figure 1–1 and Figure 1–2 in the POA’s seasons (April through November): (4.6 miles) southwest of the POA. From IHA application), as part of its Port of Phase 1 will occur in 2020 and Phase 2 Alaska Modernization Project (PAMP). will occur in 2021. Point Woronzof, Knik Arm extends about 48 kilometers (30 miles) in a In general, the PAMP will include Dates and Duration construction of new pile-supported north-northeasterly direction to the wharves and trestles south and west of POA anticipates two construction mouths of the Matanuska and Knik the existing terminals, with a planned seasons (April–November) will be rivers. At Cairn Point, just northeast of design life of 75 years. The proposed required to complete the PCT terminal. the POA, Knik Arm narrows to about 2.4 project, the PCT project, is one The POA has requested two IHAs to kilometers (1.5 miles) before widening component of the PAMP. cover this work. These IHAs correspond to as much as 8 kilometers (5 miles) at The PCT project will replace the with Phase 1 and Phase 2. The POA the tidal flats northwest of Eagle Bay at existing Petroleum Oil Lubricants anticipates 359 hours of pile driving and the mouth of Eagle River, which are Terminal which is currently the only removal over 127 days in Phase 1 and heavily utilized by Cook Inlet beluga bulk cement-handling facility in Alaska 229 hours of pile driving and removal whales (CIBWs). Approximately 60 and is the primary terminal for receipt over 75 days in Phase 2. For each phase, percent of Knik Arm is exposed at mean of refined petroleum products. The PCT construction mobilization is planned to lower low water (MLLW). The intertidal Project will involve new construction of commence the first week of April, with (tidally influenced) areas of Knik Arm, a loading platform, access trestle, and the potential to initiate pile installation including those at the POA, are dolphins; and installation of utilities activities by mid-April. Construction mudflats, both vegetated and (electricity, water, and communication), demobilization is planned to occur in unvegetated, which consist primarily of petroleum, and cement lines linking the November, with the expectation to fine, silt-sized glacial flour. terminal and shore. Ships mooring to remove the final temporary piles by the the PCT will utilize both breasting first week of November. Between April The POA’s boundaries currently dolphins and mooring dolphins. The and November, piles will be installed occupy an area of approximately 129 PCT will be designed to satisfy project- and removed during daylight hours acres. Other commercial and industrial specific seismic performance criteria, only. activities related to secure maritime allowing the terminal to be quickly operations are located near the POA on Specific Geographic Region restored to service following a major Alaska Railroad Corporation (ARRC) seismic event such as the magnitude 7.0 Cook Inlet is a large tidal estuary that property immediately south of the POA, earthquake that struck Anchorage on exchanges waters at its mouth with the on approximately 111 acres. November 30, 2018. Gulf of Alaska. The inlet is roughly BILLING CODE 3510–22–C

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BILLING CODE 3510–22–P Inlet (see Figure 1–1 in the POA’s IHA Port facilities are substantially past their Detailed Description of Specific Activity application), the POA’s existing design life, have degraded to levels of infrastructure and support facilities marginal safety, and are in many cases Located within the Municipality of were constructed largely in the 1960s. functionally obsolete, especially in Anchorage on Knik Arm in upper Cook

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regard to seismic design criteria and quake caused some piling failure and be installed primarily with an impact condition. predisposes the docks to additional hammer; however, some vibratory pile The purpose for the PCT Project is to failure during future earthquakes. The driving is also required. A bubble replace the existing Petroleum Oil PCT has been designed to satisfy curtain will be deployed to reduce in- Lubricants Terminal (POL 1), the only project-specific seismic performance water sound levels during PCT bulk cement-handling facility in Alaska criteria, allowing the terminal to be construction for impact and vibratory and the primary terminal for receipt of quickly restored to service following a hammer pile installation of 144-, 48-, refined petroleum products. POL 1, major seismic event. POL 1 is 36-, and 24-inch plumb (vertical) piles built in 1965, is more than 50 years old functionally obsolete, has exceeded its and vibratory hammer removal of 36- and consists of 160 wharf pilings that useful life, and is unlikely to withstand and 24-inch plumb piles (all temporary are uncoated, hollow-steel pile. The another such earthquake. and permanent piles). A bubble curtain need for the PCT is based on the heavily The PCT Project includes three major will not be deployed during installation deteriorated physical condition of POL components: (1) A loading platform in 1. It suffers from severe corrosion of its Phase 1, (2) an access trestle (bridge-like and removal of 24-inch battered foundation pilings to levels of marginal structure allowing access to the loading (installed at an angle, not vertical) piles safety, as evidenced by currently platform) in Phase 1, and (3) breasting for the temporary construction work imposed load restrictions. A 2014 pile and mooring dolphins in Phase 2 (see trestle and temporary dolphins due to condition assessment found severe Table 1–1). A temporary work trestle the difficult geometric application. corrosion throughout the facility, with and temporary templates are required All Phase 1 work will occur under the pile wall losses exceeding 67 percent of for constructing the permanent access first IHA, while Phase 2 work will occur their original thickness. It also sustained trestle in Phase 1, and temporary under the second IHA. Pile sizes and structural damage from a magnitude 7.1 templates are required for constructing quantities for permanent and temporary earthquake that struck the area on the dolphins in Phase 2. During both components for each phase are shown November 30, 2018. Recent inspections Phase 1 and Phase 2, temporary mooring in Table 1–1; estimates of the time in 2019 have led engineers to confirm dolphins will be required to required to install or remove piles for that the stress imposed on the already- accommodate construction barges and each phase are shown in Table 1–2. weakened structure by the November 30 to moor construction vessels. Piles will

TABLE 1–1—SUMMARY OF PCT PROJECT COMPONENTS AND ACTIVITIES

Type of activity Location Phase Size and type Total amount or number

Permanent Components

Permanent pile installation (loading platform) ...... In water ...... 1 48-inch steel pipe (plumb) 45 piles. Permanent pile installation (access trestle) ...... In water ...... 1 48-inch steel pipe (plumb) 26 piles. Permanent pile installation (breasting and mooring In water ...... 2 144-inch steel pipe (plumb) 9 piles. dolphins). Installation of concrete decking on loading platform Above water ..... 1 Pre-cast panels ...... About 120 panels. and main trestle. Catwalks ...... Above water ..... 2 Prefabricated steel or alu- 9 units, totaling 990 feet. minum trusses with open steel grating.

Construction Support and Temporary Components

Vessel support ...... In water ...... 1 & 2 Barges and tugs ...... 16 flat deck barges, 2 der- rick barges, and 3–4 tugs. Temporary pile installation (construction work trestle) In-water ...... 1 24-inch steel pipe (plumb) 26 piles 1 24-inch steel pipe (bat- 10 piles. tered). Temporary pile installation (dolphin templates) ...... In-water ...... 2 36-inch steel pipe (plumb) 72 piles. Temporary pile installation (construction work trestle) In-water ...... 1 36-inch steel pipe (plumb) 26 piles. Temporary pile installation (access trestle templates) In-water ...... 1 24-inch steel pipe (plumb) 36 piles. Temporary mooring anchor systems ...... In-water ...... 1 & 2 20,000 pound Danforth an- 2 mooring systems. chors. Temporary derrick barge ...... In-water ...... 1 & 2 36-inch steel pipe (plumb) 4 piles. Temporary dolphins for mooring construction vessels In-water ...... 1 & 2 24-inch steel pipe (plumb) 3 dolphins, each with 1 4-inch steel pipe (battered) plumb and 2 battered piles (9 piles total).

Installation of Utility, Petroleum, and Cement Lines

Installation on access trestle and loading platform ...... Above water, 1 Pipelines, various sizes 300–600 linear feet each. on-dock. and types.

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TABLE 1–2—PCT CONSTRUCTION PILE DETAILS AND ESTIMATED EFFORT REQUIRED FOR PILE INSTALLATION AND REMOVAL

Total Average Vibratory Estimated Production Pipe pile a Number embedded duration per total rate piles Days of installation diameter Feature of piles number depth pile Impact strikes per pile number per day and removal of piles (feet) (minutes) of hours (range)

Phase 1

48-inch ...... Loading Platform ...... 45 71 100 30 2,300 (50 restrikes 73 1.5 30. each for 4 piles). Access Trestle ...... 26 130 3,000 (50 restrikes 56 (1–3) 17. each for 3 piles). 36-inch ...... Temporary Construc- 26 30 115 75 50 restrikes for 10 33 3 9 installation. tion Work Trestle. piles. (2–4) 9 removal. Temporary Derrick 4 40 75 NA...... 5 4 1 installation. Barge. 1 removal. 24-inch ...... Temporary Construc- 26 81 140 75 50 restrikes of 10 65 3 9 installation tion Work Trestle. piles. (2–4) 9 removal. Temporary Construc- 10 105 75 NA...... 25 1.6 6 installation. tion Work Trestle, (1–2) 6 removal. Battered. Temporary Construc- 36 105 75 NA...... 90 3 12 installation. tion Access Trestle (2–4) 12 removal. Template. Temporary Dolphins 3 50 30 NA...... 3 3 1 installation. for mooring con- 1 removal. struction vessels. Temporary Dolphins 6 50 30 NA...... 9 3 2 installation. for mooring con- 2 removal. struction vessels, Battered.

Phase 1 Construction Totals ...... 182 piles ...... 359 ...... 127.

Phase 2

24-inch ...... Temporary Dolphins 3 9 50 30 NA...... 3 3 1 installation. for mooring con- 1 removal. struction vessels. Temporary Dolphins 6 50 30 NA...... 9 3 2 installation. for mooring con- 2 removal. struction vessels, Battered. 36-inch ...... Temporary Construc- 72 76 115 75 NA...... 180 3 (2–4) 24 installation. tion Dolphin Tem- 24 removal. plate. Temporary derrick 4 40 75 NA...... 5 4 1 installation. barge. 1 removal. 144-inch ..... Mooring Dolphin ...... 6 9 140 45 ( 1 pile) 5,000 (1,500 first day, 21 0.5 13. 3,500 second day). Breasting Dolphin ...... 3 135 11 (0.3 or 0.7) 6.

Phase 2 Construction Totals ...... 94 piles ...... 229 ...... 75.

The estimated source levels for each are from the acoustic monitoring during existing literature at other locations for pile type and installation method are the POA’s 2016 Test Pile Program (TPP) non-48-in piles. provided in Table 2. These source levels (for 48-in piles) and investigation of

TABLE 2—ESTIMATED PILE SOURCE LEVELS WITH AND WITHOUT BUBBLE CURTAINS

Method and pile Sound level at 10 m Data source size

Unattenuated Bubble curtain Vibratory db rms 7 dB reduction, dB rms

144-in ...... 178 171 Caltrans 2015. 48-in ...... 168 161 Austin et al 2016. 36-in ...... 166 159 Navy 2015. 24-in ...... 161 154 Navy 2015.

Unattenuated Bubble curtain Impact dB rms dB SEL dB peak dB rms dB SEL dB peak

144-in ...... 209 198 220 202 191 213 Caltrans 2015. 48-in ...... 200 187 215 193 180 208 Austin et al. 2016.

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Unattenuated Bubble curtain Impact dB rms dB SEL dB peak dB rms dB SEL dB peak

36-in ...... 194 184 211 187 177 204 Navy 2015. 24-in ...... 193 181 210 186 174 203 Navy 2015.

Phase 1—Loading Platform and Access adhered to the top inside of the pile will trestle piles may need to be proofed to Trestle Construction Description be removed to prepare for concrete confirm load capacities for construction installation, and a soffit form will be equipment. Template piles will stay in Phase 1 will take place during 2020 inserted into the hollow pile to prevent place until precast pile caps are placed and will include construction of the the closure pour concrete from reaching on the permanent trestle piles following loading platform and access trestle. mudline. Formwork will be constructed installation. The temporary trestle will Construction will be accomplished from around the top of the pile, out of the stay in place for the entire construction two concurrent headings or directions; water, to support placement of a precast season, and will be used as a work one marine-side derrick barge with a concrete cap on top of each pile. The platform for decking installation on the crane/hammer will be used to construct closure pour, where concrete is poured permanent trestle. The temporary trestle the loading platform, and a land-side into the pile above the soffit form, decking and piles will be removed at the crawler crane/hammer will be used to connects the pile to the precast pile end of construction activities for Phase construct the temporary and permanent caps, bonding the pile to the cap. 1. Removal is expected to require the access trestle from the shoreline out. Precast platform panels are then placed same amount of time as installation due The crawler crane will initially advance on the deck, and additional concrete to the strong pile setup and resistance the temporary work trestle out from the will be poured on top of the panels to conditions related to Knik Arm shoreline with a top-down or leap-frog create the platform decking. sediments. type construction method, and then the For the access trestle, the permanent The permanent access trestle is crawler crane will work off of the access trestle construction requires comprised of eight bents (clusters) of temporary work trestle to construct the construction of a parallel temporary three piles each and one bent of two permanent trestle all the way out to the trestle, installed adjacent to the piles at the abutment. The abutment loading platform. permanent trestle, from which to bent (two piles) is located above mean For the loading platform, which is advance the temporary piles used for high water on shore and will be supported with 48-inch piles, the templates and installation of the installed in the dry. The next three contractor will first mobilize the permanent access trestle piles. While bents are located in the intertidal zone marine-based derrick barge on the the permanent trestle requires 48-inch and therefore may or may not be seaward side of the platform location piles, the temporary trestle will be installed in water depending upon the and install four temporary mooring piles constructed using 24- and 36-inch piles. tidal stage (i.e., if the tide is high, they to stabilize the derrick barge during the Initial construction of the temporary may be in water, but if the tide is low, construction season. Also, three work trestle will be advanced first; then, they will not be in water). The parallel temporary mooring dolphins will be as the work trestle advances water-ward temporary construction trestle will constructed in the vicinity of the PCT to and room is made available to follow the same pattern. For purposes of serve as mooring for construction accommodate construction equipment, this analysis, it is assumed that all piles vessels and barges containing work will commence on construction of will be driven in water; however, if construction materials, and will be the permanent access trestle piles are driven in the dry during actual removed at the end of the construction coincidentally as the temporary work construction, takes of marine mammals season. The derrick barge will host the trestle is advanced water-ward toward will be assumed not to occur. Also, crane and hammer used to install the the loading platform. some of the permanent trestle piles may permanent loading platform piles and Construction of the trestles will occur be started/partially driven with a decking. Each of the platform piles will concurrently with construction of the vibratory hammer when in the dry at the be installed using an impact hammer loading platform. A crawler crane will abutment (two piles) and the first three with a bubble curtain applied. A be used to install piles for the temporary bents (three piles each) in order to set vibratory hammer would only be used trestle, building seaward from the shore the pile up for impact hammer in the infrequent event that an using a top-down or leap-frog installation; this condition also is not obstruction were encountered while construction method. The crawler crane expected to generate takes. This is a driving the pile that requires removal or will advance onto the temporary trestle unique situation at this location due to repositioning of the pile with a vibratory to complete pile installation and the highly variable tidal conditions and hammer. decking for the temporary trestle. Once the need to provide initial pile support Four of the permanent platform piles the first section of temporary trestle is for impact hammer installation. will be ‘‘proofed’’ to confirm their constructed and the crawler crane is To construct the loading platform and ability to withstand design loads. advanced, a second crawler crane will permanent access trestle, piles will be Proofing involves approximately 50 advance onto the deck of the temporary installed using an impact hammer to impact hammer restrikes over an trestle and be used to install the first drive through the overburden sediment approximate 10-minute period while section of template and permanent piles layer and into the bearing layer, to an instrumentation is attached to the pile for the permanent access trestle (see Pile average embedded depth of about 100 during restrike to confirm design Driving Scenarios, below). feet (loading platform piles) and 130 feet conformance. Pile cleanout activities, to Three of the permanent trestle piles (access trestle piles) below the substrate. prepare the interior of the hollow pile will be ‘‘proofed’’ to confirm their Installation and removal of all for partial concrete filling, will occur ability to withstand design loads. In temporary piles, including derrick barge only in the top portion of the pile, but addition, it is estimated that 10 each of mooring piles, mooring dolphin piles not below mudline. Any material the 24- and 36-inch temporary work for mooring construction vessels,

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temporary access trestle piles, and longitudinal movements of berthed activity will commence as described templates for installation of the vessels. above. permanent access trestle piles, will use In total, nine 144-in mooring and One crane will be used for installation vibratory hammer methods. Limited breasting dolphins will be installed at of dolphin piles and associated vibratory hammer application may be the PCT. Six mooring dolphins will be temporary template piles; multiple required for loading platform and constructed parallel to and landward of hammers will not be employed permanent trestle piles due to safety the loading platform face and three simultaneously. Templates will be re- reasons, constructability, or if a pile breasting dolphins will be installed in used at each dolphin location. The encounters an obstruction. alignment with the loading platform crane will alternate between installing (Figure 1–2 in the POA’s IHA template piles, driving dolphin piles, Phase 2—Mooring and Breasting removing template piles, and out-of- Dolphins Construction Description application). These dolphins will provide for secure ship docking at the water work such as placement of Phase 2 will occur in 2021 and will terminal. Each mooring and breasting decking, catwalks, and utility racks include construction of the mooring and dolphin will be comprised of a single along the platform and trestle. All breasting dolphins. Construction will be round 144-inch steel pipe pile or terminal utility work is out of the water, accomplished from one marine-based monopile, driven to an average and includes installation of pipe racks derrick barge with a crane/hammer embedded depth of about 140 feet below and utilities along the platform and work station. Similar to Phase 1, the the substrate. trestle. contractor will initially install four Following temporary pile installation temporary mooring piles to stabilize the Phases 1 and 2—Temporary Mooring with a vibratory hammer of the dolphin derrick barge during the construction Dolphins template, held in place with 36-inch season. Also, three temporary mooring Three temporary mooring dolphins piles, the crane will loft the first dolphins will be constructed in the will be installed near the PCT during permanent pile length (approximately vicinity of the PCT to serve as mooring Phases 1 and 2. Working barges and 100 feet) and ready it for lowering for construction vessels and barges construction vessels associated with the through the template framework. The containing construction materials, and PCT Project will use the temporary crane will have a boom holding the top will be removed at the end of the mooring dolphins during PCT of the pile as well as a spotter arm lower construction season. The derrick barge construction. Each temporary mooring on the pile to steady the pile for will host the crane and hammer used to dolphin will consist of one 24-inch install the mooring and breasting positioning. The pile will then be plumb pile and two 24-inch battered dolphins. Temporary template piles will lowered through the template and piles installed with a vibratory hammer then be installed to anchor the template readied for pile driving. Impact pile (nine piles total). driving will be used to advance the pile that will guide the installation of the Pile-Driving Summary—Phases 1 and 2 permanent dolphin piles at each of the to a prescribed depth, at which point dolphin locations. Template piles will pile-driving activity will stop to allow Pile installation will occur in water be installed approximately 115 feet into field splicing of the second pile length. depths that range from a few feet or dry the substrate. Temporary template piles Decking will be added to the temporary conditions (at low tide) nearest the will be driven in a grid formation pile template framework to shore to approximately 24 meters (80 surrounding the location of each accommodate welders; no pile driving feet) at the outer face of the loading dolphin pile, with a steel framework will be conducted during the welding platform at high tide, depending on bolted to the temporary piles to guide and testing of the two lengths of pile, as tidal stage (see Figure 1–3 and Figure 1– dolphin pile installation. The the crane will be holding the second 4 in the POA’s IHA application). Figure framework includes adjustable pile length in place. Once the first and 1–3 in the POA’s IHA application shows components and hydraulic guides that second lengths of pile are spliced, pile three test piles that were installed in can be adjusted to maintain correct driving will be reinitiated until the tip 2016 and are located just water-ward of positioning of the dolphins once they is at the prescribed depth. Limited the face of the PCT loading platform are in place. All template piles will be vibratory hammer application may be (test piles were removed in 2019). The aligned plumb (vertically) and installed required on the mooring or breasting PCT will be constructed between these and removed using a vibratory hammer dolphin piles for safety reasons or if a three test piles and the shore; for due to accuracy requirements for setting pile encounters an obstruction. illustrative purposes, the distance from the template. All plumb piles will Following monopile installation, the the water-ward edge of the PCT loading employ a bubble curtain during all pile- superstructure will be installed atop the platform (general location of test piles) driving activity. monopile. A precast concrete mooring is approximately 30 meters from mean Ships mooring to the PCT will utilize cap will be added to the monopile. The lower low water and 115 meters from both breasting dolphins and mooring caps will be welded to the piles by an mean higher high water. dolphins. To meet required structural embedded steel ring in the precast cap. The pile-driving construction season demands, monopile dolphins are This activity will not require in-water for Phase 1 is scheduled to commence planned for both the breasting and work or hammer activity. The three April 15, 2020, and end the first week mooring dolphins. Breasting dolphins breasting dolphins will have fenders of November 2020 (November 7 for are designed to assist in the berthing of installed, which will be attached to the purposes of this analysis), with vessels by absorbing some of the lateral mooring cap and will not require in- decommissioning occurring during the load during vessel impact. Breasting water or hammer work. remainder of November. dolphins also protect the loading Once the first and second lengths of Decommissioning will not require in- platform from impacts by vessels. pile, ring and mooring cap, and fender, water pile driving. Construction days Mooring dolphins, as their name if applicable, are assembled at the first when piles are not being installed or implies, are used for mooring only and location, the temporary pile template removed will be devoted to other work provide a place for a vessel to be will be removed using a vibratory such as welding or deck work. The POA secured by lines (ropes). Use of mooring hammer. The barge will be repositioned is working with their contractor to dolphins helps control transverse and to the next location, and the work schedule deck work and other non-pile-

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driving work to the maximum extent 144-inch monopiles. When using two history, of the potentially affected practicable during the August/ hammers, one must consider the species. Additional information September timeframe when beluga accumulated energy, and there are regarding population trends and threats whale abundance is higher in Knik Arm. fundamental approaches for adjusting may be found in NMFS’s Stock Similarly, the pile driving construction source levels to account for the Assessment Reports (SARs; https:// season for Phase 2 is planned to aforementioned scenarios. While two www.fisheries.noaa.gov/national/ commence in May 2021 and end in impact hammers could work at the same marine-mammal-protection/marine- early November 2021. The estimated time, it is unlikely that the hammers mammal-stock-assessments) and more duration for installation and removal of would be dropping at the exact same general information about these species PCT permanent and temporary piles is time; therefore, two impact hammers (e.g., physical and behavioral shown in Table 1–2. would not necessitate additional descriptions) may be found on NMFS’s acoustic analysis. website (https:// Pile-Driving Scenarios www.fisheries.noaa.gov/find-species). Auxiliary Non-Pile-Driving Activities During Phase 1, the POA expects to Additional information on beluga utilize three hammers on the job site to Other activities necessary to construct whales may be found in NMFS’ 2016 expedite construction, including an the PCT involve the installation of Recovery Plan for the Cook Inlet Beluga impact hammer for loading platform temporary mooring anchor systems, Whale (Delphinapterus leucas), construction and an impact hammer and installation of utility lines and available online at https:// a vibratory hammer for permanent and pipelines, and use of cranes, tugs, and www.fisheries.noaa.gov/resource/ temporary work trestle construction. In floating barges. These activities are document/recovery-plan-cook-inlet- order to mitigate potential impacts to described in detail in the POA’s IHA beluga-whale-delphinapterus-leucas. beluga whales and attempt to maximize application. The National Marine Table 3 lists all species with expected pile installation activities during the Fisheries Service has evaluated these potential for occurrence in upper Cook lower density months of occurrence activities for the potential to harass Inlet and summarizes information (May–July), the contractor plans to add marine mammals. Installation of the related to the population or stock, the third crane with a vibratory hammer mooring anchor systems would not including regulatory status under the to the equipment work mix in order to elevate noise levels in Knik Arm; MMPA and ESA and potential accelerate construction of the temporary therefore, marine mammal harassment biological removal (PBR), where known. and permanent trestles. This could is not a likely outcome. Utility, For taxonomy, we follow Committee on mean that one vibratory and two impact petroleum, and cement lines will extend Taxonomy (2016). PBR is defined by the hammers may be operating at the same between the PCT loading platform and MMPA as the maximum number of time along the trestles for brief periods the shore, and will connect with animals, not including natural of time. Use of these hammers could existing onshore infrastructure. The mortalities, that may be removed from a also be coincidental with use of the installed utility lines and pipelines will marine mammal stock while allowing impact hammer for installation of the be supported by the access trestle and that stock to reach or maintain its platform piles. It is not anticipated that loading platform above marine waters. optimum sustainable population (as two vibratory hammers will be No pile installation or removal is described in NMFS’s SARs). While no operating at the same time. Section associated with these auxiliary mortality is anticipated or authorized 6.3.2.3 of the IHA application further activities; therefore, no impacts on the here, PBR and annual serious injury and details these conditions. aquatic environment, including elevated mortality from anthropogenic sources Given the proximity of the platform in-water noise, are anticipated from the are included here as gross indicators of and trestle, hammers could work very installation of utility lines and the status of the species and other close to each other or as far as 100 pipelines. threats. meters away from each other. The most Proposed mitigation, monitoring, and Marine mammal abundance estimates likely combinations of piles that could reporting measures are described in presented in this document represent be installed within a day include (1) detail later in this document (please see the total number of individuals that vibratory hammer installation of 24-inch Proposed Mitigation and Proposed make up a given stock or the total temporary piles and impact hammer Monitoring and Reporting). number estimated within a particular installation of 48-inch permanent trestle study or survey area. NMFS’s stock Description of Marine Mammals in the or loading platform piles, and (2) abundance estimates for most species Area of Specified Activities vibratory hammer installation of 36-inch represent the total estimate of temporary piles and impact hammer There are six species of marine individuals within the geographic area, installation of 48-inch permanent trestle mammals that may be found in upper if known, that comprises that stock. For or loading platform piles. Cook Inlet during the proposed pile some species, this geographic area may Since only one crane will be driving activities. Sections 3 and 4 of extend beyond U.S. waters. All managed operational during Phase 2, there will be the POA’s application summarize stocks and all values presented in Table no additional pile-driving activity available information regarding status 3 are the most recent available at the during the impact installation of either and trends, distribution and habitat time of publication and are available in the 36-inch temporary template piles or preferences, and behavior and life the 2019 draft SARs (Muto et al., 2019).

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TABLE 3—MARINE MAMMAL SPECIES POTENTIALLY OCCURRING IN UPPER COOK INLET, ALASKA

ESA/ MMPA Stock abundance Annual Common name Scientific name Stock status; (CV, N , most recent PBR min M/SI 3 strategic abundance survey) 2 (Y/N) 1

Order Cetartiodactyla—Cetacea—Superfamily Mysticeti (baleen whales)

Family Balaenopteridae (rorquals): Humpback whale ...... Megaptera novaeangliae ...... Western North Pacific .... E/D; Y 1,107 (0.3, 865, 2006) ...... 3 2.6

Superfamily Odontoceti (toothed whales, dolphins, and porpoises)

Family Delphinidae: Beluga whale ...... Delphinapterus leucas ...... Cook Inlet ...... E/D; Y 327 (0.06, 311, 2016) ...... 0.54 0 Killer whale ...... Orcinus orca ...... Alaska Resident ...... -/-; N 2,347 (N/A, 2,347, 2012) ...... 24 1 Alaska Transient ...... -/-; N 587 (N/A, 587, 2012) ...... 5.9 1 Family Phocoenidae (por- poises): Harbor porpoise ...... Phocoena ...... Gulf of Alaska ...... -/-; Y 31,046 (0.214, N/A, 1998) ...... Undet 72

Order Carnivora—Superfamily Pinnipedia

Family Otariidae (eared seals and sea lions): Steller sea lion ...... Eumetopias jubatus ...... Western ...... E/D; Y 54,267 (N/A, 54,267, 2017) ...... 326 247 Family Phocidae (earless seals): Harbor seal ...... Phoca vitulina ...... Cook Inlet/Shelikof ...... -/-; N 28,411 (26,907, N/A, 2018) ...... 807 807 1 Endangered Species Act (ESA) status: Endangered (E), Threatened (T)/MMPA status: Depleted (D). A dash (-) indicates that the species is not listed under the ESA or designated as depleted under the MMPA. Under the MMPA, a strategic stock is one for which the level of direct human-caused mortality exceeds PBR or which is determined to be declining and likely to be listed under the ESA within the foreseeable future. Any species or stock listed under the ESA is automatically designated under the MMPA as depleted and as a strategic stock. 2 NMFS marine mammal stock assessment reports online at: www.nmfs.noaa.gov/pr/sars/. CV is coefficient of variation; Nmin is the minimum estimate of stock abundance. In some cases, CV is not applicable because it has not been calculated. 3 These values, found in NMFS’ SARs, represent annual levels of human-caused mortality plus serious injury from all sources combined (e.g., commercial fisheries, ship strike). Annual M/SI often cannot be determined precisely and is in some cases presented as a minimum value or range. A CV associated with estimated mor- tality due to commercial fisheries is presented in some cases.

As described below, all six species Humpback whales are encountered been identified for this stock. Other (comprising six managed MMPA stocks) regularly in lower Cook Inlet and potential impacts include harmful algal temporally and spatially co-occur with occasionally in mid-Cook Inlet; blooms (Geraci et al. 1989), possible the activity to the degree that take is however, sightings are rare in upper changes in prey distribution with reasonably likely to occur, and we have Cook Inlet. There have been few climate change, entanglement in fishing proposed authorizing it. sightings of humpback whales near the gear, ship strikes due to increased vessel project area. Humpback whales were not traffic (e.g., from increased shipping in Humpback Whale documented during POA construction higher latitudes and through the Bering or scientific monitoring from 2005 to Sea with changes in sea-ice coverage), Currently, three populations of 2011 or during 2016 (Cornick and and oil and gas activities. An intentional humpback whales are recognized in the Pinney 2011; Cornick and Saxon- unauthorized take of a humpback whale North Pacific, migrating between their Kendall 2008, 2009; Cornick and by Alaska Natives in Toksook Bay was respective summer/fall feeding areas Seagars 2016; Cornick et al. 2010, 2011; documented in 2016 (Muto et al., 2019); and winter/spring calving and mating ICRC 2009a, 2010a, 2011a, 2012; however, no subsistence use of areas (Baker et al. 1998; Calambokidis et Markowitz and McGuire 2007; Prevel- humpback whales occurs in Cook Inlet. al. 1997). Although there is considerable Ramos et al. 2006). Observers The overall trend for most humpback distributional overlap in the humpback monitoring the Ship Creek Small Boat whale populations found in U.S. waters whale stocks that use Alaska, the whales Launch from August 23 to September is positive and points toward recovery seasonally found in Cook Inlet are 11, 2017 recorded two sightings, each of (81 FR 62259; September 8, 2016), probably of the Central North Pacific a single humpback whale, which was indicating that prey availability is not a stock (Muto et al. 2017). The Central presumed to be the same individual. major problem. However, a sharp North Pacific stock winters in Hawaii One other humpback whale sighting has decline in observed reproduction and and summers from British Columbia to been recorded for the immediate encounter rates of humpback whales the Aleutian Islands (Calambokidis et vicinity of the project area. This event from the Central North Pacific stock al. 1997), including Cook Inlet. The involved a stranded whale that was between 2013 and 2018 has been related humpback whale ESA listing final rule sighted near a number of locations in to oceanographic anomalies and (81 FR 62259, September 8, 2016) upper Cook Inlet before washing ashore consequent impacts on prey resources established 14 Distinct Population at Kincaid Park in 2017; it is unclear as (Cartwright et al. 2019), suggesting that Segments (DPSs) with different listing to whether the humpback whale was humpback whales are vulnerable to statuses. The Hawaii DPS is not listed alive or deceased upon entering Cook major environmental changes. as threatened or endangered under the Inlet waters. Beluga Whale ESA. NMFS is in the process of Potential concerns include elevated reviewing humpback whale stock levels of sound from anthropogenic The CIBW stock is a small, structure under the MMPA in light of sources (e.g., shipping, military sonars) geographically isolated population the 14 DPSs established under the ESA. but no specific habitat concerns have separated from other beluga populations

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by the Alaska Peninsula. The beluga whales in the northernmost on July 20, 2015 in the Susitna Delta population is genetically distinct from portion of Cook Inlet appears to be area (T. McGuire, pers. comm. March other Alaska populations, suggesting the consistent from June to October (Rugh et 27, 2017). The first neonates peninsula is an effective barrier to al. 2000, 2004a, 2005, 2006, 2007). encountered during each field season genetic exchange (O’Corry-Crowe et al. Research reports generated from the from 2005 through 2015 were always 1997). The CIBW population is surveys can be found at https:// seen in the Susitna River Delta in July. estimated to have declined from 1,300 www.fisheries.noaa.gov/alaska/ The photo ID team’s documentation of animals in the 1970s (Calkins 1989) to endangered-species-conservation/ the dates of the first neonate of each about 340 animals in 2014 (Shelden et research-reports-and-publications-cook- year indicate that calving begins in mid- al. 2015). The precipitous decline inlet-beluga-whales. late July/early August, generally documented in the mid-1990s was Though CIBWs can be found coinciding with the observed timing of attributed to unsustainable subsistence throughout the inlet at any time of year, annual maximum group size. Probable practices by Alaska Native hunters they spend the ice-free months generally mating behavior of belugas was (harvest of >50 whales per year) in the upper Cook Inlet, shifting into the observed in April and May of 2014, in (Mahoney and Shelden 2000). In 2006, middle and lower Inlet in winter (Hobbs Trading Bay. Young beluga whales are a moratorium to cease hunting was et al. 2005). In 1999, one beluga whale nursed for two years and may continue agreed upon to protect the species. was tagged with a satellite transmitter, to associate with their mothers for a The Cook Inlet beluga stock remains and its movements were recorded from considerable time thereafter (Colbeck et within Cook Inlet throughout the year June through September of that year. al. 2013). (Goetz et al. 2012a). NMFS designated Since 1999, 18 beluga whales in upper During the spring and summer, beluga two areas, consisting of 7,809 km2 Cook Inlet have been captured and fitted whales are generally concentrated near (3,016 mi2) of marine and estuarine with satellite tags to provide the warmer waters of river mouths environments considered essential for information on their movements during where prey availability is high and the species’ survival and recovery as late summer, fall, winter, and spring. predator occurrence is low (Moore et al. critical habitat. However, in recent years Using location data from satellite-tagged 2000). Goetz et al. (2012b) modeled the range of the beluga whale has Cook Inlet belugas, Ezer et al. (2013) habitat preferences using NMFS’ 1994– contracted to the upper reaches of Cook found most tagged whales were in the 2008 June abundance survey data. In Inlet because of the decline in the lower to middle inlet (70 to 100 percent large areas, such as the Susitna Delta population (Rugh et al. 2010). Area 1 of of tagged whales) during January (Beluga to Little Susitna Rivers) and the CIBW critical habitat encompasses through March, near the Susitna River Knik Arm, there was a high probability all marine waters of Cook Inlet north of Delta from April to July (60 to 90 that beluga whales were in larger group a line connecting Point Possession percent of tagged whales) and in the sizes. Beluga whale presence also (61.04° N, 150.37° W) and the mouth of Knik and Turnagain Arms from August increased closer to rivers with Chinook Three Mile Creek (61.08.55° N, to December. salmon (Oncorhynchus tshawytscha) 151.04.40° W), including waters of the More recently, the Marine Mammal runs, such as the Susitna River. Susitna, Little Susitna, and Chickaloon Lab has conducted long-term passive Movement has been correlated with the Rivers below mean higher high water acoustic monitoring demonstrating peak discharge of seven major rivers (MHHW). This area provides important seasonal shifts in CIBW concentrations emptying into Cook Inlet. Boat-based habitat during ice-free months and is throughout Cook Inlet. Castellote et al. surveys from 2005 to the present used intensively by Cook Inlet beluga (2015) conducted long-term acoustic (McGuire and Stephens 2017), and between April and November (NMFS monitoring at 13 locations throughout initial results from passive acoustic 2016a). More information on CIBW Cook Inlet between 2008 and 2015: monitoring across the entire inlet habitat can be found at https:// North Eagle Bay, Eagle River Mouth, (Castellote et al. 2015) also support www.fisheries.noaa.gov/action/critical- South Eagle Bay, Six Mile, Point seasonal patterns observed with other habitat-cook-inlet-beluga-whale. MacKenzie, Cairn Point, Fire Island, methods. Based on long-term passive Since 1993, NMFS has conducted Little Susitna, Beluga River, Trading acoustic monitoring, seasonally, annual aerial surveys in June, July or Bay, Kenai River, Tuxedni Bay, and foraging behavior was more prevalent August to document the distribution Homer Spit; the former six stations during summer, particularly at upper and abundance of beluga whales in being located within Knik Arm. In inlet rivers, than during winter. Cook Inlet. The collective survey results general, the observed seasonal Foraging index was highest at Little show that beluga whales have been distribution is in accordance with Susitna, with a peak in July-August and consistently found near or in river descriptions based on aerial surveys and a secondary peak in May, followed by mouths along the northern shores of satellite telemetry: Beluga detections are Beluga River and then Eagle Bay; upper Cook Inlet (i.e., north of East and higher in the upper inlet during monthly variation in the foraging index West Foreland). In particular, beluga summer, peaking at Little Susitna, indicates belugas shift their foraging whale groups are seen in the Susitna Beluga River, and Eagle Bay, followed behavior among these three locations River Delta, Knik Arm, and along the by fewer detections at those locations from April through September. shores of Chickaloon Bay. Small groups during winter. Higher detections in Despite protection from hunting, this had also been recorded farther south in winter at Trading Bay, Kenai River, and stock continues to decline. The Kachemak Bay, Redoubt Bay (Big River), Tuxedni Bay suggest a broader beluga population was declining at the end of and Trading Bay (McArthurRiver) prior distribution in the lower inlet during the period of unregulated harvest, with to 1996 but very rarely thereafter. Since winter. the relatively steep decline ending in the mid-1990s, most (96 to 100 percent) Beluga whales in Cook Inlet are 1999, coincident with harvest removals beluga whales in upper Cook Inlet have believed to mostly calve between mid- dropping from an estimated 42 in 1998 been concentrated in shallow areas near May and mid-July, and concurrently to just 0 to 2 whales per year in 2000 river mouths, no longer occurring in the breed between late spring and early to 2006 (and with no removals after central or southern portions of Cook summer (NMFS 2016a), primarily in 2006). From 1999 to 2016, the rate of Inlet (Hobbs et al. 2008). Based on these upper Cook Inlet. The only known decline of the population was estimated aerial surveys, the concentration of observed occurrence of calving occurred to be 0.4% (SE = 0.6%) per year, with

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a 73% probability of a population different prey species. During aerial There has been an increase in harbor decline. While from 2006 to 2016, the surveys conducted between 1993 and porpoise sightings in upper Cook Inlet most recent 10-year period, the rate of 2004, killer whales were observed on over the past two decades (Shelden et decline was estimated to be 0.5% per only three flights, all in the Kachemak al. 2014). Small numbers of harbor year, (with a 70% probability of a and English Bay area (Rugh et al. 2005). porpoises have been consistently population decline) (Shelden et al. Anecdotal reports of killer whales reported in upper Cook Inlet between 2017). No human-caused mortality or feeding on belugas in upper Cook Inlet April and October (Prevel-Ramos et al. serious injury of CIBWs has been began increasing in the 1990s; several of 2008). Harbor porpoises have been recently documented. Other potential these sightings and strandings report observed within Knik Arm during threats most likely to result in direct killer whale predation on beluga monitoring efforts since 2005. During human-caused mortality or serious Whales. POA construction from 2005 through injury of this stock include ship strikes. No killer whales were spotted in the 2011 and in 2016, harbor porpoises Mortality related to live stranding vicinity of the POA during surveys by were reported in 2009, 2010, and 2011 events, where a beluga whale group Funk et al. (2005), Ireland et al. (2005), (Cornick and Saxon-Kendall 2008, 2009; strands as the tide recedes, has been or Brueggeman et al. (2007, 2008a, Cornick and Seagars 2016; Cornick et al. regularly observed in upper Cook Inlet. 2008b). No killer whale sightings were 2010, 2011; Markowitz and McGuire Most whales involved in a live documented during POA construction 2007; Prevel-Ramos et al. 2006; Table stranding event survive, although some or scientific monitoring from 2005 to 4–2). In 2009, a total of 20 harbor associated deaths may not be observed 2011 or during the 2016 TPP. Very few porpoises were observed during if the whales die later from live- killer whales, if any, are expected to construction monitoring, with sightings stranding-related injuries (Vos and approach or be near the project area in June, July, August, October, and Shelden 2005, Burek-Huntington et al. during construction of the PCT. November. Harbor porpoises were 2015). Between 2013 and 2017, there There are no reports of a subsistence observed twice in 2010, once in July and were reports of approximately 78 beluga harvest of killer whales in Alaska. Based again in August. In 2011, POA whales involved in two known live on currently available data, a minimum monitoring efforts documented harbor stranding events, plus one suspected estimate of the mean annual mortality porpoises five times, with a total of six live stranding event with two associated and serious injury rate for both the individuals, in August, October, and deaths reported. In 2014, necropsy Alaska Residents and transient stocks November at the POA (Cornick et al. results from two whales found in due to U.S. commercial fisheries is less 2011). During other monitoring efforts Turnagain Arm suggested that a live than 10% of the PBR and, therefore, is conducted in Knik Arm, there were four stranding event contributed to their considered to be insignificant and sightings of harbor porpoises in 2005 deaths as both had aspirated mud and approaching zero mortality and serious (Shelden et al. 2014), and a single water. No live stranding events were injury rate. Therefore, neither stock is harbor porpoise was observed within reported prior to the discovery of these classified as a strategic stock. the vicinity of the POA in October 2007. dead whales, suggesting that not all live Harbor Porpoise Estimates of human-caused mortality stranding events are observed. Most live and serious injury from stranding data strandings occur in Knik Arm and Harbor porpoises primarily frequent and fisherman self-reports are Turnagain Arm, which are shallow and the coastal waters of the Gulf of Alaska underestimates because not all animals have big tides. Another source of beluga and Southeast Alaska (Dahlheim et al. strand or are self-reported nor are all whale mortality in Cook Inlet is 2000, 2008), typically occurring in stranded animals found, reported, or predation by transient-type (mammal- waters less than 100 m deep (Hobbs and have the cause of death determined. In eating) killer whales. Waite 2010). Harbor porpoise prefer addition, the trend of this stock is In its Recovery Plan (NMFS, 2016), nearshore areas, bays, tidal areas, and unknown given data is more than eight NMFS identified several threats to river mouths (Dahlheim et al. 2000, years old. Given their shallow water CIBWs. Potential threats include: (1) Hobbs and Waite 2010). In Alaskan distribution, harbor porpoise are High concern: Catastrophic events (e.g., waters, NMFS has designated three vulnerable to physical modifications of natural disasters, spills, mass stocks of harbor porpoises for nearshore habitats resulting from urban strandings), cumulative effects of management purposes: Southeast and industrial development (including multiple stressors, and noise; (2) Alaska, Gulf of Alaska, and Bering Sea waste management and nonpoint source medium concern: Disease agents (e.g., Stocks (Muto et al. 2017). Porpoises runoff) and activities such as pathogens, parasites, and harmful algal found in Cook Inlet belong to the Gulf construction of docks and other over- blooms), habitat loss or degradation, of Alaska Stock, which is distributed water structures, filling of shallow areas, reduction in prey, and unauthorized from Cape Suckling to Unimak Pass. dredging, and noise (Linnenschmidt et take; and (3) low concern: Pollution, Although harbor porpoise have been al. 2013). Subsistence users have not predation, and subsistence harvest. The frequently observed during aerial reported any harvest from the Gulf of recovery plan did not treat climate surveys in Cook Inlet (Shelden et al. Alaska harbor porpoise stock since the change as a distinct threat but rather as 2014), most sightings are of single early 1900s (Shelden et al. 2014). a consideration in the threats of high animals, and are concentrated at Steller Sea Lion and medium concern. Chinitna and Tuxedni Bays on the west side of lower Cook Inlet (Rugh et al. Steller sea lions inhabiting Cook Inlet Killer Whale 2005) and in the upper inlet. The belong to the western distinct Two stocks of killer whales may be occurrence of larger numbers of population segment (WDPS), and this is present in upper Cook Inlet: The Eastern porpoise in the lower Cook Inlet may be the stock considered in this analysis. North Pacific Alaska Residents and the driven by greater availability of NMFS defines the Steller sea lion WDPS Gulf of Alaska, Aleutian Islands, and preferred prey and possibly less as all populations west of longitude Bering Sea Transients. Both ecotypes competition with beluga whales, as 144° W to the western end of the overlap in the same geographic area; belugas move into upper inlet waters to Aleutian Islands. The most recent however, they maintain social and forage on Pacific salmon during the comprehensive aerial photographic and reproductive isolation and feed on summer months (Shelden et al. 2014). land-based surveys of WDPS Steller sea

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lions in Alaska were conducted during Several factors may have been Strait stock is approximately ¥111 seals the 2014 and 2015 breeding seasons important drivers of the decline of the per year, with a probability that the (Fritz et al. 2015). The WDPS of Steller stock. However, there is uncertainty stock is decreasing of 0.609 (Muto et al., sea lions is currently listed as about threats currently impeding their 2015). The estimated level of human- endangered under the ESA (55 FR recovery, particularly in the Aleutian caused mortality and serious injury for 49204, November 26, 1990) and Islands. Many factors have been this stock is 234 seals, of which 233 designated as depleted under the suggested as causes of the steep decline seals are taken for subsistence uses. MMPA. NMFS designated critical in abundance of western Steller sea Additional potential threats most likely habitat on August 27, 1993 (58 FR lions observed in the 1980s, including to result in direct human-caused 45269). The critical habitat designation competitive effects of fishing, mortality or serious injury for all stocks for the WDPS of Steller sea lions was environmental change, disease, of harbor seals in Alaska include determined to include a 37 km (20 nm) contaminants, killer whale predation, unmonitored subsistence harvests, buffer around all major haul outs and incidental take, and illegal and legal incidental takes in commercial fisheries, rookeries, and associated terrestrial, shooting (Atkinson et al. 2008, NMFS and illegal shooting. Disturbance by atmospheric, and aquatic zones, plus 2008). A number of management actions cruise vessels is an additional threat for three large offshore foraging areas, none have been implemented since 1990 to harbor seal stocks that occur in glacial of which occurs in the project area. promote the recovery of the Western fjords (Jansen et al. 2010, 2015; Steller sea lions feed largely on walleye U.S. stock of Steller sea lions, including Matthews et al. 2016). The average pollock, salmon, and arrowtooth 3-nmi no-entry zones around rookeries, annual harvest of this stock of harbor flounder during the summer, and prohibition of shooting at or near sea seals between 2004 and 2008 was 233 walleye pollock and Pacific cod during lions, and regulation of fisheries for sea seals per year. The annual harvest in the winter (Sinclair and Zeppelin 2002). lion prey species (e.g., walleye pollock, 2014 was 104 seals (Muto et al., 2019). Except for salmon, none of these are Pacific cod, and Atka mackerel) In addition, sea otters (Enhydra lutris) found in abundance in upper Cook Inlet (Sinclair et al. 2013, Tollit et al. 2017). may be found in Cook Inlet. However, sea otters are managed by the U.S. Fish (Nemeth et al. 2007). Harbor Seal Within Cook Inlet, Steller sea lions and Wildlife Service and are not Harbor seals belonging to the Cook primarily inhabit lower Cook Inlet. considered further in this document. Inlet/Shelikof Strait stock inhabit the However, they occasionally venture to coastal and estuarine waters of Cook Marine Mammal Hearing upper Cook Inlet and Knik Arm. Steller Inlet and are observed in both upper Hearing is the most important sensory sea lions have been observed near the and lower Cook Inlet throughout most of modality for marine mammals POA in June 2009 (ICRC 2009a) and in the year (Boveng et al. 2012; Shelden et underwater, and exposure to May 2016 (Cornick and Seagars 2016). al. 2013). Recent research on satellite- anthropogenic sound can have During POA construction monitoring in tagged harbor seals observed several deleterious effects. To appropriately June of 2009, a Steller sea lion was movement patterns within Cook Inlet assess the potential effects of exposure documented three times (within the (Boveng et al. 2012). In the fall, a to sound, it is necessary to understand same day) in Knik Arm and was portion of the harbor seals appeared to the frequency ranges marine mammals believed to be the same individual move out of Cook Inlet and into Shelikof are able to hear. Current data indicate (ICRC 2009a). In 2016, Steller sea lions Strait, northern Kodiak Island, and that not all marine mammal species were observed on two separate days. On coastal habitats of the Alaska Peninsula. have equal hearing capabilities (e.g., May w, 2016, one individual was The western coast of Cook Inlet had Richardson et al., 1995; Wartzok and sighted. On May 25, 2016, there were higher usage by harbor seals than Ketten, 1999; Au and Hastings, 2008). five Steller sea lion sightings within a eastern coast habitats, and seals To reflect this, Southall et al. (2007) 50-minute period, and these sightings captured in lower Cook Inlet generally recommended that marine mammals be occurred in areas relatively close to one exhibited site fidelity by remaining divided into functional hearing groups another suggesting they were likely the south of the Forelands in lower Cook based on directly measured or estimated same animal (Cornick and Seagars Inlet after release (Boveng et al. 2012). hearing ranges on the basis of available 2016). Steller sea lions are likely The presence of harbor seals in upper behavioral response data, audiograms attracted to the salmon runs; however, Cook Inlet is seasonal. Harbor seals are derived using auditory evoked potential their presence is less common in upper commonly observed along the Susitna techniques, anatomical modeling, and Cook Inlet than lower Cook Inlet. River and other tributaries within upper other data. Note that no direct The total estimated annual level of Cook Inlet during eulachon and salmon measurements of hearing ability have human-caused mortality and serious migrations (NMFS 2003). The major been successfully completed for injury for Western U.S. Steller sea lions haulout sites for harbor seals are located mysticetes (i.e., low-frequency in 2012–2016 was 247 sea lions: 35 in in lower Cook Inlet with fewer sites in cetaceans). Subsequently, NMFS (2018) U.S. commercial fisheries, 1.2 in upper Cook Inlet (Montgomery et al. described generalized hearing ranges for unknown (commercial, recreational, or 2007). In the project area (Knik Amr), these marine mammal hearing groups. subsistence) fisheries, 2 in marine harbor seals tend to congregate near the Generalized hearing ranges were chosen debris, 5.5 due to other causes (arrow mouth of Ship Creek (Cornick et al. based on the approximately 65 decibel strike, entangled in hatchery net, illegal 2011; Shelden et al. 2013), likely (dB) threshold from the normalized shooting, Marine Mammal Protection foraging on salmon and eulachon runs. composite audiograms, with the Act (MMPA) authorized research- Approximately 138 harbor seals were exception for lower limits for low- related), and 203 in the Alaska Native observed during previous POA frequency cetaceans where the lower subsistence harvest. However, there are monitoring with sightings ranging from bound was deemed to be biologically multiple nearshore commercial fisheries 3 individuals in 2008 to 59 individuals implausible and the lower bound from which are not observed; thus, there is in 2011 (see Table 4–1 in POA’s Southall et al. (2007) retained. Marine likely to be unreported fishery-related application). mammal hearing groups and their mortality and serious injury of Steller The most current population trend associated hearing ranges are provided sea lions. estimate of the Cook Inlet/Shelikof in Table 4.

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TABLE 4—MARINE MAMMAL HEARING GROUPS [NMFS, 2018]

Generalized hearing Hearing group range *

Low-frequency (LF) cetaceans (baleen whales) ...... 7 Hz to 35 kHz. Mid-frequency (MF) cetaceans (dolphins, toothed whales, beaked whales, bottlenose whales) ...... 150 Hz to 160 kHz. High-frequency (HF) cetaceans (true porpoises, Kogia, river dolphins, cephalorhynchid, Lagenorhynchus cruciger & L. 275 Hz to 160 kHz. australis). Phocid pinnipeds (PW) (underwater) (true seals) ...... 50 Hz to 86 kHz. Otariid pinnipeds (OW) (underwater) (sea lions and fur seals) ...... 60 Hz to 39 kHz. * Represents the generalized hearing range for the entire group as a composite (i.e., all species within the group), where individual species’ hearing ranges are typically not as broad. Generalized hearing range chosen based on ∼65 dB threshold from normalized composite audiogram, with the exception for lower limits for LF cetaceans (Southall et al. 2007) and PW pinniped (approximation).

The pinniped functional hearing mammals from the proposed activity is the following: Temporary or permanent group was modified from Southall et al. the introduction of noise into the hearing impairment, non-auditory (2007) on the basis of data indicating aquatic environment; therefore, we physical or physiological effects, that phocid species have consistently focus our impact analysis on the effects behavioral disturbance, and masking demonstrated an extended frequency of anthropogenic noise on marine (Richardson et al., 1995; Gordon et al., range of hearing compared to otariids, mammals. To better understand the 2004; Nowacek et al., 2007; Southall et especially in the higher frequency range potential impacts of exposure to pile al., 2007). The potential for and (Hemila¨ et al., 2006; Kastelein et al., driving noise, we describe sound source magnitude of these effects are 2009; Reichmuth and Holt, 2013). characteristics below. Specifically, we dependent on several factors, including For more detail concerning these look at the following two ways to received characteristics (e.g., age, size, groups and associated frequency ranges, characterize sound: by its temporal (i.e., depth of the animal during exposure); please see NMFS (2018) for a review of continuous or intermittent) and its pulse the energy needed to drive the pile available information. Six marine (i.e., impulsive or non-impulsive) (usually related to pile size, depth mammal species (four cetacean and two properties. Continuous sounds are those driven, and substrate), the standoff pinniped (one otariid and one phocid) whose sound pressure level remains distance between the pile and receiver; species) have the reasonable potential to above that of the ambient sound, with and the sound propagation properties of co-occur with the proposed survey negligibly small fluctuations in level the environment. activities. Please refer to Table 3. Of the (NIOSH, 1998; ANSI, 2005), while Impacts to marine mammals from pile cetacean species that may be present, intermittent sounds are defined as driving activities are expected to result one is classified as a low-frequency sounds with interrupted levels of low or primarily from acoustic pathways. As cetacean (i.e., all mysticete species), two no sound (NIOSH, 1998). Impulsive such, the degree of effect is intrinsically are classified as mid-frequency sounds, such as those generated by related to the received level and cetaceans (i.e., all delphinid and ziphiid impact pile driving, are typically duration of the sound exposure, which species and the sperm whale), and one transient, brief (<1 sec), broadband, and are in turn influenced by the distance is classified as a high-frequency consist of a high peak pressure with between the animal and the source. The cetacean (i.e., harbor porpoise and Kogia rapid rise time and rapid decay (ANSI, further away from the source, the less spp.). 1986; NIOSH, 1998). The majority of intense the exposure should be. The energy in pile impact pulses is at substrate and depth of the habitat affect Potential Effects of Specified Activities frequencies below 500 Hz. Impulsive the sound propagation properties of the on Marine Mammals and Their Habitat sounds, by definition, are intermittent. environment. Shallow environments are This section includes a summary and Non-impulsive sounds, such as those typically more structurally complex, discussion of the ways that components generated by vibratory pile driving, can which leads to rapid sound attenuation. of the specified activity may impact be broadband, narrowband or tonal, In addition, substrates that are soft (e.g., marine mammals and their habitat. The brief or prolonged, and typically do not sand) absorb or attenuate the sound Estimated Take by Incidental have a high peak sound pressure with more readily than hard substrates (e.g., Harassment section later in this rapid rise/decay time that impulsive rock) which may reflect the acoustic document includes a quantitative sounds do (ANSI 1995; NIOSH 1998). wave. Soft porous substrates also likely analysis of the number of individuals Non-impulsive sounds can be require less time to drive the pile, and that are expected to be taken by this intermittent or continuous. Similar to possibly less forceful equipment, which activity. The Negligible Impact Analysis impact pile driving, vibratory pile ultimately decrease the intensity of the and Determination section considers the driving generates low frequency sounds. acoustic source. content of this section, the Estimated Vibratory pile driving is considered a Richardson et al. (1995) described Take by Incidental Harassment section, non-impulsive, continuous source. zones of increasing intensity of effect and the Proposed Mitigation section, to Discussion on the appropriate that might be expected to occur, in draw conclusions regarding the likely harassment threshold associated with relation to distance from a source and impacts of these activities on the these types of sources based on these assuming that the signal is within an reproductive success or survivorship of characteristics can be found in the animal’s hearing range. First is the area individuals and how those impacts on Estimated Take section. within which the acoustic signal would individuals are likely to impact marine Potential Effects of the Specified be audible (potentially perceived) to the mammal species or stocks. Activity—In general, the effects of animal, but not strong enough to elicit Description of Sound Sources—The sounds from pile driving to marine any overt behavioral or physiological primary relevant stressor to marine mammals might result in one or more of response. The next zone corresponds

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with the area where the signal is audible individual’s hearing range above a TTS from pile driving and only one has to the animal and of sufficient intensity previously established reference level elicited a small amount of TTS in a to elicit behavioral or physiological (NMFS 2018). Available data from single harbor porpoise individual responsiveness. Third is a zone within humans and other terrestrial mammals (Kastelein et al., 2015). However, which, for signals of high intensity, the indicate that a 40 dB threshold shift captive bottlenose dolphins and beluga received level is sufficient to potentially approximates PTS onset (see NMFS whales have exhibited changes in cause discomfort or tissue damage to 2018 for review). behavior when exposed to pulsed auditory or other systems. Overlaying Temporary Threshold Shift—NMFS sounds (Finneran et al., 2000, 2002, these zones to a certain extent is the defines TTS as a temporary, reversible 2005). The animals tolerated high area within which masking (i.e., when a increase in the threshold of audibility at received levels of sound before sound interferes with or masks the a specified frequency or portion of an exhibiting aversive behaviors. ability of an animal to detect a signal of individual’s hearing range above a Experiments on a beluga whale showed interest that is above the absolute previously established reference level that exposure to a single watergun hearing threshold) may occur; the (NMFS 2018). Based on data from impulse at a received level of 207 kPa masking zone may be highly variable in cetacean TTS measurements (see (30 psi) p-p, which is equivalent to 228 size. Finneran 2014 for a review), a TTS of dB p-p, resulted in a 7 and 6 dB TTS We describe the more severe effects 6 dB is considered the minimum in the beluga whale at 0.4 and 30 kHz, (i.e., permanent hearing impairment, threshold shift clearly larger than any respectively. Thresholds returned to certain non-auditory physical or day-to-day or session-to-session within 2 dB of the pre-exposure level physiological effects) only briefly as we variation in a subject’s normal hearing within four minutes of the exposure do not expect that there is a reasonable ability (Schlundt et al., 2000; Finneran (Finneran et al., 2002). Although the likelihood that POA’s activities would et al., 2000; Finneran et al., 2002). source level of pile driving from one result in such effects (see below for Depending on the degree (elevation of hammer strike is expected to be lower further discussion). threshold in dB), duration (i.e., recovery than the single watergun impulse cited NMFS defines a noise-induced time), and frequency range of TTS, and here, animals being exposed for a threshold shift (TS) as ‘‘a change, the context in which it is experienced, prolonged period to repeated hammer usually an increase, in the threshold of TTS can have effects on marine strikes could receive more sound audibility at a specified frequency or mammals ranging from discountable to exposure in terms of SEL than from the portion of an individual’s hearing range serious (similar to those discussed in single watergun impulse (estimated at above a previously established reference auditory masking, below). For example, 188 dB re 1 mPa2-s) in the level’’ (NMFS, 2016). The amount of a marine mammal may be able to readily aforementioned experiment (Finneran et threshold shift is customarily expressed compensate for a brief, relatively small al., 2002). Results of these studies in dB (ANSI 1995, Yost 2007). A TS can amount of TTS in a non-critical suggest odontocetes are susceptible to be permanent (PTS) or temporary (TTS). frequency range that takes place during TTS from pile driving, but that they As described in NMFS (2018), there are a time when the animal is traveling seem to recover quickly from at least numerous factors to consider when through the open ocean, where ambient small amounts of TTS. examining the consequence of TS, noise is lower and there are not as many including, but not limited to, the signal competing sounds present. Behavioral Harassment—Behavioral temporal pattern (e.g., impulsive or non- Alternatively, a larger amount and disturbance may include a variety of impulsive), likelihood an individual longer duration of TTS sustained during effects, including subtle changes in would be exposed for a long enough time when communication is critical for behavior (e.g., minor or brief avoidance duration or to a high enough level to successful mother/calf interactions of an area or changes in vocalizations), induce a TS, the magnitude of the TS, could have more serious impacts. We more conspicuous changes in similar time to recovery (seconds to minutes or note that reduced hearing sensitivity as behavioral activities, and more hours to days), the frequency range of a simple function of aging has been sustained and/or potentially severe the exposure (i.e., spectral content), the observed in marine mammals, as well as reactions, such as displacement from or hearing and vocalization frequency humans and other taxa (Southall et al., abandonment of high-quality habitat. range of the exposed species relative to 2007), so we can infer that strategies Disturbance may result in changing the signal’s frequency spectrum (i.e., exist for coping with this condition to durations of surfacing and dives, how animal uses sound within the some degree, though likely not without number of blows per surfacing, or frequency band of the signal; e.g., cost. moving direction and/or speed; Kastelein et al., 2014), and the overlap Schlundt et al. (2000) performed a reduced/increased vocal activities; between the animal and the source (e.g., study exposing five bottlenose dolphins changing/cessation of certain behavioral spatial, temporal, and spectral). When and two belugas (same individuals as activities (such as socializing or analyzing the auditory effects of noise Finneran’s studies) to intense 1 second feeding); visible startle response or exposure, it is often helpful to broadly tones at different frequencies. The aggressive behavior (such as tail/fluke categorize sound as either impulsive— resulting levels of fatiguing stimuli slapping or jaw clapping); avoidance of noise with high peak sound pressure, necessary to induce 6 dB or larger areas where sound sources are located. short duration, fast rise-time, and broad masked TTSs were generally between Pinnipeds may increase their haul out frequency content—or non-impulsive. 192 and 201 dB re: 1 microPascal (mPa). time, possibly to avoid in-water When considering auditory effects, Dolphins began to exhibit altered disturbance (Thorson and Reyff 2006). vibratory pile driving is considered a behavior at levels of 178–193 dB re: Behavioral responses to sound are non-impulsive source while impact pile 1mPa and above; belugas displayed highly variable and context-specific and driving is treated as an impulsive altered behavior at 180–196 dB re: 1 mPa any reactions depend on numerous source. and above. At the conclusion of the intrinsic and extrinsic factors (e.g., Permanent Threshold Shift—NMFS study, all thresholds were at baseline species, state of maturity, experience, defines PTS as a permanent, irreversible values. current activity, reproductive state, increase in the threshold of audibility at There are a limited number of studies auditory sensitivity, time of day), as a specified frequency or portion of an investigating the potential for cetacean well as the interplay between factors

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(e.g., Richardson et al. 1995; Wartzok et mammals perceiving the signal. If a However, respiration rates in and of al. 2003; Southall et al. 2007; Weilgart marine mammal does react briefly to an themselves may be representative of 2007; Archer et al. 2010). Behavioral underwater sound by changing its annoyance or an acute stress response. reactions can vary not only among behavior or moving a small distance, the Various studies have shown that individuals but also within an impacts of the change are unlikely to be respiration rates may either be individual, depending on previous significant to the individual, let alone unaffected or could increase, depending experience with a sound source, the stock or population. However, if a on the species and signal characteristics, context, and numerous other factors sound source displaces marine again highlighting the importance in (Ellison et al. 2012), and can vary mammals from an important feeding or understanding species differences in the depending on characteristics associated breeding area for a prolonged period, tolerance of underwater noise when with the sound source (e.g., whether it impacts on individuals and populations determining the potential for impacts is moving or stationary, number of could be significant (e.g., Lusseau and resulting from anthropogenic sound sources, distance from the source). In Bejder 2007; Weilgart 2007; NRC 2005). exposure (e.g., Kastelein et al., 2001, general, pinnipeds seem more tolerant However, there are broad categories of 2005b, 2006; Gailey et al., 2007). of, or at least habituate more quickly to, potential response, which we describe Marine mammals vocalize for potentially disturbing underwater sound in greater detail here, that include different purposes and across multiple than do cetaceans, and generally seem alteration of dive behavior, alteration of modes, such as whistling, echolocation to be less responsive to exposure to foraging behavior, effects to breathing, click production, calling, and singing. industrial sound than most cetaceans. interference with or alteration of Changes in vocalization behavior in Please see Appendices B–C of Southall vocalization, avoidance, and flight. response to anthropogenic noise can et al. (2007) for a review of studies Changes in dive behavior can vary occur for any of these modes and may involving marine mammal behavioral widely, and may consist of increased or result from a need to compete with an responses to sound. decreased dive times and surface increase in background noise or may Habituation can occur when an intervals as well as changes in the rates reflect increased vigilance or a startle animal’s response to a stimulus wanes of ascent and descent during a dive (e.g., response. For example, in the presence with repeated exposure, usually in the Frankel and Clark 2000; Costa et al., of potentially masking signals, absence of unpleasant associated events 2003; Ng and Leung 2003; Nowacek et humpback whales and killer whales (Wartzok et al., 2003). Animals are most al., 2004; Goldbogen et al., 2013a,b). have been observed to increase the likely to habituate to sounds that are Variations in dive behavior may reflect length of their songs (Miller et al., 2000; predictable and unvarying. It is interruptions in biologically significant Fristrup et al., 2003; Foote et al., 2004), important to note that habituation is activities (e.g., foraging) or they may be while right whales (Eubalaena glacialis) appropriately considered as a of little biological significance. The have been observed to shift the ‘‘progressive reduction in response to impact of an alteration to dive behavior frequency content of their calls upward stimuli that are perceived as neither resulting from an acoustic exposure while reducing the rate of calling in aversive nor beneficial,’’ rather than as, depends on what the animal is doing at areas of increased anthropogenic noise more generally, moderation in response the time of the exposure and the type (Parks et al., 2007b). In some cases, to human disturbance (Bejder et al., and magnitude of the response. animals may cease sound production 2009). The opposite process is Disruption of feeding behavior can be during production of aversive signals sensitization, when an unpleasant difficult to correlate with anthropogenic (Bowles et al., 1994). experience leads to subsequent sound exposure, so it is usually inferred Avoidance is the displacement of an responses, often in the form of by observed displacement from known individual from an area or migration avoidance, at a lower level of exposure. foraging areas, the appearance of path as a result of the presence of a As noted above, behavioral state may secondary indicators (e.g., bubble nets sound or other stressors, and is one of affect the type of response. For example, or sediment plumes), or changes in dive the most obvious manifestations of animals that are resting may show behavior. As for other types of disturbance in marine mammals greater behavioral change in response to behavioral response, the frequency, (Richardson et al., 1995). For example, disturbing sound levels than animals duration, and temporal pattern of signal gray whales (Eschrictius robustus) are that are highly motivated to remain in presentation, as well as differences in known to change direction—deflecting an area for feeding (Richardson et al., species sensitivity, are likely from customary migratory paths—in 1995; NRC, 2003; Wartzok et al., 2003). contributing factors to differences in order to avoid noise from seismic Controlled experiments with captive response in any given circumstance surveys (Malme et al., 1984). Avoidance marine mammals have showed (e.g., Croll et al. 2001; Nowacek et al. may be short-term, with animals pronounced behavioral reactions, 2004; Madsen et al. 2006; Yazvenko et returning to the area once the noise has including avoidance of loud sound al. 2007). A determination of whether ceased (e.g., Bowles et al., 1994; Goold sources (Ridgway et al., 1997; Finneran foraging disruptions incur fitness 1996; Stone et al., 2000; Morton and et al., 2003). Observed responses of wild consequences would require Symonds, 2002; Gailey et al., 2007). marine mammals to loud pulsed sound information on or estimates of the Longer-term displacement is possible, sources (typically seismic airguns or energetic requirements of the affected however, which may lead to changes in acoustic harassment devices) have been individuals and the relationship abundance or distribution patterns of varied but often consist of avoidance between prey availability, foraging effort the affected species in the affected behavior or other behavioral changes and success, and the life history stage of region if habituation to the presence of suggesting discomfort (Morton and the animal. the sound does not occur (e.g., Symonds 2002; see also Richardson et Variations in respiration naturally Blackwell et al., 2004; Bejder et al., al., 1995; Nowacek et al., 2007). vary with different behaviors and 2006; Teilmann et al., 2006). Available studies show wide variation alterations to breathing rate as a A flight response is a dramatic change in response to underwater sound; function of acoustic exposure can be in normal movement to a directed and therefore, it is difficult to predict expected to co-occur with other rapid movement away from the specifically how any given sound in a behavioral reactions, such as a flight perceived location of a sound source. particular instance might affect marine response or an alteration in diving. The flight response differs from other

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avoidance responses in the intensity of exposed to activity-related stressors for have also been reviewed (Fair and the response (e.g., directed movement, multiple days or, further, exposed in a Becker 2000; Romano et al., 2002b) and, rate of travel). Relatively little manner resulting in sustained multi-day more rarely, studied in wild populations information on flight responses of substantive behavioral responses. (e.g., Romano et al., 2002a). For marine mammals to anthropogenic Stress Responses—An animal’s example, Rolland et al. (2012) found signals exist, although observations of perception of a threat may be sufficient that noise reduction from reduced ship flight responses to the presence of to trigger stress responses consisting of traffic in the Bay of Fundy was predators have occurred (Connor and some combination of behavioral associated with decreased stress in Heithaus 1996). The result of a flight responses, autonomic nervous system North Atlantic right whales. These and response could range from brief, responses, neuroendocrine responses, or other studies lead to a reasonable temporary exertion and displacement immune responses (e.g., Seyle 1950; expectation that some marine mammals from the area where the signal provokes Moberg 2000). In many cases, an will experience physiological stress flight to, in extreme cases, marine animal’s first and sometimes most responses upon exposure to acoustic mammal strandings (Evans and England economical (in terms of energetic costs) stressors and that it is possible that 2001). However, it should be noted that response is behavioral avoidance of the some of these would be classified as response to a perceived predator does potential stressor. Autonomic nervous ‘‘distress.’’ In addition, any animal not necessarily invoke flight (Ford and system responses to stress typically experiencing TTS would likely also Reeves 2008), and whether individuals involve changes in heart rate, blood experience stress responses (NRC, are solitary or in groups may influence pressure, and gastrointestinal activity. 2003). These responses have a relatively short the response. Specific to CIBWs, we have several Behavioral disturbance can also duration and may or may not have a years of marine mammal monitoring impact marine mammals in more subtle significant long-term effect on an data demonstrating the behavioral ways. Increased vigilance may result in animal’s fitness. responses to pile driving at the POA. costs related to diversion of focus and Neuroendocrine stress responses often Previous pile driving activities range attention (i.e., when a response consists involve the hypothalamus-pituitary- from the installation and removal of of increased vigilance, it may come at adrenal system. Virtually all sheet pile driving to installation of 48- the cost of decreased attention to other neuroendocrine functions that are in pipe piles with both vibratory and critical behaviors such as foraging or affected by stress—including immune impact hammers. Kendell and Cornick resting). These effects have generally not competence, reproduction, metabolism, been demonstrated for marine and behavior—are regulated by pituitary (2016) provide a comprehensive mammals, but studies involving fish hormones. Stress-induced changes in overview of four years of scientific and terrestrial animals have shown that the secretion of pituitary hormones have marine mammal monitoring conducted increased vigilance may substantially been implicated in failed reproduction, during the POA’s Expansion Project. reduce feeding rates (e.g., Beauchamp altered metabolism, reduced immune These were observations made and Livoreil 1997; Fritz et al., 2002; competence, and behavioral disturbance independent of pile driving activities Purser and Radford 2011). In addition, (e.g., Moberg 1987; Blecha 2000). (i.e., not construction based PSOs). The chronic disturbance can cause Increases in the circulation of authors investigated beluga whale population declines through reduction glucocorticoids are also equated with behavior before and during pile driving of fitness (e.g., decline in body stress (Romano et al., 2004). activity at the POA. Sighting rates, mean condition) and subsequent reduction in The primary distinction between sighting duration, behavior, mean group reproductive success, survival, or both stress (which is adaptive and does not size, group composition, and group (e.g., Harrington and Veitch, 1992; Daan normally place an animal at risk) and formation were compared between the et al., 1996; Bradshaw et al., 1998). ‘‘distress’’ is the cost of the response. two periods. A total of about 2,329 h of However, Ridgway et al. (2006) reported During a stress response, an animal uses sampling effort was completed across that increased vigilance in bottlenose glycogen stores that can be quickly 349 d from 2005 to 2009. Overall, 687 dolphins exposed to sound over a five- replenished once the stress is alleviated. whales in 177 groups were documented day period did not cause any sleep In such circumstances, the cost of the during the 69 days that whales were deprivation or stress effects. stress response would not pose serious sighted. A total of 353 and 1,663 h of Many animals perform vital functions, fitness consequences. However, when pile driving activity took place in 2008 such as feeding, resting, traveling, and an animal does not have sufficient and 2009, respectively. There was no socializing, on a diel cycle (24-hour energy reserves to satisfy the energetic relationship between monthly beluga cycle). Disruption of such functions costs of a stress response, energy whale sighting rates and monthly pile resulting from reactions to stressors resources must be diverted from other driving rates (r = 0.19, p = 0.37). such as sound exposure are more likely functions. This state of distress will last Sighting rates before (n = 12; 0.06 ± to be significant if they last more than until the animal replenishes its 0.01) and during (n = 13; 0.01 ± 0.03) one diel cycle or recur on subsequent energetic reserves sufficient to restore pile driving activity were not days (Southall et al., 2007). normal function. significantly different. However, Consequently, a behavioral response Relationships between these sighting duration of beluga whales lasting less than one day and not physiological mechanisms, animal decreased significantly during pile recurring on subsequent days is not behavior, and the costs of stress driving (39 ± 6 min before and 18 ± 3 considered particularly severe unless it responses are well-studied through min during). There were also significant could directly affect reproduction or controlled experiments and for both differences in behavior before versus survival (Southall et al., 2007). Note that laboratory and free-ranging animals during pile driving. Beluga whales there is a difference between multi-day (e.g., Holberton et al., 1996; Hood et al., primarily traveled through the study substantive behavioral reactions and 1998; Jessop et al., 2003; Krausman et area both before and during pile driving; multi-day anthropogenic activities. For al., 2004; Lankford et al., 2005). Stress however, traveling increased relative to example, just because an activity lasts responses due to exposure to other behaviors during pile driving for multiple days does not necessarily anthropogenic sounds or other stressors activity. Suspected feeding decreased mean that individual animals are either and their effects on marine mammals during pile driving although the sample

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size was low as feeding was observed on levels. Masking affects both senders and between group members, and concluded only two occasions before pile driving receivers of the signals and could have a noise source would have to be very and on zero occasions during pile long-term chronic effects on marine close to potentially limit any driving. Documentation of milling began mammal species and populations. communication within the beluga group in 2008 and was observed on 21 Masking occurs at the frequency band (Lesage et al. 1999). However, increasing occasions. No acute behavioral which the animals utilize so the the intensity or repetition rate, or responses were documented. Mean frequency range of the potentially shifting to higher frequencies when group size decreased during pile masking sound is important in exposed to shipping noise (from driving; however, this difference was determining any potential behavioral merchant, whale watching, ferry and not statistically significant. There were impacts. Pile driving generates low small boats), is indicative of an increase significant differences in group frequency sounds; therefore, mysticete of energy costs (Bradbury and composition before and during pile foraging is likely more affected than Vehrencamp 1998). driving ship between monthly beluga odontocetes given very high frequency Marine mammals in Cook Inlet are whale sighting rates and monthly pile echolocation clicks (typically associated continuously exposed to anthropogenic driving rates with more white (i.e., with odontocete foraging) are likely noise which may lead to some older) animals being present during pile unmasked to any significant degree. habituation but is also a source of driving. However, lower frequency man-made masking. A subsample (8,756 hours) of Acoustically, Kendall et al. (2013) sounds may affect communication the acoustic recordings collected by the only recorded echolocation clicks and signals when they occur near the sound Cook Inlet Beluga Acoustics research no whistles or noisy vocalizations near band and thus reduce the program in Cook Inlet, Alaska, from July construction activity at the POA. Beluga communication space of animals (e.g., 2008 to May 2013, were analyzed to whales have been occasionally Clark et al., 2009) and cause increased describe anthropogenic sources of documented to forage around Ship stress levels (e.g., Foote et al., 2004; Holt underwater noise, acoustic Creek (south of the POA) but, during et al., 2009). characteristics, and frequency of pile driving, may choose to move past Moreover, even within a given occurrence and evaluate the potential the POA to other, potentially richer, species, different types of man-made for acoustic impact to Cook Inlet feeding areas further into Knik Arm noises may results in varying degrees of belugas. As described in Castellote et al. (e.g., Six Mile Creek, Eagle River, masking. For example, Erbe et al. (1999) (2016), a total of 13 sources of noise Eklutna River). These locations contain were identified: Commerical ship, predictable salmon runs (ADFG, 2010), and Erbe (2000), analyzed the effect of an important food source for CIBWss masking of beluga calls by exposing a dredging, helicopter, jet aircraft (NMFS1), and the timing of these runs trained beluga to icebreaker propeller (commercial or non-fighter), jet aircraft has been correlated with beluga whale noise, an icebreaker’s bubbler system, (military fighter), outboard engine movements into the upper reaches of and ambient Arctic ice cracking noise, (small skiffs, rafts), pile driving, Knik Arm (Ezer et al., 2013). and found that the latter was the least propeller aircraft, sub-bottom profiler, problematic for the whale detecting the unclassified machinery (continuous Auditory Masking calls. Sheifele et al. (2005) studied a mechanical sound; e.g., engine), Since many marine mammals rely on population of belugas in the SLE to unidentified ‘clank’ or ‘bang’ (impulsive sound to find prey, moderate social determine whether beluga vocalizations mechanical sound; e.g., barge dumping), interactions, and facilitate mating showed intensity changes in response to unidentified (unclassifiable (Tyack, 2008), noise from anthropogenic shipping noise. This type of behavior anthropogenic sound), unknown up- or sound sources can interfere with these has been observed in humans and is down-sweep (modulated tone of functions, but only if the noise spectrum known as the Lombard vocal response mechanical origin; e.g., hydraulics). A overlaps with the hearing sensitivity of (Lombard 1911). Sheifele et al. (2005) total of 6,263 anthropogenic acoustic the marine mammal (Southall et al., demonstrated that shipping noise did events were detected and classified, 2007; Clark et al., 2009; Hatch et al., cause belugas to vocalize louder. The which had a total duration of 1,025 2012). Chronic exposure to excessive, acoustic behavior of this same hours and represented 11.7% of the though not high-intensity, noise could population of belugas was studied in the sound recordings analyzed. There was cause masking at particular frequencies presence of ferry and small boat noise. strong variability in source diversity, for marine mammals that utilize sound Lesage et al. (1999) described more loudness, distribution, and seasonal for vital biological functions (Clark et persistent vocal responses when whales occurrence of noise, which reflects the al., 2009). Acoustic masking is when were exposed to the ferry than to the many different activities within the other noises such as from human small-boat noise. These included a Cook Inlet. Cairn Point was the location sources interfere with animal detection progressive reduction in calling rate where the loudness and duration of of acoustic signals such as while vessels were approaching, an commercial ship noise events were most communication calls, echolocation increase in the repetition of specific concentrated, due to activities at the sounds, and environmental sounds calls, and a shift to higher frequency POA. This specific source of important to marine mammals. bands used by vocalizing animals when anthropogenic noise was present in the Therefore, under certain circumstances, vessels were close to the whales. The recordings from all months analyzed, marine mammals whose acoustical authors concluded that these changes, with highest levels in August. In sensors or environment are being and the reduction in calling rate to addition to the concentrated shipping severely masked could also be impaired almost silence, may reduce noise at Cairn Point, a combination of from maximizing their performance communication efficiency which is unknown noiseclasses occurred in this fitness in survival and reproduction. critical for a species of a gregarious area, particularly during summer. Masking, which can occur over large nature. However, the authors also stated Specifically, unknown up or down temporal and spatial scales, can that because of the gregarious nature of sweeps, unidentified, unclassed potentially affect the species at belugas, this ‘‘would not pose a serious machinery, and unidentified clank or population, community, or even problem for intraherd communication’’ bang noise classes were all documented. ecosystem levels, as well as individual of belugas given the short distance In contrast, Eagle River (north of the

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POA and where CIBWs concentrate to earthquakes, lightning, wind, rain, Creek or critical CIBW foraging habitats forage) was the quietest of all sampled waves) make up the natural are anticipated. locations. contributions to the total acoustics of a In summary, activities associated with Potential Pile Driving Effects on place. These acoustic conditions, the proposed PCT project are not likely Prey—Pile driving produces continuous, termed acoustic habitat, are one to have a permanent, adverse effect on non-impulsive (i.e., vibratory pile attribute of an animal’s total habitat. marine mammal habitat or populations driving) sounds and intermittent, pulsed Soundscapes are also defined by, and of fish species or on the quality of (i.e., impact driving) sounds. Fish react acoustic habitat influenced by, the total acoustic habitat. Marine mammals may to sounds that are especially strong and/ contribution of anthropogenic sound. choose to not forage in close proximity or intermittent low-frequency sounds. This may include incidental emissions to the PCT site during pile driving; Short duration, sharp sounds can cause from sources such as vessel traffic or however, the POA is not a critical overt or subtle changes in fish behavior may be intentionally introduced to the foraging location for any marine and local distribution. Hastings and marine environment for data acquisition mammal species. As discussed above, Popper (2005) identified several studies purposes (as in the use of airgun arrays harbor seals primarily use Ship Creek as that suggest fish may relocate to avoid or other sources). Anthropogenic noise foraging habitat within Knik Arm. certain areas of sound energy. varies widely in its frequency content, Beluga whales utilize Eagle Bay and Additional studies have documented duration, and loudness and these rivers north of the POA which are not effects of pile driving on fish, although characteristics greatly influence the expected to be ensonified by the PCT several are based on studies in support potential habitat-mediated effects to project. Therefore, no impacts to critical of large, multiyear bridge construction marine mammals (please see also the foraging grounds are anticipated. projects (e.g., Scholik and Yan, 2001, previous discussion on masking under Estimated Take 2002; Popper and Hastings, 2009). SPLs ‘‘Acoustic Effects’’), which may range of sufficient strength have been known from local effects for brief periods of This section provides an estimate of to cause injury to fish and fish mortality time to chronic effects over large areas the number of incidental takes proposed (summarized in Popper et al. 2014). The and for long durations. Depending on for authorization through this IHA, most likely impact to fish from pile the extent of effects to habitat, animals which will inform both NMFS’ driving activities at the project area may alter their communications signals consideration of ‘‘small numbers’’ and would be temporary behavioral (thereby potentially expending the negligible impact determination. avoidance of the area. The duration of additional energy) or miss acoustic cues Harassment is the only type of take fish avoidance of this area after pile (either conspecific or adventitious). For expected to result from these activities. driving stops is unknown, but a rapid more detail on these concepts see, e.g., Except with respect to certain activities return to normal recruitment, Barber et al., 2010; Pijanowski et al. not pertinent here, section 3(18) of the distribution and behavior is anticipated. 2011; Francis and Barber 2013; Lillis et MMPA defines ‘‘harassment’’ as any act As discussed in the Marine Mammal al. 2014. of pursuit, torment, or annoyance, section above, NMFS designated CIBW Beluga foraging habitat is limited at which (i) has the potential to injure a critical habitat in Knik Arm. Knik Arm the POA given the highly industrialized marine mammal or marine mammal is Type 1 habitat for the CIBWs, which area. However, foraging habitat exists stock in the wild (Level A harassment); means it is the most valuable, used near the POA, including Ship Creek and or (ii) has the potential to disturb a intensively by beluga whales from to the north of Cairn Point. Potential marine mammal or marine mammal spring through fall for foraging and impacts to foraging habitat include stock in the wild by causing disruption nursery habitat. However, the POA, the increased turbidity and elevation in of behavioral patterns, including, but adjacent navigation channel, and the noise levels during pile driving. Because not limited to, migration, breathing, turning basin were excluded from the POA is replacing an existing nursing, breeding, feeding, or sheltering critical habitat designation due to terminal, permanent impacts from the (Level B harassment). national security concerns (76 FR presence of structures is negligible. Authorized takes would primarily be 20180, April 11, 2011). Foraging Here, we focus on construction impacts by Level B harassment, as pile driving primarily occurs at river mouths (e.g., such as increased turbidity and has the potential to result in disruption Susitna Delta, Eagle River flats) which reference the section on acoustic habitat of behavioral patterns for individual are unlikely to be influenced by pile impacts above. marine mammals. There is also some driving activities. The Susitna Delta is Pile installation may temporarily potential for auditory injury (Level A more than 20 km from the POA and increase turbidity resulting from harassment) to result, primarily for Cairn Point is likely to impede any pile suspended sediments. Any increases mysticetes, high frequency species, and driving noise from propagating into would be temporary, localized, and phocids because predicted auditory northern Knik Arm. minimal. POA must comply with state injury zones are larger than for mid- Acoustic habitat is the soundscape water quality standards during these frequency species and otariids. Auditory which encompasses all of the sound operations by limiting the extent of injury is unlikely to occur for mid- present in a particular location and turbidity to the immediate project area. frequency species and otariids. The time, as a whole, when considered from In general, turbidity associated with pile proposed mitigation and monitoring the perspective of the animals installation is localized to about a 25- measures are expected to minimize the experiencing it. Animals produce sound foot (7.6 m) radius around the pile severity of such taking to the extent for, or listen for sounds produced by, (Everitt et al. 1980). Cetaceans are not practicable. conspecifics (communication during expected to be close enough to the As described previously, no mortality feeding, mating, and other social project activity areas to experience is anticipated or proposed to be activities), other animals (finding prey effects of turbidity, and any small authorized for this activity. Below we or avoiding predators) and the physical cetaceans and pinnipeds could avoid describe how the take is estimated. environment (finding suitable habitats, localized areas of turbidity. Therefore, Generally speaking, we estimate take navigating). Together, sounds made by the impact from increased turbidity by considering: (1) Acoustic thresholds animals and the geophysical levels is expected to be discountable to above which NMFS believes the best environment (e.g., produced by marine mammals. No impacts to Ship available science indicates marine

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mammals will be behaviorally harassed harassment. In general, NMFS predicts collection, no dredging was occurring. or incur some degree of permanent that marine mammals are likely to be Therefore, the median provides a better hearing impairment; (2) the area or behaviorally harassed in a manner we representation of background noise volume of water that will be ensonified consider Level B harassment when levels when the PCT project would be above these levels in a day; (3) the exposed to underwater anthropogenic occurring. With regard to spatial density or occurrence of marine noise above received levels of 120 dB re considerations of the measurements, the mammals within these ensonified areas; 1 mPa (rms) for continuous (e.g., Ambient-Offshore location is most and, (4) and the number of days of vibratory pile-driving, drilling) and applicable to this discussion as it is activities. We note that while these above 160 dB re 1 mPa (rms) for non- complies with the NMFS 2012 memo basic factors can contribute to a basic explosive impulsive (e.g., seismic discussed above. The median ambient calculation to provide an initial airguns) or intermittent (e.g., scientific noise level collected over four days at prediction of takes, additional sonar) sources. However, ambient noise the end of May at the Ambient-Offshore information that can qualitatively levels within Knik Arm are above the hydrophone was 122.2 dB. We note the inform take estimates is also sometimes 120-dB threshold, and therefore, for Ambient-Dock location was quieter, available (e.g., previous monitoring purposes of this analysis, NMFS with a median of 117 dB; however, that results or average group size). Below, we considers received levels above those of hydrophone was placed very close to describe the factors considered here in the measured ambient noise (122.2 dB) the dock and not where we would more detail and present the proposed to constitute Level B harassment of expect Level B harassment to occur take estimate. marine mammals incidental to given mitigation measures (e.g., shut Acoustic Thresholds continuous noise, including vibratory downs). If additional data collected in pile driving. the future warrant revisiting this issue, Using the best available science, Results from the most recent acoustic NMFS may adjust the 122.2 dB rms NMFS has developed acoustic Level B harassment threshold. thresholds that identify the received monitoring conducted at the port are level of underwater sound above which presented in Austin et al. (2016) and Level A harassment for non-explosive exposed marine mammals would be Denes et al. (2016) wherein noise levels sources—NMFS’ Technical Guidance reasonably expected to be behaviorally were measured in absence of pile for Assessing the Effects of harassed (equated to Level B driving from May 27 through May 30, Anthropogenic Sound on Marine harassment) or to incur PTS of some 2016 at two locations: Ambient-Dock Mammal Hearing (Version 2.0) degree (equated to Level A harassment). and Ambient-Offshore. NMFS considers (Technical Guidance, 2018) identifies Level B harassment for non-explosive the median sound levels to be most dual criteria to assess auditory injury sources—Though significantly driven by appropriate when considering (Level A harassment) to five different received level, the onset of behavioral background noise levels for purposes of marine mammal groups (based on disturbance from anthropogenic noise evaluating the potential impacts of the hearing sensitivity) as a result of exposure is also informed to varying POA’s PCT Project on marine mammals. exposure to noise from two different degrees by other factors related to the By using median value, which is the types of sources (impulsive or non- source (e.g., frequency, predictability, 50th percentile of the measurements, for impulsive). The POA’s proposed duty cycle), the environment (e.g., ambient noise level, one will be able to activity includes the use of impulsive bathymetry), and the receiving animals eliminate the few transient loud (impact pile driving) and non-impulsive (hearing, motivation, experience, identifiable events that do not represent (vibratory pile driving) sources. demography, behavioral context) and the true ambient condition of the area. These thresholds are provided in can be difficult to predict (Southall et This is relevant because during two of Table 5 below. The references, analysis, al., 2007, Ellison et al., 2012). Based on the four days (50 percent) when and methodology used in the what the available science indicates and background measurement data were development of the thresholds are the practical need to use a threshold being collected, the U.S. Army Corps of described in NMFS 2018 Technical based on a factor that is both predictable Engineers was dredging Terminal 3 Guidance, which may be accessed at and measurable for most activities, (located just north of the Ambient- https://www.fisheries.noaa.gov/ NMFS uses a generalized acoustic Offshore hydrophone) for 24 hours per national/marine-mammal-protection/ threshold based on received level to day with two 1-hour breaks for crew marine-mammal-acoustic-technical- estimate the onset of behavioral change. On the last two days of data guidance.

TABLE 5—THRESHOLDS IDENTIFYING THE ONSET OF PERMANENT THRESHOLD SHIFT

PTS onset acoustic thresholds * Hearing group (received level) Impulsive Non-impulsive

Low-Frequency (LF) Cetaceans ...... Lpk,flat: 219 dB; LE,LF,24h: 183 dB ...... LE,LF,24h: 199 dB. Mid-Frequency (MF) Cetaceans ...... Lpk,flat: 230 dB; LE,MF,24h: 185 dB ...... LE,MF,24h: 198 dB. High-Frequency (HF) Cetaceans ...... Lpk,flat: 202 dB; LE,HF,24h: 155 dB ...... LE,HF,24h: 173 dB. Phocid Pinnipeds (PW) (Underwater) ...... Lpk,flat: 218 dB; LE,PW,24h: 185 dB ...... LE,PW,24h: 201 dB. Otariid Pinnipeds (OW) (Underwater) ...... Lpk,flat: 232 dB; LE,OW,24h: 203 dB ...... LE,OW,24h: 219 dB. * Dual metric acoustic thresholds for impulsive sounds: Use whichever results in the largest isopleth for calculating PTS onset. If a non-impul- sive sound has the potential of exceeding the peak sound pressure level thresholds associated with impulsive sounds, these thresholds should also be considered.

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2 Note: Peak sound pressure (Lpk) has a reference value of 1 μPa, and cumulative sound exposure level (LE) has a reference value of 1μPa s. In this Table, thresholds are abbreviated to reflect American National Standards Institute standards (ANSI 2013). However, peak sound pressure is defined by ANSI as incorporating frequency weighting, which is not the intent for this Technical Guidance. Hence, the subscript ‘‘flat’’ is being included to indicate peak sound pressure should be flat weighted or unweighted within the generalized hearing range. The subscript associated with cumulative sound exposure level thresholds indicates the designated marine mammal auditory weighting function (LF, MF, and HF cetaceans, and PW and OW pinnipeds) and that the recommended accumulation period is 24 hours. The cumulative sound exposure level thresholds could be exceeded in a multitude of ways (i.e., varying exposure levels and durations, duty cycle). When possible, it is valuable for action proponents to indicate the conditions under which these acoustic thresholds will be exceeded.

Ensonified Area thresholds, which include source levels unattenuated 48-in piles during the and transmission loss coefficient. POA’s 2016 TPP and measurements Here, we describe operational and The estimated sound source levels collected during marine construction environmental parameters of the activity and transmission loss coefficient used projects conducted by the U.S. Navy. that will feed into identifying the area in our analysis are based on direct All source levels used in our analysis ensonified above the acoustic measurements during installation of are presented in Table 6.

TABLE 6—ESTIMATED SOUND SOURCE LEVEL WITH AND WITHOUT A BUBBLE CURTAIN

Sound Level at 10 m

Method and pile Unattenuated 1 Bubble curtain Data source size

Vibratory db rms 7 dB reduction, dB rms

144-in ...... 178 171 Caltrans 2015. 48-in ...... 168 161 Austin et al. 2016 36-in ...... 166 159 Navy 2015. 24-in ...... 161 154 Navy 2015.

Unattenuated 1 Bubble curtain

Impact dB rms dB SEL dB peak dB rms dB SEL dB peak

144-in ...... 209 198 220 202 191 213 Caltrans 2015. 48-in ...... 200 187 215 193 180 208 Austin et al. 2016. 36-in ...... 194 184 211 187 177 204 Navy 2015. 24-in ...... 193 181 210 186 174 203 Navy 2015. 1 We note the only piles that may be driven or removed without a bubble curtain are 24-in battered piles. We included unattenuated SLs here for 36-in, 48-in, and 144-in piles to demonstrate how the 7dB reduction for bubble curtains was applied.

During the TPP, JASCO computed dissipated in the marine environment. with marine mammal density or transmission loss (TL) coefficients, During underwater sound propagation, occurrence to help predict takes. We derived from fits of the received sound pressure amplitude tends to suffer more note that because of some of the level data versus range. TL coefficients loss due to multipath propagation and assumptions included in the methods varied between piles with values reverberation, while acoustic energy used for these tools, we anticipate that ranging from 13 to 19.2 for impact pile does not dissipate as rapidly. isopleths produced are typically going driving and from 12.6 to 17.9 for Accordingly, the POA proposed using to be overestimates of some degree, vibratory pile driving when using sound TL rate of 16.85 for assessing potential which may result in some degree of attenuation devices. Results for the for Level A harassment from impact pile overestimate of Level A harassment unattenuated hydraulic impact hammer driving but a TL rate of 18.35, based on take. However, these tools offer the best yielded the highest TL coefficient, 19.2, Austin et al. (2016), when assessing way to predict appropriate isopleths indicating that sounds from the potential for Level B harassment from when more sophisticated 3D modeling hydraulic impact hammer decayed most impact pile driving. For vibratory pile methods are not available, and NMFS rapidly with range compared to the driving, SPLrms is used for both Level continues to develop ways to other hammers. The TL coefficient for A harassment and Level B harassment quantitatively refine these tools, and the unattenuated diesel impact hammer analysis and, based on Austin et al. will qualitatively address the output averaged 17.5. Sounds from the (2016), the POA applied a TL rate of where appropriate. For stationary unattenuated vibratory hammer had the 16.5. NMFS found these transmission sources (such as pile driving), NMFS lowest TL coefficient, with values of loss rates acceptable and carried them User Spreadsheet predicts the closest 16.1 and 16.9. forward in our analysis. distance at which, if a marine mammal Based on these data, the POA When the NMFS Technical Guidance remained at that distance the whole proposed different transmission loss (2016) was published, in recognition of duration of the activity, it would not rates depending on if SEL (used for the fact that ensonified area/volume incur PTS. Level A harassment) or rms (used for could be more technically challenging The User Spreadsheet also includes a Level B harassment) values were being to predict because of the duration default, single frequency weighting evaluated. SPLrms is a pressure metric component in the new thresholds, we factor adjustment (WFA) to account for and SEL an energy metric. The developed a User Spreadsheet that frequency hearing groups. During the difference in TL coefficient is a includes tools to help predict a simple 2016 TPP, the POA collected direct reflection of how SPLrms or SEL is isopleth that can be used in conjunction measurements of sound generated

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during installation of 48-in piles. The accepted POA’s applied spectra Inputs used in the User Spreadsheet spectra associated with impact and approach for 48-in piles but relied on for 24-in, 36-in and 144-in piles, and the vibratory driving 48-in unattenuated the User Spreadsheet default WFA for resulting isopleths are reported in Table piles was also derived. Therefore, we all other pile sizes. 7. TABLE 7—NMFS USER SPREADSHEET INPUTS

24-in 24-in 36-in 48-in 144-in (unattenuated) (bubble curtain) (bubble curtain) (bubble curtain) (bubble curtain) Spreadsheet Tab Used (E.1) Impact pile (E.1) Impact pile (E.1) Impact pile (E.1) Impact pile (E.1) Impact pile driving driving driving driving driving

User Spreadsheet Input: Impact Pile Driving (TL = 16.85)

Source Level (Single Strike/shot SEL) ...... 181 ...... 174 ...... 177 ...... 180 ...... 191 Weighting Factor Adjustment (kHz) ...... 2 ...... 2 ...... 2 ...... measured spectra ..... 2 Number of strikes pile ...... 100 ...... 100 ...... 3,000 ...... 2,300 or 3,000 ...... 5,000 Piles per day ...... 5 ...... 5 ...... 1–3 ...... 1–3 ...... 0.3 or 0.7

User Spreadsheet Input: Vibratory Pile Driving (TL = 16.5)

Spreadsheet Tab Used (A) Non-Impul, Stat, (A) Non-Impul, Stat, (A) Non-Impul, Stat, (A) Non-Impul, Stat, (A) Non-Impul, Stat, Cont. Cont. Cont. Cont. Cont.

Source Level (SPL RMS) ...... 161 ...... 154 ...... 159 ...... 171 ...... 171 Weighting Factor Adjustment (kHz) ...... 2.5 ...... 2.5 ...... 2.5 ...... measured spectra ..... 2.5 Time to drive single pile (minutes) ...... 75 ...... 100 ...... 75 ...... 30 ...... 45 Piles per day ...... 1–5 ...... 1–3 ...... 1–3 ...... 1 ...... 1

To calculate the Level B harassment coefficients of 18.35 and 16.5 for impact Level B harassment isopleths are isopleths, NMFS considered SPLrms and vibratory pile driving, respectively. presented in Table 8. source levels and the corresponding TL The resulting Level A harassment and

TABLE 8—DISTANCES TO LEVEL A HARASSMENT, BY HEARING GROUP, AND LEVEL B HARASSMENT THRESHOLDS PER PILE TYPE AND INSTALLATION METHOD

Level A harassment Hammer Piles (m) Level B Pile size type Attenuation installed/ harassment day LF MF HF PW OW (m)

48-in (2,300 strikes per Impact ...... Bubble Curtain..... 1 655 34 766 376 36 629 pile). 2 989 51 1156 567 55 ...... 3 1258 65 1470 721 70 ...... 48-in (3,000 strikes per Impact ...... Bubble Curtain..... 1 767 39 897 440 43 629 pile). 2 1158 59 1353 664 64 ...... 3 1473 76 1721 844 82 ...... 48-in ...... Vibratory ... Bubble Curtain..... 1 5 1 7 3 0 2,247 36-in ...... Vibratory ... Bubble Curtain..... 3 12 1 17 8 1 1,699 4 14 2 20 9 1 ...... Impact ...... Bubble Curtain..... 1 509 26 595 292 28 296 2 768 39 898 440 43 ...... 3 978 50 1142 560 54 ...... 24-in ...... Vibratory ... Bubble Curtain..... 3 3 0 5 2 0 846 4 7 1 10 4 0 ...... Unattenuated ...... 3 9 1 13 6 1 2,247 4 19 2 27 12 1 ...... Impact ...... Bubble Curtain..... 5 77 4 90 44 4 261 Unattenuated ...... 5 304 16 355 174 17 629 144-in ...... Impact ...... Bubble Curtain ..... 0.3 2286 117 2672 1311 127 1,945 0.7 3781 194 4418 2167 210 1,945 Vibratory ...... 1 24 3 34 15 1 9,069

Marine Mammal Occurrence and Take available for upper Cook Inlet. except beluga whales is calculated by Estimation Therefore, the POA relied on marine the following equation: Exposure In this section we provide the mammal monitoring data collected estimate = N * # days of pile information about the presence, density, during past POA projects. These data installation, where: N = highest daily or group dynamics of marine mammals cover the construction season (April abundance estimate for each species in and present take calculations. through November) across multiple project area across all years of data. For all species of cetaceans other than years. Estimated exposure from pile beluga whales, density data is not installation for all marine mammals

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Harbor Seals an exposure rate of 2 individuals every hammer. Further, the Level A Marine mammal monitoring data 19 days during PCT pile installation and harassment isopleths consider long collected during from previous POA removal. Based on this rate, the POA durations and harbor porpoise are likely projects were used to estimate daily requested 13 sea lions takes during moving through the area, if present, not sighting rates for harbor seals in the Phase 1 (127 days * [2 sea lions every lingering. Therefore, we propose to project area. The highest individual 19 days]) and 8 Steller sea lion takes authorize approximately one-third of sighting rate recorded for a previous during Phase 2 (75 days for Phase 2 * the expected take to Level A year was used to quantify take of harbor [2 sea lions every 19 days]). During harassment. For Phase 1, we are installation of 144-in piles (Phase 2), the proposing to authorize 21 takes by Level seals for pile installation associated Level A harassment isopleth extends A harassment and 43 takes by Level B with the PCT. The number of sightings beyond 100 m. Although Steller sea harassment. For Phase 2, we propose to of harbor seals during 2016 TPP lions are readily detectable at these authorize 13 Level A harassment and 25 construction monitoring was 28 distances, we are not proposing the POA Level B harassment takes. sightings recorded over 83.5 hours of be required to shut down if a Steller sea monitoring from May 3 through June 21, Killer Whales lion is observed. Steller sea lions are 2016. Based on these observations, the rarely present in Knik Arm; however, Few, if any, killer whales are expected sighting rate during the 2016 TPP they can linger in the area for multiple to approach the project area. No killer construction monitoring period was one days. During Phase 1, the Level A whales were sighted during previous harbor seal every 3 hours, or harassment isopleth is less than the 100 monitoring programs for the Knik Arm approximately four harbor seals per 12- m shutdown zone for all scenarios; Crossing and POA construction projects, hour work day. Given projected positive therefore, the potential for Level A take including the 2016 TPP. The infrequent population growth, it is anticipated that is negligible. During installation of the sightings of killer whales that are eight harbor seals may be observed, and 144-in piles in Phase 2, there is a low reported in upper Cook Inlet tend to potentially exposed to noise, per 12- potential for Level A harassment and an occur when their primary prey hour work day. animal may remain for a couple days; (anadromous fish for resident killer Pile installation and removal is therefore, we allocate two takes in Phase whales and beluga whales for transient anticipated to take approximately 127 2 to Level A harassment. killer whales) are also in the area days for Phase 1 and 75 days for Phase (Shelden et al. 2003). Previous sightings 2. Therefore, we estimate that no more Harbor Porpoise of transient killer whales have than 1,016 harbor seals during Phase 1 Previous monitoring data at the POA documented pod sizes in upper Cook (8 harbor seals per day * 127 days) plus were used to evaluate daily sighting Inlet between one and six individuals 600 harbor seals (8 harbor seals per day rates for harbor porpoises in the project (Shelden et al. 2003). The potential for * 75 days) during Phase 2, for a total of area. During most years of monitoring, exposure of killer whales within the 1,616 harbor seals, would be potentially no harbor porpoises were observed. The Level B harassment isopleths is exposed to in-water noise levels highest individual sighting rate for any anticipated to be extremely low. Level B exceeding the Level B harassment recorded year during pile installation take is conservatively estimated at no thresholds for pile installation/removal and removal associated with the PCT more than 12 individuals during Phase during PCT construction. was an average of 0.09 harbor porpoises 1 and Phase 2 to account for two large The mouth of Ship Creek, where per day during 2009 construction (n = 12) groups or several smaller harbor seals tend to concentrate is monitoring, but this value may not groups. No Level A harassment take for located approximately 700 m from the account for increased sightings in Upper killer whales is anticipated or proposed southern end of the PCT, and is Cook Inlet (Shelden et al. 2014). to be authorized due to the small Level therefore located outside the harbor Therefore, the POA assumed that one A harassment zones and seals Level A zone for the majority of harbor porpoise could be observed every implementation of a 100 m shutdown pile sizes for both impact and vibratory 2 days of pile driving. Based on this which is larger than Level A harassment pile installation. However, there is assumption, the POA has requested, and isopleths. potential for Level A harassment near NMFS is proposing to authorize, 64 Humpback Whales Ship Creek during installation of three exposures during Phase 1 (127 days * [1 48-in piles per day and installation of harbor porpoise every 2 days]) and 38 Sightings of humpback whales in the 144-in piles. We estimate 30 percent of harbor porpoises during Phase 2 (75 project area are rare, and the potential the Level B exposures could result in days for Phase 2 * [1 harbor porpoise risk of exposure of a humpback whale Level A harassment which is similar to every 2 days]). This estimate also covers to sounds exceeding the Level B the proportion of work where the Level the possibility that larger groups (2–3 harassment threshold is low. Few, if A harassment isopleth extend to Ship individuals) of harbor porpoise could any, humpback whales are expected to Creek. Therefore, the POA has occur occasionally. approach the project area. However, requested, and NMFS proposes to Harbor porpoises are relatively small there were two sightings in 2017 of what authorize 305 Level A harassment and cetaceans that move at high velocities, was likely a single individual at the 711 Level B harassment takes in Phase which can make their detection and Ship Creek Boat Launch (ABR 2017) 1 and 180 Level A harassment and 420 identification at great distances difficult. which is located south of the project Level B harassment takes in Phase 2. Using the NMFS User Spreadsheet, area. Based on these data, the POA impact driving 36-in, 48-in and 144-in conservatively estimates one humpback Steller Sea Lions piles results in Level A harassment whale could be harassed every 16 days Steller sea lions are anticipated to be isopleths larger than the Level B of pile driving. Therefore, the POA encountered in low numbers, if at all, harassment isopleth. Vibratory driving requested 8 humpback whale takes within the project area. Three sightings and removal result in much smaller during Phase 1 (127 days for Phase 1 * of what was likely a single individual Level B harassment zone than Level B [1 humpback whale every 16 days]) and occurred in the project area in 2009 and harassment zones and many temporary 5 takes (75 days for Phase 2 * [1 two sightings occurred in 2016. Based piles (the bulk of the work) would be humpback whale every 16 days]) for on observations in 2016, we anticipate installed and removed with a vibratory Phase 2. This could include sighting a

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cow-calf pair on multiple days or POA is located, habitat use is more POA is not pile driving during winter multiple sightings of single humpback commonly associated with traveling. when beluga whale abundance is lowest whales. The POA did not request Level The POA’s simple calculation results in and although early summer tends to see A take of humpback whales; however, 103 takes in Phase 1 and 125 takes in lower beluga abundance, the density based on the distances to the large Level Phase 2. The second step in POA’s take used in the take calculation is from June A harassment thresholds relative to estimate approach was to apply a 50 surveys. Finally, any habituation to Level B harassment isoplehts and the percent correction factor to their repeated exposure may be considered fact humback whale sightings in Upper density-based calculation. The POA qualitatively in analyzing the intensity Cook Inlet is rare, NMFS is proposing to provided several reasons why this of reactions to pile driving but it cannot issue two Level A harassment takes per reduction factor was appropriate, be quantified and is not considered in year to account for a single individual including, but not limited to: The POA’s take estimates. or a cow/calf pair. Therefore, NMFS is commitment to using a bubble curtain To better capture beluga whale proposing to issue two Level A means that noise levels along the distribution and abundance, we harassment takes and six Level B western side of Knik Arm will remain undertook a multi-step analysis harassment takes during Phase 1 and below the regulatory thresholds; consisting of an evaluation of long-term, two Level A harassment takes and three providing a travel corridor for beluga Level B harassment takes for Phase 2. seasonal sighting data, proposed whales to access upper Knik Arm; for mitigation and monitoring measures, the Beluga Whales the majority of PCT construction and amount of documented take from pile installation and removal, only For beluga whales, we looked at previous POA projects compared to approximately half of the width of Knik authorized take, and considered group several sources of information on Arm, along the eastern shore, would be marine mammal occurrence in upper size. First, in lieu of density data, NMFS ensonified; beluga whales observed in Cook Inlet to determine how best to applied sighting rate data presented in Knik Arm during the autumn were most estimate the potential for exposure to Kendell and Cornick (2015) to estimate frequently sighted on the western side pile driving noise from the PCT Project. hourly sighting rates per month (April of the arm (Funk et al. 2005); and beluga In their application, the POA took a through November). We then identified whales in Knik Arm year-round; two-step approach to estimating Level B hours of pile driving per month. The however, sightings are much lower in harassment take. The POA first POA indicated there will be extended winter through early summer. estimated the numbers of beluga whales durations when no pile driving is potentially exposed to noise levels We reviewed the POA’s density-based happening (e.g., later in the season above the Level B harassment threshold take calculation approach and their when decking and other out-of-water for pile installation and removal using reasons for applying a 50 percent work is occurring); however, the the following formula: Beluga Exposure correction factor. We determined use of schedule could not be more refined than Estimate = N * Area * number of days the Goetz density data for this specific assuming an equal work distribution of pile installation/removal, where: N = project is problematic because the across the construction season. The maximum predicted # of beluga whales/ density data is based on June aerial POA did indicate the first two weeks of km2 in Knik Arm (0.291 whales/km2) surveys while the PCT project is April and the last two weeks in based on data from Goetz et al. (2012a) occurring from April through November would be most likely utilized and Area = Area ensonified above Level November, the data is over seven years for equipment mobilization and B harassment threshold (km2). We note old, and the multiple years of demobilization; therefore, pile driving the actual beluga whale densities within monitoring data collected by the POA is effort during those months were limited the Level B harassment isopleths not incorporated into this approach. to two weeks. The data and calculated predicted for the PCT project ranged Regarding the rationale for applying a exposure estimates are presented below. from 0.042 to 0.236 beluga whales/km2. 50 percent correction factor, we found These calculations assume no mitigation However, the POA applied the highest the use of a bubble curtain and the fact (i.e., uncorrected take estimates) and beluga whale density in upper Knik the majority of pile driving would that all animals observed would enter a Arm. The higher densities north of the ensonify half or less than half of the given Level B harassment zone during POA are expected as beluga whales tend width of Knik Arm is already captured pile driving. In total, we would expect to concentrate in Eagle Bay to forage by the ensonsified area which is approximately 94 exposures in Phase 1 whereas in the lower Arm, where the embedded into the take calculation. The and 60 exposures in Phase 2. TABLE 9—UNCORRECTED BELUGA WHALE EXPOSURE ESTIMATES FOR PHASE 1 AND PHASE 2

Monitoring data 1 Estimated instances of take

Month Number of Average Pile driving CIBW Pile driving CIBW Effort hours whales whale/hr hours exposures hours exposures observed Phase 1 2 Phase 1 Phase 2 2 Phase 2

April ...... 12 2 0.17 25.64 4.27 16.37 2.73 May ...... 156 40 0.26 51.29 13.15 32.71 8.39 June ...... 280 8 0.03 51.29 1.47 32.71 0.94 July ...... 360 2 0.01 51.29 0.28 32.71 0.18 August ...... 426 269 0.63 51.29 32.38 32.71 20.65 Sept ...... 447 169 0.38 51.29 19.37 32.71 12.35 October ...... 433 22 0.05 51.29 2.61 32.71 1.66 Nov ...... 215 175 0.82 25.64 20.91 16.37 13.35

Total ...... 2317 685 0.30 359.02 94.44 229.00 60.25 1 From Kendell and Cornick 2015. 2 Assumes equal work distribution/month except in April and November when the POA has indicated they would be conducting only 2 weeks of pile driving due to time needed for mobilization and demobilization.

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Second, NMFS then considered the immediately shut down, but the 15 per year to POA with mitigation proposed mitigation and distribution of whales were documented as takes. On measures similar to the measures beluga whales in Knik Arm. In the other occasions, beluga whales were proposed here. The percent of the POA’s application, they proposed a 100- initially sighted outside of the authorized takes that were documented m shutdown zone. However, as harassment zone and shut down was as actually occurring during this time described in more detail below, NMFS called, but the beluga whales swam into period ranged from 12 to 59 percent has imposed additional mitigation the harassment zone before activities with an average of 36 percent (Table 10). designed to reduce Level B harassment could be halted, and take occurred. For The previous method of estimating take take as well as Level A harassment take. example, on September 14, 2009, a was based on density; however, the We recognize that in certain situations, construction observer sighted a white results between using densities versus pile driving may not be able to be beluga whale just outside the sighting rate are somewhat comparable shutdown prior to whales entering the harassment zone, moving quickly Level B harassment zone due to safety towards the 1,300 meter Level B (e.g., 94 exposures in Phase 1 using concerns. Sometimes beluga whales harassment zone during vibratory pile sighting rates versus 103 exposures were initially observed when they driving. The animal entered the using density). Further, there was surfaced within the harassment zone. harassment zone before construction extensive scientific monitoring and POA For example, on November 4, 2009, 15 activity could be shut down, and was construction monitoring occurring whales were initially sighted documented as a take (ICRC 2009c). during these time periods; therefore, we approximately 950 meters north of the To more accurately estimate potential believe there is little potential animals project site near the shore, and then exposures, we looked at previous takes were taken but not observed. Therefore they surfaced in the Level B harassment at the POA and those actually we believe this first step in our analysis zone during vibratory pile driving (ICRC authorized. Between 2008 and 2012, is reasonable. 2009b). Construction activities were NMFS authorized 34 beluga whale takes

TABLE 10—AUTHORIZED AND REPORTED BELUGA WHALE TAKES DURING POA ACTIVITIES FROM 2009–2012

Percent of ITA effective dates Reported Authorized authorized takes take takes occurred

15 July 2008–14 July 2009 ...... 12 34 35 15 July 2009–14 July 2010 ...... 20 34 59 15 July 2010–14 July 2011 ...... 13 34 38 15 July 2011–14 July 2012 ...... 4 34 12

Second, we applied the highest 2 (n=64) will actually be realized. This monitoring effort and POA percentage of previous takes to ensure approach is further supported by the opportunistic data to determine if these potential impacts to beluga whales are proposed mitigation measures which are numbers represented realistic scenarios. fully evaluated and to ensure the POA strict shutdown requirements for CIBWs Figure 2 presents data from the has an adequate amount of take. with a goal of avoiding Level B take scientific monitoring program. The APU Therefore, we assume that altogether, similar to previous POA scientific monitoring data set approximately 59 percent of the takes mitigation measures. documented 390 beluga whale sightings. calculated for Phase 1 (n=94) and Phase Finally, we then considered group size from the long-term scientific

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Group size exhibits a mode of 1 and documented beluga whale groups in this For reasons described above, NMFS a median of 2, indicating that over half data set, 95 percent consisted of fewer believes this approach adequately of the beluga groups observed over the than 11.1 whales; 5 percent of the analyzes the risk of beluga whale 5-year span of the monitoring program groups consisted of more than 11.1 exposure to Level B harassment from were of individual beluga whales or whales. We conclude the amount of take the PCT Project. We conclude there is groups of 2. The 95th percentile of proposed to be authorized following the the potential for 45 exposures in Phase group size from the APU scientific approach above allows for the potential 1 and 33 exposures in Phase 2 (Table monitoring data set is 11.1 beluga for large groups to be exposed to noise 11). whales. This means that, of the 390 above NMFS harassment thresholds.

TABLE 11—PROPOSED BELUGA WHALE LEVEL B HARASSMENT EXPOSURES

PCT construction phase Calculated Proposed exposure take 1

Phase 1—2020 ...... 94 55 Phase 2—2021 ...... 60 35 1 Proposed take is identified as 59 percent of the calculated exposures using sighting rates.

In summary, the total amount of Level marine mammal stock is presented in A harassment and Level B harassment Table 12. proposed to be authorized for each

TABLE 12—PROPOSED AMOUNT OF TAKE, BY STOCK AND HARASSMENT TYPE

Phase 1 (2020) Phase 2 (2021) Species Stock Percent of Percent of Level A Level B stock Level A Level B stock

Humpback whale .. Western N Pacific 2 6 0.7 2 4 0.7 Beluga whale ...... Cook Inlet ...... 0 55 17 0 35 11 Killer whale ...... Transient/Alaska 0 12 2 0 12 2 Resident. Harbor porpoise .... Gulf of Alaska ...... 21 43 0.2 13 25 0.2 Steller sea lion ...... Western ...... 0 13 <0.1 2 6 <0.1 Harbor seal ...... Cook Inlet/Shelikof 305 711 3.6 180 420 2.1

Proposed Mitigation (1) The manner in which, and the also requested the POA consider In order to issue an IHA under degree to which, the successful additional noise attenuation measures Section 101(a)(5)(D) of the MMPA, implementation of the measure(s) is and modified shut down zones, among NMFS must set forth the permissible expected to reduce impacts to marine other things. We present mitigation methods of taking pursuant to such mammals, marine mammal species or measures NMFS has determined to activity, and other means of effecting stocks, and their habitat. This considers affect the least practicable adverse the least practicable impact on such the nature of the potential adverse impact on marine mammals and their species or stock and its habitat, paying impact being mitigated (likelihood, habitat followed by a discussion of the particular attention to rookeries, mating scope, range). It further considers the ongoing considerations by NMFS and grounds, and areas of similar likelihood that the measure will be the POA which will be made final prior significance, and on the availability of effective if implemented (probability of to issuance of the final IHA. such species or stock for taking for accomplishing the mitigating result if A key mitigation measure NMFS certain subsistence uses. NMFS implemented as planned), the considered for this project is reducing regulations require applicants for likelihood of effective implementation noise levels propagating into the incidental take authorizations to include (probability implemented as planned), environment. The POA will use a information about the availability and and; bubble curtain on all plumb piles. At feasibility (economic and technological) (2) the practicability of the measures this time, NMFS is not requiring an of equipment, methods, and manner of for applicant implementation, which unconfined bubble curtain. The POA conducting such activity or other means may consider such things as cost, presented a Technical Manual on the of effecting the least practicable adverse impact on operations, and, in the case analysis of water current velocity data impact upon the affected species or of a military readiness activity, collected in the vicinity of the proposed stocks and their habitat (50 CFR personnel safety, practicality of PCT (TerraSound 2016) demonstrating 216.104(a)(11)). implementation, and impact on the current speeds were approximately 3 In evaluating how mitigation may or effectiveness of the military readiness knots (kts) during times when tides may not be appropriate to ensure the activity. were strongest. The POA has not least practicable adverse impact on The POA presented a number of finalized the bubble curtain design; species or stocks and their habitat, as mitigation measures in section 11 of however, bubble ring placement and well as subsistence uses where their application. NMFS accepted a bubble sizes and spacing must combat applicable, we carefully consider two number of these measures (e.g., use of the current. In addition, the sound primary factors: bubble curtains on all plumb piles) but source verification results (see Proposed

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Monitoring and Reporting Measures NMFS also considered other means by delayed until the whale moves away section below) must demonstrate the which to remove piles since the from the POA or is not re-sighted within bubble curtain is achieving consistent majority of piles installed for this 30 minutes. If non-beluga whale species noise attenuation such that source levels project are temporary (we note the POA are observed within or likely to enter are at or below those evaluated in this reduced the amount of temporary piles the Level B harassment zone prior to document during all tide phases. The originally proposed for this project). pile driving, the POA may commence bubble curtain will be designed to NMFS inquired about the potential to pile driving, recording and reporting absorb as much sound as possible. The direct pull piles or cut them off at the MMPA take that occurs as a result. POA proposed, and NMFS is requiring, mudline; thereby, reducing in-water • If pile driving has commenced and all plumb piles installed in-water be noise levels. The POA responded that a beluga whale is observed within or done so in the presence of a fully the depth at which temporary piles likely to enter the Level B harassment operational bubble curtain. would be installed and substrate zone, pile driving will shut down and The POA is also currently evaluating precludes directly pulling the piles. not re-commence until the whale is out means by which to reduce sound Cutting piles at the mudline also of and on a path away from the Level propagation on battered piles. The POA presents navigational (e.g., anchoring) B harassment zone or until no beluga has indicated that a full bubble curtain and safety concerns. whale has been observed in the level B In their IHA application, the POA harassment zone for 30 minutes. ring is not possible on battered piles; • however, NMFS has requested the POA proposed a 100-m shutdown zone for all If, during pile driving, PSOs can no further investigate other means of marine mammals or, where the Level A longer effectively monitor all waters reducing noise such as a linear or semi- harassment zone was deemed to be within the Level B harassment zone for circular curtain around the work area. greater than 100 m, a shutdown zone the presence of marine mammals due to environmental conditions (e.g., fog, rain, The POA is actively looking into this equivalent to the Level A harassment wind), pile driving may continue only and final noise attenuation plans will be zone. NMFS found this measure did not until the current segment of pile is made prior to issuance of the IHA. We effect the least practicable adverse driven; no additional sections of pile or note that for purposes of our analysis impact on marine mammals for several additional piles may be driven until here, NMFS did not consider any noise reasons. First, except for 48-in piles, the Level conditions improve such that the Level attenuation during installation of A harassment zones in the application B harassment zone can be effectively battered piles. However, we are are based on estimated spectra which monitored. If the Level B harassment requiring that unattenuated piles not be NMFS does not support. Therefore, zone cannot be monitored for more than driven in water depths greater than 3 NMFS calculated Level A harassment 15 minutes, the entire Level B zone meters based on the cutoff frequency zones for all piles (except 48-in piles) must be cleared again for 30 minutes (Roger and Cox, 1988). The intent of this using the single frequency, default prior to pile driving. measure is to reduce sound propagation. weighting factor adjustment provided in In addition to these measures which In shallower waters, lower frequencies the NMFS User Spreadsheet. As shown greatly reduce the potential for tend to be cutoff more rapidly than high in Table 8, Level A harassment zones for harassment to beluga whales and set frequency sources. low-frequency and high frequency shutdown zones that realistically reflect In addition to noise attenuation cetaceans and pinnipeds are rather large non-beluga whale detectability, NMFS devices, NMFS considered the amount when considering multiple piles is including general mitigation measures of sound energy entering the aquatic installed per day and installation of the typically included in IHAs: environment. The installation of 144-in 144-in piles. Sighting rates at these • PSOs shall begin observing for piles is included in Phase 2 (2021) and distances, specifically for harbor seals marine mammals 30 minutes before pile NMFS has determined that given the and porpoise, are unlikely to be good driving begins for the day and must extensive Level B harassment zone enough to ensure effective coverage. For continue for 30 minutes when pile generated from this activity, vibratory these reasons, NMFS proposes a 100-m driving ceases at any time. If pile driving these large piles during peak shutdown zone for all marine mammals driving has ceased for more than 30 beluga whale season poses an amount of (except beluga whales). minutes within a day, another 30- risk and uncertainty to the degree that For beluga whales, NMFS determined minute pre-pile driving observation it should be minimized. Therefore, the proposed shutdown zone of 100 m period is required before pile driving vibratory driving 144-in piles will not or the Level A harassment zone (if may commence. occur during August. Further, to greater than 100 m) was not consistent • POA must use soft start techniques minimize the potential for overlapping with the conservation intentions of the when impact pile driving. Soft start sound fields from multiple stressors, the POA nor what NMFS would consider as requires contractors to provide an initial POA will not simultaneously operate effecting the least practicable adverse set of three strikes at reduced energy, two vibratory hammers for either pile impact based on the proposed project followed by a thirty-second waiting installation or removal. This measure is description and acoustic analysis. period, then two subsequent reduced designed to reduce simultaneous in- NMFS and the POA entered into energy strike sets. A soft start must be water noise exposure. Because impact discussions to discuss these opinions implemented at the start of each day’s hammers will unlikely be dropping at and have determined that measures and impact pile driving and at any time the same time, and to expedite shutdown zones used in previous IHAs following cessation of impact pile construction of the project to minimize would ensure valuable protection and driving for a period of thirty minutes or pile driving during peak beluga whale conservation of beluga whales. For this longer. abundance periods, NMFS is not reason, NMFS is proposing the POA • For in-water construction other proposing to restrict the operation of implement the following measures for than pile driving, the POA must cease two impact hammers at the same time. CIBWs: operations or reduce vessel speed to the We note that harassment zones during • Prior to the onset of pile driving, minimum level required to maintain impact pile driving will radiate from should a beluga whale(s) be observed steerage and safe working conditions if both of the piles being driven, not a within Knik Arm or approaching the a marine mammal approaches within 10 single pile. mouth of Knik Arm, pile driving will be m of the equipment or vessel.

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• POA is required to conduct better understanding of: (1) Action or entry by hand, and allowing quicker briefings for construction supervisors environment (e.g., source data assessment. and crews, the monitoring team, and characterization, propagation, ambient • Hard copy maps with POA staff prior to the start of all pile noise); (2) affected species (e.g., life pre-established grid-cells and driving activity, and when new history, dive patterns); (3) co-occurrence harassment zones specific to the pile personnel join the work, in order to of marine mammal species with the location being driven were invaluable. explain responsibilities, communication action; or (4) biological or behavioral These maps allowed for immediate, procedures, the marine mammal context of exposure (e.g., age, calving or accurate and consistent identification of monitoring protocol, and operational feeding areas). marine mammal locations relative to the procedures. • Individual marine mammal harassment zones, regardless of • If a species for which authorization responses (behavioral or physiological) observation station. has not been granted, or a species for to acoustic stressors (acute, chronic, or The POA’s IHA application addresses which authorization has been granted cumulative), other stressors, or the majority of these recommendations but the authorized takes are met, is cumulative impacts from multiple in its Marine Mammal Monitoring Plan observed approaching or within the stressors. (Appendix A in POA’s application) and monitoring zone (Table 8), pile driving • How anticipated responses to NMFS proposes additional measures and removal activities must shut down stressors impact either: (1) Long-term here. NMFS is requiring at least three immediately using delay and shut-down fitness and survival of individual PSOs (two on-watch and one to record procedures. Activities must not resume marine mammals; or (2) populations, data) will be positioned at the norther until the animal has been confirmed to species, or stocks. and southern station while two PSOs have left the area or the 30 minutes • Effects on marine mammal habitat will be on-watch at the PCT (i.e., pile observation time period has elapsed. (e.g., marine mammal prey species, driving) station. Each station will be Based on our evaluation of the acoustic habitat, or other important equipped with several pieces of equipment (see section 2.4 in Appendix applicant’s proposed measures, as well physical components of marine A of POA’s application), including 25x as other measures considered by NMFS, mammal habitat). NMFS has preliminarily determined binoculars and a range finders, as • Mitigation and monitoring that the proposed mitigation measures recommended above. One station will effectiveness. provide the means effecting the least have a theodolite. PSOs may observe for During the 2016 TPP, observers for practicable impact on the affected no more than 4 hours at time and no that project ()provided a number of species or stocks and their habitat, more than 12 hours per day. The POA recommendations to improve marine paying particular attention to rookeries, will submit all PSO CVs to NMFS prior mammal monitoring for POA projects. mating grounds, and areas of similar to a PSO working on this project. Where These recommendations included: significance and on the availability of necessary, NMFS may require a • A minimum of three PSOs at an such species or stock for subsistence potential PSO shadow an experienced observation station is necessary to uses. PSO before working independently. prevent fatigue and increase accuracy of To improve beluga whale detection, Proposed Monitoring and Reporting detecting marine mammals, especially NMFS has worked with the POA to In order to issue an IHA for an for large-radius zones. When using three include PSO stations in different activity, Section 101(a)(5)(D) of the PSOs, one PSO is observing, one PSO is locations than the three stations MMPA states that NMFS must set forth recording data (and observing when proposed by the POA, which were all on requirements pertaining to the there are no data to record), and the POA property. The POA will have three monitoring and reporting of such taking. third PSO is resting. A fourth PSO PSO stations. One PSO station will be The MMPA implementing regulations at allows the scanning of a 90-degree arc, located at the PCT pile driving site. One 50 CFR 216.104 (a)(13) indicate that instead of a 180-degree arc, increasing station will be at Port Wornzof or a requests for authorizations must include scan intensity and the likelihood of similar location to maximize beluga the suggested means of accomplishing detecting marine mammals. Thirty to 60 whale detection outside of Knik Arm the necessary monitoring and reporting minute rotations work well with this and the mouth of Knik Arm. PSOs at that will result in increased knowledge schedule. this location will have unencumbered • of the species and of the level of taking Communications between the pile views of the entrance to Knik Arm and or impacts on populations of marine driving/construction contractor and the can provide information on beluga mammals that are expected to be PSOs should take place between one whale group dynamics (e.g., group size, present in the proposed action area. dedicated point of contact, or Lead PSO, demographics, etc) and behavior of Effective reporting is critical both to for each shift. animals approaching Knik Arm in the • compliance as well as ensuring that the Each observation station should absence of and during pile driving. We most value is obtained from the required employ a pair of 25-power binoculars as have also considered moving a station monitoring. they were superior to the 7- and 10- from the POA property to Port Monitoring and reporting power binoculars at detecting and MacKenzie for an improved view of requirements prescribed by NMFS identifying marine mammals at greater beluga whales moving from north to should contribute to improved distances. south within Knik Arm. However, the understanding of one or more of the • Electronic data collection methods POA is currently investigating if this is following: should be considered. iPad applications an option with respect to accessibility • Occurrence of marine mammal and other technological advances make (i.e. private property) and personnel species or stocks in the area in which it possible to collect data quickly and safety. If Port MacKenzie is not an take is anticipated (e.g., presence, accurately. A theodolite can be plugged available option, the third PSO station abundance, distribution, density). into the device and marine mammal will be located toward the north end of • Nature, scope, or context of likely locations can be calculated on the spot, the POA property. The exact placement marine mammal exposure to potential minimizing uncertainty. Data can be of this northern station will be stressors/impacts (individual or downloaded throughout the day to a determined prior to issuing the IHA. We cumulative, acute or chronic), through database, eliminating the need for data note the previous station at Cairn Point

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used several years ago is Elemendorf Air Alaska Region Stranding Coordinator, CIBWs, independent of the other species Force Base property and is no longer NMFS. In addition, in the event that for which we propose to authorize take. accessible. POA discovers an injured or dead NMFS has identified key factors For both Phase 1 and Phase 2, NMFS marine mammal, and the lead observer which may be employed to assess the is requiring the POA submit interim determines that the injury or death is level of analysis necessary to conclude weekly and monthly monitoring reports not associated with or related to the whether potential impacts associated during the PCT construction season. specified activities (e.g., previously with a specified activity should be These reports must include a summary wounded animal, carcass with moderate considered negligible. These include of marine mammal species and to advanced decomposition, or (but are not limited to) the type and behavioral observations, pile driving scavenger damage), POA must report the magnitude of taking, the amount and shutdowns or delays, and pile work incident to the Office of Protected importance of the available habitat for completed. A final end-of season report Resources, NMFS, and the Alaska the species or stock that is affected, the will be submitted to NMFS within 90 Region Stranding Coordinator, NMFS, duration of the anticipated effect to the days following pile driving. The report within 24 hours of the discovery. species or stock, and the status of the must include: Dates and times (begin species or stock. The following factors and end) of all marine mammal Negligible Impact Analysis and support a negligible impact monitoring; a description of daily Determination determination for the affected stocks of construction activities, weather NMFS has defined negligible impact humpback whales, killer whales, harbor parameters and water conditions during as an impact resulting from the porpoise, harbor seals, and Steller sea each monitoring period; number of specified activity that cannot be lions. Some of these also apply to marine mammals observed, by species, reasonably expected to, and is not CIBWs; however, a more detailed distances and bearings of each marine reasonably likely to, adversely affect the analysis for CIBWs is provided below. mammal observed to the pile being species or stock through effects on • No takes by mortality or serious driven or removed, age and sex class, if annual rates of recruitment or survival injury are anticipated or authorized; possible; number of individuals of each (50 CFR 216.103). A negligible impact • The number of total takes (by Level species (differentiated by month as finding is based on the lack of likely A and Level B harassment) are less than appropriate) detected within the adverse effects on annual rates of 3 percent of the best available monitoring zone, and estimates of recruitment or survival (i.e., population- abundance estimates for all stocks; number of marine mammals taken, by level effects). An estimate of the number • Take would not occur in places species (a correction factor may be of takes alone is not enough information and/or times where take would be more applied); description of mitigation on which to base an impact likely to accrue to impacts on triggered, and description of attempts to determination. In addition to reproduction or survival, such as within distinguish between the number of considering estimates of the number of ESA-designated or proposed critical individual animals taken and the marine mammals that might be ‘‘taken’’ habitat, biologically important areas number of incidences of take. In through harassment, NMFS considers (BIA), or other habitats critical to addition, any acoustic data and analysis other factors, such as the likely nature recruitment or survival (e.g., rookery); collected throughout the year will also of any responses (e.g., intensity, • Take would occur over a short be made available to NMFS in the form duration), the context of any responses timeframe, being limited to the short of an interim report within 10 days of (e.g., critical reproductive time or duration a marine mammal would likely data collection and a final report within location, migration), as well as effects be present within a Level B harassment 60 days. Mean, median, and peak sound on habitat, and the likely effectiveness zone during pile driving; source levels (dB re: 1mPa): cumulative of the mitigation. We also assess the • Any impacts to marine mammal sound exposure level (SELcum), peak number, intensity, and context of habitat from pile driving are temporary sound pressure level (SPLpeak), root estimated takes by evaluating this and minimal; and mean square sound pressure level information relative to population • Take would only occur within (SPLrms), and single-strike sound status. Consistent with the 1989 upper Cook Inlet—a limited, confined exposure level (SELs-s) will be reported preamble for NMFS’s implementing area of any given stock’s home range. as well as pile descriptions and acoustic regulations (54 FR 40338; September 29, For CIBWs, we further discuss our monitoring methods (e.g., sampling rate, 1989), the impacts from other past and negligible impact finding in the context distance to the hydrophone from the ongoing anthropogenic activities are of potential impacts to this endangered pile, etc.). incorporated into this analysis via their stock. As described in the Recovery Plan NMFS has also included reporting impacts on the environmental baseline for the Cook Inlet Beluga Whale (NMFS, requirements for more uncommon (e.g., as reflected in the regulatory status 2016), NMFS determined the following situations. In the unanticipated event of the species, population size and physical or biological features are that the specified activity clearly causes growth rate where known, ongoing essential to the conservation of this the take of a marine mammal in a sources of human-caused mortality, or species: (1) Intertidal and subtidal manner prohibited by this IHA, such as ambient noise levels). waters of Cook Inlet with depths less serious injury, or mortality, POA must To avoid repetition, the majority of than 30 feet mean lower low water (9.1 immediately cease the specified our analysis applies to all species listed m) and within 5 mi (8 km) of high and activities and report the incident to the in Table 4 except for CIBWs, given that medium flow anadromous fish streams; NMFS. In the event POA discovers an many of the anticipated effects of this (2) Primary prey species consisting of injured or dead marine mammal, and project on different marine mammal four species of Pacific salmon (Chinook, the lead observer determines that the stocks are expected to be relatively sockeye, chum, and coho), Pacific cause of the injury or death is unknown similar in nature. For CIBWs, there are eulachon, Pacific cod, walleye pollock, and the death is relatively recent (e.g., meaningful differences in anticipated saffron cod, and yellowfin sole, (3) in less than a moderate state of individual responses to activities, Waters free of toxins or other agents of decomposition), POA must immediately impact of expected take on CIBWs), or a type and amount harmful to CI beluga report the incident to the Office of impacts on habitat; therefore, we whales, (4) Unrestricted passage within Protected Resources, NMFS, and the provide a supplemental analysis for or between the critical habitat areas, and

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(5) Waters with in-water noise below at http://www.smruconsulting.com/ such as those around Eagle Bay. As levels resulting in the abandonment of publications/ and we provide a previously described, sighting rates critical habitat areas by CI beluga summary of the expert elicitation were not different in the presence or whales. The PCT would not impact portion of the workshop here. absence of pile driving. This is not essential features 1–3 listed above. All For each of the noise effect surprising as food is a strong motivation construction would be done in a manner mechanisms chosen for expert for marine mammals. As described in implementing best management elicitation, the experts to provide a set Forney et al. (2017), animals typically practices to preserve water quality and of parameter values that determined the favor particular areas because of their no work would occur around creek forms of a relationship between the importance for survival (e.g. feeding or mouths or river systems leading to prey number of days of disturbance a female breeding), and leaving may have abundance reductions. In addition, no CIBW experiences in a particular period significant costs to fitness (reduced physical structures would restrict and the effect of that disturbance on her foraging success, increased predation passage; however, impacts to the energy reserves. Examples included the risk, increased exposure to other acoustic habitat are of concern. Previous number of days of disturbance during anthropogenic threats). Consequently, marine mammal monitoring data at the the period April, May and June that animals may be highly motivated to POA demonstrate beluga whales indeed would be predicted to reduce the energy remain in an area despite negative pass by the POA during pile driving. As reserves of a pregnant CIBW to such a impacts (e.g., Rolland et al. 2012). described above, there was no level that she is certain to terminate the Previous monitoring data indicates significant difference in beluga sighting pregnancy or abandon the calf soon after beluga whales are responding to pile rate with and in the absence of pile birth, the number of days of disturbance driving noise but not through driving (Kendell and Cornick, 2015). in the period April-September required abandonment of critical habitat, However, beluga whales do swim faster to reduce the energy reserves of a including primary foraging areas north and in tighter formation in the presence lactating CIBW to a level where she is of the port. Instead, they travel faster of pile driving (Kendell and Cornick, certain to abandon her calf, and the past the POA, more quietly, and in 2015). number of days of disturbance where a tighter groups (which may be linked to female fails to gain sufficient energy by During review of the POA’s the decreased communication patterns). the end of summer to maintain application, NMFS was concerned that We anticipate these behaviors to themselves and their calves during the exposure to pile driving at the PCT continue; however, do not believe they subsequent winter. Overall, median had adverse effects on reproduction or could result in beluga whales avoiding values ranged from 16 to 69 days of Knik Arm and thereby not accessing the survival as the whales continue to disturbance depending on the question. access critical foraging grounds north of productive foraging grounds north of However, for this elicitation, a ‘‘day of POA such as Eagle River flats based on the POA and tight associations combat disturbance’’ was defined as any day on any communication space lost within a the proposed project and mitigation which an animal loses the ability to measures—thus, impacting essential group. Finally, as described previously, forage for at least one tidal cycle (i.e., it beluga whales likely stay in upper Knik feature number 5 above. Although the forgoes 50–100% of its energy intake on data previously presented demonstrate Arm for several days before exiting Knik that day). Therefore, disturbance in this Arm. Acoustic data indicate beluga whales are not abandoning the area (i.e., context is not equivalent to Level B no significant difference in sighting rate whales move through lower Knik Arm harassment. The mitigation measures relatively quickly, when entering or with and without pile driving), we NMFS has proposed for the PCT project exiting the arm, and remain in the upper considered the results of a recent expert are designed to avoid the potential that arm for several days, or weeks, before elicitation (EE) at a 2016 workshop, any animal would lose the ability to moving back out into Cook Inlet which predicted the impacts of noise on forage for one or more tidal cycles. (Castellote et al., in press). Satellite CIBW survival and reproduction given While Level B harassment (behavioral telemetry data indicate such a lost foraging opportunities, to inform disturbance) is proposed to be movement pattern may be common. our assessment of impacts on this stock. authorized, our mitigation measures Specifically, a beluga instrumented with The 2016 EE workshop used conceptual would minimize the intensity of that a satellite link time/depth recorder models of an interim population harassment to behavioral changes such entered Knik Arm on August 18th and consequences of disturbance (PCoD) for as increased swim speeds, tighter group marine mammals (NRC 2005; New et al. formations, and cessation of remained in Eagle Bay until September 2014, Tollit et al., 2016) to help in vocalizations, not the loss of foraging 12th (Ferrero et al. 2000). This longer- understanding how noise-related capabilities. Regardless, this elicitation term use of upper Knik Arm would stressors might affect vital rates recognized that pregnant or lactating avoid repetitive exposures from pile (survival, birth rate and growth) for females and calves are inherently more driving noise. CIBW (King et al. 2015). NMFS (2015, at risk than other animals, such as NMFS has included mitigation section IX.D—CI Beluga Hearing, males. NMFS first considered proposing measures beyond those proposed by the Vocalization, and Noise Supplement) the POA shutdown based on more POA in the IHA application, suggests that the main direct effects of vulnerable life stages (e.g., calf specifically, not commencing pile noise on CIBW are likely to be through presence) but ultimately determined all driving if beluga whales are observed masking of vocalizations used for beluga whales warranted pile driving within Knik Arm or within 1 km of the communication and prey location, and shutdown to be protective of potential mouth of Knik Arm, shutting down pile habitat degradation. The 2016 workshop vulnerable life stages, such as driving should a beluga whale approach on beluga whales was specifically pregnancy, that could not be determined or enter the Level B harassment zone, designed to provide regulators with a from observations, and to avoid more stationing PSOs at Point Woronzof, and tool to help understand whether chronic severe behavioral reaction. not vibratory pile driving 144-in piles and acute anthropogenic noise from Monitoring data from the POA suggest during August (peak beluga season). various sources and projects are likely pile driving does not discourage beluga These measures are designed to ensure to be limiting recovery of the CIBW whales from entering Knik Arm and beluga whales will not abandon critical population. The full report can be found travelling to critical foraging grounds habitat and exposure to pile driving

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noise will not result in adverse impacts numbers are available, NMFS compares speeds, changes in dive time, temporary on the reproduction or survival of any the number of individuals taken to the avoidance near the POA, etc.) within the individuals. The location of PSOs at most appropriate estimation of vicinity of the POA. Therefore, NMFS Point Woronzof allows for detection of abundance of the relevant species or has determined that the total taking of beluga whales at much farther distances stock in our determination of whether affected species or stocks would not than previous years and behavioral an authorization is limited to small have an unmitigable adverse impact on observations prior to whales entering numbers of marine mammals. the availability of such species or stocks Knik Arm. Although NMFS does not Additionally, other qualitative factors for taking for subsistence purposes. anticipate beluga whales would may be considered in the analysis, such Endangered Species Act (ESA) abandon entering Knik Arm in the as the temporal or spatial scale of the presence of pile driving with the activities. Section 7(a)(2) of the Endangered proposed mitigation measures, these For all stocks, the amount of taking is Species Act of 1973 (ESA: 16 U.S.C. PSOs will be integral to identifying if small relative to the population size (0.2 1531 et seq.) requires that each Federal belugas are potentially altering to 17 percent). Further, the amount of agency insure that any action it pathways they would otherwise take in take proposed to be authorized likely authorizes, funds, or carries out is not the absence of pile driving. Because the represents smaller numbers of likely to jeopardize the continued POA is submitting weekly and monthly individual harbor seals and Steller sea existence of any endangered or reports, NMFS will be able to regularly lions. Harbor seals tend to concentrate threatened species or result in the evaluate the impacts of the project on near Ship Creek and have small home destruction or adverse modification of beluga whales. Finally, take by ranges; therefore, the amount of take designated critical habitat. To ensure mortality, serious injury, or Level A authorized likely represents repeat ESA compliance for the issuance of harassment of CIBWs is not anticipated exposures to the same animals. Previous IHAs, NMFS consults internally, in this or proposed to be authorized. Steller sea lion sightings identified that case with the Alaska Region Protected In summary and as described above, if a Steller sea lion is within Knik Arm, Resources Division Office, whenever we the following factors primarily support it is likely lingering to forage on salmon propose to authorize take for our preliminary determination that the or eulachon runs and may be present for endangered or threatened species. impacts resulting from this activity are several days. With respect to CIBW, they NMFS is proposing to authorize take not expected to adversely affect CIBWs are known to enter Knik Arm and then of CIBWs, humpback whales from the through effects on annual rates of exit after several days of remaining Mexico DPS stock, and Steller sea lions recruitment or survival: within Knik Arm. There is potential an from the western DPS, which are listed • No mortality or serious injury is individual is taken on both ingress and under the ESA. Therefore, the Permit anticipated or authorized. egress; however, due to the mitigation and Conservation Division has • Area of exposure would be limited measures (essentially takes are for requested initiation of Section 7 to travel corridors. Data demonstrates animals where pile driving cannot be consultation with the Alaska Region for Level B harassment manifests as shut down before exposure), the the issuance of this IHA. NMFS will increased swim speeds past the POA circumstances would have to be such conclude the ESA consultation prior to and tight group formations and not that pile driving is occurring while the reaching a determination regarding the through habitat abandonment. whale is both entering and exiting Knik proposed issuance of the authorization. • No critical foraging grounds (e.g. Arm and that the animal is missed or Eagle Bay, Eagle River, Susitna Delta) taken due to logistical constraints of Proposed Authorization would be impacted by pile driving. shutting down pile driving immediately As a result of these preliminary • While animals could be harassed in both cases. Therefore, the potential determinations, NMFS proposes to issue more than once, exposures are not likely for repeat takes is low and we anticipate an IHA to the POA for the PCT Project, to exceed more than a few per year for take predominantly represents provided the previously mentioned any given individual and are not individual animals. Regardless, the mitigation, monitoring, and reporting expected to occur on sequential days; amount of take proposed to be requirements are incorporated. A draft thereby, decreasing the likelihood of authorized for CIBW is small (17 of the proposed IHA can be found at physiological impacts caused by chronic percent or less). https://www.fisheries.noaa.gov/permit/ stress or masking. Based on the analysis contained incidental-take-authorizations-under- Based on the analysis contained herein of the proposed activity marine-mammal-protection-act. herein of the likely effects of the (including the proposed mitigation and specified activity on marine mammals monitoring measures) and the Request for Public Comments and their habitat, and taking into anticipated take of marine mammals, We request comment on our analyses, consideration the implementation of the NMFS preliminarily finds that small the proposed authorization, and any proposed monitoring and mitigation numbers of marine mammals will be other aspect of this Notice of Proposed measures, NMFS preliminarily finds taken relative to the population sizes of IHA for the POA’s PCT Project. We also that the total marine mammal take from the affected species or stocks. request comment on the potential for the proposed activity will have a renewal of this proposed IHA as Unmitigable Adverse Impact Analysis negligible impact on all affected marine described in the paragraph below. and Determination mammal species or stocks. Please include with your comments any There are no relevant subsistence uses supporting data or literature citations to Small Numbers of the affected marine mammal stocks or help inform our final decision on the As noted above, only small numbers species implicated by this action. No request for MMPA authorization. of incidental take may be authorized subsistence use of CIBWs occurs and On a case-by-case basis, NMFS may under Sections 101(a)(5)(A) and (D) of subsistence harvest of other marine issue a one-year IHA renewal with an the MMPA for specified activities other mammals is limited. The potential expedited public comment period (15 than military readiness activities. The impacts from harassment on stocks that days) when (1) another year of identical MMPA does not define small numbers are harvested would be limited to minor or nearly identical activities as and so, in practice, where estimated behavioral changes (e.g., increased swim described in the Specified Activities

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section is planned or (2) the activities analyzed activities or include changes species or stocks, and any other would not be completed by the time the so minor (e.g., reduction in pile size) pertinent information, NMFS IHA expires and a second IHA would that the changes do not affect the determines that there are no more than allow for completion of the activities previous analyses, take estimates, or minor changes in the activities, the beyond that described in the Dates and mitigation and monitoring mitigation and monitoring measures Duration section, provided all of the requirements. remain the same and appropriate, and following conditions are met: (2) A preliminary monitoring report the original findings remain valid. • A request for renewal is received no showing the results of the required later than 60 days prior to expiration of Dated: December 20, 2019. monitoring to date and an explanation the current IHA. Donna S. Wieting, • showing that the monitoring results do The request for renewal must Director, Office of Protected Resources, include the following: not indicate impacts of a scale or nature not previously analyzed or authorized. National Marine Fisheries Service. (1) An explanation that the activities [FR Doc. 2019–28102 Filed 12–27–19; 8:45 am] to be conducted beyond the initial dates • Upon review of the request for either are identical to the previously renewal, the status of the affected BILLING CODE 3510–22–P

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Part III

The President

Proclamation 9974—To Take Certain Actions Under the African Growth and Opportunity Act and for Other Purposes Executive Order 13901—Adjustments of Certain Rates of Pay

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Federal Register Presidential Documents Vol. 84, No. 249

Monday, December 30, 2019

Title 3— Proclamation 9974 of December 26, 2019

The President To Take Certain Actions Under the African Growth and Op- portunity Act and for Other Purposes

By the President of the United States of America

A Proclamation 1. In Proclamation 7350 of October 2, 2000, the President designated the Republic of Cameroon (Cameroon) as a beneficiary sub-Saharan African coun- try for purposes of section 506A(a)(1) of the Trade Act of 1974, as amended (the ‘‘Trade Act’’), as added by section 111(a) of the African Growth and Opportunity Act (the ‘‘AGOA’’) (title I of Public Law 106–200, 114 Stat. 251, 257–58 (19 U.S.C. 2466a(a)(1)). 2. Section 506A(a)(3) of the Trade Act (19 U.S.C. 2466a(a)(3)) provides that the President shall terminate the designation of a country as a beneficiary sub-Saharan African country for purposes of section 506A if he determines that the country is not making continual progress in meeting the requirements described in section 506A(a)(1) of the Trade Act. 3. Pursuant to section 506A(a)(3) of the Trade Act, I have determined that Cameroon is not making continual progress in meeting the requirements described in section 506A(a)(1) of the Trade Act. Accordingly, I have decided to terminate the designation of Cameroon as a beneficiary sub-Saharan Afri- can country for purposes of section 506A of the Trade Act, effective January 1, 2020. 4. I have determined that the Republic of Niger (Niger), the Central African Republic, and the Republic of The Gambia (The Gambia) have not established effective visa systems and related customs procedures meeting the require- ments of section 113 of the AGOA (19 U.S.C. 3722), which are required in order for a beneficiary sub-Saharan African country to receive the pref- erential treatment provided for under section 112(a) of the AGOA (19 U.S.C. 3721(a)). Therefore, Niger, the Central African Republic, and The Gambia are not eligible for the treatment provided for under section 112(a). 5. Section 112(c) of the AGOA, as amended in section 6002 of the Africa Investment Incentive Act of 2006 (division D, title VI, Public Law 109– 432, 120 Stat. 2922, 3190–93 (19 U.S.C. 3721(c)), provides special rules for certain apparel articles imported from ‘‘lesser developed beneficiary sub- Saharan African countries.’’ 6. I have determined that Guinea-Bissau and Niger satisfy the criterion for treatment as ‘‘lesser developed beneficiary sub-Saharan African countries’’ under section 112(c) of the AGOA. 7. On April 22, 1985, the United States and Israel entered into the Agreement on the Establishment of a Free Trade Area between the Government of the United States of America and the Government of Israel (the ‘‘USIFTA’’), which the Congress approved in section 3 of the United States-Israel Free Trade Area Implementation Act of 1985 (the ‘‘USIFTA Act’’) (Public Law 99–47, 99 Stat. 82 (19 U.S.C. 2112 note)). 8. Section 4(b) of the USIFTA Act provides that, whenever the President determines that it is necessary to maintain the general level of reciprocal and mutually advantageous concessions with respect to Israel provided for by the USIFTA, the President may proclaim such withdrawal, suspension,

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modification, or continuance of any duty, or such continuance of existing duty-free or excise treatment, or such additional duties, as the President determines to be required or appropriate to carry out the USIFTA. 9. In order to maintain the general level of reciprocal and mutually advan- tageous concessions with respect to agricultural trade with Israel, on July 27, 2004, the United States entered into an agreement with Israel concerning certain aspects of trade in agricultural products during the period January 1, 2004, through December 31, 2008 (the ‘‘2004 Agreement’’). 10. In Proclamation 7826 of October 4, 2004, consistent with the 2004 Agreement, the President determined, pursuant to section 4(b) of the USIFTA Act, that, in order to maintain the general level of reciprocal and mutually advantageous concessions with respect to Israel provided for by the USIFTA, it was necessary to provide duty-free access into the United States through December 31, 2008, for specified quantities of certain agricultural products of Israel. 11. Each year from 2008 through 2018, the United States and Israel entered into agreements to extend the period that the 2004 Agreement was in force for 1-year periods to allow additional time for the two governments to conclude an agreement to replace the 2004 Agreement. 12. To carry out the extension agreements, the President in Proclamation 8334 of December 31, 2008; Proclamation 8467 of December 23, 2009; Procla- mation 8618 of December 21, 2010; Proclamation 8770 of December 29, 2011; Proclamation 8921 of December 20, 2012; Proclamation 9072 of Decem- ber 23, 2013; Proclamation 9223 of December 23, 2014; Proclamation 9383 of December 21, 2015; Proclamation 9555 of December 15, 2016; Proclamation 9687 of December 22, 2017; and Proclamation 9834 of December 21, 2018, modified the Harmonized Tariff Schedule of the United States (the ‘‘HTS’’) to provide duty-free access into the United States for specified quantities of certain agricultural products of Israel, each time for an additional 1- year period. 13. On December 4, 2019, the United States entered into an agreement with Israel to extend the period that the 2004 Agreement is in force through December 31, 2020, and to allow for further negotiations on an agreement to replace the 2004 Agreement. 14. Pursuant to section 4(b) of the USIFTA Act, I have determined that it is necessary, in order to maintain the general level of reciprocal and mutually advantageous concessions with respect to Israel provided for by the USIFTA, to provide duty-free access into the United States through the close of December 31, 2020, for specified quantities of certain agricultural products of Israel, as provided in Annex I of this proclamation. 15. On September 16, 2019, in accordance with section 103(a)(2) of the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (the ‘‘Trade Priorities Act’’) (title I of Public Law 114–26, 129 Stat. 319, 333 (19 U.S.C. 4202(a)(2)), I notified the Congress that I intended to enter into an agreement regarding tariff barriers with Japan under section 103(a) of the Trade Priorities Act. On October 7, 2019, the United States and Japan entered into the Trade Agreement between the United States and Japan. 16. Section 103(a)(1) of the Trade Priorities Act authorizes the President to proclaim such modification of any existing duty as the President deter- mines to be required or appropriate to carry out a trade agreement entered into under section 103(a). The President generally may proclaim such modi- fication provided that the modification does not reduce the rate of duty to a rate that is less than 50 percent of the date of such duty that applied on June 29, 2015; does not reduce the rate of duty below that applicable under the Uruguay Round Agreements or a successor agreement on any import-sensitive agricultural product; and does not increase the rate of duty above the rate of such duty that applied on June 29, 2015.

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17. Pursuant to section 103(a) of the Trade Priorities Act, I have determined that it is required and appropriate to modify existing duties with respect to certain goods to carry out the Trade Agreement between the United States and Japan. 18. In Proclamation 6763 of December 23, 1994, the President established a tariff-rate quota for beef. Section 404(d)(3) of the Uruguay Round Agree- ments Act (title IV of Public Law 103–465, 108 Stat. 4809, 4960 (19 U.S.C. 3601(d)(3)) authorizes the President to allocate the in-quota quantity of a tariff-rate quota for any agricultural product among supplying countries or customs areas and to modify any allocation as the President determines appropriate. Pursuant to section 404(d)(3) of the Uruguay Round Agreements Act, I have determined that it is appropriate to modify the tariff-rate quota allocation for beef by providing that the tariff-rate quota allocation for Japan will become part of the total tariff-rate quota allocation for other countries or areas. 19. Section 1206(a) of the Omnibus Trade and Competitiveness Act of 1988 (the ‘‘1988 Act’’) (title I of Public Law 100–418, 102 Stat. 1107, 1151 (19 U.S.C. 3006(a)) authorizes the President to proclaim modifications to the HTS based on the recommendations of the United States International Trade Commission (the ‘‘Commission’’) under section 1205 of the 1988 Act (19 U.S.C. 3005) if the President determines that the modifications are in con- formity with United States obligations under the International Convention on the Harmonized Commodity Description and Coding System (the ‘‘Con- vention’’) and do not run counter to the national economic interest of the United States. 20. In Proclamation 9549 of December 1, 2016, pursuant to section 1206(a) of the 1988 Act, the President proclaimed modifications to the HTS to conform it to the Convention, to promote the uniform application of the Convention, to establish additional subordinate tariff categories, and to make technical and conforming changes to existing provisions. These modifications to the HTS were set out in Annex I of Publication 4653 of the Commission, which was incorporated by reference into the proclamation. 21. Proclamation 7746 of December 30, 2003, implemented the United States- Chile Free Trade Agreement (the ‘‘USCFTA’’) with respect to the United States and, pursuant to the United States-Chile Free Trade Agreement Imple- mentation Act (the ‘‘USCFTA Act’’) (Public Law 108–77, 117 Stat. 909 (19 U.S.C. 3805 note)), incorporated in the HTS the schedule of duty reduc- tions and rules of origin necessary or appropriate to carry out the USCFTA. 22. In order to ensure the continuation of such staged reductions in rates of duty for originating goods of Chile in tariff categories that were modified to reflect amendments to the Convention, Proclamation 9549 made modifica- tions to the HTS that the President determined were necessary or appropriate to carry out the duty reductions proclaimed in Proclamation 7746. The United States and Chile are parties to the Convention. 23. Section 201 of the USCFTA Act authorizes the President to proclaim such modifications or continuation of any duty, such continuation of duty- free or excise treatment, or such additional duties, as the President determines to be necessary or appropriate to carry out or apply Articles 3.3, 3.7, 3.9, Article 3.20(8), (9), (10), and (11), and Annex 3.3 (including the schedule of United States duty reductions with respect to originating goods) of the USCFTA. 24. I have determined that, pursuant to section 201 of the USCFTA Act and section 1206(a) of the 1988 Act, modifications to the HTS are necessary or appropriate to ensure the continuation of tariff and certain other treatment accorded to originating goods under tariff categories modified in Proclamation 9549 and to carry out the duty reductions proclaimed in Proclamation 7746. 25. Section 604 of the Trade Act (19 U.S.C. 2483) authorizes the President to embody in the HTS the substance of the relevant provisions of that Act, and of other acts affecting import treatment, and actions thereunder,

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including removal, modification, continuance, or imposition of any rate of duty or other import restriction. NOW, THEREFORE, I, DONALD J. TRUMP, President of the United States of America, acting under the authority vested in me by the Constitution and the laws of the United States of America, including sections 506A(a)(1) and 506A(a)(3) of the Trade Act; sections 111(a) and 112(c) of the AGOA; section 6002 of the Africa Investment Incentive Act of 2006; section 4(b) of the USIFTA Act; section 103(a) of the Trade Priorities Act; section 404(d)(3) of the Uruguay Round Agreements Act; section 1206(a) of the 1988 Act; section 201 of the USCFTA Act; and section 604 of the Trade Act, do proclaim that: (1) The designation of Cameroon as a beneficiary sub-Saharan African country for purposes of section 506A of the Trade Act is terminated, effective January 1, 2020. (2) In order to reflect in the HTS that beginning January 1, 2020, Cameroon shall no longer be designated as a beneficiary sub-Saharan African country, general note 16(a) to the HTS is modified by deleting ‘‘Republic of Cameroon’’ from the list of beneficiary sub-Saharan African countries. Note 7(a) to subchapter II and note 1 to subchapter XIX of chapter 98 of the HTS are modified to delete ‘‘Cameroon’’ from the list of beneficiary countries. Further, note 2(d) to subchapter XIX of chapter 98 of the HTS is modified by deleting ‘‘Republic of Cameroon’’ from the list of lesser developed bene- ficiary sub-Saharan African countries. (3) In order to provide the tariff treatment intended under sections 112(a) and 113 of the AGOA, note 1 to subchapter XIX of Chapter 98 of the HTS is modified by deleting ‘‘Niger’’, ‘‘Central African Republic’’, and ‘‘The Gambia’’ from the list of beneficiary sub-Saharan African countries. Further, note 7(a) to subchapter II of chapter 98 of the HTS is modified by deleting ‘‘Niger’’ from the list of beneficiary sub-Saharan African countries. (4) For purposes of section 112(c) of the AGOA, Guinea-Bissau and Niger are lesser developed beneficiary sub-Saharan African countries. (5) In order to provide for Guinea-Bissau and Niger the tariff treatment intended under section 112(c) of the AGOA, note 2(d) to subchapter XIX of chapter 98 of the HTS is modified by inserting in alphabetical sequence in the list of lesser developed beneficiary sub-Saharan African countries ‘‘Guinea-Bissau’’ and ‘‘Niger’’. (6) The modifications to the HTS set forth in paragraphs (1) through (5) of this proclamation shall be effective with respect to articles that are entered for consumption, or withdrawn from warehouse for consumption, on or after January 1, 2020. (7) In order to implement United States tariff commitments under the 2004 Agreement through December 31, 2020, the HTS is modified as provided in Annex I of this proclamation. (8) The modifications to the HTS set forth in Annex I of this proclamation shall be effective with respect to eligible agricultural products of Israel that are entered for consumption, or withdrawn from warehouse for consump- tion, on or after January 1, 2020. (9) The provisions of subchapter VIII of chapter 99 of the HTS, as modified by Annex I of this proclamation, shall continue in effect through December 31, 2020. (10) In order to modify tariffs on certain goods to carry out the Trade Agreement between the United States and Japan, the HTS is modified as set forth in Annex II of this proclamation. (11) The modifications to the HTS set forth in Annex II of this proclamation shall be effective with respect to originating goods, as defined in the Trade Agreement between the United States and Japan, effective on the dates specified in Annex II and on any subsequent dates set forth for such duty reductions in Annex II.

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(12) The Secretary of the Treasury shall use existing authority to issue any regulations necessary to implement the modifications made pursuant to paragraphs (10) and (11) of this proclamation. (13) Additional U.S. note 3 to chapter 2 of the HTS is modified as specified in Annex III of this proclamation. The modifications to the HTS set forth in Annex III of this proclamation shall be effective with respect to goods that are entered for consumption, or withdrawn from warehouse for consumption, on or after January 1, 2020. (14) In order to reflect in the HTS the modifications to the rules of origin under the USCFTA, general note 26 to the HTS is modified as provided in Annex IV of this proclamation. (15) The modifications to the HTS made by paragraph (14) of this proclama- tion shall enter into effect on April 1, 2020. (16) Any provisions of previous proclamations and Executive Orders that are inconsistent with the actions taken in this proclamation are superseded to the extent of such inconsistency. IN WITNESS WHEREOF, I have hereunto set my hand this twenty-sixth day of December, in the year of our Lord two thousand nineteen, and of the Independence of the United States of America the two hundred and forty-fourth.

Billing code 3295–F0–P

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[FR Doc. 2019–28285

Filed 12–27–19; 11:15 am] Billing code 7020–02–C

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Executive Order 13901 of December 26, 2019

Adjustments of Certain Rates of Pay

By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows: Section 1. Statutory Pay Systems. The rates of basic pay or salaries of the statutory pay systems (as defined in 5 U.S.C. 5302(1)), as adjusted under 5 U.S.C. 5303 and section 748 of division C of the Consolidated Appropriations Act, 2020, are set forth on the schedules attached hereto and made a part hereof: (a) The General Schedule (5 U.S.C. 5332(a)) at Schedule 1; (b) The Foreign Service Schedule (22 U.S.C. 3963) at Schedule 2; and (c) The schedules for the Veterans Health Administration of the Department of Veterans Affairs (38 U.S.C. 7306, 7404; section 301(a) of Public Law 102–40) at Schedule 3. Sec. 2. Senior Executive Service. The ranges of rates of basic pay for senior executives in the Senior Executive Service, as established pursuant to 5 U.S.C. 5382, are set forth on Schedule 4 attached hereto and made a part hereof. Sec. 3. Certain Executive, Legislative, and Judicial Salaries. The rates of basic pay or salaries for the following offices and positions are set forth on the schedules attached hereto and made a part hereof: (a) The Executive Schedule (5 U.S.C. 5312–5318) at Schedule 5; (b) The Vice President (3 U.S.C. 104) and the Congress (2 U.S.C. 4501) at Schedule 6; and (c) Justices and judges (28 U.S.C. 5, 44(d), 135, 252, and 461(a)) at Schedule 7. Sec. 4. Uniformed Services. The rates of monthly basic pay (37 U.S.C. 203(a)) for members of the uniformed services, as adjusted under 37 U.S.C. 1009, and the rate of monthly cadet or midshipman pay (37 U.S.C. 203(c)) are set forth on Schedule 8 attached hereto and made a part hereof. Sec. 5. Locality-Based Comparability Payments. (a) Pursuant to sections 5304 and 5304a of title 5, United States Code, and section 748 of division C of the Consolidated Appropriations Act, 2020, locality-based comparability payments shall be paid in accordance with Schedule 9 attached hereto and made a part hereof. (b) The Director of the Office of Personnel Management shall take such actions as may be necessary to implement these payments and to publish appropriate notice of such payments in the Federal Register. Sec. 6. Administrative Law Judges. Pursuant to section 5372 of title 5, United States Code, the rates of basic pay for administrative law judges are set forth on Schedule 10 attached hereto and made a part hereof.

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Sec. 7. Effective Dates. Schedule 8 is effective January 1, 2020. The other schedules contained herein are effective on the first day of the first applicable pay period beginning on or after January 1, 2020. Sec. 8. Prior Order Superseded. Executive Order 13866 of March 28, 2019, is superseded as of the effective dates specified in section 7 of this order.

THE WHITE HOUSE, December 26, 2019.

Billing code 3295–F0–P

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[FR Doc. 2019–28286

Filed 12–27–19; 11:15 am] Billing code 6325–39–C

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Reader Aids Federal Register Vol. 84, No. 249 Monday, December 30, 2019

CUSTOMER SERVICE AND INFORMATION CFR PARTS AFFECTED DURING DECEMBER

Federal Register/Code of Federal Regulations At the end of each month the Office of the Federal Register General Information, indexes and other finding 202–741–6000 publishes separately a List of CFR Sections Affected (LSA), which aids lists parts and sections affected by documents published since Laws 741–6000 the revision date of each title. 248...... 67243 Presidential Documents 3 CFR 264...... 67243 Executive orders and proclamations 741–6000 Proclamations: 274a...... 67243 The United States Government Manual 741–6000 9968...... 66281 301...... 67243 9969...... 66283 Other Services 319...... 67243 9970...... 66286 320...... 67243 741–6020 Electronic and on-line services (voice) 9971...... 67657 322...... 67243 Privacy Act Compilation 741–6050 9972...... 68323 324...... 67243 9973...... 69617 334...... 67243 9974...... 72187 ELECTRONIC RESEARCH 341...... 67243 Executive Orders: 343a...... 67243 World Wide Web 13866 (superseded by 343b...... 67243 13901) ...... 72213 392...... 67243 Full text of the daily Federal Register, CFR and other publications 13898...... 66059 1208...... 69640 is located at: www.govinfo.gov. 13899...... 68779 9 CFR Federal Register information and research tools, including Public 13900...... 69983 Inspection List and electronic text are located at: 13901...... 72213 Proposed Rules: www.federalregister.gov. Administrative Orders: 56...... 66631 Notices: 145...... 66631 E-mail Notice of December 146...... 66631 FEDREGTOC (Daily Federal Register Table of Contents Electronic 18, 2019 ...... 69981 147...... 66631 Mailing List) is an open e-mail service that provides subscribers 5 CFR 10 CFR with a digital form of the Federal Register Table of Contents. The digital form of the Federal Register Table of Contents includes Proposed Rules: 1...... 66561 HTML and PDF links to the full text of each document. 335...... 70906 2...... 66561, 68781 1630...... 68815 37...... 66561 To join or leave, go to https://public.govdelivery.com/accounts/ 1632...... 68815 40...... 66561 USGPOOFR/subscriber/new, enter your email address, then 1650...... 68815 50...... 66561, 70399 follow the instructions to join, leave, or manage your 2424...... 70439 51...... 66561 subscription. 52...... 66561, 68781 7 CFR PENS (Public Law Electronic Notification Service) is an e-mail 55...... 66561 service that notifies subscribers of recently enacted laws. 2...... 69295 71...... 66561 273...... 66783 72 ...... 66561, 67827, 70400 To subscribe, go to http://listserv.gsa.gov/archives/publaws-l.html 990...... 69295 73...... 66561, 67659 and select Join or leave the list (or change settings); then follow 1410...... 66813 74...... 66561 the instructions. 1466...... 69272 100...... 66561 FEDREGTOC and PENS are mailing lists only. We cannot 1486...... 69985 140...... 66561 respond to specific inquiries. 1487...... 70393 150...... 66561 Reference questions. Send questions and comments about the 3555...... 70881 430...... 71626 Federal Register system to: [email protected] 4288...... 71297 955...... 70402 The Federal Register staff cannot interpret specific documents or Proposed Rules: Proposed Rules: 66...... 68816 regulations. 429...... 67106 205...... 67242 430 ...... 67106, 68060, 70842 1216...... 65929 431...... 66327 FEDERAL REGISTER PAGES AND DATE, DECEMBER 1260...... 71829 12 CFR 65907–66062...... 2 70881–71296...... 26 8 CFR 1...... 69296 66063–66280...... 3 71297–71734...... 27 Proposed Rules: 3...... 68019, 71735 66281–66560...... 4 71735–72226...... 30 103...... 67243 5...... 69296 66561–66812...... 5 106...... 67243 6...... 71735 66813–67168...... 6 204...... 67243 19...... 71735 67169–67342...... 9 208...... 69640 23...... 69296 67343–67656...... 10 211...... 67243 24...... 69296 67657–67826...... 11 212...... 67243 25...... 71738 67827–68018...... 12 214...... 67243 32...... 69296 216...... 67243 34...... 69296, 71735 68019–68324...... 13 223...... 67243 46...... 71735 68325–68780...... 16 235...... 67243 109...... 71735 68781–69294...... 17 236...... 67243 160...... 71735 69295–69616...... 18 240...... 67243 161...... 71735 69617–69982...... 19 244...... 67243 163...... 71735 69983–70392...... 20 245...... 67243 167...... 71735 70393–70880...... 23 245a...... 67243 195...... 71738

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206...... 70887 68827, 69346 251...... 70796 685...... 67778 208...... 70887 814...... 68829 686...... 67778 209...... 68325 15 CFR 690...... 67778 211...... 70887 744...... 66840, 69298 22 CFR 692...... 67778 215...... 70887 902...... 67183 51...... 67184 694...... 67778 217...... 68019, 70887 Proposed Rules: 120...... 70887 223...... 70887 7...... 70445 37 CFR 225...... 70887 24 CFR 2...... 68045, 69330 228...... 71738 17 CFR Proposed Rules: 7...... 69330 238...... 70887 4...... 67343, 67355 267...... 70073 Proposed Rules: 251...... 70887 13...... 68787 Ch. II ...... 66328 25 CFR Ch. III ...... 70413 200...... 68550 Ch. III ...... 71852 324...... 68019 240...... 68550 224...... 69602 327...... 66833 249...... 68550 38 CFR 345...... 71738 26 CFR Proposed Rules: 17...... 68046 351...... 66063 1...... 69664 1 ...... 66968, 67370, 68042, 51...... 67868 624...... 68326 23...... 69664 68790, 69022, 69305 Ch. VII...... 65907 Proposed Rules: 50...... 70446 Proposed Rules: 702...... 68781 1...... 68065 140...... 69664 1 ...... 65937, 67046, 68833, 703...... 69298 17...... 70908 69124, 70089, 70356, 71836 1003...... 69993 202...... 71580 301...... 69124, 70462 39 CFR 1026...... 70410 229...... 71580 1310...... 71740 230...... 71580 20...... 66072 232...... 71580 28 CFR Proposed Rules: Proposed Rules: 239...... 71580 2...... 70013 43...... 70073 111...... 69688 240...... 71580 45...... 71833 3010...... 67685 246...... 70073 29 CFR 217...... 67381 3017...... 70466 270...... 71580 102...... 69524, 70424 237...... 71833 3020...... 67685 274...... 71580 548...... 68736 244...... 70073 3050...... 67402, 67685 275...... 67518 778...... 68736 252...... 67381 3055...... 67685 279...... 67518 1910...... 68794 303...... 68353 240...... 66458, 66518 4022...... 68043 308...... 68353 40 CFR 4044...... 67186, 68043 331...... 66845 18 CFR 9...... 66591, 66599 349...... 71833 Proposed Rules: 52 ...... 66074, 66075, 66316, 373...... 70073 Proposed Rules: 10...... 67681 66612, 67189, 67191, 67196, 624...... 71833 1304...... 67386 90...... 67681 67378, 67873, 68049, 68050, 103...... 66327, 67682 1005...... 67132 20 CFR 69331, 70428, 70895, 71306, 1221...... 71833 401...... 68842 71824 1234...... 70073 404...... 69298 516...... 67681 68...... 69834 1238...... 68350 416...... 69298 531...... 67681 70...... 67200 Proposed Rules: 578...... 67681 80...... 69335 13 CFR 402...... 70080 579...... 67681 81...... 70897 120...... 66287 404...... 67394, 70080 580...... 67681 180 ...... 66616, 66620, 66626, 121...... 66561 408...... 70080 1614...... 67683 70021, 70023, 70429 411...... 70080 Proposed Rules: 30 CFR 260...... 67202 124...... 66647 416...... 67394, 70080 261...... 67202 422...... 70080 902...... 66296 264...... 67202 14 CFR 617...... 67681 950...... 66309 265...... 67202 618...... 67681 11...... 71714 32 CFR 268...... 67202 25...... 67828 270...... 67202 39 ...... 66063, 66579, 66582, 21 CFR 225...... 71819 272...... 67875 66838, 67169, 67171, 67174, 73...... 69620 775...... 66586 273...... 67202 67176, 67179, 67830, 67832, 310...... 68331 Proposed Rules: 282...... 69626 67834, 67837, 67851, 67854, 807...... 68334 651...... 70328 721...... 66591, 66599 68034, 68037, 68326, 69995, 812...... 68334 33 CFR Proposed Rules: 69997, 70000, 70415, 71304, 814...... 68334 1...... 66084 71770, 71772, 71776, 71778, 862...... 71794 52...... 68342 22...... 66084 71782, 71785, 71788, 71792 864...... 71794 100...... 67375, 68044 23...... 66084 71 ...... 66066, 67858, 67860, 866...... 71794 117...... 70426 49...... 66084 68039, 68041, 68330, 69619 868...... 71794 165 ...... 66069, 66840, 67187, 51...... 68069, 70092 91...... 67659, 67665 870...... 71794 67375, 68343, 69326, 69328, 52 ...... 66084, 66096, 66098, 97 ...... 67862, 67864, 70419, 872...... 71794 70014, 70017, 70019, 70893, 66103, 66334, 66345, 66347, 70423 874...... 71794 71823 66352, 66361, 66363, 66366, 300...... 71714 876...... 71794 Proposed Rules: 66853, 68097, 68863, 69349, 302...... 71714 878...... 71794 117 ...... 69685, 69687, 70090 70092, 70109, 70130, 70913, Proposed Rules: 880...... 71794 147...... 69348 71854, 71862, 71866 39 ...... 65931, 65935, 66080, 882...... 70003, 71794 165...... 68858, 68860 55...... 65938, 66084 66082, 67246, 67248, 67251, 884...... 71794 60...... 68069 68060, 68063, 68363, 68365, 886...... 71794 34 CFR 61...... 68069 68368, 68370, 68374, 68376, 888...... 71794 5...... 67865 63 ...... 67889, 68069, 68870, 68817, 68819, 68822, 68824, 890...... 71794 Proposed Rules: 69182 69662, 70076, 70078, 71333, 892...... 71794 Ch. III ...... 67395 71...... 66084 71335 1301...... 68340 674...... 67778 78...... 66084 71 ...... 67381, 67383, 67385, Proposed Rules: 675...... 67778 124...... 66084 67880, 67881, 67884, 67886, 1...... 70796 676...... 67778 141...... 69695 68379, 68381, 68383, 68385, 133...... 71834 682...... 67778 142...... 69695

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222...... 66084 350...... 70435 74...... 70489 Ch. III ...... 68386 257...... 65941 571...... 69698 271...... 70135 45 CFR 48 CFR 572...... 70916 282...... 69696 155...... 71674 Ch. I...... 68314, 68319 320...... 70467 156...... 71674 4...... 68314 50 CFR 372...... 66369 1115...... 66319 52...... 68314 721...... 66855 1230...... 70902 501...... 69627 17...... 69918 1604...... 67899 2554...... 70902 536...... 69627 216...... 70040 552...... 69627 217...... 70274 41 CFR 47 CFR 1419...... 69343 218...... 70712 Proposed Rules: 1 ...... 66078, 66716, 66843 223...... 70048 60-1...... 71875 9...... 66716 49 CFR 300...... 68057, 70040 60-2...... 71875 12...... 66716 1...... 71714 622 ...... 67236, 67674, 68058, 60-300...... 71875 20...... 66716 5...... 71714 69715, 70904 60-741...... 71875 22...... 66716 7...... 71714 648 ...... 66630, 68348, 68797, 25...... 66716 10...... 67671 68798 42 CFR 54 ...... 67220, 70026, 71308 106...... 71714 660 ...... 65925, 65926, 67674, 414...... 71827 64...... 66716 211...... 71714 68799, 70904 Proposed Rules: 73...... 70037 382...... 68052 679 ...... 65927, 67183, 70064, 121...... 70139 76...... 69342 383...... 68052 70436, 70438, 71828 430...... 71887 Proposed Rules: 384...... 68052 697...... 71329 433...... 71887 1...... 69696 389...... 71714 Proposed Rules: 447...... 71887 27...... 69351, 69696 553...... 71714 17 ...... 67060, 69707, 69712, 455...... 71887 51...... 70484 601...... 71714 69713 457...... 71887 54...... 69697, 71338 1152...... 66320 218...... 67404 486...... 70628 61...... 70484 Proposed Rules: 600...... 68389 64...... 71888 24...... 69466 622...... 69715 44 CFR 69...... 70484 172...... 70491 648...... 68871 64...... 65924, 68346 73...... 70485, 70489 173...... 70491 679 ...... 66109, 66129, 67421

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