Vol. 85 Tuesday, No. 218 November 10, 2020

Pages 71529–71814

OFFICE OF THE FEDERAL REGISTER

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Contents Federal Register Vol. 85, No. 218

Tuesday, November 10, 2020

Alcohol and Tobacco Tax and Trade Bureau Education Department PROPOSED RULES NOTICES Establishment of Viticultural Area: Agency Information Collection Activities; Proposals, Ulupalakua, 71726–71731 Submissions, and Approvals: Expansion of Viticultural Area: 21st Century Community Learning Centers Waiver Clarksburg, 71722–71726 Request, 71639–71640 Impact Study of Federally-Funded Magnet Schools, 71638–71639 Army Department District of Columbia Opportunity Scholarship Program NOTICES After the 2017 Reauthorization: Performance Review Board Membership, 71634–71636 Evaluation; Correction, 71639

Census Bureau Energy Department NOTICES See Federal Energy Regulatory Commission Agency Information Collection Activities; Proposals, NOTICES Submissions, and Approvals: Environmental Impact Statements; Availability, etc.: National Survey of Children’s Health, 71603–71605 Remediation of Area IV and the Northern Buffer Zone of the Santa Susana Field Laboratory, CA, 71640–71644 Meetings: Centers for Medicare & Medicaid Services Environmental Management Site-Specific Advisory NOTICES Board, Savannah River Site, 71644–71645 Agency Information Collection Activities; Proposals, Submissions, and Approvals, 71653–71654 Environmental Protection Agency RULES Coast Guard Air Quality State Implementation Plans; Approvals and RULES Promulgations: Security Zone: Arizona; Nonattainment Plan for the Hayden Sulfur Fleet Week Demonstration Area, San Diego Bay, San Dioxide Nonattainment Area, 71547–71553 NOTICES Diego, CA, 71545–71546 Meetings: Special Local Regulation: National Drinking Water Advisory Council, 71650 Boat Parade, San Diego, CA, 71543–71545 Federal Aviation Administration Commerce Department RULES See Census Bureau Airspace Designations and Reporting Points: See Industry and Security Bureau Delavan, WI, 71534–71535 See International Trade Administration Waterloo, IA, 71535–71537 See National Oceanic and Atmospheric Administration Airworthiness Directives: Airbus SAS Airplanes, 71529–71532 Rolls-Royce Corporation (Type Certificate Previously Commodity Futures Trading Commission Held by Allison Engine Company) RULES Engines, 71532–71534 Compliance Requirements for Commodity Pool Operators, PROPOSED RULES 71772–71813 Airspace Designations and Reporting Points: Kankakee, IL, 71586–71587 Court Services and Offender Supervision Agency for the Airworthiness Directives: District of Columbia Airbus Defense and Space S.A. (Formerly Known as NOTICES Construcciones Aeronauticas, S.A.) Airplanes, Senior Executive Service: 71583–71586 Performance Review Board; Correction, 71634 Airbus Helicopters, 71580–71583 NOTICES Agency Information Collection Activities; Proposals, Defense Department Submissions, and Approvals: See Army Department General Aviation and Part 135 Activity Survey, 71710– NOTICES 71711 Agency Information Collection Activities; Proposals, Approval of Noise Compatibility Program: Submissions, and Approvals, 71638 Burlington International , South Burlington VT, Agency Information Collection Activities; Proposals, 71709–71710 Submissions, and Approvals: Preaward Survey Forms, 71653 Federal Communications Commission Prospective Subcontractor Requests for Bonds, 71652– PROPOSED RULES 71653 Assessment and Collection of Regulatory Fees for Fiscal Privacy Act; System of Records, 71636–71638 Year 2020, 71593–71596

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NOTICES Health and Human Services Department Agency Information Collection Activities; Proposals, See Centers for Medicare & Medicaid Services Submissions, and Approvals, 71650–71651 See Food and Drug Administration See Indian Health Service Federal Contract Compliance Programs Office See National Institutes of Health RULES Nondiscrimination Obligations of Federal Contractors and Homeland Security Department Subcontractors: See Coast Guard Procedures To Resolve Potential Employment Discrimination, 71553–71575 Housing and Urban Development Department Federal Energy Regulatory Commission RULES NOTICES Implementing Executive Order 13891: Application: Promoting the Rule of Law Through Improved Agency STS Hydropower, LLC, 71647–71648 Guidance Documents, 71537–71543 Combined Filings, 71645–71649 NOTICES Meetings: Meetings: American Electric Power Service Corp. v. Midcontinent Manufactured Housing Consensus Committee, 71661 Independent System Operator, Inc./Southwest Power Pool, Inc.; City of Prescott, AR v. Southwestern Indian Health Service Electric Power Co./Midcontinent Independent PROPOSED RULES System Operator, Inc.: Technical Conference, 71649 Acquisition Regulations: Petition for Declaratory Order: Buy Indian Act; Procedures for Contracting, 71596–71602 Pine Creek Mine, LLC, 71649 Technical Conference: Industry and Security Bureau RTO/ISO Credit Principles and Practices, 71649–71650 NOTICES Agency Information Collection Activities; Proposals, Federal Maritime Commission Submissions, and Approvals: NOTICES Additional Protocol to the -International Privacy Act; System of Records, 71651 Atomic Energy Agency Safeguards, 71605–71606 Import, End-User, Delivery Verification Certificates and Federal Railroad Administration Firearms Entry Clearance Requirements, 71605 NOTICES Agency Information Collection Activities; Proposals, Internal Revenue Service Submissions, and Approvals, 71711–71712 RULES Additional First Year Depreciation Deduction, 71734–71770 Federal Reserve System PROPOSED RULES PROPOSED RULES Additional First Year Depreciation Deduction, 71587–71588 Capital Planning and Stress Testing Requirements for Large Bank Holding Companies, Intermediate Holding International Trade Administration Companies and Savings and Loan Holding Companies: NOTICES Correction, 71580 Antidumping or Countervailing Duty Investigations, Orders, NOTICES or Reviews: Change in Bank Control: Monosodium Glutamate From the Republic of Indonesia, Acquisitions of Shares of a Bank or Bank Holding 71610–71611 Company, 71652 Passenger Vehicle and Light Truck Tires From the Socialist Republic of Vietnam, 71607–71610 Food and Drug Administration Polyethylene Terephthalate Film, Sheet, and Strip From NOTICES the United Arab Emirates, 71606–71607 Guidance: Assessing User Fees Under the Prescription Drug User Fee Amendments of 2017, 71658–71659 Labor Department Enhancing the Diversity of Clinical Trial Populations–– See Federal Contract Compliance Programs Office Eligibility Criteria, Enrollment Practices, and Trial See Mine Safety and Health Administration Designs, 71654–71656 Regulatory Considerations for Microneedling Products, Mine Safety and Health Administration 71656–71658 NOTICES Special Considerations, Incentives, and Programs To Petitions for Modification: Support the Approval of New Animal Drugs for Application of Existing Mandatory Safety Standards, Minor Uses and for Minor Species, 71659–71660 71661–71663

General Services Administration National Aeronautics and Space Administration NOTICES NOTICES Agency Information Collection Activities; Proposals, Agency Information Collection Activities; Proposals, Submissions, and Approvals: Submissions, and Approvals: Preaward Survey Forms, 71653 Preaward Survey Forms, 71653 Prospective Subcontractor Requests for Bonds, 71652– Prospective Subcontractor Requests for Bonds, 71652– 71653 71653

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National Highway Traffic Safety Administration The Nasdaq Stock Market, LLC, 71704, 71708 NOTICES Agency Information Collection Activities; Proposals, Small Business Administration Submissions, and Approvals: NOTICES National Survey of Drowsy Driving Knowledge, Attitudes, Major Disaster Declaration: and Behaviors, 71717–71719 New York; Public Assistance Only, 71708–71709 Petition for Decision of Inconsequential Noncompliance: Military Reservist Economic Injury Disaster Loans: Consolidated Glass and Mirror, LLC, 71712–71713 Interest Rate for First Quarter FY 2021, 71709 , LLC, 71713–71717 State Department National Institutes of Health NOTICES NOTICES Agency Information Collection Activities; Proposals, Meetings: Submissions, and Approvals: Eunice Kennedy Shriver National Institute of Child Family Liaison Office Professional Development Health and Human Development, 71660 Fellowship Application, 71709 National Institute of Allergy and Infectious Diseases, 71660–71661 Transportation Department See Federal Aviation Administration National Oceanic and Atmospheric Administration See Federal Railroad Administration RULES See National Highway Traffic Safety Administration Magnuson-Stevens Fishery Conservation and Management Act Provisions: Treasury Department Fisheries of the Northeastern United States, 71575–71577 Pacific Island Fisheries: See Alcohol and Tobacco Tax and Trade Bureau Swordfish Trip Limits in the American Samoa Pelagic See Internal Revenue Service PROPOSED RULES Longline Fishery, 71577–71579 Terrorism Risk Insurance Program: NOTICES Application: Updated Regulations in Light of the Terrorism Risk Marine Mammals; File No. 23554, 71633–71634 Insurance Program Reauthorization Act, and Other Takes of Marine Mammals Incidental to Specified Purposes, 71588–71593 Activities: Berth III New Mooring Dolphins Project in Ketchikan, Veterans Affairs Department AK, 71612–71633 NOTICES Meetings: National Science Foundation National Academic Affiliations Council, 71719 NOTICES Veterans’ Advisory Committee on Education, 71720 Meetings: Proposal Review Panel for Physics, 71663 Separate Parts In This Issue Nuclear Regulatory Commission NOTICES Part II Environmental Assessments; Availability, etc.: Treasury Department, Alcohol and Tobacco Tax and Trade Holtec Decommissioning International, LLC; Indian Point Bureau, 71722–71731 Nuclear Generating Unit Nos. 1, 2, and 3, 71664– 71666 Part III Meetings; Sunshine Act, 71663–71664 Treasury Department, Internal Revenue Service, 71734– 71770 Securities and Exchange Commission NOTICES Part IV Application: Commodity Futures Trading Commission, 71772–71813 Principal Diversified Select Real Asset Fund, et al., 71696–71704 Intention To Cancel Registration Pursuant to the Investment Advisers Act of 1940, 71707–71708 Reader Aids Securities and Exchange Commission’s FY 2016 and FY Consult the Reader Aids section at the end of this issue for 2017 Service Contract Inventory; Availability, 71705 phone numbers, online resources, finding aids, and notice Self-Regulatory Organizations; Proposed Rule Changes: of recently enacted public laws. Cboe Exchange, Inc., 71666–71689, 71705–71707 To subscribe to the Federal Register Table of Contents Financial Industry Regulatory Authority, Inc., 71691, electronic mailing list, go to https://public.govdelivery.com/ 71695–71696 accounts/USGPOOFR/subscriber/new, enter your e-mail Nasdaq PHLX, LLC, 71689–71690 address, then follow the instructions to join, leave, or NYSE Arca, Inc., 71691–71695 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.

12 CFR Proposed Rules: 225...... 71580 238...... 71580 252...... 71580 14 CFR 39 (2 documents) ...... 71529, 71532 71 (2 documents) ...... 71534, 71535 Proposed Rules: 39 (2 documents) ...... 71580, 71583 71...... 71586 17 CFR 4...... 71772 24 CFR 11...... 71537 26 CFR 1...... 71734 Proposed Rules: 1...... 71587 27 CFR Proposed Rules: 9 (2 documents) ...... 71722, 71726 31 CFR Proposed Rules: 50...... 71588 33 CFR 100...... 71543 165...... 71545 40 CFR 52...... 71547 41 CFR 60-1...... 71553 60-2...... 71553 60-300...... 71553 60-741...... 71553 47 CFR Proposed Rules: 1...... 71593 48 CFR Proposed Rules: 326...... 71596 352...... 71596 50 CFR 648...... 71575 665...... 71577

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Rules and Regulations Federal Register Vol. 85, No. 218

Tuesday, November 10, 2020

This section of the FEDERAL REGISTER ADDRESSES: You may send comments, Discussion contains regulatory documents having general using the procedures found in 14 CFR The FAA issued AD 2001–16–13, applicability and legal effect, most of which 11.43 and 11.45, by any of the following are keyed to and codified in the Code of Amendment 39–12382 (66 FR 44295, methods: August 23, 2001) (‘‘AD 2001–16–13’’), Federal Regulations, which is published under • 50 titles pursuant to 44 U.S.C. 1510. Federal eRulemaking Portal: Go to which applied to certain Model A330 https://www.regulations.gov. Follow the series airplanes. AD 2001–16–13 was The Code of Federal Regulations is sold by instructions for submitting comments. prompted by a report that during fatigue the Superintendent of Documents. • Fax: 202–493–2251. testing on the fuselage, cracks were • Mail: U.S. Department of detected in the longitudinal buttstrap at DEPARTMENT OF TRANSPORTATION Transportation, Docket Operations, M– stringer 9, at frame 31, and at frame 30, West Building Ground Floor, Room 37.1. AD 2001–16–13 required a roto- Federal Aviation Administration W12–140, 1200 New Jersey Avenue SE, test inspection of fastener holes of Washington, DC 20590. certain fuselage joints for cracks, reinforcement of the fuselage between 14 CFR Part 39 • Hand Delivery: Deliver to Mail frames 31 and 37.1, and, if necessary, an address above between 9 a.m. and 5 [Docket No. FAA–2020–0970; Project HFEC inspection and repair. The FAA Identifier AD–2020–01359–T; Amendment p.m., Monday through Friday, except issued AD 2001–16–13 to address 39–21305; AD 2020–22–09] Federal holidays. fatigue cracking of the fuselage RIN 2120–AA64 For material incorporated by reference longitudinal buttstrap, which could (IBR) in this AD, contact Airbus SAS, result in reduced structural integrity of Airworthiness Directives; Airbus SAS Airworthiness Office—EAL, Rond-Point the fuselage. Airplanes Emile Dewoitine No: 2, 31700 Blagnac Cedex, France; telephone +33 5 61 93 36 Actions Since AD 2001–16–13 Was AGENCY: Federal Aviation Issued Administration (FAA), Department of 96; fax +33 5 61 93 45 80; email Transportation (DOT). [email protected]; Since the FAA issued AD 2001–16– internet http://www.airbus.com. You 13, the FAA received a report that the ACTION: Final rule; request for may view this referenced service comments. applicability of AD 2001–16–13 does information at the FAA, Airworthiness not match the applicability of the SUMMARY: The FAA is superseding Products Section, Operational Safety corresponding Direction Ge´ne´rale de Airworthiness Directive (AD) 2001–16– Branch, 2200 South 216th St., Des l’Aviation Civile (DGAC) AD: French 13, which applied to certain Airbus SAS Moines, WA. For information on the Airworthiness Directive 2001–075(B), Model A330 series airplanes. AD 2001– availability of this material at the FAA, dated March 17, 2001, which is also 16–13 required a roto-test inspection of call 206–231–3195. It is also available referred to after this as the Mandatory fastener holes of certain fuselage joints on the internet at https:// Continuing Airworthiness Information, for cracks, reinforcement of the fuselage www.regulations.gov by searching for or ‘‘the MCAI.’’ The model designations between certain frames, and, if and locating Docket No. FAA–2020– identified in the applicability of the necessary, a high frequency eddy 0970. MCAI were inadvertently identified as current (HFEC) inspection and repair. Examining the AD Docket serial numbers in the applicability of As published, the applicability of AD AD 2001–16–13. 2001–16–13 inadvertently identified the You may examine the AD docket on You may examine the MCAI in the model designations as serial numbers. the internet at https:// AD docket on the internet at https:// This document corrects that error. This www.regulations.gov by searching for www.regulations.gov by searching for new AD requires a roto-test inspection and locating Docket No. FAA–2020– and locating Docket No. FAA–2020– of fastener holes of certain fuselage 0970; or in person at the Docket 0970. joints for cracks, reinforcement of the Management Facility between 9 a.m. This AD was prompted by a report of fuselage, and, if necessary, an HFEC and 5 p.m., Monday through Friday, an error in the applicability of AD 2001– inspection and repair. The FAA is except Federal holidays. The AD docket 16–13. The FAA has determined the issuing this AD to address the unsafe contains this AD, any comments applicability must be revised to correct condition on these products. received, and other information. The the error. There are no affected U.S. DATES: This AD is effective November street address for the Docket Operations registered airplanes; however, an 25, 2020. office is listed above. Comments will be affected airplane might be imported and The Director of the Federal Register available in the AD docket shortly after placed on the U.S. Register in the future. approved the incorporation by reference receipt. The FAA is issuing this AD to address of a certain publication listed in this AD fatigue cracking of the fuselage FOR FURTHER INFORMATION CONTACT: longitudinal buttstrap, which could as of November 25, 2020. Vladimir Ulyanov, Aerospace Engineer, The Director of the Federal Register result in reduced structural integrity of Large Aircraft Section, International approved the incorporation by reference the fuselage. Validation Branch, FAA, 2200 South of a certain other publication listed in Since the FAA issued AD 2001–16– 216th St., Des Moines, WA 98198; this AD as of September 7, 2001 (66 FR 13, the FAA has reviewed Airbus telephone and fax 206–231–3229; email 44295, August 23, 2001). Service Bulletin A330–53–3090, The FAA must receive comments on [email protected]. Revision 03, dated December 11, 2002 this AD by December 28, 2020. SUPPLEMENTARY INFORMATION: (the FAA referred to Airbus Service

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Bulletin A330–53–3090, Revision 02, evaluated all pertinent information and The FAA will also post a report dated January 9, 2001, as the determined the unsafe condition exists summarizing each substantive verbal appropriate source of service and is likely to exist or develop on other contact the FAA receives about this AD. information for accomplishing the products of the same type design. actions required by AD 2001–16–13). Confidential Business Information Requirements of This AD Airbus Service Bulletin A330–53–3090, CBI is commercial or financial Revision 03, dated December 11, 2002, This AD requires a roto-test inspection of fastener holes of certain information that is both customarily and clarifies certain inspection areas and actually treated as private by its owner. specifies no additional work is needed fuselage joints for cracks, reinforcement of the fuselage between frames 31 and Under the Freedom of Information Act for airplanes modified by a previous (FOIA) (5 U.S.C. 552), CBI is exempt revision. The FAA has determined 37.1, and, if necessary, an HFEC from public disclosure. If your Airbus Service Bulletin A330–53–3090, inspection and repair. comments responsive to this AD contain Revision 03, dated December 11, 2002, FAA’s Justification and Determination commercial or financial information is an appropriate source of service of the Effective Date that is customarily treated as private, information for accomplishing the required actions of this AD. There are currently no domestic that you actually treat as private, and operators of these products. Therefore, that is relevant or responsive to this AD, Related IBR Material Under 1 CFR Part the FAA finds that notice and it is important that you clearly designate 51 opportunity for prior public comment the submitted comments as CBI. Please Airbus Service Bulletin A330–53– are unnecessary and that good cause mark each page of your submission 3090, Revision 03, dated December 11, exists for making this amendment containing CBI as ‘‘PROPIN.’’ The FAA 2002. This service information describes effective in less than 30 days. will treat such marked submissions as confidential under the FOIA, and they procedures for a roto-test inspection of Comments Invited fastener holes of certain fuselage joints will not be placed in the public docket for cracks, reinforcement of the fuselage This AD is a final rule that involves of this AD. Submissions containing CBI between frames 31 and 37.1, and, if requirements affecting flight safety, and should be sent to the person identified necessary, an HFEC inspection. the FAA did not precede it by notice in the FOR FURTHER INFORMATION This AD also requires Airbus Service and opportunity for public comment. CONTACT section. Any commentary that Bulletin A330–53–3090, Revision 02, The FAA invites you to send any the FAA receives which is not dated January 9, 2001, which the written relevant data, views, or specifically designated as CBI will be Director of the Federal Register arguments about this AD. Send your placed in the public docket for this approved for incorporation by reference comments to an address listed under the rulemaking. as of September 7, 2001 (66 FR 44295, ADDRESSES section. Include ‘‘Docket No. August 23, 2001). FAA–2020–0970; Project Identifier AD– Regulatory Flexibility Act (RFA) This service information is reasonably 2020–01359–T’’ at the beginning of your comments. The most helpful comments The requirements of the RFA do not available because the interested parties apply when an agency finds good cause have access to it through their normal reference a specific portion of the proposal, explain the reason for any pursuant to 5 U.S.C. 553 to adopt a rule course of business or by the means without prior notice and comment. identified in the ADDRESSES section. recommended change, and include supporting data. Except for Confidential Because the FAA has determined that it FAA’s Determination Business Information (CBI) as described has good cause to adopt this rule This product has been approved by in the following paragraph, and other without notice and comment, RFA the aviation authority of another information as described in 14 CFR analysis is not required. country, and is approved for operation 11.35, the FAA will consider all Costs of Compliance in the United States. Pursuant to the comments received by the closing date FAA’s bilateral agreement with the State and may amend this AD based on those Currently, there are no affected U.S.- of Design Authority, the FAA has been comments. registered airplanes. If an affected notified of the unsafe condition The FAA will post all comments the airplane is imported and placed on the described in the MCAI and service FAA receives, without change, to U.S. Register in the future, the FAA information referenced above. The FAA https://www.regulations.gov, including provides the following cost estimates to is issuing this AD because the FAA any personal information you provide. comply with this AD:

ESTIMATED COSTS FOR REQUIRED ACTIONS

Cost per Labor cost Parts cost product

377 work-hours × $85 per hour = $32,045 ...... $6,187 $38,232

The FAA has received no definitive section 106, describes the authority of that section, Congress charges the FAA data on which to base the cost estimates the FAA Administrator. Subtitle VII: with promoting safe flight of civil for the on-condition actions specified in Aviation Programs, describes in more aircraft in air commerce by prescribing this AD. detail the scope of the Agency’s regulations for practices, methods, and authority. procedures the Administrator finds Authority for This Rulemaking The FAA is issuing this rulemaking necessary for safety in air commerce. Title 49 of the United States Code under the authority described in This regulation is within the scope of specifies the FAA’s authority to issue Subtitle VII, Part A, Subpart III, Section that authority because it addresses an rules on aviation safety. Subtitle I, 44701: General requirements. Under unsafe condition that is likely to exist or

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develop on products identified in this (e) Reason Section, International Validation Branch, rulemaking action. This AD was prompted by a report that FAA, has the authority to approve AMOCs during fatigue testing on the fuselage, cracks for this AD, if requested using the procedures Regulatory Findings were detected in the longitudinal buttstrap at found in 14 CFR 39.19. In accordance with The FAA determined that this AD stringer 9, at frame 31, and at frame 37.1. The 14 CFR 39.19, send your request to your principal inspector or responsible Flight will not have federalism implications FAA is issuing this AD to address fatigue cracking of the fuselage longitudinal Standards Office, as appropriate. If sending under Executive Order 13132. This AD information directly to the Large Aircraft will not have a substantial direct effect buttstrap, which could result in reduced structural integrity of the fuselage. Section, International Validation Branch, on the States, on the relationship send it to the attention of the person between the national government and (f) Compliance identified in paragraph (k)(2) of this AD. the States, or on the distribution of Comply with this AD within the Information may be emailed to: 9-AVS-AIR- power and responsibilities among the compliance times specified, unless already [email protected]. Before using any various levels of government. done. approved AMOC, notify your appropriate For the reasons discussed above, I principal inspector, or lacking a principal (g) Retained Inspection, with New Service inspector, the manager of the responsible certify that this AD: Information Flight Standards Office. (1) Is not a ‘‘significant regulatory This paragraph restates the requirements of (2) Contacting the Manufacturer: For any action’’ under Executive Order 12866, paragraph (a) of AD 2001–16–13, with new requirement in this AD to obtain instructions and service information. Prior to the from a manufacturer, the instructions must (2) Will not affect intrastate aviation accumulation of 15,000 total flight cycles: be accomplished using a method approved in Alaska. Perform a roto-test inspection to detect cracks by the Manager, Large Aircraft Section, of the fastener holes at frame 31, frame 37.1, International Validation Branch, FAA; or the List of Subjects in 14 CFR Part 39 and stringer 9, in accordance with Airbus European Union Aviation Safety Agency Air transportation, Aircraft, Aviation Service Bulletin A330–53–3090, Revision 02, (EASA); or Airbus SAS’s EASA DOA. If safety, Incorporation by reference, dated January 9, 2001; or Airbus Service approved by the DOA, the approval must include the DOA-authorized signature. Safety. Bulletin A330–53–3090, Revision 03, dated December 11, 2002. (3) Required for Compliance (RC): Except Adoption of the Amendment as required by paragraph (j)(2) of this AD: If (h) Retained Reinforcement, With New any service information contains procedures Accordingly, under the authority Service Information or tests that are identified as RC, those delegated to me by the Administrator, This paragraph restates the requirements of procedures and tests must be done to comply the FAA amends 14 CFR part 39 as paragraph (b) of AD 2001–16–13, with new with this AD; any procedures or tests that are follows: service information. If no cracks are detected not identified as RC are recommended. Those during the inspection performed in procedures and tests that are not identified PART 39—AIRWORTHINESS accordance with paragraph (g) of this AD, as RC may be deviated from using accepted DIRECTIVES prior to further flight, reinforce the fuselage methods in accordance with the operator’s structure between frames 31 and 37.1, in maintenance or inspection program without ■ 1. The authority citation for part 39 accordance with Airbus Service Bulletin obtaining approval of an AMOC, provided continues to read as follows: A330–53–3090, Revision 02, dated January 9, the procedures and tests identified as RC can 2001; or Airbus Service Bulletin A330–53– be done and the airplane can be put back in Authority: 49 U.S.C. 106(g), 40113, 44701. 3090, Revision 03, dated December 11, 2002. an airworthy condition. Any substitutions or changes to procedures or tests identified as § 39.13 [Amended] (i) Retained Follow-Up Inspection and RC require approval of an AMOC. Repair, With New Service Information and ■ 2. The FAA amends § 39.13 by: Revised Repair Approval Language (k) Related Information ■ a. Removing airworthiness directive This paragraph restates the requirements of (1) Refer to Mandatory Continuing (AD) 2001–16–13, Amendment 39– paragraph (c) of AD 2001–16–13, with new Airworthiness Information (MCAI) French 12382 (66 FR 44295, August 23, 2001), service information and revised repair airworthiness directive 2001–075(B), dated and approval language. If any crack is detected March 17, 2001, for related information. This ■ b. Adding the following new AD: during the inspection performed in MCAI may be found in the AD docket on the 2020–22–09 Airbus SAS: Amendment 39– accordance with paragraph (g) of this AD, internet at https://www.regulations.gov by 21305; Docket No. FAA–2020–0970; prior to further flight, perform a high searching for and locating Docket No. FAA– Project Identifier AD–2020–01359–T. frequency eddy current (HFEC) inspection to 2020–0970. determine the crack length, in accordance (2) For more information about this AD, (a) Effective Date with Airbus Service Bulletin A330–53–3090, contact Vladimir Ulyanov, Aerospace This AD is effective November 25, 2020. Revision 02, dated January 9, 2001; or Airbus Engineer, Large Aircraft Section, Service Bulletin A330–53–3090, Revision 03, International Validation Branch, FAA, 2200 (b) Affected ADs dated December 11, 2002. Prior to further South 216th St., Des Moines, WA 98198; This AD replaces AD 2001–16–13, flight, repair the crack in accordance with a telephone and fax 206–231–3229; email Amendment 39–12382 (66 FR 44295, August method approved by the Direction Ge´ne´rale [email protected]. 23, 2001) (‘‘AD 2001–16–13’’). de l’Aviation Civile (or its delegated agent) or using a method approved by the Manager, (l) Material Incorporated by Reference (c) Applicability Large Aircraft Section, International (1) The Director of the Federal Register This AD applies to Airbus SAS Model Validation Branch, FAA; or the European approved the incorporation by reference A330–301, –321, –322, –323, –341, –342, and Union Aviation Safety Agency (EASA); or (IBR) of the service information listed in this –343 airplanes, certificated in any category, Airbus SAS’s EASA Design Organization paragraph under 5 U.S.C. 552(a) and 1 CFR except airplanes on which Airbus Industrie Approval (DOA). If approved by the DOA, part 51. Modification 46636 has been accomplished the approval must include the DOA- (2) You must use this service information in production or which have been modified authorized signature. as applicable to do the actions required by in service as specified in Airbus Service this AD, unless this AD specifies otherwise. Bulletin A330–53–3090. (j) Other FAA AD Provisions (3) The following service information was The following provisions also apply to this approved for IBR on November 25, 2020. (d) Subject AD: (i) Airbus Service Bulletin A330–53–3090, Air Transport Association (ATA) of (1) Alternative Methods of Compliance Revision 03, dated December 11, 2002. America Code 53, Fuselage. (AMOCs): The Manager, Large Aircraft (ii) [Reserved]

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(4) The following service information was manufacturer. The FAA is issuing this usage hours to the PGB shaft and carrier approved for IBR on September 7, 2001 (66 AD to address the unsafe condition on assembly at the next engine shop visit FR 44295, August 23, 2001). these products. and replacement of PGB shaft and (i) Airbus Service Bulletin A330–53–3090, carrier assemblies before exceeding the Revision 02, dated January 9, 2001. DATES: This AD is effective December (ii) [Reserved] 15, 2020. new life limits established by the (5) For service information identified in The Director of the Federal Register manufacturer. The FAA is issuing this this AD, contact Airbus SAS, Airworthiness approved the incorporation by reference AD to address the unsafe condition on Office—EAL, Rond-Point Emile Dewoitine of certain publications listed in this AD these products. No: 2, 31700 Blagnac Cedex, France; as of December 15, 2020. telephone +33 5 61 93 36 96; fax +33 5 61 Comments ADDRESSES: For service information 93 45 80; email airworthiness.A330-A340@ identified in this final rule, contact The FAA gave the public the airbus.com; internet https://www.airbus.com. opportunity to participate in developing (6) You may view this service information Rolls-Royce Corporation, 450 South Meridian Street, Mail Code NB–01–06, this final rule. The FAA received no at the FAA, Airworthiness Products Section, comments on the NPRM or on the Operational Safety Branch, 2200 South 216th , IN 46225; phone: 317– St., Des Moines, WA. For information on the 230–1667; email: CMSEindyOSD@rolls- determination of the cost to the public. availability of this material at the FAA, call royce.com; internet: www.rolls- Conclusion 206–231–3195. royce.com. You may view this service (7) You may view this service information The FAA reviewed the relevant data information at the FAA, Airworthiness and determined that air safety and the that is incorporated by reference at the Products Section, Operational Safety National Archives and Records public interest require adopting this AD Administration (NARA). For information on Branch, 1200 District Avenue, as proposed except for minor editorial the availability of this material at NARA, Burlington, MA 01803. For information changes. The FAA has determined that email [email protected], or go to: https:// on the availability of this material at the these minor changes: www.archives.gov/federal-register/cfr/ibr- FAA, call 781–238–7759. It is also • Are consistent with the intent that locations.html. available on the internet at https:// was proposed in the NPRM for Issued on October 26, 2020. www.regulations.gov by searching for addressing the unsafe condition; and Lance T. Gant, and locating Docket No. FAA–2020– • Do not add any additional burden 0687. Director, Compliance & Airworthiness upon the public than was already Division, Aircraft Certification Service. Examining the AD Docket proposed in the NPRM. [FR Doc. 2020–24855 Filed 11–9–20; 8:45 am] You may examine the AD docket on Related Service Information Under 1 BILLING CODE 4910–13–P the internet at https:// CFR Part 51 www.regulations.gov by searching for The FAA reviewed RRC Alert Service and locating Docket No. FAA–2020– DEPARTMENT OF TRANSPORTATION Bulletin (ASB) AE 2100A–A–72–322/AE 0687; or in person at Docket Operations 2100P–A–72–047, Revision 1 (single Federal Aviation Administration between 9 a.m. and 5 p.m., Monday document), dated May 11, 2018, and through Friday, except Federal holidays. RRC ASB AE 2100D2–A–72–111/AE 14 CFR Part 39 The AD docket contains this final rule, 2100D3–A–72–313/AE 2100J–A–72– any comments received, and other 111, Revision 1 (single document), [Docket No. FAA–2020–0687; Project information. The address for Docket dated May 28, 2018. RRC ASB AE Identifier AD–2020–00571–E; Amendment Operations is U.S. Department of 39–21314; AD 2020–22–18] 2100A–A–72–322/AE 2100P–A–72–047 Transportation, Docket Operations, M– describes procedures for assigning usage RIN 2120–AA64 30, West Building Ground Floor, Room hours to the PGB shaft and carrier W12–140, 1200 New Jersey Avenue SE, assemblies on RRC AE 2100A and AE Airworthiness Directives; Rolls-Royce Washington, DC 20590. 2100P model engines. RRC ASB AE Corporation (Type Certificate FOR FURTHER INFORMATION CONTACT: Kyri 2100D2–A–72–111/AE 2100D3–A–72– Previously Held by Allison Engine Zaroyiannis, Aerospace Engineer, 313/AE 2100J–A–72–111 describes Company) Turboprop Engines ACO Branch, FAA, 2300 East procedures for verifying the PGB shaft AGENCY: Federal Aviation Devon Avenue, Des Plaines, IL 60018; and carrier assembly serial numbers and Administration (FAA), DOT. phone: 847–294–7836; fax: 847–294– assigning usage hours to the PGB shaft ACTION: Final rule. 7834; email: [email protected]. and carrier assemblies on RRC AE SUPPLEMENTARY INFORMATION: 2100D2 and AE 2100D2A model SUMMARY: The FAA is adopting a new engines. This service information is Background airworthiness directive (AD) for all reasonably available because the Rolls-Royce Corporation (RRC) AE The FAA issued a notice of proposed interested parties have access to it 2100A, AE 2100D2, AE 2100D2A, and rulemaking (NPRM) to amend 14 CFR through their normal course of business AE 2100P model turboprop engines. part 39 by adding an AD that would or by the means identified in the This AD was prompted by a report of a apply to all RRC AE 2100A, AE 2100D2, ADDRESSES section. propeller gearbox (PGB) development AE 2100D2A, and AE 2100P model test conducted by the manufacturer, in turboprop engines. The NPRM Other Related Service Information which high vibration occurred due to a published in the Federal Register on The FAA reviewed Task 05–10–00– fatigue crack that initiated in the PGB August 11, 2020 (85 FR 48482). The 800–801 of RRC AE 2100A Engine shaft and carrier assembly. This AD NPRM was prompted by a report of a Maintenance Manual (MM) CSP31005, requires assignment of usage hours to PGB development test conducted by the Revision 57, dated August 15, 2019, and the PGB shaft and carrier assembly at manufacturer, in which high vibration Task 05–12–11–800–802 of RRC AE the next engine shop visit and occurred due to a fatigue crack that 2100A Engine MM CSP31005, Revision replacement of PGB shaft and carrier initiated in the PGB shaft and carrier 57, dated August 15, 2019. Task 05–10– assemblies prior to exceeding the new assembly. In the NPRM, the FAA 00–800–801 of RRC AE 2100A Engine life limits established by the proposed to require the assignment of MM provides information for

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determining the usage hours and engine AE 2100D2 and AE 2100D2A Engine information for determining the usage cycles for each life-limited part on RRC MM provides information for hours and engine cycles for each life- AE 2100A model engines. Task 05–12– determining the usage hours and engine limited part on RRC AE 2100P model 11–800–802 of RRC AE 2100A Engine cycles for each life-limited part on RRC engines. Task 05–12–11–800–802 of MM specifies the PGB shaft and carrier AE 2100D2 and AE 2100D2A model RRC AE 2100P Engine MM specifies the assembly life limits. engines. Task 05–12–11–800–802 of PGB shaft and carrier assembly life The FAA reviewed Task 05–11–00– RRC AE 2100D2 and AE 2100D2A limits. 800–801 of RRC AE 2100D2 and AE Engine MM specifies the PGB shaft and Costs of Compliance 2100D2A Engine MM CSP34081, carrier assembly life limits. Revision 64, dated June 1, 2020, and The FAA reviewed Task 05–10–00– The FAA estimates that this AD Task 05–12–11–800–802 of RRC AE 800–801 of RRC AE 2100P Engine MM affects 18 engines installed on airplanes 2100D2 and AE 2100D2A Engine MM CSP31015, Revision 15, dated May 15, of U.S. registry. CSP34081, Revision 64, dated June 1, 2018. Task 05–10–00–800–801 of RRC The FAA estimates the following 2020. Task 05–11–00–800–801 of RRC AE 2100P Engine MM provides costs to comply with this AD:

ESTIMATED COSTS

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

Assign usage hours to PGB shaft and carrier 3 work-hours × $85 per hour = $255 ...... $0 $255 $4,590 assembly. Remove and replace PGB shaft and carrier 15 work-hours × $85 per hour = $1,275 ...... 49,952 51,227 922,086 assembly.

Authority for This Rulemaking (3) Will not have a significant previously held by Allison Engine Company) Title 49 of the United States Code economic impact, positive or negative, AE 2100A, AE 2100D2, AE 2100D2A, and AE 2100P model turboprop engines. specifies the FAA’s authority to issue on a substantial number of small entities rules on aviation safety. Subtitle I, under the criteria of the Regulatory (d) Subject Flexibility Act. section 106, describes the authority of Joint Aircraft System Component (JASC) the FAA Administrator. Subtitle VII: List of Subjects in 14 CFR Part 39 Code 7210, Engine Reduction Gear. Aviation Programs, describes in more Air transportation, Aircraft, Aviation detail the scope of the Agency’s (e) Unsafe Condition safety, Incorporation by reference, authority. This AD was prompted by a report of a Safety. The FAA is issuing this rulemaking propeller gearbox (PGB) development test in under the authority described in Adoption of the Amendment which high vibration occurred due to a Subtitle VII, Part A, Subpart III, Section Accordingly, under the authority fatigue crack that initiated in the propeller 44701: ‘‘General requirements.’’ Under delegated to me by the Administrator, shaft. The FAA is issuing this AD to prevent loss of the propeller. The unsafe condition, that section, Congress charges the FAA the FAA amends 14 CFR part 39 as if not addressed, could result in damage to with promoting safe flight of civil follows: aircraft in air commerce by prescribing the engine and damage to the airplane. regulations for practices, methods, and PART 39—AIRWORTHINESS (f) Compliance procedures the Administrator finds DIRECTIVES necessary for safety in air commerce. Comply with this AD within the This regulation is within the scope of ■ 1. The authority citation for part 39 compliance times specified, unless already done. that authority because it addresses an continues to read as follows: unsafe condition that is likely to exist or Authority: 49 U.S.C. 106(g), 40113, 44701. (g) Required Actions develop on products identified in this (1) No later than the next shop visit for the § 39.13 [Amended] rulemaking action. engine with the PGB, or the next shop visit ■ Regulatory Findings 2. The FAA amends § 39.13 by adding for the PGB only, whichever shop visit the following new airworthiness occurs first after the effective date of this AD, This AD will not have federalism directive (AD): assign usage hours to the installed PGB shaft implications under Executive Order and carrier assembly using RRC Alert Service 13132. This AD will not have a 2020–22–18 Rolls-Royce Corporation (Type Certificate previously held by Allison Bulletin (ASB) AE 2100A–A–72–322/AE substantial direct effect on the States, on Engine Company): Amendment 39– 2100P–A–72–047, Revision 1 (single the relationship between the national 21314; Docket No. FAA–2020–0687; document), dated May 11, 2018, or RRC ASB government and the States, or on the Project Identifier AD–2020–00571–E. AE 2100D2–A–72–111/AE 2100D3–A–72– distribution of power and 313/AE 2100J–A–72–111, Revision 1 (single (a) Effective Date responsibilities among the various document), dated May 28, 2018. levels of government. This AD is effective December 15, 2020. (2) After the effective date of this AD, For the reasons discussed above, I (b) Affected ADs before exceeding the life limit (usage hours) certify that this AD: None. specified in Table 1 to paragraph (g)(2) (Table (1) Is not a ‘‘significant regulatory 1) of this AD, remove the PGB shaft and action’’ under Executive Order 12866, (c) Applicability carrier assembly, identified by part numbers (2) Will not affect intrastate aviation This AD applies to all Rolls-Royce (P/Ns) in Table 1, from service and replace in Alaska, and Corporation (RRC) (Type Certificate with a part eligible for installation.

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(h) No Reporting Requirement (IBR) of the service information listed in this DEPARTMENT OF TRANSPORTATION The reporting requirements in RRC ASB paragraph under 5 U.S.C. 552(a) and 1 CFR AE 2100A–A–72–322/AE 2100P–A–72–047, part 51. Federal Aviation Administration Revision 1 (single document), dated May 11, (2) You must use this service information 2018, and RRC ASB AE 2100D2–A–72–111/ as applicable to do the actions required by 14 CFR Part 71 AE 2100D3–A–72–313/AE 2100J–A–72–111, this AD, unless the AD specifies otherwise. [Docket No. FAA–2020–0734; Airspace Revision 1 (single document), dated May 28, (i) Rolls-Royce Corporation (RRC) Alert Docket No. 20–AGL–29] 2018, are not required by this AD. Service Bulletin (ASB) AE 2100A–A–72–322/ (i) Credit for Previous Actions AE 2100P–A–72–047, Revision 1 (single RIN 2120–AA66 You may take credit for assigning the usage document), dated May 11, 2018. hours required by paragraph (g) of this AD if (ii) RRC ASB AE 2100D2–A–72–111/AE Revocation of Class E Airspace; you performed the action before the effective 2100D3–A–72–313/AE 2100J–A–72–111, Delavan, WI date of this AD using RRC ASB AE 2100A– Revision 1 (single document), dated May 28, AGENCY: Federal Aviation A–72–322/AE 2100P–A–72–047, original 2018. Administration (FAA), DOT. issue (single document), dated January 15, (3) For RRC service information identified 2018, or RR AE 2100D2–A–72–111/AE in this AD, contact Rolls-Royce Corporation, ACTION: Final rule. 2100D3–A–72–313/AE 2100J–A–72–111, 450 South Meridian Street, Mail Code NB– original issue (single document), dated SUMMARY: This action revokes the Class 01–06, Indianapolis, IN 46225; phone: 317– January 15, 2018. 230–1667; email: CMSEindyOSD@rolls- E airspace extending upward from 700 (j) Alternative Methods of Compliance royce.com; internet: www.rolls-royce.com. feet above the surface at Lake Lawn (AMOCs) (4) You may view this service information Airport, Delavan, WI, due to the (1) The Manager, Chicago ACO Branch, at FAA, Airworthiness Products Section, cancellation of the instrument FAA, has the authority to approve AMOCs Operational Safety Branch, 1200 District procedures at that airport and the for this AD, if requested using the procedures Avenue, Burlington, MA 01803. For airspace no longer being required. found in 14 CFR 39.19. In accordance with information on the availability of this DATES: Effective 0901 UTC, February 25, 14 CFR 39.19, send your request to your material at the FAA, call 781–238–7759. 2021. The Director of the Federal principal inspector or local Flight Standards (5) You may view this service information Register approves this incorporation by District Office, as appropriate. If sending information directly to the manager of the that is incorporated by reference at the reference action under Title 1 Code of certification office, send it to the attention of National Archives and Records Federal Regulations part 51, subject to the person identified in paragraph (k). Administration (NARA). For information on the annual revision of FAA Order (2) Before using any approved AMOC, the availability of this material at NARA, 7400.11 and publication of conforming notify your appropriate principal inspector, email: [email protected], or go to: amendments. or lacking a principal inspector, the manager https://www.archives.gov/federal-register/cfr/ ADDRESSES: FAA Order 7400.11E, of the local flight standards district office/ ibr-locations.html. Airspace Designations and Reporting certificate holding district office. Issued on October 23, 2020. Points, and subsequent amendments can (k) Related Information Lance T. Gant, be viewed online at https:// For more information about this AD, www.faa.gov/air_traffic/publications/. Director, Compliance & Airworthiness contact Kyri Zaroyiannis, Aerospace Division, Aircraft Certification Service. For further information, you can contact Engineer, Chicago ACO Branch, FAA, 2300 the Airspace Policy Group, Federal East Devon Avenue, Des Plaines, IL 60018; [FR Doc. 2020–24865 Filed 11–9–20; 8:45 am] Aviation Administration, 800 phone: 847–294–7836; fax: 847–294–7834; BILLING CODE 4910–13–P Independence Avenue SW, Washington, email: [email protected]. DC 20591; telephone: (202) 267–8783. (l) Material Incorporated by Reference The Order is also available for (1) The Director of the Federal Register inspection at the National Archives and approved the incorporation by reference Records Administration (NARA). For

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information on the availability of FAA Class A, B, C, D, and E airspace areas, PART 71—DESIGNATION OF CLASS A, Order 7400.11E at NARA, email air traffic service routes, and reporting B, C, D, AND E AIRSPACE AREAS; AIR [email protected] or go to https:// points. TRAFFIC SERVICE ROUTES; AND www.archives.gov/federal-register/cfr/ REPORTING POINTS ibr-locations.html. The Rule ■ FOR FURTHER INFORMATION CONTACT: This amendment to Title 14 Code of 1. The authority citation for part 71 Jeffrey Claypool, Federal Aviation Federal Regulations (14 CFR) part 71 continues to read as follows: Administration, Operations Support revokes the Class E airspace extending Authority: 49 U.S.C. 106(f), 106(g); 40103, Group, Central Service Center, 10101 upward from 700 feet above the surface 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, Hillwood Parkway, Fort Worth, TX Lake Lawn Airport, Delavan, WI, as this 1959–1963 Comp., p. 389. 76177; telephone (817) 222–5711. airspace no longer being required. § 71.1 [Amended] SUPPLEMENTARY INFORMATION: This action is the result of the ■ 2. The incorporation by reference in Authority for This Rulemaking cancellation of instrument procedures at 14 CFR 71.1 of FAA Order 7400.11E, The FAA’s authority to issue rules this airport. Airspace Designations and Reporting regarding aviation safety is found in FAA Order 7400.11, Airspace Points, dated July 21, 2020, and Title 49 of the United States Code. Designations and Reporting Points, is effective September 15, 2020, is Subtitle I, Section 106 describes the published yearly and effective on amended as follows: authority of the FAA Administrator. September 15. Paragraph 6005 Class E Airspace Areas Subtitle VII, Aviation Programs, Regulatory Notices and Analyses Extending Upward From 700 Feet or More describes in more detail the scope of the Above the Surface of the Earth. agency’s authority. This rulemaking is The FAA has determined that this * * * * * promulgated under the authority regulation only involves an established AGL WI E5 Delavan, WI [Remove] described in Subtitle VII, Part A, body of technical regulations for which Subpart I, Section 40103. Under that frequent and routine amendments are section, the FAA is charged with Issued in Fort Worth, Texas, on November necessary to keep them operationally 4, 2020. prescribing regulations to assign the use current, is non-controversial and of airspace necessary to ensure the Martin A. Skinner, unlikely to result in adverse or negative safety of aircraft and the efficient use of Acting Manager, Operations Support Group, comments. It, therefore: (1) Is not a airspace. This regulation is within the ATO Central Service Center. ‘‘significant regulatory action’’ under scope of that authority as it revokes the [FR Doc. 2020–24810 Filed 11–9–20; 8:45 am] Executive Order 12866; (2) is not a Class E airspace extending upward from BILLING CODE 4910–13–P ‘‘significant rule’’ under DOT 700 feet above the surface at Lake Lawn Regulatory Policies and Procedures (44 Airport, Delavan, WI, due to the FR 11034; February 26, 1979); and (3) cancellation of the instrument DEPARTMENT OF TRANSPORTATION procedures at this airport. does not warrant preparation of a regulatory evaluation as the anticipated Federal Aviation Administration History impact is so minimal. Since this is a The FAA published a notice of routine matter that only affects air traffic 14 CFR Part 71 proposed rulemaking in the Federal procedures and air navigation, it is certified that this rule, when [Docket No. FAA–2020–0708; Airspace Register (85 FR 49609; August 14, 2020) Docket No. 20–ACE–14] for Docket No. FAA–2020–0734 to promulgated, does not have a significant revoke the Class E airspace extending economic impact on a substantial RIN 2120–AA66 upward from 700 feet above the surface number of small entities under the at Lake Lawn Airport, Delavan, WI. criteria of the Regulatory Flexibility Act. Amendment of Class D and Class E Interested parties were invited to Environmental Review Airspace; Waterloo, IA participate in this rulemaking effort by AGENCY: Federal Aviation submitting written comments on the The FAA has determined that this Administration (FAA), DOT. proposal to the FAA. No comments action qualifies for categorical exclusion were received. under the National Environmental ACTION: Final rule. Class E airspace designations are Policy Act in accordance with FAA published in paragraph 6005 of FAA SUMMARY: This action amends the Class Order 1050.1F, ‘‘Environmental D and Class E airspace at Waterloo Order 7400.11E, dated July 21, 2020, Impacts: Policies and Procedures,’’ and effective September 15, 2020, which Regional Airport, Waterloo, IA. This paragraph 5–6.5.a. This airspace action action is the result of an airspace review is incorporated by reference in 14 CFR is not expected to cause any potentially 71.1. The Class E airspace designations due to the closure of 6/24 at significant environmental impacts, and Waterloo Regional Airport. The names listed in this document will be no extraordinary circumstances exist published subsequently in the Order. and geographic coordinates of the that warrant preparation of an airport and navigational aids are also Availability and Summary of environmental assessment. being updated to coincide with the Documents for Incorporation by Lists of Subjects in 14 CFR Part 71 FAA’s aeronautical database. Reference DATES: Effective 0901 UTC, February 25, This document amends FAA Order Airspace, Incorporation by reference, 2021. The Director of the Federal 7400.11E, Airspace Designations and Navigation (air). Register approves this incorporation by Reporting Points, dated July 21, 2020, Adoption of the Amendment reference action under Title 1 Code of and effective September 15, 2020. FAA Federal Regulations part 51, subject to Order 7400.11E is publicly available as In consideration of the foregoing, the the annual revision of FAA Order listed in the ADDRESSES section of this Federal Aviation Administration 7400.11 and publication of conforming document. FAA Order 7400.11E lists amends 14 CFR part 71 as follows: amendments.

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ADDRESSES: FAA Order 7400.11E, 6004, and 6005, respectively, of FAA by removing the extension southeast of Airspace Designations and Reporting Order 7400.11E, dated July 21, 2020, the airport, as it is no longer needed; Points, and subsequent amendments can and effective September 15, 2020, which adds an extension 2.4 miles each side of be viewed online at https:// is incorporated by reference in 14 CFR the 313° radial of the Waterloo VOR/ www.faa.gov/air_traffic/publications/. 71.1. The Class D and E airspace DME extending from the 6.8-mile radius For further information, you can contact designations listed in this document of the Waterloo Regional Airport to 7 the Airspace Policy Group, Federal will be published subsequently in the miles northwest of the Waterloo VOR/ Aviation Administration, 800 Order. DME; adds an extension 2.4 miles each side of the 356° radial of the Waterloo Independence Avenue SW, Washington, Availability and Summary of DC 20591; telephone: (202) 267–8783. Documents for Incorporation by VOR/DME extending from the 6.8-mile The Order is also available for Reference radius of the Waterloo Regional Airport inspection at the National Archives and to 7 miles northwest of the Waterloo Records Administration (NARA). For This document amends FAA Order VOR/DME; and updates the name and information on the availability of FAA 7400.11E, Airspace Designations and geographic coordinates of the Waterloo Order 7400.11E at NARA, email: Reporting Points, dated July 21, 2020, Regional Airport (previously Waterloo [email protected] or go to https:// and effective September 15, 2020. FAA Municipal Airport) and the name of the www.archives.gov/federal-register/cfr/ Order 7400.11E is publicly available as Waterloo VOR/DME (previously ibr-locations.html. listed in the ADDRESSES section of this Waterloo VORTAC) to coincide with the document. FAA Order 7400.11E lists FOR FURTHER INFORMATION CONTACT: FAA’s aeronautical database. Class A, B, C, D, and E airspace areas, Jeffrey Claypool, Federal Aviation This action is due to an airspace air traffic service routes, and reporting Administration, Operations Support review caused by the closure of runway points. Group, Central Service Center, 10101 6/24 at Waterloo Regional Airport. Hillwood Parkway, Fort Worth, TX The Rule FAA Order 7400.11, Airspace 76177; telephone (817) 222–5711. Designations and Reporting Points, is This amendment to Title 14 Code of published yearly and effective on SUPPLEMENTARY INFORMATION: Federal Regulations (14 CFR) part 71: September 15. Amends the Class D airspace at Authority for This Rulemaking Waterloo Regional Airport, Waterloo, Regulatory Notices and Analyses The FAA’s authority to issue rules IA, by updating the name (previously The FAA has determined that this regarding aviation safety is found in Waterloo Municipal Airport) and regulation only involves an established Title 49 of the United States Code. geographic coordinates of the airport to body of technical regulations for which Subtitle I, Section 106 describes the coincide with the FAA’s aeronautical frequent and routine amendments are authority of the FAA Administrator. database; and replaces the outdated necessary to keep them operationally Subtitle VII, Aviation Programs, term ‘‘Airport/Facility Directory’’ with current, is non-controversial and describes in more detail the scope of the ‘‘Chart Supplement’’; unlikely to result in adverse or negative agency’s authority. This rulemaking is Amends the Class E surface area comments. It, therefore: (1) Is not a promulgated under the authority Waterloo Regional Airport by updating ‘‘significant regulatory action’’ under described in Subtitle VII, Part A, the name (previously Waterloo Executive Order 12866; (2) is not a Subpart I, Section 40103. Under that Municipal Airport) and geographic ‘‘significant rule’’ under DOT section, the FAA is charged with coordinates of the airport to coincide Regulatory Policies and Procedures (44 prescribing regulations to assign the use with the FAA’s aeronautical database; FR 11034; February 26, 1979); and (3) of airspace necessary to ensure the and replaces the outdated term does not warrant preparation of a safety of aircraft and the efficient use of ‘‘Airport/Facility Directory’’ with ‘‘Chart regulatory evaluation as the anticipated airspace. This regulation is within the Supplement’’; impact is so minimal. Since this is a scope of that authority as it amends the Amends the Class E airspace area routine matter that only affects air traffic Class D airspace, Class E surface designated as an extension to Class D procedures and air navigation, it is airspace, Class E airspace area and Class E surface airspace at Waterloo certified that this rule, when designated as an extension to Class D Regional Airport by removing the promulgated, does not have a significant and Class E surface airspace, and Class extensions east, south, and southwest of economic impact on a substantial E airspace extending upward from 700 the VORTAC, as they are no longer number of small entities under the feet above the surface at Waterloo needed; adds an extension within 1 mile criteria of the Regulatory Flexibility Act. Regional Airport, IA, to support each side of the 128° bearing from the instrument flight rule operations at this Waterloo Regional: RWY 12–LOC Environmental Review airport. extending from the 4.3-mile radius of The FAA has determined that this the Waterloo Regional Airport to 4.4 History action qualifies for categorical exclusion miles southeast of the Waterloo under the National Environmental The FAA published a notice of Regional Airport; amends the extension Policy Act in accordance with FAA proposed rulemaking in the Federal north of the VOR/DME to the 356° radial Order 1050.1F, ‘‘Environmental Register (85 FR 49607; August 14, 2020) (previously 351° radial); and updates Impacts: Policies and Procedures,’’ for Docket No. FAA–2020–0708 to the name and geographic coordinates of paragraph 5–6.5.a. This airspace action amend the Class D and Class E airspace the Waterloo Regional Airport is not expected to cause any potentially at Waterloo Regional Airport, Waterloo, (previously Waterloo Municipal significant environmental impacts, and IA. Interested parties were invited to Airport) and the name of the Waterloo no extraordinary circumstances exist participate in this rulemaking effort by VOR/DME (previously Waterloo that warrant preparation of an submitting written comments on the VORTAC) to coincide with the FAA’s environmental assessment. proposal to the FAA. No comments aeronautical database; were received. And amends the Class E airspace Lists of Subjects in 14 CFR Part 71 Class D and E airspace designations extending upward from 700 feet above Airspace, Incorporation by reference, are published in paragraph 5000, 6002, the surface at Waterloo Regional Airport Navigation (air).

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Adoption of the Amendment and within 2.4 miles each side of the 313° The interim rule would also establish a radial from the Waterloo VOR/DME procedure by which the public may In consideration of the foregoing, the extending from the 4.3-mile radius of the Federal Aviation Administration petition HUD for the withdrawal or Waterloo Regional Airport to 7 miles modification of guidance documents, amends 14 CFR part 71 as follows: northwest of the Waterloo VOR/DME, and within 2.4 miles each side of the 356° radial and the process for the public to make PART 71—DESIGNATION OF CLASS A, from the Waterloo VOR/DME extending from comments on certain significant B, C, D, AND E AIRSPACE AREAS; AIR the 4.3-mile radius of the Waterloo Regional guidance documents. TRAFFIC SERVICE ROUTES; AND Airport to 7 miles north of the Waterloo DATES: REPORTING POINTS VOR/DME. Effective Date: December 10, 2020. Comment Due Date: January 11, 2021. ■ 1. The authority citation for part 71 Paragraph 6005 Class E Airspace Areas Extending Upward From 700 Feet or More ADDRESSES: Interested persons are continues to read as follows: Above the Surface of the Earth. invited to submit comments regarding Authority: 49 U.S.C. 106(f), 106(g); 40103, * * * * * this rule to the Regulations Division, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, Office of General Counsel, Department 1959–1963 Comp., p. 389. ACE IA E5 Waterloo, IA [Amended] of Housing and Urban Development, Waterloo Regional Airport, IA § 71.1 [Amended] 451 7th Street SW, Room 10276, (Lat. 42°33′26″ N, long. 92°24′01″ W) Washington, DC 20410–0500. All ■ 2. The incorporation by reference in Waterloo VOR/DME ° ′ ″ ° ′ ″ submissions must refer to the above 14 CFR 71.1 of FAA Order 7400.11E, (Lat. 42 33 23 N, long. 92 23 56 W) docket number and title. There are two Airspace Designations and Reporting That airspace extending upward from 700 methods for submitting public Points, dated July 21, 2020, and feet above the surface within a 6.8-mile comments. effective September 15, 2020, is radius of Waterloo Regional Airport, and ° 1. Submission of Comments by Mail. amended as follows: within 2.4 miles each side of the 313 radial from the Waterloo VOR/DME extending from Comments may be submitted by mail to Paragraph 5000 Class D Airspace. the 6.8-mile radius of the Waterloo Regional the Regulations Division, Office of * * * * * Airport to 7 miles northwest of the Waterloo General Counsel, Department of VOR/DME, and within 2.4 miles each side of Housing and Urban Development, 451 ACE IA D Waterloo, IA [Amended] the 356° radial from the Waterloo VOR/DME 7th Street SW, Room 10276, Waterloo Regional Airport, IA extending from the 6.8-mile radius of the Washington, DC 20410–0500. (Lat. 42°33′26″ N, long. 92°24′01″ W) Waterloo Regional Airport to 7 miles north of 2. Electronic Submission of That airspace extending upward from the the Waterloo VOR/DME. Comments. Interested persons may surface to and including 3,400 feet MSL Issued in Fort Worth, Texas, on November submit comments electronically through within a 4.3-mile radius of Waterloo Regional 4, 2020. the Federal eRulemaking Portal at Airport. This Class D airspace area is Martin A. Skinner, www.regulations.gov. HUD strongly effective during the specific dates and times established in advance by a Notice to Acting Manager, Operations Support Group, encourages commenters to submit Airmen. The effective date and times will ATO Central Service Center. comments electronically. Electronic thereafter be continuously published in the [FR Doc. 2020–24809 Filed 11–9–20; 8:45 am] submission of comments allows the Chart Supplement. BILLING CODE 4910–13–P commenter maximum time to prepare and submit a comment, ensures timely Paragraph 6002 Class E Airspace Areas Designated as a Surface Area. receipt by HUD, and enables HUD to make them immediately available to the * * * * * DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT public. Comments submitted ACE IA E2 Waterloo, IA [Amended] electronically through the Waterloo Regional Airport, IA 24 CFR Part 11 www.regulations.gov website can be (Lat. 42°33′26″ N, long. 92°24′01″ W) viewed by other commenters and [Docket No. FR–6192–I–01] Within a 4.3-mile radius of Waterloo interested members of the public. Regional Airport. This Class E airspace area RIN 2501–AD93 Commenters should follow the is effective during the specific dates and instructions provided on that site to times established in advance by a Notice to Implementing Executive Order 13891; submit comments electronically. Airmen. The effective date and time will Promoting the Rule of Law Through thereafter be continuously published in the Improved Agency Guidance Note: To receive consideration as public Chart Supplement. comments, comments must be submitted Documents through one of the two methods specified Paragraph 6004 Class E Airspace Areas AGENCY: Office of General Counsel, above. Again, all submissions must refer to Designated as an Extension to a Class D or the docket number and title of the rule. Class E Surface Area. HUD. ACTION: Interim final rule. No Facsimile Comments. Facsimile * * * * * (fax) comments are not acceptable. ACE IA E4 Waterloo, IA [Amended] SUMMARY: This interim rule implements Public Inspection of Public Waterloo Regional Airport, IA Executive Order (E.O.) 13891, Comments. All properly submitted (Lat. 42°33′26″ N, long. 92°24′01″ W) ‘‘Promoting the Rule of Law Through comments and communications Waterloo Regional: RWY 12–LOC Improved Agency Guidance submitted to HUD will be available for (Lat. 42°32′55″ N, long. 92°22′53″ W) Documents.’’ This E.O. requires Federal public inspection and copying between Waterloo VOR/DME agencies to publish regulations that 8 a.m. and 5 p.m., weekdays, at the establish processes and procedures for above address. Due to security measures (Lat. 42°33′23″ N, long. 92°23′56″ W) issuing guidance documents. The at the HUD Headquarters building, an That airspace extending upward from the interim rule would create a new part 11 appointment to review the public surface within 1 mile each side of the 128° bearing from the Waterloo Regional: RWY in title 24 of the Code of Federal comments must be scheduled in 12–LOC extending from the 4.3-mile radius Regulations (CFR) that outlines HUD advance by calling the Regulations of the Waterloo Regional Airport to 4.4-miles policy on guidance documents and how Division at 202–708–3055 (this is not a southeast of the Waterloo Regional Airport, HUD designates guidance documents. toll-free number). Individuals with

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speech or hearing impairments may sometimes used this authority to modification of a particular guidance access this number via TTY by calling regulate the public without following document; and the Federal Relay Service at 800–877– the notice and comment rulemaking • Establishing procedures for the 8339 (this is a toll-free number). Copies procedures of the APA. As a result, E.O. issuance of significant guidance of all comments submitted are available 13891 reaffirms Executive Branch policy documents unless the OIRA for inspection and downloading at that, consistent with applicable law and Administrator and the agency agree that www.regulations.gov. except as authorized by law or exigency, safety, health, or other compelling cause warrants an FOR FURTHER INFORMATION CONTACT: incorporated into a contract, Federal exemption from some or all of Aaron Santa Anna, Associate General agencies treat guidance documents as non-binding both in law and practice. requirements. These procedures Counsel, Office of Legislation and include: Affording the public not less Regulation, Office of General Counsel, To further this policy, E.O. 13891 requires that each Federal agency take than 30 days for the submission of Department of Housing and Urban comments, unless the agency for good Development, 451 7th Street SW, Room certain actions to ensure the transparent availability and use of guidance cause finds that notice and public 10282, Washington, DC 20410; comment thereon are impracticable, telephone number 202–708–1793 (this documents; to treat guidance documents as non-binding in law and practice, to unnecessary, or contrary to the public is not a toll-free number). Individuals interest; requiring the approval of an with hearing or speech impediments the extent consistent with applicable law; and to take public input into agency head or component head may access this number via TTY by appointed by the President; and calling the Federal Relay Service during account when appropriate in formulating or modifying significant requiring OIRA review of the guidance working hours at 1–800–877–8339 (this under E.O. 12866 (Regulatory Planning guidance documents. Pursuant to is a toll-free number). and Review). section 6 of E.O. 13891, the Office of SUPPLEMENTARY INFORMATION: Significant guidance documents must Management and Budget (OMB), Office also comply with the applicable I. Background of Information and Regulatory Affairs requirements for regulations or rules, A. The Purpose of HUD Guidance (OIRA) on October 31, 2019, issued including significant regulatory actions, Documents memorandum M–20–02 entitled, set forth in Executive Orders 12866, ‘‘Guidance Implementing Executive The Department of Housing and 13563 (Improving Regulation and Order 13891, Titled ‘Promoting the Rule Regulatory Review), 13609 (Promoting Urban Development issues guidance of Law Through Improved Agency documents that are statements of International Regulatory Cooperation), Guidance Documents’ ’’ (OMB 13771 (Reducing Regulation and general applicability and future effect 2 Guidance) instructing Federal agencies Controlling Regulatory Costs), and that set forth policy on statutory, regarding compliance with requirements 13777 (Enforcing the Regulatory Reform regulatory, or technical issues or of E.O. 13891. Among other things, E.O. Agenda). interpret statute or regulation. HUD 13891 requires that Federal agencies guidance generally clarifies existing make their guidance documents II. This Interim Rule regulatory or statutory requirements that available at a single, searchable, indexed This interim rule implements E.O. pertain to HUD programs or operations. website, and that the website include a 13891 by establishing a new part 11 in HUD’s guidance documents do not have statement that guidance documents lack title 24, CFR, that sets forth the the force and effect of law, except when the force and effect of law, except as Department’s policy and procedures for restating statutory or regulatory authorized by law or as incorporated issuing guidance documents. Part 11 authority or as incorporated into a into a contract. Federal agencies must would be codified in Subtitle A of contract. HUD guidance documents are also review their guidance documents, HUD’s title of the CFR and establish not used to impose new requirements rescind guidance documents that it requirements that generally apply to all on the public except as expressly determines should no longer be in HUD programs. It supplements part 10 authorized by law.1 effect, and inform the public of these in the same title which establishes the B. Executive Order 13891 on Promoting actions by Federal Register notice. policy and procedures for promulgating the Rule of Law Through Improved Of significance to this interim rule, regulations. Agency Guidance Documents E.O. 13891 requires that each Federal Section 11.1 states HUD’s policy agency codify procedures for issuing regarding the issuance of guidance On October 9, 2019 (84 FR 55235), the guidance documents by amending an documents and reflects the President issued E.O. 13891, existing regulation or adopting a new requirements of E.O. 13891. HUD’s ‘‘Promoting the Rule of Law Through regulation, pursuant to the OMB policy regarding the issuance of Improved Agency Guidance Guidance. E.O. 13891 and the OMB guidance documents is based on three Documents.’’ E.O. 13891 recognizes that Guidance require that the agency core principles. First, as reflected in the Administrative Procedure Act (5 regulation on guidance incorporate § 11.1(a), HUD provides that guidance U.S.C. 551–559) (APA) exempts from specific elements. These elements documents will be treated as non- the notice and comment requirements include: binding and will not impose on for rule making ‘‘interpretive rules, • members of the public new general statements of policy, or rules of Requiring that each guidance document clearly state that it does not requirements that have the force and agency organization, procedure or effect of law, except as authorized by practice,’’ except when required by bind the public, except as authorized by law or as incorporated into a contract; law or regulation, or as incorporated statute except when it is required by into a contract. Consistent with this • Establishing procedures for the statute. 5 U.S.C. 553(b). E.O. 13891 principle, this paragraph provides that public to petition for withdrawal or provides, however, that agencies have the each of the Department’s guidance documents will clearly state that it does 1 See, e.g., Reverse Mortgage Stabilization Act of 2 OMB memorandum M–20–02 of October 31, 2013 (Pub. L. 113–29, approved August 9, 2013) 2019, is available at https://www.whitehouse.gov/ not have the force and effect of law, and the Housing and Economic Recovery Act of wp-content/uploads/2019/10/M-20-02-Guidance- except as authorized by law or as 2008 (Pub. L. 110–289, approved July 30, 2008). Memo.pdf. incorporated into a contract.

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Second, § 11.1(b) reflects the principle facilities, research papers and studies, Section 11.3(c) also reflects the of seeking public participation in the and correspondence and exemption provided by E.O. 13891 for development of significant guidance communications with individual guidance documents ‘‘as authorized by documents. Toward this goal, paragraph persons or entities not intended to set law[3] or as incorporated into a (b) of this section provides that HUD policy, including communications contract.’’ For example, this part does will seek public participation in the regarding program administration, not apply to handbooks and mortgagee development of significant guidance enforcement actions, and notices of letters issued by the Federal Housing documents and will afford the public violation, or Congressional Administration (FHA). HUD’s FHA not less than thirty days for the correspondence. These issuances are not program provides mortgage insurance submission of comments, except when statements of ‘‘general applicability, on loans made by FHA-approved the Department finds for good cause that intended to have future effect on the lenders. Participants in HUD’s insured notice and public comment are behavior of regulated parties,’’ as stated mortgage programs have a contractual impracticable, unnecessary, or contrary in the E.O. Rather, these issuances only relationship with HUD. HUD has no to the public interest. HUD may use affect single entities based on their obligation to insure any mortgage, and various methods to obtain public specific circumstances. As such, they so can set the terms and conditions participation including by publishing a are not within the definition of under which a mortgage is insured. A notice in the Federal Register ‘‘guidance document’’ in the E.O. mortgagee likewise has no obligation to announcing the availability of ‘‘Guidance portal’’ is defined at insure a mortgage with FHA; a significant guidance documents for § 11.2(b) as the single, publicly mortgagee who chooses to accept the comment. accessible, searchable website where conditions and participate in the Finally, § 11.1(c) reflects the principle HUD posts or links to all guidance mortgage insurance program assents to that agency guidance should be documents that are in effect. ‘‘OIRA’’ is these terms and conditions. In addition, transparent and made readily available defined at § 11.2(c) to mean the Office the participation of mortgagee’s in FHA to the public. Toward this end, of Information and Regulatory Affairs at programs is governed by statutes such as paragraph (c) of this section provides OMB. ‘‘Significant guidance document,’’ the National Housing Act and HUD’s that HUD will make available guidance is defined at § 11.2(d), and reflects regulations. Mortgagee letters either documents on a single, searchable, section 3(f) of E.O. 12866. Specifically, reflect these statutes and regulations or indexed public website. Section 11.1(c) significant guidance documents mean are essentially contractual in nature. makes clear that guidance documents guidance documents that have an The exception for guidance not posted on the Department’s documents ‘‘as authorized by law or as annual effect on the economy of $100 guidance website shall no longer have incorporated into a contract’’ also million or more or adversely affect in a effect and shall not be cited except to applies to Participant Memoranda and material way the economy, a sector of establish historical fact. Finally, Multiclass Participant Memoranda the economy, productivity, competition, § 11.1(c) provides that in furtherance of issued by the Government National jobs, the environment, public health or its policy of transparency and Mortgage Association (Ginnie Mae). safety, or state, local, or tribal encouraging public participation, the Ginnie Mae, through its Mortgage- governments or communities; create a Department is establishing a procedure Backed Securities (MBS) Programs, serious inconsistency or otherwise at § 11.6 for the public to request the guarantees securities that are backed by interfere with an action taken or withdrawal or modification of a pools of mortgages and issued by particular guidance document. planned by another agency; materially mortgage lenders (Issuers) approved by Section 11.2 of the interim rule alter the budgetary impact of Ginnie Mae. Participant Memoranda provides definitions of ‘‘guidance entitlements, grants, user fees, or loan announce policy and Mortgage Backed document,’’ ‘‘guidance portal,’’ ‘‘OIRA,’’ programs or the rights and obligations of Securities Guide changes accessed by and ‘‘significant guidance document.’’ recipients thereof; or raise novel legal or Issuers, Document Custodians and other ‘‘Guidance document’’ is defined as a policy issues arising out of legal participants in Ginnie Mae programs. statement of general applicability, mandates, the President’s priorities, or They are part of the agreement to designed to shape or intended to have the principles set forth in E.O. 12866. participate in Ginnie Mae programs, future effect on the behavior of Consistent with E.O. 12866 and E.O. which is voluntary, and so essentially regulated parties, that sets forth a policy 13891, HUD will make an initial contractual requirements. on a statutory, regulatory, or technical determination of whether a guidance Section 11.4(a) requires that all issue, or an interpretation of a statute or document is significant and OIRA will guidance documents be published and regulation. Consistent with E.O. 13891, make a final determination. posted on HUD’s guidance portal unless the definition lists several types of Section 11.3 describes the it is guidance under § 11.3(c) or the documents that are not guidance applicability of part 11. It provides that requirement is waived under the documents. These include rules part 11 applies to the issuance of procedures in § 11.4(c). Section 11.4(b) promulgated under section 553 of the guidance documents covered by E.O. also requires that each document be in APA (5 U.S.C. 553) (APA), rules exempt 13891. It also provides that HUD and a searchable, machine readable format from rulemaking requirements under OIRA may jointly determine that a and have certain information, including the APA, notices of funding availability, guidance document is exempt from grant agreements, cooperative some or all of the requirements of this 3 Examples of publications authorized by law agreements, or contracts entered into part due to exigency, safety, health, or include Fair Market Rents, under Section 8(c)(1) of with program participants in accordance other compelling cause. It should be the United States Housing Act of 1937 (USHA), as amended by the Housing Opportunities Through with statutory and regulatory noted that there are cases where specific Modernization Act of 2016 (HOTMA); Qualified requirements, agency adjudicatory aspects of part 11 may not apply. For Census Tract and Difficult Development Area decisions, internal guidance that is not example, this rule contains the same designations, under Internal Revenue Code (IRC) intended to have a substantial effect on good cause exemption from notice and Section 42, as enacted by the Tax Reform Act of 1986; Annual Adjustment Factors under the United regulated parties, legal opinions, legal comment as exists for regulations under States Housing Act of 1937; Section 8 Annual briefs, and court filings, notices section 553(b) of the Administrative Inflation Factors for Public Housing under HUD’s regarding particular locations and Procedure Act. annual appropriations acts.

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a title, an identification of any previous approval by a Presidentially appointed regulations that are ‘‘outmoded, document that it revises or replaces, the official. ineffective, insufficient, or excessively issuing office, the date of issuance, burdensome, and to modify, streamline, III. Justification for Interim document identification number, the expand, or repeal them in accordance Rulemaking applicable legal authority or authorities, with what has been learned.’’ E.O. a brief summary, the persons to whom In general, HUD publishes a rule for 13563 also directs that, where relevant, the guidance applies, and a statement public comment before issuing a rule for feasible, and consistent with regulatory that the guidance document lacks the effect in accordance with its own objectives, and to the extent permitted force and effect of binding law, except regulations on rulemaking, 24 CFR part by law, agencies are to identify and as authorized by statute, regulation or as 10. Part 10, however, provides for consider regulatory approaches that incorporated into a contract. For exceptions from that general rule where reduce burdens and maintain flexibility significant guidance documents, the Department finds good cause to omit and freedom of choice for the public. § 11.4(b)(9) provides that HUD’s advance notice and public participation. This interim rule has been determined guidance documents will comply with The good cause requirement is satisfied not to be a ‘‘significant regulatory the applicable requirement for when the prior public comment action,’’ under section 3(f) of E.O. 12866 regulations or rules including procedure is ‘‘impracticable, and therefore was not reviewed by significant regulatory actions, set forth unnecessary, or contrary to the public OMB. The Office of Information and in Executive Orders 12866, 13563, interest.’’ Regulatory Affairs (OIRA) has (Improving Regulation and Regulatory The Department finds that good cause designated this rule not as a major rule Review, 13609 (Promoting International exists to publish this interim rule. This under the Congressional Review Act (5 Regulatory Cooperation), 13771 interim rule implements E.O. 13891, U.S.C. 801 et seq.). (Reducing Regulation and Controlling which directs that HUD take certain Environmental Impact Regulatory Costs), and 13777 (Enforcing actions to ensure the transparent the Regulatory Reform Agenda). availability and use of guidance The interim rule does not direct, Section 11.4(c) provides that a senior documents; to treat guidance documents provide for assistance or loan and policy official may request a waiver as non-binding in law and practice, to mortgage insurance for, or otherwise from posting a document or category of the extent consistent with applicable govern or regulate, real property documents on the HUD guidance portal. law and except authorized by law or acquisition, disposition, leasing, Such a request will be submitted to incorporated into a contract; to take rehabilitation, alteration, demolition, or OIRA for review. public input into account when new construction, or establish, revise or Section 11.6 sets forth the procedure appropriate in formulating or modifying provide for standards for construction or for members of the public to request the significant guidance documents and construction materials, manufactured withdrawal or removal of a particular provide a procedure for the public to housing, or occupancy. Accordingly, guidance document. Under this section, petition for the withdrawal or under 24 CFR 50.19(c)(1), this interim any member of the public can direct modification of a particular guidance rule is categorically excluded from their petition to the applicable program document. While this interim rule does environmental review under the office head with a copy to the Office of exercise some discretion on the part of National Environmental Policy Act of General Counsel, setting forth all data HUD, the exercise relies on E.O. 13891’s 1969 (42 U.S.C. 4321). and arguments available to the mandates for HUD to initiate actions on Unfunded Mandates Reform Act petitioner supporting the action sought. matters of internal procedure. Further, Under paragraph (c) of this section, the the internal procedures established by The Unfunded Mandates Reform Act Department shall respond to all this rule do not impose on members of of 1995 (2 U.S.C. 1531–1538) (UMRA) petitions for the removal or the public new requirements that have establishes requirements for Federal modification of guidance documents no the force and effect of law. agencies to assess the effects of their later than 90 days after receipt of the Although HUD has determined that regulatory actions on State, local, and petitioner’s request. good cause exists to publish this rule for tribal governments and on the private Section 11.8 provides for public effect without prior solicitation of sector. This rule does not impose a participation in the formulation of public comment, HUD recognizes the Federal mandate on any state, local, or significant guidance documents through value and importance of public input in tribal government, or on the private at least a 30-day public notice and the rulemaking process. Accordingly, sector, within the meaning of UMRA. comment period. Paragraph (a) of this HUD is issuing these regulatory section provides that OIRA, consistent Regulatory Flexibility Act amendments on an interim basis and with E.O. 12866 and with the advice of The Regulatory Flexibility Act (RFA) the Department, shall identify or providing a 60-day public comment (5 U.S.C. 601 et seq.), generally requires determine which guidance documents period. an agency to conduct a regulatory are significant. Section 11.8 provides IV. Findings and Certifications flexibility analysis of any rule subject to that the Department may employ notice and comment rulemaking various methods of providing for public Regulatory Review—Executive Orders requirements unless the agency certifies participation in the development of 12866 and 13563 that the rule will not have a significant significant guidance documents and Under E.O. 12866 (Regulatory economic impact on a substantial may publish a notice in the Federal Planning and Review), a determination number of small entities. This rule Register announcing the availability of must be made whether a regulatory requires HUD to follow certain a significant guidance document. This action is significant and, therefore, procedures in issuing guidance section also outlines certain actions the subject to review by the Office of documents. These procedures include Department will take before the final Management and Budget (OMB) in establishing a single agency website issuance of a significant guidance accordance with the requirements of the where the public can find all HUD document, including responding to order. E.O. 13563 (Improving guidance in effect; OMB review to major issues raised in the comments, Regulations and Regulatory Review) determine whether guidance is OIRA review, and non-delegable directs executive agencies to analyze significant, and OMB review of

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significant guidance; public comment existing law and regulation, clarifying § 11.2 Definitions. on significant guidance; and a existing program obligations, or (a) Guidance document means a procedure for the public to request otherwise providing information that statement of general applicability, withdrawal or modification of a assists members of the public subject to designed to shape or intended to have guidance document. These revisions HUD’s statutes and regulations comply future effect on the behavior of impose no significant economic impact with statutory and regulatory reporting regulated parties, that sets forth a policy on a substantial number of small requirements. The Department’s policy on a statutory, regulatory, or technical entities. Therefore, the undersigned is that guidance documents issued by issue, or an interpretation of a statute or certifies that this rule will not have a HUD shall be treated as non-binding regulation. HUD guidance documents significant impact on a substantial and will not impose on members of the include, but are not limited to, number of small entities. public new requirements that have the handbooks, policy statements, policy Notwithstanding HUD’s view that this force and effect of law, except as directives, notices of general rule will not have a significant effect on authorized by statue or regulation or applicability, compliance documents, a substantial number of small entities, incorporated into a contract. Consistent bulletins, documents addressing HUD specifically invites comments with this policy, each of the frequently asked questions, and other regarding any less burdensome Department’s guidance documents will direct notices issued by HUD program alternatives to this rule that will meet clearly state that it does not have the offices, but do not include: HUD’s objectives as described in this force and effect of law, except as (1) Rules promulgated pursuant to preamble. authorized by law or as incorporated notice and comment under section 553 Executive Order 13132, Federalism into a contract. of title 5, United States Code (as (b) Public participation in codified at 24 CFR part 10), or similar E.O. 13132 (entitled ‘‘Federalism’’) development of significant guidance. statutory provisions; prohibits an agency from publishing any The Department recognizes the benefit (2) Rules exempt from rulemaking rule that has federalism implications if of providing members of the public the requirements under section 553(a) of the rule either: (1) Imposes substantial opportunity to participate in the title 5, United States Code; direct compliance costs on State and development of significant guidance (3) Rules of agency organization, local governments and is not required documents, as defined in § 11.2(d). procedure, or practice, provided such by statute, or (2) preempts State law, Public participation can provide the rules do not alter substantive obligations unless the agency meets the Department more comprehensive data, for parties outside the Department; consultation and funding requirements facts, and information on which to base (4) Decisions of agency adjudications of Section 6 of the E.O. This interim rule its decisions. It is, therefore, the policy under section 554 of title 5, United does not have federalism implications of the Department that its significant States Code, or similar statutory and does not impose substantial direct guidance documents will afford the provisions; compliance costs on State and local public not less than thirty days for the (5) Internal guidance directed to HUD governments nor preempt state law submission of comments, except when or other agencies that is not intended to within the meaning of the E.O. the Department finds for good cause that have substantial future effect on the List of Subjects in 24 CFR Part 11 notice and public comment are substantive behavior of regulated impracticable, unnecessary, or contrary Administrative practice and parties; to the public interest (and incorporates procedure. (6) Internal executive branch legal such finding and a brief statement of the advice or legal opinions addressed to For the reasons described in the reasons into the guidance document). executive branch officials, or directed to preamble, the Department of Housing The Department may employ various particular parties about circumstance- and Urban Development adds 24 CFR methods of providing public specific questions; part 11 as set forth below: participation, including publishing a (7) Legal briefs, charges, and other PART 11—GUIDANCE DOCUMENTS: request for information or notice in the court filings intended to persuade a POLICY AND PROCEDURES Federal Register inviting public court, or administrative or arbitral comments or publishing a request on its authority; Sec. website. (8) Notices regarding particular 11.1 Policy. (c) Single searchable website; locations or facilities; 11.2 Definitions. procedure to request withdrawal. The (9) Research papers and studies; 11.3 Applicability. Department is committed to facilitating (10) Notices of Funding Availability, 11.4 Published guidance documents. 11.6 Withdrawal or modification of access to guidance documents by and correspondence and documents. regulated entities and the public. It is, communications with individual 11.8 Issuance of significant guidance therefore, the policy of the Department persons or entities not intended to set documents. to make available a comprehensive set general policy, including grant Authority: 42 U.S.C. 3535(d); E.O. 13891, of guidance documents on a single, agreements with individual program 84 FR 55235, October 9, 2019. searchable, indexed website that participants and other communications contains or links to all guidance regarding program administration, § 11.1 Policy. documents currently in effect. Guidance enforcement actions, and notices of (a) Non-binding effect of guidance documents not posted on the violation, or congressional documents. The Department of Housing Department’s guidance website shall no correspondence. and Urban Development issues longer have effect and shall not be cited (b) Guidance portal means the single, guidance documents that help explain except to establish historical fact. In publicly accessible, searchable website its programs and policies or addition, the Department establishes a where HUD posts or links to all communicate other important procedure, as provided in § 11.6, for the guidance documents that are in effect. information to members of the public. public to request the withdrawal or (c) OIRA means the Office of These statements of general modification of a particular guidance Information and Regulatory Affairs at applicability include interpreting document. the Office of Management and Budget.

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(d) Significant guidance document (5) Identify the applicable legal later than 90 days after receipt of the means a guidance document that may authority or authorities for issuance of petitioner’s request unless the Secretary reasonably be anticipated to: the guidance, and provide a brief makes an extension for good cause or (1) Lead to an annual effect on the summary of the subject matter the consideration is deferred pursuant to economy of $100 million or more or document covers; paragraph (e) of this section. adversely affect in a material way the (6) Describe the document contents as (d) The Department will post a copy economy, a sector of the economy, guidance, pursuant to § 11.2(a); of requests for withdrawal or productivity, competition, jobs, the (7) Identify the activities to which and modification and responses on its environment, public health or safety, or the persons to whom the document website. State, local, or tribal governments or applies; (e) The Department will consolidate communities; (8) State that the guidance document, multiple requests for the same guidance (2) Create a serious inconsistency or if meeting the definition thereof, lacks document and need not consider a otherwise interfere with an action taken the force and effect of binding law; and single guidance document more than or planned by another agency (9) For significant guidance once each calendar year. (3) Materially alter the budgetary documents, comply with the applicable (f) If the program office head or the impact of entitlements, grants, user fees, requirement for regulations or rules person with delegated authority finds or loan programs, or the rights and including significant regulatory actions, that the petition contains substantial obligations of recipients thereof; or set forth in Executive Orders 12866, (4) Raise novel legal or policy issues justification, the guidance document 13563 (Improving Regulation and will be withdrawn or, consistent with arising out of legal mandates, the Regulatory Review, 13609 (Promoting President’s priorities, or the principles the requirements of this part, modified International Regulatory Cooperation), as appropriate. If the program office of Executive Order 12866, ‘‘Regulatory 13771 (Reducing Regulation and Planning and Review.’’ head or person with delegated authority Controlling Regulatory Costs), and finds that the petition does not contain § 11.3 Applicability. 13777 (Enforcing the Regulatory Reform substantial justification, or based on (a) This part governs HUD’s issuance Agenda). other considerations such official deems of guidance documents. (c) A senior policy official may relevant, the petition will be denied by (b) HUD and the Administrator of request a waiver of the requirement to letter or other notice, with a brief OIRA may jointly determine that a post a guidance document or a category statement of the ground for denial. guidance document is exempt from of guidance documents. Such a request some or all of the requirements of this should be submitted through OIRA for § 11.8 Issuance of significant guidance documents. part for exigency, safety, health, or other review. A request for a waiver should compelling cause. clearly explain the purpose of the (a) Determination of significance. (c) This part is not applicable to any document(s) and why making the Consistent with E.O. 12866 and E.O. guidance document that is authorized document(s) publicly available on an 13891, HUD will make an initial by law or contemplated by or agency website would cause specific determination of significance and OIRA, incorporated into a contract, including: harm or otherwise interfere with the with the advice of the Department, will (1) Handbooks and mortgagee letters agency’s mission. make a final determination. issued by the Federal Housing § 11.6 Removal or modification of (b) Notice of a significant guidance Administration; and documents. document. Except as provided by (2) All Participant Memoranda and (a) The Department may rescind, paragraph (d) of this section, HUD will Multiclass Participant Memoranda remove from its public website or afford the public not less than thirty issued by the Government National modify published guidance documents days for the submission of comments Mortgage Association. on its own initiative, or in the response prior to issuing a significant guidance document and will publicly respond to § 11.4 Published guidance documents. to the petition of any interested person. (b) Public petition. Any interested major categories of, or the most (a) HUD makes available to the public significant, concerns raised in a comprehensive set of guidance person may petition the applicable program office head for the modification comments. The Department may employ documents through a guidance portal various methods of providing for public that can be accessed from the or withdrawal of a guidance document. Each petition shall: participation in the development of a Department’s public website. Unless significant guidance documents exempt pursuant to paragraph (c) of (1) Be directed to the applicable program office head with a copy to the including publishing a notice in the § 11.3 or a waiver is granted under Federal Register announcing the paragraph (c) of this section, HUD will Office of General Counsel, Office of Legislation and Regulations, Department availability of a significant guidance publish or link to each guidance document which includes: document that is in effect on its of Housing and Urban Development, Washington, DC 20410; (1) The substance or terms of the guidance portal. interim guidance or a description of the (b) Each guidance document issued (2) Identify with specificity the subject matter and issues involved; pursuant to this part shall: guidance document sought to be (1) Be in a user-searchable, machine withdrawn or modified and, if (2) Direction on how to access the readable format; applicable, set forth the text or draft guidance document available on (2) Provide the document title, and substance of the interim modification; the Department’s website; and identify what, if any, previous (3) Explain the interest of the (3) The citation to the statutory document the new guidance document petitioner in the action sought; and provision or regulation (in Code of revises or replaces; (4) Set forth any data and arguments Federal Regulations format) to which (3) Identify the issuing office or available to the petitioner in support of the guidance document applies or division; the action sought. which it interprets. (4) Indicate the date of issuance and (c) The Department shall respond to (c) Each draft guidance document the unique document identification all petitions for the removal or announced in the Federal Register shall number; modification of guidance documents no be available on the HUD website,

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concurrent with the publication of ADDRESSES: To view documents this rule would be contrary to public public notice and comment period. mentioned in this preamble as being interest because prompt action is (d) Exception. The Department may available in the docket, go to https:// needed to respond to the potential omit the public participation www.regulations.gov, type USCG–2020– safety hazards associated with the requirement of this section if it for good 0656 in the ‘‘SEARCH’’ box and click location, size and complexity of the boat cause determines that public notice and ‘‘SEARCH.’’ Click on Open Docket parade that is planned to take place on comment is impracticable, unnecessary, Folder on the line associated with this November 11, 2020. or contrary to the public interest. The rule. III. Legal Authority and Need for Rule Department shall incorporate a brief FOR FURTHER INFORMATION CONTACT: If statement of the reasons for its you have questions on this rule, call or The Coast Guard is issuing this rule determination to omit public email Lieutenant John Santorum, under authority in 46 U.S.C. 70041. The participation into its guidance Waterways Management, U.S. Coast Captain of the Port (COTP) Sector San document. Guard Sector San Diego, CA; telephone Diego has determined that potential (e) Review and approval. (1) Unless (619) 278–7656, email hazards associated with the proposed excepted under paragraph (c) of this [email protected]. parade will be a safety concern for section, the issuance of a significant SUPPLEMENTARY INFORMATION: anyone within the vicinity of the parade guidance document will follow review route. This rule is needed to protect by OIRA under Executive Order 12866, I. Table of Abbreviations personnel, vessels, spectators, and the which may run in whole or part, CFR Code of Federal Regulations marine environment in the navigable concurrently with the public comment DHS Department of Homeland Security waters of the San Diego Bay in the process in paragraph (a) or this section. FR Federal Register vicinity of the marine event during the (2) Approval of significant guidance NPRM Notice of proposed rulemaking enforcement period of this rule. documents shall be by signature of the § Section Secretary, Deputy Secretary, General U.S.C. United States Code IV. Discussion of the Rule Counsel, or Assistant Secretary or II. Background Information and This rule establishes an SLR from 10 equivalent, or by an official who is Regulatory History a.m. until 1 p.m. on November 11, 2020. serving in an acting capacity in any of The SLR will cover all navigable waters the foregoing positions. The Coast Guard is issuing this on a pre-determined course in the temporary rule without prior notice and northern portion of the San Diego Main Benjamin S. Carson, Sr., opportunity to comment pursuant to Ship Channel from Shelter Island Basin, Secretary. authority under section 4(a) of the past the Embarcadero, crossing the [FR Doc. 2020–23982 Filed 11–9–20; 8:45 am] Administrative Procedure Act (APA) (5 federal navigable channel and ending BILLING CODE 4210–67–P U.S.C. 553(b)). This provision off of Coronado Island. The duration of authorizes an agency to issue a rule the SLR is intended to protect without prior notice and opportunity to personnel, vessels, spectators, and the DEPARTMENT OF HOMELAND comment when the agency for good marine environment in these navigable SECURITY cause finds that those procedures are waters before, during, and after the ‘‘impracticable, unnecessary, or contrary event is scheduled to occur. During the Coast Guard to the public interest.’’ Under 5 U.S.C. enforcement period, persons and vessels 553(b)(B), the Coast Guard finds that are prohibited from anchoring, blocking, 33 CFR Part 100 good cause exists for not publishing a loitering, or impeding within this [Docket Number USCG–2020–0656] notice of proposed rulemaking (NPRM) regulated area unless authorized by the with respect to this rule because it is RIN 1625–AA08 Captain of the Port, or his designated impracticable due to the short time representative. between the Coast Guard received final Special Local Regulation; Boat Parade; details of the event on October 21, 2020, V. Regulatory Analyses San Diego, CA and the scheduled event occurring on We developed this rule after AGENCY: Coast Guard, DHS. November 11, 2020. The marine event considering numerous statutes and ACTION: Temporary final rule. sponsor of this boat parade is expecting Executive orders related to rulemaking. to draw a high concentration of vessels Below we summarize our analyses SUMMARY: The Coast Guard is to the San Diego Bay area along the based on a number of these statutes and establishing a temporary special local proposed parade route. Traditionally, Executive orders, and we discuss First regulation (SLR) on the waters of San the San Diego Bay area serves as a major Amendment rights of protestors. Diego Bay, California to provide for the thoroughfare for commercial traffic, safety of the participants, crew, naval operations, ferry routes, and a A. Regulatory Planning and Review spectators, sponsor vessels, and general number of other recreational uses. The Executive Orders 12866 and 13563 users of the waterway during a boat Coast Guard is establishing this SLR to direct agencies to assess the costs and parade. This SLR temporarily minimize impacts on this congested benefits of available regulatory encompasses all navigable waters, from waterway. We must establish this SLR alternatives and, if regulation is surface to bottom, on a pre-determined by November 11, 2020 to ensure the necessary, to select regulatory course in the northern portion of the safety of individuals, property, and the approaches that maximize net benefits. San Diego Main Ship Channel from marine environment and we do not have Executive Order 13771 directs agencies Shelter Island Basin, past the sufficient time to request and respond to to control regulatory costs through a Embarcadero, crossing the federal comments. budgeting process. This rule has not navigable channel and ending off of Under 5 U.S.C. 553(d)(3), the Coast been designated a ‘‘significant Coronado Island. Guard finds that good cause exists for regulatory action,’’ under Executive DATES: This rule is effective from 10 making this rule effective less than 30 Order 12866. Accordingly, this rule has a.m. through 1 p.m. on November 11, days after publication in the Federal not been reviewed by the Office of 2020. Register. Delaying the effective date of Management and Budget (OMB), and

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pursuant to OMB guidance it is exempt Paperwork Reduction Act of 1995 (44 G. Protest Activities from the requirements of Executive U.S.C. 3501–3520). The Coast Guard respects the First Order 13771. D. Federalism and Indian Tribal Amendment rights of protesters. This regulatory action determination Governments Protesters are asked to call or email the is based on the size, location, duration, A rule has implications for federalism person listed in the FOR FURTHER and time-of-day of the SLR. The Coast INFORMATION CONTACT section to Guard will publish a Local Notice to under Executive Order 13132, Federalism, if it has a substantial direct coordinate protest activities so that your Mariners and will issue a Broadcast message can be received without Notice to Mariners via VHF–FM marine effect on the States, on the relationship between the National Government and jeopardizing the safety or security of channel 16 that details the vessel people, places or vessels. restrictions of the regulated area. the States, or on the distribution of power and responsibilities among the List of Subjects in 33 CFR Part 100 B. Impact on Small Entities various levels of government. We have Marine safety, Navigation (water), analyzed this rule under that Order and The Regulatory Flexibility Act of Reporting and recordkeeping 1980, 5 U.S.C. 601–612, as amended, have determined that it is consistent with the fundamental federalism requirements, Waterways. requires Federal agencies to consider For the reasons discussed in the the potential impact of regulations on principles and preemption requirements described in Executive Order 13132. preamble, the Coast Guard amends 33 small entities during rulemaking. The CFR part 100 as follows: term ‘‘small entities’’ comprises small Also, this rule does not have tribal businesses, not-for-profit organizations implications under Executive Order 13175, Consultation and Coordination PART 100—SAFETY OF LIFE ON that are independently owned and NAVIGABLE WATERS. operated and are not dominant in their with Indian Tribal Governments, fields, and governmental jurisdictions because it does not have a substantial ■ 1. The authority citation for part 100 with populations of less than 50,000. direct effect on one or more Indian continues to read as follows: The Coast Guard certifies under 5 U.S.C. tribes, on the relationship between the Federal Government and Indian tribes, Authority: 46 U.S.C. 70041; 33 CFR 1.05– 605(b) that this rule will not have a 1. significant economic impact on a or on the distribution of power and ■ 2. Add § 100.T11–043 to read as substantial number of small entities. responsibilities between the Federal Government and Indian tribes. follows: While some owners or operators of vessels intending to transit the SLR may E. Unfunded Mandates Reform Act § 100.T11–043 Boat Parade, San Diego, CA be small entities, for the reasons stated The Unfunded Mandates Reform Act (a) Regulated area. The regulations in in section V.A above, this rule will not of 1995 (2 U.S.C. 1531–1538) requires this section apply to the following area: have a significant economic impact on Federal agencies to assess the effects of (1) Parade Area: All navigable waters, any vessel owner or operator. their discretionary regulatory actions. In from surface to bottom, on a pre- Under section 213(a) of the Small particular, the Act addresses actions determined course in the northern Business Regulatory Enforcement that may result in the expenditure by a portion of the San Diego Main Ship Fairness Act of 1996 (Pub. L. 104–121), State, local, or tribal government, in the Channel from Shelter Island Basin, past we want to assist small entities in aggregate, or by the private sector of the Embarcadero, crossing the federal understanding this rule. If the rule $100,000,000 (adjusted for inflation) or navigable channel and ending off of would affect your small business, more in any one year. Though this rule Coronado Island. organization, or governmental will not result in such an expenditure, (2) [Reserved. jurisdiction and you have questions we do discuss the effects of this rule (b) Definitions. As used in this concerning its provisions or options for elsewhere in this preamble. section— compliance, please call or email the Designated representative means a person listed in the FOR FURTHER F. Environment Coast Guard Patrol Commander, INFORMATION CONTACT section. We have analyzed this rule under including a Coast Guard coxswain, petty Small businesses may send comments Department of Homeland Security officer, or other officer operating a Coast on the actions of Federal employees Directive 023–01, Rev. 1, associated Guard vessel and a Federal, State, and who enforce, or otherwise determine implementing instructions, and local officer designated by or assisting compliance with, Federal regulations to Environmental Planning COMDTINST the Captain of the Port Sector San Diego the Small Business and Agriculture 5090.1 (series), which guide the Coast (COTP) in the enforcement of the Regulatory Enforcement Ombudsman Guard in complying with the National regulations in this section. and the Regional Small Business Environmental Policy Act of 1969(42 Participant means all persons and Regulatory Fairness Boards. The U.S.C. 4321–4370f), and have vessels registered with the event Ombudsman evaluates these actions determined that this action is one of a sponsor as a participants in the parade. annually and rates each agency’s category of actions that do not (c) Regulations. (1) All non- responsiveness to small business. If you individually or cumulatively have a participants are prohibited from wish to comment on actions by significant effect on the human entering, transiting through, anchoring employees of the Coast Guard, call 1– environment. This rule involves an SLR in, or remaining within the regulated 888–REG–FAIR (1–888–734–3247). The lasting less than four hours that will area described in paragraph (a) of this Coast Guard will not retaliate against monitor entry to the SLR area for the section unless authorized by the Captain small entities that question or complain duration of the enforcement period to of the Port Sector San Diego or their about this rule or any policy or action cover before, during and after the parade designated representative. of the Coast Guard. has concluded. It is categorically (2) To seek permission to enter, excluded from further review under contact the COTP or the COTP’s C. Collection of Information paragraph L61 of Appendix A, Table 1 representative by calling the Sector San This rule will not call for a new of DHS Instruction Manual 023–01– Diego JHOC at 619–278–7033. Those in collection of information under the 001–01, Rev. 1. the regulated area, including

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participants, must comply with all FOR FURTHER INFORMATION CONTACT: If IV. Discussion of the Rule lawful orders or directions given to you have questions on this rule, call or This rule establishes a temporary them by the COTP or the designated email Lieutenant John Santorum, security zone from 10 a.m. until 2 p.m. representative. Waterways Management, U.S. Coast on November 11, 2020. The security (3) The COTP will provide notice of Guard Sector San Diego, CA; telephone zone will encompass the waters within the regulated areas through advanced (619) 278–7656, email a 900-foot radius centered at position: notice via Broadcast Notice to Mariners [email protected]. 32°42′56″ N, 117°10′46″ W off the and by on-scene designated SUPPLEMENTARY INFORMATION: Broadway Pier in the San Diego Bay. representatives. I. Table of Abbreviations The purpose of the security zone is to (d) Enforcement period. This section protect the U.S. Coast Guard surface and will be enforced from 10 a.m. through CFR Code of Federal Regulations aerial assets, crews, and support 1 p.m. on Wednesday, November 11, DHS Department of Homeland Security personnel who will be performing 2020. FR Federal Register search and rescue demonstrations in NPRM Notice of proposed rulemaking San Diego, CA. No vessel or person will Dated: November 3, 2020. § Section T.J. Barelli, U.S.C. United States Code be permitted to enter the security zone Captain, U.S. Coast Guard, Captain of the without obtaining permission from the Port San Diego. II. Background Information and COTP or his designated representative. Regulatory History [FR Doc. 2020–24860 Filed 11–9–20; 8:45 am] V. Regulatory Analyses BILLING CODE 9110–04–P The Coast Guard is issuing this temporary rule without prior notice and We developed this rule after opportunity to comment pursuant to considering numerous statutes and Executive orders related to rulemaking. DEPARTMENT OF HOMELAND authority under section 4(a) of the Below we summarize our analyses SECURITY Administrative Procedure Act (APA) (5 based on a number of these statutes and U.S.C. 553(b)). This provision Executive orders, and we discuss First Coast Guard authorizes an agency to issue a rule Amendment rights of protestors. without prior notice and opportunity to 33 CFR Part 165 comment when the agency for good A. Regulatory Planning and Review [Docket Number USCG–2020–0655] cause finds that those procedures are Executive Orders 12866 and 13563 ‘‘impracticable, unnecessary, or contrary RIN 1625–AA87 direct agencies to assess the costs and to the public interest.’’ Under 5 U.S.C. benefits of available regulatory 553(b)(B), the Coast Guard finds that Security Zone; Fleet Week alternatives and, if regulation is good cause exists for not publishing a Demonstration Area, San Diego Bay, necessary, to select regulatory notice of proposed rulemaking (NPRM) San Diego, CA approaches that maximize net benefits. with respect to this rule because it is Executive Order 13771 directs agencies AGENCY: Coast Guard, Homeland impracticable. The Coast Guard did not to control regulatory costs through a Security Department (DHS). receive final details for this event until budgeting process. This rule has not ACTION: Temporary final rule. October 21, 2020. The Coast Guard must been designated a ‘‘significant establish this security zone by regulatory action,’’ under Executive SUMMARY: The Coast Guard is November 11, 2020 and lacks sufficient Order 12866. Accordingly, this rule has establishing a temporary 900-foot radius time to provide a reasonable comment not been reviewed by the Office of security zone on the navigable waters of period and consider those comments Management and Budget (OMB), and the U.S. off of Broadway Pier in San before issuing the rule. pursuant to OMB guidance it is exempt Diego Bay, San Diego, CA, in support of Under 5 U.S.C. 553(d)(3), the Coast from the requirements of Executive Fleet Week San Diego on November 11, Guard finds that good cause exists for Order 13771. 2020. This action is necessary to making this rule effective less than 30 This regulatory action determination provide for the safety and security of days after publication in the Federal is based on the size, location, duration, U.S. Coast Guard surface and aerial Register. Delaying implementation of and time-of-day of the security zone. assets, crews and support personnel this rulemaking is contrary to public Vessel traffic will be able to safely who will be performing mission search interest and is needed to ensure the transit around this safety zone which and rescue demonstrations. This safety and security of military personnel will impact a small designated area of rulemaking prohibits persons and and assets on November 11, 2020. the San Diego Bay. The Coast Guard will issue a Broadcast Notice to Mariners via vessels from entering, transiting, or III. Legal Authority and Need for Rule anchoring in the security zone unless VHF–FM marine channel 16 about the authorized by the Captain of the Port The Coast Guard is issuing this rule zone, and the rule will allow vessels to San Diego or his designated under authority in 46 U.S.C. 70034 seek permission to enter the zone. representative. (previously 33 U.S.C. 1231). The Captain of the Port San Diego (COTP) B. Impact on Small Entities DATES: This rule is effective from 10 has determined that potential hazards The Regulatory Flexibility Act of a.m. through 2 p.m. on November 11, associated with military demonstrations 1980, 5 U.S.C. 601–612, as amended, 2020. on November 11, 2020 will be a security requires Federal agencies to consider ADDRESSES: To view documents concern for military assets in the the potential impact of regulations on mentioned in this preamble as being vicinity of the Broadway pier in San small entities during rulemaking. The available in the docket, go to https:// Diego Bay, San Diego, CA. This rule is term ‘‘small entities’’ comprises small www.regulations.gov, type USCG–2020– needed to protect military personnel, businesses, not-for-profit organizations 0655 in the ‘‘SEARCH’’ box and click vessels, and the marine environment on that are independently owned and ‘‘SEARCH.’’ Click on Open Docket the navigable waters within the security operated and are not dominant in their Folder on the line associated with this zone during the San Diego Fleet Week fields, and governmental jurisdictions rule. event. with populations of less than 50,000.

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The Coast Guard certifies under 5 U.S.C. tribes, on the relationship between the For the reasons discussed in the 605(b) that this rule will not have a Federal Government and Indian tribes, preamble, the Coast Guard amends 33 significant economic impact on a or on the distribution of power and CFR part 165 as follows: substantial number of small entities. responsibilities between the Federal While some owners or operators of Government and Indian tribes. If you PART 165—REGULATED NAVIGATION vessels intending to transit the security believe this rule has implications for AREAS AND LIMITED ACCESS AREAS zone may be small entities, for the federalism or Indian tribes, please call ■ 1. The authority citation for part 165 reasons stated in section V.A above, this or email the person listed in the FOR continues to read as follows: rule will not have a significant FURTHER INFORMATION CONTACT section economic impact on any vessel owner above. Authority: 46 U.S.C. 70034, 70051; 33 CFR or operator. 1.05–1, 6.04–1, 6.04–6, and 160.5; Under section 213(a) of the Small E. Unfunded Mandates Reform Act Department of Homeland Security Delegation Business Regulatory Enforcement The Unfunded Mandates Reform Act No. 0170.1. Fairness Act of 1996 (Pub. L. 104–121), of 1995 (2 U.S.C. 1531–1538) requires ■ 2. Add § 165.T11–042 to read as we want to assist small entities in Federal agencies to assess the effects of follows: understanding this rule. If the rule their discretionary regulatory actions. In §165.T11–042 Security Zone; San Diego would affect your small business, particular, the Act addresses actions Bay; San Diego, CA. organization, or governmental that may result in the expenditure by a (a) Location. The following area is a jurisdiction and you have questions State, local, or tribal government, in the security zone, including all navigable concerning its provisions or options for aggregate, or by the private sector of waters of San Diego Bay, from surface to compliance, please call or email the $100,000,000 (adjusted for inflation) or sea floor, within a 900-foot radius person listed in the FOR FURTHER more in any one year. Though this rule centered at the following coordinate: INFORMATION CONTACT section. will not result in such an expenditure, ° ′ ″ ° ′ ″ Small businesses may send comments 32 42 56 N, 117 10 46 W. we do discuss the effects of this rule (b) Definition. The term ‘‘designated on the actions of Federal employees elsewhere in this preamble. representative’’ means a Coast Guard who enforce, or otherwise determine F. Environment Patrol Commander, including a Coast compliance with, Federal regulations to Guard coxswain, petty officer, and other We have analyzed this rule under the Small Business and Agriculture officer operating a Coast Guard vessel, Department of Homeland Security Regulatory Enforcement Ombudsman or a Federal, State, or local officer Directive 023–01 and Environmental and the Regional Small Business designated by or assisting the Captain of Planning COMDTINST 5090.1 (series), Regulatory Fairness Boards. The the Port San Diego in the enforcement which guide the Coast Guard in Ombudsman evaluates these actions of the regulated area. annually and rates each agency’s complying with the National (c) Regulations. (1) Under the general responsiveness to small business. If you Environmental Policy Act of 1969 (42 security zone regulations in subpart D of wish to comment on actions by U.S.C. 4321–4370f), and have this part, all persons and vessels are employees of the Coast Guard, call 1– determined that this action is one of a prohibited from entering, transiting 888–REG–FAIR (1–888–734–3247). The category of actions that do not through, anchoring in, or remaining Coast Guard will not retaliate against individually or cumulatively have a within the security zone unless small entities that question or complain significant effect on the human authorized by the Captain of the Port about this rule or any policy or action environment. This rule involves a Sector San Diego (COTP) or his of the Coast Guard. security zone lasting only 5 days that designated representative. will prohibit entry within a 900-foot feet C. Collection of Information (2) The security zone is closed to all radius of a designated coordinate west vessel traffic, except as may be This rule will not call for a new of Broadway Pier in San Diego Bay. It permitted by the COTP or the COTP’s collection of information under the is categorically excluded from further designated representative. Paperwork Reduction Act of 1995 (44 review under paragraph L60(a) in Table (3) Vessel operators desiring to enter U.S.C. 3501–3520). 3–1 of U.S. Coast Guard Environmental or operate within the security zone must D. Federalism and Indian Tribal Planning Implementing Procedures. A contact the COTP or the COTP’s Governments Record of Environmental Consideration designated representative to obtain supporting this determination is permission to do so. Vessel operators A rule has implications for federalism available in the docket where indicated given permission to enter or operate in under Executive Order 13132, under ADDRESSES. the security zone must comply with all Federalism, if it has a substantial direct lawful orders or directions given to effect on the States, on the relationship G. Protest Activities them by the COTP or the COTP’s between the National Government and The Coast Guard respects the First designated representative. Persons and the States, or on the distribution of Amendment rights of protesters. vessels may request permission to enter power and responsibilities among the Protesters are asked to call or email the the security zone on VHF channel 16 or various levels of government. We have person listed in the FOR FURTHER through the 24-hour Command Center at analyzed this rule under that order and INFORMATION CONTACT section to telephone (619) 278–7033. have determined that it is consistent coordinate protest activities so that your (d) Enforcement period. This section with the fundamental federalism message can be received without will be enforced from 10 a.m. through principles and preemption requirements jeopardizing the safety or security of 2 p.m. on November 11, 2020. described in Executive Order 13132. people, places or vessels. Also, this rule does not have tribal Dated: November 3, 2020. implications under Executive Order List of Subjects in 33 CFR Part 165 T. J. Barelli, 13175, Consultation and Coordination Harbors, Marine safety, Navigation Captain, U.S. Coast Guard, Captain of the with Indian Tribal Governments, (water), Reporting and recordkeeping Port San Diego. because it does not have a substantial requirements, Security measures, [FR Doc. 2020–24863 Filed 11–9–20; 8:45 am] direct effect on one or more Indian Waterways. BILLING CODE 9110–04–P

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ENVIRONMENTAL PROTECTION than English or if you are a person with enacted the 1990 Amendments to the AGENCY disabilities who needs a reasonable CAA, the EPA issued comprehensive accommodation at no cost to you, please guidance on SIP revisions in the 40 CFR Part 52 contact the person identified in the FOR ‘‘General Preamble for the [EPA–R09–OAR–2020–0109; FRL–10014– FURTHER INFORMATION CONTACT section. Implementation of Title I of the Clean 84–Region 9] FOR FURTHER INFORMATION CONTACT: Air Act Amendments of 1990’’ Ashley Graham, EPA Region IX, Air (‘‘General Preamble’’).3 Among other Partial Approval and Partial Division, Air Planning Office, 75 things, the General Preamble addressed Disapproval of Air Quality Hawthorne St., San Francisco, CA SO2 SIP submissions and fundamental Implementation Plans; Arizona; 94105. By phone: (415) 972–3877 or by principles for SIP control strategies.4 On Nonattainment Plan for the Hayden email at [email protected]. April 23, 2014, the EPA issued guidance SO Nonattainment Area for meeting the statutory requirements 2 SUPPLEMENTARY INFORMATION: Throughout this document, ‘‘we,’’ ‘‘us,’’ in SO2 SIP submissions in a document AGENCY: Environmental Protection and ‘‘our’’ refer to the EPA. titled, ‘‘Guidance for 1-Hour SO2 Agency (EPA). Nonattainment Area SIP Submissions’’ ACTION: Final rule. 5 Table of Contents (‘‘2014 SO2 Guidance’’). In the 2014 SUMMARY: The Environmental Protection I. Background SO2 Guidance, the EPA described the Agency (EPA) is finalizing a partial II. Public Comments and EPA Responses statutory requirements for a complete approval and partial disapproval of an A. Comments From ADEQ nonattainment plan, which include: An Arizona state implementation plan (SIP) B. Comments From Asarco accurate emissions inventory of current revision for attaining the 2010 1-hour III. The EPA’s Final Action emissions for all sources of SO2 within IV. Statutory and Executive Order Reviews the NAA; an attainment demonstration; primary sulfur dioxide (SO2) national ambient air quality standard (NAAQS or I. Background a demonstration of RFP; implementation ‘‘standard’’) for the Hayden SO of RACM (including RACT); new source 2 On June 22, 2010, the EPA nonattainment area (NAA). This SIP review; enforceable emissions promulgated a new 1-hour primary SO revision (hereinafter called the ‘‘Hayden 2 limitations and control measures; NAAQS of 75 parts per billion (ppb) SO Plan’’ or ‘‘Plan’’) includes Arizona’s conformity; and adequate contingency 2 (hereinafter called ‘‘the 2010 SO attainment demonstration and other 2 measures for the affected area. NAAQS’’ or ‘‘the SO NAAQS’’). This elements required under the Clean Air 2 For the EPA to fully approve a SIP standard is met at an ambient air quality Act (CAA or ‘‘Act’’). The EPA is revision as meeting the requirements of monitoring site when the 3-year average approving the base year and projected CAA sections 110, 172, 191, and 192, of the annual 99th percentile of daily emissions inventories and affirming that and the EPA’s regulations at 40 CFR part maximum 1-hour average the new source review requirements for 51, the plan for the affected area needs the area have been met. We are concentrations does not exceed 75 ppb, to demonstrate that each of the as determined in accordance with aforementioned requirements has been disapproving the attainment 1 demonstration, as well as other appendix T of 40 CFR part 50. On met. Under CAA section 110(l), the EPA elements of the Plan tied to this August 5, 2013, the EPA designated 29 may not approve a plan that would demonstration, namely, the requirement areas of the country as nonattainment interfere with any applicable for meeting reasonable further progress for the 2010 SO2 NAAQS, including the requirement concerning NAAQS 2 (RFP) toward attainment of the NAAQS, Hayden SO2 NAA within Arizona. attainment and RFP, or any other reasonably available control measures These area designations became applicable requirement. Under CAA and reasonably available control effective on October 4, 2013. Section section 193, no requirement in effect (or technology (RACM/RACT), enforceable 191(a) of the CAA directs states to required to be adopted by an order, settlement, agreement, or plan in effect emissions limitations and control submit SIP revisions for areas before November 15, 1990) in any area measures, and contingency measures. designated as nonattainment for the SO2 NAAQS to the EPA within 18 months of that is a NAA for any air pollutant may DATES: This rule will be effective on the effective date of the designation, i.e., be modified in any manner unless it December 10, 2020. in this case by no later than April 4, ensures equivalent or greater emission ADDRESSES: The EPA has established a 2015. Under CAA section 192(a), these reductions of such air pollutant. docket for this action under Docket No. SIP submissions are required to include The EPA published a notice on March EPA–R09–OAR–2020–0109. All measures that will bring the NAA into 18, 2016, finding that Arizona and other documents in the docket are listed on attainment of the NAAQS as states had failed to submit the required the https://www.regulations.gov expeditiously as practicable, but no later SO2 nonattainment plans for the Hayden website. Although listed in the index, than five years from the effective date of SO2 NAA and several other areas by the some information is not publicly designation. The attainment date for the submittal deadline.6 This finding, available, e.g., Confidential Business Hayden SO2 NAA was October 4, 2018. which became effective on April 18, Information (CBI) or other information Nonattainment plans for SO2 must 2016, initiated a deadline under CAA whose disclosure is restricted by statute. meet sections 110, 172, 191, and 192 of section 179(a) for the potential Certain other material, such as the CAA. The EPA’s regulations imposition of new source review offset copyrighted material, is not placed on governing nonattainment SIP and highway funding sanctions. the internet and will be publicly submissions are set forth at 40 CFR part Additionally, under CAA section 110(c), available only in hard copy form. 51, with specific procedural Publicly available docket materials are requirements and control strategy 3 57 FR 13498 (April 16, 1992). available through https:// requirements residing at subparts F and 4 Id. at 13545–13549, 13567–13568. 5 www.regulations.gov, or please contact G, respectively. Soon after Congress EPA, Guidance for 1-Hour SO2 Nonattainment the person identified in the FOR FURTHER Area SIP Submissions, April 23, 2014, available at https://www.epa.gov/sites/production/files/2016- INFORMATION CONTACT section for 1 75 FR 35520 (codified at 40 CFR 50.17(a)–(b)). 06/documents/20140423guidance_nonattainment_ additional availability information. If 2 78 FR 47191 (codified at 40 CFR part 81, subpart sip.pdf. you need assistance in a language other C). 6 81 FR 14736 (March 18, 2016).

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the finding triggered a requirement that also received comments from ADEQ, attainment demonstration, that the error the EPA promulgate a federal submitted to the docket for our related was a recent discovery, or that it has implementation plan within two years proposal on Rule B1302, that are taken no action to resolve the modeling of the effective date of the finding relevant to our proposed action on the issue. ADEQ contends that a 13 unless the State has submitted, and the Hayden SO2 Plan. All comments clarification regarding the additional EPA has approved, the nonattainment received on both proposals, including modeling efforts would help avoid any plan as meeting applicable the comments from ADEQ, are included misunderstanding. Finally, ADEQ requirements. in the docket for this action. The asserts that the new modeling In response to the EPA’s finding, the comments from FMI pertain to Rule methodology shows attainment of the Arizona Department of Environmental B1302 and are addressed in our final NAAQS and that it was approved by the Quality (ADEQ) submitted the Hayden action on the rule. Copies of these EPA in 2018. SO2 Plan on March 9, 2017, and responses are also included in the Response: We agree that extensive submitted associated final rules on docket for this action.14 The comments work has been done by ADEQ and April 6, 2017.7 The EPA issued letters from ADEQ and from Asarco, along with Asarco, in consultation with EPA staff, dated July 17, 2017, and September 26, our responses, are summarized below. to correct the flawed modeling in the 2017, finding the submittals complete March 2017 submittal. While we noted and halting the sanctions clock under A. Comments From ADEQ in our proposal that ADEQ has been CAA section 179(a).8 Comment: ADEQ’s comment letter working with Asarco and the EPA on expresses concern that the EPA’s revised modeling, we acknowledge that II. Public Comments and EPA proposed action does not clearly the high level of effort that has gone into Responses acknowledge the work that ADEQ and that work was not clearly presented in The EPA proposed to partially Asarco have completed since our proposed action and the sequence of approve and partially disapprove the identifying the modeling error that was ADEQ submitting the SIP revision in 9 Hayden SO2 Plan on May 22, 2020. Our part of the basis for the EPA’s proposed March 2017, identifying the error later proposed action contains more disapproval of the modeled attainment in 2017, and subsequently working information on the basis for this demonstration and related elements. extensively with Asarco and the EPA to rulemaking and on our evaluation of the ADEQ describes the modeling error that correct the error was not discussed. submittal. In a separate, concurrent was discovered in 2017 after the SIP In response to the statement that the action, we also proposed a limited revision was submitted to the EPA and new methodology was approved by the approval and limited disapproval of discusses the extensive work that was EPA in 2018, we would like to clarify Arizona Administrative Code, Title 18, conducted to develop a revised that, while ADEQ and Asarco consulted Chapter 2, Article 13, Section R18–2– modeling methodology. These efforts with EPA staff to revise the modeling, B1302 (‘‘Rule B1302’’).10 include additional analyses, work to and has shared new modeling files and The EPA’s proposed action for the justify new assumptions and modeling a modeling TSD with EPA staff, these Hayden SO2 Plan provided a 30-day parameters, and the development of documents have not undergone ADEQ public comment period. During this new modeling files and a modeling public notice and comment or been period, we received comments from technical support document (TSD), draft formally submitted to the EPA as a SIP Freeport-McMoRan Incorporated (FMI) versions of which were shared with EPA revision. Therefore, the revised 11 12 and ASARCO LLC (‘‘Asarco’’). We staff for review. ADEQ does not dispute modeling has not been formally the modeling error and acknowledges approved by the EPA and was not 7 Letters dated March 8, 2017, and April 6, 2017, evaluated as part of our proposed from Tim Franquist, Director, Air Quality Division, that the EPA was required to take action on the SIP revision submitted in March action. Only upon such future ADEQ, to Alexis Strauss, Acting Regional submission, if it occurs, will the EPA be Administrator, EPA Region IX. Although the cover 2017. However, ADEQ expresses able to formally evaluate and make a letter for the Hayden SO2 Plan was dated March 8, concern that the language in the EPA’s 2017, the Plan was transmitted to the EPA on March proposal could lead the reader to determination regarding its adequacy to 9, 2017. demonstrate attainment of the 2010 SO2 8 believe that it knowingly submitted a Letters dated July 17, 2017, and September 26, NAAQS. 2017, from Elizabeth Adams, Acting Air Division SIP revision containing a flawed Director, EPA Region IX, to Tim Franquist, Director, B. Comments From Asarco Air Quality Division, ADEQ. Air Plan Revisions, Hayden Area; Sulfur Dioxide 9 85 FR 31118. Control Measures—Copper Smelters, 85 FR 31113 Comment: Asarco notes that it has 10 85 FR 31113 (May 22, 2020). (May 22, 2020), Docket No. EPA–R09–OAR–2020– spent considerable time and resources 11 Letter dated June 22, 2020, from Todd Weaver, 0173.’’ since 2011, in collaboration with ADEQ Senior Counsel, Freeport-McMoRan, to Rulemaking 13 Letter dated June 18, 2020, from Daniel and the EPA, to achieve attainment of Docket EPA–R09–2020–0109, Subject: ‘‘Re: Czecholinski, Air Quality Division Director, ADEQ, the 2010 SO NAAQS in the Hayden Comments on Partial Approval and Partial to Rulemaking Docket EPA–HQ–OAR–2020–0109, 2 Disapproval of Air Quality Implementation Plans; Subject: ‘‘Partial Approval Partial Disapproval of NAA. The commenter states that Arizona Nonattainment Plan for the Hayden SO2 Air Quality Implementation Plans; Arizona; Asarco’s efforts, including Nonattainment Area (EPA–R09–OAR–2020–0109) Nonattainment Plan for the Hayden SO2 improvements to the capture and and Limited Approval, Limited Disapproval of Nonattainment Area, Docket ID Number: EPA–HQ– control systems, retrofits and Arizona Plan Revisions, Hayden Area; Sulfur OAR–2020–0109.’’ ADEQ’s comment letter Dioxide Control Measures—Copper Smelters (EPA– mistakenly references Rulemaking Docket ‘‘EPA– rebalancing of the converter aisle to R09–OAR–2020–0173).’’ HQ–OAR–2020–0109’’ instead of the rulemaking enhance sulfur recovery at the acid 12 Letter dated June 22, 2020, from Amy Veek, docket for this action, ‘‘EPA–R09–OAR–2020– plant, and installation of an improved Environmental Manager, Asarco Hayden 0109,’’ and was submitted to the rulemaking docket preheater system to reduce startup Operations, ASARCO LLC, to Ashley Graham, Air for our related proposal on Rule B1302, ‘‘EPA–R09– Planning Office, Air Division, EPA Region 9, OAR–2020–0173.’’ emissions, have resulted in SO2 Subject: ‘‘Re: Comments of ASARCO LLC on (1) 14 Response to Comments Document for the EPA’s emission reductions of approximately ‘‘Partial Approval and Partial Disapproval of Air Final Actions on the ‘‘Arizona State 90 percent relative to pre-2010 levels. Quality Implementation Plans; Arizona; Implementation Plan Revision: Hayden Sulfur Response: The EPA acknowledges the Nonattainment Plan for the Hayden SO2 Dioxide Nonattainment Area for the 2010 SO2 efforts that Asarco has undertaken to Nonattainment Area, 85 FR 31118 (May 22, 2020), NAAQS’’ and Rule R18–2–B1302, ‘‘Limits on SO2 Docket No. EPA–R09–OAR–2020–0109. (2) Emissions from the Hayden Smelter’’ (September reduce SO2 emissions and improve air ‘‘Limited Approval, Limited Disapproval of Arizona 2020). quality in the Hayden SO2 NAA. A

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summary of the equipment and process attainment of the NAAQS, and the level that was assumed in the upgrades that have been implemented therefore, it does not agree that the attainment modeling. In particular, the 15 was included in our proposed action, Hayden SO2 Plan cannot be approved installation of new and improved and a more detailed discussion was without numeric fugitive emissions capture and control equipment was included in the TSD accompanying our limits. Asarco contends that the EPA expected to reduce fugitive emissions, proposed action on Rule B1302.16 improperly relied upon selective but, in the absence of ongoing Comment: Asarco asserts that the citation of the CAA and EPA regulations monitoring, it is not known whether statement in the EPA’s proposal that an and non-binding guidance to conclude these changes were sufficient to reduce error in ADEQ’s modeling ‘‘changed that a numeric fugitive emissions limit emissions to the level necessary to predicted SO2 concentrations such that is required. Asarco lists the ‘‘other achieve attainment. Similarly, operation the modeling no longer shows control measures, means or techniques’’ and maintenance requirements and 17 attainment of the 2010 SO2 NAAQS’’ provided for in the Hayden SO2 Plan, work practice controls are helpful for is disingenuous because ADEQ’s revised which it asserts are sufficient ‘‘to ensuring that process and control modeling demonstration shows achieve and demonstrate attainment of equipment are properly operated, but attainment of the 2010 SO2 NAAQS. the 2010 SO2 NAAQS,’’ including new they do not correspond to or assure Asarco believes that the accompanying and upgraded capture and control achievement of any particular level of footnote 18 in the proposed action equipment, operation and maintenance emissions. suggests that the modeling error was plans for process and control The fugitive emissions studies, the discovered in 2020, rather than in 2017, equipment, numeric emissions limits on first of which began last year, will and suggests that the EPA should have the main stack, a new preheater system provide better information regarding the acknowledged that ADEQ’s revised to reduce startup emissions, work actual level of fugitive emissions from modeling shows attainment even if the practice controls for fugitive emissions, the facility. However, these studies will EPA felt compelled to act only on the and fugitive emissions studies to last for only one year each and do not submitted version of the plan. evaluate the efficacy of the improved correspond to any numeric emission Response: As discussed in our gas capture and control equipment. limit. Therefore, if one of the studies response to ADEQ’s comments in Response: We disagree with this were to show that fugitive emissions Section II.A of this notice, the EPA does comment. Section 172(c)(6) of the CAA exceeded the levels assumed in the not dispute that the modeling error was requires attainment plans to include attainment modeling, this would not discovered in 2017. We referenced the ‘‘enforceable emission limitations, and constitute a violation of an emissions 2020 email 19 in our proposed action such other control measures, means or limit that could give rise to an because we did not have techniques’’ as necessary or appropriate enforcement action. Rather, it would contemporaneous documentation of the to provide for attainment. The guidance simply trigger a requirement for Asarco discovery of the modeling error to cite documents we cited in our proposal to conduct new modeling to assess in our proposal. We did not intend for (i.e., the General Preamble and the 2014 whether the NAAQS would still be 21 our proposal to suggest that the SO2 Guidance) describe and interpret attained at the higher emissions levels. modeling error was identified in 2020 CAA section 172(c)(6) and other binding If that modeling shows an increased and acknowledge the extensive work statutory and regulatory requirements. likelihood of a NAAQS exceedance, that has been done by ADEQ and Asarco While the guidance documents are not then Asarco would have to submit to to revise the modeling in the March themselves binding, they guide the ADEQ a proposed revision to its 2017 SIP revision. EPA’s review of SIP submittals for operations and maintenance plan and We also note that ADEQ and Asarco compliance with the relevant associated modeling to demonstrate have informally sent draft revised requirements. In any case, the text of attainment of the NAAQS. ADEQ would modeling to EPA staff, who have section 172(c)(6) is clear that the EPA then submit revisions to the operational provided feedback on the draft revised must determine whether a submitted limits and volumetric flow monitoring modeling. However, as previously SIP includes all enforceable emission provisions, and a revised attainment noted, ADEQ has not yet released the limitations and other measures that are demonstration to the EPA as a SIP revised modeling for public notice and necessary to provide for attainment. revision. comment or formally submitted the While measures other than emission There is substantial risk that fugitive modeling to the EPA as a SIP revision. limits might be sufficient by themselves emissions from the facility could cause Accordingly, the EPA has not yet in some circumstances (for example, or contribute to violations of the 2010 reviewed the revised modeling for where a particular source contributes SO2 NAAQS. Consequently, the Plan approvability under the applicable little to the attainment problem or is not must assure that these emissions are requirements of the CAA and EPA susceptible to a numeric limit due to limited in an enforceable manner. A regulations. technological limitations), such process for future evaluation of fugitive Comment: Asarco asserts that under circumstances do not exist in this case, emissions and potential future SIP CAA section 172(c)(6), ‘‘other control given that fugitive SO2 emissions at the revisions contingent on the results of measures, means or techniques’’ may be Hayden facility have the potential to that evaluation cannot substitute for sufficient to achieve and demonstrate cause or contribute to NAAQS enforceable limitations on fugitive violations and are capable of being emissions. Moreover, if fugitive 15 85 FR 31118, 31122. continuously monitored.20 emissions were to increase during the 16 EPA, ‘‘Technical Support Document for the The measures listed in Asarco’s EPA’s Rulemaking for the Arizona State period between the two studies or after Implementation Plan; Arizona Administrative Code, comment, while important components the second study, there would be no Title 18, Chapter 2, Article 13, Part B—Hayden, of the control strategy, do not ensure mechanism to address those increased Arizona, Planning Area, R18–2–B1302—Limits on that fugitive emissions will remain at emissions. In contrast, if the Plan were SO2 Emissions from the Hayden Smelter,’’ April 2020 (‘‘Rule B1302 TSD’’). to rely on enforceable numeric fugitive 20 Letter dated April 29, 2019, from Elizabeth 17 emissions limits corresponding to the 85 FR 31118, 31120. Adams, Air Division Director, EPA Region IX, to 18 Id. at footnote 16. Timothy Franquist, Air Director, ADEQ, Subject: 19 Email dated March 25, 2020, from Farah ‘‘Re: Comments on draft letter regarding R18–2– 21 See Arizona Administrative Code R18–2– Esmaeili, ADEQ, to Rynda Kay, EPA Region IX. B1302’’ (‘‘April 2019 Comment Letter’’). C1302 Appendix 14 paragraphs A.14.8 and 9.

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modeled fugitive emissions levels, with from the smelter by 90 percent between proposal, one of four basic principles ongoing monitoring, recordkeeping and 2011 and 2019. that apply to all SIPs and control reporting requirements, then an With regards to the adequacy of the strategies is replicability, which means exceedance of any of these emissions fugitive emissions controls, the EPA that ‘‘where a rule contains procedures levels would be a violation of the SIP disagrees that there are sufficient data to for changing the rule, interpreting the that could result in an immediate conclude that fugitive emissions are rule, or determining compliance with enforcement action by ADEQ, the EPA, below the level needed to ensure the rule, the procedures are sufficiently or a third party. Such an approach attainment. Asarco references emissions specific and non-subjective such that would satisfy the requirement of CAA reductions based on initial data two independent entities applying the section 172(c)(6) for enforceable limits collected during the first fugitive procedures would obtain the same and other measures that provide for emissions study, stating that ‘‘[u]nder result.’’ 24 We find that the language in attainment of the 2010 SO2 NAAQS. the Plan, fugitive emissions fall from a Rule B1302 subsection (E)(4) allowing Finally, Asarco lists the stack maximum annual average of 295 for ‘‘measurement of the flow rate at an emission limits among the control pounds/hour to an average range alternative sampling point’’ where the measures that it believes are sufficient between 4.3 and 39.8 pounds/hour.’’ measurement in the outlet of the control to demonstrate attainment. As discussed However, Asarco has not provided the equipment ‘‘would yield inaccurate in our proposal, the stack emission hourly emissions data from specific results or would be technologically limits would be enforceable were it not roofline sources over an extended infeasible’’ is too general and subjective for the flaws in monitoring, period that would be necessary to assess to ensure that two independent entities recordkeeping and reporting whether the recently monitored levels of applying this standard would reach the requirements. In any case, the stack fugitive emissions have been same conclusion. For example, ADEQ limits have no bearing on the SIP’s flaw consistently at or below the levels might find that measurement of stack in not imposing an enforceable limit for necessary for attainment. Moreover, gas volumetric flow rate in the outlet of even if recent fugitive emissions have fugitive SO2 emissions. a particular piece of SO2 control For the foregoing reasons, we been below the modeled level, there is equipment is technologically infeasible conclude that the requirements for no assurance that these levels will be in a situation where the EPA might enforceable limits and other measures maintained over the long-term because, conclude that such measurement is as described in the previous response, feasible. Moreover, the rule does not that provide for attainment of the SO2 NAAQS under CAA section 172(c)(6) the Plan and Rule B1302 do not include specify any procedures or criteria for have not been satisfied. any ongoing requirements to measure determining whether measurement at Comment: Asarco reiterates its view fugitive emissions or assure that these the alternative sampling point would emissions remain low. that the EPA’s proposal is dismissive of yield accurate and representative Comment: Regarding the EPA’s the progress that Asarco has made in results. Therefore, this provision of the position that Rule B1302 subsection rule is inconsistent with the principle of reducing total SO2 emissions at the (E)(4) ‘‘provides an option for Hayden smelter, and that it implies that replicability. alternative sampling points that could As stated in the April 2019 Comment fugitive emissions controls at the undermine the enforceability of the Letter conveying the EPA’s comments to smelter are inadequate. Asarco cites stack emission limit by providing undue ADEQ regarding Rule B1302, the EPA emissions reductions observed based on flexibility to change sampling points agrees that withdrawal of subsection the initial data collected during the first without undergoing a SIP revision,’’ 23 (E)(4) is appropriate and will resolve fugitive emissions study to assert that the commenter states that the EPA’s this issue, if such withdrawal occurs. fugitive emissions are well below what concern is not justified and lacks merit Comment: Asarco objects to the EPA’s is needed to ensure attainment of the because the provision requires Asarco to position that Rule B1302 subsection 2010 SO2 NAAQS. demonstrate to ADEQ’s satisfaction that (E)(6) ‘‘allows for nearly 10 percent of Response: The EPA acknowledges the the measurement ‘‘would yield total facility SO2 emissions annually to progress that has been made to reduce inaccurate results or would be be exempt from continuous emissions SO2 emissions at the Hayden smelter. technologically infeasible’’ prior to monitoring systems; this deficiency As discussed in Asarco’s comments and using an alternative sampling point. could compromise the enforceability of in the TSD accompanying our proposed Asarco asserts that it would be the main stack emission limit.’’ 25 The action on Rule B1302, Asarco’s SO2 indefensible for the EPA to require commenter asserts that there is no control strategy includes several inaccurate results be used to deficiency and the basis for disapproval equipment and process upgrades, demonstrate attainment. Lastly, Asarco lacks merit because the provision to including replacement of the notes that it has recommended that allow Asarco to petition ADEQ to electrostatic precipitator and flash ADEQ withdraw subsection (E)(4) replace the continuous emissions furnace with a new vent gas baghouse because Asarco and ADEQ have agreed monitoring system (CEMS) with annual system; replacement of five 13-foot that the monitoring points are yielding stack testing and report emissions rates diameter converters with new 15-foot acceptable results so this issue should as a pounds per hour (lb/hr) or pounds diameter units that operate more be resolved upon ADEQ’s submittal of a per ton production factor would still efficiently; installation of extended revised plan. allow calculation of the emissions rates. secondary and tertiary hooding in the Response: The EPA disagrees that this Asarco states that there were legitimate converter aisle to maximize ventilation issue lacks merit. The EPA is not concerns that it would not be able to gas capture during charging, transfer, suggesting that inaccurate sampling perform a relative accuracy test audit and tapping operations; and points be required to be used to (RATA) of the CEMS due to the low improvements to the acid plant with an demonstrate attainment, but rather that concentrations of SO2 present, but that upgraded pre-heater system.22 ADEQ any change to sampling points should it has now determined that it can has estimated that the converter retrofit be the subject of EPA and public review perform a RATA of the relevant CEMS project would reduce SO2 emissions through a SIP revision. As noted in our 24 General Preamble, 13568. 22 Rule B1302 TSD, 5. 23 85 FR 31118, 31120. 25 85 FR 31118, 31120.

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and has requested that ADEQ withdraw shutdown ventilation flue and require and (2) the stack emission limit is not subsection (E)(6) in ADEQ’s submittal of the use of the operation and fully enforceable due to various a revised plan to resolve this issue. maintenance plan value in compliance deficiencies in Rule B1302.30 Response: The EPA disagrees that this calculations. Comment: Asarco states that it issue lacks merit. While the rule Response: The EPA disagrees that the disagrees with the EPA’s conclusion language does provide for an emissions concern is unfounded and lacks merit. that the modeling in the Hayden SO2 value that can allow for the calculation While the procedure for calculating Plan is flawed. It notes that the revised of an overall stack emissions rate, we do emissions for planned and unplanned modeling that was informally submitted not consider this sufficient to ensure the shutdowns and the value are included to EPA staff indicates that the Converter enforceability of the one-hour main in supporting documentation for the Retrofit Project meets the RACM/RACT stack emissions limit given the large Plan, they are not included in Rule requirements and that Asarco’s variability in hourly emissions from the B1302 or elsewhere in the SIP; understands that the revised modeling Asarco facility. The commenter asserts therefore, they are not currently will be submitted to the EPA as a SIP that units encompassed by the provision enforceable. revision. typically emit less than 75 lb/hr SO2; Comment: Regarding the EPA’s Response: As discussed above, the however, we note that Asarco’s position that Rule B1302 ‘‘lacks a EPA has not reviewed the revised emissions estimate for these units method for calculating hourly SO2 modeling because, as Asarco forecasts a maximum emission rate as emissions,’’ 28 Asarco asserts that the acknowledges, it has not been formally high as 417 lb/hr SO2 (out of a total calculation method is presented in submitted to the EPA as a SIP revision. 1,069.1 lb/hr or 1,518 lb/hr main stack subsections (F)(1) and (F)(2) and The EPA’s proposal to disapprove the limit).26 In addition, we note that source acknowledges that there was a RACM/RACT demonstration is based on test results represent a ‘‘snapshot’’ of typographical omission of the ‘‘valid the modeling that was submitted as part unit emissions (and of corresponding hour’’ definition that was included in of the March 2017 SIP submittal. Both unit operations) at the time of the source Arizona’s submission. Asarco notes that ADEQ and Asarco acknowledge the test. Generally, source tests must be it has submitted to ADEQ the same error in the modeling in the March 2017 performed at approximately 80 to 100 definition included in the EPA- submittal. The EPA will review any percent of maximum operating levels, approved plan for the 2010 SO2 NAAQS revised modeling upon formal and emissions limits relying upon a for the Miami, Arizona area and that submission of such modeling to the EPA source test for demonstrating Asarco has requested that ADEQ as a SIP revision. compliance typically require continuous include it in a revised submittal to Comment: Asarco states that ADEQ monitoring of one or more parameters of resolve the issue. intends to submit a SIP revision that unit operation. This allows for the Response: The omission of the ‘‘valid includes updated modeling that shows determination that unit operations are hour’’ definition leads to ambiguity in attainment; removal of Rule B1302, representative of source test conditions how hourly emissions are calculated, Section (E)(4); removal of Rule B1302, and ensures the validity of the source thus undermining enforceability. Section (E)(6); a provision in the test result. Rule B1302 subsection (E)(6), However, the EPA agrees that inclusion operation and maintenance plan to however, relies solely on source test of a ‘‘valid hour’’ definition will clarify demonstrate the quantity of SO2 present results for demonstrating compliance, the method for calculating hourly SO2 during planned and unplanned use of which we do not consider sufficient to emissions for the Hayden facility and the shutdown ventilation flue; and a ensure enforceability of the main stack will resolve this issue, if submitted to ‘‘valid hour’’ definition that is the same emissions limit. As stated in our April the EPA in a future SIP revision. as the definition in the approved Miami 2019 Comment Letter, the EPA agrees Comment: The commenter states that SO2 SIP. Asarco reiterates its position that withdrawal of subsection (E)(6) is Asarco is disappointed that the EPA has that the CAA does not require the appropriate and will resolve this issue, not evaluated a fundamental part of the Hayden SO2 SIP to include numeric if such withdrawal occurs. Hayden SO2 control strategy—i.e., the fugitive emissions limits but notes that Comment: Asarco objects to the EPA’s ‘‘dual limit.’’ Asarco discusses its it is working with ADEQ to establish position that Rule B1302 ‘‘lacks a rationale for the dual limit, states that workable emissions limits and method for measuring or calculating there is no basis for the EPA to question monitoring provisions for demonstrating emissions from a shutdown ventilation it, and states that it is presumptively compliance with such limits. Asarco flue; this omission could compromise approvable under the EPA’s SO2 also states that the submission of the SIP the enforceability of the main stack Guidance. revision is imminent and recommends emission limit.’’ 27 Asarco asserts that Response: As noted in our proposal that the EPA prioritize action on the the concern is unfounded and lacks on Rule B1302, we are approving the pending revised submittal rather than merit. Asarco explains the purpose of main stack emission limit because it is development of a new plan. the shutdown ventilation flue and more stringent than the existing Response: As discussed above, the describes the procedure for calculating requirements in state law, as well as EPA disagrees with the commenter’s emissions for planned and unplanned new operational standards and assertion that the CAA does not require shutdowns. Asarco notes that the monitoring, recordkeeping, and enforceable emissions limitations for procedure and resulting values are reporting requirements for the smelter.29 fugitive emissions. Section 172(c)(6) of included in the SIP documentation but However, as noted in our proposed the Act requires attainment plans to that to resolve the issue, it has requested action on the Hayden SO2 Plan, we are include ‘‘enforceable emission that ADEQ revise the operation and not evaluating its adequacy to ensure limitations, and such other control maintenance plan requirements in the attainment of the 2010 SO2 NAAQS measures, means or techniques’’ as necessary and appropriate to provide for SIP to document the SO2 emitted during because (1) ADEQ has not demonstrated planned and unplanned use of the that the emission limits in Rule B1302 attainment. With regards to the SIP are sufficient to provide for attainment, revision that ADEQ and Asarco have 26 See B-1j_Forecast_Emissions_20160927.xlsx in been working on, the EPA will review the rulemaking docket for this action. 28 Id. 27 85 FR 31118, 31120. 29 85 FR 31113, 31115. 30 85 FR 31118, 31120.

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the submittal for approvability under PRA because this action does not I. Executive Order 13211: Actions That the applicable requirements of the CAA impose additional requirements beyond Significantly Affect Energy Supply, and EPA regulations once it has those imposed by state law. Distribution, or Use undergone ADEQ public notice and D. Regulatory Flexibility Act (RFA) comment and been formally submitted This action is not subject to Executive to the EPA. While the EPA looks I certify that this action will not have Order 13211, because it is not a forward to reviewing the prospective a significant economic impact on a significant regulatory action under submittal, the EPA must also fulfill its substantial number of small entities Executive Order 12866. obligation under section 110(k) of the under the RFA. This action will not J. National Technology Transfer and CAA to act on ADEQ’s 2017 submittal. impose any requirements on small Advancement Act (NTTAA) entities beyond those imposed by state III. The EPA’s Final Action law. Section 12(d) of the NTTAA directs For the reasons discussed in our the EPA to use voluntary consensus proposed action and above, the EPA is E. Unfunded Mandates Reform Act standards in its regulatory activities finalizing our partial approval and (UMRA) unless to do so would be inconsistent partial disapproval of the Hayden SO 2 This action does not contain any with applicable law or otherwise Plan. The EPA is approving the unfunded mandate as described in emissions inventory element under impractical. The EPA believes that this UMRA, 2 U.S.C. 1531–1538, and does action is not subject to the requirements CAA section 172(c)(3) and (4) and not significantly or uniquely affect small of section 12(d) of the NTTAA because affirming that the State has met the new governments. This action does not application of those requirements would source review requirements for the impose additional requirements beyond be inconsistent with the CAA. Hayden SO2 NAA under section those imposed by state law. 172(c)(5). We are disapproving the Accordingly, no additional costs to K. Executive Order 12898: Federal attainment demonstration, RACM/ state, local, or tribal governments, or to Actions To Address Environmental RACT, enforceable emission limitations, the private sector, will result from this Justice in Minority Populations and RFP, and contingency measure elements action. Low-Income Populations because they do not meet the F. Executive Order 13132: Federalism requirements of the CAA for the 2010 The EPA lacks the discretionary SO2 NAAQS. As a result of this final This action does not have federalism authority to address environmental partial disapproval, the offset sanction implications. It will not have substantial justice in this rulemaking. in CAA section 179(b)(2) will be direct effects on the states, on the imposed 18 months after the effective relationship between the national L. Congressional Review Act (CRA) date this action, and the highway government and the states, or on the This action is subject to the CRA, and funding sanction in CAA section distribution of power and 179(b)(1) six months after the offset the EPA will submit a rule report to responsibilities among the various each House of the Congress and to the sanction is imposed. A sanction will not levels of government. be imposed if the EPA determines that Comptroller General of the United a subsequent SIP submission corrects G. Executive Order 13175: Coordination States. This action is not a ‘‘major rule’’ the identified deficiencies before the With Indian Tribal Governments as defined by 5 U.S.C. 804(2). applicable deadline. This action does not have tribal M. Petitions for Judicial Review IV. Statutory and Executive Order implications, as specified in Executive Under section 307(b)(1) of the CAA, Reviews Order 13175, because the SIP is not approved to apply on any Indian petitions for judicial review of this Additional information about these reservation land or in any other area action must be filed in the United States statutes and Executive Orders can be where the EPA or an Indian tribe has Court of Appeals for the appropriate found at http://www.epa.gov/laws- demonstrated that a tribe has circuit by January 11, 2021. Filing a regulations/laws-and-executive-orders. jurisdiction, and will not impose petition for reconsideration by the A. Executive Order 12866: Regulatory substantial direct costs on tribal Administrator of this final rule does not Planning and Review and Executive governments or preempt tribal law. affect the finality of this rule for the Order 13563: Improving Regulation and Thus, Executive Order 13175 does not purposes of judicial review nor does it Regulatory Review apply to this action. extend the time within which a petition for judicial review may be filed, and This action is not a significant H. Executive Order 13045: Protection of regulatory action and was therefore not Children From Environmental Health shall not postpone the effectiveness of submitted to the Office of Management Risks and Safety Risks such rule or action. This action may not and Budget (OMB) for review. be challenged later in proceedings to The EPA interprets Executive Order enforce its requirements (see CAA B. Executive Order 13771: Reducing 13045 as applying only to those section 307(b)(2)). Regulations and Controlling Regulatory regulatory actions that concern Costs environmental health or safety risks that List of Subjects in 40 CFR Part 52 This action is not an Executive Order the EPA has reason to believe may Environmental protection, Air disproportionately affect children, per 13771 regulatory action because SIP pollution control, Incorporation by the definition of ‘‘covered regulatory approvals, including limited approvals, reference, Intergovernmental relations, action’’ in section 2–202 of the are exempted under Executive Order Nitrogen dioxide, Particulate matter, 12866. Executive Order. This action is not subject to Executive Order 13045 Reporting and recordkeeping C. Paperwork Reduction Act (PRA) because it does not impose additional requirements, Sulfur dioxide, Volatile This action does not impose an requirements beyond those imposed by organic compounds. information collection burden under the state law. Authority: 42 U.S.C. 7401 et seq.

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Dated: October 10, 2020. PART 52—APPROVAL AND Phoenix and Tucson Areas)’’ by adding John Busterud, PROMULGATION OF an entry for ‘‘Arizona State Regional Administrator, Region IX. IMPLEMENTATION PLANS Implementation Plan Revision: Hayden Sulfur Dioxide Nonattainment Area for ■ 1. The authority citation for Part 52 Part 52, Chapter I, Title 40 of the Code the 2010 SO2 NAAQS’’ after the entry of Federal Regulations is amended as continues to read as follows: for ‘‘SIP Revision: Hayden Lead follows: Authority: 42 U.S.C. 7401 et seq. Nonattainment Area, excluding Appendix C.’’ Subpart D—Arizona § 52.120 Identification of plan. ■ 2. In 52.120(e), amend Table 1 under the heading ‘‘Part D Elements and Plans * * * * * (Other than for the Metropolitan (e) * * *

TABLE 1—EPA-APPROVED NON-REGULATORY AND QUASI-REGULATORY MEASURES [Excluding certain resolutions and statutes, which are listed in tables 2 and 3, respectively] 1

Applicable geographic Name of SIP provision or nonattainment area State submittal date EPA approval date Explanation or title/subject

*******

Part D Elements and Plans (other than for the Metropolitan Phoenix or Tucson Areas)

******* Arizona State Imple- Hayden, AZ Sulfur Di- March 9, 2017 ...... [INSERT FEDERAL Adopted by the Arizona Department of Envi- mentation Plan Re- oxide Nonattain- REGISTER CITA- ronmental Quality and submitted to the vision: Hayden Sul- ment Area. TION], November EPA as an attachment to letter dated fur Dioxide Non- 10, 2020. March 8, 2017. The EPA approved the attainment Area for emissions inventory element and affirmed the 2010 SO2 that the State had met the new source re- NAAQS. Chapter 3, view requirements for the area. The EPA Chapter 8, Appendix disapproved the attainment demonstration, A, and Appendix B. RACM/RACT, enforceable emission limita- tions, RFP, and contingency measure ele- ments.

******* 1 Table 1 is divided into three parts: Clean Air Act Section 110(a)(2) State Implementation Plan Elements (excluding Part D Elements and Plans), Part D Elements and Plans (other than for the Metropolitan Phoenix or Tucson Areas), and Part D Elements and Plans for the Metropoli- tan Phoenix and Tucson Areas.

* * * * * DEPARTMENT OF LABOR uses to resolve potential discrimination and other material violations of the laws ■ 3. Section 52.124 is amended by Office of Federal Contract Compliance and regulations administered by OFCCP revising paragraph (c) to read as follows: Programs applicable to Federal contractors and § 52.124 Part D disapproval. subcontractors, add clarifying 41 CFR Parts 60–1, 60–2, 60–300, and definitions to specify the types of * * * * * 60–741 evidence OFCCP uses to support its (c) The following portions of the [OFCCP–2019–0007–0001] discrimination findings, and correct the ‘‘Arizona State Implementation Plan title of OFCCP’s agency head. Revision: Hayden Sulfur Dioxide RIN 1250–AA10 DATES: These regulations are effective Nonattainment Area for the 2010 SO2 December 10, 2020. NAAQS’’ are disapproved because they Nondiscrimination Obligations of FOR FURTHER INFORMATION CONTACT: Tina do not meet the requirements of Part D Federal Contractors and Williams, Director, Division of Policy of the Clean Air Act: Subcontractors: Procedures To and Program Development, Office of (1) Attainment demonstration, Resolve Potential Employment Federal Contract Compliance Programs, Discrimination 200 Constitution Avenue NW, Room C– (2) Reasonably available control 3325, Washington, DC 20210. AGENCY: measures/reasonably available control Office of Federal Contract Telephone: (202) 693–0103 (voice) or technology, Compliance Programs, Labor. (202) 693–1337 (TTY). ACTION: (3) Enforceable emission limitations, Final rule. SUPPLEMENTARY INFORMATION: (4) Reasonable further progress, and SUMMARY: The U.S. Department of Labor Background (5) Contingency measures. (‘‘the Department’’) publishes this final rule to codify procedures that the Office A. Legal Authority [FR Doc. 2020–23030 Filed 11–9–20; 8:45 am] of Federal Contract Compliance OFCCP administers and enforces BILLING CODE 6560–50–P Programs (‘‘OFCCP’’ or ‘‘the agency’’) Executive Order 11246, as amended

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(E.O. 11246); section 503 of the Enacted in 1973, and amended since, either facilitate resolution 5 or proceed Rehabilitation Act of 1973, as amended, the purpose of section 503 is twofold. to administrative enforcement as 29 U.S.C. 793 (section 503); and the First, section 503 prohibits employment necessary to secure compliance.6 A Vietnam Era Veterans’ Readjustment discrimination on the basis of disability contractor found in violation who fails Assistance Act of 1974, as amended, 38 by Federal contractors. Second, it to correct violations of OFCCP’s U.S.C. 4212 (VEVRAA); and their requires each covered Federal contractor regulations may, after the opportunity implementing regulations.1 Collectively, to take affirmative action to employ and for a hearing, have its contracts these laws require Federal contractors advance in employment qualified canceled, terminated, or suspended and subcontractors 2 to take affirmative individuals with disabilities. The and/or may be subject to debarment.7 action to ensure equal employment requirements in section 503 generally B. Overview of Rule opportunity, and not discriminate on apply to any business or organization the basis of race, color, religion, sex, that holds a single Federal contract or The Department publishes this final sexual orientation, gender identity, subcontract in excess of $15,000.3 rule to increase clarity and transparency national origin, disability, or status as a Contractors with 50 or more employees for Federal contractors, establish clear protected veteran. Additionally, E.O. and a single Federal contract or parameters for OFCCP resolution 11246 prohibits a contractor from subcontract of $50,000 or more also procedures, and enhance the efficient discharging or otherwise discriminating must develop and maintain an enforcement of equal employment against applicants or employees who affirmative action program that opportunity laws. The rule will help inquire about, discuss, or disclose their complies with 41 CFR part 60–741, OFCCP to increase the number of compensation or that of others, subject subpart C. contractors that the agency evaluates to certain limitations. and focus on resolving stronger cases Enacted in 1974 and amended in the through the strategic allocation of Issued in 1965, and amended several intervening years, VEVRAA prohibits times in the intervening years, E.O. limited agency resources. The Federal contractors and subcontractors procedures codified in the final rule aim 11246 has two principal purposes. First, from discriminating against employees it prohibits covered Federal contractors to achieve that end by increasing the and applicants because of status as a transparency of OFCCP’s operations so and subcontractors from discriminating protected veteran (defined by the statute against employees and applicants that contractors and OFCCP can resolve to include disabled veterans, recently potential violations through a clear, because of race, color, religion, sex, separated veterans, Armed Forces sexual orientation, gender identity, mutual understanding of the issues. The Service Medal Veterans, and active duty final rule also enables OFCCP to pursue national origin, or because they inquire wartime or campaign badge veterans). It resolution of stronger cases efficiently about, discuss, or disclose their also requires each covered Federal and as early in the compliance compensation or that of others, subject contractor and subcontractor to take evaluation process as possible, through to certain limitations. Second, it affirmative action to employ and the Predetermination Notice (PDN) requires covered Federal contractors advance in employment these veterans. procedures and the early resolution and subcontractors to take affirmative The requirements in VEVRAA generally conciliation option. Critically, the final action to ensure equal employment apply to any business or organization rule establishes consistent parameters opportunity. that holds a single Federal contract or for findings and preliminary findings of The requirements in E.O. 11246 4 subcontract in excess of $150,000. discrimination, and provides generally apply to any business or Contractors with 50 or more employees contractors with more certainty as to organization that (1) holds a single and a single Federal contract or OFCCP’s operative standards for Federal contract, subcontract, or subcontract of $150,000 or more also compliance evaluations, and provides federally assisted construction contract must develop and maintain an guardrails on the agency’s issuance of in excess of $10,000; (2) has Federal affirmative action program that pre-enforcement notices. The contracts or subcontracts that combined complies with 41 CFR part 60–300, Department issues this rule as an total in excess of $10,000 in any 12- subpart C. exercise of its enforcement discretion to month period; or (3) holds Government focus OFCCP’s resources on those cases bills of lading, serves as a depository of Pursuant to these laws, receiving a with the strongest evidence. This Federal funds, or is an issuing and Federal contract comes with a number approach is neither compelled nor paying agency for U.S. savings bonds of responsibilities. Contractors are prohibited by Title VII and OFCCP case and notes in any amount. Supply and required to comply with all provisions law. service contractors with 50 or more of these laws as well as the rules, On December 30, 2019 (84 FR 71875), employees and a single Federal contract regulations, and relevant orders of the the Department published a notice of or subcontract of $50,000 or more also Secretary of Labor. Where OFCCP finds proposed rulemaking (NPRM) to codify must develop and maintain an noncompliance under any of the three provisions that provide contractors with affirmative action program that laws or their implementing regulations, greater certainty about the procedures complies with 41 CFR part 60–2. it utilizes established procedures to that OFCCP follows during compliance Construction contractors have different 3 evaluations to resolve employment affirmative action requirements under Effective October 1, 2010, the coverage threshold under section 503 increased from $10,000 discrimination and other material E.O. 11246 at 41 CFR part 60–4. to $15,000, in accordance with the inflationary violations of the laws it enforces. adjustment requirements in 41 U.S.C. 1908. See Specifically, the Department proposed 1 OFCCP will also begin enforcing Section 4 of Federal Acquisition Regulation; Inflation Executive Order 13950, ‘‘Combating Race and Sex Adjustment of Acquisition-Related Thresholds, 75 Stereotyping’’ for Federal contracts or subcontracts FR 53129 (Aug. 30, 2010). 5 41 CFR 60–1.28, 60–1.33, 60–300.62, 60–300.64, entered on or after November 21, 2020. OFCCP is 4 Effective October 1, 2015, the coverage 60–741.62, and 60–741.64; Federal Contract currently implementing this Executive order. threshold under VEVRAA increased from $100,000 Compliance Manual Chapter 8 (Dec. 2019); 2 Hereinafter, the terms ‘‘contractor’’ and ‘‘Federal to $150,000, in accordance with the inflationary Directive 2019–02, ‘‘Early Resolution Procedures’’ contractor’’ are used to refer collectively to adjustment requirements in 41 U.S.C. 1908. See (Nov. 30, 2018); Directive 2018–01, ‘‘Use of contractors and subcontractors that fall under Federal Acquisition Regulation; Inflation Predetermination Notices (PDN)’’ (Feb. 27, 2018). OFCCP’s authority, unless otherwise expressly Adjustment of Acquisition-Related Thresholds, 80 6 41 CFR 60–1.26, 60–300.65, and 60–741.65. stated. FR 38293 (July 2, 2015). 7 41 CFR 60–1.27, 60–300.66, and 60–741.66.

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to codify two formal notices that the Sixth, the final rule clarifies that OFCCP already exist in the FCCM and agency agency uses when it finds potential must explain in detail the basis for its guidance with some additional violations: The PDN and the Notice of findings in pre-enforcement notices, modifications to improve clarity and Violation (NOV). Since 1988, these obtain approval from the OFCCP transparency. The FCCM and agency procedures have been embedded in the Director or acting agency head, and, directives are not legally binding and Federal Contract Compliance Manual upon the contractor’s request, provide have not gone through formal notice and (FCCM), the primary document used by the model and variables used in the public comment. Therefore, they do not agency staff as the procedural agency’s statistical analysis and an provide the same level of certainty that framework for the execution of quality explanation for any variable that was this final rule does. See, e.g., Promoting and timely compliance evaluations and excluded from the statistical analysis. Regulatory Openness Through Good complaint investigations. The Seventh, in the final rule OFCCP Guidance (PRO Good Guidance), 85 FR Department proposed to clarify the extends the amount of time contractors 53163 (Aug. 28, 2020); see also E.O. different types of evidence that it uses have to respond to a PDN to 30 days 13924, Sec. 6(e), 85 FR 31353, 31355 to support a PDN or NOV through the with the possibility of extension, as (May 22, 2020) (‘‘All rules of evidence addition of definitions for ‘‘statistical opposed to the 15 days proposed in the and procedure should be public, clear, evidence’’ and ‘‘nonstatistical NPRM, in response to comments and effective.’’); id. Sec. 6(i) evidence.’’ To increase efficiency, the requesting more time to respond. These (‘‘Administrative enforcement should be Department also proposed to codify an changes are fully explained below. In free of unfair surprise.’’).9 A notice-and- option that allows contractors to addition, in response to several comment rulemaking process also expedite the conclusion of a compliance commenters, OFCCP provides ensures that the public’s views are evaluation by entering directly into a additional guidance in this preamble on heard and that the agency gains the conciliation agreement prior to issuance how it will measure practical benefit of public input that can improve of a PDN or NOV. Finally, the significance. the content of the final rule. Codifying Department proposed to update This final rule is an Executive Order the use of PDNs, NOVs, and an early outdated references to the official title of (E.O.) 13771 regulatory action. Pursuant conciliation option promotes OFCCP’s agency head from ‘‘Deputy to the Congressional Review Act (5 predictability, efficiency, and Assistant Secretary’’ to ‘‘Director.’’ U.S.C. 801 et seq.), OIRA designated timeliness. Additionally, the final rule that this rule is not a ‘‘major rule,’’ as establishes guardrails on the agency’s After careful consideration of the defined by 5 U.S.C. 804(2). Details on comments received in response to its issuance of pre-enforcement notices and the estimated costs of this rule can be the allocation of agency resources by proposal, the Department has decided to found in the economic analysis below. finalize the rule with several key providing clear evidentiary standards changes. First, the final rule clarifies C. Need for Rulemaking that OFCCP must meet to pursue that the evidentiary standards OFCCP As stated above, the Department preliminary findings and findings. The must meet in order to issue a PDN in a believes this rule is needed to increase Department will continue to examine discrimination case must also be met clarity and transparency for Federal means of furthering both these goals before issuing NOVs. Second, OFCCP contractors, establish clear parameters through other rulemakings and guidance changed the terms that the final rule for OFCCP resolution procedures, and documents, as appropriate. defines from ‘‘statistical evidence’’ and enhances the efficient enforcement of Section by Section Analysis ‘‘nonstatistical evidence’’ to equal employment opportunity laws, ‘‘quantitative evidence’’ and but one commenter, a compliance A. Definitions ‘‘qualitative evidence,’’ to provide consulting firm, specifically questioned To provide greater clarity and greater clarity as to the types of the need for rulemaking. The certainty to Federal contractors, the rule evidence that OFCCP collects and how commenter objected to codification of defines ‘‘qualitative evidence’’ and it uses the different types of evidence to OFCCP’s resolution procedures, ‘‘quantitative evidence,’’ which OFCCP support the issuance of pre-enforcement asserting that it would be better for uses to support a finding or preliminary notices. Third, the final rule OFCCP to update the FCCM or the finding of discrimination in a PDN or differentiates the procedures followed agency’s directives system. OFCCP is NOV. In the NPRM, OFCCP proposed to for disparate treatment and disparate guided by four central principles: add definitions for ‘‘nonstatistical impact theories of discrimination, Certainty, efficiency, recognition, and evidence’’ and ‘‘statistical evidence.’’ In which have separate, although similar, transparency. This focus is informed at response to comments on the proposed elements, and provides clarity on the least in part by criticisms the agency definitions, the Department revises the evidentiary standards OFCCP will have received in previous years that OFCCP terms to ‘‘qualitative evidence’’ and to meet to issue pre-enforcement notices has at times lacked sufficient ‘‘quantitative evidence,’’ respectively, under each legal theory. Fourth, the transparency, clarity, certainty, and and provides additional clarifying final rule requires OFCCP to provide timeliness in its dealings with language in the final rule to address qualitative evidence supporting a contractors, and criticisms stating that issues raised by commenters. finding of discriminatory intent for all the agency has brought cases without an The term ‘‘qualitative evidence’’ is 8 cases proceeding under a disparate adequate evidentiary foundation. defined in the final rule to include the treatment theory, subject to certain While many of these criticisms have various types of documents, testimony, enumerated exceptions. Fifth, in order been addressed by directives and other and interview statements that OFCCP to issue a PDN or NOV in cases guidance in the intervening years, this collects during its compliance involving a disparate impact theory of final rule further addresses such evaluations relevant to a finding of discrimination, the final rule requires concerns by codifying procedures that discrimination, and clarifies the OFCCP to identify the policy or practice purposes for which it will be used. of the contractor causing the adverse 8 See, e.g., U.S. Chamber of Commerce, OFCCP: impact with factual support Right Mission, Wrong Tactics—Recommendations for Reform (Sept. 21, 2017), www.uschamber.com/ 9 OFCCP will update the FCCM in light of this demonstrating why such policy or report/ofccp-right-mission-wrong-tactics- final rule and revise or repeal any directives as practice has a discriminatory effect. recommendations-reform. needed.

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The term ‘‘quantitative evidence’’ is discriminatory or non-discriminatory contradictory information about the included to clarify the support needed intent. In response to comments contractor’s employment or for OFCCP to determine that there is a received, and in order to provide greater compensation practices in statistically significant disparity in a clarity, the definition in the final rule circumstances that suggest contractor’s employment selection or has been revised to further clarify the discriminatory treatment based on a compensation outcomes affecting a meaning of qualitative evidence, and to protected characteristic. OFCCP may group protected under OFCCP’s laws. provide additional explanation also consider interview statements or The definition of ‘‘quantitative regarding how OFCCP uses it during its other documentary evidence concerning evidence’’ in the final rule also includes compliance evaluations. a contractor using broad discretion or quantitative analyses, such as cohort Before issuing a PDN, OFCCP assesses subjectivity in hiring, promotion, or analyses, which are comparisons of qualitative evidence obtained during the compensation decisions in conjunction similarly situated individuals or small course of its compliance evaluations. In with evidence suggesting the discretion groups of applicants or employees that order to proceed under a disparate or subjectivity has been used to are numerical in nature but do not use treatment theory of liability, OFCCP discriminate based on a protected hypothesis testing techniques. Both must generally provide qualitative characteristic, although the final rule terms are germane to the resolution evidence that justifies a finding of clarifies that the mere fact broad procedures that this rule codifies. discriminatory intent, whether on its discretion or subjectivity exists does The change in terminology helps own or in combination with quantitative not, in and of itself, demonstrate that an better capture the distinction between evidence. Qualitative evidence in such employment action is discriminatory.10 these types of evidence. The term cases may include factual testimony, Testimony or interview statements that ‘‘qualitative evidence’’ gives an interview statements, written OFCCP relies upon in issuing a PDN affirmative, descriptive label to the communications, documentation, may not consist wholly of mere types of evidence that fall into that internal company policies, or other assumptions or purely speculative category. The term ‘‘quantitative evidence that supports an inference of reasoning about the contractor’s actions, evidence’’ better encapsulates OFCCP’s intentional discrimination towards but must include some objective factual analytical evidence given the agency’s members of a protected class, basis from which to infer discriminatory use of descriptive statistics and non- particularly when made by a decision intent. For example, a witness’s parametric and cohort analyses, in maker involved in the action under statement merely conveying his or her addition to a variety of statistical tests investigation, or evidence that weighs subjective belief that the contractor based on hypothesis testing. against such an inference. Importantly, discriminated would not be sufficient. Quantitative analysis involves OFCCP may proceed with issuing a PDN However, a witness’s statement that a numerical comparisons, but it is not where the qualitative evidence is particular manager discriminated limited to the sort of hypothesis testing particularly strong, such as when the against him or her that was backed by that OFCCP typically performs in agency encounters a facially specific examples of problematic or systemic assessments of pay or selection discriminatory policy or a contractor unequal treatment would be evidence of outcomes, which might be more clearly has admitted to discriminatory conduct. discriminatory intent. thought of as ‘‘statistical evidence.’’ By Examples of qualitative evidence from OFCCP may also use qualitative contrast, the term ‘‘quantitative previous OFCCP compliance reviews evidence to rebut a contractor’s evidence’’ comfortably describes all help illustrate the meaning of the term. explanation for statistical disparities or these types of numerical analyses. For example, consider a company its critique of OFCCP’s statistical The change in terminology also president who sent an email to analysis. For example, in one recent allows a clear delineation of the rules managers stating his concern that case a contractor argued that OFCCP governing the sufficiency of the women were unable to lift heavy objects should have included in its statistical evidence required for OFCCP to issue a and that, if women were hired for analysis a variable to account for PDN or NOV. As explained more fully stockroom positions, there would be a applicants who held an asbestos below, the Department has decided that, higher risk of on-the-job injuries, which removal license, which was a subject to certain exceptions, OFCCP would impact the company’s requirement for employment. OFCCP will issue a PDN or NOV only if there profitability. If this rationale was used presented qualitative evidence is quantitative (i.e., statistical or other to exclude women from stockroom consisting of a hiring official’s numerical) evidence, practical positions due to their sex, rather than testimony that he hired workers without significance, and qualitative evidence. basing selection on applicants’ physical an asbestos removal license, testimony The broader definition of quantitative ability to perform the required tasks, the from an individual who attended a evidence means that OFCCP does not president’s email would be an example necessarily need statistical evidence; of qualitative evidence supporting an 10 See, e.g., OFCCP v. Analogic Corp., 2017–OFC– and the Department similarly changed inference of discriminatory intent. Often 00001, at 41 n.60 (Rec. Dec. & Order Mar. 22, 2019) (‘‘[t]he fact that hiring criteria or practices are the title of nonstatistical evidence to the evidence is less direct: In a hiring subjective, and are thus susceptible to qualitative evidence. The exceptions to case involving management trainee discriminatory application, is only marginally the general rule also use these modified positions for which prior sales and relevant to the question of discriminatory intent in definitions, as discussed below. customer service experience were stated the absence of proof that the criteria were, in fact, criteria, OFCCP gathered qualitative applied in a discriminatory manner.’’) (quoting Gay 1. Qualitative Evidence v. Waiters’ & Dairy Lunchmen’s Union, Local No. evidence regarding individual rejected 30, 694 F.2d 531, 554 (9th Cir. 1982)); see generally The definition of ‘‘qualitative applicants who had much stronger Wal-Mart Stores Inc. v. Dukes, 564 U.S. 338, 355 evidence’’ provides a nonexhaustive list experience in those areas than certain (2011) (holding policy of allowing supervisory discretion over employment matters showed ‘‘the of types of anecdotal and other evidence hires. opposite of a uniform employment practice that that OFCCP considers before and relies Qualitative evidence may include would provide commonality needed for a class upon in issuing a PDN. Such evidence information obtained through testimony action’’ claiming disparate treatment of female is not the result of statistical analysis or or other documentation of individuals workers); cf. White v. Rice, 46 F.3d 1130 (4th Cir. 1995) (‘‘such a subjective belief [of gender other quantitative comparisons, and who were denied information or who discrimination] cannot serve as the basis for judicial may be probative of a contractor’s were provided misleading or relief’’).

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recruiting session where the contractor American applicants were inform a decision on whether to issue a stated that it provided a 4-day training disproportionately screened out based PDN alleging a pattern and practice of course for new hires on asbestos on two disposition codes, one of which intentional discrimination. removal, and testimony from the owner related to a subjectively applied credit 2. Quantitative Evidence who started the asbestos training school check. In that case, OFCCP gathered onsite.11 statements from rejected applicants in As discussed above, the final rule One comment requested that the final the disfavored group who met all uses a definition of quantitative rule require anecdotal evidence as a qualification requirements but, evidence rather than statistical evidence condition of issuing a PDN, and that according to the contractor’s disposition as in the proposed rule. The most anecdotal evidence should be defined codes, were rejected because of a ‘‘bad’’ important difference is that the consistent with established authority as credit check without being given the definition of quantitative evidence is evidence that leads to an inference of opportunity to address the results. broader than statistical evidence. disparate treatment. OFCCP has Additionally, OFCCP determined based OFCCP uses a number of quantitative amended the final rule to require on evidence obtained from the recruiters measures to determine whether a qualitative evidence, along with who evaluated the credit checks that the particular disparity in employment sufficient quantitative evidence and recruiters were unable to provide any selection or compensation is sufficiently practical significance (as specified objective standards that were used to robust to support a finding of below), for all PDNs issued under a screen out applicants. Such evidence discrimination. The final rule thus disparate treatment theory of liability, demonstrating the level of subjectivity clarifies that quantitative comparisons, with clearly delineated exceptions. involved in employment decisions, in such as ‘‘cohort analyses,’’ and OFCCP has also revised the definition of connection with other evidence, may be summary data that reflect a contractor’s qualitative evidence as described in the helpful to OFCCP in making a differential selections and/or preceding paragraphs to clarify that preliminary finding that the contractor compensation between similarly anecdotal evidence includes facts that then has an opportunity to rebut. situated individuals are included within are relevant to determining a However, as stated above, the the definition of ‘‘quantitative contractor’s discriminatory or non- Department agrees that the mere fact evidence.’’ OFCCP did not receive any discriminatory intent, the business that a contractor has supervisory comments suggesting that OFCCP necessity (or lack thereof) of a discretion in its employment decisions reclassify this type of evidence, likely challenged policy or practice, or is not by itself probative of whether the contractor has otherwise because the proposed definition of discriminatory intent. OFCCP has statistical evidence was specific to complied with its non-discrimination qualified the appropriate use of such 12 hypothesis-testing techniques. However, obligations. evidence in the final rule, explaining in Other comments on OFCCP’s OFCCP believes the more exacting the regulatory text that documents about proposed definition of ‘‘nonstatistical distinction in the final rule between the extent of discretion or subjectivity evidence’’ (now ‘‘qualitative evidence’’ quantitatively driven evidence and involved in making employment in this final rule) sought to have anecdotal evidence provides greater decisions may be used as qualitative testimony on the extent of ‘‘subjectivity clarity to stakeholders. Comparative evidence, but only in conjunction with involved in making employment analyses, such as cohort analysis, while evidence suggesting the discretion or decisions’’ removed as an example, or to quantitative in nature, are distinct from subjectivity has been used to provide further explanation as to how hypothesis-based statistical measures. In discriminate based on a protected and when subjectivity could be used to some cases, statistical regression characteristic. support findings of discrimination. analysis cannot be reliably performed OFCCP declines to remove this example The Department notes that qualitative due to small sample sizes or the lack of altogether because first-hand testimony evidence may also weigh against a meaningful, quantifiable variables by about the level of subjectivity involved finding of discrimination, depending on which to conduct the analysis. OFCCP in a decision may, in certain cases, the surrounding facts and may use numerical cohort analysis or bolster other evidence of disparity.13 circumstances. Although mere small group assessment techniques in For example, in one case,14 OFCCP compliance with basic legal obligations possible combination with a global test gathered qualitative evidence to will not be considered by the agency as for these cases. The relevant employee investigate a hiring issue where African- dispositive evidence weighing against a group used for the small group analyses finding of discrimination, OFCCP may will generally align with how the 11 See OFCCP v. WMS Solutions, Inc., 2015–OFC– consider testimony and other contractor establishes specific positions 09, (Rec. Dec. & Order May 12, 2020). documentation that includes indicia and job groups, provided the job 12 To be clear, evidence demonstrating that the that a contractor has made good faith functions and responsibilities of challenged selection procedure is consistent with business necessity does not need to be provided by efforts to comply with its equal particular positions are similar. In other OFCCP, but rather by the contractor. Once employment opportunity obligations. circumstances, a general comparison of provided, however, such evidence may be relevant For instance, a contractor may provide outcomes shown through simple when the agency is determining whether to issue evidence that it has taken specific numeric ratios may demonstrate an NOV or SCN. actions to advance equal employment disparities between the number of 13 Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 990–91 (1988) (‘‘If an employer’s undisciplined opportunity as evidence that it did not individuals hired in comparison to the system of subjective decision-making has precisely discriminate intentionally. A contractor available pool of qualified applicants in the same effect as a system pervaded by may also show evidence of actions taken a protected membership class. For impermissible intentional discrimination, it is difficult to see why Title VII’s proscription against to correct discrimination issues that a example, OFCCP can generally infer discriminatory actions should not apply in contractor may have identified during hiring discrimination when a both.... We conclude, accordingly, that annual reviews of its selection and contractor’s workforce for a particular subjective or discretionary employment practices compensation systems. For disparate position is comprised of 95% from one may be analyzed under the disparate impact approach. . . .’’). treatment cases, OFCCP will consider racial group and 5% from all other 14 OFCCP v. Bank of America, 1997–OFC–16, at such evidence in conjunction with other racial groups combined, yet qualified 14 (Final Dec. & Order Apr. 21, 2016). qualitative and quantitative evidence to applicants for that position comprised

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50% for the first racial group and 50% historically conducted regression OFCCP will assess all of the variables for the other racial groups. analyses of selection and compensation that a contractor provides, including OFCCP also uses statistical outcomes, which seek to control for the preferred qualifications. If OFCCP measures.15 As described in the NPRM, major, measurable variables used by the concludes that a variable should not be the most familiar statistical measure is contractor in its decision-making. The included in its analysis, it will explain the standard deviation, which final rule provides, as did the NPRM, why and allow the contractor an represents a standardized measure of that a disparity in employment selection opportunity to rebut, as provided in the the difference between selection rates or rates or rates of compensation is previous paragraph. compensation between groups. The U.S. statistically significant by reference to The Department received a few Supreme Court has described a disparity any one of these statements: (1) The comments specific to the proposed as ‘‘suspect to a social scientist’’ when disparity is two or more times larger definition of ‘‘statistical evidence’’ (now a statistic from ‘‘large samples’’ falls than its standard error (i.e., a standard ‘‘quantitative evidence’’ in the final more than ‘‘two or three standard deviation of two or more); (2) the Z rule). The comments suggest that deviations’’ from its expected value statistic has a value greater than two; or OFCCP should ensure that the under a null hypothesis.16 In general, (3) the probability value is less than definition accounts for all factors the null hypothesis employed by 0.05. impacting an employment or OFCCP for purposes of its regression OFCCP requests information from the compensation decision, allows OFCCP analyses assumes that the contractor’s contractor regarding the qualifications it to tailor models to contractor practices, employment decisions are non- seeks in hiring after identifying an and groups only similarly situated discriminatory and that there are no initial disparity in selections. Likewise employees. OFCCP’s definition of relevant differences between racial it requests additional information from quantitative evidence provides a list of groups or genders in the relevant contractors regarding pay variables after parameters and variables generally used employee or applicant population after identifying initial indicators. OFCCP by employers that OFCCP will use in its the agency controls for the major, uses the information provided by the measurable variables used by the contractor to perform its regression hypothesis testing. It does not list every 17 conceivable variable, nor is that contractor in its decision-making. The analyses in an effort to tailor the 19 greater the number of standard analyses to each contractor’s specific necessary. With that said, the list deviations, the less likely such a compensation or personnel practices included in the definition is not statistical disparity would be produced pertaining to groupings of similarly exhaustive, and OFCCP has left the final by chance were the null hypothesis situated individuals. In circumstances definition flexible enough to include correct, and the more likely the null where the contractor does not provide variables used by contractors in their hypothesis may reasonably be such variables, OFCCP will utilize employment practices. The definition rejected.18 measurable variables generally used by will allow OFCCP to tailor statistical To estimate the probability of employers in selection and models based on contractor practices selection and compensation disparities compensation decisions in conducting and form groups that meet the relevant occurring by chance, OFCCP has the regression analysis. ‘‘similarly situated’’ standard in the OFCCP may exclude a variable as context of a potential systemic 15 Some examples of the statistical measures that tainted only when OFCCP determines discrimination case. OFCCP may use are the Chi square, Fisher’s exact, that the variable reflects underlying Another commenter requested Z-test, and regression analyses that measure discrimination or is being used as disparities in terms of standard deviations. As clarification as to whether OFCCP’s discussed further below, OFCCP considers pretext. For example, if a contractor’s treatment of statistical evidence applies statistical evidence in combination with qualitative compensation system depends heavily to only claims of disparate treatment, or evidence and the practical significance of a on the amount of revenue an employee also to disparate impact claims. OFCCP disparity as part of a comprehensive approach to brings in, but there is evidence that the decision-making about the issuance of pre- applies quantitative evidence, as enforcement notices. contractor directs more lucrative sales defined in the final rule, in the same 16 See Castaneda v. Partida, 430 U.S. 482, 496 prospects to men because they are men, manner for disparate treatment and n.17 (1977) (‘‘As a general rule for large samples, it may be appropriate to exclude a disparate impact class claims, as both if the difference between the expected value and the revenue-generation variable in the claims require evidence of a disparity observed number is greater than two or three regression analysis to that extent. standard deviations, then the hypothesis that the between favored and disfavored groups. jury drawing was random would be suspect to a Another example may be where there is In addition, for disparate treatment social scientist.’’); see also Hazelwood Sch. Dist. v. evidence that a contractor does not claims, quantitative evidence may United States, 433 U.S. 299, 311 n.17 (1977) apply the variable in a uniform fashion, support an inference of intentional (providing that ‘‘a fluctuation of more than two or such as considering or weighing the three standard deviations would undercut the discrimination, while for disparate hypothesis that decisions were being made variable differently for individuals impact claims, quantitative evidence randomly with respect to race’’). belonging to different demographic may support an inference that a specific 17 To be more precise, the null hypothesis for the groups. OFCCP will disclose any policy or practice is causing a disparate statistical regression analyses that OFCCP conducts exclusions to the contractor at the time impact. during its compliance reviews comprises the it provides its quantitative analysis and following three assumptions: (1) The contractor’s decisions were made using non-biased criteria, (2) provide the contractor with an 19 OFCCP need not account for every conceivable the skills and competencies evaluated by the opportunity to rebut exclusion of the variable, See, e.g., Bazemore v. Friday, 478 U.S. contractor’s non-biased criteria are normally variable at issue. 385, 400 (1986) (‘‘[I]t is clear that a regression distributed throughout the relevant employee or For OFCCP to consider the major, analysis that includes less than ‘all measurable applicant population without regard to race or variables’ may serve to prove a plaintiff’s case.’’); gender, and (3) the agency’s statistical modeling is measurable parameters and variables McClain v. Lufkin Indus., Inc., 519 F.3d 264, 280 able to accurately capture the non-biased criteria that the contractor uses in its selection (5th Cir. 2008) (‘‘However, in selecting an used by the contractor in its selection and/or or compensation practices, the appropriate pool and performing regression analysis compensation decisions. contractor must provide the preferred in Title VII cases, the Supreme Court has taught that 18 See David H. Kaye & David A. Freedman, a plaintiff’s regression analysis need not include ‘all ‘‘Reference Guide on Statistics,’’ National Academy qualifications that it uses along with measurable variables.’’’) (citing Bazemore, 478 U.S. of Sciences (2011), www.fjc.gov/sites/default/files/ sufficient data for OFCCP to include at 400); Mozee v. Am. Commercial Marine Serv. Co., 2012/SciMan3D07.pdf, at 250–51. such variables in its regression analysis. 940 F.2d 1036, 1045 (7th Cir. 1991) (same).

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The Department is aware that its requiring practical significance prior to of-selection shortfall; ‘‘four-fifths rule’’ statistical methods have been criticized, issuing a PDN as it would create an (or ‘‘80 percent rule’’); odds ratio; including by commenters in this unnecessary barrier to investigating percentage of pay disparity; and the rulemaking.20 OFCCP uses established discrimination. Three commenters Type II squared semi-partial correlation statistical methods in its analyses, but asked the Department to add a coefficient. For example, with regard to nonetheless the Department is definition to the final rule. Two using the size of shortfall, one practical considering whether to further examine, commenters sought clarity and greater significance threshold is a shortfall of at either in a rulemaking or in certainty so that contractors would least two 24 in a hiring analysis where, subregulatory guidance, the agency’s know how the term, as used in the based on the number of applicants and methodologies, including issues such as regulation, would be applied. One hires, the expectation would be for a variables used, as it did in a 2018 comment added that a significant contractor to have hired at least two directive on analyzing compensation.21 shortcoming of the proposed regulation additional members of the disfavored However, such a project is outside the was that it did not require an group in a neutral selection process. The scope of this rulemaking. assessment of practical significance ‘‘four-fifths rule’’ or ‘‘80 percent rule’’ is before issuing adverse findings. Another 3. Practical Significance a measure of practical significance that comment specifically requested a relies on the ‘‘impact ratio’’—if the Practical significance within the definition with express standards that selection rate for a disfavored group is framework of equal employment OFCCP would apply in assessing less than 80 percent of the selection rate opportunity enforcement refers to practical significance so that OFCCP’s for the favored group, it is generally whether an observed disparity in use of practical significance could be considered evidence of adverse employment opportunities or outcomes part of negotiations with the contractor. impact.25 Odds ratios can also be used, reflects meaningful harm to the The Department declines to add a which refer to the ratio of the odds of disfavored group.22 The concept focuses specific definition for the term in the one group being selected compared to on the contextual impact or importance final rule because there is not a settled the odds of another group. Odds ratio of the disparity, rather than its definition in the relevant academic takes into account both the selection likelihood of occurring by chance as in literature and a variety of measures may and rejection rates of the disfavored measures of statistical significance. be appropriate to use in any given case. group and can bolster the statistically OFCCP uses measures of practical The Department will continue to significant findings.26 significance as a tool of enforcement evaluate that position and propose a discretion to ensure it is targeting the new rulemaking if it determines that In the employment selection context, strongest cases in its compliance such thresholds should be codified. OFCCP will ordinarily use the impact reviews with the most compelling However, in order to provide more ratio as its measure of practical evidence, as well as a safeguard against clarity for contractors, the Department significance, which is the ratio of the limitations of statistical modeling describes below common types of employee selection rates between the when attempting to explain complex practical-significance measures and disfavored and favored group. The human phenomena. Modeling need not explains the metrics that OFCCP will impact ratio is a common measurement and cannot capture every facet of customarily use moving forward. The of practical significance that has been human interaction in the workplace, or Department believes that providing used since the 1970s.27 This statistical of contractors’ evaluations of employees these guidelines for both its compliance measure has the advantages of and applicants; but when outcomes officers and contractors will help make simplicity and clarity. among what appear to be similarly OFCCP’s compliance reviews more OFCCP utilizes a sliding scale to situated individuals differ greatly, transparent and efficient. These assess whether the impact ratio in a OFCCP can be more confident that guidelines are particularly useful given particular matter indicates that a discrimination at work. Given OFCCP’s that the final rule generally requires that disparity is practically significant. limited resources, considering practical OFCCP find any disparity that forms the OFCCP’s determination to issue a pre- significance helps the agency ensure basis for an allegation of discrimination enforcement notice depends on the that it is directing its efforts effectively. to be practically significant before strength of the relevant qualitative and Weighing practical significance as one issuing a PDN or NOV. quantitative evidence, as well as of the thresholds for issuing pre- There is no single, specific whether the disparity is practically enforcement notices is thus an measurement of practical significance significant. OFCCP uses the following important part of OFCCP’s appropriate to all compensation, hiring, thresholds to assess practical comprehensive approach to compliance promotion, and termination decisions. significance in the selection context to evaluations. There are several common measures of determine whether to issue pre- Five comments addressed the issue of practical significance discussed in enforcement notices: ‘‘practical significance’’ in OFCCP’s scholarly literature from the labor compliance reviews. One comment economics field.23 Some of the 24 OFCCP v. TNT Crust, 2004–OFC–3, at 21 recommended against such a definition measures of practical significance that (Order on Liability Sept. 10, 2007) (‘‘Generally, it due to variance among the measures of have been used by OFCCP include size- is inappropriate to require validity evidence or to practical significance used in different take enforcement action where the number of employment scenarios, while another 23 For an overview of the most common measures persons and the difference in selection rates are so small that the selection of one different person for comment recommended against of practical significance, see Frederick Oswald, Eric Dunleavy & Amy Shaw, ‘‘Measuring Practical one job would shift the result from adverse impact Significance in Adverse Impact Analysis’’ in against one group to a situation in which that group 20 See supra note 8. Adverse Impact Analysis: Understanding Data, has a higher selection rate than the other group.’’). 21 Directive 2018–05, ‘‘Analysis of Contractor Statistics, and Risk, Scott B. Morris & Eric Dunleavy 25 41 CFR 60–3.4(D). Compensation Practices During a Compliance (Eds.) (2017), www.researchgate.net/publication/ 26 But see Kaye & Freedman, supra note 18 at 235 Evaluation’’ (Aug. 24, 2018). 314245607_Measuring_practical_significance_in_ (observing that ‘‘[a]lthough the odds ratio has 22 See Practical Significance in EEO Analysis adverse_impact_analysis; and Joseph Gastwirth, desirable mathematical properties, its meaning may Frequently Asked Questions, Question #5, ‘‘Some Recurrent Problems in Interpreting be less clear than that of the selection ratio or the www.dol.gov/agencies/ofccp/faqs/practical- Statistical Evidence in Equal Employment Cases,’’ simple difference’’). significance. Law, Probability & Risk (2017). 27 See 41 CFR 60–3.4(D).

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Impact Ratio of Selection Rates As with selection rates, OFCCP’s guardrails on the agency’s issuance of > 0.9 Very Unlikely determination of whether to issue a pre- pre-enforcement notices, and to 0.8–0.9 Unlikely enforcement notice depends on the encourage appropriate early resolution 0.7–0.8 Likely practical significance of the with contractors. < 0.7 Very Likely compensation disparity in combination with the strength of the relevant OFCCP’s Existing Compliance An impact ratio of 0.8 is a frequently Evaluation and Resolution Procedures cited benchmark in the equal qualitative and quantitative evidence. employment opportunity literature for OFCCP will use the following OFCCP determines whether a Federal thresholds to assess practical determining whether the impact ratio of contractor has met the legal obligations significance in the compensation a selection disparity is practically of E.O. 11246, section 503, VEVRAA, context: significant, as described above, which is and their implementing regulations why OFCCP adopts it as the hinge point Size of Compensation Disparity during a compliance evaluation.30 The between a likely and unlikely finding of < 1% Very Unlikely agency uses a neutral selection process practical significance for selection to schedule contractors for compliance 28 1–2% Unlikely decisions. For impact ratios below 0.9, 2–5% Likely evaluations.31 A compliance evaluation OFCCP will apply its discretion in > 5% Very Likely consists of one or any combination of determining whether to issue a pre- OFCCP has used a 1% compensation the following investigative procedures, enforcement notice according to the disparity as a threshold in some as set forth in OFCCP’s implementing strength or weakness of the evidence in previous interactions with contractors, regulations: A compliance review, an particular cases, but the agency will such that the agency did not proceed offsite review of records, a compliance require strong additional supporting with issuing pre-enforcement notices if check, or a focused review.32 With the evidence when the impact ratio is compensation disparities were below exception of the compliance check, the between 0.8 and 0.9. In addition, that level. This guidance formalizes that purpose of which is to determine because the impact ratio is a less threshold as a clear benchmark for the whether the contractor maintains effective statistical measure when issuance of pre-enforcement notices. For required records and to provide related selection rates are very small, OFCCP compensation disparities above 1%, the compliance assistance, the other types utilizes a 3% disparity between the agency has discretion in determining of compliance evaluations that OFCCP selection rates of disfavored and favored whether to issue a pre-enforcement undertakes may result in the agency groups as a general minimum threshold notice according to the facts and making a preliminary determination, for a finding of practical significance, circumstances of individual cases, but although there may be situations with through its collection and analysis of OFCCP will be unlikely to determine information provided by the contractor, very low selection rates, such as a 4% that a compensation disparity below 2% selection rate for the favored group and that the information reviewed indicates is practically significant unless there is the contractor has discriminated against a 1% selection rate for the disfavored additional strong supporting evidence. group, where the odds ratio and other members of a protected class in hiring, When compensation disparities are promotion, termination, compensation, evidence would still support a finding greater than 5%, OFCCP will nearly of practical significance.29 or other employment practices. Because always find that a compensation OFCCP evaluates all of a contractor In the compensation context, OFCCP’s disparity is practically significant if the standard measure of practical establishment’s employment processes, agency also determines that its the agency has focused on identifying significance will be the percentage statistical model is sound. In rare cases, difference in compensation, which and resolving systemic discrimination. OFCCP may also apply more rigorous Findings often are supported by refers to the percentage difference practical significance tests to measure between the mean compensation of the import of compensation disparities, 30 employees within the disfavored group such as the standardized difference OFCCP also ensures compliance with these in proportion to the mean compensation laws by investigating complaints filed by applicants between disfavored and favored groups and employees who believe that a Federal of employees within the favored group. or the Type II squared semi-partial contractor discriminated against them. However, correlation, which help ensure the the resolution procedures for complaints differ from 28 See 41 CFR 60–3.4; Uniform Guidelines on agency is applying its practical compliance evaluations and would not be altered Employee Selection Procedures Section 4D (‘‘A by this rule. For complaint resolution procedures, selection rate for any race, sex, or ethnic group significance standard relatively see FCCM Chapter 6 and 41 CFR 60–1.24, 60– which is less than four-fifths (4⁄5) (or eighty percent) uniformly across administrative cases. 300.61, and 60–741.61. The FCCM is available at of the rate for the group with the highest rate will OFCCP will use the measures above to www.dol.gov/agencies/ofccp/manual/fccm. generally be regarded by the Federal enforcement make an informed decision on the 31 The majority of OFCCP’s compliance agencies as evidence of adverse impact, while a evaluations are for supply and service contractors. greater than four-fifths rate will generally not be potential strength of the case and OFCCP increased the number of contractors on its regarded by Federal enforcement agencies as whether, in light of the quantitative and supply and service scheduling list over the past evidence of adverse impact.’’). qualitative evidence, the size of an three fiscal years, from 801 in FY 2017 to 3,500 in 29 For example, if the selection rate of a favored observed disparity justifies moving FY 2019. The FY 2020 scheduling list is comprised group is 10%, OFCCP will generally not find of 2,250 establishments. A description of OFCCP’s practical significance unless the selection rate for forward with enforcement procedures. current scheduling methodology for supply and the disfavored group is 7% or less, even though the B. Resolution Procedures service contractors is available on the agency’s impact ratio would be 0.7 (or less). See, e.g., website at www.dol.gov/sites/dolgov/files/ofccp/ Oswald, Dunleavy, & Shaw, ‘‘Measuring Practical This final rule codifies many of scheduling/files/SL20R1_SupplyService_ Significance in Adverse Impact Analysis,’’ supra OFCCP’s currently used procedures Methodology_FinalFEDQA508c.pdf. The 2020 note 23, at 104 (‘‘The spirit of the [4/5ths] rule [i.e. scheduling list for construction consists of 200 that a selection disparity is not practically with adjustments to provide greater establishments. A description of OFCCP’s current significant unless the impact ratio is less than 0.8] clarity, certainty, and transparency to scheduling methodology for construction can . . . be violated when very small disparities do contractors, to ensure that OFCCP contractors is available at www.dol.gov/sites/ not satisfy the 4/5ths rule [and thus would be found appropriately allocates its resources by dolgov/files/ofccp/scheduling/files/SL20R1_ practically significant]. For example, hiring 3.5% of Construction_Methodology_FinalFEDQA508c.pdf. disadvantaged applicants versus 5% of advantaged proceeding with cases that have solid 32 See 41 CFR 60–1.20(a), 60–300.60(a), and 60– applicants is a mere 1.5% difference in selection evidentiary support and meaningful 741.60(a). The resolution procedures described in rates, but is an impact ratio of [0.7] . . . .’’). impact, to establish guidelines and this rule do not apply to compliance checks.

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statistical evidence, particularly in the agency’s preliminary findings, i.e., initiating resolution with a PDN for compliance reviews. by identifying the statistically violations that do not involve Preliminary findings of significant disparity or other discrimination, OFCCP generally begins discrimination in a compliance quantitative evidence, describing the the process with an NOV before evaluation trigger OFCCP’s resolution practical significance of that disparity, proceeding to a conciliation procedures. At the beginning of this and describing how the relevant agreement,38 or the SCN as a last resort. process, the agency discusses its qualitative evidence supports the For cases in which the contractor either preliminary findings with the particular theory of discrimination. denies access or otherwise fails to contractor. This discussion also serves Upon request, OFCCP will also provide submit information requested in to familiarize the contractor with contractors with information sufficient OFCCP’s OMB-approved scheduling OFCCP’s resolution procedures, to recreate the agency’s quantitative letters, OFCCP issues the SCN without including the agency’s current options findings and in some cases may be able first issuing an NOV for material for early resolution.33 If the preliminary to do so even before the PDN has been violations that are non-discriminatory in findings are not resolved at that stage, issued. Contractors are invited to nature; as discussed more fully later in OFCCP formalizes the preliminary respond to the PDN, and the agency findings in a PDN, a letter that is sent must consider the response in this preamble, this practice will 39 to the contractor following review and determining whether to issue an NOV. continue under this final rule. approval by the Director or acting The NOV lists the corrective actions Recently, OFCCP has promoted the agency head.34 To determine whether that are required to resolve those efficient resolution of material the evidence of discrimination is violations, and invites conciliation. violations for multi-establishment sufficient to warrant a PDN, OFCCP OFCCP responds in the NOV (or in a Federal contractors with early considers whether a disparity identified simultaneously provided reply) to any resolution procedures laid out in an during the compliance evaluation is new arguments or information raised by agency directive.40 These procedures practically significant and whether the contractor in its PDN response.35 allow OFCCP and contractors to work quantitative evidence and qualitative After issuing the NOV, OFCCP generally together to resolve violations or evidence supports the preliminary pursues a written conciliation indications of violations without finding. OFCCP will always seek out agreement with any contractor willing resorting to formal process, including qualitative evidence during compliance to correct the violation or deficiency litigation before an administrative law evaluations, regardless of the strength of identified in the NOV.36 A conciliation judge. the quantitative evidence. As discussed agreement is a binding written more fully below, there may be factors agreement between a contractor and In addition, OFCCP has recently applicable in a particular case that OFCCP that details specific contractor prioritized alternative dispute explain why OFCCP could not obtain commitments, actions, or both that it resolution to help resolve cases at the either quantitative or qualitative will undertake in order to resolve the conciliation or pre-litigation phase, evidence during its evaluation. violations set forth in the agreement. which ensures prompt remedies and OFCCP issues the PDN to encourage Conciliation agreements were codified avoids the delay, expense, and communication with contractors and in OFCCP’s regulations in 1979. OFCCP uncertainty of litigation. OFCCP has provide them an opportunity to respond is committed to active engagement with established an Ombuds Service that can to preliminary findings prior to the the contractor to conciliate a matter, and help facilitate settlement discussions at issuance of a more formal NOV. If a has issued directives detailing how the the conciliation stage, as well as a Pre- contractor does not sufficiently rebut agency will prioritize the efficient Referral Mediation Program that the preliminary findings identified in resolution of violations it finds in its provides for a full pre-litigation the PDN that evidence of unlawful compliance evaluations.37 If the administrative mediation following an discrimination exists, OFCCP issues the contractor is unwilling to enter into a SCN and prior to referral to the Solicitor NOV following approval by the Director conciliation agreement to correct the of Labor. Although the rule text does not or acting agency head to notify the violations, OFCCP issues a Show Cause directly address the Ombuds Service or contractor that the agency found Notice (SCN) requiring the contractor to Pre-Referral Mediation Program, these discrimination violations of one or more provide reasons demonstrating why programs are compatible and consistent of the laws it enforces. Under this final formal enforcement proceedings by the with the goals and procedures rule, the PDN will explain the basis for Solicitor of Labor or other appropriate action should not be instituted. established by the rule, and the agency 33 OFCCP prioritizes the early and efficient Material violations that are not intends to continue providing both resolution of potential discrimination. See Directive discriminatory in nature also trigger programs in conjunction with these 2019–02, ‘‘Early Resolution Procedures’’ (Nov. 30, procedures. 2018), www.dol.gov/agencies/ofccp/directives/ OFCCP’s resolution procedures for 2019–02. The rule does not codify OFCCP’s early compliance evaluations. Rather than resolution procedures themselves. It does, however, 38 FCCM, Chapter 8F00; FCCM, Chapter 8H00. provide a framework for OFCCP and contractors to 35 See FCCM, Chapter 8; see also FCCM, Key For example, OFCCP may issue an NOV and enter explore expedited conciliation options, such as the Terms and Phrases. into a conciliation agreement for failure to maintain early resolution procedures set forth in Directive 36 In rare circumstances, OFCCP may determine records in accordance with 41 CFR 60–1.12, 60– 2019–02. that settlement is not appropriate and refer a matter 300.80, and 60–741.80, or for failure to maintain 34 See Directive 2018–01, ‘‘Use of at this stage directly to the Office of the Solicitor affirmative action programs as required by 41 CFR Predetermination Notices (PDN)’’ (Feb. 27, 2018). of Labor to pursue formal enforcement proceedings part 60–2, 41 CFR part 60–300, subpart C, and 41 OFCCP issued this directive to ensure that PDNs be rather than pursuing a conciliation agreement. See CFR part 60–741, subpart C. used in all compliance evaluations with 41 CFR 60–1.26(b), 60–300.62, 60–300.65(a), 60– 39 See FCCM, Chapter 8D01 (explaining that preliminary discrimination findings, both 741.62(a), 60–741.65(a). OFCCP strongly disfavors OFCCP issues the SCN without first issuing an NOV individual and systemic. Directive 2018–01 is this route. when a contractor fails to provide the records, available at www.dol.gov/agencies/ofccp/directives/ 37 See Directive 2020–02, ‘‘Efficiency in information, or data requested in the scheduling 2018–01. Prior to the directive, use of PDNs was Compliance Evaluations’’ (Apr. 17, 2020), letter and when the contractor refuses to provide discretionary and reserved for systemic www.dol.gov/agencies/ofccp/directives/2020-02; access to its premises for an onsite review). discrimination findings. See FCCM, Chapter 8 Directive 2020–03, ‘‘Pre-Referral Mediation 40 See Directive 2019–02, ‘‘Early Resolution (detailing the procedures that OFCCP follows for Program’’ (Apr. 17, 2020), www.dol.gov/agencies/ Procedures’’ (Nov. 30, 2018), www.dol.gov/ofccp/ issuing PDNs). ofccp/directives/2020-03. regs/compliance/directives/dirindex.htm.

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Resolution Procedures Provisions of the described further below, the reasons for practically significant; and (iii) provides Final Rule any lack of qualitative evidence) and qualitative evidence that, in The Department proposed in the obtain the Director’s (or acting agency combination with other evidence, NPRM to codify many of OFCCP’s head’s) approval to issue a PDN or NOV; supports both a finding of resolution procedures in its E.O. 11246, and provides that, upon the contractor’s discriminatory intent by the contractor section 503, and VEVRAA regulations at request, OFCCP will provide the model and a finding that the contractor’s 41 CFR parts 60–1, 60–300, and 60–741, and variables used in its statistical discriminatory intent caused the respectively. The proposed regulatory analysis and an explanation for any disparate treatment. text was the same in each part, except variable that was excluded from the The NPRM would have required that one subparagraph of the section 503 statistical analysis. nonstatistical evidence if OFCCP’s regulations, at 41 CFR 60–741.62(b), In the rest of this section, the statistical evidence indicated a disparity retains an existing provision concerning Department describes the final rule’s of less than three standard deviations remedial benchmarks specific to the resolution procedures, including the and, conversely, would have allowed section 503 regulatory scheme that is changes from the NPRM, and responds claims to proceed without nonstatistical not present in the other parts. to relevant comments. The Department evidence if OFCCP’s statistical evidence Specifically, the Department proposed refers to the section and paragraph indicated a disparity of three standard to codify the procedures that OFCCP numbers in 41 CFR 60–1.33, which deviations or greater. The Department follows when determining whether to concerns E.O. 11246. As described has decided to require qualitative issue a PDN or NOV for discrimination below, the Department adopts the same evidence in all disparate treatment cases and other material violations. As a provisions in the regulations for as the general default. Qualitative matter of enforcement discretion and VEVRAA (41 CFR part 60–300) and evidence is very important to support a prioritization of resources, the section 503 (41 CFR part 60–741). preliminary finding of intentional Department proposed issuing a PDN discrimination, which is a fundamental 1. Predetermination Notice only after considering statistical element of disparate treatment claims. evidence, practical significance, and Section 60–1.33(a) of the final rule Indeed, in some instances qualitative nonstatistical evidence. Additionally, allows OFCCP to issue a PDN if a evidence is direct, powerful, and on its under the proposed rule, OFCCP would compliance evaluation indicates own can prove disparate treatment. have only issued a PDN without evidence sufficient to support a Quantitative evidence of statistical nonstatistical evidence when OFCCP’s preliminary finding of disparate significance alone, by contrast, can only statistical evidence indicates a treatment or disparate impact,42 subject provide an inference of intent because at confidence level of 99% or higher, to certain parameters, which are base it is able to prove only that, if the which equates to three or more standard discussed below.43 Multiple null hypothesis is correct, then the deviations or a p value of 0.01 or less. commenters sought clarity on what observed outcome is highly unlikely to Furthermore, the Department proposed thresholds OFCCP would use in have occurred by chance. It thus to codify the availability of an expedited evaluating evidence supporting an remains possible that the observed conciliation option.41 allegation of disparate impact statistical disparities were the result of The Department has decided to discrimination. The final rule provides something other than unlawful 44 finalize the early conciliation option clarity by providing distinct provisions discrimination. Nevertheless, and the codification of its PDN and for disparate treatment and disparate statistical evidence can be important NOV procedures with changes from the impact claims. It also requires the evidence because it assesses actions proposed rule, as noted above. To OFCCP Director or acting agency head taken by the company over a course of repeat, the significant changes are that to approve issuance of a PDN. time and across multiple employees, the final rule clarifies that issuance of which may be indicative of 45 NOVs is governed by the same (a) Disparate Treatment Theory of discriminatory intent. The final rule evidentiary standards as issuance of Liability thus clarifies that there is no set PDNs; clarifies the standards OFCCP Subject to certain exceptions quantum of qualitative evidence; rather, uses when determining whether to issue discussed below, paragraph (a)(1) 44 provides that OFCCP may issue a PDN See supra note 16. It is important to remember a pre-enforcement notice under a that a rejection of the null hypothesis due to the disparate treatment and/or disparate under a disparate treatment theory of magnitude of a statistical disparity does not by itself impact theory of discrimination; liability if the agency (i) provides mean that an alternative hypothesis—for example, requires OFCCP to provide qualitative quantitative evidence; (ii) demonstrates that a contractor discriminated against its applicants or employees—is true. Instead, other evidence supporting a finding of that the unexplained disparity is assumptions underlying the null hypothesis (see discriminatory intent to proceed under supra note 17) could be flawed, and/or there may a disparate treatment theory, subject to 42 Here and elsewhere in this final rule, references be alternative hypotheses that explain the data. See, certain enumerated exceptions; requires to evidence sufficient to support a preliminary e.g., Kaye & Freedman, supra note 18, at 257; see finding or finding of disparate treatment or also Coleman v. Quaker Oats Co., 232 F.3d 1271, OFCCP to identify the policy or practice disparate impact refer to the amount of evidence 1283 (9th Cir. 2000) (finding a disparity with a p- of the contractor causing the adverse OFCCP requires to continue forward with its value of ‘‘3 in 100 billion’’ did not demonstrate age impact with factual support review. Whether the evidence is sufficient to pursue discrimination because the defendant ‘‘never demonstrating why such policy or formal enforcement proceedings is a separate and contend[ed] that the disparity occurred by chance, later determination made by the Solicitor of Labor. just that it did not occur for discriminatory reasons. practice has a discriminatory effect to 43 One commenter recommended that OFCCP When other pertinent variables were factored in, the issue a PDN or NOV under a disparate make PDNs mandatory rather than discretionary in statistical disparity diminished and finally impact theory; explains that OFCCP cases involving discrimination. OFCCP made this disappeared’’). Nevertheless, if there is a plausible must explain in detail the basis for its policy change in 2018 with Directive 2018–01, the alternative explanation, the factual basis for such stated purpose of which is to ‘‘establish the explanation should be identified by the contractor finding (including, if applicable and as consistent use of PDNs for discrimination cases, during its audit so that the alternative may be both individual and systemic.’’ Directive 2018–01, included in OFCCP’s model. 41 The Department did not propose to codify ‘‘Use of Predetermination Notices (PDN)’’ (Feb. 27, 45 Of course, in cases where there have been OFCCP’s early resolution procedures per se. Rather, 2018), www.dol.gov/agencies/ofccp/directives/2018- findings of discrimination, quantitative evidence the NPRM acknowledged the early resolution 01. Since then, the change has been embedded in may also demonstrate the harm suffered by the option, which is governed by agency directives. the FCCM and now this final rule. affected class.

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the required strength of the qualitative that a contractor took adverse other cases. The Department evidence depends on the strength of the employment action against a protected acknowledges that the requirement for quantitative evidence and the extent of group of employees, or circumstantial qualitative evidence in all other cases is the practical significance. evidence that, e.g., members of a neither compelled nor prohibited by As discussed above, the Department’s protected group with superior Title VII case law. This is by design and definition of quantitative evidence qualifications were denied selections central to the purpose of this rule. The includes nonstatistical, but quantitative, that were awarded to similarly situated Department is sensitive to past analysis such as cohort analyses. members of another group with inferior criticisms that OFCCP over-relied on Subject to the enumerated exceptions in qualifications. If this evidence were statistical modeling or used models that the final rule, qualitative evidence must sufficiently strong, OFCCP should be did not properly account for contractors’ also be present for OFCCP to issue a pre- able to move forward with a PDN legitimate, nondiscriminatory enforcement notice in cases where without findings of statistical and employment practices. The Department OFCCP is relying on nonstatistical practical significance, and paragraph also wants to direct OFCCP’s resources quantitative evidence for the same (a)(2)(i) makes sure the agency has that to the most compelling cases and those reason that qualitative evidence is flexibility. most likely to have a practical impact. required where OFCCP is relying on Paragraph (a)(2)(ii) is designed to Requiring qualitative evidence responds statistical evidence. Nonstatistical capture the ‘‘inexorable zero’’ concept to those criticisms and better directs quantitative comparisons can also be from Title VII case law and other rare OFCCP’s efforts. This requirement helps used by OFCCP to support other situations where the numerical ensure that OFCCP’s cases are well- statistical evidence that shows disparities are so overwhelming that, in grounded in fact, that its presentations statistically significant disparities; OFCCP’s judgment, additional evidence are likely to be persuasive in resolution however, OFCCP must also have of discriminatory intent is unnecessary efforts, that its referrals for litigation are 47 qualitative evidence to proceed with the to support a preliminary finding. In credible, and that it is using its issuance of pre-enforcement notices in the context of an OFCCP compliance resources effectively. This is also such cases unless one of the final rule’s evaluation, this could occur, e.g., when consistent with the view of commenters enumerated exceptions applies. the disparity in selections for a given job who argued that solely relying on Paragraph (a)(2) provides three between a favored and disfavored group statistical evidence is rarely appropriate exceptions to paragraph (a)(1)’s general is so extraordinarily compelling that by in disparate treatment cases (where criteria that OFCCP must satisfy when it itself the evidence strongly supports a discriminatory intent must be alleges findings or preliminary findings preliminary finding of disparate established as the cause of the disparate of disparate treatment discrimination. treatment. For example, a court in a treatment), and thus should be reserved The three exceptions encompass famous Title VII case found the for only egregious cases.49 As stated situations where the Department ‘‘inexorable zero’’ standard satisfied by previously, OFCCP will seek to develop believes it is a worthwhile use of a trucking company that had hired 57 supporting qualitative evidence in all of OFCCP’s resources to proceed with a white truckers in Atlanta but no black its cases, including those with gross case despite not satisfying all three truckers—even though at the time numerical or statistical disparities. In requirements of paragraph (a)(1). For the Atlanta was 22% African-American— those rare circumstances where OFCCP reasons stated above relating to the and in Los Angeles had hired 372 white issues a PDN based on evidence of importance of qualitative evidence, the truckers but only two black truckers.48 extraordinary numerical or statistical Department has not adopted the The Department believes this safety disparities and no supporting NPRM’s proposal to allow PDNs to be valve for overwhelming quantitative qualitative evidence, OFCCP will issued on the basis of statistical evidence is appropriate for OFCCP’s provide an explanation for the lack of evidence alone when the disparity enforcement strategy. Nevertheless, the qualitative evidence and justification for shown was three standard deviations or Department declines to lift the the agency’s decision to proceed with more. However, as discussed more fully requirement for qualitative evidence in below, one of the exceptions allows resolution procedures in the PDN, allowing the contractor an opportunity OFCCP to proceed with a case if the 47 Cf. Int’l Bhd. of Teamsters v. United States, 431 agency finds an extraordinarily U.S. 324, 342 n.23 (1977) (‘‘[The] fine tuning of the to respond. statistics could not have obscured the glaring Finally, paragraph (a)(2)(iii) is an compelling disparity. In that situation, absence of minority line drivers. As the Court of the reasons for requiring qualitative Appeals remarked, the company’s inability to rebut exception clarifying that OFCCP may evidence have less force, and OFCCP the inference of discrimination came not from a issue a PDN in the absence of qualitative deems it appropriate to continue misuse of statistics but from ‘the inexorable zero.’ ’’) evidence if the contractor has prevented (citing United States v. T.I.M.E.-D.C. Inc., 517 F.2d OFCCP from compiling qualitative without qualitative evidence. 299, 315 (5th Cir. 1975)); Valentino v. U.S. Postal Paragraph (a)(2)(i) ensures that Serv., 674 F.2d 56, 72–73 (D.C. Cir. 1982) (‘‘small evidence. For example, OFCCP may OFCCP can move forward with issuing numbers are not per se useless, especially if the proceed without qualitative evidence if a PDN when the qualitative evidence by disparity shown is egregious. The ‘inexorable zero’ the contractor has prevented OFCCP itself is sufficient to support a can raise an inference of discrimination even if the from interviewing employees who may subgroup analyzed is relatively small.’’); cf. also preliminary finding of disparate Hazelwood Sch. Dist., 433 U.S. at 307–08 (‘‘Where have knowledge of facts relevant to a treatment, regardless of quantitative gross statistical disparities can be shown, they alone preliminary indicator of discrimination evidence.46 For example, during a may in a proper case constitute prima facie proof during compliance evaluations, or has compliance review or focused review of a pattern or practice of discrimination.’’) (citing destroyed or failed to produce personnel Int’l Bhd. of Teamsters, 431 U.S. at 339)); Analogic OFCCP could uncover direct evidence Corp., 2017–OFC–00001, at 39 (‘‘Courts have held or employment records that similarly evidence of gross statistical disparity alone may be may have contained information 46 See supra note 42. This is how individual sufficient to establish a pattern and practice case of relevant to a preliminary indicator of discrimination cases are traditionally proven. See intentional discrimination.’’). discrimination.50 The Department McDonnell Douglas Corp. v. Green, 411 U.S. 792, 48 See T.I.M.E.-D.C., Inc., 517 F.2d at 315 n.29, 802 (1973) (describing traditional burden-shifting vacated on other grounds, 431 U.S. 324 (1977) analysis under Title VII); see also Desert Palace Inc. (vacating judgment with respect to individual relief 49 Supra note 47. v. Costa, 539 U.S. 90 (2003) (describing the burden but otherwise upholding the 5th Circuit’s finding 50 See 41 CFR 60–1.12(e), 60–1.43, 60–3.15, 60– of proof in mixed-motive cases under Title VII). regarding the ‘‘inexorable zero’’ standard). 300.80–81, and 60–741.80–81.

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believes this exception is necessary to PDN apply to disparate impact findings for instance, if a contractor has avoid creating an incentive for or just disparate treatment findings and destroyed or failed to maintain records contractors not to comply with OFCCP stating that statistical evidence is only of its employment policies or processes compliance evaluations. relevant to disparate treatment because preventing OFCCP from analyzing the NPRM suggested that statistical specific steps of the process. OFCCP (b) Disparate Impact Theory of Liability evidence can support an inference of expects to invoke this exception rarely. Paragraph (a)(3) sets out OFCCP’s discriminatory intent. The quantitative (c) Disclosure to Contractors evidentiary standard for findings or evidence and practical significance preliminary findings of discrimination requirements apply to findings and Multiple comments asked OFCCP to premised on a disparate impact theory. preliminary findings of disparate provide more descriptive detail on the Title VII’s statutory text, as well as impact. The Department here requires evidence that supports preliminary interpretive case law, requires not only the same level of quantitative evidence findings in the PDN, to include the type that the plaintiff must demonstrate the as it does for disparate treatment of employment action resulting in a existence of an adverse impact on a claims—in both kinds of cases, typically preliminary finding, and to provide protected group, but that it must a two-standard-deviation showing of enough information so the contractor identify the particular employment disparate results after accounting for can investigate the preliminary findings practice causing that impact, unless the relevant variables to establish a and respond. The agency has taken elements of the employer’s decision- statistically significant disparity. OFCCP significant steps in recent years to be making process cannot be separated for also requires practical significance for more transparent and believes that the analysis.51 For findings of the same reasons it requires it for level of specificity that contractors seek discrimination premised on a disparate disparate treatment claims: to prioritize is already required by the FCCM and impact theory, paragraph (a)(3) therefore agency resources, to be especially recent directives.57 To provide greater requires OFCCP to first demonstrate that confident in its statistical findings, and certainty, the agency recommits a disparity has both sufficient to ensure it is bringing compelling specifically to be transparent in quantitative evidence and is practically cases.54 disclosing the quantitative evidence, the significant (paragraphs (a)(3)(i) and (ii)), For disparate impact cases, the PDN determination of potential significance, and second to identify the policy or must also specifically identify the and a summary of the relevant practice of the contractor causing the policy or practice that is causing an qualitative evidence OFCCP has disparate impact (paragraph adverse impact,55 and provide factual accumulated, where applicable. (a)(3)(iii)).52 As the Supreme Court has support to explain how the particular Paragraph (a)(4) requires that the PDN said, disparate-impact liability is policy or practice is causing the disclose the quantitative and qualitative concerned not with statistical discriminatory effect. This is typically evidence relied upon by OFCCP in imbalances alone but on the eradication accomplished using statistical evidence sufficient detail to allow contractors to of policies that form ‘‘artificial, to demonstrate that the identified policy investigate allegations and meaningfully arbitrary, and unnecessary barriers’’ to or practice specifically is causing the respond. The PDN also must contain an disfavored groups.53 disparity. However, consistent with the explanation for the agency’s finding of OFCCP received a few comments Title VII statute and relevant case law, practical significance. However, OFCCP seeking clarity on whether the if the elements of the decision-making may withhold personal identifying evidentiary thresholds for issuance of a process cannot be separated for analysis, information from the description of the OFCCP may issue the PDN without qualitative evidence if the information 51 42 U.S.C. 2000e(k)(1). See generally Ricci v. identifying the exact step causing is protected from disclosure under DeStefano, 557 U.S. 557, 577–78 (2009). disparate impact.56 This could include, recognized governmental privileges, or 52 Consistent with note42, supra, the final rule does not require OFCCP, at the PDN stage, to if providing that information would provide evidence that would rebut the contractor’s 54 Of course, quantitative evidence also otherwise violate confidentiality or burden of demonstrating that the selection demonstrates that a disparity exists. privacy protections afforded by law. As procedure in question has been properly validated. 55 41 CFR 60–3.3A; see also Analogic Corp., stated previously, when the exception This is in part because, under OFCCP’s regulations, 2017–OFC–00001, at 31 (‘‘In order to establish a a contractor is not required to validate selection disparate impact violation, OFCCP must procedures until it is aware of an adverse impact, demonstrate Analogic ‘uses a particular demonstrated the elements of the decision-making see 41 CFR 60–3.4(C), which it may not be until employment practice that causes a disparate impact process cannot be separated for analysis.’’) (citing OFCCP issues the PDN. on the basis of [a protected characteristic.]’’) (citing Davis v. Cintas Corp., 717 F.3d 476, 496 (6th Cir. 53 Texas Dep’t of Hous. & Cmty. Affairs v. 42 U.S.C. 2000e–2(k)(1)(A)(i); Wal-Mart Stores Inc. 2013); Bennett v. Nucor Corp., 656 F.3d 892, 817– Inclusive Communities Project, Inc., 576 U.S. 519, v. Dukes, 564 U.S. 338 (2011); Wards Cove 18 (8th Cir. 2011)); Lufkin Indus., Inc., 519 F.3d at 543 (2015) (quoting Griggs v. Duke Power Co., 401 Packaging Co., 490 U.S. at 657; Connecticut v. Teal, 278 (collecting cases in which courts found U.S. 424, 431 (1971)); see also id. at 542 (‘‘[A] 457 U.S. 440, 446 (1982); Robinson v. Metro-North employment practices were ‘‘not capable of disparate-impact claim that relies on a statistical Commuter R.R. Co., 267 F.3d 147, 160 (2d Cir. separation for analysis’’). disparity must fail if the plaintiff cannot point to 2001)); see also Griggs, 401 U.S. at 431 (‘‘[Title VII] 57 Chapter 8E01 of the FCCM states, ‘‘[The PDN] a defendant’s policy or policies causing that proscribes not only overt discrimination but also description will include identification of the disparity. A robust causality requirement ensures practices that are fair in form, but discriminatory in discrimination victim(s), e.g., the affected class or that ‘[r]acial imbalance . . . does not, without more, operation. The touchstone is business necessity. If individual(s); the employment action(s) giving rise establish a prima facie case of disparate impact’ and an employment practice which operates to exclude to the preliminary findings; and the basis for the thus protects defendants from being held liable for [African Americans] cannot be shown to be related liability determination (e.g., disparate treatment in racial disparities they did not create.’’) (quoting to job performance, the practice is prohibited.’’); see the selection of minority technicians). The PDN Wards Cove Packing Co. v. Atonio, 490 U.S. 642, also TNT Crust, 2004–OFC–3, at 35 (finding should also include facts and the results of analyses 653 (1989)). Although Inclusive Communities employer discriminated against Hispanic applicants that support the preliminary determination and involved a disparate impact claim under the federal by requiring that laborers possess basic English recommended remedies. Typically, the PDN Fair Housing Act, courts have applied the case in skills, which resulted in an adverse impact and was includes the magnitude of the impact in terms of the Title VII context as well. See, e.g., Davis v. not demonstrably related to legitimate business shortfalls or pay disparities and the measure of District of Columbia, 925 F.3d 1240, 1251 (D.C. Cir. necessities) (citing Griggs, 401 U.S. at 431–32)). statistical certainty (e.g., standard deviation).’’ See 2019); Gagliano v. Mabus, No. 15–cv–2299, 2019 56 42 U.S.C. 2000e–(k)(1)(B)(i); see also Analogic also FCCM, Letter L–35. OFCCP also provides WL 3306293, at *2 (S.D. Cal. July 23, 2019); see also Corp., 2017–OFC–00001, at 33 (‘‘Courts have guidance on what to communicate to contractors in Inclusive Communities, 576 U.S. at 539–40 determined the Title VII exception to the general Directive 2018–08, ‘‘Transparency in OFCCP (describing the analysis required under the FHA as rule requiring a plaintiff to identify a specific Compliance Activities’’ (Sept. 2018), www.dol.gov/ analogous to the disparate impact standard under employment practice caused the disparity is agencies/ofccp/directives/2018-08, and Directive Title VII). applicable only when the plaintiff has 2018–05, see supra note 21.

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in paragraph (a)(2)(ii) applies, OFCCP PDN for potential violations that do not of the equal opportunity clause. The will disclose why, in the absence of involve discrimination, OFCCP NOV informs the contractor that qualitative evidence, the agency is generally sends an NOV before corrective action is required and invites issuing the PDN based on evidence of an proceeding to a conciliation agreement, conciliation through a written extraordinarily compelling disparity or the SCN as a last resort.59 This final agreement. This section also requires alone. In addition, upon the contractor’s rule codifies use of the NOV for all the OFCCP Director or acting agency request, OFCCP must also provide the material violations, with the exception head to approve an NOV before it is model and variables used in its of cases in which the contractor either issued. statistical analysis and an explanation denies access or otherwise fails to Paragraph (b)(1) codifies use of the for why any variable proposed by the submit information requested in NOV for all material violations. An NOV contractor was excluded from the OFCCP’s OMB-approved scheduling is the first formal notification a statistical analysis. letters. For those cases, OFCCP will contractor receives for a material One commenter sought clarity on how continue its current practice of violation that does not involve OFCCP weighs evidence provided by proceeding directly to issuing an SCN to discrimination. However, consistent the contractor to rebut preliminary expedite resolution of those issues. with current OFCCP policy and findings. However, further guidance on practice, the final rule allows OFCCP to the weighing of that kind of evidence is (d) Response Deadline proceed straight to a SCN if the asserted not well-suited to regulatory text, as In response to several comments, violation is that the contractor has how OFCCP evaluates a contractor’s paragraph (a)(5) of the final rule denied OFCCP access to individuals or response depends on the particular facts increases the time for contractors to documents or otherwise failed to submit under review in each case. That same respond to a PDN from 15 to 30 days information requested in OFCCP’s commenter expressed concern regarding with the possibility of an extension. OMB-approved scheduling letters. the amount of qualitative evidence OFCCP believes that with all of the These types of violations require required before issuing a PDN and asked information being provided to a expedited treatment because they OFCCP to include language in the final contractor in the PDN, including the directly inhibit OFCCP’s compliance rule to quantify how much summary of evidence, and the option to evaluations and cause delays in nonstatistical evidence is needed for request additional information about the resolution of those evaluations. The OFCCP to make a preliminary finding. statistical analysis, that a contractor will Department did not intend for the As discussed previously, the amount of likely need 30 days to respond, with the NPRM to require an NOV for these types evidence available—as well as its possibility of an extension for good of violations and makes the exception quality, credibility, and content, which cause shown. explicit in the final rule. Paragraphs (b)(2) through (4) govern may range from innocuous to very 2. Notice of Violation concerning—will depend on the facts of specifically NOVs that allege a finding each compliance evaluation, and it is Section 60–1.33(b) of the final rule of discrimination. Paragraph (b)(2) governs NOVs. The Department did not impracticable for OFCCP to prescribe a provides that OFCCP will only issue an receive any comments solely concerning set volume or specific characteristics of NOV alleging a finding of the NOV, with some commenters qualitative evidence that would be discrimination if the contractor has not generally addressing both the PDN and sufficient in every conceivable sufficiently rebutted the preliminary NOV thresholds. Nevertheless, the evaluation. The evidence OFCCP findings identified in the PDN or if the Department has decided to revise § 60– examines and chooses to reject or rely contractor failed to respond. Paragraph 1.33(b) to make it clear that NOVs upon will be based on the overall facts (b)(3) clarifies that the requirements for alleging discrimination findings are and circumstances of each particular issuing a PDN also apply to an NOV subject to the same requirements as case. The PDN will provide sufficient alleging a discrimination violation. PDNs, and that OFCCP will fully information to contractors to be able to Finally, paragraph (b)(4) clarifies that consider the arguments raised and OFCCP must reasonably address all understand OFCCP’s finding and to information provided by contractors in meaningfully respond. concerns and defenses raised by the response to PDNs. contractor in response to the PDN. Similarly, the Department received Section 60–1.33(b)(1) explains that comments seeking a definition for OFCCP may issue an NOV if, following 3. Show Cause Notice ‘‘material’’ violation and clarity on what OFCCP’s review of any response by the SCNs are governed by existing the agency considers ‘‘preliminary contractor pursuant to paragraph (a)(5), findings.’’ The Department did not sections in the Code of Federal the agency has evidence sufficient to 61 propose these definitions in the NPRM Regulations. The Department did not support a finding of disparate treatment propose to revise those sections and and declines to add definitions for these and/or disparate impact terms to the final rule. Definitions for does not now adopt any revisions. discrimination,60 or that the contractor OFCCP may issue SCNs when the the terms are not needed. The final rule has committed other material violations provides significant clarity regarding, OFCCP Director has reasonable cause to and guardrails for issuing, pre- believe that a contractor has violated an records in accordance with 41 CFR 60–1.12, 60– equal opportunity clause. As noted enforcement notices. To the extent 300.80, and 60–741.80, or for failure to maintain commenters were concerned with affirmative action programs as required by 41 CFR above, the final rule retains OFCCP’s material but non-discriminatory part 60–2, 41 CFR part 60–300, subpart C, and 41 ability, consistent with current practice, CFR part 60–741, subpart C. to proceed directly to issuing a SCN for violations, (e.g., recordkeeping, failure 59 In some instances, OFCCP issues the SCN to implement audit and reporting cases in which the contractor either without first issuing an NOV for material violations denies access or otherwise fails to systems), those also trigger OFCCP’s that are non-discriminatory in nature. See FCCM, resolution procedures for compliance Chapter 8D01 (explaining that OFCCP issues the submit information requested in SCN without first issuing an NOV when a OFCCP’s OMB-approved scheduling evaluations.58 Rather than sending a contractor fails to provide the records, information, letters. In discrimination cases, SCNs or data requested in the scheduling letter and when 58 FCCM, Chapter 8F00; FCCM, Chapter 8H00. the contractor refuses to provide access to its generally follow issuance of an NOV For example, OFCCP may issue an NOV and enter premises for an onsite review). into a conciliation agreement for failure to maintain 60 See note 42, supra. 61 41 CFR 60–1.28, 60–300.64, and 60–741.64.

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and the contractor’s rejection of The Department received six Other comments expressed concern OFCCP’s offer to conciliate or a failure comments relevant to the expedited that the early resolution option would of conciliation. Notwithstanding a conciliation option. One contractor coerce contractors into conciliation by rejection or failure of conciliation, pre- organization specifically asked OFCCP combining data from multiple referral mediation remains a viable to endorse use of the Early Resolution establishments and that OFCCP would option for contractors who have Procedures (ERP) and Early Resolution use the early resolution option as a way, received a SCN. If a contractor raises Conciliation Agreements (ERCAs) in its in the words of one commenter, ‘‘to new or different information or final rule and codify the process. While circumvent legal standards by OFCCP arguments in response to an NOV, the the Department fully endorses use of personnel through initiation of agency’s policy is to address those ERP and ERCAs as an expedited discussions about resolution of merely issues before or coincident with issuing conciliation option, and the agency ‘potential’ employment discrimination a SCN. The Department notes the intends to continue using this option that does not meet legal standards.’’ evidentiary standards that must be met where a contractor is interested, it OFCCP does not and will not use early in order to issue PDNs and NOVs in declines to codify the procedures at this resolution procedures to coerce discrimination cases must also be met in time. OFCCP only recently began using contractors or to circumvent legal order to issue a SCN in such cases; this ERP and ERCAs to promote corporate- standards, and the Department has is the most reasonable reading of the wide compliance, and the procedures revised § 60–1.33(d) to make it clear that regulation’s current requirement that the are still evolving as the program contractors’ participation must be Director must have ‘‘reasonable cause’’ matures. Under the current procedures, voluntary. This language should not be to believe a violation has occurred in OFCCP may alert contractors of their interpreted to be coercive. It is intended order to issue a SCN, so no change to option to conciliate even before the to be permissive. One commenter the regulatory text is needed. The agency issues a PDN, and the contractor further suggested that the Department Department also notes that meeting the has the option to initiate the resolution should not allow OFCCP staff to initiate evidentiary standards for issuing PDNs procedures. If material violations exist, discussions about expedited and NOVs does not necessarily mean the contractor may agree to participate conciliation options. While the that a case is legally sufficient to initiate in ERP, ultimately resulting in an ERCA. Department appreciates the litigation. The Solicitor of Labor retains The agency will continue to provide commenter’s concern, the Department authority to pursue formal enforcement subregulatory guidance on these believes that allowing OFCCP staff to proceedings and will do so only after procedures as the program develops. inform contractors that expedited determining that the required legal One commenter requested conciliation is an available option is elements of a disparate treatment and/ establishment of a pre-PDN conference important to ensure that contractors are or disparate impact claim, as relevant, between the contractor and the agency aware of that option. However, the final are satisfied. to discuss the issues that OFCCP rule clarifies that OFCCP staff may not intends to identify in the PDN. OFCCP’s require or insist that the contractor avail 4. Conciliation Agreements current practice is to engage in the itself of the expedited conciliation Before this rule, § 60–1.33 provided equivalent of a pre-PDN conference option. OFCCP’s headquarters office for conciliation agreements. The through regular contact with the also provides oversight of early Department has retained this provision contractor, and the agency is committed resolution conciliations to ensure a without substantive change as § 60– to continuing to do so.64 Likewise, the degree of consistency in their content. 1.33(c) of the final rule.62 ERP process requires a pre-PDN Finally, OFCCP declines to change the 5. Expedited Conciliation Option conference to discuss the potential label of this section, as suggested by one ERCA if a contractor expresses interest comment. This rule clarifies in § 60–1.33(d) that in pursuing one. However, the 6. Severability Federal contractors have the option to Department believes it is premature to bypass the PDN and NOV procedures to require a pre-PDN conference in all The Department has decided to enter directly into a conciliation matters. Between the PDN, NOV, and include a severability provision as part agreement when there are preliminary SCN, there already are three mandatory of this final rule. To the extent that any findings of material violations, notices that provide the contractor provision of this final rule is declared regardless of whether those violations information about OFCCP’s findings (or invalid by a court of competent involve discrimination. This option for preliminary findings) of discrimination, jurisdiction, the Department intends for conciliation may suit contractors who as well as opportunities for the all other provisions that are capable of wish to expedite the resolution of contractor to respond to each one, operating in the absence of the specific discrimination or other material before a matter is referred for provision that has been invalidated to violations. Recently, OFCCP has sought enforcement. Adding another step remain in effect. to promote the efficient resolution of would likely add unnecessary delay. material violations for multi- Moreover, OFCCP already offers early C. Miscellaneous Comments establishment Federal contractors with conciliation as well as its Ombuds A number of comments are not 63 early resolution procedures. The final Service for assistance with complaints addressed above because they are not rule furthers the agency’s efforts to about the agency’s conduct. The agency directly germane to the provisions of the improve efficiency and prioritize early will continue to evaluate whether a final rule. Eight comments were not resolution of cases by codifying an mandatory formal pre-PDN conference posted to Regulations.gov either because expedited option for resolution that would be helpful, but declines to adopt of lack of relevance to the proposed rule would apply to compliance reviews in that procedure at this time. or because they were exact duplicates of their early stages. an already posted comment. One 64 Chapter 2O00 of the FCCM states, ‘‘After comment was withdrawn after posting 62 The Department added a comma between advising the contractor of its compliance evaluation ‘‘complaint investigation’’ and ‘‘or other review’’ in findings, the [compliance officer] must provide because the submitter subsequently the first sentence of this provision. formal notification through a PDN . . . when there provided a revised version that was 63 See supra note 40. are preliminary indicators of discrimination.’’ posted instead.

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One commenter noted that age posted its declination letter on State, local or tribal governments or discrimination is not mentioned in the Regulations.gov as a supplement to the communities (also referred to as proposed rule. That is because none of proposed rule on January 27, 2020. economically significant); (2) creates the laws that OFCCP enforces protect serious inconsistency or otherwise D. Changes in 41 CFR Parts 60–300 and applicants or employees from interferes with an action taken or 60–741 discrimination on the basis of age. The planned by another agency; (3) Age Discrimination in Employment Act, OFCCP has separate regulations materially alters the budgetary impacts the primary Federal law prohibiting age concerning E.O. 11246, VEVRAA, and of entitlement grants, user fees, or loan discrimination in employment, is section 503. No commenter suggested programs, or the rights and obligations enforced and administered by the Equal that OFCCP’s resolution procedures or of recipients thereof; or (4) raises novel Employment Opportunity Commission. the proposed definitions should be legal or policy issues arising out of legal Three comments pertained to applied differently depending on the mandates, the President’s priorities, or previously issued OFCCP guidance law the agency is enforcing. The the principles set forth in E.O. 12866. about how the agency analyzes Department thus adopts the same OMB has determined that this rule is a compensation discrimination.65 The definitions and provisions on resolution significant regulatory action under E.O. comments asked for clarification procedures in 41 CFR part 60–300 12866 and has reviewed the final rule. regarding how OFCCP groups (VEVRAA) and 41 CFR part 60–741 Pursuant to the Congressional Review employees for pay analysis and which (section 503) that are described above Act (5 U.S.C. 801 et seq.), OIRA neutrality tests OFCCP uses to for 41 CFR part 60–1 (E.O. 11246). designated that this rule is not a ‘‘major determine whether pay variables are E. Agency Head Title rule,’’ as defined by 5 U.S.C. 804(2). neutral. One of the comments suggested E.O. 13563 directs agencies to adopt The final rule replaces outdated that the Department should rescind the a regulation only upon a reasoned references to the official title of OFCCP’s OFCCP policy directive that provides determination that its benefits justify its agency head in E.O. 11246 regulations, guidance on how the agency analyzes costs; tailor the regulation to impose the from ‘‘Deputy Assistant Secretary’’ to compensation to determine whether least burden on society, consistent with 66 ‘‘Director,’’ throughout the entirety of 41 discrimination may be present. The obtaining the regulatory objectives; and CFR parts 60–1 and 60–2. The Department declines at this time to in choosing among alternative Department made the same change to expand the scope of this rule to include regulatory approaches, select those the regulations implementing VEVRAA further guidance concerning pay approaches that maximize net benefits. and section 503 through final rules in analysis groupings specifically or to E.O. 13563 recognizes that some 2013.68 The Department made the rescind its compensation directive. The benefits are difficult to quantify and change after the Department of Labor Department appreciates the input provides that, where appropriate and received and is considering addressing abolished the Employment Standards permitted by law, agencies may its methods of compensation analysis in Administration in November 2009. This consider and discuss qualitatively a future rulemaking or in new guidance restructuring resulted in the change of values that are difficult or impossible to documents. title for OFCCP’s agency head, from quantify, including equity, human Finally, five comments specifically ‘‘Deputy Assistant Secretary’’ (reporting dignity, fairness, and distributive requested that the comment period be to the head of the Employment impacts. extended. After considering those Standards Administration) to ‘‘Director’’ requests, the Department determined reporting directly to the Secretary of A. Need for Rulemaking that the original 30-day comment period Labor. The Department received no The final rule addresses stakeholder provided adequate time for the public to comments on this change and adopts it concerns by codifying the use of PDNs, comment on the proposed rule. Notably, in the final rule. the Administrative Procedure Act (APA) NOVs, and an early conciliation option does not set forth a mandatory Executive Order 12866 (Regulatory that already exist in the FCCM and minimum time for public comments, Planning and Review) and Executive agency guidance, such as directives. The but rather more generally requires an Order 13563 (Improving Regulation FCCM and agency directives are not ‘‘opportunity to participate in the rule and Regulatory Review) legally binding and have not gone making through submission of written Under E.O. 12866, OMB’s Office of through formal notice and public data, views, or arguments.’’ 67 OFCCP Information and Regulatory Affairs comment. They thus do not provide the (OIRA) determines whether a regulatory same level of clarity, transparency, and 65 See Directive 2018–01, ‘‘Use of action is significant and, therefore, certainty that this final rule does. The Predetermination Notices (PDN)’’ (Feb. 27, 2018), subject to the requirements of E.O. final rule also modifies those www.dol.gov/agencies/ofccp/directives/2018-01. 12866 and OMB review. Section 3(f) of procedures to improve clarity and OFCCP issued this directive to ensure that PDNs be transparency, establish guardrails on the used in all compliance evaluations with E.O. 12866 defines a ‘‘significant preliminary discrimination findings, both regulatory action’’ as an action that is agency’s issuance of pre-enforcement individual and systemic. Prior to the directive, use likely to result in a rule that: (1) Has an notices, and further the strategic of PDNs was discretionary and reserved for allocation of limited agency resources. systemic discrimination findings. See FCCM, annual effect on the economy of $100 Chapter 8 (detailing the procedures that OFCCP million or more, or adversely affects in B. Discussion of Impacts follows for issuing PDNs). a material way a sector of the economy, 66 Id. productivity, competition, jobs, the In this section, the Department 67 5 U.S.C. 553(c). Thirty-day public comment environment, public health or safety, or presents a summary of the costs periods are broadly viewed as permissible under associated with the codified procedures the APA, particularly where, as here, the proposal is fairly straightforward and is not detailed or helpful’’); Conference of State Bank Supervisors v. and modifications in this rulemaking. In highly technical in nature. See, e.g., Conn. Light & Office of Thrift Supervision, 792 F. Supp. 837, 844 the NPRM, the Department utilized the Power Co. v. Nuclear Regulatory Comm’n., 673 F.2d (D.D.C. 1992) (upholding the sufficiency of a thirty- General Services Administration’s 525, 534 (D.C. Cir. 1982) (upholding a thirty-day day comment period). System for Award Management (SAM) comment period even though the ‘‘technical 68 See 41 CFR 60–300.2(h) and 60–741.2(f); see complexity’’ of the regulation was ‘‘such that a also 78 FR 58613 (Sept. 24, 2013); 78 FR 58681 database to identify the number of somewhat longer comment period might have been (Sept. 24, 2013). contractors who may be impacted by the

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rule.69 Those registered in the SAM contract, subcontract, or purchase order estimated time it takes for contractors to database consist of contractor firms, and amounting to $50,000 or more. OFCCP review and understand the instructions other entities such as state and local schedules only contractors who meet for compliance. To minimize the governments and other organizations those thresholds for compliance burden, OFCCP will publish compliance that are interested in Federal contracting evaluations. While the Department assistance materials such as a fact sheet opportunities, and other forms of acknowledges that all Federal and answers to frequently asked Federal financial assistance. In the contractors may learn their EEO questions. NPRM, the Department acknowledged requirements in order to comply with In line with recent assessments in that the SAM number likely resulted in the laws that OFCCP enforces, only other rulemakings, the agency has an overestimation because the system those contractors scheduled for a determined that either a Human captures firms that do not meet the compliance evaluation are likely to have Resources Manager (SOC 11–3121) or a jurisdictional dollar thresholds for the a need to learn the resolution Lawyer (SOC 23–1011) would review three laws that OFCCP enforces, and it procedures because only those captures contractor firms for work contractors may need to interact with the rule. OFCCP estimates that 50 performed outside the United States by OFCCP through these new resolution percent of the reviewers would be individuals hired outside the United procedures. Further, because this rule human resources managers and 50 States, over which OFCCP does not have stipulates procedures OFCCP must percent would be in-house counsel. authority. follow if it desires to issue a PDN or Thus, the mean hourly wage rate reflects The Department received no NOV, unless and until a contractor is a 50/50 split between human resources comments on using the SAM database to scheduled for a compliance evaluation, managers and lawyers. The mean hourly determine the affected contractor the contractor need not familiarize itself wage of a human resources manager is universe in the NPRM. However, in the with these changes. This change $62.29 and the mean hourly wage of a 71 final rule, the Department reevaluated significantly alters the number of lawyer is $69.86. Therefore, the the contractors likely to be affected and contractors possibly impacted by the average hourly wage rate is $66.08 decided to utilize the Employment final rule, reducing the number to (($62.29 + $69.86)/2). OFCCP adjusted Information Report (EEO–1) data, which 26,514.70 The Department believes the this wage rate to reflect fringe benefits identifies the number of contractors that updated number of contractors is a more such as health insurance and retirement could be scheduled for a compliance accurate estimation of those entities benefits, as well as overhead costs such evaluation. By using the EEO–1 Report possibly impacted by the final rule and as rent, utilities, and office equipment. data, the Department mitigates the still likely overstates the number of The agency used a fringe benefits rate of problems identified with the SAM data entities that will take time to familiarize 46 percent 72 and an overhead rate of 17 that resulted in the overestimation of themselves. percent,73 resulting in a fully loaded the contractor universe. The EEO–1 hourly compensation rate of $107.71 Report must be filed by covered Federal 1. Cost of Rule Familiarization ($66.08 + ($66.08 × 46 percent) + contractors who: (1) Have 50 or more OFCCP acknowledges that 5 CFR ($66.08 × 17 percent)). The estimated employees; (2) are prime contractors or 1320.3(b)(1)(i) requires agencies to labor cost to contractors is reflected in first-tier subcontractors; and (3) have a include in the burden analysis the Table 1, below.

TABLE 1—LABOR COST

Average Fully loaded Major occupational groups hourly wage Fringe benefit Overhead rate hourly rate rate compensation

Human Resources Managers and Lawyers ...... $66.08 46% 17% $107.71

The agency estimates that it will take of time each company will take to provided by OFCCP to learn more about a minimum of 30 minutes (1⁄2 hour) for become familiar with understanding the the codified procedures. a human resources manager or lawyer at new regulations is difficult to estimate. Another contractor organization each contractor firm to either read the The elements that the agency uses in its asserted that the agency’s calculations rule or read the compliance assistance calculation take into account the length did not account for the use of outside materials provided by OFCCP to learn and complexity of the rule. Thus, third parties that are used by Federal more about the codified procedures. OFCCP has decided to retain its initial contractors and subcontractors to fully One commenter, a contractor estimate of one-half hour for rule understand a contractor’s obligations organization, asserted that the agency familiarization. The one-half hour under the proposed regulations. The underestimated the time needed to estimate is an average across all commenter surveyed its constituents become familiar with the proposed rule. contractors and accounts for the time and provided an estimate between The commenter provided an alternate needed to read the rule or read the $1,000 and $5,000 for outside estimate of two to three hours. OFCCP compliance assistance materials assistance. The commenter did not acknowledges that the precise amount provide specific data on the

69 U.S. General Services Administration, System 70 OFCCP obtained the total number of and salaries averaged $24.26 per hour worked in for Award Management, data released in monthly contractors from the most recent EEO–1 Report data 2017, while benefit costs averaged $11.26, which is files, www.sam.gov. In the NPRM, OFCCP used available, which is from FY 2018. a benefits rate of 46 percent. August 2019 data and identified 420,000 71 BLS, Occupational Employment Statistics, 73 Cody Rice, U.S. Environmental Protection contractors that may be impacted by the proposed Occupational Employment and Wages, May 2019, Agency, ‘‘Wage Rates for Economic Analyses of the _ rule. www.bls.gov/oes/current/oes nat.htm. Toxics Release Inventory Program,’’ (June 10, 2002), 72 BLS, Employer Costs for Employee www.regulations.gov/document?D=EPA-HQ-OPPT- Compensation, www.bls.gov/ncs/data.htm. Wages 2014-0650-0005.

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characteristics of the contractors 2. Cost Savings procedures described only in agency surveyed. The Department notes that OFCCP expects contractors impacted subregulatory guidance. Though OFCCP some companies may decide to by the rule will experience cost savings. codified ‘‘conciliation agreements’’ in outsource familiarization with the new Specifically, the clarity provided in the 1979, the agency’s other resolution procedures, just as some companies may new definitions, as well as the clarity of procedures, namely the PDN and NOV, wait until OFCCP initiates an OFCCP’s procedures related to have only been explained in investigation before familiarizing resolution of material violations, subregulatory guidance. Maintaining the themselves with the new procedures, provides certainty to contractors of what status quo has led to OFCCP’s but OFCCP does not anticipate that is required as well as an option for inconsistent use of the PDN across companies will incur both in-house and contractors to more expeditiously agency offices, creating inefficiencies third party familiarization costs. The resolve the violations. and leading to greater uncertainty for Department thus declines to add these If the rule increases clarity for Federal Federal contractors. Though the agency third-party costs to its estimate in contractors, this impact most likely will has taken recent subregulatory measures addition to the costs already calculated. yield cost savings to taxpayers (if to increase consistency and certainty, Consequently, the estimated burden contractor fees decrease because they do codifying these agency resolution for rule familiarization is 13,257 hours not need to engage third party procedures will have a stronger impact representatives to interpret OFCCP’s and promote more efficient enforcement (26,514 contractor firms × 1⁄2 hour). The of E.O. 11246, section 503, and Department calculates the total procedures and requirements). In VEVRAA than the status quo estimated cost of rule familiarization as addition, by increasing clarity for both contractors and for OFCCP, the rule may alternative. $1,427,911 (13,257 hours × $107.71/ reduce costs associated with resolving hour) in the first year, which amounts The Department also considered preliminary findings and violations to a 10-year annualized cost of $162,519 different types of evidentiary standards through conciliation by making it at a discount rate of 3 percent (which is for OFCCP to issue PDNs and NOVs. For clearer to both sides at the outset what $6.13 per contractor firm) or $190,002 at example, the Department considered is required by the regulation. a discount rate of 7 percent (which is mandating a higher threshold for $7.17 per contractor firm). Table 2, 3. Benefits statistical significance, such as the three-standard-deviation threshold below, reflects the estimated regulatory E.O. 13563 recognizes that some rules proposed in the NPRM, and not familiarization costs for the final rule. have benefits that are difficult to mandating qualitative evidence. The quantify or monetize but are TABLE 2—REGULATORY nevertheless important and states that Department ultimately determined that FAMILIARIZATION COST agencies may consider such benefits. requiring statistical evidence with two This rule has equity and fairness standard deviations or other Total number of contractors 26,514 benefits, which are explicitly recognized quantitative evidence, a finding of Time to review rule ...... 30 minutes in E.O. 13563. The rule is designed to practical significance, and appropriate Human Resources Managers achieve these benefits by: qualitative evidence best balances all fully loaded hourly com- • Supporting more effective the equities involved and promotes pensation ...... $107.71 enforcement of prohibitions against efficient and effective allocation of Regulatory familiarization certain types of employment resources. cost in the first year ...... $1,427,911 discrimination; Regulatory Flexibility Act and Annualized cost with 3 per- • Increasing fairness for contractors cent discounting ...... $162,519 Executive Order 13272 (Consideration by providing more transparency and Annualized cost per con- of Small Entities) tractor with 3 percent dis- certainty on the agency’s resolution counting ...... $6.13 procedures; The agency did not receive any public • Annualized cost with 7 per- Establishing guardrails on the comments on the Regulatory Flexibility cent discounting ...... $190,002 agency’s issuance of pre-enforcement Analysis. Annualized cost per con- notices; • The Regulatory Flexibility Act of 1980 tractor with 7 percent dis- Providing more efficient remedies (RFA), 5 U.S.C. 601 et seq., establishes counting ...... $7.17 to workers victimized by employment ‘‘as a principle of regulatory issuance discrimination by effectuating that agencies shall endeavor, consistent corporate-wide corrective actions in The rule does not include any with the objectives of the rule and conciliation agreements that may reach additional costs because it adds no new applicable statutes, to fit regulatory and more victims than standard requirements or burdens on contractors. informational requirements to the scale establishment-based conciliation When the Department uses a perpetual of the business organizations and time horizon to allow for cost agreements; • Facilitating a more efficient option governmental jurisdictions subject to comparisons under E.O. 13771, the regulation.’’ Public Law 96–354. The perpetual annualized cost is $81,215 at for contractors to resolve potential discrimination by providing notice of RFA requires agencies to consider the a 7 percent discount rate in 2016 impact of a regulation on a wide range dollars.74 OFCCP’s preliminary findings earlier in the compliance review process; and of small entities including small • Furthering the strategic allocation businesses, not-for-profit organizations, 74 To comply with E.O. 13771 accounting, the of limited agency resources. and small governmental jurisdictions. Department multiplied the rule familiarization cost Agencies must review whether a rule for Year 1 ($1,427,911) by the GDP deflator (0.9582) to convert the cost to 2016 dollars ($1,368,224). The C. Alternatives would have a significant economic Department used this result to determine the In addition to the approach proposed impact on a substantial number of small perpetual annualized cost ($106,456) at a discount in the rule, the Department considered entities. See 5 U.S.C. 603. If the rule rate of 7 percent in 2016 dollars. Assuming the rule would, then the agency must prepare a takes effect in 2020, the Department divided alternative approaches. The Department $106,456 by 1.074, which equals $81,215. considered leaving OFCCP’s resolution regulatory flexibility analysis as

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described in the RFA.75 However if an and OMB Control Number 1250–0005 amended by E.O. 11375, 32 FR 14303, 3 CFR, agency determines that the rule would (Office of Federal Contract Compliance 1966–1970 Comp., p. 684, E.O. 12086, 43 FR not be expected to have a significant Programs Recordkeeping and Reporting 46501, 3 CFR, 1978 Comp., p. 230, E.O. economic impact on a substantial 13279, 67 FR 77141, 3 CFR, 2002 Comp., p. Requirements Under Rehabilitation Act 258 and E.O. 13672, 79 FR 42971. number of small entities, then the head of 1973, as Amended Section 503). ■ 2. In part 60–1, except for § 60–1.3, of the agency may so certify and the Consequently, this rule does not require revise all references to ‘‘Deputy RFA does not require a regulatory review by the OMB under the authority Assistant Secretary’’ to read ‘‘Director’’. flexibility analysis. See 5 U.S.C. 605. of the Paperwork Reduction Act. The certification must include a ■ 3. Amend § 60–1.3 by removing the statement providing the factual basis for Executive Order 13132 (Federalism) definition for ‘‘Deputy Assistant this determination and the reasoning The Department has reviewed the rule Secretary’’ and adding definitions for should be clear. in accordance with E.O. 13132 regarding ‘‘Director’’, ‘‘Qualitative evidence’’, and The Department does not believe that federalism, and has determined that it ‘‘Quantitative evidence’’ in alphabetical this rule will have a significant does not have ‘‘federalism order to read as follows: economic impact on a substantial implications.’’ This rule will not ‘‘have § 60–1.3 Definitions. number of small entities. The final rule substantial direct effects on the States, will most likely affect small firms in the on the relationship between the national * * * * * Director means the Director, Office of construction industry (NAICS Sector 23) government and the States, or on the Federal Contract Compliance Programs and small firms in the management of distribution of power and (OFCCP) of the United States companies and enterprises industry responsibilities among the various Department of Labor, or his or her (NAICS Sector 55). The annualized cost levels of government.’’ designee. for both industries at a discount rate of 7 percent for rule familiarization is Executive Order 13175 (Consultation * * * * * $7.17 per entity ($50.33 in the first year) and Coordination With Indian Tribal Qualitative evidence includes but is which is far less than 1 percent of the Governments) not limited to testimony, interview annual revenue of the smallest of the The rule does not have tribal statements, and documents about biased small entities affected by the final rule implications under E.O. 13175 that statements, remarks, attitudes, or acts (0.01% for construction and 0.02% for requires a tribal summary impact based upon membership in a protected management of companies and statement. The rule does not have class, particularly when made by a enterprises). Accordingly, the substantial direct effects on one or more decision maker involved in the action Department certifies that the final rule Indian tribes, on the relationship under investigation; testimony, will not have a significant economic between the Federal Government and interview statements, and documents impact on a substantial number of small Indian tribes, or on the distribution of about individuals denied or given entities. That is consistent with the power and responsibilities between the misleading or contradictory information Department’s analysis in the NPRM. Federal Government and Indian tribes. about employment or compensation practices, in circumstances suggesting Paperwork Reduction Act List of Subjects discriminatory treatment based on a The Paperwork Reduction Act of 1995 41 CFR Parts 60–1 and 60–2 protected characteristic; testimony, requires that OFCCP consider the interview statements, and documents Administrative practice and impact of paperwork and other about the extent of discretion or procedure, Civil rights, Discrimination, information collection burdens imposed subjectivity involved in making Employment, Equal employment on the public. See 44 U.S.C. 3507(d). An employment decisions, in conjunction agency may not collect or sponsor the opportunity, Government contracts, with evidence suggesting the discretion collection of information or impose an Government procurement, Labor. or subjectivity has been used to information collection requirement 41 CFR Parts 60–300 and 60–741 discriminate based on a protected unless the information collection Administrative practice and characteristic; or other anecdotal instrument displays a currently valid procedure, Civil rights, Discrimination, evidence relevant to determining a OMB control number. See 5 CFR Employment, Equal employment contractor’s discriminatory or non- 1320.5(b)(1). opportunity, Government contracts, discriminatory intent, the business The Department has determined that Government procurement, Individuals necessity (or lack thereof) of a there is no new requirement for with disabilities, Labor, Veterans. challenged policy or practice, or information collection associated with whether the contractor has otherwise this rule. The information collection Craig E. Leen, complied with its non-discrimination contained in the existing E.O. 11246, Director, Office of Federal Contract obligations. Qualitative evidence may section 503, and VEVRAA regulations Compliance Programs. not be based solely on subjective are currently approved under OMB For the reasons stated in the inferences or the mere fact of Control Number 1250–0001 preamble, the Office of Federal Contract supervisory discretion in employment (Construction Recordkeeping and Compliance Programs amends 41 CFR decisions. The Office of Federal Reporting Requirements), OMB Control parts 60–1, 60–2, 60–300, and 60–741 as Contract Compliance Programs (OFCCP) Number 1250–0003 (Recordkeeping and follows: may also consider qualitative evidence Reporting Requirements—Supply and in the form of a contractor’s efforts to Service), OMB Control Number 1250– PART 60–1—OBLIGATIONS OF advance equal employment opportunity 0004 (Office of Federal Contract CONTRACTORS AND beyond mere compliance with legal Compliance Programs Recordkeeping SUBCONTRACTORS obligations in determining whether and Reporting Requirements Under the intentional discrimination has occurred. Vietnam Era Veterans’ Readjustment ■ 1. The authority citation for part 60– Quantitative evidence includes Assistance Act of 1974, as Amended), 1 continues to read as follows: hypothesis testing, controlling for the Authority: Sec. 201, E.O. 11246, 30 FR major, measurable parameters, and 75 Id. 12319, 3 CFR, 1964–1965 Comp., p. 339, as variables used by the contractor

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(including, as appropriate, preferred extraordinarily compelling that by itself and/or disparate impact discrimination, qualifications, other demographic it is sufficient to support a preliminary as established in the parameters and variables, test scores, geographic finding of disparate treatment; or exceptions in paragraph (a) of this variables, performance evaluations, (iii) Paragraphs (a)(1)(i) and (ii) of this section, or that the contractor has years of experience, quality of section are satisfied and the contractor committed other material violations of experience, years of service, quality and denied OFCCP access to sources of the equal opportunity clause (with the reputation of previous employers, years evidence that may be relevant to a exception of violations for denying of education, years of training, quality preliminary finding of discriminatory access or failing to submit records in and reputation of credentialing intent. This may include denying access response to OFCCP’s Office of institutions, etc.), related to the to its employees during a compliance Management and Budget (OMB)- probability of outcomes occurring by evaluation or destroying or failing to approved Scheduling Letters, for which chance and/or analyses reflecting produce records the contractor is legally OFCCP may proceed directly to issuing statements concluding that a disparity required to create and maintain. a Show Cause Notice), OFCCP may in employment selection rates or rates of (3) For allegations included in a issue a Notice of Violation to the compensation is statistically significant Predetermination Notice involving a contractor requiring corrective action by reference to any one of these disparate impact theory of liability, and inviting conciliation through a statements: OFCCP must: written agreement, subject to approval (1) The disparity is two or more times (i) Provide quantitative evidence as by the Director or acting agency head. larger than its standard error (i.e., a defined in this part; (2) OFCCP may issue a Notice of standard deviation of two or more); (ii) Demonstrate the unexplained Violation alleging a finding of (2) The Z statistic has a value greater disparity is practically significant; and discrimination following issuance of a than two; or (iii) Identify the specific policy or Predetermination Notice if the (3) The probability value is less than practice of the contractor causing the contractor does not respond or provide 0.05. It also includes numerical analysis adverse impact, unless OFCCP can a sufficient response within 30 calendar of similarly situated individuals, small demonstrate that the elements of the days of receipt of the Predetermination groups, or other characteristics, contractor’s selection procedures are Notice, subject to approval by the demographics or outcomes where incapable of separation for analysis. Director or acting agency head, unless hypothesis-testing techniques are not (4) The Predetermination Notice must OFCCP has extended the used. disclose the quantitative and qualitative Predetermination Notice response time evidence relied on by OFCCP in * * * * * for good cause shown. sufficient detail to allow contractors to (3) The Notice of Violation must ■ 4. Revise § 60–1.33 to read as follows: investigate allegations and meaningfully disclose the quantitative and qualitative § 60–1.33 Resolution procedures. respond. OFCCP will seek to obtain evidence relied on by OFCCP in (a) Predetermination Notice. If a qualitative evidence in all cases in sufficient detail to allow contractors to compliance review or other review by which it issues a Predetermination investigate allegations and meaningfully OFCCP indicates evidence sufficient to Notice; however, if the exception in respond. OFCCP will seek to obtain support a preliminary finding of paragraph (a)(2)(ii) of this section qualitative evidence in all cases in disparate treatment and/or disparate applies, OFCCP will disclose why, in which it issues a Notice of Violation, impact discrimination, OFCCP may the absence of qualitative evidence, the however, if the exception in paragraph issue a Predetermination Notice, subject agency is issuing the Predetermination (a)(2)(ii) of this section applies, OFCCP to the following parameters and the Notice based on evidence of an will disclose why, in the absence of approval of the Director or acting agency extraordinarily compelling disparity qualitative evidence, the agency is head: alone. In addition, upon the contractor’s issuing the Notice of Violation based on (1) For allegations included in a request, OFCCP must also provide the evidence of an extraordinarily Predetermination Notice involving a model and variables used in any compelling disparity alone. In addition, disparate treatment theory of liability, statistical analysis and an explanation upon the contractor’s request, OFCCP OFCCP must: for why any variable proposed by the must also provide the model and (i) Provide quantitative evidence as contractor was excluded from that variables used in any statistical analysis defined in this part; analysis. However, OFCCP may and an explanation why any variable (ii) Demonstrate that the unexplained withhold personal identifying proposed by the contractor was disparity is practically significant; and information from the description of the excluded from that analysis. However, (iii) Provide qualitative evidence as qualitative evidence if the information OFCCP may withhold personal defined in this part that, in combination is protected from disclosure under identifying information from the with other evidence, supports both a recognized governmental privileges, or description of the qualitative evidence if finding of discriminatory intent by the otherwise if providing that information the information is protected from contractor and a finding that the would violate confidentiality or privacy disclosure under recognized contractor’s discriminatory intent protections afforded by law. governmental privileges, or otherwise if caused the disparate treatment. (5) Any response to a providing that information would (2) OFCCP may issue a Predetermination Notice must be violate confidentiality or privacy Predetermination Notice under a submitted by the contractor within 30 protections afforded by law. disparate treatment theory of liability calendar days of receipt of the Notice, (4) The Notice of Violation must without satisfying all three components which deadline OFCCP may extend for address all relevant concerns and listed in paragraph (a)(1) of this section good cause. defenses raised by the contractor in only if: (b) Notice of Violation. (1) If, response to the Predetermination (i) The qualitative evidence by itself is following OFCCP’s review of any Notice. sufficient to support a preliminary response by the contractor pursuant to (c) Conciliation agreement. If a finding of disparate treatment; paragraph (a)(5) of this section, the compliance review, complaint (ii) The evidence of disparity between agency has evidence sufficient to investigation, or other review by OFCCP a favored and disfavored group is so support a finding of disparate treatment or its representative indicates a material

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violation of the equal opportunity § 60–300.2 Definitions. (2) The Z statistic has a value greater clause, and: * * * * * than two; or (1) If the contractor, subcontractor or (t) Qualitative evidence includes but (3) The probability value is less than bidder is willing to correct the is not limited to testimony, interview 0.05. It also includes numerical analysis violations and/or deficiencies; and statements, and documents about biased of similarly situated individuals, small (2) If OFCCP or its representative statements, remarks, attitudes, or acts groups, or other characteristics, determines that settlement (rather than based upon membership in a protected demographics or outcomes where referral for consideration of formal class, particularly when made by a hypothesis-testing techniques are not enforcement) is appropriate, a written decision maker involved in the action used. agreement shall be required. The under investigation; testimony, * * * * * agreement shall provide for such interview statements, and documents ■ 9. Revise § 60–300.62 to read as remedial action as may be necessary to about individuals denied or given follows: correct the violations and/or misleading or contradictory information deficiencies noted, including, where about employment or compensation § 60–300.62 Resolution procedures. appropriate (but not necessarily limited practices, in circumstances suggesting (a) Predetermination Notice. If a to), remedies such as back pay and discriminatory treatment based on a compliance review or other review by retroactive seniority. protected characteristic; testimony, OFCCP indicates evidence sufficient to (d) Expedited conciliation option. A interview statements, and documents support a preliminary finding of contractor may voluntarily waive the about the extent of discretion or disparate treatment and/or disparate procedures set forth in paragraphs (a) subjectivity involved in making impact discrimination, OFCCP may and/or (b) of this section to enter issue a Predetermination Notice, subject directly into a conciliation agreement. employment decisions, in conjunction with evidence suggesting the discretion to the following parameters and the OFCCP may inform the contractor of approval of the Director or acting agency this expedited conciliation option, but or subjectivity has been used to discriminate based on a protected head: may not require or insist that the (1) For allegations included in a contractor avail itself of the expedited characteristic; or other anecdotal evidence relevant to determining a Predetermination Notice involving a conciliation option. disparate treatment theory of liability, (e) Severability. Should a court of contractor’s discriminatory or non- discriminatory intent, the business OFCCP must: competent jurisdiction hold any (i) Provide quantitative evidence as provision(s) of this section to be invalid, necessity (or lack thereof) of a challenged policy or practice, or defined in this part; such action will not affect any other (ii) Demonstrate that the unexplained provision of this section. whether the contractor has otherwise complied with its non-discrimination disparity is practically significant; and (iii) Provide qualitative evidence as PART 60–2—AFFIRMATIVE ACTION obligations. Qualitative evidence may defined in this part that, in combination PROGRAMS not be based solely on subjective with other evidence, supports both a inferences or the mere fact of finding of discriminatory intent by the ■ 5. The authority citation for part 60– supervisory discretion in employment contractor and a finding that the 2 continues to read as follows: decisions. The Office of Federal contractor’s discriminatory intent Authority: Sec. 201, E.O. 11246, 30 FR Contract Compliance Programs (OFCCP) 12319, E.O. 11375, 32 FR 14303, as amended caused the disparate treatment. may also consider qualitative evidence (2) OFCCP may issue a by E.O. 12086, 43 FR 46501, and E.O. 13672, in the form of a contractor’s efforts to 79 FR 42971. Predetermination Notice under a advance equal employment opportunity disparate treatment theory of liability § 60–2.1, 60–2.2, and 60–2.31 [Amended] beyond mere compliance with legal without satisfying all three components obligations in determining whether ■ listed in paragraph (a)(1) of this section 6. In §§ 60–2.1, 60–2.2, and 60–2.31, intentional discrimination has occurred. remove ‘‘Deputy Assistant Secretary’’ only if: (u) Quantitative evidence includes everywhere it appears and add (i) The qualitative evidence by itself is hypothesis testing, controlling for the ‘‘Director’’ in its place. sufficient to support a preliminary major, measurable parameters, and finding of disparate treatment; PART 60–300—AFFIRMATIVE ACTION variables used by the contractor (ii) The evidence of disparity between AND NONDISCRIMINATION (including, as appropriate, preferred a favored and disfavored group is so OBLIGATIONS OF FEDERAL qualifications, other demographic extraordinarily compelling that by itself CONTRACTORS AND variables, test scores, geographic it is sufficient to support a preliminary SUBCONTRACTORS REGARDING variables, performance evaluations, finding of disparate treatment; or DISABLED VETERANS, RECENTLY years of experience, quality of (iii) Paragraphs (a)(1)(i) and (ii) of this SEPARATED VETERANS, ACTIVE experience, years of service, quality and section are satisfied and the contractor DUTY WARTIME OR CAMPAIGN reputation of previous employers, years denied OFCCP access to sources of BADGE VETERANS, AND ARMED of education, years of training, quality evidence that may be relevant to a FORCES SERVICE MEDAL VETERANS and reputation of credentialing preliminary finding of discriminatory institutions, etc.), related to the intent. This may include denying access ■ 7. The authority citation for part 60– probability of outcomes occurring by to its employees during a compliance 300 continues to read as follows: chance and/or analyses reflecting evaluation or destroying or failing to Authority: 29 U.S.C. 793; 38 U.S.C. 4211 statements concluding that a disparity produce records the contractor is legally and 4212; E.O. 11758 (3 CFR, 1971–1975 in employment selection rates or rates of required to create and maintain. Comp., p. 841). compensation is statistically significant (3) For allegations included in a ■ 8. Amend § 60–300.2 by redesignating by reference to any one of these Predetermination Notice involving a paragraphs (t) through (cc) as statements: disparate impact theory of liability, paragraphs (v) through (ee) and adding (1) The disparity is two or more times OFCCP must: new paragraphs (t) and (u) to read as larger than its standard error (i.e., a (i) Provide quantitative evidence as follows: standard deviation of two or more); defined in this part;

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(ii) Demonstrate the unexplained (2) OFCCP may issue a Notice of (d) Expedited conciliation option. A disparity is practically significant; and Violation alleging a finding of contractor may voluntarily waive the (iii) Identify the specific policy or discrimination following issuance of a procedures set forth in paragraphs (a) practice of the contractor causing the Predetermination Notice if the and/or (b) of this section to enter adverse impact, unless OFCCP can contractor does not respond or provide directly into a conciliation agreement. demonstrate that the elements of the a sufficient response within 30 calendar OFCCP may inform the contractor of contractor’s selection procedures are days of receipt of the Predetermination this expedited conciliation option, but incapable of separation for analysis. Notice, subject to approval by the may not require or insist that the (4) The Predetermination Notice must Director or acting agency head, unless contractor avail itself of the expedited disclose the quantitative and qualitative OFCCP has extended the conciliation option. evidence relied on by OFCCP in Predetermination Notice response time (e) Severability. Should a court of sufficient detail to allow contractors to for good cause shown. competent jurisdiction hold any investigate allegations and meaningfully (3) The Notice of Violation must provision(s) of this section to be invalid, respond. OFCCP will seek to obtain disclose the quantitative and qualitative such action will not affect any other qualitative evidence in all cases in evidence relied on by OFCCP in provision of this section. sufficient detail to allow contractors to which it issues a Predetermination PART 60–741—AFFIRMATIVE ACTION investigate allegations and meaningfully Notice; however, if the exception in AND NONDISCRIMINATION respond. OFCCP will seek to obtain paragraph (a)(2)(ii) of this section OBLIGATIONS OF FEDERAL qualitative evidence in all cases in applies, OFCCP will disclose why, in CONTRACTORS AND the absence of qualitative evidence, the which it issues a Notice of Violation, SUBCONTRACTORS REGARDING agency is issuing the Predetermination however, if the exception in paragraph INDIVIDUALS WITH DISABILITIES Notice based on evidence of an (a)(2)(ii) of this section applies, OFCCP extraordinarily compelling disparity will disclose why, in the absence of ■ 10. The authority citation for part 60– alone. In addition, upon the contractor’s qualitative evidence, the agency is 741 continues to read as follows: issuing the Notice of Violation based on request, OFCCP must also provide the Authority: 29 U.S.C. 705 and 793; E.O. model and variables used in any evidence of an extraordinarily 11758 (3 CFR, 1971–1975 Comp., p. 841). compelling disparity alone. In addition, statistical analysis and an explanation ■ 11. Amend § 60–741.2 by upon the contractor’s request, OFCCP for why any variable proposed by the redesignating paragraphs (s) through must also provide the model and contractor was excluded from that (bb) as paragraphs (u) through (dd) and variables used in any statistical analysis analysis. However, OFCCP may adding new paragraphs (s) and (t) to and an explanation why any variable withhold personal identifying read as follows: information from the description of the proposed by the contractor was qualitative evidence if the information excluded from that analysis. However, § 60–741.2 Definitions. is protected from disclosure under OFCCP may withhold personal * * * * * recognized governmental privileges, or identifying information from the (s) Qualitative evidence includes but otherwise if providing that information description of the qualitative evidence if is not limited to testimony, interview would violate confidentiality or privacy the information is protected from statements, and documents about biased protections afforded by law. disclosure under recognized statements, remarks, attitudes, or acts (5) Any response to a governmental privileges, or otherwise if based upon membership in a protected Predetermination Notice must be providing that information would class, particularly when made by a submitted by the contractor within 30 violate confidentiality or privacy decision maker involved in the action calendar days of receipt of the Notice, protections afforded by law. under investigation; testimony, which deadline OFCCP may extend for (4) The Notice of Violation must interview statements, and documents good cause. address all relevant concerns and about individuals denied or given (b) Notice of Violation. (1) If, defenses raised by the contractor in misleading or contradictory information following OFCCP’s review of any response to the Predetermination about employment or compensation response by the contractor pursuant to Notice. practices, in circumstances suggesting paragraph (a)(5) of this section, the (c) Conciliation agreement. If a discriminatory treatment based on a agency has evidence sufficient to compliance review, complaint protected characteristic; testimony, support a finding of disparate treatment investigation, or other review by OFCCP interview statements, and documents and/or disparate impact discrimination, or its representative indicates a material about the extent of discretion or as established in the parameters and violation of the equal opportunity subjectivity involved in making exceptions in paragraph (a) of this clause, and: employment decisions, in conjunction section, or that the contractor has (1) If the contractor, subcontractor or with evidence suggesting the discretion committed other material violations of bidder is willing to correct the or subjectivity has been used to the equal opportunity clause (with the violations and/or deficiencies; and discriminate based on a protected exception of violations for denying (2) If OFCCP or its representative characteristic; or other anecdotal access or failing to submit records in determines that settlement (rather than evidence relevant to determining a response to OFCCP’s Office of referral for consideration of formal contractor’s discriminatory or non- Management and Budget (OMB)- enforcement) is appropriate, a written discriminatory intent, the business approved Scheduling Letters, for which agreement shall be required. The necessity (or lack thereof) of a OFCCP may proceed directly to issuing agreement shall provide for such challenged policy or practice, or a Show Cause Notice), OFCCP may remedial action as may be necessary to whether the contractor has otherwise issue a Notice of Violation to the correct the violations and/or complied with its non-discrimination contractor requiring corrective action deficiencies noted, including, where obligations. Qualitative evidence may and inviting conciliation through a appropriate (but not necessarily limited not be based solely on subjective written agreement, subject to approval to), remedies such as back pay and inferences or the mere fact of by the Director or acting agency head. retroactive seniority. supervisory discretion in employment

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decisions. The Office of Federal contractor and a finding that the would violate confidentiality or privacy Contract Compliance Programs (OFCCP) contractor’s discriminatory intent protections afforded by law. may also consider qualitative evidence caused the disparate treatment. (5) Any response to a in the form of a contractor’s efforts to (2) OFCCP may issue a Predetermination Notice must be advance equal employment opportunity Predetermination Notice under a submitted by the contractor within 30 beyond mere compliance with legal disparate treatment theory of liability calendar days of receipt of the Notice, obligations in determining whether without satisfying all three components which deadline OFCCP may extend for intentional discrimination has occurred. listed in paragraph (a)(1) of this section good cause. (t) Quantitative evidence includes only if: (b) Notice of Violation. (1) If, hypothesis testing, controlling for the (i) The qualitative evidence by itself is following OFCCP’s review of any major, measurable parameters, and sufficient to support a preliminary response by the contractor pursuant to variables used by the contractor finding of disparate treatment; paragraph (a)(5) of this section, the (including, as appropriate, preferred (ii) The evidence of disparity between agency has evidence sufficient to qualifications, other demographic a favored and disfavored group is so support a finding of disparate treatment variables, test scores, geographic extraordinarily compelling that by itself and/or disparate impact discrimination, variables, performance evaluations, it is sufficient to support a preliminary as established in the parameters and years of experience, quality of finding of disparate treatment; or exceptions in paragraph (a) of this experience, years of service, quality and (iii) Paragraphs (a)(1)(i) and (ii) of this section, or that the contractor has reputation of previous employers, years section are satisfied and the contractor committed other material violations of of education, years of training, quality denied OFCCP access to sources of the equal opportunity clause (with the and reputation of credentialing evidence that may be relevant to a exception of violations for denying institutions, etc.), related to the preliminary finding of discriminatory access or failing to submit records in probability of outcomes occurring by intent. This may include denying access response to OFCCP’s Office of chance and/or analyses reflecting to its employees during a compliance Management and Budget (OMB)- statements concluding that a disparity evaluation or destroying or failing to approved Scheduling Letters, for which in employment selection rates or rates of produce records the contractor is legally OFCCP may proceed directly to issuing compensation is statistically significant required to create and maintain. a Show Cause Notice), OFCCP may (3) For allegations included in a by reference to any one of these issue a Notice of Violation to the Predetermination Notice involving a statements: contractor requiring corrective action disparate impact theory of liability, (1) The disparity is two or more times and inviting conciliation through a OFCCP must: larger than its standard error (i.e., a written agreement, subject to approval (i) Provide quantitative evidence as by the Director or acting agency head. standard deviation of two or more); defined in this part; (2) OFCCP may issue a Notice of (2) The Z statistic has a value greater (ii) Demonstrate the unexplained Violation alleging a finding of than two; or disparity is practically significant; and discrimination following issuance of a (3) The probability value is less than (iii) Identify the specific policy or Predetermination Notice if the 0.05. It also includes numerical analysis practice of the contractor causing the contractor does not respond or provide of similarly situated individuals, small adverse impact, unless OFCCP can a sufficient response within 30 calendar groups, or other characteristics, demonstrate that the elements of the days of receipt of the Predetermination demographics or outcomes where contractor’s selection procedures are Notice, subject to approval by the hypothesis-testing techniques are not incapable of separation for analysis. Director or acting agency head, unless used. (4) The Predetermination Notice must OFCCP has extended the * * * * * disclose the quantitative and qualitative Predetermination Notice response time ■ 12. Revise § 60–741.62 to read as evidence relied on by OFCCP in for good cause shown. follows: sufficient detail to allow contractors to (3) The Notice of Violation must investigate allegations and meaningfully disclose the quantitative and qualitative § 60–741.62 Resolution procedures. respond. OFCCP will seek to obtain evidence relied on by OFCCP in (a) Predetermination Notice. If a qualitative evidence in all cases in sufficient detail to allow contractors to compliance review or other review by which it issues a Predetermination investigate allegations and meaningfully OFCCP indicates evidence sufficient to Notice; however, if the exception in respond. OFCCP will seek to obtain support a preliminary finding of paragraph (a)(2)(ii) of this section qualitative evidence in all cases in disparate treatment and/or disparate applies, OFCCP will disclose why, in which it issues a Notice of Violation, impact discrimination, OFCCP may the absence of qualitative evidence, the however, if the exception in paragraph issue a Predetermination Notice, subject agency is issuing the Predetermination (a)(2)(ii) of this section applies, OFCCP to the following parameters and the Notice based on evidence of an will disclose why, in the absence of approval of the Director or acting agency extraordinarily compelling disparity qualitative evidence, the agency is head: alone. In addition, upon the contractor’s issuing the Notice of Violation based on (1) For allegations included in a request, OFCCP must also provide the evidence of an extraordinarily Predetermination Notice involving a model and variables used in any compelling disparity alone. In addition, disparate treatment theory of liability, statistical analysis and an explanation upon the contractor’s request, OFCCP OFCCP must: for why any variable proposed by the must also provide the model and (i) Provide quantitative evidence as contractor was excluded from that variables used in any statistical analysis defined in this part; analysis. However, OFCCP may and an explanation why any variable (ii) Demonstrate that the unexplained withhold personal identifying proposed by the contractor was disparity is practically significant; and information from the description of the excluded from that analysis. However, (iii) Provide qualitative evidence as qualitative evidence if the information OFCCP may withhold personal defined in this part that, in combination is protected from disclosure under identifying information from the with other evidence, supports both a recognized governmental privileges, or description of the qualitative evidence if finding of discriminatory intent by the otherwise if providing that information the information is protected from

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disclosure under recognized DEPARTMENT OF COMMERCE require monthly submission. Vessels governmental privileges, or otherwise if issued a for-hire permit for a Mid- providing that information would National Oceanic and Atmospheric Atlantic Council fishery are required to violate confidentiality or privacy Administration submit vessel trip reports electronically protections afforded by law. within 48 hours of the end of a fishing 50 CFR Part 648 trip (September 11, 2017; 82 FR 42610). (4) The Notice of Violation must Vessels issued a for-hire permit for a address all relevant concerns and [Docket No. 201103–0287] New England Council fishery are subject defenses raised by the contractor in RIN 0648–BI15 to the same requirements as that FMP’s response to the Predetermination commercial permit. Notice. Magnuson-Stevens Fishery A detailed summary of the (c) Conciliation agreement. If a Conservation and Management Act development of this action can be found compliance review, complaint Provisions; Fisheries of the in the supporting documentation (see investigation, or other review by OFCCP Northeastern United States ADDRESSES) and the proposed rule (July or its representative indicates a material AGENCY: National Marine Fisheries 17, 2020; 85 FR 43528). violation of the equal opportunity Service (NMFS), National Oceanic and Approved Measures clause, and: Atmospheric Administration (NOAA), Commerce. With this action, vessels issued a (1) If the contractor, subcontractor or commercial or for-hire permit for all bidder is willing to correct the ACTION: Final rule. Mid-Atlantic and New England Council- violations and/or deficiencies; and SUMMARY: This rule announces the managed fisheries will be required to (2) If OFCCP or its representative approval of, and regulations to submit vessel trip reports electronically determines that settlement (rather than implement, an action to require within 48 hours of the end of a fishing referral for consideration of formal commercially permitted vessels in both trip. This action is applicable to all enforcement) is appropriate, a written the New England and Mid-Atlantic commercial and for-hire permits issued agreement shall be required. The Fishery Management Council regions to pursuant to the following Fishery agreement shall provide for such submit vessel trip reports electronically Management Plans: Atlantic Herring; remedial action as may be necessary to within 48 hours of the end of a trip. Atlantic Mackerel, Squid, Butterfish; correct the violations and/or This action will also require for-hire Northeast Multispecies; Surfclam and deficiencies noted, including, where vessels with permits for species Ocean Quahog; Atlantic Bluefish; appropriate (but not necessarily limited managed by the New England Fishery Atlantic Deep-Sea Red Crab; Atlantic to), remedies such as back pay and Management Council to submit vessel Sea Scallop; Summer Flounder, Scup, Black Sea Bass; Monkfish; Northeast retroactive seniority. trip reports electronically within 48 Skate Complex; Spiny Dogfish; and (d) Remedial benchmarks. The hours of the end of a trip. Document retention requirements will be removed Tilefish. This requirement does not remedial action referenced in paragraph with this action. This action is intended apply to vessels issued only a Federal (c) of this section may include the to increase data quality and timeliness lobster permit or to federally permitted establishment of benchmarks for the of vessel trip reports. private recreational tilefish vessels (July contractor’s outreach, recruitment, 16, 2020; 85 FR 43149). DATES: hiring, or other employment activities. This rule is effective November In addition to the method and 10, 2021. The purpose of such benchmarks is to submission timeframe changes, create a quantifiable method by which ADDRESSES: Copies of the Joint Omnibus document retention requirements that the contractor’s progress in correcting Electronic Vessel Trip Reporting are no longer necessary with electronic identified violations and/or deficiencies Framework Adjustment prepared by the reporting will be removed. Specifically, Mid-Atlantic and New England Fishery can be measured. the requirement to retain copies of the Management Council in support of this previously submitted vessel trip reports (e) Expedited conciliation option. A action are available from Dr. on board the vessel will no longer be contractor may voluntarily waive the Christopher Moore, Executive Director, applicable. Owners will have access to procedures set forth in paragraphs (a) Mid-Atlantic Fishery Management trip reports submitted electronically on and/or (b) of this section to enter Council, 800 North Street, Suite 201, the device from which they were directly into a conciliation agreement. Dover, DE 19901. The supporting submitted and on the Fish Online OFCCP may inform the contractor of documents are also accessible via the website. this expedited conciliation option, but internet at: https://www.mafmc.org/ There are no other changes to the may not require or insist that the actions/commercial-evtr-framework, vessel trip reporting requirements, contractor avail itself of the expedited https://www.nefmc.org/library/omnibus- including the requirement that vessel conciliation option. commercial-evtr-framework, or http:// operators are obligated to fill out the www.regulations.gov. (f) Severability. Should a court of vessel trip report with all information competent jurisdiction hold any FOR FURTHER INFORMATION CONTACT: ascertainable prior to entering port. provision(s) of this section to be invalid, Moira Kelly, Senior Fishery Program Implementation such action will not affect any other Specialist, phone: 978–281–9218; email: provision of this section. [email protected]. Electronic Vessel Trip Reporting [FR Doc. 2020–24858 Filed 11–9–20; 8:45 am] SUPPLEMENTARY INFORMATION: Currently, Systems BILLING CODE 4510–CM–P commercial vessels are required to There are several applications submit vessel trip reports (VTR) either available to vessel owners for electronic on paper or electronically following vessel trip reporting. Information about each trip. Several fishery management approved application platforms are plans require weekly submission of available on our website (https:// commercial vessel trip reports; others www.fisheries.noaa.gov/new-england-

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mid-atlantic/resources-fishing/vessel- or additional hardware that vessel certification was published in the trip-reporting-greater-atlantic- owners are required to obtain. proposed rule and is not repeated here. region#electronic-vessel-trip-reporting). Response: As noted above, we intend No comments were received regarding Vessel owners and operators should to offer many training opportunities and this certification. As a result, a determine which application is have delayed implementation of the regulatory flexibility analysis was not appropriate for their vessel and requirements until November 10, 2021. required and none was prepared. operations. In addition, most approved electronic This final rule does not contain a reporting applications can be used on a change to a collection of information Training and Implementation Timing mobile phone or a variety of tablets requirement for purposes of the In order to ensure adequate time for (both iOS and Android options are Paperwork Reduction Act of 1995. The all vessel owners to transition to available). As such, vessel owners will existing collection of information electronic vessel trip reporting systems, likely be able to download their desired requirements would continue to apply there will be several training application onto a device that they under the following OMB Control opportunities available prior to the already own. Number(s): 0648–0202, Greater Atlantic delayed implementation date (see Classification Region Permit Family of Forms. DATES). Training opportunities and List of Subjects in 50 CFR Part 648 recordings will be available on the Mid- NMFS is issuing this rule pursuant to Atlantic Council’s website (https:// section 304(b)(1)(A) of the Magnuson- Fisheries, Fishing, Recordkeeping, www.mafmc.org/commercial-evtr). Stevens Act, which provides specific and reporting requirements. authority for implementing this action. Comments and Responses Section 304(b)(1)(A) authorizes NMFS Dated: November 3, 2020. to issue regulations to implement Samuel D. Rauch III, Four comments were received during Deputy Assistant Administrator for the public comment period. One approved Council recommendations. NMFS is extending the requirements of Regulatory Programs, National Marine comment was unrelated to the proposed Fisheries Service. action and is not considered further. this action to vessels issued for-hire permits for New England Council For the reasons stated in the Comment: Two comments were fisheries pursuant to 305(d) of the preamble, 50 CFR part 648 is amended received from for-hire vessel operators Magnuson-Stevens Act. This action is as follows: in the mid-Atlantic suggesting that 48 necessary to carry out the intention of hours was an insufficient amount of the Councils to make reporting PART 648—FISHERIES OF THE time for operators to submit vessel trip requirements across all fishery NORTHEASTERN UNITED STATES reports following the end of a trip. In management plans and sectors ■ addition, these comments suggested that consistent and to minimize confusion 1. The authority citation for part 648 the reports were redundant, difficult to among industry stakeholders. The continues to read as follows: fill out, and that filling out the report at NMFS Assistant Administrator has Authority: 16 U.S.C. 1801 et seq. sea was unsafe. determined that this final rule is ■ 2. In § 648.7, revise paragraphs (b)(1), Response: For-hire vessel operators consistent with the Joint Omnibus (c), and (d), remove and reserve with Mid-Atlantic Council-managed Electronic Vessel Trip Reporting paragraph (e)(2), and revise paragraph permits have been required to submit Framework Adjustment; the Fishery (f)(2) to read as follows: vessel trip reports electronically within Management Plans for (1) Atlantic 48 hours of the end of a trip since March herring, (2) Mackerel, Squid, Butterfish, § 648.7 Recordkeeping and reporting 2018. Since then, the majority of these (3) Northeast Multispecies, (4) Surfclam requirements. reports (70 percent) have been and Ocean Quahog, (5) Atlantic * * * * * submitted within 1 day, with nearly 80 Bluefish, (6) Atlantic Deep-Sea Red (b) * * * percent of reports submitted within the Crab, (7) Atlantic Sea Scallop, (8) (1) Fishing Vessel Trip Reports. The required 48 hours. The requirement to Summer Flounder, Scup, Black Sea owner or operator of any vessel issued have vessel trip reports filled out with Bass, (9) Monkfish, (10) Northeast Skate a valid permit, or eligible to renew a all information that is ascertainable Complex, (11) Spiny Dogfish, and (12) limited access permit under this part prior to entering port is a long-standing Tilefish; other provisions of the must maintain on board the vessel, and requirement and is not being changed in Magnuson-Stevens Act; and other submit, an accurate fishing log report for this action. Finally, many of the applicable law. each fishing trip, regardless of species electronic reporting applications use This final rule has been determined to fished for or taken, by electronic means. favorites, frequently used responses, be not significant for purposes of This report must be entered into and auto-population, and drop-down Executive Order (E.O.) 12866. This final submitted through a software features to streamline reporting and rule is considered an Executive Order application approved by NMFS. The minimize the number of fields that need 13771 deregulatory action. reporting requirements specified in to be individually key-punched. Vessel This proposed rule does not contain paragraph (b)(1)(i) of this section for an operators should review all available policies with Federalism or takings owner or operator of a vessel fishing for, applications to determine which is implications as those terms are defined possessing, or landing Atlantic chub easiest for them to use. in E.O. 13132 and E.O. 12630, mackerel are effective through Comment: A comment was received respectively. December 31, 2020. from the Atlantic Offshore Lobstermen’s The Chief Counsel for Regulation of (i) Vessel owners or operators. With Association supporting the shift to the Department of Commerce certified the exception of those vessel owners or electronic reporting and encouraging to the Chief Counsel for Advocacy of the operators fishing under a surfclam or ample outreach and training Small Business Administration during ocean quahog permit, at least the opportunities prior to the rule becoming the proposed rule stage that this action following information as applicable and effective. The Association also would not have a significant economic any other information required by the recommends that electronic reporting impact on a substantial number of small Regional Administrator must be should not require expensive software entities. The factual basis for the provided:

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(A) Vessel name; (B) Total amount in bushels of each paragraph (b)(1)(iii) of this section must (B) USCG documentation number (or species taken; be filled out before landing any state registration number, if (C) Date(s) caught; surfclams or ocean quahogs. undocumented); (D) Time at sea; (d) Inspection. Upon the request of an (C) Permit number; (E) Duration of fishing time; authorized officer or an employee of (D) Date/time sailed; (F) Locality fished; NMFS designated by the Regional (E) Date/time landed; (G) Crew size; Administrator to make such inspections, (F) Trip type; (H) Crew share by percentage; all persons required to submit reports (G) Number of crew; under this part must make immediately (H) Number of anglers (if a charter or (I) Landing port; available for inspection reports, and all party boat); (J) Date sold; (I) Gear fished; (K) Price per bushel; records upon which those reports are or (J) Quantity and size of gear; (L) Buyer; will be based, that are required to be (K) Mesh/ring size; (M) Tag numbers from cages used; submitted or kept under this part. (L) Chart area fished; (N) Quantity of surfclams and ocean * * * * * (M) Average depth; quahogs discarded; and (f) * * * (N) Latitude/longitude; (O) Allocation permit number. (2) Fishing vessel trip reports—(i) (O) Total hauls per area fished; (iv) Private tilefish recreational vessel Timing requirements. For any vessel (P) Average tow time duration; owners and operators. The owner or issued a valid commercial or charter/ (Q) Hail weight, in pounds (or count operator of any fishing vessel that holds party permit, or eligible to renew a of individual fish, if a party or charter a Federal private recreational tilefish limited access permit under this part, vessel), by species, of all species, or permit, must report for each recreational fishing vessel trip reports, required by parts of species, such as monkfish trip fishing for or retaining blueline or paragraph (b)(1) of this section, must be livers, landed or discarded; and, in the golden tilefish in the Tilefish submitted within 48 hours at the case of skate discards, ‘‘small’’ (i.e., less Management Unit. The required Vessel conclusion of a trip. than 23 inches (58.42 cm), total length) Trip Report must be submitted by (ii) Commercial trips. For the or ‘‘large’’ (i.e., 23 inches (58.42 cm) or electronic means. This report must be purposes of paragraph (f)(2) of this greater, total length) skates; submitted through a NMFS-approved section, the date when fish are offloaded (R) Dealer permit number; electronic reporting system within 24 from a commercial vessel will establish (S) Dealer name; hours of the trip returning to port. The (T) Date sold, port and state landed; the conclusion of a commercial trip. vessel operator may keep paper records and (iii) Charter/party trips. For the (U) Vessel operator’s name, signature, while onboard and upload the data after purposes of paragraph (f)(2) of this and operator’s permit number (if landing. The report must contain the section, the date a charter/party vessel applicable). following information: enters port will establish the conclusion (ii) Atlantic mackerel owners or (A) Vessel name; of a for-hire trip. operators. The owner or operator of a (B) USCG documentation number (or (iv) Private recreational tilefish trips. vessel issued a limited access Atlantic state registration number, if Private recreational tilefish electronic mackerel permit must report catch undocumented); log reports, required by paragraph (retained and discarded) of Atlantic (C) Permit number; (b)(1)(iv) of this section, must be mackerel daily via VMS, unless (D) Date/time sailed; submitted within 24 hours after entering exempted by the Regional (E) Date/time landed; port at the conclusion of a trip. Administrator. The report must include (F) Trip type; * * * * * at least the following information, and (G) Number of anglers; [FR Doc. 2020–24921 Filed 11–9–20; 8:45 am] (H) Species; any other information required by the BILLING CODE 3510–22–P Regional Administrator: Fishing Vessel (I) Gear fished; Trip Report serial number; month, day, (J) Quantity and size of gear; and year Atlantic mackerel was caught; (K) Soak time; DEPARTMENT OF COMMERCE total pounds of Atlantic mackerel (L) Depth; retained and total pounds of all fish (M) Chart Area; National Oceanic and Atmospheric retained. Daily Atlantic mackerel VMS (N) Latitude/longitude where fishing Administration catch reports must be submitted in 24- occurred; hr intervals for each day and must be (O) Count of individual golden and 50 CFR Part 665 submitted by 0900 hr on the following blueline tilefish landed or discarded; [Docket No. 201102–0284] day. Reports are required even if and RIN 0648–BH61 Atlantic mackerel caught that day have (P) Port and state landed. not yet been landed. This report does * * * * * Pacific Island Fisheries; Swordfish Trip not exempt the owner or operator from (c) When to fill out a vessel trip report. Limits in the American Samoa Pelagic other applicable reporting requirements Vessel trip reports required by Longline Fishery of this section. paragraph (b)(1)(i) of this section must (iii) Surfclam and Ocean Quahog be filled out with all required AGENCY: National Marine Fisheries owners or operators. The owner or information, except for information not Service (NMFS), National Oceanic and operator of any vessel conducting any yet ascertainable, prior to entering port. Atmospheric Administration (NOAA), surfclam and ocean quahog fishing Information that may be considered Commerce. operations must provide at least the unascertainable prior to entering port ACTION: Final rule. following information and any other includes dealer name, dealer permit information required by the Regional number, and date sold. Vessel trip SUMMARY: This final rule removes the Administrator: reports must be completed as soon as swordfish retention limit in the (A) Name and permit number of the the information becomes available. American Samoa deep-set longline vessel; Vessel trip reports required by fishery. The intent of this rule is to

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eliminate wasteful regulatory discards program, prohibited fishing areas, turtles. The Council and NMFS will of marketable seafood, increasing fishery observers, logbook reporting, continue to monitor the fisheries, and if efficiency and benefits to the local vessel monitoring system, and gear and there are indications of interest in community and the Nation. operational requirements) will remain shallow-set fishing, the Council and DATES: The final rule is effective in place and continue to apply in the NMFS could consider different or December 10, 2020. fishery. additional management measures, including the establishment of a well- ADDRESSES: Copies of an environmental Comments and Responses analyses and other supporting managed shallow-set longline fishery in documents for this action are available On June 29, 2020, NMFS published a the S. Pacific. at https://www.regulations.gov/ proposed rule and request for public Comment 4: Eliminating the docket?D=NOAA-NMFS-2019-0123. comments (85 FR 38837). The comment swordfish retention limit for fishing period ended July 14, 2020. NMFS south of the Equator might incentivize FOR FURTHER INFORMATION CONTACT: received seven comments from a total of other U.S. longline fisheries to shift Sarah Ellgen, NMFS PIR Sustainable their fishing location. If NMFS removes Fisheries, 808–725–5173. three submitters and responds below. Comment 1: The primary goal of this the retention limit, the rule should SUPPLEMENTARY INFORMATION: The action is to eliminate wasteful apply only to vessels with an American Council and NMFS manage the regulatory discards of swordfish and Samoa longline limited access permit. American Samoa deep-set longline increase efficiency. The retention limit should remain in fishery under the Fishery Ecosystem Response: We have clarified that goal place for vessels holding Western Plan for Pelagic Fisheries of the Western in the environmental assessment and Pacific general longline permits or Pacific (FEP) and implementing the preamble to this final rule. Hawaii longline limited access permits. regulations, as authorized by the Comment 2: The limited amount of Response: American Samoa has a very Magnuson-Stevens Fishery discarded swordfish does not constitute small market demand for fresh fish, and Conservation and Management Act a reduction in seafood available to the limited options to export fresh-frozen (Magnuson-Stevens Act). The fishery Nation, so the limit should be retained. fish. Accordingly, it is highly unlikely targets South Pacific albacore, and Response: Although the amount of that shallow-set longline fishermen from occasionally catches other pelagic fish, swordfish discarded is small, the fish other areas would consider landing their including swordfish. In 2011, NMFS have already been caught. Requiring catch in Pago Pago. Also, restricting the implemented FEP Amendment 5, which their discard is unnecessarily wasteful. action to a permit type, rather than included gear and operational This rule considers the importance of fishing location, would not directly requirements intended to reduce supplying fresh fish to the American control where fishermen could land interactions with green sea turtles (76 Samoa community by allowing their catch. This is because vessels may FR 52888, August 24, 2011). That rule retention of those few fish that would have multiple permits, which allows included a limit of 10 swordfish per trip otherwise have been discarded. them to land their catch in Hawaii, for vessels over 40 ft (12.2 m). The limit Comment 3: Interactions between the American Samoa, or the West Coast. was intended to discourage switching fishery and green sea turtles are still a Practical constraints, however, such as from deep-set gear targeting albacore to problem, so NMFS should retain the the travel distance between ports of shallow-set gear targeting swordfish swordfish limit because it is part of a landing with high fuel costs, and the because shallow-set fishing may interact suite of requirements designed to lack of a swordfish market in American more frequently with green sea turtles discourage shallow-set fishing, which Samoa, result in distinct fisheries that than deep-set fishing due to the depth could have a relatively greater impact fish and land their catch either in and of the hooks. on green sea turtles. around American Samoa, or in and In the years since implementation of Response: The suite of gear and around Hawaii and California. The gear that rule, the number of swordfish operational requirements are the and operational requirements for fishing caught per trip has been small, and primary measures to reduce green sea south of the Equator apply to all U.S. there has been no evidence that longline turtle interactions. They do this by longline fishing, regardless of permit fishermen have targeted swordfish, nor ensuring that hooks are set deeper than type, which continues to protect green has there been any recent interest in 100 m, below the depth inhabited by the sea turtles. The Council and NMFS will shallow-set fishing in the S. Pacific. turtles. Those measures remain continue to monitor the fisheries, and if From 2008 through 2018, the average unchanged and continue to afford the there are indications that the normal number of swordfish caught was 1.3 fish intended protections to green sea patterns of fishing and landing locations per trip. turtles. are changing, the Council and NMFS The requirement for vessels over 40 ft The swordfish retention limit was an could consider different or additional (12.2 m) to discard swordfish in excess additional safeguard modeled on the N management measures. of the 10-fish limit results in wasteful Pacific deep-set fishery. The limit was Comment 5: The American Samoa discards, lost revenues, and an intended to dissuade fishermen from longline fishery has landed catch in unnecessary reduction in seafood. switching from typical deep-set gear California, and the identified action area Removing the swordfish limit allows used to target albacore to shallow-set south of the Equator is a subset of the fishermen to retain a few more fishing targeting swordfish, with its area in which the fishery operates. This swordfish that might be caught potential for a relatively higher rate of suggests that fishing effort in the eastern incidentally during deep-set fishing and green sea turtle interactions. There is no Pacific Ocean may have a larger impact are otherwise wastefully discarded. This evidence, however, that fishermen have on leatherback turtles than thought. rule maintains existing gear and switched to, or are interested in, Thus, NMFS should not finalize the rule operational safeguards to reduce shallow-set fishing for swordfish in the unless it first completes Endangered interactions with green sea turtles. The S. Pacific. Species Act (ESA) consultation on the stock of Southwest Pacific swordfish is By removing the limit, NMFS is American Samoa fishery. neither overfished nor subject to eliminating the negative impacts of Response: Longline vessels based in overfishing. All other management wasteful discards, while retaining the American Samoa operate almost measures (including a limited entry requirements that benefit green sea exclusively south of the Equator in the

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western Pacific. From 2008 through collapsed. Further, because all other regarding this certification. As a result, 2018, less than one percent of fishing management measures will continue to a regulatory flexibility analysis was not effort occurred north of the Equator, and apply in the fishery, and because we do required and none was prepared. less than one percent in the eastern not expect either a change in the This final rule has been determined to Pacific for vessels that either started or operation of the fishery or the number be not significant for purposes of ended fishing trips in American Samoa. of interactions authorized under the Executive Order 12866. NMFS reinitiated Section 7 2015 ITS, we determined that the 2015 This final rule is considered an consultation on the American Samoa BiOp remains valid during the period of Executive Order 13771 deregulatory longline fishery on April 3, 2019. The consultation. action. reinitiation to consult under the ESA Comment 6: The 15-day comment This final rule contains no was triggered by new ESA-listings and period was insufficient. information collection requirements exceedance of the incidental take Response: The development of the under the Paperwork Reduction Act of statement (ITS) in the 2015 Biological action occurred in public meetings of 1995. Opinion (BiOp) for green, hawksbill, the Council’s advisory panels, Science and olive ridley sea turtles. The 2015 and Statistical Committee, and the List of Subjects in 50 CFR Part 665 ITS for leatherback turtles, however, Council, itself, over several years. The Administrative practice and was not exceeded. Council provided notice of the procedure, American Samoa, Fisheries, On May 6, 2020, NMFS completed an rulemaking in local media releases, Fishing, Longline, Pacific Islands, updated review of the potential effects newsletter articles, and on the Council’s Seafood, Swordfish. of the American Samoa longline fishery website. Nonetheless, a comment period of 15 days is expressly allowed by Dated: November 3, 2020. on listed species during the period of Samuel D. Rauch, III, consultation under the ESA. In that section 304(b) of the Magnuson-Stevens Act. Deputy Assistant Administrator for review, NMFS determined that there Regulatory Programs, National Marine was no new information that would lead Comment 7. The proposed rule alters the FEP, so the Council should prepare Fisheries Service. us to reconsider the core assumptions For the reasons set out in the and conclusions reached in the 2015 a plan amendment and NMFS should accept public comment for a 60-day preamble, NMFS amends 50 CFR part BiOp for leatherback turtle, South 665 as follows: Pacific loggerhead turtle, Indo-West period. Response. This rule implements a Pacific scalloped hammerhead shark, regulatory amendment, i.e., a change to PART 665—FISHERIES IN THE humpback whale, sperm whale, and six existing regulations, and the Council is WESTERN PACIFIC reef-building corals. As a result, we not required to amend the FEP, found that the 2015 BiOp remains valid ■ consistent with sections 303(c) and 1. The authority citation for 50 CFR for these species during the period of 304(b) of the Magnuson-Stevens Act. part 665 continues to read as follows: reinitiated consultation. Authority: 16 U.S.C. 1801 et seq. Since the publication of the 2015 Changes From the Proposed Rule ■ 2. In § 665.813, revise paragraph (k) BiOp, NMFS has received no This final rule contains no changes introductory text and remove paragraph information to believe that eliminating from the proposed rule. the swordfish retention limit will (k)(5) to read as follows: Classification change the conduct of the fishery or that § 665.813 Western Pacific longline fishing the fishery might cause additional harm Pursuant to section 304(b)(3) of the restrictions. to the leatherback status during the Magnuson-Stevens Act, the NMFS * * * * * period of consultation. We note that Assistant Administrator has determined (k) South Pacific longline from 2015 until the present, the fishery that this final rule is consistent with the requirements. When fishing south of the has operated well within the ITS limits FEP, other provisions of the Magnuson- Equator (0° lat.) for western Pacific in the 2015 BiOp. Additionally, in Stevens Act, and other applicable law. pelagic MUS, owners and operators of reaching the no jeopardy decision for The Chief Counsel for Regulation of vessels longer than 40 ft (12.2 m) leatherbacks in the 2015 BiOp, NMFS the Department of Commerce certified registered for use with any valid explained that recent research indicated to the Chief Counsel for Advocacy of the longline permit issued pursuant to a continual and significant decline of Small Business Administration during § 665.801 must use longline gear that is the leatherback population. Present data the proposed rule stage that this action configured according to the on leatherbacks are consistent with this would not have a significant economic requirements in paragraphs (k)(1) 2015 core assumption, that is, that some impact on a substantial number of small through (4) of this section. populations are stable or increasing, but entities. The factual basis for the the data also indicate that other certification was published in the * * * * * populations for which information is proposed rule and is not repeated here. [FR Doc. 2020–24752 Filed 11–9–20; 8:45 am] available are either decreasing or have NMFS did not receive any comments BILLING CODE 3510–22–P

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Proposed Rules Federal Register Vol. 85, No. 218

Tuesday, November 10, 2020

This section of the FEDERAL REGISTER Corrections 365N helicopters, as specified in a contains notices to the public of the proposed In proposed rule FR Doc. 2020–22166, European Union Aviation Safety Agency issuance of rules and regulations. The (EASA) AD, which will be incorporated purpose of these notices is to give interested beginning on page 63222 in the issue of October 7, 2020, make the following by reference. The FAA is proposing this persons an opportunity to participate in the AD to address the unsafe condition on rule making prior to the adoption of the final corrections in the Supplementary rules. Information section: these products. 1. On page 63229, in the third DATES: The FAA must receive comments column, under the ‘‘Other Revisions’’ on this proposed AD by December 28, FEDERAL RESERVE SYSTEM heading, correct the OMB control 2020. number from ‘‘7100–NEW’’ to ‘‘7100– ADDRESSES: You may send comments, 12 CFR Parts 225, 238, and 252 0380.’’ using the procedures found in 14 CFR 2. On page 63230, in the first column, 11.43 and 11.45, by any of the following [Regulations Y, LL, and YY; Docket No. R– under Current estimated annual burden: methods: 1724] remove ‘‘41,619 hours’’ and replace • Federal eRulemaking Portal: Go to with ‘‘27,751 hours,’’ and under https://www.regulations.gov. Follow the RIN 7100–AF95 Proposed revisions estimated annual instructions for submitting comments. • burden: remove ‘‘13,868 hours’’ and Fax: 202–493–2251. • Amendments to Capital Planning and replace with ‘‘1 hour.’’ Mail: U.S. Department of Stress Testing Requirements for Large 3. On page 63230, in the second Transportation, Docket Operations, M– Bank Holding Companies, Intermediate column, under Total estimated annual 30, West Building Ground Floor, Room Holding Companies and Savings and burden: remove ‘‘27,751 hours’’ and W12–140, 1200 New Jersey Avenue SE, Loan Holding Companies; Correction replace with ‘‘27,752 hours.’’ Washington, DC 20590. • Hand Delivery: Deliver to Mail AGENCY: Board of Governors of the Board of Governors of the Federal Reserve address above between 9 a.m. and 5 Federal Reserve System (Board). System. p.m., Monday through Friday, except Ann E. Misback, ACTION: Notice of proposed rulemaking Federal holidays. with request for comment; correction. Secretary of the Board. For material incorporated by reference [FR Doc. 2020–24436 Filed 11–9–20; 8:45 am] (IBR) in this AD, contact the EASA, SUMMARY: This document corrects the BILLING CODE P Konrad-Adenauer-Ufer 3, 50668 portions of the discussion related to Cologne, Germany; telephone +49 221 collections of information published 89990 1000; email [email protected]; with a proposed rule published in the DEPARTMENT OF TRANSPORTATION internet www.easa.europa.eu. You may Federal Register of October 7, 2020, find this IBR material on the EASA regarding Amendments to Capital Federal Aviation Administration website at https://ad.easa.europa.eu. Planning and Stress Testing You may view this IBR material at the Requirements for Large Bank Holding 14 CFR Part 39 FAA, Office of the Regional Counsel, Companies, Intermediate Holding [Docket No. FAA–2020–1018; Project Southwest Region, 10101 Hillwood Companies and Savings and Loan Identifier MCAI–2020–01383–R] Pkwy., Room 6N–321, Fort Worth, TX Holding Companies. This correction 76177. For information on the adds the OMB control number for the RIN 2120–AA64 availability of this material at the FAA, reporting form FR LL. In addition, the Airworthiness Directives; Airbus call 817–222–5110. It is also available in previously published document Helicopters the AD docket on the internet at https:// incorrectly listed the estimated www.regulations.gov by searching for recordkeeping burden associated with AGENCY: Federal Aviation and locating Docket No. FAA–2020– the FR YY information collection. This Administration (FAA), DOT. 1018. correction also provides a corrected ACTION: Notice of proposed rulemaking Examining the AD Docket burden estimate. (NPRM). You may examine the AD docket on DATES: Comments must be received by the internet at https:// November 20, 2020. SUMMARY: The FAA proposes to supersede Airworthiness Directive (AD) www.regulations.gov by searching for FOR FURTHER INFORMATION CONTACT: 2018–19–01, which applies to all Airbus and locating Docket No. FAA–2020– Mark Tokarski, Lead Regulatory Analyst Helicopters Model AS–365N2, AS 365 1018; or in person at Docket Operations (202) 452–5241 or Robert Dahl, Senior N3, EC 155B, EC155B1, SA–365N1, and between 9 a.m. and 5 p.m., Monday Regulatory Analyst, (202) 452–7627, SA–366G1 helicopters. AD 2018–19–01 through Friday, except Federal holidays. Office of Data Management and requires repetitive inspections of the aft The AD docket contains this NPRM, any Business Services. For the hearing fuselage outer skin. Since the FAA comments received, and other impaired and users of TDD please call issued AD 2018–19–01, it was information. The street address for (202) 263–4869. You may also contact determined that Model SA–365N Docket Operations is listed above. any of the individuals named in the helicopters are also affected by the Comments will be available in the AD proposed rule published on October 7, unsafe condition. This proposed AD docket shortly after receipt. 2020 at 82 FR 63228. would continue to require repetitive FOR FURTHER INFORMATION CONTACT: SUPPLEMENTARY INFORMATION: inspections and would add Model SA– Kathleen Arrigotti, Aviation Safety

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Engineer, Large Aircraft Section, Discussion This material is reasonably available International Validation Branch, FAA, The FAA issued AD 2018–19–01, because the interested parties have 2200 South 216th St., Des Moines, WA Amendment 39–19401 (83 FR 46862, access to it through their normal course 98198; telephone and fax 206–231– September 17, 2018) (AD 2018–19–01), of business or by the means identified 3218; email [email protected]. which applies to all Airbus Helicopters in the ADDRESSES section. SUPPLEMENTARY INFORMATION: Model AS 365N2, AS 365 N3, EC 155B, FAA’s Determination and Requirements EC155B1, SA–365N1, and SA–366G1 of This Proposed AD Comments Invited helicopters. AD 2018–19–01 requires repetitive inspections of the aft fuselage This product has been approved by The FAA invites you to send any outer skin. The FAA issued AD 2018– the aviation authority of another written relevant data, views, or 19–01 to address disbonding of the aft country, and is approved for operation arguments about this proposal. Send fuselage (baggage compartment area) in the United States. Pursuant to the your comments to an address listed outer skin. This condition could result bilateral agreement with the State of under ADDRESSES. Include ‘‘Docket No. in loss of aft fuselage structural integrity Design Authority, the FAA has been FAA–2020–1018; Project Identifier and subsequent loss of control of the notified of the unsafe condition MCAI–2020–01383–R’’ at the beginning helicopter. described in the MCAI referenced of your comments. The most helpful above. The FAA is proposing this AD comments reference a specific portion of Actions Since AD 2018–19–01 Was because the FAA evaluated all the the proposal, explain the reason for any Issued relevant information and determined recommended change, and include Since the FAA issued AD 2018–19– the unsafe condition described supporting data. The FAA will consider 01, it was determined that Model SA– previously is likely to exist or develop all comments received by the closing 365N helicopters are also affected by the in other products of the same type date and may amend this proposal unsafe condition. In addition, it was design. because of those comments. determined the repetitive inspection Explanation of Retained Requirements Except for Confidential Business interval can be extended under certain Information (CBI) as described in the conditions. Although this proposed AD does not following paragraph, and other The EASA, which is the Technical explicitly restate the requirements of AD information as described in 14 CFR Agent for the Member States of the 2018–19–01, this proposed AD would 11.35, the FAA will post all comments European Union, has issued EASA AD retain all of the requirements of AD received, without change, to https:// 2019–0080, dated April 3, 2019 (EASA 2018–19–01. Those requirements are www.regulations.gov, including any AD 2019–0080) (also referred to as the referenced in EASA AD 2019–0080, personal information you provide. The Mandatory Continuing Airworthiness which, in turn, is referenced in agency will also post a report Information, or the MCAI), to correct an paragraph (g) of this proposed AD. summarizing each substantive verbal unsafe condition for all Airbus Proposed AD Requirements contact received about this proposal. Helicopters Model AS–365N2, AS 365 N3, EC 155B, EC155B1, SA–365N, and This proposed AD would require Confidential Business Information SA–365N1 helicopters. accomplishing the actions specified in This proposed AD was prompted by EASA AD 2019–0080 described CBI is commercial or financial the determination that Model SA–365N previously, as incorporated by information that is both customarily and helicopters are also affected by the reference, except for any differences actually treated as private by its owner. unsafe condition. The FAA is proposing identified as exceptions in the Under the Freedom of Information Act this AD to address disbonding of the aft regulatory text of this AD and except as (FOIA) (5 U.S.C. 552), CBI is exempt fuselage outer skin. This condition discussed under ‘‘Differences Between from public disclosure. If your could result in loss of aft fuselage this Proposed AD and the MCAI.’’ comments responsive to this NPRM structural integrity and subsequent loss contain commercial or financial Explanation of Required Compliance of control of the helicopter. See the Information information that is customarily treated MCAI for additional background as private, that you actually treat as information. In the FAA’s ongoing efforts to private, and that is relevant or improve the efficiency of the AD responsive to this NPRM, it is important Related Service Information Under 1 process, the FAA initially worked with that you clearly designate the submitted CFR Part 51 Airbus and EASA to develop a process comments as CBI. Please mark each EASA AD 2019–0080 describes to use certain EASA ADs as the primary page of your submission containing CBI procedures for repetitive inspections of source of information for compliance as ‘‘PROPIN.’’ The FAA will treat such the aft fuselage outer skin for Model with requirements for corresponding marked submissions as confidential AS–365N2, AS 365 N3, EC 155B, FAA ADs. The FAA has since under the FOIA, and they will not be EC155B1, SA–365N, and SA–365N1 coordinated with other manufacturers placed in the public docket of this helicopters. and civil aviation authorities (CAAs) to NPRM. Submissions containing CBI Airbus Helicopters ASB No. SA366– use this process. As a result, EASA AD should be sent to Kathleen Arrigotti, 05.48, Revision 1, dated March 27, 2019, 2019–0080 will be incorporated by Aviation Safety Engineer, Large Aircraft describes procedures for repetitive reference in the FAA final rule. This Section, International Validation inspections of the aft fuselage outer skin proposed AD would, therefore, require Branch, FAA, 2200 South 216th St., Des for Model SA366–G1 helicopters. compliance with EASA AD 2019–0080 Moines, WA 98198; telephone and fax This proposed AD would also require in its entirety, through that 206–231–3218; email Airbus Helicopters ASB No. SA366– incorporation, except for any differences [email protected]. Any 05.48, Revision 0, dated July 21, 2017, identified as exceptions in the commentary that the FAA receives that which the Director of the Federal regulatory text of this proposed AD. is not specifically designated as CBI will Register approved for incorporation by Using common terms that are the same be placed in the public docket for this reference as of October 22, 2018 (83 FR as the heading of a particular section in rulemaking. 46862, September 17, 2018). the EASA AD does not mean that

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operators need comply only with that searching for and locating Docket No. and are affected by the unsafe condition. section. For example, where the AD FAA–2020–1018 after the FAA final Therefore, the FAA has included Airbus requirement refers to ‘‘all required rule is published. Helicopters Model SA–366G1 actions and compliance times,’’ Differences Between This Proposed AD helicopters in the applicability of this compliance with this AD requirement is and the MCAI proposed AD. not limited to the section titled ‘‘Required Action(s) and Compliance The applicability of EASA AD 2019– Costs of Compliance Time(s)’’ in the EASA AD. Service 0080 does not include Airbus The FAA estimates that this proposed information specified in EASA AD Helicopters Model SA–366G1 AD affects 52 helicopters of U.S. 2019–0080 that is required for helicopters. Those helicopters are no compliance with EASA AD 2019–0080 longer listed on the EASA type registry. The FAA estimates the will be available on the internet at certificate data sheet (TCDS); however, following costs to comply with this https://www.regulations.gov by they are still listed on the U.S. TCDS proposed AD:

ESTIMATED COSTS FOR REQUIRED ACTIONS

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

4 work-hours × $85 per hour = $340 ...... $0 $340 $17,680

The FAA estimates the following the results of any required actions. The number of helicopters that might need costs to do any necessary on-condition FAA has no way of determining the these 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 10 work-hours × $85 per hour = $850 ...... Up to $20,000 $20,850

Authority for This Rulemaking responsibilities among the various FR 46862, September 17, 2018), and levels of government. adding the following new AD: Title 49 of the United States Code For the reasons discussed above, I specifies the FAA’s authority to issue Airbus Helicopters: Docket No. FAA–2020– certify this proposed regulation: 1018; Project Identifier MCAI–2020– rules on aviation safety. Subtitle I, (1) Is not a ‘‘significant regulatory 01383–R. section 106, describes the authority of action’’ under Executive Order 12866, the FAA Administrator. Subtitle VII: (2) Will not affect intrastate aviation (a) Comments Due Date Aviation Programs, describes in more in Alaska, and The FAA must receive comments by detail the scope of the Agency’s (3) Will not have a significant December 28, 2020. authority. economic impact, positive or negative, (b) Affected Airworthiness Directives (ADs) on a substantial number of small entities The FAA is issuing this rulemaking This AD removes AD 2018–19–01, under the authority described in under the criteria of the Regulatory Amendment 39–19401 (83 FR 46862, Subtitle VII, Part A, Subpart III, Section Flexibility Act. September 17, 2018) (AD 2018–19–01). 44701: General requirements. Under List of Subjects in 14 CFR Part 39 (c) Applicability that section, Congress charges the FAA with promoting safe flight of civil Air transportation, Aircraft, Aviation This AD applies to Airbus Helicopters aircraft in air commerce by prescribing safety, Incorporation by reference, Model AS–365N2, AS 365 N3, EC 155B, Safety. EC155B1, SA–365N, SA–365N1, and SA– regulations for practices, methods, and 366G1 helicopters, certificated in any procedures the Administrator finds The Proposed Amendment category, all serial numbers. necessary for safety in air commerce. This regulation is within the scope of Accordingly, under the authority (d) Subject that authority because it addresses an delegated to me by the Administrator, Joint Aircraft System Component (JASC) unsafe condition that is likely to exist or the FAA proposes to amend 14 CFR part Code 5300, Fuselage Structure. 39 as follows: develop on products identified in this (e) Reason rulemaking action. PART 39—AIRWORTHINESS This AD was prompted by aft fuselage Regulatory Findings DIRECTIVES (baggage compartment area) outer skin disbonding. The FAA is issuing this AD to The FAA determined that this ■ 1. The authority citation for part 39 address disbonding of the aft fuselage outer proposed AD would not have federalism continues to read as follows: skin. This condition could result in loss of aft fuselage structural integrity and implications under Executive Order Authority: 49 U.S.C. 106(g), 40113, 44701. 13132. This proposed AD would not subsequent loss of control of the helicopter. have a substantial direct effect on the § 39.13 [Amended] (f) Compliance States, on the relationship between the ■ 2. The FAA amends § 39.13 by Comply with this AD within the national Government and the States, or removing Airworthiness Directive (AD) compliance times specified, unless already on the distribution of power and 2018–19–01, Amendment 39–19401 (83 done.

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(g) Requirements material may be found in the AD docket on • Mail: U.S. Department of Except as specified in paragraph (h) of this the internet at https://www.regulations.gov Transportation, Docket Operations, M– AD: Comply with all required actions and by searching for and locating Docket No. 30, West Building Ground Floor, Room compliance times specified in, and in FAA–2020–1018. W12–140, 1200 New Jersey Avenue SE, accordance with, European Union Aviation (2) For more information about this AD, contact Kathleen Arrigotti, Aviation Safety Washington, DC 20590. Safety Agency (EASA) AD 2019–0080, dated • Hand Delivery: Deliver to Mail April 3, 2019 (EASA AD 2019–0080). Engineer, Large Aircraft Section, International Validation Branch, FAA, 2200 address above between 9 a.m. and 5 (h) Exceptions to EASA AD 2019–0080 South 216th St., Des Moines, WA 98198; p.m., Monday through Friday, except (1) Where EASA AD 2019–0080 refers to its telephone and fax 206–231–3218; email Federal holidays. effective date, this AD requires using the [email protected]. For EASA material that will be effective date of this AD. Issued on November 4, 2020. incorporated by reference (IBR) in this (2) Where EASA AD 2019–0080 refers to Lance T. Gant, AD, contact the EASA, Konrad- September 19, 2017 (the effective date of Adenauer-Ufer 3, 50668 Cologne, EASA AD 2017–0165), this AD requires using Director, Compliance & Airworthiness Division, Aircraft Certification Service. Germany; telephone +49 221 8999 000; October 22, 2018 (the effective date of AD email [email protected]; internet 2018–19–01). [FR Doc. 2020–24853 Filed 11–9–20; 8:45 am] www.easa.europa.eu. You may find this (3) For Airbus Helicopters Model SA– BILLING CODE 4910–13–P 366G1 helicopters: Where EASA AD 2019– IBR material on the EASA website at 0080 refers to ‘‘the instructions of the https://ad.easa.europa.eu. You may applicable ASB,’’ use Airbus Helicopters DEPARTMENT OF TRANSPORTATION view this IBR material at the FAA, ASB No. SA366–05.48, Revision 0, dated July Airworthiness Products Section, 21, 2017; or Airbus Helicopters ASB No. Federal Aviation Administration Operational Safety Branch, 2200 South SA366–05.48, Revision 1, dated March 27, 216th St., Des Moines, WA. For 2019. information on the availability of this (4) Where EASA AD 2019–0080 refers to 14 CFR Part 39 Group 1 helicopters, for this AD, Model SA– material at the FAA, call 206–231–3195. 366G1 helicopters are considered Group 1 [Docket No. FAA–2020–1020; Project It is also available in the AD docket on helicopters. Identifier MCAI–2020–00988–T] the internet at https:// (5) Paragraph (5) of EASA AD 2019–0080 www.regulations.gov by searching for RIN 2120–AA64 specifies to ‘‘contact AH [Airbus Helicopters] and locating Docket No. FAA–2020– for approved skin panel repair or Airworthiness Directives; Airbus 1020. replacement instructions and accomplish those instructions accordingly.’’ For this AD, Defense and Space S.A. (Formerly Examining the AD Docket for any repair or replacement of the panel Known as Construcciones Aeronauticas, S.A.) Airplanes You may examine the AD docket on done before the effective date of this AD, it the internet at https:// is not required to contact Airbus Helicopters. For any repair or replacement of the panel AGENCY: Federal Aviation www.regulations.gov by searching for done on or after the effective date of this AD, Administration (FAA), DOT. and locating Docket No. FAA–2020– the repair or replacement must be done using ACTION: Notice of proposed rulemaking 1020; or in person at Docket Operations a method approved by the Manager, (NPRM). between 9 a.m. and 5 p.m., Monday Rotorcraft Standards Branch, FAA. For a through Friday, except Federal holidays. repair or replacement method to be approved SUMMARY: The FAA proposes to adopt a The AD docket contains this NPRM, any by the Manager, Rotorcraft Standards Branch, new airworthiness directive (AD) for all comments received, and other FAA, as required by this paragraph, the Airbus Defense and Space S.A. Model information. The street address for Manager’s approval letter must specifically CN–235, CN–235–100, CN–235–200, Docket Operations is listed above. refer to this AD. (6) The ‘‘Remarks’’ section of EASA AD CN–235–300 airplanes and Model C– Comments will be available in the AD 2019–0080 does not apply to this AD. 295 airplanes. This proposed AD was docket shortly after receipt. (7) Where EASA AD 2019–0080 refers to prompted by cracks found on certain FOR FURTHER INFORMATION CONTACT: flight hours (FH), this AD requires using left- and right-hand stringers in a certain Shahram Daneshmandi, Aerospace hours time-in-service. area of the fuselage. This proposed AD Engineer, Large Aircraft Section, (i) Alternative Methods of Compliance would require repetitive inspections for International Validation Branch, FAA, (AMOCs) cracking or broken rivets of certain left- 2200 South 216th St., Des Moines, WA and right-hand stringers and The Manager, Rotorcraft Standards Branch, 98198; telephone and fax 206–231– FAA, may approve AMOCs for this AD. Send surrounding structure, and repair if 3220; email shahram.daneshmandi@ your proposal to: Manager, Rotorcraft necessary, as specified in a European faa.gov. Union Aviation Safety Agency (EASA) Standards Branch, FAA, 10101 Hillwood SUPPLEMENTARY INFORMATION: Pkwy., Fort Worth, TX 76177; telephone AD, which will be incorporated by 817–222–5110; email 9-ASW-FTW-AMOC- reference. The FAA is proposing this Comments Invited [email protected]. AD to address the unsafe condition on The FAA invites you to participate in (j) Related Information these products. this rulemaking by submitting written (1) For EASA AD 2019–0080, contact the DATES: The FAA must receive comments comments, data, or views about this EASA, Konrad-Adenauer-Ufer 3, 50668 on this proposed AD by December 28, proposal. The most helpful comments Cologne, Germany; telephone +49 221 89990 2020. reference a specific portion of the 6017; email [email protected]; internet ADDRESSES: You may send comments, proposal, explain the reason for any www.easa.europa.eu. You may find this using the procedures found in 14 CFR recommended change, and include EASA AD on the EASA website at https:// 11.43 and 11.45, by any of the following supporting data. To ensure the docket ad.easa.europa.eu. You may view this methods: does not contain duplicate comments, material at the FAA, Office of the Regional • Counsel, Southwest Region, 10101 Hillwood Federal eRulemaking Portal: Go to commenters should send only one copy Pkwy., Room 6N–321, Fort Worth, TX 76177. https://www.regulations.gov. Follow the of written comments, or if comments are For information on the availability of this instructions for submitting comments. filed electronically, commenters should material at the FAA, call 817–222–5110. This • Fax: 202–493–2251. submit only one time. Send your

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comments to an address listed under the Defense and Space S.A. Model CN–235, previously is likely to exist or develop ADDRESSES section. Include ‘‘Docket No. CN–235–100, CN–235–200, CN–235– in other products of the same type FAA–2020–1020; Project Identifier 300 airplanes and Model C–295 design. MCAI–2020–00988–T at the beginning airplanes. Proposed AD Requirements of your comments. This proposed AD was prompted by Except for Confidential Business cracks found on certain left-and right- This proposed AD would require Information (CBI) as described in the hand stringers in the area of frame (FR) accomplishing the actions specified in following paragraph, and other 43 of the fuselage. The FAA is EASA AD 2020–0159 described information as described in 14 CFR proposing this AD to address such previously, as incorporated by 11.35, the FAA will post all comments cracking in the stringers, which could reference, except for any differences received, without change, as well as a result in reduced structural integrity of identified as exceptions in the report summarizing each substantive the airplane. See the MCAI for regulatory text of this AD. public contact with FAA personnel additional background information. Explanation of Required Compliance concerning this proposed rulemaking. Related Service Information Under 1 Information Before acting on this proposal, the FAA CFR Part 51 will consider all comments received by In the FAA’s ongoing efforts to the closing date for comments. The FAA EASA AD 2020–0159 describes improve the efficiency of the AD will consider comments filed after the procedures for repetitive detailed visual process, the FAA initially worked with comment period has closed if it is (DET) or high frequency eddy current Airbus and EASA to develop a process possible to do so without incurring inspections of the stringer P0a and P0a’ to use certain EASA ADs as the primary expense or delay. The FAA may change at the riveted line of the attachment to source of information for compliance this NPRM because of those comments. the gusset and along the stringer head, with requirements for corresponding in particular at the area of the last FAA ADs. The FAA has since Confidential Business Information attachment of the gusset to the stringer coordinated with other manufacturers CBI is commercial or financial in the midpoint between FR43 and and civil aviation authorities (CAAs) to information that is both customarily and FR44, repetitive DET inspections for use this process. As a result, EASA AD actually treated as private by its owner. fatigue cracks of the fuselage skin, along 2020–0159 will be incorporated by Under the Freedom of Information Act the stringers’ footprint and surrounding reference in the FAA final rule. This (FOIA) (5 U.S.C. 552), CBI is exempt structure and the attachment of the proposed AD would, therefore, require from public disclosure. If your gusset to the FR43; repetitive DET compliance with EASA AD 2020–0159 comments responsive to this NPRM inspections for fatigue cracks of the in its entirety, through that contain commercial or financial actuator bracket on FR43, along the incorporation, except for any differences information that is customarily treated radius of the vertical nerves, inner lug identified as exceptions in the as private, that you actually treat as holes, and attachment holes of the regulatory text of this proposed AD. private, and that is relevant or bracket to FR43; repetitive DET Using common terms that are the same responsive to this NPRM, it is important inspections for fatigue cracks or broken as the heading of a particular section in that you clearly designate the submitted rivets in the web and joint clips to skin the EASA AD does not mean that comments as CBI. Please mark each and stringer of both sides of the frame operators need comply only with that page of your submission containing CBI between stringer P1d and P1d’ (two section. For example, where the AD as ‘‘PROPIN.’’ The FAA will treat such stringers for each side from the central requirement refers to ‘‘all required marked submissions as confidential stringer P0a); repetitive DET inspections actions and compliance times,’’ under the FOIA, and they will not be for fatigue cracks or broken rivets of the compliance with this AD requirement is placed in the public docket of this gussets, along the flange which joins not limited to the section titled NPRM. Submissions containing CBI FR43; and repair of any cracking or ‘‘Required Action(s) and Compliance should be sent to Shahram broken rivets. Time(s)’’ in the EASA AD. Service Daneshmandi, Aerospace Engineer, This material is reasonably available information specified in EASA AD Large Aircraft Section, International because the interested parties have 2020–0159 that is required for Validation Branch, FAA, 2200 South access to it through their normal course compliance with EASA AD 2020–0159 216th St., Des Moines, WA 98198; of business or by the means identified will be available on the internet at telephone and fax 206–231–3220; email in the ADDRESSES section. https://www.regulations.gov by [email protected]. Any searching for and locating Docket No. FAA’s Determination and Requirements commentary that the FAA receives FAA–2020–1020 after the FAA final of This Proposed AD which is not specifically designated as rule is published. CBI will be placed in the public docket This product has been approved by Interim Action for this rulemaking. the aviation authority of another country, and is approved for operation The FAA considers this proposed AD Discussion in the United States. Pursuant to the interim action. If final action is later The EASA, which is the Technical FAA’s bilateral agreement with the State identified, the FAA might consider Agent for the Member States of the of Design Authority, the FAA has been further rulemaking then. European Union, has issued EASA AD notified of the unsafe condition 2020–0159, dated July 16, 2020 (‘‘EASA described in the MCAI referenced Costs of Compliance AD 2020–0159’’) (also referred to as the above. The FAA is proposing this AD The FAA estimates that this proposed Mandatory Continuing Airworthiness because the FAA evaluated all the AD affects 8 airplanes of U.S. registry. Information, or ‘‘the MCAI’’), to correct relevant information and determined The FAA estimates the following costs an unsafe condition for all Airbus the unsafe condition described to comply with this proposed AD:

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ESTIMATED COSTS FOR REQUIRED ACTIONS

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

2 work-hours × $85 per hour = $170 ...... $0 $170 $1,360

The FAA has received no definitive the FAA proposes to amend 14 CFR part check, or within 300 FH after the effective data that would enable providing cost 39 as follows: date of this AD, whichever occurs later,’’ this estimates for the on-condition action AD requires using a compliance time of specified in this proposed AD. PART 39—AIRWORTHINESS within 300 flight hours (FH) after the DIRECTIVES effective date of this AD. Authority for This Rulemaking (i) No Reporting Requirement ■ 1. The authority citation for part 39 Title 49 of the United States Code Although the service information specifies the FAA’s authority to issue continues to read as follows: referenced in EASA AD 2020–0159 specifies rules on aviation safety. Subtitle I, Authority: 49 U.S.C. 106(g), 40113, 44701. to submit certain information to the section 106, describes the authority of manufacturer, this AD does not include that § 39.13 [Amended] the FAA Administrator. Subtitle VII: requirement. ■ 2. The FAA amends § 39.13 by adding Aviation Programs, describes in more (j) Other FAA AD Provisions detail the scope of the Agency’s the following new airworthiness directive (AD): The following provisions also apply to this authority. AD: The FAA is issuing this rulemaking Airbus Defense and Space S.A. (Formerly (1) Alternative Methods of Compliance under the authority described in Known as Construcciones Aeronauticas, (AMOCs): The Manager, Large Aircraft Subtitle VII, Part A, Subpart III, Section S.A.): Docket No. FAA–2020–1020; Section, International Validation Branch, 44701: General requirements. Under Project Identifier MCAI–2020–00988–T. FAA, has the authority to approve AMOCs that section, Congress charges the FAA (a) Comments Due Date for this AD, if requested using the procedures with promoting safe flight of civil found in 14 CFR 39.19. In accordance with The FAA must receive comments by 14 CFR 39.19, send your request to your aircraft in air commerce by prescribing December 28, 2020. principal inspector or local Flight Standards regulations for practices, methods, and (b) Affected ADs District Office, as appropriate. If sending procedures the Administrator finds information directly to the Large Aircraft necessary for safety in air commerce. None. Section, International Validation Branch, This regulation is within the scope of (c) Applicability send it to the attention of the person identified in paragraph (k)(2) of this AD. that authority because it addresses an This AD applies to all Airbus Defense and Information may be emailed to: 9-AVS-AIR- unsafe condition that is likely to exist or Space S.A. Model CN–235, CN–235–100, [email protected]. Before using any develop on products identified in this CN–235–200, CN–235–300 airplanes and approved AMOC, notify your appropriate Model C–295 airplanes, certificated in any rulemaking action. principal inspector, or lacking a principal category. Regulatory Findings inspector, the manager of the local flight (d) Subject standards district office/certificate holding The FAA determined that this Air Transport Association (ATA) of district office. proposed AD would not have federalism America Code 53, Fuselage. (2) Contacting the Manufacturer: For any implications under Executive Order requirement in this AD to obtain instructions 13132. This proposed AD would not (e) Reason from a manufacturer, the instructions must have a substantial direct effect on the This AD was prompted by cracks found on be accomplished using a method approved States, on the relationship between the certain left- and right-hand stringers in the by the Manager, Large Aircraft Section, International Validation Branch, FAA; or national Government and the States, or area of frame (FR) 43 of the fuselage. The FAA is issuing this AD to address such EASA; or Airbus Defense and Space S.A.’s on the distribution of power and EASA Design Organization Approval (DOA). responsibilities among the various cracking in the stringers, which could result in reduced structural integrity of the If approved by the DOA, the approval must levels of government. airplane. include the DOA-authorized signature. For the reasons discussed above, I (k) Related Information certify this proposed regulation: (f) Compliance (1) Is not a ‘‘significant regulatory Comply with this AD within the (1) For information about EASA AD 2020– action’’ under Executive Order 12866, compliance times specified, unless already 0159, contact the EASA, Konrad-Adenauer- done. Ufer 3, 50668 Cologne, Germany; telephone (2) Will not affect intrastate aviation +49 221 8999 000; email ADs@ in Alaska, and (g) Requirements easa.europa.eu; internet (3) Will not have a significant Except as specified in paragraph (h) of this www.easa.europa.eu. You may find this economic impact, positive or negative, AD: Comply with all required actions and EASA AD on the EASA website at https:// on a substantial number of small entities compliance times specified in, and in ad.easa.europa.eu. You may view this under the criteria of the Regulatory accordance with, European Union Aviation material at the FAA, Airworthiness Products Flexibility Act. Safety Agency (EASA) AD 2020–0159, dated Section, Operational Safety Branch, 2200 July 16, 2020 (‘‘EASA AD 2020–0159’’). South 216th St., Des Moines, WA. For List of Subjects in 14 CFR Part 39 information on the availability of this (h) Exceptions to EASA AD 2020–0159 Air transportation, Aircraft, Aviation material at the FAA, call 206–231–3195. This (1) Where EASA AD 2020–0159 refers to its material may be found in the AD docket on safety, Incorporation by reference, effective date, this AD requires using the the internet at https://www.regulations.gov Safety. effective date of this AD. by searching for and locating Docket No. The Proposed Amendment (2) The ‘‘Remarks’’ section of EASA AD FAA–2020–1020. 2020–0159 does not apply to this AD. (2) For more information about this AD, Accordingly, under the authority (3) Where EASA AD 2020–0159 lists a contact Shahram Daneshmandi, Aerospace delegated to me by the Administrator, compliance time of ‘‘during the next A- Engineer, Large Aircraft Section,

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International Validation Branch, FAA, 2200 Avenue SW, Washington, DC 20591; will be date/time stamped and returned South 216th St., Des Moines, WA 98198; telephone: (202) 267–8783. The Order is to the commenter. telephone and fax 206–231–3220; email also available for inspection at the All communications received before [email protected]. National Archives and Records the specified closing date for comments Issued on November 4, 2020. Administration (NARA). For will be considered before taking action Lance T. Gant, information on the availability of FAA on the proposed rule. The proposal Director, Compliance & Airworthiness Order 7400.11E at NARA, email: contained in this notice may be changed Division, Aircraft Certification Service. [email protected] or go to https:// in light of the comments received. A [FR Doc. 2020–24876 Filed 11–9–20; 8:45 am] www.archives.gov/federal-register/cfr/ report summarizing each substantive BILLING CODE 4910–13–P ibr-locations.html. public contact with FAA personnel concerned with this rulemaking will be FOR FURTHER INFORMATION CONTACT: filed in the docket. Jeffrey Claypool, Federal Aviation DEPARTMENT OF TRANSPORTATION Administration, Operations Support Availability of NPRMs Federal Aviation Administration Group, Central Service Center, 10101 An electronic copy of this document Hillwood Parkway, Fort Worth, TX may be downloaded through the 14 CFR Part 71 76177; telephone (817) 222–5711. internet at https://www.regulations.gov. SUPPLEMENTARY INFORMATION: Recently published rulemaking [Docket No. FAA–2020–0879; Airspace documents can also be accessed through Docket No. 20–AGL–36] Authority for This Rulemaking the FAA’s web page at https:// RIN 2120–AA66 www.faa.gov/air_traffic/publications/ The FAA’s authority to issue rules _ regarding aviation safety is found in airspace amendments/. Proposed Amendment of Class E You may review the public docket Title 49 of the United States Code. Airspace; Kankakee, IL containing the proposal, any comments Subtitle I, Section 106 describes the received, and any final disposition in AGENCY: Federal Aviation authority of the FAA Administrator. person in the Dockets Office (see the Administration (FAA), DOT. Subtitle VII, Aviation Programs, ADDRESSES section for the address and ACTION: Notice of proposed rulemaking describes in more detail the scope of the phone number) between 9:00 a.m. and (NPRM). agency’s authority. This rulemaking is promulgated under the authority 5:00 p.m., Monday through Friday, SUMMARY: This action proposes to described in Subtitle VII, Part A, except federal holidays. An informal amend the Class E airspace extending Subpart I, Section 40103. Under that docket may also be examined during upward from 700 feet above the surface section, the FAA is charged with normal business hours at the Federal at Greater Kankakee Airport, Kankakee, prescribing regulations to assign the use Aviation Administration, Air Traffic IL. The FAA is proposing this action as of airspace necessary to ensure the Organization, Central Service Center, the result of an airspace review caused safety of aircraft and the efficient use of Operations Support Group, 10101 by the decommissioning of the airspace. This regulation is within the Hillwood Parkway, Fort Worth, TX Kankakee VHF omnidirectional range scope of that authority as it would 76177. (VOR) navigation aid as part of the VOR amend the Class E airspace extending Availability and Summary of Minimum Operational Network (MON) upward from 700 feet above the surface Documents for Incorporation by Program. at Greater Kankakee Airport, Kankakee, Reference DATES: Comments must be received on IL, to support instrument flight rule This document proposes to amend or before December 28, 2020. operations at this airport. FAA Order 7400.11E, Airspace ADDRESSES: Send comments on this Comments Invited Designations and Reporting Points, proposal to the U.S. Department of dated July 21, 2020, and effective Transportation, Docket Operations, Interested parties are invited to September 15, 2020. FAA Order West Building Ground Floor, Room participate in this proposed rulemaking 7400.11E is publicly available as listed W12–140, 1200 New Jersey Avenue SE, by submitting such written data, views, in the ADDRESSES section of this Washington, DC 20590; telephone (202) or arguments, as they may desire. document. FAA Order 7400.11E lists 366–9826, or (800) 647–5527. You must Comments that provide the factual basis Class A, B, C, D, and E airspace areas, identify FAA Docket No. FAA–2020– supporting the views and suggestions air traffic service routes, and reporting 0879/Airspace Docket No. 20–AGL–36, presented are particularly helpful in points. at the beginning of your comments. You developing reasoned regulatory may also submit comments through the decisions on the proposal. Comments The Proposal internet at https://www.regulations.gov. are specifically invited on the overall The FAA is proposing an amendment You may review the public docket regulatory, aeronautical, economic, to Title 14 Code of Federal Regulations containing the proposal, any comments environmental, and energy-related (14 CFR) part 71 by amending the Class received, and any final disposition in aspects of the proposal. E airspace extending upward from 700 person in the Dockets Office between Communications should identify both feet above the surface to within a 6.6- 9:00 a.m. and 5:00 p.m., Monday docket numbers and be submitted in mile (decreased from a 7-mile) radius of through Friday, except federal holidays. triplicate to the address listed above. Greater Kankakee Airport, Kankakee, IL; FAA Order 7400.11E, Airspace Commenters wishing the FAA to removing the Kankakee VOR/DME and Designations and Reporting Points, and acknowledge receipt of their comments associated extensions from the airspace subsequent amendments can be viewed on this notice must submit with those legal description; and amending the online at https://www.faa.gov/air_ comments a self-addressed, stamped southwest extension to 4 (increased traffic/publications/. For further postcard on which the following from 2) miles each side of the 214° information, you can contact the statement is made: ‘‘Comments to (previously 218°) bearing from the Airspace Policy Group, Federal Aviation Docket No. FAA–2020–0879/Airspace Greater Kankakee: RWY 04–LOC Administration, 800 Independence Docket No. 20–AGL–36.’’ The postcard (previously the airport) extending from

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the 6.6-mile (decreased from 7-mile) PART 71—DESIGNATION OF CLASS A, DATES: Section 1.168(k)–2(b)(3)(iii)(B)(5) radius to 16.8 (increased from 16.6) B, C, D, AND E AIRSPACE AREAS; AIR of proposed rules (REG–106808–19) miles southwest of the airport; and TRAFFIC SERVICE ROUTES; AND published in the Federal Register on removing the city associated with the REPORTING POINTS September 24, 2019 (84 FR 50152) is airport to comply with changes to FAA withdrawn effective January 11, 2021]. ■ Order 7400.2M, Procedures for 1. The authority citation for 14 CFR FOR FURTHER INFORMATION CONTACT: Handling Airspace Matters. part 71 continues to read as follows: Elizabeth R. Binder at (202) 317–4869 or This action is the result of an airspace Authority: 49 U.S.C. 106(f), 106(g); 40103, Kathleen Reed at (202) 317–4660 (not review caused by the decommissioning 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, toll-free numbers). of the Kankakee VOR, which provided 1959–1963 Comp., p. 389. SUPPLEMENTARY INFORMATION: navigation information for the instrument procedures this airport, as § 71.1 [Amended] Background ■ 2. The incorporation by reference in part of the VOR MON Program. On August 8, 2018, the Department of Class E airspace designations are 14 CFR 71.1 of FAA Order 7400.11E, the Treasury (Treasury Department) and published in paragraph 6005 of FAA Airspace Designations and Reporting the IRS published a notice of proposed Order 7400.11E, dated July 21, 2020, Points, dated July 21, 2020, and rulemaking (REG–104397–18) in the and effective September 15, 2020, which effective September 15, 2020, is Federal Register (83 FR 39292) is incorporated by reference in 14 CFR amended as follows: containing proposed regulations under 71.1. The Class E airspace designations Paragraph 6005 Class E Airspace Areas section 168(k) (2018 Proposed listed in this document will be Extending Upward from 700 Feet or More Regulations). After full consideration of published subsequently in the Order. Above the Surface of the Earth. the comments received on the 2018 FAA Order 7400.11, Airspace * * * * * Proposed Regulations and the testimony Designations and Reporting Points, is heard at the public hearing on published yearly and effective on AGL IL E5 Kankakee, IL [Amended] November 28, 2018, the Treasury September 15. Greater Kankakee Airport, IL (Lat. 41°04′17″ N, long. 87°50′47″ W) Department and the IRS published final Regulatory Notices and Analyses regulations in the Federal Register as Greater Kankakee: RWY 04–LOC The FAA has determined that this (Lat. 41°05′00″ N, long. 87°50′12″ W) TD 9874 on September 24, 2019 (84 FR 50208) (the 2019 Final Regulations) regulation only involves an established That airspace extending upward from 700 body of technical regulations for which feet above the surface within a 6.6-mile adopting the 2018 Proposed Regulations frequent and routine amendments are radius of Greater Kankakee Airport, and with modifications in response to such necessary to keep them operationally within 4 miles each side of the 214° bearing comments and testimony. current, is non-controversial and from the Greater Kankakee: RWY 04–LOC Concurrently with the publication of unlikely to result in adverse or negative extending from the 6.6-mile radius of the the 2019 Final Regulations, the Treasury comments. It, therefore: (1) Is not a airport to 16.8 miles southwest of the airport. Department and the IRS published an ‘‘significant regulatory action’’ under Issued in Fort Worth, Texas, on November additional notice of proposed Executive Order 12866; (2) is not a 4, 2020. rulemaking (REG–106808–19) in the ‘‘significant rule’’ under DOT Martin A. Skinner, Federal Register (84 FR 50152) Regulatory Policies and Procedures (44 Acting Manager, Operations Support Group, withdrawing certain provisions of the FR 11034; February 26, 1979); and (3) ATO Central Service Center. 2018 Proposed Regulations and does not warrant preparation of a [FR Doc. 2020–24878 Filed 11–9–20; 8:45 am] proposing additional guidance under regulatory evaluation as the anticipated BILLING CODE 4910–13–P section 168(k) (2019 Proposed impact is so minimal. Since this is a Regulations). routine matter that will only affect air The 2019 Proposed Regulations include § 1.168(k)–2(b)(3)(iii)(B)(5), traffic procedures and air navigation, it DEPARTMENT OF THE TREASURY is certified that this rule, when which addresses the extent to which a promulgated, would not have a Internal Revenue Service partner is deemed to have a depreciable significant economic impact on a interest in property held by a substantial number of small entities 26 CFR Part 1 partnership. This document withdraws under the criteria of the Regulatory § 1.168(k)–2(b)(3)(iii)(B)(5) of the 2019 Flexibility Act. [REG–106808–19] Proposed Regulations for the reason stated in the Summary of Comments RIN 1545–BP32 Environmental Review and Explanation of Revisions section of This proposal will be subject to an Additional First Year Depreciation the final regulations published in the environmental analysis in accordance Deduction Federal Register by the Treasury with FAA Order 1050.1F, Department and the IRS as TD 9916 on ‘‘Environmental Impacts: Policies and AGENCY: Internal Revenue Service (IRS), November 10, 2020. Treasury. Procedures’’ prior to any FAA final List of Subjects in 26 CFR Part 1 regulatory action. ACTION: Partial withdrawal of a notice of proposed rulemaking. Income taxes, Reporting and List of Subjects in 14 CFR Part 71 recordkeeping requirements. SUMMARY: This document withdraws a Airspace, Incorporation by reference, Partial Withdrawal of a Notice of Navigation (air). portion of a notice of proposed rulemaking published in the Federal Proposed Rulemaking The Proposed Amendment Register on September 24, 2019. The Accordingly, under the authority of Accordingly, pursuant to the withdrawn portion relates to the extent 26 U.S.C. 7805, § 1.168(k)– authority delegated to me, the Federal to which a partner is deemed to have a 2(b)(3)(iii)(B)(5) of the notice of Aviation Administration proposes to depreciable interest in property held by proposed rulemaking (REG–106808–19) amend 14 CFR part 71 as follows: a partnership. published in the Federal Register on

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September 24, 2019 (84 FR 50152) is Department of the Treasury, 1500 signed into law the 2019 withdrawn. Pennsylvania Avenue NW, Washington, Reauthorization Act.3 Section 502 of DC 20220. Because postal mail may be that Act extends the Program’s Sunita Lough, subject to processing delay, it is termination date to December 31, 2027. Deputy Commissioner for Services and recommended that comments be The risk-sharing mechanisms for Enforcement. submitted electronically. All comments calendar year 2020 remain constant for [FR Doc. 2020–24026 Filed 11–5–20; 4:15 pm] should be captioned with ‘‘2019 TRIA the entire reauthorization period, and BILLING CODE 4830–01–P Reauthorization Proposed Rules are not modified by the 2019 Comments.’’ Please include your name, Reauthorization Act.4 organizational affiliation, address, email Treasury is issuing this notice of DEPARTMENT OF THE TREASURY address and telephone number in your proposed rulemaking to align certain comment. Where appropriate, a 31 CFR Part 50 dates in the Program regulations with comment should include a short the 2019 Reauthorization Act. Treasury Executive Summary (no more than five Terrorism Risk Insurance Program; is also taking this opportunity to update single-spaced pages). Updated Regulations in Light of the links to the Program website in the In general, comments received will be regulations. Terrorism Risk Insurance Program posted on http://www.regulations.gov Treasury is also proposing several Reauthorization Act of 2019, and for without change, including any business changes in response to a recent report Other Purposes or personal information provided. by the Government Accountability Comments received, including AGENCY: Departmental Offices, Office (GAO) addressing certain sources Department of the Treasury. attachments and other supporting materials, will be part of the public of risk and uncertainty related to the ACTION: Notice of proposed rulemaking Program.5 In the report, GAO indicated and request for comments. record and subject to public disclosure. Do not enclose any information in your that, based upon its engagement with stakeholders during the preparation of SUMMARY: comment or supporting materials that The Department of the the report, some uncertainty may exist Treasury (Treasury) is issuing proposed you consider confidential or inappropriate for public disclosure. about how Treasury would factor in rules to implement technical changes to policyholder retention amounts in FOR FURTHER INFORMATION CONTACT: the Terrorism Risk Insurance Program calculating ‘‘property and casualty Richard Ifft, Senior Insurance (TRIP or Program) required by the insurance losses’’ versus ‘‘insured Regulatory Policy Analyst, Federal Terrorism Risk Insurance Program losses’’ to determine the Program Insurance Office, 202–622–2922, or Reauthorization Act of 2019 (2019 certification threshold, Program Trigger, Lindsey Baldwin, Senior Insurance Reauthorization Act), and to update and Program Cap.6 GAO recommended Regulatory Policy Analyst, Federal links to the Program’s website, where that Treasury provide further Insurance Office, 202–622–3220. additional information relating to the clarification to ‘‘prevent uncertainty in SUPPLEMENTARY INFORMATION: administration of the Program is located the insurance market and potential for public reference. In addition, I. Background litigation following a terrorist event that Treasury is proposing rules to: Clarify The Terrorism Risk Insurance Act could delay insurance payments and the manner in which Treasury will economic recovery.’’ 7 Treasury agrees calculate ‘‘property and casualty (TRIA) 1 was enacted following the attacks on September 11, 2001 to that the reduction of uncertainty is an insurance losses’’ for purposes of important goal. Accordingly, Treasury considering certification of an act of address disruptions in the market for terrorism risk insurance, to help ensure proposes certain rule changes designed terrorism, and ‘‘insured losses’’ when to clarify how Treasury will apply these administering the financial sharing the continued availability and affordability of commercial property defined terms to effectuate the intent mechanisms under the Program, and goals of the Program. including the Program Trigger and and casualty insurance for terrorism Program Cap; and incorporate into the risk, and to help private markets Treasury is also proposing certain Program rules prior guidance provided stabilize and build insurance capacity to changes based on previous Treasury by Treasury in connection with stand- absorb any future losses for terrorism guidance regarding cyber coverage. In alone cyber insurance under the events. TRIA requires insurers to ‘‘make December 2016, Treasury issued interim Program. Treasury also seeks further available’’ terrorism risk insurance for guidance confirming that certain stand- public comment concerning the commercial property and casualty losses alone cyber coverage written in a TRIP- certification process under the Program, resulting from certified acts of terrorism eligible line of insurance was within the and the participation of captive insurers (insured losses) and provides for shared scope of the Program, such that insurers in the Program, to facilitate further public and private compensation for were obligated to adhere to the ‘‘make such insured losses. Under TRIA, the available’’ and disclosure requirements analysis and study by the Federal 8 Insurance Office (FIO) of the Program Secretary of the Treasury administers under TRIA for such coverage. and potential future rulemakings in the Program, with the assistance of FIO. The Program was originally scheduled 3 Public Law 116–94, 133 Stat. 2534, Title V. these areas. to terminate on December 31, 2005, but 4 TRIA, sec. 103(e)(1)(B)(vi). DATES: Comments must be in writing it was extended several times between 5 GAO, Terrorism Risk Insurance: Program and received by January 11, 2021. Early 2005 and 2015.2 Most recently, on Changes Have Reduced Federal Fiscal Exposure submissions are encouraged. (GAO–20–348) (April 2020), https://www.gao.gov/ December 20, 2019, President Trump assets/710/706243.pdf. ADDRESSES: Please submit comments 6 Id. at 18–19. electronically through the Federal 1 15 U.S.C. 6701 note. 7 Id. at 19. eRulemaking Portal: http:// 2 Terrorism Risk Insurance Extension Act of 2005, 8 Guidance Concerning Stand-Alone Cyber www.regulations.gov, or by mail (if hard Public Law 109–144, 119 Stat. 2660; Terrorism Risk Liability Insurance Policies Under the Terrorism Insurance Program Reauthorization Act of 2007, Risk Insurance Program, 81 FR 95312 (Dec. 27, copy, preferably an original and two Public Law 110–160, 121 Stat.1839; Terrorism Risk 2016) (Cyber Guidance), https:// copies) to the Federal Insurance Office, Insurance Program Reauthorization Act of 2015, www.federalregister.gov/documents/2016/12/27/ Attention: Richard Ifft, Room 1410 MT, Public Law 114–1, 129 Stat. 3. 2016-31244/guidance-concerning-stand-alone-

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Treasury is proposing certain claims for payment of the Federal share losses in question ultimately will be definitional changes to incorporate the of compensation for insured losses are paid by the policyholder. cyber coverage guidance in the Program found at Subpart H of 31 CFR part 50. The $5 million certification threshold regulations. Subpart I of 31 CFR part 50 contains in TRIA is based upon ‘‘property and While Treasury seeks comments from rules on audit and recordkeeping casualty insurance losses,’’ a term that interested parties and the public on all requirements for insurers, while Subpart is not defined under the statute. By aspects of the proposed rules, it J of 31 CFR part 50 addresses contrast, TRIA defines the term insured particularly seeks comments on issues recoupment and surcharge procedures. loss, which governs the calculation of related to the certification process and Finally, Subpart K of 31 CFR part 50 the Program Trigger and the Program the participation of captive insurers in contains rules implementing the Cap, as ‘‘any loss resulting from an act the Program. Comments received will litigation management provisions of of terrorism . . . that is covered by inform additional analyses concerning TRIA, and Subpart L of 31 CFR part 50 primary or excess property and casualty the Program and potential future addresses rules concerning the cap on insurance issued by an insurer[.]’’ 13 The rulemakings. Treasury has determined annual liability under TRIA.12 term property and casualty insurance is to further review these topics partly in also defined under TRIA, and refers to 9 III. The Proposed Rules response to a May 2020 report issued all insurance subject to the Program.14 by the Advisory Committee on Risk- This proposed rulemaking would Treasury also commonly refers to Sharing Mechanisms (ACRSM), which revise 31 CFR part 50 to incorporate property and casualty insurance as the was established under the 2015 new dates pursuant to the 2019 ‘‘TRIP-eligible lines of insurance.’’ Reauthorization Act to provide advice, Reauthorization Act. The proposed rules In practice, the certification analysis recommendations, and encouragement also provide an updated link to the needed to accurately assess the size of to Treasury for the creation and Program’s website. Finally, the an event involves calculating all losses development of non-governmental, proposed rules identify certain changes associated with property and casualty private market risk-sharing mechanisms designed to clarify how Treasury will insurance policies, regardless of to protect against losses arising from apply certain defined terms to effectuate whether the policyholder obtained 10 acts of terrorism. The ACRSM Report the intent and goals of the Program and terrorism risk coverage within the identifies a number of Program areas for incorporate Treasury’s prior guidance policy. The calculated amount would further action and study by Treasury, concerning stand-alone cyber coverage. also include, for example, policy including Treasury’s existing rules B. Description of the Proposed Rules deductibles or fronting arrangements, governing the certification process as even though the financial loss well as the participation within TRIP of The changes to the existing rules at 31 associated with these components will captive insurers and other alternative CFR part 50 as provided for in these ultimately fall on the policyholder.15 11 carrier mechanisms. proposed rules, on a section-by-section Accordingly, Treasury proposes to add The changes are explained below in basis, are as follows: language to Section 50.4(b)(2)(ii) to the context of the proposed rules. Subpart A—General Provisions clarify that, for purposes of the II. Program Regulations certification analysis, ‘‘property and Section 50.1—Authority, purpose, and casualty insurance losses’’ include any Rules establishing general provisions scope. implementing the Program, including losses associated with a property and key definitions, and requirements for The proposed change adds the 2019 casualty insurance policy, even if those policy disclosures and mandatory Reauthorization Act to the statutory losses are ultimately payable by the availability, can be found in Subparts A, authority for the Program. policyholder. The proposed change to the definition B, and C of 31 CFR part 50. Treasury’s Section 50.4—Definitions rules applying provisions of the Act to of insured loss in Section 50.4(n) would state residual market insurance entities The proposed change to Section add subsection (3)(iv) to clarify that and state workers’ compensation funds 50.4(b)(2)(ii) adds a sentence to the end insured loss does not include amounts are located at Subpart D of 31 CFR part of the subsection to clarify that, for that are paid by the policyholder under 50. Rules addressing Treasury’s data purposes of calculating the threshold property and casualty insurance collection authorities are found at that must be reached before the policies. Subpart F of 31 CFR part 50. Subpart G Secretary may certify an act of An insured loss under TRIA governs of 31 CFR part 50 contains the terrorism, ‘‘property and casualty payments under the Program, including Program’s certification regulations. insurance losses’’ include amounts that application of the Program Trigger and Rules setting forth procedures for filing are ultimately payable by the Program Cap. As noted above, it is policyholder, as long as they arise under defined as ‘‘any loss resulting from an cyber-liability-insurance-policies-under-the- an insurance policy subject to the act of terrorism . . . that is covered by terrorism-risk. Program. ‘‘Property and casualty primary or excess property and casualty 9 Advisory Committee on Risk-Sharing insurance losses’’ is thus broader than insurance issued by an insurer[.]’’ 16 Mechanisms, Initial Report of the Committee (May insured loss, as it is not limited to Insured losses ‘‘covered’’ means insured 11, 2020) (ACRSM Report), https:// home.treasury.gov/system/files/311/5-20-ACRSM- amounts ‘‘covered’’ under the policy. It losses paid by insurers under insurance Report-Final.pdf. includes all losses arising from claims 10 Terrorism Risk Insurance Program associated with TRIP-eligible lines 13 TRIA, sec. 102(5). Reauthorization Act of 2015, Public Law 114–1, 129 policies, whether or not the 14 TRIA, sec. 102(11). Stat. 3, § 110. policyholder obtained terrorism risk 15 Treasury also addressed the potential 11 In addition, GAO issued a separate report in parameters of the ‘‘property and casualty insurance April 2020 in which it recommended that Treasury coverage under that policy, or if the losses’’ language in its 2015 report, The Process for consider further changes to the rules governing the Certifying an ‘‘Act of Terrorism’’ Under the certification process. See GAO, Terrorism Risk 12 To assist insurers, policyholders, and other Terrorism Risk Insurance Act of 2002 (Certification Insurance: Market is Stable but Treasury Could interested parties in complying with immediately Report), at 6 (https://www.treasury.gov/resource- Strengthen Communications about Its Processes applicable requirements of TRIA, Treasury has also center/fin-mkts/Documents/TRIP_Certification_ (GAO–20–364) (April 2020), https://www.gao.gov/ issued interim guidance to be relied upon by Report.pdf). assets/710/706252.pdf. insurers until superseded by regulations. 16 TRIA, sec. 102(5).

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policies within the scope of the the Program, since it is often written as Subpart D—State Residual Market Program. This reading is consistent with professional liability insurance, which Insurance Entities; Workers’ TRIA’s intent, which is to provide a is a type of insurance expressly Compensation Funds 21 backstop for the losses of insurance excluded from TRIP. Treasury Section 50.30—General Participation companies. There is no mechanism observed, however, that the National Requirements under TRIA for policyholders to recover Association of Insurance Commissioners ‘‘insured losses’’ from Treasury.17 If the (NAIC) had recently identified, for state The proposed change to Section 50.30 insured loss of an insurer included the purposes, an insurance product called updates the reference to the Program’s obligations of its policyholders, it could ‘‘Cyber Liability’’ within the general website to the current address. permit an insurer to achieve a double scope of the Other Liability line of Subpart E—Self-Insurance recovery of its losses.18 insurance, which is generally subject to Arrangements; Captives [Reserved] Although the insured loss definition the Program.22 under TRIA does not expressly exclude Treasury continues to reserve Subpart Given that this is a type of E for future additional rules addressing a deductible under a policy for which 23 insurance within a line of insurance the participation of self-insurance the policyholder will be responsible, subject to the Program, and is not such a deductible would not be arrangements and captive insurers in otherwise excluded in any fashion, TRIP. Treasury poses a number of ‘‘covered’’ by the insurer unless the Treasury confirmed in its guidance that policyholder failed to pay it.19 TRIA questions below concerning the such stand-alone cyber liability participation of captive insurers in the bases the Federal share payment upon insurance is subject to the Program, and ‘‘all payments made for insured losses’’ Program, as to which it seeks comments instructed participating insurers (to the from the public. by the insurer.20 Therefore, for purposes extent they were not doing so already) of the Program Trigger and Program to conform to the ‘‘make available’’ and Subpart F—Data Collection Cap, TRIA contemplates an insured loss disclosure requirements of TRIA with There are no proposed changes to definition that is limited to the actual respect to such policies. Since the TRIA Subpart F. losses sustained by the participating compliance periods identified in the insurers. Accordingly, Treasury guidance have now passed, there is no Subpart G—Certification proposes to add a new subsection (3)(iv) need to further modify the Program There are no proposed changes to to Section 50.4(n) to clarify that insured Rules to address the timing of when Subpart G. Treasury poses a number of loss does not include amounts paid by TRIA requirements for such insurance questions below concerning Treasury’s policyholders as part of their retained must be met. certification process under its existing obligations under TRIP-eligible lines Section 50.6—Special Rules for Interim rules, as to which it seeks comments policies subject to the Program. from the public. The proposed change to Section Guidance Safe Harbors Subpart H—Claims Procedures 50.4(w) would incorporate into the The proposed change to Section Program rules the guidance provided by 50.6(b) updates the reference to the Section 50.74—Payment of Federal Treasury in December 2016. That Program’s website to the current address Share of Compensation guidance stated that stand-alone cyber and deletes specific reference to now- The proposed change to Section 50.74 liability insurance is subject to the obsolete prior Interim Guidance. updates the reference to the Program’s Program, unless it is otherwise website to the current address. identified for state reporting purposes as Subpart B—Disclosures as Conditions a type of insurance that is not property for Federal Payment Subpart I—Audit and Investigative and casualty insurance under the Section 50.16—Use of Model Forms Procedures Program. In the guidance, Treasury also The proposed change to Section 50.16 Section 50.83—Adjustment of Civil noted the uncertainty presented in some Monetary Penalty Amount circumstances as to whether cyber updates the reference to the Program’s liability insurance is within the scope of website to the current address. The proposed change to Section 50.83 Subpart C—Mandatory Availability updates the reference to the Program’s 17 See, e.g., TRIA, sec. 103(e)(1)(A) (‘‘The Federal website to the current address. share of compensation under the Program to be paid Section 50.20—General Mandatory by the Secretary for insured losses of an insurer ’’) Availability Requirements Subpart J—Recoupment and Surcharge (Emphasis added.). Procedures 18 The proposed change provides that Id., sec. 103(e)(1)(C) (prohibiting duplicative Section 50.90—Mandatory and compensation where the Federal Government has participating insurers must now comply Discretionary Recoupment through another program already provided with the ‘‘make available’’ requirement compensation for the insured losses in question). The proposed change to Section 50.90 19 Insurance practices may make the insurer through December 31, 2027, as responsible for payment of a policy deductible to distinguished from December 31, 2020, identifies the new dates by which a third party, with the policyholder subject to the given the Program extension provided Treasury must collect mandatory insurer’s claim for reimbursement of the deductible for under the 2019 Reauthorization Act. recoupment amounts under the 2019 amount. By contrast, the policyholder must satisfy Reauthorization Act. a self-insured retention obligation before any obligation on the part of the insurer is triggered 21 TRIA, sec. 102(11); see Cyber Guidance, 81 FR Subpart K—Federal Cause of Action; under the policy. Thus, this issue would be limited 95312–13. Approval of Settlements to policyholder deductibles and not self-insured 22 Cyber Guidance, 81 FR 95313; see NAIC, retentions, which could not be considered Uniform Property & Casualty Product Coding Section 50.103—Procedure for ‘‘property and casualty insurance issued by an Matrix (effective Jan. 1, 2020), 10, https:// Requesting Approval of Proposed insurer.’’ If an insurer paid a deductible that was www.naic.org/documents/industry_pcm_p_c_ not reimbursed by the policyholder (because of 2020.pdf. Settlements financial responsibility issues), Treasury could 23 In one place in the Cyber Guidance, stand- The proposed change to Section view such a payment as being within the definition alone cyber liability insurance was identified as, for of ‘‘insured loss’’ under ‘‘property and casualty reporting purposes, a sub-line of insurance within 50.103 updates the reference to the insurance issued by an insurer.’’ Other Liability, which is not the case, and the Program’s website to the current 20 TRIA, sec. 103(b)(5)(B)(ii). proposed rule does not incorporate such language. address.

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Subpart L—Cap on Annual Liability (a) How such a procedure could be recommends that Treasury provide There are no proposed changes to established consistent with TRIA; further transparency concerning the Subpart L. (b) What types of parties should be participation of captive insurers in the permitted to make such a petition to Program.28 We request comment on: IV. Request for Comments Concerning Treasury; and (1) With respect to captive insurers: Certification Process and Captive (c) The information that a prospective (a) Whether, in light of the size and Insurers petitioner should be required to submit operation of captive insurers and the FIO periodically issues reports and to inform Treasury that the certification current structure of TRIP, captive proposes regulations to address and requirements of TRIA have been met, insurers are likely to obtain larger improve the efficiency and effectiveness including but not limited to whether payments under the Program in a large of the administration of the Program. property and casualty insurance losses loss event as compared to traditional FIO has also received have met the $5 million certification insurers that assume similar risk recommendations from the ACRSM on threshold. exposures; (b) Whether there are administrative certain issues. In its May 2020 report, The ACRSM also recommended that rule changes that could be made to the the ACRSM made a number of Treasury consider whether the existing Program rules and administration for suggestions concerning the certification time periods and notification captive insurers that would result in process under TRIA, including matters requirements under the certification recovery percentages for captive concerning the treatment of cyber process should be modified. Treasury insurers that may be more consistent incidents, a potential petitioning invites comment on this proposal, while with those indicated in modeled loss procedure for a certification process, noting that it has previously analyses for other industry segments; and further adjustment of the existing acknowledged the difficulty of using (c) Whether the Program should timeframes in the Program rules prescriptive time periods or attribute some amount of captive parent associated with the certification requirements in connection with the 26 revenues to captive insurers for TRIP process.24 Treasury invites the public to certification process. We request deductible calculation purposes; and comment on the following issues: comment on: (a) How different time periods or (d) Whether changes to the Program Program’s Treatment of Cyber Events notification requirements under the structure for captive insurers could Outside the United States certification process could affect the prevent policyholders (who may be unable to obtain terrorism risk TRIA is generally limited (subject to administration of the Program and the insurance in the conventional market certain defined exceptions) to acts of terrorism risk insurance market; and for a reasonable price) from obtaining terrorism that ‘‘result[ ] in damage (b) How any modifications to the such insurance from captive insurers. within the United States.’’ 25 The existing time periods or notification requirements would be consistent with (2) Whether FIO should make public ACRSM has asked that FIO evaluate financial information regarding whether ‘‘cyber incidents that occur the flexibility that Treasury has previously indicated it needs for participating captive insurers, taking outside the U.S. with damage outside into account whether this additional the U.S., but with impacts both inside certification under various circumstances. transparency would be beneficial to the and outside the U.S.’’ could be eligible terrorism risk insurance market and the for certification under the Program. We Captive Insurers administration of TRIP. We request request comment on: comment on: (a) Whether cyber events outside the Prior Treasury studies concerning the effectiveness of the Program have noted, (a) The information that should and United States can inflict cyber-related should not be made available to the losses within the United States that in connection with analysis of the results of modeled loss questions posed public; qualify as ‘‘damage within the United (b) The reasons for making (or not States’’ for purposes of TRIA; by Treasury, that captive insurers have been projected to receive benefits in making) this type of information (b) To the extent such cyber events available to the public; can be said to inflict losses that qualify connection with those hypothetical loss events that are proportionally larger (c) Whether the publication of as ‘‘damage within the United States,’’ information on an individual company whether such losses may also be subject than those received by other insurance industry segments.27 In addition, the basis is consistent with the provisions of to compensation under the terrorism TRIA stating that Treasury should only risk insurance pools or arrangements of ACRSM Report provides an example of how losses of a similar size could be obtain information from participating other jurisdictions; and insurers in an anonymized fashion, and (c) How Treasury could evaluate such reimbursed for such insurers as compared with conventional insurers otherwise providing for the losses representing ‘‘damage within the confidentiality of the information United States’’ from a certification that have a much larger direct earned 29 premium base from which Program submitted; and standpoint, particularly if the causative (d) How making information publicly deductibles are calculated, and cyber events in question take place available concerning captive insurers outside the United States. 27 See Treasury, Report on the Effectiveness of the could address, if at all, the issues Certification Process Terrorism Risk Insurance Program (June 2018), 47– presented by potentially 53, https://home.treasury.gov/system/files/311/ disproportionate recoveries by captive The ACRSM recommended that 2018_TRIP_Effectiveness_Report.pdf; Treasury, insurers under TRIP, or otherwise assist Treasury establish a petitioning Report on the Effectiveness of the Terrorism Risk FIO in the administration of the procedure under the Program rules that Insurance Program (June 2020), 49–55, https:// home.treasury.gov/system/files/311/2020-TRIP- Program. would permit third parties to request Effectiveness-Report.pdf. Based upon the (3) Any other issues regarding the that Treasury commence a certification information available to FIO, this is likely because participation of captive insurers in process under its rules. We request although captive insurers may insure large TRIP. comment on: exposures of their policyholders, they tend to have smaller deductibles under the Program because of the small amount of their overall TRIP-eligible lines 28 ACRSM Report, 6, 19–20. 24 ACRSM Report, 6, 27. premiums. 29 TRIA, sec. 104(h)(3), (5).

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V. Procedural Requirements Program Reauthorization Act of 2019, financial-institutions-and-fiscal-service/ Executive Order 12866, ‘‘Regulatory Public Law 116–94, 133 Stat. 2534. federal-insurance-office/terrorism-risk- Planning and Review.’’ This proposed * * * * * insurance-program. ■ rule is not a significant regulatory action ■ 3. Amend § 50.4 by revising 5. Amend § 50.16 by revising for purposes of Executive Order 12866, paragraphs (b)(2)(ii), (n)(3), (w)(1) and paragraph (c) as follows: ‘‘Regulatory Planning and Review,’’ and (w)(2) as follows: § 50.16 Use of model forms. thus has not been reviewed by the § 50.4 Definitions. * * * * * Office of Management and Budget (c) Definitions. For purposes of this (OMB). * * * * * (b) * * * section, references to NAIC Model Regulatory Flexibility Act. Under the Disclosure Form No. 1 and NAIC Model Regulatory Flexibility Act, 5 U.S.C. 601 (2) * * * (ii) Property and casualty insurance Disclosure Form No. 2 refer to such et seq., Treasury must consider whether forms as revised in March 2020, or as this rule, if promulgated, will have a losses resulting from the act, in the aggregate, do not exceed $5,000,000. For subsequently modified by the NAIC, ‘‘significant economic impact on a provided that Treasury has stated that substantial number of small entities.’’ 5 these purposes, property and casualty insurance losses include any amounts usage by insurers of any such U.S.C. 605(b). In this case, Treasury subsequently modified forms is deemed certifies that this proposed rule, if subject to payment under a property and casualty insurance policy, even if the to satisfy the disclosure requirements of adopted, would not have a significant the Act and that the insurer uses the economic impact on a substantial policyholder declined to obtain terrorism risk insurance under the most current forms, so approved by number of small entities, because the Treasury, that are available at the time changes it proposes are largely policy or is otherwise ultimately responsible for the payment. of disclosure. These forms may be found ministerial and are not expected to on the Treasury website at https:// * * * * * impact small entities more than the home.treasury.gov/policy-issues/ (n) * * * existing Program regulations. financial-markets-financial-institutions- Paperwork Reduction Act. No (3) * * * and-fiscal-service/federal-insurance- collection of information is addressed in (iii) Payments by an insurer in excess office/terrorism-risk-insurance-program. this proposed rule. Treasury continues of policy limits; or ■ 6. Amend § 50.20 by revising to submit to OMB for review, under the (iv) Amounts paid by a policyholder paragraphs (b) and (c) as follows: requirements of the Paperwork as required under the terms and Reduction Act, 44 U.S.C. 3507(d), conditions of property and casualty § 50.20 General mandatory availability material changes to existing collection insurance issued by an insurer. requirements. requirements. * * * * * * * * * * (b) Compliance through 2027. Under List of Subjects in 31 CFR Part 50 (w) * * * (1) Means commercial lines within section 108(a) of the Act, an insurer Insurance, Terrorism. only the following lines of insurance must comply with paragraphs (a)(1) and For the reasons stated in the from the NAIC’s Exhibit of Premiums (2) of this section through calendar year preamble, the Department of the and Losses (commonly known as 2027. Treasury proposes to amend 31 CFR Statutory Page 14): Line 1—Fire; Line (c) Beyond 2027. Notwithstanding part 50 as follows: 2.1—Allied Lines; Line 5.1— paragraph (a)(2) of this section and Commercial Multiple Peril (non-liability § 50.22(a), property and casualty PART 50—TERRORISM RISK portion); Line 5.2—Commercial insurance coverage for insured losses INSURANCE PROGRAM Multiple Peril (liability portion); Line does not have to be made available beyond December 31, 2027, even if the ■ 1. The authority citation for part 50 is 8—Ocean Marine; Line 9—Inland policy period of insurance coverage for revised to read as follows: Marine; Line 16—Workers’ Compensation; Line 17—Other Liability; losses from events other than acts of Authority: 5 U.S.C. 301; 31 U.S.C. 321; Line 18—Products Liability; Line 22— terrorism extends beyond that date. Title I, Pub. L. 107–297, 116 Stat. 2322, as Aircraft (all perils); and Line 27—Boiler ■ 7. Amend § 50.30 by revising amended by Pub. L. 109–144, 119 Stat. 2660, paragraph (c) as follows: Pub. L. 110–160, 121 Stat. 1839, Pub. L. 114– and Machinery; a stand-alone cyber 1, 129 Stat. 3, Pub. L. 116–94, 133 Stat. 2534 liability policy falling within Line 17— § 50.30 General participation (15 U.S.C. 6701 note), Pub. L. 114–74, 129 Other Liability, is property and casualty requirements. Stat. 601, Title VII (28 U.S.C. 2461 note). insurance, so long as it is not otherwise * * * * * ■ 2. Amend § 50.1 by revising paragraph identified for state reporting purposes as (c) Identification. Treasury maintains (a) as follows: a policy that is not property and a list of state residual market insurance casualty insurance, such as professional entities and state workers’ § 50.1 Authority, purpose, and scope. liability insurance. compensation funds at https:// (a) Authority. This part is issued (2) Property and casualty insurance home.treasury.gov/policy-issues/ pursuant to authority in Title I of the does not include: financial-markets-financial-institutions- Terrorism Risk Insurance Act of 2002, * * * * * and-fiscal-service/federal-insurance- Public Law 107–297, 116 Stat. 2322, as ■ 4. Amend § 50.6 by revising paragraph office/terrorism-risk-insurance-program. amended by the Terrorism Risk (b) as follows: Procedures for providing comments and Insurance Extension Act of 2005, Public updates to that list are posted with the Law 109–144, 119 Stat. 2660, the § 50.6 Special rules for Interim Guidance safe harbors. list. Terrorism Risk Insurance Program ■ 8. Amend § 50.74 by revising Reauthorization Act of 2007, Public Law * * * * * paragraph (b) as follows: 110–160, 121 Stat. 1839, the Terrorism (b) For purposes of this section, any Risk Insurance Program Reauthorization Interim Guidance will be posted by § 50.74 Payment of Federal share of Act of 2015, Public Law 114–1, 129 Stat. Treasury at https://home.treasury.gov/ compensation. 3, and the Terrorism Risk Insurance policy-issues/financial-markets- * * * * *

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(b) Payment process. Payment of the percent of any required amounts by Electronic Filing of Documents in Federal share of compensation for September 30, 2024, and the remainder Rulemaking Proceedings, 63 FR 24121 insured losses will be made to the by September 30, 2029; and (1998). insurer designated on the Notice of (3) For any act of terrorism that occurs • Electronic Filers: Comments may be Deductible Erosion required by § 50.72. on or after January 1, 2024, the Secretary filed electronically using the internet by An insurer that requests payment of the shall collect all required amounts by accessing the ECFS: http://apps.fcc.gov/ Federal share of compensation for September 30, 2029. ecfs/. insured losses must receive payment ■ 11. Amend § 50.103 by revising • Paper Filers: Parties who choose to through electronic funds transfer. The paragraph (a) as follows: file by paper must file an original and insurer must establish either an account one copy of each filing. § 50.103 Procedure for requesting Filings can be sent by commercial for reimbursement as described in approval of proposed settlements. paragraph (c) of this section (if the overnight courier, or by first-class or insurer only seeks reimbursement) or a (a) Submission of notice. Insurers overnight U.S. Postal Service mail. All segregated account as described in must request advance approval of a filings must be addressed to the paragraph (d) of this section (if the proposed settlement by submitting a Commission’s Secretary, Office of the insurer seeks advance payments or a notice of the proposed settlement and Secretary, Federal Communications combination of advance payments and other required information in writing to Commission. • Commercial overnight mail (other reimbursement). Applicable procedures the Terrorism Risk Insurance Program than U.S. Postal Service Express Mail will be posted at https:// Office or its designated representative. and Priority Mail) must be sent to 9050 home.treasury.gov/policy-issues/ The address where notices are to be Junction Drive, Annapolis Junction, MD financial-markets-financial-institutions- submitted will be available at https:// home.treasury.gov/policy-issues/ 20701. and-fiscal-service/federal-insurance- • U.S. Postal Service first-class, office/terrorism-risk-insurance-program financial-markets-financial-institutions- and-fiscal-service/federal-insurance- Express, and Priority mail must be or otherwise will be made publicly addressed to 445 12th Street SW, available. office/terrorism-risk-insurance-program following any certification of an act of Washington DC 20554. • * * * * * terrorism pursuant to section 102(1) of Effective March 19, 2020, and until ■ 9. Amend § 50.83 by revising the Act. further notice, the Commission no paragraph (b) as follows: longer accepts any hand or messenger * * * * * delivered filings. This is a temporary § 50.83 Adjustment of civil monetary Dated: October 30, 2020. penalty amount. measure taken to help protect the health Jonathan Greenstein, and safety of individuals, and to * * * * * mitigate the transmission of COVID–19. (b) Annual adjustment. The maximum Deputy Assistant Secretary for Financial Institutions Policy. See FCC Announces Closure of FCC penalty amount that may be assessed Headquarters Open Window and under this section will be adjusted in [FR Doc. 2020–24522 Filed 11–9–20; 8:45 am] Change in Hand-Delivery Policy, Public accordance with the Federal Civil BILLING CODE P Notice, DA 20–304 (March 19, 2020). Penalties Inflation Adjustment Act https://www.fcc.gov/document/fcc- Improvements Act of 2015, 28 U.S.C. closes-headquarters-open-window-and- 2461 note, by January 15 of each year FEDERAL COMMUNICATIONS COMMISSION changes-hand-delivery-policy and the updated amount will be posted • During the time the Commission’s in the Federal Register and on the 47 CFR Part 1 building is closed to the general public Treasury website at https:// and until further notice, if more than home.treasury.gov/policy-issues/ [MD Docket Ns. 20–105; FCC 20–120; FRS one docket or rulemaking number 17210] financial-markets-financial-institutions- appears in the caption of a proceeding, and-fiscal-service/federal-insurance- Assessment and Collection of paper filers need not submit two office/terrorism-risk-insurance-program. additional copies for each additional ■ Regulatory Fees for Fiscal Year 2020 10. Amend § 50.90 by revising docket or rulemaking number; an paragraph (c) as follows: AGENCY: Federal Communications original and one copy are sufficient. § 50.90 Mandatory and discretionary Commission. FOR FURTHER INFORMATION CONTACT: recoupment. ACTION: Proposed rule. Roland Helvajian, Office of Managing * * * * * Director at (202) 418–0444. SUMMARY: In this document, the Federal (c) If the Secretary imposes a Federal SUPPLEMENTARY INFORMATION: This is a Communications Commission terrorism policy surcharge as provided summary of the Commission’s Further (Commission) seeks comment on several in paragraph (a) of this section, then the Notice of Proposed Rulemaking regulatory fee issues impacting required amounts, based upon the ((Further Notice)), FCC 20–120, MD international services. extent to which payments for the Docket No. 20–105, adopted and Federal share of compensation have DATES: Submit comments on or before released on August 31, 2020. The full been made by the collection deadlines December 10, 2020; and reply comments text of this document is available for in section 103(e)(7)(E) of the Act, shall December 28, 2020. public inspection on the Commission’s be collected in accordance with such ADDRESSES: Pursuant to §§ 1.415 and website at https://docs.fcc.gov/public/ deadlines: 1.419 of the Commission’s rules, 47 CFR attachments/FCC-20-120A1.pdf. This (1) For any act of terrorism that occurs 1.415, 1.419, interested parties may file document is available in alternative on or before December 31, 2022, the comments and reply comments formats (computer diskette, large print, Secretary shall collect all required identified by MD Docket No. 20–105, by audio record, and braille). Persons with amounts by September 30, 2024; any of the following methods below. disabilities who need documents in (2) For any act of terrorism that occurs Comments and reply comments may be these formats may contact the FCC by between January 1 and December 31, filed using the Commission’s Electronic email: [email protected] or phone: 202– 2023, the Secretary shall collect 35 Comment Filing System (ECFS). See 418–0530 or TTY: 202–418–0432.

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I. Procedural Matters contain new or modified information have fewer applicants and less complex 1. Ex Parte Information. This collection requirements subject to the issues, relative to the FSS systems. In proceeding shall be treated as a ‘‘permit- Paperwork Reduction Act of 1995 addition, NGSO rulemakings from but-disclose’’ proceeding in accordance (PRA), Public Law 104–13. In addition, 2017–2019 primarily benefited NGSO with the Commission’s ex parte rules. therefore, it does not contain any new FSS systems and the Commission has Persons making ex parte presentations or modified information collection not updated the rules for MSS or remote must file a copy of any written burden for small business concerns with sensing during that time period. Myriota presentation or a memorandum fewer than 25 employees, pursuant to argues that the Commission’s rules for summarizing any oral presentation the Small Business Paperwork Relief NGSO FSS systems generally reflect a within two business days after the Act of 2002, Public Law 107–198, see 44 level of complexity not present for other presentation (unless a different deadline U.S.C. 3506(c)(4). NGSO systems due to the extremely applicable to the Sunshine period II. Notice Of Proposed Rulemaking large constellations and complex applies). Persons making oral ex parte sharing and coordination requirements. 4. In this Further Notice of Proposed We seek comment on this proposal. presentations are reminded that Rulemaking, we invite comment on four memoranda summarizing the 7. Finally, AWS suggests that we proposals from commenters in this assess a nominal fee for NGSO systems presentation must (1) list all persons proceeding to differentiate regulatory attending or otherwise participating in with five or fewer U.S. licensed earth fees for different types of NGSO systems stations for TT&C and non-domestic the meeting at which the ex parte in future years. First, Kineis notes the presentation was made, and (2) data downlink purposes. AWS proposes Commission has already concluded that that the regulatory fee would be summarize all data presented and a separate fee for small satellites would arguments made during the assessed on a per earth station basis at be appropriate; the NGSO systems vary the same rate as earth station licenses. presentation. If the presentation dramatically in size, number of space We seek comment on this proposal. consisted in whole or in part of the stations, spectrum required, and 8. The Commission considers the presentation of data or arguments services offered; the proposed fee already reflected in the presenter’s increase for NGSO systems is adoption of a new fee category or a written comments, memoranda, or other substantial; and the Commission has not change in fee categories only when it filings in the proceeding, the presenter addressed this issue in many years. develops sufficient basis for making the may provide citations to such data or Kineis therefore proposes a formula to change. Commenters should address arguments in his or her prior comments, determine NGSO regulatory fees: × whether the proposal are in accord with memoranda, or other filings (specifying (number of operating satellites) the requirements of section 9. the relevant page and/or paragraph multiplied by y (total transmit Commenters should also address numbers where such data or arguments bandwidth) = index value. Kineis whether such proposals serve the goal of can be found) in lieu of summarizing suggests fee tiers based on groupings of ensuring that our actions in assessing them in the memorandum. Documents index values and basing the difference regulatory fees are fair, administrable, shown or given to Commission staff in fees on the average index value for and sustainable. during ex parte meetings are deemed to each tier. We seek comment on this 9. It has not been the experience of be written ex parte presentations and proposal. Commission staff reviewing satellite must be filed consistent with § 1.1206(b) 5. Second, Eutelsat contends that the applications that certain broad of the Commission’s rules. In fees assessed on NGSO systems should categories of NGSO systems require proceedings governed by § 1.49(f) of the be separated into small and large NGSO substantially more time to process than Commission’s rules or for which the systems, based on the number of others under the current rules. A Commission has made available a satellites in the system. According to smaller NGSO system in bands shared method of electronic filing, written ex Eutelsat, large and complex NGSO with other services may require greater parte presentations and memoranda systems require more staff time to staff efforts to approve than a larger summarizing oral ex parte oversee and receive greater benefits NGSO system in bands without presentations, and all attachments from the Commission. Smaller NGSO coordination difficulties. NGSO FSS thereto, must be filed through the systems in more established bands, systems, while occupying substantial electronic comment filing system Eutelsat suggests, represent a smaller staff time to review in the past few available for that proceeding, and must burden on Commission staff because years, have also benefited from be filed in their native format (e.g., .doc, they have greater sharing capabilities streamlining rulemakings that have .xml, .ppt, searchable .pdf). Participants and operate in less congested and less eliminated some of the most in this proceeding should familiarize contested frequency bands. We seek cumbersome technical demonstrations, themselves with the Commission’s ex comment on this proposal. such as equivalent power-flux density parte rules. 6. Third, Myriota proposes we divide showings. In contrast, systems operating 2. Initial Regulatory Flexibility NGSO systems into three categories: in services that are allegedly easier to Analysis. An initial regulatory flexibility fixed-satellite service (FSS); mobile- license, such as EESS, have involved analysis (IRFA) is contained in this satellite service (MSS); and remote complicated, multi-year coordination, summary. Comments to the IRFA must sensing, Earth-exploration satellite phased deployments, multiple be identified as responses to the IRFA service (EESS), and other NGSO application amendments, and frequent and filed by the deadlines for comments systems. Myriota explains that the grants in part, with the associated staff on the Notice of Proposed Rulemaking. Commission has spent multiple years on investment. Nonetheless, we recognize The Commission will send a copy of the the NGSO FSS processing round for that the Commission has created the Notice of Proposed Rulemaking, more than ten applicants and some regulatory category for small satellites, including the IRFA, to the Chief applicants seeking constellations of tens in part, to charge different fees for Counsel for Advocacy of the Small of thousands of satellites. Myriota certain systems. Accordingly, we invite Business Administration. contends that other types of NGSO comment on the proposals above 3. Initial Paperwork Reduction Act of systems, such as MSS or EESS systems, regarding other categories of NGSO 1995 Analysis. This document does not require fewer resources because they systems for FY 2021.

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III. Initial Regulatory Flexibility C. Description and Estimate of the 12,184 Special purpose governments Analysis Number of Small Entities To Which the (independent school districts and Proposed Rules Will Apply special districts) with populations of 1. As required by the Regulatory 4. The RFA directs agencies to less than 50,000. The 2012 U.S. Census Flexibility Act of 1980, as amended Bureau data for most types of (RFA), the Commission prepared this provide a description of, and where feasible, an estimate of the number of governments in the local government Initial Regulatory Flexibility Analysis category show that the majority of these (IRFA) of the possible significant small entities that may be affected by the proposed rules and policies, if governments have populations of less economic impact on small entities by than 50,000. Based on this data we the policies and rules proposed in the adopted. The RFA generally defines the term ‘‘small entity’’ as having the same estimate that at least 49,316 local Further Notice of Proposed Rulemaking. government jurisdictions fall in the meaning as the terms ‘‘small business,’’ Written comments are requested on this category of ‘‘small governmental ‘‘small organization,’’ and ‘‘small IRFA. Comments must be identified as jurisdictions.’’ Governmental entities governmental jurisdiction.’’ In addition, responses to the IRFA and must be filed are, however, exempt from application the term ‘‘small business’’ has the same by the deadline for comments on this fees. Further Notice. The Commission will meaning as the term ‘‘small business 8. All Other Telecommunications. send a copy of the Notice, including the concern’’ under the Small Business Act. ‘‘All Other Telecommunications’’ is IRFA, to the Chief Counsel for Advocacy A ‘‘small business concern’’ is one defined as follows: This U.S. industry is of the Small Business Administration which: (1) Is independently owned and comprised of establishments that are (SBA). In addition, the Further Notice operated; (2) is not dominant in its field primarily engaged in providing and IRFA (or summaries thereof) will be of operation; and (3) satisfies any specialized telecommunications published in the Federal Register. additional criteria established by the services, such as satellite tracking, SBA. communications telemetry, and radar A. Need for, and Objectives of, the 5. Small Businesses, Small station operation. This industry also Proposed Rules Organizations, Small Governmental includes establishments primarily Jurisdictions. Our actions, over time, engaged in providing satellite terminal 2. The Further Notice seeks comment may affect small entities that are not on a regulatory fee issue raised by stations and associated facilities easily categorized at present. We connected with one or more terrestrial commenters for fiscal year (FY) 2021. In therefore describe here, at the outset, the Further Notice, the Commission systems and capable of transmitting three broad groups of small entities that telecommunications to, and receiving seeks comment on four proposals to could be directly affected herein. First, differentiate regulatory fees for different telecommunications from, satellite while there are industry specific size systems. Establishments providing types of nongeostationary orbit satellite standards for small businesses that are (NGSO) systems. The Commission seeks internet services or Voice over internet used in the regulatory flexibility Protocol (VoIP) services via client- comment on a proposed formula to analysis, according to data from the determine NGSO regulatory fees: × supplied telecommunications SBA’s Office of Advocacy, in general a connections are also included in this (number of operating satellites) small business is an independent multiplied by y (total transmit industry. The SBA has developed a business having fewer than 500 small business size standard for ‘‘All bandwidth) = index value. The employees. These types of small Commission also seeks comment on Other Telecommunications,’’ which businesses represent 99.9% of all consists of all such firms with gross separating large and small NGSO businesses in the United States which systems into different categories, based annual receipts of $35 million or less. translates to 28.8 million businesses. For this category, census data for 2012 on the number of satellites in each 6. Next, the type of small entity system. In addition, the Commission show that there were 1,442 firms that described as a ‘‘small organization’’ is operated for the entire year. Of these seeks comment on a proposal to divide generally ‘‘any not-for-profit enterprise NGSO systems into categories: Fixed- firms, a total of 1,400 had gross annual which is independently owned and receipts of less than $25 million. Thus, satellite service (FSS); mobile-satellite operated and is not dominant in its service (MSS); and remote sensing, a majority of ‘‘All Other field.’’ Nationwide, as of August 2016, Telecommunications’’ firms potentially Earth-exploration satellite service there were approximately 356,494 small (EESS), and other NGSO systems. affected by the proposals in the Further organizations based on registration and Notice can be considered small. Finally, the Commission seeks comment tax data filed by nonprofits with the on assessing a nominal fee for NGSO Internal Revenue Service (IRS). D. Description of Projected Reporting, systems with five or fewer U.S. licensed 7. Finally, the small entity described Recordkeeping and Other Compliance earth stations for telemetry, tracking, as a ‘‘small governmental jurisdiction’’ Requirements for Small Entities and command (TT&C) and non- is defined generally as ‘‘governments of 9. This Further Notice does not domestic data downlink purposes, on a cities, counties, towns, townships, propose any changes to the per earth station basis at the same rate villages, school districts, or special Commission’s current information as earth station licenses. The districts, with a population of less than collection, reporting, recordkeeping, or Commission seeks comment on these fifty thousand.’’ U.S. Census Bureau compliance requirements. four proposals for different regulatory data from the 2012 Census of fee categories of NGSO systems for FY Governments indicate that there were E. Steps Taken To Minimize Significant 2021. 90,056 local governmental jurisdictions Economic Impact on Small Entities, and Significant Alternatives Considered B. Legal Basis consisting of general purpose governments and special purpose 10. The RFA requires an agency to 3. This action, including publication governments in the United States. Of describe any significant alternatives that of proposed rules, is authorized under this number there were 37, 132 General it has considered in reaching its sections (4)(i) and (j), 159, and 303(r) of purpose governments (county, approach, which may include the the Communications Act of 1934, as municipal and town or township) with following four alternatives, among amended. populations of less than 50,000 and others: (1) The establishment of

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differing compliance or reporting implementation of the Buy Indian Act, authorizes IHS to use the Buy Indian requirements or timetables that take into which provides IHS with authority to Act (25 U.S.C. 47) to carry out its health account the resources available to small set-aside procurement contracts for care responsibilities. IHS authority to entities; (2) the clarification, Indian-owned and controlled use the Buy Indian Act is further consolidation, or simplification of businesses. governed by 25 U.S.C.1633. This rule is compliance or reporting requirements DATES: Send your comments on or proposed to describe uniform under the rule for small entities; (3) the before January 11, 2021. administration procedures that the IHS use of performance, rather than design, ADDRESSES: You may send comments will use in all of its locations to standards; and (4) an exemption from identified by docket number January 11, encourage procurement relationships coverage of the rule, or any part thereof, 2021 using any of the following with Indian labor and industry in the for small entities. methods: execution of the Buy Indian Act. IHS’ 11. The Further Notice seeks comment Evonne Bennett, Acting Director, current rules are codified at HHSAR, 48 on four proposals for NGSO regulatory Division of Regulatory Policy CFR part 326, subpart 326.6. fee categories for FY 2021. The Coordination (DRPC), Office of II. Statutory Authority Commission will release a Notice of Management Services (OMS), Indian The Transfer Act authorizes the Proposed Rulemaking for all regulatory Health Service, 5600 Fishers Lane, Mail Secretary of HHS to ‘‘make such other fees for FY 2021; the Further Notice will Stop 09E70, Rockville, MD 20857. give parties an opportunity to file Tiffani Redding, Director, Office of regulations as he deems desirable to comments prior to the annual Notice of Recipient Integrity Coordination (ORIC), carry out the provisions of the [Transfer Proposed Rulemaking. If any of these Department of Health and Human Act]’’. 42 U.S.C. 2003. The Secretary’s proposals are adopted, it may reduce the Services, Office of the Assistant authority to carry out functions under regulatory fee burden on some satellite Secretary for Financial Resources the Transfer Act has been vested in the entities. In addition, the section 9(e)(2) (ASFR), Room 533H, Hubert H. Director of the Indian Health Service annual regulatory fee exemption of Humphrey Building, 200 Independence under 25 U.S.C. 1661. Because of these $1,000 will reduce burdens on small Avenue SW, Washington, DC 20201. authorities, use of the Buy Indian Act is entities with annual regulatory fees that reserved to IHS and is not available for FOR FURTHER INFORMATION CONTACT: For total $1,000 or less. use by any other HHS component. IHS technical questions concerning this authority to use the Buy Indian Act is F. Federal Rules That May Duplicate, proposed rule contact: further governed by 25 U.S.C.1633, Evonne Bennett, Acting Director, Overlap, or Conflict With the Proposed which directs the Secretary to issue Division of Regulatory Policy Rules regulations governing the application of Coordination (DRPC), Office of 12. None. the Buy Indian Act to construction Management Services, Indian Health activities. IV. Ordering Clauses Service, 301–443–4750, 13. Accordingly, it is ordered that, [email protected]; or Santiago III. Overview of Proposed Rule pursuant to section 9(a), (b), (e), (f), and Almaraz, Acting Director Office of This rule supplements the Federal (g) of the Communications Act of 1934, Management Services, Indian Health Acquisition Regulations (FAR) and the as amended, 47 U.S.C. 159(a), (b), (e), Service, 301–443–4872, Health and Human Services Acquisition (f), and (g), this Notice of Proposed [email protected]. Regulations (HHSAR). This rule Rulemaking is hereby adopted. SUPPLEMENTARY INFORMATION: formalizes an administrative procedure Federal Communications Commission. I. Background for all IHS acquisition activities and Marlene Dortch, locations to ensure uniformity for offers The Indian Health Service (IHS) is an submitted by Indian labor and industry Secretary. agency of the United States Department under solicitations set aside under the [FR Doc. 2020–24503 Filed 11–9–20; 8:45 am] of Health and Human Services (HHS) Buy Indian Act and this part. BILLING CODE 6712–01–P whose principal mission is to provide health care to American Indians and A. Numbering System Alaska Natives. 25 U.S.C. 1661. IHS’ This rule replaces the HHSAR, DEPARTMENT OF HEALTH AND authority to provide health care services Subpart 326.6—Acquisitions Under the HUMAN SERVICES to the American Indian and Alaska Buy Indian Act. Native people derives from the Snyder Indian Health Service Act of 1921, 25 U.S.C. 13, a broad, B. How This Rule Fits With the Indian general authority to ‘‘expend such Health Service and Department 48 CFR Parts 326 and 352 moneys as Congress may from time to Acquisition Regulations [Docket No. OI–2012–0005] time appropriate, for the benefit, care, This rule proposes to amend the and assistance of the Indians,’’ for, HHSAR, which is maintained by RIN 0917–AA18 among other things, the ‘‘relief of Assistant Secretary for Financial distress and conservation of health.’’ 25 Resources (ASFR) pursuant to 48 CFR Acquisition Regulations; Buy Indian U.S.C. 13. In 1954, Congress transferred 301.103. ASFR is responsible for Act; Procedures for Contracting this responsibility and other health care developing and preparing for issuance AGENCY: Indian Health Service (IHS), ‘‘functions, responsibilities, authorities, all acquisition regulatory material to be Department of Health and Human and duties of the Department of the included in the HHSAR. Accordingly, Services (HHS). Interior’’ (including the Snyder Act) to the rule is being proposed through ACTION: Notice of Proposed Rulemaking the Department of Health, Education, coordination between IHS and ASFR. (NPRM). and Welfare, the predecessor of the The rule is intended to establish Buy Department of Health and Human Indian Act acquisition policies and SUMMARY: The United States Department Services (‘‘HHS’’). See Public Law 83– procedures for IHS that are consistent of Health and Human Services (HHS) is 568, 68 Stat. 674 (1954) (codified at 42 with rules proposed and/or adopted by proposing to issue regulations guiding U.S.C. 2001 et seq.) The Transfer Act the Department of the Interior.

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IV. Tribal Consultation Indian Health Care Improvement Act, in Because this rule is being promulgated the Federal Register not less than sixty in part based on the Indian Health Care Under 25 U.S.C. 1672, IHS must days prior to the effective date of such Improvement Act, IHS will be hosting consult with Indian tribes and publish, revision or amendment in order to tribal consultation meetings addressing any proposed revision or amendment of provide adequate notice to, and receive this rule on the following dates at these any regulation promulgated under the comments from, other interested parties. locations:

Time Date (local time zone) Location

November 9, 2020 ...... 3:00–4:30 p.m. EST ...... 1–888–391–3141, Participant Code: 8680097. November 16, 2020 ...... 3:00–4:30 p.m. EST ...... 1–888–391–3141, Participant Code: 8680097.

Tribal leader letters announcing these prices for consumers, individual its government-to-government consultation meetings will be industries, Federal, State, or local relationship with Indian tribes through distributed to provide advance notice of government agencies, or geographic a commitment to consultation with these consultations. regions. This proposed rule does not Indian tribes and recognition of their have significant adverse effects on right to self-governance and tribal V. Required Determinations competition, employment, investment, sovereignty. We have evaluated this rule 1. Regulatory Planning and Review productivity, innovation, or the ability under the Department and Agency (Executive Orders 12866 and 13563). of U.S.-based enterprises to compete consultation policies and under the Executive Order (E.O.) 12866 provides with foreign-based enterprises. criteria in E.O. 13175 and have that the Office of Information and 4. Unfunded Mandates Reform Act. determined there may be substantial Regulatory Affairs (OIRA) will review This proposed rule does not impose an direct effects on federally recognized all significant rules. OIRA has unfunded mandate on State, local, or Indian Tribes that will result from this determined that this proposed rule is tribal governments or the private sector rulemaking. In addition, we note that 25 not significant. Executive Order 13563 of more than $100 million per year. The U.S.C. 1672 expressly directs reaffirms the principles of E.O. 12866 rule does not have a significant or consultation prior to amendment of the while calling for improvements in the unique effect on State, local, or tribal rule. HHS will hold meetings with the nation’s regulatory system to promote governments, or the private sector nor Tribes as stated in the Background predictability, to reduce uncertainty, does the rule impose requirements on section of this preamble. and to use the best, most innovative, State, local, or tribal governments. A 9. Paperwork Reduction Act, 44 and least burdensome tools for statement containing the information U.S.C. 3501, et seq. This proposed rule achieving regulatory ends. The required by the Unfunded Mandates requires offerors to certify whether they Executive Order directs agencies to Reform Act (2 U.S.C. 1531 et seq.) is not met the definition of an ‘‘Indian consider regulatory approaches that required. Economic Enterprise’’ and to provide reduce burdens and maintain flexibility 5. Takings (E.O. 12630). This the name of the federally recognized and freedom of choice for the public, proposed rule does not affect a taking of Indian Tribe or Alaska Native where these approaches are relevant, private property or otherwise have Corporation with which they are feasible, and consistent with regulatory taking implications under Executive affiliated. These statements are objectives. E.O. 13563 emphasizes Order 12630. A takings implication considered simple representations that further that regulations must be based assessment is not required. an offeror submitted to support its claim on the best available science and that 6. Federalism (E.O. 13132). Under the for eligibility to participate in contract the rulemaking process must allow for criteria in section 1 of E.O. 13132, this awards under the authority of the Buy public participation and an open proposed rule does not have sufficient Indian Act (25 U.S.C. 47, as amended). exchange of ideas. We have developed federalism implications to warrant the Because these statements are a simple this rule in a manner consistent with preparation of a federalism summary certification or acknowledgment related these requirements. impact statement. This rule would not to a transaction, they do not qualify as 2. Regulatory Flexibility Act. HHS substantially and directly affect the a collection of information under the certifies that the adoption of this relationship between the Federal and Paperwork Reduction Act. See 5 CFR proposed rule will not have a significant State Governments. A Federalism 1320.3(h). economic impact on a substantial summary impact statement is not 10. National Environmental Policy number of small entities as they are required. Act. This proposed rule does not defined in the Regulatory Flexibility Act 7. Civil Justice Reform (E.O. 12988). constitute a major Federal action (5 U.S.C. 601 et seq.). Therefore, under This proposed rule complies with the significantly affecting the quality of the 5 U.S.C. 605(b), this rulemaking is requirements of E.O. 12988. human environment. A detailed exempt from the initial and final Specifically, this rule (1) meets the statement under the National regulatory flexibility analysis criteria of section 3(a) of this E.O. Environmental Policy Act of 1969 requirements of sections 603 and 604. requiring that all regulations be (NEPA) is not required because the rule 3. Small Business Regulatory reviewed to eliminate errors and is covered by the categorical exclusion Enforcement Fairness Act. This ambiguity and be written to minimize listed in 43 CFR 46.210(c). We have also proposed rule is not a major rule under litigation; and (2) meets the criteria of determined that the rule does not the Small Business Regulatory section 3(b)(2) of this E.O. requiring that involve any of the extraordinary Enforcement Fairness Act (5 U.S.C. all regulations be written in clear circumstances listed in 43 CFR 46.215 804(2)). This rule does not have an language and contain clear legal that would require further analysis annual effect on the economy of $100 standards. under NEPA. million or more. This proposed rule will 8. Consultation with Indian tribes 11. Clarity of this Regulation. We are not cause a major increase in costs or (E.O. 13175). IHS strives to strengthen required by Executive Orders 12866

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(section 1(b)(12)), and 12988 (section Authority: 5 U.S.C. 301, 25 U.S.C. 47, 25 (b) This subpart is under the direct 3(b)(1)(B)), and 13563 (section 1(a)), and U.S.C. 1633, 41 U.S.C. 253(c)(5), and 42 oversight and control of the Head of by the Presidential Memorandum of U.S.C. 2003. Contracting Activity (HCA), within the June 1, 1998, to write all rules in plain ■ 2. Revise subpart 326.6 to read as Office of Management Services (OMS)— language. This means that each rule we follows: Indian Health Service, Department of publish must (1) be logically organized; Health and Human Services. The HCA, (2) use the active voice to address Subpart 326.6—Acquisitions Under the Buy in consultation with the ASFR and the readers directly; (3) use common, Indian Act Senior Procurement Executive (SPE), is everyday words and clear language 326.600—General responsible for promulgating this rather than jargon; (4) be divided into Sec. subpart, and following its enactment, short sections and sentences; and (5) use 326.600–1 Scope of part. will be primarily responsible for lists and tables wherever possible. 326.600–2 Buy Indian Act acquisition implementing its terms. If you feel that we have not met these regulations. (c) Acquisitions conducted under this requirements, send us comments by one 326.601—Definitions subpart are subject to all applicable of the methods listed in the FOR FURTHER requirements of the FAR and HHSAR, as 326.601 Definitions. INFORMATION CONTACT section. To better well as internal policies, procedures, or help us revise the rule, your comments 326.602—Applicability instructions issued by Indian Health should be as specific as possible. For 326.602–1 Scope of part. Service. After the FAR, this HHSAR example, you should tell us the number 326.602–2 Restrictions on the use of the subpart would take precedence over any of section or paragraphs that you find Buy Indian Act. inconsistent Indian Health Service unclear, which section or sentences are 326.603—Policy policies, procedures, or instructions. too long, the sections where you feel 326.601—Definitions lists or tables would be useful, etc. 326–603–1 Requirement to give preference to Indian Economic Enterprises. 12. Public availability of comments. 326–603–2 Delegations and responsibility. § 326.601 Definitions. Before including your address, phone 326–603–3 Deviations. Alaska Native Claims Settlement Act number, email address, or other 326.604—Procedures (ANCSA) means Public Law 92–203 personal identifying information in your (December 18, 1971), 85 Stat. 688, comment, you should be aware that 326.604–1 General. codified at 43 U.S.C. 1601–1629h. 326.604–2 Procedures for Acquisitions your entire comment—including your Alaska Native Corporation means any personal identifying information—may under the Buy Indian Act. 326.604–3 Debarment and suspension. Regional Corporation, any Village be publicly available at any time. While Corporation, any Urban Corporation, you can ask us in your comment to 326.605—Contract Requirements and any Group Corporation as those withhold your personal identifying 326.605–1 Subcontracting limitations. terms are defined by ANCSA. information from public review, we 326.605–2 Performance and payment Buy Indian Act means section 23 of cannot guarantee that we will be able to bonds. the Act of June 25, 1910, codified at 25 do so. When submitting comments 326.606—Representation by an Indian U.S.C. 47. please identify what topic your Economic Enterprise Offeror Chief Contracting Officer (CCO) comment covers from the following list: 326.606–1 General. means a person with authority to enter (1) Subcontract Limitations 326.606–2 Representation provision. into, administer, or terminate contracts (2) Buy Indian Act Deviations 326.606–3 Representation process. and make related determinations and (3) Preventing Fraud and Abuse 326.607—Challenges to Representation findings on behalf of the U.S. (4) Covered Construction Government for the respective IHS (5) Other Topic Related to the Proposed 326.607–1 Procedure. Areas. Rule Subpart 326.6—Acquisitions Under the Contracting Officer (CO) means a person with the authority to enter into, List of Subjects Buy Indian Act administer, or terminate contracts and 48 CFR Part 326 326.600—General make related determinations and findings on behalf of the U.S. Government procurement, Indians, § 326.600–1 Scope of part. Indians-business and finance, Reporting Government. and recordkeeping requirements. This subpart implements policies and Covered construction means the procedures for the procurement of planning, design, construction and 48 CFR Part 352 supplies, general services, architect and renovation, including associated Government procurement. engineering (A&E) services, or covered architecture and engineering services, of construction (including A&E services), IHS facilities pursuant to 25 U.S.C. 1631 For the reasons set out in the while giving preference to Indian and in the construction of safe water preamble, the HHS proposes to amend Economic Enterprises under authority of and sanitary waste disposal facilities parts 326 and 352 as follows: the Buy Indian Act (25 U.S.C. 47). pursuant to 25 U.S.C. 1632. CHAPTER 3—HEALTH AND HUMAN Deviation means an exception to the § 326.600–2 Buy Indian Act acquisition requirement to use the Buy Indian Act SERVICES regulations. in fulfilling an acquisition requirement Subchapter D—Socioeconomic (a) This subpart supplements Federal subject to the Buy Indian Act. Programs Acquisition Regulation (FAR) and Fair market price means a price based Health and Human Services Acquisition on reasonable costs under normal PART 326—OTHER SOCIOECONOMIC Regulation (HHSAR) requirements to competitive conditions and not on PROGRAMS meet the needs of the Department of lowest possible cost, as determined in Health and Human Services, Indian accordance with FAR 19.202–6(a). ■ 1. The authority citation for part 326 Health Service in implementing the Buy Federally Recognized Indian Tribe is revised to read as follows: Indian Act. means an Indian tribe, band, nation, or

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other recognized group or community, Services (DHHS). Public Law 83–568, 68 conjunction with the procedures from or any Alaska Native village or Native Stat. 674 (1954) (codified at 42 U.S.C. FAR part 12, 13, 14, 15 and/or 16. group (as those terms are defined in 2001 et. seq). The Transfer Act (c) The CO will give priority to ANCSA) found on the List of Federally authorizes IHS to use the Buy Indian ISBEEs for all purchases, regardless of Recognized Tribes. Governing Body Act (25 U.S.C. 47) to carry out its health dollar value, by utilizing ISBEE set- means the recognized entity empowered care responsibilities. aside to the maximum extent possible. to exercise governmental authority over (d) If the CO determines after market 326.602—Applicability a Federally Recognized Indian Tribe. research that there is no reasonable Indian means a person who is an § 326.602–1 Scope of part. expectation of obtaining offers from two enrolled member of a Federally Except as provided in HHSAR or more ISBEEs that will be competitive Recognized Indian Tribe. 326.602–2, this subpart applies to all in terms of market price, product Indian Health Service (IHS) means acquisitions, including simplified quality, and delivery capability, the CO operations at all administrative levels of acquisitions, made by IHS, any HHS shall expand the market research to all IHS, including Headquarters, Area operating divisions or agency outside of IEEs to determine if the requirement can Offices and Service Units (inclusive of HHS conducting acquisitions on behalf be set aside for IEEs. clinics). (e) If the CO determines after market of IHS. Indian Economic Enterprise (IEE) research that there is no reasonable means any business activity owned by § 326.602–2 Restrictions on the use of the expectation of obtaining two or more one or more Indians, Federally Buy Indian Act. offers that will be competitive in terms Recognized Indian Tribes, or Alaska (a) IHS may not use the authority of of market price, product quality, and Native Corporations provided that: the Buy Indian Act and the procedures delivery capability, from ISBEEs and/or (1) The combined Indian, Federally contained in this subpart to award IEEs, then the CO shall follow the Recognized Indian Tribe, or Alaska intergovernmental contracts to tribal Deviation process under HHSAR Native Corporation ownership of the organizations to plan, operate, or 326.603–3. enterprise constitutes not less than 51 administer authorized IHS programs (or (f) Price analysis technique(s) percent; parts thereof) that are within the scope provided in FAR 15.404–1(b) shall be (2) The Indians, Federally Recognized and intent of the Indian Self- used in determination of price fair and Indian Tribes, or Alaska Native Determination and Education reasonableness when only one offer is Corporations must, together, receive at Assistance Act (ISDEAA) (Pub. L. 93– received from a responsible ISBEE or least 51 percent of the earnings from the 638). IHS must use the Buy Indian Act IEE in response to an acquisition set- contract; and solely to award procurement contracts aside under paragraph (c) or (d) of this (3) The management and daily to IEEs. Contracts subject to ISDEAA are section. business operations of an enterprise not covered under the FAR and are (g) If the offers received in response must be controlled by one or more codified separately under 25 CFR part to an acquisition set-aside under individuals who are Indians. The Indian 900 and 42 CFR part 137. paragraph (c) or (d) of this section are individual(s) must possess requisite (b) Contract health services (referred determined to be unacceptable upon management or technical capabilities to administratively as Purchased/ price and/or technical evaluations, then directly related to the primary industry Referred Care services) are defined at 25 the CO must follow the Deviation in which the enterprise conducts U.S.C. 1603 as excluding services process under HHSAR 326.603–3. The business. CO must document in the deviation Indian Small Business Economic provided by Buy Indian Act contractors. Accordingly, the Buy Indian Act may determination the reasons why the IEE Enterprise (ISBEE) means an IEE that is offeror(s) were not reasonable or also a small business concern not be used to obtain services through the Purchased/Referred Care program otherwise unacceptable. established in accordance with the (1) If a deviation determination is criteria and size standards of 13 CFR (previously CHS). Purchase orders for care authorized pursuant to 42 CFR part approved, the CO must cancel the part 121. current ISBEE or IEE set-aside Interested Party means an IEE that is 136 subpart C may be issued without regard to the provisions of this Part. solicitation and identify, based on an actual or prospective offeror whose current available market research, an direct economic interest would be 326.603—Policy alternate set-aside or procurement affected by the proposed or actual award method. of a particular contract set-aside § 326.603–1 Requirement to give preference to Indian Economic Enterprises. (h) With respect to covered pursuant the Buy Indian Act. construction, the provisions of 25 U.S.C. List of Federally Recognized Tribes (a) Except as provided by 25 U.S.C. 1633 shall apply. Under 25 U.S.C. 1633, means a tribal entity recognized by and 1633, IHS must use the negotiation IHS may give a preference to an IEE eligible for funding and services from authority of the Buy Indian Act to give unless the agency finds, after the Indian Health Service by virtue of preference to Indians, Federally considering the evaluation criteria listed their status as Indian Tribes. A full list Recognized Tribes, or Alaska Native in 25 U.S.C. 1633, that the project to be of these entities is published annually Corporations whenever the use of that contracted for will not be satisfactory or in the Federal Register pursuant to authority is practicable. Thus, IHS may cannot be properly completed or Section 104 of Public Law 103–454, use the Buy Indian Act to give maintained under the proposed codified at 25 U.S.C. 5131. preference to IEEs through set-asides contract. Transfer Act of 1954 means the when acquiring supplies, general authority of transferred responsibility services, A&E services, or covered § 326.603–2 Delegations and and other health care ‘‘functions, construction to meet IHS needs and responsibility. responsibilities, authorities and duties requirements. (a) The Director, IHS—exercises the of the Department of the Interior’’ (b) Contract awards under the authority of the Buy Indian Act (including the Snyder Act) to health, authority of the Buy Indian Act can be pursuant to the Transfer Act of 1954, as education and welfare, the predecessor pursued via the acquisition procedures delegated pursuant to 25 U.S.C. 1661. of the Department of Health and Human prescribed in this HHSAR subpart in Under 25 U.S.C. 1661, the Director is

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authorized ‘‘to enter into contracts for § 326.603–3 Deviations. (1) Any sole source acquisition the procurement of goods and services (a) There are certain instances where justified and approved in accordance to carry out the functions of the IHS.’’ the application of the Buy Indian Act to with FAR Subpart 6.3 and HHSAR 306.3 IHS exercises this authority in support an acquisition may not be appropriate. constitutes an authorized deviation from of its mission and program activities In these instances, the Contracting the requirements of the Buy Indian Act. and as a means of fostering Indian Officer must detail the reasons in (2) Any order or call placed against an writing or via email and make a employment and economic indefinite delivery vehicle that already development. deviation determination. (b) Some acquisitions by their very has an approved deviation from the (b) The Head of Contracting Activity, nature would make such a written requirements of the Buy Indian Act. IHS (IHS HCA) is responsible for determination unnecessary. The (c) Deviation determinations shall be ensuring that all IHS acquisitions under following acquisitions do not require a required for all other acquisitions where the Buy Indian Act comply with the written deviation from the requirements the Buy Indian Act is applicable and requirements of this part. of the Buy Indian Act: must be approved as follows:

TABLE 1 TO PARAGRAPH (c)

For a proposed contract action The following official may authorize a deviation

Exceeding the micro-purchase Contracting Officer. threshold and up to $25,000. Exceeding $25,000 but not exceed- Chief Contracting Officer (CCO) (or the IHS Division of Acquisition Policy (DAP) Director, absent a CCO). ing $700,000. Exceeding $700,000 but not ex- IHS Competition Advocate. ceeding $13.5 million. Exceeding $13.5 million but not ex- Head of Contracting Activity. ceeding $68 million. Exceeding $68 million ...... HHS Office of Small & Disadvantaged Business Utilization (OSDBU), Office of General Counsel (OGC), HHS Department Competition Advocate and the HHE Senior Procurement Executive.

326.604—Procedures solicitations for acquisitions that are set § 326.605–2 Performance and payment aside to IEE concerns in accordance bonds. § 326.604–1 General. with HHSAR 326.603–1(d). Solicitations requiring performance All acquisitions under the authority of (3) The contracting officer shall insert and payment bonds must conform to the Buy Indian Act, must conform to all the clause at HHSAR 352.226–6, FAR Part 28 and authorize use of any of applicable requirements of the FAR and SUBCONTRACTING LIMITATIONS, in the types of security acceptable in HHSAR. all solicitations and contracts when the accordance with FAR Subpart 28.2 or § 326–604–2 Procedures for Acquisitions contract award is to be made under the section 11 of Public Law 98–449, the under the Buy Indian Act. authority of the Buy Indian Act. Indian Financing Act Amendments of (a) This paragraph applies to (4) The contracting officer shall insert 1984 (25 U.S.C. 47a). In accordance with solicitations that are not restricted to the provision at HHSAR 352.226–7, FAR 28.102 and 25 U.S.C. 47a, the CO participation of IEEs. INDIAN ECONOMIC ENTERPRISE may accept alternative forms of security (1) If an interested IEE is identified REPRESENTATION, in all solicitations in lieu of performance and payment after a solicitation has been issued, but when the contract award is to be made bonds if a determination is made that before the date established for receipt of under the authority of the Buy Indian such forms of security provide the offers, the contracting office must Act. Government with adequate security for provide a copy of the solicitation to this performance and payment. § 326.604–3 Debarment and suspension. enterprise. In this case, the CO: 326.606—Representation by an Indian (i) Will not give preference under the A misrepresentation by an offeror of Economic Enterprise Offeror Buy Indian Act to the IEE; and its status as an IEE, failure to notify the (ii) May extend the date for receipt of CO of any change in IEE status that § 326.606–1 General. offers when practical. would make the contractor ineligible as (2) If more than one IEE is identified (a) The CO must insert the provision an IEE, or any violation of the at HHSAR 352.226–7, INDIAN after issuing a solicitation, but prior to regulations in this part by an offeror or the date established for receipt of offers, ECONOMIC ENTERPRISE an awardee may lead to debarment or REPRESENTATION, in all solicitations the CO may cancel the solicitation and suspension in accordance with FAR re-compete it as an IEE set-aside. regardless of dollar value solicited 9.406 and 9.407 and HHSAR 309.406 under HHSAR 326.603–1 (c) or (d) and (b) Clauses and Provisions. and 309.407. (1) The contracting officer shall insert in accordance with this part. the provision at HHSAR 352.226–4, 326.605—Contract Requirements (b) To be considered for an award NOTICE OF INDIAN SMALL BUSINESS under HHSAR 326.603–1(c) or (d), an ECONOMIC ENTERPRISE SET–ASIDE, § 326.605–1 Subcontracting limitations. offeror must: in solicitations for acquisitions that are (a) The contracting officer shall insert (1) Certify that it meets the definition set aside to ISBEE concerns under FAR clause at 52.219–14, Limitations on of ‘‘Indian Economic Enterprise’’ in HHSAR 326.603–1(c). Subcontracting, in solicitations and response to a specific solicitation set- (2) The contracting officer shall insert contracts for supplies, services, and aside in accordance with the Buy Indian the provision at HHSAR 352.226–5, construction, if any portion of the Act and this part; and NOTICE OF INDIAN ECONOMIC requirement is to be set aside for ISBEEs (2) Identify the Federally Recognized ENTERPRISE SET–ASIDE, in and IEEs. Indian Tribe(s) or Alaska Native

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Corporation(s) upon which the offeror awardees’ IEE representations via IHS only when it is submitted in response to relies for its IEE status. public sites and/or other means. a Sources Sought Notice, Request for (c) The enterprise must meet the (b) Any false or misleading Information (RFI) or with an offer in definition of ‘‘Indian Economic information submitted by an enterprise response to a solicitation under the Buy Enterprise’’ throughout the following when submitting an offer in Indian Act. Another interested party time periods: consideration for an award set aside may challenge the representation of an (1) At the time an offer is made in under the Buy Indian Act may be a offeror or awardee by filing a written response to a solicitation; violation of the law punishable under challenge. (2) At the time of contract award; and 18 U.S.C. 1001. False claims submitted (b) Upon receipt of the challenge, the (3) During the full term of the as part of contract performance may be CO shall re-verify the representation of contract. subject to the penalties enumerated in the offeror or awardee in accordance (d) If, after award, a contractor no 31 U.S.C. 3729 to 3731 and 18 U.S.C. with the requirements of this subpart, longer meets the eligibility requirements 287. including the provisions of 326.606. as it has certified and as set forth in this (c) The CO shall inform the Head of section, then the contractor must Contracting Activity, within 10 business PART 352—SOLICITATION provide the CO with written notification days, of all suspected IEE PROVISIONS AND CONTRACT within 3 calendar days of its failure to misrepresentation by an offeror or CLAUSES comply with the eligibility failure to provide written notification of ■ 1. The authority citation for part 352 requirements. The notification must a change in IEE eligibility. is revised to read as follows: include: (1) Full disclosure of circumstances § 326.606–3 Representation process. Authority: 5 U.S.C. 301, 40 U.S.C. causing the contractor to lose eligibility (a) Only IEEs may participate in 121(c)(2), 42 U.S.C. 2003 acquisitions set aside in accordance status; and Subpart 352.2—Text of Provisions and (2) A description of actions, if any, with the Buy Indian Act and this part. Clauses that must be taken to regain eligibility. The procedures in this Part are intended (e) Failure to maintain eligibility to support responsible IEEs and prevent ■ 2. Add §§ 352.226–4 through 352.226– under the Buy Indian Act or to provide circumvention or abuse of the Buy 7 to read as follows: written notification required by Indian Act. paragraph (d) of this section means that: (b) The CO shall review the § 352.226–4 Notice of Indian Small (1) The contractor may be declared ownership information furnished under Business Economic Enterprise set-aside. ineligible for future contract awards HHSAR 352.226–7(b) and ensure that As prescribed in HHSAR 326.604– under this part; the information submitted matches the 2(b)(1), and in lieu of the requirements (2) The CO may consider termination List of Federally Recognized Tribes or is of 48 CFR 19.508, insert the following for default of the ongoing contract; and an Alaska Native Corporation, as clause in solicitations and contracts for (3) The CO may pursue debarment or identified and published via a Federal acquisitions that are set aside to Indian suspension of the contractor. Register Notice as Indian entities Small Business Economic Enterprise (f) The CO will review the offeror’s recognized by and eligible to receive concerns. representation that it is an IEE in a services from the United States Notice of Indian Small Business Economic specific bid or proposal and verify that Department of the Interior (DOI), Bureau Enterprise Set-Aside the Federally Recognized Indian of Indian Affairs (BIA). (c) If the CO cannot verify the offeror Under the Buy Indian Act, 25 U.S.C. 47, Tribe(s) or Alaska Native Corporation(s) offers are solicited only from Indian that the offeror identifies in the submission with the List of Federally Economic Enterprises (HHSAR 326.606) that representation is either on the List of Recognized Tribes the CO must allow are also small business concerns. As required Federally Recognized Tribes or is an the offeror to correct information by HHSAR § 352.226–7(b), offerors shall Alaska Native Corporation. A CO will submitted under HHSAR 352.226–7(b). include a completed Indian Economic also investigate the representation if an The contracting officer should make Enterprise Representation form in response interested party challenges the IEE every effort to allow the offeror to to Sources Sought Notices, Request for Information (RFI) and as part of the proposal representation or if the CO has any other correct the information. If the requirement is time sensitive the submission. The Indian Economic Enterprise reason to question the representation. Representation form, available on the IHS The CO may ask the offeror for more contracting officer must specify to the Division of Acquisition Policy public website information to substantiate the offeror the time and date by which a (www.IHS.gov/DAP), shall be included in representation. Challenges of and response is required. synopses, presolicitation notices, and questions concerning a specific (1) If the CO determines the offeror is solicitations for the acquisitions under the representation must be referred to the not responsive, the CO must document Buy Indian Act. Offers received from CO or CCO in accordance with HHSAR the circumstances and inform the enterprises that are not both Indian Economic offeror of the determination. Enterprises and small business concerns 326.607. shall not be considered. (g) Participation in the Mentor-Prote´ge´ (2) The CO may ask the Office of the Program established under section 831 General Counsel to review the IEE (End of clause) representation. of the National Defense Authorization § 352.226–5 Notice of Indian Economic Act for Fiscal Year 1991 (25 U.S.C. 47 (3) The IEE representation does not relieve the CO of the obligation for Enterprise set-aside. note) does not render an IEE ineligible As prescribed in HHSAR 326.604– for contracts awarded under the Buy determining contractor responsibility, as required by FAR Subpart 9.1. 2(b)(2), insert the following clause in Indian Act. solicitations and contracts involving 326.607—Challenges to Representation § 326.606–2 Representation provision. Indian Economic Enterprise set-asides. (a) Contracting offices must provide § 326.607–1 Procedure. Notice of Indian Economic Enterprise Set- copies of the awardees’ IEE (a) The CO can accept an offeror’s Aside representation to any interested parties written representation of being an ISBEE Under the Buy Indian Act, 25 U.S.C. 47, upon written request. IHS will make or IEE (as defined in HHSAR 326.601) offers are solicited only from Indian

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Economic Enterprises (326.606). As required Corporation ownership of the enterprise shall Indian Economic Enterprise Representation by HHSAR 352.226–7(b), offerors shall constitute not less than 51 percent; (a) The offeror must represent as part of its include a completed Indian Economic (ii) The Indians, Federally Recognized offer that it does meet the definition of Indian Enterprise Representation form in response Indian Tribes, or Alaska Native Corporations Economic Enterprise (IEE) as defined in to Sources Sought Notices, Request for shall, together, receive at least 51 percent of HHSAR 326.601 and that it intends to meet Information (RFI) and as part of the proposal the earnings from the contract; and the definition of an IEE throughout the submission. The Indian Economic Enterprise (iii) The management and daily business performance of the contract. The offeror must Representation form, available on the IHS operations of an Indian Economic Enterprise notify the contracting officer within 10 Division of Acquisition Policy public website must be controlled by one or more business days, via email, if there is any (www.IHS.gov/DAP), shall be included in individuals who are Indians. To ensure ownership change affecting compliance with synopses, presolicitation notices, and this representation. solicitations for the acquisitions under the actual control over the enterprise, the (b) The representation must be made on the Buy Indian Act. Offers received from individuals must possess requisite designated IHS Indian Economic Enterprise enterprises that are not Indian Economic management or technical capabilities directly Representation form or any successor forms Enterprises shall not be considered. related to the primary industry in which the enterprise conducts business. through which the offeror will certify that the (End of clause) (2) Subcontract means any agreement ownership requirements defined by HHSAR 326.601 are met. § 352.226–6 Indian Economic Enterprise (other than one involving an employer- employee relationship) entered into by a (c) Any false or misleading information Subcontracting Limitations. submitted by an enterprise when submitting subcontractor to furnish supplies and/or A contractor shall not subcontract an offer in consideration for an award set services required for performance of a prime more than the subcontract limitations aside under the Buy Indian Act is a violation contract or a subcontract. It includes but is of the law punishable under 18 U.S.C. 1001. specified under FAR 52.219–14 not limited to contracts and contract Limitations on Subcontracting. As False claims submitted as part of contract modifications. performance are subject to the penalties prescribed in HHSAR 326.604–2(b)(3), (3) Subcontractor means any supplier, insert the following clause in each enumerated in 31 U.S.C. 3729 to 3731 and 18 distributor, vendor, or firm that furnishes U.S.C. 287. written solicitation and contract to supplies or services to or for a prime provide supplies, general services, A&E contractor or another subcontractor. (End of provision) services, or covered construction: (b) The contractor must comply with FAR Dated: September 30, 2020. 52.219–14, Limitations on Subcontracting Indian Economic Enterprise Subcontracting Michael D. Weahkee, clause throughout the contract period. Limitations RADM, Assistant Surgeon General, U.S. (a) Definitions as used in this clause. (End of clause) Public Health Service, Director, Indian Health (1) Indian Economic Enterprise Concern Service. means any business activity owned by one or 352.226–7 Indian Economic Enterprise Approved: October 6, 2020. more Indians, Federally Recognized Indian representation. Alex M. Azar II, Tribes, or Alaska Native Corporations that is Secretary, Department of Health and Human established for the purpose of profit, As prescribed in HHSAR 326.604– Services. provided that: 2(b)(4), insert the following provision in (i) The combined Indian, Federally each written solicitation for supplies, [FR Doc. 2020–24339 Filed 11–9–20; 8:45 am] Recognized Indian Tribe, or Alaska Native services, A&E, or covered construction: BILLING CODE 4160–01–P

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Notices Federal Register Vol. 85, No. 218

Tuesday, November 10, 2020

This section of the FEDERAL REGISTER Identifiable Information (for example, interactions, parental health, school and contains documents other than rules or name and address) voluntarily after-school experiences, and proposed rules that are applicable to the submitted by the commenter may be neighborhood characteristics. The goal public. Notices of hearings and investigations, publicly accessible. Do not submit of the 2021 NSCH is to provide HRSA committee meetings, agency decisions and Confidential Business Information or MCHB, the supplemental sponsoring rulings, delegations of authority, filing of petitions and applications and agency otherwise sensitive or protected agencies, states, regions, and other data statements of organization and functions are information. You may submit users with the necessary data to support examples of documents appearing in this attachments to electronic comments in the production of national estimates section. Microsoft Word, Excel, or Adobe PDF yearly and state- or region-based file formats. estimates with pooled samples on the FOR FURTHER INFORMATION CONTACT: health and well-being of children, their DEPARTMENT OF COMMERCE Requests for additional information or families, and their communities as well specific questions related to collection as estimates of the prevalence and Census Bureau activities should be directed to Carolyn impact of children with special health care needs. Agency Information Collection Pickering, Survey Director, by way of NSCH is seeking clearance to make Activities; Submission to the Office of phone (301–763–3873) or email the following changes: Management and Budget (OMB) for ([email protected]). • Increased sample size—The base Review and Approval; Comment SUPPLEMENTARY INFORMATION: NSCH sample plus the proposed Request; National Survey of Children’s I. Abstract oversamples may reach up to 300,000 Health Sponsored primarily by the U.S. addresses for the 2021 NSCH, compared AGENCY: U.S. Census Bureau, Department of Health and Human with 240,000 in 2020. The increased Commerce. Services’ Health Resources Services sample will allow individual states and ACTION: Notice of information collection, Administration’s Maternal and Child agencies to produce statistically sound request for comment. Health Bureau (HRSA MCHB), the child health estimates in a fewer National Survey of Children’s Health number of pooled years than if the SUMMARY: The Department of (NSCH) is designed to produce data on sample were to remain the same Commerce, in accordance with the the physical and emotional health of annually, thereby resulting in more Paperwork Reduction Act (PRA) of children under 18 years of age who live timely age-, state- and region-based 1995, invites the general public and in the United States. The United States health estimates of children. other Federal agencies to comment on Department of Agriculture (USDA) and • Unconditional incentive proposed, and continuing information the United States Department of Health distribution percentage—We plan to collections, which helps us assess the and Human Services’ Center for Disease continue monitoring the effectiveness of impact of our information collection Control and Prevention, National Center the unconditional monetary incentive, requirements and minimize the public’s on Birth Defects and Developmental but request an increase to the percent of reporting burden. The purpose of this Disabilities (CDC–NCBDDD) sponsor addresses receiving a $5 incentive in the notice is to allow for 60 days of public supplemental content on the NSCH. initial screener mailing. Response rates comment on the proposed revision of Additionally, the upcoming cycle of the for the unconditional monetary the National Survey of Children’s NSCH would like to feature four incentive groups showed a statistically Health, prior to the submission of the returning state-based oversamples and significant difference over the control information collection request (ICR) to four new oversamples that are either group that did not receive an OMB for approval. age-based, state-based, or region-based. unconditional monetary incentive. A DATES: To ensure consideration, The age-based oversample would be larger increase in response was noted comments regarding this proposed funded by the United States Department for the households mailed a $5 information collection must be received of Health and Human Services’ Center compared with the $2 incentive; on or before January 11, 2021. for Disease Control and Prevention, however, both treatment groups have ADDRESSES: Interested persons are National Center for Chronic Disease proven effective at reducing invited to submit written comments by Prevention and Health Promotion (CDC– nonresponse bias by encouraging email to [email protected]. NCCDPHP). The state- or region-based response. For both the 2018 NSCH and Please reference National Survey of oversamples would be sponsored by 2019 NSCH, the initial screener Children’s Health in the subject line of Children’s Health Care of Atlanta, the incentive splits were 45% received $2; your comments. You may also submit State of Colorado, the State of Nebraska, 45% received $5; and 10% did not comments, identified by Docket Number the Ohio Department of Health, the receive an incentive. In the 2020 NSCH, USBC–2020–0027, to the Federal e- Oregon Center for Children and Youth the share of addresses receiving the $5 Rulemaking Portal: http:// with Special Health Care Needs, the incentive was increased to 60%, with www.regulations.gov. All comments Southeast Louisiana Area Health 30% receiving the $2 incentive; again, received are part of the public record. Education Center, and the State of 10% did not receive an incentive. The No comments will be posted to http:// Wisconsin. proposal for 2021 NSCH is to remove www.regulations.gov for public viewing The NSCH collects information on the $2 incentive group, so 90% receive until after the comment period has factors related to the well-being of $5 and 10% would not receive an closed. Comments will generally be children, including access to health incentive with the initial mailing. The posted without change. All Personally care, in-home medical care, family incentive assignment to each sampled

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address would still be random as was NSCH an overall screener completion eligible children will be mailed a paper done in prior cycles and approved by rate to be about 46.3% and an overall topical questionnaire upon receipt of OMB. topical completion rate to be about their completed paper screener at the • Alternative invitation letter 36.0%.3 This is different from the Census Bureau’s National Processing wording—A random selection of overall response rate, which we expect Center. If a household in the mixed- addresses will receive an initial to be about 41.4%.4 mode group chooses to complete the invitation letter than uses the traditional paper screener instead of completing the II. Method of Collection letter design but slightly modified web-based screener via the internet, wording that may encourage internet The 2021 NSCH plan for the web then the household may receive an response. This test is conditional on push data collection design includes additional topical questionnaire ongoing results from the current NSCH approximately 70% of the production incentive. This group will receive both 2020 redesigned envelope and letter addresses receiving an initial invite a web survey invitation letter along with test. with instructions on how to complete an a mailed paper screener questionnaire • Revised questionnaire content— English or Spanish-language screener with either the initial invitation or the The NSCH questionnaires with newly questionnaire via the web. Households first follow-up and each additional proposed and revised content from the that decide to complete the web-based nonresponse follow-up mailing. sponsors at HRSA MCHB and CDC– survey will be taken through the NCCDPHP are currently undergoing two screener questionnaire to determine if III. Data rounds of cognitive testing. This testing they are eligible for one of three topical OMB Control Number: 0607–0990. request was submitted under the generic instruments. Households that list at Form Number(s): NSCH–S1 (English clearance package and approved by least one child who is 0 to 17 years old Screener), NSCH–T1 (English Topical OMB.1 Based on the results, a final set in the screener are directed into a for 0- to 5-year-old children), NSCH–T2 of proposed new and modified content topical questionnaire immediately after (English Topical for 6- to 11-year-old will be included in the full OMB ICR for the last screener question. If a children), NSCH–T3 (English Topical the 2021 NSCH. household in the web push treatment for 12- to 17-year-old children), NSCH– • Oversamples 2—In order to inform group decides to complete the paper S–S1 (Spanish Screener), NSCH–S–T1 various priorities that are otherwise not screener, the household may have a (Spanish Topical for 0- to 5-year-old supported by the NSCH, some chance to receive an additional topical children), NSCH–S–T2 (Spanish Topical stakeholders have shown interest in questionnaire incentive. This group will for 6- to 11-year-old children), and sponsoring an oversample of particular receive two web survey invitation letters NSCH–S–T3 (Spanish Topical for 12- to populations as part of the annual NSCH requesting their participation in the 17-year-old children). administration. Currently, there are six survey prior to receiving up to two Type of Review: Regular submission, states, one region, and one federal additional paper screener Request for a Revision of a Currently partner contributing to an oversample as questionnaires in the second and third Approved Collection. part of the 2021 NSCH. Four states follow-up mailings. Affected Public: Parents, researchers, (Colorado, Nebraska, Oregon and The 2021 NSCH plan for the mixed- policymakers, and family advocates. Wisconsin) were initially oversampled mode data collection design includes up Estimated Number of Respondents: in 2020, and are continuing with the to 30% of the production addresses 114,818. option as part of the 2021 NSCH. Two receiving a paper screener questionnaire Estimated Time per Response: 5 states (Louisiana and Ohio) and the in either the initial or the first minutes per screener response and 35– Atlanta, GA Metro Area will be nonresponse follow-up and instructions 36 minutes per topical response, which oversampled for the first time in 2021. on how to complete an English or in total is approximately 40–41 minutes Finally, CDC–NCCDPHP is supporting Spanish language screener for households with eligible children. an oversample of households with questionnaire via the web. Households Estimated Total Annual Burden young children. that decide to complete the web-based Hours: 39,400. Estimated Total Annual Cost to Besides the proposed changes listed survey will follow the same screener Public: $0 (This is not the cost of above, the 2021 NSCH will proceed and topical selection path as the web respondents’ time, but the indirect costs with the current design outlined in the push. Households that choose to respondents may incur for such things previous OMB ICR package. We will complete the paper screener as purchases of specialized software or continue to make modifications to data questionnaire rather than completing hardware needed to report, or collection strategies based on modeled the survey on the internet and that have information about paper or internet expenditures for accounting or records response preference. Results from prior 3 Screener Completion Rate is the proportion of maintenance services required survey cycles will continue to be used screener-eligible households (i.e., occupied specifically by the collection.) to inform the decisions made regarding residences) that completed a screener. It is equal to Respondent’s Obligation: Voluntary. (S+X)/(S+X+R+e(UR+UO)), where S is the count of Legal Authority: Title 13 U.S.C. future cycles of the NSCH. completed screeners with children, X is completed Section 8(b); 42 U.S.C. 701; From prior cycles of the NSCH, using screeners without children, R is screener refusals, American Association for Public and e(UR+UO) is the estimated count of screener 1769d(a)(4)(B); and 42 U.S.C. 241. Opinion Research definitions of eligible households among nonresponding addresses. IV. Request for Comments response, we can expect for the 2021 The Topical Completion Rate is the proportion of We are soliciting public comments to topical-eligible households (i.e., occupied permit the Department/Bureau to: (a) 1 Generic Clearance Information Collection residences with children present) that completed a Request: https://www.reginfo.gov/public/do/ topical questionnaire. It is equal to I/HCt, where I Evaluate whether the proposed PRAViewIC?ref_nbr=201909-0607- is the count of completed topicals and HCt is the information collection is necessary for 002&icID=242679. estimated count of households with children in the the proper functions of the Department, 2 State Oversampling in the National Survey of sample or S+R+(S+R)/(S+X+R)*e(UR+UO). including whether the information will Children’s Health: Feasibility, Cost, and Alternative 4 Overall Response Rate is the probability a Approaches https://census.gov/content/dam/ resolved address completes a screener have practical utility; (b) Evaluate the Census/programs-surveys/nsch/NSCH_State_ questionnaire and then, when eligible, completes a accuracy of our estimate of the time and Oversample_Summary_Document.pdf. topical questionnaire. cost burden for this proposed collection,

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including the validity of the Title: Import, End-User, Delivery items no longer warrant control under methodology and assumptions used; (c) Verification Certificates and Firearms United States Munitions List (USML) Evaluate ways to enhance the quality, Entry Clearance Requirements. Category I—Firearms, Close Assault utility, and clarity of the information to OMB Control Number: 0694–0093. Weapons and Combat Shotguns; be collected; and (d) Minimize the Form Number(s): BIS–645P, BIS– Category II—Guns and Armament; and reporting burden on those who are to 647P. Category III—Ammunition/Ordnance respond, including the use of automated Type of Request: Regular submission, would be controlled under the collection techniques or other forms of extension of a current information Commerce Control List (CCL). As the information technology. collection. State Department previously collected Number of Respondents: 11,776. Comments that you submit in this same type of information, the Average Hours per Response: 1 to 30 Department of Commerce controls the response to this notice are a matter of minutes. public record. We will include, or CCL and must now take over this Burden Hours: 1,630. collection of information. Section summarize, each comment in our Needs and Uses: This collection of 758.10 Entry clearance requirements for request to OMB to approve this ICR. information addresses three activities: temporary imports will specify the EAR Before including your address, phone (1) Import Certificates/End Use procedures for temporary imports and number, email address, or other Certificates, (2) Delivery Verification, subsequent exports. personal identifying information in your and (3) Firearms Entry Clearance Affected Public: Business or other for- comment, you should be aware that Requirements. profit organizations. Import Certificates or End-User your entire comment—including your Frequency: On Occasion. personal identifying information—may Certificates (IC/EUC)—The IC/EUC, Respondent’s Obligation: Mandatory. be made publicly available at any time. BIS–645P, is obtained by the foreign Legal Authority: §§ 748.9, 748.10, While you may ask us in your comment importer and transmitted to the U.S. 748.12, 748.14, Part 748 Supplement to withhold your personal identifying exporter. They are issued by the No. 5, 758.10, 762.5(d), 762.6, information from public review, we government of the country of ultimate 764.2(g)(2), and of the Export cannot guarantee that we will be able to destination to exercise legal control over Administration Regulations (EAR). do so. the disposition of the items covered by This information collection request the IC/EUC. The control exercised by Sheleen Dumas, may be viewed at www.reginfo.gov. the government issuing the IC/EUC is in Follow the instructions to view the Department PRA Clearance Officer, Office of addition to the conditions and Department of Commerce collections the Chief Information Officer, Commerce restrictions placed on the transaction by Department. currently under review by OMB. BIS. Written comments and [FR Doc. 2020–24920 Filed 11–9–20; 8:45 am] Delivery Verification—The Delivery recommendations for the proposed BILLING CODE 3510–07–P Verification Certificate (DV) is required information collection should be by BIS as part of its export control submitted within 30 days of the program. The license holder is publication of this notice on the DEPARTMENT OF COMMERCE responsible for having the ultimate following website www.reginfo.gov/ consignee complete the BIS–647P, Bureau of Industry and Security public/do/PRAMain. Find this Delivery Verification Certificate Form particular information collection by when the goods are delivered. BIS uses selecting ‘‘Currently under 30-day Agency Information Collection the DV procedure on an ‘‘as needed’’ Activities; Submission to the Office of Review—Open for Public Comments’’ or basis. The DV is usually required when by using the search function and Management and Budget (OMB) for there is suspicion of violation of the Review and Approval; Comment entering either the title of the collection EAR. Therefore, if the exporter cannot or the OMB Control Number 0694–0093. Request; Import, End-User, Delivery supply the DV, BIS must be notified to Verification Certificates and Firearms determine if an exception is legitimate. Sheleen Dumas, Entry Clearance Requirements Otherwise, the exporter would be in Department PRA Clearance Officer, Office of violation of the EAR. the Chief Information Officer, Commerce The Department of Commerce will Firearms Entry Clearance Department. submit the following information Requirements—On January 23, 2020, [FR Doc. 2020–24922 Filed 11–9–20; 8:45 am] collection request to the Office of The Department of Commerce issued a BILLING CODE 3510–33–P Management and Budget (OMB) for final rule that described how articles the review and clearance in accordance President determines no longer warrant with the Paperwork Reduction Act of control under the United States DEPARTMENT OF COMMERCE 1995, on or after the date of publication Munitions List (USML) Category I— of this notice. We invite the general Firearms, Close Assault Weapons and Bureau of Industry and Security public and other Federal agencies to Combat Shotguns; Category II—Guns Agency Information Collection comment on proposed, and continuing and Armament; and Category III— information collections, which helps us Activities; Submission to the Office of Ammunition/Ordnance would be Management and Budget (OMB) for assess the impact of our information controlled under the Commerce Control collection requirements and minimize Review and Approval; Comment List (CCL). This final rule, which Request; Additional Protocol to the the public’s reporting burden. Public became effective on March 9, 2020, was comments were previously requested U.S.—International Atomic Energy published in conjunction with a final Agency Safeguards via the Federal Register on 8/27/2020 rule on Categories I, II, and III from the (85 FR 52949) during a 60-day comment Department of State, Directorate of The Department of Commerce will period. This notice allows for an Defense Trade Controls (DDTC). submit the following information additional 30 days for public comments. This entry clearance requirement is collection request to the Office of Agency: Bureau of Industry and necessary due to the changes by the Management and Budget (OMB) for Security, Commerce. President in determining that certain review and clearance in accordance

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with the Paperwork Reduction Act of information collection should be November 1, 2018 through October 31, 1995, on or after the date of publication submitted within 30 days of the 2019. On April 24, 2020, Commerce of this notice. We invite the general publication of this notice on the uniformly tolled deadlines for all public and other Federal agencies to following website www.reginfo.gov/ antidumping duty and countervailing comment on proposed, and continuing public/do/PRAMain. Find this duty administrative reviews by 50 information collections, which helps us particular information collection by days,2 and on July 21, 2020, we assess the impact of our information selecting ‘‘Currently under 30-day uniformly tolled deadlines for all collection requirements and minimize Review—Open for Public Comments’’ or antidumping duty and countervailing the public’s reporting burden. Public by using the search function and duty administrative reviews by an comments were previously requested entering either the title of the collection additional 60 days, thereby extending via the Federal Register on August 17, or the OMB Control Number 0694–0135. the deadline for these preliminary 2020 during a 60-day comment period. results until November 19, 2020.3 Sheleen Dumas, This notice allows for an additional 30 Scope of the Order days for public comments. Department PRA Clearance Officer, Office of Agency: Bureau of Industry and the Chief Information Officer, Commerce The merchandise subject to the order Department. Security, Commerce. is polyethylene terephthalate film. The Title: Additional Protocol to the [FR Doc. 2020–24919 Filed 11–9–20; 8:45 am] product is currently classified under U.S.—International Atomic Energy BILLING CODE 3510–33–P subheading 3920.62.00.90 of the Agency Safeguards. Harmonized Tariff Schedule of the OMB Control Number: 0694–0135. United States (HTSUS). Although the Form Number(s): AP–1 through AP– DEPARTMENT OF COMMERCE HTSUS number is provided for convenience and for customs purposes, 17, and AP–A through AP–Q. International Trade Administration Type of Request: Regular submission, the written product description, extension of a current information [A–520–803] available in the Preliminary Decision collection. Memorandum, remains dispositive.4 Polyethylene Terephthalate Film, Number of Respondents: 500. Methodology Average Hours per Response: 23 Sheet, and Strip From the United Arab minutes to 6 hours. Emirates: Preliminary Results of Commerce is conducting this review Burden Hours: 920. Antidumping Duty Administrative in accordance with section 751(a) of the Needs and Uses: The Additional Review; 2018–2019 Tariff Act of 1930, as amended (the Act). Protocol requires the United States to Pursuant to sections 776(a) and (b) of submit declaration forms to the AGENCY: Enforcement and Compliance, the Act, Commerce has preliminarily International Atomic Energy Agency International Trade Administration, relied upon facts otherwise available (IAEA) on a number of commercial Department of Commerce. with adverse inferences (AFA) for Flex, nuclear and nuclear-related items, SUMMARY: The Department of Commerce because this respondent notified materials, and activities that may be (Commerce) preliminarily finds that Commerce that it would not participate used for peaceful nuclear purposes, but Flex Middle East FZE (Flex), the sole in the review. also would be necessary elements for a producer/exporter subject to this For a full description of the nuclear weapons program. These forms administrative review, has made sales of methodology and analysis underlying provides the IAEA with information subject merchandise at less than normal the preliminary application of AFA, see about additional aspects of the U.S. value. Interested parties are invited to the Preliminary Decision Memorandum. commercial nuclear fuel cycle, comment on these preliminary results. A list of topics included in the including: Mining and milling of DATES: Applicable November 10, 2020. Preliminary Decision Memorandum is nuclear materials; buildings on sites of FOR FURTHER INFORMATION CONTACT: included as an appendix to this notice. facilities selected by the IAEA from the Andrew Huston, AD/CVD Operations, The Preliminary Decision Memorandum U.S. Eligible Facilities List; nuclear- Office VII, Enforcement and is a public document and is made related equipment manufacturing, Compliance, International Trade available to the public via Enforcement assembly, or construction; import and Administration, U.S. Department of and Compliance’s Antidumping and export of nuclear and nuclear-related Commerce, 1401 Constitution Avenue Countervailing Duty Centralized items and materials; and research and NW, Washington, DC 20230; telephone: Electronic Service System (ACCESS). ACCESS is available to registered users development. The Protocol also expands (202) 482–4261. at https://access.trade.gov. In addition, a IAEA access to locations where these SUPPLEMENTARY INFORMATION: activities occur in order to verify the complete version of the Preliminary form data. Background Decision Memorandum can be accessed Affected Public: Business or other for- directly at http://enforcement.trade.gov/ Commerce is conducting an frn/. The signed and the electronic profit organizations. administrative review of the Frequency: On Occasion. antidumping duty order on Respondent’s Obligation: Voluntary or 2 See Memorandum, ‘‘Tolling of Deadlines for polyethylene terephthalate film, sheet, Antidumping and Countervailing Duty Mandatory. and strip (PET Film) from the United Administrative Reviews in Response to Operational Legal Authority: Additional Protocol Arab Emirates (UAE). The notice of Adjustments due to COVID–19,’’ dated April 24, 2020. Implementation Act (Title II of Pub. L. initiation of this administrative review 109–401), Executive Order (E.O.) 13458. 3 See Memorandum, ‘‘Tolling of Deadlines for was published on January 17, 2020.1 Antidumping and Countervailing Duty This information collection request This review only covers Flex, a Administrative Reviews,’’ dated July 21, 2020. may be viewed at www.reginfo.gov. producer and exporter of the subject 4 See Memorandum, ‘‘Decision Memorandum for Follow the instructions to view the merchandise. The period of review is the Preliminary Results of Antidumping Duty Department of Commerce collections Administrative Review: Polyethylene Terephthalate Film, Sheet, and Strip from the United Arab currently under review by OMB. 1 See Initiation of Antidumping and Emirates,’’ dated concurrently with and hereby Written comments and Countervailing Duty Administrative Reviews, 85 FR adopted by this notice (Preliminary Decision recommendations for the proposed 3014, 1333 (January 17, 2020). Memorandum).

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versions of the Preliminary Decision the merchandise; and (4) the cash limited to those raised in the respective Memorandum are identical in content. deposit rate for all other manufacturers case and rebuttal briefs. or exporters will continue to be 4.05 Preliminary Results of Review Final Results of Review percent, the all-others rate established As a result of our review, we in the investigation.7 These cash deposit Unless otherwise extended, preliminarily determine the following requirements, when imposed, shall Commerce intends to issue the final weighted-average dumping margin for remain in effect until further notice. results of this administrative review, the period November 1, 2018 through including the results of its analysis of October 31, 2019: Disclosure and Public Comment the issues raised in any written briefs, Normally, Commerce discloses to not later than 120 days after the date of Weighted- interested parties the calculations publication of this notice, pursuant to average performed in connection with the section 751(a)(3)(A) of the Act and 19 Manufacturer/exporter margin (percent) preliminary results within five days of CFR 351.213(h)(1). the date of publication of the notice of Notification to Importers Flex Middle East FZE ...... 70.75 preliminary results in the Federal Register, in accordance with 19 CFR This notice also serves as a Assessment Rates 351.224(b). However, there are no preliminary reminder to importers of calculations to disclose here because, in their responsibility under 19 CFR Upon completion of the accordance with section 776 of the Act, 351.402(f) to file a certificate regarding administrative review, Commerce shall Commerce preliminarily applied AFA to the reimbursement of antidumping determine, and U.S. Customs and Flex, the only respondent subject to this duties prior to liquidation of the Border Protection (CBP) shall assess, review. relevant entries during this review antidumping duties on all appropriate Pursuant to 19 CFR 351.309(c), period. Failure to comply with this entries covered by this review.5 The interested parties may submit case briefs requirement could result in Commerce’s final results of this review shall be the no later than 30 days after the date of presumption that reimbursement of basis for the assessment of antidumping publication of this notice. Rebuttal antidumping duties occurred and the duties on entries of merchandise briefs, limited to issues raised in the subsequent assessment of double covered by the final results of this case briefs, may be filed not later than antidumping duties. review and for future deposits of seven days after the date for filing case estimated duties, where applicable.6 If Notification to Interested Parties briefs.8 Parties who submit case briefs or the preliminary results are unchanged rebuttal briefs in this proceeding are This administrative review and notice for the final results, we will instruct encouraged to submit with each are issued and published in accordance CBP to apply an ad valorem assessment argument: (1) A statement of the issue, with sections 751(a)(1) and 777(i)(1) of rate of 70.75 percent to all entries of (2) a brief summary of the argument, the Act, and 19 CFR 351.213 and subject merchandise during the period and (3) a table of authorities.9 Case and 351.221(b)(4). of review from Flex. We intend to issue rebuttal briefs should be filed using liquidation instructions to CBP 15 days Dated: November 5, 2020. ACCESS.10 Note that Commerce has after the publication date of the final Joseph A. Laroski Jr., temporarily modified certain of its results of this review. Deputy Assistant Secretary for Policy and requirements for serving documents Negotiations. Cash Deposit Requirements containing business proprietary 11 Appendix The following deposit requirements information, until further notice. will be effective upon publication of the Pursuant to 19 CFR 351.310(c), List of Topics Discussed in the Preliminary final results for all shipments of PET interested parties who wish to request a Decision Memorandum Film from the UAE entered, or hearing must submit a written request to I. Summary withdrawn from warehouse, for the Assistant Secretary for Enforcement II. Background consumption on or after the date of and Compliance, filed electronically via III. Scope of the Order publication of the final results of this ACCESS. An electronically filed IV. Application of Facts Available and document must be received successfully Adverse Inferences administrative review, as provided for V. Recommendation by section 751(a)(2)(C) of the Act: (1) in its entirety through Commerce’s The cash deposit rate for the company electronic records system, ACCESS, by [FR Doc. 2020–24937 Filed 11–9–20; 8:45 am] under review will be the rate 5:00 p.m. Eastern Time within 30 days BILLING CODE 3510–DS–P established in the final results of this after the date of publication of this notice. Requests should contain: (1) The review (except, if the rate is zero or de DEPARTMENT OF COMMERCE minimis, no cash deposit will be party’s name, address, and telephone number; (2) the number of participants; required); (2) for previously reviewed or International Trade Administration investigated companies not listed above, and (3) a list of issues to be discussed. the cash deposit rate will continue to be Issues raised in the hearing will be [C–552–829] the company-specific rate published for the most recent period; (3) if the 7 See Polyethylene Terephthalate Film, Sheet, and Strip from Brazil, the People’s Republic of China Passenger Vehicle and Light Truck exporter is not a firm covered in this and the United Arab Emirates: Antidumping Duty Tires From the Socialist Republic of review, a prior review, or the less-than- Orders and Amended Final Determination of Sales Vietnam: Preliminary Affirmative fair-value investigation, but the at Less Than Fair Value for the United Arab Countervailing Duty Determination and manufacturer is, the cash deposit rate Emirates, 73 FR 66595, 66597 (November 10, 2008). 8 Alignment of Final Determination With will be the rate established for the most See 19 CFR 351.309(c)(1)(ii) and 351.309(d)(1). 9 Final Antidumping Duty Determination recent period for the manufacturer of See 19 CFR 351.309(c)(2) and (d)(2). 10 See generally 19 CFR 351.303. AGENCY: 11 See Temporary Rule Modifying AD/CVD Enforcement and Compliance, 5 See 19 CFR 351.212(b). Service Requirements Due to COVID–19; Extension International Trade Administration, 6 See section 751(a)(2)(C) of the Act. of Effective Period, 85 FR 41363 (July 10, 2020). Department of Commerce.

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SUMMARY: The Department of Commerce Scope of the Investigation a request made by the petitioner.9 (Commerce) preliminarily determines The product covered by this Consequently, the final CVD that countervailable subsidies are being investigation is passenger tires from determination will be issued on the provided to producers and exporters of Vietnam. For a complete description of same date as the final AD passenger vehicle and light truck tires the scope of this investigation, see determination, which is currently (passenger tires) from the Socialist Appendix I. scheduled to be issued no later than Republic of Vietnam (Vietnam). The March 15, 2021, unless postponed. Scope Comments period of investigation is January 1, All-Others Rate 2019 through December 31, 2019. In accordance with the Preamble to Sections 703(d) and 705(c)(5)(A) of Interested parties are invited to Commerce’s regulations,4 the Initiation comment on this preliminary the Act provide that in the preliminary Notice set aside a period of time for determination, Commerce shall determination. parties to raise issues regarding product 5 determine an estimated all-others rate DATES: Applicable November 10, 2020. coverage (i.e., scope). Certain interested for companies not individually parties commented on the scope of the examined. This rate shall be an amount FOR FURTHER INFORMATION CONTACT: antidumping duty (AD) and equal to the weighted average of the Michael Romani or Thomas Schauer, countervailing duty (CVD) estimated subsidy rates established for AD/CVD Operations, Office I, investigations of passenger tires as it those companies individually Enforcement and Compliance, appeared in the Initiation Notice. We examined, excluding any zero and de International Trade Administration, are currently evaluating the scope minimis rates and any rates based U.S. Department of Commerce, 1401 comments filed by the interested entirely under section 776 of the Act. Constitution Avenue NW, Washington, parties. Commerce intends to issue its In this investigation, Commerce DC 20230; telephone: (202) 482–0198 or preliminary decision regarding the calculated individual estimated (202) 482–0410, respectively. scope of the AD and CVD investigations countervailable subsidy rates for Kumho SUPPLEMENTARY INFORMATION: in the preliminary determinations of the Tire (Vietnam) Co., Ltd. and Sailun companion AD investigations, the (Vietnam) Co., Ltd. that are not zero, de Background deadline for which is December 29, minimis, or based entirely on facts 2020.6 We will incorporate the scope otherwise available. Commerce This preliminary determination is decisions from the AD investigations made in accordance with section 703(b) calculated the all-others rate using a into the scope of the final CVD weighted average of the individual of the Tariff Act of 1930, as amended determination for this investigation after (the Act). Commerce published the estimated subsidy rates calculated for considering any relevant comments the examined respondents using each notice of initiation of this investigation submitted in scope case and rebuttal company’s publicly-ranged values for on June 29, 2020.1 On August 4, 2020, briefs.7 the merchandise under consideration.10 Commerce postponed the preliminary determination of this investigation and Methodology Preliminary Determination the revised deadline is now October 30, Commerce is conducting this Commerce preliminarily determines 2 2020. For a complete description of the investigation in accordance with section that the following estimated events that followed the initiation of 701 of the Act. For each of the subsidy countervailable subsidy rates exist: this investigation, see the Preliminary programs found countervailable, Decision Memorandum.3 A list of topics Commerce preliminarily determines Company Subsidy rate discussed in the Preliminary Decision that there is a subsidy, i.e., a financial (percent) Memorandum is included as Appendix contribution by an ‘‘authority’’ that II to this notice. The Preliminary Kumho Tire (Vietnam) Co., gives rise to a benefit to the recipient, Ltd ...... 10.08 Decision Memorandum is a public and that the subsidy is specific.8 document and is on file electronically Alignment 9 See Petitioner’s Letter, ‘‘Passenger Vehicle and via Enforcement and Compliance’s Light Truck Tires from Vietnam: Request for Antidumping and Countervailing Duty In accordance with section 705(a)(1) Alignment,’’ dated October 13, 2020. Centralized Electronic Service System of the Act and 19 CFR 351.210(b)(4), 10 With two respondents under examination, (ACCESS). ACCESS is available to Commerce normally calculates: (A) A weighted- Commerce is aligning the final CVD average of the estimated subsidy rates calculated for registered users at http:// determination in this investigation with the examined respondents; (B) a simple average of access.trade.gov. The signed and the final determination in the the estimated subsidy rates calculated for the electronic versions of the Preliminary companion AD investigation of examined respondents; and (C) a weighted-average Decision Memorandum are identical in of the estimated subsidy rates calculated for the passenger tires from Vietnam based on examined respondents using each company’s content. publicly-ranged U.S. sale quantities for the 4 See Antidumping Duties; Countervailing Duties, merchandise under consideration. Commerce then 1 See Passenger Vehicle and Light Truck Tires Final Rule, 62 FR 27296, 27323 (May 19, 1997) compares (B) and (C) to (A) and selects the rate from the Socialist Republic of Vietnam: Initiation of (Preamble). closest to (A) as the most appropriate rate for all Countervailing Duty Investigation, 85 FR 38850 5 See Initiation Notice, 85 FR at 38851. other producers and exporters. See, e.g., Ball (June 29, 2020) (Initiation Notice). 6 See Passenger Vehicle and Light Truck Tires Bearings and Parts Thereof from France, Germany, Italy, Japan, and the United Kingdom: Final Results 2 from the Republic of Korea, Taiwan, Thailand, and See Passenger Vehicle and Light Truck Tires of Antidumping Duty Administrative Reviews, Final the Socialist Republic of Vietnam: Postponement of from the Socialist Republic of Vietnam: Results of Changed-Circumstances Review, and Preliminary Determinations in the Less-Than-Fair- Postponement of Preliminary Determination in the Revocation of an Order in Part, 75 FR 53661, 53663 Value Investigations, 85 FR 65791 (October 16, Countervailing Duty Investigation, 85 FR 48666 (September 1, 2010). As complete publicly ranged (August 12, 2020). 2020). sales data was available, Commerce based the all- 3 See Memorandum, ‘‘Decision Memorandum for 7 The deadline for interested parties to submit others rate on the publicly ranged sales data of the the Preliminary Affirmative Determination: scope case and rebuttal briefs will be established in mandatory respondents. For a complete analysis of Countervailing Duty Investigation of Passenger the preliminary scope decision memorandum. the data, please see Memorandum, ‘‘Countervailing Vehicle and Light Truck Tires from the Socialist 8 See sections 771(5)(B) and (D) of the Act Duty Investigation of Passenger Vehicle and Light Republic of Vietnam,’’ dated concurrently with, and regarding financial contribution; section 771(5)(E) Truck Tires from the Socialist Republic of Vietnam: hereby adopted by, this notice (Preliminary of the Act regarding benefit; and section 771(5A) of Calculation of All-Others Rate,’’ dated concurrently Decision Memorandum). the Act regarding specificity. with this notice.

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Subsidy rate rebuttal briefs in this investigation are LT—Identifies a tire intended primarily for Company (percent) encouraged to submit with each service on light trucks. argument: (1) A statement of the issue; Suffix letter designations: Sailun (Vietnam) Co., Ltd ..... 6.23 (2) a brief summary of the argument; LT—Identifies light truck tires for service All Others ...... 6.77 on trucks, buses, trailers, and multipurpose and (3) a table of authorities. passenger vehicles used in nominal highway Pursuant to 19 CFR 351.310(c), service. Suspension of Liquidation interested parties who wish to request a All tires with a ‘‘P’’ or ‘‘LT’’ prefix, and all In accordance with section hearing, limited to issues raised in the tires with an ‘‘LT’’ suffix in their sidewall 703(d)(1)(B) and (d)(2) of the Act, case and rebuttal briefs, must submit a markings are covered by this investigation Commerce will direct U.S. Customs and written request to the Assistant regardless of their intended use. Border Protection (CBP) to suspend Secretary for Enforcement and In addition, all tires that lack a ‘‘P’’ or ‘‘LT’’ Compliance, U.S. Department of prefix or suffix in their sidewall markings, as liquidation of entries of subject well as all tires that include any other prefix merchandise as described in the scope Commerce within 30 days of the date of or suffix in their sidewall markings, are of the investigation section entered, or publication of this notice. Requests included in the scope, regardless of their withdrawn from warehouse, for should contain the party’s name, intended use, as long as the tire is of a size consumption on or after the date of address, and telephone number, the that fits passenger cars or light trucks. Sizes publication of this notice in the Federal number of participants, whether any that fit passenger cars and light trucks Register. Further, pursuant to 19 CFR participant is a foreign national, and a include, but are not limited to, the numerical size designations listed in the passenger car 351.205(d), Commerce will instruct CBP list of the issues to be discussed. If a request for a hearing is made, Commerce section or light truck section of the Tire and to require a cash deposit equal to the Rim Association Year Book, as updated rates indicated above. intends to hold the hearing at a time and annually. The scope includes all tires that are date to be determined. Parties should of a size that fits passenger cars or light Disclosure confirm by telephone the date, time, and trucks, unless the tire falls within one of the Commerce intends to disclose its location of the hearing two days before specific exclusions set out below. calculations and analysis performed to the scheduled date. Passenger vehicle and light truck tires, whether or not attached to wheels or rims, interested parties in this preliminary International Trade Commission determination within five days of its are included in the scope. However, if a Notification subject tire is imported attached to a wheel public announcement, or if there is no or rim, only the tire is covered by the scope. public announcement, within five days In accordance with section 703(f) of the Act, Commerce will notify the Specifically excluded from the scope are of the date of this notice in accordance the following types of tires: with 19 CFR 351.224(b). International Trade Commission (ITC) of (1) Racing car tires; such tires do not bear its determination. If the final the symbol ‘‘DOT’’ on the sidewall and may Verification determination is affirmative, the ITC be marked with ‘‘ZR’’ in size designation; Commerce is currently unable to will determine before the later of 120 (2) pneumatic tires, of rubber, that are not conduct on-site verification of the days after the date of this preliminary new, including recycled and retreaded tires; information relied upon in making its determination or 45 days after the final (3) non-pneumatic tires, such as solid determination. rubber tires; final determination in this investigation. (4) tires designed and marketed exclusively Accordingly, we intend to take Notification to Interested Parties as temporary use spare tires for passenger additional steps in lieu of on-site This determination is issued and vehicles which, in addition, exhibit each of verification. Commerce will notify the following physical characteristics: published pursuant to sections 703(f) interested parties of any additional (a) The size designation and load index documentation or information required. and 777(i) of the Act and 19 CFR combination molded on the tire’s sidewall 351.205(c). are listed in Table PCT–1B (‘‘T’’ Type Spare Public Comment Dated: October 30, 2020. Tires for Temporary Use on Passenger Vehicles) or PCT–1B (‘‘T’’ Type Diagonal Case briefs or other written comments Jeffrey I. Kessler, on non-scope issues may be submitted (Bias) Spare Tires for Temporary Use on Assistant Secretary for Enforcement and Passenger Vehicles) of the Tire and Rim to the Assistant Secretary for Compliance. Association Year Book, Enforcement and Compliance. Appendix I (b) the designation ‘‘T’’ is molded into the Interested parties will be notified of the tire’s sidewall as part of the size designation, timeline for the submission of such case Scope of the Investigation and, briefs and written comments at a later The scope of this investigation is passenger (c) the tire’s speed rating is molded on the date. Rebuttal briefs, limited to issues vehicle and light truck tires. Passenger sidewall, indicating the rated speed in MPH raised in case briefs, may be submitted vehicle and light truck tires are new or a letter rating as listed by Tire and Rim no later than seven days after the pneumatic tires, of rubber, with a passenger Association Year Book, and the rated speed is 81 MPH or a ‘‘M’’ rating; deadline date for case briefs.11 vehicle or light truck size designation. Tires covered by this investigation may be tube- (5) tires designed and marketed exclusively Commerce has modified certain of its type, tubeless, radial, or non-radial, and they for specialty tire (ST) use which, in addition, requirements for serving documents may be intended for sale to original exhibit each of the following conditions: containing business proprietary equipment manufacturers or the replacement (a) The size designation molded on the information until further notice.12 market. tire’s sidewall is listed in the ST sections of Pursuant to 19 CFR 351.309(c)(2) and Subject tires have, at the time of the Tire and Rim Association Year Book, (d)(2), parties who submit case briefs or importation, the symbol ‘‘DOT’’ on the (b) the designation ‘‘ST’’ is molded into the sidewall, certifying that the tire conforms to tire’s sidewall as part of the size designation, (c) the tire incorporates a warning, 11 applicable motor vehicle safety standards. See 19 CFR 351.309; see also 19 CFR 351.303 prominently molded on the sidewall, that the (for general filing requirements); see also Subject tires may also have the following Temporary Rule Modifying AD/CVD Service prefixes or suffix in their tire size tire is ‘‘For Trailer Service Only’’ or ‘‘For Requirements Due to COVID–19, 85 FR 17006, designation, which also appears on the Trailer Use Only’’, 17007 (March 26, 2020). sidewall of the tire: (d) the load index molded on the tire’s 12 See Temporary Rule Modifying AD/CVD Prefix designations: sidewall meets or exceeds those load indexes Service Requirements Due to COVID–19; Extension P—Identifies a tire intended primarily for listed in the Tire and Rim Association Year of Effective Period, 85 FR 41363 (July 10, 2020). service on passenger cars. Book for the relevant ST tire size, and

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(e) either V. Injury Test party submitted a rebuttal brief, and no (i) the tire’s speed rating is molded on the VI. Application of the CVD Law to Imports party requested a hearing in this sidewall, indicating the rated speed in MPH From Vietnam administrative review. Based on its or a letter rating as listed by Tire and Rim VII. Subsidies Valuation analysis of the comments that Association Year Book, and the rated speed VIII. Benchmarks and Interest Rates does not exceed 81 MPH or an ‘‘M’’ rating; IX. Analysis of Programs Commerce received, Commerce made or X. Conclusion no changes to the weighted-average dumping margin determined for CJ (ii) the tire’s speed rating molded on the [FR Doc. 2020–24913 Filed 11–9–20; 8:45 am] sidewall is 87 MPH or an ‘‘N’’ rating, and in Indonesia with respect to the either case the tire’s maximum pressure and BILLING CODE 3510–DS–P Preliminary Results. maximum load limit are molded on the On April 24, 2020, Commerce tolled sidewall and either DEPARTMENT OF COMMERCE all deadlines in administrative reviews (1) both exceed the maximum pressure and by 50 days.4 On June 30, 2020, maximum load limit for any tire of the same size designation in either the passenger car International Trade Administration Commerce extended the deadline for the final results by 60 days.5 On July 21, or light truck section of the Tire and Rim [A–560–826] Association Year Book; or 2020, Commerce tolled all deadlines for (2) if the maximum cold inflation pressure Monosodium Glutamate From the preliminary and final results in molded on the tire is less than any cold Republic of Indonesia: Final Results of administrative reviews by an additional inflation pressure listed for that size 60 days, thereby extending the deadline designation in either the passenger car or Antidumping Duty Administrative Review; 2017–2018 for the final results to November 2, light truck section of the Tire and Rim 2020.6 Association Year Book, the maximum load AGENCY: Enforcement and Compliance, limit molded on the tire is higher than the Scope of the Order maximum load limit listed at that cold International Trade Administration, inflation pressure for that size designation in Department of Commerce. The merchandise covered by the either the passenger car or light truck section SUMMARY: The Department of Commerce antidumping duty order is monosodium of the Tire and Rim Association Year Book; (Commerce) determines that the sole glutamate (MSG), whether or not (6) tires designed and marketed exclusively mandatory respondent, PT. Cheil Jedang blended or in solution with other for off-road use and which, in addition, products. For a complete description of exhibit each of the following physical Indonesia (CJ Indonesia), did not sell subject merchandise in the United the scope of the order, see the Issues characteristics: and Decision Memorandum.7 (a) The size designation and load index States at prices below normal value combination molded on the tire’s sidewall during the period of review (POR) Analysis of Comments Received are listed in the off-the-road, agricultural, November 1, 2017 through October 31, industrial or ATV section of the Tire and Rim 2018. Commerce addressed all issues raised Association Year Book, in the case and rebuttal briefs in the DATES: (b) in addition to any size designation Applicable November 10, 2020. Issues and Decision Memorandum. markings, the tire incorporates a warning, FOR FURTHER INFORMATION CONTACT: These issues are identified in the prominently molded on the sidewall, that the Gene H. Calvert, AD/CVD Operations, Appendix to this notice. The Issues and tire is ‘‘Not For Highway Service’’ or ‘‘Not for Office VII, Enforcement and Decision Memorandum is a public Highway Use’’, Compliance, International Trade document and is on file electronically (c) the tire’s speed rating is molded on the Administration, U.S. Department of via Enforcement and Compliance’s sidewall, indicating the rated speed in MPH Commerce, 1401 Constitution Avenue or a letter rating as listed by the Tire and Rim Antidumping and Countervailing Duty Association Year Book, and the rated speed NW, Washington, DC 20230; telephone: Centralized Electronic Service System does not exceed 55 MPH or a ‘‘G’’ rating, and (202) 482–3586. (ACCESS). ACCESS is available to (d) the tire features a recognizable off-road SUPPLEMENTARY INFORMATION: registered users at http:// tread design. access.trade.gov. In addition, a complete Background The products covered by this investigation version of the Issues and Decision are currently classified under the following On January 16, 2020, Commerce Memorandum can be accessed directly Harmonized Tariff Schedule of the United published the Preliminary Results of States (HTSUS) subheadings: 4011.10.10.10, on the internet at http:// 4011.10.10.20, 4011.10.10.30, 4011.10.10.40, this administrative review in the enforcement.trade.gov/frn/index.html. 1 4011.10.10.50, 4011.10.10.60, 4011.10.10.70, Federal Register. Commerce invited The signed Issues and Decision 4011.10.50.00, 4011.20.10.05, and interested parties to comment on the Memorandum and its electronic version 4011.20.50.10. Tires meeting the scope Preliminary Results. On June 1, 2020, are identical in content. description may also enter under the Ajinomoto Health & Nutrition North following HTSUS subheadings: America, Inc. (the petitioner) and CJ 4 See Memorandum, ‘‘Tolling of Deadlines for 4011.90.10.10, 4011.90.10.50, 4011.90.20.10, Indonesia each timely submitted case Antidumping and Countervailing Duty 4011.90.20.50, 4011.90.80.10, 4011.90.80.50, briefs.2 CJ Indonesia timely submitted a Administrative Reviews in Response to Operational Adjustments Due to COVID–19,’’ dated April 24, 8708.70.45.30, 8708.70.45.46, 8708.70.45.48, 3 8708.70.45.60, 8708.70.60.30, 8708.70.60.45, rebuttal brief on June 8, 2020. No other 2020. and 8708.70.60.60. While HTSUS 5 See Memorandum, ‘‘Administrative Review of subheadings are provided for convenience 1 See Monosodium Glutamate from the Republic the Antidumping Duty Order on Monosodium and for customs purposes, the written of Indonesia: Preliminary Results of Antidumping Glutamate from the Republic of Indonesia: description of the subject merchandise is Duty Administrative Review; 2017–2018, 85 FR Extension of Deadline for the Final Results,’’ dated 2717 (January 16, 2020) (Preliminary Results), and June 30, 2020. dispositive. accompanying Preliminary Decision Memorandum. 6 See Memorandum, ‘‘Tolling of Deadlines for Appendix II 2 See Petitioner’s Letter, ‘‘MSG from Indonesia: Antidumping and Countervailing Duty Petitioner’s Case Brief,’’ dated June 1, 2020; see also Administrative Review,’’ dated July 21, 2020. List of Topics Discussed in the Preliminary CJ Indonesia’s Letter, ‘‘Monosodium Glutamate 7 See Memorandum, ‘‘Issues and Decision Decision Memorandum (‘‘MSG’’) from Indonesia; 4th Administrative Memorandum for the Final Results of the 2017– Review; CJ Case Brief,’’ dated June 1, 2020. 2018 Administrative Review of the Antidumping I. Summary 3 See CJ Indonesia’s Letter, ‘‘Monosodium Duty Order on Monosodium Glutamate from the II. Background Glutamate (‘‘MSG’’) from Indonesia; 4th Republic of Indonesia,’’ dated concurrently with, III. Scope of the Investigation Administrative Review; CJ Rebuttal Brief,’’ dated and hereby adopted by, this notice (Issues and IV. Scope Comments June 8, 2020. Decision Memorandum).

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Changes Since the Preliminary Results the appropriate duties at the time of Notification to Importers 11 Based on its analysis of the comments liquidation. Where an importer- (or customer-) specific ad valorem or per- This notice serves as a final reminder that Commerce received, Commerce to importers of their responsibility made changes to its normal value and unit rate is zero or de minimis, under 19 CFR 351.402(f)(2) to file a margin calculations, but these did not Commerce will instruct CBP to liquidate change the weighted-average dumping appropriate entries without regard to certificate regarding the reimbursement margin determined for CJ Indonesia antidumping duties.12 of antidumping duties prior to liquidation of the relevant entries with respect to the Preliminary Results.8 In accordance with Commerce’s during this POR. Failure to comply with Final Results of Review ‘‘automatic assessment’’ practice, for entries of subject merchandise that this requirement could result in the As a result of this administrative entered the United States during the presumption that reimbursement of review, Commerce is assigning the POR that were produced by CJ antidumping duties occurred and the following weighted-average dumping Indonesia for which CJ Indonesia did subsequent assessment of double margin for the period November 1, 2017 not know that its merchandise was antidumping duties. through October 31, 2018: destined to the United States, Administrative Protective Order Weighted-average Commerce will instruct CBP to liquidate Producer/exporter dumping margin unreviewed entries at the all-others rate This notice also serves as a reminder (percent) of 6.19 percent,13 if there is no rate for to parties subject to administrative PT. Cheil Jedang Indonesia ..... 0.00 (de minimis). the intermediate company(ies) involved protective order (APO) of their in the transaction.14 responsibility concerning the Disclosure Cash Deposit Requirements destruction of proprietary information Commerce intends to disclose the disclosed under APO in accordance calculations performed in these final The following cash deposit with 19 CFR 351.305(a)(3). Timely results to interested parties within five requirements will be effective upon written notification of the return or days of the date of publication of this publication of the notice of the final destruction of APO materials or notice in the Federal Register, in results of this administrative review for conversion to judicial protective order is accordance with 19 CFR 351.224(b). all shipments of MSG from Indonesia hereby requested. Failure to comply entered, or withdrawn from warehouse, Assessment with the regulations and the terms of an for consumption on or after the date of APO is a sanctionable violation. Pursuant to section 751(a)(2)(C) of the publication of the final results in the Tariff Act of 1930, as amended (the Act), Federal Register, as provided by section Notification of Interested Parties Commerce shall determine, and U.S. 751(a)(2)(C) of the Act: (1) The cash Customs and Border Protection (CBP) deposit rate for CJ Indonesia will be Commerce is issuing and publishing shall assess, antidumping duties on all equal to the weighted-average dumping these final results in accordance with appropriate entries of subject margin established in the final results of sections 751(a)(1) and 777(i)(1) of the merchandise in accordance with the this administrative review; (2) for Act, and 19 CFR 351.221(b)(5). final results of this administrative merchandise exported by producers or Dated: November 2, 2020. review. Commerce intends to issue exporters not covered in this Jeffrey I. Kessler, assessment instructions to CBP 15 days administrative review but covered in a after the date of publication of the final Assistant Secretary for Enforcement and prior segment of the proceeding, the Compliance. results of this administrative review in cash deposit rate will continue to be the the Federal Register. company-specific rate published in a Appendix Where CJ Indonesia reported reliable completed segment for the most recent entered values, Commerce calculated List of Topics Discussed in the Issues and period of review; (3) if the exporter is Decision Memorandum importer- (or customer-) specific ad not a firm covered in this review or in valorem rates by aggregating the the original investigation, but the I. Summary dumping margins calculated for all U.S. producer is, the cash deposit rate will be II. Background sales to each importer (or customer) and the rate established for the most recently III. Scope of the Order dividing this amount by the total completed segment of this proceeding IV. Changes Since the Preliminary Results entered value of the sales to each for the producer of the merchandise; V. Discussion of the Issues 9 Comment 1: Whether the Application of importer (or customer). Where and (4) the cash deposit rate for all other Adverse Facts Available Is Warranted Commerce calculated a weighted- producers or exporters will continue to Regarding Certain of CJ Indonesia’s U.S. average dumping margin by dividing the be 6.19 percent, the all-others rate Sales total amount of dumping for reviewed established in the investigation.15 These Comment 2: Whether CJ Indonesia’s sales to that party by the total sales cash deposit requirements, when quantity associated with those General & Administrative Expenses imposed, shall remain in effect until Should Be Revised To Correct a Clerical transactions, Commerce will direct CBP further notice. to assess importer- (or customer-) Error VI. Recommendation specific assessment rates based on the 11 Id. 10 [FR Doc. 2020–24914 Filed 11–9–20; 8:45 am] resulting per-unit rates. Where an 12 See 19 CFR 351.106(c)(2). importer- (or customer-) specific ad 13 See Monosodium Glutamate from the Republic BILLING CODE 3510–DS–P valorem or per-unit rate is greater than of Indonesia: Final Determination of Sales at Less de minimis (i.e., 0.50 percent), Than Fair Value, 79 FR 58329 (September 29, 2014) Commerce will instruct CBP to collect (MSG Investigation Final Determination). 14 For a full discussion of this practice, see Antidumping and Countervailing Duty Proceedings: 8 See Issues and Decision Memorandum. Assessment of Antidumping Duties, 68 FR 23954 9 See 19 CFR 351.212(b)(1). (May 6, 2003). 10 Id. 15 See MSG Investigation Final Determination.

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DEPARTMENT OF COMMERCE submit confidential business Categorical Exclusion B4 (IHAs with no information or otherwise sensitive or anticipated serious injury or mortality) National Oceanic and Atmospheric protected information. of the Companion Manual for NOAA Administration FOR FURTHER INFORMATION CONTACT: Administrative Order 216–6A, which do not individually or cumulatively have [RTID 0648–XA569] Robert Pauline, Office of Protected Resources, NMFS, (301) 427–8401. the potential for significant impacts on Takes of Marine Mammals Incidental to Electronic copies of the application and the quality of the human environment Specified Activities; Taking Marine supporting documents, as well as a list and for which we have not identified Mammals Incidental to the Berth III of the references cited in this document, any extraordinary circumstances that New Mooring Dolphins Project in may be obtained online at: https:// would preclude this categorical Ketchikan, Alaska www.fisheries.noaa.gov/permit/ exclusion. Accordingly, NMFS has incidental-take-authorizations-under- preliminarily determined that the AGENCY: National Marine Fisheries marine-mammal-protection-act. In case issuance of the proposed IHA qualifies Service (NMFS), National Oceanic and of problems accessing these documents, to be categorically excluded from Atmospheric Administration (NOAA), please call the contact listed above. further NEPA review. Commerce. We will review all comments SUPPLEMENTARY INFORMATION: ACTION: Notice; proposed incidental submitted in response to this notice harassment authorization. Background prior to concluding our NEPA process The MMPA prohibits the ‘‘take’’ of or making a final decision on the IHA SUMMARY: NMFS has received a request marine mammals, with certain request. from the City of Ketchikan, Alaska exceptions. sections 101(a)(5)(A) and (D) (COK) for authorization to take marine Summary of Request of the MMPA (16 U.S.C. 1361 et seq.) mammals incidental to the Berth III On May 14, 2020, NMFS received a direct the Secretary of Commerce (as New Mooring Dolphins Project in request from COK for an IHA to take delegated to NMFS) to allow, upon Ketchikan, AK. Pursuant to the Marine marine mammals incidental to request, the incidental, but not Mammal Protection Act (MMPA), NMFS construction activities associated with intentional, taking of small numbers of is requesting comments on its proposal the Berth III Mooring Dolphin Project in marine mammals by U.S. citizens who to issue an incidental harassment Ketchikan, Alaska. After several engage in a specified activity (other than authorization (IHA) to incidentally take revisions, the application was deemed commercial fishing) within a specified marine mammals during the specified adequate and complete on September geographical region if certain findings activities. NMFS is also requesting 22, 2021. COK’s request is for take of are made and either regulations are comments on a possible one-time, one- nine species of marine mammals by issued or, if the taking is limited to year renewal that could be issued under Level B harassment, including Level A harassment, a notice of a proposed certain circumstances and if all harassment of three of these species. incidental take authorization may be requirements are met, as described in Neither COK nor NMFS expects serious provided to the public for review. Request for Public Comments at the end injury or mortality to result from this Authorization for incidental takings of this notice. NMFS will consider activity and, therefore, an IHA is shall be granted if NMFS finds that the public comments prior to making any appropriate. taking will have a negligible impact on final decision on the issuance of the the species or stock(s) and will not have Description of Proposed Activity requested MMPA authorizations and an unmitigable adverse impact on the agency responses will be summarized in Overview availability of the species or stock(s) for the final notice of our decision. taking for subsistence uses (where COK is proposing improvements to DATES: Comments and information must relevant). Further, NMFS must prescribe Berth III, in order to accommodate a be received no later than December 10, the permissible methods of taking and new fleet of large cruise ships (i.e. Bliss 2020. other ‘‘means of effecting the least class) and to meet the needs of the ADDRESSES: Comments should be practicable adverse impact’’ on the growing cruise ship industry and its addressed to Jolie Harrison, Chief, affected species or stocks and their vessels in Southeast Alaska. Expansion Permits and Conservation Division, habitat, paying particular attention to activities would include vibratory pile Office of Protected Resources, National rookeries, mating grounds, and areas of removal, vibratory pile driving, impact Marine Fisheries Service. Written similar significance, and on the pile driving and down-the-hole (DTH) comments should be submitted via availability of the species or stocks for pile installation. Underwater sound email to [email protected]. taking for certain subsistence uses generated by these in-water activities Instructions: NMFS is not responsible (referred to in shorthand as may result in harassment including for comments sent by any other method, ‘‘mitigation’’); and requirements Level B harassment and Level A to any other address or individual, or pertaining to the mitigation, monitoring harassment of marine mammal species. received after the end of the comment and reporting of the takings are set forth. In-water work is proposed to occur on period. Comments, including all approximately 120 days between attachments, must not exceed a 25- National Environmental Policy Act October 1, 2021 and March 13, 2022 megabyte file size. All comments To comply with the National although the IHA would be effective received are a part of the public record Environmental Policy Act of 1969 until September 30, 2022. and will generally be posted online at (NEPA; 42 U.S.C. 4321 et seq.) and While Bliss class vessels started www.fisheries.noaa.gov/permit/ NOAA Administrative Order (NAO) calling to Ketchikan during the 2018 incidental-take-authorizations-under- 216–6A, NMFS must review our cruise ship season and were able to marine-mammal-protection-act without proposed action (i.e., the issuance of an moor at Berth III, operational wind change. All personal identifying IHA) with respect to potential impacts speed restrictions were established to information (e.g., name, address) on the human environment. safely moor the vessel to prevent voluntarily submitted by the commenter This action is consistent with damage to Berth III structures. To safely may be publicly accessible. Do not categories of activities identified in moor a Bliss class vessel, additional tie

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up locations are needed to the north and generate in-water noise. Work may not Islands that consists of a long narrow south ends of the berth. Without the begin without sufficient daylight to water body approximately 11 miles proposed improvements, vessels may be conduct pre-activity monitoring, and (17.7 kilometers) in length (See Figure unable to safely moor at Berth III. may extend into twilight hours as 1). The berth is part of the Port of needed to embed the pile far enough to Ketchikan, an active marine commercial Dates and Duration safely leave piles in place until and industrial area. Construction is expected to take place installation can resume. This is because, At the project site where piles will be over a 200-day period between October during the winter, the shortest days are 1, 2021 and May 1, 2022. Actual in- driven, water depths range between approximately 7 hours of daylight; approximately 60 feet (18.3 meters) to water work is estimated to take a total however, a portion of the daylight hours of 4 months, 120 days or 17 weeks and 160 feet (48.8 meters) (PND 2006). Tidal consists of civil twilight and it can get currents generally range from 0.3 to 1.6 is expected to be completed by March darker earlier due to the tall mountains 13, 2022. In case of unanticipated miles per hour during flood and ebb surrounding Ketchikan and the frequent tides (PND 2006). delays, the effective dates of the cloudy conditions. proposed IHA are from October 1, 2021, The tide range in Ketchikan is to September 30, 2022. The daily Specific Geographic Region significant, with highest observed tides duration of construction activities will COK is located in Southeast Alaska on of 21.4 feet (6.5 meters) and lowest vary based on the daylight hours the western coast of Revillagigedo observed tides of –5.2 feet (-6.5 meters) available. In winter months, shorter 7- Island, near the southernmost boundary based on a mean lower low water hour to 10-hour workdays in available of Alaska. Ketchikan encompasses an (MLLW) elevation of 0.0. Water depths daylight are anticipated and in the early area of approximately 3 square miles of in the area of Tongass Narrows that will fall and early spring longer daylight land and 1 square mile of water. The be ensonified are generally 160 feet or workdays of up to 14-hour days are site is located on the east side of shallower, but get deeper past the anticipated. While COK may work these Tongass Narrows, a marine channel in- southern end of Pennock Island hours, not all activity in a workday will between Revillagigedo and Gravina reaching depths up to 625 feet.

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Detailed Description of Specific Activity be removed as shown in Table 1. Pile anchored up to 10 or more feet into the The proposed project would install driving will be conducted from an solid rock. Tension anchoring involves three new mooring dolphins (MD) with anchored barge, utilizing vibratory and creating an anchor hole that is smaller one at the north end of Berth III (MD#2) impact hammers to install and remove in diameter than the pile. The holes and two at the south end (MD#3 & piles and DTH pile installation to extend 10 to 20 feet or more below the MD#4) as shown in Figure 2 in COK’s position rock sockets and tension bottom of the pile. A steel bar or other IHA application (available online at: anchors. Rock socketing is a process anchoring structure (e.g., rebar frame) is https://www.fisheries.noaa.gov/ where a pile is driven by conventional then grouted or cemented in place from national/marine-mammal-protection/ vibratory and impact hammers until the bottom of the anchor hole and incidental-take-authorizations- reaching solid bedrock. If at that point extending up to the top of the pile. construction-activities). A total of 20 the pile cannot support the needed load, Attaching the anchor bar or frame to the piles will be installed. Eight of the piles a hole can be drilled into the rock with pile then helps anchor the pile in place are temporary template piles and would a DTH system to allow the pile to be to support the required project loads.

TABLE 1—PROJECT PILE TYPES AND QUANTITIES

Location Item Size and type Qty

MD#2 ...... Dolphin and Fender Piles ...... 48-inch (1.22 m) steel pipe piles ...... 6 Temporary Template Piles ...... 30-inch (0.76 m) steel pipe piles ...... 8 MD#3 ...... Dolphin Piles ...... 36-inch (0.9 m) steel pipe piles ...... 3 MD#4 ...... Dolphin Piles ...... 36-inch (0.9 m) steel pipe piles ...... 3

MD#2 will require six 48-inch deep will be hammered through the pile impact hammer advancing the tip 1 to diameter steel pipe piles up to 180 feet shaft to the width of the associated pile. 2 feet into fractured bedrock. Once a in length each. MD#3 and MD#4 will COK will then socket hammer the pile pile has been seated into bedrock with each require three 36-inch diameter up to 20 feet into bedrock. The pile will an impact hammer, COK may elect to steel pipe piles up to 180 feet in length be drawn into the hammered socket socket hammer the pile up to 10 feet each. These piles will be installed in through the hammering action. Finally, into bedrock. COK will use the vibratory water depths up to 110 feet deep and on 4 of the 6 piles, a smaller 12-inch hammer to remove the temporary will be driven through approximately 10 diameter DTH device will be used to template piles at the MD#2 after the feet of loose overburden substrate. drill a rock anchor hole into bedrock 60- permanent piles have been installed. Due to the nature of deep-water pile feet past the pile tip. A 14-inch casing Installation of permanent piles at both installation in loose sediment, a variety will be inserted into the pile and a 12- MD#3 and MD#4 is identical to that of means and methods are required to inch hole will be hammered up to 60 described for installation of permanent install a single pile. Each pile will be feet in depth from the base of the rock piles MD#2. Although additional installed using a combination of socket. The 12-inch hole for the rock construction actions will be required, installation methods: vibratory hammer, anchor is hammered beneath the pile tip the final installation of piles at MD#3 impact hammer, and DTH pile from within the hollow pipe pile. Three and MD#4 represents the end of all in- installation. COK may alternate between anchor rods will be inserted inside the water construction activities. installation methods depending on the casing; extending all the way from the Proposed mitigation, monitoring, and conditions encountered. Only one top of pile to the tip of the hammered reporting measures are described in installation method will occur at a time. 12-inch hole. The hammered 12-inch detail later in this document (please see COK may also be required to splice on hole and casing will be filled with grout Proposed Mitigation and Proposed additional lengths of pile (i.e. weld piles after component installation. Monitoring and Reporting). together to make them longer) with up Description of Marine Mammals in the to three splices expected per pile. Piles Temporary template piles will be Area of Specified Activities will be initially driven with a vibratory required for installation of the hammer from a barge-based crane. permanent piles at MD#2 and will be Sections 3 and 4 of the application Following vibratory driving, an impact removed after permanent dolphin piles summarize available information hammer will be used to seat the piles have been installed. Template piles are regarding status and trends, distribution firmly into bedrock. not necessary at the MD#3 and MD#4 and habitat preferences, and behavior COK will initially vibratory drive all because the dock structure can be used and life history, of the potentially permanent piles to first refusal which in lieu of temporary template piles. affected species. Additional information occurs when they are unable to advance Temporary template piles will include regarding population trends and threats the pile tip any further with a vibratory up to eight 30-inch (0.76 m) diameter may be found in NMFS’s Stock hammer. This will likely occur at piles or smaller. Once installed, each Assessment Reports (SARs; https:// bedrock elevation. COK will seat (or temporary template pile will measure www.fisheries.noaa.gov/national/ secure) tip of pile into bedrock with an around 150-feet (46 m) in length and marine-mammal-protection/marine- impact hammer usually to a depth of 1 will consist of up to two sections that mammal-stock-assessments) and more to 2 feet info fractured bedrock. Once will be spliced together as they are general information about these species the pile has been seated (or secured) installed. Installation methods for the (e.g., physical and behavioral into bedrock with the impact hammer, temporary template piles will be similar descriptions) may be found on NMFS’s DTH equipment will be employed to to those applied for installation of website (https:// create hammered rock sockets. Due to permanent dolphin piles. COK will www.fisheries.noaa.gov/find-species). limited overburden, all piles will initially vibratory drive all temporary Table 2 lists all species or stocks for require hammered rock sockets using piles to first refusal. COK will then seat which take is expected and proposed to DTH equipment. Sockets up to 20 feet the tip of pile into bedrock with an be authorized for this action, and

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summarizes information related to the described in NMFS’s SARs). While no abundance estimates for most species population or stock, including mortality is anticipated or authorized represent the total estimate of regulatory status under the MMPA and here, PBR and annual serious injury and individuals within the geographic area, Endangered Species Act (ESA) and mortality from anthropogenic sources if known, that comprises that stock. For potential biological removal (PBR), are included here as gross indicators of some species, this geographic area may where known. For taxonomy, we follow the status of the species and other extend beyond U.S. waters. All managed Committee on Taxonomy (2020). PBR is threats. stocks in this region are assessed in defined by the MMPA as the maximum Marine mammal abundance estimates NMFS’s U.S. Alaska SARs (Muto et al. number of animals, not including presented in this document represent 2020). All values presented in Table 2 natural mortalities, that may be removed the total number of individuals that are the most recent available at the time from a marine mammal stock while make up a given stock or the total of publication and are available in the allowing that stock to reach or maintain number estimated within a particular 2019 SARs (Muto et al., 2020). its optimum sustainable population (as study or survey area. NMFS’s stock TABLE 2—MARINE MAMMALS THAT COULD OCCUR IN THE PROPOSED PROJECT AREA

ESA/ MMPA Stock abundance Nbest, Annual Common name Scientific name MMPA 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 Eschrichtiidae: Gray Whale ...... Eschrichtius robustus ...... Eastern North Pacific ...... -, -, N 26,960 (0.05, 25,849, 801 139 2016). Family Balaenidae: Humpback whale ...... Megaptera novaeangliae ...... Central North Pacific ...... -, -,Y 10,103 (0.3; 7,891; 2006) 83 25 Minke whale ...... Balaenoptera acutorostrata ...... Alaska ...... -, -, N N.A...... N.A. 0

Order Cetartiodactyla—Cetacea—Superfamily Odontoceti (toothed whales, dolphins, and porpoises)

Family Delphinidae: Killer whale ...... Orcinus orca ...... Alaska Resident ...... -, -, N 2,347 (N.A.; 2,347; 2012) 24 1 West Coast Transient ...... -, -, N 243 (N.A, 243, 2009) ...... 2.4 0 Northern Resident ...... -, -, N 302 (N.A.; 302, 2018) ..... 2.2 0.2 Gulf of Alaska, Aleutian Islands, -, -, N 587 (N.A.;587; 2012 ...... 5.87 1 and Bering Sea Transient. Pacific white-sided dolphin Lagenorhynchus obliquidens .... North Pacific ...... -, -, N 26,880 (N.A.; N.A.; 1990) N.A. 0 Family Phocoenidae: Harbor porpoise ...... Phocoena phocoena ...... Southeast Alaska ...... -, -, Y 1,354 (0.10; 896; 2012) .. 8.95 34 Dall’s porpoise ...... Phocoenoides dalli ...... Alaska ...... -, -, N 83,400 (0.097; N.A.; N.A. 38 1991.

Order Carnivora—Superfamily Pinnipedia

Family Otariidae (eared seals and sea lions): Steller sea lion ...... Eumetopias jubatus ...... Eastern U.S...... -, -, N 43,201 (N.A.; 43,201; 2,592 112 2017). Family Phocidae (earless seals): Harbor seal ...... Phoca vitulina richardii ...... Clarence Strait ...... -, -, N 27,659 (N.A.; 24,854; 746 40 2015). 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: https://www.fisheries.noaa.gov/national/marine-mammal-protection/marine-mammal-stock-assess- ments. CV is coefficient of variation; Nmin is the minimum estimate of stock abundance. In some cases, CV is not applicable (N.A.). 3 These values, found in NMFS’s SARs, represent annual levels of human-caused mortality plus serious injury from all sources combined (e.g., commercial fish- eries, 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 mortality due to commercial fisheries is presented in some cases.

As indicated above, all nine species California, Mexico to the arctic waters of (Sitkiewicz 2020). However a gray (with 12 managed stocks) in Table 2 the Bering and Chukchi Seas. Gray whale could migrate through or near the temporally and spatially co-occur with whales are generally solitary creatures Dixon Entrance during November, and the activity to the degree that take is and travel together alone or in small possibly travel up the Nichols Channel reasonably likely to occur, and we have groups (NMFS 2020f). into the action area as it extends into the proposed authorizing it. Gray whales are rare in the action area Revillagigedo Channel. Gray Whale and unlikely to occur in Tongass Humpback Whale Narrows. They were not observed Gray whales are distributed during the Dahlheim et al. (2009) The humpback whale is distributed throughout the North Pacific Ocean and surveys of Alaska’s inland waters with worldwide in all ocean basins. are found primarily in shallow coastal surveys conducted in the spring, Relatively high densities of humpback waters (NMFS 2020f; Muto et al. 2020). summer and fall months. No gray whales are found in feeding grounds in Gray whales in the Eastern North Pacific whales were reported during the COK Southeast Alaska and northern British stock range from the southern Gulf of Rock Pinnacle Blasting Project Columbia, particularly during summer

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months. Based on extensive photo Southeast Alaska is considered a frequency of killer whales passing identification data. biologically important area (BIA) for through the action area is estimated to Humpbacks migrate to Alaska to feed feeding humpback whales between be once per month (Frietag 2017). after months of fasting in low latitude March and May (Ferguson et al., 2015). Killer whales occurring near breeding grounds. The timing of Most humpback whales migrate to other Ketchikan could belong to one of four migration varies among individuals: regions during the winter to breed, but different stocks: Eastern North Pacific Most humpbacks begin returning to rare events of over-wintering Alaska resident stock (Alaska residents); Alaska in spring and most depart Alaska humpbacks have been noted (Straley Eastern North Pacific Northern resident for southern breeding grounds in fall or 1990). It is thought that those stock (Northern residents); Gulf of winter. Peak numbers of humpbacks in humpbacks that remain in Southeast Alaska, Aleutian Islands, and Bering Sea Southeast Alaska occur during late Alaska do so in response to the transient stock (Gulf of Alaska summer to early fall, but because there availability of winter schools of fish transients); or West Coast transient stock is significant overlap between departing prey (Straley 1990).Critical habitat was (Muto et al., 2020). The Northern and returning whales, humpbacks can proposed for designation on October 9, resident stock is a transboundary stock, be found in Alaska feeding grounds in 2019 by NMFS (84 FR 54354). A final and includes killer whales that frequent every month of the year (Baker et al. determination was not issued at the British Columbia, Canada, and 1985, Straley 1990, Witteveen and time of this writing. Proposed Critical southeastern Alaska (Muto et al., 2018). Wynne 2009). There is also an apparent Habitat Unit 10 Southeast Alaska In recent years, a small number of the increase in the number of humpbacks encompasses the action area; however, Gulf of Alaska transients (identified by overwintering in feeding grounds in the Department of Defense petitioned genetics and association) have been seen Alaska, including reports in Ketchikan for an exclusion of a portion of the Unit in southeastern Alaska; previously only during some years in the winter (Straley 10 due to national security reasons. As West Coast transients had been seen in et al. 2017, Liddle 2015, 84 FR 36891; a result, the boundary of Unit 10 was southeastern Alaska (Muto et al., 2020). July 30, 2019). redefined to exclude Tongass Narrows Therefore, the Gulf of Alaska transient In 2016 NMFS revised the ESA listing and vicinity from the proposed critical stock occupies a range that includes of humpback whales (81 FR 62259; habitat designation, including the southeastern Alaska. The West Coast September 8, 2016). NMFS is in the proposed action area. transient stock includes animals that process of reviewing humpback whale occur in California, Oregon, stock structure and abundance under Minke Whale Washington, British Columbia and the MMPA in light of the ESA revisions. Minke whales are widely distributed southeastern (Muto et al., 2020). The MMPA stock in southeast Alaska is throughout the northern hemisphere Despite being rare in occurrence considered to be the Central North and are found in both the Pacific and during the proposed time of Pacific stock. Humpbacks from 2 of the Atlantic oceans. Minke whales in construction (pods expected to absent 14 newly identified Distinct Population Alaska are considered migratory. During more often than present), it must be Segments (DPSs) occur in the project summer months are typically found in acknowledged that killer whales often area: The Mexico DPS, which is a the Arctic and during winter months travel in pods and would occur as such threatened species; and the Hawaii DPS, found near the equator (NMFS 2020e). if they were to occur at all in the project which is not listed under the ESA. There are no known occurrences of area. While killer whales can be NMFS considers humpback whales in minke whales within the action area. common, they are not known to linger Southeast Alaska to be 94 percent Since their ranges extend into the in Tongass Narrows or other similar comprised of the Hawaii DPS and 6 project area and they have been environments. During the COK’s percent of the Mexico DPS (Wade et al., observed in southeast Alaska, including monitoring for the Rock Pinnacle 2016). Humpback whales occur in Clarence Strait (Dahlheim et al. Removal project in December 2019 and frequently in Tongass Narrows and the 2009), it is possible the species could January 2020, no killer whales were adjacent Clarence Strait during summer occur near the project area. During the observed. and fall months to feed. Data on the surveys by Dalheim et al. (2009), all but distribution suggests that both the one encounter was with a single whale Pacific White-Sided Dolphin Mexico and Hawaii Distinct Population and, although infrequent, minke whales There are three stocks of the Pacific Segments (DPS) of humpback whales were observed during all seasons white-sided dolphin in U.S. waters. may be present in the Tongass Narrows surveyed (spring, summer and fall). No Only the North Pacific stock is found area. The Alaska Department of Fish minke whales where reported during within the action area. The Pacific and Game reports that humpback the COK Rock Pinnacle Blasting Project white-sided dolphin is distributed whales occur in Clarence Strait year- (Sitkiewicz 2020). throughout the temperate north Pacific round, with numbers peaking in May Ocean, north of Baja California to and June and falling off from July to Killer Whale Alaska’s southern coastline and September (ADF&G 2020). Local No systematic studies of killer whales Aleutian Islands. The North Pacific anecdotal reports indicate that have been conducted in or around Stock ranges from Canada into Alaska humpback whales are becoming more Tongass Narrows. Killer whales have (Muto et al. 2019). common and abundant in Tongass been observed in Tongass Narrows year- Dalheim et al. (2009) frequently Narrows during August and September, round and are most common during the encountered Pacific white-sided which is consistent with research in summer Chinook salmon run (May- dolphin in Clarence Strait with Southeast Alaska. July). During the Chinook salmon run, significant differences in mean group The COK Rock Pinnacle project Ketchikan residents have reported pods size and rare enough encounters to limit reported one humpback whale sighting of 20–30 whales and during the 2016/ the seasonality investigation to a of one individual during the project 2017 winter a pod of 5 whales was qualitative note that spring featured the (December 2019 through January 2020). observed in Tongass Narrows (84 FR highest number of animals observed. The sighting was 55 minutes post-blast 36891; July 30, 2019). Typical pod sizes These observations were noted most and not recorded as a take (Sitkiewicz observed within the project vicinity typically in open strait environments, 2020). range from 1 to 10 animals and the near the open ocean. Mean group size

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was over 20, with no recorded winter mean group size of Dall’s porpoise in harbor seal haulouts within the project observations nor observations made in Southeast Alaska is estimated at area. According to the list of harbor seal the Nichols Passage or Behm Canal, approximately three individuals haulout locations, the closest listed located on either side of the Tongass (Dahlheim et al., 2009; Jefferson et al., haulouts are located off the tip of Narrows. Though generally preferring 2019). However, in the Ketchikan Gravina Island, approximately 8 more pelagic, open-water environments, vicinity, Dall’s porpoises are reported to kilometers (5 miles) northwest of Ward Pacific white-sided dolphin could be typically occur in groups of 10–15 Cove (AFSC 2018). present within the action area during animals, with an estimated maximum Steller Sea Lion the construction period. group size of 20 animals (Freitag 2017). There were no sightings of Pacific Jefferson et al. (2019) presents historical The Steller sea lion is the largest of white-sided dolphins during the COK survey data showing few sightings in the eared seals, ranging along the North Rock Pinnacle Blasting Project during the Ketchikan area, and based on these Pacific Rim from northern Japan to monitoring surveys conducted in occurrence patterns, concludes that California, with centers of abundance December 2019 and January 2020 Dall’s porpoise rarely come into narrow and distribution in the Gulf of Alaska (Sitkiewicz 2020). waterways, like Tongass Narrows. and Aleutian Islands. They are common Anecdotal reports suggest that Dall’s throughout the inside waters of Harbor Porpoise porpoises are found northwest of southeast Alaska and reside in areas In the eastern North Pacific Ocean, Ketchikan near the Guard Islands, nearby Tongass Narrows, but are not the harbor porpoise ranges from Point where waters are deeper, as well as in commonly observed in Tongass Narrows Barrow, along the Alaska coast, and deeper waters to the southeast of outside of the Chinook salmon run. down the west coast of North America Tongass Narrows. Overall, sightings of There are several mapped and to Point Conception, California. The Dall’s porpoise are infrequent near regularly monitored long-term Steller Southeast Alaska stock ranges from Ketchikan, but they could be present on sea lion haulouts surrounding Cape Suckling to the Canadian border any given day during the construction Ketchikan, such as Grindall island (Muto et al. 2019). Harbor porpoises period. (approximately 20 miles (58 km) from frequent primarily coastal waters in Ketchikan), West Rocks (36 miles/58 Southeast Alaska (Dahlheim et al. 2009) Harbor Seal km), or Nose Point (37 miles/60 km), but and occur most frequently in waters less Harbor seals inhabit coastal and none within Tongass Narrows (Fritz et than 100 meters (328 feet) deep estuarine waters off Alaska. They haul al., 2015). Sea lions are rarely observed (Dahlheim et al. 2015). The mean group out on rocks, reefs, beaches, and drifting in the Tongass narrows during the size of harbor porpoise in Southeast glacial ice. They are opportunistic winter. Fritz et al. (2015) reported adult Alaska is estimated at two individuals feeders and often adjust their counts at Grindall Island, located (Dahlheim et al., 2009). They tend to distribution to take advantage of locally approximately 20 miles (32 km) away avoid areas with elevated levels of and seasonally abundant prey (Womble from the project area, averaged about vessel activity and noise such as et al., 2009, Allen and Angliss, 2015). 190 between 2002 and 2015. No pups Tongass Narrows. Harbor seals occurring in the project were recorded during this timeframe. Studies of harbor porpoises reported area belong to the Clarence Strait stock. West Rock averaged over 650 adults no evidence of seasonal changes in Distribution of the Clarence Strait stock with 0 to 3 pups observed over the same distribution for the inland waters of ranges from the east coast of Prince of timeframe. These long-term and Southeast Alaska (Dahlheim et al. 2009). Wales Island from Cape Chacon north seasonal haulouts are important habitat Ketchikan area densities are expected to through Clarence Strait to Point Baker for Steller sea lions, but all are outside be low. While less common within the and along the east coast of Mitkof and of the action area. However, due to the Tongass Narrows than nearby areas, Kupreanof Islands north to Bay Point, proximity of the Grindall Island haulout harbor porpoise could potentially pass including Ernest Sound, Behm Canal, and the possibility of Steller sea lion through the area and/or occupy the and Pearse Canal (Muto et al. 2020). The movement around this haulout, they are Revillagigedo Channel year-round. Note latest stock assessment analysis potentially present year-round within that their small overall size, lack of a indicates that the current 8-year the action area. estimate of the Clarence Strait visible blow, low dorsal fins and overall Marine Mammal Hearing low profile, and short surfacing time population trend is +138 seals per year, make them difficult to spot (Dahlheim et with a probability that the stock is Hearing is the most important sensory al. 2015). decreasing of 0.413 (Muto et al., 2020). modality for marine mammals Marine mammal monitoring In the project area, they tend to be more underwater, and exposure to associated with the COK Rock Pinnacle abundant during spring, summer and anthropogenic sound can have Removal project did not observe any fall months when salmon are present in deleterious effects. To appropriately harbor porpoise during surveys Ward Creek. Anecdotal evidence assess the potential effects of exposure conducted in December 2019 and indicates that harbor seals typically to sound, it is necessary to understand January 2020 (Sitkiewicz 2020). occur in groups of 1–3 animals in Ward the frequency ranges marine mammals Cove (Spokely 2019). They were not are able to hear. Current data indicate Dall’s Porpoise observed in Tongass Narrows during a that not all marine mammal species Dall’s porpoises are found throughout combined 63.5 hours of marine mammal have equal hearing capabilities (e.g., the North Pacific, from southern Japan monitoring that took place in 2001 and Richardson et al., 1995; Wartzok and to southern California north to the 2016 (OSSA 2001, Turnagain 2016). The Ketten, 1999; Au and Hastings, 2008). Bering Sea. All Dall’s porpoises in COK conducted pinnacle rock blasting To reflect this, Southall et al., (2007) Alaska are members of the Alaska stock. in December 2019 and January 2020 recommended that marine mammals be This species can be found in offshore, near the vicinity of the proposed project divided into functional hearing groups inshore, and nearshore habitat. and recorded a total of 21 harbor seal based on directly measured or estimated Jefferson et al. (2019) presents sightings of 24 individuals over 76.2 hearing ranges based on available historical survey data showing few hours of pre- and post-blast monitoring behavioral response data, audiograms sightings in the Ketchikan area. The (Sitkiewicz 2020). There are no known derived using auditory evoked potential

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techniques, anatomical modeling, and these marine mammal hearing groups. bound was deemed to be biologically other data. Note that no direct Generalized hearing ranges were chosen implausible and the lower bound from measurements of hearing ability have based on the approximately 65 decibel Southall et al., (2007) retained. Marine been successfully completed for (dB) threshold from the normalized mammal hearing groups and their mysticetes (i.e., low-frequency composite audiograms, with the associated hearing ranges are provided cetaceans). Subsequently, NMFS (2018) exception for lower limits for low- in Table 3. described generalized hearing ranges for frequency cetaceans where the lower

TABLE 3—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 to impact marine mammal species or the local environment or could form a group was modified from Southall et al. stocks. distinctive signal that may affect marine (2007) on the basis of data indicating mammals. Description of Sound Sources that phocid species have consistently In-water construction activities demonstrated an extended frequency The marine soundscape is comprised associated with the project would range of hearing compared to otariids, of both ambient and anthropogenic include vibratory pile driving and pile especially in the higher frequency range sounds. Ambient sound is defined as removal, impact pile driving, and DTH (Hemila¨ et al., 2006; Kastelein et al., the all-encompassing sound in a given pile installation. The sounds produced 2009; Reichmuth and Holt, 2013). place and is usually a composite of by these activities fall into one of two For more detail concerning these sound from many sources both near and general sound types: Impulsive and groups and associated frequency ranges, far. The sound level of an area is non-impulsive. Impulsive sounds (e.g., please see NMFS (2018) for a review of defined by the total acoustical energy explosions, gunshots, sonic booms, available information. Nine mammal being generated by known and impact pile driving) are typically species (seven cetacean and two unknown sources. These sources may transient, brief (less than one second), pinniped (one otariid and one phocid) include physical (e.g., waves, wind, broadband, and consist of high peak species) have the reasonable potential to precipitation, earthquakes, ice, sound pressure with rapid rise time and co-occur with the proposed survey atmospheric sound), biological (e.g., rapid decay (ANSI 1986; NIOSH 1998; activities. Please refer to Table 2. Of the sounds produced by marine mammals, ANSI 2005; NMFS, 2018). Non- cetacean species that may be present, fish, and invertebrates), and impulsive sounds (e.g., aircraft, three are classified as low-frequency anthropogenic sound (e.g., vessels, machinery operations such as drilling or cetaceans (i.e., all mysticete species), dredging, aircraft, construction). dredging, vibratory pile driving, and two are classified as mid-frequency The sum of the various natural and active sonar systems) can be broadband, cetaceans (i.e., all delphinid and ziphiid anthropogenic sound sources at any narrowband or tonal, brief or prolonged species and the sperm whale), and two given location and time—which (continuous or intermittent), and are classified as high-frequency comprise ‘‘ambient’’ or ‘‘background’’ typically do not have the high peak cetaceans (i.e., porpoise and Kogia spp.). sound—depends not only on the source sound pressure with raid rise/decay levels (as determined by current time that impulsive sounds do (ANSI Potential Effects of Specified Activities weather conditions and levels of 1995; NIOSH 1998; NMFS 2018). The on Marine Mammals and Their Habitat biological and shipping activity) but distinction between these two sound This section includes a summary and also on the ability of sound to propagate types is important because they have discussion of the ways that components through the environment. In turn, sound differing potential to cause physical of the specified activity may impact propagation is dependent on the effects, particularly with regard to marine mammals and their habitat. The spatially and temporally varying hearing (e.g., Ward 1997 in Southall et Estimated Take section later in this properties of the water column and sea al., 2007). document includes a quantitative floor, and is frequency-dependent. As a Impact hammers operate by analysis of the number of individuals result of the dependence on a large repeatedly dropping a heavy piston onto that are expected to be taken by this number of varying factors, ambient a pile to drive the pile into the substrate. activity. The Negligible Impact Analysis sound levels can be expected to vary Sound generated by impact hammers is and Determination section considers the widely over both coarse and fine spatial characterized by rapid rise times and content of this section, the Estimated and temporal scales. Sound levels at a high peak levels, a potentially injurious Take section, and the Proposed given frequency and location can vary combination (Hastings and Popper, Mitigation section, to draw conclusions by 10–20 dB from day to day 2005). Vibratory hammers install piles regarding the likely impacts of these (Richardson et al., 1995). The result is by vibrating them and allowing the activities on the reproductive success or that, depending on the source type and weight of the hammer to push them into survivorship of individuals and how its intensity, sound from the specified the sediment. Vibratory hammers those impacts on individuals are likely activity may be a negligible addition to produce significantly less sound than

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impact hammers. Peak sound pressure noise in a marine mammal’s habitat can that, for various ethical reasons, levels (SPLs) may be 180 dB or greater, mask acoustic cues used by marine experiments involving anthropogenic but are generally 10 to 20 dB lower than mammals to carry out daily functions noise exposure at levels inducing PTS SPLs generated during impact pile such as communication and predator are not typically pursued or authorized driving of the same-sized pile (Oestman and prey detection. The effects of pile (NMFS 2018). et al., 2009). Rise time is slower, driving and removal noise on marine Temporary Threshold Shift (TTS)—A reducing the probability and severity of mammals are dependent on several temporary, reversible increase in the injury, and sound energy is distributed factors, including, but not limited to, threshold of audibility at a specified over a greater amount of time (Nedwell sound type (e.g., impulsive vs. non- frequency or portion of an individual’s and Edwards 2002; Carlson et al., 2005). impulsive), the species, age and sex hearing range above a previously A DTH hammer is used to place hollow class (e.g., adult male vs. mom with established reference level (NMFS, steel piles or casings by drilling. A DTH calf), duration of exposure, the distance 2018). Based on data from cetacean TTS hammer is a drill bit that drills through between the pile and the animal, measurements (see Southall et al., the bedrock using a pulse mechanism received levels, behavior at time of 2007), a TTS of 6 dB is considered the that functions at the bottom of the hole. exposure, and previous history with minimum threshold shift clearly larger This pulsing bit breaks up rock to allow exposure (Wartzok et al., 2004; Southall than any day-to-day or session-to- removal of debris and insertion of the et al., 2007). Here we discuss physical session variation in a subject’s normal pile. The head extends so that the auditory effects (threshold shifts) hearing ability (Schlundt et al., 2000; drilling takes place below the pile. The followed by behavioral effects and Finneran et al., 2000, 2002). As sounds produced by DTH hammers potential impacts on habitat. described in Finneran (2015), marine were previously thought to be NMFS defines a noise-induced mammal studies have shown the continuous. However, recent sound threshold shift (TS) as a change, usually amount of TTS increases with source verification (SSV) monitoring has an increase, in the threshold of cumulative sound exposure level shown that DTH hammer can create audibility at a specified frequency or (SELcum) in an accelerating fashion: At sound that can be considered impulsive portion of an individual’s hearing range low exposures with lower SELcum, the (Denes et al. 2019). Since sound from above a previously established reference amount of TTS is typically small and DTH activities has both impulsive and level (NMFS 2018). The amount of the growth curves have shallow slopes. continuous components, NMFS threshold shift is customarily expressed At exposures with higher SELcum, the characterizes sound from DTH pile in dB. A TS can be permanent or growth curves become steeper and installation as being impulsive when temporary. As described in NMFS approach linear relationships with the evaluating potential Level A harassment (2018), there are numerous factors to noise sound exposure level (SEL). (i.e., injury) impacts and as being non- consider when examining the Depending on the degree (elevation of impulsive when assessing potential consequence of TS, including, but not threshold in dB), duration (i.e., recovery Level B harassment (i.e. behavior) limited to, the signal temporal pattern time), and frequency range of TTS, and effects. (e.g., impulsive or non-impulsive), the context in which it is experienced, The likely or possible impacts of likelihood an individual would be TTS can have effects on marine COK’s proposed activity on marine exposed for a long enough duration or mammals ranging from discountable to mammals could involve both non- to a high enough level to induce a TS, serious (similar to those discussed in acoustic and acoustic stressors. the magnitude of the TS, time to auditory masking, below). For example, Potential non-acoustic stressors could recovery (seconds to minutes or hours to a marine mammal may be able to readily result from the physical presence of the days), the frequency range of the compensate for a brief, relatively small equipment and personnel; however, any exposure (i.e., spectral content), the amount of TTS in a non-critical impacts to marine mammals are hearing and vocalization frequency frequency range that takes place during expected to primarily be acoustic in range of the exposed species relative to a time when the animal is traveling nature. Acoustic stressors include the signal’s frequency spectrum (i.e., through the open ocean, where ambient effects of heavy equipment operation how an animal uses sound within the noise is lower and there are not as many during pile installation and removal. frequency band of the signal; e.g., competing sounds present. Kastelein et al., 2014), and the overlap Alternatively, a larger amount and Acoustic Impacts between the animal and the source (e.g., longer duration of TTS sustained during The introduction of anthropogenic spatial, temporal, and spectral). time when communication is critical for noise into the aquatic environment from Permanent Threshold Shift (PTS)— successful mother/calf interactions pile driving and removal is the primary NMFS defines PTS as a permanent, could have more serious impacts. We means by which marine mammals may irreversible increase in the threshold of note that reduced hearing sensitivity as be harassed from COK’s specified audibility at a specified frequency or a simple function of aging has been activity. In general, animals exposed to portion of an individual’s hearing range observed in marine mammals, as well as natural or anthropogenic sound may above a previously established reference humans and other taxa (Southall et al., experience physical and psychological level (NMFS, 2018). Available data from 2007), so we can infer that strategies effects, ranging in magnitude from none humans and other terrestrial mammals exist for coping with this condition to to severe (Southall et al., 2007). In indicate that a 40 dB threshold shift some degree, though likely not without general, exposure to pile driving and approximates PTS onset (see Ward et cost. removal noise has the potential to result al., 1958, 1959; Ward 1960; Kryter et al., Currently, TTS data only exist for four in auditory threshold shifts and 1966; Miller 1974; Ahroon et al., 1996; species of cetaceans (bottlenose dolphin behavioral reactions (e.g., avoidance, Henderson et al., 2008). PTS levels for (Tursiops truncatus), beluga whale temporary cessation of foraging and marine mammals are estimates, as with (Delphinapterus leucas), harbor vocalizing, changes in dive behavior). the exception of a single study porpoise, and Yangtze finless porpoise Exposure to anthropogenic noise can unintentionally inducing PTS in a (Neophocoena asiaeorientalis)) and five also lead to non-observable harbor seal (Kastak et al., 2008), there species of pinnipeds exposed to a physiological responses such an are no empirical data measuring PTS in limited number of sound sources (i.e., increase in stress hormones. Additional marine mammals largely due to the fact mostly tones and octave-band noise) in

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laboratory settings (Finneran 2015). TTS individuals but also within an disturbance behaviors. Fifteen killer was not observed in trained spotted individual, depending on previous whales and three harbor porpoise were (Phoca largha) and ringed (Pusa experience with a sound source, also observed within the Level B hispida) seals exposed to impulsive context, and numerous other factors harassment zone during pile driving. noise at levels matching previous (Ellison et al., 2012), and can vary The killer whales were travelling or predictions of TTS onset (Reichmuth et depending on characteristics associated milling while all harbor porpoises were al., 2016). In general, harbor seals and with the sound source (e.g., whether it travelling. No signs of disturbance were harbor porpoises have a lower TTS is moving or stationary, number of noted for either of these species. Given onset than other measured pinniped or sources, distance from the source). In the similarities in activities and habitat cetacean species (Finneran 2015). general, pinnipeds seem more tolerant and the fact that many of the same Additionally, the existing marine of, or at least habituate more quickly to, species are involved, we expect similar mammal TTS data come from a limited potentially disturbing underwater sound behavioral responses of marine number of individuals within these than do cetaceans, and generally seem mammals to COK’s specified activity. species. No data are available on noise- to be less responsive to exposure to That is, disturbance, if any, is likely to induced hearing loss for mysticetes. For industrial sound than most cetaceans. be temporary and localized (e.g., small summaries of data on TTS in marine Please see Appendices B–C of Southall area movements). Monitoring reports mammals or for further discussion of et al., (2007) for a review of studies from other recent pile driving and DTH TTS onset thresholds, please see involving marine mammal behavioral drilling projects in Alaska have Southall et al., (2007), Finneran and responses to sound. observed similar behaviors (for example, Jenkins (2012), Finneran (2015), and Disruption of feeding behavior can be the Biorka Island Dock Replacement Table 5 in NMFS (2018). difficult to correlate with anthropogenic Project; see https:// Behavioral Harassment—Exposure to sound exposure, so it is usually inferred www.fisheries.noaa.gov/action/ noise from pile driving and removal also by observed displacement from known incidental-take-authorization-faa- has the potential to behaviorally disturb foraging areas, the appearance of biorka-island-dock-replacement-project- marine mammals. Available studies secondary indicators (e.g., bubble nets sitka-ak). show wide variation in response to or sediment plumes), or changes in dive Masking—Sound can disrupt behavior underwater sound; therefore, it is behavior. As for other types of through masking, or interfering with, an difficult to predict specifically how any behavioral response, the frequency, animal’s ability to detect, recognize, or given sound in a particular instance duration, and temporal pattern of signal might affect marine mammals presentation, as well as differences in discriminate between acoustic signals of perceiving the signal. If a marine species sensitivity, are likely interest (e.g., those used for intraspecific mammal does react briefly to an contributing factors to differences in communication and social interactions, underwater sound by changing its response in any given circumstance prey detection, predator avoidance, behavior or moving a small distance, the (e.g., Croll et al., 2001; Nowacek et al., navigation) (Richardson et al., 1995). impacts of the change are unlikely to be 2004; Madsen et al., 2006; Yazvenko et Masking occurs when the receipt of a significant to the individual, let alone al., 2007). A determination of whether sound is interfered with by another the stock or population. However, if a foraging disruptions incur fitness coincident sound at similar frequencies sound source displaces marine consequences would require and at similar or higher intensity, and mammals from an important feeding or information on or estimates of the may occur whether the sound is natural breeding area for a prolonged period, energetic requirements of the affected (e.g., snapping shrimp, wind, waves, impacts on individuals and populations individuals and the relationship precipitation) or anthropogenic (e.g., could be significant (e.g., Lusseau and between prey availability, foraging effort pile driving, shipping, sonar, seismic Bejder 2007; Weilgart 2007; NRC 2005). and success, and the life history stage of exploration) in origin. The ability of a Disturbance may result in changing the animal. noise source to mask biologically durations of surfacing and dives, In 2016, the Alaska Department of important sounds depends on the number of blows per surfacing, or Transportation and Public Facilities characteristics of both the noise source moving direction and/or speed; (ADOT&PF) documented observations and the signal of interest (e.g., signal-to- reduced/increased vocal activities; of marine mammals during construction noise ratio, temporal variability, changing/cessation of certain behavioral activities (i.e., pile driving and DTH direction), in relation to each other and activities (such as socializing or drilling) at the Kodiak Ferry Dock (see to an animal’s hearing abilities (e.g., feeding); visible startle response or 80 FR 60636; October 7, 2015). In the sensitivity, frequency range, critical aggressive behavior (such as tail/fluke marine mammal monitoring report for ratios, frequency discrimination, slapping or jaw clapping); avoidance of that project (ABR 2016), 1,281 Steller directional discrimination, age or TTS areas where sound sources are located. sea lions were observed within the hearing loss), and existing ambient Pinnipeds may increase their haul out Level B disturbance zone during pile noise and propagation conditions. time, possibly to avoid in-water driving or drilling (i.e., documented as Masking of natural sounds can result disturbance (Thorson and Reyff 2006). Level B harassment take). Of these, 19 when human activities produce high Behavioral responses to sound are individuals demonstrated an alert levels of background sound at highly variable and context-specific and behavior, 7 were fleeing, and 19 swam frequencies important to marine any reactions depend on numerous away from the project site. All other mammals. Conversely, if the intrinsic and extrinsic factors (e.g., animals (98 percent) were engaged in background level of underwater sound species, state of maturity, experience, activities such as milling, foraging, or is high (e.g. on a day with strong wind current activity, reproductive state, fighting and did not change their and high waves), an anthropogenic auditory sensitivity, time of day), as behavior. In addition, two sea lions sound source would not be detectable as well as the interplay between factors approached within 20 meters of active far away as would be possible under (e.g., Richardson et al., 1995; Wartzok et vibratory pile driving activities. Three quieter conditions and would itself be al., 2003; Southall et al., 2007; Weilgart harbor seals were observed within the masked. The Ketchikan area contains 2007; Archer et al., 2010). Behavioral disturbance zone during pile driving active commercial shipping, cruise ship reactions can vary not only among activities; none of them displayed and ferry operations, as well as

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numerous recreational and other expected to result in long-term effects to In-Water Construction Effects on commercial vessels; therefore, the individuals or populations. Potential Prey (Fish) background sound levels in the area are In-water pile driving, pile removal, Construction activities would produce already elevated. and DTH pile installation activities continuous (i.e., vibratory pile driving Airborne Acoustic Effects—Pinnipeds would also cause short-term effects on and DTH pile installation) and pulsed that occur near the project site could be water quality due to increased turbidity. (i.e. impact driving, DTH pile exposed to airborne sounds associated Local strong currents are anticipated to installation) sounds. Fish react to with pile driving, pile removal and DTH disburse suspended sediments sounds that are especially strong and/or pile installation that have the potential produced by project activities at intermittent low-frequency sounds. to cause behavioral harassment, moderate to rapid rates depending on Short duration, sharp sounds can cause depending on their distance from pile tidal stage. COK would employ other overt or subtle changes in fish behavior driving activities. Cetaceans are not standard construction best management and local distribution. Hastings and expected to be exposed to airborne practices, thereby reducing any impacts. Popper (2005) identified several studies sounds that would result in harassment Therefore, the impact from increased that suggest fish may relocate to avoid as defined under the MMPA. turbidity levels is expected to be certain areas of sound energy. Airborne noise would primarily be an discountable. issue for pinnipeds that are swimming Additional studies have documented or hauled out near the project site In-Water Construction Effects on effects of pile driving on fish, although within the range of noise levels Potential Foraging Habitat several are based on studies in support exceeding the acoustic thresholds. We The area likely impacted by the of large, multiyear bridge construction recognize that pinnipeds in the water project is relatively small compared to projects (e.g., Scholik and Yan, 2001, could be exposed to airborne sound that the available habitat (e.g., most of the 2002; Popper and Hastings, 2009). may result in behavioral harassment impacted area is limited to Tongass Sound pulses at received levels of 160 when looking with their heads above Narrows) and does not contain habitat dB may cause subtle changes in fish water. Most likely, airborne sound of known importance, other than being behavior. SPLs of 180 dB may cause would cause behavioral responses designated as a feeding BIA for noticeable changes in behavior (Pearson similar to those discussed above in humpback whales during the spring. et al., 1992; Skalski et al., 1992). SPLs relation to underwater sound. For However, the entirety of southeast of sufficient strength have been known instance, anthropogenic sound could Alaska is considered a feeding BIA for to cause injury to fish and fish cause hauled-out pinnipeds to exhibit humpback whales of which Tongass mortality. changes in their normal behavior, such Narrows represents only a small The most likely impact to fish from as reduction in vocalizations, or cause segment. Additionally, the project area pile driving and drilling activities at the them to temporarily abandon the area is highly influenced by anthropogenic project area would be temporary and move further from the source. activities. behavioral avoidance of the area. The However, these animals would Pile installation/removal and drilling duration of fish avoidance of this area previously have been taken by Level B may temporarily increase turbidity after pile driving stops is unknown, but harassment because of exposure to resulting from suspended sediments. a rapid return to normal recruitment, underwater sound above the behavioral Any increases would be temporary, distribution and behavior is anticipated. harassment thresholds, which are, in all localized, and minimal. COK must There are times of known seasonal cases, larger than those associated with comply with state water quality marine mammal foraging in Tongass airborne sound. Therefore, we do not standards during these operations by Narrows around fish processing/ believe that authorization of incidental using silt curtains and removing all hatchery infrastructure or when fish are take resulting from airborne sound for sediments captured as drill cutting congregating, but the impacted areas of pinnipeds is warranted, and airborne discharge to upland disposal sites. In Tongass Narrows are a small portion of sound is not discussed further here. general, turbidity associated with pile the total foraging habitat available in the installation is localized to about a 25- region. In general, impacts to marine Marine Mammal Habitat Effects foot (7.6 m) radius around the pile mammal prey species are expected to be COK’s construction activities could (Everitt et al., 1980). Any pinnipeds minor and temporary due to the short have localized, temporary impacts on would be transiting the area and could timeframe of the project and the small marine mammal habitat by increasing avoid localized areas of turbidity. project footprint. in-water sound pressure levels and Therefore, the impact from increased Construction activities, in the form of slightly decreasing water quality. turbidity levels is expected to be increased turbidity, have the potential Construction activities are of short discountable to marine mammals. to adversely affect forage fish and duration and would likely have Furthermore, pile driving and removal juvenile salmonid outmigratory routes temporary impacts on marine mammal at the project site would not obstruct in the project area. Both herring and habitat through increases in underwater movements or migration of marine salmon form a significant prey base for sound. Increased noise levels may affect mammals. Steller sea lions, herring is a primary acoustic habitat (see masking discussion Avoidance by potential prey (i.e., fish) prey species of humpback whales, and above) and adversely affect marine of the immediate area due to the both herring and salmon are mammal prey in the vicinity of the temporary loss of this foraging habitat is components of the diet of many other project area (see discussion below). also possible. The duration of fish marine mammal species that occur in During pile driving, elevated levels of avoidance of this area after pile driving the project area. Increased turbidity is underwater noise would ensonify the stops is unknown, but a rapid return to expected to occur in the immediate area where both fish and mammals may normal recruitment, distribution and vicinity (on the order of 25 feet (7.6 m) occur and could affect foraging success. behavior is anticipated. Any behavioral or less) of construction activities. Additionally, marine mammals may avoidance by fish of the disturbed area However, suspended sediments and avoid the area during construction, would still leave significantly large particulates are expected to dissipate however, displacement due to noise is areas of fish and marine mammal quickly within a single tidal cycle. expected to be temporary and is not foraging habitat in the nearby vicinity. Given the limited area affected and high

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tidal dilution rates any effects on forage acoustic sources (i.e., vibratory or source (e.g., frequency, predictability, fish and salmon are expected to be impact pile driving or DTH pile duty cycle), the environment (e.g., minor or negligible. In addition, best installation) has the potential to result bathymetry), and the receiving animals management practices would be in in disruption of behavioral patterns for (e.g., hearing, motivation, experience, effect, which would limit the extent of individual marine mammals. There is demography, behavioral context) and turbidity to the immediate project area. also some potential for auditory injury can be difficult to predict (Southall et Finally, exposure to turbid waters from (Level A harassment) to result, primarily al., 2007, Ellison et al., 2012). Based on construction activities is not expected to for high frequency cetacean species and what the available science indicates and be different from the current exposure; phocid pinnipeds. Auditory injury is the practical need to use a threshold fish and marine mammals in the unlikely to occur in low-frequency and based on a factor that is both predictable Tongass Narrows region are routinely mid-frequency cetacean species and and measurable for most activities, exposed to substantial levels of otariid pinnipeds. The proposed NMFS uses a generalized acoustic suspended sediment from glacial mitigation and monitoring measures are threshold based on received level to sources. expected to minimize the severity of the estimate the onset of behavioral In summary, given the temporary taking to the extent practicable. harassment. NMFS predicts that marine nature of the construction project and As described previously, no mortality mammals are likely to be behaviorally relatively small areas being affected, is anticipated or proposed to be harassed in a manner we consider Level pile driving and removal activities authorized for this activity. Below we B harassment when exposed to associated with the proposed action are describe how the take is estimated. underwater anthropogenic noise above not likely to have a permanent, adverse Generally speaking, we estimate take received levels of 120 dB re 1 mPa (rms) effect on any fish habitat, or populations by considering: (1) Acoustic thresholds for continuous (e.g., vibratory pile- of fish species. Thus, we conclude that above which NMFS believes the best driving, drilling) and above 160 dB re 1 impacts of the specified activity are not available science indicates marine mPa (rms) for non-explosive impulsive likely to have more than short-term mammals will be behaviorally harassed (e.g., seismic airguns) or intermittent adverse effects on any prey habitat or or incur some degree of permanent (e.g., scientific sonar) sources. populations of prey species. Further, hearing impairment; (2) the area or COK’s proposed activity includes the any impacts to marine mammal habitat volume of water that will be ensonified use of continuous (vibratory pile are not expected to result in significant above these levels in a day; (3) the driving, DTH pile installation) and or long-term consequences for density or occurrence of marine impulsive (impact pile driving), sources, individual marine mammals, or to mammals within these ensonified areas; and therefore the 120 and 160 dB re 1 contribute to adverse impacts on their and, (4) and the number of days of mPa (rms) criteria are applicable. populations. activities. We note that while these basic factors can contribute to a basic Level A harassment for non-explosive Estimated Take calculation to provide an initial sources—NMFS’ Technical Guidance This section provides an estimate of prediction of takes, additional for Assessing the Effects of the number of incidental takes proposed information that can qualitatively Anthropogenic Sound on Marine for authorization through this IHA, inform take estimates is also sometimes Mammal Hearing (Version 2.0) which will inform both NMFS’ available (e.g., previous monitoring (Technical Guidance, 2018) identifies consideration of ‘‘small numbers’’ and results or average group size). Below, we dual criteria to assess auditory injury the negligible impact determination. describe the factors considered here in (Level A harassment) to five different Harassment is the only type of take more detail and present the proposed marine mammal groups (based on expected to result from these activities. take estimate. hearing sensitivity) as a result of Except with respect to certain activities exposure to noise from two different not pertinent here, section 3(18) of the Acoustic Thresholds types of sources (impulsive or non- MMPA defines ‘‘harassment’’ as any act NMFS recommends the use of impulsive). COK’s proposed activity of pursuit, torment, or annoyance, acoustic thresholds that identify the includes the use of impulsive (impact which (i) has the potential to injure a received level of underwater sound pile driving, DTH pile installation) and marine mammal or marine mammal above which exposed marine mammals non-impulsive (vibratory pile driving/ stock in the wild (Level A harassment); would be reasonably expected to be removal, DTH pile installation) sources. or (ii) has the potential to disturb a behaviorally harassed (equated to Level These thresholds are provided in marine mammal or marine mammal B harassment) or to incur PTS of some Table 4. The references, analysis, and stock in the wild by causing disruption degree (equated to Level A harassment). methodology used in the development of behavioral patterns, including, but Level B Harassment for non-explosive of the thresholds are described in NMFS not limited to, migration, breathing, sources—Though significantly driven by 2018 Technical Guidance, which may nursing, breeding, feeding, or sheltering received level, the onset of behavioral be accessed at https:// (Level B harassment). disturbance from anthropogenic noise www.fisheries.noaa.gov/national/ Authorized takes would primarily be exposure is also informed to varying marine-mammal-protection/marine- by Level B harassment, as use of the degrees by other factors related to the mammal-acoustic-technical-guidance.

TABLE 4—THRESHOLDS IDENTIFYING THE ONSET OF PERMANENT THRESHOLD SHIFT

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

Low-Frequency (LF) Cetaceans ...... Cell 1: Lpk,flat: 219 dB: LE,LF,24h: 183 dB ...... Cell 2: LE,LF,24h: 199 dB. Mid-Frequency (MF) Cetaceans ...... Cell 3: Lpk,flat: 230 dB: LE,MF,24h: 185 dB ...... Cell 4: LE,MF,24h: 198 dB. High-Frequency (HF) Cetaceans ...... Cell 5: Lpk,flat: 202 dB: LE,HF,24h: 155 dB ...... Cell 6: LE,HF,24h: 173 dB. Phocid Pinnipeds (PW) (Underwater) ...... Cell 7: Lpk,flat: 218 dB: LE,PW,24h: 185 dB ...... Cell 8: LE,PW,24h: 201 dB.

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TABLE 4—THRESHOLDS IDENTIFYING THE ONSET OF PERMANENT THRESHOLD SHIFT—Continued

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

Otariid Pinnipeds (OW) (Underwater) ...... Cell 9: Lpk,flat: 232 dB: LE,OW,24h: 203 dB ...... Cell 10: 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. 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 of representative source levels (see al. 2019; Reyff and Heyvaert 2019). DTH Here, we describe operational and Table 5). pile installation was initially thought be Sound source levels for vibratory environmental parameters of the activity a primarily non-impulsive noise source. installation of 30-inch steel piles were that will feed into identifying the area However, Denes et al.(2019) concluded obtained by Denes et al. (2016) during ensonified above the acoustic from their study in Virginia that DTH the installation of 30-inch steel pipe thresholds, which include source levels should be characterized as impulsive piles at the Ketchikan Ferry Terminal. based on a >3 dB difference in sound and transmission loss coefficient. Vibratory removal of 30-inch piles is The sound field in the project area is pressure level in a 0.035-second expected to be quieter than installation, window (Southall et al. 2007) compared the existing background noise plus so this value is used as a proxy. Sound additional construction noise from the to a 1-second window. Therefore, DTH levels for vibratory installation of 48- pile installation is treated as both an proposed project. Marine mammals are inch steel piles were obtained by Austin expected to be affected via sound impulsive and non-impulsive noise et al. (2016) during the installation of source. In order to evaluate Level A generated by the primary components of test piles at the Port of Anchorage. The the project (i.e., vibratory pile driving, harassment, DTH pile installation applicant elected to conservatively activities are evaluated according to the vibratory pile removal, impact pile employ sound source levels for the 48- driving, and DTH pile installation). impulsive criteria and the User inch piles as a proxy to calculate Spreadsheet may be employed. Level B Vibratory hammers produce constant harassment isopleths for 36-inch piles. harassment isopleths are determined by sound when operating, and produce Sound levels for impact installation of applying non-impulsive criteria and vibrations that liquefy the sediment 30-inch steel piles were taken from using the 120 dB threshold which is surrounding the pile, allowing it to Denes et al. (2016) during the also used for vibratory driving. This penetrate to the required seating depth. installation of piles at the Ketchikan approach ensures that the largest ranges An impact hammer would then Ferry Terminal. Sound levels for impact to effect for both Level A and Level B generally be used to place the pile at its installation of 48-inch steel piles were harassment are accounted for in the take intended depth through rock or harder obtained by Austin et al. (2016) during estimation process. substrates. An impact hammer is a steel the installation of test piles at the Port device that works like a piston, of Anchorage. Overall median levels The source level employed to derive producing a series of independent were not reported for peak and single Level B harassment isopleths for DTH strikes to drive the pile. Impact strike SEL values. Therefore, the highest pile installation (both socketing and hammering typically generates the values reported for peak and single anchoring) of all pile sizes was derived loudest noise associated with pile strike SEL were used. The highest levels from the Denes et al. (2016) study at installation. The actual durations of reported were a peak of 213.2 dB re: 1 Kodiak, Alaska. The reported median each installation method vary mPa at 14 m and a single strike SEL of source value for drilling was determined depending on the type of pile, size of 186.7 dB re: 1 mPa2–sec on pile IP5 at to be 166.2 dB RMS. the pile, and substrate characteristics 11 m (Austin et al. 2016). Sound source For DTH anchoring of 12-inch holes, (e.g., bedrock). levels for 48-inch piles are used as a COK used a sound source level from In order to calculate distances to the proxy to calculate harassment isopleths Guan and Miner (2020) of 146 dB SEL Level A harassment and Level B for 36-inch piles. for Level A harassment calculations. For harassment sound thresholds for piles of DTH pile installation includes drilling DTH installation of 30 and 36-inch various sizes being used in this project, (non-impulsive sound) and hammering sockets, source levels from Reyff & NMFS used acoustic monitoring data (impulsive sound) to penetrate rocky Heyvaert (2019), Reyff (2020), and from other locations to inform selection substrates (Denes et al. 2016; Denes et Denes et al. (2019) were employed.

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TABLE 5—ESTIMATES OF MEAN UNDERWATER SOUND LEVELS GENERATED DURING VIBRATORY PILE REMOVAL, VIBRATORY PILE INSTALLATION, IMPACT PILE INSTALLATION, AND DTH PILE INSTALLATION

Sound source level at 10 meters Method and pile type Literature source SPL rms SPLPK SSSEL

Vibratory Hammer

30-inch steel piles ...... 161.9 ...... Denes et al. 2016. 36- and 48-inch steel piles ...... 168.2 ...... Austin et al. 2016.

Impact Hammer

30-inch diameters ...... 195 208.5 180.7 Austin et al. 2016. 36- and 48-inch ...... 198.6 1 213.2 2 186.7 Austin et al. 2016.

DTH Pile Installation

DTH Sockets (48-inch) ...... 166.2 ...... 168 Extrapolated from DTH SSV studies listed below; Denes et al. (2016). DTH Sockets (30-, 36-inch) ...... 166.2 194 164 Reyff & Heyvaert (2019); Reyff (2020); Denes et al. (2019); Denes et al. (2016). DTH Anchors (12-inch) ...... 166.2 172 146 Guan and Miner (2020); Denes et al. (2016). 1 Represents maximum value measured at 14 m. 2 Represents maximum value measured at 11 m. SSSEL = single strike sound exposure level; dB peak = peak sound level; rms = root mean square.

Level A Harassment Zones take. However, these tools offer the best harassment thresholds for impulsive When the NMFS Technical Guidance way to predict appropriate isopleths sound sources (impact pile driving, (2016) was published, in recognition of when more sophisticated 3D modeling DTH pile installation) are defined for the fact that ensonified area/volume methods are not available, and NMFS both SELcum and Peak SPL, with the could be more technically challenging continues to develop ways to threshold that results in the largest to predict because of the duration quantitatively refine these tools, and modeled isopleth for each marine component in the new thresholds, we will qualitatively address the output mammal hearing group used to establish developed a User Spreadsheet that where appropriate. For stationary the effective Level A harassment includes tools to help predict a simple sources such as impact driving, isopleth. Note that the peak SPL for isopleth that can be used in conjunction vibratory driving and DTH pile DTH installation of 48-in piles is with marine mammal density or installation example from project, unknown as no sound source occurrence to help predict takes. We NMFS User Spreadsheet predicts the verification testing has been conducted note that because of some of the distance at which, if a marine mammal on piles of that size. The single strike assumptions included in the methods remained at that distance the whole SEL was extrapolated using data points used for these tools, we anticipate that duration of the activity, it would incur measured for smaller piles during DTH isopleths produced are typically going PTS. installation. In this project, Level A to be overestimates of some degree, Inputs used in the User Spreadsheet harassment isopleths based on SELcum which may result in some degree of (Table 6) and the resulting isopleths are were always larger than those based on overestimate of Level A harassment reported below (Table 7). Level A Peak SPL. TABLE 6—PARAMETERS OF PILE DRIVING AND DRILLING ACTIVITY USED IN USER SPREADSHEET

Vibratory pile driv- Vibratory pile driv- DTH sockets er (Installation/re- er (Installation of Impact pile driver Impact pile driver DTH anchor Equipment type moval of 30-in 36- and 48-in (30-in steel piles) (36- and 48-in (12-in steel piles) steel piles) steel piles) steel piles) 30-, 36-in 48-in

Spreadsheet Tab Non-impulsive, Non-impulsive, Impulsive, Non- Impulsive, Non- Impulsive, Non-continuous Impulsive, Non- Used. continuous. continuous. continuous. continuous. continuous.

Source Level ...... 161.9 RMS ...... 168.2 RMS ...... 180.7 SS SEL ..... 186.7 SS SEL ..... 164 SS SEL/194 168 SS SEL ...... 146 SS SEL/172 SPLpk. SPLpk.

Weighting Factor 2.5 ...... 2.5 ...... 2 ...... 2 ...... 2 2. Adjustment (kHz).

(a) Activity duration (a) Up to 6 hrs (a) Up to 6 hrs (a) 1–10 minutes (a) 1–10 minutes (a) Up to 3 hrs (a) Up to 2 hrs (a) Up to 6 hrs (time) within 24 OR >6–8 hrs. OR >6–8 hrs. (b) Up to 500 (b) Up to 500 OR >3–6 hrs. OR >2–3 hrs OR >6–8 hrs hours. (c) 1 ...... (c) 1 ...... strikes. strikes. (c) 1 ...... OR >3–4 hrs. (c) 1. (c) 1 ...... (c) 1 ...... (c) 1 ...... (b) Number of (a) 11–20 minutes (a) 11–20 minutes strikes per pile (b) 501–1,000 (b) 501–1,000 (impact). strikes. strikes. (c) 1 ...... (c) 1..

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TABLE 6—PARAMETERS OF PILE DRIVING AND DRILLING ACTIVITY USED IN USER SPREADSHEET—Continued

Vibratory pile driv- Vibratory pile driv- DTH sockets er (Installation/re- er (Installation of Impact pile driver Impact pile driver DTH anchor Equipment type moval of 30-in 36- and 48-in (30-in steel piles) (36- and 48-in (12-in steel piles) steel piles) steel piles) steel piles) 30-, 36-in 48-in

(c) Number of piles (a) 21–30 minutes (a) 21–30 minutes per day. (b) 1,001–1,500 (b) 1,001–1,500 strikes. strikes. (c) 1 ...... (c) 1..

Propagation 15 ...... 15 ...... 15 ...... 15 ...... 15 15. (xLogR). Distance of source 10 ...... 10 ...... 10 ...... 10 ...... 10 10. level measure- ment (meters).

TABLE 7—CALCULATED DISTANCES TO LEVEL A HARASSMENT ISOPLETHS (m) DURING VIBRATORY PILE INSTALLATION/ REMOVAL, IMPACT INSTALLATION AND DTH PILE INSTALLATION FOR EACH HEARING GROUP

PTS onset isopleth (m)

Source Daily duration Cetaceans Pinnipeds Low- Mid- High- frequency frequency frequency Phocid Otariid

30-inch Vibratory (Installa- Up to 6 hours ...... 25.9 2.3 38.3 15.7 1.1 tion or Removal). 7 to 8 hours ...... 31.4 2.8 46.4 19.1 1.3 36- and 48-inch Vibratory ... Up to 6 hours ...... 68.1 6 100.7 41.4 2.9 7 to 8 hours ...... 82.5 7.3 122 50.1 3.5 Down-the-Hole Socket (30-, Up to 3 hours ...... 1,225.6 43.6 1,459.9 655.9 47.8 36-inch). 4 to 6 hours ...... 1,945.5 69.3 2,317.4 1,041.2 75.8 Down-the-Hole Socket (48- Up to 2 ...... 1,728.3 61.5 2,058.7 924.9 67.3 inch). >2 to 3 hours ...... 2,264.8 80.5 2,697.7 1,212 88.2 >3 to 4 hours ...... 2,743.6 97.6 3,268 1,468.2 106.9 Down the Hole Anchor (12- Up to 6 hours ...... 122.8 4.4 146.2 65.7 4.8 inch). 7 to 8 hours ...... 148.7 5.3 177.1 79.6 5.8 30-inch Diesel Impact ...... Up to 500 strikes (1–10 442 15.7 526.4 236.5 17.2 minutes). 501–1,000 strikes (11–20 701.6 25 835.7 375.4 27.3 minutes). 1,001–1,500 strikes (21–30 919.3 32.7 1,095 492 35.8 minutes). 36- and 48-inch Diesel Im- Up to 500 strikes (1–10 1,221 43 1,455 654 48 pact. minutes). 501–1,000 strikes (11–20 1,938.5 68.9 2,309 1,037.4 75.5 minutes). 1,001–1,500 strikes (21–30 2,540.1 90.3 3,025.7 1,359.4 99 minutes).

Level B Harassment Zones the driven pile, and of 16,343 m for vibratory pile driving of R2 = the distance from the driven pile of the 36 and 48-inch diameter piles. Other Transmission loss (TL) is the decrease initial measurement in acoustic intensity as an acoustic activities, including rock anchoring and pressure wave propagates out from a The recommended TL coefficient for impact pile driving, have smaller Level source. TL parameters vary with most nearshore environments is the B harassment zones. All Level B frequency, temperature, sea conditions, practical spreading value of 15. This harassment isopleths are reported in current, source and receiver depth, value results in an expected propagation Table 8 below. It should be noted that water depth, water chemistry, and environment that would lie between based on the geography of Tongass bottom composition and topography. spherical and cylindrical spreading loss Narrows and the surrounding islands, The general formula for underwater TL conditions, which is the most sound will not reach the full distance of is: appropriate assumption for COK’s the Level B harassment isopleth. The TL = B * Log10 (R1/R2), proposed activity. largest Level B Harassment isopleth will Where Using the practical spreading model, be truncated by land masses at approximately 12,500 meters to the TL = transmission loss in dB COK determined underwater noise B = transmission loss coefficient; for practical would fall below the behavioral effects southeast and approximately 3,590 spreading equals 15 threshold of 120 dB rms for marine meters northwest of the project area. R1 = the distance of the modeled SPL from mammals at a maximum radial distance Constraining land masses include

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Revillagigedo Island, Gravina Island, during winter and spring. The average and fish processing facilities in the Pennock Island and Spire Island. group size during the fall surveys was vicinity. two whales according to Dalheim et al. Group sizes are generally 6 to 10 TABLE 8—CALCULATED LEVEL B (2009). Local reports of humpback individuals (Freitag 2017) but have been HARASSMENT ISOPLETHS whale group size in Tongass Narrows reported to reach 80 animals (Freitag are similar, with the typical size being 2017). COK assumed one large group of Behavioral between 1 and 3. During the spring 10 individuals could be present each disturbance Source isopleth months, humpback whales tend to day in the project vicinity based on HDR (m) congregate in areas outside of the (2019) and Freitag (2017) (as cited in 83 120 dB Ketchikan area, such as Lynn Canal and FR 22009; May 11, 2018). NMFS agrees 30-inch Vibratory (Installation or Re- Fredrick Sound. Therefore, it is that this daily estimate is appropriate moval) ...... 6,213 assumed that the occurrence of and therefore proposes to authorize up 36- and 48-inch Vibratory ...... 16,343 humpback whales in the project area is to 1,200 takes by Level B harassment. DTH installation (Socket, Anchor) ...... 11,660 Take by Level A harassment is not 30-inch Diesel Impact ...... 2,154 two individuals twice per week 36- and 48-inch Diesel Impact ...... 3,744 throughout the project. A group size of expected for Steller sea lions because of two was also assumed in the Biological the relatively small Level A harassment Marine Mammal Occurrence and Take Opinion provided to the U.S. Army zones for otariids (Table 7) and the Calculation and Estimation Corp of Engineers (USACE) for the expected effectiveness of the monitoring Alaska Department of Transportation & and mitigation measures discussed In this section we provide the below. information about the presence, density, Public Ferries (ADOT&PF) Berth or group dynamics of marine mammals improvement project in Tongass Harbor Seal Narrows (NMFS 2019). that will inform the take calculations. Harbor seal densities in the Tongass Note that there is no density data for Therefore, it is estimated that up to 2 Narrows area are not well known. No any of the species near the Berth III individuals could be exposed to systematic studies of harbor seals have mooring dolphin project area, therefore underwater noise twice a week during been conducted in or near Tongass the take estimate is informed by the 17 weeks of the project’s in-water Narrows. Seals are known to occur year- qualitative data. work, for a total of 68 incidents of take round with little seasonal variation in The number of marine mammals that from the Central North Pacific stock. abundance (Freitag 2017) and local may be exposed to harassment Given that 6.1 percent of all humpback experts estimate that there are about 1 thresholds is calculated by estimating whales in Southeast Alaska and to 3 harbor seals in Tongass Narrows the likelihood of a marine mammal northern British Columbia are assumed every day, in addition to those that being present within a harassment zone to be members of the Mexico DPS, while congregate near the seafood processing during the associated activities. all others are assumed to be members of plants and fish hatcheries. COK Estimated marine mammal abundance is the Hawaii DPS (Wade et al. 2016), conducted pinnacle rock blasting in determined by reviewing local and NMFS proposes to authorize 68 December 2019 and January 2020 near regional reports, surveys, permits and incidents of take by Level B harassment the vicinity of the proposed project and observations of abundance and with 64 instances from the Hawaii DPS recorded a total of 21 harbor seal frequency near the proposed project and 4 instances from the endangered sightings of 24 individuals over 76.2 action. For example, for species that are Mexico DPS. hours of pre- and post-blast monitoring common with the potential to occur Take by Level A harassment is not (Sitkiewicz 2020). Harbor seals were daily, the take calculations are based on expected for humpback whales because observed in groups ranging from 1–3 the group size multiplied by the of the expected effectiveness of the animals throughout the 0.70-mile (1.12- projected number of days of underwater monitoring and mitigation measures. kilometer) observation zone. Based on noise activities. For species that are less While calculated Level A harassment this knowledge, COK assumed an common, take estimates are based on zones are up to 2,800 m, multiple average group size in Tongass Narrows group size multiplied by the frequency protected species observers (PSOs) will of three individuals. They anticipated (e.g., weekly, monthly). The estimated monitoring Tongass Narrows which is < that three groups of 3 harbor seals per number of takes are based upon less than 600 m in width and represents group could be exposed to project- reasonable ranges from the best a much smaller effective Level A related underwater noise each day for information currently available for these harassment zone. Humpbacks are 120 days of in-water work. Given that species near the project area. usually readily visible, therefore, harbor seals are known to follow fishing Authorization of Level A harassment shutdown measures can be vessels into the marina and may be takes was requested by COK for harbor implemented prior to any humpback difficult to detect, COK assumed that seal, harbor porpoise, and Dall’s whales incurring PTS within Level A one group of three seals could be taken porpoise. Harbor seals are habituated to harassment zones. by Level A harassment daily, resulting fishing vessels and may follow vessels Steller Sea Lion in 360 Level A harassment takes. NMFS that enter the marina. Dall’s and harbor agreed with these assumptions and, porpoises’ small size and speed make it Steller sea lion abundance in the therefore, proposes to authorize 720 possible that these animals could occur Tongass Narrows area is not well known takes by Level B harassment and 360 within the Level A harassment zones and no systematic studies of Steller sea takes by Level A harassment. and potentially incur injury prior to lions have been conducted in or near detection. the Tongass Narrows area. However, sea Dall’s Porpoise lions are known to occur in the Tongass The mean group size of Dall’s Humpback Whale Narrows area throughout the year with porpoise in Southeast Alaska is Humpback whales occur frequently in peak numbers March through estimated at approximately three Tongass Narrows and the adjacent September (ADOT 2019). Sea lions may individuals (Dahlheim et al., 2009; Clarence Strait during summer and fall be present during salmon and herring Jefferson et al., 2019). However, in the months to feed, but are less common runs and are known to visit hatcheries Ketchikan vicinity, Dall’s porpoises are

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reported to typically occur in groups of Given that harbor porpoises are Minke Whale 10–15 animals, with an estimated stealthy, having no visible blow and a There are no known occurrences of maximum group size of 20 animals low profile in the water making the minke whales within the project area (Freitag 2017, as cited in 83 FR 22009, species difficult for monitors to detect although they may be present in May 11, 2018). Overall, sightings of (Dahlheim et al. 2015), COK requested Tongass Narrows and Clarence Strait Dall’s porpoise are infrequent near that a total of 10 takes of harbor year-round. Their abundance Ketchikan, but they could be present on porpoises by Level A harassment be throughout Southeast Alaska is low. any given day during the construction authorized. Therefore, NMFS proposes However, minke whales are distributed period. to authorize 10 takes of harbor porpoise COK assumed that a maximum group throughout a wide variety of habitats by Level A harassment and 30 takes by and could occur near the project area. size of 20 Dall’s porpoise could occur in Level B harassment. the project area each month. NMFS Minke whales are generally sighted as concurs with this assessment and Killer Whale individuals (Dahlheim et al. 2009). Therefore, NMFS proposes to proposes to authorize 80 takes of Dall’s Typical pod sizes observed within the porpoise over the anticipated four- authorize two takes of minke whale by project vicinity range from 1 to 10 Level B harassment. No Level A month project duration. animals. COK assumed that the Given the large size of the Level A harassment takes of minke whales are frequency of killer whales passing anticipated due to the very limited harassment zone associated with impact through the action area is estimated to pile driving for high-frequency occurrence of minke whales and the be once per month and also ability to shut down pile driving cetaceans, it is possible Dall’s porpoises conservatively assumed a pod size of 10. may enter the Level A harassment zone activities prior to a whale entering the Therefore NMFS proposes to undetected. Therefore, NMFs proposes Level A harassment zone. authorize 40 takes of killer whales by to authorize a total of 60 takes of Dall’s Level B harassment. Pacific White-Sided Dolphin porpoise by Level B harassment and 20 takes by Level A harassment over the Take by Level A harassment is not Pacific white-sided dolphins have not course of the project. expected for killer whales because of the been reported within the Tongass small Level A harassment zones for Narrows; however, the dolphin is Harbor Porpoise mid-frequency cetaceans and the within its range and thus its presence Harbor porpoises are non-migratory; expected effectiveness of the monitoring cannot be discounted. Pacific white- therefore, occurrence estimates are not and mitigation measures discussed sided dolphin group sizes generally dependent on season. Freitag (2017 as below. range from between 20 and 164 animals. cited in 83 FR 37473; August 1, 2018) Gray Whale For the purposes of this assessment, observed harbor porpoises in Tongass COK assumed one group of 30 dolphins Narrows zero to one time per month. Gray whales have not been reported may be present within the Level B Harbor porpoises observed in the project within the Tongass Narrows; however, harassment zone every tenth day, or vicinity typically occur in groups of one their presence cannot be entirely about every other week, similar to what to five animals with an estimated discounted. Since the largest Level B was estimated for a prior IHA (84 FR maximum group size of eight animals harassment zone extends beyond 36891; July 30, 2019). Therefore, NMFS (83 FR 37473, August 1, 2018, Solstice Tongass Narrows, COK assumed that up proposes to authorize 360 takes of 2018). Based on this previous to two gray whales may be taken per Pacific white-sided dolphin by Level B information from the Ketchikan Berth IV month. Therefore, NMFS proposes to harassment. Expansion project and the AKDOT authorize take by Level B harassment of No Level A takes are expected due to Tongass Narrows project, COK up to 8 gray whales. the relatively small size of Level A estimated that two groups of five harbor Due to the unlikely occurrence of gray harassment zone for mid-frequency porpoise may enter the Tongass whales and the ability to shut down pile cetaceans which can be readily Narrows twice per month. NMFS agrees driving activities prior to a whale monitored. with this estimate and, therefore, entering the Level A harassment zone, Table 9 below summarizes the proposes to authorize take of 40 harbor no Level A harassment takes of gray proposed authorized take for all the porpoises during the duration of the whales were requested or are proposed species described above as a percentage project. for authorization. of stock abundance.

TABLE 9—PROPOSED TAKE BY LEVEL A AND B HARASSMENT AND AS A PERCENTAGE OF STOCK ABUNDANCE

Stock Percent of Species Level B takes Level A takes abundance stock

Humpback whale 1 ...... 68 N/A 10,103 0.67 Steller sea lion eDPS ...... 1,200 N/A 43,201 2.8 Harbor seal ...... 720 360 27,659 3.9 Dall’s porpoise ...... 60 20 83,400 0.09 Harbor porpoise ...... 30 10 1,354 2.9 Killer whale: 2 AK resident ...... 40 N/A 2,347 1.7 West coast transient ...... 243 16.46 Northern resident ...... 302 13.25 Gulf of Alaska, Aleutian Islands, and Bering Sea transient ...... 587 6.81 Gray whale ...... 8 N/A 26,960 0.03 Pacific white-sided Dolphin ...... 360 N/A 26,880 1.34

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TABLE 9—PROPOSED TAKE BY LEVEL A AND B HARASSMENT AND AS A PERCENTAGE OF STOCK ABUNDANCE—Continued

Stock Percent of Species Level B takes Level A takes abundance stock

Minke whale ...... 2 N/A N/A N/A 1 Assumes that 6.1 percent of humpback whales exposed are members of the Mexico DPS (Wade et al. 2016). Distribution of proposed take by ESA status is 64 Level B takes for Hawaii DPS and 4 Level B take for Mexico DPS. 2 These percentages assume all takes come from the same killer whale stock, thus the percentage should be adjusted down if multiple stocks are actually affected.

Proposed Mitigation • For in-water heavy machinery work strikes required for pile installation or In order to issue an IHA under section other than pile driving, if a marine removal. During vibratory driving/ 101(a)(5)(D) of the MMPA, NMFS must mammal comes within 10 m, operations removal and DTH pile installation, the set forth the permissible methods of shall cease and vessels shall reduce shutdown zone size will initially be set taking pursuant to the activity, and speed to the minimum level required to at the lowest tier, which represents the other means of effecting the least maintain steerage and safe working least amount of active installation/ practicable impact on the species or conditions. This type of work could removal time. Shutdown zones will be stock and its habitat, paying particular include the following activities: (1) expanded to the next largest zone after attention to rookeries, mating grounds, Movement of the barge to the pile Tier 1 time period has elapsed. For and areas of similar significance, and on location; or (2) positioning of the pile on those activities with three specified tiers the availability of the species or stock the substrate via a crane (i.e., stabbing (i.e., impact driving, DTH socketing), for taking for certain subsistence uses. the pile); the shutdown zone will be expanded to • NMFS regulations require applicants for Briefings must be conducted the largest isopleths identified in Tier 3 incidental take authorizations to include between construction supervisors and if the activity extends beyond the Tier information about the availability and crews and the marine mammal 2 active time period. During impact feasibility (economic and technological) monitoring team prior to the start of all driving, the shutdown zones associated of equipment, methods, and manner of pile driving activity and when new with 0–500 strikes will be monitored conducting the activity or other means personnel join the work, to explain until 500 strikes have occurred. The of effecting the least practicable adverse responsibilities, communication shutdown zones will increase to the impact upon the affected species or procedures, marine mammal monitoring next tier between 501–1,000 strikes. stocks and their habitat (50 CFR protocol, and operational procedures; After 1,000 strikes the shutdown zones • 216.104(a)(11)). For those marine mammals for will subsequently be increased to the In evaluating how mitigation may or which take has not been authorized, in- largest zone sizes. • may not be appropriate to ensure the water pile installation/removal will shut If a marine mammal is entering or least practicable adverse impact on down immediately if such species are is observed within an established species or stocks and their habitat, as observed within or entering the Level B shutdown zone, pile driving must be well as subsistence uses where harassment zone; and halted or delayed. Pile driving may not • applicable, we carefully consider two If take reaches the authorized limit commence or resume until either the primary factors: for an authorized species, pile animal has voluntarily left and been (1) The manner in which, and the installation will be stopped as these visually confirmed beyond the degree to which, the successful species approach the harassment zone shutdown zone or 15 minutes have implementation of the measure(s) is to avoid additional take. passed without subsequent detections of expected to reduce impacts to marine The following mitigation measures marine mammals. mammals, marine mammal species or would apply to COK’s in-water • The placement of PSOs during all stocks, and their habitat, as well as construction activities. pile driving and removal activities subsistence uses. This considers the • Establishment of Shutdown (described in detail in the Proposed nature of the potential adverse impact Zones—COK will establish shutdown Monitoring and Reporting section) will being mitigated (likelihood, scope, zones for all pile driving and removal ensure that the entire shutdown zone is range). It further considers the activities. The purpose of a shutdown visible during pile installation. Should likelihood that the measure will be zone is generally to define an area environmental conditions deteriorate effective if implemented (probability of within which shutdown of the activity such that marine mammals within the accomplishing the mitigating result if would occur upon sighting of a marine entire shutdown zone would not be implemented as planned), the mammal (or in anticipation of an animal visible (e.g., fog, heavy rain), pile likelihood of effective implementation entering the defined area). Shutdown driving and removal must be delayed (probability implemented as planned), zones will vary based on the activity until the PSO is confident marine and; type and marine mammal hearing group mammals within the shutdown zone (2) The practicability of the measures (Table 10). Due to sediment could be detected. for applicant implementation, which characteristics and variation in pile • PSOs—COK will employ PSOs who may consider such things as cost, sizes, COK does not know how much will be able to fully monitor Level A impact on operations, and, in the case time will be required for vibratory harassment zones. Placement of PSOs of a military readiness activity, driving/removal and DTH installation at will allow observation of marine personnel safety, practicality of each pile or how many strikes will be mammals within the large segments of implementation, and impact on the required for impact installation. Given the Level B harassment zones. However, effectiveness of the military readiness this uncertainty, COK will utilize a due to the large size of some of the Level activity. tiered system to identify and monitor B harassment zones (Table 8), PSOs will The following mitigation measures are appropriate shutdown zones based on not be able to effectively observe the proposed for this IHA: activity duration or the number of entire zone.

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• Pre-activity Monitoring—Prior to the harassment zone, activities may will be implemented at the start of each the start of daily in-water construction begin. If work ceases for more than 30 day’s impact pile driving and at any activity, or whenever a break in pile minutes, the pre-activity monitoring of time following cessation of impact pile driving/removal of 30 minutes or longer the shutdown zones will commence. driving for a period of thirty minutes or • occurs, PSOs will observe the shutdown Soft Start—Soft-start procedures are longer. and monitoring zones for a period of 30 believed to provide additional • protection to marine mammals by Scheduling—Pile driving or minutes. The shutdown zone will be removal activities must occur during considered cleared when a marine providing warning and/or giving marine mammals a chance to leave the area daylight hours. If poor environmental mammal has not been observed within prior to the hammer operating at full conditions restrict visibility of the the zone for that 30-minute period. If a capacity. For impact pile driving, COK shutdown zones (e.g., from excessive marine mammal is observed within the will be required to provide an initial set wind or fog, high Beaufort state), pile shutdown zone, a soft-start cannot of three strikes from the hammer at installation may not be initiated. Work proceed until the animal has left the reduced energy, followed by a thirty- that has begun with a fully cleared Level zone or has not been observed for 15 second waiting period. This procedure B harassment zone may continue during minutes. When a marine mammal for will be conducted three times before inclement weather (e.g., fog, heavy rain) which take is authorized is present in impact pile driving begins. Soft start or periods of limited visibility.

TABLE 10—SHUTDOWN AND MONITORING ZONES FOR EACH DRIVING/REMOVAL ACTIVITY

High Otariid Low Mid frequency Phocid shutdown area pinniped pinniped Level B frequency frequency (m) shutdown area harassment Pile size cetacean cetacean shutdown area (m) zone shutdown area shutdown area (harbor (m) porpoise, (harbor seal) (steller sea (m) (m) (m) dall’s lion) porpoise) 1

Vibratory Pile Driving/Removal

30-inch piles up to 6 hrs ...... 40 10 50 10 6,300 30-inch piles 7 hrs–8 hrs. 36- and 48- inch piles up to 6 hrs ...... 90 10 50 10 1 12,500 36- and 48- inch piles 7 hrs–8 hrs.

Impact Pile Driving

30-inch piles up to 500 strikes ...... 500 30-inch piles 501 to 1,000 strikes ...... 700 40 50 10 40 2,200 30-inch piles 1,001 to 1,500 strikes ...... 1,000 36- and 48- inch piles up to 500 strikes .. 1,300 50 ...... 50 36- and 48- inch piles 501 to 1,000 strikes ...... 2,000 70 50 10 ...... 3,800 36- and 48- inch piles 1,001 to 1,500 strikes ...... 2,600 90 ...... 100

DTH Socket

30-, 36-inch piles up to 3 hrs ...... 1,300 50 50 10 50 11,700 30-, 36-inch piles 4 hrs–6 hrs ...... 2,000 70 48-inch piles up to 2 hours ...... 1,750 65 ...... 70 ...... 48-inch piles >2 to 3 hrs ...... 2,300 85 ...... 100 ...... 48-inch piles >3 to 4 hours ...... 2,750 100 ...... 110 ......

DTH Anchor

12-inch hole up to 6 hours ...... 150 10 50 10 6,350 12-inch hole 7hrs–8hrs. 1 Represents largest Level B Harassment isopleth. Note that isopleth is truncated by land masses at 12,500 meters.

To minimize impacts to marine as other measures considered by NMFS, Proposed Monitoring and Reporting mammals and their prey vibratory NMFS has preliminarily determined In order to issue an IHA for an installation and/or hammering will be that the proposed mitigation measures activity, section 101(a)(5)(D) of the used as the primary methods of pile provide the means effecting the least MMPA states that NMFS must set forth installation. Impact driving will be practicable impact on the affected requirements pertaining to the minimized and used only as needed to species or stocks and their habitat, monitoring and reporting of such taking. seat the pile in its final position or to paying particular attention to rookeries, The MMPA implementing regulations at penetrate material that is too dense for mating grounds, and areas of similar 50 CFR 216.104 (a)(13) indicate that a vibratory hammer. significance. requests for authorizations must include Based on our evaluation of the the suggested means of accomplishing applicant’s proposed measures, as well the necessary monitoring and reporting

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that will result in increased knowledge • At least one PSO must have prior the distance to each sighting from the of the species and of the level of taking experience performing the duties of a project site. or impacts on populations of marine PSO during construction activity Monitoring will be conducted 30 mammals that are expected to be pursuant to a NMFS-issued incidental minutes before, during, and 30 minutes present in the proposed action area. take authorization. after pile driving/removal activities. In Effective reporting is critical both to • Other PSOs may substitute addition, observers shall record all compliance as well as ensuring that the education (degree in biological science incidents of marine mammal most value is obtained from the required or related field) or training for occurrence, regardless of distance from monitoring. experience; and activity, and shall document any Monitoring and reporting • Where a team of three or more PSOs behavioral reactions in concert with requirements prescribed by NMFS are required, a lead observer or distance from piles being driven or should contribute to improved monitoring coordinator must be removed. Pile driving activities include understanding of one or more of the designated. The lead observer must have the time to install or remove a single following: prior experience working as a marine pile or series of piles, as long as the time • mammal observer during construction; elapsed between uses of the pile driving Occurrence of marine mammal • species or stocks in the area in which COK must submit PSO Curriculum equipment is no more than 30 minutes. Vitae for approval by NMFS prior to the take is anticipated (e.g., presence, Reporting abundance, distribution, density). onset of pile driving. • Nature, scope, or context of likely PSOs should have the following A draft marine mammal monitoring marine mammal exposure to potential additional qualifications: report would be submitted to NMFS • Ability to conduct field stressors/impacts (individual or within 90 days after the completion of observations and collect data according cumulative, acute or chronic), through pile driving and removal activities, or to assigned protocols; 60 days prior to a requested date of better understanding of: (1) Action or • Experience or training in the field issuance of any future IHAs for projects environment (e.g., source identification of marine mammals, characterization, propagation, ambient at the same location, whichever comes including the identification of first. It will include an overall noise); (2) affected species (e.g., life behaviors; history, dive patterns); (3) co-occurrence • description of work completed, a Sufficient training, orientation, or narrative regarding marine mammal of marine mammal species with the experience with the construction action; or (4) biological or behavioral sightings, and associated marine operation to provide for personal safety mammal observation data sheets. context of exposure (e.g., age, calving or during observations; feeding areas). • Specifically, the report must include: Writing skills sufficient to prepare a • Dates and times (begin and end) of • Individual marine mammal report of observations including but not responses (behavioral or physiological) all marine mammal monitoring; limited to the number and species of • Construction activities occurring to acoustic stressors (acute, chronic, or marine mammals observed; dates and during each daily observation period, cumulative), other stressors, or times when in-water construction including how many and what type of cumulative impacts from multiple activities were conducted; dates, times, piles were driven or removed and by stressors. and reason for implementation of • what method (i.e., impact or vibratory); How anticipated responses to mitigation (or why mitigation was not • Weather parameters and water stressors impact either: (1) Long-term implemented when required); and conditions during each monitoring fitness and survival of individual marine mammal behavior; and period (e.g., wind speed, percent cover, • marine mammals; or (2) populations, Ability to communicate orally, by visibility, sea state) and estimated species, or stocks. radio or in person, with project • observable distance (if less than the Effects on marine mammal habitat personnel to provide real-time harassment zone distance). (e.g., marine mammal prey species, information on marine mammals • The number of marine mammals acoustic habitat, or other important observed in the area as necessary. observed, by species, relative to the pile physical components of marine A minimum of three onshore location and if pile driving or removal mammal habitat). observers will be stationed along was occurring at time of sighting; • Mitigation and monitoring Tongass Narrows at locations that • Age and sex class, if possible, of all effectiveness. provide optimal visual coverage for marine mammals observed; shutdown and monitoring zones (see • Visual Monitoring PSO locations during marine Figures 3 in COK’s Marine Mammal mammal monitoring; Monitoring must be conducted 30 Monitoring Plan). To maximize the • Distances and bearings of each minutes before, during, and 30 minutes visual coverage of shutdown and marine mammal observed to the pile after pile driving and removal activities. monitoring zones, observers will use being driven or removed for each In addition, observers shall record all elevated platforms at observation points sighting (if pile driving or removal was incidents of marine mammal to the extent practicable. Observers will occurring at time of sighting); occurrence, regardless of distance from be in contact with each other via two- • Description of any marine mammal activity, and shall document any way radio and with a cellular phone behavior patterns during observation, behavioral reactions in concert with used as back-up communications. The including direction of travel and distance from piles being driven or primary purpose of this observer is to estimated time spent within the Level A removed. Marine mammal monitoring implement the shutdown zones and and Level B harassment zones while the during pile driving and removal must be monitor the Level B harassment zones. source was active; conducted by NMFS-approved PSOs in PSOs must be positioned in order to • Number of individuals of each a manner consistent with the following: focus on monitoring these zones. PSOs species (differentiated by month as • Independent PSOs (i.e., not would scan the waters using binoculars, appropriate) detected within the construction personnel) who have no and/or spotting scopes, and would use harassment zones; other assigned tasks during monitoring a handheld global positioning system • Detailed information about any periods must be used; (GPS) or range-finder device to verify implementation of any mitigation

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triggered (e.g., shutdowns and delays), a (50 CFR 216.103). A negligible impact site, if any, are expected to be mild and description of specific actions that finding is based on the lack of likely temporary. Given that the installation of ensued, and resulting behavior of the adverse effects on annual rates of 12 permanent piles and 8 temporary animal, if any; recruitment or survival (i.e., population- piles would occur over 4 months, any • Description of attempts to level effects). An estimate of the number harassment would be temporary and distinguish between the number of of takes alone is not enough information intermittent. Effects on individuals that individual animals taken and the on which to base an impact are taken by Level B harassment, on the number of incidences of take, such as determination. In addition to basis of reports in the literature as well ability to track groups or individuals; considering estimates of the number of as monitoring from other similar and marine mammals that might be ‘‘taken’’ activities, will likely be limited to • Submit all PSO datasheets and/or through harassment, NMFS considers reactions such as increased swimming raw sighting data (in a separate file from other factors, such as the likely nature speeds, increased surfacing time, or the Final Report referenced immediately of any responses (e.g., intensity, decreased foraging (if such activity were above). duration), the context of any responses occurring) (Southall et al. 2007, ABR If no comments are received from (e.g., critical reproductive time or 2016). Most likely, individuals will NMFS within 30 days, the draft final location, migration), as well as effects simply move away from the sound report will constitute the final report. If on habitat, and the likely effectiveness source and be temporarily displaced comments are received, a final report of the mitigation. We also assess the from the areas of pile driving. These addressing NMFS comments must be number, intensity, and context of reactions and behavioral changes are submitted within 30 days after receipt of estimated takes by evaluating this expected to subside quickly when the comments. information relative to population exposures cease. status. Consistent with the 1989 The potential for harassment is Reporting Injured or Dead Marine preamble for NMFS’s implementing minimized through the implementation Mammals regulations (54 FR 40338; September 29, of the proposed mitigation measures. In the event that personnel involved 1989), the impacts from other past and During all impact driving, in the construction activities discover ongoing anthropogenic activities are implementation of soft start procedures an injured or dead marine mammal, the incorporated into this analysis via their and monitoring of established shutdown IHA-holder shall report the incident to impacts on the environmental baseline zones shall be required, significantly the Office of Protected Resources (OPR) (e.g., as reflected in the regulatory status reducing any possibility of injury. Given (301–427–8401), NMFS and to the of the species, population size and sufficient notice through use of soft start Alaska regional stranding coordinator growth rate where known, ongoing (for impact driving), marine mammals (907–586–7209) as soon as feasible. If sources of human-caused mortality, or are expected to move away from an the death or injury was clearly caused ambient noise levels). irritating sound source prior to it by the specified activity, the IHA-holder Vibratory pile removal, vibratory pile becoming potentially injurious. To must immediately cease the specified driving, impact pile driving, and DTH reduce the severity of in-water noise, activities until NMFS is able to review pile installation have the potential to vibratory pile driving will be the the circumstances of the incident and disturb or displace marine mammals. primary installation method for the determine what, if any, additional Specifically, these proposed project project and impact hammers will only measures are appropriate to ensure activities may result in take, in the form be used to seat pile tips into fractured compliance with the terms of the IHA. of Level A harassment and Level B bedrock ahead of the hammering The IHA-holder must not resume their harassment. Potential takes could occur operations or if material is encountered activities until notified by NMFS. if individuals are present in the that is too dense to penetrate with a The report must include the following ensonified zone when these activities vibratory hammer. information: are underway. No mortality is The proposed project is located • Time, date, and location (latitude/ anticipated given the nature of the within an active marine commercial and longitude) of the first discovery (and activity and measures designed to industrial area with no known pinniped updated location information if known minimize the possibility of injury to haulouts or rookeries near the project and applicable); marine mammals. area. While construction of mooring • Species identification (if known) or The Level A harassment zones dolphins at Berth III would have some description of the animal(s) involved; identified in Table 7 are based upon an permanent removal of habitat available • Condition of the animal(s) animal exposed to vibratory pile to marine mammals, the area lost is (including carcass condition if the driving, impact pile driving, and DTH relatively small and not of particular animal is dead); pile installation for periods of time importance to any marine mammals. • Observed behaviors of the ranging from 30 minutes for impact Any impacts on prey that would animal(s), if alive; driving, up to 8 hours for vibratory occur during in-water construction • If available, photographs or video driving, up to 6 hours for DTH socketing would have at most short-terms effects footage of the animal(s); and and 8 hours for DTH anchoring. on foraging of individual marine • General circumstances under which Exposures of this length are unlikely for mammals, and likely no effect on the the animal was discovered. vibratory driving/removal and DTH pile populations of marine mammals as a installation scenarios given marine whole. Therefore, effects on marine Negligible Impact Analysis and mammal movement throughout the area. mammal prey during the construction Determination Even during impact driving scenarios, are expected to be minimal and, NMFS has defined negligible impact an animal exposed to the accumulated therefore, are unlikely to cause as an impact resulting from the sound energy would likely only substantial effects on marine mammals specified activity that cannot be experience only limited PTS at the at the individual or population level. reasonably expected to, and is not lower frequencies where pile driving In addition, it is unlikely that minor reasonably likely to, adversely affect the energy is concentrated. noise effects in a small, localized area of species or stock through effects on Behavioral responses of marine habitat would have any effect on the annual rates of recruitment or survival mammals to pile driving at the project stocks’ ability to recover. In

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combination, we believe that these the MMPA for specified activities other Unmitigable Adverse Impact Analysis factors, as well as the available body of than military readiness activities. The and Determination evidence from other similar activities, MMPA does not define small numbers In order to issue an IHA, NMFS must demonstrate that the potential effects of and so, in practice, where estimated find that the specified activity will not the specified activities will have only numbers are available, NMFS compares have an ‘‘unmitigable adverse impact’’ minor, short-term effects on individuals. the number of individuals taken to the on the subsistence uses of the affected The specified activities are not expected most appropriate estimation of marine mammal species or stocks by to impact rates of recruitment or abundance of the relevant species or Alaskan Natives. NMFS has defined survival and will therefore not result in stock in our determination of whether ‘‘unmitigable adverse impact’’ in 50 CFR population-level impacts. an authorization is limited to small 216.103 as an impact resulting from the For all species except humpback numbers of marine mammals. When the specified activity: (1) That is likely to whales, there are no known BIAs near predicted number of individuals to be reduce the availability of the species to the project zone that would be impacted taken is fewer than one third of the a level insufficient for a harvest to meet by COK’s proposed activities. For species or stock abundance, the take is subsistence needs by: (i) Causing the humpback whales, the whole of considered to be of small numbers. marine mammals to abandon or avoid Southeast Alaska is a seasonal BIA from Additionally, other qualitative factors hunting areas; (ii) Directly displacing spring through late fall (Ferguson et al., may be considered in the analysis, such subsistence users; or (iii) Placing 2015). However, Tongass Narrows and as the temporal or spatial scale of the physical barriers between the marine Clarence Strait are not important activities. mammals and the subsistence hunters; portions of this habitat due to and (2) That cannot be sufficiently development and human presence. The number of instances of take for each species or stock proposed to be mitigated by other measures to increase Tongass Narrows is also a small the availability of marine mammals to passageway and represents a very small taken as a result of this project is included in Table 9. Our analysis shows allow subsistence needs to be met. portion of the total available habitat for Alaska Native hunters in the that less than one-third of the best humpback whales. Finally, there is no Ketchikan vicinity do not traditionally available population abundance ESA-designated critical habitat for harvest cetaceans (Muto et al. 2019). humpback whales. estimate of each species or stock could Harbor seals are the most commonly In summary and as described above, be taken by harassment. The number of targeted marine mammal that is hunted the following factors primarily support animals proposed to be taken for each by Alaska Native subsistence hunters our preliminary determination that the authorized stock would be considered within the Ketchikan area. In 2012 an impacts resulting from this activity are small relative to the relevant stock’s estimated 595 harbor seals were taken not expected to adversely affect the abundances even if each estimated for subsistence uses, with 22 of those species or stock through effects on taking occurred to a new individual, occurring in Ketchikan (Wolfe et al. annual rates of recruitment or survival: which is an unlikely scenario. 2012). This is the most recent data • No mortality is anticipated or The west coast transient stock of killer available. The harbor seal harvest per authorized; whales represents the highest capita in both communities was low, at • Authorized Level A harassment percentage of a single stock (<17 0.02 for Ketchikan. ADF&G subsistence would be limited and of low degree; • Mitigation measures such as percent) that is proposed for authorized data for Southeast Alaska shows that employing vibratory driving to the take. This take percentage also assumes from 1992 through 2008, plus 2012, maximum extent practicable, soft-starts, that all authorized killer whale takes from zero to 19 Steller sea lions were and shut downs will be implemented; would be from this stock, which is taken by Alaska Native hunters per year • Impacts to marine mammal habitat highly unlikely given the expansive with typical harvest years ranging from are anticipated to be minimal; range of the stock. zero to five animals (Wolfe et al. 2013). • The project area is located in an A lack of an accepted stock In 2012, it is estimated nine sea lions industrialized and commercial marina; abundance value for the Alaska stock of were taken in all of Southeast Alaska • The project area does not include minke whale did not allow for the and only from Hoonah and Sitka. There any rookeries, or known areas or calculation of an expected percentage of are no known haulout locations in the features of special significance for the population that would be affected. project area. Both the harbor seal and the Steller sea lion may be temporarily foraging or reproduction; and The most relevant estimate of partial • displaced from the action area. The anticipated incidents of Level B stock abundance is 1,232 minke whales However, neither the local population harassment consist of, at worst, in coastal waters of the Alaska nor any individual pinnipeds are likely temporary modifications in behavior. Peninsula and Aleutian Islands (Zerbini to be adversely impacted by the Based on the analysis contained et al., 2006). Given that two takes by proposed action beyond noise-induced herein of the likely effects of the Level B harassment are proposed for the harassment or slight injury. The specified activity on marine mammals stock, comparison to the best estimate of proposed project is anticipated to have and their habitat, and taking into stock abundance shows less than 0.2 no long-term impact on Steller sea lion consideration the implementation of the percent of the stock is expected to be or harbor seal populations, or their proposed monitoring and mitigation impacted. measures, NMFS preliminarily finds habitat no long term impacts on the that the total marine mammal take from Based on the analysis contained availability of marine mammals for the proposed activity will have a herein of the proposed activity subsistence uses is anticipated. negligible impact on all affected marine (including the proposed mitigation and Based on the description of the mammal species or stocks. monitoring measures) and the specified activity, the measures anticipated take of marine mammals, described to minimize adverse effects Small Numbers NMFS preliminarily finds that small on the availability of marine mammals As noted above, only small numbers numbers of marine mammals will be for subsistence purposes, and the of incidental take may be authorized taken relative to the population size of proposed mitigation and monitoring under sections 101(a)(5)(A) and (D) of the affected species or stocks. measures, NMFS has preliminarily

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determined that there will not be an of identical or nearly identical, or nearly ACTION: Notice; receipt of application. unmitigable adverse impact on identical, activities as described in the subsistence uses from COK’s proposed Description of Proposed Activity section SUMMARY: Notice is hereby given that activities. of this notice is planned or (2) the Colleen Reichmuth, Ph.D., Long Marine activities as described in the Description Laboratory, Institute of Marine Sciences Endangered Species Act of Proposed Activity section of this Address at the University of California Section 7(a)(2) of the Endangered notice would not be completed by the at Santa Cruz, 115 McAllister Way, Species Act of 1973 (ESA: 16 U.S.C. time the IHA expires and a Renewal Santa Cruz, CA 95060, has applied in 1531 et seq.) requires that each Federal would allow for completion of the due form for a permit to conduct agency insure that any action it activities beyond that described in the research on pinnipeds in captivity. authorizes, funds, or carries out is not Dates and Duration section of this DATES: Written, telefaxed, or email likely to jeopardize the continued notice, provided all of the following comments must be received on or before existence of any endangered or conditions are met: December 10, 2020. • threatened species or result in the A request for renewal is received no ADDRESSES: The application and related destruction or adverse modification of later than 60 days prior to the needed documents are available for review by designated critical habitat. To ensure Renewal IHA effective date (recognizing selecting ‘‘Records Open for Public ESA compliance for the issuance of that the Renewal IHA expiration date Comment’’ from the ‘‘Features’’ box on IHAs, NMFS Office of Protected cannot extend beyond one year from the Applications and Permits for Resources consults internally whenever expiration of the initial IHA). • Protected Species (APPS) home page, we propose to authorize take for The request for renewal must https://apps.nmfs.noaa.gov, and then endangered or threatened species, in include the following: selecting File No. 23554 from the list of this case with the NMFS Alaska (1) An explanation that the activities available applications. These documents Regional Office. to be conducted under the requested are also available upon written request NMFS is proposing to authorize take Renewal IHA are identical to the via email to NMFS.Pr1Comments@ activities analyzed under the initial of the Mexico DPS of humpback whales, noaa.gov. which are listed under the ESA. IHA, are a subset of the activities, or Written comments on this application The NMFS Office of Protected include changes so minor (e.g., should be submitted via email to Resources has requested initiation of reduction in pile size) that the changes [email protected]. Please do not affect the previous analyses, Section 7 consultation with the NMFS include File No. 23554 in the subject mitigation and monitoring Alaska Regional Office for the issuance line of the email comment. of this IHA. NMFS will conclude the requirements, or take estimates (with Those individuals requesting a public ESA consultation prior to reaching a the exception of reducing the type or hearing should submit a written request determination regarding the proposed amount of take). via email to NMFS.Pr1Comments@ (2) A preliminary monitoring report issuance of the authorization. noaa.gov. The request should set forth showing the results of the required the specific reasons why a hearing on Proposed Authorization monitoring to date and an explanation this application would be appropriate. As a result of these preliminary showing that the monitoring results do determinations, NMFS proposes to issue not indicate impacts of a scale or nature FOR FURTHER INFORMATION CONTACT: Sara an IHA to the City of Ketchikan for not previously analyzed or authorized. Young or Jennifer Skidmore, (301) 427– conducting in-water construction Upon review of the request for 8401. activities as part of the Berth III Renewal, the status of the affected SUPPLEMENTARY INFORMATION: The Expansion Project in Ketchikan between species or stocks, and any other subject permit is requested under the October 1, 2021 and May 1, 2022, pertinent information, NMFS authority of the Marine Mammal provided the previously mentioned determines that there are no more than Protection Act of 1972, as amended mitigation, monitoring, and reporting minor changes in the activities, the (MMPA; 16 U.S.C. 1361 et seq.), the requirements are incorporated. A draft mitigation and monitoring measures regulations governing the taking and of the proposed IHA can be found at will remain the same and appropriate, importing of marine mammals (50 CFR https://www.fisheries.noaa.gov/permit/ and the findings in the initial IHA part 216), the Endangered Species Act of incidental-take-authorizations-under- remain valid. 1973, as amended (ESA; 16 U.S.C. 1531 marine-mammal-protection-act. Dated: November 4, 2020. et seq.), and the regulations governing the taking, importing, and exporting of Donna S. Wieting, Request for Public Comments endangered and threatened species (50 Director, Office of Protected Resources, CFR parts 222–226). We request comment on our analyses, National Marine Fisheries Service. the proposed authorization, and any The applicant proposes to conduct other aspect of this notice of proposed [FR Doc. 2020–24871 Filed 11–9–20; 8:45 am] comparative psychological and IHA for the proposed Berth III New BILLING CODE 3510–22–P physiological studies with captive Mooring Dolphins Project. We also California sea lions (Zalophus request at this time comment on the DEPARTMENT OF COMMERCE californianus), harbor seals (Phoca potential Renewal of this proposed IHA vitulina), spotted seals (Phoca largha), as described in the paragraph below. National Oceanic and Atmospheric ringed seals (Pusa hispida), bearded Please include with your comments any Administration seals (Erignathus barbatus), and supporting data or literature citations to Hawaiian monk seals (Neomonachus help inform decisions on the request for [RTID 0648–XA606] schauinslandi) at Long Marine this IHA or a subsequent Renewal IHA. Marine Mammals; File No. 23554 Laboratory (Santa Cruz, CA) and the On a case-by-case basis, NMFS may Alaska SeaLife Center (Seward, AK). Up issue a one-time, one-year Renewal IHA AGENCY: National Marine Fisheries to four individuals per species may be following notice to the public providing Service (NMFS), National Oceanic and studied at both facilities at any given an additional 15 days for public Atmospheric Administration (NOAA), time over the duration of the permit, comments when (1) up to another year Commerce. with the exception of the Hawaiian

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monk seal, for which a max of one seal discretion of attending vet for medical DEPARTMENT OF DEFENSE will be studied at a time. purposes due to research, as well as During psychological assessments, necropsy and export of parts from the Department of the Army trained pinnipeds cooperate in animals. The applicant requests a 5-year behavioral stimulus detection and permit. Performance Review Board discrimination tasks conducted on land In compliance with the National Membership or in water. Stimuli are controlled Environmental Policy Act of 1969 (42 AGENCY: Department of the Army, DoD. sensory cues used to evaluate species- U.S.C. 4321 et seq.), an initial ACTION: Notice. typical sensory and cognitive determination has been made that the performance. Stimuli may be from any activity proposed is categorically SUMMARY: Notice is given of the names sensory modality, though there is an excluded from the requirement to of members of a Performance Review emphasis on hearing so that prepare an environmental assessment or Board for the Department of the Army. conservation issues related to ocean environmental impact statement. DATES: Applicable Date: November 13, noise can be addressed. Up to three Concurrent with the publication of 2020. times per day, depending on the this notice in the Federal Register, procedure, animals may participate in FOR FURTHER INFORMATION CONTACT: NMFS is forwarding copies of the Barbara Smith, Civilian Senior Leader voluntary psychological assessment application to the Marine Mammal procedures such as: active acoustic Management Office, 111 Army Commission and its Committee of Pentagon, Washington, DC 20310–0111. playbacks, passive acoustic recording, Scientific Advisors. behavioral observations, cognitive SUPPLEMENTARY INFORMATION: Section studies, incidental harassment, signal Dated: November 5, 2020. 4314(c)(1) through (5) of Title 5, U.S.C., detection and discrimination, Amy Sloan, requires each agency to establish, in associative learning, photography and Acting Chief, Permits and Conservation accordance with regulations, one or videography on land and underwater. Division, Office of Protected Resources, more Senior Executive Service For physiological assessments, the National Marine Fisheries Service. performance review boards. The boards same individuals, except the Hawaiian [FR Doc. 2020–24917 Filed 11–9–20; 8:45 am] shall review and evaluate the initial monk seal, participate in routine BILLING CODE 3510–22–P appraisal of senior executives’ physical evaluations to improve performance by supervisors and make understanding of their general biology, recommendations to the appointing including growth and development, authority or rating official relative to the COURT SERVICES AND OFFENDER nutritional requirements, health status, performance of these executives. SUPERVISION AGENCY FOR THE and environmental tolerance. This The Department of the Army DISTRICT OF COLUMBIA research includes longitudinal Performance Review Board will be measurements of growth, nutrition, Notice of Correction composed of a subset of the following health, metabolism, physiological individuals: capacities, and environmental tolerance. AGENCY: Court Services and Offender 1. Ms. Lisha Adams, Executive Deputy to the Data are collected from husbandry Supervision Agency for the District of Commanding General, U.S. Army Materiel records, individuals trained to cooperate Columbia. Command, Redstone Arsenal, AL in physiological measurements, and ACTION: Notice; correction. 2. Ms. Christina Altendorf, Chief, sedated animals during routine Engineering and Construction Division, veterinary examinations. Open-flow SUMMARY: The Court Services and U.S. Army Corps of Engineers, respirometry methods will be used to Offender Supervision Services for the Washington, DC gather metabolic data from animals District of Columbia (CSOSA) is 3. Mr. Stephen Austin, Assistant Chief of the trained to rest and breathe under a correcting a notice published in the Army Reserve, Office of the Chief of Army Reserve, Washington, DC plastic dome. Up to three times per day, October 30, 2020 issue of the Federal 4. Mr. Mark Averill, Deputy Administrative depending on the procedure, animals Register (Notice) entitled SES Assistant to the Secretary of the Army & may participate in voluntary Performance Review Board (PRB). This Director Resources and Program Agency, physiological procedures such as: correction applies to the misspelling of Office of the Administrative Assistant to Passive acoustic recording, drug and the name of a PRB member. the Secretary of the Army, Washington, DC sedative administration, collection of FOR FURTHER INFORMATION CONTACT: 5. Dr. David Bridges, Senior Research molt, scat, and urine, Evan’s blue dye William Layne, Assistant Director, Scientist (Environmental Science), U.S. and serial blood samples, external and Army Corps of Engineers, Vicksburg, MS Human Capital Planning and Executive 6. Mr. William Brinkley, Deputy Chief of internal instrumentation, flipper Resources, Court Services and Offender tagging, measuring, metabolic chamber Staff, G–1/4 (Personnel And Logistics), Supervision Agency for the District of U.S. Army Training and Doctrine or hood studies, behavioral Columbia, 800 North Capitol Street NW, Command, Fort Eustis, VA observations, oral fecal markers, Suite 701, Washington, DC 20005, (202) 7. LTG Gary Brito, Deputy Chief of Staff, collecting of shed whiskers, 220–5637. Office of the Deputy Chief of Staff, G–1, photogrammetry, photography and Washington, DC videography, flyovers from unmanned Correction 8. Ms. Kimberly Buehler, Director, Army aircraft systems, restraint, blood 1. In the Notice, the PRB member’s Office of Small Business Programs, Office sampling, hair clipping, transport, name is listed as Victor Valentino Davis. of the Secretary of the Army, Washington, ultrasound, underwater photography DC The correct name is Victor Valentine 9. Ms. Carol Burton, Director, Civilian and videography, and weighing. Davis. The application also includes a Human Resources Agency, Office of the Deputy Chief of Staff, G–1, Washington, DC request for the unintentional mortality Dated: November 4, 2020. Rochelle Durant, 10. GEN Christopher Cavoli, Commanding of up to two pinnipeds total of any General, U.S. Army Europe, Wiesbaden, species over the duration of the permit Federal Register Liaison. Germany associated with research or transport [FR Doc. 2020–24891 Filed 11–9–20; 8:45 am] 11. Dr. Juanita Christensen, Director, CCDC including humane euthanasia at BILLING CODE 3129–04–P Aviation & Missile Center, Combat

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Capabilities Development Command, U.S. 32. Dr. Marti Jett-Tilton, Senior Research 53. Mr. Larry Muzzelo, Deputy to the Army Futures Command, Redstone Scientist (Systems Biology), U.S. Army Commanding General, U.S. Army Arsenal, AL Medical Command, Fort Detrick, MD Communications-Electronics Command, 12. Mr. Alexander Conyers, Deputy Assistant 33. Mr. James Johnson, Deputy to the U.S. Army Materiel Command, Aberdeen Secretary of the Army (Army Review Commander, U.S. Army Space and Missile Proving Ground, MD Boards), Office of the Assistant Secretary of Defense Command/Army Forces Strategic 54. Mr. Levator Norsworthy, Jr., Deputy the Army (Manpower & Reserve Affairs), Command, Huntsville, AL General Counsel (Acquisition), Office of Washington, DC 34. Ms. Kathatine Kelley, Chief Human the General Counsel, Washington, DC 13. GEN Edward Daly, Commanding General, Capital Officer, U.S. Army Futures 55. Ms. Karen Pane, Director of Human U.S. Army Materiel Command, Redstone Command, Austin, TX Resources, U.S. Army Corps of Engineers, Arsenal, AL 35. Mr. Thomas Kelly III, Deputy Under Washington, DC 14. Mr. John Daniels, Deputy Assistant Secretary of the Army, Office of the Deputy 56. MG Paul Pardew, Commanding General, Secretary of the Army (Plans, Programs Under Secretary of the Army, Washington, U.S. Army Contracting Command, U.S. DC And Resources), Office of the Assistant Army Materiel Command, Redstone 36. Mr. David Kim, Director of Support, U.S. Secretary of the Army (Acquisition, Arsenal, AL Army Intelligence and Security Command, Logistics & Technology), Washington, DC 57. Ms. Michelle Pearce, Principal Deputy Fort Belvoir, VA General Counsel, Office of the General 15. Ms. Karen Durham-Aguilera, Executive 37. Mr. Daniel Klippstein, Assistant Deputy Director of the Army National Cemeteries Counsel, Washington, DC Chief of Staff, Office of the Deputy Chief 58. Mr. Philip Perconti, Deputy Assistant Program, Office of the Secretary of the of Staff, G–9, Washington, DC Secretary of the Army (Research and Army, Washington, DC 38. Mr. Michael Lacey, Deputy General Technology) & Chief Scientist, Office of the 16. Mr. Ryan Fisher, Principal Deputy Counsel (Operations and Personnel), Office Assistant Secretary of the Army Assistant Secretary of the Army, Office of of the General Counsel, Washington, DC (Acquisition, Logistics & Technology), the Assistant Secretary of the Army (Civil 39. Mr. Jeffrey Langhout, Director, CCDC Washington, DC Works), Washington, DC Ground Vehicle Systems Center, Combat 59. Mr. Barry Pike, Director, Weapons 17. Dr. Elizabeth Fleming, Deputy Director, Capabilities Development Command, U.S. Development and Integration, Combat Engineer Research and Development Army Futures Command, Warren, MI Capabilities Development Command, U.S. Center, U.S. Army Corps of Engineers, 40. Mr. Alvin Lee, Director of Civil Works, Army Futures Command, Austin, TX Vicksburg, MS U.S. Army Corps of Engineers, 60. LTG Walter E. Piatt, Director of the Army 18. LTG Charles Flynn, Deputy Chief of Staff, Washington, DC Staff, Office of the Director of the Army Office of the Deputy Chief of Staff, G–3/5/ 41. Mr. Mark Lewis, Deputy to the Assistant Staff, Washington, DC 7, Washington, DC Secretary, Office of the Assistant Secretary 61. Dr. David Pittman, Director, Research and of the Army (Manpower and Reserve 19. Dr. Karl Friedl, Senior Research Scientist Development, U.S. Army Corps of Affairs), Washington, DC (Performance Physiology), U.S. Army Engineers, Vicksburg, MS 42. Mr. Stephen Loftus, Deputy Assistant Medical Command, Natick, MA 62. Mr. Ronald Pontius, Deputy to the Secretary of the Army (Cost and 20. GEN Paul Funk, Commanding General, Commanding General, U.S. Army Cyber Economics), Office of the Assistant U.S. Army Training and Doctrine Command, Fort Belvoir, VA Secretary of the Army (Financial Command, Fort Eustis, VA 63. LTG Leopoldo Quintas, Jr., Deputy Management & Comptroller), Washington, 21. LTG Duane Gamble, Deputy Chief of Commanding General, U.S. Army Forces Staff, Office of the Deputy Chief of Staff, DC 43. Mr. Christopher Lowman, Assistant Command, Fort Bragg, NC G–4, Washington, DC 64. Ms. Diane Randon, Assistant Deputy 22. Mr. Greg Garcia, Deputy Chief Deputy Chief of Staff, Office of the Deputy Chief of Staff, G–4, Washington, DC Chief of Staff, Office of the Deputy Chief Information Officer, Office of the Chief of Staff, G–2, Washington, DC Information Officer, G–6, Washington, DC 44. LTG Robert Marion, Principal Military Deputy, Office of the Assistant Secretary of 65. Dr. Peter Reynolds, Senior Research 23. GEN Michael Garrett, Commanding Scientist (Physical Sciences), Combat General, U.S. Army Forces Command, Fort the Army (Acquisition, Logistics & Technology), Washington, DC Capabilities Development Command, U.S. Bragg, NC Army Futures Command, Durham, NC 24. Ms. Susan Goodyear, Deputy Chief 45. Dr. David Markowitz, Chief Data Officer & Analytics Officer, Office of the Deputy 66. Ms. Anne Richards, The Auditor General, Executive Officer, U.S. Army Futures Chief of Staff, G–8, Washington, DC U.S. Army Audit Agency, Fort Belvoir, VA Command, Austin, TX 46. LTG Theodore Martin, Deputy 67. LTG James Richardson, Deputy 25. Mr. Larry Gottardi, Director, Civilian Commanding General & Chief of Staff, U.S. Commanding General, U.S. Army Futures Senior Leader Management Office, Army Training and Doctrine Command, Command, Austin, TX Washington, DC Fort Eustis, VA 68. LTG Laura Richardson, Deputy 26. Mr. Ross Guckert, Program Executive 47. Mr. David May, Senior Cyber Intelligence Commanding General, U.S. Army North, Officer, Enterprise Information Systems, Advisor, U.S. Army Training and Doctrine San Antonio, TX Office of the Assistant Secretary of the Command, Fort Gordon, GA 69. Mr. J. Randall Robinson, Executive Army (Acquisition, Logistics & 48. Mr. Phillip McGhee, Deputy Chief of Staff Deputy to the Commanding General, U.S. Technology), Washington, DC for Resource Management, G8, U.S. Army Army Installation and Management 27. Mr. John Hall, Deputy to the Forces Command, Fort Bragg, NC Command, Fort Sam Houston, TX Commanding General, U.S. Army Training 49. Ms. Kathleen Miller, Administrative 70. Dr. Dawn Rosarius, Principal Assistant and Doctrine Command, Fort Eustis, VA Assistant to the Secretary of the Army, for Acquisition, U.S. Army Medical 28. MG David Hill, Deputy Chief of Engineers Office of the Administrative Assistant to Command, Fort Detrick, MD & Deputy Commanding General, U.S. Army the Secretary of the Army, Washington, DC 71. Dr. Robert Sadowski, Senior Research Corps of Engineers, Washington, DC 50. Mr. Jonathan Moak, Principal Deputy Scientist (Robotics), Combat Capabilities 29. Mr. Michael Hutchison, Deputy to the Assistant Secretary of the Army (Controls), Development Command, U.S. Army Commander, Surface Deployment and Office of the Assistant Secretary of the Futures Command, Warren, MI Distribution Command, U.S. Army Army (Financial Management & 72. Mr. Bryan Samson, Deputy to the Materiel Command, Scott Air Force Base, Comptroller), Washington, DC Commanding General, U.S. Army IL 51. Dr. Eric Moore, Director, Chemical and Contracting Command, U.S. Army Materiel 30. HON R.D. James, Assistant Secretary of Biological Center, Combat Capabilities Command, Redstone Arsenal, AL the Army, Office of the Assistant Secretary Development Command, U.S. Army 73. Mr. Craig Schmauder, Deputy General of the Army (Civil Works), Washington, DC Futures Command,, Aberdeen Proving Counsel (Installations, Environment and 31. HON Bruce Jette, Assistant Secretary of Ground, MD Civil Works), Office of the General the Army, Office of the Assistant Secretary 52. LTG John Morrison, Jr., Deputy Chief of Counsel, Washington, DC of the Army (Acquisition, Logistics & Staff, Office of the Deputy Chief of Staff, 74. Ms. Lauri Snider, Senior Advisor Technology), Washington, DC G–6, Washington, DC (Counter Intelligence, Disclosure, and

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Security), Office of the Deputy Chief of among volunteer team members. This Transparency Division website at Staff, G–2, Washington, DC system of records notice (SORN) is https://dpcld.defense.gov. 75. LTG Scott Spellmon, Chief of Engineers being revised to expand the category of In accordance with 5 U.S.C. 552a(r) & Commanding General, U.S. Army Corps individuals covered by the system. and Office of Management and Budget of Engineers, Washington, DC Additional administrative changes were 76. Mr. Thomas Steffens, Director of (OMB) Circular No. A–108, the DoD has Resource Management, U.S. Army Corps of made to update the SORN in accordance provided a report of this system of Engineers, Washington, DC with the OMB’s requirements. records to the OMB and to Congress. 77. Mr. Vance Stewart, Deputy Assistant DATES: This system of records Dated: November 5, 2020. Secretary of the Army (Management and modification is effective upon Kayyonne T. Marston, Budget), Office of the Assistant Secretary of publication; however, comments on the the Army (Civil Works), Washington, DC Alternate OSD Federal Register Liaison Routine Uses will be accepted on or Officer, Department of Defense. 78. Mr. Robin Swan, Director, Office of before December 10, 2020. The Routine Business Transformation, Washington, DC Uses are effective at the close of the SYSTEM NAME AND NUMBER: 79. Mr. Roy Wallace, Assistant Deputy Chief of Staff, Office of the Deputy Chief of Staff, comment period. Employer Support of the Guard and G–1, Washington, DC ADDRESSES: You may submit comments, Reserve Member Management System 80. HON Casey Wardynski, Jr., Assistant identified by docket number and title, (MMS), DHRA 17 DoD. Secretary of the Army, Office of the by any of the following methods: Assistant Secretary of the Army * Federal Rulemaking Portal: https:// SECURITY CLASSIFICATION: (Manpower and Reserve Affairs), www.regulations.gov. Unclassified. Washington, DC Follow the instructions for submitting 81. Dr. Bruce West, Senior Research Scientist comments. SYSTEM LOCATION: (Mathematical Sciences), Combat * Mail: The Department of Defense Defense Information Systems Agency Capabilities Development Command, U.S. (DoD) cannot receive written comments (DISA), Computing Directorate Army Futures Command, Durham, NC 82. Mr. Marshall Williams, Principal Deputy at this time due to the COVID–19 Mechanicsburg, 5450 Carlisle Pike, Assistant Secretary of the Army, Office of pandemic. Comments should be sent Mechanicsburg, PA 17050–2411. the Assistant Secretary of the Army electronically to the docket listed above. SYSTEM MANAGER(S): (Manpower and Reserve Affairs), Instructions: All submissions received Washington, DC must include the agency name and Executive Director, Headquarters, 83. Mr. John Willison, Deputy to the docket number for this Federal Register Employer Support of the Guard and Commanding General, Combat Capabilities document. The general policy for Reserve, 4800 Mark Center Drive, Development Command, U.S. Army comments and other submissions from Alexandria, VA 22350–1200, Email: Futures Command, Aberdeen Proving members of the public is to make these [email protected]. Ground, MD submissions available for public 84. Ms. Kathryn Yurkanin, Principal Deputy viewing on the internet at https:// AUTHORITY FOR MAINTENANCE OF THE SYSTEM: Chief, Office of the Chief Legislative 10 U.S.C. 136, Under Secretary of Liaison, Washington, DC www.regulations.gov as they are received without change, including any Defense for Personnel and Readiness; 10 James W. Satterwhite Jr., personal identifiers or contact U.S.C. 1588, Authority to Accept Alternate, Federal Register Liaison Officer. information. Certain Voluntary Services; DoD Instruction (DoDI) 1205.22, Employer [FR Doc. 2020–24890 Filed 11–9–20; 8:45 am] FOR FURTHER INFORMATION CONTACT: Ms. Support of the Guard and Reserve; DoDI BILLING CODE 5061–AP–P Lyn Kirby, Defense Privacy, Civil 1100.21, Voluntary Services in the Liberties, and Transparency Division, Department of Defense; and DoDI Directorate for Oversight and DEPARTMENT OF DEFENSE 3001.02, Personnel Accountability in Compliance, Department of Defense, Conjunction With Natural or Manmade 4800 Mark Center Drive, Mailbox #24, Office of the Secretary Disasters. Suite 08D09, Alexandria, VA 22350– [Docket ID: DoD–2020–OS–0093] 1700; [email protected]; (703) PURPOSE(S) OF THE SYSTEM: 571–0070. Privacy Act of 1974; System of To maintain a roster of and facilitate SUPPLEMENTARY INFORMATION: Records The ESGR communication between Employer maintains individual voluntary service Support to the Guard and Reserve AGENCY: Office of the Secretary of records for all statutory volunteers (ESGR) members; and track ESGR- Defense (OSD), Department of Defense within the MMS. The system facilitates related training, awards, and hours (DoD). communication between the volunteers, donated by ESGR Department of ACTION: Notice of a modified system of tracks training records, and maintains Defense (DoD) volunteer staff. To records. emergency contact information. The maintain personnel accountability and ESGR is a DoD program that develops ESGR DoD volunteer emergency contact SUMMARY: The OSD is modifying the and promotes supportive work information for accountability during system of records, ‘‘Employer Support environments for Service members in manmade disasters and other of the Guard and Reserve Member the Reserve Components through emergencies. Management System (MMS),’’ DHRA 17 outreach, recognition, and educational DoD. The MMS allows the Employer opportunities that increase awareness of CATEGORIES OF INDIVIDUALS COVERED BY THE Support of the Guard and Reserve applicable laws. SYSTEM: (ESGR) to maintain a roster of and The DoD notices for systems of DoD-affiliated personnel to include: facilitate communication between ESGR records subject to the Privacy Act of Military Service members (active duty, members, as well as track individual 1974, as amended, have been published Guard/Reserve and the Coast Guard training and volunteer efforts. Volunteer in the Federal Register and are available personnel), civilian employees leadership can securely access training from the address in FOR FURTHER (including non-appropriate fund records of members to adjust resources INFORMATION CONTACT or at the Defense employees); and other individuals as necessary to ensure adequate training Privacy, Civil Liberties, and working for or affiliated with ESGR.

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CATEGORIES OF RECORDS IN THE SYSTEM: e. To the National Archives and identification badges, closed circuit Name; home and work address; phone Records Administration for the purpose televisions, and controlled screenings. numbers (home, work, and mobile); of records management inspections Technical controls include the use of email addresses (work and personal); conducted under the authority of 44 user identifications and passwords, position/title; assigned military unit and U.S.C. 2904 and 2906. intrusion detection systems, encryption, rank; official report and departure date; f. To a Member of Congress or staff Common Access Cards (CAC), firewalls, ESGR affiliation (State Committee acting upon the Member’s behalf when virtual private networks, role-based region or headquarters); military base the Member or staff requests the access controls, and two-factor for volunteer activity; ESGR-related information on behalf of, and at the authentication. Administrative controls training completed; and emergency request of, the individual who is the include periodic security audits, regular contact information to include name, subject of the record. monitoring of users’ security practices, phone number, and relationship. g. To appropriate agencies, entities, methods to ensure only authorized Additional information collected on and persons when (1) the DoD suspects personnel access information, DoD volunteers include: Volunteer or confirms a breach of the System of encryption of backups containing hours performed; awards; mentor/ Records; (2) the DoD determines as a sensitive data, visitor registers, and mentee assignments; military result of the suspected or confirmed backups secured off-site. experience (component, rank, status, breach there is a risk of harm to and years of service); civilian work individuals, the DoD (including its RECORD ACCESS PROCEDURES: experience (industry and position type); information systems, programs, and Individuals seeking access to records special skills or qualifications; shirt operations), the Federal Government, or about themselves contained in this size; and form of DoD identification national security; and (3) the disclosure system should address written inquiries (where applicable). made to such agencies, entities, and to the Office of the Secretary of Defense/ Joint Staff, Freedom of Information Act RECORD SOURCE CATEGORIES: persons is reasonably necessary to assist Requester Service Center, Office of The individual. in connection with the DoD’s efforts to respond to the suspected or confirmed Freedom of Information, 1155 Defense ROUTINE USES OF RECORDS MAINTAINED IN THE breach or to prevent, minimize, or Pentagon, Washington, DC 20301–1155. SYSTEM, INCLUDING CATEGORIES OF USERS AND remedy such harm. Signed written requests should contain PURPOSES OF SUCH USES: h. To another Federal agency or the individual’s full name, personal In addition to those disclosures Federal entity, when the DoD contact information (home address, generally permitted under 5 U.S.C. 552a determines information from this phone number, email), and the number (b) of the Privacy Act of 1974, as System of Records is reasonably and name of this system of records amended, these records contained necessary to assist the recipient agency notice. In addition, the requester must herein may specifically be disclosed or entity in (1) responding to a provide either a notarized statement or outside the DoD as a routine use suspected or confirmed breach or (2) an unsworn declaration made in pursuant to 5 U.S.C. 552a(b)(3) as preventing, minimizing, or remedying accordance with 28 U.S.C. 1746, in the follows: the risk of harm to individuals, the following format: a. To contractors, grantees, experts, recipient agency or entity (including its If executed outside the United States: consultants, students, and others information systems, programs and ‘‘I declare (or certify, verify, or state) responsible for performing or working operations), the Federal Government, or under penalty of perjury under the laws on contracts for the DoD when national security, resulting from a of the United States of America that the necessary to accomplish an agency suspected or confirmed breach. foregoing is true and correct. Executed function related to this System of on (date). (Signature).’’ Records. POLICIES AND PRACTICES FOR STORAGE OF If executed within the United States, b. To the appropriate Federal, State, RECORDS: its territories, possessions, or local, territorial, tribal, foreign, or Electronic storage media. commonwealths: ‘‘I declare (or certify, international law enforcement authority POLICIES AND PRACTICES FOR RETRIEVAL OF verify, or state) under penalty of perjury or other appropriate entity where a RECORDS: that the foregoing is true and correct. record, either alone or in conjunction Executed on (date). (Signature).’’ with other information, indicates a Records are retrieved by full name violation or potential violation of law, and ESGR affiliation. CONTESTING RECORD PROCEDURES: whether criminal, civil, or regulatory in POLICIES AND PRACTICES FOR RETENTION AND The DoD rules for accessing records, nature. DISPOSAL OF RECORDS: contesting contents, and appealing c. To any component of the Headquarters Personnel Records. Cut initial agency determinations are Department of Justice for the purpose of off upon employee separation or contained in 32 CFR part 310 or may be representing the DoD, or its transfer. Destroy upon supersession or 1 obtained from the system manager. components, officers, employees, or year after cut off. Volunteer Staff NOTIFICATION PROCEDURES: members in pending or potential Records: Cut off upon volunteer litigation to which the record is departure from program. Destroy/delete Individuals seeking to determine pertinent. 4 years after cut off. whether information about themselves d. In an appropriate proceeding before is contained in this system should a court, grand jury, or administrative or ADMINISTRATIVE, TECHNICAL, AND PHYSICAL address written inquiries to the adjudicative body or official, when the SAFEGUARDS: Executive Director, Headquarters, DoD or other Agency representing the All personally identifiable Employer Support of the Guard and DoD determines the records are relevant information (PII) is maintained in a Reserve, 4800 Mark Center Drive, and necessary to the proceeding; or in secure, password protected electronic Alexandria, VA 22350–1200. Signed an appropriate proceeding before an system. The system utilizes security written requests should contain the administrative or adjudicative body hardware and software to include individual’s full name, ESGR affiliation, when the adjudicator determines the physical controls such as combination and personal contact information (home records to be relevant to the proceeding. locks, cipher locks, key cards, address, phone number, and email).

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In addition, the requester must Federal eRulemaking Portal: http:// may recoup from the LRA such portion provide either a notarized statement or www.regulations.gov. Follow the of these proceeds not used to support an unsworn declaration made in instructions for submitting comments. the economic redevelopment of, or accordance with 28 U.S.C. 1746, in the Mail: DoD cannot receive written related to, the installation. LRAs are following format: comments at this time due to the subject to this same seven-year If executed outside the United States: COVID–19 pandemic. Comments should reinvestment requirement if their EDC ‘‘I declare (or certify, verify, or state) be sent electronically to the docket agreement is modified to reduce the under penalty of perjury under the laws listed above. debt owed to the Federal Government. of the United States of America that the Instructions: All submissions received Military Departments monitor LRA foregoing is true and correct. Executed must include the agency name, docket compliance with this provision by on (date). (Signature).’’ number and title for this Federal requiring an annual financial statement If executed within the United States, Register document. The general policy certified by an independent Certified its territories, possessions, or for comments and other submissions Public Accountant. No specific form is commonwealths: ‘‘I declare (or certify, from members of the public is to make required. verify, or state) under penalty of perjury these submissions available for public Dated: November 5, 2020. viewing on the internet at http:// that the foregoing is true and correct. Kayyonne T. Marston, Executed on (date). (Signature).’’ www.regulations.gov as they are received without change, including any Alternate OSD Federal Register Liaison Officer, Department of Defense. EXEMPTIONS PROMULGATED FOR THE SYSTEM: personal identifiers or contact None. information. [FR Doc. 2020–24916 Filed 11–9–20; 8:45 am] BILLING CODE 5001–06–P HISTORY: FOR FURTHER INFORMATION CONTACT: To 81 FR 37585, June 10, 2016. request more information on this proposed information collection or to DEPARTMENT OF EDUCATION [FR Doc. 2020–24934 Filed 11–9–20; 8:45 am] obtain a copy of the proposal and BILLING CODE 5001–06–P associated collection instruments, [Docket No.: ED–2020–SCC–0065] please write to the Department of Agency Information Collection DEPARTMENT OF DEFENSE Defense Office of Economic Adjustment, 2231 Crystal Drive, Suite 520, Arlington, Activities; Submission to the Office of Management and Budget for Review Office of the Secretary Virginia, 22202–3711, ATTN: Ms. Elizabeth Chimienti, or call 703–697– and Approval; Comment Request; 2075. Impact Study of Federally-Funded [Docket ID: DoD–2020–OS–0092] Magnet Schools SUPPLEMENTARY INFORMATION: Title; Proposed Collection; Comment associated form; and omb number: AGENCY: Institution of Education Request Revitalizing Base Closure Communities, Sciences, Department of Education (ED). AGENCY: Office of the Under Secretary of Economic Development Conveyance ACTION: Notice. Defense for Acquisition and Annual Financial Statement; OMB SUMMARY: Sustainment, Department of Defense Control Number 0790–0004. In accordance with the (DoD). Needs and uses: The information Paperwork Reduction Act of 1995, ED is collection requirement is necessary to proposing a revision of a currently ACTION: Information collection notice. verify that Local Redevelopment approved collection. SUMMARY: In compliance with the Authority (LRA) recipients of Economic DATES: Interested persons are invited to Paperwork Reduction Act of 1995, the Development Conveyances (EDCs) are in submit comments on or before Office of the Under Secretary of Defense compliance with the requirement that December 10, 2020. for Acquisition and Sustainment the LRA reinvest proceeds from the use ADDRESSES: Written comments and announces a proposed public of EDC property for seven years. recommendations for proposed information collection and seeks public Affected public: Business or other for- information collection requests should comment on the provisions thereof. profit; Not-for-profit institutions. be sent within 30 days of publication of Comments are invited on: Whether the Annual burden hours: 960. this notice to www.reginfo.gov/public/ proposed collection of information is Number of Respondents: 24. do/PRAMain. Find this particular necessary for the proper performance of Responses per respondent: 1. information collection request by Annual responses: 24. the functions of the agency, including selecting ‘‘Department of Education’’ Average burden per response: 40 whether the information shall have under ‘‘Currently Under Review,’’ then hours. practical utility; the accuracy of the Frequency: Annually. check ‘‘Only Show ICR for Public agency’s estimate of the burden of the Respondents are LRAs that have Comment’’ checkbox. proposed information collection; ways executed EDC agreements with a FOR FURTHER INFORMATION CONTACT: For to enhance the quality, utility, and Military Department that transferred specific questions related to collection clarity of the information to be property from a closed military activities, please contact Meredith collected; and ways to minimize the installation. As provided by 32 CFR Bachman, 202–245–7494. burden of the information collection on 174.9, such agreements require that the SUPPLEMENTARY INFORMATION: The respondents, including through the use LRA reinvest the proceeds from any Department of Education (ED), in of automated collection techniques or sale, lease or equivalent use of EDC accordance with the Paperwork other forms of information technology. property (or any portion thereof) during Reduction Act of 1995 (PRA) (44 U.S.C. DATES: Consideration will be given to all at least the first seven years after the 3506(c)(2)(A)), provides the general comments received by January 11, 2021. date of the initial transfer of the public and Federal agencies with an ADDRESSES: You may submit comments, property to support the economic opportunity to comment on proposed, identified by docket number and title, redevelopment of, or related to, the revised, and continuing collections of by any of the following methods: installation. The Secretary of Defense information. This helps the Department

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assess the impact of its information Dated: November 5, 2020. proposing an extension without change collection requirements and minimize Stephanie Valentine, of a currently approved collection. the public’s reporting burden. It also PRA Coordinator, Strategic Collections and DATES: Interested persons are invited to helps the public understand the Clearance, Governance and Strategy Division, submit comments on or before Department’s information collection Office of Chief Data Officer, Office of December 10, 2020. Planning, Evaluation and Policy requirements and provide the requested ADDRESSES: Development. Written comments and data in the desired format. ED is recommendations for proposed soliciting comments on the proposed [FR Doc. 2020–24918 Filed 11–9–20; 8:45 am] information collection requests should information collection request (ICR) that BILLING CODE 4000–01–P be sent within 30 days of publication of is described below. The Department of this notice to www.reginfo.gov/public/ Education is especially interested in DEPARTMENT OF EDUCATION do/PRAMain. Find this particular public comment addressing the information collection request by following issues: (1) Is this collection [Docket No.: ED–2020–SCC–0170] selecting ‘‘Department of Education’’ necessary to the proper functions of the under ‘‘Currently Under Review,’’ then Department; (2) will this information be Evaluating the DC Opportunity check ‘‘Only Show ICR for Public processed and used in a timely manner; Scholarship Program After the 2017 Comment’’ checkbox. (3) is the estimate of burden accurate; Reauthorization; Correction FOR FURTHER INFORMATION CONTACT: For (4) how might the Department enhance specific questions related to collection AGENCY: Department of Education (ED), the quality, utility, and clarity of the activities, please contact Miriam Lund, Institute for Education Sciences (IES). information to be collected; and (5) how 202–401–2871. might the Department minimize the ACTION: Notice; Correction. SUPPLEMENTARY INFORMATION: burden of this collection on the The respondents, including through the use SUMMARY: On November 5, 2020, the Department of Education (ED), in of information technology. Please note U.S. Department of Education published accordance with the Paperwork that written comments received in a 60-day comment period notice in the Reduction Act of 1995 (PRA) (44 U.S.C. response to this notice will be Federal Register with FR DOC# 2020– 3506(c)(2)(A)), provides the general considered public records. 24608 (Page 70596, First Column, public and Federal agencies with an Second Column; Page 70597, First opportunity to comment on proposed, Title of Collection: Impact Study of revised, and continuing collections of Federally-Funded Magnet Schools. Column) seeking public comment for an information collection entitled, information. This helps the Department OMB Control Number: 1850–0943. ‘‘Evaluating the DC Opportunity assess the impact of its information Type of Review: Revision of a Scholarship Program After the 2017 collection requirements and minimize currently approved collection. Reauthorization.’’ The docket number is the public’s reporting burden. It also incorrect. The correct docket number is helps the public understand the Respondents/Affected Public: Department’s information collection Individuals and Households. ED–2020–SCC–0173. The PRA Coordinator, Strategic requirements and provide the requested Total Estimated Number of Annual Collections and Clearance, Office of the data in the desired format. ED is Responses: 706. Chief Data Officer, Office of Planning, soliciting comments on the proposed Total Estimated Number of Annual Evaluation and Policy Development, information collection request (ICR) that Burden Hours: 629. hereby issues a correction notice as is described below. The Department of Abstract: The Office of Management required by the Paperwork Reduction Education is especially interested in and Budget (OMB) package requests Act of 1995. public comment addressing the clearance for data collection activities to following issues: (1) Is this collection Dated: November 3, 2020. necessary to the proper functions of the support a rigorous Impact Study of Stephanie Valentine, Federally-Funded Magnet Schools. The Department; (2) will this information be PRA Coordinator, Strategic Collections and processed and used in a timely manner; Institute of Education Sciences (IES) at Clearance, Office of the Chief Data Officer, the U.S. Department of Education (ED) (3) is the estimate of burden accurate; Office of Planning, Evaluation and Policy (4) how might the Department enhance has contracted with Mathematica Policy Development. Research and its subcontractor, Social the quality, utility, and clarity of the [FR Doc. 2020–24953 Filed 11–9–20; 8:45 am] information to be collected; and (5) how Policy Research Associates (SPR), to BILLING CODE 4000–01–P conduct this evaluation (ED–IES–17–C– might the Department minimize the 0066). The evaluation included an burden of this collection on the respondents, including through the use initial feasibility assessment and DEPARTMENT OF EDUCATION determined that a rigorous impact study of information technology. Please note can be conducted. [Docket No.: ED–2020–SCC–0141] that written comments received in response to this notice will be The impact study would collect Agency Information Collection considered public records. survey data from principals and district Activities; Submission to the Office of Title of Collection: 21st CCLC administrative records on admissions Management and Budget for Review 4201(b)(1) Waiver Request. lotteries and student progress. The and Approval; Comment Request; 21st OMB Control Number: 1810–0746. study would use these data to estimate CCLC 4201(b)(1) Waiver Request Type of Review: Extension without the impacts of magnet schools on change of a currently approved student achievement and diversity and AGENCY: Office of Elementary and collection. to describe whether particular features Secondary Education, Department of Respondents/Affected Public: State, of magnet schools are associated with Education (ED). Local, and Tribal Governments. greater success. The study would also ACTION: Notice. Total Estimated Number of Annual collect survey data from charter schools Responses: 53. on their admissions practices to provide SUMMARY: In accordance with the Total Estimated Number of Annual context for the impact study findings. Paperwork Reduction Act of 1995, ED is Burden Hours: 159.

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Abstract: The Nita M. Lowey 21st consistent with agreements and Availability (83 FR 67282; December 28, Century Community Learning Centers decisions resulting from interagency 2018). On September 27, 2019, DOE (21st CCLC) grant program intends to consultations conducted in accordance announced its decision to demolish the offer a waiver available to State with applicable federal, state, and local 18 buildings it owns in Area IV of the education agencies (SEAs) based on laws and regulations, including the SSFL and to dispose of or recycle the section 8401 [20 U.S.C. 7861] of the Programmatic Agreement executed with resulting building materials off-site (84 Elementary and Secondary Education the California State Historic FR 51149; September 27, 2019). Act, as reauthorized by the Every Preservation Officer pursuant to the The California Department of Toxic Student Succeeds Act (ESSA) in 2015 to National Historic Preservation Act and Substances Control (DTSC) is in the allow SEAs to waive the definition of the Biological Opinion issued by the process of completing its Program Community Learning Center(s) for U.S. Fish and Wildlife Service pursuant Environmental Impact Report for the implementation of services during to the Endangered Species Act. Santa Susana Field Laboratory, Ventura ‘‘nonschool hours or periods when ADDRESSES: This Record of Decision County, California (SSFL EIR), prepared school is not in session (such as before (ROD), the SSFL Area IV Final EIS, and under the California Environmental and after school or during summer related National Environmental Policy Quality Act (CEQA). The DTSC SSFL recess)’’ per section 4201 (b)(1)(A) [20 Act (NEPA) documents are available at EIR also assesses proposed groundwater U.S.C. 7171] for 21st CCLC programs in the DOE SSFL Area IV website (http:// remediation actions at SSFL. Should school year 2020–2021. The purpose for etec.energy.gov) and the DOE NEPA DTSC—in its CEQA Findings of Fact this new collection is to collect waiver website (http://energy.gov/nepa). and/or Resource Conservation and requests from each State wishing to take FOR FURTHER INFORMATION CONTACT: For Recovery Act (RCRA) Statement of Basis advantage of the waiver. further information on the SSFL Area IV for groundwater cleanup—make a Dated: November 4, 2020. Final EIS, the ROD, and DOE cleanup decision inconsistent with the DOE NEPA EIS and this ROD, DOE will Kate Mullan, actions within Area IV of SSFL, please contact, Mr. John Jones, Energy confer with DTSC and determine PRA Coordinator, Strategic Collections and whether modifications or additional Clearance, Governance and Strategy Division, Technology Engineering Center (ETEC) Office of Chief Data Officer, Office of Federal Project Director, U.S. actions related to groundwater cleanup Planning, Evaluation and Policy Department of Energy at john.jones@ in Area IV and the Northern Buffer Zone Development. emcbc.doe.gov. For general information (NBZ) are required. SSFL, located on approximately 2,850 [FR Doc. 2020–24867 Filed 11–9–20; 8:45 am] on DOE’s NEPA process, please contact acres in the hills between Chatsworth BILLING CODE 4000–01–P Mr. Bill Ostrum, NEPA Compliance Officer, U.S. Department of Energy, and Simi Valley, California, was Office of Environmental Management, developed as a remote site to test rocket engines and conduct nuclear research. DEPARTMENT OF ENERGY 1000 Independence Avenue SW, Washington, DC 20585–0103; Rocket engine testing by North Record of Decision for Final Telephone: (202) 586–2513; or Email: American Aviation (later Rockwell Environmental Impact Statement for [email protected]. International [Rocketdyne]) began in 1947. In the mid-1950s, the Atomic Remediation of Area IV and the SUPPLEMENTARY INFORMATION: Northern Buffer Zone of the Santa Energy Commission (AEC), a Susana Field Laboratory, California Background predecessor agency to DOE, funded DOE prepared the SSFL Area IV Final nuclear research on a 90-acre parcel AGENCY: Office of Environmental EIS (DOE/EIS–0402) in accordance with within Area IV of SSFL. The Energy Management, U.S. Department of NEPA (42 U.S.C 4321 et seq.), Council Technology Engineering Center (ETEC) Energy. on Environmental Quality (CEQ) NEPA was established on this parcel as a ACTION: Record of decision for regulations (40 CFR parts 1500–1508), ‘‘center of excellence’’ for liquid metals groundwater remediation, Area IV, and DOE’s NEPA Implementing research. A total of 10 small reactors Santa Susana Field Laboratory. Procedures (10 CFR part 1021).1 DOE were built and operated as part of nuclear research that ended in 1982. announced its intent to prepare an EIS SUMMARY: The U.S. Department of DOE-directed liquid metals research on May 16, 2008, (73 FR 28437) and Energy (DOE) announces its decision to continued until 1988. initiate groundwater remediation in conducted public scoping. DOE DOE initiated the investigation of Area IV of the Santa Susana Field prepared a Draft EIS and distributed it groundwater at Area IV in 1986 when Laboratory (SSFL). DOE–EM will to interested parties. Following the U.S. the first monitoring well was installed. implement the preferred alternatives for Environmental Protection Agency (EPA) Since that time DOE has installed more groundwater remediation identified in notice of availability of the SSFL Area than 130 monitoring wells to identify the SSFL Area IV Final Environmental IV Draft EIS (82 FR 4336; January 13, the presence and type of groundwater Impact Statement (EIS), with the 2017), DOE conducted public hearings contamination. The investigation work exception of Building 4100/Building 56 and invited comment on the Draft EIS. was summarized in the Final RCRA Landfill Trichloroethylene (TCE) Plume, After considering comments received on Facility Groundwater Remedial for which DOE will implement the Draft EIS, DOE addressed the Investigation Report, Area IV (August monitored natural attenuation. This comments and prepared a Final EIS that 2019). The groundwater investigation alternative is a combination of the was issued with EPA’s Notice of work involved the 14 solid waste Treatment Alternative and the management units assigned to DOE in 1 The CEQ published on July 16, 2020 the ‘‘Final Monitored Natural Attenuation Rule Update to the Regulations Implementing the the DTSC 2007 Consent Order for Alternative. This action will be taken in Procedural Provisions of the National Corrective Action (2007 CO) and areas accordance with applicable federal, Environmental Policy Act’’. The SSFL Area IV EIS adjacent to these units including the state, and local laws and regulations, was started prior to September 14, 2020 (the NBZ and the Brandeis property. The effective date for CEQ’s updated NEPA regulations). and approvals made by the California DOE completed the EIS and is issuing this ROD investigation identified seven areas in Department of Toxic Substances Control pursuant to DOE’s NEPA regulations and the 1978 Area IV with differing groundwater (DTSC). This action will also be taken CEQ regulations. impact issues related to solvents,

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metals, and radionuclides, released from 2019). DOE will issue subsequent will assess the need for an alternative the years of energy and liquid metals ROD(s) to document its decision for soil remedy. research. Proposed groundwater remediation. HMSA TCE Plume remedies were identified in the Area IV The actions DOE will undertake to groundwater corrective measures study remediate groundwater are presented The HMSA represents the largest that was conducted at the same time the below. groundwater impact in Area IV. TCE is present in alluvium and weathered Final EIS was developed. Impacts of FSDF VOC Plume implementing the measures are bedrock material and in competent described in the Final EIS. The FSDF groundwater is impacted bedrock. DOE is considering two The DOE/ETEC SSFL Area IV by VOCs (chlorinated solvents) and remediation options for the MHSA: locations with impacted groundwater metals contained in bedrock fractures Pump and treat and in situ chemical/ are: primarily between 15 feet and 60 feet biological oxidation. Due to the large • Former Sodium Disposal Facility below ground surface. In November volume of impacted groundwater, DOE (FSDF) Volatile Organic Compound 2017 DOE initiated an interim measure will determine whether it is possible to (VOC) Plume to extract groundwater from the reuse the treated groundwater (such as • Building 4100/Building 56 Landfill fractures. The interim action reduced for dust control) or discharge it locally. Trichloroethylene (TCE) Plume VOC concentrations from 10,000 If reuse or discharge is not feasible, DOE • Building 4057 Tetrachloroethylene micrograms per liter (mg/L) to proposes conducting a pilot study to (PCE) Plume approximately 1,000 mg/L. The assess whether the plume can be treated • Hazardous Materials Storage Area maximum contaminant level (MCL) for in situ by chemical and/or biological (HMSA) TCE Plume TCE is 5 mg/L. DOE plans to continue means to reduce the TCE levels. If • Building 4010 Tritium Plume the action of dewatering the fractures successful, the in-situ treatment would • Radioactive Materials Handing and evaluating bedrock back-diffusion be extended to address the entire area of Facility (RMHF) Leach Field effects for 5 years. Extracted impacted groundwater. The success of (Strontium 90 and TCE) groundwater will be temporarily stored in situ treatment would be assessed on • Metals Clarifier/DOE Leach Field 3 in an on-site tank and then transported a five-year basis. TCE Plume off-site for treatment and disposal. After Building 4010 Tritium Plume 5 years of action, DOE will evaluate the Purpose and Need for Agency Action effectiveness of the fracture dewatering, An area of groundwater in the north The DOE Office of Environmental and then evaluate additional actions if central portion of SSFL Area IV is Management’s (DOE–EM) purpose and necessary, based on the effectiveness of impacted by the radioactive isotope of need for action remains as stated in the the remedy at reducing chemical hydrogen, termed tritium. Seven wells SSFL Area IV Final EIS. DOE–EM needs concentrations, and the assessment of in this area have been sampled for to complete remediation of Area IV and the back-diffusion rate of the tritium for 16 years and the the NBZ to comply with applicable contaminants from bedrock into the concentrations of tritium have declined requirements for cleanup of radiological fracture groundwater. from 119,000 picocuries per liter (pCi/ and hazardous substances. Pursuant to L) in 2004 to 26,000 pCi/L in 2020. Only this ROD, and upon consideration by Building 56 Landfill two wells remain above the MCL of DTSC of the Groundwater Corrective One well at the landfill is impacted by 20,000 pCi/L. This decline is consistent Measures Implementation Plan (CMIP), TCE above 5 mg/L. Trend data for the with the 12.5-year half-life of tritium. DOE–EM will initiate remediation of last six years demonstrates a continued The wells with the highest tritium groundwater in a manner that is decline of TCE concentration at the well concentrations are within Area IV and protective of the environment and the from 56 mg/L in 2015 to 22 mg/L in 2020. the leading edge of the plume at about health and safety of the public and its DOE’s evaluation of data for the landfill 1,000 pCi/L is observed in the NBZ. Due workers. area indicates that the landfill is not the to the tight bedrock conditions, source for the TCE. The decline in TCE groundwater flow is slow in this area Proposed Action at the landfill also indicates that the and the plume has moved less than DOE–EM’s proposed action is to observed contamination reflects the 1,000 feet since its release 30 years ago. remediate groundwater at seven presence of a leading edge of a plume, DOE proposes to continue to monitor locations in Area IV. DOE will also originating upgradient to the landfill. the natural attenuation of the tritium in continue the ongoing groundwater DOE proposes to continue monitoring groundwater through annual sampling monitoring of other locations in Area IV the impacted well to confirm the of several wells. Concentrations of and the NBZ in accordance with the decline in TCE at the landfill site. tritium are anticipated to be below the 2007 CO to confirm no groundwater drinking water standard (MCL) of Building 4057 PCE Impacted contamination. The final groundwater 20,000 pCi/L within the next 10 years. cleanup goals will be established by Groundwater DTSC as it evaluates the corrective One well in the vicinity of Building RMHF TCE and Strontium 90 Impacted measures and reaches its conclusions in 4057 is impacted by the chlorinated Groundwater the RCRA Statement of Basis. DTSC will solvent PCE. DOE proposes to install A small area north of the RMHF confer with DOE regarding DTSC’s additional extraction wells near the exhibits TCE contamination near the decisions regarding groundwater impacted well and pump the water for applicable MCL of 5 mg/L. DOE proposes remediation. temporary storage into an on-site tank. to continue to monitor the natural This ROD addresses only DOE’s The impacted groundwater will be attenuation of TCE concentrations at decision for groundwater remediation. transported off-site for treatment and this location; data collected from wells DOE previously announced its decision disposal. The effectiveness of the at this location show a decline of TCE to demolish the 18 buildings it owns in remedy in reducing chemical from 20 mg/L in 1998 to 5.4 mg/L in Area IV of the SSFL and dispose of or concentrations will be evaluated on a 2020. Bedrock beneath the former recycle the resulting building materials five-year basis. If the pumping remedy RMHF leach field is impacted by the off-site (84 FR 51149; September 27, is determined to not be effective, DOE radionuclide Strontium-90. When

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groundwater elevation rises in wet Final EIS Summary provides a summary Finding of No Significant Impact rainfall years, the groundwater comes and comparison of potential (FONSI), DOE published in the Federal into contact with the impacted bedrock. environmental consequences associated Register an Advanced Notice of Intent DOE proposes to excavate for off-site with each groundwater remediation (ANOI) to prepare an EIS (72 FR 58834; disposal at a mixed low-level waste alternative. The impacts of all preferred October 17, 2007). The ANOI was issued facility the bedrock containing the groundwater remediation alternatives to to request early comments and to obtain Strontium-90. Monitoring wells the physical, social, and natural input on the scope of the EIS. The NOI installed near the former leach field site environments will be minimal and to prepare an EIS and to announce will then be sampled to demonstrate the manageable. scoping meetings was published in the effectiveness of the bedrock removal in Federal Register on May 16, 2008 (73 Environmentally Preferable protecting groundwater. FR 28437). The public scoping period Alternatives started on May 16, 2008, and continued Metals Clarifier/DOE Leach Field 3 TCE The environmentally preferable through August 14, 2008. Scoping A small area in the south-central alternatives are the groundwater meetings were held in Simi Valley, portion of Area IV is impacted by TCE Treatment Alternatives, Bedrock California (July 22, 2008), Northridge, near the applicable 5 mg/L MCL. This Removal, and Monitored Natural California (July 23, 2008), and area has been monitored for 20 years Attenuation. Groundwater pumping and Sacramento, California (July 24, 2008). and the data demonstrate a continued in situ treatment technologies, and Preparation of the Draft EIS was decline in TCE levels. DOE proposes to monitored natural attenuation have the delayed due to the need to collect soil continue monitoring the wells with TCE least severe environmental impacts and groundwater characterization data to provide data demonstrating the compared with other alternatives for Area IV and the NBZ. The lack of continued attenuation of TCE at this considered for each impact area at most characterization data was an issue location (Monitored Natural locations. Bedrock excavation reduces raised in EPA’s and the State of Attenuation). by approximately 150 years California’s comments on the 2003 EA. groundwater monitoring, groundwater EPA collected characterization data for Alternatives control, and investigation work at the radionuclides from October 2010 to In the SSFL Area IV Draft and Final former RMHF leach field site. December 2012. DOE (under DTSC EIS, DOE–EM evaluated No Action, oversight) collected characterization monitored natural attenuation, pump Permits, Consultations, and Notifications data for chemicals from October 2010 to and treat, bedrock vapor extraction, June 2014. While the characterization source isolation, and bedrock removal DOE–EM will implement the data were being collected, DOE ETEC as groundwater remediation proposed groundwater remediation continued public involvement through alternatives. In the Area IV Corrective activities in accordance with the release of newsletters and conducting Measures Study, DOE evaluated these Groundwater CMIP to be approved by Community Alternatives Development technologies plus in situ groundwater California DTSC. If local discharge of Workshops in 2012. Due to the length of treatment using biological and chemical treated groundwater is considered, DOE time between the 2008 NOI and oxidation, thermal remediation, and will coordinate water release with the completion of characterization, DOE bedrock fracturing. Los Angeles Regional Water Quality ETEC published in the Federal Register Control Board. DOE will obtain Potential Environmental Impacts on February 7, 2014, an Amended NOI necessary permits for any potential for the SSFL Area IV EIS (79 FR 7439). In the SSFL Area IV Final EIS DOE– installation and operation of Additional scoping meetings were held EM analyzed environmental issues and groundwater treatment systems. DOE– in Simi Valley, California on February the potential impacts related to land EM is complying with Section 106 of 27, 2014, and in Agoura Hills/Calabasas, resources, geology and soils, surface the National Historic Preservation Act California on March 1, 2014. The water, groundwater, biology, air quality through completion and scoping period ended on March 10, and climate change, noise, implementation of the Programmatic 2014. The Notice of Availability of the transportation and traffic, human Agreement (PA) with the California SSFL Area IV Draft EIS was published health, waste management, cultural State Historic Preservation Officer in the Federal Register on January 13, resources, socioeconomics, (September 13, 2019). DOE will follow 2017 (82 FR 4336). An Amended Notice environmental justice, and sensitive- the requirements of the PA as it Extending the Comment Period to April aged populations. DOE–EM also develops and eventually implements the 13, 2017 was published in the Federal evaluated the potential impacts of the Groundwater CMIP. DOE also consulted Register on March 17, 2017 (82 FR irreversible and irretrievable with the U.S. Fish and Wildlife Service 14218). commitment of resources, the short-term (USFWS) for compliance with Section 7 Comments Received on the Final uses of the environment, and the of the Endangered Species Act. Area IV Environmental Impact Statement for maintenance and enhancement of long- of SSFL includes federally designated Remediation of Area IV and the term productivity. These analyses and critical habitat for the endangered Northern Buffer Zone of the Santa results are described in the SSFL Area Braunton’s milk-vetch. USFWS issued Susana Field Laboratory IV Final EIS, including the Summary its Biological Opinion related to DOE’s and Section 2.8. proposed actions on August 28, 2018. The Notice of Availability of the SSFL In identifying the preferred alternative (http://www.ssflareaiveis.com/ Area IV Final EIS was published in the for groundwater remediation, for each of documents/feis/ Federal Register on December 28, 2018 the impacted areas, and in making the Biological%20Opinion.pdf). (83 FR 67282). DOE–EM distributed the decisions announced in this ROD, DOE– SSFL Area IV Final EIS to Congressional EM considered the potential impacts Public and Agency Involvement members, State and local governments; that would result from the groundwater Following the 2007 federal court other federal agencies; culturally pumping, in situ treatment, bedrock decision resulting from a legal challenge affiliated American Indian tribal removal, and monitored attenuation to the DOE 2003 Environmental governments; non-governmental actions. Table S–9 of the SSFL Area IV Assessment (EA) and its subsequent organizations; and other stakeholders,

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including members of the public who continued until concentrations reach Groundwater Remedy Changes Since requested the document. Also, the SSFL the cleanup goal. the Final EIS Monitored Natural Attenuation Area IV Final EIS was made available The Final EIS DOE identified pump Comment—Commenters also objected to via the internet (http:// and treat as the preferred treatment DOE’s proposal to use monitored www.SSFLAreaIVEIS.com). In the SSFL technology for the Building 56 Landfill natural attenuation as a process for Area IV Final EIS, DOE–EM announced TCE Plume. Data collected since the preferred alternatives for groundwater remediation. Response—In the Final EIS DOE issuance of the Final EIS has groundwater remediation as a determined that the Building 56 Landfill combination of the Treatment states that monitored natural attenuation would be considered only is not the source of observed TCE Alternative and the Monitored Natural contamination. The source appears to be Attenuation Alternative. Preferred for those locations with concentrations near the contaminant’s MCL and with upgradient of the landfill. The treatment technologies included groundwater data for the landfill groundwater pump and treat, bedrock data demonstrating continued decline in concentration. The Final EIS states that location show a continuous decline in removal, and monitored natural TCE concentrations, indicative of the attenuation. monitored natural attenuation would be considered for the Tritium Plume, leading edge from a plume from another DOE–EM received 885 letters or location. DOE will continue to monitor emails regarding the SSFL Area IV Final RMHF TCE Plume, and the Metals Clarifier TCE Plume as contaminants at the declining TCE concentrations at the EIS. DOE–EM considered all comments landfill site. Under these conditions, contained in the letters and emails those locations are either at or near their MCLs and are anticipated to be at MCLs continued groundwater monitoring near received during the review period. the landfill would have less Some of the comments reiterated issues within 10 years. Compliance with the 2007 CO— environmental impact than a pump and raised during the comment period on Commenters stated that DOE was not treat action, which could draw the SSFL Area IV Draft EIS. DOE following the 2007 CO. The commenters additional contaminants from the source previously evaluated all comments did not state what aspects of the 2007 to the landfill. submitted on the SSFL Area IV Draft EIS CO were not being met. and provided responses to those DOE Comment Review and Changes Response—DOE has been compliant Conclusion comments in the SSFL Area IV Final with the 2007 CO, working in EIS, Volume 3, Comment Response coordination with California DTSC. This DOE has considered the above Document. The ROD for Building includes the sampling of Area IV mentioned comments and changes and Demolition (84 FR 51149) addressed the monitoring wells in accordance with the concludes that they do not present general comment issues (as well as SSFL Water Quality Sampling and ‘‘significant new circumstances or those specific to building demolition) Analysis Plan (SSFL WQSAP; Haley and information relevant to environmental received on the Final EIS. Comments Aldrich, 2010). DOE developed and concerns and bearing on the proposed related to groundwater remediation are DTSC approved the work plan for action or its impacts’’ within the summarized. groundwater characterization. DOE meaning of 40 CFR 1502.9(c) and 10 DOE–EM received comment letters implemented the work plan installing CFR 1021.314(a) and therefore does not from EPA, Region IX; DTSC; The Boeing 33 new wells, bringing the total number require preparation of a supplement Company; City of Los Angeles; Natural of monitoring wells in Area IV to over analysis or a supplemental EIS. Resources Defense Council/Committee 130 wells. This network is adequate to Decision to Bridge the Gap; Physicians for Social assess groundwater remedies for each Responsibility—Los Angeles; location of Area IV. As DOE designs the DOE–EM has decided to implement Rocketdyne Cleanup Coalition; groundwater remedies to be described pump and treat for the FSDF VOC and Southern California Federation of in the Groundwater CMIP, DOE will be Building 4057 PCE plumes; conduct an Scientists; and the SSFL Community identifying additional locations for new in situ treatment pilot study for the Advisory Group. DOE–EM also received monitoring wells to be installed in Area HMSA TCE plume; perform a bedrock 876 comment emails from individuals. IV. In compliance with a directive from removal action for RMHF Strontium-90 DOE reviewed and responded to all DTSC, DOE implemented the impacted bedrock; and implement comments received through March 28, groundwater interim measure at the monitored natural attenuation for the 2019. There were no comments received FSDF, which is already reducing VOC Building 56 Landfill, Tritium Plume, after that date. concentrations. DOE collected over 500 RMHF Leach Field TCE, and Metals Active Remediation Comment— groundwater samples during the last Clarifier/DOE Leach Field 3 Plume. Commenters alleged that DOE was not five years consistent with the 2007 CO These actions reflect DOE’s Preferred proposing active groundwater requirements. The results of the efforts Alternatives for groundwater remediation and was planning to leave were reported in the RCRA Facility remediation as described in the SSFL groundwater with contaminants above Groundwater Remedial Investigation Area IV Final EIS, with the one permissible levels. Report (August 2019), reviewed by and exception of the change to the Building Response—The commenters misstated conditionally approved by DTSC. 56 Landfill noted above. Under this DOE’s proposed groundwater actions Finally, in accordance with the 2007 alternative, DOE–EM will prepare a presented in the Final EIS. The Final CO, DOE prepared the Area IV Groundwater CMIP describing for each EIS states that the maximum Groundwater Corrective Measures Study groundwater impact area the details for contaminant level (MCL or drinking Report, which has been reviewed by each remedial action, handling and water standard) would be the goal for DTSC. With the issuance of this ROD, disposal of treatment residuals created locations requiring active remediation. DOE will prepare the Groundwater during the actions, monitoring The Final EIS states that active CMIP which will describe the technical requirements, and the goal for remediation is proposed to address details of the groundwater remedies completion of the actions. contamination for the FSDF, PCE identified herein. DTSC in turn will The DOE Groundwater CMIP will be Plume, HMSA, and RMHF Strontium-90 review and comment on the subject to DTSC review under the bedrock. The cleanup actions would be Groundwater CMIP. CEQA. In October 2017, DTSC released

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a draft Programmatic Environmental alternatives have been, or will be, DEPARTMENT OF ENERGY Impact Report (EIR) describing cleanup adopted. Prior to active groundwater actions for the entirety of SSFL. remediation, DOE–EM will prepare a Environmental Management Site- Approval of remedies and selection of mitigation and monitoring plan that will Specific Advisory Board, Savannah goals will be identified in the DTSC address how DOE–EM will minimize air River Site RCRA Statement of Basis. DOE–EM will emissions. Diesel emissions will be AGENCY: Office of Environmental implement the groundwater actions controlled using well installation and Management, Department of Energy. consistent with DTSC’s EIR findings and bedrock removal equipment and ACTION: Notice of open virtual meeting. approval of the Groundwater CMIP. highway trucks fitted with pollution DOE will continue to perform interim control equipment maintained to SUMMARY: This notice announces an monitored natural attenuation, which manufacturer specifications. Hazardous online virtual meeting of the does not require a final EIR, of the FSDF chemicals and radionuclides captured Environmental Management Site- plume, metals clarifier plume, tritium in treatment media will be packaged to Specific Advisory Board (EM SSAB), plume, and building 56 landfill plume, Savannah River Site. The Federal until final remedies are concurred upon prevent releases during transport. Occupational safety risks to workers Advisory Committee Act requires that with DTSC. Other actions, such as the public notice of this online virtual Sr-90 removal of bedrock, will not be will be minimized by adherence to federal and state occupational safety meeting be announced in the Federal performed until the final EIR is Register. published. laws, and DOE requirements, In reaching this decision, DOE–EM regulations, and orders. Workers will DATES: Monday, November 30, 2020; balanced the environmental information also be protected by use of engineering 1:00 p.m.–4:00 p.m. in the Final EIS with potential and administrative controls. Emergency ADDRESSES: Online Virtual Meeting. To environmental impacts of groundwater preparedness will also include an attend, please send an email to: remediation, current and future mission Accident Preparedness Program to [email protected] by needs, technical and security address protection of the public during no later than 4:00 p.m. ET on considerations, availability of resources, transport of groundwater treatment Wednesday, November 25, 2020. and public comments on the SSFL Area residuals. Stormwater control best To submit public comments: Public IV Draft and Final EIS. Groundwater management practices will be comments will be accepted via email remediation supports DOE–EM’s implemented to prevent surface water prior to and after the meeting. program initiatives for site cleanup and runoff from demolition sites. The plan Comments received by no later than closure. Groundwater contaminant will also incorporate by reference the 4:00 p.m. ET on Wednesday, November concentrations exceed levels considered monitoring and mitigation measures 25, 2020 will be read aloud during the safe for human health and ecological relevant to groundwater remediation virtual meeting. Comments will also be receptors. The current and future land established in the Programmatic accepted after the meeting, by no later use of the Area IV property is open Agreement and Biological Opinion. than 4:00 p.m. ET on Monday, space/recreational in accordance with December 7, 2020. Please submit the Grant Deed of Conservation Signing Authority comments to srscitizensadvisoryboard@ Easement and Agreement (Ventura gmail.com. This document of the Department of County 2017) and the Ventura County FOR FURTHER INFORMATION CONTACT: General Plan. The groundwater Energy was signed on November 2, Amy Boyette, Office of External Affairs, remediation actions presented in this 2020, by William I. White, Senior U.S. Department of Energy, Savannah ROD are consistent with the current and Advisor for Environmental Management River Operations Office, P.O. Box A, future land use. Implementing the to the Under Secretary for Science, Aiken, SC, 29802; Phone: (803) 952– Preferred Alternative will allow DOE– Office of Environmental Management, 6120; email: [email protected]. EM to continue its progress of cleaning pursuant to delegated authority from the SUPPLEMENTARY INFORMATION: up and eliminating liabilities for legacy Secretary of Energy. That document Purpose of the Board: The purpose of nuclear research properties. with the original signature and date is the Board is to make recommendations Mitigation Measures maintained by DOE. For administrative to DOE–EM and site management in the purposes only, and in compliance with The installation of monitoring wells areas of environmental restoration, the requirements of the Office of the waste management, and related has the potential for temporary air Federal Register, the undersigned DOE quality emissions from diesel powered activities. Federal Register Liaison Officer has equipment. The transport of treatment been authorized to sign and submit the Tentative Agenda residuals and extracted groundwater —Meeting Rules and Agenda Review also has the potential for diesel exhaust document in electronic format for —Opening and Chair Update emissions. Temporary water storage and publication, as an official document of the Department of Energy. —Agency Updates treatment systems will be installed in —Break already disturbed areas and operations The administrative process in no way —Committee Round Robin: are anticipated to be powered by solar alters the legal effect of this document • Facilities Disposition & Site systems. Overall, the groundwater upon publication in the Federal Remediation Committee remediation impacts are anticipated to Register. • Nuclear Materials Committee be minimal. This decision adopts the • Signed in Washington, DC, on November 5, Strategic & Legacy Management mitigation and monitoring measures 2020. Committee relevant to groundwater remediation • Waste Management Committee Treena V. Garrett, that are identified in Chapter 6 of the • Administrative & Outreach Final EIS, the Programmatic Agreement, Federal Register Liaison Officer, U.S. Committee and the Biological Opinion. Practicable Department of Energy. —Break means to avoid or minimize [FR Doc. 2020–24908 Filed 11–9–20; 8:45 am] —Potential Draft Recommendation environmental harm from the selected BILLING CODE 6450–01–P Discussion

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—Reading of Public Comments Applicants: Equitrans, L.P. Description: § 4(d) Rate Filing: Cap —Potential Voting on Draft Description: § 4(d) Rate Filing: Rel Neg Rate Agmt (Kaiser 35448 to Recommendations Negotiated Rate Capacity Release Koch 38818) to be effective 11/1/2020. —Adjourn Agreements—11/1/2020 to be effective Filed Date: 11/2/20. Public Participation: The online 11/1/2020. Accession Number: 20201102–5154. virtual meeting is open to the public. Filed Date: 11/2/20. Comments Due: 5 p.m. ET 11/16/20. Written statements may be filed with Accession Number: 20201102–5033. the Board either before or after the Comments Due: 5 p.m. ET 11/16/20. Docket Numbers: RP21–187–000. meeting as there will not be Docket Numbers: RP21–180–000. Applicants: Gulf South Pipeline opportunities for live public comment Applicants: Texas Eastern Company, LLC. during this online virtual meeting. The Transmission, LP. Description: § 4(d) Rate Filing: Cap Deputy Designated Federal Officer is Description: § 4(d) Rate Filing: Rel Neg Rate Agmt (Osaka 46429 to empowered to conduct the meeting in a Negotiated Rate—Range Resources Texla 53267) to be effective 11/1/2020. fashion that will facilitate the orderly 910916 Release eff 11–1–2020 to be Filed Date: 11/2/20. conduct of business. Individuals effective 11/1/2020. wishing to submit public comments Filed Date: 11/2/20. Accession Number: 20201102–5155. should email them as directed above. Accession Number: 20201102–5034. Comments Due: 5 p.m. ET 11/16/20. Comments Due: 5 p.m. ET 11/16/20. Minutes: Minutes will be available by Docket Numbers: RP21–188–000. writing or calling Amy Boyette at the Docket Numbers: RP21–181–000. Applicants: Natural Gas Pipeline address or telephone number listed Applicants: Rover Pipeline LLC. Company of America. above. Minutes will also be available at Description: § 4(d) Rate Filing: the following website: https:// Summary of Negotiated Rate Capacity Description: § 4(d) Rate Filing: cab.srs.gov/srs-cab.html. Release Agreements on 11–2–20 to be Amendment to a Negotaited Rate effective 11/1/2020. Agreement—Macquarie to be effective Signed in Washington, DC, on November 5, 11/1/2020. 2020. Filed Date: 11/2/20. Accession Number: 20201102–5048. LaTanya Butler, Filed Date: 11/2/20. Comments Due: 5 p.m. ET 11/16/20. Deputy Committee Management Officer. Accession Number: 20201102–5164. Docket Numbers: RP21–182–000. Comments Due: 5 p.m. ET 11/16/20. [FR Doc. 2020–24909 Filed 11–9–20; 8:45 am] Applicants: Algonquin Gas BILLING CODE 6450–01–P Transmission, LLC. Docket Numbers: RP21–189–000. Description: § 4(d) Rate Filing: Applicants: Chesapeake Energy Negotiated Rate—Yankee Gas 510802 Marketing, L.L.C. DEPARTMENT OF ENERGY Release eff 11–3–2020 to be effective 11/ Description: Petition For Limited Federal Energy Regulatory 3/2020. Waiver, et al. of Chesapeake Energy Commission Filed Date: 11/2/20. Marketing, L.L.C. under RP21–189. Accession Number: 20201102–5058. Filed Date: 11/2/20. Comments Due: 5 p.m. ET 11/16/20. Combined Notice of Filings Accession Number: 20201102–5188. Docket Numbers: RP21–183–000. Take notice that the Commission has Applicants: Interstate Gas Supply, Comments Due: 5 p.m. ET 11/9/20. received the following Natural Gas Inc., Dominion Energy Solutions, Inc. The filings are accessible in the Pipeline Rate and Refund Report filings: Description: Joint Petition For Limited Commission’s eLibrary system (https:// Docket Numbers: RP20–1252–001. Waiver, et al. of Interstate Gas Supply, elibrary.ferc.gov/idmws/search/ Applicants: Rover Pipeline LLC. Inc., et al. under RP21–183. fercgensearch.asp) by querying the Description: Compliance filing Filed Date: 10/30/20. docket number. Compliance with RP20–1252 Order Fuel Accession Number: 20201030–5412. Any person desiring to intervene or Filing to be effective 11/1/2020. Comments Due: 5 p.m. ET 11/12/20. protest in any of the above proceedings Filed Date: 11/2/20. Docket Numbers: RP21–184–000. must file in accordance with Rules 211 Accession Number: 20201102–5087. Applicants: East Tennessee Natural and 214 of the Commission’s Comments Due: 5 p.m. ET 11/6/20. Gas, LLC. Regulations (18 CFR 385.211 and Docket Numbers: RP21–177–000. Description: § 4(d) Rate Filing: 385.214) on or before 5:00 p.m. Eastern Applicants: Texas Eastern Negotiated Rate—Various Releases eff time on the specified comment date. Transmission, LP. 11–1–20 to be effective 11/1/2020. Protests may be considered, but Description: § 4(d) Rate Filing: Filed Date: 11/2/20. intervention is necessary to become a Negotiated Rate—Morgan Stanley Accession Number: 20201102–5152. party to the proceeding. 8947599 Release eff 11–1–2020 to be Comments Due: 5 p.m. ET 11/16/20. eFiling is encouraged. More detailed effective 11/1/2020. Docket Numbers: RP21–185–000. Filed Date: 11/2/20. information relating to filing Applicants: Transcontinental Gas requirements, interventions, protests, Accession Number: 20201102–5027. Pipe Line Company, LLC. Comments Due: 5 p.m. ET 11/16/20. service, and qualifying facilities filings Description: § 4(d) Rate Filing: Rate can be found at: http://www.ferc.gov/ Docket Numbers: RP21–178–000. Schedules GSS, LSS & SS–2 Tracker eff docs-filing/efiling/filing-req.pdf. For Applicants: Equitrans, L.P. 11/1/2020—Dominion & National Fuel other information, call (866) 208–3676 Description: § 4(d) Rate Filing: to be effective 11/1/2020. (toll free). For TTY, call (202) 502–8659. Expired Negotiated Rate Agreements— Filed Date: 11/2/20. 12/03/2020 to be effective 12/3/2020. Accession Number: 20201102–5153. Dated: November 3, 2020.. Filed Date: 11/2/20. Comments Due: 5 p.m. ET 11/16/20. Nathaniel J. Davis, Sr., Accession Number: 20201102–5032. Docket Numbers: RP21–186–000. Deputy Secretary. Comments Due: 5 p.m. ET 11/16/20. Applicants: Texas Gas Transmission, [FR Doc. 2020–24862 Filed 11–9–20; 8:45 am] Docket Numbers: RP21–179–000. LLC. BILLING CODE 6717–01–P

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DEPARTMENT OF ENERGY Comments Due: 5 p.m. ET 11/24/20. Description: § 205(d) Rate Filing: DEF Docket Numbers: ER20–1851–002. Schedule 2 Revisions—Removal of Federal Energy Regulatory Applicants: Whitetail Solar 3, LLC. Avon Park Units 1 and 2 to be effective Commission Description: Tariff Amendment: 11/1/2020. Response to Deficiency Letter in Docket Filed Date: 11/2/20. Combined Notice of Filings #1 ER20–1851 to be effective 7/18/2020. Accession Number: 20201102–5185. Take notice that the Commission Filed Date: 11/3/20. Comments Due: 5 p.m. ET 11/23/20. received the following electric corporate Accession Number: 20201103–5000. Docket Numbers: ER21–306–000. filings: Comments Due: 5 p.m. ET 11/12/20. Applicants: PJM Interconnection, Docket Numbers: EC21–16–000. Docket Numbers: ER20–2451–001. L.L.C. Applicants: CPV Fairview, LLC, CPV Applicants: Basin Electric Power Description: § 205(d) Rate Filing: Keenan II Renewable Energy Company, Cooperative. Original WMPA, Service Agreement No. LLC, CPV Maryland, LLC, CPV Shore, Description: Compliance filing: Basin 5841; Queue No. AF2–151 to be LLC, CPV Towantic, LLC, CPV Valley, Electric Compliance Filing in Docket effective 10/9/2020. LLC. No. ER20–2451 to be effective 9/16/ Filed Date: 11/3/20. Description: Application for 2020. Accession Number: 20201103–5009. Authorization Under Section 203 of the Filed Date: 11/3/20. Comments Due: 5 p.m. ET 11/24/20. Federal Power Act of CPV Fairview, Accession Number: 20201103–5106. Docket Numbers: ER21–308–000. LLC, et. al. Comments Due: 5 p.m. ET 11/24/20. Applicants: Southwest Power Pool, Filed Date: 10/29/20. Docket Numbers: ER20–2590–000. Inc. Accession Number: 20201029–5276. Applicants: Basin Electric Power Description: § 205(d) Rate Filing: Comments Due: 5 p.m. ET 11/19/20. Cooperative. 3246R2 Tenaska Power/Montana-Dakota Docket Numbers: EC21–17–000. Description: Supplement to July 31, Utilities Att AO Cancel to be effective Applicants: Deuel Harvest Wind 2020 Market Based Rate Application of 10/1/2020. Energy LLC, SP Deuel Harvest Wind Basin Electric Power Cooperative. Filed Date: 11/3/20. Energy Holdings, LLC. Filed Date: 10/30/20. Accession Number: 20201103–5039. Description: Application for Accession Number: 20201030–5416. Comments Due: 5 p.m. ET 11/24/20. Authorization Under Section 203 of the Comments Due: 5 p.m. ET 11/20/20. Docket Numbers: ER21–309–000. Federal Power Act of Deuel Harvest Docket Numbers: ER20–2722–001. Applicants: Entergy Arkansas, LLC, Wind Energy LLC, et. al. Applicants: CO Buffalo Flats, LLC. Entergy Louisiana, LLC, Entergy Filed Date: 10/30/20. Description: Notice of Non-Material Mississippi, LLC, Entergy New Orleans, Accession Number: 20201030–5430. Change in Status of CO Buffalo Flats, LLC, Entergy Texas, Inc. Comments Due: 5 p.m. ET 11/20/20. LLC. Description: Entergy Services, LLC, on Take notice that the Commission Filed Date: 10/30/20. behalf of the Entergy Operating received the following electric rate Accession Number: 20201030–5437. Companies, submits a depreciation filings: Comments Due: 5 p.m. ET 11/20/20. analysis and updated depreciation rates for Transmission Plant and General Docket Numbers: ER10–1484–022; Docket Numbers: ER20–2916–001. Plant. ER12–2381–008; ER13–1069–011. Applicants: Alabama Power Filed Date: 10/30/20. Applicants: Shell Energy North Company. Accession Number: 20201030–5427. America (US), L.P., MP2 Energy LLC, Description: Tariff Amendment: Comments Due: 5 p.m. ET 11/20/20. MP2 Energy NE LLC. Amendment to Bird Dog Solar LGIA Description: Notice of Non-Material Termination Filing to be effective 9/18/ Docket Numbers: ER21–310–000. Change in Status of Shell Energy North 2020. Applicants: Startrans IO, LLC. America (US), L.P., et. al. Filed Date: 11/2/20. Description: § 205(d) Rate Filing: Filed Date: 10/29/20. Accession Number: 20201102–5165. TRBAA 2021 Update to be effective 1/ Accession Number: 20201029–5279. Comments Due: 5 p.m. ET 11/23/20. 1/2021. Comments Due: 5 p.m. ET 11/19/20. Docket Numbers: ER21–82–001. Filed Date: 11/3/20. Accession Number: 20201103–5055. Docket Numbers: ER17–256–013; Applicants: Soldier Creek Wind, LLC. Comments Due: 5 p.m. ET 11/24/20. ER17–242–012; ER17–243–012; ER17– Description: Tariff Amendment: 245–012; ER17–652–012. Amendment to Soldier Creek Wind, LLC Docket Numbers: ER21–311–000. Applicants: Darby Power, LLC, Gavin & Irish Creek Wind SIFCA to be Applicants: Green Mountain Power Power, LLC, Lawrenceburg Power, LLC, effective 10/24/2020. Corporation. Lightstone Marketing LLC, Waterford Filed Date: 11/3/20. Description: Order No. 864 Power, LLC. Accession Number: 20201103–5113. Compliance Filing of Green Mountain Description: Notice of Non-Material Comments Due: 5 p.m. ET 11/24/20. Power Corporation. Change in Status of Darby Power, LLC, Docket Numbers: ER21–304–000. Filed Date: 10/30/20. et. al. Applicants: Cherokee County Accession Number: 20201030–5428. Filed Date: 10/30/20. Cogeneration Partners, LLC. Comments Due: 5 p.m. ET 11/20/20. Accession Number: 20201030–5436. Description: § 205(d) Rate Filing: Docket Numbers: ER21–312–000. Comments Due: 5 p.m. ET 11/20/20. Reactive Power Rate Schedule Filing to Applicants: PacifiCorp. Docket Numbers: ER20–924–004. be effective 1/1/2021. Description: § 205(d) Rate Filing: Applicants: PacifiCorp. Filed Date: 11/2/20. OATT Reconciliation (Second) to be Description: Compliance filing: OATT Accession Number: 20201102–5171. effective 6/27/2020. Queue Reform—Directive 10/5/2020 to Comments Due: 5 p.m. ET 11/23/20. Filed Date: 11/3/20. be effective 4/1/2020. Docket Numbers: ER21–305–000 Accession Number: 20201103–5063. Filed Date: 11/3/20. Applicants: Duke Energy Carolinas, Comments Due: 5 p.m. ET 11/24/20. Accession Number: 20201103–5054. LLC. Docket Numbers: ER21–313–000.

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Applicants: GridLiance West LLC. Docket Numbers: RP21–190–000. may be considered, but intervention is Description: § 205(d) Rate Filing: GLW Applicants: Rockies Express Pipeline necessary to become a party to the TRBAA 2021 Annual Update Filing to LLC. proceeding. be effective 1/1/2021. Description: § 4(d) Rate Filing: REX eFiling is encouraged. More detailed Filed Date: 11/3/20. 2020–11–03 GT&C Section 13 Revisions information relating to filing Accession Number: 20201103–5112. to be effective 12/3/2020. requirements, interventions, protests, Comments Due: 5 p.m. ET 11/24/20. Filed Date: 11/3/20. service, and qualifying facilities filings Take notice that the Commission Accession Number: 20201103–5057. can be found at: http://www.ferc.gov/ received the following electric securities Comments Due: 5 p.m. ET 11/16/20. docs-filing/efiling/filing-req.pdf. For filings: Docket Numbers: RP21–191–000. other information, call (866) 208–3676 Docket Numbers: ES21–9–000. Applicants: Algonquin Gas (toll free). For TTY, call (202) 502–8659. Applicants: Altavista Solar, LLC. Transmission, LLC. Dated: November 4, 2020. Description: Application Under Description: § 4(d) Rate Filing: Nathaniel J. Davis, Sr., Section 204 of the Federal Power Act for Negotiated Rate—Yankee Gas 510802 Deputy Secretary. Release eff 11–4–2020 to be effective 11/ Authorization to Issue Securities for [FR Doc. 2020–24924 Filed 11–9–20; 8:45 am] Altavista Solar, LLC. 4/2020. BILLING CODE 6717–01–P Filed Date: 10/29/20. Filed Date: 11/3/20. Accession Number: 20201029–5278. Accession Number: 20201103–5064. Comments Due: 5 p.m. ET 11/19/20. Comments Due: 5 p.m. ET 11/16/20. DEPARTMENT OF ENERGY The filings are accessible in the Docket Numbers: RP21–192–000 Commission’s eLibrary system (https:// Applicants: El Paso Natural Gas Federal Energy Regulatory elibrary.ferc.gov/idmws/search/ Company, L.L.C. Commission fercgensearch.asp) by querying the Description: § 4(d) Rate Filing: [Project No. 9000–006] docket number. Negotiated Rate Agreement Update Any person desiring to intervene or (EOG Nov. 20) to be effective 11/4/2020. STS Hydropower, LLC; Notice of protest in any of the above proceedings Filed Date: 11/3/20. Application Accepted For Filing and must file in accordance with Rules 211 Accession Number: 20201103–5099. Soliciting Comments, Motions To and 214 of the Commission’s Comments Due: 5 p.m. ET 11/16/20. Intervene, and Protests Regulations (18 CFR 385.211 and Docket Numbers: RP21–193–000. 385.214) on or before 5:00 p.m. Eastern Applicants: Alliance Pipeline L.P. Take notice that the following time on the specified comment date. Description: § 4(d) Rate Filing: hydroelectric application has been filed Protests may be considered, but Negotiated Rates—Contract Adjustments with the Commission and is available intervention is necessary to become a eff 11–01–2020 to be effective 11/1/ for public inspection. party to the proceeding. 2020. a. Type of Application: Temporary eFiling is encouraged. More detailed Filed Date: 11/3/20. variance of lake level elevation. information relating to filing Accession Number: 20201103–5117. b. Project No.: 9000–006. requirements, interventions, protests, Comments Due: 5 p.m. ET 11/16/20. c. Date Filed: September 21, 2020 and service, and qualifying facilities filings supplemented October 20, 2020. Docket Numbers: RP21–194–000. can be found at: http://www.ferc.gov/ d. Applicant: STS Hydropower, LLC. Applicants: Northern Natural Gas docs-filing/efiling/filing-req.pdf. For e. Name of Project: Morrow Dam Company. other information, call (866) 208–3676 Hydroelectric Project. Description: § 4(d) Rate Filing: (toll free). For TTY, call (202) 502–8659. f. Location: The project is located on 20201103 Negotiated Rate to be effective the Kalamazoo River in Kalamazoo Dated: November 3, 2020. 11/3/2020. County, Michigan. Nathaniel J. Davis, Sr., Filed Date: 11/3/20. g. Filed Pursuant to: Federal Power Deputy Secretary. Accession Number: 20201103–5122. Act, 16 U.S.C. 791(a)–825(r). [FR Doc. 2020–24864 Filed 11–9–20; 8:45 am] Comments Due: 5 p.m. ET 11/16/20. h. Applicant Contact: Ms. Jody J. BILLING CODE 6717–01–P Docket Numbers: RP21–195–000. Smet, STS Hydropower, LLC, 116 N. Applicants: Enable Mississippi River State Street, P.O. Box 167, Neshkoro, Transmission, LLC. WI, 85260, (804) 739–0654. DEPARTMENT OF ENERGY Description: § 4(d) Rate Filing: i. FERC Contact: Jennifer Polardino, Negotiated Rate Filing—SES 6129 to be (202) 502–6437, Jennifer.Polardino@ Federal Energy Regulatory effective 11/1/2020. Commission ferc.gov. Filed Date: 11/3/20. j. Deadline for filing comments, Combined Notice of Filings Accession Number: 20201103–5135. motions to intervene, and protests is 20 Comments Due: 5 p.m. ET 11/16/20. days from the issuance of this notice. Take notice that the Commission has The filings are accessible in the The Commission strongly encourages received the following Natural Gas Commission’s eLibrary system (https:// electronic filing. Please file comments, Pipeline Rate and Refund Report filings: elibrary.ferc.gov/idmws/search/ motions to intervene, and protests using Docket Number: PR20–73–002. fercgensearch.asp) by querying the the Commission’s eFiling system at Applicants: DTE Gas Company. docket number. http://www.ferc.gov/docs-filing/ Description: Tariff filing per Any person desiring to intervene or efiling.asp. Commenters can submit 284.123(b), (e)/: DTE Gas GSA Errata protest in any of the above proceedings brief comments up to 6,000 characters, Filing to be effective 10/1/2020. must file in accordance with Rules 211 without prior registration, using the Filed Date: 11/3/2020. and 214 of the Commission’s eComment system at http:// Accession Number: 202011035068. Regulations (18 CFR 385.211 and www.ferc.gov/doc-sfiling/ Comments/Protests Due: 5 p.m. ET 385.214) on or before 5:00 p.m. Eastern ecomment.asp. You must include your 11/13/2020. time on the specified date(s). Protests name and contact information at the end

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of your comments. For assistance, at http://www.ferc.gov/docs-filing/ DEPARTMENT OF ENERGY please contact FERC Online Support at esubscription.asp to be notified via [email protected], (866) email of new filings and issuances Federal Energy Regulatory 208–3676 (toll free), or (202) 502–8659 related to this or other pending projects. Commission (TTY). In lieu of electronic filing, you Agencies may obtain copies of the Combined Notice of Filings #1 may send a paper copy. Submissions application directly from the applicant. sent via the U.S. Postal Service must be At this time, the Commission has Take notice that the Commission addressed to: Kimberly D. Bose, suspended access to the Commission’s received the following electric rate Secretary, Federal Energy Regulatory Public Reference Room due to the filings: Commission, 888 First Street NE, Room proclamation declaring a National Docket Numbers: ER20–2647–001. 1A, Washington, DC 20426. Emergency concerning the Novel Applicants: Morgantown Steam, LLC. Submissions sent via any other carrier Coronavirus Disease (COVID–19), issued Description: Tariff Amendment: must be addressed to: Kimberly D. Bose, by the President on March 13, 2020. For Response to Commission Staff Request Secretary, Federal Energy Regulatory assistance, contact FERC at for Information to be effective 8/4/2020. Commission, 12225 Wilkins Avenue, [email protected] or call Filed Date: 11/4/20. Rockville, Maryland 20852. The first Accession Number: 20201104–5065. page of any filing should include docket toll free, (866) 208–3676 or TTY, (202) Comments Due: 5 p.m. ET 11/25/20. 502–8659. number P–9000–006. Comments Docket Numbers: ER21–314–000. emailed to Commission staff are not m. Individuals desiring to be included Applicants: PJM Interconnection, considered part of the Commission on the Commission’s mailing list should L.L.C. record. so indicate by writing to the Secretary Description: § 205(d) Rate Filing: Cost The Commission’s Rules of Practice of the Commission. Responsibility Agreement, SA No. 5840; require all intervenors filing documents n. Comments, Motions to Intervene, or Non-Queue No. NQ166 to be effective with the Commission to serve a copy of Protests: Anyone may submit 10/21/2020. that document on each person on the comments, a motion to intervene, or a Filed Date: 11/4/20. official service list for the project. Accession Number: 20201104–5045. protest in accordance with the Further, if an intervenor files comments Comments Due: 5 p.m. ET 11/25/20. requirements of Rules of Practice and or documents with the Commission Docket Numbers: ER21–315–000. relating to the merits of an issue that Procedure, 18 CFR 385.210, .211, .214. Applicants: Public Service Company may affect the responsibilities of a In determining the appropriate action to of Colorado. particular resource agency, they must take, the Commission will consider all Description: § 205(d) Rate Filing: also serve a copy of the document on protests or other comments filed, but 2020–11–04–NSPM–OTP–CAPX–BSSB- that resource agency. only those who file a motion to Rev TCEA–596–0.1.0-Filing to be k. Description of Request: The intervene in accordance with the effective 1/4/2021. exemptee requests a temporary variance Commission’s Rules may become a Filed Date: 11/4/20. from Article 2 of the project’s exemption party to the proceeding. Any comments, Accession Number: 20201104–5067 (exemption issued July 26, 1985) to motions to intervene, or protests must Comments Due: 5 p.m. ET 11/25/20. lower the project’s reservoir elevation to be received on or before the specified Docket Numbers: ER21–316–000. repair damages to the trunnion arms on comment date for the particular Applicants: PJM Interconnection, two Tainter gates at the Morrow application. L.L.C. Hydroelectric Project No. 9000. The o. Filing and Service of Responsive Description: § 205(d) Rate Filing: exemptee initiated a controlled Documents: Any filing must (1) bear in Original WMPA SA No. 5844; Queue drawdown of the reservoir by 9 feet for all capital letters the title COMMENTS, No. AF1–299 to be effective 10/5/2020. Filed Date: 11/4/20. this repair and public safety in October MOTION TO INTERVENE, or PROTEST 2019. The exemptee proposes to Accession Number: 20201104–5073. as applicable; (2) set forth in the Comments Due: 5 p.m. ET 11/25/20. complete the work on the Tainter gates heading the name of the applicant and by December 31, 2020 and says it would The filings are accessible in the the project number of the application to refill the reservoir 6 inches per day. The Commission’s eLibrary system (https:// which the filing responds; (3) furnish exemptee proposes to completely refill elibrary.ferc.gov/idmws/search/ the name, address, and telephone the project’s reservoir by no later than fercgensearch.asp) by querying the April 1, 2020. During this time, the number of the person protesting or docket number. exemptee proposes to mitigate impacts intervening; and (4) otherwise comply Any person desiring to intervene or to water quality, sedimentation, with the requirements of 18 CFR protest in any of the above proceedings turbidity, cultural resources, and 385.2001 through 385.2005. All must file in accordance with Rules 211 recreation as a result of the reservoir comments, motions to intervene, or and 214 of the Commission’s drawdown in consultation with the protests must set forth their evidentiary Regulations (18 CFR 385.211 and resource agencies and stakeholders. basis. A copy of all other filings in 385.214) on or before 5:00 p.m. Eastern l. Locations of the Applications: In reference to this application must be time on the specified comment date. addition to publishing the full text of accompanied by proof of service on all Protests may be considered, but this document in the Federal Register, persons listed in the service list intervention is necessary to become a the Commission provides all interested prepared by the Commission in this party to the proceeding. persons an opportunity to view and/or proceeding, in accordance with 18 CFR eFiling is encouraged. More detailed print the contents of this document via 385.2010. information relating to filing the internet through the Commission’s Dated: November 4, 2020. requirements, interventions, protests, website at http://www.ferc.gov/docs- service, and qualifying facilities filings filing/elibrary.asp. Enter the docket Nathaniel J. Davis, Sr., can be found at: http://www.ferc.gov/ number excluding the last three digits in Deputy Secretary. docs-filing/efiling/filing-req.pdf. For the docket number field to access the [FR Doc. 2020–24929 Filed 11–9–20; 8:45 am] other information, call (866) 208–3676 document. You may also register online BILLING CODE 6717–01–P (toll free). For TTY, call (202) 502–8659.

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Dated: November 4, 2020. The technical conference is open to No motion in opposition to the notice Nathaniel J. Davis, Sr., the public by using the WebEx platform of withdrawal has been filed, and the Deputy Secretary. for those who have registered pursuant Commission has taken no action to [FR Doc. 2020–24930 Filed 11–9–20; 8:45 am] to the requirements of the October 1, disallow the withdrawal. Accordingly, BILLING CODE 6717–01–P 2020 Notice in these dockets. The pursuant to Rule 216(b) of the agenda and information about the Commission’s Rules of Practice and technical conference is posted on the Procedure,1 withdrawal of the petition DEPARTMENT OF ENERGY Events Calendar available at the became effective on October 14, 2020, following link: https://www.ferc.gov/ and this proceeding is hereby Federal Energy Regulatory news-events/events. The agenda is also terminated. Commission attached to this Notice. Procedures to be Dated: November 3, 2020. [Docket Nos. EL17–89–000; EL19–60–000] followed at the technical conference and Nathaniel J. Davis, Sr., any changes to the proposed agenda will Deputy Secretary. American Electric Power Service be announced by staff at the opening of [FR Doc. 2020–24861 Filed 11–9–20; 8:45 am] Corporation v. Midcontinent the technical conference. The technical Independent System Operator, Inc. conference will be transcribed. BILLING CODE 6717–01–P Southwest Power Pool, Inc.; City of Commission conferences are accessible under section 508 of the Prescott, Arkansas v. Southwestern DEPARTMENT OF ENERGY Electric Power Company Midcontinent Rehabilitation Act of 1973. For Independent System Operator, Inc.; accessibility accommodations, please Federal Energy Regulatory Supplemental Notice of Technical send an email to [email protected] Commission Conference or call toll free 1–866–208–3372 (voice) or 202–502–8659 (TTY); or send a fax to [Docket Nos. AD21–6–000;AD20–6–000] By order dated August 27, 2020,1 the 202–208–2106 with the required Commission directed Commission staff accommodations. RTO/ISO Credit Principles and to convene a technical conference For more information about this Practices Request for Technical regarding issues raised in these dockets technical conference, please contact Conference and Petition for about the extent of overlapping Yasmine Jamnejad, yasmine.jamnejad@ Rulemaking; Notice of Technical congestion charges assessed on pseudo- ferc.gov for technical information, and Conference tie transactions at the Midcontinent Colin Beckman, colin.beckman@ Take notice that Federal Energy Independent System Operator, Inc. ferc.gov, for legal information. For Regulatory Commission (Commission) (MISO)/Southwest Power Pool, Inc. information related to logistics, please staff will convene a technical (SPP) interface and possible measures contact Sarah McKinley, 202–502–8368, conference to discuss principles and that could be taken to eliminate any [email protected]. best practices for credit risk such overlapping charges. As management in organized wholesale announced in the Notice of Technical Dated: November 4, 2020. electric markets. The conference may Conference issued on October 1, 2020, Nathaniel J. Davis, Sr., address the following aspects of credit Commission staff will hold this Deputy Secretary. policy: The credit and risk management technical conference remotely, as [FR Doc. 2020–24927 Filed 11–9–20; 8:45 am] infrastructure of the Regional further described below, on Tuesday, BILLING CODE 6717–01–P Transmission Organizations (RTOs) and November 10, 2020, beginning at 9:00 Independent System Operators (ISOs); a.m. (Eastern Time). Commissioners best practices and principles underlying may participate in the technical DEPARTMENT OF ENERGY capitalization requirements, financial conference. The conference will include Federal Energy Regulatory security requirements, and unsecured discussions between Commission staff Commission credit allowances; the applicability of Know Your Customer protocols and and panelists representing MISO, SPP, [Project No. 12532–006] American Electric Power Service other counterparty risk management Corporation, and the City of Prescott, Pine Creek Mine, LLC; Notice of tools; considerations for implementing Arkansas. These panelists should be Effectiveness of Withdrawal of Petition Financial Transmission Right-specific prepared to discuss the record in this for Declaratory Order credit policies, such as a mark-to- proceeding, particularly the questions auction mechanism; and the posed in the August 2020 Further On February 12, 2016, Pine Creek relationship between credit policy and Briefing Order and the briefs responding Mine, LLC (PCM) filed an application wholesale electric market design. thereto. If time permits, there may be an for an original license to construct, Commissioners may participate in the opportunity for other attendees to the operate, and maintain the proposed 1.5- technical conference. technical conference to submit megawatt Pine Creek Mine Tunnel The technical conference will be held questions for discussion among the Hydroelectric Project in Inyo County, on Thursday and Friday, February 25– parties during the technical conference. California. On June 4, 2020, PCM filed 26, 2021 from approximately 9:00 a.m. Following the technical conference, a petition for an order declaring that the to 5:00 p.m. Eastern Time. The technical parties to these proceedings may submit California State Water Resources conference will be held either in-person written post-technical conference Control Board waived its authority to at the Commission’s headquarters at 888 comments on or before December 8, issue water quality certification for the First Street NE, Washington, DC 20426 2020, which will be included in the project under Section 401 of the Clean in the Commission Meeting Room (with formal record of the proceeding. Water Act, 33 U.S.C. 1341(a)(1). On a WebEx option available) or solely via September 29, 2020, PCM filed a letter teleconference (over WebEx) and 1 Am. Elec. Power Serv. Corp. v. Midcontinent notifying the Commission that it was broadcast on the Commission’s website. Indep. Sys. Operator, Inc., 172 FERC ¶ 61,163 withdrawing its petition for declaratory (2020) (August 2020 Further Briefing Order). order. 1 18 CFR 385.216(b) (2020).

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The conference will be open for the Federal Officer, Office of Ground Water information concerning the NDWAC is public to attend, and there is no fee for and Drinking Water (Mail Code 4601), available at: https://www.epa.gov/ attendance. Supplemental notice(s) will U.S. Environmental Protection Agency, ndwac. be issued prior to the technical 1200 Pennsylvania Avenue NW, Jennifer L. McLain, conference with further details Washington, DC 20460; telephone regarding the agenda and organization number: (202) 564–3798; email address: Director, Office of Ground Water and Drinking Water. of the conference. Information on this [email protected]. [FR Doc. 2020–24895 Filed 11–9–20; 8:45 am] technical conference will also be posted SUPPLEMENTARY INFORMATION: BILLING CODE 6560–50–P on the Calendar of Events on the Attending the Meeting: The meeting Commission’s website, www.ferc.gov, will be open to the general public. The prior to the event. meeting agenda and information on how Individuals interested in participating FEDERAL COMMUNICATIONS to register for and attend the meeting COMMISSION as panelists should self-nominate online will be provided on EPA’s through the Webex registration form by website at https://www.epa.gov/ndwac [OMB 3060–0441; FRS 17224] 5:00 p.m. on Friday, December 11, 2020 prior to the meeting. at: https://ferc.webex.com/ferc/onstage/ Oral Statements: EPA will allocate 25 Information Collection Being Reviewed g.php?MTID= minutes for the public to present oral by the Federal Communications e2b36f2a0411532188b8cd973144668ff. comments during the meeting. Oral Commission Under Delegated For more information about this statements will be limited to five Authority technical conference, please contact minutes per person during the public Michael Hill, 202–502–8703, AGENCY: Federal Communications comment period. It is preferred that [email protected] for technical Commission. questions or Sarah McKinley, 202–502– only one person present a statement on ACTION: Notice and request for 8368, [email protected] for behalf of a group or organization. comments. logistical issues. Persons interested in presenting an oral statement should send an email to SUMMARY: As part of its continuing effort Dated: November 4, 2020. Elizabeth Corr, at corr.elizabeth@ to reduce paperwork burdens, and as Nathaniel J. Davis, Sr., epa.gov by noon, eastern time, on required by the Paperwork Reduction Deputy Secretary. November 24, 2020. Act of 1995 (PRA), the Federal [FR Doc. 2020–24928 Filed 11–9–20; 8:45 am] Written Statements: Any person who Communications Commission (FCC or BILLING CODE 6717–01–P wishes to file a written statement can do Commission) invites the general public so before or after the Council meeting. and other Federal agencies to take this Send written statements by email to opportunity to comment on the ENVIRONMENTAL PROTECTION [email protected] or see the FOR following information collections. AGENCY FURTHER INFORMATION CONTACT section if Comments are requested concerning: sending statements by mail. Written Whether the proposed collection of [FRL–10016–76–OW] statements received by noon, eastern information is necessary for the proper Meeting of the National Drinking Water time, on November 24, 2020, will be performance of the functions of the Advisory Council distributed to all members of the Commission, including whether the Council prior to the meeting. Statements information shall have practical utility; AGENCY: Environmental Protection received after that time will become part the accuracy of the Commission’s Agency (EPA). of the permanent file for the meeting burden estimate; ways to enhance the ACTION: Notice of a public meeting. and will be forwarded to the Council quality, utility, and clarity of the members after conclusion of the information collected; ways to minimize SUMMARY: The U.S. Environmental meeting. the burden of the collection of Protection Agency’s (EPA) Office of Accessibility: For information on information on the respondents, Ground Water and Drinking Water is access or services for individuals with including the use of automated announcing a virtual meeting of the disabilities, or to request collection techniques or other forms of National Drinking Water Advisory accommodations for a disability, please information technology; and ways to Council (NDWAC or Council) as contact Elizabeth Corr by email at further reduce the information authorized under the Safe Drinking [email protected], or by phone at collection burden on small business Water Act (SDWA). The purpose of the (202) 564–3798, preferably at least 10 concerns with fewer than 25 employees. meeting is to allow EPA to present an days prior to the meeting to allow as The FCC may not conduct or sponsor a overview of Safe Drinking Water Act much time as possible to process your collection of information unless it programs for fiscal year 2021 and to request. displays a currently valid Office of receive input from Council members. National Drinking Water Advisory Management and Budget (OMB) control Additional details will be provided in Council: The NDWAC was created by number. No person shall be subject to the meeting agenda, which will be any penalty for failing to comply with posted on EPA’s website at https:// Congress on December 16, 1974, as part of the Safe Drinking Water Act (SDWA) a collection of information subject to the www.epa.gov/ndwac prior to the PRA that does not display a valid OMB meeting. of 1974, Public Law 93–523, 42 U.S.C. 300j–5, and is operated in accordance control number. DATES: The meeting will be held on with the provisions of the Federal DATES: Written PRA comments should December 2, 2020, from 1 p.m. to 5 p.m., Advisory Committee Act (FACA), 5 be submitted on or before January 11, eastern time. U.S.C. App. 2. The NDWAC was 2021. If you anticipate that you will be ADDRESSES: This will be a virtual established to advise, consult with, and submitting comments but find it meeting. There will be no in-person make recommendations to the EPA difficult to do so within the period of gathering for this meeting. Administrator on matters relating to time allowed by this notice, you should FOR FURTHER INFORMATION CONTACT: activities, functions, policies, and advise the contact listed below as soon Elizabeth Corr, NDWAC Designated regulations under the SDWA. General as possible.

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ADDRESSES: Direct all PRA comments to quiet zone notification/filing FOR FURTHER INFORMATION CONTACT: Cathy Williams, FCC, via email to PRA@ procedures. Office of Service Contracts & Tariffs fcc.gov and to [email protected]. Section 90.693 requires that 800 MHz (SCT), Gary Kardian, 800 N Capitol FOR FURTHER INFORMATION CONTACT: For incumbent Specialized Mobile Radio Street NW, Suite 940, Washington, DC additional information about the (SMR) service licensees ‘‘notify the 20573–0001, (202) 523–5796, information collection, contact Cathy Commission within 30 days of any [email protected]. Williams at (202) 418–2918. changes in technical parameters or additional stations constructed that fall SUPPLEMENTARY INFORMATION: The FMC SUPPLEMENTARY INFORMATION: SERVCON system does not meet the OMB Control Number: 3060–0441. within the short-spacing criteria.’’ It has requirements of a Privacy Act System of Title: Section 90.621, Selection and been standard practice for incumbents Records because it does not maintain Assignment of Frequencies and Section to notify the Commission of all changes 90.693, Grandfathering Provisions for and additional stations constructed in ‘‘records’’ as defined under the Privacy Incumbent Licensees. cases where such stations are in fact Act (PA), that are ‘‘about’’ an individual. Form Number: N/A. located less than the required 70 mile The PA states ‘‘no agency shall disclose Type of Review: Extension of a distance separation, and are therefore any record which is contained in a currently approved collection. technically ‘‘short-spaced,’’ but are in system of records . . .’’ 5 U.S.C. Respondents: Business or other for- fact fully compliant with the parameters 552a(b). The term ‘‘record’’ as used in profit entities; Not-for-profit of the Commission’s Short-Spacing the PA, means ‘‘any item, collection, or institutions; and State, Local, or Tribal Separation Table. grouping of information about an Government. The Commission uses this individual that is maintained by an Number of Respondents: 50 information to determine whether to agency, including, but not limited to, respondents; 50 responses. grant licenses to applicants making his education, financial transactions, Estimated Time per Response: 1.5 ‘‘minor modifications’’ to their systems medical history, and criminal or hours. which do not satisfy mileage separation employment history and that contains Frequency of Response: On occasion requirements pursuant to the Short- his name, or the identifying number, reporting requirement. Spacing Separation Table. symbol, or other identifying particular Obligation to Respond: Required to Federal Communications Commission. assigned to the individual, such as a obtain or retain benefits. Statutory Marlene Dortch, finger or voice print or a photograph;’’ authority for this information collection Secretary, Office of the Secretary. 5 U.S.C.552a(4). (Emphasis added). is contained in 47 U.S.C. 154(i) and [FR Doc. 2020–24896 Filed 11–9–20; 8:45 am] 309(j). The purpose of the FMC SERVCON BILLING CODE 6712–01–P Total Annual Burden: 75 hours. system is to ‘‘record, review, and Total Annual Cost: $6,250. manage contractual arrangements by Privacy Impact Assessment: No organizations performing services as impact(s). FEDERAL MARITIME COMMISSION registered VOCCs and non-vessel- Needs and Uses: Section 90.621(b)(4) operating common carriers in order to allows stations to be licensed at Privacy Act of 1974; System of ensure legal operating requirements are distances less than those prescribed in Records met.’’ FMC SERVCON Privacy Impact the Short-Spacing Separation Table Statement (PIA), available at: https:// where applicants ‘‘secure a waiver.’’ AGENCY: Federal Maritime Commission. www.fmc.gov/wp-content/uploads/ Applicants seeking a waiver in these ACTION: Rescindment of a system of 2018/10/SERVCONPIA-2013.pdf. There circumstances are still required to records notice. are no reports in SERVCON produced submit with their application an on individuals. interference analysis, based upon any of SUMMARY: FMC–40 The Service Contract SERVCON, however does have the generally-accepted terrain-based Filing System (SERVCON) is the Federal information protected by statute and propagation models, demonstrating that Maritime Commission’s (Commission’s) co-channel stations would receive the automated filing system for service possibly business confidential same or greater interference protection contracts. Shippers or vessel-operating information. All SERVCON system than provided in the Short-Spacing common carriers (VOCCs) are required protections will continue to be Separation Table. to file service contracts with the maintained in accordance with the Section 90.621(b)(5) permits stations Commission on form FMC–83. This security and privacy protections in to be located closer than the required system is not being discontinued, place for the FMC’s General Support separation, so long as the applicant however, SERVCON does not meet the System and the FMC SQL Database, provides letters of concurrence requirements of a Privacy Act System of within which SERVCON is operated. indicating that the applicant and each Records as it does not maintain co-channel licensee within the specified ‘‘records’’ as defined under the Privacy SYSTEM NAME AND NUMBER: Act (PA), that are ‘‘about’’ an individual. separation agree to accept any FMC–40 SERVCON interference resulting from the reduced DATES: This rescindment is effective separation between systems. Applicants upon publication. HISTORY: are still required to file such ADDRESSES: Submit written comments concurrence letters with the to Rachel E. Dickon, Secretary, Federal 78 FR 55699 Commission. Additionally, the Maritime Commission, 800 N Capitol Rachel Dickon, Commission did not eliminate filings Street NW, Washington, DC 20573– Secretary. required by provisions such as 0001; or, email comments to: Secretary@ international agreements, its fmc.gov (email comments as an [FR Doc. 2020–24923 Filed 11–9–20; 8:45 am] environmental (National Environmental attachment in MS Word or PDF). BILLING CODE 6730–02–P Protection Act (NEPA)) rules, its Include in the Subject Line: Comments antenna structure registration rules, or on Systems of Records Notice FMC–40.

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FEDERAL RESERVE SYSTEM DEPARTMENT OF DEFENSE SUPPLEMENTARY INFORMATION:

Change in Bank Control Notices; GENERAL SERVICES A. OMB Control Number, Title, and Any Associated Form(s) Acquisitions of Shares of a Bank or ADMINISTRATION Bank Holding Company 9000–0135, Prospective Subcontractor NATIONAL AERONAUTICS AND Requests for Bonds. The notificants listed below have SPACE ADMINISTRATION B. Need and Uses applied under the Change in Bank [OMB Control No. 9000–0135; Docket No. Control Act (Act) (12 U.S.C. 1817(j)) and 2020–0053; Sequence No. 7] Part 28 of the Federal Acquisition § 225.41 of the Board’s Regulation Y (12 Regulation (FAR) contains guidance CFR 225.41) to acquire shares of a bank Submission for OMB Review; related to obtaining financial protection or bank holding company. The factors Prospective Subcontractor Requests against losses under Federal contracts that are considered in acting on the for Bonds (e.g., bonds, bid guarantees, etc.). Part applications are set forth in paragraph 7 AGENCY: Department of Defense (DOD), 52 contains the corresponding of the Act (12 U.S.C. 1817(j)(7)). General Services Administration (GSA), provisions and clauses. These The public portions of the and National Aeronautics and Space collectively implement the statutory applications listed below, as well as Administration (NASA). requirement for Federal contractors to furnish payment bonds under other related filings required by the ACTION: Notice. Board, if any, are available for construction contracts subject to 40 U.S.C. chapter 31, subchapter III, Bonds. immediate inspection at the Federal SUMMARY: Under the provisions of the Reserve Bank(s) indicated below and at Paperwork Reduction Act, the This information collection is the offices of the Board of Governors. Regulatory Secretariat Division has mandated by section 806(a)(3) of Public This information may also be obtained submitted to the Office of Management Law 102–190, as amended by sections on an expedited basis, upon request, by and Budget (OMB) a request to review 2091 and 8105 of the Federal and approve a revision and renewal of contacting the appropriate Federal Acquisition Streamlining Act of 1994 a previously approved information (10 U.S.C. 2302 note) (Pub. L. 103–335). Reserve Bank and from the Board’s collection requirement regarding Accordingly, the clause at 52.228–12, Freedom of Information Office at prospective subcontractor requests for Prospective Subcontractor Requests for https://www.federalreserve.gov/foia/ bonds. Bonds, requires prime contractors to request.htm. Interested persons may promptly provide a copy of a payment express their views in writing on the DATES: Submit comments on or before December 10, 2020. bond, upon the request of a prospective standards enumerated in paragraph 7 of subcontractor or supplier offering to ADDRESSES: Written comments and the Act. furnish labor or material under a recommendations for this information Comments regarding each of these construction contract for which a collection should be sent within 30 days payment bond has been furnished applications must be received at the of publication of this notice to pursuant to 40 U.S.C. chapter 31. Reserve Bank indicated or the offices of www.reginfo.gov/public/do/PRAMain. the Board of Governors, Ann E. Find this particular information C. Common Form Misback, Secretary of the Board, 20th collection by selecting ‘‘Currently under Street and Constitution Avenue NW, Review—Open for Public Comments’’ or This information collection is being Washington DC 20551–0001, not later by using the search function. converted into a common form. The than November 25, 2020. Additionally submit a copy to GSA General Services Administration is the sponsor agency of this common form. A. Federal Reserve Bank of Kansas through http://www.regulations.gov and All executive agencies covered by the City (Dennis Denney, Assistant Vice follow the instructions on the site. This website provides the ability to type Federal Acquisition Regulation will use President) 1 Memorial Drive, Kansas this common form. Each executive City, Missouri 64198–0001: short comments directly into the comment field or attach a file for agency will report their agency burden 1. Susan Holmes Parker, as trustee of lengthier comments. separately, and the reported information the Susan P. Mittasch Family Trust, Instructions: All items submitted will be available at Reginfo.gov. both previously approved as members of must cite OMB Control No. 9000–0135, D. Annual Burden the Parker Family Group, and both of Prospective Subcontractor Requests for Perry, Oklahoma; to acquire voting Bonds. Comments received generally General Services Administration shares of Cleo Bancshares, Inc., and will be posted without change to http:// Respondents: 565. thereby indirectly acquire voting shares www.regulations.gov, including any of Cleo State Bank, both of Cleo Springs, personal and/or business confidential Total Annual Responses: 1,412. Oklahoma. information provided. To confirm Total Burden Hours: 480. Board of Governors of the Federal Reserve receipt of your comment(s), please E. Public Comment System, November 5, 2020. check www.regulations.gov, approximately two-to-three days after A 60-day notice was published in the Michele Taylor Fennell, submission to verify posting. If there are Federal Register at 85 FR 55289 on Deputy Associate Secretary of the Board. difficulties submitting comments, September 4, 2020. No comments were [FR Doc. 2020–24939 Filed 11–9–20; 8:45 am] contact the GSA Regulatory Secretariat received. BILLING CODE P Division at 202–501–4755 or Obtaining copies: Requesters may [email protected]. obtain a copy of the information FOR FURTHER INFORMATION CONTACT: collection documents from the GSA Zenaida Delgado, Procurement Analyst, Regulatory Secretariat Division, by at telephone 202–969–7207, or calling 202–501–4755 or emailing [email protected]. [email protected]. Please cite OMB

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Control No. 9000–0135, Prospective receipt of your comment(s), please • Standard Form 1407 Preaward Subcontractor Requests for Bonds. check www.regulations.gov, Survey of Prospective Contractor approximately two-to-three days after (Financial Capability) William F. Clark, submission to verify posting. If there are • Standard Form 1408 Preaward Director, Federal Acquisition Policy Division, difficulties submitting comments, Survey of Prospective Contractor Office of Governmentwide Acquisition Policy, Office of Acquisition Policy, Office of contact the GSA Regulatory Secretariat (Accounting System) Division at 202–501–4755 or Governmentwide Policy. C. Common Form [email protected]. [FR Doc. 2020–24931 Filed 11–9–20; 8:45 am] This information collection is being BILLING CODE 6820–EP–P FOR FURTHER INFORMATION CONTACT: Zenaida Delgado, Procurement Analyst, converted into a common form. The at telephone 202–969–7207, or General Services Administration is the DEPARTMENT OF DEFENSE [email protected]. sponsor agency of this common form. All executive agencies covered by the SUPPLEMENTARY INFORMATION: GENERAL SERVICES Federal Acquisition Regulation will use ADMINISTRATION A. OMB Control Number, Title, and this common form. Each executive Any Associated Form(s) agency will report their agency burden NATIONAL AERONAUTICS AND separately, and the reported information 9000–0011, Preaward Survey Forms SPACE ADMINISTRATION will be available at Reginfo.gov. (Standard Forms 1403, 1404, 1405, [OMB Control No. 9000–0011; Docket No. 1406, 1407, and 1408). D. Annual Burden 2020–0053; Sequence No. 8] B. Needs and Uses General Services Administration Submission for OMB Review; Contracting officers, prior to award, Respondents: 107. Preaward Survey Forms (Standard must make an affirmative determination Total Annual Responses: 107. Forms 1403, 1404, 1405, 1406, 1407, that the prospective contractor is Total Burden Hours: 2,568. and 1408) responsible, i.e., capable of performing E. Public Comment the contract. Before making such a AGENCY: Department of Defense (DOD), A 60-day notice was published in the determination, the contracting officer General Services Administration (GSA), Federal Register at 85 FR 55290 on must have or obtain sufficient and National Aeronautics and Space September 4, 2020. No comments were information to establish that the Administration (NASA). received. prospective contractor: Has adequate ACTION: Notice. Obtaining Copies: Requesters may financial resources; or the ability to obtain a copy of the information obtain such resources; is able to comply SUMMARY: Under the provisions of the collection documents from the GSA with required delivery schedule; has a Paperwork Reduction Act, the Regulatory Secretariat Division, by satisfactory record of performance; has a Regulatory Secretariat Division has calling 202–501–4755 or emailing satisfactory record of integrity; and is submitted to the Office of Management [email protected]. Please cite OMB otherwise qualified and eligible to and Budget (OMB) a request to review Control No. 9000–0011, Preaward receive an award under appropriate and approve a revision and renewal of Survey Forms (Standard Forms 1403, laws and regulations. If such a previously approved information 1404, 1405, 1406, 1407, and 1408). collection requirement regarding information is not readily available to preaward survey forms. the contracting officer, it is obtained William F. Clark, DATES: Submit comments on or before through a preaward survey conducted Director, Federal Acquisition Policy Division, December 10, 2020. by the contract administration office or Office of Governmentwide Acquisition Policy, another organization designated by the Office of Acquisition Policy, Office of ADDRESSES: Written comments and agency to conduct the surveys. The Governmentwide Policy. recommendations for this information necessary data is collected from [FR Doc. 2020–24932 Filed 11–9–20; 8:45 am] collection should be sent within 30 days available data or through plant visits, BILLING CODE 6820–EP–P of publication of this notice to phone calls, and correspondence in www.reginfo.gov/public/do/PRAMain. detail commensurate with the dollar Find this particular information value and complexity of the DEPARTMENT OF HEALTH AND collection by selecting ‘‘Currently under procurement. This clearance covers the HUMAN SERVICES Review—Open for Public Comments’’ or information that prospective contractors by using the search function. must provide to ensure proper Centers for Medicare & Medicaid Additionally submit a copy to GSA completion of the following preaward Services through http://www.regulations.gov and survey forms prescribed by the Federal [Document Identifier: CMS–2552–10] follow the instructions on the site. This Acquisition Regulation (FAR): website provides the ability to type • Agency Information Collection short comments directly into the Standard Form 1403 Preaward Activities: Proposed Collection; comment field or attach a file for Survey of Prospective Contractor Comment Request lengthier comments. (General) • Instructions: All items submitted Standard Form 1404 Preaward AGENCY: Centers for Medicare & must cite OMB Control No. 9000–0011, Survey of Prospective Contractor Medicaid Services, Health and Human Preaward Survey Forms (Standard (Technical) Services (HHS). • Forms 1403, 1404, 1405, 1406, 1407, Standard Form 1405 Preaward ACTION: Notice. and 1408). Comments received generally Survey of Prospective Contractor will be posted without change to http:// (Production) SUMMARY: The Centers for Medicare & www.regulations.gov, including any • Standard Form 1406 Preaward Medicaid Services (CMS) is announcing personal and/or business confidential Survey of Prospective Contractor an opportunity for the public to information provided. To confirm (Quality Assurance) comment on CMS’ intention to collect

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information from the public. Under the detailed information can be found in 2552–10 (OMB control number: 0938– Paperwork Reduction Act of 1995 (the each collection’s supporting statement 0050); Frequency: Occasionally; PRA), Federal agencies are required to and associated materials (see Affected Public: Private Sector; Business publish notice in the Federal Register ADDRESSES). or other for-profit and not-for-profit concerning each proposed collection of CMS–2552–10 Hospital and Health institutions; Number of Respondents: information (including each proposed Health Care Complex Cost Report 6.013; Total Annual Responses: 6,013; extension or reinstatement of an existing Under the PRA (44 U.S.C. 3501– Total Annual Hours: 4,173,022. (For collection of information) and to allow 3520), federal agencies must obtain policy questions regarding this 60 days for public comment on the approval from the Office of Management collection contact Gail Duncan at 410– proposed action. Interested persons are and Budget (OMB) for each collection of 786–7278.) invited to send comments regarding our information they conduct or sponsor. Dated: November 4, 2020. burden estimates or any other aspect of The term ‘‘collection of information’’ is William N. Parham, III, this collection of information, including defined in 44 U.S.C. 3502(3) and 5 CFR Director, Paperwork Reduction Staff, Office the necessity and utility of the proposed 1320.3(c) and includes agency requests of Strategic Operations and Regulatory information collection for the proper or requirements that members of the Affairs. performance of the agency’s functions, public submit reports, keep records, or [FR Doc. 2020–24948 Filed 11–9–20; 8:45 am] the accuracy of the estimated burden, provide information to a third party. BILLING CODE 4120–01–P ways to enhance the quality, utility, and Section 3506(c)(2)(A) of the PRA clarity of the information to be requires federal agencies to publish a collected, and the use of automated 60-day notice in the Federal Register DEPARTMENT OF HEALTH AND collection techniques or other forms of concerning each proposed collection of HUMAN SERVICES information technology to minimize the information, including each proposed information collection burden. extension or reinstatement of an existing Food and Drug Administration DATES: Comments must be received by collection of information, before [Docket No. FDA–2019–D–1264] January 11, 2021. submitting the collection to OMB for ADDRESSES: When commenting, please approval. To comply with this Enhancing the Diversity of Clinical reference the document identifier or requirement, CMS is publishing this Trial Populations—Eligibility Criteria, OMB control number. To be assured notice. Enrollment Practices, and Trial consideration, comments and Designs; Guidance for Industry; Information Collection recommendations must be submitted in Availability any one of the following ways: 1. Type of Information Collection 1. Electronically. You may send your Request: Revision of a currently AGENCY: Food and Drug Administration, comments electronically to http:// approved collection; Title of HHS. www.regulations.gov. Follow the Information Collection: Hospital and ACTION: Notice of availability. instructions for ‘‘Comment or Health Health Care Complex Cost Submission’’ or ‘‘More Search Options’’ Report; Use: CMS requires the Form SUMMARY: The Food and Drug to find the information collection CMS–2552–10 to determine a hospital’s Administration (FDA or Agency) is document(s) that are accepting reasonable cost incurred in furnishing announcing the availability of a final comments. medical services to Medicare guidance for industry entitled 2. By regular mail. You may mail beneficiaries and calculate the hospital ‘‘Enhancing the Diversity of Clinical written comments to the following reimbursement. Hospitals paid under a Trial Populations—Eligibility Criteria, address: CMS, Office of Strategic prospective payment system (PPS) may Enrollment Practices, and Trial Operations and Regulatory Affairs, receive reimbursement in addition to Designs.’’ This guidance recommends Division of Regulations Development, the PPS for hospital-specific approaches that sponsors of clinical Attention: Document Identifier/OMB adjustments such as Medicare trials intended to support a new drug Control Number ll, Room C4–26–05, reimbursable bad debts, application or a biologics license 7500 Security Boulevard, Baltimore, disproportionate share, uncompensated application can take to increase Maryland 21244–1850. care, direct and indirect medical enrollment of underrepresented To obtain copies of a supporting education costs, and organ acquisition populations in their clinical trials. This statement and any related forms for the costs. guidance is being issued, in part, to proposed collection(s) summarized in CMS uses the Form CMS–2552–10 for satisfy the mandates of the FDA this notice, you may make your request rate setting; payment refinement Reauthorization Act of 2017 (FDARA). using one of following: activities, including developing a This guidance finalizes the draft 1. Access CMS’ website address at hospital market basket; and Medicare guidance of the same title issued on website address at https://www.cms.gov/ Trust Fund projections; and to support June 7, 2019. Regulations-and-Guidance/Legislation/ program operations. Additionally, the DATES: The announcement of the PaperworkReductionActof1995/PRA- Medicare Payment Advisory guidance is published in the Federal Listing.html. Commission (MedPAC) uses the Register on November 10, 2020. 2. Call the Reports Clearance Office at hospital cost report data to calculate ADDRESSES: You may submit either (410) 786–1326. Medicare margins (a measure of the electronic or written comments on FOR FURTHER INFORMATION CONTACT: relationship between Medicare’s Agency guidances at any time as William N. Parham at (410) 786–4669. payments and providers’ Medicare follows: SUPPLEMENTARY INFORMATION: costs) and analyze data to formulate Medicare Program recommendations to Electronic Submissions Contents Congress. Submit electronic comments in the This notice sets out a summary of the We welcome comments on our following way: use and burden associated with the burden estimates for the information • Federal eRulemaking Portal: following information collections. More collection request. Form Number: CMS– https://www.regulations.gov. Follow the

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instructions for submitting comments. second copy, which will have the I. Background Comments submitted electronically, claimed confidential information FDA is announcing the availability of including attachments, to https:// redacted/blacked out, will be available a guidance for industry entitled www.regulations.gov will be posted to for public viewing and posted on ‘‘Enhancing the Diversity of Clinical the docket unchanged. Because your https://www.regulations.gov. Submit Trial Populations—Eligibility Criteria, comment will be made public, you are both copies to the Dockets Management Enrollment Practices, and Trial solely responsible for ensuring that your Staff. If you do not wish your name and Designs.’’ In issuing this guidance, FDA comment does not include any contact information to be made publicly is satisfying the mandates under section confidential information that you or a available, you can provide this 610(a)(3) of FDARA (Pub. L. 115–52). third party may not wish to be posted, information on the cover sheet and not One objective of eligibility criteria is such as medical information, your or in the body of your comments and you to help protect participants by anyone else’s Social Security number, or must identify this information as excluding people for whom the risk of confidential business information, such ‘‘confidential.’’ Any information marked an adverse event from participation is as a manufacturing process. Please note as ‘‘confidential’’ will not be disclosed not likely to be reasonable in relation to that if you include your name, contact except in accordance with 21 CFR 10.20 any potential benefit and the information, or other information that and other applicable disclosure law. For importance of the knowledge that may identifies you in the body of your more information about FDA’s posting be expected to result. FDA recognizes comments, that information will be of comments to public dockets, see 80 that certain exclusions are appropriate posted on https://www.regulations.gov. FR 56469, September 18, 2015, or access when necessary to help protect these • If you want to submit a comment the information at: https:// individuals. For example, patients with with confidential information that you www.govinfo.gov/content/pkg/FR-2015- varying degrees of kidney or liver do not wish to be made available to the 09-18/pdf/2015-23389.pdf. impairment are often excluded early in public, submit the comment as a Docket: For access to the docket to drug development programs because written/paper submission and in the read background documents or the adequate information is not available on manner detailed (see ‘‘Written/Paper electronic and written/paper comments how to adjust doses for such patients or Submissions’’ and ‘‘Instructions’’). received, go to https:// whether these patients could be more Written/Paper Submissions www.regulations.gov and insert the vulnerable to certain risks. Medically Submit written/paper submissions as docket number, found in brackets in the complex patients with certain follows: heading of this document, into the concomitant illnesses or those taking • Mail/Hand Delivery/Courier (for ‘‘Search’’ box and follow the prompts particular drugs may also be excluded written/paper submissions): Dockets and/or go to the Dockets Management from drug development programs. As Management Staff (HFA–305), Food and Staff, 5630 Fishers Lane, Rm. 1061, data on excretory and metabolic Drug Administration, 5630 Fishers Rockville, MD 20852, 240–402–7500. pathways and drug-drug interactions Lane, Rm. 1061, Rockville, MD 20852. You may submit comments on any become available during the drug • For written/paper comments guidance at any time (see 21 CFR development program, allowing submitted to the Dockets Management 10.115(g)(5)). appropriate dose adjustments, Staff, FDA will post your comment, as Submit written requests for single exclusions related to concomitant well as any attachments, except for copies of this guidance to the Division medications or comorbidities should be information submitted, marked and of Drug Information, Center for Drug narrowed. Similarly, as the safety identified, as confidential, if submitted Evaluation and Research, Food and experience with a product increases, as detailed in ‘‘Instructions.’’ Drug Administration, 10001 New eligibility criteria should be broadened Instructions: All submissions received Hampshire Ave., Hillandale Building, to include more medically complex must include the Docket No. FDA– 4th Floor, Silver Spring, MD 20993– participants; any remaining exclusions 2019–D–1264 for ‘‘Enhancing the 0002; or the Office of Communication, should be justified. This guidance Diversity of Clinical Trial Populations— Outreach and Development, Center for provides recommendations on Eligibility Criteria, Enrollment Practices, Biologics Evaluation and Research, broadening eligibility criteria in clinical and Trial Designs.’’ Received comments Food and Drug Administration, 10903 trials through inclusive trial practices, will be placed in the docket and, except New Hampshire Ave., Bldg. 71, Rm. trial designs, and methodological for those submitted as ‘‘Confidential 3128, Silver Spring, MD 20993–0002. approaches. Submissions,’’ publicly viewable at Send one self-addressed adhesive label Beyond the limitations in https://www.regulations.gov or at the to assist that office in processing your participation imposed by narrow Dockets Management Staff between 9 requests. See the SUPPLEMENTARY eligibility criteria, potential participants a.m. and 4 p.m., Monday through INFORMATION section for electronic may face additional challenges to Friday, 240–402–7500. access to the guidance document. enrolling in clinical trials. A trial • Confidential Submissions—To requiring participants to make frequent submit a comment with confidential FOR FURTHER INFORMATION CONTACT: Dat visits to specific sites may result in an information that you do not wish to be Doan, Center for Drug Evaluation and added burden for participants, made publicly available, submit your Research, Food and Drug especially the elderly, children, comments only as a written/paper Administration, 10903 New Hampshire disabled, and cognitively impaired submission. You should submit two Ave., Bldg. 51, Rm. 3334, Silver Spring, individuals who require transportation copies total. One copy will include the MD 20993, 240–402–8926, Dat.Doan@ or caregiver assistance, or participants information you claim to be confidential fda.hhs.gov; or Stephen Ripley, Center who live far from research facilities, with a heading or cover note that states for Biologics Evaluation and Research, such as those in rural or remote ‘‘THIS DOCUMENT CONTAINS Food and Drug Administration, 10903 locations. Financial costs (e.g., travel, CONFIDENTIAL INFORMATION.’’ The New Hampshire Ave., Bldg. 71, Rm. missing work, dependent care) may also Agency will review this copy, including 7301, Silver Spring, MD 20993–0002, impede participation, and study visits the claimed confidential information, in 240–402–7911. may interfere with jobs and/or family its consideration of comments. The SUPPLEMENTARY INFORMATION: and community obligations. Moreover,

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for individuals under current clinical and Trial Designs.’’ It does not establish pathway to market for microneedling care on a regularly scheduled basis (e.g., any rights for any person and is not devices for aesthetic use. individuals with multiple chronic binding on FDA or the public. You can DATES: The announcement of the conditions), additional clinical trial use an alternative approach if it satisfies guidance is published in the Federal study visits may be psychologically, the requirements of the applicable Register on November 10, 2020. physically, and financially burdensome statutes and regulations. ADDRESSES: You may submit either and a disincentive for enrollment. This II. Paperwork Reduction Act of 1995 electronic or written comments on guidance provides recommendations on Agency guidances at any time as how sponsors can improve the diversity While this guidance contains no follows: of enrolled participants by accounting collection of information, it does refer to for logistical and other participant- previously approved FDA collections of Electronic Submissions related factors that could limit information. Therefore, clearance by the Submit electronic comments in the participation in clinical trials. Office of Management and Budget following way: Clinical trials of investigational drugs (OMB) under the Paperwork Reduction • Federal eRulemaking Portal: intended to treat rare diseases or Act of 1995 (PRA) (44 U.S.C. 3501– https://www.regulations.gov. Follow the conditions present a unique set of 3521) is not required for this guidance. instructions for submitting comments. challenges. Because of the limited The previously approved collections of Comments submitted electronically, numbers of patients, maximum information are subject to review by including attachments, to https:// participation in clinical trials is OMB under the PRA. The collections of www.regulations.gov will be posted to essential for successful trial completion information in 21 CFR part 312 have the docket unchanged. Because your and interpretation. Rare diseases often been approved under OMB control comment will be made public, you are affect small, geographically dispersed number 0910–0014. solely responsible for ensuring that your patient populations with disease-related comment does not include any travel limitations, so special efforts may III. Electronic Access confidential information that you or a be necessary to enroll and retain these Persons with access to the internet third party may not wish to be posted, participants to ensure that a broad may obtain the guidance at https:// such as medical information, your or spectrum of the patient population is www.fda.gov/drugs/guidance- anyone else’s Social Security number, or represented. This guidance provides compliance-regulatory-information/ confidential business information, such recommendations on broadening guidances-drugs, https://www.fda.gov/ as a manufacturing process. Please note clinical trial eligibility criteria for vaccines-blood-biologics/guidance- that if you include your name, contact clinical trials of investigational drugs compliance-regulatory-information- information, or other information that intended to treat rare diseases and biologics/biologics-guidances, or https:// identifies you in the body of your recommendations on improving the www.regulations.gov. comments, that information will be enrollment and retention of participants Dated: November 4, 2020. posted on https://www.regulations.gov. with rare diseases. • If you want to submit a comment This guidance finalizes the draft Lauren K. Roth, with confidential information that you guidance of the same title issued on Acting Principal Associate Commissioner for do not wish to be made available to the June 7, 2019 (84 FR 26687). FDA Policy. public, submit the comment as a considered comments received on the [FR Doc. 2020–24881 Filed 11–9–20; 8:45 am] written/paper submission and in the draft guidance as the guidance was BILLING CODE 4164–01–P manner detailed (see ‘‘Written/Paper finalized. Changes to the guidance Submissions’’ and ‘‘Instructions’’). include additional recommendations on broadening eligibility criteria, such as DEPARTMENT OF HEALTH AND Written/Paper Submissions the use of real-world data to find trial HUMAN SERVICES Submit written/paper submissions as participants and the use of mobile follows: medical professionals to visit Food and Drug Administration • Mail/Hand delivery/Courier (for participants at their locations instead of written/paper submissions): Dockets [Docket No. FDA–2017–D–4792] requiring participants to visit distant Management Staff (HFA–305), Food and clinical trial sites. FDA added Regulatory Considerations for Drug Administration, 5630 Fishers information on the inclusion of racial Lane, Rm. 1061, Rockville, MD 20852. Microneedling Products; Guidance for • and ethnic minorities, with Industry and Food and Drug For written/paper comments recommendations included from FDA’s Administration Staff; Availability submitted to the Dockets Management draft guidance entitled ‘‘Collection of Staff, FDA will post your comment, as Race and Ethnicity Data in Clinical AGENCY: Food and Drug Administration, well as any attachments, except for Trials.’’ FDA also added HHS. information submitted, marked and recommendations on fostering ACTION: Notice of availability. identified, as confidential, if submitted community engagement and making as detailed in ‘‘Instructions.’’ recruitment events more accessible as SUMMARY: The Food and Drug Instructions: All submissions received well as information on how to reach Administration (FDA or Agency) is must include the Docket No. FDA– participants with little or no internet announcing the availability of a final 2017–D–4792 for ‘‘Regulatory access. In addition, editorial changes guidance entitled ‘‘Regulatory Considerations for Microneedling were made to improve clarity. Considerations for Microneedling Products.’’ Received comments will be This guidance is being issued Products.’’ This guidance is being placed in the docket and, except for consistent with FDA’s good guidance issued to assist industry in those submitted as ‘‘Confidential practices regulation (21 CFR 10.115). understanding when a microneedling Submissions,’’ publicly viewable at The guidance represents the current product is a device as defined in the https://www.regulations.gov or at the thinking of FDA on ‘‘Enhancing the Federal Food, Drug, and Cosmetic Act Dockets Management Staff between 9 Diversity of Clinical Trial Populations— (FD&C Act). This document also a.m. and 4 p.m., Monday through Eligibility Criteria, Enrollment Practices, provides information on the regulatory Friday, 240–402–7500.

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• Confidential Submissions—To Products’’ to the Office of the Center notification requirements under section submit a comment with confidential Director, Guidance and Policy 510(k) of the FD&C Act ((21 U.S.C. information that you do not wish to be Development, Center for Devices and 360(k)) and special controls. The made publicly available, submit your Radiological Health, Food and Drug classification is codified at 21 CFR comments only as a written/paper Administration, 10903 New Hampshire 878.4430. submission. You should submit two Ave., Bldg. 66, Rm. 5431, Silver Spring, This guidance is being issued copies total. One copy will include the MD 20993–0002. Send one self- consistent with FDA’s good guidance information you claim to be confidential addressed adhesive label to assist that practices regulation (21 CFR 10.115). with a heading or cover note that states office in processing your request. The guidance represents the current ‘‘THIS DOCUMENT CONTAINS FOR FURTHER INFORMATION CONTACT: thinking of FDA on ‘‘Regulatory CONFIDENTIAL INFORMATION.’’ The Kimberly Ferlin, Center for Devices and Considerations for Microneedling Agency will review this copy, including Radiological Health, Food and Drug Products.’’ It does not establish any the claimed confidential information, in Administration, 10903 New Hampshire rights for any person and is not binding its consideration of comments. The Ave., Bldg. 66, Rm. 4522, Silver Spring, on FDA or the public. You can use an second copy, which will have the MD 20993–0002, 240–402–1834. alternative approach if it satisfies the claimed confidential information SUPPLEMENTARY INFORMATION: requirements of the applicable statutes redacted/blacked out, will be available and regulations. for public viewing and posted on I. Background https://www.regulations.gov. Submit ‘‘Microneedling products’’ is a generic II. Electronic Access both copies to the Dockets Management term that encompasses instruments with Staff. If you do not wish your name and common technological features that Persons interested in obtaining a copy contact information to be made publicly include an array of needles, ‘‘micro- of the guidance may do so by available, you can provide this protrusion’’ tips, or pins, which can be downloading an electronic copy from information on the cover sheet and not blunt or sharp, and of varying lengths. the internet. A search capability for all in the body of your comments and you This document discusses when a Center for Devices and Radiological must identify this information as microneedling product is a device as Health guidance documents is available ‘‘confidential.’’ Any information marked defined under section 201(h) of the at https://www.fda.gov/MedicalDevices/ as ‘‘confidential’’ will not be disclosed FD&C Act (21 U.S.C. 321(h)), and is, DeviceRegulationandGuidance/ except in accordance with 21 CFR 10.20 therefore, subject to the device GuidanceDocuments/default.htm. This and other applicable disclosure law. For requirements under the FD&C Act and guidance document is also available at more information about FDA’s posting its implementing regulations.1 This https://www.regulations.gov and at of comments to public dockets, see 80 guidance also provides clarity on the https://www.fda.gov/regulatory- FR 56469, September 18, 2015, or access regulatory pathway to market for information/search-fda-guidance- the information at: https:// microneedling devices for aesthetic use, documents. Persons unable to download www.govinfo.gov/content/pkg/FR-2015- resulting in more transparency and an electronic copy of ‘‘Regulatory 09-18/pdf/2015-23389.pdf. predictability to firms and stakeholders, Considerations for Microneedling Docket: For access to the docket to which may translate into more efficient Products’’ may send an email request to read background documents or the device development and patient access [email protected] to receive electronic and written/paper comments to such devices. The scope of this an electronic copy of the document. received, go to https:// guidance document does not include Please use the document number www.regulations.gov and insert the microneedling combination products, 1500036 to identify the guidance you docket number, found in brackets in the acupuncture needles, hypodermic are requesting. heading of this document, into the needles or other needles for injection, III. Paperwork Reduction Act of 1995 ‘‘Search’’ box and follow the prompts tattoo machine needles, needle probes and/or go to the Dockets Management that emit any type of energy (e.g., radio- While this guidance contains no Staff, 5630 Fishers Lane, Rm. 1061, frequency needles) or deliver any type collection of information, it does refer to Rockville, MD 20852, 240–402–7500. of energy to a patient (e.g., LASER, previously approved FDA collections of You may submit comments on any ultrasound), or dermabrasion devices. information. Therefore, clearance by the guidance at any time (see 21 CFR FDA considered comments received on Office of Management and Budget 10.115(g)(5)). the draft guidance that appeared in the (OMB) under the Paperwork Reduction An electronic copy of the guidance Federal Register of September 15, 2017 Act of 1995 (PRA) (44 U.S.C. 3501– document is available for download (82 FR 43383). FDA revised the 3521) is not required for this guidance. from the internet. See the guidance as appropriate in response to The previously approved collections of SUPPLEMENTARY INFORMATION section for the comments. Further, the guidance information are subject to review by information on electronic access to the was revised to account for a De Novo OMB under the PRA. The collections of guidance. Submit written requests for a request that was granted since issuance information in the following FDA single hard copy of the guidance of the draft, which classified regulations and guidance have been document entitled ‘‘Regulatory microneedling devices for aesthetic use approved by OMB as listed in the Considerations for Microneedling into class II subject to premarket following table:

OMB control 21 CFR part; guidance; or FDA form Topic No.

807, subpart E ...... Premarket notification ...... 0910–0120

1 On September 23, 2020, FDA published a evaluating whether a product is intended for use as evidence may be considered, including a variety of proposed rule to amend its intended use regulations a drug or device. As described in the proposed rule, direct and circumstantial evidence. 85 FR 59718, for medical products (21 CFR 201.128 and 801.4) FDA’s longstanding position is that, in evaluating 59721 (Sept. 23, 2020). to better reflect the Agency’s current practices in a product’s intended use, any relevant source of

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OMB control 21 CFR part; guidance; or FDA form Topic No.

‘‘De Novo Classification Process (Evaluation of Automatic Class III Designation)’’ ... De Novo classification process ...... 0910–0844 ‘‘Requests for Feedback on Medical Device Submissions: The Pre-Submission Pro- Q-submissions ...... 0910–0756 gram and Meetings with Food and Drug Administration Staff’’. 800, 801, and 809 ...... Medical Device Labeling Regulations ...... 0910–0485

Dated: November 5, 2020. the docket unchanged. Because your ‘‘THIS DOCUMENT CONTAINS Lauren K. Roth, comment will be made public, you are CONFIDENTIAL INFORMATION.’’ The Acting Principal Associate Commissioner for solely responsible for ensuring that your Agency will review this copy, including Policy. comment does not include any the claimed confidential information, in [FR Doc. 2020–24943 Filed 11–9–20; 8:45 am] confidential information that you or a its consideration of comments. The BILLING CODE 4164–01–P third party may not wish to be posted, second copy, which will have the such as medical information, your or claimed confidential information anyone else’s Social Security number, or redacted/blacked out, will be available DEPARTMENT OF HEALTH AND confidential business information, such for public viewing and posted on HUMAN SERVICES as a manufacturing process. Please note https://www.regulations.gov. Submit that if you include your name, contact both copies to the Dockets Management Food and Drug Administration information, or other information that Staff. If you do not wish your name and [Docket No. FDA–2017–D–5913] identifies you in the body of your contact information to be made publicly comments, that information will be available, you can provide this Assessing User Fees Under the posted on https://www.regulations.gov. information on the cover sheet and not Prescription Drug User Fee • If you want to submit a comment in the body of your comments and you Amendments of 2017; Revised with confidential information that you must identify this information as Guidance for Industry; Availability do not wish to be made available to the ‘‘confidential.’’ Any information marked public, submit the comment as a as ‘‘confidential’’ will not be disclosed AGENCY: Food and Drug Administration, written/paper submission and in the except in accordance with 21 CFR 10.20 HHS. manner detailed (see ‘‘Written/Paper and other applicable disclosure law. For ACTION: Notice of availability. Submissions’’ and ‘‘Instructions’’). more information about FDA’s posting of comments to public dockets, see 80 SUMMARY: The Food and Drug Written/Paper Submissions FR 56469, September 18, 2015, or access Administration (FDA or we) is Submit written/paper submissions as the information at: https:// announcing the availability of a revised follows: www.govinfo.gov/content/pkg/FR-2015- final guidance for industry entitled • Mail/Hand Delivery/Courier (for 09-18/pdf/2015-23389.pdf. ‘‘Assessing User Fees Under the written/paper submissions): Dockets Docket: For access to the docket to Prescription Drug User Fee Management Staff (HFA–305), Food and read background documents or the Amendments of 2017,’’ which Drug Administration, 5630 Fishers electronic and written/paper comments supersedes the now withdrawn final Lane, Rm. 1061, Rockville, MD 20852. received, go to https:// guidance issued in May 2018 (May 2018 • For written/paper comments www.regulations.gov and insert the guidance). This revised final guidance submitted to the Dockets Management docket number, found in brackets in the concerns FDA’s implementation of the Staff, FDA will post your comment, as heading of this document, into the Prescription Drug User Fee well as any attachments, except for ‘‘Search’’ box and follow the prompts Amendments of 2017. In particular, this information submitted, marked and and/or go to the Dockets Management revised final guidance removes section identified, as confidential, if submitted Staff, 5630 Fishers Lane, Rm. 1061, VI.B. contained in the May 2018 as detailed in ‘‘Instructions.’’ Rockville, MD 20852, 240–402–7500. guidance, regarding the ‘‘same product Instructions: All submissions received You may submit comments on any as another product’’ prescription drug must include the Docket No. FDA– guidance at any time (see 21 CFR program fee exception for certain 2017–D–5913 for ‘‘Assessing User Fees 10.115(g)(5)). prescription drug products under the Under the Prescription Drug User Fee Submit written requests for single Federal Food, Drug, and Cosmetic Act. Amendments of 2017; Guidance for copies of the revised guidance to the DATES: The announcement of the Industry.’’ Received comments will be Division of Drug Information, Center for guidance is published in the Federal placed in the docket and, except for Drug Evaluation and Research, Food Register on November 10, 2020. those submitted as ‘‘Confidential and Drug Administration, 10001 New ADDRESSES: You may submit either Submissions,’’ publicly viewable at Hampshire Ave., Hillandale Building, electronic or written comments on https://www.regulations.gov or at the 4th Floor, Silver Spring, MD 20993– Agency guidances at any time as Dockets Management Staff between 9 0002; or to the Office of follows: a.m. and 4 p.m., Monday through Communication, Outreach and Friday, 240–402–7500. Development, Center for Biologics Electronic Submissions • Confidential Submissions—To Evaluation and Research, Food and Submit electronic comments in the submit a comment with confidential Drug Administration, 10903 New following way: information that you do not wish to be Hampshire Ave., Bldg. 71, Rm. 3128, • Federal eRulemaking Portal: made publicly available, submit your Silver Spring, MD 20993–0002. Send https://www.regulations.gov. Follow the comments only as a written/paper two self-addressed adhesive labels to instructions for submitting comments. submission. You should submit two assist that office in processing your Comments submitted electronically, copies total. One copy will include the requests. See the SUPPLEMENTARY including attachments, to https:// information you claim to be confidential INFORMATION section for electronic www.regulations.gov will be posted to with a heading or cover note that states access to the guidance document.

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FOR FURTHER INFORMATION CONTACT: practices regulation (§ 10.115). The FDA is taking this action in response to Peter Chen, Center for Drug Evaluation revised guidance represents the current a request for an extension to allow and Research, Food and Drug thinking of FDA on Assessing User Fees interested persons additional time to Administration, 10001 New Hampshire Under the Prescription Drug User Fee submit comments. Ave., Rm. 2185, Silver Spring, MD Amendments of 2017. It does not DATES: FDA is extending the comment 20993, 301–796–7900, establish any rights for any person and period announced in the notice of [email protected]; or is not binding on FDA or the public. availability published July 15, 2020 (85 Stephen Ripley, Center for Biologics You can use an alternative approach if FR 42876). Submit either electronic or Evaluation and Research, Food and it satisfies the requirements of the written comments by January 11, 2021, Drug Administration, 10903 New applicable statutes and regulations. to ensure that the Agency considers Hampshire Ave., Bldg. 71, Rm. 7301, II. Paperwork Reduction Act of 1995 your comments on this draft guidance Silver Spring, MD 20993–0002, 240– before it begins work on the final 402–7911. This guidance contains no collection version of the guidance. SUPPLEMENTARY INFORMATION: of information. Therefore, clearance by the Office of Management and Budget ADDRESSES: You may submit comments I. Background under the Paperwork Reduction Act of on any guidance at any time as follows: We are announcing the availability of 1995 is not required. Electronic Submissions a revised guidance for industry entitled III. Electronic Access Submit electronic comments in the ‘‘Assessing User Fees Under the following way: Prescription Drug User Fee Persons with access to the internet • Federal eRulemaking Portal: Amendments of 2017.’’ We are issuing may obtain the document at https:// this revised final guidance consistent www.fda.gov/RegulatoryInformation/ https://www.regulations.gov. Follow the with our good guidance practices (GGP) Guidances/default.htm, https:// instructions for submitting comments. regulation (§ 10.115 (21 CFR 10.115)). www.fda.gov/vaccines-blood-biologics/ Comments submitted electronically, We are implementing this revised guidance-compliance-regulatory- including attachments, to https:// guidance without prior public comment information-biologics/biologics- www.regulations.gov will be posted to because we have determined that prior guidances or https:// the docket unchanged. Because your public participation is not feasible or www.regulations.gov. Use the FDA comment will be made public, you are appropriate (§ 10.115(g)(2)). The change website listed in the previous sentence solely responsible for ensuring that your reflected in the revised guidance needs to find the most current version of the comment does not include any to be implemented and communicated guidance. confidential information that you or a in a timely manner in light of the third party may not wish to be posted, Dated: November 5, 2020. such as medical information, your or ongoing user fee billing process. Lauren K. Roth, Although this revised guidance anyone else’s Social Security number, or Acting Principal Associate Commissioner for confidential business information, such document is immediately in effect, it Policy. remains subject to comment in as a manufacturing process. Please note [FR Doc. 2020–24941 Filed 11–9–20; 8:45 am] accordance with FDA’s GGP regulation. that if you include your name, contact In May 2018, FDA issued guidance BILLING CODE 4164–01–P information, or other information that concerning the Agency’s identifies you in the body of your implementation of the Prescription Drug comments, that information will be DEPARTMENT OF HEALTH AND posted on https://www.regulations.gov. User Fee Amendments of 2017 (PDUFA HUMAN SERVICES VI) and clarifying certain changes in • If you want to submit a comment policies and procedures surrounding its Food and Drug Administration with confidential information that you application (83 FR 19564). Section VI.B. do not wish to be made available to the of the May 2018 guidance provided an [Docket No. FDA–1997–D–0444] public, submit the comment as a written/paper submission and in the interpretation of the term ‘‘same Special Considerations, Incentives, product’’ as it is used in the prescription manner detailed (see ‘‘Written/Paper and Programs To Support the drug program fee exception for certain Submissions’’ and ‘‘Instructions’’). Approval of New Animal Drugs for prescription drug products under Minor Uses and for Minor Species; Written/Paper Submissions section 736(a)(2)(B)(ii) (21 U.S.C. Draft Guidance for Industry; 379h(a)(2)(B)(ii)) of the Federal Food, Submit written/paper submissions as Availability; Extension of Comment Drug, and Cosmetic Act. After further follows: Period consideration of the issue, we have • Mail/Hand delivery/Courier (for decided to withdraw the interpretation AGENCY: Food and Drug Administration, written/paper submissions): Dockets in our May 2018 guidance and return to HHS. Management Staff (HFA–305), Food and our prior practice. Accordingly, for FY ACTION: Notice of availability; extension Drug Administration, 5630 Fishers 2020 and FY 2021 billing we are of comment period. Lane, Rm. 1061, Rockville, MD 20852. considering drug products to be the • For written/paper comments ‘‘same product’’ if they were SUMMARY: The Food and Drug submitted to the Dockets Management pharmaceutically equivalent to a Administration (FDA or the Agency) is Staff, FDA will post your comment, as prescription drug product as determined extending the comment period for the well as any attachments, except for through the process for assigning notice of availability that appeared in information submitted, marked and therapeutic equivalence codes. the Federal Register of July 15, 2020. In identified, as confidential, if submitted Therefore, this revised guidance that notice, FDA requested comments as detailed in ‘‘Instructions.’’ removes section VI.B. as described in on draft guidance for industry (GFI) #61 Instructions: All submissions received the May 2018 guidance. There are no entitled ‘‘Special Considerations, must include the Docket No. FDA– other changes to the guidance. Incentives, and Programs to Support the 1997–D–0444 for ‘‘Special This revised guidance is being issued Approval of New Animal Drugs for Considerations, Incentives, and consistent with FDA’s good guidance Minor Uses and for Minor Species.’’ Programs to Support the Approval of

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New Animal Drugs for Minor Uses and New Animal Drugs for Minor Uses and Contact Person: Mary C. Dasso, Ph.D., for Minor Species.’’ Received comments for Minor Species’’ with a 120-day Acting Scientific Director, Eunice Kennedy will be placed in the docket and, except comment period. Shriver National Institute of Child Health and for those submitted as ‘‘Confidential Human Development, NIH, 9000 Rockville Interested persons were originally Pike, Building 31A, Room 2A46, Bethesda, Submissions,’’ publicly viewable at given until November 12, 2020, to MD 20892, (301) 594–5984, dassom@ https://www.regulations.gov or at the comment on the draft guidance. The mail.nih.gov. Dockets Management Staff between 9 Agency received a request to allow Information is also available on the a.m. and 4 p.m., Monday through interested persons additional time to Institute’s/Center’s home page: https:// Friday, 240–402–7500. comment. The request conveyed www.nichd.nih.gov/about/meetings/Pages/ • Confidential Submissions—To concern that the initial 120-day index.aspx, where an agenda and any submit a comment with confidential comment period did not allow sufficient additional information for the meeting will information that you do not wish to be time to develop a comprehensive be posted when available. made publicly available, submit your response. FDA believes that an (Catalogue of Federal Domestic Assistance comments only as a written/paper extension of 60 days allows adequate Program Nos. 93.865, Research for Mothers submission. You should submit two time for interested persons to submit and Children, National Institutes of Health, HHS) copies total. One copy will include the comments. information you claim to be confidential Dated: November 4, 2020. Dated: November 5, 2020. with a heading or cover note that states Ronald J. Livingston, Jr., Lauren K. Roth, ‘‘THIS DOCUMENT CONTAINS Program Analyst, Office of Federal Advisory Acting Principal Associate Commissioner for CONFIDENTIAL INFORMATION.’’ The Committee Policy. Policy. Agency will review this copy, including [FR Doc. 2020–24870 Filed 11–9–20; 8:45 am] [FR Doc. 2020–24970 Filed 11–9–20; 8:45 am] the claimed confidential information, in BILLING CODE 4140–01–P its consideration of comments. The BILLING CODE 4164–01–P second copy, which will have the claimed confidential information DEPARTMENT OF HEALTH AND DEPARTMENT OF HEALTH AND redacted/blacked out, will be available HUMAN SERVICES for public viewing and posted on HUMAN SERVICES National Institutes of Health https://www.regulations.gov. Submit National Institutes of Health both copies to the Dockets Management National Institute of Allergy and Staff. If you do not wish your name and Eunice Kennedy Shriver National Infectious Diseases; Notice of Closed contact information to be made publicly Institute of Child Health & Human Meeting available, you can provide this Development; Notice of Closed information on the cover sheet and not Meeting in the body of your comments and you Pursuant to section 10(d) of the must identify this information as Pursuant to section 10(d) of the Federal Advisory Committee Act, as ‘‘confidential.’’ Any information marked Federal Advisory Committee Act, as amended, notice is hereby given of the as ‘‘confidential’’ will not be disclosed amended, notice is hereby given of a following meeting. except in accordance with 21 CFR 10.20 meeting of the Board of Scientific The meeting will be closed to the and other applicable disclosure law. For Counselors, NICHD. public in accordance with the more information about FDA’s posting The meeting will be closed to the provisions set forth in sections of comments to public dockets, see 80 public as indicated below in accordance 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., FR 56469, September 18, 2015, or access with the provisions set forth in sections as amended. The grant applications and the information at: https:// 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., the discussions could disclose www.govinfo.gov/content/pkg/FR-2015- as amended for the review, discussion, confidential trade secrets or commercial 09-18/pdf/2015-23389.pdf. and evaluation of individual intramural property such as patentable material, Docket: For access to the docket to programs and projects conducted by the and personal information concerning read background documents or the EUNICE KENNEDY SHRIVER individuals associated with the grant electronic and written/paper comments NATIONAL INSTITUTE OF CHILD applications, the disclosure of which received, go to https:// HEALTH & HUMAN DEVELOPMENT, would constitute a clearly unwarranted www.regulations.gov and insert the including consideration of personnel invasion of personal privacy. docket number, found in brackets in the qualifications and performance, and the Name of Committee: National Institute of heading of this document, into the competence of individual investigators, Allergy and Infectious Diseases Special ‘‘Search’’ box and follow the prompts the disclosure of which would Emphasis Panel; Emergency Awards: Rapid and/or go to the Dockets Management constitute a clearly unwarranted Investigation of Severe Acute Respiratory Syndrome Coronavirus 2 (SARS–CoV–2) and Staff, 5630 Fishers Lane, Rm. 1061, invasion of personal privacy. Rockville, MD 20852, 240–402–7500. Coronavirus Disease 2019 (COVID–19). Name of Committee: Board of Scientific Date: December 18, 2020. FOR FURTHER INFORMATION CONTACT: Counselors, NICHD. Time: 11:00 a.m. to 6:00 p.m. Margaret Oeller, Center for Veterinary Date: December 4, 2020. Agenda: To review and evaluate grant Medicine (HFV–50), Food and Drug Time: 10:00 a.m. to 4:00 p.m. applications. Administration, 7500 Standish Pl., Agenda: A report by the Acting Scientific Place: National Institute of Allergy and Rockville, MD 20855, 240–402–0566, Director, NICHD, on the status of the NICHD Infectious Diseases, National Institutes of [email protected]. Division of Intramural Research; current Health, 5601 Fishers Lane, Room 3G53, organizational structure; to review and Rockville, MD 20892 (Virtual Meeting). SUPPLEMENTARY INFORMATION: In the evaluate personnel qualifications and Contact Person: Konrad J. Krzewski, Ph.D., Federal Register of July 15, 2020, FDA performance, and competence of individual Scientific Review Officer, Scientific Review published a notice announcing the investigators. Program, Division of Extramural Activities, availability of draft GFI #61 entitled Place: National Institutes of Health, 31 National Institute of Allergy and Infectious ‘‘Special Considerations, Incentives, and Center Drive, Bethesda, MD 20892 (Video- Diseases, National Institutes of Health, 5601 Programs to Support the Approval of Assisted Meeting). Fishers Lane, Room 3G53, Rockville, MD

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20852, (240) 747–7526, konrad.krzewski@ Manufactured Housing Construction Tentative Agenda for Technical nih.gov. and Safety Standards Act of 1974, 42 Systems Subcommittee Teleconference (Catalogue of Federal Domestic Assistance U.S.C. 5403(a)(3), as amended by the Tuesday, December 8, 2020—10 a.m. to Program Nos. 93.855, Allergy, Immunology, Manufactured Housing Improvement 4 p.m. EST and Transplantation Research; 93.856, Act of 2000, (Pub. L. 106–569, Sec. 601, Microbiology and Infectious Diseases et seq.). According to 42 U.S.C. 5403, as I. Call to Order—Subcommittee Chair & Research, National Institutes of Health, HHS) amended, the purposes of the MHCC are Designated Federal Officer (DFO) Roll Dated: November 4, 2020. to: Call—AO Tyeshia M. Roberson, • II. Opening Remarks—Subcommittee Chair & Provide periodic recommendations DFO Program Analyst, Office of Federal Advisory to the Secretary to adopt, revise, and III. Approval of minutes from the October 30, Committee Policy. interpret the Federal manufactured 2019, Technical Systems Subcommittee [FR Doc. 2020–24873 Filed 11–9–20; 8:45 am] housing construction and safety Meeting Occurring as Part of the MHCC BILLING CODE 4140–01–P standards in accordance with this Annual Meeting subsection; IV. Public Comment Period—15 minutes • Provide periodic recommendations V. Assigned Proposed Change Review Proposed Changes Log: DEPARTMENT OF HOUSING AND to the Secretary to adopt, revise, and • URBAN DEVELOPMENT interpret the procedural and LOG 211, LOG 212, LOG 216, LOG 219, LOG 222, and LOG 223 (These log items enforcement regulations, including [Docket No. FR–6237–N–02] can be viewed through the following web regulations specifying the permissible address: https://www.hud.gov/sites/ Notice of a Federal Advisory scope and conduct of monitoring in dfiles/images/ProposedChanges2020- Committee Meeting Manufactured accordance with subsection (b); and 21Cycle.pdf) Housing Consensus Committee • Be organized and carry out its VI. Lunch from 12:30 p.m. to 1:30 p.m. business in a manner that guarantees a VII. Assigned Proposed Change Review AGENCY: Office of the Assistant fair opportunity for the expression and Continued Secretary for Housing—Federal Housing consideration of various positions and VIII. Public Comment Period—15 minutes Commissioner, Department of Housing IX. Wrap Up—DFO & AO for public participation. X. Adjourn and Urban Development (HUD). The MHCC is deemed an advisory ACTION: Notice of Federal Advisory committee not composed of Federal Dana T. Wade, Committee Meetings: Manufactured employees. Assistant Secretary for Housing-Federal Housing Consensus Committee (MHCC). Public Comment: Citizens wishing to Housing Commissioner. make comments on the business of the [FR Doc. 2020–24940 Filed 11–9–20; 8:45 am] SUMMARY: This notice sets forth the schedule and proposed agenda for the MHCC must register in advance by BILLING CODE 4210–67–P Technical System Subcommittee contacting the Administering teleconference meeting of the MHCC. Organization (AO), Home Innovation The meeting is open to the public. The Research Labs; Attention: Kevin DEPARTMENT OF LABOR Kauffman, 400 Prince Georges Blvd., agenda for the meeting provides an Mine Safety and Health Administration opportunity for citizens to comment on Upper Marlboro, MD 20774, or email to [email protected], or call the business before the MHCC Petitions for Modification of Subcommittee. 888–602–4663. With advance registration, members of the public will Application of Existing Mandatory DATES: The Technical Systems have an opportunity to provide written Safety Standards Subcommittee meeting will be held on comments relative to agenda topics for AGENCY: Mine Safety and Health December 8, 2020, 10:00 a.m. to 4:00 the Subcommittee’s consideration. All Administration, Labor. p.m. Eastern Standard Time (EST). The written comments must be provided to ACTION: Notice. teleconference number is: 301–715– [email protected]. Written 8592 or 646–558–8656 and the Meeting comments must be provided no later SUMMARY: This notice is a summary of ID is: 96243433408. To access the than December 3, 2020. Please note, two petitions for modification submitted webinar, use the following link: https:// written comments submitted will not be to the Mine Safety and Health zoom.us/j/96243433408. read during the meeting but will be Administration (MSHA) by the parties FOR FURTHER INFORMATION CONTACT: provided to the Subcommittee members listed below. Teresa B. Payne, Administrator, Office prior to the meeting. The MHCC will DATES: All comments on the petitions of Manufactured Housing Programs, also provide an opportunity for oral must be received by MSHA’s Office of Department of Housing and Urban public comments on specific matters Standards, Regulations, and Variances Development, 451 7th Street SW, Room before the Subcommittee. The total on or before December 10, 2020. 9166, Washington, DC 20410, telephone amount of time for oral comments will ADDRESSES: You may submit your 202–402–2698 (this is not a toll-free be 30 minutes, in two 15-minute comments, identified by ‘‘docket number). Persons who have difficulty periods, with each commenter limited number’’ on the subject line, by any of hearing or speaking may access this to two minutes to ensure pertinent the following methods: number via TTY by calling the Federal Subcommittee business is completed 1. Electronic Mail: zzMSHA- Relay Service at 800–877–8339 (this is and all public comments can be [email protected]. Include the docket a toll-free number). expressed. The Subcommittee will not number of the petition in the subject SUPPLEMENTARY INFORMATION: Notice of respond to individual written or oral line of the message. these meetings are provided in statements; however, it will take all 2. Facsimile: 202–693–9441. accordance with the Federal Advisory public comments into account in its 3. Regular Mail or Hand Delivery: Committee Act, 5 U.S.C. App. 10(a)(2) deliberations. The MHCC strives to MSHA, Office of Standards, through implementing regulations at 41 accommodate citizen comments to the Regulations, and Variances, 201 12th CFR 102–3.150. The MHCC was extent possible within the time Street South, Suite 4E401, Arlington, established by the National constraints of the meeting agenda. Virginia 22202–5452, Attention: Roslyn

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B. Fontaine, Deputy Director, Office of (b) The current 3M Airstream PAPR, (f) Miners will be trained on how to Standards, Regulations, and Variances. the Mining Headgear-Mounted model, is safely use and take care of PAPR units, Persons delivering documents are approved by MSHA but is being per manufacturer instructions. required to check in at the receptionist’s discontinued by the manufacturer, 3M. (g) The above instruments will be desk in Suite 4E401. Individuals may The 3M Airstream model allows for assessed for physical damage as well as inspect copies of the petition and constantly filtered air to flow, reducing the integrity of the case. comments during normal business exposure to respirable dust. There are (h) If methane levels go above 1.0 hours at the address listed above. no other MSHA-approved PAPRs. percent, 30 CFR 57.22234 procedures MSHA will consider only comments (c) The petitioner is applying to allow will be followed. postmarked by the U.S. Postal Service or for non-MSHA approved PAPRs to The petitioner asserts that the proof of delivery from another delivery protect miners from exposure to proposed alternative method will at all service such as UPS or Federal Express respirable dust during regular mining times guarantee no less than the same on or before the deadline for comments. operations in or inby the last open measure of protection afforded by the FOR FURTHER INFORMATION CONTACT: crosscut. standard. (d) This petition will allow longwall Docket Number: M–2020–033–C. Aromie Noe, Office of Standards, Petitioner: Canyon Fuel Company, Regulations, and Variances at 202–693– miners to use PAPRs in MMU 001–0 and MMU 007–0, giving miners the LLC, HC 35 Box 380, Helper, UT 84526. 9557 (voice), [email protected] Mine: Skyline Mine, MSHA I.D. No. opportunity to reduce dust exposure, (email), or 202–693–9441 (facsimile). 42–01566, located in Carbon County, [These are not toll-free numbers.] decreasing health risks. As an alternative to the existing Utah. SUPPLEMENTARY INFORMATION: Section Regulation Affected: 30 CFR 75.507– standard, the petitioner proposes the 101(c) of the Federal Mine Safety and 1 (Electric equipment other than power- Health Act of 1977 and Title 30 of the following: (a) The petitioner proposes using the connection points; outby the last open Code of Federal Regulations Part 44 following intrinsically safe models: crosscut; return air; permissibility govern the application, processing, and (1) CleanSpace EX—full or half mask; requirements). disposition of petitions for modification. (2) CleaSpace2—Full or half mask, Modification Request: The petitioner is applying to use various non-MSHA I. Background this is NIOSH approved and approved Powered Air Purifying Section 101(c) of the Federal Mine intrinsically safe; (3) 3M Versaflo TR–800—certified Respirators (PAPRs) equipment in lieu Safety and Health Act of 1977 (Mine under ANSI/UL 60079–11 standard for of the current standard, in return air and Act) allows the mine operator or hazardous locations, it is intrinsically outby the last open crosscut. representative of miners to file a The petitioner states that: safe; and (a) The modification to the current petition to modify the application of any (4) Non-battery powered 3M Ultimate standard is requested to allow for an mandatory safety standard to a coal or FX full facepiece respirator mask. other mine if the Secretary of Labor (b) CleanSpace respirators use an air alternative method of respiratory determines that: filtering, fan assisted pressure mask, protection for longwall miners. (b) The current 3M Airstream PAPR, 1. An alternative method of achieving which can be used in high dust the Mining Headgear-Mounted model, is the result of such standard exists which environments. They are light and approved by MSHA but is being will at all times guarantee no less than compact, require no servicing, are discontinued by the manufacturer, 3M. the same measure of protection afforded intrinsically safe, and have few parts. The 3M Airstream model allows for the miners of such mine by such The 3M Versaflo TR–800 allows for constantly filtered air to flow, reducing standard; or increased movement in tight spaces, 2. The application of such standard to exposure to respirable dust. There are while protecting against airborne such mine will result in a diminution of no other MSHA-approved PAPRs. contaminates. It is easy to use, has safety to the miners in such mine. (c) The petitioner is applying to allow In addition, the regulations at 30 CFR interchangeable components for specific for non-MSHA approved PAPRs to 44.10 and 44.11 establish the application, is intrinsically safe, has protect miners from exposure to requirements for filing petitions for audible and visual alarms, multi-speed respirable dust during regular mining modification. blower, long battery run times, charges operations in return air and outby the quickly and is ANSI/UL 60079–11 last open crosscut. II. Petitions for Modification certified, allowing it to be used in (d) This petition will allow longwall Docket Number: M–2020–032–C. hazardous locations. The 3M Ultimate miners to use PAPRs in MMU 001–0 Petitioner: Canyon Fuel Company, FX respirator utilizes a scotchguard and MMU 007–0, giving miners the LLC, HC 35 Box 380, Helper, UT 84526. protection lens, allowing liquids to bead opportunity to reduce dust exposure, Mine: Skyline Mine, MSHA I.D. No. up and be removed easily, a large lens decreasing health risks. 42–01566, located in Carbon County, provides visibility, it is comfortable and As an alternative to the existing Utah. easy to use, the 3M cool flow valve standard, the petitioner proposes the Regulation Affected: 30 CFR 75.500(d) allows for easier breathing, and particle following: (Permissible electric equipment). filters help filter out various (a) The petitioner proposes using the Modification Request: The petitioner particulates. following intrinsically safe models: is applying to use various non-MSHA (c) When not in operation, batteries (1) CleanSpace EX—full or half mask; approved Powered Air Purifying for the PAPR models will be charged (2) CleaSpace2—Full or half mask, Respirators (PAPRs) equipment in lieu outby the last open crosscut. this is NIOSH approved and of the current standard, in or inby the (d) The following battery charger intrinsically safe; last open crosscut. products will be used: 3M battery (3) 3M Versaflo TR–800—certified The petitioner states that: charger TR–641N or 3M 4-station under ANSI/UL 60079–11 standard for (a) The modification to the current battery charger TR–644–N. hazardous locations, it is intrinsically standard is requested to allow for an (e) The 3M Versaflo TR–800 PAPR safe; and alternative method of respiratory will exclusively use the 3M TR–830 (4) Non-battery powered 3M Ultimate protection for longwall miners. battery pack. FX full facepiece respirator mask.

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(b) CleanSpace respirators use an air (1208), Center for the Physics of Dated: November 5, 2020. filtering, fan assisted pressure mask, Biological Function (CBPF). Crystal Robinson, which can be used in high dust Date and Time: Committee Management Officer. environments. They are light and December 7, 2020 10:00 a.m.–6:30 p.m. [FR Doc. 2020–24949 Filed 11–9–20; 8:45 am] compact, require no services, are December 8, 2020 10:00 a.m.–5:00 p.m. BILLING CODE 7555–01–P intrinsically safe, and have few parts. December 9, 2020 10:00 a.m.–1:00 p.m. The 3M Versaflo TR–800 allows for Place: Princeton University, 1 Nassau increased movement in tight spaces, Hall, Princeton, NJ 08544. NUCLEAR REGULATORY while protecting against airborne Type of Meeting: Part-open. COMMISSION contaminates. It is easy to use, has Contact Persons: James Shank, interchangeable components for specific Program Director for Physics Frontier [NRC–2020–0001] application, is intrinsically safe, has Centers, Division of Physics; National audible and visual alarms, multi-speed Science Foundation, 2415 Eisenhower Sunshine Act Meetings blower, long battery run times, charges Avenue, Room W9214, Alexandria, VA quickly and is ANSI/UL 60079–11 22314; Telephone: (703) 292–4516. TIME AND DATE: Weeks of November 9, certified, allowing it to be used in Purpose of Meeting: Virtual site visit 16, 23, 30, December 7, 14, 2020. hazardous locations. The 3M Ultimate to provide an evaluation of the progress PLACE: Commissioners’ Conference FX respirator utilizes a scotchguard of the projects at the host site for the Room, 11555 Rockville Pike, Rockville, protection lens, allowing liquids to bead Division of Physics at the National Maryland. up and be removed easily, a large lens Science Foundation. STATUS: Public. provides visibility, it is comfortable and Agenda easy to use, the 3M cool flow valve Week of November 9, 2020 allows for easier breathing, and particle December 7, 2020; 10:00 a.m.–06:30 There are no meetings scheduled for filters help filter out various p.m. the week of November 9, 2020. particulates. 10:00 a.m.–12:00 p.m. Week of November 16, 2020—Tentative (c) When not in operation, batteries Directors Overview & Science Talks— for the PAPR models will be charged Session 1 Wednesday, November 18, 2020 outby the last open crosscut. 12:00 p.m.–01:00 p.m. 10:00 a.m. Meeting with the Advisory (d) The following battery charger Lunch Committee on the Medical Uses of products will be used: 3M battery 01:00 p.m.–03:00 p.m. Isotopes (Public Meeting) (Contact: charger TR–641N or 3M 4-station Science Talks—Session 2 Kellee Jamerson: 301–415–7408) battery charger TR–644–N. 03:30 p.m.–04:30 p.m. (e) The 3M Versaflo TR–800 PAPR Additional Information: Due to Executive Session (CLOSED) COVID–19, there will be no physical will exclusively use the 3M TR–830 Questions delivered to PIs battery pack. public attendance. The public is invited 04:30 p.m.–06:30 p.m. to attend the Commission’s meeting live (f) Miners will be trained on how to Poster Session safely use and take care of PAPR units, by webcast at the Web address—https:// per manufacturer instructions. December 8, 2020; 10:00 a.m.–05:00 www.nrc.gov/. (g) The above instruments will be p.m. Week of November 23, 2020—Tentative assessed for physical damage as well as 10:00 a.m.–12:00 p.m. the integrity of the case. There are no meetings scheduled for Education/Outreach/Diversity the week of November 23, 2020. (h) If methane levels go above 1.0 12:00 p.m.–01:00 p.m. percent, 30 CFR 57.22234 procedures Lunch Week of November 30, 2020—Tentative will be followed. 01:00 p.m.–02:00 p.m. Friday, December 4, 2020 The petitioner asserts that the Directors Conclusion and Plans for proposed alternative method will at all Coming Year 10:00 a.m. Meeting with Advisory times guarantee no less than the same 02:00 p.m.–03:00 p.m. Committee on Reactor Safeguards measure of protection afforded by the University Administrators (Public Meeting) (Contact: Larry standard. 03:00 p.m.–04:30 p.m. Burkhart: 301–287–3775) Roslyn Fontaine, Executive Session (CLOSED) Additional Information: Due to Deputy Director, Office of Standards, 04:30 p.m.–05:00 p.m. COVID–19, there will be no physical Regulations, and Variances. Questions delivered to PIs public attendance. The public is invited [FR Doc. 2020–24898 Filed 11–9–20; 8:45 am] to attend the Commission’s meeting live December 9, 2020; 10:00 a.m.–01:00 by webcast at the Web address—https:// BILLING CODE 4520–43–P p.m. www.nrc.gov/. 10:00 a.m.–11:00 a.m. Week of December 7, 2020—Tentative Responses to Questions NATIONAL SCIENCE FOUNDATION 11:00 a.m.–01:00 p.m. There are no meetings scheduled for the week of December 7, 2020. Proposal Review Panel for Physics; Panel Discussion of Report Notice of Meeting Reason for Closing: Topics to be Week of December 14, 2020—Tentative discussed and evaluated during closed In accordance with the Federal portions of the site review will include There are no meetings scheduled for Advisory Committee Act (Pub. L. 92– information of a proprietary or the week of December 14, 2020. 463, as amended), the National Science confidential nature, including technical CONTACT PERSON FOR MORE INFORMATION: Foundation (NSF) announces the information and information on For more information or to verify the following meeting: personnel. These matters are exempt status of meetings, contact Denise Name and Committee Code: Proposal under 5 U.S.C. 552b(c), (4) and (6) of the McGovern at 301–415–0681 or via email Review Panel for Division of Physics Government in the Sunshine Act. at [email protected]. The

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schedule for Commission meetings is IP3 nuclear decommissioning trusts I. Introduction subject to change on short notice. (NDTs) for spent fuel management and The NRC is considering issuance of an The NRC Commission Meeting site restoration activities for IP1, IP2, exemption from sections Schedule can be found on the internet and IP3, respectively. The exemption 50.82(a)(8)(i)(A) and 50.75(h)(1)(iv) of at: https://www.nrc.gov/public-involve/ would also allow such withdrawals title 10 of the Code of Federal public-meetings/schedule.html. without prior notification to the NRC. Regulations (10 CFR) to HDI for The NRC provides reasonable The NRC staff is issuing an Provisional Operating License No. DPR– accommodation to individuals with Environmental Assessment (EA) and 5 and Renewed Facility Operating disabilities where appropriate. If you Finding of No Significant Impact License Nos. DPR–26 and DPR–64 for need a reasonable accommodation to (FONSI) associated with the proposed IP1, IP2, and IP3, respectively, located participate in these public meetings or exemption. in Westchester County, New York. HDI need this meeting notice or the DATES: The EA and FONSI referenced in requested the exemption by letter dated transcript or other information from the this document are available on February 12, 2020 (ADAMS Accession public meetings in another format (e.g., November 10, 2020. No. ML20043C539). The exemption braille, large print), please notify Anne would permit HDI to use funds from the Silk, NRC Disability Program Specialist, ADDRESSES: Please refer to Docket ID NRC–2020–0239 when contacting the IP1, IP2, and IP3 NDTs for spent fuel at 301–287–0745, by videophone at management and site restoration 240–428–3217, or by email at NRC about the availability of information regarding this document. activities for IP1, IP2, and IP3, [email protected]. Determinations on respectively, in the same manner that requests for reasonable accommodation You may obtain publicly available information related to this document funds from the NDTs are used under 10 will be made on a case-by-case basis. CFR 50.82(a)(8) for decommissioning Members of the public may request to using any of the following methods: activities. HDI submitted the exemption receive this information electronically. • Federal Rulemaking Website: Go to request based on its analysis of the If you would like to be added to the https://www.regulations.gov and search expected IP1, IP2, and IP3 distribution, please contact the Nuclear for Docket ID NRC–2020–0239. Address decommissioning costs, spent fuel Regulatory Commission, Office of the questions about Docket IDs in management costs, and site restoration Secretary, Washington, DC 20555 (301– Regulations.gov to Jennifer Borges; costs, as provided in the IPEC Post- 415–1969), or by email at Tyesha.Bush@ telephone: 301–287–9127; email: Shutdown Decommissioning Activities nrc.gov or [email protected]. [email protected]. For technical Report (PSDAR) using the prompt The NRC is holding the meetings questions, contact the individual listed decontamination and dismantlement under the authority of the Government in the FOR FURTHER INFORMATION (DECON) method submitted by HDI to in the Sunshine Act, 5 U.S.C. 552b. CONTACT section of this document. • the NRC on December 19, 2019 Dated: November 6, 2020. NRC’s Agencywide Documents Access and Management System (ADAMS Accession No. ML19354A698). For the Nuclear Regulatory Commission. By letter dated November 21, 2019 (ADAMS): You may obtain publicly (ADAMS Accession No. ML19326B953), Denise L. McGovern, available documents online in the Entergy Nuclear Operations, Inc. Policy Coordinator, Office of the Secretary. ADAMS Public Documents collection at (ENOI), on behalf of itself, Entergy [FR Doc. 2020–25026 Filed 11–6–20; 4:15 pm] https://www.nrc.gov/reading-rm/ Nuclear Indian Point 2, LLC, Entergy BILLING CODE 7590–01–P adams.html. To begin the search, select Nuclear Indian Point 3, LLC, Holtec ‘‘Begin Web-based ADAMS Search.’’ For International (Holtec), and HDI problems with ADAMS, please contact (collectively, the applicants), requested NUCLEAR REGULATORY the NRC’s Public Document Room (PDR) that the NRC consent to the transfer of COMMISSION reference staff at 1–800–397–4209, 301– control of Provisional Operating License 415–4737, or by email to pdr.resource@ [Docket Nos. 50–003, 50–247, and 50–286; No. DPR–5 and Renewed Facility nrc.gov. The ADAMS accession number NRC–2020–0239] Operating License Nos. DPR–26 and for each document referenced (if it is DPR–64 for IP1, IP2, and IP3, Holtec Decommissioning International, available in ADAMS) is provided the respectively, as well as the general LLC; Indian Point Nuclear Generating first time that it is mentioned in this license for the IPEC Independent Spent Unit Nos. 1, 2, and 3 document. In addition, for the Fuel Storage Installation. Specifically, convenience of the reader, the ADAMS the applicants requested that the NRC AGENCY: Nuclear Regulatory accession numbers are provided in a consent to the transfer of ENOI’s Commission. table in the AVAILABILITY OF operating authority under these licenses ACTION: Environmental assessment and DOCUMENTS section of this document. to HDI and the ownership of the IP1 and finding of no significant impact; • Attention: The PDR, where you may IP2 licenses to the Holtec subsidiary issuance. examine and purchase copies of public Holtec Indian Point 2, LLC and the documents, is currently closed. You SUMMARY: The U.S. Nuclear Regulatory ownership of the IP3 license to the may submit your request to the PDR by Commission (NRC) is considering Holtec subsidiary Holtec Indian Point 3, email to [email protected] or call issuance of an exemption in response to LLC. The requested exemption would 1–800–397–4209 between 8:00 a.m. and the February 12, 2020, request from only apply following an NRC approval 4:00 p.m. (EST), Monday through Holtec Decommissioning International, of this license transfer application and Friday, except Federal holidays. LLC (HDI) related to Indian Point the consummation of the transfer Nuclear Generating Unit Nos. 1, 2, and FOR FURTHER INFORMATION CONTACT: transaction. 3 (referred to individually as IP1, IP2, Richard V. Guzman, Office of Nuclear In accordance with 10 CFR 51.21, the and IP3, respectively, and collectively Reactor Regulation; U.S. Nuclear NRC prepared the following EA that as the Indian Point Energy Center or Regulatory Commission, Washington, analyzes the environmental impacts of IPEC), located in Westchester County, DC 20555–0001; telephone: 301–415– the proposed action. Based on the New York. The exemption would permit 1030; email: [email protected]. results of this EA, which are provided HDI to use funds from the IP1, IP2, and SUPPLEMENTARY INFORMATION: in Section II, and in accordance with 10

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CFR 51.31(a), the NRC has determined as well as spent fuel management and funds, plus expected rate of return, plus not to prepare an environmental impact site restoration activities. The adequacy any other financial surety mechanism statement for the proposed licensing of funds in the NDTs to cover the costs does not cover the estimated cost to action and is issuing a FONSI. of activities associated with spent fuel complete radiological decommissioning, management, site restoration, and additional financial assurance must be II. Environmental Assessment radiological decommissioning through provided to cover the cost of Description of the Proposed Action license termination is supported by the completion. These annual reports HDI IPEC DECON PSDAR. HDI stated provide a means for the NRC to The proposed action would partially that it needs access to the funds in the continually monitor the adequacy of exempt HDI from the requirements set NDTs in excess of those needed for available funding. Since the exemption forth in 10 CFR 50.82(a)(8)(i)(A) and 10 radiological decommissioning to would allow HDI to use funds from the CFR 50.75(h)(1)(iv). Specifically, the support spent fuel management and site NDTs that are in excess of those proposed action would allow HDI to use restoration activities not associated with required for radiological funds from the NDTs for spent fuel radiological decommissioning. decommissioning, the adequacy of the management and site restoration The requirements of 10 CFR funds dedicated for radiological activities not associated with 50.75(h)(1)(iv) further provide that, decommissioning are not affected by the radiological decommissioning activities except for withdrawals being made proposed exemption. Therefore, there is and would exempt HDI from the under 10 CFR 50.82(a)(8) or for reasonable assurance that there will be requirement for prior notification to the payments of ordinary administrative no environmental impact due to lack of NRC for these activities. costs and other incidental expenses of adequate funding for radiological The proposed action is in accordance the NDTs in connection with the decommissioning. with HDI’s application dated February operation of the NDTs, no disbursement The proposed action will not 12, 2020. may be made from the NDTs without significantly increase the probability or Need for the Proposed Action written notice to the NRC at least 30 consequences of radiological accidents. working days in advance. Therefore, an The NRC staff has concluded that the By letter dated February 8, 2017 exemption from 10 CFR 50.75(h)(1)(iv) proposed action has no direct (ADAMS Accession No. ML17044A004), is also needed to allow HDI to use funds radiological impacts. There would be no ENOI submitted to the NRC a from the NDTs for spent fuel change to the types or amounts of certification in accordance with 10 CFR management and site restoration radiological effluents that may be 50.82(a)(1)(i), stating its determination activities without prior NRC released; therefore, there would be no to permanently cease power operations notification. change in occupational or public at IP2 and IP3 by April 30, 2020, and In summary, by letter dated February radiation exposure from the proposed April 30, 2021, respectively, subject to 12, 2020, HDI requested an exemption action. There are no materials or operating extensions through, but not to allow NDT withdrawals, without chemicals introduced into the plant that beyond, 2024 and 2025, respectively. prior written notification to the NRC, for could affect the characteristics or types ENOI permanently ceased power spent fuel management and site of effluents released offsite. In addition, operations at IP2 on April 30, 2020, and restoration activities. the method of operation of waste permanently defueled IP2 on May 12, processing systems would not be 2020 (ADAMS Accession No. Environmental Impacts of the Proposed Action affected by the exemption. The ML20133J902). proposed action will not result in As required by 10 CFR The proposed action involves an changes to the design basis 50.82(a)(8)(i)(A), decommissioning trust exemption from regulatory requirements requirements of structures, systems, and funds may be used by the licensee if the that are of a financial or administrative components (SSCs) that function to withdrawals are for legitimate nature and that do not have an impact limit or monitor the release of effluents. decommissioning activity expenses, on the environment. The NRC has All the SSCs associated with limiting consistent with the definition of completed its evaluation of the the release of effluents will continue to decommissioning in 10 CFR 50.2. This proposed action and concludes that be able to perform their functions. definition addresses radiological there is reasonable assurance that Moreover, no changes would be made to decommissioning and does not include adequate funds are available in the plant buildings or the site property from activities associated with spent fuel NDTs to complete all activities the proposed action. Therefore, there are management or site restoration. associated with radiological no significant radiological Similarly, the requirements of 10 CFR decommissioning as well as spent fuel environmental impacts associated with 50.75(h)(1)(iv) restrict the use of management and site restoration. There the proposed action. decommissioning trust fund is no decrease in safety associated with With regard to potential non- disbursements (other than for ordinary the use of the NDTs to also fund radiological impacts, the proposed and incidental expenses) to activities associated with spent fuel action would have no direct impacts on decommissioning expenses until final management and site restoration. land use or water resources, including decommissioning has been completed. Section 50.82(a)(8)(v) of 10 CFR requires terrestrial and aquatic biota, as it Therefore, exemption from 10 CFR a licensee to submit a financial involves no new construction or 50.82(a)(8)(i)(A) and 10 CFR assurance status report annually modification of plant operational 50.75(h)(1)(iv) is needed to allow HDI to between the time of submitting its site- systems. There would be no changes to use funds from the NDTs for spent fuel specific decommissioning cost estimate the quality or quantity of non- management and site restoration and submitting its final radiation survey radiological effluents and no changes to activities. and demonstrating that residual the plant’s National Pollutant Discharge HDI stated that Tables 1, 2, and 3 of radioactivity has been reduced to a level Elimination System permits would be the exemption request demonstrate that that permits termination of its license. needed. In addition, there would be no the NDTs contain the amount needed to Section 50.82(a)(8)(vi) of 10 CFR noticeable effect on socioeconomic cover the estimated costs of IP1, IP2, requires that if the sum of the balance conditions in the region, no and IP3 radiological decommissioning, of any remaining decommissioning environment justice impacts, no air

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quality impacts, and no impacts to action. On October 28, 2020, the NRC significant effects on the quality of the historic and cultural resources from the notified the State of New York human environment. Accordingly, the proposed action. Therefore, there are no representative of the EA and FONSI. NRC has determined not to prepare an significant non-radiological environmental impact statement for the III. Finding of No Significant Impact environmental impacts associated with proposed action. the proposed action. The requested exemption from 10 Other than HDI’s letter dated February Accordingly, the NRC concludes that CFR 50.82(a)(8)(i)(A) and 10 CFR 12, 2020, there are no other there are no significant environmental 50.75(h)(1)(iv) would allow HDI to use environmental documents associated impacts associated with the proposed funds from the NDTs for spent fuel with this review. This document is action. management and site restoration available for public inspection as Environmental Impacts of the activities, without prior written indicated in Section I. notification to the NRC. The proposed Alternatives to the Proposed Action Previous considerations regarding the action would not significantly affect As an alternative to the proposed environmental impacts of operating plant safety, would not have a action, the NRC staff considered denial IPEC are described in NUREG–1437, significant adverse effect on the of the proposed action (i.e., the ‘‘no- Supplement 38, Volume 1, ‘‘Generic probability of an accident occurring, action’’ alternative). Denial of the Environmental Impact Statement for and would not have any significant proposed action would result in no License Renewal of Nuclear Plants: radiological or non-radiological impacts. change in current environmental Supplement 38 Regarding Indian Point The reason the human environment impacts. The environmental impacts of Nuclear Generating Unit Nos. 2 and 3— would not be significantly affected is the proposed action and the alternative Final Report, Main Report and that the proposed action involves an action are similar. Comment Responses,’’ dated December exemption from requirements that are of 2010 (ADAMS Accession No. Alternative Use of Resources a financial or administrative nature and ML103350405), and Volume 5, ‘‘Generic that do not have an impact on the There are no unresolved conflicts Environmental Impact Statement for human environment. Consistent with 10 concerning alternative uses of available License Renewal of Nuclear Plants: CFR 51.21, the NRC conducted the EA resources under the proposed action. Supplement 38 Regarding Indian Point for the proposed action, and this FONSI Nuclear Generating Unit Nos. 2 and 3— Agencies or Persons Consulted incorporates by reference the EA Final,’’ dated April 2018 (ADAMS No additional agencies or persons included in Section II of this document. Accession No. ML18107A759). were consulted regarding the Therefore, the NRC concludes that the environmental impact of the proposed proposed action will not have IV. Availability of Documents

ADAMS Date Title Accession No.

5/12/2020 ...... Letter from ENOI to NRC, ‘‘Certifications of Permanent Cessation of Power Operations and Permanent Re- ML20133J902. moval of Fuel from the Reactor Vessel, Indian Point Nuclear Generating Unit No. 2’’. 2/12/2020 ...... Letter from HDI to NRC, ‘‘Request for Exemptions from 10 CFR 50.82(a)(8)(i)(A) and 10 CFR ML20043C539. 50.75(h)(1)(iv)’’. 12/19/2019 ...... Letter from HDI to NRC, ‘‘Post Shutdown Decommissioning Activities Report including Site-Specific Decom- ML19354A698. missioning Cost Estimate for Indian Point Nuclear Generating Units 1, 2, and 3’’. 11/21/2019 ...... Letter from ENOI to NRC, ‘‘Application for Order Consenting to Transfers of Control of Licenses and Ap- ML19326B953. proving Conforming License Amendments’’. 4/2018 ...... NUREG–1437, Supplement 38, Volume 5, ‘‘Generic Environmental Impact Statement for License Renewal ML18107A759. of Nuclear Plants, Supplement 38, Regarding Indian Point Nuclear Generating Unit Nos. 2 and 3—Final’’. 2/8/2017 ...... Letter from ENOI to NRC, ‘‘Notification of Permanent Cessation of Power Operations, Indian Point Nuclear ML17044A004. Generating Unit Nos. 2 and 3’’. 12/2010 ...... NUREG–1437, Supplement 38, Volume 1, ‘‘Generic Environmental Impact Statement for License Renewal ML103350405. of Nuclear Plants, Supplement 38, Regarding Indian Point Nuclear Generating Unit Nos. 2 and 3—Final Report, Main Report and Comment Responses’’.

Dated: November 5, 2020. SECURITIES AND EXCHANGE notice is hereby given that on October For the Nuclear Regulatory Commission. COMMISSION 23, 2020, Cboe Exchange, Inc. (the Richard V. Guzman, ‘‘Exchange’’ or ‘‘Cboe Options’’) filed [Release No. 34–90333; File No. SR–CBOE– with the Securities and Exchange Senior Project Manager, Plant Licensing 2020–105] Branch I, Division of Operating Reactor Commission (the ‘‘Commission’’) the Licensing, Office of Nuclear Reactor Self-Regulatory Organizations; Cboe proposed rule change as described in Regulation. Exchange, Inc.; Notice of Filing and Items I, II and III below, which Items have been prepared by the Exchange. [FR Doc. 2020–24935 Filed 11–9–20; 8:45 am] Immediate Effectiveness of a Proposed The Commission is publishing this BILLING CODE 7590–01–P Rule Change To Amend Its Fees Schedule in Connection With Migration notice to solicit comments on the proposed rule change from interested November 4, 2020. persons. Pursuant to Section 19(b)(1) of the I. Self-Regulatory Organization’s Securities Exchange Act of 1934 (the Statement of the Terms of the Substance ‘‘Act’’),1 and Rule 19b–4 thereunder,2 of the Proposed Rule Change 1 15 U.S.C. 78s(b)(1). Cboe Exchange, Inc. (the ‘‘Exchange’’ 2 17 CFR 240.19b–4. or ‘‘Cboe Options’’) proposes to amend

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its Fees Schedule in connection with Inc. (‘‘C2’’), acquired Cboe EDGA addition to providing a consistent migration. The text of the proposed rule Exchange, Inc. (‘‘EDGA’’), Cboe EDGX technology offering across the Cboe change is provided in Exhibit 5.3 Exchange, Inc. (‘‘EDGX’’ or ‘‘EDGX Affiliated Exchanges, the migration also The text of the proposed rule change Options’’), Cboe BZX Exchange, Inc. provided market participants a latency is also available on the Exchange’s (‘‘BZX’’ or ‘‘BZX Options’’), and Cboe equalized infrastructure, improved website (http://www.cboe.com/About BYX Exchange, Inc. (‘‘BYX’’ and, system performance, and increased CBOE/CBOELegalRegulatory together with Cboe Options, C2, EDGX, sustained order and quote per second Home.aspx), at the Exchange’s Office of EDGA, and BZX, the ‘‘Affiliated capacity, as discussed more fully below. the Secretary, and at the Commission’s Exchanges’’). The Cboe Affiliated Accordingly, in connection with the Public Reference Room. Exchanges recently aligned certain migration and in order to more closely system functionality, including with align the Exchange’s fee structure with II. Self-Regulatory Organization’s respect to connectivity, retaining only that of its Affiliated Exchanges, the Statement of the Purpose of, and intended differences between the Exchange intends to update and Statutory Basis for, the Proposed Rule Affiliated Exchanges, in the context of a simplify its fee structure with respect to Change technology migration. The Exchange access and connectivity and adopt new In its filing with the Commission, the migrated its trading platform to the access and connectivity fees. Exchange included statements same system used by the Affiliated The Exchange initially filed the concerning the purpose of and basis for Exchanges, which the Exchange proposed fee changes on October 1, the proposed rule change and discussed completed on October 7, 2019 (the 2019 (SR–CBOE–2019–077) (the any comments it received on the ‘‘migration’’). As a result of this ‘‘Original Filing’’).7 The Commission proposed rule change. The text of these migration, the Exchange’s pre-migration received only one comment letter on the statements may be examined at the connectivity architecture was rendered Original Filing, six days after the places specified in Item IV below. The obsolete, and as such, the Exchange now comment period deadline ended.8 On Exchange has prepared summaries, set offers new functionality, including new November 29, 2019, the Exchange forth in sections A, B, and C below, of logical connectivity, and therefore withdrew the Original Filing and the most significant aspects of such proposes to adopt corresponding fees.4 submitted SR–CBOE–2019–111 statements. In determining the proposed fee (‘‘Second Proposed Rule Change’’).9 changes, the Exchange assessed the Among other things, the Second A. Self-Regulatory Organization’s impact on market participants to ensure Proposed Rule Change was filed in Statement of the Purpose of, and that the proposed fees would not create response to, and addressed, the Statutory Basis for, the Proposed Rule an undue financial burden on any Commission’s request for inclusion of Change market participants, including smaller the following information: Clarity as to 1. Purpose market participants. While the Exchange what revenue streams are included in the Exchange’s calculation of In 2016, the Exchange’s parent has no way of predicting with certainty company, Cboe Global Markets, Inc. the impact of the proposed changes, the Exchange had anticipated its post- than expected (although 34% of Trading Permit Holders maintained the same number of 10 Gb (formerly named CBOE Holdings, Inc.) 5 (‘‘Cboe Global’’), which is also the migration connectivity revenue to be Physical and 44% reduced the amount of 10 Gb parent company of Cboe C2 Exchange, approximately 1.75% lower than Physical Ports maintained), (2) a higher quantity of connectivity revenue pre-migration.6 In BOE/FIX Logical Ports being purchased than predicted, and (3) a significantly higher quantity of 3 The Exchange notes that subsequent to the the optional Drop, GRP, Multicast PITCH/Top Spin 4 Original Filing that proposed these changes on As of October 7, 2019, market participants no Server Ports and Purge Ports being purchased than October 1 and 2, 2019 (SR–CBOE–2019–077 and longer have the ability to connect to the old predicted. For April 2020, the Exchange’s SR–CBOE–2019–082) and subsequent to the Second Exchange architecture. connectivity revenue was approximately 21.97% Proposed Rule Change and Third Proposed Rule 5 Connectivity revenue post-migration includes less than connectivity revenue pre-migration using Change Filings that proposed these changes on revenue from physical port fees (other than for the same calculation. For May 2020, the Exchange’s November 29, 2019 (SR–CBOE–2019–111) and disaster recovery), Cboe Data Services Port Fee, connectivity revenue was approximately 22.32% January 28, 2020 (SR–CBOE–2020–005), the logical port fees, Trading Permit Fees, Market- less than connectivity revenue pre-migration using Exchange submitted SR–CBOE–2020–021 which Maker EAP Appointment Unit fees, Tier the same calculation. The Exchange notes that due adopted Footnote 12. Footnote 12 governs pricing Appointment Surcharges and Floor Broker Trading to the closure of its trading floor on March 16, 2020 changes in the event the Exchange trading floor Surcharges, less the Floor Broker ADV discounts through June 15, 2020, it adopted a number of becomes inoperable and is appended to the Market- and discounts on BOE Bulk Ports via the Affiliate corresponding temporary pricing changes, Maker Tier Appointment Fees and Floor Broker Volume Plan and the Market-Maker Access Credit including waiving floor Trading Permit fees. See Trading Permit Sliding Scales tables. Additionally, program. Cboe Options Fees Schedule. The Exchange also subsequent to the Fourth Proposed Rule Change 6 For February 2020, the Exchange’s connectivity notes that it has provided the dollar amounts of the filed on March 27, 2020 (SR–CBOE–2020–028), the revenue was approximately 2.5% higher than Exchange’s monthly connectivity revenue to the Exchange submitted SR–CBOE–2020–044, which connectivity revenue pre-migration. For purposes of Securities and Exchange Commission (the appended Footnotes 41 to the Market maker Tier a fair comparison of the Exchange’s initial ‘‘Commission’’) for the months of February–June Appointment Fees table and the Floor Broker projection of post-migration connectivity revenue to 2020 with a confidential treatment request. The Trading Surcharge. Subsequent to the Exchange’s realized post-migration revenue connectivity, the Exchange also intends to provide further Fifth Proposed Rule Change filed on May 22, 2020 Exchange excluded from the February 2020 information to the Commission relating to monthly (SR–CBOE–2020–48), the Exchange submitted (1) calculation revenue from a Trading Permit Holder connectivity revenue for additional months, which SR–CBOE–2020–058, which adopted new Footnote who became a Market-Maker post October 7, 2019, will also be subject to a confidential treatment 24, appended Footnote 24 in the Market-Maker Tier a Trading Permit Holder that grew it’s footprint on request. Appointment Fees table and Floor Trading Permit the Exchange significantly, and revenue derived 7 On business date October 2, 2019, due to a Sliding Scales Table, as well as added language to from incremental usage in light of the extreme technical error, the Exchange withdrew that filing the Floor Broker ADV Discount Table and (2) SR– volatility and volume experienced in February, as and submitted SR–CBOE–2019–082. See Securities CBOE–2020–061 which added further language in such circumstances were not otherwise anticipated Exchange Act Release No. 87304 (October 15, 2019), Footnote 24. Lastly, subsequent to the Seventh or incorporated into the Exchange’s original 84 FR 56240, (October 21, 2019) (‘‘Original Filing’’). Proposed Rule Change filed on September 2, 2020, projection. As noted, the Exchange had no way of 8 See Letter from Tyler Gellasch, Executive the Exchange submitted SR–CBOE–2020–097 which predicting with certainty the impact of the Director, The Healthy Markets Association amended language in Footnote 24. The additions proposed changes, nor control over choices market (‘‘Healthy Markets’’), to Vanessa Countryman, proposed by filings SR–CBOE–2020–021, SR– participants ultimately decided to make. The Secretary, Commission, dated November 18, 2019. CBOE–2020–044, SR–CBOE–2020–058, SR–CBOE– Exchange notes connectivity revenue was higher 9 See Securities Exchange Act Release No. 87727 2020–061 and SR–CBOE–2020–097 are double than anticipated in part due to (1) a higher number (December 12, 2019), 84 FR 69428 (December 18, underlined in Exhibit 5A. of 10 Gb Physical Ports being maintained by TPHs 2019).

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‘‘connectivity’’ revenue; an update on (‘‘Fourth Proposed Rule Change’’).13 On August 31, 2020, the Exchange post-migration connectivity revenue; 10 The Fourth Proposed Rule Change was withdrew the Sixth Proposed Rule further information regarding the filed in response to the Commission’s Change and submitted SR–CBOE–2020– Exchange’s new latency equalized sole request to update the connectivity 083 (‘‘Seventh Proposed Rule infrastructure including additional revenue collected in February 2020, as Change’’).18 The Seventh Proposed Rule detail regarding the benefits of such the transition of physical ports had been Change was filed in order to respond to structure; clarity on how the Cboe Data completed. The Commission received an additional request from the Services Port fee is applied; data only one comment letter on the Fourth Commission for further information and regarding the number of market Proposed Rule Change.14 dialog. The Commission received only participants that connect directly versus On May 21, 2020, the Exchange one comment letter on the Seventh indirectly and the volume attributed to withdrew that filing and submitted SR– Proposed Rule Change, which was each; enhanced discussion regarding CBOE–20202–048 (‘‘Fifth Proposed Rule submitted from the same industry products that compete with exclusively Change’’).15 The Fifth Proposed Rule participant that commented on this listed products; an update on whether Change was filed in response to the proposed rule change on two previous any market participant terminated their Commission’s request for (1) updated occasions and that frequently submits direct connectivity or membership post- connectivity revenue for April 2020, (2) negative comment letters on exchange 19 migration (and whether it was because examples of alternative products to VIX fee filings. of the fee changes); and generally and (3) any further evidence the Today, the Exchange is withdrawing provide an update on various Exchange had to support its argument the Seventh Proposed Rule change and projections made in the filing, including that competitive forces constrain submitting this filing (‘‘Eighth Proposed how many ports market participants pricing. The Commission received no Rule Change’’), as part of its ongoing purchased post-migration, how many comments letters on the Fifth Proposed efforts to adopt the post-migration Trading Permit Holders were paying Rule Change. connectivity fees and to respond to the higher or lower fees, and how many Commission’s most recent and most On July 2, 2020, the Exchange extensive request for further Trading Permit Holders achieved withdrew the Fifth Proposed Rule proposed incentive tiers. The information, including among other Change and submitted SR–CBOE–2020– things: (1) Total connectivity and access Commission received no comment 16 064 (‘‘Sixth Proposed Rule Change’’). fee revenues over a period of time, (2) letters on the Second Proposed Rule The Sixth Proposed Rule Change was Change. data relating to each TPH that has filed to respond to the Commission’s connected directly to the Exchange over On January 28, 2020, the Exchange request for another update on the a period of time (including contract withdrew the Second Proposed Rule Exchange’s post-migration connectivity volume and access and connectivity fees Change filing and submitted SR–CBOE– revenue and to provide further data paid on a month-by-month and firm-by- 2020–005 (‘‘Third Proposed Rule demonstrating competition in the firm basis), (3) information relating to Change’’).11 The Third Proposed Rule marketplace. The Commission again previous access and connectivity Change was filed in response to, and received no negative comments letters pricing changes that have been addressed, the Commission’s request for on the Sixth Proposed Rule Change. proposed; and (4) information relating further discussion regarding how Notably however, the Exchange did to the Exchange’s profit margins and competitive forces constrained fees, receive three positive comment letters return on assets for each of Cboe’s further detail on potential substitute on the Sixth Proposed Rule Change (one business lines.20 products for the Exchange’s exclusively from a market-maker TPH and two from The Exchange notes the proposed fees listed products, updated data on the floor broker TPHs), each noting that the have been effective, and thus have been number of ports purchased post- TPHS believes the proposed fees are paid by Trading Permit Holders, for over migration and an update on the reasonable and encouraging the projected post-migration connectivity Commission to allow the fees to remain 18 The Exchange refiled the Seventh Proposed revenue.12 The Exchange also provided effective and avoid an unnecessary Rule Change on September 2, 2020 due to a suspension and disapproval technical error (SR–CBOE–2020–086). See updated data on how many Trading Securities Exchange Act Release No. 89826 17 Permit Holders connected directly proceeding. (September 10, 2020), 85 FR 57900, (September 16, versus indirectly to the Exchange and 2020). 19 the volume attributed to each. The 13 See Securities Exchange Act Release No. 88586 See Letter from Tyler Gellasch, Executive (April 8, 2020), 85 FR 20773, (April 14, 2020). Director, The Healthy Markets Association Commission received no comment (‘‘Healthy Markets’’), to Vanessa Countryman, 14 See Letter from Tyler Gellasch, Executive letters on the Third Proposed Rule Secretary, Commission, dated September 30, 2020, Director, The Healthy Markets Association which letter, like the first two Healthy Markets Change. (‘‘Healthy Markets’’), to Vanessa Countryman, comment letters, consists of a number of conclusory Secretary, Commission, dated May 5, 2020, which On March 27, 2020, the Exchange statements and mischaracterizes the Exchange’s letter mischaracterized the Exchange’s proposed proposed fees as linking market data costs to submitted SR–CBOE–2020–028 fees as linking market data costs to trading volume, trading volume, among other factual inaccuracies. among other factual inaccuracies. 20 10 15 Data responsive to the Commission’s request Many market participants were still The Exchange refiled the Fifth Proposed Rule for additional information is being provided to the transitioning to the new connectivity structure at Change on May 22, 2020 due to a technical error Commission with a confidential treatment request. that time and as such, the Exchange noted it did (SR–CBOE–2020–048). See Securities Exchange Act The Exchange notes that it is unable to provide data not expect its connectivity revenue projections Release No. 88984 (June 1, 2020), 85 FR 34670, addressing the Commission’s request for regarding port purchases to be realized prior to (June 6, 2020). information relating to its profit margins and return February 2020. 16 See Securities Exchange Act Release No. 89239 on assets, as its costs are not kept in the 11 See Securities Exchange Act Release No. 88164 (July 7, 2020), 85 FR 42042, (July 13, 2020). disaggregated manner requested by the (February 11, 2020), 85 FR 8897, (February 18, 17 See Letters from Steve Crutchfield, Head of Commission. The Exchange notes that to 2020). Market Structure, Chicago Trading Company disaggregate its cost in that way would require an 12 Many market participants were still (‘‘CTC’’) and William Ellington, Managing Member/ artificial and arbitrary division resulting in transitioning to the new connectivity structure at CEO, X-Change Financial Access (‘‘XFA’’) to inaccurate and potentially meaningless data. that time and as such, the Exchange again noted it Vanessa Countryman, Secretary, Commission, dated Moreover, the Exchange notes that it did not raise did not expect its connectivity revenue projections August 27, 2020. See also Letter from Lakeshore any arguments relating to its profitability nor is it regarding port purchases to be realized prior to Securities to Vanessa Countryman, Secretary, required to do so in order to demonstrate that its February 2020. Commission, dated August 31, 2020. fees are reasonable and consistent with the Act.

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one year. The Exchange believes it is servers are located. The Exchange center.25 Additionally, the new notable that during this time no other currently assesses fees for Network infrastructure utilizes new and faster industry group or exchange, and Access Ports for these physical switches resulting in lower overall particularly no market participants who connections to the Exchange. latency. connect to the Exchange, have claimed Specifically, TPHs and non-TPHs can The Exchange proposes to assess the in comment letters to the Commission elect to connect to Cboe Options’ following fees for any physical port, that the Exchange’s new fee structure is trading system via either a 1 gigabit per regardless of whether the TPH or non- unreasonable. The Exchange also second (‘‘Gb’’) Network Access Port or TPH connects via the current Network believes it’s significant and notable that, a 10 Gb Network Access Port. Pre- Access Ports or the new Physical Ports. in addition to positive feedback migration the Exchange assessed a Specifically, the Exchange proposes to regarding the improved connectivity monthly fee of $1,500 per port for 1 Gb continue to assess a monthly fee of under the new structure, it received Network Access Ports and a monthly fee $1,500 per port for 1 Gb Network Access feedback from a number of market of $5,000 per port for 10 Gb Network Ports and new Physical Ports and participants that the Exchange’s Access Ports for access to Cboe Options increase the monthly fee for 10 Gb proposed fee changes are regarded as primary system. Through January 31, Network Access Ports and new Physical reasonable, both informally via 2020, Cboe Options market participants Ports to $7,000 per port. Physical port conversations with the firms and will continue to have the ability to fees will be prorated based on the formally via the comment letters connect to Cboe Options’ trading system remaining trading days in the calendar submitted in support of this fee change. via the current Network Access Ports. month. The proposed fee for 10 Gb As discussed herein, the Exchange As of October 7, 2019, in connection Physical Ports is in line with the believes that the proposed changes are with the migration, TPHs and non-TPHs amounts assessed by other exchanges consistent with the Act because they are may alternatively elect to connect to for similar connections by its Affiliated reasonable, equitably allocated, not Cboe Options via new latency equalized Exchanges and other Exchanges that unfairly discriminatory, and not an Physical Ports.22 The new Physical Ports utilize the same connectivity undue burden on competition, as they similarly allow TPHs and non-TPHs the infrastructure.26 are are supported by evidence ability to connect to the Exchange at the In addition to the benefits resulting (including data and analysis) and are data center where the Exchange’s from the new Physical Ports providing constrained by significant competitive servers are located and TPHs and non- latency equalization and new switches forces. The Exchange also believes the TPHs have the option to connect via 1 (i.e., improved latency), TPHs and non- proposed fees are reasonable as they are Gb or 10 Gb Physical Ports. As noted TPHs may be able to reduce their overall in line with the amounts assessed by above, both the new 1 Gb and 10 Gb physical connectivity fees. Particularly, other exchanges for similar connectivity Physical Ports provide latency Network Access Port fees are assessed offerings. Additionally, the Exchange equalization, meaning that each market for unicast (orders, quotes) and believes the proposed changes are participant will be afforded the same multicast (market data) connectivity consistent with the SEC Division of latency for 1 Gb or 10 Gb Physical Ports separately. More specifically, Network Trading and Markets (the ‘‘Division’’) in the primary data center to the Access Ports may only receive one type issued non-rulemaking fee filing Exchange’s customer-facing switches of connectivity each (thus requiring a guidance titled ‘‘Staff Guidance on SRO regardless of location of the market market participant to maintain two ports Rule Filings Relating to Fees’’ (‘‘Fee participant’s cage 23 in the primary data if that market participant desires both Guidance’’) issued on May 21, 2020.21 center relative to the Exchange’s servers. types of connectivity). The new Physical Accordingly, the Exchange believes that Conversely, the legacy Network Access Ports however, allow access to both the Commission should find that the Ports are not latency equalized, meaning unicast and multicast connectivity with Proposed Fee Increases are consistent the location of a market participant’s a single physical connection to the with the Act. The proposed rule change cage within the data center may affect 25 is immediately effective upon filing latency. For example, in the legacy The Exchange notes that 10 Gb Physical Ports system, a cage located further from the have an 11 microsecond latency advantage over 1 with the Commission pursuant to Gb Physical Ports. Other than this difference, there Section 19(b)(3)(A) of the Act. Exchange’s servers may experience are no other means to receive a latency advantage higher latency than those located closer as compared to another market participant in the Physical Connectivity to the Exchange’s servers.24 As such, the new connectivity structure. proposed Physical Ports ensure all 26 See Cboe EDGA U.S. Equities Exchange Fee A physical port is utilized by a Schedule, Physical Connectivity Fees; Cboe EDGX Trading Permit Holder (‘‘TPH’’) or non- market participants connected to the U.S. Equities Exchange Fee Schedule, Physical TPH to connect to the Exchange at the Exchange via the new Physical Ports Connectivity Fees; Cboe BZX U.S. Equities data centers where the Exchange’s will receive the same respective latency Exchange Fee Schedule, Physical Connectivity for each port size and ensure that no Fees; Cboe BYX U.S. Equities Exchange Fee Schedule, Physical Connectivity Fees; Cboe EDGX 21 Where possible, the Exchange is including market participant has a latency Options Exchange Fee Schedule, Physical numerical examples and percentages, including advantage over another market Connectivity Fees; and Cboe BZX Options Exchange with respect to revenue impact. In addition, the participant within the primary data Fee Schedule, Physical Connectivity Fees Exchange is providing data to the Commission in (collectively, ‘‘Affiliated Exchange Fee Schedules’’). support of its arguments herein, which is consistent See e.g., Nasdaq PHLX and ISE Rules, General 22 with the Fee Guidance. The non-rulemaking Fee As previously noted, market participants will Equity and Options Rules, General 8. Phlx and ISE Guidance covers all aspects of a fee filing, but as continue to have the option of connecting to Cboe each charge a monthly fee of $2,500 for each 1Gb acknowledged by the Commission, has ‘‘no legal Options via a 1 Gbps or 10 Gbps Network Access connection, $10,000 for each 10Gb connection and force or effect’’, is ‘‘not a rule, regulation or Port at the same rates as proposed, respectively. $15,000 for each 10Gb Ultra connection. See also statement of the Commission’’, does not ‘‘alter or 23 A market participant’s ‘‘cage’’ is the cage Nasdaq Price List—Trading Connectivity. Nasdaq amend applicable law’’ and ‘‘creates no new or within the data center that contains a market charges a monthly fee of $7,500 for each 10Gb additional obligations for SROs and the participant’s servers, switches and cabling. direct connection to Nasdaq and $2,500 for each Commission.’’ See Chairman Jay Clayton, Statement 24 The Exchange equalizes physical connectivity direct connection that supports up to 1Gb. See also on Division of Trading and Markets Staff Fee in the data center for its primary system by taking NYSE American Fee Schedule, Section V.B, and Guidance, June 12, 2019. The Exchange nonetheless the farthest possible distance that a Cboe market Arca Fees and Charges, Co-Location Fees. NYSE has extensively addressed the Fee Guidance participant cage may exist from the Exchange’s American and Arca each charge a monthly fee of throughout this filing and prior versions of this customer-facing switches and using that distance as $5,000 for each 1Gb circuit, $14,000 for each 10Gb filing. the cable length for any cross-connect. circuit and $22,000 for each 10Gb LX circuit.

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Exchange. Therefore, TPHs and non- port) and the proposed fee amount are Service Cost per month TPHs that currently purchase two legacy the same as the corresponding fee on its Network Access Ports for the purpose of affiliate C2.30 BOE Bulk Ports 6 to $2,500 per port. receiving each type of connectivity now 30. In connection with the proposed BOE Bulk Ports >30 .. $3,000 per port. have the option to purchase only one change, the Exchange also proposes to new Physical Port to accommodate their Purge ports ...... $850 per port. rename the ‘‘Port Fee’’ to ‘‘Direct Data GRP Ports ...... $750/primary (A or C connectivity needs, which may result in Access Fee’’. As the fee will be payable Feed). reduced costs for physical ‘‘per data source’’ used to receive data, Multicast PITCH/Top $750/set of primary 27 connectivity. instead of ‘‘per data port’’, the Exchange Spin Server Ports. (A or C feed). Cboe Data Services—Port Fees believes the proposed name is more appropriate and that eliminating the The Exchange proposes to provide for The Exchange proposes to amend the each of the logical connectivity fees that ‘‘Port Fee’’ under the Cboe Data Services term ‘‘port’’ from the fee will eliminate confusion as to how the fee is assessed. new requests will be prorated for the (‘‘CDS’’) Fees Schedule. Currently, the first month of service. Cancellation Port Fee is payable by any Customer 28 Logical Connectivity requests are billed in full month that receives data through two types of increments as firms are required to pay Next, the Exchange proposes to sources; a direct connection to CDS for the service for the remainder of the amend its login fees. By way of (‘‘direct connection’’) or through a month, unless the session is terminated background, Cboe Options market connection to CDS provided by an within the first month of service. The participants were able to access Cboe extranet service provider (‘‘extranet Exchange notes that the proration policy Command via either a CMI or a FIX connection’’). The Port Fee applies to is the same on its Affiliated Port, depending on how their systems receipt of any Cboe Options data feed Exchanges.31 but is only assessed once per data port. are configured. Effective October 7, Logical Ports (BOE, FIX, Drop): The The Exchange proposes to amend the 2019, market participants are no longer new Logical Ports represent ports monthly CDS Port Fee to provide that it able to use CMI and FIX Login IDs. established by the Exchange within the is payable ‘‘per source’’ used to receive Rather, the Exchange utilizes a variety Exchange’s system for trading purposes. data, instead of ‘‘per data port’’. The of logical connectivity ports as further Each Logical Port established is specific Exchange also proposes to increase the described below. Both a legacy CMI/FIX to a TPH or non-TPH and grants that fee from $500 per data port/month to Login ID and logical port represent a TPH or non-TPH the ability to operate $1,000 per data source/month.29 The technical port established by the a specific application, such as order/ Exchange notes the proposed change in Exchange within the Exchange’s trading quote 32 entry (FIX and BOE Logical assessing the fee (i.e., per source vs per system for the delivery and/or receipt of Ports) or drop copies (Drop Logical trading messages—i.e., orders, accepts, Ports). Similar to CMI and FIX Login 27 The Exchange proposes to eliminate the current cancels, transactions, etc. Market IDs, each Logical Port will entitle a firm Cboe Command Connectivity Charges table in its participants that wish to connect to submit message traffic of up to entirety and create and relocate such fees in a new directly to the Exchange can request a table in the Fees Schedule that addresses fees for specified number of orders per physical connectivity, including fees for the current number of different types of ports, second.33 The Exchange proposes to Network Access Ports, the new Physical Ports and including ports that support order entry, assess $750 per port per month for all Disaster Recovery (‘‘DR’’) Ports. The Exchange notes customizable purge functionality, or the Drop Logical Ports and also assess $750 that it is not proposing any changes with respect to receipt of market data. Market DR Ports other than renaming the DR ports from per port per month (which is the same ‘‘Network Access Ports’’ to ‘‘Physical Ports’’ to participants can also choose to connect amount currently assessed per CMI/FIX conform to the new Physical Port terminology. The indirectly through a number of different Login ID per month), for the first 5 FIX/ Exchange also notes that subsequent to the initial third-party providers, such as another BOE Logical Ports and thereafter assess filings that proposed these fee changes on October broker-dealer or service bureau that the 1 and 2, 2019 (SR–CBOE–2019–077 and SR–CBOE– $800 per port, per month for each 2019–082), the Exchange amended the proposed Exchange permits through specialized additional FIX/BOE Logical Port. While port fees to waive fees for ports used for PULSe in access to the Exchange’s trading system the proposed ports will be assessed the filing No. SR–CBOE–2019–105. The additions and that may provide additional same monthly fees as current CMI/FIX proposed by filing SR–CBOE–2019–105 are double services or operate at a lower Login IDs (for the first five logical ports), underlined in Exhibit 5A and the deletions are doubled bracketed in Exhibit 5A. mutualized cost by providing access to the proposed logical ports provide for 28 A Customer is any person, company or other multiple members. In light of the significantly more message traffic (and entity that, pursuant to a market data agreement discontinuation of CMI and FIX Login thus cost less per message sent) as with CDS, is entitled to receive data, either directly IDs, the Exchange proposes to eliminate shown below: from CDS or through an authorized redistributor the fees associated with the CMI and (i.e., a Customer or extranet service provider), whether that data is distributed externally or used FIX login IDs and adopt the below 31 See Affiliated Exchange Fee Schedules, Logical internally. pricing for logical connectivity in its Port Fees. 29 For example, under the pre-migration ‘‘per place. 32 As of October 7, 2019, the definition of quote port’’ methodology, if a TPH maintained 4 ports in Cboe Options Rule 1.1 means a firm bid or offer a Market-Maker (a) submits electronically as an that receive market data, that TPH would be Service Cost per month assessed $2,000 per month (i.e., $500 × 4 ports), order or bulk message (including to update any bid regardless of how many sources it used to receive or offer submitted in a previous order or bulk data. Under the proposed ‘‘per source’’ Logical Ports (BOE, $750 per port. message) or (b) represents in open outcry on the methodology, if a TPH maintains 4 ports that FIX) 1 to 5. trading floor. receive market data, but receives data through only Logical Ports (BOE, $800 per port. 33 Login Ids restrict the maximum number of one source (e.g., a direct connection) that TPH FIX) >5. orders and quotes per second in the same way would be assessed $1,000 per month (i.e., $1000 × Logical Ports (Drop) .. $750 per port. logical ports do, and Users may similarly have 1 source). If that TPH maintains 4 ports but receives BOE Bulk Ports 1 to $1,500 per port. multiple logical ports as they may have Trading data from both a direct connection and an extranet 5. Permits and/or bandwidth packets to accommodate connection, that TPH would be assessed $2,000 per their order and quote entry needs. month (i.e., $1,000 × 2 sources). Similarly, if that 34 Each Login ID has a bandwidth limit of 80,000 TPH maintains 4 ports and receives data from two 30 See Cboe C2 Options Exchange Fee Schedule, quotes per 3 seconds. However, in order to place separate extranet providers, that TPH would be Cboe Data Services, LLC Fees, Section IV, Systems such bandwidth onto a single Login ID, a TPH or assessed $2,000 per month (i.e., $1,000 × 2). Fees. non-TPH would need to purchase a minimum of 15

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CMI/FIX login Ids BOE/FIX logical ports Quotes Orders Quotes/orders

Bandwidth Limit per login ...... 5,000 quotes/3 sec 34 ...... 30 orders/sec ...... 15,000 quotes/orders/3 sec. Cost ...... $750 each ...... $750 each ...... $750/$800 each. Cost per Quote/Order Sent @Limit $0.15 per quote/3 sec ...... $25.00 per order/sec ...... $0.05/$0.053 per quote/order/3 sec.

Logical Port fees will be limited to The Exchange notes that the proposed anticipates they will be used primarily Logical Ports in the Exchange’s primary fee of $750 per port is the same amount by Market-Makers or firms that conduct data center and no Logical Port fees will assessed not only for current CMI and similar business activity, as the primary be assessed for redundant secondary FIX Login Ids, but also similar ports purpose of the proposed bulk message data center ports. Each BOE or FIX available on an affiliate exchange.35 functionality is to encourage market- Logical Port will incur the logical port The Exchange also proposes to maker quoting on exchanges. As fee indicated in the table above when provide that the fee for one FIX Logical indicated above, BOE Bulk Logical Ports used to enter up to 70,000 orders per Port connection to PULSe and one FIX are assessed $1,500 per port, per month trading day per logical port as measured Logical Port connection to Cboe Silexx for the first 5 BOE Bulk Logical Ports, on average in a single month. Each will be waived per TPH. The Exchange assessed $2,500 per port, per month notes that only one FIX Logical Port incremental usage of up to 70,000 per thereafter up to 30 ports and thereafter connection is required to support a day per logical port will incur an assessed $3,000 per port, per month for firm’s access through each of PULSe and additional logical port fee of $800 per Cboe Silexx FLEX. each additional BOE Bulk Logical Port. month. Incremental usage will be BOE Bulk Logical Ports: The Exchange Like CMI and FIX Login IDs, and FIX/ determined on a monthly basis based on also offers BOE Bulk Logical Ports, BOX Logical Ports, BOE Bulk Ports will the average orders per day entered in a which provide users with the ability to also entitle a firm to submit message single month across all of a market submit single and bulk order messages traffic of up to specified number of participant’s subscribed BOE and FIX to enter, modify, or cancel orders quotes/orders per second.36 The Logical Ports. The Exchange believes designated as Post Only Orders with a proposed BOE Bulk ports also provide that the pricing implications of going Time-in-Force of Day or GTD with an for significantly more message traffic beyond 70,000 orders per trading day expiration time on that trading day. (and thus cost less per message sent) as per Logical Port encourage users to While BOE Bulk Ports will be available compared to current CMI/FIX Login IDs, mitigate message traffic as necessary. to all market participants, the Exchange as shown below:

CMI/FIX Login Ids BOE Bulk Ports

Quotes Quotes 37

Bandwidth Limit ...... 5,000 quotes/3 sec 38 ...... 225,000 quotes 3 sec. Cost ...... $750 each ...... $1,500/$2,500/$3,000 each. Cost per Quote/Order Sent @Limit ...... $0.15 ...... $0.006/$0.011/$0.013 per quote/3 sec ...... per quote/3 sec.

Each BOE Bulk Logical Port will incur that the pricing implications of going particularly if the TPH is dealing with the logical port fee indicated in the table beyond 30,000,000 orders per trading a large number of options. Particularly, above when used to enter up to day per BOE Bulk Logical Port Purge Ports allow TPHs to submit a 30,000,000 orders per trading day per encourage users to mitigate message cancelation for all open orders, or a logical port as measured on average in traffic as necessary. The Exchange notes subset thereof, across multiple sessions a single month. Each incremental usage that the proposed BOE Bulk Logical Port under the same Executing Firm ID of up to 30,000,000 orders per day per fees are similar to the fees assessed for (‘‘EFID’’). This would allow TPHs to BOE Bulk Logical Port will incur an these ports by BZX Options.39 seamlessly avoid unintended additional logical port fee of $3,000 per Purge Ports: As part of the migration, executions, while continuing to evaluate month. Incremental usage will be the Exchange introduced Purge Ports to the direction of the market. While Purge determined on a monthly basis based on provide TPHs additional risk Ports are available to all market the average orders per day entered in a management and open order control participants, the Exchange anticipates single month across all of a market functionality. Purge ports were designed they will be used primarily by Market- participant’s subscribed BOE Bulk to assist TPHs, in the management of, Makers or firms that conduct similar Logical Ports. The Exchange believes and risk control over, their quotes, business activity and are therefore

Market-Maker Permits or Bandwidth Packets (each there may be possible performance degradation at non-TPH would need to purchase a minimum of 15 Market-Maker Permit and Bandwidth Packet 15,000 messages per second (which is the Market-Maker Permits or Bandwidth Packets (each provides 5,000 quotes/3 sec). For purposes of equivalent of 225,000 quotes/orders per 3 seconds). Market-Maker Permit and Bandwidth Packet comparing ‘‘quote’’ bandwidth, the provided As such, the Exchange uses the number at which provides 5,000 quotes/3 sec). For purposes of example assumes only 1 Market-Maker Permit or performance may be degraded for purposes of comparing ‘‘quote’’ bandwidth, the provided Bandwidth Packet has been purchased. comparison. example assumes only 1 Market-Maker Permit or 35 See Cboe BZX Options Exchange Fee Schedule, 37 See Cboe Options Rule 1.1. Bandwidth Packet has been purchased. Options Logical Port Fees. 38 Each Login ID has a bandwidth limit of 80,000 39 36 The Exchange notes that while technically quotes per 3 seconds. However, in order to place See Cboe BZX Options Exchange Fee Schedule, there is no bandwidth limit per BOE Bulk Port, such bandwidth onto a single Login ID, a TPH or Options Logical Port Fees.

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exposed to a large amount of risk across to obtain credits on their monthly BOE provide increasingly higher benefits for a number of securities. The Exchange Bulk Port Fees.42 By way of background, satisfying increasingly more stringent notes that market participants are also under AVP, if a TPH Affiliate 43 or criteria. able to cancel orders through FIX/BOE Appointed OFP 44 (collectively, an In addition to the opportunity to Logical Ports and as such a dedicated ‘‘affiliate’’) of a Market-Maker qualifies receive credits via AVP, the Exchange Purge Port is not required nor necessary. under the Volume Incentive Program proposes to provide an additional Rather, Purge Ports were specially (‘‘VIP’’) (i.e., achieves VIP Tiers 2–5), opportunity for Market-Makers to obtain developed as an optional service to that Market-Maker will also qualify for credits on their monthly BOE Bulk Port further assist firms in effectively a discount on that Market-Maker’s fees based on the previous month’s managing risk. As indicated in the table Liquidity Provider (‘‘LP’’) Sliding Scale make rate percentage. By way of above, the Exchange proposes to assess transaction fees and Trading Permit background, the Liquidity Provider a monthly charge of $850 per Purge fees. The Exchange proposes to amend Sliding Scale Adjustment Table Port. The Exchange notes that the AVP to provide that qualifying Market- provides that Taker fees be applied to proposed fee is in line with the fee Makers will receive a discount on Bulk electronic ‘‘Taker’’ volume and a Maker assessed by other exchanges, including Port fees (instead of Trading Permits) rebate be applied to electronic ‘‘Maker’’ its Affiliated Exchanges, for Purge where an affiliate achieves VIP Tiers 4 volume, in addition to the transaction Ports.40 or 5. As discussed more fully below, the fees assessed under the Liquidity Multicast PITCH/Top Spin Server and Exchange is amending its Trading Provider Sliding Scale.46 The amount of GRP Ports: In connection with the Permit structure, such that off-floor the Taker fee (or Maker rebate) is migration, the Exchange also offers Market-Makers no longer need to hold determined by the Liquidity Provider’s optional Multicast PITCH/Top Spin more than one Market-Maker Trading percentage of volume from the previous Server (‘‘Spin’’) and GRP ports and Permit. As such, in place of credits for month that was Maker (‘‘Make Rate’’).47 proposes to assess $750 per month, per Trading Permits, the Exchange will Market-Makers are given a Performance port. Spin Ports and GRP Ports are used provide credits for BOE Bulk Ports.45 Tier based on their Make Rate to request and receive a retransmission The proposed credits are as follows: percentage which currently provides of data from the Exchange’s Multicast adjustments to transaction fees. Thus, PITCH/Top data feeds. The Exchange’s Market Maker Percent credit the program is designed to attract Multicast PITCH/Top data feeds are affiliate VIP tier on monthly liquidity from traditional Market- available from two primary feeds, BOE bulk port access credit fees Makers. The Exchange proposes to now identified as the ‘‘A feed’’ and the ‘‘C also provide BOE Bulk Port fee credits feed’’, which contain the same Credit Tier ..... 1 0 if Market-Makers satisfy the thresholds information but differ only in the way 2 0 of certain Performance Tiers. such feeds are received. The Exchange 3 0 Particularly, the Performance Tier also offers two redundant feeds, 4 15 earned will also determine the identified as the ‘‘B feed’’ and the ‘‘D 5 25 percentage credit applied to a Market- feed.’’ All secondary feed Spin and GRP Maker’s monthly BOE Bulk Port fees, as Ports will be provided for redundancy at The Exchange believes the proposed shown below: no additional cost. The Exchange notes change to AVP continues to allow the a dedicated Spin and GRP Port is not Exchange to provide TPHs that have 46 See Cboe Options Exchange Fees Schedule, required nor necessary. Rather, Spin both Market-Maker and agency Liquidity Provider Sliding Scale Adjustment Table. ports enable a market participant to operations reduced Market-Maker costs 47 More specifically, the Make Rate is derived receive a snapshot of the current book via the credits, albeit credits on BOE from a Liquidity Provider’s electronic volume the quickly in the middle of the trading Bulk Port fees instead of Trading Permit previous month in all symbols excluding Underlying Symbol List A using the following session without worry of gap request fees. AVP also continues to provide formula: (i) The Liquidity Provider’s total electronic limits and GRP Ports were specially incremental incentives for TPHs to automatic execution (‘‘auto-ex’’) volume (i.e., developed to request and receive strive for the higher tier levels, which volume resulting from that Liquidity Provider’s retransmission of data in the event of resting quotes or single sided quotes/orders that were executed by an incoming order or quote), 42 missed or dropped message. The As noted above, while BOE Bulk Ports will be divided by (ii) the Liquidity Provider’s total auto- Exchange notes that the proposed fee is available to all market participants, the Exchange ex volume (i.e., volume that resulted from the anticipates they will be used primarily by Market Liquidity Provider’s resting quotes/orders and in line with the fee assessed for the Makers or firms that conduct similar business same ports on BZX Options.41 volume that resulted from that LP’s quotes/orders activity. that removed liquidity). For example, a TPH’s 43 Access Credits For purposes of AVP, ‘‘Affiliate’’ is defined as electronic Make volume in September 2019 is having at least 75% common ownership between 2,500,000 contracts and its total electronic auto-ex The Exchange next proposes to amend the two entities as reflected on each entity’s Form volume is 3,000,000 contracts, resulting in a Make its Affiliate Volume Plan (‘‘AVP’’) to BD, Schedule A. Rate of 83% (Performance Tier 4). As such, the TPH 44 provide Market-Makers an opportunity See Cboe Options Fees Schedule Footnote 23. would receive a 40% credit on its monthly Bulk Particularly, a Market-Maker may designate an Port fees for the month of October 2019. For the Order Flow Provider (‘‘OFP’’) as its ‘‘Appointed month of October 2019, the Exchange will be billing 40 See e.g., Nasdaq ISE Options Pricing Schedule, OFP’’ and an OFP may designate a Market-Maker certain incentive programs separately, including the Section 7(C), Ports and Other Services. See also to be its ‘‘Appointed Market-Maker’’ for purposes of Liquidity Provider Sliding Scale Adjustment Table, Cboe EDGX Options Exchange Fee Schedule, qualifying for credits under AVP. for the periods of October 1–October 4 and October Options Logical Port Fees; Cboe C2 Options 45 The Exchange notes that Trading Permits 7–October 31 in light of the migration of its billing Exchange Fee Schedule, Options Logical Port Fees currently each include a set bandwidth allowance system. As such, a Market-Maker’s Performance and Cboe BZX Options Exchange Fee Schedule, and 3 logins. Current logins and bandwidth are akin Tier for November 2019 will be determined by the Options Logical Port Fees. to the proposed logical ports, including BOE Bulk Market-Maker’s percentage of volume that was 41 See Cboe BZX Options Exchange Fee Schedule, Ports which will primarily be used by Market- Maker from the period of October 7–October 31, Options Logical Port Fees. Makers. 2019.

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Liquidity provider Percent credit sliding scale on monthly Market Maker access credit adjustment Make Rate(% based on prior month) BOE bulk port performance tier fees

Credit Tier ...... 1 0%–50% ...... 0 2 Above 50%–60%...... 0 3 Above 60%–75%...... 0 4 Above 75%–90%...... 40 5 Above 90%...... 40

The Exchange believes the proposal CASs (in addition to the shared public, (c) Proprietary TPHs and (d) mitigates costs incurred by traditional backups) based on the amount of order service firms. The permit did not Market-Makers that focus on adding quoting bandwidth that the Market- provide access to the trading floor. An liquidity to the Exchange (as opposed to Maker had. The Exchange no longer EAP also provided an order entry those that provide and take, or just uses CAS Servers, post-migration. In bandwidth allowance, up to 3 logins take). The Exchange lastly notes that light of the elimination of CAS Servers, and TPH status.53 The Exchange also both the Market-Maker Affiliate Access the Exchange proposes to eliminate the provided an opportunity for TPHs to Credit under AVP and the Market-Maker CAS Server allotment table and extra pay reduced rates for Trading Permits Access Credit tied to Performance Tiers CAS Server fee. via the Market Maker and Floor Broker can both be earned by a TPH, and these Trading Permit Sliding Scale Programs Trading Permit Fees credits will each apply to the total (‘‘TP Sliding Scales’’). Particularly, the monthly BOE Bulk Port Fees including By way of background, the Exchange TP Sliding Scales allowed Market- any incremental BOE Bulk Port fees may issue different types of Trading Makers and Floor Brokers to pay incurred, before any credits/adjustments Permits and determine the fees for those reduced rates for their Trading Permits have been applied (i.e. an electronic Trading Permits.49 Pre-migration, the if they committed in advance to a MM can earn a credit from 15% to Exchange issued the following three specific tier that includes a minimum 65%). types of Trading Permits: (1) Market- number of eligible Market-Maker and Maker Trading Permits, which were Floor Broker Trading Permits, Bandwidth Packets assessed a monthly fee of $5,000 per respectively, for each calendar year.54 As described above, post-migration, permit; (2) Floor Broker Trading As noted above, Trading Permits were the Exchange utilizes a variety of logical Permits, which were assessed a monthly tied to bandwidth allocation, logins and ports. Part of this functionality is similar fee of $9,000 per permit; and (3) appointment costs, and as such, TPH to bandwidth packets that were Electronic Access Permits (‘‘EAPs’’), organizations may hold multiple previously available on the Exchange. which were assessed a monthly fee of Trading Permits of the same type in Bandwidth packets restricted the $1,600 per permit. The Exchange also order to meet their connectivity and maximum number of orders and quotes offered separate Market-Maker and appointment cost needs. Post-Migration, per second. Post-migration, market Electronic Access Permits for the Global bandwidth allocation, logins and participants may similarly have Trading Hours (‘‘GTH’’) session, which appointment costs are no longer tied to multiple Logical Ports and/or BOE Bulk were assessed a monthly fee of $1,000 a Trading Permit, and as such, the Ports as they may have had bandwidth per permit and $500 per permit Exchange proposes to modify its packets to accommodate their order and respectively.50 For further color, a Trading Permit structure. Particularly, quote entry needs. As such, the Market-Maker Trading Permit entitled in connection with the migration, the Exchange proposes to eliminate all of the holder to act as a Market-Maker, Exchange adopted separate on-floor and the current Bandwidth Packet fees.48 including a Market-Maker trading off-floor Trading Permits for Market- The Exchange believes that the remotely, DPM, eDPM, or LMM, and Makers and Floor Brokers, adopted a proposed pricing implications of going also provided an appointment credit of new Clearing TPH Permit, and proposes beyond specified bandwidth described 1.0, a quoting and order entry to modify the corresponding fees and above in the logical connectivity fees bandwidth allowance, up to three discounts. As was the case pre- section will be able to otherwise logins, trading floor access and TPH migration, the proposed access fees mitigate message traffic as necessary. status.51 A Floor Broker Trading Permit discussed below will continue to be CAS Servers entitled the holder to act as a Floor non-refundable and will be assessed Broker, provided an order entry through the integrated billing system By way of background, in order to bandwidth allowance, up to 3 logins, during the first week of the following connect to the legacy Cboe Command, trading floor access and TPH status.52 month. If a Trading Permit is issued which allowed a TPH to trade on the Lastly, an EAP entitled the holder to during a calendar month after the first Cboe Options System, a TPH had to electronic access to the Exchange. trading day of the month, the access fee connect via either a CMI or FIX interface Holders of EAPs must have been broker- for the Trading Permit for that calendar (depending on the configuration of the dealers registered with the Exchange in month is prorated based on the TPH’s own systems). For TPHs that one or more of the following capacities: remaining trading days in the calendar connected via a CMI interface, they had (a) Clearing TPH, (b) TPH organization month. Trading Permits will be renewed to use CMI CAS Servers. In order to approved to transact business with the ensure that a CAS Server was not 53 Id. overburdened by quoting activity for 54 Due to the October 7 migration, the Exchange 49 See Cboe Options Rules 3.1(a)(iv)–(v). had amended the TP Sliding Scale Programs to Market-Makers, the Exchange allotted 50 The fees were waived through September 2019 provide that any commitment to Trading Permits each Market-Maker a certain number of for the first Market-Maker and Electronic Access under the TP Sliding Scales shall be in place GTH Trading Permits. through September 2019, instead of the calendar 48 See Cboe Options Fees Schedule, Bandwidth 51 See Cboe Options Fees Schedule. year. See Cboe Options Fees Schedule, Footnotes 24 Packet Fees. 52 Id. and 25.

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automatically for the next month unless Additionally, the Exchange proposes a single Trading Permit and therefore the Trading Permit Holder submits to eliminate its fees for Global Trading TPHs no longer need to have multiple written notification to the Membership Hours Trading Permits. Particularly, the permits for each type of electronic Services Department by 4 p.m. CT on Exchange proposes to provide that any Trading Permit. Market-Makers must the second-to-last business day of the Market-Maker EAP, EAP and Clearing still select class appointments in the prior month to cancel the Trading TPH Permit provides access (at no classes they seek to make markets Permit effective at or prior to the end of additional cost) to the GTH session.57 electronically.60 Particularly, a Market- the applicable month. Trading Permit Additionally, the Exchange proposes to Maker firm will only be required to have Holders will only be assessed a single amend Footnote 37 of the Fees Schedule one permit and will thereafter be monthly fee for each type of electronic regarding GTH in connection with the charged for one or more ‘‘Appointment Trading Permit it holds. migration. Currently Footnote 37 Units’’ (which will scale from 1 ‘‘unit’’ First, TPHs no longer need to hold provides that separate access permits to more than 5 ‘‘units’’), depending on multiple permits for each type of and connectivity is needed for the GTH which classes they elect appointments electronic Trading Permit (i.e., session. The Exchange proposes to in. Appointment Units will replace the electronic Market-Maker Trading eliminate this language as that is no standard 1.0 appointment cost, but Permits and/or and Electronic Access longer the case post-migration (i.e., an function in the same manner. Permits). Rather, for electronic access to electronic Trading Permits will grant Appointment weights (formerly known the Exchange, a TPH need only access to both sessions and physical and as ‘‘appointment costs’’) for each purchase one of the following permit logical ports may be used in both appointed class will be set forth in Cboe types for each trading function the TPH sessions, eliminating the need to Options Rule 5.50(g) and will be intends to perform: Market-Maker purchase separate connectivity). The summed for each Market-Maker in order Electronic Access Permit (‘‘MM EAP’’) Exchange also notes that in connection to determine the total appointment in order to act as an off-floor Market- with migration, the Book used during units, to which fees will be assessed. Maker and which will continue to be Regular Trading Hours (‘‘RTH’’) will be This was the manner in which the tier assessed a monthly fee of $5,000, the same Book used during GTH (as costs per class appointment were Electronic Access Permit (‘‘EAP’’) in compared to pre-migration where the summed to meet the 1.0 appointment order to submit orders electronically to Exchange maintained separate Books for cost, the only difference being that if a the Exchange 55 and which will be each session). The Exchange therefore Market-Maker exceeds this ‘‘unit’’, then assessed a monthly fee of $3,000, and a also proposes to eliminate language in their fees will be assessed under the Clearing TPH Permit, for TPHs acting Footnote 37 stating that GTH is a ‘‘unit’’ that corresponds to the total of solely as a Clearing TPH, which will be segregated trading session and that there their appointment weights, as opposed assessed a monthly fee of $2,000 (and is is no market interaction between the to holding another Trading Permit more fully described below). For two sessions. because it exceeded the 1.0 ‘‘unit’’. example, a TPH organization that The Exchange next proposes to adopt Particularly, the Exchange proposes to wishes to act as a Market-Maker and MM EAP Appointment fees. By way of adopt a new MM EAP Appointment also submit orders electronically in a background, a registered Market-Maker Sliding Scale. Appointment Units for non-Market Maker capacity would have may currently create a Virtual Trading each assigned class will be aggregated to purchase one MM EAP and one EAP. Crowd (‘‘VTC’’) Appointment, which for each Market-Maker and Market- TPHs will be assessed the monthly fee confers the right to quote electronically Maker affiliate. If the sum of in an appropriate number of classes for each type of Permit once per appointments is a fractional amount, the selected from ‘‘tiers’’ that have been electronic access capacity. total will be rounded up to the next structured according to trading volume Next, the Exchange proposes to adopt highest whole Appointment Unit. The statistics, except for the AA tier.58 Each a new Trading Permit, exclusively for following lists the progressive monthly Trading Permit historically held by a 61 Clearing TPHs that are approved to act fees for Appointment Units: Market-Maker had an appointment solely as a Clearing TPH (as opposed to credit of 1.0. A Market-Maker could those that are also approved in a Monthly select for each Trading Permit the Market-Maker EAP Quantity fees capacity that allows them to submit appointments Market-Maker held any combination of (per unit) orders electronically). Currently any classes whose aggregate appointment TPH that is registered to act as a Appointment Units .... 1 $0 cost did not exceed 1.0. A Market-Maker 2 6,000 Clearing TPH must purchase an EAP, could not hold a combination of whether or not that Clearing TPH acts 3 to 5 4,000 appointments whose aggregate >5 3,100 solely as a Clearing TPH or acts as a appointment cost was greater than the Clearing TPH and submits orders number of Trading Permits that Market- As noted above, upon migration the electronically. The Exchange proposes Maker held.59 Exchange required separate Trading to adopt a new Trading Permit, for any As discussed, post-migration, Permits for on-floor and off-floor TPH that is registered to act solely as bandwidth allocation, logins and activity. As such, the Exchange Clearing TPH at a discounted rate of appointment costs are no longer tied to $2,000 per month.56 60 See Cboe Options Rule 5.50(a). 57 The Exchange notes that Clearing TPHs must be 61 For example, if a Market-Maker’s total 55 EAPs may be purchased by TPHs that both properly authorized by the Options Clearing appointment costs amount to 3.5 unites, the Market- clear transactions for other TPHs (i.e., a ‘‘Clearing Corporation (‘‘OCC’’) to operate during the Global Maker will be assessed a total monthly fee of TPH’’) and submit orders electronically. Trading Hours session and all TPHs must have a $14,000 (1 appointment unit at $0, 1 appointment 56 Cboe Option Rules provides the Exchange Letter of Guarantee to participate in the GTH unit at $6,000 and 2 appointment units at $4,000) authority to issue different types of Trading Permits session (as is the case today). as and for appointment fees and $5,000 for a which allows holders, among other things, to act in 58 See Cboe Options Rule 5.50 (Appointment of Market-Maker Trading Permit, for a total monthly one or more trading functions authorized by the Market-Makers). sum of $19,000, where a Market-Maker currently Rules. See Cboe Options Rule 3.1(a)(iv). The 59 For example, if a Market-Maker selected a (i.e., prior to migration) with a total appointment Exchange notes that currently 17 out of 38 Clearing combination of appointments that has an aggregate cost of 3.5 would need to hold 4 Trading Permits TPHs are acting solely as a Clearing TPH on the appointment cost of 2.5, that Market-Maker must and would therefore be assessed a monthly fee of Exchange. hold at least 3 Market-Maker Trading Permits. $20,000.

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proposes to maintain a Floor Broker As briefly described above, the Trading Permits, respectively, for each Trading Permit and adopt a new Market- Exchange currently maintains TP calendar year. The Exchange proposes Maker Floor Permit for on-floor Market- Sliding Scales, which allow Market- to eliminate the current TP Sliding Makers. In addition, RUT, SPX, and VIX Makers and Floor Brokers to pay Scales, including the requirement to Tier Appointment fees will be charged reduced rates for their Trading Permits commit to a specific tier, and replace it separately for Permit, as discussed more if they commit in advance to a specific with new TP Sliding Scales as fully below. tier that includes a minimum number of follows: 62 eligible Market-Maker and Floor Broker

Current Proposed Floor TPH permits Current permit qty monthly fee Proposed monthly fee (per permit) permit qty (per permit)

Market-Maker Floor Permit ...... 1–10 $5,000 1 $6,000 11–20 3,700 2 to 5 4,500 21 or more 1,800 6 to 10 3,500 ...... >10 2,000 Floor Broker Permit ...... 1 9,000 1 7,500 2–5 5,000 2 to 3 5,700 6 or more 3,000 4 to 5 4,500 ...... >5 3,200

Floor Broker ADV Discount contracts executed per day over the per month VIX Tier Appointment is Footnote 25, which governs rebates on course of a calendar month in all assessed to any Market-Maker Trading Floor Broker Trading Permits, currently underlying symbols, while the rebate Permit Holder that either (i) has an SPX provides that any Floor Broker that amount will be modified to be a Tier Appointment at any time during a executes a certain average of customer percentage of the TPH’s Floor Broker calendar month and trades at least 100 or professional customer/voluntary Permit total costs, instead of a straight VIX contracts while that appointment is 63 customer (collectively ‘‘customer’’) rebate. The criteria and corresponding active or (ii) conducts at least 1000 open 64 open-outcry contracts per day over the percentage rebates are noted below. outcry transaction in VIX at any time during the month. Lastly, the $1,000 course of a calendar month in all Floor underlying symbols excluding Floor broker RUT Tier Appointment is assessed to broker ADV ADV permit any Market-Maker Trading Permit Underlying Symbol List A (except RLG, discount rebate RLV, RUI, and UKXM), DJX, XSP, and tier (percent) Holder that either (i) has an RUT Tier subcabinet trades (‘‘Qualifying Appointment at any time during a Symbols’’), will receive a rebate on that 1 ...... 0 to 99,999 ...... 0 calendar month and trades at least 100 2 ...... 100,000 to 174,999 ..... 15 RUT contracts while that appointment TPH’s Floor Broker Trading Permit Fees. 3 ...... >174,999 ...... 25 Specifically, any Floor Broker Trading is active or (ii) conducts at least 1000 Permit Holder that executes an average Next, the Exchange proposes to open outcry transaction in RUT at any of 15,000 customer (‘‘C’’ origin code) modify its SPX, VIX and RUT Tier time during the month. and/or professional customer and Appointment Fees. Currently, these fees Because the Exchange is separating voluntary customer (‘‘W’’ origin code) are assessed to any Market-Maker TPH Market-Maker Trading Permits for open-outcry contracts per day over the that either (i) has the respective SPX, electronic and open-outcry market- course of a calendar month in VIX or RUT appointment at any time making, the Exchange will be assessing Qualifying Symbols will receive a rebate during a calendar month and trades a separate Tier Appointment Fees for each of $9,000 on that TPH’s Floor Broker specified number of contracts or (ii) type of Market-Maker Trading Permit. Trading Permit fees. Additionally, any trades a specified number of contracts in The Exchange proposes that a MM EAP Floor Broker that executes an average of open outcry during a calendar month. will be assessed the Tier Appointment 25,000 customer open-outcry contracts More specifically, the Fees Schedule Fee whenever the Market-Maker per day over the course of a calendar provides that the $3,000 per month SPX executes the corresponding specified month in Qualifying Symbols will Tier Appointment is assessed to any number of contracts, if any. The receive a rebate of $14,000 on that Market-Maker Trading Permit Holder Exchange also proposes to modify the TPH’s Floor Broker Trading Permit fees. that either (i) has an SPX Tier threshold number of contracts a Market- The Exchange proposes to maintain, but Appointment at any time during a Maker must execute in a month to modify, its discount for Floor Broker calendar month and trades at least 100 trigger the fee for SPX, VIX and RUT. Trading Permit fees. First, the SPX contracts while that appointment is Particularly, for SPX, the Exchange measurement criteria to qualify for a active or (ii) conducts any open outcry proposes to eliminate the 100 contract rebate will be modified to only include transaction in SPX or SPX Weeklys at threshold for electronic SPX customer (‘‘C’’ origin code) open-outcry any time during the month. The $2,000 executions.65 The Exchange notes that

62 In light of the proposed change to eliminate the currently set forth under Footnote 25, the Exchange that the SPX Tier Appointment Fee will be assessed TP Sliding Scale, the Exchange proposes to proposes to eliminate Footnote 25 in its entirety. to any Market-Maker EAP that executes at least eliminate Footnote 24 in its entirety. 65 The Exchange notes that subsequent to the 1,000 contracts in SPX (including SPXW) excluding 63 As is the case today, the Floor Broker ADV Original Filing that proposed these changes on contracts executed during the opening rotation on October 1 and 2, 2019 (SR–CBOE–2019–077 and the final settlement date of VIX options and futures Discount will be available for all Floor Broker SR–CBOE–2019–082), and subsequent to the with the expiration used in the VIX settlement Trading Permits held by affiliated Trading Permit Second Proposed Rule Change filing that proposed calculation in filing No. SR–CBOE–2019–124. The Holders and TPH organizations. these changes on November 29, 2019 (SR–CBOE– additions proposed by filing SR–CBOE–2019–124 64 In light of the proposal to eliminate the TP 2019–111), the Exchange amended the proposed are double underlined in Exhibit 5A and the Sliding Scales and the Floor Broker rebates Market-Maker Tier Appointment fees to provide deletions are doubled bracketed in Exhibit 5A.

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historically, all TPHs that trade SPX and facilitating transactions in some of which have similar or lower electronically executed more than 100 securities, to remove impediments to connectivity fees.71 Based on publicly contracts electronically each month (i.e., and perfect the mechanism of a free and available information, no single options no TPH electronically traded between 1 open market and a national market exchange has more than 17% of the and 100 contracts of SPX). As no TPH system, and, in general, to protect market share as of October 21, 2020.72 would currently be negatively impacted investors and the public interest. Further, low barriers to entry mean that by this change, the Exchange proposes Additionally, the Exchange believes the new exchanges may rapidly and to eliminate the threshold for SPX and proposed rule change is consistent with inexpensively enter the market and offer align the electronic SPX Tier Section 6(b)(4) of the Act,69 which additional substitute platforms to Appointment Fee with that of the floor requires that Exchange rules provide for further compete with the Exchange. For SPX Tier Appointment Fee, which is the equitable allocation of reasonable example, there have been 4 exchanges not subject to any executed volume dues, fees, and other charges among its that have been added in the U.S. options threshold. For the VIX and RUT Tier Trading Permit Holders and other markets in the last 5 years (i.e., Cboe appointments, the Exchange proposes to persons using its facilities. Additionally, EDGX Inc., Nasdaq MRX, LLC, MIAX increase the threshold from 100 the Exchange believes the proposed rule Pearl, LLC and MIAX Emerald LLC). contracts a month to 1,000 contracts a change is consistent with the Section There is also no regulatory 6(b)(5) 70 requirement that the rules of month. The Exchange notes the Tier requirement that any market participant an exchange not be designed to permit Appointment Fee amounts are not connect to any one options exchange, 66 unfair discrimination between changing. In connection with the that any market participant connect at a proposed changes, the Exchange customers, issuers, brokers, or dealers. The Exchange first stresses that the particular connection speed or act in a proposes to relocate the Tier particular capacity on the Exchange, or Appointment Fees to a new table and proposed changes were not designed with the objective to generate an overall trade any particular product offered on eliminate the language in the current an exchange. Moreover, membership is respective notes sections of each Tier increase in access fee revenue, as demonstrated by the anticipated loss of not a requirement to participate on the Appointment Fee as it is no longer Exchange. A market participant may necessary. revenue discussed above. Rather, the proposed changes were prompted by the submit orders to the Exchange via a TPH 73 Trading Permit Holder Regulatory Fee Exchange’s technology migration and broker. Indeed, the Exchange is unaware of any one options exchange The Fees Schedule provides for a the adoption of a new (and improved) whose membership includes every Trading Permit Holder Regulatory Fee of connectivity infrastructure, rendering registered broker-dealer. In fact, the $90 per month, per RTH Trading Permit, the pre-migration structure obsolete. Exchange believes that as of October 21, applicable to all TPHs, which fee helps Such changes accordingly necessitated 2020, only 3 broker-dealers out of more closely cover the costs of an overhaul of the Exchange’s previous approximately 250 broker-dealers that regulating all TPHs and performing access fee structure and corresponding are members of at least one exchange regulatory responsibilities. In light of fees. Moreover, the proposed changes that lists options for trading were the changes to the Exchange’s Trading more closely align the Exchange’s access members of all 16 options exchanges.74 Permit structure, the Exchange proposes fees to those of its Affiliated Exchanges, Additionally, several broker-dealers are to eliminate the TPH Regulatory Fee. and reasonably so, as the Affiliated members of only a single exchange that The Exchange notes that there is no Exchanges offer substantially similar lists options for trading.75 The Exchange regulatory requirement to maintain this connectivity and functionality and are has also identified numerous broker- fee. on the same platform that the Exchange has now migrated to. dealers that are members of other 2. Statutory Basis The Exchange also operates in a options exchanges, but not the The Exchange believes the proposed highly competitive environment. The Exchange. For example, the Exchange rule change is consistent with the SEC Division of Trading and Markets’ has identified approximately 25 broker- Securities Exchange Act of 1934 (the Fee Guidance provides that in dealers that are members of Nasdaq ISE, ‘‘Act’’) and the rules and regulations determining whether a proposed fee is LLC (an exchange that lists only thereunder applicable to the Exchange constrained by significant competitive options), but not Cboe Exchange, Inc and, in particular, the requirements of forces, the Commission will consider Section 6(b) of the Act.67 Specifically, whether there are reasonable substitutes 71 See e.g., Affiliated Exchange Fee Schedules. the Exchange believes the proposed rule for the product or service that is the See also e.g., BOX Options Fees Schedule, Section subject of a proposed fee. As described VI (Technology Fees) and Section IX (Participant change is consistent with the Section Fees). 6(b)(5) 68 requirements that the rules of in further detail below, the Exchange 72 See Cboe Global Markets U.S. Options Market an exchange be designed to prevent believes substitutable products and Volume Summary (October 21, 2020), available at _ fraudulent and manipulative acts and services are in fact available to market https://markets.cboe.com/us/options/market statistics/. practices, to promote just and equitable participants, including, among other things, other options exchanges a 73 Such market participant would be subject to principles of trade, to foster cooperation the fees of that broker. The Exchange notes that and coordination with persons engaged market participant may connect to in such broker is not required to publicize, let alone in regulating, clearing, settling, lieu of the Exchange, indirect justify or file with the Commission its fees, and as processing information with respect to, connectivity to the Exchange via a third- such could charge the market participant any fees party reseller of connectivity and/or it deems appropriate, even if such fees would otherwise be considered potentially unreasonable 66 Floor Broker Trading Surcharges for SPX/ trading of any options product, or uncompetitive fees. SPXW and VIX are also not changing. The Exchange including proprietary products, in the 74 See SEC October 2020 Active Broker Dealer however, is creating a new table for Floor Broker Over-the-Counter (OTC) markets. Report, provided by the SEC Office of Managing Trading Surcharges and relocating such fees in the Indeed, there are currently 16 registered Executive on October 8, 2020. Fees Schedule in connection with the proposal to 75 options exchanges that trade options, Id. Approximately 7 broker-dealers are eliminate fees currently set forth in the ‘‘Trading members of the Cboe Exchange, Inc. only, Permit and Tier Appointment Fees’’ Table. approximately 7 broker-dealers are members of only 67 15 U.S.C. 78f(b). 69 15 U.S.C. 78f(b)(4). Nasdaq PHLX LLC, and approximately 3 broker- 68 15 U.S.C. 78f(b)(5). 70 15 U.S.C. 78f(b)(5). dealers are members of only Nasdaq ISE, Inc.

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(which also lists only options).76 connectivity to the Exchange, and they exchange.80 Moreover, of these 3 broker- Similarly, the Exchange has identified at do not purchase market data from the dealers, only 1 such broker-dealer least 4 broker-dealers that trade options Exchange. Accordingly, not only is there connects directly to the Exchange and and are members of one or more of the not an actual regulatory requirement to that broker-dealer does not provide Exchange’s affiliated options exchanges, connect to every options exchange, the connectivity to any other TPH. but not Cboe Exchange, Inc. Indeed, the Exchange believes there is also no ‘‘de Additionally, the Exchange notes that number of members at each exchange facto’’ or practical requirement as well, non-TPHs such as Service Bureaus and that trades options varies greatly. as further evidenced by the recent Extranets resell Cboe Options Particularly, the number of members of significant reduction in the number of connectivity.81 This indirect exchanges that trade options vary broker-dealers that are members of all connectivity is another viable between approximately 9 and 171 options exchanges. alternative for market participants to broker-dealers.77 Even the number of trade on the Exchange without The Exchange is also not aware of any members between the Exchange and its connecting directly to the Exchange 3 other options exchange affiliates vary. reason why any particular market (and thus not pay the Exchange’s Particularly, while the Exchange participant could not simply drop its connectivity fees), which alternative is currently has 92 members, Cboe C2 has connections and cease being a TPH of already being used by non-TPHs and 54 members, Cboe EDGX has 52 the Exchange if the Exchange were to further constrains the price that the members that trade options and Cboe establish ‘‘unreasonable’’ and Exchange is able to charge for BZX has 66 members that trade options. uncompetitive price increases for its connectivity to its Exchange. The The rule structure for options connectivity alternatives. As further Exchange notes that it could, but exchanges are also fundamentally evidence of the fact that market chooses not to, preclude market different from those of equities participants can and do disconnect from participants from reselling its exchanges. In particular, options market exchanges based on connectivity connectivity. The Exchange also participants are not forced to connect to pricing, R2G Services LLC (‘‘R2G’’) filed chooses not to adopt fees that would be (and purchase market data from) all a comment letter after BOX Exchange assessed to third-party resellers on a per options exchanges. For example, there LLC (‘‘BOX’’) proposed rule changes to customer basis (i.e., fee based on are many order types that are available increase its connectivity fees (SR–BOX– number of TPHs that connect to the in the equities markets that are not 2018–24, SRBOX–2018–37, and SR– Exchange indirectly via the third-party). utilized in the options markets, which BOX–2019–04).79 The R2G Letter stated, Indeed, the Exchange does not receive relate to mid-point pricing and pegged ‘‘[w]hen BOX instituted a $10,000/ any connectivity revenue when pricing which require connection to the month price increase for connectivity; connectivity is resold by a third-party, SIPs and each of the equities exchanges we had no choice but to terminate which often is resold to multiple in order to properly execute those connectivity into them as well as customers, some of whom are agency orders in compliance with best terminate our market data relationship. broker-dealers that have numerous execution obligations. Additionally, in The cost benefit analysis just didn’t customers of their own.82 Moreover, the the options markets, the linkage routing make any sense for us at those new Exchange has seen an increase in the and trade through protection are levels.’’ Accordingly, this example number of resellers since pre-migration, handled by the exchanges, not by the shows that if an exchange sets too high adding to the pool of potential individual members. Thus not of a fee for connectivity and/or market competitors. In sum, the Exchange connecting to an options exchange or data services for its relevant believes this creates and fosters a disconnecting from an options exchange marketplace, market participants can competitive environment and subjects does not potentially subject a broker- choose to disconnect from the the Exchange to competitive forces in dealer to violate order protection Exchange. Moreover, the Exchange does pricing its connectivity. Particularly, in requirements.78 Gone are the days when not assess any termination fee for a the event that a market participant the retail brokerage firms (such as market participant to drop its Fidelity, Schwab, and eTrade) were connectivity or membership, nor is the 80 The Exchange further notes that these 3 broker- members of the options exchanges— Exchange aware of any other costs that dealers represent different market participants. they are not members of the Exchange Particularly, 1 of these broker-dealers is a bulge would be incurred by a market bracket bank, 1 is a brokerage firm and 1 is a or its affiliates, they do not purchase participant to do so. The Exchange notes clearing firm. that in fact, a number of firms currently 81 Prior to migration, there were 13 firms that 76 Id. The Exchange notes this is an increase since do not participate on the Exchange or resold Cboe Options connectivity. Post-migration, June 2020, when approximately 20 broker-dealers the Exchange anticipated that there would be 19 were members of ISE but not Cboe Options. See participate on the Exchange though firms that resell Cboe Options connectivity (both SEC June 2020 Active Broker Dealer Report. sponsored access arrangements with physical and logical) and as of October 2020 there 77 See e.g., SEC June 2020 Active Broker Dealer other broker-dealers rather than by are 17 firms that resell Cboe Options connectivity. Report. More specifically, 1 exchange had 9 becoming a member. Additionally, as The Exchange does not have specific knowledge as members, 4 exchanges had between 36–50 to what latency a market participant may members, 5 exchanges had between 50–100 noted above, only 3 broker-dealers are experience using an indirect connection versus a members, 4 exchanges had between 100–150 currently members of all 16 options direct connection and notes it may vary by the members and 2 exchanges had more than 150 exchanges, which the Exchange believes service provided by the extranet provider and vary members. The Exchange notes however that some further demonstrates that, in addition to between extranet providers. The Exchange believes of these exchanges also trade equities and the however, that there are extranet providers able to Exchange is therefore unable to determine how the absence of a rule requirement to provide connections with a latency that is many members at each exchange trade options. connect to every option exchange, there comparable to latency experienced using a direct 78 The Exchange notes this discussion is is no prevailing business model that connection. consistent with the Fee Guidance suggestion that would practically require a broker- 82 The Exchange notes that resellers are not any discussion of alternatives should ‘‘include a dealer to connect to every single options required to publicize, let alone justify or file with discussion of how regulatory requirements, the Commission their fees, and as such could particularly best execution obligations, Regulation charge the market participant any fees it deems NMS Rule 611 (the Order Protection Rule), and/or 79 See Letter from Stefano Durdic, R2G, to appropriate (including connectivity fees higher than the Options Order Protection and Locked/Crossed Vanessa Countryman, Acting Secretary, the Exchange’s connectivity fees), even if such fees Market Plan (Options Linkage Plan), as applicable, Commission, dated March 27, 2019 (the ‘‘R2G would otherwise be considered potentially affect the competitive analysis.’’ Letter’’). unreasonable or uncompetitive fees.

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views the Exchange’s direct participants connected indirectly to the has the option to participate on an connectivity and access fees as more or Exchange. More specifically, in exchange without direct connectivity. less attractive than the competition, that December 2019, 47 TPHs connected Indeed, market participants choose if market participant can choose to directly to the Exchange and accounted and how to connect to a particular connect to the Exchange indirectly or for approximately 66% of the exchange and because it is a choice, the may choose not to connect to that Exchange’s volume, 46 TPHs connected Exchange must set reasonable exchange and connect instead to one or indirectly to the Exchange and connectivity pricing, otherwise more of the other 15 options markets. accounted for approximately 29% of the prospective members would not connect For example, two TPHs that connected Exchange’s volume and 4 TPHs utilized and existing members would disconnect directly to the Exchange pre-migration, both direct and indirect connections or connect through a third-party reseller began connecting indirectly via an and accounted for approximately 5% of of connectivity.91 87 extranet provider shortly after the the Exchange’s volume. In December Moreover, the Exchange notes that the October 2019 migration and currently 2019, TPHs that connected directly to Commission itself has repeatedly still connect via extranets. An the Exchange purchased a collective 179 expressed its preference for competition additional four TPHs transitioned to physical ports (including legacy over regulatory intervention in indirect connectivity from direct physical ports), 144 of which were 10 determining prices, products, and Gb ports and 35 of which were 1 Gb connectivity in or around February services in the securities markets. ports.88 The Exchange notes that of 2020, which was the first month after Particularly, in Regulation NMS, the those market participants that do the legacy Network Access Ports were Commission highlighted the importance connect to the Exchange, it is the decommissioned. The Exchange notes of market forces in determining prices individual needs of each market that it has not received any comments and SRO revenues and, also, recognized participant that determine the amount that, and has no evidence to suggest, the that current regulation of the market and type of Trading Permits and six total TPHs that transitioned from system ‘‘has been remarkably successful physical and logical connections to the direct connections to an indirect in promoting market competition in its Exchange.89 With respect to physical connections post-migration were the broader forms that are most important to connectivity, many TPHs were able to result of an undue financial burden investors and listed companies.’’ 92 purchase small quantities of physical The resulting from the proposed fee number of available exchanges to 83 ports. For example, approximately 36% changes. Rather, the Exchange connect to ensures increased believes the transitions demonstrate that of TPHs that connected directly to the Exchange purchased only one to two 1 competition in the marketplace, and indirect connectivity is in fact a viable constrains the ability of exchanges to option for market participants, therefore Gb ports, approximately 40% purchased only one to two 10 Gb ports, and charge supracompetitive fees for access reflecting a competitive environment to its market. The Exchange is also not that the Exchange must be mindful of approximately 40% had purchased a combined total of one to two ports (for aware of any evidence that has been when determining its connectivity offered or demonstrated that a market fees.84 It further demonstrates the both 1 Gb and 10 Gb). Further, no TPHs that connected directly to the Exchange share of approximately 17% provides manner in which market participants the Exchange with anti-competitive connect to the Exchange is entirely had more than five 1 Gb ports, and only 8.5% of TPHs that connected directly to pricing power. Indeed, the Exchange within the discretion of market believes for all the reasons articulated participants, who can consider the fees the Exchange had between six and ten 10 GB ports and only 8.5% had between above, that its market share does not charged by the Exchange and by provide it with anti-competitive pricing resellers when making decisions. ten and fourteen 10 Gb ports. There were also a combined total of 41 ports power. Moreover, the Exchange believes Additionally, pre-migration, in the fact that it can lose, and has lost, August 2019, the Exchange had 97 used for indirect connectivity (twenty- one 1 Gb ports and twenty 10 Gb market share demonstrates the members (TPH organizations), of which competitive forces to which the ports).90 The Exchange notes that all nearly half connected indirectly to the Exchange is subject. For example, in 85 types of members connected indirectly Exchange. Similarly, in December 2019 and through March 2020, the to the Exchange including Clearing 2019, after a new broker-dealer became Exchange generally had a market share firms, Floor Brokers, order flow a member of the Exchange in late percentage in the low to mid 20s. Since 86 providers, and on-floor and off-floor November 2019, the Exchange had 97 March 2020, the Exchange’s market Market-Makers, further reflecting the members, of which nearly half of the share has generally been in the mid to fact that each type of market participant high teens.93 Furthermore, the 83 The Exchange notes that TPHs are not required to specify to the Exchange why it opts to no longer 87 Between June 2017 and December 2019, the Exchange’s affiliated options exchanges be a TPH, or why it cancels its ports, nor is a non- number of TPHs that connected directly to the have substantially similar physical and TPH market participating required to specify to the Exchange ranged from 43 to 47 TPHs and on logical connectivity fees, Exchange why it opts to not be a TPH and directly average, accounted for an average of approximately notwithstanding a much lower market connect to the Exchange. 61% of the Exchange’s total volume each month. share ranging from approximately 84 In the post-migration period between February 88 Of the 4 TPHs that connected both directly and 2020 and June 2020, approximately 38 TPHs on indirectly to the Exchange, 1 TPH had two 1 Gb average were directly connected to the Exchange Ports and the remaining 3 TPHs had a combined 91 As shown above, the availability of 15 each month, which is notably fewer than the total of six 10 Gb ports. alternative options exchanges in addition to the approximately 45 TPHs that were directly 89 To assist market participants that are connected viable option of indirect connectivity demonstrates connected each month during the pre-migration or considering connecting to the Exchange, the that substitute connectivity products and services period between June 2017 through September 2019. Exchange provides detailed information and do exist, supporting the assertion the proposed fees 85 The Exchange notes that one firm terminated in specifications about its available connectivity are constrained by competitive forces. late September 2019, but that it believes it was alternatives in the Cboe C1 Options Exchange 92 See Securities Exchange Act Release No. 51808 unrelated to the migration and the proposed fee Connectivity Manual, as well as the various (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) changes. technical specifications. See http:// (‘‘Regulation NMS Adopting Release’’). 86 In February 2020, such member also became a markets.cboe.com/us/options/support/technical/. 93 See The Options Clearing Corporation, Market member of the Exchange’s affiliated options 90 The Exchange notes that it does not know how Data, Daily Volume, available at https:// exchanges, which have similar physical and logical many, and which kind of, connections each TPH www.theocc.com/Market-Data/Market-Data- connectivity fees to the proposed fees in this filing. that indirectly connects to the Exchange has. Reports/Volume-and-Open-Interest/Daily-Volume.

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2.5%–9%.94 As discussed extensively, if SPX options may compete with the services in the event of the exit of a an exchange sets too high of a fee for following products traded on other competitor is likely to be swiftly met by connectivity and/or market data services markets: Multiply-listed SPY options existing competitors.’’ 100 The for its relevant marketplace, market (options on the ETF), E-mini S&P 500 Commission further recognized that participants can choose to disconnect Options (options on futures), and E- while some exchanges may have a from the Exchange. Mini S&P 500 futures (futures on index). unique business model that is not The Exchange also believes that Additionally, exclusively listed VIX currently offered by competitors, a competition in the marketplace options may compete with the following competitor could create similar business constrains the ability of exchanges to products traded on other markets: models if demand were adequate, and if charge supracompetitive fees for access Multiply-listed VXX options (options on a competitor did not do so, the to its market, even if such market, like the ETF) and exclusively listed SPIKES Commission believes it would be likely the Exchange, offers proprietary options on the Miami International that new entrants would do so if the products exclusive to that market. Securities Exchange, LLC (‘‘MIAX’’).96 exchange with that unique business Notably, just as there is no regulatory Other options exchanges are also not model was otherwise profitable.101 requirement to become a member of any precluded from creating new Similarly, although the Exchange may one options exchange, there is also no proprietary products that may achieve have proprietary products not offered by regulatory requirement for any market similar objectives to (and therefore other competitors, not unlike unique participant to trade any particular compete with) the Exchange’s existing business models, a competitor could product, nor is there any requirement proprietary products. For example, create similar products to an existing that any Exchange create or indefinitely Nasdaq PHLX exclusively lists options proprietary product if demand were maintain any particular product.95 The on the Nasdaq-100, which options, like adequate. As noted above, other Exchange also highlights that market index options listed on the Exchange, exchanges, that have comparable participants may trade an Exchange’s offer investors an alternative method to connectivity fees, also currently offer proprietary products through a third- manage and hedge portfolio exposure to exclusively listed products.102 As such, party without directly or indirectly the U.S. equity markets. Indeed, even the Exchange is still very much subject connecting to the Exchange. though exclusively listed proprietary to competition and does not possess Additionally, market participants may products may not be offered by anti-competitive pricing power, even trade any options product, including competitors, a competitor could create with its offering of proprietary products. proprietary products, in the unregulated similar products if demand were Rather, the Exchange must still set Over-the-Counter (OTC) markets for adequate. As noted above for example, reasonable connectivity pricing, which there is no requirement for fees MIAX created its exclusive product otherwise prospective members would related to those markets to be public. SPIKES specifically to compete against not connect, and existing members 97 Given the benefits offered by trading VIX options. In connection with a would disconnect or connect through a options on a listed exchange, such as recently proposed amendment to the third-party reseller of connectivity, increased market transparency and National Market System Plan Governing regardless of what products its offers. heightened contra-party the Consolidated Audit Trail (‘‘CAT Recently, on October 16, 2020, the 98 creditworthiness due to the role of the NMS Plan’’), the Commission Commission approved a proposal by Options Clearing Corporation as issuer discussed the existence of competition NYSE National, Inc. (‘‘NYSE National’’) and guarantor, the Exchange generally in the marketplace generally, and to adopt fees for the NYSE National seeks to incentivize market participants particularly for exchanges with unique Integrated Feed (a NYSE National-only to trade options on an exchange, which business models. Specifically, the market data feed), finding that NYSE further constrains connectivity pricing. Commission contemplated the National provided sufficient Market participants may also access possibility of a forced exit by an information to demonstrate that it was other exchanges to trade other similar or exchange as a result of a proposed subject to significant substitution-based competing proprietary or multi-listed amendment that could reduce the competitive forces in setting the amount of CAT funding a participant products. Alternative products to the proposed fees.103 In the approval order, could recover if certain implementation Exchange’s proprietary products may milestones were missed. The include other options products, 100 Id. Commission acknowledged that, even if 101 including options on ETFs or options Id. an exchange were to exit the 102 futures, as well as particular ETFs or See e.g., Nasdaq PHLX LLC Rules, (Options 7 marketplace due to its proposed fee- Pricing Schedule), Section 8A (Permit and futures. For example, exclusively listed related change, it would not Registration Fees) which provide for floor permit significantly impact competition in the fees between $4,000 to $6,000 per permit and 94 See Cboe Global Markets U.S. Options Market Section 9B (Port Fees), which provides various port Volume Summary (August 31, 2020), available at market for exchange trading services fees ranging from $500 to $1,250 per port. See also https://markets.cboe.com/us/options/market_ because these markets are served by Nasdaq PHLX LLC Rules, General 8 Connectivity, statistics/. multiple competitors.99 The which provides for monthly physical connectivity 95 If an option class is open for trading on another Commission explicitly stated that fees including fees for 1 Gb physical connections national securities exchange, the Exchange may priced at $2,500 per port and for 10 Gb physical delist such option class immediately. For ‘‘[c]onsequently, demand for these connections starting at $10,000 per port and see proprietary products, the Exchange may determine MIAX Options Fees Schedule, Section 3b to not open for trading any additional series in that 96 MIAX has described SPIKES options as (Membership Fees, Monthly Trading Permit Fee), option class; may restrict series with open interest ‘‘designed specifically to compete head-to-head which provides for trading permit fees ranging from ® to closing transactions, provided that, opening against Cboe’s proprietary VIX product.’’ See $1,500 to $22,000 per permit (which may include transactions by Market-Makers executed to MIAX Press Release, SPIKES Options Launched on market-maker appointment costs) and Section 5 accommodate closing transactions of other market MIAX, February 21, 2019, available at https:// (System Connectivity Fees) which provides for _ participants and opening transactions by TPH www.miaxoptions.com/sites/default/files/press monthly physical connectivity fees including fees _ _ _ organizations to facilitate the closing transactions of release-files/MIAX Press Release 02212019.pdf. for 1 Gb physical connections priced at $1,400 per public customers executed as crosses pursuant to 97 Id. port and for 10 Gb physical connections priced at and in accordance with Rule 6.74(b) or (d) may be 98 See Securities Exchange Act Release No. 86901 $6,100 per port. permitted; and may delist the option class when all (September 9, 2019), 84 FR 48458 (September 13, 103 See Securities Exchange Act Release No. series within that class have expired. See Cboe Rule 2019) (File No. S7–13–19). 90217 (October 16, 2020) (SR–NYSENAT–2020– 4.4, Interpretations and Policies .11. 99 Id. Continued

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the Commission cited NetCoalition I, in services (i.e., broker-dealers who are to significant competitive forces in which the D.C. Circuit in vacating the members of at least one options setting the terms of its proposed fees. Commission’s 2008 ArcaBook Approval exchange and may become a member of, Moreover, the Commission has found Order, stated ‘‘the existence of a and/or connect directly to, the that, if an exchange meets the burden of substitute does not necessarily preclude Exchange). Additionally, the Exchange demonstrating it was subject to market power,’’ that ‘‘whether a market provided the number of broker-dealers significant competitive forces in setting is competitive notwithstanding that are members of the Exchange its fees, the Commission ‘‘will find that potential alternatives depends on factors (approximately 92—which is less than its fee rule is consistent with the Act such as the number of buyers who half of the potential user base) and the unless ‘‘there is a substantial consider other products interchangeable number of members that have connected countervailing basis to find that the and at what prices,’’ and that ‘‘[t]he directly to the Exchange (approximately terms’’ of the rule violate the Act or the inquiry into whether a market for a 38—which is less than half of the rules thereunder.’’ 109 The Exchange is product is competitive . . . focuses on Exchange’s members). The Exchange not aware of, nor has the Commission . . . the product’s elasticity of also provided information articulated, a substantial countervailing demand.’’ 104 The Commission also demonstrating that market participants basis for finding the proposal violates noted that the court found that the have access to one or more substitutes the Act or the rules thereunder. Commission’s analysis of alternatives in to (i) trade options without becoming a In addition to all the reasons the 2008 ArcaBook Approval Order did member of the Exchange (e.g., the discussed above, the Exchange believes not reveal the number of potential users availability of 15 other options its proposed fees are reasonable in light of the data or how they might react to exchanges, the ability to trade through of the numerous benefits the new a change in price.105 The court also a third-party, and the ability to trade connectivity infrastructure provides stated that there was no information options products in the OTC market) market participants. As described, the regarding how many traders accessed and (ii) connect indirectly to the post-migration connectivity architecture NYSE Arca’s depth-of-book data during Exchange (e.g., the ability to connect provides for a latency equalized the period it was offered without charge indirectly through one of 17 third-party infrastructure, improved system (and thus how many traders might have resellers). The Exchange also cited to performance, and increased sustained been interested in paying for NYSE data demonstrating TPHs can, and have, order and quote per second capacity. As Arca’s depth-of-book data), or whether transitioned their direct access to such, even where a fee for a particular the traders who wanted depth-of-book indirect access (6 TPHs transitioned to type or kind of connectivity may be data would have declined to purchase it indirect connectivity subsequent to this higher than it was to its pre-migration if met with a supracompetitive price.106 proposed rule change).107 Furthermore, equivalent, such increase is reasonable In contrast to the facts in the 2008 the Exchange provided information given the increased benefits market ArcaBook Approval Order, the relating to the number of market participants are getting for a similar or Commission pointed out in the NYSE participants that are either not members modestly higher price. Moreover, as National Approval Order that NYSE of the Exchange (at least 25 broker- noted above, the objective of the National had in fact provided dealers 108) or that do not or did not proposed fee changes was not to information regarding potential users of connect directly to the Exchange both generate an overall increase in access the proposed data feed, along with after and before the fee change fee revenue, but rather adopt fees in information regarding the reactions of (approximately 38). Lastly, the connection with a new (and improved) users to the change in price. The Exchange has described the reactions of connectivity infrastructure. Indeed, the Commission also cited information that TPHs to the price change, received both Exchange tried to the best of its ability was provided to show that market informally and formally, and which to approximate the overall connectivity participants did not subscribe to the again, were notably positive. The revenue generated by the Exchange’s data feed, even when the fee was offered Exchange stresses that the proof of pre-migration fees. Notably, the for free. The Commission ultimately competitive constraints does not depend Exchange’s pre-migration access fees relied on, in part, this information in on showing that members walked away, were previously filed with the making its determination that NYSE or threatened to walk away, from a Commission and not suspended nor National was subject to significant product due to a pricing change. Rather, disapproved.110 The Exchange further competitive forces in pricing their the very absence of such negative product. feedback (in and of itself, and 109 See Securities Exchange Act Release No. The Exchange points out that it too particularly when coupled with positive 59039 (December 2, 2008), 73 FR 74770, 74781 has provided similar types of feedback) is indicative that the proposed (December 9, 2008) (‘‘2008 ArcaBook Approval information to the Commission and fees are, in fact, reasonable and Order’’) (approving proposed rule change to establish fees for a depth-of-book market data believes such information supports the consistent with the Exchange being product). finding that the Exchange is subject to subject to competitive forces in setting 110 Although the Dodd-Frank Wall Street Reform significant substitution-based fees. Accordingly, the Exchange believes and Consumer Protection Act of 2010 (the ‘‘Dodd- competitive forces in pricing its the Commission has a sufficient basis to Frank Act’’) amended 19(b) of the Exchange Act to connectivity and access fees. For provide that SROs’ fee changes become determine that the Exchange was subject immediately effective on filing, the legislative instance, the Exchange noted there are history makes clear that while Congress intended to approximately 250 broker-dealers that 107 The Exchange again notes however that the streamline SROs’ rule filing procedures, the are potential ‘‘users’’ of the Exchange’s TPHs did not explain to the Exchange as to why proposed change did not ‘‘[diminish ]the SEC’s they terminated their direct connectivity in favor of authority to reject an improperly filed rule, connecting indirectly to the Exchange. disapprove a rule that is not consistent with the 005) (order approving proposed fees for NYSE 108 As discussed, the Exchange identified Exchange Act or [diminish] the applicable public National Integrated Feed) (‘‘NYSE National approximately 25 broker-dealers that are members notice and comment period.’’ See S. Rep 111–176, Approval Order’’). of Nasdaq ISE, LLC (an exchange that lists only at 106 (2010). The Commission therefore had every 104 See NetCoalition v. SEC, 615 F.3d 525, 542 options) and not members the Exchange. The right to pursue a suspension and disapproval order (D.C. Cir. 2010) (‘‘NetCoalition I’’) (internal Exchange believes there are additional broker- of prior rule filings that adopted or amended quotation marks omitted). dealers that trade options but do not trade on the connectivity fees that were in place prior to the 105 Id. Exchange, but uses the ISE comparison as an migration if it had believed any proposed fees in 106 Id. example. those rule filings were not consistent with the

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believes that the reasonableness of its participants for connectivity to the pre- describing the proposed post-migration proposed connectivity fees is migration system, and also assessed the fees, the TPH relayed to the Exchange demonstrated by the very fact that such impact on market participants to ensure that it would instead remain a member fees are in line with, and in some cases that the proposed fees would not create and add logical connectivity in light of lower than, the costs of connectivity at an undue financial burden on any the cost savings it expected to realize other Exchanges,111 including its own market participants, including smaller due to the proposed changes. The affiliated exchanges which have the market participants. Indeed, the Exchange believes this further same connectivity infrastructure as the Exchange received no comments from demonstrates competition within the Exchange currently does since any TPH suggesting that it was unduly market for exchange connectivity, migration.112 The Exchange notes these burdened by the proposed changes which as a result constrains fees the fees were similarly filed with the described herein, which were first Exchange may charge for that Commission and not suspended nor announced via Exchange Notice nearly connectivity. Another TPH, that prior to disapproved.113 Particularly, the two months in advance of the migration migration acted only as a proprietary Exchange’s affiliate C2, previously (now over one year ago),115 nor were trading firm, added the trading function migrated to the same trading platform to any timely comment letters received by as a Market-Maker on the Exchange which the Exchange has now migrated. the Commission by the comment period (which required the purchase of In that connection, C2 overhauled its submission deadline of November 12, additional trading permits and connectivity structure and adopted 2019. The Exchange again underscores connectivity). The Exchange also notes similar connectivity fees under similar the fact that no comment letters were that since migration, one TPH circumstances as those proposed received in response to its Second, terminated its membership with the herein.114 The Commission did not Third, Fifth or Sixth Proposed Rule Exchange but retained its membership suspend that C2 proposed rule change Change, and that no individual market with 10 other SROs.117 The Exchange and did not contend that C2 had failed participant has provided any written believes the fact that only one TPH to demonstrate its proposal was comments specifically suggesting that terminated in the past eleven months reasonable, equitable and not unfairly the Exchange has failed to provide but retained its memberships at other discriminatory. The C2 migration filing sufficient information in the Original, options exchanges demonstrates the was filed subsequent to the D.C. Circuit Second, Third, Fourth, Fifth, or Sixth proposed fees are appropriate and decision in Susquehanna Int’l Grp., LLC Proposed Rule Change to meets its reasonable and not unduly burdensome. v. SEC, 866 F.3d 442 (D.C. Cir. 2017), burden to demonstrate its proposed fees While the TPH that did terminate did meaning that such filing was subject to are consistent with the requirements of not specify to the Exchange why it the same (and current) standard for SEC the Exchange Act. As discussed, the ended its membership, if it had in fact review and approval as the standard to three comment letters the Exchange did determined that the Exchange’s which this filing is subject. receive on its Original Filing and the proposed connectivity fees did not make Furthermore, in determining the Fourth and Seventh Proposed Rule business sense for itself, for all the proposed fee changes discussed above, Changes were all submitted by the same reasons discussed above, it was free to the Exchange reviewed the current industry participant and consisted of leave the Exchange at no cost and retain competitive landscape, considered the conclusory statements and factual its membership with other SROs and/or fees historically paid by market inaccuracies. More importantly, the pursue new memberships. Exchange received three positive The proposed connectivity structure Exchange Act. Additionally, the Commission did comment letters from members (which and corresponding fees, like the pre- not request additional data or discussion in the Exchange believes is rare with migration connectivity structure and connection with prior rule filings regarding respect to fees), all of which expressed fees, continue to provide market connectivity fees, as it has with respect to the their support for the proposed fees; participants flexibility with respect to proposed fees in this filing (and its previous versions). In the absence of such an order, the noting the belief that the fees were how to connect to the Exchange based Exchange presumes that its pre-migration fees were reasonable and encouraging the on each market participants’ respective reasonable and consistent with the Exchange Act. Commission to allow the fees to remain business needs. For example, the 111 See e.g., Nasdaq PHLX and ISE Rules, General effective.116 amount and type of physical and logical Equity and Options Rules, General 8. Phlx and ISE Furthermore, the Exchange wishes to ports are determined by factors relevant each charge a monthly fee of $2,500 for each 1Gb connection, $10,000 for each 10Gb connection and highlight that at least two market and specific to each market participant, $15,000 for each 10Gb Ultra connection. See also participants have in fact expanded their including its business model, costs of Nasdaq Price List—Trading Connectivity. Nasdaq connectivity footprint since the connectivity, how its business is charges a monthly fee of $7,500 for each 10Gb implementation of the proposed fee segmented and allocated and volume of direct connection to Nasdaq and $2,500 for each direct connection that supports up to 1Gb. See also changes. One of those market messages sent to the Exchange. NYSE American Fee Schedule, Section V.B, and participants was a TPH that had Moreover, the Exchange notes that it Arca Fees and Charges, Co-Location Fees. NYSE discussed terminating its membership American and Arca each charge a monthly fee of from the Exchange altogether prior to 117 Two other Trading Permit Holders also $5,000 for each 1Gb circuit, $14,000 for each 10Gb migration. However, after that TPH terminated their respective memberships in the first circuit and $22,000 for each 10Gb LX circuit. quarter of 2020. The Exchange notes, however, that 112 reviewed the notice the Exchange issued See e.g., Affiliated Exchange Fee Schedules, one TPH consolidated its membership with an Physical Connectivity Fees. For example, Cboe affiliate and another TPH no longer appears to be BZX, Cboe EDGX and C2 each charge a monthly fee 115 See Exchange Notice ‘‘Cboe Options Exchange a registered broker-dealer. In the second quarter, of $2,500 for each 1Gb connection and $7,500 for Access and Capacity Fee Schedule Changes another TPH terminated its membership with the each 10Gb connection. Effective October 1, 2019 and November 1, 2019’’ Exchange but similarly merged its business with 113 For the same reason noted above, the Reference ID C2019081900. another TPH. In August 2020, a TPH terminated its Exchange presumes that the fees of other exchanges, 116 See Letters from Steve Crutchfield, Head of membership with the Exchange, along with all of including its affiliates, are reasonable, as required Market Structure, Chicago Trading Company its other SRO memberships as well. Lastly, in by the Exchange Act in the absence of any (‘‘CTC’’) and William Ellington, Managing Member/ September 2020, two TPHs terminated their suspension or disapproval order by the Commission CEO, X-Change Financial Access (‘‘XFA’’) to membership with the Exchange. One of those TPHs providing otherwise. Vanessa Countryman, Secretary, Commission, dated merged with another TPH and the other terminated 114 See Securities Exchange Act Release No. August 27, 2020. See also Letter from Lakeshore its memberships with other options exchanges at 83201 (May 9, 2018), 83 FR 22546 (May 15, 2018) Securities to Vanessa Countryman, Secretary, the same time it terminated its membership with (SR–C2–2018–006). Commission, dated August 31, 2020. the Exchange.

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does not have unlimited system ($5,000 per port). Under the proposed allocation of reasonable dues, fees and capacity to support an unlimited rule change, using the new Physical other charges as its fees for physical number of order and quote entry per Ports, that TPH has the option of connectivity are reasonably constrained second. Accordingly, the proposed utilizing one single port, instead of two by competitive alternatives, as connectivity fees, and connectivity ports, to receive both unicast and discussed above. The proposed amounts structure are designed to encourage multicast traffic, therefore paying only are in line with, and in some cases market participants to be efficient with $7,000 per month for a port that lower than, the costs of physical their respective physical and logical provides both connectivity types. The connectivity at other Exchanges,118 port usage. While the Exchange has no Exchange notes that pre-migration, including the Cboe Affiliated way of predicting with certainty the approximately 50% of TPHs maintained Exchanges, which have the same amount or type of connections market two or more 10 Gb Network Access connectivity infrastructure the Exchange participants will in fact purchase, if any, Ports. While the Exchange has no way has migrated to and some of which also the Exchange anticipates that like today, of predicting with certainty the amount offer exclusive products.119 The some market participants will continue or type of connections market Exchange does not believe it is to decline to connect and participate on participants will in fact purchase post- unreasonable to assess fees that are in the Exchange, some will participate on migration, the Exchange anticipated line with fees that have already been the Exchange via indirect connectivity, approximately 50% of the TPHs with established for the same physical ports some will only purchase one physical two or more 10 Gb Network Access used to connect to the same connection and/or logical port Ports to reduce the number of 10 Gb connectivity infrastructure and common connection, and others will purchase Physical Ports that they purchase and platform. The Exchange believes the multiple connections. expected the remaining 50% of TPHs to proposed Physical Port fees are In sum, the Exchange believes the maintain their current 10 Gb Physical equitable and not unreasonably proposed fees are reasonable and reflect Ports, but reduce the number of 1 Gb discriminatory as the connectivity a competitive environment, as the Physical Ports. Particularly, pre- pricing is associated with relative usage Exchange seeks to amend its access fees migration, a number of TPHs of the various market participants in connection with the migration of its maintained two 10 Gb Network Access (including smaller participants) and the technology platform, while still Ports to receive multicast data and two Exchange has not been presented with attracting market participants to 1 Gb Network Access Ports for order any evidence to suggest its proposed fee continue to be, or become, connected to entry (unicast connectivity). As the new changes would impose a barrier to entry the Exchange. 10 Gb Physical Ports are able to for participants, including smaller Physical Ports accommodate unicast connectivity participants. In fact, as noted above, the (order entry), TPHs may choose to Exchange is unaware of any market The Exchange believes increasing the participant that has terminated direct fee for the new 10 Gb Physical Port is eliminate their 1 Gb Network Access Ports and utilize the new 10 Gb Physical connectivity solely as a result of the reasonable because unlike, the current proposed fee changes. The Exchange 10 Gb Network Access Ports, the new Ports for both multicast and unicast connectivity. The Exchange notes that also believes increasing the fee for 10 Gb Physical Ports provides a connection Physical Ports and charging a higher fee through a latency equalized in February 2020, approximately 78% of TPHs that maintained a 1 Gb Network as compared to the 1 Gb Physical Port infrastructure with faster switches and is equitable as the 1 Gb Physical Port is also allows access to both unicast order Access Port pre-migration, no longer maintained a 1 Gb Physical Port. 1/10th the size of the 10 Gb Physical entry and multicast market data with a Port and therefore does not offer access single physical connection. As Additionally, as of February 2020, approximately 44% reduced the to many of the products and services discussed above, legacy Network Access offered by the Exchange (e.g., ability to Ports do not permit market participants quantity of 10 Gb Physical Ports they maintained as compared to pre- receive certain market data products). to receive unicast and multicast Thus the value of the 1 Gb alternative connectivity. As such, in order to migration. As discussed above, if a TPH deems is lower than the value of the 10 Gb receive both connectivity types pre- alternative, when measured based on migration, a market participant needed a particular exchange as charging the type of Exchange access it offers. to purchase and maintain at least two 10 excessive fees for connectivity, such Moreover, market participants that Gb Network Access Ports. The proposed market participants may opt to purchase 10 Gb Physical Ports utilize Physical Ports not only provide latency terminate their connectivity the most bandwidth and therefore equalization (i.e., eliminate latency arrangements with that exchange, and consume the most resources from the advantages between market participants adopt a possible range of alternative based on location) as compared to the strategies, including routing to the 118 See e.g., Nasdaq PHLX and ISE Rules, General legacy ports, but also alleviate the need applicable exchange through another Equity and Options Rules, General 8. Phlx and ISE to pay for two physical ports as a result participant or market center or taking each charge a monthly fee of $2,500 for each 1Gb of needing unicast and multicast that exchange’s data indirectly. connection, $10,000 for each 10Gb connection and connectivity. Accordingly, market Accordingly, if the Exchange charges $15,000 for each 10Gb Ultra connection. See also Nasdaq Price List—Trading Connectivity. Nasdaq participants who historically had to excessive fees, it would stand to lose not charges a monthly fee of $7,500 for each 10Gb purchase two separate ports for each of only connectivity revenues but also direct connection to Nasdaq and $2,500 for each multicast and unicast activity, will be revenues associated with the execution direct connection that supports up to 1Gb. See also able to purchase only one port, and of orders routed to it, and, to the extent NYSE American Fee Schedule, Section V.B, and Arca Fees and Charges, Co-Location Fees. NYSE consequently pay lower fees overall. For applicable, market data revenues. The American and Arca each charge a monthly fee of example, pre-migration if a TPH had Exchange believes that this competitive $5,000 for each 1Gb circuit, $14,000 for each 10Gb two 10 Gb legacy Network Access Ports, dynamic imposes powerful restraints on circuit and $22,000 for each 10Gb LX circuit. one of which received unicast traffic the ability of any exchange to charge 119 See e.g., Affiliated Exchange Fee Schedules, Physical Connectivity Fees. For example, Cboe and the other of which received unreasonable fees for physical BZX, Cboe EDGX and C2 each charge a monthly fee multicast traffic, that TPH would have connectivity. The Exchange also notes of $2,500 for each 1Gb connection and $7,500 for been assessed $10,000 per month that the proposal represents an equitable each 10Gb connection.

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network. As such, the Exchange believes because the Exchange is proposing to the matching engine, and firms the proposed fees for the 1 and 10 Gb replace them with fees associated with purchase additional logical ports when Physical Ports, respectively are the new logical connectivity options. they require more capacity due to their reasonably and appropriately allocated. The Exchange believes that it is business needs. reasonable to harmonize the Exchange’s Data Port Fees An obvious driver for a market logical connectivity options and participant’s decision to purchase The Exchange believes assessing the corresponding connectivity fees now multiple ports will be their desire to data port fee per data source, instead of that the Exchange is on a common send or receive additional levels of per port, is reasonable because it may platform as its Affiliated Exchanges. message traffic in some manner, either allow for market participants to Additionally, the Exchange notes the by increasing their total amount of maintain more ports at a lower cost and proposed fees are the same as, or in line message capacity available, or by applies uniformly to all market with, the fees assessed on its Affiliated segregating order flow for different participants. The Exchange believes the 121 Exchanges for similar connectivity. trading desks and clients to avoid proposed increase is reasonable The proposed logical connectivity fees latency sensitive applications from because, as noted above, market are also equitable and not unfairly competing for a single thread of participants may pay lower fees as a discriminatory because the Exchange resources. For example, a TPH may result of charging per data source and will apply the same fees to all market purchase one or more ports for its not per data port. Indeed, while the participants that use the same respective market making business based on the Exchange has no way of predicting with connectivity options. certainty the impact of the proposed amount of message traffic needed to The Exchange believes the proposed support that business, and then changes, the Exchange had anticipated Logical Port fees are reasonable as it is approximately 76% of the 51 market purchase separate ports for proprietary the same fee for Drop Ports and the first trading or customer facing businesses so participants who pay data port fees to five BOE/FIX Ports that is assessed for pay the same or lower fees upon that those businesses have their own CMI and FIX Logins, which the distinct connection, allowing the firm to implementation of the proposed change. Exchange is eliminating in lieu of As of December 2019, 46 market send multiple messages into the 120 logical ports. Additionally, while the Exchange’s trading system in parallel participants pay the proposed data proposed ports will be assessed the port fees, of which approximately 78% rather than sequentially. Some TPHs same monthly fees as current CMI/FIX that provide direct market access to market participants are paying the same Login IDs, the proposed logical ports or lower fees in connection with the their customers may also choose to provide for significantly more message proposed change. Monthly savings for purchase separate ports for different traffic. Specifically, the proposed BOE/ firms paying lower fees range from $500 clients as a service for latency sensitive FIX Logical Ports will provide for 3 to $6,000 per month. The Exchange also customers that desire the lowest times the amount of quoting 122 capacity anticipated that 19% of TPHs who pay possible latency to improve trading and approximately 165 times order data port fees would pay a modest performance. Thus, while a smaller TPH entry capacity. Similarly, the Exchange increase of only $500 per month. In that demands more limited message believes the proposed BOE Bulk Port December 2019, approximately 22% traffic may connect through a service fees are reasonable because while the market participants paid higher fees, bureau or other service provider, or may fees are higher than the CMI and FIX with the majority of those market choose to purchase one or two logical Login Id fees and the proposed Logical participants paying a modest monthly ports that are billed at a rate of $750 per Port fees, BOE Bulk Ports offer increase of $500 and only 3 firms paying month each, a larger market participant significantly more bandwidth capacity either $1,000 or $1,500 more per month. with a substantial and diversified U.S. than both CMI and FIX Login Ids and Additionally, as discussed above, the options business may opt to purchase Logical Ports. Particularly, a single BOE Exchange’s affiliate C2 has the same fee additional ports to support both the Bulk Port offers 45 times the amount of which is also assessed at the proposed volume and types of activity that they quoting bandwidth than CMI/FIX Login rate and assessed by data source instead conduct on the Exchange. While the Ids 123 and 5 times the amount of of per port. The proposed name change Exchange has no way of predicting with quoting bandwidth than Logical Ports is also appropriate in light of the certainty the amount or type of logical will offer. Additionally, the Exchange Exchange’s proposed changes and may ports market participants will in fact believes that its fees for logical alleviate potential confusion. purchase post-migration, the Exchange connectivity are reasonable, equitable, anticipated approximately 16% of TPHs Logical Connectivity and not unfairly discriminatory as they to purchase one to two logical ports, and Port fees are designed to ensure that firms that approximately 22% of TPHs to not use the most capacity pay for that purchase any logical ports. In December The Exchange believes it’s reasonable capacity, rather than placing that 2019, 13% of TPHs purchased one to to eliminate certain fees associated with burden on market participants that have two logical ports and 27% have not legacy options for connecting to the more modest needs. Although the purchased any logical ports. At the same Exchange and to replace them with fees Exchange charges a ‘‘per port’’ fee for time, market participants that desire associated with new options for logical connectivity, it notes that this fee more total capacity due to their business connecting to the Exchange that are is in effect a capacity fee as each FIX, needs, or that wish to segregate order similar to those offered at its Affiliated BOE or BOE Bulk port used for order/ flow by purchasing separate capacity Exchanges. In particular, the Exchange quote entry supports a specified allocations to reduce latency or for other believes it’s reasonable to no longer capacity (i.e., messages per second) in operational reasons, would be permitted assess fees for CMI and FIX Login IDs to choose to purchase such additional because the Login IDs were retired and 121 See Affiliated Exchange Fee Schedules, capacity at the same marginal cost. The rendered obsolete upon migration and Logical Port Fees. Exchange believes the proposal to assess 122 Based on the purchase of a single Market- 120 The Exchange notes the reduction in market Maker Trading Permit or Bandwidth Packet. an additional Logical and BOE Bulk port participants that pay the data port fee is due to firm 123 Based on the purchase of a single Market- fee for incremental usage per logical consolidations and acquisitions. Maker Trading Permit or Bandwidth Packet. port is reasonable because the proposed

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fees are modestly higher than the exchanges.126 Moreover, the Exchange to the fees charged for the services proposed Logical Port and BOE Bulk believes that offering purge port offered by the Exchange. fees and encourage users to mitigate functionality at the Exchange level Access Credits message traffic as necessary. The promotes robust risk management across Exchange notes one of its Affiliated the industry, and thereby facilitates The Exchange believes the proposal to Exchanges has similar implied port investor protection. Some market adopt credits for BOE Bulk Ports is fees.124 participants, and, in particular, larger reasonable, equitable and not unfairly discriminatory because it provides an firms, could build similar risk In sum, the Exchange believes that the opportunity for TPHs to pay lower fees functionality on their trading systems proposed BOE/FIX Logical Port and for logical connectivity. The Exchange BOE Bulk Port fees are appropriate as that permit the flexible cancellation of notes that the proposed credits are in these fees would ensure that market orders entered on the Exchange. lieu of the current credits that Market- participants continue to pay for the Offering Exchange level protections Makers are eligible to receive today for amount of capacity that they request, however, ensures that such Trading Permits fees. Although only and the market participants that pay the functionality is widely available to all Market-Makers may receive the most are the ones that demand the most firms, including smaller firms that may proposed BOE Bulk Port credits, resources from the Exchange. The otherwise not be willing to incur the Market-Makers are valuable market Exchange also believes that its logical costs and development work necessary participants that provide liquidity in the connectivity fees are aligned with the to support their own customized mass marketplace and incur costs that other goals of the Commission in facilitating cancel functionality. The Exchange market participants do not incur. For a competitive market for all firms that operates in a highly competitive market example, Market-Makers have a number trade on the Exchange and of ensuring in which exchanges offer connectivity of obligations, including quoting that critical market infrastructure has and related services as a means to obligations and fees associated with ‘‘levels of capacity, integrity, resiliency, facilitate the trading activities of TPHs appointments that other market availability, and security adequate to and other participants. As the proposed participants do not have. The Exchange maintain their operational capability Purge Ports provide voluntary risk also believes that the proposals provide and promote the maintenance of fair management functionality, excessive incremental incentives for TPHs to 125 and orderly markets.’’ fees would simply serve to reduce strive for the higher tier levels, which The Exchange believes waiving the demand for this optional product. The provide increasingly higher benefits for FIX/BOE Logical Port fee for one FIX Exchange also believes that the satisfying increasingly more stringent Logical Port used to access PULSe and proposed Purge Port fees are not criteria, including criteria to provide Silexx (for FLEX Trading) is reasonable unfairly discriminatory because they more liquidity to the Exchange. The because it will allow all TPHs using will apply uniformly to all TPHs that Exchange believes the value of the proposed credits is commensurate with PULSe and Silexx to avoid having to choose to use dedicated Purge Ports. the difficulty to achieve the pay a fee that they would otherwise The proposed Purge Ports are corresponding tier thresholds of each have to pay. The waiver is equitable and completely voluntary and, as they relate not unfairly discriminatory because program. solely to optional risk management First, the Exchange believes the TPHs using PULSe are already subject to functionality, no TPH is required or a monthly fee for the PULSe proposed BOE Bulk Port fee credits under any regulatory obligation to provided under AVP will incentivize Workstation, which the Exchange views utilize them. The Exchange believes that as inclusive of fees to access the the routing of orders to the Exchange by adopting separate fees for these ports Exchange. Moreover, while PULSe users TPHs that have both Market-Maker and ensures that the associated costs are today do not require a FIX/CMI Login agency operations, as well as incent borne exclusively by TPHs that Id, post-migration, due to changes to the Market-Makers to continue to provide connectivity infrastructure, PULSe users determine to use them based on their critical liquidity notwithstanding the will be required to maintain a FIX business needs, including Market- costs incurred with being a Market- Logical Port and as such incur a fee they Makers or similarly situated market Maker. More specifically, in the options previously would not have been subject participants. Similar to Purge Ports, industry, many options orders are to. Similarly, the Exchange believes that Spin and GRP Ports are optional routed by consolidators, which are firms the waiver for Silexx (for FLEX trading) products that provide an alternative that have both order router and Market- will encourage TPHs to transact means for market participants to receive Maker operations. The Exchange is aware not only of the importance of business using FLEX Options using the multicast data and request and receive providing credits on the order routing new Silexx System and encourage a retransmission of such data. As such side in order to encourage the trading of FLEX Options. Additionally, excessive fees would simply serve to submission of orders, but also of the the Exchange notes that it currently reduce demand for these products, operations costs on the Market-Maker waives the Login Id fees for Login IDs which TPHs are under no regulatory side. The Exchange believes the used to access the CFLEX system. obligation to utilize. All TPHs that proposed change to AVP continues to The Exchange believes its proposed voluntarily select these service options (i.e., Purge Ports, Spin Ports or GRP allow the Exchange to provide relief to fee for Purge Ports is reasonable as it is the Market-Maker side via the credits, also in line with the amount assessed Ports) will be charged the same amount for the same respective services. All albeit credits on BOE Bulk Port fees for purge ports offered by its Affiliated instead of Trading Permit fees. TPHs have the option to select any Exchanges, as well as other Additionally, the proposed credits may connectivity option, and there is no incentivize and attract more volume and differentiation among TPHs with regard 124 See e.g., Cboe C2 Options Exchange Fees liquidity to the Exchange, which will Schedule, Logical Connectivity Fees. benefit all Exchange participants 125 126 See Securities Exchange Act Release No. See Affiliated Exchange Fee Schedules, through increased opportunities to trade 73639 (November 19, 2014), 79 FR 72251 Logical Port Fees. See also, Nasdaq ISE Pricing (December 5, 2014) (File No. S7–01–13) (Regulation Schedule, Section 7(C). ISE charges a fee of $1,100 as well as enhancing price discovery. SCI Adopting Release). per month for SQF Purge Ports. While the Exchange has no way of

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predicting with certainty how many and to provide liquidity for the Exchange, exchanges. The proposed Trading which TPHs will satisfy the required notwithstanding the costs incurred by Permit fees are also equitable and not criteria to receive the credits, the purchasing multiple ports. Particularly, unfairly discriminatory because the Exchange had anticipated the proposal is intended to mitigate the Exchange will apply the same fees to all approximately two TPHs (out of costs incurred by traditional Market- market participants that use the same approximately 5 TPHs that are eligible Makers that focus on adding liquidity to type and number of Trading Permits. for AVP) to reach VIP Tiers 4 or 5 and the Exchange (as opposed to those that With respect to electronic Trading consequently earn the BOE Bulk Port fee provide and take, or just take). While Permits, the Exchange notes that TPHs credits for their respective Market- the Exchange cannot predict with previously requested multiple Trading Maker affiliate. For the month of certainty which Market-Makers will Permits because of bandwidth, login or October 2019, two TPHs received access reach Performance Tiers 4 and 5 each appointment cost needs. As described credits under Tier 5 and no TPHs month, based on historical performance above, in connection with migration, received credits under Tier 4. The it anticipated approximately 10 Market- bandwidth, logins and appointment Exchange notes that it believes its Makers would achieve Tiers 4 or 5. In costs are no longer tied to Trading reasonable, equitable and not unfairly October 2019, 12 Market-Makers Permits or Bandwidth Packets and as discriminatory to no longer provide achieved Tiers 4 or 5. Lastly, the such, the need to hold multiple permits access credits for Market-Makers whose Exchange notes that it is common and/or Bandwidth Packets is obsolete. affiliates achieve VIP Tiers 2 or 3 as the practice among options exchanges to As such, the Exchange believes the Exchange has adopted another differentiate fees for adding liquidity structure to require only one of each opportunity for all Market-Makers, not and fees for removing liquidity.127 type of applicable electronic Trading just Market-Makers that are part of a Permit is appropriate. Moreover, the Bandwidth Packets and CMI CAS Server consolidator, to receive credits on BOE Exchange believes offering separate Fees Bulk Port fees (i.e., credits available via marketing making permits for off-floor the proposed Market-Maker Access The Exchange believes it’s reasonable and on-floor Market-Makers provides for Credit Program). More specifically, to eliminate Bandwidth Packet fees and a cleaner, more streamlined approach to limiting the credits under AVP to the the CMI CAS Server fee because TPHs trading permits and corresponding fees. top two tiers enables the Exchange to will not pay fees for these connectivity Other exchanges similarly provide provide further credits under the new options and because Bandwidth Packets separate and distinct fees for Market- Market-Maker Access Credit Program. and CAS Servers have been retired and Makers that operate on-floor vs off-floor Furthermore, the Exchange notes that it rendered obsolete as part of the and their corresponding fees are similar is not required to provide any credits at migration. The Exchange believes that to those proposed by the Exchange.129 any tier level. even though it will be discontinuing The Exchange believes the proposed The Exchange believes the proposed Bandwidth Packets, the proposed fee for its MM EAP Trading Permits is BOE Bulk Port fee credits available for incremental pricing for Logical Ports reasonable as it is the same fee it TPHs that reach certain Performance and BOE Bulk Ports will continue to assesses today for Market-Maker Tiers under the Liquidity Provider encourage users to mitigate message Trading Permits (i.e., $5,000 per month Sliding Scale Adjustment Table is traffic. The proposed change is equitable per permit). Additionally, the proposed reasonable as the credits provide for and not unfairly discriminatory because fee is in line with, and in some cases reduced connectivity costs for those it will apply uniformly to all TPHs. even lower than, the amounts assessed Market-Makers that reach the required Access Fees for similar access fees at other thresholds. The Exchange believe it’s exchanges, including its affiliate C2.130 reasonable, equitable and not unfairly The Exchange believes the The Exchange believes the proposed discriminatory to provide credits to restructuring of its Trading Permits is EAP fee is also reasonable, and in line those Market-Makers that primarily reasonable in light of the changes to the with the fees assessed by other provide and post liquidity to the Exchange’s connectivity infrastructure Exchanges for non-Market-Maker Exchange, as the Exchange wants to in connection with the migration and electronic access.131 The Exchange the resulting separation of bandwidth continue to encourage Market-Makers notes that while the Trading Permit fee allowance, logins and appointment with significant Make Rates to continue is increasing, TPHs overall cost to to participate on the Exchange and add costs from each Trading Permit. The Exchange also believes that it is liquidity. Greater liquidity benefits all 129 See e.g., PHLX Section 8A, Permit and market participants by providing more reasonable to harmonize the Exchange’s Registration Fees. See also, BOX Options Fee trading opportunities and tighter Trading Permit structure and Schedule, Section IX Participant Fees; NYSE spreads. corresponding connectivity options to American Options Fees Schedule, Section III(A) more closely align with the structures Monthly ATP Fees and NYSE Arca Options Fees Moreover, the Exchange notes that and Charges, OTP Trading Participant Rights. For Market-Makers with a high Make Rate offered at its Affiliated Exchanges once similar Trading Floor Permits for Floor Market percentage generally require higher the Exchange is on a common platform Makers, Nasdaq PHLX charges $6,000; BOX charges amounts of capacity than other Market- as its Affiliated Exchanges.128 The up to $5,500 for 3 registered permits in addition to Makers. Particularly, Market-Makers proposed Trading Permit structure and a $1,500 Participant Fee, NYSE Arca charges up to corresponding fees are also in line with $6,000; and NYSE American charges up to $8,000. with high Make Rates are generally 130 See e.g., Cboe C2 Options Exchange Fees streaming significantly more quotes the structure and fees provided by other Schedule. See also, NYSE Arca Options Fees and than those with lower Make Rates. As Charges, General Options and Trading Permit (OTP) such, Market-Makers with high Make 127 See e.g., MIAX Options Fees Schedule, Fees, which assesses up to $6,000 per Market Maker OTP and NYSE American Options Fee Schedule, Rates may incur more costs than other Section 1(a), Market Maker Transaction Fees. 128 For example, the Exchange’s affiliate, C2, Section III. Monthly ATP Fees, which assess up to Market-Makers as they may need to similarly provides for Trading Permits that are not $8,000 per Market Maker ATP. See also, PHLX purchase multiple BOE Bulk Ports in tied to connectivity, and similar physical and Section 8A, Permit and Registration Fees, which order to accommodate their capacity logical port options at similar pricings. See Cboe C2 assesses up to $4,000 per Market Maker Permit. 131 needs. The Exchange believes the Options Exchange Fees Schedule. Physical See e.g., PHLX Section 8A, Permit and connectivity and logical connectivity are also not Registration Fees, which assesses up to $4,000 per proposed credits for BOE Bulk Ports tied to any type of permits on the Exchange’s other Permit for all member and member organizations encourages Market-Makers to continue options exchange affiliates. other than Floor Specialists and Market Makers.

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access the Exchange may be reduced in the value of the new connectivity is approximately 98% higher than the light of the fact that a TPH no longer infrastructure, the Exchange notes that cost for the same capacity post- must purchase multiple Trading the cost that would be incurred by a migration. The following examples Permits, Bandwidth Packets and Login TPH today in order to receive the same further demonstrate potential cost Ids in order to receive sufficient amount of order capacity that will be savings/value added for an EAP holder bandwidth and logins to meet their provided by a single Logical Port post- with modest capacity needs and an EAP respective business needs. To illustrate migration (i.e., 5,000 orders per second), holder with larger capacity needs:

TPH THAT HOLDS 1 EAP, NO BANDWIDTH PACKETS AND 1 CMI LOGIN

Current fee structure Post-migration fee structure

EAP ...... $1,600 ...... $3,000. CMI Login/Logical Port ...... $750 ...... $750. Bandwidth Packets ...... 0 ...... N/A. Total Bandwidth Available ...... 30 orders/sec ...... 5,000 orders/sec. Total Cost ...... $2,350 ...... $3,750. Total Cost per message ...... $78.33/order/sec ...... $0.75/order/sec.

TPH THAT HOLDS 1 EAP, 4 BANDWIDTH PACKETS AND 15 CMI LOGINS

Current fee structure Post-migration fee structure

EAP ...... $1,600 ...... $3,000. CMI Login/Logical Port ...... $11,250 (15@750) ...... $750. Bandwidth Packets ...... $6,400 (4@$1,600) ...... N/A. Total Bandwidth Available ...... 150 orders/sec ...... 5,000 orders/sec. Total Cost ...... $19,250 ...... $3,750. Total Cost per message ...... $128.33/order/sec ...... $0.75/order/sec.

The Exchange believes the proposal to number of Trading Permits TPHs held while the ADV requirements under the adopt a new Clearing TPH Permit is upon migration, 60% of TPHs that hold proposed ADV Discount program are reasonable because it offers TPHs that Floor Broker Trading Permits will pay higher than are required under the only clear transactions of TPHs a lower Trading Permit fees. Particularly, current rebate program, the proposed discount. Particularly, Clearing TPHs any Floor Broker holding ten or less ADV Discount counts volume from all that also submit orders electronically to Floor Broker Trading Permits will pay products towards the thresholds as the Exchange would purchase the lower fees under the proposed tiers as compared to the current rebate program proposed EAP at $3,000 per permit. The compared to what they pay today. While which excludes volume from Exchange believe it’s reasonable to the remaining 40% of TPHs holding Underlying Symbol List A (except RLG, provide a discount to Clearing TPHs Floor Broker Trading Permits (who each RLV, RUI, and UKXM), DJX, XSP, and that only clear transactions and do not hold between 12–21 Floor Broker subcabinet trades. Moreover, the ADV otherwise submit electronic orders to Trading Permits) will pay higher fees, Discount is designed to encourage the the Exchange. The Exchange notes that the Exchange notes the monthly execution of orders in all classes via another exchange similarly charges a increase is de minimis, ranging from an open outcry, which may increase separate fee for clearing firms.132 increase of 0.6%–2.72%.134 volume, which would benefit all market The Exchange believes the proposed The Exchange believes the proposed participants (including Floor Brokers fee structure for on-floor Market-Makers ADV Discount is reasonable because it who do not hit the ADV thresholds) is reasonable as the fees are in line with provides an opportunity for Floor trading via open outcry (and indeed, 133 those offered at other Exchanges. The Brokers to pay lower FB Trading Permit this increased volume could make it Exchange believes that the proposed fee fees, similar to the current rebate possible for some Floor Brokers to hit for MM Floor Permits as compared to program offered to Floor Brokers. The the ADV thresholds). The Exchange MM EAPs is reasonable because it is Exchange notes that while the new ADV believes the proposed discounts are only modestly higher than MM EAPs Discount program includes only equitable and not unfairly and Floor MMs don’t have other costs customer volume (‘‘C’’ origin code) as discriminatory because all Floor Brokers that MM EAP holders have, such as MM compared to Customer and Professional are eligible. While the Exchange has no EAP Appointment fees. Customer/Voluntary Professional, the way of predicting with certainty how The Exchange believes its proposed amount of Professional Customer/ many and which TPHs will satisfy the fees for Floor Broker Permits are Voluntary Professional volume was de various thresholds under the ADV reasonable because the fees are similar minimis and the Exchange does not Discount, the Exchange anticipated to, and in some cases lower than, the believe the absence of such volume will approximately 3 Floor Brokers to fees the Exchange currently assesses for have a significant impact.135 receive a rebate under the program. In such permits. Specifically, based on the Additionally, the Exchange notes that December 2019, 2 Floor Brokers received a rebate under the program. 132 See e.g., NYSE Arca Options Fees and Charges, General Options and Trading Permit (OTP) 134 The Floor Brokers whose fees are increasing The Exchange believes its proposed Fees and NYSE American Options Fee Schedule, have each committed to a minimum number of MM EAP Appointment fees are permits and therefore currently receive the rates set Section III. Monthly ATP Fees. reasonable in light of the Exchange’s 133 See e.g., PHLX Section 8A, Permit and forth in the current Floor Broker TP Sliding Scale. Registration Fees, which assesses $6,000 per permit 135 Furthermore, post-migration the Exchange will elimination of appointment costs tied to for Floor Specialists and Market Makers. not have Voluntary Professionals. Trading Permits. Other exchanges also

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offer a similar structure with respect to respect to fees for Trading Permits and Appointment Unit costs, but also the fees for appointment classes.136 Appointment Unit Fees, under the cost incurred for logical connectivity Additionally, the proposed MM EAP proposed pricing structure, the cost for and bandwidth. Particularly, the first Appointment fee structure results in a TPH wishing to quote the entire example demonstrates the total approximately 36% electronic MMs universe of available classes is minimum cost that would be incurred paying lower fees for trading permit and approximately 29% less (if they are not today in order for a Market-Maker to appointment costs. For example, in eligible for the MM TP Sliding Scale) or have the same amount of capacity as a order to have the ability to make approximately 2% less (if they are Market-Maker post-migration that electronic markets in every class on the eligible for the MM TP Sliding Scale). would have only 1 MM EAP and 1 Exchange, a Market-Maker would need To further demonstrate the potential Logical Port (i.e., 15,000 quotes/3 sec). 1 Market-Maker Trading Permit and 37 cost savings/value added, the Exchange The Exchange is also providing Appointment Units post-migration. is providing the following examples Under, the current pricing structure, in comparing current Market-Maker examples that demonstrate the costs of order for a Market-Maker to quote the connectivity and access fees to projected (i) a Market-Maker with small capacity entire universe of available classes, a connectivity and access fees for needs and appointment unit of 1.0 and Market-Maker would need 33 different scenarios. The Exchange notes (ii) a Market-Maker with large capacity Appointment Credits, thus necessitating that the below examples not only needs and appointment cost/unit of 33 Market-Maker Trading Permits. With compare Trading Permit and 30.0:

MARKET-MAKER THAT NEEDS CAPACITY OF 15,000/QUOTES/3 SECONDS

Current fee structure Post-migration fee structure

MM Permit/MM EAP ...... $5,000 ...... $5,000. Appointment Unit Cost ...... N/A (1 appointment cost) ...... $0 (1 appointment unit). CMI Login/Logical Port ...... $750 137 ...... $750. Bandwidth Packets ...... $5,500 (2@$2,750) ...... N/A. Total Bandwidth Available ...... 15,000 quotes/3 sec ...... 15,000 quotes/3 sec. Total Cost ...... $11,250 ...... $5,750. Total Cost per message allowed ...... $0.75/quote/3 sec ...... $0.38/quote/3 sec.

MARKET MAKER THAT NEEDS CAPACITY OF NO MORE THAN 5,000 QUOTES/3 SECS

Current fee structure Post-migration fee structure

MM Permit/MM EAP ...... $5,000 ...... $5,000. Appointment Unit Cost ...... N/A (1 appointment cost) ...... $0 (1 appointment unit). CMI Login/Logical Port ...... $750 ...... $750. Bandwidth Packets ...... 0 ...... N/A. Total Bandwidth Available ...... 5,000 quotes/3 sec ...... 15,000 quotes/3 sec. Total Cost ...... $5,750 ...... $5,750. Total Cost per message allowed ...... $1.15/quote/3 sec ...... $0.38/quote/3 sec.

MARKET-MAKER THAT NEEDS 30 APPOINTMENT UNITS AND CAPACITY OF 300,000 QUOTES/3 SEC

Current fee structure Post-migration fee structure

MM Permits/MM EAP...... $105,000 (30 MM Permits as- $5,000. sumes eligible for MM TP Slid- ing Scale) 138. Appointment Units Cost ...... N/A (30 appointment costs) ...... $95,500 (30 appointment units). CMI Logins/BOE Bulk Port ...... $3,000 (4@$750) 139 ...... $3,000 (2 BOE Bulk@$1,500). Bandwidth Packets ...... $82,500 (30@$2750) ...... N/A. Total Bandwidth Available ...... 300,000 quotes/3 sec ...... * 450,000 quotes/3 sec. Total Cost ...... $190,500 ...... $103,500. Total Cost per message allowed ...... $0.63/quotes/3 sec ...... $0.23/quote/3 sec. * Possible performance degradation at 15,000 messages per second.

The Exchange believes its proposal to discussed above. The proposal to than 100 SPX contracts per month and provide separate fees for Tier eliminate the volume threshold for the therefore will not be negatively Appointments for MM EAPs and MM electronic SPX Tier Appointment fee is impacted by the proposed change, and Floor Permits as the Exchange will be reasonable as no TPHs in the past because it aligns the electronic SPX Tier issuing separate Trading Permits for on- several months have electronically Appointment with the floor SPX Tier floor and off-floor market making as traded more than 1 SPX contract or less Appointment, which has no volume

136 See e.g., PHLX Section 8. Membership Fees, B, 138 For simplicity of the comparison, this assumes Maker purchases minimum amount of Login IDs to Streaming Quote Trader (‘‘SQT’’) Fees and C. no appointments in SPX, VIX, RUT, XEO or OEX accommodate 300,000 quotes/3 sec. Remote Market Maker Organization (RMO) Fee. (which are not included in the TP Sliding Scale). 137 The maximum quoting bandwidth that may be 139 Given the bandwidth limit per Login Id of applied to a single Login Id is 80,000 quotes/3 sec. 80,000 quotes/3 sec, example assumes Market-

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threshold. The Exchange believes the expensive 1 Gb Physical Port and utilize necessary or appropriate in furtherance proposal to increase the electronic only one Logical Port. Moreover, the of the purposes of the Act. volume thresholds for VIX and RUT are pricing for 1 Gb Physical Ports and FIX/ C. Self-Regulatory Organization’s reasonable as those that do not regularly BOE Logical Ports are no different than Statement on Comments on the trade VIX or RUT in open-outcry will are assessed today (i.e., $1,500 and $750 Proposed Rule Change Received From continue to not be assessed the fee. In per port, respectively), yet the capacity Members, Participants, or Others fact, any TPH that executes more than and access associated with each is 100 contracts but less than 1,000 in the greatly increasing. While pricing may be The Exchange neither solicited nor respective classes will no longer have to increased for larger capacity physical received written comments on the pay the proposed Tier Appointment fee. and logical ports, such options provide proposed rule change. As noted above, the Exchange is not far more capacity and are purchased by III. Date of Effectiveness of the proposing to change the amounts those that consume more resources from Proposed Rule Change and Timing for assessed for each Tier Appointment Fee. the network. Accordingly, the proposed Commission Action The proposed change is equitable and connectivity fees do not favor certain The foregoing rule change has become not unfairly discriminatory because it categories of market participants in a will apply uniformly to all TPHs. effective pursuant to Section 19(b)(3)(A) manner that would impose a burden on of the Act 140 and paragraph (f) of Rule Trading Permit Holder Regulatory Fee competition; rather, the allocation 19b–4 141 thereunder. At any time The Exchange believes it’s reasonable reflects the network resources within 60 days of the filing of the to eliminate the Trading Permit Holder consumed by the various size of market proposed rule change, the Commission Regulatory fee because TPHs will not participants—lowest bandwidth summarily may temporarily suspend pay this fee and because the Exchange consuming members pay the least, and such rule change if it appears to the is restructuring its Trading Permit highest bandwidth consuming members Commission that such action is structure. The Exchange notes that pays the most, particularly since higher necessary or appropriate in the public although it will less closely be covering bandwidth consumption translates to interest, for the protection of investors, the costs of regulating all TPHs and higher costs to the Exchange. or otherwise in furtherance of the performing its regulatory The Exchange also does not believe purposes of the Act. If the Commission responsibilities, it still has sufficient that the proposed rule change will result takes such action, the Commission will funds to do so. The proposed change is in any burden on inter-market institute proceedings to determine equitable and not unfairly competition that is not necessary or whether the proposed rule change discriminatory because it will apply appropriate in furtherance of the should be approved or disapproved. uniformly to all TPHs. purposes of the Act. As discussed in the IV. Solicitation of Comments The Exchange believes corresponding Statutory Basis section above, options changes to eliminate obsolete language market participants are not forced to Interested persons are invited to in connection with the proposed connect to (or purchase market data submit written data, views, and changes described above and to relocate from) all options exchanges, as shown arguments concerning the foregoing, and reorganize its fees in connection by the number of TPHs at Cboe and including whether the proposed rule with the proposed changes maintain shown by the fact that there are varying change is consistent with the Act. clarity in the Fees Schedule and number of members across each of Comments may be submitted by any of alleviate potential confusion, thereby Cboe’s Affiliated Exchanges. The the following methods: removing impediments to and Exchange operates in a highly Electronic Comments perfecting the mechanism of a free and competitive environment, and as open market and a national market • Use the Commission’s internet discussed above, its ability to price system, and, in general, protecting comment form (http://www.sec.gov/ access and connectivity is constrained investors and the public interest. rules/sro.shtml); or by competition among exchanges and • Send an email to rule-comments@ B. Self-Regulatory Organization’s third parties. As discussed, there are sec.gov. Please include File Number SR– Statement on Burden on Competition other options markets of which market CBOE–2020–105 on the subject line. The Exchange does not believe that participants may connect to trade the proposed rule change will impose options. There is also a possible range Paper Comments any burden on competition that is not of alternative strategies, including • Send paper comments in triplicate necessary or appropriate in furtherance routing to the exchange through another to Secretary, Securities and Exchange of the purposes of the Act. participant or market center or accessing Commission, 100 F Street NE, With respect to intra-market the Exchange indirectly. For example, Washington, DC 20549–1090. competition, the Exchange does not there are 15 other U.S. options All submissions should refer to File believe that the proposed rule change exchanges, which the Exchange must Number SR–CBOE–2020–105. This file would place certain market participants consider in its pricing discipline in number should be included on the at the Exchange at a relative order to compete for market subject line if email is used. To help the disadvantage compared to other market participants. In this competitive Commission process and review your participants or affect the ability of such environment, market participants are comments more efficiently, please use market participants to compete. As free to choose which competing only one method. The Commission will stated above, the Exchange does not exchange or reseller to use to satisfy post all comments on the Commission’s believe its proposed pricing will impose their business needs. As a result, the internet website (http://www.sec.gov/ a barrier to entry to smaller participants Exchange believes this proposed rule rules/sro.shtml). Copies of the and notes that its proposed connectivity change permits fair competition among submission, all subsequent pricing is associated with relative usage national securities exchanges. amendments, all written statements of the various market participants. For Accordingly, the Exchange does not example, market participants with believe its proposed fee change imposes 140 15 U.S.C. 78s(b)(3)(A). modest capacity needs can buy the less any burden on competition that is not 141 17 CFR 240.19b–4(f).

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with respect to the proposed rule solicit comments on the proposed rule certain threshold levels of total change that are filed with the change from interested persons. Consolidated Volume 3 on the Exchange Commission, and all written during the month. I. Self-Regulatory Organization’s communications relating to the To help minimize any adverse impact Statement of the Terms of Substance of proposed rule change between the of the temporary relocation on member the Proposed Rule Change Commission and any person, other than organizations, Exchange proposes to those that may be withheld from the The Exchange proposes to amend the amend its pricing schedule at Equities 7, public in accordance with the Exchange’s transaction fees at Equity 7, Section 3 to state that for purposes of provisions of 5 U.S.C. 552, will be Section 3, as discussed below. determining which of the execution available for website viewing and The text of the proposed rule change charges and credits listed therein a printing in the Commission’s Public is available on the Exchange’s website at member organization qualifies for Reference Room, 100 F Street NE, https://listingcenter.nasdaq.com/ during the month of October 2020, the Washington, DC 20549 on official rulebook/phlx/rules, at the principal Exchange will calculate the member business days between the hours of office of the Exchange, and at the organization’s total Consolidated 10:00 a.m. and 3:00 p.m. Copies of such Commission’s Public Reference Room. Volume on the Exchange for the full month of October as well as for the filing also will be available for II. Self-Regulatory Organization’s month of October excluding the week of inspection and copying at the principal Statement of the Purpose of, and October 26–30, 2020. Furthermore, the office of the Exchange. All comments Statutory Basis for, the Proposed Rule Exchange proposes to state that it will received will be posted without change. Change Persons submitting comments are then assess which total Consolidated cautioned that we do not redact or edit In its filing with the Commission, the Volume calculations would qualify the personal identifying information from Exchange included statements member organization for the most comment submissions. You should concerning the purpose of and basis for advantageous credits and charges for the submit only information that you wish the proposed rule change and discussed month of October and then it will apply to make available publicly. All any comments it received on the those credits and charges to the member submissions should refer to File proposed rule change. The text of these organization. Thus, if but for the Number SR–CBOE–2020–105, and statements may be examined at the relocation, a member organization should be submitted on or before places specified in Item IV below. The would qualify for a higher credit or a December 1, 2020. Exchange has prepared summaries, set lower fee tier in October, then the forth in sections A, B, and C below, of For the Commission, by the Division of Exchange will apply that higher credit Trading and Markets, pursuant to delegated the most significant aspects of such or lower fee tier to the member authority.142 statements. organization’s trading activity during J. Matthew DeLesDernier, A. Self-Regulatory Organization’s the month. Assistant Secretary. Statement of the Purpose of, and 2. Statutory Basis [FR Doc. 2020–24884 Filed 11–9–20; 8:45 am] Statutory Basis for, the Proposed Rule The Exchange believes that its BILLING CODE 8011–01–P Change proposal is consistent with Section 6(b) 1. Purpose of the Act,4 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) During the week of October 26–30, SECURITIES AND EXCHANGE of the Act,5 in particular, in that it 2020, the Exchange will temporarily COMMISSION provides for the equitable allocation of relocate its place of primary operations reasonable dues, fees and other charges from Carteret, New Jersey to Chicago, [Release No. 34–90339; File No. SR–Phlx– among members and issuers and other Illinois. The purpose of this temporary 2020–50] persons using any facility, and is not relocation is to demonstrate that the designed to permit unfair Self-Regulatory Organizations; Nasdaq Exchange is capable of and willing to discrimination between customers, PHLX LLC; Notice of Filing and operate outside of the State of New issuers, brokers, or dealers. Jersey in the event that the New Jersey Immediate Effectiveness of Proposed The Exchange believes that the State Government enacts pending Rule Change To Amend the proposal is reasonable and equitable legislation that would impose a tax on Exchange’s Transaction Fees at Equity because in its absence, member securities transactions processed within 7, Section 3 organizations may fail to qualify for the State. If enacted, the tax would be certain volume-based credits or charges November 4, 2020. prohibitively expensive and onerous, in October should they determine to not only for the Exchange, but also for Pursuant to Section 19(b)(1) of the alter their trading behavior when the its member organizations and ultimately Securities Exchange Act of 1934 Exchange relocates to Chicago during 1 2 for investors, and the Exchange likely (‘‘Act’’), and Rule 19b–4 thereunder, the week of October 26–30, 2020. The would have no option but to relocate notice is hereby given that on October Exchange does not wish to penalize permanently outside of New Jersey. 26, 2020, Nasdaq PHLX LLC (‘‘Phlx’’ or these member organizations for altering Although the Exchange believes that ‘‘Exchange’’) filed with the Securities their trading behavior in response to the its member organizations will maintain and Exchange Commission (‘‘SEC’’ or Exchange’s decision to relocate ‘‘Commission’’) the proposed rule their ordinary trading activity during change as described in Items I, II, and the relocation period, the Exchange also 3 As set forth in Equity 7, Section 3(a)(1), the term III below, which Items have been recognizes the possibility that some of ‘‘Consolidated Volume’’ means the total prepared by the Exchange. The its member organizations will adjust consolidated volume reported to all consolidated Commission is publishing this notice to their trading behavior during this time, transaction reporting plans by all exchanges and trade reporting facilities during a month in equity and that if they do so, they may fail to securities, excluding executed orders with a size of 142 17 CFR 200.30–3(a)(12). qualify for credits or discounted charges less than one round lot. 1 15 U.S.C. 78s(b)(1). that the Exchange would otherwise 4 15 U.S.C. 78f(b). 2 17 CFR 240.19b–4. provide to them if they were to achieve 5 15 U.S.C. 78f(b)(4) and (5).

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temporarily. The proposed rule would In this instance, the proposed fee Electronic Comments seek to avoid such a penalty by change does not impose a burden on • calculating a member organization’s competition because the Exchange’s Use the Commission’s internet total Consolidated Volume on the execution services are completely comment form (http://www.sec.gov/ Exchange, both for the full month of voluntary and subject to extensive rules/sro.shtml); or October and for the month excluding competition both from other exchanges • Send an email to rule-comments@ October 26–30 to determine which of and from off-exchange venues. If the sec.gov. Please include File Number SR– those two calculations would result in changes proposed herein are Phlx–2020–50 on the subject line. the member organization qualifying for unattractive to market participants, it is credits and charges that are most likely that the Exchange will lose Paper Comments advantageous to it, and then applying market share as a result. • Send paper comments in triplicate those most advantageous credits and If anything, the Exchange believes to Secretary, Securities and Exchange charges to the member organization. that the proposal is pro-competitive in Commission, 100 F Street NE, The Exchange notes that other that it will help the Exchange to Washington, DC 20549–1090. exchanges have taken similar steps to maintain its competitive standing vis-a- avoid penalizing their members for vis other trading venues that are not All submissions should refer to File exchange outages that would otherwise planning a similar operational move Number SR–Phlx–2020–50. This file cause members to fail to qualify for during this month. number should be included on the volume-based tiered pricing.6 Similarly, the Exchange does not subject line if email is used. To help the The Exchange believes that the believe that the proposal will burden Commission process and review your proposed rule change is an equitable intra-market competition. As noted comments more efficiently, please use allocation and is not unfairly above, the proposal will simply help to only one method. The Commission will discriminatory because the Exchange ensure that no participant suffers a post all comments on the Commission’s intends for it to ensure that no member pricing disadvantage as a result of the internet website (http://www.sec.gov/ organization suffers adverse pricing Exchange’s decision to operate from rules/sro.shtml). Copies of the impacts because of the temporary Chicago during the last week of October. submission, all subsequent relocation of the Exchange to Chicago. It is not intended to provide a amendments, all written statements That is, the Exchange does not intend competitive advantage to any particular with respect to the proposed rule for the proposal to advantage any member organization. change that are filed with the particular member organization; rather, Commission, and all written it intends for the proposal to avoid C. Self-Regulatory Organization’s Statement on Comments on the communications relating to the disadvantaging any member proposed rule change between the organization. Proposed Rule Change Received From Members, Participants, or Others Commission and any person, other than B. Self-Regulatory Organization’s those that may be withheld from the Statement on Burden on Competition No written comments were either public in accordance with the solicited or received. provisions of 5 U.S.C. 552, will be The Exchange does not believe that available for website viewing and the proposed rule change will impose III. Date of Effectiveness of the printing in the Commission’s Public any burden on competition not Proposed Rule Change and Timing for necessary or appropriate in furtherance Commission Action Reference Room, 100 F Street NE, of the purposes of the Act. In terms of Washington, DC 20549, on official The foregoing rule change has become business days between the hours of inter-market competition, the Exchange effective pursuant to Section 10:00 a.m. and 3:00 p.m. Copies of the notes that it operates in a highly 19(b)(3)(A)(ii) of the Act.7 competitive market in which market filing also will be available for At any time within 60 days of the participants can readily favor competing inspection and copying at the principal filing of the proposed rule change, the venues if they deem fee levels at a office of the Exchange. All comments Commission summarily may particular venue to be excessive, or received will be posted without change. temporarily suspend such rule change if rebate opportunities available at other Persons submitting comments are it appears to the Commission that such venues to be more favorable. In such an cautioned that we do not redact or edit action is: (i) Necessary or appropriate in environment, the Exchange must personal identifying information from the public interest; (ii) for the protection continually adjust its fees to remain comment submissions. You should of investors; or (iii) otherwise in competitive with other exchanges and furtherance of the purposes of the Act. submit only information that you wish with alternative trading systems that If the Commission takes such action, the to make available publicly. All have been exempted from compliance Commission shall institute proceedings submissions should refer to File with the statutory standards applicable to determine whether the proposed rule Number SR–Phlx–2020–50 and should to exchanges. Because competitors are should be approved or disapproved. be submitted on or before December 1, free to modify their own fees in 2020. response, and because market IV. Solicitation of Comments participants may readily adjust their For the Commission, by the Division of order routing practices, the Exchange Interested persons are invited to Trading and Markets, pursuant to delegated 8 believes that the degree to which fee submit written data, views, and authority. changes in this market may impose any arguments concerning the foregoing, J. Matthew DeLesDernier. burden on competition is extremely including whether the proposed rule Assistant Secretary. change is consistent with the Act. limited. [FR Doc. 2020–24887 Filed 11–9–20; 8:45 am] Comments may be submitted by any of the following methods: BILLING CODE 8011–01–P 6 See, e.g., Securities Exchange Act Release No. 34–85025 (Jan 1, 2019), 84 FR 2611 (February 7, 2019) (ISE–2018–102). 7 15 U.S.C. 78s(b)(3)(A)(ii). 8 17 CFR 200.30–3(a)(12).

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SECURITIES AND EXCHANGE approve or disapprove, or institute statements concerning the purpose of, COMMISSION proceedings to determine whether to and basis for, the proposed rule change disapprove, the proposed rule change and discussed any comments it received [Release No. 34–90335; File No. SR–FINRA– 2020–031] (File No. SR–FINRA–2020–031). on the proposed rule change. The text For the Commission, by the Division of of those statements may be examined at Self-Regulatory Organizations; Trading and Markets, pursuant to delegated the places specified in Item IV below. Financial Industry Regulatory authority.6 The Exchange has prepared summaries, Authority, Inc.; Notice of Designation J. Matthew DeLesDernier, set forth in sections A, B, and C below, of a Longer Period for Commission Assistant Secretary. of the most significant parts of such Action on a Proposed Rule Change To [FR Doc. 2020–24886 Filed 11–9–20; 8:45 am] statements. Adopt FINRA Rule 6439 (Requirements BILLING CODE 8011–01–P A. Self-Regulatory Organization’s for Member Inter-Dealer Quotation Statement of the Purpose of, and Systems) and Delete the Rules Related Statutory Basis for, the Proposed Rule to the OTC Bulletin Board Service SECURITIES AND EXCHANGE Change COMMISSION November 4, 2020. 1. Purpose On September 24, 2020, the Financial [Release No. 34–90334; File No. SR– Industry Regulatory Authority, Inc. NYSEArca–2020–97] The Exchange proposes to amend the (‘‘FINRA’’) filed with the Securities and Fee Schedule to adopt an alternative Exchange Commission (‘‘Commission’’), Self-Regulatory Organizations; NYSE method to qualify for the Tier 2 pricing pursuant to Section 19(b)(1) of the Arca, Inc.; Notice of Filing and tier. Securities Exchange Act of 1934 Immediate Effectiveness of Proposed The proposed change responds to the (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a Rule Change Amending the NYSE Arca current competitive environment where proposed rule change to delete the rules Equities Fees and Charges To Adopt order flow providers have a choice of related to the OTC Bulletin Board an Alternative Method To Qualify for where to direct liquidity-providing Service and cease its operation and to the Tier 2 Pricing Tier orders by offering further incentives for 4 adopt FINRA Rule 6439 (Requirements ETP Holders to send additional November 4, 2020. liquidity to the Exchange. for Member Inter-Dealer Quotation Pursuant to Section 19(b)(1) 1 of the Systems). The proposed rule change was The Exchange proposes to implement Securities Exchange Act of 1934 the fee change effective November 2, published for comment in the Federal (‘‘Act’’),2 and Rule 19b–4 thereunder,3 Register on October 7, 2020.3 2020. 4 notice is hereby given that on November Section 19(b)(2) of the Act provides 2, 2020, NYSE Arca, Inc. (‘‘NYSE Arca’’ Background that within 45 days of the publication of or ‘‘Exchange’’) filed with the Securities notice of the filing of a proposed rule The Exchange operates in a highly and Exchange Commission competitive market. The Commission change, or within such longer period up (‘‘Commission’’) the proposed rule to 90 days as the Commission may has repeatedly expressed its preference change as described in Items I, II, and for competition over regulatory designate if it finds such longer period III below, which Items have been to be appropriate and publishes its intervention in determining prices, prepared by the Exchange. The products, and services in the securities reasons for so finding, or as to which the Commission is publishing this notice to self-regulatory organization consents, markets. In Regulation NMS, the solicit comments on the proposed rule Commission highlighted the importance the Commission shall either approve the change from interested persons. proposed rule change, disapprove the of market forces in determining prices proposed rule change, or institute I. Self-Regulatory Organization’s and SRO revenues and, also, recognized proceedings to determine whether the Statement of the Terms of Substance of that current regulation of the market proposed rule change should be the Proposed Rule Change system ‘‘has been remarkably successful disapproved. The 45th day after in promoting market competition in its The Exchange proposes to amend the broader forms that are most important to publication of the notice for this NYSE Arca Equities Fees and Charges 5 proposed rule change is November 21, investors and listed companies.’’ (‘‘Fee Schedule’’) to adopt an alternative While Regulation NMS has enhanced 2020. The Commission is extending this method to qualify for the Tier 2 pricing competition, it has also fostered a 45-day time period. tier. The Exchange proposes to ‘‘fragmented’’ market structure where The Commission finds it appropriate implement the fee change effective to designate a longer period within trading in a single stock can occur November 2, 2020. The proposed rule across multiple trading centers. When which to take action on the proposed change is available on the Exchange’s rule change so that it has sufficient time multiple trading centers compete for website at www.nyse.com, at the order flow in the same stock, the to consider the proposed rule change principal office of the Exchange, and at and the comments received. Commission has recognized that ‘‘such the Commission’s Public Reference competition can lead to the Accordingly, the Commission, pursuant Room. 5 fragmentation of order flow in that to Section 19(b)(2) of the Act, 6 designates January 5, 2021 as the date II. Self-Regulatory Organization’s stock.’’ Indeed, equity trading is by which the Commission shall either Statement of the Purpose of, and Statutory Basis for, the Proposed Rule 4 All references to ETP Holders in connection with this proposed fee change include Market 1 15 U.S.C. 78s(b)(1). Change Makers. 2 17 CFR 240.19b–4. In its filing with the Commission, the 5 See Securities Exchange Act Release No. 51808 3 See Securities Exchange Act Release No. 90067 self-regulatory organization included (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (October 1, 2020), 85 FR 63314. Comments on the (File No. S7–10–04) (Final Rule) (‘‘Regulation proposed rule change can be found at: https:// NMS’’). 6 www.sec.gov/comments/sr-finra-2020-031/ 17 CFR 200.30–3(a)(31). 6 See Securities Exchange Act Release No. 61358, srfinra2020031.htm. 1 15 U.S.C. 78s(b)(1). 75 FR 3594, 3597 (January 21, 2010) (File No. S7– 4 15 U.S.C. 78s(b)(2). 2 15 U.S.C. 78a. 02–10) (Concept Release on Equity Market 5 Id. 3 17 CFR 240.19b–4. Structure).

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currently dispersed across 16 than 0.70% of US consolidated average the Exchange in order to qualify for the exchanges,7 numerous alternative daily volume (‘‘US CADV’’).11 Tier 2 fees and credits. trading systems,8 and broker-dealer The Exchange proposes to permit ETP The Exchange believes that, by internalizers and wholesalers, all Holders to alternatively qualify for Tier providing for an additional method of competing for order flow. Based on 2 fees and credits if they (a) provide qualifying for Tier 2, this proposed publicly-available information, no liquidity an average daily share volume change will provide a greater incentive single exchange currently has more than per month of 0.25% or more, but less to attract additional liquidity from 18% market share.9 Therefore, no than 0.70% of the US CADV, (b) execute additional ETP Holders so as to qualify exchange possesses significant pricing removing volume in Tape B Securities for the Tier 2 fees and credits. The power in the execution of equity order equal to at least 0.40% of US Tape B Exchange does not know how much flow. More specifically, the Exchange CADV, and (c) are affiliated with an order flow ETP Holders choose to route currently has less than 10% market OTP Holder or OTP Firm that provides to other exchanges or to off-exchange share of executed volume of equities an ADV of electronic posted Customer venues. The Exchange anticipates, based trading.10 and Professional Customer executions on their current trading profile, that a The Exchange believes that the ever- in all issues on NYSE Arca Options small number of ETP Holders could shifting market share among the (excluding mini options) of at least qualify for Tier 2 under the proposed exchanges from month to month 0.25% of total Customer equity and ETF alternative method if they so choose. demonstrates that market participants option ADV as reported by The Options However, without having a view of ETP can move order flow, or discontinue or Clearing Corporation (‘‘OCC’’). The Holders’ activity on other exchanges reduce use of certain categories of Exchange is not proposing any change and off-exchange venues, the Exchange products. While it is not possible to to the level of fees and credits has no way of knowing whether this know a firm’s reason for shifting order applicable under Tier 2. proposed rule change would result in flow, the Exchange believes that one The purpose of this proposed rule any ETP Holder directing orders to the such reason is because of fee changes at change is to incentivize ETP Holders to Exchange in order to qualify for Tier 2 any of the registered exchanges or non- increase the liquidity-providing orders under the proposed alternative method. exchange venues to which a firm routes they send to the Exchange, which would The proposed changes are not order flow. With respect to non- support the quality of price discovery otherwise intended to address any other marketable order flow that would on the Exchange and provide additional issues, and the Exchange is not aware of provide liquidity on an Exchange liquidity for incoming orders. The any significant problems that market against which market makers can quote, Exchange believes that the proposal participants would have in complying ETP Holders can choose from any one would create an added incentive for with the proposed changes. of the 16 currently operating registered ETP Holders to bring additional order 2. Statutory Basis exchanges to route such order flow. flow to a public market while also Accordingly, competitive forces providing an alternative method for ETP The Exchange believes that the constrain exchange transaction fees that Holders to qualify for Tier 2 fees and proposed rule change is consistent with relate to orders that would provide credits. The Exchange further believes Section 6(b) of the Act,13 in general, and liquidity on an exchange. that providing fees and credits to ETP furthers the objectives of Sections In response to the competitive Holders that are affiliated with an OTP 6(b)(4) and (5) of the Act,14 in particular, environment described above, the Holder or OTP Firm could lead to because it provides for the equitable Exchange has established incentives for increased trading on the Exchange’s allocation of reasonable dues, fees, and ETP Holders who submit orders that equities and options markets.12 As other charges among its members, provide liquidity on the Exchange. The noted above, the Exchange operates in a issuers and other persons using its proposed fee change is designed to competitive environment, particularly facilities and does not unfairly attract additional order flow to the as it relates to attracting non-marketable discriminate between customers, Exchange by offering an alternative orders, which add liquidity to the issuers, brokers or dealers. method to qualify for the Tape 2 fees Exchange. Because the proposed The Proposed Fee Change is Reasonable and credits to incentivize ETP Holders alternative method requires that an ETP to direct their liquidity-providing orders Holder, in addition to providing As discussed above, the Exchange in Tapes A, B and C securities. liquidity at a level below the current operates in a highly fragmented and competitive market. The Commission Proposed Rule Change requirement under Tier 2, also remove liquidity in Tape B securities coupled has repeatedly expressed its preference Currently, ETP Holders qualify for with the required minimum of options for competition over regulatory Tier 2 fees and credits by providing volume, the Exchange believes that the intervention in determining prices, liquidity an average daily share volume proposed change would provide an products, and services in the securities per month of 0.30% or more, but less incentive for a greater number of ETP markets. Specifically, in Regulation Holders to send additional liquidity to NMS, the Commission highlighted the 7 See Cboe Global Markets, U.S Equities Market importance of market forces in Volume Summary, available at https:// 11 US CADV means the United States determining prices and SRO revenues _ markets.cboe.com/us/equities/market share. See Consolidated Average Daily Volume for and, also, recognized that current generally https://www.sec.gov/fast-answers/ transactions reported to the Consolidated Tape, regulation of the market system ‘‘has divisionsmarketregmrexchangesshtml.html. excluding odd lots through January 31, 2014 (except 8 See FINRA ATS Transparency Data, available at for purposes of Lead Market Maker pricing), and been remarkably successful in https://otctransparency.finra.org/otctransparency/ excludes volume on days when the market closes promoting market competition in its AtsIssueData. A list of alternative trading systems early and on the date of the annual reconstitution broader forms that are most important to registered with the Commission is available at of the Russell Investments Indexes. Transactions investors and listed companies.’’ 15 https://www.sec.gov/foia/docs/atslist.htm. that are not reported to the Consolidated Tape are 9 See Cboe Global Markets, U.S. Equities Market not included in US CADV. See Fee Schedule, Volume Summary, available at http:// footnote 3. 13 15 U.S.C. 78f(b). markets.cboe.com/us/equities/market_share/. 12 There are currently 53 firms that are both ETP 14 15 U.S.C. 78f(b)(4) and (5). 10 See id. Holders and OTP Holders. 15 See Regulation NMS, 70 FR at 37499.

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The Exchange believes that the ever- based on members achieving certain submit additional liquidity on the shifting market share among the volume thresholds. Moreover, the Exchange and on NYSE Arca Options to exchanges from month to month Exchange believes the proposed qualify for the Tier 2 fees and credits. demonstrates that market participants amendment to Tier 2 is a reasonable To the extent an ETP Holder can shift order flow, or discontinue to means to encourage ETP Holders to participates on the Exchange but not on reduce use of certain categories of increase their liquidity on the Exchange NYSE Arca Options, the Exchange products, in response to fee changes. and their participation on NYSE Arca believes that the proposal is still With respect to non-marketable orders Options. The Exchange believes reasonable, equitable and not unfairly that provide liquidity on an Exchange, amending the current pricing tier by discriminatory with respect to such ETP ETP Holders can choose from any one adopting an alternative requirement Holder based on the overall benefit to of the 16 currently operating registered may encourage those ETP Holders who the Exchange resulting from the success exchanges to route such order flow. could not previously achieve the pricing of NYSE Arca Options. In particular, Accordingly, competitive forces tier to increase their order flow on both such success would allow the Exchange reasonably constrain exchange the Exchange and on NYSE Arca to continue to provide and potentially transaction fees that relate to orders that Options. Increased liquidity benefits all expand its existing incentive programs would provide displayed liquidity on an investors by deepening the Exchange’s to the benefit of all participants on the exchange. Stated otherwise, changes to liquidity pool, offering additional Exchange, whether they participate on exchange transaction fees can have a flexibility for all investors to enjoy cost NYSE Arca Options or not. direct effect on the ability of an savings, supporting the quality of price The proposal neither targets nor will exchange to compete for order flow. discovery, promoting market it have a disparate impact on any Given this competitive environment, transparency and improving investor particular category of market the proposal represents a reasonable protection. participant. Rather, should an ETP attempt to attract additional order flow Holder not meet the proposed criteria, to the Exchange. In particular, the The Proposed Fee Change is an the ETP Holder can still qualify for the Exchange believes the proposed Equitable Allocation of Fees and Credits same credit by meeting the current amendment to Tier 2 is reasonable The Exchange believes the proposed criteria which does not require it to because it provides ETP Holders rule change to adopt an alternative way have any affiliation with an OTP Holder affiliated with an OTP Holder or OTP to qualify for the Tier 2 fees and credits or OTP Firm and conduct options Firm with an additional way to qualify equitably allocates its fees and credits trading on NYSE Arca Options. for the Tier 2 fees and credits through among market participants because it is The Proposed Fee Change is not equity and options orders. The reasonably related to the value of the Unfairly Discriminatory Exchange believes that the proposed Exchange’s market quality associated alternative to qualify for the pricing tier with higher equities and options The Exchange believes that the utilizing a lower equity adding volume volume. Additionally, a number of ETP proposal is not unfairly discriminatory. requirement coupled with a minimum Holders have a reasonable opportunity In the prevailing competitive equity removing volume requirement to satisfy the tier’s criteria.16 environment, ETP Holders are free to and a minimum options volume The Exchange does not know how disfavor the Exchange’s pricing if they requirement is reasonable because the much order flow ETP Holders choose to believe that alternatives offer them proposal provides firms with greater route to other exchanges or to off- better value. flexibility to reach volume tiers across exchange venues. The proposed The Exchange believes it is not asset classes, thereby creating an added alternative method to qualify for the unfairly discriminatory to provide an incentive for ETP Holders to bring Tier 2 fees and credits would be alternative way to qualify for per share additional order flow to a public available to all ETP Holders that are fees and credits, as each would be exchange, thereby encouraging greater affiliated with OTP Holders or OTP provided on an equal basis to all ETP participation and liquidity. Firms. There are currently 3 ETP Holders that are affiliated with an OTP The Exchange notes that volume- Holders that qualify for the Tier 2 fees Holder or OTP Firm that meet the based incentives and discounts have and credits. And as noted above, there proposed alternative requirement of Tier been widely adopted by exchanges, are 53 firms that are both ETP Holders 2. Further, the Exchange believes the including the Exchange, and are and OTP Holders and a number of such proposed alternative requirement would reasonable, equitable and not unfairly firms could qualify for Tier 2 pricing incentivize ETP Holders that are discriminatory because they are tier under the proposed alternative affiliated with an OTP Holder or OTP available to all ETP Holders on an equal method. However, without having a Firm to send their options orders to the basis. They also provide additional view of an ETP Holder’s activity on Exchange to qualify for the pricing tier. benefits or discounts that are reasonably other markets and off-exchange venues, The Exchange also believes that the related to the value of the Exchange’s the Exchange has no way of knowing proposed change is not unfairly market quality and associated higher whether this proposed rule change discriminatory because it is reasonably levels of market activity, such as higher would result in any ETP Holder related to the value to the Exchange’s levels of liquidity provision and/or affiliated with an OTP Holder or OTP market quality associated with higher growth patterns. Additionally, as noted Firm to increase participation in the volume. above, the Exchange operates in a highly Exchange’s equities and options markets The proposal to amend the volume competitive market. The Exchange is to qualify for the Tier 2 fees and credits. requirement to qualify for the Tier 2 fees one of many venues and off-exchange The Exchange cannot predict with and credits neither targets nor will it venues to which market participants certainty how many ETP Holders would have a disparate impact on any may direct their order flow, and it avail themselves of this opportunity. particular category of market represents a small percentage of the The Exchange believes the proposed participant. The proposal does not overall market. Competing exchanges amended tier could provide an permit unfair discrimination because offer similar tiered pricing structures to incentive for other ETP Holders to the amended threshold would be that of the Exchange, including applied to all similarly situated ETP schedules of rebates and fees that apply 16 See supra note 12. Holders, who would all be eligible for

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the same fees and credits on an equal on the Exchange. As such, the Exchange Commission shall institute proceedings basis. Accordingly, no ETP Holder believes the proposed amendments to under Section 19(b)(2)(B) 21 of the Act to already operating on the Exchange its Fee Schedule would not impose any determine whether the proposed rule would be disadvantaged by this burden on intramarket competition that change should be approved or allocation of fees. is not necessary or appropriate in disapproved. Finally, the submission of orders to furtherance of the purposes of the Act. IV. Solicitation of Comments the Exchange is optional for ETP Intermarket Competition. The Holders in that they could choose Exchange operates in a highly Interested persons are invited to whether to submit orders to the competitive market in which market submit written data, views, and Exchange and, if they do, the extent of participants can readily choose to send arguments concerning the foregoing, its activity in this regard. The Exchange their orders to other exchange and off- including whether the proposed rule believes that it is subject to significant exchange venues if they deem fee levels change is consistent with the Act. competitive forces, as described below at those other venues to be more Comments may be submitted by any of in the Exchange’s statement regarding favorable. As noted above, the the following methods: the burden on competition. Exchange’s market share of intraday Electronic Comments For the foregoing reasons, the trading (i.e., excluding auctions) is • Exchange believes that the proposal is currently less than 10%. In such an Use the Commission’s internet consistent with the Act. environment, the Exchange must comment form (http://www.sec.gov/ continually adjust its fees and rebates to rules/sro.shtml); or B. Self-Regulatory Organization’s • Send an email to rule-comments@ remain competitive with other Statement on Burden on Competition sec.gov. Please include File Number SR– exchanges and with off-exchange In accordance with Section 6(b)(8) of NYSEArca–2020–97 on the subject line. 17 venues. Because competitors are free to the Act, the Exchange believes that the modify their own fees and credits in Paper Comments proposed rule change would not impose response, and because market • any burden on competition that is not Send paper comments in triplicate participants may readily adjust their necessary or appropriate in furtherance to Secretary, Securities and Exchange order routing practices, the Exchange of the purposes of the Act. Instead, as Commission, 100 F Street NE, does not believe its proposed fee change discussed above, the Exchange believes Washington, DC 20549–1090. can impose any burden on intermarket that the proposed changes would All submissions should refer to File competition. encourage the submission of additional Number SR–NYSEArca–2020–97. This The Exchange believes that the file number should be included on the liquidity to a public exchange, thereby proposed change could promote promoting market depth, price subject line if email is used. To help the competition between the Exchange and Commission process and review your discovery and transparency and other execution venues, including those enhancing order execution comments more efficiently, please use that currently offer similar order types only one method. The Commission will opportunities for ETP Holders. As a and comparable transaction pricing, by result, the Exchange believes that the post all comments on the Commission’s encouraging additional orders to be sent internet website (http://www.sec.gov/ proposed change furthers the to the Exchange for execution. Commission’s goal in adopting rules/sro.shtml). Copies of the Regulation NMS of fostering integrated C. Self-Regulatory Organization’s submission, all subsequent competition among orders, which Statement on Comments on the amendments, all written statements promotes ‘‘more efficient pricing of Proposed Rule Change Received From with respect to the proposed rule individual stocks for all types of orders, Members, Participants, or Others change that are filed with the large and small.’’ 18 No written comments were solicited Commission, and all written Intramarket Competition. The or received with respect to the proposed communications relating to the proposed change is designed to attract rule change. proposed rule change between the additional equities and options order Commission and any person, other than flow to the Exchange. The Exchange III. Date of Effectiveness of the those that may be withheld from the believes that the proposed amendment Proposed Rule Change and Timing for public in accordance with the to the volume requirement under Tier 2 Commission Action provisions of 5 U.S.C. 552, will be would continue to incentivize market The foregoing rule change is effective available for website viewing and participants to direct providing upon filing pursuant to Section printing in the Commission’s Public displayed order flow to the Exchange 19(b)(3)(A) 19 of the Act and Reference Room, 100 F Street NE, and greater participation on NYSE Arca subparagraph (f)(2) of Rule 19b–4 20 Washington, DC 20549, on official Options. Greater liquidity benefits all thereunder, because it establishes a due, business days between the hours of market participants on the Exchange by fee, or other charge imposed by the 10:00 a.m. and 3:00 p.m. Copies of the providing more trading opportunities Exchange. filing also will be available for and encourages ETP Holders to send At any time within 60 days of the inspection and copying at the principal orders to the Exchange, thereby filing of such proposed rule change, the office of the Exchange. All comments contributing to robust levels of liquidity, Commission summarily may received will be posted without change. which benefits all market participants. temporarily suspend such rule change if Persons submitting comments are The proposed volume requirement it appears to the Commission that such cautioned that we do not redact or edit would be applicable to all similarly- action is necessary or appropriate in the personal identifying information from situated market participants, and, as public interest, for the protection of comment submissions. You should such, the proposed change would not investors, or otherwise in furtherance of submit only information that you wish impose a disparate burden on the purposes of the Act. If the to make available publicly. All competition among market participants Commission takes such action, the submissions should refer to File Number SR–NYSEArca-2020–97, and 17 15 U.S.C. 78f(b)(8). 19 15 U.S.C. 78s(b)(3)(A). 18 See Regulation NMS, 70 FR at 37498–99. 20 17 CFR 240.19b–4(f)(2). 21 15 U.S.C. 78s(b)(2)(B).

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should be submitted on or before Procedure for Customer Disputes, the The Office of Dispute Resolution December 1, 2020. Code of Arbitration Procedure for administers an arbitration and For the Commission, by the Division of Industry Disputes, and the Code of mediation forum for investors and Trading and Markets, pursuant to delegated Mediation Procedure to replace any brokerage firms and their registered authority.22 references to ‘‘Office of Dispute employees while RAD manages, among J. Matthew DeLesDernier, Resolution’’ with ‘‘FINRA Dispute other matters, the registration of these Assistant Secretary. Resolution Services.’’ The proposed rule firms and their employees. As part of [FR Doc. 2020–24885 Filed 11–9–20; 8:45 am] change would also amend the Books, FINRA360, FINRA refined the name of Records and Reports, the Code of its arbitration and mediation forum to BILLING CODE 8011–01–P Procedure, and the Funding Portal Rules FINRA Dispute Resolution Services to to replace any references to more closely describe its key functions, SECURITIES AND EXCHANGE ‘‘Department of Registration and to highlight the customer service it COMMISSION Disclosure’’ (also referred to as ‘‘RAD’’ provides, and to feature the in FINRA rules) with ‘‘Credentialing, independence and impartiality of the [Release No. 34–90344; File No. SR–FINRA– Registration, Education and Disclosure’’ forum. FINRA also refined the name of 2020–039] (also referred to as ‘‘CRED’’ in FINRA RAD to Credentialing, Registration, Self-Regulatory Organizations; rules). The proposed rule change would Education and Disclosure to better Financial Industry Regulatory also replace any references to ‘‘RAD’’ describe the totality of functions it Authority, Inc.; Notice of Filing and with ‘‘CRED.’’ performs on behalf of FINRA for its The text of the proposed rule change Immediate Effectiveness of a Proposed stakeholders. is available on FINRA’s website at Rule Change To Amend FINRA Rules The proposed rule change would http://www.finra.org, at the principal To Reflect Name Changes to Two amend FINRA rules to reflect these office of FINRA and at the FINRA Departments: The Office of name changes. Commission’s Public Reference Room. Dispute Resolution and the Proposed Amendments Department of Registration and II. Self-Regulatory Organization’s The proposed rule change would Disclosure Statement of the Purpose of, and amend FINRA Rules 0160 (Definitions), Statutory Basis for, the Proposed Rule 10308 (Selection of Arbitrators), 10312 November 4, 2020. Change Pursuant to Section 19(b)(1) of the (Disclosures Required of Arbitrators and Securities Exchange Act of 1934 In its filing with the Commission, Director’s Authority to Disqualify), (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 FINRA included statements concerning 10314 (Initiation of Proceedings), 12100 notice is hereby given that on October the purpose of and basis for the (Definitions), 12103 (Director of Office 29, 2020, the Financial Industry proposed rule change and discussed any of Dispute Resolution), 12701 Regulatory Authority, Inc. (‘‘FINRA’’) comments it received on the proposed (Settlement), 13100 (Definitions), 13103 filed with the Securities and Exchange rule change. The text of these statements (Director of Office of Dispute Commission (‘‘SEC’’ or ‘‘Commission’’) may be examined at the places specified Resolution), 13701 (Settlement) and in Item IV below. FINRA has prepared the proposed rule change as described 14100 (Definitions) to replace references summaries, set forth in sections A, B, in Items I, II, and III below, which Items to ‘‘Office of Dispute Resolution’’ with and C below, of the most significant have been prepared by FINRA. FINRA ‘‘FINRA Dispute Resolution Services.’’ aspects of such statements. has designated the proposed rule change The proposed rule change would also as concerned solely with the A. Self-Regulatory Organization’s amend FINRA Funding Portal Rule 900 administration of the self-regulatory Statement of the Purpose of, and (Code of Procedure) and FINRA Rules organization under Section Statutory Basis for, the Proposed Rule 4530 (Reporting Requirements), 9521 19(b)(3)(A)(iii) of the Act 3 and Rule Change (Purpose and Definitions), 9522 19b–4(f)(3) thereunder,4 which renders (Initiation of Eligibility Proceeding: 1. Purpose the proposal effective upon receipt of Member Regulation Consideration), and this filing by the Commission. The In March 2017, FINRA launched 9524 (National Adjudicatory Council Commission is publishing this notice to FINRA360, a comprehensive self- Consideration) to replace references to solicit comments on the proposed rule evaluation and organizational ‘‘Department of Registration and change from interested persons. improvement initiative to ensure that Disclosure’’ with ‘‘Credentialing, FINRA is operating as the most effective Registration, Education and Disclosure’’ I. Self-Regulatory Organization’s self-regulatory organization it can be, and any references to ‘‘RAD’’ with Statement of the Terms of Substance of working to protect investors and ‘‘CRED.’’ the Proposed Rule Change promote market integrity in a manner FINRA has filed the proposed rule FINRA is proposing to amend FINRA that supports strong and vibrant capital change for immediate effectiveness. The rules to reflect name changes to two markets. In connection with this effective date will be the date of the FINRA departments: (1) The Office of ongoing initiative, FINRA has sought filing. Dispute Resolution and (2) the feedback from its members, as well as 2. Statutory Basis Department of Registration and investors, investor advocates, regulators, Disclosure. Specifically, the proposed trade associations and FINRA FINRA believes that the proposed rule change is consistent with the provisions rule change would amend the General employees. FINRA has analyzed the 6 Standards, the Code of Arbitration feedback received from these of Section 15A(b)(6) of the Act, which Procedure, the Code of Arbitration stakeholders and as a result has made requires, among other things, that significant changes across the FINRA rules must be designed to 22 17 CFR 200.30–3(a)(12). organization.5 prevent fraudulent and manipulative 1 15 U.S.C. 78s(b)(1). acts and practices, to promote just and 2 17 CFR 240.19b–4. 5 See FINRA, Progress Report on FINRA360 (June equitable principles of trade, and, in 3 15 U.S.C. 78s(b)(3)(A)(iii). 2019), https://www.finra.org/sites/default/files/ 4 17 CFR 240.19b–4(f)(3). finra360-progress-report.pdf. 6 15 U.S.C. 78o–3(b)(6).

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general, to protect investors and the Commission, 100 F Street NE, Investment Company Act of 1940 (the public interest. The proposed rule Washington, DC 20549–1090. ‘‘Act’’) and Rule 17d–1 under the Act to change will update FINRA rules to All submissions should refer to File permit certain joint transactions reflect recent name changes to two Number SR–FINRA–2020–039. This file otherwise prohibited by Sections 17(d) FINRA departments, thereby bringing number should be included on the and 57(a)(4) of the Act and Rule 17d– clarity and consistency to FINRA rules. subject line if email is used. To help the 1 under the Act. B. Self-Regulatory Organization’s Commission process and review your Summary of Application: Applicants Statement on Burden on Competition comments more efficiently, please use request an order to permit certain only one method. The Commission will closed-end investment companies and FINRA does not believe that the post all comments on the Commission’s business development companies to co- proposed rule change will result in any internet website (http://www.sec.gov/ invest in portfolio companies with burden on competition that is not rules/sro.shtml). Copies of the affiliated investment funds. necessary or appropriate in furtherance submission, all subsequent Applicants: Principal Diversified of the purposes of the Act. The amendments, all written statements Select Real Asset Fund (‘‘Existing proposed rule change would bring with respect to the proposed rule Regulated Fund’’), Principal Global clarity and consistency to FINRA rules change that are filed with the Investors, LLC (‘‘PGI’’), Principal Life without affecting the numerous services Commission, and all written Insurance Company (‘‘PLIC’’), Principal and benefits provided by the forum or communications relating to the Real Estate Strategic Debt Fund I, LP the cost to any party to use it. proposed rule change between the (‘‘Existing Affiliated Fund’’), and C. Self-Regulatory Organization’s Commission and any person, other than Principal Real Estate Investors, LLC Statement on Comments on the those that may be withheld from the (‘‘PrinREI’’). Proposed Rule Change Received From public in accordance with the Filing Dates: The application was Members, Participants, or Others provisions of 5 U.S.C. 552, will be filed on December 12, 2019, and Written comments were neither available for website viewing and amended on April 1, 2020, June 16, solicited nor received. printing in the Commission’s Public 2020, August 18, 2020, August 31, 2020, Reference Room, 100 F Street NE, and October 22, 2020. III. Date of Effectiveness of the Washington, DC 20549, on official Hearing or Notification of Hearing: An Proposed Rule Change and Timing for business days between the hours of 10 order granting the requested relief will Commission Action a.m. and 3 p.m. Copies of such filing be issued unless the Commission orders The foregoing rule change has become also will be available for inspection and a hearing. Interested persons may effective pursuant to Section 19(b)(3)(A) copying at the principal office of request a hearing by emailing the of the Act 7 and paragraph (f)(3) of Rule FINRA. All comments received will be Commission’s Secretary at Secretarys- 19b–4 thereunder.8 At any time within posted without change. Persons [email protected] and serving Applicants 60 days of the filing of the proposed rule submitting comments are cautioned that with a copy of the request, personally or change, the Commission summarily may we do not redact or edit personal by mail. Hearing requests should be temporarily suspend such rule change if identifying information from comment received by the Commission by 5:30 it appears to the Commission that such submissions. You should submit only p.m. on November 30, 2020, and should action is necessary or appropriate in the information that you wish to make be accompanied by proof of service on public interest, for the protection of available publicly. All submissions Applicants, in the form of an affidavit, investors, or otherwise in furtherance of should refer to File Number SR–FINRA– or, for lawyers, a certificate of service. the purposes of the Act. If the 2020–039 and should be submitted on Pursuant to Rule 0–5 under the Act, Commission takes such action, the or before December 1, 2020. hearing requests should state the nature Commission shall institute proceedings For the Commission, by the Division of of the writer’s interest, any facts bearing to determine whether the proposed rule Trading and Markets, pursuant to delegated upon the desirability of a hearing on the should be approved or disapproved. authority.9 matter, the reason for the request, and IV. Solicitation of Comments J. Matthew DeLesDernier, the issues contested. Persons who wish to be notified of a hearing may request Interested persons are invited to Assistant Secretary. notification by emailing the submit written data, views and [FR Doc. 2020–24889 Filed 11–9–20; 8:45 am] Commission’s Secretary at Secretarys- arguments concerning the foregoing, BILLING CODE 8011–01–P [email protected]. including whether the proposed rule change is consistent with the Act. ADDRESSES: The Commission: Comments may be submitted by any of SECURITIES AND EXCHANGE [email protected]. Applicants: the following methods: COMMISSION Attn: John L. Sullivan, Sullivan.john.l@ principal.com. Electronic Comments [Investment Company Act Release No. 34086; File No. 812–15083] FOR FURTHER INFORMATION CONTACT: • Use the Commission’s internet Joseph Toner, Senior Counsel, at (202) comment form (http://www.sec.gov/ Principal Diversified Select Real Asset 551–7595, or David Nicolardi, Branch rules/sro.shtml); or Fund, et al. Chief, at (202) 551–6825 (Chief • Send an email to rule-comments@ November 4, 2020. Counsel’s Office, Division of Investment sec.gov. Please include File Number SR– Management). FINRA–2020–039 on the subject line. AGENCY: Securities and Exchange Commission (‘‘Commission’’). SUPPLEMENTARY INFORMATION: The Paper Comments ACTION: Notice. following is a summary of the • Send paper comments in triplicate application. The complete application to Secretary, Securities and Exchange Notice of application for an order may be obtained via the Commission’s under Sections 17(d) and 57(i) of the website by searching for the file 7 15 U.S.C. 78s(b)(3)(A). number, or for an Applicant using the 8 17 CFR 240.19b–4(f)(3). 9 17 CFR 200.30–3(a)(12). Company name box, at http://

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www.sec.gov/search/search.htm or by with one or more Affiliated Funds and/ Applicants represent that the Existing calling (202) 551–8090. or one or more other Regulated Funds Affiliated Fund is a separate and in reliance on the Order. ‘‘Potential Co- distinct legal entity and it would be an Introduction Investment Transaction’’ means any investment company but for Section 1. Applicants request an order of the investment opportunity in which a 3(c)(7) of the Act. Commission under Sections 17(d) and Regulated Fund (or its Wholly-Owned 7. Each of Applicants may be deemed 57(i) and Rule 17d–1 thereunder (the Investment Sub) could not participate ‘‘Order’’) to permit, subject to the terms to be directly or indirectly controlled by together with one or more Affiliated PFG. Additionally, PGI is an indirect and conditions set forth in the Funds and/or one or more other application (the ‘‘Conditions’’), a wholly-owned subsidiary of PFG. Thus, Regulated Funds without obtaining and PFG may be deemed to control the Regulated Fund 1 and one or more other 4 relying on the Order. For the avoidance Regulated Funds and the Affiliated Regulated Funds and/or one or more of doubt, investment opportunities that Affiliated Funds 2 to enter into Co- Funds. Applicants state that PFG, are sourced by sub-advisers that are not however, does not currently offer Investment Transactions with each Advisers are excluded from the other. ‘‘Co-Investment Transaction’’ investment advisory services to any definitions of Potential Co-Investment person and is not expected to do so in means any transaction in which a Transaction. Only investment the future. Applicants state that as a Regulated Fund (or its Wholly-Owned opportunities that are sourced by 3 result, PFG has not been included as an Investment Sub) participated together Advisers will be considered Potential Applicant. Co-Investment Transactions. 1 ‘‘Regulated Funds’’ means the Existing 8. Applicants state that a Regulated Regulated Fund and any Future Regulated Funds. Applicants ‘‘Future Regulated Fund’’ means a closed-end Fund may, from time to time, form one management investment company (a) that is 2. The Existing Regulated Fund is a or more Wholly-Owned Investment registered under the Act or has elected to be Delaware statutory trust that is Subs. Such a subsidiary may be regulated as a BDC, (b) whose investment adviser registered with the Commission under prohibited from investing in a Co- (and sub-adviser(s), if any) is an Adviser (defined below), and (c) that intends to participate in the Co- the Act as a closed-end, diversified Investment Transaction with a Investment Program (defined below). ‘‘Adviser’’ management investment company. The Regulated Fund (other than its parent) means (a) PGI, (b) PrinREI, and (c) any future Existing Regulated Fund relies on Rule or any Affiliated Fund because it would investment adviser that (i) controls, is controlled by be a company controlled by its parent or is under common control with PGI and (ii) is 23c–3 under the Act and operates as an registered as an investment adviser under the interval fund. The Existing Regulated Regulated Fund for purposes of Section Investment Advisers Act of 1940 (the ‘‘Advisers Fund’s Board 5 is comprised of a 57(a)(4) and Rule 17d–1. Applicants Act’’), and (iii) is not a Regulated Fund or a majority of members who are request that each Wholly-Owned subsidiary of a Regulated Fund. An Adviser will not 6 rely on the requested Order with respect to any Independent Trustees. Investment Sub be permitted to investment vehicles it manages that have a sub- 3. PGI is a Delaware limited liability participate in Co-Investment adviser other than to the extent those vehicles are company that is registered under the Transactions in lieu of the Regulated sub-advised by an Adviser. ‘‘Co-Investment Advisers Act. PGI serves as the Fund that owns it and that the Wholly- Program’’ means the proposed co-investment program that would permit one or more Regulated investment adviser to the Existing Owned Investment Sub’s participation Funds and/or one or more Affiliated Funds to Affiliated Funds and to certain asset in any such transaction be treated, for participate in the same investment opportunities classes of the PFG Accounts. purposes of the Order, as though the where such participation would otherwise be 4. PLIC is a stock life insurance prohibited under Section 57(a)(4) and Rule 17d–1 parent Regulated Fund were by (a) co-investing with each other in securities company incorporated in Iowa. PLIC participating directly. Applicants issued by issuers in private placement transactions operates as an indirect wholly-owned represent that this treatment is justified in which an Adviser negotiates terms in addition to subsidiary of PFG and, with respect to because a Wholly-Owned Investment price, and (b) making Follow-On Investments certain asset classes, is advised by PGI (defined below). The term ‘‘private placement Sub would have no purpose other than transactions’’ means transactions in which the offer and PrinREI pursuant to an investment serving as a holding vehicle for the and sale of securities by the issuer are exempt from advisory agreement. Regulated Fund’s investments and, registration under the Securities Act of 1933 (the 5. PrinREI is a Delaware limited therefore, no conflicts of interest could ‘‘Securities Act’’). liability company that is registered 2 ‘‘Affiliated Fund’’ means the Existing Affiliated arise between the parent Regulated Fund, the PFG Accounts (defined below), and any under the Advisers Act and (i) serves as Fund and the Wholly-Owned entity (a) whose investment adviser (and sub- the investment manager of the Existing Investment Sub. Applicants represent adviser(s), if any) is an Adviser, (b) that either (x) Affiliated Fund and (ii) serves as an that the Board of the parent Regulated would be an investment company but for Section investment sub-adviser to the Existing 3(c)(1), 3(c)(5)(C), or 3(c)(7) of the Act or (y) relies Fund would make all relevant on Rule 3a–7 under the Act, and (c) that intends Regulated Fund, and to certain asset determinations under the Conditions to participate in the Co-Investment Program. ‘‘PFG classes of the PFG Accounts. with regard to a Wholly-Owned Accounts’’ means PLIC, and any future direct or 6. The Existing Affiliated Fund is a indirect wholly-owned or majority-owned Investment Sub’s participation in a Co- subsidiaries Principal Financial Group, Inc. Delaware limited partnership. Investment Transaction, and the Board (‘‘PFG’’) that intend to participate in Co-Investment would be informed of, and take into Transactions. 4 All existing entities that currently intend to rely consideration, any proposed use of a 3 on the Order have been named as Applicants and ‘‘Wholly-Owned Investment Sub’’ means an Wholly-Owned Investment Sub in the entity (i) that is wholly-owned by a Regulated Fund any existing or future entities that may rely on the (with such Regulated Fund at all times holding, Order in the future will comply with its terms and Regulated Fund’s place. If the parent beneficially and of record, 100% of the voting and Conditions set forth in the application. Regulated Fund proposes to participate economic interests); (ii) whose sole business 5 ‘‘Board’’ means the board of trustees (or the in the same Co-Investment Transaction purpose is to hold one or more investments on equivalent) of a Regulated Fund. with any of its Wholly-Owned behalf of such Regulated Fund; (iii) with respect to 6 ‘‘Independent Trustee’’ means a member of the which such Regulated Fund’s Board (defined Board of any relevant entity who is not an Investment Subs, Applicants represent below) has the sole authority to make all ‘‘interested person’’ as defined in Section 2(a)(19) that the Board of the parent Regulated determinations with respect to the entity’s of the Act. No Independent Trustee of a Regulated Fund will also be informed of, and take participation under the Conditions; and (iv) that Fund will have a financial interest in any Co- into consideration, the relative would either (a) be an investment company but for Investment Transaction, other than indirectly Section 3(c)(1), 3(c)(5)(C), or 3(c)(7) of the Act, or through share ownership in one of the Regulated participation of the Regulated Fund and (b) relied on Rule 3a–7 under the Act. Funds. the Wholly-Owned Investment Sub.

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Applicants’ Representations Regulated Fund, the policies and 14. If the aggregate Internal Orders for procedures will require that the relevant a Potential Co-Investment Transaction A. Allocation Process Investment Team responsible for that do not exceed the size of the investment 9. Applicants state that each of PGI Regulated Fund receive sufficient opportunity immediately prior to the and PrinREI are presented with a information to allow the Regulated submission of the orders to the substantial number of investment Fund’s Adviser to make its independent underwriter, broker, dealer or issuer, as opportunities each year on behalf of its determination and recommendations applicable (the ‘‘External Submission’’), clients and must determine how to under the Conditions. then each Internal Order will be allocate those opportunities in a manner 12. The Adviser to each applicable fulfilled as placed. If, on the other hand, that, over time, is fair and equitable to Regulated Fund will then make an the aggregate Internal Orders for a all of its clients. Such investment independent determination of the Potential Co-Investment Transaction opportunities may be Potential Co- appropriateness of the investment for exceed the size of the investment Investment Transactions. the Regulated Fund in light of the opportunity immediately prior to the 10. Applicants represent that the each Regulated Fund’s then-current External Submission, then the allocation of PGI and PrinREI has established circumstances. If the Adviser to a of the opportunity will be made pro rata rigorous processes for allocating initial Regulated Fund deems the Regulated on the basis of the size of the Internal investment opportunities, opportunities Fund’s participation in such Potential Orders.11 If, subsequent to such External for subsequent investments in an issuer Co-Investment Transaction to be Submission, the size of the opportunity and dispositions of securities holdings appropriate, it will formulate a is increased or decreased, or if the terms reasonably designed to treat all clients recommendation regarding the proposed of such opportunity, or the facts and fairly and equitably. Further, Applicants order amount for the Regulated Fund. circumstances applicable to the represent that these processes will be 13. Applicants state that, for each Regulated Funds’ or the Affiliated extended and modified in a manner Regulated Fund and Affiliated Fund Funds’ consideration of the opportunity, reasonably designed to ensure that the whose Adviser recommends change, the participants will be additional transactions permitted under participating in a Potential Co- permitted to submit revised Internal the Order will both (i) be fair and Investment Transaction, the applicable Orders in accordance with written equitable to the Regulated Funds and Investment Team will approve the allocation policies and procedures that the Affiliated Funds and (ii) comply investment and the investment amount, the Advisers will establish, implement with the Conditions. and will coordinate an order submission and maintain.12 11. Applicants represent that PGI and process with a designated representative PrinREI are, and any future Adviser will of each applicable Investment Team of B. Follow-On Investments be, organized and managed such that a Regulated Fund and Affiliated Fund. 15. Applicants state that from time to the relevant portfolio management Applicants state further that, at this time the Regulated Funds and Affiliated teams (‘‘Investment Teams’’) responsible stage, each proposed order or Funds may have opportunities to make for evaluating investment opportunities investment amount may be reviewed Follow-On Investments 13 in an issuer in and making investment decisions on and adjusted, in accordance with the which a Regulated Fund and one or behalf of client assets managed by that applicable Adviser’s written allocation more other Regulated Funds and/or Adviser are promptly notified of the policies and procedures.9 The order of opportunities made available to the a Regulated Fund or Affiliated Fund the Required Majority will be determined as if the Advisers. If the requested Order is resulting from this process is referred to Regulated Fund were a BDC subject to Section granted, the Advisers will establish, 57(o). as its ‘‘Internal Order.’’ The final 11 The Advisers will maintain records of all maintain and implement policies and Internal Order will be submitted for proposed order amounts, Internal Orders and procedures reasonably designed to approval by the Required Majority of External Submissions in conjunction with Potential ensure that, when such opportunities any participating Regulated Fund in Co-Investment Transactions. Each applicable arise, the Advisers to the relevant 10 Adviser will provide the Eligible Directors (defined accordance with the Conditions. below) with information concerning the Affiliated Regulated Funds are promptly notified Funds’ and Regulated Funds’ order sizes to assist and receive the same information about Investment Transactions that fall within the the Eligible Directors with their review of the the opportunity as any other Advisers Regulated Fund’s then-current Objectives and applicable Regulated Fund’s investments for Strategies. Board-Established Criteria will be compliance with the Conditions. ‘‘Eligible considering the opportunity for their objective and testable, meaning that they will be Directors’’ means, with respect to a Regulated Fund clients. In particular, consistent with based on observable information, such as industry/ and a Potential Co-Investment Transaction, the Condition 1, if a Potential Co- sector of the issuer, minimum EBITDA of the issuer, members of the Regulated Fund’s Board eligible to Investment Transaction falls within the asset class of the investment opportunity or vote on that Potential Co-Investment Transaction then-current Objectives and Strategies 7 required commitment size, and not on under Section 57(o) of the Act. characteristics that involve a discretionary 12 8 However, if the size of the opportunity is and any Board-Established Criteria of a assessment. The Adviser to the Regulated Fund may decreased such that the aggregate of the original from time to time recommend criteria for the Internal Orders would exceed the amount of the 7 ‘‘Objectives and Strategies’’ means a Regulated Board’s consideration, but Board-Established remaining investment opportunity, then upon Fund’s investment objectives and strategies, as Criteria will only become effective if approved by submitting any revised order amount to the Board described in its most current registration statement a majority of the Independent Trustees. The of a Regulated Fund for approval, the Adviser to the on Form N–2, other current filings with the Independent Trustees of a Regulated Fund may at Regulated Fund will also notify the Board promptly Commission under the Securities Act or under the any time rescind, suspend or qualify its approval of the amount that the Regulated Fund would Securities Exchange Act of 1934, as amended, and of any Board-Established Criteria, though receive if the remaining investment opportunity its most current report to stockholders. Applicants anticipate that, under normal were allocated pro rata on the basis of the size of 8 ‘‘Board-Established Criteria’’ means criteria that circumstances, the Board would not modify these the original Internal Orders. The Board of the the Board of a Regulated Fund may establish from criteria more often than quarterly. Regulated Fund will then either approve or time to time to describe the characteristics of 9 The reason for any such adjustment to a disapprove of the investment opportunity in Potential Co-Investment Transactions regarding proposed order amount will be documented in accordance with Conditions 2, 6, 7, 8 or 9, as which the Adviser to the Regulated Fund should be writing and preserved in the records of the applicable. notified under Condition 1. The Board-Established Advisers. 13 ‘‘Follow-On Investment’’ means an additional Criteria will be consistent with the Regulated 10 ‘‘Required Majority’’ means a required investment in the same issuer, including, but not Fund’s Objectives and Strategies. If no Board- majority, as defined in Section 57(o) of the Act. In limited to, through the exercise of warrants, Established Criteria are in effect, then the Regulated the case of a Regulated Fund that is a registered conversion privileges or other rights to purchase Fund’s Adviser will be notified of all Potential Co- closed-end fund, the Board members that make up securities of the issuer.

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Affiliated Funds previously have Applicants believe that these Pro Rata Pro Rata Disposition 19 or (ii) the invested. and Non-Negotiated Follow-On securities are Tradable Securities 20 and 16. Applicants propose that Follow- Investments do not present a significant the Disposition meets the other On Investments would be divided into opportunity for overreaching on the part requirements of Condition 6(c)(ii). Pro two categories depending on whether of any Adviser and thus do not warrant Rata Dispositions and Dispositions of a the prior investment was a Co- the time or the attention of the Board. Tradable Security remain subject to the Investment Transaction or a Pre- Pro Rata Follow-On Investments and Board’s periodic review in accordance Boarding Investment.14 If such Non-Negotiated Follow-On Investments with Condition 10. Regulated Funds and Affiliated Funds remain subject to the Board’s periodic D. Delayed Settlement had previously participated in a Co- review in accordance with Condition Investment Transaction with respect to 10. 20. Applicants represent that all Regulated Funds and Affiliated Funds the issuer, then the terms and approval C. Dispositions of the Follow-On Investment would be participating in a Co-Investment subject to the Standard Review Follow- 18. Applicants propose that Transaction will invest at the same time, Ons described in Condition 8. If such Dispositions 17 would be divided into for the same price and with the same Regulated Funds and Affiliated Funds two categories. If the Regulated Funds terms, conditions, class, registration have not previously participated in a and Affiliated Funds holding rights and any other rights, so that none Co-Investment Transaction with respect investments in the issuer had previously of them receives terms more favorable to the issuer but hold a Pre-Boarding participated in a Co-Investment than any other. However, the settlement Investment, then the terms and approval Transaction with respect to the issuer, date for an Affiliated Fund in a Co- of the Follow-On Investment would be then the terms and approval of the Investment Transaction may occur up to subject to the Enhanced-Review Follow- Disposition would be subject to the ten business days after the settlement Ons described in Condition 9. All Standard Review Dispositions date for the Regulated Fund, and vice Enhanced Review Follow-Ons require requirements described in Condition 6. versa. Nevertheless, in all cases, (i) the the approval of the Required Majority. If the Regulated Funds and Affiliated date on which the commitment of the For a given issuer, the participating Funds have not previously participated Affiliated Funds and Regulated Funds is Regulated Funds and Affiliated Funds in a Co-Investment Transaction with made will be the same even where the would need to comply with the respect to the issuer but hold a Pre- settlement date is not and (ii) the requirements of Enhanced-Review Boarding Investment, then the terms earliest settlement date and the latest Follow-Ons only for the first Co- and approval of the Disposition would settlement date of any Affiliated Fund Investment Transaction. Subsequent Co- be subject to the Enhanced Review or Regulated Fund participating in the Investment Transactions with respect to Dispositions requirements described in transaction will occur within ten the issuer would be governed by the Condition 7. Subsequent Dispositions business days of each other. with respect to the same issuer would requirements of Standard Review E. Holders be governed by Condition 6.18 Follow-Ons. 21. Under Condition 15, if an Adviser, 17. A Regulated Fund would be 19. A Regulated Fund may participate its principals, or any person controlling, permitted to invest in Standard Review in a Standard Review Disposition either controlled by, or under common control Follow-Ons either with the approval of with the approval of the Required with the Adviser or its principals, and the Required Majority under Condition Majority under Condition 6(d) or the Affiliated Funds (collectively, the 8(c) or without Board approval under without Board approval under ‘‘Holders’’) own in the aggregate more Condition 8(b) if it is (i) a Pro Rata Condition 6(c) if (i) the Disposition is a than 25 percent of the outstanding Follow-On Investment 15 or (ii) a Non- 16 participates together with one or more Affiliated Negotiated Follow-On Investment. Funds and/or one or more other Regulated Funds 19 A ‘‘Pro Rata Disposition’’ is a Disposition (i) in (i) in which the only term negotiated by or on behalf which the participation of each Affiliated Fund and 14 ‘‘Pre-Boarding Investments’’ are investments in of the funds is price and (ii) with respect to which, each Regulated Fund is proportionate to its an issuer held by a Regulated Fund as well as one if the transaction were considered on its own, the outstanding investment in the security subject to or more Affiliated Funds and/or one or more other funds would be entitled to rely on one of the JT No- Disposition immediately preceding the Disposition; Regulated Funds that were acquired prior to Action Letters. ‘‘JT No-Action Letters’’ means SMC and (ii) in the case of a Regulated Fund, a majority participating in any Co-Investment Transaction: (i) Capital, Inc., SEC Staff No-Action Letter (pub. avail. of the Board has approved the Regulated Fund’s In transactions in which the only term negotiated Sept. 5, 1995) and Massachusetts Mutual Life participation in pro rata Dispositions as being in the by or on behalf of such funds was price in reliance Insurance Company, SEC Staff No-Action Letter best interests of the Regulated Fund. The Regulated on one of the JT No-Action Letters (defined below); (pub. avail. June 7, 2000). Fund’s Board may refuse to approve, or at any time or (ii) in transactions occurring at least 90 days 17 ‘‘Disposition’’ means the sale, exchange or rescind, suspend or qualify, its approval of Pro Rata apart and without coordination between the other disposition of an interest in a security of an Dispositions, in which case all subsequent Regulated Fund and any Affiliated Fund or other issuer. Dispositions will be submitted to the Regulated Regulated Fund. 18 However, with respect to an issuer, if a Fund’s Eligible Directors. 15 A ‘‘Pro Rata Follow-On Investment’’ is a Regulated Fund’s first Co-Investment Transaction is 20 ‘‘Tradable Security’’ means a security that Follow-On Investment (i) in which the participation an Enhanced Review Disposition, and the Regulated meets the following criteria at the time of of each Affiliated Fund and each Regulated Fund Fund does not dispose of its entire position in the Disposition: (i) It trades on a national securities is proportionate to its outstanding investments in Enhanced Review Disposition, then before such exchange or designated offshore securities market the issuer or security, as appropriate, immediately Regulated Fund may complete its first Standard as defined in Rule 902(b) under the Securities Act; preceding the Follow-On Investment, and (ii) in the Review Follow-On in such issuer, the Eligible (ii) it is not subject to restrictive agreements with case of a Regulated Fund, a majority of the Board Directors must review the proposed Follow-On the issuer or other security holders; and (iii) it has approved the Regulated Fund’s participation in Investment not only on a stand-alone basis but also trades with sufficient volume and liquidity the pro rata Follow-On Investments as being in the in relation to the total economic exposure in such (findings as to which are documented by the best interests of the Regulated Fund. The Regulated issuer (i.e., in combination with the portion of the Advisers to any Regulated Funds holding Fund’s Board may refuse to approve, or at any time Pre-Boarding Investment not disposed of in the investments in the issuer and retained for the life rescind, suspend or qualify, its approval of Pro Rata Enhanced Review Disposition), and the other terms of the Regulated Fund) to allow each Regulated Follow-On Investments, in which case all of the investments. This additional review is Fund to dispose of its entire position remaining subsequent Follow-On Investments will be required because such findings were not required after the proposed Disposition within a short period submitted to the Regulated Fund’s Eligible Directors in connection with the prior Enhanced Review of time not exceeding 30 days at approximately the in accordance with Condition 8(c). Disposition, but they would have been required had value (as defined by Section 2(a)(41) of the Act) at 16 A ‘‘Non-Negotiated Follow-On Investment’’ is a the first Co-Investment Transaction been an which the Regulated Fund has valued the Follow-On Investment in which a Regulated Fund Enhanced Review Follow-On. investment.

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voting shares (the ‘‘Shares’’) of a Regulated Fund; and (iv) the Advisers Board-Established Criteria of any Regulated Fund, then the Holders will (including PGI and PrinREI) are under Regulated Fund the Adviser manages. vote such Shares as required under common control. Thus, each of the (b) When an Adviser to a Regulated Condition 15; provided however, that Affiliated Funds could be deemed to be Fund is notified of a Potential Co- Condition 15 will not apply to a a person related to the Regulated Funds Investment Transaction under Regulated Fund during any time which in a manner described by Section 57(b) Condition 1(a), the Adviser will make the Holders in the aggregate own 100% and related to the other Regulated an independent determination of the of the Shares of such Regulated Fund. Funds in a manner described by Rule appropriateness of the investment for the Regulated Fund in light of the Applicants’ Legal Analysis 17d–1; and therefore the prohibitions of Rule 17d–1 and Section 57(a)(4) would Regulated Fund’s then-current 1. Section 17(d) of the Act and Rule apply respectively to prohibit the circumstances. 17d–1 under the Act prohibit Affiliated Funds from participating in participation by a registered investment 2. Board Approvals of Co-Investment Co-Investment Transactions with the Transactions company and an affiliated person in any Regulated Funds. (a) If the Adviser deems a Regulated ‘‘joint enterprise or other joint 4. In passing upon applications under Fund’s participation in any Potential arrangement or profit-sharing plan,’’ as Rule 17d–1, the Commission considers Co-Investment Transaction to be defined in the rule, without prior whether the company’s participation in appropriate for the Regulated Fund, it approval by the Commission by order the joint transaction is consistent with will then determine an appropriate level upon application. Section 17(d) of the the provisions, policies, and purposes of Act and Rule 17d–1 under the Act are of investment for the Regulated Fund. the Act and the extent to which such applicable to Regulated Funds that are (b) If the aggregate amount participation is on a basis different from registered closed-end investment recommended by the Advisers to be or less advantageous than that of other companies. invested in the Potential Co-Investment 2. Similarly, with regard to BDCs, participants. Transaction by the participating Section 57(a)(4) of the Act generally 5. Applicants state that in the absence Regulated Funds and any participating prohibits certain persons specified in of the requested relief, in many Affiliated Funds, collectively, exceeds Section 57(b) from participating in joint circumstances the Regulated Funds the amount of the investment transactions with the BDC or a company would be limited in their ability to opportunity, the investment opportunity controlled by the BDC in contravention participate in attractive and appropriate will be allocated among them pro rata of rules as prescribed by the investment opportunities. Applicants based on the size of the Internal Orders, Commission. Section 57(i) of the Act state that, as required by Rule 17d–1(b), as described in Section III.A.1.b. of the provides that, until the Commission the Conditions ensure that the terms on application. Each Adviser to a prescribes rules under Section 57(a)(4), which Co-Investment Transactions may participating Regulated Fund will the Commission’s rules under Section be made will be consistent with the promptly notify and provide the Eligible 17(d) of the Act applicable to registered participation of the Regulated Funds Directors with information concerning closed-end investment companies will being on a basis that it is neither the Affiliated Funds’ and Regulated be deemed to apply to transactions different from nor less advantageous Funds’ order sizes to assist the Eligible subject to Section 57(a)(4). Because the than other participants, thus protecting Directors with their review of the Commission has not adopted any rules the equity holders of any participant applicable Regulated Fund’s under Section 57(a)(4), Rule 17d–1 also from being disadvantaged. Applicants investments for compliance with these applies to joint transactions with further state that the Conditions ensure Conditions. Regulated Funds that are BDCs. that all Co-Investment Transactions are (c) After making the determinations 3. Co-Investment Transactions are reasonable and fair to the Regulated required in Condition 1(b) above, each prohibited by either or both of Rule Funds and their shareholders and do Adviser to a participating Regulated 17d–1 and Section 57(a)(4) without a not involve overreaching by any person Fund will distribute written information prior exemptive order of the concerned, including the Advisers. concerning the Potential Co-Investment Commission to the extent that the Applicants state that the Regulated Transaction (including the amount Affiliated Funds and the Regulated Funds’ participation in the Co- proposed to be invested by each Funds participating in such transactions Investment Transactions in accordance participating Regulated Fund and each fall within the category of persons with the Conditions will be consistent participating Affiliated Fund) to the described by Rule 17d–1 and/or Section with the provisions, policies, and Eligible Directors of its participating 57(b), as applicable, vis-a`-vis each purposes of the Act and would be done Regulated Fund(s) for their participating Regulated Fund. Each of in a manner that is not different from, consideration. A Regulated Fund will the participating Regulated Funds and or less advantageous than, that of other enter into a Co-Investment Transaction Affiliated Funds may be deemed to be participants. with one or more other Regulated Funds affiliated persons vis-a`-vis a Regulated Applicants’ Conditions or Affiliated Funds only if, prior to the Fund within the meaning of Section Regulated Fund’s participation in the 2(a)(3) by reason of common control Applicants agree that the Order will Potential Co-Investment Transaction, a because (i) PrinREI manages, and may be subject to the following Conditions: Required Majority concludes that: be deemed to control, the Existing 1. Identification and Referral of (i) The terms of the transaction, Affiliated Fund; (ii) each of PGI and Potential Co-Investment Transactions including the consideration to be paid, PrinREI manages, and may be deemed to are reasonable and fair to the Regulated control, certain asset classes of the PFG (a) The Advisers will establish, Fund and its equity holders and do not Accounts; (iii) PGI is the investment maintain and implement policies and involve overreaching in respect of the adviser to, and may be deemed to procedures reasonably designed to Regulated Fund or its equity holders on control the Existing Regulated Fund, ensure that each Adviser is promptly the part of any person concerned; and an Adviser will be the investment notified of all Potential Co-Investment (ii) the transaction is consistent with: adviser or sub-adviser to, and may be Transactions that fall within the then- (A) The interests of the Regulated deemed to control, any Future current Objectives and Strategies and Fund’s equity holders; and

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(B) the Regulated Fund’s then-current the amount of each such party’s apart. The grant to one or more Objectives and Strategies; investment; and Regulated Funds or Affiliated Funds, (iii) the investment by any other (iv) the proposed investment by the but not the respective Regulated Fund, Regulated Fund(s) or Affiliated Fund(s) Regulated Fund will not involve of the right to nominate a director for would not disadvantage the Regulated compensation, remuneration or a direct election to a portfolio company’s board Fund, and participation by the or indirect 21 financial benefit to the of directors, the right to have an Regulated Fund would not be on a basis Advisers, any other Regulated Fund, the observer on the board of directors or different from, or less advantageous Affiliated Funds or any affiliated person similar rights to participate in the than, that of any other Regulated of any of them (other than the parties to governance or management of the Fund(s) or Affiliated Fund(s) the Co-Investment Transaction), except portfolio company will not be participating in the transaction; (A) to the extent permitted by Condition interpreted so as to violate this provided that the Required Majority 14, (B) to the extent permitted by Condition 5, if Condition 2(c)(iii)(B) is shall not be prohibited from reaching Section 17(e) or 57(k), as applicable, (C) met. the conclusions required by this indirectly, as a result of an interest in 6. Standard Review Dispositions. Condition 2(c)(iii) if: the securities issued by one of the (a) General. If any Regulated Fund or (A) The settlement date for another parties to the Co-Investment Affiliated Fund elects to sell, exchange Regulated Fund or an Affiliated Fund in Transaction, or (D) in the case of fees or or otherwise dispose of an interest in a a Co-Investment Transaction is later other compensation described in security and one or more Regulated Funds and Affiliated Funds have than the settlement date for the Condition 2(c)(iii)(B)(z). 3. Right to Decline. Each Regulated previously participated in a Co- Regulated Fund by no more than ten Fund has the right to decline to Investment Transaction with respect to business days or earlier than the participate in any Potential Co- the issuer, then: settlement date for the Regulated Fund Investment Transaction or to invest less (i) The Adviser to such Regulated by no more than ten business days, in than the amount proposed. Fund or Affiliated Fund will notify each either case, so long as: (x) The date on 4. General Limitation. Except for Regulated Fund that holds an which the commitment of the Affiliated Follow-On Investments made in investment in the issuer of the proposed Funds and Regulated Funds is made is accordance with Conditions 8 and 9 Disposition at the earliest practical time; the same; and (y) the earliest settlement below,22 a Regulated Fund will not and date and the latest settlement date of invest in reliance on the Order in any (ii) the Adviser to each Regulated any Affiliated Fund or Regulated Fund issuer in which a Related Party has an Fund that holds an investment in the participating in the transaction will investment.23 issuer will formulate a recommendation occur within ten business days of each 5. Same Terms and Conditions. A as to participation by such Regulated other; or Regulated Fund will not participate in Fund in the Disposition. (B) any other Regulated Fund or any Potential Co-Investment (b) Same Terms and Conditions. Each Affiliated Fund, but not the Regulated Transaction unless (i) the terms, Regulated Fund will have the right to Fund itself, gains the right to nominate conditions, price, class of securities to participate in such Disposition on a a director for election to a portfolio be purchased, date on which the proportionate basis, at the same price company’s board of directors, the right commitment is entered into and and on the same terms and conditions to have a board observer or any similar registration rights (if any) will be the as those applicable to the Affiliated right to participate in the governance or same for each participating Regulated Funds and any other Regulated Fund. management of the portfolio company Fund and Affiliated Fund and (ii) the (c) No Board Approval Required. A so long as: (x) The Eligible Directors will earliest settlement date and the latest Regulated Fund may participate in such have the right to ratify the selection of settlement date of any participating a Disposition without obtaining prior such director or board observer, if any; Regulated Fund or Affiliated Fund will approval of the Required Majority if: (y) the Adviser agrees to, and does, occur as close in time as practicable and (i) (A) The participation of each provide periodic reports to the in no event more than ten business days Regulated Fund and Affiliated Fund in Regulated Fund’s Board with respect to such Disposition is proportionate to its the actions of such director or the 21 For example, procuring the Regulated Fund’s then-current holding of the security (or information received by such board investment in a Potential Co-Investment securities) of the issuer that is (or are) Transaction to permit an affiliate to complete or the subject of the Disposition; 24 (B) the observer or obtained through the obtain better terms in a separate transaction would exercise of any similar right to constitute an indirect financial benefit. Board of the Regulated Fund has participate in the governance or 22 This exception applies only to Follow-On approved as being in the best interests management of the portfolio company; Investments by a Regulated Fund in issuers in of the Regulated Fund the ability to and (z) any fees or other compensation which that Regulated Fund already holds participate in such Dispositions on a pro investments. rata basis (as described in greater detail that any other Regulated Fund or 23 ‘‘Related Party’’ means (i) any Close Affiliate Affiliated Fund or any affiliated person and (ii) in respect of matters as to which any in the application); and (C) the Board of of any other Regulated Fund or Adviser has knowledge, any Remote Affiliate. the Regulated Fund is provided on a Affiliated Fund receives in connection ‘‘Close Affiliate’’ means the Advisers, the Regulated quarterly basis with a list of all Funds, the Affiliated Funds and any other person Dispositions made in accordance with with the right of one or more Regulated described in Section 57(b) (after giving effect to Funds or Affiliated Funds to nominate Rule 57b–1) in respect of any Regulated Fund this Condition; or a director or appoint a board observer or (treating any registered investment company or (ii) each security is a Tradable otherwise to participate in the series thereof as a BDC for this purpose) except for Security and (A) the Disposition is not limited partners included solely by reason of the to the issuer or any affiliated person of governance or management of the reference in Section 57(b) to Section 2(a)(3)(D). portfolio company will be shared ‘‘Remote Affiliate’’ means any person described in the issuer; and (B) the security is sold proportionately among any participating Section 57(e) in respect of any Regulated Fund Affiliated Funds (who may, in turn, (treating any registered investment company or 24 In the case of any Disposition, proportionality series thereof as a BDC for this purpose) and any will be measured by each participating Regulated share their portion with their affiliated limited partner holding 5% or more of the relevant Fund’s and Affiliated Fund’s outstanding persons) and any participating limited partner interests that would be a Close investment in the security in question immediately Regulated Fund(s) in accordance with Affiliate but for the exclusion in that definition. preceding the Disposition.

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for cash in a transaction in which the as those applicable to the Affiliated securities of the portfolio company of only term negotiated by or on behalf of Funds and any other Regulated Fund; the proposed transaction at the earliest the participating Regulated Funds and (ii) Original Investments. All of the practical time; and Affiliated Funds is price. Affiliated Funds’ and Regulated Funds’ (ii) the Adviser to each Regulated (d) Standard Board Approval. In all investments in the issuer are Pre- Fund that holds an investment in the other cases, the Adviser will provide its Boarding Investments; issuer will formulate a recommendation written recommendation as to the (iii) Advice of counsel. Independent as to the proposed participation, Regulated Fund’s participation to the counsel to the Board advises that the including the amount of the proposed Eligible Directors and the Regulated making and holding of the investments investment, by such Regulated Fund. Fund will participate in such in the Pre-Boarding Investments were (b) No Board Approval Required. A Disposition solely to the extent that a not prohibited by Section 57 (as Regulated Fund may participate in the Required Majority determines that it is modified by Rule 57b–1) or Rule 17d– Follow-On Investment without in the Regulated Fund’s best interests. 1, as applicable; obtaining prior approval of the Required 7. Enhanced Review Dispositions. (iv) Multiple Classes of Securities. All Majority if: (a) General. If any Regulated Fund or Regulated Funds and Affiliated Funds (i) (A) The proposed participation of Affiliated Fund elects to sell, exchange that hold Pre-Boarding Investments in each Regulated Fund and each or otherwise dispose of a Pre-Boarding the issuer immediately before the time Affiliated Fund in such investment is Investment in a Potential Co-Investment of completion of the Co-Investment proportionate to its outstanding Transaction and the Regulated Funds Transaction hold the same security or investments in the issuer or the security and Affiliated Funds have not securities of the issuer. For the purpose at issue, as appropriate,26 immediately previously participated in a Co- of determining whether the Regulated preceding the Follow-On Investment; Investment Transaction with respect to Funds and Affiliated Funds hold the and (B) the Board of the Regulated Fund the issuer: same security or securities, they may has approved as being in the best (i) The Adviser to such Regulated disregard any security held by some but interests of the Regulated Fund the Fund or Affiliated Fund will notify each not all of them if, prior to relying on the ability to participate in Follow-On Regulated Fund that holds an Order, the Required Majority is Investments on a pro rata basis (as investment in the issuer of the proposed presented with all information described in greater detail in the Disposition at the earliest practical time; necessary to make a finding, and finds, application); or (ii) the Adviser to each Regulated that: (x) Any Regulated Fund’s or (ii) it is a Non-Negotiated Follow-On Fund that holds an investment in the Affiliated Fund’s holding of a different Investment. issuer will formulate a recommendation class of securities (including for this (c) Standard Board Approval. In all as to participation by such Regulated purpose a security with a different other cases, the Adviser will provide its Fund in the Disposition; and maturity date) is immaterial 25 in written recommendation as to the (iii) the Advisers will provide to the amount, including immaterial relative to Regulated Fund’s participation to the Board of each Regulated Fund that the size of the issuer; and (y) the Board Eligible Directors and the Regulated holds an investment in the issuer all records the basis for any such finding in Fund will participate in such Follow-On information relating to the existing its minutes. In addition, securities that Investment solely to the extent that a investments in the issuer of the differ only in respect of issuance date, Required Majority makes the Regulated Funds and Affiliated Funds, currency, or denominations may be determinations set forth in Condition including the terms of such investments treated as the same security; and 2(c). If the only previous Co-Investment and how they were made, that is (v) No control. The Affiliated Funds, Transaction with respect to the issuer necessary for the Required Majority to the other Regulated Funds, and their was an Enhanced Review Disposition, make the findings required by this affiliated persons (within the meaning the Eligible Directors must complete Condition. of Section 2(a)(3)(C) of the Act), this review of the proposed Follow-On (b) Enhanced Board Approval. The individually or in the aggregate, do not Investment both on a stand-alone basis Adviser will provide its written control the issuer of the securities and together with the Pre-Boarding recommendation as to the Regulated (within the meaning of Section 2(a)(9) of Investments in relation to the total Fund’s participation to the Eligible the Act). economic exposure and other terms of Directors, and the Regulated Fund will 8. Standard Review Follow-Ons. the investment. participate in such Disposition solely to (a) General. If any Regulated Fund or (d) Allocation. If, with respect to any the extent that a Required Majority Affiliated Fund desires to make a such Follow-On Investment: (i) The amount of the opportunity determines that: Follow-On Investment in an issuer and proposed to be made available to any (i) The Disposition complies with the Regulated Funds and Affiliated Conditions 2(c)(i), (ii), (iii)(A), and (iv); Funds holding investments in the issuer previously participated in a Co- 26 To the extent that a Follow-On Investment and opportunity is in a security or arises in respect of (ii) the making and holding of the Pre- Investment Transaction with respect to a security held by the participating Regulated Boarding Investments were not the issuer: Funds and Affiliated Funds, proportionality will be prohibited by Section 57 or Rule 17d– (i) The Adviser to each such measured by each participating Regulated Fund’s Regulated Fund or Affiliated Fund will and Affiliated Fund’s outstanding investment in the 1, as applicable, and records the basis security in question immediately preceding the for the finding in the Board minutes. notify each Regulated Fund that holds Follow-On Investment using the most recent (c) Additional Requirements. The available valuation thereof. To the extent that a 25 Disposition may only be completed in In determining whether a holding is Follow-On Investment opportunity relates to an ‘‘immaterial’’ for purposes of the Order, the opportunity to invest in a security that is not in reliance on the Order if: Required Majority will consider whether the nature respect of any security held by any of the (i) Same Terms and Conditions. Each and extent of the interest in the transaction or participating Regulated Funds or Affiliated Funds, Regulated Fund has the right to arrangement is sufficiently small that a reasonable proportionality will be measured by each person would not believe that the interest affected participating Regulated Fund’s and Affiliated participate in such Disposition on a the determination of whether to enter into the Fund’s outstanding investment in the issuer proportionate basis, at the same price transaction or arrangement or the terms of the immediately preceding the Follow-On Investment and on the same terms and conditions transaction or arrangement. using the most recent available valuation thereof.

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Regulated Fund is not based on the total economic exposure and other Funds’ outstanding investments in the Regulated Funds’ and the Affiliated terms and makes the determinations set issuer or the security at issue, as Funds’ outstanding investments in the forth in Condition 2(c). In addition, the appropriate, immediately preceding the issuer or the security at issue, as Follow-On Investment may only be Follow-On Investment; and: appropriate, immediately preceding the completed in reliance on the Order if (ii) The aggregate amount Follow-On Investment; and the Required Majority of each recommended by the Advisers to be (ii) the aggregate amount participating Regulated Fund invested in the Follow-On Investment recommended by the Advisers to be determines that the making and holding by the participating Regulated Funds invested in the Follow-On Investment of the Pre-Boarding Investments were and any participating Affiliated Funds, by the participating Regulated Funds not prohibited by Section 57 (as collectively, exceeds the amount of the and any participating Affiliated Funds, modified by Rule 57b–1) or Rule 17d– investment opportunity, then the collectively, exceeds the amount of the 1, as applicable. The basis for the Follow-On Investment opportunity will investment opportunity, then the Board’s findings will be recorded in its be allocated among them pro rata based Follow-On Investment opportunity will minutes. on the size of the Internal Orders, as be allocated among them pro rata based (c) Additional Requirements. The described in Section III.A.1.(b) of the on the size of the Internal Orders, as Follow-On Investment may only be application. described in Section III.A.1.b. of the completed in reliance on the Order if: (e) Other Conditions. The acquisition application. (i) Original Investments. All of the of Follow-On Investments as permitted (e) Other Conditions. The acquisition Affiliated Funds’ and Regulated Funds’ by this Condition will be considered a of Follow-On Investments as permitted investments in the issuer are Pre- Co-Investment Transaction for all by this Condition will be considered a Boarding Investments; purposes and subject to the other (ii) Advice of counsel. Independent Co-Investment Transaction for all Conditions set forth in the application. purposes and subject to the other counsel to the Board advises that the making and holding of the investments 10. Board Reporting, Compliance and Conditions set forth in the application. Annual Re-Approval. 9. Enhanced Review Follow-Ons. in the Pre-Boarding Investments were (a) General. If any Regulated Fund or not prohibited by Section 57 (as (a) Each Adviser to a Regulated Fund Affiliated Fund desires to make a modified by Rule 57b–1) or Rule 17d– will present to the Board of each Follow-On Investment in an issuer that 1, as applicable; Regulated Fund, on a quarterly basis, is a Potential Co-Investment Transaction (iii) Multiple Classes of Securities. All and at such other times as the Board and the Regulated Funds and Affiliated Regulated Funds and Affiliated Funds may request, (i) a record of all Funds holding investments in the issuer that hold Pre-Boarding Investments in investments in Potential Co-Investment have not previously participated in a the issuer immediately before the time Transactions made by any of the other Co-Investment Transaction with respect of completion of the Co-Investment Regulated Funds or any of the Affiliated to the issuer: Transaction hold the same security or Funds during the preceding quarter that (i) The Adviser to each such securities of the issuer. For the purpose fell within the Regulated Fund’s then- Regulated Fund or Affiliated Fund will of determining whether the Regulated current Objectives and Strategies and notify each Regulated Fund that holds Funds and Affiliated Funds hold the Board-Established Criteria that were not securities of the portfolio company of same security or securities, they may made available to the Regulated Fund, the proposed transaction at the earliest disregard any security held by some but and an explanation of why such practical time; not all of them if, prior to relying on the investment opportunities were not made (ii) the Adviser to each Regulated Order, the Required Majority is available to the Regulated Fund; (ii) a Fund that holds an investment in the presented with all information record of all Follow-On Investments in issuer will formulate a recommendation necessary to make a finding, and finds, and Dispositions of investments in any as to the proposed participation, that: (x) Any Regulated Fund’s or issuer in which the Regulated Fund including the amount of the proposed Affiliated Fund’s holding of a different holds any investments by any Affiliated investment, by such Regulated Fund; class of securities (including for this Fund or other Regulated Fund during and purpose a security with a different the prior quarter; and (iii) all (iii) the Advisers will provide to the maturity date) is immaterial in amount, information concerning Potential Co- Board of each Regulated Fund that including immaterial relative to the size Investment Transactions and Co- holds an investment in the issuer all of the issuer; and (y) the Board records Investment Transactions, including information relating to the existing the basis for any such finding in its investments made by other Regulated investments in the issuer of the minutes. In addition, securities that Funds or Affiliated Funds that the Regulated Funds and Affiliated Funds, differ only in respect of issuance date, Regulated Fund considered but declined including the terms of such investments currency, or denominations may be to participate in, so that the and how they were made, that is treated as the same security; and Independent Trustees, may determine necessary for the Required Majority to (iv) No control. The Affiliated Funds, whether all Potential Co-Investment make the findings required by this the other Regulated Funds, and their Transactions and Co-Investment Condition. affiliated persons (within the meaning Transactions during the preceding (b) Enhanced Board Approval. The of Section 2(a)(3)(C) of the Act), quarter, including those investments Adviser will provide its written individually or in the aggregate, do not that the Regulated Fund considered but recommendation as to the Regulated control the issuer of the securities declined to participate in, comply with Fund’s participation to the Eligible (within the meaning of Section 2(a)(9) of the Conditions. Directors, and the Regulated Fund will the Act). (b) All information presented to the participate in such Follow-On (d) Allocation. If, with respect to any Regulated Fund’s Board pursuant to this Investment solely to the extent that a such Follow-On Investment: Condition will be kept for the life of the Required Majority reviews the proposed (i) The amount of the opportunity Regulated Fund and at least two years Follow-On Investment both on a stand- proposed to be made available to any thereafter, and will be subject to alone basis and together with the Pre- Regulated Fund is not based on the examination by the Commission and its Boarding Investments in relation to the Regulated Funds’ and the Affiliated staff.

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(c) Each Regulated Fund’s chief competitive rate of interest that will also Commission (‘‘Commission’’), pursuant compliance officer, as defined in Rule be divided pro rata among the to Section 19(b)(1) of the Securities 38a–1(a)(4), will prepare an annual participants. None of the Advisers, the Exchange Act of 1934 (‘‘Act’’) 1 and Rule report for its Board each year that Affiliated Funds, the other Regulated 19b–4 thereunder,2 a proposed rule evaluates (and documents the basis of Funds or any affiliated person of the change to amend listing rules applicable that evaluation) the Regulated Fund’s Affiliated Funds or the Regulated Funds to companies whose business plan is to compliance with the terms and will receive any additional complete one or more business Conditions of the application and the compensation or remuneration of any combinations. The proposed rule procedures established to achieve such kind as a result of or in connection with change was published for comment in compliance. a Co-Investment Transaction other than the Federal Register on September 22, (d) The Independent Trustees will (i) in the case of the Regulated Funds 2020.3 The Commission has received no consider at least annually whether and the Affiliated Funds, the pro rata comment letters on the proposed rule continued participation in new and transaction fees described above and change. existing Co-Investment Transactions is fees or other compensation described in in the Regulated Fund’s best interests. Condition 2(c)(iii)(B)(z), (ii) brokerage or Section 19(b)(2) of the Act 4 provides 11. Record Keeping. Each Regulated underwriting compensation permitted that within 45 days of the publication of Fund will maintain the records required by Section 17(e) or 57(k) or (iii) in the notice of the filing of a proposed rule by Section 57(f)(3) of the Act as if each case of the Advisers, investment change, or within such longer period up of the Regulated Funds were a BDC and advisory compensation paid in to 90 days as the Commission may each of the investments permitted under accordance with investment advisory designate if it finds such longer period these Conditions were approved by the agreements between the applicable to be appropriate and publishes its Required Majority under Section 57(f). Regulated Fund(s) or Affiliated Fund(s) reasons for so finding, or as to which the 12. Director Independence. No and its Adviser. self-regulatory organization consents, Independent Trustee of a Regulated 15. Independence. If the Holders own the Commission will either approve the Fund will also be a director, general in the aggregate more than 25 percent of proposed rule change, disapprove the partner, managing member or principal, the Shares of a Regulated Fund, then the proposed rule change, or institute or otherwise be an ‘‘affiliated person’’ Holders will vote such Shares in the proceedings to determine whether the (as defined in the Act) of any Affiliated same percentages as the Regulated proposed rule change should be Fund. Fund’s other shareholders (not disapproved. The 45th day after 13. Expenses. The expenses, if any, including the Holders) when voting on publication of the notice for this associated with acquiring, holding or (1) the election of trustees; (2) the proposed rule change is November 6, disposing of any securities acquired in removal of one or more trustees; or (3) 2020. The Commission is extending this a Co-Investment Transaction (including, any other matter under either the Act or 45-day time period. without limitation, the expenses of the applicable State law affecting the distribution of any such securities Board’s composition, size or manner of The Commission finds it appropriate registered for sale under the Securities election; provided however, that this to designate a longer period within Act) will, to the extent not payable by Condition 15 will not apply to a which to take action on the proposed the Advisers under their respective Regulated Fund during any time which rule change so that it has sufficient time advisory agreements with the Regulated the Holders in the aggregate own 100% to consider the proposed rule change. Funds and the Affiliated Funds, be of the Shares of such Regulated Fund. Accordingly, the Commission, pursuant 5 shared by the Regulated Funds and the For the Commission, by the Division of to Section 19(b)(2) of the Act, participating Affiliated Funds in Investment Management, under delegated designates December 21, 2020 as the proportion to the relative amounts of the authority. date by which the Commission shall securities held or being acquired or J. Matthew DeLesDernier, either approve or disapprove, or disposed of, as the case may be. institute proceedings to determine 27 Assistant Secretary. 14. Transaction Fees. Any whether to disapprove, the proposed transaction fee (including break-up, [FR Doc. 2020–24879 Filed 11–9–20; 8:45 am] rule change (File No. SR–NASDAQ– structuring, monitoring or commitment BILLING CODE 8011–01–P 2020–062). fees but excluding brokerage or For the Commission, by the Division of underwriting compensation permitted SECURITIES AND EXCHANGE Trading and Markets, pursuant to delegated by Section 17(e) or 57(k)) received in COMMISSION connection with any Co-Investment authority.6 Transaction will be distributed to the [Release No. 34–90340; File No. SR– J. Matthew DeLesDernier, participants on a pro rata basis based on NASDAQ–2020–062] Assistant Secretary. the amounts they invested or [FR Doc. 2020–24888 Filed 11–9–20; 8:45 am] committed, as the case may be, in such Self-Regulatory Organizations; The BILLING CODE 8011–01–P Co-Investment Transaction. If any Nasdaq Stock Market LLC; Notice of transaction fee is to be held by an Designation of a Longer Period for Adviser pending consummation of the Commission Action on a Proposed transaction, the fee will be deposited Rule Change To Amend Listing Rules into an account maintained by the Applicable to Special Purpose Adviser at a bank or banks having the Acquisition Companies Whose 1 qualifications prescribed in Section Business Plan Is To Complete One or 15 U.S.C. 78s(b)(1). 2 26(a)(1), and the account will earn a More Business Combinations 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 89897 November 4, 2020. (September 16, 2020), 85 FR 59574. 27 Applicants are not requesting and the 4 15 U.S.C. 78s(b)(2). Commission is not providing any relief for On September 3, 2020, The Nasdaq transaction fees received in connection with any Stock Market LLC (‘‘Exchange’’) filed 5 Id. Co-Investment Transaction. with the Securities and Exchange 6 17 CFR 200.30–3(a)(31).

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SECURITIES AND EXCHANGE Dated: November 4, 2020. the most significant aspects of such COMMISSION Vanessa Countryman, statements. Secretary. A. Self-Regulatory Organization’s [Release No. 34–90346] [FR Doc. 2020–24880 Filed 11–9–20; 8:45 am] Statement of the Purpose of, and BILLING CODE 8011–01–P Statutory Basis for, the Proposed Rule Public Availability of the Securities and Change Exchange Commission’s FY 2016 and FY 2017 Service Contract Inventory SECURITIES AND EXCHANGE 1. Purpose COMMISSION The Exchange proposes to amend its AGENCY: Securities and Exchange [Release No. 34–90332; File No. SR–CBOE– Fees Schedule in connection with Commission. 2020–107] Compression, or Position Compression Cross (‘‘PCC’’), orders, effective October ACTION: Notice. Self-Regulatory Organizations; Cboe 29, 2020. Exchange, Inc.; Notice of Filing and By way of background, the Exchange SUMMARY: In accordance with Section Immediate Effectiveness of a Proposed has historically permitted open outcry 743 of Division C of the Consolidated Rule Change Relating To Amend Its compression forums which allow Appropriations Act of 2010 (Pub. L. Fees Schedule Trading Permit Holders (‘‘TPHs’’) to 111–117), SEC is publishing this notice reduce open interest in SPX options. to advise the public of the availability November 4, 2020. Footnote 41 of the Fees Schedule of the FY2017 Service Contract Pursuant to Section 19(b)(1) of the currently provides a rebate of Inventory (SCI) and the FY2016 SCI Securities Exchange Act of 1934 (the transaction fees, including the Index 1 2 Analysis along with the FY2018 Service ‘‘Act’’), and Rule 19b–4 thereunder, License Surcharge, for closing Contract Inventory (SCI) and the notice is hereby given that on October transactions involving SPX and SPXW FY2017 SCI Analysis. 28, 2020, Cboe Exchange, Inc. (the compression-list positions executed in a ‘‘Exchange’’ or ‘‘Cboe Options’’) filed compression forum. From March 16 to The SCI provides information on with the Securities and Exchange FY2016 and FY2017 actions over June 12, 2020, the Exchange’s trading Commission (the ‘‘Commission’’) the floor was closed due to the coronavirus $150,000 for service contracts. The proposed rule change as described in pandemic. During that time, the inventory organizes the information by Items I, II, and III below, which Items Exchange operated in an all-electronic function to show how SEC distributes have been prepared by the Exchange. configuration, which would have contracted resources throughout the The Commission is publishing this prevented market participants from agency. SEC developed the inventory notice to solicit comments on the reducing open SPX interest in open per the guidance issued on January 17, proposed rule change from interested outcry compression forums. As a result, 2017 by the Office of Management and persons. the Exchange adopted Rule 5.24(e)(1)(E) Budget’s Office of Federal Procurement I. Self-Regulatory Organization’s to permit TPHs to reduce open interest Policy (OFPP). OFPP’s guidance is Statement of the Terms of Substance of in SPX options in electronic available at https:// the Proposed Rule Change compression forums in the same manner www.whitehouse.gov/sites/ as an open outcry compression forum Cboe Exchange, Inc. (the ‘‘Exchange’’ whitehouse.gov/files/omb/memoranda/ (as set forth in Rule 5.88) while the _ _ or ‘‘Cboe Options’’) proposes to amend 2017/service contract inventories.pdf. trading floor was inoperable.3 Footnote its Fees Schedule. The text of the 12 of the Fees Schedule was also The Service Contract Inventory proposed rule change is provided in amended to provide a waiver for all Analysis for FY2016 provides Exhibit 5. information based on the FY 2016 The text of the proposed rule change transaction fees, including any Inventory and the Service Contract is also available on the Exchange’s applicable surcharges (e.g., Index Inventory Analysis for FY2017 provides website (http://www.cboe.com/ License Surcharge and SPX/SPXW information based on the FY 2017 AboutCBOE/ Execution Surcharges), for closing Inventory. Please note that the SEC’s FY CBOELegalRegulatoryHome.aspx), at transactions involving SPX and SPXW 2016 and FY 2017 Service Contract the Exchange’s Office of the Secretary, compression-list positions executed in Inventory data is now included in and at the Commission’s Public an electronic compression forum, like government-wide inventory available on Reference Room. that of the waiver provided in footnote www.acquisition.gov. The government- 41 for open outcry compression wide inventory can be filtered to display II. Self-Regulatory Organization’s forums.4 The Exchange recently adopted the inventory data for the SEC. The SEC Statement of the Purpose of, and Compression, or ‘‘PCC’’, orders that can has posted its FY 2017 and FY2018 Statutory Basis for, the Proposed Rule be executed electronically or in open plans for analyzing data, a link to the FY Change outcry on a permanent basis, and, as a 2017 and 2018 government-wide In its filing with the Commission, the result, removed Rule 5.24(e)(1)(E), as Service Contract Inventory, the FY 2016 Exchange included statements well as relocated and amended Rule 5 SCI Analysis, and the FY 2017 SCI concerning the purpose of and basis for 5.88. The Exchange notes that PCC Analysis on the SEC’s homepage at the proposed rule change and discussed any comments it received on the 3 See Securities Exchange Release No. 88490 http://www.sec.gov/about/ (March 26, 2020), 85 FR 18318 (April 1, 2020) (SR– secreports.shtml and http:// proposed rule change. The text of these CBOE–2020–026). www.sec.gov/open. statements may be examined at the 4 See Securities Exchange Release No. 88678 places specified in Item IV below. The (April 17, 2020), 85 FR 22770 April 23, 2020) (SR– FOR FURTHER INFORMATION CONTACT: Exchange has prepared summaries, set CBOE–2020–033). Direct questions regarding the service forth in sections A, B, and C below, of 5 See Securities Exchange Release Nos. 89707 contract inventory to Vance Cathell, (August 28, 2020), 85 FR 55040 (September 3, 2020) (SR–CBOE–2020–074) (Notice of Filing of a Director Office of Acquisitions 1 15 U.S.C. 78s(b)(1). Proposed Rule Change Relating To Adopt 202.551.8385 or [email protected]. 2 17 CFR 240.19b–4. Continued

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orders may be comprised of opening compression waiver language in Section 6(b) of the Act.8 Specifically, and closing positions. The Exchange footnote 41 by replacing the language the Exchange believes the proposed rule plans to launch PCC order functionality describing the prior compression forum change is consistent with the Section on October 29, 2020. process with ‘‘PCC orders’’, clarifying 6(b)(5) 9 requirements that the rules of The Exchange proposes to amend the that the waiver will apply to PCC orders an exchange be designed to prevent Fees Schedule in light of the adoption executed both electronically and in fraudulent and manipulative acts and of PCC orders (i.e., compression orders) open outcry, removing references to practices, to promote just and equitable on a permanent basis. As noted above, closing transactions (as PCC orders may principles of trade, to foster cooperation footnote 12 currently provides that the now be comprised of opening and and coordination with persons engaged Exchange shall waive transaction fees, closing positions) and removing in regulating, clearing, settling, including the Index License Surcharge references to prior Rules 5.24 and 5.88. processing information with respect to, and SPX/SPXW Execution Surcharge, Specifically, the proposed language in and facilitating transactions in for closing transactions involving SPX footnote 41 provides that the Exchange securities, to remove impediments to and SPXW compression-list positions shall waive transaction fees, including and perfect the mechanism of a free and executed in a compression forum the Index License Surcharge and SPX/ open market and a national market (pursuant to Rule 5.24) when the trading SPXW Execution Surcharge, for PCC system, and, in general, to protect floor is inoperable. In order to receive a transactions executed electronically or investors and the public interest. waiver of fees for compression forum in open outcry, as applicable.7 A PCC Additionally, the Exchange believes the transactions, a TPH must mark its orders order submitted for execution in open proposed rule change is consistent with in a form and manner determined by the outcry must be marked as Section 6(b)(4) of the Act,10 which Exchange to identify them as eligible for ‘‘compression’’ in order to receive requires that Exchange rules provide for the compression rebates. Likewise, waiver of fees for PCC orders. PCC the equitable allocation of reasonable footnote 41 currently provides that the transactions will not to count towards dues, fees, and other charges among its Exchange shall rebate transaction fees, any volume thresholds. The Exchange Trading Permit Holders and other including the Index License Surcharge, notes that the proposed language persons using its facilities. for closing transactions involving SPX provides for a waiver of transaction fees The Exchange believes the proposed and SPXW compression-list positions for all PCC orders, as is currently the rule change is consistent with the Act, executed in a compression forum case for electronic compression trades, in that, it is reasonable, equitable and (pursuant to Rule 5.88). In order to instead of the rebate currently provided not unfairly discriminatory. The receive either rebate, a TPH must mark for compression trades in open outcry. proposed rule change is reasonable its orders in a form and manner This proposed rule change does not because it does not alter the transaction determined by the Exchange to identify alter the ultimate amount charged or fee waiver currently available for them as eligible for the compression benefit provided to a TPH for compression trades, but merely updates rebates. Pursuant to both footnote 12 compression transactions in open the waiver language to appropriately and 41, orders identified as compression outcry, but instead removes the extra reflect its application to the permanent trades do not count towards any volume reimbursement step in the billing electronic compression orders (i.e., PCC thresholds.6 process and provides uniformity for the orders) recently adopted by the The Exchange notes that the proposed billing process across electronic and Exchange and clarifies that only open rule change does not alter the current open outcry compression trades by outcry compression orders must be waiver already in place pursuant to waiving all compression transaction marked for open outcry execution. All footnote 12 for transactions in fees. Finally, the proposed rule change compression transactions will continue temporary electronic compression removes the requirement that in order to not to count toward volume thresholds. forums (when the Exchange’s trading receive a waiver of fees for compression Additionally, the Exchange notes that floor is inoperable) or rebate in place forum transactions, a TPH must mark its the proposed change to update the pursuant to footnote 41 for transactions orders (for both electronic execution rebate applied to open outcry in open outcry compression forums. and open outcry) in a form and manner compression trades to a fee waiver is Instead, the proposed rule change determined by the Exchange to identify reasonable as it does not change the removes the electronic compression them as eligible for the compression ultimate amount charged or benefit forum waiver language in footnote 12 rebates. It replaces this former currently provided to a TPH for and relocates it to footnote 41, as the requirement with the requirement that compression transactions, but instead waiver will now apply at all times, as only PCC orders submitted for execution removes the extra reimbursement step PCC orders will be available at all times in open outcry must be marked as in the billing process and provides rather than only when the trading floor ‘‘compression’’, as the System will now uniformity for the billing process across is inoperable. The proposed rule change be able to automatically determine electronic and open outcry compression updates and streamlines the electronic PCC orders as ‘‘compression’’ trades by waiving all compression without any other marking. transaction fees. Also, the Exchange Compression Orders); and 90179 (October 14, believes that, generally, the transaction 2020), 85 FR 66590 (October 20, 2020) (SR–CBOE– 2. Statutory Basis 2020–074) (Order Granting Approval of a Proposed fee waiver in place for compression Rule Change To Adopt Position Compression Cross The Exchange believes the proposed orders is reasonable and equitable (‘‘PCC’’) Orders for SPX). rule change is consistent with the because the compression of these 6 This includes the following programs: (1) SPX Securities Exchange Act of 1934 (the positions would improve market Liquidity Provider Sliding Scale, (2) Clearing ‘‘Act’’) and the rules and regulations liquidity by freeing capital currently Trading Permit Holder Proprietary Products Sliding thereunder applicable to the Exchange Scale, (3) Select Customer Options Reduction tied up in positions for which there is (‘‘SCORe’’) Program, (4) SPX/SPXW Market-Maker and, in particular, the requirements of a minimal chance that a significant loss Tier Appointment Fees, (5) SPX/SPXW Floor would occur. Finally, the Exchange Broker Trading Surcharge, (6) Floor Broker ADV 7 The proposed rule change also appends footnote Discount, (7) Floor Brokerage Fees Discount, and (8) 41 to the surcharges in the Fees Schedule to which 8 Frequent Trader Program. See also Securities the compression waiver for Rule 5.24 electronic 15 U.S.C. 78f(b). Exchange Release No. 88836 (May 7, 2020), 85 FR compression trades applied, as the waiver will 9 15 U.S.C. 78f(b)(5). 28669 (May 13, 2020) (SR–CBOE–2020–044). continue to apply for electronic PCC orders. 10 15 U.S.C. 78f(b)(4).

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believes that the proposed rule change change should be approved or For the Commission, by the Division of is equitable and not unfairly disapproved. Trading and Markets, pursuant to delegated discriminatory because the fee waiver authority.14 will continue to apply in the same IV. Solicitation of Comments J. Matthew DeLesDernier, uniform manner for the same Interested persons are invited to Assistant Secretary. transactions, both electronically and in submit written data, views and [FR Doc. 2020–24883 Filed 11–9–20; 8:45 am] 11 open outcry, for all TPHs that submit arguments concerning the foregoing, BILLING CODE 8011–01–P compression orders to the Exchange. including whether the proposed rule change is consistent with the Act. B. Self-Regulatory Organization’s SECURITIES AND EXCHANGE Comments may be submitted by any of Statement on Burden on Competition COMMISSION the following methods: Exchange does not believe that the proposed rule change will impose any Electronic Comments [Release No. IA–5622] burden on intramarket or intermarket • Notice of Intention To Cancel competition that is not necessary or Use the Commission’s internet Registration Pursuant to the appropriate in furtherance of the comment form (http://www.sec.gov/ Investment Advisers Act of 1940 purposes of the Act. rules/sro.shtml); or • The Exchange does not believe that Send an email to rule-comments@ November 5, 2020. the proposed rule change will impose sec.gov. Please include File Number SR– Notice is given that the Securities and any burden on intramarket competition CBOE–2020–107 on the subject line. Exchange Commission (the that is not necessary or appropriate in Paper Comments ‘‘Commission’’) intends to issue an furtherance of the purposes of the Act order, pursuant to section 203(h) of the because the compression transaction fee • Send paper comments in triplicate Investment Advisers Act of 1940 (the waiver will apply to all TPHs that to Secretary, Securities and Exchange ‘‘Act’’), cancelling the registration of submit compression orders to the Commission, 100 F Street NE, Ann T. Coffey Wealth Management LLC Exchange, as it does today and will to Washington, DC 20549–1090. [File No. 801–77092], hereinafter compression orders executed referred to as the ‘‘registrant.’’ electronically and in open outcry. The All submissions should refer to File Section 203(h) of the Act provides, in Exchange does not believe that the Number SR–CBOE–2020–107. This file pertinent part, that if the Commission proposed rule change will impose any number should be included on the finds that any person registered under burden on intermarket competition that subject line if email is used. To help the section 203 of the Act, or who has is not necessary or appropriate in Commission process and review your pending an application for registration furtherance of the purposes of the Act comments more efficiently, please use filed under that section, is no longer in because the transaction fee waiver will only one method. The Commission will existence, is not engaged in business as continue to apply to compression orders post all comments on the Commission’s an investment adviser, or is prohibited available only for Exchange proprietary internet website (http://www.sec.gov/ from registering as an investment products, SPX/SPXW. rules/sro.shtml). Copies of the adviser under section 203A of the Act, submission, all subsequent the Commission shall by order, cancel C. Self-Regulatory Organization’s amendments, all written statements Statement on Comments on the the registration of such person. with respect to the proposed rule The registrant indicated on its most Proposed Rule Change Received From change that are filed with the Members, Participants, or Others recent Form ADV annual amendment Commission, and all written that it is no longer eligible to remain The Exchange neither solicited nor communications relating to the registered with the Commission as an received comments on the proposed proposed rule change between the investment adviser but has not filed rule change. Commission and any person, other than Form ADV–W to withdraw its those that may be withheld from the registration.1 III. Date of Effectiveness of the Furthermore, the registrant public in accordance with the has not filed a Form ADV amendment Proposed Rule Change and Timing for provisions of 5 U.S.C. 552, will be Commission Action annually with the Commission as available for website viewing and required by rule 204–1 under the Act; The foregoing rule change has become printing in the Commission’s Public therefore, it appears that the registrant is effective pursuant to Section 19(b)(3)(A) Reference Room, 100 F Street NE, not in existence or otherwise not of the Act 12 and paragraph (f) of Rule Washington, DC 20549, on official engaged in business as an investment 19b–4 13 thereunder. At any time within business days between the hours of adviser.2 Accordingly, the Commission 60 days of the filing of the proposed rule 10:00 a.m. and 3:00 p.m. Copies of the believes that reasonable grounds exist change, the Commission summarily may filing also will be available for for a finding that the registrant is no temporarily suspend such rule change if inspection and copying at the principal longer eligible to be registered with the it appears to the Commission that such office of the Exchange. All comments Commission as an investment adviser action is necessary or appropriate in the received will be posted without change. and that the registration should be public interest, for the protection of Persons submitting comments are cancelled pursuant to section 203(h) of investors, or otherwise in furtherance of cautioned that we do not redact or edit the Act. the purposes of the Act. If the personal identifying information from Commission takes such action, the comment submissions. You should 14 17 CFR 200.30–3(a)(12). Commission will institute proceedings submit only information that you wish 1 The registrant filed its most recent Form ADV to determine whether the proposed rule to make available publicly. All annual amendment on March 27, 2018. submissions should refer to File 2 Rule 204–1 under the Act requires any adviser Number SR–CBOE–2020–107 and that is required to complete Form ADV to amend 11 See supra note 7. the form at least annually and to submit the 12 15 U.S.C. 78s(b)(3)(A). should be submitted on or before amendments electronically through the Investment 13 17 CFR 240.19b–4(f). December 1, 2020. Adviser Registration Depository.

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Notice is also given that any SECURITIES AND EXCHANGE and the comments received. interested person may, by November 30, COMMISSION Accordingly, the Commission, pursuant to Section 19(b)(2) of the Act,5 2020, at 5:30 p.m., submit to the [Release No. 34–90331; File No. SR– Commission in writing a request for a NASDAQ–2020–057] designates December 20, 2020 as the hearing on the cancellation, date by which the Commission shall accompanied by a statement as to the Self-Regulatory Organizations; The either approve or disapprove, or nature of his or her interest, the reason Nasdaq Stock Market LLC; Notice of institute proceedings to determine for such request, and the issues, if any, Designation of a Longer Period for whether to disapprove, the proposed of fact or law proposed to be Commission Action on a Proposed rule change (File No. SR–NASDAQ– controverted, and he or she may request Rule Change, To Allow Companies To 2020–057). that he or she be notified if the List in Connection With a Direct Listing For the Commission, by the Division of Commission should order a hearing With a Primary Offering in Which the Trading and Markets, pursuant to delegated 6 thereon. Any such communication Company Will Sell Shares Itself in the authority. Opening Auction on the First Day of should be emailed to the Commission’s J. Matthew DeLesDernier, Trading on Nasdaq and To Explain Secretary at [email protected]. Assistant Secretary. How the Opening Transaction for Such [FR Doc. 2020–24882 Filed 11–9–20; 8:45 am] At any time after November 30, 2020, a Listing Will Be Effected the Commission may issue an order BILLING CODE 8011–01–P cancelling the registration, upon the November 4, 2020. basis of the information stated above, On September 4, 2020, The Nasdaq SMALL BUSINESS ADMINISTRATION unless an order for a hearing on the Stock Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the Securities cancellation shall be issued upon [Disaster Declaration #16694 and #16695; and Exchange Commission request or upon the Commission’s own NEW YORK Disaster Number NY–00198] (‘‘Commission’’), pursuant to Section motion. Persons who requested a 19(b)(1) of the Securities Exchange Act hearing, or who requested to be advised Presidential Declaration Amendment of of 1934 (‘‘Act’’) 1 and Rule 19b–4 a Major Disaster for Public Assistance as to whether a hearing is ordered, will thereunder,2 a proposed rule change to Only for the State of New York receive any notices and orders issued in allow companies to list in connection this matter, including the date of the with a direct listing with a primary AGENCY: U.S. Small Business hearing (if ordered) and any offering in which the company will sell Administration. postponements thereof. Any adviser shares itself in the opening auction in ACTION: Amendment 1. whose registration is cancelled under the first day of trading on Nasdaq and delegated authority may appeal that to explain how the opening transaction SUMMARY: This is an amendment of the decision directly to the Commission in for such a listing will be effected. The Presidential declaration of a major accordance with rules 430 and 431 of proposed rule change was published for disaster for Public Assistance Only for the Commission’s rules of practice (17 comment in the Federal Register on the State of NEW YORK (FEMA–4567– CFR 201.430 and 431). September 21, 2020.3 DR), dated 10/02/2020. Section 19(b)(2) of the Act 4 provides Incident: Tropical Storm Isaias. ADDRESSES: The Commission: that within 45 days of the publication of Incident Period: 08/04/2020. [email protected]. notice of the filing of a proposed rule DATES: Issued on 11/03/2020. FOR FURTHER INFORMATION CONTACT: change, or within such longer period up Physical Loan Application Deadline Alexis Palascak, Senior Counsel at 202– to 90 days as the Commission may Date: 12/01/2020. 551–6999; SEC, Division of Investment designate if it finds such longer period Economic Injury (EIDL) Loan Management, Investment Adviser to be appropriate and publishes its Application Deadline Date: 07/02/2021. reasons for so finding, or as to which the Regulation Office, 100 F Street NE, ADDRESSES: Submit completed loan self-regulatory organization consents, Washington, DC 20549–8549. applications to: U.S. Small Business the Commission shall either approve the Administration, Processing and For the Commission, by the Division of proposed rule change, disapprove the Disbursement Center, 14925 Kingsport Investment Management, pursuant to proposed rule change, or institute Road, Fort Worth, TX 76155. delegated authority.3 proceedings to determine whether the FOR FURTHER INFORMATION CONTACT: A. J. Matthew DeLesDernier, proposed rule change should be Escobar, Office of Disaster Assistance, disapproved. The 45th day after Assistant Secretary. U.S. Small Business Administration, publication of the notice for this [FR Doc. 2020–24938 Filed 11–9–20; 8:45 am] 409 3rd Street SW, Suite 6050, proposed rule change is November 5, BILLING CODE 8011–01–P Washington, DC 20416, (202) 205–6734. 2020. The Commission is extending this 45-day time period. SUPPLEMENTARY INFORMATION: The notice The Commission finds it appropriate of the President’s major disaster to designate a longer period within declaration for Private Non-Profit which to take action on the proposed organizations in the State of NEW rule change so that it has sufficient time YORK, dated 10/02/2020, is hereby to consider the proposed rule change amended to include the following areas as adversely affected by the disaster. 1 15 U.S.C.78s(b)(1). Primary Counties: Putnam, Queens, 2 17 CFR 240.19b–4. Richmond, Rockland, Westchester. 3 See Securities Exchange Act Release No. 89878 All other information in the original (September 15, 2020), 85 FR 59349 (September 21, 2020). Comments received on the proposed rule declaration remains unchanged. change available at: https://www.sec.gov/comments/ sr-nasdaq-2020-057/srnasdaq2020057.htm. 5 Id. 3 17 CFR 200.30–5(e)(2). 4 15 U.S.C. 78s(b)(2). 6 17 CFR 200.30–3(a)(31).

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(Catalog of Federal Domestic Assistance DATES: The Department will accept Abstract of Proposed Collection Number 59008) comments from the public up to January The Family Liaison Office (FLO) Cynthia Pitts, 11, 2021. needs the information collected in the Acting Associate Administrator for Disaster ADDRESSES: You may submit comments PDF application to determine who will Assistance. by the following method: receive a Professional Development • [FR Doc. 2020–24869 Filed 11–9–20; 8:45 am] Web: Persons with access to the Fellowship. The information is internet may comment on this notice by BILLING CODE 8026–03–P provided to selection committees that going to www.Regulations.gov. You can use a set of criteria to score the search for the document by entering applications. Respondents are spouses SMALL BUSINESS ADMINISTRATION ‘‘Docket Number: DOS–2020–0043’’ in and partners of direct-hire U.S. the Search field. Then click the government employees from all agencies Military Reservist Economic Injury ‘‘Comment Now’’ button and complete serving overseas under Chief of Mission Disaster Loans; Interest Rate for First the comment form. who want to develop, maintain, and/or Quarter FY 2021 You must include the DS form number refresh their professional skills while (if applicable), information collection overseas. The information is sought AGENCY: U.S. Small Business title, and the OMB control number in Administration. pursuant to 22 U.S.C § 2651a— any correspondence. Organization of Department of State, 22 ACTION: Notice. SUPPLEMENTARY INFORMATION: U.S.C § 3921—Management of the • Title of Information Collection: FLO SUMMARY: This is a notice of the Military Foreign Service. Professional Development Fellowship Reservist Economic Injury Disaster Methodology Loans interest rate for loans approved (PDF) Application. • OMB Control Number: 1405–0229. Applicants will email the completed on or after October 30, 2020. • Type of Request: Revision of a application to FLO’s PDF program DATES: Issued on 11/04/2020. Currently Approved Collection. manager. FOR FURTHER INFORMATION CONTACT: A. • Originating Office: Bureau of Global Escobar, Office of Disaster Assistance, Talent Management, Family Liaison Zachary Parker, U.S. Small Business Administration, Office (GTM/FLO). Director. 409 3rd Street SW, Suite 6050, • Form Number: DS–4297. [FR Doc. 2020–24893 Filed 11–9–20; 8:45 am] Washington, DC 20416, (202) 205–6734. • Respondents: The PDF program is BILLING CODE 4710–15–P SUPPLEMENTARY INFORMATION: The Small open to spouses and partners of direct- Business Administration publishes an hire U.S. government employees from interest rate for Military Reservist all agencies serving overseas under DEPARTMENT OF TRANSPORTATION Economic Injury Disaster Loans (13 CFR Chief of Mission authority. • Federal Aviation Administration 123.512) on a quarterly basis. The Estimated Number of Respondents: interest rate will be 3.000 for loans 260. • Estimated Number of Responses: Burlington International Airport, South approved on or after October 30, 2020. 260. Burlington VT; FAA Approval of Noise Cynthia Pitts, • Average Time per Response: 2.75 Compatibility Program hours. Acting Associate Administrator for Disaster AGENCY: Federal Aviation • Total Estimated Burden Time: 715 Assistance. Administration, DOT. [FR Doc. 2020–24875 Filed 11–9–20; 8:45 am] hours. • Frequency: Annually. ACTION: Notice. BILLING CODE 8026–03–P • Obligation to Respond: Required to SUMMARY: The Federal Aviation Obtain a Benefit. Administration (FAA) announces its We are soliciting public comments to findings on the noise compatibility DEPARTMENT OF STATE permit the Department to: program submitted by the City of • Evaluate whether the proposed Burlington, Vermont under the information collection is necessary for [Public Notice 11229] provisions of Title I of the Aviation the proper functions of the Department. Safety and Noise Abatement Act of 60-Day Notice of Proposed Information • Evaluate the accuracy of our 1979. These findings are made in Collection: FLO Professional estimate of the time and cost burden for recognition of the description of federal Development Fellowship (PDF) this proposed collection, including the and non-federal responsibilities in Application validity of the methodology and assumptions used. Senate Report No. 96–52 (1980). On ACTION: Notice of request for public • Enhance the quality, utility, and October 14, 2020, the Division comment. clarity of the information to be Deputy Director approved the collected. Burlington International Airport noise SUMMARY: The Department of State is • Minimize the reporting burden on compatibility program. This supersedes seeking Office of Management and those who are to respond, including the the approval issued August 27, 2020. Budget (OMB) approval for the use of automated collection techniques All of the proposed program elements information collection described below. or other forms of information were approved. In accordance with the Paperwork technology. DATES: The date of the FAA’s approval Reduction Act of 1995, we are Please note that comments submitted of the Burlington International Airport requesting comments on this collection in response to this Notice are public noise compatibility program is October from all interested individuals and record. Before including any detailed 14, 2020. organizations. The purpose of this personal information, you should be FOR FURTHER INFORMATION CONTACT: notice is to allow 60 days for public aware that your comments as submitted, Richard Doucette, Federal Aviation comment preceding submission of the including your personal information, Administration, New England Region, collection to OMB. will be available for public review. Airports Division, 1200 District Avenue,

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Burlington, Massachusetts 01803. safety, adversely affecting the efficient Approval, the FAA discussed its Telephone (781) 238–7613. Email: use and management of the navigable implementation with the City of [email protected]. Documents airspace and air traffic control systems, Burlington. Based on this discussion, reflecting this FAA action may be or adversely affecting other powers and the FAA made two small revisions to obtained from the same individual. The responsibilities of the Administrator as the Record of Approval and issued a Noise Compatibility Plan and prescribed by law. revised approval on October 14, 2020. supporting information can also be Specific limitations with respect to These revisions clarify FAA funding of found at www.btvsound.com. FAA’s approval of an airport noise the Purchase Assurance and Sales SUPPLEMENTARY INFORMATION: This compatibility program are delineated in Assistance programs (measures #6 and notice announces that the FAA has Part 150, Section 150.5. Approval is not #7). That prior approval is superseded given its overall approval to the a determination concerning the by issuance of a new Record of Burlington International Airport noise acceptability of land uses under Federal, Approval on October 14, 2020. compatibility program, effective October state, or local law. Approval does not by FAA’s determinations are set forth in 14, 2020. itself constitute a FAA implementing detail in a Record of Approval approved Under Section 104 (a) of the Aviation action. A request for Federal action or on October 14, 2020. The Record of Safety and Noise Abatement Act of 1979 approval to implement specific noise Approval, as well as other evaluation (hereinafter the Act), an airport operator compatibility measures may be materials and the documents who has previously submitted a noise required, and an FAA decision on the comprising the submittal, are available request may require an environmental exposure map may submit to the FAA for review at the FAA office listed above assessment of the proposed action. a noise compatibility program which and at the administrative offices of Approval does not constitute a sets forth the measures taken or Burlington International Airport, South commitment by the FAA to financially Burlington, Vermont. proposed by the airport operator for the assist in the implementation of the reduction of existing non-compatible program nor a determination that all Issued in Burlington, Massachusetts, on land uses and prevention of additional measures covered by the program are October 14, 2020. non-compatible land uses within the eligible for grant-in-aid funding from the Julie Seltsam-Wilps, area covered by the noise exposure FAA under the Airport and Airway Airports Division Deputy Director, FAA New maps. Improvement Act of 1982. Where England Region. The Act requires such programs to be Federal funding is sought, requests for [FR Doc. 2020–23279 Filed 11–9–20; 8:45 am] developed in consultation with project grants must be submitted to the BILLING CODE 4910–13–P interested and affected parties including FAA Regional Office in Burlington, local communities, government Massachusetts. agencies, airport users, and FAA The Burlington International Airport DEPARTMENT OF TRANSPORTATION personnel. study contains a proposed noise Each airport noise compatibility compatibility program comprised of Federal Aviation Administration program developed in accordance with actions designed for implementation by 14 CFR part 150 is a local program, not airport management and adjacent [Docket No. FAA–2020–0993] a federal program. The FAA does not jurisdictions. The Burlington substitute its judgment for that of the International Airport, South Burlington, Agency Information Collection airport proprietor with respect to which Vermont requested that the FAA Activities: Requests for Comments; measures should be recommended for evaluate and approve this material as a Clearance of Renewed; Approval of action. The FAA’s approval or noise compatibility program as Information Collection: General disapproval of the Part 150 program described in Section 104(b) of the Act. Aviation and Part 135 Activity Survey recommendations is measured The FAA began its review of the AGENCY: Federal Aviation according to the standards expressed in program on April 15, 2020, and was Administration (FAA), DOT. Part 150 and the Act, and is limited to required by a provision of the Act to the following determinations: approve or disapprove the program ACTION: Notice and request for (a) The noise compatibility program within 180 days (other than the use of comments. was developed in accordance with the new flight procedures for noise control). SUMMARY: The FAA’s primary provisions and procedures of FAR Part Failure to approve or disapprove such a 150; requirement is for annual hours flown, program within the 180-day period shall optimal determination of sample size is (b) Program measures are reasonably be deemed to be an approval of such a consistent with achieving the goals of based on flight time variation by state program. and aircraft type, and a sampling reducing existing non-compatible land The submitted program contained 9 fraction is determined for each cell with uses around the airport and preventing noise mitigation measures, including 2 a no-zero population. Sample units are the introduction of additional non- to be removed. The FAA completed its selected randomly within each stratum. compatible land uses; review and determined that the Respondents to this survey are owners (c) Program measures would not procedural and substantive of general aviation aircraft. create an undue burden on interstate or requirements of the Act and Part 150 This information is used by FAA, foreign commerce, unjustly discriminate have been satisfied. All 7 recommended NTSB, and other government agencies, against types or classes of aeronautical measures were approved, and 2 the aviation industry, and others for uses, violate the terms of airport grant recommended for removal were safety assessment, planning, forecasting, agreements, or intrude into areas approved for removal. The new program cost/benefit analysis, and to target areas preempted by the federal government; will de-emphasize land acquisition in for research. and lieu of sound insulation, as the primary (d) Program measures relating to the noise mitigation measure. DATES: Written comments should be use of flight procedures can be The Airports Division originally submitted by January 11, 2021. implemented within the period covered approved the program on August 27, ADDRESSES: Please send written by the program without derogating 2020. After issuance of the Record of comments:

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By Electronic Docket: Issued in Washington, DC, on November 4, the ICR for which it is now seeking www.regulations.gov (Enter docket 2020. OMB approval. See 85 FR 52190. FRA number into search field). Parasha Vincent Flowers, received no comments related to the By mail: N/A. Program Manager, Program Management & proposed collection of information. By fax: N/A. Development Branch, AVP–220, Office of Before OMB decides whether to FOR FURTHER INFORMATION CONTACT: Accident Investigation & Prevention. approve the proposed collection of [Shane Bertish] by email at: [FR Doc. 2020–24874 Filed 11–9–20; 8:45 am] information, it must provide 30 days for [email protected]; phone: N/A. BILLING CODE 4910–13–P public comment. Federal law requires SUPPLEMENTARY INFORMATION: OMB to approve or disapprove Public Comments Invited: You are paperwork packages between 30 and 60 DEPARTMENT OF TRANSPORTATION asked to comment on any aspect of this days after the 30-day notice is published. 44 U.S.C. 3507(b)–(c); 5 CFR information collection, including (a) Federal Railroad Administration Whether the proposed collection of 1320.12(d); see also 60 FR 44978, 44983, information is necessary for FAA’s [Docket No. FRA–2020–0027–N–30] Aug. 29, 1995. OMB believes the 30-day performance; (b) the accuracy of the notice informs the regulated community Proposed Agency Information estimated burden; (c) ways for FAA to to file relevant comments and affords Collection Activities; Comment enhance the quality, utility and clarity the agency adequate time to digest Request of the information collection; and (d) public comments before it renders a decision. 60 FR 44983, Aug. 29, 1995. ways that the burden could be AGENCY: Federal Railroad Therefore, respondents should submit minimized without reducing the quality Administration (FRA), Department of of the collected information. The agency their respective comments to OMB Transportation (DOT). within 30 days of publication to best will summarize and/or include your ACTION: Notice of information collection; comments in the request for OMB’s ensure having their full effect. request for comment. Comments are invited on the clearance of this information collection. following ICR regarding: (1) Whether the OMB Control Number: 2120–6160. SUMMARY: Under the Paperwork information collection activities are Title: General Aviation and Part 135 Reduction Act of 1995 (PRA) and its necessary for FRA to properly execute Activity Survey. implementing regulations, this notice its functions, including whether the Form Numbers: 1800–54. announces that FRA is forwarding the Type of Review: Renewal. information will have practical utility; Information Collection Request (ICR) (2) the accuracy of FRA’s estimates of Background: Title 49, United States abstracted below to the Office of Code, empowers the Secretary of the burden of the information collection Management and Budget (OMB) for activities, including the validity of the Transportation to collect and review and comment. The ICR describes disseminate information relative to civil methodology and assumptions used to the information collection and its determine the estimates; (3) ways for aeronautics, to study the possibilities for expected burden. On August 24, 2020, development of air commerce and the FRA to enhance the quality, utility, and FRA published a notice providing a 60- clarity of the information being aeronautical industries, and to make day period for public comment on the long-range plans for, and formulate collected; and (4) ways to minimize the ICR. burden of information collection policy with respect to, the orderly DATES: Interested persons are invited to development and use of the navigable activities on the public, including the submit comments on or before use of automated collection techniques airspace, radar installations and all December 10, 2020. other aids for air navigation. These data or other forms of information ADDRESSES: Written comments and are necessary to assess performance of technology. recommendations for the proposed ICR The summary below describes the ICR the Department of Transportation in should be sent within 30 days of that FRA will submit for OMB clearance meeting the strategic goal for General publication of this notice to as the PRA requires: Aviation safety as described in the www.reginfo.gov/public/do/PRAMain. Title: Track Safety Standards; Destination 2025 Strategic Plan. Concrete Crossties. The agency and the National Find the particular ICR by selecting ‘‘Currently under 30-day Review—Open OMB Control Number: 2130–0592. Transportation Safety Board (NTSB) use Abstract: In 2011, FRA mandated the exposure data, both by itself and in for Public Comments’’ or by using the search function. specific requirements for effective conjunction with aircraft age, to concrete crossties, for rail fastening FOR FURTHER INFORMATION CONTACT: Ms. calculate accident rates, which are used systems connected to concrete crossties, Hodan Wells, Information Collection to compare safety over time and safety and for automated inspections of track Clearance Officer, Office of Railroad performance among different aircraft constructed with concrete crossties. Safety, Regulatory Analysis Division, types and configurations. FRA uses the information collected Federal Railroad Administration, The agency and the NTSB will use the under 49 CFR 213.234 to ensure telephone (202) 493–0440, email: exposure data for public use aircraft to automated track inspections of track [email protected]. calculate accident rates for those constructed with concrete crossties are aircraft. The NTSB is now required to SUPPLEMENTARY INFORMATION: The PRA, carried out as specified in the rule to investigate accidents involving public 44 U.S.C. 3501–3520, and its supplement visual inspections by Class use aircraft. This is a responsibility implementing regulations, 5 CFR part I and Class II railroads, intercity assigned by Public Law 103–411. 1320, require Federal agencies to issue passenger railroads, and commuter Respondents: Owners of general two notices seeking public comment on railroads. aviation aircraft. information collection activities before Type of Request: Extension with Frequency: Annual. OMB may approve paperwork packages. change (revised estimates) of a currently Estimated Average Burden per See 44 U.S.C. 3506, 3507; 5 CFR 1320.8 approved collection. Response: 20 minutes. through 1320.12. On August 24, 2020, Affected Public: Businesses. Estimated Total Annual Burden: FRA published a 60-day notice in the Form(s): N/A. 39,000 responses; 13,000 hours. Federal Register soliciting comment on Respondent Universe: 30 railroads.

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Frequency of Submission: On W12–140, 1200 New Jersey Avenue SE, comply with paragraph S6 of FMVSS occasion. Washington, DC 20590. No. 205, Glazing Materials (49 CFR Total Estimated Annual Responses: • Hand Delivery: Deliver comments 571.205). On May 23, 2018, Guardian 2,405. by hand to the U.S. Department of petitioned NHTSA for an Total Estimated Annual Burden: 279 Transportation, Docket Operations, M– inconsequential safety decision (49 hours. 30, West Building Ground Floor, Room U.S.C. 30118(d) and 30120(h) and 49 Total Estimated Annual Burden Hour W12–140, 1200 New Jersey Avenue SE, CFR part 556, Exemption for Dollar Cost Equivalent: $19,888. Washington, DC 20590. The Docket Inconsequential Defect or Under 44 U.S.C. 3507(a) and 5 CFR Section is open on weekdays from 10 Noncompliance) without initially filing 1320.5(b) and 1320.8(b)(3)(vi), FRA a.m. to 5 p.m. except for Federal a noncompliance report (49 CFR part informs all interested parties that a Holidays. 573, Defect and Noncompliance respondent is not required to respond • Electronically: Submit comments Responsibility and Reports). Although to, conduct, or sponsor a collection of electronically by logging onto the NHTSA could have properly rejected information that does not display a Federal Docket Management System this petition, it did not and prompted currently valid OMB control number. (FDMS) website at https:// Guardian to file the required Authority: 44 U.S.C. 3501–3520. www.regulations.gov/. Follow the online noncompliance report. Guardian finally instructions for submitting comments. did so on April 15, 2020. Guardian filed Brett A. Jortland, • Comments may also be faxed to another noncompliance report dated Deputy Chief Counsel. (202) 493–2251. December 14, 2018 and subsequently [FR Doc. 2020–24947 Filed 11–9–20; 8:45 am] Comments must be written in the filed a second petition on December 20, BILLING CODE 4910–06–P English language, and be no greater than 2018, for a decision that this second 15 pages in length, although there is no noncompliance is inconsequential as limit to the length of necessary they relate to motor vehicle safety. DEPARTMENT OF TRANSPORTATION attachments to the comments. If Because the two petitions address comments are submitted in hard copy similar issues, this document announces National Highway Traffic Safety form, please ensure that two copies are Administration the receipt of the two CGM’s petitions. provided. If you wish to receive This notice of receipt of CGM’s [Docket No. NHTSA–2018–0109 and confirmation that comments you have petitions is published under 49 U.S.C. NHTSA–2018–0074; Notice 1] submitted by mail were received, please 30118 and 30120 and does not represent enclose a stamped, self-addressed any Agency decision or other exercises Consolidated Glass & Mirror, LLC, postcard with the comments. Note that of judgment concerning the merits of the Receipt of Petitions for Decision of all comments received will be posted petition. Inconsequential Noncompliance without change to https:// www.regulations.gov, including any II. Equipment Involved AGENCY: National Highway Traffic personal information provided. Approximately 223 laminated Safety Administration (NHTSA), All comments and supporting Department of Transportation (DOT). windshields manufactured on March 8, materials received before the close of 2018, and shipped to IC Corp Tulsa Bus ACTION: Receipt of petitions. business on the closing date indicated Plant for installation into Navistar buses SUMMARY: Consolidated Glass & Mirror, above will be filed in the docket and are potentially involved. LLC (CGM), a subsidiary of Guardian will be considered. All comments and Approximately 1,390 bus door Industries Corporation (Guardian), has supporting materials received after the window panes, manufactured between determined that certain laminated glass closing date will also be filed and will November 1, 2017 and March 29, 2018 parts do not fully comply with Federal be considered to the fullest extent are potentially involved. The window motor vehicle safety standard (FMVSS) possible. panes were sold to Vapor Bus for use in No. 205, Glazing Materials. Guardian When the petition is granted or the fabrication of bus doors. Vapor Bus filed two noncompliance reports dated denied, notice of the decision will also subsequently shipped the bus doors to April 15, 2020 and December 14, 2018 be published in the Federal Register Nova Bus for installation in their buses. pursuant to the authority indicated at CGM petitioned NHTSA on May 23, III. Noncompliance 2018, and December 20, 2018, for a the end of this notice. All comments, background decision that the subject CGM explained that the documentation, and supporting noncompliances are inconsequential as noncompliance is that the markings on materials submitted to the docket may they relate to motor vehicle safety. This the subject laminated glass panes do not be viewed by anyone at the address and document announces receipt of CGM’s fully meet the requirements specified in times given above. The documents may petitions. paragraph S6 of FMVSS No. 205. also be viewed on the internet at https:// Specifically, the laminated glass panes DATES: The closing date for comments www.regulations.gov by following the shipped to IC Corp Tulsa Bus Plant were on the petition is December 10, 2020. online instructions for accessing the marked AS–2, when they should have ADDRESSES: Interested persons are dockets. The docket ID numbers for been marked AS–1 and the bus window invited to submit written data, views, these petitions are shown in the heading panes sold to Nova Bus were marked and arguments on this petition. of this notice. AS–S, when they should have been Comments must refer to the docket DOT’s complete Privacy Act marked AS–2. number(s) and notice number cited in Statement is available for review in a the title of this notice and may be Federal Register notice published on IV. Rule Requirements submitted by any of the following April 11, 2000 (65 FR 19477–78). Paragraph S6 of FMVSS No. 205 methods: SUPPLEMENTARY INFORMATION: includes the requirements relevant to • Mail: Send comments by mail this petition. A manufacturer or addressed to the U.S. Department of I. Overview distributor who cuts a section of glazing Transportation, Docket Operations, M– CGM has determined that certain material, to which FMVSS No. 205 30, West Building Ground Floor, Room laminated glass parts do not fully applies, for use in a motor vehicle or

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camper, must mark that material in NHTSA notes that the statutory 202–366–3820, or Mr. Jack Chern, Office accordance with section 7 of ANSI/SAE provisions (49 U.S.C. 30118(d) and of Vehicle Safety Compliance, NHTSA, Z26.1–1996. 30120(h)) that permit manufacturers to telephone 202–366–0661, facsimile file petitions for a determination of 202–366–3081. V. Summary of CGM’s Petitions inconsequentiality allow NHTSA to SUPPLEMENTARY INFORMATION: The following views and arguments exempt manufacturers only from the presented in this section, V. Summary duties found in sections 30118 and I. Overview: of CGM’s Petitions, are the views and 30120, respectively, to notify owners, arguments provided by CGM. They have purchasers, and dealers of a defect or GM has determined that the seat belt not been evaluated by the Agency and noncompliance and to remedy the assemblies in certain MY 2017–2018 do not reflect the views of the Agency. defect or noncompliance. Therefore, any Silverado heavy duty and The petitioner described the subject decision on these petitions only applies GMC Sierra heavy duty motor vehicles noncompliances and stated their belief to the subject equipment that CGM no do not fully comply with paragraphs that the noncompliance is longer controlled at the time it S4.4(b)(5) of FMVSS No. 209, Seat Belt inconsequential as it relates to motor determined that the noncompliances Assemblies (49 CFR 571.209). GM filed vehicle safety. existed. However, any decision on these a noncompliance report dated In support of their petitions, CGM petitions does not relieve equipment September 14, 2017, and amended it on submitted the following reasoning: distributors and dealers of the September 22, 2017, pursuant to 49 CFR 1. The laminated glass parts are prohibitions on the sale, offer for sale, part 573, Defect and Noncompliance affixed with the CGM trademark and the or introduction or delivery for Responsibility and Reports. GM also correct DOT number and M number. introduction into interstate commerce of petitioned NHTSA on October 6, 2017, 2. Although the laminated glass parts the noncompliant equipment under for an exemption from the notification are affixed with the misprinted AS their control after CGM notified them and remedy requirements of 49 U.S.C. number, the glass construction from that the subject noncompliance existed. Chapter 301 on the basis that this which the laminated glass parts were Authority: 49 U.S.C. 30118, 30120: noncompliance is inconsequential as it fabricated is in full compliance with the delegations of authority at 49 CFR 1.95 and relates to motor vehicle safety, pursuant technical requirements that 49 CFR 501.8. to 49 U.S.C. 30118(d) and 30120(h) and 571.205 as it currently applies to 49 CFR part 556, Exemption for laminated glass for use in a motor Otto G. Matheke III, Inconsequential Defect or vehicle. In no way is the actual safety Director, Office of Vehicle Safety Compliance. Noncompliance. [FR Doc. 2020–24825 Filed 11–9–20; 8:45 am] aspect of the laminated glass Notice of receipt of GM’s petition was compromised by the misprinted AS BILLING CODE 4910–59–P published, with a 30-day public number. comment period, on January 10, 2018, 3. Despite the misprinted AS number DEPARTMENT OF TRANSPORTATION in the Federal Register (83 FR 1282). No being affixed to the laminated glass comments were received. To view the parts described herein, the correct parts National Highway Traffic Safety petition and all supporting documents, were sold and shipped to Navistar and Administration log onto the Federal Docket Nova Bus for use as windscreens and Management System (FDMS) website at: [Docket No. NHTSA–2017–0097; Notice 2] door windows. http://www.regulations.gov/. Then 4. CGM asserts that the follow the online search instructions to noncompliance reported herein could General Motors, LLC, Denial of Petition for Decision of Inconsequential locate docket number ‘‘NHTSA–2017– not result in the wrong part being used 0097.’’ in an OEM application, given that the Noncompliance part would be ordered by its unique part AGENCY: National Highway Traffic II. Vehicles Involved number and not the ‘‘M number’’ Safety Administration (NHTSA), U.S. This petition concerns approximately (which corresponds to the glass Department of Transportation (DOT). 38,048 MY 2017–2018 Chevrolet construction from which the part is ACTION: Denial of petition. fabricated). The parts are also easily Silverado heavy duty and GMC Sierra traceable back to CGM via their unique SUMMARY: General Motors, LLC (GM), heavy duty (Gross Vehicle Weight DOT number. has determined that the seat belt Rating (GVWR) of 9,300–13,400 lbs) CGM concluded by expressing the assemblies in certain model year (MY) motor vehicles, manufactured between belief that the subject noncompliances 2017–2018 Chevrolet Silverado heavy July 18, 2016, and August 7, 2017. The are inconsequential as they relate to duty and GMC Sierra heavy duty motor double cab versions of the subject motor vehicle safety, and that their vehicles do not fully comply with vehicles are not included in this petitions to be exempted from providing Federal Motor Vehicle Safety Standard petition. notification of the noncompliance, as (FMVSS) No. 209, Seat Belt Assemblies. III. Noncompliance required by 49 U.S.C. 30118, and a GM filed a noncompliance report dated remedy for the noncompliance, as September 14, 2017, and later amended GM explains the noncompliance as required by 49 U.S.C. 30120, should be it on September 22, 2017. GM also seat belt assemblies that do not conform granted. petitioned NHTSA on October 6, 2017, to the upper-torso seat belt elongation CGM’s complete petitions and all for a decision that the subject requirements specified in paragraph supporting documents are available by noncompliance is inconsequential as it S4.4(b)(5) of FMVSS No. 209. logging onto the Federal Docket relates to motor vehicle safety. This Specifically, the seat belt assemblies Management System (FDMS) website at: document announces the denial of GM’s were built with load-limiting torsion https://www.regulations.gov and petition. bars measuring 9.5 mm in diameter on following the online search instructions FOR FURTHER INFORMATION CONTACT: Mr. the driver side and 8.0 mm on the to locate the docket numbers listed in Stephen Hench, Office of Chief Counsel, passenger side, instead of 12 mm for the title of this notice. telephone 202–366–2262, facsimile both sides as specified by GM.

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IV. Rule Requirements S5.1.1(a) of FMVSS No. 208.3 The S4.4(b)(5) of FMVSS No. 209. Further, Paragraph S4.4(b)(5) of FMVSS No. petition also states that the tested GM states that seat belt retractors 209, includes the requirements relevant vehicles performed below the injury equipped with the lower-diameter to this petition. Except as provided in assessment reference limits specified in torsion bars may reduce upper torso paragraph S4.5 of FMVSS No. 209, S5.1.1(a) even when tested at 35 mph, injury potential in frontal crashes as when tested by the procedure specified which subjects the vehicle to 36 percent compared to retractors with the larger- more energy than at the 30 mph testing in paragraph S5.3(b), the length of the diameter torsion bars. standard provided in the regulation. GM upper torso restraint between contends that the tested vehicles were 3. GM Believes NHTSA Precedent anchorages shall not increase more than also rated by NHTSA with an overall 4- Supports Granting the Petition 508 mm when subjected to a force of Star NCAP score. GM states that NHTSA has previously 11,120 N. GM expects that the subject vehicles ruled that failure to comply with certain V. Summary of GM’s Petition will perform nearly the same as the FMVSS No. 209 static testing tested vehicles in dynamic frontal crash GM stated that smaller diameter requirements can be inconsequential to testing and would therefore also meet torsion bars in the noncompliant trucks motor vehicle safety, where the all of the belted barrier test are regularly used in retractor manufacturer demonstrates by dynamic requirements specified by S5.1.1(a) of assemblies in other full-size trucks, testing that the noncompliant seat belt FMVSS No. 208. assembly performs similarly to a including variants of the subject GM cites statements made by NHTSA vehicles. Due to their smaller size and compliant assembly. On May 3, 2002, in prior rulemaking notices 4 to support GM submitted an inconsequentiality weight rating, these similar variants are its position that the dynamic belted subject to S5.1 of FMVSS No. 208, and petition to NHTSA relating to certain frontal barrier crash testing of S5.1.1(a) trucks and SUVs that were built with exempt from S4.4(b)(5) of FMVSS No. of FMVSS No. 208 is a more appropriate 1 damaged and inoperative ‘‘vehicle- 209. GM contends that the seat belt means to evaluate occupant protection retractors with undersized torsion bars sensitive’’ emergency-locking retractors than the static seat belt elongation (ELRs), which lock the seat belts under inadvertently installed in the subject testing requirements of S4.4(b)(5) of vehicles provide at least the same level rapid deceleration. Notwithstanding the FMVSS No. 209 for vehicles with seat noncompliance with FMVSS No. 209 of occupant protection in frontal crashes belts equipped with load limiters. while optimizing belt force-deflection caused by this condition, GM asserted characteristics. However, the subject 2. GM Believes the Subject Vehicles Will that the failure was inconsequential to vehicles were not certified to S5.1 of Provide No Less Protection to vehicle safety because the ELRs in these FMVSS No. 208 and, accordingly, were Occupants in a Frontal Crash Than vehicles also had a redundant not intended to be equipped with these Vehicles Equipped With Seat Belt ‘‘webbing-sensitive’’ mechanism, which smaller diameter torsion bars because Retractors Utilizing the 12 mm Torsion locks the belts when the webbing is they were required to meet the Bars rapidly extracted. GM contends it presented dynamic testing data elongation requirements of S4.4(b)(5) of GM believes that replacing the (including some data developed using FMVSS No. 209. retractors installed in the subject the test procedures set forth in FMVSS GM described the subject vehicles with retractors that have the No. 208) demonstrating that the noncompliance and stated its belief that larger torsion bars would not result in webbing-sensitive system ‘‘offered a the noncompliance is inconsequential an added safety benefit to the occupants level of protection nearly equivalent to as it relates to motor vehicle safety. In of these vehicles in frontal crashes. The that provided by a compliant ELR.’’ support of its petition, GM submitted petition contends that the subject GM states that NHTSA granted GM’s the following reasoning: vehicles will provide no less occupant petition, in part, and ruled the protection than vehicles built with the 1. GM Indicates the Subject Vehicles noncompliance in certain of the larger 12 mm diameter torsion bars that Meet the Belted Frontal Crash vehicles subject to the petition was meet the elongation requirements of Performance Testing Requirements of inconsequential to motor vehicle safety: S5.1 of FMVSS No. 208 3 S5.1.1(a) of FMVSS No. 208 specifies the belted On the basis of the sled test and simulation GM has conducted dynamic frontal barrier test requirements for certain vehicles not data provided by GM, the agency has crash testing on 2500 series vehicles certified to S14 of FMVSS No. 208 (i.e., those with concluded that GM has adequately a GVW >8,500 lbs. or an unloaded weight >5,500 that it describes as substantially similar demonstrated that the potential safety lbs). consequences of the failure of the vehicle- to the subject vehicles and equipped 4 In its 1991 rulemaking modifying FMVSS No. sensitive locking mechanisms in the ELRs in with the same load-limiting seat belt 209 to exclude certain dynamically tested seat belts the C/K vehicles to function properly are from some of the static seat-belt testing retractors with the lower-diameter inconsequential. While the webbing-sensitive 2 requirements, NHTSA acknowledged that it ‘‘has torsion bars (the ‘‘Tested Vehicles’’). long believed it more appropriate to evaluate the systems in these vehicles do allow slightly According to GM, the tested vehicles occupant protection afforded by vehicles by increased belt payout compared to a comply with the belted frontal crash conducting dynamic testing . . .’’ versus static tests functional vehicle-sensitive system, and lock performance testing requirements under such as the elongation requirements in S4.4(b)(5) of slightly later in crash event, these differences FMVSS No. 209. Final Rule, 56 FR 15295, 15295 do not appear to expose a vehicle occupant (April 16, 1991). Further, ‘‘[s]ince the dynamic test to a significantly greater risk of injury. 1 S4.5 of FMVSS No. 209 exempts load-limited measures the actual occupant protection which the seat belts installed at a designated seating position belt provides during a crash, there is no apparent General Motors Corporation, Ruling subject to S5.1 of FMVSS No. 208 from the need to subject that belt to static testing procedures on Petition for Determination of elongation requirements. that are surrogate and less direct measures of the 2 The subject vehicles and tested vehicles share protection which the belt would provide to its Inconsequential Noncompliance, 69 FR the same frame, body structure, powertrains and occupant during a crash.’’ Notice of Proposed 19897, 19900 (April 14, 2004). In its under-hood crush space; instrument panel, steering Rulemaking, 55 FR 1681 (January 18, 1990). GM decision, NHTSA also noted that ‘‘the column and wheel, seats, seat-belt anchorages, and believes NHTSA’s rationale for creating these dummy injury measurements did not general interior vehicle layout/spatial relationships; exemptions applies to the subject vehicles even and driver and passenger frontal airbags. In similar though they may not all technically be ‘‘subject to’’ increase significantly and were well configurations, the subject vehicles and test S5.1 of FMVSS No. 208 and therefore exempt from below the maximum values permitted vehicles have similar mass. FMVSS No. 209’s elongation requirements. under FMVSS No. 208.’’

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Here, GM argues that the subject performance requirements are objective, especially where other sources of vehicles will provide no less protection practicable, and meet the need for motor correct information are available. See, to occupants in the designated seating vehicle safety. See 49 U.S.C. 30111(a). e.g., General Motors, LLC, Grant of positions in frontal crashes than Thus, there is a general presumption Petition for Decision of Inconsequential vehicles equipped with seat belt that the failure of a motor vehicle or Noncompliance, 81 FR 92963 (Dec. 20, retractors conforming to S4.4(b)(5) of item of motor vehicle equipment to 2016). FMVSS No. 209. comply with an FMVSS increases the The burden of establishing the risk to motor vehicle safety beyond the inconsequentiality of a failure to comply 4. GM Is Not Aware of any Injuries or level deemed appropriate by NHTSA with a performance requirement in a Customer Complaints Associated With through the rulemaking process. To standard—as opposed to a labeling the Condition protect the public from such risks, requirement—is more substantial and As of September 22, 2017, after manufacturers whose products fail to difficult to meet. Accordingly, the searching VOQ, TREAD and internal comply with an FMVSS are normally Agency has not found many such GM databases, GM stated it was not required to conduct a safety recall under noncompliances inconsequential.5 aware of any crashes, injuries, or which they must notify owners, Potential performance failures of safety- customer complaints associated with purchasers, and dealers of the critical equipment, like seat belts or air this condition. noncompliance and provide a free bags, are rarely deemed inconsequential. remedy. 49 U.S.C. 30118–30120. An important issue to consider in 5. GM Has Corrected the However, Congress has recognized that, determining inconsequentiality based Noncompliance in Production Vehicles under some limited circumstances, a upon NHTSA’s prior decisions on and Service Part Inventory noncompliance could be noncompliance issues was the safety GM states that it has corrected the ‘‘inconsequential’’ to motor vehicle risk to individuals who experience the noncompliance in production. safety. It, therefore, established a type of event against which the recall According to GM, vehicles produced procedure under which NHTSA may would otherwise protect.6 NHTSA also after August 7, 2017, have seat belt consider whether it is appropriate to does not consider the absence of assemblies containing retractor torsion exempt a manufacturer from its complaints or injuries to show that the bars that meet GM’s original notification and remedy (i.e., recall) issue is inconsequential to safety. ‘‘Most specifications and comply with obligations. 49 U.S.C. 30118(d) & importantly, the absence of a complaint S4.4(b)(5) of FMVSS No. 209. The 30120(h). The agency’s regulations does not mean there have not been any petition also states that retractor governing the filing and consideration safety issues, nor does it mean that there assemblies with this condition that were of petitions for inconsequentiality will not be safety issues in the future.’’ 7 manufactured as service parts are no exemptions are set out at 49 CFR part ‘‘[T]he fact that in past reported cases longer available for sale and all affected 556. good luck and swift reaction have inventory has been purged. Further, GM Under the Safety Act and Part 556, prevented many serious injuries does contends that any such seat belt inconsequentiality exemptions may be not mean that good luck will continue assembly previously sold as a service granted only in response to a petition to work.’’ 8 part could only have been installed on from a manufacturer, and then only after Arguments that only a small number a subject vehicle because these seat belt notice in the Federal Register and an of vehicles or items of motor vehicle assemblies are not compatible with opportunity for interested members of equipment are affected have also not the public to present information, justified granting an inconsequentiality prior model year (i.e., 2015 or 2016) 9 versions of the Silverado or Sierra HD, views, and arguments on the petition. In petition. Similarly, NHTSA has due to a different type of wiring addition to considering public 5 connector used. comments, the agency will draw upon Cf. Gen. Motors Corporation; Ruling on Petition its own understanding of safety-related for Determination of Inconsequential GM concludes by expressing the Noncompliance, 69 FR 19897, 19899 (Apr. 14, belief that the subject noncompliance is systems and its experience in deciding 2004) (citing prior cases where noncompliance was inconsequential as it relates to motor the merits of a petition. An absence of expected to be imperceptible, or nearly so, to vehicle occupants or approaching drivers). vehicle safety, and that its petition to be opposing argument and data from the public does not require NHTSA to grant 6 See Gen. Motors, LLC; Grant of Petition for exempted from providing notification of Decision of Inconsequential Noncompliance, 78 FR the noncompliance, as required by 49 a manufacturer’s petition. 35355 (June 12, 2013) (finding noncompliance had U.S.C. 30118, and a remedy for the Neither the Safety Act nor Part 556 no effect on occupant safety because it had no effect noncompliance, as required by 49 defines the term ‘‘inconsequential.’’ The on the proper operation of the occupant agency determines whether a particular classification system and the correct deployment of U.S.C. 30120, should be granted. an air bag); Osram Sylvania Prods. Inc.; Grant of noncompliance is inconsequential to Petition for Decision of Inconsequential VI. NHTSA’s Analysis motor vehicle safety based upon the Noncompliance, 78 FR 46000 (July 30, 2013) specific facts before it in a particular (finding occupant using noncompliant light source 1. General Principles petition. In some instances, NHTSA has would not be exposed to significantly greater risk Congress passed the National Traffic than occupant using similar compliant light determined that a manufacturer met its source). and Motor Vehicle Safety Act of 1966 burden of demonstrating that a 7 Morgan 3 Wheeler Limited; Denial of Petition for (the ‘‘Safety Act’’) with the express noncompliance is inconsequential to Decision of Inconsequential Noncompliance, 81 FR purpose of reducing motor vehicle safety. For example, a label intended to 21663, 21666 (Apr. 12, 2016). accidents, deaths, injuries, and property provide safety advice to an owner or 8 United States v. Gen. Motors Corp., 565 F.2d damage. 49 U.S.C. 30101. To this end, occupant may have a misspelled word, 754, 759 (D.C. Cir. 1977) (finding defect poses an unreasonable risk when it ‘‘results in hazards as the Safety Act empowers the Secretary or it may be printed in the wrong format potentially dangerous as sudden engine fire, and of Transportation to establish and or the wrong type size. Where a where there is no dispute that at least some such enforce mandatory FMVSS 49 U.S.C. manufacturer has shown that the hazards, in this case fires, can definitely be 30111. The Secretary has delegated this discrepancy with the safety requirement expected to occur in the future’’). 9 See Mercedes-Benz, U.S.A., L.L.C.; Denial of authority to NHTSA. 49 CFR 1.95. should not lead to any Application for Decision of Inconsequential NHTSA adopts an FMVSS only after misunderstanding, NHTSA has granted Noncompliance, 66 FR 38342 (July 23, 2001) the agency has determined that the an inconsequentiality exemption, Continued

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rejected petitions based on the assertion requirements if it is installed at a seating of certain variants of the 2500 vehicles that only a small percentage of vehicles position subject to the requirements of is a valid surrogate for the subject or items of equipment are likely to S5.1 of Standard No. 208—that is, vehicles with the smaller diameter actually exhibit a noncompliance. The ‘‘subject to’’ a belted crash test specified torsion bars. GM indicated that the percentage of potential occupants that in FMVSS No. 208. tested vehicles were ‘‘substantially could be adversely affected by a GM argues that the crash testing it similar’’ to the subject vehicles. noncompliance does not determine the performed on the 2500 series vehicles However, a simple examination of the question of inconsequentiality. Rather, that were substantially similar to the GVWR comparison between the two sets the issue to consider is the consequence subject vehicles and were equipped of vehicles indicates that this is a to an occupant who is exposed to the with the same load-limiting seat belt questionable conclusion. The tested consequence of that noncompliance.10 retractors with the lower-diameter vehicles were 2500 series and the These considerations are also relevant torsion bars shows that the subject vehicles were 2500, 3500, and when considering whether a defect is noncompliant seat belts in the subject 3600 series. As reported by GM, the inconsequential to motor vehicle safety. vehicles will provide no less protection 2500 series have a GVWR range of to occupants in the designated seating 9,300–10,000 lbs. The 3500 and 3600 Response to GM’s Arguments positions in frontal crashes than are encompassed in a GVWR range of NHTSA has considered GM’s vehicles equipped with seat belt 10,000–13,400 lbs. arguments and determined that the retractors conforming to S4.5 of FMVSS GM’s argument seems to be load-limiting retractor installed with No. 209. GM also cites a prior grant of predicated on the assumption that if the torsion bars measuring 9.5 mm in an inconsequentiality petition for subject vehicles were tested using the diameter on the driver side and 8.0 mm certain of the FMVSS No. 209 static FMVSS No. 208 procedure, the tested on the passenger side, instead of 12 mm requirements based, in part, on dynamic weight of the subject vehicles would be as specified by GM, is not test data. similar to the tested weight of the tested inconsequential to motor vehicle safety. The agency disagrees with GM’s vehicles. We have no reason to believe NHTSA, therefore, denies GM’s request assessment. NHTSA has more recently that GM has not optimized the sharing for an inconsequentiality determination, considered this issue, its putative of the occupant restraint contribution for the following reasons: inconsequentiality, and whether testing from the seat belt for the tested vehicles supporting compliance with FMVSS No. a. NHTSA Does Not Find the Dynamic to the parameters required by the 208 may support finding a Testing of Similar Vehicles Compelling FMVSS No. 208 barrier impacts. noncompliance with FMVSS No. 209 in This Case However, just as important for the inconsequential. See BMW of North agency’s consideration of this issue is GM believes that the noncompliance America, LLC; Jaguar Land Rover North the difference in the GVWR range for of load limiters, mistakenly installed America, LLC; and Autoliv, Inc.; the subject and tested vehicles. GM with torsion bars measuring 9.5 and 8.0 Decisions of Petitions for contends that ‘‘[t]he primary difference mm in diameter on the driver and Inconsequential Noncompliance, 84 FR between the Subject Vehicles and passenger side instead of 12 mm as 19994 (May 7, 2019). In any case, the Tested Vehicles is that the Subject specified by GM, is inconsequential to petition cited by GM as precedent, Vehicles have increased capacity motor vehicle safety. A load limiter is a General Motors Corporation, Ruling on suspension components, which do not seat belt assembly component that Petition for Determination of affect the vehicles’ crash performance.’’ controls tension on the seat belt and Inconsequential Noncompliance, 69 FR This statement seems to ignore that with modulates the forces imparted to a 19897, 19900 (April 14, 2004), concerns these differences in the subject vehicles vehicle occupant during a crash. Load a different requirement in FMVSS No. comes the much greater GVWR range of limiters are intended primarily to 209: Lock up within 25 mm versus subject vehicles compared to the tested reduce upper torso injuries caused by elongation. The petition states that ‘‘GM vehicles. With this much greater fully the compressive force applied by the expects that the Subject Vehicles will loaded mass would potentially come relatively narrow seat belt. They may perform nearly the same as the Tested much different frontal crash dynamics. work in concert with an air bag system Vehicles in dynamic frontal crash Although GM states the subject and to optimize occupant protection in a testing, and would therefore also meet tested vehicles share many of the same crash and provide overall crash energy all of the belted barrier test structural components related to crash management. Section S4.5 of FMVSS requirements specified by S5.1.1 (a) of energy management, the fact remains No. 209 exempts a belt with a load FMVSS No. 208.’’ However, whether the that the subject vehicles may require limiter from the standard’s elongation subject vehicles would be capable of much more energy to be managed meeting the test requirements of FMVSS because of the GVWR differences. For (rejecting argument that noncompliance was No. 208 S5.1.1(a) is not at issue. This is example, it could be theorized that this inconsequential because of the small number of vehicles affected); Aston Martin Lagonda Ltd.; not a compliance requirement or option additional mass may extend the crash Denial of Petition for Decision of Inconsequential for the front outboard seats in the pulse duration. Similarly, managing this Noncompliance, 81 FR 41370 (June 24, 2016) subject vehicles. Rather, the issue is additional energy could mean (noting that situations involving individuals whether the subject vehicles’ additional vehicle crush, essentially trapped in motor vehicles—while infrequent—are consequential to safety); Morgan 3 Wheeler Ltd.; noncompliance with FMVSS No. 209 changing the shape of the crash pulse. Denial of Petition for Decision of Inconsequential S4.4(b)(5) is inconsequential to safety. Differences in pulse shape and duration Noncompliance, 81 FR 21663, 21664 (Apr. 12, We do not agree that the test results for may change the optimal sharing of 2016) (rejecting argument that petition should be the tested vehicles are sufficient for this restraint between the seat belt and air granted because the vehicle was produced in very low numbers and likely to be operated on a limited showing. We explain our reasoning bag. This change in crash pulse may basis). below. also affect the air bag deployment 10 See Gen. Motors Corp.; Ruling on Petition for The subject vehicles were neither timing. Determination of Inconsequential Noncompliance, subject to, nor tested to, S5.1.1(a) of In summary, we are not convinced 69 FR 19897, 19900 (Apr. 14, 2004); Cosco Inc.; FMVSS No. 208. GM contends, that the crash test data provided in the Denial of Application for Decision of Inconsequential Noncompliance, 64 FR 29408, however, that the belted frontal barrier GM submission is sufficient to show 29409 (June 1, 1999). impact data used to certify compliance that the smaller torsion bar placed in the

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subject vehicles would be manufacture for sale a vehicle it knows comment period soliciting public inconsequential to safety. In real-world to be noncompliant. Id. The fact that comments on the following information frontal crashes, with subject vehicles new vehicle production has been collection was published on July 14, loaded near the GVWR, we believe the corrected simply informs the agency 2020. NHTSA received two comments, crash pulse duration and shape may that the noncompliance is limited to the which we address below. differ from what would be seen in an affected vehicles described in the DATES: Comments must be submitted on FMVSS No. 208 frontal barrier test, petition. Therefore, the fact that new or before December 10, 2020. affecting the optimization of the vehicle production has been corrected ADDRESSES: Written comments and occupant restraint system that includes does not factor into our analysis of recommendations for the proposed the lower diameter torsion bars in the whether the noncompliance is information collection, including seat belt load limiters. inconsequential and will not justify our suggestions for reducing burden, should More generally, GM’s assessment also granting an inconsequentiality petition. be submitted to the Office of ignores the crucial role that the static VII. NHTSA’s Decision Management and Budget at testing requirements of FMVSS No. 209 www.reginfo.gov/public/do/PRAMain. play in acting as a safety backstop for In consideration of the foregoing, To find this particular information crash scenarios that are not accounted NHTSA finds that GM has not met its collection, select ‘‘Currently under for in dynamic tests such as those burden of persuasion that the subject Review—Open for Public Comment’’ or conducted by GM. Dynamic tests are FMVSS No. 209 noncompliance in the use the search function. Comments may meant to assess whether a vehicle’s subject vehicles is inconsequential to also be sent by mail to the Office of occupant protection systems work motor vehicle safety. Accordingly, Information and Regulatory Affairs, cohesively in certain representative NHTSA hereby denies GM’s petition. Office of Management and Budget, 725 crashes. However, there are countless GM is therefore obligated to provide 17th Street NW, Washington, DC 20503, crash and pre-crash scenarios that these notification of, and a free remedy for, Attention: Desk Officer for Department sorts of tests do not cover, which is why that noncompliance in accordance with of Transportation, National Highway static requirements of FMVSS No. 209 49 U.S.C. 30118 through 30120. Traffic Safety Administration, or by are intended to ‘‘fill in the gaps’’ to (Authority: 49 U.S.C. 30118, 30120: email at [email protected], ensure that the vehicle’s seat belt delegations of authority at 49 CFR 1.95 and or fax: 202–395–5806. equipment maintains a minimum level 501.8) FOR FURTHER INFORMATION CONTACT: of performance in untested scenarios. For For example, dynamic tests do not Jeffrey Mark Giuseppe, additional information or access to account for the fact that a seat belt Associate Administrator for Enforcement. background documents, contact Jordan A. Blenner, JD, Ph.D., Contracting assembly is intended to protect [FR Doc. 2020–24866 Filed 11–9–20; 8:45 am] Officer’s Representative, Office of occupants even when they are out-of- BILLING CODE 4910–59–P position. The agency believes it is Behavioral Safety Research (NPD–320), essential to ensure seat belt assemblies National Highway Traffic Safety perform their important safety function DEPARTMENT OF TRANSPORTATION Administration, 1200 New Jersey of not exceeding the permitted Avenue SE, W46–470, Washington, DC maximum webbing pay-out/elongation, National Highway Traffic Safety 20590. Dr. Blenner’s telephone number to protect occupants who may be out-of- Administration is 202–366–9982, and her email address is [email protected]. position during a crash, and the [Docket No. NHTSA–2020–0024] resulting increased risk of that occupant SUPPLEMENTARY INFORMATION: Under the striking the vehicle’s interior structure. Agency Information Collection PRA (44 U.S.C. 3501 et seq.), before a Activities; Submission to the Office of Federal agency can collect certain b. The Absence of Complaints Does Not information from the public, it must Support GM’s Petition Management and Budget for Review and Approval; National Survey of receive approval from the Office of GM stated that they received no Drowsy Driving Knowledge, Attitudes Management and Budget (OMB). In complaints and knew of no reported and Behaviors compliance with these requirements, injuries related to the noncompliance this notice announces that the following when they filed this petition in AGENCY: National Highway Traffic information collection request has been September of 2017. NHTSA does not Safety Administration (NHTSA), forwarded to OMB. consider the absence of complaints or Department of Transportation. A Federal Register notice with a 60- injuries to show that the issue is ACTION: Notice and request for day comment period soliciting public inconsequential to safety; the absence of comments on a new information comments on the following information a complaint does not mean there have collection. collection was published on July 14, been no safety issues, nor that there will 2020 (Federal Register/Vol. 85, No. 135/ not be any in the future. In any event, SUMMARY: In compliance with the pp. 42486–42488). NHTSA received two three injuries involving 2500 series Paperwork Reduction Act of 1995 comments. General Motors (GM) vehicles’ seat belt assemblies were (PRA), this notice announces that the provided comments supportive of the reported in the Early Warning Reporting Information Collection Request (ICR) proposed information collection. The database in the second quarter of 2018. abstracted below will be submitted to American Alliance for Healthy Sleep the Office of Management and Budget (AAHS) also provided comments c. That GM Has Corrected the (OMB) for review. The ICR describes the supportive of the proposed collection Noncompliance for Vehicles Produced nature of the information collection and but expressed concerns about the After August 7, 2017, Does Not Support its expected burden. The ICR is for a collection methods. the Merits of Its Petition new information collection for a one- We appreciate the comments from GM Manufacturers are legally obligated to time voluntary survey regarding and the AAHS and thank them for correct new vehicle production. See 49 knowledge, attitudes, and behaviors thoughtfully considering the described U.S.C. 30112(a); 30115(a). A associated with drowsy driving. A program. The AAHS raised two areas of manufacturer cannot certify or Federal Register notice with a 60-day concern. The first is that the AAHS

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‘‘suggests that participants be contacted, demonstration projects and the fatalities were drowsy driving related in and the survey completed, by electronic collection and analysis of highway and 2018.1 However, the involvement of means instead, if possible.’’ While we motor vehicle safety data and related drowsy driving in crashes is likely agree with the AAHS that electronic information needed to carry out this underreported due to difficulty in methods generally improve efficiency section, with respect to all aspects of defining and reporting drowsy driving and cost-effectiveness, we chose to use highway and traffic safety systems and incidents.2 Using a multiple imputation an address-based sampling frame to conditions relating to vehicle, highway, methodology, the study estimated 21% select and contact respondents to driver, passenger, motorcyclist, of fatal crashes involved drowsy increase representativeness of the bicyclist, and pedestrian characteristics; driving.3 If this estimate is accurate, it national and State samples. Address- accident causation and investigations; suggests that more than 7,000 people die based samples are generally more and human behavioral factors and their in drowsy driving related motor vehicle representative of the population than effect on highway and traffic safety. crashes across the United States each email or other electronic-based samples The National Highway Traffic Safety year. While there have been several because they allow people who do not Administration (NHTSA) of the U.S. studies of self-reported drowsy driving have a way to be contacted Department of Transportation is seeking behavior, there is limited research about electronically to be selected for the approval to collect information from a knowledge and attitudes that lead to survey. Also, given a main purpose of random sample of adults (18 years or drowsy driving. NHTSA last fielded a the survey is to produce national and older) who have driven a motor vehicle similar survey in 2002, and much has State estimates of knowledge, attitudes, in the past month for a one-time changed since then. The information and behaviors, the use of address-based voluntary survey to report their will assist NHTSA in (a) planning sampling more readily allows for the knowledge, attitudes, and behaviors drowsy driving prevention program calculation of sample weights to reflect associated with drowsy driving. This activities; (b) supporting groups the population since the United States collection has two parts. The first part involved in improving public safety; Postal Service maintains a computerized is a pilot test for which NHTSA will and (c) identifying countermeasure list of all U.S. residential addresses from contact 1,000 households for an strategies that are most acceptable and which the contractor will draw the expected number of 163 voluntary effective in reducing drowsy driving. sample. Regarding the responses, the responses. The second part is the full Respondents: Random sample of proposed methodology is a web-based survey for which NHTSA will contact adults (18 years or older) who have survey with a paper-based version as a 81,490 households to achieve a total driven a motor vehicle in the past back-up. The initial invitation letter and target of at least 15,000 complete month. the two reminder postcards direct the voluntary responses, consisting of 7,000 Estimated Number of Respondents: respondent to the web version of the completed instruments from a 82,490 Invitations/16,122 Expected survey. The second and third invitation nationally representative sample and Responses. The pilot study will invite letters direct the respondent to the web 2,000 completed instruments from each one voluntary participant from 1,000 but also provide a paper survey and of four samples representative of States households, and the full study (national Business Reply Envelope as a back-up that recently have had drowsy driving and four State surveys) will invite one for those without internet access. Like law or program activities (Arkansas, voluntary participant from 81,490 the sampling process, we do not want to Iowa, Massachusetts, and New Jersey). households. The expected number of exclude respondents who may not have The total estimated burden associated survey responses is 16,122 (163 for the easy access to the internet. The second with this collection is 16,323 hours—up pilot and 15,959 for the full survey). area of concern was allowing the survey to 10,949 hours associated with survey Estimated Time per Response: The to be completed anonymously and to invitations and reminders and up to time required to participate in this recognize that respondents ‘‘may under- 5,374 hours associated with completing survey is approximately 25 minutes for report or may not be willing to disclose the survey. NHTSA will summarize the the pilot study and 28 minutes for the certain behaviors.’’ We agree, and the results of the collection using aggregate full study. Households selected for the survey is anonymous in that we do not statistics in a final report to be pilot survey will receive two invitation collect the names of the respondents. In distributed to NHTSA program and letters and a reminder postcard that addition, the invitation letters and regional offices, State Highway Safety would take an estimated five minutes to survey instruments inform the Offices, and other traffic safety read (2 minutes for each letter, and 1 minute for the postcard). Households respondents that their responses are stakeholders. This collection will selected for the full survey will receive anonymous. inform the development of Title: National Survey of Drowsy countermeasures, particularly in the three invitation letters and two Driving Knowledge, Attitudes and areas of communications and outreach, reminder postcards that would take an Behaviors. for reducing fatalities, injuries and estimated eight minutes to read (2 OMB Control Number: New. crashes associated with drowsy driving. Form No.: NHTSA Forms 1547, 1548, Description of the Need for the 1 National Center for Statistics and Analysis. Information and Proposed Use of the (October 2019). 2018 Fatal Motor Vehicle Crashes: 1549, 1550, 1551, and 1552. Overview, pg. 8. (Traffic Safety Facts, Research Type of Information Collection Information: NHTSA’s Congressional Note, Report No. DOT HS 812 826). Washington, Request: Approval of a new information mandate is to reduce deaths, injuries, DC: National Highway Traffic Safety collection. and economic losses resulting from Administration. Type of Review Requested: Regular. motor vehicle crashes on the Nation’s 2 National Center for Statistics and Analysis. Requested Expiration Date of highways. As part of this statutory (October 2017). Drowsy Driving 2015, pg. 2 (Crash•Stats, A Brief Statistical Summary. Report Approval: 3 years from date of approval. mandate, NHTSA is authorized to No. DOT HS 812 446). Washington, DC: National Summary of the Collection of conduct research as a foundation for the Highway Traffic Safety Administration (available at Information: Title 23, United States development of traffic safety programs. https://crashstats.nhtsa.dot.gov/Api/Public/ Code, Chapter 4, Section 403 gives the See 23 U.S.C. 403; 49 U.S.C. 30101(2); ViewPublication/812446). 3 Tefft, Brian C. (2014) Prevalence of Motor Secretary authorization to use funds 49 U.S.C. 32501. NHTSA’s Fatality Vehicle Crashes Involving Drowsy Drivers, United appropriated to conduct research and Analysis Reporting System (FARS) States, 2009–2013. Washington, DC: AAA development activities, including database reports that 2% of traffic Foundation for Traffic Safety.

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minutes for each letter, and 1 minute for multiplying by the number of invitations and reminders (2,716.3 each postcard). The estimated time to respondents (i.e., Form 1547 invitation hours (Form 1547) + 1,358.2 hours complete the survey is 20 minutes. letter 1 for the pilot phase: 1,000 (Form 1548) + 2,716.3 hours (Form Total Estimated Annual Burden Respondents × 2 minutes ÷ 60 = 33.3 1549) + 1,358.2 hours (Form 1550) + Hours: 16,323 hours. hours). This estimate includes 83 hours 2,716.3 hours (Form 1551) = 10,865.3 or The total estimated burden hours associated with pilot invitations and 10,866 hours), and up to 5,374 hours associated with this collection is 16,323 reminders (33.3 hours (Form 1547) + associated with completing the survey hours. The total burden hours for the 16.7 hours (Form 1548) + 33.3 hours (54.3 hours (pilot) + 5,319.7 hours (full) respondents are derived by estimating (Form 1549) = 83.3 or 83 hours), 10,866 = 5,374 hours). The details are the number of minutes each respondent would spend on each form and hours associated with the full survey presented in Table 1 below.

TABLE 1—BURDEN HOURS BY FORM

Est. minutes Total burden Form Description Respondents per respond- hours per form Total burden ent per phase hours per form

Form 1547 ...... Invitation Letter 1—Pilot Survey ...... 1,000 2 33.3 2,749.6 Invitation Letter 1—Full Survey ...... 81,490 2 2,716.3 Form 1548 ...... Reminder Postcard 1—Pilot Survey 1,000 1 16.7 1,374.9 Reminder Postcard 1—Full Survey 81,490 1 1,358.2 Form 1549 ...... Invitation Letter 2—Pilot Survey ...... 1,000 2 33.3 2,749.6 Invitation Letter 2—Full Survey ...... 81,490 2 2,716.3 Form 1550 ...... Reminder Postcard 2—Full Survey 81,490 1 1,358.2 1,358.2 Form 1551 ...... Invitation Letter 3—Full Survey ...... 81,490 2 2,716.3 2,716.3 Form 1552 ...... Pilot Survey ...... 163 20 54.3 5,374.0 Full Survey ...... 15,959 20 5,319.7

Totals ...... 16,322.6 or 16,323

Total Estimated Burden Cost: NHTSA Issued in Washington, DC. conference call is: 646–828–7666. At the estimates that there are no costs to Nanda Narayanan Srinivasan, prompt, enter meeting ID 160 398 5160, respondents beyond the time spent Associate Administrator, Research and then press #. The meeting passcode is completing the survey. Program Development. 531119, then press #. Individuals Frequency of Collection: The [FR Doc. 2020–24868 Filed 11–9–20; 8:45 am] seeking to present oral statements are information collection will be BILLING CODE 4910–59–P invited to submit a 1–2 page summary administered a single time. of their comments at the time of the meeting for inclusion in the official Public Comments Invited: You are DEPARTMENT OF VETERANS meeting record. Oral presentations will asked to comment on any aspects of this AFFAIRS be limited to five minutes or less, information collection, including (a) depending on the number of whether the proposed collection of VA National Academic Affiliations participants. Interested parties may also information is necessary for the proper Council, Notice of Meeting provide written comments for review by performance of the functions of the The Department of Veterans Affairs the Council prior to the meeting or at Department of Transportation, including (VA) gives notice under the Federal any time, by email to Larissa.Emory@ whether the information will have Advisory Committee Act, 5 U.S.C. App. va.gov, or by mail to Larissa A. Emory practical utility; (b) the accuracy of the 2., that the VA National Academic PMP, CBP, MS, Designated Federal agency’s estimate of the burden of the Affiliations Council (the Council) will Officer, Office of Academic Affiliations proposed information collection, meet via conference call on December 8, (10X1), 810 Vermont Avenue NW, including the validity of the from 1:00 p.m. to 3:00 p.m. EST. The Washington, DC 20420. Any member of methodology and assumptions used; (c) meeting is open to the public. the public wishing to participate or ways to enhance the quality, utility and The purpose of the Council is to seeking additional information should clarity of the information to be advise the Secretary on matters affecting contact Ms. Emory via email or by collected; and (d) ways to minimize the partnerships between VA and its phone at (915) 269–0465. burden of the collection of information academic affiliates. on respondents, including the use of On December 8, 2020, the Council Dated: November 5, 2020. appropriate automated, electronic, will receive briefings about health Jelessa M. Burney, mechanical, or other technological profession student debt; VA scholarship Federal Advisory Committee Management collection techniques or other forms of and loan repayment opportunities; Officer. information technology, e.g., permitting status of VA’s Electronic Health Record [FR Doc. 2020–24907 Filed 11–9–20; 8:45 am] implementation; and updates from its electronic submission of responses. BILLING CODE 8320–01–P Subcommittees. The Council will Authority: The Paperwork Reduction Act receive public comments from 2:45 p.m. of 1995; 44 U.S.C. Chapter 35, as amended; to 2:55 p.m. EST. 49 CFR 1.49; and DOT Order 1351.29. Interested persons may attend and/or present oral statements to the Council. The dial in number to attend the

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DEPARTMENT OF VETERANS The purpose of the meeting is for the Committee’s review to Ms. Debra Committee to prioritize and modify Morgan, Designated Federal Official, Veterans’ Advisory Committee on existing recommendations not approved Department of Veterans Affairs, by Education, Notice of Meeting for action previously submitted to the email at EDUSTAENG.VBAVACO@ Secretary, discuss proposition for va.gov. Comments will be accepted until The Department of Veterans Affairs establishment of subcommittees to close of business on Monday, December (VA) gives notice under the Federal determine new recommendations, 7, 2020. In the communication, the Advisory Committee Act, 5 U.S.C. App. provide information centered around writers must identify themselves and 2., that the Veterans’ Advisory the GI Bill user database, automation state the organization or association tools, distance education and online Committee on Education (the they represent for inclusion in the learning outcomes and measures, and Committee) will meet via conference official record. Any member of the COVID response outcomes. call December 9, 2020–December 10, public wishing to participate or seeking 2020 from 1:00 p.m. to 4:00 p.m., EST. Interested persons may attend. The meeting will be conducted using additional information should contact The meeting sessions are open to the Janet Elder at public. Microsoft Teams. Please email [email protected] for an invitation link [email protected] or The purpose of the Committee is to prior to December 9, 2020 or dial by [email protected] not later than advise the Secretary of Veterans Affairs phone 1–872–701–0185 United States, December 8, 2020. on the administration of education and Chicago (Toll) Conference ID: 205 967 Dated: November 5, 2020. training programs for Veterans, 563#. Servicepersons, Reservists, and Although no time will be allotted for Jelessa M. Burney, Dependents of Veterans including receiving oral presentations from the Federal Advisory Committee Management programs under Chapters 30, 32, 33, 35, public, individuals wishing to share Officer. and 36 of title 38, and Chapter 1606 of information with the Committee may [FR Doc. 2020–24906 Filed 11–9–20; 8:45 am] title 10, United States Code. submit written statements for the BILLING CODE 8320–01–P

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Part II

Department of the Treasury

Alcohol and Tobacco Tax and Trade Bureau 27 CFR Part 9 Proposed Expansion of the Clarksburg Viticultural Area and Establishment of the Ulupalakua Viticultural Area; Proposed Rules

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DEPARTMENT OF THE TREASURY U.S.C. 205(e), authorizes the Secretary of the TTB regulations (27 CFR 9.12(c)) of the Treasury to prescribe regulations prescribes standards for petitions for Alcohol and Tobacco Tax and Trade for the labeling of wine, distilled spirits, modifying established AVAs. Petitions Bureau and malt beverages. The FAA Act to expand an established AVA must provides that these regulations should, include the following: 27 CFR Part 9 among other things, prohibit consumer • Evidence that the region within the [Docket No. TTB–2020–0013; Notice No. deception and the use of misleading proposed expansion area is nationally or 198] statements on labels and ensure that locally known by the name of the labels provide the consumer with established AVA; RIN 1513–AC62 adequate information as to the identity • An explanation of the basis for and quality of the product. The Alcohol defining the boundary of the proposed Proposed Expansion of the Clarksburg and Tobacco Tax and Trade Bureau expansion area; Viticultural Area (TTB) administers the FAA Act • A narrative description of the AGENCY: Alcohol and Tobacco Tax and pursuant to section 1111(d) of the features of the proposed expansion area Trade Bureau, Treasury. Homeland Security Act of 2002, affecting viticulture, including climate, ACTION: Notice of proposed rulemaking. codified at 6 U.S.C. 531(d). The geology, soils, physical features, and Secretary has delegated the functions elevation, that make the proposed SUMMARY: The Alcohol and Tobacco Tax and duties in the administration and expansion area similar to the and Trade Bureau (TTB) proposes to enforcement of these provisions to the established AVA and distinguish it from expand the approximately 64,640-acre TTB Administrator through Treasury adjacent areas outside the established ‘‘Clarksburg’’ viticultural area by Order 120–01, dated December 10, 2013 AVA boundary; • approximately 27,945 acres. The (superseding Treasury Order 120–01, The appropriate United States Clarksburg viticultural area is located in dated January 24, 2003). Geological Survey (USGS) map(s) Sacramento, Solano, and Yolo Counties, Part 4 of the TTB regulations (27 CFR showing the location of the proposed in California, and the proposed part 4) authorizes TTB to establish expansion area, with the boundary of expansion area is located in Sacramento definitive viticultural areas and regulate the proposed expansion area clearly and Solano Counties. The established the use of their names as appellations of drawn thereon; and Clarksburg viticultural area and the origin on wine labels and in wine • A detailed narrative description of proposed expansion area are not located advertisements. Part 9 of the TTB the proposed expansion area boundary within any established viticultural area. regulations (27 CFR part 9) sets forth based on USGS map markings. TTB designates viticultural areas to standards for the preparation and Petition To Expand the Clarksburg AVA allow vintners to better describe the submission of petitions for the origin of their wines and to allow establishment or modification of TTB received a petition from James consumers to better identify wines they American viticultural areas (AVAs) and Reamer of Reamer Farms vineyard, may purchase. TTB invites comments lists the approved AVAs. submitted on behalf of himself and on this proposed amendment to its other wine industry members, regulations. Definition proposing to expand the established ‘‘Clarksburg’’ AVA. The Clarksburg DATES: Comments must be received by Section 4.25(e)(1)(i) of the TTB AVA (27 CFR 9.95) was established by January 11, 2021. regulations (27 CFR 4.25(e)(1)(i)) defines a viticultural area for American wine as T.D. ATF–166, which published in the ADDRESSES: You may electronically a delimited grape-growing region having Federal Register on January 23, 1984 submit comments to TTB on this distinguishing features, as described in (49 FR 2758). The Clarksburg AVA proposal, and view copies of this part 9 of the regulations, and a name covers approximately 64,640 acres in document, its supporting materials, and Sacramento, Solano, and Yolo Counties any comments TTB receives on it within and a delineated boundary, as established in part 9 of the regulations. in California. The Clarksburg AVA and Docket No. TTB–2020–0013 as posted the proposed expansion area are not on Regulations.gov (https:// These designations allow vintners and located within any other AVA. www.regulations.gov), the Federal e- consumers to attribute a given quality, Although the established Clarksburg rulemaking portal. Please see the reputation, or other characteristic of a AVA does contain the established ‘‘Public Participation’’ section of this wine made from grapes grown in an area Merritt Island AVA (27 CFR 9.68), the document below for full details on how to the wine’s geographic origin. The proposed expansion area is not adjacent to comment on this proposal via establishment of AVAs allows vintners to the Merritt Island AVA and therefore Regulations.gov or U.S. mail and for full to describe more accurately the origin of would not affect the boundaries of that details on how to view or obtain copies their wines to consumers and helps AVA. The petition included a letter of this document, its supporting consumers to identify wines they may from the Clarksburg Winegrowers and materials, and any comments related to purchase. Establishment of an AVA is this proposal. neither an approval nor an endorsement Vintners Association supporting the by TTB of the wine produced in that proposed expansion. FOR FURTHER INFORMATION CONTACT: area. The proposed expansion area is Karen A. Thornton, Regulations and adjacent to the southern portion of the Rulings Division, Alcohol and Tobacco Requirements established AVA and entirely Tax and Trade Bureau, 1310 G Street Section 4.25(e)(2) of the TTB encompasses Grand Island and Ryer NW, Box 12, Washington, DC 20005; regulations (27 CFR 4.25(e)(2)) outlines Island, which together cover phone 202–453–1039, ext. 175. the procedure for proposing the approximately 27,945 acres. The SUPPLEMENTARY INFORMATION: establishment of an AVA and provides petitioner states that within the Background on Viticultural Areas that any interested party may petition proposed expansion area there are 350 TTB to establish a grape-growing region acres of grapevines on Grand Island and TTB Authority as an AVA. Petitioners may use the three vineyards on Ryer Island. Unless Section 105(e) of the Federal Alcohol same procedures to request changes otherwise noted, all information and Administration Act (FAA Act), 27 involving existing AVAs. Section 9.12(c) data pertaining to the proposed

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expansion area contained in this which are within the proposed Soils document come from the petition and expansion area. T.D. ATF–166 describes the soils of its supporting exhibits. Boundary Evidence the Clarksburg AVA as poorly drained Name Evidence clay and clay loam soils. Little The established Clarksburg AVA is a information is given about the soils of The expansion petition provides roughly triangular region at the the surrounding regions except that evidence that the name ‘‘Clarksburg’’ is confluence of the Sacramento River and viticulture to the west of the AVA is used to describe a region larger than just the San Joaquin River. The lands within made impossible due to the the established Clarksburg AVA. For the Clarksburg AVA are mostly islands combination of soils and flooding, and example, the petition included surrounded by rivers and/or sloughs. that the soils to the south of the AVA information on three limousine tour The Sacramento River Deep Water Ship contain poorly drained organic and services offering tours of the Clarksburg Channel forms the majority of the mineral soils. region that each include at least one western boundary, while the eastern The expansion petition provides more location within the proposed expansion boundary is formed by Interstate 5, a detailed information about the soils of area. Baja Limo’s ‘‘Clarksburg Wine levee, and the Sacramento River. The the Clarksburg AVA and the Tour’’ offers a stop at the Grand Island southern boundary is formed by the surrounding regions. The expansion Vineyard’s winery, which is located Sacramento River, Steamboat Slough, petition states that the lands within the within the proposed expansion area on Miner Slough, and Sutter Slough. To the Clarksburg AVA and the proposed Grand Island.1 Limousine Service north of the Clarksburg AVA is the city expansion area readily fall into two Sacramento’s ‘‘Clarksburg Wine Testing of Sacramento, which is too heavily groups: The alluvial fan–basin group Tours’’ also offers a stop at the Grand urbanized for commercial viticulture. and the flood plain–basin–blackswamp Island Vineyard’s tasting room and Six The proposed expansion area is group. These landform groups Hands Winery.2 The Six Hands Winery adjacent to the southern boundary of the influenced the development of the soils is located on Andrus Island, which is Clarksburg AVA and consists of Ryer in the AVA. The alluvial fan–basin adjacent to the eastern boundary of the Island and Grand Island. The proposed group lands are found mostly in the proposed expansion area but outside of boundary expansion would begin on the western portion of the Clarksburg AVA. the established AVA. Although the current boundary at the intersection of Common soils found in these lands winery is not within the established Miner Slough and the levee connecting include the Lang, Laugenour, Maria, AVA or the proposed expansion area, its the slough to the Sacramento River Deep Merritt, Sycamore, Tyndall, and Valdez inclusion on the tour offers evidence Water Ship Channel. Instead of series. Egbert, Omni, Sacramento, and that the region known as ‘‘Clarksburg’’ continuing east along Miner Slough to Willows soils are also present. The extends beyond the boundaries of the Steamboat Slough, as the current eastern portion of the Clarksburg AVA Clarksburg AVA. Finally, Exotic boundary does, the proposed boundary is characterized by flood plain–basin– Limousine’s ‘‘Concord–Clarksburg Wine expansion would proceed south along blackswamp landforms. Soils commonly Tour’’ travels from ‘‘Concord and the Miner Slough to its confluence with found in this region include the East Bay area to [the] Clarksburg Cache Slough. The proposed boundary Columbia, Consumnes, Lang, appellation,’’ which includes ‘‘some of would then proceed south along the Laugenour, Sailboat, and Valpac series, the very best wedding venues like the Cache Slough to its confluence with the as well as Clear Lake, Dierssen, and Grand Island Mansion.’’ 3 TTB notes Sacramento River and then east- Tinnin soils. that the Grand Island Mansion is a northeasterly along the Sacramento The proposed expansion area contains historic site located within the proposed River to its intersection with the Delta both flood plain–basin–blackswamp AVA expansion area. Cross Channel and the Southern Pacific landforms and alluvial fan–basin landforms. Grand Island, in the eastern Other examples of the use of the name Railroad near Walnut Grove. At this point, the proposed expansion area portion of the proposed expansion area, ‘‘Clarksburg’’ to describe the proposed consists mostly of flood plain–basin– expansion area includes a vacation boundary would rejoin the current Clarksburg AVA boundary. blackswamp landforms. Soils found in rental listing. This listing is for a both Grand Island and the Clarksburg property on Grand Island, which is To the west of both the AVA and the AVA include the Consumnes, Egbert, within the proposed expansion area, proposed expansion area is the Yolo Laugenour, and Sailboat series. Ryer and is listed under the general heading Bypass that diverts floodwaters away Island, in the western portion of the of ‘‘Clarksburg.’’ 4 Grand Island from the city of Sacramento. Because of proposed expansion area, contains Vineyards, which is within the its frequent flooding, the petition states alluvial fan–basin landforms. Soils of proposed expansion area, is included in that this region is suitable only for the Egbert, Sacramento, and Valdez a list of Clarksburg wineries on the wildlife habitat and summer annual series are found in both the Clarksburg American Winery Guide website.5 crops. To the east of the Clarksburg AVA and Ryer Island. Finally, a map created by the Clarksburg AVA and the proposed expansion area The expansion petition states that all Wine Growers and Vintners Association is the Central Valley. To the south of the of the soils of the Clarksburg AVA and titled ‘‘Clarksburg Appellation Wine proposed expansion area are Andrus the proposed expansion area share Country’’ shows the established AVA as Island and Brennan Island, both of several characteristics, including low-to- well as Grand Island and Ryer Island, which have a persistently high water moderate levels of organic material, table that makes the potential for poor to somewhat-poor drainage, and a 1 www.bajalimo.net/clarksburg-wine-tours. vineyards unlikely. combination of silt, clay, sand, and 2 www.limoservicesacramento.com/clarksburg- Distinguishing Features loam. Because of the poor drainage wine-tasting-tours. quality of the soils in both the proposed 3 _ www.limoserviceconcord.com/Concord expansion area and the Clarksburg AVA, clarksburg_wine_tour.php. The petition states that the soils, 4 www.vrbo.com/1311885. climate, and topography of the proposed a well-placed and maintained system of 5 www.americanwineryguide.com/regions/ expansion area are similar to those of ditches and canals is necessary, as are clarksburg-ava-wineries. the established Clarksburg AVA. tile drains in some locations. The

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drainage systems lower the water table Climate growing seasons from 2013 to 2017, the and allow the vineyard root zones to Ryer Island location received a total of T.D. ATF–166 included precipitation become better aerated. As a result, a 2.5 inches of rain, while the Clarksburg as a distinguishing feature of the better environment is created for the AVA location received 3.1 inches. Clarksburg AVA, stating that the AVA bottom of the vine trunks and the major However, the proposed expansion roots that originate for them. The received an average of 16 inches of rain annually. The regions to the north and petition did not include growing season petition states that ridges in the vine rainfall amounts from the surrounding rows called berms also allow for better east were described as having higher annual rainfall amounts, while the regions for comparison, so TTB is drainage and are common features in unable to determine if the growing both the AVA and the proposed regions to the south and west had lower annual amounts. T.D. ATF–166 also season rainfall amounts within the expansion area. Additionally, vineyard proposed expansion area are more owners often use rootstocks with briefly discussed temperature, noting that Sacramento, which is north of the similar to those of the Clarksburg AVA greater-than-average tolerances of wet than to those of the surrounding regions. soils in order to limit the risk of Clarksburg AVA, is generally 8 to 10 significant root dieback and root degrees warmer than the AVA in the The expansion petition also provides diseases. summer. more detailed information on None of the alluvial fan–basin The proposed expansion petition temperatures in the region than what landform soils found in the proposed includes information about the average was included in T.D. ATF–166. The expansion area and the Clarksburg AVA annual rainfall amounts of the information on the growing season are found in the regions to the east and Clarksburg AVA and the surrounding mean, maximum, and minimum south. These regions also contain a type regions, which suggest that the temperatures from within the of marshland soil called Rindge mucky Clarksburg AVA receives less rainfall Clarksburg AVA and the proposed silt loam, which is not found in either annually than the surrounding regions. expansion area is included in the the Clarksburg AVA or the proposed However, the petition did not include following table, and suggests that the expansion area. Furthermore, the soils annual average rainfall amounts from climate of the proposed expansion area to the east and south contain greater within the proposed expansion area for is similar to that of the Clarksburg AVA. concentrations of organic matter. To the comparison. The proposed expansion The petition states that temperature west of the proposed expansion area petition did include the growing season within the Clarksburg AVA and the and the Clarksburg AVA, the common rainfall amounts 6 for a location on Ryer proposed expansion area are suitable for soils include the Capay and Pescadero Island, within the proposed expansion growing a variety of wine grapes, series, which are not found in either the area, and from within the Clarksburg including Pinot Noir, Pinot Gris, and proposed expansion area or the AVA. AVA. The data shows that during the Chardonnay.

TABLE—GROWING SEASON TEMPERATURE AVERAGES IN DEGREES FAHRENHEIT

Location Mean Maximum Minimum

Within Clarksburg AVA

Clarksburg 7 ...... 67.7 85.8 52.3

Lake Winchester 8 ...... 67.8 85.0 53.2

Within Proposed Expansion Area

Ryer Island 9 ...... 68.7 85.1 53.3

Grand Island 10 ...... 67.8 83.7 53.4

The expansion petition also includes area. However, the other data in the Additionally, the Clarksburg location graphs showing the average growing petition demonstrates that the proposed had a lower growing season maximum season mean, minimum, and maximum expansion area has temperatures similar temperature than all but two of the temperatures gathered from the Western to the Clarksburg AVA. Therefore, TTB locations and a lower average growing Regional Climate Center 11 for a weather believes that the Clarksburg location season minimum temperature than all station location within the Clarksburg used in the graphs is an acceptable but three of the locations. Most notably, AVA and 10 weather station locations in stand-in for the proposed expansion the temperatures for the Clarksburg the surrounding regions. For each area for the purpose of comparison to location were all lower than the location, the data was collected from a the surrounding regions. temperatures for the two Sacramento minimum of 38 years, which provides a The graphs show that the location weather stations, supporting the claim broad picture of the climate of the within the Clarksburg AVA had the in T.D. ATF–166 that temperatures in region.12 The graphs do not include data lowest growing season mean the Clarksburg AVA are typically lower from within the proposed expansion temperature of all the locations.

6 The growing season is defined as April 1 9 Data source: Lodi Winegrape Commission via 12 For a listing of all weather station locations and through October 31. Western Weather Group, 2013–2017. https:// the period of record for each, see Exhibit 9 of the 7 Data source: Lodi Winegrape Commission via lodi.westernweathergroup.com. expansion petition in Docket TTB–2020–0013 at Western Weather Group, 2013–2017. https:// 10 Data source: Private weather station at Rio www.regulations.gov. lodi.westernweathergroup.com. Viento Vineyard, 2012–2014, and Ranch Systems, 8 Data source: Private weather station at Reamer 2016–2017. Farms, 2012–2014, and Ranch Systems, 2016–2017. 11 www.wrcc.dri.edu.

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than those in Sacramento to the north of functional root zones are very shallow, derived from grapes grown within the the AVA. and the potential for viticulture in these area represented by that name, and the regions is feasible but limited. wine must meet the other conditions Topography Although topography was not listed in § 4.25(e)(3) of the TTB T.D. ATF–166, which established the considered to be a distinguishing feature regulations (27 CFR 4.25(e)(3)). If the Clarksburg AVA, did not consider of the Clarksburg AVA in T.D. ATF–166, wine is not eligible for labeling with an topography to be a distinguishing we are including a discussion of AVA name and that name appears in the feature of the Clarksburg AVA, only topography in this proposed rule brand name, then the label is not in noting that the ‘‘lower terraces to the because TTB agrees that the range of compliance and the bottler must change east’’ of the AVA are prone to elevations within the proposed the brand name and obtain approval of flooding.13 However, the expansion expansion area appears to be similar to a new label. Similarly, if the AVA name petition includes topographic that of the Clarksburg AVA. The data in appears in another reference on the information to demonstrate that the the expansion petition suggests that the label in a misleading manner, the bottler proposed expansion area is more regions to the south and east have lower would have to obtain approval of a new topographically similar to the elevations than both the proposed label. Different rules apply if a wine has Clarksburg AVA than the surrounding expansion area and the Clarksburg AVA. a brand name containing an AVA name regions outside the AVA. The petition While the data indicates that the that was used as a brand name on a includes a table of the highest and elevations to the west of the proposed label approved before July 7, 1986. See lowest elevations from locations within expansion area are within the range of § 4.39(i)(2) of the TTB regulations (27 the Clarksburg AVA, which is north of those of the Clarksburg AVA, the CFR 4.39(i)(2)) for details. the proposed expansion area, as well as frequency of flooding in the Yolo The approval of the proposed from within the proposed expansion Bypass would be a logical reason for not expansion of the Clarksburg AVA would area and the regions to the south, west, including it in the proposed expansion not affect any other existing viticultural and east. area. TTB is seeking comment on area, including the established Merritt The expansion petition states that due whether the topography of the proposed Island AVA, which is located within the to the low elevations throughout the expansion area provides additional Clarksburg AVA. The proposed Sacramento Delta, the islands once support for including the proposed expansion of the Clarksburg AVA would regularly flooded. The entire delta expansion area in the established AVA. allow vintners to use ‘‘Clarksburg’’ as an would flood periodically during spring appellation of origin for wines made tides and river floods, and the islands TTB Determination primarily from grapes grown within the furthest downstream would flood daily TTB concludes that the petition to proposed expansion area if the wines during high tides. However, a system of expand the boundaries of the meet the eligibility requirements for the levees, open ditches, and canals has established Clarksburg AVA merits appellation. The proposed AVA made viticulture possible within the consideration and public comment, as expansion would not affect any vintners Clarksburg AVA and the proposed invited in this notice of proposed using ‘‘Merritt Island’’ as an appellation expansion area. Within the proposed rulemaking. expansion area, elevations range from a of origin on wine labels. lowest point of 10 feet below sea level Boundary Description Public Participation to a highest point of 5 feet above sea See the narrative description of the Comments Invited level. Within the current boundaries of boundary of the petitioned-for the Clarksburg AVA, elevations range expansion area in the proposed TTB invites comments from interested from 10 feet below sea level to 10 feet regulatory text published at the end of members of the public on whether it above sea level. this proposed rule. should expand the Clarksburg AVA as By comparison, elevations in the proposed. TTB is specifically interested surrounding regions are generally lower Maps in receiving comments on the similarity than within the Clarksburg AVA and the The proposed boundary change to the of the proposed expansion area to the proposed expansion area. The region Clarksburg AVA would affect the established Clarksburg AVA, as well as east of the proposed expansion area has portion of the current AVA boundary the differences between the proposed elevations between 15 feet below sea shown on the 1:24,000 scale Liberty expansion area and the areas outside the level on Tyler Island and Staten Island, Island, Isleton, and Courtland Clarksburg AVA. Please provide specific and 5 feet above sea level at the city of quadrangle maps, and would add the information in support of your Walnut Grove and the upper portion of 1:24,000 scale Rio Vista quadrangle map comments. Andrus Island. To the south of both the to the list of maps in the regulatory text Submitting Comments AVA and proposed expansion area, of 27 CFR 9.95. The petitioner included elevations range from 20 feet below sea copies of these maps in the expansion You may submit comments on this level to 0 feet above sea level. To the petition. You may also view a map of notice of proposed rulemaking by using west of the proposed expansion area, the proposed expansion of the one of the following methods: elevations range from 5 feet below sea Clarksburg AVA boundary on the AVA • Federal e-Rulemaking Portal: You level on Liberty Island and the Egbert Map Explorer on the TTB website, at may send comments via the online Tract Reclamation District to a high of https://www.ttb.gov/wine/ava-map- comment form posted with this notice 10 feet above sea level on the Egbert explorer. within Docket No. TTB–2020–0013 on Tract. The petition states that the ‘‘Regulations.gov,’’ the Federal e- generally lower elevations in the Impact on Current Wine Labels rulemaking portal, at http:// surrounding regions also mean that the Part 4 of the TTB regulations prohibits www.regulations.gov. A direct link to depths to water tables are appreciably any label reference on a wine that that docket is available under Notice shallower than within the AVA and the indicates or implies an origin other than No. 198 on the TTB website at https:// proposed expansion area. As a result, the wine’s true place of origin. For a www.ttb.gov/wine/wine- wine to be labeled with an AVA name, rulemaking.shtml. Supplemental files 13 48 FR 2759. at least 85 percent of the wine must be may be attached to comments submitted

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via Regulations.gov. For complete All posted comments will display the Subpart C—Approved American instructions on how to use commenter’s name, organization (if Viticultural Areas Regulations.gov, visit the site and click any), city, and State, and, in the case of on the ‘‘Help’’ tab. mailed comments, all address ■ 2. Section 9.95 is amended by adding • U.S. Mail: You may send comments information, including email addresses. paragraph (b)(9), revising paragraphs via postal mail to the Director, TTB may omit voluminous attachments (c)(4) and (5), redesignating paragraphs Regulations and Rulings Division, or material that the Bureau considers (c)(6) through (12) as paragraphs (c)(7) Alcohol and Tobacco Tax and Trade unsuitable for posting. through (13), and adding new Bureau, 1310 G Street NW, Box 12, You may also obtain copies of this paragraph(c)(6) to read as follows: Washington, DC 20005. proposed rule, all related petitions, § 9.95 Clarksburg. Please submit your comments by the maps and other supporting materials, * * * * * closing date shown above in this notice. and any electronic or mailed comments (b) * * * Your comments must reference Notice that TTB receives about this proposal at (9) Rio Vista, Calif., 1978 (minor No. 198 and include your name and 20 cents per 8.5- x 11-inch page. Please revision 1993). mailing address. Your comments also note that TTB is unable to provide (c) * * * must be made in English, be legible, and copies of USGS maps or any similarly- (4) Then south along Miner Slough to be written in language acceptable for sized documents that may be included the point where it joins Cache Slough. public disclosure. TTB does not as part of the AVA petition. Contact (5) Then south along Cache Slough to acknowledge receipt of comments, and TTB’s Regulations and Rulings Division the point where it joins the Sacramento TTB considers all comments as by email using the web form at https:// River. originals. www.ttb.gov/contact-rrd, or by (6) Then east, then generally In your comment, please clearly state telephone at 202–453–1039, ext. 175, to northeasterly along the meandering if you are commenting for yourself or on request copies of comments or other Sacramento River to the point where it behalf of an association, business, or materials. meets the Delta Cross Channel at the other entity. If you are commenting on Regulatory Flexibility Act Southern Pacific Railroad. behalf of an entity, your comment must * * * * * include the entity’s name, as well as TTB certifies that this proposed your name and position title. If you regulation, if adopted, would not have Signed: September 5, 2020. comment via Regulations.gov, please a significant economic impact on a Mary G. Ryan, enter the entity’s name in the substantial number of small entities. Administrator. ‘‘Organization’’ blank of the online The proposed regulation imposes no Approved: October 9, 2020. comment form. If you comment via new reporting, recordkeeping, or other Timothy E. Skud, postal mail or hand delivery/courier, administrative requirement. Any benefit Deputy Assistant Secretary (Tax, Trade, and please submit your entity’s comment on derived from the use of an AVA name Tariff Policy). letterhead. would be the result of a proprietor’s [FR Doc. 2020–24140 Filed 11–9–20; 8:45 am] You may also write to the efforts and consumer acceptance of BILLING CODE 4810–31–P Administrator before the comment wines from that area. Therefore, no closing date to ask for a public hearing. regulatory flexibility analysis is The Administrator reserves the right to required. DEPARTMENT OF THE TREASURY determine whether to hold a public Executive Order 12866 hearing. Alcohol and Tobacco Tax and Trade It has been determined that this Bureau Confidentiality proposed rule is not a significant All submitted comments and regulatory action as defined by 27 CFR Part 9 attachments are part of the public record Executive Order 12866 of September 30, [Docket No. TTB–2020–0014; Notice No. and subject to disclosure. Do not 1993. Therefore, no regulatory 199] enclose any material in your comments assessment is required. RIN 1513–AC65 that you consider to be confidential or Drafting Information inappropriate for public disclosure. Proposed Establishment of the Karen A. Thornton of the Regulations Ulupalakua Viticultural Area Public Disclosure and Rulings Division drafted this notice TTB will post, and you may view, of proposed rulemaking. AGENCY: Alcohol and Tobacco Tax and copies of this notice, selected List of Subjects in 27 CFR Part 9 Trade Bureau, Treasury. supporting materials, and any online or ACTION: Notice of proposed rulemaking. mailed comments received about this Wine. proposal within Docket No. TTB–2020– SUMMARY: The Alcohol and Tobacco Tax Proposed Regulatory Amendment 0013 on the Federal e-rulemaking and Trade Bureau (TTB) proposes to portal, Regulations.gov, at http:// For the reasons discussed in the establish the approximately 70-acre www.regulations.gov. A direct link to preamble, TTB proposes to amend title ‘‘Ulupalakua’’ viticultural area on the that docket is available on the TTB 27, chapter I, part 9, Code of Federal island of Maui, Hawaii. The proposed website at https://www.ttb.gov/wine/ Regulations, as follows: viticultural area is not within any other wine_rulemaking.shtml under Notice established viticultural area. TTB No. 198. You may also reach the PART 9—AMERICAN VITICULTURAL designates viticultural areas to allow relevant docket through the AREAS vintners to better describe the origin of Regulations.gov search page at http:// their wines and to allow consumers to www.regulations.gov. For information ■ 1. The authority citation for part 9 better identify wines they may on how to use Regulations.gov, click on continues to read as follows: purchase. TTB invites comments on this the website’s ‘‘Help’’ tab. Authority: 27 U.S.C. 205. proposed addition to its regulations.

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DATES: Comments must be received by Definition contains approximately 70 acres, with January 11, 2021. Section 4.25(e)(1)(i) of the TTB approximately 16 acres of vineyards. ADDRESSES: You may electronically regulations (27 CFR 4.25(e)(1)(i)) defines The petition notes that an additional 5 submit comments to TTB on this a viticultural area for American wine as acres of land within the proposed AVA proposal, and view copies of this a delimited grape-growing region having have been prepared with trellising and document, its supporting materials, and distinguishing features, as described in irrigation in preparation for vineyard any comments TTB receives on it within part 9 of the regulations, and a name expansion. Three other parcels Docket No. TTB–2020–0014 as posted and a delineated boundary, as averaging two acres each have also been on Regulations.gov (https:// established in part 9 of the regulations. surveyed for future planting within the www.regulations.gov), the Federal e- These designations allow vintners and proposed AVA. Grape varietals grown rulemaking portal. Please see the consumers to attribute a given quality, within the proposed AVA include ‘‘Public Participation’’ section of this reputation, or other characteristic of a Gewurztraminer, Chenin Blanc, document below for full details on how wine made from grapes grown in an area Viognier, Grenache, Malbec, and Syrah. to comment on this proposal via to the wine’s geographic origin. The Although there is no winery within the Regulations.gov, or U.S. mail, and for establishment of AVAs allows vintners boundary of the proposed AVA, grapes full details on how to obtain copies of to describe more accurately the origin of from the proposed AVA are made into this document, its supporting materials, their wines to consumers and helps wine at the Maui Wines facility, which and any comments related to this consumers to identify wines they may is a short distance south of the proposed proposal. purchase. Establishment of an AVA is AVA. neither an approval nor an endorsement According to the petition, the FOR FURTHER INFORMATION CONTACT: by TTB of the wine produced in that distinguishing features of the proposed Karen A. Thornton, Regulations and area. Ulupalakua AVA include its Rulings Division, Alcohol and Tobacco topography, soils, and climate. Unless Tax and Trade Bureau, 1310 G Street Requirements otherwise noted, all information and NW, Box 12, Washington, DC 20005; Section 4.25(e)(2) of the TTB data pertaining to the proposed AVA phone 202–453–1039, ext. 175. regulations (27 CFR 4.25(e)(2)) outlines contained in this document are from the SUPPLEMENTARY INFORMATION: the procedure for proposing an AVA petition for the proposed Ulupalakua and provides that any interested party AVA and its supporting exhibits. Background on Viticultural Areas may petition TTB to establish a grape- Name Evidence TTB Authority growing region as an AVA. Section 9.12 of the TTB regulations (27 CFR 9.12) The term ‘‘Ulupalakua’’ translates Section 105(e) of the Federal Alcohol prescribes the standards for petitions for from the Hawaiian language as Administration Act (FAA Act), 27 the establishment or modification of ‘‘breadfruit ripened on the back.’’ The U.S.C. 205(e), authorizes the Secretary AVAs. Petitions to establish an AVA petition states that local folklore tells of the Treasury to prescribe regulations must include the following: how an ancient Maui chief would for the labeling of wine, distilled spirits, • Evidence that the area within the request breadfruit, his favorite fruit, be and malt beverages. The FAA Act proposed AVA boundary is nationally picked on the far eastern side of Maui provides that these regulations should, or locally known by the AVA name and brought to his home on the western among other things, prohibit consumer specified in the petition; side of the island. The harvesters would deception and the use of misleading • An explanation of the basis for gather unripe fruit, which would ripen statements on labels and ensure that defining the boundary of the proposed by the time they had reached the area labels provide the consumer with AVA; that came to be called Ulupalakua. adequate information as to the identity • A narrative description of the Although there is a town several miles and quality of the product. The Alcohol features of the proposed AVA affecting south of the proposed AVA called and Tobacco Tax and Trade Bureau viticulture, such as climate, geology, Ulupalakua, the petition provided (TTB) administers the FAA Act soils, physical features, and elevation, evidence that the name ‘‘Ulupalakua’’ pursuant to section 1111(d) of the that make the proposed AVA distinctive applies to a region larger than just the Homeland Security Act of 2002, and distinguish it from adjacent areas town. For example, the proposed codified at 6 U.S.C. 531(d). The outside the proposed AVA; Ulupalakua AVA is located on the Secretary has delegated the functions • The appropriate United States Ulupalakua Ranch, which the petition and duties in the administration and Geological Survey (USGS) map(s) states was so named in 1922 to honor enforcement of these provisions to the showing the location of the proposed the land’s history. In 1947, after a visit TTB Administrator through Treasury AVA, with the boundary of the to the region, Hawaiian composer John Order 120–01, dated December 10, 2013, proposed AVA clearly drawn thereon; P. Watkins was inspired to write a song (superseding Treasury Order 120–01, and called ‘‘Ulupalakua.’’ 1 A scenic dated January 24, 2003). • A detailed narrative description of overlook just north of the proposed Part 4 of the TTB regulations (27 CFR the proposed AVA boundary based on AVA is labeled ‘‘Ulupalakua Scenic part 4) authorizes TTB to establish USGS map markings. Overlook’’ on Google Maps.2 A real definitive viticultural areas and regulate estate website describes a house for sale the use of their names as appellations of Ulupalakua Petition north of both the town of Ulupalakua origin on wine labels and in wine TTB received a petition from Mark and the proposed AVA as ‘‘a real advertisements. Part 9 of the TTB Beaman, winemaker at Maui Wines, Ulupalakua gem.’’ 3 The petition also regulations (27 CFR part 9) sets forth proposing the establishment of the standards for the preparation and ‘‘Ulupalakua’’ AVA. The proposed 1 www.huapala.org/UL//Ulupalakua.html. submission of petitions for the Ulupalakua AVA is located within the 2 See Figure 7 of the petition in Docket TTB– 2020–0014 at https://www.regulations.gov. establishment or modification of privately-owned, 18,000-acre 3 The property is no available on the real estate American viticultural areas (AVAs) and Ulupalakua Ranch on the island of website, but a copy of the original real estate listing lists the approved AVAs. Maui, Hawaii. The proposed AVA Continued

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included a Maui guidebook excerpt facilitate safe agriculture. The open, less results in a greater consistency in titled ‘‘Keokea through Ulupalakua.’’ steep terrain also allows vineyards growing conditions for vineyards than The excerpt states, ‘‘[b]etween planted on the benches to receive can be found in the surrounding Grandma’s [Coffee House] and the uniform amounts of sunlight, rainfall, regions. Tedeschi Winery is the larger area and temperature-moderating cloud To the south of the proposed called Ulupalakua.’’ 4 TTB notes that cover. Ulupalakua AVA, the soil changes to Grandma’s Coffee House is located in The proposed AVA is surrounded in Kula very rocky loam. This soil consist Keokea, north of the proposed AVA, and each direction by more steeply sloped, of very large volcanic rocks and the Tedeschi Winery, now called Maui mountainous terrain. To the west and boulders which would not be suitable Wines, is located just south of the east of the proposed AVA, the slope for vineyards. To the west is a proposed AVA and north of the town of angles average 17 percent. To the north continuation of the same Kula loam that Ulupalakua. Finally, the wine-oriented and south of the proposed AVA, slope is found in the proposed AVA. website Wine-Searcher describes angles average about 15 percent. The However, the petition notes that the top Ulupalakua as ‘‘the only wine region of regions to the north and west also soil in this region has been scoured by Hawaii’’ and notes that ‘‘Tedeschi contain more erosional features, such as erosion and thus would be thinner and Vineyards’ Maui winery, part of the ravines, that are less suited for not as suitable for viticulture as the Kula Ulupalakua Ranch Site, * * * makes viticulture than the benches of the loam soils of the proposed AVA. The both grape and pineapple wines.’’ 5 proposed AVA. The region to the south petition did not provide information on Boundary Evidence of the proposed AVA features another the soils to the north and east of the ravine comprised of rugged exposed proposed AVA. The proposed Ulupalakua AVA is volcanic rocks, which are not well- Climate located on the southwestern slopes of suited for viticulture. Mt. Haleakala and encompasses a series The petition states that although most of bench lands that are fully surrounded Soils people would consider Hawaii to be hot, by steeper, more rugged terrain. The According to the petition, soils within the proposed Ulupalakua AVA is cool proposed northern and southern the proposed Ulupalakua AVA formed due to its elevation and proximity to the boundaries approximate ravines, which from the erosion of ancient alkali lava 10,000-foot Mt. Haleakala. The proposed mark the northern and southern edges of flows from Mt. Haleakala. The most AVA sits at elevations between 1,560 the bench lands. The proposed eastern prominent soil within the proposed and 1,850 feet above sea level. The boundary is marked by a highway, AVA is Kula loam, which makes up 80 petition states that temperatures in Maui beyond which the elevation rises percent of the soil. Kula loam is derived typically drop 3.5 degrees Fahrenheit steeply. The western boundary follows from weathered basic igneous rock and for every 1,000 feet of elevation gained.6 an elevation contour, beyond which is well-drained and moderately rapid in A 2003 article about Maui Wines notes slope angles and the number of drainage permeability. The top soil is typically 8 that ‘‘[m]ornings and late afternoons and erosional features increase. inches deep, with subsoils reaching tend to be cool at these elevations Distinguishing Features around 4 feet before hitting bedrock of * * *.’’ 7 The petition notes that the The distinguishing features of the andesite and basalt. The remaining 20 mild temperatures of the region are even proposed Ulupalakua AVA are its percent of the soil of the proposed AVA described in John Watkin’s song topography, soils, and climate. is comprised of the Io series. Soils of ‘‘Ulupalakua’’, which contains the line, this series are silt loams that gradually ‘‘[f]amous is Ulupalakua, the pangs of Topography acquire more clay deeper in the soil. cold evening air * * *.’’ 8 The proposed Ulupalakua AVA The top soil is about 10 inches, and The petition provided information on contains a series of four distinct benches subsoils reach basalt and andesite the average monthly high and low that are oriented to the southwest. The bedrock at around 4 feet. The petition temperatures, as well as the monthly benches are gently sloped, with slope states that the soils of the proposed highest and lowest recorded angles between 0 and 5 percent, and are AVA are fertile enough to produce temperatures for the proposed AVA and separated by more steeply sloped healthy vines and fruit without the region to the north.9 Temperature erosional ravines. The petition states promoting excessive vine and leaf data was not provided for the regions to that the gentle slopes of the benches growth. Additionally, the uniformity of the east, west, or south. The information minimize the risk of erosion and the soils within the proposed AVA is summarized in the following tables.

TABLE 1—AVERAGE MONTHLY HIGH AND LOW TEMPERATURES IN DEGREES FAHRENHEIT (F)

Proposed Ulupalakua AVA Keokea (North) Month High Low High Low

January ...... 81 63 68 52 February ...... 81 63 68 52 March ...... 82 63 69 52 April ...... 83 64 70 53 May ...... 85 66 71 55

is available in Docket TTB–2020–0014 at https:// 6 https://treelinebackpacker.com/2013/05/06/ 9 The information was collected from the almanac www.regulations.gov. calculate-temperatures-change-with-elevation. on The Weather Channel’s website, which did not 4 http://mauiguidebook.com/adventures/ 7 http://napavalleyregister.com/business/maui- provide the period of record for the data. For grandmas-ulupalakua. winemakers-make-a-splash-with-pineapple-wines- Ulupalakua data, see https://weather.com/weather/ and-island/article_48281276-094c-5fec-80d9- monthly/l/’Ulupalakua+USHI0343:27:US. For 5 www.wine-searcher.com/regions-ulupalakua. 18be5666b9cf.html. Keokea data, see https://weather.com/weather/ 8 www.huapala.org/UL//Ulupalakua.html. monthly/l/USHI0220:1:US.

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TABLE 1—AVERAGE MONTHLY HIGH AND LOW TEMPERATURES IN DEGREES FAHRENHEIT (F)—Continued

Proposed Ulupalakua AVA Keokea (North) Month High Low High Low

June ...... 87 67 73 56 July ...... 87 68 74 57 August ...... 88 69 75 58 September ...... 87 69 75 58 October ...... 87 68 74 57 November ...... 84 67 72 56 December ...... 82 65 69 53

TABLE 2—MAXIMUM MONTHLY HIGH AND LOW RECORDED TEMPERATURES IN DEGREES F

Proposed Ulupalakua AVA Keokea (North) Month High Low High Low

January ...... 91 54 84 38 February ...... 91 54 81 41 March ...... 89 54 82 41 April ...... 89 58 77 37 May ...... 90 54 78 48 June ...... 91 62 81 50 July ...... 93 62 80 50 August ...... 94 62 82 51 September ...... 94 61 81 49 October ...... 92 61 83 48 November ...... 90 56 81 47 December ...... 89 57 80 41

The data shows that the proposed required for vine growth and fruit proposed AVA protect ripening fruit Ulupalakua AVA has generally mild development.10 By contrast, Keokea, against sunburn and heat stress. temperatures, with a 20 degree or less which is located to the north of the The petition also included difference between the average high and proposed AVA and at higher elevations, information on the average monthly average low temperatures for any given recorded substantially lower precipitation amounts for the proposed month. The average monthly low temperatures than the proposed AVA Ulupalakua AVA and the regions to the temperatures and lowest recorded for each category, including monthly temperatures within the east and west. Precipitation amounts temperatures below 50 degrees F. were not provided for the regions to the proposed AVA do not drop below 50 According to the petition, the lack of degrees F, which is generally considered south and north. The information is extremes in temperatures within the to be the minimum temperature summarized in the following table.

TABLE 3—AVERAGE PRECIPITATION AMOUNTS IN INCHES 11

Proposed Polipoli Month Ulupalakua Makena Bay Springs AVA (West) (East)

January ...... 4.9 2.8 9.8 February ...... 3 1.4 7.5 March ...... 3.1 1.6 4.8 April ...... 2.5 0.7 4.7 May ...... 1.8 0.9 3.1 June ...... 1.4 0.4 1.6 July ...... 1.8 0.6 2.4 August ...... 1.7 0.6 2.6 September ...... 2.3 0.9 2.5 October ...... 2.2 1.6 2.9 November ...... 2.6 1.7 3.2 December ...... 3.4 2.9 5.6

Annual ...... 30.7 16.1 50.6

10 See Albert J. Winkler et al., General Viticulture 11 The information came from and the Ulupalakua data covered a period of 56 (Berkeley: University of California Press, 2nd ed. www.weatherbase.com. The website noted that the years. However, the exact years for each location 1974), pages 61–64. Makena Bay data covered a period of 30 years, the was not given. Polipoli Springs data covered a period of 47 years,

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The data in the table shows that the Boundary Description Please provide any available specific proposed Ulupalakua AVA receives See the narrative description of the information in support of your substantially more precipitation than boundary of the petitioned-for AVA in comments. the region to the west and less than the the proposed regulatory text published Because of the potential impact of the region to the east. The petition notes at the end of this proposed rule. establishment of the proposed that the differences in rainfall are due to Ulupalakua AVA on wine labels that the orographic effects of Mt. Haleakala. Maps include the term ‘‘Ulupalakua’’ as As the moist air moves from east to west The petitioner provided the required discussed above under Impact on over the mountain, locations at higher maps, and they are listed below in the Current Wine Labels, TTB is elevations, such as Polipoli Springs, proposed regulatory text. You may also particularly interested in comments receive more rainfall than regions at view the proposed Ulupalakua AVA regarding whether there will be a lower elevations, such as Makena Bay boundary on the AVA Map Explorer on conflict between the proposed AVA on the coast. Ulupalakua, which is the TTB website, at https://www.ttb.gov/ name and currently used brand names. located at elevations higher than wine/ava-map-explorer. If a commenter believes that a conflict Makena Bay and lower than Polipoli will arise, the comment should describe Impact on Current Wine Labels Springs, receives almost twice as much the nature of that conflict, including any annual rainfall as the lower location and Part 4 of the TTB regulations prohibits anticipated negative economic impact over half as much as the higher location. any label reference on a wine that that approval of the proposed AVA will The petition states that the lower indicates or implies an origin other than have on an existing viticultural enterprise. TTB is also interested in rainfall amounts within the proposed the wine’s true place of origin. For a receiving suggestions for ways to avoid AVA, particularly during the harvest wine to be labeled with an AVA name, conflicts, for example, by adopting a season of June through August, reduce at least 85 percent of the wine must be modified or different name for the the risk of mildew and rot. derived from grapes grown within the area represented by that name, and the proposed AVA. Summary of Distinguishing Features wine must meet the other conditions Submitting Comments listed in § 4.25(e)(3) of the TTB In summary, the topography, soils, regulations (27 CFR 4.25(e)(3)). If the You may submit comments on this and climate of the proposed Ulupalakua wine is not eligible for labeling with an notice by using one of the following two AVA distinguish it from the AVA name and that name appears in the methods: • Federal e-Rulemaking Portal: You surrounding regions. The proposed brand name, then the label is not in may send comments via the online Ulupalakua AVA is characterized by a compliance and the bottler must change comment form posted with this notice series of four gently sloped benches the brand name and obtain approval of within Docket No. TTB–2020–0014 on comprised of Kula loam and Io soils. a new label. Similarly, if the AVA name ‘‘Regulations.gov,’’ the Federal e- Average temperatures are moderate and appears in another reference on the rulemaking portal, at https:// do not drop below 50 degrees F. Annual label in a misleading manner, the bottler www.regulations.gov. A direct link to precipitation amounts within the would have to obtain approval of a new that docket is available under Notice proposed AVA are moderate, averaging label. Different rules apply if a wine has No. 199 on the TTB website at https:// 30.7 inches. a brand name containing an AVA name www.ttb.gov/wine/wine- To the north of the proposed AVA, that was used as a brand name on a rulemaking.shtml. Supplemental files the slopes are steeper and average about label approved before July 7, 1986. See may be attached to comments submitted 15 percent. Average temperatures are § 4.39(i)(2) of the TTB regulations (27 via Regulations.gov. For complete cooler than within the proposed AVA CFR 4.39(i)(2)) for details. instructions on how to use and do drop below 50 degrees F. To the If TTB establishes this proposed AVA, Regulations.gov, visit the site and click east of the proposed AVA, on the higher its name, ‘‘Ulupalakua,’’ will be on the ‘‘Help’’ tab at the top of the page. elevations of Mt. Haleakala, the slope recognized as a name of viticultural • U.S. Mail: You may send comments angles average 17 percent. Annual significance under § 4.39(i)(3) of the via postal mail to the Director, precipitation amounts are significantly TTB regulations (27 CFR 4.39(i)(3)). The Regulations and Rulings Division, higher, averaging 50.6 inches. To the text of the proposed regulation clarifies Alcohol and Tobacco Tax and Trade south of the proposed AVA, slope this point. Consequently, wine bottlers Bureau, 1310 G Street NW, Box 12, angles average about 15 percent, and the using the name ‘‘Ulupalakua’’ in a brand Washington, DC 20005. soil changes to Kula very rocky loam, name, including a trademark, or in Please submit your comments by the which consists of large volcanic rocks another label reference as to the origin closing date shown above in this notice. and boulders. To the west of the of the wine, would have to ensure that Your comments must reference Notice proposed AVA, slope angles average 17 the product is eligible to use the AVA No. 199 and include your name and percent. Soils to the west of the name as an appellation of origin if this mailing address. Your comments also proposed AVA are a continuation of the proposed rule is adopted as a final rule. must be made in English, be legible, and Kula loam soils, but much of the top soil Public Participation be written in language acceptable for has been scoured by erosion. Annual public disclosure. TTB does not rainfall amounts are lower than within Comments Invited acknowledge receipt of comments, and the proposed AVA, averaging 16.1 TTB invites comments from interested TTB considers all comments as inches. members of the public on whether it originals. TTB Determination should establish the proposed In your comment, please clearly state Ulupalakua AVA. TTB is also interested if you are commenting for yourself or on TTB concludes that the petition to in receiving comments on the behalf of an association, business, or establish the 70-acre Ulupalakua AVA sufficiency and accuracy of the name, other entity. If you are commenting on merits consideration and public boundary, soils, climate, topography, behalf of an entity, your comment must comment, as invited in this notice of and other required information include the entity’s name, as well as proposed rulemaking. submitted in support of the petition. your name and position title. If you

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comment via Regulations.gov, please by email using the web form at https:// ‘‘Ulupalakua’’. For purposes of part 4 of enter the entity’s name in the www.ttb.gov/contact-rrd, or by this chapter, ‘‘Ulupalakua’’ is a term of ‘‘Organization’’ blank of the online telephone at 202–453–1039, ext. 175, to viticultural significance. comment form. If you comment via request copies of comments or other (b) Approved maps. The United States postal mail or hand delivery/courier, materials. Geological Survey (USGS) 1:24,000 please submit your entity’s comment on Regulatory Flexibility Act scale topographic map used to letterhead. You may also write to the determine the boundary of the Administrator before the comment TTB certifies that this proposed Ulupalakua viticultural area is titled closing date to ask for a public hearing. regulation, if adopted, would not have ‘‘Makena, Hawaii, 1983.’’ a significant economic impact on a The Administrator reserves the right to (c) Boundary. The Ulupalakua substantial number of small entities. determine whether to hold a public viticultural area is located on the island The proposed regulation imposes no hearing. of Maui, in Hawaii. The boundary of the new reporting, recordkeeping, or other Confidentiality Ulupalakua viticultural area is as administrative requirement. Any benefit described below: All submitted comments and derived from the use of a viticultural attachments are part of the public record area name would be the result of a (1) The beginning point is on the and subject to disclosure. Do not proprietor’s efforts and consumer Makena, Hawaii, map at the intersection enclose any material in your comments acceptance of wines from that area. of an unnamed, light-duty road known that you consider to be confidential or Therefore, no regulatory flexibility locally as State Highway 37 and the inappropriate for public disclosure. analysis is required. northernmost unnamed, unimproved road in the Palauea land division (a land Public Disclosure Executive Order 12866 division is known as an ‘‘ahupua’a’’ in TTB will post, and you may view, It has been determined that this Hawaii). From the beginning point, copies of this notice, selected proposed rule is not a significant proceed south along State Highway 37 supporting materials, and any online or regulatory action as defined by to the next unnamed, unimproved road mailed comments received about this Executive Order 12866 of September 30, in the Palauea land division; then proposal within Docket No. TTB–2020– 1993. Therefore, no regulatory (2) Proceed west in a straight line for 0014 on the Federal e-rulemaking assessment is required. approximately 2,700 feet to the 1,560- portal, Regulations.gov, at https:// foot elevation contour; then Drafting Information www.regulations.gov. A direct link to (3) Proceed north along the 1,560-foot that docket is available on the TTB Karen A. Thornton of the Regulations elevation contour to the northern website at https://www.ttb.gov/wine/ and Rulings Division drafted this notice _ boundary of the Palauea land division; wine rulemaking.shtml under Notice of proposed rulemaking. then No. 199. You may also reach the relevant docket through the List of Subjects in 27 CFR Part 9 (4) Proceed east along the northern Regulations.gov search page at https:// Wine. boundary of the Palauea land division to www.regulations.gov. For information the 1,800-foot elevation contour; then Proposed Regulatory Amendment on how to use Regulations.gov, click on (5) Proceed south along the 1,800-foot the site’s ‘‘Help’’ tab. For the reasons discussed in the elevation contour for approximately 400 All posted comments will display the preamble, TTB proposes to amend title feet to the point where the 1,800-foot commenter’s name, organization (if 27, chapter I, part 9, Code of Federal elevation contour intersects with an any), city, and State, and, in the case of Regulations, as follows: imaginary line drawn from the terminus mailed comments, all address of the northernmost unnamed, information, including email addresses. PART 9—AMERICAN VITICULTURAL unimproved road in the Palauea land TTB may omit voluminous attachments AREAS division; then or material that the Bureau considers (6) Proceed east in a straight line for ■ 1. The authority citation for part 9 unsuitable for posting. approximately 800 feet, returning to the continues to read as follows: You may also obtain copies of this beginning point. Authority: 27 U.S.C. 205. proposed rule, all related petitions, Signed: August 14, 2020. maps and other supporting materials, Mary G. Ryan, and any electronic or mailed comments Subpart C—Approved American that TTB receives about this proposal at Viticultural Areas Administrator. Approved: October 9, 2020. 20 cents per 8.5- x 11-inch page. Please ■ 2. Subpart C is amended by adding note that TTB is unable to provide §9.ll to read as follows: Timothy E. Skud, copies of USGS maps or any similarly- Deputy Assistant Secretary (Tax, Trade, and sized documents that may be included §9.ll Ulupalakua. Tariff Policy). as part of the AVA petition. Contact (a) Name. The name of the viticultural [FR Doc. 2020–24143 Filed 11–9–20; 8:45 am] TTB’s Regulations and Rulings Division area described in this section is BILLING CODE 4810–31–P

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Part III

Department of the Treasury

Internal Revenue Service 26 CFR Part 1 Additional First Year Depreciation Deduction; Final Rule

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DEPARTMENT OF THE TREASURY I.R.B. 912), for depreciable property September 27, 2017. However, section acquired and placed in service or 13201(h) of the TCJA also provides that Internal Revenue Service certain plants planted or grafted, as property is not treated as acquired after applicable, after September 27, 2017, by the date on which a written binding 26 CFR Part 1 the taxpayer during a taxable year contract is entered into for such [TD 9916] ending on or after September 28, 2017, acquisition. Section 13201(h)(2) and ending before the taxpayer’s first provides that the amendments apply to RIN 1545–BP32 taxable year that begins on or after specified plants planted or grafted after January 1, 2021, if the taxpayer follows September 27, 2017. Additional First Year Depreciation the proposed regulations in their Additionally, section 12001(b)(13) of Deduction entirety, except for § 1.168(k)– the TCJA repealed section 168(k)(4), AGENCY: Internal Revenue Service (IRS), 2(b)(3)(iii)(B)(5), and in a consistent relating to the election to accelerate Treasury. manner. alternative minimum tax credits in lieu of the additional first year depreciation ACTION: Final regulations. Background deduction, for taxable years beginning SUMMARY: This document contains final This document contains amendments after December 31, 2017. Further, regulations that provide guidance to the Income Tax Regulations (26 CFR section 13204(a)(4)(B)(ii) repealed regarding the additional first year part 1) under sections 168(k) and 1502. section 168(k)(3), so that qualified depreciation deduction under section Section 168(k) allows an additional improvement property placed in service 168(k) of the Internal Revenue Code first year depreciation deduction for after December 31, 2017, was not (Code). These final regulations reflect qualified property in the property’s eligible for the additional first year and further clarify the increased placed-in-service year. On December 22, depreciation deduction. However, deduction and the expansion of 2017, section 168(k) was amended by section 2307 of the Coronavirus Aid, qualified property, particularly to sections 12001(b)(13), 13201, and 13204 Relief, and Economic Security Act, certain classes of used property, of Public Law 115–97 (131 Stat. 2054), Public Law 116–136, 134 Stat. 281 authorized by the Tax Cuts and Jobs commonly referred to as the Tax Cuts (March 27, 2020) (CARES Act) amended and Jobs Act (TCJA). Act. These final regulations generally section 168(e)(3)(E) to provide that Section 13201 of the TCJA made affect taxpayers who depreciate qualified improvement property is several significant amendments to the classified as 15-year property, thereby qualified property acquired and placed additional first year depreciation in service after September 27, 2017. providing a 15-year recovery period deduction provisions in section 168(k) under section 168(c) and making DATES: Effective date: These regulations (additional first year depreciation qualified improvement property again are effective on January 11, 2021. deduction). First, the additional first Applicability dates: For dates of eligible for the additional first year year depreciation deduction percentage depreciation deduction, consistent with applicability, see §§ 1.168(b)–1(b)(2)(iv), was increased from 50 to 100 percent. the original intent of the TCJA. Section 1.168(k)–2(h), and 1.1502–68(e). See Second, the property eligible for the 2307 of the CARES Act is discussed in SUPPLEMENTARY INFORMATION for an in- additional first year depreciation greater detail in part II.B of the depth discussion. deduction was expanded, for the first Summary of Comments and Explanation FOR FURTHER INFORMATION CONTACT: time, to include certain used of Revisions section in this preamble. Concerning §§ 1.168(b)–1 and 1.168(k)– depreciable property and certain film, Unless otherwise indicated, all 2, Elizabeth R. Binder at (202) 317–4869 television, or live theatrical references to section 168(k) hereinafter or Kathleen Reed at (202) 317–4660 (not productions. Third, the placed-in- are references to section 168(k) as toll-free numbers); concerning § 1.1502– service date was extended from before amended by the TCJA. 68, Samuel G. Trammell at (202) 317– January 1, 2020, to before January 1, On August 8, 2018, the Treasury 6975 or Katherine H. Zhang at (202) 2027 (and from before January 1, 2021, Department and the IRS published a 317–5363 (not toll-free numbers). to before January 1, 2028, for longer notice of proposed rulemaking (REG– SUPPLEMENTARY INFORMATION: production period property or certain 104397–18) in the Federal Register (83 aircraft property described in section FR 39292) containing proposed Applicability 168(k)(2)(B) or (C)). Fourth, the date on regulations under section 168(k) (2018 A taxpayer may choose to apply which a specified plant may be planted Proposed Regulations). After full §§ 1.168(k)–2 and 1.1502–68 of these or grafted by the taxpayer was extended consideration of the comments received final regulations, in their entirety, to from before January 1, 2020, to before on the 2018 Proposed Regulations and depreciable property acquired and January 1, 2027. The provisions of the testimony heard at the public placed in service or certain plants section 168(k), as amended by the TCJA, hearing on November 28, 2018, the planted or grafted, as applicable, after are explained in greater detail in the Treasury Department and the IRS September 27, 2017, by the taxpayer preamble to the final regulations published the 2019 Final Regulations during a taxable year ending on or after published by the Department of the adopting the 2018 Proposed Regulations September 28, 2017, provided the Treasury (Treasury Department) and the with modifications in response to such taxpayer consistently applies all rules in IRS as TD 9874 on September 24, 2019 comments and testimony. these final regulations. However, once (2019 Final Regulations) in the Federal Concurrently with the publication of the taxpayer applies §§ 1.168(k)–2 and Register (84 FR 50108). the 2019 Final Regulations, the Treasury 1.1502–68 of these final regulations for Section 13201(h) of the TCJA provides Department and the IRS published an a taxable year, the taxpayer must the effective dates of the amendments to additional notice of proposed continue to apply §§ 1.168(k)–2 and section 168(k) made by section 13201 of rulemaking (REG–106808–19) in the 1.1502–68 of these final regulations for the TCJA. Except as provided in section Federal Register (84 FR 50152) subsequent taxable years. Alternatively, 13201(h)(2) of the TCJA, section withdrawing certain provisions of the a taxpayer may rely on the proposed 13201(h)(1) of the TCJA provides that 2018 Proposed Regulations and regulations under section 168(k) in these amendments apply to property proposing additional guidance under REG–106808–19 (84 FR 50152; 2019–41 acquired and placed in service after section 168(k) (2019 Proposed

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Regulations). The Summary of the definition of qualified property, (2) 163(j)(1)(A) and (B) for the taxable year, Comments and Explanation of Revisions rules for consolidated groups, (3) rules to choose to limit its interest expense section of this preamble summarizes the regarding components acquired or self- deduction to the sum of the amounts provisions of the 2019 Proposed constructed after September 27, 2017, under section 163(j)(1)(A) and (B), and Regulations, which are explained in for larger self-constructed property for not be precluded by section 168(k)(9)(B) greater detail in the preamble to the which manufacture, construction, or from claiming the additional first year 2019 Proposed Regulations. production began before September 28, depreciation deduction. The Treasury The Treasury Department and the IRS 2017, (4) rules regarding the application Department and the IRS do not interpret received written and electronic of the mid-quarter convention, as section 163(j)(1) as allowing such an comments responding to the 2019 determined under section 168(d), and option. Consistent with the plain Proposed Regulations and held a public (5) changes to the definitions in the language of section 163(j)(1), § 1.163(j)– hearing on the 2019 Proposed 2019 Final Regulations for the terms 2(b)(1) provides that the amount Regulations on November 13, 2019. qualified improvement property, allowed as a deduction for business After full consideration of the comments predecessor, and class of property. Also, interest expense for the taxable year received on the 2019 Proposed the rules for consolidated groups have generally cannot exceed the sum of (1) Regulations and the testimony heard at been moved from § 1.168(k)–2(b)(3)(v) of the taxpayer’s business interest income the public hearing, this Treasury the 2019 Proposed Regulations to new for the taxable year, (2) 30 percent of the decision adopts the 2019 Proposed § 1.1502–68 of these final regulations. taxpayer’s adjusted taxable income for Regulations with modifications in Part I of this Background section the taxable year, and (3) the taxpayer’s response to certain comments and addresses operational rules. Part II of floor plan financing interest expense for testimony, as described in the Summary this Background section addresses the taxable year. Pursuant to section of Comments and Explanation of definitions. 2306(a) of the CARES Act, the adjusted Revisions section. taxable income percentage is increased I. Operational Rules Summary of Comments and from 30 to 50 percent for any taxable Explanation of Revisions A. Property Described in Section year beginning in 2019 or 2020, subject 168(k)(9)(B) to certain exceptions. Because neither The Treasury Department and the IRS section 163(j)(1) nor § 1.163(j)–2(b) Section 1.168(k)–2(b)(2)(ii)(G) of the received written comments from five provide an option for a trade or business 2019 Proposed Regulations provides commenters in response to the 2019 with floor plan financing indebtedness Proposed Regulations. In connection that, for purposes of section to include or exclude its floor plan with these comments, some commenters 168(k)(9)(B), floor plan financing financing interest expense in also provided comments on aspects of interest is not taken into account for the determining the amount allowed as a the 2019 Final Regulations. All taxable year by a trade or business that deduction for business interest expense comments were considered and are has had floor plan financing for the taxable year, the Treasury available at https://www.regulations.gov indebtedness if the sum of the amounts Department and the IRS decline to or upon request. The comments calculated under section 163(j)(1)(A) adopt this comment. addressing the 2019 Proposed and (B) for the trade or business for the The commenter also requested that Regulations and 2019 Final Regulations taxable year equals or exceeds the the Treasury Department and the IRS are summarized in this Summary of business interest (which includes floor provide transition relief for taxpayers Comments and Explanation of Revisions plan financing interest), as defined in that treated, on their 2018 Federal section. section 163(j)(5), of the trade or business income tax returns, section 163(j)(1) as Because of the amendments to section for the taxable year. If the business providing an option for a trade or 168(k) by the TCJA, the 2019 Final interest, which includes floor plan business with floor plan financing Regulations updated existing financing interest, exceeds the sum of indebtedness to include or exclude its regulations in § 1.168(k)–1 by providing the amounts calculated under section floor plan financing interest expense in a new section at § 1.168(k)–2 for 163(j)(1)(A) and (B) for the taxable year, determining the amount allowed as a property acquired and placed in service the floor plan financing interest is taken deduction for business interest expense after September 27, 2017. The 2019 into account for the taxable year for for the taxable year. Further, the Final Regulations also made conforming purposes of section 168(k)(9)(B). See commenter requested transition relief amendments to the existing regulations. Example 7 in § 1.168(k)–2(b)(2)(iii)(G) of for taxpayers with a trade or business The 2019 Final Regulations described the 2019 Proposed Regulations. Floor with floor plan financing indebtedness and clarified the statutory requirements plan financing indebtedness is defined that want to revoke their elections not that must be met for depreciable in section 163(j)(9)(B) and § 1.163(j)– to claim the additional first year property to qualify for the additional 1(b)(18) as indebtedness that is (i) used depreciation for property placed in first year depreciation deduction to finance the acquisition of motor service during 2018 in order to rely on provided by section 168(k), and they vehicles held for sale or lease; and (ii) the 2019 Proposed Regulations. The provided guidance to taxpayers in secured by the motor vehicles so Treasury Department and the IRS intend determining the additional first year acquired. Floor plan financing interest to issue published guidance that will depreciation deduction and the amount expense is defined in section address these requests. of depreciation otherwise allowable for 163(j)(9)(A) and § 1.163(j)–1(b)(19) as this property. interest paid or accrued on floor plan B. Used Property These final regulations provide financing indebtedness. 1. Depreciable Interest taxpayers with guidance regarding A commenter on the 2019 Proposed issues relating to the application of Regulations requested that these final a. Five-Year Safe Harbor section 168(k) that are not addressed in regulations allow a trade or business Section 1.168(k)–2(b)(3)(iii)(B)(1) of the 2019 Final Regulations, along with that has business interest expense, the 2019 Final Regulations provides that clarifying changes to the 2019 Final including floor plan financing interest property is treated as used by the Regulations. Specifically, these final expense, that exceeds the sum of the taxpayer or a predecessor at any time regulations provide (1) rules relevant to amounts calculated under section prior to acquisition by the taxpayer or

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predecessor if the taxpayer or the be clarified to say that the taxpayer and been added to clarify the application of predecessor had a depreciable interest each predecessor is subject to a separate the Five-Year Safe Harbor. in the property at any time prior to such lookback period that begins no earlier b. De Minimis Use acquisition, whether or not the taxpayer than the date such person came into or the predecessor claimed depreciation existence. Section 1.168(k)–2(b)(3)(iii)(B)(4) of deductions for the property. To The Treasury Department and the IRS the 2019 Proposed Regulations provides determine if the taxpayer or a intended the ‘‘placed-in-service year’’ to an exception to the prior depreciable predecessor had a depreciable interest be the current calendar year in which interest rule in the 2019 Final in the property at any time prior to the property is placed in service by the Regulations when the taxpayer disposes acquisition, the 2019 Final Regulations taxpayer. Also, the Treasury Department of property to an unrelated party within also provide that only the five calendar and the IRS intended the portion of that 90 calendar days after the taxpayer years immediately prior to the calendar year covering the period up to originally placed such property in taxpayer’s current placed-in-service year the placed-in-service date of the service (De Minimis Use Rule). The of the property are taken into account property to be considered in 2019 Proposed Regulations also provide (Five-Year Safe Harbor). If the taxpayer determining whether the taxpayer or a that the De Minimis Use Rule does not and a predecessor have not been in predecessor previously had a apply if the taxpayer reacquires and existence for this entire five-year period, depreciable interest. This approach is again places in service the property the 2019 Final Regulations provide that consistent with an exception to the de during the same taxable year the only the number of calendar years the minimis use rule in § 1.168(k)– taxpayer disposed of the property. A taxpayer and the predecessor have been 2(b)(3)(iii)(B)(4) of the 2019 Proposed commenter on the 2019 Proposed in existence are taken into account. Regulations, which is discussed in Regulations asked for clarification Commenters requested clarification greater detail in part I.B.1.b of this regarding the application of the De that the Five-Year Safe Harbor applies Summary of Comments and Explanation Minimis Use Rule in the following for purposes of the special rules for of Revisions section. Pursuant to that situations: consolidated groups in § 1.168(k)– exception, when a taxpayer places in (1) The taxpayer places in service 2(b)(3)(v) of the 2019 Proposed service eligible property in Year 1, property in Year 1, disposes of that Regulations. A commenter also disposes of that property to an unrelated property to an unrelated party in Year requested clarification whether ‘‘the party in Year 1 within 90 calendar days 1 within 90 calendar days of that partnership’s current year’’ in of that placed-in-service date, and then original placed-in-service date, and then § 1.168(k)–2(b)(3)(iii)(B)(5) of the 2019 reacquires the same property later in reacquires and again places in service Proposed Regulations (Partnership Year 1, the taxpayer is treated as having the same property later in Year 1 and Lookthrough Rule) is the taxable year or a prior depreciable interest in the does not dispose of the property again the calendar year. These comments are property upon the taxpayer’s in Year 1; addressed later in this Summary of reacquisition of the property in Year 1. (2) The taxpayer places in service Comments and Explanation of Revisions This rule would be superfluous if the property in Year 1, disposes of that section. Five-Year Safe Harbor did not consider property to an unrelated party in Year In connection with comments the portion of the calendar year covering 2 within 90 calendar days of that received on the Five-Year Safe Harbor the period up to the placed-in-service original placed-in-service date, and then and the Partnership Lookthrough Rule, date of the property. reacquires and again places in service the Treasury Department and the IRS Accordingly, § 1.168(k)– the same property in Year 2 or later; and reviewed the Five-Year Safe Harbor and 2(b)(3)(iii)(B)(1) is amended to clarify (3) The taxpayer places in service determined that clarification of this safe that the five calendar years immediately property in Year 1 and disposes of that harbor would be beneficial. One prior to the current calendar year in property to an unrelated party in Year commenter requested clarification of the which the property is placed in service 1 within 90 calendar days of that Five-Year Safe Harbor as to: (1) Whether by the taxpayer, and the portion of such original placed-in-service date, then the the ‘‘placed-in-service year’’ is the current calendar year before the placed- taxpayer reacquires and again places in taxable year or the calendar year; and (2) in-service date of the property service the same property later in Year whether the portion of the calendar year determined without taking into account 1 and disposes of that property to an covering the period up to the placed-in- the applicable convention, are taken unrelated party in Year 2 within 90 service date of the property is taken into into account to determine if the calendar days of the subsequent placed- account. The commenter also requested taxpayer or a predecessor had a in-service date in Year 1, and the clarification regarding the application of depreciable interest in the property at taxpayer reacquires and again places in the Five-Year Safe Harbor to situations any time prior to acquisition (lookback service the same property in Year 4. where the taxpayer or a predecessor was period). Section 1.168(k)– In situation 1, the additional first year not in existence during the entire 5-year 2(b)(3)(iii)(B)(1) also is amended to depreciation deduction is not allowable lookback period. Specifically, the adopt the suggestion of the commenter for the property when it was initially commenter pointed out that the safe that each of the taxpayer and the placed in service in Year 1 by the harbor in the 2019 Final Regulations predecessor be subject to a separate taxpayer pursuant to § 1.168(k)– could be read to apply only to those lookback period. These final regulations 2(g)(1)(i) of the 2019 Final Regulations. periods in the 5-year lookback period clarify that if the taxpayer or a The additional first year depreciation that both the taxpayer and a predecessor predecessor, or both, have not been in deduction also is not allowable when are in existence, and not to those existence during the entire lookback the same property is subsequently periods in the 5-year lookback period period, then only the portion of the placed in service in Year 1 by the same during which the taxpayer or a lookback period during which the taxpayer under the De Minimis Use predecessor, or both, were in existence taxpayer or a predecessor, or both, have Rule in the 2019 Proposed Regulations. and had a depreciable interest in the been in existence is taken into account The commenter asserted that the property later acquired and placed in to determine if the taxpayer or the additional first year depreciation service by the taxpayer. The commenter predecessor had a depreciable interest deduction should be allowable for the suggested that the Five-Year Safe Harbor in the property. More examples have property when it is placed in service

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again in Year 1 and is not disposed of that a person is treated as having a transactions, as described in the 2019 again in Year 1, because the additional depreciable interest in a portion of Final Regulations. The Treasury first year depreciation deduction is not property prior to the person’s Department and the IRS have allowable for the property when it acquisition of the property if the person determined that this comment is outside initially was placed in service in Year was a partner in a partnership at any of the scope of these final regulations. 1 by the taxpayer. The Treasury time the partnership owned the 3. Series of Related Transactions Department and the IRS agree with this property. The Partnership Lookthrough comment if the property is originally Rule further provides that the portion of Section 1.168(k)–2(b)(3)(iii)(C) of the acquired by the taxpayer after property in which a partner is treated as 2019 Proposed Regulations provides September 27, 2017. The Treasury having a depreciable interest is equal to special rules for a series of related Department and the IRS decline to the total share of depreciation transactions (Proposed Related adopt this comment with respect to deductions with respect to the property Transactions Rule). The Proposed property that was originally acquired by allocated to the partner as a percentage Related Transactions Rule generally the taxpayer before September 28, 2017, of the total depreciation deductions provides that the relationship between as the exception to the De Minimis Use allocated to all partners during the the parties under section 179(d)(2)(A) or Rule was intended to prevent certain current calendar year and the five (B) in a series of related transactions is churning transactions involving such calendar years immediately prior to the tested immediately after each step in the property. The Treasury Department and partnership’s current year. series, and between the original the IRS believe that property that is One commenter requested that the transferor and the ultimate transferee placed in service, disposed of, and Treasury Department and the IRS immediately after the last transaction in reacquired in the same taxable year is withdraw the Partnership Lookthrough the series. The Proposed Related more likely to be part of a Rule and replace it with a rule that Transactions Rule also provides that the predetermined churning plan. treats a taxpayer as having a depreciable relationship between the parties in a In situation 2, the additional first year interest in an item of property only if series of related transactions is not depreciation deduction is allowable for the taxpayer was a controlling partner in tested in certain situations. For the same property by the same taxpayer a partnership at any time the example, a party in the series that is twice (in Year 1 when the property is partnership owned the property during neither the original transferor nor the initially placed in service, and in Year the applicable lookback period. The ultimate transferee is disregarded in 2 when the property is placed in service Treasury Department and the IRS agree applying the relatedness test if the party again). This result is consistent with the with the commenter that the Partnership placed in service and disposed of the De Minimis Use Rule in the 2019 Lookthrough Rule should be withdrawn. property in the party’s same taxable year Proposed Regulations, and this result is The Treasury Department and the IRS or did not place the property in service. not changed in these final regulations. have determined that the complexity of The relationship between the parties In situation 3, the De Minimis Use applying the Partnership Lookthrough also is not tested if the step is a Rule provides only one 90-day period Rule would place a significant transaction described in § 1.168(k)– that is disregarded in determining administrative burden on both taxpayers 2(g)(1)(iii) (that is, a transfer of property whether the taxpayer had a depreciable and the IRS. For this reason, these final in a transaction described in section interest in the property prior to its regulations do not retain the Partnership 168(i)(7) in the same taxable year that reacquisition. That 90-day period is Lookthrough Rule. Therefore, under the property is placed in service by the measured from the original placed-in- these final regulations, a partner will transferor). Finally, the 2019 Proposed service date of the property by the not be treated as having a depreciable Regulations provide that the Proposed taxpayer. As a result, the second 90-day interest in partnership property solely Related Transactions Rule does not period in situation 3 (during which the by virtue of being a partner in the apply to syndication transactions or taxpayer reacquired the property in Year partnership. The Treasury Department when all transactions in the series are 1, again placed it in service in Year 1, and the IRS have determined that a described in § 1.168(k)–2(g)(1)(iii). and then disposed of it in Year 2) is replacement rule that applies only to A commenter stated that the Proposed taken into account in determining controlling partners is not necessary Related Transactions Rule may whether the taxpayer previously used because the related party rule in section disregard significant relationships that the property when the taxpayer again 179(d)(2)(A) applies to a direct purchase existed before the series, or that are places in service the property in Year 4. of partnership property by a current formed as a result of the series. The The De Minimis Use Rule in these majority partner, and the series of commenter also stated that the rule does final regulations is clarified to reflect related transactions rules in § 1.168(k)– not address how relatedness should be these results. These final regulations 2(b)(3)(iii)(C) prevents avoidance of the tested when the relationship between also include additional examples to related party rule through the use of the parties changes over the course of illustrate the application of the De intermediary parties. the series or when a party ceases to Minimis Use Rule in these situations The same commenter recommended a exist. and conforming changes to § 1.168(k)– number of changes to the Partnership The commenter recommended that 2(g)(1)(i) of the 2019 Final Regulations. Lookthrough Rule if it were to be the final regulations test relatedness retained. It is not necessary to address immediately before the first step in the 2. Application to Partnerships these comments, because these final series of related transactions and The Treasury Department and the IRS regulations do not retain the Partnership immediately after the last step in the received several comments regarding Lookthrough Rule. series, similar to § 1.197–2(h)(6)(ii)(B). the Partnership Lookthrough Rule in Additionally, one commenter The commenter also recommended § 1.168(k)–2(b)(3)(iii)(B)(5) of the 2019 recommended that the Treasury simplifying the Proposed Related Proposed Regulations, which addresses Department and the IRS clarify the Transactions Rule and alleviating the extent to which a partner is deemed operation of the section 168(k) knowledge burdens imposed on to have a depreciable interest in regulations with respect to section transferees and the IRS as to whether a property held by a partnership. The 743(b) adjustments after transfers of transfer is pursuant to a series of related Partnership Lookthrough Rule provides partnership interests in section 168(i)(7) transactions, the date that a transferee in

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a series placed the asset in service, and taxpayers and the IRS to administer. related to such acquired corporation for whether a transferee is related to a Furthermore, this approach fails to purposes of testing relatedness. This transferor. adequately address situations where the rule is similar to § 1.197–2(h)(6)(iii) and The Treasury Department and the IRS parties other than the original transferor properly reflects the change in have determined that the rule in and the ultimate transferee in a series ownership of depreciable property in a § 1.197–2(h)(6)(ii)(B) is not appropriate may be related or may become related series of related transactions without for testing relatedness for purposes of pursuant to the series. Thus, these final taking into account certain transitory the additional first year depreciation regulations do not adopt the relationships the purpose of which is deduction. Section 1.197–2(h)(6)(ii)(B) commenter’s second alternative unrelated to the additional first year provides that relatedness is tested approach. depreciation deduction. immediately before the first step in a However, the Treasury Department Finally, these final regulations series of related transactions and and the IRS agree that the Proposed provide that, if a transferee in a series immediately after the last step in the Related Transactions Rule should be of related transactions acquires series. The purpose of this rule is to simplified. The Treasury Department depreciable property from a transferor prevent the churning of assets, and the and the IRS also agree that this rule that was not in existence immediately relationship that is of importance is that should be modified to take into account prior to the first transfer of the property of the first and last acquisition. In changes in the relationship between the in the series (new transferor), the contrast, the purpose of the Proposed parties, including a party ceasing to transferee tests its relationship with the Related Transactions Rule is to exist, over the course of a series of party from which the new transferor determine whether each transferee in related transactions. For example, acquired the depreciable property. the series qualifies to claim the assume that, pursuant to a series of Examples illustrating these revised rules additional first year depreciation related transactions, A transfers are provided in these final regulations. deduction for the assets and, therefore, property to B, B transfers property to C, testing for relatedness is done and C transfers property to D. Under the 4. Application to Members of a immediately after each step in the Proposed Related Transactions Rule, Consolidated Group series. Testing for relatedness at no relatedness is tested after each step and a. The 2019 Proposed Regulations point in time other than immediately between D and A. Assume further that, before the first step and immediately at the beginning of the series, C was The 2019 Proposed Regulations after the last step in the series would related to A but, prior to acquiring the provide special rules addressing the preclude all intermediaries in the series property, C ceases to be related to A, or availability of the additional first year from claiming the additional first year A ceases to exist. The Proposed Related depreciation deduction upon the depreciation deduction. Accordingly, Transactions Rule does not address how acquisition of depreciable property by a the Treasury Department and the IRS do to treat such changes. member of a consolidated group, as not adopt this recommendation. Accordingly, these final regulations defined in § 1.1502–1(b) and (h), The commenter also recommended provide that each transferee in a series respectively. Under the 2019 Proposed several alternative approaches to testing of related transactions tests its Regulations, if a member acquires relatedness: (1) Any transferee in a relationship under section 179(d)(2)(A) property in which the consolidated series of related transactions tests its or (B) with the transferor from which group had a depreciable interest at any relatedness to every prior transferor in the transferee directly acquires the time prior to the member’s acquisition the series; or (2) a transferee tests its depreciable property (immediate of such property, then the member is relatedness only to its immediate transferor) and with the original treated as previously having a transferor if the transferee demonstrated transferor of the depreciable property in depreciable interest in such property that it did not know, or have reason to the series. The transferee is treated as (Group Prior Use Rule). This rule was know, that the transfer occurred related to the immediate transferor or first included in the 2018 Proposed pursuant to a series of related the original transferor if the relationship Regulations to address situations in transactions. exists either immediately before the first which property is disposed of by one The Treasury Department and the IRS transfer of the depreciable property in member of a consolidated group and have determined that requiring each the series or when the transferee subsequently is acquired by another transferee in a series of related acquires the property. Any transferor in member of the same consolidated group, transactions to test its relatedness to a series of related transactions that because the Treasury Department and every prior transferor in the series ceases to exist during the series is the IRS had determined that allowing would impose a significant deemed to continue to exist for the additional first year depreciation administrative burden. Therefore, these purposes of testing relatedness. deduction in such situations would not final regulations do not adopt the These final regulations also provide a clearly reflect the income of the commenter’s first alternative approach. special rule that disregards certain consolidated group. See 83 FR 39292, The Treasury Department and the IRS transitory relationships created 39295 (Aug. 8, 2018). For purposes of also have determined that, because a pursuant to a series of related the Group Prior Use Rule, a series of related transactions generally is transactions. More specifically, if a consolidated group is treated as having undertaken among the relevant parties party acquires depreciable property in a a depreciable interest in property during pursuant to a preconceived plan, the series of related transactions in which the time any current or former member rule in the commenter’s second the acquiring party acquires stock, of the group had a depreciable interest alternative approach would have meeting the requirements of section while a member of the group. See limited application. Because the 1504(a)(2), of a corporation in a fully § 1.168(k)–2(b)(3)(v)(A) of the 2019 application of this approach would taxable transaction, followed by a Proposed Regulations. depend upon the taxpayer’s liquidation of the acquired corporation Further, when members of a demonstration that it did not know, and under section 331, any relationship consolidated group acquire both did not have reason to know, that a created as part of such series of depreciable property and the stock of a transfer occurred pursuant to a series, transactions is disregarded in corporation that previously had a this rule also may be difficult for both determining whether any party is depreciable interest in such property

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pursuant to the same series of related acquisitions of property because such days of the QSP or QSD. Under this transactions, the 2019 Proposed deemed acquisitions generally are proposed rule, (1) the acquisition date Regulations treat the member that respected as actually occurring for or disposition date, as applicable, is acquires the property as previously Federal income tax purposes. See treated as the day that is one day after having a depreciable interest in such §§ 1.336–2(e) and 1.338–1(a)(2); see also the Deconsolidation Date for all Federal property (Stock and Asset Acquisition § 1.336–1(a)(1) (generally providing that, income tax purposes, and (2) new target Rule). See § 1.168(k)–2(b)(3)(v)(B) of the except to the extent inconsistent with is treated as placing the property in 2019 Proposed Regulations. Like the section 336(e), the results of section service no earlier than one day after the Group Prior Use Rule, the Stock and 336(e) should coincide with those of Deconsolidation Date for purposes of Asset Acquisition Rule initially was section 338(h)(10)). Accordingly, the depreciation and the investment credit included in the 2018 Proposed Treasury Department and the IRS allowed by section 38. The Proposed Regulations. As stated in the preamble proposed a rule analogous to the Consolidated Deemed Acquisition Rule to those regulations, the Treasury Proposed Consolidated Asset does not apply to QSDs described in Department and the IRS have Acquisition Rule for deemed section 355(d)(2) or (e)(2). See determined that, in substance, this acquisitions of property pursuant to § 1.168(k)–2(b)(3)(v)(D) of the 2019 series of related transactions is the same such an election (Proposed Proposed Regulations. as a series of related transactions in Consolidated Deemed Acquisition Rule, which a consolidated group acquired and together with the Proposed b. Comments on Consolidated Group the selling corporation, which Consolidated Asset Acquisition Rule, Rules in the 2019 Proposed Regulations subsequently reacquired the property in the Proposed Consolidated Acquisition The Treasury Department and the IRS which it previously had a depreciable Rules). received comments regarding the interest and then transferred it to Section 338 and section 336(e) both foregoing consolidated group rules in another member of the consolidated provide elections to treat certain the 2019 Proposed Regulations. group. In that situation, the additional transfers of a target corporation’s stock first year depreciation deduction would as transfers of the target corporation’s (1) The Proposed Consolidated not be allowed. See 83 FR 39292, 39295 assets. If a section 338 election is made Acquisition Rules (Aug. 8, 2018). Both the Group Prior Use for a ‘‘qualified stock purchase’’ (QSP), (a) Issues Under the Proposed Rule and the Stock and Asset then the target corporation generally is Consolidated Acquisition Rules Acquisition Rule are adopted in these treated as two separate corporations The Proposed Consolidated final regulations with certain before and after the acquisition date for Acquisition Rules were intended to modifications, as discussed further in Federal income tax purposes. As a result make the additional first year part I.B.4.b(2) of this Summary of of the election, ‘‘old target’’ is deemed depreciation deduction available to the Comments and Explanation of Revisions to sell its assets to an unrelated person buyer of depreciable property in an section. at the close of the acquisition date at fair The 2019 Proposed Regulations also market value, and ‘‘new target’’ is intercompany transaction, as defined in include rules addressing transfers of deemed to acquire those assets from an § 1.1502–13(b)(1)(i), if the buyer depreciable property between members unrelated person at the beginning of the member leaves the consolidated group of the same consolidated group. One following day. See section 338(a). If the within 90 calendar days pursuant to the such rule (Proposed Consolidated Asset election is a section 338(h)(10) election, same series of related transactions that Acquisition Rule) applies if a member then old target is deemed to liquidate includes the property acquisition. As (transferee member) acquires following the deemed sale of its assets. discussed in the preamble to the 2019 depreciable property from another See § 1.338–1(a)(1). Proposed Regulations, the Treasury member of the same consolidated group Generally, a similar sale and Department and the IRS have in a taxable transaction and, as part of liquidation are deemed to occur if a determined that, in substance, such a the same series of related transactions, section 336(e) election is made for a transaction should be treated the same the transferee member then ceases to be ‘‘qualified stock disposition’’ (QSD) of as if the buyer member first left the a member of that group within 90 target corporation stock. However, if a consolidated group and then purchased calendar days of the date of the property section 336(e) election is made for a the depreciable property (in which case acquisition. Under the Proposed QSD described in section 355(d)(2) or the buyer member would be allowed to Consolidated Asset Acquisition Rule, (e)(2), then a different transaction is claim the additional first year the transferee member is treated as (1) deemed to occur. In that case, old target depreciation deduction). See 84 FR acquiring the property one day after the is deemed to sell its assets to an 50152, 50156 (Sep. 24, 2019). Treating date on which the transferee member unrelated party and then reacquire those the property acquisition as occurring ceases to be a member of the assets from an unrelated party, and old after the buyer member leaves the consolidated group (Deconsolidation target is not deemed to liquidate (sale- consolidated group reduces the Date) for all Federal income tax to-self model). See § 1.336–2(b). likelihood that the transfer fails to purposes, and (2) placing the property The Proposed Consolidated Deemed satisfy the ‘‘purchase’’ requirements in in service no earlier than one day after Acquisition Rule changes certain section 179(d)(2) and (3), helps ensure the Deconsolidation Date for purposes aspects of the deemed acquisitions that that the buyer member is not attributed of depreciation and the investment result from a section 338 election or a the seller member’s prior use of the credit allowed by section 38. See section 336(e) election. This proposed property, and precludes the application § 1.168(k)–2(b)(3)(v)(C) of the 2019 rule applies if a member (transferee of section 168(i)(7). Proposed Regulations. member) acquires, in a QSP or QSD, Commenters appreciated the The Treasury Department and the IRS stock of another member (target) that Proposed Consolidated Acquisition also determined that, in general, holds depreciable property and, as part Rules. However, commenters also deemed acquisitions of property of the same series of related argued that, because these rules treat pursuant to a section 338 election or a transactions, the transferee member and certain actual or deemed asset section 336(e) election should be subject target cease to be members of the selling acquisitions as occurring on a date that to the same treatment as actual consolidated group within 90 calendar is different than the date on which the

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acquisitions occurred up to 90 calendar acquired assets to satisfy the ‘‘active transfer may be a preparatory step days after the date of such an trade or business’’ requirements of undertaken well in advance of the acquisition for all Federal income tax section 355(b) in connection with the Deconsolidation Date, particularly if the purposes, these rules create some distribution of the transferee member’s transaction involves the transfer of legal uncertainty and raise certain stock, commenters asked whether the title to assets. Additionally, delays in implementation issues. Proposed Consolidated Acquisition regulatory approval for the transaction Many of the questions raised by Rules could prevent the distribution may preclude the transferee member commenters regarding the Proposed from qualifying under section 355 from leaving the consolidated group Consolidated Acquisition Rules concern because the asset acquisition would be within 90 days. Moreover, one the period beginning on the date of the treated as occurring one day after the commenter argued that the rationale for actual or deemed asset acquisition and transferee member has left the selling the 90-day requirement for syndication ending on the Deconsolidation Date group. See section 355(b)(1)(A) transactions differs from the rationale (interim period). In particular, (providing that the distributing for such a requirement in the Proposed commenters noted that tax items may corporation and the controlled Consolidated Acquisition Rules. The arise during the interim period from corporation must be ‘‘engaged commenter noted that the syndication both the depreciable property acquired immediately after the distribution in the exception in section 168(k)(2)(E)(iii) by the transferee member and the active conduct of a trade or business’’). specifies a period of time that consideration received by the transferor The Treasury Department and the IRS ownership of an asset (rather than the member. Commenters asked how appreciate the comments received with relationship between the transferor and income, deductions, or other tax items regard to the Proposed Consolidated transferee, as in the Proposed from the transferred depreciable Acquisition Rules. The Treasury Consolidated Acquisition Rules) should property during the interim period Department and the IRS agree that these be disregarded, and the commenter should be reported, particularly if the proposed rules could create uncertainty suggested that the primary authority for asset acquisition occurs in one taxable and raise implementation issues. As a disregarding periods of transitory year and the Deconsolidation Date result, these final regulations adopt an ownership is the step transaction occurs in the subsequent taxable year. alternative approach (Delayed Bonus doctrine rather than section 168(k). Additionally, commenters suggested Approach) that would alleviate many of Commenters also suggested that the 90- that the consideration used to acquire the concerns raised by commenters. See day requirement does not further the depreciable property from the transferor the discussion in part I.B.4.b(1)(e) of policy goals of section 168(k). In other member may consist of stock or debt this Summary of Comments and words, so long as there is a series of instruments that produce dividends or Explanation of Revisions section. related transactions, whether the asset interest during the interim period. (b) The 90-Day Requirement acquisition and the deconsolidation According to commenters, the Proposed occur within 90 days should not be Consolidated Acquisition Rules do not The Proposed Consolidated determinative. Based on the foregoing, address how such income should be Acquisition Rules apply only if, as part the commenters recommended reported. Commenters also asked how of the same series of related removing the 90-day requirement and changes in the depreciable property (or transactions, the transferee member simply retaining the ‘‘series of related the seller consideration) during the leaves (or, in the case of a deemed asset transactions’’ requirement. interim period—such as a change in purchase, the transferee member and The Treasury Department and the IRS value, or a change in use that affects target leave) the transferor member’s agree with commenters that the 90-day eligibility for the additional first year consolidated group within 90 calendar requirement would be difficult for depreciation deduction—should be days of the date of the property taxpayers to satisfy in many ordinary- taken into account, and how tax items acquisition (90-day requirement). See course business transactions. The associated with the property should be part I.B.4.a of this Summary of Treasury Department and the IRS also reported if the transferor member leaves Comments and Explanation of Revisions have determined that the Delayed Bonus the selling group during the interim section. The 90-day requirement was Approach would eliminate many of the period. based in part on the rule for syndication aforementioned issues with the Commenters also raised questions transactions in section 168(k)(2)(E)(iii) Proposed Consolidated Acquisition about the interim period relating and § 1.168(k)–2(b)(3)(vi) and (b)(4)(iv). Rules by respecting the date on which specifically to the Proposed By capping the period of time that could each transaction in the series actually Consolidated Deemed Acquisition Rule. elapse between the property transfer occurs. Consequently, the Delayed Commenters noted that additional date and the Deconsolidation Date, the Bonus Approach does not include a 90- transaction steps, such as property 90-day requirement was intended to day requirement. See the discussion in transfers by the transferee member to limit the scope of certain issues created part I.B.4.b(1)(e) of this Summary of target, or the assumption of additional by treating the asset acquisition as Comments and Explanation of Revisions liabilities of the transferee member by occurring after the actual transfer date section. target, may occur between the date of under the Proposed Consolidated the QSP and the Deconsolidation Date. Acquisition Rules. See the discussion in (c) Assets to Which the Proposed If these transaction steps occur, part I.B.4.b(1)(a) of this Summary of Consolidated Acquisition Rules Apply commenters asked whether the Comments and Explanation of Revisions Under the 2019 Proposed Regulations, aggregate deemed sale price (ADSP) and section. the Proposed Consolidated Acquisition adjusted grossed-up basis (AGUB) (see The Treasury Department and the IRS Rules apply to actual or deemed §§ 1.338–4 and 1.338–5, respectively) received several comments acquisitions of ‘‘depreciable property,’’ are adjusted and, if so, how. recommending the elimination of the regardless of whether such property is Additionally, commenters asked 90-day requirement. The commenters of a type that is eligible for the about the interaction of the Proposed generally argued that, in many cases, the additional first year depreciation Consolidated Acquisition Rules with 90-day requirement will be difficult for deduction (eligible property) or of a type section 355. More specifically, if the taxpayers to satisfy. In business that is ineligible for the additional first transferee member is relying on the transactions, an intercompany asset year depreciation deduction (ineligible

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property). For example, under a literal Department and the IRS determined that old target remains in existence under reading of the Proposed Consolidated this limitation would be appropriate this construct, such attributes would Asset Acquisition Rule, a member’s because the rules applicable to such include old target’s prior use of its acquisition of several parcels of QSDs do not treat a new target depreciable property. Accordingly, the depreciable real estate that is not corporation as acquiring assets from an Treasury Department and the IRS eligible property from another member unrelated person. See § 1.336–2(b)(2). decline to expand the scope of the would be subject to this rule (assuming One commenter argued that, although Proposed Consolidated Deemed that all other requirements for the sale-to-self model in § 1.336–2(b)(2) Acquisition Rule. application of this rule are satisfied), could be construed as violating the ‘‘no (e) Alternative Approaches even though none of the transferred prior use’’ requirement in section property is eligible property. Similarly, 168(k)(2)(E)(ii)(I) and § 1.168(k)– Commenters recommended several a member’s acquisition of the stock of a 2(b)(3)(iii)(A)(1), this model should not alternative approaches to alleviate the target corporation whose assets largely control eligibility for the additional first uncertainties and implementation issues consist of depreciable real estate that is year depreciation deduction, for several raised by the Proposed Consolidated not eligible property would be subject to reasons. First, the commenter argued Acquisition Rules. This part I.B.4.b(1)(e) the Proposed Consolidated Deemed that there is no policy rationale under of this Summary of Comments and Acquisition Rule (again, assuming that section 168(k) for treating QSDs Explanation of Revisions section all other requirements for application of described in section 355(d)(2) or (e)(2) discusses each alternative approach. this rule are satisfied), even though most differently than other transactions for (i) Delayed Bonus Approach of the target corporation’s assets are not which an election under section 336(e) eligible property. is made. Second, the commenter argued The first alternative approach One commenter recommended that that the sale-to-self model was not recommended by commenters (Delayed the final regulations limit the intended to be applied, and has not Bonus Approach) would treat the asset application of the Proposed been applied, for all Federal income tax acquisition as occurring on the date Consolidated Acquisition Rules to purposes. See, for example, § 1.336– such acquisition actually occurred for actual or deemed acquisitions of eligible 2(b)(2)(ii)(C) (for purposes of section all Federal income tax purposes and, property. The commenter explained that 197(f)(9), section 1091, and any other thus, as generally being subject to all application of the Proposed provision designated in the Internal Federal income tax rules that ordinarily Consolidated Acquisition Rules to Revenue Bulletin by the Internal would apply (with the exception of the ineligible property would not further Revenue Service, old target in its series of related transactions rules in the purposes of section 168(k) and capacity as the deemed seller of assets § 1.168(k)–2(b)(3)(iii)(C)). For example, might lack statutory authority. The is treated as separate and distinct from, during the interim period, the transferee commenter also asserted that such an and unrelated to, old target in its member would recognize depreciation application might create a trap for capacity as the deemed acquirer of on all depreciable transferred assets unwary taxpayers who do not consult assets). Third, the commenter suggested (including the eligible property), and the regulations under section 168(k) that taxpayers will structure around the the transferor member would recognize when planning transfers of ineligible exclusion for these QSDs in order to gain or loss in accordance with section property. avail themselves of the Proposed 168(i)(7) and § 1.1502–13(c)(2). The Treasury Department and the IRS Consolidated Deemed Acquisition Rule. Absent additional rules, the transferee agree that the Proposed Consolidated Thus, the commenter recommended member would not be able to claim the Acquisition Rules should apply only to expanding this rule to include all types additional first year depreciation eligible property. Thus, the Delayed of QSD for which an election under deduction (see sections 179(d)(2)(A) and Bonus Approach applies solely to section 336(e) is made. (B) and the Group Prior Use Rule). To depreciable property, as defined in The Treasury Department and the IRS enable the transferee member to claim § 1.168(b)–1(a)(1), that meets the do not agree with the commenter’s this deduction, the Delayed Bonus requirements in § 1.168(k)–2(b)(2), recommendation to expand the scope of Approach treats the transferee member determined without regard to the Proposed Consolidated Deemed as (1) selling the eligible property to an § 1.168(k)–2(b)(2)(ii)(C) (election not to Acquisition Rule to include all types of unrelated third party one day after the claim the additional first year QSD for which an election under Deconsolidation Date for an amount depreciation for a class of property) section 336(e) is made. In general, a equal to the member’s basis in the except on the day after the section 336(e) election should not affect eligible property at such time, and then Deconsolidation Date. See the the tax consequences to which the (2) acquiring identical, but different, discussion in part I.B.4.b(1)(e) of this purchaser or the distributee would have eligible property from another unrelated Summary of Comments and Explanation been subject with respect to the third party for the same amount of Revisions section. acquisition of target stock if a section (deemed sale and purchase of eligible 336(e) election had not been made. See property). For this purpose, the (d) Application of the Proposed § 1.336–2(c). As explained in the transferee member’s basis in the eligible Consolidated Deemed Acquisition Rule preamble to the final section 336(e) property on the day after the to Qualified Stock Dispositions regulations, the Treasury Department Deconsolidation Date is the value of the Described in Section 355(d)(2) or (e)(2) and the IRS believe that ‘‘the consideration paid by the transferee The Proposed Consolidated Deemed predominant feature of the section member for the property less any Acquisition Rule does not apply to 336(e) election with respect to a section depreciation deductions taken by the QSDs described in section 355(d)(2) or 355(d)(2) or (e)(2) transaction is the member with respect to such property (e)(2). As explained in part 2(D)(iv) of section 355 transaction.’’ 78 FR 28347, during the interim period. the Explanation of Provisions section in 28469 (May 15, 2013). Following such a The Treasury Department and the IRS the 2019 Proposed Regulations and part transaction, the controlled corporation have determined that the Delayed Bonus II(C)(2)(c) of the Summary of Comments (that is, old target) generally remains in Approach would achieve the objectives and Explanation of Revisions section in existence, and it retains its earnings and of the Proposed Consolidated the 2019 Final Regulations, the Treasury profits and other tax attributes. Because Acquisition Rules (that is, permitting

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additional first year depreciation to the transferee member (or target) from component in the definition of eligible transferee member after the member claiming the additional first year property effectively provides that for leaves the selling group pursuant to a depreciation deduction for such such taxable year, the transferee series of related transactions) while property. To avoid any potential member cannot have made an election creating fewer collateral consequences. uncertainty in this regard, these final under section 168(k)(7) not to claim the Moreover, because the Delayed Bonus regulations expressly provide that the additional first year depreciation Approach would respect the asset acquisition of the deemed replacement deduction for the class of property to acquisition as occurring on the actual property does not result in the basis in which the acquired property belongs. By acquisition date for all Federal income such property being determined, in extension, the Delayed Bonus Approach tax purposes, this approach would whole or in part, by reference to the does not apply to acquired property provide taxpayers with greater certainty basis of other property held at any time belonging to a class of property with regarding the tax consequences of the by the transferee member or target. respect to which the transferee makes an acquisition and the treatment of tax The Treasury Department and the IRS election under section 168(k)(7), for items arising during the interim period. note that, under the Delayed Bonus property placed in service in the taxable Thus, these final regulations adopt the Approach in these final regulations, the year that includes the day after the Delayed Bonus Approach for actual and deemed sale and purchase of eligible Deconsolidation Date. deemed acquisitions of eligible property property are treated as occurring for all Additionally, these final regulations that satisfy certain requirements. As Federal income tax purposes. Treating allow taxpayers to elect out of the noted in part I.B.4.b(1)(b) of this the deemed sale and purchase of eligible application of the Delayed Bonus Summary of Comments and Explanation property as applicable solely for Approach with respect to all eligible of Revisions section, the Delayed Bonus purposes of sections 168 and 179 (and property that otherwise would be Approach does not include a 90-day not for all Federal income tax purposes) subject to the Delayed Bonus Approach. requirement because this approach could lead to complications and If a taxpayer makes this election for a would not raise the same issues as the inconsistencies. Under such an transaction, the taxpayer also is deemed Proposed Consolidated Acquisition approach, taxpayers would be required to have made such an election for all Rules. Furthermore, as noted in part to treat each piece of eligible property other transactions in the same series of I.B.4.b(1)(c) of this Summary of as two separate assets: (1) An asset that related transactions that otherwise Comments and Explanation of Revisions exists for purposes of sections 168 and would be subject to the Delayed Bonus section, the transferee member’s (or 179; and (2) an asset that exists for all Approach and that involve the same (or target’s) deemed sale and purchase of other Federal income tax purposes. a related) transferee member or target. assets the day after the Deconsolidation Therefore, this approach could present To provide clarity and uniformity with Date under the Delayed Bonus difficulties in determining, for instance, the other elections in § 1.168(k)–2, these Approach applies solely to eligible (1) how any depreciation claimed with final regulations provide that the property (rather than to all depreciable respect to the asset that exists for election may be revoked only by filing assets). purposes of sections 168 and 179 affects a request for a private letter ruling and Under the Delayed Bonus Approach the taxpayer’s adjusted basis in the asset obtaining the Commissioner of Internal in these final regulations, the transferee that exists for all other Federal income Revenue’s written consent to revoke the member (or target) is treated as selling tax purposes, and (2) how to calculate election. and then purchasing eligible property the gain or loss recognized on a future A commenter requested confirmation for cash. Accordingly, the deemed sale disposition of the eligible property. that the deemed sale and purchase of and purchase of eligible property cannot The Delayed Bonus Approach does eligible property under the Delayed be characterized as an exchange of not apply to property unless such Bonus Approach would not prevent the property that is eligible for property is eligible property as of the transferee member’s deconsolidation in nonrecognition treatment under section time of its acquisition by the transferee a stock distribution from qualifying 1031. Moreover, in the deemed sale and member, the Deconsolidation Date, and under section 355. In other words, if purchase of eligible property, the the day after the Deconsolidation Date. such eligible property comprises the transferee member (or target) is treated For this purpose, the status of acquired transferee member’s entire trade or as acquiring used property (deemed property as ‘‘eligible property’’ is business, the deemed sale and purchase replacement property). Accordingly, the generally determined without regard to might be viewed as precluding the original use of such property does not § 1.168(k)–2(b)(2)(ii)(C) (property distribution from satisfying the ‘‘active commence with the transferee member subject to an election not to claim the trade or business’’ requirement in (or target). As a result, the deemed sale additional first year depreciation section 355(b). See section 355(b)(2)(C) and purchase of eligible property does deduction for a class of property). As a (a corporation is treated as engaged in not allow the deemed replacement result, a series of related transactions the active conduct of a trade or business property to be eligible for federal may be subject to the Delayed Bonus only if, among other things, such trade income tax credits or deductions that Approach even if the common parent of or business was not acquired in a require new property. For example, the selling consolidated group makes an recognition transaction during the five- such property does not satisfy the election under section 168(k)(7) not to year period ending on the date of the original use requirement in section claim the additional first year distribution). The Treasury Department 48(a)(3)(B)(ii) for the energy credit. depreciation deduction for a class of and the IRS are considering this issue Because the cost of the deemed property placed in service by the and request comments for purposes of replacement property (and, transferee member for the short taxable potential future guidance. consequently, the adjusted basis in such year ending on the Deconsolidation property) is identical to the transferee Date. However, to avoid creating a trap (ii) Other Alternative Approaches member’s (or target’s) adjusted basis in for the unwary, the definition of The second alternative approach the eligible property, a question has ‘‘eligible property’’ takes into account recommended by commenters (Modified arisen as to whether section 179(d)(3) any such election made for the taxable Consolidated Acquisition Approach) and § 1.168(k)–2(b)(3)(iii)(A)(3) year that includes the day after the would be identical to the Proposed potentially could apply to prevent the Deconsolidation Date. Accordingly, one Consolidated Acquisition Rules, except

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that the asset acquisition would not be the Proposed Consolidated Acquisition and 3 in § 1.1502–68(d) of these final treated as occurring on the day after the Rules. Such issues include the proper regulations) accordingly. Deconsolidation Date for all Federal manner for reporting transactions that (3) Request for Additional Examples income tax purposes. Instead, the asset are part of a series of related acquisition would be treated as transactions spanning multiple taxable One commenter requested several occurring on the day after the years, and the appropriate way to additional examples to clarify the Deconsolidation Date solely for account for changes in the depreciable application of the aforementioned purposes of determining (1) whether the property during the interim period. special rules for consolidated groups. requirements of section 168(k) are Accordingly, if the Frozen Depreciation One such example would illustrate that satisfied and, if so, (2) the amount, Approach were to be adopted, the 90- the Group Prior Use Rule does not apply location, and timing of the transferee day requirement might be required to to situations in which an asset is member’s (or new target’s) additional limit the scope of such issues. Thus, acquired by a former group member first year depreciation deduction with these final regulations also do not adopt (other than the member that directly respect to the depreciable property. For this approach. held the asset) following the termination all other Federal income tax purposes, of the group. Another such example (2) Application of the Five-Year Safe the asset acquisition would be treated as Harbor would address the consequences of an occurring on the date such acquisition asset acquisition by one member of a actually occurred. As discussed in part I.B.1.a of this consolidated group if, in an unrelated The third alternative approach Summary of Comments and Explanation transaction, a corporation that recommended by commenters (Frozen of Revisions section, the Five-Year Safe previously had a depreciable interest in Depreciation Approach) is the same as Harbor in § 1.168(k)–2(b)(3)(iii)(B)(1) of the property becomes a member of the the Delayed Bonus Approach, except these final regulations provides that, in same consolidated group. that the transferee member would not be determining if the taxpayer or a The Treasury Department and the IRS permitted to claim depreciation predecessor previously had a agree that such examples would be deductions during the interim period for depreciable interest in property, ‘‘only helpful and have included them in these the acquired assets (and the transferor the five calendar years immediately final regulations. member would not be required to take prior to the current calendar year in into account gain or loss from the asset which the property is placed in service (4) Movement of Consolidated Rules to acquisition under § 1.1502–13(c)). by the taxpayer, and the portion of such Regulations Under Section 1502 The Treasury Department and the IRS current calendar year before the placed- The Treasury Department and the IRS have determined that, although the in-service date of the property without have determined that moving the Modified Consolidated Acquisition taking into account the applicable section 168(k) rules for consolidated Approach would address certain issues convention, are taken into account.’’ groups to the regulations under section and uncertainties created by the Commenters requested confirmation 1502 would facilitate the identification Proposed Consolidated Acquisition that the Five-Year Safe Harbor applies and application of these rules by Rules, this approach would create other for purposes of the Group Prior Use practitioners. Thus, these rules have issues and uncertainties by delaying the Rule and the Stock and Asset been moved from § 1.168(k)–2(b)(3)(v) of asset acquisition date for purposes of Acquisition Rule. the 2019 Proposed Regulations to new section 168(k) but not for other Federal The Treasury Department and the IRS § 1.1502–68. income tax purposes. For instance, if the did not intend to require a different (and Modified Consolidated Acquisition longer) ‘‘look back’’ period for C. Acquisition of Property Approach were applied to a deemed consolidated group members than for 1. Acquisition of a Trade or Business or other taxpayers. Accordingly, these final asset acquisition pursuant to a section an Entity 338(h)(10) election, the acquisition date regulations clarify the Group Prior Use would be delayed until one day after the Rule to provide that a member of a Section 1.168(k)–2(b)(5)(iii)(G) of the Deconsolidation Date for purposes of consolidated group is treated as having 2019 Proposed Regulations provides section 168(k), but old target would be a depreciable interest in property only that a contract to acquire all or deemed to sell its assets and liquidate if the group had a depreciable interest substantially all of the assets of a trade pursuant to § 1.338(h)(10)–1(d)(4)(i) on within the ‘‘lookback period.’’ This or business or to acquire an entity is the actual acquisition date for all other period, which is defined in these final binding if it is enforceable under State Federal income tax purposes. This regulations in accordance with the Five- law against the parties to the contract duality could complicate the calculation Year Safe Harbor, includes both the five and that certain conditions do not and allocation of the ADSP and AGUB calendar years immediately prior to the prevent the contract from being a among the target’s assets by creating two current calendar year in which the binding contract. This proposed rule separate acquisition dates, and thus two property is placed in service by the also provides that it applies to a contract different dates on which such member and the portion of such current for the sale of stock of a corporation that calculation and allocation must be calendar year before the placed-in- is treated as an asset sale as a result of determined. Therefore, these final service date of the property, without an election under section 338. regulations do not adopt the Modified taking into account the applicable The Treasury Department and the IRS Consolidated Acquisition Approach. convention. Similarly, these final are aware of potential questions Similarly, with respect to the Frozen regulations clarify that the Stock and regarding whether § 1.168(k)– Depreciation Approach, the Treasury Asset Acquisition Rule applies only if 2(b)(5)(iii)(G) of the 2019 Proposed Department and the IRS have the corporation that joins the Regulations also applies to a contract for determined that holding the transferee consolidated group had a depreciable the sale of stock of a corporation that is member’s depreciation deductions (and interest in the property within the treated as an asset sale as a result of an the transferor member’s gain or loss on lookback period. These final regulations election under section 336(e). The the asset acquisition) in abeyance could have modified Examples 26, 27, and 30 Federal income tax consequences of a create some of the same issues as those in § 1.168(k)–2(b)(3)(vii) of the 2019 section 336(e) election made with identified by commenters with regard to Proposed Regulations (Examples 1, 2, respect to a qualified stock disposition

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not described, in whole or in part, in Explanation of Revisions section) These final regulations provide that section 355(d)(2) or (e)(2) are similar to generally addresses this comment. eligible larger self-constructed property the Federal income tax consequences of Therefore, the Treasury Department and also includes property that is a section 338 election. See §§ 1.336– the IRS decline to provide a special rule manufactured, constructed, or produced 1(a)(1) and 1.336–2(b)(1). Accordingly, for this particular type of contract. for the taxpayer by another person these final regulations clarify that 3. Component Election under a written contract that does not § 1.168(k)–2(b)(5)(iii)(G) applies to a meet the definition of a binding contract contract for the sale of stock of a Section 1.168(k)–2(c) of the 2019 under § 1.168(k)–2(b)(5)(iii) of the 2019 corporation that is treated as an asset Proposed Regulations allows a taxpayer Final Regulations (written non-binding sale as a result of an election under to elect to treat one or more components contract) and that is entered into prior section 336(e) made for a disposition acquired or self-constructed after to the manufacture, construction, or described in § 1.336–2(b)(1). September 27, 2017, of certain larger production of the property for use by self-constructed property as being the taxpayer in its trade or business or 2. Property Not Acquired Pursuant to a eligible for the additional first year Written Binding Contract for its production of income. Further, depreciation deduction (Component these final regulations remove the Section 1.168(k)–2(b)(5)(v) of the 2019 Election). The larger self-constructed requirement that the larger self- Proposed Regulations provides that, in property must be qualified property constructed property be qualified general, the acquisition date of property under section 168(k)(2), as in effect property under section 168(k)(2), as in that the taxpayer acquires pursuant to a before the enactment of the TCJA, for effect on the day before the enactment contract that does not meet the which the manufacture, construction, or of the TCJA, and instead provide that definition of a written binding contract production began before September 28, the larger self-constructed property in § 1.168(k)–2(b)(5)(iii) of the 2019 2017. However, the election is not must be (i) MACRS property with a Final Regulations is the date on which available for components of larger self- recovery period of 20 years or less, the taxpayer paid or incurred more than constructed property when such computer software, water utility 10 percent of the total cost of the components are not otherwise eligible property, or qualified improvement property, excluding the cost of any land for the additional first year depreciation property under section 168(k)(3) as in and preliminary activities. A commenter deduction. effect on the day before the enactment on the 2019 Proposed Regulations a. Eligible Larger Self-Constructed date of the TCJA, and (ii) qualified requested the bifurcation of a particular Property property under § 1.168(k)–2(b) of the type of contract that the taxpayer has 2019 Final Regulations and these final determined does not meet the definition Pursuant to § 1.168(k)–2(c)(2)(ii) of regulations, determined without regard of a written binding contract in the 2019 Proposed Regulations, larger to the acquisition date requirement in § 1.168(k)–2(b)(5)(iii) of the 2019 Final self-constructed property that is placed § 1.168(k)–2(b)(5), for which the Regulations. The contract at issue is in service by the taxpayer after taxpayer begins the manufacture, cancelable at any time by the taxpayer/ December 31, 2019, or larger self- construction, or production before customer without penalty and requires constructed property described in September 28, 2017. As a result of this the taxpayer to reimburse the contractor section 168(k)(2)(B) or (C), as in effect change, the cut-off dates for when the only for the costs the contractor has on the day before enactment of the larger self-constructed property must be incurred, plus the contractor’s profit TCJA, that is placed in service after margin, prior to the date the contractor December 31, 2020, is not eligible larger placed in service by the taxpayer now receives a notice of cancellation by the self-constructed property. Accordingly, align with the placed-in-service dates taxpayer. For such a contract, the any components of such property that under section 168(k)(6) and § 1.168(k)– commenter requested that the final are acquired or self-constructed after 2(b)(4)(i). Because the Component regulations allow the contract to be September 27, 2017, do not qualify for Election is an exception to the bifurcated into a binding contract for the the Component Election. A commenter acquisition date requirements in period prior to the effective date of on the 2019 Proposed Regulations § 1.168(k)–2(b)(5)(iv) of the 2019 Final section 13201 of the TCJA and a requested that the final regulations Regulations and § 1.168(k)–2(b)(5)(v) of separate non-binding contract for the remove this cut-off date for when the these final regulations, and such rules period after the effective date of section larger self-constructed property must be do not apply to qualified film, 13201 of the TCJA. If the final placed in service because it does not television, and live theatrical regulations allow such a bifurcation, the reflect the intent of section 13201 of the productions, the Treasury Department commenter asserted that, if more than TCJA of promoting capital investment, and the IRS have determined to retain 10 percent of the costs of the project are modernization, and growth. If a the rule in § 1.168(k)–2(c) of the 2019 paid or incurred by the taxpayer before taxpayer constructs a building, the Proposed Regulations to exclude these the effective date of section 13201 of the Treasury Department and the IRS are productions from being eligible for the TCJA, none of such costs are eligible for aware that taxpayers have questioned Component Election. the 100-percent additional first year whether the larger self-constructed With regard to the taxpayers’ question depreciation deduction, but all costs property is the building or the tangible of whether the larger self-constructed paid or incurred by the taxpayer after personal property constructed as part of property is the building constructed by the effective date of section 13201 of the the building. the taxpayer or the tangible personal TCJA would meet the acquisition date After considering these comments and property constructed as part of the requirements for the 100-percent the comment for property not acquired building, all tangible personal property additional first year depreciation pursuant to a written binding contract constructed as part of that building deduction. (see part I.C.2 of this Summary of generally is MACRS property with a The Treasury Department and the IRS Comments and Explanation of Revisions recovery period of 20 years or less. As have determined that the change made section), the Treasury Department and a result, the Treasury Department and in these final regulations to the the IRS have determined to expand the the IRS have determined that such component election (see part I.C.3 of larger self-constructed property that is tangible personal property is the larger this Summary of Comments and eligible for the Component Election. self-constructed property for purposes

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of the Component Election if the January 1, 2027. These final regulations ‘‘made by the taxpayer.’’ In addition, construction of all tangible personal clarify that such rules apply regardless section 2307(a)(2) of the CARES Act property of the building began before of whether the manufacture, amended the table in section September 28, 2017, and any eligible construction, or production of such 168(g)(3)(B) to provide a recovery period component of such tangible personal property is pursuant to a written of 20 years for qualified improvement property is eligible for the Component binding contract or a written non- property for purposes of the alternative Election. Accordingly, these final binding contract. depreciation system under section regulations clarify that all property that 168(g). These amendments to section is constructed as part of residential II. Definitions 168(e) and (g) are effective as if included rental property, nonresidential real A. Depreciable Property in section 13204 of the TCJA and, property, or an improvement to such therefore, apply to property placed in Section 1.168(b)–1(a)(1) defines the property, and that is MACRS property service after December 31, 2017. term ‘‘depreciable property’’ for with a recovery period of 20 years or As a result of these changes by section purposes of section 168. See also less, computer software, water utility 2307 of the CARES Act, these final § 1.168(k)–2(b)(1). In connection with its property, or qualified improvement regulations amend § 1.168(b)– comments on the special rules for property under section 168(k)(3) as in 1(a)(5)(i)(A) to provide that the consolidated groups in § 1.168(k)– effect on the day before the enactment improvement must be made by the 2(b)(3)(v) of the 2019 Proposed date of the TCJA, is the larger self- taxpayer. The Treasury Department and Regulations, a commenter requested the constructed property for purposes of the the IRS are aware of questions regarding final regulations provide either an Component Election. the meaning of ‘‘made by the taxpayer’’ explicit definition of that term or an with respect to third-party construction b. Eligible Components alternate term that is expressly limited of the improvement and the acquisition To be eligible for the Component to property the nature of which is of a building in a transaction described Election, § 1.168(k)–2(c)(3) of the 2019 eligible for the additional first year in section 168(i)(7)(B) (pertaining to Proposed Regulations provides that a depreciation deduction. treatment of transferees in certain component of the larger self-constructed The definition of ‘‘depreciable nonrecognition transactions) that property must be qualified property property’’ in § 1.168(b)–1(a)(1) is the includes an improvement previously under § 1.168(k)–2(b) of the 2019 Final same definition of that term in made by, and placed in service by, the Regulations and these final regulations § 1.168(k)–1(a)(2)(i) for purposes of transferor or distributor of the building. that is acquired or self-constructed by section 168(k) as in effect before the In this regard, the Treasury Department the taxpayer after September 27, 2017. enactment of the TCJA. The Treasury and the IRS believe that an These final regulations retain this rule. Department and the IRS are not aware improvement is made by the taxpayer if In addition, these final regulations of problems with applying the the taxpayer makes, manufactures, clarify that the acquisition date of a definition under either § 1.168(b)– constructs, or produces the component acquired pursuant to a 1(a)(1) or § 1.168(k)–1(a)(2)(i). Moreover, improvement for itself or if the written binding contract is determined the Treasury Department and the IRS improvement is made, manufactured, under § 1.168(k)–2(b)(5)(ii)(B) of the have determined that such definition constructed, or produced for the 2019 Final Regulations. If a component clearly describes which property is taxpayer by another person under a is acquired or self-constructed pursuant depreciable property. Accordingly, the written contract. In contrast, if a to a written non-binding contract, these Treasury Department and the IRS taxpayer acquires nonresidential real final regulations provide that the rules decline to adopt this comment. property in a taxable transaction and under § 1.168(k)–2(b)(5)(v) of these final However, the rules in § 1.1502–68 for such nonresidential real property regulations determine the acquisition consolidated groups use the term includes an improvement previously date of such component or when ‘‘eligible property’’ to identify the types placed in service by the seller of such manufacture, construction, or of depreciable property eligible for the nonresidential real property, the production of such component begins. additional first year depreciation improvement is not made by the These final regulations also include a deduction. taxpayer. conforming change to § 1.168(k)– B. Qualified Improvement Property Consistent with section 168(i)(7) 2(b)(5)(v) clarifying that these rules (pertaining to treatment of transferees in apply to property that is self- Section 1.168(b)–1(a)(5) of the 2019 certain nonrecognition transactions), the constructed pursuant to a written non- Final Regulations defines the term Treasury Department and the IRS also binding contract, and amend § 1.168(k)– ‘‘qualified improvement property’’ for believe that if a transferee taxpayer 2(d)(3) to provide a rule similar to the purposes of section 168. Section acquires nonresidential real property in rule in § 1.168(k)–2(b)(5)(v) for property 168(e)(6), as amended by section 13204 a transaction described in section that is described in section 168(k)(2)(B) of the TCJA, and § 1.168(b)–1(a)(5)(i)(A) 168(i)(7)(B) (for example, section 351 or or (C) and is not acquired pursuant to and (a)(5)(ii) provide the definition of 721), any improvement that was a written binding contract. that term for improvements placed in previously made by, and placed in service after December 31, 2017. Section service by, the transferor or distributor D. Property Described in Section 2307 of the CARES Act amended section of such nonresidential real property and 168(k)(2)(B) 168(e)(3)(E), (e)(6), and (g)(3)(B). Section that is qualified improvement property Section 1.168(k)–2(e)(1)(iii) of the 2307(a)(1)(A) of the CARES Act added a in the hands of the transferor or 2019 Proposed Regulations provides new clause (vii) to the end of section distributor is treated as being made by that rules similar to the rules in section 168(e)(3)(E) to provide that qualified the transferee taxpayer, and thus is 4.02(1)(b) of Notice 2007–36 (2007–17 improvement property is classified as qualified improvement property in the I.R.B. 1000) apply for determining the 15-year property. Section 2307(a)(1)(B) hands of the transferee taxpayer, but amounts of unadjusted depreciable basis of the CARES Act amended the only for the portion of its basis in such attributable to the manufacture, definition of qualified improvement property that does not exceed the construction, or production of property property in section 168(e)(6) by transferor’s or distributor’s adjusted described in section 168(k)(2)(B) before providing that the improvement must be depreciable basis of this property.

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However, because the basis is Statement of Availability of IRS for the taxpayer’s subsequent taxable determined by reference to the Documents years. transferor’s or distributor’s adjusted The IRS Revenue Procedures and Alternatively, a taxpayer may rely on basis in the improvement, the transferee Revenue Rulings cited in this document the proposed regulations under section taxpayer’s acquisition does not satisfy are published in the Internal Revenue 168(k) in regulation project REG– section 179(d)(2)(C) and § 1.179– Bulletin (or Cumulative Bulletin) and 106808–19 (84 FR 50152; 2019–41 I.R.B. 4(c)(1)(iv) and thus, does not satisfy the are available from the Superintendent of 912), with respect to depreciable used property acquisition requirements Documents, U.S. Government property, including certain components, of § 1.168(k)–2(b)(3)(iii). Accordingly, Publishing Office, Washington, DC acquired and placed in service after the qualified improvement property is 20402, or by visiting the IRS website at September 27, 2017, or certain plants not eligible for the additional first year http://www.irs.gov. planted or grafted after September 27, 2017, as applicable, by the taxpayer depreciation deduction in the hands of Applicability Date during a taxable year ending on or after the transferee taxpayer, except as September 28, 2017, and before the provided in § 1.168(k)–2(g)(1)(iii). The definition of qualified improvement property in § 1.168(b)– taxpayer’s first taxable year that begins An example has been added to 1(a)(5)(i)(A) of these final regulations on or after January 1, 2021, if (1) the § 1.168(k)–2(b)(2)(iii) to illustrate the applies to depreciable property placed taxpayer follows the proposed eligibility of qualified improvement in service by the taxpayer after regulations in their entirety, except for property for the additional first year December 31, 2017. Sections 1.168(k)–2 the Partnership Lookthrough Rule in depreciation deduction. and 1.1502–68 of these final regulations proposed § 1.168(k)–2(b)(3)(iii)(B)(5), and in a consistent manner, and (2) all C. Predecessor and Class of Property apply to depreciable property, including certain components, acquired after members of a consolidated group Section 1.168(k)–2(a)(2)(iv)(B) of the September 27, 2017, and placed in consistently rely on the same set of 2019 Final Regulations defines a service, or certain plants planted or rules. Further, if such property is predecessor as including a transferor of grafted, as applicable, by the taxpayer acquired in a transaction described in proposed § 1.168(k)–2(b)(3)(v)(C) or (D), an asset to a transferee in a transaction during or after the taxpayer’s taxable the taxpayer may rely on the proposed in which the transferee’s basis in the year that begins on or after January 1, regulations under section 168(k) for asset is determined, in whole or in part, 2021. However, a taxpayer may choose to apply §§ 1.168(k)–2 and 1.1502–68 of such property only if the rules are by reference to the basis of the asset in followed, in their entirety and in a the hands of the transferor. A these final regulations to depreciable property, including certain components, consistent manner, by all parties to the commenter requested clarification of transaction, including the transferor whether this definition was intended to acquired and placed in service after September 27, 2017, or certain plants member, the transferee member, and the apply only with respect to the specific planted or grafted after September 27, target, as applicable, and the property transferred or more broadly. 2017, as applicable, by the taxpayer consolidated groups of which they are The Treasury Department and the IRS during a taxable year ending on or after members, for the taxable year(s) in intended the definition of a September 28, 2017, provided the which the transaction occurs and the ‘‘predecessor’’ in § 1.168(k)– taxpayer applies all rules in §§ 1.168(k)– taxable year(s) that includes the day 2(a)(2)(iv)(B) of the 2019 Final 2 and 1.1502–68 (to the extent relevant) after the Deconsolidation Date. For this Regulations to be property-specific. in their entirety and in a consistent purpose, the terms transferor member, Similarly, the Treasury Department and manner. See section 7805(b)(7). transferee member, and target have the the IRS intended the definition of a In the case of property described in meaning provided in proposed ‘‘class of property’’ in § 1.168(k)– § 1.1502–68(e)(2)(i) of these final § 1.168(k)–2(b)(3)(v)(C) and (D), and the 2(f)(1)(ii)(G) of the 2019 Final regulations that is acquired in a term Deconsolidation Date has the Regulations (regarding basis transaction that satisfies the meaning provided in proposed adjustments in partnership assets under requirements of § 1.1502–68(c)(1)(ii) or § 1.168(k)–2(b)(3)(v)(C)(1). section 743(b)) to be partner-specific. (c)(2)(ii) of these final regulations, the Special Analyses Accordingly, these final regulations taxpayer may apply §§ 1.168(k)–2 and I. Regulatory Planning and Review— amend § 1.168(k)–2(a)(2)(iv)(B) of the 1.1502–68 of these final regulations for Economic Analysis 2019 Final Regulations to substitute such property only if the rules are ‘‘the’’ for ‘‘an’’, and these final applied, in their entirety and in a Executive Orders 12866, 13563, and regulations amend § 1.168(k)– consistent manner, by all parties to the 13771 direct agencies to assess costs and 2(f)(1)(ii)(G) of the 2019 Final transaction, including the transferor benefits of available regulatory Regulations to substitute ‘‘Each’’ for member, the transferee member, and the alternatives and, if regulation is ‘‘A’’. target, as applicable, and the necessary, to select regulatory consolidated groups of which they are approaches that maximize net benefits Pursuant to § 1.168(k)–2(a)(2)(iv)(E) of members, for the taxable year(s) in (including (i) potential economic, the 2019 Final Regulations, a transferor which the transaction occurs and the environmental, and public health and of an asset to a trust is a predecessor taxable year(s) that includes the day safety effects, (ii) potential distributive with respect to the trust. The Treasury after the deconsolidation date, as impacts, and (iii) equity). Executive Department and the IRS intended that defined in § 1.1502–68(a)(2)(iii) of these Order 13563 emphasizes the importance this provision apply only to transfers final regulations. of quantifying both costs and benefits, involving carryover basis. Because Additionally, once a taxpayer applies reducing costs, harmonizing rules, and § 1.168(k)–2(a)(2)(iv)(B) of the 2019 §§ 1.168(k)–2 and 1.1502–68 of these promoting flexibility. Final Regulations applies to such final regulations, in their entirety, for a These final regulations have been transfers, these final regulations remove taxable year, the taxpayer must continue designated as subject to review under § 1.168(k)–2(a)(2)(iv)(E) of the 2019 to apply §§ 1.168(k)–2 and 1.1502–68 of Executive Order 12866 pursuant to the Final Regulations. these final regulations, in their entirety, Memorandum of Agreement (April 11,

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2018) (MOA) between the Treasury ineligible for bonus depreciation. slightly from the interpretation Congress Department and the Office of Second, these regulations create a de intended for deductions of these items. Management and Budget (OMB) minimis rule which provides that a For example, these regulations may regarding review of tax regulations. The taxpayer will be deemed not to have had specify a tax treatment that few or no Office of Information and Regulatory a prior depreciable interest in a taxpayers would adopt in the absence of Affairs has designated these regulations property—and thus that property will be specific guidance but that nonetheless as economically significant under eligible for bonus depreciation in that advances Congressional intent. In these section 1(c) of the MOA. Accordingly, taxpayer’s hands (assuming it otherwise cases, guidance provides value by the OMB has reviewed these qualifies)—if the taxpayer previously bringing economic decisions closer in regulations. disposed of that property within 90 days line with the intent and purpose of the of the date on which that property was statute. A. Background originally placed in service. Third, these While no guidance can curtail all i. Bonus Depreciation regulations provide for the treatment of differential or inaccurate interpretations In general, section 168(k) allows an asset acquisition as part of a sale of of the statute, these regulations taxpayers to immediately deduct some a member of a consolidated group from significantly mitigate the chance for portion of investment in certain types of one group to another. Fourth, these differential or inaccurate interpretations capital assets referred to as the ‘‘bonus regulations clarify the treatment of a and thereby increase economic percentage.’’ This provision is series of related transactions. Finally, efficiency. colloquially referred to as ‘‘bonus these regulations provide an election to Because these regulations clarify the depreciation.’’ Public Law 115–97, treat certain components of larger self- tax treatment of bonus depreciation for commonly referred to as the Tax Cuts constructed property as eligible for the certain taxpayers, there is the possibility and Jobs Act (TCJA), increased the increased bonus percentage even if the that business decisions may change as a bonus percentage from 50 percent to 100 construction of such larger self- result of these regulations relative to the percent for qualified property acquired constructed property began before no-action baseline. Averaged across after September 27, 2017, which September 28, 2017. taxpayers in the economy, these regulations will tend to expand the pool accelerates depreciation deductions B. Economic Analysis relative to previous law. The TCJA also of property that is eligible for bonus removed the ‘‘original use’’ requirement, 1. No-Action Baseline depreciation, thus reducing effective tax meaning that taxpayers could claim In this analysis, the Treasury rates for affected taxpayers, relative to bonus depreciation on certain ‘‘used’’ Department and the IRS assess the the no-action baseline. This reduction in property. The TCJA made several other benefits and costs of these regulations effective tax rates, viewed in isolation, modest changes to the operation of relative to a no-action baseline reflecting is generally projected to increase section 168(k). First, it excluded from anticipated Federal income tax-related economic activity by these taxpayers the definition of qualified property any behavior in the absence of these relative to the no-action baseline. property used by rate-regulated utilities regulations. 3. Economic Analysis of Specific and certain firms (primarily automobile 2. Summary of Economic Effects Provisions dealerships) with ‘‘floor plan financing i. Property Excluded From Bonus by indebtedness’’ as defined under section These regulations provide certainty Section 168(k)(9) 163(j). Furthermore, section and consistency in the application of 168(k)(2)(a)(ii)(IV) and (V) allowed section 168(k) by providing definitions Section 168(k)(9) provides that qualified film, television, and live and clarifications regarding the statute’s property used by certain businesses is theatrical productions (as defined under terms and rules. In the absence of the not eligible for bonus depreciation. Section 181) to qualify for bonus guidance provided in these regulations, These businesses include certain rate- depreciation. the chance that different taxpayers regulated utilities and certain firms The Treasury Department and the IRS might interpret the statute differently is (primarily motor vehicle dealerships) promulgated regulations under exacerbated. For example, two similarly with floor plan financing indebtedness § 1.168(k)–2 to generally provide situated taxpayers might interpret the and total interest expense that exceeds structure and clarity for the statutory provisions pertaining to the certain thresholds. implementation of section 168(k). Such definition of property eligible for bonus These regulations clarify that those regulations were proposed as REG– depreciation differently, with one taxpayers that lease property to such 104397–18 (2018 Proposed Regulations) taxpayer pursuing a project that another businesses described by section and finalized as TD 9874 (2019 Final comparable taxpayer might decline 168(k)(9) may claim bonus depreciation, Regulations). However, the Treasury because of a different interpretation of so long as other requirements of section Department and the IRS determined that whether property is eligible for bonus 168(k) are met. This approach broadly there remained several outstanding depreciation under 168(k). If this second follows existing normalization rules issues requiring clarification that should taxpayer’s activity is more profitable, an (which pre-date TCJA and which be subject to notice and comment. In economic loss arises. Similar situations provide generally for the reconciliation response, the Treasury Department and may arise under each of the provisions of tax income and book income for the IRS issued an additional notice of addressed by these regulations. regulatory purposes for utilities), which proposed rulemaking as REG 106808–19 Certainty and clarity over tax treatment provide that lessors to public utilities (2019 Proposed Regulations). These generally also reduce compliance costs are not bound by such rules so long as final regulations finalize the 2019 for taxpayers and increase overall they themselves are not a public utility. Proposed Regulations with only minor economic performance. The Treasury Department and the IRS changes. An economic loss might also arise if expect that this guidance will be easy These final regulations (these all taxpayers have similar for taxpayers to interpret and comply regulations) address ambiguities related interpretations under the baseline of the with. To the extent that lessors can to the operation of section 168(k)(9), tax treatment of particular deductible claim bonus depreciation, it is plausible which describes property that is items but those interpretations differ that the market-clearing lease price for

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such assets will fall, potentially tax year or any other later year. The initial date when the property was enabling some expansions of output and Treasury Department and the IRS placed in service (additional contributing to economic growth. considered two options to address the requirements apply to the extent the These regulations next clarify which length of time to which this designation original acquisition occurred prior to businesses fall under the umbrella of would apply: (i) In perpetuity, such that September 28, 2017). The Treasury section 168(k)(9)(A) (utilities) and such businesses would be forever Department and the IRS instituted this section 168(k)(9)(B) (firms with floor ineligible for bonus depreciation; or (ii) rule to address situations where plan financing indebtedness). In regards annually; that is, section 168(k)(9)(B) is temporary ownership of property is to section 168(k)(9)(A), which applies to determined on an annual basis. Under necessary to facilitate certain lease property that is ‘‘primarily used’’ in this option, the firm in Example A arrangements so that the property certain utilities businesses, these would not be eligible for bonus subsequently purchased off-lease is not regulations provide that the ‘‘primary depreciation in 2021, but so long as the ineligible for bonus depreciation and to use’’ of property is consistent with how other requirements were met, it would coordinate with the syndication primary use is determined in existing be eligible for bonus depreciation in transaction rules of section regulations under section 167. This 2022. 168(k)(2)(E)(iii). application should be familiar to These regulations adopt the second The Treasury Department and the IRS taxpayers, and thus relatively easy to option. This interpretation enables more do not anticipate substantial economic comply with. firms to be eligible for bonus effects of this provision. Nevertheless, it The statutory language of section depreciation in more years, relative to will generally have the effect of causing 168(k)(9)(B) is somewhat ambiguous, the alternative regulatory approach, and more property to be eligible for bonus requiring more substantive would thus potentially increase depreciation (increasing incentives to clarifications. First, section 168(k)(9)(B) investment by such firms. The Treasury invest) relative to the no-action baseline. provides that firms with floor plan Department and the IRS expect that a This provision is not expected to financing indebtedness are ineligible for substantial proportion of taxpayers meaningfully increase tax-driven or bonus depreciation ‘‘if the floor plan would have come to a different economically wasteful churning of financing interest [from such conclusion regarding the interpretation assets relative to the no-action baseline. indebtedness] was taken into account of this timing in the absence of these iii. Group Prior Use Rule under [section 163(j)(1)(C)].’’ These regulations. Therefore, this provision regulations clarify that such interest is could be expected to affect economic These regulations clarify several in fact ‘‘taken into account’’ only if the activity by these taxpayers relative to aspects of the ‘‘Group Prior Use Rule’’ firm in fact received a benefit from the no-action baseline. as introduced in the 2018 Proposed section 163(j)(1)(C)—i.e., if total The Treasury Department and the IRS Regulations. Under that rule, all business interest expense (including engaged in an analysis of these effects members of a consolidated group are floor plan financing interest) exceeds based on historical tax data, parameter treated as having had a depreciable business interest income plus 30 values from the economic literature for interest in a property if any member of percent (50 percent for taxable years the effect of bonus depreciation on the consolidated group had such a beginning during 2019 and 2020) of investment, and assumptions regarding depreciable interest. First, these final adjusted taxable income. This decision taxpayer interpretations in the absence regulations clarify that the rule ceases to allows more firms to claim bonus of these regulations. This analysis be in effect once the consolidated group depreciation than if the Treasury projects that this provision will cause terminates as a result of joining another Department and the IRS had made the investment to increase in this industry consolidated group. Second, these opposite interpretation (deeming all by no greater than $55 million in any regulations clarify that the Group Prior firms with floor plan financing interest year, and approximately $25 million per Use Rule does not apply to a to be ineligible for bonus depreciation, year on average over the period from corporation after it deconsolidates from regardless of whether the firm received 2019–2028, relative to the no-action the consolidated group, so long as that a benefit from section 163(j)(1)(C)). baseline. Additionally, this analysis corporation did not in fact previously However, the Treasury Department and projects that some share of this own that property. As is the case with the IRS expect that most taxpayers increased investment will reduce the prior use rules generally, the would have interpreted the phrase investment in other industries through Treasury Department and the IRS do not ‘‘taken into account’’ in the same crowd-out effects. anticipate large economic effects as a manner as these regulations in the result of this section of these regulations ii. Prior Depreciable Interest absence of these regulations, implying relative to the no-action baseline. that the economic effects of this In general, to be statutorily eligible for iv. Purchases of Assets as Part of provision are modest. bonus depreciation, a given property An additional ambiguity in section may not have been owned and Acquisition of Entire Business 168(k)(9)(B) pertains to the length of depreciated by the same firm in the These regulations clarify the time that the section applies to a given past. This requirement has the effect of procedure for certain purchases of assets firm. The section refers to a ‘‘trade or penalizing any tax-driven ‘‘churning’’ of by a given corporation from a related business that has had floor plan assets, whereby a firm could sell and party that are a part of an integrated financing indebtedness . . . if the floor soon thereafter repurchase the same plan involving the selling of that plan financing interest related to such asset in order to claim the 100 percent corporation from one group to another. indebtedness was taken into account deduction. The 2019 Final Regulations Specifically, these regulations provide under [section 163(j)(1)(C)]’’ (emphasis defined ‘‘ownership’’ for this purpose as that the deduction for bonus added). Consider a firm (Example A) having a prior depreciable interest. depreciation is allowed in such that received a benefit from section These regulations create an exception circumstances and should be claimed by 163(j)(C)(1) in the 2021 tax year that provides that a taxpayer does not the acquiring group. These regulations (meaning that its interest deduction have a prior depreciable interest in a provide for a similar treatment in the would have been smaller if not for given property if the taxpayer disposed case of deemed acquisitions in the case section 163(j)(C)(1)) but not in the 2022 of the property within 90 days of the of an election under section 338(h)(10)

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or section 336(e). These rules cause the had expressed confusion regarding regulations based on the taxpayer’s tax treatment to reflect the economic whether this rule applies to testing voluntarily reported NAICS code. Of reality, in which the acquiring group is whether parties are related under this 94,000, 14,000 are filers of Form bearing the economic outlay of the asset section 179(d)(2), or whether it applies 1120, 42,000 are filers of Form 1120S, purchase, and that acquiring group had more broadly (e.g., in determining 12,000 are filers of Form 1065, and no economic prior depreciable interest. whether the taxpayer had a prior 26,000 are filers of Form 1040. By aligning the tax consequences with depreciable interest). These regulations Additionally, other components of these the economic allocations, this treatment clarify that this Series of Related regulations may have a very slight effect minimizes potential distortions caused Transactions Rule is intended only to on all taxpayers that claim bonus by the anti-churning rules relative to the test the relatedness of the parties depreciation. Including such taxpayers, no-action baseline. involved in the series of related these regulations may affect transactions. approximately 2.85 million taxpayers, v. Component Rule Election These regulations further revise the including 160,000 filers of Form 1120, In 2010, Congress increased the bonus Series of Related Transactions Rule to 560,000 filers of Form 1120S, 400,000 percentage from 50 percent to 100 address its application in various filers of Form 1065, and 1.75 million percent for property placed in service situations. Under these regulations, filers of Form 1040. between September 9, 2010 and relatedness is tested after each step of December 31, 2011. In 2011, the IRS the series of related transactions and II. Paperwork Reduction Act issued Revenue Procedure 2011–26 to between the original transferor in the The collections of information in allow taxpayers to elect to have the 100 series and the direct transferor, with a these final regulations are in percent bonus rate apply to components substantial exception that any §§ 1.168(k)–2(c) and 1.1502–68(c)(4). of larger self-constructed property intermediary (i.e., a taxpayer other than The collection of information in whose construction began before the original transferor or ultimate § 1.168(k)–2(c) is an election that a September 9, 2010, so long as (1) the transferee) is disregarded so long as that taxpayer may make to treat one or more components were acquired (or self- intermediary (1) never places the components acquired or self- constructed) after that date and (2) the property in service or (2) disposes of the constructed after September 27, 2017, of larger self-constructed property itself property in the same taxable year in certain larger self-constructed property otherwise qualifies for bonus which it was placed in service. Testing as being eligible for the 100-percent depreciation generally. These relatedness after each step in the additional first year depreciation regulations provide an analogous rule, transaction allows certain deduction under section 168(k). The replacing September 9, 2010 with intermediaries in the series to claim larger self-constructed property must be September 28, 2017. This provision will bonus depreciation if they maintained MACRS property with a recovery period allow more property to qualify for 100 use of the property for a non-trivial of 20 years or less, computer software, percent bonus depreciation relative to length of time. The Treasury water utility property, or qualified the no-action baseline. Furthermore, Department and the IRS do not predict improvement property placed in service this provision provides neutrality substantial economic effects of this by the taxpayer after September 27, between taxpayers who acquire distinct, provision relative to the no-action 2017, and before January 1, 2018, that is smaller pieces of depreciable property baseline. qualified property under section and those taxpayers that invest a similar 168(k)(2) for which the manufacture, amount in fewer, larger pieces of vii. Miscellaneous construction, or production began depreciable property whose These regulations put forward rules to before September 28, 2017. The election construction takes place over a longer the extent existing regulations apply in is made by attaching a statement to a period of time. By treating similar slightly new contexts. In particular, Federal income tax return indicating taxpayers (and similar choices) these regulations clarify when a binding that the taxpayer is making the election similarly, this rule enhances economic contract is in force to acquire all or under § 1.168(k)–2(c) and whether the efficiency by minimizing tax-related substantially all the assets of a trade or taxpayer is making the election for all or distortions. However, the Treasury business. Additionally, consistent with some of the components described in Department and the IRS project these the rules of § 1.168(d)–1(b)(4), these § 1.168(k)–2(c). rules to have only a modest effect on regulations provide that, for the purpose The collection of information in future economic decisions relative to of determining whether the mid-quarter § 1.1502–68(c)(4) is an election that a the no-action baseline. These rules convention applies, depreciable basis is taxpayer may make to not claim the affect only taxpayers (1) that acquire (or not reduced by the amount of bonus additional first year depreciation self-construct) components after depreciation. deduction for qualified property, and September 27, 2017 and (2) that began The Treasury Department and the IRS which § 1.1502–68(c)(1) or (2) would construction of the larger self- do not anticipate large economic effects otherwise require the taxpayer to claim constructed property prior to September of these clarifications relative to the no- such deduction when a member of a 28, 2017 (approximately 32 months action baseline, though the additional consolidated group acquires from ago). The Treasury Department and the clarity provided by these regulations another member property eligible for the IRS expect relatively few taxpayers to be will likely reduce compliance burdens. additional first year depreciation affected by this provision going forward. deduction (or stock of a third member 4. Number of Affected Taxpayers holding such property), and the acquirer vi. Series of Related Transactions The most substantial components of member (and acquired member, if The 2018 Proposed Regulations these regulations affect the ability of applicable) then leaves the consolidated provided that, in a series of related dealers of motor vehicles to claim bonus group. To make the election, the transactions, the relationship between depreciation. Based on data from tax corporation must attach a statement to the transferor and transferee of an asset year 2017, the Treasury Department and its timely filed federal income tax return was determined only after the final the IRS estimate that there are (including extensions) for the taxable transaction in the series (Series of approximately 94,000 taxpayers in that year that begins after the date on which Related Transactions Rule). Commenters industry who may be affected by these it leaves the consolidated group. The

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statement must describe the to the collection of information number of impacted filers with respect transaction(s) to which § 1.1502–68(c)(1) described in this part is 0 to 41,775 to the collection of information or (2) would apply and state that the respondents. Partial data was available described in this part is 0 to 500 corporation elects not to claim the to directly estimate the upper bound for respondents. Partial data was available additional first year depreciation the number of impacted filers. The to estimate the upper bound for the deduction for any property transferred upper bound estimate is based on the number of impacted filers. The upper in such transaction(s). change in volume of federal income tax bound estimate is based on the observed For purposes of the Paperwork return filers that amended a 2017 or volume of federal income tax return Reduction Act of 1995 (44 U.S.C. 2018 filing a nonzero entry on Form filers that are a subsidiary corporation of 3507(d)) (PRA), the reporting burden 4562 Line 14 (additional first year a parent, have a history of reporting associated with § 1.168(k)–2(c) will be depreciation deduction). reflected in the PRA submission For purposes of the PRA, the depreciation on a Form 4562, and based associated with income tax returns in reporting burden associated with on the parent’s consolidated federal tax the Form 1120 series, Form 1040 series, § 1.1502–68(c)(4) will be reflected in the return filing in 2017 and 2018, the Form 1041 series, and Form 1065 series PRA submission associated with income subsidiary deconsolidated from the (for OMB control numbers, see chart at tax returns in the Form 1120 series (for consolidated group. the end of this part II of this Special OMB control number, see chart at the The IRS estimates the number of Analysis section). The estimate for the end of this part II of this Special affected filers to be the following: number of impacted filers with respect Analysis section). The estimate for the

TAX FORMS IMPACTED

Number of Collection of information respondents Forms to which the information may be attached (estimated)

Section 1.168(k)–2(c) Election for components of larger self-con- 0–41,775 Form 1120 series, Form 1040 series, Form 1041 se- structed property for which the manufacture, construction, or produc- ries, and Form 1065 series. tion begins before September 28, 2017. Section 1.1502–68(c)(4) Election to not claim the additional first year 0–500 Form 1120 series. depreciation deduction under § 1.1502–68(c)(1) or (2) for property owned by a subsidiary corporation of a consolidated group that is qualified property after the subsidiary corporation leaves the consoli- dated group. Source: IRS:RAAS:KDA (CDW 5–16–20 for § 1.168(k)–2(c) election and CDW 5–15–20 for § 1.1502–68(c)(4)(i) election).

The current status of the PRA expected that future estimates under including that of any new information submissions related to the tax forms that this OMB control number will include collections, related to the requirements will be revised as a result of the dollar estimates of annual burden costs under the regulations. For the OMB information collections in the section to taxpayers calculated using this control numbers discussed earlier, the 168(k) regulations and the section 1502 revised methodology. The overall Treasury Department and the IRS regulations is provided in the burden estimates provided for the OMB estimate PRA burdens on a taxpayer- accompanying table. As described control numbers below are aggregate type basis rather than a provision- earlier, the reporting burdens associated amounts that relate to the entire package specific basis. Those estimates would with the information collections in the of forms associated with the applicable capture changes made by the TCJA and regulations are included in the OMB control number and will in the those that arise out of discretionary aggregated burden estimates for OMB future include, but not isolate, the authority exercised in these final control numbers 1545–0123 (which estimated burden of the tax forms that regulations and other regulations that represents a total estimated burden time will be created or revised as a result of affect the compliance burden for those for all forms and schedules for the information collections in the forms. corporations of 3.344 billion hours and regulations. These numbers are total estimated monetized costs of therefore unrelated to the future The Treasury Department and the IRS $61.558 billion ($2019)), 1545–0074 calculations needed to assess the burden request comments on all aspects of (which represents a total estimated imposed by the regulations. These information collection burdens related burden time, including all other related burdens have been reported for other to these final regulations, including forms and schedules for individuals, of regulations that rely on the same OMB estimates for how much time it would 1.721 billion hours and total estimated control numbers to conduct information take to comply with the paperwork monetized costs of $33.267 billion collections under the PRA, and the burdens described earlier for each ($2019)), and 1545–0092 (which Treasury Department and the IRS urge relevant form and ways for the IRS to represents a total estimated burden readers to recognize that these numbers minimize the paperwork burden. In time, including all other related forms are duplicates and to guard against over addition, when available, drafts of IRS and schedules for trusts and estates, of counting the burden that the regulations forms are posted for comment at https:// 307,844,800 hours and total estimated that cite these OMB control numbers apps.irs.gov/app/picklist/list/ monetized costs of $9.950 billion imposed prior to the TCJA. No burden draftTaxForms.htm. IRS forms are ($2016)). The IRS is currently in the estimates specific to the forms affected available at https://www.irs.gov/forms- process of revising the methodology it by the regulations are currently instructions. Forms will not be finalized uses to estimate burden and costs for available. The Treasury Department and until after they have been approved by OMB control number 1545–0092. It is the IRS have not estimated the burden, OMB under the PRA.

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Form Type of filer OMB No(s). Status

Form 1040 ...... Individual (NEW Model) 1545–0074 Approved by OIRA through 1/31/2021.

Link: https://www.federalregister.gov/documents/2019/09/30/2019-21066/proposed-collection-comment-request-for- form-1040-form-1040nr-form-1040nr-ez-form-1040x-1040-sr-and

Form 1041 ...... Trusts and estates ...... 1545–0092 Approved by OIRA through 5/3/2022.

Link: https://www.federalregister.gov/documents/2018/04/04/2018-06892/proposed-collection-comment-request-for- form-1041

Forms 1065 and 1120 ... Business (NEW Model) 1545–0123 Approved by OIRA through 1/31/2021.

Link: https://www.federalregister.gov/documents/2019/09/30/2019-21068/proposed-collection-comment-request-for- forms-1065-1066-1120-1120-c-1120-f-1120-h-1120-nd-1120-s

III. Regulatory Flexibility Act return indicating that the taxpayer is extensions) for the taxable year that making the election under § 1.168(k)– begins after the date on which it leaves It is hereby certified that these final 2(c) and whether the taxpayer is making the consolidated group. The statement regulations will not have a significant this election for all or some of the must describe the transaction(s) to economic impact on a substantial components described in § 1.168(k)– which § 1.1502–68(c)(1) or (2) would number of small entities within the 2(c). apply and state that the corporation meaning of section 601(6) of the The reporting burden in § 1.1502– elects not to claim the additional first Regulatory Flexibility Act (5 U.S.C. 68(c)(4) generally affects taxpayers that chapter 6). year depreciation deduction for any elect to not claim the additional first property transferred in such Section 168(k) generally affects year depreciation deduction for transaction(s). taxpayers that own and use depreciable qualified property, and which § 1.1502– property in their trades or businesses or 68(c)(1) or (2) would otherwise require For purposes of the PRA, the Treasury for their production of income. The the taxpayer to claim such deduction Department and the IRS estimate that reporting burden in § 1.168(k)–2(c) when a member of a consolidated group there are 0 to 41,775 respondents of all generally affects taxpayers that elect to acquires from another member property sizes that are likely to be impacted by have the 100-percent additional first eligible for the additional first year the collection of information in year depreciation deduction apply to depreciation deduction (or stock of a § 1.168(k)–2(c). Most of these filers are components that are acquired or self- third member holding such property), likely to be small entities (business constructed after September 27, 2017, of and the acquirer member (and acquired entities with gross receipts of $25 depreciable property for which the member, if applicable) then leaves the million or less pursuant to section manufacture, construction, or consolidated group. To make the 448(c)(1)). The Treasury Department production began before September 28, election, the corporation must attach a and the IRS estimate the number of 2017. The election is made by attaching statement to its timely filed federal filers affected by § 1.168(k)–2(c) to be a statement to a Federal income tax income tax return (including the following:

Form Gross receipts of $25 million or less Gross receipts over $25 million

Form 1040 ...... 0–7,000 Respondents (estimated) ...... 0–25 Respondents (estimated). Form 1065 ...... 0–12,000 Respondents (estimated) ...... 0–500 Respondents (estimated). Form 1120 ...... 0–1,500 Respondents (estimated) ...... 0–750 Respondents (estimated). Form 1120S ...... 0–19,000 Respondents (estimated) ...... 0–1,000 Respondents (estimated).

Total ...... 0–39,500 Respondents (estimated) ...... 0–2,275 Respondents (estimated). Source: IRS:RAAS:KDA (CDW 5–6–20).

For purposes of the PRA, the Treasury § 1.1502–68(c)(4). Only a small number Department and the IRS estimate the Department and the IRS estimate that of these filers are likely to be small number of filers affected by § 1.1502– there are 0 to 500 respondents of all entities, business entities with gross 68(c)(4)(i) to be the following: sizes that are likely to be impacted by receipts of $25 million or less pursuant the collection of information in to section 448(c)(1). The Treasury

Form Gross receipts of $25 million or less Gross receipts over $25 million

Form 1120 ...... 0–67 Respondents (estimated) ...... 0–433 Respondents (estimated). Source: IRS:RAAS:KDA (CDW 5–15–2020).

Regardless of the number of small that §§ 1.168(k)–2(c) and 1.1502– all changes in these final regulations, entities potentially affected by these 68(c)(4) will not have a significant the Treasury Department and the IRS final regulations, the Treasury economic impact on a substantial estimate that individual taxpayers who Department and the IRS have concluded number of small entities. As a result of have gross receipts of $25 million or less

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and experience an increase in burden business, and no comments were List of Subjects in 26 CFR Part 1 will incur an average increase of 0 to 3 received from the Chief Counsel for the Income taxes, Reporting and hours, and business taxpayers that have Office of Advocacy of the Small recordkeeping requirements. gross receipts of $25 million or less and Business Administration. experience an increase in burden will Adoption of Amendments to the incur an average increase of 0 to 2 hours IV. Unfunded Mandates Reform Act Regulations (Source: IRS:RAAS (8–28–2019)). Section 202 of the Unfunded Accordingly, 26 CFR part 1 is Because the elections in §§ 1.168(k)–2(c) Mandates Reform Act of 1995 requires amended as follows: and 1.1502–68(c)(4) are one of several that agencies assess anticipated costs PART 1—INCOME TAXES changes in these final regulations, the and benefits and take certain other Treasury Department and the IRS expect actions before issuing a final rule that Paragraph 1. The authority citation the average increase in burden to be less includes any Federal mandate that may for part 1 is amended by adding an entry for the collections of information in result in expenditures in any one year for § 1.1502–68 in numerical order to §§ 1.168(k)–2(c) and 1.1502–68(c)(4) by a state, local, or tribal government, in read in part as follows: than the average increase in burden in the aggregate, or by the private sector, of Authority: 26 U.S.C. 7805 * * * the preceding sentence. The Treasury $100 million in 1995 dollars, updated Department and the IRS also note that * * * * * annually for inflation. In 2019, that many taxpayers with gross receipts of Section 1.1502–68 also issued under 26 threshold is approximately $154 $25 million or less may experience a U.S.C. 1502. million. These final regulations do not reduction in burden as a result of all * * * * * include any Federal mandate that may changes in these final regulations. ■ Par. 2. Section 1.168(b)–1 is amended Additionally: (1) Many small result in expenditures by state, local, or tribal governments, or by the private by: businesses are not required to capitalize ■ 1. Revising paragraph (a)(5)(i)(A); under section 263(a) the amount paid or sector in excess of that threshold. ■ 2. In paragraph (b)(2)(i), removing incurred for the acquisition of V. Executive Order 13132: Federalism ‘‘paragraphs (b)(2)(ii) and (iii)’’ and depreciable tangible property that costs adding ‘‘paragraphs (b)(2)(ii) through $5,000 or less if the business has an Executive Order 13132 (entitled (iv)’’ in its place; and applicable financial statement or costs ‘‘Federalism’’) prohibits an agency from ■ 3. Adding paragraph (b)(2)(iv). $500 or less if the business does not publishing any rule that has federalism The addition and revision read as have an applicable financial statement, implications if the rule either imposes follows: substantial, direct compliance costs on pursuant to § 1.263(a)–1(f)(1); (2) many § 1.168(b)–1 Definitions. small businesses are no longer required state and local governments, and is not to capitalize under section 263A the required by statute, or preempts state (a) * * * (5) * * * law, unless the agency meets the costs to construct, build, manufacture, (i) * * * install, improve, raise, or grow consultation and funding requirements (A) For purposes of section 168(e)(6), depreciable property if their average of section 6 of the Executive order. the improvement is made by the annual gross receipts are $26,000,000 or These final regulations do not have taxpayer and is placed in service by the less (2020 inflation adjusted amount); federalism implications and do not taxpayer after December 31, 2017; and (3) a small business that capitalizes impose substantial direct compliance costs of depreciable tangible property * * * * * costs on state and local governments or (b) * * * may deduct under section 179 up to preempt state law within the meaning of (2) * * * $1,040,000 (2020 inflation adjusted the Executive order. (iv) Addition of language in amount) of the cost of such property VI. Congressional Review Act paragraph (a)(5)(i)(A) of this section. placed in service during the taxable year The language ‘‘is made by the taxpayer if the total cost of depreciable tangible The Administrator of the Office of and’’ in paragraph (a)(5)(i)(A) of this property placed in service during the Information and Regulatory Affairs of section applies to property placed in taxable year does not exceed $2,590,000 the OMB has determined that this service by the taxpayer after December (2020 inflation adjusted amount). Treasury decision is a major rule for 31, 2017. Therefore, the Treasury Department and purposes of the Congressional Review ■ Par. 3. Section 1.168(k)–0 is amended the IRS have determined that a Act (5 U.S.C. 801 et seq.) (CRA). Under under § 1.168(k)–2 by: substantial number of small entities will section 801(3) of the CRA, a major rule ■ 1. Adding entries for (b)(3)(iii)(C), not be subject to these final regulations. takes effect 60 days after the rule is (b)(3)(v), (b)(5)(iii)(G), (b)(5)(v), (c), (c)(1) Further, §§ 1.168(k)–2(c) and 1.1502– published in the Federal Register. and (2), (c)(2)(i) through (iv), (c)(3), 68(c)(4) apply only if the taxpayer Accordingly, the Treasury Department (c)(3)(i) through (iii), (c)(4), (c)(4)(i) and chooses to make an election. Finally, no and IRS are adopting these final (ii), (c)(5), (c)(5)(i) and (ii), (c)(6), comments regarding the economic regulations with the delayed effective (c)(6)(i) and (ii), (c)(7), (c)(7)(i) and (ii), impact of these regulations on small date generally prescribed under the and (c)(8) and (c)(9); entities were received. Accordingly, the Congressional Review Act. ■ 2. Revising the entry for (d)(3)(iv); Secretary of the Treasury’s delegate ■ 3. Adding entries for (d)(4), (f)(7), and certifies that these final regulations will Drafting Information (g)(11); not have a significant economic impact ■ 4. Revising the entries for (h)(2) and on a substantial number of small The principal authors of these final (3); and entities. regulations are Kathleen Reed and ■ 5. Adding entries for (h)(3)(i) through Pursuant to section 7805(f) of the Elizabeth R. Binder of the Office of (iii). Code, the proposed rule preceding this Associate Chief Counsel (Income Tax The additions and revisions read as final rule was submitted to the Chief and Accounting). However, other follows: Counsel for the Office of Advocacy of personnel from the Treasury the Small Business Administration for Department and the IRS participated in § 1.168(k)–0 Table of contents. comment on its impact on small their development. * * * * *

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§ 1.168(k)–2 Additional first year (iii) Bound by early application. sentence and adding the word ‘‘Each’’ in depreciation deduction for property ■ Par. 4. Section 1.168(k)–2 is amended its place; acquired and placed in service after by: ■ 23. Adding paragraph (f)(7); September 27, 2017. ■ 1. At the end of paragraph (a)(1), ■ 24. In paragraph (g)(1)(i): * * * * * removing the period and adding ‘‘, ■ i. In the first sentence, after (b) * * * except as provided in paragraph (c) of ‘‘paragraphs (g)(1)(ii) and (iii) of this (3) * * * this section.’’ in its place; section’’ adding ‘‘and by the application (iii) * * * ■ 2. In paragraph (a)(2)(iv)(B), removing (C) Special rules for a series of related of paragraph (b)(3)(iii)(B)(4) of this transactions. ‘‘an asset’’ and adding ‘‘the asset’’ in its section’’; and place; ■ ii. In the last sentence, removing the * * * * * ■ 3. After the semicolon at the end of period at the end of the sentence and (v) Application to members of a paragraph (a)(2)(iv)(C), adding the word consolidated group. adding ‘‘, except as otherwise provided ‘‘or’’; by the application of paragraph * * * * * ■ 4. In paragraph (a)(2)(iv)(D), removing (5) * * * (b)(3)(iii)(B) of this section.’’ in its place; ‘‘; or’’ and adding a period in its place; ■ (iii) * * * 25. Adding paragraph (g)(11); and ■ 5. Removing paragraph (a)(2)(iv)(E); ■ 26. Revising paragraphs (h)(1), (2), (G) Acquisition of a trade or business or an ■ 6. Revising paragraphs (b)(2)(ii)(F) and entity. and (3). (G); The additions and revisions read as * * * * * ■ 7. Adding paragraphs (b)(2)(iii)(F) follows: (v) Determination of acquisition date for through (I); property not acquired pursuant to a written ■ 8. Revising the second and third § 1.168(k)–2 Additional first year binding contract. sentences in paragraph (b)(3)(iii)(B)(1); depreciation deduction for property * * * * * ■ 9. Adding paragraphs (b)(3)(iii)(B)(4), acquired and placed in service after (c) Election for components of larger self- (b)(3)(iii)(C), (b)(3)(v), and (b)(3)(vii)(Y) September 27, 2017. constructed property for which the through (OO); * * * * * manufacture, construction, or production ■ 10. Revising the last sentence in begins before September 28, 2017. (b) * * * (1) In general. paragraph (b)(5)(ii)(A); (2) * * * ■ (2) Eligible larger self-constructed property. 11. In the first sentence in paragraph (ii) * * * (i) In general. (b)(5)(iii)(A), removing the word ‘‘A’’ at (F) Primarily used in a trade or (ii) Residential rental property or the beginning of the sentence and business described in section nonresidential real property. adding ‘‘Except as provided in 163(j)(7)(A)(iv) and §§ 1.163(j)– (iii) Beginning of manufacture, paragraph (b)(5)(iii)(G) of this section, 1(b)(15)(i) and 1.163(j)– construction, or production. a’’ in its place; 10(c)(3)(iii)(C)(3), and placed in service (iv) Exception. ■ 12. In the first sentence in paragraph by the taxpayer in any taxable year (3) Eligible components. (b)(5)(iii)(B), removing the word ‘‘A’’ at beginning after December 31, 2017. For (i) In general. the beginning of the sentence and (ii) Acquired components. purposes of section 168(k)(9)(A) and (iii) Self-constructed components. adding ‘‘Except as provided in this paragraph (b)(2)(ii)(F), the term (4) Special rules. paragraph (b)(5)(iii)(G) of this section, primarily used has the same meaning as (i) Installation costs. a’’ in its place; that term is used in § 1.167(a)– (ii) Property described in section ■ 13. Adding paragraph (b)(5)(iii)(G); 11(b)(4)(iii)(b) and (e)(3)(iii) for ■ 168(k)(2)(B). 14. In the fourth sentence in classifying property. This paragraph (5) Computation of additional first year paragraph (b)(5)(iv)(C)(1), removing the (b)(2)(ii)(F) does not apply to property depreciation deduction. period at the end of the sentence and that is leased to a lessee’s trade or (i) Election is made. adding ‘‘, except as provided in business described in section (ii) Election is not made. paragraph (c) of this section.’’ in its (6) Time and manner for making election. 163(j)(7)(A)(iv) and §§ 1.163(j)– place; 1(b)(15)(i) and 1.163(j)– (i) Time for making election. ■ 15. In the fourth sentence in 10(c)(3)(iii)(C)(3), by a lessor’s trade or (ii) Manner of making election. paragraph (b)(5)(iv)(C)(2), removing the (7) Revocation of election. business that is not described in section period at the end of the sentence and (i) In general. 163(j)(7)(A)(iv) and §§ 1.163(j)– adding ‘‘, except as provided in (ii) Automatic 6-month extension. 1(b)(15)(i) and 1.163(j)–10(c)(3)(iii)(C)(3) paragraph (c) of this section.’’ in its (8) Additional procedural guidance. for the taxable year; or (9) Examples. place; (G) Used in a trade or business that (d) * * * ■ 16. Adding paragraph (b)(5)(v); (3) * * * ■ 17. Revising the second sentence in has had floor plan financing (iv) Determination of acquisition date for paragraph (b)(5)(viii) introductory text; indebtedness, as defined in section property not acquired pursuant to a written ■ 18. Adding paragraph (c); 163(j)(9)(B) and § 1.163(j)–1(b)(18), if the binding contract. ■ 19. Redesignating paragraph (d)(3)(iv) floor plan financing interest expense, as (4) Examples. as paragraph (d)(4) and adding new defined in section 163(j)(9)(A) and * * * * * paragraph (d)(3)(iv); § 1.163(j)–1(b)(19), related to such (f) * * * ■ 20. Adding three sentences at the end indebtedness is taken into account (7) Additional procedural guidance. of paragraph (e)(1)(iii); under section 163(j)(1)(C) for the taxable (g) * * * ■ 21. In paragraph (f)(1)(ii)(D), removing year. Such property also must be placed (11) Mid-quarter convention. ‘‘(a)(5)(ii),’’ and adding ‘‘(a)(5)(ii) in service by the taxpayer in any taxable (h) * * * (acquired by the taxpayer after year beginning after December 31, 2017. (2) Applicability of this section for prior Solely for purposes of section taxable years. September 27, 2017, and placed in (3) Early application of this section and service by the taxpayer after September 168(k)(9)(B) and this paragraph § 1.1502–68. 27, 2017, and before January 1, 2018),’’ (b)(2)(ii)(G), floor plan financing interest (i) In general. in its place; expense is taken into account for the (ii) Early application to certain ■ 22. In paragraph (f)(1)(ii)(G), removing taxable year by a trade or business that transactions. the word ‘‘A’’ at the beginning of the has had floor plan financing

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indebtedness only if the business price of $50,000 for the computers does (1) * * * To determine if the taxpayer interest expense, as defined in section not qualify for the additional first year or a predecessor had a depreciable 163(j)(5) and § 1.163(j)–1(b)(3), of the depreciation deduction under this interest in the property at any time prior trade or business for the taxable year section. to the acquisition, only the five calendar (which includes floor plan financing (H) Example 8. The facts are the same years immediately prior to the current interest expense) exceeds the sum of the as in Example 7 in paragraph calendar year in which the property is amounts calculated under section (b)(2)(iii)(G) of this section, except F placed in service by the taxpayer, and 163(j)(1)(A) and (B) for the trade or buys new computers for $30,000 for use the portion of such current calendar business for the taxable year. If the trade in its trade or business of selling year before the placed-in-service date of or business has taken floor plan automobiles and, for purposes of section the property without taking into account financing interest expense into account 163(j), F has $1,300 of adjusted taxable the applicable convention, are taken pursuant to this paragraph (b)(2)(ii)(G) income. The sum of the amounts into account (lookback period). If either for a taxable year, this paragraph calculated under section 163(j)(1)(A) the taxpayer or a predecessor, or both, (b)(2)(ii)(G) applies to any property and (B) for F for 2020 is $690 ($40 + have not been in existence for the entire placed in service by that trade or ($1,300 × 50 percent)). F’s business lookback period, only the portion of the business in that taxable year. This interest expense, which includes floor lookback period during which the paragraph (b)(2)(ii)(G) does not apply to plan financing interest expense, for taxpayer or a predecessor, or both, as property that is leased to a lessee’s trade 2020 is $400. As a result, F’s floor plan applicable, have been in existence is or business that has had floor plan financing interest expense is not taken taken into account to determine if the financing indebtedness, by a lessor’s into account by F for 2020 pursuant to taxpayer or a predecessor had a trade or business that has not had floor paragraph (b)(2)(ii)(G) of this section. depreciable interest in the property at plan financing indebtedness during the Assuming all other requirements are any time prior to the acquisition. * * * taxable year or that has had floor plan met, F’s purchase price of $30,000 for (4) De minimis use of property. If a financing indebtedness but did not take the computers qualifies for the taxpayer acquires and places in service into account floor plan financing additional first year depreciation property, the taxpayer or a predecessor interest expense for the taxable year deduction under this section. did not previously have a depreciable pursuant to this paragraph (b)(2)(ii)(G). (I) Example 9. (1) G, a calendar-year interest in the property, the taxpayer (iii) * * * taxpayer, owns an office building for disposes of the property to an unrelated (F) Example 6. In 2019, a financial use in its trade or business and G placed party within 90 calendar days after the institution buys new equipment for $1 in service such building in 2000. In date the property was originally placed million and then leases this equipment November 2018, G made and placed in in service by the taxpayer, without to a lessee that primarily uses the taking into account the applicable service an improvement to the inside of equipment in a trade or business convention, and the taxpayer reacquires such building at a cost of $100,000. In described in section 163(j)(7)(A)(iv) and and again places in service the property, January 2019, G entered into a written §§ 1.163(j)–1(b)(15)(i) and 1.163(j)– then the taxpayer’s depreciable interest contract with H for H to construct an 10(c)(3)(iii)(C)(3). The financial in the property during that 90-day improvement to the inside of the institution is not described in section period is not taken into account for building. In March 2019, H completed 163(j)(7)(A)(iv) and §§ 1.163(j)– determining whether the property was construction of the improvement at a 1(b)(15)(i) and § 1.163(j)– used by the taxpayer or a predecessor at cost of $750,000 and G placed in service 10(c)(3)(iii)(C)(3). As a result, paragraph any time prior to its reacquisition by the such improvement. Both improvements (b)(2)(ii)(F) of this section does not taxpayer under paragraphs apply to this new equipment. Assuming to the building are section 1250 (b)(3)(iii)(A)(1) and (b)(3)(iii)(B)(1) of all other requirements are met, the property and are not described in this section. If the taxpayer originally financial institution’s purchase price of § 1.168(b)–1(a)(5)(ii). acquired the property before September $1 million for the new equipment (2) Both the improvement to the office 28, 2017, as determined under qualifies for the additional first year building made by G in November 2018 § 1.168(k)–1(b)(4), and the taxpayer depreciation deduction under this and the improvement to the office reacquires and again places in service section. building that was constructed by H for the property during the same taxable (G) Example 7. During its taxable year G in 2019 are improvements made by G year the taxpayer disposed of the beginning in 2020, F, a corporation that under § 1.168(b)–1(a)(5)(i)(A). Further, property to the unrelated party, then is an automobile dealer, buys new each improvement is made to the inside this paragraph (b)(3)(iii)(B)(4) does not computers for $50,000 for use in its of the office building, is section 1250 apply. For purposes of this paragraph trade or business of selling automobiles. property, and is not described in (b)(3)(iii)(B)(4), an unrelated party is a For purposes of section 163(j), F has the § 1.168(b)–1(a)(5)(ii). As a result, each person not described in section following for 2020: $700 of adjusted improvement meets the definition of 179(d)(2)(A) or (B), and § 1.179– taxable income, $40 of business interest qualified improvement property in 4(c)(1)(ii) or (iii) or (c)(2). income, $400 of business interest section 168(e)(6) and § 1.168(b)– (C) Special rules for a series of related expense (which includes $100 of floor 1(a)(5)(i)(A) and (a)(5)(ii). Accordingly, transactions—(1) In general. Solely for plan financing interest expense). The each improvement is 15-year property purposes of paragraph (b)(3)(iii) of this sum of the amounts calculated under under section 168(e)(3) and is described section, each transferee in a series of section 163(j)(1)(A) and (B) for F for in § 1.168(k)–2(b)(2)(i)(A). Assuming all related transactions tests its relationship 2020 is $390 ($40 + ($700 × 50 percent)). other requirements of this section are under section 179(d)(2)(A) or (B) with F’s business interest expense, which met, each improvement made by G the transferor from which the transferee includes floor plan financing interest qualifies for the additional first year directly acquires the depreciable expense, for 2020 is $400. As a result, depreciation deduction for G under this property (immediate transferor) and F’s floor plan financing interest expense section. with the original transferor of the is taken into account by F for 2020 (3) * * * depreciable property in the series. The pursuant to paragraph (b)(2)(ii)(G) of (iii) * * * transferee is treated as related to the this section. Accordingly, F’s purchase (B) * * * immediate transferor or the original

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transferor if the relationship exists under paragraph (b)(3)(iii)(C)(1) of this in existence immediately prior to the either when the transferee acquires, or section if the step is a transaction first transfer of such property in such immediately before the first transfer of, described in paragraph (g)(1)(iii) of this series (new transferor), the transferee the depreciable property in the series. A section. In this case, the relationship is tests its relationship with the party from series of related transactions may not tested between the transferor and which the new transferor acquired such include, for example, a transfer of transferee of that transaction. Instead, property and with the original transferor partnership assets followed by a transfer the relationship is tested between the of the depreciable property in the series of an interest in the partnership that transferor in the disregarded step and for purposes of paragraph owned the assets; or a disposition of the party to which the transferee in the (b)(3)(iii)(C)(1) of this section. If the property and a disposition, directly or disregarded step disposed of the series has consecutive new transferors, indirectly, of the transferor or transferee depreciable property, the transferee in the party to which the last new of the property. For special rules that the disregarded step and the party to transferor disposed of the depreciable may apply when the transferor and which the transferee in the disregarded property tests its relationship with the transferee of the property are members step disposed of the depreciable party from which the first new of a consolidated group, as defined in property, and the original transferor of transferor acquired the depreciable § 1.1502–1(h), see § 1.1502–68. the depreciable property in the series property and with the original transferor (2) Special rules—(i) Property placed and the party to which the transferee in of the depreciable property in the series. in service and disposed of in same the disregarded step disposed of the The rules for testing the relationships in taxable year or property not placed in depreciable property. If the series has paragraph (b)(3)(iii)(C)(1) of this section service. Any party in a series of related consecutive disregarded steps, the continue to apply for the other transactions that is neither the original relationship is tested between the transactions in the series. transferor nor the ultimate transferee is transferor in the first disregarded step (viii) Application of paragraph (g)(1) disregarded (disregarded party) for and the party to which the transferee in of this section. Paragraph (g)(1) of this purposes of testing the relationships the last disregarded step disposed of the section applies to each step in a series under paragraph (b)(3)(iii)(C)(1) of this depreciable property, the transferee in of related transactions. section if the party places in service and the last disregarded step and the party disposes of the depreciable property to which the transferee in the last * * * * * subject to the series, other than in a disregarded step disposed of the (v) Application to members of a transaction described in paragraph depreciable property, and the original consolidated group. For rules applicable (g)(1)(iii) of this section, during the transferor of the depreciable property in to the acquisition of depreciable party’s same taxable year, or if the party the series and the party to which the property by a member of a consolidated does not place in service the depreciable transferee in the last disregarded step group, see § 1.1502–68. property subject to the series for use in disposed of the depreciable property. * * * * * the party’s trade or business or The rules for testing the relationships in (vii) * * * production of income. In either case, the paragraph (b)(3)(iii)(C)(1) of this section (Y) Example 25. (1) JL is a fiscal year party to which the disregarded party continue to apply for the other taxpayer with a taxable year ending June disposed of the depreciable property transactions in the series. 30. On April 22, 2020, JL acquires and tests its relationship with the party from (iv) Syndication transaction. This places in service a new machine for use which the disregarded party acquired paragraph (b)(3)(iii)(C) does not apply to in its trade or business. On May 1, 2022, the depreciable property and with the a syndication transaction described in JL sells this machine to JM, an unrelated original transferor of the depreciable paragraph (b)(3)(vi) of this section. party, for use in JM’s trade or business. (v) Certain relationships disregarded. property in the series. If the series has JM is a fiscal year taxpayer with a If a party acquires depreciable property consecutive disregarded parties, the taxable year ending March 31. On in a series of related transactions in party to which the last disregarded party February 1, 2023, JL buys the machine which the party acquires stock, meeting disposed of the depreciable property from JM and places the machine in tests its relationship with the party from the requirements of section 1504(a)(2), service. JL uses the machine in its trade which the first disregarded party of a corporation in a fully taxable or business for the remainder of its acquired the depreciable property and transaction followed by a liquidation of taxable year ending June 30, 2023. with the original transferor of the the acquired corporation under section depreciable property in the series. The 331, any relationship created as part of (2) JL’s acquisition of the machine on rules for testing the relationships in such series of related transactions is April 22, 2020, satisfies the original use paragraph (b)(3)(iii)(C)(1) of this section disregarded in determining whether any requirement in paragraph (b)(3)(ii) of continue to apply for the other party is related to such acquired this section. Assuming all other transactions in the series. corporation for purposes of testing the requirements are met, JL’s purchase (ii) All section 168(i)(7) transactions. relationships under paragraph price of the machine qualifies for the This paragraph (b)(3)(iii)(C) does not (b)(3)(iii)(C)(1) of this section. additional first year depreciation apply if all transactions in a series of (vi) Transferors that cease to exist for deduction for JL for the taxable year related transactions are described in Federal tax purposes. Any transferor in ending June 30, 2020, under this paragraph (g)(1)(iii) of this section a series of related transactions that section. (section 168(i)(7) transactions in which ceases to exist for Federal tax purposes (3) JM placed in service the machine property is transferred in the same during the series is deemed, for on May 1, 2022, and disposed of it on taxable year that the property is placed purposes of testing the relationships February 1, 2023. As a result, JM placed in service by the transferor). under paragraph (b)(3)(iii)(C)(1) of this in service and disposed of the machine (iii) One or more section 168(i)(7) section, to be in existence at the time of during the same taxable year (JM’s transactions. Any step in a series of any transfer in the series. taxable year beginning April 1, 2022, related transactions that is neither the (vii) Newly created party. If a and ending March 31, 2023). original step nor the ultimate step is transferee in a series of related Accordingly, JM’s acquisition of the disregarded (disregarded step) for transactions acquires depreciable machine on May 1, 2022, does not purposes of testing the relationships property from a transferor that was not qualify for the additional first year

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depreciation deduction pursuant to includes Property. On July 1, 2016, Corporation is formed on July 1, 2015. paragraph (g)(1)(i) of this section. Partnership T sells Property to EG. On January 1, 2016, Y Corporation (4) Pursuant to paragraph (2) Partnership T’s acquisition of merges into X Corporation in a (b)(3)(iii)(B)(1) of this section, the Property on January 1, 2016, does not transaction described in section lookback period is calendar years 2018 satisfy the original use requirement of 368(a)(1)(A). On April 1, 2018, X through 2022 and January 1, 2023, § 1.168(k)–1(b)(3) and is not eligible for Corporation buys Property from Q and through January 31, 2023, to determine the additional first year depreciation places it in service for use in its trade if JL had a depreciable interest in the deduction under section 168(k) as in or business. machine when JL reacquired it on effect prior to the enactment of the Act. (2) Pursuant to paragraph (a)(2)(iv)(A) February 1, 2023. As a result, JL’s (3) With respect to Partnership T’s of this section, Y Corporation is X depreciable interest in the machine acquisition of Property on April 1, 2018, Corporation’s predecessor. Pursuant to during the period April 22, 2020, to EF is Partnership T’s predecessor with paragraph (b)(3)(iii)(B)(1) of this section, April 30, 2022, is taken into account for respect to Property within the meaning the lookback period is 2013–2017, plus determining whether the machine was of paragraph (a)(2)(iv)(B) of this section. January through March 2018, to used by JL or a predecessor at any time Pursuant to paragraph (b)(3)(iii)(B)(1) of determine if X Corporation or Y prior to its reacquisition by JL on this section, the lookback period is Corporation had a depreciable interest February 1, 2023. Accordingly, the 2013–2017, plus January through March in Property that X Corporation acquired reacquisition of the machine by JL on 2018, to determine if EF or Partnership on April 1, 2018. Because Y Corporation February 1, 2023, does not qualify for T had a depreciable interest in Property had a depreciable interest in Property the additional first year depreciation that Partnership T acquired on April 1, from 2013 through 2014, X deduction. 2018. Because EF had a depreciable Corporation’s acquisition of Property on (Z) Example 26. (1) EF has owned and interest in Property from 2013 to 2015 April 1, 2018, does not satisfy the used and Partnership T had a depreciable had a depreciable interest in Property property acquisition requirement of interest in Property from January since 2012. On January 1, 2016, EF paragraph (b)(3)(iii)(B)(1) of this section through June 2016, Partnership T’s contributes assets (not including and is not eligible for the additional first acquisition of Property on April 1, 2018, Property) to existing Partnership T in a year depreciation deduction. does not satisfy the used property (DD) Example 30. (1) On September 5, transaction described in section 721, in acquisition requirement of paragraph 2017, Y, a calendar-year taxpayer, exchange for a partnership interest in (b)(3)(iii)(B)(1) of this section and is not acquires and places in service a new Partnership T, and Partnership T placed eligible for the additional first year machine (Machine #1), and begins using in service these assets for use in its trade depreciation deduction. Machine #1 in its manufacturing trade or business. On July 1, 2016, EF sells (BB) Example 28. (1) X Corporation or business. On November 1, 2017, Y Property to EG, a party unrelated to has owned and had a depreciable sells Machine #1 to Z, then Z leases either EF or Partnership T. On April 1, interest in Property since 2012. On Machine #1 back to Y for 4 years, and 2018, Partnership T buys Property from January 1, 2015, X Corporation sold Y continues to use Machine #1 in its EG and places it in service for use in its Property to Q, an unrelated party. Y manufacturing trade or business. The trade or business. Corporation is formed July 1, 2015. On lease agreement contains a purchase (2) EF is not Partnership T’s January 1, 2016, Y Corporation merges option provision allowing Y to buy predecessor with respect to Property into X Corporation in a transaction Machine #1 at the end of the lease term. within the meaning of paragraph described in section 368(a)(1)(A). On On November 1, 2021, Y exercises the (a)(2)(iv)(B) of this section. Pursuant to April 1, 2018, X Corporation buys purchase option in the lease agreement paragraph (b)(3)(iii)(B)(1) of this section, Property from Q and places it in service and buys Machine #1 from Z. The lease the lookback period is 2013–2017, plus for use in its trade or business. between Y and Z for Machine #1 is a January through March 2018, to (2) Pursuant to paragraph (a)(2)(iv)(A) true lease for Federal tax purposes. determine if Partnership T had a of this section, Y Corporation is X (2) Because Y, a calendar-year depreciable interest in Property that Corporation’s predecessor. Pursuant to taxpayer, placed in service and disposed Partnership T acquired on April 1, 2018. paragraph (b)(3)(iii)(B)(1) of this section, of Machine #1 during 2017, Machine #1 EF need not be examined in the the lookback period is 2013–2017, plus is not eligible for the additional first lookback period to see if EF had a January through March 2018, to year depreciation deduction for Y depreciable interest in Property, because determine if Y Corporation or X pursuant to § 1.168(k)–1(f)(1)(i). EF is not Partnership T’s predecessor. Corporation had a depreciable interest (3) The use of Machine #1 by Y Because Partnership T did not have a in Property that X Corporation acquired prevents Z from satisfying the original depreciable interest in Property in the on April 1, 2018. Y Corporation did not use requirement of paragraph (b)(3)(ii) lookback period prior to its acquisition have a depreciable interest in Property of this section. However, Z’s acquisition of Property on April 1, 2018, at any time during the lookback period. of Machine #1 satisfies the used Partnership T’s acquisition of Property Because X Corporation had a property acquisition requirements of on April 1, 2018, satisfies the used depreciable interest in Property from paragraph (b)(3)(iii) of this section. property acquisition requirement of 2013 through 2014, X Corporation’s Assuming all other requirements are paragraph (b)(3)(iii)(B)(1) of this section. acquisition of Property on April 1, 2018, met, Z’s purchase price of Machine #1 Assuming all other requirements of this does not satisfy the used property qualifies for the additional first year section are satisfied, Partnership T’s acquisition requirement of paragraph depreciation deduction for Z under this purchase price of Property qualifies for (b)(3)(iii)(B)(1) of this section and is not section. the additional first year depreciation eligible for the additional first year (4) During 2017, Y sold Machine #1 deduction under this section. depreciation deduction. within 90 calendar days of placing (AA) Example 27. (1) The facts are the (CC) Example 29. (1) Y Corporation Machine #1 in service originally on same as in Example 26 of paragraph has owned and had a depreciable September 5, 2017. Pursuant to (b)(3)(vii)(Z)(1) of this section, except interest in Property since 2012. On paragraph (b)(3)(iii)(B)(4) of this section, that on January 1, 2016, EF’s January 1, 2015, Y Corporation sells Y’s depreciable interest in Machine #1 contribution of assets to Partnership T Property to Q, an unrelated party. X during that 90-day period is not taken

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into account for determining whether additional first year depreciation and is not related to FD. On November Machine #1 was used by Y or a deduction pursuant to paragraph 7, 2020, FD buys the machine from FE predecessor at any time prior to its (g)(1)(i) of this section. and places in service the machine. FD reacquisition by Y on November 1, (3) During 2020, FB sold the machine uses the machine in its trade or business 2021. Accordingly, assuming all other to FA within 90 calendar days of placing for the remainder of 2020. requirements are met, Y’s purchase the machine in service originally on (2) Because FD incurred more than 10 price of Machine #1 on November 1, January 10, 2020. After FB reacquired percent of the cost of the machine before 2021, qualifies for the additional first the machine on November 1, 2020, FB September 28, 2017, and FD uses the year depreciation deduction for Y under did not dispose of the property during safe harbor test in § 1.168(k)– this section. the remainder of 2020. Pursuant to 1(b)(4)(iii)(B)(2) to determine when the (EE) Example 31. (1) On October 15, paragraph (b)(3)(iii)(B)(4) of this section, manufacturing of the machine began, FD 2019, FA, a calendar-year taxpayer, buys FB’s depreciable interest in the machine acquired the machine before September and places in service a new machine for during that 90-day period is not taken 28, 2017. If FD had not disposed of the use in its trade or business. On January into account for determining whether machine on March 26, 2020, the cost of 10, 2020, FA sells this machine to FB for the machine was used by FB or a the machine would have qualified for use in FB’s trade or business. FB is a predecessor at any time prior to its the 30-percent additional first year calendar-year taxpayer and is not reacquisition by FB on November 1, depreciation deduction pursuant to related to FA. On March 30, 2020, FA 2020. Accordingly, assuming all other section 168(k)(8), assuming all buys the machine from FB and places requirements are met, FB’s purchase requirements are met under section the machine in service. FA uses the price of the machine on November 1, 168(k)(2) as in effect on the day before machine in its trade or business for the 2020, qualifies for the additional first the date of the enactment of the Act. remainder of 2020. year depreciation deduction for FB However, because FD placed in service (2) FA’s acquisition of the machine on under this section. the machine on February 8, 2020, and October 15, 2019, satisfies the original (GG) Example 33. (1) The facts are the disposed of it on March 26, 2020, FD’s use requirement in paragraph (b)(3)(ii) same as in Example 32 of paragraph acquisition of the machine on February of this section. Assuming all other (b)(3)(vii)(FF)(1) of this section, except 8, 2020, does not qualify for the requirements are met, FA’s purchase FB sells the machine to FC, an unrelated additional first year depreciation price of the machine qualifies for the party, on December 31, 2020. deduction pursuant to § 1.168(k)– additional first year depreciation (2) Because FB placed in service the 1(f)(1)(i). deduction for FA for the 2019 taxable machine on November 1, 2020, and (3) Because FE placed in service the year under this section. disposed of it on December 31, 2020, machine on March 26, 2020, and (3) Because FB placed in service the FB’s reacquisition of the machine on disposed of it on November 7, 2020, machine on January 10, 2020, and November 1, 2020, does not qualify for FE’s acquisition of the machine on disposed of it on March 30, 2020, FB’s the additional first year depreciation March 26, 2020, does not qualify for the acquisition of the machine on January deduction pursuant to paragraph additional first year depreciation 10, 2020, does not qualify for the (g)(1)(i) of this section. deduction pursuant to paragraph additional first year depreciation (3) FC’s acquisition of the machine on (g)(1)(i) of this section. deduction pursuant to § 1.168(k)– December 31, 2020, satisfies the used (4) During 2020, FD sold the machine 2(g)(1)(i). property acquisition requirement of to FE within 90 calendar days of placing (4) FA sold the machine to FB in 2020 paragraph (b)(3)(iii)(A)(2) of this section. the machine in service originally on and within 90 calendar days of placing Accordingly, assuming all other February 8, 2020. After FD reacquired the machine in service originally on requirements of this section are the machine on November 7, 2020, FD October 15, 2019. Pursuant to paragraph satisfied, FC’s purchase price of the did not dispose of the machine during (b)(3)(iii)(B)(4) of this section, FA’s machine qualifies for the additional first the remainder of 2020. FD originally depreciable interest in the machine year depreciation deduction under this acquired this machine before September during that 90-day period is not taken section. 28, 2017. As a result, paragraph into account for determining whether (HH) Example 34. (1) In August 2017, (b)(3)(iii)(B)(4) of this section does not the machine was used by FA or a FD, a calendar-year taxpayer, entered apply. Pursuant to paragraph predecessor at any time prior to its into a written binding contract with X (b)(3)(iii)(B)(1) of this section, the reacquisition by FA on March 30, 2020. for X to manufacture a machine for FD lookback period is 2015 through 2019 Accordingly, assuming all other for use in its trade or business. Before and January 1, 2020, through November requirements are met, FA’s purchase September 28, 2017, FD incurred more 6, 2020, to determine if FD had a price of the machine on March 30, 2020, than 10 percent of the total cost of the depreciable interest in the machine qualifies for the additional first year machine. On February 8, 2020, X when FD reacquired it on November 7, depreciation deduction for FA for the delivered the machine to FD and FD 2020. As a result, FD’s depreciable 2020 taxable year under this section. placed in service the machine. The interest in the machine during the (FF) Example 32. (1) The facts are the machine is property described in period February 8, 2020, to March 26, same as in Example 31 of paragraph section 168(k)(2)(B) as in effect on the 2020, is taken into account for (b)(3)(vii)(EE)(1) of this section, except day before the date of the enactment of determining whether the machine was that on November 1, 2020, FB buys the the Act. FD’s entire unadjusted used by FD or a predecessor at any time machine from FA and places the depreciable basis of the machine is prior to its reacquisition by FD on machine in service. FB uses the machine attributable to the machine’s November 7, 2020. Accordingly, the in its trade or business for the remainder manufacture before January 1, 2020. FD reacquisition of the machine by FD on of 2020. uses the safe harbor test in § 1.168(k)– November 7, 2020, does not qualify for (2) Because FA placed in service the 1(b)(4)(iii)(B)(2) to determine when the additional first year depreciation machine on March 30, 2020, and manufacturing of the machine began. deduction. disposed of it on November 1, 2020, On March 26, 2020, FD sells the (II) Example 35. (1) In a series of FA’s reacquisition of the machine on machine to FE for use in FE’s trade or related transactions, a father sells a March 30, 2020, does not qualify for the business. FE is a calendar-year taxpayer machine to an unrelated individual on

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December 15, 2019, who sells the property in the series. The relationship BA’s purchase price of the machine machine to the father’s daughter on is tested when the transferee acquires, qualifies for the additional first year January 2, 2020, for use in the and immediately before the first transfer depreciation deduction under this daughter’s trade or business. Pursuant to of, the depreciable property in the section. paragraph (b)(3)(iii)(C)(1) of this section, series. As a result, the following (3) Pursuant to paragraph a transferee tests its relationship with relationships are tested under section (b)(3)(iii)(C)(1) of this section, a the transferor from which the transferee 179(d)(2)(A): The son tests his transferee tests its relationship with the directly acquires the depreciable relationship to the father as of December transferor from which the transferee property, and with the original 15, 2019; and the daughter tests her directly acquires the depreciable transferor of the depreciable property in relationship to her brother as of January property, and with the original the series. The relationship is tested 2, 2020, and December 15, 2019, and to transferor of the depreciable property in when the transferee acquires, and the father as of January 2, 2020, and the series. The relationship is tested immediately before the first transfer of, December 15, 2019. when the transferee acquires, and the depreciable property in the series. (2) Because the father and his son are immediately before the first transfer of, As a result, the following relationships related parties within the meaning of the depreciable property in the series. are tested under section 179(d)(2)(A): section 179(d)(2)(A) and § 1.179– However, because BB placed in service The unrelated individual tests its 4(c)(1)(ii) as of December 15, 2019, the and disposed of the machine in the relationship to the father as of December son’s acquisition of the machine does same taxable year, BB is disregarded 15, 2019; and the daughter tests her not satisfy the used property acquisition pursuant to paragraph (b)(3)(iii)(C)(2)(i) relationship to the unrelated individual requirements of paragraph (b)(3)(iii) of of this section. As a result, the following as of January 2, 2020, and December 15, this section. Accordingly, the son’s relationships are tested under section 2019, and to the father as of January 2, acquisition of the machine is not 179(d)(2)(A) and (B): BC tests its 2020, and December 15, 2019. eligible for the additional first year relationship to BA as of December 1, (2) Because the individual is not depreciation deduction. 2019, and October 1, 2019; and BD tests related to the father within the meaning (3) The son and his sister are not its relationship to BC as of January 2, of section 179(d)(2)(A) and § 1.179– related parties within the meaning of 2020, and October 1, 2019, and to BA as 4(c)(1)(ii) as of December 15, 2019, the section 179(d)(2)(A) and § 1.179– of January 2, 2020, and October 1, 2020. individual’s acquisition of the machine 4(c)(1)(ii) as of January 2, 2020, or (4) Because BA is not related to BC satisfies the used property acquisition December 15, 2019. However, the father within the meaning of section requirement of paragraph and his daughter are related parties 179(d)(2)(A) and § 1.179–4(c)(1)(ii) as of (b)(3)(iii)(A)(2) of this section. within the meaning of section December 1, 2019, or October 1, 2019, Accordingly, assuming the unrelated 179(d)(2)(A) and § 1.179–4(c)(1)(ii) as of BC’s acquisition of the machine satisfies individual placed the machine in January 2, 2020, or December 15, 2019. the used property acquisition service for use in its trade or business Accordingly, the daughter’s acquisition requirement of paragraph in 2019 and all other requirements of of the machine does not satisfy the used (b)(3)(iii)(A)(2) of this section. this section are satisfied, the unrelated property acquisition requirements of Accordingly, assuming all other individual’s purchase price of the paragraph (b)(3)(iii) of this section and requirements of this section are machine qualifies for the additional first is not eligible for the additional first satisfied, BC’s purchase price of the year depreciation deduction under this year depreciation deduction. machine qualifies for the additional first section. (KK) Example 37. (1) In June 2018, year depreciation deduction under this (3) The individual and the daughter BA, an individual, bought and placed in section. are not related parties within the service a new machine from an (5) Because BC is not related to BD meaning of section 179(d)(2)(A) and unrelated party for use in its trade or and BA is not related to BD within the § 1.179–4(c)(1)(ii) as of January 2, 2020, business. In a series of related meaning of section 179(d)(2)(A) and or December 15, 2019. However, the transactions, BA sells the machine to BB § 1.179–4(c)(1)(ii), or section father and his daughter are related and BB places it in service on October 179(d)(2)(B) and § 1.179–4(c)(1)(iii) as of parties within the meaning of section 1, 2019, BB sells the machine to BC and January 2, 2020, or October 1, 2019, 179(d)(2)(A) and § 1.179–4(c)(1)(ii) as of BC places it in service on December 1, BD’s acquisition of the machine satisfies January 2, 2020, or December 15, 2019. 2019, and BC sells the machine to BD the used property acquisition Accordingly, the daughter’s acquisition and BD places it in service on January requirement of paragraph of the machine does not satisfy the used 2, 2020. BA and BB are related parties (b)(3)(iii)(A)(2) of this section. property acquisition requirements of within the meaning of section Accordingly, assuming all other paragraph (b)(3)(iii) of this section and 179(d)(2)(A) and § 1.179–4(c)(1)(ii). BB requirements of this section are is not eligible for the additional first and BC are related parties within the satisfied, BD’s purchase price of the year depreciation deduction. meaning of section 179(d)(2)(B) and machine qualifies for the additional first (JJ) Example 36. (1) The facts are the § 1.179–4(c)(1)(iii). BC and BD are not year depreciation deduction under this same as in Example 35 of paragraph related parties within the meaning of section. (b)(3)(vii)(II)(1) of this section, except section 179(d)(2)(A) and § 1.179– (LL) Example 38. (1) In June 2018, CA, that instead of selling to an unrelated 4(c)(1)(ii), or section 179(d)(2)(B) and an individual, bought and placed in individual, the father sells the machine § 1.179–4(c)(1)(iii). BA is not related to service a new machine from an to his son on December 15, 2019, who BC or to BD within the meaning of unrelated party for use in his trade or sells the machine to his sister (the section 179(d)(2)(A) and § 1.179– business. In a series of related father’s daughter) on January 2, 2020. 4(c)(1)(ii). All parties are calendar-year transactions, CA sells the machine to CB Pursuant to paragraph (b)(3)(iii)(C)(1) of taxpayers. and CB places it in service on this section, a transferee tests its (2) BA’s purchase of the machine in September 1, 2019, CB transfers the relationship with the transferor from June 2018 satisfies the original use machine to CC in a transaction which the transferee directly acquires requirement of paragraph (b)(3)(ii) of described in paragraph (g)(1)(iii) of this the depreciable property, and with the this section and, assuming all other section and CC places it in service on original transferor of the depreciable requirements of this section are met, November 1, 2019, and CC sells the

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machine to CD and CD places it in and CC is allocated the remaining pursuant to paragraph (b)(3)(iii)(C)(2)(vi) service on January 2, 2020. CA and CB portion of CB’s 100-percent additional of this section, DA is deemed to be in are not related parties within the first year depreciation deduction for the existence at the time of each transfer for meaning of section 179(d)(2)(A) and machine. purposes of testing relationships under § 1.179–4(c)(1)(ii). CB and CC are related (5) CC is not related to CD and CA is paragraph (b)(3)(iii)(C)(1). As a result, parties within the meaning of section not related to CD within the meaning of the following relationships are tested 179(d)(2)(B) and § 1.179–4(c)(1)(iii). CB section 179(d)(2)(A) and § 1.179– under section 179(d)(2)(A) and (B): DB and CD are related parties within the 4(c)(1)(ii), or section 179(d)(2)(B) and tests its relationship to DA as of January meaning of section 179(d)(2)(A) and § 1.179–4(c)(1)(iii) as of January 2, 2020, 2, 2019, and January 2, 2018; and DC § 1.179–4(c)(1)(ii), or section or September 1, 2019. However, CB and tests its relationship to DB and DA as of 179(d)(2)(B) and § 1.179–4(c)(1)(iii). CC CD are related parties within the March 1, 2020, and January 2, 2018. and CD are not related parties within meaning of section 179(d)(2)(A) and (4) Because DB acquired the machine the meaning of section 179(d)(2)(A) and § 1.179–4(c)(1)(ii), or section in a series of related transactions in § 1.179–4(c)(1)(ii), or section 179(d)(2)(B) and § 1.179–4(c)(1)(iii) as of which DB acquired stock, meeting the 179(d)(2)(B) and § 1.179–4(c)(1)(iii). CA January 2, 2020, or September 1, 2019. requirements of section 1504(a)(2), of is not related to CC or to CD within the Accordingly, CD’s acquisition of the DA followed by a liquidation of DA meaning of section 179(d)(2)(A) and machine does not satisfy the used under section 331, the relationship of § 1.179–4(c)(1)(ii). All parties are property acquisition requirements of DB and DA created thereof is calendar-year taxpayers. paragraph (b)(3)(iii) of this section and disregarded for purposes of testing the (2) CA’s purchase of the machine in is not eligible for the additional first relationship pursuant to paragraph June 2018 satisfies the original use year depreciation deduction. (b)(3)(iii)(C)(2)(v) of this section. requirement of paragraph (b)(3)(ii) of (MM) Example 39. (1) In a series of Therefore, DA is not related to DB this section and, assuming all other related transactions, on January 2, 2018, within the meaning of section requirements of this section are met, DA, a corporation, bought and placed in 179(d)(2)(A) and § 1.179–4(c)(1)(ii) or CA’s purchase price of the machine service a new machine from an section 179(d)(2)(B) and § 1.179– qualifies for the additional first year unrelated party for use in its trade or 4(c)(1)(iii) as of January 2, 2019, or depreciation deduction under this business. As part of the same series, DB January 2, 2018, and DB’s acquisition of section. purchases 100 percent of the stock of the machine satisfies the used property (3) Pursuant to paragraph DA on January 2, 2019, and such stock acquisition requirement of paragraph (b)(3)(iii)(C)(1) of this section, a acquisition meets the requirements of (b)(3)(iii)(A)(2) of this section. transferee tests its relationship with the section 1504(a)(2). DB and DA were not Accordingly, assuming all other transferor from which the transferee related prior to the acquisition within requirements of this section are directly acquires the depreciable the meaning of section 179(d)(2)(A) and satisfied, DB’s depreciable basis of the property, and with the original § 1.179–4(c)(1)(ii) or section 179(d)(2)(B) machine as a result of the liquidation of transferor of the depreciable property in and § 1.179–4(c)(1)(iii). Immediately DA qualifies for the additional first year the series. The relationship is tested after acquiring the DA stock, and DB depreciation deduction under this when the transferee acquires, and liquidates DA under section 331. In the section. immediately before the first transfer of, liquidating distribution, DB receives the (5) Because DC is not related to DB or the depreciable property in the series. machine that was acquired by DA on DA within the meaning of section However, because CB placed in service January 2, 2018. As part of the same 179(d)(2)(A) and § 1.179–4(c)(1)(ii) or and transferred the machine in the same series, on March 1, 2020, DB sells the section 179(d)(2)(B) and § 1.179– taxable year in a transaction described machine to DC and DC places it in 4(c)(1)(iii) as of March 1, 2020, or in paragraph (g)(1)(iii) of this section, service. Throughout the series, DC is not January 2, 2018, DC ’s acquisition of the the section 168(i)(7) transaction between related to DB or DA within the meaning machine satisfies the used property CB and CC is disregarded pursuant to of section 179(d)(2)(A) and § 1.179– acquisition requirements of paragraph paragraph (b)(3)(iii)(C)(2)(iii) of this 4(c)(1)(ii) or section 179(d)(2)(B) and (b)(3)(iii)(A)(2) of this section. section. As a result, the following § 1.179–4(c)(1)(iii). Accordingly, assuming all other relationships are tested under section (2) DA’s purchase of the machine on requirements of this section are 179(d)(2)(A) and (B): CB tests its January 2, 2018, satisfies the original satisfied, DC ’s purchase price of the relationship to CA as of September 1, use requirement of paragraph (b)(3)(ii) machine qualifies for the additional first 2019; and CD tests its relationship to of this section and, assuming all other year depreciation deduction. CB, CC, and CA as of January 2, 2020, requirements of this section are met, (NN) Example 40. (1) Pursuant to a and September 1, 2019. DA’s purchase price of the machine series of related transactions, on January (4) Because CA is not related to CB qualifies for the additional first year 2, 2018, EA bought and placed in within the meaning of section depreciation deduction under this service a new machine from an 179(d)(2)(A) and § 1.179–4(c)(1)(ii) as of section. unrelated party for use in its trade or September 1, 2019, CB’s acquisition of (3) Pursuant to paragraph business. As part of the same series, EA the machine satisfies the used property (b)(3)(iii)(C)(1) of this section, a sells the machine to EB and EB places acquisition requirement of paragraph transferee tests its relationship with the it in service on January 2, 2019. As part (b)(3)(iii)(A)(2) of this section. transferor from which the transferee of the same series, EB sells the machine Accordingly, assuming all other directly acquires the depreciable to EC and EC places it in service on requirements of this section are property, and with the original January 2, 2020. Throughout the series, satisfied, CB’s purchase price of the transferor of the depreciable property in EA is not related to EB or EC within the machine qualifies for the additional first the series. The relationship is tested meaning of section 179(d)(2)(B) and year depreciation deduction under this when the transferee acquires, and § 1.179–4(c)(1)(iii). EB and EC were section. Pursuant to paragraph (g)(1)(iii) immediately before the first transfer of, related parties within the meaning of of this section, CB is allocated 2/12 of the depreciable property in the series. section 179(d)(2)(B) and § 1.179– its 100-percent additional first year Although DA is no longer in existence 4(c)(1)(iii) until July 1, 2019, at which depreciation deduction for the machine, as of the date DC acquires the machine, time, they ceased to be related.

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(2) EA’s purchase of the machine on requirements of this section are met, is not eligible for the additional first January 2, 2018, satisfies the original EA’s purchase price of the machine year depreciation deduction. use requirement of paragraph (b)(3)(ii) qualifies for the additional first year * * * * * of this section and, assuming all other depreciation deduction under this (5) * * * requirements of this section are met, section. (ii) * * * EA’s purchase price of the machines (3) Pursuant to paragraph (A) * * * For determination of qualifies for the additional first year (b)(3)(iii)(C)(1) of this section, a acquisition date, see paragraph depreciation deduction under this transferee tests its relationship with the (b)(5)(ii)(B) of this section for property section. acquired pursuant to a written binding transferor from which the transferee (3) Pursuant to paragraph contract, paragraph (b)(5)(iv) of this directly acquires the depreciable (b)(3)(iii)(C)(1) of this section, a section for self-constructed property, property, and with the original transferee tests its relationship with the and paragraph (b)(5)(v) of this section transferor of the depreciable property in transferor from which the transferee for property not acquired pursuant to a the series. The relationship is tested directly acquires the depreciable written binding contract. property, and with the original when the transferee acquires, and immediately before the first transfer of, * * * * * transferor of the depreciable property in (iii) * * * the depreciable property in the series. the series. The relationship is tested (G) Acquisition of a trade or business when the transferee acquires, and However, because EE was not in or an entity. A contract to acquire all or immediately before the first transfer of, existence immediately prior to the first substantially all of the assets of a trade the depreciable property in the series. transfer of the depreciable property in or business or to acquire an entity (for As a result, the following relationships the series, EC tests its relationship with example, a corporation, a partnership, are tested under section 179(d)(2)(A) EB and EA pursuant to paragraph or a limited liability company) is and (B): EB tests its relationship to EA (b)(3)(iii)(C)(2)(vii) of this section. As a binding if it is enforceable under State as of January 2, 2019, and January 2, result, the following relationships are law against the parties to the contract. 2018; and EC tests its relationship to EA tested under section 179(d)(2)(A) and The presence of a condition outside the and EB as of January 2, 2020, and (B): EB tests its relationship to EA as of control of the parties, including, for January 2, 2018. January 2, 2019, and January 2, 2018; EE example, regulatory agency approval, (4) Because EA is not related to EB tests its relationship to EA and EB as of will not prevent the contract from being within the meaning of section January 2, 2020, and January 2, 2018; a binding contract. Further, the fact that 179(d)(2)(B) and § 1.179–4(c)(1)(iii) as of and EC tests its relationship to EA and insubstantial terms remain to be January 2, 2019, or January 2, 2018, EB’s EB as of January 2, 2021, and January 2, negotiated by the parties to the contract, acquisition of the machine satisfies the 2018. or that customary conditions remain to used property acquisition requirement be satisfied, does not prevent the of paragraph (b)(3)(iii)(A)(2) of this (4) Because EA is not related to EB contract from being a binding contract. section. Accordingly, assuming all other within the meaning of section This paragraph (b)(5)(iii)(G) also applies requirements of this section are 179(d)(2)(B) and § 1.179–4(c)(1)(iii) as of satisfied, EB’s purchase price of the January 2, 2019, or January 2, 2018, EB’s to a contract for the sale of the stock of machine qualifies for the additional first acquisition of the machine satisfies the a corporation that is treated as an asset year depreciation deduction under this used property acquisition requirement sale as a result of an election under section. of paragraph (b)(3)(iii)(A)(2) of this section 338 or under section 336(e) (5) EC and EA are not related parties section. Accordingly, assuming all other made for a disposition described in within the meaning of section requirements of this section are § 1.336–2(b)(1). 179(d)(2)(B) and § 1.179–4(c)(1)(iii) as of satisfied, EB’s purchase price of the * * * * * January 2, 2020, or January 2, 2018. machine qualifies for the additional first (v) Determination of acquisition date Within the meaning of section year depreciation deduction under this for property not acquired pursuant to a 179(d)(2)(B) and § 1.179–4(c)(1)(iii), EC section. written binding contract. Except as provided in paragraphs (b)(5)(iv), (vi), is not related to EB as of January 2, (5) Because EE is not related to EA or and (vii) of this section, the acquisition 2020; however, EC is related to EB as of EB within the meaning of section date of property that the taxpayer January 2, 2018. Accordingly, EC ’s 179(d)(2)(B) and § 1.179–4(c)(1)(iii) as of acquires pursuant to a contract that does acquisition of the machine does not January 2, 2020, or January 2, 2018, EE’s not meet the definition of a written satisfy the used property acquisition acquisition of the machine satisfies the binding contract in paragraph (b)(5)(iii) requirement of paragraph (b)(3)(iii) of used property acquisition requirement of this section, is the date on which the this section and is not eligible for the of paragraph (b)(3)(iii)(A)(2) of this additional first year depreciation taxpayer paid, in the case of a cash basis section. Accordingly, assuming all other taxpayer, or incurred, in the case of an deduction. requirements of this section are (OO) Example 41. (1) The facts are the accrual basis taxpayer, more than 10 satisfied, EE ’s purchase price of the same as in Example 40 of paragraph percent of the total cost of the property, machine qualifies for the additional first (b)(3)(vii)(NN)(1) of this section, except excluding the cost of any land and year depreciation deduction under this that instead of selling to EC, EB sells the preliminary activities such as planning section. machine to EE, and EE places in service and designing, securing financing, on January 2, 2020, and EE sells the (6) Within the meaning of section exploring, or researching. The preceding machine to EC and EC places in service 179(d)(2)(B) and § 1.179–4(c)(1)(iii), EC sentence also applies to property that is on January 2, 2021. EE was not in is not related to EA as of January 2, manufactured, constructed, or produced existence until July 2019 and is not 2021, or January 2, 2018; however, EC for the taxpayer by another person related to EA or EB. is related to EB as of January 2, 2018. under a written contract that does not (2) EA’s purchase of the machine on Accordingly, EC ’s acquisition of the meet the definition of a binding contract January 2, 2018, satisfies the original machine does not satisfy the used in paragraph (b)(5)(iii) of this section, use requirement of paragraph (b)(3)(ii) property acquisition requirement of and that is entered into prior to the of this section and, assuming all other paragraph (b)(3)(iii) of this section and manufacture, construction, or

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production of the property for use by acquisition date requirement in (b)(5)(iv)(B) of this section, this the taxpayer in its trade or business or paragraph (b)(5) of this section; and paragraph (c) does not apply. If the for its production of income. This (C) For which the taxpayer begins the taxpayer enters into a written contract paragraph (b)(5)(v) does not apply to an manufacture, construction, or that does not meet the definition of a acquisition described in paragraph production before September 28, 2017. binding contract in paragraph (b)(5)(iii) (b)(5)(iii)(G) of this section. (ii) Residential rental property or of this section before September 28, * * * * * nonresidential real property. If the 2017, with another person to taxpayer constructs, manufactures, or manufacture, construct, or produce the (viii) * * * Unless the facts produces residential rental property or specifically indicate otherwise, assume larger self-constructed property and the nonresidential real property, as defined manufacture, construction, or that the parties are not related within in section 168(e)(2), or an improvement production of this property begins after the meaning of section 179(d)(2)(A) or to such property, for use in its trade or September 27, 2017, as determined (B) and § 1.179–4(c), paragraph (c) of business or production of income, all under paragraph (b)(5)(v) of this section, this section does not apply, and the property that is constructed, this paragraph (c) does not apply. parties do not have predecessors: manufactured, or produced as part of (iv) Exception. This paragraph (c) * * * * * such residential rental property, does not apply to any larger self- (c) Election for components of larger nonresidential real property, or constructed property that is included in self-constructed property for which the improvement, as applicable, and that is a class of property for which the manufacture, construction, or described in paragraph (c)(2)(i)(A) of taxpayer made an election under section production begins before September 28, this section is the larger self-constructed 168(k)(7) (formerly section 2017—(1) In general. A taxpayer may property for purposes of applying the 168(k)(2)(D)(iii)) not to deduct the elect to treat any acquired or self- rules in this paragraph (c). additional first year depreciation constructed component, as described in (iii) Beginning of manufacturing, deduction. paragraph (c)(3) of this section, of the construction, or production. Solely for (3) Eligible components—(i) In larger self-constructed property, as purposes of paragraph (c)(2)(i)(C) of this general. Solely for purposes of this described in paragraph (c)(2) of this section, the determination of when paragraph (c), a component of the larger section, as being eligible for the manufacture, construction, or self-constructed property, as described additional first year depreciation production of the larger self-constructed in paragraph (c)(2) of this section, must deduction under this section, assuming property begins is made in accordance be qualified property under section all requirements of section 168(k) and with the rules in paragraph (b)(5)(iv)(B) 168(k)(2) and paragraph (b) of this this section are met. The taxpayer may of this section if the larger self- section. Solely for purposes of the make this election for one or more such constructed property is manufactured, preceding sentence, a component will components. constructed, or produced by the satisfy the acquisition date requirement (2) Eligible larger self-constructed taxpayer for its own use in its trade or in paragraph (b)(5) of this section if it property—(i) In general. Solely for business or production of income, or is satisfies the requirements in paragraph purposes of this paragraph (c), a larger manufactured, constructed, or produced (c)(3)(ii) or (iii) of this section, as for the taxpayer by another person self-constructed property is property applicable. under a written binding contract, as (ii) Acquired components. If a that is manufactured, constructed, or defined in paragraph (b)(5)(iii) of this component of the larger self-constructed produced by the taxpayer for its own section, that is entered into prior to the property is acquired pursuant to a use in its trade or business or manufacture, construction, or written binding contract, as defined in production of income. Solely for production of the property for use by paragraph (b)(5)(iii) of this section, the purposes of this paragraph (c), property the taxpayer in its trade or business or component must be acquired by the that is manufactured, constructed, or production of income. If the larger self- taxpayer after September 27, 2017, as produced for the taxpayer by another constructed property is manufactured, determined under the rules in paragraph person under a written binding contract, constructed, or produced for the (b)(5)(ii)(B) of this section. If a as defined in paragraph (b)(5)(iii) of this taxpayer by another person under a component of the larger self-constructed section, or under a written contract that written contract that does not meet the property is acquired pursuant to a does not meet the definition of a definition of a binding contract in written contract that does not meet the binding contract in paragraph (b)(5)(iii) paragraph (b)(5)(iii) of this section, that definition of a binding contract in of this section, that is entered into prior is entered into prior to the manufacture, paragraph (b)(5)(iii) of this section, the to the manufacture, construction, or construction, or production of the component must be acquired by the production of the property for use by property for use by the taxpayer in its taxpayer after September 27, 2017, as the taxpayer in its trade or business or trade or business or production of determined under the rules in paragraph production of income is considered to income, the determination of when (b)(5)(v) of this section. be manufactured, constructed, or manufacture, construction, or (iii) Self-constructed components. The produced by the taxpayer. Except as production of the larger self-constructed manufacture, construction, or provided in paragraph (c)(2)(iv) of this property begins is made in accordance production of a component of a larger section, such larger self-constructed with the rules in paragraph (b)(5)(v) of self-constructed property must begin property must be property— this section. If the taxpayer enters into after September 27, 2017. The (A) That is described in paragraph a written binding contract, as defined in determination of when manufacture, (b)(2)(i)(A), (B), (C), or (D) of this paragraph (b)(5)(iii) of this section, construction, or production of the section. Solely for purposes of the before September 28, 2017, with another component begins is made in preceding sentence, the requirement person to manufacture, construct, or accordance with the rules in— that property has to be acquired after produce the larger self-constructed (A) Paragraph (b)(5)(iv)(B) of this September 27, 2017, is disregarded; property and the manufacture, section if the component is (B) That meets the requirements construction, or production of this manufactured, constructed, or produced under paragraph (b) of this section, property begins after September 27, by the taxpayer for its own use in its determined without regard to the 2017, as determined under paragraph trade or business or for its production of

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income, or is manufactured, first year depreciation deduction, if any, in this paragraph (c) may not be revoked constructed, or produced for the for the remaining unadjusted through a request under section 446(e) taxpayer by another person under a depreciable basis of the larger self- to change the taxpayer’s method of written binding contract, as defined in constructed property, as described in accounting. paragraph (b)(5)(iii) of this section, that paragraph (c)(2) of this section, is (ii) Automatic 6-month extension. If a is entered into prior to the manufacture, determined under section 168(k), as in taxpayer made the election specified in construction, or production of the effect on the day before the date of the this paragraph (c), an automatic component for use by the taxpayer in its enactment of the Act, and section extension of 6 months from the due date trade or business or for its production of 168(k)(8). For purposes of this of the taxpayer’s Federal tax return, income; or paragraph (c), the remaining unadjusted excluding extensions, for the placed-in- (B) Paragraph (b)(5)(v) of this section depreciable basis of the larger self- service year of the larger self- if the component is manufactured, constructed property is equal to the constructed property is granted to constructed, or produced for the unadjusted depreciable basis, as defined revoke that election, provided the taxpayer by another person under a in § 1.168(b)–1(a)(3), of the larger self- taxpayer timely filed the taxpayer’s written contract that does not meet the constructed property, including all Federal tax return for that placed-in- definition of a binding contract in components, reduced by the sum of the service year and, within this 6-month paragraph (b)(5)(iii) of this section, that component basis of the components for extension period, the taxpayer, and all is entered into prior to the manufacture, which the taxpayer makes the election taxpayers whose tax liability would be construction, or production of the specified in this paragraph (c). affected by the election, file an amended component for use by the taxpayer in its (ii) Election is not made. If the Federal tax return for the placed-in- trade or business or for its production of taxpayer does not make the election service year in a manner that is income. specified in this paragraph (c), the consistent with the revocation of the (4) Special rules—(i) Installation additional first year depreciation election. costs. If the taxpayer pays, in the case deduction, if any, for the larger self- (8) Additional procedural guidance. of a cash basis taxpayer, or incurs, in the constructed property, including all The IRS may publish procedural case of an accrual basis taxpayer, costs, components, is determined under guidance in the Internal Revenue including labor costs, to install a section 168(k), as in effect on the day Bulletin (see § 601.601(d)(2)(ii)(b) of this component of the larger self-constructed before the date of the enactment of the chapter) that provides alternative property, as described in paragraph Act, and section 168(k)(8). procedures for complying with (c)(2) of this section, such costs are (6) Time and manner for making paragraph (c)(6) or (c)(7)(i) of this eligible for the additional first year election—(i) Time for making election. section. depreciation under this section, The election specified in this paragraph (9) Examples. The application of this assuming all requirements are met, only (c) must be made by the due date, paragraph (c) is illustrated by the if the component being installed meets including extensions, of the Federal tax following examples. Unless the facts the requirements in paragraph (c)(3) of return for the taxable year in which the specifically indicate otherwise, assume this section. taxpayer placed in service the larger that the larger self-constructed property (ii) Property described in section self-constructed property. is described in paragraph (c)(2) of this 168(k)(2)(B). The rules in paragraph (ii) Manner of making election. The section, the components that are (e)(1)(iii) of this section apply for election specified in this paragraph (c) acquired or self-constructed after determining the unadjusted depreciable must be made by attaching a statement September 27, 2017, are described in basis, as defined in § 1.168(b)–1(a)(3), of to such return indicating that the paragraph (c)(3) of this section, the larger self-constructed property taxpayer is making the election taxpayer is an accrual basis taxpayer, described in paragraph (c)(2) of this provided in this paragraph (c) and and none of the costs paid or incurred section and in section 168(k)(2)(B). whether the taxpayer is making the after September 27, 2017, are for the (5) Computation of additional first election for all or some of the installation of components that do not year depreciation deduction—(i) components described in paragraph meet the requirements of paragraph Election is made. Before determining (c)(3) of this section. The election is (c)(3) of this section. the allowable additional first year made separately by each person owning (i) Example 1. (A) BC, a calendar year depreciation deduction for the larger qualified property (for example, for each taxpayer, is engaged in a trade or self-constructed property, as described member of a consolidated group by the business described in section in paragraph (c)(2) of this section, for agent for the group (within the meaning 163(j)(7)(A)(iv) and §§ 1.163(j)– which the taxpayer makes the election of § 1.1502–77(a) and (c)), by the 1(b)(15)(i) and 1.163(j)– specified in this paragraph (c) for one or partnership (including a lower-tier 10(c)(3)(iii)(C)(3). In December 2015, BC more components of such property, the partnership), or by the S corporation). decided to construct an electric taxpayer must determine the portion of (7) Revocation of election—(i) In generation power plant for its own use. the unadjusted depreciable basis, as general. Except as provided in This plant is property described in defined in § 1.168(b)–1(a)(3), of the paragraph (c)(7)(ii) of this section, the section 168(k)(2)(B) as in effect on the larger self-constructed property, election specified in this paragraph (c), day before the date of the enactment of including all components, attributable once made, may be revoked only by the Act. However, the turbine for the to the component that meets the filing a request for a private letter ruling plant had to be manufactured by requirements of paragraphs (c)(3) and and obtaining the Commissioner of another person for BC. In January 2016, (c)(4)(i) of this section (component Internal Revenue’s written consent to BC entered into a written binding basis). The additional first year revoke the election. The Commissioner contract with CD to acquire the turbine. depreciation deduction for the may grant a request to revoke the BC received the completed turbine in component basis is determined by election if the taxpayer acted reasonably August 2017 at which time BC incurred multiplying such component basis by and in good faith, and the revocation the cost of the turbine. The cost of the the applicable percentage for the placed- will not prejudice the interests of the turbine is 11 percent of the total cost of in-service year of the larger self- Government. See generally § 301.9100– the electric generation power plant to be constructed property. The additional 3 of this chapter. The election specified constructed by BC. BC began

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constructing the electric generation enactment of the Act. On its timely filed vessel begins before September 28, power plant in October 2017 and placed Federal income tax return for 2019, BD 2017, paragraph (b)(5)(iv)(B) of this in service this new power plant, made the election specified in this section provides that manufacture, including all component parts, in 2020. paragraph (c). construction, or production of property (B) The larger self-constructed (B) The larger self-constructed begins when physical work of a property is the electric generation power property is the locomotive being significant nature begins. BF uses the plant to be constructed by BC. For manufactured by CE for BD. For safe harbor test in paragraph determining if the construction of this determining if the manufacturing of this (b)(5)(iv)(B)(2) of this section to power plant begins before September locomotive begins before September 28, determine when physical work of a 28, 2017, paragraph (b)(5)(iv)(B) of this 2017, paragraph (b)(5)(iv)(B) of this significant nature begins for the vessel. section provides that manufacture, section provides that manufacture, Because BF had incurred more than 10 construction, or production of property construction, or production of property percent of the total cost of the vessel begins when physical work of a begins when physical work of a before September 28, 2017, physical significant nature begins. BC uses the significant nature begins. BD uses the work of a significant nature for this safe harbor test in paragraph safe harbor test in paragraph vessel began before September 28, 2017. (b)(5)(iv)(B)(2) of this section to (b)(5)(iv)(B)(2) of this section to (C) Because BF made the election determine when physical work of a determine when physical work of a specified in this paragraph (c), the cost significant nature begins for the electric significant nature begins for the of $15,000,000 for the vessel’s generation power plant. Because the locomotive. Because BD had incurred components acquired or self- turbine that was manufactured by CD more than 10 percent of the total cost of constructed after September 27, 2017, for BC is more than 10 percent of the the locomotive before September 28, qualifies for the 100-percent additional total cost of the electric generation 2017, physical work of a significant first year depreciation deduction under power plant, physical work of a nature for this locomotive began before this section, assuming all other significant nature for this plant began September 28, 2017. requirements are met. Pursuant to before September 28, 2017. (C) Because BD made the election section 168(k)(8) and because BF placed (C) The power plant is described in specified in this paragraph (c), the cost in service the vessel after 2020, none of section 168(k)(9)(A) and paragraph of $4,000,000 for the locomotive’s the remaining cost of the vessel is (b)(2)(ii)(F) of this section and, components acquired or self- eligible for any additional first year therefore, is not larger self-constructed constructed after September 27, 2017, depreciation deduction under section property eligible for the election qualifies for the 100-percent additional 168(k) and this section nor under pursuant to paragraph (c)(2)(i)(B) of this first year depreciation deduction under section 168(k) as in effect on the day section. Accordingly, none of BC’s this section, assuming all other before the date of the enactment of the expenditures for components of the requirements are met. The remaining Act. power plant that are acquired or self- cost of the locomotive is $500,000 and (iv) Example 4. (A) In March 2017, constructed after September 27, 2017, such amount qualifies for the 40-percent BG, a calendar year taxpayer, entered are eligible for the election specified in additional first year depreciation into a written contract with CH for CH this paragraph (c). Assuming all deduction pursuant to section 168(k)(8), to construct a building for BG to use in requirements are met under section assuming all other requirements in its retail business. This written contract 168(k)(2) as in effect on the day before section 168(k) as in effect on the day does not meet the definition of a the date of the enactment of the Act, the before the date of the enactment of the binding contract in paragraph (b)(5)(iii) unadjusted depreciable basis of the Act are met. of this section. In September 2019, the power plant, including all components, (iii) Example 3. (A) In February 2016, construction of the building was attributable to its construction before BF, a calendar-year taxpayer, entered completed and placed in service by BG. January 1, 2020, is eligible for the 30- into a written binding contract with CG The total cost is $10,000,000. Of this percent additional first year for CG to manufacture a vessel for BF for amount, $3,000,000 is the total cost for depreciation deduction pursuant to use in its trade or business. Before all section 1245 properties constructed section 168(k)(8). September 28, 2017, BF acquired or self- as part of the building, and $7,000,000 (ii) Example 2. (A) In August 2017, constructed components for the vessel. is for the building. Under section 168(e), BD, a calendar-year taxpayer, entered These components cost $30,000,000, section 1245 properties in the total into a written binding contract with CE which is more than 10 percent of the amount of $2,400,000 are 5-year for CE to manufacture a locomotive for total cost of the vessel, and BF incurred property and in the total amount of BD for use in its trade or business. such costs before September 28, 2017. $600,000 are 7-year property. The Before September 28, 2017, BD acquired After September 27, 2017, BF acquired building is nonresidential real property or self-constructed components of the or self-constructed components for the under section 168(e). Before September locomotive. These components cost vessel and these components cost 28, 2017, BG acquired or self- $500,000, which is more than 10 $15,000,000. In February 2021, CG constructed certain components and the percent of the total cost of the delivered the vessel to BF and BF placed total cost of these components is locomotive, and BD incurred such costs in service the vessel. The vessel is $500,000 for the section 1245 properties before September 28, 2017. After property described in section and $3,000,000 for the building. BG September 27, 2017, BD acquired or 168(k)(2)(B) as in effect on the day incurred these costs before September self-constructed components of the before the date of the enactment of the 28, 2017. After September 27, 2017, BG locomotive and these components cost Act. The total cost of the vessel is acquired or self-constructed the $4,000,000. In February 2019, CE $45,000,000. On its timely filed Federal remaining components of the section delivered the locomotive to BD and BD income tax return for 2021, BF made the 1245 properties and these components placed in service the locomotive. The election specified in this paragraph (c). cost $2,500,000. BG incurred these costs total cost of the locomotive is (B) The larger self-constructed of $2,500,000 after September 27, 2017. $4,500,000. The locomotive is property property is the vessel being On its timely filed Federal income tax described in section 168(k)(2)(B) as in manufactured by CG for BF. For return for 2019, BG made the election effect on the day before the date of the determining if the manufacturing of this specified in this paragraph (c).

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(B) All section 1245 properties are (A) Property that the taxpayer (1) In general. Except as provided in constructed as part of the construction acquires pursuant to a contract that does paragraphs (h)(2) and (3) of this section, of the building and are described in not meet the definition of a written this section applies to— paragraph (b)(2)(i)(A) of this section. binding contract in paragraph (b)(5)(iii) (i) Depreciable property acquired after The building is not described in of this section; or September 27, 2017, by the taxpayer and paragraph (b)(2)(i)(A), (B), (C), or (D) of (B) Property that is manufactured, placed in service by the taxpayer during this section. As a result, under constructed, or produced for the or after the taxpayer’s taxable year that paragraph (c)(2)(ii) of this section, the taxpayer by another person under a begins on or after January 1, 2021; larger self-constructed property is all written contract that does not meet the (ii) A specified plant for which the section 1245 properties with a total cost definition of a binding contract in taxpayer properly made an election to of $3,000,000. For determining if the paragraph (b)(5)(iii) of this section, and apply section 168(k)(5) and that is construction of these section 1245 that is entered into prior to the planted, or grafted to a plant that was properties begins before September 28, manufacture, construction, or previously planted, by the taxpayer 2017, paragraph (b)(5)(v) of this section production of the property for use by during or after the taxpayer’s taxable provides that manufacture, the taxpayer in its trade or business or year that begins on or after January 1, construction, or production of property production of income. 2021; and (iii) Components acquired or self- begins when the taxpayer incurs more * * * * * than 10 percent of the total cost of the constructed after September 27, 2017, of property. Because BG incurred more (e) * * * larger self-constructed property than 10 percent of the total cost of the (1) * * * described in paragraph (c)(2) of this section 1245 properties before (iii) * * * The amounts of unadjusted section and placed in service by the September 28, 2017, construction of the depreciable basis attributable to the taxpayer during or after the taxpayer’s section 1245 properties began before property’s manufacture, construction, or taxable year that begins on or after September 28, 2017. production before January 1, 2027, are January 1, 2021. (C) Because BG made the election referred to as ‘‘progress expenditures.’’ (2) Applicability of this section for specified in this paragraph (c), the cost Rules similar to the rules in section prior taxable years. For taxable years of $2,500,000 for the section 1245 4.02(1)(b) of Notice 2007–36 (2007–17 beginning before January 1, 2021, see components acquired or self- I.R.B. 1000) (see § 601.601(d)(2)(ii)(b) of § 1.168(k)-2 as contained in 26 CFR part constructed by BG after September 27, this chapter) apply for determining 1, revised as of April 1, 2020. 2017, qualifies for the 100-percent progress expenditures, regardless of (3) Early application of this section additional first year depreciation whether the property is manufactured, and § 1.1502–68—(i) In general. Subject deduction under this section, assuming constructed, or produced for the to paragraphs (h)(3)(ii) and (iii) of this all other requirements are met. The taxpayer by another person under a section, and provided that all members remaining cost of the section 1245 written binding contract, as defined in of a consolidated group consistently components is $500,000 and such paragraph (b)(5)(iii) of this section, or apply the same set of rules, a taxpayer amount qualifies for the 30-percent under a written contract that does not may choose to apply both the rules of additional first year depreciation meet the definition of a binding contract this section and the rules of § 1.1502–68 deduction pursuant to section 168(k)(8), in paragraph (b)(5)(iii) of this section. (to the extent relevant), in their entirety assuming all other requirements in The IRS may publish procedural and in a consistent manner, to— section 168(k), as in effect on the day guidance in the Internal Revenue (A) Depreciable property acquired before the date of the enactment of the Bulletin (see § 601.601(d)(2)(ii)(b) of this after September 27, 2017, by the Act, are met. Because the building is not chapter) that provides alternative taxpayer and placed in service by the qualified property under section 168(k), procedures for complying with this taxpayer during a taxable year ending as in effect on the day before the date paragraph (e)(1)(iii). on or after September 28, 2017; of the enactment of the Act, none of the * * * * * (B) A specified plant for which the taxpayer properly made an election to cost of $7,000,000 for the building is (f) * * * eligible for any additional first year apply section 168(k)(5) and that is (7) Additional procedural guidance. depreciation deduction under section planted, or grafted to a plant that was The IRS may publish procedural 168(k) and this section or under section previously planted, after September 27, guidance in the Internal Revenue 168(k), as in effect on the day before the 2017, by the taxpayer during a taxable Bulletin (see § 601.601(d)(2)(ii)(b) of this date of the enactment of the Act. year ending on or after September 28, (d) * * * chapter) that provides alternative 2017; and (3) * * * procedures for complying with (C) Components acquired or self- (iv) Determination of acquisition date paragraph (f)(1)(iii), (f)(1)(iv), (f)(2)(ii), constructed after September 27, 2017, of for property not acquired pursuant to a (f)(2)(iii), (f)(3)(ii), (f)(3)(iii), or (f)(5)(i) of larger self-constructed property written binding contract. For purposes this section. described in paragraph (c)(2) of this of the acquisition rules in paragraph (g) * * * section and placed in service by the (d)(1) of this section, the following (11) Mid-quarter convention. In taxpayer during a taxable year ending property is acquired by the taxpayer determining whether the mid-quarter on or after September 28, 2017. before January 1, 2027, if the taxpayer convention applies for a taxable year (ii) Early application to certain paid, in the case of a cash basis under section 168(d)(3) and § 1.168(d)– transactions. In the case of property taxpayer, or incurred, in the case of an 1, the depreciable basis, as defined in described in § 1.1502–68(e)(2)(i) that is accrual basis taxpayer, more than 10 § 1.168(d)–1(b)(4), for the taxable year acquired in a transaction that satisfies percent of the total cost of the property the qualified property is placed in the requirements of § 1.1502–68(c)(1)(ii) before January 1, 2027, excluding the service by the taxpayer is not reduced or (c)(2)(ii), the taxpayer may apply the cost of any land and preliminary by the allowed or allowable additional rules of this section and the rules of activities such as planning and first year depreciation deduction for that § 1.1502–68 (to the extent relevant), in designing, securing financing, taxable year. See § 1.168(d)–1(b)(4). their entirety and in a consistent exploring, or researching: (h) * * * manner, to such property only if those

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rules are applied, in their entirety and forth in paragraph (c)(1)(i) of this (ix) Lookback Period. The term in a consistent manner, by all parties to section addressing certain intercompany lookback period means, with respect to the transaction, including the transferor transfers of eligible property. a member of a consolidated group, the member, the transferee member, and the (ii) Consolidated Deemed Acquisition period that includes the five calendar target, as applicable, and the Rule. The term Consolidated Deemed years immediately prior to the current consolidated groups of which they are Acquisition Rule refers to the rule set calendar year in which the property is members, for the taxable year(s) in forth in paragraph (c)(2)(i) of this placed in service by such member, as which the transaction occurs and the section addressing certain intercompany well as the portion of such current taxable year(s) that includes the day transfers of the stock of target (as calendar year before the date on which after the deconsolidation date, as defined in paragraph (a)(2)(xi) of this the member placed the property in defined in § 1.1502–68(a)(2)(iii). section). service (without taking into account the (iii) Bound by early application. Once (iii) Deconsolidation date. The term applicable convention). a taxpayer applies the rules of this deconsolidation date means the date on (x) Stock and Asset Acquisition Rule. section and the rules of § 1.1502–68 (to which a transferee member ceases to be The term Stock and Asset Acquisition the extent relevant), in their entirety, for a member of a consolidated group. Rule refers to the rule set forth in a taxable year, the taxpayer must (iv) Designated transaction. The term paragraph (b)(2) of this section continue to apply the rules of this designated transaction has the meaning addressing when a member of a section and the rules of § 1.1502–68 (to provided in paragraph (c)(4)(i) of this consolidated group is attributed a new the extent relevant), in their entirety, for section. member’s depreciable interest in the taxpayer’s subsequent taxable years. (v) Deemed replacement property. property. (xi) Target. The term target means the ■ Par. 5. Section 1.1502–68 is added The term deemed replacement property member whose stock is transferred in a immediately following § 1.1502–59A to means used property that is identical to transaction that is subject to the read as follows: (but is separate and distinct from) the Consolidated Deemed Acquisition Rule. § 1.1502–68 Additional first year eligible property that the transferee (xii) Transferee member. The term depreciation deduction for property member or target is deemed to sell to an transferee member means the member acquired and placed in service after unrelated party under the Consolidated that acquires eligible property or target September 27, 2017. Asset Acquisition Rule or the stock, respectively, in a transaction that (a) In general—(1) Overview. This Consolidated Deemed Acquisition Rule. is subject to the Consolidated Asset section provides rules governing the For all Federal income tax purposes, the Acquisition Rule or the Consolidated availability of the additional first year deemed purchase of deemed Deemed Acquisition Rule. depreciation deduction allowable under replacement property by the transferee (xiii) Transferor member. The term section 168(k) for qualified property that member or target under paragraph transferor member means the member is acquired and placed in service after (c)(1)(i)(B) or (c)(2)(i)(B) of this section, that transfers eligible property or target September 27, 2017, by a member of a respectively, does not result in the basis stock, respectively, in a transaction that consolidated group. Except as otherwise in such property being determined, in is subject to the Consolidated Asset provided in paragraph (c) of this whole or in part, by reference to the Acquisition Rule or the Consolidated section, the rules in § 1.168(k)–2 apply basis of other property held at any time Deemed Acquisition Rule. to members of a consolidated group in by the transferee member or target. See (b) Acquisitions of depreciable addition to the rules in this section. section 179(d)(3) and § 1.168(k)– property by a member of a consolidated Paragraph (a)(2) of this section provides 2(b)(3)(iii)(A)(3). group—(1) General rule (Group Prior definitions of terms used in this section. (vi) Deemed sale amount. The term Use Rule). Solely for purposes of Paragraph (b) of this section provides deemed sale amount means an amount applying § 1.168(k)–2(b)(3)(iii)(A)(1), if a rules addressing the application of equal to the transferee member’s or the member of a consolidated group § 1.168(k)–2(b)(3)(iii)(A)(1) (requiring target’s adjusted basis in the eligible acquires depreciable property in which that a taxpayer claiming the additional property immediately before the the group had a depreciable interest at first year depreciation deduction for transferee member or target is deemed to any time within the lookback period, used property not previously have used sell the property to an unrelated party the member is treated as having a the property) to members of a under the Consolidated Asset depreciable interest in the property consolidated group. Paragraph (c) of this Acquisition Rule or the Consolidated prior to the acquisition. For purposes of section provides rules addressing Deemed Acquisition Rule. this paragraph (b)(1), a consolidated certain transfers of eligible property (as (vii) Eligible property. The term group is treated as having a depreciable defined in paragraph (a)(2)(vii) of this eligible property means depreciable interest in property during the time any section) between members of a property (as defined in § 1.168(b)– current or previous member of the group consolidated group if the transferee 1(a)(1)) that meets the requirements in had a depreciable interest in the member (as defined in paragraph § 1.168(k)–2(b)(2), determined without property while a member of the group. (a)(2)(xii) of this section) leaves the regard to § 1.168(k)–2(b)(2)(ii)(C) For special rules that apply when a group pursuant to the same series of (property subject to an election not to member of a consolidated group related transactions. Paragraph (d) of claim the additional first year acquires depreciable property in an this section provides examples depreciation for a class of property) intercompany transaction (as defined in illustrating the application of the rules except on the day after the § 1.1502–13(b)(1)(i)) and then leaves the of this section. Paragraph (e) of this deconsolidation date. group pursuant to the same series of section provides the applicability dates. (viii) Group Prior Use Rule. The term related transactions, see paragraph (c) of (2) Definitions. The following Group Prior Use Rule refers to the rule this section. definitions apply for purposes of this set forth in paragraph (b)(1) of this (2) Certain acquisitions pursuant to a section. section addressing when a member of a series of related transactions (Stock and (i) Consolidated Asset Acquisition consolidated group is attributed another Asset Acquisition Rule). Solely for Rule. The term Consolidated Asset member’s depreciable interest in purposes of applying § 1.168(k)– Acquisition Rule refers to the rule set property. 2(b)(3)(iii)(A)(1), if a series of related

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transactions includes one or more deconsolidation date and the day after this section does not apply if, following transactions in which property is the deconsolidation date. the deemed acquisition of eligible acquired by a member of a consolidated (2) Deemed acquisition of eligible property, the target disposes of such group, and one or more transactions in property pursuant to an election under property pursuant to the same series of which a corporation that had a section 338 or 336(e) by a member that related transactions that includes the depreciable interest in the property leaves the group—(i) General rule qualified stock purchase or qualified (determined without regard to the (Consolidated Deemed Acquisition stock disposition. See § 1.168(k)– application of the Group Prior Use Rule) Rule). This paragraph (c)(2) applies to 2(b)(3)(iii)(C) for rules regarding the within the lookback period becomes a certain transactions pursuant to which a transfer of property in a series of related member of the group, then the member transferee member acquires from a transactions. See also § 1.168(k)–2(g)(1) that acquires the property is treated as transferor member the stock of another for rules regarding property placed in having a depreciable interest in the member of the same consolidated group service and disposed of in the same property prior to the acquisition. that holds eligible property (target) in taxable year. For purposes of this (c) Certain intercompany transfers of either a qualified stock purchase for paragraph (c)(3), the deemed sale of eligible property followed by which a section 338 election is made or eligible property by the transferee deconsolidation—(1) Acquisition of a qualified stock disposition described member or the target pursuant to eligible property by a member that in § 1.336–2(b)(1) for which a section paragraph (c)(1)(i)(A) or (c)(2)(i)(A) of leaves the group—(i) General rule 336(e) election is made. Except as this section is not treated as a (Consolidated Asset Acquisition Rule). otherwise provided in paragraph (c)(3) ‘‘disposition’’ of such property. This paragraph (c)(1) applies to certain or (4) of this section, if a transaction (4) Election to not apply paragraph transactions pursuant to which one satisfies the requirements of paragraph (c)(1)(i) or (c)(2)(i) of this section—(i) In member of a consolidated group (c)(2)(ii) of this section, then § 1.168(k)– general. If a transaction satisfies the (transferee member) acquires from 2(b)(3)(iii)(C) does not apply to the requirements of the Consolidated Asset another member of the same transaction, and for all Federal income Acquisition Rule or the Consolidated consolidated group (transferor member) tax purposes— Deemed Acquisition Rule in paragraph eligible property. Except as otherwise (A) The target is treated as selling the (c)(1)(ii) or (c)(2)(ii) of this section, provided in paragraph (c)(3) or (4) of eligible property to an unrelated person respectively, the transferee member or this section, if a transaction satisfies the on the day after the deconsolidation the target nonetheless may elect not to requirements of paragraph (c)(1)(ii) of date in exchange for an amount of cash apply the Consolidated Asset this section, then § 1.168(k)– equal to the deemed sale amount; and Acquisition Rule or the Consolidated 2(b)(3)(iii)(C) (providing special rules (B) Immediately after the deemed sale Deemed Acquisition Rule, respectively, when depreciable property is acquired in paragraph (c)(2)(i)(A) of this section, to all eligible property that is acquired as part of a series of related transactions) the target is treated as purchasing or deemed acquired in such transaction. does not apply to the transaction, and deemed replacement property from an If a transferee member or target makes for all Federal income tax purposes— unrelated person for an amount of cash an election under this paragraph (c)(4) (A) The transferee member is treated equal to the deemed sale amount. with respect to any transaction as selling the eligible property to an (ii) Requirements. A transaction (designated transaction), then— unrelated person on the day after the satisfies the requirements of this (A) The transferee member or target is deconsolidation date in exchange for an paragraph (c)(2)(ii) if: deemed to have made such an election amount of cash equal to the deemed sale (A) The target’s acquisition of the for all other transactions— amount; and eligible property meets the requirements (1) That satisfy the requirements of (B) Immediately after the deemed sale of § 1.168(k)–2(b)(3)(iii)(A) without the Consolidated Asset Acquisition Rule in paragraph (c)(1)(i)(A) of this section, regard to the Group Prior Use Rule; or the Consolidated Deemed Acquisition the transferee member is treated as (B) As part of the same series of Rule; purchasing deemed replacement related transactions that includes the (2) That are part of the same series of property from an unrelated person for qualified stock purchase or qualified related transactions as the designated an amount of cash equal to the deemed stock disposition, the transferee member transaction; and sale amount. and the target cease to be members of (3) In which the transferee member or (ii) Requirements. A transaction the transferor member’s consolidated target either is the same transferee satisfies the requirements of this group and cease to be related, within the member or target as in the designated paragraph (c)(1)(ii) if— meaning of section 179(d)(2)(A) or (B) transaction or is related, within the (A) The transferee member’s and § 1.179–4(c)(1)(ii) or (iii), to the meaning of section 179(d)(2)(A) or (B) acquisition of the eligible property transferor member; and and § 1.179–4(c)(1)(ii) or (iii), to the meets the requirements of § 1.168(k)– (C) The target’s eligible property on transferee member or target in the 2(b)(3)(iii)(A) without regard to section the acquisition date (within the meaning designated transaction immediately 179(d)(2)(A) or (B) and § 1.179– of § 1.338–2(c)(1)) or the disposition after the end of the series of related 4(c)(1)(ii) or (iii) or the Group Prior Use date (within the meaning of § 1.336– transactions; and Rule; 1(b)(8)) continues to be eligible property (B) Any eligible property acquired or (B) As part of the same series of on the deconsolidation date and the day deemed acquired in the designated related transactions that includes the after the deconsolidation date. transaction and in any transactions acquisition, the transferee member (3) Disposition of depreciable described in paragraph (c)(4)(i)(A) of ceases to be a member of the property pursuant to the same series of this section does not satisfy either the consolidated group and ceases to be related transactions. Paragraph (c)(1) of original use requirement or the used related, within the meaning of section this section does not apply if, following property acquisition requirements in 179(d)(2)(A) or (B) and § 1.179– the acquisition of eligible property, the § 1.168(k)–2(b)(3) and, thus, is not 4(c)(1)(ii) or (iii), to the transferor transferee member disposes of such ‘‘qualified property’’ within the member; and property pursuant to the same series of meaning of § 1.168(k)–2(b)(1). (C) The acquired eligible property related transactions that includes the (ii) Time and manner for making continues to be eligible property on the property acquisition. Paragraph (c)(2) of election—(A) Time to make election. An

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election under this paragraph (c)(4) of each of S, B, Controlled, and T; X is of the Parent group prior to B’s must be made by the due date, the common parent of the X acquisition of Equipment #2. including extensions, for the Federal tax consolidated group (X group); no (iii) Sale outside of the consolidated return for the taxable year of the member of the X group is related, within group followed by a reacquisition transferee member or target that begins the meaning of section 179(d)(2)(A) or beyond the lookback period. The facts on the day after the deconsolidation (B) and § 1.179–4(c)(1)(ii) or (iii) are the same as in paragraph (d)(2)(i) of date. (Related), to any member of the Parent this section, except that B acquires (B) Manner of making election. A group; G and U are corporations that are Equipment #2 and places it in service in transferee member or target, as not Related to each other or to any 2024 instead of 2019. B’s acquisition of applicable, makes the election under member of the Parent group or the X Equipment #2 satisfies the No Prior Use this paragraph (c)(4) by attaching a group; the Equipment in each example Requirement. B would not be treated as statement to its return for the taxable is eligible property; no member of the previously having a depreciable interest year that begins on the day after the Parent group or the X group has had a in Equipment #2 under the Group Prior deconsolidation date. The statement depreciable interest in the Equipment Use Rule because the Parent group did must describe the transaction(s) to within the lookback period; § 1.168(k)– not have a depreciable interest in which the Consolidated Asset 2(b)(3)(iii)(A)(1) is referred to as the No Equipment #2 within the lookback Acquisition Rule or Consolidated Prior Use Requirement; and § 1.168(k)– period. Further, B itself did not have a Deemed Acquisition Rule otherwise 2(b)(3)(iii)(A)(2) is referred to as the prior depreciable interest in Equipment would apply and state that the Unrelated Party Requirement. The rules #2 within the lookback period. transferee member or the target, as of this section are illustrated by the Assuming all other requirements in applicable, is not claiming the following examples. § 1.168(k)–2 are satisfied, B is eligible to additional first year depreciation (1) Example 1: Intercompany sale of claim the additional first year deduction for any eligible property eligible property—(i) Facts. S has a depreciation deduction for Equipment transferred in such transaction(s). If, at depreciable interest in Equipment #1. In #2 in 2024. The result would be the the time the election is made, the 2018, S sells Equipment #1 to B, and B same if S, rather than B, acquired and transferee member or the target is a places Equipment #1 in service in the placed in service Equipment #2 in 2024. member of a consolidated group, the same year. (3) Example 3: Acquisition of eligible statement is made by the agent for the (ii) Analysis. B’s acquisition of property by the consolidated group group (within the meaning of § 1.1502– Equipment #1 does not satisfy either the followed by a corporation with a prior 77(a) and (c)) on behalf of the transferee No Prior Use Requirement or the depreciable interest joining the group as member or the target and is attached to Unrelated Party Requirement. Under the part of the same series of related the consolidated return of the group for Group Prior Use Rule, B is treated as transactions—(i) Facts. G has a the taxable year of the group that previously having a depreciable interest depreciable interest in Equipment #3. includes the taxable year of the in Equipment #1 because B (a member During 2018, G sells Equipment #3 to U. transferee member or target that begins of the Parent group) acquired In a series of related transactions that on the day after the deconsolidation Equipment #1 and S, while a member of does not include the 2018 sale, Parent date. the Parent group, had a depreciable acquires all of the stock of G in 2019. (C) Additional procedural guidance. interest in Equipment #1 within the Later in 2019, B purchases Equipment The IRS may publish procedural lookback period. In addition, B acquires #3 from U and places it in service guidance in the Internal Revenue Equipment #1 from S, and B and S are immediately thereafter. Bulletin (see § 601.601(d)(2)(ii)(b) of this Related at the time of the acquisition. (ii) Analysis. B’s acquisition of chapter) that provides alternative Accordingly, B is not eligible to claim Equipment #3 does not satisfy the No procedures for complying with the additional first year depreciation Prior Use Requirement as a result of the paragraph (c)(4)(ii)(A) or (B) of this deduction for Equipment #1 in 2018. Stock and Asset Acquisition Rule. In a section. (2) Example 2: Sale outside of the series of related transactions, G became (iii) Revocation of election. An consolidated group followed by a a member of the Parent group and B election specified in this paragraph reacquisition within the lookback acquired Equipment #3. Because G had (c)(4), once made, may be revoked only period—(i) Facts. S has a depreciable a depreciable interest in Equipment #3 by filing a request for a private letter interest in Equipment #2. In 2018, S within the lookback period, B is treated ruling and obtaining the Commissioner sells Equipment #2 to G. In 2019, in an as having a depreciable interest in of Internal Revenue’s written consent to unrelated transaction, B acquires Equipment #3 under the Stock and revoke the election. The Commissioner Equipment #2 from G and places it in Asset Acquisition Rule. Thus, B is not may grant a request to revoke the service in the same year. eligible to claim the additional first year election if the taxpayer acted reasonably (ii) Analysis. B’s acquisition of depreciation deduction for Equipment and in good faith, and the revocation Equipment #2 does not satisfy the No #3 in 2019. will not prejudice the interests of the Prior Use Requirement as a result of the (iii) B purchases Equipment #3 in Government. See generally § 301.9100– Group Prior Use Rule. Pursuant to the 2024. The facts are the same as in 3 of this chapter. An election specified Group Prior Use Rule, B is treated as paragraph (d)(3)(i) of this section, except in this paragraph (c)(4) may not be previously having a depreciable interest that B acquires and places in service revoked through a request under section in Equipment #2 because B is a member Equipment #3 in 2024 instead of 2019. 446(e) to change the taxpayer’s method of the Parent group and S, while a B is not treated under the Stock and of accounting. member of the Parent group, had a Asset Acquisition Rule as having a prior (d) Examples. For purposes of the depreciable interest in Equipment #2 depreciable interest in Equipment #3 examples in this section, unless within the lookback period. Thus, B is because G (which sold Equipment #3 to otherwise stated: Parent, S, B, not eligible to claim the additional first U in 2018) did not have a depreciable Controlled, and T are members of a year depreciation deduction for interest in Equipment #3 within the consolidated group of which Parent is Equipment #2 in 2019. The result would lookback period. In addition, B is not the common parent (Parent group); be the same if, after selling Equipment treated under the Group Prior Use Rule Parent owns all of the only class of stock #2 to G, S had ceased to be a member as having a prior depreciable interest in

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Equipment #3 at the time of the in § 1.168(k)–2 are satisfied, B is eligible requirements of the Consolidated Asset purchase because neither G nor any to claim the additional first year Acquisition Rule in paragraph (c)(1)(ii) other member of the Parent group had depreciation deduction for Equipment of this section. First, B’s acquisition of a depreciable interest in Equipment #3 #4 in 2020. Equipment #5 meets the requirements of while a member of the Parent group (iii) S purchases Equipment #4 in § 1.168(k)–2(b)(3)(iii)(A) without regard within the lookback period. Further, B 2020. The facts are the same as in to the related-party tests under section itself did not have a depreciable interest paragraph (d)(4)(i) of this section, except 179(d)(2)(A) or (B) and § 1.179– in Equipment #3 within the lookback that S rather than B purchases and 4(c)(1)(ii) or (iii) or the Group Prior Use period. Accordingly, B’s acquisition of places in service Equipment #4 in 2020. Rule. Second, as part of the same series Equipment #3 satisfies the No Prior Use S’s purchase of Equipment #4 does not of related transactions that includes B’s Requirement. Assuming all other satisfy the No Prior Use Requirement acquisition of Equipment #5, B ceases to requirements in § 1.168(k)–2 are because S had a depreciable interest in be a member of the Parent group and satisfied, B is eligible to claim the Equipment #4 within the lookback ceases to be Related to S. Third, additional first year depreciation period. Thus, S is not eligible to claim Equipment #5 continues to be eligible deduction for Equipment #3 in 2024. the additional first year depreciation property on the deconsolidation date (iv) No series of related transactions. deduction for Equipment #4 in 2020. (June 1, 2019). The facts are the same as in paragraph (iv) Acquisitions are part of the same (B) Consequences of the Consolidated (d)(3)(i) of this section, except that series of related transactions. The facts Asset Acquisition Rule. Under the Parent’s acquisition of the G stock and are the same as in paragraph (d)(4)(i) of Consolidated Asset Acquisition Rule, B B’s purchase of Equipment #3 are not this section, except that X’s acquisition is treated for all Federal income tax part of the same series of related of the Parent stock and B’s purchase of purposes as transferring Equipment #5 transactions. Because B’s purchase of Equipment #4 are part of the same series to an unrelated person on June 2, 2019, Equipment #3 and Parent’s acquisition of related transactions. Thus, pursuant in exchange for an amount of cash equal of the G stock did not occur pursuant to to the same series of related to the deemed sale amount and, the same series of related transactions, transactions, S became a member of the immediately thereafter, acquiring the Stock and Asset Acquisition Rule X group and B (another member of the deemed replacement property (New does not apply. In addition, B is not X group) acquired Equipment #4. Equipment #5) from an unrelated person treated under the Group Prior Use Rule Because S had a depreciable interest in for an amount of cash equal to the as having a prior depreciable interest in Equipment #4 within the lookback deemed sale amount. Accordingly, Equipment #3 at the time of the period, B is treated as having a assuming all other requirements in purchase because neither G nor any depreciable interest in Equipment #4 § 1.168(k)–2 are satisfied, B is eligible to other member of the Parent group had under the Stock and Asset Acquisition claim the additional first year a depreciable interest in Equipment #3 Rule. As a result, B’s acquisition of depreciation for an amount equal to the while a member of the Parent group Equipment #4 does not satisfy the No deemed sale amount for the taxable year within the lookback period. Further, B Prior Use Requirement, and B is not in which it places New Equipment #5 in itself did not have a depreciable interest eligible to claim the additional first year service. in Equipment #3 within the lookback depreciation deduction for Equipment (iii) Distribution of B. The facts are the period. Accordingly, B’s acquisition of #4 in 2020. same as in paragraph (d)(5)(i) of this Equipment #3 satisfies the No Prior Use (5) Example 5: Intercompany sale of section, except that, on June 1, 2019, Requirement. Assuming all other eligible property followed by sale of B Parent distributes the stock of B to its requirements in § 1.168(k)–2 are stock as part of the same series of shareholders (which are not Related to satisfied, B is eligible to claim the related transactions—(i) Facts. S has a S) in a distribution that qualifies for additional first year depreciation depreciable interest in Equipment #5. nonrecognition under section 355(a). deduction for Equipment #3 in 2019. On January 1, 2019, B purchases Accordingly, the Consolidated Asset (4) Example 4: Termination of the Equipment #5 from S and places it in Acquisition Rule applies. As in consolidated group—(i) Facts. S owns service. On June 1, 2019, as part of the paragraph (d)(5)(ii)(B) of this section, Equipment #4. In 2018, S sells same series of related transactions that assuming all other requirements in Equipment #4 to U. In 2019, X acquires includes B’s purchase of Equipment #5, § 1.168(k)–2 are satisfied, B is eligible to all of the stock of Parent in a transaction Parent sells all of the stock of B to X. claim the additional first year that causes the Parent group to Thus, B leaves the Parent group at the depreciation deduction for an amount terminate and Parent, B, and S to end of the day on June 1, 2019, and B equal to the deemed sale amount for the become members of the X group. In is a member of the X group starting June taxable year in which it places New 2020, in a transaction that is not part of 2, 2019. See § 1.1502–76(b). As of June Equipment #5 in service. a series of related transactions, B 1, 2019, Equipment #5 remains eligible (iv) Equipment #5 ceases to be eligible purchases Equipment #4 from U and property. property. The facts are the same as in places it in service in the same year. (ii) Analysis—(A) Application of the paragraph (d)(5)(i) of this section, except (ii) Analysis. B’s acquisition of Consolidated Asset Acquisition Rule. B that, on June 1, 2019, Equipment #5 is Equipment #4 satisfies the No Prior Use was a member of the Parent group when no longer eligible property. The Requirement. The Group Prior Use Rule it acquired Equipment #5. Because S, Consolidated Asset Acquisition Rule does not apply to treat B as having a another member of the Parent group, does not apply because B’s acquisition prior depreciable interest in Equipment had a depreciable interest in Equipment of Equipment #5 fails to satisfy the #4 because B is a member of the X group #5 while a member of the group within requirement in paragraph (c)(1)(ii)(C) of and no member of the X group had a the lookback period, B would be treated this section that the acquired eligible depreciable interest in Equipment #4 as having a prior depreciable interest in property continue to be eligible property while a member of the X group within Equipment #5 under the Group Prior on the deconsolidation date. Therefore, the lookback period. Further, B itself Use Rule and B’s acquisition of B’s acquisition of Equipment #5 on did not have a prior depreciable interest Equipment #5 would not satisfy the No January 1, 2019, fails to satisfy the No in Equipment #4 within the lookback Prior Use Requirement. However, B’s Prior Use Requirement. Under the period. Assuming all other requirements acquisition of Equipment #5 satisfies the Group Prior Use Rule, B is treated as

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having a prior depreciable interest in Parent group and cease to be Related to and then distributes the Controlled Equipment #5 because B is a member of S. Third, Equipment #6 continues to be common stock to Parent’s shareholders the Parent group and S, while a member eligible property on the deconsolidation in a distribution qualifying under of the Parent group, had a depreciable date (June 1, 2019). section 355(a) (Controlled Distribution). interest in Equipment #5 within the (C) Consequences of the Consolidated In the Controlled Distribution, T and B lookback period. Accordingly, B is not Deemed Acquisition Rule. Under the cease to be Related to Parent. Equipment eligible to claim the additional first year Consolidated Deemed Acquisition Rule, #7 remains eligible property on June 1, depreciation deduction with respect to New T is treated for all Federal income 2019. Equipment #5 in 2019. tax purposes as transferring Equipment (ii) Section 338(h)(10) election. (6) Example 6: Intercompany sale of #6 to an unrelated person on June 2, Immediately after the Controlled member stock for which a section 2019, in exchange for an amount of cash Distribution, Parent and B are not 338(h)(10) election is made followed by equal to the deemed sale amount and, related as determined under section sale of B stock as part of a series of immediately thereafter, acquiring 338(h)(3)(A)(iii). Further, B’s basis in related transactions—(i) Facts. S owns deemed replacement property (New the T stock is not determined, in whole all of the stock of T, which has a Equipment #6) from an unrelated person or in part, by reference to the adjusted depreciable interest in Equipment #6. for an amount of cash equal to the basis of the T stock in the hands of On January 1, 2019, B purchases all of deemed sale amount. Accordingly, Parent, and the stock is not acquired in the T stock from S in a qualified stock assuming all other requirements in an exchange to which section 351, 354, purchase for which a section 338(h)(10) § 1.168(k)–2 are satisfied, New T is 355, or 356 applies. Accordingly, the T election is made. On June 1, 2019, as eligible to claim the additional first year Exchange qualifies as a ‘‘purchase’’ part of the same series of related depreciation deduction for an amount within the meaning of section 338(h)(3). transactions that includes B’s purchase equal to the deemed sale amount for the Pursuant to the section 338(h)(10) of the T stock, Parent sells all of the taxable year in which it places New election, Old T is treated as transferring stock of B to X. Thus, B and T leave the Equipment #6 in service. all of its assets, including Equipment #7, (iii) T owns multiple assets. The facts Parent group at the end of the day on to an unrelated person in a single are the same as in paragraph (d)(6)(i) of June 1, 2019, and B and T are members transaction in exchange for this section, except that, in addition to of the X group starting June 2, 2019. See consideration at the close of the Equipment #6, T also owns Asset A § 1.1502–76(b). As of June 1, 2019, acquisition date (January 1, 2019), and (depreciable real estate that is not Equipment #6 remains eligible property. New T is treated as acquiring all of its (ii) Analysis—(A) Section 338(h)(10) eligible property). With respect to assets, including Equipment #7, from an election. Pursuant to the section Equipment #6, the results are the same unrelated person in exchange for 338(h)(10) election, Old T is treated as as in paragraph (d)(6)(ii) of this section. transferring all of its assets, including However, the Consolidated Deemed consideration. Old T is deemed to Equipment #6, to an unrelated person in Acquisition Rule does not apply to liquidate following the deemed asset a single transaction in exchange for Asset A because it is not eligible sale. See § 1.338–1(a)(1). consideration at the close of the property. Accordingly, New T is not (iii) Application of the Consolidated acquisition date (January 1, 2019), and treated as transferring Asset A to an Deemed Acquisition Rule. New T was a New T is treated as acquiring all of its unrelated person on June 2, 2019 and member of the Parent group when New assets, including Equipment #6, from an then, immediately thereafter, acquiring T acquired Equipment #7 from an unrelated person in exchange for deemed replacement property for Asset unrelated person. Because Old T, consideration. Old T is deemed to A. If Equipment #6 had ceased to be another member of the Parent group, liquidate following the deemed asset eligible property as of June 1, 2019, the had a depreciable interest in Equipment sale. See § 1.338–1(a)(1). Consolidated Deemed Acquisition Rule #7 while a member of the group within (B) Application of the Consolidated also would not apply to Equipment #6. the lookback period, New T would be Deemed Acquisition Rule. New T was a (7) Example 7: Section 355 treated as having a prior depreciable member of the Parent group when New transaction following a section interest in Equipment #7 under the T acquired Equipment #6 from an 338(h)(10) transaction pursuant to the Group Prior Use Rule and New T’s unrelated person. Because Old T, same series of related transactions—(i) acquisition of Equipment #7 would not another member of the Parent group, Facts. T has a depreciable interest in satisfy the No Prior Use Requirement. had a depreciable interest in Equipment Equipment #7. On January 1, 2019, However, New T’s acquisition of #6 while a member of the group within Parent contributes all of the stock of T Equipment #7 satisfies the requirements the lookback period, New T would be to B in exchange for common and non- of the Consolidated Deemed Acquisition treated as having a prior depreciable voting preferred stock of B and sells the Rule in paragraph (c)(2)(ii) of this interest in Equipment #6 under the non-voting preferred stock of B to U section. Thus, New T is treated for all Group Prior Use Rule and New T’s pursuant to a binding commitment Federal income tax purposes as acquisition of Equipment #6 would not entered into prior to the contribution (T transferring Equipment #7 to an satisfy the No Prior Use Requirement. Exchange). The non-voting preferred unrelated person on June 2, 2019, in However, New T’s acquisition of stock is not treated as ‘‘stock’’ for exchange for an amount of cash equal to Equipment #6 satisfies the requirements purposes of section 1504(a). See section the deemed sale amount and, of the Consolidated Deemed Acquisition 1504(a)(4). Parent and B jointly make an immediately thereafter, acquiring Rule in paragraph (c)(2)(ii) of this election under section 338(h)(10) with deemed replacement property (New section. First, New T’s acquisition of respect to the T Exchange. On June 1, Equipment #7) from an unrelated person Equipment #6 meets the requirements of 2019, as part of the same series of for an amount of cash equal to the § 1.168(k)–2(b)(3)(iii)(A) without regard related transactions that includes the T deemed sale amount. Accordingly, to the Group Prior Use Rule. Second, as Exchange, Parent contributes the stock assuming all other requirements in part of the same series of related of B and assets comprising an active § 1.168(k)–2 are satisfied, New T is transactions that includes B’s qualified trade or business (within the meaning of eligible to claim the additional first year stock purchase of the T stock, B and section 355(b)) to Controlled in depreciation deduction for an amount New T cease to be members of the exchange for Controlled common stock equal to the deemed sale amount for the

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taxable year in which it places New may choose to apply both the rules of rules of this section and the rules of Equipment #7 in service. this section and the rules of § 1.168(k)– § 1.168(k)–2, in their entirety and in a (e) Applicability dates—(1) In general. 2, in their entirety and in a consistent consistent manner, to such property Except as provided in paragraph (e)(2) manner, to— only if those rules are applied, in their of this section, this section applies to— (A) Depreciable property acquired entirety and in a consistent manner, by (i) Depreciable property acquired after after September 27, 2017, by the all parties to the transaction (including September 27, 2017, by the taxpayer and taxpayer and placed in service by the the transferor member, the transferee placed in service by the taxpayer during taxpayer during a taxable year ending member, and the target, as applicable) or after the taxpayer’s taxable year that on or after September 28, 2017; and the consolidated groups of which begins on or after January 1, 2021; (B) A specified plant for which the they are members, for the taxable year(s) (ii) A specified plant for which the taxpayer properly made an election to in which the transaction occurs and the taxpayer properly made an election to apply section 168(k)(5) and that is taxable year(s) that includes the day apply section 168(k)(5) and that is planted, or grafted to a plant that was after the deconsolidation date. planted, or grafted to a plant that was previously planted, after September 27, (iii) Bound by early application. Once previously planted, by the taxpayer 2017, by the taxpayer during a taxable a taxpayer applies the rules of this during or after the taxpayer’s taxable year ending on or after September 28, section and the rules of § 1.168(k)–2, in year that begins on or after January 1, 2017; and their entirety, for a taxable year, the 2021; and (C) Components acquired or self- taxpayer must continue to apply the (iii) Components acquired or self- constructed after September 27, 2017, of rules of this section and the rules of constructed after September 27, 2017, of larger self-constructed property § 1.168(k)–2, in their entirety, for the larger self-constructed property described in § 1.168(k)–2(c)(2) and taxpayer’s subsequent taxable years. described in § 1.168(k)–2(c)(2) and placed in service by the taxpayer during placed in service by the taxpayer during a taxable year ending on or after Sunita Lough, or after the taxpayer’s taxable year that September 28, 2017. Deputy Commissioner for Services and begins on or after January 1, 2021. (ii) Early application to certain Enforcement. (2) Early application of this section transactions. In the case of property Approved: September 16, 2020. and § 1.168(k)–2—(i) In general. Subject described in paragraph (e)(2)(i) of this David J. Kautter, to paragraphs (e)(2)(ii) and (iii) of this section that is acquired in a transaction Assistant Secretary of the Treasury (Tax section, and provided that all members that satisfies the requirements of Policy). of a consolidated group consistently paragraph (c)(1)(ii) or (c)(2)(ii) of this [FR Doc. 2020–21112 Filed 11–5–20; 4:15 pm] apply the same set of rules, a taxpayer section, the taxpayer may apply the BILLING CODE 4830–01–P

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Part IV

Commodity Futures Trading Commission

17 CFR Part 4 Compliance Requirements for Commodity Pool Operators on Form CPO– PQR; Final Rule

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COMMODITY FUTURES TRADING (202) 418–5985 or [email protected]; or investment trust, syndicate, or similar COMMISSION Christopher Cummings, Special form of enterprise, and who, with Counsel, at (202) 418–5445 or respect to that commodity pool, solicits, 17 CFR Part 4 [email protected], Division of Swap accepts, or receives from others, funds, Dealer and Intermediary Oversight, securities, or property, either directly or RIN 3038–AE98 Commodity Futures Trading through capital contributions, the sale of Compliance Requirements for Commission, Three Lafayette Centre, stock or other forms of securities, or Commodity Pool Operators on Form 1151 21st Street NW, Washington, DC otherwise, for the purpose of trading in 3 CPO–PQR 20581. commodity interests. CEA section 4m(1) generally requires each person SUPPLEMENTARY INFORMATION: AGENCY: Commodity Futures Trading who satisfies the CPO definition to Commission. Table of Contents register as such with the Commission.4 ACTION: Final rule. I. Introduction and Background CEA section 4n(3)(A) requires registered A. Overview of Form CPO–PQR, as CPOs to maintain books and records and SUMMARY: The Commodity Futures Originally Adopted file such reports in such form and Trading Commission (CFTC or B. The Proposal manner as may be prescribed by the Commission) is adopting amendments II. Final Rule Commission.5 (the Final Rule) to Commission A. General Comments and Adopting the Following the enactment in 2010 of regulations on additional reporting by Revised Form the Dodd-Frank Wall Street Reform and commodity pool operators (CPOs) and B. The Elimination of Schedules B and C Consumer Protection Act (Dodd-Frank commodity trading advisors and to From the Revised Form Act) 6 and subsequent joint adoption Form CPO–PQR (also, the form). The C. Adoption of the Proposed Schedule of with the Securities and Exchange Investments in the Revised Form Commission (SEC) of Form PF (Joint Commission is: Eliminating existing D. Retaining the Five Percent Threshold for Schedules B and C of Form CPO–PQR, Reportable Assets Form PF) for advisers to large private 7 except for the Pool Schedule of E. Adding LEI Fields to the Revised Form funds, the CFTC adopted a new Investments; amending the information F. The Revised Form’s Definitions, reporting requirement for CPOs through requirements and instructions to request Instructions, and Questions Commission regulation at § 4.27, which, Legal Entity Identifiers (LEIs) for CPOs i. Quarterly Filing Schedule for All CPOs among other things, requires certain and their operated pools that have them, Completing the Revised Form CPOs to report periodically on Form and to delete questions regarding pool ii. Instructions 3 and 5 CPO–PQR.8 The Commission proposed auditors and marketers; and making iii. Instruction 4 this new reporting requirement after iv. Definition of ‘‘Broker’’ certain other changes due to the reevaluating its regulatory approach to v. Elimination of Questions Regarding CPOs due to the 2008 financial crisis rescission of Schedules B and C, Auditors and Marketers including the elimination of all existing vi. FAQs and Glossary and the purposes and goals of the Dodd- reporting thresholds. Pursuant to the G. Substituted Compliance Frank Act in light of the then-current Final Rule, all reporting CPOs will be i. NFA Form PQR economic environment. Amendments to required to file the revised Form CPO– ii. Joint Form PF the CPO regulatory program adopted at PQR (Revised Form CPO–PQR, or the iii. Substituted Compliance for CPOs of that time, including Form CPO–PQR Revised Form) quarterly. The Final Rule Registered Investment Companies and § 4.27, were intended to: (1) Align also amends Commission regulations to H. Compliance Date the Commission’s regulatory structure III. Related Matters for CPOs with the purposes of the Dodd- permit reporting CPOs to file NFA Form A. Regulatory Flexibility Act PQR, a comparable form required by the Frank Act; (2) encourage more B. Paperwork Reduction Act congruent and consistent regulation by National Futures Association (NFA), in i. Overview lieu of filing the Commission’s Revised ii. Revisions to the Collection of Federal financial regulatory agencies of Form. Conversely, Form PF will no Information: OMB Control Number similarly-situated entities, such as longer be accepted in lieu of the Revised 3038–0005 dually registered CPOs required to file Form, though it will remain a C. Cost-Benefit Considerations Joint Form PF; (3) improve Commission form. i. The Elimination of Pool-Specific accountability and increase Reporting Requirements in Schedules B transparency of the activities of CPOs DATES: Effective Date: The effective date and C and the commodity pools that they for the Final Rule, including the ii. The Revised Form operate or advise; and (4) facilitate a adoption of the Revised Form, is iii. Alternatives data collection that would potentially December 10, 2020. iv. Section 15(a) Factors assist the Financial Stability Oversight Compliance Date: All reporting CPOs D. Antitrust Laws will be required to file the Revised Form I. Introduction and Background 3 7 U.S.C. 1a(11); see also 17 CFR 1.3, with respect to their operated pools for ‘‘commodity pool operator.’’ the first calendar quarter of 2021, which Section 1a(11) of the Commodity 4 7 U.S.C. 6m(1). ends on March 31, 2021. The deadline Exchange Act (CEA or the Act) 1 defines 5 7 U.S.C. 6n(3)(A). Registered CPOs have for filing the Revised Form for that the term ‘‘commodity pool operator,’’ as regulatory reporting obligations with respect to any person 2 engaged in a business that their operated pools. See, e.g., 17 CFR 4.22. reporting period is sixty days after the 6 is of the nature of a commodity pool, Public Law 111–203, 124 Stat. 1376 (2010). quarter-end, or May 30, 2021. 7 Section 202(a)(29) of the Investment Advisers FOR FURTHER INFORMATION CONTACT: Act of 1940 (Advisers Act) defines the term ‘‘private 1 7 U.S.C. 1a(11). The Act is found at 7 U.S.C. 1, fund’’ as ‘‘an issuer that would be an investment Joshua B. Sterling, Director, at 202–418– et seq. (2018), and is accessible through the company, as defined in section 3 of the Investment 6700 or [email protected]; Amanda Commission’s website, https://www.cftc.gov. Company Act of 1940 (15 U.S.C. 80a–3), but for Lesher Olear, Deputy Director, at 202– 2 7 U.S.C. 1a(38); 17 CFR 1.3, ‘‘person’’ (defining section 3(c)(1) or 3(c)(7) of that Act.’’ Advisers Act 418–5283 or [email protected]; Pamela M. ‘‘person’’ to include individuals, associations, Section 202(a)(29), 15 U.S.C. 80ab–2(a)(29). 8 Geraghty, Associate Director, at 202– partnerships, corporations, and trusts). The Commodity Pool Operators and Commodity Commission’s regulations are found at 17 CFR ch. Trading Advisors: Compliance Obligations, 77 FR 418–5634 or [email protected]; I (2020), and are accessible through the 11252 (Feb. 24, 2012) (Form CPO–PQR Final Rule); Elizabeth Groover, Special Counsel, at Commission’s website, https://www.cftc.gov. 17 CFR part 4, app. A; 17 CFR 4.27.

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Counsel (FSOC).9 To that end, the § 4.27 and Form CPO–PQR.15 In the PF.21 A Large CPO is a CPO that had at requirements of Form CPO–PQR were Proposal, the Commission stated that, least $1.5 billion in aggregated pool modeled closely after those of Joint after seven years of experience with the assets under management (AUM) 22 as of Form PF.10 form, the Commission was reassessing the close of business on any day during the form’s scope and alignment with the In adopting Form CPO–PQR, the the reporting period; a Mid-Sized CPO Commission’s current regulatory Commission indicated that the collected is a CPO that had at least $150 million, priorities.16 The Commission explained data would be used for several broad but less than $1.5 billion, in aggregated that its ability to make full use of the purposes, including: (1) Increasing the pool AUM as of the close of business on more detailed information collected 23 Commission’s understanding of its any day during the reporting period. under the form has not met the Although not defined in the form, registrant population; (2) assessing the Commission’s initial expectations.17 market risk associated with pooled ‘‘Small CPO,’’ as used herein, refers to The Commission emphasized that, since a CPO that had less than $150 million investment vehicles under its the form’s adoption, it has devoted jurisdiction; and (3) monitoring for in aggregated pool AUM during the substantial resources to developing reporting period. The reporting period systemic risk.11 Specifically, the other data streams and regulatory Commission was interested in receiving for Large CPOs is any of the individual initiatives, which are designed to calendar quarters (ending March 31, information regarding the operations of enhance the Commission’s ability to June 30, September 30, and December CPOs and their pools, including their broadly surveil financial markets for 31), whereas, for Small and Mid-Sized participation in commodity interest risk posed by all manner of market CPOs, the reporting period is the markets, their relationships with participants, including CPOs and their calendar year.24 intermediaries, and their operated pools.18 interconnectedness with the financial Thus, as further explained in the Prior to the Final Rule amendments system at large.12 In proposing the discussion that follows, the Commission adopted herein, Form CPO–PQR majority of the more pool-specific has concluded that the form should be consisted of three schedules: Schedules questions in the form, in particular, the revised to better facilitate the A, B, and C.25 Schedule A requires Commission believed the incoming data Commission’s oversight of CPOs and reporting CPOs to disclose basic would assist it in monitoring their operated pools, as well as its identifying information about the CPO commodity pools in such a way as to coordination of other Commission data (Part 1) and about each of the CPO’s allow the Commission to identify trends streams and regulatory initiatives, while pools and the service providers they use reducing the overall reporting burdens 26 over time, including a pool’s exposure (Part 2). Consistent with the for CPOs required to file the Revised to asset classes, the composition and ‘‘Reporting Period’’ definitions Form. liquidity of a commodity pool’s described above, Large CPOs submit portfolio, and a pool’s susceptibility to A. Overview of Form CPO–PQR, as Schedule A on a quarterly basis, failure in times of stress.13 Although the Originally Adopted whereas all other reporting CPOs submit it annually.27 Schedule B requires Commission recognized that the Pursuant to § 4.27, any CPO registered requested data may have some or required to be registered with the additional detailed information for each limitations, it believed that, in light of Commission is a ‘‘reporting person,’’ pool operated by Mid-Sized and Large the 2008 financial crisis and the sources except for a CPO that operates only CPOs, in particular regarding each of risk delineated in the Dodd-Frank Act pools for which it maintains an operated pool’s investment strategy, with respect to private funds, the exclusion from the CPO definition borrowings and types of creditors, detailed, pool-specific information to be available under § 4.5, and/or an counterparty credit exposure, trading collected by Form CPO–PQR was both exemption from CPO registration and clearing mechanisms, value of necessary and appropriately balanced to available under § 4.13.19 The amount of aggregated derivative positions, and assess the risks posed by a single pool, information that a reporting CPO has 21 or a CPO’s operations as a whole.14 been required to disclose on the form See generally Instructions to Form PF, available varies depending on the size of the at http://www.sec.gov/about/forms/formpf.pdf. On April 16, 2020, the Commission Private fund investment advisers with ‘‘regulatory operator and the quantity and size of the unanimously approved, and, on May 4, AUM,’’ as that term is defined in Joint Form PF, of operated pools.20 at least $150 million are required to file Section 1 2020, subsequently published in the The form, as adopted in 2012, of Joint Form PF; private fund investment advisers Federal Register, a notice of proposed identifies three classes of filers: Large with regulatory AUM equal to or exceeding $1.5 billion are required to file Sections 1 and 2 of Joint rulemaking (Proposal or NPRM) that CPOs, Mid-Sized CPOs, and Small proposed to amend both Commission Form PF. Id. CPOs. The thresholds for determining 22 As used in the form, AUM refers to the amount Large and Mid-Sized CPO status, and of all assets that are under the control of the CPO. 9 Commodity Pool Operators and Commodity thus their reporting obligations, 17 CFR part 4, app. A, ‘‘Definitions of Terms’’ Trading Advisors: Compliance Obligations, 76 FR (providing specific definitions for terminology used 7976, 7978 (Feb. 11, 2011) (Form CPO–PQR generally align with those in Joint Form in the form, including AUM). The ‘‘Definitions of Proposal). Terms’’ section of the form is renamed by this Final 10 Id. (‘‘The Commission proposes [Form CPO– 15 Amendments to Compliance Requirements for Rule ‘‘Defined Terms’’ in the Revised Form. PQR] to solicit information that is generally Commodity Pool Operators on Form CPO–PQR, 85 23 Id. identical to that sought through Form PF’’). FR 26378 (May 4, 2020) (2020 CPO–PQR NPRM). 24 Id. (defining ‘‘Reporting Period’’). The form Commission regulation at § 4.27 further permits the 16 2020 CPO–PQR NPRM, 85 FR at 26380 (May 4, additionally defines, ‘‘Reporting Date,’’ as the last filing of Joint Form PF in lieu of Commission filing 2020). calendar day of the Reporting Period for which this requirements (i.e., Form CPO–PQR) for CPOs that 17 Id. Form CPO–PQR is required to be completed and are dually registered with the SEC as investment 18 Id. filed,’’ e.g., ‘‘the Reporting Date for the first advisers. 17 CFR 4.27(d). 19 17 CFR 4.27(b)(1)(i); see also 17 CFR calendar quarter of a year is March 31. Id. For Mid- 11 Form CPO–PQR Final Rule, 77 FR 11253–54 4.27(b)(2)(i) (establishing that CPOs operating only Sized and Small CPOs, their Reporting Date would (Feb. 24, 2012). pools for which they claim relief under 17 CFR 4.5 therefore be December 31. Id. 12 Id. at 77 FR 11266–67 (Feb. 24, 2012). or 4.13 are not considered ‘‘reporting persons’’ for 25 17 CFR part 4, app. A, ‘‘Reporting 13 Form CPO–PQR Proposal, 76 FR at 7981 (Feb. purposes of the Form CPO–PQR filing requirement). Instructions.’’ 11, 2011). 20 See generally 17 CFR part 4 app. A, ‘‘Reporting 26 Id. at ‘‘Reporting Instructions,’’ no. 2. 14 Id. Instructions.’’ 27 Id.

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schedule of investments.28 Large CPOs its advisory services to private funds,37 CPO–PQR, as well as several also submit Schedule B on a quarterly the CPO is deemed to have satisfied its amendments to § 4.27.42 Specifically, basis; Mid-Sized CPOs are required to Schedule B and C filing requirements, the Commission proposed to eliminate complete and submit Schedule B provided that the CPO completes and the requirement to complete and submit annually.29 files the referenced sections of Joint Schedules B or C of the form, with the Schedule C requires further detailed Form PF with respect to the pool(s) exception of the Pool Schedule of 38 information about the pools operated by operated during the reporting period. Investments (PSOI) (currently, question Large CPOs on an aggregate and pool- In addition to Joint Form PF and Form 6 of Schedule B). The Commission by-pool basis. Part 1 of Schedule C CPO–PQR, in 2010, NFA adopted and proposed to retain the questions set requires aggregate information for all implemented its own NFA Form PQR to forth in current Schedule A with certain pools operated by a Large CPO, elicit data in support of NFA’s risk- amendments, notably the addition of based examination program for its CPO questions regarding LEIs, and the including (1) a geographical breakdown 39 of the pools’ investment on an membership. Pursuant to NFA deletion of questions regarding pool 43 aggregated basis, and (2) the turnover Compliance Rule 2–46, all CPO NFA marketers and auditors. Thus, the members, which includes all CPOs rate of the aggregate portfolio of pools.30 Commission proposed the Revised Form registered with the Commission, must Part 2 of Schedule C requires certain consisting of a revised Schedule A, plus file NFA Form PQR on a quarterly basis detailed information for each ‘‘Large the PSOI and the instructions and with respect to all of their operated Pool’’ the Large CPO operates,31 where definitions in the current form that pools.40 44 a ‘‘Large Pool’’ is a commodity pool that NFA accepts the filing of Form remain relevant. The Proposal CPO–PQR (but not Joint Form PF) in has a net asset value (NAV) 32 required all reporting CPOs to file the lieu of filing NFA Form PQR for any individually, or in combination with Revised Form on a quarterly basis, quarter in which a Form CPO–PQR any parallel pool structure,33 of at least regardless of AUM or size of operations, filing is required under § 4.27.41 $500 million as of the close of business and such reporting CPOs would be on any day during the reporting Consequently, dually registered CPO- permitted to file NFA Form PQR in lieu investment advisers that file Joint Form 45 period.34 Specifically, Part 2 requires of the Revised Form. The Proposal PF in lieu of a Form CPO–PQR filing, information with respect to each Large included an amendment to § 4.27(d) that consistent with § 4.27(d), as it reads Pool the Large CPO operates during the would eliminate the substituted prior to these Final Rule amendments, given reporting period; this section of compliance currently available for are also required to file NFA Form PQR the form elicits information regarding dually registered CPO-investment with NFA quarterly. the Large Pool’s: (1) Identity; (2) advisers required to file Joint Form PF liquidity; (3) counterparty credit B. The Proposal with respect to their operated private funds, while retaining Joint Form PF as exposure; (4) risk metrics; (5) borrowing; As noted above, the Commission (6) derivative positions and posted a Commission form. The comment published the NPRM on May 4, 2020, period for the Proposal expired on June collateral; (7) financing liquidity; (8) proposing substantial revisions to Form participant information; and (9) the 15, 2020, and the Commission received 46 35 ten relevant comment letters: Two duration of its fixed income assets. 37 As used in the form, the term ‘‘private fund’’ Large CPOs complete and file Schedule has the same meaning as the definition of ‘‘private from individuals; one from a registered C on a quarterly basis: This filing fund’’ in Joint Form PF. 17 CFR part 4, app. A, futures association; and seven from includes Part 1 of Schedule C, as well ‘‘Definitions of Terms.’’ industry professional and trade 38 17 CFR part 4, app. A, ‘‘Reporting associations.47 as a separate Part 2 for each Large Pool Instructions,’’ no. 2. that a Large CPO operates during the 39 NFA Compliance Rule 2–46 (2017), available at 42 reporting period.36 If a CPO is also https://www.nfa.futures.org/rulebook/ 2020 CPO–PQR NPRM. registered with the SEC as an rules.aspx?RuleID=RULE%202-46&Section=4 43 2020 CPO–PQR NPRM, 85 FR at 26381, 26383 (May 4, 2020). investment adviser, and is therefore (noting this rule was initially adopted effective March 31, 2010, and subsequently amended in 44 2020 CPO–PQR NPRM, 85 FR at 26381 (May 4, required to file Joint Form PF regarding 2013, 2016, and most recently, 2017). Commission 2020). regulations require each person registered as a CPO 45 2020 CPO–PQR NPRM, 85 FR at 26381 and 28 17 CFR part 4, app. A, Sched. B, ‘‘Detailed to become and remain a member of at least one 26389 (May 4, 2020) (proposing to amend Information About the Pools Operated by Mid-Sized registered futures association, of which there is § 4.27(c)(1) by adding substituted compliance for CPOs and Large CPOs.’’ currently one, i.e., NFA. 17 CFR 170.17. this filing requirement with respect to NFA Form 29 17 CFR part 4, app. A, ‘‘Reporting 40 NFA Compliance Rule 2–46(a). CFTC staff has PQR). Instructions,’’ no. 2. previously advised that reporting CPOs should 46 The Commission received a total of 14 30 17 CFR part 4, app. A, Sched. C, pt. 1. exclude all pools operated subject to relief provided comment letters, four of which were either spam or in either 17 CFR 4.5 or 4.13 from their Form CPO– otherwise not substantively relevant to the Proposal 31 17 CFR part 4, app. A, Sched. C, pt. 2, PQR filings, including with respect to any in any respect. ‘‘Information About the Large Pools of Large CPOs.’’ applicable reporting threshold calculations. CFTC 47 Comments were submitted by Mr. Chris 32 As used in Form CPO–PQR, the term ‘‘net asset Division of Swap Dealer and Intermediary Barnard (Barnard) (May 8, 2020); NFA (June 10, value’’ has the same meaning as in § 4.10(b). See 17 Oversight Responds to Frequently Asked Questions 2020); the Alternative Investment Management CFR 4.10(b) (defining ‘‘net asset value’’ as total Regarding Commission Form CPO–PQR (Nov. 5, Association (AIMA) (June 11, 2020); the Depository assets minus total liabilities, determined in accord 2015), available at http://www.cftc.gov/ucm/ Trust and Clearing Corporation (DTCC) (June 15, with generally accepted accounting principles, with groups/public/@newsroom/documents/file/faq_ 2020); the Global Legal Entity Identifier Foundation each position in a commodity interest transaction cpocta.pdf (2015 CPO–PQR FAQs). NFA Form PQR (GLEIF) (June 15, 2020); the Managed Funds accounted for at a fair market value). similarly focuses its data collection efforts on the Association (MFA) (June 15, 2020); the Investment 33 As used in the form, the term ‘‘parallel pool listed pools of registered CPO Members. NFA may, Adviser Association (IAA) (June 15, 2020); the structure’’ means any structure in which one or however, use NFA Form PQR to collect information Securities Industry and Financial Market more Pools pursues substantially the same beyond that collected by the Commission’s Revised Association Asset Management Group (SIFMA investment objective and strategy and invests side Form. See, e.g., NFA Compliance Rule 2–46(b). AMG) (June 15, 2020); Ms. Talece Y. Hunter by side in substantially the same assets as another Nothing in the Commission’s Proposal or the Final (Hunter) (June 15, 2020); and the Investment Pool. 17 CFR part 4, app. A, ‘‘Definitions of Terms.’’ Rule restricts NFA’s ability to require reporting Company Institute (ICI) (June 15, 2020). The 34 17 CFR part 4, app. A, Sched. C, pt. 2, beyond that required by the Commission, provided complete comment file for the 2020 CPO–PQR ‘‘Information About the Large Pools of Large CPOs.’’ that such NFA requirements are consistent with the NPRM can be found on the Commission’s website. 35 Id. CEA and Commission regulations promulgated Comments for Proposed Rule 85 FR 26378 (May 4, 36 17 CFR part 4, app. A, ‘‘Reporting thereunder. See 7 U.S.C. 17(j). 2020), available at https://comments.cftc.gov/ Instructions,’’ no. 2. 41 NFA Compliance Rule 2–46(b). PublicComments/CommentList.aspx?3098.

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II. Final Rule pools,55 for the reasons it explained in information in Form CPO–PQR that has the Proposal.56 Today’s Final Rule A. General Comments and Adopting the not been helpful for the CFTC’s constitutes the first of several steps in 62 Revised Form oversight purposes.’’ Furthermore, ICI the Commission’s ongoing reassessment concurred with the Commission that the The comments that the Commission of Form CPO–PQR, the substantive agency’s limited resources should not be received were, in general, strongly information it seeks to collect, and the spent on trying to make use of the supportive of the Proposal.48 form and manner in which the ‘‘voluminous and very specific pool- Commenters largely agreed with the Commission collects and uses that level data sought in Schedules B and proposed amendments and viewed the information. 63 proposal of the Revised Form as a C.’’ Expressing support for the ‘‘helpful improvement to the current B. The Elimination of Schedules B and elimination of Schedules B and C, as system.’’ 49 Multiple commenters stated C From the Revised Form well as the retention of a revised PSOI that the Proposal, if adopted, would In proposing to eliminate a majority of for each pool, SIFMA AMG praised the simplify CPO reporting requirements, the pool-specific reporting requirements Commission for recognizing ‘‘lessons significantly reduce filers’ reporting in Schedules B and C of Form CPO– learned’’ from seven years of experience burdens, increase the regulatory PQR, the Commission observed that, with the form and the data it has integrity and utility of the data collected challenges with the data collected in elicited.64 SIFMA AMG described the by the Revised Form, and serve as a Schedules B and C, combined with the Proposal as a demonstration of the critical step in the development of a resource constraints of broader CFTC’s consideration of the utility of ‘‘holistic market surveillance program,’’ Commission priorities, have frustrated the data currently collected by the form, with respect to registered CPOs and the the Commission’s ability to fully realize and balancing that against the pools they operate.50 Similarly, NFA its vision for this data collection.57 As successful use of other Commission data stated its support of ‘‘the Commission’s described above, the eliminated data streams, which were developed after the efforts to streamline and simplify the elements in Schedules B and C include form was initially adopted.65 In reporting requirements for CPOs,’’ and detailed pool-specific information, asset addition, SIFMA AMG strongly its belief that ‘‘the [P]roposal will satisfy liquidity and concentration of positions, supported the adoption of a streamlined the Commission’s goal of reducing clearing relationships, risk metrics, Revised Form for all CPOs and their reporting requirements in a manner that financing, and investor composition.58 pools, thereby eliminating the CPO and continues to facilitate effective oversight In explaining the proposed rescission of pool threshold calculations that dictated of CPOs and the pools they operate.’’ 51 Schedules B and C, the Commission Although MFA stated its preference stated that its ability to identify trends the scope and burden of each CPO’s 66 for a consolidated form for both SEC across CPOs or pools using Form CPO– Form CPO–PQR filing. and CFTC filings with respect to pooled PQR data has been substantially Due to the logistical and timing investment vehicles and their operators challenged, due to the post hoc nature difficulties the Commission explained or advisers, MFA nonetheless expressed of the previous filings and the in detail in the NPRM,67 the its strong support for the Proposal’s substantial amount of flexibility the Commission has determined to forego Revised Form.52 Similarly, SIFMA AMG Commission permitted for CPOs the collection of the detailed stated that the Proposal is well-aligned completing the form.59 In the Proposal, information requested by Schedules B with the Commission’s intended the Commission noted that certain of its and C of Form CPO–PQR, in part, purpose for it, and subject to alternate data streams provide a more because the Commission was not able to recommended revisions, strongly timely, standardized, and reliable view fully incorporate the resulting data set recommended it be adopted.53 into relevant market activity than that into its oversight program for registered Encouraged by the Commission’s provided under Form CPO–PQR, which proposed amendments eliminating CPOs and their operated pools. The make them much easier to combine into Commission acknowledges the strong significant pool-specific sections of the 60 a holistic surveillance program. support from commenters with respect form, AIMA requested that the The proposed removal of Schedules B Commission consider further reducing and C was broadly supported by to this particular amendment, and the scope of the Revised Form, if at all commenters.61 For instance, IAA believes that, in conjunction with other possible.54 supported the Commission’s efforts to amendments explained below, the After considering the public streamline the process, stating, ‘‘We Commission will receive more complete comments received, the Commission appreciate the CFTC tailoring the and usable data regarding reporting has determined to adopt the Revised regulatory reporting requirements for CPOs’ pool operations due to the more Form and the amendments to § 4.27, CPOs to limit data collection that the targeted data collected in the Revised largely as proposed, in furtherance of its Commission will make use of[,] and Form. Accordingly, Schedules B and C, regulatory goals with respect to eliminating the more detailed along with all references to the registered CPOs and their operated thresholds associated therewith, have 55 Consistent with past Commission staff been removed in their entirety from the 48 See, e.g., DTCC, at 2. guidance, ‘‘operated pools,’’ as used in this Revised Form adopted by the Final 49 ICI, at 4 (noting that ‘‘the Proposal would document, means those pools for which a CPO is Rule. significantly reduce the reporting burdens to which required to be registered with the Commission. registered fund CPOs are currently subject’’). 56 2020 CPO–PQR Proposal, 85 FR at 26381–84 50 Hunter, at 1; AIMA, at 2; SIFMA AMG, at 2; (May 4, 2020). 62 IAA, at 4. 57 Barnard, at 1. 2020 CPO–PQR NPRM, 85 FR at 26381 (May 4, 63 ICI, at 6. 51 2020). NFA, at 1. 64 SIFMA AMG, at 4. 52 MFA, at 1–2. 58 2020 CPO–PQR NPRM, 85 FR at 26380 (May 4, 65 SIFMA AMG, at 4–5. 53 SIFMA AMG, at 2. 2020). 59 66 SIFMA AMG, at 6 (noting that these threshold 54 AIMA, at 2–3 (stating also that AIMA 2020 CPO–PQR NPRM, 85 FR at 26381 (May 4, welcomed the Proposal, instead of ‘‘incremental 2020). calculations for CPO and pool size have proved and non-transformative change,’’ and was ‘‘in 60 2020 CPO–PQR NPRM, 85 FR at 26382 (May 4, difficult to practically apply and calculate). favour of making better use of data obtained 2020). 67 2020 CPO–PQR NPRM, 85 FR at 26381 (May 4, through other reporting obligations’’). 61 E.g., IAA, at 3–4; NFA, at 1–2. 2020).

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C. Adoption of the Proposed Schedule the Commission has determined not to diminished dataset would provide the of Investments in the Revised Form make material revisions at this time. Commission an insufficient view into One of the specific questions posed by Events in the bond and energy markets, the actual holdings of operated the Commission in the Proposal was: both recently and in its past experience, commodity pools in markets subject to Should the Commission consider have reinforced the Commission’s the Commission’s oversight, which, in amending the Schedule of Investments understanding of the turn, potentially undermines the to align with the simpler schedule that interconnectedness of financial markets, Commission’s assessment of the risk appeared in NFA Form PQR in 2010? 68 and emphasized the importance of posed by CPOs and their operated pools The Commission received several understanding how CPOs are positioned within the commodity interest markets vis-a`-vis their counterparties and the and their vulnerabilities when faced comments on the content of the 74 proposed PSOI, including multiple economy as a whole. Moreover, with challenging market conditions. recommendations that the Commission incorporating a PSOI that is aligned This information is currently essential adopt a schedule in the Revised Form with the 2010 Schedule of Investments, to the Commission’s ability to identify that aligned with the former Schedule of particularly the 10% asset threshold CPOs and pools with whom the Investments originally adopted by NFA discussed below, in the Revised Form Commission should engage more deeply results in a material loss of information depending on market events, especially in 2010 for its NFA Form PQR (2010 from reporting CPOs on their operated in times of unpredictable market Schedule of Investments).69 The 2010 pools’ alternative investment or volatility. Therefore, the Commission Schedule of Investments is less detailed derivatives positions, which are the has decided to collect the more detailed than the PSOI currently in use by both primary focus of the Commission’s PSOI, as it continues to reassess its data Form CPO–PQR and NFA Form PQR.70 Several of the commenters argued that jurisdiction. For instance, the needs in this space. In the Commission’s experience, the detailed information required by the Commission notes that the 2010 commodity interest markets change over proposed PSOI is no longer necessary in Schedule of Investments lacks specific line items for crude oil, natural gas, and time, as do the Commission’s own the broader context of the Revised Form. some precious metals like gold, all of technological applications, surveillance For instance, NFA, in a comment that which have been subject to significant capabilities, and access to real-time data was supported by both MFA and ICI, volatility.75 streams, and thus, require the ongoing, supported aligning with the 2010 At this time, the Commission believes careful review of the appropriateness of Schedule of Investments because a that reducing the amount of information existing regulatory approaches. ‘‘more streamlined schedule will collected with respect to multiple asset Accordingly, the Commission hereby significantly alleviate filing burdens on classes, particularly those that are under instructs its staff to evaluate the ongoing CPOs without negatively impacting the the Commission’s primary jurisdictional utility of the PSOI information in the usefulness of the information that is mandate,76 is premature. The resulting Revised Form, including comparing it to 71 collected.’’ NFA explained that it does the 2010 Schedule of Investments, not need the more granular information 74 ‘‘Options trading firm blows up amid natural within 18–24 months following the in the PSOI, and that this granularity gas volatility,’’ Financial Times (Nov. 19, 2018), Final Rule’s Compliance Date. As part of has not, in NFA’s experience, improved available at https://ft.com/content/b7c525f6-ec44/ 11e8/89c8/d36339d835c0; ‘‘The Shine Is Off,’’ Slate its review, Commission staff should their analysis, in part, because ‘‘very (June 9, 2013), available at https://www.slate.com/ consider whether or not it is appropriate few CPOs include balances on a business/2013/06/gold-bubble-paranoid-investors- to adopt the 2010 Schedule of significant number of line items set pushed-gold-to-1900-an-ounce-in-2011-but-the- Investments, in light of such utility. forth in the current schedule.’’ 72 IAA bubble-has-burst; ‘‘Bond investors say some energy companies ‘will not survive’ oil rout slamming After completing this review, and taking also expressed its support, stating that markets,’’ Market Watch (Mar. 10, 2020), available into consideration the Commission’s the specific data fields in the PSOI at https://www.marketwatch.com/story/bond- current regulatory needs, the should be aligned with that of NFA investors-say-some-energy-companies-will-not- Commission expects its staff to develop 73 survive-oil-rout-slamming-markets-2020-03-09; Form PQR. ‘‘Global stocks, oil prices, and government bonds recommendations or a proposed The Commission acknowledges and tumble,’’ Financial Times (Mar. 18, 2020), available rulemaking for the Commission’s further understands commenters’ arguments at https://www.ft.com/content/1b1b47d4-68bd- review to effectuate staff’s findings. supporting a more narrowly focused 11ea-a3c9/1fe6fedcca75; ‘‘Oil plunges into negative territory for the first time ever as demand In addition, as part of this review, PSOI in the Revised Form. Nevertheless, evaporates,’’ Business Insider (Apr. 20, 2020), Commission staff should continue to available at https://markets.businessinsider.com/ explore the use of data available from 68 2020 CPO–PQR NPRM, 85 FR at 26384 (May 4, commodities/news/us-crude-oil-wti-falls-to-21-year- designated contract markets, swap low-1029106364#. 2020). execution facilities, and swap data 69 IAA, at 4; ICI, at 6; NFA, at 1–2; MFA, at 3. 75 Id. 70 See infra pt. II.G.i for additional discussion on 76 ‘‘Gold prices settle at 1-week low as U.S. stock repositories—i.e., existing sources of permissible substituted compliance for § 4.27 with market tumbles,’’ MarketWatch (Sept. 3, 2020), transaction and position data—and its respect to NFA Form PQR. available at https://www.marketwatch.com/story/ application to effecting robust oversight 71 NFA, at 2 (discussing how the 2010 Schedule gold-heads-for-back-to-back-loss-amid-vaccine- hope-us-dollar-strength-2020-09-03; ‘‘Oil sinks with of CPOs and commodity pools, as of Investments elicits the information necessary for compared to the information received NFA’s risk assessment purposes). See also ICI, at 4; equities on wavering hopes for demand pickup,’’ MFA, at 4. ICI further emphasized that the overall Bloomberg (Sept. 3, 2020, updated Sept. 4, 2020), from Revised Form CPO–PQR. In success of the Proposal’s revisions to Form CPO– available at https://www.bloomberg.com/news/ addition, the Commission expects its articles/2020-09-03/oil-extends-biggest-weekly- PQR will depend on whether the resulting dataset drop-since-june-as-demand-woes-return; ‘‘U.S. oil staff to continue engaging with their is appropriately calibrated to the Commission’s prices settle at lowest in nearly a month as supplies, counterparts at the SEC during this 18– regulatory interests and limited to data the output log sharp but temporary hurricane-related Commission will employ in regulating CPOs and 24 month period regarding potential drop,’’ Market Watch (Sept. 2, 2020), available at modifications to Joint Form PF, which their commodity pools. ICI, at 4. https://www.marketwatch.com/story/oil-prices- 72 NFA, at 2 (concluding that its 2010 Schedule lifted-by-lackluster-bounce-in-opec-crude-output- should inform further revisions to of Investments ‘‘elicits the information necessary inventory-fall-2020/09/02; ‘‘Oil prices continue to Revised Form CPO–PQR. for both the CFTC’s and NFA’s needs’’). slide as U.S. data feeds fuel demand worry,’’ Consistent with the views expressed 73 IAA, at 5. MFA also supported this alignment Reuters (Sept. 2, 2020), available at https:// by other commenters, NFA stated its and strongly advocates for consistency between the www.reuters.com/article/us-global-oil/oil-prices- Schedules of Investment in the Revised Form and continue-to-slide-as-us-data-feeds-fuel-demand- belief that the more limited dataset NFA Form PQR. MFA, at 3–4. worry-idUSKBN25U04D. collected on the 2010 Schedule of

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Investments would be sufficient for both Commission should carefully review the CPOs and their operated pools.82 This is NFA’s and the Commission’s proposed PSOI, weigh the utility of the of particular importance to the purposes.77 The Commission notes, asset sub-categories, and eliminate those Commission given the recent however, that direct oversight of deemed to be unnecessary or not unprecedented market conditions reporting CPOs and their operated pools implicating the Commission’s regulatory discussed above. Accordingly, the is only one of the uses of the data interests.81 Revised Form adopted herein retains the collected by the Revised Form’s PSOI. Upon consideration of the comments, 5% asset reporting threshold, and the This information is also useful to the and consistent with the overall PSOI Commission reiterates its direction to Commission in developing its analysis above, the Commission is Commission staff to evaluate the understanding of the commodity declining to increase the threshold for a ongoing utility of the PSOI information interest markets more broadly, pool’s reportable assets from 5% to 10% in the Revised Form, within 18–24 including how various asset classes are at this time. The Commission has months of the Compliance Date for the being utilized by reporting CPOs and reviewed data from past Form CPO– Final Rule. their operated pools. Although there PQR filings, and concludes that, if it E. Adding LEI Fields to the Revised may be certain subcategories of asset were to raise the threshold from 5% to Form classes that have not had many, if any, 10%, the Commission would lose a The Commission also proposed responses over the past six reporting material portion of the data that it has adding fields to the Revised Form periods, that does not mean that such been receiving regarding pool positions requesting LEIs for reporting CPOs and subcategories of asset classes may not in derivatives and alternative their operated pools that are otherwise become more widely used in the future, investments. Specifically, the required to have them, due to their or that a pool’s exposure to asset classes Commission reviewed the first level of activity in the swaps market.83 The that are currently less widely utilized subcategory data within the seven Commission emphasized in the would not be useful in overseeing the headings of asset classes from the 2019 operations of reporting CPOs and their Proposal that the inclusion of existing year-end Form CPO–PQR filings. There LEIs within the smaller dataset on pools going forward. Eliminating was a total of 5,574 PSOIs filed, with questions due solely to a lack of past Revised Form CPO–PQR should enable 1,240 of those filings reporting at least the Commission to more efficiently and responses seems to presume that the one balance that was between 5% and operations and pool trading activity of accurately synthesize the various 10% of NAV, which means that 22% of Commission data streams on an entity- reporting CPOs will remain static going the total filed PSOIs reported an asset forward. The Commission knows from by-entity basis and may permit better balance that would be lost to the use of other data to illuminate the risk its direct regulatory experience in Commission, if the Commission overseeing CPOs that such a inherent in pools and pool families.84 increased the reporting threshold to Specifically, the NPRM queried, Should presumption is false because these 10%. registrants and their pools exhibit high the Commission include LEIs on Looking at the data further, the levels of variability and dynamism in Revised Form CPO–PQR? Why or why Commission found that, of those 1,240 85 their investment strategies. not? PSOIs reporting at least one asset Commenters supported the inclusion D. Retaining the Five Percent Threshold between 5 and 10% of a pool’s NAV, of LEIs because of their low cost, ability for Reportable Assets 660 of them reported balances in either to facilitate standardization across Aligning the Revised Form’s PSOI alternative investments or derivatives— multiple data streams and generally with the 2010 Schedule of Investments asset classes in which the Commission enhance reporting, and ‘‘their risk would include increasing the threshold retains a significant regulatory interest. management capabilities.’’ 86 SIFMA for reportable assets of a pool from 5% Those 660 PSOIs constitute 53% of all AMG also supported the addition of of a pool’s NAV to 10%, which multiple PSOIs reporting an asset as 5–10% of questions on LEIs, stating that it commenters specifically addressed and the pool’s NAV, and amount to understood that ‘‘[requiring LEIs in the supported.78 As discussed above, MFA approximately 12% of the total PSOI Revised Form CPO–PQR] is the key to also requested the Commission align its population. Losing data on 12% of its integrating the information collected in PSOI with NFA’s 2010 Schedule of total PSOI filings by reporting CPOs multiple data streams,’’ and would Investments, and increase the reportable regarding alternative investment or make information collected by the asset threshold from 5% to 10%.79 derivatives positions, which are the SIFMA AMG stated that revising the primary focus of the Commission’s 82 In concluding that losing Form CPO–PQR data jurisdiction, is a material loss, because for 22% of its total filing population was material, PSOI in this manner would greatly staff was guided by the SEC’s Staff Accounting reduce or eliminate the burden on CPOs it would provide the Commission with Bulletin 99, which addresses accounting materiality to provide information on pool assets or an incomplete picture of the actual thresholds. Materiality, SEC Staff Accounting investments that are, ‘‘either nominal or holdings of a pool in markets subject to Bulletin No. 99, 64 FR 45150 (Aug. 19, 1999), the Commission’s oversight, which available at https://www.sec.gov/interps/account/ so minimal they do not affect the daily sab99.htm. risk of a CPO.’’ 80 As an alternative to could undermine the Commission’s 83 2020 CPO–PQR NPRM, 85 FR at 26378 (May 4, adopting the 2010 Schedule of assessment of the market risk posed by 2020). Investments, SIFMA AMG also would 84 2020 CPO–PQR NPRM, 85 FR at 26383 (May 4, support a more holistic analysis by the 81 SIFMA AMG, at 14 (describing such an analysis 2020) (anticipating that the inclusion of LEIs would greatly facilitate the aggregation of data from Commission of the proposed PSOI: as ‘‘weighing the difficulty of certain CPOs to provide data for the more granular sub-categories commodity pools under different levels of common rather than simply doubling the compared with the usefulness of such data for the control). percentage threshold for reportable Commission, with a focus on categories of assets 85 2020 CPO–PQR NPRM, 85 FR at 26384 (May 4, assets, SIFMA AMG argued that the where the Commission does not have a specific 2020). regulatory interest or otherwise would have limited 86 DTCC, at 2; SIFMA AMG, at 6; GLEIF, at 1. See use for such detail’’). See also IAA, at 5 (questioning also Hunter, at 1, and Barnard, at 1. GLEIF noted 77 NFA, at 2. the relevance and necessity of certain line items in further that standardizing the LEI requirement 78 IAA, at 5; MFA, at 4; SIFMA, at 14. the proposed PSOI); MFA, at 6–14 (providing line would also contribute to the harmonization of rules 79 MFA, at 4. edits to the proposed PSOI, and recommending the and standards across regulatory regimes. GLEIF, at 80 SIFMA AMG, at 14. deletion of multiple asset classes). 2.

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Revised Form ‘‘much easier to combine collected registrant data.93 According to entities 98 are the only Commission into a holistic surveillance program’’ for MFA, registered CPOs should be registrants required to maintain and registered CPOs and their operated permitted to file their LEIs for the renew their LEIs.99 Notably, CPOs and pools.87 Citing a list of benefits Revised Form in a separate submission, their operated pools are not among associated with LEIs, GLEIF and DTCC such that the LEIs and identifying those entities. Additionally, because advocated for further expanding the LEI information of the CPO and its pools are CPOs and their operated pools are not requirement to all reporting CPOs and separated from the confidential required to obtain, maintain, or renew pools, instead of only requiring them information the Revised Form otherwise LEIs to participate in the futures market, from entities that currently have them.88 collects.94 the Commission believes that imposing GLEIF also requested the Commission such a requirement solely for Form The Commission is adopting this consider two specific recommendations CPO–PQR reporting purposes would provision as proposed. The LEI fields regarding LEIs: (1) Adopting a not, at this time, advance the included in the Revised Form should requirement that only LEIs that are Commission’s goal of monitoring CPOs provide significant regulatory benefits, maintained and duly renewed would and their operated pools for market and satisfy this reporting obligation in the particularly with respect to the systemic risk. Revised Form; and (2) requiring LEIs for Commission’s stated goal of developing The Commission notes that this all reporting entities submitting the a holistic surveillance program for approach to LEIs in the Final Rule does Revised Form, as well as for a reporting registered CPOs and their operated not preclude expanding the LEI 95 CPO’s miscellaneous service providers, pools. At this time, the Commission requirement in the Revised Form in the like a third-party administrator, broker, will not require CPOs that do not future. As noted herein, and in the trading manager, and/or custodian.89 currently have LEIs to obtain them Proposal, the Final Rule is intended to DTCC argued that expanding the LEI solely for the purposes of reporting on leverage the other data developed by the requirement to cover all reporting CPOs the Revised Form.96 The Commission’s Commission as they currently exist. The and all of their operated pools would regulations currently only require Commission currently does not require allow the Commission to obtain a more entities to obtain LEIs if they are LEIs to participate in the commodity complete picture of pool activity across engaged in swaps transactions. interest markets beyond the swaps all derivatives transactions, rather than Specifically, the Commission’s market; however, in the future, the LEI just with respect to swaps.90 DTCC also regulations regarding swap data requirement could be expanded to other provided specific cost estimates for LEI reporting, which were amended in commodity interest asset classes. If that acquisition, renewal, and maintenance, September 2020, require CPOs or should happen, reporting CPOs and positing that these costs would not be a commodity pools that are counterparties their pools would be required to report significant burden on CPOs. Moreover, to swaps to use LEIs in all swap data those LEIs on the Revised Form as well. DTCC argued that expanding the recordkeeping and reporting.97 The As LEIs become more ubiquitous in the requirement could instead ease CPOs’ Commission would therefore expect that market, and as more CPOs obtain and reporting burden, ‘‘through the any CPO or commodity pool entering use them in operating their pools, the standardization of a common into swap transactions would have an Commission anticipates that there will identifier,’’ i.e., an LEI for each reporting LEI. Conversely, if a reporting CPO and be a corresponding increase of reported entity and each operated pool, and its pools do not engage in swap LEIs on the Revised Form. further facilitate the synthesis of CPO transactions, they would not be required With respect to commenters’ concerns and pool data.91 to have LEIs. Moreover, futures market about cybersecurity, determining the MFA suggested that the Commission participants are not required to have feasibility of filing LEI information collect LEI data separately from the LEIs generally, and as such, LEIs are not separately from the Revised Form would Revised Form for purposes of protecting collected by the designated contract hinder the Commission’s ability to highly confidential information in these markets or derivatives clearing adopt the Final Rule in a timely manner. filings from potential cyber breaches.92 organizations with respect to futures The Commission believes that such Specifically, MFA recommended that transactions. Therefore, imposing such a delay serves neither its own regulatory the Commission incorporate requirement on reporting CPOs and interests nor the interests of alphanumeric identifiers to conceal the their pools that do not engage in swaps Commission registrants required to file identities of reporting CPOs in the would not assist the Commission in Form CPO–PQR. In arriving at this Revised Form, and that the Commission utilizing the other data streams available conclusion, the Commission weighed separate this data to mitigate potential to it regarding futures trading activity. the benefits of adopting Revised Form breaches and enhance protections for CPO–PQR sooner, including the Additionally, allowing only those opportunity to begin fully incorporating LEIs that are maintained and duly the Revised Form’s dataset into the 87 SIFMA AMG, at 2. renewed to satisfy the reporting 88 GLEIF, at 1 (stating that the Proposal’s current Commission’s oversight program for LEI requirement would not allow the Commission requirement in the Revised Form runs registered CPOs and their operated to aggregate all derivatives transactions by pools counter to the Commission’s stated pools, as well as operational efficiencies under common control); DTCC, at 2. purpose of the Revised Form. Currently, for the Revised Form’s filers, against 89 GLEIF, at 1. swap dealers and other registered whether the Commission should modify 90 DTCC, at 2. 91 DTCC, at 2–3 (discussing the average costs how data on the Revised Form is 93 associated with obtaining and maintaining an LEI: MFA, at 3. average cost for an LEI is $111, and the renewal fee 94 Id. 98 17 CFR 1.3, ‘‘registered entity’’ (including, inter is $91; the annual one-time cost for all CPOs 95 2020 CPO–PQR NPRM, at 85 FR 26382 (May 4, alia, designated contract markets, swap execution without an LEI would total $64,828; the annual 2020). facilities, derivatives clearing organizations, and renewal fee combined for all 1326 registered CPOs 96 See infra Form CPO–PQR, ‘‘Reporting swap data repositories, in the ‘‘registered entity’’ would total $120,666). Neither DTCC nor GLEIF Instructions,’’ no. 9. definition). provided any cost estimates with respect to 97 Swap Data Recordkeeping and Reporting 99 Swap Data Recordkeeping and Reporting expanding the LEI requirement to all operated pools Requirements, approved by the Commission on Requirements, approved by the Commission on or to all of a reporting CPO’s service providers. September 17, 2020. Publication in the Federal September 17, 2020. Publication in the Federal 92 MFA, at 3. Register is pending. Register is pending.

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collected. That analysis also included to a limited portion of the Form CPO– i. Quarterly Filing Schedule for All an assessment of the state of the PQR filing population. The Commission CPOs Completing the Revised Form Commission’s current data security finds that the outcome of this approach The simplified, uniform, quarterly protocols. would undermine and run counter to filing schedule proposed for the Revised With respect to the Commission’s data the Commission’s stated purposes in the Form with respect to all reporting CPOs security protocols, it is currently in full Proposal, i.e., revising Form CPO–PQR and their operated pools received broad compliance with all of the relevant in a way that supports the Commission’s support from commenters. NFA statutes relating to information security ability to exercise its oversight of CPOs generally expressed strong support for and protection.100 The Commission’s and their operated pools, while the Commission’s efforts to streamline Office of Inspector General (OIG) audits reducing reporting burdens for market and simplify the reporting regime for the agency’s security program annually, 103 participants. Taking all of this into reporting CPOs, including the quarterly and as of the 2019 audit, OIG identified account, the Commission concludes that filing schedule, and stated its belief that, no material weaknesses and made no adopting Revised Form CPO–PQR at ‘‘the proposal will satisfy the significant findings. Moreover, the OIG this time, absent any significant Commission’s goal of reducing reporting rated the Commission’s security modification as to how the information, 101 requirements in a manner that continues program as ‘‘effective.’’ In addition to including LEIs, is submitted, is the OIG review, the U.S. Department of to facilitate effective oversight of CPOs appropriate. In conjunction with and the pools that they operate.’’ 108 Homeland Security (DHS) also assesses Commission staff’s review of the the Commission on a semiannual basis, SIFMA AMG also expressed its support Revised Form’s PSOI within 18–24 to increase the filing frequency of the and DHS’ most recent assessment of the months of this Final Rule’s Compliance CFTC’s security program for compliance Revised Form for all reporting CPOs Date, the Commission further directs its with the Cybersecurity Framework because of the simplified filing schedule staff to determine the feasibility, (CSF), as required by the Office of across all CPOs, regardless of size, and necessity, and advisability of separating Management and Budget, resulted in the consistency in filing schedules a CPO’s LEIs from the rest of Revised ratings of ‘‘managed and measurable’’ in between the Revised Form and NFA Form CPO–PQR in that same time 109 all five functions of the CSF.102 Form PQR. In the Commission’s opinion, frame. Lastly, the Commission remains In adopting the changes as proposed, delaying the adoption of the Final Rule committed to devoting significant the Commission still favors employing a and of Revised Form CPO–PQR, resources to ensure its internal data simpler, more uniform filing specifically in order to separately collect security procedures are aligned with, or requirement for all reporting CPOs. This a filing CPO’s LEIs, would lead to an surpass, industry best practices, as they straightforward filing structure and undesirable regulatory outcome. This develop over time. schedule should facilitate compliance and reporting under § 4.27, thereby approach would delay the adoption of F. The Revised Form’s Definitions, enhancing the efficacy of the Revised Form CPO–PQR significantly, if Instructions, and Questions not indefinitely, thereby depriving filing Commission’s oversight of reporting CPOs of much-anticipated compliance As discussed above, the Commission CPOs and their operated pools. relief, for the purpose of addressing also proposed several amendments to ii. Instructions 3 and 5 arguably unwarranted (given the recent the Instructions of the Revised Form.104 objective and favorable evaluations of For instance, the Commission proposed Instruction 3 on Form CPO–PQR was this agency’s information security and to require all reporting CPOs to file the carried over, in relevant part, to the data protection protocols cited above) Revised Form quarterly by redefining Proposal’s Revised Form and states: The data security concerns only applicable ‘‘Reporting Period,’’ to mean a calendar CPO May Be Required to Aggregate quarter.105 Additionally, the Information Concerning Certain Types 100 See, e.g., the Federal Information Security Commission proposed significant of Pools. For the parts of Form CPO– Modernization Act of 2014, 44 U.S.C 3551, et seq. changes to Instructions 2 and 3, in PQR that request information about (Dec. 18, 2014). connection with deleting Form CPO– individual Pools, you must report 101 ‘‘Office of the Inspector General Semiannual aggregate information for Parallel Report to Congress: October 1, 2019-March 31, PQR’s Schedules B and C, as well as the 2020,’’ CFTC Office of the Inspector General, p. 8 elimination of terms related to the Managed Accounts and Master Feeder (Mar. 31, 2020), available at https://www.cftc.gov/ Arrangements as if each were an _ various thresholds used for those media/3946/oig reporttocongress033120/download. schedules, i.e., Mid-Sized CPO, Large individual Pool, but not Parallel Pools. 102 ‘‘Federal Information Security Modernization 106 Assets held in Parallel Managed Act of 2014 Annual Report to Congress: Fiscal Year CPO, and Large Pool. The 2019,’’ Office of Management and Budget. Although Commission further queried in the Accounts should be treated as assets of DHS has not yet published the Fiscal Year 2019 Proposal: Are there ways the the Pools with which they are 110 report to its website, the Commission notes that it Commission could further clarify and aggregated. Paragraphs in Instruction received similar ratings in fiscal year 2018. See 3 of the existing form describing how to ‘‘Federal Information Security Modernization Act of refine the reporting instructions for 2014 Annual Report to Congress: Fiscal Year 2018,’’ completing Revised Form CPO–PQR in determine if a CPO is a Mid-Sized or Office of Management and Budget, p. 49 (Aug. 23, order to provide CPOs with greater Large CPO required to complete 2019), available at https://www.whitehouse.gov/wp- certainty that they are completing the Schedules B or C, or if a pool is a Large content/uploads/2019/08/FISMA/2018/Report- Pool for purposes of completing FINAL-to-post.pdf. The CSF, developed by the form correctly? 107 National Institute of Standards and Technology, Schedule C, were proposed to be includes five function areas: ‘‘Identify, Protect, deleted from the Revised Form.111 In the 103 2020 CPO–PQR NPRM, 85 FR at 26380 (May Detect, Respond, and Recover.’’ Id. at 17. A finding 4, 2020). Proposal, the Commission also retained of ‘‘managed and measurable,’’ is the fourth highest 104 of five levels and means, ‘‘[q]uantitative and 2020 CPO–PQR NPRM, 85 FR at 26378 (May 108 qualitative measures on the effectiveness of 4, 2020). NFA, at 1. policies, procedures, and strategies are collected 105 2020 CPO–PQR NPRM, 85 FR at 26396 (May 109 SIFMA AMG, at 4. across the organization and used to assess them and 4, 2020). 110 2020 CPO–PQR NPRM, 85 FR at 26391 (May make necessary changes.’’ Id. at 31. Per the IG 106 2020 CPO–PQR NPRM, 85 FR at 26391 (May 4, 2020) (proposing Instruction 3 of the Revised Reporting Metrics, a finding of ‘‘managed and 4, 2020). Form). measurable’’ ‘‘is considered to be effective at the 107 2020 CPO–PQR NPRM, 85 FR at 26384 (May 111 2020 CPO–PQR NPRM, 85 FR at 26391 (May domain, function, and overall level[s].’’ Id. at 32. 4, 2020). 4, 2020).

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Instruction 5, which read as follows: I The Commission generally agrees because Instruction 5 is no longer am required to aggregate funds or with commenters with respect to PMAs applicable, the Commission has accounts to determine whether I meet a and the remaining references to removed it from the Revised Form. reporting threshold, or I am electing to reporting thresholds in the proposed iii. Instruction 4 aggregate funds for reporting purposes. Revised Form. Consequently, the How do I ‘‘aggregate’’ funds or accounts Commission believes that much of the The Proposal also retained Instruction for these purposes? 112 Instruction 5 language in these instructions should be 4, which provided the following: I then provided substantive examples on deleted for internal consistency in the advise a Pool that invests in other Pools how to aggregate funds as if they were Revised Form. Therefore, the or funds (e.g., a ‘‘fund of funds’’). How one pool with respect to parallel Commission is revising Instruction 3 to should I treat these investments for managed accounts (PMAs) and/or remove all references to PMAs and purposes of Form CPO–PQR? 122 The Master-Feeder Arrangements.113 Parallel Pools, focusing solely on Instruction states, in pertinent part, that NFA responded to the Commission’s reporting information concerning pools for purposes of this Form CPO–PQR, question on additional clarifications to in a Master-Feeder Arrangement. Thus, you may disregard any Pool’s equity the Revised Form’s instructions, stating Instruction 3 in the Revised Form only investments in other Pools.123 NFA that, if the Revised Form is adopted as addresses how Master-Feeder requested that the Commission proposed, the reporting requirements for Arrangements should be reported.120 ‘‘consider eliminating the guidance in CPOs will no longer be dependent on With respect to the treatment of Instruction 4 regarding the ‘investments reporting thresholds, and therefore, a Master-Feeder Arrangements under the in other Pools generally’ heading’’ detailed instruction on PMAs is not Revised Form, commenters raise an because that guidance allows a CPO to necessary.114 NFA recommended interesting question as to the proper disregard a pool’s equity investments in accordingly that the Commission requirements to impose on structures other pools, and NFA would like these ‘‘consider whether these instructions meeting the form’s definition of a assets included.124 This reporting helps and the related definitional terms Master-Feeder Arrangement. NFA ‘‘identify pool assets that may also should be eliminated.’’ 115 SIFMA AMG Specifically, the form provides that a be reported by another pool or fund.’’ 125 also stated that the purpose of Master-Feeder Arrangement is ‘‘an However, IAA disagreed ‘‘with any aggregating pool assets would no longer arrangement in which one or more recommendation to eliminate be relevant under the Revised Form, and funds (‘‘Feeder Funds’’) invest all or Instruction 4,’’ because IAA would it would be unclear what these substantially all of their assets in a 121 consider that ‘‘a significant change in instructions mean under the Revised single fund (‘‘Master Fund’’).’’ This how CPOs currently report on the Form, absent those reporting definition encompasses many variations form.’’ 126 Consequently, IAA stated that thresholds.116 Therefore, SIFMA AMG of fund complexes from funds with this particular change should be also requested the Commission remove wholly-owned subsidiaries, to funds considered, if at all, ‘‘as part of a formal Instructions 3 and 5 related to PMAs, with multiple levels of intermediary rulemaking, with notice and funds between the feeder and master given the proposed deletion of comment.’’ 127 funds, to the more traditional structures Schedules B and C and the associated Instruction 4, in the original form, thresholds for CPOs and pools. SIFMA where two or more feeder funds invest substantially all of their assets into a was generally intended to provide clear AMG, like NFA, believed that the instruction that investments in other concept of PMAs and pool asset commonly owned master fund. The Commission believes that, to adequately pools should not be included in a aggregation, as a whole, is no longer consider the propriety of permitting all specific reporting CPO’s or operated relevant to completing the Revised such fund structures to consolidate their pool’s applicable reporting threshold. Form.117 SIFMA AMG also filings on the Revised Form, additional For example, a pool’s fund-of-funds recommended the Commission revise analysis is required to determine the investments, in which the reporting the Revised Form further to permit the appropriate parameters to impose on CPO may have little to no control over filing of Master-Feeder Arrangements as such relief. Therefore, the Commission the management or performance of one pool, rather than requiring each declines to change the reporting those assets, should not cause a pool to fund to report separately.118 Finally, approach for Master-Feeder be considered a ‘‘Large Pool,’’ which SIFMA AMG suggested the Commission Arrangements at this time and instead, would require additional, highly adopt the approach taken in Joint Form instructs staff to engage in such an detailed reporting with respect to that PF with respect to Master-Feeder analysis to determine what pool. Similarly, a reporting CPO should Arrangements, specifically in Joint Form not also have been categorized as a 119 modifications may be needed to provide PF Instruction 5. for consolidated reporting where Large or Mid-Sized CPO, with appropriate. consequences to the scope and breadth 112 2020 CPO–PQR NPRM, 85 FR at 26392 (May of their filings, solely due to the fact that 4, 2020) (proposing Instruction 5 of the Revised Upon consideration of the comments, Form). the Commission is deleting Instruction its aggregated pool AUM included 113 Id. 5 in its entirety because this instruction 114 NFA, at 3. was originally included to explain how 122 2020 CPO–PQR NPRM, 85 FR at 26391–92 115 Id. a reporting CPO should determine if it (May 4, 2020) (proposing to retain Instruction 4 in 116 SIFMA AMG, at 8–9 (stating its belief that the Revised Form). is a Large, Mid-Sized, or Small CPO, 123 these instructions were borrowed from Joint Form and what the resulting scope of its filing Id. PF and the main function of this instruction is to 124 NFA, at 3. aggregate pool assets of a CPO, for the purpose of should be, i.e., whether Schedules B or 125 Id. (emphasizing that NFA would like to see determining whether a firm is a Large, Mid-Sized, C (or both) were required. Accordingly, these ‘‘other pool investments’’ reflected in or Small CPO, and whether a pool is a Large Pool). multiple answers in the Revised Form, in particular 117 Id. for Master-Feeder Arrangements, a CPO should to Questions 2 and 8 on assets under management, 118 Id. at 9. provide the LEI of a Master Fund’’). Question 9 for the calculation of monthly rates of 119 SIFMA AMG, at 11–13 (explaining further 120 See infra Revised Form CPO–PQR, ‘‘Reporting return, and the PSOI in Question 11 on investments that, ‘‘[t]o align with the Commission’s proposal to Instructions,’’ no. 3. in other funds). require pool LEIs on the CPO–PQR, we are 121 17 CFR part 4, app. A, ‘‘Definitions of Terms,’’ 126 IAA, at 6, n.28. suggesting that should a single filing be permitted ‘‘Master-Feeder Arrangement.’’ 127 IAA, at 6.

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investments in other pools that it does private funds, and money market funds, the commodities markets.’’ 131 ICI also not operate. reporting CPOs must disclose their supported clarifying the ‘‘broker’’ Although NFA presents a compelling pools’ investments in other funds as definition in this manner, and limiting argument regarding its anticipated use part of the PSOI. The Commission the responses to the Revised Form ‘‘to of information regarding pools’ further believes that requiring these brokers that a CPO uses with respect to investments in other pools, the investments to be listed in the PSOI is commodity interest transactions,’’ Commission has determined to continue necessary for it to make full use of the because, ICI explained, such an to provide CPOs with the discretion to information provided on Question 8 in approach would be consistent with the include or exclude such investments, the Revised Form, for which such Proposal’s stated purpose of refining provided that their treatment is investments must also be included. reporting, ‘‘in order to better monitor consistent throughout the Revised Form. Without this detail in the PSOI, it would the commodity interest markets.’’ 132 The Commission understands from IAA be very difficult to determine the asset The Commission has consistently that this would be a significant change classes influencing the movement in a understood the term ‘‘broker,’’ in the in how CPOs of pools that invest in pool’s AUM and NAV from one context of Form CPO–PQR, to include other pools engage with the form and reporting period to the next. Therefore, more than just those service providers could be quite burdensome for CPOs the Revised Form retains the current engaging in the commodity interest that may be reporting such information general treatment of investments in markets,133 and has not limited the for the first time. Moreover, the other pools currently set forth in definition of the term ‘‘broker,’’ as used Commission believes that retaining the Instruction 4, with the additional either in the current form or the Revised obligation to include such investments clarification that they are included in Form, in any manner. Moreover, Form in the reported pool’s AUM and NAV the PSOI. CPO–PQR, as a general matter, has (Question 8 of the Revised Form), as consistently requested information on well as requiring the investments to be With respect to pools that invest substantially all of their assets in other all enumerated service providers used enumerated in the PSOI, as discussed by a reporting CPO for its operated below, provides adequate information pools, their investments in other pools were required to be included in the pool(s), regardless of the asset class or about a pool’s investments in other 134 reporting CPO’s responses to Schedule markets involved. Consistent with pools for the Commission to oversee this position, which is supported by the their activities, while the Commission A of Form CPO–PQR. Because under the Revised Form, Schedule A comprises plain meaning of the Form CPO–PQR’s continues to develop its abilities to definition of ‘‘broker,’’ reporting CPOs integrate its data regarding reporting the entirety of the Revised Form, with the exception of the addition of the currently filing the form should identify CPOs and their operated pools. any broker used in any transactions for Therefore, consistent with Instruction 4 PSOI, the Commission is revising Instruction 4 to provide that such other any pool not operated pursuant to an as originally adopted, the Commission exemption or exclusion during the will continue to require that such pool investments must be reported on in the Revised Form. reporting period. This is also consistent investments be included in a reporting with other aspects of the form and the CPO’s response to Question 10 in the iv. Definition of ‘‘Broker’’ Revised Form, e.g., the PSOI, which are current form, which solicits information not limited to collecting data solely on regarding the pool’s statement of Like the original iteration of the form, the commodity interest transactions of a changes concerning AUM, and which the Proposal defined ‘‘broker’’ as any reporting CPO and its operated pools. has been redesignated as Question 8 in entity that provides clearing, prime The Commission notes elsewhere in the Revised Form, as well as in the PSOI brokerage, or similar services to the this release that the trading activity or 128 in the Revised Form, but will not Pool. IAA recommended that the investments of pools in asset classes otherwise require such CPO to include Commission clarify whether a ‘‘broker’’ other than commodity interests may a pool’s investments in other pools in its in the Revised Form refers to only impact the viability of that pool and/or responses to the Revised Form. commodity-related brokers, or includes the overall operations of its CPO.135 129 The Final Rule’s revisions to non-commodity brokers. IAA further This fact has been highlighted by the Instruction 4 also require the reporting explained that CPOs may have many recent unprecedented market CPO to include such investments in relationships with executing brokers for movements and difficulties resulting other pools in the PSOI. In the Proposal, non-commodity interest transactions, from the Covid–19 pandemic and its the Commission amended the form by and absent a clarification of this broad negative effects on the U.S. and removing detailed pool information set definition, this prompt would constitute global economies. Therefore, the out in Schedules B and C, but retained a substantial burden for CPOs to include Commission finds that collecting data the PSOI, which has now become the 130 all brokers in the Revised Form. on CPO and pool activity outside of only section on Revised Form CPO–PQR Finally, IAA queried what regulatory commodity interests is also of general that provides detailed pool investment interest or benefit the Commission information. In the original form, the would gain from a broad definition of 131 IAA, at 6. IAA further stated its expectation PSOI supplemented the rest of the ‘‘broker,’’ and concluded that, ‘‘we do that, should the Commission clarify the ‘‘broker’’ information provided; going forward, not believe this information is necessary definition to refer only to brokers involved in with the amendments removing to implement [Revised] Form CPO–PQR commodity interest transactions, then NFA would likewise adopt an identical interpretation for NFA Schedules B and C, the PSOI’s value or to assist the CFTC in its oversight of and status has changed, as it is now the Form PQR. Id. 132 ICI, at 5. key collection of information through 128 2020 CPO–PQR NPRM, 85 FR at 26394 (May 133 See 17 CFR part 4, app. A, ‘‘Definitions of which the Commission can analyze the 4, 2020). Terms,’’ ‘‘broker’’ (defining ‘‘broker’’ as ‘‘an entity market activities and risks of CPOs and 129 IAA, at 5. that provides clearing, prime brokerage or similar their operated pools. Therefore, due to 130 Id. (stating that large numbers of non- services to the Pool’’). the change of importance and status of commodity interest transactions and differences in 134 See, e.g., 2015 CPO–PQR FAQs, in which brokerage firm names could make answering this Commission staff further echoed this broad the PSOI, along with its plain language, question completely particularly difficult for CPOs understanding of ‘‘broker’’ in its discussion of pool which includes line items for various that have hundreds of relationships with approved custodians, marketers, and underwriters. classes of funds, such as mutual funds, brokers for their non-commodity interest trading). 135 See supra II.C.

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regulatory interest and concern to the be clarified and updated for Terms precede its Instructions, which Commission with respect to its effective completeness and accuracy.139 IAA the Commission hopes will facilitate oversight of reporting CPOs and their recommended that the Commission understanding of the Revised Form. operated pools. The Commission has improve the clarity of the FAQs by G. Substituted Compliance concluded that limiting the brokers removing language that would not apply reported solely to those used in to the Revised Form, specifically The Proposal also included connection with commodity interest referencing PMAs, parallel pool amendments to § 4.27 that would allow transactions would not be conducive to structures, and aggregating funds for CPOs to file NFA Form PQR in lieu of its effective oversight, would be a reporting threshold purposes.140 MFA filing the Revised Form with the significant departure from its clear past suggested the Commission amend the Commission,143 and eliminate the positions and interpretations of the instructions in the Revised Form to ability of dually registered CPO- form, and further, would result in ‘‘incorporate relevant, substantive FAQs investment advisers filing Joint Form PF internal inconsistency in the Revised into the instructions of Form CPO– to file such form in lieu of the Revised 144 Form, where some aspects of the data PQR.’’ 141 Furthermore, SIFMA AMG Form. collection would be limited to requested an additional change to the i. NFA Form PQR commodity interests, whereas others FAQs to create a complete Glossary of In general, commenters supported the would not. Therefore, after considering Terms for use by filers of the Revised proposed amendment permitting CPOs the comments, the Commission is not Form.142 to file NFA Form PQR in lieu of the changing the scope of the definition of The Commission understands Revised Form for the purpose of the term ‘‘brokers,’’ and confirms, in the commenters’ concerns that the form will improving filing efficiencies.145 IAA context of the Revised Form as adopted, be significantly revised by the Final commended the Commission ‘‘for that the term is not limited to those Rule, resulting in large portions of the 2015 CPO–PQR FAQs becoming offering CPOs additional filing brokers used in connection with efficiencies without compromising the commodity interest transactions. obsolete or inaccurate, absent commensurate revisions. Therefore, Commission’s ability to obtain affected v. Elimination of Questions Regarding while reviewing comments and data.’’ 146 IAA further recommended Auditors and Marketers developing the Revised Form for the that the Commission add a specific The Proposal also would remove Commission’s consideration, instruction to the Revised Form to Commission staff has also reviewed the reflect this allowing the filing of NFA questions regarding a CPO’s auditors 147 and marketers employed for its operated 2015 CPO–PQR FAQs in light of the Form PQR as substituted compliance. IAA stated that by explaining this pools because the Commission and NFA revisions adopted herein. The substituted compliance for NFA Form have access to this information through Commission expects staff to complete PQR within the Revised Form’s other regulatory sources, ‘‘which the this review and to publish updated instructions, the Commission would Commission preliminarily believes FAQs regarding the Revised Form, as ‘‘assist CPOs that frequently review the obviates the need for obtaining this soon as practicable, following the instructions for the form in addition to information through Revised Form adoption of the Final Rule. or instead of the text of the rule to CPO–PQR.’’ 136 SIFMA AMG The Commission is also making some ensure the filing is accurate and specifically supported the removal of technical changes to regulatory citations complete.’’ 148 Additionally, as noted these questions, stating this proposed and cross-references in the Revised with respect to the proposed uniform, deletion is especially appropriate where Form, and further clarifying its quarterly filing schedule above, SIFMA the information is already required definitions and instructions to facilitate AMG expressed its strong support for a elsewhere by other regulations or completion of the Revised Form. The single filing schedule across the Revised filings, and is therefore, easily technical clarifications include revising Form and NFA Form PQR, as well as for accessible to the CFTC and NFA.137 the definition of ‘‘GAAP’’ in the Revised the adoption of substituted compliance With respect to questions regarding a Form to reflect the ability of reporting with respect to NFA Form PQR.149 CPO’s auditors or marketers, the CPOs to use certain ‘‘alternative accounting principles, standards, or The Commission has determined that, Commission is adopting the Revised upon NFA’s inclusion of questions Form as proposed, omitting those practices’’ currently permitted under § 4.27(c)(2), which is redesignated by eliciting LEIs, NFA Form PQR will be questions, for the reasons articulated in substantively consistent with Revised the Proposal. the Final Rule as § 4.27(c)(4). The Commission is also reorganizing the Form CPO–PQR. The Commission vi. FAQs and Glossary Revised Form, so that the Defined recognizes, however, that absent a The Revised Form includes a list of condition requiring NFA Form PQR to ‘‘Defined Terms,’’ which was entitled 139 SIFMA AMG, at 17 (recommending further the be substantively consistent with Form ‘‘Definitions of Terms’’ in its prior creation of a centralized ‘‘Glossary of Terms’’ for CPO–PQR on an ongoing basis, it is use by filers of the Revised Form and/or NFA Form possible for the two forms to diverge iteration. In 2015, Commission staff PQR). Currently, SIFMA AMG states that some published responses to frequently asked definitions may be found in NFA Form PQR, while 143 questions (the 2015 CPO–PQR FAQs, or others are solely in the Revised Form, and still 2020 CPO–PQR NPRM, 85 FR at 26378 (May other definitions or information solely published in 4, 2020). FAQs) providing detailed answers to 144 the FAQs. SIFMA AMG would like to see this 2020 CPO–PQR NPRM, 85 FR at 26378 (May questions from CPOs attempting to information centralized and easily accessible for 4, 2020) (citing the lack of similarities between Joint complete Form CPO–PQR.138 SIFMA CPOs filing the Revised Form. Id. Form PF and the Proposal’s Revised Form). AMG requested that the Commission 140 IAA, at 6. 145 Barnard, at 1–2; Hunter, at 1; IAA, at 4. align the 2015 CPO–PQR FAQs with the 141 MFA, at 3. MFA stated that otherwise, 146 IAA, at 4. 147 Revised Form, such that these items can Commission staff would need to separately issue IAA, at 6 (requesting that ‘‘the instruction state FAQs with respect to the adopted Revised Form to that a CPO ‘required to file NFA Form PQR with replace the existing 2015 CPO–PQR FAQs, which the NFA for the reporting period may make the 136 2020 CPO–PQR NPRM, 85 FR at 26383 (May MFA views as less effective than centralizing and NFA filing in lieu of the Form CPO–PQR report 4, 2020). incorporating FAQs and instruction examples in the required under Rule 4.27(c)’’’). 137 SIFMA AMG, at 7. Revised Form. Id. at 4. 148 IAA, at 6. 138 2015 CPO–PQR FAQs. 142 SIFMA AMG, at 17. 149 SIFMA AMG, at 15–16.

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over time while still being eligible for Conversely, AIMA requested that the After considering the comments substituted compliance, and that this Commission and NFA allow dually received, the Commission is adopting could undermine the Commission’s registered CPOs to file Joint Form PF in the amendments to § 4.27, eliminating collection of vital information regarding satisfaction of the reporting obligations the substituted compliance for a dually reporting CPOs and their operated in § 4.27 and NFA Compliance Rule 2– registered CPO-investment adviser pools. Therefore, the Commission will 46, because this approach would reduce completing Joint Form PF in lieu of the review any proposed changes to NFA the reporting burden, ‘‘while still Revised Form, as proposed for the Form PQR consistent with the assuring NFA has the necessary reasons stated in the Proposal.160 The procedure set forth in CEA section information from a supervisory original § 4.27(d), which provided that 17(j).150 This will ensure the continued perspective.’’ 154 Rather than eliminate substituted compliance mechanism with alignment of the forms. Because any § 4.27(d) entirely, SIFMA AMG respect to Joint Form PF, is no longer alterations to NFA Form PQR would be requested that the Commission preserve appropriate because: (1) The Revised accomplished through amendments to substituted compliance with respect to Form will differ from Joint Form PF, NFA membership rules, which are Joint Form PF on a voluntary basis both in substance and filing schedule; subject to review by Commission staff because some of its members believe and (2) continuing to accept Joint Form and either notice to, or review by, the there would be efficiencies in allowing PF in lieu of the Revised Form would Commission, ongoing monitoring of the Joint Form PF to be filed for both private frustrate an intended and clearly stated continued substantive consistency of fund and non-private fund pools.155 purpose of the Proposal, i.e., is to the forms should be easily implemented The Commission specifically asked in enhance and better coordinate the through this existing process. Commission’s own internal data streams Therefore, the Commission is the Proposal, For CPOs dually-registered to more efficiently and effectively adopting, as proposed, the amendments with the CFTC and the SEC, if Form oversee its registered, reporting CPOs to § 4.27(c)(2) clearly establishing CPO–PQR is amended as proposed, and their operated pools. substituted compliance for the Revised would you cease reporting data for these Form with respect to NFA Form PQR. pools on Joint Form PF?’’ 156 AIMA iii. Substituted Compliance for CPOs of Finally, upon consideration of the responded that these CPOs are likely to Registered Investment Companies comments, the Commission is adding a continue including them rather than new Instruction 2 in the Revised Form incurring the costs of a separate filing ICI also commented particularly on that explicitly states that to the extent a obligation, if ‘‘the inclusion of such the burdens imposed by the proposed CPO has timely filed the National non-private fund pools on Form PF can amendments on CPOs of registered Futures Association’s Form PQR, such be treated as satisfaction of separate investment companies (RICs). filing shall be deemed to satisfy this Form CPO–PQR and NFA Form PQR Specifically, ICI requested that, to Form CPO–PQR.151 filing obligations, and those pools have eliminate duplicative reporting between been included in the Form PF the SEC and CFTC regimes applicable to ii. Joint Form PF previously.’’ 157 ICI argued that, the operations of RICs, the Commission The decision to rescind substituted although adopting the Proposal may consider adopting a substituted compliance with respect to Joint Form mean less data with respect to compliance approach with respect to PF elicited differing opinions from commodity pools would be reported on periodic reporting by CPOs of RICs, commenters. For instance, NFA did not Joint Form PF, that prospect, in general, similar to its 2013 rulemaking to support the alternative of filing all or should not be the driving factor in this harmonize RIC and CPO/pool regulatory part of Joint Form PF, in lieu of the policy decision—rather, the requirements.161 Although the Revised Form, because Joint Form PF is Commission should focus on whether Commission noted in the Proposal that at least as burdensome as the the Revised Form elicits the information RICs are subject to comprehensive Commission’s form, and further, it it needs and will use in pursuit of its regulation by the SEC, it did not discuss includes ‘‘significantly more regulatory mission with respect to CPOs the possibility of deferring to the SEC 152 information than NFA needs.’’ ICI and their pools.158 SIFMA AMG noted, with respect to collecting information also disagreed with replacing the form however, that it generally supports the from CPOs of RICs. Under these with all or part of Joint Form PF because elimination of detailed reporting circumstances, the Commission would that would impose additional burdens requirements for CPOs, and it does not be unable to address the issue of on dually registered CPOs, who are not believe there would be regulatory harm, providing additional substituted currently required to file Joint Form PF if information is no longer being compliance to CPOs of RICs without re- for their registered funds, and therefore, provided on Joint Form PF with respect proposing and reopening the comment would be required to adapt their current to non-private fund pools.159 period for the NPRM.162 systems and processes to Joint Form PF.153 Moreover, the Commission believes would permit the Commission to discharge its that the suggested approach by ICI regulatory duties with respect to CPOs and their 150 7 U.S.C. 21(j). operated pools that might have the greatest impact would simply not be practical. As 151 See infra Revised Form CPO–PQR, ‘‘Reporting on market and systemic risk, while easing reporting explained by ICI, RICs file numerous Instructions,’’ no. 2. obligations on a significant number of CPOs’’). 152 NFA, at 2 (stating there is no need to ensure 154 AIMA, at 2. 160 similar reporting obligations between the SEC and 2020 CPO–PQR NPRM, 85 FR at 26383 (May 155 SIFMA AMG, at 16. 4, 2020). CFTC, where ‘‘the Commission believes it will have 156 sufficient tools with [the Revised Form] and other 2020 CPO–PQR NPRM, 85 FR at 26384 (May 161 ICI, at 2–3, n.6. ICI suggested that the CFTC data streams to effectively oversee registered CPOs 4, 2020). use the SEC filings and reports already filed by and the commodity interest markets’’). NFA noted 157 AIMA, at 2 (noting that if the Commission CPO/IAs of RICs, which require disclosure of LEIs, further that, even if the CFTC were to rescind Form decides against allowing Joint Form PF as to glean data on the commodity interest activities CPO–PQR in favor of Joint Form PF, NFA would substituted compliance for § 4.27, ‘‘it is likely that of these operators and pools. Id. See also still require its CPO Members to file NFA Form non-private fund commodity pools will no longer Harmonization of Compliance Obligations for PQR, ‘‘which is tailored to NFA’s needs and is not be included in Form PF to reduce the filing burden Registered Investment Companies Required to a significant burden on Members to complete.’’ Id. as far as possible’’). Register as Commodity Pool Operators, 78 FR 52308 153 ICI, at 5 (agreeing that ‘‘the proposed changes 158 ICI, at 5–6. (Aug. 22, 2013). to Form CPO–PQR, relative to the alternatives, 159 SIFMA AMG, at 16. 162 5 U.S.C. 553(c).

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regulatory filings, 163 each of which are and, if so, to provide a regulatory collection of information within the designed for a particular purpose by the flexibility analysis regarding the meaning of the PRA, as discussed SEC. Incorporating those filings into the economic impact on those entities. Each below. The Commission therefore Commission’s filing regime via Federal agency is required to conduct an submitted the Proposal to OMB for substituted compliance would be initial and final regulatory flexibility review. The Proposal also invited the difficult to accomplish and would analysis for each rule of general public and other Federal agencies to require the devotion of significant time applicability for which the agency comment on any aspect of the proposed and resources by both the Commission issues a general notice of proposed information collection requirements and NFA. None of these filings, rulemaking.165 discussed therein; 170 however, no such however, is a direct analog to the The Final Rule adopted by the comments were received. Revised Form, which adds to the Commission will affect only persons The Final Rule affects a single complexity of any undertaking to create registered or required to be registered as collection of information for which the a substituted compliance regime with CPOs. The Commission has previously Commission has previously received a respect to those filings. Finally, the established certain definitions of ‘‘small control number from OMB. This Commission has identified limited entities’’ to be used by the Commission collection of information is, ‘‘Rules benefit in providing such relief, if it in evaluating the impact of its rules on Relating to the Operations and were possible, because such CPOs such entities in accordance with the Activities of Commodity Pool Operators would remain subject to NFA’s requirements of the RFA.166 With and Commodity Trading Advisors and independent reporting requirement in respect to CPOs, the Commission to Monthly Reporting by Futures NFA Form PQR. Therefore, the previously has determined that a CPO is Commission Merchants, OMB control Commission declines to provide a small entity for purposes of the RFA, number 3038–0005’’ (Collection 3038– additional substituted compliance for if it meets the criteria for an exemption 0005). Collection 3038–0005 primarily CPOs of RICs in the amendments to from registration under § 4.13(a)(2).167 accounts for the burden associated with § 4.27 adopted by the Final Rule. Because the Final Rule generally applies part 4 of the Commission’s regulations to persons registered or required to be that concern compliance obligations H. Compliance Date registered as CPOs with the generally applicable to CPOs and MFA requested that the Commission Commission, the RFA is not applicable commodity trading advisors (CTAs), as consider providing registered CPOs with to the Final Rule.168 well as certain enumerated exemptions six months from the adoption of a Final Accordingly, the Chairman, on behalf from registration as such, exclusions Rule with respect to Form CPO–PQR to of the Commission, hereby certifies from those definitions, and available permit reporting CPOs to make ‘‘coding pursuant to 5 U.S.C. 605(b) that this relief from compliance with certain and software changes’’ to accommodate Final Rule will not have a significant regulatory requirements. Revised Form CPO–PQR’s economic impact on a substantial As discussed above, the Final Rule requirements.164 The Commission has number of small entities. includes substantive changes to the current form, such as (1) amending determined not to require filing of B. Paperwork Reduction Act reports on the Revised Form for the Schedule A, (which, together with the reporting period ending December 31, i. Overview PSOI that is currently part of Schedule 2020. However, to the extent reporting The Paperwork Reduction Act (PRA) B, will constitute the entirety of the CPOs are required to file NFA Form imposes certain requirements on Revised Form), to add a requirement to PQR for the reporting period ending Federal agencies in connection with disclose the LEIs (if any) for each December 31, 2020, that filing must still their conducting or sponsoring any reporting CPO and operated pool; (2) be submitted in accordance with collection of information as defined by moving Schedule B’s ‘‘Schedule of applicable NFA membership rules. the PRA.169 Under the PRA, an agency Investments’’ section to Schedule A; Therefore, reporting CPOs will be may not conduct or sponsor, and a and (3) rescinding the remainder of the required to submit the Revised Form person is not required to respond to, a current form’s current Schedules B and sixty days after the first 2021 reporting collection of information unless it C. Additionally, § 4.27(c)(2) will now period ends on March 31, 2021, making displays a currently valid control permit the filing of NFA Form PQR with initial compliance with the Revised number from the Office of Management NFA in lieu of reporting CPOs filing the Form due on May 30, 2021. The and Budget (OMB). The amendments set Revised Form with the Commission. Commission has determined that this forth in the Proposal would result in a Therefore, the Commission is amending schedule allows for adequate time for Collection 3038–0005 to be consistent CPOs and NFA to prepare their systems 165 5 U.S.C. 601 et seq. with the finalized restructuring of the and procedures with respect to the 166 See, e.g., Policy Statement and Establishment Revised Form. Specifically, the Revised Form. of Definitions of ‘‘Small Entities’’ for Purposes of Commission is amending the collection the Regulatory Flexibility Act, 47 FR 18618, 18620 to reflect the expected adjustment in III. Related Matters (Apr. 30, 1982). burden hours for registered CPOs filing 167 Id. at 47 FR 18619–20 (Apr. 30, 1982). A. Regulatory Flexibility Act Commission regulation at § 4.13(a)(2) exempts a the Revised Form for their operated The Regulatory Flexibility Act (RFA) person from registration as a CPO when: (1) None pools, and also to include in the of the pools operated by that person has more than requires Federal agencies, in collection, a reporting CPO’s ability to 15 participants at any time, and (2) when excluding file NFA Form PQR in lieu of filing the promulgating regulations, to consider certain sources of funding, the total gross capital whether the rules they propose will contributions the person receives for units of Revised Form, provided that it is have a significant economic impact on participation in all of the pools it operates or determined to be substantively intends to operate do not, in the aggregate, exceed a substantial number of small entities consistent with the Revised Form. $400,000. 17 CFR 4.13(a)(2). This Final Rule is not expected to 168 Moreover, § 4.27(b)(2)(i) specifically excludes impose any significant new burdens on 163 ICI, at 2, n.7. These reports include N–PORT from the obligation to file Form CPO–PQR any CPO and N–CEN and address information about the that operates only pools for which it maintains . . . CPOs, but rather will constitute a RIC’s portfolio, investment policies and practices, an exemption from registration as a commodity and other information. Id. pool operator as provided in § 4.13. 170 2020 CPO–PQR NPRM, 85 FR at 26386 (May 164 MFA, at 4. 169 44 U.S.C. 3501, et seq. 4, 2020).

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substantial reduction in reporting above, the Commission has determined been provided by OMB, and it was burden for most impacted registrants. to accept the filing of NFA Form PQR renewed recently on January 30, Approximately half of all registered in lieu of filing the Revised Form. 2019.175 As stated above, Collection CPOs are currently considered Mid- Because any data on NFA Form PQR 3038–0005 governs responses made Sized CPOs or Large CPOs under the submitted as substituted compliance for pursuant to part 4 of the Commission’s existing form and filing regime. Due to required § 4.27 reporting would thereby regulations, pertaining to the operations the Final Rule and its significant become data collected by the of CPOs and CTAs, including the revisions to the form, these reporting Commission, the burden associated with required responses of registered CPOs CPOs will be required to answer far NFA Form PQR must also be included on Form CPO–PQR pursuant to § 4.27. fewer questions, when compared to the in a collection of information with an Generally, the Commission is adjusting, historical Form CPO–PQR’s OMB control number. Therefore, the as discussed below, the information requirements.171 CPOs classified as Commission is amending the current collection to reflect an increase in the Small CPOs may experience a slight burden associated with OMB Control burden hours associated with the increase in burden, due to an increase Number 3038–0005 to also reflect the collection of information in the Revised in the frequency of reporting to a burden resulting from NFA Form PQR, Form. The Commission anticipates, quarterly basis rather than annually, and which the Commission estimates to be however, that (1) CPOs currently the addition of the PSOI to the Revised substantively identical to that derived categorized as either Mid-Sized or Large Form for all reporting CPOs. The from the Revised Form.173 CPOs are expected to experience a Commission believes, however, that for Despite the fact that the Commission substantial reduction in burden relative many of these CPOs, this burden will accept the filing of NFA Form PQR to the current filing requirements under increase will practically be slight or in lieu of a filing on the Revised Form, § 4.27 and Form CPO–PQR; and (2) very technical in nature, because all the Commission has determined that it CPOs considered Small CPOs under the reporting CPOs currently complete NFA should retain its own form for data current filing requirements will Form PQR, which also includes a collection purposes and to ensure that it experience no practical or substantial schedule of investments identical to the retains the ability to perform its increase in burden because, like all Revised Form’s PSOI, on a quarterly regulatory duties and satisfy its data other registered CPOs, they are currently basis pursuant to NFA membership needs regarding CPOs in the future on required to file NFA Form PQR, which rules. The Commission anticipates that a unilateral basis, if necessary. already includes a schedule of going forward, pursuant to amended Moreover, the Commission anticipates investments identical to the Revised § 4.27(c)(2), reporting CPOs, regardless that it will incorporate the information Form’s PSOI, on a quarterly basis, and of their size or classification under the collected on the Revised Form more such Small CPOs, as well as all other original form, will complete and file consistently with its other data streams. reporting CPOs, will be permitted to file NFA Form PQR in lieu of the Revised To that end, retaining its own form NFA Form PQR in lieu of filing the Form, which will further allow them to independent of NFA confirms and Revised Form. maximize efficiency by fulfilling both preserves the Commission’s The currently approved total burden NFA and CFTC reporting requirements independent and primary role in associated with Collection 3038–0005, 172 with one filing. developing its regulatory and in the aggregate, is as follows: Therefore, the Commission infers that compliance program with respect to Estimated number of respondents: the Final Rule and the Revised Form registered CPOs and their pools 45,097. will generally prove to be less generally, notwithstanding its history of Annual responses for all respondents: burdensome for reporting CPOs, or at delegating certain registration and 118,824. least, will not create any new net compliance functions to NFA. Estimated average hours per response: burdens for them. As a result, the Furthermore, retaining the Revised 3.16.176 Commission is amending Collection Form should ensure that the public is Annual reporting burden: 375,484. 3038–0005, as proposed, to reflect the able to exercise its rights to receive The portion of the aggregate burden elimination of reporting thresholds and notice and provide comment as to the that is derived from the current Form classifications of CPO by size, as well as content and structure of the Revised CPO–PQR filing requirements is as the multiple Schedules in the original Form, as required by the Administrative follows: form; to account for the uniform Procedure Act, and consistent with Schedule A (for non-Large CPOs and quarterly filing schedule adopted for all prior practice for the original form.174 reporting CPOs for their operated pools; Large CPOs filing Joint Form PF): Therefore, the Commission concludes Estimated number of respondents: and to adopt an overall estimated that the final Revised Form announced burden for all filings that includes the 1,450. today in the Final Rule is not Annual responses for all respondents: retained questions from Schedule A, as unnecessarily duplicative to well as the adopted PSOI (from original 1,450. information otherwise reasonably Estimated average hours per response: Schedule B) discussed above. Although accessible to the Commission. the Final Rule results in an increase in 6. the burden hours associated with ii. Revisions to the Collection of Annual reporting burden: 8,700. completing the Revised Form, the Information: OMB Control Number Schedule A (for Large CPOs not filing Commission anticipates that, in 3038–0005 Joint Form PF): practice, reporting CPOs will either Collection 3038–0005 is currently in Estimated number of respondents: experience no change in their burden, or force with its control number having 250. some decrease in burden. As discussed 173 As stated in the Proposal, ‘‘the PRA estimates 175 See Notice of Office of Management and 171 See, e.g., supra pt. II.B (discussing the . . . assume that all registered CPOs will either file Budget Action, OMB Control No. 3038–0005, elimination of Schedules B and C from the Revised Revised Form CPO–PQR on a quarterly basis, or available at https://www.reginfo.gov/public/do/ Form). NFA Form PQR, but in no event will a CPO be PRAViewICR?ref_nbr=201701-3038-005. 172 See infra § 4.27(c)(2), as amended by this Final required to file both.’’ 2020 CPO–PQR NPRM, 85 FR 176 The Commission rounded the average hours Rule (permitting the filing of NFA Form PQR in lieu at 26386 (May 4, 2020). per response to the second decimal place for ease of filing the Revised Form with the Commission). 174 APA, 5 U.S.C. 553(c). of presentation.

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Annual responses for all respondents: respondent. Further, in the public concern: (1) Protection of market 1,000. Commission’s experience, the PSOI participants and the public; (2) Estimated average hours per response: comprised a considerable portion of the efficiency, competitiveness, and 6. burden hours previously associated financial integrity of swaps markets; (3) Annual reporting burden: 6,000. with completing Schedule B, depending price discovery; (4) sound risk Schedule B (for Mid-Sized CPOs): on the complexity of a reporting CPO’s management practices; and (5) other Estimated number of respondents: operations and the number of pools it public interest considerations. The 400. operated. Thus, the Commission is Commission considers the costs and Annual responses for all respondents: estimating average hours per response benefits resulting from its discretionary 400. in such a way as to ensure that burden determinations with respect to the CEA Estimated average hours per response: continues to be counted. As noted section 15(a) considerations. 4. above, although the estimated hours per As discussed above, the Commission Annual reporting burden: 1,600. response is expected to increase due to is finalizing amendments to Form CPO– Schedule B (for Large CPOs not filing the retention of the PSOI and the filing PQR that would significantly reduce the Joint Form PF): frequency increasing to quarterly for amount of reporting required Estimated number of respondents: many reporting CPOs, CPOs should not thereunder. Specifically, the Final Rule: 250. practically experience an increase in (1) Eliminates the pool-specific Annual responses for all respondents: burden. The Commission comes to this reporting requirements in existing 1,000. conclusion because all reporting CPOs Schedules B and C of Form CPO–PQR, Estimated average hours per response: are already required to provide a other than the PSOI (question 6 of 4. schedule of investments identical to the Schedule B); (2) amends the information Annual reporting burden: 4,000. PSOI, as part of their existing NFA Form in existing Schedule A of the form to Schedule C (for Large CPOs not filing PQR filings, which NFA membership request LEIs for CPOs and their operated Joint Form PF): rules require on a quarterly basis, and pools and to eliminate questions Estimated number of respondents: because the Commission expects that regarding the pool’s auditors and 250. those CPOs will continue to make such marketers; (3) requires all reporting Annual responses for all respondents: filings to take advantage of the CPOs to submit all information retained 1,000. substituted compliance for NFA Form in the Revised Form on a quarterly Estimated average hours per response: PQR with respect to the Revised Form, basis; and (4) allows CPOs to file NFA 18. as adopted by the Final Rule. Form PQR in lieu of filing the Revised Annual reporting burden: 18,000. Therefore, the Commission estimates Form, provided that NFA amends NFA The burden associated with NFA the burden to registered CPOs for Form PQR to include LEIs. In the Form PQR was proposed as follows: completing the Revised Form and NFA sections that follow, the Commission Estimated number of respondents: Form PQR, because of the option to file considers the various costs and benefits 1,700. this form in lieu of the Revised Form, associated with each aspect of the Final Annual responses by each to be as follows: Rule. The baseline against which these respondent: 6,800. For the Revised Form and NFA Form costs and benefits are compared is the Estimated average hours per response: PQR for All Registered CPOs: regulatory status quo, represented by 8. Estimated number of respondents: Form CPO–PQR as codified in appendix Annual reporting burden: 54,400. 1,700. A to part 4 prior to these amendments. Total annual reporting burden for all Annual responses by each The consideration of costs and CPOs for current Form CPO–PQR and respondent: 6,800. benefits below is based on the NFA Estimated average hours per response: understanding that the markets function Form PQR: 86,900. 8. internationally, with many transactions Annual reporting burden: 54,400. The Commission will no longer be involving U.S. firms taking place across The new total burden associated with estimating burden hours according to international boundaries; with some Collection 3038–0005, in the aggregate, each individual Schedule of the form, Commission registrants being organized reflecting the adjustment in burden because, pursuant to the Final Rule, the outside of the United States; with some associated with § 4.27 and the Revised Revised Form will not have schedules. leading industry members typically Therefore, the Commission is amending Form, is as follows: Estimated number of respondents: conducting operations both within and the collection for Form CPO–PQR outside the United States; and with compliance to be a single burden-hours 43,062. Annual responses for all respondents: industry members commonly following estimate for each reporting CPO substantially similar business practices completing the Revised Form in its 113,980. Estimated average hours per response: wherever located. Where the entirety.177 As noted above, the Commission does not specifically refer Commission is also requiring that the 3.25. Annual reporting burden: 370,467. to matters of location, the discussion of Revised Form be filed quarterly by each costs and benefits below refers to the reporting CPO, regardless of the size of C. Cost-Benefit Considerations effects of this proposal on all activity their operations, which would result in Section 15(a) of the CEA requires the subject to the proposed and amended four (4) annual responses by each Commission to consider the costs and regulations, whether by virtue of the benefits of its discretionary actions activity’s physical location in the 177 Additionally, the Commission will be United States or by virtue of the accepting the filing of NFA Form PQR in lieu of the before promulgating a regulation under Revised Form, which the Commission has designed the CEA or issuing certain orders.178 activity’s connection with or effect on purposefully to be very similar. See supra pt. II.G.i. Section 15(a) further specifies that the U.S. commerce under CEA section The Commission reiterates that these PRA estimates costs and benefits shall be evaluated in 2(i).179 Some CPOs are located outside assume that all registered CPOs will either file the of the United States. Revised Form on a quarterly basis, or NFA Form light of five broad areas of market and PQR, but in no event will a CPO be required to file both. 178 7 U.S.C. 19(a). 179 7 U.S.C. 2(i).

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i. The Elimination of Pool-Specific those CPOs considered Mid-Sized CPOs reporting CPOs and their operated pools Reporting Requirements in Schedules B or Large CPOs, and which may move that engage in swaps with respect to the and C between those filing categories with initial filing of the Revised Form, as The Commission is adopting as final some regularity, under the status quo. LEIs do not change over time, amendments that eliminate the pool- Consequently, those reporting CPOs potentially allowing fields for those specific reporting requirements in would no longer need to devote their questions to be prepopulated in existing Schedules B and C of Form resources to compiling, analyzing, and subsequent filings. The Commission CPO–PQR, other than the PSOI reporting this data, which may have had observes further that neither the Revised (question 6 of Schedule B). The limited utility with respect to their day- Form nor § 4.27 independently creates Commission acknowledges that this to-day operations, to the Commission. an affirmative requirement for CPOs to change could result in less information Additionally, reporting CPOs in general obtain LEIs for themselves and their available to the Commission and, will no longer be required to monitor operated pools, and that CPOs engaging their AUMs for the specific purpose of potentially, to FSOC. The detailed and in swaps already have LEIs for determining their filing obligations specific information requested in themselves and/or their pools. because, pursuant to the Final Rule, Schedules B and C of Form CPO–PQR Additionally, the Commission has there is now a single filing requirement is not available to the Commission declined in the Final Rule to require the for all reporting CPOs. It is possible that through any of its other data streams renewal or maintenance of LEIs for the resulting cost savings may allow and, if put to its full use, would allow purposes of meeting this Revised Form those CPOs to devote their resources to 180 for monitoring of CPOs and their requirement. Accordingly, the other compliance or operational operated pools in a way that could help Commission finds that there is likely no initiatives, or to potentially pass those identify trends and points of stress. The additional cost to consider for a cost savings on to pool participants challenges associated with the Form reporting CPO related to LEIs beyond through reduced fees. These cost the minimal one-time expenditure for CPO–PQR dataset are a primary reason savings will likely be reduced, however, for the Commission’s decision to the initial Revised Form filing that for any CPO that is dually registered includes LEIs. discontinue its collection of this with the SEC and required to file Joint information, including challenges posed The Final Rule also eliminates from Form PF because that form requires the Revised Form questions regarding by the degree of flexibility afforded reporting of information substantially CPOs in reporting this information, and the pool’s auditors and marketers. The similar to that required in the Commission has determined that these the fact that this information is only eliminated Schedules B and C, and the reported to the Commission on a amendments will result in reduced costs Final Rule does not alter any such for reporting CPOs without affecting the quarterly basis, at its most frequent. CPO’s Joint Form PF filing obligations. Given these limitations associated with scope of information available to the Finally, the Commission recognizes that Commission, as the Commission already the data collected, the Commission has the Final Rule also does not alleviate determined to prioritize its limited receives information regarding CPO’s any of the fixed or long-term costs accountants and has alternate means of resources to pursue other key regulatory reporting CPOs may have already initiatives. obtaining information about a pool’s incurred in developing systems and marketers. For example, persons However, considering the alternate procedures designed to meet the data streams currently available to the soliciting for pool participation units are reporting requirements of the original typically either associated persons of Commission, the Commission should form, including Schedules B and C. nevertheless be able to effectively the CPO or registered representatives of oversee registered CPOs and their ii. The Revised Form a broker-dealer. Such persons are operated pools, and potentially do so in This Final Rule adopts the Revised already subject to regulation by either a more efficient and effective manner, Form, which retains questions from the Commission and NFA, or the SEC by adopting the Revised Form as existing Schedule A of Form CPO–PQR, and FINRA, and therefore readily proposed, with some additional and also adds questions to request LEIs identifiable by the Commission outside clarifications to the Instructions and for CPOs and their operated pools. The of Form CPO–PQR. Defined Terms. Furthermore, due in Commission anticipates that adding Currently, all CPOs other than Large part to the identified data quality issues, these LEI questions will allow it to CPOs submit the information required the Commission has not provided FSOC integrate the data collected by the by the existing form’s Schedule A with any Form CPO–PQR data to date. Revised Form with the Commission’s annually. Increasing the frequency with The Commission acknowledges, though, other more current data streams. which this information is reported will that FSOC would now receive less data Leveraging these other data sources in assist the Commission in its efforts to from the Commission, as a result of combination with filings of the Revised integrate the Revised Form with the changes made by the Final Rule, as Form will enable the Commission to Commission’s other timelier data some CPOs that are filing CFTC-only continue its oversight and monitoring of sources, which the Commission believes pool information through Joint Form PF counterparty and liquidity risk for some will improve the overall efficacy of its may stop. Nonetheless, the Commission of the largest pools within the monitoring and oversight of CPOs and does not believe that FSOC’s monitoring Commission’s jurisdiction. The their operated pools. Although this abilities would be materially or Commission thereby concludes that the amendment will result in an increased negatively affected, compared to the Final Rule will allow it to focus on areas regulatory cost for CPOs considered to status quo, by the Commission’s relevant for assessing and monitoring be Small and Mid-Sized CPOs under the rescission of most of Schedules B and C market and systemic risk, while existing form, when compared to the in Form CPO–PQR, as the Commission eliminating the reporting burden regulatory status quo, the Commission has not provided FSOC with any data. associated with Schedules B and C, concludes that the costs actually The Commission anticipates that particularly with respect to pools that realized by these CPOs will not be as eliminating these pool-specific reporting would be considered Large Pools. significant, as they are already reporting requirements will also reduce the The addition of these LEI fields may ongoing variable compliance costs for minimally increase the cost for 180 See supra pt. II.E.

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this information on a quarterly basis via scope of information available to the likely result in increased costs for NFA Form PQR, as required by NFA. Commission under the Revised Form. registered fund CPOs, noting that, Under the current form, only Mid- As mentioned above, the Commission although CPOs of RICs are regulated by Sized and Large CPOs are required to acknowledges that, through adopting both the Commission and the SEC, such submit a PSOI, and Mid-Sized CPOs this revision to § 4.27(d), the Final Rule CPOs are not currently required to file submit that information annually. The could result in less data being collected Joint Form PF.183 The Commission Revised Form, as adopted by the Final on Joint Form PF, as compared to the agrees that this alternative would likely Rule, will require all CPOs to submit current status quo. Many dually increase the reporting burdens and costs that information quarterly. The registered CPOs currently include for CPOs not so dually registered, as Commission believes that receiving this commodity pools that are not private well as for CPOs that are dually information from all reporting CPOs funds in data that they report on Joint registered, yet do not currently file Joint more frequently will, when combined Form PF, in lieu of filing Form CPO– Form PF; under this alternative, those with the new questions regarding LEIs, PQR for such pools, in reliance on CPOs would incur increased reporting further enhance its ability to integrate § 4.27(d). As a result of the Final Rule’s burdens and costs without providing the data collected by the Revised Form revisions to § 4.27(d), these CPO- information directly to the Commission with other data streams and to identify investment advisers could decide to that will be integrated with its other trends on a timelier basis. As a result, stop including these pools in their Joint data sources to develop its internal the Commission concludes that Form PF filings. The Commission oversight initiatives over CPOs and their adopting a quarterly filing schedule for concludes though that this loss of data operated pools. all CPOs reporting on the Revised Form to the SEC and FSOC will not The second alternative described in will ultimately support its goal of meaningfully impact the efficacy and the Proposal that the Commission effectively monitoring CPOs and their intent of Joint Form PF in furthering the considered was to devote resources to operated pools for market and systemic oversight of the private fund industry, rectifying the challenges with the data risk, while also simplifying the given that it would only result in the reported under the current form, and reporting requirements applicable to loss of data with respect to non-private amend it to require greater consistency registered CPOs. fund pools; the Commission and frequency of reporting of the data The Commission realizes that acknowledges, however, that FSOC may fields eliminated by the Final Rule. requiring all information on the Revised lose data for a specific type of private However, the Commission stated in the Form, including a PSOI for each fund asset class, specifically, managed Proposal its preliminarily belief that its operated pool, from all reporting CPOs futures.181 limited resources could be better on a quarterly basis will result in an Additionally, all CPOs will be directed in line with its regulatory increased regulatory cost, when required to make a certain amount of priorities, and that its objectives with compared to the regulatory status quo, alterations to their reporting systems to respect to oversight of reporting CPOs particularly for CPOs that would be accommodate the changes adopted and their operated pools could be considered Small and Mid-Sized CPOs herein, even if it is just to deactivate effectively and potentially, more under the existing filing regime. For certain data elements that are no longer efficiently, achieved through integration instance, CPOs previously considered required and to add the questions with existing data streams.184 ICI Small CPOs may be required to develop regarding LEIs. The Commission supported this preliminary conclusion the procedures and systems necessary to anticipates that any such costs will by the Commission and argued that a meet the additional reporting generally be one-time expenditures, and ‘‘more targeted data set is most useful obligations for the Revised Form’s PSOI, moreover, should not be extensive, for initial monitoring purposes.’’ 185 and CPOs previously considered either given the Commission’s efforts in the After considering the alternatives and Small CPOs or Mid-Sized CPOs will be Final Rule to align the Revised Form the responsive comments, the required by the Final Rule to report that with NFA Form PQR, to the greatest Commission concludes that the changes information to the Commission on a extent possible. to the form and § 4.27 adopted by the quarterly basis. The Commission iii. Alternatives Final Rule, relative to the alternatives, emphasizes, however, that all registered will facilitate the Commission’s CPOs, regardless of the size of their In lieu of amending Form CPO–PQR effective discharging of its regulatory operations or AUM, are currently as proposed, the Commission also duties in a manner that simultaneously required to report the PSOI on a considered two alternative approaches has the greatest impact on market and quarterly basis via NFA Form PQR, as in the Proposal, and requested systemic risk and eases reporting required by NFA membership rules, comments and data on how those obligations on a significant number of meaning the actual costs as realized by potential alternatives might impact the reporting CPOs with respect to their these CPOs as a result of the Final Rule estimated costs and benefits to market operated pools. participants and the public.182 The first should not be as significant, given the iv. Section 15(a) Factors Commission’s goal of aligning the alternative considered by the Revised Form with NFA Form PQR. Commission was requiring all CPOs, a. Protection of Market Participants and The Final Rule also amends § 4.27(c) regardless of whether they are dually the Public such that it allows reporting CPOs to file registered, to file Joint Form PF. ICI commented that this alternative would The Commission believes that the NFA Form PQR in lieu of filing the Final Rule will enhance the ability of Revised Form, provided that NFA 181 ICI commented that it did not believe that the the Commission to protect derivatives amends NFA Form PQR to include Commission should focus on any perceived data questions regarding LEIs. Under NFA’s needs of the FSOC in determining the scope and 183 ICI, at 5 (noting additionally that CPOs of RICs membership rules, all CPOs regardless focus of Form CPO–PQR, but rather the would thus incur costs related to adapting their of size are currently required to file NFA Commission should act in whatever manner best current systems and processes for the purpose of supports its own regulatory interests in revising the filing Joint Form PF instead). Form PQR on a quarterly basis. This form. ICI, at 5–6. 184 2020 CPO–PQR NPRM, 85 FR at 26388 (May provision will help CPOs maintain their 182 2020 CPO–PQR NPRM, 85 FR at 26388 (May 4, 2020). current filing costs without affecting the 4, 2020). 185 ICI, at 6.

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markets, its participants, and the public e. Other Public Interest Considerations (c) Reporting. (1) Each reporting by allowing it to integrate the data The Commission did not identify any person shall file with the National collected by the Revised Form with other public interest considerations that Futures Association, a report with other existing, more up-to-date data the Final Rule would have. respect to the directed assets of each streams in a way that will allow the pool under the advisement of a Commission to better exercise its D. Antitrust Laws commodity pool operator consistent oversight of registered CPOs and their Section 15(b) of the CEA requires the with appendix A to this part, or a operated pools. As discussed above, the Commission to ‘‘take into consideration commodity trading advisor consistent Final Rule may result in a loss of data the public interest to be protected by the with appendix C to this part. available to FSOC, which could limit antitrust laws and endeavor to take the (2) A reporting person required to file FSOC’s visibility into the activities of least anticompetitive means of NFA Form PQR with the National CPOs and their operated pools. achieving the purposes of the CEA, in Futures Association for the reporting issuing any order or adopting any period may make such filing in lieu of b. Efficiency, Competitiveness, and Commission rule or regulation the report required under paragraph Financial Integrity of Markets (including any exemption under CEA (c)(1) of this section; provided that, the The Commission believes that the section 4(c) or 4c(b)), or in requiring or Commission has determined that NFA Final Rule will assist the Commission in approving any bylaw, rule, or regulation Form PQR is substantively consistent its efforts to support market efficiency, of a contract market or registered futures with appendix A to this part. competitiveness, and financial integrity. association established pursuant to (3) Nothing in this provision restricts 186 Under the Final Rule, reporting CPOs section 17 of this Act.’’ the National Futures Association’s will continue to provide useful The Commission believes that the ability to require reporting beyond that information about themselves and their public interest to be protected by the required by the Commission; provided operated pools to the Commission in a antitrust laws is generally to protect that, such additional requirements are competition. The Commission requested way that will permit the Commission to consistent with the Commodity comment on whether the Proposal incorporate that data with its other data Exchange Act and 17 CFR chapter I. implicates any other specific public streams. The Commission believes that (4) All financial information shall be interest to be protected by the antitrust consolidating the data collected in this reported in accordance with generally laws, but did not receive any comments manner will improve its oversight of accepted accounting principles on whether the Proposal was reporting CPOs, their operated pools, consistently applied. A reporting person anticompetitive. operating a pool that meets the and how they affect the derivatives The Commission has considered the conditions specified in § 4.22(d)(2)(i) to markets. Additionally, the Commission Final Rule to determine whether it is present and compute the commodity believes that the specific requirement anticompetitive and has identified no pool’s financial statements contained in that a reporting CPO prepare a PSOI on anticompetitive effects. Because the the Annual Report other than in a quarterly basis for each of its operated Commission has determined the Final accordance with United States generally pools may result in heightened Rule is not anticompetitive and has no accepted accounting principles and has diligence by such CPOs, with respect to anticompetitive effects, the Commission filed notice pursuant to § 4.22(d)(2)(iii) their pools’ ongoing operations, and has not identified any less may also use the alternative accounting may encourage particularly smaller anticompetitive means of achieving the principles, standards, or practices CPOs to adopt more formalized controls purposes of the CEA. for their businesses. The Commission identified in that notice in reporting believes that both of those results will List of Subjects in 17 CFR Part 4 information required to be reported generally enhance the confidence of Advertising, Brokers, Commodity pursuant to paragraph (c)(1) of this other market participants in transacting futures, Commodity pool operators, section. with registered CPOs and their operated Commodity trading advisors, Consumer (d) Investment advisers to private pools, and generally, support the protection, Reporting and recordkeeping funds. Commodity pool operators and efficiency, competitiveness, and requirements. commodity trading advisors that are financial integrity of the markets. For the reasons stated in the dually registered as investment advisers with the Securities and Exchange c. Price Discovery preamble, the Commodity Futures Trading Commission hereby amends 17 Commission, and that are required to The Commission has not identified CFR part 4 as set forth below: file Form PF under the rules any impact that the Final Rule would promulgated under the Investment have on price discovery. PART 4—COMMODITY POOL Advisers Act of 1940, shall file Form PF OPERATORS AND COMMODITY with the Securities and Exchange d. Sound Risk Management Practices TRADING ADVISORS Commission, in addition to filings made pursuant to paragraph (c)(1) of this Although the Commission is no ■ 1. The authority citation for part 4 section. Dually registered commodity longer requiring reporting CPOs and continues to read as follows: pool operators and commodity trading their operated pools to report certain Authority: 7 U.S.C. 1a, 2, 6(c), 6b, 6c, 6l, advisors that file Form PF with the risk information on the Revised Form, 6m, 6n, 6o, 12a, and 23. Securities and Exchange Commission the Commission recognizes that CPOs ■ 2. In § 4.27, revise paragraphs (c) and will be deemed to have filed Form PF will likely, in general, continue to (d) to read as follows: with the Commission, for purposes of benefit from establishing and possessing any enforcement action regarding any systems that collect and review risk- § 4.27 Additional reporting by commodity false or misleading statement of material pool operators and commodity trading related information, even if it is no fact in Form PF. longer reported. The Commission has advisors. not identified any other impact that the * * * * * * * * * * Final Rule would have on sound risk ■ 3. Revise appendix A to part 4 to read management practices. 186 7 U.S.C. 19(b). as follows:

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Appendix A to Part 4—Form CPO–PQR

BILLING CODE 6351–01–P

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BILLING CODE 6351–01–C is, the concept that flawed, or nonsense, Background on Form CPO–PQR Issued in Washington, DC, on October 9, input data produces nonsense output or Form CPO–PQR requests information 2020, by the Commission. ‘‘garbage.’’ regarding the operations of a CPO, and each Robert Sidman, Since becoming Chairman, I have pool that it operates, in varying degrees of prioritized improving the CFTC’s approach to frequency and complexity, depending upon Deputy Secretary of the Commission. collecting data. As a federal agency, we must the assets under management of both the Note: The following appendices will not be selective about the data we collect, and CPO and the operated pool(s). When it appear in the Code of Federal Regulations. then make sure we are actually making good adopted Form CPO–PQR in 2012, the use of the data for its intended purpose.3 For Commission determined that form data Appendices to Compliance example, we recently adopted three final would be used for several broad purposes, rules to revise CFTC regulations for swap including: Requirements for Commodity Pool • Operators on Form CPO–PQR— data reporting, dissemination, and public Increasing the CFTC’s understanding of reporting requirements for market our registrant population; Commission Voting Summary, • participants.4 One purpose of those assessing the market risk associated with Chairman’s Statement, and pooled investment vehicles under our Commissioners’ Statements amendments was to simplify the swap data reporting process to ensure that market jurisdiction; and • monitoring for systemic risk.6 Appendix 1—Commission Voting participants are not burdened with unclear or For the majority of pool-specific questions Summary duplicative reporting obligations that do little on Form CPO–PQR, the Commission believed to reduce market risk or facilitate price On this matter, Chairman Tarbert and the incoming data would assist the CFTC in discovery.5 Commissioners Quintenz, Behnam, Stump, monitoring commodity pools to identify and Berkovitz voted in the affirmative. No Today we are engaged in a similar exercise. trends over time. For example, the CFTC Commissioner voted in the negative. The amendments to the compliance would get information regarding a pool’s requirements for CPOs on Form CPO–PQR exposure to asset classes, the composition Appendix 2—Supporting Statement of that we are considering reflect the CFTC’s and liquidity of a pool’s portfolio, and a Chairman Heath P. Tarbert reassessment of the scope of the form and pool’s susceptibility to failure in times of how it aligns with our current regulatory 7 When the Commission considered the stress. priorities. By refining our approach to data proposed rule to amend the compliance collection, the final rule—in conjunction Shortcomings of Form CPO–PQR requirements for commodity pool operators (CPOs) on Form CPO–PQR,1 I observed that with our current market surveillance Seven years of experience with Form CPO– the esteemed 19th century mathematician efforts—will enhance the CFTC’s ability to PQR, however, have not borne out that Charles Babbage had asked ‘‘if you put into gain more timely insight into the activities of vision. To begin with, in an effort to take into the machine the wrong figures, will the right CPOs and their operated pools. At the same account the different ways CPOs maintain answers come out?’’ 2 Baggage foresaw what time, the final rule will reduce reporting information, the Commission has allowed would evolve in the 20th century as the burdens for market participants. CPOs flexibility in how they calculate and ‘‘garbage-in, garbage-out’’ predicament—that present certain of the data elements. As a result, it has been challenging, to say the 3 See Statement of Chairman Heath P. Tarbert in least, for the CFTC to identify trends across 1 Amendments to Compliance Requirements for Support of Revising Form CPO–PQR, supra note 2. Commodity Pool Operators on Form CPO–PQR, 86 4 CFTC Finalizes Rules to Improve Swap Data CPOs or pools using Form CPO–PQR data. In FR 26378 (May 4, 2020). Reporting, Approves Other Measures at September 2 Statement of Chairman Heath P. Tarbert in 17 Open Meeting, available at: https:// 6 See Commodity Pool Operators and Commodity Support of Revising Form CPO–PQR (Apr. 14, www.cftc.gov/PressRoom/PressReleases/8247/20. Trading Advisors: Compliance Obligations, 77 FR 2020), available at: https://www.cftc.gov/ 5 See Statement of Chairman Heath P. Tarbert in 11252 (Feb. 24, 2012). PressRoom/SpeechesTestimony/ Support of Final Rules on Swap Data Reporting 7 See Commodity Pool Operators and Commodity tarbertstatement041420b. See Charles Baggage, (Sep. 17, 2020), available at: https://www.cftc.gov/ Trading Advisors: Amendments to Compliance Passages from the Life of a Philosopher (London PressRoom/SpeechesTestimony/ Obligations, 76 FR 7976, 7981 (Form CPO–PQR 1864). tarbertstatement091720c. Proposal) (Feb. 11, 2011).

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addition, taking into account the volume and timely and frequent basis than the data which the NFA may revise to include complexity of the data it was requesting, the received on the current iteration of Form questions regarding LEIs. Under these Commission decided not to require the data CPO–PQR. Furthermore, CFTC programs to circumstances, we could permit a CPO to file to be provided in real-time, but instead conduct surveillance of exchanges, NFA Form PQR in lieu of our Form CPO– mandated only post hoc quarterly or annual clearinghouses, and futures commission PQR as revised. In doing so, we would offer filings. merchants already include CPOs and do not CPOs greater filing efficiencies without As the CFTC staff has reviewed the data rely on the information contained in compromising our ability to obtain relevant over the years, it has become apparent that Schedules B and C of Form CPO–PQR. data. the disparate, infrequent, and delayed nature Taken together, the CFTC’s other existing of CPO reporting has made it difficult to data efforts have enhanced our ability to Form CPO–PQR, as Revised, has Other assess the impact of CPOs and their operated surveil financial markets, including with Regulatory Benefits pools on markets. This is largely because respect to the activities of CPOs and the The Dodd-Frank Act established the Office conditions and relative CPO risk profiles may pools they operate. In general, the CFTC’s of Financial Research (OFR) nearly a decade have changed, potentially significantly, by alternate data streams provide a more ago to look across our financial system for prompt, standardized, and reliable view into the time Form CPO–PQR is filed with the risks and potential vulnerabilities.10 It was relevant market activity than that provided CFTC. contemplated that, for the OFR to do its under Form CPO–PQR. As revised, data from work, it would have access to data from other Sound Regulation Means Collecting Only Form CPO–PQR will more easily be Information We Intend to Use integrated with these existing and more U.S. financial regulators. Yet to date, the What we need is not over-regulation or developed data streams. This will enable the CFTC has shared none of the Form CPO–PQR even de-regulation, but rather sound CFTC to oversee and assess the impact of data with the OFR, largely because of the regulation. In the midst of the coronavirus CPOs and their operated pools in a way that shortcomings outlined above. pandemic, when we are facing the greatest is both more effective for us and less Once Form CPO–PQR is revised, it has the economic challenge since the 2008 financial burdensome for those we regulate. potential to be useful not only to the CFTC. crisis, and possibly since the Great In keeping with these principles— To this end, we have negotiated a Depression, the fact that we are asking particularly the principle that we should not memorandum of understanding (MOU) with market participants to put significant time collect data we cannot use effectively—I note the OFR, under which we will for the first and effort into providing us data that is that as part of this rulemaking the time provide to the OFR the information we difficult to integrate with the CFTC’s other Commission is instructing the staff to collect regarding CPOs. Under the MOU, the more timely and standardized data streams is evaluate the ongoing utility of the Pool OFR will receive the Form CPO–PQR not sound regulation. Frankly, it is wasteful Schedule of Investments information in Information consistent with the provisions of and an example of ineffective government. revised Form CPO–PQR. This will include Section 8(e) of the CEA, which establishes My colleague Commissioner Dan Berkovitz comparing it to the 2010 Schedule of important protections for CFTC data made the following observation in Investments. The review will be completed sharing.11 connection with a different rulemaking: ‘‘In within 18–24 months following the date addition to obtaining accurate data, the upon which persons are required to comply Conclusion Commission must also develop the tools and with the final rule and may result in further For these reasons, I am pleased to support resources to analyze that data.’’ 8 He is spot recommended actions. During the review the Commission’s final rule to amend the on. But I believe the converse is also true. We period, the staff also may identify and extend compliance requirements for CPOs on Form should not collect data we cannot use targeted relief for data fields that the CFTC CPO–PQR. As revised, Form CPO–PQR will effectively. In the case of Form CPO–PQR, receives from other sources. focus on the collection of data elements that this means not requiring market participants can be used with other CFTC data streams to provide information that the CFTC has Legal Entity Identifiers Are Something We Need and regulatory initiatives to facilitate neither the resources nor the ability to oversight of CPOs and their operated pools. analyze with our other data streams. Our The final rule does more than simply This will primarily reduce current data credibility as a regulator is strengthened eliminate certain data collections. It also collection requirements, but also mandate requires the collection of an additional piece when we honestly admit that our regulations disclosure of LEIs by CPOs and their of key information: Legal entity identifiers ask for data that we both have not used operated pools. Focusing on enhancing data (LEIs) for CPOs and their operated pools. effectively and have no intention of using collection by the agency is no doubt tedious. going forward. That is what we are doing LEIs are critical to understanding the Nonetheless, I am convinced it leads to today. activities and interconnectedness within financial markets. Although LEIs have been smarter regulation that helps promote the Alternative, and Sometimes Better, Sources around since 2012 and authorities in over 40 integrity, resilience, and vibrancy of U.S. of Data Are Available to the Commission jurisdictions have mandated the use of LEI derivatives markets. Form CPO–PQR is not our only source of codes to identify legal entities involved in a data regarding commodity pools. The CFTC financial transaction,9 this is a new 10 See Sections 151–56 of the Dodd-Frank Wall has devoted substantial resources to requirement for Form CPO–PQR. The lack of Street Reform and Consumer Protection Act, Public developing other data streams and regulatory LEI information for CPOs and their operated Law 111–203, 124 Stat. 1376 (2010). initiatives designed to enhance our ability to pools has made it challenging to align the 11 In Section 8(e) of the CEA (7 U.S.C. 12(e)), surveil financial markets for risk posed by all data collected on Form CPO–PQR with the Congress authorized the CFTC to share nonpublic manner of market participants, including data received from exchanges, information it obtains under the CEA with other federal agencies acting within the scope of their CPOs and their operated pools. clearinghouses, swap data repositories, and jurisdiction. Although Congress prohibited the These alternative data streams, which futures commission merchants. As a result, CFTC from publishing data and information that include extensive information related to we cannot always get a full picture of what would separately disclose the business transactions trading, reporting, and clearing of swaps, are is happening in the markets we regulate. or market positions of any person and trade secrets in some cases more useful or robust than Adding an LEI requirement for CPOs and or names of customers, Section 8(a) allows the information from Form CPO–PQR. their operated pools will help give us a CFTC to publish research and analysis based on Importantly, most of the transaction and complete perspective. such data and information where it has been position information the CFTC uses for our In addition, the final rule better aligns appropriately aggregated, anonymized, or otherwise Form CPO–PQR with Form PQR of the NFA, masked to avoid such separate disclosure. In surveillance activities is available on a more conjunction, these two provisions of Section 8 give which all CPOs must file quarterly and the CFTC the power to review the work product of 8 Dan M. Berkovitz, Commissioner, CFTC, other federal agencies with which it shares data and Statement on Proposed Amendments to Parts 45, 9 See Financial Stability Board, Thematic Review information to ensure that they do not separately 46, and 49: Swap Data Reporting Requirements on Implementation of the Legal Entity Identifier, disclose confidential information obtained from the (Feb. 20, 2020), available at: https://www.cftc.gov/ Peer Review Report (May 28, 2019), available at: CFTC, and to authorize those agencies to publish PressRoom/SpeechesTestimony/ https://www.fsb.org/2019/05/thematic-review-on- research and analysis based on such confidential berkovitzstatement022020b. implementation-of-the-legal-entity-identifier/. information.

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Appendix 3—Supporting Statement of I am disappointed that this final rule does In determining to reduce the frequency and Commissioner Brian Quintenz not amend the form to adopt the 2010 scope of commodity pool operator (CPO) data Schedule of Investments, but I am reporting and collection, the Commission is I support today’s final rule that would encouraged that the preamble instructs DSIO pivoting away from what was an ambitious simplify and streamline the reporting staff to evaluate the ongoing utility of the vision for ongoing oversight, monitoring, and obligations of commodity pool operators current Schedule of Investments, including trend analysis inspired by the events and (CPOs) on Form CPO–PQR. The Commission comparing it to the 2010 Schedule of fallout of the 2008 financial crisis.3 To be first adopted Form CPO–PQR in 2012 and Investments, within 18–24 months following sure, keeping pace with regulatory change closely modeled the form on Form PF. The the compliance date. As part of this review, and shifting priorities while exercising Commission adopted the Form of its own staff is instructed to consider whether or not, appropriate discipline in collecting, volition; unlike Form PF, which is in light of its utility, the Commission should handling, and managing data is an endless specifically mandated by the Dodd-Frank revert back to the 2010 Schedule of endeavor. Nevertheless, I am pleased with Act, there is no similar statutory directive Investments. After completing this review, in today’s outcome, and I am confident that as 1 requiring the adoption of Form CPO–PQR. whole or in stages, staff will develop we continue moving forward, the tremendous In my opinion, since its adoption, the recommendations, provide relief, or propose abilities of the dedicated staff whose direct detailed information requested on Form a rulemaking for the Commission’s further insight and experience informed our CPO–PQR has not significantly enhanced the consideration to effectuate staff’s findings. decisions will ensure we continue to act Commission’s oversight over CPOs and has This review will allow staff to carefully decisively in furthering our goals and never been fully utilized by staff. I have long consider which questions on the Schedule of supporting our mission critical duties. questioned the Commission’s need to know Investments are necessary to effectively The CFTC shares aspects of its regulatory the litany of data requested on the Form. oversee CPOs and to propose eliminating any initiatives, risk surveillance, and monitoring In my view, many of the questions on the fields which are being received through other duties with respect to CPO and commodity existing form are more academic than data channels or have no regulatory use case pools with the Securities and Exchange pragmatic in nature—information that may to the Commission’s oversight function. I Commission (SEC), the National Futures be nice for the Commission to have, but data think this review is long overdue and is Association (NFA), and the FSOC. The Final that is certainly not necessary for the especially timely given the developments in Rule in its detailed preamble identifies areas Commission to effectively oversee other data streams, like part 45 swap data, of overlap in which commenters suggested commodity pools and the derivatives that DSIO is actively working to combine that the Commission ought to retreat from its markets. This is why I am very pleased that with clearinghouse data to provide a proposed baseline for data collection in the final rule eliminates the most complete picture of a CPO’s derivatives Revised Form CPO–PQR. I am pleased that burdensome sections on the current form— activity. I believe that DSIO’s ability to the Commission reasonably considered such Schedules B and C, which together contain monitor, in real time, a fund’s derivatives comments and provides well-reasoned roughly 72 distinct questions, if one includes positions will be absolutely vital to the responses based on analysis of facts and data all the separately identifiable subparts. Many oversight and regulation of commodity pools incorporated directly into the record. While of these questions are challenging for CPOs in the future. the Commission and its staff must always be to calculate precisely and require numerous In closing, I deeply appreciate DSIO staff’s prudent and judicious in our allocation of data, resources, authority, and deference in underlying assumptions that vary from firm efforts to address my concerns on this point to firm, making it difficult, if not impossible, working amicably towards common goals, we in the weeks leading up to today’s vote. for the Commission to perform an apples-to- should exercise great care so as to avoid Thank you all very much for your apples comparison across the commodity sacrificing primacy and independence when engagement and dedication. pool industry. acting directly in support of Congressional While today’s final rule represents a Appendix 4—Concurring Statement of mandates and statutory directives. marked improvement over the current CPO Commissioner Rostin Behnam I appreciate the Commission and its staff’s reporting regime, more work remains to be ongoing engagement with the SEC and FSOC, done. Importantly, the proposal requested I respectfully concur with the Commodity as well as with NFA, throughout the drafting comment about reverting back to the former Futures Trading Commission’s (the of the NPRM and the Final Rule, and I am Schedule of Investments originally adopted ‘‘Commission’’ or ‘‘CFTC’’) issuance of encouraged that discussions are ongoing. As by the National Futures Association (NFA) in today’s final rule (the ‘‘Final Rule’’) we move forward, it is my intention to ensure 2010 for its NFA Form PQR (2010 Schedule amending Regulation 4.27 and Form CPO– that the Commission provides staff the of Investments). In 2012, the Schedule of PQR. As a whole, the Final Rule provides a support and resources necessary to effectuate Investments adopted by the Commission thoughtfully balanced and complete its current plans for Form CPO–PQR data and went further than the 2010 Schedule of evaluation of the issues identified in the make future amendments and adjustments, as Investments, by lowering the itemized notice of proposed rulemaking 1 and the appropriate. reporting thresholds and adding significantly responsive comments. Perhaps, just as Appendix 5—Statement of more granular subcategories of investments. importantly, the Final Rule clearly For example, the Commission sought acknowledges that it is the first of several Commissioner Dan M. Berkovitz information regarding the tranches of various steps in the Commission’s ongoing I am voting for the final rule to amend types of securitizations and the types of assessment of Form CPO–PQR not only for its Regulation 4.27 and Form CPO–PQR (‘‘Final bonds held by the pool. Historically, the utility as a regulatory tool, but as a yardstick Rule’’). This Final Rule makes adjustments to information on the Schedule of Investments to measure improvements to the the reporting requirements for Commodity has mostly been used by the NFA for their Commission’s data integration and analytical Pool Operators (‘‘CPOs’’) and their pools CPO examination program. However, in its capabilities. The Final Rule makes smart, based on lessons learned over several years comment letter to the Commission, the NFA targeted corrections without forgoing the since the requirements were first adopted. noted that it ‘‘does not have a need for the possibility of future adjustments should the more granular information currently in the Commission later determine that additional asked to provide information necessary for the Schedule’’ and that it ‘‘fully supports data would support evolving regulatory FSOC to perform its statutorily mandated duties, [aligning the current schedule with the 2010 initiatives or Financial Stability Oversight but the FSOC may issue recommendations to the Schedule of Investments] because [NFA] Counsel (FSOC) requirements to fulfill Commission regarding more stringent regulation of believe[s] a more streamlined schedule will statutorily mandated duties and initiatives financial activities that FSOC determines may significantly alleviate filing burdens on CPOs aimed at identifying and monitoring risks to create or increase systemic risk. See Dodd-Frank Act sections 112(d)(1), 120; See also Reporting by without negatively impacting the usefulness financial stability.2 2 Investment Advisers to Private Funds and Certain of the information that is collected.’’ Commodity Pool Operators and Commodity 1 Amendments to Compliance Requirements for Trading Advisors on Form PF, 76 FR 71128, 71129 1 See section 404 of the Dodd-Frank Act. Commodity Pool Operators on Form CPO–PQR, 85 (Nov. 16, 2011); Commodity Pool Operators and 2 NFA Comment Letter (June 20, 2020), https:// FR 26378 (proposed May 4, 2020) (the ‘‘NPRM’’). Commodity Trading Advisors: Compliance comments.cftc.gov/Handlers/ 2 See NPRM, 85 FR at 26379. Not only is the Obligations, 77 FR 11252, 11253 (Feb. 24, 2012). PdfHandler.ashx?id=29369. Commission among those agencies that could be 3 See, e.g., NPRM, 85 FR at 26381.

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Eight years ago, the Commission began total portfolio of each pool and its trading To ensure that the Commission has a collecting information from CPOs on Form strategy. Recent market volatility—including complete picture of pool activity across all CPO–PQR. During that period, the historic price movements in crude oil— derivatives markets, it should continue Commission has come to learn that certain underscores the importance of the CFTC’s working to integrate swaps data with futures information in Form CPO–PQR has not ability to understand the nature of the data. Some commenters have suggested that materially improved the Commission’s participants in our markets and the scope of one way to do this would be to require all understanding of CPOs’ participation in their activities in order to conduct timely reporting CPOs and their pools—not just commodity interest markets, or its ability to oversight and spot emerging trends or risks. those that trade swaps—to obtain LEIs and assess the risks their pools may pose. The Since joining the Commission I have submit them on Form CPO–PQR. I encourage Final Rule eliminates information that has supported and encouraged efforts to improve the Commission and staff to continue to not proven to be of value to the Commission. our data and analytical capabilities, and explore this approach, among others, so that Several commenters suggested that the believe they should be expanded in the the CFTC is able to aggregate all derivatives Commission collect less information on the coming years. Commission staff currently is transactions by pools under common control. Pool Schedule of Investments (‘‘PSOI’’) about taking steps to better synthesize swap data I would like to thank the Division of Swap CPO investments in various asset classes. I for large account controllers and develop a Dealer and Intermediary Oversight for their support the Commission’s decision in the more holistic surveillance program. Once efforts in finalizing this rule in a form that Final Rule to continue to collect position these analytical tools have been further I can support. data about pool investments. To evaluate the developed, staff will then be in a position to risks posed by CPOs and the pools they advise the Commission regarding whether [FR Doc. 2020–22874 Filed 11–9–20; 8:45 am] operate, it is necessary to understand the any changes to the PSOI are appropriate. BILLING CODE 6351–01–P

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Reader Aids Federal Register Vol. 85, No. 218 Tuesday, November 10, 2020

CUSTOMER SERVICE AND INFORMATION CFR PARTS AFFECTED DURING NOVEMBER

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. Ch. X...... 69482 Presidential Documents 3 CFR 1003...... 69119 Executive orders and proclamations 741–6000 Proclamations: Proposed Rules: The United States Government Manual 741–6000 10107...... 70027 4...... 70512 10108...... 70415 Other Services 225...... 71580 10109...... 70417 238...... 71580 Electronic and on-line services (voice) 741–6020 10110...... 70419 252...... 71580 Privacy Act Compilation 741–6050 10111...... 70421 262...... 70512 10112...... 70423 302...... 70512 ELECTRONIC RESEARCH 10113...... 70425 791...... 70512 10114...... 70427 Ch. X...... 71003 World Wide Web 10115...... 70429 1074...... 70512 Executive Orders: 1253...... 71276 Full text of the daily Federal Register, CFR and other publications 13958...... 70951 is located at: www.govinfo.gov. Administrative Orders: 13 CFR Federal Register information and research tools, including Public Memorandums: 124...... 69120 Inspection List and electronic text are located at: Memorandum of 125...... 69120, 70050 www.federalregister.gov. October 31, 2020 ...... 70039 129...... 69120 Memorandum of E-mail October 26, 2020 ...... 71213 14 CFR FEDREGTOC (Daily Federal Register Table of Contents Electronic Notices: 39 ...... 69126, 69129, 69131, Mailing List) is an open e-mail service that provides subscribers Notice of October 30, 69134, 69138, 69140, 69142, with a digital form of the Federal Register Table of Contents. The 2020 ...... 69463 69144, 69485, 69488, 69492, digital form of the Federal Register Table of Contents includes Presidential 69493, 69496, 70051, 70439, HTML and PDF links to the full text of each document. Determinations: 70442, 70955, 71229, 71232, No. 2020–12 of 71235, 71238, 71240, 71244, To join or leave, go to https://public.govdelivery.com/accounts/ September 28, USGPOOFR/subscriber/new, enter your email address, then 71529, 71532 2020 ...... 71209 71 ...... 69147, 69148, 71534, follow the instructions to join, leave, or manage your No. 2021–02 of subscription. 71535 September 27, 97...... 69149, 69151 PENS (Public Law Electronic Notification Service) is an e-mail 2020 ...... 71219 Proposed Rules: service that notifies subscribers of recently enacted laws. 5 CFR 27...... 69265 To subscribe, go to http://listserv.gsa.gov/archives/publaws-l.html 39 ...... 69267, 69269, 69272, and select Join or leave the list (or change settings); then follow Proposed Rules: 69276, 69519, 69522, 70087, the instructions. 831...... 70502 70523, 70526, 71286, 71580, 842...... 70502 FEDREGTOC and PENS are mailing lists only. We cannot 71583 71 ...... 69279, 69281, 70089, respond to specific inquiries. 7 CFR 70092, 70093, 70096, 70532, Reference questions. Send questions and comments about the 205...... 70431 70534, 71289, 71290, 71292, Federal Register system to: [email protected] 284...... 70043 71293, 71586 The Federal Register staff cannot interpret specific documents or Proposed Rules: regulations. 1280...... 71274 15 CFR Proposed Rules: 8 CFR FEDERAL REGISTER PAGES AND DATE, NOVEMBER 774...... 71012 1001...... 69465 69119–69464...... 2 1003...... 69465 17 CFR 69465–70026...... 3 1292...... 69465 4...... 71772 70027–70414...... 4 Proposed Rules: 23...... 69498, 71246 70415–70954...... 5 214...... 69236 232...... 69499 240...... 70240, 70898 70955–71222...... 6 10 CFR 71223–71528...... 9 249...... 70898 71529–71814...... 10 2...... 70435 Proposed Rules: 72...... 71223 23...... 70536 Proposed Rules: 200...... 70716 2...... 70507 230...... 70716 53...... 71002 239...... 70716 72...... 71274 240...... 70536, 70716 430...... 70508 270...... 70716 274...... 70716 12 CFR 327...... 71227 20 CFR 615...... 70955 655...... 70445

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21 CFR 165...... 69172, 71545 70497, 70976, 70997 1635...... 70564 403...... 69189 1301...... 69153 Proposed Rules: 503...... 69189 1306...... 69153 165...... 69299, 69301 47 CFR Proposed Rules: Proposed Rules: 34 CFR 52 ...... 69307, 70554, 71022, 2...... 69515 6...... 70096 71023, 71295 9...... 70500 112...... 71294 75...... 70975 63...... 71490 90...... 69515 1300...... 69282 76...... 70975 97...... 69515 106...... 70975 81...... 71023 1301...... 69282 Proposed Rules: 606...... 70975 271...... 70558 1...... 71593 24 CFR 607...... 70975 41 CFR 5...... 71296 608...... 70975 11...... 71537 25...... 71296 609...... 70975 60-1...... 71553 26 CFR 60-2...... 71553 73...... 69311, 70569 36 CFR 60-300...... 71553 97...... 71296 1 ...... 69500, 70958, 71734 60-741...... 71553 54...... 71142 1...... 69175 48 CFR Proposed Rules: 4...... 69175 42 CFR 1...... 71587 Proposed Rules: 409...... 70298 Proposed Rules: 54...... 71016 7...... 71017 410...... 70298, 71142 326...... 71596 222...... 69303 411...... 71142 352...... 71596 27 CFR 9904...... 70572 37 CFR 413...... 71398 Proposed Rules: 414...... 70298, 71142 9...... 71722, 71726 6...... 69501 417...... 71142 49 CFR Proposed Rules: 424...... 70298 28 CFR 299...... 69700 210...... 70544 433...... 71142 572...... 69898 0...... 69465 484...... 70298 Proposed Rules: 38 CFR 510...... 71142 29 CFR 192...... 70124 Proposed Rules: Proposed Rules: 195...... 70124 1695...... 69167 17...... 71020 1...... 70096 571...... 69388 2590...... 71142 70...... 70551 100...... 71046 404...... 70096 30 CFR 39 CFR 50 CFR 414...... 70358 938...... 71251 3040...... 70477 600...... 69525 17...... 69778 948...... 70972 27...... 69223 40 CFR 43 CFR 216...... 69515 31 CFR 9...... 69189 8340...... 69206 622...... 70085 33...... 71142 52 ...... 69504, 70483, 71264, 635...... 71270 45 CFR Proposed Rules: 71547 648...... 71575 50...... 71588 60...... 70487 147...... 71142 665...... 71577 63...... 69508, 70487 155...... 71142 679...... 69517, 71272 32 CFR 81...... 71264 170...... 70064 Proposed Rules: 2402...... 70054 122...... 69189 171...... 70064 17...... 69540 123...... 69189 182...... 71142 216...... 71297 33 CFR 127...... 69189 Proposed Rules: 648...... 70573 100...... 71543 180 ...... 69512, 70062, 70494, 6...... 70096 665...... 71300

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