On April 10, 2012, the Board published in theFederal Registera supplemental notice of proposed rulemaking and request for comment that would establish the criteria for determining whether a company is “predominantly engaged in financial activities” for purposes of Title I of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. ThatFederal Registernotice omitted the instructions for submitting comments. This document corrects that omission.

We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under theADDRESSESsection. Include “Docket No. FAA-2012-0336; Directorate Identifier 2011-NM-213-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments.

We will post all comments we receive, without change, tohttp://www.regulations.gov,including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this proposed AD.

More than 300 incidents of skin chem-mill cracks on 26 airplanes have been reported from body station (STA) 727 to 1016, and from stringer S-14 to S-25 (left and right sides). The affected airplanes had accumulated between 29,808 and 53,454 total flight cycles. Most of the skin cracks were found aft of STA 747 on the left side. Several of the reported cracks occurred in multiple adjacent bays. On the existing skin panel assembly, the doubler is chem-milled to the skin. At these skin panel locations on the airplanes, the loads could cause a condition where skin cracks could form along the longitudinal edges of the doubler. This condition, if not corrected, could result in decompression of the airplane.

We reviewed Boeing Special Attention Service Bulletin 737-53-1315, dated July 29, 2011. For information on the procedures and compliance times, see this service information athttp://www.regulations.govby searching for Docket No. FAA-2012-0336. “Related investigative actions” and “corrective actions” are those actions specified in the service information that are necessary to address the identified unsafe condition.

We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

This proposed AD would require various repetitive inspections for cracking in the fuselage skin at the chem-mill steps. For airplanes on which cracking is found, this proposed AD would require doing one of the following:

• A time-limited repair, followed by related investigative actions (including a general visual inspection for loose or missing fasteners; an internal detailed inspection and a high frequency eddy current (HFEC) inspection for disbonding and cracks of the bonded doubler); corrective actions if necessary (i.e., replacing any loose or missing fastener, and contacting Boeing for repair instructions and doing the repair); and making the time-limited repair permanent; or

• A permanent repair, including a detailed inspection of the bonded doubler for disbonding, and an HFEC inspection for cracks in the bonded doubler; and repair of any cracks and disbonding. Accomplishment of the permanent repair would terminate the repetitive inspections required by this proposed AD for the area(s) of the repair only.

Boeing Special Attention Service Bulletin 737-53-1315, dated July 29, 2011, specifies to contact the manufacturer for instructions on how to repair certain conditions, but this proposed AD would require repairing those conditions in one of the following ways:

• In accordance with a method that we approve; or

• Using data that meet the certification basis of the airplane, and that have been approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) whom we have authorized to make those findings.

We estimate that this proposed AD affects 91 airplanes of U.S. registry. We estimate the following costs to comply with this proposed AD:

We estimate the following costs to do any necessary corrective actions that would be required based on the results of the proposed inspection. We have no way of determining the number of aircraft that might need these corrective actions:

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.

We are issuing this rulemaking under the authority described in subtitle VII, part A, subpart III, section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify this proposed regulation:

(1) Is not a “significant regulatory action” under Executive Order 12866,

(2) Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),

(3) Will not affect intrastate aviation in Alaska, and

(4) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

BIS amended the EAR in a final rule on June 19, 2007 (72 FR 33646), to create a new authorization for “validated end-users” (VEUs) located in eligible destinations to which eligible items may be exported, reexported, or transferred (in-country) under a general authorization instead of a license.

VEUs may obtain eligible items that are on the Commerce Control List, which are identified in Supplement No. 7 to part 748 of the EAR, without having to wait for their suppliers to obtain export licenses from BIS. Eligible items may include commodities, software, and technology, except those controlled for missile technology or crime control reasons.

The VEUs listed in Supplement No. 7 to part 748 of the EAR were reviewed and approved by the U.S. Government in accordance with the provisions of section 748.15 and Supplement Nos. 8 and 9 to part 748 of the EAR. The End-User Review Committee (ERC), composed of representatives from the Departments of State, Defense, Energy, and Commerce, and other agencies, as appropriate, is responsible for administering the VEU program. A unanimous vote by the ERC is required to authorize VEU status for a candidate or to add any eligible items to an existing authorization. A majority vote of the ERC is required to remove VEU authorization or to remove eligible items from an existing authorization.

In addition to U.S. exporters, Authorization VEU may be used in accordance with the provisions of the EAR by foreign reexporters and by persons transferring in-country. VEUs are subject to regular reviews by the U.S. Government to ensure that items shipped under Authorization VEU are used for civilian purposes. In addition, VEUs are subject to on-site reviews as warranted.

As of the date of this rule, pursuant to section 748.15(b) of the EAR, VEUs are located in the People's Republic of China (PRC) and India.

Through this rule, BIS proposes amending the EAR by adding paragraph (g)—Notification requirement—to section 748.15—Authorization Validated End-User. The new paragraph (g) would require persons exporting, reexporting, or transferring (in-country) under Authorization VEU to send written notification to the recipient VEU with details about their shipment within seven days of the shipment. Details that would be required in the notification include a list of the contents of the shipment and the quantity of such items that have been or will be shipped to the respective VEUs under Authorization VEU, as well as a list of the applicable Export Control Classification Numbers (ECCNs) for items included in the shipment under Authorization VEU.

The purpose of this proposed new requirement is to enhance the ability of VEUs to comply with the requirements of the VEU program. This amendment to the EAR is not the result of non-compliance with VEU requirements by existing VEUs. Rather, BIS proposes making this change at the request of VEUs. Some VEUs have informed BIS that compliance is challenging when they receive items under multiple authorizations, but are unable to determine which authorization is used for each shipment, and thus determine which set of conditions applies to the items received in each shipment. Because items may be shipped to VEUs under different forms of authorization(e.g.,individual licenses, Special Comprehensive Licenses, and Authorization VEU), VEUs may receive items classified under the same ECCN but shipped under more than one form of authorization. In addition, each form of authorization may be accompanied by different conditions with which end-users must comply. With this amendment to the EAR, BIS intends to improve the ability of VEUs to determine which authorization their suppliers utilized. This will enable VEUs to better determine which set of conditions governs their use of the received item(s) more efficiently, thereby increasing the VEUs' compliance.

BIS is not mandating the form of communication (e.g.,fax, email, letter) for the notification, but does require that it be in a written format. As noted above, the notification must be conveyed to the VEU within seven calendar days of shipment to the VEU. Exporters, reexporters and VEUs are required to maintain the notifications they receive pursuant to their recordkeeping requirements.

In addition, BIS proposes amending section 748.15—Authorization Validated End-User—by adding paragraph (h)—Termination of Conditions on VEU Authorizations. The new paragraph (h) clarifies that VEUs who are subject to item-specific conditions and have received items subject to such conditions under Authorization VEU would no longer be bound by the conditions associated with the items if the items no longer require a license for export or reexport to the PRC or India (depending on the VEU's location) or become eligible for shipment under a license exception to the destination. This proposed amendment would be the same, in effect, as existing section 750.7(i) (Terminating license conditions), which generally applies to exporters and reexporters who have shipped under license. In addition, a new paragraph (i) is added to section 748.15 to remind exporters that records requirements for shipments that were made under Authorization VEU prior to the removal of a license requirement or the availability of a license exception remain subject to the review requirements of paragraph (f)(2) of section 748.15 on and after the date that the license requirement was removed or the license exception became applicable.

Since August 21, 2001, the Export Administration Act has been in lapse and the President, through Executive Order 13222 of August 17, 2001 (3 CFR, 2001 Comp., p. 783 (2002)), as extended most recently by the Notice of August 12, 2011 (76 FR 50661, August 16, 2011), has continued the EAR in effect under the International Emergency Economic Powers Act. BIS continues to carry out the provisions of the Export Administration Act, as appropriate and to the extent permitted by law, pursuant to Executive Order 13222.

1. Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has been determined to be not significant for purposes of Executive Order 12866.

2. Notwithstanding any other provisions of law, no person is required to respond to nor be subject to a penalty for failure to comply with a collection of information, subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501,et seq.) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number. This proposed rule involves information collections previously approved by the OMB under control number 0694-0088, “Multi-Purpose Application”, which carries a burden hour estimate of 45.8 minutes to prepare and submit form B18-748, which involves requirements in connection with Authorization VEU. BIS revised the burden hour estimate shown for the 0694-0088 collection by two minutes to include the notification requirement proposed in this rule. This revision does not represent a significant increase in burden hours for submitting information under the collection. Also, the notification requirement proposed in this rule is not expected to result in an increase in license applications submitted to BIS should the agency issue the amendment to the EAR in a final rule subsequent to the close of the proposed rule comment period.

3. This rule does not contain policies with Federalism implications as that term is defined under Executive Order 13132.

4. The Chief Counsel for Regulation of the Department of Commerce has certified to the Chief Counsel for Advocacy of the Small Business Administration that this proposed rule, if adopted in final form, would not have a significant economic impact on a substantial number of small entities.

This proposed rule would affect exporters and reexporters shipping to VEUs, as well as persons making in-country transfers to VEUs, under Authorization VEU. Currently, BIS does not collect data on the size of entities that export, reexport, or transfer in-country under Authorization VEU. Although BIS is unable to estimate the number of small entities that would be affected by this rule, it does acknowledge that this rule will impact some unknown number.

This proposed rule requires exporters and reexporters shipping to VEUs, as well as persons making in-country transfers to VEUs, under Authorization VEU to provide written notification to approved VEUs about VEU shipments. It would not require extensive efforts by exporters or reexporters, or persons making in-country transfers. The proposed action is designed to coincide with other standard communications that exporters and reexporters, regardless of size, provide to their customers or parties to the transaction regarding, among other things, the description of items, sales terms, and logistics. Specifically, this rule would require only that exporters and reexporters shipping eligible items under Authorization VEU to the finite number of approved VEUs at their “Eligible Destinations” in the PRC and India ensure that those VEUs are notified in writing within seven days of shipping such items under the Authorization. Practically, BIS does not anticipate that any significant amount of time or other resources would be used to perform the proposed required action. BIS estimates that the notification requirement proposed in this rule will increase the burden hour estimate by two minutes per respondent. Also, the notification requirement proposed in this rule is not expected to result in an increase in license applications submitted to BIS should the agency issue the amendment to the EAR in a final rule subsequent to the close of the proposed rule comment period.

The proposed requirement is intended to facilitate compliance with the EAR in general and Authorization VEU in particular. The proposed requirementwill facilitate the VEUs' ability to comply with the specific conditions placed on their qualifications as VEUs and distinguish those conditions from conditions placed on items received under other authorizations. This will enhance accountability and ensuring effective control of items shipped under Authorization VEU and other authorizations.

In addition, this action is likely to enhance the attractiveness of shipping “Eligible Items” under Authorization VEU for exporters and reexporters, or persons making in-country transfers. This potential benefit outweighs any perceived inconvenience to exporters and reexporters, or persons making in-country transfers, who ship under Authorization VEU, as they retain the option to ship under an individual validated license.

In this rule, BIS also proposes to amend section 748.15—Authorization Validated End-User—by adding paragraph (h)—Termination of Conditions on VEU Authorizations. This proposed amendment would clarify that VEUs who are subject to item-specific conditions and have received items subject to such conditions under Authorization VEU would no longer be bound by the conditions associated with the items if the items no longer require a license for export or reexport to the PRC or India (depending on the VEU's location) or become eligible for shipment under a license exception to the destination. This proposed amendment would be the same, in effect, as existing section 750.7(i) (Terminating license conditions), which generally applies to exporters and reexporters who have shipped under license.

For the reasons stated, the Chief Counsel for Regulation of the Department of Commerce has certified to the Chief Counsel for Advocacy of the Small Business Administration that this proposed rule, if adopted in final form, would not have a significant economic impact on a substantial number of small entities.

Accordingly, part 748 of the Export Administration Regulations (15 CFR parts 730-774) is proposed to be amended as follows:

The collection of information contained in this notice of proposed rulemaking has been submitted to the Office of Management and Budget in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)). Comments on the collection of information should be sent to the Office of Management and Budget, Attn: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503, with copies to the Internal Revenue Service, Attn: IRS Reports Clearance Officer, SE:W:CAR:MP:T:T:SP, Washington, DC 20224. Comments on the collection of information should be received by July 16, 2012. Comments are specifically requested concerning:

Whether the proposed collection of information is necessary for the proper performance of the functions of the IRS, including whether the information will have practical utility;

How the quality, utility, and clarity of the information to be collected may be enhanced;

How the burden of complying with the proposed collection of information may be minimized, including through the application of automated collection techniques or other forms of information technology; and

Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.

The collections of information in these proposed regulations are in § 46.4375-1(c)(2)(v) (use of National Association of Insurance Commissioners (NAIC) Supplemental Health Care Exhibit to calculate the fee under section 4375); § 46.4375-1(c)(2)(vi) (use of certain state forms to calculate the fee under section 4375); § 46.4376-1(b)(2)(G) (identification or designation of a plan sponsor under the governing plan document for certain applicable self-insured health plans); and § 46.4376-1(c)(2)(v) (use of the Form 5500, “Annual Return/Report of Employee Benefit Plan,” to calculate the fee under section 4376).

The collections of information under § 46.4375-1(c)(2)(v), § 46.4375-1(c)(2)(vi), and § 46.4376-1(c)(2)(v) are intended to lower the burden on issuers and plan sponsors of calculating the average number of lives covered for the applicable policy year or plan year. The burden for the collection of information contained in these provisions will be reflected in the burden on the Form 720 “Quarterly Federal Excise Tax Return” after it is revised to include the reporting and payment of the fee imposed by sections 4375 and 4376.

The collection of information contained in § 46.4376-1(b)(2)(G) is necessary to provide certain entities that establish or maintain an applicable self-insured health plan the flexibility to designate the person that will be responsible for reporting and paying the fee imposed by section 4376. The likely respondents are employers, employee organizations, or persons that establish or maintain an applicable self-insured health plan and are entitled to make an election under § 46.4376-1(b)(2)(G).

Estimated number of respondents is 10,000.

Estimated average annual burden per respondent is 5 minutes.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by the Office of Management and Budget.

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

This document contains proposed amendments to 26 CFR part 40 (Excise Tax Procedural Regulations) and 26 CFR part 46 (relating to excise taxes imposed on policies issued by foreign insurers and obligations not in registered form) to implement the requirements under sections 4375 through 4377 of the Internal Revenue Code (Code). Sections 4375 and 4376 of the Code impose fees on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans, and section 4377 contains special rules that apply to these issuers and plan sponsors with respect to these fees. Sections 4375, 4376, and 4377 were added to the Code by section 6301 of the Patient Protection and Affordable Care Act (Affordable Care Act), Public Law 111-148 (124 Stat. 119 (2010)).

The Affordable Care Act includes provisions that promote research to evaluate and compare health outcomes and the clinical effectiveness, risks, and benefits of medical treatments, services, procedures, drugs, and other strategies or items that treat, manage, diagnose, or prevent illness or injury. One such provision relates to the establishment of the private, nonprofit corporation, the Patient-Centered Outcomes Research Institute (the “Institute”). The Institute will assist, through research, patients, clinicians, purchasers, and policy-makers in making informed health decisions by advancing the quality and relevance of evidence-based medicine through the synthesis and dissemination of comparative clinical effectiveness research findings. The statute specifically prohibits the Secretary of Health and Human Services (HHS) from using the evidence or findings of the research conducted in determining coverage, reimbursement, or incentive programs unless it is through an iterative and transparent process which includes public comment and considers the effect on subpopulations. Nothing under this provision allows the Secretary of HHS to deny coverage of items or services solely on the basis of comparative clinical effectiveness research. The statute provides that the Institute will not develop a dollars-per-quality-life-year estimate as a threshold to establish effective or recommended care. Section 6301 of the Affordable Care Act amended the Code by adding new section 9511 to establish the Patient-Centered Outcomes Research Trust Fund (the “Trust Fund”), which is the funding source for the Institute. Section 6301 of the Affordable Care Act also added new Code sections 4375, 4376, and 4377 to provide a funding source for the Trust Fund that is to be financed, in part, by fees to be paid by issuers of specified health insurance policies and sponsors of applicable self-insured health plans.

Section 4375(a) imposes a fee on an issuer of a specified health insurance policy for each policy year ending on or after October 1, 2012, and before October 1, 2019. Under section 4375(a), the fee is two dollars (one dollar in the case of policy years ending before October 1, 2013) multiplied by the average number of lives covered under the policy. Under section 4375(d), for policy years ending on or after October 1, 2014, the fee is increased based on increases in the projected per capita amount of National Health Expenditures. Section 4375(b) provides that the fee imposed by section 4375(a) shall be paid by the issuer of the policy.

Section 4375(c) definesspecified health insurance policyas any accident or health insurance policy (including a policy under a group health plan) issued with respect to individuals residing in the United States. Section 4375(c)(2) excludes from a specified health insurance policy any insurance ifsubstantially all of its coverage is of excepted benefits described in section 9832(c). Section 4375(c)(3) provides that a specified health insurance policy includes any prepaid health coverage arrangement described in section 4375(c)(3)(B). An arrangement is described in section 4375(c)(3)(B) if, under the arrangement, fixed payments or premiums are received as consideration for a person's agreement to provide or arrange for the provision of accident or health coverage to residents of the United States, regardless of how the coverage is provided or arranged to be provided.

Section 4376 imposes a fee on a plan sponsor of an applicable self-insured health plan for each plan year ending on or after October 1, 2012, and before October 1, 2019. Under section 4376(a), the fee is two dollars (one dollar for plan years ending before October 1, 2013) multiplied by the average number of lives covered under the plan for the plan year. Under section 4376(d), for plan years ending on or after October 1, 2014, the fee is increased based on increases in the projected per capita amount of National Health Expenditures. Section 4376(b)(1) provides that the fee imposed by section 4376(a) shall be paid by the plan sponsor.

Section 4376(b)(2) definesplan sponsoras the employer in the case of a plan established or maintained by a single employer, or the employee organization in the case of a plan established or maintained by an employee organization. Section 4376(b)(2) also provides that, in the case of (1) a plan established or maintained by two or more employers or jointly by one or more employers and one or more employee organizations, (2) a multiple employer welfare arrangement, or (3) a voluntary employees' beneficiary association described in section 501(c)(9), the plan sponsor is the association, committee, joint board of trustees, or other similar group of representatives of the parties who establish or maintain the plan. Section 4376(b)(2) further provides that in the case of a plan established or maintained by a rural electric cooperative (as defined in section 3(40)(B)(iv) of the Employee Retirement Income Security Act of 1974 (ERISA)) or rural telephone cooperative association (as defined in section 3(40)(B)(v) of ERISA), the plan sponsor is the cooperative or association that established or maintained the plan.

Section 4376(c) definesapplicable self-insured health planas any plan for providing accident or health coverage if any portion of the coverage is provided other than through an insurance policy, and the plan is established or maintained: (1) By one or more employers for the benefit of their employees or former employees, (2) by one or more employee organizations for the benefit of their members or former members, (3) jointly by one or more employers and one or more employee organizations for the benefit of employees or former employees, (4) by a voluntary employees' beneficiary association described in section 501(c)(9), (5) by any organization described in section 501(c)(6), or (6) if not previously described, by a multiple employer welfare arrangement (as defined in section 3(40) of ERISA), a rural electric cooperative (as defined in section 3(40)(B)(iv) of ERISA), or a rural telephone cooperative association (as defined in section 3(40)(B)(v) of ERISA).

Section 4377 includes definitions and special rules that apply for purposes of sections 4375 and 4376. Section 4377(a)(1) definesaccident and health coverageas any coverage that, if provided by an insurance policy, would cause the policy to be a specified health insurance policy (as defined in section 4375(c)).

Section 4377(b)(1)(B) provides that “[n]otwithstanding any other law or rule of law, governmental entities shall not be exempt from” the fee imposed by sections 4375 and 4376 unless the policy or plan is an exempt governmental program. Section 4377(b)(3) definesexempt governmental programas (1) any insurance program established under title XVIII of the Social Security Act (42 U.S.C. 1395et seq.) (Medicare), (2) the medical assistance program established by title XIX (42 U.S.C. 1396et seq.) (Medicaid) or title XXI of the Social Security Act (42 U.S.C. 1397aaet seq.) (Children's Health Insurance Program), (3) any program established by Federal law for providing medical care (other than through insurance policies) to individuals (or the spouses and dependents thereof) by reason of such individuals being members of the Armed Forces of the United States or veterans, and (4) any program established by Federal law for providing medical care (other than through insurance policies) to members of Indian tribes (as defined in section 4(d) of the Indian Health Care Improvement Act, 25 U.S.C. 1603). Under these special rules, a governmental entity (including a federally recognized Indian tribal government) that is the plan sponsor of an applicable self-insured health plan that does not meet the definition of an exempt governmental program must pay the fee imposed by section 4376.

Section 4377(c) provides that the fees imposed by sections 4375 and 4376 are treated as taxes for purposes of subtitle F of the Code.

On June 8, 2011, the IRS released Notice 2011-35 (2011-25 IRB 879), which requested comments on how the fees imposed under sections 4375 and 4376 should be calculated and paid, including possible rules and safe harbors. The Treasury Department and the IRS received numerous comments in response to Notice 2011-35 and have considered all comments in drafting these proposed regulations. The relevant portions of Notice 2011-35 and comments are discussed in more detail in this preamble. See § 601.601(d)(2).

The fee under section 4375 is imposed on the issuer of a specified health insurance policy. Under the proposed regulations, the fee must be calculated using the applicable dollar amount in effect for the policy year (for example, $1 for policy years ending on or after October 1, 2012, and before October 1, 2013) and one of the permitted methods for determining the average number of lives covered under the policy during the policy year.

The termspecified health insurance policyincludes only accident and health insurance policies that are issued with respect to an individual residing in the United States. The proposed regulations clarify that for purposes of this fee, “an individual residing in the United States” means an individual who has a place of abode in the United States. The United States, for this purpose, includes American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, the Virgin Islands, and any other possession of the United States.

Commentators requested a bright-line rule for determining whether an individual covered by a policy is residing in the United States. Many commentators suggested that issuers should be able to rely on the address on file for the primary insured to determine whether individuals covered by the policy are residing in the United States. The Treasury Department and the IRS recognize that the address on file for the primary insured may be the only information the insurer has with respect to the residence of the individuals covered under the policy, and also that the address on file is likely the place of abode for most, if not all, of the covered individuals. Accordingly, the proposedregulations provide that if the address on file with the issuer or plan sponsor for the primary insured is outside of the United States, the issuer or plan sponsor may treat the primary insured and the primary insured's spouse, dependents, or other beneficiaries covered under the policy as having the same place of abode and not residing in the United States. For this purpose, the term “primary insured” refers to the individual eligible for coverage other than due to his or her status as a spouse, dependent, or other beneficiary of another insured individual (for example, in the case of a group health plan for employees, the individual eligible for coverage due to his or her status as an employee).

Several commentators also suggested that expatriate policies not be considered specified health insurance policies for purposes of the fee because the policies are issued principally to cover employees who do not reside in the United States. Commentators argued that expatriate policies are predominantly group health insurance policies sold to employers for a unique subset of their employees, the substantial majority of whom are living outside the United States while working for the employer. According to these commentators, only a small minority of the individuals covered under these expatriate policies may be foreign nationals working for the employer in the United States. For these reasons, the proposed regulations provide that the term “specified health insurance policy” does not include any group policy issued to an employer if the facts and circumstances show that the group policy was designed and issued specifically to cover primarily employees who are working and residing outside of the United States.

Commentators requested that the regulations provide that stop loss and indemnity reinsurance policies not be considered specified health insurance policies. Commentators argued that stop loss and indemnity reinsurance policies are not providing coverage for lives covered; rather, these types of policies are intended to limit the original obligor's financial exposure. Section 4375 imposes a fee based on the average number of lives covered. Because stop loss and indemnity reinsurance policies generally do not provide coverage based upon the number of lives covered, the proposed regulations provide that for purposes of section 4375, these policies are not specified health insurance policies subject to the fee under section 4375. No inference is intended as to whether stop loss or indemnity reinsurance policies may constitute health insurance policies for other purposes.

Commentators raised questions about the description of prepaid health coverage arrangements in section 4375(c)(3)(B) and requested that the regulations clarify which types of arrangements are covered by that section. One commentator suggested that the language in section 4375(c)(3)(B) is intended to describe health maintenance organizations and similar arrangements, noting that the definition of “health insurance,” which was added to ERISA, the Public Health Service Act, and the Code by the Health Insurance Portability and Accountability Act of 1996, Public Law 104-191 (110 Stat. 1936 (1996)), was specifically drafted to include health maintenance organizations and similar arrangements. The Treasury Department and the IRS agree that the language in section 4375(c)(3)(B) describes health maintenance organizations and similar organizations; therefore, the proposed regulations clarify that the description in section 4375(c)(3)(B) covers any hospital or medical service policy or certificate, hospital or medical service plan contract, or health maintenance organization contract.

The fee under section 4376 is imposed on the plan sponsor of an applicable self-insured health plan. Under the statute and these proposed regulations, the fee must be calculated using the applicable dollar amount in effect for the plan year (for example, $1 for plan years ending on or after October 1, 2012, and before October 1, 2013) and one of the permitted methods for determining the average number of lives covered under the plan during the plan year.

These proposed regulations provide that an applicable self-insured health plan is a plan that is established or maintained by a plan sponsor for the benefit of employees, former employees, members, former members, or other eligible individuals to provide accident and health coverage (within the meaning of § 46.4377-1(a)(1) of these proposed regulations), any portion of which is provided other than through an insurance policy and that meets certain other conditions. The proposed regulations provide that an applicable self-insured health plan does not include an exempt governmental program (as defined in section 4377(c)(3)) but does include a plan that is established or maintained solely for the benefit of former employees (commonly referred to as a retiree-only plan).1 A self-insured health plan that does not provide coverage described in section 4376(c) is not an applicable self-insured health plan. For example, a self-insured group health plan of a Federally recognized Indian tribal government that provides coverage only to tribal members that are not employees of the Indian tribal government would not be an applicable self-insured health plan, unless it otherwise falls within one of the statutory definitions of an applicable self-insured health plan (for example, the plan is established or maintained by a section 501(c)(6) organization).

Notice 2011-35 (2011-25 IRB 879) invited comments on the type or types of health flexible spending arrangements (as described in section 106(c)(2)) (health FSAs) and health reimbursement arrangements (as described in Notice 2002-45 (2002-2 CB 93)) (HRAs) that would be excluded from the definition of an applicable self-insured health plan because they provide the kind of coverage that, if provided by an insurance policy, would not cause the policy to be treated as a specified health insurance policy, as defined in section 4375(c). Health FSAs and HRAs are both self-insured health plans.2 See § 601.601(d)(2).

Commentators generally requested that all health FSAs and HRAs be excluded from the definition of applicable self-insured health plan under section 4376. Commentators also suggested that because the majority of health FSAs or HRAs are provided in connection with a major medical plan, they should be excluded from the fee imposed by section 4376 to avoid the fee from being imposed twice with respect to the same individual. Some of the commentators also observed that there would be challenges arising from the possibility that an employer may lack information on the number of dependents whose medical expenses areeligible for reimbursement from an employee's health FSA or HRA.

Some commentators requested that if HRAs were not excluded from the definition of applicable self-insured health plan, the guidance limit the fee under section 4376 to HRAs that are not offered in connection with a major medical plan or permit treatment of an HRA that is offered in connection with a major medical plan as a single applicable self-insured health plan to avoid the fee applying twice with respect to individuals covered by a major medical plan and a related HRA.

The proposed regulations do not exclude all health FSAs and HRAs from the definition of an applicable self-insured health plan under section 4376. In response to comments, however, these proposed regulations provide that multiple self-insured arrangements established and maintained by the same plan sponsor and with the same plan year are subject to a single fee. Accordingly, an HRA is not subject to a separate fee under section 4376 if the HRA is integrated with another applicable self-insured health plan that provides major medical coverage, provided that the HRA and the other plan are established or maintained by the same plan sponsor. However, section 4375 imposes a separate fee on the issuer of a specified health insurance policy. Consistent with the statutory structure which separates the fee with respect to health insurance policies from the fee with respect to self-insured plans, the proposed regulations provide that an HRA that is integrated with an insured group health plan is treated as an “applicable self-insured health plan” the plan sponsor of which is subject to the fee under section 4376, while the issuer of the group insurance policy for the insured group health plan is subject to the fee under section 4375, even though the HRA and the insured group health plan are maintained by the same plan sponsor.

These proposed regulations reflect the special rule in section 4375(c)(2), which is carried over to self-insured arrangements through the definition of “accident and health coverage” in section 4377(a)(1), that a specified health insurance policy does not include any insurance if substantially all of its coverage is of excepted benefits described in section 9832(c). The proposed regulations provide that a health FSA that satisfies the requirements of an excepted benefit under section 9832(c) is excluded from the definition of an “applicable self-insured health plan” and therefore is not subject to the fee imposed by section 4376. (See § 54.9831-1(c)(3)(v), relating to additional rules on health FSAs that are excepted benefits.) A health FSA that does not satisfy the requirements to be treated as an excepted benefit is an applicable self-insured health plan subject to the fee imposed by section 4376 (and, for purposes of the rules in the preceding paragraph, is treated the same as an integrated HRA).

In addition, to address the concerns raised about the availability of information on the lives covered under an HRA or health FSA, the proposed regulations contain a special rule permitting the plan sponsor to assume one covered life for each employee with an HRA and for each employee with a health FSA that is not an excepted benefit.

Commentators also requested that an employee assistance program (EAP) or wellness arrangement be exempt from the fee. Commentators argued that generally, under an EAP or wellness arrangement, benefits for medical care are secondary or incidental to non-medical benefits. In response, these proposed regulations exclude from the definition of applicable self-insured health plan an EAP, disease management program, or wellness program, if the program does not provide significant benefits in the nature of medical care or treatment.

For each type of applicable self-insured health plan identified in section 4376(c), the plan sponsor is the person responsible for the payment of the fee. Section 4376(b)(2) provides that in the case of a plan established or maintained by a single employer, the plan sponsor is the employer, and in the case of a plan established or maintained by a single employee organization, the plan sponsor is the employee organization. Section 4376 does not contain rules that would treat related entities as a single entity. Accordingly, for example, under these proposed regulations, a plan that is maintained by multiple related employers is not a plan that is established or maintained by a single employer, but, for section 4376 purposes, is considered a plan that is established or maintained by two or more employers.

In the case of a plan maintained by two or more employers, the proposed regulations provide that the plan sponsor is the person identified as the plan sponsor by the terms of the document under which the plan is operated, or the employer designated as the plan sponsor for purposes of section 4376 by the terms of the document under which the plan is operated (provided that such designation is made, and that employer has consented to the designation, by no later than the due date of the return under section 4376 for that plan year is required to be filed, after which date such designation for that plan year may not be changed or revoked, and provided further that an employer may be designated as the plan sponsor only if that employer is one of the employers maintaining the plan). In the absence of the identification or designation of a plan sponsor by the terms of the document under which the plan is operated, the proposed regulations provide that the plan sponsor is each employer that maintains the plan (with respect to employees of that employer). Because the plan sponsor may be designated on or before the due date for filing the Form 720, “Quarterly Federal Excise Tax Return,” for the plan year, and under these proposed regulations the first potential due date for filing the Form 720 is July 31, 2013, this rule provides related employers that provide coverage for their employees under a single plan ample time to designate a plan sponsor if the employers wish to consolidate the filing and the payment of the fee under section 4376. In the absence of designation of a plan sponsor in the governing plan document, the proposed regulations provide that the plan sponsor is each employer that maintains the plan (with respect to employees of that employer), and therefore each employer would be required to file its own Form 720, reflecting the section 4376 fee applicable to that employer as a plan sponsor with respect to its employees.

As discussed in Notice 2011-35 and earlier in the section of this preamble entitled “Statutory Provisions,” section 4377(b) provides that the fee imposed by section 4376 applies to a governmental entity that establishes or maintains an applicable self-insured health plan (other than a plan that qualifies as an exempt governmental program) for its employees. These proposed regulations provide that a governmental entity that establishes or maintains an applicable self-insured health plan for its current or former employees is the plan sponsor for purposes of the fee imposed by section 4376. Thus, these proposed regulations require that a governmental entity (including a Federally recognized Indian tribal government) that establishes or maintains an applicable self-insured health plan (other than a plan that qualifies as an exempt governmental program) must calculate, report, and pay the fee under section 4376 in accordance with the guidance in these proposed regulations.

Several commentators requested that the guidance clarify that, in the case ofan applicable self-insured health plan that is established or maintained by a board of trustees, plan assets (for example, amounts held in a trust) or the employer contributions to the plan could be used to pay the fee under section 4376. Because the use of plan assets to pay the fee under section 4376 may have implications under various state and Federal laws (including, for example, ERISA's fiduciary provisions), the question of what the permissible sources of funds are for paying the fee under section 4376 is an issue that is outside the scope of these proposed regulations. The Treasury Department and the IRS have consulted the Department of Labor concerning comments on the appropriate sources to pay the fee under section 4376. The Department of Labor has advised the Treasury Department and the IRS that it is considering permissible funding sources for these fee payments by plan sponsors that are subject to ERISA's fiduciary provisions.

The fee imposed on an issuer of a specified health insurance policy under section 4375 is based on the average number of lives covered under the policy. Notice 2011-35 invited comments on reasonable methods an issuer may use to determine the average number of lives covered under a policy. Notice 2011-35 also invited comments on whether guidance should provide a safe harbor for issuers that are required to file the National Association of Insurance Commissioners (NAIC) Supplemental Health Care Exhibit (Exhibit). In particular, the Treasury Department and the IRS outlined a potential safe harbor based on the number of lives reported on the most recently filed Exhibit or based on the average of the covered lives reported on the most recently filed Exhibit and the immediately preceding Exhibit.

Commentators generally favored a safe harbor that allows issuers to calculate the average number of lives covered under the policy based on data reported on the Exhibit but expressed concerns with exclusive reliance upon covered lives data on the Exhibit. According to the instructions to the Exhibit, the term “covered lives” means the total number of lives insured, including dependents, at any time during the reporting period, which means the Exhibit captures all lives covered without regard to how long the coverage lasted. Several commentators recommended that the regulations allow issuers to use member months data reported in the Exhibit. The Exhibit defines the term “member months,” as the sum of the number of lives covered on a single day in every month. Commentators argued that dividing the member months data by 12 (the number of months in a reporting period) is a more accurate measure of the average number of lives covered because it better reflects that some individuals may only be insured for part of the year.

Commentators noted that some entities are not required to file the Exhibit, but must provide comparable forms to their applicable state regulators. Commentators recommended that the proposed regulations permit issuers to use information included in any other report filed with a state government.

Some commentators suggested that the regulations allow issuers to determine the average number of lives covered by counting the actual number of lives covered during the policy year. Other commentators requested that the regulations allow the use of any reasonable formula or other method to determine the average number of lives covered, including a formula or method that historically has been used by the issuer for other business purposes.

The proposed regulations provide issuers the choice of using any of four alternative methods to determine the average number of lives covered under policies that it issues for purposes of the fee imposed by section 4375. First, an issuer may determine the average number of lives covered under a policy for a policy year by calculating the sum of lives covered for each day of the policy year and dividing that sum by the number of days in the policy year (the actual count method). Second, an issuer may determine the average number of lives covered under a policy for a policy year by adding the total number of lives covered on one date in each quarter of the policy year, or an equal number of dates for each quarter, and dividing the total by the number of dates on which a count was made (the snapshot method). Third, as an alternative to determining the average number of lives covered under each individual policy for its respective policy year, an issuer may determine the average number of lives covered under all policies in effect for a calendar year based on the “member months” reported on the Exhibit divided by 12 (the member months method). Fourth, an issuer that is not required to file the Exhibit may determine the average number of lives covered under all of its policies in effect for a calendar year using data in any form that is equivalent to the Exhibit that is filed with the state of domicile if the state form reports lives covered in the same manner as member months is reported on the Exhibit (the state form method). For this purpose, an equivalent form includes only a form that reports all the lives covered under the policy (including, for example, spouses, dependents, and other beneficiaries, as applicable).

The proposed regulations direct an issuer to apply a single method in determining the average number of lives covered under the policy for the year. In addition, issuers must use the same method of counting lives for all policies reported on a single return. Issuers using the actual count or snapshot method may change to the snapshot or actual count method from one policy year to the next. For example, an issuer with a policy that has a policy year that ends on June 30, Policy A, may determine lives covered under Policy A for July 1, 2013 to June 30, 2014, using the actual count method if the issuer uses the actual count method for all policies for which a liability will be reported on the Form 720, “Quarterly Federal Excise Tax Return,” due by July 31, 2015 (the due date for the return that will include the July 2013 to June 2014 policy year for Policy A, as discussed in the section of this preamble entitled “Application of Excise Tax Procedural Rules (Filing of Returns and Payment of Fees”)). The issuer may change its method for determining lives covered under Policy A to the snapshot method for the July 1, 2014, to June 30, 2015 policy year, provided that the snapshot method is used for all policies for which a liability will be reported on the return due by July 31, 2016 (the due date for the return that will include the July 2014 to June 2015 policy year for Policy A).

While the actual count and snapshot methods count lives covered on a policy-by-policy basis for each policy having a policy year that ends in the reporting period (which is based on the calendar year), the member months and state form methods count all lives covered during the calendar year for all policies in effect during the calendar year irrespective of when actual policy years end. For example, for a policy with a policy year that ends on June 30, member months will include lives covered under that policy from January 1 to December 31 and aggregate those lives covered with all other lives covered for the calendar year under all policies in effect during the calendar year. To convert the lives covered from the member months to the total lives covered under a particular policy for a policy year is administratively burdensome. Accordingly, the proposed regulations provide that an issuer usingthe member months or state form method must use that method for all policies for all years for which the fee applies. The Treasury Department and the IRS solicit comments on whether there should be an exception to this rule for issuers of calendar-year only policies who want to switch from the member months or state form method to the actual count or snapshot method and, if so, how to address the transition in methods for the 2012 and 2019 calendar years.

Commentators noted that for 2012 and 2019 a partial year adjustment will be needed because the member months data, which uses the calendar year for all policies, will include in the member months for 2012 and 2019 lives covered under policies with a policy year that ends before October 1, 2012, or after September 30, 2019, which are policies to which the fee under section 4375 does not apply. The Treasury Department and the IRS also understand that the data reported on state forms is generally also based on the calendar year. To adjust for 2012 and 2019, the proposed regulations adopt a pro rata approach for calculating the average number of lives covered using the member months method or the state form method for 2012 and 2019. For example, the member months number for 2012 is divided by 12 and the resulting number is multiplied by one-quarter to arrive at the average number of lives covered for October through December 2012. The proposed regulations further treat the amount calculated under this pro rata approach as the average number of lives covered for policies with policy years that end on or after October 1, 2012, and before January 1, 2013. Similar rules are provided for 2019.

The Treasury Department and the IRS understand that these proposed regulations are being issued after the beginning of some policy years to which the fee under section 4375 will apply. Because issuers that do not use the member months method or state form method may not have started counting lives covered for policy years that end on or after October 1, 2012, but that began before May 14, 2012, issuers using the actual count method may begin counting lives covered under a policy as of May 14, 2012 rather than the first day of the policy year, and divide by the appropriate number of days remaining in the policy year. Similarly, for policy years that end on or after October 1, 2012, but that began before May 14, 2012, issuers using the snapshot method may use counts from quarters beginning on or after May 14, 2012 to determine the average number of lives covered under the policy. The Treasury Department and the IRS intend for these rules to facilitate compliance for the initial policy years covered by section 4375. Comments are requested as to whether any additional transition rules under section 4375 are needed for this purpose.

The fee imposed on a plan sponsor of an applicable self-insured health plan under section 4376 is based on the average number of lives covered under the plan. Notice 2011-35 invited comments on reasonable methods that could reduce administrative burdens on plan sponsors that must compute the average number of lives covered under an applicable self-insured health plan. Notice 2011-35 also invited comments on safe harbors that would permit a plan sponsor to determine the average number of covered lives under the plan using a formula based on the number of participants and one or more additional factors that account for the number of dependents without requiring that every actual dependent covered under the plan be counted.

Commentators generally favored using reasonable simplifying methods and safe harbors to determine the average number of lives covered under the plan. Some commentators suggested that the guidance permit the use of snapshot data to determine the number of lives taken into account for calculating the average number of lives covered during the plan year. Commentators also suggested that plan sponsors be permitted to determine the average number of lives covered during the year based on information reported on the plan's Form 5500, “Annual Return/Report of Employee Benefit Plan.”

Commentators generally recognized that a method that is based on Form 5500 reporting will have limited application because the requirement to file a Form 5500 does not apply to all plan sponsors that are subject to the fee under section 4376. These commentators also noted that the Form 5500 does not include information on the number of lives (participants and dependents) covered under the plan during the plan year, but rather includes information only on the number of participants on the first day and last day of the plan year. Accordingly, the information reported on the Form 5500 would need to be converted to a number that accurately represents the average number of covered lives under the plan for the plan year.

To make it easier for plan sponsors to determine the average number of lives covered under the plan for the plan year, these proposed regulations provide plan sponsors a choice to use any of three alternative methods. First, a plan sponsor may determine the average number of lives covered under the plan for the plan year by calculating the sum of the lives covered for each day of the plan year and dividing that sum by the number of days in the plan year (the actual count method). Second, a plan sponsor may determine the average number of lives covered under the plan for the plan year by adding the totals of lives covered on one date in each quarter, or an equal number of dates for each quarter, and dividing the total by the number of dates on which a count was made (the snapshot method). For this purpose, the number of lives covered on a date may be determined as equal to either the sum of the actual number of lives covered on the dates (the snapshot count method) or the sum of (1) the number of participants with self-only coverage on that date, plus (2) the product of the number of participants with coverage other than self-only coverage on the date and 2.35 (the snapshot factor method).3 The Treasury Department and the IRS request comments on additional sources of data that could be used to calculate a more accurate conversion factor.

Third, a plan sponsor may determine the average number of lives covered under the plan for the plan year based on a formula that includes the number of participants actually reported on the Form 5500 for the applicable self-insured health plan for the plan year (the Form 5500 method). For a plan providing only self-only coverage, under the Form 5500 method the plan sponsor may treat the average number of covered lives under the plan for a plan year as the sum of the total participants at the beginning and the end of the plan year, in each case as reported on the Form 5500, divided by two.

For plans providing coverage that is not limited to the self-only coverage, the Form 5500 does not identify whether the coverage is self-only or family (or some other non-self-only coverage). Therefore, the number of participants reported on the Form 5500 generally is converted to covered lives by multiplying the number of participants on each date by a factor of 2.0. (Thisfactor is lower than the 2.35 factor used in the snapshot factor method because this factor takes into account participants with self-only coverage that covers one life, as well as participants with other coverage that covers two or more lives.) Accordingly, under the Form 5500 method for plans that provide coverage not limited to self-only coverage, a plan sponsor may simply add the number of participants reported for the beginning of the plan year to the number reported for the end of the plan year to determine the average number of covered lives for the plan year. The Treasury Department and the IRS request comments on additional sources of data that could be used to calculate a more accurate conversion factor.

The proposed regulations direct a plan sponsor to apply a single method in determining the average number of lives covered under the plan for the entire plan year. However, a plan sponsor is not required to use the same method from one plan year to the next.

The Treasury Department and the IRS understand that these proposed regulations are being issued after the beginning of some plan years to which the fee under section 4376 will apply. Therefore, these proposed regulations include a special rule for the fee under section 4376 applicable for a plan year that ends on or after October 1, 2012, and began before July 11, 2012. Because self-insured plans generally are not required to complete the Exhibit or determine the number of covered lives for other regulatory purposes, under this special rule, a plan sponsor may use any reasonable method to determine the average number of lives covered under the plan for purposes of calculating the fee under section 4376 for those plan years. For more information about the return filing requirements and payment of the fees, see the section in this preamble entitled “Application of Excise Tax Procedural Rules (Filing of Returns and Payment of Fees).”

In accordance with section 4377(c), references in subtitle F (section 6001-7874) to “taxes imposed by this title,” “internal revenue tax,” and similar references apply to the fees imposed by sections 4375 and 4376. For example, the fees imposed by sections 4375 and 4376 are assessed pursuant to section 6201, collected pursuant to sections 6301, 6321, and 6331, enforced pursuant to section 7602, subject to examination and summons pursuant to section 7602, and subject to confidentiality rules pursuant to section 6103, in the same manner as other taxes imposed by the Code.

Sections 4375 and 4376 are in chapter 34 of the Code (Taxes on Certain Insurance Policies). The deficiency procedures of sections 6211-6216 apply only to income, estate, and gift taxes imposed by subtitle A (Income Taxes) and B (Estate and Gift Taxes) and the excise taxes imposed by chapters 41-44. Because sections 4375 and 4376 are in chapter 34, the deficiency procedures do not apply to the fee. Thus, the IRS may assess and collect the fees using the procedures in subtitle F without regard to the restrictions on assessment in section 6213 (relating to petitions to the Tax Court).

The Excise Tax Procedural Regulations in 26 CFR part 40 contain rules for depositing, paying, and return filing for a number of excise taxes, including the excise taxes in chapter 34.

Under existing rules for chapter 34 excise taxes, taxpayers pay and report these taxes quarterly on Form 720, “Quarterly Federal Excise Tax Return,” by the last day of the first calendar month following the calendar quarter for which it is filed. The proposed regulations amend this rule so that issuers and plan sponsors will report and pay the section 4375 and 4376 fees only once a year on Form 720, which will be due by July 31 of each year. A person that files a Form 720 only to report liability imposed by section 4375 or 4376 is not required to file a Form 720 at other times during the year. A return will generally cover policy years (section 4375) and plan years (section 4376) that end during the preceding calendar year, or in the case of an issuer that determines the average number of lives covered for purposes of section 4375 using the member months method or the state form method, the return is for all policies in effect during the previous calendar year. The instructions for Form 720 inform filers how and when to file and pay. These instructions require that the filer (the issuer or plan sponsor, as applicable) have an Employer Identification Number (EIN) to use in filing the Form 720.

Most excise taxes reported on Form 720 are required to be deposited semimonthly. However, these proposed regulations do not require semimonthly deposits of the fee imposed by section 4375 or 4376; rather, full payment of the fee is due annually by the July 31 due date of Form 720.

Any claim for a refund of the section 4375 or 4376 fees must be filed on Form 8849, “Claim for Refund of Excise Taxes,” or Form 720X, “Amended Quarterly Federal Excise Tax Return,” in accordance with the instructions for those forms.

These proposed regulations do not impose any specific recordkeeping requirements for calculating the fees under sections 4375 and 4376. However, see the instructions for Form 720 for general information on recordkeeping requirements.

The IRS will revise the current Form 720 to reflect these fees.

Form 720 may be filed electronically. For more information on e-file, seewww.irs.gov/efile. Although electronic filing of the Form 720, “Quarterly Federal Excise Tax Return,” is not required, the IRS encourages taxpayers to file the Form 720 electronically. Electronic filing of Form 720 is quick and easy, and it will allow the IRS to provide expedited and improved service and reliability to taxpayers while reducing processing time and errors. Forms 720 can be submitted on-line. A taxpayer wishing to file the Form 720 electronically must submit it through an approved transmitter software developer. The IRS has posted on its Web site contact information for all approved Form 720 e-file transmitters athttp://www.irs.gov/efile/lists/0,,id=176152,00.html.To electronically file the Form 720, taxpayers will incur the cost of the provider's required service fee for online submission.

Notice 2011-35 requested comments on the ability of third parties to act on behalf of a plan sponsor in complying with the requirements of the fee under section 4376. A number of commentators suggested that guidance should permit third parties to act on behalf of a plan sponsor in reporting and paying the fee. Most of these commentators requested that the Treasury Department and the IRS establish a special reporting and filing regime for third parties that is different than the regime for plan sponsors. Although the IRS has established limited third-party reporting and payment regimes in certain instances (see for example, Rev. Proc. 2007-38 (2007-1 CB 1442)) the IRS does not intend to adopt such a program for the fee under section 4375 or the fee under section 4376 because the benefits of such a program would be outweighed by the administrative burdens, particularly given the limited period over which the fee will apply. See § 601.601(d)(2).

These regulations are proposed to apply to policy and plan years ending on or after October 1, 2012, and before October 1, 2019. Issuers and plan sponsors may rely on these proposed regulations for guidance pending the issuance of final regulations. Final regulations will be effective as of the date these proposed regulations are published in theFederal Register. If and to the extent future guidance is more restrictive than the guidance in these proposed regulations, the future guidance will be applied without retroactive effect.

It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866, as supplemented by Executive Order 13653. Therefore, a regulatory assessment is not required. It is hereby certified that these proposed regulations will not have a significant economic impact on a substantial number of small entities. This certification is based on the fact that small businesses generally do not have self-insured health plans and that these regulations will therefore primarily affect large corporations. Therefore, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. The Treasury Department and the IRS specifically solicit comments from any party, particularly affected small entities, on the accuracy of this certification. Pursuant to section 7805(f) of the Code, this notice of proposed rulemaking has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comments on its impact on small business.

Before these proposed regulations are adopted as final regulations, consideration will be given to any written or electronic comments that are submitted timely to the IRS. The Treasury Department and the IRS request comments on all aspects of the proposed rules. All comments will be available for public inspection and copying.

A public hearing has been scheduled for August 8, 2012, beginning at 10 a.m. in room the auditorium of the Internal Revenue Building, 1111 Constitution Avenue NW., Washington, DC. Due to building security procedures, visitors must enter at the Constitution Avenue entrance. In addition, all visitors must present photo identification to enter the building. Because of access restrictions, visitors will not be admitted beyond the immediate entrance more than 15 minutes before the hearing starts. For information about having your name placed on the building access list to attend the hearing, see theFOR FURTHER INFORMATION CONTACTsection of this preamble.

The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who wish to present oral comments at the hearing must submit written or electronic comments and an outline of the topics to be discussed and the time to be devoted to each topic by July 30, 2012. A period of 10 minutes will be allotted to each person for making comments. An agenda showing the scheduling of the speakers will be prepared after the deadline for receiving outlines has passed. Copies of the agenda will be available free of charge at the hearing.

The principal authors of these regulations are Rebecca L. Baxter, Office of Associate Chief Counsel (Financial Institutions & Products), and R. Lisa Mojiri-Azad, Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). However, other personnel from the Treasury Department and the IRS participated in their development.

Accordingly, 26 CFR parts 40 and 46 are proposed to be amended as follows:

Public Participation and Request for Comments

We encourage you to submit comments and related material on the draft environmental assessment. All comments received will be posted, without change, tohttp://www.regulations.govand will include any personal information you have provided.

Submitting comments:If you submit a comment, please include the docket number for this notice (USCG-2011-0551) and provide a reason for each suggestion or recommendation. You may submit your comments and material online, or by fax, mail or hand delivery, but please use only one of these means. We recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.

To submit your comment online, go tohttp://www.regulations.gov, type “USCG-2011-0551” and click “Search.” Then click “Submit a Comment” in the “Actions” column. If you submit your comments by mail or hand delivery, submit them in an unbound format, no larger than 81/2by 11 inches, suitable for copying and electronic filing. If you submit them by mail and would like to know that they reached the Facility, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period.

Viewing the comments and draft environmental assessment:To view the comments and draft environmental assessment, go tohttp://www.regulations.gov,type “USCG-2011-0551” and click “Search.” Then click the “Open Docket Folder” in the “Actions” column. If you do not have access to the Internet, you may view the docket online by visiting the Docket Management Facility in Room W12-140 on the ground floor of the Department of Transportation West Building, 1200 New Jersey Avenue SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. We have an agreement with the Department of Transportation to use the Docket Management Facility.

Privacy Act:Anyone can search the electronic form of comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review a Privacy Act, system of records notice regarding our public dockets in the January 17, 2008, issue of theFederal Register(73 FR 3316).

The America's Cup Race Management has applied for a Marine Event Permit to hold the 34th America's Cup races on the waters of San Francisco Bay in California. The Coast Guard has not approved the Marine Event Permit and is still evaluating the application, including the potential environmental impact of the requested permit. If the permit is approved, however, we anticipate that a special local regulation may be necessary to ensure public safety during the races. To provide adequate time for public input, we proposed a special local regulation and safety zone on January 30, 2012 (77 FR 4501).

In the January 2012 notice of proposed rulemaking, the Coast Guard proposed regulations for the 2012 and 2013 races. These include proposed regulated areas surrounding the primary and contingent race areas; a designated area for recreational swimmers, rowers, and kayakers; a transit zone for using during the 2013 races; restrictions on vessel traffic and the use of Anchorage No. 7; and a safety zone around racing vessels. These proposed rules are temporary and would be enforced only on race days. The public comment period on these proposed rules remains open through April 30, 2012. If the Marine Event Permit is not approved, we will withdraw the proposed rules.

In accordance with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), Department of Homeland Security Management Directive 023-01, and Commandant Instruction M16475.lD, we have prepared a draft environmental assessment (EA) of the proposed special local regulation and safety zone described above. The draft EA, which is available in the docket, identifies andexamines the reasonable alternatives and assesses their potential environmental impact. It also identifies the preferred alternative and how it affects the proposed rulemaking.

We request your comments on environmental concerns that you may have related to the draft EA. This includes suggesting analyses and methodologies for use in the EA or possible sources of data or information not included in the draft EA. Your comments will be considered in preparing the final EA.

This notice is issued under the authority of 5 U.S.C. 552(a), and 33 CFR 1.05-1, 100.35, and 165.5.

You may be potentially affected by this action if you manufacture (including import), process, or distribute in commerce chemical substances and mixtures. Potentially affected entities may include, but are not limited to:

• Chemicals and Allied Products Manufacturers (NAICS 32411).

• Petroleum Refining (NAICS Codes 325 and 32411).

This listing is not intended to be exhaustive, but rather provides a guidefor readers regarding entities likely to be affected by this action. Other types of entities not listed in this unit could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether this action might apply to certain entities. If you have any questions regarding the applicability of this action to a particular entity, consult the technical person listed underFOR FURTHER INFORMATION CONTACT.

1.Submitting CBI.Do not submit this information to EPA through regulations.gov or email. Clearly mark the part or all of the information that you claim to be CBI. For CBI information in a disk or CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM as CBI and then identify electronically within the disk or CD-ROM the specific information that is claimed as CBI. In addition to one complete version of the comment that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.

2.Tips for preparing your comments.When submitting comments, remember to:

i. Identify the document by docket ID number and other identifying information (subject heading,Federal Registerdate and page number).

ii. Follow directions. The Agency may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or section number.

iii. Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes.

iv. Describe any assumptions and provide any technical information and/or data that you used.

v. If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced.

vi. Provide specific examples to illustrate your concerns and suggest alternatives.

vii. Explain your views as clearly as possible, avoiding the use of profanity or personal threats.

viii. Make sure to submit your comments by the comment period deadline identified.

The Agency is proposing regulations to require electronic reporting of information submitted under TSCA section 4 (including test rules and ECAs), TSCA section 8(a) PAIR rule at 40 CFR part 712, and TSCA section 8(d) Health and Safety Data Reporting rules to require use of CISS, a web-based reporting tool.

The Agency is also proposing to extend TSCA section 5 electronic reporting requirements to NOCs and support documents (e.g., correspondence, amendments, and test data) relating to TSCA section 5 notices submitted to EPA prior to April 6, 2010, the effective date of the e-PMN final rule (Ref. 1). Currently, follow-up submissions for TSCA section 5 notices submitted before this date are not subject to electronic reporting requirements.

The Government Paperwork Elimination Act (GPEA) (44 U.S.C. 3504) provides that, when practicable, Federal organizations use electronic forms, electronic filings, and electronic signatures to conduct official business with the public. EPA's Cross-Media Electronic Reporting Regulation (CROMERR) (40 CFR part 3) (Ref. 2), provides that any requirement in title 40 of the CFR to submit a report directly to EPA can be satisfied with an electronic submission that meets certain conditions once the Agency published a document in theFederal Registerannouncing that EPA is prepared to receive certain documents in electronic form. For more information about CROMERR, go tohttp://www.epa.gov/cromerr.

This action would require electronic reporting under TSCA section 4 test rules and ECAs, TSCA section 8(a) PAIR, TSCA section 8(d) regulations, and TSCA section 5-related reporting provisions where electronic reporting is not already required, taking into consideration the frequency of reporting under these regulations. EPA is considering undertaking additional rulemaking regarding requiring electronic reporting for other TSCA requirements that currently include paper-reporting obligations. Once this proposed rule becomes effective, EPA would accept only data, reports, and other information submitted through CDX. Data, reports, and other information not submitted in the manner required would be considered invalid by EPA. In addition, the Agency encourages that voluntary submissions, such as those under Memoranda of Understandings (MOUs), also be submitted through CDX. The following regulations would be affected:

1.TSCA section 4 test rules and ECAs.Documents required under TSCA section 4, include but are not limited to, letters of intent to conduct testing (40 CFR 790.45), extension requests (40 CFR 790.50), modification requests (40 CFR 790.55), exemption requests (40 CFR 790.80 and 40 CFR 790.82), hearing requests (40 CFR 790.90), and data required to be developed under rules at 40 CFR part 799, and documents and correspondence related to ECAs negotiated pursuant to 40 CFR part 790. Affected sections would include those relating to submission or modification of a study plan (40 CFR 790.62), and requests to modify the test schedule for any test required under the consent agreement (40 CFR 790.68). Electronic reporting requirements for TSCA section 4 rules and ECAs would be added to 40 CFR 766.7, 790.5, and 799.50.

2.TSCA section 5.Additionally, EPA is proposing amendments to certain TSCA section 5 reporting regulations that would extend electronic reporting requirements to NOCs and support documents (e.g., correspondence, amendment, and test data) relating to TSCA section 5 notices submitted to EPA before April 6, 2010. The e-PMN final rule (Ref. 1) requires submitters of NOCs and support documents whose original notices were submitted to EPA prior to April 6, 2010 (“legacy notices”) to submit those NOCs and support documents to EPA in hard copy. At the time the final rule was published, EPA believed the hard-copy submission of these documents was necessary because the Agency intended to operate two different databases; one for storing TSCA section 5 notices submitted to EPA after April 6, 2010, and another for storing legacy notices. EPA originally intended to enter legacy notices only into EPA's “legacy database,” i.e., the database used prior to April 6, 2010, and so a subsequent NOC or support document would not have been able to be linked up with its original or “parent” legacy notice if it was entered into EPA's new database.

However, since publication of the e-PMN final rule, EPA's electronic reporting program has evolved and EPA now has the ability to house both legacy notices and notices submitted after April 6, 2010, in the same database. EPA is therefore proposing to amend the regulations at 40 CFR parts 720, 721, 723, and 725 to require NOCs and support documents for TSCA section 5 notices originally submitted prior to April 6, 2010, to be submitted electronically allowing them to bestored with their legacy TSCA section 5 notices in the new database.

Within the e-PMN final rule, EPA phased-in electronic reporting of TSCA section 5 notices and their related NOCs and support documents over a 2-year period that ends April 6, 2012. Within this proposed rule, EPA would remove the regulatory text related to the phase-in because by the time this proposed rule is finalized, EPA expects the phase-in period will be over and all TSCA section 5 notices, NOCs, and support documents would be required to be submitted to EPA via CDX.

3.TSCA section 8(a) PAIR.Electronic reporting requirements for Form 7710-35, Manufacturer's Report—Preliminary Assessment Information (Manufacturer's Report) would be included in 40 CFR 712.28 and 712.30.

4.TSCA section 8(d).The submission of data, reports, and other documents are required under the TSCA section 8(d) Health and Safety Data reporting rule at 40 CFR part 716 and the Dibenzo-para-dioxins/Dibenzofurans rule at 40 CFR part 766 (specifically 40 CFR 716.30, 716.35, 716.60, and 766.7). Additional affected sections of 40 CFR part 716 would include: The submission of underlying data, preliminary reports of ongoing studies, additional copies of studies (40 CFR 716.40), requests for extension of time (40 CFR 716.60), and requests for withdrawal of a chemical substance from a rule (40 CFR 716.105).

The Agency collects information from manufacturers and processors of chemical substances under TSCA section 4 regulations, TSCA section 8(a) PAIR, and TSCA section 8(d) regulations. Section 4 of TSCA authorizes EPA to require manufacturers and processors of chemical substances and mixtures to perform testing to generate data relevant to a determination whether the manufacture, distribution in commerce, processing, use, or disposal of such chemical or mixtures presents an unreasonable risk of injury to health or the environment. Some TSCA section 4 testing data are required via ECAs. Section 8(a) of TSCA gives EPA authority to promulgate rules to require that manufacturers (includes importers) and processors of chemical substances and mixtures report such data as EPA may reasonably require. One TSCA section 8(a) reporting rule is the PAIR at 40 CFR part 712. The PAIR requires chemical manufacturers and importers to complete and submit to EPA a standardized reporting form with information to help facilitate the evaluation of the potential adverse human health and environmental effects from exposure to identified chemical substances, mixtures, or categories. Under TSCA section 8(d), EPA has the authority to promulgate rules to require manufacturers (including importers), processors, and distributors to submit lists and/or copies of ongoing and completed unpublished health and safety studies.

Section 5(a)(1)(A) of TSCA requires persons to notify EPA at least 90 daysbefore manufacturing a new chemical substance for commercial purposes (under TSCA manufacture includes import). Section 3(9) of TSCA defines a “new chemical substance” as any chemical substance that is not on the TSCA Inventory of Chemical Substances compiled by EPA under TSCA section 8(b). Section 5(a)(2) of TSCA authorizes EPA to determine that a use of a chemical substance is a “significant new use.” EPA must make this determination by a Significant New Use Rule (SNUR) after considering all relevant factors, including those listed in TSCA section 5(a)(2). Once EPA determines that a use of a chemical substance is a significant new use, TSCA section 5(a)(1)(B) requires persons to submit a Significant New Use Notice (SNUN) to EPA at least 90 days before manufacturing or processing the chemical substance for that use.

Since 2006, under the TSCA section 8(a) Inventory Update Reporting rule (IUR), manufacturers (including importers) have been able to submit IUR information electronically to the EPA through CDX (Ref. 3). EPA is improving upon the 2006 IUR electronic reporting software by making electronic reporting easier and more accessible to potential reporters, including non-U.S. companies and those submitters filing jointly. On August 16, 2011 (Ref. 4), the Agency published the final Chemical Data Reporting (CDR) rule, amending and renaming the IUR rule and making electronic reporting mandatory, beginning with the 2012 submission period. In addition, on January 6, 2010, EPA published the e-PMN final rule, which phased in electronic reporting requirements for TSCA section 5 notices and other related documents over a 2-year period. After the 2-year phase-in period ends on April 6, 2012, the final rule mandates electronic reporting for these documents (Ref. 1).

This unit provides an overview of EPA's CDX, CISS, and e-PMN software for NOCs and support documents associated with legacy TSCA section 5 notices, the proposed changes to the TSCA reporting process, and the benefits of electronic reporting to both industry and EPA.

CDX is EPA's electronic system for environmental data exchange to the Agency. CDX also provides the capability for submitters to access their data through the use of web services. CDX enables EPA to work with stakeholders, including governments, regulated industries, and the public to enable streamlined, electronic submission of data via the Internet. For more information about CDX, go tohttp://epa.gov/cdx.

EPA developed CISS for use in submitting data for TSCA sections 4, 8(a), and 8(d) electronically to the Agency. The tool is available for use with Windows, Macs, Linux, and UNIX based computers, using “Extensible Markup Language” (XML) specifications for efficient data transmission across the Internet. CISS, a web-based reporting tool, provides user-friendly navigation, works with CDX to secure online communication, creates a completed Portable Document Format (PDF) for review prior to submission, and enables data, reports, and other information to be submitted easily as PDF attachments, or by other electronic standards, such as XML.

EPA developed e-PMN software for use in preparing and submitting Premanufacture Notices (PMNs) and other TSCA section 5 notices and support documents electronically to the Agency. For further information on the software capabilities, please visit the TSCA New Chemicals Program Web sitehttp://www.epa.gov/oppt/newchems.Also, see the e-PMN final rule for further guidance (Ref. 1).

The effort to eliminate paper-based submissions in favor of CDX reporting, including use of CISS, is part of broader government efforts to move to modern, electronic methods of information gathering. CISS and e-PMN software enable more efficient data transmittal and reduce errors with the built-in validation procedures. EPA believes the adoption of electronic reporting reduces the reporting burden for submitters byreducing the cost and time required to review, edit, and transmit data to the Agency. It also allows submitters to share a draft submission within their organization, and more easily save a copy for their records or future use. The resource and time requirements to review and process data by the Agency will also be reduced and document storage and retrieval will require fewer resources. EPA expects to benefit from receiving electronic submissions and communicating back electronically with submitters. In addition, the use of CDX, CISS, and e-PMN software ensures the legal dependability of electronic reports so that they meet the needs of the compliance and enforcement programs. The legal dependability of electronically submitted documents is enhanced by valid electronic signatures that can be submitted into evidence, assurance that electronic documents can be authenticated to provide evidence of what an individual submitted and/or attested to, and assurance that electronic signatures resist repudiation by the signatory (Ref. 5).

This proposed rule would require submitters to register with EPA's CDX and use CISS to prepare a data file for submission.

1.Registering with CDX.Registration enables CDX to perform two important functions:

i. Authentication of identity.

ii. Verification of authorization.

To submit electronically to EPA via CDX, individuals must first register with that system athttp://cdx.epa.gov/epa_home.asp.

To register in CDX, the CDX registrant (also referred to as “Electronic Signature Holder” or “Public/Private Key Holder”) agrees to the Terms and Conditions, provides information about the submitter and organization, selects a user name and password, and follows the procedures outlined in the guidance document for CDX available athttp://www.epa.gov/cdr/tools/CDX_Registration_Guide_v0_02.pdf.

Users who have previously registered with CDX for TSCA section 5 submissions, or the Toxic Release Inventory TRI-ME web reporting flow, will be able to add the “Submission for Chemical Safety and Pesticide Program (CSPP)” CDX flow to their current registration, and use the CISS web-based reporting tool.

2.Preparing the submission.All submitters would be required to use CISS to prepare their submissions. CISS guides users through a “hands-on” process of creating an electronic submission. Once a user completes the relevant data fields, attaches appropriate PDF files, or other file types, such as XML files, and completes metadata information, the web-based tool validates the submission by performing a basic error check and makes sure all the required fields and attachments are provided and complete. Further instructions on submitting voluntary submissions, such as under MOUs, are available, and instructions for uploading PDF attachments or other file types, such as XML, and completing metadata information would be available through CISS reporting guidance.

3.Completing the submission to EPA.CISS, a web-based reporting tool, also allows the user to choose “Print,” “Save,” or “Transmit through CDX.” When “Transmission through CDX” is selected, the user is asked to provide the user name and password that was created during the CDX registration process. CISS then encrypts the file and submits it via CDX.

4.Correspondence through CDX.The user will log in to the application and check the status of their submissions. Upon successful receipt of the submission by EPA, the status of the submissions will be flagged as “Completed.” The CDX inbox is currently used to notify the users of any correspondence related to user registration. Information on accessing the CDX user inbox is provided in the guidance document for CDX athttp://www.epa.gov/cdr/tools/CDX_Registration_Guide_v0_02.pdf.

EPA is proposing that NOCs and support documents relating to legacy TSCA section 5 notices be submitted to EPA using the same process and timeline as described in 40 CFR 720.40(a)(2), see Unit II.A.3. All NOCs and support documents would be required to be generated using e-PMN software and be completed through the finalization step of the software. See the e-PMN final rule (Ref. 1) for more detailed information on the process and timeline for submitting NOCs and support documents.

All information sent by the submitter via CDX is transmitted securely to protect CBI. CISS enables the user to submit CBI in an electronic format. The reporting tool guides the user through the process of submitting CBI by prompting the submitter to check a CBI checkbox if using a form or by submitting a scanned document containing CBI by bracketing, underlining, or otherwise marking the confidential information on the document to be submitted prior to scanning. Documents containing information claimed as CBI would have to be submitted in an electronic format, in accordance with the recordkeeping requirements (Ref. 5) and the following regulations:

1.TSCA section 4 test rules and ECAs.Documents required under TSCA section 4 that may contain information claimed as CBI include study plans submitted in accordance with test rules (40 CFR 790.50) and study plans submitted in accordance with an ECA (40 CFR 790.62). CISS would allow the submitter to indicate if a study plan contains information claimed as CBI by checking the appropriate box. Then, the submitter would be prompted to submit the study plan document in an electronic format. The submitter would need to indicate which information in the study plan contains information claimed as CBI by marking the specific information claimed as confidential and designating it with the words “confidential business information,” “trade secret,” or another appropriate phrase in the document prior to scanning. Subsequently, if CBI is claimed in either a study plan for test rules or an ECA, the submitter would be prompted by CISS to substantiate those claims by answering the substantiating questions pursuant to 40 CFR 790.7 in a document submitted in an electronic format.

2.TSCA section 8(a) PAIR.CISS would include areas for indicating CBI on Form 7710-35, Manufacturer's Report (40 CFR 712.28 and 712.30). If CBI is indicated on Form 7710-35, the reporting tool would prompt the submitter to certify that the confidentiality statements are true by prompting the submitter to select the “Confidentiality Certification Statement.”

3.TSCA section 8(d).Documents submitted under TSCA section 8(d) that contain information claimed as CBI would have to be indicated as such by using CISS. CISS would allow the submitter to indicate if the document contains CBI by checking the appropriate box. Then, the submitter would be prompted to submit the document in an electronic format. In submitting a document that contains CBI, CISS would prompt the submitter to submit two copies of the document in an electronic format. The copycontaining CBI would need to identify the confidential information by bracketing or underlining the information and labeling the copy “confidential,” “proprietary,” or “trade secret.” The non-CBI second copy would need to have all confidential information deleted. Once CBI is claimed, CISS would prompt the submitter to substantiate their claims (40 CFR 716.55).

The user guide would also instruct users on how to submit and substantiate CBI information using CISS.

All information sent by the submitter via CDX would be transmitted securely to protect CBI. Furthermore, if anything in the submission is claimed as CBI, a non-CBI copy of the submission would have to be provided by the submitter. The guidance document would instruct users on how to submit and substantiate CBI information using CISS.

The Agency ensures secure transmission of the data, reports, and other documents sent from the user's desktop through the Internet via the Transport Layer Security (TLS) 1.0 protocol. TLS 1.0 is a widely used approach for securing Internet transactions and is endorsed by the National Institute of Standards and Technology (NIST) as a means for protecting data sent over the Internet. See NIST Special Publication 800-52, “Guidelines for the Selection and Use of Transport Layer Security (TLS) Implementations.”Available online athttp://csrc.nist.gov/publications/nistpubs/800-52/SP800-52.pdf.

In addition, CISS enables the submitter to electronically sign, encrypt, and transmit submissions which EPA subsequently provides back to the submitter as an unaltered copy of record. This assures the submitter that the Agency has received exactly what the submitter sent to EPA. CISS encrypts using a module based on the 256-bit Advanced Encryption Standard (AES) adopted by NIST. Details about AES can be found on the NIST Web site athttp://csrc.nist.gov/publications/fips/fips197/fips-197.pdf,and EPA may incorporate other encryption modules into future versions of the tool (such versions might be developed before or after the final rule is to take effect depending upon availability and suitability). Information submitted via CDX is processed within EPA by secure systems certified for compliance with Federal Information Processing Standards.

The Agency does not expect to offer any exceptions to any final requirements to submit data, reports, and other documents affected by this proposed rule electronically. The Agency believes that the overall benefits of using CISS and e-PMN software, and submission through CDX exceed those associated with maintaining a paper-based reporting approach. The proposed electronic reporting requirements are not the first that would mandate electronic reporting as explained in Unit II.C. For example, the e-PMN final rule provided for a phased-in approach using CDX in three phases over a 2-year period. During the first year following the April 6, 2010 effective date of the final rule, the Agency allowed submissions via CDX, optical disc (CD or DVD), and paper. Paper submissions are no longer accepted, and optical discs will no longer be accepted after April 6, 2012. The phased-in approach was designed to allow submitters to gain experience using the e-PMN software and the submission delivery system (Ref. 6).

On August 16, 2011, the Agency published the final rule for the TSCA Inventory Update Reporting Modifications; Chemical Data Rule (Ref. 4). This final rule requires electronic reporting and does not provide for a phased-in approach. Previously, in 2006 EPA accepted the 2006 IUR submissions electronically via CDX, optical discs, and paper-based methods. However, by allowing submissions to be received through a variety of mechanisms, the time and resources needed to review and correct submitter and scanning-related errors took the Agency over 2 years to validate and process for the 2006 IUR. By requiring submissions to be sent via CDX and the e-CDR web-based reporting tool, called e-CDRweb, resources and the number of errors should be greatly reduced.

The Agency recognizes that there is the potential for costs and burdens associated with predictable or unanticipated technical difficulties in electronic filing or with conversion to an electronic format. Since the use of CDX has been in existence for a number of years and has undergone a number of enhancements, EPA expects the potential for difficulty to be minimal. However, EPA expects that reduced reporting costs to submitters would ultimately exceed the transition costs(see Economic Analysis referenced in Unit IV.).

The Agency will offer a webinar open to the public for potential users to become familiar with CISS before its release following publication of the final rule. The webinar will be recorded and available athttp://www.epa.gov/oppt/chemtest/ereporting/index.html.An “Industry Day” will be scheduled to allow users to become familiar with CISS in a collaborative setting. Industry Day details will be announced in theFederal Register. There will also be a week-long familiarization opportunity to allow users to become accustomed with CISS on their own and to provide comments to the Agency on its functionality.

The Agency's estimated economic impact of this proposed rule is presented in a document entitled “Economic Analysis for the Electronic Reporting under TSCA Section 4, Section 5 NOCs, Section 8(a) PAIR, and Section 8(d)”(Ref. 7) (Economic Analysis), a copy of which is available in the docket and is briefly summarized in this unit. If a TSCA section 5 PMN or a SNUN was submitted after the effective date (April 6, 2010) of the e-PMN final rule it would be subject to the e-PMN final rule and is required to be submitted electronically online. However, if a TSCA section 5 PMN or SNUN was submitted prior to the effective date of the e-PMN final rule (April 2010), it must be printed and mailed as hard copy to the Agency. This proposed rule would require all NOC and supporting documents whose original notices were submitted on paper beforethe new system was implemented to now be submitted electronically via the CDX system.

EPA estimated that this proposed rule, if finalized, would result in cost savings to the affected companies because the time required to enter, review, edit, and submit their reports using CDX would be reduced compared to the existing paper-based process.

EPA estimated that this proposed rule would result in total cost to the industry of approximately $14,061 in year 1 and a cost savings of $66,834 in each subsequent year. The cost savings in subsequent years are greater than those in year 1 because of the one-time CDX registration costs incurred at the initial submission. EPA assumed that industry would continue to realize cost savings each additional year.

EPA estimates that the Agency also would experience a reduction in thecost to administer submissions of data under TSCA in the long-run. Due to the one-time development cost of $200,000 for CDX in year 1 and an annual CDX Operations and Maintenance (O&M) cost of $57,353, EPA would incur a cost of $197,918 in year 1, after accounting for $59,435 in savings resulting from the burden reductions associated with electronic processing of submissions within the Agency. However, in subsequent years, EPA would only incur the $57,353 annually in O&M costs, resulting in the Agency savings of $2,082 a year in subsequent years.

In addition to the quantifiable cost savings, EPA believes this proposed rule would result in other benefits. For example, electronic reporting would allow for faster review and transmission of submissions to EPA. For studies containing CBI, electronic reporting would also improve security during transmission of CBI data to EPA. Additionally, all information submitted electronically could be linked in a tracking system, which would facilitate document management efforts. This would allow companies to manage past and future submissions more easily.

EPA received 9,280 TSCA section 5 supporting documents between April 1, 2005 and June 22, 2011, with an average of 1,510 supporting documents each year. EPA assumed that the impact of this proposed rule on TSCA section 5 supporting documents would be very minimal given that industry has already undertaken electronic submission of such supplemental materials.

The Agency is specifically soliciting comments on the following five topics. EPA encourages all interested persons to submit comments on these five topics or other relevant topics and submission of data via CDX. This input will assist the Agency in developing a final rule that addresses information needs while minimizing reporting burdens associated with paper-based reporting. EPA requests that comments include specific recommendations, where appropriate, including cost and burden estimates.

1. EPA expects that reporting health and safety information electronically would reduce the burden associated with current paper-based submission method under TSCA. EPA is seeking information that might further inform the Agency's burden estimates. Estimated costs presented by EPA for submitters (reporting burden) and the Agency (time required for manual processing of data) may overstate actual costs to the extent that submitters are able to use the electronic submission tool. EPA invites comment on the relative time and resource burden of completing CDX registration requirements and making an electronic submission, versus making a submission via the current paper-based method.

2. EPA seeks comment on its belief that persons required to report information under TSCA section 4 or 8(d) rules, or under the TSCA 8(a) PAIR would benefit from moving from paper based reporting to electronic because it is less expensive, faster, and easier.

3. CISS enables submitters to send CBI electronically. EPA invites comments on the submission of CBI information via CDX. The Agency is requesting submitters use a Portable Document Format (PDF) to send documents to the Agency. Would this be an acceptable format for submitters to send CBI to the Agency or is there another format submitters would prefer?

4. EPA is also considering using CDX to send correspondence relating to submissions under TSCA sections 4 and 8(d) rules. EPA invites comments on whether persons required to report under these sections of TSCA would benefit from receiving electronic correspondence from EPA via CDX.

5. CISS allows submitters to provide some information to EPA in fielded formats, such as the chemical identity, while also allowing submitters to upload files as attachments to a web-based form. EPA invites comments on the submission of forms, reports, and other documents in fielded formats. Would it be feasible for submitters to enter data and information in a fielded format, e.g., the Organisation for Economic Co-operation and Development (OECD) harmonized template formats? The OECD harmonized template formatsare available online at:http://www.oecd.org/document/18/0,3746,en_21571361_43392827_44169746_1_1_1_1,00.html.

As indicated underADDRESSES, a docket has been established for this proposed rule under docket ID number EPA-HQ-OPPT-2011-0519. The following is a listing of the documents that are specifically referenced in this action. The docket includes these documents and other information considered by EPA, including documents that are referenced within the documents that are included in the docket, even if the referenced document is not physically located in the docket. For assistance in locating these other documents, please consult the technical contact listed underFOR FURTHER INFORMATION CONTACT.

This action is not a “significant regulatory action” under the terms of Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993), and is therefore not subject to review by the Office of Management and Budget (OMB) under Executive Orders 12866 and 13563, entitled “Improving Regulation and Regulatory Review” (76 FR 3821, January 21, 2011). EPA has prepared an economic analysis of this action, which is contained in a document entitled “Economic Analysis for Electronic Reporting under TSCA Section 4, Section 5 NOCs, Section 8(a) PAIR, and Section 8(d)” (Ref. 7). A copy of the economic analysis is available in the docket for this proposed rule and is summarized in Unit IV.

The information collection requirements contained in this proposed rule have been submitted for OMB approval under PRA, 44 U.S.C. 3501et seq.The ICR document prepared by EPA, identified under EPA ICR No. 2412.01 and OMB control number 2070-NEW, is available in the docket for the proposed rule. The ICR addresses the incremental changes to the five currently approved ICR documents thatcover the existing reporting and recordkeeping programs that are approved under OMB control numbers 2070-0004, 2070-0012, 2070-0033, 2070-0054, and 2070-0156. An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The amended information collection activities contained in this proposed rule are designed to assist the Agency in meeting its responsibility under TSCA to receive, process, and review reports, data, and other information. As such, responses to the collection of information covered by this ICR would still be mandatory, but with the final rule, respondents would be required to use the CISS reporting tool, except for TSCA section 5 submissions, which would require the use of existing e-PMN software.

Burden is defined at 5 CFR 1320.3(b). The ICR document for this proposed rule provides a detailed presentation of the estimated burden and costs for the first year of the program. The rule-related burden and cost to chemical manufacturers, importers, and processors who would submit notices to the Agency for review is summarized here. The projected total burden to industry is 363 hours per year for the first year of the final rule. This includes an estimated average burden per response of 0.9 hours for CDX registration, 1.8 hours for requesting a CDX electronic signature, and 0.8 hours for final rule familiarization.

Any comments on the Agency's need for this information, the accuracy of the provided burden estimates, and any suggested methods for minimizing respondent burden, should be submitted to the docket for this proposed rule, under docket ID number EPA-HQ-OPPT-2011-0519. You may also submit a copy of your comments on the ICR to OMB. SeeADDRESSESfor submission of comments to EPA. Send comments to OMB at the Office of Information and Regulatory Affairs, Office of Management and Budget, 725 17th St. NW., Washington, DC 20503, Attention: Desk Office for EPA. Since OMB is required to make a decision concerning the ICR between 30 and 60 days after April 17, 2012, a comment to OMB is best assured of having its full effect if OMB receives it by May 17, 2012. The final rule will respond to any OMB or public comments on the information collection requirements contained in this proposed rule.

Pursuant to section 605(b) of the Regulatory Flexibility Act (RFA), 5 U.S.C. 601et seq.,the Agency hereby certifies that this proposed rule, if promulgated as proposed, would not have a significant adverse economic impact on a substantial number of small entities.

Small entities include small businesses, small organizations, and small governmental jurisdictions. For purposes of assessing the impacts of this proposed rule on small entities, small entity is defined as:

1. A small business as defined by the Small Business Administration's (SBA) regulations at 13 CFR 121.201.

2. A small governmental jurisdiction that is a government of a city, county, town, school district, or special district with a population of less than 50,000.

3. A small organization that is any not-for-profit enterprise, which is independently owned and operated and is not dominant in its field.

State, local, andtribal governments have not been affected by the TSCA sections 4, 5, 8(a) PAIR, and 8(d) reporting requirements, and EPA does not have any reason to believe that any State, local, or tribal government would be affected by this proposed rule. Therefore, EPA has determined that this proposed rule would not impose any enforceable duty, contain any unfunded mandate, or otherwise have any effect on small governments subject to the requirements of sections 202, 203, 204, or 205 of the Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. L. 104-4).

Under Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), EPA has determined that this proposed rule would not have federalism implications because the proposed rule would not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in the Executive Order. This proposed rule would establish electronic notification requirements that apply to manufacturers (including importers) and processors of certain chemicals. This proposed rule would not apply directly to States and localities and would not affect State and local governments. Thus, Executive Order 13132 does not apply to this proposed rule.

Under Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), EPA has determined that this proposed rule would not have tribal implications because it would not have substantial direct effects on tribal governments, on the relationship between the Federal Government and the Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified in the Executive Order. EPA has no information to indicate that any tribal government manufactures or imports the chemical substances covered by this action. Thus, Executive Order 13175 does not apply to this proposed rule.

This proposed rule would not require special consideration pursuant to the terms of Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997),because this action is not an economically significant action as defined by EO 12866, nor does EPA expect the environmental health or safety risks addressed by this action to present a disproportionate risk to children.

This proposed rule is not subject to Executive Order 13211, entitled “Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001), because this proposal is not an economically significant action as defined by EO 12866, nor would it have any significant adverse effect on the supply, distribution, or use of energy.

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), 15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or impractical. Voluntary consensus standards are technical standards (e.g., materials specifications, test methods, sampling procedures, etc.) that are developed or adopted by voluntary consensus standards bodies. This action is not expected to impose technical standards, and whether an available and applicable voluntary consensus standard needs to be evaluated.

This proposed rule does not have an adverse impact on the environmental and health conditions in low-income and minority communities that require special consideration by the Agency under Executive Order 12898, entitled “Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations” (59 FR 7629, February 16, 1994). This document proposes to establish procedures for satisfying existing regulatory requirements through electronic reporting. It would not affect the level of protection provided to human health or the environment.

Therefore, it is proposed that 40 CFR chapter I be amended as follows:

This is a summary of the Commission'sNotice of Proposed Rulemaking and Notice of Inquiry,FCC 12-32, adopted and released on March 21, 2012. The full text of this document is available for inspection and copying during normal business hours in the FCC Reference Information Center, Room CY-A257, 445 12th Street SW., Washington, DC 20554. The complete text may be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc. (BCPI), Portals II, 445 12th Street SW., Room CY-B402, Washington, DC 20554, (202) 488-5300, facsimile (202) 488-5563, or via email atfcc@bcpiweb.com. The complete text is also available on the Commission's Web site athttp://hraunfoss.fcc.gov/edocs_public/attachment/FCC-12-32A1doc.Alternative formats (computer diskette, large print, audio cassette, and Braille) are available by contacting Brian Millin at (202) 418-7426, TTY (202) 418-7365, or via email tobmillin@fcc.gov.

Pursuant to §§ 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments and reply comments on or before the dates indicated on the first page of this document. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS).See Electronic Filing of Documents in Rulemaking Proceedings,63 FR 24121 (1998). All filings should reference the docket numbers in this proceeding, WT Docket No. 12-70, ET Docket No. 10-142, WT Docket No. 04-356.

1. In thisNotice of Proposed Rulemaking,we propose to increase the Nation's supply of spectrum for mobile broadband by removing unnecessary barriers to flexible use of spectrum currently assigned to the Mobile Satellite Service (MSS) in the 2 GHz band. This proposal would carry out a recommendation in theNational Broadband Planthat the Commission enable the provision of stand-alone terrestrial services in this spectrum. (Connecting America: The National Broadband Plan (2010) (National Broadband Plan), available athttp://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-296935A1.pdf(last visited Mar. 19, 2012)). We do so by proposing service, technical, assignment, and licensing rules for this spectrum. These proposed rules are designed to provide for flexible use of this spectrum, to encourage innovation and investment in mobile broadband, and to provide a stable regulatory environment in which broadband deployment could develop. Additionally, in our Notice of Inquiry, we seek comment on potential ways to free up additional valuable spectrum to address the Nation's growing demand for mobile broadband spectrum.

2. With this proceeding we intend to fulfill the Commission's previously stated plan to create a solid and lasting foundation for the provision of terrestrial services in 40 megahertz of spectrum in the 2 GHz band. As indicated in theNational Broadband Plan,each MSS band is differently situated and therefore merits a band-specific approach to the expansion of terrestrial use. For example, the 2 GHz MSS band, unlike other MSS bands, has terrestrial Fixed and Mobile allocations and is comprised of large, contiguous blocks of spectrum. ThisNotice of Proposed Rulemakingdirectly follows on the2 GHz Band Co-Allocation Order,in which the Commission laid the predicate for full terrestrial use of the 2 GHz MSS band.See Fixed and Mobile Services in the Mobile Satellite Service Bands at 1525-1559 MHz and 1626.5-1660.5 MHz, 1610-1626.5 MHz and 2483.5-2500 MHz, and 2000-2020 MHz and 2180-2200 MHz,76 FR 31252 (2011).

3. In thisNotice of Proposed Rulemaking(AWS-4 Notice), we build on the Commission's recent actions to enable the provision of terrestrial mobile broadband service in up to 40 megahertz of spectrum in the 2000-2020 MHz and 2180-2200 MHz spectrum bands. We propose terrestrial service rules for these spectrum bands that would generally follow the Commission's part 27 rules, modified as necessary to account for issues unique to the 2000-2020 MHz and 2180-2200 MHz spectrum bands. Given the proximity of these spectrum bands to spectrum bands previously identified as Advanced Wireless Services or AWS, in our proposal we refer to these spectrum bands as “AWS-4” or “AWS-4 spectrum.” We are mindful that this spectrum is now allocated on a co-primary basis for Mobile Satellite and for terrestrial Fixed and Mobile services and that MSS licensees already have authorizations to provide service in the band. Accordingly, as explained below, we seek comment on a proposal that AWS-4 terrestrial service rules will need to provide for the protection of 2 GHz MSS systems from harmful interference caused by AWS-4 systems. Finally, for each of the issues identified below, we seek comment on the most efficient manner to address the issue. If a party believes any of these issues would be more properly resolved in another Commission proceeding, we request that the party identify those issues and the relevant Commission proceeding.

4. In the sections that follow, we seek comment on a number of parameters governing the licensing, use, and assignment of the spectrum, including their costs and benefits. We ask that commenters take into account only those costs and benefits that directly result from the implementation of the particular rules that could be adopted, including any proposed requirement or potential alternative requirement. Commenters should identify the various costs and benefits associated with a particular proposal. Further, to the extent possible, commenters should provide specific data and information, such as actual or estimated dollar figures for each specific cost or benefit addressed, including a description of how the data or information was calculated or obtained, and any supporting documentation or other evidentiary support.

5. In this section, we make two overarching proposals to establish the AWS-4 band plan. First, we propose to pair the two AWS-4 spectrum bands. Second, we propose block sizes and a geographic area licensing scheme to define license boundaries.

6. The spectrum in the 2000-2020 MHz and 2180-2200 MHz bands is presently licensed as paired spectrum for mobile satellite use. The 2000-2020 MHz band serves as an uplink band and 2180-2200 MHz band serves as a downlink band. We propose to pair the AWS-4 blocks, consistent with the existing 2 GHz MSS licenses and the Commission's treatment of other bands used for mobile wireless and broadband service, AWS and PCS. We seek comment on this proposal. We also seek comment on whether we should take any action to ensure that equipment for the AWS-4 band is interoperable across both paired blocks.

7. Specifically, we propose to adopt the same uplink and downlink pairing designations for provision of terrestrial service as presently exists for satellite service in this spectrum: 2000-2020 MHz would serve as an uplink band; 2180-2200 MHz would serve as a downlink band. Adopting the same uplink/downlink pairing approach for AWS-4 as for 2 GHz MSS may facilitate the continued use of the existing satellites for MSS. We seek comment on the above proposals and proposed AWS-4 band plan. We also seek comment on two alternative possibilities, in which the uplink band would be shifted up 5 megahertz to 2005-2025 MHz or up 10 megahertz and compressed to 2010-2025 MHz, as discussed below.

8. We also propose to license the spectrum in paired 10-megahertz blocks for each license area. Currently, the 2 GHz MSS spectrum is assigned as two paired blocks: Block A pairs 2000-2010 MHz with 2190-2200 MHz and Block B pairs 2010-2020 MHz with 2180-2190 MHz. We observe, however, that the 3rd Generation Partnership Project (3GPP) standards organization is in the process of examining whether to change the duplex spacing for Band 23, which includes this spectrum, from a spacing that corresponds to the existing duplex spacing to one that would remove the variable duplex spacing. We seek comment on which pairing approach to apply. We ask commenters to discuss the affect the ongoing 3GPP process should have on our decision. In addition, commenters seeking alternative spectrum block sizes should support their recommendations with evidence that these alternative schemes will promote greater efficiency and more flexible use of the bands than the proposed approach. Commenters also should discuss and quantify any associated costs or benefits of implementing the proposals discussed above or any alternative schemes.

9. Our proposal to license AWS-4 spectrum in paired 10-megahertz blocks reflects several considerations. First, the MSS band is currently licensed as paired 10-megahertz blocks. Issuing AWS-4 licenses with equivalent bandwidth would facilitate coordination between the two services. Second, establishing paired 10-megahertz blocks strikes a balance between potentially enabling multiple licensees in any given geographical area (i.e.,different licensees in each 10 + 10 block pair) and allowing the use of newer high-bandwidth technologies. We seek comment on these approaches.

10. We also seek comment on adopting a flexible paired single block option that, in the event a single licensee holds both the A and B Blocks, would allow that entity to combine them into one paired 20-megahertz block and use these contiguous spectrum blocks seamlessly with flexibility to design its network and respond effectively to any business and technical needs. Alternatively, if we were to adopt a licensing mechanism that allows AWS-4 spectrum licensees to be held by entities other than the existing 2 GHz MSS licensees, we seek comment on whether this spectrum should be licensed in smaller block sizes.

11. We propose to license the AWS-4 band using a geographic area licensing approach, and we seek comment on this proposal. A geographic licensing area approach is well suited for the types of fixed and mobile services that would likely be deployed in this band. Additionally, geographic licensing is consistent with the Commission's licensing approach adopted for the AWS-1 bands, and proposed for both the AWS-2 and the AWS-3 bands. In the event that interested parties do not support geographic licensing for the AWS-4 spectrum, those commenters should explain their position and identify the costs and benefits associated with an alternative licensing proposal and what type of licensing scheme it supports.

12. Assuming that we utilize a geographic area approach for licensing these bands, we must determine the appropriate size(s) of service areas on which licenses should be based. In previous AWS service rule proceedings the Commission has sought to balance policy goals of fostering service to rural areas and tribal lands, and promoting investment in and rapid deployment of new technologies and services consistent with its obligations under section 309(j) of the Communications Act. To do that, the Commission, among other things, established spectrum blocks in three geographic area sizes. In regard to the AWS-4 spectrum, however, we propose to apply a single size geographic area. We propose that any new AWS-4 licenses should be assigned on an Economic Area (EA) basis.See47 CFR 27.6. Assigning AWS-4 in EA geographic areas would allow AWS-4 licensees to make adjustments to suit their individual needs. EA license areas are small enough to provide spectrum access opportunities for smaller carriers. EA license areas also nest within and may be aggregated up to larger license areas that have been used by the Commission for other services, such as Major Economic Areas (MEAs) and Regional Economic Area Groupings (REAGs) for those seeking to create larger service areas. Depending on the licensing mechanism we adopt, licensees may aggregate or otherwise adjust their geographic coverage through auction or through secondary markets. We seek comment on this approach. We ask commenters to discuss and quantify the economic, technical, and other public interest considerations of any particular geographic scheme for this particular band, as well as the impact that any such scheme would have on rural service and competition.

13. We also seek comment on including the Gulf of Mexico in our licensing scheme for these bands. We question whether to include it as part of larger service areas, as we did for the Upper 700 MHz band, or whether we should separately license a service area or service areas to cover the Gulf of Mexico. Commenters who advocate a separate service area or areas to cover the Gulf of Mexico should discuss what boundaries should be used, and whether special interference protection criteria or performance requirements are necessary due to the unique radio propagation characteristics and antenna siting challenges that exist for Gulf licensees.

14. When the Commission adopted the MSS/ATC regime in 2003, it addressed intra-service and adjacent-band interference concerns, and enacted unique MSS/ATC technical rules in part 25 of the Commission's rules, which did not fully align with the technical rules for similar terrestrial operations in other bands. The ATC interference rules for the 2 GHz MSS band are contained in rule 25.252.See47 CFR 25.252. Subsequently, in addressing requests for ATC authority by the two 2 GHz MSS authorization holders, ICO and TerreStar, the Commission granted them waivers of several of the part 25 ATC interference rules.SeeNew ICO Satellite Services G.P. Application for Blanket Authority to operate Ancillary Terrestrial Component base stations and dual-mode MSS-ATC mobile terminals in the 2 GHz MSS Bands, DA 09-38,Order and Authorization,24 FCC Rcd 171 (2009) (ICO Waiver Order). In general, these waivers resulted in aligning the terrestrial requirements for the 2 GHz MSS band operators more closely with the part 27 technical rules that apply to AWS-1 license holders. Based on review of current interference possibilities, we propose an approach that would permit deployment under the current rules and waivers by proposing that the technical rules and license conditions applicable today to the provision of terrestrial services in the 2 GHz MSS bands should generally apply to the AWS-4 bands.

15. In general, our aim in establishing technical rules is to maximize the flexible use of spectrum while appropriately protecting incumbent operations in neighboring bands. The technical rules we propose below are based on the rules for AWS-1 spectrum, with specific additions or modifications designed to protect broadband PCS services operating in the 1930-1995 MHz band, as well as future services operating in the 1995-2000 MHz band, from harmful interference from AWS-4 mobile devices operating in the 2000-2020 MHz band. Any rules would also address protection of Federal operations in the 2200-2290 MHz band from harmful interference from AWS-4 base stations operating in the 2180-2200 MHz band. We also seek comment on whether modifications to these rules might be warranted in order to provide for more flexible use of AWS-4 spectrum, while at the same time protecting other spectrum uses from interference.

16. In the proposed band plan, AWS-4 spectrum would be issued in paired 10-megahertz blocks, using Economic Area licenses. Therefore, interference must be considered between AWS-4 blocks and adjacent bands, between different blocks within the AWS-4 band, and between different geographic area licenses within the AWS-4 band.

17.Emissions limit.To minimize harmful interference, the Commission's rules often limit the amount of RF power that may be emitted outside of the assigned block of an RF transmitter. The Commission has previously concluded that attenuating base station out-of-band emissions (OOBE) by 43+10*log10(P) dB at the edge of an assigned block, where P is the transmit power in watts, is appropriate to minimize harmful electromagnetic interference between terrestrial operations in the 2180-2190 MHz and 2190-2200 MHz blocks. Similarly, the Commission has previously found that attenuating terrestrial mobile emissions by 43+10*log10(P) dB outside the assigned block will minimize interference within the 2000-2020 MHz band. Furthermore, when the Commission created the service rules for AWS-1, it concluded that this level of attenuation is appropriate for protecting wireless systems that will operate in the AWS bands.See Service Rules for Advanced Wireless Services in the 1.7 GHz and 2.1 GHz Bands,69 FR 5711 (2003) (AWS-1 Report and Order). At the time, the Commission noted that this limit is commonly employed in other wireless services, and it has generally been found to be adequate in preventing adjacent channel interference. This level of attenuation is now established in the Commission's rules for the AWS band, both for both mobile station and base station emissions. This OOBE limit also applies in the broadband PCS band.

18.Measurement procedure.To fully define an emissions limit, the Commission's rules generally specify details of how to measure the power of the emissions, such as the measurement bandwidth. The part 25 ATC rules determine mobile station compliance with the OOBE limit based on a measurement bandwidth of 1 MHz or greater. For AWS-1, the measurement bandwidth used to determine compliance with this limit for both mobile stations and base stations is generally 1 MHz, with some modification within the first 1 MHz. Previously, the Commission concluded the AWS-1 measurement procedure was also appropriate for mobile stations operating in 2000-2020 MHz. At that time the Commission did not address the measurement procedure for base stations operating in 2180-2200 MHz.However, as mentioned above, in the AWS-1 band this procedure applies to mobile and base transmissions. We believe that it is similarly reasonable to apply this procedure to both mobile and base transmissions in the AWS-4 band.

19.Proposal.To address potential harmful electromagnetic interference within the AWS-4 band, we propose that § 27.53(h) of the Commission's rules, which includes OOBE attenuation of 43+10*log10(P) dB and the associated measurement procedure, should be expanded to apply to AWS-4 operations in the 2000-2020 MHz and 2180-2200 MHz bands. We seek comment on this proposal. Commenters should discuss and quantify the costs and benefits of this proposal and any proposed alternative approaches.

20. After considering interference between adjacent blocks within the AWS-4 band in the previous section, we next examine the adjacent and nearly adjacent bands outside the AWS-4 band. In so doing, we seek to establish rules that permit flexible use of the AWS-4 band, while effectively protecting operations in adjacent bands from harmful interference. We begin our examination of adjacent band interference by considering whether attenuation greater than 43+10*log10(P) dB—a level the Commission frequently applies to adjacent band operations—is needed to prevent harmful electromagnetic interference from the AWS-4 band to other bands. Although the previous section only discussed 43+10*log10(P) for interference within the band, that attenuation applies to all transmissions outside the assigned block, including emissions in other bands.

21.Interference with operations below 1995 MHz.The AWS-4 uplink band at 2000-2020 MHz is 5 megahertz from the broadband PCS downlink band at 1930-1995 MHz. To protect PCS mobile receivers from harmful electromagnetic interference from mobile stations transmitting in the 2000-2020 MHz band, the ATC rules specify an attenuation of 70+10*log10(P) dB below 1995 MHz. We propose that this emission limit should continue to apply to terrestrial operations in the 2000-2020 MHz band, and that a rule should be added to part 27 that fixed and mobile transmitters operating in 2000-2020 MHz must attenuate emissions below 1995 MHz by 70+10*log10(P) dB. We further propose that this attenuation should be measured using the existing measurement procedure of § 27.53(h) discussed above. We seek comment on these proposals. Commenters should discuss and quantify the costs and benefits of this proposal and any proposed alternative approaches.

22.Interference with operations in 1995-2000 MHz.The part 25 ATC technical rules also include a linear interpolation of OOBE attenuation between 70+10*log10(P) dB at 1995 MHz and 43+10*log10(P) dB at 2000 MHz. However, recently enacted legislation directs the Commission to allocate the 1995-2000 MHz band (AWS-2 Upper H block) for commercial use, and to auction and grant new initial licenses for the use of this spectrum under flexible-use service rules. Middle Class Tax Relief and Job Creation Act of 2012, Pub. L. 112-96, section 6401(b). Given this statutory directive and considering that the 1995-2000 MHz block is adjacent to existing broadband PCS downlink operations, it is likely that this block will be used for terrestrial downlink operations. This will exacerbate the existing potential for harmful interference between downlink operations below 2000 MHz and uplink operations above 2000 MHz. For example, commenters to the2 GHz Public Noticehave suggested that a guard band of 5 MHz or more would be necessary to prevent interference between downlink operations in 1930-1995 MHz and uplink operations in 2000-2020 MHz. To address this apparent tension, we seek comment on three alternative proposals for OOBE limits in 1995-2000 MHz.

23. First, we could maintain the existing linear interpolation. However, this would offer the 1995-2000 MHz block less protection than the existing PCS blocks, which as discussed above is 70+10*log10(P) dB below the transmit power. In addition, meeting this limit may have a negative impact on mobile transmitters in 2000-2020 MHz, as the mobile station components, such as power amplifiers and filters, may not have sharp enough roll off characteristics to meet this limit when operating in the lower parts of the band, particularly when operating at the maximum power level supported. In this regard, we observe that, in standardizing the 2000-2020 MHz and 2180-2200 MHz bands as Band 23, 3GPP has allowed for up to 12 dB of additional power reduction below the maximum transmit power for mobile stations in 2000-2010 MHz to meet the Commission's current rules. As the mobile transmit power affects the ability of the mobile station to reach the base station, this reduction of power would appear to have a significant impact on cell coverage, uplink throughput, and ultimately the usability of this spectrum.

24. Second, we could require that fixed and mobile transmitters operating in 2000-2020 MHz attenuate emissions below 2000 MHz by 70+10*log10(P) dB, consistent with the emissions limit below 1995 MHz. We note, however, that this level may be difficult to meet for mobile transmitters in 2000-2020 MHz, as it requires even sharper roll off from mobile stations than the previous alternative.

25. Third, we could require that fixed and mobile transmitters operating in 2000-2020 MHz attenuate emissions below 2000 MHz by 43+10*log10(P) dB, symmetric with existing limits for PCS emissions in 2000-2020 MHz and broadly consistent with Commission rules as discussed above. In this case, if future service rules for 1995-2000 MHz have the same requirement, then the licensees above and below 2000 MHz would be placed on a more equal footing, and could determine among themselves if there is a need for any stricter limits.

26. We seek comment on each of these alternatives. For each alternative, we ask commenters to address whether the proposal is adequate to protect expected uses of the 1995-2000 MHz band. Commenters should address and quantify the magnitude and effect of any possible harmful interference, such as the impact on link budgets or coverage areas. Commenters should also address the amount of spectrum that may be unusable or partially usable in either band. For each alternative, we also seek comment on the impact on operations in the 2000-2020 MHz band, including whether mobile stations will be able to utilize the entire 2000-2020 MHz band while meeting the proposed limit, and if not, the amount of spectrum that may be unusable or usable only at a reduced power, as well as the extent of any such power reductions.

27. For all three alternatives, we propose that the attenuation should be measured using the existing measurement procedure of § 27.53(h) discussed above. We seek comment on this proposal.

28. Finally, in the event that the record shows none of these three proposals sufficiently addresses issues of interference with 1995-2000 MHz, we seek comment on two additional proposals. First, we seek comment on an alternative proposal to shift the uplink band up 5 megahertz from 2000-2020 MHz to 2005-2025 MHz, including the lower portion of the AWS-2 “J” Block at 2020-2025 MHz. This concept was part of Ericcson's proposal in its comments in response to the2 GHzPublic Notice.Would this shift proposal better mitigate interference with the AWS-2 H Upper block and PCS downlink bands, increasing the value of the spectrum for mobile broadband and other uses? Further, would this alternative approach allow for more productive use of the “stranded” lower portion of the AWS-2 J Block (2020-2025 MHz) should the Commission eventually decide to auction the upper portion of the J Block as part of an extended AWS-3 band? Second, we seek comment on an alternative proposal to shift the uplink band up 10 megahertz, while compressing the band from 20 to 15 megahertz, resulting in an uplink band of 2010-2025 MHz. For this alternative, in light of the interference issues that may impact the terrestrial use of 2000-2005 MHz, we seek comment on whether shifting the spectrum to a 15 megahertz band at 2010-2025 MHz would result in the actual loss of spectrum usable for terrestrial broadband service.

29. For both spectrum shift alternatives, we propose that the shift apply to the lower end of the band for both terrestrial and satellite service. Shifting the satellite service out of the 2000-2005 MHz or the 2000-2010 MHz blocks (in a manner consistent with the terrestrial service) would mitigate against the possibility of mobile satellite devices causing harmful interference into the 1995-2000 MHz block. The 2020-2025 MHz block is not presently allocated for satellite service. 47 CFR 2.106. We do not intend to shift the satellite service into this block. We seek comment on this proposal including its costs and benefits. Lastly, in considering the spectrum shift alternatives, we seek comment on how each might affect all of the applicable proposals contained in thisAWS-4 Notice,including without limitation the technical protections discussed in this section, the assignment proposals, and relocation and cost sharing proposals discussed below.

30.Interference with operations in 2020-2025 MHz.The AWS-4 uplink band will be adjacent to the AWS-2 Lower J block, 2020-2025 MHz. Although the part 25 ATC rules adopted in 2003 originally attenuated the mobile station emissions in this range by a linear interpolation from 43+10*log10(P) dB at 2020 MHz to 70+10*log10(P) dB at 2025 MHz, the Commission separately proposed in 2004 to apply a standard of 43+10*log10(P) to the AWS-2 J block. Service Rules for Advanced Wireless Services in the 1915-1920 MHz, 1995-2000 MHz, 2175-2180 MHz and 1.7 GHz and 2.1 GHz Bands, 63 FR 63489 (2004). In 2009, in theICO Waiver Order,the Commission waived the part 25 ATC rules and instead applied the 43+10*log10(P) to OOBE in 2020-2025 MHz from transmitters operating in 2000-2020 MHz.See ICO Waiver Order.We propose that no additional attenuation beyond 43+10*log10(P) dB is needed to protect services in the 2020-2025 MHz band. We seek comment on this approach. Commenters should discuss and quantify the costs and benefits of this proposal and any proposed alternative approaches.

31.Inference with operations above 2025 MHz.The AWS-4 uplink band is 5 megahertz from the 2025-2110 MHz band, which includes broadcast auxiliary service (BAS) and cable television service (CARS) operations, as well as certain Federal government operations. Although the ATC rules originally limited the mobile emissions to 70+10*log10(P) above 2025 MHz, in 2009, the Commission waived the part 25 ATC rule and instead applied the 43+10*log10(P) standard.See ICO Waiver Order.As the interference potential between these bands has not changed significantly since then, we propose that no additional attenuation beyond 43+10*log10(P) dB is needed to protect operations above 2025 MHz. We seek comment on this approach. Commenters should discuss and quantify the costs and benefits of this proposal and any proposed alternative approaches.

32.Interference with operations below 2180 MHz.The AWS-4 downlink band, 2180-2200 MHz, is adjacent to the AWS-2 Upper J block, 2175-2180 MHz, which is itself adjacent to the AWS-3 band, 2155-2175 MHz. The Commission has previously proposed that an attenuation of 43+10*log10(P) dB is an appropriate base station emission limit to prevent harmful electromagnetic interference in the AWS-2 and AWS-3 bands.See, e.g.,Service Rules for Advanced Wireless Services in the 1915-1920 MHz, 1995-2000 MHz, 2155-2175 MHz, and 2175-2180 MHz Bands, 73 FR 35995 (2008). As the circumstances have not changed significantly since that attenuation level was proposed, we propose that no additional attenuation beyond 43+10*log10(P) dB is needed below 2180 MHz. We seek comment on this approach. Commenters should discuss and quantify the costs and benefits of this proposal and any proposed alternative approaches.

33.Interference with opertions above 2200 MHz.The proposed AWS-4 downlink band, 2180-2200 MHz, is adjacent to Federal operations in 2200-2290 MHz. Federal operations in the band 2200-2290 MHz consist mainly of space, airborne telemetry, and fixed point-to-point microwave radio relay communications. The space communications in the band consist of the tracking, telemetry, scientific data communications, and control of U.S. spacecraft. The band is used by these agencies to operate space research, space operations, and Earth exploration-satellites for space-to-Earth communications, and in the case of NASA for space-to-space communications through their Tracking and Data Relay Satellite System (TDRSS). Federal agencies use this band for research; law enforcement video surveillance; control of robotic systems for explosive neutralization and disposal; and the testing of robotic ground vehicles.

34. The Commission's part 25 ATC rules require strict emissions limitations (−100.6 dBW/4 kHz) in the 2180-2200 MHz band, and prohibit the location of base stations within 820 meters of a Federal earth station operating in the 2200-2290 MHz band. See 47 CFR 25.252(a)(1), (a)(6). In 2009, the Commission waived the part 25 emissions limit rule for MSS/ATC operator ICO, replacing it with the standard emission limit of 43+10*log10(P) dB.See ICO Waiver Order.Specific to emissions limits and restrictions on base station locations with respect to the 2200-2290 MHz band, the waiver order required that ICO follow an operator-to-operator agreement that ICO had reached with several Federal agencies. Letter from Karl B. Nebbia, Associate Administrator, Office of Spectrum Management, National Telecommunications and Information Administration, to Julius Knapp, Chief, Office of Engineering and Technology, Federal Communications Commission, File No. SES-LIC-20071203-01646, SES-AMD-20080118-00075, SES-AMD-20080219-00172, Call Sign: E070272, Attachment at 2 (Jan. 6, 2009) (ICO-Federal Agreement).Finally, TerreStar also requested a waiver of the part 25 emission limit rules to the extent granted ICO, and is discussing an operator-to-operator agreement with Federal agencies. In summary, as it stands, ATC base stations in the 2190-2200 MHz block must meet −100.6 dBW/4 kHz in 2200-2290 MHz throughout the licensed areas, while ATC base stations in 2180-2190 MHz must meet the limits set forth in theICO-Federal Agreement.If the Commission adopts the proposals contained in thisAWS-4 Notice,we expect that licensees will construct extensive cellular systems in this band.We seek comment on whether such deployments would represent a material change in the expected density of deployment in the band. If so, we seek comment on the advantages and disadvantages of such a change.

35. We seek comment on the appropriate emissions limits to protect Federal operations in the 2200-2290 MHz band in light of the current state of affairs. We observe that the emissions limit of −100.6 dBW/4 kHz EIRP is considerably more stringent than the standard OOBE limit of 43+10*log10(P) dB and may limit flexible use of the AWS-4 band. We seek comment on whether licensees would be able to use their entire spectrum block for commercial terrestrial broadband base stations while meeting this limit, or, if not, how much spectrum would be unusable or usable only at a reduced power level (that is, would effectively become a guard band), as well as the extent of any such power reductions. We also seek comment on whether current, state-of-the-art base station filter design would feasibly be able to meet the OOBE limit of -100.6 dBW/4 kHz in any portion of the 2200-2290 MHz band, and the practicality, including the costs, of commercially deploying such filters. We seek comment on whether any internal guard band would affect the band plan proposal made in the previous section that guard bands would have on the band plan proposal. Finally, we seek comment on whether to carry forward the existing waivers of the part 25 emissions limits into the part 27 regime (e.g.,pursuant to the Commission's license modification authority under section 316 of the Communications Act). Commenters should discuss the costs and benefits of their proposals.

36. We seek comment on whether to prohibit the location of AWS-4 base stations within 820 meters of existing Federal earth stations, consistent with both the current part 25 rule and theICO-Federal Agreement.Commenters should discuss and quantify the costs and benefits of their proposals.

37. We also seek comment on whether there are any other part 25 MSS/ATC technical rules that we should incorporate into the AWS-4 technical rules.

38.Other alternative approaches.We also seek comment on any other alternative approaches to protecting Federal stations above 2200 MHz while maximizing the usability of AWS-4 spectrum. Commenters should discuss and quantify the costs and benefits of any proposed alternative approaches.

39.PFD limits for protection of operations above 2200 MHz.We seek comment on an alternative approach of specifying an aggregate power flux density (PFD) that must be met at the protected site, which would enable the AWS-4 licensee to operate as long as this limit is met. We seek comment on what PFD limit will prevent harmful interference, what methods can be used to determine that such a limit is met (e.g.,engineering studies), and the degree to which this approach would increase flexibility in the AWS-4 band while protecting Federal operations in the 2200 MHz band.

40.Sliding scale for protection of operations above 2200 MHz.The emissions limit in theICO-Federal Agreementchanges from an emissions limit of 43+10*log10(P) dB of attenuation of the transmit power beyond a specified distance from the protected site to an EIRP limit of −100.6 dBW/4 kHz within the specified distance. However, the attenuation needed and therefore the necessary emissions limit is a function of the isolation provided by the geographic separation of the protected site and the terrestrial base station, and therefore follows a curve as a function of the distance from the protected site. Therefore, we seek comment on an alternative approach where the OOBE limit is an interpolation between 43+10*log10(P) dB and −100.6 dBW/4 kHz as a function of distance. In this case it may be necessary for the interpolation to be linear in the logarithm of the distance.

41.Global Positioning System (GPS).We note that the MSS/ATC rules contain provisions regarding interference with GPS systems operating at 1559-1610 MHz.See47 CFR 252(a)(7), (b)(3). We further note that different MSS/ATC bands are differently situated in terms of frequency separation from the GPS band. We request comment on whether any special interference rules protecting GPS are warranted for the 2 GHz band if we implement the AWS-4 proposals. We ask that commenters provide technical analysis supporting their views. We also seek comment on the costs and benefits associated with their proposals.

42. We invite comment on any potential for receiver overload interference between AWS-4 operations and operations above 2200 MHz, below 2180 MHz, above 2020 MHz, and below 2000 MHz. If such a risk exists, we request that parties provide whatever information may be available about the characteristics of the receivers operating in these frequencies, potential solutions to overload interference, and an assessment of the impact this might have on deployment of AWS-4 service. We also invite comment on any other receiver issues that should be considered in this proceeding that could affect the potential for harmful interference and usability of the AWS-4 spectrum.

43. We seek comment on appropriate power limits for terrestrial operations in the AWS-4 band. Specifically, as described below, we propose to apply existing AWS power limits to the AWS-4 band. We seek comment on this proposal, including the costs and benefits of the proposal.

44.Base stations.The MSS/ATC rules limit ATC base station transmit power to 27 dBW EIRP in 1.23 MHz. The current AWS-1 rules limit base station power in non-rural areas to 1640 watts EIRP for emission bandwidths less than 1 MHz and to 1640 watts per MHz EIRP for emission bandwidths greater than 1 MHz, and double these limits (3280 watts EIRP) in rural areas. The Commission has previously concluded that a power limitation of 32 dBW/MHz EIRP is appropriate for base stations in the 2180-2190 MHz band, and that a power limitation of 32 dBW EIRP is appropriate for base stations in the 2190-2200 MHz band. Although neither of these limits aligns exactly with the AWS-1 rules, the 32 dBW EIRP level was specifically chosen because it approximates the 1640 watt EIRP limit of AWS-1 specified in § 27.50(d). The Commission did not consider whether the higher power level of 3280 watts EIRP allowed for rural AWS-1 base stations is appropriate for 2180-2200 MHz. Although not fully aligned with AWS-1, the current power limits are very similar. The 32 dBW EIRP limit is the same as the AWS-1 limit of 1640 watts EIRP for emissions under 1 MHz, but is more burdensome for larger bandwidths. Similarly, the 32 dBW/MHz EIRP limit is the same as the AWS-1 limit of 1640 watts/MHz EIRP for emission over 1 MHz, but is more burdensome for emissions under 1 MHz. Changing both limits to the existing AWS-1 rule of 1640 watts EIRP for emissions less than 1 MHz and 1640 watts/MHz EIRP for emissions over 1 MHz would best allow flexibility for the use of various bandwidths in the AWS-4 spectrum.

45. Furthermore, allowing the increase of these power levels to the current AWS-1 rules of 3280 watts EIRP for emissions less than 1 MHz and 3280 watts/MHz EIRP for emissions over 1 MHz in rural areas may promote theCommission's goals of furthering rural deployment of broadband services. Therefore, we propose that § 27.50(d)(1-2), which sets the AWS-1 power limits for base stations, should also apply to AWS-4. We seek comment on this proposal, including the costs and benefits of the proposal.

46. The current AWS-1 rules also require that base stations with transmit power above 1640 watts EIRP and 1640 watts/MHz EIRP must coordinate with licensees in adjacent AWS blocks located within 120 kilometers, BRS licensees in the 2155-2160 MHz band located within 120 kilometers, and satellite entities in the 2025-2110 MHz band. As AWS-4 is not adjacent to the 2155-2160 MHz and 2025-2110 MHz bands, we do not see a need to carry these requirements over to AWS-4. Therefore, we propose only that AWS-4 base stations with transmit power above 1640 watts EIRP and 1640 watts/MHz EIRP be required to coordinate with users in adjacent AWS blocks located within 120 kilometers. We seek comment on this proposal, including the costs and benefits of the proposal.

47.Mobile stations.The part 25 ATC rules set a power limit of 1 dBW (1.25 watts) EIRP in a bandwidth of 1.23 MHz for mobiles operating in 2000-2020 MHz. The existing AWS-1 rules set a power limit of 1 watt EIRP for mobiles operating in AWS-1, which is somewhat more restrictive. In the interest of harmonizing the AWS rules, and given the similarity of these two limits, we propose that the more restrictive limit of § 27.50(d)(4), which is 1 watt EIRP, should apply to AWS-4. We seek comment on this proposal, including the costs and benefits of the proposal.

48. We propose that the flexible antenna height rules that apply to AWS-1 should also apply to AWS-4. We seek comment on this proposal, including the costs and benefits of the proposal.

49.Base stations.Specific antenna height restrictions for AWS-1 base stations are not set forth in part 27 of our rules. However, all part 27 services are subject to § 27.56, which prevents antenna heights that would be a hazard to air navigation.See47 CFR 27.56. Furthermore, the limitations of field strength at the geographical boundary of the license discussed below also effectively limit antenna heights. We propose that no unique antenna height limits are needed for AWS-4 facilities; rather, we believe that the general height restrictions are sufficient. We seek comment on this proposal, including the costs and benefits of the proposal.

50.Fixed stations.Section 27.50(d)(4) specifies a height restriction of 10 meters for fixed stations operating in AWS-1 spectrum. 47 CFR 27.50(d). Given the similarity of the proposed AWS-4 use to AWS-1 use, we propose that this rule should be expanded to apply to AWS-4, as well. We seek comment on this proposal, including the costs and benefits of the proposal.

51. If we ultimately decide to license the AWS-4 bands on the basis of geographic service areas that are less than nationwide, we will have to ensure that such licensees do not cause interference to co-channel systems operating along common geographic borders. The current rules for AWS-1 address the possibility of harmful co-channel interference between geographically adjacent licenses by setting a field strength limit of 47 dBμV/m at the edge of the license area.See47 CFR 27.55(a)(1). Due to the similarities between AWS-1 and AWS-4 spectrum use, we propose that this same signal strength limit is appropriate for AWS-4, and therefore that § 27.55(a)(1) should be expanded to include the 2180-2200 MHz band. We seek comment on this proposal, including the costs and benefits of the proposal.

52. Section 27.57(c) of our rules indicates that AWS-1 operations are subject to international agreements with Mexico and Canada.See47 CFR 27.57(c). Until such time as any adjusted agreements between the United States, Mexico and/or Canada can be agreed to, operations must not cause harmful interference across the border, consistent with the terms of the agreements currently in force. We note that further modification (of the proposed rules) might be necessary in order to comply with any future agreements with Canada and Mexico regarding the use of these bands. We seek comment on this issue, including the costs and benefits of alternative approaches to this issue.

53. There are several additional technical rules applicable to all part 27 services. Specifically, these are: § 27.51 Equipment authorization, § 27.52 RF safety, § 27.54 Frequency stability, § 27.56 Antennas structures; air navigation safety, and § 27.63 Disturbance of AM broadcast station antenna patterns. 47 CFR 27.51, 27.52, 27.54, 27.56, 27.63. As AWS-4 will be a part 27 service, we propose that all of these rules should apply to all AWS-4 licensees, including licensees who acquire their licenses through partitioning or disaggregation. We seek comment on this approach, including the costs and benefits of this approach.

54. We propose to adopt a rule requiring an AWS-4 licensee to protect the incumbent 2 GHz MSS licensee from harmful interference. The 2000-2020 MHz band was allocated to MSS in 1997; fourteen years later the Commission added the current co-primary terrestrial Fixed and Mobile allocations. In adding the co-primary Fixed and Mobile allocations in 2011, the Commission explained that “MSS remains co-primary in the 2 GHz MSS band.” Fixed and Mobile Services in the Mobile Satellite Service Bands at 1525-1559 MHz and 1626.5-1660.5 MHz, 1610-1626.5 MHz and 2483.5-2500 MHz, and 2000-2020 MHz and 2180-2200 MHz, 76 FR 31252 (2011) (2 GHz Band Co-Allocation Order). The Commission further explained that the addition of the new allocation “will not result in harmful interference, and would not inevitably lead to uses that would result in harmful interference,” impliedly because (other than the pre-existing MSS/ATC rules) no terrestrial service rules yet existed for the band.2 GHz Band Co-Allocation Order.As we are now proposing service rules for the AWS-4 band, we propose to codify the determination that “adding co-primary Fixed and Mobile allocations in this band will not result in harmful interference” by requiring that AWS-4 licensees protect the 2 GHz MSS licensee from harmful interference.Id.We seek comment on this proposal, including the costs and benefits of the proposal.

55. The Commission concluded in 2003 that it would grant additional ATC authority to the MSS incumbents.See Flexibility for Delivery of Communications by Mobile Satellite Service Providers in the 2 GHz Band, the L-Band, and the 1.6/2.4 GHz Bands,68 FR 33640 (2003) (ATC Report and Order). The Commission reasoned that separately controlled MSS and terrestrial mobile operations (i.e.,two ubiquitous mobile services) in the same band would be “impractical and ill-advised” because the parties would not be able to overcome the technical hurdles to reach a workable sharing arrangement. In particular, the Commission stated:

56. In the ATC proceeding, the Commission adopted a blanket authorization process to implement geographic area licensing of ATC base station facilities operating in the U.S. coverage of the MSS space segment,i.e.,all 50 states and the U.S. territories and possessions. DBSD and TerreStar received ATC authority in 2009 and 2010, respectively, allowing for the deployment of terrestrial base stations and collectively up to three million dual-mode MSS/ATC user terminals in the United States. Thus, in considering the impact that AWS-4 operations would have on the existing 2 GHz MSS licensee, we also consider the impact on the MSS licensee's significant, albeit ancillary, authority to operate terrestrial stations in the 2 GHz band throughout the nation.

57. Taken together, the above concerns appear to present strong reasons that lead us to propose that AWS-4 licenses in this band should be assigned to the incumbent MSS licensee. First, the complexities of coordination between MSS and terrestrial uses that the Commission identified in 2003 in theATC Report and Ordersuggest that assignment of terrestrial licenses to an entity other than the incumbent MSS licensee remains impractical. Second, we expect that the interference problems associated with two or more distinct terrestrial licensees in the same band (i.e.,distinct co-channel ATC and part 27 licensees) point to assigning the AWS-4 licenses to the incumbent MSS licensee. Third, we observe that this result would not diminish the MSS licensee's existing ability to provide terrestrial service in the band.

58. We seek comment on these issues. In particular, commenters should address whether there have been technological advances or other developments since 2003 that would either reinforce or alter these points and provide detailed technical analysis supporting any information provided. Should the record show, contrary to our expectations, that same-band, separate-operator sharing is possible—between AWS-4 licensees and an MSS licensee's satellite and ATC operations—then we seek comment on alternative approaches to licensing the new service under the Communications Act that would achieve our goal of making additional spectrum available for terrestrial mobile broadband use. In addition, we seek comment on what effect the spectrum shift alternatives proposed above would have on assigning AWS-4 licenses. We further seek comment on the impact, including the quantification of the costs and benefits that any method for assigning licenses would have on innovation, investment, and competition.

59. Based on our expectation that the Commission's earlier technical findings are still sound, and mindful of the 2 GHz MSS license holder's existing rights to operate MSS in the AWS-4 band and our proposal, above, to require protection of MSS uses, we propose to grant terrestrial authority to operate in the AWS-4 band to the current 2 GHz MSS licensee. We believe this would serve the public interest, convenience and necessity by making more spectrum available for broadband use and avoiding harmful electromagnetic interference.

60.Legal Authority.Under section 316 of the Communications Act, the Commission has the authority to modify a station license if “in the judgment of the Commission such action will promote the public interest, convenience, and necessity.”See47 U.S.C. 316(a)(1). As the D.C. Circuit explained inCalifornia Metro Mobile Communicationsv.FCC,“section 316 grants the Commission broad power to modify licenses; the Commission need only find that the proposed modification serves the public interest, convenience and necessity.”California Metro Mobile Communicationsv.FCC,365 F.3d 38, 45 (D.C. Cir. 2004) For example, in that case, the court found that the Commission's modification served the public interest, even though it was based on an analysis of potential rather than actual interference, and the modification could cause a minor disruption in the licensee's operations. Here, we propose that, once the AWS-4 service rules are effective, we would issue an Order of Proposed Modification, under section 316 of the Communications Act, to modify the existing 2 GHz MSS licensee's authority to operate in the 2000-2020 MHz and 2180-2200 MHz bands by adding part 27 terrestrial authority and obligations, which would apply to all the AWS-4 service areas in these bands. We seek comment on this proposed approach, including the costs and benefits of the proposal.

61.Public Interest Considerations.The incumbent MSS licensee holds exclusive authority to operate terrestrial base stations in the AWS-4 band nationwide. And existing Commission rules permit the MSS licensee to enter into spectrum manager leasing arrangements with spectrum lessees. We believe that modifying the 2 GHz MSS licensee's authority as described herein, to have 2 GHz terrestrial operations governed under part 27, would remove outdated regulatory barriers that have frustrated the Commission's goal of having the 2 GHz band used for terrestrial mobile broadband. Additionally, if the record developed in this proceeding confirms that current technology will not permit separate MSS and terrestrial mobile licensees, the envisioned section 316 license modification would serve the public interest, convenience and necessity, by: (1) Making more spectrum available for broadband use, and (2) avoiding harmful electromagnetic interference. We seek comment on this proposal, including the costs and benefits of the proposal.

62. The availability and quality of wireless broadband services will likely become constrained if additional spectrum does not become available to enable network expansion and technology upgrades. This could result in higher prices, poor service quality, an inability for the U.S. to compete effectively on an international basis, depressed demand and, ultimately, a drag on innovation. To address the need for broadband spectrum, the Commission has endeavored to promote the use of the 2 GHz MSS band, but there is virtually no current commercial use of this spectrum.

63. We believe that modifying the 2 GHz MSS licensee's authority as described herein would enhance the licensee's ability to offer high-quality, affordable terrestrial wireless broadband services, while retaining the right to offer MSS using the same spectrum; spectrum that is already licensed nationwide on an exclusive, primary basis for MSS. Thus, we propose that authorizing terrestrial operations will provide the 2 GHz MSS licensee with the possibility of achieving greater usageof the 2000-2020 MHz and 2180-2200 MHz bands than are possible under the current regulations. We seek comment on this proposal. We also seek comment on the extent that this proposal would increase innovation and investment in mobile broadband use of this spectrum. Commenters should discuss and quantify the costs and benefits of the proposal.

64. The Commission may also modify licenses to achieve the public interest purpose of avoiding harmful interference. In 2003, the Commission concluded that separately controlled MSS and terrestrial operations (i.e.,two ubiquitous mobile services) in the same band would be “impractical and ill-advised” because the parties would not be able to overcome the technical hurdles to reach a workable sharing arrangement. If the record developed in this proceeding confirms that allowing terrestrial operations in the 2000-2020 MHz and 2180-2200 MHz bands independent from the MSS licensee would likely substantially compromise the effectiveness of both the mobile satellite and terrestrial services, we propose that the public interest would be best served by modifying the license to operate in the 2 GHz MSS band, as contemplated herein, rather than making the band available for initial terrestrial licenses under a sharing regime with MSS. We seek comment on this proposal and its effect on interference. Commenters should discuss and quantify the costs and benefits of this proposal on eliminating harmful interference.

65.Other Assignment Approaches.If, contrary to our expectations, the record developed in this proceeding reflects that it is now possible for separately authorized, independent AWS-4 licensees to protect MSS including ATC operations, then we seek comment on other approaches to authorizing terrestrial use, upon creation of the new AWS-4 service. These other approaches may include the assignment of new initial licenses via competitive bidding, if mutually exclusive applications are received, under section 309(j) of the Communications Act.See47 U.S.C. 309(j). Commenters should be mindful that existing MSS licensees would still retain MSS licenses and, therefore, any new terrestrial licensees would have to protect the incumbent 2 GHz MSS licensee from harmful interference. Commenters should discuss and quantify and costs and benefits associated with any alternative approaches.

66.Applications for Any AWS-4 Licenses Returned to the Commission.There is a potential, under proposals discussed herein or otherwise, for AWS-4 licenses to be terminated automatically or otherwise to become a part of the Commission's spectrum inventory. Under such a scenario, we would resolve any mutually exclusive applications for such AWS-4 licenses using competitive bidding. We seek comment on the appropriate competitive bidding procedures below.

67.Procedures for Any AWS-4 Licenses Subject to Assignment by Competitive Bidding.Some of the scenarios on which we seek comment in this notice could result in the acceptance of mutually exclusive applications for licenses that would be resolved by competitive bidding. Accordingly, we seek comment on a number of proposals relating to competitive bidding for licenses for spectrum in the AWS-4 band.

68. We propose that the Commission would conduct any auction for AWS-4 licenses in conformity with the general competitive bidding rules set forth in part 1, subpart Q, of the Commission's rules, and substantially consistent with the competitive bidding procedures that have been employed in previous auctions.See47 CFR 1.2101-1.2114. Specifically, we propose to employ the part 1 rules governing competitive bidding design, designated entity preferences, unjust enrichment, application and payment procedures, reporting requirements, and the prohibition on certain communications between auction applicants. Under this proposal, such rules would be subject to any modifications that the Commission may adopt for its part 1 general competitive bidding rules in the future. In addition, consistent with our long-standing approach, auction-specific matters such as the competitive bidding design and mechanisms, as well as minimum opening bids and/or reserve prices, would be determined by the Wireless Telecommunications Bureau pursuant to its delegated authority. We seek comment on this approach, including the costs and benefits of this approach. We also seek comment on whether any of our part 1 rules would be inappropriate or should be modified for an auction of licenses in the AWS-4 bands.

69. In authorizing the Commission to use competitive bidding, Congress mandated that the Commission “ensure that small businesses, rural telephone companies, and businesses owned by members of minority groups and women are given the opportunity to participate in the provision of spectrum-based services.” 47 U.S.C. 309(j)(4)(D). In addition, section 309(j)(3)(B) of the Communications Act provides that, in establishing eligibility criteria and bidding methodologies, the Commission shall promote “economic opportunity and competition * * * by avoiding excessive concentration of licenses and by disseminating licenses among a wide variety of applicants, including small businesses, rural telephone companies, and businesses owned by members of minority groups and women.” 47 U.S.C. 309(j)(3)(B). One of the principal means by which the Commission fulfills this mandate is through the award of bidding credits to small businesses.

70. In theCompetitive Bidding Second Memorandum Opinion and Order,the Commission stated that it would define eligibility requirements for small businesses on a service-specific basis, taking into account the capital requirements and other characteristics of each particular service in establishing the appropriate threshold.See Implementation of Section 309(j) of the Communications Act—Competitive Bidding,59 FR 44272 (1994) (Competitive Bidding Second Memorandum Opinion and Order).Further, in thePart 1 Third Report and Order,the Commission, while standardizing many auction rules, determined that it would continue a service-by-service approach to defining small businesses.See Amendment of Part 1 of Commission's Rules—Competitive Bidding Procedures,63 FR 770 (1997) (Part 1 Third Report and Order).

71. In the event that the Commission assigns exclusive geographic area licenses for terrestrial use of the AWS-4 band, we believe that this spectrum would be employed for purposes similar to those for which the AWS-1 band is used. We therefore propose to establish the same small business size standards and associated bidding credits for the AWS-4 bands as the Commission adopted for the AWS-1 band. Thus, we propose to define a small business as an entity with average annual gross revenues for the preceding three years not exceeding $40 million, and a very small business as an entity with average annual gross revenues for the preceding three years not exceeding $15 million. We seek comment on this proposal, including the costs and benefits of the proposal.

72. We propose to provide small businesses with a bidding credit of 15 percent and very small businesses with a bidding credit of 25 percent, as set forth in the standardized schedule in part 1 of our rules. We seek comment on the use of these standards and associated bidding credits, with particular focus on the appropriate definitions of small businesses and verysmall businesses as they may relate to the size of the geographic area to be served and the spectrum allocated to each license. Commenters should discuss and quantify any costs or benefits associated with these standards and associated bidding credits as they relate to the proposed geographic areas. In discussing these issues, commenters are requested to address and quantify the expected capital requirements for services in these bands and other characteristics of the service. Commenters are also invited to use comparisons with other services for which the Commission has already established auction procedures as a basis for their comments and any quantification of costs and benefits regarding the appropriate small business size standards.

73. In establishing the criteria for small business bidding credits, we acknowledge the difficulty in accurately predicting the market forces that will exist at the time these frequencies are licensed. Thus, our forecasts of types of services that will be offered over these bands may require adjustment depending upon ongoing technological developments and changes in market conditions.

74. Finally, we seek comment on whether to use a different approach to bidding credits. To the extent commenters support a different approach to bidding credits than those discussed here, they should support their proposals with relevant information, including costs and benefits of their alternative proposals on the types of system architecture that are likely to be deployed in these bands, the availability of equipment, market conditions, and other factors that may affect the capital requirements of the types of services that may be provided.

75. The Commission establishes performance requirements to promote access to spectrum and the provision of service, including to rural areas. Over the years the Commission has applied different performance and construction requirements to different spectrum bands. For example, for licensees operating in the 2.3 GHz Wireless Communications Services (WCS) band, the Commission adopted performance requirements, which include population-based construction requirements (40 percent of the license area's population within three-and-a-half (3.5) years and 75 percent within six (6) years) and reporting requirements.See47 CFR 27.14(p).

76. We propose to establish performance requirements for AWS-4 licensees. Our proposal is informed by proposals made in the proceeding on DISH's request for waiver of certain ATC rules for the 2000-2020 MHz and 2180-2200 MHz bands. Specifically, DISH proposed a buildout schedule based on “the buildout principles established in the Sprint/Nextel and Sprint/Clearwire transaction decisions” and “keyed to commercial availability of the LTE Advanced standard.” DISH, DBSD, TerreStar Consolidated Opposition to Petitions to Deny and Response to Comments, IB Docket Nos. 11-149, 11-150, at 31 (Oct. 27, 2011) (internal citations omitted). The Sprint/Nextel build-out requirements were to offer service to a population of 15 million within four years and 30 million within 6 years; Applications of Nextel Communications, Inc., and Sprint Corporation For Consent to Transfer Control of Licenses and Authorizations, WT Docket No. 05-63,Memorandum Opinion and Order,20 FCC Rcd 13967, 14028 paragraphs 164-65 (2005) the Sprint/Clearwire build-out requirement is to “cover 140 million people by the end of 2010,” slightly more than two years after the adoption of the order. Sprint Nextel Corporation and Clearwire Corporation Applications for Consent to Transfer Control of Licenses, Leases, and Authorizations, WT Docket No. 08-94,Memorandum Opinion and Order,23 FCC Rcd 17570, 17617 paragraph 119 (2008). Alternatively, AT&T proposes that the Commission impose the build out conditions consistent with the March 2010 Harbinger/SkyTerra transfer of control. Letter from Joan Marsh, Vice President—Federal Regulatory, AT&T Services, Inc., to Marlene H. Dortch, Sec'y, Federal Communications Commission, Docket No. 11-149, at 2 (Jan. 26, 2012). In approving that transfer, the Commission required Harbinger (now operating as LightSquared) to build out its 4G terrestrial network according to Harbinger's proposed build-out schedule of providing coverage to at least 100 million people in the United States by the end of 2012 (21 months after the transfer order), to at least 145 million people by the end of 2013 (33 months), and to at least 260 million people in the United States by the end of 2015 (57 months). SkyTerra Communications, Inc., Transferor, and Harbinger Capital Partners Funds, Transferee, Applications for Consent to Transfer of Control of SkyTerra Subsidiary, LLC, IB Docket No. 08-184,Memorandum Opinion and Order and Declaratory Ruling,25 FCC Rcd 3059, 3085, 3088-89, 3098 at paragraphs 56, 72, App. B at Att. 2, p.1 (2010). On February 15, 2012, the Commission proposed to modify LightSquared's satellite license “to suspend indefinitely LightSquared's underlying ATC authorization, first granted in 2004, to an extent consistent with the NTIA Letter.” International Bureau Invites Comment on NTIA Letter Regarding LightSquared Conditional Waiver, IB Docket No. 11-109,Public Notice,DA 12-214 at 4 (Feb. 15, 2012).

77.Build-out requirements.Building off of these approaches and in light of the unique circumstances of the AWS-4 band, including its interplay with the 2 GHz MSS band located in the same frequencies, we propose to adopt a middle ground between these two proposals. We seek comment on the following build-out requirements for AWS-4 spectrum:

• AWS-4 Interim Build-out Requirement: Within three (3) years, an AWS-4 licensee shall provide signal coverage and offer service to at least thirty (30) percent of their total AWS-4 population. A licensee's total AWS-4 population shall be calculated by summing the population of each of its license authorizations in the AWS-4 band.

• AWS-4 Final Build-out Requirement: Within seven (7) years, an AWS-4 licensee shall provide signal coverage and offer service to at least seventy (70) percent of the population in each of its license authorization areas.

78. We propose these performance requirements in an effort to foster timely deployment in the AWS-4 band for the provision of wireless, terrestrial broadband service, and to enable the Commission to take appropriate corrective action should such deployment fail to occur. Specifically, the interim benchmark at three years would ensure that a licensee will begin deploying facilities quickly and thereby evidencing meaningful utilization of the spectrum. At the same time, by proposing a relatively low population threshold in the interim benchmark, we acknowledge that large-scale network deployment may ramp up over time as equipment becomes available and a customer base is established. In addition, by proposing a final build-out requirement timeline of seven years, we believe we allow a reasonable amount of time for any AWS-4 licensee to attain nationwide scale. Further, we propose geographic area based (i.e.EA based) requirements for the final milestone in order to encourage deployment in all areas of the country. We seek comment on the proposed build-out requirements. We encourage comment on whether our proposals represent the appropriatebalance between requirements that are too low as to not result in meaningful build-out and those that would be too high as to be unattainable. Would the DISH or AT&T proposals represent more appropriate requirements? Commenters should discuss and quantify how any supported buildout requirements will affect investment and innovation as well as discuss and quantify other costs and benefits associated with the proposal.

79.Penalties for failure to meet construction requirements.Again, building on what we have learned from other bands and on the unique characteristics of the AWS-4 bands, we propose and seek comment, including the costs and benefits, on the following penalties in the event an AWS-4 licensee fails to satisfy its build-out requirements:

• In the event an AWS-4 licensee fails to meet the AWS-4 Interim Build-out Requirement,allof the licensee's AWS-4 license authorizations shall terminate automatically without Commission action.

• In the event an AWS-4 licensee fails to meet the AWS-4 Final Build-out Requirement in any of its license authorizations, its AWS-4 license for each license authorization areas in which it fails to meet the build-out requirement shall terminate automatically without Commission action.

80. If the Commission assigns AWS-4 rights to the 2 GHz MSS licensee pursuant to a section 316 license modification, the license would include both part 27 terrestrial and part 25 mobile satellite authorizations. In such a situation, we propose that the failure to satisfy a build-out requirement would trigger the automatic termination of the mobile satellite authorization in any area in which the terrestrial authorizations are terminated. Specifically, failure to meet the AWS-4 Interim Build-out Requirement would result in the AWS-4 and 2 GHz MSS licenses automatically terminating in all license areas (i.e.,nationwide). Failure to meet the AWS-4 Final Build-out Requirement would result in the AWS-4 and 2 GHz MSS licenses automatically terminating in those areas where the licensee fails to meet the requirement. This proposal appears consistent with the 2 GHz MSS licensee's assertion that the ability to offer stand-alone terrestrial service is critical to support the provision of MSS in this spectrum. We similarly expect that failure to satisfy terrestrial build-out requirements would be accompanied by failure to provide meaningful MSS. We seek comment on whether the protection that is afforded to MSS operations under our proposed rules should be modified if the MSS licensee fails to meet the AWS-4 Final Build-out Requirement and the costs and benefits to any modification. If so, to what extent should the interference protection be modified?

81. We further propose that, in the event that a licensee's authority to operate terminates, terrestrial spectrum rights would become available for reassignment pursuant to the competitive bidding provisions of section 309(j). Further, consistent with the Commission's rules for other spectrum bands, including AWS-1, 700 MHz, and Broadband Radio Service, we propose that any AWS-4 licensee who forfeits its license for failure to meet it performance requirements would be precluded from regaining it.See, e.g.,27 CFR 27.14(a), (j), (o). We observe that for AWS-4 spectrum assigned under section 316, termination of individual AWS-4 area licenses for failure to satisfy the AWS-4 Final Build-out Requirement could result in an inability for the Commission to meaningfully reassign the spectrum rights should the Commission continue to require coordination of reassigned spectrum with the MSS operator. We request comment on the appropriate remedy in such circumstances, and commenters should discuss and quantify the costs and benefits or any proposed remedy. For example, should any subsequent Commission reassignment of the AWS-4 spectrum occur without a requirement to coordinate with, or protect MSS operations or should the MSS operations continue to receive interference protection?

82.Compliance procedures.Consistent with § 1.946(d) of the Commission's rules, we propose to require AWS-4 licensees to demonstrate compliance with the new performance requirements by filing a construction notification within 15 days of the relevant milestone certifying that they have met the applicable performance benchmark.See47 CFR 1.946(d) (“notification[s] must be filed with Commission within 15 days of the expiration of the applicable construction or coverage period”). Further, we propose that each construction notification include electronic coverage maps and supporting documentation, which must be truthful and accurate and must not omit material information that is necessary for the Commission to determine compliance with its performance requirements.

83. Electronic coverage maps must accurately depict the boundaries of each license area in the licensee's service territory. If a licensee does not provide reliable signal coverage to an entire license area, we propose that its map must accurately depict the boundaries of the area or areas within each license area not being served. Further, we propose that each licensee also must file supporting documentation certifying the type of service it is providing for each licensed area within its service territory and the type of technology used to provide such service. Supporting documentation must include the assumptions used to create the coverage maps, including the propagation model and the signal strength necessary to provide reliable service with the licensee's technology.

84. We propose to provide AWS-4 licensees with the flexibility to provide any fixed or mobile service that is consistent with the allocations for this spectrum, as we have generally done with other spectrum allocated or designated for licensed fixed and mobile services,e.g.,AWS-1 spectrum. We also propose to license this spectrum under our market-oriented part 27 rules. We seek comment on these proposals. In addition, we seek comment on the appropriate regulatory framework for AWS-4 licenses, the license term, criteria for renewal, and other licensing and operating rules pertaining to these bands. We also seek comment on the potential impact of all of our proposals on competition. Commenters should also comment on how any proposal that they support enhances competition and results in rapid provisioning of competitive mobile broadband services to consumers. Commenters also should discuss the costs and benefits of these proposals and any alternative proposals.

85.Flexible Use.We propose service rules for the AWS-4 band that would permit a licensee to employ the spectrum for any terrestrial use permitted by the United States Table of Frequency Allocations contained in part 2 of our rules (i.e.,fixed or mobile services). 47 CFR 2.106. Part 27 licensees must also comply with other Commission rules of general applicability.See47 CFR 27.3. These service rule proposals cover only the terrestrial use of the spectrum in this band. MSS use in this spectrum will continue to be governed by part 25. Congress recognized the potential benefits of flexibility in allocations of the electromagnetic spectrum and amended the Communications Act in 1999 to add section 303(y). This sectionprovides the Commission with authority to provide for flexibility of use if:

86. We believe that our proposal for flexibility meets these section 303(y) criteria. The public interest benefits of flexibility are manifold. The Commission has identified the establishment of maximum feasible flexibility in both allocations and service rules as a critical means of ensuring that spectrum is put to its most beneficial use. For example, in a 1999Policy Statementon spectrum management, the Commission observed that “[i]n the majority of cases, efficient spectrum markets will lead to use of spectrum for the highest value end use,” and that “[f]lexible allocations may result in more efficient spectrum markets.”SeePrinciples for Reallocation of Spectrum to Encourage the Development of Telecommunications Technologies for the New Millenium, FCC 99-354,Policy Statement,14 FCC Rcd 19868, 19870 paragraph 9 (1999). We would expect these economic efficiencies to foster—not deter—technology development and investment in communications services and systems. And the technical rules we are proposing here should prevent harmful interference among users. In addition, as discussed above, flexible use would be subject to bilateral discussions commonly undertaken whenever spectrum is put to use in border areas, but is consistent with applicable international agreements. Finally, in the2 GHz Band Co-Allocation Order,the Commission added co-primary Fixed and Mobile allocations, along with the pre-existing MSS allocation, in the 2 GHz band, expressly “lay[ing] the foundation for more flexible use of the band [and] * * * promoting investment in the development of new services and additional innovative technologies.”2 GHz Band Co-Allocation Order.

87. We seek comment on our proposal to provide for flexible use of the AWS-4 band, especially in light of the section 303(y) criteria noted above. If any restrictions are warranted, what should they be and why are they needed? Commenters should quantify the costs and benefits or any such restrictions. Are there trade-offs between flexibility and investment in technology and new services that we should consider? To the extent commenters believe flexibility will deter investment in these bands, they should also suggest specific restrictions on how spectrum should be used by a licensee, and provide detailed analysis and quantification of the economic tradeoffs between flexibility and investment that justify any particular recommended restriction on use. We also specifically seek comment on the types of uses that pose the greatest risk of interference to terrestrial or satellite use of this spectrum, and the quantification of these risks.

88.Regulatory Framework.Because we propose to permit flexible use of these bands, we also propose licensing the spectrum under the flexible regulatory framework of part 27 of our rules. Unlike other rule parts applicable to specific services, part 27 does not prescribe a comprehensive set of licensing and operating rules for the spectrum to which it applies. Rather, for each frequency band under its umbrella, part 27 defines permissible uses and any limitations thereon, and specifies basic licensing requirements. The licensing requirements for a number of spectrum bands, including the AWS spectrum at 1710-1755 MHz and 2110-2155 MHz and the Upper and Lower 700 MHz bands, are contained in part 27. In order to promote flexibility and permit market forces to determine what services are ultimately offered in these bands, we therefore seek comment on our proposal to license the AWS-4 band under part 27 service and licensing rules, and any associated costs or benefits or doing so.

89.Regulatory Status.We propose to apply the regulatory status provisions of § 27.10 of the Commission's rules to licensees in the AWS-4 band. The Commission's current mobile service license application requires an applicant for mobile services to identify the regulatory status of the service(s) it intends to provide because service offerings may bear on eligibility and other statutory and regulatory requirements. Under part 27, the Commission permits applicants who may wish to provide both common carrier and non-common carrier services (or to switch between them) under a single license to request status as both a common carrier and a non-common carrier. Thus, a part 27 applicant is not required to choose between providing common carrier and non-common carrier services. We propose to adopt this same approach here. Licensees in the AWS-4 band would be able to provide all allowable services anywhere within their licensed area at any time, consistent with their regulatory status. We believe that this approach is likely to achieve efficiencies in the licensing and administrative process, and provide flexibility to the marketplace. We seek comment on this approach and the costs and benefits of this approach.

90. We further propose that applicants and licensees in the AWS-4 band be required to indicate a regulatory status for any services they choose to provide. Apart from this designation of regulatory status, we would not require applicants to describe the services they seek to provide. We caution potential applicants that an election to provide service on a common carrier basis typically requires that the elements of common carriage be present; otherwise the applicant must choose non-common carrier status. If potential applicants are unsure of the nature of their services and their classification as common carrier services, they may submit a petition with their applications, or at any time, requesting clarification and including service descriptions for that purpose. We propose to apply this framework to AWS-4 licensees and seek comment on this proposal, including the costs and benefits of this proposal.

91. We also propose that if a licensee were to change the service or services it offers such that its regulatory status would change, the licensee must notify the Commission. A change in a licensee's regulatory status would not require prior Commission authorization, provided the licensee was in compliance with the foreign ownership requirements of section 310(b) of the Communications Act that would apply as a result of the change, consistent with the Commission's rules for AWS-1 spectrum. Consistent with our part 27 rules, we propose to require the notification within 30 days of a change made without the need for prior Commission approval, except that a different time period may apply where the change results in the discontinuance, reduction, or impairment of the existing service. We seek comment on this proposal, including the costs and benefits of this proposal.

92.Foreign Ownership.We propose that the provisions of § 27.12 of the Commission's rules should apply to applicants applying for licenses in the AWS-4 band. 47 CFR 27.12. Section 27.12 implements section 310 of the Communications Act, as modified by the Telecommunications Act of 1996, imposing foreign ownership and citizenship requirements that restrict the issuance of licenses to certainapplicants. An applicant requesting authorization for services other than broadcast, common carrier, aeronautical en route, or aeronautical fixed services would be subject to section 310(a), but not to the additional prohibitions of section 310(b). An applicant requesting authorization for these particular services would be subject to both sections 310(a) and 310(b). As applicable to these bands, we do not believe that common carriers and non-common carriers filing an application should be subject to varied reporting obligations. By establishing parity in reporting obligations, however, we do not propose a single, substantive standard for compliance. For example, we would be unlikely to deny a license to an applicant requesting authorization exclusively to provide services not enumerated in section 310(b), solely because its foreign ownership would disqualify it from receiving a license if the applicant had applied for a license to provide the services enumerated in section 310(b). We request comment on this proposal, including any costs or benefits of this proposal.

93.Eligibility.In recent years the Commission determined in a number of services that eligibility restrictions on licenses may be imposed only when open eligibility would pose a significant likelihood of substantial harm to competition in specific markets and when an eligibility restriction would be effective in eliminating that harm. This approach relies on market forces absent a compelling showing that regulatory intervention to exclude potential participants is necessary.

94. We propose not to apply any eligibility restrictions to AWS-4 licenses. We believe that open eligibility in the AWS-4 band would not pose a significant likelihood of substantial harm to competition in any specific markets, and thus an eligibility restriction in these bands is not warranted. We also believe that open eligibility in these bands is consistent with our statutory mandate to promote the development and rapid deployment of new technologies, products, and services; economic opportunity and competition; and the efficient and intensive use of the electromagnetic spectrum. We seek comment on this approach. Commenters should discuss the costs and benefits of the open eligibility proposal on competition, innovation, and investment.

95.Spectrum Aggregation.Spectrum is an essential input for the provision of mobile telephony/broadband services, and a service provider, in order to compete effectively, must have access to adequate spectrum. The Commission therefore closely examines the impact of spectrum aggregation on competition, innovation, and the efficient use of spectrum, generally on a case-by-case basis, upon establishing the relevant product and geographic markets. For example, in analyzing transactions, the Commission identifies markets where the spectrum amounts held provide reason for further competitive analysis. Thus, in this context, when evaluating the competitive effect of spectrum aggregation in bands that it has found available and suitable for the provision of mobile telephony/broadband services, the Commission conducts a market-by-market analysis of those markets identified by the initial screen to determine whether competitive harms would be likely to result. In addition, in 2008 the Commission determined that it would apply this standard competitive analysis to mobile spectrum acquired via competition bidding.

96. We seek comment on whether the acquisition of AWS-4 spectrum should be subject to the same general spectrum aggregation policies currently applicable to frequency bands that the Commission has determined to be available and suitable for mobile telephony/broadband services. Specifically, should the current spectrum screen for mobile telephony/broadband services be revised to include AWS-4 spectrum? Alternatively, depending on the specific rules and requirements that apply to AWS-4 spectrum, would there continue to be reasons to distinguish AWS-4 spectrum from other bands evaluated pursuant to the spectrum aggregation policies applicable to mobile telephony/broadband services? We seek comment generally on whether and how to address any spectrum aggregation concerns involving AWS-4 spectrum. Commenters should discuss and quantify any costs and benefits associated with alternative proposals on spectrum aggregation policies for AWS-4 spectrum on competition, innovation and investment.

97.Partitioning and Disaggregation.The Commission's part 27 rules generally allow for geographic partitioning and spectrum disaggregation.See47 CFR 27.15. Geographic partitioning refers to the assignment of geographic portions of a license to another licensee along geopolitical or other boundaries. Spectrum disaggregation refers to the assignment of discrete amount of spectrum under the license to another entity. Disaggregation allows for multiple transmitters in the same geographic area operated by different companies on adjacent frequencies in the same band. As the Commission noted when first establishing partitioning and disaggregation rules, allowing such flexibility could facilitate the efficient use of spectrum by providing licensees with the flexibility to make offerings directly responsive to market demands for particular types of services, increase competition by allowing market entry by new entrants, and expedite provision of services that might not otherwise receive service in the near term.

98. We seek comment on allowing licensees in the AWS-4 band to partition their service areas or to disaggregate their spectrum into new licenses. Part 27 rules for terrestrial wireless service provide that licensees may apply to partition their licensed geographic service areas or disaggregate their licensed spectrum at any time following the grant of their licenses. The Commission's rules also set forth the general requirements that apply with regard to approving applications for partitioning or disaggregation, as well as other specific requirements (e.g.,performance requirements) that would apply to licensees that hold licenses created through partitioning or disaggregation. We seek comment on applying these general procedures and requirements to any permissible partitioning or disaggregation of AWS-4 licenses. In particular, we seek comment on the performance requirements that would apply to any license created through partitioning or disaggregation. To ensure that the public interest would be served if partitioning or disaggregation is allowed, we propose requiring each AWS-4 licensee who is a party to a partitioning, disaggregation or combination of both to independently meet the applicable performance and renewal requirements. We believe this approach would facilitate efficient spectrum use, while enabling service providers to configure geographic area licenses and spectrum blocks to meet their operational needs. We seek comment on these proposals. Commenters should discuss and quantify the costs and benefits of these proposals on competition, innovation, and investment.

99. We acknowledge, however, that there may be technical impediments to partitioning or disaggregating satellite spectrum and service. As noted above, we seek comment on the Commission's earlier conclusion that the complexities of coordination between MSS and terrestrial operations render impractical assignment of terrestrial licenses to anentrant other than the incumbent MSS licensee(s). Further, we seek comment on whether the actual capabilities of existing or future satellites make partitioning or disaggregation of spectrum difficult or problematic. We also acknowledge that part 25 of the Commission's rules do not contain provisions governing the partition or disaggregation of MSS. We seek comment on the affect the answers to these questions should have on whether we should permit disaggregation or partition of AWS-4 spectrum or licenses. Would an affirmation of the Commission's prior finding require us to not permit disaggregation or partition here? Conversely, if we find same-band, separate operator sharing possible and in the public interest, should that lead us apply the part 27 rules governing disaggregation and partition to AWS-4 spectrum and licensees. In the event that we apply rule § 27.15 to AWS-4 licensees (or otherwise permit partitioning or disaggregation for AWS-4 licensees), we seek comment on whether the part 25 rules should be amended to address partition and disaggregation of 2 GHz MSS spectrum by its licensees. Similarly, if we permit partitioning or disaggregation, should we require that any such arrangement apply to both the terrestrial and mobile satellite authorizations, but not to only one set of such authorizations? Should such a requirement only apply in the case where the AWS-4 authorizations are assigned to the same entity that holds the 2 GHz MSS rights? Commenters should discuss and quantify the costs and benefits of allowing partitioning and disaggregating AWS-4 spectrum.

100. We also seek comment on whether the Commission should adopt additional or different mechanisms to encourage partitioning and/or disaggregation of AWS-4 band spectrum and the extent to which such policies ultimately may promote more service, especially in rural areas. Commenters should discuss and quantify the costs and benefits of promoting more service using mechanisms to encourage partitioning and disaggregation AWS-4 spectrum, including the effects of the proposal on competition, innovation, and investment.

101.Spectrum Leasing.In 2003, in order to promote more efficient use of terrestrial wireless spectrum through secondary market transactions, while also eliminating regulatory uncertainty, the Commission adopted a comprehensive set of policies and rules to govern spectrum leasing arrangements between terrestrial licensees and spectrum lessees. These policies and rules enabled terrestrially-based Wireless Radio Service licensees holding “exclusive use” spectrum rights to lease some or all of the spectrum usage rights associated with their licenses to third party spectrum lessees, which then would be permitted to provide wireless services consistent with the underlying license authorization. Through these actions, the Commission sought to promote more efficient, innovative, and dynamic use of the terrestrial spectrum, expand the scope of available wireless services and devices, enhance economic opportunities for accessing spectrum, and promote competition among terrestrial wireless service providers. In 2004, the Commission built upon this spectrum leasing framework by establishing immediate approval procedures for certain categories of terrestrial spectrum leasing arrangements and extending the spectrum leasing policies to additional Wireless Radio Services. Since then, the Commission has added more terrestrial services to this spectrum leasing framework, including the Advanced Wireless Services in 2003 (when the service rules were adopted for this new service) and the Broadband Radio Services and Educational Broadband Services in 2004 (when the rebanding plan for these services in the 2.5 GHz band was adopted). Most recently, in 2011 in the2 GHz Band Co-Allocation Order,the Commission extended the Commission's secondary market spectrum leasing policies, procedures, and rules to MSS/ATC spectrum and licenses for spectrum manager lease arrangements; the Commission did not extend the secondary market regime to MSS/ATCde factotransfer lease arrangements because that would have been inconsistent with the need to have the same entity control both the terrestrial and satellite operations.

102. We now seek comment on the extent to which we should extend the Commission's secondary markets spectrum leasing policies and rules to AWS-4 spectrum. For the reasons articulated in the2 GHz Band Co-Allocation Order,we propose to extend spectrum manager lease arrangements to AWS-4 spectrum. With regard tode factotransfer lease arrangements, we propose to permit them only to the extent that we permit the disaggregation and partitioning of AWS-4 spectrum and licenses. To the extent that we find that the Commission's earlier conclusion that the complexities of coordination between MSS and terrestrial operations renders impractical assignment of terrestrial licenses to an entrant other than the incumbent MSS licensee(s), we propose to not allowde factotransfer lease arrangements for AWS-4 spectrum or licenses. Alternatively, if the record we develop reflects that same-band, separate terrestrial and mobile operator sharing is possible and would benefit the public interest, we propose to permitde factotransfer lease arrangements for AWS-4 spectrum and licenses. We seek comment on these proposals. Commenters should discuss the costs and benefits of extending the Commission's secondary spectrum leasing policies and rules to AWS-4 spectrum on competition, innovation, and investment.

103.License Term.We propose to establish a 10-year term for licenses in the AWS-4 band. The Communications Act does not specify a term limit for AWS band licenses. The Commission has adopted 10-year license term for most wireless radio services licenses. We propose that in the AWS-4 band the license term similarly be 10 years. We seek comment on this proposal, including any costs and benefits of the proposal.

104. We also seek comment on whether a license term longer than 10 years would better serve the public interest. We note that in theAWS-1 Report and Order,we established an initial license term in the 1710-1755 MHz and 2110-2155 MHz bands of 15 years and subsequent renewal terms of 10 years because of the relocation and band clearance issues that were associated with those bands. Commenters who favor a different license term for the AWS-4 band should specify a reasonable license term and the bases for the period proposed.AWS-1 Report and Order.Commenters should also address whether it would be possible to have different license terms, depending on the type of service offered by the licensee, including the costs and benefits of an alternative proposal. We seek comment on how we would administer such an approach, particularly if licensees provide more than one service in their service area, or decide to change the type of service they plan to offer. We also seek comment on whether we should match the license term to the 15-year term of the satellite licenses. How would this be accomplished given that the term of the two 2 GHz MSS licenses have different expiration dates, and what are the costs and benefits of this proposal?

105. Under our license term proposal, if a license in these bands is partitioned or disaggregated, any partitionee or disaggregatee would be authorized to hold its license for the remainder of the partitioner's or disaggregator's original license term. This approach is similar to the partitioning provisions the Commission adopted for BRS, for broadband PCS licensees, for the 700 MHz band licensees, and for AWS-1 licenses at 1710-1755 MHz and 2110-2155 MHz. We emphasize that nothing in our proposal is intended to enable a licensee, by partitioning or disaggregation, to be able to confer greater rights than it was awarded under the terms of its license grant; nor would any partitionee or disaggregatee obtain rights in excess of those previously possessed by the underlying Commission licensee. We seek comment on these proposals, including the cost and benefits of these proposals.

106.Renewal Criteria.Pursuant to section 308(b) of the Communications Act, the Commission may require renewal applicants to “set forth such facts as the Commission by regulation may prescribe as to the citizenship, character, and financial, technical, and other qualifications of the applicant to operate the station” as well as “such other information as it may require.” 47 U.S.C. 308(b). We propose to adopt AWS-4 license renewal requirements consistent with those adopted in the700 MHz First Report and Orderand which form the basis of the renewal paradigm proposed in our recentWireless Radio Services Renewal NPRM. See Service Rules for the 698-746, 747-762 and 777-792 MHz Bands,72 FR 24238 (2007) (700 MHz First Report and Order); Amendment of parts 1, 22, 24, 27, 74, 80, 90, 95, and 101 To Establish Uniform License Renewal, Discontinuance of Operation, and Geographic Partitioning and Spectrum Disaggregation Rules and Policies for Certain Wireless Radio Services,75 FR 38959 (2010) (Wireless Radio Services Renewal NPRM). We emphasize that, as the Commission made clear in both of these items, a licensee's performance showing and its renewal showing are two distinct showings. Broadly speaking, a performance showing provides a snapshot in time of the level of a licensee's service. By contrast, a renewal showing provides information regarding the level and types of the licensee's service offered over its entire license term.

107. We propose that applicants for renewal of AWS-4 licenses file a “renewal showing,” in which they demonstrate that they have and are continuing to provide service to the public, and are compliant with the Commission's rules and policies and [with] the Communications Act. In the700 MHz First Report and Order,the Commission explained that in the renewal context, the Commission considers “a variety of factors including the level and quality of service, whether service was ever interrupted or discontinued, whether service has been provided to rural areas, and any other factors associated with a licensee's level of service to the public.”700 MHz First Report and Order.TheWRS Renewals NPRM and Orderalso proposed to consider the extent to which service is provided to qualifying tribal lands.WRS Renewals NPRM and Order.We propose that these same factors should be considered when evaluating renewal showings for the AWS-4 band and seek comment on this approach. Commenters should discuss and quantify the costs and benefits of this approach on competition, innovation, and investment.

108. As explained above, today we are proposing that AWS-4 licensees meet three and seven-year performance obligations. We therefore seek comment on whether the public interest would be served by awarding AWS-4 licensees renewal expectancies where they maintain the level of service demonstrated at the seven year performance benchmark through the end of their license term, provided that they have otherwise complied with the Commission's rules and policies and the Communications Act during their license term. We also seek comment on whether AWS-4 licensees should obtain a renewal expectancy for subsequent license terms, if they continue to provide at least the level of service demonstrated at the seven year performance benchmark through the end of any subsequent license terms. Commenters should discuss and quantify the costs and benefits of this approach on competition, innovation, and investment.

109. Finally, consistent with the700 MHz First Report and Orderand theWRS Renewals NPRM and Order,we propose to prohibit the filing of mutually exclusive renewal applications, and that if a license is not renewed, the associated spectrum would be returned to the Commission for reassignment. We seek comment on these proposals, including the costs and benefits of these proposals.

110.Permanent Discontinuance of Operations.We also request comment on the Commission's rules governing the permanent discontinuance of operations, which are intended to afford licensees operational flexibility to use their spectrum efficiently while ensuring that spectrum does not lay idle for extended periods. Under § 1.955(a)(3), an authorization will automatically terminate, without specific Commission action, if service is “permanently discontinued.” 47 CFR 1.955(a)(3). For the AWS-4 band, we propose to define “permanently discontinued” as a period of 180 consecutive days during which a licensee does not operate and does not serve at least one subscriber that is not affiliated with, controlled by, or related to the provider. We believe this definition strikes an appropriate balance between our twin goals of providing licensees operational flexibility while ensuring that spectrum does not lie fallow. Licensees would not be subject to this requirement until the date of the first performance requirement benchmark, which is proposed as 3 years from the license grant, so they will have adequate time to construct their terrestrial network. In addition, consistent with § 1.955(a)(3) of the Commission's rules, we propose that, if an AWS-4 licensee permanently discontinues service, the licensee must notify the Commission of the discontinuance within 10 days by filing FCC Form 601 or 605 and requesting license cancellation. An authorization will automatically terminate without specific Commission action if service is permanently discontinued even if a licensee fails to file the required form.

111. Even though licenses in the AWS-4 band may be issued pursuant to one rule part, licensees in this band may be required to comply with rules contained in other parts of the Commission's rules by virtue of the particular services they provide. For example:

• Applicants and licensees would be subject to the application filing procedures for the Universal Licensing System, set forth in part 1 of our rules.

• Licensees would be required to comply with the practices and procedures listed in part 1 of our rules for license applications, adjudicatory proceedings, etc.

• Licensees would be required to comply with the Commission's environmental provisions, including § 1.1307.

• Licensees would be required to comply with the antenna structure provisions of part 17 of our rules.

• To the extent a licensee provides a Commercial Mobile Radio Service, such service would be subject to the provisions of part 20 of the Commission's rules, including 911/E911and hearing aid-compatibility (HAC) requirements, along with the provisions in the rule part under which the license was issued. Part 20 applies to all CMRS providers, even though the stations may be licensed under other parts of our rules.

• The application of general provisions of parts 22, 24, 27, or 101 of our rules would include rules related to equal employment opportunity,etc.

112. We seek comment generally on any provisions in existing service-specific rules that may require specific recognition or adjustment to comport with the supervening application of another rule part, as well as any provisions that may be necessary in this other rule part to fully describe the scope of covered services and technologies. We seek comment on applying these rules to the spectrum that is the subject of thisAWS-4 Notice,and specifically on any rules that would be affected by our proposal to apply elements of the framework of these parts, whether separately or in conjunction with other requirements.

113. We also seek comment generally on whether any conditions should govern the operation of a provider's network if it is granted a license to operate in these bands. What are the potential problems that may be associated with the Commission's adoption of any of these potential requirements, and how do they compare to the potential benefits?

114. The Commission currently has under consideration various provisions and policies intended to promote greater use of spectrum over Tribal lands. Improving Communications Services for Native Nations by Promoting Greater Utilization of Spectrum Over Tribal Lands, 76 FR 18476 (2011). We propose to extend any rules and policies adopted in that proceeding to any licenses that may be issued through competitive bidding in this proceeding. We seek comment on this proposal, including any costs and benefits of this proposal.

115. Our Emerging Technologies (ET) procedures represent a broad set of tools that the Commission has used to aid the process of making spectrum available for new uses. Generally speaking, ET procedures are used when the Commission has made the decision that it is necessary to relocate incumbent licensees to introduce new services into a frequency band. The Commission sets a “sunset date”—a date by which incumbent licensees may not cause interference to new band entrants. Prior to the sunset date, the new entrants may negotiate with incumbents to gain early entry into the band and, if necessary, may relocate the incumbents to comparable facilities. Because new entrants may have to relocate incumbents from a larger frequency range or greater geographic area than where the new entrants will operate, the Commission also typically establishes a companion set of cost sharing procedures. These procedures allow new entrants to be reimbursed a portion of their relocation expenses from other new entrants that benefit from the spectrum clearance. The specific relocation process we establish under the ET framework has varied for each frequency band, and has been based on the types of incumbent licensees and particular band characteristics. We discuss, below, the particular relocation and cost sharing procedures for the 2000-2020 MHz and 2180-2200 MHz bands.

116. The lower portion of AWS-4 (2000-2020 MHz) is part of the 1990-2025 MHz band that the Commission reallocated from the Broadcast Auxiliary Service (BAS) to emerging technologies such as PCS, AWS, and MSS. Consistent with the relocation principles first established in the Commission'sEmerging Technologiesproceeding, each new entrant had an independent responsibility to relocate incumbent BAS licensees. Sprint Nextel (Sprint), which is licensed for 1990-1995 MHz, completed the BAS transition in 2010. Cost-sharing disputes between Sprint and the MSS licensees (for Sprint's clearing of 2000-2020 MHz) have been settled privately. In light of this, if the Commission assigns terrestrial licenses under part 27, do any relocation and cost-sharing issues for the 2000-2020 MHz band remain? In addition, should the Commission adopt either of the spectrum shift approaches that would include the 2020-2025 MHz block, we seek comment on any additional relocation or cost-sharing issues including this spectrum block would raise.

117.Relocation.The upper portion of AWS-4 (2180-2200 MHz) is part of the 2160-2200 MHz band that the Commission reallocated from the Fixed Microwave Services (FS) to emerging technologies. Our licensing records show approximately 700 active FS licenses in this band. Most of these incumbents appear to be state or local governmental entities, utilities, railroads, and other businesses with FS links licensed in the Microwave Public Safety Pool (MW) or the Microwave Industrial/Business Pool (MG) for private, internal communication. FS links in the 2180-2200 MHz band typically are paired, for two-way operation, with FS links in the 2130-2150 MHz band. The Commission previously adopted relocation and cost-sharing rules for AWS-1 licensees in the 2110-2155 MHz band and we now propose to extend these rules to AWS-4 as discussed below.

118. Prior to initiating operations from any base or fixed station, AWS-1 licensees are required to coordinate their frequency usage with all co-channel and adjacent channel incumbents. If interference would occur, the AWS-1 licensee can initiate a mandatory negotiation period (two years for non-public safety, three years for public safety) during which each party must negotiate in good faith for the purpose of agreeing to terms under which the FS licensees would: (1) Relocate their operations to other fixed microwave bands or other media; or alternatively (2) accept a sharing arrangement with the AWS-1 licensee that may result in an otherwise impermissible level of interference to the FS operations. If no agreement is reached during the mandatory negotiation period, the AWS-1 licensee can initiate involuntary relocation procedures. We propose to revise these rules to apply them to AWS-4.

119. Under the emerging technologies policies, the Commission sunsets the relocation obligation owed by new licensees in the band to the incumbents. For example, MSS/ATC relocation obligations to FS in the 2180-2200 MHz band will sunset in December 2013 (ten years after the mandatory negotiation period began for MSS/ATC operators). Similarly, for the 2110-2150 MHz, 2160-2175 MHz and 2175-2180 MHz bands, the sunsets occur “ten years after the first ET license is issued in the respective band.” Thus, for AWS-1 licenses in the 2110-2155 MHz band, which were first-issued in 2006, the sunset for relocation obligations for FS incumbents in the 2130-2150 MHz band will occur in 2016. For AWS-4, we propose to sunset AWS-4 relocation obligations ten years after the first AWS-4 license is issued in the band. We recognize that the 2013 sunset date applies to 2180-2200 MHz for MSS/ATC but under our proposal to issue full-terrestrial licenses under part 27,we believe it is appropriate to treat the AWS-4 band the same as other AWS bands by setting the sunset ten-years after we issue the first license in the band. Thus, we propose to revise § 101.79(a)(2) to include part 27 sunset rules in the 2180-2200 MHz band. Under this proposal, should the 2 GHz MSS licensee receive full terrestrial authority under part 27 of the Commission's rules, it would become the AWS-4 licensee responsible for relocating incumbent FS in the 2180-2200 MHz band. We seek comment on these proposals, including the costs and benefits of these proposals. We also propose to delete the reference to all Fixed and Mobile facilities operating on a secondary basis not later than December 9, 2013, in footnote NG168 in the U.S. Table of Frequency Allocations. Specifically, this would clarify that after the applicable sunset date grandfathered fixed microwave systems will be governed by the procedures in § 101.79. We seek comment on this proposal.

120.Cost-sharing.As noted above, FS links in the 2180-2200 MHz band typically are paired, for two-way operation, with FS links in the 2130-2150 MHz band. The Commission previously established a cost-sharing plan for MSS, MSS/ATC, and AWS-1 licensees in these paired bands. Briefly, for terrestrial stations (AWS and MSS/ATC), cost-sharing obligations are governed by §§ 27.1160 through 27.1174 except that MSS/ATC operators are not obligated to reimburse voluntarily relocating fixed microwave service incumbents in the 2180-2200 MHz band while AWS reimbursement and cost-sharing obligations relative to voluntarily relocating FMS incumbents are governed by § 27.1166. The cost-sharing plan is administered by AWS clearinghouses selected by the Commission's Wireless Telecommunications Bureau under delegated authority. We propose to extend to the AWS-4 band the cost-sharing rules adopted for AWS-1 licensees. Under this proposal, the cost-sharing plan will sunset for AWS-4 licensees on the same date on which the relocation obligation sunsets. We also propose conforming amendments to parts 27 and 101 to include AWS-4 under the relocation and cost-sharing rules generally and to delete references to MSS/ATC. We seek comment on these proposals, including the costs and benefits of these proposals.

121. In order to provide more efficient and intensive use of the 2 GHz MSS band, we are proposing herein to authorize terrestrial operations under part 27 of the Commission's rules for the AWS-4 band. If we ultimately adopt this proposal, we must consider the disposition of the current ATC regulations and authorizations in this band. We believe that, if we assign part 27 rights pursuant to a license modification under section 316 of the Communications Act, authorizing both terrestrial operations and ATC operations in the 2 GHz MSS band would be redundant and confusing to operators. With changing circumstances in the 2 GHz MSS band, we believe that the ATC regulations would no longer be the best framework for development of terrestrial mobile broadband in this band. Accordingly, we believe that eliminating the ATC rules for this band will best encourage terrestrial broadband deployment in the 2 GHz MSS band. We therefore propose to eliminate the ATC regulations in the 2 GHz MSS band and request comment on this proposal, including associated costs and benefits. In addition, because we are proposing to eliminate the ATC regulations in the 2 GHz band, we propose to delete footnote NG168 from the U.S. Table of Frequency Allocations. We seek comment on this proposal.

122. In thisNotice of Inquiry (NOI),we seek comment on a variation of the band plan proposed above. This alternative approach poses greater complexities with respect to coordination among existing users and any new licensees. However, provided these barriers could be overcome, it could release a greater quantity of usable spectrum into the marketplace, reduce the need for guard bands to protect against harmful interference, and extend the existing PCS and AWS bands. We therefore invite comment on this alternative band plan and its associated coordination and license assignment challenges. Because we do not intend that this Notice of Inquiry should impede the timely implementation of the proposed AWS-4 service, we also invite comment as to whether this alternative band plan could be realized as a subsequent step to that proposal.

123. For purposes of facilitating discussion, and to avoid confusion with the foregoing AWS-4 proposal, we refer to this alternative as the “2 GHz Extension Band Concept.” The concept incorporates the NTIA proposal to reallocate the 1695-1710 MHz band from Federal to commercial use. It also builds upon the record generated in the Spectrum Task Force's comprehensive examination of opportunities to make additional spectrum available for mobile broadband use in the 2 GHz band.

124. Several assumptions inform the 2 GHz Extension Band Concept:

• The proposed “fast track” reallocation band (1695-1710 MHz) could become an extension to the existing AWS uplink band, although without a readily-available downlink pairing candidate.

• Together, AWS-3 and the upper portion of the AWS-2 J block (2155-2170 MHz) could become an extension to the existing AWS downlink band.

• The existing MSS downlink band (2180-2200 MHz) could further extend the existing AWS downlink band.

• The existing MSS uplink band requires separation from the PCS downlink band to prevent uplink/downlink interference issues between the MSS band and broadband PCS spectrum. This “zoning issue” currently hinders use of the upper portion of the AWS-2 H block (1995-2000 MHz), as well as a portion of the MSS uplink band itself (e.g.,2000-2010 MHz).

• Extension of existing bands (i.e.,PCS and AWS) may enable greater economies of scale—and therefore lower costs, increased interoperability, and greater technology availability—as compared to the creation of an all-new terrestrial band (i.e.,AWS-4).

125. The 2 GHz Extension Band Concept would involve the creation of two new blocks of spectrum, PCS-Extension and AWS-Extension, totaling 65 megahertz of usable bandwidth. A 35 megahertz AWS-Extension block would consist of the existing MSS downlink band at 2180-2200 MHz paired on the uplink with the NTIA fast track band at 1695-1710 MHz. A 30 megahertz PCS-Extension block (which could be subdivided into smaller blocks) would consist of the existing MSS uplink band at 2000-2020 MHz, combined with the lower portion of the AWS-2 J block at 2020-2025 MHz and the upper portion of the AWS-2 H block at 1995-2000 MHz, all of which would be converted to downlink use. We note that the AWS-Extension would abut the 2155-2180 MHz frequencies (AWS-3 and the upper portion of AWS-2 J block) and would not affect their disposition from a licensing and auction perspective. Weseek comment on the technical viability and the economic costs and benefits of this 2 GHz Extension Band Concept as presented or with modifications as commenters deem appropriate.

126. The 2 GHz Extension Band Concept would necessitate severing the existing 2000-2020 MHz pairing from 2180-2200 MHz, spectrum for which there is an existing licensee. It may be appropriate, therefore, to consider moving that existing licensee from its currently assigned uplink spectrum in the 2000-2020 MHz band to 1695-1710 MHz. The resulting license would contain paired terrestrial spectrum of 1695-1710 MHz and 2180-2200 MHz. This would, however, likely result in the 2 GHz MSS licensee forgoing the mobile uplink portion of its existing satellite spectrum and thus converting its satellite spectrum to a one-way, satellite transmit, system (or needing to launch another satellite to provide MSS using 1695-1710 MHz (depending in part, on how the 1695-1710 MHz band is allocated)). We seek comment on this aspect of the Concept and the costs and benefits of this Concept on competition, innovation, and investment.

127. On June 28, 2010, a Presidential Memorandum was issued directing the Department of Commerce, working with the Commission, to identify and make available 500 megahertz of spectrum over the next ten years for expanded wireless broadband use. Memorandum for the Heads of Executive Departments and Agencies, Unleashing the Wireless Broadband Revolution, 75 FR 38387 (Jul. 1, 2010). NTIA performed a technical study and determined that the 1695-1710 megahertz band, with a limited number of exclusion zones to protect Federal meteorological satellite receive Earth stations, could be made available for wireless broadband.SeeAn Assessment of the Near-Term Viability of Accomodating Wireless Broadband Systems in the 1675-1710 MHz, 1755-1780 MHz, 3500-3650MHz, and 4200-4220 MHz, 4380-4400 MHz Bands, U.S. Department of Commerce, 3-1 to 3-25, 5-1 to 5-2, and H-1 to H-5 (October 2010);see alsoSpectrum Task Force Requests Information on Frequency Bands Indentified By NTIA As Potential Broadband Spectrum, ET Docket No. 10-123,Public Notice,24 FCC Rcd 3486 (2011). The 1695-1710 megahertz band has incumbent Federal and non-Federal users. We observe that the Middle Class Tax Relief and Job Creation Act of 2012 requires (1) that the Administration, within three years, “begin the process of withdrawing or modifying the assignment” to Federal stations operating within 15 megahertz between 1675 and 1710 MHz, Middle Class Tax Relief and Job Creation Act of 2012, Pub. L. 112-96, section 6401(a)(1)(A) and (2) that the Secretary of Commerce, within one year, “submit to the President a report identifying 15 megahertz of spectrum between 1675 megahertz and 1710 megahertz for reallocation from Federal use to non-Federal use.”SeeMiddle Class Tax Relief and Job Creation Act of 2012, Pub. L. 112-96, section 6401(a)(3). We seek comment on how incumbent users might affect implementation of the 2 GHz Extension Band Concept and what steps, if any, might be taken to expedite availability of the band.

128. The 30 megahertz PCS-Extension block would be unpaired downlink spectrum. We seek comment on whether this spectrum could be paired with a matching uplink block. We also seek comment on the utility of licensing the spectrum as an unpaired downlink block. Commenters should discuss and quantify the costs and benefits for any approaches.

129. We seek comment on assignment procedures that could effectuate the 2 GHz Extension Band Concept. One possibility, as was suggested in the2 GHz Public Notice,might be to conduct an incentive auction for the MSS uplink band. However, the recently enacted Middle Class Tax Relief and Job Creation Act of 2012 appears to require that a reverse auction for spectrum (the first step in an incentive auction) involve at least two “competing licensees”, whereas, following theDISH Transfer Orderthere is only one licensee in the 2 GHz MSS band. New DBSD Satellite Service G.P., Debtor-in-Possession, and TerreStar Licensee Inc., Debtor-In-Possession, Request for Rule Waivers and Modified Ancillary Terrestrial Component Authority, IB Docket Nos. 11-149, 11-150,Order,DA 12-332 (Mar. 2, 2012) (DISH Transfer Order). We seek comment on whether an incentive auction could be used to effectuate the 2 GHz Extension Band Concept.

130. Another possibility might be to relocate the existing MSS uplink into the 1695-1710 MHz band and to auction the resulting PCS-Extension band. Would an auction of 30 megahertz of downlink spectrum in an extended PCS band create more value than an auction of 15 megahertz of uplink spectrum adjacent in an extended AWS band? Commenters should quantify the value of this proposal. We note that the Middle Class Tax Relief and Job Creation Act of 2012 mandates an auction of 15 megahertz of spectrum in the 1675-1710 MHz band (to be identified by NTIA within one year). Middle Class Tax Relief and Job Creation Act of 2012, Pub. L. 112-96, section 6401. Does this provision preclude implementation of a “swap” with the 2 GHz MSS licensee?

131. Alternatively, we seek comment on any other assignment or license modification approaches to enabling the 2 GHz Extension Band Concept. Could the Commission implement the Concept as a section 316 license modification or pursuant to section 309 or other existing assignment authority?

132. Finally, were the Commission to implement the 2 GHz Extension Band Concept, it would result in leaving a single five megahertz block of former AWS-2 spectrum unpaired and unassigned—the AWS-2 lower H block at 1915-1920 MHz. We seek comment on the disposition of this spectrum block under this scenario. We observe that the Middle Class Tax Relief and Job Creation Act of 2012 requires the Commission to allocate this spectrum for commercial use and grant flexible use licenses through a system of competitive bidding unless the Commission determines that this spectrum band “cannot be used without causing harmful interference to commercial mobile service licensees in the frequencies between 1930 megahertz and 1995 megahertz.” Middle Class Tax Relief and Job Creation Act of 2012, Pub. L. 112-96, sections 6401(b)(2)(A), (b)(4). We seek comment on whether we would need to auction the AWS-2 lower H block or whether its use as a licensed band would lead to harmful interference in the upper PCS band. We observe that the record in response to the AWS-2 NPRM indicated raised concerns about harmful interference between the AWS-2 lower H block and the PCS band. Should the Commission conclude that the band “cannot be used without causing harmful interference,” the statute prohibits us from “allocate[ing] such band for commercial use * * * or * * * grant[ing] licenses * * * for the use of such band.” Middle Class Tax Relief and Job Creation Act of 2012, Pub. L. 112-96, sections 6401(b)(2)(A), (b)(4). In such an instance, we seek comment on whether the Commission should convert the 1915-1920 MHz band to unlicensed use, perhaps by adding it to the existing UPCS band. Unlicensed use, among other things, might provide additional capacity for devices using the ETSI DECT standard, including cordless phones and wireless microphones. What would be the most effective and efficient use of the “orphaned” five megahertz block? Commenters should discuss and quantify the costs and benefits of alternative proposals for the AWS-2 lower H block.

133. The proceedings thisAWS-4 Notice and NOIinitiate shall be treated as a “permit-but-disclose” proceeding in accordance with the Commission'sex parterules. Persons makingex partepresentations must file a copy of any written presentation or a memorandum summarizing any oral presentation within two business days after the presentation (unless a different deadline applicable to the Sunshine period applies). Persons making oralex partepresentations are reminded that memoranda summarizing the presentation must (1) list all persons attending or otherwise participating in the meeting at which theex partepresentation was made, and (2) summarize all data presented and arguments made during the presentation. If the presentation consisted in whole or in part of the presentation of data or arguments already reflected in the presenter's written comments, memoranda or other filings in the proceeding, the presenter may provide citations to such data or arguments in his or her prior comments, memoranda, or other filings (specifying the relevant page and/or paragraph numbers where such data or arguments can be found) in lieu of summarizing them in the memorandum. Documents shown or given to Commission staff duringex partemeetings are deemed to be writtenex partepresentations and must be filed consistent with rule § 1.1206(b). In proceedings governed by rule § 1.49(f) or for which the Commission has made available a method of electronic filing, writtenex partepresentations and memoranda summarizing oralex partepresentations, and all attachments thereto, must be filed through the electronic comment filing system available for that proceeding, and must be filed in their native format (e.g.,.doc, .xml, .ppt, searchable .pdf). Participants in this proceeding should familiarize themselves with the Commission'sex parterules.

134. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), the Commission has prepared this present Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on a substantial number of small entities by the policies and rules proposed in thisNotice of Proposed Rulemaking and Notice of Inquiry (NPRM and NOI). Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines specified in theNPRM and NOIfor comments. The Commission will send a copy of theNPRM and NOI,including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (SBA). In addition, theNPRM and NOIand IRFA (or summaries thereof) will be published in theFederal Register.

135. The rapid adoption of smartphones and tablet computers, combined with deployment of high-speed 3G and 4G technologies, is driving more intensive use of America's mobile networks. This explosive growth is creating an urgent need for more network capacity and, in turn, for suitable spectrum. Responding to this demand for additional spectrum, the National Broadband Plan recommended the Commission undertake to make 500 megahertz of spectrum available for broadband use within ten years. The National Broadband Plan also recommended that 300 megahertz of this spectrum should be made available for mobile use within five years. The Commission has launched several proceedings to facilitate bringing spectrum suitable for wireless broadband to the commercial marketplace. More recently, Congress passed the Middle Class Tax Relief and Job Creation Act of 2012, which grants the Commission new authority to conduct “voluntary incentive auctions,” a key pillar of the National Broadband Plan's roadmap to bring more spectrum online for broadband.

136. In thisNPRM and NOI,we seek to increase the nation's supply of spectrum for mobile broadband by removing unnecessary barriers to flexible use of spectrum currently assigned to the Mobile Satellite Service (MSS) in the 2 GHz band. ThisNPRM and NOIdirectly follows on the 2 GHz Band Co-Allocation Order, in which the Commission laid the predicate for full terrestrial use of the 2 GHz MSS band. In proposing terrestrial service rules for the band, which include technical rules to protect against harmful interference, licensing rules to establish geographic license areas and spectrum block sizes, and performance requirements to promote robust buildout, we advance toward enabling widespread deployment in the band. We do so by proposing service, technical, assignment, and licensing rules for this spectrum that generally follow the Commission's part 27 rules that generally govern flexible use terrestrial wireless service. These proposals are designed to provide for flexible use of this spectrum by allowing licensees to choose their type of service offerings, to encourage innovation and investment in mobile broadband use in this spectrum, and to provide a stable regulatory environment in which broadband deployment would be able to develop through the application of standard terrestrial wireless rules. Additionally, the Notice of Inquiry seeks input on potential ways to free up additional valuable spectrum to address the Nation's growing demand for mobile broadband spectrum.

137. The proposed action is authorized pursuant to sections 1, 2, 4(i), 201, 301, 302, 303, 307, 308, 309, 310, 316, 319, 324, 332 and 333 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i), 201, 301, 302, 303, 307, 308, 309, 310, 316, 319, 324, 332, and 333.

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

139.Small Businesses, Small Organizations, and Small Governmental Jurisdictions.Our action may, over time, affect small entities that are not easily categorized at present. We therefore describe here, at the outset, three comprehensive, statutory small entity size standards. First, nationwide, there are a total of approximately 27.5 million small businesses, according to the SBA. In addition, a “small organization” is generally “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.” Nationwide, as of 2007, there were approximately 1,621,315 small organizations. Finally, the term “small governmental jurisdiction” is defined generally as “governments of cities, towns, townships, villages, school districts, or special districts, with apopulation of less than fifty thousand.” Census Bureau data for 2011 indicate that there were 89,476 local governmental jurisdictions in the United States. We estimate that, of this total, as many as 88,506 entities may qualify as “small governmental jurisdictions.” Thus, we estimate that most governmental jurisdictions are small.

140.Satellite Telecommunications and All Other Telecommunications.Two economic census categories address the satellite industry. The first category has a small business size standard of $15 million or less in average annual receipts, under SBA rules. The second has a size standard of $25 million or less in annual receipts.

141. The category of Satellite Telecommunications “comprises establishments primarily engaged in providing telecommunications services to other establishments in the telecommunications and broadcasting industries by forwarding and receiving communications signals via a system of satellites or reselling satellite telecommunications.” Census Bureau data for 2007 show that 512 Satellite Telecommunications firms operated for that entire year. Of this total, 464 firms had annual receipts of under $10 million, and 18 firms had receipts of $10 million to $24,999,999. Consequently, the Commission estimates that the majority of Satellite Telecommunications firms are small entities that might be affected by our action.

142. The second category,i.e.,“All Other Telecommunications,” comprises “establishments primarily engaged in providing specialized telecommunications services, such as satellite tracking, communications telemetry, and radar station operation. This industry also includes establishments primarily engaged in providing satellite terminal stations and associated facilities connected with one or more terrestrial systems and capable of transmitting telecommunications to, and receiving telecommunications from, satellite systems. Establishments providing Internet services or voice over Internet protocol (VoIP) services via client-supplied telecommunications connections are also included in this industry.” For this category, Census Bureau data for 2007 show that there were a total of 2,383 firms that operated for the entire year. Of this total, 2,347 firms had annual receipts of under $25 million and 12 firms had annual receipts of $25 million to $49,999,999. Consequently, the Commission estimates that the majority of All Other Telecommunications firms are small entities that might be affected by our action.

143.Satellite Telecommunications/Mobile Satellite Service Licensees.Neither the Commission nor the U.S. Small Business Administration has developed a small business size standard specifically for mobile satellite service licensees. The appropriate size standard is therefore the SBA standard for Satellite Telecommunications, which provides that such entities are small if they have $15 million or less in annual revenues. This industry comprises establishments primarily engaged in providing telecommunications services to other establishments in the telecommunications and broadcasting industries by forwarding and receiving communications signals via a system of satellites or reselling satellite telecommunications. Currently, the Commission's records show that there are 31 entities authorized to provide voice and data MSS in the United States. The Commission does not have sufficient information to determine which, if any, of these parties are small entities. The Commission notes that small businesses are not likely to have the financial ability to become MSS system operators because of high implementation costs, including construction of satellite space stations and rocket launch, associated with satellite systems and services.

144. However, the U.S. Census publishes data about Satellite Telecommunications generally, and this data may well be relevant to the estimate of the number of voice and data MSS. Census data for 2007 indicate that 512 satellite telecommunications firms operated during that year. Of that 512, 290 received annual receipts of $10.0 million or less. Eighteen firms received annual receipts of between $10.0 million and $24,999,999 and 30 received annual receipts of $25.0 million or more. Since the Census data does not distinguish between MSS and other types of satellite communications companies, it cannot be known precisely, based on Census data, how many of the 31 authorized MSS firms are small. However, since the majority of all satellite telecommunications companies were small under the applicable standard, a limited inference is possible that some of the 31 MSS firms are small. Since it is possible that some MSS companies are small entities affected by this Notice of Proposed Rulemaking and Notice of Inquiry, we therefore include them in this section of the IFRFA.

145.Wireless Telecommunications Carriers (except satellite).TheNPRM and NOIproposes to apply various Commission policies and rules to terrestrial service in the MSS bands. We cannot predict who may in the future become a licensee or lease spectrum for terrestrial use in these bands. In general, any wireless telecommunications provider would be eligible to become an Advanced Wireless Service licensee or lease spectrum from the MSS or AWS licensees. This industry comprises establishments engaged in operating and maintaining switching and transmission facilities to provide communications via the airwaves. Establishments in this industry have spectrum licenses and provide services using that spectrum, such as cellular phone services, paging services, wireless Internet access, and wireless video services. The appropriate size standard under SBA rules is for the category Wireless Telecommunications Carriers. The size standard for that category is that a business is small if it has 1,500 or fewer employees. Under the present and prior categories, the SBA has deemed a wireless business to be small if it has 1,500 or fewer employees. For this category, census data for 2007 show that there were 1,383 firms that operated for the entire year. Of this total, 1,368 firms had employment of 999 or fewer employees and 15 had employment of 1000 employees or more. Similarly, according to Commission data, 413 carriers reported that they were engaged in the provision of wireless telephony, including cellular service, Personal Communications Service (PCS), and Specialized Mobile Radio (SMR) Telephony services. Of these, an estimated 261 have 1,500 or fewer employees and 152 have more than 1,500 employees. Consequently, the Commission estimates that approximately half or more of these firms can be considered small. Thus, using available data, we estimate that the majority of wireless firms can be considered small.

146. The projected reporting, recordkeeping, and other compliance requirements resulting from theNPRMwill apply to all entities in the same manner. The Commission believes that applying the same rules equally to all entities in this context promotes fairness. The Commission does not believe that the costs and/or administrative burdens associated with the rules will unduly burden small entities. The revisions the Commission adopts should benefit small entities by giving them more information, moreflexibility, and more options for gaining access to valuable wireless spectrum.

147. Applicants for AWS-4 licenses will be required to file license applications using the Commission's automated Universal Licensing System (ULS). ULS is an online electronic filing system that also serves as a powerful information tool that enables potential licensees to research applications, licenses, and antennae structures. It also keeps the public informed with weekly public notices, FCC rulemakings, processing utilities, and a telecommunications glossary. AWS-4 licensees must submit long-form license applications through ULS using Form 601, FCC Ownership Disclosure Information for the Wireless Telecommunications Services using FCC Form 602, and other appropriate forms.

148. The RFA requires an agency to describe any significant, specifically small business, alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): “(1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance and reporting requirements under the rule for such small entities; (3) the use of performance rather than design standards; and (4) an exemption from coverage of the rule, or any part thereof, for such small entities.”

149. The proposal to license the AWS-4 bands under Economic Areas (EA) geographic size licenses will provide regulatory parity with other AWS bands that are licensed on an EA basis, such as AWS-1 licenses. Additionally, assigning AWS-4 in EA geographic areas would allow AWS-4 licensees to make adjustments to suit their individual needs. EA license areas are small enough to provide spectrum access opportunities for smaller carriers. EA license areas also nest within and may be aggregated up to larger license areas that have been used by the Commission for other services, such as Major Economic Areas (MEAs) and Regional Economic Area Groupings (REAGs) for those seeking to create larger service areas. Depending on the licensing mechanism we adopt, licensees may adjust their geographic coverage through auction or through secondary markets. This proposal should enable AWS-4 providers, or any entities, whether large or small, providing service in other AWS bands to more easily adjust their spectrum to build their networks pursuant to individual business plans.

150. ThisNPRM and NOImakes several proposals to protect entities operating in nearby spectrum bands from harmful interference, which may include small entities. The technical rules proposed in section III.B of theNPRM and NOIare based on the rules for AWS-1 spectrum, with specific additions or modifications designed to protect broadband PCS services operating in the 1930-1995 MHz band, as well as future services operating in the 2020-2025 MHz band, and to protect Federal operations in the 2200-2290 MHz band from harmful interference from AWS-4 base stations. The technical analyses contained in the section III.B of theNPRM and NOIalso proposes that no additional rule modifications to protect other spectrum bands are necessary, which may help minimize the impact on any small entities—both existing and potential small entities that may seek to provide services using AWS-4 spectrum—by streamlining regulations for operations in these spectrum bands.

151. TheNPRM and NOIproposals pertaining to how AWS-4 licenses will be assigned includes a focus on the cost and benefits such proposals would have on innovation, investment, and competition. While recognizing the 2 GHz MSS license holder's existing rights, theNPRM and NOIproposes to grant terrestrial authority to operate in the AWS-4 band to the current 2 GHz MSS licensee pursuant to a license modification. TheNPRM and NOIfurther proposes that in certain alternative scenarios the Commission would allow the filing of applications for the terrestrial rights to the 2000-2020 MHz and 2180-2200 MHz band. In the event mutually exclusive applications were accepted, the Commission would use competitive bidding to assign terrestrial rights, as required by section 309(j) of the Communications Act of 1934, as amended. To assist small entities in competitive bidding, theNPRM and NOIproposes to employ part 1 rules such as governing competitive bidding design, designated entity preferences, and unjust enrichment. Furthermore, theNPRM and NOIproposes to assign exclusive geographic area licenses for terrestrial use of the AWS-4 band, and that this spectrum would be used for purposes similar to those for which the AWS-1 band is used. As such, theNPRM and NOIproposes to establish small business size standards and bidding credits that were adopted in the AWS-1 band. Specifically, theNPRM and NOIproposes to define a small business as an entity with average annual gross revenues for the preceding three years not exceeding $40 million, and a very small business as an entity with average gross revenues for the proceeding three years not exceeding $15 million. Additionally, theNPRM and NOIproposes bidding credits for both small and very small businesses, as set forth in the standardized schedule in part 1 of the Commission's rules. Providing small businesses and very small businesses with bidding credits may help such entities acquire spectrum. In addition, included in theNPRM and NOIis a proposal that, in the event a licensee's authority to operate terminates, terrestrial spectrum rights would become available for reassignment of any AWS-4 spectrum through the competitive bidding process. We believe these proposals will provide an economic benefit to small entities by making it easier for small entities to acquire spectrum or access to spectrum in these bands.

152. TheNPRM and NOIalso proposes to provide AWS-4 licensees with the flexibility to provide any fixed or mobile service that is consistent with the allocations for this spectrum, which is consistent with other spectrum allocated or designated for licensed fixed and mobile services,e.g.,AWS-1. TheNPRM and NOIfurther proposes to license this spectrum under the Commission's market-oriented part 27 rules. These proposals include applying the Commission's secondary market policies and rules to all transactions involving the use of AWS-4 bands for terrestrial services, which will provide greater predictability and regulatory parity with bands licensed for terrestrial mobile broadband service. This proposal should make it easier for AWS-4 providers to enter secondary market arrangements involving terrestrial use of their spectrum. The secondary market rules apply equally to all entities, whether small or large. As a result, we believe that this proposal will provide an economic benefit to small entities by making it easier for entities, whether large or small, to enter into secondary market arrangements for AWS-4 spectrum.

153. None.

154. Accordingly, it is ordered, pursuant to sections 1, 2, 4(i), 201, 301,302, 303, 307, 308, 309, 310, 316, 319, 324, 332 and 333 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i), 201, 301, 302, 303, 307, 308, 309, 310, 316, 319, 324, 332, and 333 that thisNotice of Proposed Rulemaking and Notice of Inquiryare hereby adopted.

155. It is further ordered that notice is hereby given of the proposed regulatory changes described in theAWS-4 Notice,and that comment is sought on these proposals.

156. It is further ordered that the Initial Regulatory Flexibility Analysis is adopted.

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

For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR parts 1, 2, 25, 27, and 101 as follows:

Background

This request for information is not part of any rulemaking action, but is issued to assist us in determining the most appropriate course of action on a petition we received to list 83 species of coral in the Caribbean and Indo-Pacific as threatened or endangered under the ESA. On February 10, 2010, we published a 90-day finding on the petition in theFederal Register, concluding that the petition presented substantial scientific or commercial information indicating that listing may be warranted for 82 of the 83 petitioned species (75 FR 6616). The 90-day finding was followed by a public comment period, during which we received approximately 400 public comments.

We also established a Biological Review Team (BRT) composed of Federal scientists to examine the status of the 82 coral species in question and evaluate, based on the best available scientific information, the extinction risk for each species. The BRT was not charged with making recommendations for listing. In September 2011, after being peer-reviewed by the Center for Independent Experts, we finalized the Status Review Report, which is a technical document approximately 450 pages in length (excluding references). Separately, NMFS' Pacific Islands and Southeast Regional offices drafted a Management Report (approximately 130 pages, excluding references and an appendix) to evaluate management activities affecting coral species across their range, including existing regulatory mechanisms and conservation efforts. Together, these two reports constitute the best available scientific and commercial information that we have compiled to date on the 82 species of coral under review.

On September 27, 2011, CBD sued us challenging our failure to make a 12-month finding as to the 82 coral species. Shortly thereafter, we entered into a stipulated settlement agreement with CBD in which we agreed to submit our 12-month finding to theFederal Registerfor publication on or before April 15, 2012. The U.S. District Court for the Northern District of California (court) entered this stipulated settlement agreement on November 8, 2011. Subsequent discussions between CBD and us resulted in the court modifying the deadline to require us to submit our 12-month finding to theFederal Registeron or before December 1, 2012. The court also ordered that we publish the Status Review Report and draft Management Report for public comment on or before April 15, 2012.

The response to the petition to list 83 coral species is one of the most complex listing processes we have ever undertaken. Given the petition's scale and the precedential nature of the issues, we have determined that our decision-making process would bestrengthened if we take additional time to allow the public, non-federal experts, non-governmental organizations, state and territorial governments, and academics to review and provide information related to the Status Review Report and draft Management Report prior to issuing our 12-month finding. We will hold listening sessions and scientific workshops in the Southeast region and Pacific Islands region and will then consider the information gathered through these venues and through written submissions to inform our 12-month finding and, if appropriate, a proposed listing rule.

We expect that this outreach effort will allow the public to understand more clearly the context in which this petition is being evaluated and the basis and rationale supporting our 12-month finding. We also expect this process will ensure that any additional relevant scientific information available is brought to our attention. This document is not part of the usual rulemaking process and is unique to NMFS' response to the petition to list 83 coral species. Thus, the additional outreach conducted in this case does not establish precedent for any other ESA-listing process.

We are particularly interested in receiving information on the following:

(1) Relevant scientific information collected or produced since the completion of the Status Review Report (2011) or any relevant scientific information not included in the Report; and

(2) Relevant management information not included in the draft Management Report, such as descriptions of regulatory mechanisms for greenhouse gas emissions globally, and for local threats in the 83 foreign countries and the U.S. (Florida, Hawaii, Puerto Rico, U.S. Virgin Islands, Guam, American Samoa, and Northern Mariana Islands), where the 82 coral species collectively occur.

Although this action is not a rulemaking, we will accept information received in response to this solicitation and will take such information into account, along with the information received on the 90-day finding (75 FR 6616; February 10, 2010), when we make our 12-month finding on whether CBD's petitioned action is warranted. If you have submitted information during the previous comment period, there is no need to re-submit it. We request that all information submitted be accompanied by supporting documentation such as maps, bibliographic references, or reprints of pertinent publications. If possible, comments should include the heading of the relevant section of the Status Review Report or draft Management Report. Please submit any information to theADDRESSESlisted above.

In addition to soliciting input from the public on the Status Review Report and draft Management Report, we will hold one public listening session and one scientific workshop in each of the two relevant regions: the Southeast and Pacific Islands, during which we will explain the evaluation process and the public and experts will have opportunity to provide any additional relevant information on this matter. Dates, times, and locations of these meetings will be announced in a subsequentFederal Registerdocument and on our Web site at:http://www.nmfs.noaa.gov/stories/2012/04/4_13_12corals_petition.html.

We have not yet published a proposed listing rule for the 82 coral species. Therefore, we cannot consider comments on whether a determination should be made as to whether some or all of the petitioned corals are an endangered or threatened species. The ESA also prohibits us from taking economic or social impacts into consideration in any listing decisions. Accordingly, we cannot consider comments on these matters.

Under the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), the United States has exclusive fishery management authority over all living marine resources found within the exclusive economic zone. The management of these marine resources, with the exception of certain marine mammals and birds, is vested in the Secretary of Commerce. The Council has the responsibility to prepare fishery management plans for those marine resources off Alaska requiring conservation and management. Management of the Federal groundfish fishery in the BSAI is carried out under the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area (FMP). The FMP, its amendments, and implementing regulations (found at 50 CFR part 679) are developed in accordance with the requirements of the Magnuson-Stevens Act and other applicable Federal laws and executive orders, notably the National Environmental Policy Act (NEPA) and the ESA.

Steller sea lion protection measures have been used to manage the groundfish fisheries since 1999 (64 FR 3437, January 22, 1999) and have been annually revised in 2000 through 2004. Details of these rules are available at the NMFS Alaska Region Web site athttp://www.alaskafisheries.noaa.gov/sustainablefisheries/sslpm/. The protection measures have been used to mitigate the potential adverse effects of the groundfish fisheries on Steller sea lions and on their designated critical habitat. Steller sea lions may be incidentally taken in fishing gear, may be disturbed by fishing activities, and may compete with groundfish fisheries for important prey species. Atka mackerel, Pacific cod, and pollock are important Steller sea lion prey species that also are harvested in the groundfish fisheries. The protection measures temporally and spatially disperse Atka mackerel, Pacific cod, and pollock harvest to reduce potential impacts from the groundfish fisheries on Steller sea lions and on their designated critical habitat. Spatial protection measures include closures of areas to groundfish fishing near Steller sea lion haulouts and rookeries, and in foraging areas, to reduce potential interactions with Steller sea lions and fishing vessels and to reduce potential impacts on prey resources in locations important to Steller sea lions. Harvest of pollock, Pacific cod, and Atka mackerel also is temporally dispersed through seasonal apportionments of the annual total allowable catch for these species. The details of the current Steller sea lion protection measures for the Alaska groundfish fisheries are available on the NMFS Alaska Region Web site athttp://www.alaskafisheries.noaa.gov/sustainablefisheries/sslpm/.

In 2010, NMFS completed an ESA section 7 consultation on the effects of the Alaska groundfish fisheries on ESA-listed species, including the western DPS of Steller sea lions, and on designated critical habitat. Based on the best available commercial and scientific information, the consultation resulted in a biological opinion (2010 Biop) that found that the Steller sea lion protection measures implemented in the BSAI since 2003 could not ensure that the groundfish fisheries were not likely to result in JAM for the western DPS of Steller sea lions. A reasonable and prudent alternative (RPA) to the protection measures was included in the 2010 Biop to ensure the groundfish fisheries were not likely to result in JAM. This RPA was implemented by an interim final rule as the 2011 Steller sea lion protection measures (75 FR 77535, December 13, 2010, corrected 75 FR 81921, December 29, 2010).

The 2011 Steller sea lion protection measures primarily affected the Pacific cod and Atka mackerel fisheries in the Aleutian Islands subarea and were in addition to previous measures adopted since 2004. The 2010 Biop determined that the weight of evidence indicated that fisheries may remove prey species important to Steller sea lions, which may affect the reproduction and numbers of Steller sea lions and adversely modify the conservation value of their critical habitat in Statistical Areas 543, 542, and 541. Competition with fisheries for prey is likely one component of an intricate suite of natural and anthropogenic factors affecting Steller sea lion numbers and reproduction. While natural factors may be contributing, NMFS must ensure that actions authorized by NMFS are not likely to appreciably reduce the likelihood of survival and recovery of the western DPS of Steller sea lions, which is required to avoid the likelihood of JAM.

The RPA was developed based on performance standards that address the effects of the groundfish fisheries—and the population status and foraging behavior of Steller sea lions—in the Aleutian Islands subarea. The details of these standards are in the 2010 Biop (seeADDRESSES). The RPA was structured to mitigate effects of the fishery in locations where Steller sea lion abundance continues to decline (Statistical Areas 543, 542, and 541). One of the performance standards requires that the protection measures be commensurate with the rate of Steller sea lion population declines, with more stringent measures in those locations with greater population declines. The RPA meets this standard by applying more fisheries restrictions in Area 543, where Steller sea lions have the highest population decline, and applying fewer fisheries restrictions in Areas 542 and 541, where Steller sea lion population decline is less than in Area 543.Implementation of the RPA is expected to minimize local competition between Steller sea lions and the Atka mackerel and Pacific cod fisheries in Area 543. This is intended to improve foraging success and prey availability for juvenile and adult Steller sea lions, which is expected to lead to higher survival and natality rates. The RPA also reduces the competitive overlap between Steller sea lions and fisheries for Atka mackerel and Pacific cod in Areas 542 and 541. This is intended to improve foraging success and prey availability for Steller sea lions, particularly adult females with dependent young in winter, which is expected to lead to higher natality rates and survival.

On March 5, 2012, NMFS was ordered by the U.S. District Court of Alaska to prepare an EIS on the Steller sea lion protection measures implemented in January 2011 (75 FR 77535, December 13, 2010, corrected 75 FR 81921, December 29, 2010). The Court's decision and order for this action are available on the NMFS Alaska Region Web site athttp://alaskafisheries.noaa.gov/sustainablefisheries/sslpm/eis/.The Court ordered NMFS to prepare an EIS for the Steller sea lion protection measures because NMFS failed to provide sufficient environmental information for informed public comment to the agency decision-making and failed to provide for adequate public participation when it prepared the environmental assessment for this action in 2010 (seeADDRESSES). Two areas identified by the Court as scientifically controversial were the use of single species rather than multispecies models for groundfish fisheries stock assessments and the effects of the groundfish fisheries on the availability of Steller sea lion prey resources.

The Court ordered the completion of the final EIS by March 2, 2014. The Court also ordered that any subsequent rulemaking for the BSAI groundfish fisheries as a result of the EIS must be completed by January 1, 2015.

The proposed action is a set of protection measures that would ensure groundfish fishing in the BSAI is not likely to result in JAM for the western DPS of Steller sea lions. Spatial and temporal dispersion of the harvest of Steller sea lion prey species would be included in the protection measures to reduce potential adverse impacts. The protection measures should ensure the groundfish fisheries are not likely to result in JAM while minimizing economic impact on fishery participants to the extent practicable.

The EIS will evaluate a range of alternative management measures for the BSAI groundfish fisheries with focus on the Aleutian Islands groundfish fisheries management. Alternatives may be developed based on the elements identified here, and those developed through the public scoping and Council processes. Possible alternatives could be constructed from one or more of the following alternatives, and public suggestions on the specific features for these alternatives are requested:

1. The status quo alternative to continue implementation of the 2011 Steller sea lion protection measures and management of the groundfish fisheries under the FMP.

2. An alternative recommended by the Council that is intended to maintain protection of Steller sea lions while reducing fishing restrictions imposed by the 2011 Steller sea lion protection measures, particularly for the Pacific cod and Atka mackerel fisheries in the Aleutian Islands subarea.

3. An alternative that provides precautionary, additional protection to Steller sea lions in the Aleutian Islands beyond those provided by the 2011 Steller sea lion protection measures.

4. An alternative that changes the 2011 Steller sea lion protection measures based on information since development of the 2010 biological opinion, and may be more or less restrictive than status quo.

The Council will recommend alternatives for analysis in the EIS. The Council's Steller Sea Lion Mitigation Committee may review the latest scientific information regarding the biology of Steller sea lions and fisheries interaction, and may develop alternative Steller sea lion protection measures for the Aleutian Islands groundfish fisheries for the Council's consideration. NMFS may develop additional alternatives to ensure that a reasonable range of alternatives is analyzed and that its responsibilities under the Magnuson-Stevens Act, the ESA, and other applicable law are met.

A principal objective of the scoping and public input process is to identify potentially significant impacts to the human environment that should be analyzed in the EIS. The analysis will evaluate the impacts of the alternatives for all resources, species, and issues that may be directly or indirectly affected by the Steller sea lion protection measures for the BSAI groundfish fisheries. The following components of the biological and physical environment may be evaluated: (1) Target and non-target fish stocks, forage fish, and prohibited species (including Pacific halibut, Pacific salmon, and crab); (2) species listed under the ESA and their critical habitat; (3) seabirds; (4) marine mammals; (5) habitat; and (6) the ecosystem. The target species analysis would include examination of the use of single species and multispecies stock assessment models. The latest information regarding interactions between the groundfish fisheries and Steller sea lions for prey resources would be examined in the EIS. The direct, indirect, and cumulative impacts on the environmental components would be based on the environmental assessment prepared for the 2011 Steller sea lion protection measures with revisions based on the alternatives and issues identified in scoping, and the best available information during the development of the EIS.

The baseline used to compare the impacts of the alternatives on the human environment is recommended to be the human environment in the BSAI between 2004 and 2010. This time period represents the condition of the environment before the implementation of the 2011 Steller sea lion protection measures, includes the most complete data set of fisheries catch information, and provides a reasonable time period to compare potential effects of all alternatives, including status quo, which has only been implemented for 1 year. Public review and comments on the baseline for the analysis during the scoping period are welcome.

Social and economic impacts caused by changes to Steller sea lion protection measures also would be considered in terms of the effects on the following groups of individuals: (1) Those who participate in harvesting groundfish (particularly Pacific cod and Atka mackerel in the Aleutian Islands subarea); (2) those who process and market Pacific cod and Atka mackerel and their products; (3) those who consume Pacific cod and Atka mackerel products; (4) those who rely on living marine resources caught in the management area, particularly Pacific cod, Atka mackerel and Steller sea lions; (5) those who benefit from commercial, subsistence, and recreational fisheries and Steller sea lion harvest; and (6) fishing communities, including Adak, AK.

Scoping is an early and open process for determining the scope of issues, alternatives, and impacts to be addressed in an EIS, and for identifying the significant issues related to the proposed action. A principal objective of the scoping and public involvement process is to identify a range of reasonable management alternatives that, with adequate analysis, will delineate critical issues and provide a clear basis for distinguishing among those alternatives and selecting a preferred alternative. Through this notice, NMFS is notifying the public that an EIS and decision-making process for this proposed action have been initiated so that interested or affected people may participate and contribute to the final decision.

NMFS is seeking written public comments on the scope of issues, potential impacts, and alternatives that should be considered for the Steller sea lion protection measures. Written comments will be accepted at the address above (seeADDRESSES). Written comments should be as specific as possible to be the most helpful. Written comments received during the scoping process, including the names and addresses of those submitting them, will be considered part of the public record for this proposal and will be available for public inspection.

The public is invited to participate at the Council and any Steller Sea Lion Mitigation Committee meetings where the latest scientific information regarding Steller sea lions and fisheries interactions with the BSAI groundfish fisheries is reviewed and alternative Steller sea lion protection measures may be developed and evaluated. During the scoping period, and in conjunction with the October 2012 Council meeting, a public meeting will be held where this proposed action and alternatives, issues, and potential impacts will be discussed. The public may participate by submitting written comments or by testifying at these public meetings. Notice of future Council and Steller Sea Lion Mitigation Committee meetings, and any other public meetings where these issues will be discussed, will be published in theFederal Registerand posted on the Internet athttp://alaskafisheries.noaa.gov/sustainablefisheries/sslpm/eis/.Please visit this Web site for more information on this EIS and for guidance on submitting effective public comments.

NMFS will publish a proposed rule in theFederal Registerto restructure the funding and deployment system for observers in the North Pacific groundfish and halibut fisheries via Amendment 86 to the BSAI FMP and Amendment 76 to GOA FMP. Per the requirements of MSA section 313, we will conduct three public hearings to inform interested parties of the proposed regulations and receive written and oral comments.

The proposed rule to implement Amendment 86 to the BSAI FMP and Amendment 76 to the GOA FMP was prepared under the authority of Section 313 of the Magnuson-Stevens Fishery Conservation and Management Act (MSA). MSA section 313 requires NMFS to conduct a public hearing in each state represented on the North Pacific Fishery Management Council (Council) for the purpose of receiving public comment on the proposed regulations. The states represented on the Council are Alaska, Oregon, and Washington.

We will conduct public hearings on the proposed regulations on the specific dates listed below:

• April 17, 2012; Pacific Daylight Time (PDT) 1 p.m. to 4 p.m., Seattle, WA.

• April 19, 2012, PDT 1 p.m. to 4 p.m., Newport, OR.

• May 2, 2012, Alaska Daylight Time 1 p.m. to 4 p.m., Juneau, AK.

The hearing locations are:

• Seattle, WA—NOAA Western Regional Center, Building 9 Auditorium, 7600 Sand Point Way NE., Bldg. 9, Seattle, WA 98115.

• Newport, OR—Hatfield Marine Science Center, Hennings Auditorium, 2030 SE. Marine Science Dr., Newport, OR 97365.

• Juneau, AK—Centennial Hall, Hickel Room, 101 Egan Drive, Juneau, AK 99801.

People wishing to make an oral statement for the record at a public hearing are encouraged to provide a written copy of their statement and present it to us at the hearing. If attendance at the public hearings is large, the time allotted for individual oral statements may be limited. Oral and written statements receive equal consideration. There are no limits on the length of written comments submitted to us.

There is no need to register for these hearings. Please be advised that a valid government-issued photo-identification will be required for entry through building security at the Seattle, WA, hearings.