Pursuant to Marketing Agreement and Order No. 945, as amended (7 CFR part 945), hereinafter referred to as the “Order,” and the applicable provisions of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act,” it is hereby directed that a referendum be conducted to ascertain whether continuance of the Order is favored by the producers. The referendum shall be conducted from April 12 to April 30, 2021, among eligible Irish potato producers in the production area. Only producers that were engaged in the production of Irish potatoes for the fresh market in Idaho, and Malheur County, Oregon, during the period of August 1, 2019, through July 31, 2020, may participate in the continuance referendum.

USDA has determined that continuance referenda are an effective means for determining whether producers favor continuation of marketing order programs. The Order will continue in effect if at least two-thirds of producers voting in the referendum, or producers of at least two-thirds of the volume of Irish potatoes represented in the referendum, favor continuance. In evaluating the merits of continuance versus termination, USDA will not exclusively consider the results of the continuance referendum. USDA will also consider all other relevant information concerning the operation of the Order and the relative benefits and disadvantages to producers, handlers, and consumers in order to determine whether continued operation of the Order would tend to effectuate the declared policy of the Act.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the ballots used in the referendum have been approved by the Office of Management and Budget (OMB) and have been assigned OMB No. 0581-0178—Vegetable and Specialty Crops. It has been estimated that it will take an average of 20 minutes for each of the approximately 450 producers of Irish potatoes grown in Idaho, and Malheur County, Oregon, to cast a ballot. Participation is voluntary. Ballots postmarked after April 30, 2021, will not be included in the vote tabulation.

Gregory A. Breasher and Gary D. Olson of the Northwest Marketing Field Office, Specialty Crops Program, AMS, USDA, are hereby designated as the referendum agents of the Secretary of Agriculture to conduct this referendum. The procedure applicable to the referendum shall be the “Procedure for the Conduct of Referenda in Connection with Marketing Orders for Fruits, Vegetables, and Nuts Pursuant to the Agricultural Marketing Agreement Act of 1937, as Amended” (7 CFR 900.400-900.407).

Ballots will be mailed to all producers of record and may also be obtained from the referendum agents, or from their appointees.

The OCC recognizes the important distinction between issuances that serve to implement acts of Congress (known as “regulations” or legislative rules”) and non-binding supervisory guidance documents. 1 Regulations create binding legal obligations. Supervisory guidance is issued by an agency to “advise the public prospectively of the manner in which the agency proposes to exercise a discretionary power” and does not create binding legal obligations. 2

In recognition of the important distinction between rules and guidance, on September 11, 2018, the agencies issued the Interagency Statement Clarifying the Role of Supervisory Guidance (2018 Statement) to explain the role of supervisory guidance and describe the agencies' approach to supervisory guidance. 3 As noted in the 2018 Statement, the agencies issue various types of supervisory guidance to their respective supervised institutions, including, but not limited to, interagency statements, advisories, bulletins, policy statements, questions and answers, and frequently asked questions. Supervisory guidance outlines the agencies' supervisory expectations or priorities and articulates the agencies' general views regarding practices for a given subject area. Supervisory guidance often provides examples of practices that mitigate risks, or that the agencies generally consider to be consistent with safety-and-soundness standards or other applicable laws and regulations, including those designed to protect consumers. 4 The agencies noted in the 2018 Statement that supervised institutions at times request supervisory guidance and that guidance is important to provide clarity to these institutions, as well as supervisory staff, in a transparent way that helps to ensure consistency in the supervisory approach. 5

The 2018 Statement restated existing law and reaffirmed the agencies' understanding that supervisory guidance does not create binding, enforceable legal obligations. The 2018 Statement reaffirmed that the agencies do not issue supervisory criticisms for “violations” of supervisory guidance and described the appropriate use of supervisory guidance by the agencies. In the 2018 Statement, the agencies also expressed their intention to (1) limit the use of numerical thresholds in guidance; (2) reduce the issuance of multiple supervisory guidance documents on the same topic; (3) continue efforts to make the role of supervisory guidance clear in communications to examiners and supervised institutions; and (4) encourage supervised institutions to discuss their concerns about supervisory guidance with their agency contact.

On November 5, 2018, the OCC, Board, FDIC, and Bureau each received a petition for a rulemaking (Petition), as permitted under the Administrative Procedure Act (APA), 6 requesting that the agencies codify the 2018 Statement. 7 The Petition argued that a rule on guidance is necessary to bind future agency leadership and staff to the 2018 Statement's terms. The Petition also suggested there are ambiguities in the 2018 Statement concerning how supervisory guidance is used in connection with matters requiring attention, matters requiring immediate attention (collectively, MRAs), as well as in connection with other supervisory actions that should be clarified through a rulemaking. Finally, the Petition called for the rulemaking to implement changes in the agencies' standards for issuing MRAs. Specifically, the Petition requested that the agencies limit the role of MRAs to addressing circumstances in which there is a violation of a statute, regulation, or order, or demonstrably unsafe or unsound practices.

On November 5, 2020, the agencies issued a proposed rule (Proposed Rule or Proposal) that would have codified the 2018 Statement, with clarifying changes, as an appendix to proposed rule text. 8 The Proposed Rule would have superseded the 2018 Statement. The rule text would have provided that an amended version of the 2018 Statement is binding on each respective agency.

The Petition expressed support for the 2018 Statement and acknowledged that it addresses many issues of concern for the Petitioners relating to the use of supervisory guidance. The Petition expressed concern, however, that the 2018 Statement's reference to not basing “criticisms” on violations of supervisory guidance has led to confusion about whether MRAs are covered by the 2018 Statement. Accordingly, the agencies proposed to clarify in the Proposed Rule that the term “criticize” includes the issuance of MRAs and other supervisory criticisms, including those communicated through matters requiring board attention, documents of resolution, and supervisory recommendations (collectively, supervisory criticisms). 9 As such, the agencies reiterated that examiners will not base supervisory criticisms on a “violation” of or “non-compliance with” supervisory guidance. 10 The agencies noted that, in some situations, examiners may reference (including in writing) supervisory guidance to provide examples of safe and sound conduct, appropriate consumer protection and risk management practices, and other actions for addressing compliance with laws or regulations. The agencies also reiterated that they will not issue an enforcement action on the basis of a “violation” of or “non-compliance” with supervisory guidance. The Proposed Rule reflected these clarifications. 11

The Petition requested further that these supervisory criticisms should not include “generic” or “conclusory” references to safety and soundness. The agencies agreed that supervisory criticisms should continue to be specific as to practices, operations, financial conditions, or other matters that could have a negative effect on the safety and soundness of the financial institution, could cause consumer harm, or could cause violations of laws, regulations, final agency orders, or other legally enforceable conditions. Accordingly, the agencies included language reflecting this practice in the Proposed Rule.

The Petition also suggested that MRAs, as well as memoranda of understanding, examination downgrades, and any other formal examination mandate or sanction, should be based only on a violation of a statute, regulation, or order, including a “demonstrably unsafe or unsound practice.”  12 As noted in the Proposed Rule, examiners all take steps to identify deficient practices before they rise to violations of law or regulation or before they constitute unsafe or unsound banking practices. The agencies stated that they continue to believe that early identification of deficient practices serves the interest of the public and of supervised institutions. Early identification protects the safety and soundness of banks, promotes consumer protection, and reduces the costs and risk of deterioration of financial condition from deficient practices resulting in violations of laws or regulations, unsafe or unsound conditions, or unsafe or unsound banking practices. The Proposed Rule also noted that the agencies have different supervisory processes, including for issuing supervisory criticisms. For these reasons, the agencies did not propose revisions to their respective supervisory practices relating to supervisory criticisms.

The agencies also noted that the 2018 Statement was intended to focus on the appropriate use of supervisory guidance in the supervisory process, rather than the standards for supervisory criticisms. To address any confusion concerning the scope of the 2018 Statement, the Proposed Rule removed two sentences from the 2018 Statement concerning grounds for “citations” and the handling of deficiencies that do not constitute violations of law. 13

The five agencies received approximately 30 unique comments concerning the Proposed Rule. 14 The OCC discusses below those comments that are potentially relevant to the OCC. 15 Commenters representing trade associations for banking institutions and other businesses, state bankers' associations, individual financial institutions, and one member of Congress expressed general support for the Proposed Rule. These commenters supported codification of the 2018 Statement and the reiteration by the agencies that guidance does not have the force of law and cannot give rise to binding, enforceable legal obligations. One of these commenters stated that the Proposal would serve the interests of consumers and competition by clarifying the law for institutions and potentially removing ambiguities that could deter the development of innovative products that serve consumers and business clients, without uncertainty regarding potential regulatory consequences. These commenters expressed strong support as well for the clarification in the Proposed Rule that the agencies will not criticize, including through the issuance of “matters requiring attention,” a supervised financial institution for a “violation” of, or “non-compliance” with, supervisory guidance.

One commenter agreed with the agencies that supervisory criticisms should not be limited to violation of statutes, regulations, or orders, including a “demonstrable unsafe or unsound practice” and that supervisory guidance remains a beneficial tool to communicate supervisory expectations to the industry. The commenter stated that the proactive identification of supervisory criticism or deficiencies that do not constitute violations of law facilitates forward-looking supervision, which helps address problems before they warrant a formal enforcement action. The commenter noted as well that supervisory guidance provides important insight to the industry and ensures consistency in the supervisory approach and that supervised institutions frequently request supervisory guidance. The commenter observed that the COVID-19 pandemic has amplified the requests for supervisory guidance and interpretation and that it is apparent institutions want clarity and guidance from regulators.

Two commenters, both public interest advocacy groups, opposed the proposed rule, suggesting that codifying the 2018 Statement may undermine the important role that supervisory guidance can play by informing supervisory criticism, rather than merely clarifying that it will not serve as the basis for enforcement actions. One commenter stated that it is essential for agencies to have the prophylactic authority to base criticisms on imprudent bank practices that may not yet have ripened into violations of law or significant safety and soundness concerns. The commenter stated that this is particularly important with respect to large banks, where delay in addressing concerns could lead to a broader crisis. One commenter stated that the agencies have not explained the benefits that would result from the rule or demonstrated how the rule will promote safety and soundness or consumer protection. The commenter argued that supervision is different from other forms of regulation and requires supervisory discretion, which could be constrained by the rule. One of these commenters argued that the Proposal would send a signal that banking institutions have wider discretion to ignore supervisory guidance.

Several industry commenters requested that the Proposed Rule cover interpretive rules and clarify that interpretive rules do not have the force and effect of law. One commenter stated that the agencies should clarify whether they believe that interpretive rules can be binding. The commenter argued that, under established legal principles, interpretive rules can be binding on the agency that issues them, but not on the public. Some commenters suggested that the agencies follow ACUS recommendations for issuing interpretive rules and that the agencies should clarify when particular guidance documents are (or are not) interpretive rules and allow the public to petition to change an interpretation. A number of commenters requested that the agencies expand the statement to address the standards that apply to MRAs and other supervisory criticisms, a suggestion made in the Petition.

Several commenters recommended that the agencies clarify that the practices described in supervisory guidance are merely examples of conduct that may be consistent with statutory and regulatory compliance, not expectations that may form the basis for supervisory criticism. One commenter suggested that the agencies state that when agencies offer examples of safe and sound conduct, compliance with consumer protection standards, appropriate risk management practices, or acceptable practices through supervisory guidance or interpretive rules, the agencies will treat adherence to practices outlined in that supervisory guidance or interpretive rule as a safe harbor from supervisory criticism. One commenter also requested that the agencies make clear that guidance that goes through public comment, as well as any examples used in guidance, is not binding. The commenter also requested that the agencies affirm that they will apply statutory factors while processing applications.

One commenter argued that guidance provides valuable information to supervisors about how their discretion should be exercised and therefore plays an important role in supervision. As an example, according to this commenter, 12 U.S.C. 1831p-1 and 12 U.S.C. 1818 recognize the discretionary power conferred on the Federal banking agencies, 16 which is separate from the power to issue regulations. The commenter noted that, pursuant to these statutes, regulators may issue cease and desist orders based on reasonable cause to believe that an institution has engaged, is engaging, or is about to engage in an unsafe and unsound practice, separately and apart from whether the institution has technically violated a law or regulation. The commenter added that Congress entrusted the Federal banking agencies with the power to determine whether practices are unsafe and unsound and attempt to halt such practices through supervision, even if a specific case may not constitute a violation of a written law or regulation.

Several commenters addressed supervisory criticisms and how they relate to guidance. These commenters suggested that supervisory criticisms should be specific as to practices, operations, financial conditions, or other matters that could have a negative effect. These commenters also suggested that MRAs, memoranda of understanding, and any other formal written mandates or sanctions should be based only on a violation of a statute or regulation. Similarly, these commenters argued that there should be no references to guidance in written formal actions and that banking institutions should be reassured that they will not be criticized or cited for a violation of guidance when no law or regulation is cited. One commenter suggested that it would instead be appropriate to discuss supervisory guidance privately, rather than publicly, potentially during the pre-exam meetings or during examination exit meetings. Another commenter suggested that, while referencing guidance in supervisory criticism may be useful at times, agencies should provide safeguards to prevent such references from becoming the de facto basis for supervisory criticisms. One commenter stated that examiners also should not criticize community banks in their final written examination reports for not complying with “best practices” unless the criticism involves a violation of bank policy or regulation. The commenter added that industry best practices should be transparent enough and sufficiently known throughout the industry before being cited in an examination report. One commenter requested that examiners should not apply large bank practices to community banks that have a different, less complex, and more conservative business model. One commenter asserted that MRAs should not be based on “reputational risk,” but rather on the underlying conduct giving rise to concerns and asked the agencies to address this in the final rule.

Commenters that opposed the Proposal did not support restricting supervisory criticism or sanctions to explicit violations of law or regulation. One commenter expressed concern that requiring supervisors to wait for an explicit violation of law before issuing criticism would effectively erase the line between supervision and enforcement. According to the commenter, it would eliminate the space for supervision as an intermediate practice of oversight and cooperative problem-solving between banks and the regulators who support and manage the banking system and would also clearly violate the intent of the law in 12 U.S.C. 1818(b). One commenter emphasized the importance of bank supervisors basing their criticisms on imprudent bank practices that may not yet have ripened into violations of laws or rules but could undermine safety and soundness or pose harm to consumers if left unaddressed.

One commenter argued that the agencies should state clearly that guidance can and will be used by supervisors to inform their assessments of banks' practices and that it may be cited as, and serve as the basis for, criticisms. According to the commenter, even under the legal principles described in the Proposal, it is permissible for guidance to be used as a set of standards that may inform a criticism, provided that application of the guidance is used for corrective purposes, if not to support an enforcement action.

According to one commenter, the Proposal makes fine conceptual distinctions between, for example, issuing supervisory criticisms “on the basis of” guidance and issuing supervisory criticisms that make “reference” to supervisory guidance. The commenter suggested that is a distinction that it may be difficult for “human beings to parse in practice.” According to the commenter, a rule that makes such a distinction is likely to have a chilling effect on supervisors attempting to implement policy in the field. According to another commenter, the language allowing examiners to reference supervisory guidance to provide examples is too vague and threatens to marginalize the role of guidance and significantly reduce its usefulness in the process of issuing criticisms designed to correct deficient bank practices.

One commenter questioned the Federal banking agencies' reference in the Proposal to visitorial powers as an additional authority for early identification of supervisory concerns that may not rise to a violation of law, unsafe or unsound banking practice, or breach of fiduciary duty under 12 U.S.C. 1818.

Several commenters made suggestions about how the agencies should issue and manage supervisory guidance. Some commenters suggested that the agencies should delineate clearly between regulations and supervisory guidance. Commenters encouraged the agencies to regularly review, update, and potentially rescind outstanding guidance. One commenter suggested that the agencies rescind outstanding guidance that functions as rule but has not gone through notice and comment. One commenter suggested that the agencies memorialize their intent to revisit and potentially rescind existing guidance, as well as limit multiple guidance documents on the same topic. Commenters suggested that supervisory guidance should be easy to find, readily available, online, and in a format that is user-friendly and searchable.

One commenter encouraged the agencies to issue principles-based guidance that avoids the kind of granularity that could be misconstrued as binding expectations. According to this commenter, the agencies can issue separate frequently asked questions with more detailed information, but should clearly identify these as non-binding illustrations. This commenter also encouraged the agencies to publish proposed guidance for comment when circumstances allow. Another commenter requested that the agencies issue all “rules” as defined by the APA through the notice-and-comment process. One commenter expressed concern that the agencies will aim to reduce the issuance of multiple supervisory guidance documents and will thereby reduce the availability of guidance in circumstances where guidance would be valuable.

As stated in the Proposed Rule, the 2018 Statement was intended to focus on the appropriate use of supervisory guidance in the supervisory process, rather than the standards for supervisory criticisms. The standards for issuing MRAs and other supervisory actions were, therefore, outside the scope of this rulemaking. For this reason, and for reasons discussed earlier, the final rule does not address the standards for MRAs or other supervisory actions. Similarly, because the OCC is not addressing its approach to supervisory criticism in the final rule, including any criticism related to reputation risk, the final rule does not address supervisory criticisms relating to “reputation risk.”

With respect to the comments on coverage of interpretive rules, the OCC agrees with the commenter that interpretive rules do not, alone, “have the force and effect of law” and must be rooted in, and derived from, a statute or regulation. 17 While interpretive rules and supervisory guidance are similar in lacking the force and effect of law, interpretive rules and supervisory guidance are distinct under the APA and its jurisprudence and are generally issued for different purposes. 18 Interpretive rules are typically issued by an agency to advise the public of the agency's construction of the statutes and rules that it administers, 19 whereas general statements of policy, such as supervisory guidance, advise the public of how an agency intends to exercise its discretionary powers. 20 To this end, guidance generally reflects an agency's policy views, for example, on safe and sound risk management practices. On the other hand, interpretive rules generally resolve ambiguities regarding requirements imposed by statutes and regulations. Because supervisory guidance and interpretive rules have different characteristics and serve different purposes, the OCC has decided that the final rule will continue to cover supervisory guidance only.

With respect to the question of whether to adopt ACUS's procedures for allowing the public to request reconsideration or revision of an interpretive rule, this rulemaking, again, does not address interpretive rules. As such, the OCC is not adding procedures for challenges to interpretive rules through this rulemaking.

In response to the comment that the agencies should treat examples in guidance as “safe harbors” from supervisory criticism, the OCC agrees that examples offered in supervisory guidance can provide insight about practices that, in general, may lead to safe and sound operation and compliance with regulations and statutes. The examples in guidance, however, are generalized. When an institution implements examples, examiners must consider the facts and circumstances of that institution in assessing the application of those examples. In addition, the underlying legal principle of supervisory guidance is that it does not create binding legal obligation for either the public or an agency. As such, the OCC does not deem examples used in supervisory guidance to categorically establish safe harbors from supervisory criticism.

In response to the comments that the Proposal may undermine the important role that supervisory guidance can play in informing supervisory criticism and serving to address conditions before those conditions lead to enforcement actions, the OCC agrees that the appropriate use of supervisory guidance generates a more collaborative and constructive regulatory process that supports the safety and soundness and compliance of institutions, thereby diminishing the need for enforcement actions. As noted by ACUS, guidance can make agency decision-making more predictable and uniform and shield regulated parties from unequal treatment, unnecessary costs, and unnecessary risk, while promoting compliance with the law. The OCC does not view the final rule as weakening the role of guidance in the supervisory process and the OCC will continue to use guidance in a robust way to support the safety and soundness of banks and promote compliance with consumer protection laws and regulations.

Further, the OCC does not agree with one commenter's assertion that the Proposal made an unclear distinction between, on the one hand, inappropriate supervisory criticism for a “violation” of or “non-compliance” with supervisory guidance, and, on the other hand, OCC examiners' appropriate use of supervisory guidance to reference examples of safe and sound conduct, appropriate consumer protection and risk management practices, and other actions for addressing compliance with laws or regulations. This approach appropriately implements the principle that institutions are not required to follow supervisory guidance in itself but may find such guidance useful. The OCC disagrees with the commenter that institutions and examiners are incapable of understanding this important distinction.

With respect to the comment that visitorial powers do not provide the Federal banking agencies with authority to issue MRAs or other supervisory criticisms, the OCC disagrees. The OCC's visitorial powers are well-established. The Supreme Court's decision in Cuomo v. Clearing House Assn L.L.C. explained that the visitation included the “exercise of supervisory power.”  21 The Court ruled that the “power to enforce the law exists separate and apart from the power of visitation.”  22 While the Cuomo decision involved the question of which powers may be exercised by state governments (and ruled that states could exercise law enforcement powers, but could not exercise visitorial powers), the decision did not dispute that the Federal banking agencies possess both these powers. The Court in Cuomo explained that visitorial powers entailed “oversight and supervision,” while the Court's earlier decision in Watters v. Wachovia Bank, N.A. explained that visitorial powers entailed “general supervision and control.”  23 Accordingly, visitorial powers include the power to issue supervisory criticisms independent of the agencies' authority to enforce applicable laws or ensure safety and soundness. For these reasons, the OCC reaffirms the statement in the preamble to the Proposed Rule that such visitorial powers have been conferred through statutory examination and reporting authorities, which facilitate the OCC's identification of supervisory concerns that may not rise to a violation of law, unsafe or unsound practice, or breach of fiduciary duty under 12 U.S.C. 1818. These statutory examination and reporting authorities pre-existed 12 U.S.C. 1818, which neither superseded nor replaced such authorities. The OCC has been vested with statutory examination and reporting authorities with respect to banks under its supervision. 24

In response to the comments regarding the role of public comment for supervisory guidance, the OCC notes that it has made clear through the 2018 Statement and in this final rule that supervisory guidance (including guidance that goes through public comment) does not create binding, enforceable legal obligations. Rather, the OCC in some instances issues supervisory guidance for comment in order to improve its understanding of an issue, gather information, or seek ways to achieve a supervisory objective most effectively. Similarly, examples that are included in supervisory guidance (including guidance that goes through public comment) are not binding on institutions. Rather, these examples are intended to be illustrative of ways a supervised institution may implement safe and sound practices, appropriate consumer protection, prudent risk management, or other actions in furtherance of compliance with laws or regulations. Relatedly, the OCC does not agree with one comment that it should use notice and comment procedures, without exception, to issue all “rules” as defined by the APA, which would include supervisory guidance. Congress has established longstanding exceptions in the APA from the notice and comment process for certain rules, including for general statements of policy like supervisory guidance and for interpretive rules. As one court has explained, Congress intended to “accommodate situations where the policies promoted by public participation in rulemaking are outweighed by the countervailing considerations of effectiveness, efficiency, expedition and reduction in expense.”  25

With respect to the commenter's request that the agencies affirm that they will apply statutory factors while processing applications, the OCC affirms that the agency will continue to consider and apply all applicable statutory factors when processing applications.

In response to the question raised by some commenters concerning potential confusion between supervisory guidance and interpretive rules, the OCC notes that interpretive rules are outside the scope of the rulemaking. In addition, as stated earlier, interpretive rules do not, alone, “have the force and effect of law” and must be rooted in, and derived from, a statute or regulation. While interpretive rules and supervisory guidance are similar in lacking the force and effect of law, interpretive rules and supervisory guidance are distinct under the APA and its jurisprudence and are generally issued for different purposes. The OCC believes that when it issues an interpretive rule, the fact that it is an interpretive rule is generally clear. In addition, these comments relate to clarity in drafting, rather than a matter that seems suitable for rulemaking.

In response to the two commenters opposing the Proposal, this final rule does not undermine any of the OCC's safety and soundness or other authorities. Indeed, the final rule is designed to support the OCC's ability to supervise banks effectively. In addition, the OCC notes the question of the role of guidance has been one of interest to regulated parties and other stakeholders over the past few years. The Petition and the numerous comments on the Proposal are a sign of this interest. As such, the OCC believes it will serve the public interest to reaffirm the appropriate role of supervisory guidance. There are inherent benefits to the supervisory process whenever institutions and examiners have a clear understanding of their roles, including how supervisory guidance can be used effectively within legal limits. Therefore, the OCC is proceeding with the rule as proposed.

In response to the commenter expressing concern that language in the Statement on reducing multiple supervisory guidance documents on the same topic will limit the OCC's ability to provide valuable guidance, the OCC assures the commenter that this language will not inhibit the OCC from issuing new supervisory guidance when appropriate.

Finally, the OCC appreciates the other comments related to other aspects of guidance or the supervisory process, but the OCC does not believe that they are best addressed in this rulemaking.

For the reasons discussed above, the final rule adopts the Proposed Rule without substantive change. However, the OCC has decided to issue a final rule that is specifically addressed to the OCC and OCC-supervised institutions, rather than the joint version that the five agencies included in their joint Proposal. Although many of the comments were applicable to all of the agencies, some comments were specific to particular agencies or to groups of agencies. Having separate final rules has enabled agencies to better focus on explaining any agency-specific issues to their respective audiences of supervised institutions and agency employees.

The Paperwork Reduction Act of 1995  26 (PRA) states that no agency may conduct or sponsor, nor is the respondent required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The OCC has reviewed this final rule and determined that it does not contain any information collection requirements subject to the PRA. Accordingly, no submissions to OMB will be made with respect to this final rule.

In general, the Regulatory Flexibility Act  27 (RFA) requires that in connection with a rulemaking, an agency prepare and make available for public comment a regulatory flexibility analysis that describes the impact of the rule on small entities. Under section 605(b) of the RFA, this analysis is not required if an agency certifies that the rule will not have a significant economic impact on a substantial number of small entities and publishes its certification and a brief explanatory statement in the Federal Register along with its rule.

The OCC currently supervises approximately 782 small entities. 28 Because the final rule will apply to all OCC-supervised depository institutions, the final rule will affect a substantial number of OCC-supervised entities. While the final rule does clarify that the Statement is binding on the OCC, it would not impose any new mandates on the banking industry. As such, the OCC estimates that the costs, if any, associated with the final rule will be negligible. For these reasons, the OCC certifies that the final rule will not have a significant economic impact significant economic impact on a substantial number of small entities.

Section 722 of the Gramm-Leach-Bliley Act  29 requires the Federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. The OCC has sought to present the final rule in a simple and straightforward manner and did not receive any comments on the use of plain language in the Proposed Rule.

The OCC analyzed the final rule under the factors set forth in the Unfunded Mandates Reform Act of 1995 (UMRA). 30 Under this analysis, the OCC considered whether the final rule includes a Federal mandate that may result in the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year (adjusted for inflation). The OCC has determined that the final rule will not impose new mandates on the banking industry. Therefore, the OCC concludes that the final rule will not result in an expenditure of $100 million or more annually by State, local, and Tribal governments, or by the private sector.

Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act (RCDRIA), 31 in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on insured depository institutions (IDIs), each Federal banking agency must consider, consistent with principles of safety and soundness and the public interest, any administrative burdens that such regulations would place on depository institutions, including small depository institutions, and customers of depository institutions, as well as the benefits of such regulations. In addition, section 302(b) of RCDRIA requires new regulations and amendments to regulations that impose additional reporting, disclosures, or other new requirements on IDIs generally to take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form. 32 The OCC has determined that the final rule will not impose additional reporting, disclosure, or other requirements on IDIs; therefore, the requirements of the RCDRIA do not apply.

In final rule FR Doc. 2021-02182, published on February 3, 2021, on page 7938, in the third column, make the following corrections to instruction 2, amending § 217.11:

The Bureau recognizes the important distinction between issuances that serve to implement acts of Congress (known as “regulations” or legislative rules”) and non-binding supervisory guidance documents. 1 Regulations create binding legal obligations. Supervisory guidance is issued by an agency to “advise the public prospectively of the manner in which the agency proposes to exercise a discretionary power” and does not create binding legal obligations. 2

In recognition of the important distinction between rules and guidance, on September 11, 2018, the agencies issued the Interagency Statement Clarifying the Role of Supervisory Guidance (2018 Statement) to explain the role of supervisory guidance and describe the agencies' approach to supervisory guidance. 3 As noted in the 2018 Statement, the agencies issue various types of supervisory guidance to their respective supervised institutions, including, but not limited to, interagency statements, advisories, bulletins, policy statements, questions and answers, and frequently asked questions. Supervisory guidance outlines the agencies' supervisory expectations or priorities and articulates the agencies' general views regarding practices for a given subject area. Supervisory guidance often provides examples of practices that mitigate risks, or that the agencies generally consider to be consistent with safety-and-soundness standards or other applicable laws and regulations, including those designed to protect consumers. 4 The agencies noted in the 2018 Statement that supervised institutions at times request supervisory guidance and that guidance is important to provide clarity to these institutions, as well as supervisory staff, in a transparent way that helps to ensure consistency in the supervisory approach. 5

The 2018 Statement restated existing law and reaffirmed the agencies' understanding that supervisory guidance does not create binding, enforceable legal obligations. The 2018 Statement reaffirmed that the agencies do not issue supervisory criticisms for “violations” of supervisory guidance and described the appropriate use of supervisory guidance by the agencies. In the 2018 Statement, the agencies also expressed their intention to (1) limit the use of numerical thresholds in guidance; (2) reduce the issuance of multiple supervisory guidance documents on the same topic; (3) continue efforts to make the role of supervisory guidance clear in communications to examiners and supervised institutions; and (4) encourage supervised institutions to discuss their concerns about supervisory guidance with their agency contact.

On November 5, 2018, the OCC, Board, FDIC, and Bureau each received a petition for a rulemaking (Petition), as permitted under the Administrative Procedure Act (APA), 6 requesting that the agencies codify the 2018 Statement. 7 The Petition argued that a rule on guidance is necessary to bind future agency leadership and staff to the 2018 Statement's terms. The Petition also suggested there are ambiguities in the 2018 Statement concerning how supervisory guidance is used in connection with matters requiring attention, matters requiring immediate attention (collectively, MRAs), as well as in connection with other supervisory actions that should be clarified through a rulemaking. Finally, the Petition called for the rulemaking to implement changes in the agencies' standards for issuing MRAs. Specifically, the Petition requested that the agencies limit the role of MRAs to addressing circumstances in which there is a violation of a statute, regulation, or order, or demonstrably unsafe or unsound practices.

On November 5, 2020, the agencies issued a proposed rule (Proposed Rule or Proposal) that would have codified the 2018 Statement, with clarifying changes, as an appendix to proposed rule text. 8 The Proposed Rule would have superseded the 2018 Statement. The rule text would have provided that an amended version of the 2018 Statement is binding on each respective agency.

The Petition expressed support for the 2018 Statement and acknowledged that it addresses many issues of concern for the Petitioners relating to the use of supervisory guidance. The Petition expressed concern, however, that the 2018 Statement's reference to not basing “criticisms” on violations of supervisory guidance has led to confusion about whether MRAs are covered by the 2018 Statement. Accordingly, the agencies proposed to clarify in the Proposed Rule that the term “criticize” includes the issuance of MRAs and other supervisory criticisms, including those communicated through matters requiring board attention, documents of resolution, and supervisory recommendations (collectively, supervisory criticisms). 9 As such, the agencies reiterated that examiners will not base supervisory criticisms on a “violation” of or “non-compliance with” supervisory guidance. The agencies noted that, in some situations, examiners may reference (including in writing) supervisory guidance to provide examples of safe and sound conduct, appropriate consumer protection and risk management practices, and other actions for addressing compliance with laws or regulations. The agencies also reiterated that they will not issue an enforcement action on the basis of a “violation” of or “non-compliance” with supervisory guidance. The Proposed Rule reflected these clarifications. 10

The Petition requested further that these supervisory criticisms should not include “generic” or “conclusory” references to safety and soundness. The agencies agreed that supervisory criticisms should continue to be specific as to practices, operations, financial conditions, or other matters that could have a negative effect on the safety and soundness of the financial institution, could cause consumer harm, or could cause violations of laws, regulations, final agency orders, or other legally enforceable conditions. Accordingly, the agencies included language reflecting this practice in the Proposed Rule.

The Petition also suggested that MRAs, as well as memoranda of understanding, examination downgrades, and any other formal examination mandate or sanction, should be based only on a violation of a statute, regulation, or order, including a “demonstrably unsafe or unsound practice.” As noted in the Proposed Rule, examiners all take steps to identify deficient practices before they rise to violations of law or regulation or before they constitute unsafe or unsound banking practices. The agencies stated that they continue to believe that early identification of deficient practices serves the interest of the public and of supervised institutions. Early identification protects the safety and soundness of banks, promotes consumer protection, and reduces the costs and risk of deterioration of financial condition from deficient practices resulting in violations of laws or regulations, unsafe or unsound conditions, or unsafe or unsound banking practices. The Proposed Rule also noted that the agencies have different supervisory processes, including for issuing supervisory criticisms. For these reasons, the agencies did not propose revisions to their respective supervisory practices relating to supervisory criticisms.

The agencies also noted that the 2018 Statement was intended to focus on the appropriate use of supervisory guidance in the supervisory process, rather than the standards for supervisory criticisms. To address any confusion concerning the scope of the 2018 Statement, the Proposed Rule removed two sentences from the 2018 Statement concerning grounds for “citations” and the handling of deficiencies that do not constitute violations of law. 11

The five agencies received approximately thirty unique comments concerning the Proposed Rule. 12 The Bureau discusses below those comments that are potentially relevant to the Bureau, rather than those comments that are only potentially relevant to other agencies. As one example, the Bureau notes that the Federal banking agencies (the OCC, Board, and FDIC) received a comment regarding their supervisory authorities, but the Bureau did not. Accordingly, the Bureau does not discuss that subject here.

Commenters representing trade associations for banking institutions and other businesses, State bankers' associations, individual financial institutions, and one member of Congress expressed general support for the Proposed Rule. These commenters supported codification of the 2018 Statement and the reiteration by the agencies that guidance does not have the force of law and cannot give rise to binding, enforceable legal obligations. One of these commenters stated that the Proposal would serve the interests of consumers and competition by clarifying the law for institutions and potentially removing ambiguities that could deter the development of innovative products that serve consumers and business clients, without uncertainty regarding potential regulatory consequences. These commenters expressed strong support as well for the clarification in the Proposed Rule that the agencies will not criticize, including through the issuance of “matters requiring attention,” a supervised financial institution for a “violation” of, or “non-compliance” with, supervisory guidance.

One commenter agreed with the agencies that supervisory criticisms should not be limited to violation of statutes, regulations, or orders and that supervisory guidance remains a beneficial tool to communicate supervisory expectations to the industry. The commenter stated that the proactive identification of supervisory criticism or deficiencies that do not constitute violations of law facilitates forward-looking supervision, which helps address problems before they warrant a formal enforcement action. The commenter noted as well that supervisory guidance provides important insight to industry and ensures consistency in the supervisory approach and that supervised institutions frequently request supervisory guidance. The commenter observed that the COVID-19 pandemic has amplified the requests for supervisory guidance and interpretation, and that it is apparent institutions want clarity and guidance from regulators.

Two commenters, both public interest advocacy groups, opposed the Proposed Rule, suggesting that codifying the 2018 Statement may undermine the important role that supervisory guidance can play by informing supervisory criticism, rather than merely clarifying that it will not serve as the basis for enforcement actions. One commenter stated that it is essential for agencies to have the prophylactic authority to base criticisms on imprudent bank practices that may not yet have ripened into violations of law or significant safety and soundness concerns. The commenter stated that this is particularly important with respect to large banks, where delay in addressing concerns could lead to a broader crisis. One commenter stated that the agencies have not explained the benefits that would result from the rule or demonstrated how the rule will promote safety and soundness or consumer protection. The commenter argued that supervision is different from other forms of regulation and requires supervisory discretion, which could be constrained by the rule. One of these commenters argued that the Proposal would send a signal that banking institutions have wider discretion to ignore supervisory guidance.

In a comment that was specifically addressed to the Bureau, a veterans advocacy group expressed concern that the Bureau's participation in the interagency rule would bind the hands of a future administration.

Several industry commenters requested that the Proposed Rule cover interpretive rules and clarify that interpretive rules do not have the force and effect of law. One commenter stated that the agencies should clarify whether they believe that interpretive rules can be binding. The commenter argued that, under established legal principles, interpretive rules can be binding on the agency that issues but not on the public. Some commenters suggested that the agencies follow Administrative Conference of the United States (ACUS) recommendations for issuing interpretive rules and that the agencies should clarify when particular guidance documents are (or are not) interpretive rules and allow the public to petition to change an interpretation. A number of commenters requested that the agencies expand the statement to address the standards that apply to MRAs and other supervisory criticisms, a suggestion made in the Petition.

One comment that specifically pertained to the Bureau, which was submitted by an association of community banks, recommended that the category of supervisory guidance be expanded to include the “small entity compliance guides” that the Bureau provides for small entities, which the commenter described as extremely helpful. Another comment, from an association in the debt-collection industry, generally encouraged the Bureau to issue small entity compliance guides, frequently asked questions, and advisory opinions to explain compliance expectations.

Several commenters recommended that the agencies clarify that the practices described in supervisory guidance are merely examples of conduct that may be consistent with statutory and regulations, not expectations that may form the basis for supervisory criticism. One commenter suggested that the agencies state that when supervisory guidance or interpretive rules offers examples of safe and sound conduct, compliance with consumer protection standards, appropriate risk management practices, or acceptable practices through supervisory guidance, the agencies will treat adherence to that supervisory guidance or interpretive rule as providing a safe harbor. One commenter also requested that the agencies make clear that guidance that goes through public comment, as well as any examples used in guidance, are not binding. 13

One comment that was specifically addressed to the Bureau, from an association of credit unions, stated that the Bureau should refrain from issuing supervisory guidance that adds requirements not explicitly stated in the statute or regulation.

One commenter argued that guidance provides valuable information to supervisors about how their discretion should be exercised and therefore plays an important role in supervision.

Several commenters addressed supervisory criticisms and how they relate to guidance. Some commenters suggested that supervisory criticisms should be specific as to practices, operations, financial conditions, or other matters that could have a negative effect. These commenters suggested that MRAs, memoranda of understanding and any other formal written mandates or sanctions should be based only on a violation of a statute or regulation. Similarly, these commenters argued that there should be no references to guidance in written formal actions and that banking institutions should be reassured that they will not be criticized or cited for a violation of guidance when no law or regulation is cited. One commenter suggested that it would instead be appropriate to discuss supervisory guidance privately, rather than publicly, potentially during the pre-exam meetings or during examination exit meetings. Another commenter suggested that, while referencing guidance in supervisory criticism may be useful at times, agencies should provide safeguards to prevent such references from becoming the de facto basis for supervisory criticisms. One commenter stated that examiners also should not criticize community banks in their final written examination reports for not complying with “best practices” unless the criticism involves a violation of bank policy or regulation. The commenter added that industry best practices should be transparent enough and sufficiently known throughout the industry before being cited in an examination report. One commenter requested that examiners should not apply large bank practices to community banks that have a different, less complex and more conservative business model.

Commenters that opposed the Proposal did not support restricting supervisory criticism or sanctions to explicit violations of law or regulation. One commenter expressed concern that requiring supervisors to wait for an explicit violation of law before issuing criticism would effectively erase the line between supervision and enforcement. According to the commenter, it would eliminate the space for supervision as an intermediate practice of oversight and cooperative problem-solving between banks and the regulators who support and manage the banking system. One commenter emphasized the importance of bank supervisors basing their criticisms on imprudent bank practices that may not yet have ripened into violations of laws or rules but which if left unaddressed could pose harm to consumers.

One commenter argued that the agencies should state clearly that guidance can and will be used by supervisors to inform their assessments of banks' practices and that it may be cited as, and serve as the basis for, criticisms. According to the commenter, even under the legal principles described in the Proposal, it is permissible for guidance to be used as a set of standards that may inform a criticism, provided that application of the guidance is used for corrective purposes, if not to support an enforcement action.

According to one commenter, the Proposal makes fine conceptual distinctions between, for example, issuing supervisory criticisms “on the basis of” guidance and issuing supervisory criticisms that make “reference” to supervisory guidance. The commenter suggested that is a distinction that it may be difficult for regulated entities to parse in practice. According to the commenter, a rule that makes such a distinction is likely to have a chilling effect on supervisors attempting to implement policy in the field. According to another commenter, the language allowing examiners to reference supervisory guidance to provide examples is too vague and threatens to marginalize the role of guidance and significantly reduce its usefulness in the process of issuing criticisms designed to correct deficient bank practices.

Several commenters made suggestions about how the agencies should issue and manage supervisory guidance. Some commenters suggested that the agencies should delineate clearly between regulations and supervisory guidance. Commenters encouraged the agencies to regularly review, update, and potentially rescind outstanding guidance. One commenter suggested that the agencies rescind outstanding guidance that functions as rule but has not gone through notice and comment. One commenter suggested that the agencies memorialize their intent to revisit and potentially rescind existing guidance, as well as limit multiple guidance documents on the same topic. Commenters suggested that supervisory guidance should be easy to find, readily available, online, and in a format that is user-friendly and searchable.

One commenter encouraged the agencies to issue principles-based guidance that avoids the kind of granularity that could be misconstrued as binding expectations. According to this commenter, the agencies can issue separate frequently asked questions with more detailed information but should clearly identify these as non-binding illustrations. This commenter also encouraged the agencies to publish proposed guidance for comment when circumstances allow. Another commenter requested that the agencies issue all “rules” as defined by the Administrative Procedure Act through the notice-and-comment process.

One commenter expressed concern that the agencies will aim to reduce the issuance of multiple supervisory guidance documents and will thereby reduce the availability of guidance in circumstances where guidance would be valuable.

As stated in the Proposed Rule, the 2018 Statement was intended to focus on the appropriate use of supervisory guidance in the supervisory process, rather than the standards for supervisory criticisms. The standards for issuing MRAs and other supervisory actions were, therefore, outside the scope of this rulemaking. For this reason, and for reasons discussed earlier, the final rule does not address the standards for MRAs or other supervisory actions.

With respect to the comments on coverage of interpretive rules, the Bureau agrees with the commenter that interpretive rules do not, alone, “have the force and effect of law” and must be rooted in, and derived from, a statute or regulation. 14 While interpretive rules and supervisory guidance are similar in lacking the force and effect of law, interpretive rules and supervisory guidance are distinct under the APA and its jurisprudence and are generally issued for different purposes. 15 Interpretive rules are typically issued by an agency to advise the public of the agency's construction of the statutes and rules that it administers, 16 whereas general statements of policy, such as supervisory guidance, advise the public of how an agency intends to exercise its discretionary powers. 17 To this end, guidance generally reflects an agency's policy views, for example, on risk management practices. On the other hand, interpretive rules generally resolve ambiguities regarding requirements imposed by statutes and regulations. Because supervisory guidance and interpretive rules have different characteristics and serve different purposes, the Bureau has decided that the final rule will continue to cover supervisory guidance only.

With respect to the question of whether to adopt ACUS's procedures for allowing the public to request reconsideration or revision of an interpretive rule, this rulemaking, again, does not address interpretive rules. As such, the Bureau is not adding procedures for challenges to interpretive rules through this rulemaking.

The Bureau is also not adopting the comment from an association of community banks that the category of supervisory guidance be expanded to include the “small entity compliance guides” that the Bureau provides for small entities, which the commenter described as extremely helpful. The Bureau normally designates its small entity compliance guides as “compliance aids,” pursuant to the its Policy Statement on Compliance Aids. 18 Compliance aids do not rise to the level of supervisory guidance, because they are not general statements of policy and they do not concern the Bureau's supervisory powers—neither do they rise to the level of interpretive rules, because they are not interpretive. 19 Instead, the Policy Statement on Compliance Aids outlines how compliance aids simply present the requirements of rules and statutes in a manner that is useful for compliance professionals, other industry stakeholders, and the public; compliance aids also sometimes include practical suggestions for how entities might choose to go about complying with those rules and statutes. 20 Interested parties can consult the Policy Statement on Compliance Aids for a comprehensive explanation of how the Bureau views its compliance aids.

The Bureau also notes the comment from an association in the debt-collection industry that encouraged the Bureau to issue small entity compliance guides, frequently asked questions, and advisory opinions to explain compliance expectations. The Bureau observes that these particular materials are outside the scope of this particular rulemaking. This is because the Bureau's small entity compliance guides and frequently asked questions are generally designated as compliance aids and not supervisory guidance under the Policy Statement on Compliance Aids, 21 while the Bureau's advisory opinions are classified as interpretive rules under the Bureau's Advisory Opinion Policy. 22 However, the Bureau agrees that the appropriate Bureau use of compliance aids and advisory opinions, like supervisory guidance, is useful for helping entities in the debt-collection and other industries to fully comply with Federal consumer financial laws.

In response to the comment that the agencies should treat examples in guidance as “safe harbors,” the Bureau agrees that examples offered in supervisory guidance can provide insight about practices that, in general, may lead to compliance with regulations and statutes. The examples in guidance, however, are generalized. When an institution chooses to implement such examples, examiners must consider the facts and circumstances of that institution in assessing the application of those examples. In addition, the underlying legal principle of supervisory guidance is that it does not created binding legal obligation for either the public or an agency. As such, the Bureau does not deem examples in supervisory guidance to categorically establish safe harbors.

The Bureau has also considered the comment that was specifically directed to the Bureau, from an association of credit unions, which stated that the Bureau should refrain from issuing supervisory guidance that adds requirements not explicitly stated in the statute or regulation. Although the Bureau does not agree that it would be appropriate to limit the Bureau's efforts to assist entities in complying with their legal obligations to situations where the law is already explicit, the Bureau fully agrees that it is not the role of supervisory guidance to create legal requirements. Those must be located in a statute or regulation.

In response to the comments that the Proposal may undermine the important role that supervisory guidance can play in informing supervisory criticism and in serving to address conditions before those conditions lead to enforcement actions, the Bureau agrees that the appropriate use of supervisory guidance generates a more collaborative and constructive regulatory process that supports compliance by institutions, thereby diminishing the need for enforcement actions. As noted by ACUS, guidance can make agency decision-making more predictable and uniform and shield regulated parties from unequal treatment, unnecessary costs, and unnecessary risk, while promoting compliance with the law. The Bureau does not view the final rule as weakening the role of guidance in the supervisory process and the Bureau will continue to use guidance in a robust way to promote compliance by its supervised institutions.

Further, the Bureau does not agree with one commenter's assertion that the Proposal made an unclear distinction between, on the one hand, inappropriate supervisory criticism for a “violation” of or “non-compliance” with supervisory guidance, and, on the other hand, Bureau examiners' entirely appropriate use of supervisory guidance to reference examples of appropriate consumer protection and risk management practices and other actions for addressing compliance with laws or regulations. This approach appropriately implements the principle that institutions are not required to follow supervisory guidance in itself but may find such guidance useful. The Bureau disagrees with the commenter that institutions and examiners are incapable of understanding this important distinction.

As one example, Bureau examiners regularly examine the compliance management systems (CMS) at supervised institutions. Where examiners identify a deficiency in an institution's CMS, examiners may provide a supervisory recommendation or other supervisory criticism to the institution to correct the deficiency at that institution. It is also appropriate for Bureau examiners to refer to relevant supervisory guidance as an example of appropriate CMS, if the examiners believe that an institution would find such guidance informative.

In response to the comments regarding the role of public comment for supervisory guidance, the Bureau notes that it has made clear through the 2018 Statement and in this final rule that supervisory guidance (including guidance that goes through public comment) does not create binding, enforceable legal obligations. Rather, the Bureau may issue supervisory guidance for comment in order to improve its understanding of an issue, gather information, or seek ways to achieve a supervisory objective most effectively. Similarly, examples that are included in supervisory guidance (including guidance that goes through public comment) are not binding on institutions. Rather, these examples are intended to be illustrative of ways a supervised institution may implement appropriate consumer protection, prudent risk management, or other actions in furtherance of compliance with laws or regulations. Relatedly, the Bureau does not agree with one comment that it should use notice-and-comment procedures, without exception, to issue all “rules” as defined by the APA, which would include supervisory guidance. Congress has established longstanding exceptions in the APA from the notice-and-comment process for certain rules, including for general statements of policy like supervisory guidance and for interpretive rules. As one court has explained, Congress intended to “accommodate situations where the policies promoted by public participation in rulemaking are outweighed by the countervailing considerations of effectiveness, efficiency, expedition and reduction in expense.”  23

In response to the question raised by some commenters concerning potential confusion between supervisory guidance and interpretive rules, the Bureau notes that interpretive rules are outside the scope of the rulemaking. In addition, as stated earlier, interpretative rules do not, alone, “have the force and effect of law” and must be rooted in, and derived from, the statutes and regulations those rules interpret. While interpretive rules and supervisory guidance are similar in lacking the force and effect of law, interpretive rules and supervisory guidance are distinct under the APA and its jurisprudence and are generally issued for different purposes. The Bureau believes that when it issues an interpretive rule, the fact that it is an interpretive rule is generally clear. In addition, these comments relate to clarity in drafting, rather than a matter that seems suitable for rulemaking.

In response to the two public interest advocacy groups opposing the Proposal, the Bureau does not believe that this final rule would undermine any of the Bureau's authorities. Indeed, the final rule is designed to support the Bureau's ability to supervise. In addition, the Bureau notes the question of the role of guidance has been one of interest to regulated parties and other stakeholders over the past few years. The Petition and the numerous comments on the Proposal are a sign of this interest. As such, the Bureau believes it will serve the public interest to reaffirm the appropriate role of supervisory guidance. There are inherent benefits to the supervisory process whenever institutions and examiners have a clear understanding of their roles, including how supervisory guidance can be used effectively within legal limits. And in response to the concern from the veterans advocacy group that the Bureau's participation in the interagency Proposed Rule would bind the hands of a future administration, the Bureau notes that it is the nature of binding regulations that they bind an agency over time across multiple administrations. Most importantly, it does not believe that there is anything in the final rule that would prevent the Bureau from continuing to vigorously carry out its statutory supervisory functions in the interests of consumers, while respecting legal limits. Therefore, the Bureau is proceeding with the rule as proposed.

In response to the commenter expressing concern that language in the Statement on reducing multiple supervisory guidance documents on the same topic will limit the Bureau's ability to provide valuable guidance, the Bureau assures the commenter that this language will not inhibit the Bureau from issuing new supervisory guidance when appropriate.

Finally, the Bureau appreciates the other comments related to other aspects of guidance or the supervisory process, but the Bureau does not believe that they are best addressed in this rulemaking.

For the reasons discussed above, the final rule adopts the Proposed Rule without substantive change.

However, the Bureau has decided to issue a final rule that is specifically addressed to the Bureau and Bureau-supervised institutions, rather than the joint version that the five agencies included in their joint Proposal. Although many of the comments were applicable to all of the agencies, some comments were specific to particular agencies or to groups of agencies. Having separate final rules has enabled agencies to better focus on explaining any agency-specific issues to their respective audiences of supervised institutions and agency employees.

Relatedly, the Bureau has omitted from the final rule those specific phrases that are inapplicable to the Bureau, because they pertain to the safety-and-soundness responsibilities of the Federal banking agencies and the NCUA. The Bureau believes that this will provide greater clarity about how the rule applies to the Bureau's supervisory functions.

The Bureau issues this final rule based on the Bureau's authorities under sections 1012(a)(1) and 1022(b)(1) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). 24 Section 1012(a)(1) authorizes the Bureau to establish rules for conducting the general business of the Bureau, in a manner not inconsistent with title X of the Dodd-Frank Act. 25 Section 1022(b)(1) authorizes the Bureau to issue rules as may be necessary or appropriate to enable the Bureau to administer and carry out the purposes and objectives of the Federal consumer financial laws. 26 The Bureau determines that the additional clarity regarding the status of supervisory guidance provided by the final rule will enable the Bureau to carry out its supervisory responsibilities under Federal consumer financial law more effectively.

Consistent with section 1022(b)(2)(B) of the Dodd-Frank Act, in developing the final rule, the Bureau has consulted, or offered to consult with, the prudential regulators and the Federal Trade Commission, including regarding consistency with any prudential, market, or systemic objectives administered by those agencies. 27

Additionally, consistent with section 1022(b)(2)(A) of the Dodd-Frank Act, the Bureau has considered the potential benefits, costs, and impacts of the final rule. 28 The Bureau requested comment on the preliminary analysis presented in the proposal as well as submissions of additional data that could inform the Bureau's analysis of the benefits, costs, and impacts. Such comments as the Bureau received on this subject are discussed below.

Institutions Affected by the Final Rule. The Bureau's final rule applies to supervisory guidance issued by the Bureau, which is addressed to those institutions that are subject to the Bureau's supervisory authority. Accordingly, the final rule may affect those nondepository institutions that are subject to the Bureau's supervisory authority under section 1024 of the Dodd-Frank Act. 29 It may also affect those insured depository institutions and insured credit unions that have more than $10 billion in total assets, together with their affiliates, which are subject to the Bureau's supervisory authority under section 1025 of the Dodd-Frank Act. 30 The final rule may additionally affect service providers that are subject to the Bureau's supervisory authority. 31

Potential Benefits and Costs to Consumers and Covered Persons. The final rule reiterates the Interagency Statement Clarifying the Role of Supervisory Guidance (2018 Statement), which is already the policy of the Bureau, and makes it binding on the Bureau. The Bureau evaluates the final rule against a baseline in which no such rule is adopted, and the Bureau is therefore less definitively bound to implement the 2018 Statement in all supervisory activities. Accordingly, the final rule provides the relevant institutions with additional assurance that the Bureau's implementation of current and future supervisory guidance will follow the 2018 Statement.

The final rule should provide the relevant institutions with greater certainty about legal obligations that are addressed in supervisory guidance. This in turn may reduce compliance costs. It is not feasible, however, to quantify or monetize this benefit. The Bureau can only speculate on the greater certainty about legal obligations and the reduction in compliance costs due to the final rule. Further, the benefit from the greater certainty about legal obligations pertains to future as well as current supervisory guidance. The Bureau can only speculate on the frequency of future supervisory guidance. Supervisory guidance is issued from time to time as the need arises, and the Bureau cannot forecast the volume and nature of future supervisory guidance with sufficient precision to quantify or monetize this benefit.

The final rule may also indirectly benefit those consumers that are customers of the relevant institutions, if reduced compliance costs translate into better terms or availability of consumer financial products and services. For the reasons given above, this benefit cannot be quantified or monetized.

A commenter criticized the benefits discussed above and in the Proposal, deeming them implausible and speculative, and argued that there is no link between reduced compliance costs and consumer welfare. The Bureau disagrees with this assessment. While the Bureau does not have data to quantify or monetize the benefit of increased clarity, as a matter of logic and economic theory increased legal clarity can reduce compliance costs of regulated entities. Where there is uncertainty as to the requirements of the law, firms subject to the Bureau's supervisory authority may undertake excess costs to ensure compliance. To the extent that the 2018 Statement has prompted financial institutions to avoid unnecessary compliance costs in cases that comply with applicable laws and regulations and do not harm consumers, but technically contravene the Bureau's supervisory guidance, the final rule will further lower those costs by reducing the uncertainty. With respect to the criticism that compliance costs are not necessarily linked to consumer welfare, the Bureau notes that its burden under section 1022(b)(2)(A) is to consider costs and benefits to covered persons as well as to consumers. Moreover, as noted above, a reduction in unnecessary compliance costs can be passed through to consumers in the form of lower costs of credit.

Finally, the final rule does not impose any new obligations on institutions. Thus, the final rule should have no costs for institutions. A consumer advocate commenter asserted that the rule would impose costs on consumers by reducing the effectiveness of the agencies' supervision operations, leading to potential consumer harm. The commenter argued that ambiguities in the Proposed Rule and the accompanying Statement would make it difficult for supervision staff at the agencies to determine when to issue supervisory criticisms, to the detriment of consumers who may be affected by practices that would otherwise be subject to a supervisor's criticism. However, the Bureau notes that the 2018 Statement is already the policy of the Bureau. Moreover, the rule is intended to clarify at least some aspects of the 2018 Statement. To the extent that the ambiguities the commenter identifies exist and affect the Bureau's supervision operations, they already exist under the baseline. Thus, as noted in the Proposal, the effects of the rule, as described above, impose no clear costs on any consumers.

Impact on Depository Institutions and Credit Unions With No More Than $10 Billion in Assets. Under section 1026 of the Dodd-Frank Act, the Bureau has only limited supervisory authority with respect to those insured depository institutions and insured credit unions that have no more than $10 billion in total assets, 32 and so the Bureau does not normally address supervisory guidance to these institutions. Accordingly, the Bureau does not expect there to be any appreciable impact on these institutions from the final rule.

Impact on Access to Credit. The Bureau does not expect the final rule to affect consumers' access to credit, except to the extent that reduced compliance costs and additional assurance, relative to the baseline, that the Bureau will follow the 2018 Statement in the future might indirectly make some credit more available, as discussed above.

Impact on Consumers in Rural Areas. The Bureau does not believe that the final rule would have any unique impact on consumers in rural areas, and so the impact on these consumers should be similar to consumers generally.

The Regulatory Flexibility Act (RFA) generally requires an agency to conduct an initial regulatory flexibility analysis (IRFA) and a final regulatory flexibility analysis (FRFA) of any rule subject to notice-and-comment rulemaking requirements, unless the head of the agency certifies that the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities. 33 The Bureau also is subject to certain additional procedures under the RFA involving the convening of a panel to consult with small business representatives prior to proposing a rule for which an IRFA is required. 34 In the Proposal, the Bureau determined that an IRFA and small business review panel was not required because the Director of the Bureau certified the Proposed Rule, if adopted, would not have a significant economic impact on a substantial number of small entities. The Bureau explained that the Proposed Rule would not impose any obligations on regulated entities, and regulated entities would not need to take any action in response to this Proposed Rule. The Bureau did not receive comments on its analysis of the impact of the Proposal on small entities. Accordingly, the Director of the Bureau certifies that the final rule will not have a significant economic impact on a substantial number of small entities.

The Bureau has determined that this final rule does not impose any new or revise any existing recordkeeping, reporting, or disclosure requirements on covered entities or members of the public that would be collections of information requiring approval by the Office of Management and Budget under the Paperwork Reduction Act. 35

Pursuant to the Congressional Review Act  36 the Bureau will submit a report containing this rule and other required information to the United States Senate, the United States House of Representatives, and the Comptroller General of the United States prior to the rule taking effect. The Office of Information and Regulatory Affairs (OIRA) has designated this rule as not a “major rule” as defined by 5 U.S.C. 804(2).

The Director of the Bureau, Kathleen L. Kraninger, having reviewed and approved this document, is delegating the authority to electronically sign this document to Grace Feola, a Bureau Federal Register Liaison, for purposes of publication in the Federal Register .

For the reasons set forth above, the Bureau amends 12 CFR part 1074 as set forth below:

The FAA issued AD 2020-19-02, Amendment 39-21243 (85 FR 59416, September 22, 2020) (AD 2020-19-02), for certain Airbus Helicopters (previously Eurocopter France) Model SA330J helicopters. AD 2020-19-02 required, for each T/R blade part number (P/N) 330A12-0005-(all dash numbers) and 330A12-0006-(all dash numbers), repetitively accomplishing a visual and in-depth inspection for debonding and eddy current inspecting for a crack. If there was debonding within allowable limits, AD 2020-19-02 required repairing or replacing the T/R blade. If there was debonding that exceeded allowable limits or a crack, AD 2020-19-02 required replacing the T/R blade. AD 2020-19-02 also prohibited installing an affected T/R blade unless it passed the inspections. AD 2020-19-02 was prompted by EASA AD No. 2016-0059-E, dated March 22, 2016 (EASA AD 2016-0059-E), issued by the EASA, which is the Technical Agent for the Member States of the European Union, to correct an unsafe condition for Airbus Helicopters (formerly Eurocopter, Eurocopter France, Aerospatiale) Model SA 330 J helicopters. EASA AD 2016-0059-E retains the requirements of Direction Générale de l'Aviation Civile (DGAC) France AD 87-032-052(B)R3, dated January 23, 1991, which it supersedes, and also mandates improved service instructions. EASA advises of two reports of cracked metal T/R blade skin, which subsequently led to rotor blade vibrations and forced landing of the helicopter. According to EASA, this condition, if not addressed, could result in additional occurrences of T/R blade structural damage, possibly resulting in significant vibrations and reduced control of the helicopter.

Since the FAA issued AD 2020-19-02, it was identified that the compliance time for the initial visual inspection of T/R blade P/N 330A12-0006-(all dash numbers) (with a de-icing system) was inadvertently stated as within 30 hours time-in-service (TIS). This final rule corrects this compliance time to within 15 hours TIS.

Since the FAA issued AD 2020-19-02, it was also identified that the parts prohibition requirement could cause confusion about when the inspections must be accomplished prior to installation. This final rule clarifies this.

Additionally, this final rule clarifies the applicability by identifying that T/R blade P/N 330A12-0005-(all dash numbers) is without a de-icing system installed and that T/R blade P/N 330A12-0006-(all dash numbers) is with a de-icing system installed. This final rule also clarifies the required actions by adding the P/Ns.

These helicopters have been approved by EASA and are approved for operation in the United States. Pursuant to the FAA's bilateral agreement with the European Union, EASA has notified the FAA about the unsafe condition described in its AD. The FAA is proposing this AD after evaluating all known relevant information and determining that the unsafe condition described previously is likely to exist or develop on other helicopters of the same type design.

The FAA reviewed Airbus Helicopters Emergency Alert Service Bulletin No. 05.101, Revision 0, dated March 21, 2016, for Model SA330J helicopters with certain T/R blades with and without a de-icing system installed. This service information specifies procedures for a visual and in-depth inspection of the T/R blades for skin debonding and an eddy current inspection of the T/R blades for a crack using various crack detectors.

This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

This AD requires, for T/R blade P/N 330A12-0006-(all dash numbers) (with a de-icing system), within 15 hours TIS after the effective date of this AD or within 15 hours TIS after last inspecting the T/R blade as required by paragraph (f)(1) of AD 2020-19-02, whichever occurs first, and thereafter at intervals not to exceed 15 hours TIS; and for T/R blade P/N 330A12-0005-(all dash numbers) (without a de-icing system), within 30 hours TIS after the effective date of this AD, or within 30 hours TIS after last inspecting the T/R blade as required by paragraph (f)(1) of AD 2020-19-02, whichever occurs first, and thereafter at intervals not to exceed 30 hours TIS:

• Accomplishing a visual and in-depth inspection of each T/R blade for debonding. If there is debonding within allowable limits, this AD requires repairing or replacing the T/R blade. If there is debonding that exceeds allowable limits, this AD requires replacing the T/R blade.

• Eddy current inspecting each T/R blade for a crack. If there is a crack, this AD requires replacing the T/R blade.

This AD also prohibits installing an affected T/R blade on any helicopter unless it passes the inspections required by this AD.

The EASA AD requires returning a T/R blade with a discrepancy to Airbus Helicopters; whereas this AD requires repairing or replacing the T/R blade if there is debonding within allowable limits and replacing the T/R blade if there is debonding that exceeds allowable limits or a crack instead.

Section 553(b)(3)(B) of the Administrative Procedure Act (APA) (5 U.S.C. 551 et seq. ) authorizes agencies to dispense with notice and comment procedures for rules when the agency, for “good cause,” finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under this section, an agency, upon finding good cause, may issue a final rule without providing notice and seeking comment prior to issuance. Further, section 553(d) of the APA authorizes agencies to make rules effective in less than thirty days, upon a finding of good cause.

An unsafe condition exists that requires the immediate adoption of this AD without providing an opportunity for public comments prior to adoption. The FAA has found that the risk to the flying public justifies foregoing notice and comment prior to adoption of this rule because the initial instance of the repetitive inspections must be completed within 15 or 30 hours TIS, a time period of up to approximately two months based on the average flight-hour utilization rates of these helicopters. Accordingly, notice and opportunity for prior public comment are impracticable and contrary to the public interest pursuant to 5 U.S.C. 553(b)(3)(B).

In addition, the FAA finds that good cause exists pursuant to 5 U.S.C. 553(d) for making this amendment effective in less than 30 days, for the same reasons the FAA found good cause to forego notice and comment.

The FAA invites you to send any written data, views, or arguments about this final rule. Send your comments to an address listed under ADDRESSES . Include “Docket No. FAA-2021-0027; Project Identifier MCAI-2021-00048-R” at the beginning of your comments. The most helpful comments reference a specific portion of the final rule, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend this final rule because of those comments.

Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to https://www.regulations.gov, including any personal information you provide. The agency will also post a report summarizing each substantive verbal contact received about this final rule.

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this AD contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this AD, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this AD. Submissions containing CBI should be sent to Matt Fuller, AD Program Manager, General Aviation & Rotorcraft Unit, Airworthiness Products Section, Operational Safety Branch, FAA, 10101 Hillwood Pkwy., Fort Worth, TX 76177; telephone (817) 222-5110; email matthew.fuller@faa.gov. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

The requirements of the Regulatory Flexibility Act (RFA) do not apply when an agency finds good cause pursuant to 5 U.S.C. 553 to adopt a rule without prior notice and comment. Because the FAA has determined that it has good cause to adopt this rule without prior notice and comment, RFA analysis is not required.

The FAA estimates that this AD affects 17 helicopters of U.S. Registry. Labor rates are estimated at $85 per work-hour. Based on these numbers, the FAA estimates the following costs to comply with this AD.

Inspecting the T/R blades for debonding takes about 0.75 work-hour for an estimated cost of $64 per helicopter and $1,088 for the U.S. fleet, per inspection cycle. Eddy current inspecting the T/R blades for a crack takes about 1.75 work-hours for an estimated cost of $149 per helicopter and $2,533 for the U.S. fleet, per inspection cycle.

If required, replacing a T/R blade takes about 4 work-hours and parts cost about $19,000, for an estimated cost of $19,340.

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.

The FAA is 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.

This AD will not have federalism implications under Executive Order 13132. This AD will 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, I certify that this AD:

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

(2) Will not affect intrastate aviation in Alaska.

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

Background

The Federal Office of Civil Aviation (FOCA), which is the aviation authority for Switzerland, has issued FOCA AD HB-2021-001-E, dated January 8, 2021 (referred to after this as “the MCAI”), to address the unsafe condition on Pilatus Model PC-7 airplanes. The MCAI states:

FOCA advises that the release bar retaining screws on the affected Harley-type buckle assemblies were incorrectly peened during manufacture. This inadequate peening of the retaining screws has led to loose screws that can potentially be removed by hand or the actual screw falling out of the assemblies. You may examine the MCAI in the AD docket at https://www.regulations.gov by searching for and locating Docket No. FAA-2021-0049.

This product has been approved by the aviation authority of another country and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, it has notified the FAA of the unsafe condition described in the MCAI and service information referenced above. The FAA is issuing this AD because the agency has determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

The FAA reviewed IrvinGQ Limited Service Bulletin IGQSB033, Issue 2, dated December 2020 (IrvinGQ SB IGQSB033, Issue 2). This service information provides a listing of the affected parts and specifies procedures for inspecting the Harley-type buckle assemblies and repairing or replacing as necessary. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in ADDRESSES .

The FAA also reviewed Pilatus PC-7 Service Bulletin No. 25-015, Revision 1, dated December 22, 2020. This service information specifies inspecting and repairing the Harley-type buckle assemblies in accordance with IrvinGQ SB IGQSB033, Issue 2.

This AD requires accomplishing the actions specified in the IrvinGQ Limited service information already described.

Section 553(b)(3)(B) of the Administrative Procedure Act (APA) (5 U.S.C. 551 et seq. ) authorizes agencies to dispense with notice and comment procedures for rules when the agency, for “good cause,” finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under this section, an agency, upon finding good cause, may issue a final rule without providing notice and seeking comment prior to issuance. Further, section 553(d) of the APA authorizes agencies to make rules effective in less than thirty days, upon a finding of good cause.

An unsafe condition exists that requires the immediate adoption of this AD without providing an opportunity for public comments prior to adoption. The FAA has found that the risk to the flying public justifies waiving notice and comment prior to adoption of this rule because detachment of a shoulder strap from the main harness assembly could lead to loss of pilot restraint during operational maneuvers. Because this model airplane is certificated in the acrobatic category, if the pilot is not restrained during aerobatic flight, or even some normal operations, it may result in loss of airplane control, or injuries to the crew. For this reason, the FAA has determined that operators must comply with the actions required by this AD before further flight. Accordingly, notice and opportunity for prior public comment are unnecessary, pursuant to 5 U.S.C. 553(b)(3)(B).

In addition, the FAA finds that good cause exists pursuant to 5 U.S.C. 553(d) for making this amendment effective in less than 30 days, for the same reasons the FAA found good cause to forego notice and comment.

The FAA invites you to send any written data, views, or arguments about this final rule. Send your comments to an address listed under ADDRESSES . Include “Docket No. FAA-2021-0049 and Project Identifier MCAI-2021-00033-A” at the beginning of your comments. The most helpful comments reference a specific portion of the final rule, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend this final rule because of those comments.

Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to https://www.regulations.gov, including any personal information you provide. The agency will also post a report summarizing each substantive verbal contact received about this final rule.

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this AD contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this AD, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this AD. Submissions containing CBI should be sent to Doug Rudolph, Aviation Safety Engineer, General Aviation & Rotorcraft Section, International Validation Branch, FAA, 901 Locust, Room 301, Kansas City, Missouri 64106. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

The requirements of the Regulatory Flexibility Act (RFA) do not apply when an agency finds good cause pursuant to 5 U.S.C. 553 to adopt a rule without prior notice and comment. Because FAA has determined that it has good cause to adopt this rule without prior notice and comment, RFA analysis is not required.

The FAA estimates that this AD affects 21 airplanes of U.S. registry. The FAA also estimates that it would take about .5 work-hour per product to comply with the inspection requirement of this AD. The average labor rate is $85 per work-hour.

Based on these figures, the FAA estimates the cost of the AD on U.S. operators would be $892.50 or $42.50 per product.

In addition, the FAA estimates that any necessary follow-on repair actions would take .5 work-hour, for a cost of $42.50 per seat harness. The FAA estimates that any necessary replacements that may be required would take 3 work-hours and require parts costing $10,000, for a cost of $10,255 per seat harness. The FAA has no way of determining the number of airplanes that may need these 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.

The FAA is 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.

This AD will not have federalism implications under Executive Order 13132. This AD will 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 that this AD:

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

(2) Will not affect intrastate aviation in Alaska.

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

The Commission issued the Energy Labeling Rule (“Rule”) in 1979, 1 pursuant to the Energy Policy and Conservation Act of 1975 (“EPCA”). 2 The Rule requires energy labeling for major home appliances and other consumer products to help consumers compare the energy usage and costs of competing models. It also contains labeling requirements for refrigerators, refrigerator-freezers, freezers, dishwashers, water heaters, clothes washers, room air conditioners, furnaces, central air conditioners, heat pumps, plumbing products, lighting products, ceiling fans, and televisions.

The Rule requires manufacturers to attach yellow EnergyGuide labels to many of the covered products and prohibits retailers from removing these labels or rendering them illegible. In addition, it directs sellers, including retailers, to post label information on websites and in paper catalogs from which consumers can order products. EnergyGuide labels for most covered products contain three key disclosures: Estimated annual energy cost, a product's energy consumption or energy efficiency rating as determined by DOE test procedures, and a comparability range displaying the highest and lowest energy costs or efficiency ratings for all similar models. The Rule requires marketers to use national average costs for applicable energy sources ( e.g., electricity, natural gas, oil) as calculated by DOE in all cost calculations. Under the Rule, the Commission periodically updates comparability range and annual energy cost information based on manufacturer data submitted pursuant to the Rule's reporting requirements. 3

In an April 10, 2020 Notice of Proposed Rulemaking (NPRM) (85 FR 20218), the Commission sought comments on EnergyGuide labels for portable air conditioners, updates to efficiency descriptors for central air conditioner labels, and the need for changes to the current label layout and format requirements.

The NPRM proposed establishing EnergyGuide labeling for portable air conditioners. Under EPCA, the Commission may require labeling for DOE-designated covered products if it determines labeling will “assist purchasers in making purchasing decisions” and will be “economically and technologically feasible.” 42 U.S.C. 6294(a)(3). Prior to the NPRM, the Commission sought comment on labeling requirements for portable air conditioners in several previous Federal Register notices. In those publications, the Commission discussed the benefits and burdens of such labels, as well as their format and content, which would largely match the labels already required for room air conditioners. 4 Over the course of this proceeding, the Commission found, in accordance with its EPCA authority, labeling for this product category is likely to be economically and technologically feasible and assist consumers in their purchasing decisions. 5 Over several rounds of comments, a wide array of stakeholders, including industry members, utilities, and consumer groups supported (or did not oppose) the proposal.

In 2017, the Commission delayed final label requirements due to uncertainty about when DOE would promulgate efficiency standards for these products. 6 Specifically, in January of that year, DOE withdrew its final efficiency standards from Federal Register publication pursuant to the Presidential Memorandum on Implementation of Regulatory Freeze, leaving the final standards compliance date unclear. In early 2020, DOE announced a compliance date for the standards resolving any uncertainty. 7 Accordingly, the Commission then released an NPRM proposing EnergyGuide labels for portable air conditioners and a January 10, 2025 compliance date to coincide with the effective date of the DOE standards.

In previous notices on these issues, the Commission addressed the benefits as well as the economic and technological feasibility of portable air conditioner labels. In a 2015 notice, for example, it found portable air conditioners are common in the marketplace, vary in energy efficiency, and use energy similar to or greater than, currently labeled room air conditioners. 8 In addition, DOE reported the aggregate energy use of portable air conditioners has increased. 9 According to DOE estimates, sellers shipped 1.32 million units in the United States in 2014, with future growth projected. 10

DOE also found these products exhibit a wide range of efficiency ratings and energy costs for similarly sized units (a difference of about $100 per year between the most and least efficient models). After the 2025 implementation of DOE standards, that range is likely to be smaller, but remain significant (a difference of about $30-$50 depending on the size category as indicated in Appendix E2). DOE estimated average per-household annual electricity consumption for these products at 804 kWh/yr, generating $105 in annual energy costs (at $0.13 per kWh/hr). 11 Given this information, the Commission concluded energy labels are likely to assist consumers with their purchasing decisions by allowing them to compare the energy costs of competing models and, consequently, save significant money on their electric bills.

Further, in the NPRM, the Commission stated there is no evidence labeling is economically or technologically infeasible ( i.e., the costs of labeling substantially outweigh consumer benefits). Indeed, the burdens (discussed infra in the Paperwork Reduction Act section) of labeling are not likely to differ significantly from those for room air conditioners, which already have EnergyGuide labels. 12

As discussed in the NPRM, the proposed portable air conditioner label would be mostly identical to the current room air conditioner label in content, format, and placement ( i.e., on packaging, not the product itself). The proposed amendments incorporated DOE's definition of “portable air conditioner” at § 305.3. 13 Applying the same electricity cost rate ($0.13 kWh/hr) currently used for room air conditioners, the NPRM also contained cost ranges specifically for portable air conditioners in three size categories and derived from DOE energy use data. 14 Consistent with findings made in the 2016 and 2017 notices, the NPRM did not propose combining the ranges for portable and room air conditioners because it is not clear whether consumers routinely compare the two product categories when shopping. 15 However, consumers who want to compare them would be able to do so easily using the label's energy cost disclosure. In addition, consistent with provisions applicable to room air conditioners, the proposed amendments contained reporting requirements identical to those created by DOE for these products.

Finally, in the NPRM, the Commission proposed establishing an effective date for the label coinciding with the compliance date for DOE standards. Citing burdens associated with testing and labeling, industry comments earlier in this proceeding urged the Commission to synchronize any new labeling requirements with the DOE standards compliance date. 16

In the NPRM, the Commission also sought comments on updates to the efficiency descriptors on central air conditioner labels. In 2017, as part of an efficiency standards proceeding, DOE announced changes to the rating methods and associated efficiency descriptors for central air conditioners ( e.g., from “Seasonal Energy Efficiency Ratio (SEER)” to “Seasonal Energy Efficiency Ratio 2 (SEER2)”). 17 The DOE changes become effective on January 1, 2023. To ensure consistency with the DOE standards, the NPRM proposed changing all applicable references in Part 305, effective on January 1, 2023. Given the relatively small differences in the ratings produced by the old and the new rating methods, the Commission did not propose any additional label changes. The Commission noted plans to update ranges in Appendix H and I, as well as applicable numbers on the sample labels in Appendix L, when new data becomes available.

The Commission also requested comment on whether it should revise requirements in the Rule related to layout, format, and placement of EnergyGuide labels. Specifically, the NPRM asked whether some of these requirements ( e.g., § 305.13(b)) are too prescriptive. In addition, the NPRM asked whether the Rule should contain a general label durability and disclosure format requirement in lieu of the existing, specific provisions for layout, type style, setting, and label attachment. The NPRM also asked whether industry members interpret existing guidance in the Rule related to adhesive labels as a “required standard.” Finally, the NPRM contained several questions about the Rule's cost and benefits and the potential impact of more flexible requirements.

The Commission received seven comments in response to the NPRM. 18 As detailed below, the commenters generally supported (or did not oppose) labels for portable air conditioners and the transition to the new DOE efficiency descriptors. However, they provided differing views on the need to revise existing label requirements. Finally, some commenters offered broad suggestions for replacing physical labels with electronic labels.

All the commenters supported (or did not oppose) adding portable air conditioner labels to the Rule. 19 As discussed below, they asserted the labels' energy cost information would help consumers choose among portable air conditioners and alert them to the relative cost of portable and room models. The commenters also supported providing comparability ranges separate from room air conditioners.

The comments emphasized the label's consumer benefits. For example, CFA explained the labels “will provide significant value to consumers making purchasing decisions.” The Joint Commenters noted the energy costs disclosures “will correctly indicate to consumers that portable units are typically less efficient than room air conditioners.” AHAM, which represents portable air conditioner manufacturers, did not oppose the label but, as discussed further below, urged the Commission to eliminate physical labels for all products and transition to an electronic label structure.

The commenters supported (or did not oppose) separate comparability ranges for portable and room air conditioners. AHAM, which “fully agreed” with the proposed approach on ranges, explained “consumers can adequately compare the two products, to the extent they even wish to do so for these two different products, easily using the label's energy cost disclosure.” Referencing earlier comments, it argued combining the ranges would cause confusion because consumers of these products are different, and the two air conditioner categories do not have similar usage. AHAM also argued consumers focus mostly on capacity and purchase price when buying air conditioner units and thus may not use comparative energy costs information between the two categories.

Commenters further recommended two additional items. First, two commenters noted the regulatory text in § 305.10 should include a reference for DOE capacity and rounding determinations for portable air conditioners (Appendix CC to 10 CFR part 430, subpart B). 20 Second, the CA IOUs recommended statements on product packaging and literature about proper portable air conditioner operation, explaining the need for ducting to vent the heat produced by a unit to the outside.

Commenters, however, offered differing views on the timing for the new labels. AHAM strongly supported a compliance date coinciding with the DOE standards. It asserted that designing products to meet the new standards requires “considerable effort,” a fact reflected in EPCA's five-year lead- in period for DOE standards. According to AHAM, the pre-development, development, and tooling phases of launching a new product take years to complete and require extensive company resources. In its view, instituting a label mandate prior to the DOE compliance date would require companies to divert resources from developing new, more efficient products to labeling. AHAM also explained that aligning the compliance dates with the DOE standards and EnergyGuide labels would allow manufacturers to engage in the extensive development and testing activities required to innovate and bring more efficient products to market, as well as to comply with regulatory requirements.

In contrast, the Joint Commenters, ASAP et al., and the California Investor-Owned Utilities (CA IOUs) disagreed. The Joint Commenters argued consumers who currently lack the protection of a DOE minimum efficiency standard should have access to labels sooner to help identify and avoid inefficient models. Given the delays in the proceeding caused by the DOE litigation, these commenters argued manufacturers have had “ample time to make the investments they have claimed are necessary to deploy the labels.” In addition, with the issuance of DOE's test procedure in 2016, manufacturers must, pursuant to EPCA (42 U.S.C. 6293(c)), disclose the DOE results in any energy representations they make. Thus, according to the Joint Commenters, manufacturers “have had more than three years to gain familiarity with the test procedures and to understand how different basic models perform under test.” The CA IOUs also noted manufacturers are currently reporting their models' efficiency ratings to the California state database. ASAP et al. agreed FTC should require labeling sooner, stating: “[l]abeling in advance of the compliance date of the DOE standards will provide consumers with information to compare portable AC units as well as an indication that portable ACs are less efficient than room ACs.”

AHRI, Goodman, and the CA-IOUs generally supported the proposal to update the efficiency descriptors on the label. No commenter opposed the proposal. However, AHRI and Goodman urged the Commission to issue these updates as part of a broader overhaul to the Rule, which, as discussed in section V.C., would involve a transition from physical labels on individual units to online labels accessed through websites or QR codes.

These commenters also discussed the importance of updating the efficiency descriptors. In preparation for the DOE change, AHRI's members are designing, testing, certifying, and introducing new equipment. They are also educating industry members and consumers by modifying AHRI's product directory and certification program. AHRI expects manufacturers to release products with updated efficiency descriptors prior to the 2023 compliance deadline. DOE has issued guidance allowing early compliance with the test procedures, as long as the represented efficiencies comply with the 2023 minimum requirements. Given this timing, AHRI urged the Commission to complete label updates by summer 2021, so manufacturers may release compliant products as early as January 2022. In contrast, Goodman urged the Commission to issue the updates earlier, by December 2020, to give manufacturers even more time.

To minimize market confusion from such early compliance, AHRI is developing a communications campaign “to inform distributors, contractors, regulators, and building inspectors about the transition.” AHRI did not offer any specific proposals for addressing the transition on the physical label itself. It also opposed any FTC mandate for two separate labels requiring disclosures of the old and new metrics. Instead, it recommended a transition to an “electronic label” beginning in 2023 as discussed further below. Prior to that date, under AHRI's proposal, manufacturers choosing to display the new efficiency descriptor earlier would use the physical EnergyGuide label along with a smaller label containing regional installation information, as well as a QR (or equivalent) link to an updated FTC electronic label.

Finally, on a separate issue involving central air conditioners, Goodman suggested the Commission modify range information for split-systems to revert to a format that appeared on labels prior to 2016. In its view, the current label, which limits the efficiency ratings to a single value, leads to consumer confusion because the actual efficiency rating for a system depends on the combination of the outdoor condenser and indoor unit.

Commenters offered a variety of views regarding the Rule's approach to labeling. First, the Joint Commenters, the CA IOUs, and Goodman offered differing views on whether the Rule's labeling requirements are “unnecessarily prescriptive.” Second, as discussed in section D, both AHAM and AHRI recommended the Commission completely revise the Rule to transition to online or virtual energy labels.

The Joint Commenters and the CA IOUs rejected the notion that the Rule's requirements for label layout, type style and setting, and label adhesion are too prescriptive. In the CA IOUs' view, increased flexibility in the labeling requirements “could result in poor or inconsistent label quality that could inhibit consumers from making informed decisions regarding product performance.” Further, they asserted that uniform presentation facilitates effective “information delivery” and avoids “unnecessary confusion.” The CA IOUs further suggested the labels would better serve consumers if they appeared on both packages and the products themselves. Similarly, the Joint Commenters described the label specifications as “vital to the success of this program” and contended the questions in the NPRM ignore the “unique context and history of the EnergyGuide label program.” In their view, because the EnergyGuide label has more information ( e.g., operating costs, efficiency ratings, comparative range bars, key product features, and explanatory statements) than many other required disclosures in other programs ( e.g., labels for textiles and leather goods), the energy labels require a format “highly standardized to ease comparisons.” In addition, they argued allowing variability in layout and type style would hinder the label's effectiveness in assisting consumers with their purchasing decisions.

Finally, the Joint Commenters asserted the NPRM's questions regarding label flexibility “exhibits amnesia as to the widespread noncompliance that the inadequate specificity in [the FTC's] prior regulations had fostered.” The commenters cited past store visits demonstrating “the use of adhesives varied widely and that certain approaches were associated with higher rates of missing or detached labels.” The Joint Commenters noted that, in response to these findings, FTC added “specificity to its regulations governing adhesives.” In their view, reducing this specificity would “only encourage a return to labelling practices that deprive consumers of access to the important information that EnergyGuide labels provide.”

In contrast, Goodman, a heating and cooling equipment manufacturer, offered several detailed suggestions to eliminate specific labeling requirements in § 305.20. It argued that these changes would simplify the Rule and free “businesses from unnecessarily prescriptive requirements.” Specifically, Goodman recommended the Rule specify only minimum dimensions instead of the current range of widths and lengths and include only whole number minimums ( e.g., 7 inches for the length as opposed to 7 3/8 inches). It also suggested removal of requirements related to picas for copy set, the centering of text, and type style and setting, which includes requirements for a uniform font type. Goodman also recommended elimination of the existing paper stock requirement (“58 pounds per 500 sheets or equivalent”) and minimum peel adhesion capacity (“12 ounces per square inch”). Finally, it claimed the suggested minimum peel adhesion capacity in § 305.20(d) “is typically taken to be” a requirement despite the Rule's language to the contrary.

Three commenters discussed issues beyond whether the Rule's specific label requirements should be less prescriptive. Specifically, AHAM, AHRI, and Goodman urged the Commission to consider “whether physical labels continue to provide value to consumers.” AHAM, whose members manufacture large household appliances, such as refrigerators and dishwashers, argued the “showroom focus” of the label is outdated and recommended a “transition away from physical labels” and a shift to a program providing label content solely online. In addition to helping manufacturers by significantly reducing compliance costs, AHAM argued such an approach would help consumers by reflecting evolving shopping patterns. According to AHAM, the majority of consumers research appliances online before entering a store or purchasing from a website. Moreover, energy efficiency is not a primary factor in consumers' appliance purchases. Instead, according to AHAM, consumers focus on other factors, primarily purchase “cost.” Should the FTC retain requirements for a physical label, AHAM recommended more flexible requirements, but also urged the Commission to retain the existing label specifications as a safe harbor. According to AHAM, companies have invested time and resources in developing labels compliant with the existing requirements. A safe harbor would allow them to benefit from these investments and provide more certainty even if the Commission shifts to less detailed regulations.

In AHAM's view, conditions have changed even in the last decade, and significant opportunities exist to permit “the electronic delivery of label information.” It noted the Commission has already laid the groundwork for such a shift by requiring manufacturers to provide electronic access to label content ( e.g., § 305.9 (online availability of labels) and § 305.11 (submission of website address for online labels)). With these regulatory requirements in place, AHAM predicted a transition to electronic labels would involve a “small step” that would “dramatically reduce regulatory burden and cost” and eliminate the redundancy of requiring labels in both digital and paper format. AHAM asserted such a change would allow consumers “to access the content in the form and manner that best suits them” and allow them to “readily access the content wherever they may be researching their purchase.” It also suggested such a shift would allow retailers to access labels from the DOE Compliance Certification Management System (CCMS) and provide flexibility to “present the label content through printouts, electronic displays, or other means” suitable to consumer needs. In addition, an online format would allow manufacturers to more easily update labels and make corrections to online content. Finally, AHAM urged the Commission to coordinate such efforts with Canada to “align data elements, reporting and content.”

AHRI and Goodman offered similar suggestions but focused their comments on specific aspects of heating and cooling equipment. AHRI noted the FTC has the discretion under EPCA (42 U.S.C. 6294(a)) to discontinue the use of EnergyGuide labels for central air conditioners and heat pumps if it determines the label does not assist consumers in making purchasing decisions. It agreed with AHAM that the FTC has “already taken the most dramatic step forward in the virtual revolution by requiring all manufacturers to have a pdf or link version of its FTC label available online.” Nevertheless, according to AHRI, the label's small value for heating and cooling equipment renders its administrative burden “outsized.” However, as discussed below, AHRI did not recommend the “wholesale retirement of EnergyGuide labels,” but rather a “modernization” using QR codes and electronic labels to inform consumers without requiring “anachronistic prescriptive stickers.”

In discussing the Rule's current approach, AHRI argued the label on central air conditioners does not help consumers with their purchasing decisions because consumers generally do not buy these products “off-the-shelf” in retail stores and, for new home purchases, a builder (not the consumer) typically chooses equipment. In addition, contractors usually sell replacement products in the consumer's home, often in urgent situations. In such transactions, contractors usually provide homeowners with information about their products using the “manufacturer's literature, the AHRI Directory of Certified Product Performance, energy code requirements, incentive programs, and specific design features.” AHRI also argued, given the many different efficiency ratings of various outdoor-indoor unit combinations, “the actual value of the physical label is questionable at best.” Accordingly, not only are consumers unlikely to view the label prior to purchase, information provided directly by the contractor, including efficiency ratings for various unit combinations, is “significantly more accurate.”

In lieu of the current labeling approach, AHRI recommended a modified, smaller label giving both electronic access to consumer information online ( e.g., through a QR code), as well as regional standards compliance statements in “clear text.” In AHRI's view, this approach would bring “the cost-benefit equation” of the labeling program “into balance.” It would also allow consumers to learn about the product's efficiency, while dramatically reducing the burden associated with affixing labels to the equipment.

The Commission issues the final amendments as proposed, with modifications discussed below. The amendments finalize the labeling requirements for portable air conditioners with a compliance date coinciding with the DOE standards. Additionally, the amendments contain the proposed changes to the efficiency descriptors on central air conditioner labels. The Commission, however, declines to propose additional wide-ranging changes ( e.g., a transition to electronic labeling) to the EnergyGuide program at this time. Instead, the Commission may seek further comment on these issues, including the elimination of physical labels, in a future proceeding, where the Commission could gather the evidence necessary to fully consider significant amendments to the entire Rule.

As proposed in the NPRM and supported by commenters, the Commission adopts the proposed amendments containing new labeling rules for portable air conditioners. As detailed in this and previous notices, these products are common in the marketplace, vary in energy efficiency, and use energy similar to, or greater than, currently labeled room air conditioners. 21 Further, energy labels for these products are likely to assist consumers with purchasing decisions by allowing them to compare the energy costs of competing models and, consequently, save significantly on their electric bills. In addition, there is no evidence labeling is economically or technologically infeasible ( i.e., that the costs of labeling substantially outweigh consumer benefits). 22

After considering the comments, the Commission adjusts the compliance date to October 1, 2022. 23 As some commenters noted, manufacturers have sufficient information to create labels because, pursuant to 42 U.S.C. 6293(c), they have been testing their products since 2016 using the DOE procedure to substantiate any energy-related claims (including unit capacity) for all their models. Therefore, the proposed 2025 compliance date appears to be overly long, particularly given the expected consumer benefits from labeling very low efficiency units prior to the DOE standards. The Commission, however, understands such packaging changes can take time, particularly where manufacturers must redesign their box labels to accommodate the EnergyGuide. Accordingly, the final amendments establish an October 2022 compliance date to provide companies ample time to incorporate the label into packaging while getting these labels into the market sooner than originally proposed. As the Commission has noted in the past, manufacturers generally deploy their lines for these types of products on an annual basis beginning in October of each year. 24 The final compliance date, which coincides with the beginning of the model year, will allow manufacturers to incorporate the changes into their normal production schedules with minimal disruption. In addition, the Rule allows manufacturers to incorporate the label into the primary packaging display or affix them to label packaging (relieving them from redesigning boxes for models scheduled to be phased out before the 2025 standards). 25

The final amendments also contain several other minor changes for the portable air conditioner labels in response to comments. 26 First, the final Rule requires manufacturers to determine model capacity using the DOE testing requirements specifically applicable to portable air conditioners. Second, the final amendments contain a small change to the language in § 305.18(a)(9) to clarify that the comparative information on the portable air conditioners applies to models of similar capacity only (without the various configurations applicable to room air conditioners). 27

The final Rule adopts the proposed amendments to require manufacturers to update the efficiency descriptors for central air conditioners to conform to pending DOE changes. The change for all applicable references in Part 305 will become effective on January 1, 2023 to ensure consistency with the new DOE requirements. To aid the transition, manufacturers may begin using the new information prior to January 1, 2023 in a manner consistent with DOE guidance. Given the relatively small differences produced by the old and the new rating methods, the amendments do not require dual labels or any additional explanatory information. As indicated in its comments, AHRI is developing a communications campaign to help various entities with the transition to the new descriptors. In addition, as part of the scheduled 2022 update to comparability ranges for all product classes (§ 305.12), the Commission will update ranges in Appendix H and I, as well as applicable numbers and terms on the sample labels in Appendix L.

The final amendments do not make any broad changes to the Rule, although commenters recommended a wide array of potential changes. For instance, both AHRI and AHAM recommended a transition away from the current physical label to a system that relies on electronic web-based labels or energy data to aid consumer purchasing decisions. Although these proposals warrant further exploration, such broad issues would require additional rounds of notice and comment to consider and develop. Accordingly, the Commission may consider those proposals during a future proceeding to avoid delay in promulgating the present amendments for portable air conditioner labels and update to efficiency descriptors for central air conditioners.

These broad industry suggestions are part of a larger inquiry about the Rule's future, particularly as online information continues to become more prevalent and consumer shopping habits change. EPCA's basic labeling provisions, developed in the 1970's, are predicated upon an understanding that consumers routinely examine and purchase products in retail showrooms with little prior information. Further, to ensure any covered product displayed in a showroom bears a label, the Rule requires manufacturers to affix the label on every unit it produces, apparently based on the expectation that any unit may be displayed in a store.

Over the years, however, buying patterns have changed. Consumers now frequently compare and purchase products without ever visiting a store. To help consumers in this evolving marketplace, the Commission's revisions in the last several years reflect these new buying patterns. Specifically, the FTC previously updated the Rule with clear requirements that retailers display labels on websites (§ 305.27), for manufacturers to make their labels accessible online (§ 305.9), and for manufacturers to submit links to those labels as part of their routine data reports filed through DOE's CCMS (§ 305.11).

Further amendments may reduce burdens while ensuring energy information is available to consumers. For instance, the Commission could examine whether the Rule should continue to require manufacturers to affix a display-ready EnergyGuide label on every appliance typically displayed in showrooms. Indeed, only a tiny fraction of units shipped actually appear in retail store displays, while the costs of affixing display-ready labels to all units can impose significant burden. On the other hand, past commenters have noted that consumers use the label affixed to their old product in choosing a new one.

In addition, the Commission could consider changes to the label content to help consumers better compare products and understand issues not currently communicated by the label, such as climate change impacts, Smart Grid technologies, and better ways to display comparative energy cost information. However, without further commenter input, we do not know how valuable this information would be for consumers, and how easy it would be to convey such information with existing DOE-generated data.

These issues represent a few of many possible issues the Commission could consider in a future proceeding. In weighing any alternatives to the Rule, the Commission would need to ensure any new approach is consistent with its existing authority under EPCA. The Commission must also ensure consumers have access to clear, truthful energy information to assist them in their purchasing decisions while minimizing burdens placed on industry members. Fully evaluating these issues requires a more extensive proceeding focused from the outset at broad issues affecting the Rule in the 21st century.

The Commission also declines to propose amendments to eliminate the current physical labels for central air conditioners and replace them with a smaller label with a QR code (or its equivalent) linking consumers to online content as AHRI and Goodman recommended. Such substantial changes to the labeling program would require further study and consideration in a future rulemaking proceeding. In the meantime, the updated EnergyGuide label for central air conditioners, which contains both EPCA-mandated energy efficiency ratings and regional standards information for installers, will continue to aid both consumers and industry members.

Finally, the Commission may consider changes to the detailed label requirements ( e.g., the changes to current label layout and content advocated by Goodman) in a future proceeding. Some of the Rule's detailed requirements mentioned in the NPRM may have indeed become obsolete. At the same time, detailed, uniform requirements for consumer labels like the EnergyGuide provide benefits to consumers by presenting information in a format that allows consumers to easily compare products across multiple categories. Moreover, the FTC's online, editable EnergyGuide templates already include all the label's general information in the size, font, and location required by the Rule and thus largely free manufacturers from having to navigate the detailed format requirements.

The current Rule contains recordkeeping, disclosure, testing, and reporting requirements that constitute information collection requirements as defined by the Paperwork Reduction Act (“PRA”). 28 Under the PRA, an agency may not collect or sponsor the collection of information, nor may it impose an information collection requirement, unless it displays a currently valid Office of Management and Budget (“OMB”) control number. OMB has approved the Rule's existing information collection requirements through December 31, 2022 (OMB Control No. 3084-0069).

The amendments include new labeling requirements for portable air conditioners that constitute information collections under the PRA. The Commission submitted these proposed information collections for review by OMB in conjunction with its publication of the NPRM. The Commission received no comments pertaining to its PRA estimates. OMB has approved these amended information collection requirements under the existing control number for the Rule (3084-0069).

Burden estimates below are based on Census data, DOE figures and estimates, public comments, general knowledge of manufacturing practices, and trade association advice and figures. The FTC estimates there are about 150 basic models of portable air conditioners ( i.e., units with essentially identical physical and electrical characteristics). In addition, FTC staff estimates there are 45 portable air conditioner manufacturers and 1,500,000 portable air conditioner units shipped each year in the U.S.

Reporting: The Rule requires manufacturers of covered products to annually submit a report for each model in current production containing the same information that must be submitted to the Department of Energy pursuant to 10 CFR part 429. In lieu of submitting the required information to the Commission, manufacturers may submit such information to DOE directly via the agency's Compliance Certification Management System, available at https://regulations.doe.gov/ccms, as provided by 10 CFR 429.12. Because manufacturers are already required to submit these reports to DOE, FTC staff estimates any additional burden associated with providing the information to the FTC is minimal. FTC staff estimates the average reporting burden for manufacturers of portable air conditioners will be approximately 15 hours per manufacturer. Based on this estimate, the annual reporting burden for manufacturers of portable air conditioners is 675 hours (15 hours × 45 manufacturers). 29 Staff estimates that information processing staff, at an hourly rate of $16.24, 30 will typically perform the required tasks, for an estimated annual labor cost of $10,962.

Labeling: The amendments require that manufacturers label portable air conditioners. The burden imposed by this requirement consists of the time needed to draft labels and incorporate them onto package designs. Since EPCA and the Rule specify the content and format for the required labels and FTC staff provide online label templates, manufacturers need only input the energy consumption figures and other product-specific information derived from testing. FTC staff estimates the time to incorporate the required information into labels and label covered products is five hours per basic model. Accordingly, staff estimates that the approximate annual burden involved in labeling covered products is 750 hours [150 basic models × 5 hours]. Staff estimates that information processing staff, at an hourly rate of $16.24, 31 will typically perform the required tasks, for an estimated annual labor cost of $12,180.

Testing: Manufacturers of portable air conditioners must test each basic model they produce to determine energy usage, but the majority of tests conducted are required by DOE rules. As a result, it is likely only a small portion of the tests conducted are attributable to the Rule's requirements. In addition, manufacturers need not subject each basic model to testing annually; they must retest only if the product design changes in such a way as to affect energy consumption. FTC staff estimates manufacturers will require approximately 36 hours for testing of portable air conditioners, 32 and that 25% of all basic models are tested annually due to the Rule's requirements. Accordingly, the estimated annual testing burden for portable air conditioners is 1,368 hours ((150 basic models × 25%) × 36 hours). Staff estimates that engineering technicians, at an hourly rate of $28.37, 33 will typically perform the required tasks, for an estimated annual labor cost of $38,300.

Recordkeeping: The Rule also requires manufacturers of covered products to retain records of test data generated in performing the tests to derive information included on labels. See 16 CFR 305.21. The FTC estimates the annual recordkeeping burden for manufacturers of portable air conditioners will be approximately one minute per basic model to store relevant data. Accordingly, the estimated annual recordkeeping burden would be approximately 3 hours (150 basic models × one minute). Staff estimates that information processing staff, at an hourly rate of $16.24, 34 will typically perform the required tasks, for an estimated annual labor cost of $50.

Online and Retail Catalog Disclosures: Staff estimates there are approximately 400 sellers of products covered under the Rule who are subject to the Rule's catalog disclosure requirements. Staff has previously estimated covered online and catalog sellers spend approximately 17 hours per year to incorporate relevant product data for products that are currently covered by the Rule. Staff estimates the portable air conditioner requirements will add one additional hour per year in incremental burden per seller. Staff estimates these additions will result in an incremental burden of 400 hours (400 sellers × one hour annually). Staff estimates that information processing staff, at an hourly rate of $16.24, 35 will typically perform the required tasks, for an estimated incremental annual labor cost of $6,496.

Estimated annual non-labor cost burden: Staff anticipates that manufacturers are not likely to require any significant capital costs to comply with the amendments.

The Regulatory Flexibility Act (RFA), 5 U.S.C. 601 through 612, requires the Commission provide an Initial Regulatory Flexibility Analysis (IRFA) with a proposed rule and a Final Regulatory Flexibility Analysis (FRFA), with the final rule, if any, unless the Commission certifies that the rule will not have a significant economic impact on a substantial number of small entities. See 5 U.S.C. 603 through 605. The Commission does not anticipate that the amendments will have a significant economic impact on a substantial number of small entities. The Commission recognizes that some of the affected manufacturers may qualify as small businesses under the relevant thresholds. The Commission estimates that the amendments will apply to 300 online and paper catalog sellers of covered products and about 45 portable air conditioner manufacturers. The Commission expects that approximately 150 of these various entities qualify as small businesses.

Although the Commission has certified under the RFA that the amendments would not have a significant impact on a substantial number of small entities, the Commission has determined, nonetheless, that it is appropriate to publish an FRFA in order to explain the impact of the amendments on small entities as follows:

Based upon the record, including public comments, the Commission is amending the Rule to expand product coverage and make additional improvements to the Rule to help consumers in their purchasing decisions for portable air conditioners.

The Commission did not receive any comments specifically related to the impact of the final amendments on small businesses. In addition, the Chief Counsel for Advocacy of the Small Business Administration did not submit comments.

Under the Small Business Size Standards issued by the Small Business Administration, appliance manufacturers qualify as small businesses if they have fewer than 500 employees. Catalog sellers qualify as small businesses if their sales are less than $8.0 million annually. The Commission estimates that there are approximately 150 entities subject to the final amendments that qualify as small businesses. The Commission estimates that the amendments will not have a significant impact on small businesses.

The amendments will slightly increase reporting, recordkeeping, and disclosure requirements associated with the Commission's labeling rules as discussed above. The amendments likely will increase compliance burdens by extending the labeling requirements to portable air conditioners. The Commission anticipates that the label design change will be implemented by graphic designers.

The Commission sought comment and information on the need, if any, for alternative compliance methods that would reduce the economic impact of the Rule on such small entities. To allow time for industry to come into compliance with the revised Rule and minimize the impact of the amendments on covered entities, the Commission has given manufacturers until October 1, 2022 to implement portable air conditioner labels. The Commission may consider other proposals related to electronic labeling and additional issues in a future proceeding.

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq. ), the Office of Information and Regulatory Affairs designated this rule as not a “major rule,” as defined by 5 U.S.C. 804(2).

For the reasons stated above, the Commission amends part 305 of title 16 of the Code of Federal Regulations as follows:

Today's Commission action finalizes required changes to the Energy Labeling Rule, but fails to remove prescriptive aspects of the Rule that I believe are unnecessary and that could hinder important aspects of competition. For the reasons described below, I dissent.

The current amendments were proposed in March 2020. At that time, and at my urging, 1 the Commission also sought comment on the more prescriptive aspects of the Rule. 2 I was pleased to receive many interesting and thoughtful comments submitted by stakeholders. For example, industry members explained that changes in the market and consumer behavior indicate that affixed labels with detailed information may have ceased to provide benefits to consumers. 3 Industry members also proposed providing the labeling information online or through QR codes at brick-and-mortar locations. 4 Making this information easier to access in the digital era could foster greater competition among appliance manufacturers and more informed purchasing decisions by consumers.

Rather than act on these comments or proposals, though, the Commission has chosen to finalize only the air conditioning proposals necessary to conform to Department of Energy changes. The Federal Register Notice approved by a majority of the Commission explains that revising other aspects of the labeling obligations imposed by the Rule will require further exploration. I see no reason for the Commission to forego that exploration now. We can both finalize these changes and ask stakeholders for additional input on how to improve the rest of the Rule.

The FTC promulgated the Energy Labeling Rule in the 1970s, an era when the agency was engaged in prolific rulemaking. 5 As I have noted previously, 6 no area of commerce was too straightforward or mundane to escape the Commission's notice:

• The Rule on Misbranding and Deception as to Leather Content of Waist Belts prescribed unlawful practices in connection with the sale of belts when not offered for sale as part of a garment. Among other things, the Rule prohibited the sale of belts that looked like leather, but that were made of split, ground, pulverized, or shredded leather or non-leather material, absent disclosures. 7

• The Guides for Shoe Content Labeling and Advertising required leather, split leather, and concealed insoles “containing . . . non-leather material which are concealed from view, but which also contain other visible parts of leather,” to bear a label clearly disclosing the presence of the non-leather innersole. 8

• The Hosiery Guides established that the term “long staple cotton” used to describe hosiery “is understood to mean cotton fiber which is not less than 1 1/8 ″ in length of staple” and that the term “lisle” represents hosiery “made of yarn composed of two or more ply of combed long staple cotton fiber.”  9

A federal statute mandated that the FTC promulgate the Energy Labeling Rule. 10 The FTC must implement the will of Congress, but it need not adopt a prescriptive approach while doing so. Here, the FTC itself has chosen to specify the trim size dimensions for labels, including the precise width (between 5 1/4 ″ to 5 1/2 ″) and length (between 7 3/8 ″ and 7 5/8 ″); the number of picas for the copy set (between 27 and 29); the type style (Arial) and setting; the weight of the paper stock on which the labels are printed (not less than 58 pounds per 500 sheets or equivalent); and a suggested minimum peel adhesive capacity of 12 ounces per square inch. 11 I urged the Commission take the opportunity to review these detailed labeling requirements in 2018, and again in 2019, when the Commission sought comment and revised other sections of this Rule. 12

The Commission last conducted a full review of the Energy Labeling Rule in 2015; under our 10-year regulatory schedule, the next review is scheduled for 2025. However, since 2015, the Commission has sought comment on provisions of this Rule at least three times, including the current proceeding, and has made numerous amendments. 13 This piecemeal approach has clarified the Rule's requirements—and I appreciate FTC staff's efforts to keep this Rule clear and current—but the Commission can and should do more.

Specifically, the Commission should conduct a full review of the Rule to consider removing all dated and prescriptive provisions, and to consider the recent comments suggesting changes. Nothing prevents the Commission from conducting this review now—we do not have to wait until the 10-year anniversary. I urge the Commission to act on these comments, eliminate the more prescriptive aspects of the Rule, and maximize the positive impact of this Rule for consumers. If we are statutorily mandated to maintain this Rule, we should endeavor to make it beneficial for consumers and competition.

The final regulations (TD 9933) that are the subject of this correction are issued under section 512 of the Internal Revenue Code.

As published the final regulations (TD 9933) contain errors that needs to be corrected.

Accordingly, the final regulations (TD 9933), that are the subject of FR Doc. 2020-25954, published on December 2, 2020 (85 FR 77952), are corrected to read as follows:

1. On page 77952, the third column, the seventeenth line from the top of the second full paragraph, the language “balances legislative” is corrected to read “balances the legislative”.

2. On page 77954, the third column, the first line of the first full paragraph, the language “Because the NAICS” is corrected to read “Because NAICS”.

3. On page 77961, the second column, the third line from the bottom of the first partial paragraph, the language “rule” is corrected to read “test”.

4. On page 77964, the second column, removing the language “of the supported organization” from the third and fourth lines from the bottom of the last full paragraph.

5. On page 77964, the third column, the second line from the bottom of the last partial paragraph, the language “Accordingly, the” is corrected to read “The”.

6. On page 77965, the second column, the thirteenth line from the top of the first partial paragraph, the language “owns interest” is corrected to read “owns the interest”.

7. On page 77965, the third column, the third line from the bottom of the first full paragraph, the language “E.O.;” is corrected to read “exempt organization”.

8. On page 77967, the second column, the fifth line from the bottom of the first partial paragraph, the language “Accordingly,” is corrected to read “Therefore,”.

9. On page 77968, the first column, the first full paragraph of the first and second sentences, the language “Furthermore, allowing an exempt organization to elect to treat the debt-financed income as part of a 2-digit NAICS code, instead of including such income as part of an organization's investment activities, would not reduce the burden upon the exempt organization or the burden on the IRS. Such income would still need to be identified as debt-financed income and an additional determination of the underlying activity would also need to be made to determine a 2-digit NAICS code.” is corrected to read “Furthermore, allowing an exempt organization to elect to treat the debt-financed income as part of a NAICS 2-digit code, instead of including such income as part of an organization's investment activities, would not reduce the burden on the exempt organization or the burden on the IRS. Such income would still need to be identified as debt-financed income and an additional determination of the underlying activity would also need to be made to determine a NAICS 2-digit code.”

10. On page 77968, the second column, the fourth line from the bottom of the last partial paragraph, the language “(Form 1120S)” is corrected to read “(Form1120-S)”.

11. On page 77968, the third column, the fourth line from the bottom of the first paragraph, the language “1120S) is needed” is corrected to read “1120-S) is necessary”.

12. On page 77970, the third column, the tenth line from the top of the first full paragraph, the language “describe” is corrected to read “described”.

13. On page 77971, the first column, the fifth and sixth line from the top of the first full paragraph, the language “Hospitality” is corrected to read “the Hospitality” and “and Club” is corrected to read “and the Club”.

14. On page 77971, the third column, removing the language, “in the proposed regulations” in the third and fourth line from the top of the partial paragraph.

15. On page 77972, the third column, the second line of the second paragraph, the language “an organization” is corrected to read “an exempt organization”.

16. On page 77978, the first column, the third line from the top of the last partial paragraph, the language “rules are” is corrected to read “rules is”.

Background

The final regulations (TD 9933) that are the subject of this correction are issued under section 512 of the Internal Revenue Code.

As published on December 2, 2020 (85 FR 77952), the final regulations (TD 9933) contain errors that needs to be corrected.

Accordingly, 26 CFR part 1 is corrected by making the following correcting amendments:

On January 15, 2021, ONRR published a final rule in the Federal Register , at 86 FR 4612, to amend certain regulations that inform the manner in which ONRR values oil and gas produced from Federal leases for royalty purposes; values coal produced from Federal and Indian leases for royalty purposes; and assesses civil penalties for violations of certain statutes, regulations, leases, and orders associated with mineral leases. In addition, the rule, referred to as the 2020 Rule, made some minor, non-substantive corrections to ONRR's regulations. The 2020 Rule had an effective date of February 16, 2021, and, for amendments to 30 CFR part 1206, a compliance date of May 1, 2021.

On January 20, 2021, the Assistant to the President and Chief of Staff issued a memorandum entitled “Regulatory Freeze Pending Review” (“Regulatory Freeze Memorandum”) which, along with the guidance on implementation of the memorandum issued by the Office of Management and Budget (“OMB”) in Memorandum M-21-14 dated January 20, 2021, directs agencies to consider delaying the effective date of rules published in the Federal Register that have not yet become effective, consistent with applicable law, for the purpose of reviewing any questions of fact, law, and policy the rules may raise.

The OMB memorandum directed that the decision to delay should include consideration of whether:

(1) The rulemaking process was procedurally adequate;

(2) the rule reflected proper consideration of all relevant facts;

(3) the rule reflected due consideration of the agency's statutory or other legal obligations;

(4) the rule is based on a reasonable judgment about the legally relevant policy considerations;

(5) the rulemaking process was open and transparent;

(6) objections to the rule were adequately considered, including whether interested parties had fair opportunities to present contrary facts and arguments;

(7) interested parties had the benefit of access to the facts, data, or other analyses on which the agency relied; and

(8) the final rule found adequate support in the rulemaking record.

In light of the withdrawal of existing and issuance of new Executive Orders relevant to the matters addressed in the 2020 Rule after its publication date, which are discussed further below, and protracted litigation over ONRR's recent rulemakings, ONRR concludes that postponement of the 2020 Rule and invitation for public comment is appropriate under criteria three and four above. Further, ONRR appreciates the strong public interest in its rulemakings and is especially interested in public comments on each of the eight decision criteria with respect to the 2020 Rule.

Accordingly, this action delays the effective date of the 2020 Rule and opens a 30-day comment period on the facts, law, and policy underlying the rule as well as the effect of the delay. ONRR is delaying the effective date of its 2020 Rule from February 16, 2021, to April 16, 2021.

The 60-day delay of the 2020 Rule's effective date—based on the good cause articulated below—is for the purpose of reviewing any questions of fact, law, and policy that are raised by that rule as well as the effect of the delay, consistent with the Regulatory Freeze Memorandum and OMB Memorandum M-21-14. To that end, ONRR invites the public to submit comment on any issue of fact, law, or policy raised by the 2020 Rule, including, without limitation, comment on the following:

1. The 2020 Rule was premised, in part, on certain Executive Orders that are no longer in effect, including Executive Orders 13783 “Promoting Energy Independence and Economic Growth,” 13795 “Implementing an America-First Offshore Energy Strategy,” and 13892 “Promoting the Rule of Law Through Transparency and Fairness in Civil Administrative Enforcement and Adjudication.” Also, new Executive Orders, including Executive Orders 13990 “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis,” 13992 “Revocation of Certain Executive Orders Concerning Federal Regulation,” and 14008 “Tackling the Climate Crisis at Home and Abroad,” have been issued from and after January 20, 2021. Does the repeal of prior Executive Orders and issuance of new Executive Orders demonstrate a change in policy meriting or requiring reconsideration of some or all of the 2020 Rule?

2. The 2020 Rule reinstituted an allowance for certain deepwater oil and gas gathering costs based, at least in part, on declining oil and gas production and revenues from the Gulf of Mexico, which allowance is estimated to reduce royalty due the United States by $32.9 million per year. Is this allowance consistent with the current law and policy of the United States?

3. The 2020 Rule reinstituted extraordinary processing allowances, which allowances are estimated to reduce royalty due the United States by $11.1 million per year. Are extraordinary processing allowances consistent with the current law and policy of the United States in the limited circumstances described in the 2020 Rule?

The Librarian of Congress is authorized to make regulations with respect to the Library of Congress (2 U.S.C. 136). Since neither the Federal Register Act nor the Administrative Procedure Act has binding effect on the legislative branch, the Library of Congress is not required to publish its regulations in the CFR. However, because the purpose of the CFR is to “notify industry, general business, and the people” ( Toledo, P & W.R.R. v. Stover, 60 F. Supp. 587 (S.D. Ill. 1945)), it is appropriate for the Library to continue publishing those regulations which affect the rights and responsibilities of, and restrictions on, the public.

The Library of Congress is amending this regulation for the following reasons:

• To amend the regulation consistent with Title XIV of the Library of Congress Technical Corrections Act of 2019.

• To amend the terminology to refer to “blind and print-disabled” persons rather than “blind and other physically handicapped” persons.

• To amend the terminology to refer to “eligible persons” consistent with the Marrakesh Treaty Implementation Act amending 17 U.S.C. 121.

• To amend the description of services to include internet-enabled/electronic services.

• To memorialize the existing practice under which persons seeking approval to use NLS's services must certify eligibility using a form provided by NLS or by network libraries.

• To include certified psychologists, educators, certified reading specialists, and school psychologists in the list of persons who may certify eligibility for the program.

• To remove the requirement for certification by a medical doctor for those with reading disabilities, who may now be certified for participation in the program by the same persons who are authorized to certify other print-disabled individuals for participation in the program.

For the reasons set forth in the preamble, the Library of Congress amends 36 CFR part 701 as follows:

Throughout this document “we,” “us,” and “our” means the EPA.

The background for this action is discussed in detail in our June 30, 2020, proposal (85 FR 39128). In that document we proposed to approve elements of a SIP submission from the State of Arkansas for the 2015 O 3 NAAQS. Specifically, we proposed to approve the Arkansas i-SIP submission because it demonstrates compliance with CAA sections 110(a)(1) and 110(a)(2)(A) through (C) and (E) through (M), as applicable. We also proposed that Arkansas' i-SIP submission demonstrates compliance with CAA section 110(a)(2)(D)(i)(II), Interference with Prevention of Significant Deterioration (often referred to as prong 3) and CAA section 110(a)(2)(D)(ii), Interstate Pollution Abatement (which refers to CAA section 126) and International Air Pollution (which refers to CAA section 115). EPA intends to address the remaining portions of the October 4, 2019, infrastructure SIP submission, addressing CAA section 110(a)(2)(D)(i)(I), often referred to as interstate transport prongs 1 and 2, and CAA section 110(a)(2)(D)(i)(II), often referred to as interstate transport prong 4, in separate actions. 1 We also proposed to approve changes to the State's Regulation 19 definition of “National Ambient Air Quality Standards” and Appendix B of the Regulation 19 to be consistent with the 2015 O 3 NAAQS. We received comments on the proposed approval from one commenter (“Commenter”). The comments are posted and available through the regulations.gov website (Docket EPA-R06-OAR-2019-0616). The comments and our responses follow.

Comment: The commenter states that EPA should not approve the state's infrastructure SIP submission because it is “inconsistent with federal laws.”

Response: EPA disagrees with this comment. The commenter does not identify the specific requirements that the state has not met, nor do they explain the basis for this concern. As explained in the proposal for this action, and in this final action, EPA has evaluated the state's infrastructure SIP submission for compliance with the statutory requirements of CAA section 110(a)(1) and (2), as applicable, and in light of the agency's 2013 guidance for infrastructure SIP submissions. 2 This is the federal law and guidance that is relevant in the context of a state's infrastructure SIP submission. The agency has concluded in this action that the state has met the infrastructure SIP requirements for the 2015 O 3 NAAQS.

Comment: The commenter asserts that EPA must make sure the State is implementing its SIP.

Response: In acting on infrastructure SIP submissions, EPA is required to evaluate the submitting state's SIP for compliance with statutory and regulatory structural SIP requirements, not for the state's implementation of its SIP. See Montana Envtl. Info. Ctr. v. Thomas, 902 F.3d 971 (9th Cir. 2018). To the extent there were any concerns with respect to the state's implementation of the 2015 O 3 NAAQS, EPA has other authorities to address such concerns. For example, the CAA provides the EPA the authorities to issue a SIP call, under section 110(k)(5) to correct SIP inadequacies; to make a finding of failure to implement and impose appropriate sanctions against the state, under sections 110(m) and 179(a)(4) of the Act, if the EPA finds the state fails to implement any requirement of an approved SIP; and to take measures to address specific permit deficiencies pursuant to the EPA's case-by-case permitting oversight and enforcement authorities under sections 165(a)(2) and 167 of the Act. The appropriateness of employing these authorities depends on the nature and extent of the implementation problems at issue.

Also, the commenter did not provide an example of which part of the SIP the ADEQ is not currently implementing. As discussed in our proposal, ADEQ maintains an adequate monitoring program, has a permitting program, adopts rules as necessary, conducts inspections, investigations and takes enforcement actions when appropriate. EPA performs oversight of the air program through the annual air monitoring network plan review, midyear and end of year reviews on the Section 103 and 105 grants programs, and enforcement framework reviews of the state's enforcement programs. EPA also maintains on-going communications with the state, providing input on implementation issues, and sharing guidance and information through regular conference calls. A lack of adequate funding for the ADEQ's operation would impact implementation of programs we regularly discuss and review with the state. Such concerns have not been noted by the EPA.

Comment: The commenter questioned EPA's approval of the infrastructure SIP because EPA must review “the finances” of the state agency implementing the SIP to “ensure the financial health of the agency.”

Response: EPA agrees that in order to address the requirements of section 110(a)(2)(E)(i), states must establish that they have adequate funding to implement their SIP. Accordingly, EPA did evaluate this element. In its infrastructure SIP submission, the state indicated it has met the requirements of the CAA. Section 110(a)(2)(E) requires that the state provide for adequate personnel, funding, and legal authority to carry out its SIP. Ark. Code Ann. § 8-1-103(1)(A), § 8-1-103(3) and § 8-1-103(5) grants ADEQ the authority to establish, and collect fees for issuance, annual review, and modification of air permits. Regulation No. 9, Fee Regulation, Chapter 5, contains the air permit fees applicable to non-part 70 permits, part 70 permits, and general permits. Ark. Code Ann. § 8-1-202(b)(2)(D) states that the Director of ADEQ's duties include the day-to-day administration of all activities that the Department is empowered to perform by law, including, but not limited to, the employment and supervision of such technical, legal, and administrative staff, within approved appropriations, as is necessary to carry out the responsibilities vested with ADEQ.

Moreover, the State receives federal grants under CAA sections 103 and 105 to assist it in carrying out the SIP. Section 103 funding supports specific, non-recurring projects within the air program and thus, the amount of funding can vary widely from year to year. Section 105 supports the foundation of the State's air quality program, including the air monitoring network and annual air quality program activities. Section 105 funding levels are relatively consistent, varying not more than about 10% from year to year. Section 105 funds require a 40% match from the State, while section 103 funds do not require a match. During the upcoming fiscal year (FY2021), ADEQ will receive $1,139,737 in section 105 grant funding. For FY2020/2021 ADEQ will receive $1,137,068 in section 103 grant funding. This federal funding supplements the state's air program implementation funding mechanisms.

As explained in the proposal, EPA has concluded that ADEQ has adequate personnel, funding, and authority through these provisions in order to carry out the state's implementation plan.

Comment: The commenter supported concerns about the adequacy of the State agency's funding with statements attributed to the State's Governor.

Response: The commenter did not provide enough information for the EPA to be able to verify the quote or its context. The EPA of course agrees with the statements attributed to the Governor that state agencies need adequate funding to protect public health and the environment. Regardless, even taken at face value the EPA does not believe that the statement establishes that the State in fact has inadequate resources for the purposes of implementing the State's SIP. As previously explained, the EPA has considered the resources of the State as established in the infrastructure SIP submission and considers them adequate at this time.

Comment: The commenter further asserted that the EPA should disapprove the State's infrastructure SIP for the 2015 O 3 NAAQS based on concerns about the impacts that the COVID-19 pandemic will have on the State's finances and staff for implementing the SIP.

Response: The EPA acknowledges the commenter's concern that the ongoing COVID-19 pandemic may have negative impacts on the State maintaining adequate resources to meet its SIP obligations. As discussed above, EPA has concluded that Arkansas has provided assurances in the infrastructure SIP submission for the 2015 O 3 NAAQS that it has adequate personnel and funding to carry out its SIP obligations at this time. For these reasons, EPA does not agree that it must disapprove the infrastructure SIP submission. If the adequacy of Arkansas' resources to carry out its SIP is substantially affected in the future, EPA has the statutory authority to address this issue through means other than disapproving the infrastructure SIP submission at this time.

We are approving portions of the October 25, 2018, Arkansas i-SIP submittal for the 2015 O 3 NAAQS as detailed in Table 1 of this final action. The agency will take action on those portions of the submission addressing CAA section 110(a)(2)(D)(i)(I), prongs 1 and 2, Significant Contribution to Nonattainment and Interference with Maintenance in other states, and CAA section 110(a)(2)(D)(i)(II), prong 4, Interference with Visibility Protection in other states in separate, future actions.

Based upon our review of the State's infrastructure SIP submission for the 2015 O 3 NAAQS and relevant statutory and regulatory authorities and provisions referenced in this submission or referenced in the EPA-approved Arkansas SIP, EPA finds that the state has established that it has met the infrastructure SIP requirements of CAA sections 110(a)(1) and (2), as applicable, except as noted in Table 1 of this final action.

We are also approving the submitted changes to the state's Regulation 19 Definitions and Appendix B that reference the 2015 O 3 NAAQS.

In this document, EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is finalizing the incorporation by reference of a revision to Regulation 19, Chapter 2, Definitions and Appendix B, Regulations of the Arkansas Plan of Implementation for Air Pollution control. EPA has made, and will continue to make, these materials generally available through www.regulations.gov and at the EPA Region 6 Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information). Therefore, these materials have been approved by the EPA for inclusion in the SIP, have been incorporated by reference by the EPA into that plan, are fully federally enforceable under sections 110 and 113 of the CAA as of the effective date of the final rulemaking of the EPA's approval, and will be incorporated by reference in the next update to the SIP compilation.

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

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

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

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

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

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

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

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

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

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

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

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this action and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by April 13, 2021. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

For the reasons stated in the preamble, the Environmental Protection Agency amends 40 CFR part 52 as follows:

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

On September 25, 2020, EPA proposed to approve revisions to Wisconsin's VOC RACT rules for lithographic printing facilities contained in the Wisconsin Administrative Code Chapter NR 422, Sections NR 422.02, 422.142, and 422.143 (85 FR 60413). An explanation of the Clean Air Act requirements, a detailed analysis of the revisions, and EPA's reasons for proposing approval were provided in the notice of proposed rulemaking and will not be restated here. The public comment period for this proposed rule ended on October 26, 2020. EPA received no comments on the proposal.

EPA is approving revisions to the Wisconsin SIP rules relating to the control of VOC emissions from offset lithographic printing operations (WI Admin Code NR 422.02, 422.142, 422.143) submitted on December 13, 2019. These rules are approvable because they are consistent with the latest CTG for Offset Lithographic Printing and Letterpress Printing issued by EPA in 2006, clarify the existing state VOC RACT requirements for lithographic printing operations located in nine counties in Wisconsin, and streamline the implementation of these state rules.

In this rule, EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is finalizing the incorporation by reference of the Wisconsin Regulations described in the amendments to 40 CFR part 52 set forth below. EPA has made, and will continue to make, these documents generally available through www.regulations.gov, and at the EPA Region 5 Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information).

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

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

• Is not an Executive Order 13771 (82 FR 9339, February 2, 2017) regulatory action because it is not a significant regulatory action under Executive Order 12866;

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

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

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

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

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

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

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

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

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

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this action and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by April 13, 2021. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

For the reasons stated in the preamble, EPA amends 40 CFR part 52 as follows:

This is a synopsis of the Order in WC Docket No. 17-310; DA 20-1420, adopted and released November 30, 2020. Due to the COVID-19 pandemic, the Commission's headquarters will be closed to the general public until further notice. The full text of this document is available at the following internet address: https://docs.fcc.gov/public/attachments/DA-20-1420A1.pdf.

1. The Wireline Competition Bureau (Bureau) amends the prior decision, adopted in the December 2019 Public Notice (DA 19-1253), to delay the implementation date of certain rule changes introduced in the Promoting Telehealth Report and Order (FCC 19-78). Specifically, in light of changed circumstances, the Bureau finds that the rules should be implemented as soon as possible, and hence the Order accelerates the operational date of those rules, thereby ensuring that the updated site and service substitution rules, corrective and operational Service Provider Identification Number (SPIN) change rules, service delivery deadline extension rules, and invoicing deadline extension rules adopted in the Promoting Telehealth Report and Order will be fully effective for the remainder of funding year 2020. The Bureau anticipates that this action will help Rural Health Care (RHC) Program participants, now faced with the challenges of the COVID-19 pandemic, address changing circumstances in the current funding year and beyond.

2. Through the Order the Bureau ensures that the rule changes in the Promoting Telehealth Report and Order adopting site and service substitutions for the Telecom Program, amending the SPIN change process to allow for corrective and operational changes across both the Healthcare Connect Fund and Telecom Programs, establishing a service delivery deadline of June 30 while permitting a one-year extension of the service delivery deadline, and permitting a one-time 120-day invoice filing extension will be effective for the remainder of funding year 2020. The December 2019 Public Notice pushed back the operational dates to funding year 2021 for all rule changes requiring approval pursuant to the Paperwork Reduction Act (PRA). Now that such PRA approval ( eff. June 19, 2020 (85 FR 37022) has been obtained and in light of changed circumstances arising from the COVID-19 emergency, the Bureau recognizes that making these aforementioned rules operational for funding year 2020 could provide helpful flexibility to health care providers during the current funding year. Accordingly, the Bureau amends the earlier action in the December 2019 Public Notice so that the updated site and service substitution rules, corrective and operational SPIN change rules, and service delivery deadline and invoicing deadline extension rules will become operational for the remainder of funding year 2020, on March 15, 2021.

3. The COVID-19 pandemic has caused an unprecedented medical emergency, highlighting the need for remote telehealth options to treat and save the lives of Americans. The Bureau anticipates that the rule changes that are made operational for the remainder of funding year 2020 will help health care providers with changing circumstances as they serve patients in rural areas during this COVID-19 pandemic. The Bureau takes this action to amend the operational date of the rules to provide health care providers with increased flexibility to make changes to funding requests and seek extensions of RHC Program deadlines. The rules that are the subject of the Order were intended to harmonize requirements between the Telecom and Healthcare Connect Fund Programs and reduce administrative burdens on health care providers. Amending the operational date of the rules will, among other things, allow health care providers to seek extensions of the service delivery deadlines and invoice deadlines, make site and service substitution requests, and make SPIN changes. The COVID-19 pandemic is a heavy burden on health care providers, and the amendment of the operational date of the rules will assist program participants as they work to treat patients during the health emergency. Accordingly, the Bureau finds good cause exists given the urgent health care crisis to dispense with additional notice and comment, to the extent such notice and comment would normally be appropriate, before taking this action. The Bureau notes that the Order is consistent with the its prior actions in response to the COVID-19 pandemic, waiving filing deadlines and other administrative requirements to increase broadband connectivity and administrative flexibility for health care providers.

4. The Order will become effective March 15, 2021. Any program participants seeking site and service substitutions or SPIN changes for the portion of funding year 2020 prior to the effective date of the Order may seek a waiver of the Commission's rules. Additionally, in the event that a program participant is negatively impacted by any of the actions taken in the Order, it may file a petition for waiver seeking relief from the updated effective date and request to use the rules predating the Promoting Telehealth Report and Order through funding year 2020.

5. The Universal Service Administrative Company (USAC), the Universal Service Administrator, is currently working to implement technology changes that will allow program participants to make filings requesting changes consistent with the Promoting Telehealth Report and Order. In conjunction with the implementation of the new rules, USAC is updating its information technology systems to allow program participants to file the appropriate forms; however, those changes have not been implemented. Currently, USAC is working under a schedule stemming from the December 2019 Public Notice, in which the changes were to be implemented prior to the start of funding year 2021. The Commission expects that USAC will have implemented all technology deployments related to these rule changes before the end of funding year 2020. Because invoice extension requests and service delivery deadline requests occur at the end of the funding year, there should be no need for health care providers to make these requests before USAC is in position to accept such requests. Some health care providers, however, will likely wish to make SPIN change and site and service substitution requests mid-year. To ensure that the changes can be requested throughout the year, the Commission directs USAC to develop and publicize within 30 days of the Federal Register publication, an interim system for processing site and service substitutions and SPIN changes that will be available until USAC launches its permanent technological solution.

6. Accordingly, it is ordered that pursuant to the authority in sections 1-4 and 254 of the Communications Act of 1934, as amended, 47 U.S.C. 151-154 and 254, and pursuant to §§ 0.91 and 0.291 of the Commission's rules, 47 CFR 0.91 and 0.291, amending the operational date of §§ 54.624, 54.625, 54.626, and 54.627 of the Commission's rules, 47 CFR 54.624, 54.625, 54.626, and 54.627, as indicated herein.

7. It is further ordered that, pursuant to § 1.102(b)(1) of the Commission's rules, 47 CFR 1.102(b)(1), the order shall be effective March 15, 2021.

This is a summary of the Commission's Report and Order ( R&O ), MB Docket Nos. 15-146; GN Docket No. 12-268; FCC 20-175, adopted on December 8, 2020 and released December 9, 2020. The full text of this document is available for download at https://www.fcc.gov/edocs. To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an email to fcc504@fcc.gov or call the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).

1. In this Order, the Commission declines to adopt the proposals in the 2015 NPRM finding that support of white space device and wireless microphone users is now more effectively being achieved through other Commission proceedings, and, as a result, the proposals to preserve a vacant channel for shared use by white space devices and wireless microphone operations do not serve the public interest.

2. The Commission finds that the spectrum landscape has changed significantly since 2015. Without question, today's TV band is smaller and more densely packed than it was at the time the Commission adopted the 2015 NPRM. To illustrate, at the time the 2015 NPRM was adopted, there were 1,384 full power and Class A televisions stations operating on UHF channels 21 through 51 for an average of 46 stations per channel. Today, there are 1,088 such stations operating on channels 21 through 36, an average of 68 stations per channel, many with expanded facilities. In addition, the TV band is more densely packed as a result of changes made by stations after the Incentive Auction and because reverse auction winners continue to operate in the new TV band. Analyses using the Commission's TVStudy software reveal that there are numerous major metropolitan areas in the United States that have no vacant, 6 MHz channels. This reality undermines the Commission's goal of creating a nationwide solution as proponents of the 2015 NPRM proposal argued on behalf of the proposal on the grounds that such a nationwide vacant channel was essential.

3. Subsequent to adoption of the 2015 NPRM, the Commission took a number of significant steps to ensure that white space device and wireless microphone operations can flourish. In responding to the 2015 NPRM, white space device proponents cited the need to create certainty that vacant channels would be available for their use in order to promote greater innovation in new devices and services, including increased access to broadband services across the country. The Commission believes that its more recent actions in other proceedings have helped to create such certainty by allowing for more robust service and efficient spectral use in the post-Incentive Auction television band as well as in the 600 MHz guard bands and 600 MHz wireless services and by revising the rules to allow for enhanced fixed white space device operations in rural areas. The Commission finds that these actions have achieved the benefits sought by white space device proponents and obviate the need to impose the burdensome vacant channel preservation requirement on television broadcasters. Similarly, when responding to the 2015 NPRM, wireless microphone users expressed concerns about the reduced amount of spectrum that would be available for use by wireless microphones in the repacked TV bands, and they cited to such concerns to support their call to preserve a vacant channel for shared use with white space devices. Once again, the Commission believes that the steps it has taken in other proceedings since the 2015 NPRM will ensure that wireless microphone operators have access to sufficient spectrum, including spectrum outside of the broadcast television band, to meet their needs. These actions underscore the conclusion that the regulatory approach proposed in the 2015 NPRM is no longer needed and is outweighed by the burden that such an action would place on the broadcast users of the TV band.

4. White Space Devices. In August 2015, recognizing the significantly altered regulatory landscape for unlicensed white space devices in the broadcast television bands, the Commission adopted its White Spaces R&O, 30 FCC Rcd 9551. In that proceeding, the Commission modified several rules to allow for more robust service and efficient spectral use in the post-Incentive Auction television band as well as in the 600 MHz guard bands and 600 MHz wireless services band that would be created as a result of repurposing the television bands following the Incentive Auction. Specifically, the Commission enabled lower powered operations closer to television stations, as well as higher powered operations in less-congested rural areas that enhance broadband services in these areas. The Commission also established rules permitting white space device operations on spectrum outside of the broadcast television band in the 600 MHz guard bands (including duplex gap) and the 600 MHz wireless service band, and on channel 37.

5. In the Commission's White Spaces Reconsideration Order, 34 FCC Rcd 1827, in that proceeding, it took additional action to promote white spaces operations. Recognizing that white space device operations served to provide vital links for broadband services to Americans especially in rural and underserved areas, the Commission increased the maximum permissible fixed white space device antenna height above ground level in less congested areas such as rural areas.

6. In 2020, the Commission initiated a new proceeding proposing actions to “spur the continued growth of the white space device ecosystem” that had been evolving. In the White Spaces NPRM, 35 FCC Rcd 2101, the Commission focused chiefly on providing additional opportunities for unlicensed white space devices operating in the broadcast television bands to deliver wireless broadband services in rural and underserved areas and applications associated with the Internet of Things (IoT). The Commission initiated the proceeding largely in response to Microsoft's 2019 petition for rulemaking, which had proposed revisions to promote greater flexibility for white space device operations in rural areas; which had garnered broad support from many white space device proponents. On October 28, 2020, the Commission issued a Report and Order and Further Notice of Proposed Rulemaking, FCC 20-156, adopting new targeted rules with this focus, which will benefit American consumers in rural and underserved areas while protecting broadcast television stations and other protected services initiated from harmful interference. Specifically, the Commission permitted higher power and higher antennas for fixed white space devices in “less congested” geographic areas where there continue to be vacant TV channels available for use by white space devices (and wireless microphones), and permitted higher power mobile operation within “geo-fenced” areas in these “less congested” areas. The Commission also adopted rule changes designed to facilitate the development of new and innovative narrowband IoT services in these bands. Finally, the Commission sought comment on whether it should permit use of a terrain-based model ( e.g., Longley-Rice Irregular Terrain Model) when determining available TV channels for white space device operations, which if adopted could potentially expand the areas available for white space device operations in this spectrum.

7. In the 2015 vacant channel proceeding, white space device proponents argued that the proposals in the 2015 NPRM would ensure that the public has access to these services and would help promote investment and innovation in these technologies. The Commission's more recent actions, however, reflect the subsequent evolution of white space device operations, as indicated by support from major white space device proponents over the last few years, to focus on rural and underserved areas where a substantial amount of spectrum remains available for white space devices after repacking. The Commission finds that these alternative actions are an effective means for the Commission to support white space device operations and the white space device ecosystem as it has evolved since 2015. We conclude that the rationale behind the Commission's tentative conclusion concerning the need to preserve a vacant channel in the broadcast television band to provide certainty for the white space device industry no longer holds.

8. Wireless microphones. In 2015, in a proceeding that had been initiated to explore steps to address wireless microphone users' long-term needs following the Incentive Auction and repacking of the broadcast television band, the Commission adopted several changes to ensure sufficient spectrum would continue to available for wireless microphone use. With respect to the reconfigured broadcast television band following the Incentive Auction and repacking, the Commission revised its rules to provide more opportunities for wireless microphones to access spectrum by allowing greater use of the VHF broadcast television channels and more co-channel operations with television stations, and adopted more efficient analog and digital technical standards to ensure more efficient use of the available spectrum. The Commission also expanded eligibility for the licensed use of the 600 MHz duplex gap to all entities now eligible to hold wireless microphone licenses to use television band spectrum. The Commission also took several actions to promote use of spectrum bands outside of the broadcast television band, including providing new opportunities for use in UHF spectrum in the 900 MHz band.

9. In 2017, in the Wireless Microphones Reconsideration Order and Further Notice, 32 FCC Rcd 6077, the Commission furthered its goal of promoting wireless microphone operations and ensuring sufficient spectrum would be available following the Incentive Auction and repacking process. Specifically, it made technical revisions to rules it had adopted for both licensed and unlicensed wireless microphone operations in the TV bands, and in the 600 MHz guard band and duplex gap, as well as to rules for licensed wireless microphone operations in several frequency bands outside of the TV and 600 MHz bands, including the UHF spectrum in the 900 MHz band. It also issued a Further Notice of Proposed Rulemaking seeking to ensure that certain professional theater, music, performing arts, or similar organizations that currently operate wireless microphones on an unlicensed basis can obtain licenses to operate in the broadcast television bands as well as other frequency bands, including UHF spectrum in the 900 MHz band, if necessary, to ensure that they can provide the public interest benefits of significantly enhanced event productions to the American people.

10. The Commission is not persuaded by wireless microphone commenters in the dormant docket proceeding who maintain that the Commission should refresh the record in this proceeding and adopt the vacant channel preservation proposals. The Commission finds that these proposals are no longer necessary to further their stated objective.

11. Public Interest Analysis. While the Commission recognizes the important benefits provided by white space devices and wireless microphones in the TV bands, it finds that the other actions that the Commission has taken to support these users subsequent to issuance of the 2015 NPRM provide a better alternative for addressing their needs than through efforts to preserve a vacant channel. Moreover, the Commission can no longer say that the 2015 NPRM's proposals “will not significantly burden broadcast applicants.” NAB has stated the vacant channel proposals “would impose significant burdens on broadcasters both by restricting innovation and by imposing new and costly administrative burdens on broadcasters seeking to construct new or modified facilities.” The Commission agrees. In light of changed circumstances the Commission concludes that it should not deviate from previous Commission decisions that use of the TV bands by primary and secondary broadcast users have priority over wireless microphones and white space devices. The Commission believes that preserving robust over-the-air broadcast television service remains an important spectrum allocation priority, especially to rural areas without adequate MVPD and broadband service alternatives. In addition, the Commission has recognized the promise of next generation ATSC 3.0 service by over-the-air television broadcasters to expand the universe of potential uses of broadcast spectrum capacity for new and innovative services in ways that will complement the nation's burgeoning 5G networks and usher in a new wave of innovation and opportunity. As NAB and a number of broadcasters noted in their 2015 comments, adoption of the proposed rules would serve to freeze full power stations in place and hamstring their ability to expand or innovate to better serve their viewers. Having restructured the TV band, the Commission finds that to now adopt a requirement that primary and/or secondary television stations protect spectrum availability for white space devices and wireless microphones in the smaller, more densely packed television band, would not serve the public interest. Moreover, NAB points out that the proposals would require “novel engineering studies” that “would be expensive and time-consuming, particularly for smaller broadcasters” where “the cost of conducting such studies is likely to be multiples of current engineering design costs.” Significantly, television stations would bear the administrative burden of studying and proving the availability of channels for other users in order to have an application that is otherwise in the public interest granted—both in congested areas where a vacant channel may not be available in the television band and in less congested areas where more spectrum is available such that analysis is not warranted. Therefore, the Commission finds that, on balance, seeking to preserve a vacant channel for shared use by white space devices and wireless microphone operations at this time, considering all of the actions that the Commission has taken since 2015 to promote those users' interests, are outweighed by the burdens of the proposals on broadcasters and the Commission terminates the proceeding.

This is a summary of the Commission's Order on Reconsideration, document FCC 20-182, released on December 14, 2020. The full text of document FCC 20-182 is available online at https://docs.fcc.gov/public/attachments/FCC-20-182A1.pdf. To request this document in accessible formats for people with disabilities ( e.g., Braille, large print, electronic files, audio format) or to request reasonable accommodations ( e.g., accessible format documents, sign language interpreters, CART), send an email to fcc504@fcc.gov or call the FCC's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice).

1. On reconsideration of the Broadnet Declaratory Ruling, the Commission reverses its previous order to the extent that it provided that a contractor making calls on behalf of the federal government was not a “person” subject to the restrictions in section 227(b)(1) of the TCPA. The Commission also clarifies that a state government caller making calls in the conduct of official government business is not a “person” subject to section 227(b)(1) of the TCPA, while a state or local government contractor, like a federal contractor, is a “person” and thus not exempt from the TCPA's restrictions. Finally, the Commission clarifies that a local government is a “person” subject to the TCPA. As such, the Commission grants in part the National Consumer Law Center (NCLC) petition for reconsideration, denies the Professional Services Council (PSC) petition for reconsideration, reverses the Commission's Broadnet Declaratory Ruling in part, and grants in part and denies in part Broadnet's petition for declaratory ruling.

2. The Commission finds that a federal government contractor is a “person” under section 227(b)(1). The term “person” as used in the TCPA and defined in the Communications Act (Act) expressly includes an “individual, partnership, association, joint-stock company, trust, or corporation” “unless the context otherwise requires.” Every federal contractor, including those acting as agents, falls within one of these categories. And, unlike the federal government itself, there is no longstanding presumption that a federal contractor is not a “person.” Nor does the Commission find any “context that otherwise requires” it to ignore the express language of the Act's definition of the term “person” in this situation. Absent any applicable presumption to the contrary, the express definition of “person” as contained in the Act is controlling.

3. Federal government contractors may obtain consumers' prior express consent to make calls covered by the TCPA. Such contractors may also qualify for forms of derivative immunity when making calls on behalf of the federal government—the Commission does not alter or impair the ability of contractors to invoke derivative immunity from liability when making calls on behalf of the federal government.

4. In this document, the Commission finds that it incorrectly applied precedent on agency to federal government-contractor relationships in the Broadnet Declaratory Ruling. Specifically, the Commission grounded its decision in the DISH Declaratory Ruling, which pertained to a non-governmental “person” subject to the TCPA and whether it is vicariously liable for the actions of its non-governmental agents. As a result, the Commission finds that precedent does not bear on the issues here—which callers are TCPA “persons”—but instead involved principals and agents that were undoubtedly “persons.”

5. Maker of the Call. In this document, the Commission finds that a federal contractor may be able to avoid liability under the TCPA if it is not the “maker of the call.” The Commission previously clarified that a caller may be found to have made or initiated a call in one of two ways: First, by “tak[ing] the steps necessary to physically place a telephone call”; and second, by being “so involved in the placing of a specific telephone call as to be directly liable for making it.” The Commission stated that, in determining the maker of the call, it would consider “the totality of the facts and circumstances surrounding the placing of a particular call to determine: (1) Who took the steps necessary to physically place the call; and (2) whether another person or entity was so involved in placing the call as to be deemed to have initiated it, considering the goals and purposes of the TCPA.”

6. In this document, the Commission states that it will continue to apply this analysis to assess TCPA liability of parties, including government contractors, on a case-by-case basis. Based on these fact-specific criteria, Broadnet states that its “government customers, and not Broadnet, make all decisions regarding whether to make a call, the timing of the call, the call recipients, and the content of the call.” It further states that its “government customer takes the steps physically necessary to initiate a telephone town [hall] call,” while Broadnet's role is to “manage the technical aspects of the service and to ensure that its customers do not use the platform unlawfully.”

7. The Commission finds that Broadnet is not the maker of the call, but rather that Broadnet's government client is the maker of the call because that government client is so involved in placing the call as to be deemed to have initiated it.

8. The Commission clarifies that state government callers in the conduct of official business likewise do not fall within the meaning of “person” in section 227(b)(1), while state contractors, like their federal counterparts, are “person[s]” under that provision. As the Commission has noted, there is a “longstanding interpretive presumption” that the word `person' does not include the sovereign . . . [except] upon some affirmative showing of statutory intent to the contrary.” The Supreme Court has confirmed that this presumption is applicable to state governments. Moreover, neither the TCPA nor the Communications Act defines “person” to include state governmental entities.

9. This clarification is limited to calls made by state government callers in the conduct of official business and does not exempt other types of calls made by state officials, such as those related to campaigns for re-election. Nevertheless, the Commission encourages state governments to make efforts to honor consumer requests to opt out of such exempted calls to minimize any consumer privacy implications.

10. The Commission states that it is limiting its interpretation of “person” as excluding state governments to the specific statutory provision before it: Section 227(b)(1) of the TCPA. As in the Broadnet Declaratory Ruling, the Commission makes no finding with respect to the meaning of “person” as used elsewhere in the Act.

11. For the same reasons the Commission found federal contractors are “persons” under section 227(b)(1) of the TCPA, the Commission now finds that contractors acting on behalf of state governments are likewise “persons.” Such contractors fall within the express language of the Communications Act's definition of “person” and it finds no compelling argument to the contrary. As with federal contractors, this ruling leaves it to the courts to apply the body of existing immunity law to state contractors and to make determinations of derivative immunity on a case-by-case basis.

12. The Commission clarifies that local government entities, including counties, cities, and towns, are “persons” within the meaning of section 227(b)(1) and are, therefore, subject to the TCPA. Specifically, the Commission finds that the definition of “person” encompasses local governments because they are not sovereign entities and have generally been treated as persons subject to suit. In addition, the Commission finds that, even if the definition of “person” is ambiguous as applied to local governments, the underlying policy goals and legislative history of the TCPA support a finding that TCPA restrictions apply to local government entities.

13. The law has long recognized that a municipal corporation is a local political entity, such as a city or town, formed by charter from the state. Municipal corporations, like private corporations, have been “treated alike in terms of their legal status as persons capable of suing and being sued.” “The archetypal American corporation of the eighteenth century [was] the municipality,” and local governments generally are incorporated under state law and operate pursuant to a charter outlining their incorporation. The Commission further notes that all states have adopted some form of municipal corporate structure and that the federal government often treats incorporated and non-incorporated areas similarly.

14. The Commission finds that the lack of any clear indication that Congress intended to exclude local governments from the TCPA is evidence that Congress intended such government entities to fall under its purview.

15. The Commission further finds that the underlying goals and legislative history of the TCPA separately show that Congress intended local governments to be subject to the law's restrictions. Congress' intent to prohibit nuisance calls to consumers is instructive in the Commission's interpretation of any ambiguity within the statute. Because of Congress' clear intent to protect consumers, the Commission interprets any ambiguity to the benefit of the consumer.

16. The Commission also clarifies that a local government contractor is a “person,” as that term is used in section 227(b)(1) of the TCPA. Because local governments and their contractors are “persons,” they are subject to section 227(b)(1) of the TCPA and must abide by the requirements contained therein, including obtaining prior express consent when making autodialed or artificial or prerecorded voice calls to certain types of telephone numbers such as wireless numbers.

17. As with other “persons” subject to the TCPA, local governments and their contractors may avail themselves of the TCPA's exemptions to the prior express consent requirement, such as calls made for “emergency purposes.” Nothing in the Commission's decision impedes the ability of local governments or contractors to make emergency calls to wireless telephone numbers when such calls are necessary to protect the health and safety of citizens. The Commission has recently confirmed, for example, that government officials and public health care authorities, as well as a person under the express direction of such organizations and acting on its behalf, can make automated calls directly related to the imminent health or safety risks arising out of the COVID-19 pandemic without the prior express consent of the called party.

I. Background

GSA has been conducting a regulatory review initiative to identify areas which might be revised or eliminated. Upon review of GSAR part 553, we uncovered a discrepancy between the Code of Federal Regulations (CFR) and acquisition.gov. The current language in subpart 553.2 in the CFR was published in the Federal Register , Vol. 64, No. 131, on July 9, 1999 and has not changed since. However, acquisition.gov has no such language. It is determined that all of the guidance in GSAR Part 553 in the CFR should be removed.

This direct final rule amends the GSAR to remove regulations regarding forms from subpart 553.2 and section 553.300. The subpart has no content, just the header of “Illustrations of Forms”. There is no prescription information that follows. In addition, text at 553.300 contains erroneous information on how to obtain copies of forms. Therefore, the entirety of GSAR Part 553 is unnecessary.

Background

On June 18, 2018, NMFS notified the Council that three stocks of coho salmon managed under the Council's Pacific Coast Salmon Fishery Management Plan (FMP) met the overfished criteria of the FMP and the MSA, and the overfished determinations were announced in the Federal Register on August 6, 2018 (83 FR 38292). Overfished is defined in the FMP to be when the 3-year geometric mean of a salmon stock's annual spawning escapement falls below the reference point known as the minimum stock size threshold (MSST). The 3-year geometric mean of spawning escapement fell below MSST for all three coho salmon stocks for the period 2014-2016. In response to the overfished determination, the Council developed rebuilding plans for these stocks, and the rebuilding plans were transmitted to NMFS on October 17, 2019, for approval and implementation. NMFS published a proposed rule (85 FR 61912, October 1, 2020) describing the rebuilding plans and soliciting comments from the public on the proposed rule and on the draft environmental assessments (EAs) that were prepared under the National Environmental Policy Act (NEPA).

In this final rule, NMFS approves and implements the rebuilding plans for the three overfished coho salmon stocks. For Juan de Fuca and Queets natural coho, this rule adopts the existing harvest control rules, which use an annual abundance-based stepped harvest rate control rule with stock-specific abundance levels governing the total exploitation rates applied to forecast stock abundance levels. For Snohomish natural coho, this final rule amends the existing harvest control rule by adding a 10-percent buffer to the existing escapement goal and adjusting the abundance steps during the rebuilding period. Additional information on these plans is available in the preamble of the proposed rule and is not repeated here.

On October 1, 2020, NMFS published a proposed rule and requested public comment on the proposed rule (85 FR 61912). The comment period ended on November 2, 2020. Concurrent with the comment period on the proposed rule, NMFS made the related draft EAs available online for public comment. Eight individuals submitted comments on the proposed rule; no comments were submitted on the draft EAs. Most comments were supportive of regulating fishing, but did not express specific support for, or opposition to, the proposed rebuilding plans. Specific comments and responses are discussed below.

Comment 1: Two commenters expressed concern about ensuring compliance with fishery regulations.

Response: NMFS agrees that compliance with fishery regulations is important. NMFS' Office of Law Enforcement participates on the Council's Enforcement Consultants advisory body, along with representatives from state police agencies, state fish and wildlife agencies, and the Coast Guard. The Enforcement Consultants provide advice to the Council about whether proposed management actions are enforceable and how they affect safety at sea. These agencies also work to enforce fishery regulations at sea and at various fishing ports on the West Coast. The input of these agencies was considered in the development of the Council's proposal, as included in the proposed rule.

Comment 2: One comment was specifically supportive of the proposed rebuilding plans as described in the proposed rule and felt they would benefit both fish and fishermen.

Response: NMFS agrees that the Council's recommended rebuilding plans are the most appropriate response to rebuild the overfished coho salmon stocks at this time, as they rebuild the overfished stocks in the shortest time possible while taking into account the needs of the fishing communities, as required by the MSA.

Comment 3: One comment opposed the proposed rebuilding plans as not being sufficiently restrictive of fishery impacts and suggested applying a 30-percent buffer on exploitation rates.

Response: NMFS disagrees with the suggestion that there is a need for more restrictive exploitation rates at this time. For all three coho salmon stocks, the Council's Salmon Technical Team's (STT's) analysis, as detailed in the EAs, determined that freshwater and marine habitat conditions were the primary cause of these stocks meeting the FMP's criteria for being overfished rather than fishing. In addition, exploitation rates on these coho salmon stocks in Council-managed fisheries are a small fraction of the total exploitation rates in all fisheries, which include Alaskan and Canadian fisheries, and non-Council pre-terminal and terminal fisheries. The STT's analysis included exploitation rates for the overfished coho stocks in all fisheries for the period 2004-2017. For Juan de Fuca coho, the overall annual exploitation rate averaged 10.5 percent and the Council-area annual exploitation rate averaged 2.3 percent. For Queets coho, the overall annual exploitation rate averaged 38.5 percent and the Council-area annual exploitation rate averaged 7.2 percent. For Snohomish coho, the overall annual exploitation rate averaged 22.8 percent and the Council-area annual exploitation rate averaged 1.9 percent. Adding an additional 30 percent buffer to the already constrained exploitation rates in Council-area fisheries would have a severe impact on the fishing community, especially in the area from the U.S./Canada border to Cape Falcon, OR, and would not result in rebuilding these stocks substantially sooner than under the Council's rebuilding plans.

Comment 4: One comment opposed the rebuilding plans on the basis that they did not sufficiently address the impact of freshwater habitat and water quality on marine survival of salmon.

Response: NMFS understands and agrees with the concern about freshwater habitat for coho salmon. The STT's analysis found that both freshwater and marine productivity were the primary causes of these coho stocks meeting the overfished criteria, rather than fishery impacts. These rebuilding plans have been developed pursuant to the MSA, which regulates fishing in the exclusive economic zone (EEZ). NMFS's authority in adopting these rebuilding plans is therefore limited to that scope. The Council may direct its Habitat Committee to work with state, federal, and tribal fishery managers to review freshwater habitat conditions and develop recommendations for habitat recommendations and restoration as an action separate and apart from these rebuilding plans.

There are no changes made to the regulatory text of the proposed rule.

Pursuant to section 304(b)(1)(A) of the MSA, the NMFS Assistant Administrator has determined that this final rule is consistent with the FMP, other provisions of the MSA, and other applicable law.

This final rule has been determined to be not significant for purposes of Executive Order 12866.

The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration during the proposed rule stage that this action would not have a significant economic impact on a substantial number of small entities. The factual basis for the certification was published in the proposed rule and is not repeated here. No comments were received regarding this certification. As a result, a regulatory flexibility analysis was not required and none was prepared.

This final rule contains no information collection requirements under the Paperwork Reduction Act of 1995.

This final rule was developed after meaningful collaboration with the tribal representative on the Council; the tribal representative has agreed with the provisions that apply to tribal vessels.

For the reasons set out in the preamble, 50 CFR part 660 is amended as follows: