I. Background

On March 7, 2023, TSA issued Joint Emergency Amendment (EA) 23-01  1 to certain aviation stakeholders to address the significant cybersecurity threat to the aviation system, evidenced by recent incidents and intelligence. Joint EA 23-01 is part of TSA's and the Government's, more broadly, ongoing plans and efforts to rapidly increase the cybersecurity resilience of critical transportation infrastructure. TSA determined that proceeding with immediate action was warranted under the circumstances to ensure timely implementation of critical mitigation measures by higher risk regulated entities. Joint EA 23-01 amends the security programs  2 for covered owners/operators to require performance-based cybersecurity measures intended to prevent the disruption and degradation of their critical systems. Joint EA 23-01's requirements are similar to performance-based requirements that TSA has already issued to critical pipeline and rail entities. 3

The TSOB was created by the Aviation and Transportation Security Act (ATSA) to provide guidance regarding transportation security-related matters. TSOB members include the Secretaries of Homeland Security, Transportation, Defense, and the Treasury, the Attorney General, the Director of National Intelligence, or their designees, and one member appointed by the President to represent the National Security Council. The Secretary of Homeland Security serves in the role of TSOB chairman, which has been further delegated within the Department to the Deputy Secretary. 4 As part of its statutory duties, the TSOB is authorized to review plans for transportation security and make recommendations to the TSA Administrator regarding those plans. 5

Following the issuance of Joint EA 23-01, TSA sought the TSOB's discretionary review under 49 U.S.C. 115(c)(5) and (6) regarding whether a cybersecurity emergency exists that warrants TSA's determination to expedite the implementation of critical cyber mitigation measures through the exercise of its emergency regulatory authority, under which the EA was issued. 6 TSA sought the TSOB's perspective and guidance given the TSOB's role in ratifying TSA's emergency cybersecurity actions applicable in the pipeline and rail sectors as well as the context of the coordinated efforts across the Government to counter the continuing and serious cyber threats.

Under the authority of 49 U.S.C. 115(c)(5) and (6), the chairman of the TSOB convened a meeting of the Board to review TSA's transportation security plans for cybersecurity in the aviation sector and provide a recommendation regarding whether a cybersecurity emergency exists that warrants TSA's determination to expedite the implementation of critical cyber mitigation measures by exercising its emergency regulatory authority to issue Joint EA 23-01. Representatives from the White House Office of the National Cyber Director, the Department of Defense's United States Transportation Command, DHS's Cybersecurity and Infrastructure Security Agency, and the Federal Aviation Administration, as well as the Deputy National Security Advisor for Cyber and Emerging Technology at NSC were also invited to participate in the meeting given their relevant expertise.

During the meeting, the TSOB was briefed on the cyber threat to the aviation transportation system and on TSA's effort to mitigate the threat through Joint EA 23-01. The briefing included presentation of sensitive security information and classified information. Following the briefing, the TSOB discussed the circumstances precipitating TSA's issuance of Joint EA 23-01, including relevant events and intelligence presented during the briefing. At the meeting's conclusion, the TSOB recommended that a cybersecurity emergency exists that warrants TSA's determination to expedite the implementation of a critical cyber mitigation measures through the exercise of its emergency regulatory authority to issue Joint EA 23-01. This action reinforced the need for TSA to proceed with critical mitigation measures on an emergency basis.

The cyber threat to the country's critical infrastructure has only increased in the time since TSA issued its initial cybersecurity-related security directive (Security Directive Pipeline-2021-01) in response to the Colonial Pipeline incident. Cyber threats to surface transportation systems, including pipelines, continue to proliferate, as both nation-states and criminal cyber groups continue to target critical infrastructure in order to cause operational disruption and economic harm. 1 Cyber incidents, particularly ransomware attacks, are likely to increase in the near and long term, due in part to vulnerabilities identified by threat actors in U.S. networks. 2 Particularly in light of the ongoing Russia-Ukraine conflict, 3 these threats remain elevated and pose a risk to the national and economic security of the United States.

On May 27, 2021, TSA issued Security Directive Pipeline-2021-01, which was the first of two security directives issued by TSA to enhance the cybersecurity of critical pipeline systems in response to the Colonial Pipeline attack on May 7, 2021. Security Directive Pipeline-2021-01, and the subsequent amendments in this series, required covered owner/operators to: (1) report cybersecurity incidents to CISA; (2) appoint a cybersecurity coordinator to be available 24/7 to coordinate with TSA and CISA; and (3) conduct a self-assessment of cybersecurity practices, identify any gaps, and develop a plan and timeline for remediation. 4 This first security directive went into effect on May 28, 2021, was ratified by the TSOB on July 3, 2021, and was set to expire on May 28, 2022. 5

On December 2, 2021, TSA issued Security Directive Pipeline-2021-01A, amending Security Directive Pipeline-2021-01, to update the definition of cybersecurity incident covered by the directive's reporting requirement and align it with the definition applicable to the other modes. 6 The TSOB ratified Security Directive Pipeline-2021-01A on December 29, 2021. 7 Security Directive Pipeline-2021-01, as amended by Security Directive Pipeline-2021-01A, was set to expire May 28, 2022. On May 27, 2022, TSA issued Security Directive Pipeline-2021-01B to extend the requirements of Security Directive Pipeline-2021-01A for an additional year. 8 Security Directive Pipeline-2021-01B became effective May 29, 2022 and was set to expire on May 29, 2023. The TSOB ratified Security Directive Pipeline-2021-01B on June 24, 2021. 9

In light of the continuing threat, TSA determined that the measures required by the Security Directive Pipeline-2021-01, as amended and extended by Security Directive Pipeline-2021-01A and Security Directive Pipeline-2021-01B, remain necessary to protect the Nation's critical pipeline infrastructure beyond Security Directive Pipeline-2021-01B's expiration date of May 29, 2023. On May 22, 2023, TSA issued Security Directive Pipeline-2021-01C to extend the requirements of Security Directive Pipeline-2021-01B for an additional year. Security Directive Pipeline-2021-01C became effective May 29, 2023 and expires on May 29, 2024. Security Directive Pipeline-2021-01C contains no substantive changes from Security Directive Pipeline-2021-01B. Security Directive Pipeline-2021-01C is available online in TSA's Surface Transportation Cybersecurity Toolkit. 10

On July 19, 2021, TSA issued Security Directive Pipeline-2021-02, the second security directive TSA issued in response to the attack on Colonial Pipeline. This directive required owner/operators to implement additional cybersecurity measures to prevent disruption and degradation to their infrastructure in response to the ongoing threat, including a number of specific, prescribed mitigation measures. 11 On December 17, 2021, TSA issued Security Directive Pipeline-2021-02B, revising Security Directive Pipeline-2021-02 to provide additional flexibility to owner/operators in complying with certain requirements. The TSOB ratified Security Directive Pipeline-2021-02B on January 13, 2022. 12

On July 21, 2022, TSA issued Security Directive Pipeline-2021-02C, transitioning the requirements of the previous versions in the series to be more performance-based and less prescriptive. The performance-based approach enhanced security by mandating that critical security outcomes are achieved while allowing owner/operators to choose the most appropriate security measures for their specific systems and operations. The directive became effective on July 27, 2022, and was set to expire on July 27, 2023. The TSOB ratified Security Directive Pipeline-2021-02C on August 19, 2022. 13

Security Directive Pipeline-2021-02C identified critical security outcomes that covered parties must achieve. To ensure that these outcomes are met, the directive requires owner/operators to:

• Establish and implement a TSA-approved Cybersecurity Implementation Plan (CIP) that describes the specific cybersecurity measures employed and the schedule for achieving the security outcomes identified;

• Develop and maintain an up-to-date Cybersecurity Incident Response Plan (CIRP) to reduce the risk of operational disruption, or the risk of other significant impacts on necessary capacity, as defined in the directive, should the Information and/or Operational Technology systems of a gas or liquid pipeline be affected by a cybersecurity incident; and

• Establish a Cybersecurity Assessment Program (CAP) and submit an annual plan that describes how the owner/operator will proactively and regularly assess the effectiveness of cybersecurity measures and identify and resolve device, network, and/or system vulnerabilities.

In light of the continuing threat, TSA issued Security Directive Pipeline-2021-02D on July 26, 2023, extending the requirements of Security Directive Pipeline-2021-02C for an additional year. The directive became effective on July 27, 2023, and expires on July 27, 2024.

In addition to extending the performance-based requirements, Security Directive Pipeline-2021-02D includes several revisions intended to strengthen the effectiveness of the directive's requirements and allow greater ability to respond to changing threats. Security Directive Pipeline-2021-02D modified the requirements related to CIRPS and CAPS to provide greater clarity and strengthen their effectiveness and to ensure the provisions related to defining Critical Cyber Systems allow flexibility to respond to emerging and evolving threats. The security directive also contains several other clarifications and refinements of the existing requirements. The revisions contained in the directive were made following engagement with covered entities and in consultation with federal partners. Security Directive Pipeline-2021-02D is available online in TSA's Surface Transportation Cybersecurity Toolkit. 14

TSA has broad statutory responsibility and authority to safeguard the nation's transportation system. 15 The TSOB—a body consisting of the Secretary of Homeland Security, the Secretary of Transportation, the Attorney General, the Secretary of Defense, the Secretary of the Treasury, the Director of National Intelligence, or their designees, and a representative of the National Security Council—reviews certain TSA regulations and security directives as consistent with law. 16 TSA issued Security Directive Pipeline-2021-01C and Security Directive Pipeline-2021-02D under 49 U.S.C. 114( l )(2)(A), which authorizes TSA to issue emergency regulations or security directives without providing notice or the opportunity for public comment where “the Administrator determines that a regulation or security directive must be issued immediately in order to protect transportation security.” Security directives issued pursuant to the procedures in 49 U.S.C. 114( l )(2) “shall remain effective for a period not to exceed 90 days unless ratified or disapproved by the Board or rescinded by the Administrator.”  17

Following the issuance of Security Directive Pipeline-2021-01C on May 22, 2023, the chair of the TSOB convened the board to review the directive. In reviewing Security Directive Pipeline-2021-01C, the TSOB reviewed the required measures extended by the directive and the continuing need for TSA to maintain these requirements pursuant to its emergency authority under 49 U.S.C. 114( 1 )(2) to prevent the disruption and degradation of the country's critical transportation infrastructure. The TSOB also considered whether to authorize TSA to extend the security directive beyond its current expiration date of May 29, 2024, subject to certain conditions, should the TSA Administrator believe such an extension is necessary to address the evolving threat that may continue beyond the original expiration date.

Following its review, the TSOB ratified Security Directive Pipeline-2021-01C on June 21, 2023. The TSOB also authorized TSA to extend the security directive beyond its current expiration date, should the TSA Administrator determine such an extension is necessary to address the evolving threat that may continue beyond the original expiration date. Such an extension is subject to the following conditions: (1) there are no changes to the security directive other than an extended expiration date; (2) the TSA Administrator makes an affirmative determination that conditions warrant the extension of the directive's requirements; and (3) the TSA Administrator documents such a determination and notifies the TSOB.

After TSA issued Security Directive Pipeline-2021-02D on July 26, 2023, the chair of the TSOB again convened the board to review that directive. In reviewing Security Directive Pipeline-2021-02D, the TSOB reviewed the amended required measures extended by the directive as well as the continuing need for TSA to maintain these requirements pursuant to its emergency authority under 49 U.S.C. 114( l )(2) to protect critical transportation infrastructure. Again, the TSOB also considered whether to authorize TSA to extend Security Directive Pipeline-2021-02D beyond its current expiration date of July 27, 2024, subject to the same conditions, should the TSA Administrator believe such an extension is necessary to address the threat.

The TSOB ratified Security Directive Pipeline-2021-02D on August 24, 2023. The TSOB also authorized TSA to extend the security directive beyond its current expiration date, should the TSA Administrator determine such an extension is necessary to address the evolving threat that may continue beyond the original expiration date. Such an extension is subject to the following conditions: (1) there are no changes to the security directive other than an extended expiration date; (2) the TSA Administrator makes an affirmative determination that conditions warrant the extension of the directive's requirements; and (3) the TSA Administrator documents such a determination and notifies the TSOB.

The Food and Nutrition Service is extending the public comment period on the interim final rule “Establishing the Summer EBT Program and Rural Non-Congregate Option in the Summer Meal Programs”, which published on December 29, 2023, at 88 FR 90230. The Consolidated Appropriations Act, 2023 required the Secretary of Agriculture to make available an option to States to provide summer meals for non-congregate meal service in rural areas with no congregate meal service and to establish a permanent Summer Electronic Benefits Transfer for Children Program (Summer EBT) for the purpose of ensuring continued access to food when school is not in session for the summer. This interim final rule amends the Summer Food Service Program (SFSP) and the National School Lunch Program's Seamless Summer Option (SSO) regulations to codify the flexibility for rural program operators to provide non-congregate meal service in the SFSP and SSO, collectively referred to as the summer meal programs. This rule also establishes regulations and codifies the Summer EBT Program in the Code of Federal Regulations.

This action extends the public comment period to August 27, 2024, to provide additional time for the public, including State administering agencies, Territories, and Indian Tribal Organizations, as well as program participants and beneficiaries, and other stakeholders, to prepare and submit comments. Because the interim final rule became effective immediately upon publication, stakeholders are already taking active steps to implement its provisions. Extending the comment period ensures that these stakeholders are able to provide robust feedback on the entirety of the interim final rule's provisions, and that this feedback is reflective of their implementation experiences in advance of and during Summer 2024. Receipt of informed public input accounting for the first year of operations under the new Program rules will be vital when the Food and Nutrition Service considers future rulemaking to finalize the provisions of the interim final rule.

Please refer to Docket ID NRC-2023-0220 when contacting the NRC about the availability of information for this action. You may obtain publicly available information related to this action by any of the following methods:

• Federal Rulemaking Website: Go to https://www.regulations.gov and search for Docket ID NRC-2023-0220. Address questions about NRC dockets to Dawn Forder, telephone: 301-415-3407, email: Dawn.Forder@nrc.gov. For technical questions contact the individuals listed in the FOR FURTHER INFORMATION CONTACT section of this document.

• NRC's Agencywide Documents Access and Management System (ADAMS): You may obtain publicly available documents online in the ADAMS Public Documents collection at https://www.nrc.gov/reading-rm/adams.html. To begin the search, select “Begin Web-based ADAMS Search.” For problems with ADAMS, please contact the NRC's Public Document Room (PDR) reference staff at 1-800-397-4209, 301-415-4737, or by email to PDR.Resource@nrc.gov. For the convenience of the reader, instructions about obtaining materials referenced in this document are provided in the “Availability of Documents” section.

• NRC's PDR: The PDR, where you may examine and order copies of publicly available documents, is open by appointment. To make an appointment to visit the PDR, please send an email to PDR.Resource@nrc.gov or call 1-800-397-4209 or 301-415-4737, between 8 a.m. and 4 p.m. eastern time, Monday through Friday, except Federal holidays.

Please include Docket ID NRC-2023-0220 in your comment submission. The NRC requests that you submit comments through the Federal rulemaking website at https://www.regulations.gov. If your material cannot be submitted using https://www.regulations.gov, call or email the individuals listed in the FOR FURTHER INFORMATION CONTACT section of this document for alternate instructions.

The NRC cautions you not to include identifying or contact information that you do not want to be publicly disclosed in your comment submission. The NRC will post all comment submissions at https://www.regulations.gov as well as enter the comment submissions into ADAMS. The NRC does not routinely edit comment submissions to remove identifying or contact information.

If you are requesting or aggregating comments from other persons for submission to the NRC, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submission. Your request should state that the NRC does not routinely edit comment submissions to remove such information before making the comment submissions available to the public or entering the comment into ADAMS.

This direct final rule is limited to the changes contained in the Initial Certificate and Amendment Nos. 1 through 4 to Certificate of Compliance No. 1026 and does not include other aspects of the FuelSolutions TM Spent Fuel Management System Cask System design. The NRC is using the “direct final rule procedure” to issue this amendment because it represents a limited and routine change to an existing certificate of compliance that is expected to be non-controversial. Adequate protection of public health and safety continues to be reasonably assured. The amendment to the rule will become effective on July 3, 2024. However, if the NRC receives any significant adverse comment on this direct final rule by May 20, 2024, then the NRC will publish a document that withdraws this action and will subsequently address the comments received in a final rule as a response to the companion proposed rule published in the Proposed Rules section of this issue of the Federal Register or as otherwise appropriate. In general, absent significant modifications to the proposed revisions requiring republication, the NRC will not initiate a second comment period on this action.

A significant adverse comment is a comment where the commenter explains why the rule would be inappropriate, including challenges to the rule's underlying premise or approach, or would be ineffective or unacceptable without a change. A comment is adverse and significant if:

(1) The comment opposes the rule and provides a reason sufficient to require a substantive response in a notice-and-comment process. For example, a substantive response is required when:

(a) The comment causes the NRC to reevaluate (or reconsider) its position or conduct additional analysis;

(b) The comment raises an issue serious enough to warrant a substantive response to clarify or complete the record; or

(c) The comment raises a relevant issue that was not previously addressed or considered by the NRC.

(2) The comment proposes a change or an addition to the rule, and it is apparent that the rule would be ineffective or unacceptable without incorporation of the change or addition.

(3) The comment causes the NRC to make a change (other than editorial) to the rule, certificate of compliance, or technical specifications (TS).

Section 218(a) of the Nuclear Waste Policy Act of 1982, as amended, requires that “[t]he Secretary [of the Department of Energy] shall establish a demonstration program, in cooperation with the private sector, for the dry storage of spent nuclear fuel at civilian nuclear power reactor sites, with the objective of establishing one or more technologies that the [Nuclear Regulatory] Commission may, by rule, approve for use at the sites of civilian nuclear power reactors without, to the maximum extent practicable, the need for additional site-specific approvals by the Commission.” Section 133 of the Nuclear Waste Policy Act states, in part, that “[t]he Commission shall, by rule, establish procedures for the licensing of any technology approved by the Commission under Section 219(a) [sic: 218(a)] for use at the site of any civilian nuclear power reactor.”

To implement this mandate, the Commission approved dry storage of spent nuclear fuel in NRC-approved casks under a general license by publishing a final rule that added a new subpart K in part 72 of title 10 of the Code of Federal Regulations (10 CFR) entitled “General License for Storage of Spent Fuel at Power Reactor Sites” (55 FR 29181; July 18, 1990). This rule also established a new subpart L in 10 CFR part 72 entitled “Approval of Spent Fuel Storage Casks,” which contains procedures and criteria for obtaining NRC approval of spent fuel storage cask designs. The NRC subsequently issued a final rule on January 16, 2001 (66 FR 3444), that approved the FuelSolutions TM Spent Fuel Management System design and added it to the list of NRC-approved cask designs in § 72.214 as Certificate of Compliance No. 1026.

On August 28, 2007 (72 FR 49352), the NRC amended the scope of the general licenses issued under 10 CFR 72.210 to include the storage of spent fuel in an independent spent fuel storage installations (ISFSI) at power reactor sites to persons authorized to possess or operate nuclear power reactors under 10 CFR part 52. On February 16, 2011 (76 FR 8872), the NRC amended subparts K and L in 10 CFR part 72, to extend and clarify the term limits for certificates of compliance and revised the conditions for spent fuel storage cask renewals, including adding requirements for the safety analysis report to include time-limited aging analyses and a description of aging management programs. The NRC also clarified the terminology used in the regulations to use “renewal” rather than “reapproval” to better reflect that extending the term of a currently approved cask design is based on the cask design standards in effect at the time the certificate of compliance was approved rather than current standards.

The term certified by the initial Certificate of Compliance No. 1026 was 20 years. The period of extended operation for each cask begins 20 years after the cask is first used by the general licensee to store spent fuel. On November 6, 2020, Westinghouse Electric Company LLC submitted a request to the NRC to renew Certificate of Compliance No. 1026 for a period of 40 years beyond the initial certificate period. Westinghouse Electric Company LLC supplemented its request on March 30, 2021; June 30, 2022; and September 13, 2022.

The FuelSolutions TM Storage System (the system) is certified as described in the Safety Analysis Report (SAR) and in NRC's Safety Evaluation Report (SER) accompanying the certificate of compliance (CoC). The system consists of the following components: (1) canister for dry storage of spent nuclear fuel (W21 and W74); (2) transfer cask for canister loading, closure and handling capability (W100); and (3) storage cask which provides passive vertical dry storage of a loaded canister (W150). The system stores up to 21 pressurized water reactor (PWR) assemblies or 64 boiling water reactor (BWR) assemblies.

The canister is the component providing confinement to the system for the stored fuel. A typical canister consists of a shell assembly, top and bottom inner closure plates, vent and drain port covers, internal basket assembly, top and bottom shield plugs, and top and bottom outer closure plates. All structural components are constructed of high-strength carbon steel (electroless nickel coated) or stainless steel. The canister shell, top and bottom inner closure plates, and the vent and drain port covers form the confinement boundary. The storage overpack provides structural support, shielding, protection from environmental conditions, and natural convection cooling of the canister during long-term storage. The transfer cask provides shielding during canister movements between the spent fuel pool and the storage cask.

The Nuclear Energy Institute's (NEI) document NEI 14-03, Revision 2, “Format, Content and Implementation Guidance for Dry Cask Storage Operations-Based Aging Management,” (December 2016) provides an operations-based, learning approach to aging management for the storage of spent fuel, which builds on the lessons learned from industry's experience with aging management for reactors. The NRC endorsed NEI 14-03, Revision 2, with clarifications, in Regulatory Guide 3.76, Revision 0, “Implementation of Aging Management Requirements for Spent Fuel Storage Renewals,” issued July 2021. Specifically, NEI 14-03 provides a framework for sharing operating experience through an industry-developed database called the ISFSI Aging Management Institute of Nuclear Power Operations Database. NEI 14-03 also includes a framework for learning aging management programs using aging management “tollgates,” which offer a structured approach for periodically assessing operating experience and data from applicable research and industry initiatives at specific times during the period of extended operation and performing a safety assessment that confirms the safe storage of the spent nuclear fuel by ensuring the aging management programs continue to effectively manage the identified aging effects. The ISFSI Aging Management Institute of Nuclear Power Operations Database provides operating experience information and a basis to support licensees' future changes to the aging management programs. The ISFSI Aging Management Institute of Nuclear Power Operations Database and the aging management tollgates are considered key elements in ensuring the effectiveness of aging management activities and the continued safe storage of spent fuel during the period of extended operation.

Westinghouse Electric Company, LLC incorporated periodic tollgate assessments as requirements in the renewed certificate of compliance, as recommended in NEI 14-03, Revision 2. The implementation of tollgate assessments provides reasonable assurance that the aging management programs for the canister, the transfer cask, and the overpack will continue to effectively manage aging effects during the period of extended operation.

The renewal of the initial certificate and Amendment Nos. 1 through 4 was conducted in accordance with the renewal provisions in § 72.240. The NRC's regulations require the safety analysis report for the renewal to include time-limited aging analyses that demonstrate that structures, systems, and components important to safety will continue to perform their intended function for the requested period of extended operation and a description of the aging management programs for the management of issues associated with aging that could adversely affect structures, systems, and components important to safety. In addition, the regulations in § 72.240(e) authorize the NRC to revise the certificate of compliance to include any additional terms, conditions, and specifications it deems necessary to ensure the safe operation of the cask during the certificate of compliance's renewal term.

The NRC is revising the initial certificate and Amendment Nos. 1 through 4 to update the certificate holder name and address and to make corrections and editorial changes to the CoC and TSs. The changes to the aforementioned documents are identified with revision bars in the margin of each document. The NRC is adding three new conditions to address aging management activities related to the structures, systems, and components important to the safety of the dry storage system to ensure that these will maintain their intended functions during the period of extended storage operations. The three new conditions added to the renewal of the initial certificate of compliance and Amendment Nos. 1 through 4 are:

• A condition requiring the certificate of compliance holder to submit an updated final safety analysis report within 90 days after the effective date of the renewal. The updated final safety analysis report must reflect the changes resulting from the review and approval of the renewal of the certificate of compliance, including the FuelSolutions TM Spent Fuel Management System final safety analysis report. This condition ensures that final safety analysis report changes are made in a timely fashion to enable general licensees using the storage system during the period of extended operation to develop and implement necessary procedures related to renewal and aging management activities. The certificate of compliance holder is required to continue to update the final safety analysis report pursuant to the requirements of § 72.248.

• A condition requiring each general licensee using the FuelSolutions TM Spent Fuel Management System design to include, in the evaluations required by § 72.212(b)(5), evaluations related to the terms, conditions, and specifications of this certificate of compliance amendment as modified ( i.e., changed or added) as a result of the renewal of the certificate of compliance and include, in the document review required by § 72.212(b)(6), a review of the final safety analysis report changes resulting from the renewal of the certificate of compliance and the NRC Safety Evaluation Report for the renewal of the certificate of compliance. The general licensee would also be required to ensure that the evaluations required by § 72.212(b)(7) in response to these changes are conducted and the determination required by § 72.212(b)(8) is made. This condition also makes it clear that to meet the requirements in § 72.212(b)(11), general licensees that currently use a FuelSolutions TM Spent Fuel Management System will need to update their § 72.212 reports, even if they do not put additional Westinghouse Electric Company LLC FuelSolutions TM Spent Fuel Management Systems into service after the renewal's effective date. These evaluations, reviews, and determinations are to be completed before the dry storage system enters the period of extended operation (which begins 20 years after the first use of the Westinghouse Electric Company LLC FuelSolutions TM Spent Fuel Management System) or no later than 365 days after the effective date of this rule, whichever is later. This will provide general licensees a minimum of 365 days to comply with the new terms, conditions, specifications, and other changes to the certificate of compliance and to make the necessary determinations required by § 72.212(b)(8) as to whether activities related to the storage of spent nuclear fuel using the renewed certificate of compliance involve a change in the facility Technical Specifications or requires a license amendment for the facility.

• A condition requiring all future amendments and revisions to the certificate of compliance ( i.e., the initial certificate 1026 and Amendment Nos. 1 through 4) include evaluations of the impacts to aging management activities ( i.e., time-limited aging analyses and aging management programs) to ensure that they remain adequate for any changes to structures, systems, and components important to safety within the scope of renewal. This condition ensures that future amendments to the certificate of compliance address the renewed design bases for the certificate of compliance, including aging management impacts that may arise from any changes to the system in proposed future amendments.

Additionally, the condition for the initial certificate and Amendment Nos. 1 through 4 would be amended to reflect changes to the scope of the general license granted by § 72.210 that were made after the approval of the initial certificate. The authorization is amended to allow persons authorized to possess or operate a nuclear power reactor under 10 CFR part 52 to use the Westinghouse Electric Company LLC FuelSolutions TM Spent Fuel Management System under the general license issued under § 72.210.

The NRC made one corresponding change from the technical specifications for the initial certificate of compliance and Amendment Nos. 1 through 4 by adding a section addressing the aging management program. General licensees using the FuelSolutions TM Spent Fuel Management System design during the period of extended operation will need to establish, implement, and maintain written procedures for each applicable aging management program in the final safety analysis report to use the FuelSolutions TM Spent Fuel Management System design during the approved period of extended operation. The procedures will need to include provisions for changing aging management program elements, as necessary, and within the limitations of the approved design bases to address new information on aging effects based on inspection findings and/or industry operating experience. General licensees will also be required to perform tollgate assessments as described in the final safety analysis report.

General licensees will need to establish and implement these written procedures prior to entering the period of extended operation (which begins 20 years after the first use of the cask system) or no later than 365 days after the effective date of this rule, whichever is later. The general licensee is required to maintain these written procedures for as long as the general licensee continues to operate the FuelSolutions TM Spent Fuel Management System in service for longer than 20 years.

Under § 72.240(d), the design of a spent fuel storage cask will be renewed if (1) the quality assurance requirements in 10 CFR part 72, subpart G, “Quality Assurance,” are met, (2) the requirements of § 72.236(a) through (i) are met, and (3) the application includes a demonstration that the storage of spent fuel has not, in a significant manner, adversely affected the structures, systems, and components important to safety. Additionally, § 72.240(c) requires that the safety analysis report accompanying the application contain time-limited aging analyses that demonstrate that the structures, systems, and components important to safety will continue to perform their intended function for the requested period of extended operation and a description of the aging management program for management of aging issues that could adversely affect structures, systems, and components important to safety.

As documented in the preliminary safety evaluation report, the NRC reviewed the application for the renewal of the certificate of compliance and the conditions in the certificate of compliance and determined that the conditions in subpart G, §  72.236(a) through (i), have been met and the application includes a demonstration that the storage of spent nuclear fuel has not, in a significant manner, adversely affected structures, systems, and components important to safety. The NRC's safety review determined that the FuelSolutions TM Spent Fuel Management System, with the added terms, conditions, and specifications in the certificate of compliance and the technical specifications, will continue to meet the requirements of 10 CFR part 72 for an additional 40 years beyond the initial certificate term. Consistent with §  72.240, the NRC is renewing the Westinghouse Electric Company LLC FuelSolutions TM Spent Fuel Management System initial certificate 1026 and Amendment Nos. 1 through 4.

Extending the expiration date of the approval for the initial certificate and Amendment Nos. 1 through 4 for 40 years and requiring the implementation of aging management activities during the period of extended operation does not impose any modification or addition to the design of a cask system's structures, systems, and components important to safety, or to the procedures or organization required to operate the system during the initial 20-year storage term certified by the cask's initial certificate of compliance. General licensees who have loaded these casks, or who load these casks in the future under the specifications of the applicable renewed certificate of compliance, may store spent fuel in these cask system designs for 20 years without implementing the aging management program. For any casks that have been in use for more than 20 years, the general licensee will have 365 days to complete the analyses required to use the cask system design pursuant to the terms and conditions in the renewed certificate of compliance. As explained in the 2011 final rule that amended 10 CFR part 72 (76 FR 8872), the general licensee's authority to use a particular storage cask design under an approved certificate of compliance will be for at least the term certified by the cask's certificate of compliance. For casks placed into service before the expiration date of the initial certificate, the general licensee's authority to use the cask would be extended for an additional 40 years from the date the initial certificate expired. For casks placed into service after the expiration date of the initial certificate and before the effective date of this rule, the general licensee's authority to use the cask would last the length of the term certified by the cask's certificate of compliance ( i.e., 40 years after the cask is placed into service). For casks placed into service after this rule becomes effective, the general licensee's authority to use the cask would expire 40 years after the cask is first placed into service.

This direct final rule revises the FuelSolutions TM Spent Fuel Management System design listing in §  72.214 by renewing, for 40 more years, the initial certificate and Amendment Nos. 1 through 4 of Certificate of Compliance No. 1026. The renewed certificate of compliance includes the changes to the certificate of compliance and technical specifications previously described. The renewed certificate of compliance includes the terms, conditions, and specifications that will ensure the safe operation of the cask during the renewal term and the added conditions that will require the implementation of an aging management program. The preliminary safety evaluation report describes the new and revised conditions in the certificate of compliance, the changes to the technical specifications, and the NRC staff evaluation.

The National Technology Transfer and Advancement Act of 1995 (Pub. L. 104-113) requires that Federal agencies use technical standards that are developed or adopted by voluntary consensus standards bodies unless the use of such a standard is inconsistent with applicable law or otherwise impractical. In this direct final rule, the NRC revises the FuelSolutions TM Spent Fuel Management System Cask System design listed in § 72.214, “List of approved spent fuel storage casks.” This action does not constitute the establishment of a standard that contains generally applicable requirements.

Under the “Agreement State Program Policy Statement” approved by the Commission on October 2, 2017, and published in the Federal Register on October 18, 2017 (82 FR 48535), this rule is classified as Compatibility Category NRC—Areas of Exclusive NRC Regulatory Authority. The NRC program elements in this category are those that relate directly to areas of regulation reserved to the NRC by the Atomic Energy Act of 1954, as amended, or the provisions of 10 CFR chapter I. Therefore, compatibility is not required for program elements in this category.

The Plain Writing Act of 2010 (Pub. L. 111-274) requires Federal agencies to write documents in a clear, concise, and well-organized manner. The NRC has written this document to be consistent with the Plain Writing Act as well as the Presidential Memorandum, “Plain Language in Government Writing,” published June 10, 1998 (63 FR 31885).

Under the National Environmental Policy Act of 1969, as amended, and the NRC's regulations in 10 CFR part 51, “Environmental Protection Regulations for Domestic Licensing and Related Regulatory Functions,” the NRC has determined that this direct final rule, if adopted, would not be a major Federal action significantly affecting the quality of the human environment and, therefore, an environmental impact statement is not required. The NRC has made a finding of no significant impact based on this environmental assessment.

The action is to amend § 72.214 to revise the Westinghouse Electric Company LLC FuelSolutions TM Spent Fuel Management System listing within the “List of approved spent fuel storage casks” to renew the initial certificate and Amendment Nos. 1 through 4 to Certificate of Compliance No. 1026.

This direct final rule renews the certificate of compliance for the Westinghouse Electric Company LLC FuelSolutions TM Spent Fuel Management System design within the list of approved spent fuel storage casks to allow power reactor licensees to store spent fuel at reactor sites in casks with the approved modifications under a general license. Specifically, this rule extends the expiration date for the FuelSolutions TM Spent Fuel Management System certificate of compliance for an additional 40 years, allowing a power reactor licensee to continue using the cask design during a period of extended operation for a term certified by the cask's renewed certificate of compliance.

In addition, this direct final rule revises the certificate of compliance for the initial certificate and Amendment Nos. 1 through 4 to update the certificate holder name and address and adds three new conditions:

• A condition for submitting an updated FSAR to the NRC, in accordance with § 72.4, within 90 days after the effective date of the CoC renewal.

• A condition for renewed CoC use during the period of extended operation to ensure that a general licensee's report prepared under § 72.212 evaluates the appropriate considerations for the period of extended operation. All future amendments and revisions to this CoC must include evaluations of the impacts to aging management activities. The NRC is revising the initial certificate and Amendment Nos. 1 through 4 to address the language change in § 72.210 “General license issue” and other updates to the regulations. The NRC is making changes to TSs including updating the certificate holder's information in all TSs for the initial certificate and Amendment Nos. 1 through 4 and updating references to “FuelSolutions” and “Westinghouse Electric Company LLC” or “WEC.”

• A condition requiring all future amendments and revisions to the certificate of compliance ( i.e., the initial certificate 1026 and Amendment Nos. 1 through 4) include evaluations of the impacts to aging management activities ( i.e., time-limited aging analyses and aging management programs) to ensure that they remain adequate for any changes to structures, systems, and components important to safety within the scope of renewal.

Finally, the NRC will make various corrections and editorial changes to the CoC and TSs.

On July 18,1990 (55 FR 29181), the NRC issued an amendment to 10 CFR part 72 to provide for the storage of spent fuel under a general license in cask designs approved by the NRC. The potential environmental impact of using NRC-approved storage casks was analyzed in the environmental assessment for the 1990 final rule and are described in “Environmental Assessment for Proposed Rule Entitled, `Storage of Spent Nuclear Fuel in NRC-Approved Storage Casks at Nuclear Power Reactor Sites.' ” The potential environmental impacts for the longer-term use of dry cask designs and the renewal of certificates of compliance were analyzed in the environmental assessment for the 2011 final rule establishing the regulatory requirements for renewing certificates of compliance and are described in “Environmental Assessment and Finding of No Significant Impact for the Final Rule Amending 10 CFR part 72 License and Certificate of Compliance Terms.” The environmental impacts from continued storage were also considered in NUREG-2157, “Generic Environmental Impact Statement for Continued Storage of Spent Nuclear Fuel.” The environmental assessment for the initial certificate and Amendment Nos. 1 through 4 to Certificate of Compliance No. 1026 tiers off the environmental assessment for the February 16, 2011, final rule and NUREG-2157. Tiering on past environmental assessments is a standard process under the National Environmental Policy Act of 1969, as amended.

The Westinghouse Electric Company LLC FuelSolutions TM Spent Fuel Management System is designed to mitigate the effects of design basis accidents that could occur during storage. Design basis accidents account for human-induced events and the most severe natural phenomena reported for the site and surrounding area. Postulated accidents analyzed for an independent spent fuel storage installation, the type of facility at which a holder of a power reactor operating license would store spent fuel in casks in accordance with 10 CFR part 72, can include tornado winds and tornado-generated missiles, a design basis earthquake, a design basis flood, an accidental cask drop, lightning effects, fire, explosions, and other incidents.

A renewal reaffirms the original design basis and allows the cask to be used during a period of extended operation that corresponds to the term certified by the cask's certificate of compliance in the renewal. As a condition of the renewal, the NRC requires an aging management program that will ensure that structures, systems, and components important to safety will perform as designers intended during the renewal period. The renewal does not reflect a change in design or fabrication of the cask system. This renewal does not reflect a significant change in design or fabrication of the cask. Because there are no significant design or process changes, any resulting occupational exposure or offsite dose rates from the renewal of the initial certificate and Amendment Nos. 1 through 4 would remain well within the 10 CFR part 20 limits. The NRC has also determined that the design of the cask would continue to maintain confinement, shielding, and criticality control in the event of an accident. Therefore, these changes will not result in any radiological or non-radiological environmental impacts that significantly differ from the environmental impacts evaluated in the environmental assessment supporting the February 16, 2011, final rule. There will be no significant change in the types or significant revisions in the amounts of any effluent released, no significant increase in the individual or cumulative radiation exposures, and no significant increase in the potential for, or consequences from, radiological accidents. The NRC determined that the structures, systems, and components important to safety will continue to perform their intended functions during the requested period of extended operation. The NRC determined that the renewed Westinghouse Electric Company LLC FuelSolutions TM Spent Fuel Management System design, when used under the conditions specified in the renewed certificate of compliance, the technical specifications, and the NRC's regulations, will meet the requirements of 10 CFR part 72; therefore, adequate protection of public health and safety will continue to be reasonably assured. The NRC documented its safety findings in the preliminary safety evaluation report.

The alternative to this action is to deny the renewal of the initial certificate and Amendment Nos. 1 through 4 and not issue the direct final rule. Consequently, any 10 CFR part 72 general licensee that seeks to load spent nuclear fuel into Westinghouse Electric Company LLC FuelSolutions TM Spent Fuel Management System after the expiration date of the certificate of compliance or that seeks to continue storing spent nuclear fuel in the Westinghouse Electric Company LLC FuelSolutions TM Spent Fuel Management System for longer than the term certified by the cask's certificate of compliance for the initial certificate ( i.e., more than 20 years) would have to request an exemption from the requirements of §§ 72.212 and 72.214 or would have to load the spent nuclear fuel into a different approved cask design. Under this alternative, those licensees interested in continuing to use the Westinghouse Electric Company LLC FuelSolutions TM Spent Fuel Management System would have to prepare, and the NRC would have to review, a separate exemption request, thereby increasing the administrative burden upon the NRC and the costs to each licensee. If the general licensee is granted an exemption, the environmental impacts would be the same as the proposed action. If the general licensee is not granted an exemption, the general licensee would need to unload the Westinghouse Electric Company LLC FuelSolutions TM Spent Fuel Management System and load the fuel into another cask system design, which would result in environmental impacts that are greater than for the proposed action because activities associated with cask loading and decontamination may result in some small liquid and gaseous effluent.

Renewal of the initial certificate and Amendment Nos. 1 through 4 to Certificate of Compliance No. 1026 would result in no irreversible commitment of resources.

No agencies or persons outside the NRC were contacted in connection with the preparation of this environmental assessment.

This direct final rule is to amend § 72.214 to revise the Westinghouse Electric Company LLC FuelSolutions TM Spent Fuel Management System listing within the “List of approved spent fuel storage casks” to renew, for an additional 40 years, the initial certificate and Amendment Nos. 1 through 4 of Certificate of Compliance No. 1026. The environmental impacts of the action have been reviewed under the requirements in the National Environmental Policy Act of 1969, as amended, and the NRC's regulations in subpart A of 10 CFR part 51, “Environmental Protection Regulations for Domestic Licensing and Related Regulatory Functions.” The renewal does not reflect a change in design or fabrication of the cask system as approved for the initial certificate or Amendment Nos. 1 through 4. The NRC determined that the renewed Westinghouse Electric Company LLC FuelSolutions TM Spent Fuel Management System design, when used under the conditions specified in the renewed certificate of compliance, the technical specifications, and the NRC's regulations, will meet the requirements of 10 CFR part 72; therefore, adequate protection of public health and safety will continue to be reasonably assured.

Based on the foregoing environmental assessment, the NRC concludes that this direct final rule, “List of Approved Spent Fuel Storage Casks: FuelSolutions TM Spent Fuel Management System, Certificate of Compliance No. 1026, Renewal of Initial Certificate and Amendment Nos. 1 through 4,” will not have a significant effect on the quality of the human environment. Therefore, the NRC has determined that an environmental impact statement is not necessary for this direct final rule.

This direct final rule does not contain any new or amended collections of information subject to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ). Existing collections of information were approved by the Office of Management and Budget, approval number 3150-0132.

The NRC may not conduct or sponsor, and a person is not required to respond to, a request for information or an information collection requirement unless the requesting document displays a currently valid Office of Management and Budget control number.

Under the Regulatory Flexibility Act of 1980 (5 U.S.C. 605(b)), the NRC certifies that this direct final rule will not, if issued, have a significant economic impact on a substantial number of small entities. This direct final rule affects only nuclear power plant licensees and Westinghouse Electric Company LLC. These entities do not fall within the scope of the definition of small entities set forth in the Regulatory Flexibility Act or the size standards established by the NRC (§ 2.810).

On July 18, 1990 (55 FR 29181), the NRC issued an amendment to 10 CFR part 72 to provide for the storage of spent nuclear fuel under a general license in cask designs approved by the NRC. Any nuclear power reactor licensee can use NRC-approved cask designs to store spent nuclear fuel if (1) it notifies the NRC in advance; (2) the spent fuel is stored under the conditions specified in the cask's certificate of compliance; and (3) the conditions of the general license are met. A list of NRC-approved cask designs is contained in § 72.214. On January 16, 2001 (66 FR 3444), the NRC issued an amendment to 10 CFR part 72 that approved the FuelSolutions TM Spent Fuel Management System by adding it to the list of NRC-approved cask designs in § 72.214.

On November 6, 2020, and as supplemented on March 30, 2021, June 30, 2022, and September 13, 2022, Westinghouse Electric Company LLC submitted a request to renew the FuelSolutions TM Spent Fuel Management System as described in Section IV, “Discussion of Changes,” of this document.

The alternative to this action is to withhold approval of the renewal of the initial certificate and Amendment Nos. 1 through 4 and to require any 10 CFR part 72 general licensee seeking to continue the storage of spent nuclear fuel in Westinghouse Electric Company LLC FuelSolutions TM Spent Fuel Management System using the initial certificate or Amendment Nos. 1 through 4 beyond the initial 20-year storage term certified by the cask's initial certificate of compliance to request an exemption from the requirements of §§ 72.212 and 72.214. The term for general licenses would not be extended from 20 years to 40 years. Under this alternative, each interested 10 CFR part 72 licensee would have to prepare, and the NRC would have to review, a separate exemption request, thereby increasing the administrative burden upon the NRC and the costs to each licensee.

Approval of this direct final rule is consistent with previous NRC actions. Further, as documented in the preliminary safety evaluation report and environmental assessment, this direct final rule will have no adverse effect on public health and safety or the environment. This direct final rule has no significant identifiable impact or benefit on other government agencies. Based on this regulatory analysis, the NRC concludes that the requirements of this direct final rule are commensurate with the NRC's responsibilities for public health and safety and the common defense and security. No other available alternative is believed to be as satisfactory; therefore, this action is recommended.

The NRC has determined that the actions in this direct final rule do not require a backfit analysis because they do not fall within the definition of backfitting under §  72.62 or §  50.109(a)(1), they do not impact the issue finality provisions applicable to combined licenses under 10 CFR part 52, and they do not impact general licensees that are using these systems for the duration of their current general licenses.

Certificate of Compliance No. 1026 for the Westinghouse Electric Company LLC FuelSolutions TM Spent Fuel Management System design, as currently listed in §  72.214, “List of Approved Spent Fuel Storage Casks,” was initially approved for a 20-year term. This direct final rule would renew the initial certificate and Amendment Nos. 1 through 4, extending their approval period by 40 years. The term certified by the cask's certificate of compliance for a renewed certificate of compliance is the period of time commencing with the most recent certificate of compliance renewal date and ending with the certificate of compliance expiration date. With this renewal, the term certified by the cask's certificate of compliance would change from 20 years to 60 years, with the period of extended operation beginning 20 years after the cask is placed into service. The revision to the certificate of compliance through the renewal consists of the changes in the renewed initial certificate (Amendment No. 0) and renewed Amendment Nos. 1 through 4 as previously described, and as set forth in the renewed certificates of compliance and technical specifications. These changes would not affect the use of the Westinghouse Electric Company LLC FuelSolutions TM Spent Fuel Management System design for the initial 20- year term for previously loaded casks. The renewed certificates would require implementation of aging management programs during the period of extended operation, which begins after the storage cask system's initial 20-year service period.

Because the term for the renewal would be longer than the initial term certified by the cask's certificate of compliance, the general licensee's authority to use the cask would be extended and would be no less than 60 years. This change would not add, eliminate, or modify (1) structures, systems, or components of an independent spent fuel storage installation or a monitored retrievable storage installation or (2) the procedures or organization required to operate an independent spent fuel storage installation or a monitored retrievable storage installation.

Renewing these certificates does not fall within the definition of backfit under §  72.62 or §  50.109, or otherwise represent an inconsistency with the issue finality provisions applicable to combined licenses in 10 CFR part 52. General licensees who have loaded these casks, or who load these casks in the future under the specifications of the applicable certificate, may continue to store spent fuel in these systems for the initial 20-year storage period authorized by the original certificate. Extending the certificates' expiration dates for 40 more years and requiring the implementation of aging management programs does not impose any modification or addition to the design of the structures, systems, and components important to safety of a cask system, or to the procedures or organization required to operate the system during this initial 20-year term certified by the cask's certificate of compliance. The aging management programs required to be implemented by this renewal are only required to be implemented after the storage cask system's initial 20-year service period ends.

Because this rulemaking renews the certificates, and because renewal is a separate NRC licensing action voluntarily implemented by vendors or licensees, the renewal of these certificates is not an imposition of new or changed requirements from which these certificate of compliance holders or licensees would otherwise be protected by the backfitting provisions in §  72.62 or §  50.109. Even if renewal of this certificate of compliance cask system design could be considered a backfit, Westinghouse Electric Company LLC, as the certificate of compliance holder and vendor of the casks, is not protected by the backfitting provisions in §  72.62 in this capacity.

Unlike a vendor, general licensees using the existing systems subject to these renewals would be protected by the backfitting provisions in §  72.62 and §  50.109 if the renewals constituted new or changed requirements. But as previously explained, renewal of the certificates for these systems does not impose such requirements. The general licensees using these certificates of compliance may continue storing material in the Westinghouse Electric Company LLC FuelSolutions TM Spent Fuel Management System design for the initial 20-year storage period identified in the applicable certificate or amendment with no changes. If general licensees choose to continue to store spent fuel in the Westinghouse Electric Company LLC FuelSolutions TM Spent Fuel Management System design after the initial 20-year period, these general licensees will be required to implement the applicable aging management programs for any cask systems subject to a renewed certificate of compliance, but such continued use is voluntary.

Additionally, the actions in this direct final rule do not impact issue finality provisions applicable to combined licenses under 10 CFR part 52. For these reasons, renewing the initial certificate and Amendment Nos. 1 through 4 of Certificate of Compliance No. 1026 does not constitute backfitting under §  72.62 or §  50.109(a)(1), or otherwise represent an inconsistency with the issue finality provisions applicable to combined licenses in 10 CFR part 52. Accordingly, the NRC has not prepared a backfit analysis for this rulemaking.

This direct final rule is not a rule as defined in the Congressional Review Act.

The documents identified in the following table are available to interested persons as indicated.

The NRC may post materials related to this document, including public comments, on the Federal rulemaking website at https://www.regulations.gov under Docket ID NRC-2023-0220. In addition, the Federal rulemaking website allows members of the public to receive alerts when changes or additions occur in a docket folder. To subscribe: (1) navigate to the docket folder (NRC-2023-0220); (2) click the “Subscribe” link; and (3) enter an email address and click on the “Subscribe” link.

For the reasons set out in the preamble and under the authority of the Atomic Energy Act of 1954, as amended; the Energy Reorganization Act of 1974, as amended; the Nuclear Waste Policy Act of 1982, as amended; and 5 U.S.C. 552 and 553; the NRC is adopting the following amendments to 10 CFR part 72:

DOE incorporates by reference the following industry standard into part 430:

Copies of IEC 62040-3 Ed. 3.0 are available from the International Electrotechnical Commission, 3 Rue de Varembe, Case Postale 131, 1211 Geneva 20, Switzerland; webstore.iec.ch.

For a further discussion of this standard, see section IV.N of this document.

Uninterruptible power supplies (“UPSs”) are a class of battery chargers and fall among the list of “covered products” for which DOE is authorized to establish and amend energy conservation standards and test procedures. (42 U.S.C. 6295(u)) DOE's test procedure for UPSs is currently prescribed at title 10 of the Code of Federal Regulations (CFR), part 430 section 32(z)(3); and 10 CFR part 430 subpart B appendix Y (“appendix Y”) and appendix Y1 (“appendix Y1”). The following sections discuss DOE's authority to establish and amend test procedures for UPSs and relevant background information regarding DOE's consideration of test procedures for this product.

The Energy Policy and Conservation Act, Public Law 94-163, as amended (EPCA), 1 authorizes DOE to regulate the energy efficiency of a number of consumer products and certain industrial equipment. (42 U.S.C. 6291-6317) Title III, Part B of EPCA  2 established the Energy Conservation Program for Consumer Products Other Than Automobiles, which sets forth a variety of provisions designed to improve energy efficiency. These products include UPSs, the subject of this document. (42 U.S.C. 6295(u))

The energy conservation program under EPCA consists essentially of four parts: (1) testing, (2) labeling, (3) Federal energy conservation standards, and (4) certification and enforcement procedures. Relevant provisions of EPCA specifically include definitions (42 U.S.C. 6291), test procedures (42 U.S.C. 6293), labeling provisions (42 U.S.C. 6294), energy conservation standards (42 U.S.C. 6295), and the authority to require information and reports from manufacturers (42 U.S.C. 6296).

The Federal testing requirements consist of test procedures that manufacturers of covered products must use as the basis for (1) certifying to DOE that their products comply with the applicable energy conservation standards adopted under EPCA (42 U.S.C. 6295(s)), and (2) making other representations about the efficiency of those products. (42 U.S.C. 6293(c)) Similarly, DOE must use these test procedures to determine whether the products comply with any relevant standards promulgated under EPCA. (42 U.S.C. 6295(s))

Federal energy efficiency requirements for covered products established under EPCA generally supersede State laws and regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C. 6297) DOE may, however, grant waivers of Federal preemption for particular State laws or regulations, in accordance with the procedures and other provisions of EPCA. (42 U.S.C. 6297(d))

Under 42 U.S.C. 6293, EPCA sets forth the criteria and procedures DOE must follow when prescribing or amending test procedures for covered products. EPCA requires that any test procedures prescribed or amended under this section shall be reasonably designed to produce test results which measure energy efficiency, energy use or estimated annual operating cost of a covered product during a representative average use cycle (as determined by the Secretary) or period of use and shall not be unduly burdensome to conduct. (42 U.S.C. 6293(b)(3))

EPCA also requires that, at least once every 7 years, DOE evaluate test procedures for each type of covered product, including UPSs, to determine whether amended test procedures would more accurately or fully comply with the requirements for the test procedures to not be unduly burdensome to conduct and be reasonably designed to produce test results that reflect energy efficiency, energy use, and estimated operating costs during a representative average use cycle or period of use. (42 U.S.C. 6293(b)(1)(A))

If the Secretary determines, on her own behalf or in response to a petition by any interested person, that a test procedure should be prescribed or amended, the Secretary shall promptly publish in the Federal Register proposed test procedures and afford interested persons an opportunity to present oral and written data, views, and arguments with respect to such procedures. The comment period on a proposed rule to amend a test procedure shall be at least 60 days and may not exceed 270 days. In prescribing or amending a test procedure, the Secretary shall take into account such information as the Secretary determines relevant to such procedure, including technological developments relating to energy use or energy efficiency of the type (or class) of covered products involved. (42 U.S.C. 6293(b)(2)). If DOE determines that test procedure revisions are not appropriate, DOE must publish its determination not to amend the test procedure. (42 U.S.C. 6293(b)(1)(A)(ii))

In addition, EPCA requires that DOE amend its test procedures for all covered products to integrate measures of standby mode and off mode energy consumption into the overall energy efficiency, energy consumption, or other energy descriptor, unless the current test procedure already incorporates the standby mode and off mode energy consumption, or if such integration is technically infeasible. (42 U.S.C. 6295(gg)(2)(A)) If an integrated test procedure is technically infeasible, DOE must prescribe separate standby mode and off mode energy use test procedures for the covered product, if a separate test is technically feasible. (42 U.S.C. 6295(gg)(2)(A)(ii)) Any such amendment must consider the most current versions of the International Electrotechnical Commission (“IEC”) Standard 62301  3 and IEC Standard 62087  4 as applicable. (42 U.S.C. 6295(gg)(2)(A))

DOE is publishing this final rule in satisfaction of the 7-year review requirement specified in EPCA. (42 U.S.C. 6293(b)(1)(A))

On December 12, 2016, DOE amended its battery charger test procedure by publishing a final rule in the Federal Register that added a discrete test procedure for UPSs (“December 2016 Final Rule”). 81 FR 89806. The December 2016 Final Rule incorporated by reference specific sections of the relevant industry standard for UPSs, with additional instructions, into the current battery charger test procedure published at appendix Y. 81 FR 89806, 89810.

On September 8, 2022, DOE published a final rule in the Federal Register amending the existing test procedure at appendix Y for battery chargers and creating a new test procedure at appendix Y1 that expanded the scope of the battery charger test method to include open placement and fixed-position wireless battery chargers and established separate metrics for active mode, standby mode, and off mode for all battery chargers other than UPSs (“September 2022 Final Rule”). 87 FR 55090. Manufacturers will be required to continue to use the amended test procedure in appendix Y until the compliance date of any new final rule establishing amended energy conservation standards based on the newly established test procedure in appendix Y1. 87 FR 55090, 55122. At such time as DOE establishes new standards for battery chargers other than UPSs using these new metrics, manufacturers would no longer use appendix Y and instead will be required to determine compliance using the updated test procedure at appendix Y1. Id. at 87 FR 55125. The September 2022 Final Rule also replicated all aspects of testing UPSs from appendix Y to appendix Y1, ensuring that instructions for all battery chargers are consolidated in one location. Id. at 87 FR 55125-55132.

On February 2, 2022, DOE initiated a rulemaking process to consider amendments to the UPS test procedure by publishing in the Federal Register a request for information (“RFI”) seeking data and information regarding the existing DOE test procedure for UPSs (“February 2022 RFI”). 87 FR 5742. On May 11, 2022, DOE issued a correcting amendment to address an error in describing input dependency modes in the regulatory text as it appeared in the December 2016 Final Rule. 87 FR 28755.

On January 5, 2023, DOE published a notice of proposed rulemaking (NOPR) proposing amendments to appendices Y and Y1 of the UPS test procedure to consider the latest revision of the industry standard that is incorporated by reference and to provide an optional test method for measuring power consumption of a UPS at no-load conditions (“January 2023 NOPR”). 88 FR 790. DOE held a webinar related to the January 2023 NOPR on February 2, 2023 (“February 2023 public meeting”).

DOE received comments in response to the January 2023 NOPR from the interested parties listed in Table I.1.

A parenthetical reference at the end of a comment quotation or paraphrase provides the location of the item in the public record. 5 To the extent that interested parties have provided written comments that are substantively consistent with any oral comments provided during the February 2023 public meeting, DOE cites the written comments throughout this final rule. Any substantial oral comments provided during the webinar but were not accompanied by written comments are summarized and cited separately throughout this final rule.

In this final rule, DOE amends appendices Y and Y1 as follows:

• Incorporate by reference the current revision to the applicable industry standard—IEC 62040-3 Ed. 3.0, “Uninterruptible power systems (UPS)—Part 3: Method of specifying the performance and test requirements”—to reflect redesignated subsections in the latest version of that standard.

• Provide an optional test method for measuring the power consumption of UPSs at no-load conditions.

The adopted amendments are summarized in Table II.1 and compared to the test procedure provision prior to the amendment, as well as the reason for the adopted change.

DOE has determined that the amendments described in section III of this document and adopted in this document will not alter the measured efficiency of UPSs or require retesting or recertification solely as a result of DOE's adoption of the amendments to the test procedure. Additionally, DOE has determined that the amendments will not increase the cost of testing. Discussion of DOE's actions are addressed in detail in section III of this document.

The effective date for the amended test procedure adopted in this final rule is 75 days after publication of this document in the Federal Register . Representations of energy use or energy efficiency must be based on testing in accordance with the amended test procedure beginning 180 days after the publication of this final rule.

In the following sections, DOE adopts certain proposed amendments to its test procedure for UPSs. For each adopted amendment, DOE provides relevant background information, discusses relevant public comments, and provides reasons for the amendment.

The scope of the current test procedure at appendices Y and Y1, as applicable to UPSs, covers UPSs  6 that utilize the standardized National Electrical Manufacturer Association (“NEMA”) plug, 1-15P or 5-15P, 7 and have an alternating current (“AC”) output. Appendices Y and Y1, section 1.

To the extent that a portable power system meets the definition of a battery charger, operates on direct current (“DC”) or United States AC line voltage, but does not meet the definition of a back-up battery charger as defined by DOE, such a product is currently covered within the scope of the non-UPS portion of the battery charger test procedure, which includes all battery chargers operating at either DC or United States AC line voltage (115V at 60Hz). Appendices Y and Y1, section 1. As discussed in the January 2023 NOPR, DOE has identified—based on a review of product literature—a wide range of portable power stations currently certified as non-UPS battery chargers and listed in the compliance certification database (“CCD”), 8 suggesting that manufacturers have the mutual understanding that such products are covered within the scope of the non-UPS portion of the battery charger test procedure. 88 FR 790, 793. Because such products are already included within the scope of the non-UPS battery charger test procedure, DOE tentatively determined that no changes were warranted to the scope of the UPS test procedure with respect to such products. Id.

To the extent that a portable power station meets DOE's definition of a back-up battery charger, such a product is likely a “whole-home power backup device” and would be outside the scope of appendices Y and Y1. DOE tentatively determined in the January 2023 NOPR that the market for whole-home backup devices is still nascent, albeit growing, and the devices currently lack widespread use among consumers. Id. at 88 FR 794. DOE stated its concern that defining such technologies and addressing them in the UPS test procedure at this time could potentially restrict the development of these less mature technologies. Id. Furthermore, DOE did not have sufficient consumer usage data, nor did commenters provide any such information, that would be needed at this time to develop a test procedure that produces representative results for these products. Id. For these reasons, DOE did not propose to expand the scope of the UPS test procedure to include whole-home backup power systems. Id.

In response to the January 2023 NOPR, NEEA expressed its support for DOE's determination that portable power stations would be covered under the non-UPS battery charger test procedure scope. (NEEA, No. 11 at p. 2)

For the reasons discussed here and in the January 2023 NOPR, in this final rule, DOE has determined that no amendments are needed to the scope of the UPS test procedure to address portable power systems that meet the definition of a battery charger, operate on DC or United States AC line voltage, but do not meet the definition of a back-up battery charger as defined by DOE. Consistent with the January 2023 NOPR, DOE is also not expanding the scope of the UPS test procedure to include whole-home backup power systems.

DOE defines a UPS as a battery charger consisting of a combination of convertors, switches, and energy storage devices (such as batteries), constituting a power system for maintaining continuity of load power in case of input power failure. Appendices Y and Y1, section 2.27. This definition aligns with the definition of a UPS provided in IEC 62040-3 Ed. 2.0, which is currently incorporated by reference into appendices Y and Y1.

DOE recognizes the benefit of harmonizing with the latest versions of industry standards where applicable and appropriate. IEC 62040-3 Ed. 3.0 includes slightly revised language stating “maintaining continuity of AC load power in case of AC input power failure.” In the January 2023 NOPR, DOE tentatively determined that the addition of the term “AC” in the IEC 62040-3 Ed. 3.0 definition is consistent with the range of products that meet the current definition of a UPS and would not change the scope of products subject to the test procedure. 9 88 FR 790, 794. Therefore, DOE proposed to update its definition of a UPS to incorporate by reference the definition specified in IEC 62040-3 Ed. 3.0 and requested comment on its proposal to harmonize its definition of a UPS with that of IEC 62040-3 Edition 3.0 in the January 2023 NOPR. Id. Specifically, DOE requested comment on its tentative determination that such harmonization would not affect the current scope of the UPS test procedure. Id.

In response to the January 2023 NOPR, NEMA supported DOE's proposal to harmonize its UPS definition with IEC 62040-3 Ed. 3.0 but suggested that DOE further clarify that the load power being maintained must be AC. (NEMA, No. 10 at pp. 1-2) Similarly, in the February 2023 public meeting, Schneider Electric suggested to DOE to further clarify in the UPS definitions that the current test procedure is only designed for AC input and AC output UPSs. 10

With regards to the suggestions from NEMA and Schneider Electric, DOE notes that the proposed UPS definition has already harmonized with IEC 62040-3 Ed. 3.0 by adding the clarification of “maintaining continuity of AC load power in case of AC input power failure.” Additionally, section 1 of appendices Y and Y1 describes the scope of the test procedure as applying to only those UPSs that utilize a NEMA 1-15P or 5-15P plug and have an AC output. DOE has determined that adding the term “AC” to describe the load power within the definition of UPS is redundant and risks falling out of harmonization with the definition found in IEC 62040-3 Ed. 3.0 without much to gain. As such, DOE has determined that adding the additional term “AC” to describe output power in the definition is unnecessary. Accordingly, DOE is finalizing its proposed definition of a UPS to harmonize with that of IEC 62040-3 Edition 3.0 without changes in this final rule.

Section 2.26 of appendices Y and Y1 defines “total harmonic distortion” (THD), expressed as a percent, as the root mean square (RMS) value of an AC signal after the fundamental component is removed and interharmonic components are ignored, divided by the RMS value of the fundamental component. Section 3.5.49 of IEC 62040-3 Ed. 3.0 defines THD as the ratio of the RMS value of the sum of the harmonic components X h of orders 2 to 40 to the RMS value of the fundamental component X 1 , and also includes a mathematical formula accompanying this descriptive definition. The key difference between the definitions is that DOE refers to the RMS value of the AC signal, whereas the IEC 62040-3 Ed. 3.0 definition more narrowly specifies measuring the RMS value of harmonic components of order 2 through 40. DOE understands that, in measuring the RMS value of a signal, a laboratory would be required to determine the number of harmonics to include within the measurement. By specifying harmonic components of order 2 through 40, DOE tentatively concluded in the January 2023 NOPR that the IEC definition may provide a more reproducible measurement among different laboratories compared to the current DOE definition, which requires a laboratory to determine which harmonic components to measure. For this reason, DOE proposed to update its definition of THD to incorporate by reference the definition specified in IEC 62040-3 Ed. 3.0. 88 FR 790, 794.

Additionally, DOE carefully reviewed its definitions of “voltage frequency dependent (VFD) UPS,”  11 “voltage and frequency independent (VFI) UPS,”  12 and “voltage independent (VI) UPS”  13 in comparison to the definitions provided in sections 5.3.4.2.2, 14 5.3.4.2.3, 15 and 5.3.4.2.4, 16 respectively, of IEC 62040-3 Ed. 3.0. The IEC definitions closely align with the core capabilities described by the DOE definitions. However, DOE's definitions each include a “Note” that provides greater specificity regarding certain product characteristics than the definitions provided by IEC 62040-3 Ed. 3.0. For example, the Note to section 2.27.2 of appendices Y and Y1 (providing the definition for VFI UPS) specifies that, at a minimum, the VFI UPS produces an output voltage and frequency within the specified output range even when the input voltage is varied by ±10 percent of the rated input voltage and the input frequency is varied by ±2 percent of the rated input frequency. By contrast, the definition of VFI UPS in IEC 62040-3 Ed. 3.0 specifies the AC input power voltage tolerance bands to be the greater of ±10 percent of the rated input voltage and what is declared by the manufacturer and the AC input power frequency to be the greater of ±2 percent of the rated input frequency and what is declared by the manufacturer. Similarly, the Note to section 2.27.3 of appendices Y and Y1 (providing the definition for VI UPS) specifies an input voltage variation of ±10 percent, whereas the corresponding definition in IEC 62040-3 Ed 3.0 specifies the voltage limits to be the greater of ±10 percent of the rated input voltage and what is declared by the manufacturer.

DOE notes that there are scenarios where using the manufacturer-declared limits may result in a different input dependency classification of a UPS when compared to using DOE's current input voltage tolerance limits. For example, a manufacturer that declares an input voltage tolerance limit of ±15 percent for a VI basic model could have a unit that is unable to maintain the required output when the input voltage is adjusted by more than 13 percent in real world testing. Per the IEC definition, this unit would fail the VI input dependency at the manufactured declared limits of ±15 percent and therefore be classified as a VFD UPS (the highest input dependent UPS topology). However, the same unit when tested per DOE's current input voltage limits of ±10 percent would continue to classify it as a VI.

To avoid such discrepancies, DOE proposed in the January 2023 NOPR to harmonize its definitions of VFD UPS, VI UPS, and VFI UPS with IEC 62040-3 Ed 3.0 but maintain the notes alongside each definition that currently establish the input voltage and frequency tolerance limits of ±10 percent and ±2 percent, respectively. Id. at 88 FR 794-795.

DOE noted also that the section numbers of IEC 62040-3 Ed. 2.0 currently referenced by DOE's definitions have been updated to different section numbers in IEC 62040-3 Ed. 3.0. Therefore, DOE proposed to update its definitions of VFD UPS, VI UPS, and VFI UPS to reference the corresponding updated section numbers within IEC 62040-3 Ed. 3.0. Id. at 88 FR 795.

DOE initially determined that the proposed amended definitions would not substantively change the scope or applicability of the test procedure as compared to the current definitions. Id.

In the January 2023 NOPR, DOE requested comment on its proposal to update its definitions of THD, VFD UPS, VI UPS, and VFI UPC to harmonize with the IEC 62040-3 Ed 3.0 definitions. Id.

In response to the January 2023 NOPR, NEEA and NEMA supported DOE's proposal to harmonize with IEC 62040-3 Ed. 3.0, specifically on the proposed updated definitions of THD, VFD, VI, and VFI. (NEEA, No. 11 at pp. 2-3; NEMA, No. 10 at pp. 1-2) NEEA further stated that these updated definitions can increase reproducibility and reduce complexity. (NEEA, No. 11 at p. 2)

NEMA further recommended that DOE specify VFI operating conditions and revise the language used when referring to drawing power from the energy storage device. (NEMA, No. 10 at p. 2) NEMA also recommended that DOE clarify that the voltage limits should be referring to those described in section 5.3 of IEC 62040-3 Ed. 3.0 for VI UPSs. ( Id. )

DOE appreciates the comments from NEMA and NEEA regarding their support for the updates to the definitions of THD, VFD, VI, and VFI. In response to the recommendation from NEMA, DOE notes that DOE's proposed updates to the VFI UPS definition already reference section 5.2 of IEC 62040-3 Ed. 3.0 for VFI UPS input voltage and frequency variation limits. Furthermore, the proposed definition also clarifies that VFI UPSs “shall protect the load against adverse effects from such variations without discharging the energy storage device.” 88 FR 790, 805. DOE further notes that IEC 62040-3 Ed. 3.0 does not specifically prescribe a voltage limit for VI UPSs. Rather, the voltage limit is based on the UPS model and is declared by manufacturers directly. As such, DOE has determined that it would not be essential to add reference to section 5.3 of IEC 62040-3 Ed. 3.0 for VI UPS output voltage tolerance.

For the reasons discussed here and in the January 2023 NOPR, in this final rule, DOE is updating the definitions of THD, VFD, VI, and VFI to harmonize with the IEC 62040-3 Ed 3.0 definitions, including referencing the corresponding updated section numbers within IEC 62040-3 Ed 3.0 definitions, and maintaining the notes to these definitions as proposed in the January 2023 NOPR.

As discussed, the current UPS test procedure incorporates by reference certain sections of IEC 62040-3 Ed. 2.0 regarding test setup, input and output power measurement, and the optional determination of UPS architecture. Specifically:

• The definitions of VFD UPS, VFI UPS, and VI UPS in sections 2.27.1 through 2.27.3 of appendices Y and Y1 reference: (1) the AC input failure test in section 6.2.2.7 of IEC 62040-3 Ed. 2.0, which in turn references section 5.3.4 and Annex G of IEC 62040-3 Ed. 2.0; (2) the steady state input voltage tolerance test in section 6.4.1.1 of IEC 62040-3 Ed. 2.0, as a subsection to section 6.4.1, which in turn references sections 5.2.1 and 5.2.2.k of IEC 62040-3 Ed. 2.0; and (3) the input frequency tolerance test in section 6.4.1.2 of IEC 62040-3 Ed. 2.0, which in turn references sections 5.3.2.d and 5.3.2.3 of IEC 62040-3 Ed. 2.0.

• Section 4.2.1 of appendices Y and Y1 specifies configuring the UPS according to Annex J.2 of IEC 62040-3 Ed. 2.0.

• Section 4.3.3 of appendices Y and Y1 specifies measuring input and output power according to section J.3 of Annex J of IEC 62040-3 Ed. 2.0.

Since the publication of the December 2016 Final Rule, IEC has updated the IEC 62040-3 standard to its third edition ( i.e., IEC 62040-3 Ed. 3.0). The following paragraphs summarize the key changes from the second edition, based on DOE's review of the revised standard.

Section 4 of IEC 62040-3 Ed. 3.0 includes updates to various environmental conditions, such as the general test environment and operating conditions when testing UPSs. Appendices Y and Y1, however, do not refer to section 4 of the IEC 62040-3 standard but instead provide their own environmental and operating conditions for testing purposes. Therefore, DOE determined in the January 2023 NOPR that its test procedure for measuring the efficiency of UPSs will remain unaffected by the updates to section 4 of the IEC 62040-3 Ed. 3.0. 88 FR 790, 795.

Section 5.2 of IEC 62040-3 Ed. 2.0 addresses UPS input specifications, such as the input voltage range, input frequency range, and total harmonic distortions during which the UPS under test must remain in the normal mode of operation. While an initial review of IEC 62040-3 Ed. 3.0 shows significant editorial changes to the sections that define these parameters, the remainder of the parameters remain unchanged. Similarly, section 5.3 of IEC 62040-3 Ed. 3.0 provides the minimum output specifications for UPSs that must be declared by manufacturers, such as its input dependency, rated output voltage and RMS output voltage tolerance band, rated frequency tolerance band, rated output active and apparent power, total harmonic distortion, etc. As before, the majority of the changes to this section are editorial or a reorganization.

Section 6 of IEC 62040-3 Ed. 2.0 previously provided instructions for performing the AC input failure test ( see section 6.2.2.7), the steady-state input voltage tolerance test ( see section 6.4.1.1), and the input frequency tolerance test ( see section 6.4.1.2) that are used to classify the input dependency of a UPS as VI, VFD, or VFI. IEC 62040-3 Ed. 3.0 has since updated these subsections with the following changes: subsection titles and numbering have been updated to specifically refer to them as VI, VFD, and VFI input dependency tests; additional criteria have been added for meeting the VI, VFD, and VFI classifications; and a new test load condition at 0 percent ( i.e., no-load) has been added (see section III.E of this document for further discussion of a no-load test).

Additional updates to Annex J to IEC 62040-3 Ed. 3.0 require multi-mode UPSs to be tested at all dependency modes, whereas DOE's current test procedure explicitly requires UPSs to be tested at only their highest and lowest input dependency modes. Annex J has also been updated to allow manufacturers to test UPSs with functions or ports set to the lowest power-consuming mode or disconnected if they are not related to maintaining the energy storage device ( i.e., batteries) at full charge, along with added reporting requirements for manufacturers to report these features, interfaces, or ports that have been turned off or set to the lowest power-consuming mode. This updated clarification regarding additional features is similar to DOE's current UPS test procedure, which requires UPSs to be tested with such features off or disconnected; however, DOE currently does not require manufacturers to report these manually switched-off features.

DOE did not propose to amend the certification or reporting requirements for UPSs in the January 2023 NOPR. Id. at 88 FR 796. Instead, DOE stated that it may consider proposals to amend the certification requirements and reporting for UPSs under a separate rulemaking regarding appliance and equipment certification. Id.

In the January 2023 NOPR, DOE carefully reviewed IEC 62040-3 Ed. 3.0 as it relates to measuring the efficiency of a UPS. DOE determined that the relevant updates to IEC 62040-3 Ed. 3.0 compared to IEC 62040-3 Ed. 2.0 are largely editorial, including renumbering of certain sections referenced by the DOE test procedure, and that updating DOE's existing references to IEC 62040-3 Ed. 3.0 would not alter the measured efficiency of basic models. As a result, DOE proposed in the January 2023 NOPR to update its incorporation by reference of IEC 62040-3 Ed. 2.0 to IEC 62040-3 Ed. 3.0 in 10 CFR 430.3 and to update its references in appendices Y and Y1 accordingly to reflect the renumbering of sections in IEC 62040-3 Ed. 3.0. Id.

DOE's existing test procedure for UPSs allows recording of either instantaneous power or accumulated energy over a 15-minute period. DOE's review of Annex J in IEC 62040-3 Ed. 3.0 did not reveal any additional instructions that would further facilitate the use of the accumulated energy method. As such, DOE did not propose any changes to its existing language in section 4.3.3 of appendices Y and Y1. Id.

In the January 2023 NOPR, DOE requested comment on its proposal to incorporate by reference IEC 62040-3 Ed 3.0 and to update references in appendices Y and Y1 accordingly to reflect the renumbering of sections in IEC 62040-3 Ed 3.0. Id.

In response to the January 2023 NOPR, NEMA supported the proposed incorporation by reference and the associated renumbering. (NEMA, No. 10 at p. 2) NEEA also commented in support of DOE's proposal to update references based on the IEC 62040-3 Ed. 3.0 edition and recommended that DOE consider requiring manufacturers to report whether additional functionality was switched off for testing, which would increase transparency and harmonization. (NEEA, No. 11 at pp. 2-3) DOE appreciates NEEA's recommendation but reiterates that, under a separate rulemaking regarding appliance and equipment certification, DOE will review relevant reporting and certification requirements and may consider proposals to amend the certification requirements for UPSs at that time.

For the reasons discussed here and in the January 2023 NOPR, in this final rule, DOE is incorporating by reference IEC 62040-3 Ed 3.0 and updating references in appendices Y and Y1 to reflect the renumbering of sections in IEC 62040-3 Ed 3.0.

Section 4.3.3 of appendices Y and Y1 requires that the efficiency of a UPS be measured at 100, 75, 50, and 25 percent of the device's rated output power. Each of these measured efficiencies is weighted according to values provided in Table 4.3.1 of appendices Y and Y1 and combined to determine a single weighted average output metric ( i.e., the average load adjusted efficiency) representing the UPS's overall efficiency. These load conditions and weightings were established in the December 2016 Final Rule consistent with the load weightings specified in ENERGY STAR UPS Specification Version 1.0. 17 81 FR 89806, 89816. The current ENERGY STAR UPS Specification Version 2.0  18 maintains these same load conditions and weightings. These load conditions and weightings are also consistent with those specified in section 6.4.1.6 of IEC 62040-3 Ed. 2.0 and section 6.4.1.9 of IEC 62040-3 Ed. 3.0.

In the January 2023 NOPR, DOE discussed comments received in response to the February 2022 RFI regarding a 10 percent loading point. 88 FR 790, 796-797. DOE noted that EPCA requires that any test procedures prescribed or amended under this section be reasonably designed to produce test results that measure energy efficiency, energy use, or estimated annual operating cost of a covered product during a representative average use cycle or period of use, and not be unduly burdensome to conduct. (42 U.S.C. 6293(b)(3)) As such, DOE must weigh the representativeness of test results with the associated test burden in evaluating any amendments to its test procedures. Regarding the representativeness of the DOE UPS test procedure, the commenters did not provide specific data, nor was DOE aware of any specific data, demonstrating that a 10-percent loading condition would produce a more representative measure of energy use or energy efficiency of UPSs. In addition, DOE's test procedure does not differentiate between specific end-use applications. Therefore, load profiles specific to certain applications ( e.g., desktop computers) may not be representative of overall average use of UPSs across all end-use applications. Further, were DOE to consider a 10-percent load condition, DOE was not aware of any data to suggest what corresponding weighting factor should be used to combine this loading condition with the other defined loading conditions comprising the overall efficiency metric.

Regarding test burden, as noted, the loading points currently specified in appendices Y and Y1 are consistent with the loading points defined by ENERGY STAR, as well as section 6.4.1.6 of IEC 62040-3 Ed. 3.0. DOE also noted that the requirements of IEC 62040-3 Ed. 3.0 are referenced by the European Union (“EU”) Code of Conduct (“CoC”) on Energy Efficiency and Quality of AC UPSs Version 2.0. 19 Like many other types of consumer electronics, UPSs are manufactured and distributed globally by multi-national suppliers; as such, any differences between the DOE UPS test procedure (applicable to products sold or imported into the United States) and internationally-recognized industry test methods impose a burden that is acutely impactful to the consumer electronics industry.

Having weighed the potential improvement to representativeness against the potential for increased test burden associated with adding a required 10-percent loading condition that would be applicable to all UPSs, DOE tentatively concluded in the January 2023 NOPR—based on information available—that the potential burden would outweigh any potential improvement in representativeness ( i.e., would introduce undue test burden). Id. at 88 FR 797. Consequently, DOE did not propose to modify its existing loading points, weightings, or overall efficiency metric in the January 2023 NOPR. Id.

In the January 2023 NOPR, DOE requested comment on its proposal to not modify the existing loading points, weighting, or the overall efficiency metric in the current UPS test procedure. Id.

In response to the January 2023 NOPR, NEMA commented in support of DOE's proposal to maintain the existing loading points as the referenced loading points and associated coefficients are employed by not only the IEC standard, but also EU CoC's regulation for UPSs. (NEMA, No. 10 at p. 2)

For the reasons discussed here and in the January 2023 NOPR, in this final rule, DOE is not modifying the existing loading points, weighting, or the overall efficiency metric in the UPS test procedure.

DOE's test procedure for UPSs does not currently specify a method for determining the energy consumption of a UPS at no-load ( i.e., 0-percent loading condition).

However, DOE recognizes the usefulness of a no-load power consumption metric to the industry and stakeholders and proposed in the January 2023 NOPR to incorporate by reference the no-load test condition specified in section 6.4.1.10 of IEC 62040-3 Ed. 3.0 as an optional test in section 4.3.3 of appendices Y and Y1 that would be used as the basis for any representations of no-load power consumption. 88 FR 790, 797. DOE noted that manufacturers would not be required to certify no-load power consumption to DOE as a result of this amendment because the energy conservation standards for UPSs do not have a no-load requirement at this time. Id.

In the January 2023 NOPR, DOE requested feedback on its proposal to add a method for measuring the power consumption of UPSs at no-load as a test to be used as the basis for any representations of no-load power consumption. Id.

During the February 2023 public meeting, Appliance Standards Awareness Project (ASAP) supported adding the optional no-load test based on the IEC test method and stated that the added no-load test can provide important information to customers. ASAP further encouraged DOE to enable voluntary no-load power reporting in the compliance database. 20 Schneider Electric also expressed support of the optional no-load testing requirement during the February 2023 public meeting. 21

NEMA and NEEA also supported adding the optional no-load test procedure. (NEMA, No. 10 at p. 3; NEEA, No. 11 at p. 1) NEEA additionally urged DOE to enable manufacturer reporting of the no-load power and to require the no-load test in the next round of rulemaking. (NEEA, No. 11 at p. 1) NEEA stated that the no-load test would improve harmonization with other test procedures as the no-load test was already required by both the IEC and the ENERGY STAR test procedure. ( Id. at pp. 1-2) NEEA stated that the no-load test can better and more effectively represent real-world usage of UPSs because desktop computers that are commonly connected to UPSs spend substantial time in sleep or off mode. ( Id. at p. 2) NEEA noted that addressing the energy use of a UPS in no-load condition will increase the representativeness and can possibly achieve additional energy savings. ( Id. ) Similarly, the Joint Commenters supported DOE's proposal to add an optional no-load test, which would better represent current UPS usage, and requested DOE to enable voluntary reporting of the no-load power consumption on DOE's CCD. (Joint Commenters, No. 12 at p. 1) The Joint Commenters recommended that DOE establish a separate standby mode metric and standard based on the no-load testing condition in the future because UPSs' no-load mode aligns closely with battery chargers' maintenance mode, which qualify under EPCA's definition of standby. ( Id. )

Regarding the comments recommending enabling the reporting option for the optional no-load test, DOE reiterates that DOE is not making any amendments to reporting or certification requirements for UPSs in this rulemaking. Instead, DOE may consider proposals to amend the certification requirements and reporting for UPSs under a separate rulemaking regarding appliance and equipment certification. DOE notes that it is only adopting the no-load test as an optional test in this rulemaking and will continue to regularly review the UPS market to analyze the representativeness of the no-load test condition in real world applications. DOE also notes that an analysis of any potential energy conservation standards pertaining to the no-load test is outside the scope of this test procedure rulemaking.

For the reasons discussed here and in the January 2023 NOPR, in this final rule, DOE is finalizing the proposals to add a method for measuring the power consumption of UPSs at no-load as a test to be used as the basis for any representations of no-load power consumption.

DOE's UPS test procedure refers to the 25, 50, 75, and 100-percent loads as “reference test loads.” In general, test loads for testing consumer electronics can be either linear  22 or non-linear  23 in nature.

While IEC 62040-3 Ed. 2.0 provides a definition for reference test load, 24 it does not explicitly address whether such a test load is linear or non-linear in nature. Section 2.24 of appendices Y and Y1 defines “reference test load” as a load or condition with a power factor of greater than 0.99 in which the AC output socket of the UPS delivers the active power (W) for which the UPS is rated. By specifying a power factor requirement of greater than 0.99, DOE's current definition of “reference test load” necessitates the use of a test load that is both linear and resistive.

Section D.2 in Annex D of IEC 62040-3 Ed. 3.0 explains that the diversity of types of load equipment and their relevant characteristics are always changing with technology. For this reason, the UPS output performance is characterized by loading with passive reference loads to simulate, as far as practical, the expected load types, but it cannot be taken that these load types are totally representative of the actual load equipment in a given application. The UPS industry has generally specified UPS output characteristics under conditions of linear loading ( i.e., resistive or resistive/inductive). The effect on the output of the UPS by non-linear loads both in steady state and dynamic is, in many cases, to cause deviation from the output characteristic specified by the manufacturer/supplier where these are quoted under linear load conditions.

In the January 2023 NOPR, DOE discussed comments suggesting the use of non-linear loads. 88 FR 790, 798. While DOE recognized that loads protected by UPSs can be non-linear, the use of non-linear loads for testing may create certain challenges or difficulties in meeting the specified test conditions, as described within section D.2 of IEC 62040-3 Ed. 3.0. Id. This suggests that testing with non-linear loads may produce results that are less repeatable or reproducible than testing with linear loads. Id. In the January 2023 NOPR, DOE stated that it had no information, nor had commenters provided any information, about how the use of non-linear loads for UPS testing may affect repeatability, reproducibility, or test burden. Id. As a result, DOE did not propose the use of non-linear test loads for testing UPSs in the January 2023 NOPR. Id.

DOE did not receive any stakeholder comments on this topic in response to the January 2023 NOPR. As such, in this final rule, DOE is not making any amendments to the UPS test loads.

In this final rule, DOE is amending the existing test procedure for UPSs by updating the industry standard incorporated by reference to its latest version, updating definitions consistent with the latest version of the industry standard, and introducing an optional test for measuring the power consumption of UPSs at no-load conditions. DOE has determined that these amendments would not be unduly burdensome for manufacturers to conduct.

EPCA requires that test procedures prescribed by DOE not be unduly burdensome to conduct. (42 U.S.C. 6293(b)(3)) The following sections discuss DOE's evaluation of estimated costs associated with the finalized amendments.

This final rule updates certain referenced sections in the UPS test procedure at appendices Y and Y1 to the latest version of the industry standard and would not change the method of testing UPSs, but rather would only make non-substantive changes, such as section renumbering. The adopted amendments to harmonize certain definitions with the industry standard would not change the scope of products currently subject to the DOE test procedure or energy conservation standards. Additionally, the adopted optional test procedure for measuring the power consumption of UPSs at no-load conditions would not be required for demonstrating compliance with standards. Therefore, the finalized amendments would not alter the measured energy efficiency or energy use of UPSs. Manufacturers will be able to rely on data generated under the current test procedure. Further, the adopted changes would not require the purchase of additional equipment or increased test burden, and consequently would not impact testing costs. If manufacturers elected to continue to make representations or begin making representations regarding UPS power consumption at no-load conditions, they may need to retest the no-load power portion of the test procedure for their UPS model. DOE estimates that this retest would cost approximately $1,700 per unit if the test is conducted by a third-party lab and substantially less if done by the manufacturer themselves. However, as stated previously, any representations from such a retest would not be required for demonstrating compliance with standards for UPSs.

DOE's established practice is to adopt relevant industry standards as DOE test procedures unless such methodology would be unduly burdensome to conduct or would not produce test results that reflect the energy efficiency, energy use, water use (as specified in EPCA), or estimated operating costs of that product during a representative average use cycle or period of use. Section 8(c) of appendix A of 10 CFR part 430 subpart C. In cases where the industry standard does not meet EPCA statutory criteria for test procedures, DOE will make modifications through the rulemaking process to these standards as the DOE test procedure.

The test procedure for UPSs at appendices Y and Y1 currently incorporates by reference IEC 62040-3 Ed. 2.0 regarding test setup, input and output power measurement, and the optional determination of UPS architecture. DOE is incorporating by reference the latest version of this industry standard ( i.e., IEC 62040-3 Ed. 3.0). Additional discussion of this update is provided in section III.C of this document.

In the January 2023 NOPR, DOE requested comment on the benefits and burdens of the proposed updates and additions to the industry standard referenced in the test procedure for UPSs. 88 FR 790, 798. NEMA supported DOE's proposal to harmonize with industry standards. (NEMA, No. 10 at p. 3) Therefore, in this final rule, DOE is adopting its proposal to harmonize with IEC 62040-3 Ed. 3.0.

The effective date for the adopted test procedure amendment will be 75 days after publication of this final rule in the Federal Register . EPCA prescribes that all representations of energy efficiency and energy use, including those made on marketing materials and product labels, must be made in accordance with an amended test procedure, beginning 180 days after publication of the final rule in the Federal Register . (42 U.S.C. 6293(c)(2)) EPCA provides an allowance for individual manufacturers to petition DOE for an extension of the 180-day period if the manufacturer may experience undue hardship in meeting the deadline. (42 U.S.C. 6293(c)(3)) To receive such an extension, petitions must be filed with DOE no later than 60 days before the end of the 180-day period and must detail how the manufacturer will experience undue hardship. ( Id. )

DOE also recognizes that the publication of separate final rules for battery chargers and UPSs may complicate the compliance dates in appendices Y and Y1 as they apply to battery chargers and UPSs, respectively. As an example, the September 2022 Final Rule amended appendices Y and Y1 requiring manufacturers of battery chargers to use this recently updated version of appendix Y beginning March 7, 2023. Considering that there are no differences in how a UPS is tested between the two versions, DOE concludes that it would be beneficial to refer to the same version of the appendix (as finalized by the September 2022 Final Rule) for testing both battery chargers and UPSs. DOE also concludes that presenting these various compliance dates and references to different versions of the appendices in a tabular format would clearly show the applicability of each appendix. Accordingly, in this final rule, DOE is updating the notes section at the beginning of appendices Y and Y1 to include a table that clearly identifies the appropriate appendix reference and compliance dates for each product at any given time.

Executive Order (“E.O.”) 12866, “Regulatory Planning and Review,” as supplemented and reaffirmed by E.O. 13563, “Improving Regulation and Regulatory Review,” 76 FR 3821 (Jan. 21, 2011) and amended by E.O. 14094, “Modernizing Regulatory Review,” 88 FR 21879 (April 11, 2023), requires agencies, to the extent permitted by law, to (1) propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs (recognizing that some benefits and costs are difficult to quantify); (2) tailor regulations to impose the least burden on society, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations; (3) select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity); (4) to the extent feasible, specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt; and (5) identify and assess available alternatives to direct regulation, including providing economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information upon which choices can be made by the public. DOE emphasizes as well that E.O. 13563 requires agencies to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible. In its guidance, the Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget (OMB) has emphasized that such techniques may include identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes. For the reasons stated in this preamble, this final regulatory action is consistent with these principles.

Section 6(a) of E.O. 12866 also requires agencies to submit “significant regulatory actions” to OIRA for review. OIRA has determined that this final regulatory action does not constitute a “significant regulatory action” under section 3(f) of E.O. 12866. Accordingly, this action was not submitted to OIRA for review under E.O. 12866.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires preparation of a final regulatory flexibility analysis (FRFA) for any final rule where the agency was first required by law to publish a proposed rule for public comment, unless the agency certifies that the rule, if promulgated, will not have a significant economic impact on a substantial number of small entities. As required by Executive Order 13272, “Proper Consideration of Small Entities in Agency Rulemaking,” 67 FR 53461 (August 16, 2002), DOE published procedures and policies on February 19, 2003, to ensure that the potential impacts of its rules on small entities are properly considered during the DOE rulemaking process. 68 FR 7990. DOE has made its procedures and policies available on the Office of the General Counsel's website: www.energy.gov/gc/office-general-counsel. DOE reviewed this final rule under the provisions of the Regulatory Flexibility Act and the procedures and policies published on February 19, 2003. DOE has recently conducted a focused inquiry into small business manufacturers of the UPSs covered by this rulemaking. DOE used available public information to identify potential small manufacturers. DOE accessed the CCD  25 to create a list of companies that import or otherwise manufacture the UPSs covered by this final rule.

For manufacturers of UPSs, the Small Business Administration (“SBA”) has set a size threshold, which defines those entities classified as “small businesses” for the purposes of the statute. DOE used the SBA's small business size standards to determine whether any small entities would be subject to the requirements of the rule. See 13 CFR part 121. The size standards are listed by the North American Industry Classification System (“NAICS”) code and industry description and are available at www.sba.gov/document/support—table-size-standards. Manufacturing of UPSs is classified under NAICS 335999, “All Other Miscellaneous Electrical Equipment and Component Manufacturing.” The SBA sets a threshold of 500 employees or less for an entity to be considered as a small business for this category.

To estimate the number of small businesses that manufacture UPSs impacted by this rulemaking, DOE conducted a survey using information from DOE's CCD and previous rulemakings. DOE used information from these sources to create a list of companies that potentially manufacture or sell UPSs. DOE screened out companies that do not offer products covered by this rulemaking, do not meet the definition of a “small business,” or are foreign owned and operated. DOE identified five companies that are small businesses manufacturing UPSs covered by this rulemaking.

However, DOE has concluded that the updates to DOE's test procedure for UPSs do not involve substantive changes to the test setup and methodology and will not pose any additional test burden or additional test costs for any UPS manufacturers, large or small.

Therefore, DOE concludes that the cost effects accruing from the final rule would not have a “significant economic impact on a substantial number of small entities,” and that the preparation of a FRFA is not warranted. DOE has submitted a certification and supporting statement of factual basis to the Chief Counsel for Advocacy of the Small Business Administration for review under 5 U.S.C. 605(b).

Manufacturers of UPSs must certify to DOE that their products comply with any applicable energy conservation standards. To certify compliance, manufacturers must first obtain test data for their products according to the DOE test procedures, including any amendments adopted for those test procedures. DOE has established regulations for the certification and recordkeeping requirements for all covered consumer products and commercial equipment, including UPSs. ( See generally 10 CFR part 429.) The collection-of-information requirement for the certification and recordkeeping is subject to review and approval by OMB under the Paperwork Reduction Act (PRA). This requirement has been approved by OMB under OMB control number 1910-1400. Public reporting burden for the certification is estimated to average 35 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.

DOE is not amending the certification or reporting requirements for UPSs in this final rule. Instead, DOE may consider proposals to amend the certification requirements and reporting for UPSs under a separate rulemaking regarding appliance and equipment certification. DOE will address changes to OMB Control Number 1910-1400 at that time, as necessary.

Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB Control Number.

In this final rule, DOE establishes test procedure amendments that it expects will be used to develop and implement future energy conservation standards for UPSs. DOE has determined that this rule falls into a class of actions that are categorically excluded from review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq. ) and DOE's implementing regulations at 10 CFR part 1021. Specifically, DOE has determined that adopting test procedures for measuring energy efficiency of consumer products and industrial equipment is consistent with activities identified in 10 CFR part 1021, appendix A to subpart D, A5 and A6. Accordingly, neither an environmental assessment nor an environmental impact statement is required.

Executive Order 13132, “Federalism,” 64 FR 43255 (August 4, 1999), imposes certain requirements on agencies formulating and implementing policies or regulations that preempt State law or that have federalism implications. The Executive order requires agencies to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and to carefully assess the necessity for such actions. The Executive order also requires agencies to have an accountable process to ensure meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications. On March 14, 2000, DOE published a statement of policy describing the intergovernmental consultation process it will follow in the development of such regulations. 65 FR 13735. DOE examined this final rule and determined that it 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. EPCA governs and prescribes Federal preemption of State regulations as to energy conservation for the products that are the subject of this final rule. States can petition DOE for exemption from such preemption to the extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297(d)) No further action is required by Executive Order 13132.

Regarding the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” 61 FR 4729 (Feb. 7, 1996), imposes on Federal agencies the general duty to adhere to the following requirements: (1) eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; (3) provide a clear legal standard for affected conduct rather than a general standard; and (4) promote simplification and burden reduction. Section 3(b) of Executive Order 12988 specifically requires that Executive agencies make every reasonable effort to ensure that the regulation (1) clearly specifies the preemptive effect, if any; (2) clearly specifies any effect on existing Federal law or regulation; (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction; (4) specifies the retroactive effect, if any; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations in light of applicable standards in sections 3(a) and 3(b) to determine whether they are met or it is unreasonable to meet one or more of them. DOE has completed the required review and determined that, to the extent permitted by law, this final rule meets the relevant standards of Executive Order 12988.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) requires each Federal agency to assess the effects of Federal regulatory actions on State, local, and Tribal governments and the private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). For a regulatory action resulting in a rule that may cause 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 annually for inflation), section 202 of UMRA requires a Federal agency to publish a written statement that estimates the resulting costs, benefits, and other effects on the national economy. (2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to develop an effective process to permit timely input by elected officers of State, local, and Tribal governments on a proposed “significant intergovernmental mandate,” and requires an agency plan for giving notice and opportunity for timely input to potentially affected small governments before establishing any requirements that might significantly or uniquely affect small governments. On March 18, 1997, DOE published a statement of policy on its process for intergovernmental consultation under UMRA. 62 FR 12820; also available at www.energy.gov/gc/office-general-counsel. DOE examined this final rule according to UMRA and its statement of policy and determined that the rule contains neither an intergovernmental mandate, nor a mandate that may result in the expenditure of $100 million or more in any year, so these requirements do not apply.

Section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family Policymaking Assessment for any rule that may affect family well-being. This final rule will not have any impact on the autonomy or integrity of the family as an institution. Accordingly, DOE has concluded that it is not necessary to prepare a Family Policymaking Assessment.

DOE has determined, under Executive Order 12630, “Governmental Actions and Interference with Constitutionally Protected Property Rights” 53 FR 8859 (March 18, 1988), that this regulation will not result in any takings that might require compensation under the Fifth Amendment to the U.S. Constitution.

Section 515 of the Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516 note) provides for agencies to review most disseminations of information to the public under guidelines established by each agency pursuant to general guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR 62446 (Oct. 7, 2002). Pursuant to OMB Memorandum M-19-15, Improving Implementation of the Information Quality Act (April 24, 2019), DOE published updated guidelines which are available at www.energy.gov/sites/prod/files/2019/12/f70/DOE%20Final%20Updated%20IQA%20Guidelines%20Dec%202019.pdf. DOE has reviewed this final rule under the OMB and DOE guidelines and has concluded that it is consistent with applicable policies in those guidelines.

Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use,” 66 FR 28355 (May 22, 2001), requires Federal agencies to prepare and submit to OMB, a Statement of Energy Effects for any significant energy action. A “significant energy action” is defined as any action by an agency that promulgated or is expected to lead to promulgation of a final rule, and that (1) is a significant regulatory action under Executive Order 12866, or any successor order; and (2) is likely to have a significant adverse effect on the supply, distribution, or use of energy; or (3) is designated by the Administrator of OIRA as a significant energy action. For any significant energy action, the agency must give a detailed statement of any adverse effects on energy supply, distribution, or use if the regulation is implemented, and of reasonable alternatives to the action and their expected benefits on energy supply, distribution, and use.

This regulatory action is not a significant regulatory action under Executive Order 12866. Moreover, it would not have a significant adverse effect on the supply, distribution, or use of energy, nor has it been designated as a significant energy action by the Administrator of OIRA. Therefore, it is not a significant energy action, and, accordingly, DOE has not prepared a Statement of Energy Effects.

Under section 301 of the Department of Energy Organization Act (Pub. L. 95-91; 42 U.S.C. 7101), DOE must comply with section 32 of the Federal Energy Administration Act of 1974, as amended by the Federal Energy Administration Authorization Act of 1977. (15 U.S.C. 788; FEAA) Section 32 essentially provides in relevant part that, where a proposed rule authorizes or requires use of commercial standards, the notice of proposed rulemaking must inform the public of the use and background of such standards. In addition, section 32(c) requires DOE to consult with the Attorney General and the Chairman of the Federal Trade Commission (FTC) concerning the impact of the commercial or industry standards on competition.

The modifications to the test procedure for UPSs adopted in this final rule incorporate testing methods contained in certain sections of the following commercial standard: IEC 62040-3 Ed. 3.0. DOE has evaluated this standard and is unable to conclude whether it fully complies with the requirements of section 32(b) of the FEAA ( i.e., whether it was developed in a manner that fully provides for public participation, comment, and review.) DOE has consulted with both the Attorney General and the Chairman of the FTC about the impact on competition of using the methods contained in this standard and has received no comments objecting to its use.

As required by 5 U.S.C. 801, DOE will report to Congress on the promulgation of this rule before its effective date. The report will state that it has been determined that the rule is not a “major rule” as defined by 5 U.S.C. 804(2).

IEC 62040-3 Ed. 3.0, “Uninterruptible power systems (UPS)—Part 3: Method of specifying the performance and test requirements” is an industry-accepted test standard that specifies methods for measuring the efficiency of a UPS. The test procedure amended in this final rule updates all references from the previous edition (IEC 62040-3 Ed. 2.0) to this most current edition (IEC 62040-3 Ed. 3.0). IEC 62040-3 Ed. 3.0 is reasonably available from IEC at https://webstore.iec.ch/ and ANSI at webstore.ansi.org.

In this final rule, DOE included amendments to add a new section 0 (Incorporation by Reference) to both appendices Y and Y1 listing the applicable sections of IEC 62040-3 Ed. 3.0 that are referenced by the test procedure.

The Secretary of Energy has approved publication of this final rule.

This document of the Department of Energy was signed on March 25, 2024, by Jeff Marootian, Principal Deputy Assistant Secretary for Energy Efficiency and Renewable Energy, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters the legal effect of this document upon publication in the Federal Register .

For the reasons stated in the preamble, DOE amends part 430 of Chapter II of Title 10, Code of Federal Regulations as set forth below:

BIS is amending the EAR (15 CFR parts 730-774), by revising the license requirements for items being exported, reexported, or transferred (in-country) to or within Australia and the UK. Background regarding these changes is detailed below.

On September 15, 2021, the leaders of Australia, the UK, and the United States announced their “resolve to deepen diplomatic, security, and defense cooperation in the Indo-Pacific region, including by working with partners, to meet the challenges of the twenty-first century” by creating AUKUS, an enhanced trilateral security partnership. Through AUKUS, partner governments are strengthening each other's ability to support their collective security and defense interests, building on longstanding and ongoing bilateral ties. AUKUS implementation promotes deeper information and technology sharing, while fostering integration of security and defense-related science, technology, industrial bases, and supply chains. In particular, AUKUS significantly enhances cooperation on a range of security and defense capabilities, many of which are detailed below. AUKUS is part of a broader U.S. Government effort to fortify international alliances and partnerships in mutually reinforcing ways across issues and continents. It is one of multiple partnerships that the United States is pursuing, enhancing cooperation on security issues in the Indo-Pacific region and around the world.

As it currently stands, AUKUS consists of two main pillars, Pillar I and Pillar II. Pillar I focuses on trilateral submarine cooperation. Pillar II has a wider scope than Pillar I because it focuses initial partner collaboration efforts on advanced capabilities in the following areas: (1) advanced cyber, artificial intelligence (AI), and autonomy; (2) quantum technologies; (3) hypersonic and counter-hypersonic capabilities; (4) electronic warfare; (5) innovation; (6) information sharing; and (7) additional undersea capabilities. Recognizing the deep defense ties built over decades, the three partner nations endeavor to streamline their collective defense collaboration while strengthening the ability to protect the sensitive technologies that underpin national security on these topics. It should be noted that the AUKUS partnership will continue to evolve. The technologies and areas of cooperation highlighted above are illustrative, not exhaustive, and are referenced here to highlight how license-free exports of certain items facilitated by the changes in this rule directly support not only the AUKUS partnership, but general defense trade and innovation between and among the AUKUS nations.

On December 22, 2023, President Biden signed the National Defense Authorization Act (NDAA) for Fiscal Year 2024, Public Law 118-31, which enacted provisions related to streamlining defense trade between and among the United States, UK, and Australia, provided certain conditions are met. The Department of State has purview over the implementation of the new authorities provided through the NDAA's revisions to the Arms Export Control Act. Separately, to support the United States' broader defense trade and technology cooperation with the AUKUS partners, BIS is issuing this rule to remove certain license requirements under the EAR.

The UK and Australia are two of the United States' closest allies, with longstanding collective defense arrangements. They are also members of all four multilateral export control regimes ( i.e., the Wassenaar Arrangement on Export Controls for Conventional Arms and Related Dual-Use Goods and Technologies, Australia Group, Nuclear Suppliers Group, and Missile Technology Control Regime (MTCR)) and are also members of the Global Export Controls Coalition (GECC) of governments that have substantially aligned on export control measures in response to Russia's illegal war against Ukraine (see supplement no. 3 to part 746 of the EAR). The UK and Australia have robust export control systems and have taken additional measures in recent months to enhance technology protection and promote secure trade. Specifically, in December 2023, the United Kingdom's National Security Act 2023 came into force, providing for inter alia enhanced protections against the unauthorized disclosure of certain defense-related information. In March 2024, the Australian Parliament passed the Defence Trade Controls Amendment Act 2024 and the Safeguarding Australia's Military Secrets Act 2024, providing for inter alia controls on the reexport of items originally exported from Australia, and disclosures of controlled technology to certain foreign persons within Australia, as well as controls on the provision of defense services. Following their passage in their respective parliaments, the UK and Australian actions received royal assent. These actions highlight the UK's and Australia's commitment to implementing robust export controls and technology protection measures. Accordingly, this rule significantly streamlines many license requirements under the EAR for exports, reexports, and transfers (in-country) to and within the UK and Australia.

With this rule, Australia and the UK will have nearly the same licensing treatment under the EAR as Canada. The liberal licensing treatment of items destined to Canada was made possible in part because Canada is included in the National Technology and Industrial Base (NTIB) (as defined in 10 U.S.C. 4801(1)). In 2017, this definition was broadened to include the UK and Australia. Accordingly, the regulatory changes in this rule not only advance the goals of the AUKUS Enhanced Trilateral Security Partnership, but also further align treatment of the UK and Australia under the EAR with fellow NTIB member Canada. This rule makes six primary export control policy changes as well as several minor conforming changes to further align the treatment of Australia, Canada, and the UK under the EAR.

The first three changes involve the removal of list-based license requirements for exports, reexports, and transfers (in-country) to Australia and the UK. Specifically, BIS is removing license requirements for national security column 1 (NS1), regional stability column 1 (RS1), and missile technology column 1 (MT1) reasons for control for the destinations of Australia and the UK. As Australia and the UK are not currently subject to NS2 or RS2 controls, with this rule all Commerce Country Chart-based NS and RS controls are removed for these countries. As detailed above, the AUKUS partners are among the closest allies of the United States and have similar export control and technology protection systems in place, mitigating the risk of misuse or diversion of license-free exports, reexports, and transfers of NS1, RS1, and MT1 items to and within these destinations. To facilitate this change, the Xs are being removed from the Country Chart (supplement no. 1 to part 738) for NS1, RS1, and MT1 for Australia and the UK. Corresponding to the Commerce Country Chart, provisions in part 742 of the EAR that specify the license requirements for NS, MT, and RS reasons (§§ 742.4(a), .5(a), and .6(a), respectively) are revised in order to fully remove the license for Australia and the UK.

With these changes, “600 series” items, which are generally items on the Wassenaar Arrangement Munitions List, will no longer require a license to Australia or the UK. In addition, items controlled under the EAR for missile technology reasons consistent with the MTCR Annex will also no longer require a license to Australia or the UK. Finally, except for those items requiring a license to all destinations worldwide pursuant to § 742.6(a)(9), many 9x515 satellite-related items will no longer require a license to Australia or the UK. These changes will significantly reduce the volume of BIS licenses for exports, reexports, and transfers to and within Australia and the UK, as BIS previously issued over 1,800 licenses per year for such items to Australia and the UK.

The fourth policy change is consistent with the general RS1 removal. BIS maintains a special RS Column 1 license requirement in § 742.6(a)(3) applicable to military commodities described under ECCN 0A919. Specifically, the special RS1 control required a license for reexports to all destinations except Canada for items classified under ECCN 0A919 except when such items are being reexported as part of a military deployment by a unit of the government of a country in Country Group A:1 (see supplement no. 1 to part 740 of the EAR) or the United States. This final rule will remove license requirements for 0A919 items to Australia and the UK, further aligning their treatment with Canada. As licenses for ECCN 0A919 items will no longer be required to the two countries under § 744.9(a)(1)(iii), this rule also removes footnote 3 on the Country Chart from Australia and the UK, which highlighted that a license was required for these items to those destinations.

Fifth, BIS is removing military end-use and end-user-based license requirements for exports, reexports, and transfers (in-country) of certain cameras, systems, or related components detailed under § 744.9(a)(1)(i) and (a)(1)(iii) of the EAR. Paragraph (a)(1)(i) of § 744.9 pertains to commodities described in ECCN 6A003.a.3, 6A003.a.4, or 6A003.a.6 that will be or are intended to be used by a `military end-user,' as defined in § 744.9(d); paragraph (a)(1)(iii) pertains to commodities described in ECCNs 0A504 (incorporating commodities controlled by ECCNs 6A002 or 6A003, or commodities controlled by 6A993.a that meet the criterion of Note 3.a to 6A003.b.4), 6A002, 6A003, or 6A993.a (having a maximum frame rate equal to or less than 9 Hz and thus meeting the criteria of Note 3.a to 6A003.b.4), or 8A002.d that will be or are intended to be incorporated into a “military commodity” controlled by ECCN 0A919. Prior to this rule, the only exception to the requirements under these paragraphs was to Canada. With the publication of this rule, the exception now applies to Australia, Canada, and the UK.

Finally, BIS is revising its treatment of significant items (SI) ( i.e., hot section technology for the development, production or overhaul of commercial aircraft engines, components, and systems) controlled under ECCN 9E003.a.1 through a.6, a.8, .h, .i, and .l, and related controls to allow these items to be exported, reexported, or transferred (in-country) to or within Australia and the UK without a license, consistent with the current exception for Canada. This provision is in § 742.14(a).

In addition to the major policy changes discussed above, the broader alignment of controls on Australia, Canada, and the UK under the EAR requires additional minor policy changes. These changes are as follows:

1. Under § 734.17(c)(1), precautions for internet transfers of products eligible for export under § 740.17(b)(2) shall include such measures as an access control system that, either through automated means or human intervention, checks the address of every system outside of the U.S. or Canada to check against transfers to foreign government end users, is edited to include Australia and the UK within the list of countries exempted from the required measures;

2. Under §§ 740.15, 740.16, and 740.17 (License Exceptions Aircraft, Vessels and Spacecraft (AVS), Additional Permissive Reexports (APR), and Encryption Commodities, Software, and Technology (ENC), respectively), BIS is expanding the explicit applicability of these License Exceptions for use to Australia, Canada, and the UK;

3. Under § 742.2(a)(1), a license was required to all destinations, including Canada, for CB Column 1 items; with the publication of this rule the countries exempt from the license requirement is expanded to include Australia and the UK in the list for clarity, although the revision does not change existing license requirements;

4. Under § 742.7(a)(4), Canada remains exempted from certain crime control related license requirements for non-firearms items, but the text has been edited to read “Canada only” as these items are not available without a license to Australia and the UK;

5. Under § 742.13(a)(1), Canada is mentioned as requiring a license for certain communications intercepting devices, with the publication of this rule, this phrase now includes Australia and the UK for clarity, although the revision does not change existing license requirements;

6. Under § 742.18(a)(1), Canada is mentioned as requiring a license under the Chemical Weapons Convention; with the publication of this rule, this phrase now includes Australia and the UK for clarity although the revision does not change existing license requirements;

7. Under § 743.3(b), BIS is exempting Australia and the UK alongside Canada from unilateral reporting requirements for thermal imaging camera transactions;

8. Under §§ 754.3(a), .4(a), and .5(a), a license is required for short supply reasons for control for certain items, including to Canada; these phrases now include Australia and the UK for clarity without changing existing license requirements;

9. Under § 758.1(b)(3), (6), and (9), BIS requires certain transactions involving Canada to be reported in Electronic Export Information (EEI) filings, and these paragraphs now include Australia and the UK for clarity without changing existing EEI filing requirements; and

10. Under § 758.11(a), which covers the scope of export clearance requirements for firearms and related items, BIS now includes Australia and the UK alongside Canada for clarity as destinations to which certain clearance requirements continue to pertain.

Among other things, license exception Aircraft, Vessels, and Spacecraft (AVS) treats exports to Canadian airlines in most destinations as an export to Canada. Since MT1 items do not require a license for export to Canada, the primary impact of this AVS eligibility is that Canadian airlines in most destinations may receive MT1 items as spare parts. Consistent with the removal in this rule of MT1 license requirements for the UK and Australia, and as discussed above, BIS is adding AVS eligibility for Australian and United Kingdom airlines to receive such items in most destinations. As a conforming change, BIS is creating two new definitions for what constitutes an “Australian airline” and “United Kingdom (or UK) airline.” These two definitions are added to § 772.1 and mirror the definition of “Canadian airline.” Both definitions state that an Australian or UK airline is a citizen of that destination who is authorized by their respective government to engage in business as an airline. The definitions then define, for purposes of these defined terms only, what it means to be a citizen of these countries, including firms incorporated or otherwise organized in a state or territory for Australia and a country or territory for the UK. To ensure alignment across these definitions, BIS is adding the term territory under the existing definition for a “Canadian airline,” which will now include firms incorporated or otherwise organized in Canadian provinces or territories.

Furthermore, BIS notes one particular license requirement that will remain unchanged as a result of this rule. Under the EAR, firearms-related items and other CC controlled items in ECCNs 0A501 (except 0A501.y), 0A502, 0A503, 0A504, 0A505. a, .b, and .x, 0A981, 0A982, 0A983, 0D501, 0D505, 0E501, 0E502, 0E504, 0E505, and 0E982 will continue to require a license when destined to and among the UK and Australia. This license requirement mirrors the license requirement for firearms-related items in ECCNs 0A501 (except 0A501.y), 0A502, 0A504 (except 0A504.f), and 0A505 (except 0A505.d) destined to Canada. Prior to this IFR, license requirements for these items to the UK and Australia were implemented through NS1/RS1 reasons for control. Since these license requirements are removed for the UK and Australia in this rule, BIS is adding a footnote to the Commerce Country Chart for the UK and Australia, which indicates that a license is still required for these 0x5zz firearms-related items to those two countries. This does not change the scope of the license requirements for these items to the UK and Australia that applied prior to the effective date of this rule.

To ensure that the export control revisions implemented in this rule advance AUKUS objectives, BIS requests comments on the impacts of these changes. BIS also requests comments on additional revisions to the EAR that would further enhance defense industrial base cooperation and technology innovation with Australia and the United Kingdom. In particular, BIS is not removing license requirements to Australia and the UK in this IFR for encryption items (EI) in § 742.15(a)(1) of the EAR. BIS notes that license exceptions such as encryption commodities, software, and technology (ENC) and authorized cybersecurity exports (ACE) are currently available for exports, reexports, and transfers (in-country) of such items to and within Australia and the UK, subject to certain conditions. BIS welcomes comments on the potential impact of removing EI licensing requirements for Australia and the UK.

On August 13, 2018, the President signed into law the John S. McCain National Defense Authorization Act for Fiscal Year 2019, which included the Export Control Reform Act of 2018 (ECRA), 50 U.S.C. 4801-4852. ECRA, as amended, provides the legal basis for BIS's principal authorities and serves as the authority under which BIS issues this rule.

1. Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distribute impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This final rule has been designated a “significant regulatory action” under Executive Order 12866.

2. Notwithstanding any other provision of law, no person may be required to respond to, or be subject to a penalty for failure to comply with, a collection of information, subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number. This regulation involves a collection currently approved by OMB under control number 0694-0088, Simplified Network Application Processing System. This collection includes, among other things, license applications and commodity classification, and carries a burden estimate of 29.4 minutes for a manual or electronic submission for a total burden estimate of 38,826 hours. BIS expects license application submissions to decrease by approximately 1,800 applications annually, for a total decrease in burden estimate under this collection of approximately 882 hours.

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

4. Pursuant to Section 1762 of ECRA (50 U.S.C. 4821), this action is exempt from the Administrative Procedure Act (APA) (5 U.S.C. 553) requirements for notice of proposed rulemaking, opportunity for public participation and delay in effective date. Additionally, this rule is exempt from the ordinary rulemaking requirements of the APA pursuant to 5 U.S.C. 553(a)(1) as a military or foreign affairs function of the United States Government.

5. Because neither the APA nor any other law requires that notice of proposed rulemaking and an opportunity for public comment be given for this rule, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) are not applicable. Accordingly, no Final Regulatory Flexibility Analysis is required and none has been prepared.

Accordingly, parts 734, 738, 740, 742, 743, 744, 754, 758, 772, and 774 of the Export Administration Regulations (15 CFR parts 730-774) are amended as follows:

The Poison Prevention Packaging Act of 1970 (PPPA), 15 U.S.C. 1471-1476, gives the Commission authority to establish standards for the “special packaging” of household substances, such as drugs, when child-resistant (CR) packaging is required to protect children from serious personal injury or serious illness resulting from handling, using, or ingesting the substance, and the special packaging is technically feasible, practicable, and appropriate for such substance. 15 U.S.C. 1472(a). Special packaging requirements under the PPPA have been codified at 16 CFR parts 1700 and 1702. Specifically, CPSC regulations require special packaging for oral prescription drugs. 16 CFR 1700.14(a)(10). CPSC regulations allow companies to petition the Commission for an exemption from CR requirements. 16 CFR part 1702.

Two of the three “reasonable grounds”  1 for granting an exemption from the special packaging requirements are: (1) that the degree or nature of the hazard to children in the availability of the substance, by reason of its packaging, is such that special packaging is not required to protect children from serious personal injury or serious illness resulting from handling, using, or ingesting the substance; or (2) special packing is not technically feasible, practicable, or appropriate for the subject substance. 16 CFR 1702.17(a) and (b).

If the Commission determines that a petition presents reasonable grounds for an exemption, CPSC regulations require publication in the Federal Register of a proposed amendment to the listing of substances that require special packaging, stating that the substance at issue would be exempt. 16 CFR 1702.17.

On March 30, 2020, Genentech, Inc. (Genentech), petitioned the Commission to exempt two specified sized tablets of baloxavir marboxil, which it markets as XOFLUZA, from the special packaging requirements for oral prescription drugs. The U.S. Food and Drug Administration (FDA) approved XOFLUZA in October 2018, with a two-tablet dose for acute uncomplicated flu in patients older than 12 years old showing symptoms for less than 48 hours. FDA approved single tablet doses in March 2021. XOFLUZA has been marketed in tablet form and is currently dispensed in CR packaging. The petitioner asserted that an exemption from special packaging is justified because of the lack of toxicity and lack of adverse human experience with the drug. The petitioner also claimed that special packaging is not technically feasible, practicable, or appropriate for XOFLUZA.

Genentech represents that it intends to continue U.S. production and packaging of XOFLUZA if the petition is granted. The firm also states that grant of the petition would allow it to use a packaging site in Kaiseraugst, Switzerland, as a back-up facility for the U.S. market in the event there is a spike in demand for XOFLUZA over a short period of time.

In September 2021, after considering the information provided by the petitioner up to that date and other available toxicity and human experience data, the Commission preliminarily concluded in the preamble of the Notice of Proposed Rulemaking (NPR) that the “lack of toxicity and lack of adverse human experience for the substance” presented by the availability of 40 mg and 80 mg tablets of baloxavir marboxil (currently marketed as XOFLUZA) is such that special packaging is not required to protect children from serious injury or serious illness from handling, using, or ingesting XOFLUZA. 86 FR 51640, at 54641-42 (September 16, 2021); 16 CFR 1702.17(a). However, the Commission preliminarily found that the petitioner's request for an exemption from special packaging, on the basis that it is not technically feasible, practicable, or appropriate for XOFLUZA, was not warranted based on the information provided by the petitioner. Based on the lack of toxicity, the Commission determined that reasonable grounds for an exemption were presented and voted to grant the petition and begin a rulemaking proceeding to exempt baloxavir marboxil tablets in packages containing not more than 80 mg of the drug from the special packaging requirements for oral prescription drugs.

Staff reviewed the toxicity of XOFLUZA. XOFLUZA has been studied in pediatric patients. 2 Overall, clinically relevant doses of XOFLUZA (40 or 80 mg total dose) in humans are well tolerated. 3

We are adopting an updated Filer Manual, Volume II: “EDGAR Filing,” Version 69 (March 2024) and amendments to 17 CFR 232.301 (“Rule 301”). The updated Filer Manual is incorporated by reference into the Code of Federal Regulations.

The Filer Manual contains information needed for filers to make submissions on EDGAR. Filers must comply with the applicable provisions of the Filer Manual in order to assure the timely acceptance and processing of filings made in electronic format. 1 Filers must consult the Filer Manual in conjunction with our rules governing mandated electronic filings when preparing documents for electronic submission.

EDGAR is being updated in EDGAR Release 24.1, and corresponding amendments to Volume II of the Filer Manual are being made to reflect these changes, as described below. 2

On June 2, 2022, the Commission adopted amendments to its rules governing the electronic filing and submission of documents to require the use of Inline eXtensible Business Reporting Language (“Inline XBRL”) for the filing of the financial statements and accompanying schedules to the financial statements required by Form 11-K. 3 EDGAR will be updated to allow filers to file submission form types 11-K, 11-KT, 11-K/A, and 11-KT/A in Inline XBRL format.

In furtherance of the Commission's rule requiring clearing agencies that provide a central matching service to establish, implement, maintain, and enforce policies and procedures reasonably designed to facilitate straight-matching processing, filers will be able to file submission form types 17AD-27 and 17AD-27/A in an Inline XBRL format that includes the data elements described in Rule 17Ad-27(b)(1) through (5). 4 These form types will allow the filer to request confidential treatment on sections of the document that the filer does not want to be publicly disseminated.

Consistent with the Commission's amendments to rules that govern beneficial ownership reporting, 5 on February 5, 2024, EDGAR underwent software changes to extend the filing “cut-off” times for Schedule 13D, Schedule 13G, and corresponding amendments from 5:30 p.m. Eastern time to 10 p.m. eastern time. In accordance with this software change, the EDGAR Filer Manual will be revised to include references to SC 13D, SC 13G, SC 13D/A, SC 13G/A, SCHEDULE 13D, SCHEDULE 13D/A, SCHEDULE 13G, and SCHEDULE 13G/A as submission types that will have a “Filing Date” identical to the EDGAR “Received Date” even if received after 5:30 p.m. eastern time, and will be disseminated until 10 p.m. eastern time.

References to submission types F-SR and F-SR/A, Exhibit 26 of Form 10-K and 10-Q, and the SHR taxonomy were removed from the EDGAR Filer Manual as a result of the United States Court of Appeals for the Fifth Circuit ruling  6 vacating the Share Repurchase Disclosure Modernization rule. 7 Further, the SHR taxonomy has been removed from EDGAR.

General functional enhancements to EDGAR Release 24.1 are set forth below.

Chapter 6 of the Filer Manual, Interactive Data, will be revised to remove technical and instructional details of XBRL formatting and validation. The information to be removed from Chapter 6 consists of technical specifications and guidance that filers will be able to consult in a new EDGAR XBRL Guide on SEC.gov. The revised Chapter 6 will present XBRL content in a concise fashion and will continue to complement Chapter 3, Index to Forms, by identifying different XBRL formatted documents associated with relevant EDGAR form and submission types. The revised Chapter 6 will also make clear that Interactive Data submissions in EDGAR use the Extensible Business Reporting Language (“XBRL”) information model and explain the use of taxonomies and instances which comprise this model.

The EDGAR system will be updated to accept the 2024 versions of the following taxonomies:

EDGAR will also accept validations based on FASB's 2024 XBRL US Data Quality Committee Rules Taxonomy (DQCRT).

The EDGAR Filer Manual reference to 8-K and 1-U Items will be updated in Table 7-1: Information Fields Available on Main Page.

On January 29, 2024, EDGAR Release 24.0.1 introduced the following changes, in addition to those noted in the December 2023 Filer Manual update:

• The check box labeled “Attach Inline XBRL Fee Tagging Exhibit” on the EDGARLink Online “Documents” tab was renamed to “Attach Inline XBRL Filing Fee Exhibit” for the 72 fee bearing submission types impacted.

• Submission type SC 13E1 has been updated to remove the “Is Fee Table/Exhibit included?” check box from the “Main” tab of the EDGARLink Online interface. As a result, filers are now required to attach an EX-FILING FEES exhibit attachment on a SC 13E1 filing.

Along with the adoption of the updated Filer Manual, we are amending Rule 301 of Regulation S-T to provide for the incorporation by reference into the Code of Federal Regulations of the current revisions. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51.

The updated EDGAR Filer Manual is available at https://www.sec.gov/edgar/filerinformation/current-edgar-filer-manual.

Because the Filer Manual and rule amendments relate solely to agency procedures or practice and do not substantially alter the rights and obligations of non-agency parties, publication for notice and comment is not required under the Administrative Procedure Act (“APA”). 9 It follows that the amendments do not require analysis under requirements of the Regulatory Flexibility Act  10 or a report to Congress under the Small Business Regulatory Enforcement Fairness Act of 1996. 11

The effective date for the updated Filer Manual and related rule amendments is April 19, 2024. In accordance with the APA, 12 we find that there is good cause to establish an effective date less than 30 days after publication of these rules. The Commission believes that establishing an effective date less than 30 days after publication of these rules is necessary to coordinate the effectiveness of the updated Filer Manual with the related system upgrades.

We are adopting the amendments to Regulation S-T under the authority in Sections 6, 7, 8, 10, and 19(a) of the Securities Act of 1933, 13 Sections 3, 12, 13, 14, 15, 15B, 23, and 35A of the Securities Exchange Act of 1934, 14 Section 319 of the Trust Indenture Act of 1939, 15 and Sections 8, 30, 31, and 38 of the Investment Company Act of 1940. 16

In accordance with the foregoing, title 17, chapter II of the Code of Federal Regulations is amended as follows:

The SSI program provides monthly payments to: (1) adults and children with a disability or blindness; and (2) people aged 65 and older who have little or no income and resources. Eligible individuals must meet all the requirements in the Social Security Act (Act), including having resources and income below specified amounts. 1 Generally, the more income an individual has, the less their SSI payment will be. Under the SSI program, resources are cash or other liquid assets or any real or personal property that an individual (or spouse, if any) owns and could convert to cash to be used for their support and maintenance. 2 Income, on the other hand, is anything the SSI applicant or recipient receives in cash or in-kind that can be used to meet food and shelter needs. 3 Applicants' and recipients' resources may affect their SSI eligibility, while their income may affect both their SSI eligibility and payment amounts.

Once an applicant is found eligible for SSI, their monthly payment is determined by subtracting countable monthly income from the Federal benefit rate (FBR), which is the monthly maximum Federal SSI payment. 4 The FBR for 2024 is $943 for an individual and $1,415 for an eligible individual with an eligible spouse. 5 The Act and our regulations  6 define income as “earned,” such as wages from work, and “unearned,” such as gifted cash or ISM. 7

As indicated above, income that affects an individual's monthly SSI payment can be provided in cash or in-kind. We calculate ISM considering any shelter that is given to the individual or that the individual receives because someone else pays for it. 8 For example, if an applicant or recipient lives with their sibling and does not pay rent, we would consider the shelter that their sibling provides to be ISM.

Like other forms of income, ISM can reduce the amount of a recipient's monthly SSI payment. For example, we reduce the SSI monthly payment by one-third of the FBR if an individual is living in another person's household, receives shelter from others living in the household, and others within the household pay for or provide the individual with all of the individual's meals. 9

Additional circumstances regarding ISM are discussed further in our regulations. 10

In addition to counting ISM that an applicant or recipient receives, the SSI program deems income of certain individuals to the SSI applicant or recipient. 11 “Deeming” is the process of considering a portion of another person's income to be the income of an SSI applicant or recipient. 12 When our deeming rules apply, it does not matter whether the other person's income is actually available to the applicant or recipient. 13 In determining an SSI applicant's or recipient's eligibility and payment amount, we consider both the SSI applicant's or recipient's own income as well as any relevant deemed income from others. For example, when a child who is applying for or receiving SSI lives with a parent who is ineligible for SSI, we deem a portion of that parent's income to the child through the month in which the child reaches age 18. 14 Likewise, when an adult who is applying for or receiving SSI lives with a spouse who is ineligible for SSI, we deem a portion of the ineligible spouse's income to the applicant or recipient. 15 We look at the deemor's income to see if we must deem a portion of it to the applicant or recipient because we expect the deemor, based on their relationship with the SSI applicant or recipient, to use some of their income to take care of (some of) the applicant's or recipient's needs. Ultimately, only some of the deemor's income is assigned to the SSI applicant or recipient.

Some income from ineligible parents and spouses is not deemed to the SSI applicant or recipient. For example, our policy excludes from deeming: the amount of any PIM payments the ineligible parents and spouses receive under the programs listed in the PA household definition;  16 any income that those programs counted or excluded in determining the amount of the PIM payments they received; and any income of the ineligible spouse or parent that is used by a PIM program to determine the amount of that program's benefit to someone else. 17 For example, if an ineligible spouse or parent receives Temporary Aid for Needy Families (TANF) assistance based on their income of $400 per month, we do not consider the TANF benefit amount or the $400 in our income determination for the SSI applicant or recipient. This is based on the premise that the income used to demonstrate eligibility for a PIM program and the PIM payment itself are required for that individual's own needs.

We previously defined a PA household as one in which every member receives a PIM payment under at least one of the following:

1. Title IV-A of the Social Security Act (Temporary Assistance for Needy Families or TANF);

2. Title XVI of the Social Security Act (Supplemental Security Income or SSI);

3. The Refugee Act of 1980 (payments based on need);

4. The Disaster Relief and Emergency Assistance Act;

5. General assistance programs of the Bureau of Indian Affairs;

6. State or local government assistance programs based on need (tax credits or refunds are not assistance based on need); and

7. Department of Veterans Affairs program (payments based on need). 18

We are making changes based on the Commissioner of Social Security's rulemaking authority specified in sections 205(a), 702(a)(5), 1631(d)(1), 1631(e)(1)(A), and 1633(a) of the Social Security Act. Under those sections, the Commissioner may adopt rules regarding, among other things, the nature and extent of evidence needed to establish benefit eligibility, as well as methods of taking and furnishing such evidence.

We are finalizing three changes discussed in the Notice of Proposed Rulemaking (NPRM) that we published on September 29, 2023. 19 First, we are finalizing a minor clarification to our definition of a PA household at 20 CFR 416.1142(a). The term “public assistance” may have implications outside our programs. We are finalizing, without change from the NPRM, the clarification that our definition of “public assistance household,” which we use as a term of art, applies only for purposes of our programs. Second, we are finalizing, without change from the NPRM, our proposed revision to the definition of a PA household in 20 CFR 416.1142(a) of adding SNAP to the existing list of PIM programs. 20 Third, we are changing our definition of a PA household from one in which every member receives a PIM payment to one in which the household has both an SSI applicant or recipient, and at least one other household member who receives one or more of the listed PIM payments. If determined to be living in a PA household, inside ISM would no longer need to be developed. We discussed this potential change (from every to any other ) in the NPRM and invited public comment; public commenters were largely supportive of the change. 21

In the event of an invalidation of any part of this rule, our intent is to preserve the remaining portions of the rule to the fullest possible extent. Each of the three changes can be implemented independently of the others, and we intend each of the three changes to be severable from the others. The addition of SNAP to our list of PIM programs in 20 CFR 416.1142(a) is independent of our adoption of the any other definition—adding SNAP could be implemented separately even if we did not adopt the any other definition. Likewise, expanding our definition of a PA household by adopting the any other definition could be fully implemented whether or not SNAP is added to the list of PIM programs in 20 CFR 416.1142(a). The clarification that our definition of “public assistance household” is a term of art that applies only for purposes of our programs is a minor administrative clarification that is not contingent on the implementation of the two ways in which we are expanding the definition of a PA household with this final rule. If any of these three changes were to be invalidated, the others could still be implemented fully, as these changes relate to three separate aspects of the PA household policy.

During the development of the NPRM, we considered other programs which are often considered means-tested programs, including Medicaid, 22 the Low Income Home Energy Assistance Program (LIHEAP), 23 the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), 24 the Housing Choice Voucher Program, 25 Project Based Rental Assistance, and Public Housing  26 which we discussed in the “Rationale for the Proposed Policy” in the NPRM. 27 At this time, we have decided to add SNAP with this expansion and continue to explore adding other programs in the future.

SNAP provides nutrition benefits via an Electronic Benefit Transfer (EBT) card, which can be used to buy groceries at authorized food stores and retailers. 28 Everyone who lives together and purchases and prepares meals together is grouped together as one SNAP household; and, in most cases, the household must meet both gross and net income limits, which vary with household size, for the household to be eligible for and receive SNAP benefits. 29 If everyone in the SNAP household is receiving TANF and/or SSI, the household may be deemed “categorically eligible” for SNAP because they have already been determined eligible for another means-tested program. 30 SNAP benefits meet the definition of income in our regulations. 31 However, SNAP benefits are excluded from our income counting based on Federal statute. 32 Because our policy links the types of PIM payments listed in 20 CFR 416.1142(a) with the income of ineligible spouses and parents that is excluded from deeming under 20 CFR 416.1161(a)(2)-(3), adding SNAP to the list of PIM programs will decrease the amount of income that is deemed to SSI applicants and recipients. If an SSI-ineligible spouse or parent is receiving SNAP benefits, the value of the SNAP benefit, as well as any income that was counted or excluded in figuring the amount of the SNAP benefits, would not be deemed to the SSI applicant or recipient. In addition, any income of the ineligible spouse or parent that is used to determine the amount of SNAP benefits to someone else would not be deemed to the SSI applicant or recipient.

We also discussed and invited public comment on broadening our definition of a PA household from one in which every member receives a PIM payment to one in which any member other than the SSI applicant or recipient receives a PIM payment. We have decided to adopt this change. Thus, under our new definition of PA household, if there is an SSI applicant or recipient in a household where at least one other member receives one or more of the listed PIM payments, the household will be considered a PA household, and we will not develop for inside ISM. 33

As we discussed in the NPRM, the previous definition of PA household (requiring every member to receive a PIM payment) may have disadvantaged individuals in low-income households where household members still needed their income (and resources) to meet their own needs but where a household member was not receiving a PIM payment for reasons unrelated to need. For example, college students, who do not meet a student exception for SNAP, may not receive SNAP benefits even though the rest of the household does. 34 In such circumstances, under our previous definition of PA household, the household would not qualify. But under the expanded definition of PA household that we are adopting, the household would not be disqualified as a PA household simply because one member was not receiving a PIM payment. In fact, many commenters supported the change we are now adopting based on their experiences, under the previous definition, of households that did not qualify for reasons unrelated to need. 35

Additionally, when we first established the PA household rule in 1980, we explained that our rule “relied on the fact that other agencies have determined that these individuals [receiving PIM payments] need all their income for their own needs.”  36 Because SNAP and several of the other PIM programs listed in our PA household definition provide, or may provide, benefits at the household (or family) level instead of the individual level ( e.g., TANF, Refugee Act of 1980, Disaster Relief and Emergency Assistance Act, and general assistance programs of the Bureau of Indian Affairs), we note that in many circumstances a needs-based determination has been made for other household members. We discuss further justification for the change (from every member to any other member) in the Comments Summary section below.

We received 221 public comments on our NPRM from September 29 through November 29, 2023. Of the total comments, 219 are available for public viewing at https://www.regulations.gov/document/SSA-2023-0015-0001. 37 These comments were from:

• Individuals; and

• Advocacy groups, such as the National Organization of Social Security Claimants' Representatives and the National Association of Disability Representatives.

We carefully considered the public comments we received. More than 95 percent of commenters supported the proposals in the NPRM to add SNAP and to adopt the change from every member to any other member, meaning the household has both an SSI applicant or recipient, and at least one other household member who receives one or more of the listed PIM payments. Some commenters agreed with the overarching proposals but recommended amendments. Other commenters asked questions and offered opinions on the potential financial and legal implications of the proposals. A few commenters disagreed with the proposals altogether.

We received some comments that were outside the scope of this rulemaking because they did not relate to our proposals either to add SNAP to our list of PIM programs or to change our definition from every member to any other member. Even though outside the scope, we address some of these other comments where they related to ISM more generally because a response might help the public understand our program better.

The next section summarizes and responds to the public comments.

Comment: Many commenters broadly supported, and encouraged us to quickly finalize and implement, adding SNAP to the list of PIM programs in our definition of a PA household.

Response: We acknowledge and appreciate the support for that change.

Comment: Many commenters supported the proposed change in the PA household definition from one in which every member receives some kind of PIM payments to one that has both an SSI applicant or recipient, and at least one other household member who receives one or more of the listed PIM payments. Some commenters stated that the any other proposal would simplify our processing of SSI claims, save time, and increase the speed with which we serve applicants and recipients. Some commenters noted that some SNAP households face barriers to SNAP enrollment for all household members, including households with: college students who do not meet a student exemption for SNAP; individuals with Able-Bodied Adults Without Dependent (ABAWD) status who are otherwise eligible for SNAP, but who are generally limited to no more than three months of SNAP benefits within a three-year period if they are not meeting certain work requirements or they do not qualify for an exception; and households with mixed immigration status. 38 These commenters stated that such households, where some, but not all, members may be eligible for SNAP, would not benefit from the addition of SNAP to our list of PIM programs unless we adopted the any other proposal. In support of this point, commenters stated that the change to any other member would be consistent with Executive Order (E.O.) 13985. 39

One commenter objected to the examination and discussion of the any other proposal because they want further analysis and justification of the change. The commenter suggested that such a change should be explored through an Advance Notice of Proposed Rulemaking.

Response: We carefully considered the comments on the any other proposal and have decided to adopt the any other change in this final rule.

First, the commenters cited examples of how requiring every member of the household to receive a PIM payment has disadvantaged individuals in low-income households under the previous definition when there was a household member who did not receive a PIM payment for reasons unrelated to need. We found these examples to be persuasive. The commenters noted, for example, that SNAP and TANF restrict certain individuals in the household from receiving benefits even if their income is used to determine the household's eligibility for the benefits. 40 Specifically, several commenters  41 pointed out that some members of a household are not eligible to receive SNAP because of their immigration status, even if they would otherwise qualify for SNAP benefits based on their income (or need). 42 In such a case, under the previous policy, although the SSI recipient lives in a household where all but one of the other members are receiving SNAP, we would not have considered this a PA household because not every member of the household was receiving a PIM payment. As a result, we may have treated the SSI recipient as receiving inside ISM and would have reduced their benefit despite the fact that the household was still sufficiently low income to qualify everyone in the household for the PIM payments based on financial need.

Second, for households with an SSI applicant or recipient and at least one other member who receives means-tested PIM payments, we find it reasonable to conclude that members of the household likely would not be able to provide the SSI applicant or recipient with inside ISM. This conclusion is supported by the data we have about the composition of households that receive the types of PIM payments covered by our PA household policy. This data generally shows that individuals eligible for PIM payments live in low-income households. For example:

• The average monthly income for TANF households is $958 (or under $12,000 annually). These income levels indicate that if someone in a household is receiving TANF, the entire household is likely to be low income. 43

• In 2014, a study showed that families who receive public assistance are significantly lower income than families who do not, with annual incomes averaging $33,549 for a family of four who receive at least one form of public assistance versus $74,597 for a family of four who do not receive any assistance. 44

• 70 percent of SSI recipients live in households with family incomes below $30,000, including income from assistance benefits. 45

• In FY 2020, 81 percent of SNAP households had gross monthly income less than or equal to the poverty line. 46

• An analysis of families receiving multiple public benefits (but not necessarily where every member received some form of public assistance) found that higher levels of benefit receipt are associated with lower income, earnings, and employment, and greater material hardship. 47

• A 2013 study found that about 25 percent of SSI recipients lived in a household where the total family income was below 100 percent of the applicable family poverty threshold, even though the household contained at least one member who was not receiving PIM payments. This was true regardless of whether the SSI recipients were individuals/couples or noncouple multi-recipient. 48

• The 2019 Survey of Income and Program Participation found that in households that receive both TANF and SSI, 85.7 percent (+/− 8.4 percent) have incomes less than 200 percent of the Federal poverty rate, even after all transfers (that is, including the income the household receives from all sources of cash public assistance payments). 49

• Lastly, related to the policy to add SNAP to the list of PIM programs, among households receiving SSI in 2021, 64.7 percent also qualified for and received SNAP. 50

Third, as discussed above and in our NPRM, SNAP and several other listed PIM programs provide, or may provide, household-level (or family-level) benefits ( e.g., TANF, Refugee Act of 1980, Disaster Relief and Emergency Assistance Act, and General assistance programs of the Bureau of Indian Affairs). This means a government agency has already determined that a household's income is sufficiently low such that the household is in need of public assistance. Based on that finding, it is reasonable for us to conclude that household members require their own income (and resources) to meet their own needs.

Finally, regarding the suggestion that we explore whether to adopt the any other definition through an ANPRM, we used the NPRM to explore this option. In the NPRM, we discussed the possible policy change, examined evidence that supported the change, invited public comment specifically on the proposed change, and included an estimate and cost analysis from our Office of the Chief Actuary (OCACT) over the fiscal years 2024 to 2033. The OCACT estimate projected SSI payments, and estimated changes for both recipients and new individuals who will be eligible under the revised any other definition that would not have been eligible under our previous rules.

Comment: Some commenters encouraged us to go beyond the any other proposal and change the definition of a PA household to refer simply to any member, including the SSI applicants or recipients themselves.

Response: Under the commenters' alternative proposal, every SSI recipient would live in a PA household and, thus, would be considered not to be receiving ISM from other members of the household ( i.e., inside ISM). We do not think that result would be supportable because it would mean that we would never apply the one-third reduction (VTR) rule, 51 which is based on a provision in the Social Security Act. 52

Comment: Many commenters encouraged us to expand the definition of PA household to include additional programs, whether in this final rule or in a future rulemaking, including: Medicaid; LIHEAP and similar energy assistance programs; housing assistance from the Department of Housing and Urban Development (HUD); WIC; CHIP; and the earned income tax credit (EITC).

Response: As we discussed in the NPRM, 53 this is our first expansion of the definition of a PA household since 1980, when the policy was first established. Therefore, we decided to add SNAP initially and will consider other programs in the future; our choosing not to do so now does not preclude adding other programs via future rulemaking. As discussed in our NPRM, SNAP recipients have been determined to be low-income and, therefore, need their income (and resources) to take care of their own needs, which is consistent with the rationale underlying our policy when it was first established. 54 The other programs cited by the commenter do not align as easily with the criteria we used. For example, while the benefits of the EITC are concentrated among low-income households, some moderate-income taxpayers are eligible for a small credit, including taxpayers with three or more children earning up to $63,398 and with up to $11,000 in investment income (in 2023). This demonstrates that the EITC does not align with the underlying intent of our initially established PA household policy to the extent that SNAP does.

In addition, SNAP has several advantages over other programs that we considered that make it the best fit for this first expansion of our PA household definition. First, SNAP eligibility and receipt have relatively low State variability because SNAP is a nationwide program with relatively uniform eligibility standards. In general, net monthly income limits for SNAP eligibility are set at 100 percent of the poverty level. 55 In contrast, Medicaid, for example, has varying income limits based on an individual's State of residence. 56 Likewise, the upper eligibility levels for CHIP vary by State and range widely, 57 as do the types of CHIP programs and groups covered by States. In contrast, the relative uniformity in SNAP eligibility requirements makes this initial expansion of our PA household policy more consistent and supportable.

Second, SNAP benefits are typically certified for relatively longer periods than other government benefit programs. For example, many SNAP participants are certified for 12 months, and older individuals and individuals with disabilities may be certified for up to 24 or 36 months. In contrast, other programs with shorter or less predictable benefit periods might require more frequent development of individuals' living arrangements, which could be burdensome for recipients and our staff. For example, LIHEAP benefits, which help low-income households pay for heating or cooling, are typically seasonal, meaning that eligibility can vary within a 12-month period.

Moreover, SNAP does not have a cap on enrollment, meaning those who qualify or meet eligibility requirements receive benefits. This ensures that we can include the entire SNAP-eligible population when we determine what households qualify as PA households. In contrast, programs like WIC, LIHEAP, and HUD housing are capped based on the availability of resources, which means there are waiting lists for those who are financially eligible and priority levels to receive benefits. 58 As we strive for uniformity across the SSI program, we are concerned that including government benefit programs with enrollment caps or waiting lists may lead to disparate treatment of similarly situated SSI applicants and recipients.

Finally, we note that SNAP participation overlaps to a great extent with participation in other means-tested programs and, thus, by adding SNAP to the definition of PA household, we anticipate that we will also capture many of the individuals who receive benefits from other means-tested programs. We would like to observe how adding SNAP to the PA household definition affects the SSI population before we determine whether to add additional programs, and if so, which programs.

Despite the considerations cited above, we are not precluding adding other programs to the list of PIM payments in our PA Household definition. As well, changes to the programs discussed here might also cause us to reconsider them for inclusion on the list. Expanding the definition of PA household to include additional programs would require further, program-specific consideration.

Comment: One commenter encouraged us to proactively recalculate benefits for existing recipients based on this new rule, rather than waiting until the recipients' next scheduled redetermination. The commenter wanted us to do this to ensure recipients received the benefit of the new policy as soon as possible. The commenter also stated that this process of proactive recalculation could be simplified by utilizing data we already receive through existing data matches. The commenter further stated that “SSA should conduct Limited Issue reviews of all VTR and ISM records in order to comply with the new rules, as well as of all claims denied in the previous twelve months to identify erroneously denied applicants.”

Similarly, many commenters, in their support for finalizing the proposed rule, encouraged us to expand or implement data sharing agreements with State SNAP administrators across the country. They advocated that expanded data sharing with SNAP administrators would be an improvement over using redeterminations to identify and correct “over-reduction” of payment and ineligibility decisions.

Response: We acknowledge and share the commenter's desire to ensure existing recipients receive the benefit of the new PA household policy as soon as possible. However, due to limited resources it is not administratively feasible to conduct Limited Issue reviews of all the VTR and ISM records. Further, this final rule does not apply to any claims denied before its effective date.

Expanding or implementing data sharing agreements with States across the country would involve several important considerations that are outside the scope of this rulemaking, including the interest, capacity, and requirements of the States. We have an established process for data exchanges that we follow to implement any data exchange, including establishing the agreements. We currently have 174 data sharing agreements with States/State agencies under which we provide data for the State/State agency to determine entitlement and eligibility for federally funded benefit programs, including Medicaid, SNAP, and TANF.

Comment: One commenter expressed concern that our regulations that deem income create a disincentive for SSI recipients to get married, and implied tension or conflict with the Supreme Court's holding in Obergefell v. Hodges, 59 which holds that same-sex couples may not be deprived of the fundamental right to marry.

Response: In general, deeming from a spouse is required by the Social Security Act. 60 In the context of this rulemaking, as we explained in the NPRM, adding SNAP to our list of PIM programs will “decrease the amount of income we [will] deem to SSI applicants and recipients because we [will] no longer deem income from ineligible spouses . . . who receive SNAP benefits and live in the same household.” There is no tension or conflict between spouse-to-spouse deeming and the Supreme Court's holding in Obergefell: spouse-to-spouse deeming applies equally to opposite-sex couples and same-sex couples.

Comment: Several commenters made a broad suggestion to entirely eliminate ISM because counting ISM discourages friends and family from providing assistance to disabled loved ones, while one commenter acknowledged that a statutory change would be required to eliminate ISM.

Response: We acknowledge the commenters' desired policy change, but as the one commenter stated, entirely removing ISM from our income calculations would require a statutory change. 61

Comment: One commenter opposed the proposed rulemaking because the NPRM did not extensively discuss the distinctions in the definitions of household composition for SSI and SNAP.

Response: This rulemaking does not change the definition of a household for SSI purposes  62 or for SNAP purposes. 63 The commenter did not explain how the distinctions in the household composition definitions are relevant to our addition of SNAP, and we do not believe that the distinctions preclude us from adding SNAP to our regulatory list.

Comment: One commenter asserted that because a federal food-stamp program existed in 1980, when the PA household policy was first created, the relative increase in SNAP participation since that time does not sufficiently justify the change to include SNAP in the list of PIM programs in our definition of a PA household. The commenter further noted that “the large increase in SNAP users and concurrent decline in the poverty rate since 1980 . . . is not a relevant indication of increased need.”

Response: When we first established the PA household policy in 1980, we explained that it was based on the idea that if the other individuals in the household were receiving a PIM payment, they needed their income (and resources) to meet their own needs. This meant they could not support the SSI applicant or recipient because they had no extra income (or resources) to share. The determination of need, made by the applicable Federal or State agency providing the PIM payments, supported the assumption that the others in the household could not provide ISM to the SSI applicant or recipient. The fluctuations in the overall poverty rate in the United States are not directly relevant to whether the household members are able to provide ISM to the SSI applicant or recipient. As we discussed in the NPRM, when the PA household policy was first created in 1980, the list of PIM programs in our definition of a PA household reflected the most widely used means-tested public benefit programs at that time. 64 The nationwide food-stamp program began in 1974—just six years before the establishment of the PA household policy—and had approximately 21.1 million participants in 1980. 65 In contrast, approximately 42.1 million people receive SNAP benefits today, 66 making SNAP now one of the most widely used public benefit programs. As we discussed in the NPRM, we have not updated our list of PIM programs for the PA household policy since 1980, despite the significant shifts in the landscape of public assistance programs since that time. SNAP recipients have been determined to be low-income and, therefore, need their income (and resources) to meet their own needs. 67 Indeed, a USDA report from 2019 showed that approximately 80 percent of all SNAP households had gross monthly income that was less than or equal to the Federal poverty level. 68

Comment: One commenter opposed adding other programs, such as “in-kind assistance programs like food and medical care,” that are not cash assistance programs, to the programs listed in our definition of a PA household. Further, the commenter asserted that we had taken an inconsistent stance by calling our treatment of food “insignificant” in a different rulemaking  69 but “including SNAP . . . as significant” in this PA household rulemaking.

Response: Regarding the commenter's statement that we should not add in-kind assistance programs like food and medical care to our PA household definition, we have determined that means-tested programs largely have shifted over the last several decades from cash assistance programs toward voucher-based or in-kind support programs. Because of this shift over time, we have a reduced ability to effectively identify the individuals we intended to serve under our PA household definition.

As we noted in the NPRM, SNAP benefits meet our definition of income in 20 CFR 416.1102. 70 The commenter's reference to our NPRM on Omitting Food from In-Kind Support and Maintenance is generally outside the scope of this rulemaking. However, we note that, contrary to the commenter's assertion, we have not described food assistance as “insignificant,” nor is food assistance treated inconsistently under the two rules. Here, we are adding SNAP benefits to the list of PIM programs under the PA household policy. This change means that if the household has both an SSI applicant or recipient, and at least one other household member who receives SNAP benefits (or other PIM payments listed in the PA household definition), we will not develop inside ISM because we consider that the household is sufficiently low income such that the members need all of their income (and resources) to meet their own needs—they are not able to share with or provide ISM to the SSI applicant or recipient. In contrast, under the final rule Omitting Food from In-Kind Support and Maintenance, we removed food from our calculations of ISM. More importantly, it is less accurate to compare potentially partial, inconsistent food assistance that an individual receives from family or friends with something like SNAP, a Federal benefit one can only qualify for after demonstrating they do not have enough income or resources to fulfill their own basic nutrition needs.

Comment: One commenter described the NPRM as incomplete because there was “no federalism, no distributional analysis, no alternatives considered[.]” The commenter also desired estimates of costs from Medicaid, and other programs using an SSI Financial Eligibility Model (FEM). The same commenter asserted that data from the Survey of Income and Program Participation (SIPP) was better for this rulemaking than the Current Population Survey (CPS) data used in our proposed rule. The commenter asserted that CPS data undercounts income and suggested our estimates might be incorrect.

Response: Regarding federalism, section 1(a) of E.O. 13132 defines “policies that have federalism implications” as “refer[ring] to regulations, legislative comments or proposed legislation, and other policy statements or actions that have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.”  71 As stated in the NPRM and this final rule, we analyzed the rule in accordance with the principles and criteria established by E.O. 13132 and determined that the rule will not have sufficient federalism implications to warrant the preparation of a federalism assessment. As also stated in the NPRM and this final rule, we also determined that the rule will not preempt any State law or State regulation or affect States' abilities to discharge traditional State governmental functions. We maintain that those determinations are accurate, and the commenter did not give any reason to believe they are not.

As a matter of protocol, the estimates prepared by SSA's Office of the Chief Actuary (OCACT) focus on the impact on SSA. The commenter is incorrect in stating regarding the NPRM that “no alternatives [were] considered[.]” For example, the reasons that we provided in support of the proposal, particularly in the “Rationale for the Proposed Policy” section of the NPRM, demonstrate that we considered the proposal against the alternative of making no change. 72 Also, as we stated in the “Proposed Policy” section of the NPRM, “[d]uring the development of [the NPRM], we considered other means-tested programs, including Medicaid, the Low Income Home Energy Assistance Program (LIHEAP), the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), the Housing Choice Voucher Program, Project Based Rental Assistance, and Public Housing, which we discuss[ed] in the `Rationale for the Proposed Policy' section” of the NPRM. 73

With regard to the commenter's assertion that SIPP data was better for this rulemaking than CPS data, in our development of the estimated Federal SSI program cost effects, we did not use the income fields from the CPS to estimate the effects of this proposal. The CPS was only used for the purpose of determining how many SSI households were also receiving SNAP and would thus be impacted by implementation of the proposal. Regarding the research cited in the NPRM that used the CPS, the CPS Annual Social and Economic Supplement (CPS ASEC) is the source of official poverty measures, and we consider it sufficiently reliable for other government estimates. A chief advantage of the CPS ASEC over the SIPP (used by the FEM) is larger sample size. Because PA households represent a small fraction of the SSI caseload, we rely on the larger data source to make more precise estimates. Even the CPS ASEC does not include enough cases to support the additional detailed analyses that the commenter would like to see.

Comment: Two commenters stated that the NPRM should comply with the Fiscal Responsibility Act of 2023, known as the Administrative Pay-As-You-Go Act of 2023. 74

Response: This rule complies with the Administrative Pay-As-You-Go Act of 2023. That Act does not impose requirements at the NPRM stage. Additionally, this final rule is not subject to the Act's requirements because it is not estimated to increase direct spending by at least $100 million for FY 2024 (the first fiscal year during the 10-year period). See section 266 of the Act.

Comment: One commenter opposed the proposed rule based on the administrative implementation cost of $105 million because, in the commenter's view, it conflicts with our anticipated administrative burden reduction from simplified calculations. The commenter also stated that there will be more redeterminations and more applications because of the new policy.

Response: To clarify, administrative costs to implement a new regulation (stemming from a variety of sources, such as new systems) are distinct from non-financial administrative burden sources such as time, ease, and efficiency. Administrative costs and non-financial burdens, then, will not necessarily move in the same direction. As explained in the NPRM, we anticipate this policy change will result in administrative costs that will be only partially offset by administrative savings. At the same time, we expect processing time savings because employees will spend less time developing household expenses and making inside ISM determinations. Nonetheless, as the comment suggests, we estimated that there will be costs to process additional claims, reconsiderations, and appeals. As we stated in the NPRM, we anticipate that this expansion of our PA household policy will increase the amount of monthly SSI benefits for those to whom the policy applies and make more individuals eligible for SSI benefits. Consequently, we anticipate that there will be additional costs to process redeterminations and post-eligibility actions associated with this rule change.

In summary, we acknowledge what the commenter is expressing, and we provided revised estimate text in the preamble to clarify that the administrative burden would be reduced in a subset of cases, which would only partially offset the greater amount of costs from newly eligible recipients. However, as further discussed in the preamble and in the Regulatory Impact Analysis, we have determined that the benefits of the rule justify the costs, and that the rule can have administrative benefits even while it imposes administrative costs.

Comment: One commenter asserted that using SNAP to confirm SSI eligibility will result in overpayments in multiple programs, thereby increasing financial burdens on beneficiaries to repay the funds. The commenter stated that “SNAP income and asset testing has changed dramatically with the creation and expansion of Broad-Based Categorical Eligibility (BBCE). This has contributed to a massive increase in SNAP participation rolls and a greater reliance on recipient self-attestation—the number one contributor to program overpayments.” The commenter also asserted that our proposed rule “will increase the participation in SSI, not decrease as imagined in [the] NPRM.”

Response: Under this final rule, receipt of SNAP is not dispositive of the applicant's or recipient's SSI eligibility. It is true that under this final rule, receipt of SNAP by one or more household members (other than the SSI applicant or recipient) may factor into our determination of whether the SSI applicant or recipient lives in a PA household, but this is advantageous to the individual applying for or receiving SSI. If the SSI applicant or recipient lives in a PA household, that means only that we consider the SSI applicant or recipient not to be receiving ISM from members of the household—not necessarily that the SSI applicant or recipient is eligible for SSI.

We carefully considered the commenter's reservations about SNAP. However, we continue to maintain that adding SNAP is consistent with the rationales and purposes of our PA household policy, as discussed in the NPRM and in this final rule. We would add, first, that we find it reasonable and supportable to consider a needs-based eligibility determination by a government entity, on a matter within its competence, as reliable. Second, an overpayment determination for a given type of benefit does not necessarily mean that the applicant or recipient was not entitled or eligible to receive any such benefits for the period at issue; and our PA household policy looks at receipt of a PIM payment generally, not the amount of the PIM payment. Third, if we determined, in light of another government entity's overpayment determination, that a household member did not receive a PIM payment, we could and would make a correction, as appropriate and subject to all our usual rules, including administrative finality. 75 Fourth, BBCE “is a policy in which households may become categorically eligible for SNAP because they qualify for a non-cash Temporary Assistance for Needy Families (TANF) or state maintenance of effort (MOE) funded benefit.”  76 BBCE is consistent with our longstanding list of PIM programs, which includes both TANF and State or local government assistance programs based on need. 77

Lastly, contrary to the commenter's statement, our proposed rule did not indicate that we anticipated a decrease in SSI participation. In the NPRM, we stated that there would be a “decrease [in] the number of SSI applicants and recipients charged with in-kind support and maintenance (ISM)” and a “decrease [in] the amount of income we would deem to SSI applicants or recipients because we would no longer deem income from ineligible spouses and parents who receive SNAP benefits and live in the same household.”  78

Comment: One commenter suggested reducing administrative burden when we determine eligibility by conducting mandatory verifications of all income and assets in SSI applications, because self-attestation creates “an environment favorable to first and third-party fraud[.]” The commenter stated that “the `pay and chase' implications in overpayment recoveries infers an administrative burden upon state and local welfare agencies.”

Response: Verification of “all income and assets in SSI applications” is outside the scope of this rulemaking. However, we note that in administering the SSI program, we carefully ensure that our policies and procedures are consistent with the requirement in the Social Security Act: “that eligibility for [SSI] benefits . . . will not be determined solely on the basis of declarations by the applicant concerning eligibility factors or other relevant facts, and that relevant information will be verified from independent or collateral sources and additional information obtained as necessary in order to assure that such benefits are provided only to eligible individuals (or eligible spouses) and that the amounts of such benefits are correct.”  79

Regarding our PA household policy, we do not rely on self-attestation alone. For initial claims, we “substantiate receipt of PA payments” (or PIM payments) with “evidence . . . [in] the form of an award letter, report of contact with the paying agency, etc.”; and, in post-eligibility situations, we appropriately document or substantiate PIM payments depending on indications of a changed living arrangement. 80 Lastly, after over 40 years of applying our PA household policy, we are aware of no evidence that the policy as such leads to overpayments or that overpayments occur with respect to PA household determinations more than other comparable determinations.

Comment: One commenter asserted the proposed rule would not benefit the quality of life of all U.S. citizens and that “[t]here is no defined option to revert changes if [the rulemaking] proves to be incorrect.”

Response: Under the Social Security Act, we have broad authority to make and revise rules and regulations, consistent with the Act, that are necessary or appropriate for the administration of our programs, including the SSI program. 81 Adding SNAP to the list of PIM programs in our definition of a PA household and adopting the any other definition are proper exercises of the Commissioner's rulemaking authority under the Act, and these changes are appropriate and justified. For the reasons articulated in the NPRM and this final rule, we believe these changes will help us administer the SSI program and provide better support to individuals with limited income and resources. Administering the SSI program as we have been charged to do benefits the public more broadly and the common good.

Comment: One commenter opposed the proposed rule in light of inflation, which “is presenting challenges for low/no income individuals with their SSI payment and SNAP benefits taken together. Any cuts to their SSI payment at this time will place such individuals at a disadvantage in paying their bills and living with dignity in their households.” The commenter also suggested that we tax “the super-rich” and “[s]top illegal immigrants at the border and stop them from exploiting the benefits budgeted for legal residents with genuine needs.”

Response: This rulemaking will not result in cuts to SSI payments. We anticipate that the expansion of our PA household policy will increase SSI payments for those to whom the policy applies. Taxation and border control are outside our administrative authority and outside the scope of this rulemaking. Immigration status may be relevant for SSI purposes, but changes to national immigration policy are outside the scope of this rulemaking.

We consulted with the OMB, and OMB determined that this final rule meets the criteria for a significant regulatory action under section (3)(f)(1) of E.O. 12866, as amended by E.O. 14094, and is subject to OMB review.

The primary anticipated impact of this rule is an increase in monetary transfers from the government to SSI recipients. Our Office of the Chief Actuary (OCACT) estimates that implementation of this rule would result in a total increase in Federal SSI payments of $15 billion over fiscal years 2024 through 2033, assuming implementation of this rule beginning on September 30, 2024. When the effects of implementing this rule are fully realized, the annual increase in Federal SSI payments is estimated to be about two percent relative to what would have occurred under previous rules. To estimate the impact, OCACT used the Annual and Social Economic Supplement (ASEC) to the Current Population Survey (CPS) and our administrative data. We expect that adding SNAP to the list of PIM programs and changing to the any other definition of a PA household will increase the number of PA households for which we do not charge inside ISM, which will increase Federal SSI payments for these recipients. In addition, we expect that no longer deeming income from ineligible spouses and parents whose income is used to determine eligibility for or amount of SNAP payments will also increase Federal SSI payments. We expect that implementation of this final rule will also cause some individuals to receive Federal SSI payments who would not have been eligible under the previous rules.

According to our Office of the Chief Information Officer, Office of Benefit Information Systems, as of January 2023, there were 303,609 SSI recipients living in a PA household according to the previous definition, approximately four percent of our total 7.5 million SSI recipients. 82 We expect the share of SSI recipients living in a PA household, as defined under this rule, to increase substantially when this final rule is implemented. Specifically, OCACT estimates that once this rule is implemented and the effects have stabilized, in fiscal year 2033 roughly 277,000 Federal SSI recipients (4 percent of all SSI recipients) will have an increase in monthly payments compared to current rules, and an additional 109,000 individuals (1 percent increase) will receive Federal SSI payments who would not have been eligible under current rules.

Additionally, the expansions of our PA household definition could result in a reduction of SNAP benefits due to potential interaction between SSI and SNAP. For example, if an ineligible spouse or parent were receiving SNAP, we would no longer deem their income to an SSI applicant or recipient. Not deeming income for SSI purposes could lead to an increase in the SSI payment, which could in turn cause the household to receive a SNAP reduction that is 30 percent of the SSI increase, up to the point of ineligibility. 83 The household's ineligibility for SNAP could mean, in turn, that the SSI recipient is no longer part of a PA household for SSI purposes. Our understanding is that: an individual or household generally would prefer cash to SNAP benefits; an increase in SSI could not result in a decrease in SNAP benefits greater than the increase in SSI; and, in the main, the increase in SSI that may result from the expansions of our definition of a PA household will be favorable on net to individuals and households. However, we recognize that the interplay among various benefit types, as well as the relationships and financial interests of the SSI individual and other household members, can be complicated. We cannot necessarily predict how the change could affect individuals participating in other programs within these households.

The Office of Budget, Finance, and Management estimates that this proposal will result in a total net administrative cost of $83 million for the 10-year period from FY 2024 to FY 2033. This estimate includes costs to update our systems, to send notices to inform current recipients of the policy changes, to address inquiries from the notices, to verify receipt of SNAP benefits, and to perform additional post-eligibility actions to account for changes in living arrangements. Under this final rule, more individuals will be newly eligible for SSI benefits than under the current rule, resulting in additional costs to process additional claims, reconsiderations, appeals, redeterminations, and post-eligibility actions. In addition to the costs, our estimate also includes processing time savings as field office employees will not have to spend time developing for household expenses/contributions or the full income of deemors (ineligible parents and spouses) or go through the inside ISM determination process during initial claims, pre-effectuation reviews, redeterminations, and post-eligibility actions. While our estimate includes savings due to the reduction in processing times for affected cases, we expect that the costs to process new claims, reconsiderations, and appeals for additional newly eligible individuals will outweigh the savings.

We anticipate qualitative benefits from the revision of adding SNAP to the PA household definition, thereby ensuring that ISM and income deeming do not undermine the economic security of households who receive nutrition assistance.

Additionally, the revision will reduce administrative burdens for SSI applicants or recipients. Under our finalized policy, the list of PIM programs includes SNAP, and the definition of PA household has changed to refer to a household which has both the SSI applicant or recipient, and at least one other household member who receives a PIM payment. Once we identify that an SSI applicant or recipient lives in a PA household, the applicant or recipient would not have to provide household expenses information.

Our change from every member to any other member receiving a PIM payment to meet the definition of a PA household further simplifies the development of living arrangements and ISM, reduces SSA's administrative costs and compliance costs during initial determinations and redeterminations for applicants and recipients living in PA households, and reduces ISM complexities that lead to payment errors. Removing the requirement that every member be in receipt of a PIM payment will help ensure that we reach more SSI applicants and recipients based on their need, especially in cases where one individual in a household was categorically ineligible for a PIM payment for reasons unrelated to their potential need. For example, the change to any other will save time for individuals, household members, and us, since we will no longer have to develop for the entire household once we identify one other person in the household receiving a PIM payment. We acknowledge that if the individual receiving the PIM payment leaves the household we would subsequently inquire if there is another household member also receiving a PIM payment, and this would impose a small administrative burden. However, this burden is not meaningfully different from those caused by other changes in circumstances that would lead us to verify whether the SSI recipient remains eligible for SSI benefits. We anticipate this final rule will still reduce administrative burden overall.

We also anticipate some qualitative costs. Specifically, because of our new definition of a “public assistance household,” the SSI applicant or recipient will now need to answer new questions and provide documentation about the public assistance they and others in their household receive, so we can accurately determine if they live in a “public assistance household.” As well, since SNAP is being added to the list of programs considered for PA household determinations, processing times may temporarily increase as we verify receipt of SNAP benefits. This additional information is a qualitative cost of the regulation, although ultimately, providing the information may be beneficial to the SSI applicant or recipient.

Additionally, the rule change may impose quantitative costs on us due to our increased need for additional development in certain circumstances. For instance, it is possible our regulatory change may incentivize current SSI recipients to change living arrangements to co-locate with family or friends who are receiving SNAP. This is similar to our current policy that requires SSI applicants and recipients to notify us of changes in their living arrangements. SSI applicants and recipients will need to ask ineligible spouses or parents whether their income was used to determine eligibility for, or the amount of, the SNAP benefits. If it was, and if this information is verified by SSA during the initial claim, we would exclude the income for deeming purposes in the SSI program. 84

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq. ), the Office of Information and Regulatory Affairs designated this rule as meeting the criteria in 5 U.S.C. 804(2).

We analyzed this rule in accordance with the principles and criteria established by E.O. 13132 and determined that the rule will not have sufficient federalism implications to warrant the preparation of a federalism assessment. We also determined that this rule will not preempt any State law or State regulation or affect the States' abilities to discharge traditional State governmental functions.

We certify that this rule will not have a significant economic impact on a substantial number of small entities because it affects individuals only. Therefore, a regulatory flexibility analysis is not required under the Regulatory Flexibility Act, as amended.

The final rule requires minor revisions to our existing information collections to expand our definition of PA Household and include SNAP as an example of a PIM program. In addition, the application of the revisions to these rules causes a burden change to our currently approved information collections under the following information collection requests: 0960 0174, the SSA-8006, Statement of Living Arrangements, In Kind Support and Maintenance; 0960-0456, the SSA-8011, Statement of Household Expense and Contributions; and 0960-0529, the SSA-5062, Claimant Statement about Loan of Food or Shelter, and the SSA L5063-F3, Statement about Food or Shelter Provided to Another. We also anticipate a small burden reduction per response for the SSA 8006 (0960-0174) as respondents will not need to develop the responses about their household. In addition, we anticipate a 50% reduction in the number of respondents based on those who indicate they are part of a Public Assistance Household and who may not need to complete the follow-up forms SSA-5062, SSA L5063, SSA-8006, and SSA 8011. We anticipate this will result in a reduction in the overall burden for these information collections.

We published a notice of proposed rulemaking on September 29, 2023, at 88 FR 67148. In that notice, we solicited comments under the PRA on the burden estimate; the need for the information; its practical utility; ways to enhance its quality, utility, and clarity; and on ways to minimize the burden on respondents, including the use of automated collection techniques or other forms of information technology. The comments section above includes our responses to the PRA-related public comments we received under the NPRM.

The following chart shows the reduction in time burden information associated with the final rule:

The Attorney General is responsible for enforcing the Gun Control Act of 1968 (“GCA”), as amended. This responsibility includes the authority to promulgate regulations necessary to enforce the provisions of the GCA. See 18 U.S.C. 926(a). Congress and the Attorney General have delegated the responsibility for administering and enforcing the GCA to the Director of ATF, subject to the direction of the Attorney General and the Deputy Attorney General. See 28 U.S.C. 599A(b)(1), (c)(1); 28 CFR 0.130(a)(1)-(2); Treas. Order No. 221(2)(a), (d), 37 FR 11696-97 (June 10, 1972). Accordingly, the Department and ATF have promulgated regulations to implement the GCA. See 27 CFR part 478.

The Bipartisan Safer Communities Act (“BSCA”) (Pub. L. 117-159) was signed into law and became effective on June 25, 2022. It made several changes to the mental health services system, school safety programs, and gun safety laws. Among other provisions, the BSCA requires enhanced background checks for firearm purchasers under 21 years old, addresses Federal firearms license requirements, authorizes funding for State red flag laws and other crisis intervention programs, creates new Federal offenses for firearms trafficking and straw purchases, and partially closes the “boyfriend loophole,” which previously excluded domestic violence offenses involving dating relationships from firearms restrictions that apply to spouses convicted of similar offenses. This direct final rule serves only to incorporate many of these new statutory provisions into existing ATF firearms regulations.

Federal law prohibits persons meeting certain criteria from receiving any firearm or ammunition that has been shipped or transported in interstate or foreign commerce, see 18 U.S.C. 922(g), (n), and makes it unlawful to sell or otherwise dispose of any firearm or ammunition to any person who is known or reasonably believed to meet certain criteria, see 18 U.S.C. 922(d). 1 The Brady Handgun Violence Prevention Act of 1993 (“Brady Act”) (Pub. L. 103-159), as amended, established a background check system that federally licensed manufacturers, dealers, and importers of firearms—otherwise known as Federal firearms licensees (“FFLs”), see 18 U.S.C. 923—must, unless the transfer is excepted, contact for an immediate response on whether transfer of a firearm to, or receipt of a firearm by, a prospective transferee would violate 18 U.S.C. 922 or State, local, or Tribal law. Consistent with the Brady Act's requirements, the Federal Bureau of Investigation (“FBI”) operates the National Instant Criminal Background Check System (“NICS”) for FFLs to use to initiate a background check in connection with a proposed transfer of a firearm to a non-licensee.

When an FFL contacts NICS to initiate a background check, NICS searches three nationally held electronic systems—the National Crime Information Center (“NCIC”), 2 the Interstate Identification Index, 3 and the NICS Index  4 —that may reveal the existence of a record demonstrating that the person is prohibited from receiving or possessing firearms. If the query of those three systems results in no matching records, NICS provides a “Proceed” response to the FFL. If a record demonstrates that the person is prohibited from receiving or possessing a firearm, NICS provides the FFL with a “Denied” response. For those transactions for which NICS cannot provide a definitive response of either “Proceed” or “Denied” and must conduct additional research to determine whether the prospective transferee is disqualified from receiving or possessing a firearm by Federal or State law, the transaction will be placed in a “Delayed” status. If NICS has not notified the FFL that the transferee is prohibited from receiving or possessing a firearm within three business days of when the FFL initiated the NICS check, the FFL is not federally prohibited from transferring the firearm beginning on the day after the third business day. See 18 U.S.C. 922(t)(1), 27 CFR 478.102, 28 CFR 25.6. However, the BSCA now provides that, in the case of a person under 21 years old, if NICS notifies the FFL that cause exists to further investigate possible disqualifying juvenile records, an FFL may not transfer the firearm until 10 business days have elapsed  5 since the FFL contacted NICS. See 18 U.S.C. 922(t)(1)(C).

As described below, the BSCA also added new disqualifying factors to existing restrictions on the transfer of firearms and ammunition and set forth additional requirements for transfers of firearms to persons under the age of 21, including enhanced contacts to State and local entities. The BSCA provisions affecting NICS are discussed in this rulemaking only to the extent that they inform FFLs of the requirements they must follow during prospective firearms transfers. Such FFL transfer requirements are the subject of ATF regulations that are among those amended in this rule. See 27 CFR 478.102. As noted above, the Department regulates and manages NICS processes, such as notifications and responses, under the FBI's authority, not ATF's.

The BSCA also necessitated conforming changes to the Firearms Transaction Record, ATF Form 4473 (“Form 4473”). FFLs are required to complete a Form 4473 as part of a firearms transaction involving a non-licensee, and some of the information recorded on the form must be submitted to NICS for the background check. ATF received emergency approval, beginning December 9, 2022, from the Office of Management and Budget (“OMB”) to issue a revised Form 4473 (OMB No. 1140-0020) that incorporates conforming changes so that FFLs could begin complying with the information-collecting requirements set forth in the BSCA. In August 2023, OMB approved the new form for another three years.

In addition, on March 15, 2022, the President signed into law the Consolidated Appropriations Act of 2022 (Pub. L. 117-103), which included the NICS Denial Notification Act of 2022 (“NDNA”). The NDNA requires the Attorney General to report to applicable State, local, or Tribal law enforcement and, where practicable, the relevant State, local, or Tribal prosecutors, if a person has attempted to acquire a firearm and been denied pursuant to a NICS background check. NICS must provide such a report within 24 hours after NICS denies a firearm transfer and include the Federal, State, local or Tribal prohibition, the date and time of the notice, the location of the licensee where the attempted firearm transfer was sought, and the person's identity. This direct final rule incorporates relevant portions of the new statutory language into existing ATF regulations to account for the addition of State, local, and Tribal law enforcement reporting requirements in the NDNA.

In summary, this direct final rule makes conforming updates to ATF regulations to incorporate many of the firearm-related statutory changes made by the BSCA and the NDNA to ensure that the regulations are consistent with the statutes and can be relied upon by the public. The Department has also published a separate proposed ATF rulemaking, “Definition of `Engaged in the Business' as a Dealer in Firearms,” that proposed implementing the BSCA provisions related to what it means to be “engaged in the business” as a wholesale or retail firearms dealer (RIN 1140-AA58; 88 FR 61993 (Sept. 8, 2023)). The Department published the final rule, “Definition of `Engaged in the Business' as a Dealer in Firearms,” in the Federal Register of April 19, 2024 (FR Doc. 2024-07838). In addition, the Department anticipates issuing three rules that implement BSCA and NDNA provisions related to FBI's operations. 6

With the enactment of the BSCA on June 25, 2022, a number of amendments to the GCA went into effect. This rule updates ATF's corresponding regulatory provisions within title 27, Code of Federal Regulations, part 478, to conform with the new statutory amendments. It also makes minor revisions to incorporate the NDNA's State, local, and Tribal law enforcement authority notification requirements.

18 U.S.C. 922(d) provides that it is unlawful for any person to sell or otherwise dispose of a firearm or ammunition to another person if the transferor knows, or has reasonable cause to believe, that the prospective transferee is disqualified as specified in that subsection. As amended by the BSCA, 18 U.S.C. 922(d) now specifies that events occurring when the person was a juvenile are disqualifying, except that the prohibition against the sale or disposition of firearms and ammunition to persons who have been adjudicated as a “mental defective,” see GCA, Public Law 90-618, sec. 102, 82 Stat. 1213, 1220 (1968), or committed to any mental institution applies only to persons who were adjudicated or committed at 16 years of age or older, 18 U.S.C. 922(d)(4).

To conform to the statutory changes in the BSCA, this rule adds the phrase “including as a juvenile” to the end of the introductory language in 27 CFR 478.32(d) and 478.99(c). This rule is also adding the phrase “at 16 years of age or older” to the end of paragraph (d)(4) of § 478.32 and the end of paragraph (c)(4) of § 478.99. Paragraph (d) of § 478.32 mirrors 18 U.S.C. 922(d) and prohibits the sale and disposition of firearms and ammunition to persons meeting certain criteria. Paragraph (c) of § 478.99 also mirrors 18 U.S.C. 922(d) and sets forth prohibitions against sales or deliveries by FFLs to prohibited categories of persons. Because of the BSCA amendments to 18 U.S.C. 922(d), the Department is amending both corresponding regulatory provisions. These revisions bring the existing language in the regulations into conformity with the revised statutory provisions they mirror.

The BSCA added new offenses for “straw purchasing of firearms” and “trafficking in firearms” at 18 U.S.C. 932 and 933, respectively (discussed in detail under Section II.C of this preamble), which are accompanied by additions to the list of prohibitions under 18 U.S.C. 922(d) as new paragraphs (10) and (11). These additional prohibitions make it unlawful to sell or otherwise dispose of firearms or ammunition to persons who intend to sell or otherwise dispose of the firearms or ammunition in furtherance of a “felony,” a “Federal crime of terrorism,” or a “drug trafficking offense,” as those terms are defined in 18 U.S.C. 932(a), or who intend to sell or otherwise dispose of the firearms or ammunition to a person disqualified by any of the criteria listed under 18 U.S.C. 922(d). As a result of these additions to 18 U.S.C. 922(d), the Department is adding the same prohibitions as new 27 CFR 478.32(d)(10) and (11) and 478.99(c)(10) and (11). As noted above, paragraph (d) of § 478.32 mirrors 18 U.S.C. 922(d) and prohibits the sale and disposition of firearms and ammunition to persons meeting certain criteria. Paragraph (c) of § 478.99 also mirrors 18 U.S.C. 922(d) and sets forth prohibitions against sales or deliveries by FFLs to prohibited categories of persons. Because of the BSCA amendments to 18 U.S.C. 922(d), the Department is also adding to 27 CFR 478.11 new definitions of “drug trafficking crime,”  7 “Federal crime of terrorism,”  8 and “felony”  9 to mirror the definitions enacted by the BSCA in 18 U.S.C. 932(a). These revisions bring the existing language in the regulations into conformity with the revised statutory provisions they mirror.

The Department is also making minor revisions to the civil penalty provisions in 27 CFR 478.73(a) to reflect the statutory amendments to 18 U.S.C. 922(d) discussed above, as well as changes the BSCA made to 18 U.S.C. 922(t). Section 922(t) sets forth the requirement that FFLs initiate a background check with NICS before they transfer firearms (the process is discussed in more detail in Section II.D of this preamble). Although NICS is operated by the FBI, which has promulgated regulations on NICS use and request processes, ATF regulations (1) set forth the requirement that licensees must conduct background checks before transferring firearms, and (2) establish when they may subsequently transfer a firearm. These ATF regulations are affected by the BSCA changes regarding prohibited persons, background checks, and timing of transfers in under-21 transactions. This rule is updating the ATF regulations, and the FBI is updating its corresponding NICS regulations in separate rules.

Prior to the enactment of the BSCA, a unique identification number would be provided if NICS determined that the receipt of a firearm would not violate subsections 922(g) or (n), which prohibit certain qualifying persons from shipping, transporting, or receiving firearms. Relevant to this rulemaking, the BSCA revised subsection 922(t)(2) to state that NICS will provide a unique identification number for a transfer if the system determines that “transfer or” receipt of a firearm would not violate 18 U.S.C. 922(d) in addition to 922(g) and (n). And, consistent with 922(t)(2) as amended, the BSCA also revised subsection 922(t)(5), which authorizes the Attorney General to impose civil penalties when an FFL knowingly fails to comply with the background check requirements in subsection 922(t)(1), to refer to the “transfer” of a firearm and to 922(d). In addition, the NDNA added that, as a condition of NICS issuing a unique identification number, receipt of a firearm must not violate local or Tribal law. The Department is revising 27 CFR 478.73(a), which sets forth the basis for civil penalty actions against FFLs, to conform to these changes to the statute.

The BSCA also includes criminal penalty provisions that amend 18 U.S.C. 924(h) and (k). As revised by the BSCA:

• 18 U.S.C. 924(h) makes it unlawful for a person to transfer or receive a firearm or ammunition—or attempt or conspire to do so—knowing or having reasonable cause to believe that it will be used to commit any felony, a Federal crime of terrorism, a drug trafficking crime (as such terms are defined in 18 U.S.C. 932(a)), or a crime under the Arms Export Control Act (22 U.S.C. 22751 et seq. ), the Export Control Reform Act of 2018 (50 U.S.C. 4081 et seq. ), the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq. ), or the Foreign Narcotics Kingpin Designation Act (21 U.S.C. 1901 et seq. ). Under this provision, persons who engage in such unlawful actions, as described, are subject to fines under title 18 of the United States Code, or imprisonment for not more than 15 years, or both.

• 18 U.S.C. 924(k) makes it illegal for a person to smuggle or knowingly bring into the United States a firearm or ammunition with intent to engage in or promote conduct that is punishable under the Controlled Substances Import and Export Act (21 U.S.C. 951, et seq. ) or under 46 U.S.C. chapter 705 (pertaining to Maritime Drug Law Enforcement); or that constitutes any felony, a Federal crime of terrorism, or a drug trafficking crime (as defined in 18 U.S.C. 932(a)). This offense also includes smuggling or knowingly taking a firearm or ammunition out of the United States with intent to engage in or promote conduct punishable under the Controlled Substances Import and Export Act (21 U.S.C. 951, et seq. ) or under 46 U.S.C. chapter 705 (pertaining to Maritime Drug Law Enforcement), if the conduct had occurred within the United States; or that would constitute a felony or a Federal crime of terrorism (as such terms are defined in 18 U.S.C. 932(a)) for which the person may be prosecuted in a court of the United States, if the conduct had occurred within the United States. Under this provision, persons who engage in such unlawful actions are subject to fines under title 18 of the United States Code, or imprisonment for not more than 15 years, or both.

Existing ATF regulations do not include every criminal provision of the GCA, and as a result, the Department is not currently amending its regulations to reflect these particular criminal provisions in the BSCA and is including them in this discussion solely for the public's awareness.

The BSCA revises pre-existing prohibitions against selling or disposing of a firearm or ammunition to a person who has been convicted of a misdemeanor crime of domestic violence, and against such a person receiving or possessing a firearm or ammunition. See 18 U.S.C. 921(a)(33), 922(d)(9), and 922(g)(9). Previously, the domestic violence prohibitions applied only to persons convicted of crimes committed by a current or former spouse, parent, or guardian of the victim; by a person sharing a child in common with the victim; by a person who is cohabitating with or has cohabitated with the victim as a spouse, parent, or guardian; or by a person “similarly situated” to a spouse, parent, or guardian of the victim. 18 U.S.C. 921(a)(33) (2020). This left open the so-called “boyfriend loophole,” because convictions for misdemeanor crimes of domestic violence against a non-married dating partner who did not cohabitate or otherwise share a spouse-like relationship with the victim did not preclude the convicted person from receiving or possessing firearms or ammunition.

The BSCA narrows this gap by including within these prohibitions persons who are, or were recently, in a dating relationship with the victim and who have been convicted of a misdemeanor crime of domestic violence after June 25, 2022. The statute defines “dating relationship” to mean a relationship between persons who have or have recently had a continuing serious relationship of a romantic or intimate nature. 18 U.S.C. 921(a)(37)(A). It also provides factors that must be considered when determining whether a relationship constitutes a dating relationship: the length of the relationship, the nature of the relationship, and the frequency and type of interaction between the persons involved in the relationship. Id. 921(a)(37)(B). A “casual acquaintanceship or ordinary fraternization in a business or social context” is not a dating relationship. Id. 921(a)(37)(C).

A person will not be considered to have been convicted of a misdemeanor crime of domestic violence against a person in a dating relationship if the conviction has been expunged or set aside, or is an offense for which the person has been pardoned or has had firearm rights restored, unless the expungement, pardon, or restoration of rights expressly provides that the person may not ship, transport, possess, or receive firearms. In addition, the statutory prohibition does not apply to persons who have only one conviction of a misdemeanor crime of domestic violence against a person in a dating relationship if five years have elapsed from the later of their conviction or the completion of their custodial or supervisory sentence (if any), provided that the person has not subsequently been convicted of (a) another such offense, (b) a different offense that has as an element the use or attempted use of physical force or the threatened use of a deadly weapon, or (c) any other offense that would disqualify the person from purchasing or possessing firearms under 18 U.S.C. 922(g). More than one conviction for an offense of domestic violence against a person in a dating relationship committed since June 25, 2022, regardless of whether with the same or a different partner, disqualifies the person under Federal law from purchasing or possessing firearms and precludes the person from restoration pursuant to 18 U.S.C. 921(a)(33)(C).

To incorporate the BSCA amendments relating to these provisions, the Department is amending ATF regulations to add a definition of “dating relationship” to 27 CFR 478.11. This definition mirrors the language that the BSCA added to 18 U.S.C. 921(a)(37). In addition, the Department is adding to the end of the definition of “misdemeanor crime of domestic violence,” paragraph (a)(3), the phrase “or by a person who has a current or recent former dating relationship with the victim.” This language is identical to the language in 18 U.S.C. 921(a)(33)(A)(ii). In that same definition, the Department is making minor technical edits to paragraph (a)(3) to bring this part of the definition into direct alignment with the revised statutory language at 18 U.S.C. 921(a)(33)(C), which was added by the BSCA and specifically lists Federal, State, Tribal and local offenses. Further, the Department is revising paragraph (a)(1) of the regulatory definition to expressly align the regulation with the existing statutory language in 18 U.S.C. 921(a)(33)(A)(i), which also explicitly states that the definition of a “misdemeanor crime of domestic violence” involves a misdemeanor under Federal, State, Tribal, or local law. Notably, the NDNA specifically amended section 921(a)(33)(A)(i) to include misdemeanors under local law. Currently, paragraph (a)(1) of the regulatory definition provides that the term includes an offense under Federal and State law and only includes a parenthetical that less directly incorporates Tribal convictions. These changes to the definition of “misdemeanor crime of domestic violence” bring the regulatory language into alignment with 18 U.S.C. 921(a)(33)(A)(i) and (C), as amended by the BSCA and the NDNA.

The Department is also adding a new paragraph (d) to the regulatory definition of “misdemeanor crime of domestic violence” to reflect the statutory changes discussed above as to when a person will, or will not, be considered convicted of a misdemeanor crime of domestic violence against a person in a dating relationship. See 18 U.S.C. 921(a)(33)(C).

The BSCA creates two new criminal offenses, for “straw purchasing of firearms” and for “trafficking in firearms,” as mentioned in Section II.B of this preamble. See 18 U.S.C. 932 and 933. The “straw purchasing” offense makes it illegal for any person to knowingly purchase, or conspire to purchase, a firearm on behalf of another person knowing or having reasonable cause to believe the person for whom they are making the purchase:

• is prohibited under 18 U.S.C. 922(d);

• intends to use, carry, possess, sell, or dispose of the firearm in furtherance of any felony, a Federal crime of terrorism, or a drug trafficking crime (as those terms are defined in 18 U.S.C. 932(a)); or

• intends to sell or dispose of the firearm to a section 922(d)-prohibited person or a person intending to use, carry, possess, sell, or dispose of the firearm in furtherance of any felony, a Federal crime of terrorism, or a drug trafficking crime (as those terms are defined in 18 U.S.C. 932(a)).

The “firearms trafficking” offense makes it illegal for any person to (1) ship, transport, cause to be transported, transfer, or otherwise dispose of a firearm knowing or having reasonable cause to believe that the use, carrying, or possession of a firearm by the recipient would constitute a felony (as defined in 18 U.S.C. 932(a)); or (2) receive a firearm from another person knowing or having reasonable cause to believe the receipt would constitute such a felony. The “firearms trafficking” offense also makes it illegal for a person to attempt or conspire to transfer or receive a firearm in the manners just described. Accordingly, this regulation further amends 27 CFR 478.32 to add new paragraphs (g) and (h) and further amends 27 CFR 478.99 to add new paragraphs (f) and (g) that mirror 18 U.S.C. 932 and 933. In addition, the Department is adding the word “purchases” into the headings of both provisions because the prohibition on straw purchasing in 18 U.S.C. 932 prohibits certain firearms purchases.

As mentioned above, the BSCA establishes criminal penalties for the new “straw purchases” and “firearms trafficking” offenses. Both the “straw purchases” and “firearms trafficking” offenses are subject to broad criminal forfeiture provisions that provide that any person convicted of either offense shall forfeit any proceeds or property obtained, directly or indirectly, as the result of such offenses, as well as any property used or intended to be used, in any manner, to facilitate the violation. 18 U.S.C. 934. Such property may include firearms and ammunition, in which case section 924(d) applies. 10 Id. The BSCA also provides that a defendant who derives profits or other proceeds from a straw purchase or firearms trafficking offense under 18 U.S.C. 932 or 933 may be fined not more than the greater of the fine otherwise authorized under part I of title 18 of the United States Code or the amount equal to twice the gross profits or other proceeds of the offense. 18 U.S.C. 934(b).

To incorporate these BSCA seizure and forfeiture provisions into ATF regulations, the Department is amending ATF regulations at 27 CFR 478.152, which governs seizure and forfeiture, to add paragraphs (d) and (e). This rule is adding paragraphs (d) and (e) to incorporate and mirror the statutory provisions on fines and the forfeiture of firearms, ammunition, and other property or proceeds used in, derived from, constituting, or intended to be used to commit or facilitate commission of “straw purchases” or “firearms trafficking” and the seizure of profits provisions of the new “straw purchases” and “firearms trafficking” offenses in 18 U.S.C. 934.

In addition, the BSCA establishes the maximum term of imprisonment for a “straw purchase” offense at 25 years, 18 U.S.C. 932(c), and for “trafficking in firearms” at 15 years, 18 U.S.C. 933(b), and all other unlawful transfer and possession of firearms offenses under 18 U.S.C. 922(d) and 922(g) now carry a maximum term of not more than 15 years' imprisonment, 18 U.S.C. 924(a)(8). As previously mentioned, existing ATF regulations do not include every criminal provision of the GCA and, as a result, the Department is not currently amending its regulations to reflect these particular criminal provisions in the BSCA. The Department provides a discussion above on these amendments to the statutory penalty provisions solely to inform the public that they apply in this context.

The BSCA made changes to 18 U.S.C. 922(t) and 34 U.S.C. 40901( l ) to expand the records searched for background checks involving persons under the age of 21 that could preclude approval of a firearm or ammunition transfer to such persons. Related to this amendment, possibly disqualifying juvenile records are subject to further investigation, and the BSCA provides an additional investigatory period, if needed, for NICS to conduct the enhanced records checks for criminal, mental health, or other relevant juvenile records. As discussed in Section II.B of this preamble, the FBI operates NICS and FBI regulations govern NICS use and request processes, while ATF regulations (1) set out the requirement that licensees must conduct background checks before transferring firearms and (2) establish when they may subsequently transfer a firearm. These regulatory provisions are outdated in light of the BSCA changes to the GCA regarding background checks and timing of transfers in under-21 transactions. The Department is updating ATF's regulations on FFL responsibilities with regard to NICS through this rule, and is also updating the related FBI NICS regulations in separate rules. For purposes of understanding the regulatory revisions the Department is making in this rule, the Department is providing a synopsis of the BSCA changes affecting NICS.

When a NICS transaction is initiated, regardless of the age of the prospective transferee, NICS searches three FBI systems, as noted above, to determine if the person is disqualified from possessing or receiving firearms under 18 U.S.C. 922(d), (g), or (n), or under State, local, or Tribal law. If a possibly disqualifying record results from the search, NICS provides a “Delayed” status and advises the FFL that the transfer should not proceed pending receipt of a follow-up “Proceed” response from NICS or the expiration of three business days, whichever occurs first. See 28 CFR 25.6. State, local, or Tribal laws may impose a separate waiting period—or require a “Proceed” response—before an FFL can lawfully transfer a firearm.

The BSCA now requires enhanced NICS background checks on transactions for which the prospective firearm transferee is under 21 years of age. 11 With respect to these enhanced background checks of under-21 transactions, Congress imposed two overarching requirements upon NICS via the BSCA. First, in addition to the traditional NICS check of relevant FBI systems, NICS is required to conduct additional outreach to three specified types of State and local entities to determine whether the prospective transferee has a “possibly disqualifying juvenile record” under 18 U.S.C. 922(d). See 34 U.S.C. 40901( l ).

Second, beyond the possibility of a three-business-day investigatory period already allowed for a NICS transaction as noted above, the BSCA provides for an additional investigatory period, if needed, as part of an under-21 transaction, up to a total of ten business days (the traditional three business days described above plus up to an additional seven business days for further investigation), before an FFL may transfer a firearm to a person under 21. See 18 U.S.C. 922(t)(1)(C), 34 U.S.C. 40901( l )(3). The additional investigatory period applies if NICS determines that there is cause to further investigate whether the prospective transferee has a possibly disqualifying juvenile record under 18 U.S.C. 922(d). See 18 U.S.C. 922(t)(1)(C); 34 U.S.C. 40901( l )(3). NICS is required to notify the FFL no later than the end of the third business day if the additional investigatory period is needed. See 34 U.S.C. 40901( l )(2).

The BSCA amended 18 U.S.C. 922(t) to provide that, for under-21 transactions, where cause exists (in the first three business days) to investigate further whether the prospective transferee has a possibly disqualifying juvenile record under 18 U.S.C. 922(d), and the FFL is notified that such cause exists, the FFL may not transfer a firearm to the prospective transferee during the investigatory period without receiving a follow-up “Proceed” response from the system, or allowing the elapse of up to ten business days from the date the background check was initiated, whichever occurs first. The permissible transfer date for an under-21 transaction on which the FFL has been notified that there is cause for further investigation, therefore, is now the day after the tenth business day, in the absence of a follow-up “Proceed” response.

Accordingly, the Department is making amendments to conform ATF's regulations that instruct FFLs on the requirement to conduct NICS checks and when they may subsequently transfer a firearm with the above-described provisions of the BSCA for under-21 transactions. The Department is amending 27 CFR 478.102(a)(2) and (3) by adding information on a possible further investigatory response from NICS for transferees under 21 years old, how that affects the timing of the possible transaction, and revising the examples to distinguish between the standard background check investigatory period and a potential additional investigatory period for a transferee who is under 21 years old.

The Department is also amending 27 CFR 478.124(c)(1) to reflect the BSCA and NDNA statutory amendments by adding additional information requirements for transaction records. Section 478.124 covers firearms transaction records that licensees are required to keep for transactions with nonlicensees. Paragraph (c)(1) of § 478.124 establishes that, for each transaction, the licensee must have a transferee fill out a Form 4473 with information relevant to conducting a background check as well as recording the transfer and certifying that the transferee is not a prohibited person. In accordance with the new “straw purchase” and “firearms trafficking” prohibitions and additional transfer prohibitions included in the BSCA, the Department is adding language to the transferee certification portion of the form, whereby the transferee will certify that they do not intend to purchase or acquire a firearm for sale or other disposition to a prohibited person or in furtherance of a felony, Federal crime of terrorism, or a drug trafficking offense. These provisions requiring that the Form 4473 reflect this information implement new subsections (d)(10) and (d)(11) of 18 U.S.C. 922, which make it unlawful for a person to transfer a firearm to another if the transferor has reasonable cause to believe the transferee intends to sell or otherwise dispose of the firearm to a prohibited person or in furtherance of a felony, Federal crime of terrorism, or a drug trafficking offense. These BSCA provisions were already incorporated into the certification on ATF Form 4473, as described above.

The NDNA requires the Attorney General to report when NICS issues a denial of a firearm transfer pursuant to 18 U.S.C. 922(t) to the local law enforcement authorities (as defined in 18 U.S.C. 921(a)(36)) of the State or Tribe where the person sought to acquire the firearm, or, if different, the local law enforcement authorities of the State or Tribe where the person resides. Moreover, as discussed in Section II.D of this preamble, the BSCA requires NICS to contact certain State and local authorities when a licensee contacts NICS regarding a proposed transfer of a firearm to a person under 21 years old. The Department is amending § 478.124(c)(1) to require additional information on the transferee's residence address (to add whether they reside in city limits or not) as necessary to identify the record locations that must be searched pursuant to the BSCA and NDNA, and, as necessary, for NICS to notify the “local law enforcement authority” where the transferee resides when a transfer is denied, pursuant to the NDNA (18 U.S.C. 925B). The revised Form 4473 already includes a question requesting this city limits information from potential transferees; this rule will require FFLs to collect that information from potential transferees on the Form 4473.

The NDNA requirements for NICS background checks of, and reports to, local and Tribal law enforcement also include a new definition of “local law enforcement authority” added to 18 U.S.C. 921(a)(36), and the Department is adding this definition to 27 CFR 478.11 as well. The Department is also including a minor technical revision to 27 CFR 478.124(c)(1) to update references to “INS” to references to “DHS.” Although the relevant statute refers to the INS, that agency no longer exists, and the Department is therefore taking this opportunity to update the regulation to refer to DHS, the successor agency for that function.

Because of the BSCA and NDNA changes described above, the Department is also making technical revisions to paragraph (f) of § 478.124, which requires nonlicensees, among other provisions, to submit a Form 4473 to an FFL if they are acquiring firearms by other than an over-the-counter transaction as permitted by 18 U.S.C. 922(c). The regulations refer to the same Form 4473 whether the person is acquiring a firearm under § 478.124(c) or (f); therefore, the technical revisions the Department is making to § 478.124(f) that describe what the Form 4473 must show as submitted by the transferee are the same as those described for § 478.124(c)(1). As described above, these technical changes to conform with the BSCA and NDNA include that the Form 4473 reflect the transferee's residence address (including county or similar political subdivision and whether they reside within the city limits) and certification that the transferee does not intend to purchase or acquire a firearm for sale or other disposition to a prohibited person or in furtherance of a felony, Federal crime of terrorism, or a drug trafficking offense. Other minor revisions to § 478.124(f) include adding “sex,” “transferee's country of citizenship,” “the transferee's DHS-issue alien number or admission number” and “the transferee's State of residence” to the list of information that the Form 4473 must include when submitted by the transferee. These changes are to ensure parity between § 478.124(c)(1) and (f).

Executive Order 12866 (“Regulatory Planning and Review”) directs agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 (“Improving Regulation and Regulatory Review”) emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. Executive Order 14094 (“Modernizing Regulatory Review”) amends section 3(f) of Executive Order 12866.

OMB has determined that this rule is not a “significant regulatory action” under Executive Order 12866, as amended by Executive Order 14094, and it is not a significant action under section 3(f)(1) of Executive Order 12866.

The BSCA requires enhanced background checks for firearm purchasers under 21 years old, clarifies Federal firearms license requirements, authorizes funding for State red flag laws and other crisis intervention programs, creates new Federal offenses for arms trafficking and straw purchases, and partially closes the “boyfriend loophole,” which previously excluded domestic violence offenses involving dating relationships from firearms restrictions equivalent with those involving a spouse. The NDNA requires the Attorney General to report to State, local, and Tribal law enforcement when NICS provides a notice pursuant to 18 U.S.C. 922(t) that the receipt of a firearm by a person seeking to receive a firearm in their jurisdiction (or living in their jurisdiction and seeking a firearm from elsewhere) would violate 18 U.S.C. 922(g) or (n). This direct final rule merely incorporates the new statutory provisions into existing ATF firearms regulations (the related revisions to the FBI NICS regulations will be implemented in separate rules). Upon review of these new provisions, ATF has determined that costs associated with this rule are largely costs associated with updating ATF Form 4473 to align the questions and information regarding background checks on that form with the new statutory requirements. ATF Form 4473 was updated through OMB to align with the new requirements in December 2022 and the form was approved for another three years in August 2023. This rule does not require further updates to the form.

This regulation will not have substantial direct effects on the States, the relationship between the Federal Government and the States, or the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with section 6 of Executive Order 13132 (“Federalism”), the Attorney General has determined that this regulation does not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement.

This regulation meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988 (“Civil Justice Reform”).

In accordance with the Regulatory Flexibility Act, 5 U.S.C. 603, 604, and 605(b), a Regulatory Flexibility Analysis is not required for this direct final rule because the Department was not required to publish a general notice of proposed rulemaking for this matter.

This direct final rule will not 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 (as adjusted for inflation), and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995, Pub. L. 104-4, 109 Stat. 48.

Under the Paperwork Reduction Act of 1995 (“PRA”), 44 U.S.C. 3501-3521, agencies are required to submit to OMB, for review and approval, any reporting requirements inherent in a rule. This direct final rule does not impose any new reporting or recordkeeping requirements under the PRA. OMB has approved the existing Form 4473 information collection under OMB Control Number 1140-0020.

Pursuant to the Congressional Review Act, 5 U.S.C. 801-808, OMB's Office of Information and Regulatory Affairs has determined that this direct final rule is not a “major rule,” as defined in 5 U.S.C. 804(2).

Under the Administrative Procedure Act (“APA”), 5 U.S.C. 553(b)(B), an agency may, for good cause, find that the usual requirements of prior notice and comment are impracticable, unnecessary, or contrary to the public interest. The notice-and-comment requirements also do not apply to “interpretive rules,” meaning those that “remind parties of existing statutory or regulatory duties, or `merely track[ ]' preexisting requirements and explain something the statute or regulation already required.” POET Biorefining, LLC v. EPA, 970 F.3d 392, 407 (D.C. Cir. 2020) (quotation marks omitted); see also United States v. Kriesel, 508 F.3d 941, 945 (9th Cir. 2007) (a regulation that “mirror[s] the statute” is a “classic interpretive rule”). As described above, this direct final rule simply incorporates statutory changes into existing regulatory provisions that already mirrored preexisting statutory language. These conforming updates to ATF regulations in part 478 are to ensure that ATF regulations are consistent with the statutes and can be relied upon by the public. In the absence of this rule, however, the relevant statutes provide an adequate basis for enforcement action. Therefore, because this rulemaking is limited to directly incorporating statutory provisions, which can already be enforced absent this rule, notice and comment on this rule is unnecessary and not practical to implement the BSCA and NDNA. Were ATF to receive an adverse comment on the statutory requirements, the Department would not be able to alter those requirements in response to comments because it cannot change the statutory provisions enacted by Congress. For these reasons, the Department has determined that publishing a notice of proposed rulemaking and providing opportunity for comment is unnecessary under the good cause and interpretive rule exceptions to the APA's notice-and-comment requirements. See 5 U.S.C. 553(b)(4).

Nonetheless, the Department is providing the public a 90-day delayed effective date and an opportunity to comment in accordance with Recommendation 95-4, Procedures for Noncontroversial and Expedited Rulemaking, issued by the Administrative Conference of the United States (“ACUS”). ACUS has described direct final rulemaking as an appropriate procedure where the “unnecessary” prong of the good cause exemption is available, in order to expedite promulgation of rules that are non-controversial and that are not expected to generate significant adverse comment. See 60 FR 43108, 43108 (Aug. 18, 1995).

Under direct final rulemaking, an agency may issue a rule that it believes to be non-controversial “without having to go through the review process twice . . . while at the same time offering the public the opportunity to challenge the agency's view that the rule is noncontroversial.” Id. at 43110. If the agency determines that it has received a significant adverse comment the direct final rule will be withdrawn before its effective date. Id. Recommendation 95-4 also provides that, in determining whether a significant adverse comment is sufficient to terminate a direct final rulemaking, agencies should consider whether the comment raises an issue serious enough to warrant a substantive response in a notice-and-comment process. Id.

As this rulemaking is limited to directly incorporating statutory provisions (rather than effecting a substantive or discretionary change in existing law pursuant to the Department's congressional delegation of authority), direct final rulemaking is appropriate here because the Department does not expect ATF to receive any significant adverse comments. 12 As discussed in more detail in Section IV of this preamble, ATF could receive adverse comments on the assessment that the rulemaking is non-controversial.

In sum, although the Department has determined that prior notice and comment and a delayed effective date are “unnecessary” in accordance with the APA's good cause and interpretive rule exceptions in 5 U.S.C. 553(b)(4), the Department is providing that the rule will take effect 90 days after publication and is allowing a 30-day period for submission of significant adverse comments for the reasons described above. Therefore, unless ATF receives a significant adverse comment by May 20, 2024, this rule will become effective on July 18, 2024. If ATF receives any timely significant adverse comments, the Department will publish notification in the Federal Register , withdrawing this direct final rule before its effective date. See the section on “Public Participation” in this preamble for a description of a significant adverse comment.

ATF accepts comments from all interested persons. Pertinent to this direct final rule, a significant adverse comment is a comment in which the commenter explains why the rule, rather than the statutory language that the Department is incorporating into ATF's regulations, is controversial or would be inappropriate, including challenges to the rule's underlying premise or approach, or would be ineffective or unacceptable without a change. A comment is significant and adverse if:

(1) The comment opposes the Department's assessment regarding the non-controversial nature of the rule and provides a reason sufficient to require a substantive response in a notice-and-comment process. For example, a substantive response may be required when:

(a) The comment causes the Department to reconsider its position or conduct additional analysis;

(b) The comment raises an issue serious enough to warrant a substantive response to clarify or complete the record; or

(c) The comment raises a relevant issue that was not previously addressed or considered by the Department;

(2) The comment proposes a salient change or an addition to the rule, and it is apparent that the rule would be ineffective or unacceptable without incorporation of the change or addition; or

(3) The comment causes the Department to make a change (other than editorial or administrative) to the rule.

Comments that raise concerns regarding the underlying statutory provisions that this rule is incorporating into existing regulations will not be considered significant adverse comments. Those statutory provisions were enacted by Congress and cannot be altered by the Department. Accordingly, the Department is unable to provide a substantive response to such comments.

All comments must reference this document's docket number ATF 2022R-09 and be legible. Commenters are encouraged to include the commenter's complete first and last name and contact information. If submitting a comment through the Federal eRulemaking portal, as described below in Section IV.C of this preamble, commenters should carefully review and follow the instructions on that website on submitting comments. If submitting a comment by mail, commenters should review Section IV.B (“Confidentiality”) of this preamble regarding proper submission of PII. ATF may not consider, or respond to, comments that do not meet these requirements or comments containing profanity. ATF will retain comments containing profanity as part of this direct final rule's administrative record but will not publish such documents on www.regulations.gov. ATF will treat all comments as originals and will not acknowledge receipt of comments. In addition, if ATF cannot read your comment due to technical difficulties and cannot contact you for clarification, ATF may not be able to consider your comment.

ATF will make all comments meeting the requirements of Section IV, whether submitted electronically or on paper, available for public viewing at ATF and on the internet through the Federal eRulemaking portal, and subject to the Freedom of Information Act (5 U.S.C. 552) (“FOIA”). Commenters who submit by mail and who do not want their name or other PII posted on the internet should submit their comments along with a separate cover sheet containing their PII. Both the cover sheet and comment must reference this docket number (ATF 2022R-09). For comments submitted by mail, information contained on the cover sheet will not appear when posted on the internet but any PII that appears within the body of a comment will not be redacted by ATF and it will appear on the internet. Commenters who submit through the Federal eRulemaking portal and who do not want any of their PII posted on the internet should omit such PII from the body of their comment or in any uploaded attachments.

A commenter may submit to ATF information identified as proprietary or confidential business information. The commenter must place any portion of a comment that is proprietary or confidential business information under law on pages separate from the balance of the comment with each page prominently marked “PROPRIETARY OR CONFIDENTIAL BUSINESS INFORMATION” at the top of the page.

ATF will not make proprietary or confidential business information submitted in compliance with these instructions available when disclosing the comments that it receives, but will disclose that the commenter provided proprietary or confidential business information that ATF is holding in a separate file to which the public does not have access. If ATF receives a request to examine or copy this information, it will treat it as any other request under FOIA. In addition, ATF will disclose such proprietary or confidential business information to the extent required by other legal processes.

Submit comments using either of the two methods below (but do not submit the same comment multiple times or by more than one method). Hand-delivered comments will not be accepted.

• Federal eRulemaking portal: ATF recommends that you submit your comments to ATF via the Federal eRulemaking portal at www.regulations.gov and follow the instructions. Comments will be posted within a few days of being submitted. However, if large volumes of comments are being processed simultaneously, your comment may not be viewable for up to several weeks. Please keep the comment tracking number that is provided after you have successfully uploaded your comment.

• Mail: Send written comments to the address listed in the ADDRESSES section of this document. Written comments must appear in minimum 12-point font size (.17 inches), include the commenter's first and last name and full mailing address, be signed, and may be of any length. See also Section IV.B (“Confidentiality”) of this preamble.

Copies of this direct final rule and the comments received in response to it will be available through the Federal eRulemaking portal, at www.regulations.gov (search for RIN 1140-AA57), and for public inspection by appointment during normal business hours at: ATF Reading Room, Room 1E-063, 99 New York Ave. NE, Washington, DC 20226; telephone: (202) 648-8740.

For the reasons discussed in the preamble, the Department amends 27 CFR part 478 as follows:

This rule implements the HAVANA Act of 2021, Public Law 117-46, 135 Stat. 391 (2021) (codified at 22 U.S.C. 2680b(i)).

In 2016, Department of State employees stationed in Havana, Cuba, began reporting a sudden onset of symptoms, including headaches, pain, nausea, disequilibrium, and hearing loss, in conjunction with sensory events. Federal agencies have called such incidents Anomalous Health Incidents (“AHIs”). Since 2016, Federal employees in numerous countries reported suspected AHIs. On December 20, 2019, Congress authorized the Department of State to pay benefits to employees and their dependents for injuries suffered after January 1, 2016, in the Republic of Cuba, the People's Republic of China, or other foreign countries designated by the Secretary of State, in connection with war, insurgency, hostile acts, or terrorist activity, or in connection with other incidents designated by the Secretary of State. See Further Consolidated Appropriations Act, 2020, Public Law 116-94, div. J, title IX, section 901, 133 Stat. 2534, 3079-81 (2019) (codified as amended at 22 U.S.C. 2680b). These benefits were limited to State Department employees only ( i.e., not other employees under Chief of Mission (“COM”) authority).

On January 1, 2021, Congress amended this law to authorize other Federal Government agencies to provide benefits to their own employees under COM authority if they suffered similar injuries. National Defense Authorization Act for Fiscal Year 2021, Public Law 116-283, section 1110, 134 Stat. 3388, 3892-93 (2021).

On October 8, 2021, Congress passed the Helping American Victims Affected by Neurological Attacks or the HAVANA Act of 2021, Public Law 117-46, 135 Stat. 391 (2021) (“HAVANA Act”). In the HAVANA Act, Congress authorized Federal Government agencies to compensate affected current employees, former employees, and their dependents for qualifying injuries to the brain. The HAVANA Act also omitted the previous law's requirement that the qualifying injury must occur in the Republic of Cuba, the People's Republic of China, or another foreign country designated by the Secretary of State. The scope of coverage now includes a qualifying injury that occurs in any foreign or domestic location. The HAVANA Act requires Federal agencies who make payments under the HAVANA Act to prescribe implementing regulations not later than 180 days after the effective date of the Act. Section 9216 of the National Defense Authorization Act for Fiscal Year 2023, Public Law 117-263, 136 Stat. 2395, 3877 (2022) (codified at 22 U.S.C. 2680b(j)), provided agencies with authority to designate incidents affecting employees or dependents who are not under the security responsibility of the Secretary of State.

This rule implements section 3 of the HAVANA Act as it applies to the Department of Justice (the “Department”). This rule only applies to current and former employees of the Department and their dependents, as defined in § 106.2 of this rule.

On June 30, 2022, the Department of State published an interim final rule to implement its requirements under the HAVANA Act, with an effective date of August 15, 2022. 87 FR 38981 (June 30, 2022) (codified at 22 CFR part 135). The Department of State subsequently published a final rule that became effective on January 25, 2023. 88 FR 4722 (Jan. 25, 2023) (codified at 22 CFR part 135). The Department of Justice has independently reviewed the approach implemented by the Department of State in these rules and has determined that its approach is reasonable and well considered. Accordingly, the Department of Justice plans to adopt that approach as appropriate in its regulations to ensure consistency of benefits among Federal employees and their dependents. In particular, the Department has based its interim final rule on the Department of State's definitions and process for the payment of benefits.

The rule defines those who are eligible to receive payments: covered employees (including current and former employees) and covered dependents who on or after January 1, 2016, experience a qualifying brain injury. A “covered employee” includes all Department employees, including employees on Limited Non-Career Appointments, employees on Temporary Appointments, personnel hired on Personal Services Contracts, and students providing volunteer services under 5 U.S.C. 3111.

An employee's family member is a covered dependent if, on or after January 1, 2016, the family member experiences a qualifying injury. The rule defines the family members who are eligible as certain children, parents residing with the employee sponsor, dependent siblings, or spouses.

For the purposes of this rule, the Department also adopts the Department of State's definition of “qualifying injury to the brain.” 22 CFR 135.2. The Department has determined that the Department of State definition is reasonable and well considered. The Department of State consulted with the chief medical officers at other Federal agencies and experts at civilian medical centers of excellence. There is no diagnostic code or criteria for AHIs in the International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM). Because of the varied symptoms and still nascent understanding of how to test or otherwise screen for AHI impacts, the standard adopted is broadly inclusive of the types of injuries that have been reported to date.

The definition of “qualifying injury to the brain” is based on current medical practices related to brain injuries. The individual must have: (1) an acute injury to the brain such as a concussion, a penetrating injury, or an injury as the consequence of an event that leads to permanent alterations in brain function as demonstrated by confirming correlative findings on imaging studies or electroencephalogram (“EEG”); (2) a medical diagnosis of a traumatic brain injury that required active medical treatment for 12 months or more; or (3) the acute onset of new, persistent, disabling neurologic symptoms, as demonstrated by confirming correlative findings on imaging studies, EEG, a physical exam, or other appropriate testing, that required active medical treatment for 12 months or more.

The first component of the definition of “qualifying injury to the brain” set forth in § 106.2(d)(2)(i) accounts for a variety of observable impacts to an individual, including a concussion or a penetrating injury or, absent either of those, permanent alterations in brain function as confirmed by a board-certified physician's review of a variety of forms of medical imaging evidence. The goal with this standard is to ensure there is some documented evidence of impact to the brain, while minimally circumscribing what that impact entails. The second and third components of the definition (paragraphs (d)(2)(ii) and (iii)) are intended to provide alternative avenues for demonstrating sustained, long-term impact to the individual. This benefit is intended for individuals who experience long-term consequences, potentially including an inability to gainfully work, as a result of a suspected AHI.

The standard is consistent with that employed by other agencies, including the Department of State. A 12-month threshold of active medical treatment is indicative of a long-term injury. For example, the Centers for Disease Control and Prevention (“CDC”) broadly defines chronic diseases “as conditions that last 1 year or more and require ongoing medical attention or limit activities of daily living or both.” CDC, About Chronic Diseases, https://www.cdc.gov/chronicdisease/about/index.htm (last reviewed July 21, 2022). The Department notes that applicants who have suffered kinetic or external, physically caused injuries to the brain such as the head striking an object, the brain undergoing an acceleration or deceleration movement, or brain injuries from events such as a blast or explosion, including penetrating injuries, may be eligible if the injuries satisfy the other requirements of this rule.

Under the HAVANA Act, the injury must have occurred “in connection with war, insurgency, hostile act, terrorist activity, or other incidents designated by the Secretary of State,” and cannot have been “the result of the willful misconduct” of the covered individual. 22 U.S.C. 2680b(e)(4)(A)(ii)-(iii), (e)(4)(B)(ii)-(iii), (i)(1)(D). The Department will work with an applicant upon the applicant's submission of the DS-4316, “Eligibility Questionnaire for HAVANA Act Payments,” to determine whether their alleged incident qualifies.

The definition of “other incident” is a new onset of physical manifestations that cannot otherwise be readily explained and that is designated under 22 U.S.C. 2680b. The Department will review available information on the reported incident. If a physician does not indicate that there is a credible alternative explanation for the individual's symptoms, and if the information the Department has regarding the incident does not provide a credible alternative explanation for the incident, that incident will be recommended for designation. Incidents for which an alternative explanation has been identified will not be recommended for designation. For incidents affecting employees or dependents who are not under the security responsibility of the Secretary of State, the Department will determine whether to designate such incidents.

The Department will make available to its workforce information on the regulations and the process to apply for HAVANA Act payments. Current employees, former employees, and dependents (as defined in this rule) can apply for consideration. Applicants will be required to provide the necessary documentation so the Department may determine whether they qualify for payment. The DS-4316, “Eligibility Questionnaire for HAVANA Act Payments,” is the form associated with developing the necessary evidence to submit a claim, and it will be available upon request with instructions on how to apply for a HAVANA Act payment. A portion of the form must be filled out by a qualified physician; the rule specifies certain board certification requirements for physicians who can evaluate a qualifying injury to the brain.

The Department has determined that the payment scheme set forth in the Department of State's HAVANA Act regulations, 22 CFR 135.3, is well reasoned and provides an effective means of compensating covered employees. Accordingly, the Department has adopted it for purposes of this rulemaking. Pursuant to this interim final rule, the Department, in its discretion, may authorize a one-time, non-taxable, lump sum payment based on Level III of the Executive Schedule. See 5 U.S.C. 5311 et seq. The payment is non-taxable pursuant to 22 U.S.C. 2680b(g). Payment eligibility and the amount of the payment will be at the Department's discretion. The maximum should only be awarded where a condition has a consistent, sustained, and exceptionally severe impact on a victim's quality of life or prevents a victim from successfully performing their work-related duties. The purpose is to compensate individuals only for qualifying brain injuries that meet the criteria set forth in this rule. The following factors will be taken into account to determine the amount of the payment to be authorized: (1) the applicant's responses on the eligibility form; and (2) whether the Department of Labor (Office of Workers' Compensation Programs) has determined that the applicant has no reemployment potential, the Social Security Administration (“SSA”) has approved the applicant for Social Security Disability Insurance or Supplemental Security Income benefits, or the applicant's board-certified physician has certified that the individual requires a full-time caregiver for activities of daily living, as defined by the Katz Index of Independence in Activities of Daily Living.

The award thresholds are based on Level III of the Executive Schedule. A Base payment will be 75 percent of Level III pay, and a Base+ payment will be 100 percent of Level III pay. The specific use of Level III of the Executive Schedule sets the compensation at the maximum annual salary potentially available to most of the Federal workforce. The Department believes this amount is the most it can reasonably compensate each applicant while ensuring funds for the total number of applicants it believes will likely receive payments. If the applicant meets any of the criteria for severe impacts, the applicant will be eligible to receive a Base+ payment. Applicants whose board-certified physician confirms that the definition of qualifying injury to the brain has been met, but who have not met any of the criteria for severe impacts, will be eligible to receive a Base payment.

The criteria established for severe impacts are reflective of the Department's objective of ensuring that the individuals most severely affected by AHIs (as indicated by a lack of reemployment potential, an inability to engage in substantial gainful activity, or the need for a full-time caregiver) receive additional payment. The use of the Department of Labor's or the SSA's determination is to ensure that both Federal employees as well as their dependents have access to a mechanism for this determination. The Department recognizes that the criteria the Department of Labor and SSA use in their determinations are distinct, as well as the fact that the procedural timelines for seeking and receiving approval may be different between these agencies. The third option, that a board-certified physician certify that the individual requires a full-time caregiver for activities of daily living, provides an alternative mechanism for all individuals. Finally, the Department notes that if an applicant who received a Base payment later meets any of the criteria listed for severe impacts, the applicant may apply for an additional payment that will be the difference between the Base and Base+ payment. As the payments are tied to the Executive Schedule payment levels, the amounts will change over time based on changes to the Federal salary schedule. Payments will be based on the Executive Schedule in effect at the time the payment was approved.

While payments under the HAVANA Act may be in addition to other leave benefits, disability benefits, or workers' compensation payments that the applicant may be receiving or may be entitled to receive that also help augment any loss of income, the Department believes this is an appropriate additional payment. This payment scheme is also consistent with what is being offered by other Federal agencies and will ensure consistency of benefits among affected individuals.

The Department notes that payments may only be made using amounts appropriated in advance specifically for this purpose in the relevant fiscal year, unless Congress specifies otherwise. Therefore, payments are contingent on appropriated funds, and all payments will be paid out on a first-come, first-served basis.

Under the rule, the Department's procedures for determining whether an incident has been designated under 22 U.S.C. 2680b include, where appropriate, consultation with the Secretary of State. See 22 U.S.C. 2680b(i)(1)(D) (cross-referencing subparagraph 2680b(e)(4)).

Each Federal agency is responsible for (1) processing applications for the HAVANA Act payments; (2) determining or, as necessary, consulting with the Secretary of State to determine, whether the incident causing the injury may be deemed a designated incident under the statute, see 22 U.S.C. 2680b(j); id. 2680b(i)(1)(D) (cross-referencing subparagraph 2680b(e)(4)); (3) determining eligibility for the benefit, determining the amount of the benefit, and processing payment of the benefit; and (4) notifying applicants upon receipt of their applications and when a decision has been made whether to authorize payment.

The Executive Assistant Director, Human Resources Branch, Federal Bureau of Investigation (“FBI”), is authorized to approve HAVANA Act payments to FBI employees or their dependents. The Deputy Assistant Attorney General, Human Resources and Administration, Justice Management Division (“JMD”), is authorized to approve HAVANA Act payments for all other Department employees or their dependents. If payment is denied by the designated FBI or JMD official, the applicant may direct an appeal to the Assistant Attorney General for Administration within 60 days of the notification of denial, but decisions on the amount of payment are not appealable.

This rule is being published as an interim final rule. Because this rule is a matter relating to public benefits, it is exempt from requirements for notice-and-comment rulemaking. See 5 U.S.C. 553(a)(2). Because the rule is exempt from section 553 of title 5 of the United States code, the provisions of section 553(d) do not apply. Nevertheless, the rule will go into effect 30 days after publication. However, the Department is seeking comment from interested persons on the provisions of this rule and will consider all relevant comments in determining whether additional rulemaking is warranted under the provisions of the HAVANA Act.

This rule is not a major rule as defined by 5 U.S.C. 804 for the purposes of congressional review of agency rulemaking under the Small Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 801-808.

This rule will not result in the expenditure by State, local, or Tribal governments, in the aggregate, or by the private sector, of $100 million in any year, and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1501 et seq.

The Department has determined that this rulemaking will not have tribal implications, will not impose substantial direct compliance costs on Indian tribal governments, and will not preempt tribal law. Accordingly, the requirements of Executive Order 13175 do not apply to this rulemaking.

A regulatory flexibility analysis is not required under the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., because the Department was not required to issue a notice of proposed rulemaking.

The Department provided this interim final rule to the Office of Management and Budget for its review. The Office of Information and Regulatory Affairs has designated this rule as “significant” under Executive Order 12866. The Department has also reviewed the rule to ensure its consistency with the regulatory philosophy and principles set forth in Executive Order 12866 and finds that the benefits of the rule (in providing mechanisms for individuals to obtain compensation for certain injuries) outweigh any costs to the public, which are limited, given the anticipated small number of individuals with qualifying injuries. The Department has also considered this rulemaking in light of Executive Order 13563 and affirms that this proposed regulation is consistent with the guidance therein.

The Department has reviewed this rule in light of Executive Order 12988 to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden.

This rule will not have substantial direct effects on the States, on the relationships between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with Executive Order 13132, it is determined that this rule does not have sufficient federalism implications to require consultations or warrant the preparation of a federalism summary impact statement.

This rulemaking is related to an information collection for the DS-4316, “Eligibility Questionnaire for HAVANA Act Payments,” OMB Control Number 1405-0250.

The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to 5 U.S.C. 553(b). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because it is impracticable. This safety zone must be in place by April 22 to protect personnel, vessels, and the marine environment from potential hazards associated with removal of the pipelines and there is insufficient time between now and April 22 to provide notice of a proposal to create these safety zones, consider comments received, and publish a final rule.

In addition, the Coast Guard finds that good cause also exists under 5 U.S.C. 553(d)(3) for making this rule effective less than 30 days after publication in the Federal Register because the safety zone must be in effect less than 30 days from now to serve their purpose and it would be contrary to the public interest to delay its effective date until after the hazardous activities begin.

The Coast Guard is issuing this rule under authority in 46 U.S.C. 70034. The Captain of the Port, Sector Corpus Christi (COTP) has determined that hazards inherent in blocking the channel for pipeline removal activities necessitate provisions to protect personnel, vessels, and the marine environment while those activities are taking place. The activities giving rise to these hazards include the deployment of heavy equipment which will obstruct vessel traffic, continuous diving operations, and various other activities which create underwater hazards while people are working.

This rule is subject to overnight enforcement, starting from 8 p.m. of the first day, to 6 a.m., of the next day, each and every day, from April 22, 2024 through May 31, 2024. No vessel or person will be permitted to enter the temporary safety zones during the period in which the rule is subject to enforcement without obtaining permission from the COTP or a designated representative, who may be contacted on Channel 16 VHF-FM (156.8 MHz) or by telephone at 1-800-874-2143. The Coast Guard will issue Broadcast Notices to Mariners, Local Notices to Mariners, and/or Safety Marine Information Broadcasts as appropriate.

We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. This rule has not been designated a “significant regulatory action,” under Executive Order 12866, as amended by Executive Order 14094 (Modernizing Regulatory Review). Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB).

This regulatory action determination is based on the size, location, and duration of the safety zones. The safety zones cover less than 0.5 square mile area of the Corpus Christi Ship Channel in Texas. The temporary safety zones will be subject to enforcement for a period of 9 consecutive hours, from April 22, 2024 through May 31, 2024. The rule does not completely prohibit vessel traffic within the waterway and it allows mariners to request permission to enter the zones.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

While some owners or operators of vessels intending to transit the temporary safety zone may be small entities, for the reasons stated in section V.A above, this rule will not have a significant economic impact on any vessel owner or operator.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section.

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial, direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.

Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this rule has implications for federalism or Indian tribes, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section above.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

We have analyzed this rule under Department of Homeland Security Directive 023-01 and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f) and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves establishment of a temporary safety zone for navigable waters in the Corpus Christi Bay. The safety zone is needed to protect personnel, vessels, and the marine environment from potential hazards created by pipeline removal activities that may include deployment of heavy equipment which will obstruct vessel traffic, continuous diver's operations, and various other activities which create underwater hazards while people are working. It is categorically excluded from further review under paragraph L60(a), in Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating the docket, see the ADDRESSES section of this preamble.

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

Throughout this document “we,” “us,” and “our” refer to EPA.

The EPA is approving revisions to the Iowa SIP and the Operating Permits Program received on March 29, 2023. The revisions incorporate recent changes to Iowa Administrative Code. The following chapters are impacted:

• Chapter 20, “Scope of Title—Definitions;”

• Chapter 22, “Controlling Pollution;”

• Chapter 25, “Measurement of Emissions;” and

• Chapter 28, “Ambient Air Quality Standards.”

The revisions update incorporations by reference to EPA methods for performance testing (stack testing) and adopt the most recent National Ambient Air Quality Standards (NAAQS) for ozone. As explained in detail in the EPA's proposed rule, EPA finds these revisions meet the requirements of the Clean Air Act, do not impact the stringency of the SIP, and do not adversely impact air quality (89 FR 12291, February 16, 2024). The full text of these changes can be found in the State's submission, which is included in the docket for this action.

Sections 111 and 112 of the Clean Air Act (CAA) allow EPA to delegate authority to states for New Source Performance Standards (NSPS) and National Emission Standards for Hazardous Air Pollutants (NESHAPs). EPA has delegated authority to Iowa for approved portions of these sections of the CAA. Changes made to Iowa's Chapter 23 pertaining to new and revised NSPS and NESHAPs are not directly approved into the SIP, but rather, are adopted by reference. Thus, EPA is not approving the changes to Chapter 23 of the Iowa Administrative Code into the state's SIP.

The State submission has met the public notice requirements for SIP submissions in accordance with 40 CFR 51.102. The submission also satisfied the completeness criteria of 40 CFR part 51, appendix V. The State provided public notice on this SIP revision from November 2, 2022, to December 5, 2022, and held a public hearing on December 5, 2022. The State received no comments. In addition, as explained above, the revision meets the substantive SIP requirements of the CAA, including section 110 and implementing regulations.

The public comment period on the EPA's proposed rule opened February 16, 2024, the date of its publication in the Federal Register and closed on March 18, 2024. During this period, EPA received one comment. The comment is available for review in the docket for this action.

Comment 1: The commenter stated the date the state public comment period opened was incorrect in section V. of the proposed rule. The proposed rule incorrectly stated that the state provided public notice on the SIP revision from November 22, 2022, to December 5, 2022. The correct date the state public comment period opened is November 2, 2022.

Response 1: The EPA acknowledges that the proposed rule used an incorrect date for the opening of the state public comment period. While the error does not have a substantive impact on EPA's proposed action, EPA has changed the date the state public comment period opened in the final rulemaking.

The EPA is finalizing its proposal to approve revisions to the Iowa SIP and the Operating Permits Program at IAC 567-20.2, 567-25.1, 567-28.1, and 567-22.100.

In this document, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of the Iowa rules 567-20.2, Definitions, which provides definitions for air quality regulations; 567-25.1, Testing and Sampling of New and Existing Equipment, which regulates testing and sampling of equipment; 567-28.1, State-wide Standards, which regulates ambient air quality standards; and 22.100, Definitions for Title V Operating Permits, which provides definitions for state operating permits. The state effective date of these rules is March 15, 2023. The EPA has made, and will continue to make, these materials generally available through https://www.regulations.gov and at the EPA Region 7 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 State Implementation Plan, have been incorporated by reference by 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. 1

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 14094 (88 FR 21879, April 11, 2023);

• 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 subject to Executive Order 13045 (62 FR 19885, April 23, 1997) because it approves a state program;

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

• 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.

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).

Executive Order 12898 (Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations, 59 FR 7629, February 16, 1994) directs Federal agencies to identify and address “disproportionately high and adverse human health or environmental effects” of their actions on minority populations and low-income populations to the greatest extent practicable and permitted by law. EPA defines environmental justice (EJ) as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.” EPA further defines the term fair treatment to mean that “no group of people should bear a disproportionate burden of environmental harms and risks, including those resulting from the negative environmental consequences of industrial, governmental, and commercial operations or programs and policies.”

The Iowa Department of Natural Resources did not evaluate environmental justice considerations as part of its SIP submittal; the CAA and applicable implementing regulations neither prohibit nor require such an evaluation. EPA did not perform an EJ analysis and did not consider EJ in this action. Due to the nature of the action being taken here, this action is expected to have a neutral to positive impact on the air quality of the affected area. Consideration of EJ is not required as part of this action, and there is no information in the record inconsistent with the stated goal of E.O. 12898 of achieving environmental justice for people of color, low-income populations, and Indigenous peoples.

This action is subject to the Congressional Review Act, and EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. 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 June 18, 2024. 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 EPA amends 40 CFR parts 52 and 70 as set forth below:

Section 340B of the PHS Act entitled “Limitation on Prices of Drugs Purchased by Covered Entities,” was created under section 602 of Public Law 102-585, the “Veterans Health Care Act of 1992,” and codified at 42 U.S.C. 256b. The 340B Program is intended to enable covered entities “to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” H.R. Rep. No. 102-384(II), at 12 (1992). The Secretary of Health and Human Services (Secretary) has delegated the authority to administer the 340B Program to the HRSA Administrator, who has further delegated authority to the Office of Pharmacy Affairs (OPA), within HRSA, which oversees the 340B Program. Eligible covered entity types are defined in section 340B(a)(4) of the PHS Act, as amended. Section 340B(a)(1) of the PHS Act instructs HHS to enter into pharmaceutical pricing agreements (PPAs) with manufacturers of covered outpatient drugs. Under section 1927(a)(5)(A) of the Social Security Act, a manufacturer must enter into an agreement with the Secretary that complies with section 340B of the PHS Act “[i]n order for payment to be available under section 1903(a) or under part B of title XVIII of the Social Security Act for covered outpatient drugs of a manufacturer.” When a drug manufacturer signs a PPA, it agrees that the prices charged for covered outpatient drugs to covered entities will not exceed statutorily defined 340B ceiling prices. 340B ceiling prices are based on quarterly pricing reports that manufacturers must provide to the Secretary through the Centers for Medicare & Medicaid Services (CMS) and are calculated and verified by HRSA.

Section 7102 of the Patient Protection and Affordable Care Act (Pub. L. 111-148), as amended by section 2302 of the Health Care and Education Reconciliation Act (Pub. L. 111-152), jointly referred to as the “Affordable Care Act,” added section 340B(d)(3) to the PHS Act, which requires the Secretary to promulgate regulations establishing and implementing a binding 340B ADR process for certain disputes arising under the 340B Program. Under the 340B statute, the purpose of the 340B ADR process is to resolve (1) claims by covered entities that they have been overcharged for covered outpatient drugs by manufacturers and (2) claims by manufacturers, after a manufacturer has conducted an audit as authorized by section 340B(a)(5)(C) of the PHS Act, that a covered entity has violated the prohibition on diversion or duplicate discounts.

The 340B ADR process is an administrative process designed to assist covered entities and manufacturers in resolving disputes regarding overcharging, duplicate discounts, or diversion, as outlined in statute. This 340B ADR process is also designed to provide stakeholders the opportunity to have disputes evaluated in a timely, consistent, and fair and equitable manner.

Historically, HHS has encouraged manufacturers and covered entities to work with one another to attempt to resolve disputes in good faith. HHS recognizes that most disputes that occur between individual parties are resolved in a timely manner without HRSA's involvement. The 340B ADR process is not intended to replace these good faith efforts and should be considered only when good faith efforts to resolve disputes independently have been exhausted and failed.

In 2020, HHS issued a final rule ((85 FR 80632, Dec. 14, 2020) herein referred to as the 2020 final rule), which was codified at 42 CFR 10.20 through 10.24. HRSA began implementing the 2020 final rule when it became effective on January 13, 2021, by accepting claims through the 340B ADR process. HRSA encountered policy and operational challenges with implementation of the 2020 final rule and issued a notice of proposed rulemaking (NPRM) on November 30, 2022 (87 FR 73516), to propose a revision to the 340B ADR process.

HHS is issuing this final rule to revise the current ADR process by modifying the regulations issued under the 2020 final rule. As HHS has indicated in the 2022 NPRM, the 2020 final rule poses policy and operational challenges that are described in this section.

First, HHS is finalizing that the 340B ADR process be revised to be more accessible, administratively feasible and timely than the 2020 final rule. The 340B statute at section 340B(d)(3)(B)(ii) of the PHS Act, requires the establishment of deadlines and procedures that ensure that claims are resolved fairly, efficiently, and expeditiously. This ADR process should be an expeditious and less formal process for parties to resolve disputes than the 2020 final rule. An ADR process governed by the Federal Rules of Evidence (FRE) and Civil Procedure (FRCP), as envisioned in the 2020 final rule, does not advance these goals. For example, potential petitioners, many of whom are safety net providers in under-resourced communities, may lack the resources to undertake ADR even if it would be in their best interest to do so. In addition, reliance on the FRE and FRCP could create unnecessary delays in what is intended to be a timely decision-making process. Finally, it is challenging to assign ADR Panel members with expertise in the FRE or FRCP. In implementing the 2020 final rule, HRSA received questions from stakeholders about the formality of the ADR process and the legal requirements under the FRCP for submitting a petition and accompanying documents, e.g., whether the filings submitted must conform to the FRCP, which added to the complexity and difficulty of the ADR process.

HHS is finalizing an ADR process that is designed to assist covered entities and manufacturers in resolving disputes regarding overcharging, duplicate discounts, or diversion, as set forth in the 340B statute. HHS believes that for the ADR process to be workable, it needs to be accessible. HHS recognizes that many covered entities are small, community-based organizations with limited means. These covered entities may not have the financial resources to hire an attorney to navigate the complex FRCP and FRE requirements and engage in a lengthy, trial-like process, as envisioned in the 2020 final rule. The 340B statute does not compel such a process. The 2020 final rule also institutes a minimum threshold of $25,000 or where the equitable relief sought will likely have a value of more than $25,000 to be met before the petition could be filed. Given the smaller, community-based nature of many covered entities, HHS believes that flexibility should be maintained with respect to the amount of damages and is therefore not finalizing a minimum threshold for accessing the ADR process. However, covered entities and manufacturers should carefully evaluate whether the ADR process is appropriate for minor or de minimis claims given the time and resource investment required of the parties involved. After deliberate consideration of these issues and review of the comments, HHS is finalizing rule provisions that create a more accessible process where stakeholders have equal access to the ADR process and can easily understand and participate in it without having legal expertise or expending significant resources.

Second, the 2020 final rule states that the Secretary of HHS shall establish a 340B ADR Board that consists of at least six members appointed by the Secretary with equal numbers from HRSA, CMS, and the HHS Office of the General Counsel (OGC). It also requires the HRSA Administrator to select three members from the ADR Board to form a 340B ADR Panel and that each 340B ADR Panel include one ex-officio, non-voting member (appointed by the Secretary) from OPA to assist the 340B ADR Panel. The 2020 final rule states that HRSA and CMS ADR Board members must have relevant expertise and experience in drug pricing or drug distribution and that the OGC ADR Board members must have expertise and experience in handling complex litigation. While the 340B Program is related to drug pricing and drug distribution, it is a distinct program that requires knowledge of the 340B statute and specific 340B Program operations. Few OGC, CMS, and HRSA employees (outside of OPA) have both the required expertise as well as the availability (in addition to their day-to-day responsibilities) to serve on such 340B ADR Panels.

Therefore, HHS is finalizing rule provisions requiring that 340B ADR Panel members should be subject matter experts from OPA to ensure Panel members have specific knowledge of the authorizing statute and the operational processes of the 340B Program ( e.g., registration and program integrity efforts) and the ability to dedicate a portion of their time to ADR Panel service. Moreover, decisions by subject matter experts from OPA are less likely to conflict with current 340B policy. All members on the 340B ADR Panel will undergo an additional screening prior to reviewing a specific claim to ensure that the 340B ADR Panel member was not involved in previous agency actions related to the claim (including previous 340B ADR Panel decisions).

Third, HHS is finalizing final rule provisions stating that prior to initiating the ADR process, parties must undertake good-faith efforts to resolve the disputed issues. Historically, HRSA has encouraged parties to work in good faith and covered entities, and manufacturers have not had significant numbers of disputes due to the success of these good-faith-resolution efforts. 340B Program administrative improvements have narrowed the areas where parties had, in the past, disagreed over 340B Program issues. For example, HRSA released the pricing component of the 340B Office of Pharmacy Affairs Information System (340B OPAIS) in February 2019, which, for the first time, provided 340B ceiling prices to authorized covered entity users. OPAIS implementation has provided the necessary transparency to decrease disputes specific to the 340B ceiling price and its calculation. Outside of an issue involving some manufacturers placing restrictions on certain covered entities use of contract pharmacies, OPA has only received three covered entity overcharge complaints since making 340B ceiling prices available to covered entities through 340B OPAIS. Of additional note, prior to the 2020 final rule, stakeholders were able to utilize an informal dispute resolution process to resolve disputes between covered entities and manufacturers (61 FR 65406, Dec. 12, 1996) (“1996 guidelines”). There have been only four informal dispute resolution requests since the publication of the 1996 guidelines. Of the four informal dispute resolution requests received, two were terminated by HRSA due to non-participation by one of the parties, another was dismissed due to lack of sufficient evidence, and the last was terminated because the parties disputed each other's attempts of good faith resolution. The relatively small number may also be attributed to the parties' successful attempts to resolve issues in good faith. With this very small number of past informal disputes, the increased transparency in 340B pricing data, and HRSA's encouragement that parties work to resolve issues in good faith, HHS is finalizing final rule provisions that include an ADR process more closely aligned with the process that was established in the 1996 guidelines, and less trial-like and resource-intensive—for both the participants and HHS—than that established in the 2020 final rule.

Also, in the time since Congress enacted the 340B ADR statutory provision, HRSA implemented its extensive audit program in 2012, which ensures that participating covered entities and manufacturers can demonstrate compliance with all 340B Program requirements. On average, HRSA conducts 200 covered entity audits each fiscal year including child/associate sites and contract pharmacies associated with the covered entities, and issues findings in three areas: eligibility, diversion, and duplicate discounts. These findings vary in terms of severity—from covered entities not having the correct information in the 340B OPAIS to the diversion of 340B drugs to individuals who are not patients of the covered entity. HRSA conducts approximately five manufacturer audits each year and makes findings related to manufacturers charging above the 340B statutorily required ceiling price and manufacturers not reporting the required 340B pricing data to HRSA. Since HRSA began auditing covered entities and manufacturers, HRSA has identified 340B compliance concerns that would have previously been disputed. In addition to the extensive audit program, HRSA has also developed a comprehensive program integrity strategy to ensure compliance among all stakeholders participating in the 340B Program. These activities include quarterly checks of 340B Program eligibility, a self-disclosure and allegation process, which involves communication between OPA and the stakeholders regarding the compliance issue, and spot checks of covered eligibility documentation including contracts with State and local governments and contract pharmacy agreements.

Further, manufacturers are required to audit a covered entity prior to filing an ADR claim pursuant to section 340B(d)(3)(B)(iv) of the PHS Act. Since November 2022, HRSA has received two final audit reports from the manufacturers. The infrequency of finalized manufacturer audit reports along with the requirement that manufacturers audit covered entities prior to filing an ADR claim suggests that the number of manufacturer ADR claims will be low.

HRSA's impartial facilitation of good faith resolution efforts have allowed parties to take advantage of opportunities for open communication to better understand each other's positions and come to an agreement, without need for formal intervention by HRSA ( e.g., through a HRSA targeted audit).

Fourth, the ADR process should be reserved for those disputes set forth in the statutory ADR provision (overcharge, diversion, or duplicate discount). For example, a manufacturer that audited a covered entity may report its findings of alleged duplicate discounts identified by specific purchasing patterns over a period of time. The covered entity may disagree with the audit assessment of purchases. In this example, the matter would be best resolved through the ADR process as it involves an alleged duplicate discount violation.

This final rule aligns with the statutory provisions by outlining the specific types of claims that can be brought forth through the ADR process—claims for overcharge, diversion or duplicate discounts.

Fifth, HHS believes that there should be an opportunity for dissatisfied parties to seek reconsideration of the 340B ADR Panel's decision by HRSA. The 2020 final rule did not include such a process. This final rule establishes an appeals or reconsideration process option that would be made available to either party.

Therefore, based on these issues with the 2020 final rule, HHS is finalizing in this rule to (1) establish a more accessible ADR process that is reflective of an administrative process rather than a trial-like proceeding; (2) revise the structure of the 340B ADR Panel so that it is comprised of 340B Program subject-matter experts; (3) ensure that the parties have worked in good faith before proceeding through the ADR process; (4) more closely align the ADR process with the provisions set forth in the 340B statute (diversion, duplicate discounts, and overcharges); and (5) include a reconsideration process for parties dissatisfied with a 340B ADR Panel's decision.

HRSA received 112 non-duplicative comments and, after consideration of the comments received, HHS has developed this final rule.

Part 10 of title 42 of the Code of Federal Regulations has been revised to incorporate changes to the 340B ADR process, which is described below in conjunction with the comments received to each such section.

Comments received during the comment period addressed general issues that were raised in the preamble of the NPRM. We have summarized these general comments and have provided a response below.

Comment: The 2020 final rule instituted a minimum threshold of $25,000 or where the equitable relief sought would likely have a value of more than $25,000 as an ADR petition prerequisite. In the NPRM, HHS did not propose a minimum threshold for accessing the 340B ADR process. Many covered entity comments favored eliminating the threshold and argued that the 340B ADR process would be more accessible and would help ensure all providers could seek relief through the 340B ADR process. Most manufacturer comments were against eliminating the minimum threshold and argued that de minimis claims and frivolous claims would be filed through the 340B ADR process.

Response: Many 340B covered entities are small, rural or health care providers in underserved areas. The 340B ADR process should be accessible and available to these and all other stakeholders regardless of their volume of purchases or sales, and that flexibility should be maintained with respect to the amount of damages demonstrated when filing a 340B ADR claim; therefore, HHS is finalizing this provision as proposed without a minimum threshold for accessing the 340B ADR process. As noted above, HHS recognizes that most disputes that occur between individual parties are resolved in a timely manner without HRSA's involvement. The 340B ADR process should be considered only when good faith efforts to resolve disputes have been exhausted and failed.

Comment: The 2020 final rule established the 340B ADR process as reliant on the Federal Rules of Civil Procedure (FRCP) and the Federal Rules of Evidence (FRE). These rules govern civil proceedings and the introduction of evidence at civil and criminal trials in Federal courts. In the NPRM, HHS proposed removing reliance on these rules as the statute does not compel reliance on the FRCP and FRE and many covered entities lack the expertise in these legal rules as well as the resources to hire outside counsel to navigate them. Conflicting comments were received related to removal of reliance on the FRCP and FRE for the 340B ADR process. Some covered entity stakeholders appreciated the proposal to make the process more accessible and administrative rather than trial-like. Most manufacturer commenters raised concerns that HHS had not proposed an alternative procedural framework or evidentiary standards in the absence of the Federal Rules asserting that without standards, the ground rules would be subject to dispute in each case.

Response: HHS believes the new 340B ADR process will be a more accessible process, especially for covered entities with fewer resources, and will not require legal expertise during the claim resolution process. This approach will be more accessible to stakeholders and will use fewer stakeholder and government resources to resolve disputes. As such, this final rule sets up an accessible and comprehensible process without needing to invoke the more elaborate procedures available under the FRCP and FRE.

Comment: Some covered entity commenters approved of the proposal to automatically transfer claims under the 2020 final rule to the new process.

Other commenters disagreed that claims should be automatically transferred to the new process. These commenters specifically argued that HHS should proceed to handle the claims that are currently in the queue under the 2020 final rule as opposed to automatically transferring them to the new process. Further, one covered entity commenter generally stated that it was unclear whether HHS would be permitted under administrative law principles to transfer claims to the new process. The commenter suggested that such a transfer would conflict with the general principle that agencies must apply the law in effect at the time a decision is made, even when that law has changed during the course of a proceeding.

Most manufacturer commenters disagreed, arguing that all pending ADR claims should be dismissed upon issuance of a final rule, and claimants should be required to refile claims if they wished to initiate new ADR proceedings.

Response: After consideration of the comments received, HHS is finalizing this provision as proposed to provide for the automatic transfer of any pending claims to the new process. The decision to automatically transfer any claims that were submitted pursuant to the 2020 final rule and that are pending will minimize burden on all parties involved. For petitioners, it will mean that they do not have to resubmit claims under the new process. It will ensure the continuity of the 340B ADR process for the stakeholders involved in claims under the 2020 final rule, despite the new process as envisioned in this final rule.

In particular, we disagree that automatically transferring claims to the new process will run afoul of any administrative law principles. The general presumption that agencies apply the law in effect at the time a decision was made is of no moment here, because nothing in this final rule changes the substantive law governing disputes covered by the 340B ADR process. Transferring pending claims to the new process “takes away no substantive right but simply changes the tribunal that is to hear the case”; in such a situation, “[p]resent law normally governs.” Landgraf v. USI Film Prod., 511 U.S. 244, 274 (1994) (cleaned up). As the Supreme Court has explained, a law “govern[ing] the transfer of an action instituted prior to that statute's enactment” may “be applied in suits arising before their enactment without raising concerns about retroactivity.” Id. at 275. “Because rules of procedure regulate secondary rather than primary conduct, the fact that a new procedural rule [is] instituted after the conduct giving rise to the suit does not make application of the rule at trial retroactive.” Id.

This rule modifies procedural requirements for the 340B ADR process. It does not impair any rights possessed by parties when they acted, increase or affect their liability for past conduct, or impose new duties on the parties for already completed transactions. The changes in this final rule do not affect the substance of claims at issue for the ADR panel and accordingly could not be considered to have retroactive application that affects potential consequences understood by the parties when they began the 340B ADR process.

Claims that are automatically transferred will be first in the queue to be reviewed once this final rule becomes effective. Within a specified time period, HHS will allow petitioners of claims submitted under the 2020 final rule to submit additional information or revise their petition, as necessary, in support of their original claim. Petitioners will also be able to withdraw their pending claims. HRSA will work with affected parties to the extent that additional information is needed as part of the process outlined in this final rule. Details concerning this automatic transfer of claims will be provided to affected parties once this final rule becomes effective.

Comment: Many manufacturer commenters requested that HHS revise the 1996 manufacturer audit guidelines before it issues regulations on ADR. They stated that the guidelines are problematic because they impose onerous and unnecessary barriers on a manufacturer's ability to audit a covered entity for 340B compliance.

Response: Revisions to the 1996 manufacturer audit guidelines are outside the scope of this final rule. The requirement for a manufacturer to conduct an audit prior to initiating the 340B ADR process is a statutory requirement (section 340B(d)(3)(B)(iv) of the PHS Act). This rule is not meant to address how a manufacturer should conduct the audit—only that a manufacturer does conduct the audit prior to initiating the ADR process. Multiple manufacturers have utilized the 1996 manufacturer audit guidelines to conduct audits of covered entities. In the last 5 years, six have followed the guidelines to request audits of covered entities. During that same time frame, HRSA has not denied a request for a manufacturer audit of a covered entity, thereby, demonstrating the guidelines are not overly burdensome or present any barriers to a manufacturer's ability to perform an audit of a covered entity. Further, the guidelines present a clear and transparent process that may decrease burden on both parties with open dialogue and present an objective review of a covered entity's compliance.

Comment: Several manufacturer commenters raised that HHS has failed to establish procedures for manufacturers to issue refunds to covered entities for overcharges. They explained that this is a prerequisite to the 340B ADR process in order for it to be fair, efficient, and expeditious. Relatedly, they stated that there is a need for HHS to address refund procedures that permit offsets of covered entity overpayments and underpayments to a manufacturer.

Response: Specific procedures for refunds are outside the scope of this final rule, as the authority for this final rule directly relates to the development of an administrative process for the resolution of claims as described in section 340B(d)(3) of the PHS Act.

In the NPRM, HHS sought to add or revise the following definitions: “Administrative Dispute Resolution Panel (340B ADR Panel),” “340B Administrative Dispute Resolution Process,” “claim,” “consolidated claim,” “joint claim,” and “Office of Pharmacy Affairs.” HHS did not receive substantive comments on this section, and we are finalizing this section as proposed. HHS received numerous comments on defining the types of claims that could be adjudicated through the 340B ADR process, and HHS addresses those comments in § 10.21.

The 2020 final rule states that the Secretary shall establish a 340B ADR Board consisting of at least six members appointed by the Secretary with equal numbers from HRSA, CMS, and the HHS OG C. It also requires the HRSA Administrator to select three members from the ADR Board to form a 340B ADR Panel and that each 340B ADR Panel include one ex-officio, non-voting member (appointed by the Secretary) from OPA to assist the 340B ADR Panel. HHS proposed to revise the composition of the 340B ADR Panel that would review and make decisions for claims filed by covered entities and manufacturers. In the NPRM, HHS proposed that the Secretary appoint a roster of no fewer than 10 eligible individuals (Roster) consisting of OPA staff to serve on the 340B ADR Panels. Under the proposed rule, the OPA Director, or designee, selects at least three members for each 340B ADR Panel from the Roster of appointed staff; has the authority to remove an individual from the 340B ADR Panel and replace such individual; selects replacement members should a 340B Panel member be removed or resign; and screens for any potential conflicts of interests. After consideration of the comments received, HHS is finalizing this provision as proposed. HHS has addressed specific comments with respect to this section below.

Comment: Several covered entity commenters favored the proposal to have OPA staff serve as the 340B ADR Panel members, because the staff understand the intricacies of the 340B Program. They explained that the 340B Program is complex and it is important that individuals understand the complexities of the 340B Program to adjudicate these disputes in order to ensure a fair outcome. Some concerns were raised that the workload may be too much for a small OPA staff, and that an insufficient number of available panelists could lead to delayed decisions. Some covered entity commenters who favored OPA staff serving on 340B ADR Panels also recommended that other staff within HRSA could serve on 340B ADR Panels, such as staff working on programs with grantees that participate in the 340B Program.

Response: HHS agrees with the commenters that OPA staff should serve on 340B ADR Panels given their specialized knowledge and expertise of the 340B Program. Therefore, HHS is finalizing this provision as proposed. HHS also appreciates the commenters' concerns regarding the workload of OPA staff and the suggestion to include other HRSA staff that work with grantees participating in the 340B Program. However, as stated in the preamble of the proposed rule, OPA staff are subject matter experts and have years of experience with complex 340B matters involving covered entities and manufacturers. Given this expertise, HHS continues to believe that OPA staff are best suited to serve on 340B ADR Panels to ensure that the process is efficient and that claim reviews are handled in a timely fashion. This final rule limits 340B ADR Panel participation to OPA staff who have daily exposure to the complex issues facing both covered entities and manufacturers, to ensure there will be equitable, consistent, and fair 340B ADR adjudications. In addition, the OPA Director is aware of the workload of each OPA staff member and will be able to appropriately assign 340B ADR Panel members taking into consideration existing workload demands and priorities.

Comment: Some manufacturer commenters opposed OPA staff serving on 340B ADR Panels. These commenters argued that all OPA staff are involved in audits of covered entities and manufacturers, and with at least 10 staff planned to be on the ADR Roster under the proposed rule, there may be too many conflicts of interests and, in turn, the possibility and perception of bias may arise. Moreover, manufacturers opposing this policy were concerned that, given OPA's regular and extensive involvement in the day-to-day administration of the 340B Program, it may be difficult for OPA staff to approach adjudications without the appearance that they may be predisposed to particular views on relevant issues. Some commenters suggested Administrative Law Judges be the adjudicators of the 340B ADR process because they have the professional background, legal training and independence needed to resolve claims in a fair, consistent, and well-reasoned manner.

Response: HHS continues to believe that a Panel of OPA staff members who are steeped in 340B knowledge and experience and who can provide a consistent application of 340B policies will ensure a more efficient ADR adjudication process. As such, HHS is finalizing this provision as proposed. OPA staff members work to provide oversight of the 340B Program without bias—working with both manufacturers and covered entities in a manner that is impartial to the stakeholders involved. In addition, staff members work toward the goal of ensuring the integrity of the 340B Program and they do so without prejudice toward particular stakeholders. Those serving as 340B ADR Panel members will be fair and make consistent decisions in a well-reasoned manner using the 340B statute, applicable regulations, policies, and guidance documents. OPA staff have demonstrated their ability to follow the principles of fairness, consistency, transparency of applicable statute, regulations, policies, and guidance in their performance of covered entity and manufacturer audits. The breadth of experience, which we believe far outweighs any risks of perceived bias, among the OPA staff members serving on a 340B ADR Panel will ensure fairness, consistency, and transparency in ADR decisions. In addition, the OPA Director, in consultation with government ethics officials, will consider financial interest(s), current or former business or employment relationship(s), or other involvement of a prospective panel member or close family member who is either employed by or otherwise has a business relationship with an involved party, subsidiary of an involved party, or particular claim(s) expected to be presented to the prospective panel member. 1

In addition, specialized legal knowledge or training is not necessary for 340B ADR Panel members to effectively function in their role as the 340B ADR process is an administrative process that is best served by having 340B subject matter experience rather than legal experience. HHS disagrees with the recommendation that Administrative Law Judges should be appointed as adjudicators of the 340B ADR process.

The 340B ADR process is different, as it is designed as a process to resolve disputes between covered entities and manufacturers and in this final rule, HHS is establishing 340B ADR Panels comprised of OPA staff, who are uniquely suited to handle the complexities of the 340B Program, given their day-to-day administration of the Program. Processes are well established to provide staff opportunity for continuous learning and training on program implementation and oversight. OPA staff also have distinct knowledge of the 340B statute, laws, and policies as they apply that subject matter expertise throughout the work that is conducted on a daily basis to oversee the program and therefore will be able to handle such disputes effectively and efficiently.

Comment: Some manufacturer commenters argued that the new proposed rule has the same Appointments Clause and structural constitutional defects as the 2020 final rule. They stated that there is no mechanism for review of a 340B ADR Panel decision by a principal officer, appointed by the President with Senate confirmation, before that decision becomes “final agency decision.”

Response: HHS disagrees. Under this final rule, the Secretary will appoint a roster of eligible individuals (Roster) consisting of staff within OPA to serve on a 340B ADR Panel. When a 340B ADR claim is presented, the OPA Director will select three members from the Roster to serve on a 340B ADR Panel to review claims and make final agency decisions that will be binding on the parties involved, unless invalidated by an order of a Federal court. As discussed further in § 10.20(c), the Secretary, who is appointed by the President and Senate-confirmed, has the authority to intervene in the 340B ADR process at any time, including the ability to remove any individual from the Roster of 340B ADR Panelists for any reason. The Secretary had inherent authority to take these same actions under the 2020 final rule, and the codified regulatory text now explicitly addresses this authority. Specifically, as outlined further below, any 340B Panel decision or reconsideration decision regarding a 340B ADR Panel's decision will be effective 30 business days from issuance and serve as the final agency decision unless within 30 business days of issuance, the Secretary makes a determination that the Secretary will review the decision.

In the NPRM, HHS proposed that the OPA Director would ensure that each 340B ADR Panel member is screened prior to reviewing a claim and that there are no conflicts of interest between the parties involved in the dispute and the 340B ADR Panel member. The conflict-of-interest review includes financial interest(s), current or former business or employment relationship(s), or other involvement of a prospective panel member or close family member who is either employed by or otherwise has a business relationship with an involved party, subsidiary of an involved party, or particular claim(s) expected to be presented to the prospective panel member. Under the proposed rule, members of the 340B ADR Panel will also undergo additional screening prior to reviewing a specific claim to ensure that the 340B ADR Panel member was not involved in the previous agency action, including previous 340B ADR Panel decisions, concerning the specific issue in the claim. HHS received several comments on this provision, which are summarized below. After a review and analysis of the comments, HHS is clarifying the additional conflict of interest screening as discussed in more detail below.

Comment: Both manufacturer and covered entity commenters agreed that HHS should evaluate conflicts of interest with regard to a 340B ADR Panel member; however, they recommended that the parties should have the ability to make objections to a proposed panelist. Some commenters mentioned the small size of the OPA staff may make having too broad of screening for conflict of interest, such as having worked on an audit, difficult to fill a panel with subject matter experts. Commenters also requested the policies and procedures for screening panel members be publicly outlined.

Response: HHS will inform the parties involved in the ADR of Panel members for that specific claim. The OPA Director has full knowledge of a Panel member's workload and will select Panel members for each claim, which will also be based on the OPA Director's awareness of any potential conflicts of an OPA staff member, including financial interest conflicts, current or former business relationships or other involvement. We believe that the process sufficiently addresses the need to screen for conflicts and allowing the parties to object to proposed panelists or the specific policies or procedures for screening panel members would unduly lengthen the 340B ADR process. To the extent a conflict arises regarding an assigned panelist, the OPA Director is authorized to make changes to the panel composition. The commenters also raised concern about whether the additional conflict of interest screenings would make it difficult to fill 340B ADR Panel positions, given the small staff within OPA. In order to make this process fair, efficient and transparent, HHS is retaining the policy that a conflict of interest screening will be conducted on all 340B ADR Panel members to ensure there is no conflict of interest with respect to financial conflicts or current/former business relationships or other involvement of a prospective panel member or close family member who is either employed by or otherwise has a business relationship with an involved party, subsidiary of an involved party in an 340B ADR claim. However, based on the comments received, HHS is clarifying that the additional screening in § 10.20(b)(2) will be conducted to ensure that a 340B ADR Panel member was not directly involved in a decision concerning the specific issue of the ADR claim as it relates to the specific covered entity or manufacturer involved, including previous 340B ADR Panel decisions. This clarification responds to the concerns of the commenters and balances the fact that 340B ADR Panel members will be selected from a relatively small staff. Indirect or tangential involvement in matters affecting a specific covered entity or manufacturer will not be considered a conflict of interest.

To the extent that any significant conflict issue is raised outside of those specifically addressed in § 10.20(b), the OPA Director or the Secretary still have the discretion to remove a 340B ADR Panel member (as addressed in § 10.20(a) and (c) of this final rule, respectively).

The NPRM proposed to codify in regulatory text the Secretary's authority to remove any individual from the Roster of 340B ADR Panelists for any reason, including from any 340B ADR Panel to which the individual has already been assigned. After a review of the comments received, HHS is modifying this provision by clarifying the Secretary's role in the 340B ADR process.

To respond to commenter requests for transparency, HHS commits to publishing these policies and procedures for screening panel members on a HRSA public-facing website within 120 calendar days of the publication of this final rule and, likewise, in the event that these policies and procedures are modified, HHS commits to publishing these policies and procedures for screening panel members on a HRSA public-facing website within 120 calendar days of such modification.

Comment: Many manufacturers argued that while the preamble to the proposed rule suggests that the Secretary would have the inherent authority to review and reverse or alter the 340B ADR Panel's decision, it was not explicitly included in the proposed regulatory text. Further, they stated that the Secretary does not exercise sufficient control over ADR panelist decisions.

Response: There are no restrictions on the Secretary's oversight or supervision over the 340B ADR process. The Secretary has the authority to intervene in the 340B ADR process at any time, has the authority to remove Panel members from the Roster, and has the authority to review, reverse, or alter any decision made by the 340B ADR Panel or any reconsideration decision made by the HRSA Administrator as outlined in § 10.24. In consideration of the comments received, HHS is modifying this provision to make explicit that the Secretary has the authority to review, alter, reverse, or uphold any 340B ADR Panel or reconsideration decision. Specifically, as outlined further below, any 340B Panel decision or reconsideration decision regarding a 340B ADR Panel's decision will be effective 30 business days from issuance and serve as the final agency decision unless within 30 business days of issuance, the Secretary makes a determination that the Secretary will review the decision. If the Secretary reviews and reverses, alters, or upholds any 340B ADR Panel or reconsideration decision, the Secretary's decision will serve as the final agency decision and will be binding upon the parties involved in the dispute, unless invalidated by an order of a Federal court.

The proposed rule outlined the duties of the 340B ADR Panel, which included:

(1) reviewing and evaluating claims, including consolidated and joint claims, and documents and information submitted by covered entities and manufacturers;

(2) reviewing and possibly requesting additional documentation, information, or clarification of an issue from any or all parties to make a decision;

(3) evaluating claims based on information received, unless, at the 340B ADR Panel's discretion, the nature of the claim necessitates that a meeting with the parties be held;

(4) consulting with other Federal agencies while reviewing the claim, at the 340B ADR Panel's discretion; and

(5) making decisions on each claim.

There were no substantial comments received on this provision; therefore, HHS is finalizing the provision as proposed.

In accordance with section 340B(d)(3) of the PHS Act, 340B ADR claims may include: (1) claims by a covered entity that it has been overcharged by a manufacturer for a covered outpatient drug; and (2) claims by a manufacturer, after it has conducted an audit of a covered entity pursuant to section 340B(a)(5)(C) of the PHS Act, that the covered entity has violated section 340B(a)(5)(A) of the PHS Act, regarding the prohibition of duplicate discounts, or section 340B(a)(5)(B) of the PHS Act, regarding the prohibition of the resale or transfer of covered outpatient drugs to a person who is not a patient of the covered entity. The NPRM proposed that all claims must be specific to the parties identified in the claims. Based on the comments received, HHS is finalizing this provision as proposed. HHS has also decided to provide an illustrative but not exhaustive list of examples of the types of overcharges, diversion, and duplicate discount claims that may be eligible for the 340B ADR process.

Comment: Several covered entity commenters argued that manufacturers should not be allowed to bring claims related to a covered entity's eligibility and suggested that manufacturers cannot pursue claims alleging Medicaid managed care duplicate discount violations. These commenters believe that these types of claims are outside those permitted under the ADR statute.

Response: Generally, HHS agrees with the exclusion of claims regarding covered entity eligibility but disagrees with the commenters on claims related to duplicate discounts in Medicaid managed care. This final rule aligns claims to those expressly set forth in section 340B(d)(3) of the PHS Act: (1) claims by covered entities that they have been overcharged by manufacturers for drugs purchased under this section and (2) claims by manufacturers, after a manufacturer has conducted an audit of a covered entity, as authorized by section 340B(a)(5)(C) of the PHS Act, that a covered entity has violated the prohibitions against duplicate discounts and diversion (sections 340B(a)(5)(A) and (B) of the PHS Act). As duplicate discounts can occur with drugs subject to rebates under both Medicaid fee-for-service and Medicaid managed care, HHS declines to exclude Medicaid managed care claims from the 340B ADR process. In addition, although the eligibility of a covered entity is generally outside of the scope of the 340B ADR process; if resolution of a diversion claim depends in whole or in part on whether a claimant is an eligible covered entity, then that claim may proceed through the 340B ADR process, given that the 340B statute permits claims for overcharges, diversion, and duplicate discounts. In this final rule, the role of the 340B ADR Panel is to independently review and apply the 340B statute and applicable regulations, policies, and guidance documents to the case-specific factual circumstances at issue in an overcharge, diversion, or duplicate discount dispute.

Comment: Some covered entity commenters urged HHS to reinstate language from the 2020 final rule to make clear that covered entities may bring an overcharge claim in situations in which a manufacturer has limited the covered entity's ability to purchase a covered outpatient drug at or below the 340B ceiling price.

Response: HHS agrees and has modified § 10.21(a)(1) to further explain that an overcharge claim generally includes claims that a manufacturer has limited the covered entity's ability to purchase covered outpatient drugs at or below the 340B ceiling price.

Comment: Some covered entity commenters recommended that the final rule include a definition for the term “overcharge,” to mean an attempt to collect a price in excess of the 340B price for a covered outpatient drug, any attempt to cause a drug wholesaler to decline to offer 340B pricing on a covered outpatient drug to a covered entity, and any refusal by a manufacturer to sell a covered outpatient drug at 340B pricing.

Response: When an overcharge claim is presented before a 340B ADR Panel, the Panel will follow the 340B statute, relevant case law, all applicable regulations, and consider 340B policies and guidance documents when evaluating 340B ADR claims. One example of an overcharge claim in the 340B ADR process would be a claim that a manufacturer has limited the covered entity's ability to purchase covered outpatient drugs at or below the 340B ceiling price or the manufacturer does not offer the 340B ceiling price. We do not believe that an explicit definition of the term “overcharge” is needed in light of the process discussed above for addressing an overcharge claim.

Comment: Many manufacturer commenters objected to the lack of an explicit definition in the proposal for the terms “patient” or “diversion.” They explained that covered entities are prohibited from selling or otherwise transferring drugs purchased under the 340B Program to a person who is not a patient of the entity in accordance with section 340B(a)(5)(B) of the PHS Act. These commenters believe that HRSA should revise and clarify its current guidance (61 FR 55156 (Oct. 24, 1996)), to strengthen administration of the 340B Program, including the 340B ADR process and the parties' ability to work together to resolve disputes in good faith as proposed in § 10.21(b).

Response: Revision of the 1996 patient definition guidance is outside the scope of this rule. When a diversion claim is presented before a 340B ADR Panel, the Panel will follow the 340B statute and all applicable regulations, and consider 340B policies and guidance documents when evaluating 340B ADR claims. Examples of a diversion claim that may be submitted (after a manufacturer has conducted an audit of a covered entity), include but are not limited to: (1) transferring of covered outpatient drugs to a patient where there was no record of the individual's health care or no provider relationship or (2) transferring covered outpatient drugs to an individual who is an inpatient. Similarly, examples of a duplicate discount claim include but are not limited to: (1) if it is found after an audit of a covered entity that the covered entity billed Medicaid without the site being listed on the Medicaid Exclusion File and the manufacturer paid a State rebate or (2) if it is found after an audit of a covered entity that the manufacturer paid a State rebate and the covered entity had incomplete or inaccurate information on the Medicaid Exclusion File.

As proposed in the NPRM, a covered entity or manufacturer must file a 340B ADR claim in writing to OPA within 3 years of the date of the alleged violation. HHS also proposed that any file, document, or record associated with the claim that is the subject of a dispute must be maintained by the covered entity and manufacturer until the date of the final agency decision. Before filing a claim, each stakeholder must provide appropriate documentation, including documentation of communication with the opposing party to resolve the matter in good faith. In the case of a covered entity, the covered entity must provide documentation to support that it has been overcharged by a manufacturer, in addition to any other documentation requested by OPA. Covered entities are not permitted to file a claim against multiple manufacturers. A manufacturer must provide documents that show it audited the covered entity and that are sufficient to support its claim that a covered entity has violated the prohibition on diversion and/or duplicate discounts, in addition to any other documentation as may be requested by OPA. HHS received several comments on these provisions and considered them carefully. For the reasons detailed below, HHS is finalizing these provisions as proposed.

Comment: Some covered entities commenters requested clarification that the 3-year records limitation period begins on the date of sale or payment at issue except when the manufacturer issues a restatement of the average manufacturer price (AMP), best price, customary prompt pay discounts, nominal prices, or other data that affects the 340B ceiling prices. Some of these commenters recommended that HHS include an undue hardship exemption to the 3-year limitation on claims to benefit small rural covered entities. They explain that small rural providers may submit ADR claims without outside counsel. Further, they state that alongside other challenges that a covered entity could be facing, pulling together the needed documentation to file a claim could be burdensome for covered entities.

Some manufacturer commenters expressed that because of the manufacturer audit requirement, which may take significant time to complete, the final rule should “toll” the 3-year period for manufacturer ADR claims from the point when a manufacturer first seeks to conduct an audit until the audit concludes with the completion of the audit report.

Response: While HHS believes that the 3-year limit is sufficient, there may be times when the initial reviewer will account for extenuating circumstances. For example, the timeline for manufacturer audits of covered entities depends on a variety factors, which may affect when they are finalized. Another example is when data affecting the 340B ceiling price are revised, such as where AMP or best price are corrected or restated, an alleged violation would have not occurred until the data were revised. These examples are not exhaustive but illustrate situations that may warrant flexibilities. In addition, under the current ADR process, the 3-year time period has proved to be sufficient for the parties. Noting these flexibilities, HHS is finalizing the provision as proposed.

Comment: Most commenters were generally supportive of the proposal that documentation of “good faith” efforts is required before a party can initiate a claim through the 340B ADR process. However, some manufacturer commenters believe that HHS should specify the types of documents required to evidence “good faith”, including, but not limited to, documentation demonstrating that the covered entity has contacted the manufacturer about the potential issue and has given the manufacturer sufficient notice of a potential claim before initiating 340B ADR process.

Some covered entity commenters recommend that HHS remove the “good faith” requirement before filing a claim. Specifically, they argue that the act of overcharging a covered entity could not be an act of good faith and engaging with the manufacturer would be futile and cause unnecessary delay. These commenters argue that a “good faith effort” prerequisite to filing a claim requires the agency to make difficult determinations regarding whether an attempt at resolution was made in “good faith.”

Response: After consideration of the comments received, HHS is finalizing this provision as proposed. Given the resources required to pursue an ADR claim, HHS encourages covered entities and manufacturers to work in good faith to resolve disputes. Good faith attempts include for example, at least one instance of written documentation demonstrating that the initiating party has made attempts to contact the opposing party regarding the specific issues cited in the ADR claim. The requirement to engage in good faith efforts may resolve disputes before the need to file a petition in many cases. In addition, HHS has historically encouraged manufacturers and covered entities to work with each other to attempt to resolve disputes in good faith, and most disputes have been resolved in a timely manner without needing HRSA's involvement. Also, the 340B ADR process is not intended to replace these good faith efforts and should be considered only when good faith efforts to resolve disputes have been exhausted and failed.

Good faith efforts and documentation can include communication between parties to obtain clarifications or to provide explanations that may not be readily apparent and may provide perspective to either party that may help mitigate concerns. For example, HRSA currently has a process in place when a covered entity is unable to obtain a 340B price from a manufacturer. In this case, HRSA can facilitate good faith efforts between the parties, and oftentimes help them resolve disputes, which typically are as a result of an error or misunderstanding.

Comment: Some manufacturer commenters encouraged HHS to protect the proprietary and confidential components of all parties' information throughout the 340B ADR process. They explained that for the 340B ADR process to work efficiently, parties need assurances that the proprietary and confidential information that they disclose will not be made publicly available.

Response: HHS will work to protect the proprietary and confidential information of the parties to the maximum extent that it is able to pursuant to current law.

The NPRM proposed that two or more covered entities may jointly file claims of overcharges by the same manufacturer for the same drug. The NPRM also provided that an association or organization may file on behalf of one or more covered entities representing their interests pertaining to overcharging by a single manufacturer for the same drug(s). The proposed rule provided specific parameters for covered entities filing joint claims and for associations/organizations filing claims on behalf of one or more covered entities, including that each covered entity meets the requirements for filing the ADR claim and that there is documentation of each covered entity's consent.

The NPRM also proposes that a manufacturer or manufacturers may request to consolidate claims brought by more than one manufacturer against the same covered entity if each manufacturer could individually file a claim against the covered entity, consents to the consolidated claim, meets the requirements for filing a claim, and the 340B ADR Panel determines that such consolidation is appropriate and consistent with the goals of fairness and economy of resources. The statutory authority for implementing the 340B ADR process does not address consolidated claims on behalf of manufacturers by associations or organizations representing their interests. After a careful review and consideration of the comments received, HHS is finalizing this provision as proposed.

Comment: Many covered entities commenters indicated that the NPRM improperly limits claims brought by associations and organizations representing covered entities to only those covered entities that consent to the claim being asserted on their behalf. These commenters argued that the criteria for inclusion in an organizational claim in the 340B statute is merely membership in the organization. Representation by associations, regardless of whether the entity consents, allows covered entities to access the process more easily. They argued that requiring consent from each member of an organization introduces unnecessary resource and time burden—and could significantly delay the filing of claims that are sometimes time sensitive.

Response: An ADR claim could substantively affect a covered entity's ability to recover for 340B overcharges, as well as a covered entity's relationship with a manufacturer. However, after consideration of the comments, HHS, will permit associations or organizations filing a claim on behalf of its members to submit an attestation, rather than submitting signatures from each individual covered entity, that they have confirmed that all of the individual covered entities have agreed to be part of the ADR claim.

As part of the initial review of the claim, OPA will review the attestation statement submitted by the organization or association. If attestation documentation is missing, OPA will follow-up to obtain the attestation.

Comment: A few manufacturer commenters requested that HHS prohibit covered entities or manufacturers from asserting any individual claim that overlaps with a consolidated claim or joint claim. Commenters also urged HHS to clarify that the requirement for a joint claim by covered entities must involve the “same drug or drugs,” which would mean that the alleged overcharges must involve substantially the same national drug code (NDC) and quarters.

Response: As part of the initial claim review, OPA will evaluate whether an individual claim would overlap with a consolidated claim or joint claim. If an overlap exists, OPA will contact the parties involved and request that they resolve the discrepancy. In addition, the review will also ensure that the alleged overcharge involves the same NDCs for joint claims.

Comment: Several manufacturer commenters argued that HHS should recognize manufacturers' ability to pursue claims through a trade association or agent of their choice. The statute required HHS to allow the combining of claims and permit claims to be brought on behalf of covered entities by associations or organizations—however, commenters assert that the statute does not preclude HHS from extending this ability to manufacturers. Commenters also argued that few manufacturers will utilize the 340B ADR process due to the onerous requirements of the 2020 final rule and the audit requirement placed on them. They explained that this requirement would further preclude manufacturers from accessing the 340B ADR process by requiring them to wait several years for each manufacturer to audit a covered entity before bringing a consolidated claim.

Response: Section 340B(d)(3)(B) of the PHS Act permits associations to file joint ADR claims on behalf of covered entities; however, it does not include similar language for associations to file consolidated claims filed on behalf of manufacturers. In addition, due to the requirement that a manufacturer must first audit a covered entity before submitting an ADR claim, it would be difficult to have each manufacturer of the association or organization conduct an audit of a covered entity before filing a claim. Therefore, HHS is finalizing this provision as proposed. Regarding the commenter's argument about the audit requirements, HHS does not have the authority to waive this statutory requirement. Section 340B(d)(3)(B)(iv) of the PHSA requires that a manufacturer conduct an audit of a covered entity pursuant to subsection (a)(5)(C) as a prerequisite to initiating the 340B ADR process against a covered entity.

The proposed rule set forth the deadlines and procedures for filing a claim, including that OPA would conduct an initial review to determine whether the claim meets certain requirements as set forth by the statute and regulations. HHS proposed that OPA staff reviewing the initial claim review may not be appointed to serve on the 340B ADR Panel reviewing the specific claim. Additionally, under the proposed rule, OPA could request additional information of the initiating party and the party would have 20 business days from the receipt of the request to respond and if the party does not respond (or request and receive an extension to respond during that time period), the claim would not move forward to the 340B ADR Panel for review. The proposed rule also indicates that a written response would be sent to the initiating party once the claim is complete and OPA would send that verification of completion to the opposing party with instructions regarding the 340B ADR process, including timelines and information on how to submit their response as outlined in § 10.21(e). Once OPA receives the opposing party's response, OPA would notify both parties, either advising that the claim would move forward for the 340B ADR Panel for review or that OPA determined the claim did not meet the requirements as set forth in § 10.21(b) and the reasons why. HHS proposed that for any claim that did not proceed to review by the 340B ADR Panel, the claim could be revised and refiled if there were new information to support the alleged statutory violation and the claim meets the criteria set forth in the statute and the regulation. HHS received several comments related to this provision and is finalizing this provision as proposed.

Comment: Several commenters suggested that HHS clarify that OPA's initial review of the claim is limited to determining whether the claim meets all the information requirements to file a claim and does not involve a factual or legal review of the claim. They state that at this stage, OPA should only be requesting additional information to satisfy the filing requirements. The determination as to whether a claim is substantiated should be reserved exclusively for the 340B ADR Panel.

Response: During the initial claim review, OPA will review a claim only for completeness, and not make any determinations whether a claim is substantiated. That determination will be reserved for the 340B ADR Panel.

When responding to a submitted claim, the NPRM proposed that the opposing party would have 30 business days to submit a written response to OPA upon receipt of notification that the claim is deemed complete. The proposed rule indicated that the opposing party may request an extension of the initial 30 business days to respond. Once the opposing party's response is received, OPA would provide a copy to the initiating party as indicated in § 10.21(d). The proposed rule also explained that if the opposing party's response was not received or the party elects not to participate in the 340B ADR process, OPA would notify both parties that the claim has proceeded to 340B ADR Panel review, and the 340B ADR Panel will render its decision after review of the information submitted in the claim. HHS carefully considered the comments received, which are summarized below, and is finalizing the provision as proposed.

Comment: Some commenters suggested that HHS adopt a timeframe of 60 calendar days (with the possibility of extensions) for opposing parties to respond to claims. These commenters are concerned with the proposal to allow 340B ADR Panels to draw an adverse inference if the opposing party does not respond. They argued the proposed rule does not contain any standard that would ensure that adverse inferences are drawn against a party only in narrow circumstances. Finally, commenters noted that the final rule should recognize that an “adverse inference” is an extraordinary sanction, and there should be clear standards for when such a sanction is appropriate.

Response: HHS is revising this rule to remove references to adverse inferences, but otherwise finalizing this rule as proposed. Consistent with the statutory goals of efficiency, fairness and timeliness, we believe a response in 30 days is an adequate amount of time. However, HHS recognizes that there may be instances that require time beyond the stated deadlines, such as availability of key personnel. Depending on the circumstances presented, the 340B ADR Panel may exercise its discretion in granting additional time if warranted.

In addition, if a non-responsive party fails to respond before the deadline, the 340B ADR Panel will render its decision based on the information available to it during the adjudication process. If a party chooses not to respond, the 340B ADR Panel will move forward with its decision and there is a possibility that the decision may not be in favor of the non-responsive party.

Under the proposed rule and in accordance with section 340B(d)(3)(B)(iii) of the PHS Act, covered entities may discover or obtain information and documents from manufacturers and third parties relevant to a claim that the covered entity has been overcharged by a manufacturer. The NPRM proposed that the covered entity submit a written request within 20 business days of the receipt from OPA that the claim was forwarded to the 340B ADR Panel for review. The NPRM proposed that such covered entity document requests be facilitated by the 340B ADR Panel, including a review of the information/document request and notifying the covered entity if the request is not reasonable, not relevant or beyond the scope of the claim, and would permit the covered entity to resubmit a revised request if necessary.

The manufacturer (and any affiliated third-party agents of the manufacturer—wholesalers or other third parties) must respond to the request within 20 business days of receiving the request. The manufacturer must fully respond, in writing, to an information/document request from the 340B ADR Panel by the response deadline. An extension will be granted by notifying the 340B ADR Panel in writing within 15 business days of receipt of the request. The NPRM proposed that if a manufacturer fails to fully respond to an information request, the 340B ADR Panel shall draw an adverse inference and proceed with the facts that the 340B ADR Panel has determined have been established in the proceeding.

Many commenters recommended changes to the proposed provision allowing parties to request and receive information during the 340B ADR process, including allowing a manufacturer to submit an information request—which was not contemplated by the statute. HHS carefully reviewed the comments received, which are summarized below, and is finalizing this provision as proposed.

Comment: Commenters argued HHS should establish a process for manufacturers to directly request additional information from covered entities during an ADR proceeding. These commenters requested that HHS extend the timeframe for manufacturers to respond to additional information and document requests from 20 business days to 60 calendar days (with the possibility of reasonable extensions).

Response: Section 340B(d)(3)(B)(iii) of the PHS Act requires a process whereby a covered entity may discover or obtain information and documents from manufacturers and third parties relevant to a claim that the covered entity has been overcharged by a manufacturer. The statute does not have a similar provision for manufacturers and manufacturers have the ability to gather needed information through the audits they are required to conduct prior to filing ADR claims. As such, the provision will be finalized as proposed.

In addition, HHS believes a response from manufacturers for additional information and document requests in 20 business days is an adequate amount of time. Any such additional time will unduly delay the 340B ADR process and run counter to the goals of fairness, efficiency, and timeliness. This final rule also contains a provision through which manufacturers may request an extension of this deadline.

Aligned with section 340B(d)(3)(B)(ii) of the PHS Act, HHS has sought to ensure that the 340B ADR decision process would ensure that its review and decision of the claim is conducted in a fair, efficient, and expeditious manner. HHS proposed that the 340B ADR Panel would conduct an initial review of the claim to determine if the specific issue that would be brought forth in a claim is the same as or similar to an issue that is pending in Federal court. If this determination is made, the 340B ADR Panel would suspend review of the claim until such time as the issue is no longer pending in Federal court. If no such issue exists, the proposed rule explained that the 340B ADR Panel would review the documents submitted by the parties and determine if there is adequate support to conclude that an overcharge, diversion, or a duplicate discount has occurred in the specific case at issue. As discussed in more detail below and after consideration of the comments received on this proposal, HHS is removing this proposed provision from this final rule to allow claims on issues pending in Federal court to proceed through the 340B ADR process.

In addition, the NPRM proposed that the 340B ADR Panel would prepare a decision that would represent the determination of a majority of the 340B ADR Panel members' findings and include an explanation regarding each finding. Once the letter has been transmitted to the OPA Director and the parties involved, either party may request that the HRSA Administrator reconsider the 340B ADR Panel decision or the HRSA Administrator may decide to initiate a reconsideration without such a request as outlined in § 10.24. Under the NPRM, after 20 business days of the issuance of the 340B ADR Panel decision, there is no request for reconsideration from either party and the HRSA Administrator has not initiated a reconsideration, the 340B ADR Panel's decision letter will serve as the final agency decision and will be binding upon the parties involved in the dispute, unless invalidated by an order of a Federal court. The NPRM proposed that the OPA Director would then determine any necessary corrective action or consider whether to take enforcement action, and the form of that action, based on the final agency decision. Based on comments received and as discussed in detail below, HHS is modifying this proposal in this final rule by including a timeframe by which the 340B ADR Panel decisions will be issued to ensure that 340B ADR claims are resolved in a timely manner. Finally, HHS will address the OPA Director's role in making determinations for corrective action in future guidance and other clarifications as discussed below.

Comment: The NPRM proposed that if the ADR Panel determines that a specific issue in a claim is the same as, or similar to an issue pending in Federal court, the ADR Panel would suspend review of the claim until such time the issue is no longer pending in Federal court. The NPRM expressly solicited comments from stakeholders on this issue and HHS received significant comments. Some commenters favor suspending claims until they are resolved in Federal court as it would limit the risk of using limited ADR resources on complex legal questions that would also be considered by the courts. Without a suspension of claims, they argue there could be a risk that the ADR Panel decision would be superseded by a Federal court ruling.

In contrast, other commenters strongly oppose the proposal and argue why the provision should not be finalized. In general, the commenters raised the following arguments:

• Commenters opposing the policy expressed that an issue relevant to an ADR proceeding may be pending in several district courts and the court decisions may diverge and not achieve a final consistent resolution on the issue. They stated it is unclear how an ADR Panel would decide after the rulings and whether the ruling would be based on the outcome of the Federal court decision, and if so, which court decision would control in the case of conflicts.

• Commenters also argued that Congress created the 340B ADR process since covered entities have limited options for bringing legal claims against manufacturers. They asserted that suspending claims is a divergence from the statute, as the statute vests the ADR Panel with authority to issue final agency decisions that are binding on the parties involved through adjudication of 340B disputes. They argued that the provision violates the 340B statute and the Administrative Procedure Act (APA) as it prevents the 340B ADR Panel from resolving a claim for an indefinite period of time based solely on the determination that a Federal lawsuit is addressing an issue that is the same or similar to the one included in an ADR claim.

• Commenters also expressed that the NPRM did not include rules that would govern the 340B ADR Panel's determination that it would not review a claim nor is there any mechanism for a covered entity or manufacturer to contest a 340B ADR Panel's determination to suspend review.

• Commenters cited the 2011 U.S. Supreme Court ruling in Astra ( Astra USA, Inc. v. Santa Clara County, 563 U.S. 110 (2011)) that determined that covered entities do not have a cause of action to sue manufacturers for 340B violations, but noted that covered entities do have the option of pursuing recourse through the 340B ADR process.

• Finally, commenters opposing the policy explain that the suspension of the 340B ADR Panel review may lead a 340B ADR Panel to defer to a Federal court's decision on a 340B compliance issue, thereby abrogating the 340B ADR Panel's duty to interpret 340B statutory requirements. These commenters stated that this is contradictory to the role of the 340B ADR Panel envisioned by the NPRM, which is to independently review and apply 340B law and policy to the case-specific factual circumstances at issue.

Response: After review of the comments received, HHS is removing the provision at § 10.23 in the NPRM that would suspend review of ADR claims if the issue is the same as or similar to an issue that is pending in Federal court. By allowing claims that are the same as or similar to those pending in Federal court to move through the 340B ADR process, HHS is proceeding consistent with the Astra decision and meeting its statutory mandate to establish and implement a 340B ADR process including the establishment of such deadlines and procedures to ensure that claims involving certain 340B disputes are resolved fairly, efficiently, and expeditiously. Therefore, this final rule will remove the proposed § 10.23(a) and revise § 10.23(b) to allow for a claim to proceed through the 340B ADR process, regardless of whether it is the same as or similar to one that is pending in Federal court.

Comment: Many commenters argued that HHS should impose a timeframe for ADR Panel decisions to ensure that 340B ADR claims are resolved in a timely manner. Some suggested 45, 90, 120, or 180 days. Some explained that 120 days is longer than the 90-day timeframe that Medicare administrative law judges are subject to for Medicare claims appeals and would be a sufficient amount of time. Commenters assert that HHS should clarify that if an ADR panel has not issued a decision within 120 days, a claimant should be able to bypass the 340B ADR process and proceed to Federal court. Most commenters agreed that the decision should be rendered no later than within one year.

Response: Based on the comments received, HHS is clarifying that the expectation is that the 340B ADR Panel will make a decision on a claim within one year of receiving the claim for review. However, HHS recognizes that this general timeframe may not be suitable in every situation, as there may be complexities that warrant additional time beyond the one year timeframe. Additional time may be necessary, for example, if a claim is submitted and the 340B ADR Panel requires additional material, must determine whether there are overlapping claims, must determine whether a covered entity consented to an organizational claim, or seeks to consult with, as appropriate or necessary, other staff within OPA, other HHS offices, other Federal agencies, or with outside parties. Depending on the complexity of the issue, this timeframe may exceed the one year timeframe set forth in this final rule.

HHS does not believe it possible to list out every possible exception in this final rule as there may be situations that are beyond the control of the 340B ADR Panel and cannot be anticipated or predicted in this final rule; however, these examples serve to illustrate circumstances when it may take longer than one year for a 340B ADR Panel to render a decision. In any event, HHS does not believe that many claims that are submitted under this final rule will take longer than a year to resolve. As such, HHS is clarifying that the expectation is the 340B ADR Panel decisions will be issued within a one year time period; however, the 340B ADR Panel will inform the parties, no later than 1 year from the date a claim is deemed complete, if the forthcoming decision will exceed that one year timeframe and provide an explanation as to why the decision on the claim will exceed one year.

Comment: Many commenters requested there be the option for an in-person hearing before the 340B ADR Panel, if requested by either party. The commenters explain that ADR claims may often involve factual questions and the 340B ADR Panel may benefit from the “adversarial input” of the parties involved.

Response: The NPRM did not contemplate in-person hearings as part of the 340B ADR process, as HHS proposed a process that would be more accessible than the 2020 final rule, by making it more expeditious and less trial-like for all parties to resolve disputes. HHS believes adding in-person hearings to the process could be arduous, could create disadvantages to under-resourced parties, and could create unnecessary delays. For example, smaller or rural covered entities, including those with limited resources, could have significant difficulties complying with such a requirement compared to larger and better resourced parties.

Comment: Some commenters appreciated HHS' proposed removal of language indicating that 340B ADR Panel decisions are precedential. They argued that the 2020 final rule gave the 340B ADR Panel the ability to set and change policy on fundamental program issues, such as who qualifies as a 340B-eligbile patient—and they argued that such language was inconsistent with the 340B statute, which does not support making 340B ADR Panel decisions precedential.

Conversely, other commenters disagreed and believed that ADR decisions should be precedential because, otherwise, it would be difficult to adequately assess the viability of a claim prior to submitting it to the 340B ADR Panel. They explained that by ensuring that decisions are precedential, it would impact how well entities are able to evaluate whether the 340B ADR process is appropriate for a given claim based on the time and resource investment required of the parties involved.

Response: Section 340B(d)(3)(C) of the PHS Act states that the administrative resolution of a claim shall constitute final agency decision and will be binding on the parties involved, unless invalidated by an order of a court of competent jurisdiction. The 340B statute does not expressly state that the 340B ADR Panel decision or a subsequent reconsideration decision be precedential. As set forth in §§ 10.21 and 10.23, the 340B ADR Panel will follow the 340B statute, regulations, and all policies governing the 340B Program when reviewing and evaluating 340B ADR claims and HHS is finalizing as proposed.

Comment: Most commenters urged wider transparency and requested that HHS publish 340B ADR Panel decisions on HRSA's website and require 340B ADR Panel decisions to include the 340B ADR Panel's factual and legal conclusions, including the HRSA policy on which the decision is based. They reasoned that this would ensure ADR decisions are consistent with current 340B policies and that 340B stakeholders are able to understand and apply HRSA's rule and compliance expectations.

Response: HHS values and supports transparency in the outcome of any 340B ADR Panel decision. For HRSA audits of covered entities and manufactuers, HRSA publishes its audit findings in summary format as full audit reports may include proprietary and/or sensitive business information (for example, under the statute, 340B ceiling prices themselves cannot be publicly disclosed). Consistent with this approach, HRSA will publish 340B ADR final agency decisions on a HRSA public-facing website within 120 calendar days of issuance.

Comment: Some commenters suggest that HHS revise this section to require the 340B ADR Panel or OPA to inform the parties of their reconsideration rights when the 340B ADR Panel's decision is communicated to the parties.

Response: HHS agrees and is finalizing this rule to include a provision that would ensure that parties are informed of their reconsideration rights at the time the 340B ADR Panel's decision is communicated to the parties.

Comment: HHS received several comments recommending that HHS revise this section to require manufacturers or covered entities to repay the other party within a specified time-period ( e.g., 60 days) of the date 340B ADR Panel's decision letter or the HRSA Administrator's reconsideration decision.

Response: The NPRM explained that once the parties have been notified of the final agency decision and no request for reconsideration has been made in accordance with § 10.24, the OPA Director will consider whether to take enforcement action to ensure corrective action to the extent allowed under the 340B statute. For example, based on the final agency decision, the OPA Director may require a covered entity to repay an affected manufacturer in a timely manner. In addition, in the case of a 340B ADR Panel decision involving an overcharge, the OPA Director may require that the manufacturer refund or issue a credit to the impacted covered entity. Such an enforcement decision may include the time frame and manner of such remedies.

The NPRM proposed a process for either party to initiate a reconsideration request within 20 business days of the date of the 340B ADR Panel's decision letter. The HRSA Administrator, or their designee, may initiate the process without such a request. The NPRM also proposed that a reconsideration process may only be granted when a party demonstrates that the 340B ADR Panel decision may have been inaccurate or flawed. As proposed, the reconsideration process would involve the HRSA Administrator, or designee, reviewing the record and the 340B ADR Panel's decision, and either issuing a revised decision to be effective 20 business days from issuance or declining to issue a revised decision. Finally, the NPRM proposed that the reconsideration decision or the 340B ADR Panel decision (in the event of a declination) will serve as the final agency decision and will be binding upon the parties involved in the dispute, unless invalidated by an order of a Federal court. The proposed rule indicates that the OPA Director will determine any necessary corrective action, or consider whether to take enforcement action, and the form of any such action, based on the final agency decision. There were several comments received on the reconsideration process, and HHS is finalizing this provision with some clarifications as discussed below.

Comment: The majority of comments received support a reconsideration process by the HRSA Administrator. Some suggest that HHS clarify the timeline for a reconsideration decision.

Response: HHS appreciates the comments received in support of a reconsideration process conducted by the HRSA Administrator. Regarding a timeline for the HRSA Administrator's reconsideration and after review of the comments, the HRSA Administrator will make efforts to issue a reconsideration decision within 180 calendar days from the initiation of the reconsideration process. HHS is finalizing, as proposed, that if a reconsideration decision is rendered, the reconsideration decision, unless altered or reversed (after review) by the Secretary, will serve as the final agency decision and will be binding on the parties involved in the dispute, unless invalidated by an order of a Federal court.

Comment: Some commenters recommend that HHS lengthen the amount of time for parties to request a reconsideration. The NPRM contemplates that a request for reconsideration must be made within 20 business days of the date of the 340B ADR Panel's decision letter. Commenters urged HHS to revise this timeline to either 30 or 60 business days to allow for more time to (1) determine that they believe the reconsideration is necessary and (2) file the request in a timely manner.

Response: HHS agrees with the commenters and is finalizing § 10.24(b) to lengthen the time that a request for reconsideration can be made from the proposed 20 business days to 30 business days. This will allow a requestor additional time to obtain consent in the case of a joint or consolidated claim for a reconsideration request as indicated in § 10.24(b)(3). In the event that no request for reconsideration is received by either party after the 30-day period, the 340B ADR Panel decision or any such alteration or reversal by the Secretary (after review) will serve as the final agency decision and will be binding on the parties involved in the dispute, unless invalidated by an order of a Federal court.

Comment: Some commenters request that HHS clarify that new facts or information may not be submitted as part of the reconsideration process. They argue that new legal or policy arguments may be warranted in light of the 340B ADR Panel's decision and should not be prohibited.

Response: HHS has clarified in § 10.24 to state that no new “facts,” information, or legal or policy arguments may be submitted as part of the reconsideration process in order to remain consistent with the content reviewed by the 340B ADR Panel in reaching their decision.

Comment: Several commenters request that HHS remove the proposed provision at § 10.24(b)(3), which would require that in the case of joint or consolidated claims, the requestor for reconsideration submit documentation showing consent to the reconsideration process, including signatures of the individuals representing each covered entity or manufacturer. They state that it is unclear why consent should be required for a reconsideration request when the covered entity or manufacturer previously consented to joint/consolidated representation as part of the 340B ADR process as outlined in § 10.21(c).

Response: After consideration of the comments, HHS will permit associations or organizations filing a claim on behalf of its members to submit an attestation that they have confirmed that all covered entities have agreed to be part of the reconsideration process. Also, as discussed above, HHS is modifying the proposal to lengthen the time for a party to initiate a reconsideration request from 20 business days to 30 business days.

Comment: A few commenters recommended that HHS clarify the HRSA Administrator's standard of review used when analyzing the 340B ADR Panel's decision and further clarify that the 340B ADR Panel's decision is held in abeyance until the HRSA Administrator issues a decision on reconsideration.

Response: The standard that the HRSA Administrator will use in reviewing any reconsideration request will be the same for each request. The HRSA Administrator will review the record, including the 340B ADR Panel decision, and determine whether there was an error in the 340B ADR Panel's decision, including any deviation from policy, guidance or statute. HHS has made this clear in this final rule. HHS will also clarify in § 10.24 that in the event of a reconsideration request, the 340B ADR Panel's decision is held in abeyance until the HRSA Administrator modifies or sustains the 340B ADR Panel's decision. Any such reconsideration decision letter will be effective 30 business days from issuance and serve as the final agency decision unless within 30 business days of issuance, the Secretary makes a determination that the Secretary will review the decision. The final agency decision will be binding upon the parties involved in the dispute unless invalidated by an order of a Federal court.

In this final rule, we adopt modifications to 42 CFR part 10 that support a unified scheme for review of 340B ADR claims. While the unity and comprehensiveness of this scheme maximizes its utility, we clarify that its constituent elements operate independently of each other. Were a provision of this regulation stayed or invalidated by a reviewing court, the provisions that remain in effect would continue to provide a process for review of 340B claims. For example, this final rule contains a number of requirements to be fulfilled prior to review by the 340 ADR Panel, such as providing evidence of good faith efforts and evidence that each covered entity consents to the combining of the claims for a joint claim. To the extent that these provisions were no longer in effect, the remainder of the final rule could still function without these provisions.

To best serve these purposes, we have addressed severability in the regulations to make clear that the provisions of 42 CFR part 10 are designed to operate independently of each other and to convey the Department's intent that the potential invalidity of one provision or any of its subparts should not affect the remainder of the provisions.

HHS has examined the effects of this final rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving

Regulation and Regulatory Review (January 18, 2011), Executive Order 14094 on Modernizing Regulatory Review (April 6, 2023), the Regulatory Flexibility Act (September 19, 1980, Pub. L. 96-354), the Unfunded Mandates Reform Act of 1995 (UMRA; Pub. L. 104-4), and Executive Order 13132 on Federalism (August 4, 1999). HHS did not receive any substantive comments on this section of the proposed rule and is therefore finalizing this section as proposed.

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 is supplemental to and reaffirms the principles, structures, and definitions governing regulatory review as established in Executive Order 12866, emphasizing the importance of quantifying both costs and benefits, of reducing costs, harmonizing rules, and promoting flexibility.

Under E.O. 12866, OMB's Office of Information and Regulatory Affairs (OIRA) determines whether a regulatory action is significant and, therefore, subject to the requirements of the E.O. and review by OMB. See 58 FR 51735 (Oct. 4, 1993). Section 1(b) of E.O. 14094 amended sec. 3(f) of E.O. 12866 to define a “significant regulatory action” as an action that is likely to result in a rule that may: (1) have an annual effect on the economy of $200 million or more (adjusted every 3 years by the Administrator of OIRA for changes in gross domestic product) or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, territorial, or Tribal governments or communities; (2) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) raise legal or policy issues for which centralized review would meaningfully further the President's priorities or the principles set forth in the E.O. See 88 FR 21879 (Apr. 11, 2023). OIRA has determined that this final rule is a significant regulatory action, although not a significant regulatory action under sec. 3(f)(1) of E.O. 12866. Accordingly, OMB has reviewed this final rule.

This final rule would modify the framework for HHS to resolve certain disputed claims regarding manufacturers overcharging covered entities and disputed claims of diversion and duplicate discounts by covered entities audited by manufacturers under the 340B Program. HHS does not anticipate the modification of the 340B ADR process to result in significant economic impact. Because this rule only updates an existing process, there is no additional economic impact. In addition, the parties involved already have the information that will reported through the 340B ADR process; therefore, we do not anticipate any additional impact. This is also consistent with a similar determination in the 2020 final rule that “HHS does not anticipate the introduction of an ADR process to result in significant economic impacts.” Pursuant to Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996, also known as the Congressional Review Act (5 U.S.C. 801 et seq. ), OIRA has determined that this rule does not meet the criteria set forth in 5 U.S.C. 804(2).

The Regulatory Flexibility Act (RFA; 5 U.S.C. 601 et seq. ) and the Small Business Regulatory Enforcement and Fairness Act of 1996 (SBREFA), which amended the RFA, requires HHS to analyze options for regulatory relief of small businesses. If a rule has a significant economic effect on a substantial number of small entities, HHS must specifically consider the economic effect of this rule on small entities and analyze regulatory options that could lessen the impact of this rule. HHS will use a RFA threshold of at least a 3 percent impact on at least 5 percent of small entities.

This final rule's requirements would affect drug manufacturers (North American Industry Classification System code 325412: Pharmaceutical Preparation Manufacturing). The small business size standard for drug manufacturers is 750 employees. Approximately 700 drug manufacturers participate in the 340B Program. While it is possible to estimate the impact of this final rule on the industry as a whole, the data necessary to project the impact of changes on specific manufacturers or groups of manufacturers is not available, as HRSA does not collect the information necessary to assess the size of an individual manufacturer that participates in the 340B Program. This final rule would also affect health care providers. For purposes of the RFA, HHS considers all health care providers to be small entities either by virtue of meeting the Small Business Administration (SBA) size standard for a small business, or for being a nonprofit organization that is not dominant in its market. The current SBA size standard for health care providers ranges from annual receipts of $8 million to $41.5 million. As of April 1, 2023, 14,134 covered entities participate in the 340B Program.

This final rule would modify the ADR mechanism for reviewing claims by manufacturers that covered entities have violated certain statutory obligations and claims by covered entities alleging overcharges for 340B covered outpatient drugs by manufacturers. This 340B ADR process would require submission of documents that manufacturers and covered entities are already required to maintain as part of their participation in the 340B Program. HHS expects that this documentation would be readily available prior to submitting a claim. Therefore, the collection of this information would not result in an economic impact or create additional administrative burden on these businesses.

By design of this final rule, the 340B ADR process will resolve claims in a fair, efficient, and expeditious manner in accordance with section 340B(d)(3)(B)(ii) of the PHS Act. This final rule provides an option to join or consolidate claims by similar situated entities, and covered entities may have claims asserted on their behalf by associations or organizations which could reduce costs. HHS has determined, and the Secretary certifies, that this final rule would not have a significant economic impact on a substantial number of small health care providers or a significant impact on the operations of a substantial number of small manufacturers; therefore, HHS is not preparing an analysis of impact for the purposes of the RFA. HHS estimates that the economic impact on the less than 5 percent of small entities and small manufacturers participating in the 340B Program would be minimal and less than a 3 percent economic burden and therefore does not meet the RFA threshold of 3 percent.

Section 202(a) of the Unfunded Mandates Reform Act of 1995 UMRA requires that agencies prepare a written statement, which includes an assessment of anticipated costs and benefits, before proposing “any rule that includes any 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 (adjusted annually for inflation) in any one year.” In 2023, that threshold is approximately $177 million. HHS does not expect this rule to exceed the threshold.

HHS has reviewed this final rule in accordance with Executive Order 13132 regarding federalism and has determined that it does not have federalism implications. This final rule would not “have substantial direct effects on the States, or on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” The final rule would also not adversely affect the following family elements: family safety, family stability, marital commitment; parental rights in the education, nurture, and supervision of their children; family functioning, disposable income, or poverty; or the behavior and personal responsibility of youth, as determined under section 654(c) of the Treasury and General Government Appropriations Act of 1999.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires that OMB approve all collections of information by a Federal agency from the public before they can be implemented. This final rule would not impact the current reporting and recordkeeping burden for manufacturers or covered entities under the 340B Program. Because the 340B ADR process provides the mechanism and procedures for an administrative action or investigation involving an agency against specific individuals or entities, pursuant to 44 U.S.C. 3518(c), the 340B ADR process is exempt from Paperwork Reduction Act requirements. In addition, participants in the 340B Program are already required to maintain the necessary records to submit an ADR claim.

For the reasons set forth in the preamble, the Department of Health and Human Services amends 42 CFR part 10 as follows:

This is a summary of the Commission's Report and Order ( Order ), FCC 24-29, adopted on March 14, 2024, and released on March 19, 2024. The full text of this document is available at https://docs.fcc.gov/public/attachments/FCC-24-29A1.pdf and via ECFS at https://www.fcc.gov/ecfs/. Documents will be available electronically in ASCII, Microsoft Word, and/or Adobe Acrobat. Alternative formats are available for people with disabilities (Braille, large print, electronic files, audio format), by sending an email to fcc504@fcc.gov or calling the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), 1-844-4-FCC-ASL (1-844-432-2275) (videophone).

1. In the Report and Order ( Order ), we take action to benefit video consumers by requiring cable operators and direct broadcast satellite (DBS) providers to specify the “all-in” price for video programming in their promotional materials that include pricing information and on subscribers' bills. Our action today enables consumers to make purchasing decisions with access to clear, easy-to-understand, and accurate information disclosing the price of video programming. We believe that an “all-in” price for video service also will increase transparency and have a positive effect on competition in the video programming marketplace by allowing consumers to make better informed choices among the ranges of video programming service options available to them.

2. Sections 335 and 632 of the Communications Act of 1934, as amended (the Act), authorize the Commission to adopt public interest regulations for DBS providers and direct the Commission to adopt cable operator customer service requirements, respectively. 1 In 2019, Congress adopted the Television Viewer Protection Act of 2019 (TVPA), which bolstered the consumer protection provisions of the Act by adding specific consumer protections. 2 The TVPA revised the Act to add section 642, which, among other things, requires greater transparency in subscribers' bills. 3 As Congress explained then, and we observe today, consumers face “unexpected and confusing fees when purchasing video programming,” including “fees for broadcast TV [and] regional sports.”  4

3. On June 20, 2023, the Commission released a notice of proposed rulemaking ( NPRM ) (88 FR 42277, June 20, 2023), observing that consumers who choose a video service based on an advertised monthly price may be surprised by unexpected fees that cable operators and DBS providers charge and list in the fine print separately from the top-line listed service price. The Commission found that such fees can be potentially misleading and make it difficult for consumers to compare the prices of competing video service providers. 5 In the NPRM, the Commission proposed to enhance pricing transparency by requiring cable operators and DBS providers to provide the “all-in” price for video programming in their promotional materials and on subscribers' bills. 6 The Commission sought comment on whether the proposal is sufficient to ensure that subscribers and potential subscribers have accurate information about the cost for video service for which they will be billed. Specifically, the Commission sought comment on (i) the specifics of the proposed requirement for increased marketing and billing transparency, (ii) existing Federal, state, and local requirements related to truth-in-billing, (iii) the marketplace practices regarding advertising and billing, and (iv) the Commission's legal authority to adopt this proposal. 7 The Commission also included a request for comment on the costs and benefits of the proposal, as well as the effects that the proposal could have on equity and inclusion. 8 The Commission received comments and ex parte filings from individuals, consumer advocates, cable, DBS, broadcast industry members, trade associations, state and local governments, and franchising authorities. 9 A number of comments describe general consumer frustration with unexpected “fees” (for example, for broadcast television programming and regional sports programming  10 charges listed separately from the monthly subscription rate for video programming) that are actually charges for the video programming for which the subscriber pays. 11

4. In the Order, we adopt the proposal in the NPRM to require that cable operators and DBS providers provide the “all-in” price of video programming as a prominent single line item on subscribers' bills and in promotional materials that state a price. 12 We find that the record demonstrates that charges and fees for video programming provided by cable and DBS providers are often obscured in misleading promotional materials and bills, which causes significant and costly confusion for consumers. We, therefore, adopt the “all-in” rule to promote pricing transparency and to complement existing consumer protections and practices of cable operators and DBS providers.

5. First, we describe current marketplace practices and conclude that the “all-in” rule is well-tailored to address the need for consumers to have accurate information about the cost of video service. Next, we consider issues related to implementation of the “all-in” rule, including how the rule applies to bundled services and billing material (including for currently-offered and grandfathered or legacy plans) and promotional material (including national and regional marketing where charges to consumers vary by geography and promotional discounts). We discuss the legal authority we rely upon to implement the “all-in” rule. We conclude that section 642 of the Act (the TVPA), section 632 of the Act (covering cable operators), section 335 of the Act (covering DBS providers), as well as ancillary authority, provide ample authority for the “all-in” rule. We also conclude that the “all-in” rule is consistent with the First Amendment. We consider existing local, state, and voluntary consumer protections adopted and implemented by cable operators and DBS providers, as well as existing Federal requirements stemming from the TVPA applicable to multichannel video programming distributors (MVPDs), that relate to transparency and disclosure of pricing information. We conclude that the “all-in” rule will complement existing protections by further mitigating consumer confusion about the aggregate cost of video programming. Finally, we consider the potential competitive effects of the “all-in” rule and conclude that increased consumer access to clear, easy-to-understand, and accurate information likely encourages price competition, innovation, and the provision of high-quality services.

6. Need for the “All-In” Rule. Based on the record, we find that there is a need for the “all-in” rule so that consumers can make better informed decisions about their service and can comparison shop among video programming providers without having to “read fine print or try to determine which `fees' or `surcharges' are really charges related to video programming services that might raise the monthly cost compared to other offers they are considering.”  13 In the NPRM, the Commission sought comment on whether consumers encounter misleading promotions or receive misleading bills, and on current industry practices regarding pricing categorization. 14 As described below, individuals, consumer protection organizations, state and local governments, and franchise authorities report that consumers experience “considerable” confusion and surprise when unanticipated charges and fees for cable and satellite video programming are not included in the advertised price in promotional materials and are separately listed on bills. 15

7. Consumer protection groups describe significant, recurring issues with consumer access to clear, easy-to-understand, and accurate information about the price of cable operator and DBS provider video programming. Truth in Advertising, for example, contends that “several cable and satellite service companies [are] engaged in deceptive pricing practices, including the use of unexpected fees.”  16 Truth in Advertising discusses a 2019 analysis by Consumer Reports of 800 cable bills, revealing the cable industry generates $450 per customer, per year, from company-imposed fees, and that nearly 60% of Americans who encounter these unexpected or hidden fees report the fees caused them to exceed their budget. 17 Consumer Reports examined hundreds of cable and satellite television bills collected in 2018 and made several findings in the 2019 report, “including that consumers pay significantly more than the advertised price for video programming . . . because of the addition of various fees, surcharges, and taxes.”  18 According to Consumer Reports, fees are “often imposed or increased with little notice, and are often listed among a dizzying array of other charges, including government-imposed fees and taxes” while cable companies “continue advertising relatively low base rates.”  19 Further, a 2018 “Secret Shopper Investigation” conducted by Consumer Reports found that consumers were provided with inaccurate or confusing fee-related information by customer service representatives of cable and DBS providers on a number of occasions. 20 This included customer service representatives portraying certain company-imposed fees as government-imposed taxes and fees; failing to mention fees; or offering incomplete fee information. 21

8. Comments filed by individual consumers as well as state and local governments and franchise authorities likewise detail concerns about misleading promotional materials and bills for cable and DBS service and urge the Commission to adopt an “all-in” rule to protect consumers. The record indicates that approximately 24 to 33 percent of a consumer's bill is attributable to company-imposed fees such as “Broadcast TV Fees,” “Regional Sports Surcharges,” “HD Technology Fees,” and others, 22 and that the “dollar amount of company-imposed fees has skyrocketed.”  23 However, consumers too often lack transparent information about fees that significantly increase the cost of advertised and billed video services and how they will affect their total cost and bottom-line budget. 24 Increases in fees relating to video programming during the term of the service agreement are sources of consumer surprise and confusion, and it is “especially notable . . . that these fees are being raised by cable companies even while many consumers are locked into supposed `fixed-rate' contracts.”  25 As the Local Government Commenters emphasize, these fees disproportionately impact lower-income households. 26

9. Misinformation and misunderstandings about how much subscribing to video programming service costs lead to subscriber complaints, disputed bills, and litigation. Consumer Reports observed that since 2016, state attorneys general in Massachusetts, Minnesota, and Washington have “launched investigations and/or filed lawsuits accusing Comcast, one of the nation's largest cable operators, of fee-related fraud.”  27 Truth in Advertising describes eight class-action lawsuits initiated by consumers challenging unexpected charges and fees. 28 The Local Government Commenters report that “[c]lass action lawsuits or suits brought by state Attorneys General have resulted in settlements when companies impose fees that exceed its promise of a fixed price.”  29 Local franchising authorities from several states also report a variety of complaints they are receiving, and the types of questions they respond to, in support of “subscribers who are confused” about the charges on bills from cable operators and DBS providers. 30

10. On the other hand, cable and DBS commenters dispute the characterization of their advertising and billing practices as misleading to consumers and argue that there is no need for the Commission to adopt an “all-in” rule. NCTA—The Internet & Television Association (NCTA) contends that “[p]roviding accurate and transparent pricing information to consumers is a marketplace necessity” given fierce competition for consumers in the video programming market. 31 According to NCTA, “[i]n the course of a prospective customer's consideration of which service package to buy (the `buy-flow') and on customers' bills, our members clearly disclose the specific amounts of the fees that will apply and the total amount customers will pay for service, thereby ensuring that customers are not `surprised by unexpected fees.”  32 In addition, NCTA argues that there is no need for the Commission to adopt an “all-in” requirement because the existing transparency in billing requirements of the TVPA sufficiently address this issue. 33 DIRECTV submits that an “all-in” rule could complicate “apples-to-apples” comparison shopping because it (i) would require the disclosure of only one variable in a service offering—price—rather than specific channels or other aspects of the video programming service that the provider offers, thus “creat[ing] confusion in a world where the content and other terms of the service offering differ dramatically among providers”; (ii) would apply only to cable and DBS and not other providers of video programming, including online video distributors; and (iii) would require a single price in national advertising even though actual prices differ depending on where a customer lives. 34

11. Although industry commenters assert that the practice of separating certain elements of the price for video programming and listing them as “fees” does not deceive consumers, 35 we believe that the weight of evidence in the record as detailed above suggests otherwise and that efforts to address these issues will benefit from a robust “all-in” rule. As Local Government Commenters contend, “[m]ore clarity and transparency are needed to help consumers understand their cable bills and make informed decisions about their services,” and “consumers should know what their video programming services will cost, including all charges cable operators add to those services.”  36 We agree that an “all-in” rule serves the dual purposes of helping consumers comparison shop among video programming providers when looking at promotional materials and helping subscribers recognize when the price for video service has changed when looking at their bills. 37 As we found in the NPRM, unexpected fees related to the cost of video programming, and how those fees are disclosed, can “make it difficult for consumers to compare the prices of video programming providers.”  38 An “all-in” price that lets consumers know the exact amount that they pay for video programming will give consumers a clear, easy-to-understand, and accurate price-point to consider. 39 We disagree that requiring cable operators and DBS providers to present consumers with honest pricing information without addressing other variables of video programming service will complicate comparison shopping. The “all-in” rule does not prohibit additional information that may highlight or compare a service feature (for example, the number, quality, or types of video programming channels available). Instead, it simply prohibits deceptive pricing practices. We also find, based on the record, that the “all-in” rule will benefit consumers, notwithstanding its application only to cable and DBS providers, considering the specific issues raised in the record with respect to these services.

12. The “All-In” Rule. We adopt the proposal in the NPRM to require cable operators and DBS providers to provide the “all-in” price for video programming service in both their promotional materials and on subscribers' bills. 40 As noted in the NPRM and confirmed by the record in this proceeding, the public interest requires that cable operators and DBS providers represent their subscription charges transparently, accurately, and clearly. While commenters representing the cable and DBS industry object to the proposal, the record otherwise reflects a broad swath of support for adoption of an “all-in” price rule.

13. General Implementation. In accordance with this requirement, cable operators and DBS providers must aggregate the cost of video programming (that is, any and all amounts that the cable operator or DBS provider charges the consumer for video programming, including for broadcast retransmission consent, regional sports programming, and other programming-related fees) as a prominent single line item in promotional materials (if a price is included in those promotional materials) and on subscribers' bills. 41 We do not require every cable or DBS advertisement to provide an “all-in” price where pricing is not otherwise included in the ad; but when a price is included in promotional materials, the “all-in” rule applies. 42 This aggregate price must include the full amount of the charge the cable operator or DBS provider charges (or intends to charge) the customer in exchange for video programming, including costs relating to broadcast television retransmission, and sports and entertainment programming. We agree with commenters that requiring cable and DBS providers to include these video programming charges in the “all-in” price will help consumers “better distinguish between operator-imposed charges and government-imposed taxes or fees”; as the record indicates, by separating out these charges, cable operators and DBS providers mislead consumers into believing such charges are government-imposed fees when they are nothing of the sort. Instead, such video programming charges are part of the aggregate cost for video programming in their promotional and billing material. 43

14. Consistent with the Commission's proposal in the NPRM, 44 amounts beyond those charged to the consumer for the video programming itself, such as taxes, administrative fees, equipment fees, 45 and franchise fees, 46 or other such charges, are excluded from the “all-in” rule. 47 Commenters discussed the potential benefits and downsides of extending the “all-in” rule to cover charges and fees not directly related to the provisioning of video programing. Consumer Reports and Public Knowledge, for example, support a broad application of the “all-in” rule, including where “fees might be variable,” such as equipment costs, because, if not, the advertised price “is not the real price a consumer will eventually pay.”  48 The Local Franchise Authorities, on the other hand, suggest “the Commission should be clear that an all-in price that includes government-imposed taxes or fees does not satisfy the rule.”  49 We are convinced, at this time, to focus the “all-in” rule on the issues identified in the record regarding the disclosure of charges associated with the video programming itself. We also are mindful of pragmatic difficulties of complying with the “all-in” rule when certain costs for each consumer (not for each market ) vary more than others. 50 Compliance with the “all-in” rule could be complicated, for example, by taxes that may vary by location; and decisions on whether there is a need to purchase equipment and on the number and type of devices, which vary for each household.

15. As proposed in the NPRM, we are persuaded that service providers subject to the “all-in” requirement may provide their subscribers and potential subscribers with itemized information about how much of their subscription payments are attributable to specific costs relating to providing video programming or other items that contribute to the bill. 51 Thus, consistent with sections 622(c) and 642 of the Act, 52 cable operators and DBS providers may complement the prominent aggregate cost line item with an itemized explanation of the elements that compose that aggregate cost. 53 Information in addition to the “all-in” price may be included, so long as the cable operator or DBS provider portrays the video programming-related costs as part of the “all-in” price for service. 54 Additional communications (the customer subscription and billing processes, for example) may also include information about other attributable costs with even more granularity, but may not be a substitute for, or obscure, compliance with the “all-in” price. The “all-in” rule, for example, does not prevent the additional disclosure of costs relating to retransmission consent fees incurred by cable operators and DBS providers. The record describes issues cable operators and DBS providers incur by recouping retransmission costs, which some providers would like to avoid entirely or inform their customers of, and there is a lack of evidence indicating that additional disclosures that the industry supports causes consumer confusion. 55 Our decision does not prohibit additional disclosures or separate line items, including those required by section 642 of the Act or permitted under 622(c) of the Act. 56 We also decline at this time to “reform the retransmission consent marketplace,” as some commenters have requested, as it is beyond the scope of this proceeding and the focus of the Commission in other dockets. 57

16. In the NPRM, the Commission sought comment on whether the “all-in” proposal should differentiate between residential, small business, and enterprise subscribers. 58 We agree with commenters asserting that the “all-in” rule should apply to all residential customer services provided by cable and DBS operators, including residents in multiple tenant or dwelling unit environments served by such operators. 59 However, we are also persuaded that services provided and marketed to enterprise customers and bulk purchasers of non-residential video programming service should be exempt from the rule because, as NCTA explains, “[s]uch customers subscribe to video services under customized or individually negotiated plans and thus receive all of the relevant information during the customization or negotiation process.”  60

17. We decline to impose more specific requirements for how to present an “all-in” price to consumers beyond our finding that it must be a prominent single line item in promotional materials and on subscribers' bills. In the NPRM, the Commission sought comment on whether the term “prominent” is specific enough to ensure that cable operators and DBS providers present consumers with easy-to-understand “all-in” subscription price, or whether we need to provide more detail about how the price for service must be communicated. 61 We do not at this time impose a “service nutrition-style label,” specific font size, or disclosure proximity requirement to comply with the “all-in” rule. Comments submitted on this point support a clear, easy-to-understand, and accurate statement of the total cost of video programming, while service providers suggest flexibility. We find that the clear, easy-to-understand, and accurate communication of the aggregate price of video service that the cable operator or DBS provider charges best achieves our goal of promoting transparency in promotional and billing material.

18. Compliance Date. The “all-in” rule must be fully implemented within nine months of release of the Report and Order or after the Office of Management and Budget completes review of any information collection requirements that may be required under the Paperwork Reduction Act of 1995 (PRA), 62 whichever is later, with the exception of small cable operators which will have 12 months to come into compliance. In the NPRM, we sought comment on what would be a reasonable implementation period for providers to update their systems to reflect any changes if we were to adopt the “all-in” price. 63 Verizon has suggested the Commission “allow at least six months for providers to comply and ensure `a reasonable implementation period for providers to update their system,' [and] an additional six months for parties to comply with any rules that affect legacy plans. 64 NCTA contends that “given the scope of changes that could be necessary to implement an all-in pricing rule, the Commission should grant at least 12 months for operators to come into compliance.”  65 ACA Connects likewise argues that the Commission should provide at least twelve months for providers to implement any requirements, particularly for smaller cable operators that use software platforms from third-party vendors. 66 We conclude that a nine-month implementation period will be sufficient to fully implement the “all-in” rule, which will afford time to affect operating systems and address legacy plan billing. We note that Congress afforded MVPDs six months to implement the billing requirements of the TVPA and conclude that nine months for most providers is a time period that will similarly benefit consumers when implementing the “all-in” rule. 67 However, given the concerns raised by ACA Connects, we give small cable operators, i.e., those with annual receipts of $47 million or less, an additional three months to come into compliance. 68

19. Bundled Services. The “all-in” rule requires clear, easy-to-understand, and accurate disclosure of the aggregate cost of video programming when a cable operator or DBS provider promotes or bills for video programming that is part of a bundle. Bundled services are increasingly popular among consumers. We agree with Verizon that bundles can be economically efficient and benefit consumers, and allow video programming service providers to distinguish themselves. 69 As part of the NPRM, the Commission asked for comment on whether to apply the “all-in” rule in circumstances where the cable operator or DBS provider bundles video programming with other services like broadband internet service. 70 The Commission also inquired as to whether it was possible to provide an “all-in” price, as Verizon explains, “where the video component has not been priced or itemized separately from the bundle as a whole.”  71

20. The record raises issues with how bundled service offerings disclose and bill for the costs of video programming, particularly when charges and fees for the video programming element of the bundle increase due to a promotion schedule or otherwise. Consumer Reports argues “the video portion of a bundled offering should reflect the required prominent all-in price of the equivalent stand-alone video offering.”  72 Truth in Advertising notes “deceptive pricing tactics” and comments that the rule should specifically address bundled and related services. 73 The Connecticut Office of State Broadband submits that consumers would benefit from application of the “all-in” rule to the marketing and billing of oftentimes complicated bundles that include video programing service with other services, like phone and internet. 74 They discuss consumer reports of deceptive pricing specifically related to bundled services and are in favor of applying the “all-in” rule for the video programming portion of a bundled offering, “because many bundles are discounted”  75 and “the advertised prices for such bundles often omit fees that consumers are ultimately charged,” including video programming charges that unexpectedly increase the bottom-line monthly price of the bundled service. 76

21. Verizon and NCTA argue that applying the “all-in” rule to bundled packages that include video programming removes flexibility necessary to offer competitive packages, while potentially adding to consumer confusion. Verizon contends that the “all-in” rule “threaten[s] to undermine this flexibility, by potentially requiring carriers to advertise and bill for a stand-alone price where none exists—that is, where the video component has not been priced or itemized separately from the bundle as a whole.”  77 As NCTA explains, video programming is “frequently bundled with other services, such as broadband . . . and voice services, resulting in service packages that offer consumers a wide range of choices but do not easily lend themselves to apples-to-apples comparisons between providers.”  78 “[R]equiring an all-in price for video for bundled customers is also likely to increase customer confusion, not reduce it,” especially where the “consumers have been purchasing the plans for many years,”  79 Verizon asserts.

22. We find that application of the “all-in” rule is warranted when video programing service is offered and billed as part of a bundle of services. Our driving intent is to inform and enable consumers with information regardless of the type of service agreement they have with a provider, including agreements for bundles of services. Thus, in circumstances in which a cable operator or DBS provider promotes or bills for a bundled service that includes video programming as part of a bundle that will result in a charge to a consumer, compliance with the “all-in” rule requires clear, easy-to-understand, and accurate disclosure of the aggregate customer fees and charges specific to video programming, 80 and, if applicable, either the length of time that a promotional discount will be charged or the date on which a time period will end that will result in a price change for video programming. If a cable operator or DBS provider charges (or will charge) for a cost related to video programming in whole or in part (for example, charge for costs related to local broadcast programming), then disclosure of those costs must comply with the “all-in” rule. And if a discount is applied, it also must be presented in clear, easy-to-understand, and accurate terms, which includes any expiration date, if applicable, for example. 81 In that manner, consumers will be better informed about an element of the service bundle that may lead to an unexpected charge or fee. Providers are free to describe in their promotional materials the value of bundling, including the discounts associated with bundling various services.

23. Specific Implementation Issues Raised in the Record, Billing Materials: Pricing Disclosures and Billing Material. The “all-in” rule requires providers to state the aggregate monthly (or regularly occurring) price for video programming on billing material so that consumers know the charges they will incur during the term of service and when. 82 We find requiring an “all-in” price on billing material further enables consumers access to important information about the cost of video programming, including increases in prices during the term of service. DIRECTV contends that, as an alternative to the “all-in” rule, the Commission could require that bills be “accurate” and “disclose key information regarding programming-related fees clearly and conspicuously and in close proximity to pricing.”  83 We do not, however, accept that as an alternative to the “all-in” rule, as this proposal is a more subjective alternative that would be difficult to enforce and does not address issues identified in the record specific to charges related to video programming. Thus, subscriber billing material for video programming, standalone or otherwise, requires inclusion of the aggregate monthly amount the subscriber's video programming will ultimately cost including all video programming related fees. 84 If a price is introductory or limited in time, for example, then the “all-in” rule requires customer billing to include clear, easy-to-understand, and accurate disclosure of the date the promotional rate ends (by stating either the length of a promotional period or the date on which it will end), and the post-promotion “all-in” rate ( i.e., the roll-off rate) 60 and 30 days before the end of any promotional period (as is necessary when offering a varying rate in promotional material, discussed below). 85

24. Grandfathered Service Plans. We are persuaded that the “all-in” rule should apply to billing materials for legacy or grandfathered service plans that cable operators and DBS providers no longer offer to subscribers and when promotional material is used to market legacy plans that are being renewed by customers. In the NPRM, the Commission sought comment on whether the proposal should apply to existing customers with legacy plans that are no longer available, 86 and industry commenters raise concern with how the “all-in” rule would apply to existing subscribers with legacy or grandfathered plans. 87 Verizon suggests we exempt legacy or grandfathered plans that are no longer available to new customers as the Commission did with the Broadband Nutrition Labels required of broadband internet service providers. According to DIRECTV, “[a]t a minimum, the Commission should not seek to regulate bills for legacy offers not available to new subscribers,” which would have a “substantially diminished benefit for purposes of comparison shopping.”  88 Consumer Reports disagrees, citing consumer benefits of pricing disclosures and suggests the “task need not be more complicated than a simple case of addition” of the “all-in” price. 89

25. We are persuaded that consumers of legacy plans benefit as much as consumers of available plans and that the benefits of providing an “all-in” price outweigh burdens described by industry. 90 It is a complicated process, according to Verizon, for it to apply an “all-in” rule across a wide variety of pricing plans and content packages that have changed over time to adapt to market forces, and we appreciate the difficulties involved with changing various billing formats all at once. 91 We disagree, however, that inclusion of the “all-in” price on billing material for legacy plans will “cause unnecessary confusion.”  92 To the contrary, application of the “all-in” rule to the billing of legacy service plans, including potentially long-term or renewable agreements, will benefit consumers' knowledge of how much their video programming service costs. As for promotional materials, grandfathered plans are not available to new consumers by definition, and therefore we expect that cable operators and DBS providers will not be marketing the services in a way that would trigger the “all-in” rule. But if the operator or provider issues promotional material used to inform or market a legacy plan to existing customers that are subscribed to such plans, then that material must include the “all-in” price. 93 By applying the “all-in” rule in this manner, we avoid unnecessary confusion to customers, while enabling subscriber access to information that is key to their understanding of the services they are purchasing under the grandfathered plans and ability to comparison shop. 94

26. Promotional Materials. Time-Limited Promotional Discounts. The “all-in” rule applies to promotional materials that state a price, including in circumstances involving a promotional discount when the amount billed to the customer by the cable operator or DBS provider may change (for example, at the end of a promotional period). And if a discount is applied, it also must be presented in clear, easy-to-understand, and accurate terms, which includes any expiration date, if applicable, for example. According to NCTA, consumers “do not jump immediately from advertising to bills,” rather they typically go through the “sales process during which providers disclose the total price that the consumer would pay, inclusive of the relevant fees.”  95 The record, however, indicates that the onboarding sales process has not proven to be entirely effective. 96 The record includes evidence indicating persistent confusion over the price for video programming, particularly with how the price for video programming is described in promotional material and when the price may vary over the term of the service agreement.

27. We disagree that applying the “all-in” rule to promotional rates will undermine transparency and potentially discourage the use of promotions altogether. 97 We find that knowledge of how a time-limited discounted price will increase to the ultimate price the consumer will be charged for video programming service gives consumers a reliable idea of what they will pay each month that incorporates pricing variables, and does so in a way that is uniform among providers and enables comparison shopping. Compliance with the “all-in” rule therefore includes disclosing the base (or standalone) rate with a subtracted amount (the amount after application of any promotional discount) in a way that enables consumers to know the amount they will be required to pay each month (each billing cycle) during the term of the service agreement. 98 If, for example, a promotion or other circumstance includes an introductory offer of free or discounted channels and the “all-in” price will change at the conclusion of the promotional period, then the cable operator or DBS provider must state in promotional materials the current cost of video programming service that the consumer will pay initially and state the “all-in” price that applies following the introductory period or promotion. 99 To the extent that a provider subject to this requirement has multiple or graduated roll-off periods, the operator must, at a minimum, provide the initial promotional rate and the final rate after all promotional discounts have expired. Consumers must simply be enabled to know what amount they can expect to find as a charge on their bill, particularly when the amount is scheduled to change due to promotions or other circumstances.

28. Regional And National Promotional Material. We conclude that the “all-in” rule applies to regional and national promotions of cable operators and DBS providers. Service providers raise concerns with how an “all-in” pricing requirement would affect regional and national promotional efforts. 100 In the NPRM, the Commission asked how it should account for national, regional, or local advertisements, where the actual price may not be the same for all consumers receiving the promotional materials due to market-specific price variation. 101 DIRECTV argues that the “all-in price proposal cannot account for national advertising.”  102 DIRECTV predominantly advertises nationally, but “charges different [regional sports] fees in different markets based on the differing fees it pays for access to those [regional sports networks].”  103 According to DIRECTV, a single, “all-in” price afforded to everybody could “provide inaccurate information for most subscribers and potential subscribers no matter what price DIRECTV may choose to provide.”  104 Likewise, NCTA states that there is a potential that the “all-in” requirement “would not give consumers an accurate estimate of the all-in price for video programming services available in their areas given the variation in these fees.”  105 DIRECTV reports it may have to calculate a price using the most expensive regional sports programming fees, which “could artificially encourage customers and potential customers in markets without [regional sports networks] or with lower-priced [regional sports networks] to take service from one of DIRECTV's competitors, particularly its unregulated online competitors.”  106

29. We find these arguments merely support the need for Commission action. A number of services and commodities are promoted and sold at nationwide or regional prices that include varying local costs, including services of cable operators and DBS providers. 107 These arguments support our conclusion that the manner in which promotional and billing information is being communicated with consumers currently is susceptible to costly misunderstandings. The separation of programming fees (such as the cost of regional sports programming fees) from the bottom-line, “all-in” price has been described as a leading contributor to customer confusion we seek to address. Costs may vary depending upon franchise area, as the NCTA, DIRECTV, and ACA explain, but the exclusion of any and all amounts charged to the consumer for video programming leads to significant issues, as described in the record by individuals, organizations, and state and local governments. We disagree, therefore, that programming fees should be excluded from the “all-in” rule for regional or national promotions. 108

30. To address the fact that certain costs vary by region, our rule requires any advertised price to include all video programming fees that apply to all consumers in the market that the advertisement is targeted to reach. Providers may opt to provide a “starting at” price, or a range of prices that account for the fluctuation in video programming fees in the locations that the advertisement is intended to reach. In this case, when an aggregate “all-in” price is not stated due to pricing fluctuation that depends on service location, the provider must state where and how consumers may obtain their subscriber-specific “all-in” price (for example, online at the provider's website or by contacting a customer service or sales representative). At the time the potential consumer provides location information, online or otherwise, then the provider must state the “all-in” price. Providers also may state time-limited introductory prices that are available to all potential customers the advertisement is targeted to reach, 109 if the advertised price includes the video programming fees that apply to all consumers in the targeted market and the consumer has the ability to obtain an “all-in” price before ordering video programming, as discussed above. 110 This allows flexibility for service providers to highlight information in promotional and billing material while providing transparency to promotional material that reduces consumer confusion and enables comparison shopping with a budgets in mind. Our goal is to enable consumers to know the amount they will be billed for the service offered.

31. Legal Authority. We conclude that the TVPA, section 632 of the Act (covering cable operators), and section 335 of the Act (covering DBS providers), in addition to ancillary authority, provide ample authority for the “all-in” rule. 111 We also conclude that the “all-in” rule is consistent with the First Amendment. In the NPRM, the Commission asked “whether we should consider expanding the requirements of this proceeding to other types of [MVPDs] and on our authority to do so.”  112 We decline to extend the “all-in” rule to other entities at this time given the lack of record evidence concerning the billing and advertising practices of non-cable and non-DBS video services. 113

32. Section 642 of the Act, 47 U.S.C. 562 (Television Viewer Protection Act of 2019 (TVPA)). The Commission derives authority for the “all-in” rule from the TVPA requirements as it applies to electronic billing. Section 642 of the Act, as added by the TVPA, requires MVPDs to bill subscribers transparently when the MVPD sends an electronic bill, and specifically requires MVPDs to include in their bills “an itemized statement that breaks down the total amount charged for or relating to the provision of the covered service by the amount charged for the provision of the service itself and the amount of all related taxes, administrative fees, equipment fees, or other charges.”  114 As mandated by this statutory directive, the “all-in” rule requires cable operators and DBS providers to provide consumers with the total charge for all video programming and will ensure that consumers are provided complete and accurate information about the “amount charged for the provision of the service itself,” as Congress intended. 115 Such costs make up the charges for the “provision of the service itself” because broadcast channels, regional sports programming, and other programming track the statutory definition of “video programming” (that is, all are programming provided by, or generally considered comparable to programming provided by, a television broadcast station), 116 and video programming is, by definition, the service that an MVPD makes available for purchase. 117 Listing such costs as below-the-line fees potentially results in confusion for consumers about the “amount charged for the provision of the service itself,” because the word “itself” suggests a single charge for the total service rather than one charge for one portion of the service and then a separate charge for other programming provided. This contravenes Congress's core purpose for enacting the legislation: to curb MVPDs' practice of charging “unexpected and confusing fees,” but the record, including recent press reports, suggest that this practice continues. 118

33. We observe that the TVPA provides for the disclosure of a second group of costs on electronic bills— i.e., “the amount of all related taxes, administrative fees, equipment fees, or other charges.”  119 Charges and fees relating to video programming (including broadcast channels, regional sports programming, and other programming) do not fall within this category because video programming, by definition, is the service that an MVPD makes available for purchase—in other words, the “service itself.”  120 Thus, the most reasonable reading of the statute is that the terms “taxes,” “administrative fees,” “equipment fees,” or “other charges” do not include separate charges for various types of video programming ( e.g., amounts paid for retransmission consent rights or rights to transmit regional sports programming or any other programming). 121 We accordingly reject NCTA's argument that programming fees (such as retransmission consent fees) fall within this “second group” of costs on electronic bills. 122

34. Section 632 of the Act, 47 U.S.C. 552 (Cable Operators). We conclude that section 632 of the Act provides us with authority to adopt the “all-in” rule as it will apply to cable operators. 123 Section 632(b) of the Act provides the Commission authority to establish customer service standards regarding billing practices and other communications with subscribers, and the Commission has relied on that authority for decades to regulate in this area. 124 Section 632(b)(3) also supports the Commission adopting customer service requirements regarding, among other enumerated topics, “communications between the cable operator and the subscriber (including standards governing bills and refunds).”  125 The legislative history of section 632 provides that “[p]roblems with customer service have been at the heart of complaints about cable television,” and indicates Congress' belief that “strong mandatory requirements are necessary.”  126 Congress expected “the FCC, in establishing customer service standards to provide standards addressing . . . billing and collection practices; disclosure of all available service tiers, [and] prices (for those tiers and changes in service) . . . .”  127 Our “all-in” rule addresses cable operators' billing practices, i.e., requiring clear, easy-to-understand, and accurate price information in customer bills for video programming service, and, therefore, is a customer service matter within the meaning of section 632(b)(3). In addition, the statute identifies the specific areas for the Commission to act as the “minimum” standards. 128 Thus, by its terms, section 632(b) gives the Commissions broad authority to adopt customer service standards that go beyond those enumerated in the statute. 129 We find that the “all-in” rule is also authorized under our general authority in section 632(b) to establish “customer service” standards. The term “customer service” is not defined in the statute. In 1984, when Congress first enacted section 632 authorizing franchising authorities to establish customer service requirements, the legislative history defined the term “customer service” to mean “in general” “the direct business relation between a cable operator and a subscriber,” and goes on to explain that “customer service requirements include . . . the provision to customers ( or potential customers ) of information on billing or services.”  130 In 1992, Congress retained this term when amending section 632 to require the FCC to adopt “customer service” standards. 131 The “all-in” rule imposes requirements on billing information provided to potential customers in promotional materials, which, as reflected in the legislative history, is a customer service matter. 132 Accordingly, billing communications in customer bills as well as promotional materials and advertising aimed at potential customers are precisely the type of customer service concerns that Congress meant to address when it enacted section 632. 133 Thus, the “all-in” rule covering bills, advertisements and promotional materials is within the statute's grant of authority.

35. We thus reject commenters' argument that covering “non-subscribers” or “potential subscribers” under the “all-in” rule renders it a “consumer protection” law under section 632(d) and thus falls “outside” the Commission's authority, as evidenced by section 632's title, which distinguishes between customer service and consumer protection. 134 As mentioned above, the “all-in” rule, which covers both current and potential subscribers, is a customer service requirement that is authorized under section 632(b). Moreover, section 632(d) does not place any limitation on the Commission's authority; rather it preserves States' and local governments' ability to enact and enforce consumer protection laws and customer service requirements that are not specifically preempted by the Cable Act. 135 We likewise reject commenters' argument that the text of the statute—which “uses the terms `customer' and `subscriber', and refers to `installations, outages, and service calls', and discusses `bills and refunds' ”—indicates that section 632 only addresses “interactions between the cable operators and current and former subscribers” but “not potential subscribers.”  136 Those statutory terms are found in subsection (b)'s list of specific areas for the Commission to address—areas the statute makes clear are “minimum” requirements. 137 Commenters' statutory-narrowing argument essentially reads out of the provision the Commission's general grant of authority in subsection (b) to “establish standards by which cable operators may fulfill their customer service requirements.”  138 Moreover, we are not persuaded by commenters' argument that the use of the generic term “subscriber” means “actual cable subscribers” and excludes “potential subscribers” from the authority granted under subsection (b). 139 We find that the better reading of the statute is that the term “subscriber” is not limited to current subscribers because “the term [subscriber] is sufficiently ambiguous to include those considering a subscription,” as well as current subscribers considering renewal and reviewing promotional material. 140 Indeed, those commenters arguing for a narrow construction concede that the term “subscriber” used in subsection (b) can be read to cover both “current and former subscribers.”  141 And their argument ignores the legislative history, which, as discussed above, indicates Congressional intent to cover under subsection (b) billing information provided to both current and potential customers. 142 This language from the legislative history—including the expectation that the Commission would adopt standards regarding “disclosure of all available service tiers, [and] prices”—suggests that Congress granted the Commission authority over how cable operators disclose their prices to consumers, including prices for services to which consumers may have not yet subscribed. 143

36. Section 4(i) of the Act, 47 U.S.C. 154(i). Applying the “all-in” rule's to the promotional materials of cable operators for video programming is also a proper exercise of our authority under section 4(i) of the Act. 144 The Commission is specifically delegated authority under the Communications Act to adopt standards governing communications between the cable operator and subscriber regarding bills. 145 Extending the “all-in” requirement to promotional material when a price for video programming is offered is necessary to achieve customer service standards in light of issues raised in the record. Otherwise, consumers might be misled by confusing or misleading pricing information from promotional material and enter into long-term contracts with higher charges than understood would be due. This would undermine the very purpose of the “all-in” rule as applied to bills, which aims to ensure consumers receive clear, easy-to-understand, and accurate pricing information.

37. Section 335 of the Act, 47 U.S.C. 335 (Direct Broadcast Service Providers). Section 335 of the Act provides the Commission with authority to adopt the “all-in” rule as it will apply to direct broadcast satellite (DBS) providers. 146 Our action is supported, specifically, by section 335(a), which provides the Commission with authority to impose “public interest or other requirements for providing video programming” on DBS providers. 147 We conclude that the “all-in” rule is a public interest requirement that falls squarely within our authority under section 335(a). 148

38. The Commission has previously confirmed, and we agree, that the public interest includes consumer access to clear, easy-to-understand, and accurate information about charges for service, which benefits a well-functioning marketplace. 149 The record reveals how promotional and billing materials are critical to a consumer's understanding of fees and charges relating to video programming, and that misunderstandings from promotional material lead to subscribers going over budget and billing disputes, often while locked into long-term agreements. 150 In addition to billing, we focus on the demonstrated start of the customer's understanding of the pricing of video services, and adopt the “all-in” rule to ensure consumers have accurate and understandable information about the monthly cost in order to choose an MVPD service that best suits his or her needs. 151

39. DIRECTV's description of the limits of the Commission's jurisdiction is inconsistent with the broad authority granted by Congress in section 335(a), which grants authority to impose on DBS providers “public interest or other requirements for providing video programming.”  152 We do not read the reference in section 335(a) to adopt requirements for “providing video programming” as limiting our authority to cover only public service carriage or programming requirements on DBS providers, as DIRECTV contends, 153 and we disagree with DIRECTV that our interpretation “is inconsistent with the text, structure and legislative history of the provision.”  154 Section 335(a) directs the Commission to impose on providers of DBS service “public interest or other requirements for providing video programming.” On its face, this language is broad in scope. And the regulation we are adopting here is precisely the type of regulation covered under the statute, i.e., our rule serves the public interest by requiring DBS operators in “providing video programming” to ensure consumers have clear, easy-to-understand, and accurate information about the charges for service. DIRECTV, on the other hand, argues that what Congress really intended was to grant the Commission limited authority over public interest carriage requirements, such as carriage of political advertising, educational programming, and other public service uses. 155 However, there is no “carriage” limitation in the statutory text. Although section 335(a) specifies certain topics that must be addressed by the Commission (including political advertising requirements in sections 312(a)(7) and 315 of the Act), the list is not exhaustive. Because section 335(a) states that the regulations must address these topics “at a minimum,”  156 the Commission has authority to adopt public interest requirements beyond those enumerated in the statute. DIRECTV also argues that reading section 335(a) to authorize the “all-in” rule would render “redundant” the “prices, terms and conditions” provision in section 335(b)(3) covering carriage obligations for noncommercial, educational programming. 157 We reject this argument. Our rule does not impose requirements on “reasonable prices, terms, and conditions,” as directed under section 335(b)(3). Rather our rule is a public interest requirement directed at ensuring DBS providers are transparent about the price they have chosen to charge for their service. Thus, there is no redundancy.

40. To be sure, the legislative history suggests that when enacting section 335(a), Congress was focused on potential requirements to be placed on DBS providers with respect to public service programming. 158 However, “rarely have [courts] relied on legislative history to constrict the otherwise broad application of a statute indicated by its text.”  159 Contrary to DIRECTV's assertion, 160 the legislative history cannot overcome the clearest and most common sense reading of the language of the statute, which does not limit our authority only to national educational programming. 161 The “all-in” rule is a “public interest or other requirement[]” for providing video programming that we find falls within our jurisdiction under section 335(a). 162 The “all-in” rule is not an imposition of “sweeping new authority over DBS,”  163 nor is the Commission “assert[ing] that [section 335(a) of the Act] confers power to regulate virtually all other terms and conditions of service as well,” including general regulation of terms, conditions, and pricing for DBS service. 164 Our prior invocation of section 335(b) to reserve channel capacity for noncommercial programming of an educational or informational nature does not preclude targeting non-carriage related problems when they arise under section 335(a), as the “all-in” rule does with a specific public interest problem raised in the record. 165 Moreover, the requirement we adopt for DBS providers here as necessary to protect consumers from misleading pricing information, is a proper exercise of the Commission's other authority in Title III, which courts have found endow the Commission with “expansive powers” and a “comprehensive mandate to `encourage the larger and more effective use of radio in the public interest.' ”  166

41. DIRECTV analogizes the authority granted to the Commission in section 335 with statutes conferring administration authority to the Department of Health and Human Services (Department) that the D.C. Circuit found did not support its regulation of advertisements of certain pharmaceuticals. 167 The circumstances of that decision are distinguishable. In Merck & Co., the Department argued that its regulation was “ `necessary' to [a pharmaceutical] programs' `administration,' ” and the court found that “the Secretary must demonstrate an actual and discernible nexus between the rule and the conduct or management of Medicare and Medicaid programs.”  168 The nexus was too attenuated, the court concluded, “stray[ing] far off the path of administration for four reasons.”  169 The authority granted under section 335, on the other hand, does not provide “general administrative authority” to the Commission. 170 Under section 335, a rule must further a “public interest or other requirement[ ] for providing video programming,” which the “all-in” rule does: it protects the public interest by requiring truth in billing and advertisements for video programming. 171

42. Section 4(i) of the Act, 47 U.S.C. 154(i). In addition, we find authority to extend the “all-in” rule to DBS providers under section 4(i) of the Act. 172 The Commission is specifically delegated authority under the Communications Act to adopt standards governing communications between the cable operator and subscriber. 173 Extending the “all-in” requirement imposed on cable operators to DBS is necessary for our exercise of this specifically delegated power. Otherwise, consumers might opt for DBS service based on confusing or misleading pricing information over service offered by cable operators that are required to be transparent about the price they are charging. This would undermine the very purpose of the “all-in” rule that we are imposing on cable operators. Thus, by extending our rule to DBS providers, we will ensure uniformity of regulation between and among cable operators (regulated under Title VI and by various state consumer protection laws and local franchising provisions) and DBS providers (under Title III). 174