I. Summary of the Final Rule

On October 5, 2017, the Bureau issued the 2017 Final Rule establishing regulations for payday loans, vehicle title loans, and certain high-cost installment loans, relying on authorities under Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). 1 The Rule was published in the Federal Register on November 17, 2017. 2 The 2017 Final Rule addressed two discrete topics. First, the Rule contained a set of provisions with respect to the underwriting of covered short-term loans and longer-term balloon-payment loans, including payday and vehicle title loans, and related reporting and recordkeeping requirements. 3 These provisions are referred to herein as the “Mandatory Underwriting Provisions” of the 2017 Final Rule. Second, the Rule contained a set of provisions, applicable to the same set of loans and also to certain high-cost installment loans, establishing certain requirements and limitations with respect to attempts to withdraw payments from consumers' checking or other accounts, and related recordkeeping requirements. 4 These are referred to herein as the “Payment Provisions” of the 2017 Final Rule.

The 2017 Final Rule became effective on January 16, 2018, although most provisions (12 CFR 1041.2 through 1041.10, 1041.12, and 1041.13) had a compliance date of August 19, 2019. 5

On February 6, 2019, the Bureau issued proposals seeking comment on whether the Bureau should rescind the Mandatory Underwriting Provisions of the 2017 Final Rule (Reconsideration NPRM)  6 and on whether it should delay the compliance date for those provisions (Delay NPRM). 7 In the Delay NPRM, the Bureau proposed to delay the August 19, 2019 compliance date for the 2017 Final Rule's Mandatory Underwriting Provisions—specifically, §§ 1041.4 through 1041.6, 1041.10, 1041.11, and 1041.12(b)(1)(i) through (iii) and (b)(2) and (3)—to November 19, 2020. 8 These proposals did not include reconsideration or delay of the Payment Provisions.

For the reasons discussed below and based on comments received, the Bureau is issuing this final rule to delay the August 19, 2019 compliance date for the Mandatory Underwriting Provisions, to November 19, 2020, in order to permit an orderly conclusion to its separate rulemaking process to reconsider the Mandatory Underwriting Provisions. In short, after reviewing the comments received on the Delay NPRM, the Bureau concludes that (1) it has strong reasons to revisit the Mandatory Underwriting Provisions on the grounds set out in the Reconsideration NPRM; and (2) if the Mandatory Underwriting Provisions went into effect while the Bureau was in the process of reconsidering these provisions, as described below, consequences would likely follow—some of which may be irreversible even if the Mandatory Underwriting Provisions were later rescinded—that the Bureau believes may prove unwarranted and may undermine effective reconsideration of the 2017 Final Rule. In light of these considerations, the Bureau concludes that it is appropriate to delay compliance with the Mandatory Underwriting Provisions for 15 months to allow time for the Reconsideration NPRM rulemaking process to be completed.

The Bureau is also making conforming amendments to certain regulatory text and commentary adopted in the 2017 Final Rule to reflect the compliance date delay as well as including an additional section to the Rule setting forth the compliance dates in detail.

The Bureau is also making certain corrections to address several clerical and non-substantive errors it has identified in the 2017 Final Rule. No substantive change is intended by these corrections.

In the 2017 Final Rule, the Bureau established regulations for payday loans, vehicle title loans, and certain high-cost installment loans. The Rule was published in the Federal Register on November 17, 2017. It became effective on January 16, 2018, although most provisions (§§ 1041.2 through 1041.10, 1041.12, and 1041.13) have a compliance date of August 19, 2019.

As mentioned above, the 2017 Final Rule addressed two discrete topics: The Mandatory Underwriting Provisions and the Payment Provisions. 9 The Mandatory Underwriting Provisions identified as an unfair and abusive practice the making of certain short-term and longer-term balloon-payment loans without reasonably determining that consumers will have the ability to repay the loans according to their terms. The Mandatory Underwriting Provisions include two methods that permit providers to offer covered short-term and longer-term balloon-payment loans. Under one method, lenders making covered short-term and longer-term balloon-payment loans are required to, among other things, make a reasonable determination that the consumer would be able to make the payments on the loan and be able to meet the consumer's basic living expenses and other major financial obligations without needing to re-borrow over the ensuing 30 days; the Rule sets forth a number of specific requirements that a lender must satisfy in this regard. 10 Under the other method, lenders are allowed to make certain covered short-term loans without meeting all the specific underwriting criteria as long as the loan satisfies certain prescribed terms, the lender confirms that the consumer meets specified borrowing history conditions, and the lender provides required disclosures to the consumer. 11

In general, under either method, a lender is to obtain and consider a consumer report from an information system registered or provisionally registered with the Bureau (referred to herein a as a “registered information system” or an RIS) before making a covered short-term or longer-term balloon-payment loan. 12 In addition, other portions of the Rule require lenders to furnish to RISes  13 certain information concerning covered short-term and longer-term balloon-payment loans at loan consummation, during the period that the loan is an outstanding loan, and when the loan ceases to be an outstanding loan. 14

As noted above, on January 16, 2018, the Bureau issued a statement announcing its intention to engage in rulemaking to reconsider the 2017 Final Rule. In addition, the statement notified entities seeking to become RISes that the Bureau would entertain requests to waive entities' preliminary approval application deadline. 15 Since that time, the Bureau has issued several waivers and published copies of those waivers on its website. 16 On October 26, 2018, the Bureau issued a subsequent statement announcing that it expected to issue NPRMs to reconsider certain provisions of the 2017 Final Rule and to address the Rule's compliance date. 17

On April 9, 2018, a legal challenge to the 2017 Final Rule was filed in the United States District Court for the Western District of Texas. 18 On June 12, 2018, the court issued an order staying the litigation. 19 On November 6, 2018, the court stayed the August 19, 2019 compliance date of the 2017 Final Rule until further order of the court. 20

As noted above, on February 6, 2019, the Bureau issued the Reconsideration NPRM seeking comment on the Bureau's proposal to rescind the Mandatory Underwriting Provisions of the 2017 Final Rule and the Delay NPRM seeking comment on the Bureau's proposal to delay the compliance date for those provisions. The Bureau stated in its Delay NPRM that it preliminarily believed it had set forth strong reasons for proposing to rescind the Mandatory Underwriting Provisions of the Rule, as detailed in the Reconsideration NPRM. The Bureau was concerned that mandating compliance by August 19, 2019 with portions of the Rule that the Bureau had good reasons to believe should be rescinded would impose significant and potentially unwarranted costs on industry participants, create substantial revenue disruptions that could impact the ability of some market participants to stay in business, and restrict access to consumer credit. The Bureau preliminarily believed, based on its experience developing the 2017 Final Rule and other similar rulemakings, that a compliance date of November 19, 2020 would allow the Bureau adequate opportunity to review comments on its Reconsideration NPRM regarding the Mandatory Underwriting Provisions and to make any changes to those provisions before affected entities incurred significant costs that would impair their ability to remain in business and before consumers experienced a restriction in their ability to choose the credit they prefer.

For the reasons set forth herein and based on comments received, the Bureau is issuing this final rule to delay the August 19, 2019 compliance date for the Mandatory Underwriting Provisions of the 2017 Final Rule—specifically, §§ 1041.4 through 1041.6, 1041.10, and 1041.12(b)(1) through (3)  21 —to November 19, 2020, to permit an orderly conclusion to its separate rulemaking process to reconsider the Mandatory Underwriting Provisions of the 2017 Final Rule. 22 The Bureau is making conforming amendments to certain regulatory text and commentary adopted in the 2017 Final Rule to reflect the compliance date delay as well as supplementing the Rule with an additional section (§ 1041.15) setting forth in detail its effective and compliance dates.

The Bureau is also making certain corrections to address several clerical and non-substantive errors it has identified in the 2017 Final Rule in §§ 1041.2(a)(9), 1041.3(e)(2), 1041.9(c)(3)(viii), and appendix A. No substantive change is intended by these corrections.

As noted above, the Bureau proposed to delay the compliance date for the 2017 Final Rule's Mandatory Underwriting Provisions for several reasons. As explained in more detail below, the Bureau now concludes that it is appropriate to delay the August 19, 2019 compliance date for the Mandatory Underwriting Provisions of the 2017 Final Rule—specifically, §§ 1041.4 through 1041.6, 1041.10, and 1041.12(b)(1) through (3)—to November 19, 2020.

In short, after reviewing all comments received on the Delay NPRM, the Bureau has determined that finalizing the proposed delay is appropriate because there are strong reasons for rescinding the Mandatory Underwriting Provisions of the 2017 Final Rule and because significant and potentially unwarranted consequences to covered entities, consumers, and the market would occur if compliance with those aspects of the Rule was required by August 19, 2019. In addition, the Bureau has concluded that 15 months is an adequate amount of time to allow the Bureau to complete its reconsideration rulemaking. First, there are strong reasons to reconsider the evidentiary and legal bases for the unfairness and abusiveness findings underlying the Mandatory Underwriting Provisions of the 2017 Final Rule. The Bureau has initiated the process for reconsidering those provisions by issuing the Reconsideration NPRM, which sets forth in detail the Bureau's reasons for proposing to rescind the Mandatory Underwriting Provisions. After considering all the comments received on the Delay NPRM and with an open mind on all issues to be decided in the Reconsideration NPRM, the Bureau concludes that for purposes of this final rule there are strong reasons to rescind the Mandatory Underwriting Provisions.

Second, the Bureau concludes that if compliance were to become mandatory while the reconsideration rulemaking is ongoing, several significant and potentially unwarranted consequences would likely result, including significant compliance costs, the potential exit of some smaller providers, and restricted access to consumer credit. Those consequences would risk undermining effective reconsideration of the Rule by imposing potentially market-altering effects, some of which may be irreversible if the Bureau required compliance with the Mandatory Underwriting Provisions and then later rescinded them. The Bureau is particularly concerned that some smaller providers may permanently exit the market if they are required to comply with the Mandatory Underwriting Provisions while reconsideration is ongoing.

In light of these considerations, the Bureau concludes that it is appropriate to delay the compliance date for 15 months to allow time for the Reconsideration NPRM rulemaking process that the Bureau has initiated—and through which the Bureau has received approximately 190,000 comments—to be completed.

The comment period on the Delay NPRM closed on March 18, 2019. The Bureau received approximately 150 comment letters from individuals, consumer advocacy groups, a group of State attorneys general, depository and non-depository lenders, tribal governments, national and regional trade associations, service providers, the Small Business Administration's Office of Advocacy (SBA OA), legislative and executive branch State government officials, and others. 23

Commenters writing in support of the proposed delay included lenders, trade associations, tribal governments, the SBA OA, individual commenters, and others. Some of these commenters also expressed their support for rescission of the Mandatory Underwriting Provisions as proposed in the Reconsideration NPRM. Commenters writing in opposition to the proposed delay included a number of consumer advocacy groups, a group of State attorneys general, legislative and executive branch State government officials, individual commenters, and others. Some of these commenters also expressed their opposition to the rescission of the Mandatory Underwriting Provisions as proposed in the Reconsideration NPRM.

These comments are discussed in more detail below. At a high level, comments in support of the proposed delay generally spoke to harms to industry and to consumers that the commenters asserted would occur if the August 19, 2019 compliance date for the Mandatory Underwriting Provisions stayed in place and that would be postponed if those provisions were delayed. These comments also argued that a delay was appropriate to give the Bureau time to complete its process of reconsidering the Mandatory Underwriting Provisions. Comments focusing on the merits of the Mandatory Underwriting Provisions themselves more generally also claimed that there were flaws in the Rule, the data underlying the Rule, or the rulemaking process. Some comments also discussed individual consumers' positive experiences with payday or vehicle title loans.

Commenters opposing the proposed delay generally spoke to the consumer harms that they asserted occur with loans covered by those provisions. These commenters also focused on the bad practices in which they alleged lenders engage. Commenters in addition raised issues such as requirements under the Administrative Procedure Act for compliance date delays and the Bureau's authority to delay the compliance date of the Rule. Commenters focusing on the merits of the Mandatory Underwriting Provisions also more generally referenced, for example, the Bureau's prior research and evidence in this area, and discussed the interaction of Federal protections with those offered by the States.

Commenters, both supporting and opposing the delay, addressed the Bureau's proposed rationales for delaying the compliance date of the Mandatory Underwriting Provisions. Specifically, the comments offered views on the Bureau's preliminary conclusion that there are strong reasons for rescinding the Mandatory Underwriting Provisions. They also offered views on the unanticipated obstacles to compliance that came to light after publication of the 2017 Final Rule, as discussed in the Delay NPRM. Commenters also responded to the Bureau's specific solicitations for comment, which included seeking comment on: (1) What challenges industry would face in complying with the Mandatory Underwriting Provisions by August 19, 2019; (2) whether delaying the Mandatory Underwriting Provisions would have any crossover effects on implementation of the Payment Provisions; (3) whether delaying the compliance date for the Mandatory Underwriting Provisions would be better than not delaying the date for purposes of facilitating an orderly implementation period for the Rule; (4) the consequences of not delaying the Mandatory Underwriting Provisions; and (5) the impact of the proposed delay on consumers who use payday loans, vehicle title loans, and high-cost installment loans covered by the 2017 Final Rule.

Commenters also raised a number of issues that were outside the scope of the Delay NPRM. These comments are summarized in part III.D.6 below.

A key predicate for the proposed compliance date delay was, as noted above, that the Bureau preliminarily believed that the Mandatory Underwriting Provisions of the 2017 Final Rule should be rescinded and had separately issued the Reconsideration NPRM seeking comment on whether it should rescind those provisions. As explained in the Delay NPRM, delaying the August 19, 2019 compliance date for the Mandatory Underwriting Provisions will give the Bureau the opportunity to review comments on the Reconsideration NPRM and to make any changes to those provisions before compliance with the Mandatory Underwriting Provisions causes a series of potentially market-altering effects, some of which may be irreversible for the smaller storefront lenders that permanently exit the market, that the Bureau has strong reasons to believe may prove unwarranted.

After reviewing the comments received, the Bureau concludes that there are strong reasons, on multiple grounds, to revisit the unfairness and abusiveness findings set out in the Mandatory Underwriting Provisions in the 2017 Final Rule. The Bureau initiated the process for reconsidering these specific unfairness and abusiveness findings by issuing the Reconsideration NPRM, which set forth in detail the Bureau's reasons for proposing to rescind the Mandatory Underwriting Provisions.

The Reconsideration NPRM proposed multiple independent grounds for rescinding the Mandatory Underwriting Provisions. First, the Reconsideration NPRM identified specific concerns with the adequacy of the evidence underpinning the reasonable avoidability element of the unfairness finding, and the lack of understanding and inability to protect elements of the abusiveness finding of the Mandatory Underwriting Provisions. 24 The Reconsideration NPRM identified limitations to certain pieces of evidence, especially a key study by Professor Ronald Mann, that the 2017 Final Rule relied upon in determining that injury associated with short-term and longer-term balloon-payment loans issued without the lenders having reasonably determined a borrower's ability to repay was not reasonably avoidable and evinced a lack of consumer understanding. 25 The Reconsideration NPRM also identified a number of concerns with the weight the 2017 Final Rule placed on a key study by the Pew Charitable Trusts in finding an inability of consumers to protect themselves from covered short-term and longer-term balloon-payment loans issued without the lenders having reasonably determined a borrower's ability to repay. 26 The Bureau noted in the Reconsideration NPRM that it is prudent as a policy matter to require a more robust and reliable evidentiary basis to support key findings in a rule that would significantly diminish the market for covered short-term and longer-term balloon-payment loans and that would likely cause some smaller providers to exit the marketplace, resulting in a decrease in consumers' ability to choose the credit they prefer. 27

Second, the Reconsideration NPRM identified concerns with the legal analysis in the Mandatory Underwriting Provisions of the 2017 Final Rule, specifically the application of statutory standards regarding two elements of unfairness, reasonable avoidability and countervailing benefits, and two elements of abusiveness, lack of understanding and unreasonable advantage-taking. 28 The Reconsideration NPRM preliminarily found that, even assuming that the factual findings in the 2017 Final Rule were correct and sufficiently supported, those findings did not establish that consumers could not reasonably avoid harm under a better interpretation of the unfairness standard in section 1031(c)(1) of the Dodd-Frank Act, informed by relevant longstanding precedent on reasonable avoidability under section 5 of the Federal Trade Commission Act. In particular, the Reconsideration NPRM preliminarily concluded that the 2017 Final Rule imposed what the Bureau now preliminarily believes was a problematic standard that required consumers to have a specific understanding of their individualized risk as determined by their ability to predict how long they will be in debt after taking out a covered short-term or longer-term balloon-payment loan. The Reconsideration NPRM also made similar preliminary conclusions as to the way the 2017 Final Rule interpreted lack of understanding under section 1031(d)(2)(A) of the Dodd-Frank Act. 29 The Reconsideration NPRM further preliminarily concluded that the 2017 Final Rule's application of the countervailing benefits element of the unfairness standard in section 1031(c)(1) of the Dodd-Frank Act did not consider the full countervailing benefits of the practice at issue; rather, the 2017 Final Rule discounted those benefits by taking into account the additional credit that would be available under the 2017 Final Rule's principle step-down exemption. The Bureau preliminarily found that, when fully accounted for, the countervailing benefits of the identified practice outweighed any relevant injury to consumers. 30 Finally, the Reconsideration NPRM preliminarily concluded that the 2017 Final Rule did not have a sufficient basis to conclude that by making covered short-term or longer-term balloon-payment loans without assessing consumers' ability to repay lenders take unreasonable advantage of consumers under the abusiveness provision of the Dodd-Frank Act. 31

Commenters, as set out in detail below, took issue with some of the proposed grounds for rescinding the Mandatory Underwriting Provision of the 2017 Final Rule, or generally praised or criticized the approach the Bureau took in making unfairness and abusiveness findings in the 2017 Final Rule. Commenters opposed to the compliance date delay offered some generalized criticisms of the Bureau's proposed legal conclusions, asserting that they were problematic, without offering detailed explanations of statutory text or specific issues with the approach to interpreting unfairness and abusiveness in the Reconsideration NPRM. These commenters offered more details in their criticism of the Reconsideration NPRM's reassessment of the evidentiary support for the 2017 Final Rule's factual findings, although still not with great specificity.

Some commenters asserted generally that the Bureau did not offer a compelling basis for repealing the Mandatory Underwriting Provisions. Consumer advocacy groups and a group of State attorneys general asserted that the compliance date should remain unchanged because the 2017 Final Rule came to the correct legal and factual conclusions regarding the Mandatory Underwriting Provisions, which should be implemented without further delay. These State attorneys general and consumer advocacy groups also commented that the Bureau did not offer strong reasons in the Reconsideration NPRM or the Delay NPRM for proposing to rescind those provisions.

Consumer advocacy groups asserted that the Bureau failed to provide a reasoned explanation for its new position in the Reconsideration NPRM by neglecting large amounts of evidence concerning the serious impact on vulnerable consumers that underlay the 2017 Final Rule. Another consumer advocacy group claimed that the Bureau's rationale for reconsidering the Mandatory Underwriting Provisions contradicted years of original Bureau research, data, consumer complaints, secondary research, and other sources of evidence demonstrating consumer harm and impacts, and that the Bureau failed to provide a reasoned explanation for dismissing such evidence. A consumer advocacy group argued that the Reconsideration NPRM downplays much of this information to focus on critiquing two studies, and that in doing so the Bureau was attempting to rationalize a policy result that it had already chosen.

Trade associations, lenders, and service providers commented that the Mandatory Underwriting Provisions were based on flawed data and one-sided studies, which resulted in faulty conclusions. A service provider agreed with the concerns set out in the Bureau's Reconsideration NPRM as to the flaws in the rulemaking process for the 2017 Final Rule. A trade association and a tribal government agreed with the Bureau that the 2017 Final Rule was not supported by sufficiently robust and reliable evidence.

One consumer advocacy group commented that the Delay NPRM does not provide compelling factual reasons to cast serious doubt on the Mandatory Underwriting Provisions of the 2017 Final Rule, which, it claimed, were thoroughly vetted when finalized. Specifically, the consumer advocacy group asserted that the Bureau in the Reconsideration NPRM questioned the validity of just two studies, taken from a vast body of material underlying the 2017 Final Rule, offered a new interpretation of this existing evidence, and conceded that new, additional evidence could support the older findings from the 2017 Final Rule. The commenter argued that it was arbitrary and capricious for the Bureau to assert that the 2017 Final Rule must be rescinded, as it did in the Reconsideration NPRM, when it could conduct further research and analysis to resolve evidentiary gaps.

A group of State attorneys general and consumer advocacy groups generally commented that the Bureau correctly analyzed and applied the unfairness and abusiveness standards in promulgating the Mandatory Underwriting Provisions of the 2017 Final Rule. These groups emphasized the extensive rulemaking record of the 2017 Final Rule, spanning many years, 1.4 million comments, and input from many stakeholders. These groups further asserted that the rulemaking record in the 2017 Final Rule detailed serious harm to consumers that would occur absent the Mandatory Underwriting Provisions. A consumer advocacy group asserted that the Mandatory Underwriting Provisions were precisely the type of measure that Congress designed the Bureau to create, and that in the Dodd-Frank Act, Congress identified protecting consumers from unfair, deceptive, and abusive acts and practices as a core objective of the Bureau. Further, the commenter noted that Congress singled out payday loans for special attention, providing the Bureau exclusive authority to conduct supervisory examinations of any provider that “offers or provides to a consumer a payday loan.”  32 Other consumer advocacy groups asserted in general terms that the Reconsideration NPRM mischaracterized the legal analysis of unfairness and abusiveness in the 2017 Final Rule, and that the legal analysis in the Reconsideration NPRM of unfairness and abusiveness was inconsistent with Federal Trade Commission precedent, Federal Reserve Board precedent, and Congressional intent.

Consumer advocacy groups and the group of State attorneys general emphasized the previous findings of consumer harm set out in the analyses of the 2017 Final Rule, quoting from the 2017 Final Rule and other contemporaneous research. One consumer advocacy group provided case studies of individuals and families whom payday and title loans had affected.

Lenders, trade associations, and an attorney to lenders commented that in the 2017 Final Rule, the Bureau misapplied its unfairness and abusiveness authority. These commenters asserted that, rather than identifying and prohibiting specific practices that the Bureau found to be unfair and abusive, the Bureau in the 2017 Final Rule had instead prescribed a single set of mandatory practices under the theory that any other approach was unfair and abusive. Further, a number of trade associations noted that the requirements of the Mandatory Underwriting Provisions are overly burdensome, adding manual processes and verification of data that consumer loans do not ordinarily require. One trade association claimed that the Bureau exceeded its unfairness and abusiveness authority in the 2017 Final Rule because it offered no evidence to support the sweeping legal conclusion that all alternative underwriting approaches other than the one set out in § 1041.5 would be unfair or abusive. Lenders and trade associations commented that the Bureau, in developing the Mandatory Underwriting Provisions, failed to consider alternative and less burdensome State law approaches to regulating short-term and longer-term balloon-payment loans.

Overall, the Bureau does not agree with the comments that the Bureau did not offer strong reasons, or reasoned explanations, for proposing to rescind the Mandatory Underwriting Provisions. The Bureau identified multiple, independent, and specific evidentiary and legal grounds addressing specific elements of unfairness and abusiveness that would, if finalized, result in the rescission of the unfairness and abusiveness findings in § 1041.4 of the 2017 Final Rule and, as a result, would also require the rescission of the Mandatory Underwriting Provisions predicated on § 1041.4.

The Bureau further disagrees with the commenters who asserted that the Delay NPRM or the Reconsideration NPRM ignored a large body of evidence considered in conjunction with the 2017 Final Rule. The Reconsideration NPRM challenged the sufficiency and weight given to certain linchpin pieces of evidence, without which the Bureau preliminarily believes that the factual findings on which the Mandatory Underwriting Provisions are based cannot stand. The Delay NPRM, in turn, relied on the strong reasons for rescinding the 2017 Final Rule set out in the Reconsideration NPRM. The Bureau's preliminary conclusions in the Reconsideration NPRM and its assessment of the Reconsideration NPRM here for purposes of this delay final rule are based on both the existence of the complete body of evidence included in the 2017 Final Rule and its preliminary belief that certain linchpin evidence is not sufficiently robust and representative.

The Bureau recognizes that the comments of the consumer advocacy groups reflect strong disagreement with the substance of the Reconsideration NPRM, but the Bureau believes that, whatever the ultimate merit of those arguments is found to be, those arguments do not negate the fact that the Bureau has articulated strong reasons for revisiting the Mandatory Underwriting Provisions. Commenters did not offer specific reasons why the analyses of the limitations of a study by Professor Ronald Mann (Mann Study)  33 and a survey of payday borrowers conducted by the Pew Charitable Trusts (Pew Study), 34 as set out in the Reconsideration NPRM, were flawed, nor did they otherwise present concrete arguments that change the Bureau's assessment of the strength of the concerns expressed in the Reconsideration NPRM regarding that evidence. The Bureau does not agree with the comment that it was arbitrary and capricious of the Bureau not to conduct further research and analysis to resolve any evidentiary gaps. The Bureau noted in the Reconsideration NPRM that resolving the issues raised in that proposal pertaining to reasonable avoidability and to the inability of consumers to protect their interests would take significant resources and could not be accomplished in a timely and cost-effective manner. The Bureau does not foreclose the possibility of conducting additional research farther in the future.

The Bureau notes that the comments that defended the reasoning of the 2017 Final Rule did not call into question the precise grounds on which the Bureau based its Delay NPRM—that is, its preliminary determination that it had strong reasons for believing that the evidence underlying the identification of the unfair and abusive practice in the Mandatory Underwriting Provisions of the 2017 Final Rule was not sufficiently robust and reliable, and that its approach to unfairness and abusiveness should be revisited. Commenters did not identify new or other research not previously considered by the Bureau that undermine the preliminary determinations the Bureau made in the Reconsideration NPRM that, in turn, were the basis for the Bureau's Delay NPRM. Nor did commenters challenge the Bureau's preliminary policy decision, whatever the merits of the linchpin evidence, to require more robust and reliable evidence in the face of a regulation likely to cause widespread disruption in the payday market, including the exit of some lenders and a reduction in consumers' ability to choose the credit they prefer. The Bureau also notes that, contrary to the views of some commenters, it did, in fact, consider alternative State law approaches in its 2017 Final Rule, and the Bureau does not agree that the Final Rule was devoid of evidence to support the Mandatory Underwriting Provisions; but, as explained above, the Bureau is reconsidering those provisions because it is concerned that the evidence was not sufficiently robust and reliable in light of the significant effects that would be caused by the Mandatory Underwriting Provisions.

The commenters' criticisms of the legal grounds the Bureau set out in the Reconsideration NPRM for proposing to rescind the Mandatory Underwriting Provisions have not convinced the Bureau that it was mistaken in its preliminary view that the grounds for rescinding the Mandatory Underwriting Provisions are strong. The State attorneys general and consumer advocacy groups did not present detailed comments on the specific legal analyses of the elements of unfairness and abusiveness that the Reconsideration NPRM addressed—reasonable avoidability and countervailing benefits in analyzing unfairness, and lack of understanding and unreasonable advantage-taking in analyzing abusiveness—and the general criticisms offered have not changed the Bureau's preliminary assessment of the strength of its Reconsideration NPRM for purposes of delay.

To finalize the Delay NPRM the Bureau does not, and need not, finalize its determination as to its proposed reconsideration of the unfairness and abusiveness conclusions set out in the 2017 Final Rule. The Bureau here concludes only that, in light of the consequences that would result if the compliance date became mandatory as discussed below, the Reconsideration NPRM raised sufficiently strong reasons to justify finalizing the Bureau's proposal to delay the compliance date for the Mandatory Underwriting provisions—enough time to consider the approximately 190,000 comments that have been received in that proceeding and decide how to respond to them. The Bureau remains open to the possibility that those comments may reveal other data, research, or arguments to confirm or refute the Bureau's proposed reconsideration of the unfairness and abusiveness findings of the Mandatory Underwriting Provisions in the 2017 Final Rule. The Bureau, however, will make that determination in the context of the Reconsideration NPRM.

In the 2017 Final Rule, the Bureau had estimated that the Mandatory Underwriting Provisions would result in an annual loss of revenue for payday lenders of between $3.4 billion and $3.6 billion and an annual loss of between $3.9 billion and $4.1 billion for vehicle title lenders. 35 This represents between 62 percent and 68 percent of payday loan revenue during this period and virtually all of the revenue of short-term vehicle title lenders. Based on this finding, the Delay NPRM estimated that a 15-month delay of the compliance date for the Mandatory Underwriting Provisions would avert losses in revenues for the payday industry of between $4.25 billion and $4.5 billion, and losses in revenues for the title lending industry of $4.9 billion and $5.1 billion, compared to the baseline of the provisions going into effect in August 2019. 36

The Delay NPRM stated that revenue losses of this magnitude could cause some smaller providers to exit the market and lead larger participants to consolidate their operations or make other fundamental changes to their businesses. The Delay NPRM further stated that these disruptions could have negative impacts on consumers, including restricting consumers' ability to choose the credit they prefer. The Bureau explained that it preliminarily believed that it was appropriate to avoid these potentially market-altering effects that would be associated with preparing for and complying with the Mandatory Underwriting Provisions in light of what the Bureau believed were strong reasons for revisiting the unfairness and abusiveness determinations underlying those provisions. 37

Commenters for the most part did not dispute that the Mandatory Underwriting Provisions, once in force, would have the effects on lenders described in the 2017 Final Rule. Some commenters, as set out below, suggested that the Bureau's 2017 Final Rule understated the impact on industry of the Mandatory Underwriting Provisions.

Lenders and trade associations expressed their agreement with the rationale for the proposed delay in the Delay NPRM. Lenders, a trade association, a business advocacy group, and an attorney for lenders stated that if compliance with the Mandatory Underwriting Provisions was required in August 2019, many lenders would go out of business and would likely not return to operating even if those provisions were later rescinded. Lenders, a trade association, and a credit reporting agency indicated that lenders would suffer unrecoverable losses and long-term consequences even if compliance with the Mandatory Underwriting Provisions were only required from August 2019 until the provisions were rescinded. A trade association asserted that it would be arbitrary and capricious to require temporary compliance with the Mandatory Underwriting Provisions if the provisions were fundamentally flawed at the outset.

A trade association and a law firm commented that lenders should not be required to comply with a rule that is likely to be rescinded. A lender and trade association further noted that if lenders were forced to switch underwriting practices back and forth over a short period of time because compliance with the Mandatory Underwriting Provisions was required and then those provisions were rescinded, lenders would face unnecessary costs and that consumers would be significantly confused regarding whether they and the lenders are able to enter into transactions that both think are in their interest. The trade association also noted that the Mandatory Underwriting Provisions would have a negative impact on competition among payday lenders.

Lenders, trade associations, and a tribal government commented that to the extent that lenders did not go out of business, the Mandatory Underwriting Provisions would significantly reduce revenues from lending operations, and that the proposed delay would protect businesses from revenue disruption. Lenders stated that to the extent that they did not go out of business, many of them would be forced to consolidate their operations or make other fundamental changes as a result of the Mandatory Underwriting Provisions. A credit reporting agency noted that any increase in costs to lenders as a result of efforts to comply with the Mandatory Underwriting Provisions would simply be passed on to consumers.

Lenders and trade associations noted that if finalized, the Delay NPRM would help lenders avoid injuries from any temporary disruptions as the Bureau contemplates revising the 2017 Final Rule. Lenders asserted that significant costs and work hours would go into complying with the Mandatory Underwriting Provisions by August 19, 2019, but that these costs and hours would not be recouped if the Bureau later rescinded these provisions. Lenders stated that the Delay NPRM was a reasonable and practical approach to avoid requiring small businesses to incur large and potentially unnecessary costs while the Bureau reconsiders the Mandatory Underwriting Provisions.

A tribal government noted that the Mandatory Underwriting Provisions would cause providers to close, resulting in unemployment, lost payroll, and property taxes.

Industry commenters, trade associations, a business advocacy group, a consumer advocacy group, and an attorney for lenders also asserted that if compliance with the Mandatory Underwriting Provisions of the 2017 Final Rule was required, millions of consumers would be harmed because they would be denied access to credit and would be forced into inferior and more costly alternatives, including defaulting on other debts and turning to less responsible lenders on less favorable terms. One business advocacy group and a trade association commented that access to small-dollar credit critically supports consumers facing immediate and pressing financial challenges. One trade association noted that in some areas, in particular rural communities, consumers are not served by traditional banks and access to short-term and longer-term balloon-payment products is vital and would be cut off if the compliance date for the 2017 Final Rule were not delayed. One lender claimed that consumers would be forced to turn to expensive, credit-damaging alternatives absent access to short-term and longer-term balloon-payment loans. One trade association asserted that the Bureau should not assign the weight that the 2017 Final Rule did to the interest of protecting consumers as soon as possible.

Consumer advocacy groups, on the other hand, generally commented that injury to industry from not delaying the Mandatory Underwriting Provisions did not outweigh injury to consumers from delaying these provisions. One consumer advocacy group claimed that in the Delay NPRM the Bureau prioritized industry profits over consumer protection and that the protection of industry is not one of the factors the Dodd-Frank Act requires the Bureau to consider in its rulemakings. The same group claimed that the Bureau could not frame its concern over industry profits at the expense of consumers as an attempt to preserve competition because the 2017 Final Rule explained how the Mandatory Underwriting Provisions were consistent with preserving competition. One consumer advocacy group asserted that the Delay NPRM was based on purely anecdotal input on vaguely defined compliance costs and revenue losses. Another consumer advocacy group argued that maintaining the original compliance date for the Mandatory Underwriting Provisions was consistent with maintaining an orderly implementation period.

A coalition of consumer advocacy groups, civil rights groups, religious groups, and community reinvestment groups commented that the Delay NPRM would prolong for 15 months the various harms suffered by consumers receiving loans that would not comply with the Mandatory Underwriting Provisions. These groups asserted that delay would cause a variety of impacts on consumers, including foregoing basic living expenses, vehicle repossession, aggressive debt collection by lenders, health effects (including the physical consequences of emotional distress), and reborrowing costing billions of dollars a year. In asserting the frequency of some of these harms, these commenters cited the Bureau's findings in the 2017 Final Rule. Consumer advocacy groups claimed that the delay of the compliance date for the Mandatory Underwriting Provisions would inflict the above harms particularly on communities of color, older Americans, and those on fixed incomes. Consumer advocacy groups commented that payday and vehicle title loans are debt traps by design, and that the business model for these products is not about providing access to productive credit or bridging short-term financial shortfalls. Consumer advocacy groups commented that the data show that the economic benefits from unaffordable loans are outweighed by the harms caused by the cycle of debt.

A consumer advocacy group commented that, according to the findings in the 2017 Final Rule, the Mandatory Underwriting Provisions would provide substantial benefits to consumers, reducing the harms, identified above, that consumers would otherwise suffer. An individual commenter argued that the Delay NPRM was arbitrary and capricious because it only took into account the costs to industry of complying with the 2017 Final Rule and completely ignored the benefits to consumers that would result from compliance.

Consumer advocacy groups asserted that delay of the Mandatory Underwriting Provisions would cause severe, irreparable harm to consumers, and that consumers cannot afford to wait an additional 15 months for the relief that the Mandatory Underwriting Provisions would provide. These harms, according to the commenters, would be significantly curbed by the Mandatory Underwriting Provisions, but would continue during the 15 months of the proposed delay, causing many individuals and families to experience long-lasting and spiraling harms.

Consumer advocacy groups noted the Delay NPRM illustrates the magnitude of harm to consumers through its estimate of the benefits of delay to lenders. According to these groups, the Delay NPRM never acknowledges that its estimate of impact on industry is the inverse of its impact on consumers—that is, revenue that the delay would preserve for lenders is an additional expense to consumers. The commenters asserted that a corresponding increase in expenses to consumers is just a single component of the harms caused by unaffordable payday and vehicle title loans, including the risk of falling into debt traps, delinquency and default of loans, bank account closures, repossession of vehicles, and other long-term injuries suffered by consumers. One consumer advocacy group commented that, during the 15 month delay, title lenders would repossess an estimated 425,000 vehicles.

A consumer advocacy group commented that the Bureau's estimates in the Reconsideration NPRM that the Mandatory Underwriting Provisions of the 2017 Final Rule would reduce access to credit were unsubstantiated, and that the Bureau's analysis in the Delay NPRM did not recognize that the majority of consumers would still have access to loans with terms longer than 45 days because of the availability of small installment loans or lines of credit with terms longer than 45 days. Another consumer advocacy group asserted that access to short-term or longer-term balloon-payment loans was not really access to new credit to the borrower or the broader economy, but was really one original unaffordable loan churned over and over again.

The Bureau concludes that delaying the August 19, 2019 compliance date for the Mandatory Underwriting Provisions would prevent industry participants from incurring substantial compliance and implementation costs and would avoid the Mandatory Underwriting Provisions' potentially market-altering effects, some of which may be irreversible, while the Bureau conducts its reconsideration rulemaking. In particular, the Bureau is concerned that some smaller storefront lenders may permanently exit the market if they are required to comply with the 2017 Final Rule, even if the Rule is later rescinded after the compliance date. 38 The Bureau agrees that if compliance with the Mandatory Underwriting Provisions was required in August 2019 lenders would suffer a large and potentially unrecoverable loss of revenue. The cost to industry, according to the estimates set forth in the 2017 Final Rule, would be billions of dollars in lost revenues. If compliance with the Mandatory Underwriting Provisions is required, some smaller lenders would go out of business, to the extent they cannot earn sufficient revenues and profits from other products or could not otherwise timely adapt, which would result in fewer payday storefronts as a result. The 2017 Final Rule itself acknowledges that one anticipated impact of Mandatory Underwriting Provisions would be a large contraction in the number of payday storefronts consistent with the predicted 62 to 68 percent decline in loan revenue. 39 These disruptions would likely result at least in the short-term in a significant contraction of the market for payday loans and the near elimination of the market for vehicle title loans before the Bureau had an opportunity to complete its reconsideration of the 2017 Final Rule. Further, given high fixed costs in the vehicle title lending market, some participants may not return to offering vehicle title loans if the Mandatory Underwriting Provisions were rescinded. If the Bureau does not delay the August 2019 compliance date and ultimately rescinds the Mandatory Underwriting Provisions after that date, there is a risk that the affected markets would not return to the status quo. There may be fewer competitors and less competition in the affected markets after a short period of required compliance with the Mandatory Underwriting Provisions.

Lenders that survived the impact of the Mandatory Underwriting Provisions of the 2017 Final Rule would incur, as predicted by the Rule itself, a number of operational costs from the large number of specific requirements set out by the provisions of § 1041.5, including building systems to verify income, estimate a borrower's living expenses, and project a potential borrower's residual income or debt-to-income ratio. If lenders had the option instead to make loans under § 1041.6, they still would need to establish systems for obtaining reports from a national consumer reporting agency and systems for furnishing to, and obtaining reports from, an RIS. 40

The immediate contraction of the market that would likely result if compliance with the Rule became mandatory would, in turn, result in a reduction in access to credit for consumers. The Bureau notes, for example, that the 2017 Final Rule found that the Mandatory Underwriting Provisions would prevent some consumers from obtaining a payday loan ( i.e., those consumers who exhausted their ability to obtain principal step-down loans and could not qualify for an ability-to-repay loan) and would prevent substantially all consumers from obtaining vehicle title loans, which are typically for larger amounts than payday loans and available to consumers who do not have a checking account. At a minimum, those consumers would be forced to choose a different form of credit regardless of their preference. 41 The 2017 Final Rule further found that the Mandatory Underwriting Provisions would disrupt to some extent access to payday loans in certain geographical areas, especially in rural areas. The Rule also found that the Mandatory Underwriting Provisions would impact consumers who prefer to repay a payday loan over more than three pay periods from making that choice. Delaying the compliance date will delay all of the consequences described above until the Bureau is able to resolve the question of whether there are evidentiary or legal grounds for rescinding the Mandatory Underwriting Provisions.

The Bureau disagrees with commenters who argued that the Delay NPRM's predictions regarding access to credit were “unsubstantiated.” As established above, the Delay NPRM's estimates of changes in access to credit attributable to the proposed delay were based on information from the 2017 Final Rule as analyzed by the Reconsideration NPRM. 42

At the same time, the Bureau acknowledges that for some consumers there could be adverse and potentially long-lasting consequences from delaying the compliance date for the Mandatory Underwriting Provisions. Specifically, the 2017 Final Rule found that the act or practice of making covered short-term and balloon-payment loans without assessing the consumers' ability to repay causes or is likely to cause substantial injury to consumers—principally in the form of unanticipated and repeated reborrowing—and that the Mandatory Underwriting Provisions would have the effect of preventing that injury. 43 The Reconsideration and Delay NPRMs accepted that finding, but emphasized that the finding does not reflect the Bureau's concerns that such injury may not constitute an unfair or abusive practice under applicable law because consumers could reasonably avoid it and understood the material risks of such harm. 44 The Reconsideration and Delay NPRMs likewise took as a given that the 2017 Final Rule had concluded that “the overall impacts of the decreased loan volume resulting from the 2017 Final Rule's Mandatory Underwriting Provisions on consumers would be positive,” and therefore it follows that “inverse effects would ensue, relative to the chosen baseline, from this proposal to rescind the 2017 Final Rule.”  45 The Bureau, however, also specifically emphasized that “the 2017 Final Rule's conclusion as to these effects was dependent upon the evidence that consumers who experienced long durations of indebtedness generally did not anticipate these outcomes and . . . the agency now believes that this evidence is not sufficiently robust and representative to support the findings necessary to determine that the identified practice is unfair and abusive.”  46 Contrary to the suggestion of commenters, the Bureau is not ignoring the referenced findings of the 2017 Final Rule.

However, for the reasons explained above, the Bureau has concluded that it has strong reasons to believe that those consequences are not the result of unfair or abusive practices that justify Bureau intervention that would disrupt the market and displace consumer choice. Regardless of whether the Bureau ultimately decides to rescind the Mandatory Underwriting Provisions, the Bureau now concludes that the proposed delay is appropriate based on the Bureau's present assessment of the strength of the Reconsideration NPRM and the nature and magnitude of the consequences that would follow if compliance became mandatory before the Bureau had an opportunity to conclude the reconsideration rulemaking. The Bureau believes that the Delay NPRM should be finalized to give the Bureau time to consider fully whether it should rescind provisions that may cause potentially market-altering effects, some of which may be irreversible, before those effects occur. Absent such delay, the Bureau's ability to reconsider the Mandatory Underwriting Provisions could, as a practical matter, be compromised.

The Bureau disagrees with the comment suggesting that its analysis of competition was a pretext for its concern over industry profits. The Bureau is concerned about effects on industry revenue and profits only to the extent that they, in turn, have an effect on competition among lenders and on consumers' ability to access credit of the type and on the terms they prefer. The Bureau also disagrees with the comment that the Delay NPRM only vaguely or anecdotally defined the impact of the 2017 Final Rule on compliance costs and revenue losses. The 2017 Final Rule described in detail the multi-billion dollar impact of the Mandatory Underwriting Provisions on loan volumes and revenues, and the Delay NPRM was based on those findings.

The Bureau also disagrees with the comment that the Delay NPRM should have acknowledged that its estimates of the proposed delay's impact on industry were the inverse of its impact on consumers. The payday lender revenues at issue are the finance charge the lender charges the consumer for the use of the lender's money. The finance charges lenders would forego if compliance became mandatory are amounts that consumers would have paid to lenders. However, the consequences that the Bureau is concerned with here are the potentially market-altering effects, some of which may be irreversible, that would result from disrupting these payments and the resulting effects on consumers' access to credit and ability to make their own choices. Given the Bureau's strong reasons for questioning the factual and legal predicates for the Mandatory Underwriting Provisions, the Bureau concludes that it is appropriate to delay those consequences to allow the Bureau to reconsider the Mandatory Underwriting Provisions.

A number of comments opined on whether reconsideration of a substantive regulation was a valid ground for delaying the compliance date of that regulation. A lender and a consumer advocacy group commented that reconsideration of an existing regulation is an equitable, fair, and sensible reason to delay a compliance date, as the Bureau has proposed to do.

A group of State attorneys general, consumer advocacy groups, and an individual commenter asserted that reconsideration of a rule is not an adequate basis for delay. In making this argument, the consumer advocacy groups cited cases in which courts vacated rules that delayed compliance dates for existing regulations that had not yet gone into effect.

A group of State attorneys general and consumer advocacy groups commented that the Administrative Procedure Act imposes a number of specific procedural requirements on an agency seeking to change its regulation, that an agency must provide reasoned analysis for its decision to change a regulation, and that the required reasoned analysis cannot be avoided by staying the implementation of a final rule. The group of State attorneys general and consumer advocacy groups cited case law for the proposition that a delay of a substantive regulation could not be justified with a less stringent or thorough review than other rulemakings under the Administrative Procedure Act. Finally, the group of State attorneys general asserted that the Bureau cannot use the purported proposed future revision, which has yet to be passed, as a justification for the delay of a regulation, and that a delay must be justified on its own merits. A consumer advocacy group commented that while agencies regularly reconsider rules, the authority to reconsider rules does not in itself convey to the agency the authority to delay an existing rule. According to the group of State attorneys general, consumer advocacy groups, and an individual, the Delay NPRM fails to satisfy Administrative Procedure Act requirements.

Consumer advocacy groups commented that delaying the Mandatory Underwriting Provisions of the 2017 Final Rule would be tantamount to early adoption of the rescission proposed by the Bureau in its Reconsideration NPRM, and that the Bureau can only rescind the Mandatory Underwriting Provisions by seeking and considering comments on the merits of the reconsideration. A consumer advocacy group asserted that the Delay NPRM assumed the validity and ultimate implementation of the Reconsideration NPRM and that the Bureau was not entitled to assume that the Mandatory Underwriting Provisions would be repealed such that industry compliance with them would be unnecessary, given the flaws in the Reconsideration NPRM. Further, the consumer advocacy group asserted that acting based on flawed assumptions is a cardinal example of arbitrary and capricious rulemaking.

The Bureau believes that if an agency has offered a strong and reasoned basis for reconsideration, and seeks delay to provide for an opportunity for notice and comment on the reconsideration of the underlying regulation before significant costs associated with compliance are incurred, such reconsideration of an existing regulation is an appropriate grounds to delay a compliance date—at least where, as here, there would be potentially market-altering effects, some of which may be irreversible, absent a delay. The Bureau also believes that such a reconsideration of an existing regulation can be an adequate basis for delay and that it has complied with the Administrative Procedure Act requirements for delaying the compliance date of a regulation.

The Bureau understands that agencies must engage in reasoned analysis to support proposed delays. The Bureau has done so here. As set out in the sections above, the Delay NPRM relied on the Bureau's clearly identified rationales for proposing to rescind the Mandatory Underwriting Provisions of the 2017 Final Rule without concluding that it would rescind those provisions. The Delay NPRM further articulated the Bureau's reasons for proposing to postpone the compliance date while the reconsideration rulemaking is moving forward. While many commenters dispute the rationales set out in the Reconsideration NPRM, the Bureau has articulated them clearly enough that commenters were able to understand the Bureau's preliminary grounds for proposing rescission of the Mandatory Underwriting Provisions and submit responsive comments to help the Bureau decide whether to go forward with the Reconsideration NPRM. The Delay NPRM, in turn, relied upon those preliminary grounds in proposing a limited delay of the compliance date for the Mandatory Underwriting Provisions for purposes of avoiding disruptive and potentially market-altering effects, some of which may be irreversible, while the Bureau reviews comments on the rationales set forth in the Reconsideration NPRM.

The Bureau believes that the compliance date delay is appropriate to allow for meaningful reconsideration of the 2017 Final Rule. Absent such a delay, the Bureau is concerned that the Mandatory Underwriting Provisions could have disruptive and potentially market-altering effects, some of which may be irreversible. 47 The risk of this outcome is confirmed by the comments received, as set out in part III.B.2, from lenders and trade associations who indicated that they or their members would go out of business permanently if compliance with the Mandatory Underwriting Provisions was required on August 19, 2019. Therefore, the Bureau believes that a delay of the compliance date is important to complete a meaningful reconsideration.

The Bureau disagrees with the assertion that finalization of the Delay NPRM is tantamount to early adoption of the Reconsideration NPRM. The Bureau has proposed a limited delay to the compliance date of 15 months to consider comments on the Reconsideration NPRM. This delay is not indefinite—compliance with the Mandatory Underwriting Provisions will be required as of the new compliance date unless the Bureau decides rescind those provisions via the reconsideration rulemaking.

Several commenters opposing the proposed delay noted that the 2016 Proposal, which was later finalized as the 2017 Final Rule, had a 15-month compliance period, and that the Bureau subsequently extended the period by an additional six months in the 2017 Final Rule. One commenter noted that the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) gave credit card issuers nine months to comply with major new consumer protections, including an ability-to-repay requirement, 48 and that changes to State laws with a more substantial impact on the payday and title lending industries typically provide only three to nine months for full implementation. These commenters argued that industry participants' renewed requests for more time do not justify further extension of what they consider an already lengthy implementation period, or that even if compliance challenges posed as a reason for delay (with the commenters also asserted that here they do not), they certainly cannot justify a delay of an additional 15 months. Relatedly, they argued that the industry complaints cited by the Bureau bear no relationship to the proposed 15-month delay, asserting that the Bureau's focus on these issues appears to be an attempt to support a result the agency has already determined.

A group of State attorneys general claimed that the Bureau offered, in the 2017 Final Rule, a legitimate and appropriate analysis justifying the amount of time the rule provided industry to comply with the Mandatory Underwriting Provisions, and that the reasons the Delay NPRM offered contradicted its own prior analysis. One consumer advocacy group claimed that the length of the delay the Bureau proposed does not square with the reason the Bureau suggests for such delay, i.e., that the delay proposed by the Bureau for considering and potentially finalizing the Reconsideration NPRM was more time than the Bureau took to finalize the 2017 Final Rule, which the group argued was a more complex and difficult rulemaking. Commenters supportive of the Bureau's proposal largely agreed that 15 months was an appropriate length of time for the delay. Several commenters, however, suggested that the Bureau delay for a longer period (such as 21 or 22 months, or until December 31, 2021) or that the extension of the compliance date should not begin until something else occurs (such as the completion of the reconsideration rulemaking or the lifting of the stay in the pending litigation challenging the Rule). One commenter asserted that a delay shorter than 22 months would threaten serious and irreparable harm to both payday and title lenders as well as the consumers who rely on them for credit, and further asserted that such an extension would suffice only if one assumes (incorrectly, in the view of this commenter) that the original compliance period was adequate.

One commenter asserted that the Bureau did not explain how it arrived at a decision to propose a 15-month delay, while simultaneously quoting the Bureau's explanation that the Bureau was proposing a 15-month delay in order to permit an orderly conclusion to its separate rulemaking process to reconsider the Mandatory Underwriting Provisions of the 2017 Final Rule. 49

The Bureau continues to believe that 15 months is an appropriate length of time to delay the August 19, 2019 compliance date for the Mandatory Underwriting Provisions of the Rule, in order to permit an orderly conclusion to the reconsideration rulemaking process. In addition, the Bureau believes that providing a date certain for the delay will provide more certainty and clarity to all relevant stakeholders in this context.

The comment period for the Reconsideration NPRM closed on May 15, 2019, and the Bureau received approximately 190,000 comments. The Bureau believes that the 15-month delay will give the Bureau sufficient time to review the comments received, make a determination as to how to proceed in that rulemaking, and to prepare, issue, and publish in the Federal Register a final rule sufficiently in advance of the November 19, 2020 compliance date to allow the final rule to take effect by that date (if the Bureau elects to rescind the Mandatory Underwriting Provisions). 50 This timeframe is not inconsistent with the Bureau's timing for issuing final rules where the proposal garnered a significant volume of comments. For example, the Bureau's rule governing prepaid accounts under Regulations E (12 CFR part 1005) and Z (12 CFR part 1026), which received approximately 65,000 comments, took approximately 20 months from the close of the comment period to publication, with an effective date approximately one year later (although the overall effective date was ultimately extended an additional 1.5 years, to April 1, 2019). 51

As discussed in the Delay NPRM, the Bureau's second reason for proposing to delay the compliance date of the Mandatory Underwriting Provisions was that the Bureau had discussed implementation efforts with a number of industry participants since publication of the 2017 Final Rule. Through these conversations, the Bureau had received reports of various unanticipated potential obstacles to compliance with the Mandatory Underwriting Provisions by the August 19, 2019 compliance date. The Bureau sought to better understand these reported obstacles and how they might bear on whether the Bureau should delay the August 19, 2019 compliance date for the Mandatory Underwriting Provisions while it considers whether to rescind those portions of the 2017 Final Rule. In the Delay NPRM, the Bureau specifically discussed recent changes to State laws and systems or vendor-related issues as examples of potential obstacles to compliance.

Commenters, including lenders, trade associations, consumer advocacy groups, a group of State attorneys general, the SBA OA, and others, spoke to potential obstacles to compliance generally, changes to State laws enacted after the 2017 Final Rule was issued, and systems or vendor-related issues, including such issues specifically related to RISes. Some lenders, trade associations, and an attorney to lenders asserted that the proposed delay is necessary even if the Bureau decides not to rescind the Mandatory Underwriting Provisions. Lenders and trade associations asserted that they would not be ready to comply with the Mandatory Underwriting Provisions by August 2019 and were deterred from making the significant investment in compliance by uncertainty about the compliance date. However, commenters provided little, if any, data or other specific information to support the existence or magnitude of these or other obstacles to compliance. 52 In light of the absence of such data or information in the rulemaking record, the Bureau is not basing its final rule to delay the compliance date on the presence or effect of obstacles to compliance, but rather is basing it on the need to conduct an orderly rulemaking with regard to the Reconsideration NPRM. 53

The Bureau received a number of comments that addressed crossover effects of the proposed delay of the Mandatory Underwriting Provisions on the implementation of the Payment Provisions.

A comment from a group of State attorneys general expressed some confusion about the request for comment on crossover effects. Nevertheless, the comment stated that the compliance date for the Payment Provisions should not be delayed and those provisions should go into effect as scheduled on August 19, 2019. They asserted that they were unaware of any circumstance where a high-cost lender does not act in an unfair and abusive manner by making more than two consecutive failed efforts to withdraw payments from a consumer's account without first obtaining new consumer authorization.

On the other hand, trade association and industry commenters contended that crossover effects existed and were reasons to delay or reconsider the compliance date for the Payment Provisions. Industry commenters stated that the 2017 Final Rule established a complex and interconnected set of provisions that covers various categories of covered loans. Given these interconnections, a number of commenters stated that the proposed delay of the Mandatory Underwriting Provisions potentially could impact the Payment Provisions, leading to confusion and unintended consequences for consumers and industry. Commenters stated that because of the complicated distinctions and overlapping definitions of covered loans, reconsideration of the Mandatory Underwriting Provisions could result in potential complications for industry with respect to compliance obligations and operations. Commenters asserted that such complications would be particularly likely if the Reconsideration NPRM resulted in modifications to the definitions or exemptions of covered loans.

A trade association stated that Payment Provisions cover a wider range of covered loans than the Mandatory Underwriting Provisions and therefore will impact more consumers and industry participants. Given this consequence for consumers and industry, the trade association urged the Bureau to delay and reconsider the Payment Provisions.

The Bureau has reviewed and analyzed these comments and has determined that they do not identify crossover effects on implementation of the Payment Provisions such that the Bureau should delay parts of the Rule other than the Mandatory Underwriting Provisions.

The Bureau disagrees with the comments asserting that finalizing the Delay NPRM would have crossover effects on the implementation of the Payment Provisions. The commenters in general did not identify specific or definite examples of crossover effects. Further, commenters generally did not identify with specificity negative or unintended consequences to consumers or industry that would arise from any such effects.

As to comments that said that changes to the 2017 Final Rule's covered loan definition could have potential crossover effects, the Bureau acknowledges that the Payment Provisions apply to a broader group of covered loans than do the Mandatory Underwriting Provisions, and if the Bureau undertook changes to narrow the 2017 Final Rule's coverage those changes could impact implementation. However, neither the Delay NPRM nor the Reconsideration NPRM proposed changes to the scope of the 2017 Final Rule's coverage. Additionally, the Delay NPRM did not propose delaying provisions that generally implement the covered loan definition. Further, commenters did not explain how the proposed rescission of the Mandatory Underwriting Provisions would in practice affect the covered loan definition in the Rule.

Having considered these comments, the Bureau concludes that delaying the Mandatory Underwriting Provisions will not result in significant crossover effects on implementation of the Payment Provisions.

Regarding comments about industry burden directly resulting from the Payment Provisions, which include comments about those provisions' compliance costs and market impacts, the Bureau considers these comments outside the scope of the proposal. The Bureau did not propose in the Delay NPRM to delay the compliance date for the Payment Provisions. 54 Rather, the Bureau specifically solicited comment about whether and to what extent delaying the compliance date of the Mandatory Underwriting Provisions would impact implementation of the Payment Provisions. 55 Comments about the Payment Provisions' industry burden in general are not responsive to this request for comment. However, as noted in both NPRMs, the Bureau has also received formal and informal feedback regarding the Payment Provisions. 56 As indicated in those NPRMs, the Bureau intends to examine issues raised by this feedback and determine whether further action is warranted.

Commenters argued that a compliance date delay is needed because a “cloud of uncertainty” has hung over the rule since it was published in 2017 and that as a result most lenders have deferred taking necessary steps to implement the Mandatory Underwriting Provisions. Commenters cited, variously, statements made by the Bureau or the then-Acting Director, the filing of the lawsuit challenging the Rule in April 2018, and the court's stay of the Rule's compliance date in November 2018. One commenter asserted that this uncertainty has prevented banks from being able to adequately design compliance programs.

One commenter noted that the court's stay of the compliance date remains in force, but could be lifted at any time, arguing that because of this uncertainty, the stay does not ameliorate concerns about the August 19, 2019 compliance date. Another commenter asserted that at this stage it would be inequitable for lenders to be required to commence implementation of costly compliance systems and undertake other measures required to become compliant, especially if the stay of the Rule is lifted by the court, and that the likely result would be that smaller storefront lenders would exit the business.

A consumer advocacy group commented that the Bureau failed to explain related decisions by the agency that could inform commenters' reaction to the Delay NPRM, noting that the Bureau did not explain that it had itself asked the court to stay the Rule's compliance date or explain the Bureau's assumptions about the relationship between that litigation and the Delay NPRM.

The Bureau acknowledges that its statements and pending litigation have created greater uncertainty for industry and consumers. However, the Bureau did not propose these issues as possible grounds for delaying the compliance date, and is not relying on them here to finalize the compliance date delay.

In the Reconsideration NPRM, the Bureau noted that changes to State-level regulation may have contributed to the decline in payday lending complaints that the Bureau handled through its Office of Consumer Response. 57 Several commenters suggested in their comments on the Delay NPRM that the Bureau should delay the compliance date of the Mandatory Underwriting Provisions to see if the downward trend in consumer complaints continues and whether State regulation is adequate to protect consumers without limiting access to credit. The Bureau will continue to monitor complaint volumes, but is not basing its decision to delay on these grounds.

One commenter suggested that the Bureau should adopt definitive UDAAP standards through a standalone notice-and-comment rulemaking process before promulgating and implementing specific rules relying on what the commenter referred to as shifting and unsettled interpretations of unfairness and abusiveness. The commenter also asserted that applying new or revised UDAAP interpretations on an ad hoc basis is arbitrary and capricious as well as an inappropriate way to make regulatory policy.

The Bureau indicated in its fall 2018 semiannual regulatory agenda that it is considering whether rulemaking or other activities may be helpful to further clarify the meaning of “abusiveness” under the section 1031 of the Dodd-Frank Act. 58 This issue remains on the Bureau's list of long-term actions. 59 The Bureau also recently announced that the first in an upcoming series of symposia that the Bureau is hosting will focus on clarifying the meaning of abusive acts or practices under section 1031 of the Dodd-Frank Act. 60

At this time, the Bureau has not yet decided whether it will take measures to address the general meaning of abusiveness. The Bureau believes that its Reconsideration NPRM proposes an interpretation of unfairness and abusiveness that is focused on the unique characteristics of the markets for the loans at issue. The Bureau does not consider this comment relevant to the specific issue presented in the rulemaking, which is whether the compliance date of the Mandatory Underwriting Provisions should be delayed. The Bureau already issued the Mandatory Underwriting Provisions as part of the 2017 Final Rule without the standalone rulemaking process desired by the commenter, and it is delaying the compliance date in order to reconsider those provisions.

Several commenters requested additional tribal government consultations regarding the Rule, both NPRMs, and/or tribal lending generally. Several other commenters requested that the Bureau coordinate with the prudential regulators to create a unified framework for regulating the small-dollar credit market. The Bureau will continue to coordinate and consult with tribal governments and with the prudential regulators as required by sections 1015 and 1022(b)(2)(B) of the Dodd-Frank Act and in accordance with the Bureau's frameworks on tribal government and interagency consultations.

Several commenters opposing the delay suggested that the Bureau might have prejudged the outcome of the Delay NPRM, arguing that the Bureau's actions (including the Bureau's statements regarding the rule, lack of an approved Office of Management and Budget (OMB) Control Number under the Paperwork Reduction Act of 1995 (PRA), and posture in the pending litigation) suggests that the Bureau decided to delay the Mandatory Underwriting Provisions before it issued the Delay NPRM. Commenters also asserted that the Reconsideration NPRM lacks support and rests on what one referred to as biased and contaminated input due to meetings that they asserted occurred prior to issuance of the NPRMs. They also noted recent media reports regarding the influence of the payday lending industry on academic studies and thereby purportedly on the Bureau's rulemaking. One commenter noted the difficulty in determining such industry influence on academic work and the rulemaking process, and suggested that the Bureau conduct a thorough investigation of all pro-industry studies reviewed or relied upon in connection with both NPRMs to ascertain whether there has been any industry influence on such purportedly independent work.

The Bureau issued NPRMs seeking comment on whether it should delay the compliance date of the Mandatory Underwriting Provisions as well as whether it should rescind those provisions. The Bureau's Director has stated multiple times that she has an open mind about the outcome of both rulemakings. 61 The Bureau regularly meets with representatives of industry, consumer advocacy groups, and other interested stakeholders at various points throughout the rulemaking process. 62 The Bureau summarized in the Delay NPRM the information on which it was relying that it had received from industry regarding the possible need for a delay of the compliance date for the Mandatory Underwriting Provisions, thus making that information part of the record and inviting public comment on it. As discussed elsewhere in this document, the public has used this opportunity to provide the Bureau with extensive and useful comments concerning the issues raised in the Delay NPRM.

In its rulemaking proceedings, including those relating to the 2017 Final Rule and the ongoing reconsideration of the Mandatory Underwriting Provisions in that Rule, the Bureau considers a broad range of information. Many stakeholders, including members of industry, trade associations, consumer advocacy groups, government agencies, and others, fund studies bearing on issues relevant to Bureau rulemakings. The Bureau conducts its own evaluation and analysis of the data presented in these studies, and draws its own conclusions about them. The Bureau does not believe that any information (including in media reports) it has received or reviewed since the issuance of the Reconsideration and Delay NPRMs undercuts the Bureau's preliminary determination to reconsider the weight it gave to certain studies (such as the Mann Study and Pew Study).

As the Bureau indicated in the Delay NPRM, the purpose of that document was to seek comment on whether the Bureau should delay the August 19, 2019 compliance date for the Mandatory Underwriting Provisions. The Bureau did not propose to delay the compliance date for the other provisions of the 2017 Final Rule, including the Payment Provisions. 63

Nonetheless, many commenters addressed issues related to payments or the scope of the Rule more generally in their comment letters. A number of commenters, including lenders, trade associations, tribal governments, the SBA OA, and others, requested that the Bureau: (1) Delay the compliance date for the Payment Provisions or for the Rule as a whole; (2) make modifications to the Payment Provisions or revise the scope of covered loans or entities to which the Rule applies; and/or (3) rescind the entire Rule. In addition, several commenters suggested that the Payment Provisions should be reassessed in light of the Reconsideration NPRM's proposed approach to unfairness and abusiveness, asserting that the Payment Provisions are predicated on the 2017 Final Rule's approach to unfairness and abusiveness, which the Reconsideration NPRM preliminarily deemed problematic.

As the Bureau noted in the Delay NPRM, the Bureau intends to separately examine these issues and the Bureau will determine whether further action is warranted (which may include issuing a request for information or an advance notice of proposed rulemaking relating to these issues). These comments are outside the scope of this final rule, and thus the Bureau is not delaying the compliance date for the Payment Provisions or making any of the other requested modifications to the Rule.

The legal authority for the 2017 Final Rule is described in detail in part IV of the SUPPLEMENTARY INFORMATION accompanying the 2017 Final Rule. 64 That discussion may be referred to for more information about the legal authority for this final rule.

The Bureau adopted the Mandatory Underwriting Provisions of the 2017 Final Rule in principal reliance on the Bureau's authority under section 1031(b) of the Dodd-Frank Act to identify and prohibit unfair and abusive practices. 65 Accordingly, in finalizing this rule, the Bureau is exercising its authority under Dodd-Frank Act section 1031(b) to prescribe rules under Title X of the Dodd-Frank Act.

In addition to section 1031 of the Dodd-Frank Act, the Bureau relied on other legal authorities for certain aspects of the Mandatory Underwriting Provisions in the 2017 Final Rule. 66 Section 1022(b)(3)(A) of the Dodd-Frank Act authorizes the Bureau, by rule, to conditionally or unconditionally exempt any class of covered persons, service providers, or consumer financial products or services from any rule issued under Title X, which includes a rule issued under section 1031, as the Bureau determines is necessary or appropriate to carry out the purposes and objectives of Title X. 67 The Bureau also relied, in adopting certain provisions, on its authority under section 1022(b)(1) of the Dodd-Frank Act to prescribe rules as may be necessary or appropriate to enable the Bureau to administer and carry out the purposes and objectives of the Federal consumer financial laws. 68 The term Federal consumer financial law includes rules prescribed under Title X of the Dodd-Frank Act, including those prescribed under section 1031. 69 Additionally, in the 2017 Final Rule, the Bureau relied, for certain provisions, on other authorities, including those in sections 1021(c)(3), 1022(c)(7), 1024(b)(7), and 1032 of the Dodd-Frank Act. 70

Section 1031 of the Dodd-Frank Act and each of the other legal authorities that the Bureau relied upon in the 2017 Final Rule provide the Bureau with discretion to issue rules and therefore discretion in setting compliance dates for those rules. In the 2017 Final Rule, the Bureau stated that the Rule's compliance date was “structured to facilitate an orderly implementation process.”  71 In particular, the Bureau sought “to balance giving enough time for an orderly implementation period against the interest of enacting protections for consumers as soon as possible.”  72 As discussed above and in the Reconsideration NPRM, the Bureau believes that there are strong reasons for rescinding the Mandatory Underwriting Provisions of the Rule on the grounds, inter alia, that a more robust and reliable evidentiary record is needed to support a rule that would have such dramatic impacts on the market, and that the findings of an unfair and abusive practice as set out in § 1041.4 of the 2017 Final Rule rested on applications of the relevant standards that the Bureau should no longer use. Thus, the Bureau believes that delaying the compliance date would be consistent with the “orderly implementation period,” given that the Bureau has strong reasons to rescind the Mandatory Underwriting Provisions.

Moreover, the Bureau concludes, for purposes of this final rule, that it should not assign the weight that it did in the 2017 Final Rule to “the interest of enacting protections for consumers as soon as possible.” This is because the Bureau has strong reasons to believe that the 2017 Final Rule was not the best application of the statutory scheme in section 1031 of the Dodd-Frank Act that is designed to protect that interest.

A trade association commented that the Bureau's authority to delay the implementation of the 2017 Final Rule is firmly grounded in section 1031(b) of the Dodd-Frank Act. The trade association asserted that because section 1031(b) provided that the Bureau “may prescribe rules” identifying unfair, deceptive or abusive acts or practices, Congress intended to give the Bureau the discretionary authority to decide when such rules should be implemented and when the Bureau should enforce compliance with such rules. Further, the commenter claimed that the Bureau was right to take the view that it should not assign the weight that it did in the 2017 Final Rule to the interest of enacting protections for consumers as soon as possible given its preliminary findings about the Mandatory Underwriting Provisions of the 2017 Final Rule.

An individual commenter and consumer advocacy groups asserted that the Bureau did not have the authority to delay the 2017 Final Rule. An individual commenter claimed that the Bureau could not use its “discretion” under section 1031 or other statutory sources as a legal authority to delay the compliance date. The individual commenter further claimed that the Bureau failed to identify specific legal authorities conferred by Congress that would permit the Bureau to delay the 2017 Final Rule, absent which the Bureau's proposed delay would be arbitrary and capricious under the Administrative Procedure Act. The individual commenter claimed that there was no history prior to 2017 for compliance date delays, other than one identified by the commenter that was issued in 2003 by the Office of the Comptroller of Currency, which the Bureau did not cite. The individual commenter also asserted that the Delay NPRM was arbitrary and capricious because section 705 of the Administrative Procedure Act only permits a stay of an existing rule pending judicial review if justice so requires, but the litigation over the 2017 Final Rule in the Federal district court in Texas did not justify such a stay because that case has already been stayed by the court. A consumer advocacy group asserted that, by way of analogy, the Bureau could not demonstrate under the standard established by section 705 of the Administrative Procedure Act a likelihood of success on the merits if the Reconsideration NPRM were finalized and subject to judicial review.

The Bureau concludes, contrary to the views of some commenters, that it has the discretionary authority to delay the 2017 Final Rule. Accordingly, the Bureau also agrees with the commenters who argued that section 1031(b) of the Dodd-Frank Act confers upon the Bureau the authority to reconsider or delay rules that the agency has issued based on findings of unfair, deceptive or abusive acts and practices. The Bureau further concludes that it properly identified in the Delay NPRM the specific legal authorities that it relied on to delay the 2017 Final Rule; those authorities were identified in the Legal Authorities section of the Delay NPRM and are set forth above. Finally, the Bureau does not rely on section 705 of the Administrative Procedure Act in issuing this rule, and that section is not otherwise relevant to this rulemaking.

As discussed above, the 2017 Final Rule became effective on January 16, 2018, but had a compliance date of August 19, 2019 for §§ 1041.2 through 1041.10, 1041.12, and 1041.13. The Bureau proposed to delay the August 19, 2019 compliance date to November 19, 2020 for §§ 1041.4 through 1041.6, 1041.10, 1041.11, and 1041.12(b)(1)(i) through (iii) and (b)(2) and (3). Sections 1041.4 through 1041.6 govern underwriting, with § 1041.4 identifying an unfair and abusive practice, § 1041.5 governing the ability-to-repay determination, and § 1041.6 providing a conditional exemption from §§ 1041.4 and 1041.5 for certain covered short-term loans. Section 1041.10 governs information furnishing requirements and § 1041.11 addresses RISes. 73 Section 1041.12 sets forth compliance program and record retention requirements, with § 1041.12(b)(1) through (3) detailing record retention requirements that are specific to the Rule's Mandatory Underwriting Provisions. 74

In the Delay NPRM, the Bureau sought comment on whether it had identified the appropriate provisions of the 2017 Final Rule as constituting the Mandatory Underwriting Provisions for purposes of the proposed delay, as well as whether it should amend the Rule's regulatory text or commentary to expressly state the delayed compliance date for the Mandatory Underwriting Provisions and/or the unchanged date for the Payment Provisions.

Several commenters agreed that the Bureau had identified the correct provisions to delay. One commenter requested that the Bureau amend the Rule itself to expressly state the delayed compliance date. Another commenter, however, argued that there was no reason to change the compliance date for § 1041.11, noting that unlike the rest of the rule, this section was set to be fully effective and implemented as of January 16, 2018 and that it does not impose any mandatory implementation costs. The commenter further stated that the Bureau has provided no reason it should shutter its own system for processing RIS applications, and that if the Bureau stalled the RIS application it would suggest the Bureau has prejudged the outcome to the Reconsideration NPRM.

The long-passed January 16, 2018 date for § 1041.11 should not be, and is not being, altered. As discussed above, the Bureau proposed to delay the August 19, 2019 compliance date for the Mandatory Underwriting Provisions; it did not propose to alter any other dates associated with those provisions. To avoid any potential confusion, however, the Bureau is not including § 1041.11 in the various lists that appear throughout this document of the sections for which it is delaying the compliance date (other than those reiterating language used in the Delay NPRM).

In this final rule, the Bureau is delaying the August 19, 2019 compliance date to November 19, 2020 for §§ 1041.4 through 1041.6, 1041.10, and 1041.12(b)(1) through (3). 75 To implement this compliance date delay, the Bureau is revising the few instances in the regulatory text and commentary where the August 19, 2019 compliance date appears. The Bureau is also adding new § 1041.15 to expressly state the Rule's effective and compliance dates. In addition, as noted above, the Bureau is also making certain corrections to address several clerical and non-substantive errors it has identified in the 2017 Final Rule, in §§ 1041.2(a)(9), 1041.3(e)(2), 1041.9(c)(3)(viii), and appendix A. 76 No substantive change is intended by these corrections.

Each of these revisions and additions is discussed in turn in the section-by-section analyses that follow.

Section 1041.2 provides definitions for the Rule. The term “covered person” is defined in § 1041.2(a)(9). However, that term is not used anywhere in the regulatory text or commentary of the Rule. The Bureau is thus removing that definition and reserving § 1041.2(a)(9). No substantive change is intended by this correction.

Section 1041.3 addresses the Rule's scope of coverage, as well as certain exclusions and exemptions. Section 1041.3(e) provides a conditional exemption for alternative loans; § 1041.3(e)(2) addresses the borrowing history condition, which is one of several conditions and requirements a covered loan must satisfy to qualify as an alternative loan. Section 1041.3(e)(2) states that the lender must determine from its records that the loan would not result in the consumer being indebted on more than three outstanding loans made “under this section” from the lender with a period of 180 days. However, that section (§ 1041.3) includes exclusions and exemptions for a number of other types of loans that are not relevant to the conditional exemption for alternative loans. The commentary accompanying § 1041.3(e)(2) refers to paragraph (e) rather than the entirety of § 1041.3 when discussing the requirements of the conditional exemption. The Bureau is thus correcting “this section” to “this paragraph (e)(2)” in the regulatory text of § 1041.3(e)(2). No substantive change is intended by this correction.

Section 1041.9 requires certain disclosures with respect to payment transfer attempts, with § 1041.9(c) addressing the timing, content, and electronic delivery requirements for the consumer rights notice that a lender must provide after it initiates two consecutive failed payment transfers as described in § 1041.8(b). Section 1041.9(c)(3) lists the information and statements that the notice must contain, and states that the language used must be substantially similar to the language set forth in Model Form A-5. Section 1041.9(c)(3)(viii) requires a statement that the Consumer Financial Protection Bureau created this notice, a statement that the CFPB is a Federal government agency, and the URL to www.consumerfinance.gov/payday-rule. Model Form A-5, however, lists the URL as www.cfpb.gov/payday. To avoid any potential confusion as to which URL should be used, the Bureau is revising the URL in the regulatory text of § 1041.9(c)(3)(viii) to match the URL used in Model Form A-5. No substantive change is intended by this correction.

As discussed below, the Bureau is adding new § 1041.15 to explicitly set forth the effective and compliance dates in the Rule itself. To reflect that change, the Bureau is adding “Dates” to the heading for subpart D of the Rule.

Comment 10(b)-1 addresses provisional registration and registration of information systems while a loan is outstanding, and provides an example of when a lender is and is not required to furnish information to a provisionally-registered information system. That example used dates in the year 2020. The Bureau is revising the example to instead use dates in 2021, to avoid any potential confusion as to whether and when lenders are required to furnish such information given this final rule's delay of the compliance date for that requirement.

As discussed above, the 2017 Final Rule became effective on January 16, 2018, though most provisions had a compliance date of August 19, 2019. The Bureau is not delaying the compliance date for § 1041.11, which sets forth requirements regarding RISes, because the 2017 Final Rule did not provide for an August 19, 2019 compliance date for that section; it became fully effective as of January 16, 2018. However, the Bureau is revising the regulatory text and headings in § 1041.11(c) introductory text, (c)(1) and (2), (d) introductory text, and (d)(1), 77 and related commentary, to replace August 19, 2019, where it appears, with the delayed compliance date of November 19, 2020, as those provisions address how registration of information systems is to occur before and after compliance with the Mandatory Underwriting Provisions of the Rule more generally is required.

The Bureau is adding new § 1041.15 to expressly state the effective and compliance dates for various aspects of the Rule. Section 1041.15(a) provides that the effective date of the Rule is January 16, 2018, as was stated in the Dates section of the 2017 Final Rule. 78 Section 1041.15(b) provides that the deadline to submit an application for preliminary approval for registration pursuant to § 1041.11(c)(1) was April 16, 2018; this was also stated in the Dates section of the 2017 Final Rule. Section 1041.15(c) and (d) list the sections that remain with an August 19, 2019 compliance date and those that are delayed until November 19, 2020 by this final rule; together, these paragraphs address all the sections that were listed in the Dates section of the 2017 Final Rule with an August 19, 2019 compliance date. Specifically, § 1041.15(c) provides that the compliance date for §§ 1041.2, 1041.3, 1041.7 through 1041.9, 1041.12(a), (b) introductory text, and (b)(4) and (5), and 1041.13 is August 19, 2019. Section 1041.15(d) provides that the compliance date for §§ 1041.4 through 1041.6, 1041.10, and 1041.12(b)(1) through (3) is November 19, 2020.

The 2017 Final Rule was published, and added to the Code of Federal Regulations, without text headings for the model forms and clauses contained in appendix A. The Bureau is adding these headings now, using the text that appears in the images of the forms and clauses themselves. No substantive change is intended by this correction.

For the reasons set forth herein, the Bureau believes it is appropriate to delay the August 19, 2019 compliance date for the Mandatory Underwriting Provisions of the 2017 Final Rule—specifically, §§ 1041.4 through 1041.6, 1041.10, and 1041.12(b)(1) through (3)—to November 19, 2020. 79 This final rule adopting the compliance date delay, along with several clarifying corrections to the Rule, will become effective 60 days after publication in the Federal Register , prior to the previous August 19, 2019 compliance date for the Mandatory Underwriting Provisions of the Rule, and consistent with section 553(d) of the Administrative Procedure Act  80 and with section 801(a)(3) of the Congressional Review Act. 81

In the Delay NPRM, the Bureau stated that after considering comments received on that proposal, the Bureau intended to publish a final rule with respect to the delayed compliance date for the Mandatory Underwriting Provisions of the 2017 Final Rule, if warranted. The Bureau also stated that any final rule to delay the Rule's compliance date for the Mandatory Underwriting Provisions would be published and become effective prior to August 19, 2019.

In response to the Bureau's request for comments on this aspect of the Delay NPRM, one commenter agreed that the final rule to delay the compliance date should be published and become effective prior to August 19, 2019, in order to provide clarity to industry, markets, and consumers and to avoid the possibility of piecemeal enforcement or the inference that the Bureau has determined not to enforce an existing rule. The commenter also stated that it would provide certainty beyond the pending litigation's current compliance date stay.

Another commenter stated that the Bureau should not assume that it can finalize a rule in time for it to be published and effective prior to August 19, 2019. The commenter argued that the Bureau's review of and response to comments should encompass the comments received on the Reconsideration NPRM because the Delay NPRM's impact analysis rests on the similar analysis in the Reconsideration NPRM. The commenter repeated an argument, addressed elsewhere in the preamble to this final rule, that the fact that the Reconsideration NPRM is pending does not justify a delay, but asserted that if the Bureau seeks to rely on that proposal it should address commenters' concerns about it.

The Bureau believes it was not incorrect to assume that it would be able to finalize and publish a compliance date delay final rule in time for it to be effective prior to August 19, 2019, as evidenced by the fact that it is doing so via this document. The Bureau was aware that it would not be able to finalize the Reconsideration NPRM itself by that date, however, which is why it proposed the delay and reconsideration concurrently in separate documents. As explained above, as well as in the Delay NPRM, the purpose of this compliance date delay is to permit an orderly conclusion to the Bureau's separate rulemaking process to reconsider the Mandatory Underwriting Provisions of the 2017 Final Rule.

As discussed above, this final rule delays the August 19, 2019 compliance date for the Mandatory Underwriting Provisions of the 2017 Final Rule to November 19, 2020. In the Reconsideration NPRM, the Bureau considered the impacts of rescinding the Mandatory Underwriting Provisions of the 2017 Final Rule. The analysis of the benefits and costs to consumers and covered persons required by section 1022(b)(2)(A) of the Dodd-Frank Act (also referred to as the “section 1022(b)(2) analysis”) in part VIII of the Reconsideration NPRM outlines the one-time and ongoing benefits and costs of rescinding the 2017 Final Rule's Mandatory Underwriting Provisions. 82 As this delay of the August 19, 2019 compliance date constitutes a 15-month delay of the 2017 Final Rule's compliance date for the Mandatory Underwriting Provisions, its impacts are effectively 1.25 years of the annualized, ongoing impacts described in the Reconsideration NPRM. 83 The impacts on the one-time costs described in the 2017 Final Rule primarily include a delay before covered entities must bear these costs, until no later than the new compliance date. As some covered entities may have already started to incur some of these one-time costs and others may incur the costs in advance of the delayed compliance date, the Bureau believes the monetary impact of a delay of the Mandatory Underwriting Provisions will have minimal impacts on the eventual costs incurred by lenders if the Bureau decides to retain the Mandatory Underwriting Provisions.

In developing this rule, the Bureau has considered the potential benefits, costs, and impacts as required by section 1022(b)(2)(A) of the Dodd-Frank Act. 84 Specifically, section 1022(b)(2)(A) of the Dodd-Frank Act calls for the Bureau to consider the potential benefits and costs of a regulation to consumers and covered persons, including the potential reduction of access by consumers to consumer financial products or services, the impact on depository institutions and credit unions with $10 billion or less in total assets as described in section 1026 of the Dodd-Frank Act, and the impact on consumers in rural areas.

In the Delay NPRM, the Bureau set forth a preliminary analysis of these effects and requested comments that could inform the Bureau's analysis of the benefits, costs, and impacts of the proposal. The Bureau specifically requested comment on the Delay NPRM's section 1022(b)(2) analysis as well as submission of additional information that could inform the Bureau's consideration of the potential benefits, costs, and impacts of this rule to delay the August 19, 2019 compliance date of the Mandatory Underwriting Provisions of the 2017 Final Rule. In response, the Bureau received a number of comments on the topic. The Bureau has consulted with the prudential regulators and the Federal Trade Commission, including consultation regarding consistency with any prudential, market, or systemic objectives administered by such agencies.

In considering the potential benefits, costs, and impacts of this rule the Bureau takes the 2017 Final Rule as the baseline, and considers economic attributes of the relevant markets as they are projected to exist under the 2017 Final Rule with its original August 19, 2019 compliance date and the existing legal and regulatory structures ( i.e., those that have been adopted or enacted, even if compliance is not currently required) applicable to providers. 85 This is the same baseline used in the Reconsideration NPRM. See part VIII.A.4 of the Reconsideration NPRM for a more complete description of the baseline. 86

The appropriateness of regulation in this case— i.e., for a delay of the compliance date—is discussed in more detail above. In summary, first, the Bureau's Reconsideration NPRM, published on February 14, 2019 in the Federal Register , set forth the Bureau's reasons for preliminarily concluding that the Mandatory Underwriting Provisions of the 2017 Final Rule should be rescinded. The Bureau is concerned that if the August 19, 2019 compliance date for the Mandatory Underwriting Provisions is not delayed, firms will expend significant resources and incur significant costs to comply with portions of the 2017 Final Rule that ultimately may be—and which the Bureau has proposed should be—rescinded. 87 The Bureau is likewise concerned that once the August 19, 2019 compliance date has passed, firms could experience substantial revenue disruptions that could impact their ability to stay in business while the Bureau is deciding whether to issue a final rule rescinding the Mandatory Underwriting Provisions of the 2017 Final Rule. The Bureau notes above that some of these impacts, notably, the exit of smaller market participants, may be irreversible. A consumer advocacy group commented that the Bureau should not rescind an existing rule based on lack of evidence to justify that rule, without first making an attempt to collect said evidence. The Bureau notes that the Reconsideration NPRM sets forth both factual and legal grounds for reconsideration, both with respect to the unfairness determination and the abusiveness determination, and thus does not rely solely on the absence of evidence. Furthermore, the Bureau also notes that ongoing market monitoring is part of the Bureau's activities, but that to postpone finalizing this compliance date delay in order to collect additional evidence, and in so doing allowing compliance with the 2017 Final Rule's Mandatory Underwriting Provisions to become mandatory, would cause substantial revenue and market disruptions.

The annualized quantifiable benefits and costs of rescinding the Mandatory Underwriting Provisions of the 2017 Final Rule are detailed in the section 1022(b)(2) analysis in part VIII.B through D of the Reconsideration NPRM. Under this rule to delay the August 19, 2019 compliance date for the Mandatory Underwriting Provisions, these annualized benefits and costs will be realized for a period of 15 months (1.25 years). Additional, unquantified benefits and costs are also described in the Reconsideration NPRM's section 1022(b)(2) analysis. Under this rule, these costs and benefits will be realized for 15 months (1.25 years).

This rule to delay the August 19, 2019 compliance date for the Mandatory Underwriting Provisions will delay by 15 months the implementation of the underwriting provisions and thus any restrictions on consumers' ability to choose to take out covered loans (including payday and vehicle title loans) that would be prohibited in the baseline. Several commenters, including trade associations and lenders, agreed with this characterization of maintained access, argued that choice in the market is a benefit for consumers, claimed that available alternatives are worse for consumers, and characterized those alternatives as more expensive or less regulated. A trade association further asserted it would be more costly for consumers to default on more traditional credit products. Many consumer advocacy and public interest groups, meanwhile, argued this was not a benefit to consumers of the delay as access would be maintained for most consumers under the 2017 Final Rule, alternative products are already offered by banks and credit unions, and several small-dollar lenders have begun to offer (or have discussed offering) alternative products that would not be covered by the Mandatory Underwriting Provisions of the 2017 Final Rule ( e.g., non-covered installment loans).

The Bureau notes that it discussed these payday loan alternatives and their relative costs in the 2017 Final Rule, and has taken them into account in reaching its findings here. 88

Several consumer advocacy groups also commented that extended loan sequences should not be considered credit access as they do not represent new credit, but the extension of existing loans, and asserted that the Bureau did not acknowledge this in the proposal. The Bureau disagrees that it fails to account for this; the analysis here, as well as in the Reconsideration NPRM and in the 2017 Final Rule, focuses on sequence lengths that treat reborrowing as part of a dynamic decision. 89 The Bureau agrees that most consumers would maintain access to payday loans in the absence of the delay; however, as outlined in the 2017 Final Rule, the Bureau's simulations suggest that 5.9 to 6.2 percent of borrowers would be unable to initiate a loan sequence they would choose without the delay. 90 Additionally, the Bureau noted that a larger share of vehicle title borrowers would be unable to initiate a loan under the 2017 Final Rule relative to payday borrowers, and that some of these consumers would be unable to obtain a payday loan as a substitute. 91 A few consumer advocacy groups also argued that the Bureau contradicted itself by finding that the 2017 Final Rule would result in reduced access but still concluding that the rule would be a net benefit for consumers, while it now treats access as a benefit to consumers. Access to credit itself is treated as a benefit in both the 2017 Final Rule and here, and the Bureau discusses the resulting costs from prolonged use of this credit separately in the section that follows. 92

This rule will also delay the decrease in the revenues of payday lenders anticipated in the 2017 Final Rule (62 to 68 percent) by 15 months, resulting in an estimated increase in revenues of between $4.25 billion and $4.5 billion (based on the annual rate of $3.4 billion and $3.6 billion) relative to the baseline. A similar delay in the reduction in the revenues of vehicle title lenders will result in an estimated increase in revenues relative to the baseline of between $4.9 billion and $5.1 billion (based on the annual rate of $3.9 billion to $4.1 billion). 93 The rule will also cause a small but potentially quantifiable delay in the additional transportation costs borrowers would incur to get to lenders after the storefront closures expected in response to the 2017 Final Rule.

The Bureau notes that these estimates are based on simulations that assume at least one RIS will exist in the market, allowing payday lenders to issue loans under the principal step-down approach. 94 The Bureau still believes this is the most likely case in the steady-state equilibrium. However, in the case where there would not be an RIS in place at the 2017 Final Rule's compliance date, and the principal step-down approach would not be available on the compliance date, then the estimated decrease in payday loans and revenues under the Mandatory Underwriting Provisions would be more severe. For example, the 2017 Final Rule estimates a decrease in payday loan volumes of 92 to 93 percent in a regime where all loans are subject to the prescribed ability-to-repay underwriting of § 1041.5. 95 If no RIS will exist on the 2017 Final Rule's compliance date this rule will at least delay—and to the extent it allows at least one RIS to enter the market, avoid—substantially larger decreases in revenues for payday lenders, while preserving substantially greater access to this type of credit for consumers. 96

Multiple consumer advocacy groups commented that benefits to payday lenders are overstated because the Bureau's cost estimates from the 2017 Final Rule did not account for lenders making changes to the terms of their loans to better fit the regulatory structure, or offering other products. The Bureau notes that this would fall under “changes to the profitability and industry structure that would have occurred in response to the 2017 Final Rule” discussed in part VII.B.3 below. One payday lender commented that the benefits of delay to payday lenders are understated, because the estimates from the 2017 Final Rule did not account for business closures resulting in complete revenue loss. The Bureau disagrees because the estimated revenue reductions cited are for the industry as a whole and the Bureau noted in the 2017 Final Rule that some lenders would likely exit as a result of decreased revenues. 97 Additionally, the Bureau's estimates are consistent with two industry comments citing three separate studies, as discussed in the 2017 Final Rule. 98 Similarly, a trade association claimed the revenue reduction would be higher than estimated in the 2017 Final Rule because the analysis did not account for consumers with the ability to repay being unable to demonstrate their ability under the mandated requirements, but the trade association did not cite any evidence or give further detail explaining this assertion. In the 2017 Final Rule, the Bureau allowed for reasonable steps to establish the ability to repay (including using estimates and lenders' prior experience with other customers) while also noting that the estimated share of borrowers who would qualify under the ability-to-repay provisions was “necessarily imprecise” given the available data. 99 At the same time, the Bureau notes its estimates were in line with estimates using information provided by industry in comments to the 2016 Proposal. 100 If the commenters were correct in asserting that the Bureau's estimates of these impacts are low, that would strengthen the Bureau's reasoning for postponing the compliance date. However, the Bureau does not believe this is the case, and is not relying on the assertions in those comments for its determination.

The Reconsideration NPRM's section 1022(b)(2) analysis also discusses the ongoing costs facing consumers that result from extended payday loan sequences at part VIII.B through D. The available evidence suggests that, relative to the baseline in which compliance became mandatory, the Rule would impose potential costs on consumers by increasing the risks of: Experiencing costs associated with extended unanticipated sequences of payday loans and single-payment vehicle title loans, experiencing the costs (pecuniary and non-pecuniary) of delinquency and default on these loans, defaulting on other major financial obligations, and/or being unable to cover basic living expenses in order to pay off covered short-term and longer-term balloon-payment loans. 101 Relative to the baseline where the 2017 Final Rule's compliance date is unaltered, these costs will be maintained for 15 additional months under this rule.

Several consumer advocacy groups commented that certain of these costs would continue for more than 15 months and the effects may be long-lasting for some consumers. The Bureau recognizes that some costs resulting from loan sequences begun during the 15-month delay may occur after November 19, 2020. The Bureau notes these costs are already included, and accounted for, in the baseline. Specifically, there would have been similar costs associated with loans originated prior to the 2017 Final Rule's compliance date that extended beyond that date, and that rule's section 1022(b)(2) analysis accounted for these extended costs. These same extended costs will result after this rule's delayed compliance date, and are thus accounted for in the baseline, and do not represent an additional impact on the market by this delay final rule. The Bureau also notes that there are costs resulting from loan sequences that began prior to the 15-month delay that occur during the 15-month period of time, and that these costs are included in this estimate. This is consistent with the approach used throughout this section 1022(b)(2) analysis, which symmetrically assesses the costs and benefits resulting directly from the 15-month delay only (and does not account for costs and benefits already present in the baseline). A number of consumer advocacy groups argued the revenue that lenders would receive under the delay would come from fees paid by consumers and would simply represent a transfer from consumers to lenders and should, therefore, be treated as a cost to consumers. As in the section 1022(b)(2) analysis of the 2017 Final Rule, the Bureau does not double-count such transfers; lenders will receive additional revenue as a result of the delay and consumers will pay additional fees in exchange for the use of payday loans. A trade association commented that the Bureau's estimated costs to consumers are too high because the Bureau never established that consumers are harmed by extended loan sequences, did not consider the benefits of these loan sequences for consumers, and ignored the set of alternatives consumers would have in the absence of payday loans. They further argued that consumers use these loans strategically and cite the Mann Study as evidence that borrowers know what they are getting into with an extended loan sequence. 102 The Bureau notes that in the context of the 2017 Final Rule it discussed the benefits to consumers from extended loan sequences and commenters provided no new or additional evidence of such benefits. 103

Other benefits and costs that the Bureau did not quantify are discussed in the Reconsideration NPRM's section 1022(b)(2) analysis in part VIII.E. These include (but are not limited to): The consumer welfare impacts associated with increased access to vehicle title loans; intrinsic utility (“warm glow”) from access to loans that are not used (and that would not be available under the 2017 Final Rule); innovative regulatory approaches by States that would have been discouraged by the 2017 Final Rule; public and private health costs that may or may not result from payday loan use; changes to the profitability and industry structure that would have occurred in response to the 2017 Final Rule ( e.g., industry consolidation that may create scale efficiencies, movement to installment product offerings); concerns about regulatory uncertainty and/or inconsistent regulatory regimes across markets; benefits or costs to outside parties associated with the change in access to payday loans; indirect costs arising from increased repossessions of vehicles in response to non-payment of vehicle title loans; non-pecuniary costs associated with financial stress that may be alleviated or exacerbated by increased access to/use of payday loans; and any impacts of fraud perpetrated on lenders and opacity as to borrower behavior and history related to a lack of industry-wide RISes ( e.g., borrowers circumventing lender policies against taking multiple concurrent payday loans, lenders having more difficulty identifying chronic defaulters, etc.). Each of these potential impacts is discussed in the section 1022(b)(2) analysis for the 2017 Final Rule and the section 1022(b)(2) analysis of the Reconsideration NPRM. To the extent that these impacts actually exist, they would continue under this rule for the 15-month delay of the compliance date for the 2017 Final Rule's Mandatory Underwriting Provisions.

A consumer advocacy group claimed the Bureau offered vague, “unquantified effects” in the Delay NPRM with little information on the importance of these effects in considering the impact. To the extent that data are available, the Bureau attempted to quantify these effects but notes that there is limited research on most of these effects other than what it discussed in the 2017 Final Rule. An independent research and advocacy group argued the delay will reduce the effect of regulatory uncertainty ( e.g., by reducing investment) because many lenders will not implement changes to comply with the 2017 Final Rule given that it may be changed. While the Bureau agrees this delay will have some impact on regulatory uncertainty, it does not have evidence of what the effects will be, especially given the pending status of the Reconsideration NPRM, which may ultimately decrease, increase, or have no effect on the compliance costs lenders will face. A trade association claimed the Bureau failed to consider the cost to consumer privacy. The Bureau notes that any risks to consumer privacy are delayed but otherwise are unaffected by this delay final rule. The Bureau also notes that it did discuss privacy concerns relating to consumers providing lenders with additional financial information to comply with the 2017 Final Rule (though the Bureau knows of no available data that can be used to directly estimate the cost to consumers of providing this information). Multiple consumer advocacy groups argued the estimated costs of the delay are higher since the Bureau ignored the cost of increased auto repossession under the delay. The Bureau notes that vehicle repossession was explicitly considered in the potential costs to consumers of the delay above and in the section 1022(b)(2) analysis of the 2017 Final Rule. 104 Some commenters asserted that the Bureau failed to consider emotional or psychological harms to consumers due to the delay of the rule. While consumers might face such non-pecuniary harms from this rule, most of these harms have not been causally linked to the use of payday or title loans, let alone ones issued without ability-to-repay-based underwriting, so there does not appear to be compelling evidence that the delay of the rule will cause such harms.

The Bureau does not believe the one-time benefits and costs described in the Reconsideration NPRM will be substantially affected by this rule to delay the August 19, 2019 compliance date for the Mandatory Underwriting Provisions. In effect, this rule will provide institutions greater flexibility in when and how to deal with the burdens of the 2017 Final Rule's Mandatory Underwriting Provisions if the Bureau retains those provisions in the reconsideration rulemaking. Some firms may have already undertaken some of the compliance costs, meaning this rule delaying the compliance date will not allow lenders to recoup these sunk costs. With the delayed compliance date for the Mandatory Underwriting Provisions, others may use the additional time to install the necessary systems and processes to comply with the 2017 Final Rule in a more efficient manner. Quantifying the value of this more flexible timeline is impossible, as it depends on, among other things, each firm's idiosyncratic capacities and opportunity costs. However, it is likely that this flexibility will be of relatively greater benefit to smaller entities with more limited resources. A trade association offered its support for the Bureau's claim that the delay will primarily shift compliance costs for lenders and suggested that some lenders may further reduce their costs if they use the additional time to flexibly implement changes. An independent research and advocacy group likewise supported the delay to reduce compliance costs, but further argued that these costs would be passed on to consumers. As the Bureau discussed in the 2017 Final Rule, standard economic theory does predict such costs would be shared with or passed on to consumers; however, “many covered loans are being made at prices equal to caps that are set by State law or State regulation” so lenders would have been unable to pass on such costs in a number of States. 105 As a result, while this rule will delay when lenders incur these compliance costs, it should not cause prices already at State caps to fall below those caps as those caps were unchanged by the 2017 Final Rule.

The Bureau expects, however, that with the delayed compliance date for the Mandatory Underwriting Provisions, most firms will simply delay incurring some or all of the costs of coming into compliance. The delay of 15 months will effectively reduce the one-time benefits and costs by 1.25 years of their discount rate. 106 While these firms will experience potentially quantifiable benefits, the Bureau cannot know what proportion of the firms will adopt any of the strategies described above, let alone the discounting values or strategies unique to each firm. For a 15-month delay, the discounting of the one-time benefits and costs is likely to be less than 3 percent of the value of those benefits and costs. 107 As such, the Bureau believes the one-time benefits and costs of this rule are minimal, relative to the other benefits and costs described above.

The Bureau believes that depository institutions and credit unions with less than $10 billion in assets were minimally constrained by the 2017 Final Rule's Mandatory Underwriting Provisions. To the limited extent depository institutions and credit unions do make loans in this market, many of those loans are conditionally exempt from the 2017 Final Rule under § 1041.3(e) or (f) as alternative or accommodation loans. As such, this rule will likewise have minimal impact on these institutions.

The Reconsideration NPRM notes that it is possible that a revocation of the 2017 Final Rule's Mandatory Underwriting Provisions would allow depository institutions and credit unions with less than $10 billion in assets to develop products that would not be viable under the 2017 Final Rule (subject to applicable Federal and State laws and under the supervision of their prudential regulators). Given that development of these products has been underway, and takes a significant amount of time, and that this rule's delay does not affect such products' longer-term viability, this rule will have minimal effect on these products and institutions.

The Bureau concludes that delaying the compliance date will not reduce consumer access to consumer financial products and services, and it may increase all consumers' access by delaying the point at which covered firms implement changes to comply with the 2017 Final Rule's Mandatory Underwriting Provisions. Under the rule, consumers in rural areas will have a greater increase in the availability of covered short-term and longer-term balloon-payment loans originated through storefronts relative to consumers living in non-rural areas. As described in more detail in the Reconsideration NPRM's section 1022(b)(2) analysis, the Bureau estimates that removing the restrictions in the 2017 Final Rule on making these loans would likely lead to a substantial increase in the markets for storefront payday lenders and storefront single-payment vehicle title loans. By delaying the August 19, 2019 compliance date for the Mandatory Underwriting Provisions, the Bureau similarly anticipates a substantial increase in those markets relative to the baseline for the duration of the delay. A trade association suggested the Bureau did not fully consider the impact for consumers in rural areas. The Bureau disagrees as it discussed differential impacts for rural consumers especially in regard to costs from changes in geographic availability of payday loans in the 2017 Final Rule and as referenced above.

The Regulatory Flexibility Act  108 as amended by the Small Business Regulatory Enforcement Fairness Act of 1996  109 (RFA) requires each agency to consider the potential impact of its regulations on small entities, including small businesses, small governmental units, and small not-for-profit organizations. 110 The RFA defines a “small business” as a business that meets the size standard developed by the Small Business Administration (SBA) pursuant to the Small Business Act. 111

The RFA generally requires an agency to conduct an initial regulatory flexibility analysis (IRFA) and a final regulatory flexibility analysis (FRFA) of any rule subject to notice-and-comment rulemaking requirements, unless the agency certifies that the rule would not have a significant economic impact on a substantial number of small entities. 112 The Bureau also is subject to certain additional procedures under the RFA involving the convening of a panel to consult with small entity representatives prior to proposing a rule for which an IRFA is required. 113

The Bureau certified that the Delay NPRM would not have a significant economic impact on a substantial number of small entities and that therefore neither an IRFA nor a small business review panel was required. 114 Upon considering relevant comments, the Bureau concludes that this rule will not have a significant economic impact on a substantial number of small entities. Therefore, a FRFA is not required. 115

In the Delay NPRM, the Bureau explained that the proposed compliance date delay would benefit small entities by providing additional flexibility with respect to the timing of the 2017 Final Rule's Mandatory Underwriting Provisions' implementation. In addition to generally providing increased flexibility, the delay in the compliance date would permit small entities to delay the commencement of any ongoing costs that result from complying with the Mandatory Underwriting Provisions of the 2017 Final Rule. The Bureau also explained that because small entities would retain the option of coming into compliance with the Mandatory Underwriting Provisions on the original August 19, 2019 compliance date, the proposed delay of the compliance date would not increase costs incurred by small entities relative to the baseline established by the 2017 Final Rule. Based on these considerations, the Bureau concluded that the Delay NPRM would not have a significant economic impact on any small entities.

A trade association commenter stated that it agreed with the Bureau that the proposed compliance date delay would not have a significant economic impact on small entities, but rather would significantly benefit them, reiterating the argument that the Mandatory Underwriting Provisions, if implemented, will have a devastating impact on the industry, particularly on smaller entities. The commenter also agreed that because small entities retain the option of coming into compliance with the Mandatory Underwriting Provisions on the original August 19, 2019 compliance date, a compliance date delay would not increase the costs incurred by small entities.

Other commenters criticized the Bureau's RFA certification on the grounds that various benefits to small entities from delay were described elsewhere in the Delay NPRM, and these commenters viewed such benefits as qualifying as a significant economic impact on a substantial number of small entities. Specifically, one commenter noted that the Bureau had explained elsewhere in the Delay NPRM that some small lenders believe the Mandatory Underwriting Provisions will significantly reduce their lending revenue, causing some to exit the market, and that some smaller industry participants had indicated that they do not have the resources to comply with new State and Federal requirements at the same time. 116 Another commenter perceived the Delay NPRM's RFA certification as asserting that the benefit to small entities was primarily a timing change, while earlier portions of the NPRM estimate that a delay would result in concrete revenue gains for lenders. This commenter also perceived the RFA certification as relying upon a prediction that small entities would voluntarily adopt the Mandatory Underwriting Provisions, which the commenter viewed as contradicted by the rest of the Delay NPRM.

The Bureau does not agree that the benefits to small entities of this rule are capable of qualifying as a “significant economic impact” on a substantial number of small entities such that an IRFA and FRFA are required under the RFA. 117 That specific phrase is used several times in the RFA, and under accepted principles of statutory interpretation there is a presumption that a specific phrase bears the same meaning throughout a statutory text. Other uses of the phrase make clear that it refers to adverse effects on small entities, not benefits. For example, an IRFA must discuss alternatives considered by the agency that “minimize any significant economic impact” on small entities, and a FRFA must discuss steps taken by the agency to “minimize the significant economic impact” on small entities. 118 Congress could not have intended through the RFA to minimize benefits to small entities, and accordingly the Bureau does not believe that the benefits of this rule qualify as a significant economic impact. Further reinforcing this conclusion, the other required elements of an IRFA and FRFA generally focus on adverse effects on small entities, and none specifically focuses on benefits to small entities. 119 Thus, performing an IRFA or FRFA for a rule (such as this compliance date delay rule) that has only benefits to small entities and no adverse effects on them would serve little purpose.

Clerical and non-substantive corrections. In addition to the compliance date delay, the Bureau is making certain clerical and non-substantive corrections to correct several errors it has identified in the 2017 Final Rule in §§ 1041.2(a)(9), 1041.3(e)(2), 1041.9(c)(3)(viii), and appendix A. No substantive change is intended by the corrections herein, and so these corrections will have no impact on small entities.

Certification. Accordingly, the undersigned hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities.

Under the Paperwork Reduction Act of 1995 (PRA), 120 Federal agencies are generally required to seek Office of Management and Budget (OMB) approval for information collection requirements prior to implementation. Under the PRA, the Bureau may not conduct or sponsor and, notwithstanding any other provision of law, a person is not required to respond to an information collection unless the information collection displays a valid control number assigned by OMB. The collections of information related to the 2017 Final Rule were previously submitted to OMB in accordance with the PRA and assigned OMB Control Number 3170-0065 for tracking purposes; however, this control number is not yet active as OMB has not approved this information collection request. In addition, given the Bureau's proposals to delay and reconsider the Mandatory Underwriting Provisions, pursuant to the requirements of the PRA and the applicable implementing regulations, 121 OMB requested that the Bureau make an additional submission relating to just the Payment Provisions of the Rule; as of June 5, 2019, an OMB Control Number has not been assigned for this request. 122

The Bureau has determined that this final rule would not impose any new recordkeeping, reporting, or disclosure requirements on members of the public that would constitute collections of information requiring approval under the PRA.

A consumer advocacy group commenter stated that the Delay NPRM did not explain the statement (also included herein, above) that the Bureau considers the OMB Control Number assigned to the 2017 Final Rule to be “not yet active” because OMB has not approved the PRA request submitted with the Rule. The commenter noted that January 16, 2018 was the statutory deadline for OMB to decide on the PRA request associated with the 2017 Final Rule and asserted that the Director of OMB declined to make a decision about that PRA request, with no announcement about that decision, his reasoning, or its impact. The commenter also noted that OMB regulations allow agencies to proceed with PRA collections, based on inferred OMB approval, if OMB does not act upon the agency's submission within 60 days of a final rule being published in the Federal Register . 123 The commenter suggested that the Bureau was using the lack of PRA approval and OMB's inaction as an alternative justification for delaying the Mandatory Underwriting Provisions. The commenter noted that the lack of OMB approval under the PRA affects not only the Mandatory Underwriting Provisions but also the Payment Provisions, which have a compliance date of August 19, 2019. The commenter asserted that a clear explanation of the Bureau's approach with respect to these issues is needed.

The Bureau is not relying on the lack of OMB approval under the PRA as a justification for this delay final rule; it was not cited in the Delay NPRM as such, nor is it cited herein. The Bureau does not have control over OMB's timing for approval of pending Information Collection Requests or issuance of OMB Control Numbers.

Pursuant to the Congressional Review Act, 124 the Bureau will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States at least 60 days prior to the rule's published effective date. The Office of Information and Regulatory Affairs has designated this rule as a “major rule” as defined by 5 U.S.C. 804(2).

For the reasons set forth above, the Bureau amends 12 CFR part 1041 as set forth below:

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Aviat Aircraft Inc. (Aviat) Models A-1C-180 and A-1C-200 airplanes equipped with Rapco part number (P/N) RA1798-00-1 fuel vent check valves. The NPRM published in the Federal Register on May 5, 2017 (82 FR 21142). The NPRM was prompted by a report of the fuel tank vent check valves sticking in the closed position causing fuel starvation to the engine. The incident airplane was equipped with Rapco P/N RA1798-00-1 fuel vent check valves. As designed, the check valve ball seat on this P/N valve is nearly the same diameter as the ball and the ball can readily wedge itself in the seat and block the fuel tank vent. The NPRM proposed to require revising the AFM to add a pre-flight check of the fuel vent check valves for proper operation and replacing any inoperative fuel vent check valve with a Dukes P/N 1798-00-1 fuel check valve.

Since we issued the NPRM, Aviat designed a new fuel vent check valve, P/N 38266-501, that can be installed in place of the Rapco fuel vent check valve. We determined this Aviat fuel vent check valve is not subject to the unsafe condition. We also determined that the Dukes fuel vent check valve, P/N 1798-00-1, cannot be installed to replace a Rapco fuel vent check valve due to a difference in length. Accordingly, we revised paragraph (i) of this AD to require replacing inoperative Rapco fuel vent check valves with Aviat valves instead of Dukes valves. We also removed the note from the Applicability section that referenced the Dukes valve.

We are issuing this AD to correct the unsafe condition on these products.

We gave the public the opportunity to participate in developing this final rule. We received no comments on the NPRM or on the determination of the cost to the public.

We updated the on-condition parts cost to reflect that removing and replacing the Rapco fuel vent check valve requires cutting a hole in the wing skin and installing an access cover over the hole once the valve has been replaced. We added the minimal cost of this cover to the on-condition parts cost. Labor cost was unaffected by the cover installation.

We clarified the requirement to amend the AFM and added a fourth step to the AFM amendment to alert the owner/operator (pilot) that an inoperative check valve must be replaced in accordance with this AD. We also removed the requirement to make a maintenance entry under part 43, as revising a flight manual is not a maintenance action. A record of the AFM change must still be made as required by 14 CFR 91.417(a)(2)(v).

We refined the requirements to remove and replace an inoperative fuel vent check valve by removing the references to steps 4 and 9 of the service information. Step 4 of the service information is no longer necessary due to other changes to this AD, and step 9 is unnecessary for this AD because it is required by standard maintenance practices under 14 CFR part 43. We also changed the language regarding replacing both valves with valves that are unaffected by this AD from “the repetitive pre-flight checks required in paragraph (g) of this AD are terminated” to “you may remove the AFM revisions required by paragraph (g) of this AD.” This change makes it clear that operators do not need an alternative method of compliance (AMOC) to return the AFM to its pre-AD configuration if they remove both Rapco valves.

Lastly, we added a second email address for requesting an AMOC. Requests must be submitted to both the assigned Aviation Safety Engineer and the Denver ACO Branch general email addresses.

We reviewed the relevant data and determined that air safety and the public interest require adopting this final rule as proposed except for the changes previously discussed. We have determined that these changes:

• Are consistent with the intent that was proposed in the NPRM for correcting the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM.

We reviewed Aviat Mandatory Service Bulletin No. 33, Initial Release, dated November 11, 2016. The service bulletin contains procedures for checking the fuel vent check valve on each wing of the airplane for proper operation and replacing any inoperative fuel vent check valve. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

We estimate that this AD affects 98 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

We conservatively estimated the cost to do a single pre-flight check. We recognize the pilot is allowed to perform this check without the assistance of a mechanic, which will significantly reduce the estimated cost. We further recognize that an individual airplane will require this check every pre-flight from the issuance of this AD until the end of its useful life as long as at least one P/N RA1798-00-1 fuel vent check valve is installed on either wing. We have no way of determining the total cost of repeating this check every pre-flight either for a single product or for all U.S. operators.

We estimate the following costs to do any necessary replacements that will be required based on the results of the pre-flight check. We have no way of determining the number of airplanes that may need these replacements.

The access cover cost is for a solid color. It does not include custom paint schemes to match an individual airplane.

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

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

This AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to small airplanes, gliders, balloons, airships, domestic business jet transport airplanes, and associated appliances to the Director of the Policy and Innovation Division.

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

For the reasons discussed above, I certify that this AD:

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

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

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

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

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

On April 18, 2019, we issued Emergency AD 2019-08-51, which requires replacing the AOA sensors with improved AOA sensors. Emergency AD 2019-08-51 was sent previously to all known U.S. owners and operators of Cirrus Model SF50 airplanes. This action was prompted by reports of three incidents on Cirrus Model SF50 airplanes of the SWPS or ESP System engaging when not appropriate. The SWPS or ESP systems may engage even when sufficient airspeed and proper angle of AOA exists for normal flight. The SWPS includes the stall warning alarm, stick shaker, and stick pusher. The ESP includes under speed protection (USP). The SWPS or the ESP systems engaging inappropriately could potentially result in a stall warning crew alert (CAS) message activation, accompanied by an audio alarm and stick shaker activation, followed possibly by either low speed ESP/USP engaging, and the stick pusher engaging. The pilot will also observe the dynamic and color-coded (Red) airspeed awareness ranges displaying the stall band, regardless of actual indicated airspeed.

The information below presents detailed information on the three incidents.

1. While the airplane was under manual pilot control, the airplane activated several downward pitch commands coincident with stall warning, stick shaker, and several associated alerts. The pilot reported “AOA FAIL” and “STICK PUSHER FAIL CAS” messages preceding the pitch command. The pilot was able to stop the automatic pitch commands by pressing and holding the autopilot disconnect button in accordance with the emergency procedure in the airplane flight manual and safely landed at his destination.

2. The operator reported stall warning and stick pusher failure in flight.

3. The airspeed indicator went red and the stall warning and stick shaker were heard and felt while on descent. The autopilot was disengaged with the same results. The system settled with stick pusher fail, stall warning fail, and LSA fail under the airspeed. The pilot hand flew the approach and had no V REF indicator but AOA appeared to be operating normally.

Cirrus and Aerosonic (manufacturer of the technical standard order AOA sensor) have identified the probable root cause as an AOA sensor malfunction due to a quality escape in the assembly of the AOA sensor at Aerosonic. Two set screws that secure the potentiometer shaft to the AOA vane shaft may have improper torqueing and no application of thread locker (Loctite) to secure the two set screws. The AOA sensor with this quality escape is labeled with part number 4677-03.

Potential erroneous AOA derived indications may occur before, during, and after unintended automatic control system engagement. These indications include an abnormal appearing low speed red band or VREF green donut presented on the airspeed tape. Failed indications or intermittent indication may result in one or more of the following:

• Unintended automatic flight control activations;

• The flight crew having difficulty controlling the airplane;

• Excessive nose-down attitude; and/or

• Possible impact with terrain.

We are issuing this AD to address the unsafe condition on these products.

The FAA reviewed Cirrus Design Corporation SF50 Service Bulletin Number: SB5X-34-03, dated April 16, 2019 (SB5X-34-03). The service information provides instructions for replacing the AOA sensor with an improved flight sensor. The FAA also reviewed Cirrus SF50 Alert Service Advisory SA19-08, dated April 8, 2019. This service information provides instructions for the pilot to follow in the event the AOA sensor fails in flight.his service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA is issuing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of these same type designs.

An unsafe condition exists that required the immediate adoption of Emergency AD 2019-08-51, issued on April 18, 2019, to all known U.S. owners and operators of these airplanes. The FAA found that the risk to the flying public justified waiving notice and comment prior to adoption of this rule because the noted condition presents an immediate danger to pilots and passengers of Cirrus Model SF50 airplanes. An uncommanded pitch down may be difficult to recover from in some flight regimes with potential fatal consequences. The before further flight compliance time to replace the AOA sensors due to the potential fatal consequences does not allow for prior notice and opportunity to comment for the public.

These conditions still exist and the AD is hereby published in the Federal Register as an amendment to section 39.13 of the Federal Aviation Regulations (14 CFR 39.13) to make it effective to all persons. Therefore, the FAA finds good cause that notice and opportunity for prior public comment are impracticable. In addition, for the reason(s) stated above, the FAA finds that good cause exists for making this amendment effective in less than 30 days.

SB5X-34-03 specifies 5 hours time-in-service (TIS) before replacing the AOA sensors. The FAA determined that allowing 5 hours TIS to replace the AOA sensors does not mitigate the unsafe condition; thus, this AD requires such replacement before further flight.

This AD is a final rule that involves requirements affecting flight safety and was not preceded by notice and an opportunity for public comment. However, the FAA invites you to send any written data, views, or arguments about this final rule. Send your comments to an address listed under the ADDRESSES section. Include the docket number FAA-2019-0392 and Product Identifier 2019-CE-020-AD at the beginning of your comments. The FAA specifically invites comments on the overall regulatory, economic, environmental, and energy aspects of this final rule. The FAA will consider all comments received by the closing date and may amend this final rule because of those comments.

The FAA will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. The FAA will also post a report summarizing each substantive verbal contact we receive about this final rule.

The FAA estimates that this AD affects 99 airplanes of U.S. registry.

The FAA estimates the following costs to comply with this AD:

According to the manufacturer, all of the costs of this AD may be covered under warranty, thereby reducing the cost impact on affected individuals. The FAA does not control warranty coverage for affected individuals. As a result, the FAA has included all costs in our cost estimate.

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

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

This AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to small airplanes, gliders, balloons, airships, domestic business jet transport airplanes, and associated appliances to the Director of the Policy and Innovation Division.

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

For the reasons discussed above, I certify that this AD:

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

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

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

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

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

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it modifies the National Airspace System route structure as necessary to preserve the safe and efficient flow of air traffic.

The FAA published a notice of proposed rulemaking for Docket No. FAA-2018-0220 in the Federal Register (83 FR 12887; March 26, 2018), modifying V-78 and removing V-224 in the vicinity of Manistique, MI, due to the planned decommissioning of the Schoolcraft County, MI, VOR/DME. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal. No comments were received.

VOR Federal airways are published in paragraph 6010(a) of FAA Order 7400.11C, dated August 13, 2018, and effective September 15, 2018, which is incorporated by reference in 14 CFR 71.1. The VOR Federal airways listed in this document will be subsequently published in the Order.

This document amends FAA Order 7400.11C, Airspace Designations and Reporting Points, dated August 13, 2018, and effective September 15, 2018. FAA Order 7400.11C is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11C lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

The FAA is amending Title 14 Code of Federal Regulations (14 CFR) part 71 by modifying the description of VOR Federal airway V-78 and removing VOR Federal airway V-224, due to the planned decommissioning of the Schoolcraft County, MI, VOR. The VOR Federal airway changes are described below.

V-78: V-78 extends between the Huron, SD, VOR/Tactical Air Navigation (VORTAC) and the Saginaw, MI, VOR/DME. The airway segment between the Escanaba, MI, VOR/DME and the Pellston, MI, VORTAC is removed. The unaffected portions of the airway remain as charted.

V-224: V-224 extends between the Sawyer, MI, VOR/DME and the Schoolcraft County, MI, VOR/DME. The airway is removed in its entirety.

The radials in the route description below are unchanged and stated in True degrees.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under Department of Transportation (DOT) Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA has determined that this action of modifying one VOR Federal airway and removing another near Manistique, MI qualifies for categorical exclusion under the National Environmental Policy Act and its implementing regulations at 40 CFR part 1500, and in accordance with FAA Order 1050.1F, Environmental Impacts: Policies and Procedures, paragraph 5-6.5a, which categorically excludes from further environmental impact review rulemaking actions that designate or modify classes of airspace areas, airways, routes, and reporting points (see 14 CFR part 71, Designation of Class A, B, C, D, and E Airspace Areas; Air Traffic Service Routes; and Reporting Points). As such, this action is not expected to result in any potentially significant environmental impacts. In accordance with FAA Order 1050.1F, paragraph 5-2 regarding Extraordinary Circumstances, the FAA has reviewed this action for factors and circumstances in which a normally categorically excluded action may have a significant environmental impact requiring further analysis. The FAA has determined that no extraordinary circumstances exist that warrant preparation of an environmental assessment or environmental impact study.

In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it modifies the route structure in the National Airspace System as necessary to preserve the safe and efficient flow of air traffic.

The FAA published a notice of proposed rulemaking in the Federal Register for Docket No. FAA-2018-0769 (83 FR 41021; August 17, 2018) to amend VOR Federal airways V-18, V-102, and V-278 due to the planned decommissioning of the Guthrie, TX, VORTAC. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal. No comments were received.

VOR Federal airways are published in paragraph 6010(a) of FAA Order 7400.11C dated August 13, 2018, and effective September 15, 2018, which is incorporated by reference in 14 CFR 71.1. The VOR Federal airways listed in this document would be subsequently published in the Order.

This document amends FAA Order 7400.11C, Airspace Designations and Reporting Points, dated August 13, 2018, and effective September 15, 2018. FAA Order 7400.11C is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11C lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

The FAA is amending Title 14 Code of Federal Regulations (14 CFR) part 71 by modifying VOR Federal airways V-18, V-102, and V-278. The planned decommissioning of the Guthrie, TX, VORTAC has made these actions necessary. The VOR Federal airway changes are outlined below.

V-18: V-18 extends between the Guthrie, TX, VORTAC and the Charleston, SC, VORTAC. The airway segment between the Guthrie, TX, VORTAC and the Millsap, TX, VORTAC is removed. The unaffected portions of the existing airway remain as charted.

V-102: V-102 extends between the Salt Flat, TX, VORTAC and the Wichita Falls, TX, VORTAC. The airway segment between the Lubbock, TX, VORTAC and the Wichita Falls, TX, VORTAC is removed. The unaffected portions of the existing airway remain as charted.

V-278: V-278 extends between the Texico, NM, VORTAC and the Vulcan, AL, VORTAC. The airway segment between the Plainview, TX, VOR/DME and the Bowie, TX, VORTAC is removed. The unaffected portions of the existing airway remain as charted.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under Department of Transportation (DOT) Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA has determined that this action of modifying VOR Federal airways V-18, V-102, and V-278 near Guthrie, TX, qualifies for categorical exclusion under the National Environmental Policy Act and its implementing regulations at 40 CFR part 1500, and in accordance with FAA Order 1050.1F, Environmental Impacts: Policies and Procedures, paragraph 5-6.5a, which categorically excludes from further environmental impact review rulemaking actions that designate or modify classes of airspace areas, airways, routes, and reporting points (see 14 CFR part 71, Designation of Class A, B, C, D, and E Airspace Areas; Air Traffic Service Routes; and Reporting Points). As such, this action is not expected to result in any potentially significant environmental impacts. In accordance with FAA Order 1050.1F, paragraph 5-2 regarding Extraordinary Circumstances, the FAA has reviewed this action for factors and circumstances in which a normally categorically excluded action may have a significant environmental impact requiring further analysis. The FAA has determined that no extraordinary circumstances exist that warrant preparation of an environmental assessment or environmental impact study.

In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:

Posting of Public Comments

Please note that all comments received are considered part of the public record. They will, unless reasonable cause is given, be made available by the Drug Enforcement Administration (DEA) for public inspection online at http://www.regulations.gov. Such information includes personal identifying information (such as your name, address, etc.) voluntarily submitted by the commenter. The Freedom of Information Act (FOIA) applies to all comments received. If you want to submit personal identifying information (such as your name, address, etc.) as part of your comment, but do not want it to be made publicly available, you must include the phrase “PERSONAL IDENTIFYING INFORMATION” in the first paragraph of your comment. You must also place all of the personal identifying information you do not want made publicly available in the first paragraph of your comment and identify what information you want redacted.

If you want to submit confidential business information as part of your comment, but do not want it to be made publicly available, you must include the phrase “CONFIDENTIAL BUSINESS INFORMATION” in the first paragraph of your comment. You must also prominently identify the confidential business information to be redacted within the comment.

Comments containing personal identifying information and confidential business information identified as directed above will generally be made publicly available in redacted form. If a comment has so much confidential business information or personal identifying information that it cannot be effectively redacted, all or part of that comment may not be made publicly available. Comments posted to http://www.regulations.gov may include any personal identifying information (such as name, address, and phone number) included in the text of your electronic submission that is not identified as directed above as confidential.

An electronic copy of this document and supplemental information, including the complete Department of Health and Human Services and Drug Enforcement Administration eight-factor analyses, to this interim final rule are available at http://www.regulations.gov for easy reference.

Pursuant to 21 U.S.C. 811(a), this action is a formal rulemaking “on the record after opportunity for a hearing.” Such proceedings are conducted pursuant to the provisions of the Administrative Procedure Act (APA), 5 U.S.C. 551-559. 21 CFR 1308.41-1308.45; 21 CFR part 1316, subpart D. Interested persons may file requests for a hearing or notices of intent to participate in a hearing in conformity with the requirements of 21 CFR 1308.44(a) or (b) and include a statement of interest in the proceeding and the objections or issues, if any, concerning which the person desires to be heard. Any interested person may file a waiver of an opportunity for a hearing or to participate in a hearing together with a written statement regarding the interested person's position on the matters of fact and law involved in any hearing as set forth in 21 CFR 1308.44(c).

All requests for a hearing and waivers of participation must be sent to the DEA using the address information provided above.

Under the Improving Regulatory Transparency for New Medical Therapies Act (Pub. L. 114-89), which was signed into law on November 25, 2015, the Drug Enforcement Administration (DEA) is required to commence an expedited scheduling action with respect to certain new drugs approved by the FDA. As provided in 21 U.S.C. 811(j), this expedited scheduling is required where both of the following conditions apply: (1) The Secretary of the Department of Health and Human Services (Secretary of HHS or the Secretary) has advised DEA that a New Drug Application (NDA) has been submitted for a drug that has a stimulant, depressant, or hallucinogenic effect on the central nervous system (CNS), and that it appears that such drug has an abuse potential; and, (2) the Secretary recommends that DEA control the drug in schedule II, III, IV, or V pursuant to 21 U.S.C. 811(a) and (b). In these circumstances, the DEA is required to issue an interim final rule controlling the drug within 90 days.

The law further states that the 90-day timeframe starts the later of (1) the date DEA receives the HHS scientific and medical evaluation/scheduling recommendation or (2) the date DEA receives notice of the NDA approval by HHS. In addition, the law specifies that the rulemaking shall become immediately effective as an interim final rule without requiring the DEA to demonstrate good cause therefor. Thus, the purpose of subsection (j) is to speed the process by which DEA schedules newly approved drugs that are currently either in schedule I or not controlled (but which have sufficient abuse potential to warrant control) so that such drugs may be marketed without undue delay following FDA approval. 1

Subsection (j) further provides that the interim final rule shall give interested persons the opportunity to comment and to request a hearing. After the conclusion of such proceedings, DEA must issue a final rule in accordance with the scheduling criteria of subsections 21 U.S.C. 811(b), (c), and (d) and 21 U.S.C. 812(b).

Brexanolone (3α-hydroxy-5α-pregnan-20-one), also known as allopregnanolone, is a new molecular entity with central nervous system (CNS) depressant properties. Brexanolone is an inhibitory neurosteroidal substance structurally related to progesterone. Brexanolone shares a pharmacological mechanism of action with schedule IV substances such as diazepam and alprazolam and is a positive allosteric modulator of the gamma-aminobutyric acid type A (GABA-A) receptors.

On April 19, 2018, Sage Therapeutics (Sponsor) submitted an NDA for brexanolone to the FDA. On March 19, 2019, the DEA received notification that HHS/FDA approved, on that date, the NDA for Zulresso (brexanolone) injection, for intravenous use, to treat postpartum depression (PPD) in adult women. Zulresso is approved with a Risk Evaluation and Mitigation Strategy (REMS) and is available to patients through a restricted distribution program where a healthcare professional can only administer the drug in a certified healthcare facility.

On March 19, 2019, the DEA received from the HHS a scientific and medical evaluation document (dated March 08, 2019) prepared by the FDA entitled “Basis for the Recommendation to Control Brexanolone and its Salts in schedule IV of the Controlled Substances Act.” Pursuant to 21 U.S.C. 811(b), this document contained an eight-factor analysis of the abuse potential of brexanolone, along with the HHS's recommendation to control brexanolone under schedule IV of the CSA.

In response, the DEA reviewed the scientific and medical evaluation and scheduling recommendation provided by the HHS, along with all other relevant data, and completed its own eight-factor review document pursuant to 21 U.S.C. 811(c). The DEA concluded that brexanolone met the 21 U.S.C. 812(b)(4) criteria for placement in schedule IV of the CSA.

Pursuant to subsection 811(j), and based on the HHS recommendation, NDA approvals by HHS/FDA, and the DEA's determination, the DEA is issuing this interim final rule to schedule brexanolone as a schedule IV controlled substance under the CSA.

Included below is a brief summary of each factor as analyzed by the HHS and the DEA, and as considered by the DEA in its scheduling action. Please note that both the DEA and the HHS analyses are available in their entirety under “Supporting Documents” in the public docket for this interim final rule at http://www.regulations.gov, under Docket Number “DEA-503.” Full analysis of, and citations to, the information referenced in the summary may also be found in the supporting and related material.

1. Its Actual or Relative Potential for Abuse: Brexanolone is a new molecular entity and is not currently available or marketed in any country; evidence regarding its diversion, illicit manufacturing, or deliberate ingestion is lacking. However, as stated by the HHS, brexanolone is related in action to schedule IV sedatives such as midazolam and alprazolam. It is thus reasonable to assume that brexanolone may be diverted from legitimate channels, used contrary to or without medical advice, and otherwise abused so as to create hazards to the users and to the safety of the community to an extent similar to that of schedule IV sedatives.

Pre-clinical and clinical studies show that brexanolone produces effects that are similar to schedule IV sedative-hypnotics, such as midazolam and alprazolam. Data obtained from general behavioral studies demonstrate that brexanolone produced a sedative effect. In a drug discrimination study in rats, brexanolone mimicked stimulus effects of midazolam at certain dosages. Brexanolone produced positive subjective responses and euphoria-related adverse events (AEs) similar to that of alprazolam (schedule IV) in nondependent and healthy humans with a history of recreational use of CNS depressants. Thus, brexanolone likely has abuse potential similar to that of schedule IV sedatives, such as midazolam and alprazolam, and it is likely to be abused for its sedative effects contrary to medical advice.

2. Scientific Evidence of Its Pharmacological Effects, if Known: Brexanolone, an inhibitory neurosteroid, shares a similar pharmacological profile to another inhibitory neurosteroid (alfaxalone, a schedule IV controlled substance) and schedule IV benzodiazepines such as alprazolam and midazolam. Brexanolone, a metabolite of progesterone, acts on GABA-A receptors and enhances the effects of GABA. GABA is the major inhibitory neurotransmitter in the CNS. The GABA-A receptor is a ligand-gated chloride ion channel consisting of five subunits and a central chloride channel. Benzodiazepines and other GABAergic substances enhance the opening of the ligand-gated chloride channel and the influx of chloride. Brexanolone's ability to bind to GABA-related sites is consistent with the action of other related neurosteroids, such as alfaxalone.

Brexanolone, like schedule IV benzodiazepines, has sedative activity in animals. Acute and chronic administration of brexanolone to male and female rats and dogs elicited dose-dependent behaviors indicative of the sedative and muscle relaxation properties of the drug. In a drug discrimination study using male rats previously trained to discriminate midazolam, brexanolone produced interoceptive cues that are similar to those of midazolam. In human abuse potential studies, brexanolone produced subjective responses similar to that of alprazolam and may have a reinforcing effect at a higher infusion rate. The abuse-related neuropharmacology profile of brexanolone is similar to that of schedule IV substances (alprazolam and midazolam) and consistent with its mechanism of action as a positive allosteric modulator of the GABA-A receptors.

3. The State of Current Scientific Knowledge Regarding the Drug or Other Substance: Brexanolone is a new molecular entity. It is the established name for allopregnanolone, chemically known as 5α-pregnan-3α-ol-20-one (also known as 3α-hydroxy-5α-pregnan-20-one). It is insoluble in water, very slightly soluble in n -heptane, sparingly soluble in ethyl acetate, slightly soluble in methanol, soluble in 2-methyl-tetrahydrofuran, and freely soluble in tetrahydrofuran. Brexanolone drug product is formulated as a sterile, clear, colorless solution intended for dilution followed by intravenous infusion; and it contains brexanolone, Betadex Sulfobutyl Ether Sodium USP/NF (Captisol) as a solubilizer, citric acid and sodium citrate as buffering agents, and water for injection. The pH of the final bulk compounded solution is adjusted to 6.0 using either sodium hydroxide or hydrochloric acid.

4. Its History and Current Pattern of Abuse: There is no information on the history and current pattern of abuse for brexanolone, since it has not been marketed, legally or illegally, in any country. The DEA conducted a search on the National Forensic Laboratory Information System (NFLIS)  2 and STARLiMS  3 databases for brexanolone encounters. Consistent with the fact that brexanolone is a new molecular entity, these databases had no records of encounters by law enforcement.

HHS notes that brexanolone produces abuse-related signals and abuse potential similar to that of schedule IV benzodiazepines. In particular, the pharmacological mechanism of action of brexanolone involving a positive allosteric modulation of the GABA-A receptors suggests that its pattern of abuse would be similar to schedule IV sedative-hypnotics with similar mechanisms of action, such as midazolam and diazepam.

5. The Scope, Duration, and Significance of Abuse: As noted, brexanolone is not marketed, legally or illegally, in any country. Thus, information about the scope, duration, and significance of abuse for brexanolone is lacking. However, because of brexanolone's pharmacological similarities to certain schedule IV benzodiazepines, brexanolone is likely to be abused when available in the market with a scope, duration, and significance of abuse similar to those of schedule IV benzodiazepines.

6. What, if any, Risk There Is to the Public Health: The extent of abuse potential of a drug is an indication of its public health risk. Data from preclinical and clinical studies showed that brexanolone has abuse potential similar to that of certain schedule IV benzodiazepines. Therefore, upon availability for marketing, it is likely to pose a public health risk to a degree similar to schedule IV benzodiazepines. Data from clinical trials showed that brexanolone caused excessive sedation with occasional loss of consciousness and amnesia. In addition, transient apnea occurred in one patient at a supratherapeutic dose. The HHS states that these adverse effects would likely occur in abusers of brexanolone.

The brexanolone prescription product label states that concomitant use of opioids, antidepressants, or other CNS depressants such as benzodiazepines or alcohol may increase the possibility or severity of adverse reactions related to sedation. In addition, because of the risk of excessive sedation or sudden loss of consciousness, brexanolone is only available through a REMS program. A REMS is a drug safety program required by the FDA for certain medications with serious safety concerns to ensure the benefits of the medication outweighs its risks and is designed to reinforce medication use behaviors and actions that support the safe use of the medication. 4

The abuse of brexanolone may present risks to the public health at a level similar to those associated with the abuse of schedule IV benzodiazepines, such as midazolam and alprazolam.

7. Its Psychic or Physiological Dependence Liability: The HHS review states that there were no physical dependence studies conducted in animals or humans using brexanolone. Brexanolone is pharmacologically similar to benzodiazepines that are known to produce physical dependence. Sleep disturbances, anxiety, and convulsions can occur upon discontinuation of chronic administration of benzodiazepines. Thus, it is likely brexanolone may have a physical dependence potential similar to that of benzodiazepines. Data from a dog toxicity study demonstrated that discontinuation of chronic administration of brexanolone led to convulsions, similar to the effect from discontinuing benzodiazepines. Because brexanolone produced positive subjective responses and euphoria-related AEs, it is likely to cause psychic dependence.

8. Whether the Substance Is an Immediate Precursor of a Substance Already Controlled under the CSA: Brexanolone is not an immediate precursor of any substance already controlled in the CSA.

Conclusion: After considering the scientific and medical evaluation conducted by the HHS, the HHS's recommendation, and its own eight-factor analysis, the DEA has determined that these facts and all relevant data constitute substantial evidence of a potential for abuse of brexanolone. As such, the DEA hereby schedules brexanolone as a controlled substance under the CSA.

The CSA lists the findings required to place a drug or other substance in any particular schedule (I, II, III, IV, or V). 21 U.S.C. 812(b). After consideration of the analysis and recommendation of the Assistant Secretary for Health of the HHS and review of all available data, the Acting Administrator of the DEA, pursuant to 21 U.S.C. 812(b)(4), finds that:

(1) Brexanolone has a low potential for abuse relative to the drugs or other substances in Schedule III.

Brexanolone, a neuroactive steroid, is a positive allosteric modulator of GABA-A receptors and produces sedation in general behavioral studies and locomotion study. In a drug discrimination study in animals, brexanolone was generalized to midazolam (schedule IV) at certain dosages, demonstrating it has GABA-A receptor agonist properties. In a human abuse potential (HAP) study, brexanolone produced positive subjective responses and euphoria-related AEs similar to those of alprazolam (schedule IV) in an HAP study. Furthermore, data from other clinical studies show that brexanolone produced abuse-related AEs, namely somnolence and sedation. Because brexanolone is similar to midazolam and alprazolam (both schedule IV controlled substances) in its abuse potential, brexanolone has a low potential for abuse relative to the drugs or other substances in schedule III.

(2) Brexanolone has a currently accepted medical use in the United States.

The FDA recently approved the NDA for brexanolone as an intravenous treatment of PPD in adult women. Thus, brexanolone has a currently accepted medical use for treatment in the United States.

(3) Abuse of Brexanolone may lead to limited physical dependence or psychological dependence relative to the drugs or other substances in schedule III.

Brexanolone has a pharmacology profile similar to that of benzodiazepine drugs. Because abrupt discontinuation of benzodiazepines is associated with withdrawal symptoms, it is likely that brexanolone may have the potential to produce physical dependence similar to that produced by benzodiazepines. Data from a dog toxicity study demonstrated that discontinuation of chronic administration of brexanolone led to convulsions, similar to the effect from discontinuing benzodiazepines. In addition, because brexanolone produced positive subjective responses and euphoria-related AEs, it is likely that brexanolone can produce psychic dependence. Thus, abuse of brexanolone may lead to limited physical or psychological dependence relative to the drugs or other substances in schedule III.

Based on these findings, the Acting Administrator of the DEA concludes that brexanolone, including its salts, isomers, and salts of isomers whenever the existence of such salts, isomers, and salts of isomers is possible, warrants control in schedule IV of the CSA. 21 U.S.C. 812(b)(4).

Brexanolone is subject to the CSA's schedule IV regulatory controls and administrative, civil, and criminal sanctions applicable to the manufacture, distribution, reverse distribution, dispensing, importing, exporting, research, and conduct of instructional activities and chemical analysis with, and possession involving schedule IV substances, including the following:

1. Registration. Any person who handles (manufactures, distributes, reverse distributes, dispenses, imports, exports, engages in research, or conducts instructional activities or chemical analysis with, or possesses) brexanolone, or who desires to handle brexanolone, must be registered with the DEA to conduct such activities pursuant to 21 U.S.C. 822, 823, 957, and 958 and in accordance with 21 CFR parts 1301 and 1312. Any person who currently handles or intends to handle brexanolone, and is not registered with the DEA, must submit an application for registration and may not continue to handle brexanolone, unless the DEA has approved that application for registration, pursuant to 21 U.S.C. 822, 823, 957, and 958, and in accordance with 21 CFR parts 1301 and 1312.

2. Disposal of stocks. Any person who does not desire or is not able to maintain a schedule IV registration must surrender all quantities of currently held brexanolone or may transfer all quantities of brexanolone to a person registered with the DEA in accordance with 21 CFR part 1317, in addition to all other applicable federal, state, local, and tribal laws.

3. Security. Brexanolone is subject to schedule III-V security requirements and must be handled and stored in accordance with 21 CFR 1301.71-1301.93.

4. Labeling and Packaging. All labels, labeling, and packaging for commercial containers of brexanolone must comply with 21 U.S.C. 825 and 958(e), and be in accordance with 21 CFR part 1302.

5. Inventory. Every DEA registrant who possesses any quantity of brexanolone must take an inventory of all stocks of brexanolone on hand, pursuant to 21 U.S.C. 827 and 958(e), and in accordance with 21 CFR 1304.03, 1304.04, and 1304.11.

Any person who becomes registered with the DEA to handle brexanolone must take an initial inventory of all stocks of controlled substances (including brexanolone) on hand on the date the registrant first engages in the handling of controlled substances, pursuant to 21 U.S.C. 827 and 958(e), and in accordance with 21 CFR 1304.03, 1304.04, and 1304.11.

After the initial inventory, every DEA registrant must take an inventory of all controlled substances (including brexanolone) on hand every two years, pursuant to 21 U.S.C. 827 and 958(e), and in accordance with 21 CFR 1304.03, 1304.04, and 1304.11.

6. Records and Reports. DEA registrants must maintain records and submit reports for brexanolone, pursuant to 21 U.S.C. 827 and 958(e), and in accordance with 21 CFR parts 1304, 1312, and 1317.

7. Prescriptions. All prescriptions for brexanolone or products containing brexanolone must comply with 21 U.S.C. 829, and be issued in accordance with 21 CFR parts 1306 and 1311, subpart C.

8. Manufacturing and Distributing. In addition to the general requirements of the CSA and DEA regulations that are applicable to manufacturers and distributors of schedule IV controlled substances, such registrants should be advised that (consistent with the foregoing considerations) any manufacturing or distribution of brexanolone may only be for the legitimate purposes consistent with the drug's labeling, or for research activities authorized by the Federal Food, Drug, and Cosmetic Act and the CSA.

9. Importation and Exportation. All importation and exportation of brexanolone must be in compliance with 21 U.S.C. 952, 953, 957, and 958, and in accordance with 21 CFR part 1312.

10. Liability. Any activity involving brexanolone not authorized by, or in violation of, the CSA or its implementing regulations, is unlawful, and may subject the person to administrative, civil, and/or criminal sanctions.

As explained above, under 21 U.S.C. 811(j), when a new drug is (1) approved by the Department of Health and Human Services (HHS), and (2) HHS recommends control in CSA schedule II-V, the DEA shall issue an interim final rule scheduling the drug within 90 days. Additionally, the law specifies that the rulemaking shall become immediately effective as an interim final rule without requiring the DEA to demonstrate good cause. Therefore, the DEA has determined that the notice and comment requirements of section 553 of the APA, 5 U.S.C. 553, do not apply to this scheduling action.

In accordance with Public Law 114-89, this scheduling action is subject to formal rulemaking procedures performed “on the record after opportunity for a hearing,” which are conducted pursuant to the provisions of 5 U.S.C. 556 and 557. The CSA sets forth the procedures and criteria for scheduling a drug or other substance. Such actions are exempt from review by the Office of Management and Budget (OMB) pursuant to section 3(d)(1) of Executive Order 12866 and the principles reaffirmed in Executive Order 13563.

This interim final rule is not an Executive Order 13771 regulatory action pursuant to Executive Order 12866 and OMB guidance. 5

This regulation meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988 to eliminate drafting errors and ambiguity, minimize litigation, provide a clear legal standard for affected conduct, and promote simplification and burden reduction.

This rulemaking does not have federalism implications warranting the application of Executive Order 13132. The rule does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

This rule does not have tribal implications warranting the application of Executive Order 13175. It does not have substantial direct effects 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.

In accordance with 5 U.S.C. 603(a), “[w]henever an agency is required by [5 U.S.C. 553], or any other law, to publish general notice of proposed rulemaking for any proposed rule, or publishes a notice of proposed rulemaking for an interpretive rule involving the internal revenue laws of the United States, the agency shall prepare and make available for public comment an initial regulatory flexibility analysis.” As noted in the above discussion regarding applicability of the APA, the DEA has determined that the notice and comment requirements of section 553 of the APA, 5 U.S.C. 553, do not apply to this scheduling action. Consequently, the Regulatory Flexibility Act does not apply to this interim final rule.

In accordance with the Unfunded Mandates Reform Act (UMRA) of 1995, 2 U.S.C. 1501 et seq., the DEA has determined that this action would not result in any Federal mandate that may result “in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted for inflation) in any one year.” Therefore, neither a Small Government Agency Plan nor any other action is required under UMRA of 1995.

This action does not impose a new collection of information requirement under the Paperwork Reduction Act of 1995. 44 U.S.C. 3501-3521. This action would not impose recordkeeping or reporting requirements on State or local governments, individuals, businesses, or organizations. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.

This rule is not a major rule as defined by the Congressional Review Act (CRA), 5 U.S.C. 804. This rule will not result in: An annual effect on the economy of $100,000,000 or more; a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of U.S.-based companies to compete with foreign based companies in domestic and export markets. However, pursuant to the CRA, the DEA has submitted a copy of this interim final rule to both Houses of Congress and to the Comptroller General.

For the reasons set out above, the DEA amends 21 CFR part 1308 as follows:

Please note that all comments received are considered part of the public record. They will, unless reasonable cause is given, be made available by the Drug Enforcement Administration (DEA) for public inspection online at http://www.regulations.gov. Such information includes personal identifying information (such as your name, address, etc.) voluntarily submitted by the commenter. The Freedom of Information Act (FOIA) applies to all comments received. If you want to submit personal identifying information (such as your name, address, etc.) as part of your comment, but do not want it to be made publicly available, you must include the phrase “PERSONAL IDENTIFYING INFORMATION” in the first paragraph of your comment. You must also place all of the personal identifying information you do not want made publicly available in the first paragraph of your comment and identify what information you want redacted.

If you want to submit confidential business information as part of your comment, but do not want it to be made publicly available, you must include the phrase “CONFIDENTIAL BUSINESS INFORMATION” in the first paragraph of your comment. You must also prominently identify the confidential business information to be redacted within the comment.

Comments containing personal identifying information and confidential business information identified as directed above will generally be made publicly available in redacted form. If a comment has so much confidential business information or personal identifying information that it cannot be effectively redacted, all or part of that comment may not be made publicly available. Comments posted to http://www.regulations.gov may include any personal identifying information (such as name, address, and phone number) included in the text of your electronic submission that is not identified as directed above as confidential.

An electronic copy of this document and supplemental information, including the complete Department of Health and Human Services and Drug Enforcement Administration eight-factor analyses, to this interim final rule are available at http://www.regulations.gov for easy reference.

Pursuant to 21 U.S.C. 811(a), this action is a formal rulemaking “on the record after opportunity for a hearing.” Such proceedings are conducted pursuant to the provisions of the Administrative Procedure Act (APA), 5 U.S.C. 551-559. 21 CFR 1308.41-1308.45; 21 CFR part 1316, subpart D. Interested persons may file requests for a hearing or notices of intent to participate in a hearing in conformity with the requirements of 21 CFR 1308.44(a) or (b), and include a statement of interest in the proceeding and the objections or issues, if any, concerning which the person desires to be heard. Any interested person may file a waiver of an opportunity for a hearing or to participate in a hearing together with a written statement regarding the interested person's position on the matters of fact and law involved in any hearing as set forth in 21 CFR 1308.44(c).

All requests for a hearing and waivers of participation must be sent to DEA using the address information provided above.

Under the Improving Regulatory Transparency for New Medical Therapies Act (Pub. L. 114-89), which was signed into law on November 25, 2015, the DEA is required to commence an expedited scheduling action with respect to certain new drugs approved by the U.S. Food and Drug Administration (FDA). As provided in 21 U.S.C. 811(j), this expedited scheduling is required where both of the following conditions apply: (1) The Secretary of the Department of Health and Human Services (Secretary of HHS or the Secretary) has advised DEA that a New Drug Application (NDA) has been submitted for a drug that has a stimulant, depressant, or hallucinogenic effect on the central nervous system, and that it appears that such drug has an abuse potential; and, (2) the Secretary recommends that DEA control the drug in schedule II, III, IV, or V pursuant to 21 U.S.C. 811(a) and (b). In these circumstances, DEA is required to issue an interim final rule controlling the drug within 90 days.

The law further states that the 90-day timeframe starts the later of (1) the date DEA receives the HHS scientific and medical evaluation/scheduling recommendation or (2) the date DEA receives notice of the NDA approval by HHS. In addition, the law specifies that the rulemaking shall become immediately effective as an interim final rule without requiring DEA to demonstrate good cause therefor. Thus, the purpose of subsection (j) is to speed the process by which DEA schedules newly approved drugs that are currently either in schedule I or not controlled (but which have sufficient abuse potential to warrant control) so that such drugs may be marketed without undue delay following FDA approval. 1

Subsection (j) further provides that the interim final rule shall give interested persons the opportunity to comment and to request a hearing. After the conclusion of such proceedings, DEA must issue a final rule in accordance with the scheduling criteria of subsections 21 U.S.C. 811(b), (c), and (d) and 21 U.S.C. 812(b).

On December 20, 2017, Jazz Pharmaceuticals, Inc. (Sponsor) submitted an NDA to FDA for SUNOSI (solriamfetol) 75 and 150 mg oral tablets. FDA determined that solriamfetol is a new molecular entity, and HHS determined that solriamfetol has a stimulant effect on the central nervous system. On March 20, 2019, FDA approved the NDA for SUNOSI (solriamfetol) to improve wakefulness in adult patients with excessive daytime sleepiness associated with narcolepsy or obstructive sleep apnea (OSA).

On March 19, 2019, DEA received from HHS a scientific and medical evaluation document (dated March 8, 2019) prepared by the FDA related to solriamfetol. Pursuant to 21 U.S.C. 811(b), this document contained an eight-factor analysis of the abuse potential of solriamfetol, along with HHS' recommendation to control solriamfetol under schedule IV of the CSA. Subsequently, on March 20, 2019, DEA received notification from HHS that the FDA had approved an NDA for SUNOSI (solriamfetol).

In response, DEA reviewed the scientific and medical evaluation and scheduling recommendation provided by HHS, along with all other relevant data, and completed its own eight-factor review document pursuant to 21 U.S.C. 811(c). DEA concluded that solriamfetol met the 21 U.S.C. 812(b)(4) criteria for placement in schedule IV of the CSA.

Pursuant to subsection 811(j)—and based on the HHS recommendation, NDA approval by HHS/FDA, and DEA's determination—the DEA is issuing this interim final rule to schedule solriamfetol as a schedule IV controlled substance under the CSA.

Included below is a brief summary of each factor as analyzed by HHS and DEA, and as considered by DEA in its scheduling action. Please note that both the DEA and HHS analyses are available in their entirety under “Supporting Documents” in the public docket for this interim final rule at http://www.regulations.gov, under Docket Number “DEA-504.” Full analysis of, and citations to, the information referenced in the summary may also be found in the supporting and related material.

1. Its Actual or Relative Potential for Abuse: Solriamfetol is a new molecular entity that has not been marketed in the United States or any other country. Thus, information about the diversion and actual abuse of solriamfetol is limited. Solriamfetol is currently not available for medical treatment, has not been diverted from legitimate sources, and individuals have not taken this substance in amounts sufficient to create a hazard to public health and safety. The DEA notes that there are no reports for solriamfetol in the National Forensic Laboratory Information System (NFLIS), 2 which collects drug identification results from drug cases submitted to and analyzed by state and local forensic laboratories. There were also no reports in STARLiMS, 3 DEA's laboratory drug evidence data system of record.

As stated by HHS, solriamfetol is a stimulant that has low affinity for the human dopamine, serotonin, and norepinephrine transporters. In a clinical study investigating the abuse potential of solriamfetol, HHS concluded that solriamfetol produced subjective responses that were similar to those for the schedule IV stimulant phentermine.

2. Scientific Evidence of Its Pharmacological Effects, if Known: Solriamfetol primarily acts as a dopamine and norepinephrine reuptake inhibitor and does not bind to any other receptors that are typically associated with abuse, such as opioid or cannabinoid receptors, GABAergic, and other ion channels. According to HHS, general behavioral studies in animals indicate that solriamfetol produces stimulant effects such as an increase in locomotor activity and anorexic effects. However, in drug discrimination studies used to predict subjective effects in humans, solriamfetol at doses that do not severely impact motor responses did not mimic stimulus effects of schedule II substances amphetamine or cocaine. In a human abuse potential study, therapeutic doses of solriamfetol produced feelings of relaxation, hypervigilance, elevated mood, insomnia, and hyperhidrosis. These adverse events (AEs) are consistent with those of stimulant drugs and are also seen with phentermine, a schedule IV substance. In other clinical studies, adverse events such as anxiety, insomnia, and agitation were seen in subjects treated with solriamfetol. HHS concluded that the results from animal and human studies indicate that solriamfetol has low abuse potential similar to phentermine.

3. The State of Current Scientific Knowledge Regarding the Drug or Other Substance: Solriamfetol is a new molecular entity, chemically known as ( R )-2-amino-3-phenylpropyl carbamate. It has a molecular formula of C 10 H 14 N 2 O 2 . Solriamfetol is a white to off-white solid that has a melting point between 183-189 °C. It is highly soluble in water at a pH between one and seven. On March 20, 2019, the FDA approved an NDA for solriamfetol for medical use to improve wakefulness in adult patients with excessive daytime sleepiness associated with narcolepsy or OSA. Thus, solriamfetol has an accepted medical use in the United States. Solriamfetol will be marketed as a once daily tablet and is available in strengths of 75 and 150 mg. The 75 mg tablet is functionally scored to permit a starting dose for patients with OSA of 37.5 mg once daily. 4

4. Its History and Current Pattern of Abuse: There is no information available relating to the history and current pattern of abuse of solriamfetol, since this drug is not currently marketed in any country. HHS notes that solriamfetol produces abuse-related signals and abuse potential similar to that of schedule IV controlled substance phentermine.

The DEA conducted a search on the NFLIS and STARLiMS databases for solriamfetol encounters. Consistent with the fact that solriamfetol is a new molecular entity, these databases had no records of encounters of solriamfetol by law enforcement.

5. The Scope, Duration, and Significance of Abuse: Solriamfetol as a single active ingredient in a drug product is currently not marketed in any country. Thus, information on the scope, duration, and significance of abuse for solriamfetol is lacking. However, as HHS notes, data from preclinical and clinical studies summarized in factor 2 and epidemiological data indicate that the scope, duration, and significance of abuse for solriamfetol would be similar to those of phentermine, a schedule IV substance. As stated by HHS, data from animal and human studies indicate that solriamfetol has abuse potential similar to phentermine.

6. What, if any, Risk There is to the Public Health: The extent of abuse potential of a drug is an indication of its public health risk. Data from the preclinical and clinical studies suggest that the abuse potential and physical or psychological dependence of solriamfetol are similar to schedule IV substances such as phentermine.

7. Its Psychic or Physiological Dependence Liability: Physical dependence for solriamfetol was tested in animal toxicity studies and during Phase 3 clinical trials. According to HHS, animal toxicity studies in rats and dogs demonstrated no symptoms of withdrawal from discontinuation of the solriamfetol. In clinical studies, sudden cessation of solriamfetol produced a low percentage of adverse events that HHS concluded did not exhibit a consistent pattern of withdrawal symptoms. Based on these studies, HHS stated that solriamfetol does not appear to cause physical dependence.

8. Whether the Substance is an Immediate Precursor of a Substance Already Controlled under the CSA: Solriamfetol is not an immediate precursor of any controlled substance, as defined in 21 U.S.C. 802(23).

Conclusion: After considering the scientific and medical evaluation conducted by HHS, HHS' recommendation, and its own eight-factor analysis, the DEA has determined that these facts and all relevant data constitute substantial evidence of a potential for abuse of solriamfetol. As such, DEA hereby schedules solriamfetol as a controlled substance under the CSA.

The CSA outlines the findings required to place a drug or other substance in any particular schedule (I, II, III, IV, or V). 21 U.S.C. 812(b). After consideration of the analysis and recommendation of the Assistant Secretary for Health of HHS and review of all available data, the Acting Administrator of the DEA, pursuant to 21 U.S.C. 812(b)(4), finds that:

1. Solriamfetol has a low potential for abuse relative to the drugs or other substances in schedule III.

Receptor binding and functional studies demonstrate that solriamfetol acts as a dopamine and norepinephrine reuptake inhibitor that does not appear to bind to other receptors typically associated with abuse ( e.g., opioid, cannabinoid, GABAergic, and other ion channels). Results from animal behavioral studies (using solriamfetol treated animals) demonstrated increases in locomotor activity, increases in awake time in the sleep-wake cycle, and anorexia, all of which may be indicative of abuse potential of solriamfetol. However, in drug discrimination studies used to predict subjective effects in humans, solriamfetol did not produce full generalization to cocaine or amphetamine. In a human abuse potential study, subjects treated with solriamfetol experienced adverse events that were similar to that of the schedule IV stimulant phentermine. In phase 1 through 3 clinical trials, solriamfetol treated subjects exhibited low rates of adverse effects including insomnia, anxiety, and agitation. The data from preclinical and clinical studies indicate that solriamfetol has a low potential for abuse relative to other substances in schedule III. Solriamfetol has abuse potential similar to phentermine.

2. Solriamfetol has a currently accepted medical use in the United States.

The FDA recently approved solriamfetol to improve wakefulness in adult patients with excessive daytime sleepiness associated with narcolepsy or obstructive sleep apnea. Thus, solriamfetol has a currently accepted medical use in the United States.

3. Solriamfetol may lead to limited physical dependence or psychological dependence relative to the drugs or other substances in schedule III.

In animal toxicology studies, rats or dogs exposed to solriamfetol demonstrated no indication of physical dependence after abrupt discontinuation of the drug. This is consistent with the effects of amphetamine-like stimulant drugs, which produce psychological dependence, but little or no physical dependence. In clinical studies, subjects receiving solriamfetol reported an array of adverse events after discontinuation from the drug. However, there was no consistent pattern of withdrawal symptoms that would indicate physical dependence. In a human abuse potential study, solriamfetol increased drug liking scores that are significantly greater than that of placebo and are similar to or less than that of phentermine. These data collectively suggest that solriamfetol abuse may lead to limited psychological dependence relative to drugs in schedule III and largely similar to that of schedule IV stimulants.

Based on these findings, the Acting Administrator of DEA concludes that solriamfetol warrants control in schedule IV of the CSA. 21 U.S.C. 812(b)(4).

Solriamfetol is subject to the CSA's schedule IV regulatory controls and administrative, civil, and criminal sanctions applicable to the manufacture, distribution, reverse distribution, dispensing, importing, exporting, research, and conduct of instructional activities and chemical analysis with, and possession involving schedule IV substances, including, but not limited to, the following:

1. Registration. Any person who handles (manufactures, distributes, reverse distributes, dispenses, imports, exports, engages in research, or conducts instructional activities or chemical analysis with, or possesses) solriamfetol, or who desires to handle solriamfetol, must be registered with the DEA to conduct such activities pursuant to 21 U.S.C. 822, 823, 957, and 958 and in accordance with 21 CFR parts 1301 and 1312. Any person who currently handles or intends to handle solriamfetol, and is not registered with DEA, must submit an application for registration and may not continue to handle solriamfetol, unless DEA has approved the application for registration, pursuant to 21 U.S.C. 822, 823, 957, and 958 and in accordance with 21 CFR parts 1301 and 1312.

2. Disposal of stocks. Any person who does not desire or is not able to maintain a schedule IV registration must surrender all quantities of currently held solriamfetol, or may transfer all quantities of currently held solriamfetol to a person registered with DEA in accordance with 21 CFR part 1317, in additional to all other applicable federal, state, local, and tribal laws.

3. Security. Solriamfetol is subject to schedule III-V security requirements and must be handled and stored in accordance with 21 CFR 1301.71-93.

4. Labeling and Packaging. All labels, labeling, and packaging for commercial containers of solriamfetol must comply with 21 U.S.C. 825 and 958(e) and be in accordance with 21 CFR part 1302.

5. Inventory. Every DEA registrant who possesses any quantity of solriamfetol must take an inventory of all stocks of solriamfetol on hand, pursuant to 21 U.S.C. 827 and 958(e), and in accordance with 21 CFR 1304.03, 1304.04, and 1304.11.

Any person who becomes registered with the DEA to handle solriamfetol must take an initial inventory of all stocks of controlled substances containing solriamfetol on hand on the date the registrant first engages in the handling of controlled substances, pursuant to 21 U.S.C. 827 and 958(e), and in accordance with 21 CFR 1304.03, 1304.04, and 1304.11.

After the initial inventory, every DEA registrant must take a new inventory of all stocks of controlled substances (including solriamfetol) on hand every two years, pursuant to 21 U.S.C. 827 and 958(e), and in accordance with 21 CFR 1304.03, 1304.04, and 1304.11.

6. Records and Reports. Every DEA registrant must maintain records and submit reports for solriamfetol, pursuant to 21 U.S.C. 827 and 958(e), and in accordance with 21 CFR parts 1304, 1312, and 1317.

7. Prescriptions. All prescriptions for solriamfetol or products containing solriamfetol must comply with 21 U.S.C. 829, and be issued in accordance with 21 CFR parts 1306 and 1311, subpart C.

8. Manufacturing and Distributing. In addition to the general requirements of the CSA and DEA regulations that are applicable to manufacturers and distributors of schedule IV controlled substances, such registrants should be advised that (consistent with the foregoing considerations) any manufacturing or distribution of solriamfetol may only be for the legitimate purposes consistent with the drug's labeling, or for research activities authorized by the Federal Food, Drug, and Cosmetic Act and the CSA.

9. Importation and Exportation. All importation and exportation of solriamfetol must be in compliance with 21 U.S.C. 952, 953, 957, and 958, and in accordance with 21 CFR part 1312.

10. Liability. Any activity involving solriamfetol not authorized by, or in violation of, the CSA or its implementing regulations, is unlawful, and may subject the person to administrative, civil, and/or criminal sanctions.

Public Law 114-89 was signed into law, amending 21 U.S.C. 811. This amendment provides that in cases where a new drug is (1) approved by HHS and (2) HHS recommends control in CSA schedule II-V, DEA shall issue an interim final rule scheduling the drug within 90 days. Additionally, the law specifies that the rulemaking shall become immediately effective as an interim final rule without requiring DEA to demonstrate good cause. Therefore, DEA has determined that the notice and comment requirements of section 553 of the APA, 5 U.S.C. 553, do not apply to this scheduling action.

In accordance with Public Law 114-89, this scheduling action is subject to formal rulemaking procedures performed “on the record after opportunity for a hearing,” which are conducted pursuant to the provisions of 5 U.S.C. 556 and 557. The CSA sets forth the procedures and criteria for scheduling a drug or other substance. Such actions are exempt from review by the Office of Management and Budget (OMB) pursuant to section 3(d)(1) of Executive Order 12866 and the principles reaffirmed in Executive Order 13563.

This interim final rule is not an Executive Order 13771 regulatory action pursuant to Executive Order 12866 and OMB guidance. 5

This regulation meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988 to eliminate drafting errors and ambiguity, minimize litigation, provide a clear legal standard for affected conduct, and promote simplification and burden reduction.

This rulemaking does not have federalism implications warranting the application of Executive Order 13132. The rule does not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.

This rule does not have tribal implications warranting the application of Executive Order 13175. It does not have substantial direct effects 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.

In accordance with 5 U.S.C. 603(a), “[w]henever an agency is required by [5 U.S.C. 553], or any other law, to publish general notice of proposed rulemaking for any proposed rule, or publishes a notice of proposed rulemaking for an interpretive rule involving the internal revenue laws of the United States, the agency shall prepare and make available for public comment an initial regulatory flexibility analysis.” As noted in the above discussion regarding applicability of the APA, the DEA has determined that the notice and comment requirements of section 553 of the APA, 5 U.S.C. 553, do not apply to this scheduling action. Consequently, the Regulatory Flexibility Act does not apply to this interim final rule.

In accordance with the Unfunded Mandates Reform Act (UMRA) of 1995, 2 U.S.C. 1501 et seq., DEA has determined that this action would not result in any Federal mandate that may result “in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted for inflation) in any one year.” Therefore, neither a Small Government Agency Plan nor any other action is required under UMRA of 1995.

This action does not impose a new collection of information requirement under the Paperwork Reduction Act of 1995. 44 U.S.C. 3501-3521. This action does not impose recordkeeping or reporting requirements on State or local governments, individuals, businesses, or organizations. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.

This rule is not a major rule as defined by the Congressional Review Act (CRA), 5 U.S.C. 804. This rule does not result in: An annual effect on the economy of $100,000,000 or more; a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of U.S.-based companies to compete with foreign based companies in domestic and export markets. However, pursuant to the CRA, DEA has submitted a copy of this interim final rule to both Houses of Congress and to the Comptroller General.

For the reasons set out above, DEA amends 21 CFR part 1308 as follows:

Background

This document contains amendments to 26 CFR part 1 under section 846 of the Code. Section 846 was added to the Code by section 1023(c) of the Tax Reform Act of 1986, Public Law 99-514 (100 Stat. 2085, 2399). Final regulations under section 846 were published in the Federal Register (57 FR 40841) on September 8, 1992 (T.D. 8433). See §§ 1.846-0 through 1.846-4 (1992 Final Regulations). The discounting rules under section 846 were amended for taxable years beginning after December 31, 2017, by section 13523 of the Tax Cuts and Jobs Act, Public Law 115-97 (131 Stat. 2054, 2152) (TCJA). The discounting rules of section 846, both prior to and after amendment by the TCJA, are used to determine discounted unpaid losses and estimated salvage recoverable of property and casualty (P&C) insurance companies and discounted unearned premiums of title insurance companies for Federal income tax purposes under section 832, as well as discounted unpaid losses of life insurance companies for Federal income tax purposes under sections 805(a)(1) and 807(c)(2).

The Department of the Treasury (Treasury Department) and the IRS published proposed regulations under section 846 (REG-103163-18) in the Federal Register (83 FR 55646) on November 7, 2018 (Proposed Regulations). The Treasury Department and the IRS received public comments on the Proposed Regulations and held a public hearing on December 20, 2018.

On January 7, 2019, the Treasury Department and the IRS published Rev. Proc. 2019-06, 2019-02 I.R.B. 284, which prescribes unpaid loss discount factors for the 2018 accident year and earlier accident years for use in computing discounted unpaid losses under section 846. The unpaid loss discount factors also serve as salvage discount factors for the 2018 accident year and earlier accident years for use in computing discounted estimated salvage recoverable under section 832. The discount factors prescribed in Rev. Proc. 2019-06 were determined under section 846, as amended by section 13523 of the TCJA, and the Proposed Regulations. In Rev. Proc. 2019-06, the Treasury Department and the IRS announced the intent to publish revised unpaid loss discount factors, if necessary, following the publication of the Proposed Regulations as final regulations. The Treasury Department and the IRS also announced the intent to issue guidance on the use of revised discount factors, including the adjustment to be taken into account by certain taxpayers that used the discount factors prescribed in Rev. Proc. 2019-06 in a taxable year ending before the date of publication of final regulations. The Treasury Department and the IRS requested and received public comments on Rev. Proc. 2019-06.

After consideration of all of the comments on the Proposed Regulations and Rev. Proc. 2019-06, the Proposed Regulations are adopted as amended by this Treasury decision (Final Regulations).

This section discusses the public comments received on the Proposed Regulations and Rev. Proc. 2019-06, explains the revisions adopted by the Final Regulations in response to those comments, and describes guidance the Treasury Department and the IRS intend to issue following publication of the Final Regulations in the Federal Register .

Under section 846(a)(2) and (c)(1), the “applicable interest rate” used to determine the discount factors associated with any accident year and line of business is the “annual rate” determined under section 846(c)(2).

Before amendment by section 13523(a) of the TCJA, section 846(c)(2) provided that the annual rate for any calendar year was a rate equal to the average of the applicable Federal mid-term rates (as defined in section 1274(d) but based on annual compounding) effective as of the beginning of each of the calendar months in the most recent 60-month period ending before the beginning of the calendar year for which the determination is made. The applicable Federal mid-term rate is determined by the Secretary based on the average market yield on outstanding marketable obligations of the United States with remaining periods of over three years but not over nine years. See section 1274(d)(1).

As amended by section 13523(a) of the TCJA, section 846(c)(2) provides that the annual rate for any calendar year will be determined by the Secretary based on the corporate bond yield curve (as defined in section 430(h)(2)(D)(i), determined by substituting “60-month period” for “24-month period” therein). The corporate bond yield curve, commonly referred to as the high quality market (HQM) corporate bond yield curve, is published on a monthly basis by the Treasury Department and the IRS. It reflects the average of monthly yields on investment grade corporate bonds with varying maturities that are in the top three quality levels available, and it consists of spot interest rates for each stated time to maturity. See, for example, Notice 2019-13, 2019-8 I.R.B. 580. The spot rate for a given time to maturity represents the yield on a bond that gives a single payment at that maturity. For the stated yield curve, times to maturity are specified at half-year intervals from one-half year through 100 years. Section 846(c)(2) does not specify how the Secretary is to determine the annual rate for any calendar year based on the corporate bond yield curve.

Section 1.846-1(c) of the Proposed Regulations provides that the “applicable interest rate” used to determine the discount factors associated with any accident year and line of business is the “annual rate” determined by the Secretary for any calendar year on the basis of the corporate bond yield curve (as defined in section 430(h)(2)(D)(i), determined by substituting “60-month period” for “24-month period” therein). The annual rate for any calendar year is the average of the corporate bond yield curve's monthly spot rates with times to maturity of not more than seventeen and one-half years (that is, when applied to the HQM corporate bond yield curve, times to maturity from one-half year to seventeen and one-half years), computed using the most recent 60-month period ending before the beginning of the calendar year for which the determination is made.

Consistent with the text of section 846, as amended by the TCJA, and the statutory structure as a whole, the Proposed Regulations provide for the use of a single annual rate applicable to all lines of business, as was the case under section 846 prior to amendment by the TCJA. Commenters agreed with this approach. One commenter asserted that a single rate approach continues to be mandated by the statutory language and Congressional intent. This commenter also noted that the use of a single rate is a continuance of longstanding practice related to the discounting of insurance loss reserves, and the TCJA did not specify a change to this practice.

The preamble to the Proposed Regulations states that the change from a rate based on the applicable Federal mid-term rates to a rate based on the corporate bond yield curve indicates that the annual rate should be determined in a manner that more closely matches the investments in bonds used to fund the undiscounted losses to be paid in the future by insurance companies. Several commenters agreed that the annual rate should be determined in a manner that more closely matches the investments of insurance companies.

The maturity range in the Proposed Regulations (that is, times to maturity from one-half year to seventeen and one-half years) was selected to produce a single discount rate that would provide approximately the same present value of taxable income, in the aggregate, as would be obtained by applying the 60-month average corporate bond yield curve (forecast through 2028) directly to the future loss payments expected for each line of business (determined using the loss payment patterns applicable to the 2018 accident year). That is, the selected maturity range approximates, in terms of the present value of taxable income, the overall result of discounting each projected loss payment using the spot rate from the corporate bond yield curve with a time to maturity that matches the time between the end of the accident year and the middle of the year of the projected loss payment.

Several commenters expressed concern with the selection of the maturity range used to determine the single rate applicable to all unpaid losses for all lines of business under the Proposed Regulations. A commenter addressing the application of the Proposed Regulations to certain non-life insurance reserves held by life insurance companies requested a single section 846 discount rate determined by reference to shorter maturities than those specified in the Proposed Regulations to more clearly reflect the income of life insurance companies related to these reserves. Several commenters addressing the application of the Proposed Regulations to P&C insurance companies requested that the discount rate instead be determined by reference to the maturity range of three and one-half to nine years that was used under section 846 prior to amendment by the TCJA. Some of the commenters asserted a lack of clear congressional intent to use a different maturity range than the maturity range used under section 846 prior to amendment by the TCJA. The commenters also asserted that the shorter range with a lower average maturity would more closely match the maturity of the P&C insurance industry's investments and offered alternative approaches to selecting a maturity range should a different maturity range be selected.

Some of the commenters addressing the application of the Proposed Regulations to P&C insurance companies acknowledged that the annual rate calculated under the Proposed Regulations approximates the P&C industry's current investment yield in the current bond market. However, the commenters generally asserted that an annual rate based on the maturity range in the Proposed Regulations would overstate the industry's investment yield in other interest rate environments because the average maturity and average duration of the bonds reflected in that segment of the HQM corporate bond yield curve are longer than both the average maturity and average duration of the industry's actual bond investments. The commenters asserted that the weighted average maturities of bonds held by P&C insurance companies are notably lower than the nine-year average of the maturity range suggested in the Proposed Regulations. According to one commenter, the weighted average maturities of bonds held by P&C insurance companies have ranged between 6.4 and 7.1 years since 2008. The commenters asserted that P&C companies generally do not seek to match the maturities of their investments with the expected payment dates of their liabilities. One commenter stated that P&C insurers' bond portfolios are more skewed to the short end of the curve to ensure sufficient liquidity to pay claims, especially for catastrophic events.

The commenters also explained that the average duration of bond payments held by P&C insurance companies (five to six years, according to data from one commenter) is shorter than the nine-year average payment duration of the bonds underlying the maturity range in the Proposed Regulations because P&C insurance companies typically invest in coupon bonds. Unlike the zero-coupon bonds reflected in the HQM corporate bond yield curve, coupon bonds have an average payment duration that is less than their maturity because of the periodic interest payments. Commenters asserted that the duration difference between coupon bonds and zero-coupon bonds is more pronounced in an environment with higher interest rates and a steeper yield curve.

One of the commenters requesting the use of a shorter maturity range (three and one-half to nine years) suggested that the annual rate should be determined in a manner that more closely matches the P&C insurance industry's investment yield. The commenter asserted that, in a rising rate environment, especially if there is a larger spread between the short-term and long-term rates, the longer maturity range in the Proposed Regulations would overstate the P&C insurance industry's investment yield. The commenter also asserted that the shorter maturity range would result in a better approximation of the P&C insurance industry's investment yield over a longer period of time and in different interest rate environments. The commenter suggested that if the shorter maturity range is not adopted, another approach would be to periodically adjust the maturity range. Under this approach, every five years (that is, for each determination year under section 846(d)(4)), the Secretary would select the maturity range that best approximates the industry's investment yield based on publicly available P&C insurance industry aggregate investment yield data. However, other commenters expressed a preference for a fixed range.

Two of the commenters requesting the use of a shorter maturity range (three and one-half to nine years) suggested that the maturity range selected should more closely match the average maturity of the P&C insurance industry's bond investments. The commenters asserted that the average maturity of a range consisting of three and one-half to nine years more closely matches the six to seven-year average maturity of the industry's bond investments over the past decade than the nine-year average of the longer range in the Proposed Regulations. One commenter suggested that if the shorter maturity range is not adopted, an alternative could be to use the maturity range from one-half to thirteen years because that range also reflects average maturities that more closely match the investments in bonds used to fund the undiscounted losses of P&C insurance companies. Both commenters suggested that if the range in the Proposed Regulations is retained, a “guardrail” should place an upper limit on the maturities that are used when the bond yield curve is unusually steep. The commenters assert that use of the maturity range in the Proposed Regulations in such conditions would result in an annual rate that overstates the P&C insurance industry's investment yield due to the duration and maturity differences between the industry's bond investments and the bonds reflected in the HQM corporate bond yield curve segment selected in the Proposed Regulations. The commenters expressed particular concern that use of the maturity range in the Proposed Regulations would pose a threat to the industry's financial viability in times of economic stress because steep yield curves historically have occurred during or immediately after a recession and often coincide with a downturn in the underwriting cycle.

One commenter provided recommendations regarding the “guardrail” adjustment to be made to the annual rate and the circumstances in which it would apply. The commenter suggested that a guardrail adjustment should be made when the spread between the HQM corporate bond yields at the lower end (one-half year to maturity) and upper end (seventeen and one-half years to maturity) of the maturity range proposed in the Proposed Regulations, measured on the basis of the 12-month average, is greater than 2.75 percentage points. The commenter explained that this “trigger” was selected because, compared to the other possible triggers considered by the commenter, it has the highest correlation to recession-related stress periods, it is simple to implement, and it does not result in undue volatility. The commenter suggested that the “guardrail” be an annual interest rate based on the 60-month average of a narrower range of bond maturities of one-half year to thirteen years. The commenter asserted that this trigger and guardrail adjustment proposal is reasonably simple, easily administrable, and predictable (for both the IRS and taxpayers) in its application.

After consideration of the comments received on the Proposed Regulations, the Treasury Department and the IRS have determined to use a single annual rate based on a narrower range of maturities. Specifically, the annual rate for any calendar year is the average of the corporate bond yield curve's monthly spot rates with times to maturity from four and one-half years to ten years, computed using the most recent 60-month period ending before the beginning of the calendar year for which the determination is made. In response to comments expressing a preference for a fixed range, the Final Regulations do not provide for periodic redetermination of the maturity range used to determine the annual rate.

The maturity range of four and one-half years to ten years was selected in response to comments requesting the adoption of a narrower maturity range with an average maturity that more closely matches the six- to seven-year average maturity of the P&C insurance industry's bond investments. Commenters expressed concern about the inclusion of the times-to-maturity at the upper end of the range in the Proposed Regulations, particularly when the bond yield curve is unusually steep. Therefore, the Final Regulations provide for a narrower maturity range than in the Proposed Regulations (from one-half year to seventeen and one-half years). Use of the narrower range eliminates yields for times-to-maturity at the lower and upper ends of the range in the Proposed Regulations from the calculation of an average annual rate.

The selected maturity range has an average maturity of seven and one-quarter years, which is closer to the average maturity of the industry's bond investments than the nine-year average maturity of the maturity range in the Proposed Regulations. The Final Regulations do not adopt either of the maturity ranges suggested by commenters (three and one-half to nine years and one-half to thirteen years) because the suggested ranges would typically understate the P&C industry's investment yield as compared to the range adopted in the Final Regulations. P&C industry investment portfolios include assets other than high quality bonds, and the higher returns on those other assets typically result in the industry earning a higher rate of return. Therefore, the Final Regulations adopt a maturity range that has an average maturity that is slightly greater than the average maturity of the industry's bond investments.

The Treasury Department and the IRS intend to publish guidance in the Internal Revenue Bulletin that will provide revised unpaid loss discount factors based on the Final Regulations for each property and casualty line of business for all accident years ending with or before calendar year 2018. The guidance will also provide that taxpayers may use either the revised discount factors or the discount factors published in Rev. Proc. 2019-06 for taxable years beginning after December 31, 2017, and ending before June 17, 2019. The guidance will describe the adjustment to be taken into account by any taxpayer that uses the discount factors prescribed in Rev. Proc. 2019-06 in a taxable year. See Rev. Proc. 2019-06. Taxpayers must use the revised discount factors in taxable years ending on or after June 17, 2019.

The Treasury Department and the IRS proposed, in the preamble to the Proposed Regulations, to discontinue the use of the “composite method” described in section 3.01 of Rev. Proc. 2002-74, 2002-2 C.B. 980, and section V of Notice 88-100, 1988-2 C.B. 439.

Commenters suggested that the current rules permitting use of the composite method should be retained. The commenters explained that if the composite method were discontinued, compiling the data required to compute discounted unpaid losses with respect to accident years not separately reported on the National Association of Insurance Commissioners (NAIC) annual statement would prove to be difficult for some insurers given the limitations of company data for older accident years and legacy information technology systems. One of the commenters added that discontinuance of the composite method would cause burdensome reporting requirements for insurers.

In response to these comments, the Treasury Department and the IRS have determined to continue to permit the use of the composite method and to continue to publish composite discount factors annually.

Section 1.846-1(d)(1) of the Proposed Regulations provides that the loss payment pattern determined by the Secretary for each line of business generally is determined by reference to the historical loss payment pattern applicable to such line of business. However, under § 1.846-1(d)(1) and (2) of the Proposed Regulations, the Secretary may adjust the loss payment pattern for any line of business using a methodology described by the Secretary in other published guidance if necessary to avoid negative payment amounts and otherwise produce a stable pattern of positive discount factors less than one. As explained in section 2.03(4) of Rev. Proc. 2019-06, for the 2017 determination year, one line of business required adjustments under the Proposed Regulations.

Commenters expressed support for the smoothing adjustments described in the Proposed Regulations and Rev. Proc. 2019-06. Accordingly, the Final Regulations adopt § 1.846-1(d) as proposed.

Section 1.832-4(c) provides that, except as otherwise provided in guidance published by the Commissioner of Internal Revenue (Commissioner) in the Internal Revenue Bulletin, estimated salvage recoverable must be discounted either (1) by using the applicable discount factors published by the Commissioner for estimated salvage recoverable; or (2) by using the loss payment pattern for a line of business as the salvage recovery pattern for that line of business and by using the applicable interest rate for calculating unpaid losses under section 846(c). The Treasury Department and the IRS proposed, in the preamble to the Proposed Regulations, that estimated salvage recoverable be discounted by using the published discount factors applicable to unpaid losses. Section 4.02 of Rev. Proc. 2019-06 provides that the unpaid loss discount factors set forth therein also serve as salvage discount factors for the 2018 accident year and all prior accident years for use in computing discounted estimated salvage recoverable under section 832.

Commenters expressed support for the proposed use of the discount factors applicable to unpaid losses as the discount factors for salvage. This method is permitted under section 832(b)(5)(A) and § 1.832-4(c), and it should reduce compliance complexity and costs. Accordingly, future guidance published in the Internal Revenue Bulletin will continue to provide that estimated salvage recoverable is to be discounted using the published discount factors applicable to unpaid losses.

In the preamble to the Proposed Regulations, the Treasury Department and the IRS requested comments on whether net payment data (loss payments less salvage recovered) and net losses incurred data (losses incurred less salvage recoverable) should be used to compute loss discount factors. No commenters responded to this request. The Treasury Department and the IRS will continue to use payment data unreduced by salvage recovered and losses incurred data unreduced by salvage recoverable to compute loss discount factors.

As described in the preamble to the Proposed Regulations, as a result of the repeal of former section 846(d)(3)(E) and (F) by section 13523 of the TCJA, section 846 no longer explicitly provides for the determination of loss payment patterns for non-proportional reinsurance and international lines of business extending beyond three calendar years following the accident year. The Proposed Regulations would remove § 1.846-1(b)(3)(iv) (applicable to non-proportional reinsurance business) and (b)(4) (applicable to international business) of the 1992 Final Regulations due to the repeal of former section 846(d)(3)(E) and (F). The Proposed Regulations would retain § 1.846-1(b)(3)(i) and (b)(3)(ii)(A) (applicable to proportional and non-proportional reinsurance, respectively) of the 1992 Final Regulations, however, because these rules are not affected by the repeal of former section 846(d)(3)(E) and (F).

Commenters agreed that the repeal of former section 846(d)(3)(E) and (F) means that the statute requires non-proportional reinsurance and international lines of business to be treated as short-tail lines of business with three-year loss payment patterns. The treatment of the non-proportional reinsurance and international lines of business as short-tail lines of business in Rev. Proc. 2019-06 is consistent with these comments.

Accordingly, § 1.846-1(b)(3)(iv) and (b)(4) of the 1992 Final Regulations are removed as proposed in the Proposed Regulations.

The Proposed Regulations would (1) remove § 1.846-1(a)(2) of the 1992 Final Regulations because the examples are no longer relevant; (2) remove § 1.846-1(b)(3)(ii)(B) and (b)(3)(iii) of the 1992 Final Regulations because these provisions apply only to accident years before 1992; (3) remove § 1.846-2 of the 1992 Final Regulations because section 13523 of the TCJA repealed the section 846(e) election; (4) remove § 1.846-3 because the “fresh start” and reserve strengthening rules therein are no longer applicable; (5) make conforming changes to § 1.846-1(a) and (b) of the 1992 Final Regulations to reflect the removal of various § 1.846-1 provisions, as well as the removal of §§ 1.846-2 and 1.846-3 of the 1992 Final Regulations; (6) remove § 1.846-4 of the 1992 Final Regulations, which provides applicability dates for §§ 1.846-1 through 1.846-3 of the 1992 Final Regulations, and adopt proposed § 1.846-1(e), which provides applicability dates for § 1.846-1; and (7) remove § 1.846-0 of the 1992 Final Regulations, which provides a list of the headings in §§ 1.846-1 through 1.846-4 of the 1992 Final Regulations.

Additionally, the Proposed Regulations would remove §§ 1.846-2T and 1.846-4T from the Code of Federal Regulations (CFR) because they are obsolete. On April 10, 2006, the Treasury Department and the IRS published in the Federal Register (71 FR 17990) a Treasury decision (T.D. 9257) containing §§ 1.846-2T and 1.846-4T. On January 23, 2008, the Treasury Department and the IRS published in the Federal Register (73 FR 3868) a Treasury decision (T.D. 9377) that finalized the rules contained in § 1.846-2T in § 1.846-2 and finalized the rules contained in § 1.846-4T in § 1.846-4. T.D. 9377, however, did not remove §§ 1.846-2T and 1.846-4T from the CFR.

No comments were received regarding any of these changes in the Proposed Regulations. Accordingly, these changes are adopted as proposed.

The Treasury Department and the IRS plan to publish guidance in the Internal Revenue Bulletin that provides simplified procedures under section 446 and § 1.446-1(e) for an insurance company to obtain automatic consent of the Commissioner to change its method of accounting to comply with section 846, as amended by the TCJA, for the first taxable year beginning after December 31, 2017.

This regulation is not subject to review under section 6(b) of Executive Order 12866 pursuant to the Memorandum of Agreement (April 11, 2018) between the Treasury Department and the Office of Management and Budget regarding review of tax regulations.

Under the Regulatory Flexibility Act (RFA) (5 U.S.C. chapter 6), it is hereby certified that these final regulations will not have a significant economic impact on a substantial number of small entities that are directly affected by the final regulations. These final regulations update the 1992 Final Regulations to reflect statutory changes made by the TCJA, including the applicable interest rate to be used for purposes of section 846(c) based on a statutorily prescribed corporate bond yield curve. In addition, these final regulations do not impose a collection of information on any taxpayers, including small entities. Accordingly, this rule will not have a significant economic impact on a substantial number of small entities.

Pursuant to section 7805(f) of the Code, the notice of proposed rulemaking preceding this regulation was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business, and no comments were received.

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires that agencies assess anticipated costs and benefits and take certain other actions before issuing a final rule that includes any Federal mandate that may result in expenditures in any one year by a state, local, or tribal government, in the aggregate, or by the private sector, of $100 million in 1995 dollars, updated annually for inflation. In 2018, that threshold is approximately $150 million. This rule does not include any Federal mandate that may result in expenditures by state, local, or tribal governments, or by the private sector in excess of that threshold.

Executive Order 13132 (titled “Federalism”) prohibits an agency from publishing any rule that has federalism implications if the rule either imposes substantial, direct compliance costs on state and local governments, and is not required by statute, or preempts state law, unless the agency meets the consultation and funding requirements of section 6 of the Executive Order. This final rule does not have federalism implications and does not impose substantial direct compliance costs on state and local governments or preempt state law within the meaning of the Executive Order.

The principal author of these regulations is Kathryn M. Sneade, Office of Associate Chief Counsel (Financial Institutions and Products), IRS. However, other personnel from the Treasury Department and the IRS participated in their development.

The IRS notices and revenue procedures cited in this preamble are published in the Internal Revenue Bulletin (or Cumulative Bulletin) and are available from the Superintendent of Documents, U.S. Government Publishing Office, Washington, DC 20402, or by visiting the IRS website at http://www.irs.gov.

Accordingly, 26 CFR part 1 is amended as follows:

A. Background

Part 1 of Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA), contains reporting and disclosure requirements applicable to plans covered by ERISA. For instance, sections 103 and 104 of ERISA establish requirements for the publication and filing of annual reports, while sections 102 and 104 of ERISA require plan administrators to furnish summary plan descriptions and summaries of material modifications or changes to participants and beneficiaries.

Section 104(a)(3) of ERISA, however, authorizes the Secretary to exempt any welfare benefit plan from all or part of the reporting and disclosure obligations, or to provide simplified reporting and disclosure, if the Secretary finds that the requirements are inappropriate for these plans. Under this authority, the Secretary, in 1980, issued 29 CFR 2520.104-22, which provides an exemption from the reporting and disclosure provisions of Part 1 of Title I of ERISA for employee welfare benefit plans that provide only apprenticeship or training benefits, or both, if certain conditions are met. 1 Under this regulation, a welfare plan that provides only these benefits is not required to meet the requirements of Part 1 of Title I if the administrator files with the Secretary a notice as described in § 2520.104-22 by mail or personal delivery, takes steps reasonably designed to ensure that the information required to be contained in the notice is disclosed to employees of employers contributing to the plan who may be eligible to enroll, and makes the notice available to these employees upon request.

Similarly, section 110(a) of ERISA permits the Secretary to specify an alternative form of compliance with the reporting and disclosure obligations of Part 1 of Title I for any pension plan or class of pension plans subject to ERISA if certain findings are made. Under the authority of section 110(a), in 1975 the Department issued 29 CFR 2520.104-23 to provide an alternative method of compliance with the reporting and disclosure requirements of Part 1 of Title I for unfunded or insured pension plans established for a select group of management or highly compensated employees (“top hat” plans). 2 Under the alternative method of compliance, the administrator of a top hat plan satisfies the requirements for the reporting and disclosure provisions of Part 1 of Title I by filing a statement with the Secretary by mail or personal delivery to the address specified in the regulation, and by providing plan documents, if any, to the Secretary upon request. The statement must include the information listed in the regulation.

On September 30, 2014, the Department published in the Federal Register a proposed rule that would revise the procedures for filing apprenticeship and training plan notices under § 2520.104-22 and top hat plan statements under § 2520.104-23 to require electronic submission of these notices and statements. 3 On the same date, the Department also made available a new web-based filing system for these notices and statements. 4 Use of this web-based filing system was voluntary until the adoption of this final rule. Approximately 65% of the apprenticeship and training plan notices and approximately 54% of the top hat plan statements have been filed electronically since then. 5

In the proposal, the Department solicited comments on the electronic filing mandate as well as on the design and operation of its web-based filing system. 6 The Department received one written comment, a copy of which is available under the “public comments” section of the Department's website at https://www.dol.gov/agencies/ebsa/laws-and-regulations/rules-and-regulations/public-comments/1210-AB62. Although this commenter applauded the Department for recognizing the benefits of electronic filing of these notices and statements, the comment letter focused primarily on the need (in this commenters' view) for the Department to update its regulation pertaining to the use of electronic media by plan administrators to furnish disclosures to participants and beneficiaries. After careful consideration of the comment, the final rule amends 29 CFR 2520.104-22(c) ( i.e., apprenticeship and training plan notices) and 29 CFR 2520.104-23(c) ( i.e., top hat plan statements), as proposed.

The final rule revises the current procedures for filing apprenticeship and training plan notices under § 2520.104-22 and top hat plan statements under § 2520.104-23 with the Secretary of Labor to require electronic submission of these notices and statements. The final rule does not change the current content requirements in either of these regulations. 7 The final rule requires electronic filing with the Secretary through EBSA's website in accordance with instructions published by the Department. Going forward, EBSA's web-based filing system will be the exclusive method for filing these notices and statements; filings by mail or personal delivery will no longer be accepted. The new web-based system is designed to assist administrators by ensuring that all of the information required by the regulations is included in the notice or statement before the filing can be completed through the website. Upon submission of a completed filing, the new web-based filing system sends an electronic confirmation of receipt to the administrator. This confirmation is not available through the existing paper-based filing system. The design of the new filing system facilitates the requirement that plan administrators of apprenticeship and training plans make notices available to participants upon request as required under § 2520.104-22(a)(3). Filings are now available to the public on the Department's website at http://www.dol.gov/ebsa.

The Coast Guard will enforce the safety zones listed in 33 CFR 165.160 on the specified date and time as indicated in Table 1 below. This regulation was published in the Federal Register on November 9, 2011 (76 FR 69614).

Under the provisions of 33 CFR 165.160, vessels may not enter the safety zones unless given permission from the COTP or a designated representative. Spectator vessels may transit outside the safety zones but may not anchor, block, loiter in, or impede the transit of other vessels. The Coast Guard may be assisted by other Federal, State, or local law enforcement agencies in enforcing this regulation.

This notice of enforcement is issued under authority of 33 CFR 165.160(a) and 5 U.S.C. 552(a). In addition to this notice of enforcement in the Federal Register , the Coast Guard will provide mariners with advanced notification of enforcement periods via the Local Notice to Mariners and marine information broadcasts.

If the COTP determines that a safety zone need not be enforced for the full duration stated in this notice of enforcement, a Broadcast Notice to Mariners may be used to grant general permission to enter the safety zone.

I. Table of Abbreviations CFR Code of Federal Regulations DHS Department of Homeland Security FR Federal Register NPRM Notice of proposed rulemaking § Section U.S.C. United States Code II. Background Information and Regulatory History

The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (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 the event sponsor did not submit notice to the Coast Guard with sufficient time remaining before the event to publish an NPRM. Delaying the effective date of this rule to wait for a comment period to run would be impracticable and contrary to the public interest by inhibiting the Coast Guard's ability to protect spectators and vessels from the hazards associated with a fireworks display.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register . For the same reasons discussed in the preceding paragraph, waiting for a 30-day notice period to run would be impracticable and contrary to the public interest.

The legal basis for the rule is the Coast Guard's authority to establish safety zones under 46 U.S.C. 70034 (previously 33 U.S.C. 1231), 70051; 33 CFR 1.05-1; 160.5; Department of Homeland Security Delegation No. 0170.1.

The Captain of the Port Buffalo (COTP) has determined that a fireworks display presents significant risks to the public safety and property. Such hazards include premature and accidental detonations, dangerous projectiles, and falling or burning debris. This rule is needed to protect personnel, vessels, and the marine environment in the navigable waters within the safety zone prior to, during, and immediately after the fireworks display.

This rule establishes a safety zone from 10:00 p.m. through 10:30 p.m. on July 3, 2019. The safety zone will cover all navigable waters of Lake Erie at Woodlawn Beach, Hamburg, NY contained within a 420-foot radius of: 42°47′29.88″ N, 078°51′18.61″ W.

The duration of the zone is intended to protect personnel, vessels, and the marine environment in these navigable waters while the fireworks event takes place. Entry into, transiting, or anchoring within the safety zone is prohibited unless authorized by the COTP or a designated representative.

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. Executive Order 13771 directs agencies to control regulatory costs through a budgeting process. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB), and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771.

This regulatory action determination is based on the conclusion that this rule is not a significant regulatory action. We anticipate that it will have minimal impact on the economy, will not interfere with other agencies, will not adversely alter the budget of any grant or loan recipients, and will not raise any novel legal or policy issues. The safety zone created by this rule will be relatively small and enforced for a relatively short time. Also, the safety zone has been designed to allow vessels to transit around it. Thus, restrictions on vessel movement within that particular area are expected to be minimal. Under certain conditions, moreover, vessels may still transit through the safety zone when permitted by the COTP.

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 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 establishes a temporary safety zone. It is categorically excluded from further review under paragraph L[60](a) in Table 3-1 of U.S. Coast Guard Environmental Planning Implementing Procedures 5090.1. A Record of Environmental Consideration supporting this determination is available in the docket where indicated under ADDRESSES .

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.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:

The Coast Guard will enforce a temporary safety zone in 33 CFR 165.801, Table 5, line 16, for the Mandeville 4th of July fireworks display event. This regulation will be enforced from 8:30 p.m. through 9:30 p.m. on June 29, 2019. This action is needed to provide for the safety of life on these navigable waterways during this event. Our regulation for marine events within the Eighth Coast Guard District, 33 CFR 165.801, specifies the location of the regulated area on Lake Pontchartrain near Mandeville, LA. The fireworks display barge will be at the approximate position, 30°21′12.03″ N 90°04′28.95″ W. During the enforcement period, as reflected in § 165.801, if you are the operator of a vessel in the temporary safety zone, you must comply with directions from the Captain of the Port Sector New Orleans or a designated representative.

In addition to this notice of enforcement in the Federal Register , the Coast Guard plans to provide notification of this enforcement period via a Broadcast Notice to Mariners.

The Coast Guard will enforce the Operations at Marinette Marine Safety Zone listed as item (f)(13) in Table 165.929 of 33 CFR 165.929 on June 15, 2019 from 10 a.m. through 3 p.m. This action is being taken to protect the safety of life and property on navigable waterways of the Menominee River, WI.

The safety zone will encompass all waters of the Menominee river in the vicinity of Marinette Marine Corporation, from the Bridge Street Bridge located in position 45°06.188′ N, 087°37.583′ W; then approximately .95 NM south east to a line crossing the river perpendicularly passing through positions 45°05.881′ N, 087°36.281′ W and 45°05.725′ N, 087°36.385′ W (NAD 83). As specified in 33 CFR 165.929, all vessels must obtain permission from the Captain of the Port Lake Michigan or a designated representative to enter, move within or exit the safety zone while it is enforced. Vessels or persons granted permission to enter the safety zone must obey all lawful orders or directions of the Captain of the Port Lake Michigan or a designated representative.

This notice of enforcement is issued under authority of 33 CFR 165.929 and 5 U.S.C. 552 (a). In addition to this publication in the Federal Register , the Coast Guard will provide the maritime community with advance notification for the enforcement of this zone via Broadcast Notice to Mariners or Local Notice to Mariners.

The Captain of the Port Lake Michigan or a designated representative will inform the public through a Broadcast Notice to Mariners of any changes in the planned schedule. The Captain of the Port Lake Michigan or a representative may be contacted via Channel 16, VHF-FM or at (414) 747-7182.

The Coast Guard will enforce the safety zones listed in 33 CFR 165.151, Table 1, on the following dates and times:

Under the provisions of 33 CFR 165.151, the events listed above are established as safety zones. During the enforcement period, persons and vessels are prohibited from entering into, transiting through, mooring, or anchoring within these safety zones unless they receive permission from the COTP or designated representative.

This notice of enforcement is issued under authority of 33 CFR 165 and 5 U.S.C. 552(a). In addition to this notice of enforcement in the Federal Register , the Coast Guard will provide the maritime community with advance notification of this enforcement period via the Local Notice to Mariners or marine information broadcasts. If the COTP determines that these safety zones need not be enforced for the full duration stated in this notice of enforcement, a Broadcast Notice to Mariners may be used to grant general permission to enter the regulated area.

I. Table of Abbreviations CFR Code of Federal Regulations COTP Captain of the Port Sector Upper Mississippi River DHS Department of Homeland Security FR Federal Register NPRM Notice of proposed rulemaking § Section U.S.C. United States Code II. Background Information and Regulatory History

The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (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. It is impracticable because we must establish this safety zone by July 6, 2019 and lack sufficient time to provide a reasonable comment period and then consider those comments before issuing this rule. The NPRM process would delay the establishment of the safety zone and compromise public safety.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register . Delaying the effective date of this rule would be contrary to the public interest because immediate action is needed to respond to safety hazards associated with the barge launched fireworks display at this location.

The Coast Guard is issuing this rule under authority in 46 U.S.C. 70034 (previously 33 U.S.C. 1231). The Captain of the Port Sector Upper Mississippi River (COTP) has determined that potential hazards associated with the fireworks to be used in this fireworks display will be a safety concern for anyone on the Upper Mississippi River between Mile Marker (MM) 614 and MM 615.5. The purpose of this rule is to ensure safety of vessels and the navigable waters in the safety zone before, during, and after the scheduled fireworks event.

This rule establishes a safety zone from 9 p.m. to 11:30 p.m. on July 6, 2019. The safety zone would cover all navigable waters on the Upper Mississippi River between MM 614 and MM 615.5. The duration of the zone is intended to ensure the safety of vessels on these navigable waters before, during, and after the scheduled fireworks display. No vessel or person would be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative. The Coast Guard will inform the public of the enforcement date and times for this safety zone, as well as any emergent safety concerns that may delay the enforcement of the zone through Broadcast Notice to Mariners (BNM), Local Notices to Mariners (LNMs), and/or actual notice.

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. Executive Order 13771 directs agencies to control regulatory costs through a budgeting process. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB), and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771.

This regulatory action determination is based on the size, location, and duration of the safety zone. This regulatory action will impact one and one-half miles of the Upper Mississippi River between MM 614 and MM 615.5 for a period of 2 and one-half hours on one day. Additionally this rule will allow for vessels to seek permission to enter the zone on a case by case basis.

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 a safety zone lasting 2 1/2 hours that will prohibit entry on the navigable waters of the Upper Mississippi River between MM 614 and MM 615.5. It is categorically excluded from further review under paragraph L60(a) of Table 3-1 of U.S. Coast Guard Environmental Planning Implementing Procedures 5090.1. A Record of Environmental Consideration supporting this determination is available in the docket where indicated under ADDRESSES .

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.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:

I. Table of Abbreviations CFR Code of Federal Regulations DHS Department of Homeland Security FR Federal Register NPRM Notice of proposed rulemaking § Section U.S.C. United States Code II. Background Information and Regulatory History

The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (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 doing so would be impracticable. It is impracticable to publish an NPRM because this safety zone must be established by July 3, 2019, and we lack sufficient time to provide a reasonable comment period and then consider those comments before issuing the rule.

The Coast Guard is issuing this rule under authority in 46 U.S.C. 70034 (previously 33 U.S.C. 1231). The Captain of the Port Sector Ohio Valley (COTP) has determined that potential hazards associated with a pyrotechnics display on July 03, 2019, will be a safety concern for anyone within a 600 foot radius of the pyrotechnics display. This rule is needed to protect personnel and vessels in the navigable waters within the safety zone prior to, during, and after a pyrotechnics display.

This rule establishes a safety zone from 8:45 p.m. until 9:45 p.m. on July 3, 2019. The safety zone will cover all navigable waters of the Tennessee River at mile marker 30.5 within a 600-foot radius from the fireworks launch site on the entrance jetty to Moors Resort and Marina in Gilbertsville, KY. The duration of the zone is intended to protect personnel and vessels in these navigable waters prior to, during, and after a pyrotechnic display. No vessel or person will be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative.

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. Executive Order 13771 directs agencies to control regulatory costs through a budgeting process. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB), and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771.

This regulatory action determination is based on the size, location, duration, and time-of-day of the safety zone. Vessel traffic will be able to safely transit around this safety zone, which will only impact a 600-foot radius designated area of the Tennessee River for one hour on July 03, 2019. Moreover, the Coast Guard will issue a Broadcast Notice to Mariners (BNMs) via VHF-FM marine channel 16 to inform mariners about the zone, and the rule allows vessels to seek permission to enter the zone.

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 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 Commandant Instruction M16475.1D, 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 a safety zone lasting only one hour that will prohibit the entry of vessels and persons within a 600-foot radius of the entrance to Moors Resort and Marina at mile marker 30.5 on the Tennessee River in Gilbertsville, KY. It is categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 01. A Record of Environmental Consideration supporting this determination is available in the docket where indicated under ADDRESSES .

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.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:

You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

You may access a frequently updated electronic version of 40 CFR part 180 through the Government Publishing Office's e-CFR site at http://www.ecfr.gov/cgi-bin/text-idx?&c=ecfr&tpl=/ecfrbrowse/Title40/40tab_02.tpl.

Under FFDCA section 408(g), 21 U.S.C. 346a(g), any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2017-0487 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing and must be received by the Hearing Clerk on or before August 16, 2019. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2017-0487, by one of the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov. Follow the online instructions for submitting comments. Do not submit electronically any information you consider to be CBI or other information whose disclosure is restricted by statute.

• Mail: OPP Docket, Environmental Protection Agency Docket Center (EPA/DC), (28221T), 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001.

• Hand Delivery: To make special arrangements for hand delivery or delivery of boxed information, please follow the instructions at http://www.epa.gov/dockets/contacts.html. Additional instructions on commenting or visiting the docket, along with more information about dockets generally, is available at http://www.epa.gov/dockets.

In the Federal Register of December 15, 2017 (82 FR 59604) (FRL-9970-50), EPA issued a document pursuant to FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide tolerance petition (PP 7F8599) by Suntton International Inc., 901 H St., Suite 610, Sacramento, CA 95814. The petition requested that 40 CFR part 180 be amended by establishing an exemption from the requirement of a tolerance for residues of 24-epibrassinolide in or on all food commodities. That document referenced a summary of the petition prepared by the petitioner Suntton International Inc., which is available in the docket via http://www.regulations.gov. There were no comments received in response to the notice of filing.

Section 408(c)(2)(A)(i) of FFDCA allows EPA to establish an exemption from the requirement for a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the exemption is “safe.” Section 408(c)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings but does not include occupational exposure. Pursuant to FFDCA section 408(c)(2)(B), in establishing or maintaining in effect an exemption from the requirement of a tolerance, EPA must take into account the factors set forth in FFDCA section 408(b)(2)(C), which require EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance or tolerance exemption, and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue . . . .” Additionally, FFDCA section 408(b)(2)(D) requires that EPA consider “available information concerning the cumulative effects of [a particular pesticide's] . . . residues and other substances that have a common mechanism of toxicity.”

EPA evaluated the available toxicity and exposure data on 24-epibrassinolide and considered its validity, completeness, and reliability, as well as the relationship of this information to human risk. EPA also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children.

24-epibrassinolide (24-Epi) is a naturally occurring brassinosteroid, which belongs to a class of plant steroid hormones. 24-epibrassinolide has been recently found to regulate seed germination, seedling growth, root development, and photosynthesis, and to enhance immune response against biotic and abiotic stressors. Like other brassinosteroids, 24-epibrassinolide is ubiquitously distributed in the plant kingdom at low concentrations in a variety of plant organs, including pollens, anthers, seeds, leaves, stems, roots, flowers and grains, and as a result, humans are exposed to this substance.

As a pesticide, 24-epibrassinolide is a synthetically produced brassinosteroid that is structurally similar to naturally occuring brassinsteroids and that is intended for use as a plant growth regulator (PGR) to improve crop quality and yield by promoting plant growth, defense, and development. Based on proposed label application rates, 24-epibrassinolide is applied at low concentrations, which is typical of a PGR.

Based on the data submitted in support of this petition and the comprehensive risk assessment conducted by the Agency (included in the Docket for this action), EPA concludes that there is a reasonable certainty that no harm will result to the U.S. population, including infants and children, from aggregate exposures to 24-epibrassinolide, including dietary exposures from the consumption of food treated with this active ingredient in accordance with label directions and good agricultural practices, or food containing naturally occurring residues of 24-epibrassinolide, residues in drinking water, and other non-occupational exposures. EPA has made this determination because available toxicology data indicate that the active ingredient is not acutely toxic and, based upon a weight of the evidence (WOE) approach, it has been determined not to be a developmental toxicant, a mutagen, or toxic via repeat oral exposure ( i.e. not subchronically toxic via the oral route). As such the Agency has not identified any endpoints of concern for 24-epibrassinolide and has conducted a qualitative assessment of exposure. The Agency has determined that residues of 24-epibrassinolide in drinking water are expected to be negligible since significant residues are not expected due to low application rates and currently proposed use patterns. Non-occupational exposures are anticipated because 24-epibrassinolide may be used in residential settings, such as turf, however, no toxicological endpoints have been identified. Therefore, a residential assessment was not conducted for 24-epibrassinolide. An explanation of the data upon which EPA relied and its risk assessment based on those data can be found within the April 15, 2019, document entitled “Federal Food, Drug, and Cosmetic Act (FFDCA) Safety Assessment for 24-epibrassinolide.” This document, as well as other relevant information, is available in the docket for this action as described under ADDRESSES .

Based on its safety determination, EPA is establishing an exemption from the requirement of a tolerance for residues of 24-epibrassinolide.

An analytical method is not required for enforcement purposes due to lack of concern for exposures, which supports the establishment of an exemption for residues of 24-epibrassinolide.

This action establishes a tolerance exemption under FFDCA section 408(d) in response to a petition submitted to EPA. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this action has been exempted from review under Executive Order 12866, this action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001), or Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), nor is it a regulatory action under Executive Order 13771, entitled “Reducing Regulations and Controlling Regulatory Costs” (82 FR 9339, February 3, 2017). This action does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq., nor does it require any special considerations under Executive Order 12898, entitled “Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations” (59 FR 7629, February 16, 1994).

Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the tolerance exemption in this action, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ) do not apply.

This action directly regulates growers, food processors, food handlers, and food retailers, not States or tribes. As a result, this action does not alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, EPA has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, EPA has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), do not apply to this action. In addition, this action does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501 et seq. ).

This action does not involve any technical standards that would require EPA's consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note).

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq. ), EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Therefore, 40 CFR chapter I is amended as follows:

In response to Executive Order 13563, Section 6(a), which urges agencies to repeal existing regulations that are outmoded from the Code of Federal Regulations (CFR), HHS is removing 42 CFR 22.1 and 42 CFR part 32. HHS believes that there is good cause to bypass notice and comment and proceed to a final rule, pursuant to 5 U.S.C. 553(b)(B). The action is non-controversial, as it merely removes obsolete provisions from the CFR. This rule poses no new substantive requirements on the public. Thus, we view notice and comment as unnecessary.

Regulations pertaining to the NHDP appear at 42 CFR 22.1, “Hansen's Disease Duty by Personnel Other than Commissioned Officers” and 42 CFR part 32, “Medical Care for Persons with Hansen's Disease and Other Persons in Emergencies.” The NHDP regulation at Part 22.1 was originally published at 50 FR 43146 (October 24, 1985) and was superseded by the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), Public Law 99-272 (April 7, 1986). The NHDP regulations under Part 32 were originally published at 40 FR 25816 (June 19, 1975), and later amended by 40 FR 36774 (August 22, 1975), 46 FR 51918 (October 23, 1981), and 48 FR 10318 (March 11, 1983). The NHDP authorizing statute was substantially amended after these regulations were promulgated. See 42 U.S.C. 247e; Public Law 105-78 (Nov. 13, 1997), amended by Public Law 107-220 (Aug. 21, 2002).

For the reasons indicated below, the regulations at 42 CFR 22.1 and 42 CFR part 32 are outdated, unnecessary, and/or redundant. First, as noted above, Section 22.1 was superseded by Public Law 99-272. Second, Part 32 references a Public Health Service Hospital in Carville, Louisiana, but there is no longer a Public Health Services Hospital in Carville, Louisiana. See 42 CFR 32.86 -.87. Third, section 32.1 references “the Director, Bureau of Health Care Delivery and Assistance.” This Bureau no longer exists at HRSA, and other terms set forth in section 32.1 are defined elsewhere in the Public Health Service Act. See 42 U.S.C. 201. Fourth, the NHDP authorizing statute, 42 U.S.C. 247e, only permits the Secretary to provide short-term care and treatment, including outpatient care, for Hansen's Disease and related complications at or through the National Hansen's Disease Programs Center, with the limited exception of a small number of patients who were patients of the Gillis W. Long Hansen's Disease Center as of October 1, 1996. However, Part 32 references inpatient care, hospitals, hospitalization, discharge, and hospitalized non-beneficiaries. See, e.g., 42 CFR 32.6, 32.86, 32.87, 32.89 32.91, and 32.111. Fifth, section 32.90 contains provisions regarding notification to health authorities but such notifications have been rendered obsolete in light of changes in management of the disease. Lastly, the NHDP can rely upon statutory authority to continue to operate in the absence of the regulations at part 22.1 and 32. In light of the foregoing, we are rescinding the regulations promulgated under 42 CFR 22.1, “Hansen's Disease Duty by Personnel Other than Commissioned Officers” and 42 CFR part 32, “Medical Care for Persons with Hansen's Disease and Other Persons In Emergencies”. We will continue to operate the NHDP relying on statutory authority alone.

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).

Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as “any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more 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, 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 novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in th[e] Executive Order.”

A regulatory impact analysis must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). HHS submits that this final rule is not economically significant as measured by the $100 million threshold, and hence not a major rule under the Congressional Review Act. This rule has not been designated as a significant regulatory action as defined by Executive Order 12866. As such, it has not been reviewed by the Office of Management and Budget.

Executive Order 13771, titled “Reducing Regulation and Controlling Regulatory Costs,” was issued on January 30, 2017. Pursuant to Executive Order 13771, HHS identifies this final rule as a deregulatory action ( i.e., removing an obsolete rule from the Code of Federal Regulations). For the purposes of Executive Order 13771, this final rule is not a substantive rule; rather it is administrative in nature and provides no cost savings.

On February 24, 2017, the President issued Executive Order 13777 titled “Enforcing the Regulatory Reform Agenda”. As required by Section 3 of the Executive Order, HHS established a Regulatory Reform Task Force (HHS Task Force) to review existing regulations and make recommendations regarding their repeal, replacement, or modification. The HHS Task Force evaluated the NHDP regulations at 42 CFR 22.1 and 42 CFR 32 and determined them to be outdated, unnecessary, or ineffective. Thus, the HHS Task force advised initiating this final rule to remove the obsolete regulations from the Code of Federal Regulations.

This action will not have a significant impact on a substantial number of small entities. Therefore, the regulatory flexibility analysis provided for under the Regulatory Flexibility Act is not required.

This action does not affect any information collections.

For reasons stated in the preamble, 42 CFR parts 22 and 32 are amended as follows:

In response to Executive Order 13563, Section 6(a), which urges agencies to repeal existing regulations that are outmoded from the Code of Federal Regulations (CFR), HHS is removing 42 CFR part 60. HHS believes that there is good cause to bypass notice and comment and proceed to a final rule, pursuant to 5 U.S.C. 553(b)(B). The action is non-controversial, as it merely removes an obsolete provision from the CFR. This rule poses no new substantive requirements on the public. Thus, we view notice and comment as unnecessary.

The HEAL Program is authorized by sections 701-720 of the Public Health Service Act (the Act), 42 U.S.C. 292-292p, and was first administered by the Office of Education in the former Department of Health, Education, and Welfare (HEW). From Fiscal Year (FY) 1978 through FY 1998, the HEAL Program insured loans made by participating lenders to eligible graduate students in schools of medicine, osteopathy, dentistry, veterinary medicine, optometry, podiatry, public health, pharmacy, and chiropractic, and in programs in health administration and clinical psychology.

The HEAL Program regulations were originally published on August 26, 1983. Authorization to fund new HEAL loans to students expired on September 30, 1998. Provisions of the HEAL legislation allowing for the refinancing or consolidation of existing HEAL loans expired on September 30, 2004. However, the reporting, notification, and recordkeeping burden associated with refinancing HEAL loans, servicing outstanding loans, and administering and monitoring of the HEAL Program regulations continues.

On July 1, 2014, Congress transferred the program to ED pursuant to Division H, title V, section 525 of the Consolidated Appropriations Act, 2014 (Pub. L. 113-76) (Consolidated Appropriations Act, 2014). On November 15, 2017, ED published HEAL Program regulations rendering the HHS HEAL Program regulations obsolete. See 82 FR 53378 (adding 34 CFR part 681).

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).

Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as “any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more 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, 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 novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in th[e] Executive Order.”

A regulatory impact analysis must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). HHS submits that this final rule is not economically significant as measured by the $100 million threshold, and hence not a major rule under the Congressional Review Act. This rule has not been designated as a significant regulatory action as defined by Executive Order 12866. As such, it has not been reviewed by the Office of Management and Budget.

Executive Order 13771, titled “Reducing Regulation and Controlling Regulatory Costs,” was issued on January 30, 2017. Pursuant to Executive Order 13771, HHS identifies this final rule as a deregulatory action ( i.e., removing an obsolete rule from the Code of Federal Regulations). For the purposes of Executive Order 13771, this final rule is not a substantive rule; rather it is administrative in nature and provides no cost savings.

On February 24, 2017, the President issued Executive Order 13777 titled “Enforcing the Regulatory Reform Agenda”. As required by Section 3 of the Executive Order, HHS established a Regulatory Reform Task Force (HHS Task Force) to review existing regulations and make recommendations regarding their repeal, replacement, or modification. The HHS Task Force evaluated the HEAL Program regulations and determined them to be outdated, unnecessary, or ineffective. Thus, the HHS Task force advised initiating this final rule to remove the obsolete regulations from the Code of Federal Regulations.

This action will not have a significant economic impact on a substantial number of small entities. Therefore, the regulatory flexibility analysis provided for under the Regulatory Flexibility Act is not required.

This action does not affect any information collections.

The NFIP enables property owners to purchase Federal flood insurance that is not otherwise generally available from private insurers. In return, communities agree to adopt and administer local floodplain management measures aimed at protecting lives and new construction from future flooding. Section 1315 of the National Flood Insurance Act of 1968, as amended, 42 U.S.C. 4022, prohibits the sale of NFIP flood insurance unless an appropriate public body adopts adequate floodplain management measures with effective enforcement measures. The communities listed in this document no longer meet that statutory requirement for compliance with program regulations, 44 CFR part 59. Accordingly, the communities will be suspended on the effective date in the third column. As of that date, flood insurance will no longer be available in the community. We recognize that some of these communities may adopt and submit the required documentation of legally enforceable floodplain management measures after this rule is published but prior to the actual suspension date. These communities will not be suspended and will continue to be eligible for the sale of NFIP flood insurance. A notice withdrawing the suspension of such communities will be published in the Federal Register .

In addition, FEMA publishes a Flood Insurance Rate Map (FIRM) that identifies the Special Flood Hazard Areas (SFHAs) in these communities. The date of the FIRM, if one has been published, is indicated in the fourth column of the table. No direct Federal financial assistance (except assistance pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act not in connection with a flood) may be provided for construction or acquisition of buildings in identified SFHAs for communities not participating in the NFIP and identified for more than a year on FEMA's initial FIRM for the community as having flood-prone areas (section 202(a) of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4106(a), as amended). This prohibition against certain types of Federal assistance becomes effective for the communities listed on the date shown in the last column. The Administrator finds that notice and public comment procedures under 5 U.S.C. 553(b), are impracticable and unnecessary because communities listed in this final rule have been adequately notified.

Each community receives 6-month, 90-day, and 30-day notification letters addressed to the Chief Executive Officer stating that the community will be suspended unless the required floodplain management measures are met prior to the effective suspension date. Since these notifications were made, this final rule may take effect within less than 30 days.

National Environmental Policy Act. FEMA has determined that the community suspension(s) included in this rule is a non-discretionary action and therefore the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq. ) does not apply.

Regulatory Flexibility Act. The Administrator has determined that this rule is exempt from the requirements of the Regulatory Flexibility Act because the National Flood Insurance Act of 1968, as amended, Section 1315, 42 U.S.C. 4022, prohibits flood insurance coverage unless an appropriate public body adopts adequate floodplain management measures with effective enforcement measures. The communities listed no longer comply with the statutory requirements, and after the effective date, flood insurance will no longer be available in the communities unless remedial action takes place.

Regulatory Classification. This final rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735.

Executive Order 13132, Federalism. This rule involves no policies that have federalism implications under Executive Order 13132.

Executive Order 12988, Civil Justice Reform. This rule meets the applicable standards of Executive Order 12988.

Paperwork Reduction Act. This rule does not involve any collection of information for purposes of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.

Accordingly, 44 CFR part 64 is amended as follows:

The Commission submitted revised information collection requirements for review and approval by OMB, as required by the Paperwork Reduction Act (PRA) of 1995, on May 1, 2019, which were approved by OMB on June 10, 2019. The information collection requirements are contained in the Commission's Rate-of-Return Order, FCC 18-29 published at 83 FR 18951, May 1, 2018. The OMB Control Number is 3060-0986. The Commission publishes this document as an announcement of the effective date of the rules published May 1, 2018. If you have any comments on the burden estimates listed below, or how the Commission can improve the collections and reduce any burdens caused thereby, please contact Nicole Ongele, Federal Communications Commission, Room 1-A620, 445 12th Street SW, Washington, DC 20554. Please include the OMB Control Number, 3060-0986, in your correspondence. The Commission will also accept your comments via email at PRA@fcc.gov. To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an email to fcc504@fcc.gov or call the Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507), the Commission is notifying the public that it received OMB approval on June 10, 2019, for the information collection requirements contained in 47 CFR 54.313(f)(4) published at 83 FR 18951, May 1, 2018. Under 5 CFR 1320, an agency may not conduct or sponsor a collection of information unless it displays a current, valid OMB Control Number.

No person shall be subject to any penalty for failing to comply with a collection of information subject to the Paperwork Reduction Act that does not display a current, valid OMB Control Number. The OMB Control Number is 3060-0986.

The foregoing notice is required by the Paperwork Reduction Act of 1995, Public Law 104-13, October 1, 1995, and 44 U.S.C. 3507.

The total annual reporting burdens and costs for the respondents are as follows:

OMB Control Number: 3060-0986.

OMB Approval Date: June 10, 2019.

OMB Expiration Date: June 30, 2022.

Title: High-Cost Universal Service Support.

Form Number: FCC Form 481 and FCC Form 525.

Type of Review: Revision of a currently approved collection.

Respondents: Business or other for-profit, Not-for-profit institutions and State, Local or Tribal Government.

Number of Respondents and Responses: 1,877 respondents; 11,977 responses.

Estimated Time per Response: 0.1-15 hours.

Frequency of Response: On occasion, quarterly and annual reporting requirements, recordkeeping requirement and third party disclosure requirement.

Obligation to Respond: Required to obtain or retain benefits. Statutory authority for this information collection is contained in 47 U.S.C. 151-154, 155, 201-206, 214, 218-220, 251, 252, 254, 256, 303(r), 332, 403, 405, 410, and 1302.

Total Annual Burden: 51,080 hours.

Total Annual Cost: No Cost.

Privacy Act Impact Assessment: No impact(s).

Nature and Extent of Confidentiality: The Commission notes that the Universal Service Administrative Company (USAC) must preserve the confidentiality of all data obtained from respondents and contributors to the universal service support program mechanism; must not use the data except for purposes of administering the universal service program; must not use the data except for purposes of administering the universal support program; and must not disclose data in company-specific form unless directed to do so by the Commission. Parties may submit confidential information in relation pursuant to a protective order. Also, respondents may request materials or information submitted to the Commission or to the Administrator believed confidential to be withheld from public inspection under 47 CFR 0.459 of the FCC's rules.

Needs and Uses: On November 18, 2011, the Commission adopted an order reforming its high-cost universal service support mechanisms. Connect America Fund; A National Broadband Plan for Our Future; Establish Just and Reasonable Rates for Local Exchange Carriers; High-Cost Universal Service Support; Developing a Unified Intercarrier Compensation Regime; Federal-State Joint Board on Universal Service; Lifeline and Link-Up; Universal Service Reform—Mobility Fund, WC Docket Nos. 10-90, 07-135, 05-337, 03-109; GN Docket No. 09-51; CC Docket Nos. 01-92, 96-45; WT Docket No. 10-208, Order and Further Notice of Proposed Rulemaking, 26 FCC Rcd 17663 (2011) ( USF/ICC Transformation Order ), and the Commission and Wireline Competition Bureau have since adopted a number of orders that implement the USF/ICC Transformation Order; see also Connect America Fund et al., WC Docket No. 10-90 et al., Third Order on Reconsideration, 27 FCC Rcd 5622 (2012); Connect America Fund et al., WC Docket No. 10-90 et al., Order, 27 FCC Rcd 605 (Wireline Comp. Bur. 2012); Connect America Fund et al., WC Docket No. 10-90 et al., Fifth Order on Reconsideration, 27 FCC Rcd 14549 (2012); Connect America Fund et al., WC Docket No. 10-90 et al., Order, 28 FCC Rcd 2051 (Wireline Comp. Bur. 2013); Connect America Fund et al., WC Docket No. 10-90 et al., Order, 28 FCC Rcd 7227 (Wireline Comp. Bur. 2013); Connect America Fund, WC Docket No. 10-90, Report and Order, 28 FCC Rcd 7766 (Wireline Comp. Bur. 2013); Connect America Fund, WC Docket No. 10-90, Report and Order, 28 FCC Rcd 7211 (Wireline Comp. Bur. 2013); Connect America Fund, WC Docket No. 10-90, Report and Order, 28 FCC Rcd 10488 (Wireline Comp. Bur. 2013); Connect America Fund et al., WC Docket No. 10-90 et al., Report and Order, Order and Order on Reconsideration and Further Notice of Proposed Rulemaking, 31 FCC Rcd 3087 (2016); Connect America Fund et al., WC Docket Nos. 10-90, 16-271; WT Docket No. 10-208, Report and Order and Further Notice of Proposed Rulemaking, 31 FCC Rcd 10139 (2016); Connect America Fund; ETC Annual Reports and Certifications, WC Docket Nos. 10-90, 14-58, Report and Order, 32 FCC Rcd 5944 (2017). The Commission has received OMB approval for most of the information collections required by these orders. At a later date, the Commission plans to submit additional revisions for OMB review to address other reforms adopted in the orders ( e.g., 47 CFR 54.313(a)(6)).

More recently, in the 2018 Rate-of-Return Order, the Commission adopted a rule requiring rate-of-return ETCs receiving high-cost universal service support to identify on their annual FCC Form 481 their cost consultants and cost consulting firm, or other third-party, if any, used to prepare financial and operations data disclosures used to calculate high-cost support for their submissions to the National Exchange Carrier Association, USAC, or the Commission. Connect America Fund et al., WC Docket No. 10-90 et al., Report and Order, Third Order on Reconsideration, and Notice of Proposed Rulemaking, FCC 18-29, at 19-20, para. 42 (Mar. 23, 2018) ( 2018 Rate-of-Return Order ). See also 47 CFR 54.313(f)(4).

The Commission therefore revises this information collection, as well as Form 481 and its accompanying instructions, to reflect this new requirement. Any increased burdens for particular reporting requirements are associated with ETCs newly subject to those requirements as a condition of receiving high-cost support.

The snapper-grouper fishery of the South Atlantic includes golden tilefish and is managed under the Fishery Management Plan for the Snapper-Grouper Fishery of the South Atlantic Region (FMP). The FMP was prepared by the South Atlantic Fishery Management Council and is implemented by NMFS under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) by regulations at 50 CFR part 622.

On January 2, 2018, NMFS published a final temporary rule in the Federal Register (83 FR 65) to reduce the combined ACL for golden tilefish in the South Atlantic to reduce overfishing of the stock. The final temporary rule was subsequently extended through January 3, 2019 (83 FR 28387; June 19, 2018). On January 4, 2019, NMFS implemented management measures for golden tilefish through a final rule for Amendment 28 to the Snapper-Grouper FMP (83 FR 233; December 4, 2018). This final rule set a recreational ACL of 2,316 fish (50 CFR 622.193(a)(2)(i)).

Landings data from the NMFS Southeast Fisheries Science Center indicate that the golden tilefish recreational ACL of 2,316 fish has been reached. Therefore, this temporary rule implements an AM to close the golden tilefish recreational sector of the snapper-grouper fishery for the remainder of the 2019 fishing year. As a result, the recreational sector for golden tilefish in the South Atlantic EEZ will be closed effective 12:01 a.m., local time June 17, 2019. The recreational sector for golden tilefish will open on January 1, 2020, the beginning of the 2020 fishing year and the recreational fishing season. During the closure, the bag and possession limits for golden tilefish in or from the South Atlantic EEZ are zero.

The Regional Administrator for the NMFS Southeast Region has determined this temporary rule is necessary for the conservation and management of South Atlantic golden tilefish and is consistent with the Magnuson-Stevens Act and other applicable laws.

This action is taken under 50 CFR 622.193(a)(2)(i) and is exempt from review under Executive Order 12866.

These measures are exempt from the procedures of the Regulatory Flexibility Act because the temporary rule is issued without opportunity for prior notice and comment.

This action responds to the best scientific information available. The AA finds that the need to immediately implement this action to close the recreational sector for golden tilefish constitutes good cause to waive the requirements to provide prior notice and opportunity for public comment on this temporary rule pursuant to 5 U.S.C. 553(b)(B), because such procedures are unnecessary and contrary to the public interest. Such procedures are unnecessary because the regulations at 50 CFR 622.193(a)(2)(i) have already been subject to notice and comment, and all that remains is to notify the public of the recreational closure for golden tilefish for the remainder of the 2019 fishing year. Prior notice and opportunity for comment are contrary to the public interest because of the need to immediately implement this action to protect the golden tilefish resource. Time required for notice and public comment would allow for continued recreational harvest and further exceedance of the recreational ACL.

For the aforementioned reasons, the AA also finds good cause to waive the 30-day delay in the effectiveness of this action under 5 U.S.C. 553(d)(3).